SECURITIES AND EXCHANGE COMMISSION
Washington, DC
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 21, 2006
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RBS GLOBAL, INC. |
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REXNORD CORPORATION |
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(Exact name of Registrant as specified in its charter) |
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(Exact name of Registrant as specified in its charter) |
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Delaware |
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Delaware |
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(State of Incorporation) |
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(State of Incorporation) |
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333-102428 |
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033-25967-01 |
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(Commission File Numbers) |
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01-0752045 |
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04-3722228 |
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(I.R.S. Employer Identification No.) |
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(I.R.S. Employer Identification No.) |
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4701 Greenfield Avenue |
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Milwaukee, Wisconsin |
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53214 |
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(Address of principal executive offices) |
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(Zip Code) |
(414) 643-3000
(Registrant’s telephone number, including area code)
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement.
As previously reported, on May 24, 2006, RBS Global, Inc. (the “Company”), the corporate parent of Rexnord Corporation, entered into an Agreement and Plan of Merger pursuant to which affiliates of the private equity firm Apollo Management, L.P. agreed to purchase the Company from private equity firm The Carlyle Group and management through the merger of Chase Merger Sub, Inc., a wholly-owned subsidiary of an Apollo affiliate, with and into the Company (the “Merger”).
As more fully described in Item 5.01 below, the Merger was consummated on July 21, 2006. In connection with the closing of the Merger, the Company entered into or became a party to several material definitive agreements. A brief summary of each material definitive agreement is set forth below. The following summaries are qualified in their entirety by the copy of each summarized agreement filed herewith as an exhibit under Item 9.01, which exhibits are incorporated by reference herein.
THE SENIOR NOTES AND THE SENIOR SUBORDINATED NOTES
The Senior Notes
In connection with the Merger, Chase Merger Sub, Inc. issued $485,000,000 in aggregate principal amount of 9½% Senior Notes due 2014 (the “Senior Notes”). At the time of the Merger, the Company and Rexnord Corporation assumed the obligations of Chase Merger Sub, Inc. under the Senior Notes on a joint and several basis as co-issuers pursuant to a Supplemental Indenture, dated July 21, 2006.
The Senor Notes will mature on August 1, 2014. Interest is payable on the Senior Notes on each February 1 and August 1, commencing on February 1, 2007. The Senior Notes are unsecured obligations and rank equally with all of the Company’s and Rexnord Corporation’s existing and future senior obligations. The Senior Notes are redeemable in part or in whole at any time on or after August 1, 2010, and in certain circumstances up to 35% of the aggregate principal amount of the Senior Notes are redeemable on or prior to August 1, 2009, in each case at the redemption price set forth in the indenture governing the Senior Notes. Prior to August 1, 2010, the Company may redeem some or all of the Senior Notes at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, plus the “make-whole” premium set forth in the indenture governing the Senior Notes. If a change of control occurs (as defined in the indenture governing the Senior Notes), the holders of the Senior Notes must be given an opportunity to have their Senior Notes purchased by the co-issuers at a purchase price of 101% of the principal amount of such notes, plus accrued and unpaid interest, if any, to the date of purchase.
The Senior Subordinated Notes
In connection with the Merger, Chase Merger Sub, Inc. also issued $300,000,000 in aggregate principal amount of 11¾% Senior Subordinated Notes due 2016 (the “Senior Subordinated Notes” and, together with the Senior Notes, the “Notes”). At the time of the Merger, the Company and Rexnord Corporation assumed the obligations of Chase Merger Sub, Inc. under the Senior Subordinated Notes on a joint and several basis as co-issuers pursuant to a Supplemental Indenture, dated July 21, 2006.
The Senor Subordinated Notes will mature on August 1, 2016. Interest is payable on the Senior Notes on each February 1 and August 1, commencing on February 1, 2007. The Senior Notes are unsecured subordinated obligations and rank junior to all of the Company’s and Rexnord Corporation’s existing and future senior obligations. The Senior Subordinated Notes are redeemable in part or in whole at any time on or after August 1, 2011, and in certain circumstances up to 35% of the aggregate principal amount of the Senior Subordinated Notes are redeemable on or prior to August 1, 2009, in each case at the redemption price set forth in the indenture governing the Senior Subordinated Notes. Prior to August 1, 2010, some or all of the Senior Subordinated Notes may be redeemed at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, plus the “make-whole” premium set forth in the indenture governing the Senior Subordinated Notes. If a change of control occurs (as defined in the indenture governing the Senior Subordinated Notes), the holders of the Senior Subordinated Notes must be given an opportunity to have their Senior Subordinated Notes purchased by the co-issuers at a purchase price of 101% of the principal amount of such notes, plus accrued and unpaid interest to the date of purchase.
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The Indentures
Chase Merger Sub, Inc. issued the Senior Notes and the Senior Subordinated Notes under indentures (the “Senior Note Indenture” and the “Senior Subordinated Note Indenture”, respectively, and collectively, the “Indentures”), dated as of July 21, 2006, by and between itself and Wells Fargo Bank, N.A., as Trustee. Upon the closing of the Merger, the Company and Rexnord Corporation executed the Supplemental Indentures, pursuant to which the Company and Rexnord Corporation became jointly and severally liable as co-issuers for all of the obligations under the Indentures and the Guarantors (as defined below) became guarantors of the Notes.
The Indentures set forth certain usual and customary terms and conditions for the Notes. Additionally, the Indentures set forth certain restrictive covenants applicable to the Company and its restricted subsidiaries (including Rexnord Corporation), including certain limitations with respect to the incurrence of indebtedness; dividends and other restricted payments; creation or incurrence of certain liens; sales of assets and subsidiary stock; and merger or consolidation transactions. These covenants are subject to a number of important limitations and exceptions, as set forth in the Indentures.
The Guarantees
Each of Rexnord Corporation’s direct and indirect Restricted Subsidiaries that were Domestic Subsidiaries (in each case as defined in the Indentures) on July 21, 2006 and that guarantee indebtedness under the Credit Agreement (as defined below) (collectively, the “Guarantors”), has jointly and severally irrevocably and unconditionally guaranteed (each, a “Guarantee”), on an unsecured senior basis with respect to the Senior Notes and the Senior Note Indenture, and on an unsecured senior subordinated basis with respect to the Senor Subordinated Notes and the Senior Subordinated Indenture, the performance and punctual payment when due, of all obligations of the co-issuers under the Senior Note Indenture and the Senior Notes and under the Senior Subordinated Notes and Senior Subordinated Indenture, as the case may be. Each Guarantee is limited in amount to an amount not to exceed the maximum amount that can be guaranteed by the applicable Guarantor without rendering the Guarantee voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally.
The Registration Rights Agreements
The co-issuers and the Guarantors have entered into a Senior Note Registration Rights Agreement (the “Senior Registration Rights Agreement”) and a Senior Subordinated Note Registration Rights Agreement (the “Senior Subordinated Registration Rights Agreement” and collectively, the “Registration Rights Agreements”). Pursuant to the Registration Rights Agreements, the co-issuers and the Guarantors have agreed to use their commercially reasonable efforts to file with the Securities and Exchange Commission (the “SEC”) on the appropriate form under the Securities Act of 1933, as amended, registration statements relating to offers to exchange the Senior Notes and the Senior Subordinated Notes for registered notes with terms identical to the Senior Notes and the Senior Subordinated Notes (other than certain transfer restrictions and penalties for failure to cause the registration of the respective series of Notes), within 180 days of the issue date of the Notes. Upon the effectiveness of the respective exchange offer registration statements, the co-issuers and the Guarantors will offer to the holders of the Senior Notes and the Senior Subordinated Notes the opportunity to exchange their Senior Notes and Senior Subordinated Notes for registered notes.
Material Relationships
Certain of the initial purchases of the Notes, including Merrill Lynch, Pierce, Fenner & Smith Incorporated (“ML”), Credit Suisse Securities (USA) LLC (“CS Securities”), Bear, Stearns & Co. Inc (“BSC”) and Lehman Brothers Inc (“LBI”) and their affiliates have performed investment banking, commercial banking, financial advisory and lending services for the Company, Rexnord Corporation and their affiliates from time to time.
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THE SENIOR SECURED CREDIT FACILITIES
In connection with the Merger, Chase Acquisition, Chaser Merger Sub, Inc. and Rexnord Corporation entered into new $760.0 million senior secured credit facilities, consisting of a $150.0 million revolving credit facility and a $610.0 million term loan B facility, with ML and CS Securities as co-lead arrangers; Merrill Lynch Capital Corporation as administrative agent and collateral agent; CS Securities as syndication agent; LBI and BSC as co-documentation agents; and other lenders.
The term loan facility has a maturity of seven years. The full amount of the term loan was drawn at the closing of the Merger. Subject to the prepayment requirements set forth below, the term loan facility requires Rexnord Corporation to make principal reduction payments in an amount equal to 1% per annum in equal quarterly installments for the first six years and nine months, with the remaining amount payable on the date that is seven years from the date of the closing of the senior secured credit facilities.
The revolving credit facility has a maturity of six years. Approximately $55.7 million of the revolving credit facility was utilized at the closing of the Merger, including approximately $20 million in respect of letters of credit. Principal amounts outstanding under the revolving credit facility will be due and payable in full six years from the date of the closing of the senior secured credit facilities.
Borrowings under the senior secured credit facilities bear interest at a rate equal to an applicable margin plus, at Rexnord Corporation’s option, either (a) a base rate determined by reference to the higher of (1) the prime rate determined by reference to the prime rate published by Bloomberg Professional Service Page Prime, and (2) the federal funds rate plus 1/2 of 1% or (b) a eurocurrency rate determined by reference to the costs of funds for eurocurrency deposits for the interest period relevant to such borrowing adjusted for certain additional costs. The applicable margin for such borrowings may be reduced subject to Rexnord Corporation attaining certain senior secured leverage ratios.
In addition to paying interest on outstanding principal under the senior secured credit facilities, Rexnord Corporation will be required to pay a commitment fee to the lenders under the revolving credit facility in respect of the unutilized commitments thereunder at a rate equal to 0.50% per annum (subject to reduction upon attainment of certain senior secured leverage ratios). Rexnord Corporation will also pay customary letter of credit and agency fees.
The senior secured credit facilities also contain certain customary affirmative and negative covenants and events of default. In addition, the senior secured credit facilities require Rexnord Corporation to maintain a maximum consolidated senior secured leverage ratio with respect to the revolving credit facility only. The senior secured credit facilities also require that Rexnord Corporation prepay outstanding term loans, subject to certain exceptions, based on excess cash flow, the incurrence of certain debt and the net cash proceeds of certain non-ordinary asset sales and other events. Rexnord Corporation is permitted to voluntarily repay outstanding loans under the senior secured credit facilities at any time without premium or penalty, other than customary “breakage” costs with respect to eurocurrency loans and other than a prepayment fee of 1% due on certain prepayments occurring in the first year of the senior secured credit facilities.
All obligations under the senior secured credit facilities are guaranteed by Chase Acquisition, the 100% parent of the Company, and, subject to certain exceptions, each existing and future direct and indirect domestic subsidiary of Rexnord Corporation, and are secured by substantially all of the assets of Chase Acquisition, the Company, Rexnord Corporation and each subsidiary that is a guarantor of the senior secured credit facilities.
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MANAGEMENT AGREEMENTS
The Company also entered into certain material definitive agreements with respect to the management of the Company following the Merger.
Employment Agreement
Rexnord Corporation entered into an Employment Agreement with Mr. Robert A. Hitt, dated July 21, 2006 (the “Employment Agreement”), a copy of which is filed herewith. The Employment Agreement has a term of five years, subject to automatic extensions for successive one-year periods thereafter unless either party delivers notice within specified notice periods. Under the Employment Agreement, Mr. Hitt’s initial salary will be $575,000, subject to annual review.
Upon a termination of employment by Rexnord Corporation without cause (as defined in the Employment Agreement), or by Mr. Hitt for good reason (as defined in the Employment Agreement), Mr. Hitt will be entitled to an amount equal to his stated annual base salary for a period of 18 months following such termination and, during such severance period, continued coverage under all of Rexnord Corporation’s group health benefit plans in which he or his dependents were entitled to participate immediately prior to termination. If such termination by Rexnord Corporation without cause or by Mr. Hitt for good reason occurs within 18 months of a change in control (as defined in the Employment Agreement), Mr. Hitt will also receive the bonus he would have received for the year in which such termination occurs and payments equal to the premium on his life insurance policy for 18 months. Mr. Hitt is prohibited from competing with Rexnord Corporation during the term of his employment and for a period of two years following termination of his employment. The Employment Agreement also contains customary provisions regarding non-disparagement, non-solicitation, confidentiality and intellectual property.
Cypress Consulting Agreement
Rexnord Corporation has entered into a Management Consulting Agreement with George M. Sherman, Cypress Group, LLC (“Cypress”) and Cypress Industrial Holdings, LLC (“Cypress Industrial” and collectively with Mr. Sherman and Cypress, “Consultant”), dated July 21, 2006, a copy of which is filed herewith. Pursuant to the agreement, Consultant will provide certain consulting services to Rexnord Corporation, Mr. Sherman shall serve as the Non-Executive Chairman of the Board of Rexnord Corporation and Rexnord Holdings, Inc., and Consultant will receive an annual consulting fee of $250,000 and reimbursement for reasonable out-of-pocket expenses.
Apollo Management Agreement
Rexnord Holdings, Inc. has entered into a Management Consulting Agreement with Apollo Management VI, L.P., dated July 21, 2006. Pursuant to the agreement, Apollo Management VI, L.P. will provide certain management consulting and advisory services to Rexnord Holdings, Inc., the Company, Rexnord Corporation and its subsidiaries, and will receive an annual consulting fee of $2,000,000. The agreement, a copy of which is filed herewith, also provides that Apollo Management VI, L.P. is to receive a $20,000,000 fee in connection with the closing of the Merger.
Stockholders’ Agreements
Rexnord Holdings, Inc., Rexnord Acquisition Holdings I, LLC, Rexnord Acquisition Holdings II, LLC, and certain other stockholders of Rexnord Holdings, Inc. have entered into a Stockholders’ Agreement, dated as of July 21, 2006 (the “Stockholders’ Agreement”). The Stockholders’ Agreement provides for, among other things, customary restrictions on the transferability of each such person’s equity ownership in Rexnord Holdings, Inc., tag-along rights, drag-along rights, piggyback registration rights, repurchase rights by Rexnord Holdings, Inc. in certain circumstances and customary restrictions on each management stockholder’s ability to compete with or solicit the employees or customers of Rexnord Holdings, Inc. or its subsidiaries.
Rexnord Holdings, Inc., Rexnord Acquisition Holdings I, LLC, Rexnord Acquisition Holdings II, LLC, Cypress Industrial Holdings, LLC (“Cypress”) and Mr. Sherman (Mr. Sherman, together with Cypress, the “Cypress Holders”) have entered into a Stockholders’ Agreement, dated as of July 21, 2006 (the “Cypress Stockholders’ Agreement”). The Cypress Stockholders’ Agreement provides for, among other things, customary restrictions on the transferability of each Cypress Holder’s equity ownership in Rexnord Holdings, Inc., tag-along rights, drag-along rights,
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piggyback registration rights, repurchase rights by Rexnord Holdings, Inc. in certain circumstances and put rights by the Cypress Holders in certain circumstances.
A copy of each Stockholders’ Agreement is filed herewith.
Special Signing Bonus Plan
In connection with the Merger, on July 21, 2006, Rexnord Corporation adopted the Rexnord Corporation Special Signing Bonus Plan (the “Signing Bonus Plan”), which is filed herewith.
The Signing Bonus Plan provides for the grant of a cash bonus to certain employees, directors, consultants and other service providers of Rexnord Corporation (including Mr. Robert A. Hitt and Cypress Industrial) in consideration for services rendered or to be rendered to Rexnord Corporation. The amount of each participant’s bonus is communicated to such participant in a plan participation letter, a form of which is filed herewith. The signing bonus payable under the Signing Bonus Plan to Mr. Hitt is $825,594, and the signing bonus payable to Cypress Industrial under the Signing Bonus Plan is $1,575,798. Bonuses are payable to participants upon the earliest to occur of (i) a change in control of Rexnord Corporation, (ii) the separation from service of the participant or (iii) a date specified in the participant’s plan participation letter.
Stock Option Plan
In connection with the Merger, on July 21, 2006, the Board of Directors of Rexnord Holdings, Inc. (the “Board”) adopted, and stockholders approved, the 2006 Stock Option Plan of Rexnord Holdings, Inc. (the “Option Plan”), which is filed herewith.
The Compensation Committee of the Board, or the Board in the absence of a Compensation Committee, will administer the Option Plan. Persons eligible to receive options under the Option Plan include officers, employees or directors of Rexnord Holdings, Inc. or any of its subsidiaries and certain consultants and advisors to Rexnord Holdings, Inc. or any of its subsidiaries.
The maximum number of shares of Rexnord Holdings, Inc.’s common stock that may be issued or transferred pursuant to options under the Option Plan equals 2,000,000. Shares that are subject to or underlie options which expire or for any reason are cancelled or terminated, forfeited, fail to vest, or for any other reason are not paid or delivered under the Option Plan will again be available for subsequent awards under the Option Plan.
The types of options that may be granted under the Option Plan include nonqualified stock options and “incentive stock options” within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended.
As is customary in incentive plans of this nature, each share limit and the number and kind of shares available under the Option Plan and any outstanding options, as well as the exercise prices of options, and performance targets under performance-based options, are subject to adjustment in the event of certain reorganizations, mergers, combinations, recapitalizations, stock splits, stock dividends, or other similar events that change the number or kind of shares outstanding, and extraordinary dividends or distributions of property to the stockholders.
Grant of Stock Options
In connection with the Merger and the adoption of the Option Plan, on July 21, 2006, the Board approved awards of nonqualified stock options to certain of the Company’s named executive officers (Mr. Robert A. Hitt and Mr. Michael N. Andrzejewski), Mr. Sherman and each of Rexnord Holdings, Inc.’s other non-employee directors (Mr. Laurence Berg, Mr. Steven Martinez and Mr. Peter Copses, and collectively, the “Other Non-Employee Directors”) pursuant to the Option Plan. Mr. Hitt was granted an option to purchase 230,706 shares of Rexnord Holdings, Inc. common stock; Mr. Andrzejewski was granted an option to purchase 11,535 shares of Rexnord Holdings, Inc. common stock; Mr. Sherman was granted an option to purchase 576,765 shares of Rexnord Holdings, Inc. common stock; and each Other Non-Employee Director was granted an option to purchase 4,211 shares of Rexnord Holdings, Inc. common stock. In connection with these options, Rexnord Holdings, Inc. has adopted a form of stock option agreement to be used for grants under the Option Plan to executive officers, a form of stock option agreement to be used for grants under the Option Plan to Mr. Sherman and a form of stock option agreement to be used for grants under the Option Plan to other non-employee directors, which are filed herewith.
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Fifty percent of the shares subject to each option granted to Mr. Hitt, Mr. Andrzejewski and Mr. Sherman vest ratably over five years from the date of grant of the option; the remaining fifty percent of the shares subject to the options are eligible to vest based on Rexnord Holdings, Inc.’s achievement of earnings before interest, taxes, depreciation and amortization (“EBITDA”) targets and debt repayment targets for fiscal years 2007 through 2011. The options granted to Mr. Hitt, Mr. Andrzejewski and Mr. Sherman generally are exercisable for 90 days following a termination of employment or services to the extent vested as of such termination. On a termination for good reason or certain terminations without cause (as set forth in his option agreement), Mr. Sherman’s vested options are exercisable for the remainder of the option term. The options granted to the Other Non-Employee Directors become fully vested on the first anniversary of the date of grant of the option, provided that the Other Non-Employee Director is a member of the Board on such anniversary date. The options granted to the Other Non-Employee Directors generally are exercisable for one year following a termination of directorship to the extent vested as of such termination. Each of the options is subject to possible accelerated vesting in the event of a change in control of Rexnord Holdings, Inc. The per-share exercise price of each option is $47.50 (the fair market value of Rexnord Holdings, Inc.’s common stock as of the closing of the Merger), and the term of each option is ten years.
Item 1.02 Termination of a Material Definitive Agreement.
10 1 ¤ 8 % SENIOR SUBORDINATED NOTES DUE 2012
On July 21, 2006, in connection with the closing of the Merger, the Company completed its previously announced tender offer for all of the 10 1 ¤ 8 % Senior Subordinated Notes due 2012, of Rexnord Corporation (the “Old Notes”). As of the expiration of the tender offer, Old Notes in the aggregate principal amount of $224,659,900 (or 99.85% of the total outstanding Old Notes) were validly tendered. Such Old Notes have been accepted for repurchase and retired.
SENIOR CREDIT FACILITIES
In connection with the Merger, all outstanding principal and interest under the Company’s then-existing senior credit facility (the “Old Facility”) was repaid and the Old Facility was terminated. The Old Facility provided for senior secured financing of up to $737 million, consisting of (a) a $587 million term loan, (b) a $75 million revolving credit facility and (c) a $75 million uncommitted incremental term loan facility. The indebtedness under the Old Facility was secured by substantially all of the assets of the Company, Rexnord Corporation and their domestic subsidiaries that were guarantors of the Old Facility. In connection with the termination of the Old Facility the following material definitive agreements were terminated:
• Amended and Restated Credit Agreement, dated as of May 16, 2005, by and among RBS Global, Inc., Rexnord Corporation, various lenders, Deutsche Bank Trust Company Americas, as administrative agent, General Electric Capital Corporation and Wachovia Bank, National Association as co-documentation agents, and Deutsche Bank Securities Inc. and Credit Suisse First Boston, as joint lead arrangers and joint book runners.
• Security Agreement, dated as of November 25, 2002, among RBS Global, Inc., Rexnord Corporation, certain subsidiaries of RBS Global, Inc., and Deutsche Bank Trust Company Americas, as collateral agent.
• Subordination Agreement, dated as of November 25, 2002, by and among RBS Global, Inc., Rexnord Corporation, each of its Subsidiaries party thereto, and Deutsche Bank Trust Company Americas, as collateral agent.
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• Pledge Agreement, dated as of November 25, 2002, among RBS Global, Inc., Rexnord Corporation, certain subsidiaries of RBS Global, Inc., and Deutsche Bank Trust Company Americas, as collateral agent.
MANAGEMENT AGREEMENTS
Also in connection with the Merger, RBS Global, Inc. and Rexnord Corporation terminated the following material definitive agreements, each of which agreement was replaced by the agreements described under “Management Agreements” in Item 1.01 above:
• Stockholders’ Agreement by and among RBS Global, Inc., Carlyle Partners III, L.P., CPIII Coinvestment, L.P., Carlyle High Yield Partners, L.P. and certain other stockholders listed on the signature pages thereto, dated as of November 25, 2002.
• Stockholders’ Agreement by and among RBS Global, Inc., Carlyle Partners III, L.P., CPIII Coinvestment, L.P., Carlyle High Yield Partners, L.P. and Cypress Industrial Holdings, LLC, dated as of November 25, 2002.
• Management Agreement among RBS Global, Inc. and TC Group LLC, dated November 25, 2002.
• Management Consulting Agreement among Rexnord Corporation and George M. Sherman, Cypress Group, LLC and Cypress Industrial Holdings, LLC, dated November 25, 2002.
• Employment Agreement between Rexnord Corporation and Robert A. Hitt, dated November 25, 2002, as amended March 31, 2006.
• Change of Control Retention Agreement between Rexnord Corporation and Robert A. Hitt, dated March 22, 2006.
• Consulting Agreement between Rexnord Corporation and Next Level Partners, L.L.C. dated May 16, 2005.
Carlyle Partners III, L.P., CPIII Coinvestment, L.P. and Carlyle High Yield Partners, L.P. are affiliates of TC Group, L.L.C., the principal beneficial stockholder of the Company prior to the Merger. Robert A. Hitt was the president, Chief Executive Officer and a director of the Company prior to the Merger and continues to hold these positions. George M. Sherman was the Non-Executive Chairman of the Board of Directors of the Company and a consultant to Rexnord Corporation prior to the Merger and continues to hold these positions. Cypress Group, LLC and Cypress Industrial Holdings, LLC are affiliates of Mr. Sherman.
Item 5.01 Changes in Control of Registrant.
Pursuant to the Merger, the closing of which occurred on July 21, 2006, the Company has become a direct wholly owned subsidiary of Chase Acquisition. Apollo Investment VI, L.P., an affiliate of Apollo Management, holds an approximate 92% ownership interest in Rexnord Holdings, Inc., the parent of Chase Acquisition (on a fully diluted basis), with the remaining 8% held by management of the Company. Total consideration paid in connection with the Merger was approximately $1.8 billion, including the repurchase or repayment of approximately $788 million of debt and other obligations. The acquisition was financed with an equity investment by affiliates of Apollo Management of approximately $438 million, the roll-over of shares of common stock and options to purchase shares of common stock in the Company by certain members of the Company’s management of approximately $37.0 million, the net proceeds from the sale of the Notes and borrowings of $610.0 million and $55.7 million (including approximately $20 million in respect of letters of credit) under the term loan and the revolving credit facility, respectively, of the Senior Secured Credit Facilities described in Item 1.01 above.
In connection with the Merger, Rexnord Holdings, Inc. and Apollo Management entered into certain agreements with persons who were members of management or affiliates of the Company prior to the Merger. These agreement are as described under Item 1.01.
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Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.
In connection with the closing of the Merger, the following persons resigned as directors of Rexnord Corporation and the Company:
Jerome Powell
Praveen Jeyarajah
Bruce Rosenblum
Upon the closing of the Merger, the following persons were elected as all of the directors of Rexnord Corporation and the Company:
George M. Sherman
Robert A. Hitt
Laurence Berg
Steven Martinez
Peter P. Copses
The officers of each of the Company and Rexnord Corporation following the Merger are the same officers in place at each such company immediately prior to the Merger.
Item 8.01 Other Events.
On July 25, 2006, the Company fled a Form RW with the SEC requesting that its Registration Statement on Form S-1 previously filed with the SEC on April 4, 2006 (SEC File No. 333-132981), including all amendments and exhibits thereto, be withdrawn in light of the Merger.
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Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
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Exhibit No. |
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Description |
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2.1 |
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Agreement and Plan of Merger, by and among Chase Acquisition I, Inc., Chase Merger Sub, Inc., RBS Global, Inc. and TC Group, L.L.C, dated as of May 24, 2006. The Company agrees to furnish supplementally a copy of the schedules omitted from this Exhibit 2.1 to the Commission upon request. |
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4.1 |
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Senior Note Indenture with respect to the 9½% Senior Notes due 2014, among Chase Merger Sub, Inc. and Wells Fargo Bank, National Association, dated as of July 21, 2006. |
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4.2 |
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First Supplemental Indenture with respect to the 9½% Senior Notes due 2014, by and among RBS Global, Inc., Rexnord Corporation, the guarantors listed therein, Chase Merger Sub, Inc. and Wells Fargo Bank, dated as of July 21, 2006 . |
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4.3 |
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Form of Rule 144A Global Note evidencing the 9½% Senior Notes due 2014. |
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4.4 |
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Form of Regulation S Global Note evidencing the 9½% Senior Notes due 2014. |
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4.5 |
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Registration Rights Agreement with respect to the 9½% Senior Notes due 2014, by and among Chase Merger Sub, Inc., RBS Global, Inc., Rexnord Corporation, the subsidiaries listed therein and Credit Suisse Securities (USA) LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Bear Stearns & Co. Inc. and Lehman Brothers Inc., dated July 21, 2006. |
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4.6 |
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Senior Subordinated Note Indenture with respect to the 11.75% Senior Subordinated Notes due 2016, among Chase Merger Sub, Inc. and Wells Fargo Bank, National Association, dated as of July 21, 2006. |
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4.7 |
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First Supplemental Indenture with respect to the 11.75% Senior Subordinated Notes due 2016, by and among RBS Global, Inc., Rexnord Corporation, the Guarantors listed therein, Chase Merger Sub, Inc. and Wells Fargo Bank, dated as of July 21, 2006 . |
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4.8 |
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Form of Rule 144A Global Note evidencing the 11.75% Senior Subordinated Notes due 2016. |
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4.9 |
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Form of Regulation S Global Note evidencing the 11.75% Senior Subordinated Notes due 2016. |
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4.10 |
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Registration Rights Agreement with respect to the 11.75% Senior Subordinated Notes due 2016, by and among Chase Merger Sub, Inc., RBS Global, Inc., Rexnord Corporation, the subsidiaries listed therein and Credit Suisse Securities (USA) LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Bear Stearns & Co. Inc. and Lehman Brothers Inc., dated July 21, 2006. |
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10.1 |
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Credit Agreement among Chase Acquisition I, Inc., Chase Merger Sub, Inc., Rexnord Corporation, the lenders party thereto, Merrill Lynch Capital Corporation, as administrative agent, Credit Suisse Securities (USA) LLC, as syndication agent, and Bear, Stearns & Co. Inc. and Lehman Brothers Inc., as co-documentation Agents, dated as of July 21, 2006. |
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10.2 |
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Employment Agreement, by and between Rexnord Corporation and Robert A. Hitt, dated July 21, 2006. |
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10.3 |
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Management Consulting Agreement by and among Rexnord Corporation, George M. Sherman, Cypress Group, LLC and Cypress Industrial Holdings, LLC., dated July 21, 2006. |
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10.4 |
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Management Consulting Agreement by and between Rexnord Holdings, Inc. and Apollo Management VI, L.P., dated July 21, 2006. |
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10.5 |
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Stockholders’ Agreement by and among Rexnord Holdings, Inc., Rexnord Acquisition Holdings I, LLC, Rexnord Acquisition Holdings II, LLC and certain other Stockholders, dated July 21, 2006. |
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10.6 |
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Stockholders’ Agreement by and among Rexnord Holdings, Inc., Rexnord Acquisition Holdings I, LLC, Rexnord Acquisition Holdings II, LLC, Cypress Industrial Holdings, LLC and George M. Sherman, dated July 21, 2006. |
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10.7 |
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Rexnord Corporation Special Signing Bonus Plan. |
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10.8 |
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Form of Special Signing Bonus Plan Participation Letter. |
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10.9 |
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Rexnord Holdings, Inc. 2006 Stock Option Plan. |
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10.10 |
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Form of Executive Non-Qualified Stock Option Agreement. |
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10.11 |
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Form of George M. Sherman Non-Qualified Stock Option Agreement. |
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10.12 |
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Form of Non-Employee Director Non-Qualified Option Agreement. |
10
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, as amended, the Co-registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized this 26th day of July, 2006.
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REXNORD CORPORATION |
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By: |
/s/ Thomas J. Jansen |
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Thomas J. Jansen |
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Vice President and Chief Financial Officer |
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Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, as amended, the Co-registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized this 26th day of July, 2006.
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RBS GLOBAL, INC. |
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By: |
/s/ Thomas J. Jansen |
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Thomas J. Jansen |
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Vice President and Chief Financial Officer |
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11
EXHIBIT INDEX
TO
FORM 8-K CURRENT REPORT
Date of Report: July 21, 2006
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Exhibit No. |
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Description |
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2.1 |
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Agreement and Plan of Merger, by and among Chase Acquisition I, Inc., Chase Merger Sub, Inc., RBS Global, Inc. and TC Group, L.L.C, dated as of May 24, 2006. The Company agrees to furnish supplementally a copy of the schedules omitted from this Exhibit 2.1 to the Commission upon request. |
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4.1 |
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Senior Note Indenture with respect to the 9½% Senior Notes due 2014, among Chase Merger Sub, Inc. and Wells Fargo Bank, National Association, dated as of July 21, 2006. |
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4.2 |
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First Supplemental Indenture with respect to the 9½% Senior Notes due 2014, by and among RBS Global, Inc., Rexnord Corporation, the guarantors listed therein, Chase Merger Sub, Inc. and Wells Fargo Bank, dated as of July 21, 2006 . |
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4.3 |
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Form of Rule 144A Global Note evidencing the 9½% Senior Notes due 2014. |
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4.4 |
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Form of Regulation S Global Note evidencing the 9½% Senior Notes due 2014. |
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4.5 |
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Registration Rights Agreement with respect to the 9½% Senior Notes due 2014, by and among Chase Merger Sub, Inc., RBS Global, Inc., Rexnord Corporation, the subsidiaries listed therein and Credit Suisse Securities (USA) LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Bear Stearns & Co. Inc. and Lehman Brothers Inc., dated July 21, 2006. |
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4.6 |
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Senior Subordinated Note Indenture with respect to the 11.75% Senior Subordinated Notes due 2016, among Chase Merger Sub, Inc. and Wells Fargo Bank, National Association, dated as of July 21, 2006. |
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4.7 |
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First Supplemental Indenture with respect to the 11.75% Senior Subordinated Notes due 2016, by and among RBS Global, Inc., Rexnord Corporation, the Guarantors listed therein, Chase Merger Sub, Inc. and Wells Fargo Bank, dated as of July 21, 2006 . |
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4.8 |
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Form of Rule 144A Global Note evidencing the 11.75% Senior Subordinated Notes due 2016. |
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4.9 |
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Form of Regulation S Global Note evidencing the 11.75% Senior Subordinated Notes due 2016. |
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4.10 |
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Registration Rights Agreement with respect to the 11.75% Senior Subordinated Notes due 2016, by and among Chase Merger Sub, Inc., RBS Global, Inc., Rexnord Corporation, the subsidiaries listed therein and Credit Suisse Securities (USA) LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Bear Stearns & Co. Inc. and Lehman Brothers Inc., dated July 21, 2006. |
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10.1 |
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Credit Agreement among Chase Acquisition I, Inc., Chase Merger Sub, Inc., Rexnord Corporation, the lenders party thereto, Merrill Lynch Capital Corporation, as administrative agent, Credit Suisse Securities (USA) LLC, as syndication agent, and Bear, Stearns & Co. Inc. and Lehman Brothers Inc., as co-documentation Agents, dated as of July 21, 2006. |
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10.2 |
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Employment Agreement, by and between Rexnord Corporation and Robert A. Hitt, dated July 21, 2006. |
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10.3 |
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Management Consulting Agreement by and among Rexnord Corporation, George M. Sherman, Cypress Group, LLC and Cypress Industrial Holdings, LLC., dated July 21, 2006. |
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10.4 |
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Management Consulting Agreement by and between Rexnord Holdings, Inc. and Apollo Management VI, L.P., dated July 21, 2006. |
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10.5 |
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Stockholders’ Agreement by and among Rexnord Holdings, Inc., Rexnord Acquisition Holdings I, LLC, Rexnord Acquisition Holdings II, LLC and certain other Stockholders, dated July 21, 2006. |
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10.6 |
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Stockholders’ Agreement by and among Rexnord Holdings, Inc., Rexnord Acquisition Holdings I, LLC, Rexnord Acquisition Holdings II, LLC, Cypress Industrial Holdings, LLC and George M. Sherman, dated July 21, 2006. |
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10.7 |
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Rexnord Corporation Special Signing Bonus Plan. |
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10.8 |
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Form of Special Signing Bonus Plan Participation Letter. |
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10.9 |
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Rexnord Holdings, Inc. 2006 Stock Option Plan. |
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10.10 |
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Form of Executive Non-Qualified Stock Option Agreement. |
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10.11 |
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Form of Geroge M. Sherman Non-Qualified Stock Option Agreement. |
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10.12 |
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Form of Non-Employee Director Non-Qualified Option Agreement. |
12
Exhibit 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
dated as of
May 24, 2006
by and among
CHASE ACQUISITION I, INC.,
CHASE MERGER SUB, INC.,
RBS GLOBAL, INC.
and
TC GROUP, L.L.C.
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Page |
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ARTICLE I. CERTAIN DEFINITIONS |
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2 |
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ARTICLE II. THE MERGER |
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12 |
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2.1 |
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Conversion of Company Shares and Vested Options |
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12 |
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2.2 |
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Payment and Exchange of Certificates |
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13 |
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2.3 |
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Effective Time of Merger; Closing Date |
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15 |
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2.4 |
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Estimated Adjustment Amount |
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15 |
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2.5 |
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Adjustment Amount |
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16 |
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2.6 |
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Holder Allocable Expenses |
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18 |
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2.7 |
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Exchange Agent |
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19 |
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2.8 |
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Lost Certificate |
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20 |
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2.9 |
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Dissenting Common Shares |
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20 |
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2.10 |
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No Liability |
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20 |
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ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY |
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21 |
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3.1 |
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Corporate Organization of the Company |
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21 |
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3.2 |
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Subsidiaries |
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21 |
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3.3 |
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Due Authorization |
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21 |
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3.4 |
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No Conflict |
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22 |
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3.5 |
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Governmental Authorities; Consents |
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22 |
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3.6 |
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Capitalization of the Company |
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22 |
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3.7 |
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Capitalization of Subsidiaries |
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23 |
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3.8 |
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Financial Statements |
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24 |
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3.9 |
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Undisclosed Liabilities |
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24 |
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3.10 |
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Litigation and Proceedings |
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24 |
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3.11 |
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Legal Compliance |
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25 |
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3.12 |
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Contracts; No Defaults |
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25 |
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3.13 |
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Employee Benefit Plans |
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27 |
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3.14 |
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Labor Relations |
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31 |
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3.15 |
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Taxes |
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31 |
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3.16 |
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Brokers’ Fees |
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32 |
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3.17 |
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Insurance |
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32 |
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3.18 |
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Licenses, Permits and Authorizations |
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32 |
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3.19 |
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Machinery, Equipment and Other Tangible Property |
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32 |
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3.20 |
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Real Property |
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33 |
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3.21 |
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Intellectual Property |
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33 |
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3.22 |
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Environmental Matters |
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34 |
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3.23 |
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SEC Documents |
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35 |
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3.24 |
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Absence of Certain Changes or Events |
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35 |
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3.25 |
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Related Party Transactions |
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36 |
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3.26 |
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Customers; Suppliers |
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36 |
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3.27 |
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Recalls |
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36 |
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3.28 |
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Foreign Corrupt Practices Act |
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36 |
ii
iii
Schedules
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Schedule 1.1 |
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Permitted Liens |
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Schedule 1.1(b) |
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Knowledge |
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Schedule 2.1(d) |
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Rollover Shares and Options |
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Schedule 3.2 |
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Subsidiaries of the Company |
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Schedule 3.4 |
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Exceptions to No Conflict Representation |
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Schedule 3.5 |
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Governmental Authorities; Consents |
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Schedule 3.6 |
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Capitalization of the Company |
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Schedule 3.7 |
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Ownership Interests |
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Schedule 3.8 |
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Financial Statements |
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Schedule 3.9 |
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Liabilities |
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Schedule 3.10 |
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Litigation and Proceedings |
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Schedule 3.11 |
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Legal Compliance |
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Schedule 3.12 |
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Contracts |
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Schedule 3.13 |
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Employee Benefits |
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Schedule 3.14 |
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Labor Relations |
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Schedule 3.15 |
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Taxes |
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Schedule 3.16 |
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Brokers’ Fee |
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Schedule 3.17 |
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Insurance |
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Schedule 3.18 |
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Licenses, Permits, and Authorizations |
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Schedule 3.19 |
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Machinery, Equipment, and Other Property |
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Schedule 3.20 |
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Real Property |
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Schedule 3.21 |
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Intellectual Property |
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Schedule 3.22 |
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Environmental Matters |
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Schedule 3.24 |
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Absence of Certain Changes |
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Schedule 3.25 |
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Related Party Transactions |
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Schedule 3.26 |
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Customers; Suppliers |
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Schedule 3.27 |
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Product Recalls |
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Schedule 4.3 |
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No Conflict Representation |
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Schedule 4.5 |
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Governmental Authorities; Consents |
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Schedule 4.7 |
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Brokers’ Fees |
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Schedule 5.1 |
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Conduct of Business |
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Schedule 5.9 |
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Affiliate Agreements |
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Schedule 5.10 |
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Capital Expenditures |
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Schedule 7.5 |
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Terms of Debt Tender Offer |
Annexes
Annex A – Certificate of Merger
Annex B – Holder Acknowledgement
Annex C – Escrow Agreement
Annex D – Debt Commitment Letter
Annex E – Equity Commitment Letter
Annex F – Rollover Agreement
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this “ Agreement ”), dated as of May 24, 2006, is entered into by and among CHASE ACQUISITION I, INC., a Delaware corporation (“ Acquiror ”), CHASE MERGER SUB, INC. , a Delaware corporation and a wholly-owned subsidiary of Acquiror (“ Merger Sub ”), RBS GLOBAL, INC., a Delaware corporation (the “ Company ”), and TC GROUP, L.L.C., a Delaware limited liability company (“ TC Group ”), solely in its capacity as the initial Holder Representative hereunder.
PLAN OF MERGER
A. Acquiror, Merger Sub and the Company (Merger Sub and the Company sometimes being referred to herein as the “ Constituent Corporations ”) are hereby adopting a plan of merger, providing for the merger of Merger Sub with and into the Company, with the Company being the surviving corporation. This merger (the “ Merger ”) shall be consummated in accordance with this Agreement and evidenced by a Certificate of Merger between Merger Sub and the Company in substantially the form of Annex A hereto (the “ Certificate of Merger ”), such Merger to be consummated as of the Effective Time of the Merger (as defined below).
B. Upon consummation of the Merger, the separate corporate existence of Merger Sub shall cease and the Company, as the surviving corporation in the Merger (hereinafter referred to for the periods on and after the Effective Time of the Merger as the “ Surviving Corporation ”), shall continue its corporate existence under the Delaware General Corporation Law (the “ DGCL ”) as a wholly-owned subsidiary of Acquiror.
C. On and after the Effective Time of the Merger, the Surviving Corporation shall thereupon and thereafter possess all of the rights, privileges, powers and franchises, of a public as well as a private nature, of the Constituent Corporations, and shall become subject to all the restrictions, disabilities and duties of each of the Constituent Corporations; and all rights, privileges, powers and franchises of each Constituent Corporation, and all property, real, personal and mixed, and all debts due to each such Constituent Corporation, on whatever account, and all choses in action belonging to each such corporation, shall become vested in the Surviving Corporation; and all property, rights, privileges, powers and franchises, and all and every other interest shall become thereafter the property of the Surviving Corporation as they are of the Constituent Corporations; and the title to any real property vested by deed or otherwise or any other interest in real estate vested by any instrument or otherwise in either of such Constituent Corporations shall not revert or become in any way impaired by reason of the Merger; but all Liens upon any property of either Constituent Corporation shall thereafter attach to the Surviving Corporation and shall be enforceable against it to the same extent as if said debts, liabilities and duties had been incurred or contracted by it; all of the foregoing in accordance with the applicable provisions of the DGCL.
D. At the Effective Time of the Merger, the Certificate of Incorporation and Bylaws of the Surviving Corporation shall be the Certificate of Incorporation and Bylaws of the Merger Sub as in effect immediately prior to the Effective Time of the Merger, until thereafter amended as provided therein and under the DGCL, and the officers of the Surviving Corporation shall be the officers of the Company immediately prior to the Effective Time of the Merger, and
the directors of the Surviving Corporation shall be the directors of the Merger Sub immediately prior to the Effective Time of the Merger. Each of the directors of the Company immediately prior to the Effective Time of the Merger shall tender their written resignation (in a form reasonably acceptable to Acquiror), effective as of the Closing Date.
E. On the date hereof, Acquiror and Cypress Industrial Holdings, LLC and Cypress Holdings, LLC (together, the “ Rollover Stockholders ”) are entering into an agreement in the form attached as Annex F (the “ Rollover Agreement ”), pursuant to which the Rollover Stockholders will, immediately prior to the Effective Time of the Merger, contribute to a parent company of Acquiror (“ Acquiror Parent ”) certain shares of Common Stock held by the Rollover Stockholders in exchange for the issuance by Acquiror Parent to such Rollover Stockholders of shares of the capital stock of Acquiror Parent, and Parent will thereafter and immediately prior to the Effective Time of the Merger contribute such shares of Common Stock to Acquiror.
F. On the date hereof, each of the Board of Directors of the Company and the holders of Common Stock who hold, in the aggregate, a number of shares of Common Stock entitled to cast votes in excess of that number of votes necessary for the adoption and approval of this Agreement and the transactions contemplated hereby by the stockholders of the Company, have approved and adopted this Agreement, the other Transactions Documents and the transactions contemplated hereby and thereby.
G. For certain limited purposes, and subject to the terms set forth herein, TC Group shall serve as a representative of the holders of Common Stock and Vested Options.
H. Certain capitalized terms used herein have the meanings ascribed to such terms in Article I hereof.
AGREEMENT
In order to consummate the Merger, and in consideration of the mutual agreements hereinafter contained, Acquiror, Merger Sub, the Company and TC Group agree as follows:
ARTICLE I.
CERTAIN DEFINITIONS
As used herein, the following terms shall have the following meanings:
“ Acquiror ” has the meaning specified in the Preamble hereto.
“ Acquiror Cure Period ” has the meaning specified in Section 10.1(c).
“ Acquiror Parent Options ” has the meaning specified in Section 2.1(a).
“ Acquiror Parent ” has the meaning specified in Section entitled “Plan of Merger”.
“ Acquisition Agreements ” has the meaning specified in Section 3.29.
2
“ Action ” means any claim, action, suit, audit, assessment, arbitration or inquiry, or any proceeding or investigation, by or before any Governmental Authority.
“ Adjustment Amount ” has the meaning specified in Section 2.5(c).
“ Affiliate ” means, with respect to any specified Person, any Person that, directly or indirectly, controls, is controlled by, or is under common control with, such specified Person, through one or more intermediaries or otherwise. For purposes of this definition, “control” shall mean, when used with respect to any Person, the power to direct the management and policies of such Person, directly or indirectly, through the ownership of voting securities, by contract or otherwise.
“ Agent ” has the meaning specified in Section 5.6.
“ Aggregate Fully-Diluted Common Shares ” has the meaning specified in Section 2.1(d).
“ Aggregate Option Exercise Price ” has the meaning specified in Section 2.1(d).
“ Agreement ” has the meaning specified in the preamble hereto.
“ Alternative Financing ” shall have the meaning specified in Section 6.4.
“ Ancillary Agreements ” has the meaning specified in Section 5.6.
“ Antitrust Authorities ” means the Antitrust Division of the United States Department of Justice, the United States Federal Trade Commission or the antitrust or competition law authorities of any other jurisdiction (whether United States, foreign or multinational).
“ Apollo ” has the meaning specified in Section 4.6.
“ Apollo Investors ” has the meaning specified in Section 12.13.
“ Audited Financial Statements ” has the meaning specified in Section 3.8.
“ Auditor ” has the meaning specified in Section 2.5(b).
“ Business Day ” means a day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by law to close.
“ Carlyle ” means The Carlyle Group and its Affiliates.
“ Cash and Cash Equivalents ” of any Person as of any date means the cash and cash equivalents required to be reflected as cash and cash equivalents on a consolidated balance sheet of such Person and its Subsidiaries as of such date prepared in accordance with GAAP (it being understood that Cash and Cash Equivalents shall not be reduced by the amount of uncleared checks to the extent uncleared checks are treated as a current liability on the Closing Balance Sheet).
3
“ Cash Per Fully-Diluted Common Share ” has the meaning specified in Section 2.1(d).
“ Certificate of Merger ” has the meaning specified in the Section entitled “Plan of Merger.”
“ Certificates ” has the meaning specified in Section 2.2(b).
“ Closing ” has the meaning specified in Section 8.2.
“ Closing Balance Sheet ” has the meaning specified in Section 2.5(a).
“ Closing Date ” has the meaning specified in Section 8.2.
“ Closing Date Cash ” means the lesser of (i) the Cash and Cash Equivalents of the Company and its Subsidiaries as of the Closing Date (determined without giving effect to the consummation of the Merger or the financing transactions in connection therewith or the payments made pursuant to Section 7.5 (other than payment by the Company of expenses incurred in connection with the Debt Tender Offer pursuant to Section 12.6(e))), minus (A) the amount of Cash and Cash Equivalents of any Subsidiaries of the Company that are required by a Governmental Authority, applicable law, or any Contract to be retained in the Peoples Republic of China (excluding Hong Kong); and (B) 40% of all other Cash and Cash Equivalents of the Company and its Subsidiaries that are held by Subsidiaries of the Company organized under the laws of the Peoples Republic of China (excluding Hong Kong) and (ii) $6,000,000.
“ Closing Date Funded Debt ” has the meaning specified in Section 2.5(a).
“ Closing Date Net Working Capital ” has the meaning specified in Section 2.5(a).
“ Code ” means the Internal Revenue Code of 1986, as amended.
“ Common Shares ” has the meaning specified in Section 2.1(a).
“ Common Stock ” means the common stock, par value $.01 per share, of the Company.
“ Company ” has the meaning specified in the preamble hereto.
“ Company Cure Period ” has the meaning specified in Section 10.1(b).
“ Company SEC Documents ” has the meaning specified in Section 3.23.
“ Confidential and Proprietary Information ” means all information about or relating to the business of the Company, including all Intellectual Property Rights (other than information which is in the public domain (i) at the time of receipt thereof by the Company or (ii) at the time of its use or disclosure by the Company).
4
“ Confidentiality Agreement ” has the meaning specified in Section 12.11.
“ Consent Solicitation ” has the meaning specified in Section 7.5(e).
“ Constituent Corporations ” has the meaning specified in the Section entitled “Plan of Merger.”
“ Contracts ” means any, whether written or oral, contracts, agreements, subcontracts, leases, licenses, bonds, indentures, notes and purchase orders.
“ Dalong Acquisition ” means that certain transaction contemplated by that certain Equity Acquisition Agreement among Shanghai Electric (Group) Company, Shanghai Dalong Machinery Co., Ltd, Shanghai General Machinery (Group) Company (“Dalong”) and RBS China Holdings, L.L.C., dated December 16, 2005.
“ Debt Financing ” has the meaning specified in Section 4.6.
“ Debt Financing Commitment ” has the meaning specified in Section 4.6.
“ Debt Tender Offer ” has the meaning specified in Section 7.5(a).
“ Debt Tender Premium ” means the payments made to the holders of the Senior Subordinated Notes pursuant to the Debt Tender Offer in excess of the principal amount of the sum of the Senior Subordinated Notes held by such holders and the accrued interest thereon.
“ Determination Date ” has the meaning specified in Section 2.5(b).
“ DGCL ” has the meaning specified in the Section entitled “Plan of Merger.”
“ Dissenting Common Shares ” has the meaning specified in Section 2.1(a).
“ Dissenting Stockholders ” has the meaning specified in Section 2.1(a).
“ Effective Time of the Merger ” has the meaning specified in Section 2.3.
“ Employee Options ” has the meaning specified in Section 2.2(b).
“ Employee Plans ” has the meaning specified in Section 3.13(a)(i).
“ Environmental Claim ” means any claim, action, litigation, notice of violation, consent order, consent decree, or written notice by any Person alleging potential liability arising out of, based on or resulting from (a) the presence or Release of any Hazardous Materials in, on, from or under any of the Owned Real Property or Leased Real Property, any property formerly owned or occupied by the Company, or any third party location to which the Company sent, or caused to be sent, Hazardous Materials or (b) any violation or alleged violation of any Environmental Law.
“ Environmental Laws ” means all applicable civil and criminal foreign, U.S., federal, state or local laws, statutes, ordinances, common law, rules, or regulations relating to
5
pollution or protection of the environment, human health and safety, and natural resources, including those relating to Releases of Hazardous Materials or otherwise relating to the use, treatment, storage, transport or handling of Hazardous Materials.
“ Equity Financing ” has the meaning specified in Section 4.6.
“ Equity Financing Commitment ” has the meaning specified in Section 4.6.
“ ERISA ” has the meaning specified in Section 3.13(a)(ii).
“ Escrow Agent ” has the meaning specified in Section 2.5(d).
“ Escrow Agreement ” has the meaning specified in Section 2.5(d).
“ Escrow Amount ” means $10,000,000.
“ Escrow Percentage ” means, with respect to any holder of Common Shares and/or Vested Options, a ratio (expressed as a percentage) equal to: (x) the sum of the number of Common Shares held by such holder as of immediately prior to the Effective Time of the Merger (excluding Rollover Shares, if any) and the number of Common Shares issuable upon exercise of any Vested Options (excluding Rollover Options, if any) held by such holder immediately prior to the Effective Time of the Merger divided by (y) the Aggregate Fully-Diluted Common Shares (excluding Rollover Shares, if any, and Common Shares issuable upon exercise of Rollover Options, if any).
“ Estimated Adjustment Amount ” has the meaning specified in Section 2.4(b).
“ Estimated Closing Date Cash ” has the meaning specified in Section 2.4(a).
“ Estimated Closing Date Funded Debt ” has the meaning specified in Section 2.4(a).
“ Estimated Closing Date Net Working Capital ” has the meaning specified in Section 2.4(a).
“ Evaluation Materials ” means this Agreement (together with the Schedules and Annexes hereto) and the other Transaction Documents and, as to any party hereto, means all other non-public information furnished to such party by the other parties hereto in connection with the transactions contemplated hereby relating to the disclosing party or the disclosing party’s Affiliates (including non-public information relating to Apollo, the holders of the Common Stock and their respective Affiliates), whether furnished orally or in writing or gathered by inspection, together with analyses, compilations, studies or other documents prepared by any party, or by such party’s agents, representatives (including attorneys, accountants and financial advisors) or employees, which contain or otherwise reflect such information, provided that the term Evaluation Materials shall not include information that (i) is or becomes generally available to the public other than as a result of a disclosure in violation of the terms hereof or the Confidentiality Agreement, (ii) was or becomes available to a party hereto on a non-confidential basis from a source other than any other party hereto or their
6
representatives and Affiliates, provided that such source is not prohibited from disclosing such information by a contractual, legal or fiduciary obligation to any party hereto or any of their respective representatives or Affiliates, or (iii) has been or is independently developed by the party to which such information was furnished and not derived from the Evaluation Materials.
“ Exchange Act ” has the meaning specified in Section 3.23(b).
“ Exchange Agent ” has the meaning specified in Section 2.2(a).
“ Existing Credit Agreement ” has the meaning specified in Section 5.6.
“ Falk Agreement ” has the meaning specified in Section 3.29.
“ Financing ” has the meaning specified in Section 4.6.
“ Financing Commitments ” has the meaning specified in Section 4.6.
“ Fully-Diluted Percentage ” means, with respect to any holder of Common Shares and/or Vested Options, a ratio (expressed as a percentage) equal to (x) the sum of the number of Common Shares (excluding Rollover Shares, if any) held by such holder as of immediately prior to the Effective Time of the Merger and the number of Common Shares issuable upon the exercise of any Vested Options (including Rollover Options, if any) held by such holder as of immediately prior to the Effective Time of the Merger, divided by (y) the Aggregate Fully-Diluted Common Shares (including Rollover Options, if any, but excluding Rollover Shares, if any).
“ Funded Debt ” of the Company as of any date means all indebtedness of the Company and its consolidated Subsidiaries for borrowed money (including capitalized leases), together with accrued and unpaid interest thereon, required to be reflected as indebtedness on a consolidated balance sheet of the Company and its consolidated Subsidiaries as of such date prepared in accordance with GAAP, which, as of the Closing Date, shall include the Debt Tender Premium.
“ Funding Amount ” has the meaning specified in Section 2.2(a).
“ GAAP ” has the meaning specified in Section 2.5(a).
“ Governmental Authority ” means any Federal, state, municipal, local or foreign government, governmental authority, regulatory or administrative agency, governmental commission, department, board, bureau, agency or instrumentality, court, tribunal, arbitrator or arbitral body.
“ Governmental Order ” means any order, judgment, injunction, decree, writ, stipulation, determination or award entered by or with any Governmental Authority.
“ Hazardous Materials ” means all materials, wastes or substances defined by, or regulated under, any Environmental Law as a hazardous waste, hazardous material, hazardous substance, extremely hazardous waste, restricted hazardous waste, contaminant, pollutant, toxic
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waste, or toxic substance, including petroleum, petroleum products, asbestos, urea formaldehyde and polychlorinated biphenyls.
“ HSR Act ” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.
“ Holder Acknowledgment ” means an agreement or certificate signed by a holder of Vested Options acknowledging cancellation of all Options held by such holder in a form attached as Annex B hereto.
“ Holder Allocable Expenses ” has the meaning specified in Section 2.6.
“ Holder Representative ” has the meaning specified in Section 11.1.
“ Intellectual Property Rights ” has the meaning specified in Section 3.21.
“ Invensys Agreement ” has the meaning specified in Section 3.29.
“ Leased Real Property ” means all real property leased by the Company or any of its Subsidiaries, the lease of which may not be terminated at will, or by giving notice of 90 days or less, without cost or penalty and provides for annual rental payments in excess of $500,000.
“ Lien ” means any mortgage, deed of trust, collateral security arrangement, pledge, title imperfection, title defect, hypothecation, conditional or installment sales agreement, charge, easement, encroachment, encumbrance, security interest or other lien, reservation or restriction of any kind.
“ Majority Holders ” has the meaning specified in Section 11.2.
“ Material Adverse Effect ” means, with respect to any Person, any event or circumstance that, individually or in the aggregate with other events or circumstances, has, or would be reasonably expected to have, a material adverse effect on (i) the business, results of operations or condition (financial or other) of such Person or (ii) the ability of such Person or its Subsidiaries to perform its obligations hereunder and to consummate the transactions contemplated hereby; provided , however , that in no event would any of the following, alone or in combination, be deemed to constitute, nor shall any of the following (including the effect of any of the following) be taken into account in determining whether there has been or will be, a “Material Adverse Effect” on or in respect of any Person: (a) any change in economic, business or financial market conditions generally, to the extent that such change does not disproportionately affect such Person and its Subsidiaries, taken as a whole, relative to other participants in such Persons’ industries, (b) any change generally affecting any of the industries in which such Person or its Subsidiaries operates, to the extent that such change does not disproportionately affect such Person and its Subsidiaries, taken as a whole, relative to other Persons in such industries, (c) the announcement or the execution of this Agreement or the pendency or consummation of the Merger, (d) the compliance with the terms of this Agreement or the taking of any action required by this Agreement or (e) any acts of terrorism or war, to the extent that such acts do not disproportionately affect such Person and its Subsidiaries, taken as a whole, relative to any other Person.
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“ Merger ” has the meaning specified in the Section entitled “Plan of Merger.”
“ Merger Consideration ” has the meaning specified in Section 2.1(c).
“ Merger Sub ” has the meaning specified in the preamble hereto.
“ Monthly Financial Statements ” has the meaning specified in Section 5.2(c).
“Multiemployer Plan ” has the meaning specified in Section 3.13(a)(iii).
“ New Holder Representative ” has the meaning specified in Section 11.2.
“ Non-US Plan ” has the meaning specified in Section 3.13(iv).
“ Offer Documents ” has the meaning specified in Section 7.5(b).
“ Options ” means all options to purchase Common Shares (whether vested or unvested).
“ Option Plans ” means each of the RBS Global, Inc. Stock Option Plan and the Non-Qualified Stock Option Agreement by and between the Company and Cypress Industrial Holdings, LLC, dated November 25, 2002.
“ Owned Real Property ” means all real property owned in fee by the Company or any of its Subsidiaries together with all appurtenant easements thereunder or relating thereto.
“ Payoff Letter ” has the meaning specified in Section 5.6.
“ PBGC ” has the meaning specified in Section 3.13(c)(viii)
“ Pension Plan ” has the meaning specified in Section 3.13(a)(v).
“ Permitted Liens ” means (i) mechanics, materialmen’s and similar Liens with respect to any amounts not yet due and payable or which are being contested in good faith through appropriate proceedings, (ii) Liens for current Taxes not yet due and payable or which are being contested in good faith through appropriate proceedings, (iii) Liens securing rental payments under capital lease agreements, (iv) encumbrances and restrictions on real property (including easements, covenants, rights of way and similar restrictions of record) that do not materially interfere with the present uses of such real property or with the operation of the Company as conducted consistent with past practice, (v) Liens securing payment, or any other obligations, of the Company or its Subsidiaries with respect to Funded Debt and (vi) Liens described on Schedule 1.1.
“ Person ” means any individual, firm, corporation, partnership, limited liability company, incorporated or unincorporated association, joint venture, joint stock company, trust, Governmental Authority or other entity of any kind.
“ Premium Cap ” has the meaning specified in Section 6.2(b).
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“ Prime Rate ” has the meaning specified in Section 2.5(d).
“ Quarterly Financial Statements ” has the meaning specified in Section 5.2(c).
“ Real Property Leases ” has the meaning specified in Section 3.20.
“ Release ” means any release, spill, emission, discharge, leaking, pumping, pouring, dumping, injection, deposit, disposal, dispersal, leaching or migration of Hazardous Materials into the environment (including ambient air, surface water, groundwater and surface or subsurface strata).
“ Requested Consents ” has the meaning specified in Section 7.5(e).
“ Requisite Rights ” means all Intellectual Property Rights that are necessary for the continued operation of the business of the Company and its Subsidiaries as now conducted.
“ Rollover Agreement ” shall have the meaning specified in the Section entitled “Plan of Merger.”
“ Rollover Amount ” means (i) the product of (A) the sum of the Rollover Shares, if any, and the number of shares of Common Stock issuable upon exercise in full of the Rollover Options, if any, multiplied by (B) the Cash Per Fully Diluted Common Share (determined after giving effect to the adjustments to the Merger Consideration contemplated by Section 2.4, but before giving effect to the adjustments to the Merger Consideration contemplated by Section 2.5), minus (ii) the aggregate exercise price of all Rollover Options, if any.
“ Rollover Holder ” means a holder of Rollover Options, if any, or Rollover Shares, if any.
“ Rollover Optionholders ” means the Persons listed on Schedule 2.1(d).
“ Rollover Options ” means a number of Vested Options held by the Rollover Optionholders that the Rollover Optionholders agree, pursuant to individual agreements entered into by one or more of the Rollover Optionholders and Acquiror Parent, no later than five (5) Business Days prior to the Closing Date, shall be cancelled in exchange for options to purchase shares of common stock or other equity interests of Acquiror Parent.
“ Rollover Shares ” means a number of shares of Common Stock held by the Rollover Stockholders that are contributed to Acquiror Parent immediately prior to the Effective Time of the Merger and, thereafter, contributed to Acquiror by Acquiror Parent immediately prior to the Effective Time of the Merger pursuant to the Rollover Agreement (it being understood that, if, for any reason, no shares of Common Stock are held by Acquiror or Merger Sub prior to the Effective Time of the Merger, no shares of Common Stock shall constitute Rollover Shares, and the number of Rollover Shares for all purposes under this Agreement shall be zero).
“ Rollover Stockholders ” has the meaning specified in the Section entitled “Plan of Merger.”
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“ Securities Act ” has the meaning specified in Section 3.23(b).
“ Senior Subordinated Notes ” means the 10.1875% Senior Subordinated Notes due 2012 of Rexnord Corporation.
“ Subsidiary ” means, with respect to any Person, any other Person of which 50% or more of the voting power of the equity securities or equity interests sufficient to elect at least a majority of its Board of Directors or other governing body (or, if there is no such voting power, 50% or more of the equity securities or equity interests) is owned, directly or indirectly, by such Person.
“ Stockholders’ Agreement ” means the Stockholders’ Agreement of RBS Global, Inc. (as amended and restated on May 13, 2005) dated as of November 25, 2002 by and among the Company, Carlyle and the other stockholders named therein.
“ Surviving Corporation ” has the meaning specified in the Section entitled “Plan of Merger.”
“ Taxes ” has the meaning specified in Section 3.15(a).
“ Tax Returns ” has the meaning specified in Section 3.15(a).
“ TC Group ” has the meaning specified in the Preamble hereto.
“ Tendered Notes ” has the meaning specified in Section 7.5(c).
“ Terminating Acquiror Breach ” has the meaning specified in Section 10.1(c).
“ Terminating Company Breach ” has the meaning specified in Section 10.1(b).
“ Termination Date ” has the meaning specified in Section 10.1(b).
“ Transaction Documents ” means, collectively, this Agreement, the Escrow Agreement and any and all other agreements and certificates delivered by any party hereto pursuant to the terms of this Agreement.
“ Vested Options ” has the meaning specified in Section 2.1(a).
“ Voting Company Debt ” has the meaning specified in Section 3.6(a).
“ Wholly Owned Subsidiary ” means a Subsidiary of which 95% or more of the equity securities or equity interests is owned, directly or indirectly, by the Company.
As used herein, the phrase “to the knowledge” of any Person shall mean the actual knowledge, after due inquiry, of, in the case of the Company, the Chief Executive Officer, the Executive Vice President, Finance, the Vice President, General Counsel and Corporate Secretary of the Company and the other Persons set forth in Schedule 1.1(b)(1) , and (solely with respect to
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Section 3.22 hereof) Schedule 1.1(b)(2) , and in the case of all other Persons, such Person’s executive officers.
ARTICLE
II.
THE MERGER
2.1 Conversion of Company Shares and Vested Options .
(a) At the Effective Time of the Merger, by virtue of the Merger and without any action on the part of any holder of Common Stock, (i) each share (a “ Common Share ”) of Common Stock that is then issued and outstanding (other than shares of Common Stock, if any, held in the treasury of the Company or shares of Common Stock held by Acquiror or Merger Sub (including Rollover Shares, if any, contributed to Acquiror Parent pursuant to the Rollover Agreement, which Rollover Shares, if any, shall have been, immediately prior to the Effective Time of the Merger, contributed to Acquiror), which shares shall be canceled as part of the Merger, and other than shares (each, a “ Dissenting Common Share ”) of Common Stock held by Persons who object to the Merger and comply with the provisions of the DGCL concerning the rights of holders of Common Stock to dissent from the Merger and require appraisal of their shares of Common Stock (the “ Dissenting Stockholders ”) which Dissenting Common Shares shall not constitute “Common Shares” hereunder) and (ii) each unexercised and outstanding option to purchase Common Shares (to the extent vested) that is then outstanding as of immediately prior to the Effective Time of the Merger (such vested options collectively being referred to as the “ Vested Options ”), other than Rollover Options, if any, in each case, shall thereupon be converted into and become the right to receive the applicable portion of the Merger Consideration, as determined pursuant to Section 2.1(d). At the Effective Time of the Merger, the Rollover Options, if any, shall be terminated and cancelled, and, in exchange for the termination and cancellation of the Rollover Options, if any, Acquiror will cause to be issued to each holder of the Rollover Options, if any, fully vested options (the “ Acquiror Parent Options ”) to purchase shares of common stock or other equity interests of Acquiror Parent issued under an employee stock option plan to be adopted by Acquiror Parent. The terms upon which Rollover Options, if any, held by the Rollover Optionholders may be exchanged for Acquiror Parent Options shall be set forth in definitive documentation as may be entered into by each Rollover Optionholder and the Acquiror Parent at any time on or after the date hereof and not less than five (5) Business Days prior to the Closing Date; provided , however , that, in the event any Rollover Optionholder and Acquiror Parent do not for any reason enter into such definitive documentation with respect to all or any portion of the Vested Options held by such Rollover Optionholder within five (5) Business Days prior to the Closing Date, any Vested Options held by such Rollover Optionholder for, or with respect to which, such definitive agreement has not been entered into shall not constitute, or be treated as, Rollover Options and shall be treated as Vested Options that are not Rollover Options for all purposes under this Agreement.
(b) At the Effective Time of the Merger, by virtue of the Merger and without any action on the part of Acquiror or Merger Sub, each share of common stock, par value $0.01 per share, of Merger Sub shall be converted into one share of common stock, par value $0.01 per share, of the Surviving Corporation.
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(c) Subject to the adjustments set forth in Sections 2.4 and 2.5, the “ Merger Consideration ” shall consist of One Billion Eight Hundred Twenty-Five Million Dollars ($1,825,000,000.00) in cash, less (i) the Estimated Closing Date Funded Debt (as defined in Section 2.4), plus (ii) the Estimated Closing Date Cash (as defined in Section 2.4), less (iii) the amount of Holder Allocable Expenses paid by Acquiror to the Holder Representative or at the direction of the Holder Representative at Closing in accordance with Section 2.6.
(d) Subject to Section 2.5(d), the Merger Consideration shall be allocated among the holders of the Common Shares and the Vested Options as set forth below in this Section 2.1(d). Each holder of Common Shares, other than Acquiror or Merger Sub, shall be entitled to receive a portion of the Merger Consideration in cash, without interest, equal to (x) the Cash Per Fully-Diluted Common Share (as defined below), multiplied by (y) the number of Common Shares held by such holder as of the Effective Time of the Merger (but not including Rollover Shares, if any, or Common Shares issuable upon the exercise of any Vested Options held by such holder at the Effective Time of the Merger). Each holder of Vested Options shall be entitled to receive a portion of the Merger Consideration equal to (i) the Cash Per Fully-Diluted Common Share, multiplied by the aggregate number of Common Shares issuable upon exercise in full of all Vested Options held by such holder immediately prior to the Effective Time of the Merger, other than Rollover Options, if any, minus (ii) the aggregate cash exercise price payable upon exercise of all Vested Options, other than Rollover Options, if any, held by such holder immediately prior to the Effective Time of the Merger. For purposes of the foregoing, the “ Cash Per Fully-Diluted Common Share ” shall mean (1) the sum of (A) the Merger Consideration, plus (B) the Aggregate Option Exercise Price (defined below), divided by (2) the Aggregate Fully-Diluted Common Shares. The “ Aggregate Fully-Diluted Common Shares ” shall be the sum of (i) the aggregate number of Common Shares held by all holders immediately prior to the Effective Time of the Merger (including Rollover Shares, if any), plus (ii) the aggregate number of Common Shares issuable upon the exercise in full of all Vested Options (including Rollover Options, if any) held by all holders immediately prior to the Effective Time of the Merger, plus (iii) the aggregate number of Dissenting Common Shares. The “ Aggregate Option Exercise Price ” shall mean the sum of the cash exercise prices that would be payable upon exercise in full of all Vested Options (including Rollover Options, if any) held by all holders of Vested Options immediately prior to the Effective Time of the Merger.
2.2 Payment and Exchange of Certificates .
(a) Subject to the second sentence of Section 2.2(b) and Section 2.5(d), immediately prior to the Effective Time of the Merger, Acquiror shall pay to an exchange agent (the “ Exchange Agent ”) selected by the Company and reasonably acceptable to Acquiror (the rights and obligations of the Exchange Agent to be set forth in a customary agreement in form and substance reasonably acceptable to the Company and Acquiror), by wire transfer of immediately available funds, an amount (the “ Funding Amount ”) equal to (i) the Merger Consideration, as adjusted by the Estimated Adjustment Amount in accordance with Section 2.4, minus (ii) the product of (x) the number of Dissenting Common Shares and (y) the Cash Per Fully-Diluted Common Share (determined after giving effect to the adjustments to the Merger Consideration provided for in Section 2.4 but before giving effect to the adjustments provided for in Section 2.5), minus (iii) the Rollover Amount, if any. The Exchange Agent shall invest the Funding Amount in the manner specified by Acquiror, and interest payable thereon shall be
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solely for the account of Acquiror or the Surviving Corporation. Upon (1) payment by Acquiror to the Exchange Agent of the Funding Amount and (2) payment by Acquiror to the Holder Representative of the estimated Holder Allocable Expenses pursuant to Section 2.6, Acquiror shall be deemed to have satisfied its obligations to make payments in respect of the Merger Consideration other than (A) Acquiror’s obligation to make payments required by Section 2.5 and (B) the obligation of Acquiror or the Surviving Corporation to make payments to Dissenting Stockholders, if any, following the Effective Time of the Merger.
(b) After the Effective Time of the Merger, each holder of an outstanding certificate or certificates for Common Shares (collectively, the “ Certificates ”) or Vested Options, upon surrender of such Certificates to the Exchange Agent (or, in the case of a holder of Vested Options, upon delivery of a Holder Acknowledgment to the Company), shall be entitled to receive from the Exchange Agent in exchange therefor (subject to the provisions of Section 2.5) such portion of the Merger Consideration into which such holder’s Common Shares (other than Rollover Shares, if any) and/or Vested Options (other than Rollover Options, if any) shall have been converted as a result of the Merger; provided , however , that any payment with respect to Vested Options held by employees of the Company or its Affiliates (“ Employee Options ”) shall be made by the Exchange Agent to the Company, and the Company shall make payment to such employees after reduction for the amount of any Taxes required to be withheld under applicable law with respect to such payments and amounts so withheld shall be (i) paid by the Company to the applicable taxing authority and (ii) treated for all purposes of this Agreement as having been paid to the holders of Employee Options in respect of which the withholding was made by the Company; and provided , further , that a portion of the Merger Consideration otherwise payable to each holder of Common Shares and/or Vested Options equal to the Escrow Amount multiplied by such holder’s Escrow Percentage shall be held in escrow in accordance with Section 2.5(d) and the Escrow Agreement. Notwithstanding the foregoing, in the event that any holder of Common Shares or Vested Options delivers the Certificate(s) representing the Common Shares (other than Rollover Shares, if any) and/or a Holder Acknowledgement with respect to such Vested Options (other than Rollover Options, if any) to Acquiror at the Closing, Acquiror shall pay (i) the amount which such holder is entitled in consideration for Common Shares (other than Rollover Shares, if any) directly to such holder at the Closing by wire transfer of immediately available funds and (ii) the amount which such holder is entitled in consideration for Vested Options (other than Rollover Options, if any) to the Company for payment to such holder after deduction for the amount of any Taxes required to be withheld under applicable law with respect to such payment, and the Funding Amount payable to the Exchange Agent shall be reduced by such amounts. Pending such surrender and exchange (or, in the case of a holder of Vested Options, upon such delivery of a Holder Acknowledgement) a holder’s certificate or certificates for Common Shares (other than Rollover Shares, if any) and/or Vested Options (other than Rollover Options, if any) shall be deemed for all purposes to evidence such holder’s portion of the Merger Consideration into which such Common Shares and/or Vested Options shall have been converted by the Merger. All Merger Consideration paid upon surrender of and in exchange for Common Shares and/or Vested Options in accordance with the terms hereof shall be deemed to have been paid in full satisfaction of all rights pertaining to such Common Shares and/or Vested Options, other than (i) the right to receive payment referred to in Section 2.5, (ii) the right of holders of Rollover Options, if any, to receive Acquiror Parent Options as provided in Section 2.1(a), and (iii) the rights of the Rollover Stockholders, if any, to receive shares of
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common stock or other equity interests of Acquiror Parent as provided in the Rollover Agreement.
2.3 Effective Time of Merger; Closing Date . Assuming all of the conditions set forth in Article IX of this Agreement have been fulfilled or waived, and provided that this Agreement has not been terminated pursuant to the provisions hereof, on the Closing Date, Merger Sub and the Company shall cause the Certificate of Merger to be executed and filed with the Secretary of State of Delaware as provided in Section 251 of the DGCL. For purposes of this Agreement, the “ Effective Time of the Merger ” shall mean the time at which the Certificate of Merger has been duly filed in the Office of the Secretary of State of Delaware and has become effective in accordance with the DGCL.
2.4 Estimated Adjustment Amount .
(a) Not less than five (5) Business Days prior to the Closing Date and in no event more than ten (10) Business Days prior to the Closing Date, the Company shall deliver to Acquiror its good faith estimate of (i) the Closing Date Net Working Capital (as defined below) (the “ Estimated Closing Date Net Working Capital ”), (ii) the aggregate principal amount of all Funded Debt of the Company and its Subsidiaries as of the close of business on the Closing Date, determined without giving effect to the consummation of the Merger or the financing transactions in connection therewith (the “ Estimated Closing Date Funded Debt ”), which shall not be less than the aggregate Funded Debt outstanding under the Credit Agreement, as set forth in the Payoff Letter, the Funded Debt of the Company under the Senior Subordinated Notes (including the Debt Tender Premium), and the Company’s good faith estimate of any other Funded Debt outstanding on the Closing Date, in each case as of the Closing Date, (iii) a calculation of the Cash and Cash Equivalents of the Company as of the Closing Date and (iv) the Closing Date Cash (the “ Estimated Closing Date Cash ”), it being understood that such estimates shall be made without giving effect to the consummation of the Merger or the financing transactions in connection therewith and the payments made pursuant to Section 2.5.
(b) The “ Estimated Adjustment Amount ,” which may be positive or negative, shall mean (i) the Estimated Closing Date Net Working Capital, minus (ii) $192,000,000. If the Estimated Adjustment Amount is a positive number, then the Merger Consideration shall be increased on the Closing Date by the Estimated Adjustment Amount, and if the Estimated Adjustment Amount is a negative number, the Merger Consideration shall be decreased on the Closing Date by the absolute value of the Estimated Adjustment Amount.
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2.5 Adjustment Amount .
(a) As soon as reasonably practicable following the Closing Date, and in any event within forty-five (45) calendar days thereof, Acquiror shall prepare and deliver to the Holder Representative (i) an unaudited consolidated balance sheet of the Company and its Subsidiaries as of the close of business on the Closing Date (the “ Closing Balance Sheet ”), (ii) a calculation of Closing Date Net Working Capital, (iii) a calculation of the aggregate amount of all Funded Debt of the Company as set forth on the Closing Balance Sheet (the “ Closing Date Funded Debt ”), (iv) a calculation of the Cash and Cash Equivalents of the Company as of the Closing Date, as set forth on the Closing Balance Sheet and (v) a calculation of Closing Date Cash, in each case determined without giving effect to the consummation of the Merger and the financing transactions in connection therewith and the payments made pursuant to Section 7.5 (other than payment of expenses incurred in connection with the Debt Tender Offer). The Closing Balance Sheet shall be prepared in accordance with United States generally accepted accounting principles (“ GAAP ”), applying the principles, policies, methods and practices as were used to prepare the Audited Financial Statements. Following the Closing, Acquiror shall provide the Holder Representative and its representatives reasonable access following prior notice to the records and employees of the Company and its Subsidiaries to the extent relevant for the preparation of the Closing Balance Sheet and shall cause the employees of the Company and its Subsidiaries to reasonably cooperate with the Holder Representative in connection with its review of the Closing Balance Sheet. “ Closing Date Net Working Capital ” means (i) the sum of the following current asset accounts reflected on the Closing Balance Sheet: (A) accounts receivable, net, (B) inventory and (C) other current assets (it being understood that such accounts shall not include any Cash and Cash Equivalents, deferred taxes or any assets of Dalong or any of its Subsidiaries or any assets acquired by any Subsidiary of the Company pursuant to the Dalong Acquisition) minus (ii) the sum of the following current liability accounts reflected on the Closing Balance Sheet: (A) trade payables, (B) income tax payables, (C) compensation and benefits and (D) other current liabilities (it being understood that such accounts shall not include any liabilities in respect of the current portion of long-term debt, current deferred taxes, short-term pension obligations, short-term post-retirement benefit obligations and accrued interest or any liabilities of Dalong or any of its Subsidiaries or any liabilities assumed by any Subsidiary of the Company pursuant to the Dalong Acquisition) in each case determined on the Closing Date, and based on the Closing Balance Sheet, provided that the amount of any Tax liability on the Closing Balance Sheet shall be calculated assuming that the tax year of the Company ended on the Closing Date; provided , however , that the Closing Balance Sheet shall not reflect any Tax liability or Tax asset resulting from any action taken or transaction completed by, or at the direction of, Acquiror or resulting from the transactions contemplated by this Agreement, including the financing thereof (including, without limitation, any withholding obligation or liability with respect to, arising out of, or relating to, the termination, cancellation or treatment of the Rollover Options, if any, or the issuance of Acquiror Parent Options in exchange for Rollover Options, if any).
(b) If the Holder Representative shall disagree with the calculation of Closing Date Net Working Capital, the Closing Date Funded Debt, and/or the Closing Date Cash it shall notify Acquiror of such disagreement in writing, setting forth in reasonable detail the particulars of such disagreement, within thirty (30) days after its receipt of the Closing Balance Sheet. In the event that the Holder Representative does not provide such a notice of disagreement within
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such thirty (30) day period, the Holder Representative shall be deemed to have accepted the Closing Balance Sheet and the calculation of the Closing Date Net Working Capital, the Closing Date Funded Debt and the Closing Date Cash delivered by Acquiror, which shall be final, binding and conclusive for all purposes hereunder. In the event any such notice of disagreement is timely provided, Acquiror and the Holder Representative shall use commercially reasonable efforts for a period of thirty (30) days (or such longer period as they may mutually agree) to resolve any disagreements with respect to the calculations of Closing Date Net Working Capital, the Closing Date Funded Debt and/or the Closing Date Cash; provided , however , that any such calculation not specifically objected to by the Holder Representative in such notice of disagreement shall be deemed acceptable and shall be final and binding on the parties upon delivery of such notice of disagreement. If, at the end of such period, they are unable to resolve such disagreements, then Deloitte & Touche LLP (or such other independent accounting firm of recognized national standing as may be mutually selected by Acquiror and the Holder Representative) (the “ Auditor ”) shall resolve any remaining disagreements. The parties shall use their respective commercially reasonable efforts to cause the Auditor to determine as promptly as practicable, but in any event within thirty (30) days of the date on which such dispute is referred to the Auditor, (i) whether the Closing Balance Sheet was prepared in accordance with the standards set forth in Section 2.5(a), (ii) if any mathematical errors were made in calculating Closing Date Net Working Capital, the Closing Date Funded Debt and/or the Closing Date Cash and (iii) based solely on its determinations in clause (i) and (ii) of this sentence and only with respect to the remaining disagreements submitted to the Auditor, to what extent (if any) Closing Date Net Working Capital, the Closing Date Funded Debt and/or the Closing Date Cash require adjustment, and the Auditor shall make no other determination. The fees and expenses of the Auditor shall be paid one-half by Acquiror and one-half by the Holder Representative as a Holder Allocable Expense pursuant to Section 2.6 hereof. The determination of the Auditor shall be final, conclusive and binding on the parties. The date on which Closing Date Net Working Capital, the Closing Date Funded Debt and the Closing Date Cash are finally determined in accordance with this Section 2.5(b) is hereinafter referred as to the “ Determination Date .”
(c) The “ Adjustment Amount ,” which may be positive or negative, shall mean (i) Closing Date Net Working Capital, minus the Estimated Closing Date Net Working Capital, plus (ii) the Estimated Closing Date Funded Debt, minus the Closing Date Funded Debt, plus (iii) the Closing Date Cash, minus the Estimated Closing Date Cash, plus (iv) in the event that the Dalong Acquisition is consummated on or prior to the Closing Date, the amount of cash consideration actually paid in connection with the Dalong Acquisition (converting such cash consideration to U.S. Dollars at the spot exchange rate on the date the Dalong Acquisition is consummated) up to $6,500,000. If the Adjustment Amount is a positive number, then the Merger Consideration shall be increased by the Adjustment Amount, and if the Adjustment Amount is a negative number, the Merger Consideration shall be decreased by the absolute value of the Adjustment Amount. Such adjustments to the Merger Consideration shall be paid in accordance with Section 2.5(d) below. Notwithstanding anything contained herein to the contrary, no adjustment to the Merger Consideration shall be made pursuant to this Section 2.5 unless the Adjustment Amount exceeds $500,000 in the aggregate, in which case the entire amount of such adjustment shall be made.
(d) Notwithstanding the foregoing provisions of this Article II, on the Closing Date, a portion of the Merger Consideration equal to the Escrow Amount shall be paid by
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Acquiror to Deutsche Bank Trust Company Americas, as escrow agent of the parties hereto (the “ Escrow Agent ”), to be held in escrow pending determination of the Adjustment Amount. The Escrow Amount shall be held and invested by the Escrow Agent in accordance with the terms of an Escrow Agreement substantially in the form attached hereto as Annex C hereto (the “ Escrow Agreement ”). Upon final determination of the Adjustment Amount in accordance with Section 2.5(b) hereof, Acquiror and the Holder Representative shall execute joint written instructions to the Escrow Agent instructing the Escrow Agent to disburse the Escrow Amount as set forth in this Section 2.5(d). If the Adjustment Amount is a positive number, then, subject to the last sentence of Section 2.5(c), promptly following the Determination Date, and in any event within five (5) Business Days following the Determination Date, (i) the Escrow Agent shall pay to the holders of the Common Shares and Vested Options entitled to receive the Merger Consideration (pro rata, in accordance with their respective Escrow Percentages) the Escrow Amount, together with all interest earned thereon, and (ii) Acquiror shall pay to the holders of Common Shares and Vested Options entitled to receive the Merger Consideration (pro rata, in accordance with their respective Fully-Diluted Percentages) cash in an amount equal to the Adjustment Amount, as finally determined, together with interest thereon from the Closing Date to the date of payment at the prime rate of interest published in the “Money Rates” column of the Eastern Edition of The Wall Street Journal (or the average of such rates if more than one rate is indicated) on the Closing Date (the “ Prime Rate ”). If the Adjustment Amount is a negative number, then, subject to the last sentence of Section 2.5(c), promptly following the Determination Date, and in any event within five (5) Business Days following the Determination Date, (A) the Escrow Agent shall pay to Acquiror out of the Escrow Amount an amount equal to the absolute value of the Adjustment Amount, together with the interest earned on the portion of the Escrow Amount equal to the absolute value of the Adjustment Amount, and (B) if the absolute value of the Adjustment Amount is less than an amount equal to the Escrow Amount plus interest thereon to the date of payment (as determined above), the Escrow Agent shall pay to the holders of Common Shares and Vested Options entitled to receive the Merger Consideration (pro rata, in accordance with their respective Escrow Percentages) the balance of the Escrow Amount, together with any interest earned thereon. In no event shall the Holder Representative or any holder of Common Shares and/or Vested Options have any liability under this Section 2.5 in excess of such holders’ Escrow Percentage of the Escrow Amount. Notwithstanding the foregoing, any distributions to the holders of Vested Options pursuant to this Section 2.5(d) shall be net of the amount of any taxes required to be withheld from such distributions under applicable law, and the amounts so withheld shall be paid over to the Company for payment by the Company to the applicable Governmental Authority as required by law. In no event shall the holders of the Common Shares and Vested Options be entitled to payment pursuant to this Section 2.5(d) of any amount in excess of (i) $10,000,000, plus (ii) in the event that the Dalong Acquisition is consummated on or prior to the Closing Date, the amount of cash consideration actually paid in connection with the Dalong Acquisition (converting such cash consideration to U.S. Dollars at the spot exchange rate on the date the Dalong Acquisition is consummated) up to $6,500,000. In no event shall Acquiror be entitled to payment pursuant to this Section 2.5(d) of any amount in excess of $10,000,000.
2.6 Holder Allocable Expenses . The Company shall use commercially reasonable efforts to pay Holder Allocable Expenses (as defined below) prior to the Closing Date, except for the fees and expenses of investment bankers and counsel. Prior to the Closing Date, the Holder Representative shall provide to Acquiror a written estimate (which estimate shall include such
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reserves as the Holder Representative determines in good faith to be appropriate for any Holder Allocable Expenses that are not then known or determinable) of the aggregate amount of the following fees and expenses that may be incurred by the Holder Representative on behalf of the Company and the holders of the Common Shares and/or Vested Options in connection with the preparation, negotiation and execution of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby (but excluding any such fees or expenses incurred in connection with the financing thereof, other than as set forth in Section 12.6(e)): (i) the fees and disbursements of the financial advisor and special outside counsel to the Company and/or the Holder Representative incurred in connection with the transactions contemplated hereby, (ii) the fees and expenses of any other agents, advisors, consultants and experts employed by the Company and/or the Holder Representative in connection with the Merger, (iii) any transaction fee payable to one or more Affiliates of the Holder Representative in connection with the Merger, (iv) any bonuses payable to officers and employees of the Company in connection with the consummation of the Merger, and (v) the expenses of the Holder Representative incurred in such capacity (the “ Holder Allocable Expenses ”) to the extent that such Holder Allocable Expenses have not been paid by the Company prior to the Closing Date. On the Closing Date, Acquiror shall pay to the Holder Representative (or, at the request of the Holder Representative, to the Persons identified in such estimate) cash in the amount of such estimated unpaid Holder Allocable Expenses. Whether or not paid on or prior to the Closing Date, no amount shall be accrued on the Closing Balance Sheet with respect to the Holder Allocable Expenses. In no event shall Acquiror or the Company or its Subsidiaries be responsible for payment of any Holder Allocable Expenses in excess of the amount of Holder Allocable Expenses deducted from the Merger Consideration pursuant to Section 2.1(c). Any and all Holder Allocable Expenses that become due and payable after Closing or that are otherwise in excess of the amount of Holder Allocable Expenses that were deducted from the Merger Consideration pursuant to Section 2.1(c) shall be for the sole account of the Holder Representative.
2.7 Exchange Agent . Promptly following the date which is three months after the Effective Time of the Merger, Acquiror shall instruct the Exchange Agent to deliver to Acquiror by wire transfer of immediately available funds to an account or accounts specified by the Acquiror the undistributed portion of the Funding Amount (including any interest or other income resulting from the investment of the Funding Amount), Certificates and other documents in its possession relating to the transactions contemplated hereby, and the Exchange Agent’s duties shall terminate. Thereafter, each holder of a Certificate (other than Certificates representing Dissenting Common Shares) and each holder of Vested Options who has not delivered a Holder Acknowledgment may surrender such Certificate or deliver such Holder Acknowledgement to Acquiror and (subject to applicable abandoned property, escheat and similar laws) receive in consideration therefor, and Acquiror shall promptly pay, the portion of the Merger Consideration deliverable in respect thereof as determined in accordance with this Article II without any interest thereon.
2.8 Lost Certificate . In the event any Certificate has been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and an indemnification or other undertaking that may be reasonably requested by the Surviving Corporation, the Exchange Agent shall issue in exchange for such
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lost, stolen or destroyed Certificate the Merger Consideration deliverable in respect thereof as determined in accordance with this Article II.
2.9 Dissenting Common Shares . Notwithstanding the foregoing provisions of this Article II, the Dissenting Common Shares shall not be converted into a right to receive the Merger Consideration and the holders thereof shall be entitled to such rights as are granted by Section 262 of the DGCL. Each holder of Dissenting Common Shares who becomes entitled to payment for such shares pursuant to Section 262 of the DGCL shall receive payment therefor from the Surviving Corporation in accordance with the DGCL; provided , however , that (i) if any such holder of Dissenting Common Shares shall have failed to establish such holder’s entitlement to appraisal rights as provided in Section 262 of the DGCL, or (ii) if any such holder of Dissenting Common Shares shall have effectively withdrawn such holder’s demand for appraisal of such shares or lost such holder’s right to appraisal and payment for such holder’s shares under Section 262 of the DGCL, such holder shall forfeit the right to appraisal of such shares and each such share shall not constitute a Dissenting Common Share and shall be treated as if it had been converted, as of the Effective Time of the Merger, into a right to receive from the Surviving Corporation the portion of the Merger Consideration deliverable in respect thereof as determined in accordance with this Article II, without any interest thereon. The Company shall deliver prompt notice to Acquiror of any demands for appraisal of any Dissenting Common Shares, attempted withdrawals of such demands and any other instruments served pursuant to the DGCL that are received by the Company for appraisal of any Dissenting Common Shares, and provide Acquiror with the opportunity to participate in and control all negotiations and proceedings with respect to demands for appraisal under the DGCL. Prior to the Effective Time of the Merger, the Company shall not, without the prior written consent of Acquiror, make any payment with respect to, or settle or offer to settle, any such demands, or agree to do any of the foregoing.
2.10 No Liability . None of Acquiror, Merger Sub, the Company, the Surviving Corporation or the Exchange Agent shall be liable to any Person in respect of any cash delivered to a public official pursuant to any applicable abandoned property, escheat or similar law. If any Certificate has not been surrendered prior to the date that is five years after the Effective Time (or immediately prior to such earlier date on which Merger Consideration in respect of such Certificate would otherwise escheat to or become the property of any Governmental Authority), any such shares, cash, dividends or distributions in respect of such Certificate shall, to the extent permitted by applicable law, become the property of Acquiror, free and clear of all claims or interest of any Person previously entitled thereto.
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ARTICLE
III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Acquiror and Merger Sub as follows:
3.1 Corporate Organization of the Company . The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware and has the corporate power and authority to own, lease or otherwise hold its properties and assets and to conduct its business as it is now being conducted. The copies of the Certificate of Incorporation and Bylaws of the Company previously made available by the Company to Acquiror are true, correct and complete. The Company is duly licensed or qualified and in good standing as a foreign corporation in each jurisdiction in which the ownership of its property or the character of its activities is such as to require it to be so licensed or qualified, except where the failure to be so licensed or qualified would not have, individually or in the aggregate, a Material Adverse Effect on the Company and its Subsidiaries, taken as a whole.
3.2 Subsidiaries . The Subsidiaries of the Company are set forth in Schedule 3.2 attached hereto. The Subsidiaries have been duly formed or organized and are validly existing under the laws of their state of incorporation or organization and have the power and authority to own or lease their properties and to conduct their business as it is now being conducted. The Company has previously provided to Acquiror copies of the organizational documents of its Subsidiaries. Such copies are true, correct and complete. Each Subsidiary is duly licensed or qualified and in good standing as a foreign corporation (or other entity, if applicable) in each jurisdiction in which its ownership of property or the character of its activities is such as to require it to be so licensed or qualified, except where the failure to be so licensed or qualified would not have, individually or in the aggregate, a Material Adverse Effect on the Company and its Subsidiaries, taken as a whole.
3.3 Due Authorization . The Company has all requisite corporate power and authority to execute and deliver this Agreement and the other Transaction Documents to which it is, or is specified to be, a party, and (subject to the approvals discussed below) to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the other Transaction Documents to which the Company is, or is specified to be, a party, and the consummation of the transactions contemplated hereby and thereby by the Company have been duly and validly authorized and approved by the Board of Directors and stockholders of the Company, and no other corporate proceeding on the part of the Company is necessary to authorize this Agreement, the other Transaction Documents to which it is, or is specified to be, a party, or the transactions contemplated hereby and thereby. The Company has duly executed and delivered this Agreement and, at or prior to the Closing, will, subject to the terms and conditions hereof, duly execute and deliver each other Transaction Document to which it is specified to be a party, and this Agreement constitutes, and each other Transaction Document to which the Company is specified to be a party upon execution thereof will constitute, a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors’ rights generally and subject, as to enforceability, to general principles of equity
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3.4 No Conflict . Except as set forth in Schedule 3.4 , the execution and delivery by the Company of this Agreement or any other Transaction Document to which it is, or is specified to be, a party, and the consummation of the transactions contemplated hereby and thereby do not and will not conflict with, violate any provision of, result in the breach of, or give rise to a right of termination, cancellation or acceleration of any obligation or to a loss of a material benefit under, or to increased, additional, accelerated or guaranteed rights or entitlements of any Person under, any applicable law, rule or regulation of any Governmental Authority, the certificate of incorporation, bylaws or other organizational documents of the Company or any of its Subsidiaries, or any Contract or other instrument to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries may be bound, or of any Governmental Order applicable to any of them, or terminate or result in the termination of any such Contract or other instrument, or result in the creation of any Lien upon any of the properties or assets of the Company or any of its Subsidiaries, or constitute an event which (with or without notice or lapse of time or both) would result in any such conflict, violation, breach, acceleration, termination or creation of a Lien or result in a violation or revocation of any required consent, license, permit or approval from any Governmental Authority or other Person, except to the extent that the occurrence of any of the foregoing would not have, individually or in the aggregate, a Material Adverse Effect on the Company and its Subsidiaries, taken as a whole.
3.5 Governmental Authorities; Consents . Assuming the truth and completeness of the representations and warranties of Acquiror contained in this Agreement, no material consent, approval or authorization of, or material designation, declaration or filing with, any Governmental Authority or other Person is required on the part of the Company or any of its Subsidiaries with respect to the Company’s execution, delivery and performance of this Agreement and the other Transaction Documents to which it is, or is specified to be, a party, or the consummation of the transactions contemplated hereby and thereby, except for (i) applicable requirements of the HSR Act or any similar foreign law; and (ii) as otherwise disclosed in Schedule 3.18 .
3.6 Capitalization of the Company .
(a) The authorized capital stock of the Company consists of 5,000,000 shares of Common Stock, of which, as of the date of this Agreement, (i) 3,623,809 are issued and outstanding, (ii) no shares of Common Stock are held by the Company in treasury, (iii) 372,017 shares of Common Stock are subject to outstanding Options, and 119,247 additional shares of Common Stock are reserved for issuance pursuant to the Option Plans and (iv) no shares of Common Stock are held by any of the Company’s Subsidiaries. All of the issued and outstanding shares of Common Stock have been duly authorized and validly issued and are fully paid and nonassessable and not subject to or issued in violation of any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the DGCL, the Company’s certificate of incorporation, bylaws or other organizational document, or any Contract to which the Company or any of its Subsidiaries is a party or it or any of its properties or assets is otherwise bound. The shares of Common Stock held by each of the Persons set forth in Schedule 3.6 constitute of all the issued and outstanding shares of capital stock of the Company as of the date of this Agreement. There are no bonds, debentures, notes or other indebtedness of the Company having the right to vote (or convertible
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into, or exchangeable for, securities having the right to vote) on any matters on which holders of Common Stock may vote (“ Voting Company Debt ”).
(b) Except for the Options held by each of the Persons set forth in Schedule 3.6 , the Company has not granted any outstanding options, warrants, rights or other securities convertible into or exchangeable or exercisable for shares of the Common Stock, or entered into any other commitments or Contracts to which the Company is a party or by which it is bound (i) for the issuance of additional shares, the sale of additional shares, the sale of treasury shares or for the repurchase or redemption of shares of Common Stock or other equity interests in the Company; (ii) obligating the Company to issue, deliver or sell, or cause to be issued, delivered or sold any security convertible or exercisable for or exchangeable into any capital stock of or other equity interest in, the Company or any Voting Company Debt, (iii) obligating the Company to issue, grant, extend or enter into any such option, warrant, right, security, commitment, Contract or agreement or (iv) that give any person the right to receive any economic benefit derived from the economic benefits and rights occurring to holders of Common Stock. There are no agreements of any kind which may obligate the Company to issue, purchase, redeem or otherwise acquire any of its capital stock, options or other equity-linked securities.
3.7 Capitalization of Subsidiaries . The outstanding shares of capital stock, or other ownership interests, as applicable, of each of the Company’s Subsidiaries have been duly authorized and validly issued and are fully paid and nonassessable. Except as set forth in Schedule 3.7 , the Company or one or more of its wholly-owned Subsidiaries own of record and beneficially all the issued and outstanding shares of capital stock, or other ownership interests, as applicable, of such Subsidiaries free and clear of any Liens other than Permitted Liens and all such outstanding shares of capital stock, or other ownership interests, as applicable, of such Subsidiaries are not subject to or issued in violation of any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the local or state law applicable to such shares, such Subsidiary’s certificate of incorporation, bylaws or other organizational document, or any Contract to which the Company or any of its Subsidiaries is a party or it or any of its properties or assets is otherwise bound. There are no outstanding options, warrants, rights or other securities exercisable or exchangeable for any capital stock, or other ownership interests, as applicable, of such Subsidiaries, any other commitments or agreements providing for the issuance of additional shares, the sale of treasury shares, or for the repurchase or redemption of shares of such Subsidiaries’ capital stock, or other ownership interests, as applicable, or any agreements of any kind which may obligate any Subsidiary of the Company to issue, purchase, register for sale, redeem or otherwise acquire any of its capital stock, or other ownership interests, as applicable. Except for its interests in its Subsidiaries and except for the ownership interests set forth in Schedule 3.7 , the Company does not own, directly or indirectly, any capital stock, membership interest, partnership interest, joint venture interest or other equity or equity-linked interest, or hold any Voting Company Debt, or other ownership interests in any Person (other than such shares or interests having a value that is not material).
3.8 Financial Statements . Attached as Schedule 3.8 hereto are the audited consolidated balance sheets and statements of income, cash flow and stockholders’ equity as of March 31, 2005 and March 31, 2006, together with the auditor’s reports thereon (the “ Audited Financial Statements ”). Each of the Audited Financial Statements has been prepared from the
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books and records of the Company and its Subsidiaries in accordance with GAAP applied on a consistent basis throughout the periods covered thereby (except as otherwise stated in the footnotes or the audit opinion related thereto), presents fairly in all material respects the consolidated financial position, results of operations, cash flows and stockholders’ equity of the Company and its consolidated Subsidiaries at and as of the dates stated in such financial statements.
3.9 Undisclosed Liabilities . Except as set forth in Schedule 3.9 , there is no material liability, debt, obligation or claim of any nature, whether known or unknown, absolute, accrued, contingent or otherwise and whether due or to become due against the Company or its Subsidiaries of a type required to be reflected or reserved for on a balance sheet prepared in accordance with GAAP, except for liabilities and obligations (i) reflected or reserved for on the latest Audited Financial Statements as of March 31, 2006 or disclosed in the notes thereto, (ii) that have arisen since the date of the Audited Financial Statements as of March 31, 2006 in the ordinary course of the operation of business of the Company and its Subsidiaries, or (iii) disclosed in the Schedules hereto.
3.10 Litigation and Proceedings . Except (i) as set forth in Schedule 3.10 and (ii) Actions under Environmental Law (as to which certain representations and warranties are made pursuant to Section 3.22), there are no pending or, to the knowledge of the Company, threatened, Actions at law or in equity before or by any Governmental Authority against the Company or any of its Subsidiaries that (v) involve any accounting practices of the Company or any of its Subsidiaries or any malfeasance by any current or former executive officer of the Company, (w) involve, in any individual Action, a claim for monetary damages in excess of $1,000,000, (x) prohibit or materially restrict the Company or any of its Subsidiaries from operating their business as they have historically, (y) seek any injunctive relief that would have a material impact on the business of the Company and its Subsidiaries, or (z) would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company and its Subsidiaries, taken as a whole. There are no unsatisfied material Governmental Orders pending against the Company or any of its Subsidiaries. To the knowledge of the Company, no executive officer or director of the Company is a defendant in any Action or subject to any material Governmental Order in connection with his or her status as an executive officer or director of the Company or any of its Subsidiaries.
3.11 Legal Compliance . Except with respect to (i) matters set forth in Schedule 3.11 , and (ii) compliance with Environmental Laws (as to which certain representations and warranties are made pursuant to Section 3.22) (x) the Company and its Subsidiaries are currently (and at all times since March 31, 2004 have been) in compliance in all material respects with all applicable laws, and (y) since March 31, 2004, neither the Company nor any of its Subsidiaries has received any written communication from a Governmental Authority that alleges that the Company or any of its Subsidiaries is not in compliance in any material respect with any such applicable law. The Company has made all certifications and statements required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 and the related rules and regulations promulgated thereunder with respect to the Company SEC Documents
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3.12 Contracts; No Defaults .
(a) Schedule 3.12 contains a listing of all Contracts described in clauses (i) through (xv) below to which, as of the date of this Agreement, the Company or any of its Subsidiaries is a party. True, correct and complete copies of Contracts referred to in clauses (i) through (xv) below have been delivered to or made available to Acquiror or its agents or representatives prior to the date hereof.
(i) Each Contract that involves performance of services or delivery of goods and/or materials by or for the Company or any of its Subsidiaries of an amount or value in excess of $2,000,000 and is not cancelable on thirty (30) calendar days’ notice without payment or penalty;
(ii) Each note, debenture, other evidence of indebtedness, guarantee, loan, credit or financing agreement or instrument or other Contract for money borrowed, including any agreement or commitment for future loans, credit or financing;
(iii) Each Contract for the acquisition of any Person or any business unit thereof or the disposition of any material assets of the Company or its Subsidiaries (other than in the ordinary course of business), in each case involving payments in excess of $2,000,000;
(iv) Each lease, rental or occupancy agreement, license, installment and conditional sale agreement, and other Contract affecting the ownership of, leasing of, title to, use of, or any leasehold, freehold or other interest in any real or personal property and involving aggregate payments in excess of $2,000,000 in any calendar year;
(v) Each material licensing agreement with respect to Intellectual Property;
(vi) Each joint venture Contract, partnership agreement, or limited liability company agreement or similar agreement or arrangement relating to the formation, creation, operation, management or control of any material partnership or joint venture;
(vii) Each Contract requiring capital expenditures after the date of this Agreement in an amount in excess of $2,000,000 in any calendar year;
(viii) Each Contract filed or required to be filed as an exhibit to the Company’s Annual Report on Form 10-K pursuant to Item 601(b)(10) of Regulation S-K under the Securities Act or disclosed or required to be disclosed by the Company in a Current Report on Form 8-K;
(ix) Each Contract that purports to materially limit the right of the Company or any of its Subsidiaries or Affiliates to (A) engage or compete in any line of business or (B) compete with any Person or operate in any location;
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(x) Each Contract that (A) contains most favored customer pricing provisions (other than Contracts entered into in the ordinary course of business consistent with past practice) or (B) other than Contracts with distributors and Contracts entered into in the ordinary course of business consistent with past practice, grants any material exclusive rights, rights of first refusal, rights of first negotiations or similar rights to any Person;
(xi) Each Contract between or among the Company or any of its Subsidiaries or Affiliates, on the one hand, and any of their respective Affiliates (other than the Company or any of its Subsidiaries), on the other hand; and
(xii) Each Contract with a Governmental Authority involving annual payments in excess of $2,000,000.
(b) Except as set forth in Schedule 3.12 , all the Contracts listed pursuant to Section 3.12(a), Section 3.13, Section 3.14, Section 3.20 and Section 3.26, and the Contracts that would be required to be listed in Schedule 3.12 if the parenthetical phrase in 3.12(a)(x) were not given effect are (i) in full force and effect and (ii) represent the legal, valid and binding obligations of the Company or one of its Subsidiaries party thereto and, to the knowledge of the Company, represent the legal, valid and binding obligations of the other parties thereto. Except as set forth in Schedule 3.12 , (i) neither the Company nor any of its Subsidiaries party thereto nor any other party thereto is in material breach of or material default under any such Contract, (ii) neither the Company nor any of its Subsidiaries is and, to the Company’s knowledge, no other party to such Contract is in material breach of or material default under, any such Contract, (iii) neither the Company nor any of its Subsidiaries have received any claim or notice of material breach of or material default under any such Contract, (iv) to the knowledge of the Company, no event has occurred which individually or together with other events, would reasonably be expected to result in a material breach of or a material default under any such Contract (in each case, with or without notice or lapse of time or both) and (v) neither the Company nor any of its Subsidiaries has been determined to be a non-responsible bidder ineligible to contract with any Governmental Authority or suspended or debarred from contracting with any Governmental Authority.
3.13 Employee Benefit Plans .
(a) Definitions. The following terms, when used in this Section 3.13, shall have the following meanings. Any of these terms may, unless the context otherwise requires, be used in the singular or the plural depending on the reference.
(i) Employee Plans . “ Employee Plans ” shall mean any written or material unwritten employment (except for employment agreements that are terminable at will, without cost or penalty, and do not provide for severance or change in control benefits), consulting, severance or other similar contract, arrangement or policy and each plan, arrangement, program, agreement or commitment providing for insurance coverage (including without limitation any self-insured arrangements), workers’ compensation, disability benefits, supplemental unemployment benefits, vacation benefits, retirement benefits, life,
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health, disability or accident benefits (including without limitation any “voluntary employees’ beneficiary association” as defined in Section 501(c)(9) of the Code providing for the same or other benefits) or for deferred compensation, profit-sharing bonuses, stock options, stock appreciation rights, stock purchases or other forms of incentive compensation, post-retirement insurance, compensation or benefits which is entered into, maintained, contributed to or required to be contributed to, as the case may be, by the Company or any of its Subsidiaries or under which the Company or any of its Subsidiaries may incur any material liability. For this purpose, an employment agreement will be deemed to constitute a “material liability” if it provided for compensation or benefits during the fiscal year ended March 31, 2006 in excess of $100,000 or if it is reasonably expected, as of the date of this Agreement, that the compensation or benefits under such agreement would exceed $100,000 for the current fiscal year. The term “Employee Plans” includes each Multiemployer Plan, Pension Plan and Non-U.S. Plan.
(ii) ERISA . “ ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as amended.
(iii) Multiemployer Plan . “ Multiemployer Plan ” shall mean any “multiemployer plan” as defined in Section 4001(a)(3) of ERISA, which the Company or any of its Subsidiaries contributes to, or has in the last six years had an obligation to contribute to, which covers any current or former employee of the Company or any of its Subsidiaries.
(iv) Non-U.S. Plan . “ Non-U.S. Plan ” shall mean each Employee Plan that is adopted, maintained, contributed to or required to be contributed to by the Company or any of its Subsidiaries principally for the benefit of employees who are not United States citizens and perform services outside of the United States.
(v) Pension Plan . “ Pension Plan ” shall mean any “employee pension benefit plan” as defined in Section 3(2) of ERISA (other than a Multiemployer Plan) which the Company or any of its Subsidiaries sponsors, maintains, administers, contributes to, or is obligated to contribute to, which covers any current or former employee of the Company or any of its Subsidiaries.
(b) Disclosure . Schedule 3.13(b) contains a correct and complete list of each Employee Plan as of the date of this Agreement. True, correct and complete copies of the following documents, with respect to each of the Employee Plans, if applicable, have been made available or delivered to Acquiror: (i) most recent plans and related trust documents, and material amendments thereto; (ii) Forms 5500 for the past two years; (iii) the most recent actuarial report; (iv) summary plan descriptions, summaries of material modifications, and any other material written communications that have been distributed to such Employee Plan participants in the past year or that otherwise materially modify the terms of the applicable Employee Plan as set forth in the documents referred to in clause (i) above; and (v) all material annuity contracts or other funding instruments.
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(c) Representations . Except as separately described in the corresponding subsections of Schedule 3.13 , the Company represents and warrants the following:
(i) Neither the Company nor any of its Subsidiaries has any current or potential liability under Section 412 of the Code or Title IV of ERISA. If, as of the date of this Agreement, the Company and all Subsidiaries were to withdraw from all Multiemployer Plans, they would incur no material liabilities under Title IV of ERISA or analogous foreign law.
(ii) Each Employee Plan that covers current or former employees of the Company or any of its Subsidiaries that is intended to be qualified within the meaning of Section 401 of the Code has received a favorable determination or opinion letter from the Internal Revenue Service regarding its tax-qualification (and no event has occurred which, since the date of such letter, would reasonably be expected to result in the revocation of such determination letter).
(iii) The Employee Plans have been maintained in all material respects in accordance with their terms and any applicable laws, and there is no material breach thereof or thereunder. At and as of and including the Closing, the Company and the Subsidiaries shall have made, or, if applicable, accrued in accordance with the Company’s normal accounting practices, all contributions and payments required to be made by each of them up to and including the Closing with respect to each Employee Plan, except for such failures as would not be reasonably expected to result in any material liability to the Company or any of its Subsidiaries.
(iv) None of the Company, any of its Subsidiaries, or any Employee Plan has any present or future obligation to provide health or life insurance benefits coverage to past or present employees of the Company and its Subsidiaries beyond their retirement or other termination of service except as required by applicable law.
(v) Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will (either alone or in combination with another event) (i) result in any payment becoming due, or increase the amount of any compensation or benefits due, to any current or former employee of the Company and its Subsidiaries or with respect to any Employee Plan; (ii) increase any benefits otherwise payable under any Employee Plan; (iii) result in the acceleration of the time of payment or vesting of any such compensation or benefits; (iv) to the knowledge of the Company, limit or restrict the right of the Company to merge, amend or terminate any of the Employee Plans; or (v) result in the payment of any amount that would, individually or in combination with any other such payment, reasonably be expected to constitute an “excess parachute payment,” as defined in Section 280G(b)(1) of the Code.
(vi) Fiduciary Duties and Prohibited Transactions . Neither the Company nor any of its Subsidiaries has any material liability with respect to any
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transaction in violation of Sections 404 or 406 of ERISA or any “prohibited transaction,” as defined in Section 4975(c)(1) of the Code, for which no exemption exists under Section 408 of ERISA or Section 4975(c)(2) or (d) of the Code. Neither the Company nor any of its Subsidiaries has knowingly participated in a material violation of Part 4 of Title I, Subtitle B of ERISA or Section 4980B of the Code by any plan fiduciary of any Pension Plan. The Secretary of Labor has not assessed a civil penalty on the Company or any of its Subsidiaries under Section 502(l) of ERISA that remains unpaid.
(vii) No “accumulated funding deficiency” (for which an excise tax is due or would be due in the absence of a waiver) as defined in Section 412 of the Code or as defined in Section 302(a)(2) of ERISA, whichever may apply, exists with respect to any Pension Plan, whether or not waived. None of the Company or any of its Subsidiaries is subject to the payment of material penalties or interest for failure to pay when due any “required installment” within the meaning of Section 412(m) of the Code and Section 302(e) of ERISA, whichever may apply, with respect to any Pension Plan.
(viii) The Company has paid all premiums (and interest charges and penalties for late payment, if applicable) due the Pension Benefit Guarantee Corporation (the “ PBGC ”). None of the Company or any of its Subsidiaries has engaged in a transaction described in Section 4069 of ERISA. Within the last four plan years, there has been no “reportable event” (as defined in Section 4043(c) of ERISA and the PBGC regulations under such Section) with respect to any Pension Plan (other than such events for which notice has been waived under applicable PBGC regulations) and, as to any Non-U.S. Plans, there has been no analogous event under applicable foreign law. No such reportable event (other than such events for which notice has been waived under applicable PBGC regulations), or analogous event under applicable foreign law, is expected to occur as a result of consummation of the transaction contemplated by this Agreement. No filing has been made by the Company or any of its Subsidiaries with the PBGC, and no proceedings commenced by the PBGC, to terminate any Pension Plan.
(ix) The pension liabilities under all Non-U.S. Plans pursuant to which any present or former employee in Germany has earned any claim or benefit are either funded or sufficient book reserves to the maximum extent permitted by applicable law have been accrued in accordance with GAAP and are backed by pension re-insurances where such option is provided for in the relevant Pension Plan, except for any failure that would not result in material liability to the Company or any of its Subsidiaries. As to such plans, the contributions to direct insurances, if any, are free of any liens or pledges or any other third party right affecting these insurances with the exception of potential assignment of claims for the relevant beneficiaries of these plans.
(x) With respect to any Non-U.S. Plan that is a registered pension plan under the Pension Benefits Act of Ontario, (i) any payments, distributions or
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withdrawals from or transfers of assets to or from any such plan or any other application of such plan’s assets including contribution holidays, have been made in material compliance with the terms of such plan and all applicable laws and occurred with the consent, to the extent required, of any applicable regulatory authorities and there are no outstanding transfers of assets to any such plan from another plan yet to be completed, (ii) where any such plan has been or is subject to a partial or full wind-up, all assets, including any surplus, attributable to such partial or full wind-up have been fully distributed in material compliance with all applicable laws or where such distribution of assets is pending, the amount of the surplus attributable to such partial or full wind-up together with the date as of which such amount is determined is disclosed in Schedule 3.13(c) , (iii) to the knowledge of the Company, no event has occurred respecting any such plan which would reasonably be expected to result in the revocation of the registration of such plan or entitle any Person (without the consent of the Company or its Subsidiaries) to wind-up or terminate any such plan, in whole or in part, or which could otherwise reasonably be expected to materially adversely affect the tax status of any such plan, (iv) except in accordance with the terms of such Non-U.S. Plan, no material conditions have otherwise been imposed by any Person and no undertakings or commitments have been given to any employee or any other Person concerning the use of assets relating to any such Non-U.S. Plan or any related funding medium, and (v) there are no material unfunded liabilities in respect of any such plan including material going concern unfunded liabilities, solvency deficiencies or material wind-up deficiencies except as disclosed in Schedule 3.13(c).
3.14 Labor Relations . Except as set forth in the corresponding subsections of Schedule 3.14 :
(a) Neither the Company nor any of its Subsidiaries is a party to any labor or collective bargaining agreement and there are no other labor or collective bargaining agreements that are binding on the Company or any of its Subsidiaries. The Company has delivered or made available to Acquiror true, correct and complete copies of each such labor or collective bargaining agreement, as amended to date.
(b) There are no strikes, work stoppages, unfair labor practice charges, slowdown, lockouts, grievances (other than grievances that will, individually, result in damage award or settlement amount payable by the Company or any of its Subsidiaries of less than $1,000,000), or other material labor disputes pending or, to the knowledge of the Company, threatened against or involving the Company or any of its Subsidiaries, and, since March 31, 2004, neither the Company nor any of its Subsidiaries has experienced any strike, work stoppage or lockout. To the knowledge of the Company, neither the Company nor any of its Subsidiaries has any current or potential liability, individually or in the aggregate, in excess of $1,000,000 with respect to any misclassification of any person or persons as an independent contractor rather than as an employee.
3.15 Taxes . Except as otherwise set forth in Schedule 3.15 :
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(a) All federal, state, local and foreign tax returns of the Company and its Subsidiaries (“ Tax Returns ”), including those Tax Returns relating to income, employment, franchise, property, sales and use, and excise taxes, and any other taxes due from and/or withheld by or required to be withheld by the Company and its Subsidiaries (including by reason of being a member of a combined, consolidated, affiliated or similar Tax group) (collectively, “ Taxes ”) have been duly and timely filed and are correct and complete in all material respects. There are no Tax liens on any assets of the Company or any of its Subsidiaries, other than Permitted Liens.
(b) All Taxes of the Company and its Subsidiaries have been timely and appropriately paid. The Company and its Subsidiaries have withheld all amount required to be withheld by applicable Tax law.
(c) None of the Tax Returns has been audited or is being audited by any taxing authority, and no statute of limitations has been extended with respect to any Tax Return.
(d) No assessment, audit or other proceeding by any taxing authority, court or other Governmental Authority is pending, or, to the knowledge of the Company, threatened with respect to the Taxes or Tax Returns of the Company or any of its Subsidiaries.
(e) There are no outstanding agreements, waivers or arrangements extending the statutory period of limitations applicable to any claim for, or the period for the collection or assessment of, Taxes due for any taxable period.
(f) The Company is not a U.S. real property holding corporation within the meaning of Section 897 of the Code.
3.16 Brokers’ Fees . Except as set forth in Schedule 3.16 and except for the fees payable to Merrill Lynch & Co., Credit Suisse Securities (USA) LLC, or their respective Affiliates (which fees shall be paid by the Holder Representative as a Holder Allocable Expense), no broker, finder, investment banker or other Person is entitled to any brokerage fee, finders’ fee or other commission in connection with the transactions contemplated by this Agreement based upon arrangements made by the Company, any of its Subsidiaries or their Affiliates.
3.17 Insurance . Schedule 3.17 contains a summary description of all policies of property, fire and casualty, product liability, workers’ compensation, and other forms of insurance held by, or for the benefit of, the Company or any of its Subsidiaries as of the date of this Agreement. True, correct and complete copies of such insurance policies have been made available to Acquiror prior to the date hereof. Each such material policy is in full force and effect. No notice of cancellation or termination has been received with respect to any such current policy.
3.18 Licenses, Permits and Authorizations . Except as set forth in Schedule 3.18 , and subject to Section 3.22 herein (which contains the Company’s sole and exclusive representations and warranties with respect to Permits (as defined below) required under, and otherwise obtained pursuant to, any applicable Environmental Law), the Company and its Subsidiaries have obtained all of the material licenses, certificates, approvals, consents, filings, registrations, notifications, authorizations and permits (collectively, “ Permits ”) from any Governmental
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Authority or other Person necessary to permit the Company and its Subsidiaries to own, operate, use and maintain their assets in all material respects in the manner in which they are now operated and maintained and to conduct in all material respects the business of the Company and its Subsidiaries as currently conducted. Except with respect to Permits otherwise obtained pursuant to applicable Environmental Laws , the Company and each of its Subsidiaries is currently in compliance in all material respects with its obligations under, and the terms of, each Permit, and (i) no event has occurred or condition or state of facts exists which constitutes or, after notice or lapse of time or both, would constitute a material breach or material default under any such Permit or which permits or, after notice or lapse of time or both, would permit revocation or termination of any such material Permit, or which would materially and adversely affect the rights of any member of the Company or any of its Subsidiaries under any such Permit; (ii) no notice of cancellation, or of material default concerning any such Permit has been received by the Company or any of its Subsidiaries since March 31, 2004; and (iii) each such Permit is valid, subsisting and in full force and effect.
3.19 Machinery, Equipment and Other Tangible Property . Except as set forth in Schedule 3.19 , the Company or its Subsidiaries own and have good title to all material machinery, equipment and other tangible property reflected on the books of the Company and its Subsidiaries as owned by the Company or its Subsidiaries, free and clear of all Liens other than Permitted Liens. The material machinery, equipment or other tangible personal property owned or leased by the Company and its Subsidiaries are, taken as a whole, in good working condition and repair (reasonable wear and tear excepted).
3.20 Real Property . Schedule 3.20 lists (a) all Owned Real Property and (b) all Leased Real Property. True, correct and complete copies of all leases entered into in connection with the Leased Real Property (collectively, “ Real Property Leases ”) and amendments thereto, if any, have been provided to Acquiror. Except as set forth in Schedule 3.20 , the Company or one of its Subsidiaries has good and marketable fee simple title to all Owned Real Property subject only to any (i) Permitted Liens, (ii) Liens constituting a lease, sublease or occupancy agreement that gives any third party any right to occupy any portion of the Owned Real Property and (iii) Liens reflected on any survey or in any title report delivered to Acquiror prior to the date of this Agreement, in the case of (ii) and (iii), none of which interfere in any material respect with the conduct of the business of the Company and its Subsidiaries as currently conducted. The Company has provided a copy of the most recent survey and the most recent owner’s policy of title insurance procured by the Company or its Subsidiaries for each Owned Real Property described on Schedule 3.20 . Except as set forth in Schedule 3.20 , the Company or one of its Subsidiaries has a valid and subsisting leasehold estate in, and enjoys peaceful and undisturbed possession of, all Leased Real Property, subject only to (A) Permitted Liens, and (B) Liens constituting a lease, sublease or occupancy agreement that gives any third party any right to occupy any portion of the Leased Real Property. The Company and its Subsidiaries, as applicable, have the right to use all of the Leased Real Property in accordance with the applicable Real Property Lease for the conduct of the business of the Company and its Subsidiaries. The Owned Real Property and the Leased Real Property, and all Real Property leased by the Company or its Subsidiaries that does not fall within the definition of Leased Real Property, comprises all of the material real property occupied by the Company and its Subsidiaries.
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3.21 Intellectual Property . (a) Schedule 3.21 lists each material patent, registered trademark, registered service mark or trade name, registered copyright or mask work, domain name, application and registration for any of the foregoing (collectively, “ Intellectual Property Rights ”) owned by the Company or any of its Subsidiaries for which applications have been filed or registrations or patents have been obtained, whether in the United States or internationally as of the date of this Agreement. Except as set forth in Schedule 3.21 , to the knowledge of the Company, (a) the Company or one of its Subsidiaries owns all right, title and interest in and to each item of Intellectual Property Rights owned by it, free and clear of all Liens other than Permitted Liens, and (b) the Company or one of its Subsidiaries own or have the right to use pursuant to license, sublicense, agreement or permission, all Intellectual Property Rights used in the operation of the business of the Company and any of its Subsidiaries, as presently conducted, except where the failure to have such rights would not have, individually or in the aggregate, a Material Adverse Effect on the Company and its Subsidiaries, taken as a whole. (b) Except as set forth in Schedule 3.21 , (i) to the knowledge of the Company, the Company and its Subsidiaries are not interfering with, infringing upon, misappropriating or otherwise violating Intellectual Property Rights of any Person, the Company and its Affiliates have not received from any Person since March 31, 2004 any written notice, charge, complaint, claim or other written assertion of any present, impending or threatened infringement or violation by or misappropriation of, or other conflict with, any Intellectual Property Rights of any Person except as would not reasonably be expected to have a Material Adverse Effect on the Company and its Subsidiaries, taken as a whole, and (iii) there are no unresolved pending or threatened Actions that challenge or otherwise question the validity, enforceability or effectiveness of any Intellectual Property Rights.
3.22 Environmental Matters .
(a) Except as set forth in Schedule 3.22 :
(i) The Company and its Subsidiaries possess all material permits required under Environmental Law in connection with their current business operations and are in material compliance with all applicable Environmental Laws and conditions of such permits. The Company and its Subsidiaries have not, since March 31, 2004 (and, with respect to the real property owned or leased by the Falk Corporation since May 16, 2005) received written notice of a material actual or, to the knowledge of the Company, threatened material Environmental Claim.
(ii) To the knowledge of the Company, the Company and its Subsidiaries have not treated, stored, disposed of, arranged for the disposal of, transported to, or Released in reportable quantities any Hazardous Materials from, on or under any Owned Real Property or real property leased by the Company or any of its Subsidiaries, or any property formerly owned or occupied by the Company or any of its Subsidiaries, or any third party location to which the Company or any of its Subsidiaries sent, or caused to be sent, Hazardous Materials, except (A) in material compliance with applicable Environmental Laws, and (B) in a manner that has not resulted in a pending material Environmental Claim against the Company or its Subsidiaries or any ongoing
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material remediation requirements for the Company or its Subsidiaries under any Environmental Law.
(iii) Neither the Company nor its Subsidiaries have tendered contractual indemnity claims against any third-party with respect to any material pending Environmental Claims, or received actual or, to the knowledge of the Company, threatened written notice that the Company and its Subsidiaries have a contractual indemnification obligation with respect to any material pending Environmental Claims including notices related to any real property formerly owned or operated by the Company or any Subsidiary of the Company .
(b) To the knowledge of the Company, other than de minimis quantities, all foundry sand and related substances used, sold, transferred or distributed by the Company or its Subsidiaries from the Owned Real Property located at 1314 Rawson Avenue in South Milwaukee, Wisconsin for beneficial reuse purposes are and have been in material compliance with, and have met either Category 1 or Category 2 levels as defined in, Wisconsin Administrative Code Chapter NR 538 or as otherwise approved by the Wisconsin Department of Natural Resources.
(c) The Company has provided to Acquiror prior to the date hereof copies of all environmental site assessments in its possession or control that were performed in connection with this Agreement, the Invensys Agreement, and the Falk Agreement with respect to the Owned Real Property or Leased Real Property, all of which are listed on Schedule 3.22 .
(d) To the knowledge of the Company, the Company’s only financial assurance obligations required pursuant to Environmental Law with respect to the transport, storage, and disposal of solid and hazardous wastes relates to the landfill located at 1314 Rawson Avenue in South Milwaukee, Wisconsin.
3.23 SEC Documents .
(a) The Company and its Subsidiaries have timely filed all reports, forms, statements and other documents (collectively, the “ Company SEC Documents ”) required to be filed by them with the SEC since March 31, 2004.
(b) As of its respective date, each Company SEC Document complied in all material respects with the requirements of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), or the Securities Act of 1933, as amended (the “ Securities Act ”), as the case may be, and the rules and regulations of the SEC promulgated thereunder applicable to such Company SEC Document. Except to the extent that information contained in any Company SEC Document has been revised or superseded by a later filed Company SEC Document, none of the Company SEC Documents contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.
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3.24 Absence of Certain Changes or Events .
(a) From March 31, 2006 through the date of this Agreement, there has not been any Material Adverse Effect on the Company and its Subsidiaries, taken as a whole, or any event, change, effect or development that would, individually or in the aggregate, have or reasonably be expected to have a Material Adverse Effect on the Company and its Subsidiaries, taken as a whole.
(b) From March 31, 2006 through the date of this Agreement, the Company and its Subsidiaries have, in all material respects, conducted their business and operated their properties in the ordinary course of business consistent with past practice.
(c) Except as set forth in Schedule 3.24, there has not been any action taken by the Company or any of its Subsidiaries from March 31, 2006 through the date of this Agreement that, if taken during the period from the date of this Agreement through the Effective Time, would constitute a breach of Section 5.1(a), 5.1(b), 5.1(d), 5.1(e), 5.1(f), 5.1(h), 5.1(k), 5.1(n) or 5.1(o) if taken after the date of this Agreement.
3.25 Related Party Transactions . Except as set forth in Schedule 3.25 , and other than compensation payable to officers, directors and employee expense reimbursement obligations, there are no outstanding material amounts payable to or receivable from, or advances by the Company or any of its Subsidiaries to, and neither the Company nor any of its Subsidiaries is otherwise a creditor or debtor (with respect to any material loan obligation) to, or party to any material Contract or material transaction with (other than an employment or retention agreement or any employee benefit plan or obligation relating thereto), any stockholder, director, officer or other Affiliate of the Company or any of its Subsidiaries (other than the Company or any Subsidiary), or to the Company’s knowledge any relative of any of the foregoing. To the knowledge of the Company, the Company has made available to Acquiror all Contracts entered into between or among the shareholders of the Company relating to the Company or the capital stock of the Company.
3.26 Customers; Suppliers . Schedule 3.26 sets forth (a) the top ten (10) customers of the Company and its Subsidiaries, together with the total revenue generated from each such customer from March 31, 2005 to March 31, 2006 and (b) the top ten (10) suppliers of the Company and its Subsidiaries (based on amounts spent by the Company and its Subsidiaries from March 31, 2005 to March 31, 2006). Since March 31, 2005, none of the Company or any of its Subsidiaries has received any written notice that any such customer or supplier intends to cancel any Material Contract or materially reduce the level of business it currently conducts with the Company and/or any of its Subsidiaries (as a result of the Merger or otherwise).
3.27 Recalls . Except as set forth in Schedule 3.27 , since March 31, 2004, the Company and its Subsidiaries have not experienced any (i) recall of products required by any Governmental Order or (ii) any mass recall of products sold to multiple customers, excluding any replacement or repair of products in the ordinary course of business.
3.28 Foreign Corrupt Practices Act . None of Company or its Subsidiaries or, to the knowledge of the Company, any employee, officer, director or agent or other Person associated with or acting on behalf of Company or its Subsidiaries, has with respect to the Company or its
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Subsidiaries (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; (ii) made any unlawful payment to any foreign or domestic government official or employee from corporate funds; (iii) violated in any material respect or is in material violation of any provision of the Foreign Corrupt Practices Act of 1977 applicable to the Company or its operations; or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment.
3.29 Invensys and Falk Indemnities . The Company has made available to Acquiror prior to the date hereof true and complete copies (including all amendments) of each of (a) the Stock Purchase Agreement dated as of April 5, 2005 by and among a Subsidiary of the Company, Hamilton Sunstrand Corporation and Falk Corporation (the “ Falk Agreement ”); and (b) the Stock Purchase Agreement dated as of September 27, 2002 by and among an Affiliate of the Company, Invensys plc and certain other parties named therein (the “ Invensys Agreement ”; together with the Falk Agreement, the “ Acquisition Agreements ”). The execution and delivery of this Agreement and each other Transaction Document and the consummation of the transactions contemplated hereby and thereby will not result in the termination of, or in any way adversely affect or alter the terms of, any provision of, or in any way lessen or alter any benefit provided to the Company and its Subsidiaries under, either of the Acquisition Agreements, including the indemnity provisions contained in Article IX of the Falk Agreement, and Article 9 of the Invensys Agreement, respectively.
3.30 No Additional Representation or Warranties . Except as provided in this Article III, neither the Company nor any of its Affiliates, nor any of their respective directors, officers, employees, shareholders, partners, members or representatives has made, or is making, any representation or warranty whatsoever to Acquiror or Merger Sub or their Affiliates and no such party shall be liable in respect of the accuracy or completeness of any information provided to Acquiror or Merger Sub or their Affiliates. For the purposes herein, any information provided to, or made available to, Acquiror or Merger Sub by the Company and its Subsidiaries shall include any and all information that may be contained or posted in any electronic data room established by the Company in connection with the transactions contemplated by this Agreement. The Company hereby acknowledges and agrees that no investigation or review of the information provided to, or made available to, Acquiror, Merger Sub or any of their respective advisors or representatives by the Company, its Subsidiaries and their respective advisors and representatives, other than the information set forth in the Company Disclosure Schedules, shall be deemed to alter or amend the representations and warranties set forth in this Article III.
ARTICLE
IV.
REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND MERGER SUB
Acquiror and Merger Sub represent and warrant to the Company as follows:
4.1 Corporate Organization . Each of Acquiror and Merger Sub has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware and has the corporate power and authority to own or lease or otherwise hold its properties and assets and to conduct its business as it is now being conducted. The copies of the Certificate of Incorporation of each of Acquiror and Merger Sub, certified by the Secretary of the
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State of Delaware and their Bylaws, certified by the Secretary of Acquiror and Merger Sub, respectively, previously delivered by Acquiror to the Company, are true, correct and complete. Each of Acquiror and Merger Sub is duly licensed or qualified and in good standing as a foreign corporation in each jurisdiction in which the ownership of its property or the character of its activities is such as to require it to be so licensed or qualified, except where the failure to be so licensed or qualified would not have a material adverse effect on the ability of Acquiror or Merger Sub to enter into this Agreement or consummate the transactions contemplated hereby.
4.2 Due Authorization . Each of Acquiror and Merger Sub has all requisite corporate power and authority to execute and deliver this Agreement and the other Transaction Documents to which it is, or is specified to be, a party, and (subject to the approvals discussed below) to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the other Transaction Documents to which the Acquiror and/or Merger Sub, as applicable, is specified to be, a party, and the consummation of the transactions contemplated hereby and thereby by the Acquiror and/or Merger Sub, as applicable, have been duly and validly authorized and approved by the Board of Directors and the stockholders of Acquiror and approved by the Board of Directors of Merger Sub, and no other corporate proceeding on the part of Acquiror or Merger Sub is necessary to authorize this Agreement, the other Transaction documents to which it is, or is specified to be, a party, or the transactions contemplated hereby and thereby. This Agreement has been duly and validly executed and delivered by each of Acquiror and Merger Sub, and Acquiror and/or Merger Sub, as applicable, will, subject to the terms and conditions hereof, and, at or prior to the Closing, will, subject to the terms and conditions hereof, duly execute and deliver each other Transaction Document to which it is specified to be a party, and this Agreement constitutes, and each other Transaction Document to which Acquiror and/or Merger Sub, as applicable, is specified to be a party upon execution thereof will constitute a legal, valid and binding obligation of Acquiror and Merger Sub, enforceable against Acquiror and Merger Sub in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors’ rights generally and subject, as to enforceability, to general principles of equity.
4.3 No Conflict . Except as set forth in Schedule 4.3 , the execution and delivery by Acquiror and Merger Sub of this Agreement or any other Transaction Document to which it is, or is specified to be, a party and the consummation of the transactions contemplated hereby and thereby does not and will not conflict with, violate any provision of, or result in the breach of, or give rise to a right of termination, cancellation or acceleration of any obligation or to a loss of material benefit under, or to increased, additional, accelerated or guaranteed rights or entitlements of any Person under, any applicable law, rule or regulation of any Governmental Authority, the Certificate of Incorporation, Bylaws, as amended, or other organizational documents of Acquiror and Merger Sub, or any Contract, agreement, indenture or other instrument to which Acquiror or Merger Sub is a party or by which Acquiror or Merger Sub may be bound, or of any Governmental Order, judgment or decree applicable to Acquiror or Merger Sub, or terminate or result in the termination of any such Contract or other agreement, indenture or instrument, or result in the creation of any Lien upon any of the properties or assets of Acquiror or Merger Sub or constitute an event which, after notice or lapse of time or both, would result in any such violation, breach, acceleration, termination or creation of a Lien, or result in a violation or revocation of any required consent, license, permit or approval from any
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Governmental Authority or other Person, except to the extent that the occurrence of any of the foregoing would not have a material adverse effect on the ability of Acquiror and Merger Sub to enter into and perform their obligations under this Agreement.
4.4 Litigation and Proceedings . There are no lawsuits, actions, suits, claims or other proceedings at law or in equity, or, to the knowledge of Acquiror, investigations, pending before or by any Governmental Authority or, to the knowledge of Acquiror, threatened, against Acquiror or Merger Sub which, if determined adversely, could reasonably be expected to have a material adverse effect on the ability of Acquiror or Merger Sub to enter into and perform its obligations under this Agreement. There is no unsatisfied judgment or any open injunction binding upon Acquiror or Merger Sub which could reasonably be expected to have a material adverse effect on the ability of Acquiror or Merger Sub to enter into and perform its obligations under this Agreement.
4.5 Governmental Authorities; Consents . Assuming the truth and completeness of the representations and warranties of the Company contained in this Agreement, no material consent, approval or authorization of, or material designation, declaration or filing with, any Governmental Authority or other Person is required on the part of Acquiror or Merger Sub with respect to Acquiror or Merger Sub’s execution, delivery and performance of this Agreement and the other Transaction Documents to which Acquiror and/or Merger Sub, as applicable, is, or is specified to be, a party, or the consummation of the transactions contemplated hereby, except for (i) applicable requirements of the HSR Act or any similar foreign law and (ii) as otherwise disclosed in Schedule 4.5 .
4.6 Financial Ability . Attached hereto as Annex D is a true and complete copy of the executed commitment letter from the banks named therein to Acquiror (the “ Debt Financing Commitment ”), pursuant to which lenders party thereto have agreed to provide or cause to be provided $1,420,000,000, subject to the terms and conditions set forth therein, for the purposes of funding payment of the Merger Consideration and fees and expenses of Acquiror relating to the transactions contemplated by this Agreement (the “ Debt Financing ”). Attached hereto as Annex E is a true and complete copy of the executed equity commitment letter (the “ Equity Financing Commitment ” and, together with the Debt Financing Commitments, the “ Financing Commitments ”), by and between Acquiror and Apollo Management VI, L.P. (“ Apollo ”) pursuant to which Apollo has committed that certain of its Affiliates will provide equity financing in the amount of $480,000,000, subject to the terms and conditions set forth therein, to purchase Common Stock of Acquiror (the “ Equity Financing ” and, together with the Debt Financing, the “ Financing ”). The Equity Financing Commitment, in the form so delivered, is in full force and effect and is a legal, valid and binding obligation of Acquiror and the other parties thereto. The Debt Financing Commitment, in the form so delivered, is a legal, valid and binding obligation of Acquiror and, to the knowledge of Acquiror as of the date of this Agreement, the other parties thereto. As of the date of this Agreement, no event has occurred which, with or without notice, lapse of time or both, would result in the Debt Financing not being available at Closing. As of the date of this Agreement, to the knowledge of Acquiror and Merger Sub, Acquiror has no reason to believe that it will be unable to satisfy on a timely basis any term or condition of closing to be satisfied by it contained in the Financing Commitments. Acquiror has fully paid any and all commitment fees or other fees required by the Financing Commitments to be paid on or before the date of this Agreement. Subject to its terms and conditions, the
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Financing, when funded in accordance with the Financing Commitments, will provide Acquiror with acquisition financing at the Effective Time of the Merger sufficient to consummate the Merger upon the terms contemplated by this Agreement and pay all related fees and expenses. There is no condition to the funding of the financing described in the Debt Financing Commitment other than the conditions precedent set forth in the Debt Financing Commitment.
4.7 Brokers’ Fees . Except fees described on Schedule 4.7 (which fees shall be the sole responsibility of Acquiror), no broker, finder, investment banker or other Person is entitled to any brokerage fee, finders’ fee or other commission in connection with the transactions contemplated by this Agreement based upon arrangements made by Acquiror or any of its Affiliates.
4.8 No Outside Reliance . Notwithstanding anything contained in this Article IV or any other provision hereof, each of Acquiror and Merger Sub acknowledge and agree that neither the Company nor any of its Affiliates, agents or representatives is making any representation or warranty whatsoever, express or implied, beyond those expressly given in this Agreement, including any implied warranty or representation as to condition, merchantability, suitability or fitness for a particular purpose or trade as to any of the assets of the Company or its Subsidiaries. Without limiting the generality of the foregoing, it is understood that any cost estimates, financial or other projections or other predictions that may be contained or referred to in the Schedules hereto or elsewhere, as well as any information, documents or other materials (including any such materials contained in any “data room” or reviewed by Acquiror pursuant to the Confidentiality Agreement) or management presentations that have been or shall hereafter be provided to Acquiror or any of its Affiliates, agents or representatives are not and will not be deemed to be representations or warranties of the Company, and no representation or warranty is made as to the accuracy or completeness of any of the foregoing except as may be expressly set forth in this Agreement. Except as otherwise expressly set forth in this Agreement, Acquiror understands and agrees that any inventory, equipment, vehicles, assets, properties and business of the Company and its Subsidiaries are furnished “as is”, “where is” and subject to the representations and warranties contained in Article III, with all faults and without any other representation or warranty of any nature whatsoever. Acquiror and Merger Sub acknowledge and agree that their obligations to consummate the transactions contemplated hereby are in no way conditioned upon any Options being treated as Rollover Options under this Agreement or the consummation of the transactions contemplated by the Rollover Agreement.
4.9 Acquisition of Interests for Investment . Acquiror has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of its participation in this Merger. Acquiror confirms that the Company has made available to Acquiror and Acquiror’s agents the opportunity to ask questions of the officers and management employees of the Company and its Subsidiaries as well as access to the documents, information and records of the Company and its Subsidiaries and to acquire additional information about the business and financial condition of the Company and its Subsidiaries, and Acquiror confirms that it has made an independent investigation, analysis and evaluation of the Company and its Subsidiaries and their respective properties, assets, business, financial condition, documents, information and records. Acquiror is acquiring the stock of the Surviving Corporation for investment and not with a view toward or for sale in connection with any distribution thereof, or with any present intention of distributing or selling common stock of the Surviving Corporation.
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Acquiror understands and agrees that common stock of the Surviving Corporation may not be sold, transferred, offered for sale, pledged, hypothecated or otherwise disposed of without registration under the Securities Act of 1933, as amended, except pursuant to an exemption from such registration available under such Act, and without compliance with state, local and foreign securities laws, in each case, to the extent applicable.
ARTICLE
V.
COVENANTS OF THE COMPANY
5.1 Conduct of Business . From the date of this Agreement through the Closing, the Company shall, and shall cause its Subsidiaries to, except as contemplated by this Agreement, or as consented to by Acquiror in writing (which consent shall not be unreasonably conditioned, withheld, delayed or denied) operate its business in the ordinary course and substantially in accordance with past practice and shall use its reasonable best efforts to maintain its assets and relationships with third parties and keep available the services of its present officers and employees. Without limiting the generality of the foregoing, except as set forth in Schedule 5.1 or consented to by Acquiror in writing (which consent shall not be unreasonably conditioned, withheld, delayed or denied), the Company shall, and the Company shall cause its Subsidiaries to, except as specifically contemplated by this Agreement:
(a) not change or amend the Certificate of Incorporation, Bylaws or other organizational documents of the Company or its Subsidiaries, except as otherwise required by law;
(b) not declare, issue, pay or make any dividend or distribution to the stockholders of the Company, or set aside any funds for the purpose thereof, other than dividends paid or payable in cash;
(c) not materially and adversely modify, assign (other than to a Wholly Owned Subsidiary), terminate or renew any Contract of a type required to be listed on Schedule 3.12, Schedule 3.14, or Real Property Leases required to be listed on Schedule 3.20 if in effect on the date of this Agreement, except in the ordinary course of business;
(d) not, directly or indirectly (through any merger, consolidation, reorganization, issuance of securities or rights, or otherwise), sell, assign, transfer, convey, lease or otherwise dispose of any assets or properties, except in the ordinary course of business;
(e) not, except as otherwise required by law, existing Employee Plans or in the ordinary course consistent with past practice, (i) take any action with respect to the grant of any material severance or material termination payment (other than pursuant to policies or agreements of the Company or any of its Subsidiaries in effect on the date of this Agreement) which will become due and payable on or after the Closing Date; (ii) make any material change in the key management structure of the Company or any of its Subsidiaries, including the hiring of additional officers or the termination of existing officers, other than in the ordinary course of business; (iii) adopt, enter into, terminate or amend any Employee Plan if such action would be material to the Company; (iv) accelerate the time of payment or vesting of any material compensation or material benefits under any Employee Plan; or (v) except as otherwise provided
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in any applicable collective bargaining agreement or as required by Contract or by law, increase any compensation of any employee, director, independent contractor or consultant;
(f) not acquire by merger or consolidation with, or merge or consolidate with, or purchase substantially all of the assets of, otherwise acquire any assets or business of, or acquire any equity interests in, or make any investment in, any corporation, partnership, association, joint venture or other business organization or division thereof (other than any Wholly Owned Subsidiaries of the Company), other than investments and acquisitions not in excess of $2,000,000 in any one case;
(g) not make any loans or advances to any Person, or make any guarantee for the benefit of any Person (other than the Company or a Wholly Owned Subsidiary of the Company), except for advances to employees or officers of the Company or its Subsidiaries for expenses incurred in the ordinary course of business;
(h) not make or change any Tax election or any material method of Tax accounting, amend any Tax Return or file any claim for Tax refunds, enter into any material closing agreement, settle or compromise any Tax claim, audit or assessment, or surrender any right to claim a material Tax refund, offset or other reduction in Tax liability;
(i) not transfer, issue, sell, pledge, encumber or dispose of any shares of capital stock or other securities of the Company or any of its Subsidiaries (other than issuances of Common Stock upon exercise of any Options outstanding as of the date of this Agreement) or grant options, warrants, calls or other rights to purchase, redeem or otherwise acquire shares of the capital stock or other securities of the Company or any of its Subsidiaries;
(j) not cancel any indebtedness owed to it or waive any material rights, including the settlement of any material claims or litigation, other than in the ordinary course of business consistent with past practice;
(k) not accelerate or delay collection of any notes or accounts receivable in advance of or beyond their regular due dates, other than in the ordinary course of business consistent with past practice;
(l) not delay or accelerate payment of any account payable or other liability beyond or in advance of its due date or the date when such liability, other than in the ordinary course of business consistent with past practice;
(m) not split, combine or reclassify its outstanding capital stock or other equity securities;
(n) not incur, create, assume or guarantee any Funded Debt or other indebtedness, other than (i) ordinary course working capital borrowings under the Existing Credit Agreement, (ii) indebtedness outstanding of the Company or another Wholly Owned Subsidiary owed to the Company or another Subsidiary and (iii) short term working capital borrowings or capital leases that do not involve any pre-payment penalties;
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(o) not license, sell transfer, pledge, modify, disclose, dispose of, dedicate to the public or forfeit any material Intellectual Property Right held by the Company, except in the ordinary course of business consistent with past practice;
(p) not change any accounting methods or practices, except as required by GAAP;
(q) not adopt a plan or agreement of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other material reorganization of the Company or any of its Subsidiaries;
(r) not effectuate a “plant closing” or “mass layoff” as those terms are defined in the Worker Adjustment and Retraining Notification Act of 1988, as amended, or any similar state or local law, affecting in whole or in part any site of employment, facility or operating unit of the Company or any of its Subsidiaries; and
(s) not enter into any agreement, or otherwise become obligated, to do any action prohibited hereunder.
5.2 Inspection; Cooperation .
(a) Subject to confidentiality obligations and similar restrictions that are applicable to information furnished to the Company or any of its Subsidiaries by third-parties that are in the Company’s or any of its Subsidiaries’ possession from time to time, the Company shall, and shall cause its Subsidiaries to, afford to Acquiror and its accountants, counsel and other representatives reasonable access, during normal business hours, in such manner as to not interfere with normal operation of the Company and its Subsidiaries, to all of their respective properties, books, contracts, commitments, tax returns, records and appropriate officers and employees of the Company and its Subsidiaries, shall furnish Acquiror and its representatives with all financial and operating data and other information concerning the affairs of the Company and its Subsidiaries as such representatives may reasonably request, and shall instruct its employees, counsel, financial advisors, auditors and other representatives to cooperate in all reasonable respects with Acquiror and its Affiliates and representatives in its and their due diligence investigation of the Company and its Subsidiaries. No investigation by Acquiror and its Affiliates, accountants, counsel and other representatives pursuant to this Section 5.2 shall be deemed to modify or otherwise affect the representations and warranties of the Company contained in this Agreement.
(b) The Company agrees to provide, and will cause its Subsidiaries and its and their respective officers and employees to provide, all cooperation reasonably requested by Acquiror in connection with the arrangement and consummation of, and the negotiation of agreements with respect to, the Debt Financing (and any substitutions or replacements thereof). In furtherance of and not in limitation of the foregoing, the Company shall, and shall cause its Subsidiaries and its and their respective officers and employees to, (i) cause the senior officers of the Company to be reasonably available, on reasonable advance notice, to Acquiror and the financial institutions providing the Debt Financing to participate in due diligence sessions and to participate in presentations (including any “road shows”, lender meetings or similar
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presentations) related with the Debt Financing, (ii) assist in the preparation of one or more appropriate and customary offering documents and bank books, including the MD&A and business description to be contained therein, and assist Acquiror and the financial institutions providing the Debt Financing in preparing other appropriate and customary marketing materials, in each case to be used in connection with the Debt Financing, and (iii) request the Company’s independent auditors to prepare and deliver “comfort letters”, dated the date of each offering document used in connection with any transaction in connection with the Debt Financing (with appropriate bring down comfort letters delivered on the Closing Date for each component of the Debt Financing), in compliance with professional standards and otherwise on terms reasonably acceptable to Acquiror, in each of the foregoing cases as may be necessary and customary in connection with a financing substantially similar to the Debt Financing; provided , however , that the Company shall be reimbursed promptly by Acquiror for all reasonable out-of-pocket expenses incurred in connection with the foregoing. Notwithstanding the foregoing, nothing contained in this Section 5.2(b) shall require (i) the Company or its senior officers to engage in any action that would interfere unreasonably with the business of the Company and its Subsidiaries or (ii) the Company or any of its Subsidiaries to pay any commitment or other similar fee or incur any other liability in connection with the Debt Financing prior to the Closing Date.
(c) The Company shall, and shall cause each of its Subsidiaries to provide to Acquiror the monthly consolidated balance sheets and related statements of income, stockholders’ equity and cash flows of the Company (collectively, the “ Monthly Financial Statements ”) within fifteen (15) Business Days following the end of each calendar month prior to the Closing. Company shall provide to Acquiror within forty-five (45) days following the end of each calendar quarter ending forty-five (45) days or more prior to Closing, unaudited consolidated and consolidating balance sheets and related statements of income, stockholders’ equity and cash flows of the Company (collectively, the “ Quarterly Financial Statements ”). The Quarterly Financial Statements shall be prepared in accordance with GAAP, consistently applied (except as disclosed in the footnotes thereto), contain condensed notes thereto, and fairly present, in all material respects, the combined financial position of the Company and its Subsidiaries as of the dates thereof and their results of operations, changes in equity and cash flows for the periods then ended, subject to the absence of footnotes and year-end adjustments. The Company shall, and shall cause its agents, consultants, financial advisors, attorneys and other representatives to, assist and cooperate in good faith with Acquiror, including using reasonable efforts to permit reasonable access to the auditors and auditor workpapers (to the extent permitted by the auditors preparing same) and permitting reasonable access to employees, books and records, and any financial data (including updated budgets and projections) reasonably requested by Acquiror.
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5.3 HSR Act and Foreign Antitrust Approvals . In connection with the transactions contemplated by this Agreement, the Company shall (and, to the extent required, shall cause its Affiliates to) (i) comply promptly but in no event later than five (5) Business Days after the date hereof with the notification and reporting requirements of the HSR Act and use its commercially reasonable efforts to obtain early termination of the waiting period under the HSR Act and (ii) make such other filings with any similar foreign Governmental Authorities as may be required under any applicable similar foreign law, and exercise commercially reasonable efforts to make such filings promptly after the date hereof, taking into consideration the nature of the requirements of and usual practices under the respective foreign laws and (iii) provide all necessary assistance to Acquiror for those filings for which Acquiror has responsibility, or filings where Acquiror is filing on behalf of the Company, by providing Acquiror with all information Acquiror requests for the purpose of making such filings. The Company shall substantially comply with any additional requests for information, including requests for production of documents and production of witnesses for interviews or depositions, by any Antitrust Authority.
5.4 No Solicitations . From the date of this Agreement through the Closing, the Company shall not, nor shall it authorize or permit any of its or its Subsidiaries’ Affiliates, officers, directors, employees, investment bankers, representatives or other advisors or agents to, directly or indirectly, encourage, solicit, participate in, initiate discussions or negotiations with, enter into any agreement or understanding with, provide any information to, or take any other similar action with respect to, any Person or group of Persons (other than Acquiror, Merger Sub or any of their respective Affiliates) that constitutes, or could reasonably be expected to lead to, any merger, sale of assets, sale of shares of capital stock, other business combination or similar transaction involving the Company or any of its Subsidiaries or any business unit thereof.
5.5 Stockholder Approval . The approval of this Agreement by the stockholders of the Company shall not restrict the ability of the Board of Directors of the Company to terminate this Agreement in accordance with Section 10.1 hereof or to cause the Company to enter into an amendment to this Agreement pursuant to Section 12.12 hereof to the extent permitted under Section 251(d) of the DGCL.
5.6 Payoff Letter . Prior to the Effective Time of the Merger, the Company shall use reasonable efforts to cause Deutsche Bank Trust Company Americas, as administrative agent (the “ Agent ”) under that certain amended and restated credit agreement dated as of May 16, 2005 (the “ Existing Credit Agreement ”) by and among Rexnord Corporation, the Agent and the lenders from time to time party thereto, to provide Rexnord Corporation with a payoff letter (the “ Payoff Letter ”) in form and substance reasonably satisfactory to Acquiror that shall acknowledge, assuming all existing letters of credit are cash collateralized or otherwise replaced to the satisfaction of the Agent, (i) on the Closing Date, the Existing Credit Agreement and all commitments thereunder will be terminated (other than obligations under the Existing Credit Agreement that survive such termination), (ii) the Agent shall, within a reasonable period of time following Closing, deliver to Rexnord Corporation, documents evidencing release of any and all Liens held by the Agent, on behalf of the lenders party thereto, reasonably requested by Rexnord Corporation, and (iii) the Company, Rexnord Corporation and each of the Company’s Subsidiaries party to the Existing Credit Agreement or any guaranty, pledge, security or other ancillary agreement executed in connection with the Existing Credit Agreement (the “ Ancillary Agreements ”) will be released from any and all liabilities, guaranties, pledges, grants and other
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obligations under the Existing Credit Agreement and the Ancillary Agreements (other than obligations under the Existing Credit Agreement that survive such termination), upon the repayment of the aggregate principal amount outstanding under the Existing Credit Agreement, together with all interest accrued thereon and any other fees or expenses payable thereunder in connection with such prepayment, and in each case as set forth in such payoff letter.
5.7 Options . The Company shall take, or cause to be taken, such actions necessary to (a) ensure that, as of the Effective Time of the Merger, any options outstanding prior to the Effective Time of the Merger that are not Vested Options shall become Vested Options immediately prior to the Effective Time of the Merger; and (b) permit the treatment of all Vested Options at Closing as provided under Article II. Any such action taken by the Company pursuant to the terms of this Section 5.7 shall be effected concurrent with the consummation of the transactions contemplated by this Agreement and shall be carried out in accordance with the terms of the Option Plans and applicable law.
5.8 Labor Organizations . The Company shall, or shall cause its Subsidiaries to, provide all notifications and engage in all communications to and with any labor organization representing employees of the Company and its Subsidiaries that are required by law or any collective bargaining agreement or similar labor agreement to be made or undertaken prior to the Closing Date in connection with the Merger and the other transactions contemplated by the Transaction Documents.
5.9 Termination of Affiliate Agreements . At or prior to Closing, the Company shall, and shall cause each of its Subsidiaries (as applicable) to, terminate the Contracts and other transactions with its Affiliates set forth in Schedule 5.9 .
5.10 Capital Expenditures . The Company shall make capital expenditures, so that, as of the end of each month ending after the date hereof and prior to the Closing Date, the cumulative capital expenditures of the Company and its Subsidiaries between April 1, 2006 and the end of such month shall be not less than the amount set forth in Schedule 5.10 for such period.
5.11 Section 280G .
(a) The Company shall use its reasonable best efforts to obtain and, if obtained, deliver to Acquiror, promptly after the date hereof (and in any event prior to the Closing Date), a waiver, in a form reasonably acceptable to the Company and Acquiror, from each Person who the Company or Acquiror reasonably believes is, with respect to the Company and/or any of its Subsidiaries, a “disqualified individual” (within the meaning of Section 280G of the Code and the regulations promulgated thereunder) and who the Company or Acquiror reasonably believes might otherwise receive, have received, or have the right or entitlement to receive a parachute payment under Section 280G of the Code pursuant to which such Person waives any and all rights such person may have as to any such payment if the shareholder approval referred to in Section 5.11(b) is not obtained prior to the Closing Date.
(b) With respect to each person who has executed a waiver referred to in Section 5.11(a), the Company shall seek, prior to the Closing Date, the approval by such number
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of stockholders of the Company as is required by the terms of Section 280G(b)(5)(B) of the Code so as to render the parachute payment provisions of Section 280G of the Code inapplicable to any and all payments and/or benefits provided pursuant to Contracts or arrangements that, in the absence of the executed parachute payment waivers by the affected Persons under Section 5.11(a), might otherwise result, separately or in the aggregate, in the payment of any amount and/or the provision of any benefit that would not be deductible by reason of Section 280G of the Code, with such stockholder approval to be carried out in a manner which satisfies, subject to Section 5.11(a), all applicable requirements of such Section 280G(b)(5)(B) of the Code and the Treasury Regulations thereunder, including Q-7 of Section 1.280G-1 of such Treasury Regulations.
ARTICLE
VI.
COVENANTS OF ACQUIROR
6.1 HSR Act and Foreign Antitrust Approvals .
(a) In connection with the transactions contemplated by this Agreement, Acquiror shall (and, to the extent required, shall cause its Affiliates to) (i) comply promptly but in no event later than five (5) Business Days after the date hereof with the notification and reporting requirements of the HSR Act and use its commercially reasonable efforts to obtain early termination of the waiting period under the HSR Act and (ii) make such other filings with any foreign Governmental Authorities as may be required under any applicable similar foreign law, and exercise commercially reasonable efforts to make such filings promptly after the date hereof, taking into consideration the nature of the requirements of and usual practices under the respective foreign laws. Acquiror shall substantially comply with any additional requests for information, including requests for production of documents and production of witnesses for interviews or depositions, by any Antitrust Authorities.
(b) Acquiror shall exercise commercially reasonable efforts to prevent the entry in any Action brought by an Antitrust Authority or any other Person of any Governmental Order which would prohibit, make unlawful or delay the consummation of the transactions contemplated by this Agreement.
(c) Acquiror shall cooperate in good faith with the Antitrust Authorities and undertake promptly any and all action required to complete lawfully the transactions contemplated by this Agreement, including proffering and consenting to a Governmental Order providing for the sale or other disposition, or the holding separate, of particular assets, categories of assets or lines of business, of either assets or lines of business of the Company, or any other assets or lines of business of Acquiror; provided , however , that such action would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect on the Company and its Subsidiaries, taken as a whole. For purposes of this Section 6.1(c), the sale or other disposition, or the holding separate, of particular assets, categories of assets or lines of business, of the Company and its Subsidiaries that generated net sales of $100,000,000 or more in the fiscal year of the Company ended March 31, 2006, shall be deemed to have a “Material Adverse Effect on the Company and its Subsidiaries, taken as a whole”. Subject to the provisions of this Section 6.1(c), the entry by any Governmental Authority in any Action of a Governmental Order permitting the consummation of the transactions contemplated hereby but requiring any of the
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assets or lines of business of Acquiror to be held separate thereafter (including the business and assets of the Company and its Subsidiaries) shall not be deemed a failure to satisfy the conditions specified in Section 9.1(a), 9.1(b), 9.1(c), 9.2(a), 9.2(b) or 9.2(c).
6.2 Indemnification and Insurance .
(a) For six years after the Effective Time of the Merger, Acquiror agrees that it shall cause the Surviving Corporation to continue to indemnify and hold harmless each present and former director and officer of the Company or any of its Subsidiaries against any costs or expenses (including reasonable attorneys’ fees), judgments, fines, losses, claims, damages or liabilities incurred in connection with any Action, whether civil, criminal, administrative or investigative, arising out of or pertaining to matters existing or occurring at or prior to the Effective Time of the Merger, whether asserted or claimed prior to, at or after the Effective Time of the Merger, to the fullest extent that the Company or any of its Subsidiaries, as the case may be, would have been permitted under applicable law and its charter or by-laws or other organizational documents in effect on the date of this Agreement to indemnify such person (including the advancing of expenses as incurred to the fullest extent permitted under applicable law), provided the person to whom such expenses are advanced provides an undertaking to the Surviving Corporation to repay such advances if it is ultimately determined that such person is not entitled to indemnification; provided , further , that any determination required to be made with respect to whether an officer’s or director’s conduct complies with the standards set forth under applicable law and the charter and by-laws or other organizational documents of the Company or any of its Subsidiaries shall be made by independent counsel mutually acceptable to the Holder Representative and the Surviving Corporation.
(b) For six years from the Effective Time of the Merger, Acquiror shall cause the Surviving Corporation to maintain in effect directors’ and officers’ liability insurance covering those Persons who are currently covered by the Company’s directors’ and officers’ liability insurance policies (true, correct and complete copies of which have been heretofore delivered to Acquiror) on terms not materially less favorable than the terms of such current insurance coverage with respect to claims arising from or related to facts or events which occurred at or prior to the Effective Time of the Merger; provided , however , that if any claim is asserted or made within such six-year period, such insurance shall be continued in respect of such claim until the final disposition thereof; and provided further , however , that in complying with its obligations pursuant to the terms of this Section 6.2(b), Acquiror shall not be required to pay annual insurance premiums in excess of 300% of the current annual premium paid by the Company for its existing coverage in the aggregate (the “ Premium Cap ”). If Acquiror cannot obtain such insurance coverage without paying annual premiums in excess of the Premium Cap, Acquiror shall purchase such insurance with the maximum coverage available by paying annual premiums equal to the Premium Cap.
6.3 Employment Matters .
(a) Except as otherwise provided in a collective bargaining agreement to which the Company or its Subsidiaries is currently a party, for a period of no less than one year following the Closing Date, Acquiror shall cause Surviving Corporation to continue to provide the employees of the Company and its Subsidiaries with employment at a level of salary, wages, commissions, if applicable, and benefits (other than equity based compensation) which are at least substantially equivalent, in the aggregate, to the salary, wages,
47
commissions, if applicable, and benefits provided prior to the Closing Date by the Company or its Subsidiaries taken as a whole (it being understood that incentive programs will remain discretionary); provided , however , that management of the Company who became management of the Surviving Corporation shall be permitted to propose and authorize modifications to salary, wages, commissions, if applicable, and benefits provided to employees from time to time after the Closing Date (and any changes made as a result thereof shall not be deemed to be, and shall not be, a breach of this Section 6.3 buy the Acquiror or the Surviving Corporation). This Section 6.3 shall not limit the obligation of Surviving Corporation to maintain any Employee Plan that, pursuant to an existing contract, must be maintained for a period longer than one year or limit the ability of Surviving Corporation to amend or terminate any Employee Plan in accordance with its terms as long as the Surviving Corporation continues to comply with its minimum aggregate benefit obligations under this Section 6.3. No provision of this Agreement shall be construed as a guarantee of continued employment of any employee of the Company or its Subsidiaries and this Agreement shall not be construed so as to prohibit the Surviving Corporation or its Subsidiaries from terminating the employment of any employee of Surviving Corporation or its Subsidiaries.
(b) Except as otherwise provided in a collective bargaining agreement, to the extent Acquiror does not maintain any Employee Plan after the Closing Date, (i) each employee and former employee of the Company and its Subsidiaries shall be credited with his or her years of service with the Company and its Subsidiaries (and any predecessor entities thereof) before the Closing Date under any employee benefit plan of Acquiror and its Subsidiaries providing benefits similar to those provided under such Employee Plan to the same extent as such employee or former employee was entitled, before the Closing Date, to credit for such service under such Employee Plan; and (ii) with respect to the calendar year in which Acquiror ceases to maintain any particular Employee Plan, each employee shall be given credit for amounts paid under such Employee Plan for purposes of applying deductibles, co-payments and out-of-pocket maximums as though such amounts had been paid in accordance with the terms and conditions of the parallel plan, program or arrangement of Acquiror.
(c) No provision of this Section 6.3 will create any third party beneficiary right on behalf of any current or former employee, director or consultant of the Company or its Subsidiaries or any collective bargaining unit.
6.4 Financing . Acquiror shall use its commercially reasonable efforts to arrange the Debt Financing on the terms and conditions described in the Debt Financing Commitment, including using its commercially reasonable efforts to (i) negotiate definitive agreements with respect thereto on the terms and conditions contained therein, (ii) satisfy on a timely basis all conditions applicable to Acquiror or any of its Affiliates in such definitive agreements that are within its or its Affiliates’ control and (iii) consummate the Debt Financing at the Closing. Such efforts shall include Acquiror’s and Merger Sub’s use of commercially reasonable efforts to cause the lenders party to the Debt Financing Commitment to fund the Bridge Facilities (as defined in the Debt Financing Commitment) on or before September 29, 2006, provided that the conditions precedent to the provision of such facilities have been satisfied or waived by such date. Acquiror shall use its reasonable best efforts to obtain the Equity Financing upon
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satisfaction or waiver of (A) the conditions to Closing set forth in Article IX and (B) the conditions to the funding of the Debt Financing (or any Alternative Financing (as defined below)) (in the case of clauses (A) and (B), other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions). If any portion of the Debt Financing becomes unavailable on the terms and conditions contemplated in the Debt Financing Commitment, Acquiror shall use its commercially reasonable efforts to obtain any such portion from alternative sources on terms that are not less favorable to Acquiror and the Surviving Corporation (“ Alternative Financing ”) as promptly as practicable following the occurrence of such event. Acquiror shall give the Company prompt notice of any breach by any party of the Debt Financing Commitment or any termination of the Debt Financing Commitment. Acquiror shall keep the Company informed on a reasonably current basis in reasonable detail of the status of its efforts to arrange the Debt Financing and shall not permit any amendment or modification adverse to the Company to be made to the Debt Financing Commitment without obtaining the Company’s prior written consent (not to be unreasonably withheld or delayed). Acquiror shall provide notice to the Company promptly upon receiving the Debt Financing. Acquiror shall not permit the Equity Financing Commitment to be amended or modified in a manner that is adverse to the Company, and Acquiror shall not permit any provision thereof to be waived in a manner that is adverse to the Company, without the prior written consent of the Company.
ARTICLE VII.
JOINT COVENANTS
7.1 Confidentiality .
(a) Use of Evaluation Materials . Except for any governmental filings required in order to complete the transactions contemplated herein, and except as Acquiror and the Company may agree or consent in writing, each party hereto shall, for a period of two years following the date hereof, keep the Evaluation Materials confidential, and, except as required by applicable law, no party shall disclose any Evaluation Materials or any information contained therein to any Person; provided , however , that any such information may be disclosed to those of such party’s directors, officers, employees, agents and representatives who need to know such information for the purposes of evaluating the transactions contemplated hereby (it being understood that such directors, officers, employees, agents and representatives shall be informed by such party of the confidential nature of such information and shall be directed by such party, and shall each agree to treat such information confidentially in accordance with this Section 7.1(a)). Without limiting the generality of the foregoing, in the event that the transactions contemplated hereby are not consummated, neither party hereto nor its directors, officers, employees, agents, shareholders or representatives shall use any of the Evaluation Materials furnished to it by another party hereto for any purpose. The terms and conditions of the Confidentiality Agreement shall terminate and be of no further force and effect as of the date of this Agreement.
(b) Compelled Disclosure . In the event that any party hereto or any of its representatives receives a request or is required (by applicable law, regulation or legal process) to disclose all or any part of the information contained in the Evaluation Materials, such party or its representatives, as the case may be, shall (i) promptly notify the disclosing party of the
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existence, terms and circumstances surrounding such a request, (ii) consult with the disclosing party on the advisability of taking legally available steps to resist or narrow such request and (iii) assist the disclosing party in seeking a protective order or other appropriate remedy. In the event that such protective order or other remedy is not obtained or that the disclosing party waives compliance with the provisions hereof, (x) such party or its representatives, as the case may be, may disclose only that portion of the Evaluation Materials which such party is advised by opinion of its legal counsel is legally required to be disclosed and shall exercise reasonable efforts to assist the disclosing party in obtaining assurance that confidential treatment shall be accorded such Evaluation Materials that are disclosed and (y) such party shall not be liable for such disclosure unless disclosure to any such tribunal was caused by or resulted from a previous disclosure by such party or its representatives not permitted by this Section 7.1.
7.2 Support of Transaction . In addition to the other covenants of the parties set forth in this Agreement, Acquiror and the Company shall each, and shall each cause their respective Affiliates to: (a) use commercially reasonable efforts to assemble, prepare and file any information (and, as needed, to supplement such information) as may be reasonably necessary to obtain as promptly as practicable all governmental and regulatory consents required to be obtained in connection with the transactions contemplated hereby, (b) use commercially reasonable efforts to obtain all material consents and approvals of third parties that any of Acquiror, the Company, or their respective Affiliates reasonably request or are otherwise required to obtain in order to consummate the Merger, (c) execute and deliver such other documents, certificates and other agreements and take such other action as may reasonably be necessary or as another party may reasonably request to satisfy the conditions of Article IX or otherwise to comply with this Agreement or to consummate the Merger and the other transactions contemplated by the Transaction Documents, (d) use commercially reasonable efforts to defend any Actions, whether judicial or administrative, challenging this Agreement or any other Transaction Document or the consummation of the transactions contemplated hereby or thereby and to have lifted, vacated, reversed or overturned any law, rule, regulation, judgment, injunction, decree or order that prohibits or materially delays or materially impedes the consummation of the Merger, and (e) provide the other parties, and such other parties’ employees, officers, accountants, lawyers, financial advisors and other representatives with reasonable access, during normal business hours in such a manner as not to interfere unreasonably with its operations, to its personnel, properties, business and records for any reasonable purposes.
7.3 Reasonable Best Efforts . Subject to the terms and conditions herein (including Section 5.2(b), 5.2(c), 5.3, 5.5 and 6.1), between the date of this Agreement and the Closing Date, each party shall use its reasonable best efforts to cause the conditions set forth in Article IX to be satisfied.
7.4 Advise of Changes . From and after the date of this Agreement until the Effective Time of the Merger, the Company and Acquiror shall promptly notify each other of the occurrence, or non-occurrence, of any event that, to the knowledge of the Company or Acquiror, as applicable, individually or in the aggregate, would make the satisfaction of the conditions set forth in Article IX impossible or unlikely.
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7.5 Debt Tender
(a) As soon as practicable after the date hereof and promptly upon the request of Acquiror, the Company and Rexnord Corporation shall commence a tender offer and Consent Solicitation (the “ Debt Tender Offer ”) for all of the outstanding Senior Subordinated Notes on the terms and conditions set forth in Schedule 7.5 , and Acquiror and Merger Sub shall assist the Company and Rexnord Corporation in connection therewith.
(b) Promptly after the date of this Agreement, Acquiror shall prepare all necessary and appropriate documentation in connection with the Debt Tender Offer, including the offer to purchase, related letters of transmittal and other related documents (collectively, the “ Offer Documents ”). Acquiror and the Company and Rexnord Corporation shall cooperate, and shall use commercially reasonable efforts to cause their respective advisors and representatives to cooperate, with each other in the preparation of the Offer Documents. All mailings to the holders of the Senior Subordinated Notes in connection with the Debt Tender Offer shall be subject to the prior review and comment by each of the Company and Acquiror and shall be reasonably acceptable to each of them. The Company, Acquiror and Merger Sub shall cooperate in connection with the Debt Tender Offer in order to cause the initial settlement of the Debt Tender Offer to occur simultaneously with the Closing of the Merger.
(c) Promptly upon the receipt of the Requested Consents with respect to the indenture for the Senior Subordinated Notes, the Company shall cause Rexnord Corporation to enter into a supplemental indenture reflecting the amendments to such indenture approved by such Requested Consents and will use its reasonable best efforts to cause the indenture trustee to promptly enter into such supplemental indenture; provided, that the amendments contained in such supplemental indenture shall become effective upon signing, but not operative until the acceptance of the Debt Tender Offer. The closing of the Debt Tender Offer shall be conditioned on the simultaneous occurrence of the Closing. Simultaneously with the Closing and in accordance with the terms of the Debt Tender Offer, Acquiror shall provide to Rexnord Corporation the funds necessary to consummate the Debt Tender Offer and Consent Solicitation (including the payment of all applicable premiums, consent fees and all related fees and expenses) and Rexnord Corporation shall accept for purchase and use such funds to purchase the Senior Subordinated Notes tendered in the Debt Tender Offer (the “ Tendered Notes ”).
(d) If requested by Acquiror, the Company shall cause Rexnord Corporation to enter into one or more dealer manager agreements with such Persons as Acquiror shall reasonably request, Acquiror shall pay the reasonable fees and expenses of any dealer manager, information agent, depositary or other agent retained in connection with the Debt Tender Offer. Notwithstanding the foregoing, the Company shall not be obligated to require Rexnord Corporation to agree to cause its counsel to provide any 10b-5 negative assurance letters or other opinions with regard to the Offer Documents with any such dealer manager pursuant to such dealer manager agreement(s).
(e) For purposes of this Agreement, “ Consent Solicitation ” shall mean a solicitation of the Requested Consents from the holders of the Senior Subordinated Notes; and “ Requested Consents ” shall mean the consents of holders of a majority in principal amount of the Senior Subordinated Notes to the amendments to indenture in respect of the Senior Subordinated Notes described in Schedule 7.5 .
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ARTICLE
VIII.
CLOSING
8.1 Filing of Certificate of Merger . Assuming all of the conditions set forth in Article IX of this Agreement have either been fulfilled or waived, and if this Agreement has not theretofore been terminated pursuant to its terms, the Boards of Directors of Acquiror, Merger Sub and the Company shall direct their officers forthwith to file and record all relevant documents, including the Certificate of Merger, with the appropriate Governmental Authority to effectuate the Merger on the Closing Date.
8.2 Closing . The Closing shall take place at the offices of Latham & Watkins LLP, 555 Eleventh Street, N.W., Suite 1000, Washington, DC 20004, at 10:00 a.m. on the date which is three (3) Business Days after the date on which all conditions set forth in Section 9.1 shall have been satisfied or waived (other than those conditions that by their terms are to be satisfied at the Closing) or such other time and place as Acquiror and the Company may mutually agree (the “ Closing Date ”). The term “ Closing ,” when used in this Agreement, means the Effective Time of the Merger.
ARTICLE
IX.
CONDITIONS TO OBLIGATIONS
9.1 Conditions to Obligations of Acquiror, Merger Sub and the Company . The obligations of Acquiror, Merger Sub and the Company to consummate, or cause to be consummated, the Merger are subject to the satisfaction of the following conditions, any one or more of which may be waived in writing by such parties:
(a) All waiting periods under the HSR Act applicable to the Merger shall have expired or been terminated.
(b) All the approvals, clearances, filings or waiting periods or consents of Governmental Authorities required under German and Norwegian antitrust law and applicable to the Merger shall have expired or been made or obtained, as applicable.
(c) There shall not be in force any Governmental Order, statute, rule or regulation restraining, enjoining or prohibiting the consummation of the Merger.
9.2 Conditions to Obligations of Acquiror and Merger Sub . The obligations of Acquiror and Merger Sub to consummate, or cause to be consummated, the transactions contemplated by this Agreement are subject to the satisfaction of the following additional conditions, any one or more of which may be waived in writing by Acquiror and Merger Sub:
(a) Each of the representations and warranties of the Company in Section 3.1 (with respect to the representations and warranties contained in the first and second sentences of such Section 3.1 only), Section 3.3, Section 3.4 (with respect to conflicts with the Certificate of Incorporation or Bylaws of the Company only) and Section 3.6, and the representations and warranties of the Holder Representative set forth in Section 11.4, shall be true and correct in all respects at and as of the date of this Agreement and at and as of the Closing Date as though then made (provided that any such representation and warranty that addresses matters only as of a certain date shall be so true and correct in all respects only as of that certain date), in each case determined without regard to qualifications as to materiality or Material Adverse Effect on the Company and its Subsidiaries, taken as a whole, and (ii) each of the other representations and warranties of the Company set forth in Article III shall be true and correct in all respects at and as of the date of this Agreement and at and as of the Closing Date as though then made (provided that any such representation and warranty that addresses matters only as of a
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certain date shall be so true and correct in all respects only as of that certain date), in each case determined without regard to qualifications as to materiality or Material Adverse Effect, except to the extent the failure of any such representations and warranties to be true and correct has not resulted in, and would not reasonably be expected to result in, individually or in the aggregate, a Material Adverse Effect on the Company and its Subsidiaries, taken as a whole.
(b) Each of the covenants and agreements of the Company required by this Agreement to be performed as of or prior to the Closing shall have been performed in all material respects.
(c) The Company shall have delivered to Acquiror a certificate signed by an officer of the Company, dated the Closing Date, certifying that the conditions specified in Section 9.2(a) and Section 9.2(b) have been fulfilled.
(d) The Company and the Holder Representative shall have executed and delivered to Acquiror and Merger Sub each of the other Transaction Documents required to be delivered by the Company and/or the Holder Representative on or prior to the Closing Date.
(e) Acquiror shall have received the proceeds of the financings described in the Debt Financing Commitment or the Alternative Financing.
(f) Acquiror shall have received a certificate executed by the Company and reasonably acceptable to Acquiror establishing that no Tax is required to be withheld on payments hereunder pursuant to Section 1445 of the Code.
(g) Between the date hereof and the Closing Date, there shall not have been a Material Adverse Effect on the Company and its Subsidiaries, taken as a whole.
9.3 Conditions to the Obligations of the Company . The obligation of the Company to consummate the transactions contemplated by this Agreement is subject to the satisfaction of the following additional conditions, any one or more of which may be waived in writing by the Company:
(a) Each of the representations and warranties of Acquiror contained in this Agreement shall be true and correct in all material respects both on the date of this Agreement and as of the Closing Date, as if made anew at and as of that time, except with respect to representations and warranties which speak as to an earlier date, which representations and warranties shall be true and correct only as of such date, except in each case for changes after the date of this Agreement which are contemplated or expressly permitted by this Agreement.
(b) Each of the covenants and agreements of Acquiror to be performed as of or prior to the Closing shall have been performed in all material respects.
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(c) Acquiror shall have delivered to the Company a certificate signed by an officer of Acquiror, dated the Closing Date, certifying that, to the knowledge and belief of such officer, the conditions specified in Section 9.3(a) and Section 9.3(b) have been fulfilled.
(d) Acquiror and Merger Sub shall have executed and delivered to the Holder Representative the Escrow Agreement.
ARTICLE
X.
TERMINATION/EFFECTIVENESS
10.1 Termination . This Agreement may be terminated and the transactions contemplated hereby abandoned:
(a) By mutual written consent of the parties authorized by their respective Boards of Directors, at any time prior to the Closing.
(b) Prior to the Closing, by written notice to the Company from Acquiror, authorized by the Board of Directors of Acquiror, if (i) there is any breach of any representation, warranty, covenant or agreement on the part of the Company set forth in this Agreement, including any failure of the Company to consummate the transactions contemplated hereby on the date provided in Section 8.2 hereof, or if a representation or warranty of the Company shall be untrue, in either case, such that the conditions specified in Section 9.2(a) or Section 9.2(b) hereof would not be satisfied at the Closing (a “ Terminating Company Breach ”), except that, if any such Terminating Company Breach (other than any breach resulting from the failure of the Company to consummate the transactions contemplated hereby on the date provided in Section 8.2 hereof) is curable by the Company through the exercise of its commercially reasonable efforts, then, for a period of up to ten (10) days, but only as long as the Company continues to use its commercially reasonable efforts to cure such Terminating Company Breach (the “ Company Cure Period ”), such termination shall not be effective, and such termination shall become effective only if the Terminating Company Breach is not cured within the Company Cure Period; provided , however , that Acquiror may not terminate this Agreement under this Section 10.1(b)(i) if Acquiror is then in material breach of any of its representations, warranties, covenants or agreements contained herein, (ii) the Closing has not occurred on or before September 30, 2006 (the “ Termination Date ”), (iii) any governmental or regulatory consent or approval required for consummation of the transactions contemplated hereby is denied by or in a final, non-appealable Governmental Order or other final, non-appealable Action issued or taken by the appropriate Governmental Authority or (iv) consummation of any of the transactions contemplated hereby is enjoined, prohibited or otherwise restrained by the terms of a final, non-appealable Governmental Order of a court of competent jurisdiction or other Governmental Authority.
(c) Prior to the Closing, by written notice to Acquiror from the Company, authorized by the Board of Directors of the Company, if (i) there is any breach of any representation, warranty, covenant or agreement on the part of Acquiror or Merger Sub set forth in this Agreement, including any failure of Acquiror and Merger Sub to consummate the transactions contemplated hereby on the date provided in Section 8.2 hereof, or if a representation or warranty of Acquiror or Merger Sub shall be untrue, in either case, such that
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the conditions specified in Section 9.3(a) or Section 9.3(b) hereof would not be satisfied at the Closing (a “ Terminating Acquiror Breach ”), except that, if any such Terminating Acquiror Breach (other than any breach resulting from the failure of Acquiror and Merger Sub to consummate the transactions contemplated hereby on the date provided in Section 8.2 hereof) is curable by Acquiror through the exercise of its commercially reasonable efforts, then, for a period of up to ten (10) days, but only as long as Acquiror continues to use its commercially reasonable efforts to cure such Terminating Acquiror Breach (the “ Acquiror Cure Period ”), such termination shall not be effective and such termination shall become effective only if the Terminating Acquiror Breach is not cured within the Acquiror Cure Period; provided , however , that the Company may not terminate this Agreement under this Section 10.1(c)(i) if the Company is then in material breach of any of its representations, warranties, covenants or agreements contained herein, (ii) the Closing has not occurred on or before the Termination Date, (iii) any governmental or regulatory consent or approval required for consummation of the transactions contemplated hereby is denied by or in a final, non-appealable Governmental Order or other final non-appealable Action issued or taken by the appropriate Governmental Authority or (iv) consummation of any of the transactions contemplated hereby is enjoined, prohibited or otherwise restrained by the terms of a final, non-appealable Governmental Order of a court of competent jurisdiction or other Governmental Authority.
10.2 Effect of Termination .
(a) In the event of termination and abandonment of this Agreement pursuant to Section 10.1, this Agreement shall forthwith become void and have no effect, without any liability on the part of any party hereto or its respective Affiliates (including any directors, officer, partners, members, stockholders (including partners of partners and shareholders of such partners)), other than (i) liability of the Company, the Holder Representative, Acquiror or Merger Sub, as the case may be, for any intentional and willful breach of this Agreement occurring prior to such termination, and the parties hereto acknowledge that it is the intention of the parties hereto that no party shall have any remedy or right to recover for any losses or damages resulting from any breach of the provisions hereof unless such breach was intentional and willful on the part of the breaching party and (ii) the obligation of Apollo Management, L.P. under the Equity Financing Commitment.
(b) The provisions of Section 7.1, this Section 10.2 and Article XII hereof shall survive any termination of this Agreement.
ARTICLE
XI.
HOLDER REPRESENTATIVE
11.1 Acknowledgement . By voting in favor of the Merger, the holders of the Common Shares and Vested Options are acknowledging their agreement to be bound by this Article XI, and hereby appoint TC Group as the representative to act on behalf of holders of the Common Shares and Vested Options for certain limited purposes, as specified herein (the “ Holder Representative ”). The holders of the Common Shares and Vested Options hereby grant the Holder Representative a power of attorney to act on their behalf in connection with the transactions contemplated by this Agreement, including executing documents, making all elections and decisions to be made by the holders of the Common Shares and Vested Options in
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connection with the Merger, both prior to and following the Closing Date, receiving payments of Merger Consideration and the Escrow Amount, retaining a portion of the Merger Consideration necessary to pay fees and expenses, giving and receiving notices on behalf of the holders of the Common Shares and Vested Options and otherwise exercising all rights of the holders of the Common Shares and Vested Options on their behalf. Acquiror is entitled to rely on the actions of the Holder Representative taken on behalf of the holders of the Common Stock and Vested Options of the Company in connection with the transactions contemplated by this Agreement.
11.2 Designation and Replacement of Holder Representative . The parties have agreed that it is desirable to appoint the Holder Representative as the initial Holder Representative, and approval of this Agreement by the holders of Common Shares and Vested Options shall constitute ratification and approval of such designation. The Holder Representative may resign at any time, and the Holder Representative may be removed by the vote of Persons which collectively owned more than fifty percent (50%) of the Aggregate Fully-Diluted Common Shares at the Effective Time of the Merger (“ Majority Holders ”). In the event that a Holder Representative has resigned or been removed, such resignation or removal shall only become effective upon the appointment of a new Holder Representative (the “ New Holder Representative ”) by a vote of Majority Holders, such appointment to become effective upon the written acceptance thereof by the New Holder Representative and written acknowledgement by the New Holder Representative that it shall be a party to this Agreement, with the same rights and obligations as the Holder Representative.
11.3 Authority and Rights of the Holder Representative; Limitations on Liability . The Holder Representative shall have such powers and authority as are necessary to carry out the functions assigned to it under this Agreement; provided , however , that the Holder Representative shall have no obligation to act on behalf of the holders of Common Shares and Vested Options, except as expressly provided herein. Without limiting the generality of the foregoing, the Holder Representative shall have full power, authority and discretion to estimate and determine the amounts of Holder Allocable Expenses, and to pay such Holder Allocable Expenses in accordance with Section 2.6 hereof. The Holder Representative shall have no liability to Acquiror, the Company or the holders of Common Shares and Vested Options with respect to actions taken or omitted to be taken in its capacity as the Holder Representative, except with respect to the Holder Representative’s gross negligence or willful misconduct. The Holder Representative shall at all times be entitled to rely on any directions received from the Majority Holders; provided , however , that the Holder Representative shall not be required to follow any such direction, and shall be under no obligation to take any action in its capacity as the Holder Representative, unless the Holder Representative is holding funds delivered to it under Section 2.6 of this Agreement and/or has been provided with other funds, security or indemnities which, in the sole determination of the Holder Representative, are sufficient to protect the Holder Representative against the costs, expenses and liabilities which may be incurred by the Holder Representative in responding to such direction or taking such action. The Holder Representative shall be entitled to engage such counsel, experts and other agents and consultants as it shall deem necessary in connection with exercising its powers and performing its function hereunder and (in the absence of bad faith on the part of the Holder Representative) shall be entitled to conclusively rely on the opinions and advice of such Persons. The Holder Representative shall be entitled to reimbursement from funds paid to it under Section 2.6 of this Agreement and/or otherwise received by it in its capacity as the Holder Representative pursuant to or in connection
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with this Agreement, for all reasonable expenses, disbursements and advances (including fees and disbursements of its counsel, experts and other agents and consultants) incurred by the Holder Representative in such capacity, and for indemnification, by the holders of the Common Shares and Vested Options against any loss, liability or expenses arising out of actions taken or omitted to be taken in its capacity as the Holder Representative (except for those arising out of the Holder Representative’s gross negligence or willful misconduct), including the costs and expenses of investigation and defense of claims, it being understood that, except as provided in Section 2.6, the Company shall not be obligated to indemnify and reimburse the Holder Representative and such obligations shall be borne solely by the holders of the Common Shares and Vested Options. In the event that the funds paid to the Holder Representative pursuant to Section 2.6 exceed the Holder Allocable Expenses, the Holder Representative shall be entitled to retain such excess amount as a fee for its services as Holder Representative hereunder.
11.4 Representations and Warranties .
(a) The Holder Representative has been duly formed and is validly existing as a limited liability company in good standing under the laws of the State of Delaware. The Holder Representative has all requisite limited liability company power and authority to execute and deliver this Agreement and the other Transaction Documents to which it will be a party.
(b) The execution and delivery by the Holder Representative of this Agreement or any other Transaction Document to which it is, or is specified to be, a party, and the consummation of the transactions contemplated hereby and thereby do not and will not conflict with, violate any provision of, any applicable law, rule or regulation of any Governmental Authority or the certificate of formation or limited liability company agreement of the Holder Representative.
ARTICLE
XII.
MISCELLANEOUS
12.1 Nonsurvival of Representations and Warranties . The representations and warranties contained in this Agreement or in any certificate delivered pursuant hereto shall not survive beyond the Effective Time of the Merger or termination of this Agreement and shall terminate on the earlier of the Effective Time of the Merger or the date on which this Agreement is terminated.
12.2 Waiver . Any party to this Agreement may, at any time prior to the Closing, by action taken by its Board of Directors, or officers thereunto duly authorized, waive any of the terms or conditions of this Agreement or agree to an amendment or modification to this Agreement by an agreement in writing executed by such party. The waiver by a party hereto of any breach of any provision of this Agreement shall not constitute or operate as a waiver of any other breach of such provision or of any other provision hereof, nor shall any failure to enforce any provision hereof operate as a waiver of such provision or of any other provision hereof. The rights and remedies provided herein shall be cumulative and not exclusive of any rights or remedies provided by law.
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12.3 Notices . All notices and other communications among the parties shall be in writing and shall be deemed to have been duly given when (i) delivered in person, or (ii) five days after posting in the United States mail having been sent registered or certified mail return receipt requested, (iii) delivered by FedEx or other nationally recognized overnight delivery service, or (iv) delivered by telecopy and promptly confirmed by delivery in person or post as aforesaid in each case, with postage prepaid, addressed as follows:
(a) If to Acquiror or Merger Sub, to:
Chase Acquisition I, Inc.
c/o Apollo Management, L.P.
9 West 57th Street, 43rd Floor
New York, NY 10019
Attention: Mr. Steven Martinez
Telecopy No.: (212) 515-3288
with copies to:
O’Melveny & Myers LLP
Times Square Tower
7 Times Square
New York, NY 10036
Attention: John M. Scott, Esq.
Telecopy No.: (212) 326-2061
(b) If to the Company, to:
RBS Global, Inc.
c/o TC Group, L.L.C.
c/o The Carlyle Group
1001 Pennsylvania Ave. N.W., Suite 220 South
Washington, D.C. 20004
Attention: Praveen Jeyarajah
Telecopy No.: (202) 347-1818
with copies to:
Latham & Watkins LLP
555 Eleventh Street, N.W., Suite 1000
Washington, D.C. 20004-1304
Attention: Daniel T. Lennon
James R. Hanna
Telecopy No.: (202) 637-2201
(c) If to TC Group, to:
TC Group, L.L.C.
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c/o The Carlyle Group
1001 Pennsylvania Ave. N.W.
Suite 220 South
Washington, D.C. 20004
Attention: Praveen Jeyarajah
Telecopy No.: (202) 347-1818
with copies to:
Latham & Watkins LLP
555 Eleventh Street, N.W., Suite 1000
Washington, D.C. 20004-1304
Attention: Daniel T. Lennon
James R. Hanna
Telecopy No.: (202) 637-2201
or to such other address or addresses as the parties may from time to time designate in writing.
12.4 Assignment . No party hereto shall assign this Agreement or any part hereof without the prior written consent of the other parties, except that (a) each of Acquiror and Merger Sub may assign all of its respective rights, duties and obligations hereunder to any of its Affiliates without the prior written consent of any other party hereto, provided that Acquiror or Merger Sub, as applicable, shall remain primarily liable hereunder following any such assignment and Acquiror or Merger Sub, as applicable, shall be deemed to have unconditionally guaranteed the performance of its obligations hereunder by any such assignee and (b) each of Acquiror and Merger Sub may pledge its respective rights hereunder to their financing sources as collateral security in connection with the Debt Financing, without the prior written consent of any other party hereto. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors and assigns.
12.5 Rights of Third Parties . Nothing expressed or implied in this Agreement is intended or shall be construed to confer upon or give any Person, other than the parties hereto, any right or remedies under or by reason of this Agreement; provided , however , that, notwithstanding the foregoing, in the event the Closing occurs, the directors of the Company shall be intended third-party beneficiaries of, and shall be entitled to the protections of, Section 6.2 hereof.
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12.6 Expenses . Except as provided in Section 5.2(b), each party hereto, other than the Holder Representative (whose expenses shall be paid out of funds paid to the Holder Representative under Section 2.6 in the event the transactions contemplated hereby are consummated), shall bear its own expenses incurred in connection with this Agreement and the transactions herein contemplated whether or not such transactions shall be consummated, including all fees of its legal counsel, financial advisers and accountants. Notwithstanding the foregoing, (a) the fees and expenses of the Auditor, if any, shall be paid one-half by Acquiror and one-half by the Holder Representative out of funds paid to the Holder Representative under Section 2.6; (b) up to $1,000,000 of (i) all stamp tax or other transfer tax payable as a result of the Merger or the consummation of the transactions contemplated hereby; (ii) all regulatory filing fees and expenses incurred in connection with the transactions contemplated by the Transaction Documents; and (iii) all fees incurred in connection with obtaining and maintaining the insurance required to be obtained and maintained by Acquiror or the Company after Closing pursuant to Section 6.2 shall be paid one-half by Acquiror and one-half by the Holder Representative out of funds paid to the Holder Representative under Section 2.6 and all such expenses in excess of $1,000,000 shall be paid by Acquiror; (c) in the event the transactions contemplated hereby are consummated, Acquiror shall pay the Holder Allocable Expenses in accordance with the terms of Section 2.6 hereof; (d) in the event that the transactions contemplated hereby are not consummated, (i) the Company shall reimburse the Holder Representative for all Holder Allocable Expenses and (ii) Acquiror shall pay all fees and expenses in connection with any financing arrangements, regardless of whether such financing fees and expenses were to be incurred by the Surviving Corporation or its Subsidiaries; and (e) the Company shall pay the reasonable out-of-pocket fees and expenses of Acquiror and its representatives and advisors incurred in connection with the Debt Tender Offer up to a maximum of $50,000.
12.7 Governing Law . This Agreement shall be construed and enforced in accordance with the laws of the State of New York, without regard to the conflict of law principles that would result in the application of any law other than the law of the State of New York; provided , however , the laws of the State of Delaware (including any Law related to any fiduciary duty, duty of loyalty, or other duty or obligation of the Company’s Board of Directors with respect to the Merger or this Agreement) shall apply to the Merger.
12.8 Captions; Counterparts . The captions in this Agreement are for convenience only and shall not be considered a part of or affect the construction or interpretation of any provision of this Agreement. This Agreement may be executed in two or more counterparts, including by facsimile transmission, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
12.9 Schedules and Annexes . The Schedules and Annexes are a part of this Agreement as if fully set forth herein. All references herein to articles, sections, paragraphs, Schedules and Annexes shall be deemed references to such parts of this Agreement, unless the context shall otherwise require. Any disclosure made by a party in the Schedules with reference to any section or schedule of this Agreement shall be deemed to be a disclosure with respect to all other sections or schedules to the extent the applicability of such disclosure to such other sections or schedules is reasonably apparent. Certain information set forth in the Schedules is included solely for informational purposes and may not be required to be disclosed pursuant to
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this Agreement. The disclosure of any information shall not be deemed to constitute an acknowledgment that such information is required to be disclosed in connection with the representations and warranties made in this Agreement, nor shall such information be deemed to establish a standard of materiality.
12.10 Construction .
(a) Unless the context of this Agreement otherwise requires, (i) words of any gender include each other gender; (ii) words using the singular or plural number also include the plural or singular number, respectively; (iii) the terms “hereof,” “herein,” “hereby” and derivative or similar words refer to this entire Agreement; (iv) the terms “Article” or “Section” refer to the specified Article or Section of this Agreement; (v) the word “including” shall mean “including, without limitation” and (vi) the word “or” shall be disjunctive but not exclusive.
(b) References to agreements and other documents shall be deemed to include all subsequent amendments and other modifications thereto.
(c) References to statutes shall include all regulations promulgated thereunder and references to statutes or regulations shall be construed as including all statutory and regulatory provisions consolidating, amending or replacing the statute or regulation.
(d) The language used in this Agreement shall be deemed to be the language chosen by the parties to express their mutual intent and no rule of strict construction shall be applied against any party.
(e) Whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified.
(f) All accounting terms used herein and not expressly defined herein shall have the meanings given to them under GAAP; provided , however , that to the extent that a definition of a term in this Agreement is inconsistent with the meaning of such term under GAAP, the definition set forth in this Agreement shall control.
(g) Any reference to “Dollars” or “$” shall refer to U.S. Dollars.
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12.11 Entire Agreement . This Agreement (together with the Schedules and Annexes to this Agreement) and the other Transaction Documents constitute the entire agreement among the parties and supersede any other agreements, whether written or oral, that may have been made or entered into by or among any of the parties hereto or any of their respective Subsidiaries relating to the transactions contemplated hereby (including that certain Confidentiality Agreement dated as of February 15, 2006 between Acquiror and the Company (the “ Confidentiality Agreement ”)). No representations, warranties, covenants, understandings, agreements, oral or otherwise, relating to the transactions contemplated by this Agreement exist between the parties except as expressly set forth in this Agreement and the other Transaction Documents.
12.12 Amendments . This Agreement may be amended or modified in whole or in part, only by a duly authorized agreement in writing executed by the parties hereto which makes reference to this Agreement.
12.13 Publicity . All press releases or other public communications of any nature whatsoever relating to the transactions contemplated by this Agreement, and the method of the release for publication thereof, shall be subject to the prior mutual approval of Acquiror and the Company which approval shall not be unreasonably withheld by any party. For purposes of this Agreement, internal, non-pubic disclosures to fund investors and general or limited partners of Apollo (the “ Apollo Investors ”) shall not be deemed a public disclosure and shall not be subject to the provisions of this Section 12.13, so long as the Apollo Investors are subject to confidentiality obligations to Apollo.
12.14 Severability . If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement shall remain in full force and effect. The parties further agree that if any provision contained herein is, to any extent, held invalid or unenforceable in any respect under the laws governing this Agreement, they shall take any actions necessary to render the remaining provisions of this Agreement valid and enforceable to the fullest extent permitted by law and, to the extent necessary, shall amend or otherwise modify this Agreement to replace any provision contained herein that is held invalid or unenforceable with a valid and enforceable provision giving effect to the intent of the parties.
12.15 Jurisdiction; Waiver of Jury Trial . Any Action arising out of or relating to this Agreement or the transactions contemplated hereby may be brought in the Supreme Court of the State of New York in New York County, or, if it has or can acquire jurisdiction, in the United States District Court for the Southern District of New York, and each of the parties irrevocably submits to the exclusive jurisdiction of each such court in any such Action, waives any objection it may now or hereafter have to venue or to convenience of forum, agrees that all claims in respect of the Action shall be heard and determined only in any such court, and agrees not to bring any Action arising out of or relating to this Agreement or the transactions contemplated hereby in any other court. Each party hereto further agrees that service of any process, summons, notice or document by U.S. registered mail to such party’s address set forth in Section 12.3 above shall be effective service of process for any Action with respect to any matters to which it has submitted to jurisdiction in this Section 12.15 or otherwise. EACH PARTY HERETO HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY ACTION
62
RELATED TO OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
12.16 Withholding . For amounts payable pursuant to this Agreement for which withholding is required under applicable law, the payor of such amount shall withhold the amount required, and pay such amount to the applicable Governmental Authority, and such withheld amount shall be considered to have been paid for all purposes under this Agreement.
63
IN WITNESS WHEREOF the parties have hereunto caused this Agreement to be duly executed as of the date first above written.
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CHASE ACQUISITION I, INC. |
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By: |
/s/ Michael D. Weiner |
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Name: |
Michael D. Weiner |
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Title: |
President |
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CHASE MERGER SUB, INC. |
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By: |
/s/ Michael D. Weiner |
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Name: |
Michael D. Weiner |
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Title: |
President |
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RBS GLOBAL, INC. |
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By: |
/s/ Robert A. Hitt |
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Name: |
Robert A. Hitt |
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Title: |
President and Chief Executive Officer |
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TC GROUP, L.L.C., solely in its capacity as the initial Holder Representative hereunder |
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By: TCG HOLDINGS, L.L.C. |
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Its: Managing Member |
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By: |
/s/ Bruce E. Rosenblum |
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Name: |
Bruce E. Rosenblum |
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Title: |
Managing Director |
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64
Exhibit 4.1
CHASE MERGER SUB, INC.
and
(following the merger of Chase Merger Sub, Inc.
with and into RBS Global, Inc.)
RBS GLOBAL, INC.
and
REXNORD CORPORATION
,
as Issuers,
and the Guarantors named herein
9½% Senior Notes due 2014
INDENTURE
Dated as of July 21, 2006
WELLS
FARGO BANK, NATIONAL ASSOCIATION,
as Trustee
TABLE OF CONTENTS
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Page |
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Article 1 |
DEFINITIONS AND INCORPORATION BY REFERENCE |
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1 |
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SECTION 1.01. |
Definitions |
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1 |
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SECTION 1.02. |
Other Definitions |
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33 |
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SECTION 1.03. |
Incorporation by Reference of Trust Indenture Act |
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34 |
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SECTION 1.04. |
Rules of Construction |
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35 |
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Article 2 |
THE SECURITIES |
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36 |
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SECTION 2.01. |
Amount of Securities |
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36 |
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SECTION 2.02. |
Form and Dating |
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37 |
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SECTION 2.03. |
Execution and Authentication |
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37 |
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SECTION 2.04. |
Registrar and Paying Agent |
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38 |
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SECTION 2.05. |
Paying Agent to Hold Money in Trust |
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38 |
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SECTION 2.06. |
Holder Lists |
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39 |
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SECTION 2.07. |
Transfer and Exchange |
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39 |
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SECTION 2.08. |
Replacement Securities |
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39 |
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SECTION 2.09. |
Outstanding Securities |
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40 |
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SECTION 2.10. |
Temporary Securities |
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40 |
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SECTION 2.11. |
Cancellation |
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41 |
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SECTION 2.12. |
Defaulted Interest |
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41 |
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SECTION 2.13. |
CUSIP Numbers, ISINs, etc |
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41 |
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SECTION 2.14. |
Calculation of Principal Amount of Securities |
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41 |
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Article 3 |
REDEMPTION |
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42 |
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SECTION 3.01. |
Redemption |
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42 |
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SECTION 3.02. |
Applicability of Article |
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42 |
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SECTION 3.03. |
Notices to Trustee |
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42 |
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SECTION 3.04. |
Selection of Securities to Be Redeemed |
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42 |
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SECTION 3.05. |
Notice of Optional Redemption |
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42 |
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SECTION 3.06. |
Effect of Notice of Redemption |
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43 |
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SECTION 3.07. |
Deposit of Redemption Price |
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43 |
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SECTION 3.08. |
Securities Redeemed in Part |
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44 |
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Article 4 |
COVENANTS |
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44 |
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i
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SECTION 4.01. |
Payment of Securities |
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44 |
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SECTION 4.02. |
Reports and Other Information |
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44 |
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SECTION 4.03. |
Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock |
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46 |
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SECTION 4.04. |
Limitation on Restricted Payments |
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51 |
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SECTION 4.05. |
Dividend and Other Payment Restrictions Affecting Subsidiaries |
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56 |
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SECTION 4.06. |
Asset Sales |
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58 |
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SECTION 4.07. |
Transactions with Affiliates |
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61 |
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SECTION 4.08. |
Change of Control |
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64 |
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SECTION 4.09. |
Compliance Certificate |
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66 |
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SECTION 4.10. |
Further Instruments and Acts |
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66 |
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SECTION 4.11. |
Future Guarantors |
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66 |
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SECTION 4.12. |
Liens |
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67 |
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SECTION 4.13. |
Limitation on Other Senior Subordinated Indebtedness |
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67 |
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SECTION 4.14. |
Maintenance of Office or Agency |
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67 |
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Article 5 |
SUCCESSOR COMPANY |
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67 |
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SECTION 5.01. |
When Company May Merge or Transfer Assets |
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67 |
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Article 6 |
DEFAULTS AND REMEDIES |
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71 |
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SECTION 6.01. |
Events of Default |
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71 |
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SECTION 6.02. |
Acceleration |
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72 |
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SECTION 6.03. |
Other Remedies |
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73 |
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SECTION 6.04. |
Waiver of Past Defaults |
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73 |
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SECTION 6.05. |
Control by Majority |
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73 |
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SECTION 6.06. |
Limitation on Suits |
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74 |
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SECTION 6.07. |
Rights of the Holders to Receive Payment |
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74 |
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SECTION 6.08. |
Collection Suit by Trustee |
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74 |
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SECTION 6.09. |
Trustee May File Proofs of Claim |
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74 |
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SECTION 6.10. |
Priorities |
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75 |
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SECTION 6.11. |
Undertaking for Costs |
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75 |
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SECTION 6.12. |
Waiver of Stay or Extension Laws |
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75 |
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Article 7 |
TRUSTEE |
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76 |
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ii
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SECTION 7.01. |
Duties of Trustee |
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76 |
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SECTION 7.02. |
Rights of Trustee |
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77 |
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SECTION 7.03. |
Individual Rights of Trustee |
|
78 |
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SECTION 7.04. |
Trustee’s Disclaimer |
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78 |
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SECTION 7.05. |
Notice of Defaults |
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78 |
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SECTION 7.06. |
Reports by Trustee to the Holders |
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78 |
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SECTION 7.07. |
Compensation and Indemnity |
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79 |
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SECTION 7.08. |
Replacement of Trustee |
|
80 |
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SECTION 7.09. |
Successor Trustee by Merger |
|
81 |
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SECTION 7.10. |
Eligibility; Disqualification |
|
81 |
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SECTION 7.11. |
Preferential Collection of Claims Against the Issuers |
|
81 |
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Article 8 |
DISCHARGE OF INDENTURE; DEFEASANCE |
|
81 |
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SECTION 8.01. |
Discharge of Liability on Securities; Defeasance |
|
81 |
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SECTION 8.02. |
Conditions to Defeasance |
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83 |
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SECTION 8.03. |
Application of Trust Money |
|
84 |
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SECTION 8.04. |
Repayment to Company |
|
84 |
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SECTION 8.05. |
Indemnity for Government Obligations |
|
84 |
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SECTION 8.06. |
Reinstatement |
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84 |
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Article 9 |
AMENDMENTS AND WAIVERS |
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85 |
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SECTION 9.01. |
Without Consent of the Holders |
|
85 |
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SECTION 9.02. |
With Consent of the Holders |
|
86 |
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SECTION 9.03. |
Compliance with Trust Indenture Act |
|
87 |
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SECTION 9.04. |
Revocation and Effect of Consents and Waivers |
|
87 |
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SECTION 9.05. |
Notation on or Exchange of Securities |
|
87 |
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SECTION 9.06. |
Trustee to Sign Amendments |
|
88 |
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SECTION 9.07. |
Payment for Consent |
|
88 |
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SECTION 9.08. |
Additional Voting Terms; Calculation of Principal Amount |
|
88 |
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|
Article 10 |
SUBORDINATION OF THE SECURITIES |
|
88 |
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|
SECTION 10.01. |
Agreement to Subordinate |
|
88 |
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SECTION 10.02. |
Liquidation, Dissolution, Bankruptcy |
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88 |
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SECTION 10.03. |
Default on Designated Senior Indebtedness |
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88 |
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iii
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SECTION 10.04. |
Acceleration of Payment of Securities |
|
88 |
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SECTION 10.05. |
When Distribution Must Be Paid Over |
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88 |
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SECTION 10.06. |
Subrogation |
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88 |
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SECTION 10.07. |
Relative Rights |
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88 |
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SECTION 10.08. |
Subordination May Not Be Impaired by Company |
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88 |
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SECTION 10.09. |
Rights of Trustee and Paying Agent |
|
88 |
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SECTION 10.10. |
Distribution or Notice to Representative |
|
88 |
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SECTION 10.11. |
Article 10 Not to Prevent Events of Default or Limit Right to Accelerate |
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89 |
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SECTION 10.12. |
Trust Monies Not Subordinated |
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89 |
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SECTION 10.13. |
Trustee Entitled to Rely |
|
89 |
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SECTION 10.14. |
Trustee to Effectuate Subordination |
|
89 |
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SECTION 10.15. |
Trustee Not Fiduciary for Holders of Senior Indebtedness |
|
89 |
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SECTION 10.16. |
Reliance by Holders of Senior Indebtedness on Subordination Provisions |
|
89 |
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Article 11 |
GUARANTEES |
|
89 |
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|
SECTION 11.01. |
Guarantees |
|
89 |
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SECTION 11.02. |
Limitation on Liability |
|
91 |
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SECTION 11.03. |
Successors and Assigns |
|
92 |
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|
SECTION 11.04. |
No Waiver |
|
92 |
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SECTION 11.05. |
Modification |
|
92 |
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SECTION 11.06. |
Execution of Supplemental Indenture for Future Guarantors |
|
92 |
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SECTION 11.07. |
Non-Impairment |
|
93 |
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Article 12 |
SUBORDINATION OF THE GUARANTEES |
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93 |
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SECTION 12.01. |
Agreement to Subordinate |
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93 |
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SECTION 12.02. |
Liquidation, Dissolution, Bankruptcy |
|
93 |
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SECTION 12.03. |
Default on Designated Senior Indebtedness of a Guarantor |
|
93 |
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SECTION 12.04. |
Demand for Payment |
|
93 |
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SECTION 12.05. |
When Distribution Must Be Paid Over |
|
93 |
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SECTION 12.06. |
Subrogation |
|
93 |
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SECTION 12.07. |
Relative Rights |
|
93 |
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SECTION 12.08. |
Subordination May Not Be Impaired by a Guarantor |
|
93 |
|
iv
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SECTION 12.09. |
Rights of Trustee and Paying Agent |
|
93 |
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SECTION 12.10. |
Distribution or Notice to Representative |
|
93 |
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SECTION 12.11. |
Article 12 Not to Prevent Events of Default or Limit Right to Accelerate |
|
93 |
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SECTION 12.12. |
Trustee Entitled to Rely |
|
93 |
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|
SECTION 12.13. |
Trustee to Effectuate Subordination |
|
93 |
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|
SECTION 12.14. |
Trustee Not Fiduciary for Holders of Senior Indebtedness of a Guarantor |
|
94 |
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|
SECTION 12.15. |
Reliance by Holders of Senior Indebtedness of a Guarantor on Subordination Provisions |
|
94 |
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|
SECTION 12.16. |
Trust Monies Not Subordinated |
|
94 |
|
|
Article 13 |
MISCELLANEOUS |
|
94 |
|
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|
SECTION 13.01. |
Trust Indenture Act Controls |
|
94 |
|
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|
SECTION 13.02. |
Notices |
|
94 |
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|
SECTION 13.03. |
Communication by the Holders with Other Holders |
|
95 |
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|
SECTION 13.04. |
Certificate and Opinion as to Conditions Precedent |
|
95 |
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|
SECTION 13.05. |
Statements Required in Certificate or Opinion |
|
95 |
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|
SECTION 13.06. |
When Securities Disregarded |
|
95 |
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|
SECTION 13.07. |
Rules by Trustee, Paying Agent and Registrar |
|
96 |
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SECTION 13.08. |
Legal Holidays |
|
96 |
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|
SECTION 13.09. |
GOVERNING LAW |
|
96 |
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|
SECTION 13.10. |
No Recourse Against Others |
|
96 |
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|
SECTION 13.11. |
Successors |
|
96 |
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|
SECTION 13.12. |
Multiple Originals |
|
96 |
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|
SECTION 13.13. |
Table of Contents; Headings |
|
96 |
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SECTION 13.14. |
Indenture Controls |
|
96 |
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SECTION 13.15. |
Severability |
|
96 |
|
v
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|
— |
|
Provisions Relating to Initial Securities, Additional Securities and Exchange Securities |
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|
EXHIBIT INDEX |
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Exhibit A |
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— |
|
Initial Security |
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Exhibit B |
|
— |
|
Exchange Security |
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Exhibit C |
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— |
|
Form of Transferee Letter of Representation |
|
Exhibit D |
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— |
|
Form of Supplemental Indenture |
vi
CROSS-REFERENCE TABLE
|
TIA
|
|
Indenture
|
|
|
310 |
(a)(1) |
|
7.10 |
|
|
(a)(2) |
|
7.10 |
|
|
(a)(3) |
|
N.A. |
|
|
(a)(4) |
|
N.A. |
|
|
(b) |
|
7.08; 7.10 |
|
|
(c) |
|
N.A. |
|
311 |
(a) |
|
7.11 |
|
|
(b) |
|
7.11 |
|
|
(c) |
|
N.A. |
|
312 |
(a) |
|
2.06 |
|
|
(b) |
|
13.03 |
|
|
(c) |
|
13.03 |
|
313 |
(a) |
|
7.06 |
|
|
(b)(1) |
|
N.A. |
|
|
(b)(2) |
|
7.06 |
|
|
(c) |
|
7.06 |
|
|
(d) |
|
4.02; 4.09 |
|
314 |
(a) |
|
4.02; 4.09 |
|
|
(b) |
|
N.A. |
|
|
(c)(1) |
|
13.04 |
|
|
(c)(2) |
|
13.04 |
|
|
(c)(3) |
|
N.A. |
|
|
(d) |
|
N.A. |
|
|
(e) |
|
13.05 |
|
|
(f) |
|
4.10 |
|
315 |
(a) |
|
7.01 |
|
|
(b) |
|
7.05 |
|
|
(c) |
|
7.01 |
|
|
(d) |
|
7.01 |
|
|
(e) |
|
6.11 |
|
316 |
(a)(last sentence) |
|
13.06 |
|
|
(a)(1)(A) |
|
6.05 |
|
|
(a)(1)(B) |
|
6.04 |
|
|
(a)(2) |
|
N.A. |
|
|
(b) |
|
6.07 |
|
317 |
(a)(1) |
|
6.08 |
|
|
(a)(2) |
|
6.09 |
|
|
(b) |
|
2.05 |
|
318 |
(a) |
|
13.01 |
|
|
|
|
|
N.A. Means Not Applicable.
Note: This Cross-Reference Table shall not, for any purposes, be deemed to be part of this Indenture.
vii
INDENTURE dated as of July 21, 2006 among CHASE MERGER SUB, INC. , a Delaware corporation (“Merger Sub”), the Guarantors (as defined herein), WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as trustee (the “Trustee”), and, upon execution and delivery of a supplemental indenture, RBS GLOBAL, INC. , a Delaware corporation (the “Company”) and REXNORD CORPORATION , a Delaware corporation (“Rexnord”).
Each party agrees as follows for the benefit of the other parties and for the equal and ratable benefit of the Holders of (a) $485,000,000 aggregate principal amount of the Issuers’ 9½% Senior Notes due 2014 (the “Original Securities”) issued on the date hereof, (b) any Additional Securities (as defined herein) that may be issued after the date hereof in the form of Exhibit A (all such securities in clauses (a) and (b) being referred to collectively as the “Initial Securities”) and (c) if and when issued as provided in the Registration Agreement (as defined in Appendix A hereto (the “Appendix”)) or otherwise registered under the Securities Act and issued, the Issuers’ 9½% Senior Notes due 2014 (the “Exchange Securities” and, together with the Initial Securities, the “Securities”) issued in the Registered Exchange Offer (as defined in the Appendix) in exchange for any Initial Securities or otherwise registered under the Securities Act and issued in the form of Exhibit B. Subject to the conditions and compliance with the covenants set forth herein, the Issuers may issue an unlimited aggregate principal amount of Additional Securities.
SECTION 1.01. Definitions .
“Acquired Indebtedness” means, with respect to any specified Person:
“Acquisition” means the acquisition by Affiliates of the Sponsors of substantially all of the outstanding shares of capital stock of the Company pursuant to the terms of the Merger Agreement.
“Acquisition Documents” means the Merger Agreement and any other document entered into in connection therewith, in each case as amended, supplemented or modified from time to time prior to the Issue Date or thereafter (so long as any amendment, supplement or modification after the Issue Date, together with all other amendments, supplements and modifications after the Issue Date, taken as a whole, is not more disadvantageous to the holders of the Securities in any material respect than the Acquisition Documents as in effect on the Issue Date).
“Additional Securities” means 9½% Senior Notes due 2014 issued under the terms of this Indenture subsequent to the Issue Date.
“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, means 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.
“Applicable Premium” means, with respect to any Security on any applicable redemption date, the greater of:
(a) the present value at such redemption date of (i) the redemption price of the Security, at August 1, 2010 as set forth in Paragraph 5 of the applicable Security plus (ii) all required interest payments due on such Security through August 1, 2010 (excluding accrued but unpaid interest), computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points; over
(b) the then outstanding principal amount of the Security.
“Asset Sale” means:
(1) the sale, conveyance, transfer or other disposition (whether in a single transaction or a series of related transactions) of property or assets (including by way of a Sale/Leaseback Transaction) outside the ordinary course of business of the Company or any Restricted Subsidiary of the Company (each referred to in this definition as a “disposition”) or
(2) the issuance or sale of Equity Interests (other than directors’ qualifying shares and shares issued to foreign nationals or other third parties to the extent required by applicable law) of any Restricted Subsidiary (other than to the Company or another Restricted Subsidiary of the Company) (whether in a single transaction or a series of related transactions),
in each case other than:
(a) a disposition of Cash Equivalents or Investment Grade Securities or obsolete or worn out property or equipment in the ordinary course of business;
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(b) the disposition of all or substantially all of the assets of the Company in a manner permitted pursuant to Section 5.01 or any disposition that constitutes a Change of Control;
(c) any Restricted Payment or Permitted Investment that is permitted to be made, and is made, under Section 4.04;
(d) any disposition of assets or issuance or sale of Equity Interests of any Restricted Subsidiary, which assets or Equity Interests so disposed or issued have an aggregate Fair Market Value of less than $7.5 million;
(e) any disposition of property or assets, or the issuance of securities, by a Restricted Subsidiary of the Company to the Company or by the Company or a Restricted Subsidiary of the Company to a Restricted Subsidiary of the Company;
(f) any exchange of assets (including a combination of assets and Cash Equivalents) for assets related to a Similar Business of comparable or greater market value or usefulness to the business of the Company and its Restricted Subsidiaries as a whole, as determined in good faith by the Issuers, which in the event of an exchange of assets with a Fair Market Value in excess of (A) $7.5 million shall be evidenced by an Officers’ Certificate, and (B) $15 million shall be set forth in a resolution approved in good faith by at least a majority of the Board of Directors of the Company;
(g) foreclosure on assets of the Company or any of its Restricted Subsidiaries;
(h) any sale of Equity Interests in, or Indebtedness or other securities of, an Unrestricted Subsidiary;
(i) the lease, assignment or sublease of any real or personal property in the ordinary course of business;
(j) any sale of inventory or other assets in the ordinary course of business;
(k) any grant in the ordinary course of business of any license of patents, trademarks, know-how or any other intellectual property;
(l) a transfer of accounts receivable and related assets of the type specified in the definition of “Receivables Financing” (or a fractional undivided interest therein) by a Receivables Subsidiary in a Qualified Receivables Financing;
(m) the sale of any property in a Sale/Leaseback Transaction within six months of the acquisition of such property; and
(n) the conversion of Rexnord into a Delaware limited liability company.
“Bank Indebtedness” means any and all amounts payable under or in respect of the Credit Agreement and the other Credit Agreement Documents as amended, restated, supplemented, waived, replaced, restructured, repaid, refunded, refinanced or otherwise modified
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from time to time (including after termination of the Credit Agreement), including principal, premium (if any), interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to either of the Issuers whether or not a claim for post-filing interest is allowed in such proceedings), fees, charges, expenses, reimbursement obligations, guarantees and all other amounts payable thereunder or in respect thereof.
“Board of Directors” means, as to any Person, the board of directors or managers, as applicable, of such Person (or, if such Person is a partnership, the board of directors or other governing body of the general partner of such Person) or any duly authorized committee thereof.
“Business Day” means a day other than a Saturday, Sunday or other day on which banking institutions are authorized or required by law to close in New York City or the city in which the Trustee’s principal office is located.
“Capital Stock” means:
(1) in the case of a corporation, corporate stock or shares;
(2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;
(3) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and
(4) 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.
“Capitalized 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 and reflected as a liability on a balance sheet (excluding the footnotes thereto) in accordance with GAAP.
“Cash Contribution Amount” means the aggregate amount of cash contributions made to the capital of the Company described in the definition of “Contribution Indebtedness.”
“Cash Equivalents” means:
(1) U.S. Dollars, pounds sterling, euros, the national currency of any member state in the European Union or, in the case of any Foreign Subsidiary that is a Restricted Subsidiary, such local currencies held by it from time to time in the ordinary course of business;
(2) securities issued or directly and fully guaranteed or insured by the U.S. government or any country that is a member of the European Union or any agency or instrumentality thereof in each case maturing, not more than two years from the date of acquisition;
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(3) certificates of deposit, time deposits and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers’ acceptances, in each case with maturities not exceeding one year and overnight bank deposits, in each case with any commercial bank having capital and surplus in excess of $250 million and whose long-term debt is rated “A” or the equivalent thereof by Moody’s or S&P (or reasonably equivalent ratings of another internationally recognized ratings agency);
(4) repurchase obligations for underlying securities of the types described in clauses (2) and (3) above entered into with any financial institution meeting the qualifications specified in clause (3) above;
(5) commercial paper issued by a corporation (other than an Affiliate of the Company) rated at least “A-1” or the equivalent thereof by Moody’s or S&P (or reasonably equivalent ratings of another internationally recognized ratings agency) and in each case maturing within one year after the date of acquisition;
(6) readily marketable direct obligations issued by any state of the United States of America or any political subdivision thereof having one of the two highest rating categories obtainable from either Moody’s or S&P (or reasonably equivalent ratings of another internationally recognized ratings agency) in each case with maturities not exceeding two years from the date of acquisition;
(7) Indebtedness issued by Persons (other than the Sponsors or any of their Affiliates) with a rating of “A” or higher from S&P or “A-2” or higher from Moody’s in each case with maturities not exceeding two years from the date of acquisition; and
(8) investment funds investing at least 95% of their assets in securities of the types described in clauses (1) through (7) above.
“Change of Control” means the occurrence of any of the following events:
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“Code” means the Internal Revenue Code of 1986, as amended.
“Company” means the party named as such in the Preamble to this Indenture until a successor replaces it and, thereafter, means the successor and, for purposes of any provision contained herein and required by the TIA, each other obligor on the Securities.
“consolidated” means, with respect to any Person, such Person consolidated with its Restricted Subsidiaries, and shall not include any Unrestricted Subsidiary, but the interest of such Person in an Unrestricted Subsidiary shall be accounted for as an Investment.
“Consolidated Interest Expense” means, with respect to any Person for any period, the sum, without duplication, of:
(1) consolidated interest expense of such Person and its Restricted Subsidiaries for such period, to the extent such expense was deducted in computing Consolidated Net Income (including amortization of original issue discount, the interest component of Capitalized Lease Obligations, and net payments and receipts (if any) pursuant to interest rate Hedging Obligations and excluding amortization of deferred financing fees and expensing of any bridge or other financing fees); plus
(2) consolidated capitalized interest of such Person and its Restricted Subsidiaries for such period, whether paid or accrued; plus
(3) commissions, discounts, yield and other fees and charges Incurred in connection with any Receivables Financing which are payable to Persons other than the Company and its Restricted Subsidiaries; minus
(4) interest income for such period.
“Consolidated Net Income” means, with respect to any Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis; provided , however , that:
(1) any net after-tax extraordinary, nonrecurring or unusual gains or losses or income, expenses or charges (less all fees and expenses relating thereto), including, without limitation, any severance expenses, and fees, expenses or charges related to any Equity Offering, Permitted Investment, acquisition or Indebtedness permitted to be Incurred by this Indenture (in each case, whether or not successful), including any such
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fees, expenses, charges or change in control payments made under the Acquisition Documents or otherwise related to the Transactions, in each case, shall be excluded;
(2) any increase in amortization or depreciation or any one-time non-cash charges increases or reductions in Net Income, in each case resulting from purchase accounting in connection with the Transactions or any acquisition that is consummated after the Issue Date shall be excluded;
(3) the Net Income for such period shall not include the cumulative effect of a change in accounting principles during such period;
(4) any net after-tax income or loss from discontinued operations and any net after-tax gains or losses on disposal of discontinued operations shall be excluded;
(5) any net after-tax gains or losses (less all fees and expenses or charges relating thereto) attributable to business dispositions or asset dispositions other than in the ordinary course of business (as determined in good faith by the Board of Directors of the Company) shall be excluded;
(6) any net after-tax gains or losses (less all fees and expenses or charges relating thereto) attributable to the early extinguishment of indebtedness shall be excluded;
(7) the Net Income for such period of any Person that is not a Subsidiary of such Person, or is an Unrestricted Subsidiary, or that is accounted for by the equity method of accounting, shall be included only to the extent of the amount of dividends or distributions or other payments paid in cash (or to the extent converted into cash) to the referent Person or a Restricted Subsidiary thereof in respect of such period;
(8) solely for the purpose of determining the amount available for Restricted Payments under clause (1) of the definition of Cumulative Credit, the Net Income for such period of any Restricted Subsidiary (other than any Guarantor) shall be excluded to the extent that the declaration or payment of dividends or similar distributions by such Restricted Subsidiary of its Net Income is not at the date of determination permitted without any prior governmental approval (which has not been obtained) or, directly or indirectly, by the operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders, unless such restrictions with respect to the payment of dividends or similar distributions have been legally waived; provided that the Consolidated Net Income of such Person shall be increased by the amount of dividends or other distributions or other payments actually paid in cash (or converted into cash) by any such Restricted Subsidiary to such Person, to the extent not already included therein;
(9) an amount equal to the amount of Tax Distributions actually made to any parent of such Person in respect of such period in accordance with Section 4.04(b)(xii) shall be included as though such amounts had been paid as income taxes directly by such Person for such period;
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(10) any non-cash impairment charges resulting from the application of Statement of Financial Accounting Standards (“SFAS”) Nos. 142 and 144 and the amortization of intangibles arising pursuant to SFAS No. 141 shall be excluded;
(11) any non-cash expense realized or resulting from employee benefit plans or post-employment benefit plans, grants of stock appreciation or similar rights, stock options or other rights to officers, directors and employees of such Person or any of its Restricted Subsidiaries shall be excluded;
(12) any (a) severance or relocation costs or expenses, (b) one-time non-cash compensation charges, (c) the costs and expenses after the Issue Date related to employment of terminated employees, (d) costs or expenses realized in connection with, resulting from or in anticipation of the Transactions or (e) costs or expenses realized in connection with or resulting from stock appreciation or similar rights, stock options or other rights existing on the Issue Date of officers, directors and employees, in each case of such Person or any of its Restricted Subsidiaries, shall be excluded;
(13) accruals and reserves that are established within 12 months after the Issue Date and that are so required to be established in accordance with GAAP shall be excluded;
(14) solely for purposes of calculating EBITDA, (a) the Net Income of any Person and its Restricted Subsidiaries shall be calculated without deducting the income attributable to, or adding the losses attributable to, the minority equity interests of third parties in any non-wholly-owned Restricted Subsidiary except to the extent of dividends declared or paid in respect of such period or any prior period on the shares of Capital Stock of such Restricted Subsidiary held by such third parties and (b) any ordinary course dividend, distribution or other payment paid in cash and received from any Person in excess of amounts included in clause (7) above shall be included;
(15) (a)(i) the non-cash portion of “straight-line” rent expense shall be excluded and (ii) the cash portion of “straight-line” rent expense which exceeds the amount expensed in respect of such rent expense shall be included and (b) non-cash gains, losses, income and expenses resulting from fair value accounting required by Statement of Financial Accounting Standards No. 133 shall be excluded;
(16) unrealized gains and losses relating to hedging transactions and mark-to-market of Indebtedness denominated in foreign currencies resulting from the applications of Financial Accounting Standards 52 shall be excluded; and
(17) solely for the purpose of calculating Restricted Payments, the difference, if positive, of the Consolidated Taxes of the Company calculated in accordance with GAAP and the actual Consolidated Taxes paid in cash by the Company during any Reference Period shall be included.
Notwithstanding the foregoing, for the purpose of Section 4.04 only, there shall be excluded from Consolidated Net Income any dividends, repayments of loans or advances or other transfers of assets from Unrestricted Subsidiaries of the Company or a Restricted
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Subsidiary of the Company to the extent such dividends, repayments or transfers increase the amount of Restricted Payments permitted under clauses (D) and (E) of the definition of “Cumulative Credit.”
“Consolidated Non-cash Charges” means, with respect to any Person for any period, the aggregate depreciation, amortization and other non-cash expenses of such Person and its Restricted Subsidiaries reducing Consolidated Net Income of such Person for such period on a consolidated basis and otherwise determined in accordance with GAAP, but excluding any such charge which consists of or requires an accrual of, or cash reserve for, anticipated cash charges for any future period.
“Consolidated Taxes” means provision for taxes based on income, profits or capital, including, without limitation, state, franchise and similar taxes and any Tax Distributions taken into account in calculating Consolidated Net Income.
“Contingent Obligations” means, with respect to any Person, any obligation of such Person guaranteeing any leases, dividends or other obligations that do not constitute Indebtedness (“primary obligations”) of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including, without limitation, any obligation of such Person, whether or not contingent:
(1) to purchase any such primary obligation or any property constituting direct or indirect security therefor,
(2) to advance or supply funds:
(a) for the purchase or payment of any such primary obligation; or
(b) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor; or
(3) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation against loss in respect thereof.
“Contribution Indebtedness” means Indebtedness of the Company or any Guarantor in an aggregate principal amount not greater than twice the aggregate amount of cash contributions (other than Excluded Contributions) made to the capital of the Company or any Guarantor after the Issue Date; provided that:
(1) such cash contributions have not been used to make a Restricted Payment,
(2) if the aggregate principal amount of such Contribution Indebtedness is greater than the aggregate amount of such cash contributions to the capital of the Company or any Guarantor, as the case may be, the amount in excess shall be Indebtedness (other than Secured Indebtedness) with a Stated Maturity later than the Stated Maturity of the Securities, and
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(3) such Contribution Indebtedness (a) is Incurred within 180 days after the making of such cash contributions and (b) is so designated as Contribution Indebtedness pursuant to an Officers’ Certificate on the Incurrence date thereof.
“Credit Agreement” means (i) the credit agreement entered into in connection with, and on or prior to, the consummation of the Acquisition, as amended, restated, supplemented, waived, replaced (whether or not upon termination, and whether with the original lenders or otherwise), restructured, repaid, refunded, refinanced or otherwise modified from time to time, including any agreement or indenture extending the maturity thereof, refinancing, replacing or otherwise restructuring all or any portion of the Indebtedness under such agreement or agreements or indenture or indentures or any successor or replacement agreement or agreements or indenture or indentures or increasing the amount loaned or issued thereunder or altering the maturity thereof, among the Issuers, the guarantors named therein, the financial institutions named therein, and Merrill Lynch Capital Corporation, as Administrative Agent, and (ii) whether or not the credit agreement referred to in clause (i) remains outstanding, if designated by the Company to be included in the definition of “Credit Agreement,” one or more (A) debt facilities or commercial paper facilities, providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to lenders or to special purpose entities formed to borrow from lenders against such receivables) or letters of credit, (B) debt securities, indentures or other forms of debt financing (including convertible or exchangeable debt instruments or bank guarantees or bankers’ acceptances), or (C) instruments or agreements evidencing any other Indebtedness, in each case, with the same or different borrowers or issuers and, in each case, as amended, supplemented, modified, extended, restructured, renewed, refinanced, restated, replaced or refunded in whole or in part from time to time.
“Credit Agreement Documents” means the Credit Agreement, any notes issued pursuant thereto and the guarantees thereof, and the collateral documents relating thereto, as amended, supplemented, restated, renewed, refunded, replaced, restructured, repaid, refinanced or otherwise modified from time to time.
“Cumulative Credit” means the sum of (without duplication):
(A) 50% of the Consolidated Net Income of the Company for the period (taken as one accounting period, the “Reference Period”) from July 1, 2006 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, in the case such Consolidated Net Income for such period is a deficit, minus 100% of such deficit), plus
(B) 100% of the aggregate net proceeds, including cash and the Fair Market Value (as determined in accordance with the next succeeding sentence) of property other than cash, received by the Company after the Issue Date from the issue or sale of Equity Interests of the Company (excluding Refunding Capital Stock, Designated Preferred Stock, Excluded Contributions, Disqualified Stock and the Cash Contribution Amount), including Equity Interests issued upon conversion of Indebtedness or Disqualified Stock or upon exercise of warrants or options (other than an issuance or sale to a Restricted Subsidiary of the Company or an employee stock ownership plan or trust established by the Company or any of its Subsidiaries), plus
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(C) 100% of the aggregate amount of contributions to the capital of the Company received in cash and the Fair Market Value (as determined in accordance with the next succeeding sentence) of property other than cash after the Issue Date (other than Excluded Contributions, Refunding Capital Stock, Designated Preferred Stock, Disqualified Stock and the Cash Contribution Amount), plus
(D) the principal amount of any Indebtedness, or the liquidation preference or maximum fixed repurchase price, as the case may be, of any Disqualified Stock of the Company or any Restricted Subsidiary thereof issued after the Issue Date (other than Indebtedness or Disqualified Stock issued to a Restricted Subsidiary) which has been converted into or exchanged for Equity Interests in the Company (other than Disqualified Stock) or any direct or indirect parent of the Company (provided in the case of any parent, such Indebtedness or Disqualified Stock is retired or extinguished), plus
(E) 100% of the aggregate amount received by the Company or any Restricted Subsidiary in cash and the Fair Market Value (as determined in accordance with the next succeeding sentence) of property other than cash received by the Company or any Restricted Subsidiary from:
(I) the sale or other disposition (other than to the Company or a Restricted Subsidiary of the Company) of Restricted Investments made by the Company and its Restricted Subsidiaries and from repurchases and redemptions of such Restricted Investments from the Company and its Restricted Subsidiaries by any Person (other than the Company or any of its Restricted Subsidiaries) and from repayments of loans or advances which constituted Restricted Investments (other than in each case to the extent that the Restricted Investment was made pursuant to clause (vii) or (x) of Section 4.04(b)),
(II) the sale (other than to the Company or a Restricted Subsidiary of the Company) of the Capital Stock of an Unrestricted Subsidiary, or
(III) a distribution or dividend from an Unrestricted Subsidiary, plus
(F) in the event any Unrestricted Subsidiary of the Company has been redesignated as a Restricted Subsidiary or has been merged, consolidated or amalgamated with or into, or transfers or conveys its assets to, or is liquidated into, the Company or a Restricted Subsidiary of the Company, the Fair Market Value (as determined in accordance with the next succeeding sentence) of the Investment of the Company in such Unrestricted Subsidiary at the time of such redesignation, combination or transfer (or of the assets transferred or conveyed, as applicable), after taking into account any Indebtedness associated with the Unrestricted Subsidiary so designated or combined or any Indebtedness associated with the assets so transferred or conveyed (other than in each case to the extent that the designation of such Subsidiary as an Unrestricted Subsidiary was made pursuant to clause (vii) or (x) of Section 4.04(b) or constituted a Permitted Investment).
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The Fair Market Value of property other than cash covered by clauses (B), (C), (D), (E) and (F) of this definition of “Cumulative Credit” shall be determined in good faith by the Company and
(x) in the event of property with a Fair Market Value in excess of $7.5 million, shall be set forth in an Officers’ Certificate or
(y) in the event of property with a Fair Market Value in excess of $15 million, shall be set forth in a resolution approved by at least a majority of the Board of Directors of the Company.
“Default” means any event which is, or after notice or passage of time or both would be, an Event of Default.
“Designated Non-cash Consideration” means the Fair Market Value of non-cash consideration received by the Company or one of its Restricted Subsidiaries in connection with an Asset Sale that is so designated as Designated Non-cash Consideration pursuant to an Officers’ Certificate, setting forth the basis of such valuation, less the amount of Cash Equivalents received in connection with a subsequent sale of such Designated Non-cash Consideration.
“Designated Preferred Stock” means Preferred Stock of the Company or any direct or indirect parent of the Company, as applicable (other than Disqualified Stock), that is issued for cash (other than to the Company or any of its Subsidiaries or an employee stock ownership plan or trust established by the Company or any of its Subsidiaries) and is so designated as Designated Preferred Stock, pursuant to an Officers’ Certificate, on the issuance date thereof.
“Disqualified Stock” means, with respect to any Person, any Capital Stock of such Person which, by its terms (or by the terms of any security into which it is convertible or for which it is redeemable or exchangeable), or upon the happening of any event:
(1) matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise (other than as a result of a change of control or asset sale; provided that the relevant asset sale or change of control provisions, taken as a whole, are no more favorable in any material respect to holders of such Capital Stock than the asset sale and change of control provisions applicable to the Securities and any purchase requirement triggered thereby may not become operative until compliance with the asset sale and change of control provisions applicable to the Securities (including the purchase of any Securities tendered pursuant thereto)),
(2) is convertible or exchangeable for Indebtedness or Disqualified Stock of such Person, or
(3) is redeemable at the option of the holder thereof, in whole or in part,
in each case prior to 91 days after the maturity date of the Securities; provided , however , that only the portion of Capital Stock which so matures or is mandatorily redeemable, is so convertible or exchangeable or is so redeemable at the option of the holder thereof prior to such
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date shall be deemed to be Disqualified Stock; provided , further , however , that if such Capital Stock is issued to any employee or to any plan for the benefit of employees of the Company or its Subsidiaries or by any such plan to such employees, such Capital Stock shall not constitute Disqualified Stock solely because it may be required to be repurchased by the Company in order to satisfy applicable statutory or regulatory obligations or as a result of such employee’s termination, death or disability; provided , further , that any class of Capital Stock of such Person that by its terms authorizes such Person to satisfy its obligations thereunder by delivery of Capital Stock that is not Disqualified Stock shall not be deemed to be Disqualified Stock.
“Domestic Subsidiary” means a Restricted Subsidiary that is not a Foreign Subsidiary.
“EBITDA” means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period plus, without duplication, to the extent the same was deducted in calculating Consolidated Net Income:
(1) Consolidated Taxes; plus
(2) Consolidated Interest Expense; plus
(3) Consolidated Non-cash Charges; plus
(4) business optimization expenses and other restructuring charges or expenses (which, for the avoidance of doubt, shall include, without limitation, the effect of inventory optimization programs, plant closures, retention, systems establishment costs and excess pension charges); provided that with respect to each business optimization expense or other restructuring charge, the Company shall have delivered to the Trustee an Officers’ Certificate specifying and quantifying such expense or charge and stating that such expense or charge is a business optimization expense or other restructuring charge, as the case may be; plus
(5) the amount of management, monitoring, consulting and advisory fees and related expenses paid to the Sponsors (or any accruals relating to such fees and related expenses) during such period pursuant to the terms of the agreements between the Sponsors and the Company and its Subsidiaries as described with particularity in the Offering Circular and as in effect on the Issue Date;
less, without duplication,
(6) non-cash items increasing Consolidated Net Income for such period (excluding the recognition of deferred revenue or any items which represent the reversal of any accrual of, or cash reserve for, anticipated cash charges in any prior period and any items for which cash was received in a prior period).
“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).
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“Equity Offering” means any public or private sale after the Issue Date of common stock or Preferred Stock of the Company or any direct or indirect parent of the Company, as applicable (other than Disqualified Stock), other than:
(1) public offerings with respect to the Company’s or such direct or indirect parent’s common stock registered on Form S-8; and
(2) any such public or private sale that constitutes an Excluded Contribution.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder.
“Exchange Offer Registration Statement” means the registration statement filed with the SEC in connection with the Registered Exchange Offer.
“Excluded Contributions” means the Cash Equivalents or other assets (valued at their Fair Market Value as determined in good faith by senior management or the Board of Directors of the Company) received by the Company after the Issue Date from:
(1) contributions to its common equity capital, and
(2) the sale (other than to a Subsidiary of the Company or to any Subsidiary management equity plan or stock option plan or any other management or employee benefit plan or agreement) of Capital Stock (other than Disqualified Stock and Designated Preferred Stock) of the Company,
in each case designated as Excluded Contributions pursuant to an Officers’ Certificate on or promptly after the date such capital contributions are made or the date such Capital Stock is sold, as the case may be.
“Fair Market Value” means, with respect to any asset or property, the price which could be negotiated in an arm’s-length, free market transaction, for cash, between a willing seller and a willing and able buyer, neither of whom is under undue pressure or compulsion to complete the transaction.
“Fixed Charge Coverage Ratio” means, with respect to any Person for any period, the ratio of EBITDA 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 Restricted Subsidiaries Incurs, repays, repurchases or redeems any Indebtedness (other than in the case of revolving credit borrowings or revolving advances under any Qualified Receivables Financing, in which case interest expense shall be computed based upon the average daily balance of such Indebtedness during the applicable period) or issues, repurchases or redeems Disqualified Stock or Preferred Stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but prior to 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, repayment, repurchase or redemption of Indebtedness, or such issuance, repurchase or redemption of Disqualified Stock or Preferred Stock, as if the same had occurred at the beginning of the applicable four-quarter period.
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For purposes of making the computation referred to above, Investments, acquisitions, dispositions, mergers, consolidations and discontinued operations (as determined in accordance with GAAP), in each case with respect to an operating unit of a business, and any operational changes that the Company or any of its Restricted Subsidiaries has both determined to make and made after the Issue Date and during the four-quarter reference period or subsequent to such reference period and on or prior to or simultaneously with the Calculation Date (each, for purposes of this definition, a “pro forma event”) shall be calculated on a pro forma basis assuming that all such Investments, acquisitions, dispositions, mergers, consolidations (including the Transactions) discontinued operations and operational changes (and the change of any associated fixed charge obligations and the change in EBITDA resulting therefrom) had occurred on the first day of the four-quarter reference period. If since the beginning of such period any Person that subsequently became a Restricted Subsidiary or was merged with or into the Company or any Restricted Subsidiary since the beginning of such period shall have made any Investment, acquisition, disposition, merger, consolidation, discontinued operation or operational change, in each case with respect to an operating unit of a business, that would have required adjustment pursuant to this definition, then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect thereto for such period as if such Investment, acquisition, disposition, discontinued operation, merger, consolidation or operational change had occurred at the beginning of the applicable four-quarter period.
For purposes of this definition, whenever pro forma effect is to be given to any pro forma event, the pro forma calculations shall be made in good faith by a responsible financial or accounting officer of the Company. Any such pro forma calculation may include adjustments appropriate, in the reasonable good faith determination of the Issuers as set forth in an Officers’ Certificate, to reflect (1) operating expense reductions and other operating improvements or synergies reasonably expected to result from the applicable pro forma event (including, to the extent applicable, from the Transactions), and (2) all adjustments of the nature used in connection with the calculation of “Adjusted EBITDA” as set forth in footnote 3 to the “Summary Historical and Unaudited Pro Forma Financial Data” under “Offering Circular Summary” in the Offering Circular to the extent such adjustments, without duplication, continue to be applicable to such four-quarter period.
If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the Calculation Date had been the applicable rate for the entire period (taking into account any Hedging Obligations applicable to such Indebtedness if such Hedging Obligation has a remaining term in excess of 12 months). Interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by a responsible financial or accounting officer of the Company to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with GAAP. For purposes of making the computation referred to above, interest on any Indebtedness under a revolving credit facility computed on a pro forma basis shall be computed based upon the average daily balance of such Indebtedness during the applicable period. Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rate, shall be deemed to have been based upon the rate actually chosen, or, if none, then based upon such optional rate chosen as the Issuers may designate.
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“Fixed Charges” means, with respect to any Person for any period, the sum, without duplication, of:
(1) Consolidated Interest Expense of such Person for such period, and
(2) all cash dividend payments (excluding items eliminated in consolidation) on any series of Preferred Stock or Disqualified Stock of such Person and its Restricted Subsidiaries.
“Foreign Subsidiary” means a Restricted Subsidiary not organized or existing under the laws of the United States of America or any state or territory or the District of Columbia thereof and any direct or indirect subsidiary of such Restricted Subsidiary.
“GAAP” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect on the Issue Date. For the purposes of this Indenture, the term “consolidated” with respect to any Person shall mean such Person consolidated with its Restricted Subsidiaries, and shall not include any Unrestricted Subsidiary, but the interest of such Person in an Unrestricted Subsidiary will be accounted for as an Investment.
“Guarantee” means any guarantee of the obligations of the Company under this Indenture and the Securities by any Person in accordance with the provisions of this Indenture.
“guarantee” means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including, without limitation, letters of credit and reimbursement agreements in respect thereof), of all or any part of any Indebtedness or other obligations.
“Guarantor” means any Person that Incurs a Guarantee; provided that upon the release or discharge of such Person from its Guarantee in accordance with this Indenture, such Person ceases to be a Guarantor.
“Hedging Obligations” means, with respect to any Person, the obligations of such Person under:
(1) currency exchange, interest rate or commodity swap agreements, currency exchange, interest rate or commodity cap agreements and currency exchange, interest rate or commodity collar agreements; and
(2) other agreements or arrangements designed to protect such Person against fluctuations in currency exchange, interest rates or commodity prices.
“Holder” or “Noteholder” means the Person in whose name a Security is registered on the Registrar’s books.
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“Incur” means issue, assume, guarantee, incur or otherwise become liable for; provided , however , that any Indebtedness or Capital Stock of a Person existing at the time such Person becomes a Subsidiary (whether by merger, amalgamation, consolidation, acquisition or otherwise) shall be deemed to be Incurred by such Person at the time it becomes a Subsidiary.
“Indebtedness” means, with respect to any Person:
(1) the principal and premium (if any) of any indebtedness of such Person, whether or not contingent, (a) in respect of borrowed money, (b) evidenced by bonds, notes, debentures or similar instruments or letters of credit or bankers’ acceptances (or, without duplication, reimbursement agreements in respect thereof), (c) representing the deferred and unpaid purchase price of any property, except any such balance that constitutes a trade payable or similar obligation to a trade creditor due within six months from the date on which it is Incurred, in each case Incurred in the ordinary course of business, which purchase price is due more than six months after the date of placing the property in service or taking delivery and title thereto, (d) in respect of Capitalized Lease Obligations, or (e) representing any Hedging Obligations, if and to the extent that any of the foregoing indebtedness (other than letters of credit and Hedging Obligations) would appear as a liability on a balance sheet (excluding the footnotes thereto) of such Person prepared in accordance with GAAP;
(2) to the extent not otherwise included, any obligation of such Person to be liable for, or to pay, as obligor, guarantor or otherwise, on the Indebtedness of another Person (other than by endorsement of negotiable instruments for collection in the ordinary course of business);
(3) to the extent not otherwise included, Indebtedness of another Person secured by a Lien on any asset owned by such Person (whether or not such Indebtedness is assumed by such Person); provided , however , that the amount of such Indebtedness will be the lesser of: (a) the Fair Market Value of such asset at such date of determination, and (b) the amount of such Indebtedness of such other Person; and
(4) to the extent not otherwise included, with respect to the Company and its Restricted Subsidiaries, the amount then outstanding ( i.e. , advanced, and received by, and available for use by, the Company or any of its Restricted Subsidiaries) under any Receivables Financing (as set forth in the books and records of the Company or any Restricted Subsidiary and confirmed by the agent, trustee or other representative of the institution or group providing such Receivables Financing);
provided , however , that notwithstanding the foregoing, Indebtedness shall be deemed not to include (1) Contingent Obligations incurred in the ordinary course of business and not in respect of borrowed money; (2) deferred or prepaid revenues; (3) purchase price holdbacks in respect of a portion of the purchase price of an asset to satisfy warranty or other unperformed obligations of the respective seller; (4) Obligations under or in respect of Qualified Receivables Financing or (5) obligations under the Acquisition Documents.
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Notwithstanding anything in this Indenture to the contrary, Indebtedness shall not include, and shall be calculated without giving effect to, the effects of Statement of Financial Accounting Standards No. 133 and related interpretations to the extent such effects would otherwise increase or decrease an amount of Indebtedness for any purpose under this Indenture as a result of accounting for any embedded derivatives created by the terms of such Indebtedness; and any such amounts that would have constituted Indebtedness under this Indenture but for the application of this sentence shall not be deemed an Incurrence of Indebtedness under this Indenture.
“Indenture” means this Indenture as amended or supplemented from time to time.
“Independent Financial Advisor” means an accounting, appraisal or investment banking firm or consultant, in each case of nationally recognized standing, that is, in the good faith determination of the Company, qualified to perform the task for which it has been engaged.
“Investment Grade Securities” means:
(1) securities issued or directly and fully guaranteed or insured by the U.S. government or any agency or instrumentality thereof (other than Cash Equivalents),
(2) securities that have a rating equal to or higher than Baa3 (or equivalent) by Moody’s or BBB- (or equivalent) by S&P, or an equivalent rating by any other Rating Agency, but excluding any debt securities or loans or advances between and among the Company and its Subsidiaries;
(3) investments in any fund that invests exclusively in investments of the type described in clauses (1) and (2) which fund may also hold immaterial amounts of cash pending investment and/or distribution, and
(4) corresponding instruments in countries other than the United States customarily utilized for high quality investments and in each case with maturities not exceeding two years from the date of acquisition.
“Investments” means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the form of loans (including guarantees), advances or capital contributions (excluding accounts receivable, trade credit and advances to customers and commission, travel and similar advances to officers, employees and consultants made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities issued by any other Person and investments that are required by GAAP to be classified on the balance sheet of the Company in the same manner as the other investments included in this definition to the extent such transactions involve the transfer of cash or other property. For purposes of the definition of “Unrestricted Subsidiary” and Section 4.04:
(1) “Investments” shall include the portion (proportionate to the Company’s equity interest in such Subsidiary) of the Fair Market Value of the net assets of a Subsidiary of the Company at the time that such Subsidiary is designated an Unrestricted Subsidiary; provided , however , that upon a redesignation of such Subsidiary as a
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Restricted Subsidiary, the Company shall be deemed to continue to have a permanent “Investment” in an Unrestricted Subsidiary equal to an amount (if positive) equal to:
(a) the Company’s “Investment” in such Subsidiary at the time of such redesignation less
(b) the portion (proportionate to the Company’s equity interest in such Subsidiary) of the Fair Market Value of the net assets of such Subsidiary at the time of such redesignation; and
(2) any property transferred to or from an Unrestricted Subsidiary shall be valued at its Fair Market Value at the time of such transfer, in each case as determined in good faith by the Board of Directors of the Company.
“Issue Date” means July 21, 2006, the date on which the Original Securities are issued.
“Issuer” or “Issuers” mean (i) Merger Sub only, prior to the merger of Merger Sub with and into the Company pursuant to the Merger Agreement (the “merger”), and (ii) the Company and Rexnord, but not any of their respective Subsidiaries, following the merger.
“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction); provided that in no event shall an operating lease be deemed to constitute a Lien.
“Management Group” means the group consisting of the directors, executive officers and other management personnel of the Company or any direct or indirect parent of the Company, as the case may be, on the Issue Date together with (1) any new directors whose election by such boards of directors or whose nomination for election by the shareholders of the Company or any direct or indirect parent of the Company, as applicable, was approved by a vote of a majority of the directors of the Company or any direct or indirect parent of the Company, as applicable, then still in office who were either directors on the Issue Date or whose election or nomination was previously so approved and (2) executive officers and other management personnel of the Company or any direct or indirect parent of the Company, as applicable, hired at a time when the directors on the Issue Date together with the directors so approved constituted a majority of the directors of the Company or any direct or indirect parent of the Company, as applicable.
“Merger Agreement” means the agreement and plan of merger, dated as of May 24, 2006, by and among Chase Acquisition I, Inc., a Delaware corporation, Merger Sub, the Company and TC Group, L.L.C., a Delaware limited liability company, as amended, supplemented or modified from time to time prior to the Issue Date or thereafter (so long as any amendment, supplement or modification after the Issue Date, together with all other
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amendments, supplements and modifications after the Issue Date, taken as a whole, is not more disadvantageous to the Holders of the Securities in any material respect than the Merger Agreement as in effect on the Issue Date).
“Moody’s” means Moody’s Investors Service, Inc. or any successor to the rating agency business thereof.
“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.
“Net Proceeds” means the aggregate cash proceeds received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received in respect of or upon the sale or other disposition of any Designated Non-cash Consideration received in any Asset Sale and any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise, but only as and when received, but excluding the assumption by the acquiring Person of Indebtedness relating to the disposed assets or other consideration received in any other non-cash form), net of the direct costs relating to such Asset Sale and the sale or disposition of such Designated Non-cash Consideration (including, without limitation, legal, accounting and investment banking fees, and brokerage and sales commissions), and any relocation expenses Incurred as a result thereof, taxes paid or payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements related thereto), amounts required to be applied to the repayment of principal, premium (if any) and interest on Indebtedness required (other than pursuant to Section 4.06(b)(i)) to be paid as a result of such transaction, and any deduction of appropriate amounts to be provided by the Company as a reserve in accordance with GAAP against any liabilities associated with the asset disposed of in such transaction and retained by the Company after such sale or other disposition thereof, including, without limitation, pension and other post-employment benefit liabilities and liabilities related to environmental matters or against any indemnification obligations associated with such transaction.
“Obligations” means any principal, interest, penalties, fees, indemnifications, reimbursements (including, without limitation, reimbursement obligations with respect to letters of credit and bankers’ acceptances), damages and other liabilities payable under the documentation governing any Indebtedness; provided that Obligations with respect to the Securities shall not include fees or indemnifications in favor of the Trustee and other third parties other than the Holders of the Securities.
“Offering Circular” means the offering circular relating to the offering of the Original Securities dated July 14, 2006.
“Officer” means the Chairman of the Board, Chief Executive Officer, Chief Financial Officer, President, any Executive Vice President, Senior Vice President or Vice President, the Treasurer or the Secretary of the Company.
“Officers’ Certificate” means a certificate signed on behalf of the Issuer by two Officers of the Issuer, one of whom must be the principal executive officer, the principal
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financial officer, the treasurer or the principal accounting officer of the Issuer that meets the requirements set forth in this Indenture.
“Opinion of Counsel” means a written opinion from legal counsel who is acceptable to the Trustee. The counsel may be an employee of or counsel to the Company or the Trustee.
“Pari Passu Indebtedness” means:
(1) with respect to the Company, the Securities and any Indebtedness which ranks pari passu in right of payment to the Securities; and
(2) with respect to any Guarantor, its Guarantee and any Indebtedness which ranks pari passu in right of payment to such Guarantor’s Guarantee.
“Permitted Holders” means, at any time, each of (i) the Sponsors and (ii) the Management Group. Any person or group whose acquisition of beneficial ownership constitutes a Change of Control in respect of which a Change of Control Offer is made in accordance with the requirements of this Indenture will thereafter, together with its Affiliates, constitute an additional Permitted Holder.
“Permitted Investments” means:
(1) any Investment in the Company or any Restricted Subsidiary;
(2) any Investment in Cash Equivalents or Investment Grade Securities;
(3) any Investment 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 Restricted Subsidiary of the Company, or (b) such Person, in one transaction or a series of related transactions, is merged, consolidated or amalgamated with or into, or transfers or conveys all or substantially all of its assets to, or is liquidated into, the Company or a Restricted Subsidiary of the Company;
(4) any Investment in securities or other assets not constituting Cash Equivalents and received in connection with an Asset Sale made pursuant to the provisions of Section 4.06 or any other disposition of assets not constituting an Asset Sale;
(5) any Investment existing on, or made pursuant to binding commitments existing on, the Issue Date;
(6) advances to employees not in excess of $15 million outstanding at any one time in the aggregate;
(7) any Investment acquired by the Company or any of its Restricted Subsidiaries (a) in exchange for any other Investment or accounts receivable held by the Company or any such Restricted Subsidiary in connection with or as a result of a
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bankruptcy, workout, reorganization or recapitalization of the issuer of such other Investment or accounts receivable, or (b) as a result of a foreclosure by the Company or any of its Restricted Subsidiaries with respect to any secured Investment or other transfer of title with respect to any secured Investment in default;
(8) Hedging Obligations permitted under Section 4.03(b)(x);
(9) any Investment by the Company or any of its Restricted Subsidiaries in a Similar Business having an aggregate Fair Market Value, taken together with all other Investments made pursuant to this clause (9) that are at that time outstanding, not to exceed the greater of (x) $100.0 million and (y) 4.5% of Total Assets at the time of such Investment (with the Fair Market Value of each Investment being measured at the time made and without giving effect to subsequent changes in value); provided , however , that if any Investment pursuant to this clause (9) is made in any Person that is not a Restricted Subsidiary of the Company at the date of the making of such Investment and such Person becomes a Restricted Subsidiary of the Company after such date, such Investment shall thereafter be deemed to have been made pursuant to clause (1) above and shall cease to have been made pursuant to this clause (9) for so long as such Person continues to be a Restricted Subsidiary;
(10) additional Investments by the Company or any of its Restricted Subsidiaries having an aggregate Fair Market Value, taken together with all other Investments made pursuant to this clause (10) that are at that time outstanding, not to exceed the greater of (x) $100.0 million and (y) 4.5% of Total Assets at the time of such Investment (with the Fair Market Value of each Investment being measured at the time made and without giving effect to subsequent changes in value);
(11) loans and advances to officers, directors and employees for business-related travel expenses, moving expenses and other similar expenses, in each case Incurred in the ordinary course of business;
(12) Investments the payment for which consists of Equity Interests of the Company (other than Disqualified Stock) or any direct or indirect parent of the Company, as applicable; provided , however , that such Equity Interests will not increase the amount available for Restricted Payments under clause (C) of the definition of “Cumulative Credit”;
(13) any transaction to the extent it constitutes an Investment that is permitted by and made in accordance with the provisions of Section 4.07(b) (except transactions described in clauses (ii), (vi), (vii) and (xi)(b) of such Section);
(14) Investments consisting of the licensing or contribution of intellectual property pursuant to joint marketing arrangements with other Persons;
(15) guarantees issued in accordance with Sections 4.03 and 4.11;
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(16) Investments consisting of purchases and acquisitions of inventory, supplies, materials and equipment or purchases of contract rights or licenses or leases of intellectual property, in each case in the ordinary course of business;
(17) any Investment in a Receivables Subsidiary or any Investment by a Receivables Subsidiary in any other Person in connection with a Qualified Receivables Financing, including Investments of funds held in accounts permitted or required by the arrangements governing such Qualified Receivables Financing or any related Indebtedness; provided , however , that any Investment in a Receivables Subsidiary is in the form of a Purchase Money Note, contribution of additional receivables or an equity interest;
(18) additional Investments in joint ventures of the Company or any of its Restricted Subsidiaries existing on the Issue Date not to exceed $15 million at any one time; and
(19) Investments of a Restricted Subsidiary of the Company acquired after the Issue Date or of an entity merged into, amalgamated with, or consolidated with a Restricted Subsidiary of the Company in a transaction that is not prohibited by Section 5.01 after the Issue Date to the extent that such Investments were not made in contemplation of such acquisition, merger, amalgamation or consolidation and were in existence on the date of such acquisition, merger, amalgamation or consolidation.
“Permitted Liens” means, with respect to any Person:
(1) pledges or deposits by such Person under workmen’s compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or deposits to secure public or statutory obligations of such Person or deposits of cash or U.S. government bonds to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import duties or for the payment of rent, in each case Incurred in the ordinary course of business;
(2) Liens imposed by law, such as carriers’, warehousemen’s and mechanics’ Liens, in each case for sums not yet due or being contested in good faith by appropriate proceedings or other Liens arising out of judgments or awards against such Person with respect to which such Person shall then be proceeding with an appeal or other proceedings for review;
(3) Liens for taxes, assessments or other governmental charges not yet due or payable or subject to penalties for nonpayment or which are being contested in good faith by appropriate proceedings;
(4) Liens in favor of issuers of performance and surety bonds or bid bonds or with respect to other regulatory requirements or letters of credit issued pursuant to the request of and for the account of such Person in the ordinary course of its business;
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(5) minor survey exceptions, minor encumbrances, easements or reservations of, or rights of others for, licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real properties or Liens incidental to the conduct of the business of such Person or to the ownership of its properties which were not Incurred in connection with Indebtedness and which do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person;
(6) (A) Liens on assets of a Restricted Subsidiary that is not a Guarantor securing Indebtedness of such Restricted Subsidiary, permitted to be Incurred pursuant to Section 4.03, (B) Liens securing an aggregate principal amount of Pari Passu Indebtedness not to exceed the greater of (x) the aggregate amount of Pari Passu Indebtedness permitted to be incurred pursuant to clause (i) of Section 4.03(b) and (y) the maximum principal amount of Indebtedness that, as of the date such Indebtedness was Incurred, and after giving effect to the Incurrence of such Indebtedness and the application of proceeds therefrom on such date, would not cause the Secured Indebtedness Leverage Ratio of the Company to exceed 4.00 to 1.00, and (C) Liens securing Indebtedness permitted to be Incurred pursuant to clause (iv), (xii) or (xx) of Section 4.03(b) ( provided that in the case of clause (xx), such Lien does not extend to the property or assets of any Subsidiary of the Company other than a Foreign Subsidiary);
(7) Liens existing on the Issue Date;
(8) Liens on assets, property or shares of stock of a Person at the time such Person becomes a Subsidiary; provided , however , that such Liens are not created or Incurred in connection with, or in contemplation of, such other Person becoming such a Subsidiary; provided , further , however , that such Liens may not extend to any other property owned by the Company or any Restricted Subsidiary of the Company);
(9) Liens on assets or property at the time the Company or a Restricted Subsidiary of the Company acquired the assets or property, including any acquisition by means of a merger, amalgamation or consolidation with or into the Company or any Restricted Subsidiary of the Company; provided , however , that such Liens are not created or Incurred in connection with, or in contemplation of, such acquisition; provided , further , however , that the Liens may not extend to any other property owned by the Company or any Restricted Subsidiary of the Company;
(10) Liens securing Indebtedness or other obligations of a Restricted Subsidiary owing to the Company or another Restricted Subsidiary of the Company permitted to be Incurred in accordance with Section 4.03;
(11) Liens securing Hedging Obligations not incurred in violation of this Indenture; provided that with respect to Hedging Obligations relating to Indebtedness, such Lien extends only to the property securing such Indebtedness;
(12) Liens on specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of bankers’ acceptances issued or
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created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;
(13) leases and subleases of real property which do not materially interfere with the ordinary conduct of the business of the Company or any of its Restricted Subsidiaries;
(14) Liens arising from Uniform Commercial Code financing statement filings regarding operating leases entered into by the Company and its Restricted Subsidiaries in the ordinary course of business;
(15) Liens in favor of the Company or any Guarantor;
(16) Liens on accounts receivable and related assets of the type specified in the definition of “Receivables Financing” Incurred in connection with a Qualified Receivables Financing;
(17) deposits made in the ordinary course of business to secure liability to insurance carriers;
(18) Liens on the Equity Interests of Unrestricted Subsidiaries;
(19) grants of software and other technology licenses in the ordinary course of business;
(20) Liens to secure any refinancing, refunding, extension, renewal or replacement (or successive refinancings, refundings, extensions, renewals or replacements) as a whole, or in part, of any Indebtedness secured by any Lien referred to in the foregoing clauses (6)(B), (7), (8), (9), (10), (11) and (15); provided , however , that (x) such new Lien shall be limited to all or part of the same property that secured the original Lien (plus improvements on such property), and (y) the Indebtedness secured by such Lien at such time is not increased to any amount greater than the sum of (A) the outstanding principal amount or, if greater, committed amount of the Indebtedness described under clauses (6)(B), (7), (8), (9), (10), (11) and (15) at the time the original Lien became a Permitted Lien under this Indenture, and (B) an amount necessary to pay any fees and expenses, including premiums, related to such refinancing, refunding, extension, renewal or replacement;
(21) Liens on equipment of the Company or any Restricted Subsidiary granted in the ordinary course of business to the Company’s or such Restricted Subsidiary’s client at which such equipment is located; and
(22) judgment and attachment Liens not giving rise to an Event of Default and notices of lis pendens and associated rights related to litigation being contested in good faith by appropriate proceedings and for which adequate reserves have been made;
(23) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into in the ordinary course of business;
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(24) Liens incurred to secure cash management services in the ordinary course of business; and
(25) other Liens securing obligations incurred in the ordinary course of business which obligations do not exceed $20 million at any one time outstanding.
“Person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity.
“Preferred Stock” means any Equity Interest with preferential right of payment of dividends or upon liquidation, dissolution, or winding up.
“Purchase Money Note” means a promissory note of a Receivables Subsidiary evidencing a line of credit, which may be irrevocable, from the Company or any Subsidiary of the Company to a Receivables Subsidiary in connection with a Qualified Receivables Financing, which note is intended to finance that portion of the purchase price that is not paid by cash or a contribution of equity.
“Qualified Receivables Financing” means any Receivables Financing of a Receivables Subsidiary that meets the following conditions:
(1) the Board of Directors of the Company shall have determined in good faith that such Qualified Receivables Financing (including financing terms, covenants, termination events and other provisions) is in the aggregate economically fair and reasonable to the Company and the Receivables Subsidiary;
(2) all sales of accounts receivable and related assets to the Receivables Subsidiary are made at Fair Market Value (as determined in good faith by the Company); and
(3) the financing terms, covenants, termination events and other provisions thereof shall be market terms (as determined in good faith by the Company) and may include Standard Securitization Undertakings.
The grant of a security interest in any accounts receivable of the Company or any of its Restricted Subsidiaries (other than a Receivables Subsidiary) to secure Bank Indebtedness shall not be deemed a Qualified Receivables Financing.
“Rating Agency” means (1) each of Moody’s and S&P and (2) if Moody’s or S&P ceases to rate the Securities for reasons outside of the Issuers’ control, a “nationally recognized statistical rating organization” within the meaning of Rule 15cs-1(c)(2)(vi)(F) under the Exchange Act selected by the Issuers or any direct or indirect parent of the Issuers as a replacement agency for Moody’s or S&P, as the case may be.
“Receivables Fees” means distributions or payments made directly or by means of discounts with respect to any participation interests issued or sold in connection with, and all
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other fees paid to a Person that is not a Restricted Subsidiary in connection with, any Receivables Financing.
“Receivables Financing” means any transaction or series of transactions that may be entered into by the Company or any of its Subsidiaries pursuant to which the Company or any of its Subsidiaries may sell, convey or otherwise transfer to (a) a Receivables Subsidiary (in the case of a transfer by the Company or any of its Subsidiaries); and (b) any other Person (in the case of a transfer by a Receivables Subsidiary), or may grant a security interest in, any accounts receivable (whether now existing or arising in the future) of the Company or any of its Subsidiaries, and any assets related thereto including, without limitation, all collateral securing such accounts receivable, all contracts and all guarantees or other obligations in respect of such accounts receivable, proceeds of such accounts receivable and other assets which are customarily transferred or in respect of which security interests are customarily granted in connection with asset securitization transactions involving accounts receivable and any Hedging Obligations entered into by the Company or any such Subsidiary in connection with such accounts receivable.
“Receivables Repurchase Obligation” means any obligation of a seller of receivables in a Qualified Receivables Financing to repurchase receivables arising as a result of a breach of a representation, warranty or covenant or otherwise, including as a result of a receivable or portion thereof becoming subject to any asserted defense, dispute, off-set or counterclaim of any kind as a result of any action taken by, any failure to take action by or any other event relating to the seller.
“Receivables Subsidiary” means a Wholly Owned Restricted Subsidiary of the Company (or another Person formed for the purposes of engaging in Qualified Receivables Financing with the Company in which the Company or any Subsidiary of the Company makes an Investment and to which the Company or any Subsidiary of the Company transfers accounts receivable and related assets) which engages in no activities other than in connection with the financing of accounts receivable of the Company and its Subsidiaries, all proceeds thereof and all rights (contractual or other), collateral and other assets relating thereto, and any business or activities incidental or related to such business, and which is designated by the Board of Directors of the Company (as provided below) as a Receivables Subsidiary and:
(a) no portion of the Indebtedness or any other obligations (contingent or otherwise) of which (i) is guaranteed by the Company or any other Subsidiary of the Company (excluding guarantees of obligations (other than the principal of and interest on, Indebtedness) pursuant to Standard Securitization Undertakings), (ii) is recourse to or obligates the Company or any other Subsidiary of the Company in any way other than pursuant to Standard Securitization Undertakings, or (iii) subjects any property or asset of the Company or any other Subsidiary of the Company, directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to Standard Securitization Undertakings;
(b) with which neither the Company nor any other Subsidiary of the Company has any material contract, agreement, arrangement or understanding other than on terms which the Company reasonably believes to be no less favorable to the Company or such
27
Subsidiary than those that might be obtained at the time from Persons that are not Affiliates of the Company; and
(c) to which neither the Company nor any other Subsidiary of the Company has any obligation to maintain or preserve such entity’s financial condition or cause such entity to achieve certain levels of operating results.
Any such designation by the Board of Directors of the Company shall be evidenced to the Trustee by filing with the Trustee a certified copy of the resolution of the Board of Directors of the Company giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the foregoing conditions.
“Restricted Investment” means an Investment other than a Permitted Investment.
“Restricted Subsidiary” means, with respect to any Person, any Subsidiary of such Person other than an Unrestricted Subsidiary of such Person. Rexnord shall be a Restricted Subsidiary of the Company. Unless otherwise indicated in this Indenture, all references to Restricted Subsidiaries shall mean Restricted Subsidiaries of the Company.
“Sale/Leaseback Transaction” means an arrangement relating to property now owned or hereafter acquired by the Company or a Restricted Subsidiary whereby the Company or a Restricted Subsidiary transfers such property to a Person and the Company or such Restricted Subsidiary leases it from such Person, other than leases between the Company and a Restricted Subsidiary of the Company or between Restricted Subsidiaries of the Company.
“S&P” means Standard & Poor’s Ratings Group or any successor to the rating agency business thereof.
“SEC” means the Securities and Exchange Commission.
“Secured Indebtedness” means any Indebtedness secured by a Lien.
“Secured Indebtedness Leverage Ratio” means, with respect to any Person at any date, the ratio of (i) Secured Indebtedness of such Person and its Restricted Subsidiaries as of such date (determined on a consolidated basis in accordance with GAAP) to (ii) EBITDA of such Person for the four full fiscal quarters for which internal financial statements are available immediately preceding such date. In the event that the Company or any of its Restricted Subsidiaries Incurs or redeems any Indebtedness subsequent to the commencement of the period for which the Secured Indebtedness Leverage Ratio is being calculated but prior to the event for which the calculation of the Secured Indebtedness Leverage Ratio is made (the “Secured Leverage Calculation Date”), then the Secured Indebtedness Leverage Ratio shall be calculated giving pro forma effect to such Incurrence or redemption of Indebtedness as if the same had occurred at the beginning of the applicable four-quarter period; provided that the Issuers may elect, pursuant to an Officers’ Certificate delivered to the Trustee, that all or any portion of the commitment under any Secured Indebtedness as being Incurred at the time such commitment is entered into and any subsequent Incurrence of Indebtedness under such commitment shall not be deemed, for purposes of this calculation, to be the creation or Incurrence of a Lien at such subsequent time.
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For purposes of making the computation referred to above, Investments, acquisitions, dispositions, mergers, consolidations and discontinued operations (as determined in accordance with GAAP), in each case with respect to an operating unit of a business, and any operational changes that the Company or any of its Restricted Subsidiaries has both determined to make and made after the Issue Date and during the four-quarter reference period or subsequent to such reference period and on or prior to or simultaneously with the Secured Leverage Calculation Date (each, for purposes of this definition, a “pro forma event”) shall be calculated on a pro forma basis assuming that all such Investments, acquisitions, dispositions, mergers, consolidations, discontinued operations and other operational changes (and the change in EBITDA resulting therefrom) had occurred on the first day of the four-quarter reference period. If since the beginning of such period any Person that subsequently became a Restricted Subsidiary or was merged with or into the Company or any Restricted Subsidiary since the beginning of such period shall have made any Investment, acquisition, disposition, merger, consolidation, discontinued operation or operational change, in each case with respect to an operating unit of a business, that would have required adjustment pursuant to this definition, then the Secured Indebtedness Leverage Ratio shall be calculated giving pro forma effect thereto for such period as if such Investment, acquisition, disposition, discontinued operation, merger, consolidation or operational change had occurred at the beginning of the applicable four-quarter period.
For purposes of this definition, whenever pro forma effect is to be given to any pro forma event, the pro forma calculations shall be made in good faith by a responsible financial or accounting officer of the Company. Any such pro forma calculation may include adjustments appropriate, in the reasonable good faith determination of the Issuers as set forth in an Officers’ Certificate, to reflect (1) operating expense reductions and other operating improvements or synergies reasonably expected to result from the applicable pro forma event (including, to the extent applicable, from the Transactions), and (2) all adjustments of the nature used in connection with the calculation of “Adjusted EBITDA” as set forth in footnote 3 to the “Summary Historical and Unaudited Pro Forma Financial Data” under “Summary” in the Offering Circular to the extent such adjustments, without duplication, continue to be applicable to such four-quarter period.
“Securities” means the securities issued under this Indenture.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.
“Senior Subordinated Notes” means the 11¾% Senior Subordinated Notes due 2016 of the Issuers.
“Significant Subsidiary” means Rexnord and any other Restricted Subsidiary that would be a “Significant Subsidiary” of the Company within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC.
“Similar Business” means a business, the majority of whose revenues are derived from the activities of the Company and its Subsidiaries as of the Issue Date or any business or
29
activity that is reasonably similar thereto or a reasonable extension, development or expansion thereof or ancillary thereto.
“Sponsors” means (1) one or more investment funds controlled by Apollo Management, L.P. and its Affiliates (collectively, the “Apollo Sponsors”) and (2) any Person that forms a group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision) with any Apollo Sponsors, provided that any Apollo Sponsor (x) owns a majority of the voting power and (y) controls a majority of the Board of Directors of the Company.
“Standard Securitization Undertakings” means representations, warranties, covenants, indemnities and guarantees of performance entered into by the Company or any Subsidiary of the Company which the Company has determined in good faith to be customary in a Receivables Financing including without limitation, those relating to the servicing of the assets of a Receivables Subsidiary, it being understood that any Receivables Repurchase Obligation shall be deemed to be a Standard Securitization Undertaking.
“Stated Maturity” means, with respect to any security, the date specified in such security as the fixed date on which the final payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision (but excluding any provision providing for the repurchase of such security at the option of the holder thereof upon the happening of any contingency beyond the control of the issuer unless such contingency has occurred).
“Subordinated Indebtedness” means (a) with respect to either of the Issuers, any Indebtedness of the Issuer which is by its terms subordinated in right of payment to the Securities, and (b) with respect to any Guarantor, any Indebtedness of such Guarantor which is by its terms subordinated in right of payment to its Guarantee.
“Subsidiary” means, with respect to any Person, (1) any corporation, association or other business entity (other than a partnership, joint venture or limited liability company) 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 of determination owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof, and (2) any partnership, joint venture or limited liability company of which (x) more than 50% of the capital accounts, distribution rights, total equity and voting interests or general and limited partnership interests, as applicable, are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof, whether in the form of membership, general, special or limited partnership interests or otherwise, and (y) such Person or any Subsidiary of such Person is a controlling general partner or otherwise controls such entity.
“Tax Distributions” means any distributions described in Section 4.04(b)(xii).
“TIA” means the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date of this Indenture.
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“Total Assets” means the total consolidated assets of the Company and its Restricted Subsidiaries, as shown on the most recent balance sheet of the Company.
“Transactions” means the Acquisition and the transactions related thereto, the issuance of the Securities and Senior Subordinated Notes, and borrowings made pursuant to the Credit Agreement on the Issue Date.
“Treasury Rate” means, as of the applicable redemption date, the yield to maturity as of such redemption date of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available at least two business days prior to such redemption date (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from such redemption date to August 1, 2010; provided , however , that if the period from such redemption date to August 1, 2010 is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used.
“Trust Officer” means:
(1) any officer within the corporate trust department of the Trustee, including any vice president, assistant vice president, assistant secretary, assistant treasurer, trust officer or any other officer of the Trustee who customarily performs functions similar to those performed by the Persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of such Person’s knowledge of and familiarity with the particular subject, and
(2) who shall have direct responsibility for the administration of this Indenture.
“Trustee” means the party named as such in this Indenture until a successor replaces it and, thereafter, means the successor.
“Uniform Commercial Code” means the New York Uniform Commercial Code as in effect from time to time.
“Unrestricted Subsidiary” means:
(1) any Subsidiary of the Company that at the time of determination shall be designated an Unrestricted Subsidiary by the Board of Directors of such Person in the manner provided below; and
(2) any Subsidiary of an Unrestricted Subsidiary.
The Board of Directors of the Company may designate any Subsidiary of the Company (including any newly acquired or newly formed Subsidiary of the Company) to be an Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Equity Interests or Indebtedness of, or owns or holds any Lien on any property of, the Company or any other Subsidiary of the Company that is not a Subsidiary of the Subsidiary to be so designated;
31
provided , however , that the Subsidiary to be so designated and its Subsidiaries do not at the time of designation have and do not thereafter Incur any Indebtedness pursuant to which the lender has recourse to any of the assets of the Company or any of its Restricted Subsidiaries; provided , further , however , that either:
(a) the Subsidiary to be so designated has total consolidated assets of $1,000 or less; or
(b) if such Subsidiary has consolidated assets greater than $1,000, then such designation would be permitted under Section 4.04.
The Board of Directors of the Company may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided , however , that immediately after giving effect to such designation:
(x) (1) the Company could Incur $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.03(a) or (2) the Fixed Charge Coverage Ratio for the Company and its Restricted Subsidiaries would be greater than such ratio for the Company and its Restricted Subsidiaries immediately prior to such designation, in each case on a pro forma basis taking into account such designation, and
(y) no Event of Default shall have occurred and be continuing.
Any such designation by the Board of Directors of the Company shall be evidenced to the Trustee by promptly filing with the Trustee a copy of the resolution of the Board of Directors of the Company giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the foregoing provisions.
“U.S. Government Obligations” means securities that are:
(1) direct obligations of the United States of America for the timely payment of which its full faith and credit is pledged, or
(2) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America, the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America,
which, in each case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act) as custodian with respect to any such U.S. Government Obligations or a specific payment of principal of or interest on any such U.S. Government Obligations held by such custodian for the account of the holder of such depository receipt; provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Obligations or the specific payment of principal of or interest on the U.S. Government Obligations evidenced by such depository receipt.
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“Voting Stock” of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person.
“Weighted Average Life to Maturity” means, when applied to any Indebtedness or Disqualified Stock, as the case may be, at any date, the quotient obtained by dividing (1) the sum of the products of the number of years from the date of determination to the date of each successive scheduled principal payment of such Indebtedness or redemption or similar payment with respect to such Disqualified Stock multiplied by the amount of such payment, by (2) the sum of all such payments.
“Wholly Owned Restricted Subsidiary” is any Wholly Owned Subsidiary that is a Restricted Subsidiary.
“Wholly Owned Subsidiary” of any Person means a Subsidiary of such Person 100% of the outstanding Capital Stock or other ownership interests of which (other than directors’ qualifying shares or shares required to be held by Foreign Subsidiaries) shall at the time be owned by such Person or by one or more Wholly Owned Subsidiaries of such Person.
SECTION 1.02. Other Definitions .
|
Term |
|
Defined
|
|
|
|
|
|
“Additional Interest” |
|
Appendix A |
|
“Affiliate Transaction” |
|
4.07 |
|
“Appendix” |
|
Preamble |
|
“Asset Sale Offer” |
|
4.06(b) |
|
“Bankruptcy Law” |
|
6.01 |
|
“Blockage Notice” |
|
10.03 |
|
“covenant defeasance option” |
|
8.01(c) |
|
“Custodian” |
|
6.01 |
|
“Definitive Security” |
|
Appendix A |
|
“Depository” |
|
Appendix A |
|
“Euroclear” |
|
Appendix A |
|
“Event of Default” |
|
6.01 |
|
“Excess Proceeds” |
|
4.06(b) |
|
“Exchange Securities” |
|
Preamble |
|
“Global Securities Legend” |
|
Appendix A |
|
“Guarantee Blockage Notice” |
|
12.03 |
|
“Guarantee Payment Blockage Period” |
|
12.03 |
|
“Guaranteed Obligations” |
|
11.01(a) |
|
“IAI” |
|
Appendix A |
|
“incorporated provision” |
|
13.01 |
|
“Initial Purchasers” |
|
Appendix A |
|
“Initial Securities” |
|
Preamble |
|
“legal defeasance option” |
|
8.01 |
|
“Notice of Default” |
|
6.01 |
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|
“Offer Period” |
|
4.06(d) |
|
“Original Securities” |
|
Preamble |
|
“pay its Guarantee” |
|
12.03 |
|
“pay the Securities” |
|
10.03 |
|
“Paying Agent” |
|
2.04(a) |
|
“Payment Blockage Period” |
|
10.03 |
|
“protected purchaser” |
|
2.08 |
|
“Purchase Agreement” |
|
Appendix A |
|
“QIB” |
|
Appendix A |
|
“Refinancing Indebtedness” |
|
4.03(b) |
|
“Refunding Capital Stock” |
|
4.04(b) |
|
“Registered Exchange Offer” |
|
Appendix A |
|
“Registration Agreement” |
|
Appendix A |
|
“Registrar” |
|
2.04(a) |
|
“Regulation S” |
|
Appendix A |
|
“Regulation S Securities” |
|
Appendix A |
|
“Restricted Payment” |
|
4.04(a) |
|
“Restricted Period” |
|
Appendix A |
|
“Restricted Securities Legend” |
|
Appendix A |
|
“Retired Capital Stock” |
|
4.04(b) |
|
“Rule 501” |
|
Appendix A |
|
“Rule 144A” |
|
Appendix A |
|
“Rule 144A Securities” |
|
Appendix A |
|
“Securities Custodian” |
|
Appendix A |
|
“Shelf Registration Statement” |
|
Appendix A |
|
“Successor Company” |
|
5.01(a) |
|
“Successor Guarantor” |
|
5.01(b) |
|
“Transfer” |
|
5.01(b) |
|
“Transfer Restricted Securities” |
|
Appendix A |
|
“Unrestricted Definitive Security |
|
Appendix A |
|
|
|
|
SECTION 1.03. Incorporation by Reference of Trust Indenture Act . This Indenture incorporates by reference certain provisions of the TIA. The following TIA terms have the following meanings:
“Commission” means the SEC.
“indenture securities” means the Securities and the Guarantees.
“indenture security holder” means a Holder.
“indenture to be qualified” means this Indenture.
“indenture trustee” or “institutional trustee” means the Trustee.
34
“obligor” on the indenture securities means the Company, the Guarantors and any other obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule have the meanings assigned to them by such definitions.
SECTION 1.04. Rules of Construction . Unless the context otherwise requires:
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SECTION 2.01. Amount of Securities . The aggregate principal amount of Original Securities which may be authenticated and delivered under this Indenture on the Issue Date is $485,000,000. All Securities shall be substantially identical except as to denomination.
The Company may from time to time after the Issue Date issue Additional Securities under this Indenture in an unlimited principal amount, so long as (i) the Incurrence of the Indebtedness represented by such Additional Securities is at such time permitted by Section 4.03 and (ii) such Additional Securities are issued in compliance with the other applicable provisions of this Indenture. With respect to any Additional Securities issued after the Issue Date (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities pursuant to Section 2.07, 2.08, 2.09, 2.10, 3.06, 4.06(g), 4.08(c) or the Appendix), there shall be (a) established in or pursuant to a resolution of the Board of Directors and (b) (i) set forth or determined in the manner provided in an Officers’ Certificate or (ii) established in one or more indentures supplemental hereto, prior to the issuance of such Additional Securities:
If any of the terms of any Additional Securities are established by action taken pursuant to a resolution of the Board of Directors, a copy of an appropriate record of such action shall be certified by the Secretary or any Assistant Secretary of the Company and delivered to the Trustee at or prior to the delivery of the Officers’ Certificate or the indenture supplemental hereto setting forth the terms of the Additional Securities.
36
The Securities, including any Additional Securities, shall be treated as a single class for all purposes under this Indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase.
SECTION 2.02. Form and Dating . Provisions relating to the Initial Securities and the Exchange Securities are set forth in the Appendix, which is hereby incorporated in and expressly made a part of this Indenture. The (i) Initial Securities and the Trustee’s certificate of authentication and (ii) any Additional Securities (if issued as Transfer Restricted Securities) and the Trustee’s certificate of authentication shall each be substantially in the form of Exhibit A hereto, which is hereby incorporated in and expressly made a part of this Indenture. The (i) Exchange Securities and the Trustee’s certificate of authentication and (ii) any Additional Securities issued other than as Transfer Restricted Securities and the Trustee’s certificate of authentication shall each be substantially in the form of Exhibit B hereto, which is hereby incorporated in and expressly made a part of this Indenture. The Securities may have notations, legends or endorsements required by law, stock exchange rule, agreements to which the Company or any Guarantor is subject, if any, or usage ( provided that any such notation, legend or endorsement is in a form acceptable to the Company). Each Security shall be dated the date of its authentication. The Securities shall be issuable only in registered form without interest coupons and in denominations of $2,000 and any integral multiples of $1,000.
SECTION 2.03. Execution and Authentication . The Trustee shall authenticate and make available for delivery upon a written order of the Issuer signed by one Officer (a) Original Securities for original issue on the date hereof in an aggregate principal amount of $485,000,000, (b) subject to the terms of this Indenture, Additional Securities in an aggregate principal amount to be determined at the time of issuance and specified therein and (c) the Exchange Securities for issue in a Registered Exchange Offer pursuant to the Registration Agreement for a like principal amount of Initial Securities exchanged pursuant thereto or otherwise pursuant to an effective registration statement under the Securities Act. Such order shall specify the amount of the Securities to be authenticated, the date on which the original issue of Securities is to be authenticated and whether the Securities are to be Initial Securities or Exchange Securities. Notwithstanding anything to the contrary in the Indenture or the Appendix, any issuance of Additional Securities after the Issue Date shall be in a principal amount of at least $2,000 and integral multiples of $1,000 in excess of $2,000.
One Officer shall sign the Securities for the Issuer by manual or facsimile signature.
If an Officer whose signature is on a Security no longer holds that office at the time the Trustee authenticates the Security, the Security shall be valid nevertheless.
A Security shall not be valid until an authorized signatory of the Trustee manually signs the certificate of authentication on the Security. The signature shall be conclusive evidence that the Security has been authenticated under this Indenture.
The Trustee may appoint one or more authenticating agents reasonably acceptable to the Issuer to authenticate the Securities. Any such appointment shall be evidenced by an instrument signed by a Trust Officer, a copy of which shall be furnished to the Issuer. Unless
37
limited by the terms of such appointment, an authenticating agent may authenticate Securities 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 any Registrar, Paying Agent or agent for service of notices and demands.
SECTION 2.04. Registrar and Paying Agent . (a) The Company shall maintain (i) an office or agency where Securities may be presented for registration of transfer or for exchange (the “Registrar”) and (ii) an office or agency where Securities may be presented for payment (the “Paying Agent”). The Registrar shall keep a register of the Securities and of their transfer and exchange. The Company may have one or more co-registrars and one or more additional paying agents. The term “Registrar” includes any co-registrars. The term “Paying Agent” includes the Paying Agent and any additional paying agents. The Company initially appoints the Trustee as Registrar, Paying Agent and the Securities Custodian with respect to the Global Securities.
SECTION 2.05. Paying Agent to Hold Money in Trust . Prior to each due date of the principal of and interest on any Security, the Company shall deposit with each Paying Agent (or if the Company or a Wholly Owned Subsidiary is acting as Paying Agent, segregate and hold in trust for the benefit of the Persons entitled thereto) a sum sufficient to pay such principal and interest when so becoming due. The Company shall require each Paying Agent (other than the Trustee) to agree in writing that a Paying Agent shall hold in trust for the benefit of Holders or the Trustee all money held by a Paying Agent for the payment of principal of and interest on the Securities, and shall notify the Trustee of any default by the Company in making any such payment. If the Company or a Wholly Owned Subsidiary of the Company acts as Paying Agent, it shall segregate the money held by it as Paying Agent and hold it in trust for the benefit of the Persons entitled thereto. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee and to account for any funds disbursed by such Paying Agent. Upon complying with this Section, a Paying
38
Agent shall have no further liability for the money delivered to the Trustee.
SECTION 2.06. 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 Holders. If the Trustee is not the Registrar, the Company shall furnish, or cause the Registrar to furnish, to the Trustee, in writing at least five 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 Holders.
SECTION 2.07. Transfer and Exchange . The Securities shall be issued in registered form and shall be transferable only upon the surrender of a Security for registration of transfer and in compliance with the Appendix. When a Security is presented to the Registrar with a request to register a transfer, the Registrar shall register the transfer as requested if its requirements therefor are met. When Securities are presented to the Registrar with a request to exchange them for an equal principal amount of Securities of other denominations, the Registrar shall make the exchange as requested if the same requirements are met. To permit registration of transfers and exchanges, the Company shall execute and the Trustee shall authenticate Securities at the Registrar’s request. The Company may require payment of a sum sufficient to pay all taxes, assessments or other governmental charges in connection with any transfer or exchange pursuant to this Section. The Company shall not be required to make, and the Registrar need not register, transfers or exchanges of Securities selected for redemption (except, in the case of Securities to be redeemed in part, the portion thereof not to be redeemed) or of any Securities for a period of 15 days before a selection of Securities to be redeemed.
Prior to the due presentation for registration of transfer of any Security, the Company, the Guarantors, the Trustee, the Paying Agent and the Registrar may deem and treat the Person in whose name a Security is registered as the absolute owner of such Security for the purpose of receiving payment of principal of and interest, if any, on such Security and for all other purposes whatsoever, whether or not such Security is overdue, and none of the Company, any Guarantor, the Trustee, the Paying Agent or the Registrar shall be affected by notice to the contrary.
Any Holder of a beneficial interest in a Global Security shall, by acceptance of such beneficial interest, agree that transfers of beneficial interests in such Global Security may be effected only through a book-entry system maintained by (a) the Holder of such Global Security (or its agent) or (b) any Holder of a beneficial interest in such Global Security, and that ownership of a beneficial interest in such Global Security shall be required to be reflected in a book entry.
All Securities issued upon any transfer or exchange pursuant to the terms of this Indenture shall evidence the same debt and shall be entitled to the same benefits under this Indenture as the Securities surrendered upon such transfer or exchange.
SECTION 2.08. Replacement Securities . If a mutilated Security is surrendered to the Registrar or if the Holder of a Security claims that the Security has been lost, destroyed or wrongfully taken, the Company shall issue and the Trustee shall authenticate a replacement
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Security if the requirements of Section 8-405 of the Uniform Commercial Code are met, such that the Holder (a) satisfies the Company or the Trustee within a reasonable time after such Holder has notice of such loss, destruction or wrongful taking and the Registrar does not register a transfer prior to receiving such notification, (b) makes such request to the Company or the Trustee prior to the Security being acquired by a protected purchaser as defined in Section 8-303 of the Uniform Commercial Code (a “protected purchaser”) and (c) satisfies any other reasonable requirements of the Trustee. If required by the Trustee or the Company, such Holder shall furnish an indemnity bond sufficient in the judgment of the Trustee or the Company to protect the Company, the Trustee, a Paying Agent and the Registrar from any loss that any of them may suffer if a Security is replaced. The Company and the Trustee may charge the Holder for their expenses in replacing a Security (including without limitation, attorneys’ fees and disbursements in replacing such Security). In the event any such mutilated, lost, destroyed or wrongfully taken Security has become or is about to become due and payable, the Company in its discretion may pay such Security instead of issuing a new Security in replacement thereof.
Every replacement Security is an additional obligation of the Company.
The provisions of this Section 2.08 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, lost, destroyed or wrongfully taken Securities.
SECTION 2.09. Outstanding Securities . Securities outstanding at any time are all Securities authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation and those described in this Section as not outstanding. Subject to Section 13.06, a Security does not cease to be outstanding because the Company or an Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Section 2.08 (other than a mutilated Security surrendered for replacement), it ceases to be outstanding unless the Trustee and the Company receive proof satisfactory to them that the replaced Security is held by a protected purchaser. A mutilated Security ceases to be outstanding upon surrender of such Security and replacement thereof pursuant to Section 2.08.
If a Paying Agent segregates and holds in trust, in accordance with this Indenture, on a redemption date or maturity date money sufficient to pay all principal and interest payable on that date with respect to the Securities (or portions thereof) to be redeemed or maturing, as the case may be, and no Paying Agent is prohibited from paying such money to the Holders on that date pursuant to the terms of this Indenture, then on and after that date such Securities (or portions thereof) cease to be outstanding and interest on them ceases to accrue.
SECTION 2.10. Temporary Securities . In the event that Definitive Securities are to be issued under the terms of this Indenture, until such Definitive Securities are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Securities. Temporary Securities shall be substantially in the form of Definitive Securities but may have variations that the Company considers appropriate for temporary Securities. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate Definitive Securities and make them available for delivery in exchange for temporary Securities upon
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surrender of such temporary Securities at the office or agency of the Company, without charge to the Holder. Until such exchange, temporary Securities shall be entitled to the same rights, benefits and privileges as Definitive Securities.
SECTION 2.11. Cancellation . The Company at any time may deliver Securities to the Trustee for cancellation. The Registrar and each Paying Agent shall forward to the Trustee any Securities surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel all Securities surrendered for registration of transfer, exchange, payment or cancellation and shall dispose of canceled Securities in accordance with its customary procedures. The Company may not issue new Securities to replace Securities it has redeemed, paid or delivered to the Trustee for cancellation. The Trustee shall not authenticate Securities in place of canceled Securities other than pursuant to the terms of this Indenture.
SECTION 2.12. Defaulted Interest . If the Company defaults in a payment of interest on the Securities, the Company shall pay the defaulted interest then borne by the Securities (plus interest on such defaulted interest to the extent lawful) in any lawful manner. The Company may pay the defaulted interest to the Persons who are Holders on a subsequent special record date. The Company shall fix or cause to be fixed any such special record date and payment date to the reasonable satisfaction of the Trustee and shall promptly mail or cause to be mailed to each affected Holder a notice that states the special record date, the payment date and the amount of defaulted interest to be paid.
SECTION 2.13. CUSIP Numbers, ISINs, etc . The Issuer in issuing the Securities may use CUSIP numbers, ISINs and “Common Code” numbers (if then generally in use) and, if so, the Trustee shall use CUSIP numbers, ISINs and “Common Code” numbers in notices of redemption as a convenience to Holders; provided , however , that any such notice may state that no representation is made as to the correctness of such numbers, either as printed on the Securities or as contained in any notice of a redemption that reliance may be placed only on the other identification numbers printed on the Securities and that any such redemption shall not be affected by any defect in or omission of such numbers. The Issuer shall advise the Trustee of any change in the CUSIP numbers, ISINs and “Common Code” numbers.
SECTION 2.14. Calculation of Principal Amount of Securities . The aggregate principal amount of the Securities, at any date of determination, shall be the principal amount of the Securities at such date of determination. With respect to any matter requiring consent, waiver, approval or other action of the Holders of a specified percentage of the principal amount of all the Securities, such percentage shall be calculated, on the relevant date of determination, by dividing (a) the principal amount, as of such date of determination, of Securities, the Holders of which have so consented, by (b) the aggregate principal amount, as of such date of determination, of the Securities then outstanding, in each case, as determined in accordance with the preceding sentence, Section 2.09 and Section 13.06 of this Indenture. Any such calculation made pursuant to this Section 2.14 shall be made by the Company and delivered to the Trustee pursuant to an Officers’ Certificate.
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SECTION 3.01. Redemption . The Securities may be redeemed, in whole, or from time to time in part, subject to the conditions and at the redemption prices set forth in Paragraph 5 of the form of Securities set forth in Exhibit A and Exhibit B hereto, which are hereby incorporated by reference and made a part of this Indenture, together with accrued and unpaid interest to the redemption date.
SECTION 3.02. Applicability of Article . Redemption of Securities at the election of the Company or otherwise, as permitted or required by any provision of this Indenture, shall be made in accordance with such provision and this Article.
SECTION 3.03. Notices to Trustee . If the Company elects to redeem Securities pursuant to the optional redemption provisions of Paragraph 5 of the Security, it shall notify the Trustee in writing of (i) the Section of this Indenture pursuant to which the redemption shall occur, (ii) the redemption date, (iii) the principal amount of Securities to be redeemed and (iv) the redemption price. The Company shall give notice to the Trustee provided for in this paragraph at least 30 days but not more than 60 days before a redemption date if the redemption is pursuant to Paragraph 5 of the Security, unless a shorter period is acceptable to the Trustee. Such notice shall be accompanied by an Officers’ Certificate and Opinion of Counsel from the Company to the effect that such redemption will comply with the conditions herein. If fewer than all the Securities are to be redeemed, the record date relating to such redemption shall be selected by the Company and given to the Trustee, which record date shall be not fewer than 15 days after the date of notice to the Trustee. Any such notice may be canceled at any time prior to notice of such redemption being mailed to any Holder and shall thereby be void and of no effect.
SECTION 3.04. Selection of Securities to Be Redeemed . In the case of any partial redemption, selection of the Securities for redemption will be made by the Trustee on a pro rata basis to the extent practicable; provided that no Securities of $2,000 or less shall be redeemed in part. The Trustee shall make the selection from outstanding Securities not previously called for redemption. The Trustee may select for redemption portions of the principal of Securities that have denominations larger than $2,000. Securities and portions of them the Trustee selects shall be in amounts of $2,000 or any integral multiple of $1,000. Provisions of this Indenture that apply to Securities called for redemption also apply to portions of Securities called for redemption. The Trustee shall notify the Company promptly of the Securities or portions of Securities to be redeemed.
SECTION 3.05. Notice of Optional Redemption . (a) At least 30 days but not more than 60 days before a redemption date pursuant to Paragraph 5 of the Security, the Company shall mail or cause to be mailed by first-class mail a notice of redemption to each Holder whose Securities are to be redeemed.
Any such notice shall identify the Securities to be redeemed and shall state:
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SECTION 3.06. Effect of Notice of Redemption . Once notice of redemption is mailed in accordance with Section 3.05, Securities called for redemption become due and payable on the redemption date and at the redemption price stated in the notice, except as provided in the final sentence of paragraph 5 of the Securities. Upon surrender to the Paying Agent, such Securities shall be paid at the redemption price stated in the notice, plus accrued interest, to, but not including, the redemption date; provided , however , that if the redemption date is after a regular record date and on or prior to the interest payment date, the accrued interest shall be payable to the Holder of the redeemed Securities registered on the relevant record date. Failure to give notice or any defect in the notice to any Holder shall not affect the validity of the notice to any other Holder.
SECTION 3.07. Deposit of Redemption Price . With respect to any Securities, prior to 10:00 a.m., New York City time, on the redemption date, the Company shall deposit with the Paying Agent (or, if the Company or a Wholly Owned Subsidiary is the Paying Agent, shall segregate and hold in trust) money sufficient to pay the redemption price of and accrued interest on all Securities or portions thereof to be redeemed on that date other than Securities or portions of Securities called for redemption that have been delivered by the Company to the Trustee for cancellation. On and after the redemption date, interest shall cease to accrue on
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Securities or portions thereof called for redemption so long as the Company has deposited with the Paying Agent funds sufficient to pay the principal of, plus accrued and unpaid interest on, the Securities to be redeemed, unless the Paying Agent is prohibited from making such payment pursuant to the terms of this Indenture.
SECTION 3.08. Securities Redeemed in Part . Upon surrender of a Security that is redeemed in part, the Company shall execute and the Trustee shall authenticate for the Holder (at the Company’s expense) a new Security equal in principal amount to the unredeemed portion of the Security surrendered.
SECTION 4.01. Payment of Securities . The Company shall promptly pay the principal of and interest on the Securities on the dates and in the manner provided in the Securities and in this Indenture. An installment of principal of or interest shall be considered paid on the date due if on such date the Trustee or the Paying Agent holds as of 12:00 p.m. Eastern time money sufficient to pay all principal and interest then due and the Trustee or the Paying Agent, as the case may be, is not prohibited from paying such money to the Holders on that date pursuant to the terms of this Indenture.
The Company shall pay interest on overdue principal at the rate specified therefor in the Securities, and it shall pay interest on overdue installments of interest at the same rate borne by the Securities to the extent lawful.
SECTION 4.02. Reports and Other Information . Notwithstanding that the Company may not be subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act or otherwise report on an annual and quarterly basis on forms provided for such annual and quarterly reporting pursuant to rules and regulations promulgated by the SEC, the Company shall file with the SEC (and provide the Trustee and Holders with copies thereof, without cost to each Holder, within 15 days after it files them with the SEC),
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provided , however , that the Company shall not be so obligated to file such reports with the SEC if the SEC does not permit such filing, in which event the Company shall make available such information to prospective purchasers of Securities, including by posting such reports on the primary website of the Company or its Subsidiaries in addition to providing such information to the Trustee and the Holders, in each case within 15 days after the time the Company would be required to file such information with the SEC if it were subject to Section 13 or 15(d) of the Exchange Act.
Notwithstanding the foregoing, the Company will be deemed to have furnished such reports referred to above to the Trustee and the Holders if the Company has filed such reports with the SEC via the EDGAR filing system and such reports are publicly available. In addition, such requirements shall be deemed satisfied prior to the commencement of the exchange offer contemplated by the Registration Agreement relating to the Securities or the effectiveness of the shelf registration statement by the filing with the SEC of the Exchange Offer Registration Statement and/or shelf registration statement in accordance with the provisions of such registration rights agreement, and any amendments thereto and such registration statement and/or amendments thereto are filed at times that otherwise satisfy the time requirements set forth in Section 4.02(a).
In the event that any direct or indirect parent of the Company is or becomes a Guarantor of the Securities, the Company may satisfy its obligations under this Section 4.02 with respect to financial information relating to the Company by furnishing financial information relating to such direct or indirect parent; provided that the same is accompanied by consolidating
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information that explains in reasonable detail the differences between the information relating to such direct or indirect parent and any of its Subsidiaries other than the Company and its Subsidiaries, on the one hand, and the information relating to the Company, the Guarantors and the other Subsidiaries of the Company on a standalone basis, on the other hand.
SECTION 4.03. Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock . (a) (i) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, Incur any Indebtedness (including Acquired Indebtedness) or issue any shares of Disqualified Stock; and (ii) the Company shall not permit any of its Restricted Subsidiaries (other than a Guarantor) to issue any shares of Preferred Stock; provided , however , that the Company and any Restricted Subsidiary that is a Guarantor or a Foreign Subsidiary may Incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock and any Restricted Subsidiary may issue shares of Preferred Stock, in each case if the Fixed Charge Coverage Ratio of the Company for the 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 or Preferred Stock is issued would have been at least 2.00 to 1.00 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 or Preferred Stock had been issued, as the case may be, and the application of proceeds therefrom had occurred at the beginning of such four-quarter period.
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(1) has a Weighted Average Life to Maturity at the time such Refinancing Indebtedness is Incurred which is not less than the shorter of (x) the remaining Weighted Average Life to Maturity of the Indebtedness, Disqualified Stock or Preferred Stock being refunded or refinanced and (y) the Weighted Average Life to Maturity that would result if all payments of principal on the Indebtedness, Disqualified Stock and Preferred Stock being refunded or refinanced that were due on or after the date one year following the last maturity date of any Securities then outstanding were instead due on such date one year following the last date of maturity of the Securities;
(2) has a Stated Maturity which is not earlier than the earlier of (x) the Stated Maturity of the Indebtedness being refunded or refinanced or (y) 91 days following the last maturity date of the Securities;
(3) to the extent such Refinancing Indebtedness refinances (a) Indebtedness equal to or junior to the Securities or the Guarantee of such Restricted Subsidiary, as applicable, such Refinancing Indebtedness is equal to or junior, as applicable, to the Securities or the Guarantee of such Restricted Subsidiary, as applicable, or (b) Disqualified Stock or Preferred Stock, such Refinancing Indebtedness is Disqualified Stock or Preferred Stock;
(4) is Incurred in an aggregate amount (or if issued with original issue discount, an aggregate issue price) that is equal to or less than the aggregate amount (or if issued with original issue discount, the aggregate accreted value) then outstanding of the Indebtedness being refinanced plus premium, fees and expenses Incurred in connection with such refinancing;
(5) shall not include (x) Indebtedness of a Restricted Subsidiary of the Company that is not a Guarantor that refinances Indebtedness of the Company or a Restricted Subsidiary that is a Guarantor, or (y) Indebtedness of the Company or a Restricted Subsidiary that refinances Indebtedness of an Unrestricted Subsidiary; and
(6) in the case of any Refinancing Indebtedness Incurred to refinance Indebtedness outstanding under clause (iv) or (xix) of this Section 4.03(b), shall be deemed to have been Incurred and to be outstanding under such clause (iv) or (xx) of this Section 4.03(b), as applicable, and not this clause (xiv) for purposes of determining amounts outstanding under such clauses (iv) or (xix) of this Section 4.03(b);
provided , further , that subclauses (1) and (2) of this clause (xiv) shall not apply to any refunding or refinancing of any Bank Indebtedness.
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(1) the Company would be permitted to Incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first sentence of Section 4.03(a); or
(2) the Fixed Charge Coverage Ratio would be greater than immediately prior to such acquisition;
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SECTION 4.04. Limitation on Restricted Payments . (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly:
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(all such payments and other actions set forth in clauses (i) through (iv) above being collectively referred to as “ Restricted Payments ”), unless, at the time of such Restricted Payment:
(1) no Default shall have occurred and be continuing or would occur as a consequence thereof;
(2) immediately after giving effect to such transaction on a pro forma basis, the Company could Incur $1.00 of additional Indebtedness under Section 4.03(a); and
(3) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Company and its Restricted Subsidiaries after the Issue Date (including Restricted Payments permitted by clauses (i), (iv) (only to the extent of one-half of the amounts paid pursuant to such clause), (vi) and (viii)of Section 4.04(b), but excluding all other Restricted Payments permitted by Section 4.04(b)), is less than the amount equal to the Cumulative Credit.
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(A) the principal amount of such new Indebtedness does not exceed the principal amount of the Subordinated Indebtedness being so redeemed, repurchased, acquired or retired for value (plus the amount of any premium required to be paid under the terms of the instrument governing the Subordinated Indebtedness being so redeemed, repurchased, acquired or retired plus any fees incurred in connection therewith),
(B) such Indebtedness is subordinated to the Securities or the related Guarantee, as the case may be, at least to the same extent as such Subordinated Indebtedness so purchased, exchanged, redeemed, repurchased, acquired or retired for value,
(C) such Indebtedness has a final scheduled maturity date equal to or later than the earlier of (x) the final scheduled maturity date of the Subordinated Indebtedness being so redeemed, repurchased, acquired or retired or (y) 91 days following the maturity date of the Securities, and
(D) such Indebtedness has a Weighted Average Life to Maturity at the time Incurred which is not less than the shorter of (x) the remaining Weighted Average Life to Maturity of the Subordinated Indebtedness being so redeemed, repurchased, acquired or retired and (y) the Weighted Average Life to Maturity that would result if all payments of principal on the Subordinated Indebtedness being redeemed, repurchased, acquired or retired that were due on or after the date one year following the last maturity date of any Securities then outstanding were instead due on such date one year following the last date of maturity of the Securities;
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(A) the cash proceeds received by the Company or any of its Restricted Subsidiaries from the sale of Equity Interests (other than Disqualified Stock) of the Company or any direct or indirect parent of the Company (to the extent contributed to the Company) to members of management, directors or consultants of the Company and its Restricted Subsidiaries or any direct or indirect parent of the Company that occurs after the Issue Date ( provided that the amount of such cash proceeds utilized for any such repurchase, retirement, other acquisition or dividend shall not increase the amount available for Restricted Payments under Section 4.04(a)(3)); plus
(B) the cash proceeds of key man life insurance policies received by the Company or any direct or indirect parent of the Company (to the extent contributed to the Company) or the Company’s Restricted Subsidiaries after the Issue Date;
provided that the Company may elect to apply all or any portion of the aggregate increase contemplated by clauses (A) and (B) above in any calendar year;
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(A) in amounts required for any direct or indirect parent of the Company, if applicable, to pay fees and expenses (including franchise or similar taxes) required to maintain its corporate existence, customary salary, bonus and other benefits payable to, and indemnities provided on behalf of, officers and employees of any direct or indirect parent of the Company, if applicable, and general corporate overhead expenses of any direct or indirect parent of the Company, if applicable, in each case to the extent such fees and expenses are attributable to the ownership or operation of the Company, if applicable, and its Subsidiaries; and
(B) in amounts required for any direct or indirect parent of the Company, if applicable, to pay interest and/or principal on Indebtedness the proceeds of which have been contributed to the Company or any of its Restricted Subsidiaries and that has been guaranteed by, or is otherwise considered Indebtedness of, the Company Incurred in accordance with Section 4.03;
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provided , however , that at the time of, and after giving effect to, any Restricted Payment permitted under clauses (vi), (vii), (x) and (xi) of this Section 4.04(b), no Default shall have occurred and be continuing or would occur as a consequence thereof.
SECTION 4.05. Dividend and Other Payment Restrictions Affecting 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 consensual encumbrance or consensual restriction on the ability of any Restricted Subsidiary to:
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except in each case for such encumbrances or restrictions existing under or by reason of:
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For purposes of determining compliance with this Section 4.05, (i) the priority of any Preferred Stock in receiving dividends or liquidating distributions prior to dividends or liquidating distributions being paid on common stock shall not be deemed a restriction on the ability to make distributions on Capital Stock and (ii) the subordination of loans or advances made to the Company or a Restricted Subsidiary of the Company to other Indebtedness Incurred by the Company or any such Restricted Subsidiary shall not be deemed a restriction on the ability to make loans or advances.
SECTION 4.06. Asset Sales . (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, cause or make an Asset Sale, unless (x) the Company or any of its Restricted Subsidiaries, as the case may be, receives consideration at the time of such Asset Sale at least equal to the Fair Market Value (as determined in good faith by the Issuers) 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, as the case may be, is in the form of Cash Equivalents; provided that the amount of:
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shall be deemed to be Cash Equivalents for the purposes of this Section 4.06(a).
In the case of Sections 4.06(b)(ii) and (iii), a binding commitment shall be treated as a permitted application of the Net Proceeds from the date of such commitment; provided that (x)
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such investment is consummated within 545 days after receipt by the Company or any Restricted Subsidiary of the Net Proceeds of any Asset Sale and (y) if such investment is not consummated within the period set forth in subclause (x), the Net Proceeds not so applied will be deemed to be Excess Proceeds (as defined below).
Pending the final application of any such Net Proceeds, the Company or such Restricted Subsidiary of the Company may temporarily reduce Indebtedness under a revolving credit facility, if any, or otherwise invest such Net Proceeds in Cash Equivalents or Investment Grade Securities. Any Net Proceeds from any Asset Sale that are not applied as provided and within the time period set forth in the first sentence of this Section 4.06(b) (it being understood that any portion of such Net Proceeds used to make an offer to purchase Securities, as described in clause (i) of this Section 4.06(b), shall be deemed to have been invested whether or not such offer is accepted) shall be deemed to constitute “Excess Proceeds.” When the aggregate amount of Excess Proceeds exceeds $15 million, the Issuers shall make an offer to all Holders of Securities (and, at the option of the Issuers, to holders of any Pari Passu Indebtedness) (an “Asset Sale Offer”) to purchase the maximum principal amount of Securities (and such Pari Passu Indebtedness), that is at least $2,000 and an integral multiple of $1,000 that may be purchased out of the Excess Proceeds at an offer price in cash in an amount equal to 100% of the principal amount thereof (or, in the event such Pari Passu Indebtedness was issued with significant original issue discount, 100% of the accreted value thereof), plus accrued and unpaid interest and Additional Interest, if any (or, in respect of such Pari Passu Indebtedness, such lesser price, if any, as may be provided for by the terms of such Pari Passu Indebtedness), to the date fixed for the closing of such offer, in accordance with the procedures set forth in this Section 4.06. The Issuers shall commence an Asset Sale Offer with respect to Excess Proceeds within ten Business Days after the date that Excess Proceeds exceeds $15 million by mailing the notice required pursuant to the terms of Section 4.06(f), with a copy to the Trustee. To the extent that the aggregate amount of Securities (and such Pari Passu Indebtedness) tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Issuers may use any remaining Excess Proceeds for general corporate purposes. If the aggregate principal amount of Securities (and such Pari Passu Indebtedness) surrendered by holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Securities to be purchased in the manner described in Section 4.06(e). Upon completion of any such Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.
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SECTION 4.07. Transactions with Affiliates . (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction or series of transactions, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate of the Company (each of the foregoing, an “Affiliate Transaction”) involving aggregate consideration in excess of $7.5 million, unless:
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SECTION 4.08. Change of Control . (a) Upon a Change of Control, each Holder shall have the right to require the Issuers to repurchase all or any part of such Holder’s Securities at a purchase price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of repurchase (subject to the right of the Holders of record on the relevant record date to receive interest due on the relevant interest payment date), in accordance with the terms contemplated in this Section 4.08; provided , however , that notwithstanding the occurrence of a Change of Control, the Issuers shall not be obligated to purchase any Securities pursuant to this Section 4.08 in the event that they have exercised their right to redeem such Securities in accordance with Article 3 of this Indenture. In the event that at the time of such Change of Control the terms of the Bank Indebtedness restrict or prohibit the repurchase of Securities pursuant to this Section 4.08, then prior to the mailing of the notice to the Holders provided for in Section 4.08(b) but in any event within 30 days following any Change of Control, the Issuers shall (i) repay in full all Bank Indebtedness or, if doing so will allow the purchase of Securities, offer to repay in full all Bank Indebtedness and repay the Bank Indebtedness of each lender who has accepted such offer, or (ii) obtain the requisite consent under the agreements governing the Bank Indebtedness to permit the repurchase of the Securities as provided for in Section 4.08(b).
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SECTION 4.09. Compliance Certificate . The Company shall deliver to the Trustee within 120 days after the end of each fiscal year of the Company, beginning with the fiscal year end on March 31, 2007, an Officers’ Certificate stating that in the course of the performance by the signers of their duties as Officers of the Company they would normally have knowledge of any Default and whether or not the signers know of any Default that occurred during such period. If they do, the certificate shall describe the Default, its status and what action the Company is taking or proposes to take with respect thereto. The Company also shall comply with Section 314(a)(4) of the TIA.
SECTION 4.10. Further Instruments and Acts . Upon request of the Trustee, the Company shall execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture.
SECTION 4.11. Future Guarantors . The Company shall cause each Restricted Subsidiary that is a Domestic Subsidiary (unless such Subsidiary is a Receivables Subsidiary) that
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to execute and deliver to the Trustee a supplemental indenture substantially in the form of Exhibit D pursuant to which such Subsidiary shall guarantee the Issuers’ Obligations under the Securities and the Indenture.
SECTION 4.12. Liens . The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, Incur or suffer to exist any Lien on any asset or property of the Company or such Restricted Subsidiary securing Indebtedness unless the Securities are equally and ratably secured with (or on a senior basis to, in the case of obligations subordinated in right of payment to the Securities) the obligations so secured until such time as such obligations are no longer secured by a Lien. The preceding sentence shall not require the Company or any Restricted Subsidiary of the Company to secure the Securities if the Lien consists of a Permitted Lien. Any Lien which is granted to secure the Securities or such Guarantee under this Section 4.12 shall be automatically released and discharged at the same time as the release of the Lien that gave rise to the obligation to secure the Securities or such Guarantee under this Section 4.12.
SECTION 4.13. Limitation on Other Senior Subordinated Indebtedness . [Reserved]
SECTION 4.14. Maintenance of Office or Agency . (a) The Company shall maintain an office or agency (which may be an office of the Trustee or an affiliate of the Trustee or Registrar) where Securities may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Company in respect of the Securities 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 as set forth in Section 13.02.
SECTION 5.01. When Company May Merge or Transfer Assets . (a) The Company shall not, directly or indirectly, consolidate, amalgamate or merge with or into or wind up or convert into (whether or not the Company is the surviving Person), or sell, assign, transfer,
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lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions, to any Person unless:
(A) the Successor Company would be permitted to Incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.03(a); or
(B) the Fixed Charge Coverage Ratio for the Successor Company and its Restricted Subsidiaries would be greater than such ratio for the Company and its Restricted Subsidiaries immediately prior to such transaction;
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The Successor Company (if other than the Company) shall succeed to, and be substituted for, the Company under this Indenture and the Securities, and in such event the Company will automatically be released and discharged from its obligations under this Indenture and the Securities. Notwithstanding the foregoing clauses (iii) and (iv) of this Section 5.01, (a) any Restricted Subsidiary may merge, consolidate or amalgamate with or transfer all or part of its properties and assets to the Company or to another Restricted Subsidiary, and (b) the Company may merge, consolidate or amalgamate with an Affiliate incorporated solely for the purpose of reincorporating the Company in another state of the United States, the District of Columbia or any territory of the United States or may convert into a limited liability company, so long as the amount of Indebtedness of the Company and its Restricted Subsidiaries is not increased thereby. This Article 5 will not apply to (i) a sale, assignment, transfer, conveyance or other disposition of assets between or among the Company and its Restricted Subsidiaries, or (ii) the conversion of Rexnord into a Delaware limited liability company.
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Except as otherwise provided in this Indenture, the Successor Co-Issuer or Successor Guarantor (if other than Rexnord or such Guarantor, as the case may be) will succeed to, and be substituted for, Rexnord or such Guarantor, as the case may be, under this Indenture and, if applicable, such Guarantor’s Guarantee, and Rexnord or such Guarantor, as the case may be, will automatically be released and discharged from its obligations under this Indenture and, if applicable, such Guarantor’s Guarantee. Notwithstanding the foregoing, (1) Rexnord or a Guarantor may merge, amalgamate or consolidate with an Affiliate incorporated solely for the purpose of reincorporating Rexnord or such Guarantor in another state of the United States, the District of Columbia or any territory of the United States so long as the amount of Indebtedness of Rexnord or the Guarantor is not increased thereby and (2) Rexnord or a Guarantor may merge, amalgamate or consolidate with another Guarantor or the Company.
In addition, notwithstanding the foregoing, Rexnord or any Guarantor may consolidate, amalgamate or merge with or into or wind up into, or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets (collectively, a “Transfer”) to, (x) the Company, Rexnord or any Guarantor or (y) any Restricted Subsidiary of the Company that is not Rexnord or a Guarantor; provided that at the time of each such Transfer pursuant to clause (y) the aggregate amount of all such Transfers since the Issue Date shall not exceed 5.0% of the consolidated assets of the Company, Rexnord and the Guarantors as shown on the most recent available balance sheet of the Company and the Restricted Subsidiaries after giving effect to each such Transfer and including all Transfers occurring from and after the Issue Date (excluding Transfers in connection with the Transactions described in the Offering Circular).
Upon consummation of the Transactions, the Company shall execute and deliver to the Trustee a supplemental indenture of the type referred to in Section 5.01(ii), whereupon the Company shall be the Successor Company and shall succeed to, and be substituted for, and may exercise every right and power of, Merger Sub under this Indenture. Notwithstanding anything above to the contrary, the merger of Merger Sub with and into the Company on the Issue Date as described in the Merger Agreement and the conversion of Rexnord into a Delaware limited liability company immediately following the Transactions, in each case shall be permitted under this Indenture.
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SECTION 6.01. Events of Default . An “Event of Default” occurs if:
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or any similar relief is granted under any foreign laws and the order or decree remains unstayed and in effect for 60 days,
The foregoing shall constitute Events of Default whatever the reason for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body.
The term “Bankruptcy Law” means Title 11, United States Code, or any similar Federal or state law for the relief of debtors. The term “Custodian” means any receiver, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law.
A Default under clause (d) above shall not constitute an Event of Default until the Trustee notifies the Issuers or the Holders of at least 25% in principal amount of the outstanding Securities notify the Issuers and the Trustee of the Default and the Issuers do not cure such Default within the time specified in clause (d) above after receipt of such notice. Such notice must specify the Default, demand that it be remedied and state that such notice is a “Notice of Default.” The Issuers shall deliver to the Trustee, within five (5) Business Days after the occurrence thereof, written notice in the form of an Officers’ Certificate of any event which is, or with the giving of notice or the lapse of time or both would become, an Event of Default, its status and what action the Issuers are taking or propose to take with respect thereto.
SECTION 6.02. Acceleration . If an Event of Default (other than an Event of Default specified in Section 6.01(f) or (g) with respect to either of the Issuers) occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of outstanding Securities, by notice to the Issuers shall declare that the principal of, premium, if any, and accrued but unpaid interest on all the Securities is due and payable. Upon such a declaration, such principal and interest shall be due and payable immediately. If an Event of Default specified in Section 6.01(f) or (g) with respect to either of the Issuers occurs, the principal of, premium, if any, and interest on all the Securities shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holders.
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The Holders of a majority in principal amount of the Securities by notice to the Trustee may rescind an acceleration and its consequences.
In the event of any Event of Default specified in Section 6.01(e), such Event of Default and all consequences thereof (excluding, however, any resulting payment default) shall be annulled, waived and rescinded, automatically and without any action by the Trustee or the Holders of the Securities, if within 20 days after such Event of Default arose the Issuers deliver an Officers’ Certificate to the Trustee stating that (x) the Indebtedness or guarantee that is the basis for such Event of Default has been discharged or (y) the holders thereof have rescinded or waived the acceleration, notice or action (as the case may be) giving rise to such Event of Default or (z) the default that is the basis for such Event of Default has been cured, it being understood that in no event shall an acceleration of the principal amount of the Securities as described above be annulled, waived or rescinded upon the happening of any such events.
SECTION 6.03. Other Remedies . If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy at law or in equity to collect the payment of principal of or interest on the Securities or to enforce the performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of the Securities or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder 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. No remedy is exclusive of any other remedy. To the extent required by law, all available remedies are cumulative.
SECTION 6.04. Waiver of Past Defaults . Provided the Securities are not then due and payable by reason of a declaration of acceleration, the Holders of a majority in principal amount of the Securities by written notice to the Trustee may waive an existing Default and its consequences except (a) a Default in the payment of the principal of or interest on a Security, (b) a Default arising from the failure to redeem or purchase any Security when required pursuant to the terms of this Indenture or (c) a Default in respect of a provision that under Section 9.02 cannot be amended without the consent of each Holder affected. When a Default is waived, it is deemed cured and the Issuers, the Trustee and the Holders will be restored to their former positions and rights under this Indenture, but no such waiver shall extend to any subsequent or other Default or impair any consequent right.
SECTION 6.05. Control by Majority . The Holders of a majority in principal amount of the Securities may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture or, subject to Section 7.01, that the Trustee determines is unduly prejudicial to the rights of any other Holder or that would involve the Trustee in personal liability. Prior to taking any action under this Indenture, the Trustee shall be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action.
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SECTION 6.06. Limitation on Suits . (a) Except to enforce the right to receive payment of principal, premium (if any) or interest when due, no Holder may pursue any remedy with respect to this Indenture or the Securities unless:
SECTION 6.07. Rights of the Holders to Receive Payment . Notwithstanding any other provision of this Indenture, the right of any Holder to receive payment of principal of and interest on the Securities held by such Holder, on or after the respective due dates expressed or provided for in the Securities, 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(a) or (b) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Issuers or any other obligor on the Securities for the whole amount then due and owing (together with interest on overdue principal and (to the extent lawful) on any unpaid interest at the rate provided for in the Securities) and the amounts provided for in Section 7.07.
SECTION 6.09. Trustee May File Proofs of Claim . The Trustee may 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 reasonable compensation, expenses disbursements and advances of the Trustee (including counsel, accountants, experts or such other professionals as the Trustee deems necessary, advisable or appropriate)) and the Holders allowed in any judicial proceedings relative to the Issuers or any Guarantor, their creditors or their property, shall be entitled to participate as a member, voting or otherwise, of any official committee of creditors appointed in such matters and, unless prohibited by law or applicable regulations, may vote on behalf of the Holders in any election of a trustee in bankruptcy or other Person performing similar functions, and any Custodian in any such judicial proceeding is hereby authorized by each Holder to make 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 it for the reasonable compensation, expenses, disbursements and
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advances of the Trustee, its agents and its counsel, and any other amounts due the Trustee under Section 7.07.
SECTION 6.10. Priorities . If the Trustee collects any money or property pursuant to this Article 6, it shall pay out the money or property in the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to holders of Senior Indebtedness of the Issuers to the extent required by Article 10 and to holders of Senior Indebtedness of the Guarantors to the extent required by Article 12;
THIRD: to the Holders for amounts due and unpaid on the Securities for principal, premium, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Securities for principal and interest, respectively; and
FOURTH: to the Company or, to the extent the Trustee collects any amount for any Guarantor, to such Guarantor.
The Trustee may fix a record date and payment date for any payment to the Holders pursuant to this Section. At least 15 days before such record date, the Trustee shall mail to each Holder and the Issuers a notice that states the record date, the payment date and amount to be paid.
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 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 and expenses, 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 pursuant to Section 6.07 or a suit by Holders of more than 10% in principal amount of the Securities.
SECTION 6.12. Waiver of Stay or Extension Laws . Neither the Issuers nor any Guarantor (to the extent it may lawfully do so) shall at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Issuers and each Guarantor (to the extent that it may lawfully do so) hereby expressly waive all benefit or advantage of any such law, and shall not 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 had been enacted.
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SECTION 7.01. Duties of Trustee . (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.
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SECTION 7.02. Rights of Trustee . (a) The Trustee may conclusively rely on 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.
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SECTION 7.03. Individual Rights of Trustee . The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Issuers or their Affiliates with the same rights it would have if it were not Trustee. Any Paying Agent or Registrar may do the same with like rights. However, the Trustee must comply with Sections 7.10 and 7.11.
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, any Guarantee or the Securities, it shall not be accountable for the Issuers’ use of the proceeds from the Securities, and it shall not be responsible for any statement of the Issuers or any Guarantor in this Indenture or in any document issued in connection with the sale of the Securities or in the Securities other than the Trustee’s certificate of authentication. The Trustee shall not be charged with knowledge of any Default or Event of Default under Sections 6.01(c), (d), (e), (h), or (i) or of the identity of any Significant Subsidiary unless either (a) a Trust Officer shall have actual knowledge thereof or (b) the Trustee shall have received written notice thereof in accordance with Section 13.02 hereof from the Issuers, any Guarantor or any Holder. In accepting the trust hereby created, the Trustee acts solely as Trustee for the Holders of the Securities and not in its individual capacity and all persons, including without limitation the Holders of Securities and the Issuers having any claim against the Trustee arising from this Indenture shall look only to the funds and accounts held by the Trustee hereunder for payment except as otherwise provided herein.
SECTION 7.05. Notice of Defaults . If a Default occurs and is continuing and if it is actually known to the Trustee, the Trustee shall mail to each Holder notice of the Default within the earlier of 90 days after it occurs or 30 days after it is actually known to a Trust Officer or written notice of it is received by the Trustee. Except in the case of a Default in the payment of principal of, premium (if any) or interest on any Security, the Trustee may withhold the notice if and so long as a committee of its Trust Officers in good faith determines that withholding the notice is in the interests of the Holders.
SECTION 7.06. Reports by Trustee to the Holders . As promptly as practicable after each June 30 beginning with the June 30 following the date of this Indenture, and in any
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event prior to June 30 in each year, the Trustee shall mail to each Holder a brief report dated as of such June 30 that complies with Section 313(a) of the TIA if and to the extent required thereby. The Trustee shall also comply with Section 313(b) of the TIA.
A copy of each report at the time of its mailing to the Holders shall be filed with the SEC and each stock exchange (if any) on which the Securities are listed. The Issuers agree to notify promptly the Trustee whenever the Securities become listed on any stock exchange and of any delisting thereof.
SECTION 7.07. Compensation and Indemnity . The Issuers shall pay to the Trustee from time to time reasonable compensation for its services. The Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust. The Issuers shall reimburse the Trustee upon request for all reasonable out-of-pocket expenses incurred or made by it, including costs of collection, in addition to the compensation for its services. Such expenses shall include the reasonable compensation and expenses, disbursements and advances of the Trustee’s agents, counsel, accountants and experts. The Issuers and each Guarantor, jointly and severally shall indemnify the Trustee against any and all loss, liability, claim, damage or expense (including reasonable attorneys’ fees and expenses) incurred by or in connection with the acceptance or administration of this trust and the performance of its duties hereunder, including the costs and expenses of enforcing this Indenture or Guarantee against the Issuers or a Guarantor (including this Section 7.07) and defending itself against or investigating any claim (whether asserted by the Issuers, any Guarantor, any Holder or any other Person). The obligation to pay such amounts shall survive the payment in full or defeasance of the Securities or the removal or resignation of the Trustee. The Trustee shall notify the Issuers of any claim for which it may seek indemnity promptly upon obtaining actual knowledge thereof; provided , however , that any failure so to notify the Issuers shall not relieve the Issuers or any Guarantor of its indemnity obligations hereunder. The Issuers shall defend the claim and the indemnified party shall provide reasonable cooperation at the Issuers’ expense in the defense. Such indemnified parties may have separate counsel and the Issuers and the Guarantors, as applicable shall pay the fees and expenses of such counsel; provided , however , that the Issuers shall not be required to pay such fees and expenses if it assumes such indemnified parties’ defense and, in such indemnified parties’ reasonable judgment, there is no conflict of interest between the Issuers and the Guarantors, as applicable, and such parties in connection with such defense. The Issuers need not reimburse any expense or indemnify against any loss, liability or expense incurred by an indemnified party through such party’s own willful misconduct, negligence or bad faith.
To secure the Issuers’ and the Guarantors’ payment obligations in this Section, the Trustee shall have a Lien prior to the Securities on all money or property held or collected by the Trustee other than money or property held in trust to pay principal of and interest on particular Securities.
The Issuers’ and the Guarantors’ payment obligations pursuant to this Section shall survive the satisfaction or discharge of this Indenture, any rejection or termination of this Indenture under any bankruptcy law or the resignation or removal of the Trustee. Without prejudice to any other rights available to the Trustee under applicable law, when the Trustee incurs expenses after the occurrence of a Default specified in Section 6.01(f) or (g) with respect
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to the Issuers, the expenses are intended to constitute expenses of administration under the Bankruptcy Law.
No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if repayment of such funds or adequate indemnity against such risk or liability is not assured to its satisfaction.
SECTION 7.08. Replacement of Trustee . (a) The Trustee may resign at any time by so notifying the Issuers. The Holders of a majority in principal amount of the Securities may remove the Trustee by so notifying the Trustee and may appoint a successor Trustee. The Issuers shall remove the Trustee if:
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SECTION 7.09. Successor Trustee by Merger . If the Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation without any further act shall be the successor Trustee.
In case at the time such successor or successors by merger, conversion or consolidation to the Trustee shall succeed to the trusts created by this Indenture any of the Securities shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee, and deliver such Securities so authenticated; and in case at that time any of the Securities shall not have been authenticated, any successor to the Trustee may authenticate such Securities either in the name of any predecessor hereunder or in the name of the successor to the Trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Securities or in this Indenture provided that the certificate of the Trustee shall have.
SECTION 7.10. Eligibility; Disqualification . The Trustee shall at all times satisfy the requirements of Section 310(a) of the TIA. The Trustee shall have a combined capital and surplus of at least $100 million as set forth in its most recent published annual report of condition. The Trustee shall comply with Section 310(b) of the TIA, subject to its right to apply for a stay of its duty to resign under the penultimate paragraph of Section 310(b) of the TIA; provided , however , that there shall be excluded from the operation of Section 310(b)(1) of the TIA any series of securities issued under this Indenture and any indenture or indentures under which other securities or certificates of interest or participation in other securities of the Issuers are outstanding if the requirements for such exclusion set forth in Section 310(b)(1) of the TIA are met.
SECTION 7.11. Preferential Collection of Claims Against the Issuers . The Trustee shall comply with Section 311(a) of the TIA, excluding any creditor relationship listed in Section 311(b) of the TIA. A Trustee who has resigned or been removed shall be subject to Section 311(a) of the TIA to the extent indicated.
SECTION 8.01. Discharge of Liability on Securities; Defeasance . This Indenture shall be discharged and shall cease to be of further effect (except as to surviving rights of registration of transfer or exchange of Securities, as expressly provided for in this Indenture) as to all outstanding Securities when:
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Subject to Sections 8.01(c) and 8.02, the Issuers at any time may terminate (i) all of their obligations under the Securities and this Indenture (with respect to such Securities) (“legal defeasance option”) or (ii) their obligations under Sections 4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.11, 4.12 and 4.13 and the operation of Section 5.01 and Sections 6.01(c), 6.01(d), 6.01(e), 6.01(f) (with respect to Significant Subsidiaries of the Company only), 6.01(g) (with respect to Significant Subsidiaries of the Company only), 6.01(h) and 6.01(i) (“covenant defeasance option”). The Issuers may exercise their legal defeasance option notwithstanding their prior exercise of their covenant defeasance option. In the event that the Issuers terminate all of their obligations under the Securities and this Indenture (with respect to such Securities) by exercising their legal defeasance option or their covenant defeasance option, the obligations of each Guarantor under its Guarantee of such Securities shall be terminated simultaneously with the termination of such obligations.
If the Issuers exercise their legal defeasance option, payment of the Securities so defeased may not be accelerated because of an Event of Default. If the Issuers exercise their covenant defeasance option, payment of the Securities so defeased may not be accelerated because of an Event of Default specified in Section 6.01(c), 6.01(d), 6.01(e), 6.01(f) (with respect to Significant Subsidiaries of the Company only), 6.01(g) (with respect to Significant Subsidiaries of the Company only), 6.01(h) or 6.01(i) or because of the failure of the Issuers to comply with Section 5.01.
Upon satisfaction of the conditions set forth herein and upon request of the Issuers, the Trustee shall acknowledge in writing the discharge of those obligations that the Issuers terminate.
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SECTION 8.02. Conditions to Defeasance . (a) The Issuers may exercise their legal defeasance option or its covenant defeasance option only if:
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SECTION 8.03. Application of Trust Money . The Trustee shall hold in trust money or Government Obligations (including proceeds thereof) deposited with it pursuant to this Article 8. It shall apply the deposited money and the money from Government Obligations through each Paying Agent and in accordance with this Indenture to the payment of principal of and interest on the Securities so discharged or defeased. Money and securities so held in trust are not subject to Article 10 or 12.
SECTION 8.04. Repayment to Company . Each of the Trustee and each Paying Agent shall promptly turn over to the Issuers upon request any money or Government Obligations held by it as provided in this Article which, in the written opinion of nationally recognized firm of independent public accountants delivered to the Trustee (which delivery shall only be required if Government Obligations have been so deposited), are in excess of the amount thereof which would then be required to be deposited to effect an equivalent discharge or defeasance in accordance with this Article.
Subject to any applicable abandoned property law, the Trustee and each Paying Agent shall pay to the Issuers upon written request any money held by them for the payment of principal or interest that remains unclaimed for two years, and, thereafter, Holders entitled to the money must look to the Issuers for payment as general creditors, and the Trustee and each Paying Agent shall have no further liability with respect to such monies.
SECTION 8.05. Indemnity for Government Obligations . The Issuers shall pay and shall indemnify the Trustee against any tax, fee or other charge imposed on or assessed against deposited Government Obligations or the principal and interest received on such Government Obligations.
SECTION 8.06. Reinstatement . If the Trustee or any Paying Agent is unable to apply any money or Government Obligations in accordance with this Article 8 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Issuers’ obligations under this Indenture and the Securities so discharged or defeased shall be revived and reinstated as though no deposit had occurred pursuant to this Article 8 until such time as the Trustee or any Paying Agent is permitted to apply all such money or Government Obligations in accordance with this Article 8; provided , however , that, if the Issuers have made any payment of principal of or interest on, any such Securities because of the reinstatement of their obligations, the Issuers
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shall be subrogated to the rights of the Holders of such Securities to receive such payment from the money or Government Obligations held by the Trustee or any Paying Agent.
SECTION 9.01. Without Consent of the Holders . (a) The Issuers and the Trustee may amend this Indenture or the Securities without notice to or consent of any Holder:
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After an amendment under this Section 9.01 becomes effective, the Issuers shall mail to the Holders a notice briefly describing such amendment. The failure to give such notice to all Holders, or any defect therein, shall not impair or affect the validity of an amendment under this Section 9.01.
SECTION 9.02. With Consent of the Holders . (a) The Issuers and the Trustee may amend this Indenture or the Securities with the written consent of the Holders of at least a majority in principal amount of the Securities then outstanding voting as a single class (including consents obtained in connection with a tender offer or exchange for the Securities). However, without the consent of each Holder of an outstanding Security affected, an amendment may not:
It shall not be necessary for the consent of the Holders under this Section 9.02 to approve the particular form of any proposed amendment, but it shall be sufficient if such consent approves the substance thereof.
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An amendment under this Section 9.02 may not make any change that adversely affects the rights under Article 10 or Article 12 of any holder of Senior Indebtedness then outstanding unless the holders of such Senior Indebtedness (or any group or Representative thereof authorized to give a consent) consent to such change.
After an amendment under this Section 9.02 becomes effective, the Issuers shall mail to the Holders a notice briefly describing such amendment. The failure to give such notice to all Holders, or any defect therein, shall not impair or affect the validity of an amendment under this Section 9.02.
SECTION 9.03. Compliance with Trust Indenture Act . From the date on which this Indenture is qualified under the TIA, every amendment, waiver or supplement to this Indenture or the Securities shall comply with the TIA as then in effect.
SECTION 9.04. Revocation and Effect of Consents and Waivers . (a) A consent to an amendment or a waiver by a Holder of a Security shall bind the Holder and every subsequent Holder of that Security or portion of the Security that evidences the same debt as the consenting Holder’s Security, even if notation of the consent or waiver is not made on the Security. However, any such Holder or subsequent Holder may revoke the consent or waiver as to such Holder’s Security or portion of the Security if the Trustee receives the notice of revocation before the date on which the Trustee receives an Officers’ Certificate from the Issuers certifying that the requisite principal amount of Securities have consented. After an amendment or waiver becomes effective, it shall bind every Holder. An amendment or waiver becomes effective upon the (i) receipt by the Issuers or the Trustee of consents by the Holders of the requisite principal amount of securities, (ii) satisfaction of conditions to effectiveness as set forth in this Indenture and any indenture supplemental hereto containing such amendment or waiver and (iii) execution of such amendment or waiver (or supplemental indenture) by the Issuers and the Trustee.
SECTION 9.05. Notation on or Exchange of Securities . If an amendment, supplement or waiver changes the terms of a Security, the Issuers may require the Holder of the Security to deliver it to the Trustee. The Trustee may place an appropriate notation on the Security regarding the changed terms and return it to the Holder. Alternatively, if the Issuers or the Trustee so determines, the Issuers in exchange for the Security shall issue and the Trustee shall authenticate a new Security that reflects the changed terms. Failure to make the appropriate notation or to issue a new Security shall not affect the validity of such amendment, supplement or waiver.
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SECTION 9.06. Trustee to Sign Amendments . The Trustee shall sign any amendment, supplement or waiver authorized pursuant to this Article 9 if the amendment does not adversely affect the rights, duties, liabilities or immunities of the Trustee. If it does, the Trustee may but need not sign it. In signing such amendment, the Trustee shall be entitled to receive indemnity reasonably satisfactory to it and shall be provided with, and (subject to Section 7.01) shall be fully protected in relying upon, an Officers’ Certificate and an Opinion of Counsel stating that such amendment, supplement or waiver is authorized or permitted by this Indenture and that such amendment, supplement or waiver is the legal, valid and binding obligation of the Issuers and the Guarantors, enforceable against them in accordance with its terms, subject to customary exceptions, and complies with the provisions hereof (including Section 9.03).
SECTION 9.07. Payment for Consent . Neither the Issuers nor any Affiliate of the Issuers shall, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Securities unless such consideration is offered to be paid to all Holders that so consent, waive or agree to amend in the time frame set forth in solicitation documents relating to such consent, waiver or agreement.
SECTION 9.08. Additional Voting Terms; Calculation of Principal Amount . All Securities issued under this Indenture shall vote and consent together on all matters (as to which any of such Securities may vote) as one class and no series of Securities will have the right to vote or consent as a separate class on any matter. Determinations as to whether Holders of the requisite aggregate principal amount of Securities have concurred in any direction, waiver or consent shall be made in accordance with this Article 9 and Section 2.14.
SECTION 10.01. Agreement to Subordinate . [Reserved]
SECTION 10.03. Default on Designated Senior Indebtedness . [Reserved]
SECTION 10.04. Acceleration of Payment of Securities . [Reserved]
SECTION 10.05. When Distribution Must Be Paid Over . [Reserved]
SECTION 10.06. Subrogation . [Reserved]
SECTION 10.08. Subordination May Not Be Impaired by Company . [Reserved]
SECTION 10.09. Rights of Trustee and Paying Agent . [Reserved]
SECTION 10.10. Distribution or Notice to Representative . [Reserved]
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SECTION 10.11. Article 10 Not to Prevent Events of Default or Limit Right to Accelerate . [Reserved]
SECTION 10.12. Trust Monies Not Subordinated . [Reserved]
SECTION 10.13. Trustee Entitled to Rely . [Reserved]
SECTION 10.14. Trustee to Effectuate Subordination . [Reserved]
SECTION 10.15. Trustee Not Fiduciary for Holders of Senior Indebtedness . [Reserved]
SECTION 10.16. Reliance by Holders of Senior Indebtedness on Subordination Provisions . [Reserved]
SECTION 11.01. Guarantees . (a) Each Guarantor hereby jointly and severally, irrevocably and unconditionally guarantees on a unsecured senior basis, as a primary obligor and not merely as a surety, to each Holder and to the Trustee and its successors and assigns (i) the full and punctual payment when due, whether at Stated Maturity, by acceleration, by redemption or otherwise, of all obligations of the Issuers under this Indenture (including obligations to the Trustee) and the Securities, whether for payment of principal of, premium, if any, or interest on in respect of the Securities and all other monetary obligations of the Issuers under this Indenture and the Securities and (ii) the full and punctual performance within applicable grace periods of all other obligations of the Issuers whether for fees, expenses, indemnification or otherwise under this Indenture and the Securities (all the foregoing being hereinafter collectively called the “Guaranteed Obligations”). Each Guarantor further agrees that the Guaranteed Obligations may be extended or renewed, in whole or in part, without notice or further assent from each such Guarantor, and that each such Guarantor shall remain bound under this Article 11 notwithstanding any extension or renewal of any Guaranteed Obligation.
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SECTION 11.02. Limitation on Liability . (a) Any term or provision of this Indenture to the contrary notwithstanding, the maximum aggregate amount of the Guaranteed Obligations guaranteed hereunder by any Guarantor shall not exceed the maximum amount that can be hereby guaranteed without rendering this Indenture, as it relates to such Guarantor, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally.
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In the case of clause (b)(i) above, such Guarantor shall be released from its guarantees, if any, of, and all pledges and security, if any, granted in connection with, the Credit Agreement and any other Indebtedness of the Issuers or any Restricted Subsidiary of the Issuers.
A Guarantee also shall be automatically released upon the applicable Subsidiary ceasing to be a Subsidiary as a result of any foreclosure of any pledge or security interest securing Bank Indebtedness or other exercise of remedies in respect thereof or if such Subsidiary is released from its guarantees of, and all pledges and security interests granted in connection with, the Credit Agreement and any other Indebtedness of the Issuers or any Restricted Subsidiary of the Company which results in the obligation to guarantee the Securities.
SECTION 11.03. Successors and Assigns . This Article 11 shall be binding upon each Guarantor and its successors and assigns 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 conferred upon that party in this Indenture and in the Securities shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions of this Indenture.
SECTION 11.04. No Waiver . Neither a failure nor a delay on the part of either the Trustee or the Holders in exercising any right, power or privilege under this Article 11 shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise of any right, power or privilege. The rights, remedies and benefits of the Trustee and the Holders herein expressly specified are cumulative and not exclusive of any other rights, remedies or benefits which either may have under this Article 11 at law, in equity, by statute or otherwise.
SECTION 11.05. Modification . No modification, amendment or waiver of any provision of this Article 11, nor the consent to any departure by any Guarantor therefrom, shall in any event be effective unless the same shall be in writing and signed by the Trustee, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on any Guarantor in any case shall entitle such Guarantor to any other or further notice or demand in the same, similar or other circumstances.
SECTION 11.06. Execution of Supplemental Indenture for Future Guarantors . Each Subsidiary and other Person which is required to become a Guarantor pursuant to Section 4.11 shall promptly execute and deliver to the Trustee a supplemental indenture in the form of
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Exhibit D hereto pursuant to which such Subsidiary or other Person shall become a Guarantor under this Article 11 and shall guarantee the Guaranteed Obligations. Concurrently with the execution and delivery of such supplemental indenture, the Issuers shall deliver to the Trustee an Opinion of Counsel and an Officers’ Certificate to the effect that such supplemental indenture has been duly authorized, executed and delivered by such Subsidiary or other Person and that, subject to the application of bankruptcy, insolvency, moratorium, fraudulent conveyance or transfer and other similar laws relating to creditors’ rights generally and to the principles of equity, whether considered in a proceeding at law or in equity, the Guarantee of such Guarantor is a valid and binding obligation of such Guarantor, enforceable against such Guarantor in accordance with its terms and/or to such other matters as the Trustee may reasonably request.
SECTION 11.07. Non-Impairment . The failure to endorse a Guarantee on any Security shall not affect or impair the validity thereof.
SECTION 12.01. Agreement to Subordinate . [Reserved]
SECTION 12.02. Liquidation, Dissolution, Bankruptcy . [Reserved]
SECTION 12.03. Default on Designated Senior Indebtedness of a Guarantor . [Reserved]
SECTION 12.04. Demand for Payment . [Reserved]
SECTION 12.05. When Distribution Must Be Paid Over . [Reserved]
SECTION 12.06. Subrogation . [Reserved]
SECTION 12.08. Subordination May Not Be Impaired by a Guarantor . [Reserved]
SECTION 12.09. Rights of Trustee and Paying Agent . [Reserved]
SECTION 12.10. Distribution or Notice to Representative . [Reserved]
SECTION 12.11. Article 12 Not to Prevent Events of Default or Limit Right to Accelerate . [Reserved]
SECTION 12.12. Trustee Entitled to Rely . [Reserved]
SECTION 12.13. Trustee to Effectuate Subordination . [Reserved]
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SECTION 12.14. Trustee Not Fiduciary for Holders of Senior Indebtedness of a Guarantor . [Reserved]
SECTION 12.15. Reliance by Holders of Senior Indebtedness of a Guarantor on Subordination Provisions . [Reserved]
SECTION 12.16. Trust Monies Not Subordinated . [Reserved]
SECTION 13.01. Trust Indenture Act Controls . If and to the extent that any provision of this Indenture limits, qualifies or conflicts with the duties imposed by, or with another provision (an “incorporated provision”) included in this Indenture by operation of, Sections 310 to 318 of the TIA, inclusive, such imposed duties or incorporated provision shall control.
SECTION 13.02. Notices . (a) Any notice or communication required or permitted hereunder shall be in writing and delivered in person, via facsimile or mailed by first-class mail addressed as follows:
if to the Issuers or a Guarantor:
RBS Global, Inc.
4701 Greenfield Avenue
Milwaukee, Wisconsin 53214
Attention of: General Counsel
Facsimile: (414) 643-2510
if to the Trustee:
Well Fargo Bank, National Association
Sixth & Marquette; N9303-120
Minneapolis, MN 55479
Attention of:
Corporate Trust Services
Facsimile: (612) 667-9825
The Issuers or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications.
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SECTION 13.03. Communication by the Holders with Other Holders . The Holders may communicate pursuant to Section 312(b) of the TIA with other Holders with respect to their rights under this Indenture or the Securities. The Issuers, the Trustee, the Registrar and other Persons shall have the protection of Section 312(c) of the TIA.
SECTION 13.04. Certificate and Opinion as to Conditions Precedent . Upon any request or application by the Issuers to the Trustee to take or refrain from taking any action under this Indenture, the Issuers shall furnish to the Trustee at the request of the Trustee:
SECTION 13.05. Statements Required in Certificate or Opinion . Each certificate or opinion with respect to compliance with a covenant or condition provided for in this Indenture (other than pursuant to Section 4.09) shall include:
SECTION 13.06. When Securities Disregarded . In determining whether the Holders of the required principal amount of Securities have concurred in any direction, waiver or consent, Securities owned by the Issuers, any Guarantor or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuers or any Guarantor shall be disregarded and deemed not to be outstanding, except that, for the purpose of determining whether the Trustee shall be protected in relying on any such direction, waiver or
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consent, only Securities which the Trustee knows are so owned shall be so disregarded. Subject to the foregoing, only Securities outstanding at the time shall be considered in any such determination.
SECTION 13.07. Rules by Trustee, Paying Agent and Registrar . The Trustee may make reasonable rules for action by or a meeting of the Holders. The Registrar and a Paying Agent may make reasonable rules for their functions.
SECTION 13.08. Legal Holidays . If a payment date is not a Business Day, payment shall be made on the next succeeding day that is a Business Day, and no interest shall accrue on any amount that would have been otherwise payable on such payment date if it were a Business Day for the intervening period. If a regular record date is not a Business Day, the record date shall not be affected.
SECTION 13.09. GOVERNING LAW . THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
SECTION 13.10. No Recourse Against Others . No director, officer, employee, manager, incorporator or holder of any Equity Interests in the Issuers or of any Guarantor or any direct or indirect parent corporation, as such, shall have any liability for any obligations of the Issuers or the Guarantors under the Securities or this Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Securities by accepting a Security waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Securities.
SECTION 13.11. Successors . All agreements of the Issuers and each Guarantor in this Indenture and the Securities shall bind its successors. All agreements of the Trustee in this Indenture shall bind its successors.
SECTION 13.12. Multiple 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. One signed copy is enough to prove this Indenture.
SECTION 13.13. Table of Contents; Headings . The table of contents, cross-reference sheet and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof.
SECTION 13.14. Indenture Controls . If and to the extent that any provision of the Securities limits, qualifies or conflicts with a provision of this Indenture, such provision of this Indenture shall control.
SECTION 13.15. Severability . In case any provision in this Indenture 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 and such provision shall be ineffective only to the extent of such invalidity, illegality or unenforceability.
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IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed as of the date first written above.
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CHASE MERGER SUB, INC. |
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By: |
/s/ Patricia M. Navis |
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Name: Patricia M. Navis |
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Title: Vice President and Secretary |
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WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee |
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By: |
/s/ Timothy P. Mowdy |
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Name: Timothy P. Mowdy |
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Title: Vice President |
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APPENDIX A
PROVISIONS RELATING TO INITIAL SECURITIES, ADDITIONAL SECURITIES AND EXCHANGE SECURITIES
1. Definitions .
1.1 Definitions .
For the purposes of this Appendix A the following terms shall have the meanings indicated below:
“Additional Interest” has the meaning set forth in the Registration Agreement.
“Definitive Security” means a certificated Initial Security or Exchange Security (bearing the Restricted Securities Legend if the transfer of such Security is restricted by applicable law) that does not include the Global Securities Legend.
“Depository” means The Depository Trust Company, its nominees and their respective successors.
“Global Securities Legend” means the legend set forth under that caption in the applicable Exhibit to this Indenture.
“IAI” means an institutional “accredited investor” as described in Rule 501(a)(1), (2), (3) or (7) under the Securities Act.
“Initial Purchasers” means Credit Suisse Securities (USA) LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Bear, Stearns & Co. Inc. and Lehman Brothers Inc., and such other initial purchasers party to the Purchase Agreement entered into in connection with the offer and sale of the Securities.
“Purchase Agreement” means (a) the Purchase Agreement dated July 14, 2006, among the Company and the Initial Purchasers and (b) any other similar Purchase Agreement relating to Additional Securities.
“QIB” means a “qualified institutional buyer” as defined in Rule 144A.
“Registered Exchange Offer” means the offer by the Company, pursuant to the Registration Agreement, to certain Holders of Initial Securities, to issue and deliver to such Holders, in exchange for their Initial Securities, a like aggregate principal amount of Exchange Securities registered under the Securities Act.
“Registration Agreement” means (a) the Registration Rights Agreement dated as of July 21, 2006 among the Issuers, the Guarantors and the Initial Purchasers relating to the Securities and (b) any other similar Registration Rights Agreement relating to Additional Securities.
“Regulation S” means Regulation S under the Securities Act.
“Regulation S Securities” means all Initial Securities offered and sold outside the United States in reliance on Regulation S.
“Restricted Period,” with respect to any Securities, means the period of 40 consecutive days beginning on and including the later of (a) the day on which such Securities are first offered to persons other than distributors (as defined in Regulation S under the Securities Act) in reliance on Regulation S, notice of which day shall be promptly given by the Company to the Trustee, and (b) the Issue Date, and with respect to any Additional Securities that are Transfer Restricted Securities, it means the comparable period of 40 consecutive days.
“Restricted Securities Legend” means the legend set forth in Section 2.2(f)(i) herein.
“Rule 501” means Rule 501(a)(1), (2), (3) or (7) under the Securities Act.
“Rule 144A” means Rule 144A under the Securities Act.
“Rule 144A Securities” means all Initial Securities offered and sold to QIBs in reliance on Rule 144A.
“Securities Custodian” means the custodian with respect to a Global Security (as appointed by the Depository) or any successor person thereto, who shall initially be the Trustee.
“Shelf Registration Statement” means a registration statement filed by the Company in connection with the offer and sale of Initial Securities pursuant to the Registration Agreement.
“Transfer Restricted Securities” means Definitive Securities and any other Securities that bear or are required to bear or are subject to the Restricted Securities Legend.
“Unrestricted Definitive Security” means Definitive Securities and any other Securities that are not required to bear, or are not subject to, the Restricted Securities Legend.
1.2 Other Definitions .
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Term : |
Defined in Section : |
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Agent Members |
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Global Securities |
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Regulation S Global Securities |
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Rule 144A Global Securities |
2.1(b) |
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Regulation S Permanent Global Security |
2.1(b) |
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Regulation S Temporary Global Security |
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2. The Securities .
2.1 Form and Dating; Global Securities .
(a) The Initial Securities issued on the date hereof will be (i) offered and sold by the Issuers pursuant to the Purchase Agreement and (ii) resold, initially only to (1) QIBs in reliance on Rule 144A and (2) Persons other than U.S. Persons (as defined in Regulation S) in reliance on Regulation S. Such Initial Securities may thereafter be transferred to, among others, QIBs, purchasers in reliance on Regulation S and, except as set forth below, IAIs in accordance with Rule 501. Additional Securities offered after the date hereof may be offered and sold by the Issuers from time to time pursuant to one or more Purchase Agreements in accordance with applicable law.
(b) Global Securities . (i) Rule 144A Securities initially shall be represented by one or more Securities in definitive, fully registered, global form without interest coupons (collectively, the “Rule 144A Global Securities”).
Regulation S Securities initially shall be represented by one or more Securities in fully registered, global form without interest coupons (collectively, the “Regulation S Temporary Global Security” and, together with the Regulation S Permanent Global Security (defined below), the “Regulation S Global Securities”), which shall be registered in the name of the Depository or the nominee of the Depository for the accounts of designated agents holding on behalf of Euroclear or Clearstream.
The Restricted Period shall be terminated upon the receipt by the Trustee of: (1) a written certificate from the Depository, together with copies of certificates from Euroclear and Clearstream certifying that they have received certification of non-United States beneficial ownership of 100% of the aggregate principal amount of the Regulation S Temporary Global Security (except to the extent of any beneficial owners thereof who acquired an interest therein during the Restricted Period pursuant to another exemption from registration under the Securities Act and who shall take delivery of a beneficial ownership interest in a 144A Global Security bearing a Private Placement Legend, all as contemplated by this Appendix A); and (2) an Officers’ Certificate from the Company.
Following the termination of the Restricted Period, beneficial interests in the Regulation S Temporary Global Security shall be exchanged for beneficial interests in a permanent Global Security (the “Regulation S Permanent Global Security”) pursuant to the applicable procedures of the Depository. Simultaneously with the authentication of the Regulation S Permanent Global Security, the Trustee shall cancel the Regulation S Temporary Global Security. The aggregate principal amount of the Regulation S Temporary Global Security and the Regulation S Permanent Global Security may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depository or its nominee, as the case may be, in connection with transfers of interest as hereinafter provided.
The provisions of the “Operating Procedures of the Euroclear System” and “Terms and Conditions Governing Use of Euroclear” and the “General Terms and Conditions of Clearstream Banking” and “Customer Handbook” of Clearstream shall be applicable to transfers
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of beneficial interests in the Regulation S Temporary Global Security and the Regulation S Permanent Global Security that are held by Participants through Euroclear or Clearstream.
The term “Global Securities” means the Rule 144A Global Securities and the Regulation S Global Securities. The Global Securities shall bear the Global Security Legend. The Global Securities initially shall (i) be registered in the name of the Depository or the nominee of such Depository, in each case for credit to an account of an Agent Member, (ii) be delivered to the Trustee as custodian for such Depository and (iii) bear the Restricted Securities Legend.
Members of, or direct or indirect participants in, the Depository shall have no rights under this Indenture with respect to any Global Security held on their behalf by the Depository, or the Trustee as its custodian, or under the Global Securities. The Depository may be treated by the Issuers, the Trustee and any agent of the Issuers or the Trustee as the absolute owner of the Global Securities for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Issuers, the Trustee or any agent of the Issuers or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depository, or impair, as between the Depository and its Agent Members, the operation of customary practices governing the exercise of the rights of a Holder of any Security.
(ii) Transfers of Global Securities shall be limited to transfer in whole, but not in part, to the Depository, its successors or their respective nominees. Interests of beneficial owners in the Global Securities may be transferred or exchanged for Definitive Securities only in accordance with the applicable rules and procedures of the Depository and the provisions of Section 2.2. In addition, a Global Security shall be exchangeable for Definitive Securities if (x) the Depository (1) notifies the Company that it is unwilling or unable to continue as depository for such Global Security and the Company thereupon fails to appoint a successor depository or (2) has ceased to be a clearing agency registered under the Exchange Act or (y) there shall have occurred and be continuing an Event of Default with respect to such Global Security; provided that in no event shall the Regulation S Temporary Global Security be exchanged by the Issuers for Definitive Securities prior to (x) the expiration of the Restricted Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903(b)(3)(ii)(B) under the Securities Act. In all cases, Definitive Securities delivered in exchange for any Global Security or beneficial interests therein shall be registered in the names, and issued in any approved denominations, requested by or on behalf of the Depository in accordance with its customary procedures.
(iii) In connection with the transfer of a Global Security as an entirety to beneficial owners pursuant to subsection (i) of this Section 2.1(b), such Global Security shall be deemed to be surrendered to the Trustee for cancellation, and the Company shall execute, and the Trustee shall authenticate and make available for delivery, to each beneficial owner identified by the Depository in writing in exchange for its beneficial interest in such Global Security, an equal aggregate principal amount of Definitive Securities of authorized denominations.
(iv) Any Transfer Restricted Security delivered in exchange for an interest in a Global Security pursuant to Section 2.2 shall, except as otherwise provided in Section 2.2, bear the Restricted Securities Legend.
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(v) Notwithstanding the foregoing, through the Restricted Period, a beneficial interest in such Regulation S Global Security may be held only through Euroclear or Clearstream unless delivery is made in accordance with the applicable provisions of Section 2.2.
(vi) The Holder of any Global Security may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Securities.
2.2 Transfer and Exchange.
(a) Transfer and Exchange of Global Securities . A Global Security may not be transferred as a whole except as set forth in Section 2.1(b). Global Securities will not be exchanged by the Issuers for Definitive Securities except under the circumstances described in Section in Section 2.1(b)(ii). Global Securities also may be exchanged or replaced, in whole or in part, as provided in Sections 2.08 and 2.10 of this Indenture. Beneficial interests in a Global Security may be transferred and exchanged as provided in Section 2.2(b) or 2.2(g).
(b) Transfer and Exchange of Beneficial Interests in Global Securities . The transfer and exchange of beneficial interests in the Global Securities shall be effected through the Depository, in accordance with the provisions of this Indenture and the applicable rules and procedures of the Depository. Beneficial interests in Restricted Global Securities shall be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. Beneficial interests in Global Securities shall be transferred or exchanged only for beneficial interests in Global Securities. Transfers and exchanges of beneficial interests in the Global Securities also shall require compliance with either subparagraph (i) or (ii) below, as applicable, as well as one or more of the other following subparagraphs, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Security . Beneficial interests in any Restricted Global Security may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Security in accordance with the transfer restrictions set forth in the Restricted Securities Legend; provided , however , that prior to the expiration of the Restricted Period, transfers of beneficial interests in a Regulation S Global Security may not be made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). A beneficial interest in an Unrestricted Global Security may be transferred to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Security. No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.2(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in Global Securities . In connection with all transfers and exchanges of beneficial interests in any Global Security that is not subject to Section 2.2(b)(i), the transferor of such beneficial interest must deliver to the Registrar (1) a written order from an Agent Member given to the Depository in accordance with the applicable rules and procedures of the Depository directing the Depository to credit or cause to be credited a beneficial interest in another Global Security in an amount equal to the beneficial interest to be transferred or
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exchanged and (2) instructions given in accordance with the applicable rules and procedures of the Depository containing information regarding the Agent Member account to be credited with such increase. Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Securities contained in this Indenture and the Securities or otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount of the relevant Global Security pursuant to Section 2.2(g).
(iii) Transfer of Beneficial Interests to Another Restricted Global Security . A beneficial interest in a Transfer Restricted Global Security may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in another Transfer Restricted Global Security if the transfer complies with the requirements of Section 2.2(b)(ii) above and the Registrar receives the following:
(A) if the transferee will take delivery in the form of a beneficial interest in a Rule 144A Global Security, then the transferor must deliver a certificate in the form attached to the applicable Security; and
(B) if the transferee will take delivery in the form of a beneficial interest in a Regulation S Global Security, then the transferor must deliver a certificate in the form attached to the applicable Security.
(iv) Transfer and Exchange of Beneficial Interests in a Transfer Restricted Global Security for Beneficial Interests in an Unrestricted Global Security . A beneficial interest in a Transfer Restricted Global Security may be exchanged by any holder thereof for a beneficial interest in an Unrestricted Global Security or transferred to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Security if the exchange or transfer complies with the requirements of Section 2.2(b)(ii) above and the Registrar receives the following:
(A) if the holder of such beneficial interest in a Restricted Global Security proposes to exchange such beneficial interest for a beneficial interest in an Unrestricted Global Security, a certificate from such holder in the form attached to the applicable Security; or
(B) if the holder of such beneficial interest in a Restricted Global Security proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Security, a certificate from such holder in the form attached to the applicable Security,
and, in each such case, if the Company or the Registrar so requests or if the applicable rules and procedures of the Depository so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Restricted Securities Legend are no longer required in order to maintain compliance with the Securities Act. If any such transfer or exchange is effected pursuant
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to this subparagraph (iv) at a time when an Unrestricted Global Security has not yet been issued, the Issuers shall issue and, upon receipt of an written order of the Company in the form of an Officers’ Certificate in accordance with Section 2.01, the Trustee shall authenticate one or more Unrestricted Global Securities in an aggregate principal amount equal to the aggregate principal amount of beneficial interests transferred or exchanged pursuant to this subparagraph (iv).
(v) Transfer and Exchange of Beneficial Interests in an Unrestricted Global Security for Beneficial Interests in a Restricted Global Security . Beneficial interests in an Unrestricted Global Security cannot be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global Security.
(c) Transfer and Exchange of Beneficial Interests in Global Securities for Definitive Securities . A beneficial interest in a Global Security may not be exchanged for a Definitive Security except under the circumstances described in Section 2.1(b)(ii). A beneficial interest in a Global Security may not be transferred to a Person who takes delivery thereof in the form of a Definitive Security except under the circumstances described in Section 2.1(b)(ii). In any case, beneficial interests in Global Securities shall be transferred or exchanged only for Definitive Securities.
(d) Transfer and Exchange of Definitive Securities for Beneficial Interests in Global Securities . Transfers and exchanges of beneficial interests in the Global Securities also shall require compliance with either subparagraph (i), (ii) or (ii) below, as applicable:
(i) Transfer Restricted Securities to Beneficial Interests in Restricted Global Securities . If any Holder of a Transfer Restricted Security proposes to exchange such Transfer Restricted Security for a beneficial interest in a Restricted Global Security or to transfer such Transfer Restricted Security to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Security, then, upon receipt by the Registrar of the following documentation:
(A) if the Holder of such Transfer Restricted Security proposes to exchange such Transfer Restricted Security for a beneficial interest in a Restricted Global Security, a certificate from such Holder in the form attached to the applicable Security;
(B) if such Transfer Restricted Security is being transferred to a Qualified Institutional Buyer in accordance with Rule 144A under the Securities Act, a certificate from such Holder in the form attached to the applicable Security;
(C) if such Transfer Restricted Security is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904 under the Securities Act, a certificate from such Holder in the form attached to the applicable Security;
(D) if such Transfer Restricted Security is being transferred pursuant to an exemption from the registration requirements of the Securities Act in
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accordance with Rule 144 under the Securities Act, a certificate from such Holder in the form attached to the applicable Security;
(E) if such Transfer Restricted Security is being transferred to an Institutional Accredited Investor in reliance on an exemption from the registration requirements of the Securities Act other than those listed in subparagraphs (B) through (D) above, a certificate from such Holder in the form attached to the applicable Security, including the certifications, certificates and Opinion of Counsel, if applicable; or
(F) if such Transfer Restricted Security is being transferred to the Company or a Subsidiary thereof, a certificate from such Holder in the form attached to the applicable Security;
the Trustee shall cancel the Transfer Restricted Security, and increase or cause to be increased the aggregate principal amount of the appropriate Restricted Global Security.
(ii) Transfer Restricted Securities to Beneficial Interests in Unrestricted Global Securities . A Holder of a Transfer Restricted Security may exchange such Transfer Restricted Definitive Security for a beneficial interest in an Unrestricted Global Security or transfer such Transfer Restricted Security to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Security only if the Registrar receives the following:
(A) if the Holder of such Transfer Restricted Security proposes to exchange such Transfer Restricted Security for a beneficial interest in an Unrestricted Global Security, a certificate from such Holder in the form attached to the applicable Security; or
(B) if the Holder of such Transfer Restricted Securities proposes to transfer such Transfer Restricted Security to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Security, a certificate from such Holder in the form attached to the applicable Security,
and, in each such case, if the Company or the Registrar so requests or if the applicable rules and procedures of the Depository so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Restricted Securities Legend are no longer required in order to maintain compliance with the Securities Act. Upon satisfaction of the conditions of this subparagraph (ii), the Trustee shall cancel the Transfer Restricted Securities and increase or cause to be increased the aggregate principal amount of the Unrestricted Global Security. If any such transfer or exchange is effected pursuant to this subparagraph (ii) at a time when an Unrestricted Global Security has not yet been issued, the Company shall issue and, upon receipt of an written order of the Company in the form of an Officers’ Certificate, the Trustee shall authenticate one or more Unrestricted Global Securities in
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an aggregate principal amount equal to the aggregate principal amount of Transfer Restricted Securities transferred or exchanged pursuant to this subparagraph (ii).
(iii) Unrestricted Definitive Securities to Beneficial Interests in Unrestricted Global Securities . A Holder of an Unrestricted Definitive Security may exchange such Unrestricted Definitive Security for a beneficial interest in an Unrestricted Global Security or transfer such Unrestricted Definitive Security to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Security at any time. Upon receipt of a request for such an exchange or transfer, the Trustee shall cancel the applicable Unrestricted Definitive Security and increase or cause to be increased the aggregate principal amount of one of the Unrestricted Global Securities. If any such transfer or exchange is effected pursuant to this subparagraph (iii) at a time when an Unrestricted Global Security has not yet been issued, the Issuers shall issue and, upon receipt of an written order of the Company in the form of an Officers’ Certificate, the Trustee shall authenticate one or more Unrestricted Global Securities in an aggregate principal amount equal to the aggregate principal amount of Unrestricted Definitive Securities transferred or exchanged pursuant to this subparagraph (iii).
(iv) Unrestricted Definitive Securities to Beneficial Interests in Restricted Global Securities . An Unrestricted Definitive Security cannot be exchanged for, or transferred to a Person who takes delivery thereof in the form of, a beneficial interest in a Restricted Global Security.
(e) Transfer and Exchange of Definitive Securities for Definitive Securities . Upon request by a Holder of Definitive Securities and such Holder’s compliance with the provisions of this Section 2.2(e), the Registrar shall register the transfer or exchange of Definitive Securities. Prior to such registration of transfer or exchange, the requesting Holder shall present or surrender to the Registrar the Definitive Securities duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by its attorney, duly authorized in writing. In addition, the requesting Holder shall provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 2.2(e).
(i) Transfer Restricted Securities to Transfer Restricted Securities . A Transfer Restricted Security may be transferred to and registered in the name of a Person who takes delivery thereof in the form of a Transfer Restricted Security if the Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A under the Securities Act, then the transferor must deliver a certificate in the form attached to the applicable Security;
(B) if the transfer will be made pursuant to Rule 903 or Rule 904 under the Securities Act, then the transferor must deliver a certificate in the form attached to the applicable Security;
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(C) if the transfer will be made pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144 under the Securities Act, a certificate in the form attached to the applicable Security;
(D) if the transfer will be made to an IAI in reliance on an exemption from the registration requirements of the Securities Act other than those listed in subparagraphs (A) through (D) above, a certificate in the form attached to the applicable Security; and
(E) if such transfer will be made to the Company or a Subsidiary thereof, a certificate in the form attached to the applicable Security.
(ii) Transfer Restricted Securities to Unrestricted Definitive Securities . Any Transfer Restricted Security may be exchanged by the Holder thereof for an Unrestricted Definitive Security or transferred to a Person who takes delivery thereof in the form of an Unrestricted Definitive Security if the Registrar receives the following:
(1) if the Holder of such Transfer Restricted Security proposes to exchange such Transfer Restricted Security for an Unrestricted Definitive Security, a certificate from such Holder in the form attached to the applicable Security; or
(2) if the Holder of such Transfer Restricted Security proposes to transfer such Securities to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Security, a certificate from such Holder in the form attached to the applicable Security,
and, in each such case, if the Registrar so requests, an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Restricted Securities Legend are no longer required in order to maintain compliance with the Securities Act.
(iii) Unrestricted Definitive Securities to Unrestricted Definitive Securities . A Holder of an Unrestricted Definitive Security may transfer such Unrestricted Definitive Securities to a Person who takes delivery thereof in the form of an Unrestricted Definitive Security at any time. Upon receipt of a request to register such a transfer, the Registrar shall register the Unrestricted Definitive Securities pursuant to the instructions from the Holder thereof.
(iv) Unrestricted Definitive Securities to Transfer Restricted Securities . An Unrestricted Definitive Security cannot be exchanged for, or transferred to a Person who takes delivery thereof in the form of, a Transfer Restricted Security.
At such time as all beneficial interests in a particular Global Security have been exchanged for Definitive Securities or a particular Global Security has been redeemed, repurchased or canceled in whole and not in part, each such Global Security shall be returned to or retained and canceled by the Trustee in accordance with Section 2.11. At any time prior to
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such cancellation, if any beneficial interest in a Global Security is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Security or for Definitive Securities, the principal amount of Securities represented by such Global Security shall be reduced accordingly and an endorsement shall be made on such Global Security by the Trustee or by the Depository at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Security, such other Global Security shall be increased accordingly and an endorsement shall be made on such Global Security by the Trustee or by the Depository at the direction of the Trustee to reflect such increase.
(f) Legend .
(i) Except as permitted by the following paragraph (ii), (iii) or (iv), each Security certificate evidencing the Global Securities and the Definitive Securities (and all Securities issued in exchange therefor or in substitution thereof) shall bear a legend in substantially the following form (each defined term in the legend being defined as such for purposes of the legend only):
“THIS NOTE (OR ITS PREDECESSOR) 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 THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (I) IN THE UNITED STATES TO A PERSON WHOM 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, (II) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF APPLICABLE) OR (IV) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
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PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS SET FORTH IN CLAUSE (A) ABOVE.”
Each Definitive Security shall bear the following additional legends:
“IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.”
(ii) Upon any sale or transfer of a Transfer Restricted Security that is a Definitive Security, the Registrar shall permit the Holder thereof to exchange such Transfer Restricted Security for a Definitive Security that does not bear the legends set forth above and rescind any restriction on the transfer of such Transfer Restricted Security if the Holder certifies in writing to the Registrar that its request for such exchange was made in reliance on Rule 144 (such certification to be in the form set forth on the reverse of the Initial Security).
(iii) After a transfer of any Initial Securities during the period of the effectiveness of a Shelf Registration Statement with respect to such Initial Securities, all requirements pertaining to the Restricted Securities Legend on such Initial Securities shall cease to apply and the requirements that any such Initial Securities be issued in global form shall continue to apply.
(iv) Upon the consummation of a Registered Exchange Offer with respect to the Initial Securities pursuant to which Holders of such Initial Securities are offered Exchange Securities in exchange for their Initial Securities, all requirements pertaining to Initial Securities that Initial Securities be issued in global form shall continue to apply, and Exchange Securities in global form without the Restricted Securities Legend shall be available to Holders that exchange such Initial Securities in such Registered Exchange Offer.
(v) Upon a sale or transfer after the expiration of the Restricted Period of any Initial Security acquired pursuant to Regulation S, all requirements that such Initial Security bear the Restricted Securities Legend shall cease to apply and the requirements requiring any such Initial Security be issued in global form shall continue to apply.
(vi) Any Additional Securities sold in a registered offering shall not be required to bear the Restricted Securities Legend.
(g) Cancellation or Adjustment of Global Security . At such time as all beneficial interests in a particular Global Security have been exchanged for Definitive Securities or a particular Global Security has been redeemed, repurchased or canceled in whole and not in part, each such Global Security shall be returned to or retained and canceled by the Trustee in accordance with Section 2.11 of this Indenture. At any time prior to such cancellation, if any beneficial interest in a Global Security is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Security or for Definitive Securities, the principal amount of Securities represented by such Global Security shall be reduced accordingly and an endorsement shall be made on such Global Security by the Trustee
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or by the Depository at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Security, such other Global Security shall be increased accordingly and an endorsement shall be made on such Global Security by the Trustee or by the Depository at the direction of the Trustee to reflect such increase.
(h) Obligations with Respect to Transfers and Exchanges of Securities .
(i) To permit registrations of transfers and exchanges, the Issuers shall execute and the Trustee shall authenticate, Definitive Securities and Global Securities at the Registrar’s request.
(ii) No service charge shall be made for any registration of transfer or exchange, but the Issuers may require payment of a sum sufficient to cover any transfer tax, assessments, or similar governmental charge payable in connection therewith (other than any such transfer taxes, assessments or similar governmental charge payable upon exchanges pursuant to Sections 3.06, 4.06, 4.08 and 9.05 of this Indenture).
(iii) Prior to the due presentation for registration of transfer of any Security, the Issuers, the Trustee, a Paying Agent or the Registrar may deem and treat the person in whose name a Security is registered as the absolute owner of such Security for the purpose of receiving payment of principal of and interest on such Security and for all other purposes whatsoever, whether or not such Security is overdue, and none of the Issuers, the Trustee, the Paying Agent or the Registrar shall be affected by notice to the contrary.
(iv) All Securities issued upon any transfer or exchange pursuant to the terms of this Indenture shall evidence the same debt and shall be entitled to the same benefits under this Indenture as the Securities surrendered upon such transfer or exchange.
(i) No Obligation of the Trustee .
(i) The Trustee shall have no responsibility or obligation to any beneficial owner of a Global Security, a member of, or a participant in the Depository or any other Person with respect to the accuracy of the records of the Depository or its nominee or of any participant or member thereof, with respect to any ownership interest in the Securities or with respect to the delivery to any participant, member, beneficial owner or other Person (other than the Depository) of any notice (including any notice of redemption or repurchase) or the payment of any amount, under or with respect to such Securities. All notices and communications to be given to the Holders and all payments to be made to the Holders under the Securities shall be given or made only to the registered Holders (which shall be the Depository or its nominee in the case of a Global Security). The rights of beneficial owners in any Global Security shall be exercised only through the Depository subject to the applicable rules and procedures of the Depository. The Trustee may rely and shall be fully protected in relying upon information furnished by the Depository with respect to its members, participants and any beneficial owners.
(ii) The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Security (including any transfers
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between or among Depository participants, members or beneficial owners in any Global Security) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.
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.EXHIBIT A
[FORM OF FACE OF INITIAL SECURITY]
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THE COMPANY 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 IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS 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.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO DTC, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
[Restricted Securities Legend]
“THIS NOTE (OR ITS PREDECESSOR) 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 THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (I) IN THE UNITED STATES TO A PERSON WHOM 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, (II) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (III) PURSUANT TO AN
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EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF APPLICABLE) OR (IV) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS SET FORTH IN CLAUSE (A) ABOVE.”
Each Definitive Security shall bear the following additional legend:
“IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.”
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[FORM OF INITIAL SECURITY]
No. $__________
9½ % Senior Note due 2014
CUSIP No.
ISIN No.
CHASE MERGER SUB, INC. , a Delaware corporation, promises to pay to Cede & Co., or registered assigns, the principal sum [of Dollars] [listed on the Schedule of Increases or Decreases in Global Security attached hereto](1) on August 1, 2014.
(1) Use the Schedule of Increases and Decreases language if Security is in Global Form.
Interest Payment Dates: February 1 and August 1
Record Dates: January 15 and July 15
Additional provisions of this Security are set forth on the other side of this Security.
IN WITNESS WHEREOF, the parties have caused this instrument to be duly executed.
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CHASE MERGER SUB, INC. |
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By: |
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Name: |
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Title: |
Dated:
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TRUSTEE’S CERTIFICATE OF
AUTHENTICATION
WELLS FARGO BANK,
NATIONAL ASSOCIATION,
as Trustee, certifies that this is
one of the Securities
referred to in the Indenture.
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By: |
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Authorized Signatory |
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* / If the Security is to be issued in global form, add the Global Securities Legend and the attachment from Exhibit A captioned “TO BE ATTACHED TO GLOBAL SECURITIES - SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY”.
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[FORM OF REVERSE SIDE OF INITIAL SECURITY]
9½% Senior Note due 2014
1. Interest
(a) CHASE MERGER SUB, INC. , a Delaware corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the “Company”), promises to pay interest on the principal amount of this Security at the rate per annum shown above. The Company shall pay interest semiannually on February 1 and August 1 of each year, commencing February 1, 2007. Interest on the Securities shall accrue from the most recent date to which interest has been paid or duly provided for or, if no interest has been paid or duly provided for, from July 21, 2006 until the principal hereof is due. Interest shall be computed on the basis of a 360-day year of twelve 30-day months. The Company shall pay interest on overdue principal at the rate borne by the Securities, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful.
(b) Registration Rights Agreement . The Holder of this Security is entitled to the benefits of a Registration Rights Agreement, dated as of July 21, 2006, among the Company, RBS Global, Inc., Rexnord Corporation, the Guarantors and the Initial Purchasers.
2. Method of Payment
The Company shall pay interest on the Securities (except defaulted interest) to the Persons who are registered Holders at the close of business on the January 15 or July 15 next preceding the interest payment date even if Securities are canceled after the record date and on or before the interest payment date (whether or not a Business Day). Holders must surrender Securities to the Paying Agent to collect principal payments. The Company shall pay principal, premium, if any, and interest in money of the United States of America that at the time of payment is legal tender for payment of public and private debts. Payments in respect of the Securities represented by a Global Security (including principal, premium, if any, and interest) shall be made by wire transfer of immediately available funds to the accounts specified by The Depository Trust Company or any successor depositary. The Company shall make all payments in respect of a certificated Security (including principal, premium, if any, and interest) at the office of the Paying Agent, except that, at the option of the Company, payment of interest may be made by mailing a check to the registered address of each Holder thereof; provided , however , that payments on the Securities may also be made, in the case of a Holder of at least $1,000,000 aggregate principal amount of Securities, by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or Paying Agent to such effect designating such account no later than 30 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion).
3. Paying Agent and Registrar
Initially, Wells Fargo Bank, National Association, a national banking association (the “Trustee”), will act as Paying Agent and Registrar. The Company may appoint and change
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any Paying Agent or Registrar without notice. The Company or any of its domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent or Registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as of July 21, 2006 (the “Indenture”), among the Company and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb) as in effect on the date of the Indenture (the “TIA”). Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The Securities are subject to all terms and provisions of the Indenture, and the Holders (as defined in the Indenture) are referred to the Indenture and the TIA for a statement of such terms and provisions
The Securities are senior unsecured obligations of the Company. This Security is one of the Initial Securities referred to in the Indenture. The Securities include the Initial Securities, any Additional Securities and any Exchange Securities issued in exchange for the Initial Securities or any Additional Securities pursuant to the Indenture. The Initial Securities, any Additional Securities and any Exchange Securities are treated as a single class of securities under the Indenture. The Indenture imposes certain limitations on the ability of the Company and its Restricted Subsidiaries to, among other things, make certain Investments and other Restricted Payments, pay dividends and other distributions, incur Indebtedness, enter into consensual restrictions upon the payment of certain dividends and distributions by such Restricted Subsidiaries, issue or sell shares of capital stock of the Company and such Restricted Subsidiaries, enter into or permit certain transactions with Affiliates, create or incur Liens and make Asset Sales. The Indenture also imposes limitations on the ability of the Company and each Guarantor to consolidate or merge with or into any other Person or convey, transfer or lease all or substantially all of its property.
To guarantee the due and punctual payment of the principal and interest on the Securities and all other amounts payable by the Company under the Indenture and the Securities when and as the same shall be due and payable, whether at maturity, by acceleration or otherwise, according to the terms of the Securities and the Indenture, the Guarantors have, jointly and severally, unconditionally guaranteed the Guaranteed Obligations on a senior unsecured basis pursuant to the terms of the Indenture.
5. Optional Redemption
Except as set forth in the following two paragraphs, the Securities shall not be redeemable at the option of the Company prior to August 1, 2010. Thereafter, the Securities shall be redeemable at the option of the Company, in whole at any time or in part from time to time, upon on not less than 30 nor more than 60 days’ prior notice, at the following redemption prices (expressed as a percentage of principal amount), plus accrued and unpaid interest and additional interest, if any, to the redemption date (subject to the right of the Holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the 12-month period commencing on August 1 of the years set forth below:
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Redemption Price |
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2010 |
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In addition, prior to August 1, 2010, the Company may redeem the Securities at their option, in whole at any time or in part from time to time, upon not less than 30 nor more than 60 days’ prior notice mailed by first-class mail to each Holder’s registered address, at a redemption price equal to 100% of the principal amount of the Securities redeemed plus the Applicable Premium as of, and accrued and unpaid interest and additional interest, if any, to, the applicable redemption date (subject to the right of the Holders of record on the relevant record date to receive interest due on the relevant interest payment date).
Notwithstanding the foregoing, at any time and from time to time on or prior to August 1, 2009, the Company may redeem in the aggregate up to 35% of the original aggregate principal amount of the Securities (calculated after giving effect to any issuance of Additional Securities), with the net cash proceeds of one or more Equity Offerings (1) by the Company or (2) by any direct or indirect parent of the Company, in each case, to the extent the net cash proceeds thereof are contributed to the common equity capital of the Company or used to purchase Capital Stock (other than Disqualified Stock) of the Company from it, at a redemption price equal to 109.500% of the principal amount thereof plus accrued and unpaid interest and additional interest, if any, to the redemption date (subject to the right of the Holders of record on the relevant record date to receive interest due on the relevant interest payment date); provided , however, that at least 65% of the original aggregate principal amount of the Securities (calculated after giving effect to any issuance of Additional Securities) must remain outstanding after each such redemption; and provided , further , that such redemption shall occur within 90 days after the date on which any such Equity Offering is consummated upon not less than 30 nor more than 60 days’ notice mailed to each Holder of Securities being redeemed and otherwise in accordance with the procedures set forth in the Indenture. Notice of any redemption upon any Equity Offering may be given prior to the completion thereof, and any such redemption or notice may, at the Company’s discretion, be subject to one or more conditions precedent, including, but not limited to, completion of the related Equity Offering.
6. Sinking Fund
The Securities are not subject to any sinking fund.
7. Notice of Redemption
Notice of redemption will be mailed by first-class mail at least 30 days but not more than 60 days before the redemption date to each Holder of Securities to be redeemed at his, her or its registered address. Securities in denominations larger than $2,000 may be redeemed in part but only in whole multiples of $1,000. If money sufficient to pay the redemption price of and accrued and unpaid interest on all Securities (or portions thereof) to be redeemed on the redemption date is deposited with a Paying Agent on or before the redemption date and certain
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other conditions are satisfied, on and after such date, interest ceases to accrue on such Securities (or such portions thereof) called for redemption.
8.
Repurchase of
Securities at the Option of the
Holders upon Change of Control and Asset Sales
Upon the occurrence of a Change of Control, each Holder shall have the right, subject to certain conditions specified in the Indenture, to cause the Company to repurchase all or any part of such Holder’s Securities at a purchase price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of repurchase (subject to the right of the Holders of record on the relevant record date to receive interest due on the relevant interest payment date), as provided in, and subject to the terms of, the Indenture.
In accordance with Section 4.06 of the Indenture, the Company will be required to offer to purchase Securities upon the occurrence of certain events.
9. Subordination
[Reserved]
10. Denominations; Transfer; Exchange
The Securities are in registered form, without coupons, in denominations of $2,000 and any integral multiple of $1,000. A Holder shall register the transfer of or exchange of Securities in accordance with the Indenture. Upon any registration of transfer or exchange, the Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Securities selected for redemption (except, in the case of a Security to be redeemed in part, the portion of the Security not to be redeemed) or to transfer or exchange any Securities for a period of 15 days prior to a selection of Securities to be redeemed.
11. Persons Deemed Owners
The registered Holder of this Security shall be treated as the owner of it for all purposes.
12. Unclaimed Money
If money for the payment of principal or interest remains unclaimed for two years, the Trustee and a Paying Agent shall pay the money back to the Company at their written request unless an abandoned property law designates another Person. After any such payment, the Holders entitled to the money must look to the Company for payment as general creditors and the Trustee and a Paying Agent shall have no further liability with respect to such monies.
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13. Discharge and Defeasance
Subject to certain conditions, the Company at any time may terminate some of or all its obligations under the Securities and the Indenture if the Company deposits with the Trustee money or U.S. Government Obligations for the payment of principal and interest on the Securities to redemption or maturity, as the case may be.
14. Amendment; Waiver
Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Securities may be amended with the written consent of the Holders of at least a majority in aggregate principal amount of the outstanding Securities (voting as a single class) and (ii) any past default or compliance with any provisions may be waived with the written consent of the Holders of at least a majority in principal amount of the outstanding Securities. Subject to certain exceptions set forth in the Indenture, without the consent of any Holder, the Company and the Trustee may amend the Indenture or the Securities (i) to cure any ambiguity, omission, defect or inconsistency; (ii) to provide for the assumption by a Successor Company of the obligations of the Company under the Indenture and the Notes; (iii) to provide for the assumption by a Successor Guarantor of the obligations of a Guarantor under the Indenture and its Guarantee; (iv) to provide for uncertificated Securities in addition to or in place of certificated Securities ( provided that the uncertificated Securities are issued in registered form for purposes of Section 163(f) of the Code, or in a manner such that the uncertificated Securities are described in Section 163(f)(2)(B) of the Code); (v) to add Guarantees with respect to the Securities; (vi) to add additional covenants of the Company for the benefit of the Holders or to surrender rights and powers conferred on the Company; (vii) to comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the TIA; (viii) to make any change that does not adversely affect the rights of any Holder; or (ix) to provide for the issuance of the Exchange Securities or Additional Securities.
15. Defaults and Remedies
If an Event of Default occurs (other than an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Company) and is continuing, the Trustee or the Holders of at least 25% in principal amount of the outstanding Securities, in each case, by notice to the Company, may declare the principal of, premium, if any, and accrued but unpaid interest on all the Securities to be due and payable. If an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Company occurs, the principal of, premium, if any, and interest on all the Securities shall become immediately due and payable without any declaration or other act on the part of the Trustee or any Holders. Under certain circumstances, the Holders of a majority in principal amount of the outstanding Securities may rescind any such acceleration with respect to the Securities and its consequences.
If an Event of Default occurs and is continuing, the Trustee shall be under no obligation to exercise any of the rights or powers under the Indenture at the request or direction of any of the Holders unless such Holders have offered to the Trustee reasonable indemnity or security against any loss, liability or expense and certain other conditions are complied with. Except to enforce the right to receive payment of principal, premium (if any) or interest when
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due, no Holder may pursue any remedy with respect to the Indenture or the Securities unless (i) such Holder has previously given the Trustee notice that an Event of Default is continuing, (ii) the Holders of at least 25% in principal amount of the outstanding Securities have requested the Trustee in writing to pursue the remedy, (iii) such Holders have offered the Trustee reasonable security or indemnity against any loss, liability or expense, (iv) the Trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity and (v) the Holders of a majority in principal amount of the outstanding Securities have not given the Trustee a direction inconsistent with such request within such 60-day period. Subject to certain restrictions, the Holders of a majority in principal amount of the outstanding Securities are given the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. The Trustee, however, may refuse to follow any direction that conflicts with law or the Indenture or that the Trustee determines is unduly prejudicial to the rights of any other Holder or that would involve the Trustee in personal liability. Prior to taking any action under the Indenture, the Trustee shall be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action.
16. Trustee Dealings with the Company
Subject to certain limitations imposed by the TIA, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee.
17. No Recourse Against Others
No director, officer, employee, incorporator or holder of any equity interests in the Company or of any Guarantor or any direct or indirect parent corporation, as such, shall have any liability for any obligations of the Company or the Guarantors under the Securities, the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Securities by accepting a Security waives and releases all such liability.
18. Authentication
This Security shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of authentication on the other side of this Security.
19. 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 rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act).
A-10
20. Governing Law
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
21. CUSIP Numbers; ISINs
The Company has caused CUSIP numbers and ISINs to be printed on the Securities and has directed the Trustee to use CUSIP numbers and ISINs in notices of redemption as a convenience to the Holders. No representation is made as to the accuracy of such numbers either as printed on the Securities 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 of Securities upon written request and without charge to the Holder a copy of the Indenture which has in it the text of this Security.
A-11
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to:
(Print or type assignee’s name, address and zip code)
(Insert assignee’s soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Security 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 other side of this Security.
Signature Guarantee:
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Date: |
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Signature must be guaranteed by a participant in a recognized signature guaranty medallion program or other signature guarantor program reasonably acceptable to the Trustee |
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Signature of Signature Guarantee |
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A-12
CERTIFICATE TO BE
DELIVERED UPON EXCHANGE OR
REGISTRATION OF TRANSFER RESTRICTED SECURITIES
This certificate relates to $ principal amount of Securities held in (check applicable space) book-entry or definitive form by the undersigned.
The undersigned (check one box below):
o has requested the Trustee by written order to deliver in exchange for its beneficial interest in the Global Security held by the Depository a Security or Securities in definitive, registered form of authorized denominations and an aggregate principal amount equal to its beneficial interest in such Global Security (or the portion thereof indicated above);
o has requested the Trustee by written order to exchange or register the transfer of a Security or Securities.
In connection with any transfer of any of the Securities evidenced by this certificate occurring prior to the expiration of the period referred to in Rule 144(k) under the Securities Act, the undersigned confirms that such Securities are being transferred in accordance with its terms:
CHECK ONE BOX BELOW
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(1) |
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o |
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to the Company; or |
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(2) |
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o |
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to the Registrar for registration in the name of the Holder, without transfer; or |
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(3) |
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o |
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pursuant to an effective registration statement under the Securities Act of 1933; or |
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(4) |
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o |
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inside the United States to a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act of 1933) that purchases for its own account or for the account of a qualified institutional buyer to whom notice is given that such transfer is being made in reliance on Rule 144A, in each case pursuant to and in compliance with Rule 144A under the Securities Act of 1933; or |
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(5) |
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o |
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outside the United States in an offshore transaction within the meaning of Regulation S under the Securities Act in compliance with Rule 904 under the Securities Act of 1933 and such Security shall be held immediately after the transfer through Euroclear or Clearstream until the expiration of the Restricted Period (as defined in the Indenture); or |
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(6) |
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o |
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to an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933) that has furnished to the Trustee a signed letter containing certain representations and agreements; or |
A-13
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(7) |
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o |
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pursuant to another available exemption from registration provided by Rule 144 under the Securities Act of 1933. |
Unless one of the boxes is checked, the Trustee will refuse to register any of the Securities evidenced by this certificate in the name of any Person other than the registered Holder thereof; provided , however , that if box (5), (6) or (7) is checked, the Company or the Trustee may require, prior to registering any such transfer of the Securities, such legal opinions, certifications and other information as the Company or the Trustee have reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933.
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Date: |
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Your Signature: |
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Signature Guarantee:
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Date: |
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Signature must be guaranteed by a participant in a recognized signature guaranty medallion program or other signature guarantor program reasonably acceptable to the Trustee |
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Signature of Signature Guarantee |
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A-14
TO BE COMPLETED BY PURCHASER IF (4) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Security for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act of 1933, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned’s foregoing representations in order to claim the exemption from registration provided by Rule 144A.
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Dated: |
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NOTICE: To be executed by an executive officer |
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A-15
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The initial principal amount of this Global Security is $ . The following increases or decreases in this Global Security have been made:
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Date of Exchange |
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Amount of decrease in Principal Amount of this Global Security |
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Amount of increase in Principal Amount of this Global Security |
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Principal amount of this Global Security following such decrease or increase |
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Signature of authorized signatory of Trustee or Securities Custodian |
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A-16
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company pursuant to Section 4.06 (Asset Sale) or 4.08 (Change of Control) of the Indenture, check the box:
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Asset Sale o |
Change of Control o |
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If you want to elect to have only part of this Security purchased by the Company pursuant to Section 4.06 (Asset Sale) or 4.08 (Change of Control) of the Indenture, state the amount ($2,000 or any integral multiple of $1,000):
$
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Date: |
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Your Signature: |
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(Sign
exactly as your name
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Signature Guarantee: |
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Signature must be guaranteed by a participant in a
recognized signature guaranty medallion program or other
signature guarantor program reasonably acceptable to the
Trustee
A-17
EXHIBIT B
[FORM OF FACE OF EXCHANGE
SECURITY]
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THE COMPANY 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 IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS 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.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO DTC, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
B-1
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No. |
$ |
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9½% Senior Note due 2014 |
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CUSIP No. |
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ISIN No. |
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CHASE MERGER SUB, INC. , a Delaware corporation, promises to pay to Cede & Co., or registered assigns, the principal sum [of Dollars] [listed on the Schedule of Increases or Decreases in Global Security attached hereto](2) on August 1, 2014.
(2) Use the Schedule of Increases and Decreases language if Security is in Global Form.
Interest Payment Dates: February 1 and August 1
Record Dates: January 15 and July 15
Additional provisions of this Security are set forth on the other side of this Security.
IN WITNESS WHEREOF, the parties have caused this instrument to be duly executed.
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CHASE MERGER SUB, INC. |
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By: |
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Name: |
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Title: |
Dated:
B-2
TRUSTEE’S CERTIFICATE OF
AUTHENTICATION
WELLS FARGO BANK, NATIONAL
ASSOCIATION,
as Trustee, certifies that this is
one of the Securities
referred to in the Indenture.
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By: |
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Authorized Signatory |
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*/ If the Security is to be issued in global form, add the Global Securities Legend and the attachment from Exhibit A captioned “TO BE ATTACHED TO GLOBAL SECURITIES - SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY”.
B-3
[FORM OF REVERSE SIDE OF EXCHANGE SECURITY]
9½% Senior Note due 2014
1. Interest
CHASE MERGER SUB, INC. , a Delaware corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the “Company”), promises to pay interest on the principal amount of this Security at the rate per annum shown above. The Company shall pay interest semiannually on February 1 and August 1 of each year, commencing February 1, 2007. Interest on the Securities shall accrue from the most recent date to which interest has been paid or duly provided for or, if no interest has been paid or duly provided for, from July 21, 2006 until the principal hereof is due. Interest shall be computed on the basis of a 360-day year of twelve 30-day months. The Company shall pay interest on overdue principal at the rate borne by the Securities, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful.
2. Method of Payment
The Company shall pay interest on the Securities (except defaulted interest) to the Persons who are registered Holders at the close of business on the January 15 or July 15 next preceding the interest payment date even if Securities are canceled after the record date and on or before the interest payment date (whether or not a Business Day). Holders must surrender Securities to the Paying Agent to collect principal payments. The Company shall pay principal, premium, if any, and interest in money of the United States of America that at the time of payment is legal tender for payment of public and private debts. Payments in respect of the Securities represented by a Global Security (including principal, premium, if any, and interest) shall be made by wire transfer of immediately available funds to the accounts specified by The Depository Trust Company or any successor depositary. The Company shall make all payments in respect of a certificated Security (including principal, premium, if any, and interest), at the office of the Paying Agent, except that, at the option of the Company, payment of interest may be made by mailing a check to the registered address of each Holder thereof; provided , however , that payments on the Securities may also be made, in the case of a Holder of at least $1,000,000 aggregate principal amount of Securities, by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or Paying Agent to such effect designating such account no later than 30 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion).
3. Paying Agent and Registrar
Initially, Wells Fargo Bank, National Association, a national banking association (the “Trustee”), will act as Paying Agent and Registrar. The Company may appoint and change any Paying Agent or Registrar without notice. The Company or any of its domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent or Registrar.
B-4
4. Indenture
The Company issued the Securities under an Indenture dated as of July 21, 2006 (the “Indenture”), among the Company and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb) as in effect on the date of the Indenture (the “TIA”). Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The Securities are subject to all terms and provisions of the Indenture, and the Holders (as defined in the Indenture) are referred to the Indenture and the TIA for a statement of such terms and provisions.
The Securities are senior unsecured obligations of the Company. This Security is one of the Exchange Securities referred to in the Indenture. The Securities include the Initial Securities, any Additional Securities and any Exchange Securities issued in exchange for the Initial Securities or any Additional Securities pursuant to the Indenture. The Initial Securities, any Additional Securities and any Exchange Securities are treated as a single class of securities under the Indenture. The Indenture imposes certain limitations on the ability of the Company and its Restricted Subsidiaries to, among other things, make certain Investments and other Restricted Payments, pay dividends and other distributions, incur Indebtedness, enter into consensual restrictions upon the payment of certain dividends and distributions by such Restricted Subsidiaries, issue or sell shares of capital stock of the Company and such Restricted Subsidiaries, enter into or permit certain transactions with Affiliates, create or incur Liens and make Asset Sales. The Indenture also imposes limitations on the ability of the Company and each Guarantor to consolidate or merge with or into any other Person or convey, transfer or lease all or substantially all of its property.
To guarantee the due and punctual payment of the principal and interest on the Securities and all other amounts payable by the Company under the Indenture and the Securities when and as the same shall be due and payable, whether at maturity, by acceleration or otherwise, according to the terms of the Securities and the Indenture, the Guarantors have, jointly and severally, unconditionally guaranteed the Guaranteed Obligations on a senior subordinated basis pursuant to the terms of the Indenture.
5. Optional Redemption
Except as set forth in the following two paragraphs, the Securities shall not be redeemable at the option of the Company prior to August 1, 2010. Thereafter, the Securities shall be redeemable at the option of the Company, in whole at any time or in part from time to time, upon on not less than 30 nor more than 60 days’ prior notice, at the following redemption prices (expressed as a percentage of principal amount), plus accrued and unpaid interest and additional interest, if any, to the redemption date (subject to the right of the Holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the 12-month period commencing on August 1 of the years set forth below:
B-5
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Year |
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Redemption Price |
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2010 |
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104.750 |
% |
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2011 |
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102.375 |
% |
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2012 and thereafter |
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100.000 |
% |
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In addition, prior to August 1, 2010, the Company may redeem the Securities at its option, in whole at any time or in part from time to time, upon not less than 30 nor more than 60 days’ prior notice mailed by first-class mail to each Holder’s registered address, at a redemption price equal to 100% of the principal amount of the Securities redeemed plus the Applicable Premium as of, and accrued and unpaid interest and additional interest, if any, to, the applicable redemption date (subject to the right of the Holders of record on the relevant record date to receive interest due on the relevant interest payment date).
Notwithstanding the foregoing, at any time and from time to time on or prior to August 1, 2009, the Company may redeem in the aggregate up to 35% of the original aggregate principal amount of the Securities (calculated after giving effect to any issuance of Additional Securities), with the net cash proceeds of one or more Equity Offerings (1) by the Company or (2) by any direct or indirect parent of the Company, in each case, to the extent the net cash proceeds thereof are contributed to the common equity capital of the Company or used to purchase Capital Stock (other than Disqualified Stock) of the Company from it, at a redemption price equal to 109.500% of the principal amount thereof plus accrued and unpaid interest and additional interest, if any, to the redemption date (subject to the right of the Holders of record on the relevant record date to receive interest due on the relevant interest payment date); provided , however , that at least 65% of the original aggregate principal amount of the Securities (calculated after giving effect to any issuance of Additional Securities) must remain outstanding after each such redemption; and provided , further , that such redemption shall occur within 90 days after the date on which any such Equity Offering is consummated upon not less than 30 nor more than 60 days’ notice mailed to each Holder of Securities being redeemed and otherwise in accordance with the procedures set forth in the Indenture. Notice of any redemption upon any Equity Offering may be given prior to the completion thereof, and any such redemption or notice may, at the Company’s discretion, be subject to one or more conditions precedent, including, but not limited to, completion of the related Equity Offering.
6. Sinking Fund
The Securities are not subject to any sinking fund.
7. Notice of Redemption
Notice of redemption will be mailed by first-class mail at least 30 days but not more than 60 days before the redemption date to each Holder of Securities to be redeemed at his, her or its registered address. Securities in denominations larger than $2,000 may be redeemed in part but only in whole multiples of $1,000. If money sufficient to pay the redemption price of and accrued and unpaid interest on all Securities (or portions thereof) to be redeemed on the redemption date is deposited with a Paying Agent on or before the redemption date and certain other conditions are satisfied, on and after such date interest ceases to accrue on such Securities (or such portions thereof) called for redemption.
B-6
8.
Repurchase of
Securities at the Option of the
Holders upon Change of Control and Asset Sales
Upon the occurrence of a Change of Control, each Holder shall have the right, subject to certain conditions specified in the Indenture, to cause the Company to repurchase all or any part of such Holder’s Securities at a purchase price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of repurchase (subject to the right of the Holders of record on the relevant record date to receive interest due on the relevant interest payment date), as provided in, and subject to the terms of, the Indenture.
In accordance with Section 4.06 of the Indenture, the Company will be required to offer to purchase Securities upon the occurrence of certain events.
9. Subordination
[Reserved]
10. Denominations; Transfer; Exchange
The Securities are in registered form, without coupons, in denominations of $2,000 and any integral multiple of $1,000. A Holder shall register the transfer of or exchange of Securities in accordance with the Indenture. Upon any registration of transfer or exchange, the Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Securities selected for redemption (except, in the case of a Security to be redeemed in part, the portion of the Security not to be redeemed) or to transfer or exchange any Securities for a period of 15 days prior to a selection of Securities to be redeemed.
11. Persons Deemed Owners
The registered Holder of this Security shall be treated as the owner of it for all purposes.
12. Unclaimed Money
If money for the payment of principal or interest remains unclaimed for two years, the Trustee and a Paying Agent shall pay the money back to the Company at their written request unless an abandoned property law designates another Person. After any such payment, the Holders entitled to the money must look to the Company for payment as general creditors and the Trustee and a Paying Agent shall have no further liability with respect to such monies.
13. Discharge and Defeasance
Subject to certain conditions, the Company at any time may terminate some of or all its obligations under the Securities and the Indenture if the Company deposits with the Trustee money or U.S. Government Obligations for the payment of principal and interest on the Securities to redemption or maturity, as the case may be.
B-7
14. Amendment; Waiver
Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Securities may be amended with the written consent of the Holders of at least a majority in aggregate principal amount of the outstanding Securities (voting as a single class) and (ii) any past default or compliance with any provisions may be waived with the written consent of the Holders of at least a majority in principal amount of the outstanding Securities. Subject to certain exceptions set forth in the Indenture, without the consent of any Holder, the Company and the Trustee may amend the Indenture or the Securities (i) to cure any ambiguity, omission, defect or inconsistency; (ii) to provide for the assumption by a Successor Company of the obligations of the Company under the Indenture and the Notes; (iii) to provide for the assumption by a Successor Guarantor of the obligations of a Guarantor under the Indenture and its Guarantee; (iv) to provide for uncertificated Securities in addition to or in place of certificated Securities ( provided that the uncertificated Securities are issued in registered form for purposes of Section 163(f) of the Code, or in a manner such that the uncertificated Securities are described in Section 163(f)(2)(B) of the Code); (v) to add Guarantees with respect to the Securities; (vi) to add additional covenants of the Company for the benefit of the Holders or to surrender rights and powers conferred on the Company; (vii) to comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the TIA; (viii) to make any change that does not adversely affect the rights of any Holder; or (ix) to provide for the issuance of the Exchange Securities or Additional Securities.
15. Defaults and Remedies
If an Event of Default occurs (other than an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Company) and is continuing, the Trustee or the Holders of at least 25% in principal amount of the outstanding Securities, in each case, by notice to the Company, may declare the principal of, premium, if any, and accrued but unpaid interest on all the Securities to be due and payable. If an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Company occurs, the principal of, premium, if any, and interest on all the Securities shall become immediately due and payable without any declaration or other act on the part of the Trustee or any Holders. Under certain circumstances, the Holders of a majority in principal amount of the outstanding Securities may rescind any such acceleration with respect to the Securities and its consequences.
If an Event of Default occurs and is continuing, the Trustee shall be under no obligation to exercise any of the rights or powers under the Indenture at the request or direction of any of the Holders unless such Holders have offered to the Trustee reasonable indemnity or security against any loss, liability or expense and certain other conditions are complied with. Except to enforce the right to receive payment of principal, premium (if any) or interest when due, no Holder may pursue any remedy with respect to the Indenture or the Securities unless (i) such Holder has previously given the Trustee notice that an Event of Default is continuing, (ii) the Holders of at least 25% in principal amount of the outstanding Securities have requested the Trustee in writing to pursue the remedy, (iii) such Holders have offered the Trustee reasonable security or indemnity against any loss, liability or expense, (iv) the Trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity and (v) the Holders of a majority in principal amount of the outstanding Securities
B-8
have not given the Trustee a direction inconsistent with such request within such 60-day period. Subject to certain restrictions, the Holders of a majority in principal amount of the outstanding Securities are given the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. The Trustee, however, may refuse to follow any direction that conflicts with law or the Indenture or that the Trustee determines is unduly prejudicial to the rights of any other Holder or that would involve the Trustee in personal liability. Prior to taking any action under the Indenture, the Trustee shall be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action.
16. Trustee Dealings with the Company
Subject to certain limitations imposed by the TIA, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee.
17. No Recourse Against Others
No director, officer, employee, incorporator or holder of any equity interests in the Company or of any Guarantor or any direct or indirect parent corporation, as such, shall have any liability for any obligations of the Issuer or the Guarantors under the Securities, the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Securities by accepting a Security waives and releases all such liability.
18. Authentication
This Security shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of authentication on the other side of this Security.
19. 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 rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act).
20. Governing Law
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
B-9
21. CUSIP Numbers; ISINs
The Company has caused CUSIP numbers and ISINs to be printed on the Securities and has directed the Trustee to use CUSIP numbers and ISINs in notices of redemption as a convenience to the Holders. No representation is made as to the accuracy of such numbers either as printed on the Securities 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 of Securities upon written request and without charge to the Holder a copy of the Indenture which has in it the text of this Security.
B-10
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to:
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(Print or type assignee’s name, address and zip code) |
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(Insert assignee’s soc. sec. or tax I.D. No.) |
and irrevocably appoint agent to transfer this Security on the books of the Company. The agent may substitute another to act for him.
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Date: |
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Your Signature: |
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Sign exactly as your name appears on the other side of this Security. |
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Signature Guarantee:
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Date: |
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Signature must be guaranteed by a participant in a recognized signature guaranty medallion program or other signature guarantor program reasonably acceptable to the Trustee |
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Signature of Signature Guarantee |
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B-11
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company pursuant to Section 4.06 (Asset Sale) or 4.08 (Change of Control) of the Indenture, check the box:
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Asset Sale o |
Change of Control o |
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If you want to elect to have only part of this Security purchased by the Company pursuant to Section 4.06 (Asset Sale) or 4.08 (Change of Control) of the Indenture, state the amount ($2,000 or any integral multiple of $1,000):
$
Date: Your Signature:
(Sign exactly as your name appears on the other side of this Security)
Signature Guarantee:
Signature must be guaranteed by a participant in a recognized signature guaranty medallion program or other signature guarantor program reasonably acceptable to the Trustee
B-12
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The initial principal amount of this Global Security is $ . The following increases or decreases in this Global Security have been made:
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Principal amount of this Global Security following such decrease or increase |
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Signature of authorized signatory of Trustee or Securities Custodian |
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B-13
EXHIBIT C
[FORM OF]
TRANSFEREE LETTER OF REPRESENTATION
RBS Global, Inc.
Rexnord
Corporation
c/o Wells Fargo Bank, National Association
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•
Attention: Vice President
Ladies and Gentlemen:
This certificate is delivered to request a transfer of $[ ] principal amount of the 9½% Senior Notes due 2014 (the “Securities”) of RBS GLOBAL, INC. and REXNORD CORPORATION (together, the “Issuers”).
Upon transfer, the Securities would be registered in the name of the new beneficial owner as follows:
Name: ________________________
Address: _____________________
Taxpayer ID Number: __________
The undersigned represents and warrants to you that:
1. We are an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended (the “Securities Act”)), purchasing for our own account or for the account of such an institutional “accredited investor” at least $100,000 principal amount of the Securities, and we are acquiring the Securities not with a view to, or for offer or sale in connection with, any distribution in violation of the Securities Act. We have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Securities, and we invest in or purchase securities similar to the Securities in the normal course of our business. We, and any accounts for which we are acting, are each able to bear the economic risk of our or its investment.
2. We understand that the Securities have not been registered under the Securities Act and, unless so registered, may not be sold except as permitted in the following sentence. We agree on our own behalf and on behalf of any investor account for which we are purchasing Securities to offer, sell or otherwise transfer such Securities prior to the date that is two years after the later of the date of original issue and the last date on which either the Issuers or any affiliate of such Issuer was the owner of such Securities (or any predecessor thereto) (the “Resale Restriction Termination Date”) only (a) in the United States to a person whom we reasonably believe is a qualified institutional buyer (as defined in rule 144A under the Securities Act) in a transaction meeting the requirements of Rule 144A, (b) outside the United States in an offshore transaction in accordance with Rule 904 of Regulation S under the Securities Act, (c)
C-1
pursuant to an exemption from registration under the Securities Act provided by Rule 144 thereunder (if applicable) or (d) pursuant to an effective registration statement under the Securities Act, in each of cases (a) through (d) in accordance with any applicable securities laws of any state of the United States. In addition, we will, and each subsequent holder is required to, notify any purchaser of the Security evidenced hereby of the resale restrictions set forth above. The foregoing restrictions on resale will not apply subsequent to the Resale Restriction Termination Date. If any resale or other transfer of the Securities is proposed to be made to an institutional “accredited investor” prior to the Resale Restriction Termination Date, the transferor shall deliver a letter from the transferee substantially in the form of this letter to the Issuers and the Trustee, which shall provide, among other things, that the transferee is an institutional “accredited investor” within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act and that it is acquiring such Securities for investment purposes and not for distribution in violation of the Securities Act. Each purchaser acknowledges that the Issuers and the Trustee reserve the right prior to the offer, sale or other transfer prior to the Resale Restriction Termination Date of the Securities pursuant to clause 1(b), 1(c) or 1(d) above to require the delivery of an opinion of counsel, certifications or other information satisfactory to the Issuers and the Trustee.
Dated: ____________________
TRANSFEREE: ____________________,
By:
C-2
EXHIBIT D
[FORM OF SUPPLEMENTAL INDENTURE]
SUPPLEMENTAL INDENTURE (this “Supplemental Indenture”) dated as of [ ], among [GUARANTOR] (the “New Guarantor”), a subsidiary of RBS GLOBAL, INC. (or its successor), a Delaware corporation (the “Company”), REXNORD CORPORATION, a Delaware corporation (“Rexnord” and, together with the Company, the “Issuers”) and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as trustee under the indenture referred to below (the “Trustee”).
W I T N E S S E T H :
WHEREAS the Issuers and the existing Guarantors have heretofore executed and delivered to the Trustee an indenture (as amended, supplemented or otherwise modified, the “Indenture”) dated as of July 21, 2006, providing for the issuance of the Issuers’ 9½% Senior Notes due 2014 (the “Securities”), initially in the aggregate principal amount of $485,000,000;
WHEREAS Section 4.11 of the Indenture provides that under certain circumstances the Issuers are required to cause the New Guarantor to execute and deliver to the Trustee a supplemental indenture pursuant to which the New Guarantor shall unconditionally guarantee all the Issuers’ Obligations under the Securities and the Indenture pursuant to a Guarantee on the terms and conditions set forth herein; and
WHEREAS pursuant to Section 9.01 of the Indenture, the Trustee, the Issuers and the existing Guarantors are authorized to execute and deliver this Supplemental Indenture;
NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the New Guarantor, the Issuers and the Trustee mutually covenant and agree for the equal and ratable benefit of the holders of the Securities as follows:
1. Defined Terms . As used in this Supplemental Indenture, terms defined in the Indenture or in the preamble or recital hereto are used herein as therein defined, except that the term “Holders” in this Guarantee shall refer to the term “Holders” as defined in the Indenture and the Trustee acting on behalf of and for the benefit of such Holders. The words “herein,” “hereof” and “hereby” and other words of similar import used in this Supplemental Indenture refer to this Supplemental Indenture as a whole and not to any particular section hereof.
2. Agreement to Guarantee . The New Guarantor hereby agrees, jointly and severally with all existing Guarantors (if any), to unconditionally guarantee the Issuers’ Obligations under the Securities and the Indenture on the terms and subject to the conditions set forth in Articles 11 and 12 of the Indenture and to be bound by all other applicable provisions of the Indenture and the Securities and to perform all of the obligations and agreements of a Guarantor under the Indenture.
3. Notices . All notices or other communications to the New Guarantor shall be given as provided in Section 13.02 of the Indenture.
D-1
4. Ratification of Indenture; Supplemental Indentures Part of Indenture . Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Supplemental Indenture shall form a part of the Indenture for all purposes, and every holder of Securities heretofore or hereafter authenticated and delivered shall be bound hereby.
5. Governing Law . THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
6. Trustee Makes No Representation . The Trustee makes no representation as to the validity or sufficiency of this Supplemental Indenture.
7. Counterparts . The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.
8. Effect of Headings . The Section headings herein are for convenience only and shall not effect the construction thereof.
D-2
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed as of the date first above written.
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[NEW GUARANTOR] |
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By: |
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Name: |
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Title: |
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WELLS FARGO BANK, NATIONAL ASSOCIATION, AS TRUSTEE |
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By: |
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Name: |
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Title: |
D-3
Exhibit 4.2
FIRST SUPPLEMENTAL INDENTURE (this “ First Supplemental Indenture ”), dated as of July 21, 2006, by and among RBS Global, Inc., a Delaware corporation (the “ Company ”), Rexnord Corporation, a Delaware corporation (together with RBS Global, the “ Issuers ”), The Falk Service Corporation, a Delaware corporation (“ Falk ”), Prager Incorporated, a Louisiana corporation (“ Prager ”), PT Components, Inc., a Delaware corporation (“ PT ”), RBS Acquisition Corporation, a Delaware corporation (“ RBS Acquisition ”), RBS China Holdings, L.L.C., a Delaware limited liability company (“ RBS China ”), Rexnord Industries, LLC, a Delaware limited liability company (“ Rexnord Industries ”), Rexnord International Inc., a Delaware corporation (“ Rexnord International ”), Rexnord Puerto Rico Inc., a Nevada corporation (“ Rexnord Puerto Rico ”), W.M. Berg Inc., a Delaware corporation (collectively with Falk, Prager, PT, RBS Acquisition, RBS China, Rexnord Industries, Rexnord International and Rexnord Puerto Rico, the “ Guarantors ”), Chase Merger Sub, Inc., a Delaware corporation (“ Chase Merger Sub ” ), and Wells Fargo Bank, National Association, as Trustee (the “ Trustee ”).
WITNESSETH:
WHEREAS , Chase Merger Sub has heretofore executed and delivered to the Trustee an Indenture (the “ Indenture ”), dated as of July 21, 2006, providing for the issuance of 9½% Senior Notes due 2014 (the “ Notes ”);
WHEREAS , the Issuers desire to execute and deliver this First Supplemental Indenture to the Trustee for the purpose of becoming jointly and severally liable, as co-issuers of the Notes, for all of Chase Merger Sub’s obligations under the Indenture and the Notes;
WHEREAS the Guarantors desire to execute and deliver this First Supplemental Indenture to the Trustee for the purpose of guaranteeing the payment of all obligations of the Issuers under the Indenture and the Notes and the performance within applicable grace periods of all other obligations of the Issuers under the Indenture and the Notes, on the terms and conditions set forth in Article 11 of the Indenture; and
WHEREAS , pursuant to Section 9.01 of the Indenture, the Trustee and Chase Merger Sub are authorized to execute and deliver this First Supplemental Indenture.
NOW THEREFORE , in consideration of the foregoing and for good and valuable consideration, the receipt of which is hereby acknowledged, the Issuers, the Guarantors, Chase Merger Sub and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:
SECTION 1. Capitalized Terms. Capitalized terms used herein but not defined shall have the meanings assigned to them in the Indenture.
SECTION 2. Co-Issuers. The Issuers hereby agree that they are henceforth jointly and severally liable, as co-issuers of the Notes, for all of Chase Merger Sub’s obligations under the Indenture and the Notes, on the terms and conditions set forth therein.
1
SECTION 3. Guarantees. Each of the Guarantors hereby agrees, jointly and severally with all other Guarantors, to guarantee the Issuers’ obligations under the Notes on the terms and subject to the conditions set forth in Article 11 of the Indenture and to be bound by all applicable provisions of the Indenture.
SECTION 4. Ratification of Indenture; Supplemental Indenture Part of Indenture. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This First Supplemental Indenture shall form a part of the Indenture for all purposes, and every holder of Notes heretofore or hereafter authenticated and delivered shall be bound hereby.
SECTION 5. Governing Law. THIS FIRST SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. The Trustee . The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this First Supplemental Indenture or for or in respect of the recitals contained herein, all of which are made solely by the Issuers, Chase Merger Sub and the Guarantors. Except as otherwise expressly provided herein, no duties, responsibilities or liabilities are assumed, or shall be construed to be assumed by the Trustee by reason of this First Supplemental Indenture. This First Supplemental Indenture is executed and accepted by the Trustee subject to all the terms and conditions set forth in the Indenture with the same force and effect as if those terms and conditions were repeated at length herein and made applicable to the Trustee with respect hereto. In entering into this First Supplemental Indenture, the Trustee shall be entitled to the benefit of every provision of the Indenture relating to the conduct or affecting the liability or affording protection to the Trustee, whether or not elsewhere herein so provided.
SECTION 7. Counterparts. The parties may sign any number of copies of this First Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.
SECTION 8. Effect of Headings. The Section headings herein are for convenience only and shall not effect the construction of this First Supplemental Indenture.
[ The rest of this page has been intentionally left blank. ]
2
IN WITNESS WHEREOF, the par t ies have caused this First Supplemental Indenture to be duly executed as of the date first written above.
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ISSUERS |
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RBS GLOBAL, INC. |
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By: |
/s/ Robert A. Hitt |
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Name: Robert A. Hitt |
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Title: President and Chief Executive Officer |
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REXNORD CORPORATION |
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By: |
/s/ Thomas Janseny |
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Name: Thomas Jansen |
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Title: Executive Vice President and Chief Financial Officer |
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CHASE MERGER SUB, INC. |
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By: |
/s/ Patricia M. Navis |
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Name: Patricia M. Navis |
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Title: Vice President and Secretary |
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S-1
IN WITNESS WHEREOF, the par t ies have caused this First Supplemental Indenture to be duly executed as of the date first written above.
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GUARANTORS |
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THE FALK SERVICE CORPORATION |
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PRAGER INCORPORATED |
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PT COMPONENTS, INC. |
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RBS ACQUISITION CORPORATION |
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RBS CHINA HOLDINGS, L.L.C. |
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REXNORD INDUSTRIES, LLC |
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REXNORD INTERNATIONAL INC. |
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REXNORD PUERTO RICO INC. |
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W.M. BERG INC. |
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By: |
/s/ Michael Andrzejewski |
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Name: Michael Andrzejewski |
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Title: Secretary |
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S-2
IN WITNESS WHEREOF, the par t ies have caused this First Supplemental Indenture to be duly executed as of the date first written above.
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TRUSTEE |
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WELLS FARGO BANK, NATIONAL ASSOCIATION, as trustee |
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By: |
/s/ Timothy P. Mowdy |
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Name: Timothy P. Mowdy |
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Title: Vice President |
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S-3
Exhibit 4.3
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THE COMPANY 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 IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS 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.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO DTC, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
THIS NOTE (OR ITS PREDECESSOR) 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 THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (I) IN THE UNITED STATES TO A PERSON WHOM 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, (II) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF APPLICABLE) OR (IV) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS SET FORTH IN CLAUSE (A) ABOVE.”
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No. 001 |
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$483,225,000 |
CHASE MERGER SUB, INC.
9½ % Senior Note due 2014
CUSIP No. 75524D AA 8
ISIN No. US75524DAA81
CHASE MERGER SUB , a Delaware corporation, promises to pay to Cede & Co., or registered assigns, the principal sum Four Hundred and Eighty-Three Million, Two Hundred and Twenty-Five Thousand Dollars on August 1, 2014.
Interest Payment Dates: February 1 and August 1
Record Dates: January 15 and July 15
Additional provisions of this Security are set forth on the other side of this Security.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties have caused this instrument to be duly executed.
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CHASE MERGER SUB, INC. |
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By: |
/s/ Patricia M. Navis |
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Name: Patricia M. Navis |
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Title: Vice President and Secretary |
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Dated: July 21, 2006
TRUSTEE’S CERTIFICATE OF
AUTHENTICATION
WELLS FARGO BANK,
NATIONAL ASSOCIATION,
as Trustee, certifies that this is
one of the Securities
referred to in the Indenture.
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By: |
/s/ Timothy P. Mowdy |
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Authorized Signatory |
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REVERSE OF NOTE
CHASE MERGER SUB, INC.
9½% Senior Note due 2014
1. Interest
(a) CHASE MERGER SUB, INC., a Delaware corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the “Company”), promises to pay interest on the principal amount of this Security at the rate per annum shown above. The Company shall pay interest semiannually on February 1 and August 1 of each year, commencing February 1, 2007. Interest on the Securities shall accrue from the most recent date to which interest has been paid or duly provided for or, if no interest has been paid or duly provided for, from July 21, 2006 until the principal hereof is due. Interest shall be computed on the basis of a 360-day year of twelve 30-day months. The Company shall pay interest on overdue principal at the rate borne by the Securities, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful.
(b) Registration Rights Agreement . The Holder of this Security is entitled to the benefits of a Registration Rights Agreement, dated as of July 21, 2006, among the Company, RBS Global, Inc., Rexnord Corporation, the Guarantors and the Initial Purchasers.
2. Method of Payment
The Company shall pay interest on the Securities (except defaulted interest) to the Persons who are registered Holders at the close of business on the January 15 or July 15 next preceding the interest payment date even if Securities are canceled after the record date and on or before the interest payment date (whether or not a Business Day). Holders must surrender Securities to the Paying Agent to collect principal payments. The Company shall pay principal, premium, if any, and interest in money of the United States of America that at the time of payment is legal tender for payment of public and private debts. Payments in respect of the Securities represented by a Global Security (including principal, premium, if any, and interest) shall be made by wire transfer of immediately available funds to the accounts specified by The Depository Trust Company or any successor depositary. The Company shall make all payments in respect of a certificated Security (including principal, premium, if any, and interest) at the office of the Paying Agent, except that, at the option of the Company, payment of interest may be made by mailing a check to the registered address of each Holder thereof; provided , however , that payments on the Securities may also be made, in the case of a Holder of at least $1,000,000 aggregate principal amount of Securities, by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or Paying Agent to such effect designating such account no later than 30 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion).
3. Paying Agent and Registrar
Initially, Wells Fargo Bank, National Association, a national banking association (the “Trustee”), will act as Paying Agent and Registrar. The Company may appoint and change any
Paying Agent or Registrar without notice. The Company or any of its domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent or Registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as of July 21, 2006 (the “Indenture”), among the Company and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb) as in effect on the date of the Indenture (the “TIA”). Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The Securities are subject to all terms and provisions of the Indenture, and the Holders (as defined in the Indenture) are referred to the Indenture and the TIA for a statement of such terms and provisions
The Securities are senior unsecured obligations of the Company. This Security is one of the Initial Securities referred to in the Indenture. The Securities include the Initial Securities, any Additional Securities and any Exchange Securities issued in exchange for the Initial Securities or any Additional Securities pursuant to the Indenture. The Initial Securities, any Additional Securities and any Exchange Securities are treated as a single class of securities under the Indenture. The Indenture imposes certain limitations on the ability of the Company and its Restricted Subsidiaries to, among other things, make certain Investments and other Restricted Payments, pay dividends and other distributions, incur Indebtedness, enter into consensual restrictions upon the payment of certain dividends and distributions by such Restricted Subsidiaries, issue or sell shares of capital stock of the Company and such Restricted Subsidiaries, enter into or permit certain transactions with Affiliates, create or incur Liens and make Asset Sales. The Indenture also imposes limitations on the ability of the Company and each Guarantor to consolidate or merge with or into any other Person or convey, transfer or lease all or substantially all of its property.
To guarantee the due and punctual payment of the principal and interest on the Securities and all other amounts payable by the Company under the Indenture and the Securities when and as the same shall be due and payable, whether at maturity, by acceleration or otherwise, according to the terms of the Securities and the Indenture, the Guarantors have, jointly and severally, unconditionally guaranteed the Guaranteed Obligations on a senior unsecured basis pursuant to the terms of the Indenture.
5. Optional Redemption
Except as set forth in the following two paragraphs, the Securities shall not be redeemable at the option of the Company prior to August 1, 2010. Thereafter, the Securities shall be redeemable at the option of the Company, in whole at any time or in part from time to time, upon on not less than 30 nor more than 60 days’ prior notice, at the following redemption prices (expressed as a percentage of principal amount), plus accrued and unpaid interest and additional interest, if any, to the redemption date (subject to the right of the Holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the 12-month period commencing on August 1 of the years set forth below:
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2010 |
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104.750 |
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102.375 |
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2012 and thereafter |
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100.000 |
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In addition, prior to August 1, 2010, the Company may redeem the Securities at their option, in whole at any time or in part from time to time, upon not less than 30 nor more than 60 days’ prior notice mailed by first-class mail to each Holder’s registered address, at a redemption price equal to 100% of the principal amount of the Securities redeemed plus the Applicable Premium as of, and accrued and unpaid interest and additional interest, if any, to, the applicable redemption date (subject to the right of the Holders of record on the relevant record date to receive interest due on the relevant interest payment date).
Notwithstanding the foregoing, at any time and from time to time on or prior to August 1, 2009, the Company may redeem in the aggregate up to 35% of the original aggregate principal amount of the Securities (calculated after giving effect to any issuance of Additional Securities), with the net cash proceeds of one or more Equity Offerings (1) by the Company or (2) by any direct or indirect parent of the Company, in each case, to the extent the net cash proceeds thereof are contributed to the common equity capital of the Company or used to purchase Capital Stock (other than Disqualified Stock) of the Company from it, at a redemption price equal to 109.500% of the principal amount thereof plus accrued and unpaid interest and additional interest, if any, to the redemption date (subject to the right of the Holders of record on the relevant record date to receive interest due on the relevant interest payment date); provided , however, that at least 65% of the original aggregate principal amount of the Securities (calculated after giving effect to any issuance of Additional Securities) must remain outstanding after each such redemption; and provided , further , that such redemption shall occur within 90 days after the date on which any such Equity Offering is consummated upon not less than 30 nor more than 60 days’ notice mailed to each Holder of Securities being redeemed and otherwise in accordance with the procedures set forth in the Indenture. Notice of any redemption upon any Equity Offering may be given prior to the completion thereof, and any such redemption or notice may, at the Company’s discretion, be subject to one or more conditions precedent, including, but not limited to, completion of the related Equity Offering.
6. Sinking Fund
The Securities are not subject to any sinking fund.
7. Notice of Redemption
Notice of redemption will be mailed by first-class mail at least 30 days but not more than 60 days before the redemption date to each Holder of Securities to be redeemed at his, her or its registered address. Securities in denominations larger than $2,000 may be redeemed in part but only in whole multiples of $1,000. If money sufficient to pay the redemption price of and accrued and unpaid interest on all Securities (or portions thereof) to be redeemed on the redemption date is deposited with a Paying Agent on or before the redemption date and certain other conditions are satisfied, on and after such date, interest ceases to accrue on such Securities
(or such portions thereof) called for redemption.
8.
Repurchase of Securities at the Option of
the
Holders upon Change of Control and Asset Sales
Upon the occurrence of a Change of Control, each Holder shall have the right, subject to certain conditions specified in the Indenture, to cause the Company to repurchase all or any part of such Holder’s Securities at a purchase price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of repurchase (subject to the right of the Holders of record on the relevant record date to receive interest due on the relevant interest payment date), as provided in, and subject to the terms of, the Indenture.
In accordance with Section 4.06 of the Indenture, the Company will be required to offer to purchase Securities upon the occurrence of certain events.
9. Subordination
The Securities and Guarantees are effectively subordinated to any Secured Indebtedness to the extent of the value of the assets securing such Secured Indebtedness, as defined in the Indenture. The Company and each Guarantor agree, and each Holder by accepting a Security agrees, to the subordination provisions contained in the Indenture and authorizes the Trustee to give it effect and appoints the Trustee as attorney-in-fact for such purpose.
10. Denominations; Transfer; Exchange
The Securities are in registered form, without coupons, in denominations of $2,000 and any integral multiple of $1,000. A Holder shall register the transfer of or exchange of Securities in accordance with the Indenture. Upon any registration of transfer or exchange, the Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Securities selected for redemption (except, in the case of a Security to be redeemed in part, the portion of the Security not to be redeemed) or to transfer or exchange any Securities for a period of 15 days prior to a selection of Securities to be redeemed.
11. Persons Deemed Owners
The registered Holder of this Security shall be treated as the owner of it for all purposes.
12. Unclaimed Money
If money for the payment of principal or interest remains unclaimed for two years, the Trustee and a Paying Agent shall pay the money back to the Company at their written request unless an abandoned property law designates another Person. After any such payment, the Holders entitled to the money must look to the Company for payment as general creditors and the Trustee and a Paying Agent shall have no further liability with respect to such monies.
13. Discharge and Defeasance
Subject to certain conditions, the Company at any time may terminate some of or all its obligations under the Securities and the Indenture if the Company deposits with the Trustee money or U.S. Government Obligations for the payment of principal and interest on the Securities to redemption or maturity, as the case may be.
14. Amendment; Waiver
Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Securities may be amended with the written consent of the Holders of at least a majority in aggregate principal amount of the outstanding Securities (voting as a single class) and (ii) any past default or compliance with any provisions may be waived with the written consent of the Holders of at least a majority in principal amount of the outstanding Securities. Subject to certain exceptions set forth in the Indenture, without the consent of any Holder, the Company and the Trustee may amend the Indenture or the Securities (i) to cure any ambiguity, omission, defect or inconsistency; (ii) to provide for the assumption by a Successor Company of the obligations of the Company under the Indenture and the Notes; (iii) to provide for the assumption by a Successor Guarantor of the obligations of a Guarantor under the Indenture and its Guarantee; (iv) to provide for uncertificated Securities in addition to or in place of certificated Securities ( provided that the uncertificated Securities are issued in registered form for purposes of Section 163(f) of the Code, or in a manner such that the uncertificated Securities are described in Section 163(f)(2)(B) of the Code); (v) to add Guarantees with respect to the Securities; (vi) to add additional covenants of the Company for the benefit of the Holders or to surrender rights and powers conferred on the Company; (vii) to comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the TIA; (viii) to make any change that does not adversely affect the rights of any Holder; or (ix) to provide for the issuance of the Exchange Securities or Additional Securities.
15. Defaults and Remedies
If an Event of Default occurs (other than an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Company) and is continuing, the Trustee or the Holders of at least 25% in principal amount of the outstanding Securities, in each case, by notice to the Company, may declare the principal of, premium, if any, and accrued but unpaid interest on all the Securities to be due and payable. If an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Company occurs, the principal of, premium, if any, and interest on all the Securities shall become immediately due and payable without any declaration or other act on the part of the Trustee or any Holders. Under certain circumstances, the Holders of a majority in principal amount of the outstanding Securities may rescind any such acceleration with respect to the Securities and its consequences.
If an Event of Default occurs and is continuing, the Trustee shall be under no obligation to exercise any of the rights or powers under the Indenture at the request or direction of any of the Holders unless such Holders have offered to the Trustee reasonable indemnity or security against any loss, liability or expense and certain other conditions are complied with. Except to enforce the right to receive payment of principal, premium (if any) or interest when due, no
Holder may pursue any remedy with respect to the Indenture or the Securities unless (i) such Holder has previously given the Trustee notice that an Event of Default is continuing, (ii) the Holders of at least 25% in principal amount of the outstanding Securities have requested the Trustee in writing to pursue the remedy, (iii) such Holders have offered the Trustee reasonable security or indemnity against any loss, liability or expense, (iv) the Trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity and (v) the Holders of a majority in principal amount of the outstanding Securities have not given the Trustee a direction inconsistent with such request within such 60-day period. Subject to certain restrictions, the Holders of a majority in principal amount of the outstanding Securities are given the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. The Trustee, however, may refuse to follow any direction that conflicts with law or the Indenture or that the Trustee determines is unduly prejudicial to the rights of any other Holder or that would involve the Trustee in personal liability. Prior to taking any action under the Indenture, the Trustee shall be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action.
16. Trustee Dealings with the Company
Subject to certain limitations imposed by the TIA, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee.
17. No Recourse Against Others
No director, officer, employee, incorporator or holder of any equity interests in the Company or of any Guarantor or any direct or indirect parent corporation, as such, shall have any liability for any obligations of the Company or the Guarantors under the Securities, the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Securities by accepting a Security waives and releases all such liability.
18. Authentication
This Security shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of authentication on the other side of this Security.
19. 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 rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act).
20. Governing Law
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
21. CUSIP Numbers; ISINs
The Company has caused CUSIP numbers and ISINs to be printed on the Securities and has directed the Trustee to use CUSIP numbers and ISINs in notices of redemption as a convenience to the Holders. No representation is made as to the accuracy of such numbers either as printed on the Securities 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 of Securities upon written request and without charge to the Holder a copy of the Indenture which has in it the text of this Security.
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ASSIGNMENT FORM |
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To assign this Security, fill in the form below: |
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I or we assign and transfer this Security to: |
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(Print or type assignee’s name, address and zip code) |
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(Insert assignee’s soc. sec. or tax I.D. No.) |
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and irrevocably appoint agent to transfer this Security on the books of the Company. The agent may substitute another to act for him. |
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Date: |
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Your Signature: |
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Sign exactly as your name appears on the other side of this Security. |
Signature Guarantee:
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Date: |
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Signature must be guaranteed by a participant in a recognized signature guaranty medallion program or other signature guarantor program reasonably acceptable to the Trustee |
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Signature of Signature Guarantee |
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CERTIFICATE TO BE
DELIVERED UPON EXCHANGE OR
REGISTRATION OF TRANSFER RESTRICTED SECURITIES
This certificate relates to $ principal amount of Securities held in (check applicable space) book-entry or definitive form by the undersigned.
The undersigned (check one box below):
o has requested the Trustee by written order to deliver in exchange for its beneficial interest in the Global Security held by the Depository a Security or Securities in definitive, registered form of authorized denominations and an aggregate principal amount equal to its beneficial interest in such Global Security (or the portion thereof indicated above);
o has requested the Trustee by written order to exchange or register the transfer of a Security or Securities.
In connection with any transfer of any of the Securities evidenced by this certificate occurring prior to the expiration of the period referred to in Rule 144(k) under the Securities Act, the undersigned confirms that such Securities are being transferred in accordance with its terms:
CHECK ONE BOX BELOW
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(1) |
o |
to the Company; or |
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(2) |
o |
to the Registrar for registration in the name of the Holder, without transfer; or |
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(3) |
o |
pursuant to an effective registration statement under the Securities Act of 1933; or |
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(4) |
o |
inside the United States to a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act of 1933) that purchases for its own account or for the account of a qualified institutional buyer to whom notice is given that such transfer is being made in reliance on Rule 144A, in each case pursuant to and in compliance with Rule 144A under the Securities Act of 1933; or |
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(5) |
o |
outside the United States in an offshore transaction within the meaning of Regulation S under the Securities Act in compliance with Rule 904 under the Securities Act of 1933 and such Security shall be held immediately after the transfer through Euroclear or Clearstream until the expiration of the Restricted Period (as defined in the Indenture); or |
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(6) |
o |
to an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933) that has furnished to the Trustee a signed letter containing certain representations and agreements; or |
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(7) |
o |
pursuant to another available exemption from registration provided by Rule 144 under the Securities Act of 1933. |
Unless one of the boxes is checked, the Trustee will refuse to register any of the Securities evidenced by this certificate in the name of any Person other than the registered Holder thereof; provided , however , that if box (5), (6) or (7) is checked, the Company or the Trustee may require, prior to registering any such transfer of the Securities, such legal opinions, certifications and other information as the Company or the Trustee have reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933.
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Date: |
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Your Signature: |
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Signature Guarantee:
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Date: |
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Signature must be guaranteed by a participant in a recognized signature guaranty medallion program or other signature guarantor program reasonably acceptable to the Trustee |
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Signature of Signature Guarantee |
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TO BE COMPLETED BY PURCHASER IF (4) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Security for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act of 1933, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned’s foregoing representations in order to claim the exemption from registration provided by Rule 144A.
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Dated: |
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NOTICE: To be executed by an executive officer |
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SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The initial principal amount of this Global Security is $483,225,000 . The following increases or decreases in this Global Security have been made:
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Date of Exchange |
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Amount of decrease in Principal Amount of this Global Security |
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Amount of increase in Principal Amount of this Global Security |
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Principal amount of this Global Security following such decrease or increase |
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Signature of authorized signatory of Trustee or Securities Custodian |
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OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company pursuant to Section 4.06 (Asset Sale) or 4.08 (Change of Control) of the Indenture, check the box:
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Asset Sale o |
Change of Control o |
If you want to elect to have only part of this Security purchased by the Company pursuant to Section 4.06 (Asset Sale) or 4.08 (Change of Control) of the Indenture, state the amount ($2,000 or any integral multiple of $1,000):
$
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Date: |
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Your Signature: |
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(Sign exactly as your name appears on the other side of this Security) |
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Signature Guarantee: |
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Signature must be guaranteed by a participant in a recognized signature guaranty medallion program or other signature guarantor program reasonably acceptable to the Trustee
Exhibit 4.4
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THE COMPANY 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 IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS 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.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO DTC, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
THIS NOTE (OR ITS PREDECESSOR) 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 THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (I) IN THE UNITED STATES TO A PERSON WHOM 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, (II) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF APPLICABLE) OR (IV) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS SET FORTH IN CLAUSE (A) ABOVE.
THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION ORIGINALLY EXEMPT FROM REGISTRATION UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE TRANSFERRED IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY U.S. PERSON EXCEPT PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ALL APPLICABLE STATE SECURITIES LAWS. TERMS USED ABOVE HAVE THE MEANINGS GIVEN TO THEM IN REGULATION S UNDER THE SECURITIES ACT.
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No. 002 |
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$ 1,775,000 |
CHASE MERGER SUB, INC.
9½ % Senior Note due 2014
CUSIP No. U7533P AA 0
ISIN No. USU7533PAA04
CHASE MERGER SUB , a Delaware corporation, promises to pay to Cede & Co., or registered assigns, the principal sum One Million, Seven Hundred and Seventy-Five Thousand Dollars on August 1, 2014.
Interest Payment Dates: February 1 and August 1
Record Dates: January 15 and July 15
Additional provisions of this Security are set forth on the other side of this Security.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties have caused this instrument to be duly executed.
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CHASE MERGER SUB, INC. |
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By: |
/s/ Patricia M. Navis |
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Name: Patricia M. Navis |
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Title: Vice President and Secretary |
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Dated: July 21, 2006
TRUSTEE’S CERTIFICATE OF
AUTHENTICATION
WELLS FARGO BANK,
NATIONAL ASSOCIATION,
as Trustee, certifies that this is
one of the Securities
referred to in the Indenture.
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By: |
/s/ Timothy P. Mowdy |
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Authorized Signatory |
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REVERSE OF NOTE
CHASE MERGER SUB, INC.
9½% Senior Note due 2014
1. Interest
(a) CHASE MERGER SUB, INC., a Delaware corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the “Company”), promises to pay interest on the principal amount of this Security at the rate per annum shown above. The Company shall pay interest semiannually on February 1 and August 1 of each year, commencing February 1, 2007. Interest on the Securities shall accrue from the most recent date to which interest has been paid or duly provided for or, if no interest has been paid or duly provided for, from July 21, 2006 until the principal hereof is due. Interest shall be computed on the basis of a 360-day year of twelve 30-day months. The Company shall pay interest on overdue principal at the rate borne by the Securities, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful.
(b) Registration Rights Agreement . The Holder of this Security is entitled to the benefits of a Registration Rights Agreement, dated as of July 21, 2006, among the Company, RBS Global, Inc., Rexnord Corporation, the Guarantors and the Initial Purchasers.
2. Method of Payment
The Company shall pay interest on the Securities (except defaulted interest) to the Persons who are registered Holders at the close of business on the January 15 or July 15 next preceding the interest payment date even if Securities are canceled after the record date and on or before the interest payment date (whether or not a Business Day). Holders must surrender Securities to the Paying Agent to collect principal payments. The Company shall pay principal, premium, if any, and interest in money of the United States of America that at the time of payment is legal tender for payment of public and private debts. Payments in respect of the Securities represented by a Global Security (including principal, premium, if any, and interest) shall be made by wire transfer of immediately available funds to the accounts specified by The Depository Trust Company or any successor depositary. The Company shall make all payments in respect of a certificated Security (including principal, premium, if any, and interest) at the office of the Paying Agent, except that, at the option of the Company, payment of interest may be made by mailing a check to the registered address of each Holder thereof; provided , however , that payments on the Securities may also be made, in the case of a Holder of at least $1,000,000 aggregate principal amount of Securities, by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or Paying Agent to such effect designating such account no later than 30 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion).
3. Paying Agent and Registrar
Initially, Wells Fargo Bank, National Association, a national banking association (the
“Trustee”), will act as Paying Agent and Registrar. The Company may appoint and change any Paying Agent or Registrar without notice. The Company or any of its domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent or Registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as of July 21, 2006 (the “Indenture”), among the Company and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb) as in effect on the date of the Indenture (the “TIA”). Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The Securities are subject to all terms and provisions of the Indenture, and the Holders (as defined in the Indenture) are referred to the Indenture and the TIA for a statement of such terms and provisions
The Securities are senior unsecured obligations of the Company. This Security is one of the Initial Securities referred to in the Indenture. The Securities include the Initial Securities, any Additional Securities and any Exchange Securities issued in exchange for the Initial Securities or any Additional Securities pursuant to the Indenture. The Initial Securities, any Additional Securities and any Exchange Securities are treated as a single class of securities under the Indenture. The Indenture imposes certain limitations on the ability of the Company and its Restricted Subsidiaries to, among other things, make certain Investments and other Restricted Payments, pay dividends and other distributions, incur Indebtedness, enter into consensual restrictions upon the payment of certain dividends and distributions by such Restricted Subsidiaries, issue or sell shares of capital stock of the Company and such Restricted Subsidiaries, enter into or permit certain transactions with Affiliates, create or incur Liens and make Asset Sales. The Indenture also imposes limitations on the ability of the Company and each Guarantor to consolidate or merge with or into any other Person or convey, transfer or lease all or substantially all of its property.
To guarantee the due and punctual payment of the principal and interest on the Securities and all other amounts payable by the Company under the Indenture and the Securities when and as the same shall be due and payable, whether at maturity, by acceleration or otherwise, according to the terms of the Securities and the Indenture, the Guarantors have, jointly and severally, unconditionally guaranteed the Guaranteed Obligations on a senior unsecured basis pursuant to the terms of the Indenture.
5. Optional Redemption
Except as set forth in the following two paragraphs, the Securities shall not be redeemable at the option of the Company prior to August 1, 2010. Thereafter, the Securities shall be redeemable at the option of the Company, in whole at any time or in part from time to time, upon on not less than 30 nor more than 60 days’ prior notice, at the following redemption prices (expressed as a percentage of principal amount), plus accrued and unpaid interest and additional interest, if any, to the redemption date (subject to the right of the Holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the 12-month period commencing on August 1 of the years set forth below:
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Year |
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Redemption Price |
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2010 |
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104.750 |
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2011 |
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102.375 |
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2012 and thereafter |
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100.000 |
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In addition, prior to August 1, 2010, the Company may redeem the Securities at their option, in whole at any time or in part from time to time, upon not less than 30 nor more than 60 days’ prior notice mailed by first-class mail to each Holder’s registered address, at a redemption price equal to 100% of the principal amount of the Securities redeemed plus the Applicable Premium as of, and accrued and unpaid interest and additional interest, if any, to, the applicable redemption date (subject to the right of the Holders of record on the relevant record date to receive interest due on the relevant interest payment date).
Notwithstanding the foregoing, at any time and from time to time on or prior to August 1, 2009, the Company may redeem in the aggregate up to 35% of the original aggregate principal amount of the Securities (calculated after giving effect to any issuance of Additional Securities), with the net cash proceeds of one or more Equity Offerings (1) by the Company or (2) by any direct or indirect parent of the Company, in each case, to the extent the net cash proceeds thereof are contributed to the common equity capital of the Company or used to purchase Capital Stock (other than Disqualified Stock) of the Company from it, at a redemption price equal to 109.500% of the principal amount thereof plus accrued and unpaid interest and additional interest, if any, to the redemption date (subject to the right of the Holders of record on the relevant record date to receive interest due on the relevant interest payment date); provided , however, that at least 65% of the original aggregate principal amount of the Securities (calculated after giving effect to any issuance of Additional Securities) must remain outstanding after each such redemption; and provided , further , that such redemption shall occur within 90 days after the date on which any such Equity Offering is consummated upon not less than 30 nor more than 60 days’ notice mailed to each Holder of Securities being redeemed and otherwise in accordance with the procedures set forth in the Indenture. Notice of any redemption upon any Equity Offering may be given prior to the completion thereof, and any such redemption or notice may, at the Company’s discretion, be subject to one or more conditions precedent, including, but not limited to, completion of the related Equity Offering.
6. Sinking Fund
The Securities are not subject to any sinking fund.
7. Notice of Redemption
Notice of redemption will be mailed by first-class mail at least 30 days but not more than 60 days before the redemption date to each Holder of Securities to be redeemed at his, her or its registered address. Securities in denominations larger than $2,000 may be redeemed in part but only in whole multiples of $1,000. If money sufficient to pay the redemption price of and accrued and unpaid interest on all Securities (or portions thereof) to be redeemed on the redemption date is deposited with a Paying Agent on or before the redemption date and certain other conditions are satisfied, on and after such date, interest ceases to accrue on such Securities
(or such portions thereof) called for redemption.
8.
Repurchase of Securities at the Option of
the
Holders upon Change of Control and Asset Sales
Upon the occurrence of a Change of Control, each Holder shall have the right, subject to certain conditions specified in the Indenture, to cause the Company to repurchase all or any part of such Holder’s Securities at a purchase price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of repurchase (subject to the right of the Holders of record on the relevant record date to receive interest due on the relevant interest payment date), as provided in, and subject to the terms of, the Indenture.
In accordance with Section 4.06 of the Indenture, the Company will be required to offer to purchase Securities upon the occurrence of certain events.
9. Subordination
The Securities and Guarantees are effectively subordinated to any Secured Indebtedness to the extent of the value of the assets securing such Secured Indebtedness, as defined in the Indenture. The Company and each Guarantor agree, and each Holder by accepting a Security agrees, to the subordination provisions contained in the Indenture and authorizes the Trustee to give it effect and appoints the Trustee as attorney-in-fact for such purpose.
10. Denominations; Transfer; Exchange
The Securities are in registered form, without coupons, in denominations of $2,000 and any integral multiple of $1,000. A Holder shall register the transfer of or exchange of Securities in accordance with the Indenture. Upon any registration of transfer or exchange, the Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Securities selected for redemption (except, in the case of a Security to be redeemed in part, the portion of the Security not to be redeemed) or to transfer or exchange any Securities for a period of 15 days prior to a selection of Securities to be redeemed.
11. Persons Deemed Owners
The registered Holder of this Security shall be treated as the owner of it for all purposes.
12. Unclaimed Money
If money for the payment of principal or interest remains unclaimed for two years, the Trustee and a Paying Agent shall pay the money back to the Company at their written request unless an abandoned property law designates another Person. After any such payment, the Holders entitled to the money must look to the Company for payment as general creditors and the Trustee and a Paying Agent shall have no further liability with respect to such monies.
13. Discharge and Defeasance
Subject to certain conditions, the Company at any time may terminate some of or all its obligations under the Securities and the Indenture if the Company deposits with the Trustee money or U.S. Government Obligations for the payment of principal and interest on the Securities to redemption or maturity, as the case may be.
14. Amendment; Waiver
Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Securities may be amended with the written consent of the Holders of at least a majority in aggregate principal amount of the outstanding Securities (voting as a single class) and (ii) any past default or compliance with any provisions may be waived with the written consent of the Holders of at least a majority in principal amount of the outstanding Securities. Subject to certain exceptions set forth in the Indenture, without the consent of any Holder, the Company and the Trustee may amend the Indenture or the Securities (i) to cure any ambiguity, omission, defect or inconsistency; (ii) to provide for the assumption by a Successor Company of the obligations of the Company under the Indenture and the Notes; (iii) to provide for the assumption by a Successor Guarantor of the obligations of a Guarantor under the Indenture and its Guarantee; (iv) to provide for uncertificated Securities in addition to or in place of certificated Securities ( provided that the uncertificated Securities are issued in registered form for purposes of Section 163(f) of the Code, or in a manner such that the uncertificated Securities are described in Section 163(f)(2)(B) of the Code); (v) to add Guarantees with respect to the Securities; (vi) to add additional covenants of the Company for the benefit of the Holders or to surrender rights and powers conferred on the Company; (vii) to comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the TIA; (viii) to make any change that does not adversely affect the rights of any Holder; or (ix) to provide for the issuance of the Exchange Securities or Additional Securities.
15. Defaults and Remedies
If an Event of Default occurs (other than an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Company) and is continuing, the Trustee or the Holders of at least 25% in principal amount of the outstanding Securities, in each case, by notice to the Company, may declare the principal of, premium, if any, and accrued but unpaid interest on all the Securities to be due and payable. If an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Company occurs, the principal of, premium, if any, and interest on all the Securities shall become immediately due and payable without any declaration or other act on the part of the Trustee or any Holders. Under certain circumstances, the Holders of a majority in principal amount of the outstanding Securities may rescind any such acceleration with respect to the Securities and its consequences.
If an Event of Default occurs and is continuing, the Trustee shall be under no obligation to exercise any of the rights or powers under the Indenture at the request or direction of any of the Holders unless such Holders have offered to the Trustee reasonable indemnity or security against any loss, liability or expense and certain other conditions are complied with. Except to enforce the right to receive payment of principal, premium (if any) or interest when due, no
Holder may pursue any remedy with respect to the Indenture or the Securities unless (i) such Holder has previously given the Trustee notice that an Event of Default is continuing, (ii) the Holders of at least 25% in principal amount of the outstanding Securities have requested the Trustee in writing to pursue the remedy, (iii) such Holders have offered the Trustee reasonable security or indemnity against any loss, liability or expense, (iv) the Trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity and (v) the Holders of a majority in principal amount of the outstanding Securities have not given the Trustee a direction inconsistent with such request within such 60-day period. Subject to certain restrictions, the Holders of a majority in principal amount of the outstanding Securities are given the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. The Trustee, however, may refuse to follow any direction that conflicts with law or the Indenture or that the Trustee determines is unduly prejudicial to the rights of any other Holder or that would involve the Trustee in personal liability. Prior to taking any action under the Indenture, the Trustee shall be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action.
16. Trustee Dealings with the Company
Subject to certain limitations imposed by the TIA, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee.
17. No Recourse Against Others
No director, officer, employee, incorporator or holder of any equity interests in the Company or of any Guarantor or any direct or indirect parent corporation, as such, shall have any liability for any obligations of the Company or the Guarantors under the Securities, the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Securities by accepting a Security waives and releases all such liability.
18. Authentication
This Security shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of authentication on the other side of this Security.
19. 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 rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act).
20. Governing Law
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
21. CUSIP Numbers; ISINs
The Company has caused CUSIP numbers and ISINs to be printed on the Securities and has directed the Trustee to use CUSIP numbers and ISINs in notices of redemption as a convenience to the Holders. No representation is made as to the accuracy of such numbers either as printed on the Securities 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 of Securities upon written request and without charge to the Holder a copy of the Indenture which has in it the text of this Security.
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ASSIGNMENT FORM |
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To assign this Security, fill in the form below: |
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I or we assign and transfer this Security to: |
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(Print or type assignee’s name, address and zip code) |
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(Insert assignee’s soc. sec. or tax I.D. No.) |
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and irrevocably appoint agent to transfer this Security on the books of the Company. The agent may substitute another to act for him. |
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Date: |
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Your Signature: |
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Sign exactly as your name appears on the other side of this Security. |
Signature Guarantee:
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Date: |
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Signature must be guaranteed by a participant in a recognized signature guaranty medallion program or other signature guarantor program reasonably acceptable to the Trustee |
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Signature of Signature Guarantee |
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CERTIFICATE TO BE
DELIVERED UPON EXCHANGE OR
REGISTRATION OF TRANSFER RESTRICTED SECURITIES
This certificate relates to $ principal amount of Securities held in (check applicable space) book-entry or definitive form by the undersigned.
The undersigned (check one box below):
o has requested the Trustee by written order to deliver in exchange for its beneficial interest in the Global Security held by the Depository a Security or Securities in definitive, registered form of authorized denominations and an aggregate principal amount equal to its beneficial interest in such Global Security (or the portion thereof indicated above);
o has requested the Trustee by written order to exchange or register the transfer of a Security or Securities.
In connection with any transfer of any of the Securities evidenced by this certificate occurring prior to the expiration of the period referred to in Rule 144(k) under the Securities Act, the undersigned confirms that such Securities are being transferred in accordance with its terms:
CHECK ONE BOX BELOW
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(1) |
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to the Company; or |
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(2) |
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to the Registrar for registration in the name of the Holder, without transfer; or |
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(3) |
o |
pursuant to an effective registration statement under the Securities Act of 1933; or |
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(4) |
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inside the United States to a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act of 1933) that purchases for its own account or for the account of a qualified institutional buyer to whom notice is given that such transfer is being made in reliance on Rule 144A, in each case pursuant to and in compliance with Rule 144A under the Securities Act of 1933; or |
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(5) |
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outside the United States in an offshore transaction within the meaning of Regulation S under the Securities Act in compliance with Rule 904 under the Securities Act of 1933 and such Security shall be held immediately after the transfer through Euroclear or Clearstream until the expiration of the Restricted Period (as defined in the Indenture); or |
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(6) |
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to an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933) that has furnished to the Trustee a signed letter containing certain representations and agreements; or |
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(7) |
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pursuant to another available exemption from registration provided by Rule 144 under the Securities Act of 1933. |
Unless one of the boxes is checked, the Trustee will refuse to register any of the Securities evidenced by this certificate in the name of any Person other than the registered Holder thereof; provided , however , that if box (5), (6) or (7) is checked, the Company or the Trustee may require, prior to registering any such transfer of the Securities, such legal opinions, certifications and other information as the Company or the Trustee have reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933.
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Date: |
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Your Signature: |
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Signature Guarantee:
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Date: |
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Signature must be guaranteed by a participant in a recognized signature guaranty medallion program or other signature guarantor program reasonably acceptable to the Trustee |
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Signature of Signature Guarantee |
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TO BE COMPLETED BY PURCHASER IF (4) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Security for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act of 1933, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned’s foregoing representations in order to claim the exemption from registration provided by Rule 144A.
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Dated: |
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NOTICE: To be executed by an executive officer |
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SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The initial principal amount of this Global Security is $ 1,775,000 . The following increases or decreases in this Global Security have been made:
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Date of Exchange |
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Amount of decrease in Principal Amount of this Global Security |
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Amount of increase in Principal Amount of this Global Security |
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Principal amount of this Global Security following such decrease or increase |
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Signature of authorized signatory of Trustee or Securities Custodian |
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OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company pursuant to Section 4.06 (Asset Sale) or 4.08 (Change of Control) of the Indenture, check the box:
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Asset Sale o |
Change of Control o |
If you want to elect to have only part of this Security purchased by the Company pursuant to Section 4.06 (Asset Sale) or 4.08 (Change of Control) of the Indenture, state the amount ($2,000 or any integral multiple of $1,000):
$
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Date: |
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Your Signature: |
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(Sign exactly as your name appears on the other side of this Security) |
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Signature Guarantee: |
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Signature must be guaranteed by a participant in a recognized signature guaranty medallion program or other signature guarantor program reasonably acceptable to the Trustee
Exhibit 4.5
EXECUTION VERSION
REGISTRATION RIGHTS AGREEMENT
by and among
Chase Merger Sub, Inc.
RBS Global, Inc.
Rexnord Corporation
the subsidiaries of Rexnord Corporation parties hereto
and
Credit Suisse Securities (USA) LLC
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Bear, Stearns & Co. Inc.
Lehman Brothers Inc.
Dated as of July 21, 2006
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this “Agreement”) is made and entered into as of July 21, 2006, by and among Chase Merger Sub, Inc., a Delaware corporation (“Merger Sub”), RBS Global, Inc., a Delaware corporation (the “Company”), Rexnord Corporation, a Delaware Corporation (the “Co-Issuer”), the subsidiaries of the Co-Issuer listed on Schedule A hereto (collectively, the “Guarantors”), Credit Suisse Securities (USA) LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Bear Stearns & Co. Inc. and Lehman Brothers Inc. (collectively, the “Initial Purchasers”), each of whom has agreed to purchase, pursuant to the Purchase Agreement (as defined below), the 9.50% Senior Notes due 2014 (the “Initial Notes”) issued by the Company and the Co-Issuer and fully and unconditionally guaranteed by the Guarantors (the “Guarantees”). The Initial Notes and the Guarantees attached thereto are herein collectively referred to as the “Initial Securities.”
This Agreement is made pursuant to the Purchase Agreement, dated July 14, 2006 (the “Purchase Agreement”), among Merger Sub and the Initial Purchasers, and the Joinder Agreement, dated July 21, 2006, among the Company, the Co-Issuer, the subsidiaries of the Co-Issuer parties thereto and the Initial Purchasers (i) for the benefit of the Initial Purchasers and (ii) for the benefit of the holders from time to time of the Initial Securities, including the Initial Purchasers. In order to induce the Initial Purchasers to purchase the Initial Securities, the Company, Merger Sub, the Co-Issuer and the Guarantors have agreed to provide the registration rights set forth in this Agreement. The execution and delivery of this Agreement is a condition to the obligations of the Initial Purchasers set forth in Section 6(i) of the Purchase Agreement. This Agreement shall become effective automatically and without further action with respect to the Company, the Co-Issuer and the Guarantors only immediately upon the completion of the Merger described in the Purchase Agreement.
The parties hereby agree as follows:
Section 1. Definitions. As used in this Agreement, the following capitalized terms shall have the following meanings:
Additional Interest Payment Date: With respect to the Initial Securities, each Interest Payment Date.
Broker-Dealer: Any broker or dealer registered under the Exchange Act.
Business Day: Any day other than a Saturday, Sunday or U.S. federal holiday or a day on which banking institutions or trust companies located in New York, New York are authorized or obligated to be closed.
Closing Date: The date of this Agreement.
Commission: The Securities and Exchange Commission.
Consummate: A registered Exchange Offer shall be deemed “Consummated” for purposes of this Agreement upon the occurrence of (i) the filing and effectiveness under the Securities Act of the Exchange Offer Registration Statement relating to the Exchange Securities
to be issued in the Exchange Offer, (ii) 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 (iii) the delivery by the Company and the Co-Issuer to the Registrar under the Indenture of Exchange Securities in the same aggregate principal amount as the aggregate principal amount of Initial Securities that were tendered by Holders thereof pursuant to the Exchange Offer.
Effectiveness Target Date: As defined in Section 5 hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exchange Offer: The registration by the Company and the Co-Issuer under the Securities Act of the Exchange Securities pursuant to a Registration Statement pursuant to which the Company and the Co-Issuer offer the Holders of all outstanding Transfer Restricted Securities the opportunity to exchange all such outstanding Transfer Restricted Securities held by such Holders for Exchange Securities 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 Initial Securities to certain “qualified institutional buyers,” as such term is defined in Rule 144A under the Securities Act and to certain non-U.S. persons pursuant to Regulation S under the Securities Act.
Exchange Securities: The 9.50% Senior Notes due 2014 of the same series under the Indenture as the Initial Notes and the Guarantees attached thereto, to be issued to Holders in exchange for Transfer Restricted Securities pursuant to this Agreement.
Free Writing Prospectus: Any free writing prospectus, as such term is defined in Rule 405 under the Securities Act, relating to any portion of the Securities.
Guarantees: As defined in the preamble hereto.
Holders: As defined in Section 2(b) hereof.
Indemnified Holder: As defined in Section 8(a) hereof.
Indenture: The Indenture dated as of July 21, 2006, by and among Merger Sub, the Company, the Co-Issuer, the Guarantors and Wells Fargo Bank, N.A., as trustee (the “Trustee”), pursuant to which the Initial Notes and the Exchange Securities are to be issued, as such Indenture is amended or supplemented from time to time in accordance with the terms thereof.
Initial Notes: As defined in the preamble hereto.
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Initial Placement: The issuance and sale by the Company and the Co-Issuer of the Initial Securities to the Initial Purchasers pursuant to the Purchase Agreement.
Initial Purchasers: As defined in the preamble hereto.
Initial Securities: As defined in the preamble hereto.
Interest Payment Date: As defined in the Indenture and the Securities.
NASD: NASD Inc.
Person: An individual, partnership, corporation, trust or unincorporated organization, or a government or agency or political subdivision thereof.
Prospectus: The prospectus included in a Registration Statement, 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.
Registration Default: As defined in Section 5 hereof.
Registration Statement: Any registration statement of the Company and the Co-Issuer relating to (a) an offering of Exchange Securities pursuant to an Exchange Offer or (b) the registration for resale of Transfer Restricted Securities pursuant to the Shelf Registration Statement, which is filed pursuant to the provisions of this Agreement, in each case, including the Prospectus included therein, all amendments and supplements thereto (including post-effective amendments) and all exhibits and material incorporated by reference therein.
Securities: As defined in the preamble hereto.
Securities Act: The Securities Act of 1933, as amended.
Shelf Filing Deadline: As defined in Section 4(a) hereof.
Shelf Registration Statement: As defined in Section 4(a) hereof.
Transfer Restricted Securities: Each Initial Security, until the earliest to occur of (a) the date on which such Initial Security is exchanged in the Exchange Offer for an Exchange Security entitled to be resold to the public by the Holder thereof without complying with the prospectus delivery requirements of the Securities Act, (b) the date on which such Initial Security has been effectively registered under the Securities Act and disposed of in accordance with a Shelf Registration Statement and (c) the date on which such Initial Security is distributed to the public pursuant to Rule 144 under the Securities Act or by a Broker-Dealer pursuant to the “Plan of Distribution” contemplated by the Exchange Offer Registration Statement (including delivery of the Prospectus contained therein).
Trust Indenture Act: The Trust Indenture Act of 1939, as amended.
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Underwritten Registration or Underwritten Offering: A registration in which securities of the Company and the Co-Issuer are sold to an underwriter for reoffering to the public.
Section 2. Securities Subject to this Agreement.
(a) Transfer Restricted Securities. The securities entitled to the benefits of this Agreement are the Transfer Restricted Securities.
(b) Holders of Transfer Restricted Securities. 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 permissible under applicable law or Commission policy (after the procedures set forth in Section 6(a) hereof have been complied with), each of the Company, the Co-Issuer and the Guarantors shall (i) use its commercially reasonable efforts to cause to be filed with the Commission as soon as practicable after the Closing Date, but in no event later than 180 days after the Closing Date (or if such 180th day is not a Business Day, the next succeeding Business Day), a Registration Statement under the Securities Act relating to the Exchange Securities and the Exchange Offer, (ii) use its commercially reasonable efforts to cause such Registration Statement to become effective as promptly as possible (unless it becomes effective automatically upon filing), but in no event later than 365 days after the Closing Date (or if such 365th day is not a Business Day, the next succeeding Business Day), (iii) in connection with the foregoing, file (A) all pre-effective amendments to such Registration Statement as may be necessary in order to cause such Registration Statement to become effective, (B) if applicable, a post-effective amendment to such Registration Statement pursuant to Rule 430A under the Securities Act and (C) cause all necessary filings in connection with the registration and qualification of the Exchange Securities to be made under the state securities or blue sky laws of such jurisdictions as are necessary to permit Consummation of the Exchange Offer, and (iv) upon the effectiveness of such Registration Statement, commence the Exchange Offer. The Exchange Offer shall be on the appropriate form permitting registration of the Exchange Securities to be offered in exchange for the Transfer Restricted Securities and to permit resales of Initial Securities held by Broker-Dealers as contemplated by Section 3(c) hereof.
(b) The Company, the Co-Issuer and the Guarantors shall 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 30 days after the date notice of the Exchange Offer is mailed to the Holders. The Company and the Co-Issuer shall cause the Exchange Offer to comply with all applicable federal and state securities laws. No securities other than the Exchange Securities shall be included in the Exchange Offer Registration Statement. The Company and the Co-Issuer shall use their commercially reasonable 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
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event later than 30 days after the date notice of the Exchange Offer is required to be mailed to the Holders (or if such 30th day is not a Business Day, the next succeeding Business Day).
(c) The Company and the Co-Issuer shall indicate in a “Plan of Distribution” section contained in the Prospectus forming a part of the Exchange Offer Registration Statement that any Broker-Dealer who holds Initial Securities that are Transfer Restricted Securities and that were acquired for its own account as a result of market-making activities or other trading activities (other than Transfer Restricted Securities acquired directly from the Company and the Co-Issuer) may exchange such Initial Securities pursuant to the Exchange Offer; however, such Broker-Dealer may be deemed to be an “underwriter” within the meaning of the Securities Act and must, therefore, deliver a prospectus meeting the requirements of the Securities Act in connection with any resales of the Exchange Securities 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 resales by Broker-Dealers that the Commission may require in order to permit such resales pursuant thereto, but such “Plan of Distribution” shall not name any such Broker-Dealer or disclose the amount of Initial Securities held by any such Broker-Dealer except to the extent required by the Commission.
Each of the Company, the Co-Issuer and the Guarantors shall use its commercially reasonable efforts to keep the Exchange Offer Registration Statement continuously effective, supplemented and amended as required by the provisions of Section 6(c) hereof to the extent necessary to ensure that it is available for resales of Initial Securities acquired by Broker-Dealers for their own accounts as a result of market-making activities or other trading activities, and to ensure that it conforms with the requirements of this Agreement, the Securities Act and the policies, rules and regulations of the Commission as announced from time to time, for a period ending on the earlier of (i) 180 days from the date on which the Exchange Offer Registration Statement is declared effective and (ii) the date on which a Broker-Dealer is no longer required to deliver a prospectus in connection with market-making or other trading activities.
The Company and the Co-Issuer shall provide sufficient copies of the latest version of such Prospectus to Broker-Dealers promptly upon request at any time during such 180-day (or shorter as provided in the foregoing sentence) period in order to facilitate such resales.
Section 4. Shelf Registration.
(a) Shelf Registration. If (i) the Company and the Co-Issuer are not required to file an Exchange Offer Registration Statement or to consummate the Exchange Offer because the Exchange Offer is not permitted by applicable law or Commission policy (after the procedures set forth in Section 6(a) hereof have been complied with), (ii) for any reason the Exchange Offer is not Consummated within 30 days after the date notice of the Exchange Offer is required to be mailed to the Holders (or if such 30th day is not a Business Day, the next succeeding Business Day), or (iii) with respect to any Holder of Transfer Restricted Securities (A) such Holder is prohibited by applicable law or Commission policy from participating in the Exchange Offer, or (B) such Holder may not resell the Exchange Securities acquired by it in the Exchange Offer to the public without delivering a prospectus (other than by reason of such Holder’s status as an
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affiliate of the Company or the Co-Issuer) 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 Initial Securities acquired directly from the Company, the Co-Issuer or one of their affiliates, then, upon such Holder’s request prior to the 20 th day following consummation of the Exchange Offer, the Company, the Co-Issuer and the Guarantors shall:
(x) cause to be filed a shelf registration statement pursuant to Rule 415 under the Securities Act, which may be an amendment to the Exchange Offer Registration Statement (in either event, the “Shelf Registration Statement”) as soon as practicable but in any event on or prior to 180 days after such filing obligation arises (or if such 180th day is not a Business Day, the next succeeding Business Day) (such date being the “Shelf Filing Deadline”), which Shelf Registration Statement shall provide for resales of all Transfer Restricted Securities the Holders of which shall have provided the information required pursuant to Section 4(b) hereof; and
(y) use their commercially reasonable efforts to cause such Shelf Registration Statement to be declared effective by the Commission as promptly as possible (unless it becomes effective automatically upon filing), and in any event on or before the 365th day after the obligation to file such Shelf Registration Statement arises (or if such 365th day is not a Business Day, the next succeeding Business Day).
Each of the Company, the Co-Issuer and the Guarantors shall use its commercially reasonable efforts to keep such Shelf Registration Statement continuously effective, supplemented and amended as required by the provisions of Sections 6(b) and (c) hereof to the extent necessary to ensure that it is available for resales of Initial Securities by the Holders of Transfer Restricted Securities entitled to the benefit of this Section 4(a), and to ensure that it conforms with the requirements of this Agreement, the Securities Act and the policies, rules and regulations of the Commission as announced from time to time, for a period of at least two years following the effective date of such Shelf Registration Statement (or shorter period that will terminate when all the Initial Securities covered by such Shelf Registration Statement have been sold pursuant to such Shelf Registration Statement). During the period during which the Company is required to maintain an effective Shelf Registration Statement pursuant to this Agreement, the Company will, prior to the expiration of that Shelf Registration Statement, file, and use its commercially reasonable efforts to cause to be declared effective (unless it becomes effective automatically upon filing) within a period that avoids any interruption in the ability of Holders of Securities covered by the expiring Shelf Registration Statement to make registered dispositions, a new registration statement relating to the Securities, which shall be deemed the “Shelf Registration Statement” for purposes of this Agreement.
(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 such Holder furnishes to the Company and the Co-Issuer in writing, within 20 Business Days after receipt of a request therefor, such information as the Company and the Co-Issuer may reasonably request for use in connection with any Shelf Registration Statement or Prospectus or preliminary Prospectus included therein or amendment or supplement thereto or
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Free Writing Prospectus. Each Holder as to which any Shelf Registration Statement is being effected agrees to furnish promptly to the Company and the Co-Issuer all information required to be disclosed in order to make the information previously furnished to the Company and the Co-Issuer by such Holder not materially misleading.
Section 5. Additional Interest. If (i) any of the Registration Statements 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 of such Registration Statements has not been declared effective by the Commission (or become automatically effective) on or prior to the date specified for such effectiveness in this Agreement (the “Effectiveness Target Date”), (iii) the Exchange Offer has not been Consummated within 30 Business Days after the Effectiveness Target Date with respect to the Exchange Offer Registration Statement, 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 for its intended purpose without being succeeded immediately by a post-effective amendment to such Registration Statement that cures such failure and that is itself immediately declared or automatically effective (except in the case of a Registration Statement that ceases to be effective or usable as specifically permitted by the last paragraph of Section 6 hereof) (each such event referred to in clauses (i) through (iv), a “Registration Default”), the Company and the Co-Issuer hereby agree that the interest rate borne by the Transfer Restricted Securities shall be increased by 0.25% per annum during the 90-day period immediately following the occurrence of any Registration Default and shall increase by 0.25% per annum at the end of each subsequent 90-day period, but in no event shall such increase exceed 1.00% per annum. Following the earliest of (x) the cure of all Registration Defaults relating to any particular Transfer Restricted Securities, (y) the date on which such Transfer Restricted Security ceases to be a Transfer Restricted Security or otherwise becomes freely transferable by Holders other than affiliates of the Company or the Co-Issuer without further registration under the Securities Act and (z) the date that is two years after the Closing Date, the interest rate borne by the relevant Transfer Restricted Securities will be reduced to the original interest rate borne by such Transfer Restricted Securities; provided, however, that, if after any such reduction in interest rate, a different Registration Default occurs, the interest rate borne by the relevant Transfer Restricted Securities shall again be increased pursuant to the foregoing provisions.
Notwithstanding the foregoing, (i) the amount of Additional Interest payable shall not increase because more than one Registration Default has occurred and is pending and (ii) a Holder of Transfer Restricted Securities that is not entitled to the benefits of the Shelf Registration Statement (because, e.g., such Holder has not elected to include information or has not timely delivered such information to the Company and the Co-Issuer pursuant to Section 4(b) hereof) shall not be entitled to Additional Interest with respect to a Registration Default that pertains to the Shelf Registration Statement.
All obligations of the Company, the Co-Issuer and the Guarantors 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.
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Section 6. Registration Procedures.
(a) Exchange Offer Registration Statement. In connection with the Exchange Offer, the Company, the Co-Issuer and the Guarantors shall comply with all of the provisions of Section 6(c) hereof, shall use their commercially reasonable efforts to effect such exchange to permit the sale of 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 in the reasonable opinion of counsel to the Company and the Co-Issuer there is a question as to whether the Exchange Offer is permitted by applicable law, each of the Company, the Co-Issuer and the Guarantors hereby agrees to seek a favorable decision from the Commission allowing the Company, the Co-Issuer and the Guarantors to Consummate an Exchange Offer for such Initial Securities. Each of the Company, the Co-Issuer and the Guarantors hereby agrees to pursue the issuance of such a decision to the Commission staff level but shall not be required to take commercially unreasonable action to effect a change of Commission policy. Each of the Company, the Co-Issuer and the Guarantors hereby agrees, however, to (A) participate in telephonic conferences with the Commission, (B) deliver to the Commission staff an analysis prepared by counsel to the Company and the Co-Issuer setting forth the legal bases, if any, upon which such counsel has concluded that such an Exchange Offer should be permitted and (C) diligently pursue a favorable resolution by the Commission staff of such submission.
(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 and the Co-Issuer, prior to the Consummation thereof, a written representation to the Company and the Co-Issuer (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 or the Co-Issuer, (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 Exchange Securities to be issued in the Exchange Offer and (C) it is acquiring the Exchange Securities in its ordinary course of business. In addition, all such Holders of Transfer Restricted Securities shall otherwise cooperate in the Company’s and the Co-Issuer’s preparations for the Exchange Offer. 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 (which may include any no-action letter obtained pursuant to clause (i) above), and (2) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction and that such a secondary resale transaction should 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 Exchange Securities obtained by such Holder in exchange for Initial Securities acquired by such Holder directly from the Company and the Co-Issuer.
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(b) Shelf Registration Statement. In connection with the Shelf Registration Statement, each of the Company, the Co-Issuer and the Guarantors shall comply with all the provisions of Section 6(c) hereof and shall use its commercially reasonable efforts to effect such registration (unless automatically declared effective) to permit the sale of the Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution thereof, and pursuant thereto each of the Company, the Co-Issuer and the Guarantors will as expeditiously as is commercially reasonable prepare and file with the Commission a Registration Statement relating to the registration on any appropriate form under the Securities 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.
(c) General Provisions. In connection with any Registration Statement and any Prospectus required by this Agreement to permit the sale or resale of Transfer Restricted Securities and any Free Writing Prospectus (including, without limitation, any Registration Statement and the related Prospectus required to permit resales of Initial Securities by Broker-Dealers and any Free Writing Prospectus related thereto), each of the Company, the Co-Issuer and the Guarantors shall:
(i) use its commercially reasonable efforts to keep such Registration Statement continuously effective during the period required by this Agreement and provide all requisite financial statements (including, if required by the Securities Act or any regulation thereunder, financial statements of the Guarantors for the period specified in Section 3 or 4 hereof, 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 and the Co-Issuer shall file promptly an appropriate amendment to such Registration Statement, in the case of clause (A), correcting any such misstatement or omission, and, in the case of either clause (A) or (B), use its commercially reasonable efforts to cause such amendment to be declared effective (unless automatically 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 applicable Registration Statement as may be necessary to keep the Registration Statement effective for the applicable period set forth in Section 3 or 4 hereof, as applicable, 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 Securities Act, and to comply fully with the applicable provisions of Rules 424 and 430A under the Securities Act in a timely manner; and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration 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;
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(iii) advise the underwriter(s), if any, and selling Holders promptly and, if requested by such Persons, to confirm such advice in writing, (A) when the Prospectus, any Prospectus supplement, any post-effective amendment or any Free Writing Prospectus 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 Securities Act, 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, of the issuance by the Commission of a notification of objection to the use of the form on which the Registration Statement has been filed, or of the happening of any event that causes the Company to become an “ineligible issuer,” as defined in Commission Rule 405, (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 or the Prospectus in order to make the statements therein not misleading. If at any time the Commission shall issue any stop order suspending the effectiveness of the Registration Statement or a notification of objection to the use of the form on which the Registration Statement has been filed or if 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, each of the Company, the Co-Issuer and the Guarantors shall use its commercially reasonable efforts to obtain the withdrawal or lifting of such order at the earliest practicable time;
(iv) (A) furnish without charge to each of the Initial Purchasers, each selling Holder named in any Registration Statement that has requested such copies, if any, and each of the underwriter(s), 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 (including 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 requesting Holders and underwriter(s) in connection with such sale, if any, for a period of at least five Business Days, and neither the Company nor the Co-Issuer will file any such Registration Statement or Prospectus or any amendment or supplement to any such Registration Statement or Prospectus (including all such documents incorporated by reference) to which an Initial Purchaser of Transfer Restricted Securities covered by such Registration Statement or the underwriter(s), if any, shall reasonably object in writing within five Business Days after the receipt thereof (such objection to be deemed timely made upon confirmation of telecopy transmission within such period). The objection of an Initial Purchaser or underwriter, if any, shall be deemed to be reasonable if such Registration Statement, amendment, Prospectus or supplement, as applicable, as proposed to be filed, contains a material misstatement or omission;
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(B) furnish without charge to each of the Initial Purchasers before filing with the Commission, a copy of any Free Writing Prospectus, which will be subject to the consent of the Initial Purchasers, and neither the Company nor the Co-Issuer will file any such Free Writing Prospectus to which the Initial Purchasers of Transfer Restricted Securities covered by such Registration Statement have not consented (such consent not to be unreasonably withheld, conditioned or delayed);
(v) promptly prior to the filing of any document that is to be incorporated by reference into a Registration Statement or Prospectus, provide copies of such document to the Initial Purchasers, each selling Holder named in any Registration Statement that has requested such documents, if any, and to the underwriter(s), if any, make the Company’s, the Co-Issuer’s and the Guarantors’ representatives available for discussion of such document and other customary due diligence matters, subject to customary confidentiality agreements, 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, subject to customary confidentiality agreements, at reasonable times for inspection by the Initial Purchasers, the managing underwriter(s), if any, participating in any disposition pursuant to such Registration Statement and any attorney or accountant retained by such Initial Purchasers or any of the underwriter(s), all financial and other records, pertinent corporate documents and properties of each of the Company, the Co-Issuer and the Guarantors, and cause the Company’s, the Co-Issuer’s and the Guarantors’ officers, directors and employees to supply all information, in each case as shall be reasonably necessary to enable any such Holder, underwriter, attorney or accountant to exercise any applicable responsibilities in connection with such Registration Statement or any post-effective amendment thereto subsequent to the filing thereof and prior to its effectiveness and to participate in meetings with investors to the extent reasonably requested by the managing underwriter(s), if any;
(vii) if requested by any selling Holders or the underwriter(s), if any, promptly incorporate in any Registration Statement or 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 and the Co-Issuer are notified of the matters to be incorporated in such Prospectus supplement or post-effective amendment;
(viii) cause the Transfer Restricted Securities covered by the Registration Statement to be rated with the appropriate rating agencies, if so requested by the Holders of a majority in aggregate principal amount of Securities covered thereby or the underwriter(s), if any;
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(ix) furnish to each Initial Purchaser, each selling Holder and each of the underwriter(s), if any, without charge, at least one copy of the Registration Statement, as first filed with the Commission, and of each amendment thereto, including financial statements and schedules, all documents incorporated by reference therein and all exhibits (including exhibits incorporated therein by reference);
(x) 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; each of the Company, the Co-Issuer and the Guarantors hereby consents to the use 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;
(xi) enter into such agreements (including an underwriting agreement), and make such representations and warranties, and take all such other commercially reasonable 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, all to such extent as may be reasonably requested by any Initial Purchaser or 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 whether or not an underwriting agreement is entered into and whether or not the registration is an Underwritten Registration, each of the Company, the Co-Issuer and the Guarantors shall:
(A) furnish to each Initial Purchaser, each selling Holder and each underwriter, if any, in such substance and scope as they may reasonably request and as are customarily made by issuers to underwriters in primary underwritten offerings, upon the date of the effectiveness of the Shelf Registration Statement:
(1) a certificate, dated the date of effectiveness of the Shelf Registration Statement, as the case may be, signed by (y) the President or any Vice President and (z) a principal financial or accounting officer of each of the Company, the Co-Issuer and the Guarantors, confirming, as of the date thereof, the matters set forth in Section 6(g) of the Purchase Agreement and such other matters as such parties may reasonably request;
(2) if requested by a majority of selling Holders, an opinion, dated the date of effectiveness of the Shelf Registration Statement, as the case may be, of counsel for the Company, the Co-Issuer and the Guarantors, covering the matters set forth in Section 6(c) of the Purchase Agreement and such other matter as such parties may reasonably request, and in any event including a statement to the effect that such counsel has participated in conferences with officers and other representatives of the Company, the Co-Issuer and the Guarantors, representatives of the independent public accountants for the Company, the Co-Issuer and the Guarantors,
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representatives of the underwriter(s), if any, and counsel to the underwriter(s), if any, in connection with the preparation of such Registration Statement and the related Prospectus and have considered the matters required to be stated therein and the statements contained therein, although such counsel has not independently verified the accuracy, completeness or fairness of such statements; and that such counsel advises that, on the basis of the foregoing, no facts came to such counsel’s attention that caused such counsel to believe that the applicable Registration Statement, (A) at the date of the opinion and at the time such Registration Statement or any post-effective amendment thereto became effective, (B) at the applicable time identified by such Holders or managing underwriters, and (C) in the case of the Exchange Offer Registration Statement, as of the date of Consummation, in the case of (A), (B) and (C) contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus contained in such Registration Statement as of its date and, in the case of the opinion dated the date of Consummation of the Exchange Offer, as of the date of Consummation, contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein not misleading. Without limiting the foregoing, such counsel may state further that such counsel assumes no responsibility for, and has not independently verified, the accuracy, completeness or fairness of the financial statements, notes and schedules and other financial data included in any Registration Statement contemplated by this Agreement or the related Prospectus; and
(3) a customary comfort letter, dated the date of effectiveness of the Shelf Registration Statement, from the Company’s and the Co-Issuer’s independent accountants, in the customary form and covering matters of the type customarily requested to be covered in comfort letters by underwriters in connection with primary underwritten offerings, and covering or affirming the matters set forth in the comfort letters delivered pursuant to Section 6(a) of the Purchase Agreement, without exception;
(B) set forth in full or incorporate by reference in the underwriting agreement, if any, 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 such parties to evidence compliance with Section 6(c)(xi)(A) hereof and with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company, the Co-Issuer or any of the Guarantors pursuant to this Section 6(c)(xi), if any.
If at any time the representations and warranties of the Company, the Co-Issuer and the Guarantors contemplated in Section 6(c)(xi)(A)(1) hereof cease to be true and
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correct, the Company, the Co-Issuer or the Guarantors shall so advise the Initial Purchasers and the underwriter(s), if any, and each selling Holder promptly and, if requested by such Persons, shall confirm such advice in writing;
(xii) 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 state 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 Shelf Registration Statement; provided, however , that none of the Company, the Co-Issuer or the Guarantors shall be required to register or qualify as a foreign corporation where it is not then 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 Registration Statement, in any jurisdiction where it is not then so subject;
(xiii) issue, upon the request of any Holder of Initial Securities covered by the Shelf Registration Statement, Exchange Securities having an aggregate principal amount equal to the aggregate principal amount of Initial Securities surrendered to the Company and the Co-Issuer by such Holder in exchange therefor or being sold by such Holder; such Exchange Securities to be registered in the name of such Holder or in the name of the purchaser(s) of such Securities, as the case may be; in return, the Initial Securities held by such Holder shall be surrendered to the Company and the Co-Issuer for cancellation;
(xiv) subject to the terms of the Indenture, 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 enable such Transfer Restricted Securities to be in such denominations and registered in such names as the Holders or the underwriter(s), if any, may request at least two Business Days prior to any sale of Transfer Restricted Securities made by such Holders or underwriter(s);
(xv) use its commercially reasonable efforts to cause 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 Section 6(c)(xii) hereof;
(xvi) if any fact or event contemplated by Section 6(c)(iii)(D) hereof 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 in order to make the statements therein not misleading;
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(xvii) provide a CUSIP number for all Securities not later than the effective date of the Registration Statement covering such Securities and provide the Trustee under the applicable Indenture with printed certificates for such Securities which are in a form eligible for deposit with the Depository Trust Company and take all other action necessary to ensure that all such Securities are eligible for deposit with the Depository Trust Company;
(xviii) 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;
(xix) otherwise use its commercially reasonable efforts to comply with all applicable rules and regulations of the Commission, and make generally available to its security holders, as soon as practicable, a consolidated earning statement meeting the requirements of Rule 158 (which need not be audited) for the twelve-month period (A) commencing at the end of any fiscal quarter in which Transfer Restricted Securities are sold to underwriters in a firm commitment or best efforts Underwritten Offering or (B) if not sold to underwriters in such an offering, beginning with the first month of the Company’s and the Co-Issuer’s first fiscal quarter commencing after the effective date of the Registration Statement;
(xx) cause the Indenture to be qualified under the Trust Indenture Act 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 Securities 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 Trust Indenture Act; and to execute, and to use its commercially reasonable 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;
(xxi) maintain the listing of all Securities covered by the Registration Statement on the PORTAL Market; and
(xxii) provide promptly to each Holder upon request each document filed with the Commission pursuant to the requirements of Section 13 and Section 15 of the Exchange Act.
Each Holder agrees by acquisition of a Transfer Restricted Security that, upon receipt of any notice from the Company and the Co-Issuer of the existence of any fact of the kind described in 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)(xvi) hereof, or until it is advised in writing (the “Advice”) by the Company and the Co-Issuer 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. If so directed by the
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Company and the Co-Issuer, each Holder will deliver to the Company and the Co-Issuer (at the Company’s and the Co-Issuer’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 and the Co-Issuer 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 (a “Delay Period”) during the period from and including the date of the giving of such notice pursuant to 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)(xvi) hereof or shall have received the Advice; provided that there shall not be more than 75 days of Delay Periods during any 12-month period; provided further, however, that (except as provided in Section 5(iv) hereof) no such extension shall be taken into account in determining whether Additional Interest is due pursuant to Section 5 hereof or the amount of such Additional Interest, it being agreed that the Company’s and the Co-Issuer’s option to suspend use of a Registration Statement pursuant to this paragraph shall be treated as a Registration Default for purposes of Section 5 hereof.
Section 7. Registration Expenses.
(a) All expenses incident to the Company’s, the Co-Issuer’s and the Guarantor’s performance of or compliance with this Agreement will be borne by the Company, the Co-Issuer and the Guarantors, jointly and severally, 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 one counsel to such person, that may be required by the rules and regulations of the NASD)); (ii) all fees and expenses of compliance with federal securities and state securities or blue sky laws (including the reasonable fees and disbursements of one counsel to the Holder of Transfer Restricted Securities); (iii) all expenses of printing (including printing certificates for the Exchange Securities 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, the Co-Issuer, the Guarantors and, subject to Section 7(b) hereof, one counsel to the Holders of Transfer Restricted Securities; (v) all application and filing fees in connection with listing the Exchange Securities on a securities exchange or automated quotation system pursuant to the requirements thereof; and (vi) all fees and disbursements of independent certified public accountants of the Company, the Co-Issuer and the Guarantors (including the expenses of any special audit and comfort letters required by or incident to such performance).
Each of the Company, the Co-Issuer and the Guarantors 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, the Co-Issuer or the Guarantors.
(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, the Co-Issuer and the Guarantors, jointly and severally,
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will reimburse the Initial Purchasers and 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 Cravath, Swaine & Moore LLP or such other counsel as may 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.
Section 8. Indemnification.
(a) The Company, the Co-Issuer and the Guarantors, jointly and severally, agree to indemnify and hold harmless (i) each Holder and (ii) each Person, if any, who controls (within the meaning of Section 15 of the Securities 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, settling, compromising, paying 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), joint or several, 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, Prospectus (or any amendment or supplement thereto) or Free Writing Prospectus, 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 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 relating to any of the Holders furnished in writing to the Company and the Co-Issuer by any of the Holders expressly for use therein. This indemnity agreement shall be in addition to any liability that the Company, the Co-Issuer or any of the Guarantors may otherwise have.
In case any action or proceeding (including any governmental or regulatory investigation or proceeding) shall be brought or asserted against any of the Indemnified Holders with respect to which indemnity may be sought against the Company, the Co-Issuer or the Guarantors, such Indemnified Holder (or the Indemnified Holder controlled by such controlling person) shall promptly notify the Company, the Co-Issuer and the Guarantors in writing; provided, however, that the failure to give such notice shall not relieve any of the Company, the Co-Issuer or the Guarantors of its obligations pursuant to this Agreement. Such Indemnified Holder shall have the right to employ its own counsel in any such action and the fees and expenses of such counsel shall be paid, as incurred, by the Company, the Co-Issuer and the Guarantors (regardless of whether it is ultimately determined that an Indemnified Holder is not entitled to indemnification hereunder). The Company, the Co-Issuer and the Guarantors shall not, in connection with any one such action or proceeding or separate but substantially similar or related actions or proceedings in the same jurisdiction arising out of the same general allegations or circumstances,
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be liable for the reasonable fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) at any time for such Indemnified Holders, which firm shall be designated by the Holders. The Company, the Co-Issuer and the Guarantors shall be liable for any settlement of any such action or proceeding effected with the Company’s, the Co-Issuer’s and the Guarantors’ prior written consent, which consent shall not be withheld unreasonably, and each of the Company, the Co-Issuer and the Guarantors 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, the Co-Issuer and the Guarantors. The Company, the Co-Issuer and the Guarantors 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, the Co-Issuer, the Guarantors and their respective directors, officers of the Company, the Co-Issuer and the Guarantors who sign a Registration Statement, and any Person controlling (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) the Company, the Co-Issuer or any of the Guarantors, and the respective officers, directors, partners, employees, representatives and agents of each such Person, to the same extent as the foregoing indemnity from the Company, the Co-Issuer and the Guarantors to each of the Indemnified Holders, but only with respect to claims and actions based on information relating to such Holder 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, the Co-Issuer, the Guarantors or their respective 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, the Co-Issuer and the Guarantors, and the Company, the Co-Issuer, the Guarantors, their respective directors and officers and such controlling person shall have the rights and duties given to each Holder by the preceding paragraph.
(c) If the indemnification provided for in this Section 8 is unavailable to an indemnified party under Section 8(a) or (b) hereof (other than by reason of exceptions provided in those Sections) in respect of any losses, claims, damages, liabilities, judgments, actions 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, the Co-Issuer and the Guarantors, on the one hand, and the Holders, on the other hand, from the Initial Placement (which in the case of the Company, the Co-Issuer and the Guarantors shall be deemed to be equal to the total gross proceeds to the Company, the Co-Issuer and the Guarantors from the Initial Placement), the amount of Additional Interest which did not become payable as a result of the filing of the Registration Statement resulting in such losses, claims, damages, liabilities, judgments actions or expenses, and such Registration Statement, or if such allocation is not permitted by applicable law, the relative fault of the Company, the Co-Issuer and the Guarantors, on the one hand, and
18
the Holders, 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 and the Co-Issuer on the one hand and of the Indemnified Holder on the other 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, the Co-Issuer or any of the Guarantors, on the one hand, or the Indemnified Holders, on the other hand, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in the second paragraph of Section 8(a) hereof, any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim.
The Company, the Co-Issuer, the Guarantors 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 legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 8, none of the Holders (and its related Indemnified Holders) shall be required to contribute, in the aggregate, any amount in excess of the amount by which the total discount received by such Holder with respect to the Initial Securities 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 Securities 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 Initial Securities held by each of the Holders hereunder and not joint.
Section 9. Rule 144A. Each of t he Company, the Co-Issuer and the Guarantors hereby agrees with each Holder, for so long as any Transfer Restricted Securities remain outstanding, to make available 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 from such Holder or beneficial owner, the information required by Rule 144A(d)(4) under the Securities Act in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144A under the Securities Act.
Section 10. Participation in 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 any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements and (b) completes and executes
19
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. The Holders of Transfer Restricted Securities covered by the Shelf Registration Statement who desire to do so may sell such Transfer Restricted Securities in an Underwritten Offering. In any such Underwritten Offering, the investment banker(s) and managing underwriter(s) 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, however , that such investment banker(s) and managing underwriter(s) must be reasonably satisfactory to the Company and the Co-Issuer.
Section 12. Miscellaneous.
(a) Remedies. Each of the Company, the Co-Issuer and the Guarantors hereby agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it 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. Each of the Company, the Co-Issuer and the Guarantors will not on or after the date of this Agreement enter into any agreement with respect to its securities that conflicts with the provisions hereof. The rights granted to the Holders hereunder do not in any way conflict with the rights granted to the holders of the Company’s and the Co-Issuer’s or any of the Guarantors’ securities under any agreement in effect on the date hereof.
(c) Adjustments Affecting the Securities. Neither the Company nor the Co-Issuer will effect any change, or permit any change to occur, in each case, with respect to the terms of the Securities that would materially and adversely affect the ability of the Holders to Consummate any Exchange Offer.
(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 the Company and the Co-Issuer have (i) in the case of Section 5 hereof and this Section 12(d)(i), obtained the written consent of Holders of all outstanding Transfer Restricted Securities and (ii) in the case of all other provisions hereof, obtained the written consent of Holders of a majority of the outstanding principal amount of Transfer Restricted Securities (excluding any Transfer Restricted Securities held by the Company, the Co-Issuer or their Affiliates). 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 being tendered or registered; provided, however, that, with respect to any matter that directly or indirectly affects the rights of any Initial Purchaser hereunder, the Company and the Co-Issuer shall obtain the written consent of each such Initial Purchaser with respect to which such amendment, qualification, supplement, waiver, consent or departure is to be effective.
20
(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, the Co-Issuer or the Guarantors:
RBS Global, Inc
4701 Greenfield Avenue
Milwaukee, WI 53214
Telecopier No.: (212) 643-2510
Attention: General Counsel
With a copy to:
O’Melveny &
Myers LLP
Times Square Tower
7 Times Square
New York, NY 10036
Telecopier No.: (212) 326-2061
Attention: Gregory Ezring
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 answered back, if telexed; 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 from such Holder.
(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.
21
(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 CONFLICTS 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 by the Company and the Co-Issuer with respect to the Transfer Restricted Securities. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter.
22
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
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CHASE MERGER SUB, INC. |
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By: |
/s/ Patricia M. Navis |
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Name: Patricia M. Navis |
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Title: Vice President and Secretary |
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RBS GLOBAL, INC. |
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By: |
/s/ Robert A. Hitt |
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Name: Robert A. Hitt |
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Title: President and Chief Executive Officer |
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REXNORD CORPORATION |
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By: |
/s/ Thomas Jansen |
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Name: Thomas Jansen |
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Title: |
Executive Vice President and Chief |
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Financial Officer |
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GUARANTORS: |
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THE FALK SERVICE CORPORATION |
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PT COMPONENTS, INC. |
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RBS ACQUISITION CORPORATION |
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REXNORD INDUSTRIES, LLC |
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W.M. BERG INC. |
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PRAGER INCORPORATED |
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REXNORD PUERTO RICO INC. |
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REXNORD INTERNATIONAL INC. |
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By: |
/s/ Michael Andrzejewski |
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Name: Michael Andrzejewski |
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Title: Vice President and Secretary |
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RBS CHINA HOLDINGS, L.L.C. |
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By: |
/s/ Michael Andrzejewski |
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Name: Michael Andrzejewski |
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Title: Secretary |
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The foregoing Registration Rights Agreement is hereby confirmed and accepted as of the date first above written:
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CREDIT SUISSE SECURITIES (USA) LLC
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INCORPORATED |
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BEAR, STEARNS & CO. INC. |
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LEHMAN BROTHERS INC. |
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Credit Suisse Securities (USA) LLC
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by |
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/s/ Edward Neuberg |
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Name: Edward Neuberg |
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Title: Director |
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Merrill Lynch, Pierce, Fenner & Smith
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by |
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/s/ Harold Varah |
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Name: Harold Varah |
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Title: Vice President |
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Schedule A
Guarantors
The Falk Service Corporation
Prager Incorporated
PT Components, Inc.
RBS Acquisition Corporation
RBS China Holdings, L.L.C.
Rexnord Industries, LLC
Rexnord International Inc.
Rexnord Puerto Rico Inc.
W.M. Berg Inc.
Exhibit 4.6
CHASE MERGER SUB, INC.
and
(following the merger of Chase Merger Sub, Inc.
with and into RBS Global, Inc.)
RBS GLOBAL, INC.
and
REXNORD CORPORATION
,
as Issuers,
and the Guarantors named herein
11¾% Senior Subordinated Notes due 2016
INDENTURE
Dated as of July 21, 2006
WELLS
FARGO BANK, NATIONAL ASSOCIATION,
as Trustee
TABLE OF CONTENTS
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Page |
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ARTICLE 1 |
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DEFINITIONS AND INCORPORATION BY REFERENCE |
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SECTION 1.01. Definitions |
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2 |
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SECTION 1.02. Other Definitions |
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77 |
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SECTION 1.03. Incorporation by Reference of Trust Indenture Act |
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80 |
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SECTION 1.04. Rules of Construction |
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81 |
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ARTICLE 2 |
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THE SECURITIES |
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SECTION 2.01. Amount of Securities |
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83 |
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SECTION 2.02. Form and Dating |
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85 |
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SECTION 2.03. Execution and Authentication |
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86 |
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SECTION 2.04. Registrar and Paying Agent |
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87 |
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SECTION 2.05. Paying Agent to Hold Money in Trust |
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89 |
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SECTION 2.06. Holder Lists |
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90 |
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SECTION 2.07. Transfer and Exchange |
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90 |
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SECTION 2.08. Replacement Securities |
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92 |
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SECTION 2.09. Outstanding Securities |
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93 |
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SECTION 2.10. Temporary Securities |
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94 |
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SECTION 2.11. Cancellation |
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94 |
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SECTION 2.12. Defaulted Interest |
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95 |
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SECTION 2.13. CUSIP Numbers, ISINs, etc. |
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95 |
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SECTION 2.14. Calculation of Principal Amount of Securities |
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96 |
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ARTICLE 3 |
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REDEMPTION |
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SECTION 3.01. Redemption |
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97 |
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SECTION 3.02. Applicability of Article |
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97 |
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SECTION 3.03. Notices to Trustee |
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97 |
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SECTION 3.04. Selection of Securities to Be Redeemed |
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98 |
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SECTION 3.05. Notice of Optional Redemption |
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98 |
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SECTION 3.06. Effect of Notice of Redemption |
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100 |
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SECTION 3.07. Deposit of Redemption Price |
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101 |
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SECTION 3.08. Securities Redeemed in Part |
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101 |
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ARTICLE 4 |
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COVENANTS |
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SECTION 4.01. Payment of Securities |
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102 |
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SECTION 4.02. Reports and Other Information |
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102 |
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SECTION 4.03. Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock |
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106 |
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SECTION 4.04. Limitation on Restricted Payments |
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120 |
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SECTION 4.05. Dividend and Other Payment Restrictions Affecting Subsidiaries |
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133 |
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SECTION 4.06. Asset Sales |
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137 |
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SECTION 4.07. Transactions with Affiliates |
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144 |
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SECTION 4.08. Change of Control |
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151 |
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SECTION 4.09. Compliance Certificate |
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156 |
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SECTION 4.10. Further Instruments and Acts |
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156 |
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SECTION 4.11. Future Guarantors |
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157 |
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SECTION 4.12. Liens |
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157 |
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SECTION 4.13. Limitation on Other Senior Subordinated Indebtedness |
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158 |
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SECTION 4.14. Maintenance of Office or Agency |
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158 |
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ARTICLE 5 |
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SUCCESSOR COMPANY |
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SECTION 5.01. When Company May Merge or Transfer Assets |
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160 |
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ARTICLE 6 |
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DEFAULTS AND REMEDIES |
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SECTION 6.01. Events of Default |
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167 |
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SECTION 6.02. Acceleration |
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172 |
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SECTION 6.03. Other Remedies |
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173 |
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SECTION 6.04. Waiver of Past Defaults |
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173 |
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SECTION 6.05. Control by Majority |
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174 |
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SECTION 6.06. Limitation on Suits |
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174 |
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SECTION 6.07. Rights of the Holders to Receive Payment |
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175 |
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SECTION 6.08. Collection Suit by Trustee |
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176 |
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SECTION 6.09. Trustee May File Proofs of Claim |
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176 |
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SECTION 6.10. Priorities |
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177 |
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SECTION 6.11. Undertaking for Costs |
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178 |
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SECTION 6.12. Waiver of Stay or Extension Laws |
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178 |
ii
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ARTICLE 7 |
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TRUSTEE |
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SECTION 7.01. Duties of Trustee |
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179 |
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SECTION 7.02. Rights of Trustee |
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182 |
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SECTION 7.03. Individual Rights of Trustee |
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184 |
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SECTION 7.04. Trustee’s Disclaimer |
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185 |
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SECTION 7.05. Notice of Defaults |
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185 |
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SECTION 7.06. Reports by Trustee to the Holders |
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186 |
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SECTION 7.07. Compensation and Indemnity |
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186 |
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SECTION 7.08. Replacement of Trustee |
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189 |
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SECTION 7.09. Successor Trustee by Merger |
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190 |
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SECTION 7.10. Eligibility; Disqualification |
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191 |
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SECTION 7.11. Preferential Collection of Claims Against the Issuers |
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192 |
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ARTICLE 8 |
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DISCHARGE OF INDENTURE; DEFEASANCE |
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SECTION 8.01. Discharge of Liability on Securities; Defeasance |
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192 |
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SECTION 8.02. Conditions to Defeasance |
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195 |
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SECTION 8.03. Application of Trust Money |
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198 |
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SECTION 8.04. Repayment to Company |
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198 |
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SECTION 8.05. Indemnity for Government Obligations |
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199 |
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SECTION 8.06. Reinstatement |
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199 |
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ARTICLE 9 |
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AMENDMENTS AND WAIVERS |
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SECTION 9.01. Without Consent of the Holders |
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200 |
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SECTION 9.02. With Consent of the Holders |
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202 |
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SECTION 9.03. Compliance with Trust Indenture Act |
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205 |
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SECTION 9.04. Revocation and Effect of Consents and Waivers |
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205 |
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SECTION 9.05. Notation on or Exchange of Securities |
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206 |
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SECTION 9.06. Trustee to Sign Amendments |
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207 |
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SECTION 9.07. Payment for Consent |
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207 |
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SECTION 9.08. Additional Voting Terms; Calculation of Principal Amount |
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207 |
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ARTICLE 10 |
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SUBORDINATION OF THE SECURITIES |
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SECTION 10.01. Agreement to Subordinate |
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208 |
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SECTION 10.02. Liquidation, Dissolution, Bankruptcy |
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209 |
iii
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SECTION 10.03. Default on Designated Senior Indebtedness |
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210 |
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SECTION 10.04. Acceleration of Payment of Securities |
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213 |
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SECTION 10.05. When Distribution Must Be Paid Over |
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213 |
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SECTION 10.06. Subrogation |
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213 |
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SECTION 10.07. Relative Rights |
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214 |
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SECTION 10.08. Subordination May Not Be Impaired by Company |
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214 |
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SECTION 10.09. Rights of Trustee and Paying Agent |
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214 |
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SECTION 10.10. Distribution or Notice to Representative |
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215 |
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SECTION 10.11. Article 10 Not to Prevent Events of Default or Limit Right to Accelerate |
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215 |
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SECTION 10.12. Trust Monies Not Subordinated |
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216 |
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SECTION 10.13. Trustee Entitled to Rely |
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216 |
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SECTION 10.14. Trustee to Effectuate Subordination |
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217 |
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SECTION 10.15. Trustee Not Fiduciary for Holders of Senior Indebtedness |
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218 |
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SECTION 10.16. Reliance by Holders of Senior Indebtedness on Subordination Provisions |
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218 |
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ARTICLE 11 |
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GUARANTEES |
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SECTION 11.01. Guarantees |
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219 |
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SECTION 11.02. Limitation on Liability |
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224 |
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SECTION 11.03. Successors and Assigns |
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227 |
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SECTION 11.04. No Waiver |
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227 |
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SECTION 11.05. Modification |
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227 |
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SECTION 11.06. Execution of Supplemental Indenture for Future Guarantors |
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228 |
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SECTION 11.07. Non-Impairment |
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228 |
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ARTICLE 12 |
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SUBORDINATION OF THE GUARANTEES |
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SECTION 12.01. Agreement to Subordinate |
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229 |
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SECTION 12.02. Liquidation, Dissolution, Bankruptcy |
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229 |
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SECTION 12.03. Default on Designated Senior Indebtedness of a Guarantor |
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230 |
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SECTION 12.04. Demand for Payment |
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233 |
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SECTION 12.05. When Distribution Must Be Paid Over |
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234 |
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SECTION 12.06. Subrogation |
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234 |
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SECTION 12.07. Relative Rights |
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234 |
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SECTION 12.08. Subordination May Not Be Impaired by a Guarantor |
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235 |
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SECTION 12.09. Rights of Trustee and Paying Agent |
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235 |
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SECTION 12.10. Distribution or Notice to Representative |
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236 |
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SECTION 12.11. Article 12 Not to Prevent Events of Default or Limit Right to Accelerate |
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236 |
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SECTION 12.12. Trustee Entitled to Rely |
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237 |
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SECTION 12.13. Trustee to Effectuate Subordination |
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238 |
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SECTION 12.14. Trustee Not Fiduciary for Holders of Senior Indebtedness of a Guarantor |
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238 |
iv
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SECTION 12.15. Reliance by Holders of Senior Indebtedness of a Guarantor on Subordination Provisions |
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238 |
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SECTION 12.16. Trust Monies Not Subordinated |
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240 |
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ARTICLE 13 |
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MISCELLANEOUS |
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SECTION 13.01. Trust Indenture Act Controls |
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240 |
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SECTION 13.02. Notices |
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241 |
|
SECTION 13.03. Communication by the Holders with Other Holders |
|
242 |
|
SECTION 13.04. Certificate and Opinion as to Conditions Precedent |
|
242 |
|
SECTION 13.05. Statements Required in Certificate or Opinion |
|
243 |
|
SECTION 13.06. When Securities Disregarded |
|
244 |
|
SECTION 13.07. Rules by Trustee, Paying Agent and Registrar |
|
244 |
|
SECTION 13.08. Legal Holidays |
|
244 |
|
SECTION 13.09. Governing Law |
|
245 |
|
SECTION 13.10. No Recourse Against Others |
|
245 |
|
SECTION 13.11. Successors |
|
245 |
|
SECTION 13.12. Multiple Originals |
|
246 |
|
SECTION 13.13. Table of Contents; Headings |
|
246 |
|
SECTION 13.14. Indenture Controls |
|
246 |
|
SECTION 13.15. Severability |
|
246 |
Appendix A — Provisions
Relating to Initial Securities, Additional Securities and
Exchange
Securities
EXHIBIT INDEX
Exhibit A — Initial Security
Exhibit B — Exchange Security
Exhibit C — Form of Transferee Letter of Representation
Exhibit D — Form of Supplemental Indenture
v
CROSS-REFERENCE TABLE
|
|
|
Indenture
|
|
|
310 |
(a)(1) |
|
7.10 |
|
|
(a)(2) |
|
7.10 |
|
|
(a)(3) |
|
N.A. |
|
|
(a)(4) |
|
N.A. |
|
|
(b) |
|
7.08; 7.10 |
|
|
(c) |
|
N.A. |
|
311 |
(a) |
|
7.11 |
|
|
(b) |
|
7.11 |
|
|
(c) |
|
N.A. |
|
312 |
(a) |
|
2.06 |
|
|
(b) |
|
13.03 |
|
|
(c) |
|
13.03 |
|
313 |
(a) |
|
7.06 |
|
|
(b)(1) |
|
N.A. |
|
|
(b)(2) |
|
7.06 |
|
|
(c) |
|
7.06 |
|
|
(d) |
|
4.02; 4.09 |
|
314 |
(a) |
|
4.02; 4.09 |
|
|
(b) |
|
N.A. |
|
|
(c)(1) |
|
13.04 |
|
|
(c)(2) |
|
13.04 |
|
|
(c)(3) |
|
N.A. |
|
|
(d) |
|
N.A. |
|
|
(e) |
|
13.05 |
|
|
(f) |
|
4.10 |
|
315 |
(a) |
|
7.01 |
|
|
(b) |
|
7.05 |
|
|
(c) |
|
7.01 |
|
|
(d) |
|
7.01 |
|
|
(e) |
|
6.11 |
|
316 |
(a)(last sentence) |
|
13.06 |
|
|
(a)(1)(A) |
|
6.05 |
|
|
(a)(1)(B) |
|
6.04 |
|
|
(a)(2) |
|
N.A. |
|
|
(b) |
|
6.07 |
|
317 |
(a)(1) |
|
6.08 |
|
|
(a)(2) |
|
6.09 |
|
|
(b) |
|
2.05 |
|
318 |
(a) |
|
13.01 |
|
|
|
|
|
N.A. Means Not Applicable.
Note: This Cross-Reference Table shall not, for any purposes, be deemed to be part of this Indenture.
vi
INDENTURE dated as of July 21, 2006 among CHASE MERGER SUB, INC. , a Delaware corporation (“Merger Sub”), the Guarantors (as defined herein), WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as trustee (the “Trustee”), and, upon execution and delivery of a supplemental indenture, RBS GLOBAL, INC. , a Delaware corporation (the “Company”) and REXNORD CORPORATION , a Delaware corporation (“Rexnord”).
Each party agrees as follows for the benefit of the other parties and for the equal and ratable benefit of the Holders of (a) $300,000,000 aggregate principal amount of the Issuers’ 11¾% Senior Subordinated Notes due 2016 (the “Original Securities”) issued on the date hereof, (b) any Additional Securities (as defined herein) that may be issued after the date hereof in the form of Exhibit A (all such securities in clauses (a) and (b) being referred to collectively as the “Initial Securities”) and (c) if and when issued as provided in the Registration Agreement (as defined in Appendix A hereto (the “Appendix”)) or otherwise registered under the Securities Act and issued, the Issuers’ 11¾% Senior Subordinated Notes due 2016 (the “Exchange Securities” and, together with the Initial Securities, the “Securities”) issued in the Registered Exchange Offer (as defined in the Appendix) in exchange for any Initial Securities or otherwise registered under the Securities Act and issued in the form of Exhibit B. Subject to the conditions and compliance with the covenants set forth herein, the Issuers may issue an unlimited aggregate principal amount of Additional Securities.
SECTION 1.01. Definitions .
“Acquired Indebtedness” means, with respect to any specified Person:
“Acquisition” means the acquisition by Affiliates of the Sponsors of substantially all of the outstanding shares of capital stock of the Company pursuant to the terms of the Merger Agreement.
“Acquisition Documents” means the Merger Agreement and any other document entered into in connection therewith, in each case as amended, supplemented or modified from time to time prior to the Issue Date or thereafter (so long as any amendment, supplement or modification after the Issue Date, together with all other amendments, supplements and modifications after the Issue Date, taken as a whole, is not more disadvantageous to the holders of the Securities in any material respect than the Acquisition Documents as in effect on the Issue Date).
“Additional Securities” means 11¾% Senior Subordinated Notes due 2016 issued under the terms of this Indenture subsequent to the Issue Date.
“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, means 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.
“Applicable Premium” means, with respect to any Security on any applicable redemption date, the greater of:
(a) the present value at such redemption date of (i) the redemption price of the Security, at August 1, 2011 as set forth in Paragraph 5 of the applicable Security plus (ii) all required interest payments due on such Security through August 1, 2011 (excluding accrued but unpaid interest), computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points; over
(b) the then outstanding principal amount of the Security.
“Asset Sale” means:
(1) the sale, conveyance, transfer or other disposition (whether in a single transaction or a series of related transactions) of property or assets (including by way of a Sale/Leaseback Transaction) outside the ordinary course of business of the Company or any Restricted Subsidiary of the Company (each referred to in this definition as a “disposition”) or
(2) the issuance or sale of Equity Interests (other than directors’ qualifying shares and shares issued to foreign nationals or other third parties to the extent required by applicable law) of any Restricted Subsidiary (other than to the Company or another Restricted Subsidiary of the Company) (whether in a single transaction or a series of related transactions),
in each case other than:
(a) a disposition of Cash Equivalents or Investment Grade Securities or obsolete or worn out property or equipment in the ordinary course of business;
2
(b) the disposition of all or substantially all of the assets of the Company in a manner permitted pursuant to Section 5.01 or any disposition that constitutes a Change of Control;
(c) any Restricted Payment or Permitted Investment that is permitted to be made, and is made, under Section 4.04;
(d) any disposition of assets or issuance or sale of Equity Interests of any Restricted Subsidiary, which assets or Equity Interests so disposed or issued have an aggregate Fair Market Value of less than $7.5 million;
(e) any disposition of property or assets, or the issuance of securities, by a Restricted Subsidiary of the Company to the Company or by the Company or a Restricted Subsidiary of the Company to a Restricted Subsidiary of the Company;
(f) any exchange of assets (including a combination of assets and Cash Equivalents) for assets related to a Similar Business of comparable or greater market value or usefulness to the business of the Company and its Restricted Subsidiaries as a whole, as determined in good faith by the Issuers, which in the event of an exchange of assets with a Fair Market Value in excess of (A) $7.5 million shall be evidenced by an Officers’ Certificate, and (B) $15 million shall be set forth in a resolution approved in good faith by at least a majority of the Board of Directors of the Company;
(g) foreclosure on assets of the Company or any of its Restricted Subsidiaries;
(h) any sale of Equity Interests in, or Indebtedness or other securities of, an Unrestricted Subsidiary;
(i) the lease, assignment or sublease of any real or personal property in the ordinary course of business;
(j) any sale of inventory or other assets in the ordinary course of business;
(k) any grant in the ordinary course of business of any license of patents, trademarks, know-how or any other intellectual property;
(l) a transfer of accounts receivable and related assets of the type specified in the definition of “Receivables Financing” (or a fractional undivided interest therein) by a Receivables Subsidiary in a Qualified Receivables Financing;
(m) the sale of any property in a Sale/Leaseback Transaction within six months of the acquisition of such property; and
(n) the conversion of Rexnord into a Delaware limited liability company.
“Bank Indebtedness” means any and all amounts payable under or in respect of the Credit Agreement and the other Senior Credit Documents as amended, restated, supplemented, waived, replaced, restructured, repaid, refunded, refinanced or otherwise modified
3
from time to time (including after termination of the Credit Agreement), including principal, premium (if any), interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to either of the Issuers whether or not a claim for post-filing interest is allowed in such proceedings), fees, charges, expenses, reimbursement obligations, guarantees and all other amounts payable thereunder or in respect thereof.
“Board of Directors” means, as to any Person, the board of directors or managers, as applicable, of such Person (or, if such Person is a partnership, the board of directors or other governing body of the general partner of such Person) or any duly authorized committee thereof.
“Business Day” means a day other than a Saturday, Sunday or other day on which banking institutions are authorized or required by law to close in New York City or the city in which the Trustee’s principal office is located.
“Capital Stock” means:
(1) in the case of a corporation, corporate stock or shares;
(2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;
(3) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and
(4) 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.
“Capitalized 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 and reflected as a liability on a balance sheet (excluding the footnotes thereto) in accordance with GAAP.
“Cash Contribution Amount” means the aggregate amount of cash contributions made to the capital of the Company described in the definition of “Contribution Indebtedness.”
“Cash Equivalents” means:
(1) U.S. Dollars, pounds sterling, euros, the national currency of any member state in the European Union or, in the case of any Foreign Subsidiary that is a Restricted Subsidiary, such local currencies held by it from time to time in the ordinary course of business;
(2) securities issued or directly and fully guaranteed or insured by the U.S. government or any country that is a member of the European Union or any agency or instrumentality thereof in each case maturing, not more than two years from the date of acquisition;
4
(3) certificates of deposit, time deposits and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers’ acceptances, in each case with maturities not exceeding one year and overnight bank deposits, in each case with any commercial bank having capital and surplus in excess of $250 million and whose long-term debt is rated “A” or the equivalent thereof by Moody’s or S&P (or reasonably equivalent ratings of another internationally recognized ratings agency);
(4) repurchase obligations for underlying securities of the types described in clauses (2) and (3) above entered into with any financial institution meeting the qualifications specified in clause (3) above;
(5) commercial paper issued by a corporation (other than an Affiliate of the Company) rated at least “A-1” or the equivalent thereof by Moody’s or S&P (or reasonably equivalent ratings of another internationally recognized ratings agency) and in each case maturing within one year after the date of acquisition;
(6) readily marketable direct obligations issued by any state of the United States of America or any political subdivision thereof having one of the two highest rating categories obtainable from either Moody’s or S&P (or reasonably equivalent ratings of another internationally recognized ratings agency) in each case with maturities not exceeding two years from the date of acquisition;
(7) Indebtedness issued by Persons (other than the Sponsors or any of their Affiliates) with a rating of “A” or higher from S&P or “A-2” or higher from Moody’s in each case with maturities not exceeding two years from the date of acquisition; and
(8) investment funds investing at least 95% of their assets in securities of the types described in clauses (1) through (7) above.
“Change of Control” means the occurrence of any of the following events:
5
“Code” means the Internal Revenue Code of 1986, as amended.
“Company” means the party named as such in the Preamble to this Indenture until a successor replaces it and, thereafter, means the successor and, for purposes of any provision contained herein and required by the TIA, each other obligor on the Securities.
“consolidated” means, with respect to any Person, such Person consolidated with its Restricted Subsidiaries, and shall not include any Unrestricted Subsidiary, but the interest of such Person in an Unrestricted Subsidiary shall be accounted for as an Investment.
“Consolidated Interest Expense” means, with respect to any Person for any period, the sum, without duplication, of:
(1) consolidated interest expense of such Person and its Restricted Subsidiaries for such period, to the extent such expense was deducted in computing Consolidated Net Income (including amortization of original issue discount, the interest component of Capitalized Lease Obligations, and net payments and receipts (if any) pursuant to interest rate Hedging Obligations and excluding amortization of deferred financing fees and expensing of any bridge or other financing fees); plus
(2) consolidated capitalized interest of such Person and its Restricted Subsidiaries for such period, whether paid or accrued; plus
(3) commissions, discounts, yield and other fees and charges Incurred in connection with any Receivables Financing which are payable to Persons other than the Company and its Restricted Subsidiaries; minus
(4) interest income for such period.
“Consolidated Net Income” means, with respect to any Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis; provided , however , that:
(1) any net after-tax extraordinary, nonrecurring or unusual gains or losses or income, expenses or charges (less all fees and expenses relating thereto), including, without limitation, any severance expenses, and fees, expenses or charges related to any Equity Offering, Permitted Investment, acquisition or Indebtedness permitted to be Incurred by this Indenture (in each case, whether or not successful), including any such
6
fees, expenses, charges or change in control payments made under the Acquisition Documents or otherwise related to the Transactions, in each case, shall be excluded;
(2) any increase in amortization or depreciation or any one-time non-cash charges increases or reductions in Net Income, in each case resulting from purchase accounting in connection with the Transactions or any acquisition that is consummated after the Issue Date shall be excluded;
(3) the Net Income for such period shall not include the cumulative effect of a change in accounting principles during such period;
(4) any net after-tax income or loss from discontinued operations and any net after-tax gains or losses on disposal of discontinued operations shall be excluded;
(5) any net after-tax gains or losses (less all fees and expenses or charges relating thereto) attributable to business dispositions or asset dispositions other than in the ordinary course of business (as determined in good faith by the Board of Directors of the Company) shall be excluded;
(6) any net after-tax gains or losses (less all fees and expenses or charges relating thereto) attributable to the early extinguishment of indebtedness shall be excluded;
(7) the Net Income for such period of any Person that is not a Subsidiary of such Person, or is an Unrestricted Subsidiary, or that is accounted for by the equity method of accounting, shall be included only to the extent of the amount of dividends or distributions or other payments paid in cash (or to the extent converted into cash) to the referent Person or a Restricted Subsidiary thereof in respect of such period;
(8) solely for the purpose of determining the amount available for Restricted Payments under clause (1) of the definition of Cumulative Credit, the Net Income for such period of any Restricted Subsidiary (other than any Guarantor) shall be excluded to the extent that the declaration or payment of dividends or similar distributions by such Restricted Subsidiary of its Net Income is not at the date of determination permitted without any prior governmental approval (which has not been obtained) or, directly or indirectly, by the operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders, unless such restrictions with respect to the payment of dividends or similar distributions have been legally waived; provided that the Consolidated Net Income of such Person shall be increased by the amount of dividends or other distributions or other payments actually paid in cash (or converted into cash) by any such Restricted Subsidiary to such Person, to the extent not already included therein;
(9) an amount equal to the amount of Tax Distributions actually made to any parent of such Person in respect of such period in accordance with Section 4.04(b)(xii) shall be included as though such amounts had been paid as income taxes directly by such Person for such period;
7
(10) any non-cash impairment charges resulting from the application of Statement of Financial Accounting Standards (“SFAS”) Nos. 142 and 144 and the amortization of intangibles arising pursuant to SFAS No. 141 shall be excluded;
(11) any non-cash expense realized or resulting from employee benefit plans or post-employment benefit plans, grants of stock appreciation or similar rights, stock options or other rights to officers, directors and employees of such Person or any of its Restricted Subsidiaries shall be excluded;
(12) any (a) severance or relocation costs or expenses, (b) one-time non-cash compensation charges, (c) the costs and expenses after the Issue Date related to employment of terminated employees, (d) costs or expenses realized in connection with, resulting from or in anticipation of the Transactions or (e) costs or expenses realized in connection with or resulting from stock appreciation or similar rights, stock options or other rights existing on the Issue Date of officers, directors and employees, in each case of such Person or any of its Restricted Subsidiaries, shall be excluded;
(13) accruals and reserves that are established within 12 months after the Issue Date and that are so required to be established in accordance with GAAP shall be excluded;
(14) solely for purposes of calculating EBITDA, (a) the Net Income of any Person and its Restricted Subsidiaries shall be calculated without deducting the income attributable to, or adding the losses attributable to, the minority equity interests of third parties in any non-wholly-owned Restricted Subsidiary except to the extent of dividends declared or paid in respect of such period or any prior period on the shares of Capital Stock of such Restricted Subsidiary held by such third parties and (b) any ordinary course dividend, distribution or other payment paid in cash and received from any Person in excess of amounts included in clause (7) above shall be included;
(15) (a)(i) the non-cash portion of “straight-line” rent expense shall be excluded and (ii) the cash portion of “straight-line” rent expense which exceeds the amount expensed in respect of such rent expense shall be included and (b) non-cash gains, losses, income and expenses resulting from fair value accounting required by Statement of Financial Accounting Standards No. 133 shall be excluded;
(16) unrealized gains and losses relating to hedging transactions and mark-to-market of Indebtedness denominated in foreign currencies resulting from the applications of Financial Accounting Standards 52 shall be excluded; and
(17) solely for the purpose of calculating Restricted Payments, the difference, if positive, of the Consolidated Taxes of the Company calculated in accordance with GAAP and the actual Consolidated Taxes paid in cash by the Company during any Reference Period shall be included.
Notwithstanding the foregoing, for the purpose of Section 4.04 only, there shall be excluded from Consolidated Net Income any dividends, repayments of loans or advances or other transfers of assets from Unrestricted Subsidiaries of the Company or a Restricted
8
Subsidiary of the Company to the extent such dividends, repayments or transfers increase the amount of Restricted Payments permitted under clauses (D) and (E) of the definition of “Cumulative Credit.”
“Consolidated Non-cash Charges” means, with respect to any Person for any period, the aggregate depreciation, amortization and other non-cash expenses of such Person and its Restricted Subsidiaries reducing Consolidated Net Income of such Person for such period on a consolidated basis and otherwise determined in accordance with GAAP, but excluding any such charge which consists of or requires an accrual of, or cash reserve for, anticipated cash charges for any future period.
“Consolidated Taxes” means provision for taxes based on income, profits or capital, including, without limitation, state, franchise and similar taxes and any Tax Distributions taken into account in calculating Consolidated Net Income.
“Contingent Obligations” means, with respect to any Person, any obligation of such Person guaranteeing any leases, dividends or other obligations that do not constitute Indebtedness (“primary obligations”) of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including, without limitation, any obligation of such Person, whether or not contingent:
(1) to purchase any such primary obligation or any property constituting direct or indirect security therefor,
(2) to advance or supply funds:
(a) for the purchase or payment of any such primary obligation; or
(b) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor; or
(3) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation against loss in respect thereof.
“Contribution Indebtedness” means Indebtedness of the Company or any Guarantor in an aggregate principal amount not greater than twice the aggregate amount of cash contributions (other than Excluded Contributions) made to the capital of the Company or any Guarantor after the Issue Date; provided that:
(1) such cash contributions have not been used to make a Restricted Payment,
(2) if the aggregate principal amount of such Contribution Indebtedness is greater than the aggregate amount of such cash contributions to the capital of the Company or any Guarantor, as the case may be, the amount in excess shall be Indebtedness (other than Secured Indebtedness) with a Stated Maturity later than the Stated Maturity of the Securities, and
9
(3) such Contribution Indebtedness (a) is Incurred within 180 days after the making of such cash contributions and (b) is so designated as Contribution Indebtedness pursuant to an Officers’ Certificate on the Incurrence date thereof.
“Credit Agreement” means (i) the credit agreement entered into in connection with, and on or prior to, the consummation of the Acquisition, as amended, restated, supplemented, waived, replaced (whether or not upon termination, and whether with the original lenders or otherwise), restructured, repaid, refunded, refinanced or otherwise modified from time to time, including any agreement or indenture extending the maturity thereof, refinancing, replacing or otherwise restructuring all or any portion of the Indebtedness under such agreement or agreements or indenture or indentures or any successor or replacement agreement or agreements or indenture or indentures or increasing the amount loaned or issued thereunder or altering the maturity thereof, among the Issuers, the guarantors named therein, the financial institutions named therein, and Merrill Lynch Capital Corporation, as Administrative Agent, and (ii) whether or not the credit agreement referred to in clause (i) remains outstanding, if designated by the Company to be included in the definition of “Credit Agreement,” one or more (A) debt facilities or commercial paper facilities, providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to lenders or to special purpose entities formed to borrow from lenders against such receivables) or letters of credit, (B) debt securities, indentures or other forms of debt financing (including convertible or exchangeable debt instruments or bank guarantees or bankers’ acceptances), or (C) instruments or agreements evidencing any other Indebtedness, in each case, with the same or different borrowers or issuers and, in each case, as amended, supplemented, modified, extended, restructured, renewed, refinanced, restated, replaced or refunded in whole or in part from time to time.
“Cumulative Credit” means the sum of (without duplication):
(A) 50% of the Consolidated Net Income of the Company for the period (taken as one accounting period, the “Reference Period”) from July 1, 2006 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, in the case such Consolidated Net Income for such period is a deficit, minus 100% of such deficit), plus
(B) 100% of the aggregate net proceeds, including cash and the Fair Market Value (as determined in accordance with the next succeeding sentence) of property other than cash, received by the Company after the Issue Date from the issue or sale of Equity Interests of the Company (excluding Refunding Capital Stock, Designated Preferred Stock, Excluded Contributions, Disqualified Stock and the Cash Contribution Amount), including Equity Interests issued upon conversion of Indebtedness or Disqualified Stock or upon exercise of warrants or options (other than an issuance or sale to a Restricted Subsidiary of the Company or an employee stock ownership plan or trust established by the Company or any of its Subsidiaries), plus
(C) 100% of the aggregate amount of contributions to the capital of the Company received in cash and the Fair Market Value (as determined in accordance with the next succeeding sentence) of property other than cash after the Issue Date (other than
10
Excluded Contributions, Refunding Capital Stock, Designated Preferred Stock, Disqualified Stock and the Cash Contribution Amount), plus
(D) the principal amount of any Indebtedness, or the liquidation preference or maximum fixed repurchase price, as the case may be, of any Disqualified Stock of the Company or any Restricted Subsidiary thereof issued after the Issue Date (other than Indebtedness or Disqualified Stock issued to a Restricted Subsidiary) which has been converted into or exchanged for Equity Interests in the Company (other than Disqualified Stock) or any direct or indirect parent of the Company (provided in the case of any parent, such Indebtedness or Disqualified Stock is retired or extinguished), plus
(E) 100% of the aggregate amount received by the Company or any Restricted Subsidiary in cash and the Fair Market Value (as determined in accordance with the next succeeding sentence) of property other than cash received by the Company or any Restricted Subsidiary from:
(I) the sale or other disposition (other than to the Company or a Restricted Subsidiary of the Company) of Restricted Investments made by the Company and its Restricted Subsidiaries and from repurchases and redemptions of such Restricted Investments from the Company and its Restricted Subsidiaries by any Person (other than the Company or any of its Restricted Subsidiaries) and from repayments of loans or advances which constituted Restricted Investments (other than in each case to the extent that the Restricted Investment was made pursuant to clause (vii) or (x) of Section 4.04(b)),
(II) the sale (other than to the Company or a Restricted Subsidiary of the Company) of the Capital Stock of an Unrestricted Subsidiary, or
(III) a distribution or dividend from an Unrestricted Subsidiary, plus
(F) in the event any Unrestricted Subsidiary of the Company has been redesignated as a Restricted Subsidiary or has been merged, consolidated or amalgamated with or into, or transfers or conveys its assets to, or is liquidated into, the Company or a Restricted Subsidiary of the Company, the Fair Market Value (as determined in accordance with the next succeeding sentence) of the Investment of the Company in such Unrestricted Subsidiary at the time of such redesignation, combination or transfer (or of the assets transferred or conveyed, as applicable), after taking into account any Indebtedness associated with the Unrestricted Subsidiary so designated or combined or any Indebtedness associated with the assets so transferred or conveyed (other than in each case to the extent that the designation of such Subsidiary as an Unrestricted Subsidiary was made pursuant to clause (vii) or (x) of Section 4.04(b) or constituted a Permitted Investment).
The Fair Market Value of property other than cash covered by clauses (B), (C), (D), (E) and (F) of this definition of “Cumulative Credit” shall be determined in good faith by the Company and
(x) in the event of property with a Fair Market Value in excess of $7.5 million, shall be set forth in an Officers’ Certificate or
11
(y) in the event of property with a Fair Market Value in excess of $15 million, shall be set forth in a resolution approved by at least a majority of the Board of Directors of the Company.
“Default” means any event which is, or after notice or passage of time or both would be, an Event of Default.
“Designated Non-cash Consideration” means the Fair Market Value of non-cash consideration received by the Company or one of its Restricted Subsidiaries in connection with an Asset Sale that is so designated as Designated Non-cash Consideration pursuant to an Officers’ Certificate, setting forth the basis of such valuation, less the amount of Cash Equivalents received in connection with a subsequent sale of such Designated Non-cash Consideration.
“Designated Preferred Stock” means Preferred Stock of the Company or any direct or indirect parent of the Company, as applicable (other than Disqualified Stock), that is issued for cash (other than to the Company or any of its Subsidiaries or an employee stock ownership plan or trust established by the Company or any of its Subsidiaries) and is so designated as Designated Preferred Stock, pursuant to an Officers’ Certificate, on the issuance date thereof.
“Designated Senior Indebtedness” means, with respect to the Company or a Guarantor:
(1) the Bank Indebtedness; and
(2) any other Senior Indebtedness of the Company or such Guarantor which, at the date of determination, has an aggregate principal amount outstanding of, or under which, at the date of determination, the holders thereof are committed to lend up to, at least $25.0 million and is specifically designated by the Issuers or such Guarantor in the instrument evidencing or governing such Senior Indebtedness as “Designated Senior Indebtedness” for purposes of this Indenture.
“Disqualified Stock” means, with respect to any Person, any Capital Stock of such Person which, by its terms (or by the terms of any security into which it is convertible or for which it is redeemable or exchangeable), or upon the happening of any event:
(1) matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise (other than as a result of a change of control or asset sale; provided that the relevant asset sale or change of control provisions, taken as a whole, are no more favorable in any material respect to holders of such Capital Stock than the asset sale and change of control provisions applicable to the Securities and any purchase requirement triggered thereby may not become operative until compliance with the asset sale and change of control provisions applicable to the Securities (including the purchase of any Securities tendered pursuant thereto)),
(2) is convertible or exchangeable for Indebtedness or Disqualified Stock of such Person, or
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(3) is redeemable at the option of the holder thereof, in whole or in part,
in each case prior to 91 days after the maturity date of the Securities; provided , however , that only the portion of Capital Stock which so matures or is mandatorily redeemable, is so convertible or exchangeable or is so redeemable at the option of the holder thereof prior to such date shall be deemed to be Disqualified Stock; provided , further , however , that if such Capital Stock is issued to any employee or to any plan for the benefit of employees of the Company or its Subsidiaries or by any such plan to such employees, such Capital Stock shall not constitute Disqualified Stock solely because it may be required to be repurchased by the Company in order to satisfy applicable statutory or regulatory obligations or as a result of such employee’s termination, death or disability; provided , further , that any class of Capital Stock of such Person that by its terms authorizes such Person to satisfy its obligations thereunder by delivery of Capital Stock that is not Disqualified Stock shall not be deemed to be Disqualified Stock.
“Domestic Subsidiary” means a Restricted Subsidiary that is not a Foreign Subsidiary.
“EBITDA” means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period plus, without duplication, to the extent the same was deducted in calculating Consolidated Net Income:
(1) Consolidated Taxes; plus
(2) Consolidated Interest Expense; plus
(3) Consolidated Non-cash Charges; plus
(4) business optimization expenses and other restructuring charges or expenses (which, for the avoidance of doubt, shall include, without limitation, the effect of inventory optimization programs, plant closures, retention, systems establishment costs and excess pension charges); provided that with respect to each business optimization expense or other restructuring charge, the Company shall have delivered to the Trustee an Officers’ Certificate specifying and quantifying such expense or charge and stating that such expense or charge is a business optimization expense or other restructuring charge, as the case may be; plus
(5) the amount of management, monitoring, consulting and advisory fees and related expenses paid to the Sponsors (or any accruals relating to such fees and related expenses) during such period pursuant to the terms of the agreements between the Sponsors and the Company and its Subsidiaries as described with particularity in the Offering Circular and as in effect on the Issue Date;
less, without duplication,
(6) non-cash items increasing Consolidated Net Income for such period (excluding the recognition of deferred revenue or any items which represent the reversal of any accrual of, or cash reserve for, anticipated cash charges in any prior period and any items for which cash was received in a prior period).
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“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).
“Equity Offering” means any public or private sale after the Issue Date of common stock or Preferred Stock of the Company or any direct or indirect parent of the Company, as applicable (other than Disqualified Stock), other than:
(1) public offerings with respect to the Company’s or such direct or indirect parent’s common stock registered on Form S-8; and
(2) any such public or private sale that constitutes an Excluded Contribution.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder.
“Exchange Offer Registration Statement” means the registration statement filed with the SEC in connection with the Registered Exchange Offer.
“Excluded Contributions” means the Cash Equivalents or other assets (valued at their Fair Market Value as determined in good faith by senior management or the Board of Directors of the Company) received by the Company after the Issue Date from:
(1) contributions to its common equity capital, and
(2) the sale (other than to a Subsidiary of the Company or to any Subsidiary management equity plan or stock option plan or any other management or employee benefit plan or agreement) of Capital Stock (other than Disqualified Stock and Designated Preferred Stock) of the Company,
in each case designated as Excluded Contributions pursuant to an Officers’ Certificate on or promptly after the date such capital contributions are made or the date such Capital Stock is sold, as the case may be.
“Fair Market Value” means, with respect to any asset or property, the price which could be negotiated in an arm’s-length, free market transaction, for cash, between a willing seller and a willing and able buyer, neither of whom is under undue pressure or compulsion to complete the transaction.
“Fixed Charge Coverage Ratio” means, with respect to any Person for any period, the ratio of EBITDA 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 Restricted Subsidiaries Incurs, repays, repurchases or redeems any Indebtedness (other than in the case of revolving credit borrowings or revolving advances under any Qualified Receivables Financing, in which case interest expense shall be computed based upon the average daily balance of such Indebtedness during the applicable period) or issues, repurchases or redeems Disqualified Stock or Preferred Stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but prior to the event for which the calculation of the Fixed Charge Coverage
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Ratio is made (the “Calculation Date”), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such Incurrence, repayment, repurchase or redemption of Indebtedness, or such issuance, repurchase or redemption of Disqualified Stock or Preferred Stock, as if the same had occurred at the beginning of the applicable four-quarter period.
For purposes of making the computation referred to above, Investments, acquisitions, dispositions, mergers, consolidations and discontinued operations (as determined in accordance with GAAP), in each case with respect to an operating unit of a business, and any operational changes that the Company or any of its Restricted Subsidiaries has both determined to make and made after the Issue Date and during the four-quarter reference period or subsequent to such reference period and on or prior to or simultaneously with the Calculation Date (each, for purposes of this definition, a “pro forma event”) shall be calculated on a pro forma basis assuming that all such Investments, acquisitions, dispositions, mergers, consolidations (including the Transactions) discontinued operations and operational changes (and the change of any associated fixed charge obligations and the change in EBITDA resulting therefrom) had occurred on the first day of the four-quarter reference period. If since the beginning of such period any Person that subsequently became a Restricted Subsidiary or was merged with or into the Company or any Restricted Subsidiary since the beginning of such period shall have made any Investment, acquisition, disposition, merger, consolidation, discontinued operation or operational change, in each case with respect to an operating unit of a business, that would have required adjustment pursuant to this definition, then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect thereto for such period as if such Investment, acquisition, disposition, discontinued operation, merger, consolidation or operational change had occurred at the beginning of the applicable four-quarter period.
For purposes of this definition, whenever pro forma effect is to be given to any pro forma event, the pro forma calculations shall be made in good faith by a responsible financial or accounting officer of the Company. Any such pro forma calculation may include adjustments appropriate, in the reasonable good faith determination of the Issuers as set forth in an Officers’ Certificate, to reflect (1) operating expense reductions and other operating improvements or synergies reasonably expected to result from the applicable pro forma event (including, to the extent applicable, from the Transactions), and (2) all adjustments of the nature used in connection with the calculation of “Adjusted EBITDA” as set forth in footnote 3 to the “Summary Historical and Unaudited Pro Forma Financial Data” under “Offering Circular Summary” in the Offering Circular to the extent such adjustments, without duplication, continue to be applicable to such four-quarter period.
If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the Calculation Date had been the applicable rate for the entire period (taking into account any Hedging Obligations applicable to such Indebtedness if such Hedging Obligation has a remaining term in excess of 12 months). Interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by a responsible financial or accounting officer of the Company to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with GAAP. For purposes of making the computation referred to above, interest on any Indebtedness under a revolving credit facility computed on a pro forma basis shall be computed based upon the average daily balance of such Indebtedness during the
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applicable period. Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rate, shall be deemed to have been based upon the rate actually chosen, or, if none, then based upon such optional rate chosen as the Issuers may designate.
“Fixed Charges” means, with respect to any Person for any period, the sum, without duplication, of:
(1) Consolidated Interest Expense of such Person for such period, and
(2) all cash dividend payments (excluding items eliminated in consolidation) on any series of Preferred Stock or Disqualified Stock of such Person and its Restricted Subsidiaries.
“Foreign Subsidiary” means a Restricted Subsidiary not organized or existing under the laws of the United States of America or any state or territory or the District of Columbia thereof and any direct or indirect subsidiary of such Restricted Subsidiary.
“GAAP” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect on the Issue Date. For the purposes of this Indenture, the term “consolidated” with respect to any Person shall mean such Person consolidated with its Restricted Subsidiaries, and shall not include any Unrestricted Subsidiary, but the interest of such Person in an Unrestricted Subsidiary will be accounted for as an Investment.
“Guarantee” means any guarantee of the obligations of the Company under this Indenture and the Securities by any Person in accordance with the provisions of this Indenture.
“guarantee” means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including, without limitation, letters of credit and reimbursement agreements in respect thereof), of all or any part of any Indebtedness or other obligations.
“Guarantor” means any Person that Incurs a Guarantee; provided that upon the release or discharge of such Person from its Guarantee in accordance with this Indenture, such Person ceases to be a Guarantor.
“Hedging Obligations” means, with respect to any Person, the obligations of such Person under:
(1) currency exchange, interest rate or commodity swap agreements, currency exchange, interest rate or commodity cap agreements and currency exchange, interest rate or commodity collar agreements; and
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(2) other agreements or arrangements designed to protect such Person against fluctuations in currency exchange, interest rates or commodity prices.
“Holder” or “Noteholder” means the Person in whose name a Security is registered on the Registrar’s books.
“Incur” means issue, assume, guarantee, incur or otherwise become liable for; provided , however , that any Indebtedness or Capital Stock of a Person existing at the time such Person becomes a Subsidiary (whether by merger, amalgamation, consolidation, acquisition or otherwise) shall be deemed to be Incurred by such Person at the time it becomes a Subsidiary.
“Indebtedness” means, with respect to any Person:
(1) the principal and premium (if any) of any indebtedness of such Person, whether or not contingent, (a) in respect of borrowed money, (b) evidenced by bonds, notes, debentures or similar instruments or letters of credit or bankers’ acceptances (or, without duplication, reimbursement agreements in respect thereof), (c) representing the deferred and unpaid purchase price of any property, except any such balance that constitutes a trade payable or similar obligation to a trade creditor due within six months from the date on which it is Incurred, in each case Incurred in the ordinary course of business, which purchase price is due more than six months after the date of placing the property in service or taking delivery and title thereto, (d) in respect of Capitalized Lease Obligations, or (e) representing any Hedging Obligations, if and to the extent that any of the foregoing indebtedness (other than letters of credit and Hedging Obligations) would appear as a liability on a balance sheet (excluding the footnotes thereto) of such Person prepared in accordance with GAAP;
(2) to the extent not otherwise included, any obligation of such Person to be liable for, or to pay, as obligor, guarantor or otherwise, on the Indebtedness of another Person (other than by endorsement of negotiable instruments for collection in the ordinary course of business);
(3) to the extent not otherwise included, Indebtedness of another Person secured by a Lien on any asset owned by such Person (whether or not such Indebtedness is assumed by such Person); provided , however , that the amount of such Indebtedness will be the lesser of: (a) the Fair Market Value of such asset at such date of determination, and (b) the amount of such Indebtedness of such other Person; and
(4) to the extent not otherwise included, with respect to the Company and its Restricted Subsidiaries, the amount then outstanding ( i.e. , advanced, and received by, and available for use by, the Company or any of its Restricted Subsidiaries) under any Receivables Financing (as set forth in the books and records of the Company or any Restricted Subsidiary and confirmed by the agent, trustee or other representative of the institution or group providing such Receivables Financing);
provided , however , that notwithstanding the foregoing, Indebtedness shall be deemed not to include (1) Contingent Obligations incurred in the ordinary course of business and not in respect of borrowed money; (2) deferred or prepaid revenues; (3) purchase price holdbacks in respect of
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a portion of the purchase price of an asset to satisfy warranty or other unperformed obligations of the respective seller; (4) Obligations under or in respect of Qualified Receivables Financing or (5) obligations under the Acquisition Documents.
Notwithstanding anything in this Indenture to the contrary, Indebtedness shall not include, and shall be calculated without giving effect to, the effects of Statement of Financial Accounting Standards No. 133 and related interpretations to the extent such effects would otherwise increase or decrease an amount of Indebtedness for any purpose under this Indenture as a result of accounting for any embedded derivatives created by the terms of such Indebtedness; and any such amounts that would have constituted Indebtedness under this Indenture but for the application of this sentence shall not be deemed an Incurrence of Indebtedness under this Indenture.
“Indenture” means this Indenture as amended or supplemented from time to time.
“Independent Financial Advisor” means an accounting, appraisal or investment banking firm or consultant, in each case of nationally recognized standing, that is, in the good faith determination of the Company, qualified to perform the task for which it has been engaged.
“Investment Grade Securities” means:
(1) securities issued or directly and fully guaranteed or insured by the U.S. government or any agency or instrumentality thereof (other than Cash Equivalents),
(2) securities that have a rating equal to or higher than Baa3 (or equivalent) by Moody’s or BBB- (or equivalent) by S&P, or an equivalent rating by any other Rating Agency, but excluding any debt securities or loans or advances between and among the Company and its Subsidiaries;
(3) investments in any fund that invests exclusively in investments of the type described in clauses (1) and (2) which fund may also hold immaterial amounts of cash pending investment and/or distribution, and
(4) corresponding instruments in countries other than the United States customarily utilized for high quality investments and in each case with maturities not exceeding two years from the date of acquisition.
“Investments” means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the form of loans (including guarantees), advances or capital contributions (excluding accounts receivable, trade credit and advances to customers and commission, travel and similar advances to officers, employees and consultants made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities issued by any other Person and investments that are required by GAAP to be classified on the balance sheet of the Company in the same manner as the other investments included in this definition to the extent such transactions involve the transfer of cash or other property. For purposes of the definition of “Unrestricted Subsidiary” and Section 4.04:
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(1) “Investments” shall include the portion (proportionate to the Company’s equity interest in such Subsidiary) of the Fair Market Value of the net assets of a Subsidiary of the Company at the time that such Subsidiary is designated an Unrestricted Subsidiary; provided , however , that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue to have a permanent “Investment” in an Unrestricted Subsidiary equal to an amount (if positive) equal to:
(a) the Company’s “Investment” in such Subsidiary at the time of such redesignation less
(b) the portion (proportionate to the Company’s equity interest in such Subsidiary) of the Fair Market Value of the net assets of such Subsidiary at the time of such redesignation; and
(2) any property transferred to or from an Unrestricted Subsidiary shall be valued at its Fair Market Value at the time of such transfer, in each case as determined in good faith by the Board of Directors of the Company.
“Issue Date” means July 21, 2006, the date on which the Original Securities are issued.
“Issuer” or “Issuers” mean (i) Merger Sub only, prior to the merger of Merger Sub with and into the Company pursuant to the Merger Agreement (the “merger”), and (ii) the Company and Rexnord, but not any of their respective Subsidiaries, following the merger.
“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction); provided that in no event shall an operating lease be deemed to constitute a Lien.
“Management Group” means the group consisting of the directors, executive officers and other management personnel of the Company or any direct or indirect parent of the Company, as the case may be, on the Issue Date together with (1) any new directors whose election by such boards of directors or whose nomination for election by the shareholders of the Company or any direct or indirect parent of the Company, as applicable, was approved by a vote of a majority of the directors of the Company or any direct or indirect parent of the Company, as applicable, then still in office who were either directors on the Issue Date or whose election or nomination was previously so approved and (2) executive officers and other management personnel of the Company or any direct or indirect parent of the Company, as applicable, hired at a time when the directors on the Issue Date together with the directors so approved constituted a majority of the directors of the Company or any direct or indirect parent of the Company, as applicable.
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“Merger Agreement” means the agreement and plan of merger, dated as of May 24, 2006, by and among Chase Acquisition I, Inc., a Delaware corporation, Merger Sub, the Company and TC Group, L.L.C., a Delaware limited liability company, as amended, supplemented or modified from time to time prior to the Issue Date or thereafter (so long as any amendment, supplement or modification after the Issue Date, together with all other amendments, supplements and modifications after the Issue Date, taken as a whole, is not more disadvantageous to the Holders of the Securities in any material respect than the Merger Agreement as in effect on the Issue Date).
“Moody’s” means Moody’s Investors Service, Inc. or any successor to the rating agency business thereof.
“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.
“Net Proceeds” means the aggregate cash proceeds received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received in respect of or upon the sale or other disposition of any Designated Non-cash Consideration received in any Asset Sale and any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise, but only as and when received, but excluding the assumption by the acquiring Person of Indebtedness relating to the disposed assets or other consideration received in any other non-cash form), net of the direct costs relating to such Asset Sale and the sale or disposition of such Designated Non-cash Consideration (including, without limitation, legal, accounting and investment banking fees, and brokerage and sales commissions), and any relocation expenses Incurred as a result thereof, taxes paid or payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements related thereto), amounts required to be applied to the repayment of principal, premium (if any) and interest on Indebtedness required (other than pursuant to Section 4.06(b)(i)) to be paid as a result of such transaction, and any deduction of appropriate amounts to be provided by the Company as a reserve in accordance with GAAP against any liabilities associated with the asset disposed of in such transaction and retained by the Company after such sale or other disposition thereof, including, without limitation, pension and other post-employment benefit liabilities and liabilities related to environmental matters or against any indemnification obligations associated with such transaction.
“Obligations” means any principal, interest, penalties, fees, indemnifications, reimbursements (including, without limitation, reimbursement obligations with respect to letters of credit and bankers’ acceptances), damages and other liabilities payable under the documentation governing any Indebtedness; provided that Obligations with respect to the Securities shall not include fees or indemnifications in favor of the Trustee and other third parties other than the Holders of the Securities.
“Offering Circular” means the offering circular relating to the offering of the Original Securities dated July 14, 2006.
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“Officer” means the Chairman of the Board, Chief Executive Officer, Chief Financial Officer, President, any Executive Vice President, Senior Vice President or Vice President, the Treasurer or the Secretary of the Company.
“Officers’ Certificate” means a certificate signed on behalf of the Issuer by two Officers of the Issuer, one of whom must be the principal executive officer, the principal financial officer, the treasurer or the principal accounting officer of the Issuer that meets the requirements set forth in this Indenture.
“Opinion of Counsel” means a written opinion from legal counsel who is acceptable to the Trustee. The counsel may be an employee of or counsel to the Company or the Trustee.
“Pari Passu Indebtedness” means:
(1) with respect to the Company, the Securities and any Indebtedness which ranks pari passu in right of payment to the Securities; and
(2) with respect to any Guarantor, its Guarantee and any Indebtedness which ranks pari passu in right of payment to such Guarantor’s Guarantee.
“Permitted Holders” means, at any time, each of (i) the Sponsors and (ii) the Management Group. Any person or group whose acquisition of beneficial ownership constitutes a Change of Control in respect of which a Change of Control Offer is made in accordance with the requirements of this Indenture will thereafter, together with its Affiliates, constitute an additional Permitted Holder.
“Permitted Investments” means:
(1) any Investment in the Company or any Restricted Subsidiary;
(2) any Investment in Cash Equivalents or Investment Grade Securities;
(3) any Investment 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 Restricted Subsidiary of the Company, or (b) such Person, in one transaction or a series of related transactions, is merged, consolidated or amalgamated with or into, or transfers or conveys all or substantially all of its assets to, or is liquidated into, the Company or a Restricted Subsidiary of the Company;
(4) any Investment in securities or other assets not constituting Cash Equivalents and received in connection with an Asset Sale made pursuant to the provisions of Section 4.06 or any other disposition of assets not constituting an Asset Sale;
(5) any Investment existing on, or made pursuant to binding commitments existing on, the Issue Date;
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(6) advances to employees not in excess of $15 million outstanding at any one time in the aggregate;
(7) any Investment acquired by the Company or any of its Restricted Subsidiaries (a) in exchange for any other Investment or accounts receivable held by the Company or any such Restricted Subsidiary in connection with or as a result of a bankruptcy, workout, reorganization or recapitalization of the issuer of such other Investment or accounts receivable, or (b) as a result of a foreclosure by the Company or any of its Restricted Subsidiaries with respect to any secured Investment or other transfer of title with respect to any secured Investment in default;
(8) Hedging Obligations permitted under Section 4.03(b)(x);
(9) any Investment by the Company or any of its Restricted Subsidiaries in a Similar Business having an aggregate Fair Market Value, taken together with all other Investments made pursuant to this clause (9) that are at that time outstanding, not to exceed the greater of (x) $100.0 million and (y) 4.5% of Total Assets at the time of such Investment (with the Fair Market Value of each Investment being measured at the time made and without giving effect to subsequent changes in value); provided , however , that if any Investment pursuant to this clause (9) is made in any Person that is not a Restricted Subsidiary of the Company at the date of the making of such Investment and such Person becomes a Restricted Subsidiary of the Company after such date, such Investment shall thereafter be deemed to have been made pursuant to clause (1) above and shall cease to have been made pursuant to this clause (9) for so long as such Person continues to be a Restricted Subsidiary;
(10) additional Investments by the Company or any of its Restricted Subsidiaries having an aggregate Fair Market Value, taken together with all other Investments made pursuant to this clause (10) that are at that time outstanding, not to exceed the greater of (x) $100.0 million and (y) 4.5% of Total Assets at the time of such Investment (with the Fair Market Value of each Investment being measured at the time made and without giving effect to subsequent changes in value);
(11) loans and advances to officers, directors and employees for business-related travel expenses, moving expenses and other similar expenses, in each case Incurred in the ordinary course of business;
(12) Investments the payment for which consists of Equity Interests of the Company (other than Disqualified Stock) or any direct or indirect parent of the Company, as applicable; provided , however , that such Equity Interests will not increase the amount available for Restricted Payments under clause (C) of the definition of “Cumulative Credit”;
(13) any transaction to the extent it constitutes an Investment that is permitted by and made in accordance with the provisions of Section 4.07(b) (except transactions described in clauses (ii), (vi), (vii) and (xi)(b) of such Section);
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(14) Investments consisting of the licensing or contribution of intellectual property pursuant to joint marketing arrangements with other Persons;
(15) guarantees issued in accordance with Sections 4.03 and 4.11;
(16) Investments consisting of purchases and acquisitions of inventory, supplies, materials and equipment or purchases of contract rights or licenses or leases of intellectual property, in each case in the ordinary course of business;
(17) any Investment in a Receivables Subsidiary or any Investment by a Receivables Subsidiary in any other Person in connection with a Qualified Receivables Financing, including Investments of funds held in accounts permitted or required by the arrangements governing such Qualified Receivables Financing or any related Indebtedness; provided , however , that any Investment in a Receivables Subsidiary is in the form of a Purchase Money Note, contribution of additional receivables or an equity interest;
(18) additional Investments in joint ventures of the Company or any of its Restricted Subsidiaries existing on the Issue Date not to exceed $15 million at any one time; and
(19) Investments of a Restricted Subsidiary of the Company acquired after the Issue Date or of an entity merged into, amalgamated with, or consolidated with a Restricted Subsidiary of the Company in a transaction that is not prohibited by Section 5.01 after the Issue Date to the extent that such Investments were not made in contemplation of such acquisition, merger, amalgamation or consolidation and were in existence on the date of such acquisition, merger, amalgamation or consolidation.
“Permitted Junior Securities” shall mean unsecured debt or equity securities of the Company or any Guarantor or any successor corporation issued pursuant to a plan of reorganization or readjustment of the Company or any Guarantor, as applicable, that are subordinated to the payment of all then outstanding Senior Indebtedness of the Company or any Guarantor, as applicable, at least to the same extent that the Securities are subordinated to the payment of all Senior Indebtedness of the Company or any Guarantor, as applicable, on the Issue Date, so long as to the extent that any Senior Indebtedness of the Company or any Guarantor, as applicable, outstanding on the date of consummation of any such plan of reorganization or readjustment is not paid in full in cash on such date, the holders of any such Senior Indebtedness not so paid in full in cash have consented to the terms of such plan of reorganization or readjustment.
“Permitted Liens” means, with respect to any Person:
(1) pledges or deposits by such Person under workmen’s compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or deposits to secure public or statutory obligations of such Person or deposits of cash or U.S. government bonds to secure surety or appeal bonds to
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which such Person is a party, or deposits as security for contested taxes or import duties or for the payment of rent, in each case Incurred in the ordinary course of business;
(2) Liens imposed by law, such as carriers’, warehousemen’s and mechanics’ Liens, in each case for sums not yet due or being contested in good faith by appropriate proceedings or other Liens arising out of judgments or awards against such Person with respect to which such Person shall then be proceeding with an appeal or other proceedings for review;
(3) Liens for taxes, assessments or other governmental charges not yet due or payable or subject to penalties for nonpayment or which are being contested in good faith by appropriate proceedings;
(4) Liens in favor of issuers of performance and surety bonds or bid bonds or with respect to other regulatory requirements or letters of credit issued pursuant to the request of and for the account of such Person in the ordinary course of its business;
(5) minor survey exceptions, minor encumbrances, easements or reservations of, or rights of others for, licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real properties or Liens incidental to the conduct of the business of such Person or to the ownership of its properties which were not Incurred in connection with Indebtedness and which do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person;
(6) (A) Liens securing Senior Indebtedness, and Liens on assets of a Restricted Subsidiary that is not a Guarantor securing Indebtedness of such Restricted Subsidiary, in each case permitted to be Incurred pursuant to Section 4.03 and (B) Liens securing Indebtedness permitted to be Incurred pursuant to clause (iv), (xii) or (xx) of Section 4.03(b) ( provided that in the case of clause (xx), such Lien does not extend to the property or assets of any Subsidiary of the Company other than a Foreign Subsidiary);
(7) Liens existing on the Issue Date;
(8) Liens on assets, property or shares of stock of a Person at the time such Person becomes a Subsidiary; provided , however , that such Liens are not created or Incurred in connection with, or in contemplation of, such other Person becoming such a Subsidiary; provided , further , however , that such Liens may not extend to any other property owned by the Company or any Restricted Subsidiary of the Company);
(9) Liens on assets or property at the time the Company or a Restricted Subsidiary of the Company acquired the assets or property, including any acquisition by means of a merger, amalgamation or consolidation with or into the Company or any Restricted Subsidiary of the Company; provided , however , that such Liens are not created or Incurred in connection with, or in contemplation of, such acquisition; provided , further , however , that the Liens may not extend to any other property owned by the Company or any Restricted Subsidiary of the Company;
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(10) Liens securing Indebtedness or other obligations of a Restricted Subsidiary owing to the Company or another Restricted Subsidiary of the Company permitted to be Incurred in accordance with Section 4.03;
(11) Liens securing Hedging Obligations not incurred in violation of this Indenture; provided that with respect to Hedging Obligations relating to Indebtedness, such Lien extends only to the property securing such Indebtedness;
(12) Liens on specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of bankers’ acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;
(13) leases and subleases of real property which do not materially interfere with the ordinary conduct of the business of the Company or any of its Restricted Subsidiaries;
(14) Liens arising from Uniform Commercial Code financing statement filings regarding operating leases entered into by the Company and its Restricted Subsidiaries in the ordinary course of business;
(15) Liens in favor of the Company or any Guarantor;
(16) Liens on accounts receivable and related assets of the type specified in the definition of “Receivables Financing” Incurred in connection with a Qualified Receivables Financing;
(17) deposits made in the ordinary course of business to secure liability to insurance carriers;
(18) Liens on the Equity Interests of Unrestricted Subsidiaries;
(19) grants of software and other technology licenses in the ordinary course of business;
(20) Liens to secure any refinancing, refunding, extension, renewal or replacement (or successive refinancings, refundings, extensions, renewals or replacements) as a whole, or in part, of any Indebtedness secured by any Lien referred to in the foregoing clauses (6)(B), (7), (8), (9), (10), (11) and (15); provided , however , that (x) such new Lien shall be limited to all or part of the same property that secured the original Lien (plus improvements on such property), and (y) the Indebtedness secured by such Lien at such time is not increased to any amount greater than the sum of (A) the outstanding principal amount or, if greater, committed amount of the Indebtedness described under clauses (6)(B), (7), (8), (9), (10), (11) and (15) at the time the original Lien became a Permitted Lien under this Indenture, and (B) an amount necessary to pay any fees and expenses, including premiums, related to such refinancing, refunding, extension, renewal or replacement;
25
(21) Liens on equipment of the Company or any Restricted Subsidiary granted in the ordinary course of business to the Company’s or such Restricted Subsidiary’s client at which such equipment is located; and
(22) judgment and attachment Liens not giving rise to an Event of Default and notices of lis pendens and associated rights related to litigation being contested in good faith by appropriate proceedings and for which adequate reserves have been made;
(23) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into in the ordinary course of business;
(24) Liens incurred to secure cash management services in the ordinary course of business; and
(25) other Liens securing obligations incurred in the ordinary course of business which obligations do not exceed $20 million at any one time outstanding.
“Person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity.
“Preferred Stock” means any Equity Interest with preferential right of payment of dividends or upon liquidation, dissolution, or winding up.
“Purchase Money Note” means a promissory note of a Receivables Subsidiary evidencing a line of credit, which may be irrevocable, from the Company or any Subsidiary of the Company to a Receivables Subsidiary in connection with a Qualified Receivables Financing, which note is intended to finance that portion of the purchase price that is not paid by cash or a contribution of equity.
“Qualified Receivables Financing” means any Receivables Financing of a Receivables Subsidiary that meets the following conditions:
(1) the Board of Directors of the Company shall have determined in good faith that such Qualified Receivables Financing (including financing terms, covenants, termination events and other provisions) is in the aggregate economically fair and reasonable to the Company and the Receivables Subsidiary;
(2) all sales of accounts receivable and related assets to the Receivables Subsidiary are made at Fair Market Value (as determined in good faith by the Company); and
(3) the financing terms, covenants, termination events and other provisions thereof shall be market terms (as determined in good faith by the Company) and may include Standard Securitization Undertakings.
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The grant of a security interest in any accounts receivable of the Company or any of its Restricted Subsidiaries (other than a Receivables Subsidiary) to secure Bank Indebtedness shall not be deemed a Qualified Receivables Financing.
“Rating Agency” means (1) each of Moody’s and S&P and (2) if Moody’s or S&P ceases to rate the Securities for reasons outside of the Issuers’ control, a “nationally recognized statistical rating organization” within the meaning of Rule 15cs-1(c)(2)(vi)(F) under the Exchange Act selected by the Issuers or any direct or indirect parent of the Issuers as a replacement agency for Moody’s or S&P, as the case may be.
“Receivables Fees” means distributions or payments made directly or by means of discounts with respect to any participation interests issued or sold in connection with, and all other fees paid to a Person that is not a Restricted Subsidiary in connection with, any Receivables Financing.
“Receivables Financing” means any transaction or series of transactions that may be entered into by the Company or any of its Subsidiaries pursuant to which the Company or any of its Subsidiaries may sell, convey or otherwise transfer to (a) a Receivables Subsidiary (in the case of a transfer by the Company or any of its Subsidiaries); and (b) any other Person (in the case of a transfer by a Receivables Subsidiary), or may grant a security interest in, any accounts receivable (whether now existing or arising in the future) of the Company or any of its Subsidiaries, and any assets related thereto including, without limitation, all collateral securing such accounts receivable, all contracts and all guarantees or other obligations in respect of such accounts receivable, proceeds of such accounts receivable and other assets which are customarily transferred or in respect of which security interests are customarily granted in connection with asset securitization transactions involving accounts receivable and any Hedging Obligations entered into by the Company or any such Subsidiary in connection with such accounts receivable.
“Receivables Repurchase Obligation” means any obligation of a seller of receivables in a Qualified Receivables Financing to repurchase receivables arising as a result of a breach of a representation, warranty or covenant or otherwise, including as a result of a receivable or portion thereof becoming subject to any asserted defense, dispute, off-set or counterclaim of any kind as a result of any action taken by, any failure to take action by or any other event relating to the seller.
“Receivables Subsidiary” means a Wholly Owned Restricted Subsidiary of the Company (or another Person formed for the purposes of engaging in Qualified Receivables Financing with the Company in which the Company or any Subsidiary of the Company makes an Investment and to which the Company or any Subsidiary of the Company transfers accounts receivable and related assets) which engages in no activities other than in connection with the financing of accounts receivable of the Company and its Subsidiaries, all proceeds thereof and all rights (contractual or other), collateral and other assets relating thereto, and any business or activities incidental or related to such business, and which is designated by the Board of Directors of the Company (as provided below) as a Receivables Subsidiary and:
27
(a) no portion of the Indebtedness or any other obligations (contingent or otherwise) of which (i) is guaranteed by the Company or any other Subsidiary of the Company (excluding guarantees of obligations (other than the principal of and interest on, Indebtedness) pursuant to Standard Securitization Undertakings), (ii) is recourse to or obligates the Company or any other Subsidiary of the Company in any way other than pursuant to Standard Securitization Undertakings, or (iii) subjects any property or asset of the Company or any other Subsidiary of the Company, directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to Standard Securitization Undertakings;
(b) with which neither the Company nor any other Subsidiary of the Company has any material contract, agreement, arrangement or understanding other than on terms which the Company reasonably believes to be no less favorable to the Company or such Subsidiary than those that might be obtained at the time from Persons that are not Affiliates of the Company; and
(c) to which neither the Company nor any other Subsidiary of the Company has any obligation to maintain or preserve such entity’s financial condition or cause such entity to achieve certain levels of operating results.
Any such designation by the Board of Directors of the Company shall be evidenced to the Trustee by filing with the Trustee a certified copy of the resolution of the Board of Directors of the Company giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the foregoing conditions.
“Representative” means the trustee, agent or representative (if any) for an issue of Senior Indebtedness or Designated Senior Indebtedness, as applicable; provided that if, and for so long as, such Senior Indebtedness lacks such a Representative, then the Representative for such Senior Indebtedness shall at all times constitute the holder or holders of a majority in outstanding principal amount of obligations under such Senior Indebtedness.
“Restricted Investment” means an Investment other than a Permitted Investment.
“Restricted Subsidiary” means, with respect to any Person, any Subsidiary of such Person other than an Unrestricted Subsidiary of such Person. Rexnord shall be a Restricted Subsidiary of the Company. Unless otherwise indicated in this Indenture, all references to Restricted Subsidiaries shall mean Restricted Subsidiaries of the Company.
“Sale/Leaseback Transaction” means an arrangement relating to property now owned or hereafter acquired by the Company or a Restricted Subsidiary whereby the Company or a Restricted Subsidiary transfers such property to a Person and the Company or such Restricted Subsidiary leases it from such Person, other than leases between the Company and a Restricted Subsidiary of the Company or between Restricted Subsidiaries of the Company.
“S&P” means Standard & Poor’s Ratings Group or any successor to the rating agency business thereof.
“SEC” means the Securities and Exchange Commission.
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“Secured Indebtedness” means any Indebtedness secured by a Lien.
“Securities” means the securities issued under this Indenture.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.
“Senior Credit Documents” means the collective reference to the Credit Agreement, any notes issued pursuant thereto and the guarantees thereof, and the collateral documents relating thereto, as amended, supplemented, restated, renewed, refunded, replaced, restructured, repaid, refinanced or otherwise modified from time to time.
“Senior Indebtedness” with respect to the Company or any of its Restricted Subsidiaries means all Indebtedness and any Receivables Repurchase Obligation of the Company or any such Restricted Subsidiary, including interest thereon (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Company or any Restricted Subsidiary of the Company at the rate specified in the documentation with respect thereto whether or not a claim for post-filing interest is allowed in such proceeding) and other amounts (including fees, expenses, reimbursement obligations under letters of credit and indemnities) owing in respect thereof, whether outstanding on the Issue Date or thereafter Incurred, unless in the instrument creating or evidencing the same or pursuant to which the same is outstanding expressly provides that such obligations are subordinated in right of payment to any other Indebtedness of the Company or such Restricted Subsidiary, as applicable; provided , however , that Senior Indebtedness shall not include, as applicable:
(1) any obligation of the Company to any Subsidiary of the Company (other than any Receivables Repurchase Obligation) or of any Subsidiary of the Company to the Company or any other Subsidiary of the Company,
(2) any liability for Federal, state, local or other taxes owed or owing by the Company or such Restricted Subsidiary,
(3) any accounts payable or other liability to trade creditors arising in the ordinary course of business (including guarantees thereof or instruments evidencing such liabilities),
(4) any Indebtedness or obligation of the Company or any Restricted Subsidiary that by its terms is subordinate or junior in any respect to any other Indebtedness or obligation of the Company or such Restricted Subsidiary, as applicable, including any Pari Passu Indebtedness and any Subordinated Indebtedness,
(5) any obligations with respect to any Capital Stock, or
(6) any Indebtedness Incurred in violation of this Indenture but, as to any such Indebtedness Incurred under the Credit Agreement, no such violation shall be deemed to exist for purposes of this clause (6) if the holders of such Indebtedness or their Representative shall have received an Officers’ Certificate to the effect that the Incurrence of such Indebtedness does not (or, in the case of a revolving credit facility
29
thereunder, the Incurrence of the entire committed amount thereof at the date on which the initial borrowing thereunder is made would not) violate this Indenture.
If any Senior Indebtedness is disallowed, avoided or subordinated pursuant to the provisions of Section 548 of Title 11 of the United States Code or any applicable state fraudulent conveyance law, such Senior Indebtedness nevertheless will constitute Senior Indebtedness.
“Senior Notes” means the 9½% Senior Notes due 2014 of the Issuers.
“Significant Subsidiary” means Rexnord and any Restricted Subsidiary that would be a “Significant Subsidiary” of the Company within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC.
“Similar Business” means a business, the majority of whose revenues are derived from the activities of the Company and its Subsidiaries as of the Issue Date or any business or activity that is reasonably similar thereto or a reasonable extension, development or expansion thereof or ancillary thereto.
“Sponsors” means (1) one or more investment funds controlled by Apollo Management, L.P. and its Affiliates (collectively, the “Apollo Sponsors”) and (2) any Person that forms a group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision) with any Apollo Sponsors, provided that any Apollo Sponsor (x) owns a majority of the voting power and (y) controls a majority of the Board of Directors of the Company.
“Standard Securitization Undertakings” means representations, warranties, covenants, indemnities and guarantees of performance entered into by the Company or any Subsidiary of the Company which the Company has determined in good faith to be customary in a Receivables Financing including without limitation, those relating to the servicing of the assets of a Receivables Subsidiary, it being understood that any Receivables Repurchase Obligation shall be deemed to be a Standard Securitization Undertaking.
“Stated Maturity” means, with respect to any security, the date specified in such security as the fixed date on which the final payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision (but excluding any provision providing for the repurchase of such security at the option of the holder thereof upon the happening of any contingency beyond the control of the issuer unless such contingency has occurred).
“Subordinated Indebtedness” means (a) with respect to either of the Issuers, any Indebtedness of the Issuer which is by its terms subordinated in right of payment to the Securities, and (b) with respect to any Guarantor, any Indebtedness of such Guarantor which is by its terms subordinated in right of payment to its Guarantee.
“Subsidiary” means, with respect to any Person, (1) any corporation, association or other business entity (other than a partnership, joint venture or limited liability company) 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
30
trustees thereof is at the time of determination owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof, and (2) any partnership, joint venture or limited liability company of which (x) more than 50% of the capital accounts, distribution rights, total equity and voting interests or general and limited partnership interests, as applicable, are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof, whether in the form of membership, general, special or limited partnership interests or otherwise, and (y) such Person or any Subsidiary of such Person is a controlling general partner or otherwise controls such entity.
“Tax Distributions” means any distributions described in Section 4.04(b)(xii).
“TIA” means the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date of this Indenture.
“Total Assets” means the total consolidated assets of the Company and its Restricted Subsidiaries, as shown on the most recent balance sheet of the Company.
“Transactions” means the Acquisition and the transactions related thereto, the issuance of the Securities and Senior Notes, and borrowings made pursuant to the Credit Agreement on the Issue Date.
“Treasury Rate” means, as of the applicable redemption date, the yield to maturity as of such redemption date of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available at least two business days prior to such redemption date (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from such redemption date to August 1, 2011; provided , however , that if the period from such redemption date to August 1, 2011 is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used.
“Trust Officer” means:
(1) any officer within the corporate trust department of the Trustee, including any vice president, assistant vice president, assistant secretary, assistant treasurer, trust officer or any other officer of the Trustee who customarily performs functions similar to those performed by the Persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of such Person’s knowledge of and familiarity with the particular subject, and
(2) who shall have direct responsibility for the administration of this Indenture.
“Trustee” means the party named as such in this Indenture until a successor replaces it and, thereafter, means the successor.
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“Uniform Commercial Code” means the New York Uniform Commercial Code as in effect from time to time.
“Unrestricted Subsidiary” means:
(1) any Subsidiary of the Company that at the time of determination shall be designated an Unrestricted Subsidiary by the Board of Directors of such Person in the manner provided below; and
(2) any Subsidiary of an Unrestricted Subsidiary.
The Board of Directors of the Company may designate any Subsidiary of the Company (including any newly acquired or newly formed Subsidiary of the Company) to be an Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Equity Interests or Indebtedness of, or owns or holds any Lien on any property of, the Company or any other Subsidiary of the Company that is not a Subsidiary of the Subsidiary to be so designated; provided , however , that the Subsidiary to be so designated and its Subsidiaries do not at the time of designation have and do not thereafter Incur any Indebtedness pursuant to which the lender has recourse to any of the assets of the Company or any of its Restricted Subsidiaries; provided , further , however , that either:
(a) the Subsidiary to be so designated has total consolidated assets of $1,000 or less; or
(b) if such Subsidiary has consolidated assets greater than $1,000, then such designation would be permitted under Section 4.04.
The Board of Directors of the Company may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided , however , that immediately after giving effect to such designation:
(x) (1) the Company could Incur $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.03(a) or (2) the Fixed Charge Coverage Ratio for the Company and its Restricted Subsidiaries would be greater than such ratio for the Company and its Restricted Subsidiaries immediately prior to such designation, in each case on a pro forma basis taking into account such designation, and
(y) no Event of Default shall have occurred and be continuing.
Any such designation by the Board of Directors of the Company shall be evidenced to the Trustee by promptly filing with the Trustee a copy of the resolution of the Board of Directors of the Company giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the foregoing provisions.
“U.S. Government Obligations” means securities that are:
(1) direct obligations of the United States of America for the timely payment of which its full faith and credit is pledged, or
32
(2) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America, the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America,
which, in each case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act) as custodian with respect to any such U.S. Government Obligations or a specific payment of principal of or interest on any such U.S. Government Obligations held by such custodian for the account of the holder of such depository receipt; provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Obligations or the specific payment of principal of or interest on the U.S. Government Obligations evidenced by such depository receipt.
“Voting Stock” of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person.
“Weighted Average Life to Maturity” means, when applied to any Indebtedness or Disqualified Stock, as the case may be, at any date, the quotient obtained by dividing (1) the sum of the products of the number of years from the date of determination to the date of each successive scheduled principal payment of such Indebtedness or redemption or similar payment with respect to such Disqualified Stock multiplied by the amount of such payment, by (2) the sum of all such payments.
“Wholly Owned Restricted Subsidiary” is any Wholly Owned Subsidiary that is a Restricted Subsidiary.
“Wholly Owned Subsidiary” of any Person means a Subsidiary of such Person 100% of the outstanding Capital Stock or other ownership interests of which (other than directors’ qualifying shares or shares required to be held by Foreign Subsidiaries) shall at the time be owned by such Person or by one or more Wholly Owned Subsidiaries of such Person.
SECTION 1.02. Other Definitions .
|
Term |
|
Defined
|
|
|
|
|
|
“Additional Interest” |
|
Appendix A |
|
“Affiliate Transaction” |
|
4.07 |
|
“Appendix” |
|
Preamble |
|
“Asset Sale Offer” |
|
4.06(b) |
|
“Bankruptcy Law” |
|
6.01 |
|
“Blockage Notice” |
|
10.03 |
|
“covenant defeasance option” |
|
8.01(c) |
|
“Custodian” |
|
6.01 |
|
“Definitive Security” |
|
Appendix A |
33
|
“Depository” |
|
Appendix A |
|
“Euroclear” |
|
Appendix A |
|
“Event of Default” |
|
6.01 |
|
“Excess Proceeds” |
|
4.06(b) |
|
“Exchange Securities” |
|
Preamble |
|
“Global Securities Legend” |
|
Appendix A |
|
“Guarantee Blockage Notice” |
|
12.03 |
|
“Guarantee Payment Blockage Period” |
|
12.03 |
|
“Guaranteed Obligations” |
|
11.01(a) |
|
“IAI” |
|
Appendix A |
|
“incorporated provision” |
|
13.01 |
|
“Initial Purchasers” |
|
Appendix A |
|
“Initial Securities” |
|
Preamble |
|
“legal defeasance option” |
|
8.01 |
|
“Notice of Default” |
|
6.01 |
|
“Offer Period” |
|
4.06(d) |
|
“Original Securities” |
|
Preamble |
|
“pay its Guarantee” |
|
12.03 |
|
“pay the Securities” |
|
10.03 |
|
“Paying Agent” |
|
2.04(a) |
|
“Payment Blockage Period” |
|
10.03 |
|
“protected purchaser” |
|
2.08 |
|
“Purchase Agreement” |
|
Appendix A |
|
“QIB” |
|
Appendix A |
|
“Refinancing Indebtedness” |
|
4.03(b) |
|
“Refunding Capital Stock” |
|
4.04(b) |
|
“Registered Exchange Offer” |
|
Appendix A |
|
“Registration Agreement” |
|
Appendix A |
|
“Registrar” |
|
2.04(a) |
|
“Regulation S” |
|
Appendix A |
|
“Regulation S Securities” |
|
Appendix A |
|
“Restricted Payment” |
|
4.04(a) |
|
“Restricted Period” |
|
Appendix A |
|
“Restricted Securities Legend” |
|
Appendix A |
|
“Retired Capital Stock” |
|
4.04(b) |
|
“Rule 501” |
|
Appendix A |
|
“Rule 144A” |
|
Appendix A |
|
“Rule 144A Securities” |
|
Appendix A |
|
“Securities Custodian” |
|
Appendix A |
|
“Shelf Registration Statement” |
|
Appendix A |
|
“Successor Company” |
|
5.01(a) |
|
“Successor Guarantor” |
|
5.01(b) |
|
“Transfer” |
|
5.01(b) |
34
|
“Transfer Restricted Securities” |
|
Appendix A |
|
“Unrestricted Definitive Security |
|
Appendix A |
|
|
|
|
SECTION 1.03. Incorporation by Reference of Trust Indenture Act . This Indenture incorporates by reference certain provisions of the TIA. The following TIA terms have the following meanings:
“Commission” means the SEC.
“indenture securities” means the Securities and the Guarantees.
“indenture security holder” means a Holder.
“indenture to be qualified” means this Indenture.
“indenture trustee” or “institutional trustee” means the Trustee.
“obligor” on the indenture securities means the Company, the Guarantors and any other obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule have the meanings assigned to them by such definitions.
SECTION 1.04. Rules of Construction . Unless the context otherwise requires:
35
SECTION 2.01. Amount of Securities . The aggregate principal amount of Original Securities which may be authenticated and delivered under this Indenture on the Issue Date is $300,000,000. All Securities shall be substantially identical except as to denomination.
The Company may from time to time after the Issue Date issue Additional Securities under this Indenture in an unlimited principal amount, so long as (i) the Incurrence of the Indebtedness represented by such Additional Securities is at such time permitted by Section 4.03 and (ii) such Additional Securities are issued in compliance with the other applicable provisions of this Indenture. With respect to any Additional Securities issued after the Issue Date (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities pursuant to Section 2.07, 2.08, 2.09, 2.10, 3.06, 4.06(g), 4.08(c) or the Appendix), there shall be (a) established in or pursuant to a resolution of the Board of Directors and (b) (i) set forth or determined in the manner provided in an Officers’ Certificate or (ii) established in one or more indentures supplemental hereto, prior to the issuance of such Additional Securities:
36
If any of the terms of any Additional Securities are established by action taken pursuant to a resolution of the Board of Directors, a copy of an appropriate record of such action shall be certified by the Secretary or any Assistant Secretary of the Company and delivered to the Trustee at or prior to the delivery of the Officers’ Certificate or the indenture supplemental hereto setting forth the terms of the Additional Securities.
The Securities, including any Additional Securities, shall be treated as a single class for all purposes under this Indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase.
SECTION 2.02. Form and Dating . Provisions relating to the Initial Securities and the Exchange Securities are set forth in the Appendix, which is hereby incorporated in and expressly made a part of this Indenture. The (i) Initial Securities and the Trustee’s certificate of authentication and (ii) any Additional Securities (if issued as Transfer Restricted Securities) and the Trustee’s certificate of authentication shall each be substantially in the form of Exhibit A hereto, which is hereby incorporated in and expressly made a part of this Indenture. The (i) Exchange Securities and the Trustee’s certificate of authentication and (ii) any Additional Securities issued other than as Transfer Restricted Securities and the Trustee’s certificate of authentication shall each be substantially in the form of Exhibit B hereto, which is hereby incorporated in and expressly made a part of this Indenture. The Securities may have notations, legends or endorsements required by law, stock exchange rule, agreements to which the Company or any Guarantor is subject, if any, or usage ( provided that any such notation, legend or endorsement is in a form acceptable to the Company). Each Security shall be dated the date of its authentication. The Securities shall be issuable only in registered form without interest coupons and in denominations of $2,000 and any integral multiples of $1,000.
SECTION 2.03. Execution and Authentication . The Trustee shall authenticate and make available for delivery upon a written order of the Issuer signed by one Officer (a) Original Securities for original issue on the date hereof in an aggregate principal amount of $300,000,000, (b) subject to the terms of this Indenture, Additional Securities in an aggregate principal amount to be determined at the time of issuance and specified therein and (c) the Exchange Securities for issue in a Registered Exchange Offer pursuant to the Registration Agreement for a like principal amount of Initial Securities exchanged pursuant thereto or otherwise pursuant to an effective registration statement under the Securities Act. Such order shall specify the amount of the Securities to be authenticated, the date on which the original issue of Securities is to be authenticated and whether the Securities are to be Initial Securities or
37
Exchange Securities. Notwithstanding anything to the contrary in the Indenture or the Appendix, any issuance of Additional Securities after the Issue Date shall be in a principal amount of at least $2,000 and integral multiples of $1,000 in excess of $2,000.
One Officer shall sign the Securities for the Issuer by manual or facsimile signature.
If an Officer whose signature is on a Security no longer holds that office at the time the Trustee authenticates the Security, the Security shall be valid nevertheless.
A Security shall not be valid until an authorized signatory of the Trustee manually signs the certificate of authentication on the Security. The signature shall be conclusive evidence that the Security has been authenticated under this Indenture.
The Trustee may appoint one or more authenticating agents reasonably acceptable to the Issuer to authenticate the Securities. Any such appointment shall be evidenced by an instrument signed by a Trust Officer, a copy of which shall be furnished to the Issuer. Unless limited by the terms of such appointment, an authenticating agent may authenticate Securities 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 any Registrar, Paying Agent or agent for service of notices and demands.
SECTION 2.04. Registrar and Paying Agent . (a) The Company shall maintain (i) an office or agency where Securities may be presented for registration of transfer or for exchange (the “Registrar”) and (ii) an office or agency where Securities may be presented for payment (the “Paying Agent”). The Registrar shall keep a register of the Securities and of their transfer and exchange. The Company may have one or more co-registrars and one or more additional paying agents. The term “Registrar” includes any co-registrars. The term “Paying Agent” includes the Paying Agent and any additional paying agents. The Company initially appoints the Trustee as Registrar, Paying Agent and the Securities Custodian with respect to the Global Securities.
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SECTION 2.05. Paying Agent to Hold Money in Trust . Prior to each due date of the principal of and interest on any Security, the Company shall deposit with each Paying Agent (or if the Company or a Wholly Owned Subsidiary is acting as Paying Agent, segregate and hold in trust for the benefit of the Persons entitled thereto) a sum sufficient to pay such principal and interest when so becoming due. The Company shall require each Paying Agent (other than the Trustee) to agree in writing that a Paying Agent shall hold in trust for the benefit of Holders or the Trustee all money held by a Paying Agent for the payment of principal of and interest on the Securities, and shall notify the Trustee of any default by the Company in making any such payment. If the Company or a Wholly Owned Subsidiary of the Company acts as Paying Agent, it shall segregate the money held by it as Paying Agent and hold it in trust for the benefit of the Persons entitled thereto. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee and to account for any funds disbursed by such Paying Agent. Upon complying with this Section, a Paying Agent shall have no further liability for the money delivered to the Trustee.
SECTION 2.06. 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 Holders. If the Trustee is not the Registrar, the Company shall furnish, or cause the Registrar to furnish, to the Trustee, in writing at least five 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 Holders.
SECTION 2.07. Transfer and Exchange . The Securities shall be issued in registered form and shall be transferable only upon the surrender of a Security for registration of transfer and in compliance with the Appendix. When a Security is presented to the Registrar with a request to register a transfer, the Registrar shall register the transfer as requested if its requirements therefor are met. When Securities are presented to the Registrar with a request to exchange them for an equal principal amount of Securities of other denominations, the Registrar shall make the exchange as requested if the same requirements are met. To permit registration of transfers and exchanges, the Company shall execute and the Trustee shall authenticate Securities at the Registrar’s request. The Company may require payment of a sum sufficient to pay all taxes, assessments or other governmental charges in connection with any transfer or exchange pursuant to this Section. The Company shall not be required to make, and the Registrar need not register, transfers or exchanges of Securities selected for redemption (except, in the case of Securities to be redeemed in part, the portion thereof not to be redeemed) or of any Securities for a period of 15 days before a selection of Securities to be redeemed.
Prior to the due presentation for registration of transfer of any Security, the Company, the Guarantors, the Trustee, the Paying Agent and the Registrar may deem and treat the Person in whose name a Security is registered as the absolute owner of such Security for the purpose of receiving payment of principal of and interest, if any, on such Security and for all other purposes whatsoever, whether or not such Security is overdue, and none of the Company,
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any Guarantor, the Trustee, the Paying Agent or the Registrar shall be affected by notice to the contrary.
Any Holder of a beneficial interest in a Global Security shall, by acceptance of such beneficial interest, agree that transfers of beneficial interests in such Global Security may be effected only through a book-entry system maintained by (a) the Holder of such Global Security (or its agent) or (b) any Holder of a beneficial interest in such Global Security, and that ownership of a beneficial interest in such Global Security shall be required to be reflected in a book entry.
All Securities issued upon any transfer or exchange pursuant to the terms of this Indenture shall evidence the same debt and shall be entitled to the same benefits under this Indenture as the Securities surrendered upon such transfer or exchange.
SECTION 2.08. Replacement Securities . If a mutilated Security is surrendered to the Registrar or if the Holder of a Security claims that the Security has been lost, destroyed or wrongfully taken, the Company shall issue and the Trustee shall authenticate a replacement Security if the requirements of Section 8-405 of the Uniform Commercial Code are met, such that the Holder (a) satisfies the Company or the Trustee within a reasonable time after such Holder has notice of such loss, destruction or wrongful taking and the Registrar does not register a transfer prior to receiving such notification, (b) makes such request to the Company or the Trustee prior to the Security being acquired by a protected purchaser as defined in Section 8-303 of the Uniform Commercial Code (a “protected purchaser”) and (c) satisfies any other reasonable requirements of the Trustee. If required by the Trustee or the Company, such Holder shall furnish an indemnity bond sufficient in the judgment of the Trustee or the Company to protect the Company, the Trustee, a Paying Agent and the Registrar from any loss that any of them may suffer if a Security is replaced. The Company and the Trustee may charge the Holder for their expenses in replacing a Security (including without limitation, attorneys’ fees and disbursements in replacing such Security). In the event any such mutilated, lost, destroyed or wrongfully taken Security has become or is about to become due and payable, the Company in its discretion may pay such Security instead of issuing a new Security in replacement thereof.
Every replacement Security is an additional obligation of the Company.
The provisions of this Section 2.08 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, lost, destroyed or wrongfully taken Securities.
SECTION 2.09. Outstanding Secrets . Securities outstanding at any time are all Securities authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation and those described in this Section as not outstanding. Subject to Section 13.06, a Security does not cease to be outstanding because the Company or an Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Section 2.08 (other than a mutilated Security surrendered for replacement), it ceases to be outstanding unless the Trustee and the Company receive proof satisfactory to them that the replaced Security is held by a protected purchaser. A
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mutilated Security ceases to be outstanding upon surrender of such Security and replacement thereof pursuant to Section 2.08.
If a Paying Agent segregates and holds in trust, in accordance with this Indenture, on a redemption date or maturity date money sufficient to pay all principal and interest payable on that date with respect to the Securities (or portions thereof) to be redeemed or maturing, as the case may be, and no Paying Agent is prohibited from paying such money to the Holders on that date pursuant to the terms of this Indenture, then on and after that date such Securities (or portions thereof) cease to be outstanding and interest on them ceases to accrue.
SECTION 2.10. Temporary Securities . In the event that Definitive Securities are to be issued under the terms of this Indenture, until such Definitive Securities are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Securities. Temporary Securities shall be substantially in the form of Definitive Securities but may have variations that the Company considers appropriate for temporary Securities. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate Definitive Securities and make them available for delivery in exchange for temporary Securities upon surrender of such temporary Securities at the office or agency of the Company, without charge to the Holder. Until such exchange, temporary Securities shall be entitled to the same rights, benefits and privileges as Definitive Securities.
SECTION 2.11. Cancellation . The Company at any time may deliver Securities to the Trustee for cancellation. The Registrar and each Paying Agent shall forward to the Trustee any Securities surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel all Securities surrendered for registration of transfer, exchange, payment or cancellation and shall dispose of canceled Securities in accordance with its customary procedures. The Company may not issue new Securities to replace Securities it has redeemed, paid or delivered to the Trustee for cancellation. The Trustee shall not authenticate Securities in place of canceled Securities other than pursuant to the terms of this Indenture.
SECTION 2.12. Defaulted Interest . If the Company defaults in a payment of interest on the Securities, the Company shall pay the defaulted interest then borne by the Securities (plus interest on such defaulted interest to the extent lawful) in any lawful manner. The Company may pay the defaulted interest to the Persons who are Holders on a subsequent special record date. The Company shall fix or cause to be fixed any such special record date and payment date to the reasonable satisfaction of the Trustee and shall promptly mail or cause to be mailed to each affected Holder a notice that states the special record date, the payment date and the amount of defaulted interest to be paid.
SECTION 2.13. CUSIP Numbers, ISINs, etc . The Issuer in issuing the Securities may use CUSIP numbers, ISINs and “Common Code” numbers (if then generally in use) and, if so, the Trustee shall use CUSIP numbers, ISINs and “Common Code” numbers in notices of redemption as a convenience to Holders; provided , however , that any such notice may state that no representation is made as to the correctness of such numbers, either as printed on the Securities or as contained in any notice of a redemption that reliance may be placed only on the other identification numbers printed on the Securities and that any such redemption shall not be
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affected by any defect in or omission of such numbers. The Issuer shall advise the Trustee of any change in the CUSIP numbers, ISINs and “Common Code” numbers.
SECTION 2.14. Calculation of Principal Amount of Securities . The aggregate principal amount of the Securities, at any date of determination, shall be the principal amount of the Securities at such date of determination. With respect to any matter requiring consent, waiver, approval or other action of the Holders of a specified percentage of the principal amount of all the Securities, such percentage shall be calculated, on the relevant date of determination, by dividing (a) the principal amount, as of such date of determination, of Securities, the Holders of which have so consented, by (b) the aggregate principal amount, as of such date of determination, of the Securities then outstanding, in each case, as determined in accordance with the preceding sentence, Section 2.09 and Section 13.06 of this Indenture. Any such calculation made pursuant to this Section 2.14 shall be made by the Company and delivered to the Trustee pursuant to an Officers’ Certificate.
SECTION 3.01. Redemption . The Securities may be redeemed, in whole, or from time to time in part, subject to the conditions and at the redemption prices set forth in Paragraph 5 of the form of Securities set forth in Exhibit A and Exhibit B hereto, which are hereby incorporated by reference and made a part of this Indenture, together with accrued and unpaid interest to the redemption date.
SECTION 3.02. Applicability of Article . Redemption of Securities at the election of the Company or otherwise, as permitted or required by any provision of this Indenture, shall be made in accordance with such provision and this Article.
SECTION 3.03. Notices to Trustee . If the Company elects to redeem Securities pursuant to the optional redemption provisions of Paragraph 5 of the Security, it shall notify the Trustee in writing of (i) the Section of this Indenture pursuant to which the redemption shall occur, (ii) the redemption date, (iii) the principal amount of Securities to be redeemed and (iv) the redemption price. The Company shall give notice to the Trustee provided for in this paragraph at least 30 days but not more than 60 days before a redemption date if the redemption is pursuant to Paragraph 5 of the Security, unless a shorter period is acceptable to the Trustee. Such notice shall be accompanied by an Officers’ Certificate and Opinion of Counsel from the Company to the effect that such redemption will comply with the conditions herein. If fewer than all the Securities are to be redeemed, the record date relating to such redemption shall be selected by the Company and given to the Trustee, which record date shall be not fewer than 15 days after the date of notice to the Trustee. Any such notice may be canceled at any time prior to notice of such redemption being mailed to any Holder and shall thereby be void and of no effect.
SECTION 3.04. Selection of Securities to Be Redeemed . In the case of any partial redemption, selection of the Securities for redemption will be made by the Trustee on a pro rata basis to the extent practicable; provided that no Securities of $2,000 or less shall be redeemed in part. The Trustee shall make the selection from outstanding Securities not
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previously called for redemption. The Trustee may select for redemption portions of the principal of Securities that have denominations larger than $2,000. Securities and portions of them the Trustee selects shall be in amounts of $2,000 or any integral multiple of $1,000. Provisions of this Indenture that apply to Securities called for redemption also apply to portions of Securities called for redemption. The Trustee shall notify the Company promptly of the Securities or portions of Securities to be redeemed.
SECTION 3.05. Notice of Optional Redemption . (a) At least 30 days but not more than 60 days before a redemption date pursuant to Paragraph 5 of the Security, the Company shall mail or cause to be mailed by first-class mail a notice of redemption to each Holder whose Securities are to be redeemed.
Any such notice shall identify the Securities to be redeemed and shall state:
SECTION 3.06. Effect of Notice of Redemption . Once notice of redemption is mailed in accordance with Section 3.05, Securities called for redemption become due and
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payable on the redemption date and at the redemption price stated in the notice, except as provided in the final sentence of paragraph 5 of the Securities. Upon surrender to the Paying Agent, such Securities shall be paid at the redemption price stated in the notice, plus accrued interest, to, but not including, the redemption date; provided , however , that if the redemption date is after a regular record date and on or prior to the interest payment date, the accrued interest shall be payable to the Holder of the redeemed Securities registered on the relevant record date. Failure to give notice or any defect in the notice to any Holder shall not affect the validity of the notice to any other Holder.
SECTION 3.07. Deposit of Redemption Price . With respect to any Securities, prior to 10:00 a.m., New York City time, on the redemption date, the Company shall deposit with the Paying Agent (or, if the Company or a Wholly Owned Subsidiary is the Paying Agent, shall segregate and hold in trust) money sufficient to pay the redemption price of and accrued interest on all Securities or portions thereof to be redeemed on that date other than Securities or portions of Securities called for redemption that have been delivered by the Company to the Trustee for cancellation. On and after the redemption date, interest shall cease to accrue on Securities or portions thereof called for redemption so long as the Company has deposited with the Paying Agent funds sufficient to pay the principal of, plus accrued and unpaid interest on, the Securities to be redeemed, unless the Paying Agent is prohibited from making such payment pursuant to the terms of this Indenture.
SECTION 3.08. Securities Redeemed in Part . Upon surrender of a Security that is redeemed in part, the Company shall execute and the Trustee shall authenticate for the Holder (at the Company’s expense) a new Security equal in principal amount to the unredeemed portion of the Security surrendered.
SECTION 4.01. Payment of Securities . The Company shall promptly pay the principal of and interest on the Securities on the dates and in the manner provided in the Securities and in this Indenture. An installment of principal of or interest shall be considered paid on the date due if on such date the Trustee or the Paying Agent holds as of 12:00 p.m. Eastern time money sufficient to pay all principal and interest then due and the Trustee or the Paying Agent, as the case may be, is not prohibited from paying such money to the Holders on that date pursuant to the terms of this Indenture.
The Company shall pay interest on overdue principal at the rate specified therefor in the Securities, and it shall pay interest on overdue installments of interest at the same rate borne by the Securities to the extent lawful.
SECTION 4.02. Reports and Other Information . (a) Notwithstanding that the Company may not be subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act or otherwise report on an annual and quarterly basis on forms provided for such annual and quarterly reporting pursuant to rules and regulations promulgated by the SEC, the
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Company shall file with the SEC (and provide the Trustee and Holders with copies thereof, without cost to each Holder, within 15 days after it files them with the SEC),
provided , however , that the Company shall not be so obligated to file such reports with the SEC if the SEC does not permit such filing, in which event the Company shall make available such information to prospective purchasers of Securities, including by posting such reports on the primary website of the Company or its Subsidiaries in addition to providing such information to the Trustee and the Holders, in each case within 15 days after the time the Company would be required to file such information with the SEC if it were subject to Section 13 or 15(d) of the Exchange Act.
such consolidated reporting at such parent entity’s level in a manner consistent with that described in this Section 4.02 for the Company shall satisfy this Section 4.02.
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Notwithstanding the foregoing, the Company will be deemed to have furnished such reports referred to above to the Trustee and the Holders if the Company has filed such reports with the SEC via the EDGAR filing system and such reports are publicly available. In addition, such requirements shall be deemed satisfied prior to the commencement of the exchange offer contemplated by the Registration Agreement relating to the Securities or the effectiveness of the shelf registration statement by the filing with the SEC of the Exchange Offer Registration Statement and/or shelf registration statement in accordance with the provisions of such registration rights agreement, and any amendments thereto and such registration statement and/or amendments thereto are filed at times that otherwise satisfy the time requirements set forth in Section 4.02(a).
In the event that any direct or indirect parent of the Company is or becomes a Guarantor of the Securities, the Company may satisfy its obligations under this Section 4.02 with respect to financial information relating to the Company by furnishing financial information relating to such direct or indirect parent; provided that the same is accompanied by consolidating information that explains in reasonable detail the differences between the information relating to such direct or indirect parent and any of its Subsidiaries other than the Company and its Subsidiaries, on the one hand, and the information relating to the Company, the Guarantors and the other Subsidiaries of the Company on a standalone basis, on the other hand.
SECTION 4.03. Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock . (a) (i) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, Incur any Indebtedness (including Acquired Indebtedness) or issue any shares of Disqualified Stock; and (ii) the Company shall not permit any of its Restricted Subsidiaries (other than a Guarantor) to issue any shares of Preferred Stock; provided , however , that the Company and any Restricted Subsidiary that is a Guarantor or a Foreign Subsidiary may Incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock and any Restricted Subsidiary may issue shares of Preferred Stock, in each case if the Fixed Charge Coverage Ratio of the Company for the 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 or Preferred Stock is issued would have been at least 2.00 to 1.00 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 or Preferred Stock had been issued, as the case may be, and the application of proceeds therefrom had occurred at the beginning of such four-quarter period.
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(1) has a Weighted Average Life to Maturity at the time such Refinancing Indebtedness is Incurred which is not less than the shorter of (x) the remaining Weighted Average Life to Maturity of the Indebtedness, Disqualified Stock or Preferred Stock being refunded or refinanced and (y) the Weighted Average Life to Maturity that would result if all payments of principal on the Indebtedness, Disqualified Stock and Preferred Stock being refunded or refinanced that were due on or after the date one year following the last maturity date of any Securities then outstanding were instead due on such date one year following the last date of maturity of the Securities;
(2) has a Stated Maturity which is not earlier than the earlier of (x) the Stated Maturity of the Indebtedness being refunded or refinanced or (y) 91 days following the last maturity date of the Securities;
(3) to the extent such Refinancing Indebtedness refinances (a) Indebtedness equal to or junior to the Securities or the Guarantee of such Restricted Subsidiary, as applicable, such Refinancing Indebtedness is equal to or junior, as applicable, to the Securities or the Guarantee of such Restricted Subsidiary, as applicable, or (b) Disqualified Stock or Preferred Stock, such Refinancing Indebtedness is Disqualified Stock or Preferred Stock;
(4) is Incurred in an aggregate amount (or if issued with original issue discount, an aggregate issue price) that is equal to or less than the aggregate amount (or if issued with original issue discount, the aggregate accreted value) then outstanding of the Indebtedness being refinanced plus premium, fees and expenses Incurred in connection with such refinancing;
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(5) shall not include (x) Indebtedness of a Restricted Subsidiary of the Company that is not a Guarantor that refinances Indebtedness of the Company or a Restricted Subsidiary that is a Guarantor, or (y) Indebtedness of the Company or a Restricted Subsidiary that refinances Indebtedness of an Unrestricted Subsidiary; and
(6) in the case of any Refinancing Indebtedness Incurred to refinance Indebtedness outstanding under clause (iv) or (xix) of this Section 4.03(b), shall be deemed to have been Incurred and to be outstanding under such clause (iv) or (xx) of this Section 4.03(b), as applicable, and not this clause (xiv) for purposes of determining amounts outstanding under such clauses (iv) or (xix) of this Section 4.03(b);
provided , further , that subclauses (1) and (2) of this clause (xiv) shall not apply to any refunding or refinancing of the Securities or any Senior Indebtedness.
(1) the Company would be permitted to Incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first sentence of Section 4.03(a); or
(2) the Fixed Charge Coverage Ratio would be greater than immediately prior to such acquisition;
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SECTION 4.04. Limitation on Restricted Payments . (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly:
(all such payments and other actions set forth in clauses (i) through (iv) above being collectively referred to as “ Restricted Payments ”), unless, at the time of such Restricted Payment:
(1) no Default shall have occurred and be continuing or would occur as a consequence thereof;
(2) immediately after giving effect to such transaction on a pro forma basis, the Company could Incur $1.00 of additional Indebtedness under Section 4.03(a); and
(3) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Company and its Restricted Subsidiaries after the Issue Date (including Restricted Payments permitted by clauses (i), (iv) (only to the extent of one-half of the amounts paid pursuant to such clause), (vi) and (viii)of Section 4.04(b), but excluding all other Restricted Payments permitted by Section 4.04(b)), is less than the amount equal to the Cumulative Credit.
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(A) the principal amount of such new Indebtedness does not exceed the principal amount of the Subordinated Indebtedness being so redeemed, repurchased, acquired or retired for value (plus the amount of any premium required to be paid under the terms of the instrument governing the Subordinated Indebtedness being so redeemed, repurchased, acquired or retired plus any fees incurred in connection therewith),
(B) such Indebtedness is subordinated to the Securities or the related Guarantee, as the case may be, at least to the same extent as such Subordinated Indebtedness so purchased, exchanged, redeemed, repurchased, acquired or retired for value,
(C) such Indebtedness has a final scheduled maturity date equal to or later than the earlier of (x) the final scheduled maturity date of the Subordinated Indebtedness being so redeemed, repurchased, acquired or retired or (y) 91 days following the maturity date of the Securities, and
(D) such Indebtedness has a Weighted Average Life to Maturity at the time Incurred which is not less than the shorter of (x) the remaining Weighted Average Life to Maturity of the Subordinated Indebtedness being so redeemed, repurchased, acquired or retired and (y) the Weighted Average Life to Maturity
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that would result if all payments of principal on the Subordinated Indebtedness being redeemed, repurchased, acquired or retired that were due on or after the date one year following the last maturity date of any Securities then outstanding were instead due on such date one year following the last date of maturity of the Securities;
(A) the cash proceeds received by the Company or any of its Restricted Subsidiaries from the sale of Equity Interests (other than Disqualified Stock) of the Company or any direct or indirect parent of the Company (to the extent contributed to the Company) to members of management, directors or consultants of the Company and its Restricted Subsidiaries or any direct or indirect parent of the Company that occurs after the Issue Date ( provided that the amount of such cash proceeds utilized for any such repurchase, retirement, other acquisition or dividend shall not increase the amount available for Restricted Payments under Section 4.04(a)(3)); plus
(B) the cash proceeds of key man life insurance policies received by the Company or any direct or indirect parent of the Company (to the extent contributed to the Company) or the Company’s Restricted Subsidiaries after the Issue Date;
provided that the Company may elect to apply all or any portion of the aggregate increase contemplated by clauses (A) and (B) above in any calendar year;
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(A) in amounts required for any direct or indirect parent of the Company, if applicable, to pay fees and expenses (including franchise or similar taxes) required to maintain its corporate existence, customary salary, bonus and other benefits payable to, and indemnities provided on behalf of, officers and
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employees of any direct or indirect parent of the Company, if applicable, and general corporate overhead expenses of any direct or indirect parent of the Company, if applicable, in each case to the extent such fees and expenses are attributable to the ownership or operation of the Company, if applicable, and its Subsidiaries; and
(B) in amounts required for any direct or indirect parent of the Company, if applicable, to pay interest and/or principal on Indebtedness the proceeds of which have been contributed to the Company or any of its Restricted Subsidiaries and that has been guaranteed by, or is otherwise considered Indebtedness of, the Company Incurred in accordance with Section 4.03;
(xiv) cash dividends or other distributions on the Company’s Capital Stock used to, or the making of loans to any direct or indirect parent of the Company to, fund the Transactions and the payment of fees and expenses incurred in connection with the Transactions or owed by the Company or any direct or indirect parent of the Company, as the case may be, or Restricted Subsidiaries of the Company to Affiliates, in each case to the extent permitted by Section 4.07;
(xv) repurchases of Equity Interests deemed to occur upon exercise of stock options or warrants if such Equity Interests represent a portion of the exercise price of such options or warrants;
(xvi) purchases of receivables pursuant to a Receivables Repurchase Obligation in connection with a Qualified Receivables Financing and the payment or distribution of Receivables Fees;
(xvii) payments of cash, or dividends, distributions or advances by the Company or any Restricted Subsidiary to allow the payment of cash in lieu of the issuance of fractional shares upon the exercise of options or warrants or upon the conversion or exchange of Capital Stock of any such Person;
(xviii) the repurchase, redemption or other acquisition or retirement for value of any Subordinated Indebtedness pursuant to the provisions similar to those described under Sections 4.06 and 4.08; provided that all Securities tendered by Holders in connection with a Change of Control Offer or Asset Sale Offer, as applicable, have been repurchased, redeemed or acquired for value; and
(xix) any payments made, including any such payments made to any direct or indirect parent of the Company to enable it to make payments, in connection with the consummation of the Transactions or as contemplated by the Acquisition Documents (other than payments to any Permitted Holder or any Affiliate thereof);
provided , however , that at the time of, and after giving effect to, any Restricted Payment permitted under clauses (vi), (vii), (x) and (xi) of this Section 4.04(b), no Default shall have occurred and be continuing or would occur as a consequence thereof.
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SECTION 4.05. Dividend and Other Payment Restrictions Affecting 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 consensual encumbrance or consensual restriction on the ability of any Restricted Subsidiary to:
except in each case for such encumbrances or restrictions existing under or by reason of:
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For purposes of determining compliance with this Section 4.05, (i) the priority of any Preferred Stock in receiving dividends or liquidating distributions prior to dividends or liquidating distributions being paid on common stock shall not be deemed a restriction on the
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ability to make distributions on Capital Stock and (ii) the subordination of loans or advances made to the Company or a Restricted Subsidiary of the Company to other Indebtedness Incurred by the Company or any such Restricted Subsidiary shall not be deemed a restriction on the ability to make loans or advances.
SECTION 4.06. Asset Sales . (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, cause or make an Asset Sale, unless (x) the Company or any of its Restricted Subsidiaries, as the case may be, receives consideration at the time of such Asset Sale at least equal to the Fair Market Value (as determined in good faith by the Issuers) 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, as the case may be, is in the form of Cash Equivalents; provided that the amount of:
shall be deemed to be Cash Equivalents for the purposes of this Section 4.06(a).
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In the case of Sections 4.06(b)(ii) and (iii), a binding commitment shall be treated as a permitted application of the Net Proceeds from the date of such commitment; provided that (x) such investment is consummated within 545 days after receipt by the Company or any Restricted Subsidiary of the Net Proceeds of any Asset Sale and (y) if such investment is not consummated within the period set forth in subclause (x), the Net Proceeds not so applied will be deemed to be Excess Proceeds (as defined below).
Pending the final application of any such Net Proceeds, the Company or such Restricted Subsidiary of the Company may temporarily reduce Indebtedness under a revolving credit facility, if any, or otherwise invest such Net Proceeds in Cash Equivalents or Investment Grade Securities. Any Net Proceeds from any Asset Sale that are not applied as provided and within the time period set forth in the first sentence of this Section 4.06(b) (it being understood that any portion of such Net Proceeds used to make an offer to purchase Securities, as described in clause (i) of this Section 4.06(b), shall be deemed to have been invested whether or not such offer is accepted) shall be deemed to constitute “Excess Proceeds.” When the aggregate amount of Excess Proceeds exceeds $15 million, the Issuers shall make an offer to all Holders of Securities (and, at the option of the Issuers, to holders of any Pari Passu Indebtedness) (an “Asset Sale Offer”) to purchase the maximum principal amount of Securities (and such Pari Passu Indebtedness), that is at least $2,000 and an integral multiple of $1,000 that may be purchased out of the Excess Proceeds at an offer price in cash in an amount equal to 100% of the principal amount thereof (or, in the event such Pari Passu Indebtedness was issued with significant original issue discount, 100% of the accreted value thereof), plus accrued and unpaid interest and Additional Interest, if any (or, in respect of such Pari Passu Indebtedness, such lesser price, if any, as may be provided for by the terms of such Pari Passu Indebtedness), to the date fixed for the closing of such offer, in accordance with the procedures set forth in this Section 4.06. The Issuers shall commence an Asset Sale Offer with respect to Excess Proceeds within ten Business Days after the date that Excess Proceeds exceeds $15 million by mailing the notice required pursuant to the terms of Section 4.06(f), with a copy to the Trustee. To the extent that the aggregate amount of Securities (and such Pari Passu Indebtedness) tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Issuers may use any remaining Excess Proceeds
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for general corporate purposes. If the aggregate principal amount of Securities (and such Pari Passu Indebtedness) surrendered by holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Securities to be purchased in the manner described in Section 4.06(e). Upon completion of any such Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.
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SECTION 4.07. Transactions with Affiliates . (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction or series of transactions, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate of the Company (each of the foregoing, an “Affiliate Transaction”) involving aggregate consideration in excess of $7.5 million, unless:
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SECTION 4.08. Change of Control . (a) Upon a Change of Control, each Holder shall have the right to require the Issuers to repurchase all or any part of such Holder’s Securities at a purchase price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of repurchase (subject to the right of the Holders of record on the relevant record date to receive interest due on the relevant interest payment date), in accordance with the terms contemplated in this Section 4.08; provided , however , that notwithstanding the occurrence of a Change of Control, the Issuers shall not be obligated to purchase any Securities pursuant to this Section 4.08 in the event that they have exercised their right to redeem such Securities in accordance with Article 3 of this Indenture. In the event that at the time of such Change of Control the terms of the Bank Indebtedness or other Senior Indebtedness restrict or prohibit the repurchase of Securities pursuant to this Section 4.08, then prior to the mailing of the notice to the Holders provided for in Section 4.08(b) but in any event within 30 days following any Change of Control, the Issuers shall (i) repay in full all Bank Indebtedness and other Senior Indebtedness or, if doing so will allow the purchase of Securities, offer to repay in full all Bank Indebtedness and/or such other Senior Indebtedness, as the case may be, and repay the Bank Indebtedness and/or such Senior Indebtedness of each lender who has accepted such offer, or (ii) obtain the requisite consent under the agreements governing the Bank Indebtedness and such Senior Indebtedness to permit the repurchase of the Securities as provided for in Section 4.08(b).
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SECTION 4.09. Compliance Certificate . The Company shall deliver to the Trustee within 120 days after the end of each fiscal year of the Company, beginning with the fiscal year end on March 31, 2007, an Officers’ Certificate stating that in the course of the performance by the signers of their duties as Officers of the Company they would normally have knowledge of any Default and whether or not the signers know of any Default that occurred during such period. If they do, the certificate shall describe the Default, its status and what action the Company is taking or proposes to take with respect thereto. The Company also shall comply with Section 314(a)(4) of the TIA.
SECTION 4.10. Further Instruments and Acts . Upon request of the Trustee, the Company shall execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture.
SECTION 4.11. Future Guarantors . The Company shall cause each Restricted Subsidiary that is a Domestic Subsidiary (unless such Subsidiary is a Receivables Subsidiary) that
to execute and deliver to the Trustee a supplemental indenture substantially in the form of Exhibit D pursuant to which such Subsidiary shall guarantee the Issuers’ Obligations under the Securities and the Indenture.
SECTION 4.12. Liens . The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, Incur or suffer to exist any Lien on any asset or property of the Company or such Restricted Subsidiary securing Indebtedness unless the Securities are equally and ratably secured with (or on a senior basis to, in the case of obligations subordinated in right of payment to the Securities) the obligations so secured until such time as such obligations are no longer secured by a Lien. The preceding sentence shall not require the Company or any Restricted Subsidiary of the Company to secure the Securities if the Lien consists of a Permitted Lien. Any Lien which is granted to secure the Securities or such Guarantee under this Section 4.12 shall be automatically released and discharged at the same time as the release of the Lien that gave rise to the obligation to secure the Securities or such Guarantee under this Section 4.12.
SECTION 4.13. Limitation on Other Senior Subordinated Indebtedness . The Company shall not, and shall not permit any Guarantor to, directly or indirectly, Incur any Indebtedness (including Acquired Indebtedness) that is subordinate in right of payment to any Indebtedness of the Company or any Indebtedness of any such Guarantor, as the case may be, unless such Indebtedness is either:
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SECTION 4.14. Maintenance of Office or Agency . (a) The Company shall maintain an office or agency (which may be an office of the Trustee or an affiliate of the Trustee or Registrar) where Securities may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Company in respect of the Securities 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 as set forth in Section 13.02.
SECTION 5.01. When Company May Merge or Transfer Assets . (a) The Company shall not, directly or indirectly, consolidate, amalgamate or merge with or into or wind up or convert 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 any Person unless:
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(A) the Successor Company would be permitted to Incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.03(a); or
(B) the Fixed Charge Coverage Ratio for the Successor Company and its Restricted Subsidiaries would be greater than such ratio for the Company and its Restricted Subsidiaries immediately prior to such transaction;
The Successor Company (if other than the Company) shall succeed to, and be substituted for, the Company under this Indenture and the Securities, and in such event the Company will automatically be released and discharged from its obligations under this Indenture and the Securities. Notwithstanding the foregoing clauses (iii) and (iv) of this Section 5.01, (a) any Restricted Subsidiary may merge, consolidate or amalgamate with or transfer all or part of its properties and assets to the Company or to another Restricted Subsidiary, and (b) the Company may merge, consolidate or amalgamate with an Affiliate incorporated solely for the purpose of reincorporating the Company in another state of the United States, the District of Columbia or any territory of the United States or may convert into a limited liability company, so
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long as the amount of Indebtedness of the Company and its Restricted Subsidiaries is not increased thereby. This Article 5 will not apply to (i) a sale, assignment, transfer, conveyance or other disposition of assets between or among the Company and its Restricted Subsidiaries, or (ii) the conversion of Rexnord into a Delaware limited liability company.
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Except as otherwise provided in this Indenture, the Successor Co-Issuer or Successor Guarantor (if other than Rexnord or such Guarantor, as the case may be) will succeed to, and be substituted for, Rexnord or such Guarantor, as the case may be, under this Indenture and, if applicable, such Guarantor’s Guarantee, and Rexnord or such Guarantor, as the case may be, will automatically be released and discharged from its obligations under this Indenture and, if applicable, such Guarantor’s Guarantee. Notwithstanding the foregoing, (1) Rexnord or a Guarantor may merge, amalgamate or consolidate with an Affiliate incorporated solely for the purpose of reincorporating Rexnord or such Guarantor in another state of the United States, the District of Columbia or any territory of the United States so long as the amount of Indebtedness of Rexnord or the Guarantor is not increased thereby and (2) Rexnord or a Guarantor may merge, amalgamate or consolidate with another Guarantor or the Company.
In addition, notwithstanding the foregoing, Rexnord or any Guarantor may consolidate, amalgamate or merge with or into or wind up into, or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets (collectively, a “Transfer”) to, (x) the Company, Rexnord or any Guarantor or (y) any Restricted Subsidiary of the Company that is not Rexnord or a Guarantor; provided that at the time of each such Transfer pursuant to clause (y) the aggregate amount of all such Transfers since the Issue Date shall not exceed 5.0% of the consolidated assets of the Company, Rexnord and the Guarantors as shown on the most recent available balance sheet of the Company and the Restricted Subsidiaries after giving effect to each such Transfer and including all Transfers occurring from and after the Issue Date (excluding Transfers in connection with the Transactions described in the Offering Circular).
Upon consummation of the Transactions, the Company shall execute and deliver to the Trustee a supplemental indenture of the type referred to in Section 5.01(ii), whereupon the Company shall be the Successor Company and shall succeed to, and be substituted for, and may exercise every right and power of, Merger Sub under this Indenture. Notwithstanding anything above to the contrary, the merger of Merger Sub with and into the Company on the Issue Date as described in the Merger Agreement and the conversion of Rexnord into a Delaware limited liability company immediately following the Transactions, in each case shall be permitted under this Indenture.
SECTION 6.01. Events of Default . An “Event of Default” occurs if:
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or any similar relief is granted under any foreign laws and the order or decree remains unstayed and in effect for 60 days,
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The foregoing shall constitute Events of Default whatever the reason for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body.
The term “Bankruptcy Law” means Title 11, United States Code, or any similar Federal or state law for the relief of debtors. The term “Custodian” means any receiver, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law.
A Default under clause (d) above shall not constitute an Event of Default until the Trustee notifies the Issuers or the Holders of at least 25% in principal amount of the outstanding Securities notify the Issuers and the Trustee of the Default and the Issuers do not cure such Default within the time specified in clause (d) above after receipt of such notice. Such notice must specify the Default, demand that it be remedied and state that such notice is a “Notice of Default.” The Issuers shall deliver to the Trustee, within five (5) Business Days after the occurrence thereof, written notice in the form of an Officers’ Certificate of any event which is, or with the giving of notice or the lapse of time or both would become, an Event of Default, its status and what action the Issuers are taking or propose to take with respect thereto.
SECTION 6.02. Acceleration . If an Event of Default (other than an Event of Default specified in Section 6.01(f) or (g) with respect to either of the Issuers) occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of outstanding Securities, by notice to the Issuers shall declare that the principal of, premium, if any, and accrued but unpaid interest on all the Securities is due and payable; provided , however , that so long as any Bank Indebtedness remains outstanding, no such acceleration shall be effective until the earlier of (i) five (5) Business Days after the giving of written notice to the Issuers and the Representative under the Credit Agreement and (ii) the day on which any Bank Indebtedness is accelerated. Upon such a declaration, such principal and interest shall be due and payable immediately. If an Event of Default specified in Section 6.01(f) or (g) with respect to either of the Issuers occurs, the principal of, premium, if any, and interest on all the Securities shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holders. The Holders of a majority in principal amount of the Securities by notice to the Trustee may rescind an acceleration and its consequences.
In the event of any Event of Default specified in Section 6.01(e), such Event of Default and all consequences thereof (excluding, however, any resulting payment default) shall be annulled, waived and rescinded, automatically and without any action by the Trustee or the Holders of the Securities, if within 20 days after such Event of Default arose the Issuers deliver an Officers’ Certificate to the Trustee stating that (x) the Indebtedness or guarantee that is the
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basis for such Event of Default has been discharged or (y) the holders thereof have rescinded or waived the acceleration, notice or action (as the case may be) giving rise to such Event of Default or (z) the default that is the basis for such Event of Default has been cured, it being understood that in no event shall an acceleration of the principal amount of the Securities as described above be annulled, waived or rescinded upon the happening of any such events.
SECTION 6.03. Other Remedies . If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy at law or in equity to collect the payment of principal of or interest on the Securities or to enforce the performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of the Securities or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder 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. No remedy is exclusive of any other remedy. To the extent required by law, all available remedies are cumulative.
SECTION 6.04. Waiver of Past Defaults . Provided the Securities are not then due and payable by reason of a declaration of acceleration, the Holders of a majority in principal amount of the Securities by written notice to the Trustee may waive an existing Default and its consequences except (a) a Default in the payment of the principal of or interest on a Security, (b) a Default arising from the failure to redeem or purchase any Security when required pursuant to the terms of this Indenture or (c) a Default in respect of a provision that under Section 9.02 cannot be amended without the consent of each Holder affected. When a Default is waived, it is deemed cured and the Issuers, the Trustee and the Holders will be restored to their former positions and rights under this Indenture, but no such waiver shall extend to any subsequent or other Default or impair any consequent right.
SECTION 6.05. Control by Majority . The Holders of a majority in principal amount of the Securities may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture or, subject to Section 7.01, that the Trustee determines is unduly prejudicial to the rights of any other Holder or that would involve the Trustee in personal liability. Prior to taking any action under this Indenture, the Trustee shall be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action.
SECTION 6.06. Limitation on Suits . (a) Except to enforce the right to receive payment of principal, premium (if any) or interest when due, no Holder may pursue any remedy with respect to this Indenture or the Securities unless:
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SECTION 6.07. Rights of the Holders to Receive Payment . Notwithstanding any other provision of this Indenture, the right of any Holder to receive payment of principal of and interest on the Securities held by such Holder, on or after the respective due dates expressed or provided for in the Securities, 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(a) or (b) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Issuers or any other obligor on the Securities for the whole amount then due and owing (together with interest on overdue principal and (to the extent lawful) on any unpaid interest at the rate provided for in the Securities) and the amounts provided for in Section 7.07.
SECTION 6.09. Trustee May File Proofs of Claim . The Trustee may 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 reasonable compensation, expenses disbursements and advances of the Trustee (including counsel, accountants, experts or such other professionals as the Trustee deems necessary, advisable or appropriate)) and the Holders allowed in any judicial proceedings relative to the Issuers or any Guarantor, their creditors or their property, shall be entitled to participate as a member, voting or otherwise, of any official committee of creditors appointed in such matters and, unless prohibited by law or applicable regulations, may vote on behalf of the Holders in any election of a trustee in bankruptcy or other Person performing similar functions, and any Custodian in any such judicial proceeding is hereby authorized by each Holder to make 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 it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and its counsel, and any other amounts due the Trustee under Section 7.07.
SECTION 6.10. Priorities . If the Trustee collects any money or property pursuant to this Article 6, it shall pay out the money or property in the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
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SECOND: to holders of Senior Indebtedness of the Issuers to the extent required by Article 10 and to holders of Senior Indebtedness of the Guarantors to the extent required by Article 12;
THIRD: to the Holders for amounts due and unpaid on the Securities for principal, premium, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Securities for principal and interest, respectively; and
FOURTH: to the Company or, to the extent the Trustee collects any amount for any Guarantor, to such Guarantor.
The Trustee may fix a record date and payment date for any payment to the Holders pursuant to this Section. At least 15 days before such record date, the Trustee shall mail to each Holder and the Issuers a notice that states the record date, the payment date and amount to be paid.
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 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 and expenses, 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 pursuant to Section 6.07 or a suit by Holders of more than 10% in principal amount of the Securities.
SECTION 6.12. Waiver of Stay or Extension Laws . Neither the Issuers nor any Guarantor (to the extent it may lawfully do so) shall at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Issuers and each Guarantor (to the extent that it may lawfully do so) hereby expressly waive all benefit or advantage of any such law, and shall not 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 had been enacted.
SECTION 7.01. Duties of Trustee . (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.
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SECTION 7.02. Rights of Trustee . (a) The Trustee may conclusively rely on 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.
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SECTION 7.03. Individual Rights of Trustee . The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Issuers or their Affiliates with the same rights it would have if it were not Trustee. Any Paying Agent or Registrar may do the same with like rights. However, the Trustee must comply with Sections 7.10 and 7.11.
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, any Guarantee or the Securities, it shall not be accountable for the Issuers’ use of the proceeds from the Securities, and it shall not be responsible for any statement of the Issuers or any Guarantor in this Indenture or in any document issued in connection with the sale of the Securities or in the Securities other than the Trustee’s certificate of authentication. The Trustee shall not be charged with knowledge of any Default or Event of Default under Sections 6.01(c), (d), (e), (h), or (i) or of the identity of any Significant Subsidiary unless either (a) a Trust Officer shall have actual knowledge thereof or (b) the Trustee shall have received written notice thereof in accordance with Section 13.02 hereof from the Issuers, any Guarantor or any Holder. In accepting the trust hereby created, the Trustee acts solely as Trustee for the Holders of the Securities and not in its individual capacity and all persons, including without limitation the Holders of Securities and the Issuers having any claim against the Trustee arising from this Indenture shall look only to the funds and accounts held by the Trustee hereunder for payment except as otherwise provided herein.
SECTION 7.05. Notice of Defaults . If a Default occurs and is continuing and if it is actually known to the Trustee, the Trustee shall mail to each Holder notice of the Default within the earlier of 90 days after it occurs or 30 days after it is actually known to a Trust Officer or written notice of it is received by the Trustee. Except in the case of a Default in the payment of principal of, premium (if any) or interest on any Security, the Trustee may withhold the notice if and so long as a committee of its Trust Officers in good faith determines that withholding the notice is in the interests of the Holders.
SECTION 7.06. Reports by Trustee to the Holders . As promptly as practicable after each June 30 beginning with the June 30 following the date of this Indenture, and in any event prior to June 30 in each year, the Trustee shall mail to each Holder a brief report dated as of such June 30 that complies with Section 313(a) of the TIA if and to the extent required thereby. The Trustee shall also comply with Section 313(b) of the TIA.
A copy of each report at the time of its mailing to the Holders shall be filed with the SEC and each stock exchange (if any) on which the Securities are listed. The Issuers agree to notify promptly the Trustee whenever the Securities become listed on any stock exchange and of any delisting thereof.
SECTION 7.07. Compensation and Indemnity . The Issuers shall pay to the Trustee from time to time reasonable compensation for its services. The Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust. The Issuers shall reimburse the Trustee upon request for all reasonable out-of-pocket expenses incurred or made by it, including costs of collection, in addition to the compensation for its services. Such expenses shall include the reasonable compensation and expenses, disbursements and advances of the Trustee’s agents, counsel, accountants and experts. The Issuers and each Guarantor,
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jointly and severally shall indemnify the Trustee against any and all loss, liability, claim, damage or expense (including reasonable attorneys’ fees and expenses) incurred by or in connection with the acceptance or administration of this trust and the performance of its duties hereunder, including the costs and expenses of enforcing this Indenture or Guarantee against the Issuers or a Guarantor (including this Section 7.07) and defending itself against or investigating any claim (whether asserted by the Issuers, any Guarantor, any Holder or any other Person). The obligation to pay such amounts shall survive the payment in full or defeasance of the Securities or the removal or resignation of the Trustee. The Trustee shall notify the Issuers of any claim for which it may seek indemnity promptly upon obtaining actual knowledge thereof; provided , however , that any failure so to notify the Issuers shall not relieve the Issuers or any Guarantor of its indemnity obligations hereunder. The Issuers shall defend the claim and the indemnified party shall provide reasonable cooperation at the Issuers’ expense in the defense. Such indemnified parties may have separate counsel and the Issuers and the Guarantors, as applicable shall pay the fees and expenses of such counsel; provided , however , that the Issuers shall not be required to pay such fees and expenses if it assumes such indemnified parties’ defense and, in such indemnified parties’ reasonable judgment, there is no conflict of interest between the Issuers and the Guarantors, as applicable, and such parties in connection with such defense. The Issuers need not reimburse any expense or indemnify against any loss, liability or expense incurred by an indemnified party through such party’s own willful misconduct, negligence or bad faith.
To secure the Issuers’ and the Guarantors’ payment obligations in this Section, the Trustee shall have a Lien prior to the Securities on all money or property held or collected by the Trustee other than money or property held in trust to pay principal of and interest on particular Securities.
The Issuers’ and the Guarantors’ payment obligations pursuant to this Section shall survive the satisfaction or discharge of this Indenture, any rejection or termination of this Indenture under any bankruptcy law or the resignation or removal of the Trustee. Without prejudice to any other rights available to the Trustee under applicable law, when the Trustee incurs expenses after the occurrence of a Default specified in Section 6.01(f) or (g) with respect to the Issuers, the expenses are intended to constitute expenses of administration under the Bankruptcy Law.
No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if repayment of such funds or adequate indemnity against such risk or liability is not assured to its satisfaction.
SECTION 7.08. Replacement of Trustee . (a) The Trustee may resign at any time by so notifying the Issuers. The Holders of a majority in principal amount of the Securities may remove the Trustee by so notifying the Trustee and may appoint a successor Trustee. The Issuers shall remove the Trustee if:
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SECTION 7.09. Successor Trustee by Merger . If the Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation without any further act shall be the successor Trustee.
In case at the time such successor or successors by merger, conversion or consolidation to the Trustee shall succeed to the trusts created by this Indenture any of the Securities shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee, and deliver such Securities so authenticated; and in case at that time any of the Securities shall not have been authenticated, any successor to the Trustee may authenticate such Securities either in the name of any predecessor hereunder or in the name of the successor to the Trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Securities or in this Indenture provided that the certificate of the Trustee shall have.
SECTION 7.10. Eligibility; Disqualification . The Trustee shall at all times satisfy the requirements of Section 310(a) of the TIA. The Trustee shall have a combined capital
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and surplus of at least $100 million as set forth in its most recent published annual report of condition. The Trustee shall comply with Section 310(b) of the TIA, subject to its right to apply for a stay of its duty to resign under the penultimate paragraph of Section 310(b) of the TIA; provided , however , that there shall be excluded from the operation of Section 310(b)(1) of the TIA any series of securities issued under this Indenture and any indenture or indentures under which other securities or certificates of interest or participation in other securities of the Issuers are outstanding if the requirements for such exclusion set forth in Section 310(b)(1) of the TIA are met.
SECTION 7.11. Preferential Collection of Claims Against the Issuers . The Trustee shall comply with Section 311(a) of the TIA, excluding any creditor relationship listed in Section 311(b) of the TIA. A Trustee who has resigned or been removed shall be subject to Section 311(a) of the TIA to the extent indicated.
SECTION 8.01. Discharge of Liability on Securities; Defeasance . This Indenture shall be discharged and shall cease to be of further effect (except as to surviving rights of registration of transfer or exchange of Securities, as expressly provided for in this Indenture) as to all outstanding Securities when:
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Subject to Sections 8.01(c) and 8.02, the Issuers at any time may terminate (i) all of their obligations under the Securities and this Indenture (with respect to such Securities) (“legal defeasance option”) or (ii) their obligations under Sections 4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.11, 4.12 and 4.13 and the operation of Section 5.01 and Sections 6.01(c), 6.01(d), 6.01(e), 6.01(f) (with respect to Significant Subsidiaries of the Company only), 6.01(g) (with respect to Significant Subsidiaries of the Company only), 6.01(h) and 6.01(i) (“covenant defeasance option”). The Issuers may exercise their legal defeasance option notwithstanding their prior exercise of their covenant defeasance option. In the event that the Issuers terminate all of their obligations under the Securities and this Indenture (with respect to such Securities) by exercising their legal defeasance option or their covenant defeasance option, the obligations of each Guarantor under its Guarantee of such Securities shall be terminated simultaneously with the termination of such obligations.
If the Issuers exercise their legal defeasance option, payment of the Securities so defeased may not be accelerated because of an Event of Default. If the Issuers exercise their covenant defeasance option, payment of the Securities so defeased may not be accelerated because of an Event of Default specified in Section 6.01(c), 6.01(d), 6.01(e), 6.01(f) (with respect to Significant Subsidiaries of the Company only), 6.01(g) (with respect to Significant Subsidiaries of the Company only), 6.01(h) or 6.01(i) or because of the failure of the Issuers to comply with Section 5.01.
Upon satisfaction of the conditions set forth herein and upon request of the Issuers, the Trustee shall acknowledge in writing the discharge of those obligations that the Issuers terminate.
SECTION 8.02. Conditions to Defeasance . (a) The Issuers may exercise their legal defeasance option or its covenant defeasance option only if:
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(iii) 123 days pass after the deposit is made and during the 123-day period no Default specified in Section 6.01(f) or (g) with respect to the Issuers occurs which is continuing at the end of the period;
(iv) the deposit does not constitute a default under any other agreement binding on the Issuers and is not prohibited by Article 10;
(v) in the case of the legal defeasance option, the Issuers shall have delivered to the Trustee an Opinion of Counsel stating that (1) the Issuers have received from, or there has been published by, the Internal Revenue Service a ruling, or (2) 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 will not recognize income, gain or loss for Federal income tax purposes as a result of such deposit and 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 deposit and defeasance had not occurred;
(vi) impair the right of any holder to receive payment of principal of, premium, if any, and interest on such holder’s Securities on or after the due dates therefore or to institute suit for the enforcement of any payment on or with respect to such holder’s Securities;
(vii) in the case of the covenant defeasance option, the Issuers shall have delivered to the Trustee an Opinion of Counsel to the effect that the Holders will not recognize income, gain or loss for Federal income tax purposes as a result of such deposit and 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 deposit and defeasance had not occurred; and
(viii) the Issuers deliver to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent to the defeasance and discharge of the Securities to be so defeased and discharged as contemplated by this Article 8 have been complied with.
SECTION 8.03. Application of Trust Money . The Trustee shall hold in trust money or Government Obligations (including proceeds thereof) deposited with it pursuant to this Article 8. It shall apply the deposited money and the money from Government Obligations through each Paying Agent and in accordance with this Indenture to the payment of principal of and interest on the Securities so discharged or defeased. Money and securities so held in trust are not subject to Article 10 or 12.
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SECTION 8.04. Repayment to Company . Each of the Trustee and each Paying Agent shall promptly turn over to the Issuers upon request any money or Government Obligations held by it as provided in this Article which, in the written opinion of nationally recognized firm of independent public accountants delivered to the Trustee (which delivery shall only be required if Government Obligations have been so deposited), are in excess of the amount thereof which would then be required to be deposited to effect an equivalent discharge or defeasance in accordance with this Article.
Subject to any applicable abandoned property law, the Trustee and each Paying Agent shall pay to the Issuers upon written request any money held by them for the payment of principal or interest that remains unclaimed for two years, and, thereafter, Holders entitled to the money must look to the Issuers for payment as general creditors, and the Trustee and each Paying Agent shall have no further liability with respect to such monies.
SECTION 8.05. Indemnity for Government Obligations . The Issuers shall pay and shall indemnify the Trustee against any tax, fee or other charge imposed on or assessed against deposited Government Obligations or the principal and interest received on such Government Obligations.
SECTION 8.06. Reinstatement . If the Trustee or any Paying Agent is unable to apply any money or Government Obligations in accordance with this Article 8 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Issuers’ obligations under this Indenture and the Securities so discharged or defeased shall be revived and reinstated as though no deposit had occurred pursuant to this Article 8 until such time as the Trustee or any Paying Agent is permitted to apply all such money or Government Obligations in accordance with this Article 8; provided , however , that, if the Issuers have made any payment of principal of or interest on, any such Securities because of the reinstatement of their obligations, the Issuers shall be subrogated to the rights of the Holders of such Securities to receive such payment from the money or Government Obligations held by the Trustee or any Paying Agent.
SECTION 9.01. Without Consent of the Holders . (a) The Issuers and the Trustee may amend this Indenture or the Securities without notice to or consent of any Holder:
(i) to cure any ambiguity, omission, defect or inconsistency;
(ii) to provide for the assumption by a Successor Company of the obligations of the Issuers under this Indenture and the Securities;
(iii) to provide for the assumption by a Successor Guarantor of the obligations of a Guarantor under this Indenture and its Guarantee;
(iv) to comply with Article 5;
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(v) to provide for uncertificated Securities in addition to or in place of certificated Securities; provided, however, that the uncertificated Securities are issued in registered form for purposes of Section 163(f) of the Code or in a manner such that the uncertificated Securities are described in Section 163(f)(2)(B) of the Code;
(vi) to make any change in Article 10 or Article 12 that would limit or terminate the benefits available to any holder of Senior Indebtedness of the Company or a Guarantor (or Representatives thereof) under Article 10 or Article 12, respectively;
(vii) to add additional Guarantees with respect to the Securities or to secure the Securities;
(viii) to add to the covenants of the Issuers for the benefit of the Holders or to surrender any right or power herein conferred upon the Issuers;
(ix) to comply with any requirement of the SEC in connection with qualifying or maintaining the qualification of, this Indenture under the TIA;
(x) to make any change that does not adversely affect the rights of any Holder; or
(xi) to provide for the issuance of the Exchange Securities or Additional Securities, which shall have terms substantially identical in all material respects to the Initial Securities, and which shall be treated, together with any outstanding Initial Securities, as a single issue of securities.
After an amendment under this Section 9.01 becomes effective, the Issuers shall mail to the Holders a notice briefly describing such amendment. The failure to give such notice to all Holders, or any defect therein, shall not impair or affect the validity of an amendment under this Section 9.01.
SECTION 9.02. With Consent of the Holders . (a) The Issuers and the Trustee may amend this Indenture or the Securities with the written consent of the Holders of at least a majority in principal amount of the Securities then outstanding voting as a single class (including consents obtained in connection with a tender offer or exchange for the Securities). However, without the consent of each Holder of an outstanding Security affected, an amendment may not:
(i) reduce the amount of Securities whose Holders must consent to an amendment,
(ii) reduce the rate of or extend the time for payment of interest on any Security,
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(iii) reduce the principal of or change the Stated Maturity of any Security,
(iv) reduce the premium payable upon the redemption of any Security or change the time at which any Security may be redeemed in accordance with Article 3,
(v) make any Security payable in money other than that stated in such Security,
(vi) make any change in Article 10 or Article 12 that adversely affects the rights of any Holder under Article 10 or Article 12,
(vii) impair the right of any Holder to receive payment of principal of or premium, if any, and interest on such Holder’s Securities on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such Holder’s Securities,
(viii) make any change in Section 6.04 or 6.07 or the second sentence of this Section 9.02, or
(ix) modify any Guarantees in any manner adverse to the Holders.
It shall not be necessary for the consent of the Holders under this Section 9.02 to approve the particular form of any proposed amendment, but it shall be sufficient if such consent approves the substance thereof.
An amendment under this Section 9.02 may not make any change that adversely affects the rights under Article 10 or Article 12 of any holder of Senior Indebtedness then outstanding unless the holders of such Senior Indebtedness (or any group or Representative thereof authorized to give a consent) consent to such change.
After an amendment under this Section 9.02 becomes effective, the Issuers shall mail to the Holders a notice briefly describing such amendment. The failure to give such notice to all Holders, or any defect therein, shall not impair or affect the validity of an amendment under this Section 9.02.
SECTION 9.03. Compliance with Trust Indenture Act . From the date on which this Indenture is qualified under the TIA, every amendment, waiver or supplement to this Indenture or the Securities shall comply with the TIA as then in effect.
SECTION 9.04. Revocation and Effect of Consents and Waivers . (a) A consent to an amendment or a waiver by a Holder of a Security shall bind the Holder and every subsequent Holder of that Security or portion of the Security that evidences the same debt as the consenting Holder’s Security, even if notation of the consent or waiver is not made on the Security. However, any such Holder or subsequent Holder may revoke the consent or waiver as to such Holder’s Security or portion of the Security if the Trustee receives the notice of revocation before the date on which the Trustee receives an Officers’ Certificate from the Issuers certifying that the requisite principal amount of Securities have consented. After an amendment or waiver becomes effective, it shall bind every Holder. An amendment or waiver becomes
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effective upon the (i) receipt by the Issuers or the Trustee of consents by the Holders of the requisite principal amount of securities, (ii) satisfaction of conditions to effectiveness as set forth in this Indenture and any indenture supplemental hereto containing such amendment or waiver and (iii) execution of such amendment or waiver (or supplemental indenture) by the Issuers and the Trustee.
SECTION 9.05. Notation on or Exchange of Securities . If an amendment, supplement or waiver changes the terms of a Security, the Issuers may require the Holder of the Security to deliver it to the Trustee. The Trustee may place an appropriate notation on the Security regarding the changed terms and return it to the Holder. Alternatively, if the Issuers or the Trustee so determines, the Issuers in exchange for the Security shall issue and the Trustee shall authenticate a new Security that reflects the changed terms. Failure to make the appropriate notation or to issue a new Security shall not affect the validity of such amendment, supplement or waiver.
SECTION 9.06. Trustee to Sign Amendments . The Trustee shall sign any amendment, supplement or waiver authorized pursuant to this Article 9 if the amendment does not adversely affect the rights, duties, liabilities or immunities of the Trustee. If it does, the Trustee may but need not sign it. In signing such amendment, the Trustee shall be entitled to receive indemnity reasonably satisfactory to it and shall be provided with, and (subject to Section 7.01) shall be fully protected in relying upon, an Officers’ Certificate and an Opinion of Counsel stating that such amendment, supplement or waiver is authorized or permitted by this Indenture and that such amendment, supplement or waiver is the legal, valid and binding obligation of the Issuers and the Guarantors, enforceable against them in accordance with its terms, subject to customary exceptions, and complies with the provisions hereof (including Section 9.03).
SECTION 9.07. Payment for Consent . Neither the Issuers nor any Affiliate of the Issuers shall, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Securities unless such consideration is offered to be paid to all Holders that so consent, waive or agree to amend in the time frame set forth in solicitation documents relating to such consent, waiver or agreement.
SECTION 9.08. Additional Voting Terms; Calculation of Principal Amount . All Securities issued under this Indenture shall vote and consent together on all matters (as to which any of such Securities may vote) as one class and no series of Securities will have the right to vote or consent as a separate class on any matter. Determinations as to whether Holders of the
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requisite aggregate principal amount of Securities have concurred in any direction, waiver or consent shall be made in accordance with this Article 9 and Section 2.14.
SECTION 10.01. Agreement to Subordinate . The Issuers agree, and each Holder by accepting a Security agrees, that the Indebtedness evidenced by the Securities 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 existing and future Senior Indebtedness of the Issuers and that the subordination is for the benefit of and enforceable by the holders of such Senior Indebtedness. The Securities shall in all respects rank pari passu in right of payment with all existing and future Pari Passu Indebtedness of the Issuers and shall rank senior in right of payment to all existing and future Subordinated Indebtedness of the Issuers; and only Indebtedness of an Issuer that is Senior Indebtedness of such Issuer shall rank senior to the Securities in accordance with the provisions set forth herein. For purposes of this Article 10, the Indebtedness evidenced by the Securities shall be deemed to include any Additional Interest payable pursuant to the provisions set forth in the Securities and the Registration Agreement. All provisions of this Article 10 shall be subject to Section 10.12.
SECTION 10.02. Liquidation, Dissolution, Bankruptcy . Upon any payment or distribution of the assets of the Company to creditors upon a total or partial liquidation or a total or partial dissolution of the Company or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Company or its property:
SECTION 10.03. Default on Designated Senior Indebtedness . The Issuers may not pay principal of, premium (if any) or interest on, the Securities or make any deposit pursuant to the provisions described under Section 8.01 and may not otherwise purchase, redeem or otherwise retire any Securities (except that the Holders may receive and retain (a) Permitted Junior Securities and (b) payments made from the trust described under Article 8) (collectively, “pay the Securities”) if:
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unless, in either case, the default has been cured or waived and any such acceleration has been rescinded or such Designated Senior Indebtedness has been paid in full in cash; provided , however , the Issuers may pay the Securities without regard to the foregoing if the Company and the Trustee receive written notice approving such payment from the Representative of the holders of such Designated Senior Indebtedness with respect to which either of the events set forth in clause (1) or (2) of this sentence has occurred and is continuing. During the continuance of any default (other than a default described in clause (1) or (2) of the preceding sentence) with respect to any Designated Senior Indebtedness of the Company pursuant to which the maturity thereof may be accelerated immediately without further notice (except such notice as may be required to effect such acceleration) or the expiration of any applicable grace periods, the Company may not pay the Securities for a period (a “Payment Blockage Period”) commencing upon the receipt by the Trustee (with a copy to the Company) of written notice (a “Blockage Notice”) of such default from the Representative of the holders of such Designated Senior Indebtedness specifying an election to effect a Payment Blockage Period and ending 179 days thereafter (or earlier if such Payment Blockage Period is terminated (i) by written notice to the Trustee and the Company from the Person or Persons who gave such Blockage Notice; (ii) by repayment in full in cash of such Designated Senior Indebtedness; or (iii) because the default giving rise to such Blockage Notice is no longer continuing). Notwithstanding the provisions described in the immediately preceding sentence (but subject to the provisions contained in the first sentence of this Section 10.03 and in Section 10.02), unless the holders of such Designated Senior Indebtedness or the Representative of such holders shall have accelerated the maturity of such Designated Senior Indebtedness or a payment default exists, the Company may resume payments on the Securities after the end of such Payment Blockage Period. Not more than one Blockage Notice may be given in any consecutive 360-day period, irrespective of the number of defaults with respect to Designated Senior Indebtedness during such period. In no event, however, may the total number of days during which any Payment Blockage Period is in effect exceed 179 days in the aggregate during any 360 consecutive day period. For purposes of this Section 10.03, no default or event of default that existed or was continuing on the date of the commencement of any Payment Blockage Period with respect to the Designated Senior Indebtedness initiating such Payment Blockage Period shall be, or be made, the basis of the commencement of a subsequent Payment Blockage Period by the Representative of such Designated Senior Indebtedness, whether or not within a period of 360 consecutive days, unless such default or event of default shall have been cured or waived for a period of not less than 90 consecutive days (it being understood that any subsequent action or any breach of any financial covenants for a period commencing after the date of commencement of such Payment Blockage Period that, in either case, would give rise to an event of default pursuant to any provision of the Designated Senior Indebtedness under which an event of default previously existed or was continuing shall constitute a new event of default for this purpose).
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SECTION 10.04. Acceleration of Payment of Securities . If payment of the Securities is accelerated because of an Event of Default, the Company or the Trustee ( provided that the Trustee shall have received written notice from the Company, on which notice the Trustee shall be entitled to conclusively rely) shall promptly notify the holders of the Designated Senior Indebtedness of the Company (or their Representative) of the acceleration.
SECTION 10.05. When Distribution Must Be Paid Over . If a distribution is made to the Holders that because of this Article 10 should not have been made to them, the Holders who receive the distribution shall hold it in trust for holders of Senior Indebtedness of the Company and pay it over to them as their interests may appear.
SECTION 10.06. Subrogation . After all Senior Indebtedness of the Company is paid in full and until the Securities are paid in full, the Holders shall be subrogated to the rights of holders of such Senior Indebtedness to receive distributions applicable to Senior Indebtedness of the Company. A distribution made under this Article 10 to holders of such Senior Indebtedness which otherwise would have been made to the Holders is not, as between the Company and the Holders, a payment by the Company on such Senior Indebtedness.
SECTION 10.07. Relative Rights . This Article 10 defines the relative rights of the Holders and holders of Senior Indebtedness of the Company. Nothing in this Indenture shall:
SECTION 10.08. Subordination May Not Be Impaired by Company . No right of any holder of Senior Indebtedness of the Company to enforce the subordination of the Indebtedness evidenced by the Securities shall be impaired by any act or failure to act by the Company or by its failure to comply with this Indenture.
SECTION 10.09. Rights of Trustee and Paying Agent . Notwithstanding Section 10.03, the Trustee or any Paying Agent may continue to make payments on the Securities and shall not be charged with knowledge of the existence of facts that would prohibit the making of any such payments unless, not less than two Business Days prior to the date of such payment, a Trust Officer of the Trustee receives notice satisfactory to it that payments may not be made under this Article 10. The Company, the Registrar, any Paying Agent, a Representative or a holder of Senior Indebtedness of the Company may give the notice; provided , however , that, if an issue of Senior Indebtedness of the Company has a Representative, only the Representative may give the notice.
The Trustee in its individual or any other capacity may hold Senior Indebtedness of the Company with the same rights it would have if it were not Trustee. The Registrar and any Paying Agent may do the same with like rights. The Trustee shall be entitled to all the rights set forth in this Article 10 with respect to any Senior Indebtedness of the Company which may at
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any time be held by it, to the same extent as any other holder of such Senior Indebtedness; and nothing in Article 7 shall deprive the Trustee of any of its rights as such holder. Nothing in this Article 10 shall apply to claims of, or payments to, the Trustee under or pursuant to Section 7.07 or any other Section of this Indenture.
SECTION 10.10. Distribution or Notice to Representative . Whenever a distribution is to be made or a notice given to holders of Senior Indebtedness of the Company, the distribution may be made and the notice given to their Representative (if any).
SECTION 10.11. Article 10 Not to Prevent Events of Default or Limit Right to Accelerate . The failure to make a payment pursuant to the Securities by reason of any provision in this Article 10 shall not be construed as preventing the occurrence of a Default. Nothing in this Article 10 shall have any effect on the right of the Holders or the Trustee to accelerate the maturity of the Securities.
SECTION 10.12. Trust Monies Not Subordinated . Notwithstanding anything contained herein to the contrary, payments from money or the proceeds of Government Obligations held in trust under Article 8 by the Trustee and deposited at a time when permitted by the subordination provisions of this Article 10 for the payment of principal of and interest on the Securities shall not be subordinated to the prior payment of any Senior Indebtedness of the Company or subject to the restrictions set forth in this Article 10, and none of the Holders shall be obligated to pay over any such amount to the Company or any holder of Senior Indebtedness of the Company or any other creditor of the Company.
SECTION 10.13. Trustee Entitled to Rely . Upon any payment or distribution pursuant to this Article 10, the Trustee and the Holders shall be entitled to rely (a) upon any order or decree of a court of competent jurisdiction in which any proceedings of the nature referred to in Section 10.02 are pending, (b) upon a certificate of the liquidating trustee or agent or other Person making such payment or distribution to the Trustee or to the Holders or (c) upon the Representatives for the holders of Senior Indebtedness of the Company for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of such Senior Indebtedness 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 10. In the event that the Trustee determines, in good faith, that evidence is required with respect to the right of any Person as a holder of Senior Indebtedness of the Company to participate in any payment or distribution pursuant to this Article 10, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of such Senior Indebtedness held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and other facts pertinent to the rights of such Person under this Article 10, and, if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. The provisions of Sections 7.01 and 7.02 shall be applicable to all actions or omissions of actions by the Trustee pursuant to this Article 10.
SECTION 10.14. Trustee to Effectuate Subordination . Each Holder by accepting a Security authorizes and directs the Trustee on his behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination between the Holders
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and the holders of Senior Indebtedness of the Company as provided in this Article 10 and appoints the Trustee as attorney-in-fact for any and all such purposes.
SECTION 10.15. Trustee Not Fiduciary for Holders of Senior Indebtedness . The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness of the Company and shall not be liable to any such holders if it shall mistakenly pay over or distribute to the Holders or the Company or any other Person money or assets to which any holders of Senior Indebtedness of the Company shall be entitled by virtue of this Article 10 or otherwise.
SECTION 10.16. Reliance by Holders of Senior Indebtedness on Subordination Provisions . Each Holder by accepting a Security acknowledges and agrees that the foregoing subordination provisions are, and are intended to be, an inducement and a consideration to each holder of any Senior Indebtedness of the Company, whether such Senior Indebtedness was created or acquired before or after the issuance of the Securities, to acquire and continue to hold, or to continue to hold, such Senior Indebtedness and such holder of such Senior Indebtedness shall be deemed conclusively to have relied on such subordination provisions in acquiring and continuing to hold, or in continuing to hold, such Senior Indebtedness.
Without in any way limiting the generality of the foregoing paragraph, the holders of Senior Indebtedness of the Company may, at any time and from time to time, without the consent of or notice to the Trustee or the Holders, without incurring responsibility to the Trustee or the Holders and without impairing or releasing the subordination provided in this Article 10 or the obligations hereunder of the Holders to the holders of the Senior Indebtedness of the Company, do any one or more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Senior Indebtedness of the Company, or otherwise amend or supplement in any manner Senior Indebtedness of the Company, or any instrument evidencing the same or any agreement under which Senior Indebtedness of the Company is outstanding; (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Indebtedness of the Company; (iii) release any Person liable in any manner for the payment or collection of Senior Indebtedness of the Company; and (iv) exercise or refrain from exercising any rights against the Company and any other Person.
SECTION 11.01. Guarantees . (a) Each Guarantor hereby jointly and severally, irrevocably and unconditionally guarantees, as a primary obligor and not merely as a surety, to each Holder and to the Trustee and its successors and assigns (i) the full and punctual payment when due, whether at Stated Maturity, by acceleration, by redemption or otherwise, of all obligations of the Issuers under this Indenture (including obligations to the Trustee) and the Securities, whether for payment of principal of, premium, if any, or interest on in respect of the Securities and all other monetary obligations of the Issuers under this Indenture and the Securities and (ii) the full and punctual performance within applicable grace periods of all other obligations of the Issuers whether for fees, expenses, indemnification or otherwise under this
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Indenture and the Securities (all the foregoing being hereinafter collectively called the “Guaranteed Obligations”). Each Guarantor further agrees that the Guaranteed Obligations may be extended or renewed, in whole or in part, without notice or further assent from each such Guarantor, and that each such Guarantor shall remain bound under this Article 11 notwithstanding any extension or renewal of any Guaranteed Obligation.
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SECTION 11.02. Limitation on Liability . (a) Any term or provision of this Indenture to the contrary notwithstanding, the maximum aggregate amount of the Guaranteed
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Obligations guaranteed hereunder by any Guarantor shall not exceed the maximum amount that can be hereby guaranteed without rendering this Indenture, as it relates to such Guarantor, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally.
In the case of clause (b)(i) above, such Guarantor shall be released from its guarantees, if any, of, and all pledges and security, if any, granted in connection with, the Credit Agreement and any other Indebtedness of the Issuers or any Restricted Subsidiary of the Issuers.
A Guarantee also shall be automatically released upon the applicable Subsidiary ceasing to be a Subsidiary as a result of any foreclosure of any pledge or security interest securing Bank Indebtedness or other exercise of remedies in respect thereof or if such Subsidiary is released from its guarantees of, and all pledges and security interests granted in connection with, the Credit Agreement and any other Indebtedness of the Issuers or any Restricted Subsidiary of the Company which results in the obligation to guarantee the Securities.
SECTION 11.03. Successors and Assigns . This Article 11 shall be binding upon each Guarantor and its successors and assigns 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 conferred upon that party in this Indenture and in the Securities shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions of this Indenture.
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SECTION 11.04. No Waiver . Neither a failure nor a delay on the part of either the Trustee or the Holders in exercising any right, power or privilege under this Article 11 shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise of any right, power or privilege. The rights, remedies and benefits of the Trustee and the Holders herein expressly specified are cumulative and not exclusive of any other rights, remedies or benefits which either may have under this Article 11 at law, in equity, by statute or otherwise.
SECTION 11.05. Modification . No modification, amendment or waiver of any provision of this Article 11, nor the consent to any departure by any Guarantor therefrom, shall in any event be effective unless the same shall be in writing and signed by the Trustee, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on any Guarantor in any case shall entitle such Guarantor to any other or further notice or demand in the same, similar or other circumstances.
SECTION 11.06. Execution of Supplemental Indenture for Future Guarantors . Each Subsidiary and other Person which is required to become a Guarantor pursuant to Section 4.11 shall promptly execute and deliver to the Trustee a supplemental indenture in the form of Exhibit D hereto pursuant to which such Subsidiary or other Person shall become a Guarantor under this Article 11 and shall guarantee the Guaranteed Obligations. Concurrently with the execution and delivery of such supplemental indenture, the Issuers shall deliver to the Trustee an Opinion of Counsel and an Officers’ Certificate to the effect that such supplemental indenture has been duly authorized, executed and delivered by such Subsidiary or other Person and that, subject to the application of bankruptcy, insolvency, moratorium, fraudulent conveyance or transfer and other similar laws relating to creditors’ rights generally and to the principles of equity, whether considered in a proceeding at law or in equity, the Guarantee of such Guarantor is a valid and binding obligation of such Guarantor, enforceable against such Guarantor in accordance with its terms and/or to such other matters as the Trustee may reasonably request.
SECTION 11.07. Non-Impairment . The failure to endorse a Guarantee on any Security shall not affect or impair the validity thereof.
SECTION 12.01. Agreement to Subordinate . Each Guarantor agrees, and each Holder by accepting a Security agrees, that the obligations of a Guarantor hereunder are subordinated in right of payment, to the extent and in the manner provided in this Article 12, to the prior payment in full of all existing and future Senior Indebtedness of such Guarantor and that the subordination is for the benefit of and enforceable by the holders of such Senior Indebtedness of such Guarantor. The obligations hereunder with respect to a Guarantor shall in all respects rank pari passu in right of payment with all existing and future Pari Passu Indebtedness of such Guarantor and shall rank senior in right of payment to all existing and future Subordinated Indebtedness of such Guarantor; and only Indebtedness of such Guarantor that is Senior Indebtedness of such Guarantor shall rank senior to the obligations of such Guarantor in accordance with the provisions set forth herein. For purposes of this Article 12, the
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Indebtedness evidenced by the Securities shall be deemed to include any Additional Interest payable pursuant to the provisions set forth in the Securities and the Registration Agreement. All provisions of this Article 12 shall be subject to Section 12.16.
SECTION 12.02. Liquidation, Dissolution, Bankruptcy . Upon any payment or distribution of the assets of a Guarantor to creditors upon a total or partial liquidation or a total or partial dissolution of such Guarantor or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to such Guarantor and its properties:
SECTION 12.03. Default on Designated Senior Indebtedness of a Guarantor . A Guarantor may not make any payment pursuant to any of the Guaranteed Obligations or otherwise purchase, redeem or otherwise retire any Securities (except that the Holders may receive and retain (a) Permitted Junior Securities and (b) payments made from the trust described under Article 8 (collectively, “pay its Guarantee”) if:
unless, in either case, the default has been cured or waived and any such acceleration has been rescinded or such Designated Senior Indebtedness has been paid in full in cash; provided , however , such Guarantor may pay its Guarantee without regard to the foregoing if such Guarantor and the Trustee receive written notice approving such payment from the Representative of the holders of such Designated Senior Indebtedness with respect to which either of the events set forth in clause (1) or (2) of this sentence has occurred and is continuing. During the continuance of any default (other than a default described in clause (1) or (2) of the preceding sentence) with respect to any Designated Senior Indebtedness of a Guarantor pursuant to which the maturity thereof may be accelerated immediately without further notice (except such notice as may be required to effect such acceleration) or the expiration of any applicable grace periods, such Guarantor may not pay its Guarantee for a period (a “Guarantee Payment
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Blockage Period”) commencing upon the receipt by the Trustee (with a copy to such Guarantor and the Company) of written notice (a “Guarantee Blockage Notice”) of such default from the Representative of the holders of such Designated Senior Indebtedness specifying an election to effect a Guarantee Payment Blockage Period and ending 179 days thereafter (or earlier if such Guarantee Payment Blockage Period is terminated (i) by written notice to the Trustee, such Guarantor and the Company from the Person or Persons who gave such Guarantee Blockage Notice; (ii) by repayment in full in cash of such Designated Senior Indebtedness; or (iii) because the default giving rise to such Guarantee Blockage Notice is no longer continuing). Notwithstanding the provisions described in the immediately preceding sentence (but subject to the provisions contained in the first sentence of this Section 12.03 and in Section 12.02(b)), unless the holders of such Designated Senior Indebtedness or the Representative of such holders shall have accelerated the maturity of such Designated Senior Indebtedness or a payment default exists, such Guarantor may resume payments on its Guarantee after the end of such Guarantee Payment Blockage Period (including any missed payments). Not more than one Guarantee Blockage Notice may be given with respect to a Guarantor in any consecutive 360-day period, irrespective of the number of defaults with respect to Designated Senior Indebtedness during such period. In no event, however, may the total number of days during which any Guarantee Payment Blockage Period is in effect exceed 179 days in the aggregate during any 360 consecutive day period. For purposes of this Section 12.03, no default or event of default that existed or was continuing on the date of the commencement of any Guarantee Payment Blockage Period with respect to the Designated Senior Indebtedness initiating such Guarantee Payment Blockage Period shall be, or be made, the basis of the commencement of a subsequent Guarantee Payment Blockage Period by the Representative of such Designated Senior Indebtedness, whether or not within a period of 360 consecutive days, unless such default or event of default shall have been cured or waived for a period of not less than 90 consecutive days (it being understood that any subsequent action or any breach of any financial covenants for a period commencing after the date of commencement of such Guarantee Payment Blockage Period that, in either case, would give rise to an event of default pursuant to any provision of the Designated Senior Indebtedness under which an event of default previously existed or was continuing shall constitute a new event of default for this purpose).
SECTION 12.04. Demand for Payment . If payment of the Securities is accelerated because of an Event of Default and a demand for payment is made on a Guarantor pursuant to Article 11, the Issuers, the Guarantor or the Trustee ( provided that the Trustee shall have received written notice from the Issuers or such Guarantor, on which notice the Trustee shall be entitled to conclusively rely) shall promptly notify the holders of the Designated Senior Indebtedness of such Guarantor (or the Representative of such holders) of such demand.
SECTION 12.05. When Distribution Must Be Paid Over . If a payment or distribution is made to the Holders that because of this Article 12 should not have been made to them, the Holders who receive the payment or distribution shall hold such payment or distribution in trust for holders of the Senior Indebtedness of the relevant Guarantor and pay it over to them as their respective interests may appear.
SECTION 12.06. Subrogation . After all Senior Indebtedness of a Guarantor is paid in full and until the Securities are paid in full in cash, the Holders shall be subrogated to the rights of holders of Senior Indebtedness of such Guarantor to receive distributions applicable to
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Senior Indebtedness of such Guarantor. A distribution made under this Article 12 to holders of Senior Indebtedness of such Guarantor which otherwise would have been made to the Holders is not, as between such Guarantor and the Holders, a payment by such Guarantor on Senior Indebtedness of such Guarantor.
SECTION 12.07. Relative Rights . This Article 12 defines the relative rights of the Holders and holders of Senior Indebtedness of a Guarantor. Nothing in this Indenture shall:
SECTION 12.08. Subordination May Not Be Impaired by a Guarantor . No right of any holder of Senior Indebtedness of a Guarantor to enforce the subordination of the obligations of such Guarantor hereunder shall be impaired by any act or failure to act by such Guarantor or by its failure to comply with this Indenture.
SECTION 12.09. Rights of Trustee and Paying Agent . Notwithstanding Section 12.03, the Trustee or any Paying Agent may continue to make payments on the Securities and shall not be charged with knowledge of the existence of facts that would prohibit the making of any such payments unless, not less than two Business Days prior to the date of such payment, a Trust Officer of the Trustee receives written notice satisfactory to it that payments may not be made under this Article 12. A Guarantor, the Registrar or co-registrar, a Paying Agent, a Representative or a holder of Senior Indebtedness of a Guarantor may give the notice; provided , however , that if an issue of Senior Indebtedness of a Guarantor has a Representative, only the Representative may give the notice.
The Trustee in its individual or any other capacity may hold Senior Indebtedness of a Guarantor with the same rights it would have if it were not Trustee. The Registrar and co-registrar and any Paying Agent may do the same with like rights. The Trustee shall be entitled to all the rights set forth in this Article 12 with respect to any Senior Indebtedness of a Guarantor which may at any time be held by it, to the same extent as any other holder of Senior Indebtedness of such Guarantor; and nothing in Article 7 shall deprive the Trustee of any of its rights as such holder. Nothing in this Article 12 shall apply to claims of, or payments to, the Trustee under or pursuant to Section 7.07 or any other Section of this Indenture.
SECTION 12.10. Distribution or Notice to Representative . Whenever a distribution is to be made or a notice given to holders of Senior Indebtedness of a Guarantor, the distribution may be made and the notice given to their Representative (if any).
SECTION 12.11. Article 12 Not to Prevent Events of Default or Limit Right to Accelerate . The failure of a Guarantor to make a payment on any of its obligations by reason of any provision in this Article 12 shall not be construed as preventing the occurrence of a default
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by such Guarantor under such obligations. Nothing in this Article 12 shall have any effect on the right of the Holders or the Trustee to make a demand for payment on a Guarantor pursuant to Article 11.
SECTION 12.12. Trustee Entitled to Rely . Upon any payment or distribution pursuant to this Article 12, the Trustee and the Holders shall be entitled to rely (a) upon any order or decree of a court of competent jurisdiction in which any proceedings of the nature referred to in Section 12.02 are pending, (b) upon a certificate of the liquidating trustee or agent or other Person making such payment or distribution to the Trustee or to the Holders or (c) upon the Representatives for the holders of Senior Indebtedness of a Guarantor for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Indebtedness of a Guarantor and other Indebtedness of a 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 12. In the event that the Trustee determines, in good faith, that evidence is required with respect to the right of any Person as a holder of Senior Indebtedness of a Guarantor to participate in any payment or distribution pursuant to this Article 12, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness of such Guarantor held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and other facts pertinent to the rights of such Person under this Article 12, and, if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. The provisions of Sections 7.01 and 7.02 shall be applicable to all actions or omissions of actions by the Trustee pursuant to this Article 12.
SECTION 12.13. Trustee to Effectuate Subordination . Each Holder by accepting a Security authorizes and directs the Trustee on his or her behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination between the Holders and the holders of Senior Indebtedness of each of the Guarantors as provided in this Article 12 and appoints the Trustee as attorney-in-fact for any and all such purposes.
SECTION 12.14. Trustee Not Fiduciary for Holders of Senior Indebtedness of a Guarantor . The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness of a Guarantor and shall not be liable to any such holders if it shall mistakenly pay over or distribute to the Holders or the relevant Guarantor or any other Person, money or assets to which any holders of Senior Indebtedness of such Guarantor shall be entitled by virtue of this Article 12 or otherwise.
SECTION 12.15. Reliance by Holders of Senior Indebtedness of a Guarantor on Subordination Provisions . Each Holder by accepting a Security acknowledges and agrees that the foregoing subordination provisions are, and are intended to be, an inducement and a consideration to each holder of any Senior Indebtedness of a Guarantor, whether such Senior Indebtedness was created or acquired before or after the issuance of the Securities, to acquire and continue to hold, or to continue to hold, such Senior Indebtedness and such holder of Senior Indebtedness shall be deemed conclusively to have relied on such subordination provisions in acquiring and continuing to hold, or in continuing to hold, such Senior Indebtedness.
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Without in any way limiting the generality of the foregoing paragraph, the holders of Senior Indebtedness of a Guarantor may, at any time and from time to time, without the consent of or notice to the Trustee or the Holders, without incurring responsibility to the Trustee or the Holders and without impairing or releasing the subordination provided in this Article 12 or the obligations hereunder of the Holders to the holders of the Senior Indebtedness of a Guarantor, do any one or more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Senior Indebtedness of a Guarantor, or otherwise amend or supplement in any manner Senior Indebtedness of a Guarantor, or any instrument evidencing the same or any agreement under which Senior Indebtedness of a Guarantor is outstanding; (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Indebtedness of a Guarantor; (iii) release any Person liable in any manner for the payment or collection of Senior Indebtedness of a Guarantor; and (iv) exercise or refrain from exercising any rights against such Guarantor and any other Person.
SECTION 12.16. Trust Monies Not Subordinated . Notwithstanding anything contained herein to the contrary, payments from money or the proceeds of Government Obligations held in trust under Article 8 by the Trustee and deposited at a time when permitted by the subordination provisions of this Article 12 for the payment of principal of and interest on the Securities shall not be subordinated to the prior payment of any Senior Indebtedness of any Guarantor or subject to the restrictions set forth in this Article 12, and none of the Holders shall be obligated to pay over any such amount to a Guarantor or any holder of Senior Indebtedness of a Guarantor or any other creditor of a Guarantor.
SECTION 13.01. Trust Indenture Act Controls . If and to the extent that any provision of this Indenture limits, qualifies or conflicts with the duties imposed by, or with another provision (an “incorporated provision”) included in this Indenture by operation of, Sections 310 to 318 of the TIA, inclusive, such imposed duties or incorporated provision shall control.
SECTION 13.02. Notices . (a) Any notice or communication required or permitted hereunder shall be in writing and delivered in person, via facsimile or mailed by first-class mail addressed as follows:
if to the Issuers or a Guarantor:
RBS Global, Inc.
4701 Greenfield Avenue
Milwaukee, Wisconsin 53214
Attention of: General Counsel
Facsimile: (414) 643-2510
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if to the Trustee:
Well Fargo Bank, National Association
Sixth & Marquette; N9303-120
Minneapolis, MN 55479
Attention of:
Corporate Trust Services
Facsimile: (612) 667-9825
The Issuers or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications.
SECTION 13.03. Communication by the Holders with Other Holders . The Holders may communicate pursuant to Section 312(b) of the TIA with other Holders with respect to their rights under this Indenture or the Securities. The Issuers, the Trustee, the Registrar and other Persons shall have the protection of Section 312(c) of the TIA.
SECTION 13.04. Certificate and Opinion as to Conditions Precedent . Upon any request or application by the Issuers to the Trustee to take or refrain from taking any action under this Indenture, the Issuers shall furnish to the Trustee at the request of the Trustee:
SECTION 13.05. Statements Required in Certificate or Opinion . Each certificate or opinion with respect to compliance with a covenant or condition provided for in this Indenture (other than pursuant to Section 4.09) shall include:
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SECTION 13.06. When Securities Disregarded . In determining whether the Holders of the required principal amount of Securities have concurred in any direction, waiver or consent, Securities owned by the Issuers, any Guarantor or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuers or any Guarantor shall be disregarded and deemed not to be outstanding, except that, for the purpose of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Securities which the Trustee knows are so owned shall be so disregarded. Subject to the foregoing, only Securities outstanding at the time shall be considered in any such determination.
SECTION 13.07. Rules by Trustee, Paying Agent and Registrar . The Trustee may make reasonable rules for action by or a meeting of the Holders. The Registrar and a Paying Agent may make reasonable rules for their functions.
SECTION 13.08. Legal Holidays . If a payment date is not a Business Day, payment shall be made on the next succeeding day that is a Business Day, and no interest shall accrue on any amount that would have been otherwise payable on such payment date if it were a Business Day for the intervening period. If a regular record date is not a Business Day, the record date shall not be affected.
SECTION 13.09. GOVERNING LAW . THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK , WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
SECTION 13.10. No Recourse Against Others . No director, officer, employee, manager, incorporator or holder of any Equity Interests in the Issuers or of any Guarantor or any direct or indirect parent corporation, as such, shall have any liability for any obligations of the Issuers or the Guarantors under the Securities or this Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Securities by accepting a Security waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Securities.
SECTION 13.11. Successors . All agreements of the Issuers and each Guarantor in this Indenture and the Securities shall bind its successors. All agreements of the Trustee in this Indenture shall bind its successors.
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SECTION 13.12. Multiple 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. One signed copy is enough to prove this Indenture.
SECTION 13.13. Table of Contents; Headings . The table of contents, cross-reference sheet and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof.
SECTION 13.14. Indenture Controls . If and to the extent that any provision of the Securities limits, qualifies or conflicts with a provision of this Indenture, such provision of this Indenture shall control.
SECTION 13.15. Severability . In case any provision in this Indenture 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 and such provision shall be ineffective only to the extent of such invalidity, illegality or unenforceability.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed as of the date first written above.
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CHASE MERGER SUB, INC. |
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By: |
/s/ Patricia M. Navis |
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Name: Patricia M. Navis |
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Title: Vice President and Secretary |
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WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee |
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By: |
/s/ Timothy P. Mowdy |
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Name: Timothy P. Mowdy |
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Title: Vice President |
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APPENDIX A
PROVISIONS RELATING TO INITIAL SECURITIES, ADDITIONAL SECURITIES AND EXCHANGE SECURITIES
1. Definitions .
1.1 Definitions .
For the purposes of this Appendix A the following terms shall have the meanings indicated below:
“Additional Interest” has the meaning set forth in the Registration Agreement.
“Definitive Security” means a certificated Initial Security or Exchange Security (bearing the Restricted Securities Legend if the transfer of such Security is restricted by applicable law) that does not include the Global Securities Legend.
“Depository” means The Depository Trust Company, its nominees and their respective successors.
“Global Securities Legend” means the legend set forth under that caption in the applicable Exhibit to this Indenture.
“IAI” means an institutional “accredited investor” as described in Rule 501(a)(1), (2), (3) or (7) under the Securities Act.
“Initial Purchasers” means Credit Suisse Securities (USA) LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Bear, Stearns & Co. Inc. and Lehman Brothers Inc., and such other initial purchasers party to the Purchase Agreement entered into in connection with the offer and sale of the Securities.
“Purchase Agreement” means (a) the Purchase Agreement dated July 14, 2006, among the Company and the Initial Purchasers and (b) any other similar Purchase Agreement relating to Additional Securities.
“QIB” means a “qualified institutional buyer” as defined in Rule 144A.
“Registered Exchange Offer” means the offer by the Company, pursuant to the Registration Agreement, to certain Holders of Initial Securities, to issue and deliver to such Holders, in exchange for their Initial Securities, a like aggregate principal amount of Exchange Securities registered under the Securities Act.
“Registration Agreement” means (a) the Registration Rights Agreement dated as of July 21, 2006 among the Issuers, the Guarantors and the Initial Purchasers relating to the Securities and (b) any other similar Registration Rights Agreement relating to Additional Securities.
“Regulation S” means Regulation S under the Securities Act.
“Regulation S Securities” means all Initial Securities offered and sold outside the United States in reliance on Regulation S.
“Restricted Period,” with respect to any Securities, means the period of 40 consecutive days beginning on and including the later of (a) the day on which such Securities are first offered to persons other than distributors (as defined in Regulation S under the Securities Act) in reliance on Regulation S, notice of which day shall be promptly given by the Company to the Trustee, and (b) the Issue Date, and with respect to any Additional Securities that are Transfer Restricted Securities, it means the comparable period of 40 consecutive days.
“Restricted Securities Legend” means the legend set forth in Section 2.2(f)(i) herein.
“Rule 501” means Rule 501(a)(1), (2), (3) or (7) under the Securities Act.
“Rule 144A” means Rule 144A under the Securities Act.
“Rule 144A Securities” means all Initial Securities offered and sold to QIBs in reliance on Rule 144A.
“Securities Custodian” means the custodian with respect to a Global Security (as appointed by the Depository) or any successor person thereto, who shall initially be the Trustee.
“Shelf Registration Statement” means a registration statement filed by the Company in connection with the offer and sale of Initial Securities pursuant to the Registration Agreement.
“Transfer Restricted Securities” means Definitive Securities and any other Securities that bear or are required to bear or are subject to the Restricted Securities Legend.
“Unrestricted Definitive Security” means Definitive Securities and any other Securities that are not required to bear, or are not subject to, the Restricted Securities Legend.
1.2 Other Definitions .
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Term : |
Defined in Section : |
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Agent Members |
2.1(b) |
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Global Securities |
2.1(b) |
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Regulation S Global Securities |
2.1(b) |
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Rule 144A Global Securities |
2.1(b) |
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Regulation S Permanent Global Security |
2.1(b) |
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Regulation S Temporary Global Security |
2.1(b) |
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2. The Securities .
2.1 Form and Dating; Global Securities .
(a) The Initial Securities issued on the date hereof will be (i) offered and sold by the Issuers pursuant to the Purchase Agreement and (ii) resold, initially only to (1) QIBs in reliance on Rule 144A and (2) Persons other than U.S. Persons (as defined in Regulation S) in reliance on Regulation S. Such Initial Securities may thereafter be transferred to, among others, QIBs, purchasers in reliance on Regulation S and, except as set forth below, IAIs in accordance with Rule 501. Additional Securities offered after the date hereof may be offered and sold by the Issuers from time to time pursuant to one or more Purchase Agreements in accordance with applicable law.
(b) Global Securities . (i) Rule 144A Securities initially shall be represented by one or more Securities in definitive, fully registered, global form without interest coupons (collectively, the “Rule 144A Global Securities”).
Regulation S Securities initially shall be represented by one or more Securities in fully registered, global form without interest coupons (collectively, the “Regulation S Temporary Global Security” and, together with the Regulation S Permanent Global Security (defined below), the “Regulation S Global Securities”), which shall be registered in the name of the Depository or the nominee of the Depository for the accounts of designated agents holding on behalf of Euroclear or Clearstream.
The Restricted Period shall be terminated upon the receipt by the Trustee of: (1) a written certificate from the Depository, together with copies of certificates from Euroclear and Clearstream certifying that they have received certification of non-United States beneficial ownership of 100% of the aggregate principal amount of the Regulation S Temporary Global Security (except to the extent of any beneficial owners thereof who acquired an interest therein during the Restricted Period pursuant to another exemption from registration under the Securities Act and who shall take delivery of a beneficial ownership interest in a 144A Global Security bearing a Private Placement Legend, all as contemplated by this Appendix A); and (2) an Officers’ Certificate from the Company.
Following the termination of the Restricted Period, beneficial interests in the Regulation S Temporary Global Security shall be exchanged for beneficial interests in a permanent Global Security (the “Regulation S Permanent Global Security”) pursuant to the applicable procedures of the Depository. Simultaneously with the authentication of the Regulation S Permanent Global Security, the Trustee shall cancel the Regulation S Temporary Global Security. The aggregate principal amount of the Regulation S Temporary Global Security and the Regulation S Permanent Global Security may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depository or its nominee, as the case may be, in connection with transfers of interest as hereinafter provided.
The provisions of the “Operating Procedures of the Euroclear System” and “Terms and Conditions Governing Use of Euroclear” and the “General Terms and Conditions of Clearstream Banking” and “Customer Handbook” of Clearstream shall be applicable to transfers
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of beneficial interests in the Regulation S Temporary Global Security and the Regulation S Permanent Global Security that are held by Participants through Euroclear or Clearstream.
The term “Global Securities” means the Rule 144A Global Securities and the Regulation S Global Securities. The Global Securities shall bear the Global Security Legend. The Global Securities initially shall (i) be registered in the name of the Depository or the nominee of such Depository, in each case for credit to an account of an Agent Member, (ii) be delivered to the Trustee as custodian for such Depository and (iii) bear the Restricted Securities Legend.
Members of, or direct or indirect participants in, the Depository shall have no rights under this Indenture with respect to any Global Security held on their behalf by the Depository, or the Trustee as its custodian, or under the Global Securities. The Depository may be treated by the Issuers, the Trustee and any agent of the Issuers or the Trustee as the absolute owner of the Global Securities for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Issuers, the Trustee or any agent of the Issuers or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depository, or impair, as between the Depository and its Agent Members, the operation of customary practices governing the exercise of the rights of a Holder of any Security.
(ii) Transfers of Global Securities shall be limited to transfer in whole, but not in part, to the Depository, its successors or their respective nominees. Interests of beneficial owners in the Global Securities may be transferred or exchanged for Definitive Securities only in accordance with the applicable rules and procedures of the Depository and the provisions of Section 2.2. In addition, a Global Security shall be exchangeable for Definitive Securities if (x) the Depository (1) notifies the Company that it is unwilling or unable to continue as depository for such Global Security and the Company thereupon fails to appoint a successor depository or (2) has ceased to be a clearing agency registered under the Exchange Act or (y) there shall have occurred and be continuing an Event of Default with respect to such Global Security; provided that in no event shall the Regulation S Temporary Global Security be exchanged by the Issuers for Definitive Securities prior to (x) the expiration of the Restricted Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903(b)(3)(ii)(B) under the Securities Act. In all cases, Definitive Securities delivered in exchange for any Global Security or beneficial interests therein shall be registered in the names, and issued in any approved denominations, requested by or on behalf of the Depository in accordance with its customary procedures.
(iii) In connection with the transfer of a Global Security as an entirety to beneficial owners pursuant to subsection (i) of this Section 2.1(b), such Global Security shall be deemed to be surrendered to the Trustee for cancellation, and the Company shall execute, and the Trustee shall authenticate and make available for delivery, to each beneficial owner identified by the Depository in writing in exchange for its beneficial interest in such Global Security, an equal aggregate principal amount of Definitive Securities of authorized denominations.
(iv) Any Transfer Restricted Security delivered in exchange for an interest in a Global Security pursuant to Section 2.2 shall, except as otherwise provided in Section 2.2, bear the Restricted Securities Legend.
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(v) Notwithstanding the foregoing, through the Restricted Period, a beneficial interest in such Regulation S Global Security may be held only through Euroclear or Clearstream unless delivery is made in accordance with the applicable provisions of Section 2.2.
(vi) The Holder of any Global Security may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Securities.
2.2 Transfer and Exchange.
(a) Transfer and Exchange of Global Securities . A Global Security may not be transferred as a whole except as set forth in Section 2.1(b). Global Securities will not be exchanged by the Issuers for Definitive Securities except under the circumstances described in Section in Section 2.1(b)(ii). Global Securities also may be exchanged or replaced, in whole or in part, as provided in Sections 2.08 and 2.10 of this Indenture. Beneficial interests in a Global Security may be transferred and exchanged as provided in Section 2.2(b) or 2.2(g).
(b) Transfer and Exchange of Beneficial Interests in Global Securities . The transfer and exchange of beneficial interests in the Global Securities shall be effected through the Depository, in accordance with the provisions of this Indenture and the applicable rules and procedures of the Depository. Beneficial interests in Restricted Global Securities shall be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. Beneficial interests in Global Securities shall be transferred or exchanged only for beneficial interests in Global Securities. Transfers and exchanges of beneficial interests in the Global Securities also shall require compliance with either subparagraph (i) or (ii) below, as applicable, as well as one or more of the other following subparagraphs, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Security . Beneficial interests in any Restricted Global Security may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Security in accordance with the transfer restrictions set forth in the Restricted Securities Legend; provided , however , that prior to the expiration of the Restricted Period, transfers of beneficial interests in a Regulation S Global Security may not be made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). A beneficial interest in an Unrestricted Global Security may be transferred to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Security. No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.2(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in Global Securities . In connection with all transfers and exchanges of beneficial interests in any Global Security that is not subject to Section 2.2(b)(i), the transferor of such beneficial interest must deliver to the Registrar (1) a written order from an Agent Member given to the Depository in accordance with the applicable rules and procedures of the Depository directing the Depository to credit or cause to be credited a beneficial interest in another Global Security in an amount equal to the beneficial interest to be transferred or
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exchanged and (2) instructions given in accordance with the applicable rules and procedures of the Depository containing information regarding the Agent Member account to be credited with such increase. Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Securities contained in this Indenture and the Securities or otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount of the relevant Global Security pursuant to Section 2.2(g).
(iii) Transfer of Beneficial Interests to Another Restricted Global Security . A beneficial interest in a Transfer Restricted Global Security may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in another Transfer Restricted Global Security if the transfer complies with the requirements of Section 2.2(b)(ii) above and the Registrar receives the following:
(A) if the transferee will take delivery in the form of a beneficial interest in a Rule 144A Global Security, then the transferor must deliver a certificate in the form attached to the applicable Security; and
(B) if the transferee will take delivery in the form of a beneficial interest in a Regulation S Global Security, then the transferor must deliver a certificate in the form attached to the applicable Security.
(iv) Transfer and Exchange of Beneficial Interests in a Transfer Restricted Global Security for Beneficial Interests in an Unrestricted Global Security . A beneficial interest in a Transfer Restricted Global Security may be exchanged by any holder thereof for a beneficial interest in an Unrestricted Global Security or transferred to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Security if the exchange or transfer complies with the requirements of Section 2.2(b)(ii) above and the Registrar receives the following:
(A) if the holder of such beneficial interest in a Restricted Global Security proposes to exchange such beneficial interest for a beneficial interest in an Unrestricted Global Security, a certificate from such holder in the form attached to the applicable Security; or
(B) if the holder of such beneficial interest in a Restricted Global Security proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Security, a certificate from such holder in the form attached to the applicable Security,
and, in each such case, if the Company or the Registrar so requests or if the applicable rules and procedures of the Depository so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Restricted Securities Legend are no longer required in order to maintain compliance with the Securities Act. If any such transfer or exchange is effected pursuant
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to this subparagraph (iv) at a time when an Unrestricted Global Security has not yet been issued, the Issuers shall issue and, upon receipt of an written order of the Company in the form of an Officers’ Certificate in accordance with Section 2.01, the Trustee shall authenticate one or more Unrestricted Global Securities in an aggregate principal amount equal to the aggregate principal amount of beneficial interests transferred or exchanged pursuant to this subparagraph (iv).
(v) Transfer and Exchange of Beneficial Interests in an Unrestricted Global Security for Beneficial Interests in a Restricted Global Security . Beneficial interests in an Unrestricted Global Security cannot be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global Security.
(c) Transfer and Exchange of Beneficial Interests in Global Securities for Definitive Securities . A beneficial interest in a Global Security may not be exchanged for a Definitive Security except under the circumstances described in Section 2.1(b)(ii). A beneficial interest in a Global Security may not be transferred to a Person who takes delivery thereof in the form of a Definitive Security except under the circumstances described in Section 2.1(b)(ii). In any case, beneficial interests in Global Securities shall be transferred or exchanged only for Definitive Securities.
(d) Transfer and Exchange of Definitive Securities for Beneficial Interests in Global Securities . Transfers and exchanges of beneficial interests in the Global Securities also shall require compliance with either subparagraph (i), (ii) or (ii) below, as applicable:
(i) Transfer Restricted Securities to Beneficial Interests in Restricted Global Securities . If any Holder of a Transfer Restricted Security proposes to exchange such Transfer Restricted Security for a beneficial interest in a Restricted Global Security or to transfer such Transfer Restricted Security to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Security, then, upon receipt by the Registrar of the following documentation:
(A) if the Holder of such Transfer Restricted Security proposes to exchange such Transfer Restricted Security for a beneficial interest in a Restricted Global Security, a certificate from such Holder in the form attached to the applicable Security;
(B) if such Transfer Restricted Security is being transferred to a Qualified Institutional Buyer in accordance with Rule 144A under the Securities Act, a certificate from such Holder in the form attached to the applicable Security;
(C) if such Transfer Restricted Security is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904 under the Securities Act, a certificate from such Holder in the form attached to the applicable Security;
(D) if such Transfer Restricted Security is being transferred pursuant to an exemption from the registration requirements of the Securities Act in
7
accordance with Rule 144 under the Securities Act, a certificate from such Holder in the form attached to the applicable Security;
(E) if such Transfer Restricted Security is being transferred to an Institutional Accredited Investor in reliance on an exemption from the registration requirements of the Securities Act other than those listed in subparagraphs (B) through (D) above, a certificate from such Holder in the form attached to the applicable Security, including the certifications, certificates and Opinion of Counsel, if applicable; or
(F) if such Transfer Restricted Security is being transferred to the Company or a Subsidiary thereof, a certificate from such Holder in the form attached to the applicable Security;
the Trustee shall cancel the Transfer Restricted Security, and increase or cause to be increased the aggregate principal amount of the appropriate Restricted Global Security.
(ii) Transfer Restricted Securities to Beneficial Interests in Unrestricted Global Securities . A Holder of a Transfer Restricted Security may exchange such Transfer Restricted Definitive Security for a beneficial interest in an Unrestricted Global Security or transfer such Transfer Restricted Security to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Security only if the Registrar receives the following:
(A) if the Holder of such Transfer Restricted Security proposes to exchange such Transfer Restricted Security for a beneficial interest in an Unrestricted Global Security, a certificate from such Holder in the form attached to the applicable Security; or
(B) if the Holder of such Transfer Restricted Securities proposes to transfer such Transfer Restricted Security to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Security, a certificate from such Holder in the form attached to the applicable Security,
and, in each such case, if the Company or the Registrar so requests or if the applicable rules and procedures of the Depository so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Restricted Securities Legend are no longer required in order to maintain compliance with the Securities Act. Upon satisfaction of the conditions of this subparagraph (ii), the Trustee shall cancel the Transfer Restricted Securities and increase or cause to be increased the aggregate principal amount of the Unrestricted Global Security. If any such transfer or exchange is effected pursuant to this subparagraph (ii) at a time when an Unrestricted Global Security has not yet been issued, the Company shall issue and, upon receipt of an written order of the Company in the form of an Officers’ Certificate, the Trustee shall authenticate one or more Unrestricted Global Securities in
8
an aggregate principal amount equal to the aggregate principal amount of Transfer Restricted Securities transferred or exchanged pursuant to this subparagraph (ii).
(iii) Unrestricted Definitive Securities to Beneficial Interests in Unrestricted Global Securities . A Holder of an Unrestricted Definitive Security may exchange such Unrestricted Definitive Security for a beneficial interest in an Unrestricted Global Security or transfer such Unrestricted Definitive Security to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Security at any time. Upon receipt of a request for such an exchange or transfer, the Trustee shall cancel the applicable Unrestricted Definitive Security and increase or cause to be increased the aggregate principal amount of one of the Unrestricted Global Securities. If any such transfer or exchange is effected pursuant to this subparagraph (iii) at a time when an Unrestricted Global Security has not yet been issued, the Issuers shall issue and, upon receipt of an written order of the Company in the form of an Officers’ Certificate, the Trustee shall authenticate one or more Unrestricted Global Securities in an aggregate principal amount equal to the aggregate principal amount of Unrestricted Definitive Securities transferred or exchanged pursuant to this subparagraph (iii).
(iv) Unrestricted Definitive Securities to Beneficial Interests in Restricted Global Securities . An Unrestricted Definitive Security cannot be exchanged for, or transferred to a Person who takes delivery thereof in the form of, a beneficial interest in a Restricted Global Security.
(e) Transfer and Exchange of Definitive Securities for Definitive Securities . Upon request by a Holder of Definitive Securities and such Holder’s compliance with the provisions of this Section 2.2(e), the Registrar shall register the transfer or exchange of Definitive Securities. Prior to such registration of transfer or exchange, the requesting Holder shall present or surrender to the Registrar the Definitive Securities duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by its attorney, duly authorized in writing. In addition, the requesting Holder shall provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 2.2(e).
(i) Transfer Restricted Securities to Transfer Restricted Securities . A Transfer Restricted Security may be transferred to and registered in the name of a Person who takes delivery thereof in the form of a Transfer Restricted Security if the Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A under the Securities Act, then the transferor must deliver a certificate in the form attached to the applicable Security;
(B) if the transfer will be made pursuant to Rule 903 or Rule 904 under the Securities Act, then the transferor must deliver a certificate in the form attached to the applicable Security;
9
(C) if the transfer will be made pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144 under the Securities Act, a certificate in the form attached to the applicable Security;
(D) if the transfer will be made to an IAI in reliance on an exemption from the registration requirements of the Securities Act other than those listed in subparagraphs (A) through (D) above, a certificate in the form attached to the applicable Security; and
(E) if such transfer will be made to the Company or a Subsidiary thereof, a certificate in the form attached to the applicable Security.
(ii) Transfer Restricted Securities to Unrestricted Definitive Securities . Any Transfer Restricted Security may be exchanged by the Holder thereof for an Unrestricted Definitive Security or transferred to a Person who takes delivery thereof in the form of an Unrestricted Definitive Security if the Registrar receives the following:
(1) if the Holder of such Transfer Restricted Security proposes to exchange such Transfer Restricted Security for an Unrestricted Definitive Security, a certificate from such Holder in the form attached to the applicable Security; or
(2) if the Holder of such Transfer Restricted Security proposes to transfer such Securities to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Security, a certificate from such Holder in the form attached to the applicable Security,
and, in each such case, if the Registrar so requests, an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Restricted Securities Legend are no longer required in order to maintain compliance with the Securities Act.
(iii) Unrestricted Definitive Securities to Unrestricted Definitive Securities . A Holder of an Unrestricted Definitive Security may transfer such Unrestricted Definitive Securities to a Person who takes delivery thereof in the form of an Unrestricted Definitive Security at any time. Upon receipt of a request to register such a transfer, the Registrar shall register the Unrestricted Definitive Securities pursuant to the instructions from the Holder thereof.
(iv) Unrestricted Definitive Securities to Transfer Restricted Securities . An Unrestricted Definitive Security cannot be exchanged for, or transferred to a Person who takes delivery thereof in the form of, a Transfer Restricted Security.
At such time as all beneficial interests in a particular Global Security have been exchanged for Definitive Securities or a particular Global Security has been redeemed, repurchased or canceled in whole and not in part, each such Global Security shall be returned to or retained and canceled by the Trustee in accordance with Section 2.11. At any time prior to
10
such cancellation, if any beneficial interest in a Global Security is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Security or for Definitive Securities, the principal amount of Securities represented by such Global Security shall be reduced accordingly and an endorsement shall be made on such Global Security by the Trustee or by the Depository at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Security, such other Global Security shall be increased accordingly and an endorsement shall be made on such Global Security by the Trustee or by the Depository at the direction of the Trustee to reflect such increase.
(f) Legend .
(i) Except as permitted by the following paragraph (ii), (iii) or (iv), each Security certificate evidencing the Global Securities and the Definitive Securities (and all Securities issued in exchange therefor or in substitution thereof) shall bear a legend in substantially the following form (each defined term in the legend being defined as such for purposes of the legend only):
“THIS NOTE (OR ITS PREDECESSOR) 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 THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (I) IN THE UNITED STATES TO A PERSON WHOM 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, (II) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF APPLICABLE) OR (IV) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
11
PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS SET FORTH IN CLAUSE (A) ABOVE.”
Each Definitive Security shall bear the following additional legends:
“IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.”
(ii) Upon any sale or transfer of a Transfer Restricted Security that is a Definitive Security, the Registrar shall permit the Holder thereof to exchange such Transfer Restricted Security for a Definitive Security that does not bear the legends set forth above and rescind any restriction on the transfer of such Transfer Restricted Security if the Holder certifies in writing to the Registrar that its request for such exchange was made in reliance on Rule 144 (such certification to be in the form set forth on the reverse of the Initial Security).
(iii) After a transfer of any Initial Securities during the period of the effectiveness of a Shelf Registration Statement with respect to such Initial Securities, all requirements pertaining to the Restricted Securities Legend on such Initial Securities shall cease to apply and the requirements that any such Initial Securities be issued in global form shall continue to apply.
(iv) Upon the consummation of a Registered Exchange Offer with respect to the Initial Securities pursuant to which Holders of such Initial Securities are offered Exchange Securities in exchange for their Initial Securities, all requirements pertaining to Initial Securities that Initial Securities be issued in global form shall continue to apply, and Exchange Securities in global form without the Restricted Securities Legend shall be available to Holders that exchange such Initial Securities in such Registered Exchange Offer.
(v) Upon a sale or transfer after the expiration of the Restricted Period of any Initial Security acquired pursuant to Regulation S, all requirements that such Initial Security bear the Restricted Securities Legend shall cease to apply and the requirements requiring any such Initial Security be issued in global form shall continue to apply.
(vi) Any Additional Securities sold in a registered offering shall not be required to bear the Restricted Securities Legend.
(g) Cancellation or Adjustment of Global Security . At such time as all beneficial interests in a particular Global Security have been exchanged for Definitive Securities or a particular Global Security has been redeemed, repurchased or canceled in whole and not in part, each such Global Security shall be returned to or retained and canceled by the Trustee in accordance with Section 2.11 of this Indenture. At any time prior to such cancellation, if any beneficial interest in a Global Security is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Security or for Definitive Securities, the principal amount of Securities represented by such Global Security shall be reduced accordingly and an endorsement shall be made on such Global Security by the Trustee
12
or by the Depository at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Security, such other Global Security shall be increased accordingly and an endorsement shall be made on such Global Security by the Trustee or by the Depository at the direction of the Trustee to reflect such increase.
(h) Obligations with Respect to Transfers and Exchanges of Securities .
(i) To permit registrations of transfers and exchanges, the Issuers shall execute and the Trustee shall authenticate, Definitive Securities and Global Securities at the Registrar’s request.
(ii) No service charge shall be made for any registration of transfer or exchange, but the Issuers may require payment of a sum sufficient to cover any transfer tax, assessments, or similar governmental charge payable in connection therewith (other than any such transfer taxes, assessments or similar governmental charge payable upon exchanges pursuant to Sections 3.06, 4.06, 4.08 and 9.05 of this Indenture).
(iii) Prior to the due presentation for registration of transfer of any Security, the Issuers, the Trustee, a Paying Agent or the Registrar may deem and treat the person in whose name a Security is registered as the absolute owner of such Security for the purpose of receiving payment of principal of and interest on such Security and for all other purposes whatsoever, whether or not such Security is overdue, and none of the Issuers, the Trustee, the Paying Agent or the Registrar shall be affected by notice to the contrary.
(iv) All Securities issued upon any transfer or exchange pursuant to the terms of this Indenture shall evidence the same debt and shall be entitled to the same benefits under this Indenture as the Securities surrendered upon such transfer or exchange.
(i) No Obligation of the Trustee .
(i) The Trustee shall have no responsibility or obligation to any beneficial owner of a Global Security, a member of, or a participant in the Depository or any other Person with respect to the accuracy of the records of the Depository or its nominee or of any participant or member thereof, with respect to any ownership interest in the Securities or with respect to the delivery to any participant, member, beneficial owner or other Person (other than the Depository) of any notice (including any notice of redemption or repurchase) or the payment of any amount, under or with respect to such Securities. All notices and communications to be given to the Holders and all payments to be made to the Holders under the Securities shall be given or made only to the registered Holders (which shall be the Depository or its nominee in the case of a Global Security). The rights of beneficial owners in any Global Security shall be exercised only through the Depository subject to the applicable rules and procedures of the Depository. The Trustee may rely and shall be fully protected in relying upon information furnished by the Depository with respect to its members, participants and any beneficial owners.
(ii) The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Security (including any transfers
13
between or among Depository participants, members or beneficial owners in any Global Security) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.
14
EXHIBIT A
[FORM OF FACE OF INITIAL SECURITY]
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THE COMPANY 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 IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS 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.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO DTC, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
[Restricted Securities Legend]
“THIS NOTE (OR ITS PREDECESSOR) 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 THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (I) IN THE UNITED STATES TO A PERSON WHOM 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, (II) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (III) PURSUANT TO AN
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EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF APPLICABLE) OR (IV) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS SET FORTH IN CLAUSE (A) ABOVE.”
Each Definitive Security shall bear the following additional legend:
“IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.”
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[FORM OF INITIAL SECURITY]
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No. |
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$ |
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11¾% Senior Subordinated Note due 2016 |
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CUSIP No. |
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ISIN No. |
CHASE MERGER SUB. , a Delaware corporation, promises to pay to Cede & Co., or registered assigns, the principal sum [of Dollars] [listed on the Schedule of Increases or Decreases in Global Security attached hereto](1) on August 1, 2016.
(1) Use the Schedule of Increases and Decreases language if Security is in Global Form.
Interest Payment Dates: February 1 and August 1
Record Dates: January 15 and July 15
Additional provisions of this Security are set forth on the other side of this Security.
IN WITNESS WHEREOF, the parties have caused this instrument to be duly executed.
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CHASE MERGER SUB, INC. |
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By: |
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Name: |
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Title: |
Dated:
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TRUSTEE’S CERTIFICATE OF
AUTHENTICATION
WELLS FARGO BANK,
NATIONAL ASSOCIATION,
as Trustee, certifies that this is
one of the Securities
referred to in the Indenture.
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By: |
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Authorized Signatory |
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* / If the Security is to be issued in global form, add the Global Securities Legend and the attachment from Exhibit A captioned “TO BE ATTACHED TO GLOBAL SECURITIES - SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY”.
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[FORM OF REVERSE SIDE OF INITIAL SECURITY]
11¾% Senior Subordinated Note due 2016
1. Interest
(a) CHASE MERGER SUB, INC. , a Delaware corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the “Company”), promises to pay interest on the principal amount of this Security at the rate per annum shown above. The Company shall pay interest semiannually on February 1 and August 1 of each year, commencing February 1, 2007. Interest on the Securities shall accrue from the most recent date to which interest has been paid or duly provided for or, if no interest has been paid or duly provided for, from July 21, 2006 until the principal hereof is due. Interest shall be computed on the basis of a 360-day year of twelve 30-day months. The Company shall pay interest on overdue principal at the rate borne by the Securities, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful.
(b) Registration Rights Agreement . The Holder of this Security is entitled to the benefits of a Registration Rights Agreement, dated as of July 21, 2006, among the Company, RBS Global, Inc., Rexnord Corporation, the Guarantors and the Initial Purchasers.
2. Method of Payment
The Company shall pay interest on the Securities (except defaulted interest) to the Persons who are registered Holders at the close of business on the January 15 or July 15 next preceding the interest payment date even if Securities are canceled after the record date and on or before the interest payment date (whether or not a Business Day). Holders must surrender Securities to the Paying Agent to collect principal payments. The Company shall pay principal, premium, if any, and interest in money of the United States of America that at the time of payment is legal tender for payment of public and private debts. Payments in respect of the Securities represented by a Global Security (including principal, premium, if any, and interest) shall be made by wire transfer of immediately available funds to the accounts specified by The Depository Trust Company or any successor depositary. The Company shall make all payments in respect of a certificated Security (including principal, premium, if any, and interest) at the office of the Paying Agent, except that, at the option of the Company, payment of interest may be made by mailing a check to the registered address of each Holder thereof; provided , however , that payments on the Securities may also be made, in the case of a Holder of at least $1,000,000 aggregate principal amount of Securities, by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or Paying Agent to such effect designating such account no later than 30 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion).
3. Paying Agent and Registrar
Initially, Wells Fargo Bank, National Association, a national banking association (the “Trustee”), will act as Paying Agent and Registrar. The Company may appoint and change
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any Paying Agent or Registrar without notice. The Company or any of its domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent or Registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as of July 21, 2006 (the “Indenture”), among the Company and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb) as in effect on the date of the Indenture (the “TIA”). Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The Securities are subject to all terms and provisions of the Indenture, and the Holders (as defined in the Indenture) are referred to the Indenture and the TIA for a statement of such terms and provisions
The Securities are senior subordinated unsecured obligations of the Company. This Security is one of the Initial Securities referred to in the Indenture. The Securities include the Initial Securities, any Additional Securities and any Exchange Securities issued in exchange for the Initial Securities or any Additional Securities pursuant to the Indenture. The Initial Securities, any Additional Securities and any Exchange Securities are treated as a single class of securities under the Indenture. The Indenture imposes certain limitations on the ability of the Company and its Restricted Subsidiaries to, among other things, make certain Investments and other Restricted Payments, pay dividends and other distributions, incur Indebtedness, enter into consensual restrictions upon the payment of certain dividends and distributions by such Restricted Subsidiaries, issue or sell shares of capital stock of the Company and such Restricted Subsidiaries, enter into or permit certain transactions with Affiliates, create or incur Liens and make Asset Sales. The Indenture also imposes limitations on the ability of the Company and each Guarantor to consolidate or merge with or into any other Person or convey, transfer or lease all or substantially all of its property.
To guarantee the due and punctual payment of the principal and interest on the Securities and all other amounts payable by the Company under the Indenture and the Securities when and as the same shall be due and payable, whether at maturity, by acceleration or otherwise, according to the terms of the Securities and the Indenture, the Guarantors have, jointly and severally, unconditionally guaranteed the Guaranteed Obligations on a senior subordinated basis pursuant to the terms of the Indenture.
5. Optional Redemption
Except as set forth in the following two paragraphs, the Securities shall not be redeemable at the option of the Company prior to August 1, 2011. Thereafter, the Securities shall be redeemable at the option of the Company, in whole at any time or in part from time to time, upon on not less than 30 nor more than 60 days’ prior notice, at the following redemption prices (expressed as a percentage of principal amount), plus accrued and unpaid interest and additional interest, if any, to the redemption date (subject to the right of the Holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the 12-month period commencing on August 1 of the years set forth below:
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Year |
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Redemption Price |
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2011 |
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105.875 |
% |
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2012 |
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103.917 |
% |
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2013 |
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101.958 |
% |
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2014 and thereafter |
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100.000 |
% |
In addition, prior to August 1, 2011, the Company may redeem the Securities at their option, in whole at any time or in part from time to time, upon not less than 30 nor more than 60 days’ prior notice mailed by first-class mail to each Holder’s registered address, at a redemption price equal to 100% of the principal amount of the Securities redeemed plus the Applicable Premium as of, and accrued and unpaid interest and additional interest, if any, to, the applicable redemption date (subject to the right of the Holders of record on the relevant record date to receive interest due on the relevant interest payment date).
Notwithstanding the foregoing, at any time and from time to time on or prior to August 1, 2009, the Company may redeem in the aggregate up to 35% of the original aggregate principal amount of the Securities (calculated after giving effect to any issuance of Additional Securities), with the net cash proceeds of one or more Equity Offerings (1) by the Company or (2) by any direct or indirect parent of the Company, in each case, to the extent the net cash proceeds thereof are contributed to the common equity capital of the Company or used to purchase Capital Stock (other than Disqualified Stock) of the Company from it, at a redemption price equal to 111.750% of the principal amount thereof plus accrued and unpaid interest and additional interest, if any, to the redemption date (subject to the right of the Holders of record on the relevant record date to receive interest due on the relevant interest payment date); provided , however, that at least 65% of the original aggregate principal amount of the Securities (calculated after giving effect to any issuance of Additional Securities) must remain outstanding after each such redemption; and provided , further , that such redemption shall occur within 90 days after the date on which any such Equity Offering is consummated upon not less than 30 nor more than 60 days’ notice mailed to each Holder of Securities being redeemed and otherwise in accordance with the procedures set forth in the Indenture. Notice of any redemption upon any Equity Offering may be given prior to the completion thereof, and any such redemption or notice may, at the Company’s discretion, be subject to one or more conditions precedent, including, but not limited to, completion of the related Equity Offering.
6. Sinking Fund
The Securities are not subject to any sinking fund.
7. Notice of Redemption
Notice of redemption will be mailed by first-class mail at least 30 days but not more than 60 days before the redemption date to each Holder of Securities to be redeemed at his, her or its registered address. Securities in denominations larger than $2,000 may be redeemed in part but only in whole multiples of $1,000. If money sufficient to pay the redemption price of and accrued and unpaid interest on all Securities (or portions thereof) to be redeemed on the redemption date is deposited with a Paying Agent on or before the redemption date and certain
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other conditions are satisfied, on and after such date, interest ceases to accrue on such Securities (or such portions thereof) called for redemption.
8. Repurchase of Securities at the Option of the Holders upon Change of Control and Asset Sales
Upon the occurrence of a Change of Control, each Holder shall have the right, subject to certain conditions specified in the Indenture, to cause the Company to repurchase all or any part of such Holder’s Securities at a purchase price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of repurchase (subject to the right of the Holders of record on the relevant record date to receive interest due on the relevant interest payment date), as provided in, and subject to the terms of, the Indenture.
In accordance with Section 4.06 of the Indenture, the Company will be required to offer to purchase Securities upon the occurrence of certain events.
9. Subordination
The Securities and Guarantees are subordinated to Senior Indebtedness, as defined in the Indenture. To the extent provided in the Indenture, Senior Indebtedness must be paid before the Securities and Guarantees may be paid. The Company and each Guarantor agree, and each Holder by accepting a Security agrees, to the subordination provisions contained in the Indenture and authorizes the Trustee to give it effect and appoints the Trustee as attorney-in-fact for such purpose.
10. Denominations; Transfer; Exchange
The Securities are in registered form, without coupons, in denominations of $2,000 and any integral multiple of $1,000. A Holder shall register the transfer of or exchange of Securities in accordance with the Indenture. Upon any registration of transfer or exchange, the Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Securities selected for redemption (except, in the case of a Security to be redeemed in part, the portion of the Security not to be redeemed) or to transfer or exchange any Securities for a period of 15 days prior to a selection of Securities to be redeemed.
11. Persons Deemed Owners
The registered Holder of this Security shall be treated as the owner of it for all purposes.
12. Unclaimed Money
If money for the payment of principal or interest remains unclaimed for two years, the Trustee and a Paying Agent shall pay the money back to the Company at their written request unless an abandoned property law designates another Person. After any such payment, the
A-8
Holders entitled to the money must look to the Company for payment as general creditors and the Trustee and a Paying Agent shall have no further liability with respect to such monies.
13. Discharge and Defeasance
Subject to certain conditions, the Company at any time may terminate some of or all its obligations under the Securities and the Indenture if the Company deposits with the Trustee money or U.S. Government Obligations for the payment of principal and interest on the Securities to redemption or maturity, as the case may be.
14. Amendment; Waiver
Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Securities may be amended with the written consent of the Holders of at least a majority in aggregate principal amount of the outstanding Securities (voting as a single class) and (ii) any past default or compliance with any provisions may be waived with the written consent of the Holders of at least a majority in principal amount of the outstanding Securities. Subject to certain exceptions set forth in the Indenture, without the consent of any Holder, the Company and the Trustee may amend the Indenture or the Securities (i) to cure any ambiguity, omission, defect or inconsistency; (ii) to provide for the assumption by a Successor Company of the obligations of the Company under the Indenture and the Notes; (iii) to provide for the assumption by a Successor Guarantor of the obligations of a Guarantor under the Indenture and its Guarantee; (iv) to provide for uncertificated Securities in addition to or in place of certificated Securities ( provided that the uncertificated Securities are issued in registered form for purposes of Section 163(f) of the Code, or in a manner such that the uncertificated Securities are described in Section 163(f)(2)(B) of the Code); (v) to add Guarantees with respect to the Securities; (vi) to add additional covenants of the Company for the benefit of the Holders or to surrender rights and powers conferred on the Company; (vii) to comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the TIA; (viii) to make any change that does not adversely affect the rights of any Holder; or (ix) to provide for the issuance of the Exchange Securities or Additional Securities.
15. Defaults and Remedies
If an Event of Default occurs (other than an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Company) and is continuing, the Trustee or the Holders of at least 25% in principal amount of the outstanding Securities, in each case, by notice to the Company, may declare the principal of, premium, if any, and accrued but unpaid interest on all the Securities to be due and payable. If an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Company occurs, the principal of, premium, if any, and interest on all the Securities shall become immediately due and payable without any declaration or other act on the part of the Trustee or any Holders. Under certain circumstances, the Holders of a majority in principal amount of the outstanding Securities may rescind any such acceleration with respect to the Securities and its consequences.
If an Event of Default occurs and is continuing, the Trustee shall be under no obligation to exercise any of the rights or powers under the Indenture at the request or direction
A-9
of any of the Holders unless such Holders have offered to the Trustee reasonable indemnity or security against any loss, liability or expense and certain other conditions are complied with. Except to enforce the right to receive payment of principal, premium (if any) or interest when due, no Holder may pursue any remedy with respect to the Indenture or the Securities unless (i) such Holder has previously given the Trustee notice that an Event of Default is continuing, (ii) the Holders of at least 25% in principal amount of the outstanding Securities have requested the Trustee in writing to pursue the remedy, (iii) such Holders have offered the Trustee reasonable security or indemnity against any loss, liability or expense, (iv) the Trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity and (v) the Holders of a majority in principal amount of the outstanding Securities have not given the Trustee a direction inconsistent with such request within such 60-day period. Subject to certain restrictions, the Holders of a majority in principal amount of the outstanding Securities are given the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. The Trustee, however, may refuse to follow any direction that conflicts with law or the Indenture or that the Trustee determines is unduly prejudicial to the rights of any other Holder or that would involve the Trustee in personal liability. Prior to taking any action under the Indenture, the Trustee shall be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action.
16. Trustee Dealings with the Company
Subject to certain limitations imposed by the TIA, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee.
17. No Recourse Against Others
No director, officer, employee, incorporator or holder of any equity interests in the Company or of any Guarantor or any direct or indirect parent corporation, as such, shall have any liability for any obligations of the Company or the Guarantors under the Securities, the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Securities by accepting a Security waives and releases all such liability.
18. Authentication
This Security shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of authentication on the other side of this Security.
19. 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 rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act).
A-10
20. Governing Law
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
21. CUSIP Numbers; ISINs
The Company has caused CUSIP numbers and ISINs to be printed on the Securities and has directed the Trustee to use CUSIP numbers and ISINs in notices of redemption as a convenience to the Holders. No representation is made as to the accuracy of such numbers either as printed on the Securities 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 of Securities upon written request and without charge to the Holder a copy of the Indenture which has in it the text of this Security.
A-11
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to:
(Print or type assignee’s name, address and zip code)
(Insert assignee’s soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Security 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 other side of this Security.
Signature Guarantee:
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Date: |
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Signature must be guaranteed by a participant in a recognized signature guaranty medallion program or other signature guarantor program reasonably acceptable to the Trustee |
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Signature of Signature Guarantee |
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A-12
CERTIFICATE TO BE
DELIVERED UPON EXCHANGE OR
REGISTRATION OF TRANSFER RESTRICTED SECURITIES
This certificate relates to $ principal amount of Securities held in (check applicable space) book-entry or definitive form by the undersigned.
The undersigned (check one box below):
o has requested the Trustee by written order to deliver in exchange for its beneficial interest in the Global Security held by the Depository a Security or Securities in definitive, registered form of authorized denominations and an aggregate principal amount equal to its beneficial interest in such Global Security (or the portion thereof indicated above);
o has requested the Trustee by written order to exchange or register the transfer of a Security or Securities.
In connection with any transfer of any of the Securities evidenced by this certificate occurring prior to the expiration of the period referred to in Rule 144(k) under the Securities Act, the undersigned confirms that such Securities are being transferred in accordance with its terms:
CHECK ONE BOX BELOW
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(1) |
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o |
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to the Company; or |
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(2) |
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o |
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to the Registrar for registration in the name of the Holder, without transfer; or |
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(3) |
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o |
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pursuant to an effective registration statement under the Securities Act of 1933; or |
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(4) |
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o |
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inside the United States to a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act of 1933) that purchases for its own account or for the account of a qualified institutional buyer to whom notice is given that such transfer is being made in reliance on Rule 144A, in each case pursuant to and in compliance with Rule 144A under the Securities Act of 1933; or |
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(5) |
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o |
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outside the United States in an offshore transaction within the meaning of Regulation S under the Securities Act in compliance with Rule 904 under the Securities Act of 1933 and such Security shall be held immediately after the transfer through Euroclear or Clearstream until the expiration of the Restricted Period (as defined in the Indenture); or |
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(6) |
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o |
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to an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933) that has furnished to the Trustee a signed letter containing certain representations and agreements; or |
A-13
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(7) |
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o |
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pursuant to another available exemption from registration provided by Rule 144 under the Securities Act of 1933. |
Unless one of the boxes is checked, the Trustee will refuse to register any of the Securities evidenced by this certificate in the name of any Person other than the registered Holder thereof; provided , however , that if box (5), (6) or (7) is checked, the Company or the Trustee may require, prior to registering any such transfer of the Securities, such legal opinions, certifications and other information as the Company or the Trustee have reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933.
Date: Your Signature:
Signature Guarantee:
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Date: |
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Signature must be guaranteed by a participant in a recognized signature guaranty medallion program or other signature guarantor program reasonably acceptable to the Trustee |
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Signature of Signature Guarantee |
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A-14
TO BE COMPLETED BY PURCHASER IF (4) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Security for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act of 1933, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned’s foregoing representations in order to claim the exemption from registration provided by Rule 144A.
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Dated: |
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NOTICE: To be executed by an executive officer |
A-15
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The initial principal amount of this Global Security is $ . The following increases or decreases in this Global Security have been made:
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Amount of decrease in Principal Amount of this Global Security |
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Amount of increase in Principal Amount of this Global Security |
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Principal amount of this Global Security following such decrease or increase |
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Signature of authorized signatory of Trustee or Securities Custodian |
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A-16
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company pursuant to Section 4.06 (Asset Sale) or 4.08 (Change of Control) of the Indenture, check the box:
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Asset Sale o |
Change of Control o |
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If you want to elect to have only part of this Security purchased by the Company pursuant to Section 4.06 (Asset Sale) or 4.08 (Change of Control) of the Indenture, state the amount ($2,000 or any integral multiple of $1,000):
$
Date: Your Signature:
(Sign exactly as your name appears on the other side of this Security)
Signature Guarantee:
Signature must be guaranteed by a participant in a recognized signature guaranty medallion program or other signature guarantor program reasonably acceptable to the Trustee
A-17
EXHIBIT B
[FORM OF FACE OF EXCHANGE
SECURITY]
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THE COMPANY 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 IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS 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.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO DTC, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
B-1
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No. |
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$ |
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11¾% Senior Subordinated Note due 2016 |
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CUSIP No. |
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ISIN No. |
CHASE MERGER SUB, INC. , a Delaware corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the “Company”), promises to pay to Cede & Co., or registered assigns, the principal sum [of Dollars] [listed on the Schedule of Increases or Decreases in Global Security attached hereto] (2) on August 1, 2016.
(2) Use the Schedule of Increases and Decreases language if Security is in Global Form.
Interest Payment Dates: February 1 and August 1
Record Dates: January 15 and July 15
Additional provisions of this Security are set forth on the other side of this Security.
IN WITNESS WHEREOF, the parties have caused this instrument to be duly executed.
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CHASE MERGER SUB, INC. |
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By: |
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Name: |
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Title: |
Dated:
B-2
TRUSTEE’S CERTIFICATE OF
AUTHENTICATION
WELLS FARGO BANK,
NATIONAL ASSOCIATION,
as Trustee, certifies that this is
one of the Securities
referred to in the Indenture.
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By: |
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Authorized Signatory |
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* / If the Security is to be issued in global form, add the Global Securities Legend and the attachment from Exhibit A captioned “TO BE ATTACHED TO GLOBAL SECURITIES - SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY”.
B-3
[FORM OF REVERSE SIDE OF EXCHANGE SECURITY]
11¾% Senior Subordinated Note due 2016
1. Interest
CHASE MERGER SUB, INC. , a Delaware corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the “Company”), promises to pay interest on the principal amount of this Security at the rate per annum shown above. The Company shall pay interest semiannually on February 1 and August 1 of each year, commencing February 1, 2007. Interest on the Securities shall accrue from the most recent date to which interest has been paid or duly provided for or, if no interest has been paid or duly provided for, from July 21, 2006 until the principal hereof is due. Interest shall be computed on the basis of a 360-day year of twelve 30-day months. The Company shall pay interest on overdue principal at the rate borne by the Securities, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful.
2. Method of Payment
The Company shall pay interest on the Securities (except defaulted interest) to the Persons who are registered Holders at the close of business on the January 15 or July 15 next preceding the interest payment date even if Securities are canceled after the record date and on or before the interest payment date (whether or not a Business Day). Holders must surrender Securities to the Paying Agent to collect principal payments. The Company shall pay principal, premium, if any, and interest in money of the United States of America that at the time of payment is legal tender for payment of public and private debts. Payments in respect of the Securities represented by a Global Security (including principal, premium, if any, and interest) shall be made by wire transfer of immediately available funds to the accounts specified by The Depository Trust Company or any successor depositary. The Company shall make all payments in respect of a certificated Security (including principal, premium, if any, and interest), at the office of the Paying Agent, except that, at the option of the Company, payment of interest may be made by mailing a check to the registered address of each Holder thereof; provided , however , that payments on the Securities may also be made, in the case of a Holder of at least $1,000,000 aggregate principal amount of Securities, by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or Paying Agent to such effect designating such account no later than 30 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion).
3. Paying Agent and Registrar
Initially, Wells Fargo Bank, National Association, a national banking association (the “Trustee”), will act as Paying Agent and Registrar. The Company may appoint and change any Paying Agent or Registrar without notice. The Company or any of its domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent or Registrar.
B-4
4. Indenture
The Company issued the Securities under an Indenture dated as of July 21, 2006 (the “Indenture”), among the Company and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb) as in effect on the date of the Indenture (the “TIA”). Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The Securities are subject to all terms and provisions of the Indenture, and the Holders (as defined in the Indenture) are referred to the Indenture and the TIA for a statement of such terms and provisions.
The Securities are senior subordinated unsecured obligations of the Company. This Security is one of the Exchange Securities referred to in the Indenture. The Securities include the Initial Securities, any Additional Securities and any Exchange Securities issued in exchange for the Initial Securities or any Additional Securities pursuant to the Indenture. The Initial Securities, any Additional Securities and any Exchange Securities are treated as a single class of securities under the Indenture. The Indenture imposes certain limitations on the ability of the Company and its Restricted Subsidiaries to, among other things, make certain Investments and other Restricted Payments, pay dividends and other distributions, incur Indebtedness, enter into consensual restrictions upon the payment of certain dividends and distributions by such Restricted Subsidiaries, issue or sell shares of capital stock of the Company and such Restricted Subsidiaries, enter into or permit certain transactions with Affiliates, create or incur Liens and make Asset Sales. The Indenture also imposes limitations on the ability of the Company and each Guarantor to consolidate or merge with or into any other Person or convey, transfer or lease all or substantially all of its property.
To guarantee the due and punctual payment of the principal and interest on the Securities and all other amounts payable by the Company under the Indenture and the Securities when and as the same shall be due and payable, whether at maturity, by acceleration or otherwise, according to the terms of the Securities and the Indenture, the Guarantors have, jointly and severally, unconditionally guaranteed the Guaranteed Obligations on a senior subordinated basis pursuant to the terms of the Indenture.
5. Optional Redemption
Except as set forth in the following two paragraphs, the Securities shall not be redeemable at the option of the Company prior to August 1, 2011. Thereafter, the Securities shall be redeemable at the option of the Company, in whole at any time or in part from time to time, upon on not less than 30 nor more than 60 days’ prior notice, at the following redemption prices (expressed as a percentage of principal amount), plus accrued and unpaid interest and additional interest, if any, to the redemption date (subject to the right of the Holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the 12-month period commencing on August 1 of the years set forth below:
B-5
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Year |
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Redemption Price |
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2011 |
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105.875 |
% |
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2012 |
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103.917 |
% |
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2013 |
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101.958 |
% |
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2014 and thereafter |
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100.000 |
% |
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In addition, prior to August 1, 2011, the Company may redeem the Securities at its option, in whole at any time or in part from time to time, upon not less than 30 nor more than 60 days’ prior notice mailed by first-class mail to each Holder’s registered address, at a redemption price equal to 100% of the principal amount of the Securities redeemed plus the Applicable Premium as of, and accrued and unpaid interest and additional interest, if any, to, the applicable redemption date (subject to the right of the Holders of record on the relevant record date to receive interest due on the relevant interest payment date).
Notwithstanding the foregoing, at any time and from time to time on or prior to August 1, 2009, the Company may redeem in the aggregate up to 35% of the original aggregate principal amount of the Securities (calculated after giving effect to any issuance of Additional Securities), with the net cash proceeds of one or more Equity Offerings (1) by the Company or (2) by any direct or indirect parent of the Company, in each case, to the extent the net cash proceeds thereof are contributed to the common equity capital of the Company or used to purchase Capital Stock (other than Disqualified Stock) of the Company from it, at a redemption price equal to 111.750% of the principal amount thereof plus accrued and unpaid interest and additional interest, if any, to the redemption date (subject to the right of the Holders of record on the relevant record date to receive interest due on the relevant interest payment date); provided , however , that at least 65% of the original aggregate principal amount of the Securities (calculated after giving effect to any issuance of Additional Securities) must remain outstanding after each such redemption; and provided , further , that such redemption shall occur within 90 days after the date on which any such Equity Offering is consummated upon not less than 30 nor more than 60 days’ notice mailed to each Holder of Securities being redeemed and otherwise in accordance with the procedures set forth in the Indenture. Notice of any redemption upon any Equity Offering may be given prior to the completion thereof, and any such redemption or notice may, at the Company’s discretion, be subject to one or more conditions precedent, including, but not limited to, completion of the related Equity Offering.
6. Sinking Fund
The Securities are not subject to any sinking fund.
7. Notice of Redemption
Notice of redemption will be mailed by first-class mail at least 30 days but not more than 60 days before the redemption date to each Holder of Securities to be redeemed at his, her or its registered address. Securities in denominations larger than $2,000 may be redeemed in part but only in whole multiples of $1,000. If money sufficient to pay the redemption price of and accrued and unpaid interest on all Securities (or portions thereof) to be redeemed on the redemption date is deposited with a Paying Agent on or before the redemption date and certain other conditions are satisfied, on and after such date interest ceases to accrue on such Securities (or such portions thereof) called for redemption.
B-6
8. Repurchase of Securities at the Option of the Holders upon Change of Control and Asset Sales
Upon the occurrence of a Change of Control, each Holder shall have the right, subject to certain conditions specified in the Indenture, to cause the Company to repurchase all or any part of such Holder’s Securities at a purchase price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of repurchase (subject to the right of the Holders of record on the relevant record date to receive interest due on the relevant interest payment date), as provided in, and subject to the terms of, the Indenture.
In accordance with Section 4.06 of the Indenture, the Company will be required to offer to purchase Securities upon the occurrence of certain events.
9. Subordination
The Securities and Guarantees are subordinated to Senior Indebtedness, as defined in the Indenture. To the extent provided in the Indenture, Senior Indebtedness must be paid before the Securities and Guarantees may be paid. The Company and each Guarantor agrees, and each Holder by accepting a Security agrees, to the subordination provisions contained in the Indenture and authorizes the Trustee to give it effect and appoints the Trustee as attorney-in-fact for such purpose.
10. Denominations; Transfer; Exchange
The Securities are in registered form, without coupons, in denominations of $2,000 and any integral multiple of $1,000. A Holder shall register the transfer of or exchange of Securities in accordance with the Indenture. Upon any registration of transfer or exchange, the Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Securities selected for redemption (except, in the case of a Security to be redeemed in part, the portion of the Security not to be redeemed) or to transfer or exchange any Securities for a period of 15 days prior to a selection of Securities to be redeemed.
11. Persons Deemed Owners
The registered Holder of this Security shall be treated as the owner of it for all purposes.
12. Unclaimed Money
If money for the payment of principal or interest remains unclaimed for two years, the Trustee and a Paying Agent shall pay the money back to the Company at their written request unless an abandoned property law designates another Person. After any such payment, the Holders entitled to the money must look to the Company for payment as general creditors and the Trustee and a Paying Agent shall have no further liability with respect to such monies.
B-7
13. Discharge and Defeasance
Subject to certain conditions, the Company at any time may terminate some of or all its obligations under the Securities and the Indenture if the Company deposits with the Trustee money or U.S. Government Obligations for the payment of principal and interest on the Securities to redemption or maturity, as the case may be.
14. Amendment; Waiver
Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Securities may be amended with the written consent of the Holders of at least a majority in aggregate principal amount of the outstanding Securities (voting as a single class) and (ii) any past default or compliance with any provisions may be waived with the written consent of the Holders of at least a majority in principal amount of the outstanding Securities. Subject to certain exceptions set forth in the Indenture, without the consent of any Holder, the Company and the Trustee may amend the Indenture or the Securities (i) to cure any ambiguity, omission, defect or inconsistency; (ii) to provide for the assumption by a Successor Company of the obligations of the Company under the Indenture and the Notes; (iii) to provide for the assumption by a Successor Guarantor of the obligations of a Guarantor under the Indenture and its Guarantee; (iv) to provide for uncertificated Securities in addition to or in place of certificated Securities ( provided that the uncertificated Securities are issued in registered form for purposes of Section 163(f) of the Code, or in a manner such that the uncertificated Securities are described in Section 163(f)(2)(B) of the Code); (v) to add Guarantees with respect to the Securities; (vi) to add additional covenants of the Company for the benefit of the Holders or to surrender rights and powers conferred on the Company; (vii) to comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the TIA; (viii) to make any change that does not adversely affect the rights of any Holder; or (ix) to provide for the issuance of the Exchange Securities or Additional Securities.
15. Defaults and Remedies
If an Event of Default occurs (other than an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Company) and is continuing, the Trustee or the Holders of at least 25% in principal amount of the outstanding Securities, in each case, by notice to the Company, may declare the principal of, premium, if any, and accrued but unpaid interest on all the Securities to be due and payable. If an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Company occurs, the principal of, premium, if any, and interest on all the Securities shall become immediately due and payable without any declaration or other act on the part of the Trustee or any Holders. Under certain circumstances, the Holders of a majority in principal amount of the outstanding Securities may rescind any such acceleration with respect to the Securities and its consequences.
If an Event of Default occurs and is continuing, the Trustee shall be under no obligation to exercise any of the rights or powers under the Indenture at the request or direction of any of the Holders unless such Holders have offered to the Trustee reasonable indemnity or security against any loss, liability or expense and certain other conditions are complied with. Except to enforce the right to receive payment of principal, premium (if any) or interest when
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due, no Holder may pursue any remedy with respect to the Indenture or the Securities unless (i) such Holder has previously given the Trustee notice that an Event of Default is continuing, (ii) the Holders of at least 25% in principal amount of the outstanding Securities have requested the Trustee in writing to pursue the remedy, (iii) such Holders have offered the Trustee reasonable security or indemnity against any loss, liability or expense, (iv) the Trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity and (v) the Holders of a majority in principal amount of the outstanding Securities have not given the Trustee a direction inconsistent with such request within such 60-day period. Subject to certain restrictions, the Holders of a majority in principal amount of the outstanding Securities are given the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. The Trustee, however, may refuse to follow any direction that conflicts with law or the Indenture or that the Trustee determines is unduly prejudicial to the rights of any other Holder or that would involve the Trustee in personal liability. Prior to taking any action under the Indenture, the Trustee shall be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action.
16. Trustee Dealings with the Company
Subject to certain limitations imposed by the TIA, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee.
17. No Recourse Against Others
No director, officer, employee, incorporator or holder of any equity interests in the Company or of any Guarantor or any direct or indirect parent corporation, as such, shall have any liability for any obligations of the Company or the Guarantors under the Securities, the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Securities by accepting a Security waives and releases all such liability.
18. Authentication
This Security shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of authentication on the other side of this Security.
19. 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 rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act).
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20. Governing Law
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
21. CUSIP Numbers; ISINs
The Company has caused CUSIP numbers and ISINs to be printed on the Securities and has directed the Trustee to use CUSIP numbers and ISINs in notices of redemption as a convenience to the Holders. No representation is made as to the accuracy of such numbers either as printed on the Securities 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 of Securities upon written request and without charge to the Holder a copy of the Indenture which has in it the text of this Security.
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ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to:
(Print or type assignee’s name, address and zip code)
(Insert assignee’s soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Security on the books of the Company. The agent may substitute another to act for him.
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Sign exactly as your name appears on the other side of this Security. |
Signature Guarantee:
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Signature must be guaranteed by a participant in a recognized signature guaranty medallion program or other signature guarantor program reasonably acceptable to the Trustee |
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OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company pursuant to Section 4.06 (Asset Sale) or 4.08 (Change of Control) of the Indenture, check the box:
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If you want to elect to have only part of this Security purchased by the Company pursuant to Section 4.06 (Asset Sale) or 4.08 (Change of Control) of the Indenture, state the amount ($2,000 or any integral multiple of $1,000):
$
Date: Your Signature:
(Sign exactly as your name appears on the other side of this Security)
Signature Guarantee:
Signature must be guaranteed by a participant in a recognized signature guaranty medallion program or other signature guarantor program reasonably acceptable to the Trustee
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[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The initial principal amount of this Global Security is $ . The following increases or decreases in this Global Security have been made:
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EXHIBIT C
[FORM OF]
TRANSFEREE LETTER OF REPRESENTATION
RBS Global, Inc.
Rexnord
Corporation
c/o Wells Fargo Bank, National Association
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Attention: Vice President
Ladies and Gentlemen:
This certificate is delivered to request a transfer of $[ ] principal amount of the 11¾% Senior Subordinated Notes due 2016 (the “Securities”) of RBS GLOBAL, INC. and REXNORD CORPORATION (together, the “Issuers”).
Upon transfer, the Securities would be registered in the name of the new beneficial owner as follows:
Name: ________________________
Address: _____________________
Taxpayer ID Number: __________
The undersigned represents and warrants to you that:
1. We are an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended (the “Securities Act”)), purchasing for our own account or for the account of such an institutional “accredited investor” at least $100,000 principal amount of the Securities, and we are acquiring the Securities not with a view to, or for offer or sale in connection with, any distribution in violation of the Securities Act. We have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Securities, and we invest in or purchase securities similar to the Securities in the normal course of our business. We, and any accounts for which we are acting, are each able to bear the economic risk of our or its investment.
2. We understand that the Securities have not been registered under the Securities Act and, unless so registered, may not be sold except as permitted in the following sentence. We agree on our own behalf and on behalf of any investor account for which we are purchasing Securities to offer, sell or otherwise transfer such Securities prior to the date that is two years after the later of the date of original issue and the last date on which either the Issuers or any affiliate of such Issuer was the owner of such Securities (or any predecessor thereto) (the “Resale Restriction Termination Date”) only (a) in the United States to a person whom we reasonably believe is a qualified institutional buyer (as defined in rule 144A under the Securities Act) in a transaction meeting the requirements of Rule 144A, (b) outside the United States in an
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offshore transaction in accordance with Rule 904 of Regulation S under the Securities Act, (c) pursuant to an exemption from registration under the Securities Act provided by Rule 144 thereunder (if applicable) or (d) pursuant to an effective registration statement under the Securities Act, in each of cases (a) through (d) in accordance with any applicable securities laws of any state of the United States. In addition, we will, and each subsequent holder is required to, notify any purchaser of the Security evidenced hereby of the resale restrictions set forth above. The foregoing restrictions on resale will not apply subsequent to the Resale Restriction Termination Date. If any resale or other transfer of the Securities is proposed to be made to an institutional “accredited investor” prior to the Resale Restriction Termination Date, the transferor shall deliver a letter from the transferee substantially in the form of this letter to the Issuers and the Trustee, which shall provide, among other things, that the transferee is an institutional “accredited investor” within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act and that it is acquiring such Securities for investment purposes and not for distribution in violation of the Securities Act. Each purchaser acknowledges that the Issuers and the Trustee reserve the right prior to the offer, sale or other transfer prior to the Resale Restriction Termination Date of the Securities pursuant to clause 1(b), 1(c) or 1(d) above to require the delivery of an opinion of counsel, certifications or other information satisfactory to the Issuers and the Trustee.
Dated: ____________________
TRANSFEREE: ____________________,
By:
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EXHIBIT D
[FORM OF SUPPLEMENTAL INDENTURE]
SUPPLEMENTAL INDENTURE (this “Supplemental Indenture”) dated as of [ ], among [GUARANTOR] (the “New Guarantor”), a subsidiary of RBS GLOBAL, INC. (or its successor), a Delaware corporation (the “Company”), REXNORD CORPORATION, a Delaware corporation (“Rexnord” and, together with the Company, the “Issuers”) and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as trustee under the indenture referred to below (the “Trustee”).
W I T N E S S E T H :
WHEREAS the Issuers and the existing Guarantors have heretofore executed and delivered to the Trustee an indenture (as amended, supplemented or otherwise modified, the “Indenture”) dated as of July 21, 2006, providing for the issuance of the Issuers’ 11¾% Senior Subordinated Notes due 2016 (the “Securities”), initially in the aggregate principal amount of $300,000,000;
WHEREAS Section 4.11 of the Indenture provides that under certain circumstances the Issuers are required to cause the New Guarantor to execute and deliver to the Trustee a supplemental indenture pursuant to which the New Guarantor shall unconditionally guarantee all the Issuers’ Obligations under the Securities and the Indenture pursuant to a Guarantee on the terms and conditions set forth herein; and
WHEREAS pursuant to Section 9.01 of the Indenture, the Trustee, the Issuers and the existing Guarantors are authorized to execute and deliver this Supplemental Indenture;
NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the New Guarantor, the Issuers and the Trustee mutually covenant and agree for the equal and ratable benefit of the holders of the Securities as follows:
1. Defined Terms . As used in this Supplemental Indenture, terms defined in the Indenture or in the preamble or recital hereto are used herein as therein defined, except that the term “Holders” in this Guarantee shall refer to the term “Holders” as defined in the Indenture and the Trustee acting on behalf of and for the benefit of such Holders. The words “herein,” “hereof” and “hereby” and other words of similar import used in this Supplemental Indenture refer to this Supplemental Indenture as a whole and not to any particular section hereof.
2. Agreement to Guarantee . The New Guarantor hereby agrees, jointly and severally with all existing Guarantors (if any), to unconditionally guarantee the Issuers’ Obligations under the Securities and the Indenture on the terms and subject to the conditions set forth in Articles 11 and 12 of the Indenture and to be bound by all other applicable provisions of the Indenture and the Securities and to perform all of the obligations and agreements of a Guarantor under the Indenture.
3. Notices . All notices or other communications to the New Guarantor shall be given as provided in Section 13.02 of the Indenture.
4. Ratification of Indenture; Supplemental Indentures Part of Indenture . Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Supplemental Indenture shall form a part of the Indenture for all purposes, and every holder of Securities heretofore or hereafter authenticated and delivered shall be bound hereby.
5. Governing Law . THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
6. Trustee Makes No Representation . The Trustee makes no representation as to the validity or sufficiency of this Supplemental Indenture.
7. Counterparts . The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.
8. Effect of Headings . The Section headings herein are for convenience only and shall not effect the construction thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed as of the date first above written.
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[NEW GUARANTOR] |
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Title: |
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RBS GLOBAL, INC. |
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REXNORD CORPORATION |
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WELLS FARGO BANK, NATIONAL ASSOCIATION, AS TRUSTEE |
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Title: |
Exhibit 4.7
FIRST SUPPLEMENTAL INDENTURE (this “ First Supplemental Indenture ”), dated as of July 21, 2006, by and among RBS Global, Inc., a Delaware corporation (the “ Company ”), Rexnord Corporation, a Delaware corporation (together with RBS Global, the “ Issuers ”), The Falk Service Corporation, a Delaware corporation (“ Falk ”), Prager Incorporated, a Louisiana corporation (“ Prager ”), PT Components, Inc., a Delaware corporation (“ PT ”), RBS Acquisition Corporation, a Delaware corporation (“ RBS Acquisition ”), RBS China Holdings, L.L.C., a Delaware limited liability company (“ RBS China ”), Rexnord Industries, LLC, a Delaware limited liability company (“ Rexnord Industries ”), Rexnord International Inc., a Delaware corporation (“ Rexnord International ”), Rexnord Puerto Rico Inc., a Nevada corporation (“ Rexnord Puerto Rico ”), W.M. Berg Inc., a Delaware corporation (collectively with Falk, Prager, PT, RBS Acquisition, RBS China, Rexnord Industries, Rexnord International and Rexnord Puerto Rico, the “ Guarantors ”), Chase Merger Sub, Inc., a Delaware corporation (“ Chase Merger Sub ” ), and Wells Fargo Bank, National Association, as Trustee (the “ Trustee ”).
WITNESSETH:
WHEREAS , Chase Merger Sub has heretofore executed and delivered to the Trustee an Indenture (the “ Indenture ”), dated as of July 21, 2006, providing for the issuance of 11¾% Senior Subordinated Notes due 2016 (the “ Notes ”);
WHEREAS , the Issuers desire to execute and deliver this First Supplemental Indenture to the Trustee for the purpose of becoming jointly and severally liable, as co-issuers of the Notes, for all of Chase Merger Sub’s obligations under the Indenture and the Notes;
WHEREAS the Guarantors desire to execute and deliver this First Supplemental Indenture to the Trustee for the purpose of guaranteeing the payment of all obligations of the Issuers under the Indenture and the Notes and the performance within applicable grace periods of all other obligations of the Issuers under the Indenture and the Notes, on the terms and conditions set forth in Article 11 of the Indenture; and
WHEREAS , pursuant to Section 9.01 of the Indenture, the Trustee and Chase Merger Sub are authorized to execute and deliver this First Supplemental Indenture.
NOW THEREFORE , in consideration of the foregoing and for good and valuable consideration, the receipt of which is hereby acknowledged, the Issuers, the Guarantors, Chase Merger Sub and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:
SECTION 1. Capitalized Terms. Capitalized terms used herein but not defined shall have the meanings assigned to them in the Indenture.
SECTION 2. Co-Issuers. The Issuers hereby agree that they are henceforth jointly and severally liable, as co-issuers of the Notes, for all of Chase Merger Sub’s obligations under the Indenture and the Notes, on the terms and conditions set forth therein.
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SECTION 3. Guarantees. Each of the Guarantors hereby agrees, jointly and severally with all other Guarantors, to guarantee the Issuers’ obligations under the Notes on the terms and subject to the conditions set forth in Article 11 of the Indenture and to be bound by all applicable provisions of the Indenture.
SECTION 4. Ratification of Indenture; Supplemental Indenture Part of Indenture. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This First Supplemental Indenture shall form a part of the Indenture for all purposes, and every holder of Notes heretofore or hereafter authenticated and delivered shall be bound hereby.
SECTION 5. Governing Law. THIS FIRST SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. The Trustee . The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this First Supplemental Indenture or for or in respect of the recitals contained herein, all of which are made solely by the Issuers, Chase Merger Sub and the Guarantors. Except as otherwise expressly provided herein, no duties, responsibilities or liabilities are assumed, or shall be construed to be assumed by the Trustee by reason of this First Supplemental Indenture. This First Supplemental Indenture is executed and accepted by the Trustee subject to all the terms and conditions set forth in the Indenture with the same force and effect as if those terms and conditions were repeated at length herein and made applicable to the Trustee with respect hereto. In entering into this First Supplemental Indenture, the Trustee shall be entitled to the benefit of every provision of the Indenture relating to the conduct or affecting the liability or affording protection to the Trustee, whether or not elsewhere herein so provided.
SECTION 7. Counterparts. The parties may sign any number of copies of this First Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.
SECTION 8. Effect of Headings. The Section headings herein are for convenience only and shall not effect the construction of this First Supplemental Indenture.
[ The rest of this page has been intentionally left blank. ]
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IN WITNESS WHEREOF, the par t ies have caused this First Supplemental Indenture to be duly executed as of the date first written above.
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ISSUERS |
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RBS GLOBAL, INC. |
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By: |
/s/ Robert A. Hitt |
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Name: Robert A. Hitt |
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Title: President and Chief Executive Officer |
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REXNORD CORPORATION |
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/s/ Thomas Jansen |
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Name: Thomas Jansen |
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Title: Executive Vice President and Chief Financial Officer |
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CHASE MERGER SUB, INC. |
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By: |
/s/ Patricia M. Navis |
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Name: Patricia M. Navis |
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Title: Vice President and Secretary |
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S-1
IN WITNESS WHEREOF, the par t ies have caused this First Supplemental Indenture to be duly executed as of the date first written above.
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GUARANTORS |
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THE FALK SERVICE CORPORATION |
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PRAGER INCORPORATED |
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PT COMPONENTS, INC. |
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RBS ACQUISITION CORPORATION |
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RBS CHINA HOLDINGS, L.L.C. |
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REXNORD INDUSTRIES, LLC |
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REXNORD INTERNATIONAL INC. |
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REXNORD PUERTO RICO INC. |
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W.M. BERG INC. |
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/s/ Michael Andrzejewski |
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Name: Michael Andrzejewski |
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Title: Secretary |
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IN WITNESS WHEREOF, the par t ies have caused this First Supplemental Indenture to be duly executed as of the date first written above.
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TRUSTEE |
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WELLS
FARGO BANK, NATIONAL
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By: |
/s/ Timothy P. Mowdy |
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Name: Timothy P. Mowdy |
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Title: Vice President |
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S-3
Exhibit 4.8
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THE COMPANY 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 IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS 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.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO DTC, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
THIS NOTE (OR ITS PREDECESSOR) 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 THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (I) IN THE UNITED STATES TO A PERSON WHOM 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, (II) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF APPLICABLE) OR (IV) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS SET FORTH IN CLAUSE (A) ABOVE.”
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No. 001 |
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$299,590,000 |
CHASE MERGER SUB, INC.
11¾% Senior Subordinated Note due 2016
CUSIP No. 75524D AC 4
ISIN No. US75524DAC48
CHASE MERGER SUB, INC. , a Delaware corporation, promises to pay to Cede & Co., or registered assigns, the principal sum Two Hundred and Ninety-Nine Million, Five Hundred and Ninety Thousand Dollars listed on the Schedule of Increases or Decreases in Global Security attached hereto on August 1, 2016.
Interest Payment Dates: February 1 and August 1
Record Dates: January 15 and July 15
Additional provisions of this Security are set forth on the other side of this Security.
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IN WITNESS WHEREOF, the parties have caused this instrument to be duly executed.
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CHASE MERGER SUB, INC. |
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By: |
/s/ Patricia M. Navis |
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Name: Patricia M. Navis |
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Title: Vice President and Secretary |
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Dated: July 21, 2006
TRUSTEE’S CERTIFICATE OF
AUTHENTICATION
WELLS FARGO BANK,
NATIONAL ASSOCIATION,
as Trustee, certifies that this is
one of the Securities
referred to in the Indenture.
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By: |
/s/ Timothy P. Mowdy |
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Authorized Signatory |
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REVERSE OF NOTE
CHASE MERGER SUB, INC.
11¾% Senior Subordinated Note due 2016
1. Interest
(a) CHASE MERGER SUB, INC., a Delaware corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the “Company”), promises to pay interest on the principal amount of this Security at the rate per annum shown above. The Company shall pay interest semiannually on February 1 and August 1 of each year, commencing February 1, 2007. Interest on the Securities shall accrue from the most recent date to which interest has been paid or duly provided for or, if no interest has been paid or duly provided for, from July 21, 2006 until the principal hereof is due. Interest shall be computed on the basis of a 360-day year of twelve 30-day months. The Company shall pay interest on overdue principal at the rate borne by the Securities, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful.
(b) Registration Rights Agreement . The Holder of this Security is entitled to the benefits of a Registration Rights Agreement, dated as of July 21, 2006, among the Company, RBS Global, Inc., Rexnord Corporation, the Guarantors and the Initial Purchasers.
2. Method of Payment
The Company shall pay interest on the Securities (except defaulted interest) to the Persons who are registered Holders at the close of business on the January 15 or July 15 next preceding the interest payment date even if Securities are canceled after the record date and on or before the interest payment date (whether or not a Business Day). Holders must surrender Securities to the Paying Agent to collect principal payments. The Company shall pay principal, premium, if any, and interest in money of the United States of America that at the time of payment is legal tender for payment of public and private debts. Payments in respect of the Securities represented by a Global Security (including principal, premium, if any, and interest) shall be made by wire transfer of immediately available funds to the accounts specified by The Depository Trust Company or any successor depositary. The Company shall make all payments in respect of a certificated Security (including principal, premium, if any, and interest) at the office of the Paying Agent, except that, at the option of the Company, payment of interest may be made by mailing a check to the registered address of each Holder thereof; provided , however , that payments on the Securities may also be made, in the case of a Holder of at least $1,000,000 aggregate principal amount of Securities, by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or Paying Agent to such effect designating such account no later than 30 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion).
3. Paying Agent and Registrar
Initially, Wells Fargo Bank, National Association, a national banking association (the
“Trustee”), will act as Paying Agent and Registrar. The Company may appoint and change any Paying Agent or Registrar without notice. The Company or any of its domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent or Registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as of July 21, 2006 (the “Indenture”), among the Company and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb) as in effect on the date of the Indenture (the “TIA”). Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The Securities are subject to all terms and provisions of the Indenture, and the Holders (as defined in the Indenture) are referred to the Indenture and the TIA for a statement of such terms and provisions
The Securities are senior subordinated unsecured obligations of the Company. This Security is one of the Initial Securities referred to in the Indenture. The Securities include the Initial Securities, any Additional Securities and any Exchange Securities issued in exchange for the Initial Securities or any Additional Securities pursuant to the Indenture. The Initial Securities, any Additional Securities and any Exchange Securities are treated as a single class of securities under the Indenture. The Indenture imposes certain limitations on the ability of the Company and its Restricted Subsidiaries to, among other things, make certain Investments and other Restricted Payments, pay dividends and other distributions, incur Indebtedness, enter into consensual restrictions upon the payment of certain dividends and distributions by such Restricted Subsidiaries, issue or sell shares of capital stock of the Company and such Restricted Subsidiaries, enter into or permit certain transactions with Affiliates, create or incur Liens and make Asset Sales. The Indenture also imposes limitations on the ability of the Company and each Guarantor to consolidate or merge with or into any other Person or convey, transfer or lease all or substantially all of its property.
To guarantee the due and punctual payment of the principal and interest on the Securities and all other amounts payable by the Company under the Indenture and the Securities when and as the same shall be due and payable, whether at maturity, by acceleration or otherwise, according to the terms of the Securities and the Indenture, the Guarantors have, jointly and severally, unconditionally guaranteed the Guaranteed Obligations on a senior subordinated basis pursuant to the terms of the Indenture.
5. Optional Redemption
Except as set forth in the following two paragraphs, the Securities shall not be redeemable at the option of the Company prior to August 1, 2011. Thereafter, the Securities shall be redeemable at the option of the Company, in whole at any time or in part from time to time, upon on not less than 30 nor more than 60 days’ prior notice, at the following redemption prices (expressed as a percentage of principal amount), plus accrued and unpaid interest and additional interest, if any, to the redemption date (subject to the right of the Holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the 12-month period commencing on August 1 of the years set forth below:
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Year |
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Redemption Price |
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2011 |
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105.875 |
% |
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2012 |
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103.917 |
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2013 |
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101.958 |
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2014 and thereafter |
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100.000 |
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In addition, prior to August 1, 2011, the Company may redeem the Securities at their option, in whole at any time or in part from time to time, upon not less than 30 nor more than 60 days’ prior notice mailed by first-class mail to each Holder’s registered address, at a redemption price equal to 100% of the principal amount of the Securities redeemed plus the Applicable Premium as of, and accrued and unpaid interest and additional interest, if any, to, the applicable redemption date (subject to the right of the Holders of record on the relevant record date to receive interest due on the relevant interest payment date).
Notwithstanding the foregoing, at any time and from time to time on or prior to August 1, 2009, the Company may redeem in the aggregate up to 35% of the original aggregate principal amount of the Securities (calculated after giving effect to any issuance of Additional Securities), with the net cash proceeds of one or more Equity Offerings (1) by the Company or (2) by any direct or indirect parent of the Company, in each case, to the extent the net cash proceeds thereof are contributed to the common equity capital of the Company or used to purchase Capital Stock (other than Disqualified Stock) of the Company from it, at a redemption price equal to 111.750% of the principal amount thereof plus accrued and unpaid interest and additional interest, if any, to the redemption date (subject to the right of the Holders of record on the relevant record date to receive interest due on the relevant interest payment date); provided , however, that at least 65% of the original aggregate principal amount of the Securities (calculated after giving effect to any issuance of Additional Securities) must remain outstanding after each such redemption; and provided , further , that such redemption shall occur within 90 days after the date on which any such Equity Offering is consummated upon not less than 30 nor more than 60 days’ notice mailed to each Holder of Securities being redeemed and otherwise in accordance with the procedures set forth in the Indenture. Notice of any redemption upon any Equity Offering may be given prior to the completion thereof, and any such redemption or notice may, at the Company’s discretion, be subject to one or more conditions precedent, including, but not limited to, completion of the related Equity Offering.
6. Sinking Fund
The Securities are not subject to any sinking fund.
7. Notice of Redemption
Notice of redemption will be mailed by first-class mail at least 30 days but not more than 60 days before the redemption date to each Holder of Securities to be redeemed at his, her or its registered address. Securities in denominations larger than $2,000 may be redeemed in part but only in whole multiples of $1,000. If money sufficient to pay the redemption price of and accrued and unpaid interest on all Securities (or portions thereof) to be redeemed on the redemption date is deposited with a Paying Agent on or before the redemption date and certain
other conditions are satisfied, on and after such date, interest ceases to accrue on such Securities (or such portions thereof) called for redemption.
8.
Repurchase of Securities at the Option of
the
Holders upon Change of Control and Asset Sales
Upon the occurrence of a Change of Control, each Holder shall have the right, subject to certain conditions specified in the Indenture, to cause the Company to repurchase all or any part of such Holder’s Securities at a purchase price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of repurchase (subject to the right of the Holders of record on the relevant record date to receive interest due on the relevant interest payment date), as provided in, and subject to the terms of, the Indenture.
In accordance with Section 4.06 of the Indenture, the Company will be required to offer to purchase Securities upon the occurrence of certain events.
9. Subordination
The Securities and Guarantees are subordinated to Senior Indebtedness, as defined in the Indenture. To the extent provided in the Indenture, Senior Indebtedness must be paid before the Securities and Guarantees may be paid. The Company and each Guarantor agree, and each Holder by accepting a Security agrees, to the subordination provisions contained in the Indenture and authorizes the Trustee to give it effect and appoints the Trustee as attorney-in-fact for such purpose.
10. Denominations; Transfer; Exchange
The Securities are in registered form, without coupons, in denominations of $2,000 and any integral multiple of $1,000. A Holder shall register the transfer of or exchange of Securities in accordance with the Indenture. Upon any registration of transfer or exchange, the Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Securities selected for redemption (except, in the case of a Security to be redeemed in part, the portion of the Security not to be redeemed) or to transfer or exchange any Securities for a period of 15 days prior to a selection of Securities to be redeemed.
11. Persons Deemed Owners
The registered Holder of this Security shall be treated as the owner of it for all purposes.
12. Unclaimed Money
If money for the payment of principal or interest remains unclaimed for two years, the Trustee and a Paying Agent shall pay the money back to the Company at their written request unless an abandoned property law designates another Person. After any such payment, the Holders entitled to the money must look to the Company for payment as general creditors and the Trustee and a Paying Agent shall have no further liability with respect to such monies.
13. Discharge and Defeasance
Subject to certain conditions, the Company at any time may terminate some of or all its obligations under the Securities and the Indenture if the Company deposits with the Trustee money or U.S. Government Obligations for the payment of principal and interest on the Securities to redemption or maturity, as the case may be.
14. Amendment; Waiver
Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Securities may be amended with the written consent of the Holders of at least a majority in aggregate principal amount of the outstanding Securities (voting as a single class) and (ii) any past default or compliance with any provisions may be waived with the written consent of the Holders of at least a majority in principal amount of the outstanding Securities. Subject to certain exceptions set forth in the Indenture, without the consent of any Holder, the Company and the Trustee may amend the Indenture or the Securities (i) to cure any ambiguity, omission, defect or inconsistency; (ii) to provide for the assumption by a Successor Company of the obligations of the Company under the Indenture and the Notes; (iii) to provide for the assumption by a Successor Guarantor of the obligations of a Guarantor under the Indenture and its Guarantee; (iv) to provide for uncertificated Securities in addition to or in place of certificated Securities ( provided that the uncertificated Securities are issued in registered form for purposes of Section 163(f) of the Code, or in a manner such that the uncertificated Securities are described in Section 163(f)(2)(B) of the Code); (v) to add Guarantees with respect to the Securities; (vi) to add additional covenants of the Company for the benefit of the Holders or to surrender rights and powers conferred on the Company; (vii) to comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the TIA; (viii) to make any change that does not adversely affect the rights of any Holder; or (ix) to provide for the issuance of the Exchange Securities or Additional Securities.
15. Defaults and Remedies
If an Event of Default occurs (other than an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Company) and is continuing, the Trustee or the Holders of at least 25% in principal amount of the outstanding Securities, in each case, by notice to the Company, may declare the principal of, premium, if any, and accrued but unpaid interest on all the Securities to be due and payable. If an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Company occurs, the principal of, premium, if any, and interest on all the Securities shall become immediately due and payable without any declaration or other act on the part of the Trustee or any Holders. Under certain circumstances, the Holders of a majority in principal amount of the outstanding Securities may rescind any such acceleration with respect to the Securities and its consequences.
If an Event of Default occurs and is continuing, the Trustee shall be under no obligation to exercise any of the rights or powers under the Indenture at the request or direction of any of the Holders unless such Holders have offered to the Trustee reasonable indemnity or security against any loss, liability or expense and certain other conditions are complied with. Except to enforce the right to receive payment of principal, premium (if any) or interest when due, no
Holder may pursue any remedy with respect to the Indenture or the Securities unless (i) such Holder has previously given the Trustee notice that an Event of Default is continuing, (ii) the Holders of at least 25% in principal amount of the outstanding Securities have requested the Trustee in writing to pursue the remedy, (iii) such Holders have offered the Trustee reasonable security or indemnity against any loss, liability or expense, (iv) the Trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity and (v) the Holders of a majority in principal amount of the outstanding Securities have not given the Trustee a direction inconsistent with such request within such 60-day period. Subject to certain restrictions, the Holders of a majority in principal amount of the outstanding Securities are given the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. The Trustee, however, may refuse to follow any direction that conflicts with law or the Indenture or that the Trustee determines is unduly prejudicial to the rights of any other Holder or that would involve the Trustee in personal liability. Prior to taking any action under the Indenture, the Trustee shall be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action.
16. Trustee Dealings with the Company
Subject to certain limitations imposed by the TIA, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee.
17. No Recourse Against Others
No director, officer, employee, incorporator or holder of any equity interests in the Company or of any Guarantor or any direct or indirect parent corporation, as such, shall have any liability for any obligations of the Company or the Guarantors under the Securities, the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Securities by accepting a Security waives and releases all such liability.
18. Authentication
This Security shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of authentication on the other side of this Security.
19. 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 rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act).
20. Governing Law
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
21. CUSIP Numbers; ISINs
The Company has caused CUSIP numbers and ISINs to be printed on the Securities and has directed the Trustee to use CUSIP numbers and ISINs in notices of redemption as a convenience to the Holders. No representation is made as to the accuracy of such numbers either as printed on the Securities 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 of Securities upon written request and without charge to the Holder a copy of the Indenture which has in it the text of this Security.
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ASSIGNMENT FORM |
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To assign this Security, fill in the form below: |
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I or we assign and transfer this Security to: |
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(Print or type assignee’s name, address and zip code) |
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(Insert assignee’s soc. sec. or tax I.D. No.) |
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and irrevocably appoint agent to transfer this Security on the books of the Company. The agent may substitute another to act for him. |
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Date: |
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Your Signature: |
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Sign exactly as your name appears on the other side of this Security. |
Signature Guarantee:
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Date: |
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Signature must be guaranteed by a participant in a recognized signature guaranty medallion program or other signature guarantor program reasonably acceptable to the Trustee |
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Signature of Signature Guarantee |
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CERTIFICATE
TO BE DELIVERED UPON EXCHANGE OR
REGISTRATION OF TRANSFER RESTRICTED SECURITIES
This certificate relates to $ principal amount of Securities held in (check applicable space) book-entry or definitive form by the undersigned.
The undersigned (check one box below):
o has requested the Trustee by written order to deliver in exchange for its beneficial interest in the Global Security held by the Depository a Security or Securities in definitive, registered form of authorized denominations and an aggregate principal amount equal to its beneficial interest in such Global Security (or the portion thereof indicated above);
o has requested the Trustee by written order to exchange or register the transfer of a Security or Securities.
In connection with any transfer of any of the Securities evidenced by this certificate occurring prior to the expiration of the period referred to in Rule 144(k) under the Securities Act, the undersigned confirms that such Securities are being transferred in accordance with its terms:
CHECK ONE BOX BELOW
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(1) |
o |
to the Company; or |
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(2) |
o |
to the Registrar for registration in the name of the Holder, without transfer; or |
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(3) |
o |
pursuant to an effective registration statement under the Securities Act of 1933; or |
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(4) |
o |
inside the United States to a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act of 1933) that purchases for its own account or for the account of a qualified institutional buyer to whom notice is given that such transfer is being made in reliance on Rule 144A, in each case pursuant to and in compliance with Rule 144A under the Securities Act of 1933; or |
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(5) |
o |
outside the United States in an offshore transaction within the meaning of Regulation S under the Securities Act in compliance with Rule 904 under the Securities Act of 1933 and such Security shall be held immediately after the transfer through Euroclear or Clearstream until the expiration of the Restricted Period (as defined in the Indenture); or |
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(6) |
o |
to an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933) that has furnished to the Trustee a signed letter containing certain representations and agreements; or |
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(7) |
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pursuant to another available exemption from registration provided by Rule 144 under the Securities Act of 1933. |
Unless one of the boxes is checked, the Trustee will refuse to register any of the Securities evidenced by this certificate in the name of any Person other than the registered Holder thereof; provided , however , that if box (5), (6) or (7) is checked, the Company or the Trustee may require, prior to registering any such transfer of the Securities, such legal opinions, certifications and other information as the Company or the Trustee have reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933.
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Date: |
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Your Signature: |
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Signature Guarantee:
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Date: |
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Signature must be guaranteed by a participant in a recognized signature guaranty medallion program or other signature guarantor program reasonably acceptable to the Trustee |
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Signature of Signature Guarantee |
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TO BE COMPLETED BY PURCHASER IF (4) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Security for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act of 1933, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned’s foregoing representations in order to claim the exemption from registration provided by Rule 144A.
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Dated: |
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NOTICE: To be executed by an executive officer |
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SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The initial principal amount of this Global Security is $299,590,000 . The following increases or decreases in this Global Security have been made:
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Date of Exchange |
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Amount of decrease in Principal Amount of this Global Security |
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Amount of increase in Principal Amount of this Global Security |
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Principal amount of this Global Security following such decrease or increase |
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Signature of authorized signatory of Trustee or Securities Custodian |
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OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company pursuant to Section 4.06 (Asset Sale) or 4.08 (Change of Control) of the Indenture, check the box:
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Asset Sale o |
Change of Control o |
If you want to elect to have only part of this Security purchased by the Company pursuant to Section 4.06 (Asset Sale) or 4.08 (Change of Control) of the Indenture, state the amount ($2,000 or any integral multiple of $1,000):
$
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Date: |
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Your Signature: |
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(Sign exactly as your name appears on the other side of this Security) |
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Signature Guarantee: |
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Signature must be guaranteed by a participant in a recognized signature guaranty medallion program or other signature guarantor program reasonably acceptable to the Trustee
Exhibit 4.9
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THE COMPANY 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 IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS 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.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO DTC, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
THIS NOTE (OR ITS PREDECESSOR) 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 THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (I) IN THE UNITED STATES TO A PERSON WHOM 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, (II) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF APPLICABLE) OR (IV) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS SET FORTH IN CLAUSE (A) ABOVE.”
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No. 002 |
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$410,000 |
CHASE MERGER SUB, INC.
11¾% Senior Subordinated Note due 2016
CUSIP No. U7533P AB 8
ISIN No. USU7533PAB86
CHASE MERGER SUB, INC., a Delaware corporation, promises to pay to Cede & Co., or registered assigns, the principal sum Four Hundred and Ten Thousand Dollars listed on the Schedule of Increases or Decreases in Global Security attached hereto on August 1, 2016.
Interest Payment Dates: February 1 and August 1
Record Dates: January 15 and July 15
Additional provisions of this Security are set forth on the other side of this Security.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties have caused this instrument to be duly executed.
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CHASE MERGER SUB, INC. |
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By: |
/s/ Patricia M. Navis |
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Name: Patricia M. Navis |
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Title: Vice President and Secretary |
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Dated: July 21, 2006
TRUSTEE’S CERTIFICATE OF
AUTHENTICATION
WELLS FARGO BANK,
NATIONAL ASSOCIATION,
as Trustee, certifies that this is
one of the Securities
referred to in the Indenture.
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By: |
/s/ Timothy P. Mowdy |
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Authorized Signatory |
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REVERSE OF NOTE
CHASE MERGER SUB, INC.
11¾% Senior Subordinated Note due 2016
1. Interest
(a) CHASE MERGER SUB, INC., a Delaware corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the “Company”), promises to pay interest on the principal amount of this Security at the rate per annum shown above. The Company shall pay interest semiannually on February 1 and August 1 of each year, commencing February 1, 2007. Interest on the Securities shall accrue from the most recent date to which interest has been paid or duly provided for or, if no interest has been paid or duly provided for, from July 21, 2006 until the principal hereof is due. Interest shall be computed on the basis of a 360-day year of twelve 30-day months. The Company shall pay interest on overdue principal at the rate borne by the Securities, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful.
(b) Registration Rights Agreement . The Holder of this Security is entitled to the benefits of a Registration Rights Agreement, dated as of July 21, 2006, among the Company, RBS Global, Inc., Rexnord Corporation, the Guarantors and the Initial Purchasers.
2. Method of Payment
The Company shall pay interest on the Securities (except defaulted interest) to the Persons who are registered Holders at the close of business on the January 15 or July 15 next preceding the interest payment date even if Securities are canceled after the record date and on or before the interest payment date (whether or not a Business Day). Holders must surrender Securities to the Paying Agent to collect principal payments. The Company shall pay principal, premium, if any, and interest in money of the United States of America that at the time of payment is legal tender for payment of public and private debts. Payments in respect of the Securities represented by a Global Security (including principal, premium, if any, and interest) shall be made by wire transfer of immediately available funds to the accounts specified by The Depository Trust Company or any successor depositary. The Company shall make all payments in respect of a certificated Security (including principal, premium, if any, and interest) at the office of the Paying Agent, except that, at the option of the Company, payment of interest may be made by mailing a check to the registered address of each Holder thereof; provided , however , that payments on the Securities may also be made, in the case of a Holder of at least $1,000,000 aggregate principal amount of Securities, by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or Paying Agent to such effect designating such account no later than 30 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion).
3. Paying Agent and Registrar
Initially, Wells Fargo Bank, National Association, a national banking association (the
“Trustee”), will act as Paying Agent and Registrar. The Company may appoint and change any Paying Agent or Registrar without notice. The Company or any of its domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent or Registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as of July 21, 2006 (the “Indenture”), among the Company and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb) as in effect on the date of the Indenture (the “TIA”). Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The Securities are subject to all terms and provisions of the Indenture, and the Holders (as defined in the Indenture) are referred to the Indenture and the TIA for a statement of such terms and provisions
The Securities are senior subordinated unsecured obligations of the Company. This Security is one of the Initial Securities referred to in the Indenture. The Securities include the Initial Securities, any Additional Securities and any Exchange Securities issued in exchange for the Initial Securities or any Additional Securities pursuant to the Indenture. The Initial Securities, any Additional Securities and any Exchange Securities are treated as a single class of securities under the Indenture. The Indenture imposes certain limitations on the ability of the Company and its Restricted Subsidiaries to, among other things, make certain Investments and other Restricted Payments, pay dividends and other distributions, incur Indebtedness, enter into consensual restrictions upon the payment of certain dividends and distributions by such Restricted Subsidiaries, issue or sell shares of capital stock of the Company and such Restricted Subsidiaries, enter into or permit certain transactions with Affiliates, create or incur Liens and make Asset Sales. The Indenture also imposes limitations on the ability of the Company and each Guarantor to consolidate or merge with or into any other Person or convey, transfer or lease all or substantially all of its property.
To guarantee the due and punctual payment of the principal and interest on the Securities and all other amounts payable by the Company under the Indenture and the Securities when and as the same shall be due and payable, whether at maturity, by acceleration or otherwise, according to the terms of the Securities and the Indenture, the Guarantors have, jointly and severally, unconditionally guaranteed the Guaranteed Obligations on a senior subordinated basis pursuant to the terms of the Indenture.
5. Optional Redemption
Except as set forth in the following two paragraphs, the Securities shall not be redeemable at the option of the Company prior to August 1, 2011. Thereafter, the Securities shall be redeemable at the option of the Company, in whole at any time or in part from time to time, upon on not less than 30 nor more than 60 days’ prior notice, at the following redemption prices (expressed as a percentage of principal amount), plus accrued and unpaid interest and additional interest, if any, to the redemption date (subject to the right of the Holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the 12-month period commencing on August 1 of the years set forth below:
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Year |
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Redemption Price |
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2011 |
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105.875 |
% |
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2012 |
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103.917 |
% |
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2013 |
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101.958 |
% |
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2014 and thereafter |
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100.000 |
% |
In addition, prior to August 1, 2011, the Company may redeem the Securities at their option, in whole at any time or in part from time to time, upon not less than 30 nor more than 60 days’ prior notice mailed by first-class mail to each Holder’s registered address, at a redemption price equal to 100% of the principal amount of the Securities redeemed plus the Applicable Premium as of, and accrued and unpaid interest and additional interest, if any, to, the applicable redemption date (subject to the right of the Holders of record on the relevant record date to receive interest due on the relevant interest payment date).
Notwithstanding the foregoing, at any time and from time to time on or prior to August 1, 2009, the Company may redeem in the aggregate up to 35% of the original aggregate principal amount of the Securities (calculated after giving effect to any issuance of Additional Securities), with the net cash proceeds of one or more Equity Offerings (1) by the Company or (2) by any direct or indirect parent of the Company, in each case, to the extent the net cash proceeds thereof are contributed to the common equity capital of the Company or used to purchase Capital Stock (other than Disqualified Stock) of the Company from it, at a redemption price equal to 111.750% of the principal amount thereof plus accrued and unpaid interest and additional interest, if any, to the redemption date (subject to the right of the Holders of record on the relevant record date to receive interest due on the relevant interest payment date); provided , however, that at least 65% of the original aggregate principal amount of the Securities (calculated after giving effect to any issuance of Additional Securities) must remain outstanding after each such redemption; and provided , further , that such redemption shall occur within 90 days after the date on which any such Equity Offering is consummated upon not less than 30 nor more than 60 days’ notice mailed to each Holder of Securities being redeemed and otherwise in accordance with the procedures set forth in the Indenture. Notice of any redemption upon any Equity Offering may be given prior to the completion thereof, and any such redemption or notice may, at the Company’s discretion, be subject to one or more conditions precedent, including, but not limited to, completion of the related Equity Offering.
6. Sinking Fund
The Securities are not subject to any sinking fund.
7. Notice of Redemption
Notice of redemption will be mailed by first-class mail at least 30 days but not more than 60 days before the redemption date to each Holder of Securities to be redeemed at his, her or its registered address. Securities in denominations larger than $2,000 may be redeemed in part but only in whole multiples of $1,000. If money sufficient to pay the redemption price of and accrued and unpaid interest on all Securities (or portions thereof) to be redeemed on the redemption date is deposited with a Paying Agent on or before the redemption date and certain
other conditions are satisfied, on and after such date, interest ceases to accrue on such Securities (or such portions thereof) called for redemption.
8.
Repurchase of Securities at the Option of
the
Holders upon Change of Control and Asset Sales
Upon the occurrence of a Change of Control, each Holder shall have the right, subject to certain conditions specified in the Indenture, to cause the Company to repurchase all or any part of such Holder’s Securities at a purchase price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of repurchase (subject to the right of the Holders of record on the relevant record date to receive interest due on the relevant interest payment date), as provided in, and subject to the terms of, the Indenture.
In accordance with Section 4.06 of the Indenture, the Company will be required to offer to purchase Securities upon the occurrence of certain events.
9. Subordination
The Securities and Guarantees are subordinated to Senior Indebtedness, as defined in the Indenture. To the extent provided in the Indenture, Senior Indebtedness must be paid before the Securities and Guarantees may be paid. The Company and each Guarantor agree, and each Holder by accepting a Security agrees, to the subordination provisions contained in the Indenture and authorizes the Trustee to give it effect and appoints the Trustee as attorney-in-fact for such purpose.
10. Denominations; Transfer; Exchange
The Securities are in registered form, without coupons, in denominations of $2,000 and any integral multiple of $1,000. A Holder shall register the transfer of or exchange of Securities in accordance with the Indenture. Upon any registration of transfer or exchange, the Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Securities selected for redemption (except, in the case of a Security to be redeemed in part, the portion of the Security not to be redeemed) or to transfer or exchange any Securities for a period of 15 days prior to a selection of Securities to be redeemed.
11. Persons Deemed Owners
The registered Holder of this Security shall be treated as the owner of it for all purposes.
12. Unclaimed Money
If money for the payment of principal or interest remains unclaimed for two years, the Trustee and a Paying Agent shall pay the money back to the Company at their written request unless an abandoned property law designates another Person. After any such payment, the Holders entitled to the money must look to the Company for payment as general creditors and the Trustee and a Paying Agent shall have no further liability with respect to such monies.
13. Discharge and Defeasance
Subject to certain conditions, the Company at any time may terminate some of or all its obligations under the Securities and the Indenture if the Company deposits with the Trustee money or U.S. Government Obligations for the payment of principal and interest on the Securities to redemption or maturity, as the case may be.
14. Amendment; Waiver
Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Securities may be amended with the written consent of the Holders of at least a majority in aggregate principal amount of the outstanding Securities (voting as a single class) and (ii) any past default or compliance with any provisions may be waived with the written consent of the Holders of at least a majority in principal amount of the outstanding Securities. Subject to certain exceptions set forth in the Indenture, without the consent of any Holder, the Company and the Trustee may amend the Indenture or the Securities (i) to cure any ambiguity, omission, defect or inconsistency; (ii) to provide for the assumption by a Successor Company of the obligations of the Company under the Indenture and the Notes; (iii) to provide for the assumption by a Successor Guarantor of the obligations of a Guarantor under the Indenture and its Guarantee; (iv) to provide for uncertificated Securities in addition to or in place of certificated Securities ( provided that the uncertificated Securities are issued in registered form for purposes of Section 163(f) of the Code, or in a manner such that the uncertificated Securities are described in Section 163(f)(2)(B) of the Code); (v) to add Guarantees with respect to the Securities; (vi) to add additional covenants of the Company for the benefit of the Holders or to surrender rights and powers conferred on the Company; (vii) to comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the TIA; (viii) to make any change that does not adversely affect the rights of any Holder; or (ix) to provide for the issuance of the Exchange Securities or Additional Securities.
15. Defaults and Remedies
If an Event of Default occurs (other than an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Company) and is continuing, the Trustee or the Holders of at least 25% in principal amount of the outstanding Securities, in each case, by notice to the Company, may declare the principal of, premium, if any, and accrued but unpaid interest on all the Securities to be due and payable. If an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Company occurs, the principal of, premium, if any, and interest on all the Securities shall become immediately due and payable without any declaration or other act on the part of the Trustee or any Holders. Under certain circumstances, the Holders of a majority in principal amount of the outstanding Securities may rescind any such acceleration with respect to the Securities and its consequences.
If an Event of Default occurs and is continuing, the Trustee shall be under no obligation to exercise any of the rights or powers under the Indenture at the request or direction of any of the Holders unless such Holders have offered to the Trustee reasonable indemnity or security against any loss, liability or expense and certain other conditions are complied with. Except to enforce the right to receive payment of principal, premium (if any) or interest when due, no
Holder may pursue any remedy with respect to the Indenture or the Securities unless (i) such Holder has previously given the Trustee notice that an Event of Default is continuing, (ii) the Holders of at least 25% in principal amount of the outstanding Securities have requested the Trustee in writing to pursue the remedy, (iii) such Holders have offered the Trustee reasonable security or indemnity against any loss, liability or expense, (iv) the Trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity and (v) the Holders of a majority in principal amount of the outstanding Securities have not given the Trustee a direction inconsistent with such request within such 60-day period. Subject to certain restrictions, the Holders of a majority in principal amount of the outstanding Securities are given the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. The Trustee, however, may refuse to follow any direction that conflicts with law or the Indenture or that the Trustee determines is unduly prejudicial to the rights of any other Holder or that would involve the Trustee in personal liability. Prior to taking any action under the Indenture, the Trustee shall be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action.
16. Trustee Dealings with the Company
Subject to certain limitations imposed by the TIA, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee.
17. No Recourse Against Others
No director, officer, employee, incorporator or holder of any equity interests in the Company or of any Guarantor or any direct or indirect parent corporation, as such, shall have any liability for any obligations of the Company or the Guarantors under the Securities, the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Securities by accepting a Security waives and releases all such liability.
18. Authentication
This Security shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of authentication on the other side of this Security.
19. 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 rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act).
20. Governing Law
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
21. CUSIP Numbers; ISINs
The Company has caused CUSIP numbers and ISINs to be printed on the Securities and has directed the Trustee to use CUSIP numbers and ISINs in notices of redemption as a convenience to the Holders. No representation is made as to the accuracy of such numbers either as printed on the Securities 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 of Securities upon written request and without charge to the Holder a copy of the Indenture which has in it the text of this Security.
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ASSIGNMENT FORM |
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To assign this Security, fill in the form below: |
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I or we assign and transfer this Security to: |
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(Print or type assignee’s name, address and zip code) |
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(Insert assignee’s soc. sec. or tax I.D. No.) |
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and irrevocably appoint agent to transfer this Security on the books of the Company. The agent may substitute another to act for him. |
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Date: |
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Your Signature: |
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Sign exactly as your name appears on the other side of this Security. |
Signature Guarantee:
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Date: |
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Signature must be guaranteed by a participant in a recognized signature guaranty medallion program or other signature guarantor program reasonably acceptable to the Trustee |
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Signature of Signature Guarantee |
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CERTIFICATE
TO BE DELIVERED UPON EXCHANGE OR
REGISTRATION OF TRANSFER RESTRICTED SECURITIES
This certificate relates to $ principal amount of Securities held in (check applicable space) book-entry or definitive form by the undersigned.
The undersigned (check one box below):
o has requested the Trustee by written order to deliver in exchange for its beneficial interest in the Global Security held by the Depository a Security or Securities in definitive, registered form of authorized denominations and an aggregate principal amount equal to its beneficial interest in such Global Security (or the portion thereof indicated above);
o has requested the Trustee by written order to exchange or register the transfer of a Security or Securities.
In connection with any transfer of any of the Securities evidenced by this certificate occurring prior to the expiration of the period referred to in Rule 144(k) under the Securities Act, the undersigned confirms that such Securities are being transferred in accordance with its terms:
CHECK ONE BOX BELOW
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o |
to the Company; or |
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(2) |
o |
to the Registrar for registration in the name of the Holder, without transfer; or |
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(3) |
o |
pursuant to an effective registration statement under the Securities Act of 1933; or |
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(4) |
o |
inside the United States to a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act of 1933) that purchases for its own account or for the account of a qualified institutional buyer to whom notice is given that such transfer is being made in reliance on Rule 144A, in each case pursuant to and in compliance with Rule 144A under the Securities Act of 1933; or |
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(5) |
o |
to an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933) that has furnished to the Trustee a signed letter containing certain representations and agreements; or |
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(6) |
o |
outside the United States in an offshore transaction within the meaning of Regulation S under the Securities Act in compliance with Rule 904 under the Securities Act of 1933 and such Security shall be held immediately after the transfer through Euroclear or Clearstream until the expiration of the Restricted Period (as defined in the Indenture); or |
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(7) |
o |
pursuant to another available exemption from registration provided by Rule 144 under the Securities Act of 1933. |
Unless one of the boxes is checked, the Trustee will refuse to register any of the Securities evidenced by this certificate in the name of any Person other than the registered Holder thereof; provided , however , that if box (5), (6) or (7) is checked, the Company or the Trustee may require, prior to registering any such transfer of the Securities, such legal opinions, certifications and other information as the Company or the Trustee have reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933.
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Date: |
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Your Signature: |
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Signature Guarantee:
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Date: |
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Signature must be guaranteed by a participant in a recognized signature guaranty medallion program or other signature guarantor program reasonably acceptable to the Trustee |
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Signature of Signature Guarantee |
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TO BE COMPLETED BY PURCHASER IF (4) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Security for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act of 1933, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned’s foregoing representations in order to claim the exemption from registration provided by Rule 144A.
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Dated: |
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NOTICE: To be executed by an executive officer |
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SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The initial principal amount of this Global Security is $410,000. The following increases or decreases in this Global Security have been made:
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Date of Exchange |
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Amount of decrease in Principal Amount of this Global Security |
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Amount of increase in Principal Amount of this Global Security |
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Principal amount of this Global Security following such decrease or increase |
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Signature of authorized signatory of Trustee or Securities Custodian |
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OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company pursuant to Section 4.06 (Asset Sale) or 4.08 (Change of Control) of the Indenture, check the box:
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Asset Sale o |
Change of Control o |
If you want to elect to have only part of this Security purchased by the Company pursuant to Section 4.06 (Asset Sale) or 4.08 (Change of Control) of the Indenture, state the amount ($2,000 or any integral multiple of $1,000):
$
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Date: |
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Your Signature: |
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(Sign exactly as your name appears on the other side of this Security) |
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Signature Guarantee: |
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Signature must be guaranteed by a participant in a recognized signature guaranty medallion program or other signature guarantor program reasonably acceptable to the Trustee
Exhibit 4.10
EXECUTION VERSION
REGISTRATION RIGHTS AGREEMENT
by and among
Chase Merger Sub, Inc.
RBS Global, Inc.
Rexnord Corporation
the subsidiaries of Rexnord Corporation parties hereto
and
Credit Suisse Securities (USA) LLC
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Bear, Stearns & Co. Inc.
Lehman Brothers Inc.
Dated as of July 21, 2006
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this “Agreement”) is made and entered into as of July 21, 2006, by and among Chase Merger Sub, Inc., a Delaware corporation (“Merger Sub”), RBS Global, Inc., a Delaware corporation (the “Company”), Rexnord Corporation, a Delaware Corporation (the “Co-Issuer”), the subsidiaries of the Co-Issuer listed on Schedule A hereto (collectively, the “Guarantors”), Credit Suisse Securities (USA) LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Bear Stearns & Co. Inc. and Lehman Brothers Inc. (collectively, the “Initial Purchasers”), each of whom has agreed to purchase, pursuant to the Purchase Agreement (as defined below), the 11.75% Senior Subordinated Notes due 2016 (the “Initial Notes”) issued by the Company and the Co-Issuer and fully and unconditionally guaranteed by the Guarantors (the “Guarantees”). The Initial Notes and the Guarantees attached thereto are herein collectively referred to as the “Initial Securities.”
This Agreement is made pursuant to the Purchase Agreement, dated July 14, 2006 (the “Purchase Agreement”), among Merger Sub and the Initial Purchasers, and the Joinder Agreement, dated July 21, 2006, among the Company, the Co-Issuer, the subsidiaries of the Co-Issuer parties thereto and the Initial Purchasers (i) for the benefit of the Initial Purchasers and (ii) for the benefit of the holders from time to time of the Initial Securities, including the Initial Purchasers. In order to induce the Initial Purchasers to purchase the Initial Securities, the Company, Merger Sub, the Co-Issuer and the Guarantors have agreed to provide the registration rights set forth in this Agreement. The execution and delivery of this Agreement is a condition to the obligations of the Initial Purchasers set forth in Section 6(i) of the Purchase Agreement. This Agreement shall become effective automatically and without further action with respect to the Company, the Co-Issuer and the Guarantors only immediately upon the completion of the Merger described in the Purchase Agreement.
The parties hereby agree as follows:
SECTION 1. Definitions. As used in this Agreement, the following capitalized terms shall have the following meanings:
Additional Interest Payment Date: With respect to the Initial Securities, each Interest Payment Date.
Broker-Dealer: Any broker or dealer registered under the Exchange Act.
Business Day: Any day other than a Saturday, Sunday or U.S. federal holiday or a day on which banking institutions or trust companies located in New York, New York are authorized or obligated to be closed.
Closing Date: The date of this Agreement.
Commission: The Securities and Exchange Commission.
Consummate: A registered Exchange Offer shall be deemed “Consummated” for purposes of this Agreement upon the occurrence of (i) the filing and effectiveness under the Securities Act of the Exchange Offer Registration Statement relating to the Exchange Securities
to be issued in the Exchange Offer, (ii) 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 (iii) the delivery by the Company and the Co-Issuer to the Registrar under the Indenture of Exchange Securities in the same aggregate principal amount as the aggregate principal amount of Initial Securities that were tendered by Holders thereof pursuant to the Exchange Offer.
Effectiveness Target Date: As defined in Section 5 hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exchange Offer: The registration by the Company and the Co-Issuer under the Securities Act of the Exchange Securities pursuant to a Registration Statement pursuant to which the Company and the Co-Issuer offer the Holders of all outstanding Transfer Restricted Securities the opportunity to exchange all such outstanding Transfer Restricted Securities held by such Holders for Exchange Securities 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 Initial Securities to certain “qualified institutional buyers,” as such term is defined in Rule 144A under the Securities Act and to certain non-U.S. persons pursuant to Regulation S under the Securities Act.
Exchange Securities: The 11.75% Senior Subordinated Notes due 2016 of the same series under the Indenture as the Initial Notes and the Guarantees attached thereto, to be issued to Holders in exchange for Transfer Restricted Securities pursuant to this Agreement.
Free Writing Prospectus: Any free writing prospectus, as such term is defined in Rule 405 under the Securities Act, relating to any portion of the Securities.
Guarantees: As defined in the preamble hereto.
Holders: As defined in Section 2(b) hereof.
Indemnified Holder: As defined in Section 8(a) hereof.
Indenture: The Indenture dated as of July 21, 2006, by and among Merger Sub, the Company, the Co-Issuer, the Guarantors and Wells Fargo Bank, N.A., as trustee (the “Trustee”), pursuant to which the Initial Notes and the Exchange Securities are to be issued, as such Indenture is amended or supplemented from time to time in accordance with the terms thereof.
Initial Notes: As defined in the preamble hereto.
2
Initial Placement: The issuance and sale by the Company and the Co-Issuer of the Initial Securities to the Initial Purchasers pursuant to the Purchase Agreement.
Initial Purchasers: As defined in the preamble hereto.
Initial Securities: As defined in the preamble hereto.
Interest Payment Date: As defined in the Indenture and the Securities.
NASD: NASD Inc.
Person: An individual, partnership, corporation, trust or unincorporated organization, or a government or agency or political subdivision thereof.
Prospectus: The prospectus included in a Registration Statement, 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.
Registration Default: As defined in Section 5 hereof.
Registration Statement: Any registration statement of the Company and the Co-Issuer relating to (a) an offering of Exchange Securities pursuant to an Exchange Offer or (b) the registration for resale of Transfer Restricted Securities pursuant to the Shelf Registration Statement, which is filed pursuant to the provisions of this Agreement, in each case, including the Prospectus included therein, all amendments and supplements thereto (including post-effective amendments) and all exhibits and material incorporated by reference therein.
Securities: As defined in the preamble hereto.
Securities Act: The Securities Act of 1933, as amended.
Shelf Filing Deadline: As defined in Section 4(a) hereof.
Shelf Registration Statement: As defined in Section 4(a) hereof.
Transfer Restricted Securities: Each Initial Security, until the earliest to occur of (a) the date on which such Initial Security is exchanged in the Exchange Offer for an Exchange Security entitled to be resold to the public by the Holder thereof without complying with the prospectus delivery requirements of the Securities Act, (b) the date on which such Initial Security has been effectively registered under the Securities Act and disposed of in accordance with a Shelf Registration Statement and (c) the date on which such Initial Security is distributed to the public pursuant to Rule 144 under the Securities Act or by a Broker-Dealer pursuant to the “Plan of Distribution” contemplated by the Exchange Offer Registration Statement (including delivery of the Prospectus contained therein).
Trust Indenture Act: The Trust Indenture Act of 1939, as amended.
3
Underwritten Registration or Underwritten Offering: A registration in which securities of the Company and the Co-Issuer are sold to an underwriter for reoffering to the public.
SECTION 2. Securities Subject to this Agreement.
(a) Transfer Restricted Securities. The securities entitled to the benefits of this Agreement are the Transfer Restricted Securities.
(b) Holders of Transfer Restricted Securities. 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 permissible under applicable law or Commission policy (after the procedures set forth in Section 6(a) hereof have been complied with), each of the Company, the Co-Issuer and the Guarantors shall (i) use its commercially reasonable efforts to cause to be filed with the Commission as soon as practicable after the Closing Date, but in no event later than 180 days after the Closing Date (or if such 180th day is not a Business Day, the next succeeding Business Day), a Registration Statement under the Securities Act relating to the Exchange Securities and the Exchange Offer, (ii) use its commercially reasonable efforts to cause such Registration Statement to become effective as promptly as possible (unless it becomes effective automatically upon filing), but in no event later than 365 days after the Closing Date (or if such 365th day is not a Business Day, the next succeeding Business Day), (iii) in connection with the foregoing, file (A) all pre-effective amendments to such Registration Statement as may be necessary in order to cause such Registration Statement to become effective, (B) if applicable, a post-effective amendment to such Registration Statement pursuant to Rule 430A under the Securities Act and (C) cause all necessary filings in connection with the registration and qualification of the Exchange Securities to be made under the state securities or blue sky laws of such jurisdictions as are necessary to permit Consummation of the Exchange Offer, and (iv) upon the effectiveness of such Registration Statement, commence the Exchange Offer. The Exchange Offer shall be on the appropriate form permitting registration of the Exchange Securities to be offered in exchange for the Transfer Restricted Securities and to permit resales of Initial Securities held by Broker-Dealers as contemplated by Section 3(c) hereof.
(b) The Company, the Co-Issuer and the Guarantors shall 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 30 days after the date notice of the Exchange Offer is mailed to the Holders. The Company and the Co-Issuer shall cause the Exchange Offer to comply with all applicable federal and state securities laws. No securities other than the Exchange Securities shall be included in the Exchange Offer Registration Statement. The Company and the Co-Issuer shall use their commercially reasonable 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
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event later than 30 days after the date notice of the Exchange Offer is required to be mailed to the Holders (or if such 30th day is not a Business Day, the next succeeding Business Day).
(c) The Company and the Co-Issuer shall indicate in a “Plan of Distribution” section contained in the Prospectus forming a part of the Exchange Offer Registration Statement that any Broker-Dealer who holds Initial Securities that are Transfer Restricted Securities and that were acquired for its own account as a result of market-making activities or other trading activities (other than Transfer Restricted Securities acquired directly from the Company and the Co-Issuer) may exchange such Initial Securities pursuant to the Exchange Offer; however, such Broker-Dealer may be deemed to be an “underwriter” within the meaning of the Securities Act and must, therefore, deliver a prospectus meeting the requirements of the Securities Act in connection with any resales of the Exchange Securities 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 resales by Broker-Dealers that the Commission may require in order to permit such resales pursuant thereto, but such “Plan of Distribution” shall not name any such Broker-Dealer or disclose the amount of Initial Securities held by any such Broker-Dealer except to the extent required by the Commission.
Each of the Company, the Co-Issuer and the Guarantors shall use its commercially reasonable efforts to keep the Exchange Offer Registration Statement continuously effective, supplemented and amended as required by the provisions of Section 6(c) hereof to the extent necessary to ensure that it is available for resales of Initial Securities acquired by Broker-Dealers for their own accounts as a result of market-making activities or other trading activities, and to ensure that it conforms with the requirements of this Agreement, the Securities Act and the policies, rules and regulations of the Commission as announced from time to time, for a period ending on the earlier of (i) 180 days from the date on which the Exchange Offer Registration Statement is declared effective and (ii) the date on which a Broker-Dealer is no longer required to deliver a prospectus in connection with market-making or other trading activities.
The Company and the Co-Issuer shall provide sufficient copies of the latest version of such Prospectus to Broker-Dealers promptly upon request at any time during such 180-day (or shorter as provided in the foregoing sentence) period in order to facilitate such resales.
SECTION 4. Shelf Registration.
(a) Shelf Registration. If (i) the Company and the Co-Issuer are not required to file an Exchange Offer Registration Statement or to consummate the Exchange Offer because the Exchange Offer is not permitted by applicable law or Commission policy (after the procedures set forth in Section 6(a) hereof have been complied with), (ii) for any reason the Exchange Offer is not Consummated within 30 days after the date notice of the Exchange Offer is required to be mailed to the Holders (or if such 30th day is not a Business Day, the next succeeding Business Day), or (iii) with respect to any Holder of Transfer Restricted Securities (A) such Holder is prohibited by applicable law or Commission policy from participating in the Exchange Offer, or (B) such Holder may not resell the Exchange Securities acquired by it in the Exchange Offer to the public without delivering a prospectus (other than by reason of such Holder’s status as an
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affiliate of the Company or the Co-Issuer) 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 Initial Securities acquired directly from the Company, the Co-Issuer or one of their affiliates, then, upon such Holder’s request prior to the 20 th day following consummation of the Exchange Offer, the Company, the Co-Issuer and the Guarantors shall:
(x) cause to be filed a shelf registration statement pursuant to Rule 415 under the Securities Act, which may be an amendment to the Exchange Offer Registration Statement (in either event, the “Shelf Registration Statement”) as soon as practicable but in any event on or prior to 180 days after such filing obligation arises (or if such 180th day is not a Business Day, the next succeeding Business Day) (such date being the “Shelf Filing Deadline”), which Shelf Registration Statement shall provide for resales of all Transfer Restricted Securities the Holders of which shall have provided the information required pursuant to Section 4(b) hereof; and
(y) use their commercially reasonable efforts to cause such Shelf Registration Statement to be declared effective by the Commission as promptly as possible (unless it becomes effective automatically upon filing), and in any event on or before the 365th day after the obligation to file such Shelf Registration Statement arises (or if such 365th day is not a Business Day, the next succeeding Business Day).
Each of the Company, the Co-Issuer and the Guarantors shall use its commercially reasonable efforts to keep such Shelf Registration Statement continuously effective, supplemented and amended as required by the provisions of Sections 6(b) and (c) hereof to the extent necessary to ensure that it is available for resales of Initial Securities by the Holders of Transfer Restricted Securities entitled to the benefit of this Section 4(a), and to ensure that it conforms with the requirements of this Agreement, the Securities Act and the policies, rules and regulations of the Commission as announced from time to time, for a period of at least two years following the effective date of such Shelf Registration Statement (or shorter period that will terminate when all the Initial Securities covered by such Shelf Registration Statement have been sold pursuant to such Shelf Registration Statement). During the period during which the Company is required to maintain an effective Shelf Registration Statement pursuant to this Agreement, the Company will, prior to the expiration of that Shelf Registration Statement, file, and use its commercially reasonable efforts to cause to be declared effective (unless it becomes effective automatically upon filing) within a period that avoids any interruption in the ability of Holders of Securities covered by the expiring Shelf Registration Statement to make registered dispositions, a new registration statement relating to the Securities, which shall be deemed the “Shelf Registration Statement” for purposes of this Agreement.
(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 such Holder furnishes to the Company and the Co-Issuer in writing, within 20 Business Days after receipt of a request therefor, such information as the Company and the Co-Issuer may reasonably request for use in connection with any Shelf Registration Statement or Prospectus or preliminary Prospectus included therein or amendment or supplement thereto or
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Free Writing Prospectus. Each Holder as to which any Shelf Registration Statement is being effected agrees to furnish promptly to the Company and the Co-Issuer all information required to be disclosed in order to make the information previously furnished to the Company and the Co-Issuer by such Holder not materially misleading.
SECTION 5. Additional Interest. If (i) any of the Registration Statements 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 of such Registration Statements has not been declared effective by the Commission (or become automatically effective) on or prior to the date specified for such effectiveness in this Agreement (the “Effectiveness Target Date”), (iii) the Exchange Offer has not been Consummated within 30 Business Days after the Effectiveness Target Date with respect to the Exchange Offer Registration Statement, 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 for its intended purpose without being succeeded immediately by a post-effective amendment to such Registration Statement that cures such failure and that is itself immediately declared or automatically effective (except in the case of a Registration Statement that ceases to be effective or usable as specifically permitted by the last paragraph of Section 6 hereof) (each such event referred to in clauses (i) through (iv), a “Registration Default”), the Company and the Co-Issuer hereby agree that the interest rate borne by the Transfer Restricted Securities shall be increased by 0.25% per annum during the 90-day period immediately following the occurrence of any Registration Default and shall increase by 0.25% per annum at the end of each subsequent 90-day period, but in no event shall such increase exceed 1.00% per annum. Following the earliest of (x) the cure of all Registration Defaults relating to any particular Transfer Restricted Securities, (y) the date on which such Transfer Restricted Security ceases to be a Transfer Restricted Security or otherwise becomes freely transferable by Holders other than affiliates of the Company or the Co-Issuer without further registration under the Securities Act and (z) the date that is two years after the Closing Date, the interest rate borne by the relevant Transfer Restricted Securities will be reduced to the original interest rate borne by such Transfer Restricted Securities; provided, however, that, if after any such reduction in interest rate, a different Registration Default occurs, the interest rate borne by the relevant Transfer Restricted Securities shall again be increased pursuant to the foregoing provisions.
Notwithstanding the foregoing, (i) the amount of Additional Interest payable shall not increase because more than one Registration Default has occurred and is pending and (ii) a Holder of Transfer Restricted Securities that is not entitled to the benefits of the Shelf Registration Statement (because, e.g., such Holder has not elected to include information or has not timely delivered such information to the Company and the Co-Issuer pursuant to Section 4(b) hereof) shall not be entitled to Additional Interest with respect to a Registration Default that pertains to the Shelf Registration Statement.
All obligations of the Company, the Co-Issuer and the Guarantors 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.
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SECTION 6. Registration Procedures.
(a) Exchange Offer Registration Statement. In connection with the Exchange Offer, the Company, the Co-Issuer and the Guarantors shall comply with all of the provisions of Section 6(c) hereof, shall use their commercially reasonable efforts to effect such exchange to permit the sale of 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 in the reasonable opinion of counsel to the Company and the Co-Issuer there is a question as to whether the Exchange Offer is permitted by applicable law, each of the Company, the Co-Issuer and the Guarantors hereby agrees to seek a favorable decision from the Commission allowing the Company, the Co-Issuer and the Guarantors to Consummate an Exchange Offer for such Initial Securities. Each of the Company, the Co-Issuer and the Guarantors hereby agrees to pursue the issuance of such a decision to the Commission staff level but shall not be required to take commercially unreasonable action to effect a change of Commission policy. Each of the Company, the Co-Issuer and the Guarantors hereby agrees, however, to (A) participate in telephonic conferences with the Commission, (B) deliver to the Commission staff an analysis prepared by counsel to the Company and the Co-Issuer setting forth the legal bases, if any, upon which such counsel has concluded that such an Exchange Offer should be permitted and (C) diligently pursue a favorable resolution by the Commission staff of such submission.
(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 and the Co-Issuer, prior to the Consummation thereof, a written representation to the Company and the Co-Issuer (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 or the Co-Issuer, (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 Exchange Securities to be issued in the Exchange Offer and (C) it is acquiring the Exchange Securities in its ordinary course of business. In addition, all such Holders of Transfer Restricted Securities shall otherwise cooperate in the Company’s and the Co-Issuer’s preparations for the Exchange Offer. 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 (which may include any no-action letter obtained pursuant to clause (i) above), and (2) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction and that such a secondary resale transaction should 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 Exchange Securities obtained by such Holder in exchange for Initial Securities acquired by such Holder directly from the Company and the Co-Issuer.
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(b) Shelf Registration Statement. In connection with the Shelf Registration Statement, each of the Company, the Co-Issuer and the Guarantors shall comply with all the provisions of Section 6(c) hereof and shall use its commercially reasonable efforts to effect such registration (unless automatically declared effective) to permit the sale of the Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution thereof, and pursuant thereto each of the Company, the Co-Issuer and the Guarantors will as expeditiously as is commercially reasonable prepare and file with the Commission a Registration Statement relating to the registration on any appropriate form under the Securities 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.
(c) General Provisions. In connection with any Registration Statement and any Prospectus required by this Agreement to permit the sale or resale of Transfer Restricted Securities and any Free Writing Prospectus (including, without limitation, any Registration Statement and the related Prospectus required to permit resales of Initial Securities by Broker-Dealers and any Free Writing Prospectus related thereto), each of the Company, the Co-Issuer and the Guarantors shall:
(i) use its commercially reasonable efforts to keep such Registration Statement continuously effective during the period required by this Agreement and provide all requisite financial statements (including, if required by the Securities Act or any regulation thereunder, financial statements of the Guarantors for the period specified in Section 3 or 4 hereof, 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 and the Co-Issuer shall file promptly an appropriate amendment to such Registration Statement, in the case of clause (A), correcting any such misstatement or omission, and, in the case of either clause (A) or (B), use its commercially reasonable efforts to cause such amendment to be declared effective (unless automatically 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 applicable Registration Statement as may be necessary to keep the Registration Statement effective for the applicable period set forth in Section 3 or 4 hereof, as applicable, 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 Securities Act, and to comply fully with the applicable provisions of Rules 424 and 430A under the Securities Act in a timely manner; and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration 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;
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(iii) advise the underwriter(s), if any, and selling Holders promptly and, if requested by such Persons, to confirm such advice in writing, (A) when the Prospectus, any Prospectus supplement, any post-effective amendment or any Free Writing Prospectus 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 Securities Act, 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, of the issuance by the Commission of a notification of objection to the use of the form on which the Registration Statement has been filed, or of the happening of any event that causes the Company to become an “ineligible issuer,” as defined in Commission Rule 405, (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 or the Prospectus in order to make the statements therein not misleading. If at any time the Commission shall issue any stop order suspending the effectiveness of the Registration Statement or a notification of objection to the use of the form on which the Registration Statement has been filed or if 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, each of the Company, the Co-Issuer and the Guarantors shall use its commercially reasonable efforts to obtain the withdrawal or lifting of such order at the earliest practicable time;
(iv) (A) furnish without charge to each of the Initial Purchasers, each selling Holder named in any Registration Statement that has requested such copies, if any, and each of the underwriter(s), 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 (including 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 requesting Holders and underwriter(s) in connection with such sale, if any, for a period of at least five Business Days, and neither the Company nor the Co-Issuer will file any such Registration Statement or Prospectus or any amendment or supplement to any such Registration Statement or Prospectus (including all such documents incorporated by reference) to which an Initial Purchaser of Transfer Restricted Securities covered by such Registration Statement or the underwriter(s), if any, shall reasonably object in writing within five Business Days after the receipt thereof (such objection to be deemed timely made upon confirmation of telecopy transmission within such period). The objection of an Initial Purchaser or underwriter, if any, shall be deemed to be reasonable if such Registration Statement, amendment, Prospectus or supplement, as applicable, as proposed to be filed, contains a material misstatement or omission;
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(B) furnish without charge to each of the Initial Purchasers before filing with the Commission, a copy of any Free Writing Prospectus, which will be subject to the consent of the Initial Purchasers, and neither the Company nor the Co-Issuer will file any such Free Writing Prospectus to which the Initial Purchasers of Transfer Restricted Securities covered by such Registration Statement have not consented (such consent not to be unreasonably withheld, conditioned or delayed);
(v) promptly prior to the filing of any document that is to be incorporated by reference into a Registration Statement or Prospectus, provide copies of such document to the Initial Purchasers, each selling Holder named in any Registration Statement that has requested such documents, if any, and to the underwriter(s), if any, make the Company’s, the Co-Issuer’s and the Guarantors’ representatives available for discussion of such document and other customary due diligence matters, subject to customary confidentiality agreements, 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, subject to customary confidentiality agreements, at reasonable times for inspection by the Initial Purchasers, the managing underwriter(s), if any, participating in any disposition pursuant to such Registration Statement and any attorney or accountant retained by such Initial Purchasers or any of the underwriter(s), all financial and other records, pertinent corporate documents and properties of each of the Company, the Co-Issuer and the Guarantors, and cause the Company’s, the Co-Issuer’s and the Guarantors’ officers, directors and employees to supply all information, in each case as shall be reasonably necessary to enable any such Holder, underwriter, attorney or accountant to exercise any applicable responsibilities in connection with such Registration Statement or any post-effective amendment thereto subsequent to the filing thereof and prior to its effectiveness and to participate in meetings with investors to the extent reasonably requested by the managing underwriter(s), if any;
(vii) if requested by any selling Holders or the underwriter(s), if any, promptly incorporate in any Registration Statement or 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 and the Co-Issuer are notified of the matters to be incorporated in such Prospectus supplement or post-effective amendment;
(viii) cause the Transfer Restricted Securities covered by the Registration Statement to be rated with the appropriate rating agencies, if so requested by the Holders of a majority in aggregate principal amount of Securities covered thereby or the underwriter(s), if any;
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(ix) furnish to each Initial Purchaser, each selling Holder and each of the underwriter(s), if any, without charge, at least one copy of the Registration Statement, as first filed with the Commission, and of each amendment thereto, including financial statements and schedules, all documents incorporated by reference therein and all exhibits (including exhibits incorporated therein by reference);
(x) 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; each of the Company, the Co-Issuer and the Guarantors hereby consents to the use 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;
(xi) enter into such agreements (including an underwriting agreement), and make such representations and warranties, and take all such other commercially reasonable 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, all to such extent as may be reasonably requested by any Initial Purchaser or 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 whether or not an underwriting agreement is entered into and whether or not the registration is an Underwritten Registration, each of the Company, the Co-Issuer and the Guarantors shall:
(A) furnish to each Initial Purchaser, each selling Holder and each underwriter, if any, in such substance and scope as they may reasonably request and as are customarily made by issuers to underwriters in primary underwritten offerings, upon the date of the effectiveness of the Shelf Registration Statement:
(1) a certificate, dated the date of effectiveness of the Shelf Registration Statement, as the case may be, signed by (y) the President or any Vice President and (z) a principal financial or accounting officer of each of the Company, the Co-Issuer and the Guarantors, confirming, as of the date thereof, the matters set forth in Section 6(g) of the Purchase Agreement and such other matters as such parties may reasonably request;
(2) if requested by a majority of selling Holders, an opinion, dated the date of effectiveness of the Shelf Registration Statement, as the case may be, of counsel for the Company, the Co-Issuer and the Guarantors, covering the matters set forth in Section 6(c) of the Purchase Agreement and such other matter as such parties may reasonably request, and in any event including a statement to the effect that such counsel has participated in conferences with officers and other representatives of the Company, the Co-Issuer and the Guarantors, representatives of the independent public accountants for the Company, the Co-Issuer and the Guarantors,
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representatives of the underwriter(s), if any, and counsel to the underwriter(s), if any, in connection with the preparation of such Registration Statement and the related Prospectus and have considered the matters required to be stated therein and the statements contained therein, although such counsel has not independently verified the accuracy, completeness or fairness of such statements; and that such counsel advises that, on the basis of the foregoing, no facts came to such counsel’s attention that caused such counsel to believe that the applicable Registration Statement, (A) at the date of the opinion and at the time such Registration Statement or any post-effective amendment thereto became effective, (B) at the applicable time identified by such Holders or managing underwriters, and (C) in the case of the Exchange Offer Registration Statement, as of the date of Consummation, in the case of (A), (B) and (C) contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus contained in such Registration Statement as of its date and, in the case of the opinion dated the date of Consummation of the Exchange Offer, as of the date of Consummation, contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein not misleading. Without limiting the foregoing, such counsel may state further that such counsel assumes no responsibility for, and has not independently verified, the accuracy, completeness or fairness of the financial statements, notes and schedules and other financial data included in any Registration Statement contemplated by this Agreement or the related Prospectus; and
(3) a customary comfort letter, dated the date of effectiveness of the Shelf Registration Statement, from the Company’s and the Co-Issuer’s independent accountants, in the customary form and covering matters of the type customarily requested to be covered in comfort letters by underwriters in connection with primary underwritten offerings, and covering or affirming the matters set forth in the comfort letters delivered pursuant to Section 6(a) of the Purchase Agreement, without exception;
(B) set forth in full or incorporate by reference in the underwriting agreement, if any, 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 such parties to evidence compliance with Section 6(c)(xi)(A) hereof and with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company, the Co-Issuer or any of the Guarantors pursuant to this Section 6(c)(xi), if any.
If at any time the representations and warranties of the Company, the Co-Issuer and the Guarantors contemplated in Section 6(c)(xi)(A)(1) hereof cease to be true and
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correct, the Company, the Co-Issuer or the Guarantors shall so advise the Initial Purchasers and the underwriter(s), if any, and each selling Holder promptly and, if requested by such Persons, shall confirm such advice in writing;
(xii) 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 state 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 Shelf Registration Statement; provided, however , that none of the Company, the Co-Issuer or the Guarantors shall be required to register or qualify as a foreign corporation where it is not then 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 Registration Statement, in any jurisdiction where it is not then so subject;
(xiii) issue, upon the request of any Holder of Initial Securities covered by the Shelf Registration Statement, Exchange Securities having an aggregate principal amount equal to the aggregate principal amount of Initial Securities surrendered to the Company and the Co-Issuer by such Holder in exchange therefor or being sold by such Holder; such Exchange Securities to be registered in the name of such Holder or in the name of the purchaser(s) of such Securities, as the case may be; in return, the Initial Securities held by such Holder shall be surrendered to the Company and the Co-Issuer for cancellation;
(xiv) subject to the terms of the Indenture, 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 enable such Transfer Restricted Securities to be in such denominations and registered in such names as the Holders or the underwriter(s), if any, may request at least two Business Days prior to any sale of Transfer Restricted Securities made by such Holders or underwriter(s);
(xv) use its commercially reasonable efforts to cause 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 Section 6(c)(xii) hereof;
(xvi) if any fact or event contemplated by Section 6(c)(iii)(D) hereof 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 in order to make the statements therein not misleading;
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(xvii) provide a CUSIP number for all Securities not later than the effective date of the Registration Statement covering such Securities and provide the Trustee under the applicable Indenture with printed certificates for such Securities which are in a form eligible for deposit with the Depository Trust Company and take all other action necessary to ensure that all such Securities are eligible for deposit with the Depository Trust Company;
(xviii) 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;
(xix) otherwise use its commercially reasonable efforts to comply with all applicable rules and regulations of the Commission, and make generally available to its security holders, as soon as practicable, a consolidated earning statement meeting the requirements of Rule 158 (which need not be audited) for the twelve-month period (A) commencing at the end of any fiscal quarter in which Transfer Restricted Securities are sold to underwriters in a firm commitment or best efforts Underwritten Offering or (B) if not sold to underwriters in such an offering, beginning with the first month of the Company’s and the Co-Issuer’s first fiscal quarter commencing after the effective date of the Registration Statement;
(xx) cause the Indenture to be qualified under the Trust Indenture Act 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 Securities 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 Trust Indenture Act; and to execute, and to use its commercially reasonable 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;
(xxi) maintain the listing of all Securities covered by the Registration Statement on the PORTAL Market; and
(xxii) provide promptly to each Holder upon request each document filed with the Commission pursuant to the requirements of Section 13 and Section 15 of the Exchange Act.
Each Holder agrees by acquisition of a Transfer Restricted Security that, upon receipt of any notice from the Company and the Co-Issuer of the existence of any fact of the kind described in 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)(xvi) hereof, or until it is advised in writing (the “Advice”) by the Company and the Co-Issuer 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. If so directed by the
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Company and the Co-Issuer, each Holder will deliver to the Company and the Co-Issuer (at the Company’s and the Co-Issuer’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 and the Co-Issuer 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 (a “Delay Period”) during the period from and including the date of the giving of such notice pursuant to 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)(xvi) hereof or shall have received the Advice; provided that there shall not be more than 75 days of Delay Periods during any 12-month period; provided further, however, that (except as provided in Section 5(iv) hereof) no such extension shall be taken into account in determining whether Additional Interest is due pursuant to Section 5 hereof or the amount of such Additional Interest, it being agreed that the Company’s and the Co-Issuer’s option to suspend use of a Registration Statement pursuant to this paragraph shall be treated as a Registration Default for purposes of Section 5 hereof.
SECTION 7. Registration Expenses.
(a) All expenses incident to the Company’s, the Co-Issuer’s and the Guarantor’s performance of or compliance with this Agreement will be borne by the Company, the Co-Issuer and the Guarantors, jointly and severally, 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 one counsel to such person, that may be required by the rules and regulations of the NASD)); (ii) all fees and expenses of compliance with federal securities and state securities or blue sky laws (including the reasonable fees and disbursements of one counsel to the Holder of Transfer Restricted Securities); (iii) all expenses of printing (including printing certificates for the Exchange Securities 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, the Co-Issuer, the Guarantors and, subject to Section 7(b) hereof, one counsel to the Holders of Transfer Restricted Securities; (v) all application and filing fees in connection with listing the Exchange Securities on a securities exchange or automated quotation system pursuant to the requirements thereof; and (vi) all fees and disbursements of independent certified public accountants of the Company, the Co-Issuer and the Guarantors (including the expenses of any special audit and comfort letters required by or incident to such performance).
Each of the Company, the Co-Issuer and the Guarantors 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, the Co-Issuer or the Guarantors.
(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, the Co-Issuer and the Guarantors, jointly and severally,
16
will reimburse the Initial Purchasers and 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 Cravath, Swaine & Moore LLP or such other counsel as may 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.
SECTION 8. Indemnification.
(a) The Company, the Co-Issuer and the Guarantors, jointly and severally, agree to indemnify and hold harmless (i) each Holder and (ii) each Person, if any, who controls (within the meaning of Section 15 of the Securities 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, settling, compromising, paying 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), joint or several, 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, Prospectus (or any amendment or supplement thereto) or Free Writing Prospectus, 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 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 relating to any of the Holders furnished in writing to the Company and the Co-Issuer by any of the Holders expressly for use therein. This indemnity agreement shall be in addition to any liability that the Company, the Co-Issuer or any of the Guarantors may otherwise have.
In case any action or proceeding (including any governmental or regulatory investigation or proceeding) shall be brought or asserted against any of the Indemnified Holders with respect to which indemnity may be sought against the Company, the Co-Issuer or the Guarantors, such Indemnified Holder (or the Indemnified Holder controlled by such controlling person) shall promptly notify the Company, the Co-Issuer and the Guarantors in writing; provided, however, that the failure to give such notice shall not relieve any of the Company, the Co-Issuer or the Guarantors of its obligations pursuant to this Agreement. Such Indemnified Holder shall have the right to employ its own counsel in any such action and the fees and expenses of such counsel shall be paid, as incurred, by the Company, the Co-Issuer and the Guarantors (regardless of whether it is ultimately determined that an Indemnified Holder is not entitled to indemnification hereunder). The Company, the Co-Issuer and the Guarantors shall not, in connection with any one such action or proceeding or separate but substantially similar or related actions or proceedings in the same jurisdiction arising out of the same general allegations or circumstances,
17
be liable for the reasonable fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) at any time for such Indemnified Holders, which firm shall be designated by the Holders. The Company, the Co-Issuer and the Guarantors shall be liable for any settlement of any such action or proceeding effected with the Company’s, the Co-Issuer’s and the Guarantors’ prior written consent, which consent shall not be withheld unreasonably, and each of the Company, the Co-Issuer and the Guarantors 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, the Co-Issuer and the Guarantors. The Company, the Co-Issuer and the Guarantors 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, the Co-Issuer, the Guarantors and their respective directors, officers of the Company, the Co-Issuer and the Guarantors who sign a Registration Statement, and any Person controlling (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) the Company, the Co-Issuer or any of the Guarantors, and the respective officers, directors, partners, employees, representatives and agents of each such Person, to the same extent as the foregoing indemnity from the Company, the Co-Issuer and the Guarantors to each of the Indemnified Holders, but only with respect to claims and actions based on information relating to such Holder 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, the Co-Issuer, the Guarantors or their respective 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, the Co-Issuer and the Guarantors, and the Company, the Co-Issuer, the Guarantors, their respective directors and officers and such controlling person shall have the rights and duties given to each Holder by the preceding paragraph.
(c) If the indemnification provided for in this Section 8 is unavailable to an indemnified party under Section 8(a) or (b) hereof (other than by reason of exceptions provided in those Sections) in respect of any losses, claims, damages, liabilities, judgments, actions 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, the Co-Issuer and the Guarantors, on the one hand, and the Holders, on the other hand, from the Initial Placement (which in the case of the Company, the Co-Issuer and the Guarantors shall be deemed to be equal to the total gross proceeds to the Company, the Co-Issuer and the Guarantors from the Initial Placement), the amount of Additional Interest which did not become payable as a result of the filing of the Registration Statement resulting in such losses, claims, damages, liabilities, judgments actions or expenses, and such Registration Statement, or if such allocation is not permitted by applicable law, the relative fault of the Company, the Co-Issuer and the Guarantors, on the one hand, and
18
the Holders, 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 and the Co-Issuer on the one hand and of the Indemnified Holder on the other 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, the Co-Issuer or any of the Guarantors, on the one hand, or the Indemnified Holders, on the other hand, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in the second paragraph of Section 8(a) hereof, any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim.
The Company, the Co-Issuer, the Guarantors 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 legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 8, none of the Holders (and its related Indemnified Holders) shall be required to contribute, in the aggregate, any amount in excess of the amount by which the total discount received by such Holder with respect to the Initial Securities 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 Securities 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 Initial Securities held by each of the Holders hereunder and not joint.
SECTION 9. Rule 144A. Each of t he Company, the Co-Issuer and the Guarantors hereby agrees with each Holder, for so long as any Transfer Restricted Securities remain outstanding, to make available 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 from such Holder or beneficial owner, the information required by Rule 144A(d)(4) under the Securities Act in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144A under the Securities Act.
SECTION 10. Participation in 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 any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements and (b) completes and executes
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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. The Holders of Transfer Restricted Securities covered by the Shelf Registration Statement who desire to do so may sell such Transfer Restricted Securities in an Underwritten Offering. In any such Underwritten Offering, the investment banker(s) and managing underwriter(s) 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, however , that such investment banker(s) and managing underwriter(s) must be reasonably satisfactory to the Company and the Co-Issuer.
SECTION 12. Miscellaneous.
(a) Remedies. Each of the Company, the Co-Issuer and the Guarantors hereby agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it 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. Each of the Company, the Co-Issuer and the Guarantors will not on or after the date of this Agreement enter into any agreement with respect to its securities that conflicts with the provisions hereof. The rights granted to the Holders hereunder do not in any way conflict with the rights granted to the holders of the Company’s and the Co-Issuer’s or any of the Guarantors’ securities under any agreement in effect on the date hereof.
(c) Adjustments Affecting the Securities. Neither the Company nor the Co-Issuer will effect any change, or permit any change to occur, in each case, with respect to the terms of the Securities that would materially and adversely affect the ability of the Holders to Consummate any Exchange Offer.
(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 the Company and the Co-Issuer have (i) in the case of Section 5 hereof and this Section 12(d)(i), obtained the written consent of Holders of all outstanding Transfer Restricted Securities and (ii) in the case of all other provisions hereof, obtained the written consent of Holders of a majority of the outstanding principal amount of Transfer Restricted Securities (excluding any Transfer Restricted Securities held by the Company, the Co-Issuer or their Affiliates). 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 being tendered or registered; provided, however, that, with respect to any matter that directly or indirectly affects the rights of any Initial Purchaser hereunder, the Company and the Co-Issuer shall obtain the written consent of each such Initial Purchaser with respect to which such amendment, qualification, supplement, waiver, consent or departure is to be effective.
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(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, the Co-Issuer or the Guarantors:
RBS Global, Inc
4701 Greenfield Avenue
Milwaukee, WI 53214
Telecopier No.: (212) 643-2510
Attention: General Counsel
With a copy to:
O’Melveny & Myers LLP
Times Square Tower
7 Times Square
New York, NY 10036
Telecopier No.: (212) 326-2061
Attention: Gregory Ezring
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 answered back, if telexed; 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 from such Holder.
(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.
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(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 CONFLICTS 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 by the Company and the Co-Issuer with respect to the Transfer Restricted Securities. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
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CHASE MERGER SUB, INC. |
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By: |
/s/ Patricia M. Navis |
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Name: Patricia M. Navis |
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Title: Vice President and Secretary |
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RBS GLOBAL, INC. |
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By: |
/s/ Robert A. Hitt |
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Name: Robert A. Hitt |
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Title: President and Chief Executive Officer |
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REXNORD CORPORATION |
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By: |
/s/ Thomas Jansen |
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Name: Thomas Jansen |
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Title: Executive Vice President and Chief |
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Financial Officer |
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GUARANTORS: |
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THE FALK SERVICE CORPORATION |
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PT COMPONENTS, INC. |
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RBS ACQUISITION CORPORATION |
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REXNORD INDUSTRIES, LLC |
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W.M. BERG INC. |
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PRAGER INCORPORATED |
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REXNORD PUERTO RICO INC. |
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REXNORD INTERNATIONAL INC. |
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By: |
/s/ Michael Andrzejewski |
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Name: Michael Andrzejewski |
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Title: Vice President and Secretary |
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RBS CHINA HOLDINGS, L.L.C. |
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By: |
/s/ |
Michael Andrzejewski |
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Name: |
Michael Andrzejewski |
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Title: |
Secretary |
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The foregoing Registration Rights Agreement is hereby confirmed and accepted as of the date first above written:
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CREDIT SUISSE SECURITIES (USA) LLC |
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MERRILL LYNCH,
PIERCE, FENNER &
SMITH
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BEAR, STEARNS & CO. INC. |
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LEHMAN BROTHERS INC. |
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CREDIT SUISSE SECURITIES (USA) LLC , a cting on behalf of itself and as a Representative of the several Initial Purchasers , |
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by |
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/s/ Edward Neuberg |
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Name: Edward Neuberg |
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Title: Director |
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MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED , a cting on behalf of itself and as a Representative of the several Initial Purchasers , |
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by |
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/s/ Harold Varah |
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Name: Harold Varah |
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Title: Vice President |
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Schedule A
Guarantors
The Falk Service Corporation
Prager Incorporated
PT Components, Inc.
RBS Acquisition Corporation
RBS China Holdings, L.L.C.
Rexnord Industries, LLC
Rexnord International Inc.
Rexnord Puerto Rico Inc.
W.M. Berg Inc.
Exhibit 10.1
EXECUTION COPY
$760,000,000
CREDIT AGREEMENT
Dated as of July 21, 2006,
Among
CHASE ACQUISITION I, INC. ,
CHASE MERGER SUB, INC. (to be merged with and into
RBS Global, Inc.)
and
REXNORD CORPORATION
,
as Borrowers,
THE LENDERS PARTY HERETO,
MERRILL LYNCH CAPITAL CORPORATION,
as Administrative Agent,
CREDIT SUISSE SECURITIES (USA)
LLC,
as Syndication Agent,
and
BEAR, STEARNS & CO. INC.
and
LEHMAN BROTHERS INC.,
as Co-Documentation Agents
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
,
CREDIT SUISSE SECURITIES (USA) LLC,
BEAR, STEARNS & CO. INC.
and
LEHMAN BROTHERS INC.,
as Joint Bookrunners
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
and
CREDIT SUISSE SECURITIES (USA) LLC
as Co-Lead Arrangers
TABLE OF CONTENTS
ARTICLE I
Definitions
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SECTION 1.01. |
Defined Terms |
1 |
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SECTION 1.02. |
Terms Generally |
117 |
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SECTION 1.03. |
Effectuation of Transfers |
118 |
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SECTION 1.04. |
Exchange Rates; Currency Equivalents |
118 |
ARTICLE II
The Credits
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SECTION 2.01. |
Commitments |
119 |
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SECTION 2.02. |
Loans and Borrowings |
120 |
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SECTION 2.03. |
Requests for Borrowings |
122 |
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SECTION 2.04. |
Swingline Loans |
124 |
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SECTION 2.05. |
Letters of Credit |
127 |
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SECTION 2.06. |
Funding of Borrowings |
140 |
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SECTION 2.07. |
Interest Elections |
142 |
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SECTION 2.08. |
Termination and Reduction of Commitments |
144 |
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SECTION 2.09. |
Repayment of Loans; Evidence of Debt |
146 |
|
SECTION 2.10. |
Repayment of Term Loans and Revolving Facility Loans |
148 |
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SECTION 2.11. |
Prepayment of Loans |
152 |
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SECTION 2.12. |
Fees |
155 |
|
SECTION 2.13. |
Interest |
157 |
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SECTION 2.14. |
Alternate Rate of Interest |
159 |
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SECTION 2.15. |
Increased Costs |
160 |
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SECTION 2.16. |
Break Funding Payments |
163 |
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SECTION 2.17. |
Taxes |
164 |
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SECTION 2.18. |
Payments Generally; Pro Rata Treatment; Sharing of Set-offs |
167 |
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SECTION 2.19. |
Mitigation Obligations; Replacement of Lenders |
172 |
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SECTION 2.20. |
Illegality |
175 |
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SECTION 2.21. |
Incremental Commitments |
176 |
ARTICLE III
Representations and Warranties
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SECTION 3.01. |
Organization; Powers |
181 |
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SECTION 3.02. |
Authorization |
182 |
i
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SECTION 3.03. |
Enforceability |
183 |
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SECTION 3.04. |
Governmental Approvals |
184 |
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SECTION 3.05. |
Financial Statements |
184 |
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SECTION 3.06. |
No Material Adverse Effect |
186 |
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SECTION 3.07. |
Title to Properties; Possession Under Leases |
186 |
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SECTION 3.08. |
Subsidiaries |
188 |
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SECTION 3.09. |
Litigation; Compliance with Laws |
188 |
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SECTION 3.10. |
Federal Reserve Regulations |
189 |
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SECTION 3.11. |
Investment Company Act |
190 |
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SECTION 3.12. |
Use of Proceeds |
190 |
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SECTION 3.13. |
Tax Returns |
191 |
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SECTION 3.14. |
No Material Misstatements |
192 |
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SECTION 3.15. |
Employee Benefit Plans |
193 |
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SECTION 3.16. |
Environmental Matters |
194 |
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SECTION 3.17. |
Security Documents |
196 |
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SECTION 3.18. |
Location of Real Property and Leased Premises |
199 |
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SECTION 3.19. |
Solvency |
199 |
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SECTION 3.20. |
Labor Matters |
200 |
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SECTION 3.21. |
Insurance |
201 |
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SECTION 3.22. |
No Default |
202 |
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SECTION 3.23. |
Intellectual Property; Licenses, Etc. |
202 |
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SECTION 3.24. |
Senior Debt |
202 |
ARTICLE IV
Conditions of Lending
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SECTION 4.01. |
All Credit Events |
203 |
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SECTION 4.02. |
First Credit Event |
205 |
ARTICLE V
Affirmative Covenants
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SECTION 5.01. |
Existence; Business and Properties |
214 |
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SECTION 5.02. |
Insurance |
215 |
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SECTION 5.03. |
Taxes |
217 |
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SECTION 5.04. |
Financial Statements, Reports, etc. |
217 |
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SECTION 5.05. |
Litigation and Other Notices |
223 |
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SECTION 5.06. |
Compliance with Laws |
224 |
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SECTION 5.07. |
Maintaining Records; Access to Properties and Inspections |
224 |
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SECTION 5.08. |
Use of Proceeds |
225 |
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SECTION 5.09. |
Compliance with Environmental Laws |
225 |
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SECTION 5.10. |
Further Assurances; Additional Security |
225 |
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SECTION 5.11. |
Rating |
231 |
ii
ARTICLE VI
Negative Covenants
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SECTION 6.01. |
Indebtedness |
232 |
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SECTION 6.02. |
Liens |
241 |
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SECTION 6.03. |
Sale and Lease-Back Transactions |
250 |
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SECTION 6.04. |
Investments, Loans and Advances |
251 |
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SECTION 6.05. |
Mergers, Consolidations, Sales of Assets and Acquisitions |
260 |
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SECTION 6.06. |
Dividends and Distributions |
267 |
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SECTION 6.07. |
Transactions with Affiliates |
271 |
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SECTION 6.08. |
Business of the Borrowers and the Subsidiaries |
278 |
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SECTION 6.09. |
Limitation on Modifications of Indebtedness; Modifications of Certificate of Incorporation, By-Laws and Certain Other Agreements; etc. |
279 |
|
SECTION 6.10. |
Capital Expenditures |
284 |
|
SECTION 6.11. |
Total Senior Secured Bank Leverage Ratio |
285 |
|
SECTION 6.12. |
Swap Agreements |
286 |
|
SECTION 6.13. |
No Other “Designated Senior Debt” |
286 |
|
SECTION 6.14. |
Fiscal Year; Accounting |
287 |
ARTICLE VIA Holdings Negative Covenants
ARTICLE VII
Events of Default
|
SECTION 7.01. |
Events of Default |
288 |
|
SECTION 7.02. |
Exclusion of Immaterial Subsidiaries |
296 |
|
SECTION 7.03. |
Right to Cure |
297 |
ARTICLE VIII
The Agents
|
SECTION 8.01. |
Appointment |
299 |
|
SECTION 8.02. |
Delegation of Duties |
303 |
|
SECTION 8.03. |
Exculpatory Provisions |
304 |
|
SECTION 8.04. |
Reliance by Administrative Agent |
306 |
|
SECTION 8.05. |
Notice of Default |
308 |
|
SECTION 8.06. |
Non-Reliance on Agents and Other Lenders |
308 |
|
SECTION 8.07. |
Indemnification |
309 |
|
SECTION 8.08. |
Agent in Its Individual Capacity |
311 |
|
SECTION 8.09. |
Successor Administrative Agent |
311 |
iii
|
SECTION 8.10. |
Agents and Arrangers |
312 |
|
SECTION 8.11. |
Special Appointment of Collateral Agent (Germany) |
313 |
|
SECTION 8.12. |
Parallel Debt (The Netherlands and Germany) |
314 |
ARTICLE IX
Miscellaneous
|
SECTION 9.01. |
Notices; Communications |
316 |
|
SECTION 9.02. |
Survival of Agreement |
319 |
|
SECTION 9.03. |
Binding Effect |
320 |
|
SECTION 9.04. |
Successors and Assigns |
321 |
|
SECTION 9.05. |
Expenses; Indemnity |
332 |
|
SECTION 9.06. |
Right of Set-off |
336 |
|
SECTION 9.07. |
Applicable Law |
337 |
|
SECTION 9.08. |
Waivers; Amendment |
337 |
|
SECTION 9.09. |
Interest Rate Limitation |
343 |
|
SECTION 9.10. |
No Liability of the Issuing Bank |
343 |
|
SECTION 9.11. |
Entire Agreement |
344 |
|
SECTION 9.12. |
WAIVER OF JURY TRIAL |
345 |
|
SECTION 9.13. |
Severability |
346 |
|
SECTION 9.14. |
Counterparts |
346 |
|
SECTION 9.15. |
Headings |
346 |
|
SECTION 9.16. |
Jurisdiction; Consent to Service of Process |
347 |
|
SECTION 9.17. |
Confidentiality |
348 |
|
SECTION 9.18. |
Platform; Borrowers Materials |
350 |
|
SECTION 9.19. |
Release of Liens and Guarantees |
351 |
|
SECTION 9.20. |
Judgment Currency |
352 |
|
SECTION 9.21. |
USA PATRIOT Act Notice |
353 |
iv
Exhibits and Schedules
|
Exhibit A |
Form of Assignment and Acceptance |
|
Exhibit B |
Form of Administrative Questionnaire |
|
Exhibit C |
Form of Solvency Certificate |
|
Exhibit D-1 |
Form of Borrowing Request |
|
Exhibit D-2 |
Form of Swingline Borrowing Request |
|
Exhibit E |
Form of Interest Election Request |
|
Exhibit F |
Form of Mortgage |
|
Exhibit G |
Form of Collateral Agreement |
|
|
|
|
Schedule 1.01A |
Certain U.S. Subsidiaries |
|
Schedule 1.01B |
Mortgaged Properties |
|
Schedule 1.01C |
Immaterial Subsidiaries |
|
Schedule 1.01D |
Restructuring Transactions |
|
Schedule 2.01 |
Commitments |
|
Schedule 3.01 |
Organization and Good Standing |
|
Schedule 3.04 |
Governmental Approvals |
|
Schedule 3.07(b) |
Possession under Leases |
|
Schedule 3.07(c) |
Intellectual Property |
|
Schedule 3.08(a) |
Subsidiaries |
|
Schedule 3.08(b) |
Subscriptions |
|
Schedule 3.13 |
Taxes |
|
Schedule 3.21 |
Insurance |
|
Schedule 3.23 |
Intellectual Property |
|
Schedule 4.02(b) |
Local Counsel |
|
Schedule 6.01 |
Indebtedness |
|
Schedule 6.02(a) |
Liens |
|
Schedule 6.04 |
Investments |
|
Schedule 6.07 |
Transactions with Affiliates |
|
Schedule 9.01 |
Notice Information |
|
Schedule 9.04 |
Processing and Recordation Fees |
v
CREDIT AGREEMENT dated as of July 21, 2006 (this “ Agreement ”), among CHASE ACQUISITION I, INC., a Delaware corporation (“ Holdings ”), CHASE MERGER SUB, INC., a Delaware corporation (“ Merger Sub ”), to be merged with and into RBS Global, Inc., a Delaware corporation (“ Target ”), REXNORD CORPORATION, a Delaware corporation (“ Rexnord ” and, together with Merger Sub (prior to the Merger) and Target (after the Merger), the “ Borrowers ”), the LENDERS party hereto from time to time, MERRILL LYNCH CAPITAL CORPORATION , as administrative agent (in such capacity, the “ Administrative Agent ”) for the Lenders, CREDIT SUISSE SECURITIES (USA) LLC , as syndication agent (in such capacity, the “ Syndication Agent ”), and BEAR, STEARNS & CO. INC. and LEHMAN BROTHERS INC., as co-documentation agents (in such capacities, the “ Documentation Agents ”).
WHEREAS, Apollo Management VI, L.P. and other affiliated co-investment partnerships (collectively, the “ Fund ”) have indirectly formed Holdings and Merger Sub for the purpose of entering into that certain Agreement and Plan of Merger by and among Holdings, Merger Sub, Target and TC Group, L.L.C., dated as of May 24, 2006 (as amended or supplemented as of the date hereof, the “ Merger Agreement ”) , pursuant to which (a) Merger Sub will merge (the “ Merger ”) with and into Target, with (i) Target surviving as a Wholly Owned Subsidiary of Holdings and (ii) Target assuming by operation of law all of the Obligations of Merger Sub under this Agreement and the other Loan Documents ; and
WHEREAS, in connection with the consummation of the Merger, the Borrowers have requested the Lenders to extend credit in the form of (a) Term B Loans on the Closing Date, in an aggregate principal amount not in excess of $610.0 million, and (b) Revolving Facility Loans and Letters of Credit at any time and from time to time prior to the Revolving Facility Maturity Date, in an aggregate principal amount at any time outstanding not in excess of $150.0 million;
NOW, THEREFORE, the Lenders are willing to extend such credit to the Borrowers on the terms and subject to the conditions set forth herein. Accordingly, the parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the following terms shall have the meanings specified below:
“ ABR ” shall mean, for any day, a fluctuating rate per annum equal to the higher of (a) the Federal Funds Effective Rate in effect for such day plus 1/2 of 1% and (b) the Prime Rate in effect on such day. Any change in such rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective from and including the effective date of such change in the Prime Rate or the Federal Funds Effective Rate, as the case may be.
“ ABR Borrowing ” shall mean a Borrowing comprised of ABR Loans.
“ ABR Loan ” shall mean any ABR Term Loan, ABR Revolving Loan or Swingline Loan.
“ ABR Revolving Facility Borrowing ” shall mean a Borrowing comprised of ABR Revolving Loans.
“ ABR Revolving Loan ” shall mean any Revolving Facility Loan bearing interest at a rate determined by reference to the ABR in accordance with the provisions of Article II.
“ ABR Term Loan ” shall mean any Term Loan bearing interest at a rate determined by reference to the ABR in accordance with the provisions of Article II.
“ Acquired Capex Amount ” shall mean, for any fiscal year, after the consummation of a Permitted Business Acquisition, an amount equal to 110% of the average annual capital expenditures made by the person or business so acquired, as shown in the financial statements (audited or unaudited) of such person or business (if available, and, if such financial statements are unavailable, as shown on a certificate provided in good faith by a Responsible Officer estimating the approximate annual capital expenditures), during the three fiscal years (or such shorter period for which such financial statements are available) preceding such acquisition.
“ Additional Mortgage ” shall have the meaning assigned to such term in Section 5.10(c).
“ Adjusted LIBO Rate ” shall mean, with respect to any Eurocurrency Borrowing for any Interest Period, an interest rate per annum equal (rounded upwards, if necessary, to the next 1/16 of 1%) to (a) the LIBO Rate in effect for such Interest Period divided by (b) one minus the Statutory Reserves applicable to such Eurocurrency Borrowing, if any.
“ Adjustment Date ” shall have the meaning assigned to such term in the definition of “Pricing Grid.”
“ Administrative Agent ” shall have the meaning assigned to such term in the introductory paragraph of this Agreement.
“ Administrative Agent Fees ” shall have the meaning assigned to such term in Section 2.12(c).
“ Administrative Questionnaire ” shall mean an Administrative Questionnaire in the form of Exhibit B or such other form supplied by the Administrative Agent.
“ Affiliate ” shall mean, when used with respect to a specified person, another person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the person specified.
“ Agents ” shall mean the Administrative Agent, the Collateral Agent, the Syndication Agent and the Documentation Agents.
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“ Agreement ” shall have the meaning assigned to such term in the introductory paragraph of this Agreement.
“ Alternate Currency ” shall mean, with respect to any Letter of Credit, Canadian Dollars, Australian Dollars, Pounds Sterling, Brazilian Real, Mexican Pesos and Euros and any other currency other than Dollars as may be acceptable to the Administrative Agent and the Issuing Bank with respect thereto in their sole discretion.
“ Alternate Currency Letter of Credit ” shall mean any Letter of Credit denominated in an Alternate Currency.
“ Applicable Commitment Fee ” shall mean for any day 0.50% per annum; provided , that on and after the first Adjustment Date occurring after delivery of the financial statements and certificates required by Section 5.04 upon the completion of one full fiscal quarter of the Borrowers after the Closing Date, the Applicable Commitment Fee will be determined pursuant to the Pricing Grid.
“ Applicable Margin ” shall mean for any day (i) with respect to any Term B Loan, 2.50% per annum in the case of any Eurocurrency Loan and 1.50% per annum in the case of any ABR Loan and (ii) with respect to any Revolving Facility Loan, 2.25% per annum in the case of any Eurocurrency Loan and 1.25% per annum in the case of any ABR Loan; provided , that on and after the first Adjustment Date occurring after delivery of the financial statements and certificates required by Section 5.04 upon the completion of one full fiscal quarter of the Borrowers after the Closing Date, the Applicable Margin with respect to the Facilities will be determined pursuant to the Pricing Grid.
“ Applicable Period ” means an Excess Cash Flow Period or an Excess Cash Flow Interim Period, as the case may be.
“ Approved Fund ” shall have the meaning assigned to such term in Section 9.04(b).
“ Asset Sale ” shall mean any loss, damage, destruction or condemnation of, or any sale, transfer or other disposition (including any sale and leaseback of assets and any mortgage or lease of Real Property) to any person of any asset or assets of Holdings, the Borrowers or any Subsidiary.
“ Assignee ” shall have the meaning assigned to such term in Section 9.04(b).
“ Assignee Group ” shall mean two or more Assignees permitted hereunder that are Affiliates of one another or two or more Approved Funds managed by the same investment advisor.
“ Assignment and Acceptance ” shall mean an assignment and acceptance entered into by a Lender and an Assignee, and accepted by the Administrative Agent and the Borrowers (if required by Section 9.04), in the form of Exhibit A or such other form as shall be approved by the Administrative Agent.
3
“ Availability Period ” shall mean the period from and including the Closing Date to but excluding the earlier of the Revolving Facility Maturity Date and in the case of each of the Revolving Facility Loans, Revolving Facility Borrowings, Swingline Loans, Swingline Borrowings and Letters of Credit, the date of termination of the Revolving Facility Commitments.
“ Available Unused Commitment ” shall mean, with respect to a Revolving Facility Lender at any time, an amount equal to the amount by which (a) the Revolving Facility Commitment of such Revolving Facility Lender at such time exceeds (b) the Revolving Facility Credit Exposure of such Revolving Facility Lender at such time; provided , that with respect to any Swingline Lender, the Available Unused Commitment at any time shall be reduced by the principal amount of any Swingline Loans made by such Lender outstanding at such time.
“ Below Threshold Asset Sale Proceeds ” shall have the meaning assigned to such term in the definition of the term “Cumulative Credit”.
“ Board ” shall mean the Board of Governors of the Federal Reserve System of the United States of America.
“ Borrowers ” shall have the meaning assigned to such term in the introductory paragraph of this Agreement.
“ Borrowing ” shall mean a group of Loans of a single Type under a single Facility and made on a single date and, in the case of Eurocurrency Loans, as to which a single Interest Period is in effect.
“ Borrowing Minimum ” shall mean $5.0 million, except in the case of Swingline Loans, $1.0 million.
“ Borrowing Multiple ” shall mean $250,000.
“ Borrowing Request ” shall mean a request by the applicable Borrower in accordance with the terms of Section 2.03 and substantially in the form of Exhibit D-1 .
“ Budget ” shall have the meaning assigned to such term in Section 5.04(e).
“ Business Day ” shall mean any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed; provided , that when used in connection with a Eurocurrency Loan, the term “Business Day” shall also exclude any day on which banks are not open for dealings in deposits in the applicable currency in the London interbank market.
“ Capital Expenditures ” shall mean, for any person in respect of any period, the aggregate of all expenditures incurred by such person during such period that, in accordance with GAAP, are or should be included in “additions to property, plant or equipment” or similar items reflected in the statement of cash flows of such person, provided , however , that Capital Expenditures for Holdings, the Borrowers and the Subsidiaries shall not include:
4
“ Capital Lease Obligations ” of any person shall mean the obligations of such person to pay rent or other amounts under any lease of (or other arrangement conveying the right
5
to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such person under GAAP and, for purposes hereof, the amount of such obligations at any time shall be the capitalized amount thereof at such time determined in accordance with GAAP.
“ Cash Interest Expense ” shall mean, with respect to the Borrowers and the Subsidiaries on a consolidated basis for any period, Interest Expense for such period, less the sum of, without duplication, (a) pay in kind Interest Expense or other non-cash Interest Expense (including as a result of the effects of purchase accounting), (b) to the extent included in Interest Expense, the amortization of any financing fees paid by, or on behalf of, the Borrowers or any Subsidiary, including such fees paid in connection with the Transactions or upon entering into a Permitted Receivables Financing, (c) the amortization of debt discounts, if any, or fees in respect of Swap Agreements and (d) cash interest income of the Borrowers and their Subsidiaries for such period; provided , that Cash Interest Expense shall exclude any one time financing fees, including those paid in connection with the Transactions, or upon entering into a Permitted Receivables Financing or any amendment of this Agreement.
A “ Change in Control ” shall be deemed to occur if:
“ Change in Law ” shall mean (a) the adoption of any law, rule or regulation after the Closing Date, (b) any change in law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the Closing Date or (c) compliance by any Lender or Issuing Bank (or, for purposes of Section 2.15(b), by any lending office of such Lender or by
6
such Lender’s or Issuing Bank’s holding company, if any) with any written request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the Closing Date.
“ Charges ” shall have the meaning assigned to such term in Section 9.09.
“ Closing Date ” shall mean July 21, 2006 .
“ Code ” shall mean the Internal Revenue Code of 1986, as amended from time to time and the regulations promulgated and rulings issued thereunder.
“ Co-Lead Arrangers ” shall mean Merrill Lynch, Pierce, Fenner & Smith Incorporated and Credit Suisse Securities (USA) LLC, in their capacities as co-lead arrangers and joint bookrunners.
“ Collateral ” shall mean all the “Collateral” as defined in any Security Document and shall also include the Mortgaged Properties and all other property that is subject to any Lien in favor of the Administrative Agent, the Collateral Agent or any Subagent for the benefit of the Lenders pursuant to any Security Documents.
“ Collateral Agent ” shall mean the Administrative Agent acting as collateral agent for the Lenders.
“ Collateral Agreement ” shall mean the Guarantee and Collateral Agreement, as amended, supplemented or otherwise modified from time to time, in the form of Exhibit G , among Holdings, the Borrowers, each Subsidiary Loan Party and the Collateral Agent.
“ Collateral and Guarantee Requirement ” shall mean the requirement that:
7
8
9
“ Commitment Fee ” shall have the meaning assigned to such term in Section 2.12(a).
“ Commitments ” shall mean (a) with respect to any Lender, such Lender’s Revolving Facility Commitment (including any Incremental Revolving Facility Commitment), Term B Loan Commitment and Incremental Term Loan Commitment and (b) with respect to any Swingline Lender, its Swingline Commitment.
“ Conduit Lender ” shall mean any special purpose corporation organized and administered by any Lender for the purpose of making Loans otherwise required to be made by such Lender and designated by such Lender in a written instrument; provided , that the designation by any Lender of a Conduit Lender shall not relieve the designating Lender of any of its obligations to fund a Loan under this Agreement if, for any reason, its Conduit Lender fails to fund any such Loan, and the designating Lender (and not the Conduit Lender) shall have the sole right and responsibility to deliver all consents and waivers required or requested under this Agreement with respect to its Conduit Lender; provided , further , that no Conduit Lender shall (a) be entitled to receive any greater amount pursuant to Section 2.15, 2.16, 2.17 or 9.05 than the designating Lender would have been entitled to receive in respect of the extensions of credit made by such Conduit Lender or (b) be deemed to have any Commitment.
“ Consent Solicitation ” shall mean the solicitation by Target in connection with the Debt Tender Offer of the consent of the holders of the Existing Senior Subordinated Notes to an amendment of certain of the covenants of the Existing Senior Subordinated Notes Indenture.
“ Consolidated Debt ” at any date shall mean the sum of (without duplication) all Indebtedness (other than letters of credit, to the extent undrawn) consisting of Capital Lease Obligations, Indebtedness for borrowed money, Disqualified Stock and Indebtedness in respect of the deferred purchase price of property or services of the Borrowers and the Subsidiaries determined on a consolidated basis on such date in accordance with GAAP.
“ Consolidated Net Income ” shall mean, with respect to any person for any period, the aggregate of the Net Income of such person and its subsidiaries for such period, on a consolidated basis; provided , however , that, without duplication,
10
11
“ Consolidated Total Assets ” shall mean, as of any date, the total assets of the Borrowers and the consolidated Subsidiaries, determined on a consolidated basis in accordance with GAAP, as set forth on the consolidated balance sheet of the Borrowers as of such date.
“ Control ” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a person, whether through the ownership of voting securities, by contract or otherwise, and “ Controlling ” and “ Controlled ” shall have meanings correlative thereto.
“ Corresponding Debt ” shall have the meaning assigned to such term in Section 8.12.
“ Credit Event ” shall have the meaning assigned to such term in Article IV.
“ Cumulative Credit ” shall mean, at any date, an amount, not less than zero in the aggregate, determined on a cumulative basis equal to, without duplication:
(a) $50.0 million, plus :
(b) the Cumulative Retained Excess Cash Flow Amount at such time, plus
(c) the aggregate amount of proceeds received after the Closing Date and prior to such time that would have constituted Net Proceeds pursuant to clause (a) of the definition thereof except for the operation of clause (x), (y) or (z) of the second proviso thereof (the “ Below Threshold Asset Sale Proceeds ”), plus
(d) the cumulative amount of proceeds (including cash and the fair market value of property other than cash) from the sale of Equity Interests of Holdings or any parent of Holdings after the Closing Date and on or prior to such time (including upon exercise of warrants or options) which proceeds have been contributed as common equity to the capital of the Borrowers and common Equity Interests of the Borrowers issued upon conversion of Indebtedness (other than Indebtedness that is contractually subordinated to the Obligations) of the Borrowers or any Subsidiary owed to a person other than the Borrowers or a Subsidiary not previously applied for a purpose other than use in the Cumulative Credit; provided , that this clause (d) shall exclude Permitted Cure Securities and the proceeds thereof, sales of Equity Interests financed as contemplated by Section 6.04(e) and any amounts used to finance the payments or distributions in respect of any Junior Financing pursuant to Section 6.09(b), plus
(e) 100% of the aggregate amount of contributions to the common capital of the Borrowers received in cash (and the fair market value of property other than cash) after the Closing Date (subject to the same exclusions as are applicable to clause (d) above); provided , that the Borrowers and their Subsidiaries shall be in Pro Forma Compliance, plus
(f) the principal amount of any Indebtedness (including the liquidation preference or maximum fixed repurchase price, as the case may be, of any Disqualified Stock) of the Borrowers or any Subsidiary thereof issued after the Closing Date (other than Indebtedness issued to a Subsidiary), which has been converted into or exchanged for Equity Interests (other than Disqualified Stock) in Holdings or any parent of Holdings, plus
12
(g) 100% of the aggregate amount received by the Borrowers or any Subsidiary in cash (and the fair market value of property other than cash received by the Borrowers or any Subsidiary) after the Closing Date from:
(A) the sale (other than to the Borrowers or any Subsidiary) of the Equity Interests of an Unrestricted Subsidiary, or
(B) any dividend or other distribution by an Unrestricted Subsidiary, plus
(h) in the event any Unrestricted Subsidiary has been redesignated as a Subsidiary or has been merged, consolidated or amalgamated with or into, or transfers or conveys its assets to, or is liquidated into, Holdings, the Borrowers or any Subsidiary, the fair market value of the Investments of Holdings, the Borrowers or any Subsidiary in such Unrestricted Subsidiary at the time of such redesignation, combination or transfer (or of the assets transferred or conveyed, as applicable), plus
(i) an amount equal to any returns (including dividends, interest, distributions, returns of principal, profits on sale, repayments, income and similar amounts) actually received by the Borrowers or any Subsidiary in respect of any Investments made pursuant to Section 6.04(j), minus
(j) any amounts thereof used to make Investments pursuant to Section 6.04(b)(y) after the Closing Date prior to such time, minus
(k) any amounts thereof used to make Investments pursuant to Section 6.04(j)(ii) after the Closing Date prior to such time, minus
(l) the cumulative amount of dividends paid and distributions made pursuant to Section 6.06(e) prior to such time, minus
(m) the cumulative amount of Capital Expenditures made pursuant to Section 6.10(c) prior to such time, minus
(n) payments or distributions in respect of Junior Financings pursuant to Section 6.09(b)(i) (other than payments made with proceeds from the issuance of Equity Interests that were excluded from the calculation of the Cumulative Credit pursuant to clause (d) above);
provided , however , for purposes of Section 6.06(e), the calculation of the Cumulative Credit shall not include any Below Threshold Asset Sale Proceeds except to the extent they are used as contemplated in clauses (j) and (k) above.
“ Cumulative Retained Excess Cash Flow Amount ” shall mean, at any date, an amount, which shall not be not less than zero in the aggregate, determined on a cumulative basis equal to:
(a) the aggregate cumulative sum of the Retained Percentage of Excess Cash Flow for all Excess Cash Flow Periods ending after the Closing Date and prior to such date, plus
13
(b) for each Excess Cash Flow Interim Period ended prior to such date but as to which the corresponding Excess Cash Flow Period has not ended, an amount equal to the Retained Percentage of Excess Cash Flow for such Excess Cash Flow Interim Period, minus
(c) the cumulative amount of all Retained Excess Cash Flow Overfundings as of such date.
“ Cure Amount ” shall have the meaning assigned to such term in Section 7.03(b).
“ Cure Right ” shall have the meaning assigned to such term in Section 7.03(b).
“ Current Assets ” shall mean, with respect to the Borrowers and the Subsidiaries on a consolidated basis at any date of determination, the sum of (a) all assets (other than cash and Permitted Investments or other cash equivalents that would, in accordance with GAAP, be classified on a consolidated balance sheet of the Borrowers and the Subsidiaries as current assets at such date of determination, other than amounts related to current or deferred Taxes based on income or profits, and (b) in the event that a Permitted Receivables Financing is accounted for off balance sheet, (x) gross accounts receivable comprising part of the Receivables Assets subject to such Permitted Receivables Financing less (y) collections against the amounts sold pursuant to clause (x).
“ Current Liabilities ” shall mean, with respect to the Borrowers and the Subsidiaries on a consolidated basis at any date of determination, all liabilities that would, in accordance with GAAP, be classified on a consolidated balance sheet of the Borrowers and the Subsidiaries as current liabilities at such date of determination, other than (a) the current portion of any Indebtedness, (b) accruals of Interest Expense (excluding Interest Expense that is due and unpaid), (c) accruals for current or deferred Taxes based on income or profits, (d) accruals of any costs or expenses related to (i) severance or termination of employees prior to the Closing Date or (ii) bonuses, pension and other post-retirement benefit obligations, and (e) accruals for add-backs to EBITDA included in clauses (a)(iv) through (a)(vi) of the definition of such term.
“ Dalong Acquisition ” means that certain transaction contemplated by that certain Equity Acquisition Agreement among Shanghai Electric (Group) Company, Shanghai Dalong Machinery Co., Ltd, Shanghai General Machinery (Group) Company and RBS China Holdings, L.L.C., dated December 16, 2005.
“ Debt Service ” shall mean, with respect to the Borrowers and the Subsidiaries on a consolidated basis for any period, Cash Interest Expense for such period plus scheduled principal amortization of Consolidated Debt for such period.
“ Debt Tender Offer ” shall mean the offer to purchase the Existing Senior Subordinated Notes made by Target on June 2, 2006.
“ Default ” shall mean any event or condition that upon notice, lapse of time or both would constitute an Event of Default.
“ Defaulting Lender ” shall mean any Lender with respect to which a Lender Default is in effect.
14
“ Disqualified Stock ” shall mean, with respect to any person, any Equity Interests of such person that, by its terms (or by the terms of any security or other Equity Interests into which it is convertible or for which it is exchangeable), or upon the happening of any event or condition (a) matures or is mandatorily redeemable (other than solely for Qualified Equity Interests), pursuant to a sinking fund obligation or otherwise (except as a result of a change of control or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior repayment in full of the Loans and all other Obligations that are accrued and payable and the termination of the Commitments), (b) is redeemable at the option of the holder thereof (other than solely for Qualified Equity Interests), in whole or in part, (c) provides for the scheduled payments of dividends in cash, or (d) is or becomes convertible into or exchangeable for Indebtedness or any other Equity Interests that would constitute Disqualified Stock, in each case, prior to the date that is ninety-one (91) days after the Term Facility Maturity Date; provided , however , that only the portion of the Equity Interests that so mature or are mandatorily redeemable, are so convertible or exchangeable or are so redeemable at the option of the holder thereof prior to such date shall be deemed to be Disqualified Stock; provided further , however , that if such Equity Interests are issued to any employee or to any plan for the benefit of employees of the Borrowers or the Subsidiaries or by any such plan to such employees, such Equity Interests shall not constitute Disqualified Stock solely because they may be required to be repurchased by the Borrowers in order to satisfy applicable statutory or regulatory obligations or as a result of such employee’s termination, death or disability; provided further , however , that, with respect to clause (d) above, Equity Interests constituting Qualified Equity Interests when issued shall not cease to constitute Qualified Equity Interests as a result of the subsequent incurrence of Other Term Loans.
“ Documentation Agents ” shall have the meaning assigned to such term in the introductory paragraph of this Agreement.
“ Dollar Equivalent ” means, at any time, (a) with respect to any amount denominated in Dollars, such amount, and (b) with respect to any amount denominated in any currency other than Dollars, the equivalent amount thereof in Dollars as determined by the Administrative Agent at such time on the basis of the Spot Rate (determined in respect of the most recent Revaluation Date or other applicable date of determination) for the purchase of Dollars with such currency.
“ Dollars ” or “ $ ” shall mean lawful money of the United States of America.
“ Domestic Subsidiary ” shall mean any Subsidiary that is not a Foreign Subsidiary.
“ EBITDA ” shall mean, with respect to Borrowers and the Subsidiaries on a consolidated basis for any period, the Consolidated Net Income of the Borrowers and the Subsidiaries for such period plus (a) the sum of (in each case without duplication and to the extent the respective amounts described in subclauses (i) through (vi) of this clause (a) reduced such Consolidated Net Income (and were not excluded therefrom) for the respective period for which EBITDA is being determined):
15
minus (b) the sum of (without duplication and to the extent the amounts described in this clause (b) increased such Consolidated Net Income for the respective period for which EBITDA is being determined) non-cash items increasing Consolidated Net Income of the Borrowers and the Subsidiaries for such period (but excluding any such items (A) in respect of which cash was received in a prior period or will be received in a future period or (B) which represent the reversal of any accrual of, or cash reserve for, anticipated cash charges in any prior period).
For purposes of determining EBITDA under this Agreement, EBITDA for the fiscal quarter ended September 30, 2005 shall be deemed to be $50.2 million, EBITDA for the fiscal quarter ended December 31, 2005 shall be deemed to be $51.0 million, EBITDA for the fiscal quarter ended March 31, 2006 shall be deemed to be $64.8 million, and EBITDA for the fiscal quarter ended June 30, 2006 shall be deemed to be $52.1 million.
“ environment ” shall mean ambient and indoor air, surface water and groundwater (including potable water, navigable water and wetlands), the land surface or subsurface strata,
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natural resources such as flora and fauna, the workplace or as otherwise defined in any Environmental Law.
“ Environmental Laws ” shall mean all applicable laws (including common law), rules, regulations, codes, ordinances, orders, binding agreements, decrees or judgments, promulgated or entered into by or with any Governmental Authority, relating in any way to the environment, preservation or reclamation of natural resources, the generation, management, Release or threatened Release of, or exposure to, any Hazardous Material or to occupational health and safety matters (to the extent relating to the environment or Hazardous Materials).
“ Environmental Permits ” shall have the meaning assigned to such term in Section 3.16.
“ Equity Financing ” shall mean, in connection with the consummation of the Merger, the contribution by the Permitted Holders, directly or indirectly, of an aggregate amount of not less than $475.0 million in cash, less the Rollover Amount (as defined in the Merger Agreement), to Holdings in the form of common equity or preferred equity having terms reasonably satisfactory to the Co-Lead Arrangers, which cash amount shall be contributed by Holdings to the Borrowers as cash common equity.
“ Equity Interests ” of any person shall mean any and all shares, interests, rights to purchase or otherwise acquire, warrants, options, participations or other equivalents of or interests in (however designated) equity or ownership of such person, including any preferred stock, any limited or general partnership interest and any limited liability company membership interest, and any securities or other rights or interests convertible into or exchangeable for any of the foregoing.
“ ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as the same may be amended from time to time and any final regulations promulgated and the rulings issued thereunder.
“ ERISA Affiliate ” shall mean any trade or business (whether or not incorporated) that, together with Holdings, the Borrowers or a Subsidiary, is treated as a single employer under Section 414(b) or (c) of the Code, or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.
“ ERISA Event ” shall mean (a) any Reportable Event or the requirements of Section 4043(b) of ERISA apply with respect to a Plan ; (b) the existence with respect to any Plan of an “accumulated funding deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan, the failure to make by its due date a required installment under Section 412(m) of the Code with respect to any Plan or the failure to make any required contribution to a Multiemployer Plan; (d) the incurrence by Holdings, the Borrowers, a Subsidiary or any ERISA Affiliate of any liability under Title IV of ERISA with respect to the termination of any Plan or Multiemployer Plan; (e) the receipt by Holdings, the Borrowers, a Subsidiary or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating
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to an intention to terminate any Plan or to appoint a trustee to administer any Plan under Section 4042 of ERISA; (f) the incurrence by Holdings, the Borrowers, a Subsidiary or any ERISA Affiliate of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; (g) the receipt by Holdings, the Borrowers, a Subsidiary or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from Holdings, the Borrowers, a Subsidiary or any ERISA Affiliate of any notice, concerning the impending imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA; (h) the conditions for imposition of a lien under Section 302(f) of ERISA shall have been met with respect to any Plan; or (i) the adoption of an amendment to a Plan requiring the provision of security to such Plan pursuant to Section 307 of ERISA .
“ Eurocurrency Borrowing ” shall mean a Borrowing comprised of Eurocurrency Loans.
“ Eurocurrency Loan ” shall mean any Eurocurrency Term Loan or Eurocurrency Revolving Loan.
“ Eurocurrency Revolving Facility Borrowing ” shall mean a Borrowing comprised of Eurocurrency Revolving Loans.
“ Eurocurrency Revolving Loan ” shall mean any Revolving Facility Loan bearing interest at a rate determined by reference to the Adjusted LIBO Rate in accordance with the provisions of Article II.
“ Eurocurrency Term Loan ” shall mean any Term Loan bearing interest at a rate determined by reference to the Adjusted LIBO Rate in accordance with the provisions of Article II.
“ Event of Default ” shall have the meaning assigned to such term in Section 7.01.
“ Excess Cash Flow ” shall mean, with respect to the Borrowers and their Subsidiaries on a consolidated basis for any Applicable Period, EBITDA of the Borrowers and their Subsidiaries on a consolidated basis for such Applicable Period, minus , without duplication,
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plus , without duplication,
“ Excess Cash Flow Interim Period ” shall mean, (x) during any Excess Cash Flow Period, any one-, two-, or three-quarter period (a) commencing on the later of (i) the end of the immediately preceding Excess Cash Flow Period and (ii) if applicable, the end of any prior Excess Cash Flow Interim Period occurring during the same Excess Cash Flow Period and (b) ending on the last day of the most recently ended fiscal quarter (other than the last day of the Fiscal Year) during such Excess Cash Flow Period for which financial statements are available
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and (y) during the period from the Closing Date until the beginning of the first Excess Cash Flow Period, any period commencing on the Closing Date and ending on the last day of the most recently ended fiscal quarter for which financial statements are available.
“ Excess Cash Flow Period ” shall mean each fiscal year of the Borrowers, commencing with the fiscal year of the Borrowers ending on March 31, 2008.
“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.
“ Excluded Indebtedness ” shall mean all Indebtedness permitted to be incurred under Section 6.01 (other than Section 6.01(v)).
“ Excluded Taxes ” shall mean, with respect to the Administrative Agent, any Lender, any Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of the Borrowers hereunder, (a) income taxes imposed on (or measured by) its net income (or franchise taxes imposed in lieu of net income taxes) by the United States of America (or any state or locality thereof) or the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located or any other jurisdiction as a result of such recipient engaging in a trade or business in such jurisdiction for tax purposes, (b) any branch profits tax or any similar tax that is imposed by any jurisdiction described in clause (a) above and (c) in the case of a Lender making a Loan to any Borrower, any withholding tax (including any backup withholding tax) imposed by the United States (or the jurisdiction under the laws of which such Lender is organized or in which its principal office is located or in which its applicable lending office is located or any other jurisdiction as a result of such Lender engaging in a trade or business in such jurisdiction for tax purposes) that (x) is in effect and would apply to amounts payable hereunder to such Lender at the time such Lender becomes a party to such Loan to such Borrower (or designates a new lending office) except to the extent that such Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from a Loan Party with respect to any withholding tax pursuant to Section 2.17(a) or Section 2.17(c) or (y) is attributable to such Lender’s failure to comply with Section 2.17(e) with respect to such Loan.
“ Existing Credit Agreement ” shall mean the Amended and Restated Credit Agreement, among Target, Rexnord, the lenders party thereto from time to time, Deutsche Bank Trust Company Americas, as administrative agent, General Electric Capital Corporation and Wachovia Bank, National Association, as co-documentation agents, and Deutsche Bank Securities Inc. and Credit Suisse, as joint lead arrangers and joint book runners, dated as of May 16, 2005, as amended, restated, supplemented or otherwise modified from time to time.
“ Existing Senior Subordinated Notes ” shall mean Rexnord’s 10.125% senior subordinated notes due 2012, issued pursuant to the Existing Senior Subordinated Notes Indenture.
“ Existing Senior Subordinated Notes Indenture ” shall mean the indenture dated as of November 25, 2002 under which the Existing Senior Subordinated Notes were issued, among Rexnord and certain of the subsidiaries party thereto and the trustee named therein, as amended, restated, supplemented or otherwise modified from time to time.
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“ Facility ” shall mean the respective facility and commitments utilized in making Loans and credit extensions hereunder, it being understood that as of the date of this Agreement there are two Facilities, i.e. , the Term B Facility and the Revolving Facility (and no Incremental Revolving Facility Commitments), and thereafter, may include the Incremental Term Facility and Incremental Revolving Facility Commitments.
“ Federal Funds Effective Rate ” shall mean, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Effective Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Effective Rate for such day shall be the average (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) of the quotations for such day for transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.
“ Fee Letter ” shall mean that certain Fee Letter dated May 22, 2006 by and among Merger Sub, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Merrill Lynch Capital Corporation, Credit Suisse Securities (USA) LLC, Credit Suisse, Bear, Stearns & Co. Inc., Bear Stearns Corporate Lending Inc., Lehman Commercial Paper Inc. and Lehman Brothers Inc.
“ Fees ” shall mean the Commitment Fees, the L/C Participation Fees, the Issuing Bank Fees and the Administrative Agent Fees.
“ Financial Officer ” of any person shall mean the Chief Financial Officer, principal accounting officer, Treasurer, Assistant Treasurer or Controller of such person.
“ Financial Performance Covenant ” shall mean the covenant of the Borrowers set forth in Section 6.11.
“ Foreign Lender ” shall mean any Lender that is organized under the laws of a jurisdiction other than the United States of America. For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.
“ Foreign Pledge Agreement ” shall mean a pledge agreement with respect to the Pledged Collateral that constitutes Equity Interests of a “first tier” Foreign Subsidiary, in form and substance reasonably satisfactory to the Administrative Agent; provided , that in no event shall more than 65% of the issued and outstanding voting Equity Interests of such Foreign Subsidiary be pledged to secure Obligations of the Borrowers.
“ Foreign Subsidiary ” shall mean any Subsidiary that is incorporated or organized under the laws of any jurisdiction other than the United States of America, any state thereof or the District of Columbia.
“ Fund ” shall have the meaning assigned to such term in the first recital hereto.
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“ Fund Affiliate ” shall mean (i) each Affiliate of the Fund that is neither a “portfolio company” (which means a company actively engaged in providing goods or services to unaffiliated customers), whether or not controlled, nor a company controlled by a “portfolio company” and (ii) any individual who is a partner or employee of Apollo Management, L.P., Apollo Management IV, L.P. or Apollo Management V, L.P.
“ GAAP ” shall mean generally accepted accounting principles in effect from time to time in the United States, applied on a consistent basis, subject to the provisions of Section 1.02; provided that any reference to the application of GAAP in Sections 3.13(b), 3.20, 5.03, 5.07 and 6.02(e) to a Foreign Subsidiary (and not as a consolidated Subsidiary of the Borrowers) shall mean generally accepted accounting principles in effect from time to time in the jurisdiction of organization of such Foreign Subsidiary.
“ German Security ” shall mean the assets that are the subject of that certain Share Pledge Agreement relating to shares in Rexnord Germany Holdings GmbH dated July 21, 2006 between RBS Acquisition Corporation, as Pledgor and Merrill Lynch Capital Corporation, as Administrative Agent, which is governed by German law. Each Lender hereby authorizes ( bevollmaechtigt ) the Collateral Agent to accept, as its representative ( Stellvertreter ), any German Security created in favor of such Lender.
“ Governmental Authority ” shall mean any federal, state, local or foreign court or governmental agency, authority, instrumentality or regulatory or legislative body.
“ Guarantee ” of or by any person (the “ guarantor ”) shall mean (a) any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other person (the “ primary obligor ”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation (whether arising by virtue of partnership arrangements, by agreement to keep well, to purchase assets, goods, securities or services, to take-or-pay or otherwise) or to purchase (or to advance or supply funds for the purchase of) any security for the payment of such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, (iv) entered into for the purpose of assuring in any other manner the holders of such Indebtedness or other obligation of the payment thereof or to protect such holders against loss in respect thereof (in whole or in part) or (v) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or other obligation, or (b) any Lien on any assets of the guarantor securing any Indebtedness or other obligation (or any existing right, contingent or otherwise, of the holder of Indebtedness or other obligation to be secured by such a Lien) of any other person, whether or not such Indebtedness or other obligation is assumed by the guarantor; provided , however , the term “Guarantee” shall not include endorsements of instruments for deposit or collection in the ordinary course of business or customary and reasonable indemnity obligations in effect on the Closing Date or entered into in connection with any acquisition or disposition of assets permitted by this Agreement (other than such obligations with respect to Indebtedness). The amount of any Guarantee shall be
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deemed to be an amount equal to the stated or determinable amount of the Indebtedness in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such person is required to perform thereunder) as determined by such person in good faith.
“ guarantor ” shall have the meaning assigned to such term in the definition of the term “Guarantee.”
“ Hazardous Materials ” shall mean all pollutants, contaminants, wastes, chemicals, materials, substances and constituents, including, without limitation, explosive or radioactive substances or petroleum by-products or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls or radon gas, of any nature subject to regulation or which can give rise to liability under any Environmental Law.
“ Holdings ” shall have the meaning assigned to such term in the introductory paragraph of this Agreement.
“ Honeywell Receivables Transaction ” shall mean the sale without recourse of accounts receivable and related assets arising from goods and services provided to Honeywell International Inc. pursuant to factoring arrangements entered into in the ordinary course of business.
“ Immaterial Subsidiary ” shall mean any Subsidiary that (a) did not, as of the last day of the fiscal quarter of the Borrowers most recently ended, have assets with a value in excess of 5.0% of the Consolidated Total Assets or revenues representing in excess of 5.0% of total revenues of the Borrowers and the Subsidiaries on a consolidated basis as of such date, and (b) taken together with all Immaterial Subsidiaries as of the last day of the fiscal quarter of the Borrowers most recently ended, did not have assets with a value in excess of 10% of Consolidated Total Assets or revenues representing in excess of 10% of total revenues of the Borrowers and the Subsidiaries on a consolidated basis as of such date. Each Immaterial Subsidiary shall be set forth in Schedule 1.01C , and the Borrowers shall update such Schedule from time to time after the Closing Date as necessary to reflect all Immaterial Subsidiaries at such time (the selection of Subsidiaries to be added to or removed from such Schedule to be made as the Borrowers may determine).
“ Increased Amount Date ” shall have the meaning assigned to such term in Section 2.21.
“ Incremental Amount ” shall mean, at any time, the excess, if any, of (a) $200.0 million over (b) the aggregate amount of all Incremental Term Loan Commitments and Incremental Revolving Facility Commitments established prior to such time pursuant to Section 2.21.
“ Incremental Assumption Agreement ” shall mean an Incremental Assumption Agreement in form and substance reasonably satisfactory to the Administrative Agent, among the Borrowers, the Administrative Agent and one or more Incremental Term Lenders and/or Incremental Revolving Facility Lenders.
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“ Incremental Revolving Facility Commitment ” shall mean any increased or incremental Revolving Facility Commitment provided pursuant to Section 2.21.
“ Incremental Revolving Facility Lender ” shall mean a Lender (including an Incremental Revolving Facility Lender) with a Revolving Facility Commitment or an outstanding Revolving Facility Loan as a result of an Incremental Revolving Facility Commitment.
“ Incremental Term Borrowing ” shall mean a Borrowing comprised of Incremental Term Loans.
“ Incremental Term Facility ” shall mean the Incremental Term Loan Commitments and the Incremental Term Loans made hereunder.
“ Incremental Term Facility Maturity Date ” shall mean, with respect to any tranche of Incremental Term Loans established pursuant to an Incremental Assumption Agreement, the maturity date for such tranche as set forth in such Incremental Assumption Agreement.
“ Incremental Term Lender ” shall mean a Lender with an Incremental Term Loan Commitment or an outstanding Incremental Term Loan.
“ Incremental Term Loan Commitment ” shall mean the commitment of any Lender, established pursuant to Section 2.21, to make Incremental Term Loans to the Borrowers.
“ Incremental Term Loan Installment Date ” shall have, with respect to any tranche of Incremental Term Loans established pursuant to an Incremental Assumption Agreement, the meaning assigned to such term in Section 2.10(a)(ii).
“ Incremental Term Loans ” shall mean Term Loans made by one or more Lenders to the Borrowers pursuant to Section 2.01(c). Incremental Term Loans may be made in the form of additional Term B Loans or, to the extent permitted by Section 2.21 and provided for in the relevant Incremental Assumption Agreement, Other Term Loans.
“ Indebtedness ” of any person shall mean, without duplication, (a) all obligations of such person for borrowed money, (b) all obligations of such person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such person under conditional sale or other title retention agreements relating to property or assets purchased by such person, (d) all obligations of such person issued or assumed as the deferred purchase price of property or services, to the extent that the same would be required to be shown as a long term liability on a balance sheet prepared in accordance with GAAP, (e) all Capital Lease Obligations of such person, (f) all payments that such person would have to make in the event of an early termination, on the date Indebtedness of such person is being determined, in respect of outstanding Swap Agreements, (g) the principal component of all obligations, contingent or otherwise, of such person as an account party in respect of letters of credit, (h) the principal component of all obligations of such person in respect of bankers’ acceptances, (i) all Guarantees by such person of Indebtedness described in clauses (a) to (h) above) and (j) the amount of all obligations of such person with respect to the redemption, repayment or other repurchase of any
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Disqualified Stock (excluding accrued dividends that have not increased the liquidation preference of such Disqualified Stock); provided , that Indebtedness shall not include (A) trade payables, accrued expenses and intercompany liabilities arising in the ordinary course of business, (B) prepaid or deferred revenue arising in the ordinary course of business, (C) purchase price holdbacks arising in the ordinary course of business in respect of a portion of the purchase prices of an asset to satisfy unperformed obligations of the seller of such asset or (D) earn-out obligations until such obligations become a liability on the balance sheet of such person in accordance with GAAP. The Indebtedness of any person shall include the Indebtedness of any partnership in which such person is a general partner, other than to the extent that the instrument or agreement evidencing such Indebtedness expressly limits the liability of such person in respect thereof. To the extent not otherwise included, Indebtedness shall include the amount of any Receivables Net Investment.
“ Indemnified Taxes ” shall mean all Taxes other than Excluded Taxes.
“ Indemnitee ” shall have the meaning assigned to such term in Section 9.05(b).
“ Industrial Chain Business ” shall mean the engineered chain, roller chain, leaf chain and conveying equipment (including sprockets, accessories and conveyor components that are complementary to such chain and conveying equipment products) business of the Borrowers and their Subsidiaries.
“ Information ” shall have the meaning assigned to such term in Section 3.14(a).
“ Information Memorandum ” shall mean the Confidential Information Memorandum dated June 2006, as modified or supplemented prior to the Closing Date.
“ Interest Election Request ” shall mean a request by the applicable Borrower to convert or continue a Term Borrowing or Revolving Facility Borrowing in accordance with Section 2.07.
“ Interest Expense ” shall mean, with respect to any person for any period, the sum of (a) gross interest expense of such person for such period on a consolidated basis, including (i) the amortization of debt discounts, (ii) the amortization of all fees (including fees with respect to Swap Agreements) payable in connection with the incurrence of Indebtedness to the extent included in interest expense and (iii) the portion of any payments or accruals with respect to Capital Lease Obligations allocable to interest expense, (b) capitalized interest of such person, and (c) commissions, discounts, yield and other fees and charges incurred in connection with any Permitted Receivables Financing which are payable to any person other than the Borrowers or a Subsidiary Loan Party. For purposes of the foregoing, gross interest expense shall be determined after giving effect to any net payments made or received and costs incurred by the Borrowers and the Subsidiaries with respect to Swap Agreements.
“ Interest Payment Date ” shall mean, (a) with respect to any Eurocurrency Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurocurrency Borrowing with an Interest Period of more than three months’ duration, each day that would have been an Interest Payment Date had successive Interest Periods of three months’ duration been applicable to such Borrowing and, in addition, the date of
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any refinancing or conversion of such Borrowing with or to a Borrowing of a different Type, (b) with respect to any ABR Loan, the last day of each calendar quarter, or if any such day is not a Business Day, on the next succeeding Business Day and (c) with respect to any Swingline Loan, the day that such Swingline Loan is required to be repaid pursuant to Section 2.09(a).
“ Interest Period ” shall mean, as to any Eurocurrency Borrowing, the period commencing on the date of such Borrowing or on the last day of the immediately preceding Interest Period applicable to such Borrowing, as applicable, and ending on the numerically corresponding day (or, if there is no numerically corresponding day, on the last day) in the calendar month that is 1, 2, 3 or 6 months thereafter (or 9 or 12 months, if at the time of the relevant Borrowing, all Lenders make interest periods of such length available), as the applicable Borrower may elect, or the date any Eurocurrency Borrowing is converted to an ABR Borrowing in accordance with Section 2.07 or repaid or prepaid in accordance with Section 2.09, 2.10 or 2.11; provided , however , that if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day. Interest shall accrue from and including the first day of an Interest Period to but excluding the last day of such Interest Period.
“ Investment ” shall have the meaning assigned to such term in Section 6.04.
“ Issuing Bank ” shall mean Credit Suisse and each other Issuing Bank designated pursuant to Section 2.05(k), in each case in its capacity as an issuer of Letters of Credit hereunder, and its successors in such capacity as provided in Section 2.05(i). An Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates of such Issuing Bank, in which case the term “Issuing Bank” shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate.
“ Issuing Bank Fees ” shall have the meaning assigned to such term in Section 2.12(b).
“ Junior Capital ” means any Permitted Cure Securities and any Junior Indebtedness incurred by Holdings, the Borrowers or any of their Subsidiaries.
“ Junior Financing ” shall have the meaning assigned to such term in Section 6.09(b).
“ Junior Indebtedness ” means Indebtedness of Holdings, the Borrowers or any of their Subsidiaries that (a) is expressly subordinated to the prior payment in full in cash of the Obligations (and any related Guarantees) on terms reasonably satisfactory to the Administrative Agent (it being understood that the subordination terms of the Senior Subordinated Notes Documents are so satisfactory), (b) provides that interest in respect of such Indebtedness shall not be payable in cash, (c) has a final maturity date that is not earlier than the Term Facility Maturity Date and has no scheduled payments of principal thereon (including pursuant to a sinking fund obligation or mandatory redemption obligations (other than pursuant to customary provisions relating to redemption or repurchase upon change of control or sale of assets)) prior to such final maturity date and (d) is not subject to covenants, events of default and remedies that,
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in the aggregate, are more onerous to Holdings or the Borrowers, as the case may be, than the terms of this Agreement; provided that such Indebtedness shall not be subject to any financial maintenance covenants; provided , further that Indebtedness constituting Junior Indebtedness when incurred shall not cease to constitute Junior Indebtedness as a result of the subsequent incurrence of Other Term Loans.
“ L/C Disbursement ” shall mean a payment or disbursement made by an Issuing Bank pursuant to a Letter of Credit.
“ L/C Participation Fee ” shall have the meaning assigned such term in Section 2.12(b).
“ Lender ” shall mean each financial institution listed on Schedule 2.01 (other than any such person that has ceased to be a party hereto pursuant to an Assignment and Acceptance in accordance with Section 9.04), as well as any person that becomes a “Lender” hereunder pursuant to Section 9.04 or Section 2.21.
“ Lender Default ” shall mean (i) the refusal (which has not been retracted) of a Lender to make available its portion of any Borrowing, to acquire participations in a Swingline Loan pursuant to Section 2.04 or to fund its portion of any unreimbursed payment under Section 2.05(e), or (ii) a Lender having notified in writing the Borrowers and/or the Administrative Agent that it does not intend to comply with its obligations under Section 2.04, 2.05 or 2.06.
“ Lending Office ” shall mean, as to any Lender, the applicable branch, office or Affiliate of such Lender designated by such Lender to make Loans.
“ Letter of Credit ” shall mean any letter of credit issued pursuant to Section 2.05, including any Alternate Currency Letter of Credit, Trade Letter of Credit or Standby Letter of Credit.
“ Letter of Credit Commitment ” shall mean, with respect to each Issuing Bank, the commitment of such Issuing Bank to issue Letters of Credit pursuant to Section 2.05.
“ Letter of Credit Sublimit ” shall mean the aggregate Letter of Credit Commitments of the Issuing Banks, in an amount not to exceed $40.0 million (or the equivalent thereof in an Alternate Currency).
“ LIBO Rate ” shall mean, with respect to any Eurocurrency Borrowing for any Interest Period, the rate appearing on Page 3750 of the Telerate Service (or on any successor or substitute page of such service, or any successor to or substitute for such service, providing rate quotations comparable to these currently provided or on such page of such service, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to Dollar deposits in the London interbank market) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, for Dollar deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period; provided that if such rate is not available at such time for any reason, then the “LIBO Rate” for such Interest Period shall be the rate per annum determined by the
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Administrative Agent to be the rate at which deposits in Dollars for delivery on the first day of such Interest Period in same day funds in the approximate amount of the Eurocurrency Rate Loan being made, continued or converted by the Administrative Agent and with a term equivalent to such Interest Period would be offered by the principal London office of the Administrative Agent to major banks in the London interbank Eurocurrency market at their request at approximately 11:00 a.m. (London time) two Business Days prior to the commencement of such Interest Period.
“ Lien ” shall mean, with respect to any asset, (a) any mortgage, deed of trust, lien, hypothecation, pledge, charge, security interest or similar encumbrance in or on such asset and (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset.
“ Loan Documents ” shall mean this Agreement, the Letters of Credit, the Security Documents and any Note issued under Section 2.09(e), and solely for the purposes of Sections 4.02 and 7.01 hereof, the Fee Letter.
“ Loan Parties ” shall mean Holdings, the Borrowers and the Subsidiary Loan Parties.
“ Loans ” shall mean the Term B Loans, the Incremental Term Loans (if any), the Revolving Facility Loans and the Swingline Loans.
“ Local Time ” shall mean New York City time.
“ Majority Lenders ” of any Facility shall mean, at any time, Lenders under such Facility having Loans and unused Commitments representing more than 50% of the sum of all Loans outstanding under such Facility and unused Commitments under such Facility at such time.
“ Management Group ” means the group consisting of the directors, executive officers and other management personnel of the Borrowers and Holdings, as the case may be, on the Closing Date together with (a) any new directors whose election by such boards of directors or whose nomination for election by the shareholders of the Borrowers or Holdings, as the case may be, was approved by a vote of a majority of the directors of the Borrowers or Holdings, as the case may be, then still in office who were either directors on the Closing Date or whose election or nomination was previously so approved and (b) executive officers and other management personnel of the Borrowers or Holdings, as the case may be, hired at a time when the directors on the Closing Date together with the directors so approved constituted a majority of the directors of the Borrowers or Holdings, as the case may be.
“ Margin Stock ” shall have the meaning assigned to such term in Regulation U.
“ Material Adverse Effect ” shall mean a material adverse effect on the business, property, operations or condition of the Borrowers and their Subsidiaries, taken as a whole, or the validity or enforceability of any of the Loan Documents or the rights and remedies of the Administrative Agent and the Lenders thereunder; provided , however , that solely for purposes of
29
determining whether the condition in Section 4.01(b) has been satisfied in connection with the first Credit Event on the Closing Date, any reference to “Material Adverse Effect” in any of the representations and warranties referred to in Section 4.01(b) shall mean, and shall be limited to, a material adverse effect on the business, results of operations or condition (financial or other) of Target and its subsidiaries, taken as a whole (a “ Target MAE ”); provided , however , that in no event shall any of the following, alone or in combination, be deemed to constitute, nor shall any of the following (including the effect of any of the following) be taken into account determining whether there has been or will be a Target MAE: (A) any change in economic, business or financial market conditions generally, to the extent that such change does not disproportionately affect Target and its subsidiaries, taken as a whole, relative to other participants in Target’s and its subsidiaries’ industry, (B) any change generally affecting any of the industries in which Target or its subsidiaries operates, to the extent that such change does not disproportionately affect Target and its subsidiaries, taken as a whole, relative to other participants in such industries, (C) the announcement or the execution of the Merger Agreement or the pendency or consummation of the merger contemplated thereby, (D) the compliance with the terms of the Merger Agreement or the taking of any action required by the Merger Agreement or (E) any acts of terrorism or war, to the extent that such acts do not disproportionately affect Target and its subsidiaries, taken as a whole, relative to any other entity.
“ Material Indebtedness ” shall mean Indebtedness (other than Loans and Letters of Credit) of any one or more of Holdings, the Borrowers or any Subsidiary in an aggregate principal amount exceeding $20.0 million.
“ Material Subsidiary ” shall mean any Subsidiary other than an Immaterial Subsidiary.
“ Maximum Rate ” shall have the meaning assigned to such term in Section 9.09.
“ Merger ” shall have the meaning assigned to such term in the first recital hereto.
“ Merger Agreement ” shall have the meaning assigned to such term in the first recital hereto.
“ Merger Documents ” shall mean the collective reference to the Merger Agreement, all material exhibits and schedules thereto and all agreements expressly contemplated thereby.
“ Moody’s ” shall mean Moody’s Investors Service, Inc.
“ Mortgaged Properties ” shall mean the Real Properties owned in fee by the Loan Parties that are set forth on Schedule 1.01B and each additional Real Property encumbered by a Mortgage pursuant to Section 5.10.
“ Mortgages ” shall mean, collectively, the mortgages, trust deeds, deeds of trust, deeds to secure debt, assignments of leases and rents, and other security documents delivered with respect to Mortgaged Properties, each substantially in the form of Exhibit F (with such changes as are reasonably consented to by the Administrative Agent to account for local law matters), as amended, supplemented or otherwise modified from time to time.
30
“ Multiemployer Plan ” shall mean a multiemployer plan as defined in Section 4001(a)(3) of ERISA to which the Borrowers, Holdings or any Subsidiary or any ERISA Affiliate (other than one considered an ERISA Affiliate only pursuant to subsection (m) or (o) of Code Section 414) is making or accruing an obligation to make contributions, or has within any of the preceding six plan years made or accrued an obligation to make contributions.
“ Net Income ” shall mean, 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.
“ Net Proceeds ” shall mean:
31
For purposes of calculating the amount of Net Proceeds, fees, commissions and other costs and expenses payable to Holdings or the Borrowers or any Affiliate of either of them shall be disregarded, except for financial advisory fees customary in type and amount paid to Affiliates of the Fund and otherwise not prohibited from being paid hereunder.
“ Non-Consenting Lender ” shall have the meaning assigned to such term in Section 2.19(c).
“ Note ” shall have the meaning assigned to such term in Section 2.09(e).
“ Obligations ” shall, unless otherwise indicated, have the meaning assigned to the term “Loan Document Obligations” in the Collateral Agreement.
“ Other Taxes ” shall mean any and all present or future stamp or documentary taxes or any other excise, transfer, sales, property, intangible, mortgage recording or similar taxes, charges or levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, the Loan Documents, and any and all interest and penalties related thereto (but not Excluded Taxes).
“ Other Term Loans ” shall have the meaning assigned to such term in Section 2.21.
“ Overdraft Line ” shall have the meaning assigned to such term in Section 6.01(w).
“ Parallel Debt ” shall have the meaning assigned to such term in Section 8.12(b).
“ Parent Entity ” means any direct or indirect parent of Holdings.
“ Participant ” shall have the meaning assigned to such term in Section 9.04(d).
32
“ PBGC ” shall mean the Pension Benefit Guaranty Corporation referred to and defined in ERISA.
“ Perfection Certificate ” shall mean the Perfection Certificate with respect to Borrowers and the other Loan Parties in a form reasonably satisfactory to the Administrative Agent.
“ Permitted Additional Debt ” shall mean any Indebtedness for borrowed money (a) for which the average life to maturity of such Permitted Additional Debt is greater than or equal to the remaining weighted average life to maturity of the Term B Loans and (b) that does not have a stated maturity prior to the date that is 91 days after the Term Facility Maturity Date; provided that Indebtedness constituting Permitted Additional Debt when incurred shall not cease to constitute Permitted Additional Debt as a result of the subsequent incurrence of Other Term Loans.
“ Permitted Business Acquisition ” shall mean any acquisition of all or substantially all the assets of, or all the Equity Interests (other than directors’ qualifying shares) in, a person or division or line of business of a person (or any subsequent investment made in a person, division or line of business previously acquired in a Permitted Business Acquisition), if immediately after giving effect thereto: (i) no Event of Default shall have occurred and be continuing or would result therefrom; (ii) all transactions related thereto shall be consummated in accordance with applicable laws; (iii) with respect to any such acquisition or investment with a fair market value in excess of $10.0 million, the Borrowers and their Subsidiaries shall be in Pro Forma Compliance after giving effect to such acquisition or investment and any related transactions; (iv) any acquired or newly formed Subsidiary shall not be liable for any Indebtedness except for Indebtedness permitted by Section 6.01; (v) to the extent required by Section 5.10, any person acquired in such acquisition, if acquired by the Borrowers or a Domestic Subsidiary, shall be merged into the Borrowers or a Subsidiary Loan Party or become upon consummation of such acquisition a Subsidiary Loan Party, and (vi) the aggregate amount of such acquisitions and investments in assets that are not owned by the Borrowers or Subsidiary Loan Parties or in Equity Interests in Subsidiary Loan Parties or persons that become Subsidiary Loan Parties upon consummation of such acquisition shall not exceed the greater of (x) 5.0% of Consolidated Total Assets and (y) $100.0 million.
“ Permitted Cure Securities ” shall mean any Equity Interests of Holdings other than Disqualified Stock, and upon which all dividends or distributions (if any) shall, prior to 91 days after the Term Facility Maturity Date, be payable solely in additional shares of such Equity Interests; provided that Equity Interests constituting Permitted Cure Securities when issued shall not cease to constitute Permitted Cure Securities as a result of the subsequent incurrence of Other Term Loans.
“ Permitted Holder ” shall mean each of (i) the Fund and the Fund Affiliates, and (ii) the Management Group.
33
“ Permitted Investments ” shall mean:
34
“ Permitted Liens ” shall have the meaning assigned to such term in Section 6.02.
“ Permitted Ratio Debt ” shall mean secured or unsecured debt issued by Holdings, the Borrowers or the Subsidiary Loan Parties, (i) if secured, the Liens with respect to which are subordinated to the Liens securing the Obligations pursuant to an intercreditor agreement in form and substance reasonably satisfactory to the Administrative Agent, (ii) the terms of which do not provide for a stated maturity date prior to the date that is 91 days after the Term Facility Maturity Date, (iii) the covenants, events of default, Subsidiary guarantees and other terms of which (other than interest rate and redemption premiums), taken as a whole, either (x) are not more restrictive to the Borrowers and their Subsidiaries than the terms of the Senior Unsecured Note Documents, or (y) if more restrictive, the Loan Documents are amended to contain such more restrictive terms; provided that Indebtedness constituting Permitted Ratio Debt when incurred shall not cease to constitute Permitted Ratio Debt as a result of the subsequent incurrence of Other Term Loans.
“ Permitted Receivables Documents ” shall mean all documents and agreements evidencing, relating to or otherwise governing a Permitted Receivables Financing.
“ Permitted Receivables Financing ” shall mean (a) the Honeywell Receivables Transaction and (b) one or more transactions pursuant to which (i) Receivables Assets or interests therein are sold to or financed by one or more Special Purpose Receivables Subsidiaries, and (ii) such Special Purpose Receivables Subsidiaries finance their acquisition of such Receivables Assets or interests therein, or the financing thereof, by selling or borrowing against Receivables Assets; provided , that (A) recourse to the Borrowers or any Subsidiary (other than the Special Purpose Receivables Subsidiaries) in connection with such transactions shall be limited to the extent customary for similar transactions in the applicable jurisdictions (including, to the extent applicable, in a manner consistent with the delivery of a “true sale”/”absolute transfer” opinion with respect to any transfer by the Borrowers or any Subsidiary (other than a Special Purpose Receivables Subsidiary), (B) the aggregate Receivables Net Investment outstanding shall not exceed $100.0 million at any time and (C) the Receivables Net Investment outstanding with respect to the Honeywell Receivables Transaction shall not exceed $1.5 million at any time.
“ Permitted Refinancing Indebtedness ” shall mean any Indebtedness issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund (collectively, to “ Refinance ”), the Indebtedness being Refinanced (or previous refinancings thereof constituting Permitted Refinancing Indebtedness); provided , that (a) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness so Refinanced (plus unpaid accrued interest and premium thereon and underwriting discounts, fees, commissions and expenses), (b) except with respect to Section 6.01(i), the average life to maturity of such Permitted Refinancing Indebtedness is greater than or equal to the earlier of (i) the weighted average life to maturity of the Indebtedness being Refinanced and (ii) 90 days after the Term Facility Maturity Date, (c) if the Indebtedness being Refinanced is subordinated in
35
right of payment to the Obligations under this Agreement, such Permitted Refinancing Indebtedness shall be subordinated in right of payment to such Obligations on terms at least as favorable to the Lenders as those contained in the documentation governing the Indebtedness being Refinanced, (d) no Permitted Refinancing Indebtedness shall have different obligors, or greater guarantees or security, than the Indebtedness being Refinanced and (e) if the Indebtedness being Refinanced is secured by any collateral (whether equally and ratably with, or junior to, the Secured Parties or otherwise), such Permitted Refinancing Indebtedness may be secured by such collateral (including in respect of working capital facilities of Foreign Subsidiaries otherwise permitted under this Agreement only, any collateral pursuant to after-acquired property clauses to the extent any such collateral secured the Indebtedness being Refinanced) on terms no less favorable to the Secured Parties than those contained in the documentation governing the Indebtedness being Refinanced; provided further , that with respect to a Refinancing of (x) the Senior Subordinated Notes or Permitted Additional Debt that are subordinated, such Permitted Refinancing Indebtedness shall (i) be subordinated to the guarantee by Holdings and the Subsidiary Loan Parties of the Facilities, and (ii) be otherwise on terms not materially less favorable to the Lenders than those contained in the documentation governing the Indebtedness being refinanced, and (y) the Senior Subordinated Notes or Permitted Additional Debt, such Permitted Refinancing Indebtedness shall meet the requirements of the definition of “Permitted Additional Debt”; provided further , that Indebtedness constituting Permitted Refinancing Debt shall not cease to constitute Permitted Refinancing Debt as a result of the subsequent incurrence of Other Term Loans.
“ person ” shall mean any natural person, corporation, business trust, joint venture, association, company, partnership, limited liability company or government, individual or family trusts, or any agency or political subdivision thereof.
“ Plan ” shall mean any employee pension benefit plan (other than a Multiemployer Plan) that is (i) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, (ii) sponsored or maintained (at the time of determination or at any time within the five years prior thereto) by Holdings, the Borrowers or any ERISA Affiliate, and (iii) in respect of which Holdings, the Borrowers, any Subsidiary or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.
“ Platform ” shall have the meaning assigned to such term in Section 9.18.
“ Pledged Collateral ” shall have the meaning assigned to such term in the Collateral Agreement.
36
“ Pricing Grid ” shall mean the tables set forth below:
Pricing Grid for Revolving Facility Loans and Swingline Loans
|
Total Senior
|
|
Applicable Margin for ABR Revolving Facility Loans and Swingline Loans |
|
Applicable Margin for Eurocurrency Revolving Facility Loans |
|
Applicable
|
|
|
Greater than or equal to 2.50 to 1.0 |
|
1.25 |
% |
2.25 |
% |
0.50 |
% |
|
|
|
|
|
|
|
|
|
|
Less than 2.50 to 1.0, but greater than or equal to 2.00 to 1.0 |
|
1.00 |
% |
2.00 |
% |
0.50 |
% |
|
|
|
|
|
|
|
|
|
|
Less than 2.00 to 1.0 but greater than or equal to 1.50 to 1.0 |
|
0.75 |
% |
1.75 |
% |
0.50 |
% |
|
|
|
|
|
|
|
|
|
|
Less than 1.50 to 1.0 |
|
0.50 |
% |
1.50 |
% |
0.375 |
% |
Pricing Grid for Term B Loans
|
Corporate Credit Ratings (Moody’s/S&P) |
|
Applicable Margin for ABR Term Loans |
|
Applicable Margin for Eurocurrency Term Loans |
|
|
B1 or better by Moody’s and B+ or better by S&P |
|
1.25 |
% |
2.25 |
% |
|
|
|
|
|
|
|
|
Otherwise |
|
1.50 |
% |
2.50 |
% |
For the purposes of the foregoing relating to Revolving Facility Loans and Swingline Loans, changes in the Applicable Margin and Applicable Commitment Fee resulting from changes in the Total Senior Secured Bank Leverage Ratio shall become effective on the date (the “ Adjustment Date ”) that is three Business Days after the date on which financial statements are delivered to the Lenders pursuant to Section 5.04 and shall remain in effect until the next change to be effected pursuant to this paragraph. If any financial statements referred to above are not delivered within the time periods specified in Section 5.04, then, at the option of the Administrative Agent or the Required Lenders, until the date that is three Business Days after the date on which such financial statements are delivered, the pricing level that is one pricing level higher than the pricing level theretofore in effect shall apply as of the first Business Day after the date on which such financial statements were to have been delivered but were not
37
delivered. Each determination of the Total Senior Secured Bank Leverage Ratio pursuant to the Pricing Grid shall be made in a manner consistent with the determination thereof pursuant to Section 6.11.
For purposes of the foregoing relating to Term B Loans, (i) if either S&P or Moody’s shall not have in effect a corporate credit rating (other than by reason of the circumstances referred to in the following sentence), then such rating agency (or, if an Event of Default has occurred and is continuing, both rating agencies) will have deemed to have established a corporate credit rating that is below B+ (in the case of S&P) or below B1 (in the case of Moody’s) and (ii) if any rating established or deemed to have been established by S&P or Moody’s shall be changed (other than as a result of a change in the rating system of either S&P or Moody’s), the change in the Applicable Margin shall be effective as of the date on which such change is first announced by the rating agency making such change. If the rating system of S&P or Moody’s shall change, or if either such rating agency shall cease to be in the business of issuing corporate credit ratings, the Borrowers and the Required Lenders shall negotiate in good faith to amend this definition to reflect such changed rating system or the non-availability of ratings from such rating agency and, pending the effectiveness of any such amendment, the rating of such rating agency shall be determined by reference to the rating most recently in effect from such rating agency prior to such change or cessation.
“ primary obligor ” shall have the meaning given such term in the definition of the term “Guarantee.”
“ Prime Rate ” means the rate of interest which is identified and normally published by Bloomberg Professional Service Page Prime as the “Prime Rate” (or, if more than one rate is published as the Prime Rate, then the highest of such rates). Any change in the Prime Rate will become effective as of the date the rate of interest which is so identified as the “Prime Rate” is different from that published on the preceding Business Day. If Bloomberg Professional Service no longer reports the Prime Rate, or if such Page Prime no longer exists, or the Administrative Agent determines in good faith that the rate so reported no longer accurately reflects an accurate determination of the prevailing Prime Rate, the Administrative Agent in agreement with the Borrowers may select a reasonably comparable index or source to use as the basis for the Prime Rate.
“ Pro Forma Basis ” shall mean, as to any person, for any events as described below that occur subsequent to the commencement of a period for which the financial effect of such events is being calculated, and giving effect to the events for which such calculation is being made, such calculation as will give pro forma effect to such events as if such events occurred on the first day of the four consecutive fiscal quarter period ended on or before the occurrence of such event (the “ Reference Period ”): (i) in making any determination of EBITDA, effect shall be given to any Asset Sale, any acquisition (or any similar transaction or transactions not otherwise permitted under Section 6.04 or 6.05 that require a waiver or consent of the Required Lenders and such waiver or consent has been obtained), any dividend, distribution or other similar payment, any designation of any Subsidiary as an Unrestricted Subsidiary and any Subsidiary Redesignation, and any restructurings of the business of the Borrowers or any of their Subsidiaries that are expected to have a continuing impact and are factually supportable, which would include cost savings resulting from head count reduction, closure of facilities and similar
38
operational and other cost savings, which adjustments the Borrowers determine are reasonable as set forth in a certificate of a Financial Officer of the Borrowers (the foregoing, together with any transactions related thereto or in connection therewith, the “relevant transactions”), in each case that occurred during the Reference Period (or, in the case of determinations made pursuant to the definition of the term “Permitted Business Acquisition” or pursuant to Sections 2.11(b), 6.01(r), 6.02(cc) or 6.06(e), occurring during the Reference Period or thereafter and through and including the date upon which the respective Permitted Business Acquisition or incurrence of Indebtedness or Liens or dividend is consummated), (ii) in making any determination on a Pro Forma Basis, all Indebtedness (including Indebtedness issued, incurred or assumed as a result of, or to finance, any relevant transactions and for which the financial effect is being calculated, whether incurred under this Agreement or otherwise, but excluding normal fluctuations in revolving Indebtedness incurred for working capital purposes and amounts outstanding under any Permitted Receivables Financing, in each case not to finance any acquisition) issued, incurred, assumed or permanently repaid during the Reference Period (or, in the case of determinations made pursuant to the definition of the term “Permitted Business Acquisition” or pursuant to Sections 2.11(b), 6.01(r), 6.02(cc) or 6.06(e), occurring during the Reference Period or thereafter and through and including the date upon which the respective Permitted Business Acquisition or incurrence of Indebtedness or Liens or dividend is consummated) shall be deemed to have been issued, incurred, assumed or permanently repaid at the beginning of such period, and (iii) (A) any Subsidiary Redesignation then being designated, effect shall be given to such Subsidiary Redesignation and all other Subsidiary Redesignations after the first day of the relevant Reference Period and on or prior to the date of the respective Subsidiary Redesignation then being designated, collectively, and (B) any designation of a Subsidiary as an Unrestricted Subsidiary, effect shall be given to such designation and all other designations of Subsidiaries as Unrestricted Subsidiaries after the first day of the relevant Reference Period and on or prior to the date of the then applicable designation of a Subsidiary as an Unrestricted Subsidiary, collectively.
Pro forma calculations made pursuant to the definition of the term “Pro Forma Basis” shall be determined in good faith by a Responsible Officer of the Borrowers and may include adjustments to reflect (1) operating expense reductions and other operating improvements or synergies reasonably expected to result from any relevant pro forma event and (2) all adjustments of the nature used in connection with the calculation of Adjusted EBITDA as set forth in footnote 3 to the “Summary Historical and Unaudited Pro Forma Financial Data” under “Offering Circular Summary” in the Senior Unsecured Notes Offering Memorandum and the Senior Subordinated Notes Offering Memorandum to the extent such adjustments, without duplication, continue to be applicable to such Reference Period. The Borrowers shall deliver to the Administrative Agent a certificate of a Financial Officer of the Borrowers setting forth such demonstrable or additional operating expense reductions, other operating improvements or synergies and adjustments pursuant to clause (2) above, and information and calculations supporting them in reasonable detail.
“ Pro Forma Compliance ” shall mean, at any date of determination, that the Borrowers and their Subsidiaries shall be in compliance, on a Pro Forma Basis after giving effect on a Pro Forma Basis to the relevant transactions (including the assumption, the issuance, incurrence and permanent repayment of Indebtedness), with the Financial Performance Covenant recomputed as at the last day of the most recently ended fiscal quarter of the Borrowers and their
39
Subsidiaries for which the financial statements and certificates required pursuant to Section 5.04 have been delivered, and the Borrowers shall have delivered to the Administrative Agent a certificate of a Responsible Officer of the Borrowers to such effect, together with all relevant financial information.
“ Pro Forma EBITDA ” shall have the meaning assigned to such term in Section 3.05(a).
“ Pro Forma Financial Statements ” shall have the meaning assigned to such term in Section 3.05(a).
“ Projections ” shall mean the projections of Holdings, the Borrowers and the Subsidiaries included in the Information Memorandum and any other projections and any forward-looking statements (including statements with respect to booked business) of such entities furnished to the Lenders or the Administrative Agent by or on behalf of Holdings, the Borrowers or any of the Subsidiaries prior to the Closing Date.
“ Qualified Equity Interests ” means any Equity Interest other than Disqualified Stock.
“ Qualified IPO ” shall mean an underwritten public offering of the Equity Interests of Holdings (or any direct or indirect parent of Holdings) which generates cash proceeds to the Borrowers of at least $75.0 million.
“ Rate ” shall have the meaning assigned to such term in the definition of the term “Type”.
“ Real Property ” means, collectively, all right, title and interest (including any leasehold estate) in and to any and all parcels of or interests in real property owned in fee or leased by any Loan Party, together with, in each case, all easements, hereditaments and appurtenances relating thereto, all improvements and appurtenant fixtures incidental to the ownership or lease thereof.
“ Receivables Assets ” shall mean accounts receivable (including any bills of exchange) and related assets and property from time to time originated, acquired or otherwise owned by the Borrowers or any Subsidiary.
“ Receivables Net Investment ” shall mean the aggregate cash amount paid by the lenders or purchasers under any Permitted Receivables Financing in connection with their purchase of, or the making of loans secured by, Receivables Assets or interests therein, as the same may be reduced from time to time by collections with respect to such Receivables Assets or otherwise in accordance with the terms of the Permitted Receivables Documents (but excluding any such collections used to make payments of items included in clause (c) of the definition of Interest Expense); provided , however, that if all or any part of such Receivables Net Investment shall have been reduced by application of any distribution and thereafter such distribution is rescinded or must otherwise be returned for any reason, such Receivables Net Investment shall be increased by the amount of such distribution, all as though such distribution had not been made.
40
“ Reference Period ” shall have the meaning assigned to such term in the definition of the term “Pro Forma Basis.”
“ Refinance ” shall have the meaning assigned to such term in the definition of the term “Permitted Refinancing Indebtedness,” and “ Refinanced ” shall have a meaning correlative thereto.
“ Register ” shall have the meaning assigned to such term in Section 9.04(b).
“ Regulation U ” shall mean Regulation U of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.
“ Regulation X ” shall mean Regulation X of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.
“ Related Fund ” shall mean, with respect to any Lender that is a fund that invests in bank or commercial loans and similar extensions of credit, any other fund that invests in bank or commercial loans and similar extensions of credit and is advised or managed by (a) such Lender, (b) an Affiliate of such Lender or (c) an entity (or an Affiliate of such entity) that administers, advises or manages such Lender.
“ Related Parties ” shall mean, with respect to any specified person, such person’s Affiliates and the respective directors, trustees, officers, employees, agents and advisors of such person and such person’s Affiliates.
“ Release ” shall mean any spilling, leaking, seepage, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing, depositing, emanating or migrating in, into, onto or through the environment.
“ Remaining Present Value ” shall mean, as of any date with respect to any lease, the present value as of such date of the scheduled future lease payments with respect to such lease, determined with a discount rate equal to a market rate of interest for such lease reasonably determined at the time such lease was entered into.
“ Reportable Event ” shall mean any reportable event as defined in Section 4043(c) of ERISA or the regulations issued thereunder, other than those events as to which the 30-day notice period referred to in Section 4043(c) of ERISA has been waived, with respect to a Plan (other than a Plan maintained by an ERISA Affiliate that is considered an ERISA Affiliate only pursuant to subsection (m) or (o) of Section 414 of the Code).
“ Repricing Transaction ” shall mean any repayment, refinancing, substitution or replacement, in whole or in part, of principal of outstanding Term B Loans, directly or indirectly, from the net proceeds of any Indebtedness of Holdings, the Borrowers or any of their Subsidiaries having an effective interest rate margin or weighted average yield (as determined by the Administrative Agent consistent with generally accepted financial practice) that is less than the Applicable Margin for, or weighted average yield (as determined by the Administrative Agent on the same basis) of, the Term B Loans, including, without limitation, as may be effected through any Incremental Term Loans or any other new or additional loans under this Agreement
41
or by an amendment of any provisions of this Agreement relating to the Applicable Margin for, or weighted average yield of, the Term B Loans.
“ Required Lenders ” shall mean, at any time, Lenders having (a) Loans (other than Swingline Loans) outstanding, (b) Revolving L/C Exposures, (c) Swingline Exposures, and (d) Available Unused Commitments, that taken together, represent more than 50% of the sum of (w) all Loans (other than Swingline Loans) outstanding, (x) Revolving L/C Exposures, (y) Swingline Exposures, and (z) the total Available Unused Commitments at such time. The Loans, Revolving L/C Exposures, Swingline Exposures and Available Unused Commitment of any Defaulting Lender shall be disregarded in determining Required Lenders at any time.
“ Required Percentage ” shall mean, with respect to an Excess Cash Flow Period (or Excess Cash Flow Interim Period), 50%; provided , that (a) if the Total Senior Secured Bank Leverage Ratio at the end of the Applicable Period (or Excess Cash Flow Interim Period) is greater than 2.25:1.00 but less than or equal to 2.50:1.00, such percentage shall be 25%, and (b) if the Total Senior Secured Bank Leverage Ratio at the end of the Applicable Period (or Excess Cash Flow Interim Period) is less than or equal to 2.25:1.00, such percentage shall be 0%.
“ Responsible Officer ” of any person shall mean any executive officer or Financial Officer of such person and any other officer or similar official thereof responsible for the administration of the obligations of such person in respect of this Agreement.
“ Restructuring Transactions ” shall mean the transactions substantially on the terms set forth on Schedule 1.01D (and any modifications thereto, so long as such modifications are not materially adverse to the Agents or the Lenders).
“ Retained Excess Cash Flow Overfunding ” shall mean, at any time, in respect of any Excess Cash Flow Period, the amount, if any, by which the portion of the Cumulative Credit attributable to the Retained Percentage of Excess Cash Flow for all Excess Cash Flow Interim Periods used in such Excess Cash Flow Period exceeds the actual Retained Percentage of Excess Cash Flow for such Excess Cash Flow Period.
“ Retained Percentage ” shall mean, with respect to any Excess Cash Flow Period (or Excess Cash Flow Interim Period), (a) 100% minus (b) the Required Percentage with respect to such Excess Cash Flow Period (or Excess Cash Flow Interim Period).
“ Revaluation Date ” means, with respect to any Alternate Currency Letter of Credit, each of the following: (i) each date of issuance of an Alternate Currency Letter of Credit, (ii) each date of an amendment of any Alternate Currency Letter of Credit having the effect of increasing the amount thereof (solely with respect to the increased amount), (iii) each date of any payment by the Issuing Bank under any Alternate Currency Letter of Credit, and (iv) such additional dates as the Administrative Agent or the Issuing Bank shall determine or the Required Lenders shall require.
“ Revolving Facility ” shall mean the Revolving Facility Commitments (including any Incremental Revolving Facility Commitments) and the extensions of credit made hereunder by the Revolving Facility Lenders.
42
“ Revolving Facility Borrowing ” shall mean a Borrowing comprised of Revolving Facility Loans.
“ Revolving Facility Commitment ” shall mean, with respect to each Revolving Facility Lender, the commitment of such Revolving Facility Lender to make Revolving Facility Loans pursuant to Section 2.01, expressed as an amount representing the maximum aggregate permitted amount of such Revolving Facility Lender’s Revolving Facility Credit Exposure hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.08, (b) reduced or increased from time to time pursuant to assignments by or to such Lender under Section 9.04, and (c) increased or provided under Section 2.21. The initial amount of each Lender’s Revolving Facility Commitment is set forth on Schedule 2.01 , or in the Assignment and Acceptance or Incremental Assumption Agreement pursuant to which such Lender shall have assumed its Revolving Facility Commitment (or Incremental Revolving Facility Commitment), as applicable. The initial aggregate amount of the Lenders’ Revolving Facility Commitments prior to any Incremental Revolving Facility Commitments) is $150.0 million.
“ Revolving Facility Credit Exposure ” shall mean, at any time, the sum of (a) the aggregate principal amount of the Revolving Facility Loans outstanding at such time, (b) the Swingline Exposure at such time and (c) the Revolving L/C Exposure at such time. The Revolving Facility Credit Exposure of any Revolving Facility Lender at any time shall be the product of (x) such Revolving Facility Lender’s Revolving Facility Percentage and (y) the aggregate Revolving Facility Credit Exposure of all Revolving Facility Lenders, collectively, at such time.
“ Revolving Facility Lender ” shall mean a Lender with a Revolving Facility Commitment or with outstanding Revolving Facility Loans.
“ Revolving Facility Loan ” shall mean a Loan made by a Revolving Facility Lender pursuant to Section 2.01.
“ Revolving Facility Maturity Date ” shall mean July 20, 2012.
“ Revolving Facility Percentage ” shall mean, with respect to any Revolving Facility Lender, the percentage of the total Revolving Facility Commitments represented by such Lender’s Revolving Facility Commitment. If the Revolving Facility Commitments have terminated or expired, the Revolving Facility Percentages shall be determined based upon the Revolving Facility Commitments most recently in effect, giving effect to any assignments pursuant to Section 9.04.
“ Revolving L/C Exposure ” shall mean at any time the sum of (a) the aggregate undrawn amount of all Letters of Credit outstanding at such time (calculated, in the case of Alternate Currency Letters of Credit, based on the Dollar Equivalent thereof), (b) the aggregate principal amount of all L/C Disbursements that have not yet been reimbursed at such time (calculated, in the case of Alternate Currency Letters of Credit, based on the Dollar Equivalent thereof). The Revolving L/C Exposure of any Revolving Facility Lender at any time shall mean its Revolving Facility Percentage of the aggregate Revolving L/C Exposure at such time. For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its
43
terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn. Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the stated amount of such Letter of Credit in effect at such time; provided , that with respect to any Letter of Credit that, by its terms or the terms of any document related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time.
“ Rexnord ” shall have the meaning assigned to such term in the introductory paragraph of this Agreement.
“ S&P ” shall mean Standard & Poor’s Ratings Group, Inc.
“ Sale and Lease-Back Transaction ” shall have the meaning assigned to such term in Section 6.03.
“ SEC ” shall mean the Securities and Exchange Commission or any successor thereto.
“ Secured Parties ” shall mean the “Secured Parties” as defined in the Collateral Agreement.
“ Securities Act ” shall mean the Securities Act of 1933, as amended.
“ Security Documents ” shall mean the Mortgages, the Collateral Agreement, the Foreign Pledge Agreements and each of the security agreements and other instruments and documents executed and delivered pursuant to any of the foregoing or pursuant to Section 5.10.
“ Senior Secured Bank Debt ” at any date shall mean (i) the aggregate principal amount of Consolidated Debt of the Borrowers and their Subsidiaries outstanding at such date that consists of, without duplication, (A) Term Loans or Revolving Facility Credit Exposure and (B) Indebtedness secured by a Lien (other than any Indebtedness of a Subsidiary that is not a Loan Party secured by a Lien on assets of a Subsidiary that is not a Loan Party) under Section 6.02(a), (c), (i), (j), (u) or (cc) (in each case of (A) and (B), other than letters of credit to the extent undrawn and not supporting Indebtedness of the type included in Consolidated Debt), less (ii) without duplication, the Unrestricted Cash and Permitted Investments of the Borrowers and their Subsidiaries on such date.
“ Senior Subordinated Note Documents ” shall mean the Senior Subordinated Notes and the Senior Subordinated Notes Indenture.
“ Senior Subordinated Notes ” shall mean the Borrowers’ 11.75% Senior Subordinated Notes due 2016, issued pursuant to the Senior Subordinated Notes Indenture and any notes issued by the Borrowers in exchange for, and as contemplated by, the Senior Subordinated Notes and the related registration rights agreement with substantially identical terms as the Senior Subordinated Notes.
44
“ Senior Subordinated Notes Indenture ” shall mean the Indenture dated as of July 21, 2006 under which the Senior Subordinated Notes were issued, among the Borrowers and certain of the Subsidiaries party thereto and the trustee named therein from time to time, as in effect on the Closing Date and as amended, restated, supplemented or otherwise modified from time to time in accordance with the requirements thereof and of this Agreement.
“ Senior Subordinated Notes Offering Memorandum ” shall mean the Offering Circular, dated July 14, 2006 , in respect of the Senior Subordinated Notes.
“ Senior Unsecured Note Documents ” shall mean the Senior Unsecured Notes and the Senior Unsecured Notes Indenture.
“ Senior Unsecured Notes ” shall mean the Borrowers’ 9.50% Senior Unsecured Notes due 2014, issued pursuant to the Senior Unsecured Notes Indenture and any notes issued by the Borrowers in exchange for, and as contemplated by, the Senior Unsecured Notes and the related registration rights agreement with substantially identical terms as the Senior Unsecured Notes.
“ Senior Unsecured Notes Indenture ” shall mean the Indenture dated as of July 21, 2006 under which the Senior Unsecured Notes were issued, among the Borrowers and certain of the Subsidiaries party thereto and the trustee named therein from time to time, as in effect on the Closing Date and as amended, restated, supplemented or otherwise modified from time to time in accordance with the requirements thereof and of this Agreement.
“ Senior Unsecured Notes Offering Memorandum ” shall mean the Offering Circular, dated July 14, 2006 , in respect of the Senior Unsecured Notes.
“ Special Purpose Receivables Subsidiary ” shall mean a direct or indirect Subsidiary of the Borrowers established in connection with a Permitted Receivables Financing for the acquisition of Receivables Assets or interests therein, and which is organized in a manner intended to reduce the likelihood that it would be substantively consolidated with Holdings, the Borrowers or any of the Subsidiaries (other than Special Purpose Receivables Subsidiaries) in the event Holdings, the Borrowers or any such Subsidiary becomes subject to a proceeding under the U.S. Bankruptcy Code (or other insolvency law).
“ Specified Representations ” shall have the meaning assigned to such term in Section 4.01.
“ Spot Rate ” for a currency means the rate determined by the Administrative Agent or the Issuing Bank, as applicable, to be the rate quoted by the person acting in such capacity as the spot rate for the purchase by such person of such currency with another currency through its principal foreign exchange trading office at approximately 11:00 a.m. on the date three Business Days prior to the date as of which the foreign exchange computation is made; provided , that the Administrative Agent or the Issuing Bank may obtain such spot rate from another financial institution designated by the Administrative Agent or the Issuing Bank if the person acting in such capacity does not have as of the date of determination a spot buying rate for any such currency.
45
“ Standby Letter of Credit ” shall have the meaning provided in Section 2.05(a).
“ Statutory Reserves ” shall mean, with respect to any currency, any reserve, liquid asset or similar requirements established by any Governmental Authority of the United States of America or of the jurisdiction of such currency or any jurisdiction in which Loans in such currency are made to which banks in such jurisdiction are subject for any category of deposits or liabilities customarily used to fund loans in such currency or by reference to which interest rates applicable to Loans in such currency are determined.
“ Subagent ” shall have the meaning assigned to such term in Section 8.02.
“ subsidiary ” shall mean, with respect to any person (herein referred to as the “parent”), any corporation, partnership, association or other business entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or more than 50% of the general partnership interests are, at the time any determination is being made, directly or indirectly, owned, Controlled or held, or (b) that is, at the time any determination is made, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent.
“ Subsidiary ” shall mean, unless the context otherwise requires, a subsidiary of the Borrowers. Notwithstanding the foregoing (and except for purposes of Sections 3.09, 3.13, 3.15, 3.16, 5.03, 5.09 and 7.01(k), and the definition of Unrestricted Subsidiary contained herein), an Unrestricted Subsidiary shall be deemed not to be a Subsidiary of the Borrowers or any of their Subsidiaries for purposes of this Agreement.
“ Subsidiary Loan Party ” shall mean each Domestic Subsidiary of the Borrowers other than (x) any Domestic Subsidiary that is a subsidiary of a Foreign Subsidiary if such Domestic Subsidiary was acquired after the Closing Date and (y) any Unrestricted Subsidiary.
“ Subsidiary Redesignation ” shall have the meaning provided in the definition of “Unrestricted Subsidiary” contained in this Section 1.01.
“ Swap Agreement ” shall mean any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided , that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of Holdings, the Borrowers or any of the Subsidiaries shall be a Swap Agreement.
“ Swingline Borrowing ” shall mean a Borrowing comprised of Swingline Loans.
“ Swingline Borrowing Request ” shall mean a request by the Borrowers substantially in the form of Exhibit D-2 .
46
“ Swingline Commitment ” shall mean, with respect to each Swingline Lender, the commitment of such Swingline Lender to make Swingline Loans pursuant to Section 2.04. The aggregate amount of the Swingline Commitments on the Closing Date is $30.0 million.
“ Swingline Exposure ” shall mean at any time the aggregate principal amount of all outstanding Swingline Borrowings at such time. The Swingline Exposure of any Revolving Facility Lender at any time shall mean its Revolving Facility Percentage of the aggregate Swingline Exposure at such time.
“ Swingline Lender ” shall mean Merrill Lynch Capital Corporation, acting through any of its Affiliates in its capacity as a lender of Swingline Loans.
“ Swingline Loans ” shall mean the swingline loans made to the Borrowers pursuant to Section 2.04.
“ Syndication Agent ” shall have the meaning assigned to such term in the introductory paragraph of this Agreement.
“ Target ” shall have the meaning assigned to such term in the introductory paragraph to this Agreement.
“ Taxes ” shall mean any and all present or future taxes, levies, imposts, duties (including stamp duties), deductions, withholdings or similar charges (including ad valorem charges) imposed by any Governmental Authority and any and all interest and penalties related thereto.
“ Term B Borrowing ” shall mean a Borrowing comprised of Term B Loans.
“ Term B Facility ” shall mean the Term B Loan Commitments and the Term B Loans made hereunder.
“ Term B Facility Maturity Date ” shall mean July 19, 2013.
“ Term B Loan Commitment ” shall mean with respect to each Lender, the commitment of such Lender to make Term B Loans as set forth in Section 2.01(a) or Incremental Term Loans in the form of Term B Loans as set forth in Section 2.01(c). The initial amount of each Lender’s Term B Loan Commitment is set forth on Schedule 2.01 , or in the Assignment and Assumption or Incremental Assumption Agreement pursuant to which such Lender shall have assumed its Term B Loan Commitment (or its Incremental Term Commitment), as applicable. The aggregate amount of the Term B Loan Commitments on the Closing Date is $610.0 million.
“ Term B Loan Installment Date ” shall have the meaning assigned to such term in Section 2.10(a)(i).
“ Term B Loans ” shall mean the term loans made by the Lenders to the Borrowers pursuant to Section 2.01(a) and any Incremental Term Loans in the form of Term B Loans made by the Incremental Term Lenders to the Borrowers pursuant to Section 2.01(c).
47
“ Term Borrowing ” shall mean any Term B Borrowing or any Incremental Term Borrowing.
“ Term Facility ” shall mean the Term Facility and/or any or all of the Incremental Term Facilities.
“ Term Facility Maturity Date ” shall mean the latest of the Term B Facility Maturity Date and any Incremental Term Facility Maturity Date.
“ Term Loan Commitment ” shall mean any Term B Loan Commitment or any Incremental Term Commitment.
“ Term Loan Installment Date ” shall mean any Term B Loan Installment Date or any Incremental Term Loan Installment Date.
“ Term Loans ” shall mean the Term B Loans and/or the Incremental Term Loans.
“ Test Period ” shall mean, on any date of determination, the period of four consecutive fiscal quarters of the Borrowers then most recently ended (taken as one accounting period).
“ Total Senior Secured Bank Leverage Ratio ” means, on any date, the ratio of (a) Senior Secured Bank Debt as of such date to (b) EBITDA for the period of four consecutive fiscal quarters of the Borrowers most recently ended as of such date, all determined on a consolidated basis in accordance with GAAP; provided , that for purposes of clause (b) above, (i) EBITDA shall be determined for the relevant Test Period on a Pro Forma Basis and (ii) EBITDA for purposes of Section 6.11 shall include all adjustments of the nature used in connection with the calculation of Adjusted EBITDA as set forth in footnote 3 to the “Summary Historical and Unaudited Pro Forma Financial Data” under “Offering Circular Summary” in the Senior Unsecured Notes Offering Memorandum and the Senior Subordinated Notes Offering Memorandum to the extent such adjustments, without duplication, continue to be applicable in the relevant Test Period; provided , further , that the Borrowers shall deliver a Financial Officer’s certificate of the type contemplated by the last sentence of the definition of “Pro Forma Basis” in respect of all adjustments pursuant to clause (ii) above.
“ Trade Letter of Credit ” shall have the meaning provided in Section 2.05(a).
“ Transaction Documents ” shall mean the Merger Documents, the Senior Unsecured Note Documents, the Senior Subordinated Note Documents and the Loan Documents.
“ Transaction Expenses ” means any fees or expenses incurred or paid by the Fund, Holdings, the Borrowers (or any direct or indirect parent of the Borrowers) or any of their Subsidiaries in connection with the Transactions, this Agreement and the other Loan Documents (including expenses in connection with Swap Agreements) and the transactions contemplated hereby and thereby.
“ Transactions ” shall mean, collectively, the transactions to occur pursuant to the Transaction Documents, including (a) the consummation of the Merger; (b) the execution and
48
delivery of the Loan Documents, the creation of the Liens pursuant to the Security Documents, and the initial borrowings hereunder; (c) the Equity Financing; (d) the sale and issuance of the Senior Unsecured Notes and the Senior Subordinated Notes; (e) the Debt Tender Offer and the Consent Solicitation; (f) the refinancing of the Existing Credit Agreement; and (g) the payment of all fees and expenses to be paid on or prior to the Closing Date and owing in connection with the foregoing.
“ Type ” shall mean, when used in respect of any Loan or Borrowing, the Rate by reference to which interest on such Loan or on the Loans comprising such Borrowing is determined. For purposes hereof, the term “ Rate ” shall include the Adjusted LIBO Rate and the ABR.
“ Unfunded Pension Liability ” means the excess of a Plan’s “accumulated benefit obligations” as defined under Statement of Financial Accounting Standards No. 87, over the current fair market value of that Plan’s assets.
“ Uniform Commercial Code ” means the Uniform Commercial Code as the same may from time to time be in effect in the State of New York or the Uniform Commercial Code (or similar code or statute) of another jurisdiction, to the extent it may be required to apply to any item or items of Collateral.
“ Unrestricted Cash ” shall mean cash or cash equivalents of the Borrowers or any of their Subsidiaries that would not appear as “restricted” on a consolidated balance sheet of the Borrowers or any of their Subsidiaries.
“ Unrestricted Subsidiary ” shall mean any Subsidiary of the Borrowers that is acquired or created after the Closing Date and designated by the Borrowers as an Unrestricted Subsidiary hereunder by written notice to the Administrative Agent; provided , that the Borrowers shall only be permitted to so designate a new Unrestricted Subsidiary after the Closing Date and so long as (a) no Default or Event of Default has occurred and is continuing or would result therefrom, (b) immediately after giving effect to such designation (as well as all other such designations theretofore consummated after the first day of such Reference Period), the Borrowers shall be in Pro Forma Compliance , (c) such Unrestricted Subsidiary shall be capitalized (to the extent capitalized by the Borrowers or any of their Subsidiaries) through Investments as permitted by, and in compliance with, Section 6.04(j), and any prior or concurrent Investments in such Subsidiary by the Borrowers or any of their Subsidiaries shall be deemed to have been made under Section 6.04(j), (d) without duplication of clause (c), any assets owned by such Unrestricted Subsidiary at the time of the initial designation thereof shall be treated as Investments pursuant to Section 6.04(j), and (e) such Subsidiary shall have been designated an “unrestricted subsidiary” (or otherwise not be subject to the covenants and defaults) under the Senior Unsecured Notes Indenture, the Senior Subordinated Notes Indenture, all Permitted Additional Debt and all Permitted Refinancing Indebtedness in respect of any of the foregoing and all Disqualified Stock ; provided , further , that at the time of the initial Investment by the Borrowers or any of their Subsidiaries in such Subsidiary, the Borrowers shall designate such entity as an Unrestricted Subsidiary in a written notice to the Administrative Agent. The Borrowers may designate any Unrestricted Subsidiary to be a Subsidiary for purposes of this Agreement (each, a “ Subsidiary Redesignation ”); provided , that (i) such Unrestricted Subsidiary,
49
both before and after giving effect to such designation, shall be a Wholly Owned Subsidiary of the Borrowers, (ii) no Default or Event of Default has occurred and is continuing or would result therefrom, (iii) immediately after giving effect to such Subsidiary Redesignation (as well as all other Subsidiary Redesignations theretofore consummated after the first day of such Reference Period), the Borrowers shall be in Pro Forma Compliance, (iv) all representations and warranties contained herein and in the other Loan Documents shall be true and correct in all material respects with the same effect as though such representations and warranties had been made on and as of the date of such Subsidiary Redesignation (both before and after giving effect thereto), unless stated to relate to a specific earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date, and (v) the Borrowers shall have delivered to the Administrative Agent an officer’s certificate executed by a Responsible Officer of the Borrowers, certifying to the best of such officer’s knowledge, compliance with the requirements of preceding clauses (i) through (iv), inclusive, and containing the calculations and information required by the preceding clause (ii).
“ U.S. Bankruptcy Code ” shall mean Title 11 of the United States Code, as amended, or any similar federal or state law for the relief of debtors.
“ USA PATRIOT Act ” shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Title III of Pub. L. No. 107-56 (signed into law October 26, 2001)).
“ Wholly Owned Subsidiary ” of any person shall mean a subsidiary of such person, all of the Equity Interests of which (other than directors’ qualifying shares or nominee or other similar shares required pursuant to applicable law) are owned by such person or another Wholly Owned Subsidiary of such person.
“ Withdrawal Liability ” shall mean liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.
“ Working Capital ” shall mean, with respect to the Borrowers and the Subsidiaries on a consolidated basis at any date of determination, Current Assets at such date of determination minus Current Liabilities at such date of determination; provided , that, for purposes of calculating Excess Cash Flow, increases or decreases in Working Capital shall be calculated without regard to any changes in Current Assets or Current Liabilities as a result of (a) any reclassification in accordance with GAAP of assets or liabilities, as applicable, between current and noncurrent or (b) the effects of purchase accounting.
SECTION 1.02. Terms Generally . The definitions set forth or referred to in Section 1.01 shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” All references herein to Articles, Sections, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Exhibits and Schedules to, this Agreement unless the context shall otherwise require. Except as otherwise expressly provided herein, any reference in this Agreement to any Loan Document shall mean
50
such document as amended, restated, supplemented or otherwise modified from time to time. Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided, that, if the Borrowers notify the Administrative Agent that the Borrowers request an amendment to any provision hereof to eliminate the effect of any change occurring after the Closing Date in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrowers that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith.
SECTION 1.03. Effectuation of Transfers. Each of the representations and warranties of Holdings and the Borrowers contained in this Agreement (and all corresponding definitions) are made after giving effect to the Transactions, unless the context otherwise requires.
51
ARTICLE II
The Credits
SECTION 2.01. Commitments . Subject to the terms and conditions set forth herein:
SECTION 2.02. Loans and Borrowings . (a) Each Loan shall be made as part of a Borrowing consisting of Loans under the same Facility and of the same Type made by the Lenders ratably in accordance with their respective Commitments under the applicable Facility (or, in the case of Swingline Loans, in accordance with their respective Swingline Commitments); provided, however, that Revolving Facility Loans shall be made by the Revolving Facility Lenders ratably in accordance with their respective Revolving Facility Percentages on the date such Loans are made hereunder. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided, that the Commitments of the Lenders are several and no Lender shall be responsible for any other Lender’s failure to make Loans as required.
52
SECTION 2.03. Requests for Borrowings . To request a Revolving Facility Borrowing and/or a Term Borrowing, the applicable Borrower shall notify the Administrative Agent of such request by telephone (a) in the case of a Eurocurrency Borrowing, not later than 12:00 p.m., Local Time, three Business Days before the date of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 12:00 noon, Local Time, one Business Day before the date of the proposed Borrowing; provided, that any such notice of an ABR Revolving Facility Borrowing to finance the reimbursement of an L/C Disbursement as contemplated by Section 2.05(e) may be given not later than 10:00 a.m., Local Time, on the date of the proposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Borrowing Request in a form approved by the Administrative Agent and signed by the applicable Borrower. Each such telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.02:
53
If no election as to the Type of Revolving Facility Borrowing is specified, then the requested Revolving Facility Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any requested Eurocurrency Borrowing, then the applicable Borrower shall be deemed to have selected an Interest Period of one month’s duration. Promptly following receipt of a Borrowing Request in accordance with this Section 2.03, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing.
SECTION 2.04. Swingline Loans . (a) Subject to the terms and conditions set forth herein, the Swingline Lender agrees to make Swingline Loans to the Borrowers from time to time during the Availability Period, in an aggregate principal amount at any time outstanding that will not result in (i) the aggregate principal amount of outstanding Swingline Loans exceeding the Swingline Commitment or (ii) the Revolving Facility Credit Exposure exceeding the total Revolving Facility Commitments; provided, that the Swingline Lender shall not be required to make a Swingline Loan to refinance an outstanding Swingline Borrowing. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrowers may borrow, prepay and reborrow Swingline Loans.
54
SECTION 2.05. Letters of Credit . (a) General. Subject to the terms and conditions set forth herein, the Borrowers may request the issuance of (x) trade letters of credit in support of trade obligations of the Borrowers and their Subsidiaries incurred in the ordinary course of business (such letters of credit issued for such purposes, “ Trade Letters of Credit ”) and (y) standby letters of credit issued for any other lawful purposes of the Borrowers and their Subsidiaries (such letters of credit issued for such purposes, “ Standby Letters of Credit ”) for its own accounts in a form reasonably acceptable to the applicable Issuing Bank, at any time and from time to time during the Availability Period and prior to the date that is five Business Days prior to the Revolving Facility Maturity Date. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by the Borrowers to, or entered into by the Borrowers with, an Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control.
55
56
57
58
59
SECTION 2.06. Funding of Borrowings . (a) Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 12:00 noon, Local Time, to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders; provided, that Swingline Loans shall be made as provided in Section 2.04. The Administrative Agent will make such Loans available to the applicable Borrower by promptly crediting the amounts so received, in
60
like funds, to an account of such Borrower designated by such Borrower in the applicable Borrowing Request; provided, that ABR Revolving Loans and Swingline Borrowings made to finance the reimbursement of a L/C Disbursement and reimbursements as provided in Section 2.05(e) shall be remitted by the Administrative Agent to the applicable Issuing Bank.
SECTION 2.07. Interest Elections . (a) Each Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Eurocurrency Borrowing, shall have an initial Interest Period as specified in such Borrowing Request. Thereafter, the applicable Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurocurrency Borrowing, may elect Interest Periods therefor, all as provided in this Section. The applicable Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing. This Section shall not apply to Swingline Borrowings, which may not be converted or continued.
61
If any such Interest Election Request requests a Eurocurrency Borrowing but does not specify an Interest Period, then the applicable Borrower shall be deemed to have selected an Interest Period of one month’s duration.
SECTION 2.08. Termination and Reduction of Commitments . (a) Unless previously terminated, the Revolving Facility Commitments shall terminate on the Revolving Facility Maturity Date.
62
SECTION 2.09. Repayment of Loans ; Evidence of Debt . (a) The Borrowers hereby unconditionally promise to pay (i) to the Administrative Agent for the account of each Revolving Facility Lender the then unpaid principal amount of each Revolving Facility Loan to the Borrowers on the Revolving Facility Maturity Date, (ii) to the Administrative Agent for the account of each Lender the then unpaid principal amount of each Term Loan of such Lender as provided in Section 2.10 and (iii) to the Swingline Lender the then unpaid principal amount of each Swingline Loan on the earlier of the Revolving Facility Maturity Date and the first date after such Swingline Loan is made that is the 15th or last day of a calendar month and is at least five Business Days after such Swingline Loan is made; provided, that on each date that a Revolving Facility Borrowing is made by the applicable Borrower, the Borrowers shall repay all Swingline Loans then outstanding.
63
SECTION 2.10.
Repayment
of Term Loans and Revolving Facility Loans
.
(a) Subject to the other paragraphs of this Section, (i) the
Borrowers shall repay Term B Borrowings on each date set forth below or,
if any such date is not a Business Day, on the next succeeding Business Day, in
the aggregate principal amount set forth opposite such date (each such date
being referred to as a “
Term B Loan Installment Date
”):
|
Date |
|
Amount of Term B
|
|
||
|
December 31, 2006 |
|
$ |
1,525,000.00 |
|
|
|
March 31, 2007 |
|
$ |
1,525,000.00 |
|
|
|
June 30, 2007 |
|
$ |
1,525,000.00 |
|
|
|
September 30, 2007 |
|
$ |
1,525,000.00 |
|
|
|
December 31, 2007 |
|
$ |
1,525,000.00 |
|
|
|
March 31, 2008 |
|
$ |
1,525,000.00 |
|
|
|
June 30, 2008 |
|
$ |
1,525,000.00 |
|
|
|
September 30, 2008 |
|
$ |
1,525,000.00 |
|
|
|
December 31, 2008 |
|
$ |
1,525,000.00 |
|
|
|
March 31, 2009 |
|
$ |
1,525,000.00 |
|
|
|
June 30, 2009 |
|
$ |
1,525,000.00 |
|
|
|
September 30, 2009 |
|
$ |
1,525,000.00 |
|
|
|
December 31, 2009 |
|
$ |
1,525,000.00 |
|
|
|
March 31, 2010 |
|
$ |
1,525,000.00 |
|
|
|
June 30, 2010 |
|
$ |
1,525,000.00 |
|
|
|
September 30, 2010 |
|
$ |
1,525,000.00 |
|
|
|
December 31, 2010 |
|
$ |
1,525,000.00 |
|
|
|
March 31, 2011 |
|
$ |
1,525,000.00 |
|
|
|
June 30, 2011 |
|
$ |
1,525,000.00 |
|
|
|
September 30, 2011 |
|
$ |
1,525,000.00 |
|
|
|
December 31, 2011 |
|
$ |
1,525,000.00 |
|
|
|
March 31, 2012 |
|
$ |
1,525,000.00 |
|
|
|
June 30, 2012 |
|
$ |
1,525,000.00 |
|
|
|
September 30, 2012 |
|
$ |
1,525,000.00 |
|
|
|
December 31, 2012 |
|
$ |
1,525,000.00 |
|
|
|
March 31, 2013 |
|
$ |
1,525,000.00 |
|
|
|
June 30, 2013 |
|
$ |
1,525,000.00 |
|
|
|
Term B Facility Maturity Date |
|
$ |
568,825,000.00 |
|
|
64
65
SECTION 2.11. Prepayment of Loans. (a) The Borrowers shall have the right at any time and from time to time to prepay any Loan in whole or in part, without premium or penalty (but subject to Sections 2.10(e) and 2.16), in an aggregate principal amount that is an integral multiple of the Borrowing Multiple and not less than the Borrowing Minimum or, if less, the amount outstanding, subject to prior notice in accordance with Section 2.10(d).
66
SECTION 2.12. Fees. (a) The Borrowers agree to pay to each Lender (other than any Defaulting Lender), through the Administrative Agent, on the date that is 10 Business Days after the last day of March, June, September and December in each year, and three Business Days after the date on which the Revolving Facility Commitments of all the Lenders shall be terminated as provided herein, a commitment fee (a “ Commitment Fee ”) on the daily amount of the Available Unused Commitment of such Lender during the preceding quarter (or other period commencing with the Closing Date or ending with the date on which the last of the Commitments of such Lender shall be terminated) at a rate equal to the Applicable Commitment Fee. All Commitment Fees shall be computed on the basis of the actual number of days elapsed in a year of 360 days. For the purpose of calculating any Lender’s Commitment Fee, the outstanding Swingline Loans during the period for which such Lender’s Commitment Fee is calculated shall be deemed to be zero. The Commitment Fee due to each Lender shall commence to accrue on the Closing Date and shall cease to accrue on the date on which the last of the Commitments of such Lender shall be terminated as provided herein.
67
SECTION 2.13. Interest . (a) The Loans comprising each ABR Borrowing (including each Swingline Loan) shall bear interest at the ABR plus the Applicable Margin.
68
SECTION 2.14. Alternate Rate of Interest . If prior to the commencement of any Interest Period for a Eurocurrency Borrowing:
then the Administrative Agent shall give notice thereof to the Borrowers and the Lenders by telephone or telecopy as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrowers and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurocurrency Borrowing shall be ineffective and such Borrowing shall be converted to or continued as on the last day of the Interest Period applicable thereto an ABR Borrowing, and (ii) if any Borrowing Request requests a Eurocurrency Borrowing, such Borrowing shall be made as an ABR Borrowing.
SECTION 2.15. Increased Costs . (a) If any Change in Law shall:
and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurocurrency Loan (or of maintaining its obligation to make any such Loan) or to increase the cost to such Lender or Issuing Bank of participating in, issuing or maintaining any Letter of Credit or to reduce the amount of any sum received or receivable by such Lender or Issuing Bank hereunder (whether of principal, interest or otherwise), then the Borrowers will pay to such Lender or Issuing Bank, as applicable, such additional amount or amounts as will compensate such Lender or Issuing Bank, as applicable, for such additional costs incurred or reduction suffered.
69
SECTION 2.16. Break Funding Payments . In the event of (a) the payment of any principal of any Eurocurrency Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurocurrency Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Eurocurrency Loan on the date specified in any notice delivered pursuant hereto or (d) the assignment of any Eurocurrency Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrowers pursuant to Section 2.19, then, in any such event, the Borrowers shall compensate each Lender for the loss, cost and expense attributable to such event. In the case of a Eurocurrency Loan, such loss, cost or expense to any Lender shall be deemed to be the amount determined by such Lender to be the excess, if any, of (i) the amount of interest that would have accrued on the principal amount of such Loan had such event not occurred, at the Adjusted LIBO Rate that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue a Eurocurrency Loan, for the period that would have been the Interest Period for such Loan), over (ii) the amount of interest that would accrue on such principal amount for such period at the
70
interest rate which such Lender would bid were it to bid, at the commencement of such period, for deposits in Dollars of a comparable amount and period from other banks in the Eurocurrency market. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section 2.16 shall be delivered to the Borrowers and shall be conclusive absent manifest error. The Borrowers shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof.
SECTION 2.17. Taxes . (a) Any and all payments by or on account of any obligation of any Loan Party hereunder shall be made free and clear of and without deduction for any Indemnified Taxes or Other Taxes; provided, that if a Loan Party shall be required to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable hereunder shall be increased as necessary so that after all required deductions are made (including deductions applicable to additional sums payable under this Section 2.17) the Administrative Agent, any Lender or any Issuing Bank, as applicable, receives an amount equal to the sum it would have received had no such deductions been required and made, (ii) such Loan Party shall make such deductions and (iii) such Loan Party shall timely pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.
71
SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of Set-offs. (a) Unless otherwise specified, the Borrowers shall make each payment required to be made by them hereunder (whether of principal, interest, fees or reimbursement of L/C Disbursements, or of amounts payable under Section 2.15, 2.16, or 2.17, or otherwise) prior to 2:00 p.m., Local Time, on the date when due, in immediately available funds, without condition or deduction for any defense, recoupment, set-off or counterclaim. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Administrative Agent to the applicable account designated to the Borrowers by the Administrative Agent, except payments to be made directly to the applicable Issuing Bank or the Swingline Lender as expressly provided herein and except that payments pursuant to Sections 2.15, 2.16, 2.17 and 9.05 shall be made directly to the persons entitled thereto. The Administrative Agent shall distribute any such payments received by it for the account of any other person to the appropriate recipient promptly following receipt thereof. If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments under the Loan Documents shall be made in Dollars. Any payment required to be made by the Administrative Agent hereunder shall be deemed to have been made by the time required if the Administrative Agent shall, at or before such time, have taken the necessary steps to make such payment in accordance with the regulations or operating procedures of the clearing or settlement system used by the Administrative Agent to make such payment.
72
73
SECTION 2.19. Mitigation Obligations ; Replacement of Lenders . (a) If any Lender requests compensation under Section 2.15, or if the Borrowers are required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17, then such Lender shall use reasonable efforts to designate a different Lending Office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or Affiliates, if, in the reasonable judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.15 or 2.17, as applicable, in the future and (ii) would not subject such Lender to any material unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender in any material respect. The Borrowers hereby agree to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.
74
75
SECTION 2.21. Incremental Commitments . (a) The Borrowers may, by written notice to the Administrative Agent from time to time, request Incremental Term Loan Commitments and/or Incremental Revolving Facility Commitments, as applicable, in an amount not to exceed the Incremental Amount from one or more Incremental Term Lenders and/or Incremental Revolving Facility Lenders (which may include any existing Lender) willing to provide such Incremental Term Loans and/or Incremental Revolving Facility Commitments, as the case may be, in their own discretion; provided, that each Incremental Revolving Facility Lender shall be subject to the approval of the Administrative Agent (which approval shall not be unreasonably withheld) unless such Incremental Revolving Lender is a Lender, an Affiliate of a Lender or an Approved Fund. Such notice shall set forth (i) the amount of the Incremental Term Loan Commitments and/or Incremental Revolving Facility Commitments being requested (which shall be in minimum increments of $5.0 million and a minimum amount of $25.0 million or equal to the remaining Incremental Amount), (ii) the date on which such Incremental Term Loan Commitments and/or Incremental Revolving Facility Commitments are requested to become effective (the “ Increased Amount Date ”), (iii) in the case of Incremental Revolving Facility Commitments, whether such Incremental Revolving Facility Commitments are to be Revolving Loan Commitments or commitments to make revolving loans with pricing and/or amortization terms different from the Revolving Loans (“ Other Revolving Loans ”), and (iv) in the case of Incremental Term Loan Commitments, whether such Incremental Term Loan Commitments are to be Term Loan Commitments or commitments to make term loans with pricing and/or amortization terms different from the Term B Loans (“ Other Term Loans ”).
76
77
ARTICLE III
Representations and Warranties
On the date of each Credit Event as provided in Section 4.01, the Borrowers represent and warrant to each of the Lenders that:
SECTION 3.01. Organization ; Powers . Except as set forth on Schedule 3.01, each of Holdings (prior to a Qualified IPO), the Borrowers and each of the Material Subsidiaries (a) is a partnership, limited liability company or corporation duly organized, validly existing and in good standing (or, if applicable in a foreign jurisdiction, enjoys the equivalent status under the laws of any jurisdiction of organization outside the United States) under the laws of the jurisdiction of its organization, (b) has all requisite power and authority to own its property and assets and to carry on its business as now conducted, (c) is qualified to do business in each jurisdiction where such qualification is required, except where the failure so to qualify would not reasonably be expected to have a Material Adverse Effect, and (d) has the power and authority to execute, deliver and perform its obligations under each of the Loan Documents and each other agreement or instrument contemplated thereby to which it is or will be a party and, in the case of the Borrowers, to borrow and otherwise obtain credit hereunder.
SECTION 3.02. Authorization . The execution, delivery and performance by Holdings (prior to a Qualified IPO), the Borrowers and each of the Subsidiary Loan Parties of each of the Loan Documents to which it is a party, and the borrowings hereunder and the transactions forming a part of the Transactions (a) have been duly authorized by all corporate, stockholder, partnership or limited liability company action required to be obtained by Holdings, the Borrowers and such Subsidiary Loan Parties and (b) will not (i) violate (A) any provision of law, statute, rule or regulation, or of the certificate or articles of incorporation or other constitutive documents (including any partnership, limited liability company or operating agreements) or by-laws of Holdings, the Borrowers or any such Subsidiary Loan Party, (B) any applicable order of any court or any rule, regulation or order of any Governmental Authority or (C) any provision of any indenture, certificate of designation for preferred stock, agreement or other instrument to which Holdings, the Borrowers or any such Subsidiary Loan Party is a party or by which any of them or any of their property is or may be bound, (ii) be in conflict with, result in a breach of or constitute (alone or with notice or lapse of time or both) a default under, give rise to a right of or result in any cancellation or acceleration of any right or obligation (including any payment) or to a loss of a material benefit under any such indenture, certificate of designation for preferred stock, agreement or other instrument, where any such conflict, violation, breach or default referred to in clause (i) or (ii) of this Section 3.02(b), would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, or (iii) result in the creation or imposition of any Lien upon or with respect to any property or assets now owned or hereafter acquired by Holdings (prior to a Qualified IPO), the Borrowers or any such Subsidiary Loan Party, other than the Liens created by the Loan Documents and Permitted Liens.
SECTION 3.03. Enforceability . This Agreement has been duly executed and delivered by Holdings and the Borrowers and constitutes, and each other Loan Document when executed and delivered by each Loan Party that is party thereto will constitute, a legal, valid and
78
binding obligation of such Loan Party enforceable against each such Loan Party in accordance with its terms, subject to (i) the effects of bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance or other similar laws affecting creditors’ rights generally, (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and (iii) implied covenants of good faith and fair dealing.
SECTION 3.04. Governmental Approvals . No action, consent or approval of, registration or filing with or any other action by any Governmental Authority is or will be required in connection with the Transactions, the perfection or maintenance of the Liens created under the Security Documents or the exercise by any Agent or any Lender of its rights under the Loan Documents or the remedies in respect of the Collateral, except for (a) the filing of Uniform Commercial Code financing statements, (b) filings with the United States Patent and Trademark Office and the United States Copyright Office and comparable offices in foreign jurisdictions and equivalent filings in foreign jurisdictions, (c) recordation of the Mortgages, (d) such as have been made or obtained and are in full force and effect, (e) such actions, consents and approvals the failure of which to be obtained or made would not reasonably be expected to have a Material Adverse Effect and (f) filings or other actions listed on Schedule 3.04.
SECTION 3.05. Financial Statements . (a) The unaudited pro forma consolidated balance sheet and related consolidated statements of income and cash flows of the Borrowers, together with its consolidated Subsidiaries (including the notes thereto) (the “ Pro Forma Financial Statements ”) and pro forma EBITDA (the “ Pro Forma EBITDA ”), for the fiscal year ending March 31, 2006, copies of which have heretofore been furnished to each Lender (via inclusion in the Information Memorandum), have been prepared giving effect (as if such events had occurred on such date, with respect to the balance sheet, or on the first day of such fiscal year with respect to such other financial statements) to the Transactions. Each of the Pro Forma Financial Statements and the Pro Forma EBITDA has been prepared in good faith based on assumptions believed by the Borrowers to have been reasonable as of the date of delivery thereof (it being understood that such assumptions are based on good faith estimates of certain items and that the actual amount of such items on the Closing Date is subject to change), and presents fairly in all material respects on a pro forma basis the estimated financial position of the Borrowers and their consolidated Subsidiaries as at March 31, 2006, assuming that the Transactions had actually occurred at such date, and the results of operations of Borrowers and their consolidated subsidiaries for the twelve-month period ended March 31, 2006, assuming that the Transactions had actually occurred on the first day of such twelve-month period.
SECTION 3.06. No Material Adverse Effect . Since March 31, 2006, there has been no event or circumstance that, individually or in the aggregate with other events or circumstances, has or would reasonably be expected to have a Material Adverse Effect.
79
SECTION 3.07. Title to Properties ; Possession Under Leases . (a) Each of Holdings (prior to Qualified IPO), the Borrowers and the Subsidiaries has good and insurable fee simple title to, or valid leasehold interests in, or easements or other limited property interests in, all its Real Properties (including all Mortgaged Properties) and has good and marketable title to its personal property and assets, in each case, except for Permitted Liens and except for defects in title that do not materially interfere with its ability to conduct its business as currently conducted or to utilize such properties and assets for their intended purposes and except where the failure to have such title would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. All such properties and assets are free and clear of Liens, other than Permitted Liens or Liens arising by operation of law.
SECTION 3.08. Subsidiaries . (a) Schedule 3.08(a) sets forth as of the Closing Date the name and jurisdiction of incorporation, formation or organization of each subsidiary of Holdings and, as to each such subsidiary, the percentage of each class of Equity Interests owned by Holdings or by any such subsidiary.
80
SECTION 3.09. Litigation; Compliance with Laws. (a) There are no actions, suits or proceedings at law or in equity or by or on behalf of any Governmental Authority or in arbitration now pending, or, to the knowledge of Holdings (prior to a Qualified IPO) or the Borrowers, threatened in writing against or affecting Holdings or the Borrowers or any of the Subsidiaries or any business, property or rights of any such person (i) that involve any Loan Document or the Transactions or (ii) that would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
SECTION 3.10. Federal Reserve Regulations . (a) None of Holdings (prior to a Qualified IPO), the Borrowers and the Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying Margin Stock.
SECTION 3.11. Investment Company Act . None of Holdings (prior to a Qualified IPO), the Borrowers and the Subsidiaries is an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940, as amended.
SECTION 3.12. Use of Proceeds . The Borrowers will use the proceeds of the Revolving Facility Loans and Swingline Loans solely for general corporate purposes (including, without limitation, for Permitted Business Acquisitions) and, in the case of up to $35.0 million, plus any amount necessary to fund any working capital adjustment pursuant to the Merger Agreement, of Revolving Facility Loans made on the Closing Date, and the Term B Loans (a) to fund a portion of the merger consideration for the Merger, (b) to finance the Debt Tender Offer and the Consent Solicitation, (c) to refinance the Existing Credit Agreement and (d) to pay the Transaction Expenses. The Letters of Credit are to be used solely for general corporate purposes (including, without limitation, for the back-up or replacement of letters of credit).
81
SECTION 3.13. Tax Returns . Except as set forth on Schedule 3.13:
SECTION 3.14. No Material Misstatements . (a) All written information (other than the Projections, estimates and information of a general economic nature) (the “ Information ”) concerning Holdings, the Borrowers, the Subsidiaries, the Transactions and any other transactions contemplated hereby included in the Information Memorandum or otherwise prepared by or on behalf of the foregoing or their representatives and made available to any Lenders or the Administrative Agent in connection with the Transactions or the other transactions contemplated hereby, when taken as a whole, was true and correct in all material respects, as of the date such Information was furnished to the Lenders and as of the Closing Date and did not, taken as a whole, contain any untrue statement of a material fact as of any such date or omit to state a material fact necessary in order to make the statements contained therein, taken as a whole, not materially misleading in light of the circumstances under which such statements were made.
SECTION 3.15. Employee Benefit Plans . (a) Except as would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect: (i) each Plan is in
82
compliance in all material respects with the applicable provisions of ERISA and the Code; (ii) no Reportable Event has occurred during the past five years as to which the Borrowers, Holdings, any of their Subsidiaries or any ERISA Affiliate was required to file a report with the PBGC, other than reports that have been filed; (iii) no Plan has any Unfunded Pension Liability in excess of $40.0 million; (iv) no ERISA Event has occurred or is reasonably expected to occur; and (v) none of the Borrowers, Holdings, the Subsidiaries and the ERISA Affiliates (A) has received any written notification that any Multiemployer Plan is in reorganization or has been terminated within the meaning of Title IV of ERISA, or has knowledge that any Multiemployer Plan is reasonably expected to be in reorganization or to be terminated or (B) has incurred or is reasonably expected to incur any withdrawal liability to any Multiemployer Plan.
SECTION 3.16. Environmental Matters . Except as to matters that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect: (i) no written notice, request for information, order, complaint or penalty has been received by the Borrowers or any of their Subsidiaries, and there are no judicial, administrative or other actions, suits or proceedings pending or, to the Borrowers’ knowledge, threatened which allege a violation of or liability under any Environmental Laws, in each case relating to the Borrowers or any of their Subsidiaries or their respective properties, (ii) each of the Borrowers and their Subsidiaries has all environmental permits, licenses and other approvals necessary for its operations to comply with all applicable Environmental Laws (“ Environmental Permits ”) and is, and during the term of all applicable statutes of limitation, has been, in compliance with the terms of such Environmental Permits and with all other applicable Environmental Laws, (iii) to the Borrowers’ knowledge, no Hazardous Material is located at, on or under any property currently or formerly owned, operated or leased by the Borrowers or any of their Subsidiaries or their predecessors that would reasonably be expected to give rise to any cost, liability or obligation of the Borrowers or any of their Subsidiaries under any Environmental Laws or Environmental Permits, and no Hazardous Material has been generated, used, treated, stored, handled or controlled, disposed, transported to or Released at, on, from, to or under any location in a manner that would reasonably be expected to give rise to any cost, liability or obligation of the Borrowers or any of their Subsidiaries under any Environmental Laws or Environmental Permits, (iv) there are no agreements in which the Borrowers or any of their Subsidiaries has expressly assumed or undertaken responsibility for any known or reasonably likely liability or obligation of any other person arising under or relating to Environmental Laws, which in any such case has not been made available to the Administrative Agent prior to the date hereof, and (v) there has been no material written environmental assessment or audit conducted since January 1, 2002, by or on behalf of the Borrowers or any of the Subsidiaries of any property currently or, to the Borrowers’ knowledge, formerly owned or leased by the Borrowers or any of the Subsidiaries that has not been made available to the Administrative Agent prior to the date hereof.
83
SECTION 3.17. Security Documents . (a) The Collateral Agreement is effective to create in favor of the Collateral Agent (for the benefit of the Secured Parties) a legal, valid and enforceable security interest in the Collateral described therein and proceeds thereof. In the case of the Pledged Collateral described in the Collateral Agreement, when certificates or promissory notes, as applicable, representing such Pledged Collateral are delivered to the Collateral Agent, and in the case of the other Collateral described in the Collateral Agreement (other than the Intellectual Property (as defined in the Collateral Agreement)), when financing statements and other filings specified in the Perfection Certificate are filed in the offices specified in the Perfection Certificate, the Collateral Agent (for the benefit of the Secured Parties) shall have a fully perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in such Collateral and, subject to Section 9-315 of the New York Uniform Commercial Code, the proceeds thereof, as security for the Obligations to the extent perfection can be obtained by filing Uniform Commercial Code financing statements, in each case prior and superior in right to any other person (except, in the case of Collateral other than Pledged Collateral, Permitted Liens and Liens having priority by operation of law).
84
SECTION 3.18. Location of Real Property and Leased Premises. (a) The Perfection Certificate lists correctly, in all material respects, as of the Closing Date all material Real Property owned by Holdings, the Borrowers and the Subsidiary Loan Parties and the addresses thereof. As of the Closing Date, Holdings, the Borrowers and the Subsidiary Loan Parties own in fee all the Real Property set forth as being owned by them on such Schedules.
SECTION 3.19. Solvency . (a) Immediately after giving effect to the Transactions on the Closing Date, (i) the fair value of the assets of the Borrowers (individually) and Holdings, the Borrowers and their Subsidiaries on a consolidated basis, at a fair valuation, will exceed the debts and liabilities, direct, subordinated, contingent or otherwise, of the Borrowers (individually) and Holdings, the Borrowers and their Subsidiaries on a consolidated basis, respectively; (ii) the present fair saleable value of the property of the Borrowers (individually) and Holdings, the Borrowers and their Subsidiaries on a consolidated basis will be greater than the amount that will be required to pay the probable liability of the Borrowers (individually) and Holdings, the Borrowers and their Subsidiaries on a consolidated basis, respectively, on their debts and other liabilities, direct, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured; (iii) the Borrowers (individually) and Holdings, the Borrowers and their Subsidiaries on a consolidated basis will be able to pay their debts and liabilities, direct, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured; and (iv) the Borrowers (individually) and Holdings, the Borrowers and their Subsidiaries on a consolidated basis will not have unreasonably small capital with which to conduct the businesses in which they are engaged as such businesses are now conducted and are proposed to be conducted following the Closing Date.
85
SECTION 3.20. Labor Matters . Except as, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect: (a) there are no strikes or other labor disputes pending or threatened against Holdings (prior to a Qualified IPO), the Borrowers or any of the Subsidiaries; (b) the hours worked and payments made to employees of Holdings (prior to a Qualified IPO), the Borrowers and the Subsidiaries have not been in violation of the Fair Labor Standards Act or any other applicable law dealing with such matters; and (c) all payments due from Holdings (prior to a Qualified IPO), the Borrowers or any of the Subsidiaries or for which any claim may be made against Holdings (prior to a Qualified IPO), the Borrowers or any of the Subsidiaries, on account of wages and employee health and welfare insurance and other benefits have been paid or accrued as a liability on the books of Holdings (prior to a Qualified IPO), the Borrowers or such Subsidiary to the extent required by GAAP. Except as, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect, the consummation of the Transactions will not give rise to a right of termination or right of renegotiation on the part of any union under any material collective bargaining agreement to which Holdings (prior to a Qualified IPO), the Borrowers or any of the Subsidiaries (or any predecessor) is a party or by which Holdings (prior to a Qualified IPO), the Borrowers or any of the Subsidiaries (or any predecessor) is bound.
SECTION 3.21. Insurance . Schedule 3.21 sets forth a true, complete and correct description of all material insurance maintained by or on behalf of Holdings, the Borrowers or the Subsidiaries as of the Closing Date. As of such date, such insurance is in full force and effect.
SECTION 3.22. No Default . No Default or Event of Default has occurred and is continuing or would result from the consummation of the transactions contemplated by this Agreement or any other Loan Document.
SECTION 3.23. Intellectual Property; Licenses, Etc . Except as would not reasonably be expected to have a Material Adverse Effect and as set forth in Schedule 3.23 , (a) the Borrowers and each of their Subsidiaries owns, or possesses the right to use, all of the patents, registered trademarks, registered service marks or trade names, registered copyrights or mask works, domain names, applications and registrations for any of the foregoing (collectively, “ Intellectual Property Rights ”) that are reasonably necessary for the operation of their respective businesses, without conflict with the rights of any other person, (b) to the best knowledge of the Borrowers, the Borrowers and their Subsidiaries are not interfering with, infringing upon, misappropriating or otherwise violating Intellectual Property Rights of any person, and (c) no claim or litigation regarding any of the foregoing is pending or, to the best knowledge of the Borrowers, threatened.
SECTION 3.24. Senior Debt . The Obligations constitute “Senior Debt” (or the equivalent thereof) and “Designated Senior Debt” (or the equivalent thereof) under the Senior Subordinated Notes Indenture and under the documentation governing any Permitted Additional Debt constituting subordinated Indebtedness or any Permitted Refinancing Indebtedness in respect of the Senior Subordinated Notes or any Permitted Additional Debt constituting subordinated Indebtedness.
86
ARTICLE IV
Conditions of Lending
The obligations of (a) the Lenders (including the Swingline Lender) to make Loans and (b) any Issuing Bank to issue Letters of Credit or increase the stated amounts of Letters of Credit hereunder (each, a “ Credit Event ”) are subject to the satisfaction of the following conditions:
SECTION 4.01. All Credit Events . On the date of each Borrowing and on the date of each issuance, amendment, extension or renewal of a Letter of Credit:
Each such Borrowing and each issuance, amendment, extension or renewal of a Letter of Credit shall be deemed to constitute a representation and warranty by the Borrowers on the date of such Borrowing, issuance, amendment, extension or renewal as applicable, as to the matters specified in paragraphs (b) and (c) of this Section 4.01.
87
SECTION 4.02. First Credit Event . On the Closing Date:
(A) that attached thereto is a true and complete copy of the by-laws (or partnership agreement, limited liability company agreement or other equivalent constituent and governing documents) of such Loan Party as in effect on the Closing Date and at all times since a date prior to the date of the resolutions described in clause (B) below,
(B) that attached thereto is a true and complete copy of resolutions duly adopted by the Board of Directors (or equivalent governing body) of such Loan Party (or its managing general partner or managing member) authorizing the execution, delivery and performance
88
of the Loan Documents to which such person is a party and, in the case of the Borrowers, the borrowings hereunder, and that such resolutions have not been modified, rescinded or amended and are in full force and effect on the Closing Date,
(C) that the certificate or articles of incorporation, certificate of limited partnership or certificate of formation or other equivalent constituent and governing documents of such Loan Party have not been amended since the date of the last amendment thereto disclosed pursuant to clause (i) above,
(D) as to the incumbency and specimen signature of each officer executing any Loan Document or any other document delivered in connection herewith on behalf of such Loan Party and
(E) as to the absence of any pending proceeding for the dissolution or liquidation of such Loan Party or, to the knowledge of such person, threatening the existence of such Loan Party;
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For purposes of determining compliance with the conditions specified in this Section 4.02, each Lender shall be deemed to have consented to, approved or accepted or to be satisfied with each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to the Lenders unless an officer of the Administrative Agent responsible for the transactions contemplated by the Loan Documents shall have received notice from such Lender prior to the Closing Date specifying its objection thereto and such Lender shall not have made available to the Administrative Agent such Lender’s ratable portion of the initial Borrowing.
ARTICLE V
Affirmative Covenants
The Borrowers covenant and agree with each Lender that so long as this Agreement shall remain in effect (other than in respect of contingent indemnification and expense reimbursement obligations for which no claim has been made) and until the Commitments have been terminated and the principal of and interest on each Loan, all Fees and all other expenses or amounts payable under any Loan Document shall have been paid in full and all Letters of Credit have been canceled or have expired and all amounts drawn or paid thereunder have been reimbursed in full, unless the Required Lenders shall otherwise consent in writing, the Borrowers will, and will cause each of the Material Subsidiaries to:
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SECTION 5.02. Insurance . (a) Maintain, with financially sound and reputable insurance companies, insurance in such amounts and against such risks as are customarily maintained by similarly situated companies engaged in the same or similar businesses operating in the same or similar locations and cause the Collateral Agent to be listed as a co-loss payee on property and casualty policies and as an additional insured on liability policies.
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SECTION 5.03. Taxes . Pay and discharge promptly when due all material Taxes, imposed upon it or upon its income or profits or in respect of its property before the same shall become delinquent or in default, as well as all lawful claims which, if unpaid, might give rise to a Lien other than a Permitted Lien upon such properties or any part thereof; provided , however , that such payment and discharge shall not be required with respect to any such Tax assessment, charge, levy or claim so long as (a) the validity or amount thereof shall be contested in good faith by appropriate proceedings or procedures and (b) Holdings, the Borrowers or the affected Subsidiary, as applicable, shall have set aside on its books reserves in accordance with GAAP with respect thereto.
SECTION 5.04. Financial Statements, Reports, etc . Furnish to the Administrative Agent (which will promptly furnish such information to the Lenders):
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SECTION 5.06. Compliance with Laws . Comply with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its property, except where the failure to do so, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect; provided, that this Section 5.06 shall not apply to Environmental Laws, which are the subject of Section 5.09, or to laws related to Taxes, which are the subject of Section 5.03.
SECTION 5.07. Maintaining Records; Access to Properties and Inspections . Maintain all financial records in accordance with GAAP and permit any persons designated by
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the Administrative Agent or, upon the occurrence and during the continuance of an Event of Default, any Lender to visit and inspect the financial records and the properties of Holdings (prior to a Qualified IPO), the Borrowers or any of the Subsidiaries at reasonable times, upon reasonable prior notice to Holdings (prior to a Qualified IPO) or the Borrowers, and as often as reasonably requested and to make extracts from and copies of such financial records, and permit any persons designated by the Administrative Agent or, upon the occurrence and during the continuance of an Event of Default, any Lender upon reasonable prior notice to Holdings (prior to a Qualified IPO) or the Borrowers to discuss the affairs, finances and condition of Holdings (prior to a Qualified IPO), the Borrowers or any of the Subsidiaries with the officers thereof and independent accountants therefor (subject to reasonable requirements of confidentiality, including requirements imposed by law or by contract).
SECTION 5.08. Use of Proceeds . Use the proceeds of the Loans and the Letters of Credit only as contemplated by Section 3.12.
SECTION 5.09. Compliance with Environmental Laws . Comply, and make reasonable efforts to cause all lessees and other persons occupying its properties to comply, with all Environmental Laws applicable to its operations and properties; and obtain and renew all material authorizations and permits required pursuant to Environmental Law for its operations and properties, in each case in accordance with Environmental Laws, except, in each case with respect to this Section 5.09, to the extent the failure to do so would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
SECTION 5.10. Further Assurances; Additional Security . (a) Execute any and all further documents, financing statements, agreements and instruments, and take all such further actions (including the filing and recording of financing statements, fixture filings, Mortgages and other documents and recordings of Liens in stock registries), that may be required under any applicable law, or that the Collateral Agent may reasonably request, to satisfy the Collateral and Guarantee Requirement and to cause the Collateral and Guarantee Requirement to be and remain satisfied, all at the expense of the Loan Parties and provide to the Collateral Agent, from time to time upon reasonable request, evidence reasonably satisfactory to the Collateral Agent as to the perfection and priority of the Liens created or intended to be created by the Security Documents.
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SECTION 5.11. Rating . Exercise commercially reasonable efforts to maintain ratings from each of Moody’s and S&P for the Term B Loans.
The Borrowers covenant and agree with each Lender that, so long as this Agreement shall remain in effect (other than in respect of contingent indemnification and expense reimbursement obligations for which no claim has been made) and until the Commitments have been terminated and the principal of and interest on each Loan, all Fees and all other expenses or amounts payable under any Loan Document have been paid in full and all Letters of Credit have been canceled or have expired and all amounts drawn thereunder have been reimbursed in full, unless the Required Lenders (or, in the case of Section 6.11, the Majority Lenders in respect of the Revolving Facility) shall otherwise consent in writing, the Borrowers will not, and will not permit any of the Material Subsidiaries to:
SECTION 6.01. Indebtedness . Incur, create, assume or permit to exist any Indebtedness, except:
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SECTION 6.02. Liens . Create, incur, assume or permit to exist any Lien on any property or assets (including stock or other securities of any person, including the Borrowers and any Subsidiary) at the time owned by it or on any income or revenues or rights in respect of any thereof, except the following (collectively, “ Permitted Liens ”):
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SECTION 6.03. Sale and Lease-Back Transactions . Enter into any arrangement, directly or indirectly, with any person whereby it shall sell or transfer any property, real or personal, used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property that it intends to use for substantially the same purpose or purposes as the property being sold or transferred (a “ Sale and Lease-Back Transaction ”); provided , that a Sale and Lease-Back Transaction shall be permitted (a) with respect to property (i) owned by the Borrowers or any Domestic Subsidiary that is acquired after the Closing Date so long as such Sale and Lease-Back Transaction is consummated within 180 days of the acquisition of such property or (ii) owned by any Foreign Subsidiary regardless
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of when such property was acquired, and (b) with respect to any property owned by the Borrowers or any Domestic Subsidiary, (i) if at the time the lease in connection therewith is entered into, and after giving effect to the entering into of such lease, the Remaining Present Value of such lease, together with Indebtedness outstanding pursuant to Sections 6.01(h) and (i) and the Remaining Present Value of outstanding leases previously entered into under this Section 6.03(b), would not exceed the greater of $75.0 million and 4% of Consolidated Total Assets as of the end of the fiscal quarter immediately prior to the date the lease was entered into for which financial statements have been delivered pursuant to Section 5.04 and (ii) if such Sale and Lease-Back Transaction is of property owned by the Borrowers or any Domestic Subsidiary as of the Closing Date, the Net Proceeds therefrom are used to prepay the Term Loans to the extent required by Section 2.11(b).
SECTION 6.04. Investments, Loans and Advances . Purchase, hold or acquire (including pursuant to any merger with a person that is not a Wholly Owned Subsidiary immediately prior to such merger) any Equity Interests, evidences of Indebtedness or other securities of, make or permit to exist any loans or advances to or Guarantees of the obligations of, or make or permit to exist any investment or any other interest in (each, an “ Investment ”), any other person, except:
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The amount of Investments that may be made at any time pursuant to Section 6.04(b) or 6.04(j) (such Sections, the “ Related Sections ”) may, at the election of the Borrowers, be increased by the amount of Investments that could be made at such time under the other Related Section; provided that the amount of each such increase in respect of one Related Section shall be treated as having been used under the other Related Section.
SECTION 6.05. Mergers, Consolidations, Sales of Assets and Acquisitions . Merge into or consolidate with any other person, or permit any other person to merge into or consolidate with it, or sell, transfer, lease or otherwise dispose of (in one transaction or in a series of transactions) all or any part of its assets (whether now owned or hereafter acquired), or issue,
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sell, transfer or otherwise dispose of any Equity Interests of the Borrowers or any Subsidiary, or purchase, lease or otherwise acquire (in one transaction or a series of transactions) all or any substantial part of the assets of any other person, except that this Section shall not prohibit:
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Notwithstanding anything to the contrary contained in Section 6.05 above, (i) no sale, transfer or other disposition of assets shall be permitted by this Section 6.05 (other than sales, transfers, leases or other dispositions to Loan Parties pursuant to paragraph (c) hereof) unless such disposition is for fair market value, (ii) no sale, transfer or other disposition of assets shall be permitted by paragraph (a) or (d) of this Section 6.05 unless such disposition is for at least 75% cash consideration and (iii) no sale, transfer or other disposition of assets shall be permitted by paragraph (g) of this Section 6.05 unless such disposition is for at least 75% cash consideration; provided that the provisions of clause (ii) shall not apply to any individual transaction or series of related transactions involving assets with a fair market value of less than $5.0 million or to other transactions involving assets with a fair market value of not more than the greater of $35.0 million and 3% of Consolidated Total Assets in the aggregate for all such transactions during the term of this Agreement; provided , further , that for purposes of clause (iii), (a) the amount of any secured Indebtedness of the Borrowers or any Subsidiary of the Borrowers or other Indebtedness of a Subsidiary that is not a Loan Party (as shown on the Borrowers’ or such Subsidiary’s most recent balance sheet or in the notes thereto) that is assumed by the transferee of any such assets shall be deemed to be cash and (b) any notes or other obligations or other securities or assets received by the Borrowers or such Subsidiary from the transferee that are converted by the Borrowers or such Subsidiary into cash within 180 days after receipt thereof (to the extent of the cash received) shall be deemed to be cash.
SECTION 6.06. Dividends and Distributions . Declare or pay any dividend or make any other distribution (by reduction of capital or otherwise), whether in cash, property, securities or a combination thereof, with respect to any of its Equity Interests (other than dividends and distributions on Equity Interests payable solely by the issuance of additional Equity Interests (other than Disqualified Stock) of the person paying such dividends or distributions) or directly or indirectly redeem, purchase, retire or otherwise acquire for value (or permit any Subsidiary to purchase or acquire) any of its Equity Interests or set aside any amount for any such purpose (other than through the issuance of additional Equity Interests (other than Disqualified Stock) of the person redeeming, purchasing, retiring or acquiring such shares); provided, however, that:
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SECTION 6.07. Transactions with Affiliates . (a) Sell or transfer any property or assets to, or purchase or acquire any property or assets from, or otherwise engage in any other transaction with, any of its Affiliates or any known direct or indirect holder of 10% or more of any class of Equity Interest of Holdings (prior to a Qualified IPO) or the Borrowers, unless such transaction is (i) otherwise permitted (or required) under this Agreement or (ii) upon terms no less favorable to the Borrowers or such Subsidiary, as applicable, than would be obtained in a comparable arm’s-length transaction with a person that is not an Affiliate.
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SECTION 6.08. Business of the Borrowers and the Subsidiaries . Notwithstanding any other provisions hereof, engage at any time in any business or business activity other than any business or business activity conducted by any of them on the Closing Date and any business or business activities incidental or related thereto, or any business or activity that is reasonably similar thereto or a reasonable extension, development or expansion thereof or ancillary thereto, and in the case of a Special Purpose Receivables Subsidiary, Permitted Receivables Financing.
SECTION 6.09. Limitation on Modifications of Indebtedness ; Modifications of Certificate of Incorporation , By-Laws and Certain Other Agreements ; etc . (a) Amend or modify in any manner materially adverse to the Lenders, or grant any waiver or release under or terminate in any manner (if such granting or termination shall be materially adverse to the Lenders), the articles or certificate of incorporation, by-laws, limited liability company operating agreement, partnership agreement or other organizational documents of the Borrowers or any of the Subsidiaries or the Merger Agreement.
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(A) restrictions imposed by applicable law;
(B) contractual encumbrances or restrictions in effect on the Closing Date under Indebtedness existing on the Closing Date and set forth on Schedule 6.01 , the Senior Unsecured Notes, the Senior Subordinated Notes or any agreements related to any Permitted Refinancing Indebtedness in respect of any such Indebtedness that does not expand the scope of any such encumbrance or restriction;
(C) any restriction on a Subsidiary imposed pursuant to an agreement entered into for the sale or disposition of the Equity Interests or assets of a Subsidiary pending the closing of such sale or disposition;
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(D) customary provisions in joint venture agreements and other similar agreements applicable to joint ventures entered into in the ordinary course of business;
(E) any restrictions imposed by any agreement relating to secured Indebtedness permitted by this Agreement to the extent that such restrictions apply only to the property or assets securing such Indebtedness;
(F) customary provisions contained in leases or licenses of intellectual property and other similar agreements entered into in the ordinary course of business;
(G) customary provisions restricting subletting or assignment of any lease governing a leasehold interest;
(H) customary provisions restricting assignment of any agreement entered into in the ordinary course of business;
(I) customary restrictions and conditions contained in any agreement relating to the sale, transfer, lease or other disposition of any asset permitted under Section 6.05 pending the consummation of such sale, transfer, lease or other disposition;
(J) customary restrictions and conditions contained in the document relating to any Lien, so long as (1) such Lien is a Permitted Lien and such restrictions or conditions relate only to the specific asset subject to such Lien, and (2) such restrictions and conditions are not created for the purpose of avoiding the restrictions imposed by this Section 6.09;
(K) customary net worth provisions contained in Real Property leases entered into by Subsidiaries, so long as the Borrowers has determined in good faith that such net worth provisions would not reasonably be expected to impair the ability of the Borrowers and their Subsidiaries to meet their ongoing obligations;
(L) any agreement in effect at the time such subsidiary becomes a Subsidiary, so long as such agreement was not entered into in contemplation of such person becoming a Subsidiary;
(M) restrictions in agreements representing Indebtedness permitted under Section 6.01 of a Subsidiary of the Borrowers that is not a Subsidiary Loan Party;
(N) customary restrictions contained in leases, subleases, licenses or Equity Interests or asset sale agreements otherwise permitted hereby as long as such restrictions relate to the Equity Interests and assets subject thereto;
(O) restrictions on cash or other deposits imposed by customers under contracts entered into in the ordinary course of business; or
(P) restrictions contained in any Permitted Receivables Document with respect to any Special Purpose Receivables Subsidiary.
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SECTION 6.10. Capital Expenditures . Permit the Borrowers or their Subsidiaries to make any Capital Expenditure, except that:
SECTION 6.11. Total Senior Secured Bank Leverage Ratio . With respect to the Revolving Facility only, permit the Total Senior Secured Bank Leverage Ratio on the last day of any fiscal quarter (beginning with the fiscal quarter ending December 31, 2006) to exceed 4.25 to 1.00.
SECTION 6.12. Swap Agreements . Enter into any Swap Agreement, other than (a) Swap Agreements required by any Permitted Receivables Financing, (b) Swap Agreements entered into in the ordinary course of business to hedge or mitigate risks to which the Borrowers or any Subsidiary is exposed in the conduct of its business or the management of its liabilities (including, without limitation, raw material, supply costs and currency risks), (c) Swap Agreements entered into in order to effectively cap, collar or exchange interest rates (from fixed to floating rates, from one floating rate to another floating rate or otherwise) with respect to any interest bearing liability or investment of the Borrowers or any Subsidiary and (d) Swap Agreements entered into in order to swap currency in connection with funding the business of the Borrowers and their Subsidiaries in the ordinary course of business.
SECTION 6.13. No Other “Designated Senior Debt” . Designate, or permit the designation of, any Indebtedness as “Designated Senior Debt” or any other similar term for the purpose of the definition of the same or the subordination provisions contained in the Senior Subordinated Notes Indenture or any indenture governing any Permitted Additional Debt that is subordinated to the Obligations or any Permitted Refinancing thereof or of the Senior
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Subordinated Notes other than (a) the Obligations under this Agreement and the other Loan Documents, and (b) the Senior Unsecured Notes.
SECTION 6.14. Fiscal Year ; Accounting . In the case of the Borrowers, permit their fiscal year to end on any date other than March 31 without prior notice to the Administrative Agent given concurrently with any required notice to the SEC.
ARTICLE
VIA
Holdings Negative Covenants
Holdings (prior to a Qualified IPO) covenants and agrees with each Lender that, so long as this Agreement shall remain in effect (other than in respect of contingent indemnification and expense reimbursement obligations for which no claim has been made) and until the Commitments have been terminated and the principal of and interest on each Loan, all Fees and all other expenses or amounts payable under any Loan Document have been paid in full and all Letters of Credit have been canceled or have expired and all amounts drawn thereunder have been reimbursed in full, unless the Required Lenders shall otherwise consent in writing, (a) Holdings will not create, incur, assume or permit to exist any Lien (other than Liens of a type described in Section 6.02(d), (e) or (k)) on any of the Equity Interests issued by the Borrowers other than the Liens created under the Loan Documents, (b) Holdings shall do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence; provided, that so long as no Default has occurred and is continuing or would result therefrom, Holdings may merge with any other person, and (c) Holdings shall at all times own directly 100% of the Equity Interests of Merger Sub (prior to the Merger) and Target (after the Merger) and shall not sell, transfer or otherwise dispose of any Equity Interests in Merger Sub or Target.
SECTION 7.01. Events of Default . In case of the happening of any of the following events (each, an “ Event of Default ”):
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then, and in every such event (other than an event with respect to any Borrower described in paragraph (h) or (i) above), and at any time thereafter during the continuance of such event, the Administrative Agent, at the request of the Required Lenders, shall, by notice to the Borrowers, take any or all of the following actions, at the same or different times: (i) terminate forthwith the Commitments, (ii) declare the Loans then outstanding to be forthwith due and payable in whole or in part, whereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and any unpaid accrued Fees and all other liabilities of the Borrowers accrued hereunder and under any other Loan Document, shall become forthwith due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Borrowers, anything contained herein or in any other Loan Document to the contrary notwithstanding and (iii) if the Loans have been declared due and payable pursuant to clause (ii) above, demand cash collateral pursuant to Section 2.05(j); and in any event with respect to any Borrower described in paragraph (h) or (i) above, the Commitments shall automatically terminate, the principal of the Loans then outstanding, together with accrued interest thereon and any unpaid accrued Fees and all other liabilities of the Borrowers accrued hereunder and under any other Loan Document, shall automatically become due and payable and the Administrative Agent shall be deemed to have made a demand for cash collateral to the full extent permitted under Section 2.05(j), without presentment, demand, protest
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or any other notice of any kind, all of which are hereby expressly waived by the Borrowers, anything contained herein or in any other Loan Document to the contrary notwithstanding.
SECTION 7.02. Exclusion of Immaterial Subsidiaries . Solely for the purposes of determining whether an Event of Default has occurred under clause (h), (i) or (j) of Section 7.01, any reference in any such clause to any Subsidiary shall be deemed not to include any Immaterial Subsidiary affected by any event or circumstance referred to in any such clause.
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SECTION 8.01. Appointment . (a) Each Lender (in its capacities as a Lender and the Swingline Lender (if applicable) and on behalf of itself and its Affiliates as potential counterparties to Swap Agreements) and each Issuing Bank (in such capacities and on behalf of itself and its Affiliates as potential counterparties to Swap Agreements) hereby irrevocably designates and appoints the Administrative Agent as the agent of such Lender under this Agreement and the other Loan Documents, including as the Collateral Agent for such Lender and the other Secured Parties under the Security Documents, and each such Lender irrevocably authorizes the Administrative Agent, in such capacity, to take such action on its behalf under the provisions of this Agreement and the other Loan Documents and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of this Agreement and the other Loan Documents, together with such other powers as are reasonably incidental thereto. In addition, to the extent required under the laws of any jurisdiction other than the United States, each of the Lenders and the Issuing Banks hereby grants to the Administrative Agent any required powers of attorney to execute any Security Document governed by the laws of such jurisdiction on such Lender’s or Issuing Bank’s behalf. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein, or 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.
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SECTION 8.03. Exculpatory Provisions . Neither any Agent or its Affiliates nor any of their respective officers, directors, employees, agents, attorneys-in-fact or affiliates shall be (a) liable for any action lawfully taken or omitted to be taken by it or such person under or in connection with this Agreement or any other Loan Document (except to the extent that any of the foregoing are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from its or such person’s own gross negligence or willful misconduct) or (b) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by any Loan Party or any officer thereof contained in this Agreement or any other Loan Document or in any certificate, report, statement or other document referred to or provided for in, or received by the Agents under or in connection with, this Agreement or any other Loan Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document or for any failure of any Loan Party a party thereto to perform its obligations hereunder or thereunder. The Agents shall not 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 any Loan Party. The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents. Without limiting the generality of the foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or other implied duties, regardless of whether a Default or Event of Default has occurred and is continuing, and (b) the Administrative Agent shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrowers or any of their Affiliates that is communicated to or obtained by the person serving as the Administrative Agent or any of its Affiliates in any capacity. The Administrative Agent shall be deemed not to have knowledge of any Default or Event of Default unless and until notice describing such Default or Event of Default is given to the Administrative Agent by the Borrowers, a Lender or an Issuing Bank. The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default or Event of Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document, or the creation,
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perfection or priority of any Lien purported to be created by the Security Documents, (v) the value or the sufficiency of any Collateral, or (vi) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.
SECTION 8.04. Reliance by Administrative Agent . The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) or conversation believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to any Credit Event, that by its terms must be fulfilled to the satisfaction of a Lender or any Issuing Bank, the Administrative Agent may presume that such condition is satisfactory to such Lender or Issuing Bank unless the Administrative Agent shall have received notice to the contrary from such Lender or the Issuing Bank prior to such Credit Event. The Administrative Agent may consult with legal counsel (including counsel to Holdings or the Borrowers), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts. The Administrative Agent may deem and treat the payee of any Note as the owner thereof for all purposes unless a written notice of assignment, negotiation or transfer thereof shall have been filed with 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 (or, if so specified by this Agreement, all or other Lenders) as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense that 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 and the other Loan Documents in accordance with a request of the Required Lenders (or, if so specified by this Agreement, all or other Lenders), and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Loans.
SECTION 8.05. Notice of Default . The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default unless the Administrative Agent has received notice from a Lender, Holdings or the Borrowers referring to this Agreement, describing such Default or Event of Default and stating that such notice is a “notice of default.” In the event that the Administrative Agent receives such a notice, the Administrative Agent shall give notice thereof to the Lenders. The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders (or, if so specified by this Agreement, all or other Lenders); provided, that unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders.
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SECTION 8.06. Non-Reliance on Agents and Other Lenders . Each Lender expressly acknowledges that neither the Agents nor any of their respective officers, directors, employees, agents, attorneys-in-fact or affiliates have made any representations or warranties to it and that no act by any Agent hereafter taken, including any review of the affairs of a Loan Party or any affiliate of a Loan Party, shall be deemed to constitute any representation or warranty by any Agent to any Lender. Each Lender represents to the Agents that it has, independently and without reliance upon any Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, financial and other condition and creditworthiness of the Loan Parties and their affiliates and made its own decision to make its Loans hereunder and enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon any Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Loan Parties and their affiliates. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder, the Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, property, condition (financial or otherwise), prospects or creditworthiness of any Loan Party or any affiliate of a Loan Party that may come into the possession of the Administrative Agent or any of its officers, directors, employees, agents, attorneys-in-fact or affiliates.
SECTION 8.07. Indemnification . The Lenders agree to indemnify each Agent and each Issuing Bank in its capacity as such (to the extent not reimbursed by Holdings or the Borrowers and without limiting the obligation of Holdings or the Borrowers to do so), in the amount of its pro rata share (based on its aggregate Revolving Facility Exposure, outstanding Term Loans and unused Commitments hereunder; provided, that the aggregate principal amount of Swingline Loans owing to the Swingline Lender and of L/C Disbursements owing to any Issuing Bank shall be considered to be owed to the Revolving Facility Lenders ratably in accordance with their respective Revolving Facility Exposure), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever that may at any time (whether before or after the payment of the Loans) be imposed on, incurred by or asserted against such Agent or such Issuing Bank in any way relating to or arising out of the Commitments, this Agreement, any of the other Loan Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by such Agent or such Issuing Bank under or in connection with any of the foregoing; provided, that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements that are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from such Agent’s or such Issuing Bank’s gross negligence or willful misconduct. The failure of any Lender to reimburse any Agent or any Issuing Bank, as the case may be, promptly upon demand for its ratable share of any amount required to be paid by the Lenders to such Agent or such Issuing Bank, as the case may be, as provided herein shall not relieve any other Lender of its obligation hereunder to reimburse such Agent or such Issuing Bank, as the case may be, for its ratable share of such
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amount, but no Lender shall be responsible for the failure of any other Lender to reimburse such Agent or such Issuing Bank, as the case may be, for such other Lender’s ratable share of such amount. The agreements in this Section shall survive the payment of the Loans and all other amounts payable hereunder.
SECTION 8.08. Agent in Its Individual Capacity . Each Agent and its affiliates may make loans to, accept deposits from, and generally engage in any kind of business with any Loan Party as though such Agent were not an Agent. With respect to its Loans made or renewed by it and with respect to any Letter of Credit issued, or Letter of Credit or Swingline Loan participated in, by it, each Agent shall have the same rights and powers under this Agreement and the other Loan Documents as any Lender and may exercise the same as though it were not an Agent, and the terms “Lender” and “Lenders” shall include each Agent in its individual capacity.
SECTION 8.09. Successor Administrative Agent . The Administrative Agent may resign as Administrative Agent upon 10 days’ notice to the Lenders and the Borrowers. If the Administrative Agent shall resign as Administrative Agent under this Agreement and the other Loan Documents, then the Required Lenders shall appoint from among the Lenders a successor agent for the Lenders, which successor agent shall (unless an Event of Default under Section 7.01(b), (c), (h) or (i) shall have occurred and be continuing) be subject to approval by the Borrowers (which approval shall not be unreasonably withheld or delayed), whereupon such successor agent shall succeed to the rights, powers and duties of the Administrative Agent, and the term “Administrative Agent” shall mean such successor agent effective upon such appointment and approval, and the former Administrative Agent’s rights, powers and duties as Administrative Agent shall be terminated, without any other or further act or deed on the part of such former Administrative Agent or any of the parties to this Agreement or any holders of the Loans. If no successor agent has accepted appointment as Administrative Agent by the date that is 10 days following a retiring Administrative Agent’s notice of resignation, the retiring Administrative Agent’s resignation shall nevertheless thereupon become effective, and the Lenders shall assume and 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. After any retiring Administrative Agent’s resignation as Administrative Agent, the provisions of this Section 8.09 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 and the other Loan Documents.
SECTION 8.10. Agents and Arrangers . Neither the Syndication Agent, the Documentation Agents nor any of the Co-Lead Arrangers shall have any duties or responsibilities hereunder in its capacity as such.
SECTION 8.11. Special Appointment of Collateral Agent (Germany) . (a) Without prejudice to the generality of Article VIII, (i) each Lender hereby appoints, on the terms hereof by its acceptance of the benefits of the German Security and by notice in writing to the Collateral Agent to that effect appoints, on the terms hereof, the Collateral Agent as trustee ( Treuhaender ), agent and administrator for the purpose of holding on trust ( Treuhand ), accepting, administering and enforcing the German Security for and on behalf of the Lenders; (ii) the Collateral Agent accepts its appointment as trustee ( Treuhaender ), agent and administrator of the German Security on the terms and subject to the conditions set out in this Agreement; and (iii) the Lenders agree that, in relation to the German Security, no Lender shall
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exercise any independent power to enforce any German Security or take any other action in relation to the enforcement of the German Security, or make or receive any declarations in relation thereto.
SECTION 8.12. Parallel Debt (The Netherlands and Germany) . (a) F or the purpose of creating a valid Lien under applicable Dutch and German law, each of the Loan Parties irrevocably and unconditionally undertakes (and to the extent necessary undertakes in advance) to pay to the Collateral Agent amounts equal to any amounts owing from time to time by a Loan Party to any Secured Party under or pursuant to the Obligations, as and when those amounts are due.
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SECTION 9.02. Survival of Agreement . All covenants, agreements, representations and warranties made by the Loan Parties herein, in the other Loan Documents and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the Lenders and each Issuing Bank and shall survive the making by the Lenders of the Loans, the execution and delivery of the Loan Documents and the issuance of the Letters of Credit, regardless of any investigation made by such persons or on their behalf, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or L/C Disbursement or any Fee or any other amount payable under this Agreement or any other Loan Document is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have not been terminated. Without prejudice to the survival of any other agreements contained herein, indemnification and reimbursement obligations contained herein (including pursuant to Sections 2.15, 2.17 and 9.05) shall survive the payment in full of the principal and interest hereunder, the expiration of the Letters of Credit and the termination of the Commitments or this Agreement.
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SECTION 9.03. Binding Effect . This Agreement shall become effective when it shall have been executed by Holdings, the Borrowers and the Administrative Agent and when the Administrative Agent shall have received copies hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of Holdings, the Borrowers, each Issuing Bank, the Administrative Agent and each Lender and their respective permitted successors and assigns.
SECTION 9.04. Successors and Assigns . (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby (including any Affiliate of the Issuing Bank that issues any Letter of Credit), except that (i) the Borrowers may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrowers without such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section 9.04. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any person (other than the parties hereto, their respective successors and assigns permitted hereby (including any Affiliate of the Issuing Bank that issues any Letter of Credit), Participants (to the extent provided in paragraph (c) of this Section 9.04), and, to the extent expressly contemplated hereby, the Related Parties of each of the Agents, the Issuing Bank and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.
(A) the Borrowers; provided , that no consent of the Borrowers shall be required for an assignment to a Lender, an Affiliate of a Lender, an Approved Fund (as defined below), during the primary syndication of the Loans to persons identified by the Administrative Agent and reasonably acceptable to the Borrowers on or prior to the Closing Date, or, if an Event of Default under Sections 7.01(b), (c), (h) or (i) has occurred and is continuing, any other person;
(B) the Administrative Agent; provided , that no consent of the Administrative Agent shall be required for an assignment of all or any portion of a Term Loan to a Lender, an Affiliate of a Lender or an Approved Fund; and
(C) the Issuing Bank and the Swingline Lender; provided , that no consent of the Issuing Bank and the Swingline Lender shall be required for an assignment of all or any portion of a Term Loan.
(A) except in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund or an assignment of the entire remaining amount of the assigning Lender’s Commitments or Loans under any Facility, the amount of the
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Commitments or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent) shall not be less than (x) $1.0 million in the case of Term Loans and (y) $5.0 million in the case of Revolving Facility Loans or Revolving Facility Commitments, unless each of the Borrowers and the Administrative Agent otherwise consent; provided , that (1) no such consent of the Borrowers shall be required if an Event of Default under Sections 7.01(b), (c), (h) or (i) has occurred and is continuing and (2) such amounts shall be aggregated in respect of each Lender and its Affiliates or Approved Funds (with simultaneous assignments to or by two or more Related Funds shall be treated as one assignment), if any;
(B) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance, together with a processing and recordation fee set forth on Schedule 9.04;
(C) the Assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire and any tax forms; and
(D) the Assignee shall not be the Borrowers or any of the Borrowers’ Affiliates or Subsidiaries.
For the purposes of this Section 9.04, “ Approved Fund ” means any person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course and that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender. Notwithstanding the foregoing, no Lender shall be permitted to assign or transfer any portion of its rights and obligations under this Agreement to any entity previously identified in that certain letter dated as of the date hereof from the Borrowers to the Administrative Agent.
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(ii) A Participant shall not be entitled to receive any greater payment under Section 2.15, 2.16 or 2.17 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrowers’ prior written consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.17 to the extent such Participant fails to comply with Section 2.17(e) and (f) as though it were a Lender.
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SECTION 9.05. Expenses ; Indemnity . (a) The Borrowers agree to pay (i) all reasonable out-of-pocket expenses (including Other Taxes) incurred by the Administrative Agent in connection with the preparation of this Agreement and the other Loan Documents, or by the Administrative Agent in connection with the syndication of the Commitments or the administration of this Agreement (including expenses incurred in connection with due diligence and initial and ongoing Collateral examination to the extent incurred with the reasonable prior approval of the Borrowers and the reasonable fees, disbursements and charges for no more than one counsel in each jurisdiction where Collateral is located) or in connection with the administration of this Agreement and any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the Transactions hereby contemplated shall be consummated), including the reasonable fees, charges and disbursements of Cravath, Swaine & Moore LLP, counsel for the Administrative Agent and the Co-Lead Arrangers, and, if necessary, the reasonable fees, charges and disbursements of one local counsel per jurisdiction, and (ii) all out-of-pocket expenses (including Other Taxes) incurred by the Administrative Agent or any Lender in connection with the enforcement or protection of their rights in connection with this Agreement and the other Loan Documents, in connection with the Loans made or the Letters of
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Credit issued hereunder, including the fees, charges and disbursements of counsel for the Administrative Agent (including any special and local counsel).
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SECTION 9.06. Right of Set-off . If an Event of Default shall have occurred and be continuing, each Lender and each Issuing Bank is hereby authorized at any time and from time to time, 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 and other indebtedness at any time owing by such Lender or such Issuing Bank to or for the credit or the account of Holdings (prior to a Qualified IPO), the Borrowers or any Subsidiary against any of and all the obligations of Holdings (prior to a Qualified IPO) or the Borrowers now or hereafter existing under this Agreement or any other Loan Document held by such Lender or such Issuing Bank, irrespective of whether or not such Lender or such Issuing Bank shall have made any demand under this Agreement or such other Loan Document and although the obligations may be unmatured. The rights of each Lender and each Issuing Bank under this Section 9.06 are in addition to other rights and remedies (including other rights of set-off) that such Lender or such Issuing Bank may have.
SECTION 9.07. Applicable Law . THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN LETTERS OF CREDIT AND AS EXPRESSLY SET FORTH IN OTHER LOAN DOCUMENTS) SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 9.08. Waivers ; Amendment . (a) No failure or delay of the Administrative Agent, any Issuing Bank or any Lender in exercising any right or power hereunder or under any Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to
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enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent, each Issuing Bank and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or any other Loan Document or consent to any departure by Holdings, the Borrowers or any other Loan Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) below, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice or demand on Holdings, the Borrowers or any other Loan Party in any case shall entitle such person to any other or further notice or demand in similar or other circumstances.
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provided , further , that no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent or an Issuing Bank hereunder without the prior written consent of the Administrative Agent or such Issuing Bank acting as such at the effective date of such agreement, as applicable. Each Lender shall be bound by any waiver, amendment or modification authorized by this Section 9.08 and any consent by any Lender pursuant to this Section 9.08 shall bind any Assignee of such Lender.
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SECTION 9.09. Interest Rate Limitation . Notwithstanding anything herein to the contrary, if at any time the applicable interest rate, together with all fees and charges that are treated as interest under applicable law (collectively, the “ Charges ”), as provided for herein or in any other document executed in connection herewith, or otherwise contracted for, charged, received, taken or reserved by any Lender or any Issuing Bank, shall exceed the maximum lawful rate (the “ Maximum Rate ”) that may be contracted for, charged, taken, received or reserved by such Lender in accordance with applicable law, the rate of interest payable hereunder, together with all Charges payable to such Lender or such Issuing Bank, shall be limited to the Maximum Rate; provided, that such excess amount shall be paid to such Lender or such Issuing Bank on subsequent payment dates to the extent not exceeding the legal limitation.
SECTION 9.10. No Liability of the Issuing Bank . The Borrowers assume all risks of the acts or omissions of any beneficiary or transferee of any Letter of Credit with respect to its use of such Letter of Credit. Neither any Issuing Bank nor any of its officers or directors shall be liable or responsible for: (a) the use that may be made of any Letter of Credit or any acts or omissions of any beneficiary or transferee in connection therewith; (b) the validity, sufficiency or genuineness of documents, or of any endorsement thereon, even if such documents should prove to be in any or all respects invalid, insufficient, fraudulent or forged; (c) payment by such Issuing Bank against presentation of documents that do not comply with the terms of a Letter of Credit, including failure of any documents to bear any reference or adequate reference to the Letter of Credit; or (d) any other circumstances whatsoever in making or failing to make payment under any Letter of Credit, except that the Borrowers shall have a claim against such Issuing Bank, and such Issuing Bank shall be liable to the Borrowers, to the extent of any direct, but not consequential, damages suffered by the Borrowers that the Borrowers prove were caused by (i) such Issuing Bank’s willful misconduct or gross negligence as determined in a final, non-appealable judgment by a court of competent jurisdiction in determining whether documents presented under any Letter of Credit comply with the terms of the Letter of Credit or (ii) such Issuing Bank’s willful failure to make lawful payment under a Letter of Credit after the presentation to it of a draft and certificates strictly complying with the terms and conditions of the Letter of Credit. In furtherance and not in limitation of the foregoing, such Issuing Bank 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.
SECTION 9.11. Entire Agreement . This Agreement, the other Loan Documents and the agreements regarding certain Fees referred to herein constitute the entire contract between the parties relative to the subject matter hereof. Any previous agreement among or representations from the parties or their Affiliates with respect to the subject matter hereof is
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superseded by this Agreement and the other Loan Documents. Notwithstanding the foregoing, the Fee Letter shall survive the execution and delivery of this Agreement and remain in full force and effect. Nothing in this Agreement or in the other Loan Documents, expressed or implied, is intended to confer upon any party other than the parties hereto and thereto any rights, remedies, obligations or liabilities under or by reason of this Agreement or the other Loan Documents.
SECTION 9.12. WAIVER OF JURY TRIAL . EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.12.
SECTION 9.13. Severability . In the event any one or more of the provisions contained in this Agreement or in any other Loan Document should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby. The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.
SECTION 9.14. Counterparts . This Agreement may be executed in two or more counterparts, each of which shall constitute an original but all of which, when taken together, shall constitute but one contract, and shall become effective as provided in Section 9.03. Delivery of an executed counterpart to this Agreement by facsimile transmission (or other electronic transmission pursuant to procedures approved by the Administrative Agent) shall be as effective as delivery of a manually signed original.
SECTION 9.15. Headings . Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.
SECTION 9.16. Jurisdiction ; Consent to Service of Process . (a) Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or federal court of the United States of America sitting in New York City, and any appellate court from any thereof (collectively, “New York Courts”), in any action or proceeding arising out of or relating to this Agreement or the other Loan Documents, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent
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permitted by law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Agreement or any of the other Loan Documents in the courts of any jurisdiction, except that each of the Loan Parties agrees that (a) it will not bring any such action or proceeding in any court other than New York Courts (it being acknowledged and agreed by the parties hereto that any other forum would be inconvenient and inappropriate in view of the fact that more of the Lenders who would be affected by any such action or proceeding have contacts with the State of New York than any other jurisdiction), and (b) in any such action or proceeding brought against any Loan Party in any other court, it will not assert any cross-claim, counterclaim or setoff, or seek any other affirmative relief, except to the extent that the failure to assert the same will preclude such Loan Party from asserting or seeking the same in the New York Courts.
SECTION 9.17. Confidentiality . Each of the Lenders, each Issuing Bank and each of the Agents agrees that it shall maintain in confidence any information relating to Holdings, the Borrowers and any Subsidiary furnished to it by or on behalf of Holdings, the Borrowers or any Subsidiary (other than information that (a) has become generally available to the public other than as a result of a disclosure by such party, (b) has been independently developed by such Lender, such Issuing Bank or such Agent without violating this Section 9.17 or (c) was available to such Lender, such Issuing Bank or such Agent from a third party having, to such person’s knowledge, no obligations of confidentiality to Holdings, the Borrowers or any other Loan Party) and shall not reveal the same other than to its directors, trustees, officers, employees and advisors with a need to know or to any person that approves or administers the Loans on behalf of such Lender (so long as each such person shall have been instructed to keep the same confidential in accordance with this Section 9.17), except: (A) to the extent necessary to comply with law or any legal process or the requirements of any Governmental Authority, the National Association of Insurance Commissioners or of any securities exchange on which securities of the disclosing party or any Affiliate of the disclosing party are listed or traded, (B) as part of normal reporting or review procedures to, or examinations by, Governmental Authorities or self-regulatory authorities, including the National Association of Insurance Commissioners or the National Association of Securities Dealers, Inc., (C) to its parent companies, Affiliates or auditors (so long as each such person shall have been instructed to keep the same confidential in accordance with this Section 9.17), (D) in order to enforce its rights under any Loan Document in a legal proceeding, (E) to any pledge under Section 9.04(d) or any other prospective assignee of, or prospective Participant in, any of its rights under this Agreement (so long as such person shall have been instructed to keep the same confidential in accordance with this Section 9.17) and (F) to any direct or indirect contractual counterparty in Swap Agreements or such contractual counterparty’s professional advisor (so long as such
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contractual counterparty or professional advisor to such contractual counterparty agrees to be bound by the provisions of this Section 9.17).
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SECTION 9.20. Judgment Currency . If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due hereunder or any other Loan Document in one currency into another currency, the rate of exchange used shall be that at which in accordance with normal banking procedures the Administrative Agent 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 Borrowers in respect of any such sum due from it to the Administrative Agent or the Lenders hereunder or under the other Loan Documents shall, notwithstanding any judgment in a currency (the “ Judgment Currency ”) other than that in which such sum is denominated in accordance with the applicable provisions of this Agreement (the “Agreement Currency”), be discharged only to the extent that on the Business Day following receipt by the Administrative Agent of any sum adjudged to be so due in the Judgment Currency, the Administrative Agent 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 Administrative Agent from the Borrowers in the Agreement Currency, the Borrowers agree, as a separate obligation and notwithstanding any such judgment, to indemnify the Administrative Agent or the person 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 Administrative Agent in such currency, the Administrative Agent agrees to return the amount of any excess to the Borrowers (or to any other person who may be entitled thereto under applicable law).
SECTION 9.21. USA PATRIOT Act Notice . Each Lender that is subject to the Act (as hereinafter defined) and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrowers that pursuant to the requirements of the USA PATRIOT Act, it is required to obtain, verify and record information that identifies each Loan Party, which information includes the name and address of each Loan Party and other information that will allow such Lender or the Administrative Agent, as applicable, to identify each Loan Party in accordance with the USA PATRIOT Act.
[Signature Pages Follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first written above.
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CHASE MERGER SUB, INC. |
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By: |
/s/ Michael Weiner |
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Name: |
Michael Weiner |
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Title: |
President |
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CHASE ACQUISITION I, INC. |
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By: |
/s/ Michael Weiner |
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Name: |
Michael Weiner |
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Title: |
President |
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REXNORD CORPORATION |
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By: |
/s/ Thomas Jansen |
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Name: |
Thomas Jansen |
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Title: |
Executive Vice President and Chief Financial Officer |
S-1
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MERRILL LYNCH CAPITAL CORPORATION , |
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as Administrative Agent and as a Lender |
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By: |
/s/ Justin Sendak |
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Name: |
Justin Sendak |
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Title: |
Managing Director |
S-2
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CREDIT SUISSE SECURITIES (USA) LLC , |
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as Syndication Agent and as a Lender |
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By: |
/s/ Richard B. Carey |
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Name: |
Richard B. Carey |
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Title: |
Managing Director |
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By: |
/s/ Edward Neuburg |
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Name: |
Edward Neuburg |
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Title: |
Director |
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BEAR, STEARNS & CO. INC. , |
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as Co-Documentation Agent |
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By: |
/s/ Keith C. Barnish |
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Name: |
Keith C. Barnish |
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Title: |
Senior Managing Director |
S-4
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LEHMAN BROTHERS INC. , |
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as Co-Documentation Agent |
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By: |
/s/ Stephen Mehos |
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Name: |
Stephen Mehos |
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Title: |
Managing Director |
S-5
Schedule 9.04
Processing and Recordation Fees
The Administrative Agent will charge a processing and recordation fee (an “Assignment Fee”) in the amount of $2,500 for each assignment; provided , however, that in the event of two or more concurrent assignments to members of the same Assignee Group (which may be effected by a suballocation of an assigned amount among member of such Assignee Group) or two or more concurrent assignments by members of the same Assignee Group to a single Assignee permitted hereunder (or to an Assignee permitted hereunder and members of its Assignee Group), the Assignment Fee will be $2,500 plus the amount set forth below:
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Transaction |
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Assignment Fee |
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First four concurrent assignments or suballocations to members of an Assignee Group (or from members of an Assignee Group, as applicable) |
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-0- |
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Each additional concurrent assignment or suballocation to a member of such Assignee Group (or from a member of such Assignee Group, as applicable) |
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$ |
500 |
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Notwithstanding the foregoing, the Administrative Agent may in its sole discretion elect to waive such processing and recordation fee in connection with any assignment.
Exhibit 10.2
Employment Agreement
This Employment Agreement (the “Agreement” or this “Agreement”), entered into as of this 21 st day of July 2006, by and between Rexnord Corporation, a Delaware corporation (together with any successor thereto, the “Company”), and Robert A. Hitt (the “Executive”), shall be effective immediately following, and subject to, the Closing (within the meaning of the Merger Agreement, as defined below) (the date of such Closing, the “Effective Date”).
RECITALS
A. It is the desire of the Company to assure itself of the services of the Executive by engaging the Executive to perform services under the terms hereof.
B. The Executive desires to provide services to the Company on the terms herein provided.
C. RBS Global, Inc., a Delaware corporation and parent company of the Company, Chase Acquisition I, Inc., Chase Merger Sub, Inc. (“Merger Sub”), and TC Group, L.L.C. entered into an Agreement and Plan of Merger dated as of May 24, 2006 (the “Merger Agreement”), pursuant to which Merger Sub shall merge with and into the Company (the “Merger”) and continue its existence as a wholly-owned subsidiary of Rexnord Holdings, Inc., a Delaware corporation (“Parent,” and together with its subsidiaries, “Rexnord”)).
D. The Executive’s agreement to enter into this Agreement and to be bound by the terms hereof was a material factor in the decision of Chase Acquisition I, Inc. to enter into the Merger Agreement and constitutes partial consideration for the payments and commitments made or to be made by Chase Acquisition I, Inc. and its affiliates in connection with the Merger.
E. In connection with the consummation of the Merger, the Executive and the Company wish to enter into this new employment agreement and to supersede (i) the employment agreement dated as of as of November 25, 2002, by and between the Company and the Executive (the “Prior Agreement”) and (ii) the change of control retention agreement dated as of March 22, 2006 by and between the Company and the Executive (the “CIC Agreement”).
F. This Agreement shall be effective immediately following the Closing on the Effective Date; provided that, in the event the Merger Agreement shall terminate and the Closing shall not occur, this Agreement shall be of no further force or effect and the Prior Agreement and the CIC Agreement shall remain in effect.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and of the respective covenants and agreements set forth below and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
1. Certain Definitions .
(a) “Agreement” shall have the meaning set forth in the preamble hereto.
(b) “Annual Base Salary” shall have the meaning set forth in Section 3(a) .
(c) “Board” shall mean the Board of Directors of the Company.
(d) The Company shall have “Cause” to terminate the Executive’s employment hereunder upon:
(i) the Board’s determination that the Executive failed to carry out, or comply with, in any material respect, any lawful and reasonable directive of the Board consistent with the terms of this Agreement, which (if capable of cure) is not remedied within 30 days after receipt of written notice from the Company specifying such failure;
(ii) the Executive’s conviction, plea of no contest, plea of nolo contendere , or imposition of unadjudicated probation for any felony;
(iii) the Executive’s unlawful use (including being under the influence) or possession of illegal drugs;
(iv) the Executive’s commission of an act of fraud, embezzlement, misappropriation, willful misconduct, or breach of fiduciary duty against the Company; or
(v) the Executive’s material breach of that certain Stockholders’ Agreement, dated as of July 21, 2006, by and among Parent, Rexnord Acquisition Holdings I, LLC, a Delaware limited liability company, Rexnord Acquisition Holdings II, LLC, a Delaware limited liability company, the Executive and the other stockholders of Parent party thereto, as the same may be amended from time to time (the “Stockholders’ Agreement”).
(e) “Change in Control” means:
(i) Approval by stockholders of the Company (or, if no stockholder approval is required, by the Board alone) of the complete dissolution or liquidation of the Company, other than in the context of a Business Combination (as defined below) that does not constitute a Change in Control under paragraph (iii) below;
(ii) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election
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of directors (the “Outstanding Company Voting Securities”); provided, however, that, for purposes of this paragraph (ii), the following acquisitions shall not constitute a Change in Control; (A) any acquisition directly from the Company or any of its Subsidiaries (as defined below), (B) any acquisition by the Company or any of its Subsidiaries, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its affiliates or a successor, (D) any acquisition by any entity pursuant to a Business Combination, (E) any acquisition by a Person who is the beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of the Outstanding Company Voting Securities on the Effective Date (or an affiliate, heir or descendant of such Person) or (F) any acquisition by Apollo Management VI, L.P., a Delaware limited partnership, or one of its affiliated investment funds; or
(iii) Consummation of a reorganization, merger, statutory share exchange or consolidation or similar corporate transaction involving the Company or any corporation or other entity a majority of whose outstanding voting stock or voting power is beneficially owned directly or indirectly by the Company (a “Subsidiary”), a sale or other disposition of all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole, or the acquisition of assets or stock of another entity by the Company or any of its Subsidiaries (each, a “Business Combination”), in each case unless, following such Business Combination, (1) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity that, as a result of such transaction, owns the Company or all or substantially all of the Company’s assets directly or through one or more subsidiaries (a “Parent”)), and (2) no Person (excluding any individual or entity described in clauses (C), (E) or (F) of paragraph (ii) above) beneficially owns (within the meaning of Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, more than 50% of the combined voting power of the then-outstanding voting securities of such entity, except to the extent that the ownership in excess of 50% existed prior to the Business Combination;
provided, however, that an underwritten public offering of the securities of the Company or any of its Subsidiaries shall in no event constitute a Change in Control.
(f) “Company” shall have the meaning set forth in the preamble hereto.
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(g) “Compensation Committee” means the Compensation Committee of the Board or its successor or designee.
(h) “Date of Termination” shall mean (i) if the Executive’s employment is terminated by his death, the date of his death; (ii) if the Executive’s employment is terminated pursuant to Sections 4(a)(ii) - (vi) either the date indicated in the Notice of Termination or the date specified by the Company pursuant to Section 4(b) , whichever is earlier; (iii) if the Executive’s employment is terminated pursuant to Section 4(a)(vii) or Section 4(a)(viii) , the expiration of the then-applicable Term.
(i) “Disability” shall mean, at any time the Company or any of its affiliates sponsors a long-term disability plan for the Company’s employees, “disability” as defined in such long-term disability plan for the purpose of determining a participant’s eligibility for benefits; provided, however, if the long-term disability plan contains multiple definitions of disability, “Disability” shall refer to that definition of disability which, if the Executive qualified for such disability benefits, would provide coverage for the longest period of time. The determination of whether the Executive has a Disability shall be made by the person or persons required to make disability determinations under the long-term disability plan. At any time the Company does not sponsor a long-term disability plan for its employees, “Disability” shall mean the Executive’s inability to perform, with or without reasonable accommodation, the essential functions of his position hereunder for a total of three months during any six month period as a result of incapacity due to mental or physical illness as determined by a physician selected by the Company or its insurers and acceptable to the Executive or the Executive’s legal representative, such agreement as to acceptability not to be unreasonably withheld or delayed. Any refusal by the Executive to submit to a medial examination for the purpose of determining Disability shall be deemed to constitute conclusive evidence of the Executive’s Disability.
(j) “Effective Date” shall have the meaning set forth in the preamble hereto.
(k) “Executive “shall have the meaning set forth in the preamble hereto.
(l) (i) The Executive shall have “Good Reason” to resign his employment upon the occurrence of any of the following:
(A) failure of the Company to continue the Executive in the position of Chief Executive Officer and as a member of the Board with the Executive’s primary contact being the chairman of the Board; or
(B) a material diminution in the nature or scope of the Executive’s responsibilities, duties or authority;
(C) failure of the Company to make any material payment or provide any material benefit under this Agreement;
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(D) the Company’s material breach of this Agreement; or
(E) the Company’s material breach of the Stockholders’ Agreement.
(ii) The Executive may not resign his employment of Good Reason unless:
(A) the Executive provided the Company with at least 30 days prior written notice of his intent to resign for Good Reason; and
(B) the Company has not remedied the alleged violation(s) within the 30-day period.
(m) “Inventions” shall have the meaning set forth in Section 8 .
(n) “Notice of Termination” shall have the meaning set forth in Section 4(b) .
(o) “Severance Period” shall have the meaning set forth in Section 5(c)(i) .
(p) “Term” shall have the meaning set forth in Section 2(b) .
2. Employment
(a) The Company shall employ the Executive and the Executive shall enter the employ of the Company, for the period set forth in Section 2(b) , in the position set forth in Section 2(c) , and upon the other terms and conditions herein provided.
(b) The initial term of employment under this Agreement (the “Initial Term”) shall be for the period beginning on the Effective Date of this Agreement and ending on the fifth anniversary thereof, unless earlier terminated as provided in Section 4 . The employment term hereunder shall automatically be extended for successive one-year periods (collectively with the Initial Term, the “Term”) unless either party gives notice of non-extension to the other no later than 90 days prior to the expiration of the then-applicable Term.
(c) Position and Duties . During the Term, the Executive shall serve as the Chief Executive Officer of the Company with such customary responsibilities, duties and authority as may from time to time be assigned to the Executive by the Board. The Executive shall report to the Board with the Executive’s primary contact being the non-executive chairman of the Board. The Executive shall devote substantially all his working time and efforts to the business and affairs of Rexnord. The Executive agrees to observe and comply with Rexnord’s rules and policies as adopted by Rexnord from time to time. During the Term, it shall not be a violation of this Agreement for the Executive to (i) serve on industry trade, civic or charitable boards or committees; (ii) deliver lectures or fulfill speaking engagements; or (iii) manage personal investments, as long as such activities do not interfere with the performance of the Executive’s duties and responsibilities as an employee of the Company. During his employment and thereafter, the Executive agrees not to disparage in any material respect Rexnord or any of its
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products or practices, or any of its directors, officers, agents, representatives, stockholders or affiliates, either orally or in writing. The Company agrees that during the Executive’s employment and thereafter, neither Rexnord nor the Company, nor any officers of Rexnord or the Company, shall, directly or indirectly, issue or communicate any public statement, or statement likely to become public, that is disparaging of or damaging to the Executive. The provisions of the preceding sentence shall not be violated by truthful responses required by law or legal process.
(d) Investment . On the Effective Date, the Executive shall invest in Parent the investment amount described in the Executive’s binding term sheet with Chase Acquisition I, Inc. dated as of May 24, 2006 (the “Binding Term Sheet”), and set forth on the Confidential Annex hereto, which amount shall be invested by the rollover of vested options to purchase shares of common stock of the Company as contemplated by the Binding Term Sheet. Such contributions shall be evidenced by a stock option assumption agreement that shall be executed prior to or on the Effective Date.
3. Compensation and Related Matters .
(a) Annual Base Salary . During the Term, the Executive shall receive a base salary at a rate of $575,000 per annum, which shall be paid in accordance with the customary payroll practices of the Company, subject to increase as determined by the Compensation Committee (the “Annual Base Salary”). The Executive’s Annual Base Salary shall be reviewed by the Compensation Committee annually, beginning for the fiscal year that commences on April 1, 2007.
(b) Annual Bonus . For the fiscal year ending March 31, 2007, the Executive shall be eligible to receive a bonus as set forth in the Company’s Executive Bonus Plan as in effect immediately prior to the closing of the Merger if the Executive satisfies the performance targets and other criteria set forth therein. For the fiscal year beginning April 1, 2007 and fiscal years thereafter, the Executive shall be eligible to participate in an annual bonus plan to be established by the Company.
(c) Equity/Membership Arrangement . In addition to the options contemplated by Section 2(d) , on the Effective Date, the Executive shall be granted options to purchase 230,706 shares of Parent common stock at an exercise price of $47.50 per share. The grant of such stock options shall be governed by the terms of the stock option plan and stock option agreement attached hereto as Exhibit A and Exhibit B , respectively.
(d) Benefits . During the Term, the Executive shall be entitled to participate, at a minimum, in the same benefit programs as are applicable generally to other senior executives of the Company, with the value of the Executive’s benefits under such plans, in the aggregate, to be substantially comparable to those historically provided to the Executive under the Prior Agreement.
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(e) Vacation . During the Term, the Executive shall be entitled to vacation each calendar year in accordance with the Company’s policy. Any vacation shall be taken at the reasonable and mutual convenience of the Company and the Executive.
(f) Expenses . The Company shall reimburse the Executive for all reasonable travel and other business expenses incurred by him in the performance of his duties to the Company in accordance with the Company’s expense reimbursement policy.
(g) Key Person Insurance . At any time during the Term, the Company shall have the right to insure the life of the Executive for the Company’s sole benefit. The Company shall have the right to determine the amount of insurance and the type of policy. The Executive shall cooperate with the Company in obtaining such insurance by submitting to physical examinations, by supplying all information reasonably required by any insurance carrier, and by executing all necessary documents reasonably required by any insurance carrier. The Executive shall incur no financial obligation by executing any required document, and shall have no interest in any such policy.
4. Termination .
The Executive’s employment hereunder may be terminated by the Company or the Executive, as applicable, without any breach of this Agreement only under the following circumstances:
(a) Circumstances .
(i) Death . The Executive’s employment hereunder shall terminate upon his death.
(ii) Disability . If the Executive has incurred a Disability, the Company may give the Executive written notice of its intention to terminate the Executive’s employment. In that event, the Executive’s employment with the Company shall terminate effective on the 30 th day after receipt of such notice by the Executive, provided that within the 30 days after such receipt, the Executive shall not have returned to full-time performance of his duties.
(iii) Termination for Cause . The Company may terminate the Executive’s employment for Cause.
(iv) Termination without Cause . The Company may terminate the Executive’s employment without Cause.
(v) Resignation for Good Reason . The Executive may resign his employment for Good Reason.
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(vi) Resignation without Good Reason . The Executive may resign his employment without Good Reason.
(vii) Non-extension of Term by the Company . The Company may give notice of non-extension to the Executive pursuant to Section 2(b) .
(viii) Non-extension of Term by the Executive . The Executive may give notice of non-extension to the Company pursuant to Section 2(b) .
(b) Notice of Termination . Any termination of the Executive’s employment by the Company or by the Executive under this Section 4 (other than termination pursuant to paragraph (a)(i)) shall be communicated by a written notice to the other party hereto indicating the specific termination provision in this Agreement relied upon, setting forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated, and specifying a Date of Termination which, if submitted by the Executive, shall be at least 30 days following the date of such notice (a “Notice of Termination”); provided, however, that the Company may, in its sole discretion, accelerate the Date of Termination to any date following the Company’s receipt of the Notice of Termination. Subject to the provisions of Section 4(a)(ii), a Notice of Termination submitted by the Company may provide for a Date of Termination on the date the Executive receives the Notice of Termination, or any date thereafter elected by the Company in its sole discretion. The failure by the Executive or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Cause or Good Reason shall not waive any right of the Executive or the Company hereunder or preclude the Executive or the Company from asserting such fact or circumstance in enforcing the Executive’s or the Company’s rights hereunder.
(c) Company Obligations upon Termination . Upon termination of the Executive’s employment, the Executive (or the Executive’s estate) shall be entitled to receive the sum of the Executive’s Annual Base Salary through the Date of Termination not theretofore paid, any expenses owed to the Executive under Section 3(f) , any accrued vacation pay owed to the Executive pursuant to Section 3(e) , and any amounts earned and vested or otherwise payable under any employee benefit plans, programs or arrangements under Section 3(d) , which amounts shall be payable in accordance with the terms and conditions of such employee benefit plans, programs or arrangements.
5. Severance Payments .
(a) Termination upon Death . If the Executive’s employment shall terminate as a result of the Executive’s death pursuant to Section 4(a)(i) , the Company shall pay to the Executive’s estate a prorated amount of the Executive’s annual bonus based on the Company’s year-to-date performance through the Date of Termination in relation to the performance targets and other criteria set forth in the annual bonus
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plan as then in effect (such amount to be determined in good faith by the Compensation Committee).
(b) Termination upon Disability . If the Executive’s employment shall terminate as a result of the Executive’s Disability pursuant to Section 4(a)(ii) , the Company shall pay to the Executive, subject to the Executive’s (or his representative’s) execution and non-revocation of a general release of claims against Rexnord and its stockholders and affiliates on customary terms and conditions:
(i) in accordance with the Company’s regular payroll practice following the Date of Termination, an amount equal to the Annual Base Salary that the Executive would have been entitled to receive if the Executive had continued his employment for a period of six months following the Date of Termination; and
(ii) a prorated amount of the Executive’s annual bonus based on the Company’s year-end performance in relation to the performance targets and other criteria set forth in the applicable annual bonus plan as then in effect, which amount will be paid at the end of the bonus period when the year-end performance of the Company has been determined and bonuses are paid to other executives (such amount to be determined in good faith by the Compensation Committee).
(c) Termination without Cause or resignation for Good Reason . If the Executive’s employment shall terminate without Cause pursuant to Section 4(a)(iv) or for Good Reason pursuant to Section 4(a)(v) , the Company shall, subject to the Executive’s execution and non-revocation of a general release of claims against Rexnord and its stockholders and affiliates on customary terms and conditions:
(i) pay to the Executive, in accordance with the Company’s regular payroll practice following the Date of Termination, an amount equal to the Annual Base Salary that the Executive would have been entitled to receive if the Executive had continued his employment hereunder for a period of 18 months following the Date of Termination (the “Severance Period”); and
(ii) subject to Section 5(e) , continue to provide during the Severance Period, to the extent provided to the Executive as of the Date of Termination, coverage for the Executive and any dependents under all Company group health benefit plans (including health, dental and vision coverage) in which the Executive and any dependents were entitled to participate immediately prior to the Date of Termination, to the extent permitted thereunder;
provided that, in the event that the Executive’s termination of employment by the Company without Cause or by the Executive for Good Reason occurs within 18 months after a Change in Control, the Executive also will be entitled to receive the following:
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(iii) the bonus the Executive would have received if the Executive remained employed with the Company through the end of the bonus performance period in which the Date of Termination occurs, which bonus, to the extent bonuses are paid by the Company for such performance period, shall be based on the Company’s performance in relation to the performance targets set forth in the bonus plan applicable to the Executive (such amount to be determined in good faith by the Compensation Committee), which shall be paid at the end of such bonus performance period when the year-end performance of the Company has been determined and bonuses otherwise would be payable to executives in the ordinary course; and
(iv) payments equal to eighteen (18) months of the premium cost for life insurance coverage (excluding supplemental life insurance coverage) under the Company’s life insurance plan in effect for the Executive immediately prior to the date of termination, payable over the Severance Period at regular intervals in accordance with the Company’s customary payroll procedures.
(d) Survival . The expiration or termination of the Term shall not impair the rights or obligations of any party hereto, which shall have accrued prior to such expiration or termination.
(e) Mitigation of Damages . In the event of any termination of the Executive’s employment by the Company other than for retirement or upon death or Disability, the Executive shall be required to seek other employment to mitigate damages, and any employee benefits received by the Executive from other full-time employment or self-employment shall be offset against any obligation of the Company to provide benefits to the Executive pursuant to this Section 5.
(f) Other Employment Terminations . The Executive shall not be entitled to any payments or benefits under this Section 5 in the event of a termination of the Executive’s employment described in Section 4(a)(iii) , 4(a)(vi) , 4(a)(vii) or 4(a)(viii) .
6. Competition .
(a) The Executive shall not, at any time during the Term of this Agreement and for 24 months following the Date of Termination, directly or indirectly engage in, have any equity interest in, or manage or operate any person, firm, corporation, partnership or business (whether as director, officer, employee, agent, representative, partner, security holder, consultant or otherwise) that engages in any business which competes with any business of the Company or any entity owned by the Company anywhere in the world; provided, however, that the Executive shall be permitted to acquire a passive stock or equity interest in such a business provided the stock or other equity interest acquired is not more than five percent (5%) of the outstanding interest in such business.
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(b) During the Term of this Agreement and for 24 months following the Date of Termination, the Executive will not, and will not permit any of his affiliates to, directly or indirectly, (i) recruit or otherwise solicit or induce (or attempt to recruit or otherwise solicit or induce) any employee of Rexnord to leave the employ of Rexnord, or in any way interfere with the relationship between Rexnord, on the one hand, and any employee thereof, on the other hand, (ii) hire any person or entity who is or any time was an employee of Rexnord until six (6) months after such individual’s employment relationship with Rexnord has ended, or (iii) induce or attempt to induce any customer, supplier, licensee or other business relation of Rexnord to cease doing business with Rexnord, or in any way interfere with the relationship between any such customer, supplier, licensee or business relation, on the one hand, and Rexnord, on the other hand.
(c) In the event terms of this Section 6 shall be determined by any court of competent jurisdiction to be unenforceable by reason of its extending for too great a period of time or over too great a geographical area or by reason of its being too extensive in any other respect, it will be interpreted to extend only over the maximum period of time for which it may be enforceable, over the maximum geographical area as to which it may be enforceable, or to the maximum extent in all other respects as to which it may be enforceable, all as determined by such court in such action.
7. Nondisclosure of Proprietary Information .
(a) Except as required in the faithful performance of the Executive’s duties hereunder or pursuant to Section 7(c) , the Executive shall, in perpetuity, maintain in confidence and shall not directly, indirectly or otherwise, use, disseminate, disclose or publish, or use for his benefit or the benefit of any person, firm, corporation or other entity any confidential or proprietary information or trade secrets of or relating to Rexnord, including, without limitation, information with respect to Rexnord’s operations, processes, products, inventions, business practices, finances, principals, vendors, suppliers, customers, potential customers, marketing methods, costs, prices, contractual relationships, regulatory status, compensation paid to employees or other terms of employment, or deliver to any person, firm, corporation or other entity any document, record, notebook, computer program or similar repository of or containing any such confidential or proprietary information or trade secrets. The parties hereby stipulate and agree that as between them the foregoing matters are important, material and confidential proprietary information and trade secrets and affect the successful conduct of the businesses of Rexnord (and any successor or assignee of Rexnord).
(b) Upon termination of the Executive’s employment with the Company for any reason, the Executive will promptly deliver to the Company all correspondence, drawings, manuals, letters, notes, notebooks, reports, programs, plans, proposals, financial documents, or any other documents concerning Rexnord’s customers, business plans, marketing strategies, products or processes.
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(c) The Executive may respond to a lawful and valid subpoena or other legal process but shall give the Company the earliest possible notice thereof, shall, as much in advance of the return date as possible, make available to the Company and its counsel the documents and other information sought and shall assist such counsel in resisting or otherwise responding to such process.
8. Inventions .
All rights to discoveries, inventions, improvements and innovations (including all data and records pertaining thereto) related to the business of Rexnord, whether or not patentable, copyrightable, registrable as a trademark, or reduced to writing, that the Executive may discover, invent or originate during the Term, and for a period of 12 months thereafter, either alone or with others and whether or not during working hours or by the use of the facilities of the Company (“Inventions”), shall be the exclusive property of Rexnord. The Executive shall promptly disclose all Inventions to the Company, shall execute at the request of the Company any assignments or other documents the Company may deem necessary to protect or perfect its rights therein, and shall assist the Company, at the Company’s expense, in obtaining, defending and enforcing the Company’s rights therein. The Executive hereby appoints the Company as his attorney-in-fact to execute on his behalf any assignments or other documents deemed necessary by the Company to protect or perfect Rexnord’s rights to any Inventions.
9. Injunctive Relief .
It is recognized and acknowledged by the Executive that a breach of the covenants contained in Section 6, 7 or 8 will cause irreparable damage to Rexnord and its goodwill, the exact amount of which will be difficult or impossible to ascertain, and that the remedies at law for any such breach will be inadequate. Accordingly, the Executive agrees that, in the event of a breach of any of the covenants contained in Section 6, 7 or 8 , in addition to any other remedy which may be available at law or in equity, the Company will be entitled to specific performance and injunctive relief.
10. Assignment and Successors .
The Company may assign its rights and obligations under this Agreement to any entity, including any successor to all or substantially all the assets of the Company, by merger or otherwise, and may assign or encumber this Agreement and its rights hereunder as security for indebtedness of the Company and its affiliates. The Executive may not assign his rights or obligations under this Agreement to any individual or entity. This Agreement shall be binding upon and inure to the benefit of the Company, the Executive and their respective successors, assigns, personnel and legal representatives, executors, administrators, heirs, distributes, devisees, and legatees, as applicable.
11. Governing Law .
This Agreement shall be governed by and construed in accordance with the domestic laws of the state of New York without regard to the conflicts of laws provisions or principles thereof that would cause the application of the laws of any jurisdiction other than the state of New York.
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12. Validity .
The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.
13. Notices .
All notices, requests, consents and other communications hereunder to any party hereto shall be deemed to be sufficient if contained in a written instrument and shall be deemed to have been duly given when delivered in person, by telecopy, by nationally-recognized overnight courier, or by first class registered or certified mail, postage prepaid, addressed to such party at the address set forth below or such other address as may hereafter be designated in writing by the addressee to the addressor:
(i) if to the Company, to:
Rexnord Corporation
4701 Greenfield Avenue
Milwaukee, WI 53214
Attention: Patty Whaley
with copies to:
Rexnord Holdings, Inc.
c/o Apollo Management, L.P.
10250 Constellation Blvd, Suite 2900
Los Angeles, CA 90067
Fax: (310) 843-1933
Attention: Larry Berg
and
Rexnord Corporation
c/o Apollo Management, L.P.
9 West 57th Street, 43rd Floor
New York, NY 10019
Fax: (212) 515-3288
Attention: Steven Martinez
and
O’Melveny & Myers LLP
Times Square Tower
7 Times Square
New York, New York 10036
Fax: (212) 326-2061
Attention: John M. Scott, Esq.
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(ii) if to the Executive, to the Executive’s home address on file with the Company.
14. Counterparts .
This Agreement may be executed in several counterparts, including via facsimile transmission, each of which shall be deemed to be an original, but all of which together will constitute one and the same Agreement.
15. Entire Agreement .
The terms of this Agreement and the other agreements and instruments contemplated hereby or referred to herein (collectively the “Related Agreements”) are intended by the parties to be the final expression of their agreement with respect to the employment of the Executive by the Company and may not be contradicted by evidence of any prior or contemporaneous agreement or understanding (all of which are superseded hereby), including, without limitation, the Prior Agreement, the CIC Agreement and the Binding Term Sheet. The parties further intend that this Agreement and the Related Agreements shall constitute the complete and exclusive statement of their terms and that no extrinsic evidence whatsoever may be introduced in any judicial, administrative, or other legal proceeding to vary the terms of this Agreement and the Related Agreements.
16. No Conflicts .
The Executive hereby represents and warrants that he is not a party to any agreement or understanding, or subject to any court order, judgment, law or regulation that would interfere with his ability to enter into this Agreement or perform the services contemplated hereby.
17. Amendments; Waivers .
This Agreement may not be modified, amended, or terminated except by an instrument in writing, signed by the Executive and a duly authorized officer of Company. By an instrument in writing similarly executed, the Executive or a duly authorized officer of the Company may waive compliance by the other party or parties with any provision of this Agreement that such other party was or is obligated to comply with or perform; provided, however, that such waiver shall not operate as a waiver of, or estoppel with respect to, any other or subsequent failure. No failure to exercise and no delay in exercising any right, remedy, or power hereunder preclude any other or further exercise of any other right, remedy, or power provided herein or by law or in equity.
18. No Inconsistent Actions .
The parties hereto shall not voluntarily undertake or fail to undertake any action or course of action inconsistent with the provisions or essential intent of this Agreement. Furthermore, it is the intent of the parties hereto to act in a fair and reasonable manner with respect to the interpretation and application of the provisions of this Agreement.
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19. Construction .
This Agreement shall be deemed drafted equally by both the parties. Its language shall be construed as a whole and according to its fair meaning. Any presumption or principle that the language is to be construed against any party shall not apply. The headings in this Agreement are only for convenience and are not intended to affect construction or interpretation. Any references to paragraphs, subparagraphs, sections or subsections are to those parts of this Agreement, unless the context clearly indicates to the contrary.
20. Arbitration; Waiver of Jury Trial .
Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted before an arbitrator in New York, New York in accordance with the applicable rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitration award in any court having jurisdiction, provided , however , that the Company shall be entitled to seek a restraining order or injunction in any court of competent jurisdiction to prevent any continuation of any violation of the provisions of Sections 6, 7 or 8 of the Agreement and the Executive hereby consents that such restraining order or injunction may be granted without requiring the Company to post a bond. Only individuals who are (i) lawyers engaged fulltime in the practice of law; and (ii) on the AAA register of arbitrators shall be selected as an arbitrator. Within 20 days of the conclusion of the arbitration hearing, the arbitrator shall prepare written findings of fact and conclusions of law. It is mutually agreed that the written decision of the arbitrator shall be valid, binding, final and non-appealable, provided , however , that the parties hereto agree that the arbitrator shall not be empowered to award punitive damages against any party to such arbitration. The arbitrator’s fees and expenses will be borne equally by each party. In the event that an action is brought to enforce the provisions of this Agreement pursuant to this Section 20 , each party shall pay its own attorney’s fees and expenses regardless of whether in the opinion of the court or arbitrator deciding such action there is a prevailing party. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL, INCLUDING TRIAL BY JURY, IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.
21. Enforcement .
If any provisions of this Agreement is held to be illegal, invalid or unenforceable under present or future laws effective during the term of this Agreement, such provision shall be fully severable; this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a portion of this Agreement; and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of such illegal, invalid or unenforceable provision there shall be added automatically as part of this Agreement a provision as similar as possible in terms that are legal, valid and enforceable.
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22. Withholding .
The Company shall be entitled to withhold from any amounts payable under this Agreement any federal, state, local or foreign withholding or other taxes or charges which the Company is required to withhold. The Company shall be entitled to rely on an opinion of counsel if any questions as to the amount or requirement of withholding shall arise.
23. Employee Acknowledgement .
The Executive acknowledges that he has read and understands this Agreement, is fully aware of its legal effect, has not acted in reliance upon any representations or promises made by the Company other than those contained in writing herein, and has entered into this Agreement freely based on his own judgment.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year first written above.
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Exhibit 10.3
MANAGEMENT CONSULTING AGREEMENT
THIS MANAGEMENT CONSULTING AGREEMENT (this “Agreement”) is entered into as of this 21 st day of July 2006, by and among Rexnord Corporation, a Delaware corporation (the “Company”), George M. Sherman (“GMS”), Cypress Group, LLC, a Maryland limited liability company (“Cypress”), and Cypress Industrial Holdings, LLC, a Maryland limited liability company (“Cypress Industrial”), effective as of and subject to the Closing (within the meaning of the Merger Agreement, as defined below) (the date of such Closing, the “Effective Date”)
RECITALS
A. The Company desires to engage Cypress to assist the Company on the terms and conditions set forth herein.
B. The Company believes that it is in its best interest to engage Cypress on the terms and conditions set forth herein and for Cypress to arrange for GMS to provide the services contemplated by this Agreement.
C. The Company desires that GMS be the individual responsible for performing the duties on behalf of Cypress set forth in this Agreement.
D. The Company, Cypress, Cypress Industrial and GMS wish to enter into this new consulting agreement and supersede the existing management consulting agreement by and among the Company, GMS, Cypress, and Cypress Industrial, effective as of November 25, 2002 (the “Prior Agreement”). The parties agree that the Prior Agreement and any other prior consulting agreements between the Company and any of its subsidiaries or parent entities, on the one hand, and GMS, Cypress, or Cypress Industrial, on the other hand, shall be terminated and of no further force or effect as of the Effective Date, except for the consulting agreements being entered into and effective as of the Closing.
E. RBS Global, Inc., a Delaware corporation and parent company of the Company, Chase Acquisition I, Inc., Chase Merger Sub, Inc. (“Merger Sub”), and TC Group, L.L.C. entered into an Agreement and Plan of Merger dated as of May 24, 2006 (the “Merger Agreement”) pursuant to which Merger Sub shall merge with and into the Company (the “Merger”) and continue its existence as a wholly-owned subsidiary of Rexnord Holdings, Inc (“Parent,” and, together with its subsidiaries, “Rexnord”).
F. Cypress’, GMS’ and Cypress Industrial’s agreement to enter into this Agreement and to be bound by the terms hereof was a material factor in the decision of Chase Acquisition I, Inc. to enter into the Merger Agreement and constitutes partial consideration for the payments and commitments made or to be made by Chase Acquisition I, Inc. and its affiliates in connection therewith.
G. Cypress desires to be engaged, and GMS desires Cypress to be engaged, by the Company in the capacities and on the terms and conditions described herein.
AGREEMENT
For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:
1. Scope of Engagement . The Company agrees to engage Cypress, and Cypress hereby accepts such engagement, on the terms and conditions set forth herein effective as of the Effective Date, until this Agreement is terminated in accordance with Section 4 . GMS and Cypress agree that, unless otherwise agreed in writing by the Company, GMS shall provide all consulting services to be performed under this Agreement by Cypress (including the duties set forth in Section 2 ). GMS understands that the Company will classify Cypress and GMS as independent contractors for all purposes. Payments due to Cypress hereunder shall not be subject to withholding except as required by law.
2. Duties .
a. During the term of this Agreement, GMS agrees to serve as a director in the capacity of Non-Executive Chairman of the Board of Directors of the Company and the Board of Directors of Rexnord Holdings, Inc. (the “Boards”), a Delaware corporation (“Parent”).
b. GMS and Cypress acknowledge and agree that GMS and Cypress have a duty to act in the best interests of Rexnord. GMS and Cypress acknowledge and agree not to knowingly commit any act that would injure the business, interests or reputation of Rexnord or, to the best of GMS’ and Cypress’ knowledge, any of Rexnord’s subsidiaries or affiliates.
c. During the term of this Agreement, GMS shall (i) devote at least two days on average per month advising Rexnord with respect to management strategy; and (ii) attend at least four meetings of each Board per year.
d. On the Effective Date, GMS shall, or shall cause Cypress Industrial Holdings, LLC to, invest in Parent the investment amount described in Cypress’, GMS’ and Cypress Industrial’s binding term sheet with Chase Acquisition I, Inc. dated as of May 24, 2006 (the “Binding Term Sheet”), and set forth on the Confidential Annex hereto, which amount shall be invested in part by contribution of shares of common stock of RBS Global, Inc. and in part by the rollover of vested options to purchase shares of common stock of RBS Global, Inc. into vested options to purchase shares of common stock of Parent, as contemplated by the Binding Term Sheet. Such contributions shall be evidenced by a subscription agreement and a stock option assumption agreement that shall be executed prior to or on the Effective Date.
3. Compensation . As compensation for GMS’ services, GMS or Cypress (as applicable) shall receive the following amounts:
a. Subject to Section 5 , the Company shall pay Cypress a base consulting fee at a rate of $250,000 per year (“Base Consulting Fee”) on a monthly basis for causing GMS to perform the duties set forth in Section 2 .
b. The Company shall reimburse Cypress for all reasonable out-of-pocket expenses incurred by GMS during the term of this Agreement for travel, lodging, entertainment,
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and other reasonable out-of-pocket business expenses incurred in connection with performing the services hereunder. For purposes of clarity, such expenses shall not include amounts paid for maintenance of an office (including a home office) or secretarial support.
c. On the Effective Date, GMS shall be granted non-qualified stock options to purchase 576,765 shares of common stock (the “Common Stock”) of Parent, at a price of $47.50 per share. Such options shall be governed by the terms of the Non-Qualified Stock Option Agreement, a copy of which is attached hereto as Exhibit A.
4. Termination . This Agreement shall be terminable as follows:
a. automatically upon the death of GMS;
b. by either the Company, GMS or Cypress for any reason with 15 days’ prior written notice to the other party;
c. by the Company for “Cause.” The Company shall have “Cause” to terminate this Agreement upon:
(i) failure by GMS to carry out, or comply with, in any material respect, any lawful and reasonable directive of a Board consistent with the terms of this Agreement that, if capable of being cured, is not remedied within 30 days after receipt of written notice from the Company specifying such failure;
(ii) GMS’ conviction, plea of no contest, plea of nolo contendere, or imposition of unadjudicated probation for any felony;
(iii) GMS’ unlawful use (including being under the influence) or possession of illegal drugs;
(iv) GMS’ commission of an act of fraud, embezzlement, misappropriation, willful misconduct, or breach of fiduciary duty against Rexnord;
(v) GMS’, Cypress’ or Cypress Industrial’s material breach of this Agreement or that certain Stockholders Agreement entered into among Parent, Rexnord Acquisition Holdings I, LLC, Rexnord Acquisition Holdings II, LLC, GMS and Cypress Industrial (the “Cypress Stockholders Agreement”), pursuant to the terms thereof and such breach continues unremedied for 30 days after receipt by GMS of written notice; or
d. by GMS, Cypress or Cypress Industrial for “Good Reason.” GMS, Cypress or Cypress Industrial shall have Good Reason to terminate this Agreement upon:
(i) failure by the Company to continue GMS as non-executive Chairman of the Board of Directors of the Company or the Board
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of Directors of Parent (or if Parent does not own, directly or indirectly a majority of the capital stock of the Company, the Board of Directors of any entity that does);
(ii) material diminution in GMS’ responsibilities, duties or authority with the Company and such diminution continues unremedied for 30 days after receipt of written notice thereof;
(iii) the Company’s breach of this Agreement and such breach continues unremedied for a period of 30 days after the Company receives written notice of such breach; or
(iv) the Company’s material breach of the Cypress Stockholders Agreement and such breach continues unremedied for 30 days after receipt of written notice of such breach.
5. Effect of Termination . The sole liability of the Company and its affiliates under this Agreement upon termination of this Agreement shall be (a) to reimburse Cypress pursuant to Section 3b for reasonable expenses incurred by Cypress or GMS during the term of this Agreement; (b) to pay any earned Base Consulting Fee not theretofore paid pursuant to Section 3a (appropriately pro-rated to the date of termination); and (c) to comply with any other obligations under this Agreement which expressly survive termination of Cypress’ engagement, including, without limitation, the indemnification obligations set forth in Section 9 hereof.
6. Nondisclosure of Proprietary Information .
a. Except as required in the faithful performance of Cypress’ or GMS’ duties hereunder or pursuant to Section 6c below or as expressly authorized by the Company in writing, GMS, Cypress and Cypress Industrial shall, in perpetuity, maintain in confidence and shall not directly, indirectly or otherwise, use, disseminate, disclose or publish, or use for its or his benefit or the benefit of any person, firm, corporation or other entity any confidential and proprietary information or trade secrets of Rexnord, including, without limitation, information that is confidential and proprietary with respect to Rexnord’s business operations, processes, products, inventions, business practices, finances, principals, vendors, suppliers, customers, potential customers, marketing methods, costs, prices, contractual relationships, regulatory status, or deliver to any person, firm, corporation or other entity any document, record, notebook, computer program or similar repository of or containing any such confidential and proprietary information or trade secrets. The parties hereby stipulate and agree that between them the foregoing information is important and material and affects the successful conduct of the businesses of Rexnord (and any successors or assignees of Rexnord). Information that (i) is generally known by the public, other than as a result of GMS’, Cypress’ or Cypress Industrial’s acts or failure to act; (ii) is obtained by GMS, Cypress or Cypress Industrial from third persons not known to GMS, Cypress or Cypress Industrial to be under an agreement to maintain the confidentiality of the information received; or (iii) GMS, Cypress or Cypress Industrial is legally required to disclose, is not subject to the restrictions of this Section 6a .
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b. Upon termination of this Agreement for any reason, GMS, Cypress and Cypress Industrial will promptly deliver to the Company all correspondence, drawings, manuals, letters, notes, notebooks, reports, programs, plans, proposals, financial documents or any other documents concerning the customers, business plans, marketing strategies, products and/or processes of Rexnord.
c. GMS, Cypress, or Cypress Industrial may respond to a lawful and valid subpoena or other legal process but shall give the Company the earliest possible notice thereof, shall, as much in advance of the return date as possible, make available to the Company and its counsel the documents and other information sought and shall assist the Company and such counsel at the Company’s expense in lawfully resisting or otherwise responding to such process.
7. No Competition; No Disparagement .
a. Except as otherwise permitted herein, during the term of Cypress’ and GMS’ engagement hereunder and until the conclusion of the 24-month period following the cessation of Cypress’ and GMS’ services to Rexnord hereunder, none of GMS, Cypress or Cypress Industrial shall:
(i) without the prior written consent of the Company, which consent may be granted or withheld by the Company in its sole discretion, directly or indirectly engage in, consult, have any equity interest in, or manage or operate any person, firm, corporation, partnership or business (whether as director, officer, employee, agent, representative, partner, security holder, consultant or otherwise) that engages in any business which competes with any material business of Rexnord anywhere in the world (as conducted during the term of this engagement); provided, however, that (A) GMS, Cypress, and Cypress Industrial shall be permitted to acquire stock or membership interests in such an entity provided the entity is publicly traded and the acquired interest is not more than five percent (5%) of the outstanding shares or membership interests of the entity; and (B) GMS, Cypress, and Cypress Industrial shall be permitted to hold stock or membership interests in companies and businesses in which GMS, Cypress, Cypress Industrial or other entities affiliated with GMS hold stock or membership interests immediately prior to the Effective Date (including, without limitation, stock in Colfax, Inc. and related entities), or invested prior to the Effective Date; or
(ii) hire, solicit or accept, if offered, with or without solicitation, on GMS’, Cypress’, or Cypress Industrial’s behalf or on behalf of any other person, the services of any person who is (or was at any time in the preceding six months) an employee of Rexnord, nor solicit any of Rexnord’s employees to terminate employment with Rexnord (it being understood that the foregoing shall not apply to employees solicited or hired without GMS’ knowledge and shall
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not preclude Cypress, Cypress Industrial or other companies or businesses associated with GMS from soliciting employees generally though newspaper or other mass media advertising); or
(iii) induce or attempt to induce any customer, supplier, licensee or other business relation of Rexnord to cease doing business with Rexnord, or in any way interfere with the relationship between any such customer, supplier, licensee or business relation, on the one hand, and Rexnord, on the other hand.
b. During the term of GMS’ engagement and thereafter, none of GMS, Cypress or Cypress Industrial shall, directly or indirectly, issue or communicate any public statement, or statement likely to become public, that is disparaging of or damaging to Rexnord, any of its products or practices, or any of its officers, directors, employees, representatives or stockholders. During the term of GMS’ engagement hereunder and thereafter, neither Rexnord nor any officers of Rexnord shall, directly or indirectly, issue or communicate any public statement, or statement likely to become public, that is disparaging of or damaging to GMS, Cypress or Cypress Industrial. The foregoing shall not be violated by truthful responses required by law or legal process.
c. In the event the terms of this Section 7 shall be determined by any court of competent jurisdiction to be unenforceable because the provision extends for too great a period of time, over too great a geographical area, or for any other reason, the provision shall be interpreted to extend only over the maximum period of time for which it may be enforceable, and/or over the maximum geographical area as to which it may be enforceable and/or to the maximum extent in all other respects as to which it may be enforceable, all as determined by such court in such action.
8. Injunctive Relief, Survival
a. GMS, Cypress and Cypress Industrial recognize and acknowledge that a breach of the covenants contained in Section 6 and Section 7 will cause irreparable damage to Rexnord and its goodwill, the exact amount of which will be difficult or impossible to ascertain, and that the remedies at law for any breach will be inadequate. Accordingly, GMS, Cypress and Cypress Industrial agree that in the event of a breach of any of the covenants contained in Section 6 and Section 7 , in addition to any other remedy which may be available at law or in equity, the Company will be entitled to specific performance and injunctive relief. Parent and the Company recognize and acknowledge that a breach of the covenants in Section 7b will cause irreparable damage to GMS, Cypress and Cypress Industrial and the goodwill of Cypress and Cypress Industrial, the exact amount of which will be difficult or impossible to ascertain, and that the remedies at law for any breach will be inadequate. Accordingly, Parent and the Company agree that in the event of a breach of the covenants contained in Section 7b , in addition to any other remedy which may be available at law or in equity, GMS, Cypress and Cypress Industrial will be entitled to specific performance and injunctive relief.
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b. The rights and obligations of the parties arising under Section 6 and Section 7 of this Agreement shall survive, and will not be impaired by, the expiration of GMS’ engagement by the Company.
9. Indemnification . The Company agrees that during the term of this Agreement and following the time GMS’ and Cypress’ relationship with the Company is terminated, GMS, Cypress and Cypress Industrial shall be entitled to receive indemnification from time to time from the Company in accordance with the Company’s charter, bylaws and applicable law to the extent GMS, Cypress or Cypress Industrial (each such person, for purposes of this Section 9 , an “Indemnitee” and collectively the “Indemnitees”) becomes subject to suits, claims, actions, causes of action, proceedings or investigations or would otherwise be entitled to or could seek indemnification thereunder in respect of matters which involve actions GMS or Cypress have taken or omitted to take prior to the termination date of their relationship with the Company as an employee, officer, director, consultant or agent of or to the Company. The Company shall provide such indemnification to the fullest extent permitted by its charter, bylaws and applicable law. Without limiting the generality of and in addition to the foregoing, to the fullest extent permitted by its charter, bylaws and applicable laws, the Company shall defend, indemnify and hold the Indemnitees harmless for, from and against all demands, suits, claims, actions or causes of action, assessments, losses, damages, liabilities, costs, judgments, proceedings, investigations and expenses (including, without limitation, interest, penalties, reasonable attorneys’ fees and disbursements) (“Losses”), imposed on or incurred by the Indemnitees relating to GMS’ or Cypress’ relationship with the Company, including by reason of actions or omissions taken or made by GMS or Cypress during the term of this Agreement. The Company will also advance reasonable fees and expenses to the Indemnitees to the maximum extent permitted by law to the extent the Indemnitees become subject to or involved in any suit, claim, action, cause of action, proceeding or investigation involving the Company, provided that each such person agrees and undertakes to reimburse the Company for all expenses paid by the Company to such Indemnitee pursuant hereto in the event and only to the extent that it shall be finally determined by a court of competent jurisdiction that Indemnitee is not entitled, under the provisions of the Company’s charter, bylaws, this Agreement, applicable law, or otherwise, to be indemnified by the Company for such expenses, or if Indemnitee receives reimbursement of such expenses from any other source.
Promptly after receipt by any Indemnitee of notice of the commencement of any action, suit, or proceeding, such Indemnitee will, if a claim in respect thereof is to be made against the Company under this Agreement, notify the Company of the commencement thereof. The failure of such Indemnitee to notify the Company shall have no effect on the obligations of the Company hereunder except if, and only to the extent that, the Company suffers actual prejudice or material loss resulting from such failure. The Company will be entitled to participate in any such action, suit or proceeding at its own expense. Except as otherwise provided below, to the extent that it may wish, the Company shall be entitled to assume the defense thereof with counsel satisfactory to such Indemnitee. After notice from the Company to such Indemnitee of its election to assume the defense thereof, the Company will not be liable to such Indemnitee under the Agreement for any legal or other expenses subsequently incurred by such Indemnitee in connection with the defense thereof except as otherwise provided below. The Indemnitees shall have the right to employ counsel in such action, suit, or proceeding, but the fees and expenses of such counsel incurred after notice from the Company of its assumption of the defense thereof
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shall be at the expense of the Indemnitees (and not subject to indemnification or reimbursement hereunder) unless (a) the employment of counsel by the Indemnitees has been authorized by the Company, (b) the Indemnitees shall have reasonably concluded that there may be a conflict of interest between the Company and the Indemnitees in the conduct of the defense of such action, or (c) the Company shall not in fact have employed counsel to assume the defense of such action, in each of which cases the fees and expenses of one counsel acting on behalf of the Indemnitees shall be at the expense of the Company. The Company shall not be entitled to assume the defense of any action, suit, or proceeding brought by or on behalf of the Company. The Company shall not be liable to indemnify any Indemnitee under this Agreement for any amounts paid in settlement of any action or claim effected without the Company’s written consent. The Company shall not settle any such action or claim in any manner without such Indemnitee’s written consent. Neither the Company nor any Indemnitee will unreasonably withhold its or his consent to any proposed settlement. Notwithstanding anything to the contrary contained herein, the Company shall not indemnify any Indemnitee for any costs of defense incurred by, or any judgment rendered against, any Indemnitee as a result of any acts or omissions that constitute fraud, intentional misconduct, or gross negligence.
During the term of this Agreement and for a period of six (6) years following its termination, the Company shall maintain directors and officers liability insurance with the limits and retentions substantially similar to the insurance which is in effect as of immediately before the Effective Date and GMS shall be covered thereunder.
For purposes of this Section 9 , the term “Company” shall include Parent, the Company, and each of their subsidiaries.
10. Legal Fees . The Company agrees that it shall reimburse GMS, Cypress or Cypress Industrial for reasonable legal fees and expenses GMS, Cypress or Cypress Industrial collectively incurred in connection with the negotiation and execution of this Agreement and the Cypress Stockholders Agreement, and the transactions contemplated hereby.
11. Public Communications . The Company agrees that Cypress and GMS shall have a right to approve in good faith the terms of any communications by the Company, other than communications not intended for the public generally, with respect to Cypress and GMS, including communications concerning the engagement and the termination of GMS’ and Cypress’ engagement with the Company. Notwithstanding the foregoing, the Company may make any disclosure required by law, court order, or applicable exchange or regulatory body without the approval of GMS or Cypress and may respond truthfully to inquiries from journalists regarding the Company and the role of GMS or Cypress therein.
12. Directors and Officers Liability Insurance . The Company shall purchase directors and officers liability insurance coverage in the amount of $25 million from, and at all times maintain such coverage with, an insurer selected by the Company.
13. Assignment . None of GMS, Cypress or Cypress Industrial shall be entitled to assign this Agreement by operation of law or otherwise without the prior written consent of the Company, and the Company shall not be entitled to assign this Agreement to any party by operation of law or otherwise without the prior written consent of GMS and Cypress. This Agreement shall be binding upon the Company, GMS, Cypress, Cypress Industrial and their respective successors, assigns, personnel and legal representatives, executors, administrators,
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heirs, distributes, devisees, and legatees, as applicable. Cypress shall be entitled to assign its right to receive all or a portion of the Base Consulting Fee and to direct that all or a part of such payments be made payable to any other person, including GMS, in the manner contemplated by this Agreement.
14. Complete Agreement . This Agreement constitutes the complete agreement and understanding concerning the arrangement between the parties and supersedes all other agreements, understandings or commitments between the parties as to the arrangement, including, without limitation, (a) the portions of the Binding Term Sheet that address the terms of GMS’ and Cypress’ consulting arrangement with the Company, (b) the Prior Agreement, and (c) any other consulting agreement between the Company and Rexnord, on the one hand, and GMS, Cypress, or Cypress Industrial, on the other hand.
15. Counterparts . This Agreement may be executed in several counterparts, including via facsimile, each of which shall be deemed to be an original, but all of which together shall constitute one and the same Agreement.
16. Notice . All notices, requests, consents and other communications hereunder to any party hereto shall be deemed to be sufficient if contained in a written instrument and shall be deemed to have been duly given when delivered in person, by telecopy, by nationally-recognized overnight courier, or by first class registered or certified mail, postage prepaid, addressed to such party at the address set forth below or such other address as may hereafter be designated in writing by the addressee to the addressor:
(i) if to the Company, to:
Rexnord Corporation
4701 Greenfield Avenue
Milwaukee, WI 53214
Attention: Patty Whaley
with copies to:
Rexnord Holdings, Inc.
c/o Apollo Management, L.P.
10250 Constellation Blvd, Suite 2900
Los Angeles, CA 90067
Fax: (310) 843-1933
Attention: Larry Berg
and
Rexnord Corporation
c/o Apollo Management, L.P.
9 West 57th Street, 43rd Floor
New York, NY 10019
Fax: (212) 515-3288
Attention: Steven Martinez
and
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O’Melveny & Myers LLP
Times Square Tower
7 Times Square
New York, New York 10036
Fax: (212) 326-2061
Attention: John M. Scott, Esq.
(ii) if to GMS, Cypress or Cypress
Industrial, to:
c/o Cypress Group, LLC
___________________
___________________
Attention: George M. Sherman
with a copy to:
King & Spalding LLP
1700 Pennsylvania Avenue, NW
Washington, DC 20006
Fax: (202) 626-3737
Attention: Glenn C. Campbell
17. Waiver . No party shall be deemed to have waived any right, power or privilege under this Agreement or any provisions hereof unless the waiver shall have been duly executed in writing and acknowledged by the party to be charged with the waiver. The failure of any party at any time to insist upon performance of any of the provisions of this Agreement shall in no way be construed to be a waiver of any provision of this Agreement, nor in any way to affect the validity of this Agreement or any part hereof. No waiver of any breach of this Agreement shall be held to be a waiver of any subsequent breach.
18. Governing Law . This Agreement shall be governed by and construed in accordance with the domestic laws of the state of New York without regard to the conflicts of laws provisions or principles thereof that would cause the application of the laws of any jurisdiction other than the state of New York.
19. Amendment . This Agreement may not be amended or modified at any time except by a written instrument executed by the Company, Cypress, Cypress Industrial and GMS.
20. Construction . This Agreement shall be deemed drafted equally by the parties. The language contained in this Agreement shall be construed as a whole and according to its fair meaning. Any presumption or principle that the language is to be construed against any party shall not apply. The headings in this Agreement are only for convenience and are not intended to affect construction or interpretation. Any references to paragraphs, subparagraphs, sections or subsections are to those parts of this Agreement, unless the context clearly indicates to the contrary.
21. Representations/Warranties . GMS, Cypress and Cypress Industrial represent and warrant to Rexnord that (i) no legal impediment, and (ii) no arrangement or understanding
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between GMS, Cypress, Cypress Industrial or any of their affiliated entities, on the one hand, and TC Group, L.L.C. or any of its affiliated entitles or any other person or entity, on the other hand, precludes GMS, Cypress and Cypress Industrial from entering into this Agreement and rendering the services contemplated hereby.
22. Arbitration; Waiver of Jury Trial . Any dispute or controversy arising under, out of, or in connection with or in relation to this Agreement shall be finally determined and settled by arbitration in New York, New York in accordance with the Commercial Rules of the American Arbitration Association, and judgment upon the award may be entered in any court having jurisdiction. Within 20 days of the conclusion of the arbitration hearing, the arbitrator shall prepare written findings of fact and conclusions of law. It is mutually agreed that the written decision of the arbitrator shall be valid, binding, final and non-appealable; provided, however, that the parties hereto agree that the arbitrator shall not be empowered to award punitive damages against any party to such arbitration. To the extent permitted by law, the arbitrator’s fees and expenses will be borne equally by each party. In the event that an action is brought to enforce the provisions of this Agreement pursuant to this Section 22 , each party shall pay its own attorney’s fees and expenses regardless of whether in the opinion of the court or arbitrator deciding such action there is a prevailing party. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL, INCLUDING TRIAL BY JURY, IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.
23. Enforcement . If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws effective during the term of this Agreement, the provision shall be fully severable; this Agreement shall be construed and enforced as if the illegal, invalid or unenforceable provision had never comprised a portion of this Agreement; and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of such illegal, invalid or unenforceable provision there shall be added automatically as part of this Agreement a provision as similar as possible in terms that are legal, valid and enforceable.
[Signature page follows]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
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COMPANY: |
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REXNORD CORPORATION |
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By: |
/s/ Thomas J. Jansen |
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Thomas J. Jansen |
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Executive Vice President and Chief Financial Officer |
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GMS: |
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GEORGE M. SHERMAN |
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/s/ George M. Sherman |
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Name: |
George M. Sherman |
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CYPRESS: |
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CYPRESS GROUP, LLC |
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By: |
/s/ George M. Sherman |
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Name: |
George M. Sherman |
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Managing Member |
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CYPRESS INDUSTRIAL: |
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CYPRESS INDUSTRIAL HOLDINGS, LLC |
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By: |
/s/ George M. Sherman |
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Name: |
George M. Sherman |
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Managing Member |
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Exhibit 10.4
MANAGEMENT CONSULTING AGREEMENT
This MANAGEMENT CONSULTING AGREEMENT (this “ Agreement ”) is entered into as of July 21, 2006 by and between Rexnord Holdings, Inc., a Delaware corporation (“ Rexnord ”), and Apollo Management VI, L.P., a Delaware limited partnership (“ Apollo ”).
RECITALS
WHEREAS, Rexnord and its subsidiaries (collectively, the “ Rexnord Group ”), desire to avail themselves of Apollo’s expertise and consequently have requested Apollo to make such expertise available from time to time in rendering certain management consulting and advisory services related to the business and affairs of the Rexnord Group and the review and analysis of certain financial and other transactions; and
WHEREAS, Apollo and Rexnord agree that it is in their respective best interests to enter into this Agreement whereby, for the consideration specified herein, Apollo has provided and shall provide such services as an independent consultant to the Rexnord Group.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, and the mutual agreements set forth herein and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:
Section 1. Retention of Apollo . Rexnord hereby retains Apollo, and Apollo accepts such retention, upon the terms and conditions set forth in this Agreement.
Section 2. Term . This Agreement shall commence on the date hereof and, unless otherwise extended pursuant to the following sentence, shall terminate on the twelfth anniversary of the date hereof (the “ Term ”) or such earlier time as Apollo and Rexnord may mutually agree in a written agreement signed by each of them. Upon the twelfth anniversary of the date hereof, and at the end of each year thereafter (each of such twelfth anniversary and the end of each year thereafter being a “ Year End ”), the Term shall automatically be extended for an additional year unless written notice to the contrary is given by Apollo at least 30, but no more than 60, days prior to such Year End. The provisions of Sections 3(d), 4(e) (with respect to any unpaid or unreimbursed expenses incurred prior to any termination of this Agreement, whether or not such expenses have then become payable), 5 and 7 through 13 shall survive the termination of this Agreement.
Apollo’s obligation to provide services hereunder shall continue through and until the earlier of (i) the expiration of the Term, as it may be extended pursuant to the terms of this Section 2, (ii) a Change of Control (as defined below) or (iii) an IPO (as defined below).
Section 3. Management Consulting Services .
(a) Apollo shall advise the Rexnord Group concerning such management matters that relate to the business, financial oversight, administration and policies of the Rexnord Group, in each case as Rexnord shall reasonably and specifically request by way of written notice to Apollo, which written notice shall specify the services required of Apollo and shall include all background material necessary for Apollo to complete such services. In addition, the Rexnord Group shall promptly provide any additional materials that Apollo may reasonably request in connection with the provision of services by Apollo pursuant to the terms of this Agreement. Apollo shall devote such time to any such written request as Apollo shall deem, in its discretion, necessary. Such consulting services, in Apollo’s discretion, shall be rendered in person or by telephone or other communication. Except as otherwise expressly agreed to, Apollo shall have no obligation to the Rexnord Group as to the manner and time of rendering its services hereunder, and the Rexnord Group shall not have any right to dictate or direct the details of the services rendered hereunder.
(b) In addition, Rexnord acknowledges and agrees that Apollo (i) has structured the transactions contemplated by that certain Agreement and Plan of Merger (the “ Merger Agreement ”), dated as of May 24, 2006, by and among Chase Acquisition I, Inc., Chase Merger Sub, Inc., RBS Global, Inc. and TC Group, L.L.C., (ii) has arranged for financing for the Rexnord Group in connection with the transactions contemplated by the Merger Agreement, and (iii) has provided other services to the Rexnord Group in connection with the transactions contemplated by the Merger Agreement. Apollo agrees to continue to provide services to the Rexnord Group in connection with the consummation of the transactions contemplated by the Merger Agreement.
(c) Apollo shall perform all services to be provided to the Rexnord Group hereunder as an independent contractor to the Rexnord Group and not as an employee, agent or representative of any member of the Rexnord Group. Apollo shall have no authority to act for or to bind any member of the Rexnord Group while acting in its capacity as an advisor to the Rexnord Group under this Agreement without Rexnord’s prior written consent.
(d) This Agreement shall in no way prohibit Apollo, its affiliates, or any of its or its affiliates’ limited partners, general partners, directors, members, officers, managers, employees, agents, advisors or representatives from engaging in other activities, whether or not competitive with any business of any member of the Rexnord Group.
Section 4. Compensation .
(a) As consideration for Apollo’s agreement to render the services set forth in Section 3(a) of this Agreement and as compensation for any such services rendered by Apollo, Rexnord agrees to pay, or cause its subsidiaries to pay, to Apollo an annual fee equal to $2,000,000. Such amounts shall be payable to Apollo in two equal semi-annual payments (ie, every six months) by wire transfer in same-day funds to a bank account designated by Apollo.
(b) As consideration for services rendered and Apollo’s agreement to render services as set forth in Section 3(b), Rexnord agrees to pay, or to cause its subsidiaries to pay, to
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Apollo a fee of $20,000,000 upon the consummation of the transactions contemplated by the Merger Agreement.
(c) The parties acknowledge and agree that an objective of the Rexnord Group is to maximize value for its shareholders which may include consummating (or participating in the consummation of) (i) a transaction (including, without limitation, any merger, consolidation, recapitalization or sale of assets or equity interests) the result of which is that any Person (as defined in the Merger Agreement) other than Apollo or an affiliate of Apollo becomes the beneficial owner, directly or indirectly, of more than 50% of the voting stock of Rexnord, Chase Acquisition I, Inc., RBS Global, Inc. or Rexnord Corporation, or all or substantially all of the assets of the Rexnord Group (each such event, a “ Change of Control ”), or (ii) one or more initial public offerings of the common stock of Rexnord, Chase Acquisition I, Inc., RBS Global, Inc. or Rexnord Corporation (each such event, an “ IPO ”). The services provided to the Rexnord Group by Apollo pursuant to this Agreement will help to facilitate the consummation of a Change of Control or IPO, should Rexnord decide to pursue such a transaction. In consideration of the services provided pursuant hereto, following the provision of notice to Apollo by Rexnord of Rexnord’s or another member of the Rexnord Group’s intent to enter into an event that constitutes a Change of Control or an IPO, Apollo may elect at any time in connection with or in anticipation of such Change of Control or IPO (or at any time thereafter) (which election shall be made by the delivery of notice to Rexnord (such notice, the “ Notice ”, and the date on which such Notice is delivered to Rexnord, the “ Notice Date ”)) to receive the Lump Sum Payment (as defined below), in lieu of annual payments of the fee set forth in Section 4(a) above, such amount to be paid, unless prohibited by and subject to the terms of any agreement or indenture governing material indebtedness of Rexnord or any of its subsidiaries, on the date on which such Change of Control or IPO is consummated, or, if the Notice occurs, subsequent to such date, as soon as practicable, but in no event, unless prohibited by and subject to the terms of any agreement or indenture governing material indebtedness of the Rexnord Group, later than 30 days subsequent to the Notice Date. The “ Lump Sum Payment ” shall be a single lump sum cash payment equal to the then present value of all then current and future fees payable pursuant to Section 4(a) above, assuming the Term ends on the date that is the twelfth anniversary hereof (using a discount rate equal to the yield to maturity on the Notice Date of the class of outstanding U.S. government bonds having a final maturity closest to the twelfth anniversary of the date hereof (the “ Discount Rate ”)); provided , however , that no portion of the Lump Sum Payment shall be payable to Apollo if on the Notice Date Apollo and its affiliates (taken as a whole) do not own any beneficial economic interest in the Rexnord Group. The Lump Sum Payment will be payable to Apollo by wire transfer in same-day funds to a bank account designated by Apollo.
(d) To the extent Rexnord does not pay any portion of the Lump Sum Payment by reason of any prohibition on such payment pursuant to the terms of any agreement or indenture governing material indebtedness of the Rexnord Group, any unpaid portion of the Lump Sum Payment shall be paid to Apollo on the first date on which the payment of such unpaid amount is permitted under such agreement or indenture, to the extent permitted by such agreement or indenture. Any portion of the Lump Sum Payment not paid on the scheduled due date shall bear interest at an annual rate equal to the Discount Rate, compounded quarterly, from the date due until paid.
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(e) Upon presentation by Apollo to Rexnord of such documentation as may be reasonably requested by Rexnord, Rexnord shall reimburse, or cause its subsidiaries to reimburse, Apollo for all out-of-pocket expenses, including, without limitation, legal fees and expenses, and other disbursements incurred by Apollo, its affiliates or any of its or its affiliates’ limited partners, general partners, directors, members, officers, managers, employees, agents, advisors or representatives in the performance of Apollo’s obligations hereunder, whether incurred on, after or prior to the date hereof, including, without limitation, out-of-pocket expenses incurred in connection with the transactions contemplated by the Merger Agreement and each of the documents referred to therein.
(f) Nothing in this Agreement shall have the effect of prohibiting Apollo, its affiliates or any of its or its affiliates’ limited partners, general partners, directors, members, officers, managers, employees, agents, advisors or representatives from receiving from Rexnord or any other member of the Rexnord Group any other fees, including any fee payable pursuant to Section 7.
Section 5. Indemnification . Rexnord agrees that it shall, and it shall cause its subsidiaries to, indemnify and hold harmless Apollo, its affiliates and its and its affiliates’ limited partners, general partners, directors, members, officers, managers, employees, agents, advisors or representatives (collectively, the “ Indemnified Persons ”) on demand from and against any and all claims, demands, actions, causes of action, judgments, obligations, contracts, agreements, debts, liabilities, costs, expenses and disbursements whether known or unknown, contingent or otherwise, both at law and in equity (collectively, “ Claims ”) of any kind with respect to or arising from this Agreement or the performance by any Indemnified Person of any services in connection herewith. Notwithstanding the foregoing provision, Rexnord shall not be liable for any Claim under this Section 5 arising from the willful misconduct of any Indemnified Person.
Section 6. Limitation on Damages . Rexnord’s sole remedy against Apollo for breach of this Agreement shall be to offset any fees paid or otherwise payable to Apollo by the amount of any Claims arising out of or relating to this Agreement or the services to be rendered hereunder; it being understood that any recovery will be limited to actual damages. No Indemnified Person shall be liable to the Rexnord Group (a) for any breach hereunder by another Indemnified Person or (b) for any breach by it, unless the same constitutes fraud or willful misconduct as determined in a final judgment of a court of competent jurisdiction from which no appeal can be made.
Section 7. Other Services . If Rexnord shall determine that it is advisable for any member of the Rexnord Group to hire a financial advisor, consultant, investment bank or any similar agent in connection with any merger, acquisition, disposition, recapitalization, divestiture, sale of assets, joint venture, issuance of securities (whether equity, equity-linked, debt or otherwise), financing or any similar transaction, Rexnord shall notify Apollo of such determination in writing. Promptly thereafter, upon the request of Apollo, the parties shall negotiate in good faith to agree upon appropriate services, additional compensation and indemnification for the relevant member of the Rexnord Group to hire Apollo or its affiliates for such services. No member of the Rexnord Group may hire any Person, other than Apollo or its affiliates, for any services, unless all of the following conditions have been satisfied: (a) the
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parties are unable to agree after 30 days following receipt by Apollo of such written notice, (b) such other Person has a reputation that is at least equal to the reputation of Apollo in respect of such services, (c) 10 business days shall have elapsed after Rexnord provides a written notice to Apollo of its intention to hire such other Person, which notice shall identify such other Person and shall describe in reasonable detail the nature of the services to be provided, the compensation to be paid and the indemnification to be provided, (d) the compensation to be paid is not more than Apollo was willing to accept in the negotiations described above, and (e) the indemnification to be provided is not more favorable to the relevant member of the Rexnord Group than the indemnification that Apollo was willing to accept in the negotiations described above. In the absence of an express agreement to the contrary, at the closing of any merger, acquisition, disposition, recapitalization, divestiture, sale of assets, joint venture, issuance of securities (whether equity, equity-linked, debt or otherwise), financing or any similar transaction, Apollo shall receive a fee equal to 1% of the aggregate enterprise value paid or provided by the Rexnord Group (including the aggregate value of (x) equity securities, warrants, rights and options acquired or retained, (y) indebtedness acquired, assumed or refinanced, and (z) any other consideration or compensation paid in connection with such transaction).
Section 8. Notices . All notices, requests, consents and other communications hereunder shall be in writing and shall be deemed sufficient if personally delivered, sent by nationally-recognized overnight courier, by telecopy, or by registered or certified mail, return receipt requested and postage prepaid, addressed as follows:
if to Apollo, to:
Apollo Management VI, L.P.
9 West 57th Street
43rd Floor
New York, New York 10019
Telecopy: 212-515-3288
Attention: Larry Berg
if to Rexnord:
Rexnord Holdings, Inc.
c/o Rexnord Corporation
4701 Greenfield Avenue
Milwaukee, WI 53214
Telecopy: (414) 643-3078
Attention: Robert Hitt
or to such other address as the party to whom notice is to be given may have furnished to each other party in writing in accordance herewith. Any such notice or communication shall be deemed to have been received (a) in the case of personal delivery, on the date of such delivery, (b) in the case of nationally-recognized overnight courier, on the next business day after the date when sent, (c) in the case of telecopy transmission, when received, and (d) in the case of mailing, on the third business day following that on which the piece of mail containing such communication is posted.
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Section 9. Benefits of Agreement . This Agreement shall bind and inure to the benefit of Apollo, Rexnord, the other members of the Rexnord Group, the Indemnified Persons and any successors to or assigns of Apollo, Rexnord and the Indemnified Persons; provided , however , that other than any assignment to an affiliate of Apollo, this Agreement may not be assigned by either party hereto without the prior written consent of the other party, which consent will not be unreasonably withheld in the case of any assignment by Apollo. Upon Apollo’s request, Rexnord shall cause the other members of the Rexnord Group to become parties hereto directly in order to avail themselves of the services hereunder.
Section 10. Governing Law . This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York (without giving effect to principles of conflicts of laws that would give effect to the laws of another jurisdiction).
Section 11. Headings . Section headings are used for convenience only and shall in no way affect the construction of this Agreement.
Section 12. Entire Agreement; Amendments . This Agreement contains the entire understanding of the parties with respect to its subject matter, and neither it nor any part of it may in any way be altered, amended, extended, waived, discharged or terminated except by a written agreement signed by each of the parties hereto.
Section 13. Counterparts . This Agreement may be executed in counterparts, including via facsimile transmission, and each such counterpart shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement.
Section 14. Waivers . Any party to this Agreement may, by written notice to the other party, waive any provision of this Agreement. The waiver by any party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach.
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IN WITNESS WHEREOF, the parties have duly executed this Management Consulting Agreement as of the date first above written.
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REXNORD HOLDINGS, INC. |
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By: |
/s/ Thomas Jansen |
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Name: |
Thomas Jansen |
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Title: |
Executive Vice President and Chief Financial Officer |
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APOLLO MANAGEMENT VI, L.P. |
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By: |
/s/ Michael Weiner |
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Name: |
Michael Weiner |
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Title: |
President |
Exhibit 10.5
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STOCKHOLDERS’ AGREEMENT
dated as of July 21, 2006
among
REXNORD HOLDINGS, INC.,
REXNORD ACQUISITION HOLDINGS I, LLC,
REXNORD ACQUISITION HOLDINGS II, LLC
and
CERTAIN OTHER STOCKHOLDERS OF REXNORD HOLDINGS, INC.
TABLE OF CONTENTS
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Page |
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SECTION 1. |
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DEFINITIONS |
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1 |
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SECTION 2. |
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RESTRICTION ON TRANSFERS |
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10 |
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SECTION 3. |
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APPROVED SALE; TAG ALONG TRANSACTION |
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10 |
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SECTION 4. |
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REPURCHASE RIGHT |
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13 |
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SECTION 5. |
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INVOLUNTARY TRANSFERS |
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16 |
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SECTION 6. |
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REPURCHASE DISABILITY |
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16 |
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SECTION 7. |
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COOPERATION |
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18 |
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SECTION 8. |
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BOARD OF DIRECTORS |
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18 |
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SECTION 9. |
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REPRESENTATIONS AND WARRANTIES |
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21 |
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SECTION 10. |
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INFORMATION RIGHTS; COVENANTS |
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21 |
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SECTION 11. |
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REGISTRATION RIGHTS |
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23 |
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SECTION 12. |
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NON-SOLICITATION; NON-HIRE; NON-COMPETE; NON-DISPARAGEMENT; CONFIDENTIALITY |
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34 |
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SECTION 13. |
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TERMINATION |
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37 |
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SECTION 14. |
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MISCELLANEOUS |
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37 |
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SECTION 15. |
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EFFECTIVENESS |
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43 |
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Schedule
Schedule I Stockholders’ names and number of Restricted Shares owned
Exhibit
Exhibit A Amended and Restated Certificate of Incorporation
Exhibit B Form of Joinder to Stockholders’ Agreement
STOCKHOLDERS’ AGREEMENT dated as of July 21, 2006 (this “ Agreement ”), by and among REXNORD HOLDINGS, INC. , a Delaware corporation (the “ Company ”), REXNORD ACQUISITION HOLDINGS I, LLC , a Delaware limited liability company (“ SPV I ”), REXNORD ACQUISITION HOLDINGS II, LLC , a Delaware limited liability company (“ SPV II ”; together with SPV I, “ Apollo ”), and the other Stockholders of the Company from time to time party hereto, which Persons as of the date hereof are set forth on Schedule I hereto (collectively, the “ Non-Apollo Holders ”).
WHEREAS , Chase Acquisition I, Inc. (“ Acquiror ”), a Delaware corporation and wholly-owned subsidiary of the Company, Chase Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Acquiror, RBS Global, Inc., a Delaware corporation (“ RBS ”), and TC Group, L.L.C., a Delaware limited liability company, entered into that certain agreement and plan of merger dated as of May 24, 2006 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “ Agreement and Plan of Merger ”);
WHEREAS , following the consummation of the merger contemplated by the Agreement and Plan of Merger (the “ Merger ”), the Stockholders shall own all of the issued and outstanding capital stock of the Company; and
WHEREAS , as a material inducement to Acquiror to enter into the Agreement and Plan of Merger and to consummate the Merger and the other transactions contemplated thereby, without which Acquiror would not have entered into the Agreement and Plan of Merger or agree to consummate the Merger and the other transactions contemplated thereby, the Company and the Non-Apollo Holders agree to provide the rights and be subject to the obligations and restrictions set forth herein.
NOW, THEREFORE , in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
Section 1. Definitions .
As used in this Agreement, the following terms shall have the following meanings:
“ Accountants ” has the meaning set forth in Section 10(a)(iii)(C) .
“ Acquiror ” has the meaning set forth in the recitals.
“ Affiliate ” means (i) with respect to any individual, (A) a spouse or descendant of such individual and (B) any trust or family partnership or other entity whose beneficiaries shall solely be such individual and/or such individual’s spouse and/or any Person related by blood or adoption to such individual or such individual’s spouse and (ii) with respect to any Person that is not an individual, any other Person which directly or indirectly controls, or is under common control with, or is controlled by, such Person. As used in this definition, “control” (including, with its correlative meanings, “controlled by” and “under common control with”) shall mean possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise).
“ Agreement ” has the meaning set forth in the caption hereto.
“ Agreement and Plan of Merger ” has the meaning set forth in the recitals.
“ Apollo ” has the meaning set forth in the caption hereto.
“ Apollo Directors ” has the meaning set forth in Section 8(a)(ii) .
“ Apollo Nominee ” has the meaning set forth in Section 3(a)(ix) .
“ Approved Sale ” has the meaning set forth in Section 3(a)(i) .
“ Approved Sale Notice ” has the meaning set forth in Section 3(a)(i) .
“ Authorized Representatives ” has the meaning set forth in Section 12(d) .
“ Board ” means the Board of Directors of the Company.
“ Business Day ” means a day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by law to close.
“ Business Combination ” has the meaning set forth in the definition of “Sale of the Company”.
“ Bylaws ” means the Bylaws of the Company, as amended from time to time.
“ Cause ” means (i) for a Non-Apollo Holder party to an Employment Agreement or an Option Agreement in effect at any time prior to the date of such Non-Apollo Holder’s termination of employment or other professional relationship with the Company or any Subsidiary of the Company, as the case may be, “Cause” as defined in such Employment Agreement or Option Agreement, and (ii) for each other Non-Apollo Holder, a termination of employment or other professional relationship with the Company or a Subsidiary of the Company after the occurrence of any of the following on the part of such Non-Apollo Holder: (a) commission of a felony; (b) intentional violation of law (excluding moving violations or by reason of vicarious liability) or intentional undertaking of any activity toward another employee or service provider of the Company or any of its Subsidiaries that is punishable by civil penalty; (c) dishonesty, bad faith, gross negligence, willful misconduct, fraud or willful or reckless disregard of duties in connection with the performance of any services on behalf of the Company or any of its Subsidiaries; (d) intentional failure to comply with any reasonable directive by a supervisor in connection with the performance of any services on behalf of the Company or any of its Subsidiaries following written notice that failure to comply shall constitute “Cause” for termination; (e) intentional breach of any material provision of any agreement with the Company or any of its Subsidiaries; (f) intentional violation of any lawful and reasonable material written policy adopted by the Company or any of its Subsidiaries governing the conduct of persons performing services on behalf of the Company; or (g) the taking of or omission to take any action that has caused or contributed to a material deterioration in the business or reputation of the Company or any of its Subsidiaries, or that was otherwise materially disruptive of its or their
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business or affairs, other than actions taken or omitted in good faith consistent with the best interests of the Company and its Subsidiaries.
“ Closing ” has the meaning set forth in the Agreement and Plan of Merger.
“ Closing Date ” has the meaning set forth in the Agreement and Plan of Merger.
“ Code ” means the Internal Revenue Code of 1986, as amended.
“ Commission ” means the Securities and Exchange Commission or any other Governmental Authority at the time administering the Securities Act.
“ Common Stock ” means the Common Stock of the Company, par value $0.01 per share.
“ Company ” has the meaning set forth in the caption hereto.
“ Company Confidential Information ” has the meaning set forth in Section 10(b) .
“ Competitive Business ” has the meaning set forth in Section 12(b) .
“ Confidential Information ” has the meaning set forth in Section 12(d) .
“ Cypress Stockholders’ Agreement ” means the Stockholders’ Agreement dated as of the date hereof by and among the Company, SPV I, SPV II, Cypress Industrial Holdings, LLC and George M. Sherman.
“ Demand Party ” has the meaning set forth in Section 11(a) .
“ Demand Notice ” has the meaning set forth in Section 11(a) .
“ Disability ” means (i) for a Non-Apollo Holder party to an Employment Agreement or an Option Agreement in effect at any time prior to the date of such Non-Apollo Holder’s termination of employment or other professional relationship with the Company or any Subsidiary of the Company, as the case may be, “Disability” (or term of similar import) as defined in such Employment Agreement or Option Agreement and (ii) for each other Non-Apollo Holder, “Disability” as defined in Section 22(e)(3) of the Code.
“ Disability Notice ” has the meaning set forth in Section 6(b) .
“ Employment Agreement ” means, with respect to any Person, such Person’s most recent employment agreement with the Company or any Subsidiary of the Company entered into on or after the Closing Date, as the same may be amended, restated, supplemented or otherwise modified from time to time.
“ Equity Incentive Plan ” means any plan or agreement approved by the Board for the purposes of issuing equity-linked Securities to any employee, officer, consultant or director of the Company or any of its Subsidiaries as incentive or bonus compensation.
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“ Equity Securities ” means (a) any equity Securities of the Company (including Common Stock but excluding any option, warrant, or similar equity-linked Security of the Company) purchased or otherwise acquired by any Stockholder or (b) any Securities issued or issuable directly or indirectly with respect to the Securities referred to in clause (a) above by way of conversion, exercise or exchange, stock dividend or stock split or in connection with a combination of shares, recapitalization, reclassification, merger, consolidation, reorganization or other similar event.
“ Exchange Act ” means the Securities Exchange Act of 1934, and the Rules and Regulations, all as the same shall be in effect from time to time.
“ Family Group ” means, with respect to any natural Person, such natural Person’s spouse and/or lineal descendants (whether by blood relationship or adoption), and any other Person as to which such natural Person is a lineal descendant (whether by blood relationship or adoption), and any trust or other entity solely for the benefit of such Person and/or any of the foregoing.
“ Financing Documents ” has the meaning set forth in Section 6(a)(iii) .
“ Fund VI ” means Apollo Investment Fund VI, L.P., a Delaware limited partnership.
“ Good Reason ” means, with respect to any Non-Apollo Holder that is a party to an Employment Agreement or Option Agreement at any time prior to the date of such Non-Apollo Holder’s termination of employment or other professional relationship with the Company or any Subsidiary of the Company, as the case may be, “Good Reason” (or a concept of similar import) as defined therein; provided , however , that the termination of an employment or other professional relationship with the Company or any Subsidiary of the Company by a Non-Apollo Holder not a party to such an Employment Agreement or Option Agreement shall be deemed to be a termination without Good Reason.
“ Governmental Authority ” means any Federal, state, municipal, local or foreign government, governmental authority, regulatory or administrative agency, governmental commission, department, board, bureau, agency or instrumentality, court, tribunal, arbitrator or arbitral body.
“ Hitt ” has the meaning set forth in Section 8(a)(iii) .
“ Information ” has the meaning set forth in Section 11(i)(xi) .
“ Inspectors ” has the meaning set forth in Section 11(i)(xi) .
“ Involuntary Transfer ” has the meaning set forth in Section 5(a) .
“ Involuntary Transferee ” has the meaning set forth in Section 5(a) .
“ Involuntary Transfer Notice ” has the meaning set forth in Section 5(a) .
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“ Involuntary Transfer Repurchase Notice ” has the meaning set forth in Section 5(b) .
“ Involuntary Transfer Repurchase Price ” has the meaning set forth in Section 5(b) .
“ Involuntary Transfer Repurchase Right ” has the meaning set forth in Section 5(b) .
“ Issuer Free Writing Prospectus ” means each “free writing prospectus” (as defined in Rule 405) prepared by or on behalf of the Company or used or referred to by the Company in any offering of Restricted Shares pursuant to Section 11 .
“ Joinder ” has the meaning set forth in Section 2(c) .
“ Material Transfer ” means a Transfer for consideration by Apollo of more than 10% of the Restricted Shares held by Apollo as of the Closing Date to a Person who is not an Affiliate of Apollo.
“ Merger ” has the meaning set forth in the recitals.
“ NASD ” means the National Association of Securities Dealers, Inc.
“ Non-Apollo Director ” has the meaning set forth in Section 8(a)(iv) .
“ Non-Apollo Holder ” has the meaning set forth in the caption hereto.
“ Non-Compete Period ” has the meaning set forth in Section 12(b) .
“ Option Agreement ” means, with respect to any Person, such Person’s agreement with the Company evidencing the grant of options to purchase shares of Common Stock first entered into at or after the Closing (excluding any such agreement with respect to Rollover Options).
“ Order ” means all judgments, injunctions, orders and decrees of all Governmental Authorities in any legal, administrative or arbitration action, suit, complaint, charge, hearing, mediation, inquiry, investigation or proceeding in which the person in question is a party or by which any of its properties or assets are bound.
“ Outstanding Company Voting Securities ” has the meaning set forth in the definition of “Sale of the Company”.
“ Permitted Issuer Information ” means any “issuer information” (as defined in Rule 433 of the Rules and Regulations) used with the prior written consent of the Company in any offering of Restricted Shares pursuant to Section 11 .
“ Person ” shall be construed broadly and shall include, without limitation, an individual, a partnership, a limited liability partnership, an investment fund, a limited liability
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company, a corporation, an association, a joint stock corporation, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof.
“ Preliminary Prospectus ” means any preliminary prospectus relating to an offering of Restricted Shares pursuant to Section 11 .
“ Proportionate Percentage ” means with respect to Apollo and each other Stockholder in respect of Restricted Shares, a fraction (expressed as a percentage) the numerator of which is the number of Restricted Shares held by Apollo or such other Stockholder, as the case may be, and the denominator of which is (i) in a situation where the Proportionate Percentage is being calculated with respect to all Stockholders, the total number of Restricted Shares outstanding at the time in question and (ii) in a situation where the Proportionate Percentage is being calculated with respect to a group of Stockholders, the total number of Restricted Shares held by the members of such group of Stockholders.
“ Prospectus ” means the final prospectus relating to any offering of Restricted Shares pursuant to Section 11 , including any prospectus supplement thereto, as filed with the Commission pursuant to Rule 424(b) of the Rules and Regulations.
“ Public Sale ” means any sale of Equity Securities to the public pursuant to an offering registered under the Securities Act or to the public effected through a broker, dealer or market maker pursuant to the provisions of Rule 144 (if such rule is available) under the Securities Act (or any similar rule or rules then in effect).
“ Qualified Public Offering ” means an underwritten public offering of Equity Securities of the Company pursuant to an effective Registration Statement filed by the Company with the Securities and Exchange Commission (other than on Forms S-4 or S-8 or successors to such forms) under the Securities Act, pursuant to which the aggregate offering price of the Equity Securities sold in such offering (whether sold by the Company or selling stockholders) is at least $75,000,000.
“ RBS ” has the meaning set forth in the recitals.
“ RBS Stockholders’ Agreement ” means the Stockholders Agreement dated November 25, 2002 by and among RBS Global, Inc., Carlyle Partners III, L.P., CP III Coinvestment, L.P., Carlyle High Yield Partners, L.P., and certain other stockholders named therein (as amended, modified, restated or supplemented from time to time).
“ Records ” has the meaning set forth in Section 11(i)(xi) .
“ Registration Expenses ” has the meaning set forth in Section 11(j) .
“ Reinstatement Notice ” has the meaning set forth in Section 6(b) .
“ Repurchase Date ” has the meaning set forth in Section 4(a) .
“ Repurchase Disability ” has the meaning set forth in Section 6(a) .
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“ Repurchase Event ” means, with respect to any Non-Apollo Holder, the termination of such Non-Apollo Holder’s employment or other professional relationship with the Company and all of its Subsidiaries for any reason (including upon death or Disability).
“ Repurchase Notice ” has the meaning set forth in Section 4(a) .
“ Repurchase Price ” has the meaning set forth in Section 4(a) .
“ Repurchase Right ” has the meaning set forth in Section 4(a) .
“ Resignation Event ” has the meaning set forth in Section 8(a)(iii) .
“ Restated Certificate ” means the Amended and Restated Certificate of Incorporation to be filed with the Secretary of State of Delaware, in the form attached hereto as Exhibit A .
“ Restricted Shares ” means at any time, with respect to Apollo or any Non-Apollo Holder, the shares of Common Stock held by Apollo or such Non-Apollo Holder; provided , however , that any (a) Common Stock that is sold in a public offering pursuant to an effective Registration Statement under the Securities Act or a sale pursuant to Rule 144 thereunder or that may be sold without restriction as to volume or otherwise pursuant to Rule 144(k) under the Securities Act shall not be Restricted Shares for purposes of Section 11 , and (b) any Person who holds any Common Stock, all of which can be sold pursuant to Rule 144 under the Securities Act, shall not be deemed to hold any Restricted Shares for purposes of Section 11 and shall have no rights to effect the registration of such securities under Section 11 .
“ Road Show Material ” has the meaning set forth in Section 11(k) .
“ Rollover Options ” means the options to purchase shares of common stock (to the extent vested) of RBS Global, Inc. in existence immediately prior to the date hereof held by each Rollover Optionholder (as defined in the Agreement and Plan of Merger) that are subject to a Stock Option Assumption Agreement entered into by and among such Rollover Optionholder, the Company and RBS Global, Inc. in connection with transactions contemplated by the Agreement and Plan of Merger providing that such options shall be exercisable for shares of Common Stock or other Equity Interests of the Company pursuant to the terms of the Agreement and Plan of Merger.
“ Rule 144 ” means Rule 144 of the Rules and Regulations or any successor rule thereto or any complementary rule thereto.
“ Rule 405 ” means Rule 405 of the Rules and Regulations or any successor rule thereto or any complementary rule thereto.
“ Rule 433 ” means Rule 433 of the Rules and Regulations or any successor rule thereto or any complementary rule thereto.
“ Rules and Regulations ” means the rules and regulations of the Commission, as the same shall be in effect from time to time.
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“ Sale Notice ” has the meaning set forth in Section 3(b)(i) .
“ Sale of the Company ” means:
(a) Approval by the Stockholders (or, if no stockholder approval is required, by the Board alone) of the complete dissolution or liquidation of the Company, other than in the context of a Business Combination (as defined below) that does not constitute a Sale of the Company under paragraph (c) below;
(b) The acquisition by any Person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (the “ Outstanding Company Voting Securities ”); provided , however , that, for purposes of this paragraph (b), the following acquisitions shall not constitute a Sale of the Company; (A) any acquisition directly from the Company or any of its Subsidiaries, (B) any acquisition by the Company or any of its Subsidiaries, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its Affiliates or a successor, (D) any acquisition by any Person pursuant to a Business Combination, (E) any acquisition by a Person who is the beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of the Outstanding Company Voting Securities on the Closing Date (or an Affiliate, heir or descendant of such Person) or (F) any acquisition by Apollo or one of its Affiliated investment funds; or
(c) Consummation of a reorganization, merger, statutory share exchange or consolidation or similar corporate transaction involving the Company or any of its Subsidiaries, a sale or other disposition of all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole, or the acquisition of assets or stock of another entity by the Company or any of its Subsidiaries (each, a “ Business Combination ”), in each case unless, following such Business Combination, (1) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own more than 50% of the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the Person resulting from such Business Combination (including, without limitation, a Person that, as a result of such transaction, owns the Company or all or substantially all of the Company’s assets directly or through one or more Subsidiaries of the Company, and (2) no Person (excluding any Person described in clauses (C), (E) or (F) of paragraph (b) above) beneficially owns (within the meaning of Rule 13d-3 promulgated under the Exchange Act) more than 50% of the combined voting power of the then-outstanding voting securities of such Person, except to the extent that the ownership in excess of 50% existed prior to the Business Combination;
provided , however , that an underwritten public offering of the securities of the Company or any of its Subsidiaries shall in no event constitute a Sale of the Company for purposes of this Agreement.
“ Securities ” means “securities” as defined in Section 2(1) of the Securities Act and includes capital stock or other equity interests or any options, warrants or other securities that are directly or indirectly convertible into, or exercisable or exchangeable for, capital stock or
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other equity interests. Whenever a reference herein to Securities is referring to any derivative Securities, the rights of a holder shall apply to such derivative Securities and all underlying Securities directly or indirectly issuable upon conversion, exchange or exercise of such derivative Securities.
“ Securities Act ” means the Securities Act of 1933, and the Rules and Regulations, all as the same shall be in effect from time to time.
“ Sellers’ Counsel ” has the meaning set forth in Section 11(i)(ii) .
“ SPV I ” has the meaning set forth in the caption hereto.
“ SPV II ” has the meaning set forth in the caption hereto.
“ Stockholder ” means Apollo, each Person listed on Schedule I and any other Person from time to time that holds Equity Securities acquired in accordance with the terms of this Agreement or the Cypress Stockholders’ Agreement.
“ Subsidiary ” means, with respect to any Person, any other Person of which 50% or more of the voting power of the equity securities or equity interests sufficient to elect at least a majority of its Board of Directors or other governing body (or, if there is no such voting power, 50% or more of the equity securities or equity interests) is owned, directly or indirectly, by such Person.
“ Tag-Along Transaction ” means a transaction involving a Transfer by Apollo of more than 10% of the Restricted Shares held by Apollo as of the Closing Date to a Person who is not an Affiliate of Apollo in which individual Non-Apollo Holders may elect in their discretion to participate in accordance with Section 3(b) ; provided , however , that a “Tag-Along Transaction” shall not include, and none of the rights of the Non-Apollo Holders set forth in Section 3(b) shall be triggered by, a Transfer by Apollo to any limited partnership or other Person which has directly or indirectly invested in, or otherwise has ownership, equity or profits interests in, Fund VI or one of its Affiliated investment funds, as part of a distribution to such Person; provided , however , that such distribution is made on a pro rata basis to all such Persons.
“ Transaction Documents ” has the meaning set forth in the Agreement and Plan of Merger.
“ Transfer ” means any direct or indirect transfer, assignment, sale, gift, pledge, hypothecation, encumbrance or other disposition, or any interest therein whatsoever, or any other transfer of beneficial ownership, whether voluntary or involuntary, including (a) as a part of any liquidation of assets or (b) as a part of any reorganization pursuant to the United States or other bankruptcy law or other similar debtor relief laws, but excluding any transfer of Equity Securities of the Company by employees of the Company or its Subsidiaries upon a termination of employment.
“ Transferee ” means any Person acquiring or intending to acquire Equity Securities through a Transfer.
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“ Underwritten Offering ” means a sale of Equity Securities to an underwriter for reoffering to the public.
Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to them in the Agreement and Plan of Merger.
Section 2. Restriction on Transfers .
(a) Except as otherwise set forth below, the Non-Apollo Holders shall not at any time Transfer any Equity Securities. Any purported Transfer in violation of the provisions of this Section 2 shall be null and void and shall have no force or effect.
(b) The restrictions contained in this Section 2 shall not apply with respect to any Transfer of Equity Securities (i) to the Company, Apollo or any of their respective Affiliates (which term, for purposes of this Section 2(b) , shall not include any other Stockholder or such other Affiliates of such Stockholder other than the Company and Apollo) or (ii) pursuant to applicable laws of descent or to such Stockholder’s executors, administrators, testamentary legatees and beneficiaries upon such Stockholder’s death or to any member of such Non-Apollo Holder’s Family Group.
(c) Each Non-Apollo Holder agrees that, as a condition precedent to any Transfer permitted under Section 2(b) , each Transferee of such Equity Securities shall have executed a joinder agreement (“ Joinder ”) substantially in the form of Exhibit B attached hereto, pursuant to which such Transferee agrees to become party hereto, a Non-Apollo Holder and have his, her or its Equity Securities subject to, the terms of this Agreement. Any failure by a Non-Apollo Holder to obtain a Joinder from the Transferee as required under this Section 2(c) shall render such Transfer null and void; provided that, in the case of a Transfer upon a Stockholder’s death or Disability, (i) the Transferee shall be deemed to have executed, and shall be deemed to be bound by, a Joinder as of the date of such Stockholder’s death or Disability and (ii) the Transferee shall be given a reasonable period of time (not to exceed 90 days from the date of such Stockholder’s death or Disability) to execute such Joinder.
(d) This Section 2 shall not apply to an Approved Sale under Section 3 or a Transfer under Section 4 .
Section 3. Approved Sale; Tag Along Transaction .
(a) Approved Sale; Sale of the Company .
(i) At any time prior to the consummation of a Qualified Public Offering that Apollo proposes a Material Transfer of its Restricted Shares, Apollo shall be entitled to deliver notice (an “ Approved Sale Notice ”) to the Company and the Non-Apollo Holders that Apollo requires the Non-Apollo Holders to Transfer an amount of their Restricted Shares that is equal to the portion of Apollo’s Restricted Shares that Apollo proposes to Transfer in the Material Transfer (an “ Approved Sale ”); provided , however , that if the proposed Transferee desires to purchase an amount of Restricted Shares that is less than the aggregate amount of Restricted Shares of Apollo and the Non-Apollo Holders that would otherwise be Transferred in the Approved Sale, then Apollo
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may elect to cancel such Approved Sale, or Apollo and the Non-Apollo Holders shall sell in the Approved Sale only that number of Restricted Shares equal to the product of (x) the total number of Restricted Shares such proposed Transferee desires to purchase and (y) such Stockholder’s Proportionate Percentage; and provided , further , that any such Approved Sale Notice shall include the name of the parties to the proposed Approved Sale, a summary of the material terms and conditions of the proposed Approved Sale, and the proposed amount and form of consideration and the terms and conditions of payment contemplated by the proposed Approved Sale.
(ii) Upon receipt of an Approved Sale Notice, each Non-Apollo Holder and the Company shall consent to and raise no objections against the Approved Sale, and if the Approved Sale is lawful and is structured as (A) a merger or consolidation of the Company or any of its Subsidiaries, or a sale of all or substantially all of the assets of the Company and its Subsidiaries taken as a whole, each Non-Apollo Holder shall, and hereby does, waive any dissenter’s rights, appraisal rights or similar rights in connection with such merger or consolidation or sale of all or substantially all of the assets and hereby instructs the Board to vote in favor of such Approved Sale and to submit, if required by law, to a vote of the Stockholders of the Company or request a written consent as promptly as possible, and hereby agrees to vote in favor of such Approved Sale at any annual or special meeting of the Stockholders of the Company or to execute a written consent approving such Approved Sale, or (B) a sale of Restricted Shares, each Non-Apollo Holder shall, and hereby does agree to, sell his, her or its Proportionate Percentage of his, her or its Restricted Shares on the terms and conditions approved by Apollo; provided , in the case of each of the foregoing clause (A) and (B), that the terms and conditions upon which each Non-Apollo Holder’s Restricted Shares are sold are the same terms and conditions that apply to Apollo.
(iii) All Non-Apollo Holders and the Company shall take all necessary and desirable actions in connection with the consummation of the Approved Sale, including the execution of such agreements and such instruments and other actions reasonably necessary to (1) provide the representations, warranties, indemnities, covenants, conditions, escrow agreements and other provisions and agreements relating to such Approved Sale; provided , however , that the Non-Apollo Holders shall not be required to provide any representations, warranties, indemnities, covenants, conditions, escrow agreements or other provisions or agreements which are different from those made by Apollo in connection with such Approved Sale and (2) effectuate the allocation and distribution of the aggregate consideration upon the consummation of the Approved Sale. At the closing of the sale of any Restricted Shares pursuant to this Section 3(a) , each Non-Apollo Holder shall deliver at such closing, against payment of the purchase price therefor, certificates representing their Restricted Shares to be sold, duly endorsed for Transfer or accompanied by duly endorsed stock powers, evidence of good title to the Restricted Shares to be sold, the absence of liens, encumbrances and adverse claims with respect thereto and such other documents as are deemed reasonably necessary by the Company for the proper Transfer of such Restricted Shares on the books of the Company.
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(iv) Apollo shall deliver any Approved Sale Notice to the Company and the Non-Apollo Holders at least ten (10) days prior to the consummation of the Approved Sale.
(v) If any Stockholders are given an option as to the form and amount of consideration to be received in an Approved Sale, all Stockholders shall be given the same option.
(vi) No Non-Apollo Holder shall be obligated to pay more than his, her or its Proportionate Percentage of reasonable expenses incurred in connection with a consummated Approved Sale to the extent such expenses are incurred for the benefit of all Stockholders and are not otherwise paid by the Company or the acquiring party (it being agreed that expenses incurred by or on behalf of Apollo or a Non-Apollo Holder for his, her or its sole benefit shall not be considered expenses incurred for the benefit of all Stockholders).
(vii) No Stockholder shall be required to make any representations or warranties that are joint and several or that pertain to matters other than title to Securities held by such Stockholder, such Stockholder’s capacity, authority or power to consummate the transaction in question, conflicts with laws, conflicts with contracts, organizational documents and Orders applicable to such Stockholder, broker and similar fees payable by such Stockholder, other representations and warranties customary for the type of transaction being consummated and representations and warranties with respect to any other matters particular to such Stockholder.
(viii) Any indemnification obligations for breaches of representations, warranties and covenants made by the Company and its Subsidiaries (but not by or on behalf of any Stockholder individually) shall be shared pro rata among the Stockholders (based on such Stockholder’s Proportionate Percentage) based on the aggregate consideration payable with respect to the Restricted Shares, and in no event shall a Stockholder be required to incur indemnification or contribution obligations with respect to such breaches that are joint and several or exceed the aggregate consideration payable with respect to such Stockholder’s Restricted Shares Transferred in the Approved Sale.
(ix) Each Non-Apollo Holder and the Company hereby grants an irrevocable proxy and power of attorney which, it is agreed, is coupled with an interest, to any nominee of Apollo (the “ Apollo Nominee ”) to take all necessary actions and execute and deliver all documents deemed necessary and appropriate by such Person to effectuate the consummation of any Approved Sale. To the extent a Non-Apollo Holder fails to comply with the provisions of this Section 3(a) , such Non-Apollo Holder hereby indemnifies, defends and holds the Apollo Nominee harmless (severally in accordance with his, her or its pro rata share of the consideration received in any such Approved Sale (and not jointly and severally)) against all liability, loss or damage, together with all reasonable costs and expenses (including reasonable legal fees and expenses), relating to or arising from its exercise of the proxy and power of attorney granted hereby.
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(x) The Non-Apollo Holders shall not be required to comply with, and shall have no obligations under, Section 2 in connection with any Approved Sale.
(b) Tag-Along Transaction .
(i) Subject to the provisions of Section 3(a) above, prior to the consummation of a Qualified Public Offering, if Apollo desires to effect a Tag-Along Transaction, Apollo shall give written notice to the Non-Apollo Holders offering such Non-Apollo Holders the option to participate in such Tag-Along Transaction (a “ Sale Notice ”) on the terms and conditions set forth in the Sale Notice (and, in any event, on the same terms and conditions as Apollo). The Sale Notice shall include the name of the parties to the proposed Tag-Along Transaction, a summary of the material terms and conditions of the proposed Tag-Along Transaction, and the proposed amount and form of consideration and the terms and conditions of payment contemplated by the proposed Tag-Along Transaction. Each Non-Apollo Holder may, by written notice to Apollo delivered within ten (10) days of the date of the Sale Notice, elect to sell in such Tag-Along Transaction, on the terms and conditions approved by Apollo (which terms and conditions shall be the same as those on which Apollo’s Restricted Shares are sold and shall be consistent with the terms and conditions set forth in the Sale Notice); provided , however , that if the proposed Transferee desires to purchase an amount of Restricted Shares that is less than the aggregate amount of Restricted Shares proposed to be Transferred by Apollo and the Non-Apollo Holders in the Tag-Along Transaction, then Apollo may elect to cancel such Tag-Along Transaction, or Apollo and the Non-Apollo Holders shall be permitted to sell only that number of Restricted Shares equal to the product of (x) the total number of Restricted Shares subject to the proposed Tag-Along Transaction and (y) such Stockholder’s Proportionate Percentage. No Transfer permitted under this Section 3(b) shall be subject to the requirements of Section 2 .
(ii) Upon the closing of the sale of any Restricted Shares pursuant to paragraph (b)(i) above, each Non-Apollo Holder shall deliver at such closing, against payment of the purchase price therefor, certificates representing their Restricted Shares to be sold, duly endorsed for Transfer or accompanied by duly endorsed stock powers, evidence of good title to the Restricted Shares to be sold, the absence of liens, encumbrances and adverse claims with respect thereto and such other documents as are deemed reasonably necessary by the Company for the proper Transfer of such Restricted Shares on the books of the Company.
Section 4. Repurchase Right .
(a) From and after a Repurchase Event, the Company shall have the right, but not the obligation, to repurchase all or any portion of the Equity Securities held by such Non-Apollo Holder (including any Equity Securities received upon a distribution from any deferred compensation plan or other Equity Incentive Plan or any Equity Securities issuable upon exercise of any option, warrant or similar equity-linked Security of the Company held by such Non-Apollo Holder) in accordance with this Section 4 (the “ Repurchase Right ”), in each case, at a price (the “ Repurchase Price ”) equal to “fair market value,” but subject to Section 4(b) , and subject further to any provisions to the contrary contained in such Non-Apollo Holder’s
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Employment Agreement or Option Agreement, as applicable. The Company may exercise the Repurchase Right, by written notice (a “ Repurchase Notice ”) to such Non-Apollo Holder, within six months after the Repurchase Event; provided , however , that with respect to Equity Securities acquired by a Non-Apollo Holder, after such Repurchase Event (whether by exercise of any option, warrant or similar equity-linked Security of the Company, distribution of shares from any deferred compensation plan or otherwise), the Company may exercise the Repurchase Right by delivering a Repurchase Notice to such Non-Apollo Holder within six months after the acquisition of such Equity Securities by such Non-Apollo Holder (each date on which any such purchase is closed with respect to the subject Equity Securities, the “ Repurchase Date ”). The determination date for purposes of determining the fair market value shall be the Repurchase Date applicable to the subject Equity Securities. Subject to Section 6 below, the Repurchase Date with respect to any repurchase of Equity Securities pursuant to the exercise of the Repurchase Right shall take place on the later of (i) the date specified by the Company, which shall in no event be later than thirty (30) days following the date of the Repurchase Notice and (ii) within ten (10) days following the receipt by the Company of all necessary government approvals.
(b) Notwithstanding anything contained herein to the contrary, unless otherwise provided in the applicable Employment Agreement or Option Agreement of a Non-Apollo Holder, in the event a Non-Apollo Holder’s employment or consulting relationship with the Company or any of its Subsidiaries is terminated for Cause by the Company or any of its Subsidiaries or by the Non-Apollo Holder without Good Reason and before the second anniversary of the Closing Date (or in the case of Hitt, the fifth anniversary of the Closing), then the Company may exercise the Repurchase Right by delivering a Repurchase Notice to such Non-Apollo Holder within the time periods set forth in Section 4(a) above at a price equal to the lesser of (i) in the case of Common Stock, $ ___ per share of Common Stock, subject to adjustment by the Company to reflect any stock split, recapitalization or similar adjustment to the Common Stock (or, for shares of Common Stock acquired after the Closing Date and not upon exercise of a Rollover Option, the original acquisition cost to such Non-Apollo Holder of such shares of Common Stock) and (ii) the fair market value of such Equity Securities. The determination date for purposes of determining the fair market value shall be the closing date of the purchase of the applicable Equity Securities.
(c) The Company shall give prompt written notice to Apollo stating whether the Company will exercise the Repurchase Rights pursuant to Section 4(a) or Section 4(b) above. If such notice states that the Company will not exercise such Repurchase Rights for all or any portion of the applicable Equity Securities subject thereto, Apollo (or its designee) shall have the right (exercisable by delivery of written notice to such Non-Apollo Holder on or before the later of (i) the 30 th day following the receipt of such notice or (ii) six months after the Repurchase Event) to purchase any such Equity Securities not purchased by the Company on the same terms and conditions as the Company set forth in Section 4(a) or Section 4(b) .
(d) The Repurchase Date shall take place on a date designated by the Company or Apollo, as applicable, in accordance with Section 4(a) or Section 4(c) , respectively; provided , however , that the Repurchase Date may be deferred to a date designated by the Company or Apollo, as applicable, or, to the extent required to avoid liability under applicable securities laws, the Non-Apollo Holder, until such time as the subject Non-Apollo Holder has
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held the Equity Securities for a period of at least six months and one day. The Company or Apollo, as applicable, may effect such repurchase of Equity Securities and the Company shall record such Transfer on its books whether or not such Non-Apollo Holder attends such closing or delivers certificates representing such Equity Securities to the Company. Each Non-Apollo Holder hereby grants an irrevocable proxy and power of attorney which, it is agreed, is coupled with an interest to any nominee of the Company or Apollo, as applicable, to take all necessary actions and execute and deliver all documents deemed necessary and appropriate by such nominee to effect such repurchase of Equity Securities. Any Non-Apollo Holder who fails to take all necessary actions and execute and deliver all documents necessary and appropriate to fulfill his, her or its obligations under this Section 4 shall indemnify, defend and hold such nominee harmless against all liability, loss or damage, together with all reasonable costs and expenses (including reasonable legal fees and expenses), relating to or arising from such nominee’s exercise of the proxy and power of attorney granted hereby. In addition, any such Non-Apollo Holder shall immediately lose all rights such holder may have under Section 8 in the event of any such purchase.
(e) For purposes of this Section 4 , Section 5 and Section 6 , the “fair market value” of any Equity Securities shall be determined as follows:
(i) if the Equity Securities are listed on one or more National Securities Exchanges (within the meaning of the Exchange Act), each share shall be valued at the average closing price per share on the principal exchange on which such shares are then trading for the 10 trading days immediately preceding the date of determination;
(ii) if the Equity Securities are not traded on a National Securities Exchange but are quoted on the NASDAQ Stock Market or a successor quotation system and the shares are listed as a National Market issue under the National Market System, each share shall be valued at the average of the last sales price per share for the 10 trading days immediately preceding the date of determination as reported by the NASDAQ Stock Market or any such successor quotation system; or
(iii) if the Equity Securities are not listed on a National Securities Exchange and are not traded on the NASDAQ Stock Market and listed as a National Market issue under the National Market System, the fair market value shall be determined by the Board in good faith based on its good faith determination of the fair market value of the Company and its subsidiaries as a whole without regard to the percentage of shares represented by the shares subject to such determination or any minority discount or control premium.
Notwithstanding the foregoing, if a Person whose Equity Securities are being valued hereunder pursuant to clause (iii) above disagrees with the valuation determined by the Board, such Person may elect to choose within five Business Days of being advised of the determination of the Board to have the fair market value determined by and independent appraiser, the selection of which shall be subject to the mutual agreement of the Company and such Person. The fees and expenses of any such independent appraiser shall be borne equally by the Company and the Person whose Equity Securities are being
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valued hereunder and the determination by the independent appraiser selected in accordance with this Section 4(e) shall be final and binding.
Section 5. Involuntary Transfers .
(a) In the case of any Transfer of title or beneficial ownership of Equity Securities upon default, foreclosure, forfeit, divorce, court order or otherwise, other than by a voluntary decision on the part of a Non-Apollo Holder (each, an “ Involuntary Transfer ”), the Non-Apollo Holder shall promptly (but in no event later than two days after the Involuntary Transfer) furnish written notice (the “ Involuntary Transfer Notice ”) to the Company indicating that the Involuntary Transfer has occurred, specifying the name of the Person to whom the Equity Securities were transferred (the “ Involuntary Transferee ”), giving a detailed description of the circumstances giving rise to, and stating the legal basis for, the Involuntary Transfer.
(b) Upon the receipt of the Involuntary Transfer Notice, and for 60 days thereafter, the Company shall have the right to repurchase, and the Involuntary Transferee shall have the obligation to sell, all (but not less than all) of the Equity Securities acquired by the Involuntary Transferee for a repurchase price equal to the “fair market value” (as determined in accordance with Section 4(e)) of such Equity Securities as of the date of the Involuntary Transfer (the “ Involuntary Transfer Repurchase Price ” and such right, the “ Involuntary Transfer Repurchase Right ”). The Involuntary Transfer Repurchase Right shall be exercised by written notice (the “ Involuntary Transfer Repurchase Notice ”) to the Involuntary Transferee given in accordance with Section 14(k) of this Agreement on or prior to the last date on which the Involuntary Transfer Repurchase Right may be exercised by the Company.
(c) Subject to Section 6 below, the repurchase of Equity Securities pursuant to the exercise of the Involuntary Transfer Repurchase Right shall take place on a date specified by the Company, but in no event following the later of the 60th day following the date of the date of the Involuntary Transfer Repurchase Notice or the 10th day following the receipt by the Company of all necessary governmental approvals. On such date, the Involuntary Transferee shall transfer the Equity Securities subject to the Involuntary Transfer Repurchase Notice to the Company, free and clear of all liens and encumbrances, by delivering to the Company the certificates representing the Equity Securities to be purchased, duly endorsed for transfer to the Company or accompanied by a stock power duly executed in blank, and the Company shall pay to the Involuntary Transferee the Involuntary Transfer Repurchase Price. The Involuntary Transferee and the Non-Apollo Holder shall use all commercially reasonable efforts to assist the Company in order to expedite all proceedings described in this Section 5 . If the Involuntary Transferee does not transfer the Equity Securities to the Company as required, the Company will cancel such Equity Securities and deposit the funds in a non-interest bearing account and make payment upon delivery.
Section 6. Repurchase Disability .
(a) Notwithstanding anything to the contrary herein, except as otherwise provided by Section 6(c) , the Company shall not be permitted to purchase any Equity Securities held by any Non-Apollo Holder or Involuntary Transferee upon exercise of the Repurchase Right or the Involuntary Transfer Repurchase Right if the Board reasonably determines that:
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(i) the purchase of Equity Securities would render the Company or its Subsidiaries unable to meet their obligations in the ordinary course of business at any time during the one year period commencing on the date such purchase of Equity Securities would otherwise be required taking into account any pending or proposed transactions, capital expenditures or other budgeted cash outlays by the Company and its Subsidiaries which are reasonably likely to be consummated or paid, as the case may be, within such one year period, including, without limitation, any proposed acquisition of any other entity by the Company or any of its Subsidiaries which is reasonably likely to be consummated within such one year period;
(ii) the Company is prohibited from purchasing the Equity Securities by applicable law restricting the purchase by a corporation of its own shares; or
(iii) the purchase of Equity Securities would constitute a breach of, default, or event of default under, or is otherwise prohibited by, the terms of any loan agreement or other agreement or instrument representing indebtedness to which the Company or any of its Subsidiaries is a party (collectively, the “ Financing Documents ”) or the Company or its applicable Subsidiaries is not able to obtain the requisite consent of any of its senior lenders to the purchase of the Equity Securities.
The events described in (i) through (iii) above each constitute a “ Repurchase Disability .”
(b) Except as otherwise provided by Section 6(c) , in the event of a Repurchase Disability, the Company shall notify in writing the Non-Apollo Holder or Involuntary Transferee with respect to whom the Repurchase Right or the Involuntary Transfer Repurchase Right has been exercised (a “ Disability Notice ”). The Disability Notice shall specify the nature of the Repurchase Disability. The Company shall thereafter repurchase the Equity Securities described in the Repurchase Notice or Involuntary Transfer Repurchase Notice as soon as reasonably practicable after all Repurchase Disabilities cease to exist (or the Company may elect, but shall have no obligation, to cause its nominee to repurchase the Equity Securities while any Repurchase Disabilities continue to exist); provided , however , that if some, but not all of the Equity Securities to be repurchased can be so repurchased without creating a Repurchase Disability, then the Company shall consummate such repurchase to the fullest extent it is able without causing a Repurchase Disability in accordance with the terms of this Agreement (without giving effect to this Section 6 ). In the event the Company suspends its obligations to repurchase the Equity Securities pursuant to a Repurchase Disability, (i) the Company shall provide written notice to each applicable Non-Apollo Holder or Involuntary Transferee as soon as practicable after all Repurchase Disabilities cease to exist (the “ Reinstatement Notice ”); (ii) the fair market value of the Equity Securities subject to a Repurchase Notice or Involuntary Transfer Repurchase Notice shall be equal to the greater of the fair market value (as determined in accordance with Section 4(e) ) of the Equity Securities as of the date of the date of the Repurchase Notice or the Involuntary Transfer Repurchase Notice, as the case may be, and the fair market value (as determined in accordance with Section 4(e) ) determined as of the date the Reinstatement Notice is delivered to the Non-Apollo Holder or Involuntary Transferee, which fair market value shall be used to determine the Repurchase Price or Involuntary Transfer Repurchase Price in the manner described above; and (iii) the repurchase shall occur on a date
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specified by the Company within 10 days following the determination of the fair market value of the Equity Securities to be repurchased as provided in clause (ii) above.
Section 7. Cooperation .
(a) In the event that Apollo exercises its rights pursuant to Section 3(a) or Section 3(b) , each Non-Apollo Holder shall consent to and raise no objections (other than to challenge the lawfulness of any transaction to be consummated in connection with Apollo’s exercise of such rights, but only in the event that such Non-Apollo Holder would be required to violate applicable law in connection with the consummation of such transaction) against the transaction, and shall take all actions that the Board reasonably deems necessary or desirable in connection with the consummation of the transaction. Without limiting the generality of the foregoing, each Non-Apollo Holder agrees to (i) consent to and raise no objections (other than to challenge the lawfulness of any transaction to be consummated in connection with Apollo’s exercise of such rights, but only in the event that such Non-Apollo Holder would be required to violate applicable law in connection with the consummation of such transaction) against the transaction; (ii) execute any stock purchase agreement, merger agreement or other agreement entered into with the third party purchaser with respect to the transaction setting forth the terms and any ancillary agreement with respect to such transaction; (iii) vote the Equity Securities held by such Non-Apollo Holder in favor of the transaction; and (iv) refrain from the exercise of dissenters’ or appraisal rights with respect to the transaction.
(b) If the Company or the holders of the Company’s securities enter into any negotiation or transaction for which Rule 506 (or any similar rule then in effect) promulgated under the Securities Act, may be available with respect to the negotiation or transaction (including a merger, consolidation, or other reorganization), each Non-Apollo Holder shall, if reasonably requested by the Company, appoint a purchaser representative (as defined in Rule 501 of the Securities Act) reasonably acceptable to the Company. If the purchaser representative is designated by the Company, the Company shall pay the fees of the purchaser representative, but if any Non-Apollo Holder appoints another purchaser representative, the Non-Apollo Holder shall be responsible for the fees of the purchaser representative so appointed.
(c) Each Non-Apollo Holder shall bear its pro rata share of the costs of any transaction in which it sells Equity Securities (based upon the net proceeds received by such Non-Apollo Holder in such transaction) to the extent such costs are incurred for the benefit of all holders of Equity Securities and are not otherwise paid by the Company or the acquiring party (it being agreed that expenses incurred by or on behalf of Apollo or a Non-Apollo Holder for his, her or its sole benefit shall not be considered expenses incurred for the benefit of all Stockholders).
Section 8. Board of Directors .
(a) Number of Directors; Nomination; Removal; Committees .
(i) The Company and the Stockholders shall take such corporate actions as may be required to ensure that (A) the number of directors constituting the Board is at all times five (5), and (B) the presence of three (3) directors (including a
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majority of Apollo Directors (as defined below)) is required to constitute a quorum of the Board.
(ii) For so long as Apollo owns any shares of Common Stock (or equity-linked Securities convertible or exchangeable into shares of Common Stock), (A) Apollo shall have the right to nominate two (2) Persons to serve as directors on the Board and propose the removal of such nominees and (B) Fund VI shall have the right to nominate one (1) Person to serve as director on the Board and propose the removal of such nominee (the Persons nominated pursuant to clause (A) and (B) of this paragraph, the “ Apollo Directors ”). Each such nomination or proposal shall be made by Apollo or Fund VI, as the case may be, delivering a written notice to the Company. As promptly as practicable, but in any event within five (5) days, after delivery of such notice, the parties hereto shall take or cause to be taken such corporate actions as may be reasonably required to cause the election or removal proposed in such notice, and the Stockholders agree to vote their shares in favor of such proposal. Such corporate actions may include calling a meeting or soliciting a written consent of the Board, or calling a meeting or soliciting a written consent of the Stockholders of the Company. The Apollo Directors initially shall be Laurence Berg, Steven Martinez and Peter P. Copses, it being acknowledged and agreed that Fund VI has nominated Peter P. Copses to serve as an Apollo Director.
(iii) Robert Hitt (“ Hitt ”) shall have the right to serve as a director until he (A) resigns as a director, or (B) ceases, for any reason, to serve the Company under his Employment Agreement and is no longer the chief executive officer of the Company (each such event, with respect to Hitt, a “ Resignation Event ”). In the event of any such Resignation Event, Hitt agrees to resign as a director of the Company and each Subsidiary of the Company immediately pursuant to a written resignation notice delivered to the Board. In the event Hitt fails to so resign following a Resignation Event, the Stockholders agree to vote their shares to remove Hitt as a director pursuant to the terms of this Agreement immediately. Hitt acknowledges and agrees that he shall have no right to be appointed to the Board following removal therefrom pursuant to this Section 8 .
(iv) While serving as a director in accordance with this Section 8 , Hitt shall be a “ Non-Apollo Director .” In the event, Hitt loses his right to serve as a director, his replacement shall be appointed by the holders of a majority of the Common Stock of the Company owned by Shareholders other than Apollo and Affiliates of Apollo and such replacement shall be a “ Non-Apollo Director .”
(v) The majority of the members of each committee created by the Board shall be Apollo Directors, and each Stockholder shall vote his, her or its Equity Securities, and the Company and the Stockholders shall take such corporate actions as may be required, to effectuate the provisions of this Section 8(a)(v) .
(b) Meetings; Expenses; Compensation .
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(i) The Company agrees to cause the Bylaws to provide, at all times from and after the Closing, that meetings of the Board or any committee thereof may be conducted by teleconference and that Board action may be taken by unanimous written consent.
(ii) The Company shall convene meetings of the Board at least once every three months. Upon any failure by the Company to convene any meeting required by this paragraph, a director nominated under Section 8(a)(ii) shall be empowered to convene such meeting.
(iii) The Company shall reimburse each director for his or her reasonable out-of-pocket expenses (including travel and related expenses) incurred in connection with (i) attending the meetings of the Board and all committees thereof and (ii) conducting any other Company business requested by the Company. The Company shall maintain directors and officers indemnity insurance coverage reasonably satisfactory to Apollo, and the Restated Certificate and By-laws shall provide for indemnification and exculpation of directors to the fullest extent permitted under applicable law.
(iv) The Company shall pay each Apollo Director and each independent director appointed by Apollo (A) a director’s fee in the amount of $40,000 per year; (B) an attendance fee in the amount of $2,000 for each meeting of the board of directors attended in person by such director; and (C) an attendance fee in the amount of $1,000 for each meeting of the board of directors attended telephonically by such director.
(c) Increase of Number of Directors . In the event that, and at such time as, the number of directors constituting the Board is increased to more than five (5), Apollo shall have the right (for so long as Apollo owns any shares of Common Stock (or equity-linked Securities convertible into shares of Common Stock)) to nominate additional directors such that the majority of the directors comprising the Board shall be Apollo Directors, and the Company and Stockholders shall take all corporate actions as may be required to ensure that (x) nominees of Apollo constitute a majority of the directors of the Board and (y) the presence of a majority of directors (including a majority of directors appointed by Apollo) is required to constitute a quorum of the Board.
(d) Subsidiaries . The provisions of this Section 8 shall apply, mutatis mutandis , to the board of directors of each Subsidiary of the Company.
(e) Inconsistency; Termination .
(i) In the event that any provision of the Bylaws or Restated Certificate is inconsistent with any provision of this Section 8 , the Stockholders shall take such action as may be necessary to amend any such provision in the Bylaws or Restated Certificate to reflect the terms and provisions of this Section 8 .
(ii) The provisions of this Section 8 shall terminate automatically and be of no further force and effect upon the consummation of a Qualified Public Offering.
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Section 9. Representations and Warranties .
Each Stockholder, severally and not jointly, represents and warrants that (a) effective as of the Closing, such Stockholder is the record owner of the number and type of Equity Securities of the Company set forth opposite his, her or its name on Schedule I attached hereto, (b) this Agreement has been duly authorized, executed and delivered by such Stockholder and constitutes the valid and binding obligation of such Stockholder, enforceable in accordance with its terms, and (c) such Stockholder has not granted and is not a party to any proxy, voting trust or other agreement which is inconsistent with or conflicts with the provisions of this Agreement, and each Stockholder covenants that it shall not grant any proxy or become party to any voting trust or other agreement which is inconsistent with or conflicts with the provisions of this Agreement.
Section 10. Information Rights; Covenants .
(a) For so long as Apollo owns any Equity Securities, it shall be entitled to receive regular and suitable business (e.g. sales, marketing and technology), financial and other information reasonably appropriate to monitor and manage its ownership interests and such other information as it may reasonably request, from time to time. Such information will include, without limitation, the following:
(i) Access to Records . The Company shall, and shall cause each Subsidiary of the Company to, afford to Apollo and its officers, employees, advisors, counsel and other authorized representatives, during normal business hours, reasonable access, upon reasonable advance notice, to all of the books, records and properties of the Company and each such Subsidiary and all officers and employees of the Company and each such Subsidiary.
(ii) Hiring of Advisors . In connection with any possible Sale of the Company or any transactions permitted or contemplated herein, and upon the request of Apollo, subject to the fiduciary duties of the directors of the Company, the Company shall hire any (A) investment bank, (B) legal advisor, (C) financial or accounting advisor, or (D) other such advisor(s) on terms and conditions satisfactory to Apollo.
(iii) Financial Reports . The Company shall furnish Apollo with the following:
(A) Monthly Reports . As soon as available, but not later than 30 days after the end of each fiscal month, a consolidated balance sheet of the Company as of the end of such period and consolidated statements of income of the Company for such period and for the period commencing at the end of the previous fiscal year and ending with the end of such period, setting forth in each case in comparative form the corresponding figures for the corresponding period of the preceding fiscal year, and including comparisons to the budget or business plan and an analysis of the variances from the budget or plan, all prepared in accordance with generally accepted accounting principals consistently applied (except for the absence of footnotes and year-end adjustments).
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(B) Quarterly Reports . As soon as available, but not later than 45 days after the end of each quarterly accounting period, (1) a consolidated balance sheet of the Company as of the end of such period and consolidated statements of income, cash flows and changes in stockholders’ equity for such quarterly accounting period and for the period commencing at the end of the previous fiscal year and ending with the end of such period, setting forth in each case in comparative form the corresponding figures for the corresponding period of the preceding fiscal year, and including comparisons to the budget or business plan and an analysis of the variances from the budget or plan, all prepared in accordance with generally accepted accounting principals consistently applied and (2) a report by management of the Company of the operating and financial highlights of the Company and its Subsidiaries for such period, which shall include (x) a comparison between operating and financial results and budget and (y) an analysis of the operations of the Company and its Subsidiaries for such period.
(C) Annual Audit . As soon as available, but not later than 90 days after the end of each fiscal year of the Company, audited consolidated financial statements of the Company, which shall include statements of income, cash flows and changes in stockholders’ equity for such fiscal year and a balance sheet as of the last day thereof, each prepared in accordance with generally accepted accounting principles, consistently applied, and accompanied by the report of a the firm of independent certified public accountants selected by the Board (the “ Accountants ”). The Company and its Subsidiaries shall maintain a system of accounting sufficient to enable its Accountants to render the report referred to in this Section 10 .
(D) Miscellaneous . Promptly upon becoming available, the Company shall provide to Apollo:
(1) copies of all financial statements, reports, press releases, notices, proxy statements and other documents sent by the Company or its Subsidiaries to Apollo or its or their stockholders generally or released to the public and copies of all regular and periodic reports, if any, filed by the Company or its Subsidiaries with the Securities and Exchange Commission, any securities exchange or the NASD;
(2) notification in writing of any litigation or governmental proceeding in which it or any of its Subsidiaries is involved and which might, if determined adversely, materially and adversely effect the Company or any of its Subsidiaries;
(3) notification in writing of the existence of any default under any material agreement or instrument to which the Company or any of its Subsidiaries is a party or by which any of their assets are bound;
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(4) upon request, copies of all reports prepared for or delivered to the management of the Company or its Subsidiaries by its or their accountants; and
(5) upon request, any other routinely collected financial or other information available to management of the Company or its subsidiaries (including, without limitation, routinely collected statistical data).
(b) Apollo shall, and shall cause its Authorized Representatives (as defined below) to, hold in confidence all Company Confidential Information (as defined below) of the Company and its Subsidiaries and Affiliates provided or made available to, or otherwise known by or in the possession of, Apollo; provided , however , that the foregoing provision shall not apply to information which: (i) is or becomes generally known to the industry or the public (other than as a result of the breach of this Section 10 by Apollo); or (ii) is or becomes available to Apollo on a non-confidential basis from a source other than the Company or its Subsidiaries or Affiliates or their respective directors, officers, employees or agents. As used in this Agreement, the term “ Company Confidential Information ” means information that is not generally known to the public and that is used, developed or obtained by the Company or any of its Subsidiaries in connection with their respective businesses, including processes, ideas, inventions (whether patentable or not), know-how, schematics, trade secrets, trademarks, copyrights, patents, designs and all other intellectual property and proprietary information, books, records, financial statements, customer lists, details regarding products and services, marketing information, sales information and all other technical, business, financial, customer and product development plans, forecasts, strategies and information, previously, presently, or subsequently disclosed to Apollo or its Affiliates or Authorized Representatives, in each case to the extent not generally known to the public. Notwithstanding the terms of this Agreement, Company Confidential Information may be disclosed by Apollo and its Authorized Representatives when compelled by governmental rule or regulation, or compelled by legal process or court order if Apollo (and/or its Authorized Representatives) has given the Company prompt written notice of such request or order and the Company Confidential Information to be disclosed as far in advance of its disclosure as reasonably possible so that the Company may seek an appropriate protective order or waive compliance by Apollo. For purposes of the preceding sentence, Apollo and its Authorized Representatives shall be entitled to rely conclusively on an opinion of its nationally recognized outside counsel that Apollo or its Authorized Representative is compelled by governmental rule or regulation, or compelled by legal process or court order, to disclose any such Company Confidential Information.
(c) Notwithstanding the disclosure obligations set forth in Section 10(a) , to the extent applicable to the Company, the Company shall comply in all material respects with the applicable requirements and provisions of Regulation FD (17 C.F.R. § 243.100, as amended, modified, restated or supplemented from time to time).
Section 11. Registration Rights .
(a) Right to Demand; Demand Notices . Subject to the provisions of this Section 11 , at any time and from time to time, Apollo (the “ Demand Party ”) shall have the right
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to make two (2) written requests in any 12-month period to the Company for registration under and in accordance with the provisions of the Securities Act of all or part of its Restricted Shares. All requests made pursuant to this Section 11 will specify the aggregate amount of Restricted Shares to be registered, and will also specify the intended method of Transfer thereof (a “ Demand Notice ”), including, if such Transfer is pursuant to an Underwritten Offering, whether such offering shall be a “firm commitment” underwriting. Subject to Section 11(e) , promptly upon receipt of any such Demand Notice, the Company will use its best efforts to effect, as soon as possible, but in any event within 90 days, such registration under the Securities Act of the Restricted Shares that the Company has been so requested to register.
(b) Company’s Right to Defer Registration . If the Company is requested to effect a Demand Registration and the Company furnishes to the Demand Party a copy of a resolution of the Board certified by the secretary of the Company stating that in the good faith judgment of the Board it would be materially adverse to the Company for such Registration Statement to be filed on or before the date such filing would otherwise be required hereunder, the Company shall have the right to defer such filing for a period of not more than ninety (90) days after receipt of the request for such registration from such Demand Party. If the Company shall so postpone the filing of a Registration Statement and if the Demand Party within thirty (30) days after receipt of the notice of postponement advises the Company in writing that such Demand Party has determined to withdraw such request for registration, then such Demand Registration shall be deemed to be withdrawn and shall not be deemed to have been requested for purposes of Section 11(a) . If the effective date of any Registration Statement filed would otherwise be at least forty-five (45) calendar days, but fewer than ninety (90) calendar days, after the end of the Company’s fiscal year, and the Securities Act requires the Company to include audited financials as of the end of such fiscal year, the Company may delay the effectiveness of such Registration Statement for such period (up to a maximum of 45 days) as is reasonably necessary to include therein audited financial statements for such fiscal year.
(c) Registration Statement Form . Registrations under this Section 11 shall be on such appropriate registration form of the Commission (i) as shall be selected by the Company and as shall be reasonably acceptable to the Demand Party and (ii) as shall permit the Transfer of Restricted Shares in accordance with the intended method or methods of Transfer specified in the Demand Party’s Demand Notice. If, in connection with any registration under this Section 11 that is proposed by the Company to be on Form S-3 or any successor form, the managing underwriter, if any, shall advise the Company in writing that in its opinion the use of another permitted form is of material importance to the success of the offering, then such registration shall be on such other permitted form.
(d) Effective Registration Statement . The Company shall be deemed to have effected a Demand Registration if (i) the Registration Statement relating to such Demand Registration is declared effective by the Commission; provided , however , that no Demand Registration shall be deemed to have been requested for purposes of Section 11(a) if (x) such registration, after it has become effective, is or becomes subject to any stop order, injunction or other Order of the Commission or other Governmental Authority or court by reason of an act or omission by the Company and such interference is not cured within twenty (20) Business Days or (y) the conditions to closing specified in the purchase agreement or underwriting agreement entered into in connection with such registration are not satisfied because of an act or omission
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by the Company (other than a failure of the Company or any of its officers or employees to execute or deliver any closing certificate by reason of facts or circumstances existing due to actions of Apollo) or (ii) at any time after the Demand Party delivers a Demand Notice to the Company and prior to the effectiveness of the Registration Statement, the preparation of such Registration Statement is discontinued or such Registration Statement is withdrawn or abandoned at the request of the Demand Party (other than as contemplated by Section 11(e) ) unless the Demand Party has elected to pay and has paid to the Company in full the Registration Expenses (as set forth in Section 11(j) ) in connection with such Registration Statement.
(e) Cutbacks . If the managing underwriter advises the Company that the inclusion of all such Restricted Shares proposed to be included in any registration would interfere with the successful marketing (including pricing) of the Equity Securities of the Company to be offered thereby, then the number of Restricted Shares proposed to be included in such registration shall be allocated among the Company and the selling Stockholders in the following order of priority:
(i) first, the Restricted Shares to be offered by the Company; and
(ii) second, the amount of Restricted Shares which all other Stockholders have requested to be included in such registration (that the managing underwriter believes can be sold without interfering with the successful marketing (including pricing) of the Equity Securities of the Company), pro rata based upon the number of Restricted Shares proposed to be sold by each such Stockholder in such registration.
(f) Piggyback Registration . If the Company at any time proposes for any reason to register Restricted Shares under the Securities Act (other than on Form S-4 or Form S-8 promulgated under the Securities Act or any successor forms thereto) including, without limitation, pursuant to Section 11(a) or Section 11(g) , it shall promptly give written notice to each Stockholder of its intention to register the Restricted Shares and, upon the written request, given within 15 days after delivery of any such notice by the Company, of any such Stockholder to include in such registration Restricted Shares (which request shall specify the number of Restricted Shares proposed to be included in such registration), the Company shall use its best efforts to cause all such Restricted Shares to be included in such registration on the same terms and conditions as the Restricted Shares otherwise being sold in such registration, and in any event, subject to Section 11(e) the Company shall include the Restricted Shares if the registration is effected pursuant to Section 11(a) or Section 11(g) on the same terms and conditions as the Restricted Shares otherwise being sold in such registration.
(g) Registrations on Form S-3 . Notwithstanding anything contained in this Agreement to the contrary, at such time as the Company shall have qualified for the use of Form S-3 promulgated under the Securities Act or any successor form thereto, Apollo shall have the right to request in writing an unlimited number of Demand Registrations on Form S-3 or such successor form of Restricted Shares held by Apollo, which request or requests shall (i) specify the number of Restricted Shares intended to be sold or otherwise Transferred and (ii) state the intended method of Transfer of such Restricted Shares. Promptly (and in any event within 5 days) after receipt of any such request, the Company shall give written notice of such proposed
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registration to the other Stockholders and, subject to Section 11(e) , shall include in such proposed registration any Restricted Shares requested to be included in such proposed registration by such Stockholders who respond in writing to the Company’s notice within 15 days after delivery of such Notice (which response shall specify the number of Restricted Shares proposed to be included in such registration).
(h) Holdback Agreement . If the Company at any time shall register any shares of Common Stock under the Securities Act (including any registration pursuant to Section 11(a) ) for sale to the public, Apollo and the Non-Apollo Holders shall not sell, make any short sale of, grant any option for the purchase of, or otherwise Transfer, any Restricted Shares (other than those Restricted Shares included in such registration pursuant to Section 11(a) ) without the prior written consent of the Company for a period designated by the Company in writing to Apollo and the Non-Apollo Holders, which period shall not begin more than 10 days prior to the effectiveness of the Registration Statement pursuant to which such public offering shall be made and shall not exceed 90 days (or 180 days in the case of the initial public offering) after the effective date of such Registration Statement.
(i) Preparation and Filing . If and whenever the Company is under an obligation pursuant to the provisions of this Agreement to use its best efforts to effect the registration of any Restricted Shares, the Company shall, as expeditiously as practicable:
(i) use its best efforts to cause a Registration Statement that registers such Restricted Shares to become and remain effective for a period of 90 days or until all of such Restricted Shares have been Transferred (if earlier);
(ii) furnish, at least five Business Days before filing a Registration Statement that registers such Restricted Shares, any Preliminary Prospectus and the Prospectus relating thereto or any amendments or supplements relating to such a Registration Statement or such prospectuses, to one counsel acting on behalf of all selling Stockholders selected by Apollo (the “ Sellers’ Counsel ”), copies of all such documents proposed to be filed (it being understood that such five Business Day period need not apply to successive drafts of the same document proposed to be filed so long as such successive drafts are supplied to such counsel in advance of the proposed filing by a period of time that is customary and reasonable under the circumstances), and shall use its best efforts to reflect in each such document, when so filed with the Commission, such comments as the Stockholders whose Restricted Shares are to be covered by such Registration Statement may reasonably propose;
(iii) prepare and file with the Commission such amendments and supplements to such Registration Statement and the Prospectus used in connection therewith as may be necessary to keep such Registration Statement effective for at least a period of 90 days or until all of such Restricted Shares have been Transferred (if earlier) and to comply with the provisions of the Securities Act with respect to the sale or other Transfer of such Restricted Shares;
(iv) promptly notify the Sellers’ Counsel in writing (A) of the receipt by the Company of any notification with respect to any comments by the Commission
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with respect to such Registration Statement, any Preliminary Prospectus, the Prospectus or any Issuer Free Writing Prospectus, or any request by the Commission for the amending or supplementing thereof or for additional information with respect thereto, (B) of the receipt by the Company of any notification with respect to the issuance by the Commission of any stop order suspending the effectiveness of such Registration Statement, Preliminary Prospectus, Prospectus or Issuer Free Writing Prospectus or any amendment or supplement thereto or the initiation of any proceedings for that purpose and (C) of the receipt by the Company of any notification with respect to the suspension of the qualification of such Restricted Shares for sale in any jurisdiction or the initiation or threatening of any proceeding for such purposes;
(v) use its best efforts to register or qualify such Restricted Shares under such other securities or blue sky laws of such jurisdictions as any selling Stockholder reasonably requests and do any and all other acts and things which may be reasonably necessary or advisable to enable the holders of such Restricted Shares to consummate the Transfer in such jurisdictions.
(vi) without limiting subsection (v) above, use its best efforts to cause such Restricted Shares to be registered with or approved by such other Governmental Authorities as may be necessary by virtue of the business and operations of the Company to enable the holders of such Restricted Shares to consummate the Transfer of such Restricted Shares;
(vii) furnish to each selling Stockholder and the underwriters, if any, such number of copies of such Registration Statement, any amendments thereto, any exhibits thereto or documents incorporated by reference therein (but only to the extent not publicly available on EDGAR or the Company’s website), any Preliminary Prospectus, any Issuer Free Writing Prospectus and the Prospectus (each in conformity with the requirements of the Securities Act), and such other documents as such selling Stockholder or underwriters may reasonably request in order to facilitate the public offering and sale or other Transfer of such Restricted Shares;
(viii) notify in writing on a timely basis each selling Stockholder at any time when the Prospectus is required to be delivered under the Securities Act, of the happening of any event as a result of which the Prospectus included in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing and, at the request of such Stockholder, prepare and furnish to such Stockholder a number of copies reasonably requested by such Stockholder of a supplement to or an amendment of such Prospectus as may be necessary so that, as thereafter delivered to the offerees of such Restricted Shares, such Prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing;
(ix) prevent the issuance of an Order suspending the effectiveness of a Registration Statement, and if one is issued, use its best efforts to obtain the withdrawal
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of any Order suspending the effectiveness of a Registration Statement as soon as possible;
(x) retain in accordance with the Rules and Regulations all Issuer Free Writing Prospectuses not required to be filed pursuant to the Rules and Regulations; and if at any time after the date hereof any event shall have occurred as a result of which any Issuer Free Writing Prospectus, as then amended or supplemented, would conflict with the information in the Registration Statement, the most recent Preliminary Prospectus or the Prospectus or would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, or, if for any other reason it shall be necessary to amend or supplement any Issuer Free Writing Prospectus effect compliance with the Securities Act and the Rules and Regulations, to notify promptly in writing the selling Stockholders and underwriters and, upon request, to file such document and to prepare and furnish without charge to each selling Stockholder and underwriter as many copies as each such selling Stockholder and underwriter may from time to time reasonably request of an amended or supplemented Issuer Free Writing Prospectus that will correct such conflict, statement or omission or effect compliance with the Securities Act and the Rules and Regulations;
(xi) make available for inspection by the selling Stockholders, the Sellers’ Counsel or any underwriter participating in any Transfer pursuant to such Registration Statement and any attorney, accountant or other agent retained by any such seller or underwriter (collectively, the “ Inspectors ”), all pertinent financial and other records, pertinent corporate documents and properties of the Company (collectively, the “ Records ”), as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause the Company’s officers, managers and employees to supply all information (together with the Records, the “ Information ”) reasonably requested by any such Inspector in connection with such Registration Statement. Any of the Information that the Company determines in good faith to be confidential, and of which determination the Inspectors are so notified, shall not be disclosed by the Inspectors unless (i) the disclosure of such Information is necessary to avoid or correct a misstatement or omission in the Registration Statement, (ii) the release of such Information is ordered pursuant to a subpoena or other Order from a Governmental Authority or (iii) such Information has been made generally available to the public. The selling Stockholders agree that they will, upon learning that disclosure of such Information is sought by a Governmental Authority, give prompt written notice to the Company and use their reasonable commercial efforts to allow the Company, at the Company’s expense, to undertake appropriate action to prevent disclosure of the Information deemed confidential;
(xii) in the case of an Underwritten Offering, use its best efforts to obtain, from its Accountants, a “cold comfort” letter in customary form and covering such matters of the type customarily covered by cold comfort letters;
(xiii) use its best efforts to obtain, from its counsel, an opinion or opinions in customary form (which shall also be addressed to the Stockholders selling
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Restricted Shares in such registration) and, in the case of an Underwritten Offering, use its best efforts to obtain, from its counsel, an opinion or opinions in customary form;
(xiv) provide a transfer agent and registrar (which may be the same entity) for such Restricted Shares and a CUSIP number for such Restricted Shares, in each case no later than the effective date of such registration;
(xv) upon the request of any underwriter, issue to any underwriter to which any selling Stockholder may sell Restricted Shares in such offering, certificates evidencing such Restricted Shares;
(xvi) upon the request of Apollo, list such Restricted Shares on any national securities exchange on which any shares of Common Stock are listed or, if no such shares are listed on a national securities exchange, use its best efforts to qualify such Restricted Shares for inclusion on the automated quotation system of the National Association of Securities Dealers, Inc. (the “ NASD ”) or such other national securities exchange as Apollo shall request;
(xvii) in connection with an Underwritten Offering, participate, to the extent requested by the managing underwriter for the offering or Apollo, in customary efforts to sell the Restricted Shares being offered, cause such steps to be taken as to ensure the good faith participation of senior management officers of the Company in “road shows” as is customary and take such other actions as the underwriters or Apollo may request in order to expedite or facilitate the Transfer of Restricted Shares;
(xviii) cooperate with each Stockholder and each underwriter participating in the Transfer of Restricted Shares and their respective counsel in connection with any filings required to be made with the NASD, including, if appropriate, the pre-filing of the Prospectus as part of a shelf Registration Statement in advance of an Underwritten Offering;
(xix) make available to its security holders, as soon as reasonably practicable but not later than eighteen (18) months after the effective date, earnings statements (which need not be audited) covering a period of twelve (12) months beginning within three (3) months after the effective date of the Registration Statement, which earnings statements shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;
(xx) during the period when the Prospectus is required to be delivered under the Securities Act, promptly file all documents required to be filed with the Commission, including pursuant to Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act;
(xxi) otherwise use its best efforts to comply with all applicable Rules and Regulations; and
(xxii) use its best efforts to take all other steps necessary to effect the registration of such Restricted Shares contemplated hereby.
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(j) Expenses . All expenses incident to the Company’s performance of, or compliance with, this Section 11 , including (a) all registration and filing fees, and any other fees and expenses associated with filings required to be made with any stock exchange, the Commission and the NASD (including, if applicable, the fees and expenses of any “qualified independent underwriter” and its counsel as may be required by the rules and regulations of the NASD); (b) all fees and expenses of compliance with state securities or “blue sky” laws (including fees and disbursements of counsel for the underwriters or Stockholders in connection with “blue sky” qualifications of the Restricted Shares and determination of their eligibility for investment under the laws of such jurisdictions as the managing underwriters may designate); (c) all printing and related messenger and delivery expenses (including expenses of printing certificates for the Restricted Shares in a form eligible for deposit with The Depository Trust Company (or any other depositary or transfer agent/registrar) and of printing any Preliminary Prospectus, any Issuer Free Writing Prospectus and the Prospectus and any amendments thereto), all fees and disbursements of counsel for the Company and of all independent certified public accountants of the issuer (including the expenses of any special audit and “cold comfort” letters required by or incident to such performance); (d) Securities Act liability insurance if the Company so desires or the underwriters so require; (e) all fees and expenses incurred in connection with the listing of the Restricted Shares on any securities exchange (including NASDAQ) and all rating agency fees; (f) all fees and disbursements of the Sellers’ Counsel to represent the selling Stockholders in connection with such registration; and (g) reasonable fees and expenses of outside counsel and advisors retained by the Company (all such expenses being herein called “ Registration Expenses ”), will be borne by the Company, regardless of whether the Registration Statement becomes effective; provided , however , that all underwriting discounts and selling commissions applicable to the Restricted Shares shall not be borne by the Company, but shall be borne by the seller or sellers thereof, in proportion to the number of Restricted Shares sold by such seller or sellers. In addition, the Company will, in any event, pay its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any audit and the fees and expenses of any Person, including special experts, retained by the Company.
(k) Indemnification .
(i) In connection with any registration of any Restricted Shares under the Securities Act pursuant to this Agreement, the Company shall indemnify and hold harmless each seller of such Restricted Shares, each underwriter, broker or any other Person acting on behalf of such seller and each other Person, if any, who controls any of the foregoing Persons within the meaning of the Securities Act against any losses, claims, damages or liabilities, joint or several, to which any of the foregoing Persons may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (1) any untrue statement or alleged untrue statement of a material fact contained in (A) any Preliminary Prospectus, the Registration Statement, the Prospectus or in any amendment or supplement thereto, (B) any Issuer Free Writing Prospectus or in any amendment or supplement thereto or (C) any Permitted Issuer Information used or referred to in any “free writing prospectus” (as defined in Rule 405) used or referred to by any underwriter or (D) any “road show” (as defined in Rule 433) not constituting an Issuer Free Writing Prospectus, when considered together with the most recent Preliminary Prospectus
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(collectively, “ Road Show Material ”), (2) the omission or alleged omission to state in any Preliminary Prospectus, the Registration Statement, the Prospectus, any Issuer Free Writing Prospectus or in any amendment or supplement thereto or in any Permitted Issuer Information or any Road Show Material any material fact required to be stated therein or necessary to make the statements therein (in the case of any Preliminary Prospectus, Issuer Free Writing Prospectus, Road Show Material and the Prospectus, in the light of the circumstances under which they were made) not misleading, or any violation by the Company of the Securities Act or state securities or blue sky laws applicable to the Company and relating to action or inaction required of the Company in connection with such registration or qualification under such state securities or blue sky laws; and shall reimburse such seller, such underwriter, such broker or such other Person acting on behalf of such seller and each such controlling Person for any legal or other expenses reasonably incurred by any of them in connection with investigating or defending any such loss, claim, damage, liability or action; provided , however , that the Company shall not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in the Preliminary Prospectus, the Registration Statement, the Prospectus, any Issuer Free Writing Prospectus or in any such amendment or supplement thereto or in any Permitted Issuer Information or any Road Show Material in reliance upon and in conformity with written information furnished to the Company through an instrument duly executed by such seller or underwriter specifically for use in the preparation thereof; and provided , further , however , that the foregoing indemnity agreement shall not inure to the benefit of any indemnified party if (w) such loss, claim, damage, liability or judgment arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any Preliminary Prospectus or any amendment or supplement thereto, as the case may be, (x) the Company informed such sellers and underwriters of such untrue statement or alleged untrue statement or omission or alleged omission prior to the confirmation of sales of the Shares, (y) such untrue statement or alleged untrue statement or omission or alleged omission was corrected in an amended or supplemented Preliminary Prospectus (or, where permitted by law, an Issuer Free Writing Prospectus) and such corrected Preliminary Prospectus (or Issuer Free Writing Prospectus) was provided to the underwriters such that the underwriters had a reasonably sufficient amount of time to deliver such corrected Preliminary Prospectus (or Issuer Free Writing Prospectus) to the Persons to whom the underwriters offered the Restricted Shares and (z) the timely delivery of such amended Preliminary Prospectus (or Issuer Free Writing Prospectus) to such Person would have constituted a complete defense to the losses, claims, damages, liabilities and judgments asserted by such Person.
(ii) In connection with any registration of Restricted Shares under the Securities Act pursuant to this Agreement, each seller of Restricted Shares shall indemnify and hold harmless (in the same manner and to the same extent as set forth in the preceding paragraph of this Section 11(k) ) the Company, each officer of the Company who shall sign such Registration Statement, each underwriter, broker or other Person acting on behalf of such seller, each Person who controls any of the foregoing Persons within the meaning of the Securities Act and each other seller of Restricted Shares under such Registration Statement with respect to any statement or omission from any
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Preliminary Prospectus, the Registration Statement, the Prospectus, any Issuer Free Writing Prospectus or in any amendment or supplement thereto or in any Road Show Material, if such statement or omission was made in reliance upon and in conformity with written information furnished to the Company or such underwriter through an instrument duly executed by such seller specifically for use in connection with the preparation of such Preliminary Prospectus, Registration Statement, Prospectus, Issuer Free Writing Prospectus or in any amendment or supplement thereto or in Road Show Material; provided , however , that the maximum amount of liability in respect of such indemnification shall be, limited, in the case of each seller of Restricted Shares, to an amount equal to the net proceeds actually received by such seller from the sale of Restricted Shares effected pursuant to such registration.
(iii) Indemnification similar to that specified in Sections 11(k)(i) and (k)(ii) shall be given by the Company and each seller of Restricted Shares (with such modifications as may be appropriate) with respect to any required registration or other qualification of their Securities under any Federal or state law or regulation of Governmental Authority other than the Securities Act.
(iv) Promptly after receipt by an indemnified party of notice of the commencement of any action involving a claim referred to in the preceding paragraphs of this Section 11(k) , such indemnified party will, if a claim in respect thereof is made against an indemnifying party, give written notice to the latter of the commencement of such action ( provided , however , that an indemnified party’s failure to give such notice in a timely manner shall only relieve the indemnification obligations of an indemnifying party to the extent such indemnifying party is materially prejudiced by such failure). In case any such action is brought against an indemnified party, the indemnifying party will be entitled to participate in and to assume the defense thereof, jointly with any other indemnifying party similarly notified to the extent that it may wish, with counsel reasonably satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be responsible for any legal or other expenses subsequently incurred by the latter in connection with the defense thereof; provided , however , that if any indemnified party shall have reasonably concluded that there may be one or more legal or equitable defenses available to such indemnified party which are additional to or conflict with those available to the indemnifying party, or that such claim or litigation involves or could have an effect upon matters beyond the scope of the indemnity agreement provided in this Section 11(k) , the indemnifying party shall not have the right to assume the defense of such action on behalf of such indemnified party and such indemnifying party shall reimburse such indemnified party and, any Person controlling such indemnified party for that portion of the fees and expenses of any counsel retained by the indemnified party which are reasonably related to the matters covered by the indemnity agreement provided in this Section 11(k) .
(v) If the indemnification provided for in this Section 11(k) is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, claim, damage or liability referred to herein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amounts paid
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or payable by such indemnified party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions which resulted in such loss, claim, damage or liability as well as any other relevant equitable considerations; provided , however , that the maximum amount of liability in respect of such contribution shall be limited, in the case of each seller of Restricted Shares, to an amount equal to the net proceeds actually received by such seller from the sale of Restricted Shares effected pursuant to such registration. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. No Person guilty of fraud shall be entitled to indemnification or contribution hereunder.
(vi) The indemnification and contribution provided for under this Agreement will remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party and will survive the Transfer of Restricted Shares.
(l) Underwritten Offerings .
Notwithstanding anything to the contrary set forth in this Agreement:
(i) to the extent that all the holders selling Restricted Shares in a proposed registration shall enter into an underwriting or similar agreement, which agreement contains provisions covering one or more issues addressed in this Section 11 , the provisions contained in this Section 11 addressing such issue or issues shall be of no force or effect with respect to such registration. If any offering pursuant to a Demand Registration or pursuant to Section 11(g) involves an Underwritten Offering, Apollo shall have the right to select the managing underwriter or underwriters to administer the offering, which managing underwriters shall be a firm of nationally recognized standing and reasonably satisfactory to the Company in which case the Company shall enter into an agreement with such firm for the underwriting of such offering containing terms and conditions reasonably satisfactory to Apollo and the Company; and
(ii) no Stockholder may participate in any registration hereunder that is underwritten unless such Stockholder agrees (A) to sell such Stockholder’s Restricted Shares proposed to be included therein on the basis provided in any underwriting arrangement(s) acceptable to Apollo and the Company and consistent with the terms hereof and (B) as expeditiously as possible, to notify the Company of the occurrence of any event concerning such Stockholder as a result of which any Preliminary Prospectus, any Issuer Free Writing Prospectus or the Prospectus contains an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
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(m) Information by Holder . Each holder of Restricted Shares to be included in any registration shall furnish to the Company such written information regarding such holder and the distribution proposed by such holder as the Company may reasonably request in writing and as shall be reasonably required in connection with any registration, qualification or compliance referred to in this Agreement.
(n) Exchange Act Compliance . From and after the date a Registration Statement filed by the Company pursuant to the Exchange Act relating to any class of the its Securities shall have become effective, the Company shall comply with all of the reporting requirements of the Exchange Act (whether or not it shall be required to do so) and shall comply with all other public information reporting requirements of the Commission which are conditions to the availability of Rule 144 for the sale of Restricted Shares. The Company shall cooperate with each holder in supplying such information as may be necessary for such holder to complete and file any information reporting forms presently or hereafter required by the Commission as a condition to the availability of Rule 144 or any comparable successor rules). The Company shall furnish to any holder of Restricted Shares upon request a written statement executed by the Company as to the steps it has taken to comply with the current public information requirement of Rule 144 (or such comparable successor rules). After the consummation of a Qualified Public Offering, subject to the limitations on Transfers imposed by this Agreement, the Company shall use its best efforts to facilitate and expedite transfers of Restricted Shares pursuant to Rule 144 under the Securities Act, which efforts shall include timely notice to its transfer agent to expedite such transfers of Restricted Shares.
(o) No Conflict of Rights . The Company represents and warrants to Apollo and the Non-Apollo Holders that the registration rights granted in this Agreement do not conflict with any other registration rights granted by the Company. The Company shall not, after the date hereof, grant any registration rights which conflict with or impair, or have any priority over, the registration rights granted hereby.
(p) Termination . The provisions of this Section 11 shall terminate and be of no further force or effect when there shall not be any Restricted Shares, provided , however , that Sections 11(j) and (k) shall survive the termination of this Agreement indefinitely.
(q) Cypress Stockholders’ Agreement . Each of the parties to this Agreement acknowledge that the Cypress Stockholders’ Agreement contains provisions comparable to the provisions of this Section 11 , including provisions relating to piggyback registration rights. Nothing in this Section 11 shall limit or in any way restrict the rights of the parties to the Cypress Stockholders’ Agreement thereunder.
Section 12. Non-Solicitation; Non-Hire; Non-Compete; Non-Disparagement; Confidentiality .
The following provisions shall apply to each Non-Apollo Holder to the extent that such Non-Apollo Holder is not subject to any similar provisions pursuant to a separate arrangement with the Company or any of its Subsidiaries:
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(a) With respect to each Non-Apollo Holder, during the period commencing on the date of this Agreement and ending on the second anniversary of the date on which such Non-Apollo Holder’s employment or other professional relationship with the Company or any Subsidiary of the Company terminates (whether pursuant to the terms of his or her Employment Agreement with the Company or any Subsidiary of the Company or otherwise), such Non-Apollo Holder shall not and shall cause its Affiliates (other than the Company and its Subsidiaries) not to (without the prior written consent of Apollo) directly or indirectly (i) induce or attempt to induce any employee of the Company or any Subsidiary of the Company to leave the employ of the Company or any Subsidiary of the Company, or in any way interfere with the relationship between the Company or any Subsidiary of the Company, on the one hand, and any employee thereof, on the other hand, (ii) hire any Person who is or at any time was an employee of the Company or any Subsidiary of the Company until six (6) months after such individual’s employment relationship with the Company or such Subsidiary has ended, or (iii) induce or attempt to induce any customer, supplier, licensee or other business relation of the Company or any Subsidiary of the Company to cease doing business with the Company or such Subsidiary, or in any way interfere with the relationship between any such customer, supplier, licensee or business relation, on the one hand, and the Company or any Subsidiary of the Company, on the other hand.
(b) With respect to each Non-Apollo Holder, during the period commencing on the date of this Agreement and ending on the first anniversary of the date on which such Non-Apollo Holder’s employment or other professional relationship with the Company or any Subsidiary of the Company terminates (whether pursuant to the terms of his or her Employment Agreement with the Company or any Subsidiary of the Company or otherwise) (the “ Non-Compete Period ”), such Non-Apollo Holder shall not and shall cause its Affiliates (other than the Company and its Subsidiaries) not to (without the prior written consent of Apollo) directly or indirectly (i) engage in any Competitive Business, (ii) render any services to any Competitive Business in a manner that enhances the capacity of such Competitive Business to engage in the production, sale, provision or distribution of products or services similar to those produced, sold, distributed or provided by the Company or any of its Subsidiaries, or (iii) acquire a financial interest in any Competitive Business. For purposes of this Agreement, the phrase “directly or indirectly engage in” shall include any direct or indirect ownership or profit participation interest in such enterprise, whether as an owner, stockholder, member, partner, joint venturer of or otherwise, and shall include any direct or indirect participation in such enterprise as an employee, consultant, director, officer, licensor of technology or otherwise. For purposes of this Agreement, the term “ Competitive Business ” shall mean a business that engages in the production, sale, provision or distribution of products or services similar to those produced, sold, distributed or provided by the Company or any of its Subsidiaries during the period in which such Non-Apollo Holder was employed or retained by the Company or any Subsidiary of the Company. Notwithstanding the foregoing, nothing herein shall prohibit such Non-Apollo Holder from being a passive owner of not more than 2% of the outstanding equity securities of any class of a corporation or other entity that is publicly traded, or not more than 2% of any non-voting equity securities or debt securities of any corporation or other entity, so long as such Non-Apollo Holder has no active participation in the business of such corporation or other entity (including serving as a member of the board of directors or as a consultant). The obligations of each Non-Apollo Holder under this Section 12(b) shall apply to any geographic area in which the Company
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or its Subsidiaries have engaged in business during such Non-Apollo Holder’s Non-Compete Period.
(c) Each Non-Apollo Holder acknowledges and agrees that, during such time as such Person is employed with, or otherwise has another professional relationship with, the Company or any Subsidiary of the Company and thereafter, he, she or it shall not (except in the ordinary course promotion of a product or a service of a subsequent employer or a company for which he, she or it is providing products or services), directly or indirectly, issue or communicate any public statement, or statement likely to become public, that is disparaging of or damaging to the Company, any of its Subsidiaries, any product, practice or service thereof, or, any officer, director or employee thereof or Apollo or any of its officers, directors, members, managers, partners, employees or Affiliated investment funds. The foregoing shall not be violated by truthful responses to legal process or inquiry by a Governmental Authority.
(d) Each Non-Apollo Holder shall, and shall cause its affiliates, employees, counsel and authorized representatives (collectively, “ Authorized Representatives ”) to, hold in confidence all Confidential Information of the Company, Apollo and their respective Subsidiaries and Affiliates provided or made available to, or otherwise known by or in the possession of, such Non-Apollo Holder; provided , however , that the foregoing provision shall not apply to information which: (a) is or becomes generally known to the industry or the public (other than as a result of the breach of this Section 12(d) by such Non-Apollo Holder); or (b) is or becomes available to such Non-Apollo Holder on a non-confidential basis from a source other than (i) the Company or its Subsidiaries or Affiliates or their respective directors, officers, employees or agents, or (ii) Apollo or its Affiliates or its or its Affiliates’ limited partners, general partners, directors, members, officers, managers, employees, agents, advisors or representatives. As used in this Agreement, the term “ Confidential Information ” means information that is not generally known to the public and that is used, developed or obtained by the Company or any of its Subsidiaries or Apollo or any of its Affiliates in connection with their respective businesses, including processes, ideas, inventions (whether patentable or not), know-how, schematics, trade secrets, trademarks, copyrights, patents, designs and all other intellectual property and proprietary information, books, records, financial statements, customer lists, details regarding products and services, marketing information, sales information and all other technical, business, financial, customer and product development plans, forecasts, strategies and information, previously, presently, or subsequently disclosed to a Non-Apollo Holder or a Non-Apollo Holder’s Authorized Representatives, in each case to the extent not generally known to the public. Notwithstanding the terms of this Agreement, Confidential Information may be disclosed by a Non-Apollo Holder and its Authorized Representatives when compelled by governmental rule or regulation, or compelled by legal process or court order if such Non-Apollo Holder (and/or its Authorized Representatives) has given the Company or Apollo, as applicable, prompt written notice of such request or order and the Confidential Information to be disclosed as far in advance of its disclosure as reasonably possible so that the Company or Apollo, as applicable, may seek an appropriate protective order or waive compliance by such Non-Apollo Holder. For purposes of the preceding sentence, a Non-Apollo Holder and its Authorized Representatives shall be entitled to rely conclusively on an opinion of his, her or its nationally recognized outside counsel that such Non-Apollo Holder or Authorized Representative is compelled by governmental rule or regulation, or compelled by legal process or court order, to disclose any such Confidential Information.
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(e) Each Non-Apollo Holder acknowledges and agrees that the covenants set forth above are both (i) in partial consideration for monies received under the Agreement and Plan of Merger and (ii) reasonable and necessary in order for the Company, Apollo and the other Non-Apollo Holders to preserve and protect their legitimate business interests, that irreparable injury will result if such Non-Apollo Holder breaches any of the terms of such covenants and that damages would be an inadequate remedy for any breach as set forth in Section 14(j) below. Accordingly, each Non-Apollo Holder acknowledges and agrees that in the event of a breach of any of the covenants contained in this Section 12 , in addition to any other remedy that may be available at law or in equity, Apollo, the Company and its Subsidiaries will be entitled to specific performance and injunctive relief.
Section 13. Termination .
Subject to the terms of Section 11(p) , this Agreement shall terminate on the first to occur of:
(a) the date the Company consummates a Qualified Public Offering;
(b) the complete liquidation of the Company and its Subsidiaries or the sale, lease or other disposition by the Company of all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole; and
(c) the execution of a resolution of the Board terminating this Agreement.
Section 14. Miscellaneous .
(a) Restrictive Legends .
(i) Each certificate for Restricted Shares (unless otherwise permitted by the provisions of Section 14(a)(ii) ) shall include a legend in substantially the following form:
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES OR BLUE SKY LAWS. THESE SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT OR LAWS. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO A STOCKHOLDERS AGREEMENT DATED AS OF JULY 21, 2006 BY AND AMONG REXNORD HOLDINGS, INC. (THE “ COMPANY ”) AND THE OTHER PARTIES NAMED THEREIN. THE TERMS OF SUCH STOCKHOLDERS AGREEMENT INCLUDE, AMONG OTHER THINGS, RESTRICTIONS ON TRANSFER. A
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COPY OF SUCH AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST.”
(ii) Subject to Section 14(b) , any holder of Restricted Shares registered that are pursuant to the Securities Act and qualified under applicable state securities laws may exchange any certificate or other evidence of ownership of such Restricted Shares for a certificate or other evidence of ownership with respect to the Common Stock so registered that shall not bear the legend set forth in clause (i) of this Section 14(a) .
(b) Compliance with Securities Laws . Upon any proposed Transfer of Restricted Shares, the Company shall not be obligated to register the Transfer of such Restricted Shares on the stock transfer books of the Company until the Company shall have received (i) to the extent required to ensure compliance with the Securities Act and any other applicable laws, an opinion of counsel reasonably satisfactory to the Company, to the effect that the proposed Transfer of Restricted Shares may be effected without registration under the Securities Act or any such other applicable laws and/or (ii) representation letters in form and substance reasonably satisfactory to the Company to ensure compliance with the provisions of the Securities Act and any other applicable laws. Each certificate evidencing Restricted Shares transferred as above provided shall bear the legend set forth in Section 14(a)(i) , except that such certificate shall not bear such legend if neither such legend nor the restrictions on Transfer in Section 14(a) and Section 14(b) are required in order to ensure compliance with the provisions of the Securities Act.
(c) Severability . Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, and such invalid, void or otherwise unenforceable provisions shall be null and void. It is the intent of the parties, however, that any invalid, void or otherwise unenforceable provisions be automatically replaced by other provisions which are as similar as possible in terms to such invalid, void or otherwise unenforceable provisions but are valid and enforceable to the fullest extent permitted by law.
(d) Entire Agreement; Termination of RBS Stockholders’ Agreement .
(i) This Agreement constitutes the entire agreement among the parties hereto and supersedes any other agreements, whether written or oral, that may have been made or entered into by or among any of the parties hereto relating to the subject matter hereof (including (A) the RBS Stockholders’ Agreement and (B) the provisions set forth across from the sub-heading “Shareholder Agreement” in those certain Management Incentive Compensation Term Sheets dated as of May 24, 2006), except for any Employment Agreements, Option Agreements or agreements relating to Rollover Options.
(ii) The Stockholders hereby acknowledge and agree that, effective as of the Closing, notwithstanding anything to the contrary contained in the RBS Stockholders’ Agreement, and with no further action on the part of any party thereto or
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hereto, the RBS Stockholders’ Agreement shall terminate and be of no further force or effect, and none of the parties hereto or thereto shall have any further liability or obligation thereunder whether arising prior to, on or after the date hereof.
(e) Successors and Assigns . This Agreement shall bind and inure to the benefit of the Company, Apollo and the Non-Apollo Holders and their respective successors and permitted assigns. Except as otherwise expressly permitted pursuant to the terms of this Agreement (or with the prior written consent of Apollo), neither the Company nor the Non-Apollo Holders shall assign or otherwise Transfer their rights or obligations hereunder. Apollo shall have the right to assign or otherwise Transfer its rights and obligations hereunder to its Affiliates.
(f) Modifications; Amendments . The terms and provisions of this Agreement may not be modified, amended or waived, except pursuant to a writing signed by the Company, and the holders of a majority of the Common Stock; provided , however , that any such modification, amendment or waiver that adversely affects any Stockholder and is prejudicial to such Stockholder relative to all of the other Stockholders shall not be effected without the consent of such Stockholder.
(g) Waiver . No course of dealing between the Company, Apollo and the Non-Apollo Holders (or any of them) or any delay in exercising any rights hereunder will operate as a waiver of any rights of any party to this Agreement. The failure of any party hereto to enforce any of the provisions of this Agreement will in no way be construed as a waiver of such provisions and will not affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms.
(h) Table of Contents and Headings . The table of contents and section headings of this Agreement are included for reference purposes only and shall not affect the construction or interpretation of any of the provisions of this Agreement.
(i) Counterparts; Facsimile Signatures . This Agreement may be executed in any number of original or facsimile counterparts, and each such counterpart hereof shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement.
(j) Remedies .
(i) Apollo and each Non-Apollo Holder shall have all rights and remedies reserved for Apollo or such Non-Apollo Holder pursuant to this Agreement and the Restated Certificate and the Bylaws and all rights and remedies which Apollo or such Non-Apollo Holder has been granted at any time under any other agreement or contract and all of the rights which such holder has under any law or equity. Any Person having any rights under any provision of this Agreement will be entitled to enforce such rights specifically, to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law or equity.
(ii) The parties hereto agree that if any parties seek to resolve any dispute arising under this Agreement pursuant to a legal proceeding, the prevailing
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parties to such proceeding shall be entitled to receive reasonable fees and expenses (including reasonable attorneys’ fees and expenses) incurred in connection with such proceedings.
(iii) It is acknowledged that it will be impossible to measure in money the damages that would be suffered if the parties fail to comply with any of the obligations herein imposed on them and that in the event of any such failure, an aggrieved Person will be irreparably damaged and will not have an adequate remedy at law. Any such Person shall, therefore, be entitled to injunctive relief, including specific performance, to enforce such obligations, and if any action should be brought in equity to enforce any of the provisions of this Agreement, none of the parties hereto shall raise the defense that there is an adequate remedy at law.
(k) Notices . All notices, requests, consents and other communications hereunder to any party hereto shall be deemed to be sufficient if contained in a written instrument and shall be deemed to have been duly given when delivered in person, by telecopy, by nationally-recognized overnight courier, or by first class registered or certified mail, postage prepaid, addressed to such party at the address set forth below or such other address as may hereafter be designated in writing by the addressee to the addressor:
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Rexnord Holdings, Inc. |
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c/o RBS Global, Inc. |
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4701 Greenfield Avenue |
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Milwaukee, WI 53214 |
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Fax: (414) 643-2510 |
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Attn: Patricia Whaley, Esq. |
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with a copy to: |
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O’Melveny & Myers LLP |
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Times Square Tower |
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7 Times Square |
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New York, New York 10036 |
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Fax: (212) 326-2061 |
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Attention: John M. Scott, Esq. |
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if to Apollo, to: |
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Apollo Management VI, L.P. |
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c/o Apollo Management, L.P. |
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9 West 57th Street, 43rd Floor |
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New York, NY 10019 |
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Mr. Laurence Berg |
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Mr. Steven Martinez |
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with a copy to:
O’Melveny & Myers LLP
Times Square Tower
7 Times Square
New York, New York 10036
Fax: (212) 326-2061
Attention: John M. Scott, Esq.
(iii) if to any Non-Apollo Holder, to the address set forth opposite such Non-Apollo Holder’s name on Schedule I or in the Joinder signed by such Non-Apollo Holder.
All such notices, requests, consents and other communications shall be deemed to have been delivered (a) in the case of personal delivery or delivery by telecopy, on the date of such delivery, (b) in the case of nationally-recognized overnight courier, on the next Business Day and (c) in the case of mailing, on the third Business Day following such mailing if sent by certified mail, return receipt requested.
(l) Arbitration . EXCEPT AS SET FORTH BELOW, THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICTS OF LAWS OR PRINCIPLES THEREOF THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK. ALL MATTERS WHICH ARE THE SUBJECT OF THIS AGREEMENT RELATING TO MATTERS OF INTERNAL GOVERNANCE OF THE COMPANY SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY LAW OR RULE THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE TO BE APPLIED. Any dispute or controversy arising under, out of, or in connection with or in relation to this Agreement shall be finally determined and settled by arbitration in New York, New York in accordance with the applicable rules of the American Arbitration Association, and judgment upon the award may be entered in any court having jurisdiction. Within 20 days of the conclusion of the arbitration hearing, the arbitrator shall prepare written findings of fact and conclusions of law. It is mutually agreed that the written decision of the arbitrator shall be valid, binding, final and non-appealable; provided , however , that the parties hereto agree that the arbitrator shall not be empowered to award punitive damages against any party to such arbitration. To the extent permitted by law, the arbitrator’s fees and expenses will be borne equally by each party. In the event that an action is brought to enforce the provisions of this Agreement pursuant to this Section 14(l) , each party shall pay its own attorney’s fees and expenses regardless of whether in the opinion of the court or arbitrator deciding such action there is a prevailing party. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL, INCLUDING TRIAL BY JURY, IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.
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(m) Interpretive Matters . Unless the context otherwise requires, (i) all references to articles, sections, schedules or exhibits are to Articles, Sections, Schedules or Exhibits of or to this Agreement, (ii) each accounting term not otherwise defined in this Agreement has the meaning assigned for it in accordance with GAAP, (iii) words in the singular or plural include the singular and plural, and pronouns stated in either the masculine, feminine or neuter gender shall include the masculine, feminine and neuter, and (iv) the term “including” and any variation thereof shall mean by way of example and not by way of limitation. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent arises, this Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.
(n) Further Assurances . Each party hereto shall do and perform or cause to be done and performed all such further acts and things and shall execute and deliver all such other agreements, certificates, instruments, and documents as any other party hereto reasonably may request in order to carry out the provisions of this Agreement and the consummation of the transactions contemplated hereby.
(o) Third Party Beneficiaries . The covenants of the Company contained in this Agreement (i) are being given by the Company as an inducement to the Stockholders to enter into this Agreement (and the Company acknowledges that the Stockholders have expressly relied thereon) and (b) are solely for the benefit of the Stockholders. Accordingly, except as expressly set forth herein (including in Section 8(b)(iii) with respect to directors and officers indemnity insurance), no third party (including, without limitation, any holder of Equity Securities of the Company) or anyone acting on behalf of any thereof, other than the Stockholders and their permitted assignees, shall be a third party or other beneficiary of such covenants and no such third party shall have any rights of contribution against the Stockholders or the Company with respect to such covenants or any matter subject to or resulting in indemnification under this Agreement or otherwise.
(p) Additional Parties; Additional Equity Securities . In the event any Equity Securities are issued to a Person (other than Cypress Industrial Holdings, LLC, George M. Sherman or any other entity controlled by George M. Sherman) that is not a party hereto (including the issuance of Equity Securities upon the exercise or conversion of options, warrants or similar equity-linked Securities of the Company) at any time during the term of this Agreement, such Equity Securities, as a condition to their issuance, shall become subject to this Agreement via the execution of a Joinder substantially in the form of Exhibit B pursuant to which such Person agrees to become party hereto, a Non-Apollo Holder and have his, her or its Equity Securities subject to, the terms of this Agreement. In the event any Stockholder acquires additional Equity Securities (including via the issuance of Equity Securities upon the exercise or conversion of options, warrants or similar equity-linked Securities of the Company), such Equity Securities shall automatically be subject to the terms of this Agreement.
(q) Stock Splits, Mergers, etc . If, and as often as, there are any changes in any Equity Securities, as applicable, by way of stock split, stock dividend, combination or reclassification, or through merger, consolidation, reorganization or recapitalization, or by any other means, appropriate adjustment shall be made in the provisions of this Agreement, as may
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be required, so that the rights, privileges, duties and obligations hereunder shall continue with respect to the Equity Securities, as so changed.
(r) No Right to Employment . None of the provisions hereof shall create, or be construed or deemed to create, any right to employment in favor of any Person by the Company or any of its Subsidiaries.
Section 15. Effectiveness .
This Agreement shall become effective as of the Closing. In the event that the Agreement and Plan of Merger is terminated pursuant to its terms and the Closing does not occur, this Agreement shall be null and void and of no force and effect.
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Exhibit A
Amended and Restated Certificate of Incorporation of the Company
See attached
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Exhibit B
FORM OF
JOINDER TO
AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
THIS JOINDER (this “ Joinder ” to that certain Stockholders Agreement dated as of , , by and among REXNORD HOLDINGS, INC. , a Delaware corporation (the “ Company ”), REXNORD ACQUISITION HOLDINGS I, LLC , a Delaware limited liability company (“ SPV I ”), REXNORD ACQUISITION HOLDINGS II, LLC , a Delaware limited liability company (“ SPV II ”; together with SPV I, “ Apollo ”), and the other stockholders of the Company (the “ Agreement ”), is made and entered into as of [ ] by and between the Company and [Holder] (“ Holder ”). Capitalized terms used but not otherwise defined herein shall have the meanings set forth in the Agreement.
WHEREAS , Holder has acquired certain shares of Common Stock, and the Agreement and the Company requires Holder, as a holder of Common Stock, to become a party to the Agreement, and Holder agrees to do so in accordance with the terms hereof.
NOW, THEREFORE , in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Joinder hereby agree as follows:
1. Agreement to be Bound . Holder hereby agrees that upon execution of this Joinder, [he, she or it] shall become a party to the Agreement and shall be fully bound by, and subject to, all of the covenants, terms and conditions of the Agreement as though an original party thereto and shall be deemed a Non-Apollo Holder for all purposes thereof. In addition, Holder hereby agrees that all Common Stock held by Holder shall be deemed Restricted Shares for all purposes of the Agreement.
2. Successors and Assigns . Except as otherwise provided herein, this Joinder shall bind and inure to the benefit of and be enforceable by the Company and its successors and assigns and Holder and any subsequent holders of Common Stock and the respective successors and assigns of each of them, so long as they hold any shares of Common Stock.
3. Counterparts . This Joinder may be executed in separate counterparts, including by facsimile, each of which shall be an original and all of which taken together shall constitute one and the same agreement.
4. Notices . For purposes of Section 14(k) of the Agreement, all notices, demands or other communications to the Holder shall be directed to:
[Name]
[Address]
[Attention]
[Facsimile Number]
5. Governing Law . EXCEPT AS SET FORTH BELOW, THIS JOINDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
B-1
THE DOMESTIC LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICTS OF LAWS OR PRINCIPLES THEREOF THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.
6. Descriptive Headings . The descriptive headings of this Joinder are inserted for convenience only and do not constitute a part of this Joinder.
* * * * *
B-2
IN WITNESS WHEREOF, the parties hereto have executed this Joinder as of the date first above written.
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REXNORD HOLDINGS, INC. |
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[HOLDER] |
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Exhibit 10.6
EXECUTION COPY
STOCKHOLDERS’ AGREEMENT
dated as of July 21, 2006
among
REXNORD HOLDINGS, INC.,
REXNORD ACQUISITION HOLDINGS I, LLC,
REXNORD ACQUISITION HOLDINGS II, LLC
CYPRESS INDUSTRIAL HOLDINGS, LLC
and
GEORGE M. SHERMAN
TABLE OF CONTENTS
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SECTION 1. |
DEFINITIONS |
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SECTION 2. |
RESTRICTION ON TRANSFERS |
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SECTION 3. |
APPROVED SALE; TAG ALONG TRANSACTION |
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SECTION 4. |
REPURCHASE RIGHT |
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SECTION 5. |
INVOLUNTARY TRANSFERS |
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SECTION 6. |
PUT RIGHT |
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SECTION 7. |
REPURCHASE DISABILITY |
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SECTION 8. |
COOPERATION |
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SECTION 9. |
BOARD OF DIRECTORS |
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SECTION 10. |
REPRESENTATIONS AND WARRANTIES |
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SECTION 11. |
INFORMATION RIGHTS; COVENANTS |
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SECTION 12. |
REGISTRATION RIGHTS |
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SECTION 13. |
TERMINATION |
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SECTION 14. |
MISCELLANEOUS |
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SECTION 15. |
EFFECTIVENESS |
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i
Schedule
Schedule I Cypress Holder Equity Securities
Exhibit
Exhibit A Amended and Restated Certificate of Incorporation
Exhibit B Form of Joinder to Stockholders’ Agreement
STOCKHOLDERS’ AGREEMENT dated as of July 21, 2006 (this “ Agreement ”), by and among REXNORD HOLDINGS, INC. , a Delaware corporation (the “ Company ”), REXNORD ACQUISITION HOLDINGS I, LLC , a Delaware limited liability company (“ SPV I ”), REXNORD ACQUISITION HOLDINGS II, LLC , a Delaware limited liability company (“ SPV II ”; together with SPV I, “ Apollo ”), CYPRESS INDUSTRIAL HOLDINGS, LLC , a Maryland limited liability company (“ CIH ”), and George M. Sherman, individually (“ Sherman ” and, together with CIH, each a “ Cypress Holder ” and collectively with their permitted transferees, the “ Cypress Holders ”).
WHEREAS , Chase Acquisition I, Inc. (“ Acquiror ”), a Delaware corporation and wholly-owned subsidiary of the Company, Chase Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Acquiror, RBS Global, Inc., a Delaware corporation (“ RBS ”), and TC Group, L.L.C., a Delaware limited liability company, entered into that certain agreement and plan of merger dated as of May 24, 2006 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “ Agreement and Plan of Merger ”);
WHEREAS , following the consummation of the merger contemplated by the Agreement and Plan of Merger (the “ Merger ”), the Stockholders shall own all of the issued and outstanding capital stock of the Company; and
WHEREAS , as a material inducement to Acquiror to enter into the Agreement and Plan of Merger and to consummate the Merger and the other transactions contemplated thereby, without which Acquiror would not have entered into the Agreement and Plan of Merger or agree to consummate the Merger and the other transactions contemplated thereby, the Company and the Cypress Holders agree to provide the rights and be subject to the obligations and restrictions set forth herein.
NOW, THEREFORE , in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
Section 1. Definitions .
As used in this Agreement, the following terms shall have the following meanings:
“ Accountants ” has the meaning set forth in Section 11(a)(iii)(C) .
“ Acquiror ” has the meaning set forth in the recitals.
“ Affiliate ” means (i) with respect to any individual, (A) a spouse or descendant of such individual and (B) any trust or family partnership or other entity whose beneficiaries shall solely be such individual and/or such individual’s spouse and/or any Person related by blood or adoption to such individual or such individual’s spouse and (ii) with respect to any Person that is not an individual, any other Person which directly or indirectly controls, or is under common control with, or is controlled by, such Person. As used in this definition, “control” (including, with its correlative meanings, “controlled by” and “under common control with”) shall mean possession, directly or indirectly, of power to direct or cause the direction of management or
policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise).
“ Agreement ” has the meaning set forth in the caption hereto.
“ Agreement and Plan of Merger ” has the meaning set forth in the recitals.
“ Apollo ” has the meaning set forth in the caption hereto.
“ Apollo Directors ” has the meaning set forth in Section 9(a)(ii) .
“ Apollo Nominee ” has the meaning set forth in Section 3(a)(ix) .
“ Approved Sale ” has the meaning set forth in Section 3(a)(i) .
“ Approved Sale Notice ” has the meaning set forth in Section 3(a)(i) .
“ Authorized Representatives ” has the meaning set forth in Section 11(b) .
“ Board ” means the Board of Directors of the Company.
“ Business Combination ” has the meaning set forth in the definition of “Sale of the Company”.
“ Business Day ” means a day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by law to close.
“ Bylaws ” means the Bylaws of the Company, as amended from time to time.
“ Cause ” has the meaning set forth in the Consulting Agreement.
“ CIH ” has the meaning set forth in the caption hereto.
“ Closing ” has the meaning set forth in the Agreement and Plan of Merger.
“ Closing Date ” has the meaning set forth in the Agreement and Plan of Merger.
“ Code ” means the Internal Revenue Code of 1986, as amended.
“ Commission ” means the Securities and Exchange Commission or any other Governmental Authority at the time administering the Securities Act.
“ Common Stock ” means the Common Stock of the Company, par value $0.01 per share.
“ Company ” has the meaning set forth in the caption hereto.
“ Company Confidential Information ” has the meaning set forth in Section 11(b) .
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“ Consulting Agreement ” means that certain management consulting agreement, dated as of the date hereof, by and among Rexnord Corporation, a Delaware corporation (“ Rexnord ”), Sherman, Cypress Group, LLC, a Maryland limited liability company (“ Cypress Group ”), and CIH.
“ Cypress Group ” has the meaning set forth in the definition of “Consulting Agreement”.
“ Cypress Holder ” has the meaning set forth in the caption hereto.
“ Demand Party ” has the meaning set forth in Section 12(a) .
“ Demand Notice ” has the meaning set forth in Section 12(a) .
“ Disability ” means “Disability” as defined in Section 22(e)(3) of the Code.
“ Disability Notice ” has the meaning set forth in Section 7(b) .
“ Equity Incentive Plan ” means any plan or agreement approved by the Board for the purposes of issuing equity-linked Securities to any employee, officer, consultant or director of the Company or any of its Subsidiaries as incentive or bonus compensation.
“ Equity Securities ” means (a) any equity Securities of the Company (including Common Stock but excluding any option, warrant, or similar equity-linked Security of the Company) purchased or otherwise acquired by any Stockholder or (b) any Securities issued or issuable directly or indirectly with respect to the Securities referred to in clause (a) above by way of conversion, exercise or exchange, stock dividend or stock split or in connection with a combination of shares, recapitalization, reclassification, merger, consolidation, reorganization or other similar event.
“ Exchange Act ” means the Securities Exchange Act of 1934, and the Rules and Regulations, all as the same shall be in effect from time to time.
“ Family Group ” means, with respect to any natural Person, such natural Person’s spouse and/or lineal descendants (whether by blood relationship or adoption), and any other Person as to which such natural Person is a lineal descendant (whether by blood relationship or adoption), and any trust or other entity solely for the benefit of such Person and/or any of the foregoing.
“ Financing Documents ” has the meaning set forth in Section 7(a)(iii) .
“ Fund VI ” means Apollo Investment Fund VI, L.P., a Delaware limited partnership.
“ Good Reason ” has the meaning set forth in the Consulting Agreement.
“ Governmental Authority ” means any Federal, state, municipal, local or foreign government, governmental authority, regulatory or administrative agency, governmental
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commission, department, board, bureau, agency or instrumentality, court, tribunal, arbitrator or arbitral body.
“ Information ” has the meaning set forth in Section 12(i)(xi) .
“ Inspectors ” has the meaning set forth in Section 12(i)(xi) .
“ Involuntary Transfer ” has the meaning set forth in Section 5(a) .
“ Involuntary Transferee ” has the meaning set forth in Section 5(a) .
“ Involuntary Transfer Notice ” has the meaning set forth in Section 5(a) .
“ Involuntary Transfer Repurchase Notice ” has the meaning set forth in Section 5(b) .
“ Involuntary Transfer Repurchase Price ” has the meaning set forth in Section 5(b) .
“ Involuntary Transfer Repurchase Right ” has the meaning set forth in Section 5(b) .
“ Issuer Free Writing Prospectus ” means each “free writing prospectus” (as defined in Rule 405) prepared by or on behalf of the Company or used or referred to by the Company in any offering of Restricted Shares pursuant to Section 12 .
“ Joinder ” has the meaning set forth in Section 2(c) .
“ Material Transfer ” means a Transfer for consideration by Apollo of more than 10% of the Restricted Shares held by Apollo as of the Closing Date to a Person who is not an Affiliate of Apollo.
“ Merger ” has the meaning set forth in the recitals.
“ NASD ” means the National Association of Securities Dealers, Inc.
“ Non-Apollo Director ” has the meaning set forth in Section 9(a)(iv) .
“ Option ” has the meaning set forth in the Option Agreement.
“ Option Agreement ” means that certain non-qualified stock option agreement, dated as of July 21, 2006, by and between the Company and Sherman.
“ Option Assumption Agreement ” means that certain stock option assumption agreement, dated as of July 21, 2006, by and among the Company, RBS and CIH.
“ Order ” means all judgments, injunctions, orders and decrees of all Governmental Authorities in any legal, administrative or arbitration action, suit, complaint, charge, hearing,
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mediation, inquiry, investigation or proceeding in which the person in question is a party or by which any of its properties or assets are bound.
“ Outstanding Company Voting Securities ” has the meaning set forth in the definition of “Sale of the Company”.
“ Permitted Issuer Information ” means any “issuer information” (as defined in Rule 433 of the Rules and Regulations) used with the prior written consent of the Company in any offering of Restricted Shares pursuant to Section 12 .
“ Person ” shall be construed broadly and shall include, without limitation, an individual, a partnership, a limited liability partnership, an investment fund, a limited liability company, a corporation, an association, a joint stock corporation, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof.
“ Preliminary Prospectus ” means any preliminary prospectus relating to an offering of Restricted Shares pursuant to Section 12 .
“ Proportionate Percentage ” means with respect to Apollo and each other Stockholder in respect of Restricted Shares, a fraction (expressed as a percentage) the numerator of which is the number of Restricted Shares held by Apollo or such other Stockholder, as the case may be, and the denominator of which is (i) in a situation where the Proportionate Percentage is being calculated with respect to all Stockholders, the total number of Restricted Shares outstanding at the time in question and (ii) in a situation where the Proportionate Percentage is being calculated with respect to a group of Stockholders, the total number of Restricted Shares held by the members of such group of Stockholders.
“ Prospectus ” means the final prospectus relating to any offering of Restricted Shares pursuant to Section 12 , including any prospectus supplement thereto, as filed with the Commission pursuant to Rule 424(b) of the Rules and Regulations.
“ Public Sale ” means any sale of Equity Securities to the public pursuant to an offering registered under the Securities Act or to the public effected through a broker, dealer or market maker pursuant to the provisions of Rule 144 (if such rule is available) under the Securities Act (or any similar rule or rules then in effect).
“ Put Notice ” has the meaning set forth in Section 6(a) .
“ Put Price ” has the meaning set forth in Section 6(a) .
“ Put Right ” has the meaning set forth in Section 6(a) .
“ Qualified Public Offering ” means an underwritten public offering of Equity Securities of the Company pursuant to an effective Registration Statement filed by the Company with the Securities and Exchange Commission (other than on Forms S-4 or S-8 or successors to such forms) under the Securities Act, pursuant to which the aggregate offering price of the
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Equity Securities sold in such offering (whether sold by the Company or selling stockholders) is at least $75,000,000.
“ RBS ” has the meaning set forth in the recitals.
“ RBS/Cypress Stockholders’ Agreement ” means the Stockholders Agreement dated November 25, 2002 by and among RBS Global, Inc., Carlyle Partners III, L.P., CP III Coinvestment, L.P., Carlyle High Yield Partners, L.P., and CIH (as amended, modified, restated or supplemented from time to time).
“ Records ” has the meaning set forth in Section 12(i)(xi) .
“ Registration Expenses ” has the meaning set forth in Section 12(j) .
“ Reinstatement Notice ” has the meaning set forth in Section 7(b) .
“ Repurchase Date ” has the meaning set forth in Section 4(a) .
“ Repurchase Disability ” has the meaning set forth in Section 7(a) .
“ Repurchase Event ” means, with respect to any Cypress Holder, the termination of such Cypress Holder’s employment, consulting or other professional relationship with the Company and all of its Subsidiaries for any reason (including upon death or Disability of Sherman).
“ Repurchase Notice ” has the meaning set forth in Section 4(a) .
“ Repurchase Price ” has the meaning set forth in Section 4(a) .
“ Repurchase Right ” has the meaning set forth in Section 4(a) .
“ Resignation Event ” has the meaning set forth in Section 9(a)(iii) .
“ Restated Certificate ” means the Amended and Restated Certificate of Incorporation to be filed with the Secretary of State of Delaware, in the form attached hereto as Exhibit A .
“ Restricted Shares ” means at any time, with respect to Apollo or any Cypress Holder, the shares of Common Stock held by Apollo or such Cypress Holder; provided , however , that any (a) Common Stock that is sold in a public offering pursuant to an effective Registration Statement under the Securities Act or a sale pursuant to Rule 144 thereunder or that may be sold without restriction as to volume or otherwise pursuant to Rule 144(k) under the Securities Act shall not be Restricted Shares for purposes of Section 12 , and (b) any Person who holds any Common Stock, all of which can be sold pursuant to Rule 144 under the Securities Act, shall not be deemed to hold any Restricted Shares for purposes of Section 12 and shall have no rights to effect the registration of such securities under Section 12 .
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“ Rexnord Stockholders’ Agreement ” means that certain Stockholders’ Agreement dated as of the date hereof by and among the Company, SPV I, SPV II and certain other stockholders of the Company named therein.
“ Road Show Material ” has the meaning set forth in Section 12(k) .
“ Rollover Options ” means the options to purchase shares of common stock (to the extent vested) of RBS Global, Inc. in existence immediately prior to the date hereof held by each Rollover Optionholder (as defined in the Agreement and Plan of Merger) that are subject to a Stock Option Assumption Agreement entered into by and among such Rollover Optionholder, the Company and RBS Global, Inc. in connection with the transactions contemplated by the Agreement and Plan of Merger providing that such options shall be exercisable for shares of Common Stock or other Equity Interests of the Company pursuant to the terms of the Agreement and Plan of Merger.
“ Rule 144 ” means Rule 144 of the Rules and Regulations or any successor rule thereto or any complementary rule thereto.
“ Rule 405 ” means Rule 405 of the Rules and Regulations or any successor rule thereto or any complementary rule thereto.
“ Rule 433 ” means Rule 433 of the Rules and Regulations or any successor rule thereto or any complementary rule thereto.
“ Rules and Regulations ” means the rules and regulations of the Commission, as the same shall be in effect from time to time.
“ Sale Notice ” has the meaning set forth in Section 3(b)(i) .
“ Sale of the Company ” means:
(a) Approval by the Stockholders (or, if no stockholder approval is required, by the Board alone) of the complete dissolution or liquidation of the Company, other than in the context of a Business Combination (as defined below) that does not constitute a Sale of the Company under paragraph (c) below;
(b) The acquisition by any Person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (the “ Outstanding Company Voting Securities ”); provided , however , that, for purposes of this paragraph (b), the following acquisitions shall not constitute a Sale of the Company; (A) any acquisition directly from the Company or any of its Subsidiaries, (B) any acquisition by the Company or any of its Subsidiaries, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its Affiliates or a successor, (D) any acquisition by any Person pursuant to a Business Combination, (E) any acquisition by a Person who is the beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of the Outstanding Company Voting
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Securities on the Closing Date (or an Affiliate, heir or descendant of such Person) or (F) any acquisition by Apollo or one of its Affiliated investment funds; or
(c) Consummation of a reorganization, merger, statutory share exchange or consolidation or similar corporate transaction involving the Company or any of its Subsidiaries, a sale or other disposition of all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole, or the acquisition of assets or stock of another entity by the Company or any of its Subsidiaries (each, a “ Business Combination ”), in each case unless, following such Business Combination, (1) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own more than 50% of the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the Person resulting from such Business Combination (including, without limitation, a Person that, as a result of such transaction, owns the Company or all or substantially all of the Company’s assets directly or through one or more Subsidiaries of the Company, and (2) no Person (excluding any Person described in clauses (C), (E) or (F) of paragraph (b) above) beneficially owns (within the meaning of Rule 13d-3 promulgated under the Exchange Act) more than 50% of the combined voting power of the then-outstanding voting securities of such Person, except to the extent that the ownership in excess of 50% existed prior to the Business Combination;
provided , however , that an underwritten public offering of the securities of the Company or any of its Subsidiaries shall in no event constitute a Sale of the Company for purposes of this Agreement.
“ Securities ” means “securities” as defined in Section 2(1) of the Securities Act and includes capital stock or other equity interests or any options, warrants or other securities that are directly or indirectly convertible into, or exercisable or exchangeable for, capital stock or other equity interests. Whenever a reference herein to Securities is referring to any derivative Securities, the rights of a holder shall apply to such derivative Securities and all underlying Securities directly or indirectly issuable upon conversion, exchange or exercise of such derivative Securities.
“ Securities Act ” means the Securities Act of 1933, and the Rules and Regulations, all as the same shall be in effect from time to time.
“ Sellers’ Counsel ” has the meaning set forth in Section 12(i)(ii) .
“ Sherman ” has the meaning set forth in the caption hereto.
“ SPV I ” has the meaning set forth in the caption hereto.
“ SPV II ” has the meaning set forth in the caption hereto.
“ Stockholder ” means Apollo, CIH, Sherman and any other Person from time to time that holds Equity Securities acquired in accordance with the terms of this Agreement or the Rexnord Stockholders’ Agreement.
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“ Subsidiary ” means, with respect to any Person, any other Person of which 50% or more of the voting power of the equity securities or equity interests sufficient to elect at least a majority of its Board of Directors or other governing body (or, if there is no such voting power, 50% or more of the equity securities or equity interests) is owned, directly or indirectly, by such Person.
“ Tag-Along Transaction ” means a transaction involving a Transfer by Apollo of more than 10% of the Restricted Shares held by Apollo as of the Closing Date to a Person who is not an Affiliate of Apollo in which each Cypress Holder may elect in his or its discretion to participate in accordance with Section 3(b) ; provided , however , that a “Tag-Along Transaction” shall not include, and none of the rights of the Cypress Holders set forth in Section 3(b) shall be triggered by, a Transfer by Apollo to any limited partnership or other Person which has directly or indirectly invested in, or otherwise has ownership, equity or profits interests in, Fund VI or one of its Affiliated investment funds, as part of a distribution to such Person; provided , however , that such distribution is made on a pro rata basis to all such Persons.
“ Transaction Documents ” has the meaning set forth in the Agreement and Plan of Merger.
“ Transfer ” means any direct or indirect transfer, assignment, sale, gift, pledge, hypothecation, encumbrance or other disposition, or any interest therein whatsoever, or any other transfer of beneficial ownership, whether voluntary or involuntary, including (a) as a part of any liquidation of assets or (b) as a part of any reorganization pursuant to the United States or other bankruptcy law or other similar debtor relief laws, but excluding any transfer of Equity Securities of the Company by employees of the Company or its Subsidiaries upon a termination of employment.
“ Transferee ” means any Person acquiring or intending to acquire Equity Securities through a Transfer.
“ Underwritten Offering ” means a sale of Equity Securities to an underwriter for reoffering to the public.
“ Vested Options ” has the meaning set forth in Section 6(a) .
Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to them in the Agreement and Plan of Merger.
Section 2. Restriction on Transfers .
(a) Except as otherwise set forth below, the Cypress Holders shall not at any time Transfer any Equity Securities. Any purported Transfer in violation of the provisions of this Section 2 shall be null and void and shall have no force or effect.
(b) The restrictions contained in this Section 2 shall not apply with respect to any Transfer of Equity Securities (i) to the Company, Apollo or any of their respective Affiliates (which term, for purposes of this Section 2(b) , shall not include any other Stockholder or such other Affiliates of such Stockholder other than the Company and Apollo), (ii) pursuant to
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applicable laws of descent or to such Stockholder’s executors, administrators, testamentary legatees and beneficiaries upon such Stockholder’s death or to any member of a Cypress Holder’s Family Group, (iii) to any member of CIH upon dissolution of CIH or (iv) to any limited liability company, limited partnership, corporation or other entity formed by Sherman or a member of Sherman’s Family Group and that is controlled by Sherman or Sherman and members of Sherman’s Family Group (for purposes of this definition, “control” being defined as the ownership of more than 50% of both the voting and economic interests of such entity) for the primary purpose of holding Sherman’s Restricted Shares, other equity interests in the Company and other equity interests of Sherman and Sherman’s Family Group.
(c) Each Cypress Holder agrees that, as a condition precedent to any Transfer permitted under Section 2(b) , each Transferee of such Equity Securities shall have executed a joinder agreement (“ Joinder ”) substantially in the form of Exhibit B attached hereto, pursuant to which such Transferee agrees to become party hereto, a Cypress Holder and have his, her or its Equity Securities subject to, the terms of this Agreement. Any failure by a Cypress Holder to obtain a Joinder from the Transferee as required under this Section 2(c) shall render such Transfer null and void; provided that, in the case of a Transfer upon a Stockholder’s death or Disability, (i) the Transferee shall be deemed to have executed, and shall be deemed to be bound by, a Joinder as of the date of such Stockholder’s death or Disability and (ii) the Transferee shall be given a reasonable period of time (not to exceed 90 days from the date of such Stockholder’s death or Disability) to execute such Joinder.
(d) This Section 2 shall not apply to an Approved Sale under Section 3(a) , a Transfer permitted under Section 3(b) or a Transfer under Section 4 .
Section 3. Approved Sale; Tag Along Transaction .
(a) Approved Sale; Sale of the Company .
(i) At any time prior to the consummation of a Qualified Public Offering that Apollo proposes a Material Transfer of its Restricted Shares, Apollo shall be entitled to deliver notice (an “ Approved Sale Notice ”) to the Company and the Cypress Holders that Apollo requires the Cypress Holders to Transfer an amount of their Restricted Shares that is equal to the portion of Apollo’s Restricted Shares that Apollo proposes to Transfer in the Material Transfer (an “ Approved Sale ”); provided , however , that if the proposed Transferee desires to purchase an amount of Restricted Shares that is less than the aggregate amount of Restricted Shares of Apollo and the Cypress Holders that would otherwise be Transferred in the Approved Sale, then Apollo may elect to cancel such Approved Sale, or Apollo and the Cypress Holders shall sell in the Approved Sale only that number of Restricted Shares equal to the product of (x) the total number of Restricted Shares such proposed Transferee desires to purchase and (y) such Cypress Holder’s Proportionate Percentage; and provided , further , that any such Approved Sale Notice shall include the name of the parties to the proposed Approved Sale, a summary of the material terms and conditions of the proposed Approved Sale, and the proposed amount and form of consideration and the terms and conditions of payment contemplated by the proposed Approved Sale.
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(ii) Upon receipt of an Approved Sale Notice, each Cypress Holder and the Company shall consent to and raise no objections against the Approved Sale, and if the Approved Sale is lawful and is structured as (A) a merger or consolidation of the Company or any of its Subsidiaries, or a sale of all or substantially all of the assets of the Company and its Subsidiaries taken as a whole, each Cypress Holder shall, and hereby does, waive any dissenter’s rights, appraisal rights or similar rights in connection with such merger or consolidation or sale of all or substantially all of the assets and hereby instructs the Board to vote in favor of such Approved Sale and to submit, if required by law, to a vote of the Stockholders of the Company or request a written consent as promptly as possible, and hereby agrees to vote in favor of such Approved Sale at any annual or special meeting of the Stockholders of the Company or to execute a written consent approving such Approved Sale, or (B) a sale of Restricted Shares, each Cypress Holder shall, and hereby does agree to, sell his or its Proportionate Percentage of his or its Restricted Shares on the terms and conditions approved by Apollo; provided , in the case of each of the foregoing clause (A) and (B), that the terms and conditions upon which each Cypress Holder’s Restricted Shares are sold are the same terms and conditions that apply to Apollo.
(iii) All Cypress Holders and the Company shall take all necessary and desirable actions in connection with the consummation of the Approved Sale, including the execution of such agreements and such instruments and other actions reasonably necessary to (1) provide the representations, warranties, indemnities, covenants, conditions, escrow agreements and other provisions and agreements relating to such Approved Sale; provided , however , that the Cypress Holders shall not be required to provide any representations, warranties, indemnities, covenants, conditions, escrow agreements or other provisions or agreements which are different from those made by Apollo in connection with such Approved Sale and (2) effectuate the allocation and distribution of the aggregate consideration upon the consummation of the Approved Sale. At the closing of the sale of any Restricted Shares pursuant to this Section 3(a) , each Cypress Holder shall deliver at such closing, against payment of the purchase price therefor, certificates representing their Restricted Shares to be sold, duly endorsed for Transfer or accompanied by duly endorsed stock powers, evidence of good title to the Restricted Shares to be sold, the absence of liens, encumbrances and adverse claims with respect thereto and such other documents as are deemed reasonably necessary by the Company for the proper Transfer of such Restricted Shares on the books of the Company.
(iv) Apollo shall deliver any Approved Sale Notice to the Company and the Cypress Holders at least ten (10) days prior to the consummation of the Approved Sale.
(v) If any Stockholders are given an option as to the form and amount of consideration to be received in an Approved Sale, all Stockholders shall be given the same option.
(vi) No Cypress Holder shall be obligated to pay more than his or its Proportionate Percentage of reasonable expenses incurred in connection with a consummated Approved Sale to the extent such expenses are incurred for the benefit of
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all Stockholders and are not otherwise paid by the Company or the acquiring party (it being agreed that expenses incurred by or on behalf of Apollo or a Cypress Holder for his or its sole benefit shall not be considered expenses incurred for the benefit of all Stockholders).
(vii) No Stockholder shall be required to make any representations or warranties that are joint and several or that pertain to matters other than title to Securities held by such Stockholder, such Stockholder’s capacity, authority or power to consummate the transaction in question, conflicts with laws, conflicts with contracts, organizational documents and Orders applicable to such Stockholder, broker and similar fees payable by such Stockholder, other representations and warranties customary for the type of transaction being consummated and representations and warranties with respect to any other matters particular to such Stockholder.
(viii) Any indemnification obligations for breaches of representations, warranties and covenants made by the Company and its Subsidiaries (but not by or on behalf of any Stockholder individually) shall be shared pro rata among the Stockholders (based on such Stockholder’s Proportionate Percentage) based on the aggregate consideration payable with respect to the Restricted Shares, and in no event shall a Stockholder be required to incur indemnification or contribution obligations with respect to such breaches that are joint and several or exceed the aggregate consideration payable with respect to such Stockholder’s Restricted Shares Transferred in the Approved Sale.
(ix) Each Cypress Holder and the Company hereby grants an irrevocable proxy and power of attorney which, it is agreed, is coupled with an interest, to any nominee of Apollo (the “ Apollo Nominee ”) to take all necessary actions and execute and deliver all documents deemed necessary and appropriate by such Person to effectuate the consummation of any Approved Sale. To the extent a Cypress Holder fails to comply with the provisions of this Section 3(a) , such Cypress Holder hereby indemnifies, defends and holds the Apollo Nominee harmless (severally in accordance with his or its pro rata share of the consideration received in any such Approved Sale (and not jointly and severally)) against all liability, loss or damage, together with all reasonable costs and expenses (including reasonable legal fees and expenses), relating to or arising from its exercise of the proxy and power of attorney granted hereby.
(x) The Cypress Holders shall not be required to comply with, and shall have no obligations under, Section 2 in connection with any Approved Sale.
(b) Tag-Along Transaction .
(i) Subject to the provisions of Section 3(a) above, prior to the consummation of a Qualified Public Offering, if Apollo desires to effect a Tag-Along Transaction, Apollo shall give written notice to the Cypress Holders offering such Cypress Holders the option to participate in such Tag-Along Transaction (a “ Sale Notice ”) on the terms and conditions set forth in the Sale Notice (and, in any event, on the same terms and conditions as Apollo). The Sale Notice shall include the name of the parties to the proposed Tag-Along Transaction, a summary of the material terms and
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conditions of the proposed Tag-Along Transaction, and the proposed amount and form of consideration and the terms and conditions of payment contemplated by the proposed Tag-Along Transaction. Each Cypress Holder may, by written notice to Apollo delivered within ten (10) days of the date of the Sale Notice, elect to sell in such Tag-Along Transaction, on the terms and conditions approved by Apollo (which terms and conditions shall be the same as those on which Apollo’s Restricted Shares are sold and shall be consistent with the terms and conditions set forth in the Sale Notice); provided , however , that if the proposed Transferee desires to purchase an amount of Restricted Shares that is less than the aggregate amount of Restricted Shares proposed to be Transferred by Apollo and the Cypress Holders in the Tag-Along Transaction, then Apollo may elect to cancel such Tag-Along Transaction, or Apollo and the Cypress Holders shall be permitted to sell only that number of Restricted Shares equal to the product of (x) the total number of Restricted Shares subject to the proposed Tag-Along Transaction and (y) such Stockholder’s Proportionate Percentage. No Transfer permitted under this Section 3(b) shall be subject to the requirements of Section 2 .
(ii) Upon the closing of the sale of any Restricted Shares pursuant to paragraph (b)(i) above, each Cypress Holder shall deliver at such closing, against payment of the purchase price therefor, certificates representing his or its Restricted Shares to be sold, duly endorsed for Transfer or accompanied by duly endorsed stock powers, evidence of good title to the Restricted Shares to be sold, the absence of liens, encumbrances and adverse claims with respect thereto and such other documents as are deemed reasonably necessary by the Company for the proper Transfer of such Restricted Shares on the books of the Company.
Section 4. Repurchase Right .
(a) Unless otherwise provided in the Consulting Agreement, in the event of the termination of the Consulting Agreement (i) by the Company or any of its Subsidiaries as a result of the failure of Sherman substantially to satisfy reasonable performance standards (after taking into account macroeconomic factors affecting the Company and its Subsidiaries) but not under circumstances constituting Cause, (ii) by Sherman without Good Reason or (iii) on account of the death or Disability of Sherman (each, a “ Repurchase Event ”), the Company shall have the right, but not the obligation, to repurchase all or any portion of the Equity Securities held by each Cypress Holder (including any Equity Securities received upon a distribution from any deferred compensation plan or other Equity Incentive Plan or any Equity Securities issuable upon exercise of any option, warrant or similar equity-linked Security of the Company held by each Cypress Holder) in accordance with this Section 4 (the “ Repurchase Right ”). Any repurchase described in the immediately preceding sentence shall be for fair market value (as determined in accordance with Section 4(e) ), but subject to Section 4(b) . The Company may exercise the Repurchase Right by written notice (a “ Repurchase Notice ”) to the Cypress Holders within six months after the Repurchase Event; provided , however , that with respect to Equity Securities acquired by any Cypress Holder after such Repurchase Event (whether by exercise of any option, warrant or similar equity-linked Security of the Company, distribution of shares from any deferred compensation plan or otherwise), the Company may exercise the Repurchase Right by delivering a Repurchase Notice to such Cypress Holder within six months after the acquisition of such Equity Securities by such Cypress Holder (each date on which any such
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repurchase is executed with respect to the subject Equity Securities, the “ Repurchase Date ”). The determination date for purposes of determining the fair market value shall be the Repurchase Date applicable to the subject Equity Securities. Subject to Section 7 below, the Repurchase Date with respect to any repurchase of Equity Securities pursuant to the exercise of the Repurchase Right shall take place on the later of (i) the date specified by the Company, which shall in no event be later than thirty (30) days following the date of the Repurchase Notice and (ii) within ten (10) days following the receipt by the Company of all necessary government approvals.
(b) Notwithstanding anything contained herein to the contrary, unless otherwise provided in the Consulting Agreement, in the event the Consulting Agreement is terminated by the Company or any of its Subsidiaries for Cause, then the Company may exercise the Repurchase Right by delivering a Repurchase Notice to the Cypress Holders within the time periods set forth in Section 4(a) above at a price equal to the lesser of (i) in the case of Common Stock, $ per share of Common Stock, subject to adjustment by the Company to reflect any stock split, recapitalization or similar adjustment to the Common Stock (or, for shares of Common Stock acquired after the Closing Date and not upon exercise of a Rollover Option, the original acquisition cost to the applicable Cypress Holder of such shares of Common Stock) and (b) the fair market value of such Equity Securities. The determination date for purposes of determining the fair market value shall be the closing date of the purchase of the applicable Equity Securities.
(c) The Company shall give prompt written notice to Apollo stating whether the Company will exercise the Repurchase Rights pursuant to Section 4(a) or Section 4(b) above. If such notice states that the Company will not exercise such Repurchase Rights for all or any portion of the applicable Equity Securities subject thereto, Apollo (or its designee) shall have the right (exercisable by delivery of written notice to such Cypress Holder on or before the later of (i) the 30 th day following the receipt of such notice or (ii) six months after the Repurchase Event) to purchase any such Equity Securities not purchased by the Company on the same terms and conditions as the Company set forth in Section 4(a) or Section 4(b) .
(d) The Repurchase Date shall take place on a date designated by the Company or Apollo, as applicable, in accordance with Section 4(a) or Section 4(c) , respectively; provided , however , that the Repurchase Date may be deferred to a date designated by the Company or Apollo, as applicable, or, to the extent required to avoid liability under applicable securities laws, the Cypress Holder, as applicable, until such time as the subject Cypress Holder has held the Equity Securities for a period of at least six months and one day. The purchase price shall be paid on the Repurchase Date in the form of a check, wire transfer of immediately available funds or by cancellation of money purchase indebtedness of such Cypress Holder, as determined in the sole discretion of the Company or Apollo, as applicable. The Company or Apollo, as applicable, may effect such repurchase of Equity Securities and the Company shall record such Transfer on its books whether or not such Cypress Holder attends such closing or delivers certificates representing such Equity Securities to the Company. Each Cypress Holder hereby grants an irrevocable proxy and power of attorney which, it is agreed, is coupled with an interest to any nominee of the Company or Apollo, as applicable, to take all necessary actions and execute and deliver all documents deemed necessary and appropriate by such nominee to effect such purchase of Equity Securities. Any Cypress Holder (with respect to Sherman, either
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on behalf of himself or on behalf of CIH) who fails to take all necessary actions and execute and deliver all documents necessary and appropriate to fulfill his or its obligations under this Section 4 shall indemnify, defend and hold such nominee harmless against all liability, loss or damage, together with all reasonable costs and expenses (including reasonable legal fees and expenses), relating to or arising from such nominee’s exercise of the proxy and power of attorney granted hereby. In addition, each Cypress Holder shall immediately lose all rights each may have under Section 9 of this Agreement in the event of any such purchase.
(e) For purposes of this Section 4 , Section 5 , Section 6 and Section 7 , the “fair market value” of any Equity Securities shall be determined as follows:
(i) if the Equity Securities are listed on one or more National Securities Exchanges (within the meaning of the Exchange Act), each share shall be valued at the average closing price per share on the principal exchange on which such shares are then trading for the 10 trading days immediately preceding the date of determination;
(ii) if the Equity Securities are not traded on a National Securities Exchange but are quoted on the NASDAQ Stock Market or a successor quotation system and the shares are listed as a National Market issue under the National Market System, each share shall be valued at the average of the last sales price per share for the 10 trading days immediately preceding the date of determination as reported by the NASDAQ Stock Market or any such successor quotation system; or
(iii) if the Equity Securities are not listed on a National Securities Exchange and are not traded on the NASDAQ Stock Market and listed as a National Market issue under the National Market System, the fair market value shall be determined by the Board in good faith based on its good faith determination of the fair market value of the Company and its subsidiaries as a whole without regard to the percentage of shares represented by the shares subject to such determination or any minority discount or control premium.
Notwithstanding the foregoing, if a Person whose Equity Securities are being valued hereunder pursuant to clause (iii) above disagrees with the valuation determined by the Board, such Person may elect to choose within five Business Days of being advised of the determination of the Board to have the fair market value determined by and independent appraiser, the selection of which shall be subject to the mutual agreement of the Company and such Person. The fees and expenses of any such independent appraiser shall be borne equally by the Company and the Person whose Equity Securities are being valued hereunder and the determination by the independent appraiser selected in accordance with this Section 4(e) shall be final and binding.
Section 5. Involuntary Transfers .
(a) In the case of any Transfer of title or beneficial ownership of Equity Securities upon default, foreclosure, forfeit, divorce, court order or otherwise, other than by a voluntary decision on the part of a Cypress Holder (each, an “ Involuntary Transfer ”), the
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Cypress Holder shall promptly (but in no event later than two days after the Involuntary Transfer) furnish written notice (the “ Involuntary Transfer Notice ”) to the Company indicating that the Involuntary Transfer has occurred, specifying the name of the Person to whom the Equity Securities were transferred (the “ Involuntary Transferee ”), giving a detailed description of the circumstances giving rise to, and stating the legal basis for, the Involuntary Transfer.
(b) Upon the receipt of the Involuntary Transfer Notice, and for 60 days thereafter, the Company shall have the right to repurchase, and the Involuntary Transferee shall have the obligation to sell, all (but not less than all) of the Equity Securities acquired by the Involuntary Transferee for a repurchase price equal to the “fair market value” (as determined in accordance with Section 4(e)) of such Equity Securities as of the date of the Involuntary Transfer (the “ Involuntary Transfer Repurchase Price ” and such right, the “ Involuntary Transfer Repurchase Right ”). The Involuntary Transfer Repurchase Right shall be exercised by written notice (the “ Involuntary Transfer Repurchase Notice ”) to the Involuntary Transferee given in accordance with Section 14(k) of this Agreement on or prior to the last date on which the Involuntary Transfer Repurchase Right may be exercised by the Company.
(c) Subject to Section 7 below, the repurchase of Equity Securities pursuant to the exercise of the Involuntary Transfer Repurchase Right shall take place on a date specified by the Company, but in no event following the later of the 60 th day following the date of the date of the Involuntary Transfer Repurchase Notice or the 10 th day following the receipt by the Company of all necessary governmental approvals. On such date, the Involuntary Transferee shall transfer the Equity Securities subject to the Involuntary Transfer Repurchase Notice to the Company, free and clear of all liens and encumbrances, by delivering to the Company the certificates representing the Equity Securities to be purchased, duly endorsed for transfer to the Company or accompanied by a stock power duly executed in blank, and the Company shall pay to the Involuntary Transferee the Involuntary Transfer Repurchase Price. The Involuntary Transferee and the Cypress Holder shall use all commercially reasonable efforts to assist the Company in order to expedite all proceedings described in this Section 5 . If the Involuntary Transferee does not transfer the Equity Securities to the Company as required, the Company will cancel such Equity Securities and deposit the funds in a non-interest bearing account and make payment upon delivery.
Section 6. Put Right .
(a) Each Cypress Holder shall have the right (but not the obligation), subject to the terms and conditions of this Section 6 and of Section 7 , to sell in one or more transactions in connection with the termination of the Consulting Agreement (i) by the Company or one of its Subsidiaries without Cause or (ii) by the Sherman, CIH or Cypress Group for Good Reason, and the Company shall be obligated to purchase (x) all or any shares of Common Stock held by such Cypress Holder as of the termination of the Consulting Agreement (whether or not acquired upon exercise of the Option) and (y) all or any portion of the options to purchase Common Stock (including, without limitation, the Option) held by such Cypress Holder that is or becomes vested (collectively, the “ Vested Options ”), in each case at the applicable Put Price (as defined below) (the “ Put Right ”). To exercise the Put Right, such Cypress Holder must give written notice thereof to the Company (the “ Put Notice ”). The Put Notice is irrevocable and must (1) be in writing and signed by such Cypress Holder, (2) set forth the intent to exercise the Put Right and
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contain the total number of shares of Common Stock and Vested Options to be sold to the Company pursuant to the Put Right and (3) be delivered to the Company within 120 days following the termination of the Consulting Agreement.
(b) The Company shall have no obligation to repurchase shares of Common Stock or Vested Options pursuant to the exercise of the Put Right unless the repurchase will not violate any loan covenants or other agreements imposed or required by any entity as part of the extension of financing to the Company. If the repurchase of Common Stock or Vested Options pursuant to the Put Right is prohibited by the Company’s financing arrangements, the Company shall deliver written notice to the applicable Cypress Holder, upon or as soon as administratively practicable after the first date on which such repurchase would not violate the Company’s financing arrangements, and, in order to exercise the Put Right, the such Cypress Holder, must again deliver a Put Notice to the Company in accordance with Section 6(a) , with such Put Right to be exercised within 120 days following the receipt of such notice from the Company. Notwithstanding anything to the contrary contained herein, no Cypress Holder shall have a Put Right if (i) the shares of Common Stock or Vested Options are subject to any lien, encumbrance, pledge, or other interest of any third party or have been transferred in violation of applicable law, or the restrictions on transfer contemplated by this Agreement or (ii) the repurchase would violate applicable laws, regulations or exchange listing rules restricting corporate distributions to stockholders.
(c) The price to be paid by the Company upon settlement of the Put Right shall equal (i) with respect to shares of Common Stock, the fair market value (as determined in accordance with Section 4(e) ) of a share of Common Stock as of the date of the closing of the repurchase, and (ii) with respect to Vested Options, the fair market value (as determined in accordance with Section 4(e) ) of the shares of Common Stock issuable upon exercise of the Vested Options as determined under this Agreement as of the date of the closing of the repurchase, less the aggregate exercise price of such Vested Options (the price under clause (i) or (ii) above, as applicable, is referred to herein as the “ Put Price ”).
(d) The closing of any repurchase under this Section 6 shall be at a date to be specified by the Company, such date to be no later than 30 days after the date of the applicable Put Notice. The Put Price shall be paid at the closing in the form of a check, wire transfer of immediately available funds or by cancellation of money purchase indebtedness of the applicable Cypress Holder against surrender by such Cypress Holder of a stock certificate evidencing the shares of Common Stock with duly endorsed stock powers, or such other instrument of transfer or cancellation of such shares and Vested Options as may be reasonably requested by the Company.
(e) The Put Right shall terminate to the extent that it is not exercised prior to a Qualified Public Offering.
Section 7. Repurchase Disability .
(a) Notwithstanding anything to the contrary herein, except as otherwise provided by Section 7(c) , the Company shall not be permitted to purchase any Equity Securities held by any Cypress Holder or Involuntary Transferee upon exercise of the Repurchase Right,
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the Involuntary Transfer Repurchase Right or the Put Right (as applicable) if the Board reasonably determines that:
(i) the purchase of Equity Securities would render the Company or its Subsidiaries unable to meet their obligations in the ordinary course of business at any time during the one year period commencing on the date such purchase of Equity Securities would otherwise be required taking into account any pending or proposed transactions, capital expenditures or other budgeted cash outlays by the Company and its Subsidiaries which are reasonably likely to be consummated or paid, as the case may be, within such one year period, including, without limitation, any proposed acquisition of any other entity by the Company or any of its Subsidiaries which is reasonably likely to be consummated within such one year period;
(ii) the Company is prohibited from purchasing the Equity Securities by applicable law restricting the purchase by a corporation of its own shares; or
(iii) the purchase of Equity Securities would constitute a breach of, default, or event of default under, or is otherwise prohibited by, the terms of any loan agreement or other agreement or instrument representing indebtedness to which the Company or any of its Subsidiaries is a party (collectively, the “ Financing Documents ”) or the Company or its applicable Subsidiaries is not able to obtain the requisite consent of any of its senior lenders to the purchase of the Equity Securities.
The events described in (i) through (iii) above each constitute a “ Repurchase Disability .”
(b) Except as otherwise provided by Section 7(c) , in the event of a Repurchase Disability, the Company shall notify in writing the Cypress Holder or the Involuntary Transferee with respect to whom the Involuntary Transfer Repurchase Right has been exercised (a “ Disability Notice ”). The Disability Notice shall specify the nature of the Repurchase Disability. The Company shall thereafter repurchase the Equity Securities described in the Repurchase Notice, Involuntary Transfer Repurchase Notice or Put Notice, as applicable, as soon as reasonably practicable after all Repurchase Disabilities cease to exist (or the Company may elect, but shall have no obligation, to cause its nominee to repurchase the Equity Securities while any Repurchase Disabilities continue to exist); provided , however , that if some, but not all of the Equity Securities to be repurchased can be so repurchased without creating a Repurchase Disability, then the Company shall consummate such repurchase to the fullest extent it is able without causing a Repurchase Disability in accordance with the terms of this Agreement (without giving effect to this Section 7 ). In the event the Company suspends its obligations to repurchase the Equity Securities pursuant to a Repurchase Disability, (i) the Company shall provide written notice to the Cypress Holder or Involuntary Transferee, as applicable, as soon as practicable after all Repurchase Disabilities cease to exist (the “ Reinstatement Notice ”); (ii) the fair market value of the Equity Securities subject to a Repurchase Notice, Involuntary Transfer Repurchase Notice or Put Notice shall be equal to the greater of the fair market value (as determined in accordance with Section 4(e) ) of the Equity Securities as of the date of the date of the Repurchase Notice, Involuntary Transfer Repurchase Notice or Put Notice, as the case may be, and the fair market value (as determined in accordance with Section 4(e) ) determined as of the date the Reinstatement Notice is delivered to the Cypress Holder or the Involuntary
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Transferee, which fair market value shall be used to determine the Repurchase Price, Involuntary Transfer Repurchase Price or Put Price, as applicable, in the manner described above; and (iii) the repurchase shall occur on a date specified by the Company within 10 days following the determination of the fair market value of the Equity Securities to be repurchased as provided in clause (ii) above.
Section 8. Cooperation .
(a) In the event that Apollo exercises its rights pursuant to Section 3(a) or Section 3(b) , each Cypress Holder shall consent to and raise no objections (other than to challenge the lawfulness of any transaction to be consummated in connection with Apollo’s exercise of such rights, but only in the event that such Cypress Holder would be required to violate applicable law in connection with the consummation of such transaction) against the transaction, and shall take all actions that the Board reasonably deems necessary or desirable in connection with the consummation of the transaction. Without limiting the generality of the foregoing, each Cypress Holder agrees to (i) consent to and raise no objections (other than to challenge the lawfulness of any transaction to be consummated in connection with Apollo’s exercise of such rights, but only in the event that such Cypress Holder would be required to violate applicable law in connection with the consummation of such transaction against the transaction); (ii) execute any stock purchase agreement, merger agreement or other agreement entered into with the third party purchaser with respect to the transaction setting forth the terms and any ancillary agreement with respect to such transaction; (iii) vote the Equity Securities held by such Cypress Holder in favor of the transaction; and (iv) refrain from the exercise of dissenters’ or appraisal rights with respect to the transaction.
(b) If the Company or the holders of the Company’s securities enter into any negotiation or transaction for which Rule 506 (or any similar rule then in effect) promulgated under the Securities Act, may be available with respect to the negotiation or transaction (including a merger, consolidation, or other reorganization), each Cypress Holder shall, if necessary, appoint a purchaser representative (as defined in Rule 501 of the Securities Act) reasonably acceptable to the Company. If the purchaser representative is designated by the Company, the Company shall pay the fees of the purchaser representative, but if any Cypress Holder appoints another purchaser representative, the Cypress Holder shall be responsible for the fees of the purchaser representative so appointed.
(c) Each Cypress Holder shall bear its pro rata share of the costs of any transaction in which it sells Equity Securities (based upon the net proceeds received by such Cypress Holder in such transaction) to the extent such costs are incurred for the benefit of all holders of Equity Securities and are not otherwise paid by the Company or the acquiring party (it being agreed that expenses incurred by or on behalf of Apollo or a Cypress Holder for his or its sole benefit shall not be considered expenses incurred for the benefit of all Stockholders).
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Section 9. Board of Directors .
(a) Number of Directors; Nomination; Removal; Committees .
(i) The Company and the Stockholders shall take such corporate actions as may be required to ensure that (A) the number of directors constituting the Board is at all times five (5), and (B) the presence of three (3) directors (including a majority of Apollo Directors (as defined below)) is required to constitute a quorum of the Board.
(ii) For so long as Apollo owns any shares of Common Stock (or equity-linked Securities convertible or exchangeable into shares of Common Stock), (A) Apollo shall have the right to nominate two (2) Persons to serve as directors on the Board and propose the removal of such nominees and (B) Fund VI shall have the right to nominate one (1) Person to serve as director on the Board and propose the removal of such nominee (the Persons nominated pursuant to clause (A) and (B) of this paragraph, the “ Apollo Directors ”). Each such nomination or proposal shall be made by Apollo or Fund VI, as the case may be, delivering a written notice to the Company. As promptly as practicable, but in any event within five (5) days, after delivery of such notice, the parties hereto shall take or cause to be taken such corporate actions as may be reasonably required to cause the election or removal proposed in such notice, and the Stockholders agree to vote their shares in favor of such proposal. Such corporate actions may include calling a meeting or soliciting a written consent of the Board, or calling a meeting or soliciting a written consent of the Stockholders of the Company. The Apollo Directors initially shall be Laurence Berg, Steven Martinez and Peter P. Copses, it being acknowledged and agreed that Fund VI has nominated Peter P. Copses to serve as an Apollo Director.
(iii) Sherman shall have the right to serve as a director until he (A) resigns as a director or (B) ceases, for any reason, to serve the Company under the Consulting Agreement (each such event, with respect to Sherman, a “ Resignation Event ”). In the event of any such Resignation Event, Sherman agrees to resign as a director of the Company and each Subsidiary of the Company immediately pursuant to a written resignation notice delivered to the Board. In the event Sherman fails to so resign following a Resignation Event, the Stockholders agree to vote their shares to remove Sherman as a director pursuant to the terms of this Agreement immediately. Sherman acknowledges and agrees that he shall have no right to be appointed to the Board following removal therefrom pursuant to this Section 9 .
(iv) While serving as a director in accordance with this Section 9 , Sherman shall be a “ Non-Apollo Director .” In the event Sherman loses his right to serve as a director, his replacement shall be appointed by the holders of a majority of the Common Stock of the Company owned by Shareholders other than Apollo and Affiliates of Apollo and such replacement shall be a “ Non-Apollo Director .”
(v) The majority of the members of each committee created by the Board shall be Apollo Directors, and each Stockholder shall vote his, her or its Equity Securities, and the Company and the Stockholders shall take such corporate actions as may be required, to effectuate the provisions of this Section 9(a)(v) .
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(b) Meetings; Expenses; Compensation .
(i) The Company agrees to cause the Bylaws to provide, at all times from and after the Closing, that meetings of the Board or any committee thereof may be conducted by teleconference and that Board action may be taken by unanimous written consent.
(ii) The Company shall convene meetings of the Board at least once every three months. Upon any failure by the Company to convene any meeting required by this paragraph, a director nominated under Section 9(a)(ii) shall be empowered to convene such meeting.
(iii) The Company shall reimburse each director for his or her reasonable out-of-pocket expenses (including travel and related expenses) incurred in connection with (i) attending the meetings of the Board and all committees thereof and (ii) conducting any other Company business requested by the Company. The Company shall maintain directors and officers indemnity insurance coverage reasonably satisfactory to Apollo, and the Restated Certificate and By-laws shall provide for indemnification and exculpation of directors to the fullest extent permitted under applicable law.
(iv) The Company shall pay each Apollo Director and each independent director appointed by Apollo (A) a director’s fee in the amount of $40,000 per year; (B) an attendance fee in the amount of $2,000 for each meeting of the board of directors attended in person by such director; and (C) an attendance fee in the amount of $1,000 for each meeting of the board of directors attended telephonically by such director.
(c) Increase of Number of Directors . In the event that, and at such time as, the number of directors constituting the Board is increased to more than five (5), Apollo shall have the right (for so long as Apollo owns any shares of Common Stock (or equity-linked Securities convertible into shares of Common Stock)) to nominate additional directors such that the majority of the directors comprising the Board shall be Apollo Directors, and the Company and Stockholders shall take all corporate actions as may be required to ensure that (x) nominees of Apollo constitute a majority of the directors of the Board and (y) the presence of a majority of directors (including a majority of directors appointed by Apollo) is required to constitute a quorum of the Board.
(d) Subsidiaries . The provisions of this Section 9 shall apply, mutatis mutandis , to the board of directors of each Subsidiary of the Company.
(e) Inconsistency; Termination .
(i) In the event that any provision of the Bylaws or Restated Certificate is inconsistent with any provision of this Section 9 , the Stockholders shall take such action as may be necessary to amend any such provision in the Bylaws or Restated Certificate to reflect the terms and provisions of this Section 9 .
(ii) The provisions of this Section 9 shall terminate automatically and be of no further force and effect upon the consummation of a Qualified Public Offering.
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Section 10. Representations and Warranties .
Each Cypress Holder, severally and not jointly, hereby represents and warrants that (a) effective as of the Closing, such Cypress Holder is the record owner of the number and type of Equity Securities of the Company set forth opposite his or its name on Schedule I attached hereto, (b) this Agreement has been duly authorized, executed and delivered by such Cypress Holder and constitutes the valid and binding obligation of such Cypress Holder, enforceable in accordance with its terms, and (c) such Cypress Holder has not granted and is not a party to any proxy, voting trust or other agreement which is inconsistent with or conflicts with the provisions of this Agreement, and each Cypress Holder covenants that he or it shall not grant any proxy or become party to any voting trust or other agreement which is inconsistent with or conflicts with the provisions of this Agreement.
Section 11. Information Rights; Covenants .
(a) For so long as Apollo owns any Equity Securities, it shall be entitled to receive regular and suitable business (e.g. sales, marketing and technology), financial and other information reasonably appropriate to monitor and manage its ownership interests and such other information as it may reasonably request, from time to time. Such information will include, without limitation, the following:
(i) Access to Records . The Company shall, and shall cause each Subsidiary of the Company to, afford to Apollo and its officers, employees, advisors, counsel and other authorized representatives, during normal business hours, reasonable access, upon reasonable advance notice, to all of the books, records and properties of the Company and each such Subsidiary and all officers and employees of the Company and each such Subsidiary.
(ii) Hiring of Advisors . In connection with any possible Sale of the Company or any transactions permitted or contemplated herein, and upon the request of Apollo, subject to the fiduciary duties of the directors of the Company, the Company shall hire any (A) investment bank, (B) legal advisor, (C) financial or accounting advisor, or (D) other such advisor(s) on terms and conditions satisfactory to Apollo.
(iii) Financial Reports . The Company shall furnish Apollo with the following:
(A) Monthly Reports . As soon as available, but not later than 30 days after the end of each fiscal month, a consolidated balance sheet of the Company as of the end of such period and consolidated statements of income of the Company for such period and for the period commencing at the end of the previous fiscal year and ending with the end of such period, setting forth in each case in comparative form the corresponding figures for the corresponding period of the preceding fiscal year, and including comparisons to the budget or business plan and an analysis of the variances from the budget or plan, all prepared in accordance with generally accepted accounting principals consistently applied (except for the absence of footnotes and year-end adjustments).
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(B) Quarterly Reports . As soon as available, but not later than 45 days after the end of each quarterly accounting period, (1) a consolidated balance sheet of the Company as of the end of such period and consolidated statements of income, cash flows and changes in stockholders’ equity for such quarterly accounting period and for the period commencing at the end of the previous fiscal year and ending with the end of such period, setting forth in each case in comparative form the corresponding figures for the corresponding period of the preceding fiscal year, and including comparisons to the budget or business plan and an analysis of the variances from the budget or plan, all prepared in accordance with generally accepted accounting principals consistently applied and (2) a report by management of the Company of the operating and financial highlights of the Company and its Subsidiaries for such period, which shall include (x) a comparison between operating and financial results and budget and (y) an analysis of the operations of the Company and its Subsidiaries for such period.
(C) Annual Audit . As soon as available, but not later than 90 days after the end of each fiscal year of the Company, audited consolidated financial statements of the Company, which shall include statements of income, cash flows and changes in stockholders’ equity for such fiscal year and a balance sheet as of the last day thereof, each prepared in accordance with generally accepted accounting principles, consistently applied, and accompanied by the report of a the firm of independent certified public accountants selected by the Board (the “ Accountants ”). The Company and its Subsidiaries shall maintain a system of accounting sufficient to enable its Accountants to render the report referred to in this Section 11 .
(D) Miscellaneous . Promptly upon becoming available, the Company shall provide to Apollo:
(1) copies of all financial statements, reports, press releases, notices, proxy statements and other documents sent by the Company or its Subsidiaries to Apollo or its or their stockholders generally or released to the public and copies of all regular and periodic reports, if any, filed by the Company or its Subsidiaries with the Securities and Exchange Commission, any securities exchange or the NASD;
(2) notification in writing of any litigation or governmental proceeding in which it or any of its Subsidiaries is involved and which might, if determined adversely, materially and adversely effect the Company or any of its Subsidiaries;
(3) notification in writing of the existence of any default under any material agreement or instrument to which the Company or any of its Subsidiaries is a party or by which any of their assets are bound;
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(4) upon request, copies of all reports prepared for or delivered to the management of the Company or its Subsidiaries by its or their accountants; and
(5) upon request, any other routinely collected financial or other information available to management of the Company or its subsidiaries (including, without limitation, routinely collected statistical data).
(b) Apollo shall, and shall cause its Affiliates, employees, counsel and authorized representatives (collectively, “ Authorized Representatives ”) to, hold in confidence all Company Confidential Information (as defined below) of the Company and its Subsidiaries and Affiliates provided or made available to, or otherwise known by or in the possession of, Apollo; provided , however , that the foregoing provision shall not apply to information which: (i) is or becomes generally known to the industry or the public (other than as a result of the breach of this Section 11 by Apollo); or (ii) is or becomes available to Apollo on a non-confidential basis from a source other than the Company or its Subsidiaries or Affiliates or their respective directors, officers, employees or agents. As used in this Agreement, the term “ Company Confidential Information ” means information that is not generally known to the public and that is used, developed or obtained by the Company or any of its Subsidiaries in connection with their respective businesses, including processes, ideas, inventions (whether patentable or not), know-how, schematics, trade secrets, trademarks, copyrights, patents, designs and all other intellectual property and proprietary information, books, records, financial statements, customer lists, details regarding products and services, marketing information, sales information and all other technical, business, financial, customer and product development plans, forecasts, strategies and information, previously, presently, or subsequently disclosed to Apollo or its Affiliates or Authorized Representatives, in each case to the extent not generally known to the public. Notwithstanding the terms of this Agreement, Company Confidential Information may be disclosed by Apollo and its Authorized Representatives when compelled by governmental rule or regulation, or compelled by legal process or court order if Apollo (and/or its Authorized Representatives) has given the Company prompt written notice of such request or order and the Company Confidential Information to be disclosed as far in advance of its disclosure as reasonably possible so that the Company may seek an appropriate protective order or waive compliance by Apollo. For purposes of the preceding sentence, Apollo and its Authorized Representatives shall be entitled to rely conclusively on an opinion of its nationally recognized outside counsel that Apollo or its Authorized Representative is compelled by governmental rule or regulation, or compelled by legal process or court order, to disclose any such Company Confidential Information.
(c) Notwithstanding the disclosure obligations set forth in Section 11(a) , to the extent applicable to the Company, the Company shall comply in all material respects with the applicable requirements and provisions of Regulation FD (17 C.F.R. § 243.100, as amended, modified, restated or supplemented from time to time).
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Section 12. Registration Rights .
(a) Right to Demand; Demand Notices . Subject to the provisions of this Section 12 , at any time and from time to time, Apollo (the “ Demand Party ”) shall have the right to make two (2) written requests in any 12-month period to the Company for registration under and in accordance with the provisions of the Securities Act of all or part of its Restricted Shares. All requests made pursuant to this Section 12 will specify the aggregate amount of Restricted Shares to be registered, and will also specify the intended method of Transfer thereof (a “ Demand Notice ”), including, if such Transfer is pursuant to an Underwritten Offering, whether such offering shall be a “firm commitment” underwriting. Subject to Section 12(e) , promptly upon receipt of any such Demand Notice, the Company will use its best efforts to effect, as soon as possible, but in any event within 90 days, such registration under the Securities Act of the Restricted Shares that the Company has been so requested to register.
(b) Company’s Right to Defer Registration . If the Company is requested to effect a Demand Registration and the Company furnishes to the Demand Party a copy of a resolution of the Board certified by the secretary of the Company stating that in the good faith judgment of the Board it would be materially adverse to the Company for such Registration Statement to be filed on or before the date such filing would otherwise be required hereunder, the Company shall have the right to defer such filing for a period of not more than ninety (90) days after receipt of the request for such registration from such Demand Party. If the Company shall so postpone the filing of a Registration Statement and if the Demand Party within thirty (30) days after receipt of the notice of postponement advises the Company in writing that such Demand Party has determined to withdraw such request for registration, then such Demand Registration shall be deemed to be withdrawn and shall not be deemed to have been requested for purposes of Section 12(a) . If the effective date of any Registration Statement filed would otherwise be at least forty-five (45) calendar days, but fewer than ninety (90) calendar days, after the end of the Company’s fiscal year, and the Securities Act requires the Company to include audited financials as of the end of such fiscal year, the Company may delay the effectiveness of such Registration Statement for such period (up to a maximum of 45 days) as is reasonably necessary to include therein audited financial statements for such fiscal year.
(c) Registration Statement Form . Registrations under this Section 12 shall be on such appropriate registration form of the Commission (i) as shall be selected by the Company and as shall be reasonably acceptable to the Demand Party and (ii) as shall permit the Transfer of Restricted Shares in accordance with the intended method or methods of Transfer specified in the Demand Party’s Demand Notice. If, in connection with any registration under this Section 12 that is proposed by the Company to be on Form S-3 or any successor form, the managing underwriter, if any, shall advise the Company in writing that in its opinion the use of another permitted form is of material importance to the success of the offering, then such registration shall be on such other permitted form.
(d) Effective Registration Statement . The Company shall be deemed to have effected a Demand Registration if (i) the Registration Statement relating to such Demand Registration is declared effective by the Commission; provided , however , that no Demand Registration shall be deemed to have been requested for purposes of Section 12(a) if (x) such registration, after it has become effective, is or becomes subject to any stop order, injunction or
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other Order of the Commission or other Governmental Authority or court by reason of an act or omission by the Company and such interference is not cured within twenty (20) Business Days or (y) the conditions to closing specified in the purchase agreement or underwriting agreement entered into in connection with such registration are not satisfied because of an act or omission by the Company (other than a failure of the Company or any of its officers or employees to execute or deliver any closing certificate by reason of facts or circumstances existing due to actions of Apollo) or (ii) at any time after the Demand Party delivers a Demand Notice to the Company and prior to the effectiveness of the Registration Statement, the preparation of such Registration Statement is discontinued or such Registration Statement is withdrawn or abandoned at the request of the Demand Party (other than as contemplated by Section 12(e) ) unless the Demand Party has elected to pay and has paid to the Company in full the Registration Expenses (as set forth in Section 12(j) ) in connection with such Registration Statement.
(e) Cutbacks . If the managing underwriter advises the Company that the inclusion of all such Restricted Shares proposed to be included in any registration would interfere with the successful marketing (including pricing) of the Equity Securities of the Company to be offered thereby, then the number of Restricted Shares proposed to be included in such registration shall be allocated among the Company and the selling Stockholders in the following order of priority:
(i) first, the Restricted Shares to be offered by the Company; and
(ii) second, the amount of Restricted Shares which all other Stockholders have requested to be included in such registration (that the managing underwriter believes can be sold without interfering with the successful marketing (including pricing) of the Equity Securities of the Company), pro rata based upon the number of Restricted Shares proposed to be sold by each such Stockholder in such registration.
(f) Piggyback Registration . If the Company at any time proposes for any reason to register Restricted Shares under the Securities Act (other than on Form S-4 or Form S-8 promulgated under the Securities Act or any successor forms thereto) including, without limitation, pursuant to Section 12(a) or Section 12(g) , it shall promptly give written notice to each Stockholder of its intention to register the Restricted Shares and, upon the written request, given within 15 days after delivery of any such notice by the Company, of any such Stockholder to include in such registration Restricted Shares (which request shall specify the number of Restricted Shares proposed to be included in such registration), the Company shall use its best efforts to cause all such Restricted Shares to be included in such registration on the same terms and conditions as the Restricted Shares otherwise being sold in such registration, and in any event, subject to Section 12(e) the Company shall include the Restricted Shares if the registration is effected pursuant to Section 12(a) or Section 12(g) on the same terms and conditions as the Restricted Shares otherwise being sold in such registration.
(g) Registrations on Form S-3 . Notwithstanding anything contained in this Agreement to the contrary, at such time as the Company shall have qualified for the use of Form S-3 promulgated under the Securities Act or any successor form thereto, Apollo shall have the right to request in writing an unlimited number of Demand Registrations on Form S-3 or such
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successor form of Restricted Shares held by Apollo, which request or requests shall (i) specify the number of Restricted Shares intended to be sold or otherwise Transferred and (ii) state the intended method of Transfer of such Restricted Shares. Promptly (and in any event within 5 days) after receipt of any such request, the Company shall give written notice of such proposed registration to the other Stockholders and, subject to Section 12(e) , shall include in such proposed registration any Restricted Shares requested to be included in such proposed registration by such Stockholders who respond in writing to the Company’s notice within 15 days after delivery of such Notice (which response shall specify the number of Restricted Shares proposed to be included in such registration).
(h) Holdback Agreement . If the Company at any time shall register any shares of Common Stock under the Securities Act (including any registration pursuant to Section 12(a) ) for sale to the public, Apollo and the Cypress Holders shall not sell, make any short sale of, grant any option for the purchase of, or otherwise Transfer, any Restricted Shares (other than those Restricted Shares included in such registration pursuant to Section 12(a) ) without the prior written consent of the Company for a period designated by the Company in writing to Apollo and the Cypress Holders, which period shall not begin more than 10 days prior to the effectiveness of the Registration Statement pursuant to which such public offering shall be made and shall not exceed 90 days (or 180 days in the case of the initial public offering) after the effective date of such Registration Statement.
(i) Preparation and Filing . If and whenever the Company is under an obligation pursuant to the provisions of this Agreement to use its best efforts to effect the registration of any Restricted Shares, the Company shall, as expeditiously as practicable:
(i) use its best efforts to cause a Registration Statement that registers such Restricted Shares to become and remain effective for a period of 90 days or until all of such Restricted Shares have been Transferred (if earlier);
(ii) furnish, at least five Business Days before filing a Registration Statement that registers such Restricted Shares, any Preliminary Prospectus and the Prospectus relating thereto or any amendments or supplements relating to such a Registration Statement or such prospectuses, to one counsel acting on behalf of all selling Stockholders selected by Apollo (the “ Sellers’ Counsel ”), copies of all such documents proposed to be filed (it being understood that such five Business Day period need not apply to successive drafts of the same document proposed to be filed so long as such successive drafts are supplied to such counsel in advance of the proposed filing by a period of time that is customary and reasonable under the circumstances), and shall use its best efforts to reflect in each such document, when so filed with the Commission, such comments as the Stockholders whose Restricted Shares are to be covered by such Registration Statement may reasonably propose;
(iii) prepare and file with the Commission such amendments and supplements to such Registration Statement and the Prospectus used in connection therewith as may be necessary to keep such Registration Statement effective for at least a period of 90 days or until all of such Restricted Shares have been Transferred (if earlier)
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and to comply with the provisions of the Securities Act with respect to the sale or other Transfer of such Restricted Shares;
(iv) promptly notify the Sellers’ Counsel in writing (A) of the receipt by the Company of any notification with respect to any comments by the Commission with respect to such Registration Statement, any Preliminary Prospectus, the Prospectus or any Issuer Free Writing Prospectus, or any request by the Commission for the amending or supplementing thereof or for additional information with respect thereto, (B) of the receipt by the Company of any notification with respect to the issuance by the Commission of any stop order suspending the effectiveness of such Registration Statement, Preliminary Prospectus, Prospectus or Issuer Free Writing Prospectus or any amendment or supplement thereto or the initiation of any proceedings for that purpose and (C) of the receipt by the Company of any notification with respect to the suspension of the qualification of such Restricted Shares for sale in any jurisdiction or the initiation or threatening of any proceeding for such purposes;
(v) use its best efforts to register or qualify such Restricted Shares under such other securities or blue sky laws of such jurisdictions as any selling Stockholder reasonably requests and do any and all other acts and things which may be reasonably necessary or advisable to enable the holders of such Restricted Shares to consummate the Transfer in such jurisdictions.
(vi) without limiting subsection (v) above, use its best efforts to cause such Restricted Shares to be registered with or approved by such other Governmental Authorities as may be necessary by virtue of the business and operations of the Company to enable the holders of such Restricted Shares to consummate the Transfer of such Restricted Shares;
(vii) furnish to each selling Stockholder and the underwriters, if any, such number of copies of such Registration Statement, any amendments thereto, any exhibits thereto or documents incorporated by reference therein (but only to the extent not publicly available on EDGAR or the Company’s website), any Preliminary Prospectus, any Issuer Free Writing Prospectus and the Prospectus (each in conformity with the requirements of the Securities Act), and such other documents as such selling Stockholder or underwriters may reasonably request in order to facilitate the public offering and sale or other Transfer of such Restricted Shares;
(viii) notify in writing on a timely basis each selling Stockholder at any time when the Prospectus is required to be delivered under the Securities Act, of the happening of any event as a result of which the Prospectus included in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing and, at the request of such Stockholder, prepare and furnish to such Stockholder a number of copies reasonably requested by such Stockholder of a supplement to or an amendment of such Prospectus as may be necessary so that, as thereafter delivered to the offerees of such Restricted Shares, such Prospectus shall not include an untrue statement of a material fact or omit to state a
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material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing;
(ix) prevent the issuance of an Order suspending the effectiveness of a Registration Statement, and if one is issued, use its best efforts to obtain the withdrawal of any Order suspending the effectiveness of a Registration Statement as soon as possible;
(x) retain in accordance with the Rules and Regulations all Issuer Free Writing Prospectuses not required to be filed pursuant to the Rules and Regulations; and if at any time after the date hereof any event shall have occurred as a result of which any Issuer Free Writing Prospectus, as then amended or supplemented, would conflict with the information in the Registration Statement, the most recent Preliminary Prospectus or the Prospectus or would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, or, if for any other reason it shall be necessary to amend or supplement any Issuer Free Writing Prospectus effect compliance with the Securities Act and the Rules and Regulations, to notify promptly in writing the selling Stockholders and underwriters and, upon request, to file such document and to prepare and furnish without charge to each selling Stockholder and underwriter as many copies as each such selling Stockholder and underwriter may from time to time reasonably request of an amended or supplemented Issuer Free Writing Prospectus that will correct such conflict, statement or omission or effect compliance with the Securities Act and the Rules and Regulations;
(xi) make available for inspection by the selling Stockholders, the Sellers’ Counsel or any underwriter participating in any Transfer pursuant to such Registration Statement and any attorney, accountant or other agent retained by any such seller or underwriter (collectively, the “ Inspectors ”), all pertinent financial and other records, pertinent corporate documents and properties of the Company (collectively, the “ Records ”), as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause the Company’s officers, managers and employees to supply all information (together with the Records, the “ Information ”) reasonably requested by any such Inspector in connection with such Registration Statement. Any of the Information that the Company determines in good faith to be confidential, and of which determination the Inspectors are so notified, shall not be disclosed by the Inspectors unless (i) the disclosure of such Information is necessary to avoid or correct a misstatement or omission in the Registration Statement, (ii) the release of such Information is ordered pursuant to a subpoena or other Order from a Governmental Authority or (iii) such Information has been made generally available to the public. The selling Stockholders agree that they will, upon learning that disclosure of such Information is sought by a Governmental Authority, give prompt written notice to the Company and use their reasonable commercial efforts to allow the Company, at the Company’s expense, to undertake appropriate action to prevent disclosure of the Information deemed confidential;
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(xii) in the case of an Underwritten Offering, use its best efforts to obtain, from its Accountants, a “cold comfort” letter in customary form and covering such matters of the type customarily covered by cold comfort letters;
(xiii) use its best efforts to obtain, from its counsel, an opinion or opinions in customary form (which shall also be addressed to the Stockholders selling Restricted Shares in such registration) and, in the case of an Underwritten Offering, use its best efforts to obtain, from its counsel, an opinion or opinions in customary form;
(xiv) provide a transfer agent and registrar (which may be the same entity) for such Restricted Shares and a CUSIP number for such Restricted Shares, in each case no later than the effective date of such registration;
(xv) upon the request of any underwriter, issue to any underwriter to which any selling Stockholder may sell Restricted Shares in such offering, certificates evidencing such Restricted Shares;
(xvi) upon the request of Apollo, list such Restricted Shares on any national securities exchange on which any shares of Common Stock are listed or, if no such shares are listed on a national securities exchange, use its best efforts to qualify such Restricted Shares for inclusion on the automated quotation system of the National Association of Securities Dealers, Inc. (the “ NASD ”) or such other national securities exchange as Apollo shall request;
(xvii) in connection with an Underwritten Offering, participate, to the extent requested by the managing underwriter for the offering or Apollo, in customary efforts to sell the Restricted Shares being offered, cause such steps to be taken as to ensure the good faith participation of senior management officers of the Company in “road shows” as is customary and take such other actions as the underwriters or Apollo may request in order to expedite or facilitate the Transfer of Restricted Shares;
(xviii) cooperate with each Stockholder and each underwriter participating in the Transfer of Restricted Shares and their respective counsel in connection with any filings required to be made with the NASD, including, if appropriate, the pre-filing of the Prospectus as part of a shelf Registration Statement in advance of an Underwritten Offering;
(xix) make available to its security holders, as soon as reasonably practicable but not later than eighteen (18) months after the effective date, earnings statements (which need not be audited) covering a period of twelve (12) months beginning within three (3) months after the effective date of the Registration Statement, which earnings statements shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;
(xx) during the period when the Prospectus is required to be delivered under the Securities Act, promptly file all documents required to be filed with the Commission, including pursuant to Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act;
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(xxi) otherwise use its best efforts to comply with all applicable Rules and Regulations; and
(xxii) use its best efforts to take all other steps necessary to effect the registration of such Restricted Shares contemplated hereby.
(j) Expenses . All expenses incident to the Company’s performance of, or compliance with, this Section 12 , including (a) all registration and filing fees, and any other fees and expenses associated with filings required to be made with any stock exchange, the Commission and the NASD (including, if applicable, the fees and expenses of any “qualified independent underwriter” and its counsel as may be required by the rules and regulations of the NASD); (b) all fees and expenses of compliance with state securities or “blue sky” laws (including fees and disbursements of counsel for the underwriters or Stockholders in connection with “blue sky” qualifications of the Restricted Shares and determination of their eligibility for investment under the laws of such jurisdictions as the managing underwriters may designate); (c) all printing and related messenger and delivery expenses (including expenses of printing certificates for the Restricted Shares in a form eligible for deposit with The Depository Trust Company (or any other depositary or transfer agent/registrar) and of printing any Preliminary Prospectus, any Issuer Free Writing Prospectus and the Prospectus and any amendments thereto), all fees and disbursements of counsel for the Company and of all independent certified public accountants of the issuer (including the expenses of any special audit and “cold comfort” letters required by or incident to such performance); (d) Securities Act liability insurance if the Company so desires or the underwriters so require; (e) all fees and expenses incurred in connection with the listing of the Restricted Shares on any securities exchange (including NASDAQ) and all rating agency fees; (f) all fees and disbursements of the Sellers’ Counsel to represent the selling Stockholders in connection with such registration; and (g) reasonable fees and expenses of outside counsel and advisors retained by the Company (all such expenses being herein called “ Registration Expenses ”), will be borne by the Company, regardless of whether the Registration Statement becomes effective; provided , however , that all underwriting discounts and selling commissions applicable to the Restricted Shares shall not be borne by the Company, but shall be borne by the seller or sellers thereof, in proportion to the number of Restricted Shares sold by such seller or sellers. In addition, the Company will, in any event, pay its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any audit and the fees and expenses of any Person, including special experts, retained by the Company.
(k) Indemnification .
(i) In connection with any registration of any Restricted Shares under the Securities Act pursuant to this Agreement, the Company shall indemnify and hold harmless each seller of such Restricted Shares, each underwriter, broker or any other Person acting on behalf of such seller and each other Person, if any, who controls any of the foregoing Persons within the meaning of the Securities Act against any losses, claims, damages or liabilities, joint or several, to which any of the foregoing Persons may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (1) any untrue statement or alleged untrue statement of a material fact contained in (A) any
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Preliminary Prospectus, the Registration Statement, the Prospectus or in any amendment or supplement thereto, (B) any Issuer Free Writing Prospectus or in any amendment or supplement thereto or (C) any Permitted Issuer Information used or referred to in any “free writing prospectus” (as defined in Rule 405) used or referred to by any underwriter or (D) any “road show” (as defined in Rule 433) not constituting an Issuer Free Writing Prospectus, when considered together with the most recent Preliminary Prospectus (collectively, “ Road Show Material ”), (2) the omission or alleged omission to state in any Preliminary Prospectus, the Registration Statement, the Prospectus, any Issuer Free Writing Prospectus or in any amendment or supplement thereto or in any Permitted Issuer Information or any Road Show Material any material fact required to be stated therein or necessary to make the statements therein (in the case of any Preliminary Prospectus, Issuer Free Writing Prospectus, Road Show Material and the Prospectus, in the light of the circumstances under which they were made) not misleading, or any violation by the Company of the Securities Act or state securities or blue sky laws applicable to the Company and relating to action or inaction required of the Company in connection with such registration or qualification under such state securities or blue sky laws; and shall reimburse such seller, such underwriter, such broker or such other Person acting on behalf of such seller and each such controlling Person for any legal or other expenses reasonably incurred by any of them in connection with investigating or defending any such loss, claim, damage, liability or action; provided , however , that the Company shall not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in the Preliminary Prospectus, the Registration Statement, the Prospectus, any Issuer Free Writing Prospectus or in any such amendment or supplement thereto or in any Permitted Issuer Information or any Road Show Material in reliance upon and in conformity with written information furnished to the Company through an instrument duly executed by such seller or underwriter specifically for use in the preparation thereof; and provided , further , however , that the foregoing indemnity agreement shall not inure to the benefit of any indemnified party if (w) such loss, claim, damage, liability or judgment arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any Preliminary Prospectus or any amendment or supplement thereto, as the case may be, (x) the Company informed such sellers and underwriters of such untrue statement or alleged untrue statement or omission or alleged omission prior to the confirmation of sales of the Shares, (y) such untrue statement or alleged untrue statement or omission or alleged omission was corrected in an amended or supplemented Preliminary Prospectus (or, where permitted by law, an Issuer Free Writing Prospectus) and such corrected Preliminary Prospectus (or Issuer Free Writing Prospectus) was provided to the underwriters such that the underwriters had a reasonably sufficient amount of time to deliver such corrected Preliminary Prospectus (or Issuer Free Writing Prospectus) to the Persons to whom the underwriters offered the Restricted Shares and (z) the timely delivery of such amended Preliminary Prospectus (or Issuer Free Writing Prospectus) to such Person would have constituted a complete defense to the losses, claims, damages, liabilities and judgments asserted by such Person.
(ii) In connection with any registration of Restricted Shares under the Securities Act pursuant to this Agreement, each seller of Restricted Shares shall
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indemnify and hold harmless (in the same manner and to the same extent as set forth in the preceding paragraph of this Section 12(k) ) the Company, each officer of the Company who shall sign such Registration Statement, each underwriter, broker or other Person acting on behalf of such seller, each Person who controls any of the foregoing Persons within the meaning of the Securities Act and each other seller of Restricted Shares under such Registration Statement with respect to any statement or omission from any Preliminary Prospectus, the Registration Statement, the Prospectus, any Issuer Free Writing Prospectus or in any amendment or supplement thereto or in any Road Show Material, if such statement or omission was made in reliance upon and in conformity with written information furnished to the Company or such underwriter through an instrument duly executed by such seller specifically for use in connection with the preparation of such Preliminary Prospectus, Registration Statement, Prospectus, Issuer Free Writing Prospectus or in any amendment or supplement thereto or in Road Show Material; provided , however , that the maximum amount of liability in respect of such indemnification shall be, limited, in the case of each seller of Restricted Shares, to an amount equal to the net proceeds actually received by such seller from the sale of Restricted Shares effected pursuant to such registration.
(iii) Indemnification similar to that specified in Sections 12(k)(i) and (k)(ii) shall be given by the Company and each seller of Restricted Shares (with such modifications as may be appropriate) with respect to any required registration or other qualification of their Securities under any Federal or state law or regulation of Governmental Authority other than the Securities Act.
(iv) Promptly after receipt by an indemnified party of notice of the commencement of any action involving a claim referred to in the preceding paragraphs of this Section 12(k) , such indemnified party will, if a claim in respect thereof is made against an indemnifying party, give written notice to the latter of the commencement of such action ( provided , however , that an indemnified party’s failure to give such notice in a timely manner shall only relieve the indemnification obligations of an indemnifying party to the extent such indemnifying party is materially prejudiced by such failure). In case any such action is brought against an indemnified party, the indemnifying party will be entitled to participate in and to assume the defense thereof, jointly with any other indemnifying party similarly notified to the extent that it may wish, with counsel reasonably satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be responsible for any legal or other expenses subsequently incurred by the latter in connection with the defense thereof; provided , however , that if any indemnified party shall have reasonably concluded that there may be one or more legal or equitable defenses available to such indemnified party which are additional to or conflict with those available to the indemnifying party, or that such claim or litigation involves or could have an effect upon matters beyond the scope of the indemnity agreement provided in this Section 12(k) , the indemnifying party shall not have the right to assume the defense of such action on behalf of such indemnified party and such indemnifying party shall reimburse such indemnified party and, any Person controlling such indemnified party for that portion of the fees and expenses of any counsel retained
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by the indemnified party which are reasonably related to the matters covered by the indemnity agreement provided in this Section 12(k) .
(v) If the indemnification provided for in this Section 12(k) is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, claim, damage or liability referred to herein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amounts paid or payable by such indemnified party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions which resulted in such loss, claim, damage or liability as well as any other relevant equitable considerations; provided , however , that the maximum amount of liability in respect of such contribution shall be limited, in the case of each seller of Restricted Shares, to an amount equal to the net proceeds actually received by such seller from the sale of Restricted Shares effected pursuant to such registration. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. No Person guilty of fraud shall be entitled to indemnification or contribution hereunder.
(vi) The indemnification and contribution provided for under this Agreement will remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party and will survive the Transfer of Restricted Shares.
(l) Underwritten Offerings . Notwithstanding anything to the contrary set forth in this Agreement:
(i) to the extent that all the holders selling Restricted Shares in a proposed registration shall enter into an underwriting or similar agreement, which agreement contains provisions covering one or more issues addressed in this Section 12 , the provisions contained in this Section 12 addressing such issue or issues shall be of no force or effect with respect to such registration. If any offering pursuant to a Demand Registration or pursuant to Section 12(g) involves an Underwritten Offering, Apollo shall have the right to select the managing underwriter or underwriters to administer the offering, which managing underwriters shall be a firm of nationally recognized standing and reasonably satisfactory to the Company in which case the Company shall enter into an agreement with such firm for the underwriting of such offering containing terms and conditions reasonably satisfactory to Apollo and the Company; and
(ii) no Stockholder may participate in any registration hereunder that is underwritten unless such Stockholder agrees (A) to sell such Stockholder’s Restricted Shares proposed to be included therein on the basis provided in any underwriting arrangement(s) acceptable to Apollo and the Company and consistent with the terms hereof and (B) as expeditiously as possible, to notify the Company of the occurrence of
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any event concerning such Stockholder as a result of which any Preliminary Prospectus, any Issuer Free Writing Prospectus or the Prospectus contains an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
(m) Information by Holder . Each holder of Restricted Shares to be included in any registration shall furnish to the Company such written information regarding such holder and the distribution proposed by such holder as the Company may reasonably request in writing and as shall be reasonably required in connection with any registration, qualification or compliance referred to in this Agreement.
(n) Exchange Act Compliance . From and after the date a Registration Statement filed by the Company pursuant to the Exchange Act relating to any class of the its Securities shall have become effective, the Company shall comply with all of the reporting requirements of the Exchange Act (whether or not it shall be required to do so) and shall comply with all other public information reporting requirements of the Commission which are conditions to the availability of Rule 144 for the sale of Restricted Shares. The Company shall cooperate with each holder in supplying such information as may be necessary for such holder to complete and file any information reporting forms presently or hereafter required by the Commission as a condition to the availability of Rule 144 or any comparable successor rules). The Company shall furnish to any holder of Restricted Shares upon request a written statement executed by the Company as to the steps it has taken to comply with the current public information requirement of Rule 144 (or such comparable successor rules). After the consummation of a Qualified Public Offering, subject to the limitations on Transfers imposed by this Agreement, the Company shall use its best efforts to facilitate and expedite transfers of Restricted Shares pursuant to Rule 144 under the Securities Act, which efforts shall include timely notice to its transfer agent to expedite such transfers of Restricted Shares.
(o) No Conflict of Rights . The Company represents and warrants to Apollo and the Cypress Holders that the registration rights granted in this Agreement do not conflict with any other registration rights granted by the Company. The Company shall not, after the date hereof, grant any registration rights which conflict with or impair, or have any priority over, the registration rights granted hereby.
(p) Termination . The provisions of this Section 12 shall terminate and be of no further force or effect when there shall not be any Restricted Shares, provided , however , that Sections 12(j) and (k) shall survive the termination of this Agreement indefinitely.
(q) Rexnord Stockholders’ Agreement . Each of the parties to this Agreement acknowledge that the Rexnord Stockholders’ Agreement contains provisions comparable to the provisions of this Section 12 , including provisions relating to piggyback registration rights. Nothing in this Section 12 shall limit or in any way restrict the rights of the parties to the Rexnord Stockholders’ Agreement thereunder.
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Section 13. Termination .
Subject to the terms of Section 12(p) , this Agreement shall terminate on the first to occur of:
(a) the date the Company consummates a Qualified Public Offering;
(b) the complete liquidation of the Company and its Subsidiaries or the sale, lease or other disposition by the Company of all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole; and
(c) the execution of a resolution of the Board terminating this Agreement.
Section 14. Miscellaneous .
(a) Restrictive Legends .
(i) Each certificate for Restricted Shares (unless otherwise permitted by the provisions of Section 14(a)(ii) ) shall include a legend in substantially the following form:
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES OR BLUE SKY LAWS. THESE SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT OR LAWS. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO A STOCKHOLDERS AGREEMENT DATED AS OF JULY 21, 2006 BY AND AMONG REXNORD HOLDINGS, INC. (THE “ COMPANY ”) AND THE OTHER PARTIES NAMED THEREIN. THE TERMS OF SUCH STOCKHOLDERS AGREEMENT INCLUDE, AMONG OTHER THINGS, RESTRICTIONS ON TRANSFER. A COPY OF SUCH AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST.”
(ii) Subject to Section 14(b) , any holder of Restricted Shares registered that are pursuant to the Securities Act and qualified under applicable state securities laws may exchange any certificate or other evidence of ownership of such Restricted Shares for a certificate or other evidence of ownership with respect to the Common Stock so registered that shall not bear the legend set forth in clause (i) of this Section 14(a) .
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(b) Compliance with Securities Laws . Upon any proposed Transfer of Restricted Shares, the Company shall not be obligated to register the Transfer of such Restricted Shares on the stock transfer books of the Company until the Company shall have received (i) to the extent required to ensure compliance with the Securities Act and any other applicable laws, an opinion of counsel reasonably satisfactory to the Company, to the effect that the proposed Transfer of Restricted Shares may be effected without registration under the Securities Act or any such other applicable laws and/or (ii) representation letters in form and substance reasonably satisfactory to the Company to ensure compliance with the provisions of the Securities Act and any other applicable laws. Each certificate evidencing Restricted Shares transferred as above provided shall bear the legend set forth in Section 14(a)(i) , except that such certificate shall not bear such legend if neither such legend nor the restrictions on Transfer in Section 14(a) and Section 14(b) are required in order to ensure compliance with the provisions of the Securities Act.
(c) Severability . Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, and such invalid, void or otherwise unenforceable provisions shall be null and void. It is the intent of the parties, however, that any invalid, void or otherwise unenforceable provisions be automatically replaced by other provisions which are as similar as possible in terms to such invalid, void or otherwise unenforceable provisions but are valid and enforceable to the fullest extent permitted by law.
(d) Entire Agreement; Termination of RBS/Cypress Stockholders’ Agreement .
(i) This Agreement constitutes the entire agreement among the parties hereto and supersedes any other agreements, whether written or oral, that may have been made or entered into by or among any of the parties hereto relating to the subject matter hereof (including (A) the RBS/Cypress Stockholders’ Agreement and (B) the provisions set forth across from the sub-heading “Shareholder Agreement” in that certain Management Incentive Compensation Term Sheet, dated as of May 24, 2006, by and among CIH, Sherman, Cypress Group and Acquiror), except for the Option Agreement and Option Assumption Agreement.
(ii) The Stockholders hereby acknowledge and agree that, effective as of the Closing, notwithstanding anything to the contrary contained in the RBS/Cypress Stockholders’ Agreement, and with no further action on the part of any party thereto or hereto, the RBS/Cypress Stockholders’ Agreement shall terminate and be of no further force or effect, and none of the parties hereto or thereto shall have any further liability or obligation thereunder whether arising prior to, on or after the date hereof.
(e) Successors and Assigns . This Agreement shall bind and inure to the benefit of the Company, Apollo and the Cypress Holders and their respective successors and permitted assigns. Except as otherwise expressly permitted pursuant to the terms of this Agreement (or with the prior written consent of Apollo), neither the Company nor the Cypress
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Holders shall assign or otherwise Transfer their rights or obligations hereunder. Apollo shall have the right to assign or otherwise Transfer its rights and obligations hereunder to its Affiliates.
(f) Modifications; Amendments . The terms and provisions of this Agreement may not be modified, amended or waived, except pursuant to a writing signed by the Company, and the holders of a majority of the Common Stock; provided , however , that any such modification, amendment or waiver that adversely affects any Stockholder and is prejudicial to such Stockholder relative to all of the other Stockholders shall not be effected without the consent of such Stockholder.
(g) Waiver . No course of dealing between the Company, Apollo and the Cypress Holders (or any of them) or any delay in exercising any rights hereunder will operate as a waiver of any rights of any party to this Agreement. The failure of any party hereto to enforce any of the provisions of this Agreement will in no way be construed as a waiver of such provisions and will not affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms.
(h) Table of Contents and Headings . The table of contents and section headings of this Agreement are included for reference purposes only and shall not affect the construction or interpretation of any of the provisions of this Agreement.
(i) Counterparts; Facsimile Signatures . This Agreement may be executed in any number of original or facsimile counterparts, and each such counterpart hereof shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement.
(j) Remedies .
(i) Apollo and each Cypress Holder shall have all rights and remedies reserved for Apollo or such Cypress Holder pursuant to this Agreement and the Restated Certificate and the Bylaws and all rights and remedies which Apollo or such Cypress Holder has been granted at any time under any other agreement or contract and all of the rights which such holder has under any law or equity. Any Person having any rights under any provision of this Agreement will be entitled to enforce such rights specifically, to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law or equity.
(ii) The parties hereto agree that if any parties seek to resolve any dispute arising under this Agreement pursuant to a legal proceeding, the prevailing parties to such proceeding shall be entitled to receive reasonable fees and expenses (including reasonable attorneys’ fees and expenses) incurred in connection with such proceedings.
(iii) It is acknowledged that it will be impossible to measure in money the damages that would be suffered if the parties fail to comply with any of the obligations herein imposed on them and that in the event of any such failure, an aggrieved Person will be irreparably damaged and will not have an adequate remedy at law. Any such Person shall, therefore, be entitled to injunctive relief, including specific
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performance, to enforce such obligations, and if any action should be brought in equity to enforce any of the provisions of this Agreement, none of the parties hereto shall raise the defense that there is an adequate remedy at law.
(k) Notices . All notices, requests, consents and other communications hereunder to any party hereto shall be deemed to be sufficient if contained in a written instrument and shall be deemed to have been duly given when delivered in person, by telecopy, by nationally-recognized overnight courier, or by first class registered or certified mail, postage prepaid, addressed to such party at the address set forth below or such other address as may hereafter be designated in writing by the addressee to the addressor:
(i) if to the Company, to:
Rexnord
Holdings, Inc.
c/o RBS Global, Inc.
4701 Greenfield Avenue
Milwaukee, WI 53214
Fax: (414) 643-2510
Attention: Patricia Whaley, Esq.
with a copy to:
O’Melveny & Myers LLP
Times Square Tower
7 Times Square
New
York, New York 10036
Fax: (212) 326-2061
Attention: John M. Scott, Esq.
(ii) if to Apollo, to:
Apollo
Management VI, L.P.
c/o Apollo Management, L.P.
9 West 57th Street, 43rd Floor
New York, NY 10019
Fax: (212) 515-3288
Attention:
Mr. Laurence Berg
Mr. Steven Martinez
with a copy to:
O’Melveny & Myers LLP
Times Square Tower
7 Times Square
New
York, New York 10036
Fax: (212) 326-2061
Attention: John M. Scott, Esq.
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(iii) if to CIH or Sherman:
Cypress
Industrial Holdings, LLC
c/o Cypress Group, LLC
111 South Calvert Street
Suite 7200
Baltimore,
MD 21202
Fax: (410) 385-0105
Attention: George M. Sherman
with a copy to:
King &
Spalding LLP
1700 Pennsylvania Avenue, N.W.
Washington, D.C. 20006-4706
Fax: (202) 626-3737
Attention: Glenn C. Campbell, Esq.
All such notices, requests, consents and other communications shall be deemed to have been delivered (a) in the case of personal delivery or delivery by telecopy, on the date of such delivery, (b) in the case of nationally-recognized overnight courier, on the next Business Day and (c) in the case of mailing, on the third Business Day following such mailing if sent by certified mail, return receipt requested.
(l) Arbitration . EXCEPT AS SET FORTH BELOW, THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICTS OF LAWS OR PRINCIPLES THEREOF THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK. ALL MATTERS WHICH ARE THE SUBJECT OF THIS AGREEMENT RELATING TO MATTERS OF INTERNAL GOVERNANCE OF THE COMPANY SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY LAW OR RULE THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE TO BE APPLIED. Any dispute or controversy arising under, out of, or in connection with or in relation to this Agreement shall be finally determined and settled by arbitration in New York, New York in accordance with the applicable rules of the American Arbitration Association, and judgment upon the award may be entered in any court having jurisdiction. Within 20 days of the conclusion of the arbitration hearing, the arbitrator shall prepare written findings of fact and conclusions of law. It is mutually agreed that the written decision of the arbitrator shall be valid, binding, final and non-appealable; provided , however , that the parties hereto agree that the arbitrator shall not be empowered to award punitive damages against any party to such arbitration. To the extent permitted by law, the arbitrator’s fees and expenses will be borne equally by each party. In the event that an action is brought to enforce the provisions of this Agreement pursuant to this Section 14(l) , each party shall pay its own attorney’s fees and expenses regardless of whether in the opinion of the court or arbitrator deciding such action there is a prevailing party. EACH OF THE PARTIES HERETO HEREBY
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IRREVOCABLY WAIVES ALL RIGHT TO TRIAL, INCLUDING TRIAL BY JURY, IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(m) Interpretive Matters . Unless the context otherwise requires, (i) all references to articles, sections, schedules or exhibits are to Articles, Sections, Schedules or Exhibits of or to this Agreement, (ii) each accounting term not otherwise defined in this Agreement has the meaning assigned for it in accordance with GAAP, (iii) words in the singular or plural include the singular and plural, and pronouns stated in either the masculine, feminine or neuter gender shall include the masculine, feminine and neuter, and (iv) the term “including” and any variation thereof shall mean by way of example and not by way of limitation. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent arises, this Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.
(n) Further Assurances . Each party hereto shall do and perform or cause to be done and performed all such further acts and things and shall execute and deliver all such other agreements, certificates, instruments, and documents as any other party hereto reasonably may request in order to carry out the provisions of this Agreement and the consummation of the transactions contemplated hereby.
(o) Third Party Beneficiaries . The covenants of the Company contained in this Agreement (i) are being given by the Company as an inducement to the Stockholders to enter into this Agreement (and the Company acknowledges that the Stockholders have expressly relied thereon) and (b) are solely for the benefit of the Stockholders. Accordingly, except as expressly set forth herein (including in Section 9(b)(iii) with respect to directors and officers indemnity insurance), no third party (including, without limitation, any holder of Equity Securities of the Company) or anyone acting on behalf of any thereof, other than the Stockholders and their permitted assignees, shall be a third party or other beneficiary of such covenants and no such third party shall have any rights of contribution against the Stockholders or the Company with respect to such covenants or any matter subject to or resulting in indemnification under this Agreement or otherwise.
(p) Stock Splits, Mergers, etc . If, and as often as, there are any changes in any Equity Securities, as applicable, by way of stock split, stock dividend, combination or reclassification, or through merger, consolidation, reorganization or recapitalization, or by any other means, appropriate adjustment shall be made in the provisions of this Agreement, as may be required, so that the rights, privileges, duties and obligations hereunder shall continue with respect to the Equity Securities, as so changed.
(q) No Right to Employment . None of the provisions hereof shall create, or be construed or deemed to create, any right to employment in favor of any Person by the Company or any of its Subsidiaries.
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Section 15. Effectiveness .
This Agreement shall become effective as of the Closing. In the event that the Agreement and Plan of Merger is terminated pursuant to its terms and the Closing does not occur, this Agreement shall be null and void and of no force and effect.
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IN WITNESS WHEREOF , the parties hereto have executed this Stockholders’ Agreement on the date first written above.
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REXNORD HOLDINGS, INC. |
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Thomas Jansen |
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Executive Vice President and Chief Financial Officer |
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REXNORD ACQUISITION HOLDINGS I, LLC |
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/s/ Patricia Navis |
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Patricia Navis |
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Authorized Person |
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REXNORD ACQUISITION HOLDINGS II,
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/s/ Patricia Navis |
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Patricia Navis |
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CYPRESS INDUSTRIAL HOLDINGS, LLC |
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/s/ George M. Sherman |
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George M. Sherman |
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Managing Member |
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/s/ George M. Sherman |
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George M. Sherman |
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Schedule I
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Stockholder |
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Restricted Shares Owned |
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Cypress Industrial Holdings, LLC |
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George M. Sherman |
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Exhibit A
Amended and Restated Certificate of Incorporation of the Company
See attached
Exhibit B
FORM OF JOINDER TO
AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
THIS JOINDER (this “ Joinder ” to that certain Stockholders Agreement dated as of , , by and among REXNORD HOLDINGS, INC. , a Delaware corporation (the “ Company ”), REXNORD ACQUISITION HOLDINGS I, LLC , a Delaware limited liability company (“ SPV I ”), REXNORD ACQUISITION HOLDINGS II, LLC , a Delaware limited liability company (“ SPV II ”; together with SPV I, “ Apollo ”), Cypress Industrial Holdings, LLC, a Maryland limited liability company and George M. Sherman, individually (the “ Agreement ”), is made and entered into as of [ ] by and between the Company and [Holder] (“ Holder ”). Capitalized terms used but not otherwise defined herein shall have the meanings set forth in the Agreement.
WHEREAS , Holder has acquired certain shares of Common Stock, and the Agreement and the Company requires Holder, as a holder of Common Stock, to become a party to the Agreement, and Holder agrees to do so in accordance with the terms hereof.
NOW, THEREFORE , in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Joinder hereby agree as follows:
1. Agreement to be Bound . Holder hereby agrees that upon execution of this Joinder, [he, she or it] shall become a party to the Agreement and shall be fully bound by, and subject to, all of the covenants, terms and conditions of the Agreement as though an original party thereto and shall be deemed [Cypress](1) for all purposes thereof. In addition, Holder hereby agrees that all Common Stock held by Holder shall be deemed Restricted Shares for all purposes of the Agreement.
2. Successors and Assigns . Except as otherwise provided herein, this Joinder shall bind and inure to the benefit of and be enforceable by the Company and its successors and assigns and Holder and any subsequent holders of Common Stock and the respective successors and assigns of each of them, so long as they hold any shares of Common Stock.
3. Counterparts . This Joinder may be executed in separate counterparts, including by facsimile, each of which shall be an original and all of which taken together shall constitute one and the same agreement.
4. Notices . For purposes of Section 14(k) of the Agreement, all notices, demands or other communications to the Holder shall be directed to:
[Name]
[Address]
[Attention]
[Facsimile Number]
(1) Discuss.
5. Governing Law . EXCEPT AS SET FORTH BELOW, THIS JOINDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICTS OF LAWS OR PRINCIPLES THEREOF THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.
6. Descriptive Headings . The descriptive headings of this Joinder are inserted for convenience only and do not constitute a part of this Joinder.
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2
IN WITNESS WHEREOF, the parties hereto have executed this Joinder as of the date first above written.
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Exhibit 10.7
REXNORD CORPORATION
SPECIAL SIGNING BONUS PLAN
DATED: JULY 21, 2006
This document sets forth the terms of the Special Signing Bonus Plan (the “ Plan ”) of Rexnord Corporation (and any successor to such corporation, the “ Company ”).
1. Operation of the Plan
1.1 Participation . Only the Persons (as defined in Exhibit A hereto) who are employees, consultants or directors of, or who are otherwise providing services to, the Company or one of its Subsidiaries (as such term is defined in Exhibit A hereto) and are listed in Exhibit B hereto (each, a “ Participant ”) are eligible to receive a bonus (a “ Bonus ”) under the Plan.
1.2 Bonus Amount . The amount of each Participant’s Bonus under the Plan shall be communicated to the Participant in a “ Plan Participation Letter ,” which may contain terms and conditions on the payment of a Bonus under the Plan in addition to those set forth herein.
1.3 Award Payment and Timing . A Participant’s Bonus will be paid by the Company to the Participant in cash upon or as soon as administratively practicable following the earliest to occur of (i) the payment date specified in the Participant’s Plan Participation Letter, (ii) a Change in Control (as defined in Exhibit A hereto) or (iii) the Participant’s Separation From Service (as defined in Exhibit A hereto), whenever it may occur (the earliest of such dates to occur is referred to herein as the “ Payment Date ”); provided, however, that in no event shall the Bonus be paid later than the 30 th day following the Payment Date.
2. Other Rules
2.1 Administration . The Board of Directors of the Company (the “ Board ”) shall administer the Plan. The Board shall have the authority to construe and interpret the Plan and any agreement, Plan Participation Letter or other document relating to the Plan. All actions taken and all interpretations and determinations made by the Board in respect of the Plan shall be made in the Board’s sole discretion, shall be conclusive and binding on all persons and shall be given the maximum deference permitted by law.
2.2 No Assignment . The rights, if any, of a Participant or any other person to any Bonus payment or other benefits under the Plan may not be assigned, transferred, pledged, or encumbered except by will or the laws of descent or distribution. The Company may, without the consent of Participants, assign its obligations under the Plan to any of its Subsidiaries or other Affiliates (as defined in Exhibit A hereto) or to any successor to all or substantially all of the its assets or otherwise in connection with a Change in Control.
2.3 Withholding . All payments made under the Plan will be subject to required income, employment and other tax withholdings and any other authorized deductions.
2.4 Amendment; Section 409A . The Company reserves the right to amend and/or terminate the Plan at any time and in any manner, with or without notice; provided, however, that the written consent of a Participant will be required to the extent such amendment or termination adversely affects the Participant’s rights under the Plan. No
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amendment shall be binding upon the Company unless approved by the Company and set forth in writing. Without limiting the foregoing, the Plan is intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “ Code ”), and the Company reserves the right to make any amendments to the Plan consistent with Participants’ rights hereunder to the extent it deems necessary or advisable to so comply.
2.5 No Fiduciary Relationship . Nothing contained in the Plan and no action taken pursuant to the provisions of the Plan shall create or be construed as creating a trust or any kind of fiduciary relationship between the Company or any of its Subsidiaries or other Affiliates, on one hand, and any Participant or any other person, on the other hand.
2.6 No Right to Continued Employment . Nothing contained in the Plan or any related document constitutes an employment or service commitment by the Company or any of its Subsidiaries or other Affiliates, affects an employee’s status as an employee at will, confers upon any Participant any right to remain employed by or in service to the Company or any of its Subsidiaries or other Affiliates, interferes in any way with the right of the Company or any of its Subsidiaries or other Affiliates to terminate a Participant’s employment or service or to change the Participant’s compensation or other terms of employment or service at any time (except as otherwise provided in an employment or consulting agreement between the Company and a Participant). The Plan provides for a one-time payment for each Participant, and it is not anticipated that any Participant will be eligible for any future bonus under the Plan.
2.7 Governing Law . The Plan, and any and all documents evidencing the Bonuses (including, without limitation, any Plan Participation Letter) and all other related documents, shall be governed by and construed in accordance with the domestic laws of the state of New York without regard to conflicts of laws principles thereof that would cause the application of the laws of any jurisdiction other than the state of New York.
2.8 Arbitration; Waiver of Trial . Any dispute or controversy arising under, out of, or in connection with or in relation to the Plan or a Plan Participation Letter shall be finally determined and settled by arbitration in New York, New York in accordance with the Commercial Rules of the American Arbitration Association, and judgment upon the award may be entered in any court having jurisdiction. Within 20 days of the conclusion of the arbitration hearing, the arbitrator shall prepare written findings of fact and conclusions of law. It is mutually agreed that the written decision of the arbitrator shall be valid, binding, final and non-appealable; provided , however , that the arbitrator shall not be empowered to award punitive damages against any party to such arbitration. To the extent permitted by law, the arbitrator’s fees and expenses will be borne equally by each party. In the event that an action is brought to enforce the provisions of the Plan or a Plan Participation Letter pursuant to this Section 2.8, each party to such action shall pay its own attorney’s fees and expenses regardless of whether in the opinion of the court or arbitrator deciding such action there is a prevailing party. THE COMPANY AND THE PARTICIPANTS EXPRESSLY WAIVE ALL RIGHT TO A TRIAL, INCLUDING, WITHOUT LIMITATION, TRIAL BY JURY, IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THE PLAN OR A PLAN PARTICIPATION LETTER .
2.9 Notices . All notices, requests, consents and other communications hereunder to the Company or any Participant shall be deemed to be sufficient if contained in a written instrument and shall be deemed to have been duly given when delivered in person, by telecopy, by nationally-recognized overnight courier, or by first class registered or certified
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mail, postage prepaid, addressed to such party at the address set forth below or such other address as may hereafter be designated in writing by the addressee to the addressor:
(i) if to the Company, to:
Rexnord Corporation
4701 Greenfield Avenue
Milwaukee, WI 53214
Attention: Patty Whaley
with copies to:
Rexnord Corporation
c/o Apollo Management, L.P.
9 West 57
th
Street, 43
rd
Floor
New York, NY 10016
Fax: (212) 515-3288
Attention: Steven Martinez
and
Rexnord Corporation
c/o Apollo Management, L.P.
10250 Constellation Blvd., Suite 2900
Los Angeles, CA 90067
Fax: (310) 843-1933
Attention: Larry Berg
and
O’Melveny & Myers LLP
Times Square Tower
7 Times Square
New York, NY 10036
Fax: (212) 326-2061
Attention: John M. Scott, Esq.
(ii) if to a Participant, to the Participant’s home address on file with the Company.
2.10 Severability . If it is determined that any provision of the Plan or a Plan Participation Letter, or any action pursuant thereto, is illegal or unenforceable for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan and/or Plan Participation Letter, the Plan and Plan Participation Letter shall be construed and enforced as if the illegal or invalid provisions had not been included, and the illegal or invalid action shall be null and void.
2.11 Other Company Compensation or Benefit Programs . A Bonus received by a Participant under the Plan shall not be deemed a part of the Participant’s compensation for purposes of the determination of benefits under any other employee welfare or benefit plans or arrangements, if any, provided by the Company or any of its Subsidiaries or other Affiliates, except where the Company expressly otherwise provides or authorizes in writing.
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Bonuses under the Plan may be made in addition to or in combination with grants, awards or commitments under any other plans or arrangements of the Company or any of its Subsidiaries or other Affiliates.
2.12 Section Headings . Section headings are provided herein for convenience only and are not to serve as a basis for interpretation or construction of the Plan.
2.13 Effective Date . The Plan is adopted by the Company effective as of July 21, 2006.
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I hereby certify that the foregoing Plan was duly adopted by the Board of Directors of Rexnord Corporation on July 21, 2006.
Executed on this 21 st day of July, 2006
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REXNORD CORPORATION |
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/s/ Thomas J. Jansen |
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Thomas J. Jansen |
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Executive Vice
President and
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EXHIBIT A
REXNORD CORPORATION SPECIAL SIGNING BONUS PLAN
DEFINITIONS
For purposes of the Plan, the following terms shall have the following meanings:
A.1 “ Affiliate ” means, with respect to any Person (as defined below), any other Person that, directly or indirectly, controls, is controlled by, or is under common control with, such Person, through one or more intermediaries or otherwise. For purposes of this definition, “control” means, when used with respect to any Person, the power to direct the management and policies of such Person, directly or indirectly, through the ownership of voting securities, by contract or otherwise.
A.2 “ Change in Control ” means:
(a) Approval by stockholders of the Company (or, if no stockholder approval is required, by the Board of Directors of the Company alone) of the complete dissolution or liquidation of the Company, other than in the context of a Business Combination (as defined below) that does not constitute a Change in Control under paragraph (c) below;
(b) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”)) (a “ Person ”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (the “ Outstanding Company Voting Securities ”); provided, however, that, for purposes of this paragraph (b), the following acquisitions shall not constitute a Change in Control; (A) any acquisition directly from the Company or any of its Subsidiaries, (B) any acquisition by the Company or any of its Subsidiaries, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its Affiliates or a successor, (D) any acquisition by any entity pursuant to a Business Combination, (E) any acquisition by a Person who is the beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of the Outstanding Company Common Stock and/or the Outstanding Company Voting Securities on the Effective Date (or an Affiliate, heir or descendant of such Person) or (F) any acquisition by Apollo Management VI, L.P., a Delaware limited partnership, or one of its Affiliated investment funds; or
(c) Consummation of a reorganization, merger, statutory share exchange or consolidation or similar corporate transaction involving the Company or any corporation or other entity a majority of whose outstanding voting stock or voting power is beneficially owned directly or indirectly by the Company (a “ Subsidiary ”), a sale or other disposition of all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole, or the acquisition of assets or stock of another entity by the Company or any of its Subsidiaries (each, a “ Business Combination ”), in each case unless, following such Business Combination, (1) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the combined voting
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power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity that, as a result of such transaction, owns the Company or all or substantially all of the Company’s assets directly or through one or more subsidiaries (a “ Parent ”)), and (2) no Person (excluding any individual or entity described in clauses (C), (E) or (F) of paragraph (b) above) beneficially owns (within the meaning of Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, more than 50% of the combined voting power of the then-outstanding voting securities of such entity, except to the extent that the ownership in excess of 50% existed prior to the Business Combination;
provided, however, that an underwritten public offering of the securities of the Company or any of its Subsidiaries shall in no event constitute a Change in Control for purposes of the Plan, and provided, further, that no event or transaction shall constitute a Change in Control for purposes of the Plan unless such event or transaction is also a “change in control event” for purposes of Section 409A of the Code and the published authorities promulgated thereunder.
A.3 “ Separation From Service ” means the death, retirement or other termination of a Participant’s employment or service with the Company and its Subsidiaries (as such term is defined in the definition of Change in Control); provided, however, that in no event shall a termination of a Participant’s employment or service with the Company or any of its Subsidiaries constitute a Separation From Service unless such termination of employment or service is also a “separation from service” within the meaning of Section 409A of the Code and the published authorities promulgated thereunder.
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Exhibit 10.8
[Rexnord Corporation Letterhead]
July 21, 2006
[ ]
Re: Plan Participation Letter: Rexnord Corporation Special Signing Bonus Plan
Dear [ ]:
Rexnord Corporation (the “ Company ”) has adopted the Rexnord Corporation Special Signing Bonus Plan (the “ Plan ”) pursuant to which certain employees, directors, consultants and other service providers of the Company (or any of its Subsidiaries) who are designated by the Company as Participants in the Plan may receive a Bonus on the terms set forth in the Plan and this Plan Participation Letter. Capitalized terms used but not defined in this Plan Participation Letter have the meaning ascribed to such terms in the Plan.
In consideration for services rendered or to be rendered to the Company (or any of its Subsidiaries), you have been designated by the Company as a Participant in the Plan. The amount of your Bonus under the Plan is $[ ], such amount to be payable in accordance with the terms of the Plan on or within 30 days after [ ], unless an earlier Payment Date is called for under Section 1.3 of the Plan. As a Participant in the Plan, you hereby agree to be bound by and subject to the terms and conditions of the Plan, including, without limitation, the terms affecting the payment of the Bonus and the mandatory arbitration and waiver of jury trial rights in Section 2.8 of the Plan.
Nothing in the Plan or this Plan Participation Letter constitutes an employment or service commitment by the Company (or any of its Affiliates). You and the Company hereby acknowledge and agree that this Plan Participation Letter and the Plan set forth the entire agreement and understanding of the parties and supersede all prior written or oral agreements or understandings with respect to the subject matter hereof.
[Signature Page to Follow]
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REXNORD CORPORATION |
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ACKNOWLEDGED AND AGREED: |
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Exhibit 10.9
2006 STOCK OPTION PLAN
OF
REXNORD HOLDINGS, INC.
Rexnord Holdings, Inc. (the “ Company ”), a Delaware corporation, hereby adopts this 2006 Stock Option Plan of Rexnord Holdings, Inc. The purposes of the Plan are as follows:
(1) To further the growth, development and financial success of the Company and its Subsidiaries (as defined herein), by providing additional incentives to employees, consultants and directors of the Company and its Subsidiaries who have been or will be given responsibility for the management or administration of the Company’s or one of its Subsidiaries’ business affairs, by providing a means through which they can purchase Common Stock, thereby benefiting directly from the growth, development and financial success of the Company and its Subsidiaries.
(2) To enable the Company and its Subsidiaries to obtain and retain the services of the type of professional, technical and managerial employees, consultants and directors considered essential to the long-range success of the Company and its Subsidiaries by providing and offering them an opportunity to purchase Common Stock upon exercise of Options, including, in the case of employees, Options that are intended to qualify as “incentive stock options” under Section 422 of the Code (as defined herein).
ARTICLE I.
DEFINITIONS
Whenever the following terms are used in the Plan, they shall have the meaning specified below unless the context clearly indicates otherwise. The singular pronoun shall include the plural where the context so indicates.
“ Affiliate ” shall mean, with respect to any Person, any other Person that, directly or indirectly, controls, is controlled by, or is under common control with, such Person, through one or more intermediaries or otherwise. For purposes of this definition, “control” shall mean, when used with respect to any Person, the power to direct the management and policies of such Person, directly or indirectly, through the ownership of voting securities, by contract or otherwise.
“ Board ” shall mean the Board of Directors of the Company.
“ CEO ” shall mean the Chief Executive Officer of the Company.
“ Closing Date ” shall mean July 21, 2006.
“ Code ” shall mean the Internal Revenue Code of 1986, as amended.
“ Committee ” shall mean the Committee appointed as provided in Section 6.1.
“ Common Stock ” shall mean the Common Stock, par value $0.01 per share, of the Company.
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“ Company ” shall mean Rexnord Holdings, Inc., a Delaware corporation. In addition, “ Company ” shall mean any corporation assuming, or issuing new employee stock options in substitution for, Incentive Stock Options outstanding under the Plan in a transaction to which Section 424(a) of the Code applies.
“ Consultant ” shall mean any Person who has entered into a consulting agreement with the Company or any of its Subsidiaries.
“ Corporate Event ” shall mean, as determined by the Committee (or by the Board, in the case of Options granted to Non-Employee Directors) in its sole discretion, any transaction or event described in Section 7.1(a) or any unusual or nonrecurring transaction or event affecting the Company, any Subsidiary of the Company, or the financial statements of the Company or any Subsidiary of the Company, or changes in applicable laws, regulations, or accounting principles.
“ Director ” shall mean a member of the Board.
“ Eligible Representative ” for an Optionee shall mean such Optionee’s personal representative or such other Person as is empowered under the deceased Optionee’s will or the then applicable laws of descent and distribution to represent the Optionee hereunder.
“ Employee ” shall mean any employee (as defined in accordance with the regulations and revenue rulings then applicable under Section 3401(c) of the Code) of the Company or one of its Subsidiaries, whether such employee is so employed at the time the Plan is adopted or becomes so employed subsequent to the adoption of the Plan.
“ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended.
“ Incentive Stock Option ” shall mean an Option which qualifies under Section 422 of the Code and is designated as an Incentive Stock Option by the Committee.
“ Liquidity Event ” shall mean:
(a) Approval by stockholders of the Company (or, if no stockholder approval is required, by the Board alone) of the complete dissolution or liquidation of the Company, other than in the context of a Business Combination (as defined below) that does not constitute a Liquidity Event under paragraph (c) below;
(b) The acquisition by any Person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (the “ Outstanding Company Voting Securities ”); provided, however, that, for purposes of this paragraph (b), the following acquisitions shall not constitute a Liquidity Event; (A) any acquisition directly from the Company or any of its Subsidiaries, (B) any acquisition by the Company or any of its Subsidiaries, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its Affiliates or a successor, (D) any acquisition by any entity pursuant
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to a Business Combination, (E) any acquisition by a Person who is the beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of the Outstanding Company Common Stock and/or the Outstanding Company Voting Securities on the Closing Date (or an Affiliate, heir or descendant of such Person) or (F) any acquisition by the Principal Stockholder(s) or one of its (their) Affiliated investment funds; or
(c) Consummation of a reorganization, merger, statutory share exchange or consolidation or similar corporate transaction involving the Company or any of its Subsidiaries, a sale or other disposition of all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole, or the acquisition of assets or stock of another entity by the Company or any of its Subsidiaries (each, a “ Business Combination ”), in each case unless, following such Business Combination, (1) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity that, as a result of such transaction, owns the Company or all or substantially all of the Company’s assets directly or through one or more subsidiaries (a “ Parent ”)), and (2) no Person (excluding any individual or entity described in clauses (C), (E) or (F) of paragraph (b) above) beneficially owns (within the meaning of Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, more than 50% of the combined voting power of the then-outstanding voting securities of such entity, except to the extent that the ownership in excess of 50% existed prior to the Business Combination;
provided, however, that an underwritten public offering of the securities of the Company or any of its Subsidiaries shall in no event constitute a Liquidity Event for purposes of the Plan.
“ Merger Agreement ” shall mean that certain Agreement and Plan of Merger, dated as of May 24, 2006, by and among Chase Acquisition I, Inc., a Delaware corporation, Chase Merger Sub, Inc., a Delaware corporation, RBS Global, Inc., a Delaware corporation, and TC Group, L.L.C., a Delaware limited liability company.
“ Non-Employee Director ” shall mean a member of the Board who is not an Employee of the Company or any of its Subsidiaries.
“ Non-Qualified Stock Option ” shall mean an Option which is not an “incentive stock option” under Section 422 of the Code and shall include an Option which is designated as a Non-Qualified Stock Option by the Committee.
“ Officer ” shall mean an officer of the Company, as defined in Rule 16a-l(f) under the Exchange Act, as such Rule may be amended in the future.
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“ Option ” shall mean an option granted under the Plan to purchase Common Stock. “ Options ” include both Incentive Stock Options and Non-Qualified Stock Options.
“ Optionee ” shall mean an Employee, Consultant or Non-Employee Director to whom an Option is granted under the Plan.
“ Person ” shall mean an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, governmental authority or other entity of whatever nature.
“ Plan ” shall mean this 2006 Stock Option Plan of Rexnord Holdings, Inc., as it may be amended from time to time.
“ Principal Stockholder(s) ” shall mean Apollo Management VI, L.P. or any of its Affiliated investment funds to which (a) Apollo Management VI, L.P. or any other Person transfers Common Stock, or (b) the Company issues Common Stock.
“ Secretary ” shall mean the Secretary of the Company.
“ Securities Act ” shall mean the Securities Act of 1933, as amended.
“ Stockholders’ Agreement ” shall mean, with respect to an Optionee, that certain agreement by and among the Optionee, the Company and the other stockholders of the Company party thereto, which contains certain restrictions and limitations applicable to the shares of Common Stock acquired upon Option exercise (and to other shares of Common Stock, if any, held by the Optionee during the term of such agreement). If an Optionee is not a party to a Stockholders’ Agreement at the time of exercise of the Option (or any portion thereof), the exercise of the Option shall be subject to the condition that the Optionee enter into a Stockholders’ Agreement with the Company.
“ Subsidiary ” means, with respect to any Person, any other Person of which 50% or more of the voting power of the equity securities or equity interests sufficient to elect at least a majority of its Board of Directors or other governing body (or, if there is no such voting power, 50% or more of the equity securities or equity interests) is owned, directly or indirectly, by such Person.
“ Termination of Consultancy ” shall mean the time when the Optionee’s consulting relationship with the Company and all of its Subsidiaries terminates for any reason. The Board, in its sole discretion, shall determine the effect of all matters and questions relating to a Termination of Consultancy.
“ Termination of Directorship ” shall mean the time when an Optionee who is a Non-Employee Director ceases to be a Director for any reason, including but not by way of limitation, a termination by resignation, failure to be elected or appointed, death or retirement. The Board, in its sole discretion, shall determine the effect of all matters and questions relating to a Termination of Directorship.
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“ Termination of Employment ” shall mean the time when the employee-employer relationship between an Optionee and the Company or one of its Subsidiaries is terminated for any reason, with or without cause, including, but not by way of limitation, a termination by resignation, discharge, death or retirement, but excluding a termination where there is a simultaneous reemployment by the Company or one of its Subsidiaries. The Committee shall determine the effect of all matters and questions relating to a Termination of Employment, including, but not by way of limitation, the question of whether a Termination of Employment resulted from a discharge for good cause, and all questions of whether a particular leave of absence constitutes a Termination of Employment; provided , however , that, with respect to Incentive Stock Options, a leave of absence shall constitute a Termination of Employment if, and to the extent that, such leave of absence interrupts employment for the purposes of Section 422(a)(2) of the Code and the then applicable regulations and revenue rulings under Section 442(a)(2) of the Code.
ARTICLE II.
SHARES SUBJECT TO PLAN
Section 2.1 Shares Subject To Plan
The shares of stock subject to Options shall be shares of Common Stock. Subject to Section 7.1, the aggregate number of such shares of Common Stock which may be issued upon exercise of Options is 2,000,000.
Section 2.2 Unexercised Options
If any Option (or portion thereof) expires or is canceled without having been fully exercised, the number of shares of Common Stock subject to such Option (or portion thereof) but as to which such Option was not exercised prior to its expiration or cancellation may again be optioned hereunder, subject to the limitations of Section 2.1.
ARTICLE III.
GRANTING OF OPTIONS
Section 3.1 Eligibility
Any Employee, Non-Employee Director and Consultant shall be eligible to be granted Options, except as provided in Section 3.2.
Section 3.2 Qualification Of Incentive Stock Options
No Incentive Stock Option shall be granted to any Person who is not an Employee.
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Section 3.3 Granting Of Options To Employees Or Consultants
(a) The Committee shall from time to time:
(i) Select from among the Employees or Consultants (including those to whom Options have been previously granted under the Plan) such of them as in its opinion should be granted Options;
(ii) Determine the number of shares of Common Stock to be subject to such Options granted to such Employees or Consultants, and determine whether such Options are to be Incentive Stock Options or Non-Qualified Stock Options; and
(iii) Determine the terms and conditions of such Options (provided such terms and conditions are consistent with the Plan).
(b) Upon the selection of an Employee or Consultant to be granted an Option pursuant to Section 3.3(a), the Committee shall instruct the Secretary or another authorized officer of the Company to issue such Option and may impose such conditions on the grant of such Option as it deems appropriate. Without limiting the generality of the preceding sentence, the Committee may require as a condition to the grant of an Option to an Employee or Consultant that the Employee or Consultant surrender for cancellation some or all of the unexercised Options which have been previously granted to such Employee or Consultant. An Option the grant of which is conditioned upon such surrender may have an Option price lower or higher than the Option price of the surrendered Option, may cover the same or a lesser or greater number of shares of Common Stock as the surrendered Option, may contain such other terms as the Committee deems appropriate and shall be exercisable in accordance with its terms, without regard to the number of shares of Common Stock, price, period of exercisability or any other term or condition of the surrendered Option.
Section 3.4 Granting Of Option To Non-Employee Directors
(a) The Board shall from time to time:
(i) Select from among the Non-Employee Directors (including those to whom Options have previously been granted under the Plan) such of them as in its opinion should be granted Options;
(ii) Determine the number of shares of Common Stock to be subject to such Options granted to such selected Non-Employee Directors; and
(iii) Determine the terms and conditions of such Options (provided such terms and conditions are consistent with the Plan); provided , however , that all Options granted to Non-Employee Directors shall be Non-Qualified Stock Options.
(b) Upon the selection of a Non-Employee Director to be granted an Option pursuant to Section 3.4(a), the Board shall instruct the Secretary or another authorized officer of the Company to issue such Option and may impose such conditions on the grant of such Option as it deems appropriate. Without limiting
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the generality of the preceding sentence, the Board may require as a condition to the grant of an Option to a Non-Employee Director that the Non-Employee Director surrender for cancellation some or all of the unexercised Options which have been previously granted to such Non-Employee Director. An Option the grant of which is conditioned upon such surrender may have an Option price lower or higher than the Option price of the surrendered Option, may cover the same or a lesser or greater number of shares of Common Stock as the surrendered Option, may contain such other terms as the Board deems appropriate (provided such terms and conditions are consistent with the Plan) and shall be exercisable in accordance with its terms, without regard to the number of shares of Common Stock, price, period of exercisability or any other term or condition of the surrendered Option.
ARTICLE IV.
TERMS OF OPTIONS
Section 4.1 Stock Option Agreement
Each Option shall be evidenced by a written Stock Option Agreement, which shall be executed by the Optionee and an authorized Officer of the Company and which shall contain such terms and conditions as the Committee (or the Board, in the case of Options granted to Non-Employee Directors) shall determine (provided such terms and conditions are consistent with the Plan). In the event of a conflict between the terms of the Stock Option Agreement and the terms of the Plan, the terms of the Plan shall govern. Stock Option Agreements evidencing Incentive Stock Options shall contain such terms and conditions as may be necessary to qualify such Options as “incentive stock options” under Section 422 of the Code.
Section 4.2 Exercisability Of Options
(a) Each Option shall become exercisable according to the terms of the applicable Stock Option Agreement; provided , however , that by a resolution adopted after an Option is granted the Committee (or the Board, in the case of Options granted to Non-Employee Directors) may, on such terms and conditions as it may determine to be appropriate, accelerate the time at which such Option or any portion thereof may be exercised.
(b) Except as otherwise provided in the applicable Stock Option Agreement, no portion of an Option which is unexercisable at Termination of Employment, Termination of Directorship or Termination of Consultancy, as applicable, shall thereafter become exercisable.
(c) To the extent that the aggregate fair market value of stock with respect to which “incentive stock options” (within the meaning of Section 422 of the Code, but without regard to Section 422(d) of the Code) are exercisable for the first time by an Optionee during any calendar year (under the Plan and all other incentive stock option plans of the Company or any Subsidiary thereof) exceeds $100,000, such options shall be treated and taxable as Non-Qualified Stock Options. The
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rule set forth in the preceding sentence shall be applied by taking options into account in the order in which they were granted, and the stock issued upon exercise of options shall designate whether such stock was acquired upon exercise of an Incentive Stock Option. For purposes of these rules, the fair market value of stock shall be determined as of the date of grant of the Option granted with respect to such stock and in the manner set forth in Section 4.3(b).
Section 4.3 Option Price
(a) The price of the Common Stock subject to each Option shall be set by the Committee (or the Board, in the case of Options granted to Non-Employee Directors); provided , however , that the price per share of Common Stock shall be not less than 100% of the fair market value of such shares on the date such Option is granted (determined as set forth in Section 4.3(b)); and, that, with respect to an Incentive Stock Option, in the case of an individual then owning (within the meaning of Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of stock of the Company, the price per share of Common Stock shall not be less than 110% of the fair market value of such shares on the date such Incentive Stock Option is granted (determined as set forth in Section 4.3(b)).
(b) For purposes of the Plan, the fair market value of a share of Common Stock as of a given date shall be:
(i) if the Common Stock is listed on one or more National Securities Exchanges (within the meaning of the Exchange Act), each share of Common Stock shall be valued at the closing price of a share of Common Stock on the principal exchange on which such shares are then trading, or, if no sales of Common Stock were made on such exchange on that date, the closing price of a share of Common Stock for the next preceding day on which sales of Common Stock were made on the exchange;
(ii) if the Common Stock is not traded on a National Securities Exchange but is quoted on NASDAQ or a successor quotation system and the Common Stock is listed as a National Market Issue under the NASD National Market System, each share of Common Stock shall be valued at the last sales price per share of Common Stock on such date as reported by NASDAQ or such successor quotation system, or, if no sales of Common Stock were reported by NASDAQ or such successor quotation system on that date, the last price of a share of Common Stock as reported by NASDAQ or such successor quotation system for the next preceding day on which sales of Common Stock were reported by NASDAQ or such successor quotation system; or
(iii) if the Common Stock is not publicly traded on a National Securities Exchange and is not quoted on NASDAQ or a successor
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quotation system, the fair market value of the Common Stock shall be determined in good faith by the Committee.
Section 4.4 Expiration Of Options
No Option may be exercised to any extent by anyone after the first to occur of the following events:
(a) The expiration of ten years from the date the Option was granted; or
(b) With respect to an Incentive Stock Option in the case of an Optionee owning (within the meaning of Section 424(d) of the Code), at the time the Incentive Stock Option was granted, more than 10% of the total combined voting power of all classes of stock of the Company or any Subsidiary of the Company, the expiration of five years from the date the Incentive Stock Option was granted.
ARTICLE V.
EXERCISE OF OPTIONS
Section 5.1 Person Eligible To Exercise
During the lifetime of the Optionee, only the Optionee may exercise an Option (or any portion thereof) granted to the Optionee; provided , however , that the Optionee’s Eligible Representative may exercise the Optionee’s Option during the period of the Optionee’s disability (as defined in Section 22(e)(3) of the Code) notwithstanding that an Option so exercised may not qualify as an Incentive Stock Option. After the death of the Optionee, any exercisable portion of an Option may, prior to the time when such portion becomes unexercisable under the Plan or the applicable Stock Option Agreement, be exercised by the Optionee’s Eligible Representative.
Section 5.2 Partial Exercise
At any time and from time to time prior to the time when the Option becomes unexercisable under the Plan or the applicable Stock Option Agreement, the exercisable portion of an Option may be exercised in whole or in part; provided , however , that the Company shall not be required to issue fractional shares and the Committee (or the Board, in the case of Options granted to Non-Employee Directors) may, by the terms of the Option, require any partial exercise to exceed a specified minimum number of shares of Common Stock.
Section 5.3 Manner Of Exercise
An exercisable Option, or any exercisable portion thereof, may be exercised solely by delivery to the Secretary of all of the following prior to the time when such Option or such portion becomes unexercisable under the Plan or the applicable Stock Option Agreement:
(a) Notice in writing signed by the Optionee or the Optionee’s Eligible Representative, stating that such Option or portion is exercised, and specifically stating the number of shares of Common Stock with respect to which the Option is being exercised;
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(b) A copy of a Joinder to the Stockholders’ Agreement designated by the Company (in the form attached to such Stockholders’ Agreement) signed by the Optionee or Eligible Representative, as applicable;
(c) Full payment (in cash or by personal, certified or bank cashier check) for the shares of Common Stock with respect to which such Option or portion is thereby exercised; or
(i) Unless otherwise determined by the Committee (or the Board, in the case of Options to Non-Employee Directors), (A) shares of Common Stock owned by the Optionee duly endorsed for transfer to the Company; or (B) except with respect to Incentive Stock Options, shares of the Common Stock issuable to the Optionee upon exercise of the Option, with a fair market value (as determined under Section 4.3(b)) on the date of Option exercise equal to the aggregate Option price of the shares of Common Stock with respect to which such Option or portion is thereby exercised; or
(ii) Unless otherwise determined by the Committee (or the Board, in the case of Options granted to Non-Employee Directors), any combination of the consideration listed in this Section 5.3(c);
(d) The payment to the Company (in cash or by personal, certified or bank cashier check or by any other means of payment approved by the Committee and set forth in Section 5.3(c)) of all amounts necessary to satisfy any and all federal, state and local tax withholding requirements arising in connection with the exercise of the Option or otherwise;
(e) Such representations and documents as the Committee (or the Board, in the case of Options granted to Non-Employee Directors) deems necessary or advisable to effect compliance with all applicable provisions of the Securities Act and any other applicable federal or state securities laws or regulations. The Committee (or the Board, in the case of Options granted to Non-Employee Directors) may, in its sole discretion, also take whatever additional actions it deems appropriate to effect such compliance including, without limitation, placing legends on share certificates and issuing stop-transfer orders to transfer agents and registrars; and
(f) In the event that the Option or portion thereof shall be exercised pursuant to Section 5.1 by any Person or Persons other than the Optionee, appropriate proof of the right of such Person or Persons to exercise the Option or portion thereof.
Section 5.4 Conditions To Issuance Of Stock Certificates
The shares of Common Stock issuable and deliverable upon the exercise of an Option, or any portion thereof, may be either previously authorized but unissued shares of Common Stock or issued shares of Common Stock which have then been reacquired by the Company. A
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certificate of shares of Common Stock will be delivered to the Optionee at the Company’s principal place of business within thirty days of receipt by the Company of the written notice and payment, unless an earlier date is agreed upon. Notwithstanding the above, the Company shall not be required to issue or deliver any certificate or certificates for shares of Common Stock purchased upon the exercise of any Option or portion thereof prior to fulfillment of all of the following conditions:
(a) The admission of such shares of Common Stock to listing on any and all stock exchanges on which such class of stock is then listed;
(b) The completion of any registration or other qualification of such shares of Common Stock under any state or federal law or under the rulings or regulations of the Securities and Exchange Commission or any other governmental regulatory body, which the Committee (or the Board, in the case of Options granted to Non-Employee Directors) shall, in its sole discretion, deem necessary or advisable;
(c) The obtaining of any approval or other clearance from any state or federal governmental agency which the Committee (or the Board, in the case of Options granted to Non-Employee Directors) shall, in its sole discretion, determine to be necessary or advisable; and
(d) The payment to the Company of all amounts which it is required to withhold under federal, state or local law in connection with the exercise of the Option or otherwise.
Section 5.5 Rights As Stockholders
The holder of an Option shall not be, nor have any of the rights or privileges of, a stockholder of the Company in respect of any shares of Common Stock purchasable upon the exercise of any part of an Option unless and until such holder has signed a Joinder to the Stockholders’ Agreement designated by the Company (in the form attached to such Stockholders’ Agreement) and certificates representing such shares of Common Stock have been issued by the Company to such holder.
Section 5.6 Transfer Restrictions
Shares of Common Stock acquired upon exercise of an Option shall be subject to the terms and conditions of a Stockholders’ Agreement. In addition, the Committee (or the Board, in the case of Options granted to Non-Employee Directors), in its sole discretion, may impose further restrictions on the transferability of the shares of Common Stock purchasable upon the exercise of an Option as it deems appropriate. Any such restriction shall be set forth in the respective Stock Option Agreement and may be referred to on the certificates evidencing such shares of Common Stock. The Committee may require the Employee to give the Company prompt notice of any disposition of shares of Common Stock, acquired by exercise of an Incentive Stock Option, within two years from the date of granting such Option or one year after the transfer of such shares of Common Stock to such Employee. The Committee may direct that the certificates evidencing shares of Common Stock acquired by exercise of an Incentive Stock Option refer to such requirement.
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ARTICLE VI.
ADMINISTRATION
Section 6.1 Committee
The Committee shall be the Compensation Committee of the Board. Any action required or permitted to be taken by the Committee hereunder or under any Stock Option Agreement may be taken by the Board.
Section 6.2 Delegation By Committee
To the extent permitted by applicable law, the Committee, in its sole discretion, may delegate all rights, powers and duties of the Committee under the Plan (except those granted pursuant to Sections 3.3, 4.3, 5.3(c), 5.3(e), 5.6 and Article VII) to the CEO pursuant to a written instrument signed by each member of the Committee.
Section 6.3 Duties And Powers Of CEO And The Committee
It shall be the duty of the Committee (or, if administrative authority is delegated by the Committee to the CEO pursuant to Section 6.2, the CEO, subject to the approval of the Committee) to conduct the general administration of the Plan in accordance with its provisions, and the Committee (or, if administrative authority is delegated by the Committee to the CEO pursuant to Section 6.2, the CEO, subject to the approval of the Committee) shall have the power to interpret the Plan and the Options and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret, amend or revoke any such rules. Notwithstanding the foregoing, the full Board, acting by a majority of its members in office, shall conduct the general administration of the Plan with respect to Options granted to Non-Employee Directors. Any such interpretations and rules in regard to Incentive Stock Options shall be consistent with the terms and conditions applicable to “incentive stock options” within the meaning of Section 422 of the Code. All determinations and decisions made by the Committee (or, if administrative authority is delegated to the CEO pursuant to Section 6.2, by the CEO and approved by the Committee) under any provision of the Plan or of any Option granted thereunder shall be final, conclusive and binding on all persons.
Section 6.4 Compensation, Professional Assistance, Good Faith Actions
The members of the Committee shall receive such compensation for their services hereunder as may be determined by the Board. All expenses and liabilities incurred by the members of the Committee or the Board in connection with the administration of the Plan shall be borne by the Company. The Committee or the Board may employ attorneys, consultants, accountants, appraisers, brokers or other persons. The Committee, the Company and its Officers and Directors shall be entitled to rely upon the advice, opinions or valuations of any such persons. All actions taken and all interpretations and determinations made by the CEO, the Committee and the Board, in good faith shall be final and binding upon all Optionees, the Company and all other interested persons. No member of the Board or the CEO shall be personally liable for any action, determination or interpretation made in good faith with respect to the Plan or the Options, and all members of the Board shall be indemnified by the Company in respect to any such action, determination or interpretation.
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ARTICLE VII.
OTHER PROVISIONS
Section 7.1 Changes In Common Stock; Disposition Of Assets And Corporate Events.
(a) Subject to Section 7.1(d), (x) in the event that the Committee (or the Board, in the case of Options granted to Non-Employee Directors) determines that any dividend or other distribution (whether in the form of cash, Common Stock, other securities, or other property), recapitalization, reclassification, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, liquidation, dissolution, or sale, transfer, exchange or other disposition of all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole (including, but not limited to, a Liquidity Event), or exchange of Common Stock or other securities of the Company, issuance of warrants or other rights to purchase Common Stock or other securities of the Company, or other similar corporate transaction or event, in the Committee’s sole discretion (or in the case of Options granted to Non-Employee Directors, the Board’s sole discretion), affects the Common Stock or the value thereof, or (y) in the event of the issuance of securities of the Company or any of its Subsidiaries or interim holding companies, in addition to the securities of any such entities outstanding as of the Closing Date, that would dilute (on a fully diluted basis) the equity interests of Optionees under the Plan in the Company and its Subsidiaries to a greater degree than any such issuance would dilute (on a fully diluted basis) the equity interests of the Principal Stockholder(s) and its (their) Affiliated investment funds, taken as a whole, in the Company and its Subsidiaries (taking into account any consideration received with respect to such securities), then the Committee (or the Board, in the case of Options granted to Non-Employee Directors) shall, in such manner and at such time, and, for an event described in clause (x) above, to such extent as it deems appropriate and equitable in the circumstances, adjust any or all of the following so as to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to an Option:
(i) The number and kind of shares (or other securities or property) with respect to which Options may be granted under the Plan (including, but not limited to, adjustments of the limitations in Section 2.1 on the maximum number and kind of shares which may be issued);
(ii) The number and kind of shares (or other securities or property) subject to outstanding Options;
(iii) The exercise price with respect to any Option; and
(iv) The financial or other “targets” specified in a Stock Option Agreement for determining the exercisability of Options.
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(b) Subject to Section 7.1(d) and the terms of outstanding Options, upon the occurrence of a Corporate Event, the Committee (or the Board, in the case of Options granted to Non-Employee Directors), in its sole discretion, is hereby authorized to take any one or more of the following actions whenever the Committee (or the Board, in the case of Options granted to Non-Employee Directors) determines that such action is appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to any Option under the Plan, to facilitate such Corporate Event or to give effect to such changes in laws, regulations or principles:
(i) In its sole discretion, and on such terms and conditions as it deems appropriate, the Committee (or the Board, in the case of Options granted to Non-Employee Directors) may provide, either by the terms of the applicable Stock Option Agreement or by action taken prior to the occurrence of such Corporate Event and either automatically or upon the Optionee’s request, for either the purchase of any such Option for an amount of cash, securities, or other property equal to the amount that could have been attained upon the exercise of the vested portion of such Option (and such additional portion of the Option as the Board or Committee may determine) immediately prior to the occurrence of such transaction or event, or the replacement of such vested (and/or other) portion of such Option with other rights or property selected by the Committee (or the Board, in the case of Options granted to Non-Employee Directors) in its sole discretion;
(ii) In its sole discretion, the Committee (or the Board, in the case of Options granted to Non-Employee Directors) may provide, either by the terms of the applicable Stock Option Agreement or by action taken prior to the occurrence of such Corporate Event, that the Option (or any portion thereof) cannot be exercised after such event;
(iii) In its sole discretion, and on such terms and conditions as it deems appropriate, the Committee (or the Board, in the case of Options granted to Non-Employee Directors) may provide, either by the terms of the applicable Stock Option Agreement or by action taken prior to the occurrence of such Corporate Event, that for a specified period of time prior to such Corporate Event, such Option shall be exercisable as to all shares of Common Stock covered thereby or a specified portion of such shares of Common Stock, notwithstanding anything to the contrary in (A) Section 4.2; or (B) the provisions of the applicable Stock Option Agreement;
(iv) In its sole discretion, and on such terms and conditions as it deems appropriate, the Committee (or the Board, in the case of Options granted to Non-Employee Directors) may provide, either by the terms of the applicable Stock Option Agreement or by action taken prior to the
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occurrence of such Corporate Event, that upon such Corporate Event, such Option (or any portion thereof) be assumed by the successor or survivor corporation, or a parent or subsidiary thereof, or shall be substituted for by similar options, rights or awards covering the stock of the successor or survivor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and the exercise price subject to such Option; and
(v) In its sole discretion, and on such terms and conditions as it deems appropriate, the Committee (or the Board, in the case of Options granted to Non-Employee Directors) may make adjustments in the number and type of shares of Common Stock (or other securities or property) subject to outstanding Options (or any portion thereof) and/or in the terms and conditions of (including the exercise price), and the criteria included in, outstanding Options and Options which may be granted in the future.
(c) Subject to Section 7.1(d), the Committee (or the Board, in the case of Options granted to Non-Employee Directors) may, in its sole discretion, include such further provisions and limitations in any Stock Option Agreement as it may deem equitable and in the best interests of the Company and its Subsidiaries.
(d) With respect to Incentive Stock Options, no adjustment or action described in this Section 7.1 or in any other provision of the Plan shall be authorized or permitted to be taken or implemented to the extent that such adjustment or action would cause the Plan to violate Section 422(b)(1) of the Code or any successor provisions thereto, unless the Committee determines that the Plan and/or the Options are not to comply with Section 422(b)(1) of the Code.
Section 7.2 Options Not Transferable
No Option or interest or right therein or part thereof shall be encumbered by any debts, contracts or engagements of the Optionee or the Optionee’s successors in interest or shall be subject to disposition by transfer, alienation, anticipation, hypothecation, pledge, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law, by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect. Notwithstanding the foregoing, nothing in this Section 7.2 shall prevent transfers of the Option to the Company or by will or by the applicable laws of descent and distribution.
Section 7.3 Amendment, Suspension Or Termination Of The Plan
The Plan may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Board or the Committee in a written instrument. However, without stockholder approval within 12 months before or after such action no action of the Board or the Committee may, except as provided in Section 7.1, increase any limit imposed in Section 2.1 on the maximum number of shares of Common Stock which may be
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issued on exercise of Options, reduce the minimum Option price requirements of Section 4.3(a), or extend the limit imposed in this Section 7.3 on the period during which Options may be granted. Except as provided by Section 7.1, neither the amendment, suspension nor termination of the Plan shall, without the consent of the holder of the Option, alter or impair any rights or obligations under any Option theretofore granted. No Option may be granted during any period of suspension nor after termination of the Plan, and in no event may any Option be granted under the Plan after the expiration of ten years from the date the Plan is adopted by the Board.
Section 7.4 Effect Of Plan Upon Other Option And Compensation Plans
The adoption of the Plan shall not affect any other compensation or incentive plans in effect for the Company or any Subsidiary of the Company. Nothing in the Plan shall be construed to limit the right of the Company or any Subsidiary of the Company (a) to establish any other forms of incentives or compensation for directors, consultants or employees of the Company or any Subsidiary of the Company; or (b) to grant or assume options other than under the Plan in connection with any proper purpose, including, but not by way of limitation, the grant or assumption of options in connection with the acquisition by purchase, lease, merger, consolidation or otherwise, of the business, stock or assets of any Person.
Section 7.5 Approval Of Plan By Board and Stockholders
This Plan is effective as of July 21, 2006 pursuant to the approval of this Plan by the Board and the Company’s stockholders on such date.
Section 7.6 Titles
Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of the Plan.
Section 7.7 Conformity to Laws Generally
The Plan, the granting and vesting of Options under the Plan, and the offer, issuance and delivery of shares of Common Stock are subject to compliance with all applicable federal and state laws, rules and regulations (including but not limited to state and federal securities laws, federal margin requirements and, to the extent applicable as the Company’s state of incorporation, the laws of the state of Delaware) and to such approvals by any listing, regulatory or governmental authority as may, in the opinion of counsel for the Corporation, be necessary or advisable in connection therewith. The person acquiring any securities under this Plan will, if requested by the Corporation, provide such assurances and representations to the Corporation as the Administrator may deem necessary or desirable to assure compliance with all applicable legal and accounting requirements.
Section 7.8 Conformity To Securities Laws
The Plan is intended to conform to the extent necessary with all provisions of the Securities Act and the Exchange Act and any and all regulations and rules promulgated by the Securities and Exchange Commission thereunder to the extent the Company or any Optionee is subject to the provisions thereof. Notwithstanding anything herein to the contrary, the Plan shall
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be administered, and Options shall be granted and may be exercised, only in such a manner as to conform to such laws, rules and regulations. To the extent permitted by applicable law, the Plan and Options granted hereunder shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.
Section 7.9 Governing Law
To the extent not preempted by federal law, the Plan shall be construed in accordance with and governed by the laws of the state of New York, without regard to conflicts of law provisions that would give effect to the laws of another jurisdiction.
Section 7.10 Severability
In the event any portion of the Plan or any action taken pursuant thereto shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provisions had not been included, and the illegal or invalid action shall be null and void.
Section 7.11 Amendment of Stock Option Agreements
The Committee (or the Board, in the case of Options granted to Non-Employee Directors) at any time, and from time to time, may amend the terms of any one or more existing Stock Option Agreements by agreement or resolution; provided, however , that the rights of an Optionee under a Stock Option Agreement shall not be adversely impaired without the Optionee’s written consent. The Company shall provide an Optionee with notice and a copy of any amendment made to such Optionee’s existing Stock Option Agreement.
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I hereby certify that the foregoing Plan was duly adopted by the Board of Directors of Rexnord Holdings, Inc. on July 21, 2006.
Executed on this 21 st day of July, 2006.
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REXNORD HOLDINGS, INC. |
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/s/ Thomas J. Jansen |
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Name: |
Thomas J. Jansen |
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Title: |
Executive Vice President and Chief |
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Financial Officer |
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Exhibit 10.10
[Executive Form]
NON-QUALIFIED STOCK OPTION AGREEMENT
OF
REXNORD HOLDINGS, INC.
THIS AGREEMENT (this “ Agreement ”), dated as of [ ] is made by and between Rexnord Holdings, Inc., a Delaware corporation (the “ Company ”), and [ ], an Employee of the Company or one of its Subsidiaries (as defined herein) (the “ Optionee ”)
WHEREAS , the Company wishes to afford the Optionee the opportunity to purchase shares of its common stock, par value $0.01 per share (“ Common Stock ”);
WHEREAS , the Company wishes to carry out the 2006 Stock Option Plan of Rexnord Holdings, Inc. (as may be amended from time to time, the “ Plan ”), the terms of which are hereby incorporated by reference and made a part of this Agreement; and
WHEREAS , the Board (i) has determined that it would be to the advantage and in the best interests of the Company and its stockholders to grant the Non-Qualified Stock Option provided for herein (the “ Option ”) to the Optionee as an inducement for the Optionee to enter into or remain in the employ of the Company or one of its Subsidiaries and as an incentive for increased efforts by the Optionee during such employment, and (ii) has instructed the officers of the Company to issue said Option.
NOW, THEREFORE , in consideration of the mutual covenants herein contained and other good and valuable consideration, receipt and sufficiency of which is hereby acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever the following terms are used in this Agreement, they shall have the meaning specified below unless the context clearly indicates otherwise. Capitalized terms used in this Agreement and not defined herein shall have the meaning given to such terms in the Plan. The singular pronoun shall include the plural, where the context so indicates.
“ Cause ” shall have the meaning ascribed to it in any employment agreement in effect between the Company or any of its Subsidiaries and the Optionee as of the date of the Optionee’s Termination of Employment and, in the absence of any such employment agreement, “ Cause ” shall mean,
(a) the Board’s determination that the Optionee failed to carry out, or comply with, in each case in any material respect, any lawful and reasonable directive of the Board or the Board of Directors of Rexnord Corporation or any of their respective designees consistent with the terms of the Optionee’s employment, which is not remedied within 30 days after the receipt of written notice from the Company specifying such failure;
(b) the Optionee’s conviction, plea of no contest, plea of nolo contendere , or imposition of unadjudicated probation for any felony;
(c) the Optionee’s unlawful use (including being under the influence) or possession of illegal drugs;
(d) the Optionee’s commission of an act of fraud, embezzlement, misappropriation, willful misconduct, or breach of fiduciary duty against the Company or any of its Subsidiaries;
(e) the breach by the Optionee of any of the provisions contained in Article IV below or similar provisions contained in any other agreement with the Company or any of its Subsidiaries or other Affiliates; or
(f) the Optionee’s material breach of the Stockholders’ Agreement.
“ Cumulative Debt Repayment ” for a given fiscal year shall mean the positive excess, if any, of (a) the weighted average of the debt outstanding during the 60 calendar days preceding April 30, 2006, as such debt outstanding may be increased or decreased as appropriate for the effect of any post closing adjustment as determined by the Committee, over (b) the weighted average of the debt outstanding during the 60 calendar days preceding April 30 of the fiscal year immediately following the given fiscal year.
“ Cumulative Debt Repayment Target ” for a period commencing on or after April 1, 2006 shall be as set forth in Appendix A to this Agreement, subject to the provisions of Section 6.6 hereof.
“ Cumulative EBITDA ” as of a given date shall mean the total of EBITDA from and after April 1, 2006 through such date.
“ Cumulative EBITDA Target ” for a given period commencing on or after April 1, 2006, shall be as set forth in Appendix A of this Agreement, subject to the provisions of Section 6.6 hereof.
“ Debt Repayment ” for a given fiscal year of the Company shall mean, excluding any debt repayment in conjunction with an equity offering of securities of the Company, the positive excess, if any, of (a) the weighted average of the debt outstanding during the 60 calendar days preceding April 30 of the given fiscal year, over (b) the weighted average of the debt outstanding during the 60 calendar days preceding April 30 of the fiscal year immediately following the given fiscal year.
“ Debt Repayment Target ” for a period commencing on or after April 1, 2006 shall be as set forth in Appendix A to this Agreement, subject to the provisions of Section 6.6 hereof.
“ EBITDA ” for a given period shall mean consolidated net income before interest, taxes, depreciation, amortization, extraordinary items (including Other Income and Expense items as well as LIFO Income and Expense items) and management or similar fees payable to Apollo Management, L.P. or any of its Affiliates, as reflected on the Company’s audited consolidated financial statements for such period. Consolidated net income shall be determined in accordance with generally accepted accounting principles except that gains or losses from extraordinary, unusual or non-recurring items may be excluded in the discretion of the Committee.
“ EBITDA Target ” for a given period commencing on or after April 1, 2006, shall be as set forth in Appendix A of this Agreement, subject to the provisions of Section 6.6 hereof.
“ Good Reason ” shall have the meaning ascribed to it in any employment agreement in effect between the Company or any of its Subsidiaries and the Optionee as of the date of the Optionee’s Termination of Employment and, in the absence of any such employment agreement, “ Good Reason ” shall mean,
(a) the failure of the Company to continue the Optionee’s employment as Chief Executive Officer and as a member of the Board with the Optionee’s primary contact being the chairman of the Board;
(b) a material diminution in the nature or scope of the Optionee’s responsibilities, duties or authorities;
(c) the failure of the Company to make any material payment or provide any material benefit to which the Optionee is entitled;
(d) the material breach by the Company or any of its Subsidiaries of the Stockholders’ Agreement; or
(e) the material breach by the Company or any of its Subsidiaries of the Optionee’s employment agreement with Rexnord Corporation, dated as of July 21, 2006, as the same may be amended from time to time;
provided , however , that the Optionee may not terminate the Optionee’s employment for Good Reason unless the Optionee provides the Company or the Subsidiary of the Company that employs the Optionee with at least 30 days’ prior written notice of the Optionee’s intent to resign for Good Reason, with such notice to set forth the event or events constituting Good Reason, and the Company or the Subsidiary of the Company that employs the Optionee has not remedied the alleged violation(s) within the 30-day period.
“ Principal Stockholder(s) Investment ” means direct or indirect investments in shares of Common Stock, preferred stock or other debt or equity securities of the Company or any of its Subsidiaries made by the Principal Stockholder(s) on or after the Closing Date.
“ Principal Stockholder(s) CAGR ” means the pretax compound annual growth rate calculated on a quarterly basis based on the cash proceeds realized to the Principal Stockholder(s) in a Liquidity Event on the Principal Stockholder(s) Investment (which proceeds, for purposes hereof, shall be determined after deducting all transaction costs and all investment banking, accounting, attorney, consultant and similar fees paid or payable by the Principal Stockholder(s) to the extent not paid or reimbursed by the Company or any other third party) and the aggregate amount invested by the Principal Stockholder(s) for all Principal Stockholder(s) Investments, assuming all Principal Stockholder(s) Investments were purchased by one Person and were held continuously by such Person, after dilution for outstanding options, warrants or other rights to acquire shares of Common Stock or other equity securities of the Company. The Principal Stockholder(s) CAGR shall be determined based on the actual time of each Principal Stockholder(s) Investment and including, as a return on such investment, any cash dividends,
cash distributions or cash interest paid by the Company or any Subsidiary of the Company in respect of such investment during such period, but shall exclude any management or monitoring fees paid to Apollo Management, L.P. or any of its Affiliates.
ARTICLE II
GRANT OF OPTION
Section 2.1 Grant of Option
In consideration of the Optionee’s agreement to enter into or remain in the employ of the Company or one of its Subsidiaries and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, on the date hereof the Company irrevocably grants to the Optionee the Option to purchase any part or all of an aggregate of 230,706 shares of Common Stock upon the terms and conditions set forth in the Plan and this Agreement. The Optionee hereby agrees that (i) except as required by law, the Optionee will not disclose to any Person other than the Optionee’s spouse and legal, financial and other advisors (if any) the grant of the Option or any of the terms or provisions hereof without the prior approval of the Committee, and (ii) in the discretion of the Committee, the Option shall terminate and any unexercised portion of such Option (whether or not vested) shall be forfeited if the Optionee violates the non-disclosure provisions of this Section 2.1.
Section 2.2 Option Subject to Plan
The Option granted hereunder is subject to the terms and provisions of the Plan, including without limitation, Article V and Sections 7.1, 7.2, 7.3 and 7.10 thereof.
Section 2.3 Option Price
The purchase price of the shares of Common Stock covered by the Option shall be $47.50 per share (without commission or other charge).
ARTICLE III
EXERCISABILITY
Section 3.1 Commencement of Exercisability
(a) Subject to Section 3.1(e) and Section 3.3 of this Agreement, 50% of the Option shall become vested in five cumulative installments, provided that the Optionee remains continuously employed in active service by the Company or one of its Subsidiaries from the date of grant through such date, as follows:
(i) The first installment shall consist of 10% of the shares of Common Stock covered by such Option and shall become vested on July 21, 2007;
(ii) The second installment shall consist of 10% of the shares of Common Stock covered by such Option and shall become vested on July 21, 2008;
(iii) The third installment shall consist of 10% of the shares of Common Stock covered by such Option and shall become vested on July 21, 2009;
(iv) The fourth installment shall consist of 10% of the shares of Common Stock covered by such Option and shall become vested on July 21, 2010; and
(v) The fifth installment shall consist of 10% of the shares of Common Stock covered by such Option and shall become vested on July 21, 2011.
(b) Subject to Section 3.1(e) and Section 3.3, 50% of the Option shall become vested as follows:
(i) An installment of up to 2.5% of the shares of Common Stock covered by the Option shall become vested on, or within 120 days following, March 31 of each fiscal year 2007 through 2011, in each case as determined by the Committee in its sole discretion as follows:
(A) with respect to the fiscal year ending March 31, 2007, if the Debt Repayment for such fiscal year equals or exceeds the Debt Repayment Target for such fiscal year, then 2.5% of the shares of Common Stock covered by the Option shall become vested;
(B) with respect to the fiscal year ending March 31, 2008:
(1) if the Debt Repayment for such fiscal year equals or exceeds 95%, but is less than 100%, of the Debt Repayment Target for such fiscal year, then 1.875% of the shares of Common Stock covered by the Option shall become vested; or
(2) if the Debt Repayment for such fiscal year equals or exceeds the Debt Repayment Target for such fiscal year, then 2.5% of the shares of Common Stock covered by the Option shall become vested;
(C) with respect to each fiscal year ending March 31, 2009, 2010 and 2011:
(1) if the Debt Repayment for any such fiscal year equals or exceeds 90%, but is less than 95%, of the Debt Repayment Target for such fiscal year, then 1.25% of the shares of Common Stock covered by the Option shall become vested; or
(2) if the Debt Repayment for any such fiscal year equals or exceeds 95%, but is less than 100%, of the Debt Repayment Target for such fiscal year, then 1.875% of the shares of Common Stock covered by the Option shall become vested; or
(3) if the Debt Repayment for any such fiscal year equals or exceeds the Debt Repayment Target for such fiscal year, then 2.5% of the shares of Common Stock covered by the Option shall become vested.
(ii) An installment of up to 2.5% of the shares of Common Stock covered by the Option shall become vested on, or within 120 days following, March 31 of each fiscal year 2007 through 2011 as determined by the Committee in its sole discretion as follows:
(A) with respect to the fiscal year ending March 31, 2007, if the Cumulative Debt Repayment for such fiscal year equals or exceeds the Cumulative Debt Repayment Target for such fiscal year, then 2.5% of the shares of Common Stock covered by the Option shall become vested;
(B) with respect to the fiscal year ending March 31, 2008:
(1) if the Cumulative Debt Repayment for such fiscal year equals or exceeds 95%, but is less than 100%, of the Cumulative Debt Repayment Target for such fiscal year, then 1.875% of the shares of Common Stock covered by the Option shall become vested; or
(2) if the Cumulative Debt Repayment for such fiscal year equals or exceeds the Cumulative Debt Repayment Target for such fiscal year, then 2.5% of the shares of Common Stock covered by the Option shall become vested;
(C) with respect to each fiscal year ending March 31, 2009, 2010 and 2011:
(1) if the Cumulative Debt Repayment for such fiscal year equals or exceeds 90%, but is less than 95%, of the Cumulative Debt Repayment Target for such fiscal year, then 1.25% of the shares of Common Stock covered by the Option shall become vested; or
(2) if the Cumulative Debt Repayment for such fiscal year equals or exceeds 95%, but is less than 100%, of the Cumulative Debt Repayment Target for such fiscal year, then 1.875% of the shares of Common Stock covered by the Option shall become vested; or
(3) if the Cumulative Debt Repayment for such fiscal year equals or exceeds the Cumulative Debt Repayment Target for such fiscal year, then 2.5% of the shares of Common Stock covered by the Option shall become vested.
(iii) If the Cumulative Debt Repayment as of the end of any fiscal year 2007 through 2011 is less than the Cumulative Debt Repayment Target through the end of such fiscal year, that portion of the Option that was subject to accelerated vesting pursuant to Section 3.1(b)(i) and 3.1(b)(ii), but which did not become vested pursuant to Sections 3.1(b)(i)(A), (B) or (C) or 3.1(b)(ii)(A), (B) or (C), with respect to such fiscal year, subject to Sections 3.2 and 3.4, shall become vested, as determined by the Committee, on, or within 120 days following, the last day of the first fiscal year in which the Cumulative Debt Repayment equals or exceeds the Cumulative Debt Repayment Target for such fiscal year.
(iv) An installment of up to 2.5% of the shares of Common Stock covered by the Option shall become vested on, or within 120 days following, March 31 of each fiscal year 2007 through 2011 as determined by the Committee in its sole discretion as follows:
(A) with respect to the fiscal year ending March 31, 2007, if EBITDA for such fiscal year equals or exceeds the EBITDA Target for such fiscal year, then 2.5% of the shares of Common Stock covered by the Option shall become vested;
(B) with respect to the fiscal year ending March 31, 2008:
(1) if EBITDA for such fiscal year equals or exceeds 95%, but is less than 100%, of the EBITDA Target for such fiscal year, then 1.875% of the shares of Common Stock covered by the Option shall become vested; or
(2) if EBITDA for such fiscal year equals or exceeds the EBITDA Target for such fiscal year, then 2.5% of the shares of Common Stock covered by the Option shall become vested;
(C) with respect to each fiscal year ending March 31, 2009, 2010 and 2011:
(1) if EBITDA for any such fiscal year equals or exceeds 90%, but is less than 95%, of the EBITDA Target for such fiscal year, then 1.25% of the shares of Common Stock covered by the Option shall become vested; or
(2) if EBITDA for any such fiscal year equals or exceeds 95%, but is less than 100%, of the EBITDA Target for such fiscal year, then 1.875% of the shares of Common Stock covered by the Option shall become vested; or
(3) if EBITDA for any such fiscal year equals or exceeds the EBITDA Target for such fiscal year, then 2.5% of the
shares of Common Stock covered by the Option shall become vested.
(v) An installment of up to 2.5% of the shares of Common Stock covered by the Option shall become vested on, or within 120 days following, March 31 of each fiscal year 2007 through 2011 as determined by the Committee in its sole discretion as follows:
(A) with respect to the fiscal year ending March 31, 2007, if Cumulative EBITDA for such fiscal year equals or exceeds the Cumulative EBITDA Target for such fiscal year, then 2.5% of the shares of Common Stock covered by the Option shall become vested;
(B) with respect to the fiscal year ending March 31, 2008:
(1) if Cumulative EBITDA for such fiscal year equals or exceeds 95%, but is less than 100%, of the Cumulative EBITDA Target for such fiscal year, then 1.875% of the shares of Common Stock covered by the Option shall become vested; or
(2) if Cumulative EBITDA for such fiscal year equals or exceeds the Cumulative EBITDA Target for such fiscal year, then 2.5% of the shares of Common Stock covered by the Option shall become vested;
(C) with respect to each fiscal year ending March 31, 2009, 2010 and 2011:
(1) if Cumulative EBITDA for such fiscal year equals or exceeds 90%, but is less than 95%, of the Cumulative EBITDA Target for such fiscal year, then 1.25% of the shares of Common Stock covered by the Option shall become vested; or
(2) if Cumulative EBITDA for such fiscal year equals or exceeds 95%, but is less than 100%, of the Cumulative EBITDA Target for such fiscal year, then 1.875% of the shares of Common Stock covered by the Option shall become vested; or
(3) if Cumulative EBITDA for such fiscal year equals or exceeds the Cumulative EBITDA Target for such fiscal year, then 2.5% of the shares of Common Stock covered by the Option shall become vested.
(vi) if Cumulative EBITDA as of the end of any fiscal year 2007 through 2011 is less than the Cumulative EBITDA Target through the end of such fiscal year, that portion of the Option that was subject to accelerated vesting pursuant to Sections 3.1(b)(iv) and 3.1(b)(v), but which did not become vested pursuant to Sections 3.1(b)(iv)(A), (B) or (C) or 3.1(b)(v)(A), (B) or (C), with
respect to such fiscal year, subject to Sections 3.2 and 3.4, shall become vested, as determined by the Committee, on, or within 120 days following, the last day of the first fiscal year in which Cumulative EBITDA equals or exceeds the Cumulative EBITDA Target for such fiscal year.
(c) Notwithstanding the foregoing provisions of this Section 3.1, but subject to Section 3.1(e), upon the occurrence of the first Liquidity Event, the following shall immediately prior to the effective date of such Liquidity Event become vested in full:
(i) that portion of the Option that remains eligible to become vested pursuant to Section 3.1(a);
(ii) at the election and sole discretion of the Committee, that portion of the Option that has not, as of such Liquidity Event, become eligible to become vested pursuant to Sections 3.1(b)(i), 3.1(b)(ii), 3.1(b)(iv) or 3.1(b)(v);
(iii) that portion of the Option that remains eligible to become vested pursuant to Section 3.1(b), but only if the Principal Stockholder(s) CAGR as of the Liquidity Event equals or exceeds 25%.
(d) The Committee shall make the determination as to whether the respective Debt Repayment, Cumulative Debt Repayment, EBITDA, and Cumulative EBITDA Targets have been met, and shall determine the extent, if any, to which the Option as become vested, on any such date as the Committee in its sole discretion shall determine; provided , however , that with respect to each fiscal year such date shall not be later than the 120 th day following March 31 of such fiscal year.
(e) Except with respect to any portion of the Option that as of the Optionee’s Termination of Employment is eligible to vest pursuant to Section 3.1(b) for the fiscal year preceding the fiscal year in which the Optionee’s Termination of Employment occurs, no portion of the Option which is unvested at the Optionee’s Termination of Employment shall thereafter become vested.
Section 3.2 Duration of Exercisability
The installments provided for in Section 3.1 are cumulative. Each such installment which becomes vested pursuant to Section 3.1 shall remain vested and may be exercised until the Option expires pursuant to Section 3.3.
Section 3.3 Expiration of Option
The Option may not be exercised to any extent by any Person after the first to occur of any of the following events:
(a) The expiration of ten years from the date the Option was granted;
(b) If the Optionee’s Termination of Employment is for any reason other than (i) by the Company or any Subsidiary of the Company for Cause, or (ii) on account of the
Optionee’s death or disability (as defined in Section 22(e)(3) of the Code), the later of (x) the ninetieth day following the date of the Optionee’s Termination of Employment or (y) to the extent that, as of the Optionee’s Termination of Employment, any portion of the Option remains eligible to vest pursuant to Section 3.1(b) for the fiscal year preceding the fiscal year in which the Optionee’s Termination of Employment occurs, the thirtieth day following the date of the Committee’s determination under Section 3.1(d) for such fiscal year;
(c) The date of the Optionee’s Termination of Employment by the Company or any Subsidiary of the Company for Cause;
(d) If the Optionee’s Termination of Employment is on account of the Optionee’s death or disability (within the meaning of Section 22(e)(3) of the Code), the expiration of 12 months from the date of the Optionee’s Termination of Employment; or
(e) The occurrence of a Liquidity Event, provided that any portion of the Option that is vested as of the occurrence of the Liquidity Event may be exercised concurrently therewith.
Section 3.4 Partial Exercise
Any vested portion of the Option or the entire Option, if then wholly vested, may be exercised in whole or in part at any time prior to the time when the Option or portion thereof expires; provided , however , that each partial exercise shall be for not less than 100 shares of Common Stock and shall be for whole shares of Common Stock only.
Section 3.5 Exercise of Option
The exercise of the Option shall be governed by the terms of this Agreement and the terms of the Plan, including without limitation, the provisions of Article V of the Plan, which, among other things, require that the Optionee (or, in the event of the Optionee’s death or disability, the Optionee’s Eligible Representative) deliver an executed copy of a Joinder to the Stockholders’ Agreement designated by the Company (in the form attached to such Stockholders’ Agreement) to the Secretary as a condition to the exercise of the Option.
ARTICLE IV
RESTRICTIVE COVENANTS
Section 4.1 Non-Competition
During the term of the Optionee’s employment with the Company or any of its Subsidiaries and for a period of two years thereafter, the Optionee shall not, directly or indirectly, engage in, have any equity interest in, or manage or operate any person, firm, corporation, partnership or business (whether as director, officer, employee, agent, representative, partner, security holder, consultant or otherwise) that engages in any business which competes with any business of the Company or any entity owned by the Company anywhere in the world; provided, however, that the Optionee shall be permitted to acquire a
passive stock or equity interest in such a business provided the stock or other equity interest acquired is not more than five percent (5%) of the outstanding interest in such business.
Section 4.2 Customer Non-Solicitation
During the term of the Optionee’s employment with the Company or any of its Subsidiaries and for a period of two years thereafter, the Optionee agrees not to, and will not permit any of the Optionee’s Affiliates to, directly or indirectly, induce or attempt to induce any customer, supplier, licensee or other business relation of the Company or any of its Subsidiaries to cease doing business with the Company or any of its Subsidiaries, or in any way interfere with the relationship between any such customer, supplier, licensee or business relation, on the one hand, and the Company or any of its Subsidiaries, on the other hand.
Section 4.3 Non-Solicitation/Non-Hiring of Employees
During the term of the Optionee’s employment with the Company or any of its Subsidiaries and for a period of two years thereafter, the Optionee agrees not to, and will not permit any of the Optionee’s Affiliates to, directly or indirectly, (i) recruit or otherwise solicit or induce (or attempt to recruit or otherwise solicit or induce) any employee of the Company or any of its Subsidiaries to leave the employ of the Company or any of its Subsidiaries, or in any way interfere with the relationship between the Company or any of its Subsidiaries, on the one hand, and any employee thereof, on the other hand, or (ii) hire any Person who is or at any time was an employee of the Company or any of its Subsidiaries until six (6) months after such Person’s employment relationship with the Company or any of its Subsidiaries has ended.
Section 4.4 Non-Disparagement
During the term of the Optionee’s employment with the Company or any of its Subsidiaries and thereafter in perpetuity, the Optionee shall not knowingly disparage, criticize, or otherwise make derogatory statements regarding the Company or any of its Affiliates, Subsidiaries, successors, directors, officers, customers or suppliers. During the term of the Optionee’s employment with the Company or any of its Subsidiaries and thereafter in perpetuity, none of the Company, Rexnord Corporation, nor any of their respective officers shall knowing disparage, criticize, or otherwise make derogatory statements regarding the Optionee. The restrictions of this Section 4.4 shall not apply to any statements that are made truthfully in response to a subpoena or other compulsory legal process.
Section 4.5 Non-Disclosure of Confidential Information
During the term of the Optionee’s employment with the Company or any of its Subsidiaries and thereafter in perpetuity, the Optionee shall maintain in confidence and shall not directly, indirectly or otherwise, use, disseminate, disclose or publish, or use for the Optionee’s benefit or the benefit of any Person, any confidential or proprietary information or trade secrets of or relating to the Company or any of its Subsidiaries or Affiliates, including, without limitation, information with respect to the Company’s or any of its Subsidiaries’ operations, processes, products, inventions, business practices, finances, principals, vendors, suppliers, customers, potential customers, marketing methods, costs, prices, contractual relationships, regulatory status, compensation paid to employees or other terms of employment, or deliver to
any Person any document, record, notebook, computer program or similar repository of or containing any such confidential or proprietary information or trade secrets. Upon the Optionee’s Termination of Employment for any reason, the Optionee shall promptly deliver to the Company all correspondence, drawings, manuals, letters, notes, notebooks, reports, programs, plans, proposals, financial documents, or any other documents concerning the Company’s or any of its Subsidiaries’ customers, business plans, marketing strategies, products or processes. The Optionee may respond to a lawful and valid subpoena or other legal process but shall give the Company the earliest possible notice thereof, shall, as much in advance of the return date as possible, make available to the Company and its counsel the documents and other information sought and shall assist such counsel in resisting or otherwise responding to such process.
Section 4.6 Injunctive Relief
The Optionee hereby acknowledges that a breach of the covenants contained in this Article IV will cause irreparable damage to the Company and its goodwill, the exact amount of which will be difficult or impossible to ascertain, and that the remedies at law for any such breach will be inadequate. Accordingly, the Optionee hereby agrees that, in the event of a breach of any of the covenants contained in this Article IV, in addition to any other remedy which may be available at law or in equity, the Company shall be entitled to specific performance and injunctive relief. The Company hereby acknowledges that a breach of the Company’s covenant contained in Section 4.4 will cause irreparable damage to the Optionee, the exact amount of which will be difficult or impossible to ascertain, and that the remedies at law for any such breach will be inadequate. Accordingly, the Company hereby agrees that, in the event of a breach of the Company’s covenant contained in Section 4.4, in addition to any other remedy which may be available at law or in equity, the Optionee shall be entitled to specific performance and injunctive relief.
ARTICLE V
LIMITED CALL RIGHT
Section 5.1 Defined Terms
Capitalized terms used in this Article V and not otherwise defined in the Plan or this Agreement shall have the meanings ascribed to them in the Stockholders’ Agreement to which the Optionee has or, as a condition to exercise of the Option, will become a party.
Section 5.2 Company’s Call Right Generally
From and after a Repurchase Event, the Company shall have the right, but not the obligation, to repurchase all or any portion of the Equity Securities held by the Optionee (including any Equity Securities received upon a distribution from any deferred compensation plan or other Equity Incentive Plan or any Equity Securities issuable upon exercise of any option, warrant or similar equity-linked Security of the Company held by the Optionee) in accordance with Section 4 of the Stockholders’ Agreement, as modified by this Article V (the “ Repurchase Right ”). Any repurchase described in the immediately preceding sentence shall be for fair market value (as determined under the Stockholders’ Agreement), but subject to Section 5.3, and
subject further to any provisions to the contrary contained in the Optionee’s Employment Agreement (if any). The Company may exercise the Repurchase Right by written notice (a “ Repurchase Notice ”) to the Optionee within six months after the Repurchase Event; provided , however , that with respect to Equity Securities acquired by the Optionee after such Repurchase Event (whether by exercise of any option, warrant or similar equity-linked Security of the Company, distribution of shares from any deferred compensation plan or otherwise), the Company may exercise the Repurchase Right by delivering a Repurchase Notice to the Optionee within six months after the acquisition of such Equity Securities by the Optionee (each date on which any such repurchase is executed with respect to the subject Equity Securities, the “ Repurchase Date ”). The determination date for purposes of determining the fair market value shall be the Repurchase Date applicable to the subject Equity Securities. Subject to Section 6 of the Stockholders’ Agreement, the Repurchase Date with respect to any repurchase of Equity Securities pursuant to the exercise of the Repurchase Right shall take place on the later of (i) the date specified by the Company, which shall in no event be later than thirty (30) days following the date of the Repurchase Notice and (ii) within ten (10) days following the receipt by the Company of all necessary government approvals.
Section 5.3 Company’s Call Right Upon Certain Terminations
Notwithstanding anything contained herein to the contrary, unless otherwise provided in an Employment Agreement of the Optionee, in the event the Optionee’s employment relationship with the Company or any of its Subsidiaries is terminated by the Optionee without Good Reason prior to the [ ] anniversary of the Closing Date or by the Company or any of its Subsidiaries for Cause, then the Company may exercise the Repurchase Right by delivering a Repurchase Notice to the Optionee within the time periods set forth in Section 5.2 above at a price equal to the lesser of (i) in the case of Common Stock, $47.50 per share of Common Stock, subject to adjustment by the Company to reflect any stock split, recapitalization or similar adjustment to the Common Stock (or, for shares of Common Stock acquired after the Closing Date and not upon exercise of a Rollover Option, the original acquisition cost to the Optionee of such shares of Common Stock) and (ii) the fair market value (as determined under the Stockholders’ Agreement) of such Equity Securities. The determination date for purposes of determining the fair market value shall be the closing date of the purchase of the applicable Equity Securities.
Section 5.4 Apollo’s Call Right
The Company shall give prompt written notice to Apollo stating whether the Company will exercise the Repurchase Right pursuant to Section 5.2 or Section 5.3 above. If such notice states that the Company will not exercise such Repurchase Rights for all or any portion of the applicable Equity Securities subject thereto, Apollo (or its designee) shall have the right (exercisable by delivery of written notice to the Optionee on or before the later of (i) the 30 th day following the receipt of such notice or (ii) 6 months after the Repurchase Event) to purchase any such Equity Securities not purchased by the Company on the same terms and conditions as the Company set forth in Section 5.2 or Section 5.3.
Section 5.5 Closing
The Repurchase Date shall take place on a date designated by the Company or Apollo, as applicable, in accordance with Section 5.2 or Section 5.4, respectively; provided , however , that the closing may be deferred to a date designated by the Company or Apollo, as applicable, or, to the extent required to avoid liability under applicable securities laws, the Optionee, until such time as the Optionee has held the Equity Securities for a period of at least six months and one day. The purchase price shall be paid at the closing in the form of a check, wire transfer of immediately available funds, or by cancellation of money purchase indebtedness of the Optionee, as determined in the sole discretion of the Company or Apollo, as applicable. The Company or Apollo, as applicable, may effect such repurchase of Equity Securities and the Company shall record such Transfer on its books whether or not the Optionee attends such closing or delivers certificates representing such Equity Securities to the Company. The Optionee hereby grants an irrevocable proxy and power of attorney which, it is agreed, is coupled with an interest to any nominee of the Company or Apollo, as applicable, to take all necessary actions and execute and deliver all documents deemed necessary and appropriate by such nominee to effect such purchase of Equity Securities. If the Optionee fails to take all necessary actions and execute and deliver all documents necessary and appropriate to fulfill his or her obligations under this Article V, the Optionee shall indemnify, defend and hold such nominee harmless against all liability, loss or damage, together with all reasonable costs and expenses (including reasonable legal fees and expenses), relating to or arising from such nominee’s exercise of the proxy and power of attorney granted hereby. In addition, the Optionee shall immediately lose all rights the Optionee may have under Section 8 of the Stockholders’ Agreement in the event of any such purchase.
ARTICLE VI
OTHER PROVISIONS
Section 6.1 Not a Contract of Employment
Nothing in this Agreement or in the Plan shall (i) confer upon the Optionee any right to continue in the employ of the Company or any of its Subsidiaries, or (ii) interfere with or restrict in any way the rights of the Company or its Subsidiaries, which are hereby expressly reserved, to discharge the Optionee at any time for any reason whatsoever, with or without Cause, except pursuant to an employment agreement, if any, executed by and between the Company or any of its Subsidiaries, on the one hand, and the Optionee, on the other hand, and approved by the Board.
Section 6.2 Shares Subject to Plan and Stockholder Agreement
The Optionee acknowledges that any shares of Common Stock acquired upon exercise of the Option are subject to the terms of the Plan and the Stockholders’ Agreement, including without limitation, the restrictions set forth in Section 5.6 of the Plan.
Section 6.3 Construction
This Agreement shall be administered, interpreted and enforced under the laws of the state of New York, without regard to conflicts of laws provisions that would give effect to the laws of another jurisdiction.
Section 6.4 Conformity to Securities Laws
The Optionee acknowledges that the Plan is intended to conform to the extent necessary with all provisions of the Securities Act and the Exchange Act and any and all regulations and rules promulgated thereunder by the Securities and Exchange Commission, including without limitation, Rule 16b-3. Notwithstanding anything herein to the contrary, the Plan shall be administered, and the Option is granted and may be exercised, only in such a manner as to conform to such laws, rules and regulations. To the extent permitted by applicable law, the Plan and this Agreement shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.
Section 6.5 280G Compliance
In the event that the Optionee becomes entitled to payments or benefits under this Agreement and/or any other payments or benefits by reason of a “change of control” as defined in Section 280G of the Code and regulations thereunder (collectively, the “ Payments ”), and any such Payment constitutes a “parachute payment” as defined in Section 280G of the Code and regulations thereunder, the Company and the Optionee shall use their respective reasonable best efforts to obtain stockholder approval of such Payments in the manner provided in Section 280G(b)(5)(B) of the Code and regulations thereunder; provided , however , that nothing in this Section 6.5 shall be interpreted to require the Optionee to waive any of the Optionee’s rights under the Option or otherwise.
Section 6.6 Adjustments in Debt Repayment and EBITDA Targets
The Debt Repayment and EBITDA Targets (including the Cumulative Debt Repayment and Cumulative EBITDA Targets) specified in Appendix A are based upon certain revenue and expense assumptions about the future business of the Company as of the date the Option is granted. Accordingly, in the event that, after such date, the Committee determines, in its sole discretion, that any acquisition or disposition of any business by the Company or any dividend or other distribution (whether in the form of cash, Common Stock, other securities, or other property), recapitalization, reclassification, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Common Stock or other securities of the Company, issuance of warrants or other rights to purchase Common Stock or other securities of the Company, any unusual or nonrecurring transactions or events affecting the Company, or the financial statements of the Company, or change in applicable laws, regulations, or accounting principles occurs such that an adjustment is determined by the Committee to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to the Option, then the Committee shall, in good faith and in such manner as it may deem equitable, adjust the financial targets set forth on Appendix A to reflect the projected effect of such transaction(s) or event(s) on Debt Repayment and/or EBITDA, subject to Section 7.1 of the Plan.
Section 6.7 Entire Agreement
The parties hereto acknowledge that this Agreement and the Plan set forth the entire agreement and understanding of the parties and supersede all prior written or oral agreements or
understandings with respect to the subject matter hereof, except that any provisions therein regarding confidentiality or non-competition remain in full force and effect in favor of the Company and its Subsidiaries as if the agreements containing such provisions were not so superseded. The obligations imposed by this Agreement are severable and should be construed independently of each other. The invalidity of one provision shall not affect the validity of any other provision. If any provision of this Agreement shall be invalid or unenforceable, in whole or in part, or as applied to any circumstances, under the laws of any jurisdiction which may govern for such purpose, then such provision shall be deemed, to the extent allowed by the laws of such jurisdiction, to be modified or restricted to the extent and in the manner necessary to render the same valid and enforceable, either generally or as applied to such circumstance, or shall be deemed exercised from this Agreement, as the case may require, and this Agreement shall be construed and enforced to the maximum extent permitted by law, as if such provision had been originally incorporated herein as so modified or restricted, or as if such provision had not been originally incorporated herein, as the case may be.
Section 6.8 Amendment
The Board at any time, and from time to time, may amend the terms of this Agreement, provided, however , that the rights of the Optionee shall not be adversely impaired without the Optionee’s written consent. The Company shall provide the Optionee with notice and a copy of any amendment made to this Agreement
Section 6.9 Arbitration; Waiver of Jury Trial
Any dispute or controversy arising under, out of, or in connection with or in relation to this Agreement or the Plan shall be finally determined and settled by arbitration in New York, New York in accordance with the Commercial Rules of the American Arbitration Association, and judgment upon the award may be entered in any court having jurisdiction. Within 20 days of the conclusion of the arbitration hearing, the arbitrator shall prepare written findings of fact and conclusions of law. It is mutually agreed that the written decision of the arbitrator shall be valid, binding, final and non-appealable; provided, however, that the parties hereto agree that the arbitrator shall not be empowered to award punitive damages against any party to such arbitration. To the extent permitted by law, the arbitrator’s fees and expenses will be borne equally by each party. In the event that an action is brought to enforce the provisions of this Agreement or the Plan pursuant to this Section 6.9, each party shall pay its own attorney’s fees and expenses regardless of whether in the opinion of the court or arbitrator deciding such action there is a prevailing party. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL, INCLUDING TRIAL BY JURY, IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THE PLAN OR THIS AGREEMENT.
Section 6.10 Notices
All notices, requests, consents and other communications hereunder to any party hereto shall be deemed to be sufficient if contained in a written instrument and shall be deemed to have been duly given when delivered in person, by telecopy, by nationally-recognized overnight courier, or by first class registered or certified mail, postage prepaid, addressed to such party at
the address set forth below or such other address as may hereafter be designated in writing by the addressee to the addressor:
(i) if to the Company, to:
Rexnord
Holdings, Inc.
4701 Greenfield Avenue
Milwaukee, WI 53214
Attention: Patty Whaley
with copies to:
Rexnord Holdings, Inc.
c/o Apollo Management, L.P.
10250 Constellation Blvd, Suite 2900
Los Angeles, CA 90067
Fax: (310) 843-1933
Attention: Larry Berg
and
Rexnord
Holdings, Inc.
c/o Apollo Management, L.P.
9 West 57
th
Street, 43
rd
Floor
New York, NY 10019
Fax: (212) 515-3288
Attention: Steven Martinez
and
O’Melveny &
Myers LLP
Times Square Tower
7 Times Square
New York, NY 10036
Fax: (212) 326-2061
Attention: John M. Scott, Esq.
(ii) if to the Optionee, to the Optionee’s home address on file with the Company.
Section 6.11 Counterparts
This Agreement may be executed in several counterparts, including via facsimile transmission, each of which shall be deemed to be an original, but all of which together will constitute one and the same Agreement.
[Signature Page to Follow]
IN WITNESS WHEREOF , this Agreement has been executed and delivered by the parties hereto as of the day, month and year first set forth above.
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THE OPTIONEE: |
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Exhibit 10.11
[George M. Sherman Form]
NON-QUALIFIED STOCK OPTION AGREEMENT
OF
REXNORD HOLDINGS, INC.
THIS AGREEMENT (this “ Agreement ”), dated as of [ ] is made by and among Rexnord Holdings, Inc., a Delaware corporation (the “ Company ”), Cypress Industrial Holdings, LLC, a Maryland limited liability company (“ Industrial ”), Cypress Group, LLC, a Maryland limited liability company (“ Cypress ”), and George M. Sherman, a Consultant to the Company or one of its Subsidiaries (as defined herein) (the “ Optionee ”).
WHEREAS , the Company wishes to afford the Optionee the opportunity to purchase shares of its common stock, par value $0.01 per share (“ Common Stock ”);
WHEREAS , the Company wishes to carry out the 2006 Stock Option Plan of Rexnord Holdings, Inc. (as may be amended from time to time, the “ Plan ”), the terms of which are hereby incorporated by reference and made a part of this Agreement; and
WHEREAS , the Board (i) has determined that it would be to the advantage and in the best interests of the Company and its stockholders to grant the Non-Qualified Stock Option provided for herein (the “ Option ”) to the Optionee as an inducement for the Optionee to enter into or remain in the service of the Company or one of its Subsidiaries and as an incentive for increased efforts by the Optionee during such service, and (ii) has instructed the officers of the Company to issue said Option.
NOW, THEREFORE , in consideration of the mutual covenants herein contained and other good and valuable consideration, receipt and sufficiency of which is hereby acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever the following terms are used in this Agreement, they shall have the meaning specified below unless the context clearly indicates otherwise. Capitalized terms used in this Agreement and not defined below shall have the meaning given to such terms in the Plan. The singular pronoun shall include the plural, where the context so indicates.
“ Cause ” shall have the meaning ascribed to such term in any consulting agreement (including, without limitation, the Consulting Agreement) in effect between the Company or any of its Subsidiaries and the Optionee as of the date of the Optionee’s termination of service and, in the absence of any such consulting agreement, “ Cause ” shall mean,
(a) the failure of the Optionee to carry out, or comply with, in each case in any material respect, any lawful and reasonable directive of the Board or the Board of Directors of Rexnord Corporation or any of their respective designees consistent with the terms of the Optionee’s consultancy, which is not remedied within 30 days after the receipt of written notice from the Company specifying such failure;
(b) the Optionee’s conviction, plea of no contest, plea of nolo contendere , or imposition of unadjudicated probation for any felony;
(c) the Optionee’s unlawful use (including being under the influence) or possession of illegal drugs;
(d) the Optionee’s commission of an act of fraud, embezzlement, misappropriation, willful misconduct, or breach of fiduciary duty against the Company or any of its Subsidiaries;
(e) the breach by the Optionee of any of the provisions contained in Article IV below or similar provisions contained in any other agreement with the Company or any of its Subsidiaries or other Affiliates; or
(f) the Optionee’s material breach of the Cypress Stockholders’ Agreement.
“ Consulting Agreement ” means that certain Management Consulting Agreement, dated as of the Closing Date, by and among Rexnord Corporation, a Delaware corporation, the Optionee, Industrial and Cypress, as the same may be amended from time to time.
“ Cumulative Debt Repayment ” for a given fiscal year shall mean the positive excess, if any, of (a) the weighted average of the debt outstanding during the 60 calendar days preceding April 30, 2006, as such debt outstanding may be increased or decreased as appropriate for the effect of any post closing adjustment as determined by the Committee, over (b) the weighted average of the debt outstanding during the 60 calendar days preceding April 30 of the fiscal year immediately following the given fiscal year.
“ Cumulative Debt Repayment Target ” for a period commencing on or after April 1, 2006 shall be as set forth in Appendix A to this Agreement, subject to the provisions of Section 5.6 hereof.
“ Cumulative EBITDA ” as of a given date shall mean the total of EBITDA from and after April 1, 2006 through such date.
“ Cumulative EBITDA Target ” for a given period commencing on or after April 1, 2006, shall be as set forth in Appendix A of this Agreement, subject to the provisions of Section 5.6 hereof.
“ Cypress Stockholders’ Agreement ” shall mean that certain agreement by and among the Optionee, Industrial, the Company and the other stockholders of the Company party thereto, which contains certain restrictions and limitations applicable to the shares of Common Stock acquired upon Option exercise (and to other shares of Common Stock, if any, held by the Optionee during the term of such agreement). If the Optionee is not a party to the Cypress Stockholders’ Agreement at the time of exercise of the Option (or any portion thereof), the exercise of the Option shall be subject to the condition that the Optionee enter into the Cypress Stockholders’ Agreement. The Cypress Stockholders’ Agreement shall constitute a Stockholders’ Agreement for purposes of the Plan.
“ Debt Repayment ” for a given fiscal year of the Company shall mean, excluding any debt repayment in conjunction with an equity offering of securities of the Company, the positive excess, if any, of (a) the weighted average of the debt outstanding during the 60 calendar days preceding April 30 of the given fiscal year, over (b) the weighted average of the debt outstanding during the 60 calendar days preceding April 30 of the fiscal year immediately following the given fiscal year.
“ Debt Repayment Target ” for a period commencing on or after April 1, 2006 shall be as set forth in Appendix A to this Agreement, subject to the provisions of Section 5.6 hereof.
“ EBITDA ” for a given period shall mean consolidated net income before interest, taxes, depreciation, amortization, extraordinary items (including Other Income and Expense items as well as LIFO Income and Expense items) and management or similar fees payable to Apollo Management, L.P. or any of its Affiliates, as reflected on the Company’s audited consolidated financial statements for such period. Consolidated net income shall be determined in accordance with generally accepted accounting principles except that gains or losses from extraordinary, unusual or non-recurring items may be excluded in the discretion of the Committee.
“ EBITDA Target ” for a given period commencing on or after April 1, 2006, shall be as set forth in Appendix A of this Agreement, subject to the provisions of Section 5.6 hereof.
“ Good Reason ” shall have the meaning ascribed to it in any consulting agreement (including, without limitation, the Consulting Agreement) in effect between the Company or any of its Subsidiaries and the Optionee as of the date of the Optionee’s termination of service and, in the absence of any such consulting agreement, “ Good Reason ” shall mean,
(a) the failure of the Company to continue the Optionee in the position of Non-Executive Chairman of the Board;
(b) a material diminution in the Optionee’s responsibilities, duties or authorities;
(c) the failure of the Company to make any material payment or provide any material benefit to which the Optionee is entitled;
(d) the material breach by the Company or any of its Subsidiaries of the Consulting Agreement; or
(e) the material breach by the Company or any of its Subsidiaries of the Cypress Stockholders’ Agreement;
provided , however , that the Optionee may not terminate the Optionee’s services for Good Reason unless the Optionee provides the Company or the Subsidiary of the Company for which the Optionee is performing services with at least 30 days’ prior written notice of the Optionee’s intent to resign for Good Reason, with such notice to set forth the event or events constituting Good Reason, and the Company or the Subsidiary for which the Optionee is performing services has not remedied the alleged violation(s) within the 30-day period.
“ Principal Stockholder(s) Investment ” means direct or indirect investments in shares of Common Stock, preferred stock or other debt or equity securities of the Company or any of its Subsidiaries made by the Principal Stockholder(s) on or after the Closing Date.
“ Principal Stockholder(s) CAGR ” means the pretax compound annual growth rate calculated on a quarterly basis based on the cash proceeds realized to the Principal Stockholder(s) in a Liquidity Event on the Principal Stockholder(s) Investment (which proceeds, for purposes hereof, shall be determined after deducting all transaction costs and all investment banking, accounting, attorney, consultant and similar fees paid or payable by the Principal Stockholder(s) to the extent not paid or reimbursed by the Company or any other third party) and the aggregate amount invested by the Principal Stockholder(s) for all Principal Stockholder(s) Investments, assuming all Principal Stockholder(s) Investments were purchased by one Person and were held continuously by such Person, after dilution for outstanding options, warrants or other rights to acquire shares of Common Stock or other equity securities of the Company. The Principal Stockholder(s) CAGR shall be determined based on the actual time of each Principal Stockholder(s) Investment and including, as a return on such investment, any cash dividends, cash distributions or cash interest paid by the Company or any Subsidiary of the Company in respect of such investment during such period, but shall exclude any management or monitoring fees paid to Apollo Management, L.P. or any of its Affiliates.
ARTICLE II
GRANT OF OPTION
Section 2.1 Grant of Option
In consideration of the Optionee’s agreement to enter into or remain in the service of the Company or one of its Subsidiaries and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, on the date hereof the Company irrevocably grants to the Optionee the Option to purchase any part or all of an aggregate of 576,765 shares of Common Stock upon the terms and conditions set forth in the Plan and this Agreement. The Optionee hereby agrees that (i) except as required by law, the Optionee will not disclose to any Person other than the Optionee’s spouse and legal, financial and other advisors (if any) the grant of the Option or any of the terms or provisions hereof without the prior approval of the Committee, and (ii) in the discretion of the Committee, the Option shall terminate and any unexercised portion of such Option (whether or not vested) shall be forfeited if the Optionee violates the non-disclosure provisions of this Section 2.1.
Section 2.2 Option Subject to Plan
The Option granted hereunder is subject to the terms and provisions of the Plan, including without limitation, Article V and Sections 7.1, 7.2, 7.3 and 7.10 thereof.
Section 2.3 Option Price
The purchase price of the shares of Common Stock covered by the Option shall be $47.50 per share (without commission or other charge).
ARTICLE III
EXERCISABILITY
Section 3.1 Commencement of Exercisability
(a) Subject to Section 3.1(f) and Section 3.3 of this Agreement, 50% of the Option shall become vested in five cumulative installments provided that the Consulting Agreement remains continuously in effect from the date of grant through such date as follows:
(i) The first installment shall consist of 10% of the shares of Common Stock covered by such Option and shall become vested on July 21, 2007;
(ii) The second installment shall consist of 10% of the shares of Common Stock covered by such Option and shall become vested on July 21, 2008;
(iii) The third installment shall consist of 10% of the shares of Common Stock covered by such Option and shall become vested on July 21, 2009;
(iv) The fourth installment shall consist of 10% of the shares of Common Stock covered by such Option and shall become vested on July 21, 2010; and
(v) The fifth installment shall consist of 10% of the shares of Common Stock covered by such Option and shall become vested on July 21, 2011.
(b) Subject to Section 3.1(f) and Section 3.3, 50% of the Option shall become fully vested as follows:
(i) An installment of up to 2.5% of the shares of Common Stock covered by the Option shall become vested on, or within 120 days following, March 31 of each fiscal year 2007 through 2011, in each case as determined by the Committee in its sole discretion as follows:
(A) with respect to the fiscal year ending March 31, 2007, if the Debt Repayment for such fiscal year equals or exceeds the Debt Repayment Target for such fiscal year, then 2.5% of the shares of Common Stock covered by the Option shall become vested;
(B) with respect to the fiscal year ending March 31, 2008:
(1) if the Debt Repayment for such fiscal year equals or exceeds 95%, but is less than 100%, of the Debt Repayment Target for such fiscal year, then 1.875% of the shares of Common Stock covered by the Option shall become vested; or
(2) if the Debt Repayment for such fiscal year equals or exceeds the Debt Repayment Target for such fiscal year, then 2.5% of the shares of Common Stock covered by the Option shall become vested;
(C) with respect to each fiscal year ending March 31, 2009, 2010 and 2011:
(1) if the Debt Repayment for any such fiscal year equals or exceeds 90%, but is less than 95%, of the Debt Repayment Target for such fiscal year, then 1.25% of the shares of Common Stock covered by the Option shall become vested; or
(2) if the Debt Repayment for any such fiscal year equals or exceeds 95%, but is less than 100%, of the Debt Repayment Target for such fiscal year, then 1.875% of the shares of Common Stock covered by the Option shall become vested; or
(3) if the Debt Repayment for any such fiscal year equals or exceeds the Debt Repayment Target for such fiscal year, then 2.5% of the shares of Common Stock covered by the Option shall become vested.
(ii) An installment of up to 2.5% of the shares of Common Stock covered by the Option shall become vested on, or within 120 days following, March 31 of each fiscal year 2007 through 2011 as determined by the Committee in its sole discretion as follows:
(A) with respect to the fiscal year ending March 31, 2007, if the Cumulative Debt Repayment for such fiscal year equals or exceeds the Cumulative Debt Repayment Target for such fiscal year, then 2.5% of the shares of Common Stock covered by the Option shall become vested;
(B) with respect to the fiscal year ending March 31, 2008:
(1) if the Cumulative Debt Repayment for such fiscal year equals or exceeds 95%, but is less than 100%, of the Cumulative Debt Repayment Target for such fiscal year, then 1.875% of the shares of Common Stock covered by the Option shall become vested; or
(2) if the Cumulative Debt Repayment for such fiscal year equals or exceeds the Cumulative Debt Repayment Target for such fiscal year, then 2.5% of the shares of Common Stock covered by the Option shall become vested;
(C) with respect to each fiscal year ending March 31, 2009, 2010 and 2011:
(1) if the Cumulative Debt Repayment for such fiscal year equals or exceeds 90%, but is less than 95%, of the Cumulative Debt Repayment Target for such fiscal year, then 1.25% of the shares of Common Stock covered by the Option shall become vested; or
(2) if the Cumulative Debt Repayment for such fiscal year equals or exceeds 95%, but is less than 100%, of the Cumulative Debt Repayment Target for such fiscal year, then 1.875% of the shares of Common Stock covered by the Option shall become vested; or
(3) if the Cumulative Debt Repayment for such fiscal year equals or exceeds the Cumulative Debt Repayment Target for such fiscal year, then 2.5% of the shares of Common Stock covered by the Option shall become vested.
(iii) If the Cumulative Debt Repayment as of the end of any fiscal year 2007 through 2011 is less than the Cumulative Debt Repayment Target through the end of such fiscal year, that portion of the Option that was subject to accelerated vesting pursuant to Section 3.1(b)(i) and 3.1(b)(ii), but which did not become vested pursuant to Sections 3.1(b)(i)(A), (B) or (C) or 3.1(b)(ii)(A), (B) or (C), with respect to such fiscal year, subject to Section 3.2 and 3.4, shall become vested, as determined by the Committee, on, or within 120 days following, the last day of the first fiscal year in which the Cumulative Debt Repayment equals or exceeds the Cumulative Debt Repayment Target for such fiscal year.
(iv) An installment of up to 2.5% of the shares of Common Stock covered by the Option shall become vested on, or within 120 days following, March 31 of each fiscal year 2007 through 2011 as determined by the Committee in its sole discretion as follows:
(A) with respect to the fiscal year ending March 31, 2007, if EBITDA for such fiscal year equals or exceeds the EBITDA Target for such fiscal year, then 2.5% of the shares of Common Stock covered by the Option shall become vested;
(B) with respect to the fiscal year ending March 31, 2008:
(1) if EBITDA for such fiscal year equals or exceeds 95%, but is less than 100%, of the EBITDA Target for such fiscal year, then 1.875% of the shares of Common Stock covered by the Option shall become vested; or
(2) if EBITDA for such fiscal year equals or exceeds the EBITDA Target for such fiscal year, then 2.5% of the shares of Common Stock covered by the Option shall become vested;
(C) with respect to each fiscal year ending March 31, 2009, 2010 and 2011:
(1) if EBITDA for any such fiscal year equals or exceeds 90%, but is less than 95%, of the EBITDA Target for such fiscal year, then 1.25% of the shares of Common Stock covered by the Option shall become vested; or
(2) if EBITDA for any such fiscal year equals or exceeds 95%, but is less than 100%, of the EBITDA Target for such fiscal year, then 1.875% of the shares of Common Stock covered by the Option shall become vested; or
(3) if EBITDA for any such fiscal year equals or exceeds the EBITDA Target for such fiscal year, then 2.5% of the shares of Common Stock covered by the Option shall become vested.
(v) An installment of up to 2.5% of the shares of Common Stock covered by the Option shall become vested on, or within 120 days following, March 31 of each fiscal year 2007 through 2011 as determined by the Committee in its sole discretion as follows:
(A) with respect to the fiscal year ending March 31, 2007, if Cumulative EBITDA for such fiscal year equals or exceeds the Cumulative EBITDA Target for such fiscal year, then 2.5% of the shares of Common Stock covered by the Option shall become vested;
(B) with respect to the fiscal year ending March 31, 2008:
(1) if Cumulative EBITDA for such fiscal year equals or exceeds 95%, but is less than 100%, of the Cumulative EBITDA Target for such fiscal year, then 1.875% of the shares of Common Stock covered by the Option shall become vested; or
(2) if Cumulative EBITDA for such fiscal year equals or exceeds the Cumulative EBITDA Target for such fiscal year, then 2.5% of the shares of Common Stock covered by the Option shall become vested;
(C) with respect to each fiscal year ending March 31, 2009, 2010 and 2011:
(1) if Cumulative EBITDA for such fiscal year equals or exceeds 90%, but is less than 95%, of the Cumulative EBITDA Target for such fiscal year, then 1.25% of the shares of Common Stock covered by the Option shall become vested; or
(2) if Cumulative EBITDA for such fiscal year equals or exceeds 95%, but is less than 100%, of the Cumulative EBITDA Target for such fiscal year, then 1.875% of the shares of Common Stock covered by the Option shall become vested; or
(3) if Cumulative EBITDA for such fiscal year equals or exceeds the Cumulative EBITDA Target for such fiscal year, then 2.5% of the shares of Common Stock covered by the Option shall become vested.
(vi) if Cumulative EBITDA as of the end of any fiscal year 2007 through 2011 is less than the Cumulative EBITDA Target through the end of such fiscal year, that portion of the Option that was subject to accelerated vesting pursuant to Sections 3.1(b)(iv) and 3.1(b)(v), but which did not become vested pursuant to Sections 3.1(b)(iv)(A), (B) or (C) or 3.1(b)(v)(A), (B) or (C), with respect to such fiscal year, subject to Sections 3.2 and 3.4, shall become vested, as determined by the Committee, on, or within 120 days following, the last day of the first fiscal year in which Cumulative EBITDA equals or exceeds the Cumulative EBITDA Target for such fiscal year.
(c) Notwithstanding the foregoing provisions of this Section 3.1, but subject to Section 3.1(f), upon the occurrence of the first Liquidity Event, the following shall immediately prior to the effective date of such Liquidity Event become vested in full:
(i) that portion of the Option that remains eligible to become vested pursuant to Section 3.1(a);
(ii) at the election and sole discretion of the Committee, that portion of the Option that has not, as of such Liquidity Event, become eligible to become vested pursuant to Sections 3.1(b)(i), 3.1(b)(ii), 3.1(b)(iv) or 3.1(b)(v);
(iii) that portion of the Option that remains eligible to become vested pursuant to Section 3.1(b), but only if the Principal Stockholder(s) CAGR as of the Liquidity Event equals or exceeds 25%.
(d) The Committee shall make the determination as to whether the respective Debt Repayment, Cumulative Debt Repayment, EBITDA, and Cumulative EBITDA Targets have been met, and shall determine the extent, if any, to which the Option as become vested, on any such date as the Committee in its sole discretion shall determine; provided , however , that with respect to each fiscal year such date shall not be later than the 120 th day following March 31 of such fiscal year.
(e) Notwithstanding anything to the contrary in Section 3.3, if the Consulting Agreement is terminated (i) by the Optionee for Good Reason or (ii) by the Company or any of its Subsidiaries without Cause and not as a result of the failure of the Optionee substantially to satisfy reasonable performance standards (taking into account macroeconomic factors affecting the Company), the Option shall become fully exercisable as of the termination of the Consulting Agreement.
(f) After giving effect to Section 3.1(e) and except with respect to any portion of the Option that as of the termination of the Consulting Agreement is eligible to vest pursuant to Section 3.1(b) for the fiscal year preceding the fiscal year in which such termination occurs, no portion of the Option which is unvested upon the termination of the Consulting Agreement for any reason shall thereafter become vested.
Section 3.2 Duration of Exercisability
The installments provided for in Section 3.1 are cumulative. Each such installment which becomes vested pursuant to Section 3.1 shall remain vested and may be exercised until the Option expires pursuant to Section 3.3.
Section 3.3 Expiration of Option
The Option may not be exercised to any extent by any Person after the first to occur of any of the following events:
(a) The expiration of ten years from the date the Option was granted;
(b) If the Consulting Agreement is terminated for any reason other than (i) by the Company or any Subsidiary of the Company for Cause, (ii) on account of the death or disability (as defined in Section 22(e)(3) of the Code) of the Optionee, (iii) by the Optionee for Good Reason or (iv) by the Company or any Subsidiary of the Company without Cause and not as a result of the failure of the Optionee substantially to satisfy reasonable performance standards (taking into account macroeconomic factors affecting the Company and its Subsidiaries), the later of (x) the ninetieth day following the date of the termination of the Consulting Agreement or (y) to the extent that, as of the termination of the Consulting Agreement, any portion of the Option remains eligible to vest pursuant to Section 3.1(b) for the fiscal year preceding the fiscal year in which the termination of the Consulting Agreement occurs, the thirtieth day following the date of the Committee’s determination under Section 3.1(d) for such fiscal year;
(c) The expiration of ten years from the date the Option was granted in the event of the termination of the Consulting Agreement (i) by the Optionee for Good Reason or (ii) by the Company or any Subsidiary of the Company without Cause and not as a result of the failure of the Optionee substantially to satisfy reasonable performance standards (taking into account macroeconomic factors affecting the Company);
(d) Except as the Committee may otherwise decide, the date of the termination of the Consulting Agreement by the Company or any Subsidiary of the Company for Cause;
(e) The expiration of 12 months from the date of the termination of the Consulting Agreement on account of the Optionee’s death or disability (within the meaning of Section 22(e)(3) of the Code); or
(f) The occurrence of a Liquidity Event, provided that any portion of the Option that is vested as of the occurrence of the Liquidity Event may be exercised concurrently therewith.
Section 3.4 Partial Exercise
Any vested portion of the Option or the entire Option, if then wholly vested, may be exercised in whole or in part at any time prior to the time when the Option or portion thereof expires; provided , however , that each partial exercise shall be for not less than 100 shares of Common Stock and shall be for whole shares of Common Stock only.
Section 3.5 Exercise of Option
The exercise of the Option shall be governed by the terms of this Agreement and the terms of the Plan, including without limitation, the provisions of Article V of the Plan, which, among other things, require that the Optionee deliver an executed copy of a Joinder to the Stockholders’ Agreement designated by the Company (in the form attached to such Stockholders’ Agreement), which for this purpose shall be the Cypress Stockholders’ Agreement, to the Secretary as a condition to the exercise of the Option.
ARTICLE IV
RESTRICTIVE COVENANTS
Section 4.1 Non-Competition
During the term of the Consulting Agreement and for a period of two years thereafter, each of the Optionee, Industrial and Cypress shall not, without the prior written consent of the Company, which consent may be granted or withheld by the Company in its sole discretion, directly or indirectly engage in, consult, have any equity interest in, or manage or operate any person, firm, corporation, partnership or business (whether as director, officer, employee, agent, representative, partner, security holder, consultant or otherwise) that engages in any business which competes with any material business of the Company or any of its Subsidiaries anywhere in the world (as conducted during the term of the Consulting Agreement); provided, however, that (A) the Optionee, Industrial and Cypress, and any of their Affiliates, shall be permitted to acquire stock or membership interests in such an entity provided the entity is publicly traded and the acquired interest is not more than five percent (5%) of the outstanding shares or membership interests of the entity; and (B) the Optionee, Industrial and Cypress shall be permitted to hold stock or membership interests in companies and businesses in which the Optionee, Industrial, Cypress or other entities affiliated with the Optionee hold stock or membership interests immediately prior to the Closing Date (including, without limitation, stock in Colfax, Inc. and related entities), or invested prior to the date of this Agreement.
Section 4.2 Customer Non-Solicitation
During the term of the Consulting Agreement and for a period of two years thereafter, each of the Optionee, Industrial and Cypress agrees not to, and will not permit any of their respective Affiliates to, directly or indirectly, induce or attempt to induce any customer, supplier, licensee or other business relation of the Company or any of its Subsidiaries to cease doing
business with the Company or any of its Subsidiaries, or in any way interfere with the relationship between any such customer, supplier, licensee or business relation, on the one hand, and the Company or any of its Subsidiaries, on the other hand.
Section 4.3 Non-Solicitation/Non-Hiring of Employees
During the term of the Consulting Agreement and for a period of two years thereafter, each of the Optionee, Industrial and Cypress agrees not to, and will not permit any of their respective Affiliates to, directly or indirectly, hire, solicit or accept, if offered, with or without solicitation, on the Optionee’s, Industrial’s or Cypress’ behalf or on behalf of any other person, the services of any person who is (or was at any time in the preceding six months) an employee of the Company or any of its Subsidiaries, nor solicit any of the Company’s or any of its Subsidiaries’ employees to terminate employment with the Company or any of its Subsidiaries (it being understood that the foregoing shall not apply to employees solicited or hired without the Optionee’s knowledge and shall not preclude Cypress, Industrial or other companies or businesses associated with the Optionee from soliciting employees generally though newspaper or other mass media advertising).
Section 4.4 Non-Disparagement
During the term of the Consulting Agreement and thereafter in perpetuity, each of the Optionee, Industrial and Cypress shall not knowingly disparage, criticize, or otherwise make derogatory statements regarding the Company or its Affiliates, Subsidiaries, successors, directors, officers, customers or suppliers. During the term of the Consulting Agreement and thereafter in perpetuity, none of the Company, Rexnord Corporation, nor any of their respective officers shall knowingly disparage, criticize, or otherwise make derogatory statements regarding any of the Optionee, Industrial or Cypress. The restrictions of this Section 4.4 shall not apply to any statements that are made truthfully in response to a subpoena or other compulsory legal process.
Section 4.5 Non-Disclosure of Confidential Information
During the term of the Consulting Agreement and thereafter in perpetuity, each of the Optionee, Industrial and Cypress shall maintain in confidence and shall not directly, indirectly or otherwise, use, disseminate, disclose or publish, or use for their respective benefit or the benefit of any Person, any confidential or proprietary information or trade secrets of or relating to the Company or any of its Subsidiaries or Affiliates, including, without limitation, information with respect to the Company’s or any of its Subsidiaries’ operations, processes, products, inventions, business practices, finances, principals, vendors, suppliers, customers, potential customers, marketing methods, costs, prices, contractual relationships, regulatory status, compensation paid to employees or other terms of employment, or deliver to any Person any document, record, notebook, computer program or similar repository of or containing any such confidential or proprietary information or trade secrets. Upon the termination of the Consulting Agreement for any reason, each of the Optionee, Industrial and Cypress shall promptly deliver to the Company all correspondence, drawings, manuals, letters, notes, notebooks, reports, programs, plans, proposals, financial documents, or any other documents concerning the Company’s or any of its Subsidiaries’ customers, business plans, marketing strategies, products or processes. Each of the
Optionee, Industrial and Cypress may respond to a lawful and valid subpoena or other legal process but shall give the Company the earliest possible notice thereof, shall, as much in advance of the return date as possible, make available to the Company and its counsel the documents and other information sought and shall assist such counsel in resisting or otherwise responding to such process.
Section 4.6 Injunctive Relief
Each of the Optionee, Industrial and Cypress hereby acknowledges that a breach of the covenants contained in this Article IV will cause irreparable damage to the Company and its goodwill, the exact amount of which will be difficult or impossible to ascertain, and that the remedies at law for any such breach will be inadequate. Accordingly, each of the Optionee, Industrial and Cypress hereby agrees that, in the event of a breach of any of the covenants contained in this Article IV, in addition to any other remedy which may be available at law or in equity, the Company shall be entitled to specific performance and injunctive relief. The Company hereby acknowledges that a breach of the Company’s covenant contained in Section 4.4 will cause irreparable damage to the Optionee, Cypress, Industrial and their respective goodwill, the exact amount of which will be difficult or impossible to ascertain, and that the remedies at law for any such breach will be inadequate. Accordingly, the Company hereby agrees that, in the event of a breach of the Company’s covenant contained in Section 4.4, in addition to any other remedy which may be available at law or in equity, the Optionee, Cypress and Industrial shall be entitled to specific performance and injunctive relief.
ARTICLE V
OTHER PROVISIONS
Section 5.1 Not a Contract of Consultancy
Nothing in this Agreement or in the Plan shall (i) confer upon the Optionee any right to continue in the service of the Company or any of its Subsidiaries, or (ii) interfere with or restrict in any way the rights of the Company or its Subsidiaries, which are hereby expressly reserved, to discharge the Optionee at any time for any reason whatsoever, with or without Cause, except as otherwise provided in the Consulting Agreement or any other agreement in effect from time to time.
Section 5.2 Shares Subject to Plan and Stockholder Agreement
The Optionee acknowledges that any shares of Common Stock acquired upon exercise of the Option are subject to the terms of the Plan and the Cypress Stockholders’ Agreement, including without limitation, the restrictions set forth in Section 5.6 of the Plan.
Section 5.3 Construction
This Agreement shall be administered, interpreted and enforced under the laws of the state of New York, without regard to conflicts of law provisions that would give effect to the laws of another jurisdiction.
Section 5.4 Conformity to Securities Laws
The Optionee acknowledges that the Plan is intended to conform to the extent necessary with all provisions of the Securities Act and the Exchange Act and any and all regulations and rules promulgated thereunder by the Securities and Exchange Commission, including without limitation, Rule 16b-3 of the Exchange Act. Notwithstanding anything herein to the contrary, the Plan shall be administered, and the Option is granted and may be exercised, only in such a manner as to conform to such laws, rules and regulations. To the extent permitted by applicable law, the Plan and this Agreement shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.
Section 5.5 280G Compliance
In the event that the Optionee or Industrial becomes entitled to payments or benefits under this Agreement and/or any other payments or benefits by reason of a “change of control” as defined in Section 280G of the Code and regulations thereunder (collectively, the “ Payments ”), and any such Payment constitutes a “parachute payment” as defined in Section 280G of the Code and regulations thereunder, the Company and the Optionee or Industrial, as applicable, shall use their respective reasonable best efforts to obtain stockholder approval of such Payments in the manner provided in Section 280G(b)(5)(B) of the Code and regulations thereunder; provided , however , that nothing in this Section 5.5 shall be interpreted to require the Optionee or Industrial to waive any of the Optionee’s or Industrial’s rights under the Option or otherwise.
Section 5.6 Adjustments in Debt Repayment and EBITDA Targets
The Debt Repayment and EBITDA Targets (including the Cumulative Debt Repayment and Cumulative EBITDA Targets) specified in Appendix A are based upon certain revenue and expense assumptions about the future business of the Company as of the date the Option is granted. Accordingly, in the event that, after such date, the Committee determines, in its sole discretion, that any acquisition or disposition of any business by the Company or any dividend or other distribution (whether in the form of cash, Common Stock, other securities, or other property), recapitalization, reclassification, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Common Stock or other securities of the Company, issuance of warrants or other rights to purchase Common Stock or other securities of the Company, any unusual or nonrecurring transactions or events affecting the Company, or the financial statements of the Company, or change in applicable laws, regulations, or accounting principles occurs such that an adjustment is determined by the Committee to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to the Option, then the Committee shall, in good faith and in such manner as it may deem equitable, adjust the financial targets set forth on Appendix A to reflect the projected effect of such transaction(s) or event(s) on Debt Repayment and/or EBITDA, subject to Section 7.1 of the Plan.
Section 5.7 Entire Agreement
The parties hereto acknowledge that this Agreement and the Plan set forth the entire agreement and understanding of the parties and superseded all prior written or oral agreements or understandings with respect to the subject matter hereof, except that any provision therein regarding confidentiality or non-competition remain in full force and effect in favor of the Company and its Subsidiaries as if the agreements containing such provisions were not superseded. The obligations imposed by this Agreement are severable and should be construed independently of each other. The invalidity of one provision shall not affect the validity of any other provision. If any provision of this Agreement shall be invalid or unenforceable, in whole or in part, or as applied to any circumstances, under the laws of any jurisdiction which may govern for such purpose, then such provision shall be deemed, to the extent allowed by the laws of such jurisdiction, to be modified or restricted to the extent and in the manner necessary to render the same valid and enforceable, either generally or as applied to such circumstance, or shall be deemed exercised from this Agreement, as the case may require, and this Agreement shall be construed and enforced to the maximum extent permitted by law, as if such provision had been originally incorporated herein as so modified or restricted, or as if such provision had not been originally incorporated herein, as the case may be.
Section 5.8 Amendment
The Board at any time, and from time to time, may amend the terms of this Agreement, provided, however , that the rights of the Optionee shall not be adversely impaired without the Optionee’s written consent. The Company shall provide the Optionee with notice and a copy of any amendment made to this Agreement.
Section 5.9 Arbitration; Waiver of Jury Trial
Any dispute or controversy arising under, out of, or in connection with or in relation to this Agreement or the Plan shall be finally determined and settled by arbitration in New York, New York in accordance with the Commercial Rules of the American Arbitration Association, and judgment upon the award may be entered in any court having jurisdiction. Within 20 days of the conclusion of the arbitration hearing, the arbitrator shall prepare written findings of fact and conclusions of law. It is mutually agreed that the written decision of the arbitrator shall be valid, binding, final and non-appealable; provided, however, that the parties hereto agree that the arbitrator shall not be empowered to award punitive damages against any party to such arbitration. To the extent permitted by law, the arbitrator’s fees and expenses will be borne equally by each party. In the event that an action is brought to enforce the provisions of this Agreement or the Plan pursuant to this Section 5.9, each party shall pay its own attorney’s fees and expenses regardless of whether in the opinion of the court or arbitrator deciding such action there is a prevailing party. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL, INCLUDING TRIAL BY JURY, IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THE PLAN OR THIS AGREEMENT.
Section 5.10 Notices
All notices, requests, consents and other communications hereunder to any party hereto shall be deemed to be sufficient if contained in a written instrument and shall be deemed to have been duly given when delivered in person, by telecopy, by nationally-recognized overnight courier, or by first class registered or certified mail, postage prepaid, addressed to such party at the address set forth below or such other address as may hereafter be designated in writing by the addressee to the addressor:
(i) if to the Company, to:
Rexnord
Holdings, Inc.
4701 Greenfield Avenue
Milwaukee, WI 53214
Attention: Patty Whaley
with copies to:
Rexnord Holdings, Inc.
c/o Apollo Management, L.P.
10250 Constellation Blvd, Suite 2900
Los Angeles, CA 90067
Fax: (310) 843-1933
Attention: Larry Berg
and
Rexnord
Holdings, Inc.
c/o Apollo Management, L.P.
9 West 57
th
Street, 43
rd
Floor
New York, NY 10019
Fax: (212) 515-3288
Attention: Steven Martinez
and
O’Melveny &
Myers LLP
Times Square Tower
7 Times Square
New York, NY 10036
Fax: (212) 326-2061
Attention: John M. Scott, Esq.
(ii) if to the Optionee, Industrial or Cypress, to:
Cypress
Group, LLC
Attention: George M. Sherman
with a copy to:
King &
Spalding LLP
1700 Pennsylvania Avenue, NW
Washington, D.C. 2006
Fax: (202) 626-3737
Attention: Glenn C. Campbell
Section 5.11 Counterparts
This Agreement may be executed in several counterparts, including via facsimile transmission, each of which shall be deemed to be an original, but all of which together will constitute one and the same Agreement.
[Signature Page to Follow]
IN WITNESS WHEREOF , this Agreement has been executed and delivered by the parties hereto as of the day, month and year first set forth above.
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Cypress Group, LLC |
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Exhibit 10.12
[ Non-Employee Director Form]
NON-QUALIFIED STOCK OPTION AGREEMENT
OF
REXNORD HOLDINGS, INC.
THIS AGREEMENT (this “ Agreement ”), dated as of [ ] is made by and between Rexnord Holdings, Inc., a Delaware corporation (the “ Company ”), and [ ], a non-employee director of the Company (as defined herein) (the “ Optionee ”)
WHEREAS , the Company wishes to carry out the 2006 Stock Option Plan of Rexnord Holdings, Inc. (as may be amended from time to time, the “ Plan ”), the terms of which are hereby incorporated by reference and made a part of this Agreement; and
WHEREAS , in consideration for the Optionee’s agreement to serve as a member of the Board, the Board has determined that it would be to the advantage and best interest of the Company and its stockholders to grant the Optionee the Non-Qualified Stock Option to purchase shares of the Company’s common stock, par value $0.01 per share (“ Common Stock ”), provided for herein.
NOW, THEREFORE , in consideration of the mutual covenants herein contained and other good and valuable consideration, receipt and sufficiency of which is hereby acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used in this Agreement and not defined herein shall have the meaning given to such terms in the Plan. The singular pronoun shall include the plural, where the context so indicates.
ARTICLE II
GRANT OF OPTION
Section 2.1 Grant of Option
In consideration of the Optionee’s service as a member of the Board, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, on the date hereof the Company irrevocably grants to the Optionee the Option to purchase any part or all of an aggregate of 4,211 shares of Common Stock upon the terms and conditions set forth in the Plan and this Agreement.
Section 2.2 Option Subject to Plan
The Option granted hereunder is subject to the terms and provisions of the Plan, including without limitation, Article V and Sections 7.1, 7.2, 7.3 and 7.10 thereof.
Section 2.3 Option Price
The purchase price of the shares of Common Stock covered by the Option shall be $47.50 per share (without commission or other charge).
ARTICLE III
EXERCISABILITY
Section 3.1 Exercisability
The Option shall become vested as to 100% of the shares of Common Stock subject thereto on the first anniversary of the date hereof; provided that the Optionee is a member of the Board on such anniversary date.
Section 3.2 Expiration of Option
The Option may not be exercised to any extent by any Person after the first to occur of the following events:
(a) The expiration of ten years from the date the Option was granted; or
(b) The first anniversary of the Optionee’s Termination of Directorship for any reason.
Section 3.3 Partial Exercise
Any portion of the Option or the entire Option may be exercised in whole or in part at any time prior to the time when the Option or portion thereof expires; provided , however , that each partial exercise shall be for not less than 100 shares of Common Stock and shall be for whole shares of Common Stock only.
Section 3.4 Exercise of Option
The exercise of the Option shall be governed by the terms of this Agreement and the terms of the Plan, including without limitation, the provisions of Article V of the Plan, which, among other things, require that the Optionee (or, in the event of the Optionee’s death or disability, the Optionee’s Eligible Representative) deliver an executed copy of a Joinder to the Stockholders’ Agreement designated by the Company (in the form attached to such Stockholders’ Agreement) to the Secretary as a condition to the exercise of the Option.
ARTICLE IV
OTHER PROVISIONS
Section 4.1 Optionee’s Service as a Director
Nothing in this Agreement or in the Plan shall confer upon the Optionee any right to continue in the service of the Company or any of its affiliates (whether as a director or otherwise).
Section 4.2 Shares Subject to Plan and Stockholder Agreement
The Optionee acknowledges that any shares of Common Stock acquired upon exercise of the Option are subject to the terms of the Plan and the Stockholders’ Agreement, including without limitation, the restrictions set forth in Section 5.6 of the Plan.
Section 4.3 Construction
This Agreement shall be administered, interpreted and enforced under the laws of the state of New York, without regard to conflicts of laws provisions that would give effect to the laws of another jurisdiction.
Section 4.4 Conformity to Securities Laws
The Optionee acknowledges that the Plan is intended to conform to the extent necessary with all provisions of the Securities Act and the Exchange Act and any and all regulations and rules promulgated thereunder by the Securities and Exchange Commission, including without limitation, Rule 16b-3. Notwithstanding anything herein to the contrary, the Plan shall be administered, and the Option is granted and may be exercised, only in such a manner as to conform to such laws, rules and regulations. To the extent permitted by applicable law, the Plan and this Agreement shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.
Section 4.5 Entire Agreement
The parties hereto acknowledge that this Agreement and the Plan set forth the entire agreement and understanding of the parties and supersede all prior written or oral agreements or understandings with respect to the subject matter hereof. The obligations imposed by this Agreement are severable and should be construed independently of each other. The invalidity of one provision shall not affect the validity of any other provision. If any provision of this Agreement shall be invalid or unenforceable, in whole or in part, or as applied to any circumstances, under the laws of any jurisdiction which may govern for such purpose, then such provision shall be deemed, to the extent allowed by the laws of such jurisdiction, to be modified or restricted to the extent and in the manner necessary to render the same valid and enforceable, either generally or as applied to such circumstance, or shall be deemed exercised from this Agreement, as the case may require, and this Agreement shall be construed and enforced to the maximum extent permitted by law, as if such provision had been originally incorporated herein as so modified or restricted, or as if such provision had not been originally incorporated herein, as the case may be.
Section 4.6 Amendment
The Board at any time, and from time to time, may amend the terms of this Agreement, provided, however , that the rights of the Optionee shall not be adversely impaired without the Optionee’s written consent. The Company shall provide the Optionee with notice and a copy of any amendment made to this Agreement
Section 4.7 Arbitration; Waiver of Jury Trial
Any dispute or controversy arising under, out of, or in connection with or in relation to this Agreement or the Plan shall be finally determined and settled by arbitration in New York, New York in accordance with the Commercial Rules of the American Arbitration Association, and judgment upon the award may be entered in any court having jurisdiction. Within 20 days of the conclusion of the arbitration hearing, the arbitrator shall prepare written findings of fact and conclusions of law. It is mutually agreed that the written decision of the arbitrator shall be valid, binding, final and non-appealable; provided, however, that the parties hereto agree that the arbitrator shall not be empowered to award punitive damages against any party to such arbitration. To the extent permitted by law, the arbitrator’s fees and expenses will be borne equally by each party. In the event that an action is brought to enforce the provisions of this Agreement or the Plan pursuant to this Section 4.7, each party shall pay its own attorney’s fees and expenses regardless of whether in the opinion of the court or arbitrator deciding such action there is a prevailing party. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL, INCLUDING TRIAL BY JURY, IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THE PLAN OR THIS AGREEMENT.
Section 4.8 Notices
All notices, requests, consents and other communications hereunder to any party hereto shall be deemed to be sufficient if contained in a written instrument and shall be deemed to have been duly given when delivered in person, by telecopy, by nationally-recognized overnight courier, or by first class registered or certified mail, postage prepaid, addressed to such party at the address set forth below or such other address as may hereafter be designated in writing by the addressee to the addressor:
(i) if to the Company, to:
Rexnord
Holdings, Inc.
4701 Greenfield Avenue
Milwaukee, WI 53214
Attention: Patty Whaley
with copies to:
Rexnord Holdings, Inc.
c/o Apollo Management, L.P.
10250 Constellation Blvd, Suite 2900
Los Angeles, CA 90067
Fax: (310) 843-1933
Attention: Larry Berg
and
Rexnord
Holdings, Inc.
c/o Apollo Management, L.P.
9 West 57
th
Street, 43
rd
Floor
New York, NY 10019
Fax: (212) 515-3288
Attention: Steven Martinez
and
O’Melveny &
Myers LLP
Times Square Tower
7 Times Square
New York, NY 10036
Fax: (212) 326-2061
Attention: John M. Scott, Esq.
(ii) if to the Optionee, to the Optionee’s home address on file with the Company.
Section 4.9 Counterparts
This Agreement may be executed in several counterparts, including via facsimile transmission, each of which shall be deemed to be an original, but all of which together will constitute one and the same Agreement.
[Signature Page to Follow]
IN WITNESS WHEREOF , this Agreement has been executed and delivered by the parties hereto as of the day, month and year first set forth above.
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