<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 7, 1998
REGISTRATION NO. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
TELECOMMUNICATIONS TECHNIQUES CO., LLC
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 3825 04-225-8582
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL CLASSIFICATION IDENTIFICATION NO.)
INCORPORATION OR CODE NUMBERS)
ORGANIZATION) ---------------
20400 OBSERVATION DRIVE
GERMANTOWN, MARYLAND 20876-4023
(301) 353-1550
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
DYNATECH CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MASSACHUSETTS 3825 04-225-8582
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL CLASSIFICATION IDENTIFICATION NO.)
INCORPORATION OR CODE NUMBERS)
ORGANIZATION) ---------------
3 NEW ENGLAND EXECUTIVE PARK
BURLINGTON, MA 01803-5087
(781) 272-6100
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
ALLAN M. KLINE
VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND TREASURER
DYNATECH CORPORATION
3 NEW ENGLAND EXECUTIVE PARK
BURLINGTON, MA 01803-5087
(781) 272-6100
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANTS' AGENT FOR SERVICE)
WITH COPIES TO:
MARK V.B. TREMALLO, ESQ. DAVID A. BRITTENHAM, ESQ.
DYNATECH CORPORATION DEBEVOISE & PLIMPTON
3 NEW ENGLAND EXECUTIVE PARK 875 THIRD AVENUE
BURLINGTON, MA 01803-5087 NEW YORK, NEW YORK 10022
(781) 272-6100 (212) 909-6347
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
If this form is filed to register additional securities of an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
---------------
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED
TITLE OF EACH CLASS AMOUNT TO BE OFFERING MAXIMUM AGGREGATE AMOUNT OF
OF SECURITIES TO BE REGISTERED REGISTERED PRICE PER SECURITY(1) OFFERING PRICE(1) REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
9 3/4% Senior
Subordinated Notes Due
2008................. $275,000,000 100% $275,000,000 $81,125.00
- -----------------------------------------------------------------------------------------------------
Guarantee of 9 3/4%
Senior Subordinated
Notes Due 2008....... $275,000,000 N/A N/A N/A(2)
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) Determined solely for the purpose of calculating the registration fee in
accordance with Rule 457 promulgated under the Securities Act of 1933, as
amended.
(2) Pursuant to Rule 457(n), no separate fee is required.
---------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE
COMMISSION (THE "COMMISSION"), ACTING PURSUANT TO SAID SECTION 8(A), MAY
DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED AUGUST , 1998
PROSPECTUS
TELECOMMUNICATIONS TECHNIQUES CO., LLC
(TO BE RENAMED DYNATECH LLC)
OFFER TO EXCHANGE 9 3/4% SENIOR SUBORDINATED NOTES DUE 2008
FOR ANY AND ALL EXISTING NOTES (AS DEFINED BELOW)
PAYMENT OF PRINCIPAL AND INTEREST GUARANTEED
BY DYNATECH CORPORATION
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME ON , 1998, UNLESS EXTENDED
AS DESCRIBED HEREIN, WITHDRAWAL RIGHTS WITH RESPECT TO THE
EXCHANGE OFFER ARE EXPECTED TO EXPIRE
AT THE EXPIRATION OF THE EXCHANGE OFFER.
----------
Telecommunications Techniques Co., LLC, a Delaware limited liability company
("TTC"), hereby offers (the "Exchange Offer"), upon the terms and subject to
the conditions set forth in this Prospectus (the "Prospectus") and the
accompanying Letter of Transmittal (the "Letter of Transmittal") to exchange up
to $275,000,000 aggregate principal amount of its 9 3/4% Senior Subordinated
Notes Due 2008 (the "New Notes"), which have been registered under the
Securities Act of 1933, as amended (the "Securities Act") pursuant to a
Registration Statement of which this Prospectus is a part, for a like principal
amount of its issued and outstanding 9 3/4% Senior Subordinated Notes Due 2008
(the "Existing Notes" and together with the New Notes, the "Notes"). The New
Notes will be issued in denominations of $1,000. The Existing Notes were
originally issued and sold by Dynatech Corporation, TTC's corporate parent
("Dynatech" or "Holding" and, together with its subsidiaries, the "Company"),
and TTC Merger Co. LLC, a Delaware limited liability company ("TTC Merger
Co."), which merged into TTC, in a transaction that was exempt from
registration under the Securities Act (the "Offering") and resold in reliance
on, and subject to the restrictions imposed pursuant to, Rule 144A under the
Securities Act ("Rule 144A") and other applicable exemptions from the
registration requirements of such Act. Immediately following the consummation
of the Offering, Holding assigned to TTC, its wholly-owned subsidiary, and TTC
assumed, all of Holding's obligations in respect of the Existing Notes and TTC
became the primary obligor on the Existing Notes. The terms of the New Notes
are identical in all material respects to the terms of the Existing Notes for
which they may be exchanged pursuant to the Exchange Offer, except that (i) the
New Notes will have been registered under the Securities Act, and thus will not
bear restrictive legends restricting their transfer pursuant to the Securities
Act and will not contain certain provisions providing for an increase in the
interest rate on the Existing Notes under certain circumstances described in
the Registration Rights Agreement (as defined), which provisions will terminate
upon the consummation of the Exchange Offer and (ii) holders of New Notes will
not be entitled to certain registration rights that holders of Existing Notes
have under the Registration Rights Agreement, except under limited
circumstances.
Interest on each of the New Notes issued pursuant to the Exchange Offer will
accrue from the last interest payment date to which interest was paid or duly
provided for on the Existing Notes surrendered in exchange therefor or, if no
interest has been paid or duly provided for, from the original date of issuance
of the Existing Notes.
Interest on the Notes will be payable semi-annually on May 15 and November 15
of each year, commencing on November 15, 1998. The Notes will mature on May 15,
2008. Except as described below, TTC may not redeem the Notes prior to May 15,
2003. On or after such date, TTC may redeem the Notes, in whole or in part, at
any time at the redemption prices set forth herein together with accrued and
unpaid interest, if any, to the date of redemption. In addition, at any time
and from time to time on or prior to May 15, 2001, TTC may redeem an aggregate
principal amount equal to up to 35% of the original aggregate principal amount
of the Notes with the proceeds of one or more Equity Offerings (as defined) at
a redemption price equal to 109.75% of the principal amount redeemed, together
with accrued and unpaid interest, if any, to the date of redemption, provided
that an aggregate principal amount of the Notes equal to at least 65% of the
original aggregate principal amount of the Notes remains outstanding after each
such redemption. The Notes are not subject to any sinking fund requirement.
Upon the occurrence of a Change of Control (as defined), (i) TTC will have the
option prior to May 15, 2003, to redeem the Notes, in whole, at a redemption
price equal to 100% of the principal amount thereof plus the Applicable Premium
(as defined), together with accrued and unpaid interest, if any, to the date of
redemption, and (ii) if TTC does not redeem the Notes, the holders of the Notes
will have the right, subject to certain exceptions, to require TTC to make an
offer to repurchase the Notes at a price equal to 101% of the principal amount
thereof, together with accrued and unpaid interest, if any, to the date of
repurchase. See "Description of Notes."
The Notes are guaranteed on a senior subordinated basis by Holding. The Notes
are unsecured senior subordinated obligations of TTC and are subordinated in
right of payment to all existing and future Senior Indebtedness (as defined
herein) of TTC, including borrowings under TTC's Senior Secured Credit Facility
(the "Senior Credit Facility"), and are effectively subordinated to all
obligations of the subsidiaries of TTC. The Notes rank pari passu in right of
payment with all other existing and future senior subordinated indebtedness of
TTC and rank senior to all other Subordinated Indebtedness (as defined) of TTC.
The indenture governing the terms of the Notes (the "Indenture") permits the
Company to incur additional indebtedness, including Senior Indebtedness,
subject to certain limitations. At May 31, 1998, the Company had $300.0 million
of Senior Indebtedness outstanding and Indebtedness of $575.2 million
(excluding a maximum $3.0 million guarantee).
The Exchange Offer is not conditioned upon any minimum number of Existing
Notes being tendered for exchange. The Exchange Offer will expire at 5:00 p.m.,
New York City time, on , 1998, unless extended by TTC (such date as it
may be so extended, the "Expiration Date"). As soon as practicable after the
Expiration Date, TTC will accept all Existing Notes properly tendered and not
validly withdrawn for Exchange (the "Exchange Date") and deliver or cause the
delivery of New Notes in exchange therefor. Existing Notes tendered pursuant to
the Exchange Offer may be withdrawn at any time prior to 5:00 p.m. New York
City time on the Expiration Date; otherwise such tenders are irrevocable. New
Notes to be issued in exchange for validly tendered Existing Notes will be
delivered through the facilities of The Depository Trust Company by the
Exchange Agent (as defined herein).
SEE "RISK FACTORS" BEGINNING ON PAGE 13 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS IN EVALUATING AN INVESTMENT
IN THE NEW NOTES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------
THE DATE OF THIS PROSPECTUS IS , 1998.
<PAGE>
The Existing Notes were issued and sold on May 21, 1998 in a transaction not
registered under the Securities Act in reliance upon an exemption from the
registration requirements thereof. In general, the Existing Notes may not be
offered or sold unless registered under the Securities Act, except pursuant to
an exemption from, or in a transaction not subject to, the Securities Act. The
New Notes are being offered hereby in order to satisfy certain obligations of
Dynatech and TTC contained in the Registration Rights Agreement. Based on
interpretations by the Staff of the Commission as set forth in no-action
letters issued to third parties, the Company believes that the New Notes
issued pursuant to the Exchange Offer may be offered for resale, resold or
otherwise transferred by any holder thereof (other than any such holder that
is a broker-dealer or an "affiliate" of the Company within the meaning of Rule
405 under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that such
holder represents to the Company that (i) any New Notes received by such
holder will be acquired in the ordinary course of business, (ii) such holder
will have no arrangements or understanding with any person to participate in
the distribution of the Securities or the New Notes within the meaning of the
Securities Act, (iii) such holder is not an "affiliate," as defined in Rule
405 of the Securities Act, of the Company or if it is an affiliate, such
holder will comply with the registration and prospectus delivery requirements
of the Securities Act to the extent applicable, (iv) if such holder is not a
broker-dealer, that it is not engaged in, and does not intend to engage in,
the distribution of the New Notes, (v) if such holder is a broker-dealer, that
it will receive New Notes for its own account in exchange for Existing Notes
that were acquired as a result of market-making activities or other trading
activities and that it will deliver a prospectus in connection with any resale
of such New Notes, and (vi) that it is not acting on behalf of any person who
could not truthfully make the foregoing representations. If a holder of
Existing Notes is unable to make the foregoing representations, such holder
may not rely on the applicable interpretations of the Staff of the Commission
as set forth in such no-action letters, and must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with
any secondary resale transaction. In addition, since the Company has not
sought, and does not intend to seek, its own non-action letter, there can be
no assurance that the staff of the Commission would make a similar
determination with respect to the Exchange Offer.
Notwithstanding the foregoing, each broker-dealer that receives New Notes
for its own account pursuant to the Exchange Offer in exchange for Existing
Notes, where such Existing Notes were acquired by such broker-dealer as a
result of market-making activities or other trading activities, must
acknowledge that it will deliver a prospectus meeting the requirements of the
Securities Act and that it has not entered into any arrangement or
understanding with the Company or an affiliate of the Company to distribute
the New Notes in connection with any resale of such New Notes. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act. A broker-dealer that acquired Existing
Notes in a transaction other than as part of its marketmaking activities or
other trading activities will not be able to participate in the Exchange
Offer. This Prospectus, as it may be amended or supplemented from time to
time, may be used by a broker-dealer in connection with resales of New Notes
where such Existing Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities (other than Existing
Notes acquired directly from the Company). Holding and TTC have agreed that,
starting on the Expiration Date, and ending on the close of business 90 days
after the Expiration Date, it will make this Prospectus available to any such
participating broker-dealer for use in connection with any such resale. Any
holder that cannot rely upon such interpretations by the Staff of the
Commission as set forth in such no-action letters must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale transaction. See "The Exchange Offer" and
"Plan of Distribution."
The New Notes will be represented by one or more Global Securities (as
defined) registered in the name of a nominee of The Depository Trust Company,
as Depositary. Beneficial interest in the Global Securities will be shown on,
and transfers will be effected only through, records maintained by the
Depositary and its participants. See "Book-Entry, Delivery and Form."
There has not previously been any public market for the New Notes. The
Issuers do not intend to list the New Notes on any securities exchange or to
seek approval for quotation through any automated quotation system.
i
<PAGE>
There can be no assurance that an active market for the New Notes will
develop. Moreover, to the extent that Existing Notes are tendered and accepted
in the Exchange Offer, a holder's ability to sell untendered, and tendered but
unaccepted, Existing Notes could be adversely affected. See "Risk Factors--
Lack of Established Market for the Existing Notes."
The Company will not receive any proceeds from the Exchange Offer. The
Company has agreed to pay the expenses it incurs for the Exchange Offer. No
dealer manager is being utilized in connection with the Exchange Offer.
THE EXCHANGE OFFER IS NOT BEING MADE, NOR WILL TTC ACCEPT SURRENDER FOR
EXCHANGE FROM HOLDERS OF EXISTING NOTES, IN ANY JURISDICTION IN WHICH THE
EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE
SECURITIES AND BLUE SKY LAWS OF SUCH JURISDICTION.
AVAILABLE INFORMATION
Holding and TTC have filed with the Commission a Registration Statement
(which term includes any amendments thereto, the "Registration Statement") on
Form S-4 under the Securities Act, with respect to the New Notes offered
hereby. As permitted by the rules and regulations of the Commission, this
Prospectus does not contain all of the information included in the
Registration Statement and the exhibits and schedules thereto. Statements
contained in this Prospectus as to the contents of any contract or other
document referred to herein or therein and filed as an exhibit to the
Registration Statement are not necessarily complete and, in each instance,
reference is made to the copy of such contract or other document filed as an
exhibit to the Registration Statement, each such statement being qualified in
all respects by such reference. For further information with respect to
Holding and TTC and the New Notes, reference is hereby made to the
Registration Statement and the exhibits and schedules thereto.
Holding is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and in accordance
therewith files reports, proxy statements and other information with the
Commission. TTC is not currently subject to the periodic reporting and other
informational requirements of the Exchange Act. Pursuant to the Indenture, TTC
has agreed to file with the Commission and provide to the holders of the Notes
annual reports and the information, documents and other reports that are
specified in Sections 13 and 15(d) of the Exchange Act, which agreement may be
satisfied by the reports, documents and other information filed by Holding if
TTC is not required to file such reports, documents and other information
separately. Reports, proxy statements and other information may be inspected
and copied at the public reference facilities maintained by the Commission at
Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549 and
at the regional offices of the Commission located at 7 World Trade Center,
13th Floor, New York, New York 10048 and Suite 1400, Northwestern Atrium
Center, 14th Floor, 500 West Madison Street, Chicago, Illinois 60661. Copies
of such material can also be obtained at prescribed rates by writing to the
Commission, Public Reference Section, 450 Fifth Street, N.W., Washington, D.C.
20549 and such material is contained on the worldwide web site maintained by
the Commission at http://www.sec.gov. Reports, proxy statements and other
information filed by TTC with the Commission can be inspected and copied at
the public reference facilities maintained by the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 or at its
regional offices located at 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661, and 7 World Trade Center, Suite 1300, New York, New York
10048. Copies of such material can be obtained from the Public References
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. The Commission maintains an Internet "website" that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission at
http://www.sec.gov. This Prospectus constitutes a part of a Registration
Statement on Form S-4 filed by TTC with the Commission under the Securities
Act. This Prospectus omits certain of the information contained in the
Registration Statement, and reference is hereby made to the Registration
Statement and to the exhibits relating thereto for further information with
respect to TTC and the New Notes offered hereby. Any statements contained
ii
<PAGE>
herein concerning the provisions of any document are not necessarily complete,
and, in each instance, reference is made to such copy filed as an exhibit to
the Registration Statement or otherwise filed with the Commission. Each such
statement is qualified in its entirety by such reference. The Registration
Statement and the exhibits thereto may be inspected without charge at the
office of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and copies thereof may be obtained from the Commission
at prescribed rates.
FORWARD-LOOKING STATEMENTS
Statements in this Prospectus that are forward looking are based on current
expectations; actual results may differ materially. Forward looking statements
involve numerous risks and uncertainties that could cause actual results to
differ materially, including, but not limited to: the timely development and
market acceptance of new products; the impact of competitive products and
pricing; the effect of changing general and industry specific economic
conditions; the Company's ability to access external sources of capital; and
such risks and uncertainties detailed under "Risk Factors," "Management's
Discussion and Analysis," "Business," and elsewhere in this Prospectus and
from time to time in the Securities and Exchange Commission reports and
filings of Holding and TTC.
DYNATECH CORPORATION and design, FIREBERD 500, FIREBERD 6000, INTERCEPTOR
116, INTERCEPTOR 1402, T-BERD 950, T-BERD 310, T-BERD 2090SP, TPI 550,
CENTEST, SSI, DA VINCI SYSTEMS, AIRSHOW, XC 6250, INDUSTRIAL COMPUTER SOURCE
and INDUSTRIAL COMPUTER SOURCE-BOOK are trademarks of TTC. Other brand or
product names used herein are trademarks or registered trademarks of their
respective companies.
iii
<PAGE>
SUMMARY
The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information, risk factors and consolidated
financial statements and notes thereto appearing elsewhere in this Prospectus.
Unless the context otherwise requires, references to "Holding" or "Dynatech"
are references to Dynatech Corporation, references to "TTC" are references to
Telecommunications Techniques Co., LLC, and references to the "Company" are
references to Dynatech and its subsidiaries, including TTC. TTC became the
obligor on the Notes, and the borrower under the Senior Credit Facility, on the
date of the closing of the offering of the Existing Notes following the
effectiveness of the merger of TTC Merger Co. into TTC, in connection with
which TTC became a direct subsidiary of Dynatech and the direct or indirect
parent of the Company's other active subsidiaries. References herein to a
"fiscal" year refer to the Company's fiscal year ended March 31 in the calendar
year indicated (e.g., references to fiscal 1997 are references to the Company's
fiscal year ended March 31, 1997). See "--Selected Historical and Pro Forma
Consolidated Financial Data" and "Unaudited Pro Forma Condensed Consolidated
Financial Data."
The market share and competitive position data contained in this Prospectus
are approximations derived from Company estimates, which the Company believes
to be reasonable but which have not been independently verified and, to a
lesser extent, from industry sources. Industry publications generally state
that the information contained therein has been obtained from sources believed
to be reliable, but that the accuracy and completeness of such information is
not guaranteed. The Company has not independently verified market and
competitive position data provided by third parties or industry or general
publications. Although such market and competitive position data are inherently
imprecise, based on its understanding of the markets in which the Company
competes, management believes that such data are generally indicative of the
Company's relative market share and competitive position. See "Risk Factors--
Market Share and Competitive Position Data."
THE COMPANY
The Company develops, manufactures and sells market-leading test, analysis,
communications and computing equipment in three product categories:
. Communications Test. The Company believes that TTC, the Company's
largest subsidiary, is the second largest U.S. provider of
communications test instruments (by U.S. sales). TTC provides products
to communications service providers (such as the Regional Bell Operating
Companies ("RBOCs"), long-distance companies and competitive access
providers), service users (such as large corporate and government
network operators), and manufacturers of communications equipment and
systems. TTC's broad test and analysis product line ranges from portable
units (used by field service technicians to test telephone and data
communications lines and services) to centralized test and monitoring
systems installed in telephone company central offices. The Company's
communications test business accounted for 51% of its sales (or
approximately $240.4 million), and a higher percentage of its EBITDA (as
defined) for fiscal 1998.
. Industrial Computing and Communications. The Company addresses two
distinct segments of the North American ruggedized computer market. The
Company's Industrial Computer Source, Inc. subsidiary ("ICS") is the
only significant direct marketer of computer products and systems
designed to withstand excessive temperatures, dust, moisture and
vibration in harsh operating environments such as production facilities.
ICS markets to engineers, scientists and production managers through its
widely recognized Industrial Computer Source-Book catalogs. The
Company's Itronix Corporation subsidiary ("Itronix") sells ruggedized
portable communications and computing devices used by field-service
workers for telephone companies, utilities, insurance companies and
other organizations with large field-service workforces. The Company's
industrial computing and communications business accounted for 33% of
the Company's sales (or approximately $155.0 million), and a lower
percentage of its EBITDA, for fiscal 1998.
1
<PAGE>
. Visual Communications. The Company's visual communications business
consists principally of two market-leading niche-focused subsidiaries:
(i) AIRSHOW, Inc. ("AIRSHOW") is the world leader in passenger cabin
video information display systems and information services for the
general and commercial aviation markets; and (ii) da Vinci Systems, Inc.
("da Vinci") is the world leader in digital color enhancement systems
used in the process of transferring film images into electronic
signals--a process commonly used to transfer film images to video for
use in the production of television commercials and programming. The
Company's visual communications business accounted for 16% of the
Company's sales (or approximately $77.5 million), and a higher
percentage of its EBITDA, for fiscal 1998.
For fiscal 1998, the Company generated sales and EBITDA of $472.9 million and
$86.9 million, respectively.
COMPETITIVE STRENGTHS
The following characteristics contribute to the Company's competitive
position and outlook.
. Leading Market Positions. The Company's principal businesses occupy the
#1 or #2 overall position in their respective principal markets. TTC,
which is the Company's largest subsidiary and operates the Company's
communications test business in a highly fragmented market, has in
recent years held the #1 or #2 position in market segments accounting
for an estimated 70% of its test instrument sales. ICS is the only
significant direct marketer of ruggedized industrial computers, and
Itronix is the leading supplier of ruggedized portable notebook
computers to U.S. telecommunications companies. AIRSHOW and da Vinci
have the #1 shares in their respective niche markets. The Company's
market leadership is enhanced by its well-known brand names, including
FIREBERD and T-BERD test instruments, the Industrial Computer Source-
Book catalogs, and the AIRSHOW map system.
. Double-Digit Market Growth. The Company participates in market segments
that management believes have been growing at least 10% annually in
recent years. Between fiscal 1995 and 1998, the Company increased sales
and EBITDA at compound annual growth rates of 25% and 27%, respectively
(15% and 20%, respectively, excluding the impact of acquisitions), rates
which management believes exceed the composite sales growth rate for the
market segments the Company addresses. The growth of the communications
test instrument market, the Company's largest, is driven in part by the
growth of telecommunications equipment and services.
. High-Margin, Cash-Generative Business. The Company's gross profit and
EBITDA margins were, as a percent of sales, 56.5% and 18.4%,
respectively, for fiscal 1998. Management believes the Company's strong
profitability is attributable to its leading market positions, its
extensive sales and distribution networks, its entrenched customer
relationships and a management culture emphasizing product quality and
customer service and support, rather than price-based competition. The
Company's strong profitability, combined with relatively low capital
expenditure requirements (averaging 3% of sales since 1995), provides
cash flow to fund the Company's growth strategy and has facilitated a
cumulative investment of approximately $165 million in product
development from the beginning of fiscal 1995 through fiscal 1998.
. High Installed Base of Products. As leaders in each of their respective
served markets, the Company's principal businesses enjoy high installed
product bases, which the Company believes generally provide a
competitive advantage in selling product enhancements, upgrades,
replacements and aftermarket parts and service. For example, the Company
has sold over 100,000 of its communications test instruments
(representing over $1.0 billion in customer investment), the majority of
which the Company believes are currently in service. This installed base
also represents a substantial investment by customers in training on the
Company's communications test products, a familiarity that the Company
capitalizes on in selling and marketing its products and in the
development of new products.
2
<PAGE>
. Extensive Sales and Distribution Network with Longstanding Customer
Relationships. Management believes that each of the Company's principal
businesses enjoys one of the most extensive, effective and highly
trained sales and distribution networks in its respective principal
markets. The communications test business, for example, has a 180-person
U.S. sales organization comprised predominantly of engineers and
technical professionals, who undergo rigorous, ongoing education and
training. The Company has been selling to service providers such as
AT&T, MCI, GTE and Bell Atlantic (or their predecessors) since prior to
the early 1980s. The Industrial Computer Source-Book (over six million
copies distributed in fiscal 1998) is the most widely recognized catalog
of ruggedized industrial computer systems by scientists and engineers.
These purchasers rely upon ICS's sales staff, comprised predominantly of
electrical engineers, to solve compatibility and functionality issues in
configuring the systems.
. Experienced Management Team with Substantial Equity Ownership. Led by
CEO John F. Reno, a 23-year Dynatech veteran, the senior management of
each of the Company's businesses has on average more than 15 years of
industry experience. As a result of the Recapitalization and related
transactions, approximately 350 senior managers and key employees
collectively own or have options to acquire approximately 25% of the
Dynatech's common stock on a fully diluted basis.
BUSINESS STRATEGY
The Company intends to pursue the following strategies:
. Leverage Leading Market Positions. The Company believes that its leading
market positions provide it with several competitive advantages in
comparison to smaller market participants, particularly in its
communications test business, and position it to expand its business by
(i) spreading product development costs over a larger sales and unit
base, (ii) leveraging its sales and marketing resources and customer
relationships to sell new and enhanced products through established
channels, and (iii) taking advantage of its high installed base of
instruments to generate incremental sales for product enhancements,
upgrades, replacements and service.
. Address New Market Segments. The Company intends to continue to develop
products to address new market segments in each of its businesses and
thereby expand the size of its total served market. For example, the
Company currently addresses approximately two-thirds of the $2.1 billion
communications test instrument market and is beginning to address
segments within the $1.0 billion communications test and monitoring
systems market. With product line extensions and additions, the Company
can expand the size of its served market while leveraging its extensive
sales and distribution network.
. Pursue Strategic Acquisitions. Since the end of fiscal 1993, the Company
has focused on its higher-growth, more profitable market-leading
businesses, selling 25 non-core businesses for gross proceeds of $211
million and acquiring five complementary businesses. The Company intends
to continue to pursue strategic acquisitions that complement its
existing businesses and further expand its product lines and
technological capabilities. The communications test instrument market is
highly fragmented, which management believes provides significant
opportunities for future strategic acquisitions. With the Company's
economies of scale, well-established sales and marketing channels and
customer relationships, the Company believes it can, through selective
acquisitions, improve profitability while expanding the breadth of its
product line and enhancing its technological expertise.
. Increase International Penetration. The Company generated approximately
87% of sales for fiscal 1998 in North America, primarily in the United
States, where it has established market-leading positions in each of its
principal businesses. The Company believes there are significant
opportunities to expand its international business. For example, while
the Company generated only 11% of its communications test sales from
markets outside North America during fiscal 1998, the $900 million
international market represents an estimated 43% of the global
communications test instrument market for the same period and grew
approximately 12% from 1996 to 1997.
3
<PAGE>
THE RECAPITALIZATION
As of December 20, 1997, Dynatech entered into the Merger Agreement between
Dynatech and MergerCo, formed by Clayton, Dubilier & Rice Fund V Limited
Partnership ("CDR Fund V"), to effect the recapitalization of Dynatech (the
"Recapitalization"). The Recapitalization was accomplished through the merger
of MergerCo with and into Dynatech (the "Merger"), with Dynatech continuing as
the surviving corporation (the "Surviving Corporation"). Dynatech succeeded to
all the rights and obligations of MergerCo. The closing of the Recapitalization
occurred simultaneously with the Offering of the Existing Notes (collectively,
the "May 1998 Closing").
In the Merger, (i) each outstanding share of common stock, par value $0.20
per share, of Dynatech (the "Common Stock") was converted into the right to
receive $47.75 in cash and 0.5 shares of common stock, no par value, of the
Surviving Corporation (the "Recapitalized Common Stock"), subject to certain
exceptions, and (ii) each outstanding share of common stock, $0.01 par value
per share, of MergerCo was converted into one share of Recapitalized Common
Stock.
As a result of the Merger, CDR Fund V holds approximately 92.3% of the
Recapitalized Common Stock, Mr. Reno (together with his family trusts) holds
approximately 0.7%, and stockholders of Dynatech ("Stockholders") other than
Mr. Reno and his family trusts hold approximately 7%. As a result of the
Recapitalization and related transactions, approximately 350 senior managers
and key employees collectively own or have options to acquire approximately 25%
of the Recapitalized Common Stock on a fully diluted basis. See "The
Recapitalization."
Dynatech is treating the Merger as a recapitalization for financial reporting
purposes. Accordingly, the historical basis of Dynatech's assets and
liabilities have not been affected by the transaction.
As a result of the Recapitalization and related transactions, Dynatech used
approximately $865.3 million to (i) finance the purchase of the Common Stock
for $803.1 million, (ii) pay $22.7 million for option cancellation payments and
(iii) pay the fees and expenses incurred in connection with the Merger. In
addition, (a) $292.9 million of bank financing was drawn down under senior
credit facilities, including $260.0 million pursuant to a term loan facility
(the "Term Loan Facility") and $32.9 million under a revolving credit facility
(the "Revolving Credit Facility," and, together with the Term Loan Facility,
the "Senior Credit Facility"), and (b) $275.0 million in gross proceeds was
provided through the sale of the Existing Notes (collectively, the
"Financing"). Dynatech had $20.4 million of cash on-hand to use in connection
with the Merger and approximately $277.0 million of gross proceeds from the
sale of MergerCo common stock to CDR Fund V, which proceeds became an asset of
Dynatech upon effectiveness of the Merger.
4
<PAGE>
The following table illustrates the estimated sources and uses of funds that
were necessary to consummate the May 1998 Closing of the Merger and related
transactions (including the Financing):
SOURCES
(DOLLARS IN MILLIONS)
<TABLE>
<S> <C>
Senior Credit Facility:
Revolving Credit Facility.. $ 32.9
Tranche A Term Loan........ 50.0
Tranche B Term Loan........ 70.0
Tranche C Term Loan........ 70.0
Tranche D Term Loan........ 70.0
Notes........................ 275.0
CDR Fund V Equity............ 277.0
Cash......................... 20.4
------
Total Sources............ $865.3
======
</TABLE>
USES
(DOLLARS IN MILLIONS)
<TABLE>
<S> <C>
Purchase of Common Stock............................................ $803.1
Option Cancellation Payments........................................ 22.7
Estimated Fees and Expenses......................................... 39.5
------
Total Uses...................................................... $865.3
======
</TABLE>
Immediately after the issuance of the Existing Notes, TTC and TTC Merger Co.
merged, with TTC surviving, TTC succeeded to and assumed all of the obligations
under the Indenture and the Existing Notes, and Dynatech was released as a
primary obligor from its obligations under the Indenture and the Existing
Notes. TTC thereby became the primary obligor on the Existing Notes. Dynatech
provided a full and unconditional guaranty of the monetary obligations of TTC
Merger Co. and TTC under the Indenture and the Existing Notes on a senior
subordinated basis. In connection with the merger of TTC and TTC Merger Co.,
TTC assumed all of the obligations under the Senior Credit Facility and became
the borrower thereunder, and Dynatech transferred to TTC its ownership
interests in all of its other subsidiaries.
5
<PAGE>
THE EXCHANGE OFFER
Registration Rights The Existing Notes were issued on May 21, 1998 to
Agreement.................. Credit Suisse First Boston Corporation and J.P.
Morgan Securities Inc. (the "Initial
Purchasers"). The Initial Purchasers resold the
Existing Notes in reliance on and subject to the
restrictions imposed pursuant to Rule 144A of the
Securities Act and other applicable exemptions
from the registration requirements of the Act. In
connection therewith, TTC, Dynatech and the
Initial Purchasers entered into the Registration
Rights Agreement, dated as of May 21, 1998 (the
"Registration Rights Agreement"), providing,
among other things, for the Exchange Offer. See
"Registration Rights" and "The Exchange Offer."
The Exchange Offer.......... The New Notes are being offered in exchange for
an equal principal amount of Existing Notes. As
of the date hereof, $275,000,000 aggregate
principal amount of Existing Notes is
outstanding.
Resale of New Notes......... Based on interpretations by the Staff of the
Commission as set forth in no-action letters
issued to third parties, the Company believes
that the New Notes issued pursuant to the
Exchange Offer may be offered for resale, resold
or otherwise transferred by any holder thereof
(other than any such holder that is a broker-
dealer or an "affiliate" of the Company within
the meaning of Rule 405 under the Securities Act)
without compliance with the registration and
prospectus delivery provisions of the Securities
Act, provided that such holder represents to the
Company that (i) any New Notes received by such
holder will be acquired in the ordinary course of
business, (ii) such holder will have no
arrangements or understanding with any person to
participate in the distribution of the Securities
or the New Notes within the meaning of the
Securities Act, (iii) such holder is not an
"affiliate," as defined in Rule 405 of the
Securities Act, of the Company or if it is an
affiliate, such holder will comply with the
registration and prospectus delivery requirements
of the Securities Act to the extent applicable,
(iv) if such holder is not a broker-dealer, that
it is not engaged in, and does not intend to
engage in, the distribution of the New Notes, (v)
if such holder is a broker-dealer, that it will
receive New Notes for its own account in exchange
for Existing Notes that were acquired as a result
of market-making activities or other trading
activities and that it will deliver a prospectus
in connection with any resale of such New Notes,
and (vi) that it is not acting on behalf of any
person who could not truthfully make the
foregoing representations. If a holder of
Existing Notes is unable to make the foregoing
representations, such holder may not rely on the
applicable interpretations of the Staff of the
Commission as set forth in such no-action
letters, and must comply with the registration
and prospectus delivery requirements of the
Securities Act in connection with any secondary
resale transaction. In addition, since the
Company has not sought, and does not intend to
seek, its own no-action letter, there can be no
6
<PAGE>
assurance that the staff of the Commission would
make a similar determination with respect to the
Exchange Offer.
Notwithstanding the foregoing, each broker-dealer
that receives New Notes for its own account
pursuant to the Exchange Offer in exchange for
Existing Notes, where such Existing Notes were
acquired by such broker-dealer as a result of
market-making activities or other trading
activities, must acknowledge that it will deliver
a prospectus meeting the requirements of the
Securities Act and that it has not entered into
any arrangement or understanding with the Company
or an affiliate of the Company to distribute the
New Notes in connection with any resale of such
New Notes. The Letter of Transmittal states that
by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to
admit that it is an "underwriter" within the
meaning of the Securities Act. A broker-dealer
that acquired Existing Notes in a transaction
other than as part of its market-making
activities or other trading activities will not
be able to participate in the Exchange Offer.
This Prospectus, as it may be amended or
supplemented from time to time, may be used by a
broker-dealer in connection with resales of New
Notes where such Existing Notes were acquired by
such broker-dealer as a result of market-making
activities or other trading activities (other
than Existing Notes acquired directly from the
Company). Holding and TTC have agreed that,
starting on the Expiration Date, and ending on
the close of business 90 days after the
Expiration Date, it will make this Prospectus
available to any such participating broker-dealer
for use in connection with any such resale. Any
holder that cannot rely upon such interpretations
by the Staff of the Commission as set forth in
such no-action letters must comply with the
registration and prospectus delivery requirements
of the Securities Act in connection with a
secondary resale transaction. See "The Exchange
Offer" and "Plan of Distribution."
Consequence of Failure to
Exchange Existing Notes.... Upon consummation of the Exchange Offer, subject
to certain limited exceptions, holders of
Existing Notes who do not exchange their Existing
Notes for New Notes in the Exchange Offer will no
longer be entitled to registration rights and
will not be able to offer or sell their Existing
Notes, unless such Existing Notes are
subsequently registered under the Securities Act
(which, subject to certain limited exceptions,
the Company will have no obligation to do),
except pursuant to an exemption from, or in a
transaction not subject to, the Securities Act
and applicable state securities laws. See "The
Exchange Offer--Terms of the Exchange Offer" and
"--Consequences of Failure to Exchange,"
"Registration Rights" and "Risk Factors--
Consequences of Failure to Exchange and
Requirements for Transfer of New Notes."
Expiration Date............. 5:00 p.m., New York City time, on (
business days following the commencement of the
Exchange Offer), unless the
7
<PAGE>
Exchange Offer is extended by the Company in its
sole discretion, in which case the term
"Expiration Date" means the latest date and time
to which the Exchange Offer is extended.
Interest on the New Notes... The New Notes will accrue interest at a rate of 9
3/4% per annum from May 21, 1998, the issue date
of the Existing Notes, or from the most recent
date to which interest has been paid or duly
provided for on the Existing Notes. Interest on
the New Notes is payable on May 15 and November
15 of each year, commencing on November 15, 1998.
See "Registration Rights" and "Description of
Notes--Terms of the Notes."
Condition to the Exchange The Exchange Offer is not conditioned upon any
Offer...................... minimum principal amount of Existing Notes being
tendered for exchange. However, the Exchange
Offer is subject to certain customary conditions,
which may be waived by the Company. See "The
Exchange Offer--Conditions." Except for the
requirements of applicable federal and state
securities laws, there are no federal or state
regulatory requirements to be complied with by
the Company in connection with the Exchange
Offer.
Procedures for Tendering
Existing Notes............. Each holder of Existing Notes wishing to accept
the Exchange Offer must complete, sign and date
the Letter of Transmittal, or a facsimile
thereof, in accordance with the instructions
contained herein and therein, and mail or
otherwise deliver such Letter of Transmittal, or
such facsimile, together with any other required
documentation to the Exchange Agent (as defined
herein) at the address set forth herein and
effect a tender of Existing Notes pursuant to the
procedures for book-entry transfer as provided
for herein. See "The Exchange Offer--Procedures
for Tendering," "--Book Entry Transfer," and "--
Guaranteed Delivery Procedures." Certain other
procedures may apply with respect to certain
book-entry transfers. See "The Exchange Offer--
Exchanging Book-Entry Notes."
Guaranteed Delivery Holders of Existing Notes who wish to tender
Procedures................. their Existing Notes and who cannot deliver their
Existing Notes and a properly completed Letter of
Transmittal or any other documents required by
the Letter of Transmittal to the Exchange Agent
prior to the Expiration Date may tender their
Existing Notes according to the guaranteed
delivery procedures set forth in "The Exchange
Offer--Guaranteed Delivery Procedures."
Withdrawal Rights........... Tenders of Existing Notes may be withdrawn to any
time prior to 5:00 p.m., New York City time, on
the Expiration Date. To withdraw a tender of
Existing Notes, a written or facsimile
transmission notice of withdrawal must be
received by the Exchange Agent at its address set
forth herein under "The Exchange Offer--Exchange
Agent" prior to 5:00 p.m., New York City time, on
the Expiration Date.
8
<PAGE>
Acceptance of Existing
Notes and Delivery of New Subject to certain conditions, any and all
Notes...................... Existing Notes that are validly tendered in the
Exchange Offer prior to 5:00 p.m., New York City
time, on the Expiration Date will be accepted for
exchange. The New Notes issued pursuant to the
Exchange Offer will be delivered as soon as
practicable following the Expiration Date. See
"The Exchange Offer--Terms of the Exchange
Offer."
Certain U.S. Tax
Consequences............... The exchange of Existing Notes for New Notes will
not constitute a taxable exchange for U.S.
federal income tax purposes. See "Certain Federal
Income Tax Considerations."
Exchange Agent/Trustee...... State Street Bank and Trust Company, the trustee
under the indenture governing the Notes (the
"Trustee") is serving as exchange agent, (in such
capacity the "Exchange Agent"), in connection
with the Exchange Offer. See "The Exchange
Offer--Exchange Agent."
Fees and Expenses...........
Expenses incident to the Company's consummation
of the Exchange Offer and compliance with the
Registration Rights Agreement will be borne by
the Company. See "The Exchange Offer--Fees and
Expenses."
Use of Proceeds............. The Company will not receive any proceeds from
the Exchange Offer. The net proceeds from the
sale of the Existing Notes comprised a portion of
the Financing for the Recapitalization and
related transactions.
9
<PAGE>
SUMMARY OF TERMS OF THE NEW NOTES
The Exchange Offer relates to the exchange of up to $275,000,000 aggregate
principal amount of Existing Notes for an equal aggregate principal amount of
New Notes. The New Notes will be entitled to the benefits of the same Indenture
that governs the Existing Notes and that will govern the New Notes. The form
and terms of the New Notes are identical in all material respects to the form
and terms of the Existing Notes, except that (i) the New Notes will have been
registered under the Securities Act, and thus will not bear restrictive legends
restricting their transfer pursuant to the Securities Act and will not contain
certain provisions providing for an increase in the interest rate on the
Existing Notes under certain circumstances described in the Registration Rights
Agreement (as defined), which provisions will terminate upon the consummation
of the Exchange Offer and (ii) holders of New Notes will not be entitled to
certain registration rights that holders of Existing Notes have under the
Registration Rights Agreement, except under limited circumstances. See
"Description of Notes."
In this summary of the Terms of the New Notes, references to the "Company"
are to TTC.
Securities Offered.......... U.S. $275.0 million aggregate principal amount of
9 3/4% Senior Subordinated Notes Due 2008 of the
Company, which have been registered under the
Securities Act.
Maturity.................... May 15, 2008.
Interest Payment Dates...... May 15 and November 15 of each year, commencing
November 15, 1998.
Holding Company Guarantee... The Notes will be fully and unconditionally
guaranteed on a senior subordinated basis by
Dynatech on the terms provided in the Indenture.
Optional Redemption......... The Notes will be redeemable at the option of the
Company (i) at any time and from time to time
prior to May 15, 2001, in an aggregate principal
amount equal to up to 35% of the original
principal amount of the Notes (including
Additional Notes (as defined)) with the proceeds
of one or more Equity Offerings by the Company,
at a redemption price set forth herein, provided
that an aggregate principal amount of Notes equal
to at least 65% of the original aggregate
principal amount of the Notes (including
Additional Notes (as defined)) remain outstanding
immediately after each such redemption, (ii) in
whole but not in part prior to May 15, 2003 upon
a Change of Control, as described below, and
(iii) in whole or in part at any time on or after
May 15, 2003, at the redemption prices set forth
herein in each case plus accrued and unpaid
interest, if any, to the date of redemption
(subject to the right of holders of record on the
relevant record date to receive interest due on
the relevant payment date). See "Description of
Notes--Optional Redemption."
Change of Control........... In the event of a Change of Control, (i) the
Company will have the option, at any time on or
prior to May 15, 2003, to redeem the Notes, in
whole but not in part, at a redemption price
equal to 100% of the principal amount thereof
plus the Applicable Premium (as defined),
together with accrued and unpaid interest, if
any, to the date of redemption (subject to the
right of holders of record on the relevant record
date to receive interest due on the relevant
payment
10
<PAGE>
date), and (ii) if the Company does not redeem
the Notes, the holders of the Notes will have the
right, subject to certain exceptions, to require
the Company to repurchase such holder's Notes at
a purchase price equal to 101% of the principal
amount thereof, plus accrued and unpaid interest,
if any, to the date of redemption (subject to the
right of holders of record on the relevant record
date to receive interest due on the relevant
payment date). See "Description of Notes--Change
of Control."
Ranking..................... The Notes will be unsecured Senior Subordinated
Indebtedness of the Company. The Notes will be
subordinated in right of payment to the payment
when due of all existing and future Senior
Indebtedness of the Company, including the
Company's obligations under the Senior Credit
Facility. The Notes will rank pari passu in right
of payment with all existing and future Senior
Subordinated Indebtedness of the Company, and
will be senior in right of payment to all
existing and future Subordinated Obligations of
the Company. The Notes will also be effectively
subordinated to any Secured Indebtedness of the
Company, to the extent of the value of the assets
securing such Indebtedness. The guarantee by
Dynatech of the Notes (the "Parent Guarantee")
will be an unsecured obligation of Dynatech, a
holding company the only significant asset of
which is 100% of the membership interest of TTC.
The Parent Guarantee will be subordinated to all
existing and future senior indebtedness of
Dynatech, including its obligations under its
guarantee in respect of the Senior Credit
Facility. At May 31, 1998, the aggregate amount
of Senior Indebtedness (including indebtedness
under the Senior Credit Facility) and
indebtedness of subsidiaries (other than
intercompany debt) that effectively ranked senior
to the Notes was approximately $300.0 million
(excluding a maximum $3.0 million guarantee), and
the Company had additional availability of $70.0
million for borrowings under the Senior Credit
Facility. See "Description of Notes--Ranking."
Restrictive Covenants....... The Indenture includes certain covenants that,
among other things, limit: (i) the incurrence of
additional indebtedness by the Company and its
Restricted Subsidiaries (as defined); (ii) the
layering of indebtedness; (iii) the payment of
dividends on capital stock of the Company and its
Restricted Subsidiaries and the redemption of
certain capital stock or subordinated obligations
of the Company; (iv) investments; (v) creation of
restrictions on distributions from Restricted
Subsidiaries; (vi) sale of assets and subsidiary
stock; (vii) certain transactions with
affiliates; (viii) incurrence of liens; and (ix)
mergers and consolidations. See "Description of
Notes--Certain Covenants" and "Description of
Notes--Merger and Consolidation."
Exchange Offer and
Registration Rights........ Holders of New Notes (other than as set forth
below) will not be entitled to any registration
rights with respect to the New Notes.
11
<PAGE>
Pursuant to the Registration Rights Agreement
(the "Registrations Rights Agreement"), the
Company agreed to use its reasonable best efforts
to file an Exchange Offer Registration Statement
(as defined). The Registration Statement of which
this Prospectus is a part constitutes the
Exchange Offer Registration Statement. Under
certain circumstances, certain holders of Notes
(including certain holders of Existing Notes who
may not participate in the Exchange Offer or who
may not freely resell New Notes received in the
Exchange Offer) may require the Company to file,
and cause to become effective, a Shelf
Registration Statement (as defined) under the
Securities Act, which would cover resales of
Notes by such holders. See "Registration Rights."
Absence of a Public Market
for the Notes.............. If issued, the New Notes generally will be freely
transferable (subject to the restrictions
discussed elsewhere herein) but will be new
securities for which initially there will not be
a market. Although the Initial Purchasers have
informed the Company that they currently intend
to make a market in the Existing Notes, and if
issued, the New Notes, the Initial Purchasers are
not obligated to do so and any such market making
may be discontinued at any time without notice.
In addition, such market making activity may be
limited during the pendency of the Exchange Offer
or the effectiveness of a Shelf Registration
Statement (as defined) in lieu thereof.
Accordingly, there can be no assurance as to the
development or liquidity of any market for the
New Notes. The Existing Notes are eligible for
trading by qualified institutional buyers in the
PORTAL market. The Company does not intend to
apply for listing of the New Notes on any
securities exchange or for quotation of the Notes
through the National Association of Securities
Dealers Automated Quotation System. See "Risk
Factors--Absence of Public Market" and "Plan of
Distribution."
RISK FACTORS
Holders of the Existing Notes and prospective purchasers of the New Notes
should carefully consider all of the information set forth in this Prospectus
and, in particular, should evaluate the specific factors set forth under "Risk
Factors" beginning on page 13 for risks involved with an exchange for or an
investment in the New Notes.
* * * * *
TTC's principal executive offices are located at 20400 Observation Drive,
Germantown, Maryland 20876, and its telephone number is (301) 353-1550.
Dynatech's principal executive offices are located at 3 New England Executive
Park, Burlington, Massachusetts 01803, and its telephone number is (781) 272-
6100.
12
<PAGE>
RISK FACTORS
In addition to the other information in this Prospectus, holders of Existing
Notes and prospective purchasers of the New Notes should consider carefully
the following factors in evaluating an exchange for or an investment in the
New Notes offered hereby.
SUBSTANTIAL LEVERAGE; LIQUIDITY
The Company incurred substantial indebtedness in connection with the Merger
and thereby became highly leveraged, with indebtedness that is very
substantial in relation to its shareholders' equity. The Company did not have
substantial indebtedness prior to the Merger (approximately $233,000 at March
31, 1998 (excluding a maximum $3.0 million guarantee)). At May 31, 1998 the
Company had a total of $575.2 million of consolidated indebtedness (excluding
a maximum $3.0 million guarantee). The Senior Credit Facility and the
Indenture permit the Company to incur or guarantee certain additional
indebtedness, subject to certain limitations. The Company will be required to
repay the $260 million in term loans under the Senior Credit Facility over the
nine year period following the May 1998 Closing. In addition, the Company will
be required to prepay Senior Credit Facility borrowings using the proceeds
from certain asset sales, certain casualty insurance, condemnation or similar
recoveries by the Company and certain indebtedness by the Company other than
indebtedness permitted under the Senior Credit Facility, as well as 50% of its
excess cash flow (as defined in the Senior Credit Facility) unless a leverage
ratio test is met. All outstanding revolving credit borrowings under the
Senior Credit Agreement will become due on the sixth anniversary of the May
1998 Closing. Because of its working capital needs, the Company expects that
it will be required at that time to enter into new revolving credit facility
arrangements. No assurance can be given that any extension, renewal,
replacement or refinancing of the Company's Revolving Credit Facility can be
successfully accomplished or accomplished on acceptable terms. See "Selected
Historical and Pro Forma Consolidated Financial Data," "Management's
Discussion and Analysis--Capital Resources and Liquidity," "Description of
Senior Credit Facility" and "Description of Notes."
The Company's high leverage may have important consequences to the holders
of the Notes, including but not limited to the following: (a) the Company's
ability to obtain additional financing for future acquisitions (if any),
working capital, capital expenditures or other purposes may be impaired or any
such financing may not be on terms favorable to the Company; (b) a substantial
amount of the Company's operating cash flow will be dedicated to the payment
of principal and interest on its indebtedness, thereby reducing funds that
would otherwise be available for the Company's operations and other purposes,
including investments in new products, research and development, capital
spending and acquisitions; (c) a substantial decrease in net operating cash
flows or increase in expenses could make it difficult for the Company to meet
its debt service requirements or force it to modify its operations or sell
assets; and (d) the Company's highly leveraged capital structure may place it
at a competitive disadvantage, hinder its ability to adjust rapidly to market
conditions or make it vulnerable to a downturn in its business or the economy
generally or changing market conditions and regulations.
The Company's ability to repay or to refinance its obligations with respect
to its indebtedness will depend on its future financial and operating
performance, which, in turn, will be subject to prevailing economic and
competitive conditions and to certain financial, business, legislative,
regulatory, industry, economic and other factors, many of which are beyond the
Company's control. These factors could include general economic conditions,
operating difficulties, increased operating costs, product pricing pressures,
potential revenue instability arising from cost savings initiatives or
otherwise, labor relations, the response of competitors or customers to the
Company's business strategy or projects, delays in implementation of the
Company's business strategy, telecommunication provider consolidation or
strategy changes, and the relative success of new product introductions. The
Company's ability to meet its debt service and other obligations may depend in
significant part on the extent to which the Company can implement successfully
its business and growth strategy. There can be no assurance that the Company
will be able to implement its strategy fully or that the anticipated results
of its strategy will be realized. See "--Risks Relating to Business and Growth
Strategy, Including Acquisitions" and "Business--Business Strategy."
13
<PAGE>
If the Company's cash flow and capital resources are insufficient to fund
its debt service obligations, the Company may be forced to reduce or delay
capital or other expenditures, sell assets, seek to obtain additional equity
capital or refinance or restructure its debt. There can be no assurance that
the Company's cash flow and capital resources will be sufficient for payment
of principal of, premium, if any, and interest on, its indebtedness, including
the Notes, in the future, or that any such alternative measures would be
successful or would permit the Company to meet its scheduled debt service
obligations. In addition, because the Company's obligations under the Senior
Credit Facility will bear interest at floating rates, an increase in interest
rates could materially adversely affect, among other things, the Company's
ability to meet its debt service obligations.
SUBORDINATION OF NOTES
The Notes are unsecured, senior subordinated obligations of TTC. The Notes
are subordinated in right of payment to all existing and future Senior
Indebtedness of TTC (which includes all indebtedness under the Senior Credit
Facility). The Notes rank pari passu with all senior subordinated indebtedness
of TTC, if any, and rank senior to all subordinated indebtedness of TTC, if
any. The Notes are also effectively subordinated to all secured indebtedness
of TTC to the extent of the value of the assets securing such indebtedness,
and to all existing and future obligations and liabilities of TTC's
subsidiaries. The obligations under the Senior Credit Facility are secured by
a pledge of the equity interest in TTC, by substantially all of the assets of
TTC and of each active direct or indirect U.S. subsidiary of TTC, and by a
pledge of the capital stock of each such subsidiary and 65% of the capital
stock of each subsidiary of TTC that acts as a holding company for TTC's
foreign subsidiaries. At May 31, 1998, the aggregate amount of Senior
Indebtedness (including indebtedness under the Senior Credit Facility) and
indebtedness of subsidiaries (other than intercompany debt) that would have
effectively ranked senior to the Notes would have been approximately $300.0
million (excluding a maximum $3.0 million guarantee).
In the event of bankruptcy, liquidation, dissolution, reorganization or any
similar proceeding regarding TTC, or any default in payment or acceleration of
any debt thereof, the assets of TTC will be available to pay obligations on
the Notes only after the Senior Indebtedness of TTC has been paid in full, and
there may not be sufficient assets remaining to pay amounts due on all or any
of the Notes. See "Description of Notes--Ranking."
STRUCTURAL SUBORDINATION
TTC generated approximately half of the Company's revenues for fiscal 1998.
However, the Company conducts a substantial part of its operations through
various direct and indirect subsidiaries of TTC. TTC therefore may be
dependent in part on dividends or other distributions of funds from its
subsidiaries to meet its debt service and other obligations, including
obligations under the Senior Credit Facility and the Notes. TTC's subsidiaries
are separate and distinct legal entities and will have no obligation,
contingent or otherwise, to pay any amounts due pursuant to the Notes or to
make any funds available therefor, whether in the form of loans, dividends or
otherwise.
The rights of TTC and its creditors, including holders of the Notes, to
participate in the distribution of the assets of any subsidiary upon such
subsidiary's liquidation or reorganization will be subject to the prior claims
of such subsidiary's creditors, including trade creditors, except to the
extent that TTC itself may be a creditor with enforceable claims against such
subsidiary.
SUBORDINATION OF DYNATECH GUARANTEE; NO INDEPENDENT OPERATIONS OF DYNATECH
Payments in respect of Dynatech's Guarantee of the Notes (the "Parent
Guarantee") are subordinated to the prior payment in full of all existing and
future senior indebtedness of Dynatech, including all of its obligations under
its guarantee in respect of the Senior Credit Facility. At May 31, 1998, the
aggregate amount of such senior indebtedness was $300.0 million (excluding a
maximum $3.0 million guarantee). In the event of a bankruptcy, liquidation,
dissolution, reorganization or similar proceedings with respect to Dynatech,
its assets
14
<PAGE>
will be available to pay obligations under the Notes only after such senior
indebtedness has been paid in full, and there can be no assurance that there
will be sufficient assets to pay amounts due in respect of the Parent
Guarantee.
Dynatech is a holding company with no independent operations and no
significant assets other than its membership interest in TTC. Dynatech,
therefore, is dependent upon the receipt of dividends or other distributions
from TTC to fund any obligations that it incurs, including obligations under
the Parent Guarantee. The Indenture does not, however, permit distributions
from TTC to Dynatech, other than under certain circumstances or for certain
specified purposes. See "Description of Notes--Certain Covenants--Limitation
on Restricted Payments." The Senior Credit Facility contains similar or more
restrictive provisions. Accordingly, if TTC should at any time be unable to
pay interest or premium, if any, on or principal of the Notes, it is unlikely
that TTC will be able to distribute the funds necessary to enable Dynatech to
meet its obligations under the Parent Guarantee.
RESTRICTIVE FINANCING COVENANTS
The Senior Credit Facility agreements contain a number of covenants that
significantly restrict the operations of the Company, limiting the discretion
of the Company's management with respect to certain business matters. These
covenants, among other things, restrict the ability of the Company to incur
additional indebtedness or guarantee obligations, pay dividends and other
distributions, prepay or modify the terms of other indebtedness, create liens,
make capital expenditures, make certain investments or acquisitions, enter
into mergers or consolidations, make sales of assets, engage in certain
transactions with affiliates and otherwise restrict corporate activities.
Certain term loans under the Senior Credit Facility are subject to negative
covenants similar to those contained in the Indenture. In addition, under the
Senior Credit Facility, the Company is required to satisfy a minimum interest
expense coverage ratio and a maximum leverage ratio. These financial tests
become more restrictive in future years.
The Company's ability to comply with the covenants and restrictions
contained in the Senior Credit Facility agreements may be affected by events
beyond its control, including prevailing economic, financial and industry
conditions, and there can be no assurance that the Company will be able to
comply with such covenants or restrictions in the future. A breach of the
covenants and restrictions contained in the Senior Credit Facility agreements
or in any agreements with respect to any additional financing would result in
an event of default under such agreements, which would permit acceleration of
the related debt and acceleration of debt under other debt agreements that may
contain cross-acceleration or cross-default provisions, as well as termination
of the commitments of the lenders to make further extensions of credit under
the Senior Credit Facility. In addition, if the Company were unable to repay
its indebtedness to the lenders under the Senior Credit Facility, such lenders
could proceed against the collateral securing such indebtedness, including
substantially all of the Company's assets, and the Company could be prohibited
from making any payments on the Notes. See "Description of Senior Credit
Facility." In addition, the Indenture contains a number of restrictive
covenants relating to the Company. See "Description of Notes."
DEPENDENCE ON COMMUNICATIONS INDUSTRY
The Company's principal customers are RBOCs, competitive access providers,
wireless service providers, competitive local exchange carriers, other
communications service providers, mobile work forces and industrial engineers
and other users of the Company's communications devices and ruggedized
computers. The industries of the Company's principal customers are
characterized by intense competition and consolidation. Fewer customers as a
result of such consolidation could lead to pressure on the Company to lower
prices. Competitive pressures among the Company's customers or other
communications industry developments could lead to discontinuance or
modifications of products manufactured by the Company and could have a
material adverse effect on the Company's business, financial condition and
results of operations. Regulation in the communications industry could
materially adversely affect the Company's customers or otherwise materially
limit or restrict the Company's business. Further, these industries are
evolving rapidly and it is difficult to predict their potential size or future
growth rate. There can be no assurance that the deregulation trend in the
15
<PAGE>
telecommunications market that has resulted in increased competition and
escalating demand for technologies and services will continue in a manner
favorable to the Company or its business strategies.
HIGHLY COMPETITIVE MARKETS
The markets for the Company's products and services are highly competitive.
The Company competes directly or indirectly with Hewlett-Packard Company and
Panasonic Industrial Co., among others. See "Business--Industry Overview." Due
to the rapidly evolving markets in which the Company competes, additional
competitors with significant market presence and financial resources,
including large telecommunications equipment manufacturers and computer
hardware and software companies, may enter those markets, thereby further
intensifying competition. Increased competition could result in price
reductions and loss of market share which would materially adversely affect
the Company's business, financial condition and results of operations. Certain
of the Company's current and potential competitors have greater name
recognition and greater financial, selling and marketing, technical,
manufacturing and other resources than the Company. Although the Company
believes it has certain technological and other advantages over its
competitors, realizing and maintaining such advantages will require a
continued high level of investment by the Company in research and product
development, marketing and customer service and support. The highly leveraged
nature of the Company after the Merger could limit the Company's ability to
continue to make such investments or other necessary or desirable capital
expenditures, to compete effectively and respond to market conditions. There
can be no assurance that the Company will be able to compete effectively with
its existing competitors or with new competitors, or that such competitors
will not succeed in adapting more rapidly and effectively to changes in
technology or in the market or in developing or marketing products that will
be more widely accepted.
RAPID TECHNOLOGICAL CHANGE; CHALLENGES OF NEW PRODUCT INTRODUCTIONS
The market for the Company's products and services is characterized by
rapidly changing technology, new and evolving industry standards and protocols
and new product and service introductions and enhancements that may render
existing offerings obsolete or unmarketable. Automation in the Company's
addressed markets for communications test instruments or a shift in customer
emphasis from communications test instruments to test and monitoring systems
could likewise render the Company's existing offerings obsolete or
unmarketable or reduce the size of the Company's addressed market. In
particular, incorporation of self-testing functions in the equipment currently
addressed by the Company's communications test instruments could render the
Company's offerings redundant and unmarketable. Failure to anticipate or
respond rapidly to advances in technology and to adapt the Company's products
appropriately could have a material adverse effect on the success of the
Company's products and thus on the Company's business, financial condition and
results of operations.
The development of new, technologically advanced products is a complex and
uncertain process requiring the accurate anticipation of technological and
market trends and the expenditure of substantial development costs. From the
beginning of fiscal 1995 through fiscal 1998, the Company has expended on
average 12.1% of its sales (or approximately $165.3 million) on product
development and, although the Company expects to continue product development
spending at similar levels, there can be no assurance that the Company will
have sufficient free cash flow to do so. There can be no assurance that errors
will not be found in new products or upgrades after commencement of commercial
shipments, resulting in delays in or loss of market acceptance and sales,
diversion of development resources, injury to the Company's reputation,
increased service and warranty costs or payment of compensatory or other
damages, any of which could have a material adverse effect on the Company's
business, financial condition and results of operations.
PRODUCT CERTIFICATION AND EVOLVING INDUSTRY STANDARDS
Several of the Company's products must meet significant communications
regulations, certifications, standards and protocols, some of which are
evolving as new technologies are deployed. These regulations, certifications,
standards and protocols include those promulgated by the Federal
Communications Commission, established by Underwriters Laboratories and
imposed by various foreign countries. Compliance with such
16
<PAGE>
regulations, certifications, standards and protocols may prove costly and
time-consuming for the Company, presenting barriers to entry in particular
markets or reducing the profitability of the Company's product offerings. Such
regulations, certifications, standards and protocols may also adversely affect
the communications industry, limit the number of potential customers for the
Company's products and services or otherwise have a material adverse effect on
the Company's business. The failure of the Company's products to comply, or
delays in compliance, with the various existing and evolving industry
regulations, standards and protocols could delay the introduction of the
Company's products or cause the Company's existing products to become
obsolete.
DEPENDENCE ON SOLE SOURCE SUPPLIERS AND LICENSORS
The Company purchases certain key components and licenses technology from
sole source vendors, including a semiconductor manufacturer of a component
utilized in the Company's communications test business and a component
manufacturer for the Itronix series of ruggedized laptop computers. There can
be no assurance that such components will continue to be produced or that such
licensed technology will continue to be made available or that the price for
such components and licensed technology may not significantly increase. The
inability to develop alternative sources for these components and licensed
technology or to obtain sufficient quantities of these components could result
in increased costs and delays or reductions in product shipments which could
materially adversely affect the Company's business, financial condition and
results of operations. In the event of a reduction or interruption of supply,
a significant amount of time could be required before the Company would begin
receiving adequate supplies from such alternative suppliers. In such event,
the Company's business, financial condition and results of operations would be
materially adversely affected. In addition, the manufacturer of certain of
these sole source components is technologically complex, and the Company's
reliance on the suppliers of these components exposes the Company to potential
production difficulties and quality variations, which could negatively impact
cost and timely delivery of the Company's products. If supply of certain
components, including but not limited to application-specific integrated
circuits, power supplies, display devices and operating system software,
should cease, the Company may be required to redesign certain of its products.
No assurance can be given that supply problems will not occur or, if such
problems do occur, that satisfactory solutions would be available.
RISKS RELATING TO BUSINESS AND GROWTH STRATEGY, INCLUDING ACQUISITIONS
The Company's future performance depends in part on the Company's success in
implementing its business and growth strategy. The components of the Company's
strategy are subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond the control of the
Company. There can be no assurance that the Company will be able to fully
implement its strategy or that the anticipated results of its strategy will be
realized.
The Company's strategy contemplates, among other things, growth through
acquisitions of complementary businesses and entry into new markets.
Management cannot predict the availability of appropriate acquisition
candidates or the likelihood of an acquisition being completed should any
negotiations commence. The Company could have difficulty obtaining financing
to pursue acquisitions due to its substantial debt and to the restrictive
covenants in its debt instruments, among other things. If the Company does
complete any acquisitions, the Company could have difficulties integrating
acquired technology and operations, or retaining and integrating key employees
of acquired companies. Integrating any acquired business could also divert
management attention from ongoing business concerns. In addition, the
Company's future growth, whether by acquisition or otherwise, depends in part
upon its ability to enter markets in which the Company may have limited
experience, including international markets. In conducting business in foreign
jurisdictions, the Company may encounter difficulties with, among other
things, tariffs and other trade or regulatory barriers, currency controls,
hyperinflation, intellectual property protection, potential adverse tax
consequences, longer payment cycles, greater difficulty or delay in accounts
receivable collection, cultural differences and increased political and
economic instability.
The Company's planned growth, if achieved, may place significant demands on
its management, administrative and operational resources. The Company's
ability to manage growth effectively will require the
17
<PAGE>
Company to continue to develop and improve its operational, financial and
other internal systems, as well as its sales capabilities, and attract, manage
and retain its employees. There can be no assurance that the Company will
effectively manage any strategic growth it may achieve.
RISKS RELATING TO ITRONIX
Itronix operated at a modest loss for fiscal 1998 and is currently facing
significant manufacturing and marketing challenges, including competition from
"semi-rugged" products that constrains pricing of premium, ruggedized products
like those manufactured by Itronix. In addition, Itronix's results of
operations have varied significantly in the past and may vary significantly in
the future, on a quarterly and annual basis, as a result of a variety of
factors, many of which are outside the Company's control. These factors
include, without limitation: (i) the timing and size of orders which are
received and can be shipped in any particular period; (ii) the seasonality of
the placement of customer orders; (iii) customer order deferrals in
anticipation of product enhancements or new product offerings by Itronix or
its competitors; (iv) customer cancellation of orders and the gain or loss of
significant customers, including those due to industry combinations and (v)
the relative unpredictability of timing of customer orders due to the relative
concentration of organizations with large field-service work forces. Moreover,
any downturn in general economic conditions could precipitate significant
reductions in corporate spending for telecommunications equipment, which could
result in delays or cancellations of orders for Itronix's products. Itronix's
expense levels are relatively fixed and are based, in significant part, on
expectations of future revenues. Currently, costs are much higher as a
percentage of revenues for Itronix than for the Company overall. As a result
of its unpredictable revenues, costs at times can be disproportionately high
as a percentage of Itronix's business. If, as a result of these factors,
Itronix's costs continue to exceed its revenues, Itronix's stand-alone
financial condition and results of operations would be materially adversely
affected.
RELIANCE ON KEY PERSONNEL
The Company's success depends in large part upon its senior management, as
well as its ability to attract and retain its highly-skilled technical,
managerial, sales and marketing personnel, particularly engineers skilled and
experienced with communications equipment. Competition for such personnel is
intense and there can be no assurance that the Company will be successful in
retaining its existing key personnel and in attracting and retaining the
personnel it requires. Failure to attract and retain key personnel will have a
material adverse effect on the Company's business, financial condition and
results of operations. In addition, continued labor market shortages of
technical personnel may require wage increases well in excess of the growth in
the Company's sales and margins, thereby reducing the overall profitability of
the Company.
CONTROL BY CDR FUND V
As a result of the recapitalization, CDR Fund V controls approximately 92.3%
of the outstanding shares of Recapitalized Common Stock of Dynatech. As a
result of its stock ownership, CDR Fund V controls Dynatech and its
subsidiaries and has the power to elect the directors of Dynatech, appoint new
management, and approve any action requiring approval by the stockholders of
Dynatech, including adopting certain amendments to the articles of
organization of Dynatech and approving any merger or sale of all or
substantially all the assets of Dynatech. The directors so elected have the
authority to effect decisions affecting the capital structure of Dynatech and
its subsidiaries, including the incurrence of additional indebtedness,
issuance of preferred stock and the declaration of dividends. There can be no
assurances that the policies of Dynatech in effect prior to the
Recapitalization with respect to such matters or other matters will continue.
There can be no assurance that the interests of CDR Fund V will not conflict
with the interests of holders of the Notes. CDR Fund V has agreed, pursuant to
certain employment agreements with Messrs. Reno, Kline and Peeler, to elect
them to serve as directors of Dynatech so long as they are employed by
Dynatech.
CHANGE OF CONTROL
The Indenture provides that, under certain conditions upon the occurrence of
a Change of Control, the Company will be required to make an offer to purchase
all or any part of the Notes at a price in cash equal to
18
<PAGE>
101% of the aggregate principal amount thereof plus accrued and unpaid
interest, if any, to the date of purchase. The Senior Credit Facility
agreements generally prohibit the Company from so repurchasing any Notes and
will also provide that certain change of control events with respect to the
Company would constitute a default thereunder. Any other agreement relating to
Senior Indebtedness to which the Company becomes a party may contain similar
provisions. If the Company does not repay or refinance borrowings having such
provisions or otherwise obtain consent to purchase the Notes under such
agreements, any resulting failure to offer to purchase or to purchase Notes
would constitute an Event of Default (as defined) under the Indenture. If, as
a result thereof, a default occurs with respect to any Senior Indebtedness,
the subordination provisions in the Indenture would likely restrict payments
to the holders of the Notes. Moreover, the exercise by the holders of the
Notes of their right to require the Company to repurchase the Notes could
cause a default under such agreements, even if the Change of Control itself
does not, due to the financial effect of such repurchase on the Company.
Finally, the Company's ability to pay cash to the holders upon a repurchase
may be limited by the Company's then existing financial resources. There can
be no assurance that sufficient funds will be available when necessary to make
any required repurchases. See "Description of Notes--Change of Control" and
"--Ranking" and "Description of Senior Credit Facility."
FRAUDULENT TRANSFER CONSIDERATIONS
The incurrence of indebtedness by the Company, such as the Notes, may be
subject to review under federal or state fraudulent transfer laws in the event
the Company is the subject of a bankruptcy filing or lawsuit commenced by or
on behalf of unpaid creditors of the Company. Under such laws, if a court in a
lawsuit by a creditor or a representative of creditors of the Company, such as
a trustee in bankruptcy, were to find that, at the time the Company incurred
indebtedness, including indebtedness under the Notes, the Company (i) was
insolvent or rendered insolvent thereby, (ii) was engaged in a business or
transaction for which its remaining assets constituted an unreasonably small
amount of capital, (iii) intended to incur, or believed that it would incur,
debts beyond its ability to pay as they matured, or (iv) intended to hinder,
delay or defraud current or future creditors and, in the case of clauses (i),
(ii) and (iii), that the Company did not receive reasonably equivalent value
or fair consideration for incurring such indebtedness, such court could avoid
or subordinate the amounts owing under the Notes to presently existing and
future indebtedness of the Company and take other actions detrimental to the
holders of the Notes.
If a court were to find that the Company came within any of clauses (i)
through (iv) above, the Company, or its creditors or the trustee in
bankruptcy, could seek to avoid the grant of security interests to the lenders
under the Senior Credit Facility. This would result in an event of default
with respect to indebtedness incurred under the Senior Credit Facility which,
under its terms (subject to applicable law), would allow the lenders to
terminate their obligations thereunder and to accelerate repayment of such
indebtedness.
The measure of insolvency for purposes of the foregoing will vary depending
upon the law of the jurisdiction which is being applied. Generally, however, a
company would be considered insolvent for purposes of the foregoing if, at the
time it incurred the indebtedness, (i) the sum of such company's debts
including contingent liabilities is greater than all such company's property
at a fair valuation, (ii) the present fair saleable value of such company's
assets is less than the amount that will be required to pay its probable
liability on its existing debts and liabilities (including contingent
liabilities) as they become absolute and matured or (iii) the company incurred
obligations beyond its ability to pay as such obligations become due. There
can be no assurance as to what standards a court would use to determine
whether the Company was solvent at the relevant time, or whether, whatever
standard were to be used, the Notes would not be avoided or further
subordinated on another of the grounds set forth above. In rendering their
opinions in connection with the initial borrowings in connection with the
Merger, counsel for the Company and counsel for the lenders did not express
any opinion as to the applicability of federal or state fraudulent transfer
and conveyance laws. Moreover, any solvency analysis conducted in connection
with the Merger would not be binding on a court and there can be no assurance
that a court would not determine that the Company was insolvent at the time of
or after giving effect to the Merger.
19
<PAGE>
The Company believes that at the time the indebtedness constituting the
Existing Notes was incurred initially by the Company, the Company (i) was (a)
neither insolvent nor rendered insolvent thereby, (b) in possession of
sufficient capital to run its businesses effectively and (c) incurring debts
within its ability to pay as the same mature or become due and (ii) had
sufficient assets to satisfy any probable money judgment against it in any
pending action. In reaching the foregoing conclusions, the Company relied upon
its analyses of internal cash flow projections and estimated values of assets
and liabilities of the Company. There can be no assurance, however, that a
court passing on such questions would reach the same conclusions.
YEAR 2000 COMPLIANCE
The Company has commenced a review of its computer systems and products in
order to assess its exposure to Year 2000 issues. The Company is currently in
the process of determining the full scope, related costs and action plan to
ensure that the Company's systems continue to meet its internal needs and
those of its customers. The Company expects to make the necessary
modifications or changes to its computer information systems to enable proper
processing of transactions relating to the Year 2000 and beyond. However,
there can be no assurance that Year 2000 costs and expenses will not have a
material adverse effect on the Company. In addition, the Company does not
currently have complete information concerning the Year 2000 compliance status
of its suppliers and customers. In the event that any of the Company's
significant suppliers or customers do not successfully and timely achieve Year
2000 compliance, the Company's business or operations could be materially
adversely affected. Finally, there can be no assurance that the Company's
existing or installed base of products are Year 2000 compliant, or that the
Company's products will not be integrated by the Company or its customers
with, or otherwise interact with, non-compliant software or other products.
Any such product non-compliance may expose the Company to claims from its
customers and others, and could impair market acceptance of the Company's
products and services, increase service and warranty costs, or result in
payment of damages, which in turn could materially adversely affect the
Company.
MARKET SHARE AND COMPETITIVE POSITION DATA
There are no independent third party sources that publicly disseminate
market share and competitive position data for all of the markets in which the
Company competes. Accordingly, a substantial part of the market share and
competitive position data in this Prospectus is based upon data compiled by
the Company for use in the ordinary course of its business to assess its
competitive position. Data with respect to sales of test, analysis,
communications and computing equipment sales by other companies has been
derived, where available, from data published by those companies, but has not
been independently verified by the Company. Many of the Company's competitors
do not publish revenue or other sales data for products sold in competition
with the Company's products and, accordingly, the Company has compiled its
data based upon estimates of such sales. Although the Company believes that
its estimates of its market shares and competitive position data are
reasonable, such estimates have not been verified by independent third party
sources and there can be no assurance that such data is accurate.
FORWARD-LOOKING STATEMENTS MAY NOT PROVE ACCURATE
When used in this Prospectus the words "anticipate," "estimate," "project,"
and similar expressions are intended to identify forward-looking statements.
Forward-looking statements are made based upon management's expectations and
beliefs concerning future developments and their potential effect upon the
Company, and actual results will vary. In addition, such statements are
subject to certain risks, uncertainties and assumptions, including but not
limited to the risks set forth above in this "Risk Factors" section. Should
one or more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those
anticipated, estimated or projected. There can be no assurance that the future
developments will be in accordance with management's expectations or that the
effect of future developments will be those anticipated by management. See
"Management's Discussion and Analysis." The forward-looking statements
contained herein are made as of the date of this Prospectus and the Company
assumes no obligation to update the forward-looking statements or to update
the reasons why the actual results could differ from those in the forward-
looking statements.
20
<PAGE>
ABSENCE OF PUBLIC MARKET; RESTRICTIONS ON RESALES
The New Notes are new securities for which there presently is no established
market and none may develop. The Existing Notes have not been registered under
the Securities Act and are subject to restrictions on transferability and
resale. Although the Initial Purchasers have informed the Company that they
intend to make a market in the Existing Notes, and if issued, the New Notes,
the Initial Purchasers are not obligated to do so and any such market making
may be discontinued at any time without notice, at the sole discretion of the
Initial Purchasers. In addition, such market making activity may be limited
during the pendency of the Exchange Offer or the effectiveness of a Shelf
Registration Statement (as defined) in lieu thereof. Accordingly, there can be
no assurance as to the development or liquidity of any market for the Existing
Notes or, if issued, the New Notes. If an active market for the Existing Notes
or, if issued, the Exchange Notes, fails to develop or be sustained, the
trading price of the Existing Notes or New Notes could be materially adversely
affected. The Existing Notes are eligible for trading through the PORTAL
market. The Company does not intend to apply for listing of the New Notes on
any securities exchange or for quotation of the New Notes through the National
Association of Securities Dealers Automated Quotation System. See "Plan of
Distribution."
CONSEQUENCES OF FAILURE TO EXCHANGE AND REQUIREMENTS FOR TRANSFER OF NEW NOTES
To the extent that Existing Notes are tendered and accepted in the Exchange
Offer, the trading market for the remaining untendered or tendered but not
accepted Existing Notes could be adversely affected. Because the Company
anticipates that most holders of the Existing Notes will elect to exchange
such Existing Notes for New Notes due to the absence of restrictions on the
resale of New Notes under the Securities Act, the Company anticipates that the
liquidity of the market for any Existing Notes remaining after the
consummation of the Exchange Offer may be substantially limited.
The liquidity of, and trading market for, the Notes also may be adversely
affected by general declines in the market or by declines in the market for
similar securities. Such declines may adversely affect such liquidity and
trading markets independent of the financial performance of, and prospects
for, the Company.
Holders of Existing Notes who do not exchange their Existing Notes for New
Notes pursuant to the Exchange Offer will continue to be subject to the
restrictions on transfer of such Existing Notes as set forth in the legend
thereon as a consequence of the issuance of the Existing Notes pursuant to
exemptions from or in transactions not subject to, the registration
requirements of the Securities Act and applicable state securities laws. In
general, the Existing Notes may not be offered or sold, unless registered
under the Securities Act, except pursuant to an exemption from, or in a
transaction not subject to, the Securities Act and applicable state securities
laws. The Company does not currently anticipate that it will register Existing
Notes under the Securities Act. Based on interpretations by the staff of the
Commission, as set forth in no-action letters issued to third parties, the
Company believes that New Notes issued pursuant to the Exchange Offer in
exchange for Existing Notes may be offered for resale, resold or otherwise
transferred by holders thereof (other than any such holder which is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such New Notes are acquired in
the ordinary course of such holders' business and such holders have no
arrangement with any person to participate in the distributions of such New
Notes. However, the Commission has not considered the Exchange Offer in the
context of a no-action letter and there can be no assurance that the staff of
the Commission would make a similar determination with respect to the Exchange
Offer as in such other circumstances. Each holder, other than a broker-dealer,
must acknowledge that it is not engaged in, and does not intend to engage in,
a distribution of New Notes and has no arrangement or understanding to
participate in a distribution of New Notes. If any holder is an affiliate of
the Company, is engaged in or intends to engage in or has any arrangement or
understanding with respect to the distribution of the New Notes to be acquired
pursuant to the Exchange Offer, such holder (i) could not rely on the
applicable interpretations of the staff of the Commission and (ii) must comply
with the registration and prospectus delivery requirements of the Securities
Act in connection with any resale transaction. Each broker-dealer that
receives New Notes for its own account pursuant to the Exchange Offer must
acknowledge that it will deliver a prospectus in connection with any resale of
such New Notes. The
21
<PAGE>
Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-
dealer in connection with resales of New Notes received in exchange for
Existing Notes where such Existing Notes were acquired by such broker-dealer
as a result of market-making activities or other trading activities. For a
period of 90 days after the Expiration Date, the Company will make this
Prospectus available to any broker-dealer for use in connection with any such
resale. See "Plan of Distribution." However, to comply with the securities
laws of certain jurisdictions, if applicable, the New Notes may not be offered
or sold unless they have been registered or qualified for sale in such
jurisdictions or an exemption from registration or qualification is available
and is complied with. See "The Exchange Offer--Consequences of Exchanging Old
Notes."
USE OF PROCEEDS
There will be no cash proceeds payable to the Company from the issuance of
New Notes pursuant to the Exchange Offer. The proceeds of the Offering of the
Existing Notes were used to fund a portion of the financings for the
Recapitalization and related translations, including payments in respect of
common stock and options for common stock of Dynatech, and payment of
transaction-related fees and expenses. For further discussion of the sources
and uses of funds related to the Recapitalization, see "The Recapitalization."
22
<PAGE>
CAPITALIZATION
The following table sets forth the (i) consolidated cash and equivalents and
capitalization of the Company at March 31, 1998 and (ii) the unaudited
consolidated cash and equivalents and capitalization of the Company at March
31, 1998 after giving pro forma effect to the Merger and related transactions
as if they had occurred on March 31, 1998. This table should be read in
conjunction with "Selected Historical and Pro Forma Consolidated Financial
Data," "Unaudited Pro Forma Condensed Consolidated Financial Data,"
"Management's Discussion and Analysis," and the consolidated financial
statements (including the notes thereto) appearing elsewhere in this Offering
Circular.
<TABLE>
<CAPTION>
MARCH 31, 1998
------------------------
ACTUAL PRO FORMA
---------- ------------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Cash and equivalents................................. $ 64.9 $ 43.6
========== ===========
Debt:
Existing debt...................................... $ 0.2 $ 0.2
Merger Financings:
Senior Credit Facility........................... -- 260.0
Notes............................................ -- 275.0
Revolving Credit Facility........................ -- 32.9
---------- -----------
Total debt....................................... 0.2 568.1
---------- -----------
Shareholders' equity (deficit):
Dynatech Common Stock, including additional paid-
in-capital........................................ 11.3 --
Recapitalized Common Stock, including additional
paid-in-capital................................... -- 304.1
Retained earnings (deficit)........................ 237.3 (647.6)
Cumulative translation adjustments................. (1.6) (1.6)
Treasury stock..................................... (44.9) --
---------- -----------
Total shareholders' equity (deficit)............. 202.1 (345.1)
---------- -----------
Total capitalization............................. $ 202.3 $ 223.0
========== ===========
</TABLE>
23
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA
The following unaudited pro forma condensed consolidated financial data of
the Company has been prepared to give effect to the Merger and related
transactions as a recapitalization for financial reporting purposes.
Accordingly, the historical basis of the Company's assets and liabilities will
not be affected by the transactions. For a discussion of the Merger and
related transactions, see "The Recapitalization."
The pro forma adjustments presented are based upon available information and
certain assumptions that the Company believes are reasonable under the
circumstances. The historical condensed consolidated statements of continuing
operations data for the year ended March 31, 1998 were derived from the
audited consolidated financial statements of the Company included elsewhere
herein.
The unaudited pro forma condensed consolidated statement of continuing
operations data of the Company for the year ended March 31, 1998 give effect
to the Merger as if it had occurred on April 1, 1997. The unaudited pro forma
condensed consolidated balance sheet data of the Company as of March 31, 1998
give effect to the Merger assuming that it was completed on March 31, 1998.
The unaudited pro forma financial data should be read in conjunction with
the historical consolidated financial statements of the Company and notes
thereto, "Management's Discussion and Analysis" and the other financial data
included elsewhere in this Offering Circular, as well as the information
concerning the Merger, including the sources and uses therefor, contained in
"The Recapitalization."
The pro forma financial data and related notes are provided for
informational purposes only and do not necessarily reflect the results of
operations or financial position of the Company that would have actually
resulted had the events referred to above or in the notes to the unaudited pro
forma financial data been consummated as of the date and for the period
indicated and are not intended to project the Company's financial position or
results of operations for any future period.
24
<PAGE>
DYNATECH CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF CONTINUING OPERATIONS DATA
FOR THE YEAR ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
DYNATECH
FOR THE YEAR ENDED RECAPITALIZATION PRO FORMA
MARCH 31, 1998 ADJUSTMENTS MARCH 31, 1998
------------------ ---------------- --------------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Sales...................... $472,948 $472,948
Cost of sales.............. 205,522 205,522
-------- --------
Gross profit............... 267,426 267,426
Selling, general and admin-
istrative expense......... 138,310 138,310
Product development ex-
pense..................... 54,995 54,995
Amortization of intangi-
bles...................... 5,835 5,835
-------- --------
Operating income........... 68,286 68,286
Interest income............ 3,012 3,012
Interest expense........... (1,221) $(53,966)(a) (55,187)
Other income, net.......... 730 (500)(b) 230
-------- -------- --------
Income before income tax-
es........................ 70,807 (54,466) 16,341
Provision (benefit) for in-
come taxes................ 29,031 (21,786)(c) 7,245
-------- -------- --------
Income from continuing op-
erations.................. $ 41,776 $(32,680) $ 9,096
======== ======== ========
Income per common share(j)
Basic.................... $ 2.49 $ 0.08
======== ========
Diluted.................. $ 2.40 $ 0.08
======== ========
Weighted average number of
common shares
Basic.................... 16,795 120,000
Diluted.................. 17,434 120,539
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Statements of
Continuing Operations Data.
25
<PAGE>
DYNATECH CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF CONTINUING OPERATIONS DATA
(AMOUNTS IN THOUSANDS)
(a) Reflects the following:
<TABLE>
<CAPTION>
YEAR
ENDED
MARCH 31, 1998
--------------
<S> <C>
Interest resulting from borrowings under the $32.9 million re-
volving credit facility at an assumed interest rate of LIBOR +
2.25% (7.9%).................................................. $ 2,632
Interest resulting from $50 million term loan under the Senior
Credit Facility at an assumed interest rate of LIBOR + 2.25%
(7.9%)........................................................ 3,938
Interest resulting from $70 million term loan under the Senior
Credit Facility at an assumed interest rate of LIBOR + 2.50%
(8.1%)........................................................ 5,688
Interest resulting from $70 million term loan under the Senior
Credit Facility at an assumed interest rate of LIBOR + 2.75%
(8.4%)........................................................ 5,863
Interest resulting from $70 million term loan under the Senior
Credit Facility at an assumed interest rate of LIBOR + 3.0%
(8.6%)........................................................ 6,036
Interest resulting from $275 million of gross proceeds related
to the issuance of Notes at an assumed interest rate of
9.75%......................................................... 26,813
Amortization of debt issuance costs associated with the Senior
Credit Facility and the issuance of Notes..................... 2,996
-------
$53,966
-------
(b) Reflects the annual fee payable to Clayton Dubilier & Rice,
Inc. for management and financial consulting services pro-
vided to the Company......................................... $ 500
-------
(c) Reflects the tax effect of the pro forma adjustments assuming
an effective tax rate of 40%................................. $21,786
=======
</TABLE>
(d) The Unaudited Pro Forma Condensed Consolidated Statements of Continuing
Operations Data exclude the following non-recurring items that are
directly attributable to the Recapitalization transactions:
1. A compensation charge of $13.6 million associated with the cash
settlement (net of related tax benefit) relating to certain stock
options that will be retired or canceled as a result of the Merger.
2. A non-cash compensation charge of $10.7 million (net of related tax
benefit) relating to the conversion of certain stock options into fully
vested and exercisable equivalent options to purchase shares of
Recapitalized Common Stock.
(e) The Financial Accounting Standards Board has issued Statement No. 128,
(titled "Earnings Per Share"), which modifies the way in which earnings
per share ("EPS") data is calculated and disclosed. The Company adopted
this standard for the interim period ending December 31, 1997, and has
restated all prior period EPS data presented. See "Management's Discussion
and Analysis--New Pronouncements."
26
<PAGE>
DYNATECH CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET DATA
AS OF MARCH 31, 1998
<TABLE>
<CAPTION>
RECAPITALIZATION
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ---------------- ---------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........... $ 64,904 $ (21,285)(a) $ 43,619
Accounts receivable, net............ 69,988 69,988
Inventories......................... 48,882 48,882
Other current assets................ 16,823 16,823
-------- --------- ---------
Total current assets.............. 200,597 (21,285) 179,312
Property and equipment, net........... 26,365 26,365
Intangible assets, net................ 39,595 39,595
Other assets.......................... 21,573 41,935 (b) 63,508
-------- --------- ---------
$288,130 $ 20,650 $ 308,780
======== ========= =========
LIABILITIES & EQUITY
Current liabilities:
Notes payable & current portion of
long-term debt..................... $ 150 $ 150
Accounts payable.................... 22,933 22,933
Accrued expenses.................... 58,967 58,967
Net liabilities of discontinued op-
erations........................... 756 756
-------- ---------
Total current liabilities......... 82,806 82,806
Long-term debt...................... 83 $ 567,900 (c) 567,983
Other liabilities................... 3,122 3,122
-------- --------- ---------
3,205 567,900 571,105
SHAREHOLDERS' EQUITY (DEFICIT)
Common stock, including additional
paid-in-capital...................... 11,368 (11,368)(d) --
Recapitalized common stock, including
additional paid-in-capital........... -- 304,092 (e) 304,092
Retained earnings (deficit)........... 237,282 (884,905)(f) (647,623)
Cumulative translation adjustments.... (1,600) (1,600)
Treasury stock........................ (44,931) 44,931 (g) --
-------- --------- ---------
Total Shareholders' equity (defi-
cit)............................. 202,119 (547,250) (345,131)
-------- --------- ---------
$288,130 $ 20,650 $ 308,780
======== ========= =========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet Data.
27
<PAGE>
DYNATECH CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED BALANCE SHEET DATA
AS OF MARCH 31, 1998
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS)
<S> <C>
(a)Reflects the following:
Total Sources
Borrowings under Term Loan Facility................. $260,000
Borrowing under Revolving Credit Facility........... 32,900
Proceeds of Notes................................... 275,000
Proceeds from issuance of 111,590,528 shares........ 277,000
--------
$844,900
--------
Total Uses
Consideration to convert to cash 16,818,945 shares
at $47.75 per share................................ $803,105
Consideration to convert to cash certain stock op-
tions in an amount equal to the excess of $49 per
share over the exercise price per share of Common
Stock subject to such settled options, net of re-
lated tax benefit.................................. 23,557
Estimated transaction fees and expenses............. 39,523
--------
866,185
--------
Net Use of Cash..................................... $(21,285)
========
(b)Reflects the following:
Deferred issuance costs incurred in connection with
the incurrence of the Senior Credit Facility and
Notes................................................ $ 25,700
Tax benefit arising from the conversion of certain
stock options into equivalent options to purchase
shares of Recapitalized Common Stock................. 7,156
Tax benefit asset arising from the conversion to cash
of certain stock options in an amount equal to the
excess of $49 per share over the exercise price per
share of Common stock subject to such settled op-
tions................................................ 9,079
--------
$ 41,935
========
(c)Reflects the following:
Borrowings under Revolving Credit Facility............ $ 32,900
Borrowings under Term Loan Facility................... 260,000
Proceeds of Notes..................................... 275,000
--------
$567,900
========
(d)Reflects the following:
Cancellation of 16,864,434 shares and historical addi-
tional paid-in-capital............................... $ (9,369)
Conversion of 40,804 shares into 799,758 shares in
MergerCo............................................. (1,999)
--------
$(11,368)
========
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS)
<S> <C>
(e)Reflects the following:
Conversion of 799,578 shares of MergerCo common stock
into Recapitalized Common Stock...................... $ 1,999
Proceeds from issuance of 111,590,528 shares.......... 276,977
Estimated fees and expenses to be paid by the Company
in connection with the Recapitalization.............. (13,800)
Conversion of certain stock options into equivalent
options to purchase shares of Recapitalized Common
Stock................................................ 17,892
Conversion of 16,864,434 shares of Common Stock
(excluding shares held by MergerCo and held in
treasury assumed to be canceled) into 0.5 shares per
share of Recapitalized Common Stock (totaling
8,409,473 shares of Recapitalized Common Stock)...... 21,024
---------
$ 304,092
=========
(f)Reflects the following:
Conversion of 16,864,434 shares into $47.75 per share
in cash and 0.5 shares of Recapitalized Common
Stock................................................ $(860,551)
Compensation expense arising from the conversion to
cash of certain stock options in an amount equal to
the excess of $49 per share over the exercise price
per share of Common Stock subject to such settled op-
tions................................................ (22,697)
Compensation expense arising from the conversion of
1,100,000 stock options held by certain members of
management into equivalent options to purchase shares
of Recapitalized Common Stock........................ (10,736)
Tax benefit arising from the conversion of stock op-
tions................................................ 9,079
---------
$(884,905)
=========
</TABLE>
(g) Reflects the retirement of treasury shares.
29
<PAGE>
SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA
The selected historical consolidated financial and other data for the five
fiscal years ended March 31, 1998 have been derived from, and should be read
in conjunction with, the audited historical Consolidated Financial Statements,
and related notes thereto, of the Company. The unaudited pro forma balance
sheet data reflects the Merger and related transactions as if they had
occurred on March 31, 1998. The unaudited pro forma income statement data
exclude certain non-recurring items directly attributable to the Merger and
related transactions and the acquisition of Itronix. The pro forma adjustments
were applied to the historical financial statements to give effect to the
Merger and related transactions as a recapitalization for financial reporting
purposes. Accordingly, the historical basis of the Company's assets and
liabilities will not be affected by the transaction. The pro forma financial
and other data are provided for information purposes only and do not
necessarily reflect the results of operations or financial position of the
Company that would have actually occurred had the events referred to above
been consummated as of the date and for the periods indicated and are not
intended to project the Company's financial position or results for any future
period. The following table should be read in conjunction with "Management's
Discussion and Analysis."
<TABLE>
<CAPTION>
PRO FORMA
UNAUDITED
YEARS ENDED MARCH 31, YEAR ENDED
---------------------------------------------- MARCH 31,
1994 1995 1996(A) 1997(B) 1998 1998
-------- -------- -------- -------- -------- ----------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Sales................... $199,612 $243,078 $293,042 $362,412 $472,948 $472,948
Cost of sales........... 72,103 91,412 111,436 137,254 205,522 205,522
-------- -------- -------- -------- -------- --------
Gross profit............ 127,509 151,666 181,606 225,158 267,426 267,426
Selling, general and ad-
ministrative expenses.. 70,719 86,329 98,487 114,479 138,310 138,310
Product development ex-
penses................. 26,863 30,585 36,456 43,267 54,995 54,995
Non-recurring
charges(c)............. -- -- 16,852 27,776 -- --
Amortization of intangi-
bles................... 5,728 5,106 5,136 6,793 5,835 5,835
-------- -------- -------- -------- -------- --------
Operating income........ 24,199 29,646 24,675 32,843 68,286 68,286
Net interest and other
income/(expense)....... (352) (1,551) 1,433 2,591 2,521 (51,945)
-------- -------- -------- -------- -------- --------
Income from continuing
operations before
income taxes........... 23,847 28,095 26,108 35,434 70,807 16,341
Provision for income
taxes.................. 9,897 11,671 10,394 17,585 29,031 7,245
-------- -------- -------- -------- -------- --------
Income from continuing
operations(d).......... $ 13,950 $ 16,424 $ 15,714 $ 17,849 $ 41,796 $ 9,096
======== ======== ======== ======== ======== ========
Income per common share
from continuing
operations--basic(e)... $ 0.75 $ 0.92 $ 0.87 $ 1.04 $ 2.49 $ 0.08
Income per common share
from continuing
operations--
diluted(e)............. $ 0.75 $ 0.91 $ 0.86 $ 0.99 $ 2.40 $ 0.08
Weighted average number
of shares
Basic.................. 18,579 17,846 17,969 17,200 16,795 120,000
Diluted................ 18,678 17,971 18,315 18,028 17,434 120,539
BALANCE SHEET DATA:
Total assets............ $280,553 $256,392 $205,189 $250,035 $288,130
Long term debt.......... 33,006 7,915 1,800 5,226 83
Total stockholders
equity/(deficit)....... 142,643 154,320 160,719 160,686 202,119
Shareholders'
equity/(deficit) per
share.................. $ 7.67 $ 8.78 $ 9.14 $ 9.57 $ 11.99
OTHER DATA:
EBITDA(f)............... $ 37,179 $ 42,514 $ 55,917 $ 77,326 $ 86,912 $ 86,912
Depreciation and amorti-
zation................. 10,782 12,018 13,415 16,073 17,901
Capital expenditures.... 7,900 8,800 8,198 10,176 15,879
Ratio of earnings to
fixed charges(g)....... 5.5x 6.2x 8.2x 13.2x 19.1x 1.2x
</TABLE>
30
<PAGE>
NOTES TO SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA
(a) On September 1, 1995, the Company acquired substantially all of the
business and assets of Tele-Path Industries, Inc. for $23.6 million, of
which approximately $12.6 million was in cash and the remaining $11.0
million was from the issuance of 688,096 shares of Common Stock.
(b) On December 31, 1996, the Company acquired the assets and liabilities and
assumed certain liabilities of Itronix, located in Spokane, Washington,
for $65.4 million in cash.
(c) The 1997 non-recurring charges included a $20.6 million non-cash charge
for incomplete technology which had not reached technological feasibility
and had no alternative use, purchased as part of the acquisition of
Itronix. In addition, the Company recorded a non-cash charge of $7.2
million related to the impairment of intangible assets, principally
related to the effects of product and distribution transitions. In 1996
the Company purchased incomplete technology activities as a part of the
acquisition of Tele-Path Industries, Inc. resulting in a pretax non-cash
charge of $16.9 million. Both the $20.6 million and $16.9 million non-cash
charges related to purchased incomplete technology and were not considered
in the pro forma income statement data as these amounts resulted directly
from such acquisitions and are non-recurring.
(d) A formal plan to discontinue non-core businesses was approved by the Board
of Directors of Dynatech on February 7, 1996. In fiscal 1997, the Company
essentially completed its disposition of the non-core businesses, which
resulted in an after-tax gain from discontinued operations of $12.0
million. See "Business--Discontinued Operations and Divested Businesses."
(e) The Financial Accounting Standards Board has issued Statement No. 128
(titled "Earnings Per Share"), which modifies the way in which EPS data is
calculated and disclosed. The Company adopted this standard for the
interim period ending December 31, 1997 and has restated all prior EPS
data presented. See "Management's Discussion and Analysis--New
Pronouncements."
(f) EBITDA represents operating income and other income (expense), before
depreciation and amortization and excludes non-recurring charges. While
EBITDA is not intended to represent cash flow from operations as defined
by generally accepted accounting principles or as a measure of liquidity,
it is included herein to provide additional information with respect to
the ability of the Company to meet future debt service, capital
expenditures and working capital requirements. See "Management's
Discussion and Analysis."
(g) For the purposes of calculating the ratio of earnings to fixed charges,
earnings represent income from continuing operations before income taxes
and fixed charges. Fixed charges consist of the total of (i) interest,
whether expensed or capitalized, (ii) amortization of debt expense and
discount or premium relating to any indebtedness, whether expensed or
capitalized and (iii) that portion of rental expense considered to
represent interest cost.
31
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
This discussion contains forward-looking statements concerning the Company's
operations, economic performance and financial condition, all of which involve
risks and uncertainties. Forward-looking statements are made based upon
management's expectations and beliefs concerning future developments and their
potential effect upon the Company. The Company's actual results may differ
significantly from management's expectations and there can be no assurance
that the effects of future developments on the Company will be those
anticipated by management. There are certain factors that might cause such a
difference. These factors include, but are not limited to, product demand and
market acceptance risks, the effect of economic conditions, the impact of
competitive products and pricing, product development, commercialization and
technological difficulties, capacity and supply constraints or difficulties,
availability of capital resources, general business and economic conditions,
the effect of the Company's accounting policies, and other risks detailed
herein. See "Risk Factors."
OVERVIEW
The Merger. On May 21, 1998, MergerCo, which was organized at the direction
of CDR, was merged with and into the Company with the Company continuing as
the surviving corporation. In the Merger, (i) each then outstanding share of
Common Stock was converted into the right to receive $47.75 in cash and 0.5
shares of Recapitalized Common Stock and (ii) each then outstanding share of
common stock of MergerCo was converted into one share of Recapitalized Common
Stock.
As a result of the Merger, CDR Fund V holds approximately 92.3% of the
Recapitalized Common Stock. Mr. Reno together with two family trusts holds
approximately 0.7% of the Recapitalized Common Stock and other Stockholders
hold approximately 7.0% of the Recapitalized Common Stock.
In connection with the Merger, the Company entered into a senior credit
agreement with certain lenders providing for the Senior Credit Facility
including a $260 million Term Loan Facility and a $110 million Revolving
Credit Facility. In connection with the Merger, the Company also completed the
offering of the Existing Notes. On May 31, 1998, the Company had a total of
$575.2 million of debt, which consisted primarily of $275 million principal
amount of the Existing Notes, $260 million in term loan borrowings under the
Term Loan Facility and $40 million in revolving credit borrowings under the
Revolving Credit Facility.
The Merger was accounted for as a recapitalization of Dynatech, which had no
impact on the historical basis of assets and liabilities as reflected in the
financial statements of Dynatech. However, the Merger involved a change in the
Company's capital structure which will lead to, among other things, higher
reported interest expense. As a result, operating results for periods
subsequent to the Merger will not be comparable in all material respects to
operating results for periods prior to the Merger.
General. The Company develops, manufactures and sells test, analysis,
communications and computing equipment in three product categories: (i)
communications test instruments, (ii) industrial computing and communications,
and (iii) visual communications. In its communications test business, the
Company provides products that test and analyze communications networks and
equipment. In its industrial computing and communications business, the
Company addresses two areas of the worldwide ruggedized computer market
through two of its subsidiaries: (i) ICS, which provides computer products for
use in harsh environments, and (ii) Itronix, which provides ruggedized
portable computing and communications devices to field-service organizations
such as telephone companies. In its visual communications business, the
Company sells visual communications products principally through two of its
subsidiaries: (i) AIRSHOW, which provides passenger cabin video information
display systems for the general and commercial aviation markets and (ii) da
Vinci, which provides digital color enhancement systems used in transferring
film images into electronic signals. Since 1993, the Company has sold 25 non-
core businesses for gross proceeds of approximately $211 million pursuant to a
plan to focus on businesses that enjoy leading positions in their respective
markets, strong profitability, and good growth prospects.
32
<PAGE>
Current and Historical Trends. The Company believes that overall trends in
the communications industry are the most significant trends affecting the
Company's sales and results of operations. The 18.3% average annual increase
in sales of its communications test instruments products from fiscal 1996 to
1998 was principally driven by market growth and new product introductions by
the Company. The Company believes that demand for communications test
equipment during that period resulted from the combination of increased
competition among existing and new telecommunications service providers, the
proliferation of new telecommunications services and the increased usage of
technologies related to wireless and internet services. The Company believes
that these trends have driven overall communications test instrument industry
growth of approximately 10-12% annually in recent years. Growth rates vary
widely across segments of the market and are typically higher in segments that
support the development of high growth communications services such as
Asynchronous Transfer Mode, frame relay and wireless services.
The Company believes the communications test and monitoring systems market
(in which the Company is now beginning to participate) is growing at
approximately 12% annually, driven by the needs of service providers to
provider higher quality networks and to reduce costs through efficiency, which
may be gained by using test and monitoring systems.
The Company's other businesses similarly benefit from growth in their
customers' markets. Growth in demand for AIRSHOW's products, for example, is
driven in part by growth in the general aviation market, which management
projects to grow at approximately 20% in 1998.
Operating Profit. From fiscal 1996 to 1998 the Company increased operating
profit, excluding non-recurring charges, by a compound annual growth of 28.2%,
driven primarily by sales growth and the Company's acquisitions during this
period. Excluding non-recurring charges, operating profit margins also
increased from 14.2% of consolidated sales to 14.4% of consolidated sales for
the same period. The non-recurring charges included a charge of $16.9 million
for purchased incomplete technology related to the acquisition of Tele-Path
Industries, Inc., and $27.8 million for purchased incomplete technology and
impaired intangible asset writeoffs in fiscal 1996 and fiscal 1997,
respectively. Itronix, as a manufacturer of ruggedized portable computing and
communications hardware, generally has lower margins than the Company's other
businesses. As a result, profitability of the Company's industrial computing
and communications businesses is lower than the average profitability of the
Company's other businesses. Itronix is also currently facing significant
manufacturing and marketing challenges, including competition from "semi-
rugged" portable computers that constrains pricing of premium ruggedized
products like Itronix's. The Company has taken several steps designed to
improve the operating performance of Itronix, including programs designed to
reduce costs and streamline manufacturing, as well as a change in Itronix
senior management. The Company anticipates improvements in Itronix's
performance in fiscal 1999, although there can be no assurance that Itronix
will return to profitability. See "Risk Factors--Risks Relating to Itronix."
Seasonality. As a result of purchasing patterns of its telecommunications
customers, which tend to place large orders periodically, typically at the end
of the Company's first and third fiscal quarters, the Company expects its
results of operations to vary significantly on a quarterly basis, as they have
in the past. In addition, growth rates and results of operations for Itronix
also have varied widely and are expected to continue to do so because of the
relatively small number of potential customers with large field-service work
forces, the timing and size of whose orders are irregular.
Product Development. The market for the Company's products is characterized
by changing technology, evolving industry standards and protocols, and
frequent introductions of new products. Automation in the Company's addressed
markets for communications test instruments or a shift in customer emphasis
from communications test instruments to test and monitoring systems could
render the Company's existing product offerings obsolete or unmarketable or
reduce the size of the Company's addressed market. In particular,
incorporation of self-testing functions in the equipment currently addressed
by the Company's communications test instruments could render the Company's
offerings redundant and unmarketable. The Company thus faces the challenges of
anticipating and responding rapidly to advances in technology and adapting its
existing products
33
<PAGE>
or developing new products. The development of new, technologically advanced
products is a complex and uncertain process requiring the accurate
anticipation of technological and market trends and the expenditure of
substantial development costs. From the beginning of fiscal 1996 through
fiscal 1998, the Company has spent an aggregate of $134.7 million on product
development or approximately 11.9% of sales, and the Company expects to
continue product development spending at similar levels as a percentage of
annual sales, to the extent that the Company has sufficient free cash flow to
do so. See "Risk Factors--Rapid Technological Change; Challenges of New
Product Introductions" and "--Substantial Leverage; Liquidity."
Recent Acquisitions and Dispositions. On December 31, 1996, the Company
acquired substantially all of the assets and assumed certain liabilities of
Itronix for $65.4 million in cash. Incident to this acquisition was the
purchase of incomplete technology activities which resulted in a one-time non-
cash charge of $20.6 million reflected in the Company's results for fiscal
1997. This incomplete technology had not reached technological feasibility and
had no alternative use.
In March 1997, the Company acquired the net assets of Advent Design, Inc.
("Advent"), a supplier to ICS for $3.5 million in cash. Advent designs and
manufactures high performance microprocessor-based systems for the computer,
medical and communications market.
During fiscal 1997, the Company essentially completed the disposition of
non-core businesses pursuant to a strategy approved by the Board of Directors
of Dynatech in February of 1996. The Company received proceeds of $110.2
million and $48.9 million in 1997 and 1996, respectively, related to these
dispositions, which resulted in an after-tax gain of $12.0 million.
On June 19, 1998, the Company acquired the stock of Pacific Systems
Corporation of Kirkland, Washington ("Pacific") for a total purchase price of
$20 million, including an incentive earnout. Pacific designs and manufactures
customer specified avionics and integrated cabin management equipment for the
corporate and general aviation market.
On June 30, 1998 the Company sold the assets and certain liabilities
ComCoTec, Inc. for a total sale price of $21.0 million.
Recapitalization Accounting; Recapitalization Fees and Expenses; Financial
Statement Presentation. The Company is treating the Merger and related
transactions as a recapitalization for financial reporting purposes.
Accordingly, the historical basis of the Company's assets and liabilities has
not been affected by these transactions.
Of the approximately $39.5 million of fees and expenses relating to these
transactions, (i) approximately $25.7 million of such costs are attributable
to costs of the Financing and will be capitalized and amortized over the life
of the Financing, and (ii) approximately $13.8 million of such costs are
attributable to costs of the Merger and related transactions and will be
accounted for as a reduction in the proceeds from the issuance of the
Recapitalized Common Stock.
The consolidated financial statements and data included in this Prospectus
are financial statements and data of Dynatech, which is the direct parent of
TTC and which was the initial issuer of the Notes. TTC became the obligor on
the Notes, and the borrower under the Senior Credit Facility, on the date of
the May 1998 Closing of the Offering of the Existing Notes following the
effectiveness of the merger of TTC Merger Co. into TTC. In connection with
that merger, TTC became a direct subsidiary of Dynatech and the direct or
indirect parent of the Company's remaining active subsidiaries, and Dynatech
guaranteed the monetary obligations of TTC Merger Co. and TTC under the Notes
as well as the Senior Credit Facility. Dynatech is a holding company with no
significant independent operations. Accordingly, the consolidated financial
statements of Dynatech are not materially different from those of TTC.
34
<PAGE>
SUPPLEMENTARY PRO FORMA FINANCIAL INFORMATION
On December 31, 1996, the Company acquired substantially all of the assets
and assumed certain liabilities of Itronix, for $65.4 million in cash.
Approximately $40 million of the purchase price was borrowed pursuant to the
terms of the Company's revolving credit and term loan agreement in effect at
that time. A significant portion of the borrowed funds was repaid during the
fourth quarter of fiscal 1997.
Incident to this acquisition was the purchase of incomplete technology
activities which resulted in a one-time pretax charge of $20.6 million or
($0.74) per share on a diluted basis. This purchased incomplete technology
that had not reached technological feasibility and which had no alternative
future use was valued using a risk adjusted cash flow model, both in 1997 and
1996, under which future cash flows associated with in-process research and
development were discounted considering risks and uncertainties related to the
viability of potential changes in future target markets and to the completion
of the products that will ultimately be marketed by the Company.
As a percentage of sales, the gross margin and selling, general and
administrative expenses of Itronix are lower than the consolidated financial
results of the Company prior to the acquisition. Therefore, the pro forma
income statements below reflect a lower gross margin and selling, general and
administrative expenses as a percent of consolidated sales. Hence, in order to
demonstrate the Company's operating performance versus the previous years, the
following unaudited pro forma information presents a summary of consolidated
results of operations of the Company as if the acquisition had occurred at the
beginning of fiscal 1996, with pro forma adjustments to give effect to
amortization of goodwill and intangibles, interest expense on acquisition
debt, and certain other adjustments, together with related income tax effects
(such pro forma basis, the "Itronix Pro Forma Basis"). (In thousands except
per share data).
<TABLE>
<CAPTION>
FISCAL YEAR ENDED FISCAL YEAR ENDED
MARCH 31, 1997 MARCH 31, 1996
----------------- -----------------
<S> <C> <C>
Sales..................................... $426,234 $355,886
Cost of sales............................. 183,076 158,602
-------- --------
Gross profit.............................. 243,158 197,284
Selling, general & administrative ex-
pense.................................... 122,232 105,383
Product development expense............... 48,515 40,913
Nonrecurring charges...................... 7,149 16,852
Amortization of intangibles............... 8,853 7,886
-------- --------
Operating income.......................... 56,409 26,250
Interest expense.......................... (3,284) (4,998)
Interest income........................... 2,785 2,181
Other income, net......................... 633 975
-------- --------
Income from continuing operations before
income taxes............................. 56,543 24,408
Provision for income taxes................ 24,974 9,799
-------- --------
Income from continuing operations......... $ 31,569 $ 14,609
======== ========
Income per share:
Basic................................... $ 1.84 $ 0.81
Diluted................................. $ 1.74 $ 0.80
Weighted average shares:
Basic................................... 17,200 17,969
Diluted................................. 18,028 18,315
</TABLE>
35
<PAGE>
The following table and commentary should be read in conjunction with the
Consolidated Financial Statements and related Notes to Consolidated Financial
Statements located elsewhere in this Prospectus.
PERCENT OF SALES
<TABLE>
<CAPTION>
YEARS ENDED MARCH
31, PERCENT CHANGE
------------------- --------------
1997
(ITRONIX PRO
1998 FORMA BASIS) 1998 VS. 1997
----- ------------ --------------
<S> <C> <C> <C>
Sales........................................ 100.0% 100.0% 11.0%
Gross profit................................. 56.5 57.1 10.0
Selling, general & admin. expense............ 29.2 28.7 13.2
Product development expense.................. 11.6 11.4 13.4
Amortization of intangibles.................. 1.2 2.1 (34.1)
Operating income............................. 14.4 13.2 21.1
Net income from operations................... 8.8% 7.4% 32.3%
</TABLE>
FISCAL 1998 COMPARED TO FISCAL 1997 ON AN ITRONIX PRO FORMA BASIS
Sales. For fiscal 1998 consolidated sales increased $46.7 million or 11.0%
to $472.9 million as compared to $426.2 million for fiscal 1997 on an Itronix
Pro Forma Basis. The increase was primarily attributable to increased demand
for communications test products, catalog sales of industrial computing and
communications products, and aircraft cabin video information services.
Sales of communications test products increased $29.1 million or 13.8% to
$240.4 million for fiscal 1998 as compared to $211.3 million for fiscal 1997.
The increase is primarily attributable to continued growth in the U.S. market
for communications test solutions as a result of network expansions of the
local telco service providers. The growth was driven by the needs of
communications service providers to provide higher quality networks and to
reduce costs through efficiency, which may be gained by using test and
monitoring systems.
Sales of industrial computing and communications products increased $12.8
million or 9% to $155.0 million for fiscal 1998 as compared to $142.2 million
for fiscal 1997 on an Itronix Pro Forma Basis. The increase was primarily
attributable to an increase in sales for the Company's catalog-marketed, rack-
mounted computers, with a significant portion of sales to customers within the
Original Equipment Manufacturer (OEM) market. The overall increase in sales of
Industrial Computing and Communication products was partially offset by
slightly lower sales of the Company's ruggedized laptop computers.
Sales of visual communications products increased $4.7 million or 6.5% to
$77.5 million for fiscal 1998 as compared to $72.8 million for fiscal 1997.
Sales of the Company's real-time flight information passenger video displays
increased as more airlines integrated this product into their in-flight
entertainment systems. In addition, the Company has improved its market
penetration with additional sales to commercial airline companies. Partially
offsetting this increase was a lower sales volume in the video compression and
graphical user-interface (GUI) product lines.
International sales (defined as sales outside of North America) were $76.1
million or 16% of consolidated sales for fiscal 1998, as compared to $70.8 or
16.6% for fiscal 1997 on an Itronix Pro Forma Basis.
Gross profit. Consolidated gross profit increased $24.2 million to $267.4
million or 56.5% of consolidated sales for fiscal 1998 as compared to $243.2
million or 57.1% for fiscal 1997 on an Itronix Pro Forma Basis. The slight
decrease in percentage was attributable to a change in the sales mix within
the consolidated group along with lower gross margins on the Company's
ruggedized laptop computers.
Operating expenses. Operating expenses consist of selling, general and
administrative expenses; product development expense; amortization of
intangibles; and non-recurring expenses. Total operating expenses were $199.1
million or 42.1% of consolidated sales for fiscal 1998 as compared to $186.7
million or 43.8% of
36
<PAGE>
consolidated sales for fiscal 1997 on an Itronix Pro Forma Basis. Excluding
the impact of the non-recurring charge of $7.1 million related to the
impairment of intangible assets during fiscal 1997, operating expenses were
$179.6 million or 42.1% of consolidated sales in fiscal 1997, at the same
level as fiscal 1998.
Selling, general and administrative expense was $138.3 million or 29.2% of
consolidated sales for fiscal 1998 as compared to $122.2 million or 28.7% of
consolidated sales for fiscal 1997 on an Itronix Pro Forma Basis. The
percentage increase was primarily attributable to additional expenses related
to information systems upgrades and increased selling expenses due to the
increased sales volume within the communications test business.
Product development expense was $55.0 million or 11.6% of consolidated sales
for fiscal 1998 as compared to $48.5 million or 11.4% of consolidated sales
for fiscal 1997 on an Itronix Pro Forma Basis. The Company continues to invest
in product development and enhancement within all three product areas.
Amortization of intangibles was $5.8 million for fiscal 1998 as compared to
$8.9 million for fiscal 1997 on an Itronix Pro Forma Basis. Amortization
decreased during fiscal 1998 due to the write-off of goodwill and certain
intangibles related to product and distribution transitions at the end of
fiscal 1997.
Interest. Interest income, net of interest expense, was $1.8 million for
fiscal 1998 as compared to net interest expense of $0.5 million for fiscal
1997 on an Itronix Pro Forma Basis. Net interest income increased year to year
based on higher average investment balances and lower overall borrowings.
Interest expense will increase in future years due to the increase in
borrowings.
Other income. Other income was $0.7 million for fiscal 1998, essentially at
the same level of $0.6 million for fiscal 1997 on an Itronix Pro Forma Basis.
Taxes. The effective tax rate, before one time charges, increased for fiscal
1998 to 41% as compared to 40.0% for fiscal 1997, primarily due to increased
income in states with higher income tax rates. The effective tax rate after
one time charges decreased to 41% for fiscal 1998 from 44.2% for fiscal 1997
due to the limited tax benefits in 1997 of the charges relating to the $20.6
million writeoff of incomplete technology from the Itronix acquisition.
Net income. Net income from continuing operations was $41.8 million or $2.40
per share on a diluted basis for fiscal 1998 as compared to $31.6 million or
$1.74 per share on a diluted basis and a pro forma basis for fiscal 1997. The
increase was primarily attributable to the increase in sales. Net income in
future years will be negatively impacted by the rise in interest expense due
to the increase in borrowings.
Backlog. Backlog at March 31, 1998 was $79.1 million, an increase of 10.3%
from $71.7 million at March 31, 1997.
37
<PAGE>
HISTORICAL FINANCIAL STATEMENTS
The following discussion relates to the actual result of operations of the
Company, in which fiscal 1998 includes a full-year of operations of Itronix as
compared to fiscal 1997 in which the results of operations included only three
months of operations.
The following table and commentary should be read in conjunction with the
Consolidated Financial Statements and related Notes to Consolidated Financial
Statements located elsewhere in this Prospectus.
<TABLE>
<CAPTION>
PERCENT OF
PERCENT OF SALES CHANGE
------------------- ------------
YEARS ENDED MARCH
31, 1998 1997
------------------- VS. VS.
1998 1997 1996 1997 1996
----- ----- ----- ------ ----
<S> <C> <C> <C> <C> <C>
Sales........................................ 100.0% 100.0% 100.0% 30.5% 23.7%
Gross profit................................. 56.5 62.1 62.0 18.8 24.0
Selling, general & admin. expense............ 29.2 31.6 33.6 20.8 16.2
Product development expense.................. 11.6 11.9 12.4 27.1 18.7
Nonrecurring charges......................... -- 7.7 5.8 (100.0) 64.8
Amortization of intangibles.................. 1.2 1.9 1.8 (14.1) 32.3
Operating income............................. 14.4 9.1 8.4 107.9 33.1
Net income from continuing operations........ 8.8 4.9 5.4 134.1 13.6
</TABLE>
FISCAL 1998 COMPARED TO FISCAL 1997 ON A HISTORICAL BASIS
Sales. For fiscal 1998 consolidated sales increased $110.5 million or 30.5%
to $472.9 million as compared to $362.4 million for fiscal 1997. The increase
was primarily attributable to a full year of operations of Itronix and
increased demand for communications test products, catalog sales of industrial
computing and communications products, and aircraft cabin video information
services.
Sales of communications test products increased $29.1 million or 13.8% to
$240.4 million for fiscal 1998 as compared to $211.3 million for fiscal 1997.
The increase was primarily attributable to continued growth in the U.S. market
for communications test solutions as a result of network expansions of the
local telco service providers. The growth is driven by the needs of
communications service providers to provide higher quality networks and to
reduce costs through efficiency, which may be gained by using test and
monitoring systems.
Sales of industrial computing and communications products increased $76.7
million or 97.8% to $155.0 million for fiscal 1998 as compared to $78.3
million for fiscal 1997. The increase was primarily attributable to a full-
year of operations of Itronix in fiscal 1998 as compared to three months of
operation in fiscal 1997. In addition, the Company had an increase in sales
for its rack-mounted computers.
Sales of visual communications products increased $4.7 million or 6.5% to
$77.5 million for fiscal 1998 as compared to $72.8 million for fiscal 1997.
Sales of the Company's real-time flight information passenger video displays
increased as more airlines integrated this product into their in-flight
entertainment systems. In addition, the Company has improved its market
penetration with additional sales to commercial airline companies. Offsetting
this increase was a lower sales volume in the video compression and graphical
user-interface (GUI) product lines.
Gross profit. Consolidated gross profit increased $42.3 million to $267.4
million or 56.5% of consolidated sales for fiscal 1998 as compared to $225.2
million or 62.1% for fiscal 1997. The decrease in gross margin was
attributable to a lower gross margin at Itronix compared with other parts of
the Company as well as a change in the sales mix within the consolidated
group.
Operating expenses. Operating expenses consist of selling, general and
administrative expense; product development expense; amortization of
intangibles; and non-recurring expenses. Total operating expenses were
38
<PAGE>
$199.1 million or 42.1% of consolidated sales for fiscal 1998 as compared to
$192.3 million or 53.1% of consolidated sales for fiscal 1997. Excluding the
impact of the non-recurring charge of $27.8 million related to the impairment
of intangible assets and the write-off of purchased incomplete technology
during fiscal 1997, operating expenses were $164.5 million or 45.4% of
consolidated sales in fiscal 1997.
Selling, general and administrative expense was $138.3 million or 29.2% of
consolidated sales for fiscal 1998 as compared to $114.5 million or 31.6% of
consolidated sales for fiscal 1997. The percentage decrease was primarily
attributable to a full-year of results of Itronix in which the percentage of
selling, general and administrative expense to sales for Itronix is less than
the consolidated average.
Product development expense was $55.0 million or 11.6% of consolidated sales
for fiscal 1998 as compared to $43.3 million or 11.9% of consolidated sales
for fiscal 1997. The Company continues to invest in product development and
enhancement within all three product areas.
Amortization of intangibles was $5.8 million for fiscal 1998 as compared to
$6.8 million for fiscal 1997. Amortization decreased during fiscal 1998 due to
the write-off of goodwill and certain intangibles related to product and
distribution transitions at the end of fiscal 1997 and was offset by an
increase in goodwill amortization related to the acquisition of Itronix.
Interest. Interest income, net of interest expense, was $1.8 million for
fiscal 1998 as compared to $2.0 million for fiscal 1997. Interest expense will
increase in future years due to the increase in borrowings.
Other income. Other income was $0.7 million for fiscal 1998, essentially at
the same level of $0.6 million for fiscal 1997.
Taxes. The effective tax rate, before one time charges, increased for fiscal
1998 to 41% as compared to 40.5% for fiscal 1997, primarily due to increased
income in states with higher income tax rates. The effective tax rate after
one time charges decreased to 41% for fiscal 1998 from 49.6% for fiscal 1997
due to the limited tax benefits in 1997 of the charges relating to the $20.6
million writeoff of incomplete technology from the Itronix acquisition.
Net income. Net income from continuing operations was $41.8 million or $2.40
per share on a diluted basis for fiscal 1998 as compared to $17.8 million or
$0.99 per share on a diluted basis for fiscal 1997. The fiscal 1997 net income
included a pretax charge of $27.8 million (with an aftertax effect on earnings
per share on a diluted basis of $1.10) related to the write-off of intangible
assets and the write-off of purchased incomplete technology. Net income in
future years will be negatively impacted by the expected rise in interest
expense due to the increase in borrowings.
FISCAL 1997 COMPARED TO FISCAL 1996 ON A HISTORICAL BASIS
Sales. For fiscal 1997, consolidated sales from continuing operations
increased 23.7% to $362.4 million from $293.0 million in fiscal 1996. Sales of
communications test products increased 22.8%, or $39.3 million due to
increased demand for existing products and a full year of operating results
for two acquisitions made in fiscal 1996. Sales of industrial computing and
communications products increased 35.3% or $20.4 million primarily driven by
revenue at Itronix during the fourth quarter of fiscal 1997. Sales of visual
communications products increased 15.3% or $9.7 million principally due to
continued strength in aircraft passenger video information systems and color
correction products.
Backlog from ongoing operations was $71.7 million at March 31, 1997, as
compared to $57.3 million at March 31, 1996.
International sales were 20% of consolidated sales in fiscal 1997, an
increase of 18% over consolidated sales in fiscal 1996.
39
<PAGE>
Gross Profit. As a percentage of consolidated sales, gross profit from
continuing operations for fiscal 1997 was 62.1%, essentially at the same level
as the prior year.
Expenses. Selling, general and administrative costs increased 16.2% in
fiscal 1997 as compared to fiscal 1996. As a percentage of consolidated sales,
selling, general and administrative expenses decreased to 31.6% as compared to
33.6% in the previous year. Administrative and selling expenses increased at a
rate slower than revenue growth in the communications test products as a
result of the fiscal 1996 acquisitions.
Product development expense increased $6.8 million to 11.9% of consolidated
sales, compared to 12.4% of sales in fiscal 1996. The increase was a result of
additional investment in developing core communications test products as well
as the full year effect of product development at Tele-Path Industries, Inc.
("TPI"), a communications test subsidiary which was purchased in September
1995. Additional expense was incurred due to the acquisition of Itronix.
Amortization of intangibles increased $1.7 million as a result of the
acquisitions in fiscal 1997 and fiscal 1996.
During fiscal 1997 nonrecurring charges were $27.8 million as compared to
$16.9 million in 1996. The 1997 charges included $20.6 million for incomplete
technology which had not reached technological feasibility and had no
alternative use, purchased as part of the acquisition of Itronix at the end of
the third quarter. In addition, the Company recorded a noncash charge of $7.1
million related to the impairment of intangible assets, principally related to
the effects of product and distribution transitions. The charge consisted of a
$4.5 million writeoff of goodwill and a $2.6 million writeoff in product
technology.
Interest expense declined in fiscal 1997 compared to the prior year as a
result of lower average borrowings. Interest income increased in fiscal 1997
primarily from higher average cash balances during the year.
Taxes. The effective tax rate, before one-time charges, increased in fiscal
1997 to 40.5% as compared to 39.8% in fiscal 1996, primarily due to losses
generated in foreign locations without tax benefit. The effective tax rate
after one-time charges increased to 49.6% due to limited tax benefits of these
charges. These charges included $20.6 million of incomplete technology from
the Itronix acquisition which resulted only in a federal tax savings. In
addition, the majority of the $7.1 million of intangibles written off
represented goodwill which was not deductible for tax purposes.
Net Income. Net income from continuing operations in fiscal 1997 was $17.8
million, or $0.99 per share [on a diluted basis], as compared to $0.86 per
share on a diluted basis in fiscal 1996. Net income in fiscal 1997 included a
pretax charge of $27.8 million for purchased incomplete technology and
impaired intangible asset writeoffs with an aftertax effect on earnings per
share of ($1.10) on a diluted basis. Net income for the prior fiscal year
included a charge for incomplete purchased technology that accounted for $16.9
million with an aftertax effect on earnings per share of ($0.56) on a diluted
basis.
CAPITAL RESOURCES AND LIQUIDITY
The Company broadly defines liquidity as its ability to generate sufficient
cash flow from operating activities to meet its obligations and commitments.
In addition, liquidity includes the ability to obtain appropriate debt and
equity financing and to convert into cash those assets that are no longer
required to meet existing strategic and financial objectives. Therefore,
liquidity cannot be considered separately from capital resources that consist
of current or potentially available funds for use in achieving long-range
business objectives and meeting debt service commitments.
The Company's liquidity needs arise primarily from debt service on the
substantial indebtedness incurred in connection with the Merger and from the
funding of working capital and capital expenditures. As of May 31, 1998, the
Company had $575.2 million of indebtedness, primarily consisting of $275
million principal amount
40
<PAGE>
of the Notes, $260 million in borrowings under the Term Loan Facility and $40
million in borrowings under the new Revolving Credit Facility. On May 21,
1998, the Company terminated its two credit facilities that were in effect
prior to the Merger.
Cash Flows. The Company's cash and cash equivalents increased $25.1 million
during the fiscal year ended March 31, 1998. Net cash provided by operating
activities generated $45.3 million after $13.7 million was used for the
payment of expenses related to discontinued operations.
During the same period, the Company's investing activities totaled $15.0
million primarily for the purchase and replacement of property and equipment.
See "--Capital Expenditures" below.
Capital Expenditures. The Company's historical capital expenditures since
fiscal 1996 have in substantial part resulted from the replacement of existing
property and equipment, including computer systems. The Company's capital
expenditures (including acquisitions) were $15.9 million, $10.2 million, and
$8.2 million for the three fiscal years ended March 31, 1998, 1997 and 1996,
respectively. The increase in expenditures for fiscal year 1998 relate
principally to the Company continuing to replace existing computer equipment.
The Company estimates that for fiscal year 1999, capital expenditures will be
similar to historic levels.
Working Capital during Fiscal 1998. During fiscal 1998 the Company's working
capital was affected as follows. The Company's operating assets and
liabilities provided a source of cash of $4.4 million. Inventory levels
increased from $40.1 million to $48.9 million, resulting in a $8.7 million use
of cash, primarily attributable to the increased volume for the Company's
rack-mounted computers. Accounts receivable decreased from $70.9 million to
$70.0 million, resulting in a source of cash of approximately $1.0 million.
Other current assets increased, resulting in a use of cash of $2.4 million.
This increase was primarily attributable to expenses relating to the Merger.
Accounts payable increased from $16.9 million to $22.9 million, resulting in a
source of cash of $6.0 million as the Company continues to aggressively manage
its working capital. Other current liabilities from continuing operations
increased $8.5 million due to an increase in deferred revenue due to higher
prepaid warranty costs and an increase in accrued income taxes due to the
effective tax rate increase. This increase was offset by a decrease in
discontinued operations liabilities of $13.7 million, of which approximately
$23.0 million was used for the payment of expenses previously provided for
offset by an $8.2 million deferred tax adjustment.
Other Fiscal 1998 Activities. During fiscal 1998, the Company generated $4.5
million from the exercise of stock options and the issuance of common stock of
Dynatech related to the Company's Employee Stock Purchase Plan. The Company
repurchased 163,000 shares of its common stock for $5.3 million during the
first quarter of fiscal 1998. During the quarter ended December 31, 1997, the
Company repaid all of its borrowings under its two then-existing credit
facilities. At March 31, 1998, the Company had $180 million in an unused line
of credit in those facilities, which were terminated on May 21, 1998 when the
Company entered into the Senior Credit Facility.
Debt Service. Principal and interest payments under the Senior Credit
Facility and interest payments on the Notes represent significant liquidity
requirements for the Company. With respect to the $260 million borrowed under
the Term Loan Facility (which is divided into four tranches), the Company will
be required to make scheduled principal payments of the $50 million tranche A
term loan thereunder over its six-year term, with substantial amortization of
the $70 million tranche B term loan, $70 million tranche C term loan and $70
million tranche D term loan thereunder occurring after six, seven and eight
years, respectively. The $275 million of Notes will mature in 2008 and bear
interest at 9 3/4%. The Senior Credit Facility is also subject to mandatory
prepayment and reduction in an amount equal to, subject to certain exceptions,
(a) 100% of the net proceeds of (i) certain debt offerings by the Company and
any of its subsidiaries, (ii) certain asset sales by the Company or any of its
subsidiaries, and (iii) casualty insurance, condemnation awards or other
recoveries received by the Company or any of its subsidiaries and (b) 50% of
the Company's excess cash flow (as defined) for each fiscal year in which the
Company exceeds a certain leverage ratio. The Notes are subject to certain
mandatory prepayments under certain circumstances. The Revolving Credit
Facility matures in 2004, with all amounts then outstanding becoming due. The
Company expects that its working capital needs will require it to obtain new
41
<PAGE>
revolving credit facilities at the time that the Revolving Credit Facility
matures, whether by extending, renewing, replacing or otherwise refinancing
the Revolving Credit Facility. No assurance can be given that any such
extension, renewal, replacement or refinancing can be successfully
accomplished or accomplished on acceptable terms. The loans under the Senior
Credit Facility bear interest at floating rates based upon the interest rate
option elected by the Company. See "Description of Senior Credit Facility." As
a result of the substantial indebtedness incurred in connection with the
Merger, the Company's interest expense will be higher and will have a greater
proportionate impact on net income in comparison to preceding periods. Total
interest expense is expected to be $51 million in fiscal 1999.
Covenant Restrictions. The Senior Credit Facility imposes restrictions on
the ability of the Company to make capital expenditures and both the Senior
Credit Facility and the Indenture governing the Notes limit the Company's
ability to incur additional indebtedness. Such restrictions, together with the
highly leveraged nature of the Company, could limit the Company's ability to
respond to market conditions, to meet its capital spending program, to provide
for unanticipated capital investments or to take advantage of business
opportunities. The covenants contained in the Senior Credit Facility also,
among other things, restrict the ability of the Company (including its
subsidiaries) to dispose of assets, incur guarantee obligations, prepay other
indebtedness, make restricted payments, create liens, make equity or debt
investments, make acquisitions, modify terms of the indenture governing the
Notes, engage in mergers or consolidations, change the business conducted by
the Company (including its subsidiaries) or engage in certain transactions
with affiliates. In addition, under the Senior Credit Facility, the Company is
required to satisfy a minimum interest expense coverage ratio and a maximum
leverage ratio. These financial tests become more restrictive in future years.
The term loans under the Senior Credit Facility (other than the $50 million
tranche A term loan) are governed by negative covenants which are
substantially similar to the negative covenants contained in the Indenture
governing the Notes, which also impose restrictions on the operation of the
Company's businesses. See "Description of Senior Credit Facility--Covenants"
and "Risk Factors--Restrictive Financing Covenants."
Future Financing Sources and Cash Flows. The amount under the Revolving
Credit Facility that remained undrawn following the May 1998 Closing of the
Merger was $70.0 million. The undrawn portion of this facility will be
available to meet future working capital and other business needs of the
Company and replaced the Company's previously outstanding credit facilities
totaling $180.0 million. The Company believes that cash generated from
operations, together with amounts available under the Revolving Credit
Facility and any other available sources of liquidity, will be adequate to
permit the Company to meet its debt service obligations, capital expenditure
program requirements, ongoing operating costs and working capital needs,
although no assurance can be given in this regard. The Company's future
operating performance and ability to service or refinance the Notes and to
repay, extend or refinance the Senior Credit Facility (including the Revolving
Credit Facility) will be, among other things, subject to future economic
conditions and to financial, business and other factors, many of which are
beyond the Company's control. See "Risk Factors--Substantial Leverage;
Liquidity."
YEAR 2000
The Company has commenced a review of its computer systems and products in
order to assess its exposure to Year 2000 issues. The Company is currently in
the process of determining the full scope, related costs and action plan to
insure that the Company's systems continue to meet its internal needs and
those of its customers. The Company expects to make the necessary
modifications or changes to its computer information systems to enable proper
processing of transactions relating to the Year 2000 and beyond. However,
there can be no assurance that Year 2000 costs and expenses will not have a
material adverse effect on the Company. In addition, the Company does not
currently have complete information concerning the Year 2000 compliance status
of its suppliers and customers. In the event that any of the Company's
significant suppliers or customers do not successfully and timely achieve Year
2000 compliance, the Company's business or operations could be materially
adversely affected. Finally, there can be no assurance that the Company's
existing or installed base of products are Year 2000 compliant, or that the
Company's products will not be integrated by the Company or its customers
with, or otherwise interact with, non-compliant software or other products.
Any such product non-
42
<PAGE>
compliance may expose the Company to claims from its customers and others, and
could impair market acceptance of the Company's products and services,
increase service and warranty costs, or result in payment of damages, which in
turn could materially adversely affect the Company.
NEW PRONOUNCEMENTS
During the quarter ended December 31, 1997, the Company adopted Statement of
Financial Accounting Standards No. 128, "Earnings per Share," which modifies
the calculation of earnings per share ("EPS"). The Standard replaces the
previous presentation of primary and fully diluted EPS to basic and diluted
EPS. Basic EPS excludes dilution and is computed by dividing income available
to common stockholders by the weighted average number of common shares
outstanding for the period. Diluted EPS includes the dilution of common stock
equivalents, and is computed similarly to fully diluted EPS pursuant to APB
Opinion 15. All prior periods presented have been restated to reflect this
adoption.
The Financial Accounting Standards Board issued Statement No. 130,
"Reporting Comprehensive Income" which establishes standards for the reporting
and display of comprehensive income in general- purpose financial statements.
This Standard is effective for fiscal periods beginning after December 15,
1997 and its adoption is not expected to have a material impact on the
Company's disclosures.
The Financial Accounting Standards Board issued Statement No. 131,
"Disclosures about Segments of an Enterprise and Related Information," which
establishes standards for the reporting of operating segments in the financial
statements. This Standard is effective for fiscal periods beginning after
December 15, 1997 and its adoption is not expected to have a material impact
on the Company's historical financial data.
In October, 1997, Statement of Position 97-2, "Software Revenue Recognition"
("SOP 97-2"), was issued which provides guidance on applying generally
accepted accounting principles in recognizing revenue on software
transactions. SOP 97-2 is effective for transactions entered into in fiscal
years beginning after December 15, 1997. The Company will adopt the guidelines
of SOP 97-2 as of April 1, 1998 and does not expect adoption to have a
material impact on the Company's financial results.
43
<PAGE>
THE EXCHANGE OFFER
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and reference is made to the
provisions of the Registration Rights Agreement, which has been filed as an
exhibit to the Registration Statement and a copy of which is available as set
forth under the heading "Available Information."
TERMS OF THE EXCHANGE OFFER
General
In connection with the issuance of the Existing Notes pursuant to a Purchase
Agreement, dated as of May 14, 1998 between Dynatech, TTC Merger Co. and the
Initial Purchasers, the Initial Purchasers and their respective assignees
became entitled to the benefits of the Registration Rights Agreement.
Under the Registration Rights Agreement, the Company has agreed (i) to file
with the Commission within 120 days after May 21, 1998, the date the Existing
Notes were issued (the "Issue Date"), the Registration Statement of which this
Prospectus is a part with respect to a registered offer to exchange the
Existing Notes for the New Notes and (ii) to use its reasonable best efforts
to cause the Registration Statement to be declared effective under the
Securities Act within 150 days after the Issue Date. The Company will keep the
Exchange Offer open for not less than business days after the date notice
of the Exchange Offer is mailed to holders of the Existing Notes. The Exchange
Offer being made hereby, if commenced and consummated within the time periods
described in this paragraph, will satisfy those requirements under the
Registration Rights Agreement.
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, all Existing Notes validly tendered and not
withdrawn prior to 5:00 p.m., New York City time, on the Expiration Date will
be accepted for exchange. New Notes will be issued in exchange for an equal
principal amount of outstanding Existing Notes accepted in the Exchange Offer.
Existing Notes may be tendered only in integral multiples of $1,000. This
Prospectus, together with the Letter of Transmittal, is being sent to all
registered holders of Existing Notes as of . The Exchange Offer is not
conditioned upon any minimum principal amount of Existing Notes being tendered
for exchange. However, the obligation to accept Existing Notes for exchange
pursuant to the Exchange Offer is subject to certain conditions as set forth
herein under "--Conditions."
Existing Notes shall be deemed to have been accepted as validly tendered
when, as and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering holders
of Existing Notes for the purposes of receiving the New Notes and delivering
New Notes to such holders.
Based on interpretations by the Staff of the Commission as set forth in no-
action letters issued to third parties (including Exxon Capital Holdings
Corporation (available May 13, 1988), Morgan Stanley & Co. Incorporated
(available June 5, 1991), K-III Communications Corporation (available May 14,
1993) and Shearman & Sterling (available July 2, 1993)), the Company believes
that the New Notes issued pursuant to the Exchange Offer may be offered for
resale, resold and otherwise transferred by any holder thereof (other than any
such holder that is a broker-dealer or an "affiliate" of the Company within
the meaning of Rule 405 under the Securities Act) without compliance with the
registration and prospectus delivery provisions of the Securities Act,
provided that (i) such New Notes are acquired in the ordinary course of
business, (ii) at the time of the commencement of the Exchange Offer such
holder has no arrangement or understanding with any person to participate in a
distribution of such New Notes and (iii) such holder is not engaged in, and
does not intend to engage in, a distribution of such New Notes. The Company
has not sought, and does not intend to seek, a no-action letter from the
Commission with respect to the effects of the Exchange Offer, and there can be
no assurance that the Staff would make a similar determination with respect to
the New Notes as it has in such no-action letters.
44
<PAGE>
By tendering Existing Notes in exchange for New Notes and executing the
Letter of Transmittal, each holder will represent to the Company that: (i) any
New Notes received by such Holder will be acquired in the ordinary course of
business, (ii) such Holder will have no arrangements or understanding with any
person to participate in the distribution of the Securities or the New Notes
within the meaning of the Securities Act, (iii) such Holder is not an
"affiliate," as defined in Rule 405 of the Securities Act, of the Company or
if it is an affiliate, such Holder will comply with the registration and
prospectus delivery requirements of the Securities Act to the extent
applicable, (iv) if such Holder is not a broker-dealer, that it is not engaged
in, and does not intend to engage in, the distribution of the New Notes, (v)
if such Holder is a broker-dealer, that it will receive New Notes for its own
account in exchange for Existing Notes that were acquired as a result of
market-making activities or other trading activities and that it will deliver
a prospectus in connection with any resale of such New Notes, and (vi) that it
is not acting on behalf of any person who could not truthfully make the
foregoing representations.
Each broker-dealer that receives New Notes for its own account in exchange
for Existing Notes where such Existing Notes were acquired by such broker-
dealer as a result of market-making or other trading activities, must
acknowledge that it will deliver a prospectus meeting the requirements of the
Securities Act and that it has not entered into any arrangement or
understanding with the Company or an affiliate of the Company to distribute
the New Notes in connection with any resale of such New Notes. See "Plan of
Distribution."
Upon consummation of the Exchange Offer, subject to certain limited
exceptions, holders of Existing Notes who do not exchange their Existing Notes
for New Notes in the Exchange Offer will no longer be entitled to registration
rights and will not be able to offer or sell their Existing Notes, unless such
Existing Notes are subsequently registered under the Securities Act (which,
subject to certain limited exceptions, the Company will have no obligation to
do), except pursuant to an exemption from, or in a transaction not subject to,
the Securities Act and applicable state securities laws.
Expiration Date; Extensions; Amendments; Termination
The term "Expiration Date" shall mean ( business days following the
commencement of the Exchange Offer), unless the Company, in its sole
discretion, extends the Exchange Offer, in which case the term "Expiration
Date" shall mean the latest date to which the Exchange Offer is extended.
To extend the Expiration Date, the Company will notify the Exchange Agent of
any extension by oral or written notice and will notify the holders of the
Existing Notes by means of a press release or other public announcement prior
to 9:00 A.M., New York City time, on the next business day after the
previously scheduled Expiration Date. Such announcement may state that the
Company is extending the Exchange Offer for a specified period of time.
The Company reserves the right (i) to delay acceptance of any Existing
Notes, to extend the Exchange Offer or to terminate the Exchange Offer and not
permit acceptance of Existing Notes not previously accepted if any of the
conditions set forth herein under "--Conditions" shall have occurred and shall
not have been waived by the Company prior to the Expiration Date, by giving
oral or written notice of such delay, extension or termination to the Exchange
Agent, or (ii) to amend the terms of the Exchange Offer in any manner deemed
by it to be advantageous to the holders of the Existing Notes. Any such delay
in acceptance, extension, termination or amendment will be followed as
promptly as practicable by oral or written notice thereof to the Exchange
Agent. If the Exchange Offer is amended in a manner determined by the Company
to constitute a material change, the Company will promptly disclose such
amendment in a manner reasonably calculated to inform the holders of the
Existing Notes of such amendment.
Without limiting the manner in which the Company may choose to make public
announcement of any delay, extension, amendment or termination of the Exchange
Offer, the Company shall have no obligations to publish, advertise, or
otherwise communicate any such public announcement, other than by making a
timely release to an appropriate news agency.
45
<PAGE>
INTEREST ON THE NEW NOTES
The New Notes will accrue interest at the rate of 9 3/4% per annum from the
last interest payment date on which interest was paid on the Existing Note
surrendered in exchange therefor, or, if no interest has been paid on such
Existing Note, from the Issue Date, provided, that if an Existing Note is
surrendered for exchange on or after a record date for an interest payment
date that will occur on or after the date of such exchange and as to which
interest will be paid, interest on the New Note received in exchange therefor
will accrue from the date of such interest payment date. Interest on the New
Notes is payable on May 15 and November 15 of each year, commencing November
15, 1998.
PROCEDURES FOR TENDERING
To tender in the Exchange Offer, a holder must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, have the signatures thereon
guaranteed if required by the Letter of Transmittal, and mail or otherwise
deliver such Letter of Transmittal or such facsimile, together with any other
required documents, to the Exchange Agent prior to 5:00 p.m., New York City
time, on the Expiration Date. In addition, either (i) a timely confirmation of
a book-entry transfer (a "Book-Entry Confirmation") of such Existing Notes
into the Exchange Agent's account at The Depository Trust Company (the "Book-
Entry Transfer Facility") pursuant to the procedure for book-entry transfer
described below, must be received by the Exchange Agent prior to the
Expiration Date or (ii) the holder must comply with the guaranteed delivery
procedures described below. THE METHOD OF DELIVERY OF LETTERS OF TRANSMITTAL
AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDERS.
IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY
INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. NO LETTERS OF TRANSMITTAL OR
OTHER REQUIRED DOCUMENTS SHOULD BE SENT TO THE COMPANY. Delivery of all
documents must be made to the Exchange Agent at its address set forth below.
Holders may also request their respective brokers, dealers, commercial banks,
trust companies or nominees to effect such tender for such holders.
The tender by a holder of Existing Notes will constitute an agreement
between such holder and the Company in accordance with the terms and subject
to the conditions set forth herein and in the Letter of Transmittal. Any
beneficial owner whose Existing Notes are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee and who wishes to
tender should contact such registered holder promptly and instruct such
registered holder to tender on his behalf.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by any member firm of a registered national
securities exchange or of the National Association of Securities Dealers,
Inc., a commercial bank or trust company having an office or correspondent in
the United States or an "eligible guarantor" institution within the meaning of
Rule 17Ad-15 under the Exchange Act (each an "Eligible Institution") unless
the Existing Notes tendered pursuant thereto is tendered for the account of an
Eligible Institution.
If the Letter of Transmittal is signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity, such person should so
indicate when signing, and unless waived by the Company, evidence satisfactory
to the Company of their authority to so act must be submitted with the Letter
of Transmittal.
All questions as to the validity, form, eligibility (including time of
receipt) and withdrawal of the tendered Existing Notes will be determined by
the Company in its sole discretion, which determination will be final and
binding. The Company reserves the absolute right to reject any and all
Existing Notes not properly tendered or any Existing Notes which, if accepted,
would, in the opinion of counsel for the Company, be unlawful. The Company
also reserves the absolute right to waive any irregularities or conditions of
tender as to particular Existing Notes. The Company's interpretation of the
terms and conditions of the Exchange Offer (including the instructions in the
Letter of Transmittal) will be final and binding on all parties. Unless
waived, any defects or
46
<PAGE>
irregularities in connection with tenders of Existing Notes must be cured
within such time as the Company shall determine. Neither the Company, the
Exchange Agent nor any other person shall be under any duty to give
notification of defects or irregularities with respect to tenders of Existing
Notes, nor shall any of them incur any liability for failure to give such
notification. Tenders of Existing Notes will not be deemed to have been made
until such irregularities have been cured or waived. Any Existing Notes
received by the Exchange Agent that is not properly tendered and as to which
the defects or irregularities have not been cured or waived will be returned
without cost to such holder by the Exchange Agent, unless otherwise provided
in the Letter of Transmittal, as soon as practicable following the Expiration
Date.
In addition, the Company reserves the right in its sole discretion, subject
to the provisions of the Indenture, (i) to purchase or make offers for any
Existing Notes that remains outstanding subsequent to the Expiration Date or,
as set forth under "--Conditions", (ii) to terminate the Exchange Offer in
accordance with the terms of the Registration Rights Agreement, (iii) to
redeem Existing Notes as a whole or in part at any time and from time to time,
as set forth under "Description of Notes--Optional Redemption" and (iv) to the
extent permitted by applicable law, to purchase Existing Notes in the open
market, in privately negotiated transactions or otherwise. The terms of any
such purchases or offers could differ from the terms of the Exchange Offer.
ACCEPTANCE OF EXISTING NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
Upon satisfaction or waiver of all of the conditions to the Exchange Offer,
all Existing Notes properly tendered will be accepted promptly after the
Expiration Date, and the New Notes will be issued promptly after acceptance of
the Existing Notes. See "--Conditions." For purposes of the Exchange Offer,
Existing Notes shall be deemed to have been accepted as validly tendered for
exchange when, as and if the Company has given oral or written notice thereof
to the Exchange Agent.
In all cases, issuance of New Notes for Existing Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of a Book-Entry Confirmation of such Existing Notes into
the Exchange Agent's account at the Book-Entry Transfer Facility, a properly
completed and duly executed Letter of Transmittal and all other required
documents. If any tendered Existing Notes are not accepted for any reason set
forth in the terms and conditions of the Exchange Offer, such unaccepted or
such nonexchanged Existing Notes will be credited to an account maintained
with such Book-Entry Transfer Facility as promptly as practicable after the
expiration or termination of the Exchange Offer.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Existing Notes at the Book-Entry Transfer Facility for purposes of the
Exchange Offer within two business days after the date of this Prospectus. Any
financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of Existing Notes by causing
the Book-Entry Transfer Facility to transfer such Existing Notes into the
Exchange Agent's account at the Book-Entry Transfer Facility in accordance
with such Book-Entry Transfer Facility's procedures for transfer. However, the
Letter of Transmittal or facsimile thereof with any required signature
guarantees and any other required documents must, in any case, be transmitted
to and received by the Exchange Agent at one of the addresses set forth below
under "--Exchange Agent" on or prior to the Expiration Date or the guaranteed
delivery procedures described below must be complied with.
EXCHANGING BOOK-ENTRY NOTES
The Exchange Agent and the Book Entry Transfer Facility have confirmed that
any financial institution that is a participant in the Book Entry Transfer
Facility may utilize the Book-Entry Transfer Facility Automated Tender Offer
Program ("ATOP") procedures to tender Existing Notes.
Any participant in the Book Entry Transfer Facility may make book-entry
delivery of Existing Notes by causing the Book Entry Transfer Facility to
transfer such Existing Notes into the Exchange Agent's account in
47
<PAGE>
accordance with the Book Entry Transfer Facility's ATOP procedures for
transfer. However, the exchange for the Existing Notes so tendered will only
be made after a Book-Entry Confirmation of such book-entry transfer of
Existing Notes into the Exchange Agent's account, and timely receipt by the
Exchange Agent of an Agent's Message (as such term is defined in the next
sentence) and any other documents required by the Letter of Transmittal. The
term "Agent's Message" means a message, transmitted by the Book Entry Transfer
Facility and received by the Exchange Agent and forming part of a Book-Entry
Confirmation, which states that the Book Entry Transfer Facility has received
an express acknowledgment from a participant tendering Existing Notes that are
the subject of such Book-Entry Confirmation that such participant has received
and agrees to be bound by the terms of the Letter of Transmittal, and that the
Company may enforce such agreement against such participant.
GUARANTEED DELIVERY PROCEDURES
If the procedures for book-entry transfer cannot be completed on a timely
basis, a tender may be effected if (i) the tender is made through an Eligible
Institution, (ii) prior to the Expiration Date, the Exchange Agent receives
from such Eligible Institution a properly completed and duly executed Letter
of Transmittal (or a facsimile thereof) and Notice of Guaranteed Delivery,
substantially in the form provided by the Company (by facsimile transmission,
mail or hand delivery), setting forth the name and address of the holder of
Existing Notes and the amount of Existing Notes tendered, stating that the
tender is being made thereby and guaranteeing that within three New York Stock
Exchange ("NYSE") trading days after the date of execution of the Notice of
Guaranteed Delivery, a Book-Entry Confirmation and any other documents
required by the Letter of Transmittal will be deposited by the Eligible
Institution with the Exchange Agent and (iii) a Book-Entry Confirmation and
all other documents required by the Letter of Transmittal are received by the
Exchange Agent within three NYSE trading days after the date of execution of
the Notice of Guaranteed Delivery.
WITHDRAWAL OF TENDERS
Tenders of Existing Notes may be withdrawn at any time prior to 5:00 p.m.,
New York, City time on the Expiration Date.
For a withdrawal to be effective, a written notice of withdrawal must be
received by the Exchange Agent prior to 5:00 p.m., New York City time on the
Expiration Date at one of the addresses set forth below under "--Exchange
Agent." Any such notice of withdrawal must specify the name and number of the
account at the Book-Entry Transfer Facility from which the Existing Notes was
tendered, identify the principal amount of the Existing Notes to be withdrawn,
and specify the name and number of the account at the Book-Entry Transfer
Facility to be credited with the withdrawn Existing Notes and otherwise comply
with the procedures of such facility. All questions as to the validity, form
and eligibility (including time of receipt) of such notice will be determined
by the Company, whose determination shall be final and binding on all parties.
Any Existing Notes so withdrawn will be deemed not be have been validly
tendered for exchange for purposes of the Exchange Offer. Any Existing Notes
which have been tendered for exchange but which are not exchanged for any
reason will be credited to an account maintained with such Book-Entry Transfer
Facility for the Existing Notes as soon as practicable after withdrawal,
rejection of tender or termination of the Exchange Offer. Properly withdrawn
Existing Notes may be retendered by following one of the procedures described
under "--Procedures for Tendering" and "--Book-Entry Transfer" above at any
time on or prior to the Expiration Date.
CONDITIONS
The Company has no obligation to consummate the Exchange Offer if the New
Notes to be received by such holder or holders of Existing Notes in the
Exchange Offer, upon receipt, will not be tradable by such holder without
restriction under the Securities Act and the Exchange Act and without material
restrictions under the "blue sky" or securities laws of the several states of
the United States. All conditions to the Exchange Offer (with the exception of
certain necessary governmental approvals) must be satisfied or waived prior to
the Expiration Date.
48
<PAGE>
Notwithstanding any other provision of the Exchange Offer, the Company shall
not be required to accept for exchange, or to issue New Notes in exchange for,
any Existing Notes and may terminate or amend the Exchange Offer, if at any
time before the acceptance of such Existing Notes for exchange or the exchange
of the New Notes for such Existing Notes, any of the following events shall
occur:
(a) there shall be threatened, instituted or pending any action or
proceeding before, or any injunction, order or decree shall have been
issued by, any court or governmental agency or other governmental
regulatory or administrative agency or commission (i) seeking to restrain
or prohibit the making or consummation of the Exchange Offer or any other
transaction contemplated by the Exchange Offer, or assessing or seeking any
damages as a result thereof, or (ii) resulting in a material delay in the
ability of the Company to accept for exchange or exchange some or all of
the Existing Notes pursuant to the Exchange Offer; or any statute, rule,
regulation, order or injunction shall be sought, proposed, introduced,
enacted, promulgated or deemed applicable to the Exchange Offer or any of
the transactions contemplated by the Exchange Offer by any government or
governmental authority, domestic or foreign, or any action shall have been
taken, proposed or threatened, by any government, governmental authority,
agency or court, domestic or foreign, that in the sole judgment of the
Company might directly or indirectly result in any of the consequences
referred to in clauses (i) or (ii) above or, in the sole judgment of the
Company, might result in the holders of New Notes having obligations with
respect to resales and transfers of New Notes which are greater than those
described in the interpretation of the Commission referred to on the cover
page of this Prospectus, or would otherwise make it inadvisable to proceed
with the Exchange Offer; or
(b) there shall have occurred (i) any general suspension of or general
limitation on prices for, or trading in, securities on any national
securities exchange or in the over-the-counter market, (ii) any limitation
by a governmental agency or authority which may adversely affect the
ability of the Company to complete the transactions contemplated by the
Exchange Offer, (iii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States or any
limitations by any governmental agency or authority which adversely affects
the extension of credit or (iv) a commencement of a war, armed hostilities
or other similar international calamity directly or indirectly involving
the United States, or, in the case of any of the foregoing existing at the
time of the commencement of the Exchange Offer, a material acceleration or
worsening thereof; or
(c) any changes (or any development involving a prospective change) shall
have occurred or be threatened in the business, properties, assets,
liabilities, financial condition, operations, results of operations or
prospects of the Company and its subsidiaries taken as a whole that, in the
sole judgment of the Company is or may be adverse to the Company, or the
Company shall have become aware of facts that, in its sole judgment have or
may have adverse significance with respect to the value of the Existing
Notes or the New Notes; which in the sole judgment of the Company in any
case, and regardless of the circumstances (including any action by the
Company) giving rise to any such condition, makes it advisable to proceed
with the Exchange Offer and/or with such acceptance for exchange or with
such exchange.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to any
time and from time to time in its sole discretion. The failure by the Company
at any time to exercise any of the foregoing rights shall not be deemed a
waiver of any such right and each such right shall be deemed an ongoing right
which may be asserted at any time and from time to time.
In addition, the Company will not accept for exchange any Existing Notes
tendered, and no New Notes will be issued in exchange for any such Existing
Notes, if at such time any stop order shall be threatened or in effect with
respect to the Registration Statement of which this Prospectus constitutes a
part or the qualification of the Indenture under the Trust Indenture Act of
1939.
49
<PAGE>
EXCHANGE AGENT
State Street Bank and Trust Company has been appointed as Exchange Agent for
the Exchange Offer. Questions and requests for assistance and requests for
additional copies of this Prospectus or of the Letter of Transmittal should be
directed to the Exchange Agent addressed as follows:
By Mail: By Overnight Carrier
State Street Bank and Trust Company State Street Bank and Trust Company
P.O. Box 778 Two International Place
Boston, Massachusetts 02102 Boston, Massachusetts 02110
Attention: Corporate Trust Department Attention: Corporate Trust Department
Kellie Mullen Kellie Mullen
By Hand: in New York (as Drop Agent) By Hand: in Boston
State Street Bank and Trust Company, State Street Bank and Trust Company
N.A. Two International Place
61 Broadway, 15th Floor Fourth Floor, Corporate Trust
Corporate Trust Window Boston, Massachusetts 02110
New York, New York 10006
For Information Call:
(617) 664-5587
By Facsimile Transmission
(for Eligible Institutions only):
(617) 664-5314
Attention: Corporate Trust Department
Confirm by Telephone:
(617) 664-5314
FEES AND EXPENSES
The expenses of soliciting tenders pursuant to the Exchange Offer will be
borne by the Company. The principal solicitation for tenders pursuant to the
Exchange Offer is being made by mail; however, additional solicitations may be
made by telegraph, telephone, telecopy or in person by officers and regular
employees of the Company.
The Company will not make any payments to brokers, dealers or other persons
soliciting acceptances of the Exchange Offer. The Company, however, will pay
the Exchange Agent reasonable and customary fees for its services and will
reimburse the Exchange Agent for its reasonable out-of-pocket expenses in
connection therewith. The Company may also pay brokerage houses and other
custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding copies of the Prospectus and related documents
to the beneficial owners of the Existing Notes, and in handling or forwarding
tenders for exchange.
The expenses to be incurred by the Company in connection with the Exchange
Offer will be paid by the Company, including fees and expenses of the Exchange
Agent and Trustee and accounting, legal, printing and related fees and
expenses.
The Company will pay all transfer taxes, if any, applicable to the exchange
of Existing Notes pursuant to the Exchange Offer. If, however, New Notes or
Existing Notes for principal amounts not tendered or accepted for exchange are
to be registered or issued in the name of any person other than the registered
holder of the
50
<PAGE>
Existing Notes tendered, or if tendered Existing Notes are registered in the
name of any person other than the person signing the Letter of Transmittal, or
if a transfer tax is imposed for any reason other than the exchange of
Existing Notes pursuant to the Exchange Offer, then the amount of any such
transfer taxes (whether imposed on the registered holder or any other persons)
will be payable by the tendering holder. If satisfactory evidence of payment
of such taxes or exemption therefrom is not submitted with the Letter of
Transmittal, the amount of such transfer taxes will be billed directly to such
tendering holder.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Existing Notes who do not exchange their Existing Notes for New
Notes pursuant to the Exchange Offer will continue to be subject to the
restrictions on transfer of such Existing Notes as set forth in the legend
thereon as a consequence of the issuance of the Existing Notes pursuant to
exemptions from, or in transactions not subject to, the registration
requirements of the Securities Act and applicable state securities laws. In
general, the Existing Notes may not be offered or sold, unless registered
under the Securities Act, except pursuant to an exemption from, or in a
transaction not subject to, the Securities Act and applicable state securities
laws. The Company does not currently anticipate that it will register the
Existing Notes under the Securities Act. To the extent that Existing Notes are
tendered and accepted in the Exchange Offer, the trading market for untendered
and tendered but unaccepted Existing Notes could be adversely affected.
51
<PAGE>
BUSINESS
The Company develops, manufactures and sells market-leading test, analysis,
communications and computing equipment in three product categories:
. Communications Test. The Company believes that TTC is the second largest
U.S. provider of communications test instruments (by U.S. sales). TTC
provides products to communications service providers (such as the
RBOCs, long-distance companies and competitive access providers),
service users (such as large corporate and government network
operators), and manufacturers of communications equipment and systems.
TTC's broad test and analysis product line ranges from portable units
(used by field service technicians to test telephone and data
communications lines and services) to centralized test and monitoring
systems installed in telephone company central offices. The Company's
communications test business accounted for 51% of its sales (or
approximately $240.4 million), and a higher percentage of its EBITDA (as
defined), for fiscal 1998.
. Industrial Computing and Communications. The Company addresses two
distinct segments of the North American ruggedized computer market. ICS
is the only significant direct marketer of computer products and systems
designed to withstand excessive temperatures, dust, moisture and
vibration in harsh operating environments such as production facilities.
ICS markets to engineers, scientists and production managers through its
widely recognized Industrial Computer Source-Book catalogs. Itronix
sells ruggedized portable communications and computing devices used by
field-service workers for telephone companies, utilities, insurance
companies and other organizations with large field-service workforces.
The Company's industrial computing and communications business accounted
for 33% of the Company's sales (or approximately $155.0 million), and a
lower percentage of its EBITDA, for fiscal 1998.
. Visual Communications. The Company's visual communications business
consists principally of two market-leading niche-focused subsidiaries:
(i) AIRSHOW is the world leader in passenger cabin video information
display systems and information services for the general and commercial
aviation markets; and (ii) da Vinci is the world leader in digital color
enhancement systems used in the process of transferring film images into
electronic signals--a process commonly used to transfer film images to
video for use in the production of television commercials and
programming. The Company's visual communications business accounted for
16% of the Company's sales (or approximately $77.5 million), and a
higher percentage of its EBITDA, for fiscal 1998.
For fiscal 1998, the Company generated sales and EBITDA of $472.9 million
and $86.9 million, respectively.
COMPETITIVE STRENGTHS
The following characteristics contribute to the Company's competitive
position and outlook.
. Leading Market Positions. The Company's principal businesses occupy the
#1 or #2 overall position in their respective principal markets. TTC,
which is the Company's largest subsidiary and operates the Company's
communications test business in a highly fragmented market, has in
recent years held the #1 or #2 position in market segments accounting
for an estimated 70% of its test instrument sales. ICS is the only
significant direct marketer of ruggedized industrial computers and
Itronix is the leading supplier of ruggedized portable notebook
computers to U.S. telecommunications companies. AIRSHOW and da Vinci
have the #1 shares in their respective niche markets. The Company's
market leadership is enhanced by its well known brand names, including
FIREBERD and T-BERD test instruments, the Industrial Computer Source-
Book catalogs, and the AIRSHOW map system.
. Double-Digit Market Growth. The Company participates in market segments
that management believes have been growing at least 10% annually in
recent years. Between fiscal 1995 and 1998, the Company increased sales
and EBITDA at compound annual growth rates of 25% and 27%, respectively
(15% and 20%, respectively, excluding the impact of acquisitions), rates
which management believes
52
<PAGE>
exceed the composite sales growth rate for the market segments the
Company addresses. The growth of the communications test instrument
market, the Company's largest, is driven in part by the growth of
telecommunications equipment and services.
. High-Margin, Cash-Generative Business. The Company's gross profit and
EBITDA margins were, as a percent of sales, 56.5% and 18.4%,
respectively, for fiscal 1998. Management believes the Company's strong
profitability is attributable to its leading market positions, its
extensive sales and distribution networks, its entrenched customer
relationships and a management culture emphasizing product quality and
customer service and support, rather than price-based competition. The
Company's strong profitability, combined with relatively low capital
expenditure requirements (averaging 3% of sales since 1995), provides
cash flow to fund the Company's growth strategy and has facilitated a
cumulative investment of approximately $165 million in product
development from the beginning of fiscal 1995 through fiscal 1998.
. High Installed Base of Products. As leaders in each of their respective
served markets, the Company's principal businesses enjoy high installed
product bases, which the Company believes generally provide a
competitive advantage in selling product enhancements, upgrades,
replacements and aftermarket parts and service. For example, the Company
has sold over 100,000 of its communications test instruments
(representing over $1.0 billion in customer investment), the majority of
which the Company believes are currently in service. This installed base
also represents a substantial investment by customers in training on the
Company's communications test products, a familiarity that the Company
capitalizes on in selling and marketing its products and in the
development of new products.
. Extensive Sales and Distribution Network with Longstanding Customer
Relationships. Management believes that each of the Company's principal
businesses enjoys one of the most extensive, effective and highly
trained sales and distribution networks in its respective principal
markets. The communications test business, for example, has a 180-person
U.S. sales organization comprising predominantly engineers and technical
professionals, who undergo rigorous, ongoing education and training. The
Company has been selling to service providers such as AT&T, MCI, GTE and
Bell Atlantic (or their predecessors) since prior to the early 1980s.
The Industrial Computer Source-Book (over six million copies distributed
in fiscal 1998) is the most widely recognized catalog of ruggedized
industrial computer systems by scientists and engineers. These
purchasers rely upon ICS's sales staff, comprised predominantly of
electrical engineers, to solve compatibility and functionality issues in
configuring the systems.
. Experienced Management Team with Substantial Equity Ownership. Led by
CEO John F. Reno, a 23-year Dynatech veteran, the senior management of
each of the Company's businesses has on average more than 15 years of
industry experience. As a result of the Recapitalization and related
transactions, approximately 350 senior managers and key employees
collectively own or have options to acquire approximately 25% of
Dynatech's common stock on a fully diluted basis.
BUSINESS STRATEGY
The Company intends to pursue the following strategies:
. Leverage Leading Market Positions. The Company believes that its leading
market positions provide it with several competitive advantages in
comparison to smaller market participants, particularly in its
communications test business, and position it to expand its business by
(i) spreading product development costs over a larger sales and unit
base, (ii) leveraging its sales and marketing resources and customer
relationships to sell new and enhanced products through established
channels, and (iii) taking advantage of its high installed base of
instruments to generate incremental sales for product enhancements,
upgrades, replacements and service.
. Address New Market Segments. The Company intends to continue to develop
products to address new market segments in each of its businesses and
thereby expand the size of its total served market. For
53
<PAGE>
example, the Company currently addresses approximately two-thirds of the
$2.1 billion communications test instrument market and is beginning to
address segments within the $1.0 billion communications test and
monitoring systems market. With product line extensions and additions,
the Company can expand the size of its served market while leveraging
its extensive sales and distribution network.
. Pursue Strategic Acquisitions. Since the end of fiscal 1993, the Company
has focused on its higher-growth, more profitable market-leading
businesses, selling 25 non-core businesses for gross proceeds of $211
million and acquiring five complementary businesses. The Company intends
to continue to pursue strategic acquisitions that complement its
existing businesses and further expand its product lines and
technological capabilities. The communications test instrument market is
highly fragmented, which management believes provides significant
opportunities for future strategic acquisitions. With the Company's
economies of scale, well-established sales and marketing channels and
customer relationships, the Company believes it can, through selective
acquisitions, improve profitability while expanding the breadth of its
product line and enhancing its technological expertise.
. Increase International Penetration. The Company generated approximately
87% of sales for fiscal 1998 in North America, primarily in the United
States, where it has established market-leading positions in each of its
principal businesses. The Company believes there are significant
opportunities to expand its international business. For example, while
the Company generated only 11% of its communications test sales from
markets outside North America during fiscal 1998, the $900 million
international market represents an estimated 43% of the global
communications test instrument market for the same period and grew
approximately 12% from 1996 to 1997.
INDUSTRY OVERVIEW
Communications Test
Market Overview. The Company believes that the worldwide market for
communications testing is approximately $3.1 billion, comprising the $2.1
billion communications test instrument market and the $1.0 billion test and
monitoring systems market. Test instruments are used in the design,
manufacturing, installation and maintenance of communications equipment and
networks while test and monitoring systems automate the process of detecting,
isolating and resolving faults within a communications network. TTC currently
addresses approximately two-thirds of the $2.1 billion test instruments
market, primarily in North America, and is beginning to address segments
within the $1.0 billion test and monitoring systems market.
Given the growth of communications networks, the multiplicity of
communications technologies and the broad range of applications at various
points in a network, there are numerous different tests and analyses necessary
for communications service providers and users to install, maintain and
troubleshoot communications networks. As a result, the communications test
instrument market is highly fragmented with many competitors, most of which
address only selected niches within the overall market. The Company estimates
that there are approximately 50 competitors in the communications test
instrument market having sales of over $1 million. A small number of larger
companies compete in many segments of the overall market, including Hewlett-
Packard Company, which the Company believes is the worldwide overall market
leader and which competes in many of the same segments as the Company. Other
significant participants in the overall market include Tektronix, Inc., Wandel
& Goltermann GmbH & Co. and Wavetek Corporation (which have recently announced
a proposed merger), and Network General Corporation. The schematic below
illustrates some of the applications of communications test instruments in
communications networks throughout the overall industry (including
applications that the Company does not currently address):
54
<PAGE>
[SCHEMATIC]
[description for Edgar filing:
A schematic showing, in the center, a cloud labeled "PSTN and Backbone"
within which are icons representing Telco CO central offices which are labeled
as follows: "Customers responsible for production, installation maintenance of
packetcell switching" and "Customers responsible for producing, installing,
and maintaining transport equipment."
Around the periphery of the schematic are the following icons, designations
and labels: an office building, designated "Business" and labeled "LAN
oriented applications requiring the testing and monitoring of private
networks" and "Customers responsible for support of the "service" that
interfaces with commercial customers' CPE"; an icon of a house, designated
"Residence," with no label; an icon of a building with a satellite dish,
designated "CATV Head-End," with no label; an icon of a building designated
"Mobil Telephone Switching office," labeled as described below; and an icon of
a radio tower, designated "Cell Site," labeled "Customers responsible for
installing, maintaining, and manufacturing the RF portion of wireless networks
and portable phones." The Mobil Telephone Switching office icon and one of the
Telco CO icons are connected by a line and together labeled "Customers who
need to provision and test TDM services carried by switches, DCSs, and similar
high end equipment" (with the Telco CO icon connected by another line to the
Cell Site icon). The Business icon is connected to a Telco CO icon by a line
labeled "Customers responsible for constructing, pre-qualifying, and
maintaining engineered copper and fiber facilities;" and the Residence icon is
connected to that same Telco CO icon by a line labeled "Customers responsible
for installing and maintaining residential and small business service." The
residence icon is also connected to the CATV Head-End icon by a line labeled
"Customers who install and maintain CATV equipment and services."]
Industry Trends. Growth in the communications test instrument market is
driven in part by growth in the number of service providers, increased demand
for communications services and the introduction of new communications
protocols. Deregulation and privatization of the worldwide telecommunications
industry has produced increased competition and a proliferation of service
providers. To compete, communications providers must accelerate their network
deployment, maintain and upgrade existing infrastructures, and continue to
increase their quality of service, all while also reducing cost structures. In
addition, the growth of the volume of voice traffic, LAN backbones and
interconnections, high-speed interconnects, Internet access and cellular and
other wireless communications systems have led to the deployment of new high-
speed transmission technologies such as Synchronous Optical Network ("SONET"),
Asynchronous Transfer Mode ("ATM"), frame relay and Integrated Services
Digital Network ("ISDN").
The Company believes that these trends have driven overall communications
test instrument industry growth of approximately 10-12% annually in recent
years. Growth rates vary widely across segments of the market and are
typically higher in segments that support the development of high growth
communications services such as ATM, frame relay, SONET and wireless services.
The Company believes the communications test and monitoring systems market
is growing at approximately 12% annually, driven by the needs of service
providers to provide higher quality networks and to reduce costs through
efficiency, which may be gained by using test and monitoring systems.
Industrial Computing and Communications
The Company's industrial computing and communications business addresses two
markets: (1) the market for ruggedized rack-mounted computers, which is
characterized by thousands of smaller customers who typically order fewer than
ten units each, and (2) the market for ruggedized portable computers, which is
characterized by a more concentrated group of larger customers that typically
order large quantities of units.
Ruggedized Rack-Mounted Computers. The Company believes that the global
market for ruggedized industrial computer products currently exceeds $1.0
billion annually, split roughly evenly between North America and the rest of
the world. The Company estimates that this global market has been growing
approximately 10% annually in recent years and will grow at approximately 12%
through 2001, driven by the
55
<PAGE>
increased use of computers in harsh environments. The market consists of sales
of (i) modular component products, which include chassis and CPUs sold
separately and integrated by the customer, and (ii) fully integrated systems,
which consist of a considerably broader product offering that is fully
integrated into complete systems prior to sale. The Company believes that
modular component products and fully integrated systems each account for
approximately half of the total global market. ICS competes primarily in the
fully integrated systems segment of the market and focuses on the direct
marketing of its products to engineers and scientists, purchasing one to ten
units through its catalogs, utilizing a proprietary database developed over
many years. In ICS's target market, ICS's principal competitors include Texas
Microsystems Inc., the I-Bus Division of Maxwell Technologies, Inc., American
Advantech Corp. and Diversified Technology, Inc. Other significant competitors
in the overall market include IBM and Siemens AG.
Ruggedized Portable Computers. The market for ruggedized portable computers
consists of customers with large mobile workforces in industries such as
telecommunications, utilities, insurance and others that employ service and
maintenance technicians for a variety of products. The Company estimates that
the global market for ruggedized portable notebook computers, Itronix's
principal market, currently exceeds $400 million, and believes this market has
grown approximately 16% in 1997. In this market, because of the relatively
small number of customers with large field-service work forces, the timing and
size of whose orders are irregular, growth rates vary widely. Ruggedized
portable computers provide field workers with the ability to install, diagnose
and maintain company and customer equipment and collect critical information
from remote locations. The critical feature of ruggedized portable computers
is the ability to operate reliably in adverse environments and work conditions
while withstanding mechanical shock, vibration, moisture and extreme
temperatures. Itronix is the market leader in sales to U.S. telecommunications
service providers, whose large field service personnel require portable
computers to collect data from various remote locations. Itronix's competitors
in the fully-ruggedized portable notebook computer market include Panasonic
Industrial Co. (which the Company believes is the worldwide market leader) and
a number of smaller competitors, as well as competition from manufacturers of
competing mass-market "semi-rugged" mobile computers, which constrains the
pricing of premium portable ruggedized products like Itronix's. Producers of
ruggedized portable computers also face indirect competition from off-the-
shelf portable computers and single-purpose diagnostic and data collection
instruments.
Visual Communications
AIRSHOW. AIRSHOW addresses a segment of the overall market for information
and entertainment systems used by passengers of commercial and general
aviation aircraft. The market is driven by growth in aircraft production and
demand by aircraft passengers to receive real-time video or data information
while the aircraft is in the air. Management projects estimated growth in new
general aviation aircraft production of 20% in 1998. AIRSHOW has a leadership
position in a market niche for passenger cabin video information systems for
the general aviation and commercial airline markets. On June 19, 1998 the
Company acquired Pacific Systems Corporation, a designer and manufacturer of
customer specified avionics and integrated cabin management equipment for the
corporate and general aviation market, which is intended to complement
AIRSHOW's existing offerings. See "--Products and Services."
da Vinci. da Vinci produces digital color correction systems, which are a
component of telecine systems used by video post production and commercial
production facilities to enhance and color match images as they are
transferred from film to video tape for editing and distribution. The
principal application of da Vinci's color correction system is to conform and
enhance color in the film editing process and to provide color to black and
white films and video images. da Vinci's products occupy the leadership
position in this small niche market, growth in which is driven primarily by
the introduction of new video technologies and standards within the film and
video production industry.
PRODUCTS AND SERVICES
Communications Test
Overview. TTC provides a wide range of test and analysis products, service
and support that enable customers worldwide to develop, manufacture, install
and maintain communications networks and equipment.
56
<PAGE>
TTC's products include a broad portfolio of test instruments, test systems,
software and professional services that address multiple technologies and
applications at various locations in communications networks.
TTC's test instrument products address two key categories of applications in
communications networks: (i) transmission testing between service providers'
central offices ("digital transport") and between a service provider's central
office and its customers (the "local loop"), and (ii) network services testing
by both service providers and users of a broad range of technologies and
services delivered principally to business customers. In addition, TTC is
expanding its product offerings for the communications test and monitoring
systems market.
TTC's sales were $116.1 million in fiscal 1994, $143.1 million in fiscal
1995, $172.0 million in fiscal 1996, $211.3 million in fiscal 1997 and $240.4
million in fiscal 1998, representing a 20% compound annual growth rate.
Transmission Testing. TTC produces a wide range of products that test and
monitor the physical transmission of voice and data signals across a service
provider's network of transmission circuits, cables, connectors and related
network components in the central office and local loop. Domestic and
international service providers use TTC's transport test products to install
and maintain high-speed transmission circuits. Service providers have employed
such circuits as inter-office links to connect voice and data transmission
between long-distance carriers, local exchange carriers and wireless carriers.
More recently, transmission circuits employing newer technologies, such as
ISDN, SONET and ATM, have been proliferating as more analog networks are being
upgraded as customers demand improvements to facilitate high-speed data
transmission. TTC's products cover most widely accepted existing and emerging
technologies in its markets, with average selling prices ranging from $5,000
for a handheld unit to $45,000 for a fully-featured portable instrument to
$70,000 for a test system.
Service providers use TTC's local loop test products to install and maintain
voice telephone services, ISDN, digital data system ("DDS"), T1 lines, and
fiber optic facilities between the service providers' local central offices
and the customers' premises. For example, technicians use products such as the
T-BERD 209OSP, a ruggedized field service test set, to perform fault location
and data quality testing of voice or data circuits in the local loop. With the
increased competition among service providers and the attendant workforce
downsizing of incumbent local service providers such as the RBOCs, TTC designs
its local loop test products to assist such customers in improving service
quality and productivity while reducing costs.
Network Services Testing. TTC's network services products test
communications technologies and services employed primarily by businesses,
including their physical transmission facilities, voice services, and data
services such as ATM, frame relay and ISDN. TTC's FIREBERD data communications
analyzers, for example, measure performance of a wide range of network
transmission equipment utilized on a business customer's premises and have a
modular construction to facilitate simple upgrades as new technologies and
services are employed. TTC's FIREBERD 500 Internetwork Analyzer monitors and
tests network traffic between a LAN and WAN and can analyze numerous
communications protocols. In addition, TTC manufactures portable, hand-held
test instruments that enable service technicians to install or repair
networks.
Communications Test and Monitoring Systems. TTC historically has focused on
the communications test instrument market, which continues to account for the
predominance of TTC's sales. However, TTC has been developing products to
address the $1.0 billion communications test and monitoring systems market.
For example, the CENTEST 650 was developed to automate the monitoring and
testing of DS0, DS1 and DS3 signals so that service providers can identify
network trouble spots quickly and direct mobile repair crews more efficiently
from a central location. In addition, TTC is devoting significant resources to
develop additional products for the communications test and monitoring systems
market.
Industrial Computing and Communications
Overview. The Company's industrial computing and communications business
consists of two subsidiaries addressing different segments of the ruggedized
computer market: (1) ICS, primarily a direct marketer of rack-mounted computer
products and systems used by engineers, scientists and others in industrial or
otherwise harsh
57
<PAGE>
operating environments, and (2) Itronix, acquired by the Company in December
1996, which produces mobile computing and communications devices used by
companies with field service organizations such as telephone companies and
utilities. ICS generally sells to thousands of small accounts, which typically
order fewer than ten units, whereas Itronix sells to a more concentrated group
of large organizations that typically order large quantities of units.
Industrial Computer Source. ICS employs a direct marketing strategy with its
widely recognized Industrial Computer Source-Book catalogs, proprietary target
customer database and highly trained sales force of electrical engineers to
sell a broad range of integrated industrial computers, input/output devices,
and communication and accessory products. ICS primarily sells fully customized
integrated systems that its sales force configures to address a customer's
particular computing needs. ICS is geared to serving a large number of
customers which typically order fewer than ten units per order. Over the past
three years, ICS has sold to over 12,000 customers with an average order size
of approximately $3,000. ICS mailed over six million catalogs in fiscal 1998
to a proprietary list of over 250,000 scientists, engineers and production
managers.
ICS offers rack-mounted personal computers for use in environments other
than homes and offices, including a wide range of commercial and
communications applications. Products include ruggedized computers and remote
terminals designed for operation in adverse environments (exposure to
vibration, noise, temperature fluctuations and extremes, dust, moisture,
electromagnetic fields and other hazards). ICS designs, configures and
assembles its products but generally sources components from third-party
vendors and contract manufacturers. ICS also uses its in-house CPU design
capabilities to sell customized modular products and subsystems to systems
integrators.
ICS's sales were $36.6 million in fiscal 1994, $44.8 million in fiscal 1995,
$57.9 million in fiscal 1996, $60.5 million in fiscal 1997, and $83.8 million
in fiscal 1998, representing a 23% compound annual growth rate.
Itronix. Itronix is the leading supplier of portable, networked notebook
computing and communications devices used by field-service technicians in the
U.S. telecommunications industry. These products are carried by field-service
technicians who use them in a broad range of environments to communicate--
either through wireline or wireless connections--to a central office.
Customers use Itronix's mobile computing products to automate dispatching,
work management and field reporting processes.
Itronix also targets utilities, insurance companies, and other organizations
seeking to increase the efficiency of their field-service personnel. Service
technicians often make multiple service calls to different locations without
returning to a base office. The use of networked computing devices allows for
more effective dispatching to service sites and provides two-way
communications with technicians. Itronix's flagship product provides
technicians with the ability to access engineering data and customer service
histories, or to collect and transmit key information regarding their service
calls to a central database.
Itronix currently produces two hardware product lines, the X-C Series of
laptop computers and the T Series of smaller handheld computing devices.
Itronix's flagship product line, the X-C series, is a rugged laptop computer
that features functionality and power that is similar to commodity laptops yet
is designed to withstand harsh environments, including heat, cold, rain and
the shock and vibration found in service vehicles. The X-C is also an
integrated communications device with options for both wired and wireless
communications. Other features include intelligent battery-life management and
touch screen functionality.
Itronix, which the Company acquired on December 31, 1996, is facing
significant manufacturing and marketing challenges and operated at a modest
loss for fiscal 1998. Management is currently implementing a plan designed to
(1) reduce manufacturing costs by renegotiating component costs, outsourcing
non-core manufacturing activities and redesigning its products and (2)
reposition its premium niche against new market competition from "semi-rugged"
and mass market products. See "Risk Factors--Risks Relating to Itronix."
Itronix's sales were $62.8 million in fiscal 1996, $81.6 million in fiscal
1997, and $71.2 million in fiscal 1998.
58
<PAGE>
Visual Communications
Overview. The Company's principal visual communications businesses are
AIRSHOW and da Vinci. The Company's total visual communications sales were
$46.9 million in fiscal 1994, $55.2 million in fiscal 1995, $63.1 million in
fiscal 1996, $72.8 million in fiscal 1997 and $77.5 million in fiscal 1998,
representing a 13% compound annual growth rate.
AIRSHOW. AIRSHOW primarily manufactures passenger cabin video information
display systems for the general and commercial aviation markets, selling its
equipment to airlines, aircraft manufacturers, and aircraft electronic system
(avionics) installation centers. AIRSHOW also provides information services by
collecting data from various information service providers and transmitting
news, weather and financial information as text and graphics to aircraft
equipped with AIRSHOW Network products. AIRSHOW systems are installed on over
3,000 general aviation aircraft and on approximately 100 commercial airlines.
The AIRSHOW moving map system and real-time flight information passenger
video displays are offered across general and commercial aviation markets with
variations in equipment interface for different aircraft and video systems
types. The AIRSHOW Network is an extension of the moving map system and
includes a real-time data communications system. AIRSHOW Network is now
offered as an option by leading corporate aircraft manufacturers such as
Bombardier Inc., The Cessna Aircraft Company, Inc., Dassault Falcon Jet Corp.,
Gulfstream Aerospace Corporation and Learjet Inc. AIRSHOW recently introduced
its AIRSHOW TV service which provides for reception of direct broadcast
satellite TV aboard general aviation aircraft which operate within the
continental U.S. This service is being primarily marketed to the general
aviation market.
da Vinci. da Vinci produces digital color correction systems, which are a
component of telecine systems used by video post production and commercial
production facilities to enhance and color match images as they are
transferred from film to video tape for editing and distribution. The
principal application of da Vinci's color correction system is to conform and
enhance color in the film editing process and to provide color to black and
white films and video images. da Vinci products occupy the leadership position
in this small niche market, growth in which is driven primarily by the
introduction of new video technologies and standards within the film and video
production industry.
Other Subsidiaries. The Company's other visual communications subsidiaries
are: DataViews, which provides tools for software developers; and Parallax
Graphics, Inc., which the Company plans to close operations over time. On June
30, 1998, the Company sold the assets and certain liabilities of ComCoTec,
Inc. for a total sale price of $21.0 million.
PRODUCT DEVELOPMENT
For each of the Company's businesses, the development of new and enhanced
products is a key element of its strategy, designed to further penetrate
served markets, address new markets and reduce costs. From the beginning of
fiscal 1994 through fiscal 1998, consolidated product development expense was
approximately $192 million, representing an average of 12.2% of sales per
year. Consolidated product development expense was 12.6% of sales ($30.6
million) in fiscal 1995, 12.4% of sales ($36.5 million) in fiscal 1996, 11.9%
of sales ($43.3 million) in fiscal 1997 and 11.6% of sales ($55.0 million) in
fiscal 1998. The Company anticipates product development spending to continue
at similar levels as a percentage of sales in the future. See "Risk Factors--
Rapid Technological Change; Challenges of New Product Introductions."
From the beginning of fiscal 1994 through fiscal 1998, the Company invested
approximately $133 million in the development of communications test products.
In fiscal 1998, the Company introduced a significant number of new test
instrument products including NetAnalyst, a client/server-based software
product that will allow users to centrally test the entire network from the
network operations center, the TPI 550E ISDN test set which provides complete
ISDN testing in a portable instrument, and the T-BERD 950 multi-service test
set.
The Company has also made recent Pentium product introductions in its
industrial computing and communications product lines and has significantly
expanded its AIRSHOW product offerings.
59
<PAGE>
The Company uses its customer relationships to focus its product development
strategy on customer needs and emerging technologies.
CUSTOMERS AND MARKETING
Overview. The Company markets its products to a diverse customer base. The
Company's products are sold to a broad range of communications service
providers, including RBOCs, long-distance carriers, competitive access
providers, wireless service companies, independent telephone companies, cable
television operations, and a wide array of computer and data communication
users, corporate and industrial customers, and scientific organizations.
Most of the Company's revenues are generated through direct selling. The
Company also uses distributorships and representative relationships to sell
its products in areas of the United States and the rest of the world with
relatively low sales volume.
The Company's sales of goods and services to various agencies of the United
States federal government were approximately $12.8 million, $17.5 million and
$19.3 million in fiscal 1996, 1997 and 1998, respectively. Sales of goods and
services to the agencies of the United States federal government are made
pursuant to standard contracts which generally permit such agencies to cancel
or revise the contracts at will.
No single customer accounted for more than 10% of sales in any of these
three years.
Communications Test. In the U.S., TTC markets and sells its communications
test and analysis products primarily through a 180-person direct sales team
comprising predominantly engineers and technical professionals who undergo
intensive initial training on TTC's and its competitors' products.
Internationally, TTC employs a 60-person direct sales team for key markets
along with distributors and representatives to market and sell its products.
TTC's principal customers are communications service providers (such as RBOCs,
long-distance companies and competitive access providers), service users such
as large corporate and government network operators, and manufacturers of
communications equipment and systems.
Industrial Computing and Communications. ICS sells its ruggedized industrial
computer products to engineers and scientists primarily through its catalogs
and a telemarketing sales force comprised of highly-trained electrical
engineers. Itronix employs a direct sales force of engineers to market and
sell its ruggedized mobile computer products to organizations with large field
service groups such as telephone and insurance companies and utilities. ICS
typically sells to thousands of customers with no significant customer
concentration while Itronix's sales tend to be more concentrated on fewer
large customers.
Visual Communications. The Company's niche visual communications businesses
generally sell into niche markets directly through their own sales forces as
well as through distributors and representatives.
PRODUCT ASSEMBLY
The Company outsources most of its manufacturing and mechanical parts
fabrication and generally performs its own final assembly and testing of
products.
COMPETITION
The markets in which the Company competes are highly competitive and are
characterized by rapidly changing technology. Principal competitors include
businesses with significant financial, development, marketing, and
manufacturing resources, as well as numerous small, specialized companies. The
Company believes it holds a relatively favorable position with respect to the
important competitive factors in each of its markets. The Company considers
rapid product development, product functionality and features, and highly
trained technical sales and support staff to be key competitive factors. See
"--Industry Overview" and "Risk Factors--Highly Competitive Markets."
60
<PAGE>
INTERNATIONAL
The Company maintains sales subsidiaries or branches for its communications
test business in major countries in Western Europe and Asia and has
distribution agreements in other countries where sales volume does not warrant
a direct sales organization. The Company's foreign sales from continuing
operations (including exports from the United States directly to foreign
customers) were approximately 20%, 20%, and 16% of consolidated net sales in
fiscal 1996, 1997, and 1998, respectively.
The Company's international business is subject to risks customarily found
in foreign operations, such as fluctuations in currency exchange rates, import
and export controls, and regulatory policies of foreign governments. A summary
of the Company's sales, earnings and identifiable assets by geographic area is
found in the Company's financial statements. See the Company's consolidated
financial statements (including the notes thereto) appearing elsewhere in this
Prospectus.
DISCONTINUED OPERATIONS AND DIVESTED BUSINESSES
The Company engaged in a business divestiture program beginning in 1994 and
ending in fiscal 1997. Through this program, the Company sold 24 non-core
businesses, which resulted in total proceeds to the Company of approximately
$190 million, including $13.5 million in non-cash proceeds. In addition, on
June 30, 1998 the Company sold the assets and certain liabilities ComCoTec,
Inc. for a total sale price of $21.0 million dollars. See the notes to the
Company's consolidated financial statements appearing elsewhere in this
Prospectus. (ComCoTec, Inc. was not considered a discontinued operation in the
Company's historical financial statements.)
BACKLOG
The Company's backlog of orders at March 31, 1997 and 1998 was $71.7 million
and $79.1 million, respectively.
EMPLOYEES
At March 31, 1998, the Company employed approximately 2,249 people. The
Company's experience has been that employees having requisite skills for the
Company's purposes are generally available in the areas where its facilities
are located, although there are constraints on the Company's ability to fill
certain engineering positions. The Company's employees are not represented by
a labor union, and the Company believes its employee relations are good.
LITIGATION
The Company is involved from time to time in routine legal matters
incidental to its business. The Company believes that the resolution of such
matters will not have a material adverse effect on the Company's financial
condition or results of operations.
On June 27, 1996, Cincinnati Microwave, Inc. ("CMI") filed an action in the
United States District Court for the Southern District of Ohio against the
Company and Whistler Corporation of Massachusetts ("Whistler"), alleging
willful infringement of CMI's patent for a mute function in radar detectors.
In 1994, the Company sold its radar detector business to Whistler. The Company
and Whistler have asserted in response that they have not infringed, and that
the patent is invalid and unenforceable. The Company obtained an opinion of
counsel from Bromberg & Sunstein LLP in connection with the manufacture and
sale of the Company's Whistler series radar detectors and will be offering the
opinion, among other things, as evidence that any alleged infringement was not
willful. On March 24, 1998, CMI, together with its co-plaintiff and patent
assignee Escort, Inc., moved for summary judgment. The Company and Whistler
have opposed the motion for summary judgment. The Company intends to defend
the lawsuit vigorously and does not believe that the outcome of the litigation
is likely to have a material adverse effect on the Company's financial
condition, results of operations or liquidity.
61
<PAGE>
INTELLECTUAL PROPERTY
The Company relies primarily on trade secrets, trademark laws,
confidentiality procedures and contractual restrictions to establish and
protect its proprietary rights.
The Company generally seeks patent protection for inventions and
improvements to its products which it believes to be patentable. It holds
numerous United States and foreign patents and patent applications covering
many products. The Company does not believe that the expiration of any patent
or group of patents would materially affect its business.
FIREBERD, T-BERD, CENTEST, INTERCEPTOR, XC 6250, INDUSTRIAL COMPUTER SOURCE-
BOOK, DA VINCI SYSTEMS and AIRSHOW are among the registered trademarks which
the Company considers valuable assets.
DYNATECH (and design) is a registered service mark of the Company in the
United States and a registered trade or service mark (issued or applied for)
of the Company in most other major industrialized countries of the world.
The Company is subject to customary risks of infringement of its proprietary
rights. While the Company considers its proprietary rights important, it
believes its technical marketing and manufacturing capabilities are of greater
competitive significance.
SUPPLIERS
Materials and components used in the Company's products are normally
available stock items or can be obtained to Company specifications from more
than one potential supplier, with the exception of certain components which
are being sourced from a single supplier. These include certain commercially
available and customized microprocessors and application specific integrated
circuits, power supplies, display devices and certain operating system
software. The Company has not entered into long term contracts for the supply
of such components. Although alternative sources generally exist for these
materials, a significant amount of time could be required before the Company
would begin to receive adequate supplies from such alternative suppliers. The
Company also purchases certain key components from sole source vendors,
including a semi-conductor manufacturer of a component utilized in the
Company's communications test business and a component manufacturer for the
Itronix series of ruggedized laptop computers. There can be no assurance that
such components will continue to be produced or that the price for such
components may not significantly increase. Some components and assemblies are
purchased in Asia pursuant to volume contracts. See "Risk Factors--Dependence
on Sole Source Suppliers and Licensors."
ENVIRONMENTAL MATTERS
Federal, state and local laws or regulations which have been enacted or
adopted regulating the discharge of materials into the environment have not
had, and under present conditions, the Company does not foresee that they will
have, a material adverse effect on capital expenditures, earnings, or the
competitive position of the Company.
62
<PAGE>
PROPERTIES
The Company's policy is generally to lease real property for its
manufacturing and sales operations. Principal operating facilities for
continuing operations are as follows:
<TABLE>
<CAPTION>
LEASE
LOCATION SQUARE FEET TERMINATION
-------- ----------- -----------
<S> <C> <C>
Burlington, Massachusetts............................ 14,600 1999
Ft. Lauderdale, Florida.............................. 16,300 2001
Germantown, Maryland................................. 30,000 2006
Germantown, Maryland................................. 68,400 2001
Germantown, Maryland................................. 30,000 2003
Germantown, Maryland................................. 68,600 2003
Northampton, Massachusetts........................... 22,500 1999
Tustin, California................................... 52,000 2005
Salem, Virginia...................................... 35,900 2004
San Diego, California................................ 135,000 2004
Spokane, Washington.................................. 66,400 1999
</TABLE>
The Company has other leases for continuing operations manufacturing space
and sales offices, but in each case the total leased space is under 15,000
square feet.
The Company has leased approximately 239,000 square feet of space in various
leased facilities in discontinued operations at March 31, 1998.
YEAR 2000
The Company has commenced a review of its computer systems and products in
order to assess its exposure to Year 2000 issues. The Company is currently in
the process of determining the full scope, related costs and action plan to
insure that the Company's systems continue to meet its internal needs and
those of its customers. The Company expects to make the necessary
modifications or changes to its computer information systems to enable proper
processing of transactions relating to the Year 2000 and beyond. However,
there can be no assurance that Year 2000 costs and expenses will not have a
material adverse effect on the Company. In addition, the Company does not
currently have complete information concerning the Year 2000 compliance status
of its suppliers and customers. In the event that any of the Company's
significant suppliers or customers do not successfully and timely achieve Year
2000 compliance, the Company's business or operations could be materially
adversely affected. Finally, there can be no assurance that the Company's
existing or installed base of products are Year 2000 compliant, or that the
Company's products will not be integrated by the Company or its customers
with, or otherwise interact with, non-compliant software or other products.
Any such product non-compliance may expose the Company to claims from its
customers and others, and could impair market acceptance of the Company's
products and services, increase service and warranty costs, or result in
payment of damages, which in turn could materially adversely affect the
Company.
63
<PAGE>
MANAGEMENT
TTC is managed by Dynatech, TTC's sole member, and TTC does not currently
have any executive officers or directors. The Company anticipates that, in the
future, TTC will have executive officers and directors that are identical to
those of Dynatech. The Communications Test Business of TTC will also have a
slate of officers.
Listed below are the individuals who currently serve as the executive
officers and directors (the "New Directors") of Dynatech, each of whom is a
citizen of the United States.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
---- --- -------------------------
<S> <C> <C>
John F. Reno............... 59 Chairman, President, Chief Executive Officer,
Director
Allan M. Kline............. 53 Corporate Vice President, Chief Financial
Officer, Treasurer, Director
John R. Peeler............. 43 Corporate Vice President--Communications Test
Business, Director
Samuel W. Tishler.......... 60 Corporate Vice President, Corporate Development
John A. Mixon.............. 52 Corporate Vice President, Human Resources
Robert W. Woodbury, Jr..... 41 Corporate Vice President, Corporate Controller
Mark V.B. Tremallo......... 41 Corporate Vice President, General Counsel
Joseph L. Rice, III........ 66 Director
Brian D. Finn.............. 37 Director
Charles P. Pieper.......... 51 Director
</TABLE>
John F. Reno presently serves as Chairman, President and Chief Executive
Officer and a Director of Holding. Mr. Reno has served as Chairman, President
and Chief Executive Officer since August 1996 and as President and Chief
Executive Officer since January 1993. From July 1991 to January 1993, Mr. Reno
was President and Chief Operating Officer. Prior to July 1991, Mr. Reno served
as Executive Vice President and Chief Operating Officer. Mr. Reno is also a
director of Millipore Corporation.
Allan M. Kline presently serves as Corporate Vice President, Chief Financial
Officer and Treasurer of Dynatech. Mr. Kline is presently a Director of
Dynatech and has served as such since May 21, 1998. Mr. Kline joined Holding
in June 1996. From 1995 to 1996, he served as Senior Vice President, Chief
Financial Officer of CrossComm Corporation, a manufacturer of networking
products. From 1994 to 1995, he was President of TAR Acquisition Corp., a
private investment company. From 1989 to 1994, Mr. Kline was also a Director
of CrossComm Corporation. From 1990 to 1994, Mr. Kline was Senior Vice
President, Chief Financial Officer of Cabot Safety Corporation, a subsidiary
of Cabot Corporation. Prior to that, he served at Leggett & Platt,
Incorporated and was a partner with Arthur Young & Company.
John R. Peeler presently serves as Corporate Vice President--Communications
Test Business, and President and Chief Executive Officer of all of the
Company's telecommunications test businesses. Mr. Peeler is presently a
Director of Dynatech and has served as such since May 21, 1998. Mr. Peeler has
been employed by the Company since 1980.
Samuel W. Tishler presently serves as Corporate Vice President--Corporate
Development of Holding. Mr. Tishler joined Holding in September 1994. From
1988 to 1994, he was Vice President of Raytheon Ventures, the venture capital
portfolio of Raytheon Co. From 1977 to 1986, he served as Vice President of
ADL Enterprises, a wholly owned subsidiary of Arthur D. Little, Inc. From 1970
to 1977, Mr. Tishler was President of Harnessed Energies, Inc., a manufacturer
of scientific instrumentation.
John A. Mixon presently serves as Corporate Vice President--Human Resources
of Holding. Mr. Mixon has been employed by the Company since 1989.
Robert W. Woodbury, Jr. presently serves as Corporate Vice President--
Corporate Controller of Holding. Mr. Woodbury joined Holding in January 1996.
From 1992 to January 1996, he served as Vice President and Controller for
Kollmorgen Corporation, a manufacturer of motion control devices. From 1990 to
1992, he was Chief Financial Officer of Kidde Fenwal, Inc., a manufacturer of
fire suppression equipment.
64
<PAGE>
Mark V.B. Tremallo presently serves as Corporate Vice President--General
Counsel of Holding. Mr. Tremallo joined Holding in May 1997. From 1995 to 1997
he served as Vice President, General Counsel and Secretary of Aearo
Corporation (formerly Cabot Safety Corporation), a manufacturer of industrial
safety products. From 1990 to 1995 he was General Counsel of Cabot Safety
Corporation, a subsidiary of Cabot Corporation.
Joseph L. Rice, III is Chairman of CDR and, since May 21, 1998, a Director
of Holding. In addition, Mr. Rice is a director of Uniroyal Holding, Inc.
Remington Arms Company, Inc. and Thyssen Schulte Bautechnik, corporations in
which an investment partnership managed by CDR has an investment, and serves
as a trustee of Williams College and The Manhattan Institute. He is a graduate
of Williams College and Harvard Law School. Mr. Rice is a limited partner of
CD&R Associates V Limited Partnership, the general partner of CDR Fund V
("Associates V"), and is a Director and President of CD&R Investment
Associates II, Inc. ("Associates II Inc."), the managing general partner of
Associates V.
Brian D. Finn is a principal of CDR and, since May 21, 1998, a Director of
Holding. Mr. Finn is also a director of U.S. Office Products Company, a
corporation in which CDR Fund V has an investment. Mr. Finn joined CDR in 1997
from Credit Suisse First Boston where he was Managing Director and Co-Head of
Mergers & Acquisitions. During his 15 years at Credit Suisse First Boston he
advised a large number of corporate clients in various industries in
transactions totaling approximately $250 billion. Mr. Finn received his B.S.
in Economics from The Wharton School of the University of Pennsylvania. He is
a limited partner of Associates V and a Director of Associates II Inc.
Charles P. Pieper is a principal of CDR and, since May 21, 1998, a Director
of Holding. Mr. Pieper is also Chairman of North American Van Lines, Inc. and
U.S. Office Products Company, corporations in which CDR Fund V has an
investment. Mr. Pieper joined CDR in 1997. Prior to joining CDR, he was
President and Chief Executive Officer of GE Lighting Europe. During his 16-
year career at GE, Mr. Pieper was responsible for several key business units,
including serving as President and Chief Executive Officer of: GE Japan,
Korea, Taiwan; GE Medical Systems Asia; as well as GE Lighting Europe. He
joined GE in 1981, from the Boston Consulting Group. Mr. Pieper graduated from
Harvard College and holds an M.B.A. from Harvard Business School. He is a
limited partner of Associates V and a Director of Associates II Inc.
The composition of the Board is subject to change from time to time. CDR
Fund V has the right to elect the directors of the Board, except that CDR Fund
V has agreed, pursuant to the employment agreements with Messrs. Reno, Kline
and Peeler, to elect such officers to serve as members of the Board during the
period of their employment with the Company.
ELECTION AND COMPENSATION OF DIRECTORS
All directors are elected annually and hold office until their successors
are elected and qualified, or until their earlier removal or resignation.
During fiscal 1998, compensation of non-employee Directors ("Non-Employee
Directors") of Holding was at the rate of $1,500 for each Board of Directors
or committee meeting attended ($500 for each committee meeting held directly
before or after a meeting of the Board of Directors), $750 for a meeting held
over the telephone, plus a quarterly retainer fee paid at the rate of 200
shares of Dynatech Common Stock per quarter. Chairmen of all committees other
than the Executive Committee also received an additional 25 shares of Dynatech
Common Stock per quarter. In addition, the Dynatech Corporation 1994 Stock
Option and Incentive Plan provides for the automatic grant of stock options to
non-employee Directors of Holding. Each Non-Employee Director is entitled to
receive an option to purchase 10,000 shares of Common Stock upon initial
election to the Board of Directors and an additional option to purchase 3,000
shares of Common Stock after each Annual Meeting of Stockholders. Non-Employee
Directors who have served on the Board for at least five years are also
entitled to receive an annual retirement benefit equal to $16,000. Such
retirement benefit is payable following the later of the Non-Employee
Director's 60th birthday or retirement from the Board (or such later date as
the Director shall elect) for a period equal to the number of full years
service on the Board, up to a maximum of ten years. None of the New Directors
of Holding participate in the programs or receive the compensation described
above.
65
<PAGE>
EXECUTIVE COMPENSATION
The following summary compensation table sets forth information concerning
compensation awarded to, earned by, or paid to (i) Holding's Chief Executive
Officer, and (ii) the four highest compensated executive officers who were
serving as executive officers at the end of fiscal 1998 (collectively, the
"Named Executive Officers"), for services rendered in all capacities with
respect to Holding's fiscal years ended March 31, 1996, 1997 and 1998
(references to "Common Stock" mean the common stock of Dynatech Corporation
prior to the Recapitalization, and not Recapitalized Common Stock):
<TABLE>
<CAPTION>
ANNUAL COMPENSATION(1) LONG TERM
----------------------- COMPENSATION ALL OTHER
FISCAL SALARY BONUS AWARDS(2) COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) OPTIONS # ($)(3)
- --------------------------- ------ ----------------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
John F. Reno............. 1998 481,250 604,053 56,700 11,857
President and Chief
Executive Officer 1997 456,250 1,032,185 55,100 31,892
1996 435,000 372,836 62,000 25,533
John R. Peeler........... 1998 270,000 383,513 24,800 47,870
Corporate Vice President
of Dynatech; 1997 244,242 662,214 20,800 18,936
President and Chief
Executive Officer of 1996 225,042 293,128 28,000 15,939
all Telecommunications
Test Businesses
Allan M. Kline(4)........ 1998 218,750 198,108 16,000 23,060
Corporate Vice
President, Chief
Financial 1997 158,333 218,918 50,000 3,234
Officer and Treasurer
John A. Mixon............ 1998 185,591 152,680 12,900 23,828
Corporate Vice
President-- 1997 178,500 270,591 13,800 9,910
Human Resources 1996 172,125 94,384 14,000 8,851
Samuel W. Tishler(5)..... 1998 176,667 145,338 31,800 15,834
Corporate Vice
President-- 1997 144,167 108,521 5,000 6,701
Corporate Development 1996 130,000 48,227 2,000 4,471
</TABLE>
- --------
(1) Perquisites and other personal benefits paid to each Named Executive
Officer in each instance aggregated less than 10% of the total annual
salary and bonus set forth in the columns entitled "Salary" and "Bonus"
for each Named Executive Officer, and accordingly, have been omitted from
the table as permitted by the rules of the SEC.
(2) Figures in this column show the number of options for Common Stock (not
Recapitalized Common Stock) granted. Holding did not grant any restricted
stock awards or stock appreciation rights to any of the Named Executive
Officers during the years shown.
(3) Figures in this column represent Holding's contributions on behalf of each
of the Named Executive Officers to Holding's 401(k) plan. These figures
also include Holding's contributions to a nonqualified deferred
compensation plan, which became effective April 1, 1995.
(4) Mr. Kline's employment with Holding commenced in June 1996.
(5) Mr. Tishler became an officer of Holding in May 1997.
66
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning individual grants of
options to purchase Common Stock (not Recapitalized Common Stock) granted to
the Named Executive Officers during fiscal 1998:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
----------------------
% OF TOTAL POTENTIAL REALIZABLE VALUED
NUMBER OF OPTIONS AT ASSUMED ANNUAL RATES
SECURITIES GRANTED TO OF STOCK PRICE APPRECIATION
UNDERLYING EMPLOYEES EXERCISE OR FOR OPTION TERM(2)
OPTIONS IN FISCAL BASE PRICE EXPIRATION ----------------------------
NAME GRANTED (#) YEAR (%) ($/SH)(1) DATE 5% ($) 10% ($)
---- ----------- ---------- ----------- ---------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
John F. Reno............ 56,700 8.9% $35.9375 7/30/07 $ 1,281,471 $ 3,247,498
John R. Peeler.......... 24,800 3.9% $35.9375 7/30/07 $ 560,502 $ 1,420,422
Allan M. Kline.......... 16,000 2.5% $35.9375 7/30/07 $ 361,614 $ 916,402
John A. Mixon........... 12,900 2.0% $35.9375 7/30/07 $ 291,552 $ 738,849
Samuel W. Tishler....... 20,000 3.2% $38.8750 5/6/07 $ 488,966 $ 1,239,134
Samuel W. Tishler....... 11,800 1.8% $35.9375 7/30/07 $ 266,691 $ 675,846
</TABLE>
- --------
(1) Options vest annually in five equal installments beginning on the first
anniversary date of grant. The options in this table expire 10 years after
grant. In connection with the Merger, all of the options became fully
vested and exercisable, other than options to purchase 20,737 shares of
Common Stock granted to Mr. Reno.
(2) These columns show the hypothetical value of the options granted at the
end of the option terms if the price of the Common Stock were to
appreciate annually by 5% and 10%, respectively. There is no assurance
that the stock price will appreciate at the rates shown.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth certain information regarding exercises of
options to purchase Common Stock (not Recapitalized Common Stock) by the Named
Executive officers during the fiscal year ended, March 31, 1998 and stock
options for Common Stock (not Recapitalized Common Stock) held by the Named
Executive Officers at March 31, 1998:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FY-END(#) AT FY-END(2)($)
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE(#) REALIZED(1)($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- -------------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
John F. Reno............ 0 0 175,820/237,180 $5,674,711/5,824,895
John R. Peeler.......... 0 0 68,160/ 98,240 2,271,940/2,464,210
Allan M. Kline.......... 0 0 10,000/ 56,000 161,875/ 843,500
John A. Mixon........... 3,250 96,906 30,360/ 52,340 898,303/1,224,860
Samuel W. Tishler....... 0 0 1,800/ 37,000 37,288/ 424,075
</TABLE>
- --------
(1) Calculated on the basis of the fair market value of the Common Stock on
the date of exercise, less the option exercise price.
(2) Calculated on the basis of the fair market value of the Common Stock on
March 31, 1998 ($48.1875), less the applicable option exercise price.
CONVERSION OF OPTIONS IN CONNECTION WITH THE MERGER
Immediately prior to the Merger, all outstanding stock options to purchase
shares of Common Stock, including those stock options held by the Named
Executive Officers, became fully vested and exercisable except those unvested
stock options held by Mr. Reno that qualify as "incentive stock options" under
the Internal Revenue Code. At the effective time of the Merger, outstanding
options to purchase Common Stock held by each of the Named Executive Officers
were converted into equivalent options to purchase shares of Recapitalized
Common Stock. As a result of the conversion of the options, Messrs. Reno,
Peeler, Kline, Mixon and Tishler
67
<PAGE>
hold options to purchase 8,094,800, 2,696,960, 1,293,600, 1,464,119 and
623,279 shares of Recapitalized Common Stock, respectively, at option exercise
prices ranging from $0.5357 to $1.9834. The terms of the converted options are
substantially similar to those of the prior options except that the period
following a termination of employment during which the Named Executive Officer
may exercise converted options (other than those that qualify as incentive
stock options) has been extended and in the case of Messrs. Reno, Peeler and
Kline, such extended period is substantial.
SPECIAL TERMINATION AGREEMENTS
Each of the Named Executive Officers, as well as certain other key employees
of the Company, was, prior to the Merger, party to a special termination
agreement with Holding. These agreements provided that if there is a "Change
in Control" of Holding (as defined in the Agreements), and if during the two-
year period following such Change in Control the officer's employment is
terminated for any reason other than on account of death or for "Cause," or
the officer terminates his or her own employment following a demotion,
reduction in compensation, or similar event, the officer will be entitled to
receive a lump sum severance payment from Holding within 15 days after the
date of termination and continuance of certain fringe benefits. Under the
special termination agreements, the amount of the severance payment is based
on an officer's length of service with Holding, ranging incrementally from one
times the officer's average annual cash compensation to three times the
officer's average annual cash compensation after fifteen years of service. In
connection with the Merger, each of the Named Executive Officers entered into
the agreements described immediately below that supersede the special
termination agreements.
EMPLOYMENT AND OTHER AGREEMENTS
In connection with the Merger, Holding entered into employment agreements
with each of Messrs. Reno, Kline and Peeler that supersede their respective
Special Termination Agreements. The employment agreements generally provide
for an initial term of five years, commencing at the effective time of the
Merger, and for compensation and benefit arrangements that are consistent with
the compensation and benefit arrangements of each such Named Executive Officer
in effect prior to the Merger. The employment agreements further provide for
the election of such officers to serve as directors of Holding during their
employment with Holding.
Pursuant to his employment agreement, Mr. Reno together with his family
trusts, contributed 40,804 shares of Common Stock to MergerCo in exchange for
799,758 shares of MergerCo Common Stock ("MergerCo Common Stock"), which
shares of MergerCo Common Stock were converted in the Merger into a like
number of shares of Recapitalized Common Stock. In addition, pursuant to their
respective other employment agreements, all options to purchase Common Stock
held by each of Messrs. Reno and Kline prior to the Merger and a substantial
majority of the options held by Mr. Peeler prior to the Merger were converted
into equivalent options to purchase shares of Recapitalized Common Stock (the
exercise prices of which preserve the economic value of their former options),
all of which, other than options to purchase 20,737 shares of Common Stock
held by Mr. Reno, became fully vested and exercisable in connection with the
Merger. In addition, the employment agreements: (i) restrict the ability of
each Named Executive Officer to transfer shares of Recapitalized Common Stock
beneficially owned by him (other than certain permitted transfers for estate
planning purposes and transfers not exceeding in the aggregate 25% of the
Recapitalized Common Stock owned, or subject to options held by each Named
Executive Officer, at the effective time of the Merger), (ii) grant each Named
Executive Officer certain "tag along" rights which entitle the Named Executive
Officer to participate in certain sales of Recapitalized Common Stock by CDR
Fund V prior to a Public Offering (as defined in the employment agreements),
(iii) grant CDR Fund V certain "drag along" rights which entitle CDR Fund V to
require each Named Executive Officer to sell his shares of Recapitalized
Common Stock in a proposed sale by CDR Fund V of substantially all of its
shares of Recapitalized Common Stock prior to a Public Offering, and (iv)
grant Holding and CDR Fund V the right, following any termination of a Named
Executive Officer's employment prior to a Public Offering, to purchase the
Named Executive Officer's shares of Recapitalized Common Stock and options to
purchase Recapitalized Common Stock.
68
<PAGE>
The Employment Agreements also provide that, in the event of a termination
of any such Named Executive Officer's employment during the term of the
agreement by Holding other than for "Cause" (as defined in the employment
agreements) or by such Named Executive Officer for "Good Reason" (as so
defined), the Named Executive Officer will be entitled to special termination
benefits consisting of (i) continued payments of his average annual base
salary and average annual bonus until the second anniversary of the date of
termination, (ii) continued coverage under Holding's medical insurance plan
until his 65th birthday and (iii) a pro rata incentive compensation bonus for
the portion of the calendar year preceding such termination. The agreements
also contain customary indemnification, confidentiality, noncompetition and
nonsolicitation provisions.
In connection with the Merger, Holding entered into certain agreements (the
"Mixon/Tischler Agreements"), with Messrs. Mixon and Tishler, which supersede
their special termination agreements. The Mixon/Tischler Agreements provide
that, in the event of a termination of employment prior to the third
anniversary of the effective time of the Merger by Holding other than for
"Cause" (as defined in such agreements) or by such executive for "Good Reason"
(as so defined), each such executive will be entitled to special termination
benefits during a salary continuation period which will be based on such
executive's period of service with Holding. Such salary continuation benefits
will consist of continued payments of such executive's average annual base
salary and average annual bonus and continued coverage under Holding's medical
insurance and other benefit plans. The Mixon/Tischler Agreements also contain
customary indemnification, confidentiality, noncompetition and nonsolicitation
provisions.
Pursuant to the Mixon/Tischler Agreements, a substantial majority of the
options to purchase shares of Common Stock held by Messrs. Mixon and Tishler
prior to the Merger were converted into equivalent options to purchase shares
of Recapitalized Common Stock (the exercise prices of which preserve the
economic value of the former options), all of which became fully vested and
exercisable as of the effective time of the Merger. In addition, these
Agreements provide for substantially the same call, drag-along and tag-along
rights as do the employment agreements of Messrs. Reno, Peeler and Kline.
69
<PAGE>
OWNERSHIP OF CAPITAL STOCK
The following table sets forth certain information regarding the beneficial
ownership of outstanding Recapitalized Common Stock as of June 3, 1998.
<TABLE>
<CAPTION>
SHARES OWNED
IMMEDIATELY AFTER MERGER(1)
---------------------------------
NAME NUMBER PERCENT(2)
---- ----------------- ---------------
<S> <C> <C>
Clayton, Dubilier & Rice Fund V Limited
Partnership(3).............................. 110,790,770 92.3%
John F. Reno(4).............................. 8,491,637 6.6%
John R. Peeler(5)............................ 2,708,907 2.2%
John A. Mixon(6)............................. 1,624,027 1.3%
Allan M. Kline(7)............................ 1,294,769 1.1%
Samuel W. Tishler(8)......................... 623,780 *
All future Directors and Executive Officers
as a group (10 persons)(9).................. 126,777,355 93.8%
</TABLE>
- --------
(1) Assumes conversion of each outstanding option to purchase Common Stock
("Company Stock Option") assumes no Stockholders of Dynatech exercise
their appraisal rights and no Company Stock Options are exercised prior to
the Merger.
(2) Based upon 120,021,689 shares of Recapitalized Common Stock outstanding at
the time of filing of the Articles of Merger with the Massachusetts
Secretary of State and the Certificate of Merger with the Delaware
Secretary of State (the "Effective Time") (which assumes no Stockholders
exercise their appraisal rights, no Company Stock Options are exercised
after April 16, 1998, and the conversion of the Company Stock Options as
described above). Recapitalized Common Stock includes all shares of
outstanding Recapitalized Common Stock plus, as required for the purpose
of determining beneficial ownership (in accordance with Rule 13d-3
promulgated pursuant to the Exchange Act), all shares of Recapitalized
Common Stock subject to any right of acquisition by such person, through
exercise or conversion of any security, within 60 days of the Effective
Time.
(3) B. Charles Ames, Michael G. Barbiarz, William A. Barbe, Kevin J. Conway,
Brian D. Finn, Donald J. Gogel, Leon J. Hendrix, Jr., Hubbard C. Howe,
Thomas E. Ireland, Charles P. Pieper and Joseph L. Rice, III may be deemed
to share beneficial ownership of the shares owned of record by CDR Fund V
by virtue of their status as stockholders of Associates II, Inc., the
managing general partner of Associates V, the general partner of CDR Fund
V, but each expressly disclaims such beneficial ownership of the shares
owned by CDR Fund V. The voting stockholders of Associates II, Inc. share
investment and voting power with respect to securities owned by CDR Fund
V. The business address for each of them is 1403 Foulk Road, Suite 106,
Wilmington, Delaware 19803.
(4) Includes 1,000 shares owned by Mr. Reno's spouse, 294,000 shares owned by
The John F. Reno 1997 Qualified Annuity Trust for which Mr. Reno has sole
voting power, 294,000 shares owned by The Suzanne M. Reno 1997 Qualified
Annuity Trust, of which Mr. Reno is a Trustee and 2,525 shares owned by a
relative for which Mr. Reno has power of attorney. Includes 7,688,354
shares of Recapitalized Common Stock issuable upon exercise of stock
options which are exercisable within 60 days of the Effective Time.
(5) Includes 2,696,690 shares of Recapitalized Common Stock issuable upon
exercise of stock options which are exercisable within 60 days of the
Effective Time.
(6) Includes 1,620,920 shares of Recapitalized Common Stock issuable upon
exercise of stock options which are exercisable within 60 days of the
Effective Time.
(7) Includes 1,293,600 shares of Recapitalized Common Stock issuable upon
exercise of stock options which are exercisable with 60 days of the
Effective Time.
(8) Includes 623,280 shares of Recapitalized Common Stock issuable upon
exercise of stock options which are exercisable within 60 days of June 3,
1998.
(9) Includes 15,165,754 shares of Recapitalized Common Stock issuable upon
exercise of stock options which are exercisable within 60 days of the
Effective Time. Brian D. Finn, Charles P. Pieper and Joseph L. Rice, III
may be deemed to share beneficial ownership of the shares owned of record
by CDR Fund V by virtue of their status as stockholders of Associates II,
Inc., the managing general partner of Associates V, the general partner of
CDR Fund V, but expressly disclaims such beneficial ownership of the
shares owned by CDR Fund V. The voting stockholders of Associates II, Inc.
share investment and voting power with respect to securities owned by CDR
Fund V.
70
<PAGE>
THE RECAPITALIZATION
The following is a summary of the structure of the Recapitalization, the
Merger and certain provisions of the Merger Agreement. This summary does not
purport to be complete and is qualified in its entirety by reference to the
Merger Agreement, a copy of which is filed as an exhibit to the Registration
Statement of which this Prospectus is a part and a copy of which is available
as set forth under the heading "Available Information".
As of December 20, 1997, Dynatech entered into the Merger Agreement between
Dynatech and MergerCo, formed by CDR Fund V, to effect the Recapitalization of
Dynatech. The Recapitalization was accomplished through the Merger of MergerCo
with and into Dynatech with Dynatech continuing as the surviving corporation.
Dynatech succeeded to all the rights and obligations of MergerCo. The May 1998
closing of the Recapitalization occurred simultaneously with the closing of
the offering of the Existing Notes. Immediately after the issuance of the
Existing Notes, TTC and TTC Merger Co. merged with TTC surviving, TTC
succeeded to and assumed all of the obligations under the Indenture and the
Existing Notes, and Dynatech was released as a primary obligor from its
obligations under the Indenture and the Existing Notes. TTC thereby became the
primary obligor on the Existing Notes. Dynatech agreed to guarantee the
monetary obligations of TTC Merger Co. and the Company under the Indenture and
the Notes on a senior subordinated basis. In connection with the merger of the
Company and TTC Merger Co., TTC assumed all of the obligations under the
Senior Credit Facility and became the borrower thereunder, and Dynatech
transferred to TTC its ownership interest in all of its other subsidiaries.
See "Description of Notes" and "Description of Senior Credit Facility."
Immediately prior to the Merger, (a) John F. Reno, together with two family
trusts established by Mr. Reno, contributed 40,804 shares of Common Stock to
MergerCo in exchange for 799,758 shares of MergerCo Common Stock and (b) CDR
Fund V purchased 110,790,770 shares of MergerCo Common Stock for approximately
$277 million.
Pursuant to the Merger Agreement, the "Effective Time" occurred upon filing
the Articles of Merger with the Massachusetts Secretary of State and the
Certificate of Merger with the Delaware Secretary of State. At the Effective
Time, (i) each share of Common Stock outstanding immediately prior to the
Effective Time was converted into the right to receive $47.75 in cash and 0.5
fully paid and nonassessable shares of Recapitalized Common Stock (the "Merger
Consideration") (except that any shares held by MergerCo or held in Dynatech's
treasury were canceled, and any stockholder that properly dissented from the
Merger is entitled to appraisal rights under the Massachusetts Business
Corporation Law (the "MBCL")); and (ii) each share of MergerCo Common Stock
was converted into one share of Recapitalized Common Stock. Of the 120,021,689
shares of Recapitalized Common Stock outstanding immediately after the Merger,
CDR Fund V holds 110,790,770 shares, or approximately 92.3%, Mr. Reno
(together with his family trusts) holds 799,758 shares, or approximately 0.7%,
and Stockholders, other than Mr. Reno and his family trusts, hold 8,431,161
shares, or approximately 7.0%. Dynatech is treating the Merger as a
recapitalization for financial reporting purposes. Accordingly, the historical
basis of Dynatech's assets and liabilities will not be affected by the
transaction.
As a result of the Recapitalization and related transactions, Dynatech used
approximately $865.3 million to (i) finance the purchase of Dynatech common
stock for $803.1 million, (ii) pay $22.7 million for option cancellation
payments and (iii) pay the fees and expenses incurred in connection with the
Merger. In addition, (a) $292.9 million of bank financing was drawn down under
the Senior Credit Facility, including $260.0 million pursuant to the Term Loan
Facility and $32.9 million under the Revolving Credit Facility, and (b) $275.0
million in gross proceeds was provided through the sale of the Existing Notes.
Dynatech had $20.4 million of cash on-hand to use in connection with the
Merger and approximately $277 million of gross proceeds from the sale of
MergerCo common stock to CDR Fund V, which proceeds became an asset of
Dynatech upon effectiveness of the Merger.
Pursuant to the Merger Agreement, Dynatech's 1996 Employee Stock Purchase
Plan (the "ESPP") was amended to provide that there would be no new stock
purchase periods after March 31, 1998. The ESPP terminated at the Effective
Time.
71
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
CDR FUND V
CDR Fund V is a private investment fund managed by CDR. Amounts contributed
to CDR Fund V by its limited partners are invested at the discretion of its
general partner, Associates V. Associates V has three general partners. The
managing general partner of Associates V is Associates II Inc. The other
general partners of Associates V are CD&R Cayman Investment Associates, Inc.,
a Cayman Islands exempted company ("Associates Cayman Inc.") and CD&R
Investment Associates Inc., a Delaware corporation ("Associates Inc.").
Mr. Rice, who is a principal of CDR and the Chairman of CDR, is a Director
and the Chairman of both Associates II Inc. and Associates Inc., is a
shareholder and Director of Associates Cayman Inc., and also serves as a
Director of Dynatech. Mr. Finn, who is a principal of CDR and is a Director of
Associates II Inc., also serves as a Director of Dynatech. Mr. Pieper, who is
a principal of CDR and a Director of Associates II Inc., also serves as a
Director of Dynatech. See "Management."
CDR is a private investment firm which is organized as a Delaware
corporation. CDR is the manager of a series of investment funds, including CDR
Fund V, formed to invest in equity or equity-related securities of entities
formed to effect leveraged acquisition transactions and in the equity of
corporations where the infusion of capital, coupled with the provision of
managerial assistance by CDR, can be expected to generate returns on
investments comparable to returns historically achieved in leveraged
acquisition transactions. CDR generally assists in structuring, arranging
financing for and negotiating the transactions in which the funds it manages
invest. After the consummation of such transactions, CDR generally provides
management and financial consulting services to the companies in which its
investment funds have invested during the period of such funds' investment.
Such services include helping such companies to establish effective banking,
legal and other business relationships and assisting management in developing
and implementing strategies for improving the operational, marketing and
financial performance of such companies.
Dynatech and TTC entered into a consulting agreement with CDR which provides
for (i) an annual fee initially of $500,000, for providing such management and
financial consulting services to the Company and (ii) reimbursement of out-of-
pocket expenses it incurs after the Merger, for so long as CDR Fund V has an
investment in the Company. At the closing of the Merger, the Company paid CDR
a transaction fee of $9.2 million plus reimbursement of out-of-pocket expenses
incurred by CDR in consideration for services provided by CDR in arranging the
Merger, arranging and negotiating the financing for the Merger and related
services. Dynatech and TTC also agreed to indemnify CDR and CDR Fund V and
certain related parties, subject to certain limitations, against all claims
and liabilities arising out of or in connection with the Securities Act, the
Exchange Act or any other applicable securities or other laws in connection
with the Merger and related transactions and the operation of the business
following the Merger. In addition, Dynatech entered into a registration rights
agreement with CDR Fund V, Mr. Reno and certain family trusts which provides
that such persons may require Dynatech to register their shares of
Recapitalized Common Stock under the Securities Act.
EMPLOYMENT AND OTHER AGREEMENTS
In connection with the Merger, the Company entered into employment
agreements with Messrs. Reno, Kline and Peeler and certain other agreements
with Messrs. Mixon and Tishler. See "Executive Compensation--Employment and
Other Agreements."
In addition, certain other executives and key employees of the Company
elected to convert substantially all of their stock options to purchase shares
of Common Stock into equivalent options to purchase shares of Recapitalized
Common Stock (the exercise prices of which preserved the economic value of
their prior Dynatech stock options), all of which became fully vested and
exercisable as of the Effective Time. Such other executives and key employees
also entered into agreements with Dynatech containing terms that are
substantially identical to the terms of the Mixon/Tishler Agreements.
72
<PAGE>
DESCRIPTION OF SENIOR CREDIT FACILITY
General. In connection with the Recapitalization, Dynatech and TTC Merger
Co. entered into the Senior Credit Facility with a syndicate of financial
institutions, Morgan Guaranty Trust Company ("Morgan") as administrative agent
(the "Administrative Agent"), The Chase Manhattan Bank, as documentation
agent, and Credit Suisse First Boston, as syndication agent. The following is
a summary of the principal terms of the credit agreement governing the Senior
Credit Facility and the related loan documents (the "Credit Documentation")
and is subject to and qualified in its entirety by reference to the Credit
Documentation, which has been filed as an exhibit to the Registration
Statement of which this Prospectus is a part and a copy of which is available
as set forth under the heading "Available Information."
Immediately after the issuance of the Existing Notes, TTC and TTC Merger Co.
merged (the "Second Merger") with TTC surviving, TTC succeeded to and assumed
all of the obligations under the Senior Credit Facility, and thereby became
the primary obligor under the Senior Credit Facility. Dynatech was released
from its obligations under the Senior Credit Facility.
The Senior Credit Facility provides for senior secured credit facilities in
an aggregate amount of $370.0 million, consisting of (i) a revolving credit
facility in the amount of $110.0 million (the "Revolving Credit Facility"),
(ii) a 6-year $50.0 million term loan (the "Tranche A Term Loan"), (iii) a 7-
year $70.0 million term loan (the "Tranche B Term Loan"), (iv) an 8-year $70.0
million term loan (the "Tranche C Term Loan"), and (v) a 9-year $70.0 million
term loan (the "Tranche D Term Loan" and together with the Tranche A Term
Loan, the Tranche B Term Loan and the Tranche C Term Loan, the "Term Loans").
The Revolving Credit Facility also provides for a swingline subfacility of
$10.0 million and a letter of credit subfacility of $25.0 million.
Amortization. The Tranche A Term Loan will be amortized in twelve quarterly
installments of $1.250 million commencing on June 30, 1998, four quarterly
installments of $2.125 million commencing on June 30, 2001, four quarterly
installments of $2.875 million commencing on June 30, 2002 and four quarterly
installments of $3.750 million commencing on June 30, 2003. The Tranche B Term
Loan will be amortized in 27 equal quarterly installments of $0.250 million,
with the balance to be paid on March 31, 2005. The Tranche C Term Loan will be
amortized in 31 equal quarterly installments of $0.250 million, with the
balance to be paid on March 31, 2006. The Tranche D Term Loan will be
amortized in 35 equal quarterly installments of $0.250 million, with the
balance to be paid on March 31, 2007. The annual amortizations of the Term
Loans are set forth in the following table:
<TABLE>
<CAPTION>
CALENDAR YEAR TRANCHE A TRANCHE B TRANCHE C TRANCHE D TOTAL
------------- ----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
1998.............. $ 3,750,000 $ 750,000 $ 750,000 $ 750,000 $ 6,000,000
1999.............. 5,000,000 1,000,000 1,000,000 1,000,000 8,000,000
2000.............. 5,000,000 1,000,000 1,000,000 1,000,000 8,000,000
2001.............. 7,625,000 1,000,000 1,000,000 1,000,000 10,625,000
2002.............. 10,750,000 1,000,000 1,000,000 1,000,000 13,750,000
2003.............. 14,125,000 1,000,000 1,000,000 1,000,000 17,125,000
2004.............. 3,750,000 1,000,000 1,000,000 1,000,000 6,750,000
2005.............. -- 63,250,000 1,000,000 1,000,000 65,250,000
2006.............. -- -- 62,250,000 1,000,000 63,250,000
2007.............. -- -- -- 61,250,000 61,250,000
----------- ----------- ----------- ----------- ------------
Total........... 50,000,000 70,000,000 70,000,000 70,000,000 260,000,000
</TABLE>
Use of Facility. In connection with the Merger, Dynatech drew down the
$260.0 million in term loan borrowings under the Senior Credit Facility, and
Dynatech drew approximately $40.0 million under the Revolving Credit Facility,
as part of the financing for the Recapitalization. See "The Recapitalization."
Any unused portion of the Revolving Credit Facility is available to TTC for
working capital and general corporate purposes.
73
<PAGE>
Guarantee; Security. The obligations of TTC under the Revolving Credit
Facility and the Term Loans are guaranteed by each active direct or indirect
U.S. subsidiary of TTC and by Dynatech. The obligations under the Senior
Credit Facility are secured by a pledge of the equity interest in TTC, by
substantially all of the assets of TTC and each active direct or indirect U.S.
subsidiary of TTC, and by a pledge of the capital stock of each such direct or
indirect U.S. subsidiary, and 65% of the capital stock of each subsidiary of
TTC that acts as a holding company of TTC's foreign subsidiaries.
Interest; Fees. At TTC's option, the Revolving Credit Facility and the Term
Loans bear interest at variable rates equal to either (i) the higher of (A)
Morgan's prime rate, or (B) 0.50% per annum over the federal funds rate (the
"Base Rate"), or (ii) reserve-adjusted LIBO rate ("LIBOR"), plus, in either
case, a borrowing margin ranging from 0% to 3%, based upon (x) whether the
loan is a Base Rate loan or LIBOR loan, (y) whether the loan is a Revolving
Credit Facility loan, Tranche A Term Loan, Tranche B Term Loan, Tranche C Term
Loan, or Tranche D Term Loan and (z) TTC's debt to EBITDA ratio.
The transaction fees and expenses set forth in the sources and uses of funds
for the Recapitalization (see "The Recapitalization") include transaction fees
payable in connection with the provision of the Senior Credit Facility. In
addition, a commitment fee is payable quarterly on the daily average unused
portion of the Revolving Credit Facility, in an amount from 0.30% to 0.50% per
annum on such unused portion, based upon TTC's debt to EBITDA ratio.
Prepayments. The Senior Credit Facility generally permits voluntary
prepayment of loans thereunder without premium or penalty, subject to certain
limitations, including certain rights of holders of the Tranche B Term Loan,
Tranche C Term Loan and Tranche D Term Loan under certain circumstances (i) to
receive a premium of 1% of the principal amount of any such Term Loans prepaid
within 18 months of the May 1998 Closing and (ii) to decline partial
prepayments. Mandatory prepayments are required to be made from (a) 100% of
net proceeds from certain asset sales, casualty insurance, and condemnation
awards or other similar recoveries; (b) 100% of the net proceeds from the
issuance of indebtedness by TTC or any of its subsidiaries, other than as
permitted by the Senior Credit Facility; and (c) 50% of annual excess cash
flow for each fiscal year in which the ratio of TTC's debt on the last day of
such fiscal year to its EBITDA for the four fiscal quarters then ended is
greater than or equal to 4.0 to 1.0 (the "Excess Cash Flow Recapture").
Subject to certain rights of holders of the Tranche B Term Loan, Tranche C
Term Loan and Tranche D Term Loan to decline partial mandatory prepayments,
mandatory prepayments will be applied to the Term Loans until all the Term
Loans are paid in full, and then to prepay loans and permanently reduce
commitments under the Revolving Credit Facility, subject to certain
limitations.
Covenants. The Revolving Credit Facility and the Tranche A Term Loan are
subject to covenants that, among other things, restrict the ability of TTC and
its subsidiaries to dispose of assets, incur additional debt, guarantee
obligations or contingent liabilities, repay the Notes, pay dividends, create
liens on assets, make investments, loans or advances, engage in mergers or
consolidations, make capital expenditures or engage in certain transactions
with affiliates, and otherwise restrict corporate activities. The Tranche B
Term Loan, Tranche C Term Loan and Tranche D Term Loan are subject to negative
covenants which are substantially similar to those contained in the Indenture.
Events of Default. The Revolving Credit Facility and the Tranche A Term Loan
are subject to customary events of default. The events of default applicable
to the Tranche B Term Loan, Tranche C Term Loan and Tranche D Term Loan
include certain events of default relating to non-financial covenants that are
substantially similar to those contained in the Indenture, in lieu of certain
non-financial covenant-related defaults applicable to the Revolving Credit
Facility and the Tranche A Term Loan, and differ in certain other respects
from the events of default applicable to the Revolving Credit Facility and
Tranche A Term Loan.
74
<PAGE>
DESCRIPTION OF NOTES
GENERAL
The Existing Notes were issued and the New Notes offered hereby will be
issued under an Indenture, dated as of May 21, 1998 (the "Indenture"), among
Holding and its wholly owned subsidiary TTC Merger Co. LLC ("TTC Merger Co."),
as primary obligors, and State Street Bank and Trust Company, as Trustee (the
"Trustee"). Immediately after the issuance of the Existing Notes, TTC and TTC
Merger Co. merged (the "Second Merger"), with TTC surviving. TTC thereupon
succeeded to and assumed all of the obligations under the Indenture and the
Existing Notes, and thereby became the primary obligor on the Existing Notes.
Concurrently, Holding was released from its obligations as primary obligor
under the Indenture and the Existing Notes. The Indenture has been filed as an
exhibit under the Registration Statement of which this Prospectus is a part
and is available as set forth under the heading "Available Information." The
terms of the New Notes are identical in all material respects to the terms of
the Existing Notes for which they may be exchanged pursuant to the Exchange
Offer, except that the New Notes will have been registered under the
Securities Act, and thus will not bear restrictive legends restricting their
transfer pursuant to the Securities Act.
The following is a summary of certain provisions of the Indenture and the
Notes after giving effect to the Second Merger. It does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
all the provisions of the Indenture, including the definitions of certain
terms therein and those terms to be made a part thereof by the Trust Indenture
Act of 1939, as amended ("TIA"). The term "Company" and the other capitalized
terms defined in "--Certain Definitions" below are used in this "Description
of Notes" as so defined. As used in this "Description of Notes" section, the
term "Notes" means the Existing Notes and the New Notes, collectively.
Principal of, and premium, if any, and interest on, the Notes will be
payable, and the Notes may be exchanged or transferred, at the office or
agency of the Company in the Borough of Manhattan, The City of New York (which
initially shall be the corporate trust office of the Trustee, at 61 Broadway,
15th Floor, New York, New York 10006), except that, at the option of the
Company, payment of interest may be made by check mailed to the address of the
registered holders of the Notes as such address appears in the Note Register.
The Notes will be unsecured obligations of the Company, ranking subordinate
in right of payment to all Senior Indebtedness of the Company.
The Notes will be issued only in fully registered form, without coupons, in
denominations of $1,000 and any integral multiple of $1,000. No service charge
will be made for any registration of transfer or exchange of Notes, but the
Company may require payment of a sum sufficient to cover any transfer tax or
other similar governmental charge payable in connection therewith.
TERMS OF THE NOTES
The Notes will mature on May 15, 2008. Each Note will bear interest at a
rate per annum shown on the front cover of this Prospectus from the date of
issuance, or from the most recent date to which interest has been paid or
provided for, payable semiannually in cash to Holders of record at the close
of business on the May 1 or November 1 immediately preceding the interest
payment date on May 15 and November 15 of each year, commencing November 15,
1998. Interest will be paid on the basis of a 360-day year consisting of
twelve 30-day months.
The Existing Notes were issued initially in an aggregate principal amount of
$275.0 million. The Company has agreed to use its reasonable best efforts to
file a registration statement relating to the Exchange Offer with the
Commission, to permit the exchange of Existing Notes for New Notes as
described under "Exchange Offer" and "Registration Rights." The Registration
Statement of which this Prospectus is a part constitutes the Exchange Offer
Registration Statement. The terms of the New Notes will be identical in all
material respects to
75
<PAGE>
the Existing Notes, except for certain transfer restrictions and other rights
relating to the Exchange Offer, and New Notes will otherwise be treated as
Notes for purposes of the Indenture.
Additional securities may be issued under the Indenture in one or more
series from time to time ("Additional Notes"), subject to the limitations set
forth under "--Certain Covenants--Limitation on Indebtedness," which may vote
as a class with the Notes and otherwise be treated as Notes for purposes of
the Indenture.
OPTIONAL REDEMPTION
The Notes will be redeemable, at the Company's option, in whole or in part,
and from time to time on and after May 15, 2003 and prior to maturity. Such
redemption may be made upon notice mailed by first-class mail to each Holder's
registered address, not less than 30 nor more than 60 days prior to the
redemption date. Any such redemption and notice may, in the Company's
discretion, be subject to the satisfaction of one or more conditions
precedent. The Notes will be so redeemable at the following redemption prices
(expressed as a percentage of principal amount), plus accrued interest, if
any, to the relevant redemption date (subject to the right of 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
May 15 of the years set forth below:
<TABLE>
<CAPTION>
REDEMPTION
PERIOD PRICE
------ ----------
<S> <C>
2003.............................................................. 104.875%
2004.............................................................. 103.250%
2005.............................................................. 101.625%
2006 and thereafter............................................... 100.000%
</TABLE>
In addition, at any time and from time to time prior to May 15, 2001, the
Company at its option may redeem Notes in an aggregate principal amount equal
to up to 35% of the original aggregate principal amount of the Notes
(including the principal amount of any Additional Notes), with funds in an
aggregate amount (the "Redemption Amount") not exceeding the aggregate
proceeds of one or more Equity Offerings (as defined below) at a redemption
price (expressed as a percentage of principal amount thereof) of 109.75% plus
accrued interest, if any, to the redemption date (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date); provided, however, that an aggregate
principal amount of Notes equal to at least 65% of the original aggregate
principal amount of the Notes (including the principal amount of any
Additional Notes) must remain outstanding after each such redemption. "Equity
Offering" means a sale of Capital Stock (other than Disqualified Stock) (x)
that is a sale of Capital Stock of the Company, or (y) proceeds of which in an
amount equal to or exceeding the Redemption Amount are contributed to the
Company or any of its Restricted Subsidiaries. The Company may make such
redemption upon notice mailed by first-class mail to each Holder's registered
address, not less than 30 nor more than 60 days prior to the redemption date
(but in no event more than 180 days after the completion of the related Equity
Offering). Any such notice may be given prior to the completion of the related
Equity Offering, and any such redemption or notice may, at the Company's
discretion, be subject to the satisfaction of one or more conditions
precedent, including but not limited to the completion of the related Equity
Offering.
At any time on or prior to May 15, 2003, the Notes may also be redeemed or
purchased (by the Company or any other Person) in whole but not in part, at
the Company's option, upon the occurrence of a Change of Control, at a price
(the "Redemption Price") equal to 100% of the principal amount thereof plus
the Applicable Premium as of, and accrued but unpaid interest, if any, to, the
date of redemption or purchase (the "Redemption Date") (subject to the right
of Holders of record on the relevant record date to receive interest due on
the relevant interest payment date). Such redemption or purchase may be made
upon notice mailed by first-class mail to each Holder's registered address,
not less than 30 nor more than 60 days prior to the Redemption Date (but in no
event more than 180 days after the occurrence of such Change of Control). The
Company may provide in such notice that payment of the Redemption Price and
performance of the Company's obligations with respect to such
76
<PAGE>
redemption or purchase may be performed by another Person. Any such notice may
be given prior to the occurrence of the related Change of Control, and any
such redemption, purchase or notice may, at the Company's discretion, be
subject to the satisfaction of one or more conditions precedent, including but
not limited to the occurrence of the related Change of Control.
"Applicable Premium" means, with respect to a Note at any Redemption Date,
the greater of (i) 1.0% of the principal amount of such Note and (ii) the
excess of (A) the present value at such Redemption Date of (1) the redemption
price of such Note on May 15, 2003 (such redemption price being that described
in the first paragraph of this "Optional Redemption" section) plus (2) all
required remaining scheduled interest payments due on such Note through May
15, 2003, computed using a discount rate equal to the Treasury Rate plus 50
basis points, over (B) the principal amount of such Note on such Redemption
Date. Calculation of the Applicable Premium will be made by the Company or on
behalf of the Company by such Person as the Company shall designate, provided,
that such calculation shall not be a duty or obligation of the Trustee.
"Treasury Rate" means, with respect to a Redemption Date, the yield to
maturity at the time of computation 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 or similar
market data)) most nearly equal to the period from such Redemption Date to May
15, 2003; provided, however, that if the period from the Redemption Date to
May 15, 2003 is not equal to the constant maturity of the United States
Treasury security for which a weekly average yield is given, the Treasury Rate
shall be obtained by linear interpolation (calculated to the nearest one-
twelfth of a year) from the weekly average yields of United States securities
for which such yields are given, except that if the period from the Redemption
Date to May 15, 2003 is less than one year, the weekly average yield on
actually traded United States Treasury securities adjusted to a constant
maturity of one year shall be used.
In addition, as more fully described under "--Change of Control," each
Holder will have the right to require the Company to repurchase all or any
part of such Holder's Notes following a Change of Control Trigger Event 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.
SELECTION
In the case of any partial redemption, selection of the Notes for redemption
will be made by the Trustee on a pro rata basis, by lot or by such other
method as the Trustee in its sole discretion shall deem to be fair and
appropriate, although no Note of $1,000 in original principal amount or less
will be redeemed in part. If any Note is to be redeemed in part only, the
notice of redemption relating to such Note shall state the portion of the
principal amount thereof to be redeemed. A new Note in principal amount equal
to the unredeemed portion thereof will be issued in the name of the Holder
thereof upon cancellation of the original Note.
HOLDING GUARANTEE
Holding has, as a primary obligor and not merely as surety, irrevocably and
fully and unconditionally Guaranteed (the "Parent Guarantee"), on a senior
subordinated basis, the punctual payment when due, whether at Stated Maturity,
by acceleration or otherwise, of all monetary obligations of the Company under
the Indenture and the Notes, whether for principal of or interest on the
Notes, expenses, indemnification or otherwise (all such obligations guaranteed
by Holding being herein called the "Parent Guaranteed Obligations"). Holding,
pursuant to the Parent Guarantee, has agreed to pay, in addition to the amount
stated above, any and all reasonable out-of-pocket expenses (including
reasonable counsel fees and expenses) incurred by the Trustee or the Holders
in enforcing any rights under the Parent Guarantee. The obligations of Holding
will be limited to the maximum amount, as will, after giving effect to all
other contingent and fixed liabilities of Holding, result in the obligations
of Holding under the Parent Guarantee not constituting a fraudulent conveyance
or fraudulent transfer under applicable law, or void or unenforceable under
any law relating to the insolvency of debtors.
77
<PAGE>
The Parent Guarantee shall be a continuing Guarantee and shall (i) remain in
full force and effect until payment in full of the principal amount of all
outstanding Notes (whether by payment at maturity, purchase, redemption,
defeasance, retirement or other acquisition) and all other Parent Guaranteed
Obligations then due and owing, (ii) be binding upon such Note Guarantor and
(iii) inure to the benefit of and be enforceable by the Trustee, the Holders
and their permitted successors, transferees and assigns. Holding will
automatically and unconditionally be released from all obligations under the
Parent Guarantee, and the Parent Guarantee shall thereupon terminate and be
discharged and of no further force of effect, (i) upon any merger or
consolidation of Holding with and into the Company, (ii) upon legal or
covenant defeasance of the Company's obligations, or satisfaction and
discharge of the Indenture, or (iii) subject to customary contingent
reinstatement provisions, upon payment in full of the aggregate principal
amount of all Notes then outstanding and all other Parent Guaranteed
Obligations then due and owing. Upon any such occurrence specified in this
paragraph, the Trustee shall execute any documents reasonably required in
order to evidence such release, discharge and termination in respect of the
Parent Guarantee. Neither the Company nor Holding shall be required to make a
notation on the Notes to reflect the Parent Guarantee or any such release,
termination or discharge.
NOTE GUARANTEES
After the Issue Date, the Company will cause each Significant Domestic
Subsidiary that guarantees payment by the Company of Indebtedness of the
Company (other than Bank Indebtedness) to execute and deliver to the Trustee a
supplemental indenture or other instrument pursuant to which such Subsidiary
will guarantee payment of the Notes, whereupon such Subsidiary will become a
Note Guarantor for all purposes under the Indenture. The Company will also
have the right to cause any other Subsidiary so to guarantee payment of the
Notes. No Subsidiaries will be Note Guarantors as of the Issue Date. Note
Guarantees will be subject to release and discharge under certain
circumstances prior to payment in full of the Notes. See "--Certain
Covenants--Future Note Guarantors."
RANKING
The indebtedness evidenced by the Notes is unsecured Senior Subordinated
Indebtedness of the Company, is subordinated in right of payment, as set forth
in the Indenture, to the payment when due of all existing and future Senior
Indebtedness of the Company, including the Company's obligations under the
Senior Credit Facility, ranks pari passu in right of payment with all existing
and future Senior Subordinated Indebtedness of the Company and is senior in
right of payment to all existing and future Subordinated Obligations of the
Company. The Notes are also be effectively subordinated to any Secured
Indebtedness of the Company to the extent of the value of the assets securing
such Indebtedness. However, payment from the money or the proceeds of U.S.
Government Obligations held in any defeasance trust described under "--
Defeasance" below is not subordinated to any Senior Indebtedness or subject to
the restrictions described herein.
At May 31, 1998, Senior Indebtedness of the Company was $300.0 million
(excluding a maximum $3.0 million guarantee) and the Company had additional
availability of $70.0 million for borrowings under the Senior Credit Facility,
all of which would have been Secured Indebtedness, and no Senior Subordinated
Indebtedness (other than the indebtedness represented by the Notes). Although
the Indenture contains limitations on the amount of additional Indebtedness
that the Company may Incur, under certain circumstances the amount of such
Indebtedness could be substantial and, in any case, such Indebtedness may be
Senior Indebtedness or Secured Indebtedness. See "--Certain Covenants--
Limitation on Indebtedness" below.
The obligations of Holding under the Parent Guarantee are unsecured Parent
Senior Subordinated Indebtedness, subordinated in right of payment, as set
forth in the Indenture, to the payment when due of all existing and future
Parent Senior Indebtedness, including Holding's obligations under or relating
to the Senior Credit Facility, rank pari passu in right of payment with all
existing and future Parent Senior Subordinated Indebtedness and are senior in
right of payment of all existing and future Parent Subordinated Obligations.
The Parent Guarantee is also effectively subordinated to any Secured
Indebtedness of Holding to the extent of the value of the assets securing such
Indebtedness. The terms on which the Parent Guarantee is subordinated to the
78
<PAGE>
prior payment in full of Parent Senior Indebtedness are substantially
identical to those described below governing the subordination of the Notes to
the prior payment in full of Senior Indebtedness. All of the operations of
Holding are conducted through Subsidiaries, including the Company. Claims of
creditors of such Subsidiaries, including trade creditors, and claims of
preferred shareholders (if any) of such Subsidiaries will have priority with
respect to the assets and earnings of such Subsidiaries over the claims of
creditors of Holding, including claims under the Parent Guarantee. The Parent
Guarantee, therefore, is effectively subordinated to creditors (including
trade creditors) and preferred shareholders (if any) of such Subsidiaries,
including of TTC. Moreover, as a holding company with no assets other than its
membership interest in TTC, Holding will depend upon distributions from TTC to
fund any obligations under the Parent Guarantee. Accordingly, if TTC should at
any time be unable to pay interest or premium, if any, on or principal of the
Notes, it is unlikely that TTC will be able to distribute the funds necessary
to enable Holding to meet its obligations under the Parent Guarantee. See
"Risk Factors--Subordination of Dynatech Guarantee; No Independent Operations
of Dynatech."
The obligations of each Note Guarantor, if any, under the Note Guarantee to
which it is a party will be unsecured Guarantor Senior Subordinated
Indebtedness of such Note Guarantor, will be subordinated in right of payment,
as set forth in the Indenture, to the payment when due of all existing and
future Guarantor Senior Indebtedness of such Note Guarantor, including the
Note Guarantor's obligations under or relating to the Senior Credit Facility,
will rank pari passu in right of payment with all existing and future
Guarantor Senior Subordinated Indebtedness of such Note Guarantor and will be
senior in right of payment to all existing and future Guarantor Subordinated
Obligations of such Note Guarantor. The Note Guarantee of each Note Guarantor,
if any, will also be effectively subordinated to any Secured Indebtedness of
such Note Guarantor to the extent of the value of the assets securing such
Indebtedness. The terms on which each Note Guarantee, if any, will be
subordinated to the prior payment in full of Guarantor Senior Indebtedness
will be substantially identical to those described below governing the
subordination of the Notes to the prior payment in full of Senior
Indebtedness.
A substantial part of the operations of the Company are conducted through
its Subsidiaries. Claims of creditors of such Subsidiaries, including trade
creditors, and claims of preferred shareholders (if any) of such Subsidiaries
will have priority with respect to the assets and earnings of such
Subsidiaries over the claims of creditors of the Company, including holders of
the Notes. The Notes, therefore, will be effectively subordinated to creditors
(including trade creditors) and preferred shareholders (if any) of
Subsidiaries of the Company (other than Subsidiaries, if any, that may become
Note Guarantors in the future). Certain of the operations of a Note Guarantor
may be conducted through Subsidiaries thereof that are not also Note
Guarantors. Claims of creditors of such Subsidiaries, including trade
creditors, and claims of preferred shareholders (if any) of such Subsidiaries
will have priority with respect to the assets and earnings of such
Subsidiaries over the claims of creditors of such Note Guarantor, including
claims under the Note Guarantee of such Note Guarantor. Such Note Guarantee,
if any, therefore, will be effectively subordinated to creditors (including
trade creditors) and preferred shareholders (if any) of such Subsidiaries.
Although the Indenture limits the incurrence of Indebtedness (including
preferred stock) by certain of the Company's Subsidiaries, such limitation is
subject to a number of significant qualifications. At May 31, 1998, the
Company's Subsidiaries had no material outstanding Indebtedness for borrowed
money (excluding inter-company indebtedness). No preferred stock of such
Subsidiaries was outstanding at such date. See "--Certain Covenants--
Limitation on Indebtedness" below.
"Senior Indebtedness" means, with respect to the Company, the following
obligations, whether outstanding on the date of the Indenture or thereafter
issued, without duplication: (i) all Bank Indebtedness, (ii) all obligations
in respect of any Receivables Financing, and (iii) all obligations consisting
of the principal of and premium, if any, and accrued and unpaid interest
(including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company regardless of whether
post-filing interest is allowed in such proceeding) on, and fees and other
amounts owing in respect of, all other Indebtedness of the Company, unless, in
the instrument creating or evidencing the same or pursuant to which the same
is outstanding, it is expressly provided that the obligations in respect of
such Indebtedness are not senior in right of payment to the Notes; provided,
however, that Senior Indebtedness shall not include (1) any obligation of the
Company to any Subsidiary, (2) any liability for Federal, state, foreign,
local or other taxes owed or owing by the Company,
79
<PAGE>
(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 of the Company (or
Guarantee by the Company of any Indebtedness) that is expressly subordinated
in right of payment to any other Indebtedness of the Company (or Guarantee by
the Company of any Indebtedness), (5) any Capital Stock of the Company or (6)
that portion of any Indebtedness of the Company that is Incurred by the
Company in violation of the covenant described under "--Certain Covenants--
Limitation on Indebtedness" (but no such violation shall be deemed to exist
for purposes of this clause (6) if any holder of such Indebtedness or such
holder's representative shall have received an Officer's Certificate of the
Company to the effect that such Incurrence of such Indebtedness does not (or
that the Incurrence by the Company of the entire committed amount thereof at
the date on which the initial borrowing thereunder is made would not) violate
such covenant). 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.
Only Indebtedness of the Company that is Senior Indebtedness will rank
senior to the Notes in accordance with the provisions of the Indenture. The
Notes will in all respects rank pari passu with all other Senior Subordinated
Indebtedness of the Company. Only Indebtedness of a Note Guarantor that is
Guarantor Senior Indebtedness will rank senior to the Note Guarantee of such
Note Guarantor in accordance with the provisions of the Indenture. Such Note
Guarantee will in all respects rank pari passu with all other Guarantor Senior
Subordinated Indebtedness of such Note Guarantor. The Company has agreed in
the Indenture that it will not Incur, directly or indirectly, any Indebtedness
that is expressly subordinated in right of payment to Senior Indebtedness of
the Company unless such Indebtedness is pari passu with, or subordinated in
right of payment to, the Notes. Each Note Guarantor, if any, will agree that
it will not Incur, directly or indirectly, any Indebtedness that is expressly
subordinated in right of payment to Guarantor Senior Indebtedness of such Note
Guarantor unless such Indebtedness is pari passu with, or subordinated in
right of payment to, the Note Guarantee of such Note Guarantor. Unsecured
Indebtedness is not deemed to be subordinate or junior to Secured Indebtedness
merely because it is unsecured, and Indebtedness that is not guaranteed by a
particular Person is not deemed to be subordinate or junior to Indebtedness
that is so guaranteed merely because it is not so guaranteed.
The Company may not pay principal of, or premium (if any) or interest on,
the Notes or make any deposit pursuant to the provisions described under "--
Defeasance" below and may not otherwise purchase, redeem or otherwise retire
any Notes (collectively, "pay the Notes") if (i) any Senior Indebtedness is
not paid when due in cash or Cash Equivalents or (ii) any other default on
Senior Indebtedness occurs and the maturity of such Senior Indebtedness is
accelerated in accordance with its terms (either such event, a "Payment
Default") unless, in either case, (x) the Payment Default has been cured or
waived and any such acceleration has been rescinded in writing or (y) such
Senior Indebtedness has been paid in full in cash or Cash Equivalents.
However, the Company may pay the Notes without regard to the foregoing if the
Company and the Trustee receive written notice approving such payment from the
Representative for the Designated Senior Indebtedness with respect to which
the Payment Default has occurred and is continuing.
In addition, during the continuance of any default (other than a Payment
Default) with respect to any Designated Senior Indebtedness 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 period (a "Non-payment Default"), the
Company may not pay the Notes for the period specified as follows (a "Payment
Blockage Period"). The Payment Blockage Period shall commence upon the receipt
by the Trustee (with a copy to the Company) of written notice (a "Blockage
Notice") of such Non-payment Default from the Representative for such
Designated Senior Indebtedness specifying an election to effect a Payment
Blockage Period and shall end on the earliest to occur of the following
events: (i) 179 days shall have elapsed since such receipt of such Blockage
Notice, (ii) the Non-payment Default giving rise to such Blockage Notice is no
longer continuing (and no other Payment Default or Non-payment Default is then
continuing), (iii) such Designated Senior Indebtedness shall have been
discharged or repaid in full in cash or
80
<PAGE>
Cash Equivalents or (iv) such Payment Blockage Period shall have been
terminated by written notice to the Trustee and the Company from the Person or
Persons who gave such Blockage Notice. The Company shall promptly resume
payments on the Notes, including any missed payments, after such Payment
Blockage Period ends, unless the holders of such Designated Senior
Indebtedness or the Representative of such holders have accelerated the
maturity of such Designated Senior Indebtedness, or any Payment Default
otherwise exists. Not more than one Blockage Notice may be given in any 360
consecutive day period, irrespective of the number of defaults with respect to
Designated Senior Indebtedness during such period, except that if any Blockage
Notice within such 360-day period is given by or on behalf of any holders of
Designated Senior Indebtedness other than Bank Indebtedness, a Representative
of holders of Bank Indebtedness may give another Blockage Notice within such
period. In no event may the total number of days during which any Payment
Blockage Period is in effect extend beyond 179 days from the date of receipt
by the Trustee of the relevant Blockage Notice, and there must be a 181
consecutive day period during any 360 consecutive day period during which no
Payment Blockage Period is in effect.
Upon any payment or distribution of the assets of the Company upon a total
or partial liquidation or dissolution or reorganization of or similar
proceeding relating to the Company or its property, or in a bankruptcy,
insolvency, receivership or similar proceeding relating to the Company or its
property, the holders of Senior Indebtedness will be entitled to receive
payment in full of the Senior Indebtedness before the Noteholders are entitled
to receive any payment and until the Senior Indebtedness is paid in full, any
payment or distribution to which Noteholders would be entitled but for the
subordination provisions of the Indenture will be made to holders of the
Senior Indebtedness as their interests may appear. If a distribution is made
to Noteholders that due to the subordination provisions should not have been
made to them, such Noteholders are required to hold it in trust for the
holders of Senior Indebtedness and pay it over to them as their interests may
appear.
If the Company fails to make any payment on the Notes when due or within any
applicable grace period, whether or not on account of the payment blockage
provisions referred to above, such failure would constitute an Event of
Default under the Indenture and would enable the holders of the Notes to
accelerate the maturity thereof. See "--Defaults." If payment of the Notes is
accelerated because of an Event of Default, the Company or the Trustee shall
promptly notify the holders of the Designated Senior Indebtedness or the
Representative of such holders of the acceleration. Such acceleration will not
be effective, and the Company may not pay the Notes, until five Business Days
after such holders or the Representative of each Designated Senior
Indebtedness receive notice of such acceleration and, thereafter, the Company
may pay the Notes only if the subordination provisions of the Indenture
otherwise permit payment at that time.
By reason of such subordination provisions contained in the Indenture, in
the event of liquidation, receivership, reorganization or insolvency, (i)
creditors of the Company who are holders of Senior Indebtedness may recover
more, ratably, than the Noteholders, (ii) trade creditors of the Company who
are not holders of Senior Indebtedness or of Senior Subordinated Indebtedness
(including the Notes) may recover less, ratably, than holders of Senior
Indebtedness and may recover more, ratably, than the holders of Senior
Subordinated Indebtedness, and (iii) the Company may be unable to meet its
obligations on the Notes. In addition, as described above, the Notes will be
effectively subordinated, with respect to the Company's Subsidiaries, to the
claims of creditors of those Subsidiaries.
CHANGE OF CONTROL
Upon the occurrence after the Issue Date of a Change of Control (as defined
below) and the failure of the Notes to have, on the 30th day after such Change
of Control, a rating of at least BBB- (or equivalent successor rating) by S&P
and a rating of at least Baa3 (or equivalent successor rating) by Moody's (a
"Change of Control Triggering Event"), each Holder will have the right to
require the Company to repurchase all or any part of such Holder's Notes 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 Holders of record on the relevant record date to receive interest due
on the relevant interest payment date); provided, however, that the Company
shall
81
<PAGE>
not be obligated to repurchase Notes pursuant to this covenant in the event
that it has exercised its right to redeem all of the Notes as described under
"--Optional Redemption."
The term "Change of Control" means:
(i) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), other than one or more Permitted Holders or Holding, is or
becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act), directly or indirectly, of more than 50% of the total
voting power of the Voting Stock of the Company, provided that so long as
the Company is a Subsidiary of Holding, no Person shall be deemed to be or
become a "beneficial owner" of more than 50% of the total voting power of
the Voting Stock of the Company unless such Person shall be or become a
"beneficial owner" of more than 50% of the total voting power of the Voting
Stock of Holding;
(ii) the Company merges or consolidates with or into, or sells or
transfers (in one or a series of related transactions) all or substantially
all of the assets of the Company and its Restricted Subsidiaries to,
another Person (other than one or more Permitted Holders) and any "person"
(as defined in clause (i) above), other than one or more Permitted Holders
or Holding, is or becomes the "beneficial owner" (as so defined), directly
or indirectly, of more than 50% of the total voting power of the Voting
Stock of the surviving Person in such merger or consolidation, or the
transferee Person in such sale or transfer of assets, as the case may be,
provided that so long as such surviving or transferee Person is a
Subsidiary of a parent Person, no Person shall be deemed to be or become a
"beneficial owner" of more than 50% of the total voting power of the Voting
Stock of such surviving or transferee Person unless such Person shall be or
become a "beneficial owner" of more than 50% of the total voting power of
the Voting Stock of such parent Person; or
(iii) during any period of two consecutive years (during which period the
Company has been a party to the Indenture), individuals who at the
beginning of such period were members of the board of directors of the
Company (together with any new members thereof whose election by such board
of directors or whose nomination for election by holders of Capital Stock
of the Company was approved by one or more Permitted Holders or by a vote
of a majority of the members of such board of directors then still in
office who were either members thereof at the beginning of such period or
whose election or nomination for election was previously so approved) cease
for any reason to constitute a majority of such board of directors then in
office.
In the event that, at the time of such Change of Control Triggering Event,
the terms of the Bank Indebtedness restrict or prohibit the repurchase of
Notes pursuant to this covenant, then prior to the mailing of the notice to
Holders provided for in the immediately following paragraph but in any event
not later than 30 days following the date the Company obtains actual knowledge
of any Change of Control Triggering Event (unless the Company has exercised
its right to redeem all the Notes as described under "--Optional Redemption"),
the Company shall (i) repay in full all Bank Indebtedness or 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
Notes as provided for in the immediately following paragraph. The Company
shall first comply with the provisions of the immediately preceding sentence
before it shall be required to repurchase Notes pursuant to the provisions
described below. The Company's failure to comply with such provisions or the
provisions of the immediately following paragraph shall constitute an Event of
Default described in clause (iv) and not in clause (ii) under "--Defaults"
below.
Unless the Company has exercised its right to redeem all the Notes as
described under "--Optional Redemption," the Company shall, not later than 30
days following the date the Company obtains actual knowledge of any Change of
Control Triggering Event having occurred, mail a notice to each Holder with a
copy to the Trustee stating: (1) that a Change of Control Triggering Event has
occurred or may occur and that such Holder has, or upon such occurrence will
have, the right to require the Company to purchase such Holder's Notes 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 purchase (subject to the
right of Holders of record on a record date to receive interest on
82
<PAGE>
the relevant interest payment date); (2) the circumstances and relevant facts
and financial information regarding such Change of Control; (3) the repurchase
date (which shall be no earlier than 30 days nor later than 60 days from the
date such notice is mailed); (4) the instructions determined by the Company,
consistent with this covenant, that a Holder must follow in order to have its
Notes purchased; and (5) if such notice is mailed prior to the occurrence of a
Change of Control or Change of Control Triggering Event, that such offer is
conditioned on the occurrence of such Change of Control Triggering Event.
The Company will comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
in connection with the repurchase of Notes pursuant to this covenant. To the
extent that the provisions of any securities laws or regulations conflict with
provisions of this covenant, the Company will comply with the applicable
securities laws and regulations and will not be deemed to have breached its
obligations under this covenant by virtue thereof.
The Change of Control Triggering Event purchase feature is a result of
negotiations between the Company and the Initial Purchasers. The Company has
no present plans to engage in a transaction involving a Change of Control,
although it is possible that the Company would decide to do so in the future.
Subject to the limitations discussed below, the Company could, in the future,
enter into certain transactions, including acquisitions, refinancings or
recapitalizations, that would not constitute a Change of Control under the
Indenture, but that could increase the amount of Indebtedness outstanding at
such time or otherwise affect the Company's capital structure or credit
ratings.
The occurrence of a Change of Control would constitute a default under the
Senior Credit Agreement. Agreements governing future Senior Indebtedness of
the Company may contain prohibitions of certain events that would constitute a
Change of Control or require such Senior Indebtedness to be repurchased or
repaid upon a Change of Control. Moreover, the exercise by the Holders of
their right to require the Company to repurchase the Notes could cause a
default under such agreements, even if the Change of Control itself does not,
due to the financial effect of such repurchase on the Company. Finally, the
Company's ability to pay cash to the Holders upon a repurchase may be limited
by the Company's then existing financial resources. There can be no assurance
that sufficient funds will be available when necessary to make any required
repurchases. As described above under "--Optional Redemption," the Company
also has the right to redeem the Notes at specified prices, in whole or in
part, upon a Change of Control.
The definition of Change of Control includes a phrase relating to the sale
or other transfer of "all or substantially all" of the Company's assets, as
such phrase is used in the Revised Model Business Corporation Act. Although
there is a developing body of case law interpreting the phrase "substantially
all," there is no precise definition of the phrase under applicable law.
Accordingly, in certain circumstances there may be a degree of uncertainty in
ascertaining whether a particular transaction would involve a disposition of
"all or substantially all" of the assets of the Company, and therefore it may
be unclear as to whether a Change of Control has occurred and whether the
holders of the Notes have the right to require the Company to repurchase such
Notes.
CERTAIN COVENANTS
The Indenture contains covenants including, among others, the following:
Limitation on Indebtedness. (a) The Company will not, and will not permit
any Restricted Subsidiary to, Incur any Indebtedness; provided, however, that
the Company or any Note Guarantor may Incur Indebtedness if on the date of the
Incurrence of such Indebtedness, after giving effect to the Incurrence
thereof, the Consolidated Coverage Ratio would be greater than 1.75:1.00 if
such Indebtedness is Incurred prior to June 1, 2001 or 2.00:1.00 if such
Indebtedness is Incurred thereafter.
(b) Notwithstanding the foregoing paragraph (a), the Company and its
Restricted Subsidiaries may Incur the following Indebtedness:
(i) Indebtedness Incurred pursuant to the Senior Credit Facility
(including but not limited to in respect of letters of credit or bankers'
acceptances issued or created thereunder) and Indebtedness of any Foreign
83
<PAGE>
Subsidiary Incurred other than under the Senior Credit Facility, and
(without limiting the foregoing), in each case, any Refinancing
Indebtedness in respect thereof, in a maximum principal amount at any time
outstanding not exceeding in the aggregate the amount equal to (A) $410.0
million, plus (B) the amount, if any, by which the Borrowing Base exceeds
$110.0 million, plus (C) in the case of any refinancing of the Senior
Credit Facility or any portion thereof, the aggregate amount of fees,
underwriting discounts, premiums and other costs and expenses incurred in
connection with such refinancing;
(ii) Indebtedness (A) of any Restricted Subsidiary to the Company or (B)
of the Company or any Restricted Subsidiary to any Restricted Subsidiary;
provided, that any subsequent issuance or transfer of any Capital Stock of
such Restricted Subsidiary to which such Indebtedness is owed, or other
event, that results in such Restricted Subsidiary ceasing to be a
Restricted Subsidiary or any other subsequent transfer of such Indebtedness
(except to the Company or a Restricted Subsidiary) will be deemed, in each
case, an Incurrence of such Indebtedness by the issuer thereof;
(iii) Indebtedness represented by the Notes, any Indebtedness (other than
the Indebtedness described in clauses (i) or (ii) above) outstanding on the
Issue Date and any Refinancing Indebtedness Incurred in respect of any
Indebtedness described in this clause (iii) or paragraph (a) above;
(iv) Purchase Money Obligations and Capitalized Lease Obligations, and
any Refinancing Indebtedness with respect thereto, in an aggregate
principal amount at any time outstanding not exceeding an amount equal to
10% of Consolidated Total Assets at any time outstanding;
(v) Indebtedness of any Foreign Subsidiary Incurred for working capital
purposes;
(vi) (A) Guarantees by the Company or any Restricted Subsidiary of
Indebtedness or any other obligation or liability of the Company or any
Restricted Subsidiary (other than any Indebtedness incurred by the Company
or such Restricted Subsidiary, as the case may be, in violation of the
covenant described under "--Limitation on Indebtedness"), or (B) without
limiting the covenant described under "--Limitation on Liens," Indebtedness
of the Company or any Restricted Subsidiary arising by reason of any Lien
granted by or applicable to such Person securing Indebtedness of the
Company or any Restricted Subsidiary (other than any Indebtedness incurred
by the Company or such Restricted Subsidiary, as the case may be, in
violation of the covenant described under "--Limitation on Indebtedness");
(vii) Indebtedness of the Company or any Restricted Subsidiary (A)
arising from the honoring of a check, draft or similar instrument of such
Person drawn against insufficient funds, provided that such Indebtedness is
extinguished within five Business Days of its incurrence, or (B) consisting
of guarantees, indemnities, obligations in respect of earnouts or other
purchase price adjustments, or similar obligations, Incurred in connection
with the acquisition or disposition of any business, assets or Person
(including pursuant to the Recapitalization);
(viii) Indebtedness of the Company or any Restricted Subsidiary in
respect of (A) letters of credit, bankers' acceptances or other similar
instruments or obligations issued, or relating to liabilities or
obligations incurred, in the ordinary course of business (including those
issued to governmental entities in connection with self-insurance under
applicable workers' compensation statutes), or (B) completion guarantees,
surety, judgment, appeal or performance bonds, or other similar bonds,
instruments or obligations, provided, or relating to liabilities or
obligations incurred, in the ordinary course of business, or (C) Hedging
Obligations entered into for bona fide hedging purposes in the ordinary
course of business, or (D) Management Guarantees, or (E) the financing of
insurance premiums in the ordinary course of business;
(ix) Indebtedness of a Receivables Subsidiary secured by a Lien on all or
part of the assets disposed of in, or otherwise incurred in connection
with, a Financing Disposition;
(x) Indebtedness of any Person that is assumed by the Company or any
Restricted Subsidiary in connection with its acquisition of assets from
such Person or any Affiliate thereof or is issued and outstanding on or
prior to the date on which such Person was acquired by the Company or any
Restricted Subsidiary or merged or consolidated with or into any Restricted
Subsidiary (other than Indebtedness Incurred to finance, or otherwise in
connection with, such acquisition), provided that on the date of such
acquisition, merger or consolidation, after giving effect thereto, (x) with
respect to any such Indebtedness of
84
<PAGE>
the Company or any Note Guarantor, (A) the Company could Incur at least
$1.00 of additional Indebtedness pursuant to paragraph (a) above or (B) the
Consolidated Coverage Ratio is greater than it was on such date immediately
prior to giving effect to such acquisition and (y) with respect to any such
Indebtedness of any Restricted Subsidiary that is not a Note Guarantor, the
Company could Incur at least $1.00 of additional Indebtedness pursuant to
paragraph (a) above; and any Refinancing Indebtedness with respect to any
such Indebtedness;
(xi) Indebtedness of the Company or any Restricted Subsidiary in an
amount at any time outstanding not exceeding twice the amount of Excluded
Contributions made after the Issue Date; provided, that the proceeds of
such Indebtedness and the related amount of such Excluded Contributions are
used to finance the acquisition of assets from any Person in a Related
Business or the merger or consolidation of such a Person into or with the
Company or any Restricted Subsidiary (including but not limited to payment
of any related fees and expenses), or to refinance any such acquisition,
merger or consolidation with such Indebtedness being Incurred for such
refinancing within nine months of the closing of such acquisition, merger
or consolidation; and any Refinancing Indebtedness with respect to any such
Indebtedness; and
(xii) Indebtedness of the Company or any Restricted Subsidiary in an
aggregate principal amount at any time outstanding not exceeding an amount
equal to 20% of Consolidated Total Assets.
(c) For purposes of determining compliance with, and the outstanding
principal amount of any particular Indebtedness Incurred pursuant to and in
compliance with, this covenant, (i) any other obligation of the obligor on
such Indebtedness (or of any other Person who could have Incurred such
Indebtedness under this covenant) arising under any Guarantee, Lien or letter
of credit, bankers' acceptance or other similar instrument or obligation
supporting such Indebtedness shall be disregarded to the extent that such
Guarantee, Lien or letter of credit, bankers' acceptance or other similar
instrument or obligation secures the principal amount of such Indebtedness;
(ii) in the event that Indebtedness meets the criteria of more than one of the
types of Indebtedness described in paragraph (b) above, the Company, in its
sole discretion, shall classify such item of Indebtedness and only be required
to include the amount and type of such Indebtedness in one of such clauses;
and (iii) the amount of Indebtedness issued at a price that is less than the
principal amount thereof shall be equal to the amount of the liability in
respect thereof determined in accordance with GAAP.
(d) For purposes of determining compliance with any Dollar-denominated
restriction on the Incurrence of Indebtedness denominated in a foreign
currency, the Dollar-equivalent principal amount of such Indebtedness Incurred
pursuant thereto shall be calculated based on the relevant currency exchange
rate in effect on the date that such Indebtedness was Incurred, in the case of
term Indebtedness, or first committed, in the case of revolving credit
Indebtedness, provided that (x) the Dollar-equivalent principal amount of any
such Indebtedness outstanding on the Issue Date shall be calculated based on
the relevant currency exchange rate in effect on the Issue Date, (y) if such
Indebtedness is Incurred to refinance other Indebtedness denominated in a
foreign currency, and such refinancing would cause the applicable Dollar-
denominated restriction to be exceeded if calculated at the relevant currency
exchange rate in effect on the date of such refinancing, such Dollar-
denominated restriction shall be deemed not to have been exceeded so long as
the principal amount of such refinancing Indebtedness does not exceed the
principal amount of such Indebtedness being refinanced and (z) the Dollar-
equivalent principal amount of Indebtedness denominated in a foreign currency
and Incurred pursuant to the Senior Credit Facility shall be calculated based
on the relevant currency exchange rate in effect on, at the Company's option,
(i) the Issue Date, (ii) any date on which any of the respective commitments
under the Senior Credit Facility shall be reallocated between or among
facilities or subfacilities thereunder, or on which such rate is otherwise
calculated for any purpose thereunder, or (iii) the date of such Incurrence.
The principal amount of any Indebtedness Incurred to refinance other
Indebtedness, if Incurred in a different currency from the Indebtedness being
refinanced, shall be calculated based on the currency exchange rate applicable
to the currencies in which such respective Indebtedness is denominated that is
in effect on the date of such refinancing.
Limitation on Layering. The Company shall not Incur any Indebtedness that is
expressly subordinated in right of payment to any Senior Indebtedness of the
Company, unless such Indebtedness so Incurred ranks pari
85
<PAGE>
passu in right of payment with the Notes, or is subordinated in right of
payment to the Notes. No Note Guarantor shall Incur any Indebtedness that is
expressly subordinated in right of payment to any Guarantor Senior
Indebtedness of such Note Guarantor, unless such Indebtedness so Incurred
ranks pari passu in right of payment with such Note Guarantor's Note
Guarantee, or is subordinated in right of payment to such Note Guarantor's
Note Guarantee. Unsecured Indebtedness is not deemed to be subordinate or
junior to secured Indebtedness merely because it is unsecured, and
Indebtedness that is not guaranteed by a particular Person is not deemed to be
subordinate or junior to Indebtedness that is so guaranteed merely because it
is not so guaranteed.
Limitation on Restricted Payments. (a) The Company shall not, and shall not
permit any Restricted Subsidiary, directly or indirectly, to (i) declare or
pay any dividend or make any distribution on or in respect of its Capital
Stock (including any such payment in connection with any merger or
consolidation to which the Company is a party) except (x) dividends or
distributions payable solely in its Capital Stock (other than Disqualified
Stock) and (y) dividends or distributions payable to the Company or any
Restricted Subsidiary (and, in the case of any such Restricted Subsidiary
making such dividend or distribution, to other holders of its Capital Stock on
no more than a pro rata basis, measured by value), (ii) purchase, redeem,
retire or otherwise acquire for value any Capital Stock of the Company held by
Persons other than the Company or a Restricted Subsidiary, (iii) purchase,
repurchase, redeem, defease or otherwise acquire or retire for value, prior to
scheduled maturity, scheduled repayment or scheduled sinking fund payment, any
Subordinated Obligations (other than a purchase, redemption, defeasance or
other acquisition or retirement for value in anticipation of satisfying a
sinking fund obligation, principal installment or final maturity, in each case
due within one year of the date of such acquisition or retirement) or (iv)
make any Investment (other than a Permitted Investment) in any Person (any
such dividend, distribution, purchase, redemption, repurchase, defeasance,
other acquisition or retirement or Investment being herein referred to as a
"Restricted Payment"), if at the time the Company or such Restricted
Subsidiary makes such Restricted Payment:
(1) a Default shall have occurred and be continuing (or would result
therefrom);
(2) the Company could not incur at least an additional $1.00 of
Indebtedness pursuant to paragraph (a) of the covenant described under "--
Limitation on Indebtedness"; or
(3) the aggregate amount of such Restricted Payment and all other
Restricted Payments (the amount so expended, if other than in cash, to be
as determined in good faith by the Board of Directors, whose determination
shall be conclusive) declared or made subsequent to the Issue Date and then
outstanding would exceed the sum of:
(A) 50% of the Consolidated Net Income accrued during the period
(treated as one accounting period) from March 31, 1998 to the end of
the most recent fiscal quarter ending prior to the date of such
Restricted Payment for which consolidated financial statements of the
Company are available (or, in case such Consolidated Net Income shall
be a negative number, 100% of such negative number);
(B) the aggregate Net Cash Proceeds, and fair value (as determined in
good faith by the Board of Directors) of property or assets, received
(x) by the Company as capital contributions to the Company after the
Issue Date or from the issuance or sale (other than to a Restricted
Subsidiary) of its Capital Stock (other than Disqualified Stock) after
the Issue Date (other than Excluded Contributions) or (y) by the
Company or any Restricted Subsidiary from the issuance and sale by the
Company or any Restricted Subsidiary after the Issue Date of
Indebtedness that shall have been converted into or exchanged for
Capital Stock of the Company (other than Disqualified Stock), plus the
amount of cash, property or assets (determined as provided above)
received by the Company or any Restricted Subsidiary upon such
conversion or exchange;
(C) the aggregate amount equal to the net reduction in Investments in
Unrestricted Subsidiaries resulting from (i) dividends, distributions,
interest payments, return of capital, repayments of Investments or
other transfers of assets to the Company or any Restricted Subsidiary
from any Unrestricted Subsidiary, or (ii) the redesignation of any
Unrestricted Subsidiary as a Restricted Subsidiary (valued in each case
as provided in the definition of "Investment"), not to exceed in the
case of any such Unrestricted Subsidiary the aggregate amount of
Investments (other than Permitted
86
<PAGE>
Investments) made by the Company or any Restricted Subsidiary in such
Unrestricted Subsidiary after the Issue Date; and
(D) in the case of any disposition or repayment of any Investment
constituting a Restricted Payment (without duplication of any amount
deducted in calculating the amount of Investments at any time
outstanding included in the amount of Restricted Payments), an amount
in the aggregate equal to the lesser of the return of capital,
repayment or other proceeds with respect to all such Investments and
the initial amount of all such Investments.
(b) The provisions of the foregoing paragraph (a) will not prohibit any
of the following (each, a "Permitted Payment"):
(i) any purchase, redemption, repurchase, defeasance or other
acquisition or retirement of Capital Stock of the Company or
Subordinated Obligations made by exchange (including any such exchange
pursuant to the exercise of a conversion right or privilege in
connection with which cash is paid in lieu of the issuance of
fractional shares) for, or out of the proceeds of the substantially
concurrent issuance or sale of, Capital Stock of the Company (other
than Disqualified Stock and other than Capital Stock issued or sold to
a Subsidiary) or a substantially concurrent capital contribution to the
Company; provided, that the Net Cash Proceeds from such issuance, sale
or capital contribution shall be excluded in subsequent calculations
under clause (B) of the preceding paragraph (a);
(ii) any purchase, redemption, repurchase, defeasance or other
acquisition or retirement of Subordinated Obligations (x) made by
exchange for, or out of the proceeds of the substantially concurrent
issuance or sale of, Indebtedness of the Company or Refinancing
Indebtedness Incurred in compliance with the covenant described under
"--Limitation on Indebtedness," (y) from Net Available Cash to the
extent permitted by the covenant described under "--Limitation on Sales
of Assets and Subsidiary Stock" or (z) to the extent required by the
agreement governing such Subordinated Obligations, following the
occurrence of a Change of Control (or other similar event described
therein as a "change of control"), but only if the Company shall have
complied with the covenant described under "--Change of Control" and,
if required, purchased all Notes tendered pursuant to the offer to
repurchase all the Notes required thereby, prior to purchasing or
repaying such Subordinated Obligations;
(iii) dividends paid within 60 days after the date of declaration
thereof if at such date of declaration such dividend would have
complied with the preceding paragraph (a);
(iv) Investments or other Restricted Payments in an aggregate amount
outstanding at any time not to exceed the amount of Excluded
Contributions, provided that such Excluded Contributions shall not
include any Excluded Contribution the proceeds of which were used to
finance the acquisition of assets from any Person in a Related Business
or the merger or consolidation of such a Person into or with the
Company or any Restricted Subsidiary pursuant to clause (xi) of
paragraph (b) of the covenant described under "--Limitation on
Indebtedness";
(v) loans, advances, dividends or distributions by the Company to
Holding to permit Holding to repurchase or otherwise acquire its
Capital Stock (including any options, warrants or other rights in
respect thereof), or payments by the Company to repurchase or otherwise
acquire Capital Stock (including any options, warrants or other rights
in respect thereof), in each case from Management Investors, such
payments, loans, advances, dividends or distributions not to exceed an
amount (net of repayments of any such loans or advances) equal to (1)
$25.0 million, plus (2) $5.0 million multiplied by the number of
calendar years that have commenced since the Issue Date, plus the Net
Cash Proceeds received by the Company since the Issue Date from, or as
a capital contribution from, the issuance or sale to Management
Investors of Capital Stock (including any options, warrants or other
rights in respect thereof), to the extent such Net Cash Proceeds are
not included in any calculation under clause (3)(B)(x) of the preceding
paragraph (a);
(vi) the payment by the Company of, or loans, advances, dividends or
distributions by the Company to Holding to pay, dividends on the common
stock or equity of the Company or Holding
87
<PAGE>
following a public offering of such common stock or equity, in an
amount not to exceed in any fiscal year 6% of the aggregate gross
proceeds received by the Company in or from such public offering;
(vii) Restricted Payments (including loans or advances) in an
aggregate amount outstanding at any time not to exceed $10.0 million
(net of repayments of any such loans or advances);
(viii) loans, advances, dividends or distributions to Holding or
other payments by the Company or any Restricted Subsidiary (A) to
satisfy or permit Holding to satisfy obligations under the Management
Agreements, (B) pursuant to the Tax Sharing Agreement, or (C) to pay or
permit Holding to pay any Holding Expenses or any Related Taxes;
(ix) payments by the Company, or loans, advances, dividends or
distributions by the Company to Holding to make payments, to holders of
Capital Stock of the Company or Holding in lieu of issuance of
fractional shares of such Capital Stock, not to exceed $100,000 in the
aggregate outstanding at any time;
(x) dividends or other distributions of Capital Stock, Indebtedness
or other securities of Unrestricted Subsidiaries; and
(xi) the Transactions;
provided, that (A) in the case of clauses (iii), (vi), (vii) and (ix), the net
amount of any such Permitted Payment shall be included in subsequent
calculations of the amount of Restricted Payments, (B) in the case of clause
(v), at the time of any calculation of the amount of Restricted Payments, the
net amount of Permitted Payments that have then actually been made under
clause (v) that is in excess of 50% of the total amount of Permitted Payments
then permitted under clause (v) shall be included in such calculation of the
amount of Restricted Payments, (C) in all cases other than pursuant to clauses
(A) and (B) immediately above, the net amount of any such Permitted Payment
shall be excluded in subsequent calculations of the amount of Restricted
Payments and (D) solely with respect to clause (vii), no Default or Event of
Default shall have occurred or be continuing at the time of any such Permitted
Payment after giving effect thereto.
Limitation on Restrictions on Distributions from Restricted
Subsidiaries. The Company will not, and will not permit any Restricted
Subsidiary to, create or otherwise cause to exist or become effective any
consensual encumbrance or restriction on the ability of any Restricted
Subsidiary to (i) pay dividends or make any other distributions on its Capital
Stock or pay any Indebtedness or other obligations owed to the Company, (ii)
make any loans or advances to the Company or (iii) transfer any of its
property or assets to the Company, except any encumbrance or restriction:
(1) pursuant to an agreement or instrument in effect at or entered into
on the Issue Date (including, without limitation, the Senior Credit
Facility), the Indenture or the Notes;
(2) pursuant to any agreement or instrument of a Person, or relating to
Indebtedness or Capital Stock of a Person, which Person is acquired by or
merged or consolidated with or into the Company or any Restricted
Subsidiary, or which agreement or instrument is assumed by the Company or
any Restricted Subsidiary in connection with an acquisition of assets from
such Person, as in effect at the time of such acquisition, merger or
consolidation (except to the extent that such Indebtedness was incurred to
finance, or otherwise in connection with, such acquisition, merger or
consolidation), provided that for purposes of this clause (2), if another
Person is the Successor Company, any Subsidiary thereof or agreement or
instrument of such Person or any such Subsidiary shall be deemed acquired
or assumed, as the case may be, by the Company or a Restricted Subsidiary,
as the case may be, when such Person becomes the Successor Company;
(3) pursuant to an agreement or instrument (a "Refinancing Agreement")
effecting a refinancing of Indebtedness Incurred pursuant to, or that
otherwise extends, renews, refunds, refinances or replaces, an agreement or
instrument referred to in clause (1) or (2) of this covenant or this clause
(3) (an "Initial Agreement") or contained in any amendment, supplement or
other modification to an Initial Agreement (an "Amendment"); provided,
however, that the encumbrances and restrictions contained in any such
88
<PAGE>
Refinancing Agreement or Amendment are not materially less favorable to the
Holders of the Notes taken as a whole than encumbrances and restrictions
contained in the Initial Agreement or Initial Agreements to which such
Refinancing Agreement or Amendment relates (as determined in good faith by
the Company);
(4) (A) that restricts in a customary manner the subletting, assignment
or transfer of any property or asset that is subject to a lease, license or
similar contract, or the assignment or transfer of any lease, license or
other contract, (B) by virtue of any transfer of, agreement to transfer,
option or right with respect to, or Lien on, any property or assets of the
Company or any Restricted Subsidiary not otherwise prohibited by the
Indenture, (C) contained in mortgages, pledges or other security agreements
securing Indebtedness of a Restricted Subsidiary to the extent restricting
the transfer of the property or assets subject thereto, (D) pursuant to
customary provisions restricting dispositions of real property interests
set forth in any reciprocal easement agreements of the Company or any
Restricted Subsidiary, (E) pursuant to Purchase Money Obligations that
impose encumbrances or restrictions on the property or assets so acquired,
(F) on cash or other deposits or net worth imposed by customers under
agreements entered into in the ordinary course of business, (G) pursuant to
customary provisions contained in agreements and instruments entered into
in the ordinary course of business (including but not limited to leases and
joint venture and other similar agreements entered into in the ordinary
course of business) or (H) that arises or is agreed to in the ordinary
course of business and does not detract from the value of property or
assets of the Company or any Restricted Subsidiary in any manner material
to the Company or such Restricted Subsidiary;
(5) with respect to a Restricted Subsidiary (or any of its property or
assets) imposed pursuant to an agreement entered into for the direct or
indirect sale or disposition of all or substantially all the Capital Stock
or assets of such Restricted Subsidiary (or the property or assets that are
subject to such restriction) pending the closing of such sale or
disposition;
(6) required by any applicable law, rule, regulation or order or by any
regulatory authority having jurisdiction over the Company or any Restricted
Subsidiary or any of their businesses; or
(7) pursuant to an agreement or instrument (A) relating to any
Indebtedness permitted to be Incurred subsequent to the Issue Date pursuant
to the provisions of the covenant described under "--Limitation on
Indebtedness," if the Company determines that such encumbrance or
restriction will not cause the Company not to have the funds necessary to
pay the principal of or interest on the Notes, (B) relating to any sale of
receivables by a Foreign Subsidiary or (C) relating to Indebtedness of or a
Financing Disposition to or by any Receivables Entity.
Limitation on Sales of Assets and Subsidiary Stock. (a) The Company will
not, and will not permit any Restricted Subsidiary to, make any Asset
Disposition unless
(i) the Company or such Restricted Subsidiary receives consideration
(including by way of relief from, or by any other Person assuming
responsibility for, any liabilities, contingent or otherwise) at the time
of such Asset Disposition at least equal to the fair market value of the
shares and assets subject to such Asset Disposition, as such fair market
value may be determined (and shall be determined, to the extent such Asset
Disposition or any series of related Asset Dispositions involves aggregate
consideration in excess of $10.0 million) in good faith by the Board of
Directors, whose determination shall be conclusive (including as to the
value of all noncash consideration),
(ii) in the case of any Asset Disposition (or series of related Asset
Dispositions) having a fair market value of $10.0 million or more, at least
75% of the consideration therefor (excluding, in the case of an Asset
Disposition (or series of related Asset Dispositions) of assets, any
consideration by way of relief from, or by any other Person assuming
responsibility for, any liabilities, contingent or otherwise, that are not
Indebtedness) received by the Company or such Restricted Subsidiary is in
the form of cash, and provided that this clause (ii) shall not apply to any
Asset Disposition (or series of related Asset Dispositions), involving
assets that accounted for less than two percent of Consolidated EBITDA
during the period of the most recent four consecutive fiscal quarters
ending prior to the date of such Asset Disposition for which consolidated
financial statements of the Company are available, and
89
<PAGE>
(iii) an amount equal to 100% of the Net Available Cash from such Asset
Disposition is applied by the Company (or any Restricted Subsidiary, as the
case may be) as follows:
(A) first, either (x) to the extent the Company elects (or is
required by the terms of any Senior Indebtedness or Indebtedness of a
Restricted Subsidiary), to prepay, repay or purchase Senior
Indebtedness or such Indebtedness of a Restricted Subsidiary (in each
case other than Indebtedness owed to the Company or a Restricted
Subsidiary) within 365 days after the date of such Asset Disposition,
or (y) to the extent the Company or such Restricted Subsidiary elects,
to reinvest in Additional Assets (including by means of an investment
in Additional Assets by a Restricted Subsidiary with Net Available Cash
received by the Company or another Restricted Subsidiary) within 365
days from the date of such Asset Disposition, or, if such reinvestment
in Additional Assets is a project authorized by the Board of Directors
that will take longer than such 365 days to complete, the period of
time necessary to complete such project;
(B) second, to the extent of the balance of such Net Available Cash
after application in accordance with clause (A) above (such balance,
the "Excess Proceeds"), to make an offer to purchase Notes and (to the
extent the Company or such Restricted Subsidiary elects, or is required
by the terms thereof) to purchase, redeem or repay any other Senior
Subordinated Indebtedness or Guarantor Senior Subordinated
Indebtedness, pursuant and subject to the conditions of the Indenture
and the agreements governing such other Indebtedness; and
(C) third, to the extent of the balance of such Net Available Cash
after application in accordance with clauses (A) and (B) above, to fund
(to the extent consistent with any other applicable provision of the
Indenture) any general corporate purpose (including but not limited to
the repurchase, repayment or other acquisition or retirement of any
Subordinated Obligations);
provided, however, that in connection with any prepayment, repayment or
purchase of Indebtedness pursuant to clause (A)(x) or (B) above, the Company
or such Restricted Subsidiary will retire such Indebtedness and will cause the
related loan commitment (if any) to be permanently reduced in an amount equal
to the principal amount so prepaid, repaid or purchased.
Notwithstanding the foregoing provisions of this covenant, the Company and
the Restricted Subsidiaries shall not be required to apply any Net Available
Cash in accordance with this covenant except to the extent that the aggregate
Net Available Cash from all Asset Dispositions that is not applied in
accordance with this covenant exceeds $15.0 million. If the aggregate
principal amount of Notes, Senior Subordinated Indebtedness and Guarantor
Senior Subordinated Indebtedness validly tendered and not withdrawn (or
otherwise subject to purchase, redemption or repayment) in connection with an
offer pursuant to clause (B) above exceeds the Excess Proceeds, the Excess
Proceeds will be apportioned between the Notes and such Senior Subordinated
Indebtedness and Guarantor Senior Subordinated Indebtedness, with the portion
of the Excess Proceeds payable in respect of the Notes to equal the lesser of
(x) the Excess Proceeds amount multiplied by a fraction, the numerator of
which is the outstanding principal amount of the Notes and the denominator of
which is the sum of the outstanding principal amount of the Notes and the
outstanding principal amount of the relevant Senior Subordinated Indebtedness
and Guarantor Senior Subordinated Indebtedness, and (y) the aggregate
principal amount of Notes validly tendered and not withdrawn.
For the purposes of clause (ii) of paragraph (a) above, the following are
deemed to be cash: (1) Temporary Cash Investments and Cash Equivalents, (2)
the assumption of Indebtedness of the Company (other than Disqualified Stock
of the Company) or any Restricted Subsidiary and the release of the Company or
such Restricted Subsidiary from all liability on payment of the principal
amount of such Indebtedness in connection with such Asset Disposition, (3)
Indebtedness of any Restricted Subsidiary that is no longer a Restricted
Subsidiary as a result of such Asset Disposition, to the extent that the
Company and each other Restricted Subsidiary are released from any Guarantee
of payment of the principal amount of such Indebtedness in connection with
such Asset Disposition, (4) securities received by the Company or any
Restricted Subsidiary from the transferee that are converted by the Company or
such Restricted Subsidiary into cash and (5) consideration consisting of
Indebtedness of the Company or any Restricted Subsidiary.
90
<PAGE>
(b) In the event of an Asset Disposition that requires the purchase of Notes
pursuant to clause (iii)(B) of paragraph (a) above, the Company will be
required to purchase Notes tendered pursuant to an offer by the Company for
the Notes (the "Offer") at a purchase price of 100% of their principal amount
plus accrued and unpaid interest to the Purchase Date in accordance with the
procedures (including prorating in the event of oversubscription) set forth in
the Indenture. If the aggregate purchase price of the Notes tendered pursuant
to the Offer is less than the Net Available Cash allotted to the purchase of
Notes, the remaining Net Available Cash will be available to the Company for
use in accordance with clause (iii)(B) of paragraph (a) above (to repay Senior
Subordinated Indebtedness or Guarantor Senior Subordinated Indebtedness) or
clause (iii)(C) of paragraph (a) above. The Company shall not be required to
make an Offer for Notes pursuant to this covenant if the Net Available Cash
available therefor (after application of the proceeds as provided in clause
(iii)(A) of paragraph (a) above) is less than $15.0 million for any particular
Asset Disposition (which lesser amounts shall be carried forward for purposes
of determining whether an Offer is required with respect to the Net Available
Cash from any subsequent Asset Disposition).
(c) The Company will comply, to the extent applicable, with the requirements
of Section 14(e) of the Exchange Act and any other securities laws or
regulations in connection with the repurchase of Notes pursuant to this
covenant. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this covenant, the Company will comply
with the applicable securities laws and regulations and will not be deemed to
have breached its obligations under this covenant by virtue thereof.
Limitation on Transactions with Affiliates. (a) The Company will not, and
will not permit any Restricted Subsidiary to, directly or indirectly, enter
into or conduct any transaction or series of related transactions (including
the purchase, sale, lease or exchange of any property or the rendering of any
service) with any Affiliate of the Company (an "Affiliate Transaction") unless
(i) the terms of such Affiliate Transaction are not materially less favorable
to the Company or such Restricted Subsidiary, as the case may be, than those
that could be obtained at the time in a transaction with a Person who is not
such an Affiliate and (ii) if such Affiliate Transaction involves aggregate
consideration in excess of $10.0 million, the terms of such Affiliate
Transaction have been approved by a majority of the Disinterested Directors.
For purposes of this paragraph, any Affiliate Transaction shall be deemed to
have satisfied the requirements set forth in this paragraph if (x) such
Affiliate Transaction is approved by a majority of the Disinterested Directors
or (y) in the event there are no Disinterested Directors, a fairness opinion
is provided by a nationally recognized appraisal or investment banking firm
with respect to such Affiliate Transaction.
(b) The provisions of the preceding paragraph (a) will not apply to:
(i) any Restricted Payment Transaction,
(ii) (1) the entering into, maintaining or performance of any employment
contract, collective bargaining agreement, benefit plan, program or
arrangement, related trust agreement or any other similar arrangement for
or with any employee, officer or director heretofore or hereafter entered
into in the ordinary course of business, including vacation, health,
insurance, deferred compensation, severance, retirement, savings or other
similar plans, programs or arrangements, (2) the payment of compensation,
performance of indemnification or contribution obligations, or any
issuance, grant or award of stock, options, other equity-related interests
or other securities, to employees, officers or directors in the ordinary
course of business, (3) the payment of fees to directors of the Company or
any of its Subsidiaries, (4) any transaction with an officer or director in
the ordinary course of business not involving more than $100,000 in any one
case, or (5) Management Advances and payments in respect thereof,
(iii) any transaction with the Company, any Restricted Subsidiary, or any
Receivables Entity,
(iv) any transaction arising out of agreements or instruments in
existence on the Issue Date, and any payments made pursuant thereto,
(v) execution, delivery and performance of the Tax Sharing Agreement and
Management Agreements, including (1) payment to CDR or any Affiliate of CDR
of a fee of $9.2 million plus out-of-pocket expenses
91
<PAGE>
in connection with the Transactions, and (2) payment to CDR or any
Affiliate of CDR of fees of up to $1.0 million in any fiscal year plus all
out-of-pocket expenses incurred by CDR or any such Affiliate in connection
with its performance of management consulting, monitoring, financial
advisory or other services with respect to the Company and its Restricted
Subsidiaries,
(vi) the Transactions, all transactions in connection therewith
(including but not limited to the financing thereof), and all fees or
expenses paid or payable in connection with the Transactions,
(vii) any transaction in the ordinary course of business on terms not
materially less favorable to the Company or the relevant Restricted
Subsidiary than those that could be obtained at the time in a transaction
with a Person who is not an Affiliate of the Company, and
(viii) any transaction in the ordinary course of business, or approved by
a majority of the Board of Directors, between the Company or any Restricted
Subsidiary and any Affiliate of the Company controlled by the Company that
is a joint venture or similar entity.
Limitation on Liens. The Company shall not, and shall not permit any
Restricted Subsidiary to, directly or indirectly, create or permit to exist
any Lien (other than Permitted Liens) on any of its property or assets
(including Capital Stock of any other Person), whether owned on the date of
the Indenture or thereafter acquired, securing any Indebtedness of the Company
or any Note Guarantor that by its terms is expressly subordinated in right of
payment to or ranks pari passu in right of payment with the Notes or such Note
Guarantor's Note Guarantee (the "Initial Lien"), unless contemporaneously
therewith effective provision is made to secure the Indebtedness due under the
Indenture and the Notes or, in respect of Liens on any Restricted Subsidiary's
property or assets, any Note Guarantee of such Restricted Subsidiary, equally
and ratably with such obligation for so long as such obligation is so secured
by such Initial Lien. Any such Lien thereby created in favor of the Notes or
any such Note Guarantee will be automatically and unconditionally released and
discharged upon (i) the release and discharge of the Initial Lien to which it
relates, or (ii) any sale, exchange or transfer to any Person not an Affiliate
of the Company of the property or assets secured by such Initial Lien, or of
all of the Capital Stock held by the Company or any Restricted Subsidiary in,
or all or substantially all the assets of, any Restricted Subsidiary creating
such Lien.
Future Note Guarantors. After the Issue Date, the Company will cause each
Significant Domestic Subsidiary that guarantees payment by the Company of
Indebtedness of the Company (other than Bank Indebtedness), to execute and
deliver to the Trustee a supplemental indenture or other instrument pursuant
to which such Subsidiary will guarantee payment of the Notes, whereupon such
Subsidiary will become a Note Guarantor for all purposes under the Indenture.
In addition, the Company may cause any Subsidiary that is not a Note Guarantor
so to guarantee payment of the Notes and become a Note Guarantor.
Each Note Guarantor, as primary obligor and not merely as surety, will
jointly and severally, irrevocably and fully and unconditionally Guarantee, on
a senior subordinated basis, the punctual payment when due, whether at Stated
Maturity, by acceleration or otherwise, of all monetary obligations of the
Company under the Indenture and the Notes, whether for principal of or
interest on the Notes, expenses, indemnification or otherwise (all such
obligations guaranteed by such Note Guarantors being herein called the
"Guaranteed Obligations"). Such Note Guarantor will agree to pay, in addition
to the amount stated above, any and all reasonable out-of-pocket expenses
(including reasonable counsel fees and expenses) incurred by the Trustee or
the Holders in enforcing any rights under its Note Guarantee.
The obligations of each Note Guarantor will be limited to the maximum
amount, as will, after giving effect to all other contingent and fixed
liabilities of such Note Guarantor, result in the obligations of such Note
Guarantor under the Note Guarantee not constituting a fraudulent conveyance or
fraudulent transfer under applicable law, or being void or unenforceable under
any law relating to insolvency of debtors.
Each such Note Guarantee shall be a continuing Guarantee and shall (i)
remain in full force and effect until payment in full of the principal amount
of all outstanding Notes (whether by payment at maturity, purchase,
92
<PAGE>
redemption, defeasance, retirement or other acquisition) and all other
Guaranteed Obligations then due and owing, unless earlier terminated as
described below, (ii) be binding upon such Note Guarantor and (iii) inure to
the benefit of and be enforceable by the Trustee, the Holders and their
permitted successors, transferees and assigns.
Notwithstanding the preceding paragraph, any Note Guarantor will
automatically and unconditionally be released from all obligations under its
Note Guarantee, and such Note Guarantee shall thereupon terminate and be
discharged and of no further force or effect, (i) concurrently with any sale
or disposition (by merger or otherwise) of any Note Guarantor or any interest
therein in accordance with the terms of the Indenture (including the covenant
described under "--Certain Covenants--Limitation on Sales of Assets and
Subsidiary Stock") by the Company or a Restricted Subsidiary, following which
such Note Guarantor is no longer a Restricted Subsidiary of the Company, (ii)
pursuant to the terms of its Note Guarantee, (iii) at any time that such Note
Guarantor is released from all of its obligations under all of its Guarantees
of payment by the Company of Indebtedness (other than Bank Indebtedness) of
the Company, (iv) upon the merger or consolidation of any Note Guarantor with
and into the Company or another Note Guarantor that is the surviving Person in
such merger or consolidation, (v) upon legal or covenant defeasance of the
Company's obligations, or satisfaction and discharge of the Indenture, or (vi)
subject to customary contingent reinstatement provisions, upon payment in full
of the aggregate principal amount of all Notes then outstanding and all other
Guaranteed Obligations then due and owing. In addition, the Company will have
the right, upon 30 days' notice to the Trustee, to cause any Note Guarantor
that has not guaranteed payment by the Company of any other Indebtedness
(other than Bank Indebtedness) of the Company to be unconditionally released
from all obligations under its Note Guarantee, and such Note Guarantee shall
thereupon terminate and be discharged and of no further force or effect. Upon
any such occurrence specified in this paragraph, the Trustee shall execute any
documents reasonably required in order to evidence such release, discharge and
termination in respect of such Note Guarantee.
Neither the Company nor any such Note Guarantor shall be required to make a
notation on the Notes to reflect any such Guarantee or any such release,
termination or discharge.
SEC Reports. Notwithstanding that the Company may not be required to be or
remain subject to the reporting requirements of Section 13(a) or 15(d) of the
Exchange Act, the Company will file with the SEC (unless such filing is not
permitted under the Exchange Act or by the SEC), so long as Notes are
outstanding, the annual reports, information, documents and other reports that
the Company is required to file with the Commission pursuant to such Section
13(a) or 15(d) or would be so required to file if the Company were so subject.
The Company will also, within 15 days after the date on which the Company was
so required to file or would be so required to file if the Company were so
subject (or, if later, 120 days after the Issue Date), transmit by mail to all
Holders, as their names and addresses appear in the Note Register, and to the
Trustee copies of any such information, documents and reports (without
exhibits) so required to be filed (or, in lieu of one or more of the annual
report for the fiscal year ended March 31, 1998 and the quarterly reports for
the following fiscal year, a registration statement filed with the SEC under
the Securities Act or any amendment thereto, provided such registration
statement or amendment contains the information that would have been included
in each such report). The Company will be deemed to have satisfied such
requirements if Holding files and provides reports, documents and information
of the types otherwise so required, in each case within the applicable time
periods, and the Company is not required to file such reports, documents and
information separately under the applicable rules and regulations of the SEC
(after giving effect to any exemptive relief) because of the filings by
Holding. The Company also will comply with the other provisions of TIA
(S) 314(a).
MERGER AND CONSOLIDATION
The Company will not consolidate with or merge with or into, or convey,
transfer or lease all or substantially all its assets to, any Person, unless:
(i) the resulting, surviving or transferee Person (the "Successor Company")
will be a Person organized and existing under the laws of the United States of
America, any State thereof or the District of Columbia and the Successor
Company (if not the Company) will expressly assume all
93
<PAGE>
the obligations of the Company under the Notes and the Indenture by executing
and delivering to the Trustee a supplemental indenture or one or more other
documents or instruments in form reasonably satisfactory to the Trustee; (ii)
immediately after giving effect to such transaction (and treating any
Indebtedness that becomes an obligation of the Successor Company or any
Restricted Subsidiary as a result of such transaction as having been Incurred
by the Successor Company or such Restricted Subsidiary at the time of such
transaction), no Default will have occurred and be continuing; (iii)
immediately after giving effect to such transaction, either (A) the Successor
Company could Incur at least $1.00 of additional Indebtedness pursuant to
paragraph (a) of the covenant described under "--Certain Covenants--Limitation
on Indebtedness," or (B) the Consolidated Coverage Ratio of the Successor
Company would equal or exceed the Consolidated Coverage Ratio of the Company
immediately prior to giving effect to such transaction; (iv) each Note
Guarantor (other than any party to any such consolidation or merger) shall
have delivered a supplemental indenture or other document or instrument in
form reasonably satisfactory to the Trustee, confirming its Note Guarantee;
and (v) the Company will have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each to the effect that such
consolidation, merger or transfer complies with the provisions described in
this paragraph, provided that (x) in giving such opinion such counsel may rely
on an Officer's Certificate as to compliance with the foregoing clauses (ii)
and (iii) and as to any matters of fact, and (y) no Opinion of Counsel will be
required for a consolidation, merger or transfer described in the last
paragraph of this covenant. Any Indebtedness that becomes an obligation of the
Company or any Restricted Subsidiary (or that is deemed to be Incurred by any
Restricted Subsidiary that becomes a Restricted Subsidiary) as a result of any
such transaction undertaken in compliance with this covenant, and any
Refinancing Indebtedness with respect thereto, shall be deemed to have been
Incurred in compliance with the covenant described under "--Certain
Covenants--Limitation on Indebtedness."
The Successor Company will succeed to, and be substituted for, and may
exercise every right and power of, the Company under the Indenture, and
thereafter the predecessor Company shall be relieved of all obligations and
covenants under the Indenture.
Clauses (ii) and (iii) of the first paragraph of this "Merger and
Consolidation" section will not apply to any transaction in which (1) any
Restricted Subsidiary consolidates with, merges into or transfers all or part
of its assets to the Company or (2) the Company consolidates or merges with or
into or transfers all or substantially all its properties and assets to (x) an
Affiliate incorporated or organized for the purpose of reincorporating or
reorganizing the Company in another jurisdiction or changing its legal
structure to a corporation or other entity or (y) a Restricted Subsidiary of
the Company so long as all assets of the Company and the Restricted
Subsidiaries immediately prior to such transaction (other than Capital Stock
of such Restricted Subsidiary) are owned by such Restricted Subsidiary and its
Restricted Subsidiaries immediately after the consummation thereof. The first
paragraph of this "Merger and Consolidation" section will not apply to the
Merger or the Second Merger.
DEFAULTS
An Event of Default is defined in the Indenture as (i) a default in any
payment of interest on any Note when due, continued for 30 days, (ii) a
default in the payment of principal of any Note when due, whether at its
Stated Maturity, upon optional redemption, upon required repurchase, upon
declaration or otherwise, whether or not such payment is prohibited by the
provisions described under "--Ranking" above, (iii) the failure by the Company
to comply for 30 days after notice with its obligations under the covenant
described under "--Merger and Consolidation" above, (iv) the failure by the
Company to comply for 30 days after notice with any of its obligations under
the covenant described under "--Change of Control" above (other than a failure
to purchase Notes), (v) the failure by the Company to comply for 60 days after
notice with its other agreements contained in the Notes or the Indenture, (vi)
the failure by any Note Guarantor to comply for 45 days after notice with its
obligations under its Note Guarantee, (vii) the failure by the Company or any
Significant Subsidiary to pay any Indebtedness within any applicable grace
period after final maturity or the acceleration of any such Indebtedness by
the holders thereof because of a default, if the total amount of such
Indebtedness so unpaid or accelerated exceeds $15.0 million or its foreign
currency equivalent (the "cross acceleration provision"), (viii) certain
events
94
<PAGE>
of bankruptcy, insolvency or reorganization of the Company or a Significant
Subsidiary (the "bankruptcy provisions"), (ix) the rendering of any judgment
or decree for the payment of money in an amount (net of any insurance or
indemnity payments actually received in respect thereof prior to or within 90
days from the entry thereof, or to be received in respect thereof in the event
any appeal thereof shall be unsuccessful) in excess of $15.0 million or its
foreign currency equivalent against the Company or a Significant Subsidiary
that is not discharged, or bonded or insured by a third Person, if such
judgment or decree remains outstanding for a period of 90 days following such
judgment or decree and is not discharged, waived or stayed (the "judgment
default provision") or (x) the failure of any Note Guarantee by a Note
Guarantor that is a Significant Subsidiary to be in full force and effect
(except as contemplated by the terms thereof or of the Indenture) or the
denial or disaffirmation in writing by any Note Guarantor that is a
Significant Subsidiary of its obligations under the Indenture or any Note
Guarantee, if such Default continues for 10 days.
The foregoing will 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.
However, a Default under clause (iii), (iv), (v) or (vi) will not constitute
an Event of Default until the Trustee or the Holders of at least 25% in
principal amount of the outstanding Notes notify the Company of the Default
and the Company does not cure such Default within the time specified in such
clause after receipt of such notice.
If an Event of Default (other than a Default relating to certain events of
bankruptcy, insolvency or reorganization of the Company) occurs and is
continuing, the Trustee by notice to the Company, or the Holders of at least a
majority in principal amount of the outstanding Notes by notice to the Company
and the Trustee, may declare the principal of and accrued but unpaid interest
on all the Notes to be due and payable, provided that so long as any
Designated Senior Indebtedness shall be outstanding, such acceleration shall
not be effective until the earlier to occur of (x) five Business Days
following delivery of a written notice of such acceleration of the Notes to
the Company and the holders of all Designated Senior Indebtedness or each
Representative thereof and (y) the acceleration of any Designated Senior
Indebtedness. Upon the effectiveness of such a declaration, such principal and
interest will be due and payable immediately. Notwithstanding the foregoing,
if an Event of Default relating to certain events of bankruptcy, insolvency or
reorganization of the Company occurs and is continuing, the principal of and
accrued interest on all the Notes will 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 Notes may rescind any such acceleration with respect
to the Notes and its consequences.
Notwithstanding the foregoing, in the event of a declaration of acceleration
in respect of the Notes because an Event of Default specified in clause (vii)
above shall have occurred and be continuing, such declaration of acceleration
of the Notes and such Event of Default and all consequences thereof (including
without limitation any acceleration or resulting payment default) shall be
annulled, waived and rescinded, automatically and without any action by the
Trustee or the Holders, and be of no further effect, if within 60 days after
such Event of Default arose (x) the Indebtedness 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 in respect of such
Indebtedness that is the basis for such Event of Default has been cured.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default occurs and is continuing, the Trustee
will 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. 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 Notes unless (i) such Holder has
previously given the Trustee written notice that an Event
95
<PAGE>
of Default is continuing, (ii) Holders of at least 25% in principal amount of
the outstanding Notes 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 Notes 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 Notes 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 will be entitled to
indemnification satisfactory to it in its sole discretion against all losses
and expenses caused by taking or not taking such action.
The Indenture provides that if a Default occurs and is continuing and is
known to the Trustee, the Trustee must mail to each Holder notice of the
Default within 90 days after it occurs. Except in the case of a Default in the
payment of principal of, or premium (if any) or interest on, any Note, the
Trustee may withhold notice if and so long as a committee of its Trust
Officers in good faith determines that withholding notice is in the interests
of the Noteholders. In addition, the Company is required to deliver to the
Trustee, within 120 days after the end of each fiscal year, a certificate
indicating whether the signers thereof know of any Default that occurred
during the previous year. The Company also is required to deliver to the
Trustee, within 30 days after the occurrence thereof, written notice of any
event that would constitute certain Defaults, their status and what action the
Company is taking or proposes to take in respect thereof.
AMENDMENTS AND WAIVERS
Subject to certain exceptions, the Indenture may be amended with the consent
of the Holders of a majority in principal amount of the Notes then outstanding
and any past default or compliance with any provisions may be waived with the
consent of the Holders of a majority in principal amount of the Notes then
outstanding (including in each case, consents obtained in connection with a
tender offer or exchange offer for Notes). However, without the consent of
each Holder of an outstanding Note affected, no amendment or waiver may
(i) reduce the principal amount of Notes whose Holders must consent to an
amendment or waiver, (ii) reduce the rate of or extend the time for payment of
interest on any Note, (iii) reduce the principal of or extend the Stated
Maturity of any Note, (iv) reduce the premium payable upon the redemption of
any Note or change the date on which any Note may be redeemed as described
under "Optional Redemption" above, (v) make any Note payable in money other
than that stated in the Note, (vi) make any change to the subordination
provisions of the Indenture that adversely affects the rights of any Holder in
any material respect, (vii) impair the right of any Holder to receive payment
of principal of and interest on such Holder's Notes 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 Notes or (viii) make any change in the amendment or
waiver provisions described in this sentence.
Without the consent of any Holder, the Company, the Trustee and (as
applicable) any Note Guarantor may amend the Indenture to cure any ambiguity,
omission, defect or inconsistency, to provide for the assumption by a
successor of the obligations of the Company under the Indenture, to provide
for uncertificated Notes in addition to or in place of certificated Notes, to
add Guarantees with respect to the Notes, to secure the Notes, to confirm and
evidence the release, termination or discharge of any Guarantee or Lien with
respect to or securing the Notes when such release, termination or discharge
is provided for under the Indenture, to add to the covenants of the Company
for the benefit of the Noteholders or to surrender any right or power
conferred upon the Company, to provide that any Indebtedness that becomes or
will become an obligation of the Successor Company or a Note Guarantor
pursuant to a transaction governed by the provisions described under "--Merger
and Consolidation" (and that is not a Subordinated Obligation) is Senior
Subordinated Indebtedness or Guarantor Senior Subordinated Indebtedness for
purposes of this Indenture, to provide for or confirm the issuance of
Additional Notes, to make any change that does not adversely affect the rights
of any Holder, or to comply with any requirement of the SEC in connection with
the qualification of the Indenture under the TIA or otherwise.
96
<PAGE>
However, no amendment may be made to the subordination provisions of the
Indenture that adversely affects the rights of any holder of Senior
Indebtedness then outstanding (which Senior Indebtedness has been previously
designated in writing by the Company to the Trustee for this purpose) unless
the holders of such Senior Indebtedness (or any group or representative
thereof authorized to give a consent) consent to such change.
The consent of the Noteholders is not necessary under the Indenture to
approve the particular form of any proposed amendment or waiver. It is
sufficient if such consent approves the substance of the proposed amendment or
waiver. Until an amendment or waiver becomes effective, a consent to it by a
Noteholder is a continuing consent by such Noteholder and every subsequent
Holder of all or part of the related Note. Any such Noteholder or subsequent
holder may revoke such consent as to its Note by written notice to the Trustee
or the Company, received thereby before the date on which the Company
certifies to the Trustee that the Holders of the requisite principal amount of
Notes have consented to such amendment or waiver. After an amendment or waiver
under the Indenture becomes effective, the Company is required to mail to
Noteholders a notice briefly describing such amendment or waiver. However, the
failure to give such notice to all Noteholders, or any defect therein, will
not impair or affect the validity of the amendment or waiver.
DEFEASANCE
The Company at any time may terminate all its obligations under the Notes
and the Indenture ("legal defeasance"), except for certain obligations,
including those relating to the defeasance trust and obligations to register
the transfer or exchange of the Notes, to replace mutilated, destroyed, lost
or stolen Notes and to maintain a registrar and paying agent in respect of the
Notes. The Company at any time may terminate its obligations under certain
covenants under the Indenture, including the covenants described under "--
Certain Covenants" and "--Change of Control," the operation of the default
provisions relating to such covenants described under "--Defaults" above, the
operation of the cross acceleration provision, the bankruptcy provisions with
respect to Subsidiaries and the judgment default provision described under "--
Defaults" above, and the limitations contained in clauses (iii), (iv) and (v)
under "--Merger and Consolidation" above ("covenant defeasance"). If the
Company exercises its legal defeasance option or its covenant defeasance
option, each Note Guarantor will be released from all of its obligations with
respect to its Note Guarantee.
The Company may exercise its legal defeasance option notwithstanding its
prior exercise of its covenant defeasance option. If the Company exercises its
legal defeasance option, payment of the Notes may not be accelerated because
of an Event of Default with respect thereto. If the Company exercises its
covenant defeasance option, payment of the Notes may not be accelerated
because of an Event of Default specified in clause (iv), (v) (as it relates to
the covenants described under "--Certain Covenants" above), (vi), (vii),
(viii) (but only with respect to events of bankruptcy, insolvency or
reorganization of a Significant Subsidiary), (ix) or (x) under "Defaults"
above or because of the failure of the Company to comply with clause (iii),
(iv) or (v) under "--Merger and Consolidation" above.
Either defeasance option may be exercised to any redemption date or to the
maturity date for the Notes. In order to exercise either defeasance option,
the Company must irrevocably deposit in trust (the "defeasance trust") with
the Trustee money or U.S. Government Obligations, or a combination thereof,
for the payment of principal of, and premium (if any) and interest on, the
Notes to redemption or maturity, as the case may be, and must comply with
certain other conditions, including delivery to the Trustee of an Opinion of
Counsel to the effect that holders of the Notes 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 amount and in
the same manner and at the same times as would have been the case if such
deposit and defeasance had not occurred (and, in the case of legal defeasance
only, such Opinion of Counsel must be based on a ruling of the Internal
Revenue Service or other change in applicable Federal income tax law since the
Issue Date).
SATISFACTION AND DISCHARGE
The Indenture will be discharged and cease to be of further effect (except
as to surviving rights of registration of transfer or exchange of the Notes,
as expressly provided for in the Indenture) as to all outstanding
97
<PAGE>
Notes when (i) either (a) all the Notes previously authenticated and delivered
(other than certain lost, stolen or destroyed Notes, and certain Notes for
which provision for payment was previously made and thereafter the funds have
been released to the Company) have been delivered to the Trustee for
cancellation or (b) all Notes not previously delivered to the Trustee for
cancellation (x) have become due and payable, (y) will become due and payable
at their Stated Maturity within one year or (z) are to be called for
redemption within one year under arrangements reasonably satisfactory to the
Trustee for the giving of notice of redemption by the Trustee in the name, and
at the expense, of the Company, (ii) the Company has irrevocably deposited or
caused to be deposited with the Trustee money, U.S. Government Obligations, or
a combination thereof, sufficient to pay and discharge the entire indebtedness
on the Notes not previously delivered to the Trustee for cancellation, for
principal, premium, if any, and interest to the date of deposit; (iii) the
Company has paid or caused to be paid all other sums payable under the
Indenture by the Company; and (iv) the Company has delivered to the Trustee an
Officer's Certificate and an Opinion of Counsel each to the effect that all
conditions precedent under the "Satisfaction and Discharge" section of the
Indenture relating to the satisfaction and discharge of the Indenture have
been complied with, provided that any such counsel may rely on any Officer's
Certificate as to matters of fact (including as to compliance with the
foregoing clauses (i), (ii) and (iii)).
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES, INCORPORATORS AND
STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of the Company,
Holding, any Note Guarantor or any Subsidiary of any thereof shall have any
liability for any obligation of the Company, Holding or any Note Guarantor
under the Indenture, the Notes, the Parent Guarantee or any Note Guarantee, or
for any claim based on, in respect of, or by reason of, any such obligation or
its creation. Each Noteholder, by accepting the Notes, waives and releases all
such liability. The waiver and release are part of the consideration for
issuance of the Notes.
CONCERNING THE TRUSTEE
State Street Bank and Trust Company is the Trustee under the Indenture and
has been appointed by the Company as Registrar and Paying Agent with regard to
the Notes.
The Indenture will provide that, except during the continuance of an Event
of Default, the Trustee will perform only such duties as are set forth
specifically in the Indenture. During the existence of an Event of Default,
the Trustee will exercise such of the rights and powers vested in it under the
Indenture and use the same degree of care and skill in its exercise as a
prudent person would exercise under the circumstances in the conduct of such
person's own affairs.
The Indenture and the TIA will impose certain limitations on the rights of
the Trustee, should it become a creditor of the Company, to obtain payment of
claims in certain cases or to realize on certain property received by it in
respect of any such claims, as security or otherwise. The Trustee is permitted
to engage in other transactions; provided, that if it acquires any conflicting
interest as described in the TIA, it must eliminate such conflict, apply to
the SEC for permission to continue as Trustee with such conflict, or resign.
GOVERNING LAW
The Indenture provides that it and the Notes will be governed by, and
construed in accordance with, the laws of the State of New York, without
giving effect to any principles of conflict of laws to the extent that the
application of the law of another jurisdiction would be required thereby.
CERTAIN DEFINITIONS
"Additional Assets" means (i) any property or assets that replace the
property or assets that are the subject of an Asset Disposition; (ii) any
property or assets (other than Indebtedness and Capital Stock) to be used by
the Company or a Restricted Subsidiary in a Related Business; (iii) the
Capital Stock of a Person that is engaged in
98
<PAGE>
a Related Business and becomes a Restricted Subsidiary as a result of the
acquisition of such Capital Stock by the Company or another Restricted
Subsidiary; or (iv) Capital Stock of any Person that at such time is a
Restricted Subsidiary, acquired from a third party.
"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 the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"all or substantially all" has the meaning given to such phrase in the
Revised Model Business Corporation Act and commentary thereto.
"Asset Disposition" means any sale, lease, transfer or other disposition of
shares of Capital Stock of a Restricted Subsidiary (other than directors'
qualifying shares, or (in the case of a Foreign Subsidiary) to the extent
required by applicable law), property or other assets (each referred to for
the purposes of this definition as a "disposition") by the Company or any of
its Restricted Subsidiaries (including any disposition by means of a merger,
consolidation or similar transaction), other than (i) a disposition to the
Company or a Restricted Subsidiary, (ii) a disposition in the ordinary course
of business, (iii) the sale or discount (with or without recourse, and on
customary or commercially reasonable terms) of accounts receivable or notes
receivable arising in the ordinary course of business, or the conversion or
exchange of accounts receivable for notes receivable, (iv) any Restricted
Payment Transaction, (v) a disposition that is governed by the provisions
described under "--Merger and Consolidation", (vi) any Financing Disposition,
(vii) any "fee in lieu" or other disposition of assets to any governmental
authority or agency that continue in use by the Company or any Restricted
Subsidiary, so long as the Company or any Restricted Subsidiary may obtain
title to such assets upon reasonable notice by paying a nominal fee, (viii)
any exchange of like property pursuant to Section 1031 (or any successor
section) of the Code, (ix) any financing transaction with respect to property
built or acquired by the Company or any Restricted Subsidiary after the Issue
Date, including without limitation any sale/leaseback transaction or asset
securitization, (x) any disposition arising from foreclosure, condemnation or
similar action with respect to any property or other assets, (xi) any
disposition of Capital Stock, Indebtedness or other securities of an
Unrestricted Subsidiary, (xii) a disposition of Capital Stock of a Restricted
Subsidiary pursuant to an agreement or other obligation with or to a Person
(other than the Company or a Restricted Subsidiary) from whom such Restricted
Subsidiary was acquired, or from whom such Restricted Subsidiary acquired its
business and assets (having been newly formed in connection with such
acquisition), entered into in connection with such acquisition, (xiii) a
disposition of not more than 5% of the outstanding Capital Stock of a Foreign
Subsidiary that has been approved by the Board of Directors, or (xiv) any
disposition or series of related dispositions for aggregate consideration not
to exceed $2.5 million.
"Average Life" means, as of the date of determination, with respect to any
Indebtedness or Preferred Stock, the quotient obtained by dividing (i) the sum
of the products of the numbers of years from the date of determination to the
dates of each successive scheduled principal payment of such Indebtedness or
redemption or similar payment with respect to such Preferred Stock multiplied
by the amount of such payment by (ii) the sum of all such payments.
"Bank Indebtedness" means any and all amounts, whether outstanding on the
Issue Date or thereafter incurred, payable under or in respect of the Senior
Credit Facility, including without limitation principal, premium (if any),
interest (including interest accruing on or after the filing of any petition
in bankruptcy or for reorganization relating to the Company or any Restricted
Subsidiary whether or not a claim for post-filing interest is allowed in such
proceedings), fees, charges, expenses, reimbursement obligations, guarantees,
other monetary obligations of any nature and all other amounts payable
thereunder or in respect thereof.
"Board of Directors" means the board of directors or other governing body of
the Company or, if the Company is owned or managed by a single entity, the
board of directors or other governing body of such entity, or, in either case,
any committee thereof duly authorized to act on behalf of such board or
governing body.
99
<PAGE>
"Borrowing Base" means the sum (determined as of the end of the most
recently ended fiscal quarter for which consolidated financial statements of
the Company are available) of (1) 60% of Inventory of the Company and its
Restricted Subsidiaries and (2) 80% of Receivables of the Company and its
Restricted Subsidiaries.
"Business Day" means a day other than a Saturday, Sunday or other day on
which commercial banking institutions are authorized or required by law to
close in New York City.
"Capital Stock" of any Person means any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any
Preferred Stock, but excluding any debt securities convertible into such
equity.
"Capitalized Lease Obligation" means an obligation that is required to be
classified and accounted for as a capitalized lease for financial reporting
purposes in accordance with GAAP. The Stated Maturity of any Capitalized Lease
Obligation shall be the date of the last payment of rent or any other amount
due under the related lease.
"Cash Equivalents" means any of the following: (a) securities issued or
fully guaranteed or insured by the United States Government or any agency or
instrumentality thereof, (b) time deposits, certificates of deposit or
bankers' acceptances of (i) any lender under the Senior Credit Agreement or
(ii) any commercial bank having capital and surplus in excess of $500,000,000
and the commercial paper of the holding company of which is rated at least A-1
or the equivalent thereof by S&P or at least P-1 or the equivalent thereof by
Moody's (or if at such time neither is issuing ratings, then a comparable
rating of another nationally recognized rating agency), (c) commercial paper
rated at least A-1 or the equivalent thereof by S&P or at least P-1 or the
equivalent thereof by Moody's (or if at such time neither is issuing ratings,
then a comparable rating of another nationally recognized rating agency) and
(d) investments in money market funds complying with the risk limiting
conditions of Rule 2a-7 or any successor rule of the SEC under the Investment
Company Act of 1940, as amended.
"CDR" means Clayton, Dubilier & Rice, Inc.
"CDR Fund V" means Clayton, Dubilier & Rice Fund V Limited Partnership, a
Cayman Islands exempted limited partnership, and any successor in interest
thereto.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means, until the consummation of the Second Merger, Holding and
TTC Merger Co., and from and after such consummation, Telecommunications
Techniques Co., LLC, a Delaware limited liability company, and any successor
in interest thereto.
"Consolidated Coverage Ratio" as of any date of determination means the
ratio of (i) the aggregate amount of Consolidated EBITDA of the Company and
its Restricted Subsidiaries for the period of the most recent four consecutive
fiscal quarters ending prior to the date of such determination for which
consolidated financial statements of the Company are available to (ii)
Consolidated Interest Expense for such four fiscal quarters (in each case,
determined, for each fiscal quarter (or portion thereof) of the four fiscal
quarters ending prior to the Issue Date, on a pro forma basis to give effect
to the Recapitalization as if it had occurred at the beginning of such four-
quarter period); provided, that
(1) if since the beginning of such period the Company or any Restricted
Subsidiary has Incurred any Indebtedness that remains outstanding on such
date of determination or if the transaction giving rise to the need to
calculate the Consolidated Coverage Ratio is an Incurrence of Indebtedness,
Consolidated EBITDA and Consolidated Interest Expense for such period shall
be calculated after giving effect on a pro forma basis to such Indebtedness
as if such Indebtedness had been Incurred on the first day of such period
(except that in making such computation, the amount of Indebtedness under
any revolving credit facility outstanding on the date of such calculation
shall be computed based on (A) the average daily balance of such
100
<PAGE>
Indebtedness during such four fiscal quarters or such shorter period for
which such facility was outstanding or (B) if such facility was created
after the end of such four fiscal quarters, the average daily balance of
such Indebtedness during the period from the date of creation of such
facility to the date of such calculation),
(2) if since the beginning of such period the Company or any Restricted
Subsidiary has repaid, repurchased, redeemed, defeased or otherwise
acquired, retired or discharged any Indebtedness (each, a "Discharge") or
if the transaction giving rise to the need to calculate the Consolidated
Coverage Ratio involves a Discharge of Indebtedness (in each case other
than Indebtedness Incurred under any revolving credit facility unless such
Indebtedness has been permanently repaid), Consolidated EBITDA and
Consolidated Interest Expense for such period shall be calculated after
giving effect on a pro forma basis to such Discharge of such Indebtedness,
including with the proceeds of such new Indebtedness, as if such Discharge
had occurred on the first day of such period,
(3) if since the beginning of such period the Company or any Restricted
Subsidiary shall have disposed of any company, any business or any group of
assets constituting an operating unit of a business (any such disposition,
a "Sale"), the Consolidated EBITDA for such period shall be reduced by an
amount equal to the Consolidated EBITDA (if positive) attributable to the
assets that are the subject of such Sale for such period or increased by an
amount equal to the Consolidated EBITDA (if negative) attributable thereto
for such period and Consolidated Interest Expense for such period shall be
reduced by an amount equal to (A) the Consolidated Interest Expense
attributable to any Indebtedness of the Company or any Restricted
Subsidiary repaid, repurchased, redeemed, defeased or otherwise acquired,
retired or discharged with respect to the Company and its continuing
Restricted Subsidiaries in connection with such Sale for such period
(including but not limited to through the assumption of such Indebtedness
by another Person) plus (B) if the Capital Stock of any Restricted
Subsidiary is sold, the Consolidated Interest Expense for such period
attributable to the Indebtedness of such Restricted Subsidiary to the
extent the Company and its continuing Restricted Subsidiaries are no longer
liable for such Indebtedness after such Sale,
(4) if since the beginning of such period the Company or any Restricted
Subsidiary (by merger, consolidation or otherwise) shall have made an
Investment in any Person that thereby becomes a Restricted Subsidiary, or
otherwise acquired any company, any business or any group of assets
constituting an operating unit of a business, including any such Investment
or acquisition occurring in connection with a transaction causing a
calculation to be made hereunder (any such Investment or acquisition, a
"Purchase"), Consolidated EBITDA and Consolidated Interest Expense for such
period shall be calculated after giving pro forma effect thereto (including
the Incurrence of any related Indebtedness) as if such Purchase occurred on
the first day of such period, and
(5) if since the beginning of such period any Person became a Restricted
Subsidiary or was merged or consolidated with or into the Company or any
Restricted Subsidiary, and since the beginning of such period such Person
shall have Discharged any Indebtedness or made any Sale or Purchase that
would have required an adjustment pursuant to clause (2), (3) or (4) above
if made by the Company or a Restricted Subsidiary during such period,
Consolidated EBITDA and Consolidated Interest Expense for such period shall
be calculated after giving pro forma effect thereto as if such Discharge,
Sale or Purchase occurred on the first day of such period.
For purposes of this definition, whenever pro forma effect is to be given to
any Sale, Purchase or other transaction, or the amount of income or earnings
relating thereto and the amount of Consolidated Interest Expense associated
with any Indebtedness Incurred or repaid, repurchased, redeemed, defeased or
otherwise acquired, retired or discharged in connection therewith, the pro
forma calculations in respect thereof (including without limitation in respect
of anticipated cost savings or synergies relating to any such Sale, Purchase
or other transaction) shall be as determined in good faith by a responsible
financial or accounting Officer of the Company. If any Indebtedness bears a
floating rate of interest and is being given pro forma effect, the interest
expense on such Indebtedness shall be calculated as if the rate in effect on
the date of determination had been the applicable rate for the entire period
(taking into account any Interest Rate Agreement applicable to such
Indebtedness). If
101
<PAGE>
any Indebtedness bears, at the option of the Company or a Restricted
Subsidiary, a rate of interest based on a prime or similar rate, a
eurocurrency interbank offered rate or other fixed or floating rate, and such
Indebtedness is being given pro forma effect, the interest expense on such
Indebtedness shall be calculated by applying such optional rate as the Company
or such Restricted Subsidiary may designate. If any Indebtedness that is being
given pro forma effect was Incurred under a revolving credit facility, the
interest expense on such Indebtedness shall be computed based upon the average
daily balance of such Indebtedness during the applicable period. Interest on a
Capitalized Lease Obligation shall be deemed to accrue at an interest rate
determined in good faith by a responsible financial or accounting officer of
the Company to be the rate of interest implicit in such Capitalized Lease
Obligation in accordance with GAAP.
"Consolidated EBITDA" means, for any period, the Consolidated Net Income for
such period, plus the following to the extent deducted in calculating such
Consolidated Net Income: (i) provision for all taxes (whether or not paid,
estimated or accrued) based on income, profits or capital, (ii) Consolidated
Interest Expense and any Receivables Fees, (iii) depreciation, amortization
(including but not limited to amortization of goodwill and intangibles and
amortization and write-off of financing costs) and all other non-cash charges
or non-cash losses, (iv) any expenses or charges related to any Equity
Offering, Investment or Indebtedness permitted by the Indenture (whether or
not consummated or incurred) and (v) the amount of any minority interest
expense.
"Consolidated Interest Expense" means, for any period, (i) the total
interest expense of the Company and its Restricted Subsidiaries to the extent
deducted in calculating Consolidated Net Income, net of any interest income of
the Company and its Restricted Subsidiaries, including without limitation any
such interest expense consisting of (a) interest expense attributable to
Capitalized Lease Obligations, (b) amortization of debt discount, (c) interest
in respect of Indebtedness of any other Person that has been Guaranteed by the
Company or any Restricted Subsidiary, but only to the extent that such
interest is actually paid by the Company or any Restricted Subsidiary, (d)
non-cash interest expense, (e) the interest portion of any deferred payment
obligation, and (f) commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers' acceptance financing, plus (ii)
Preferred Stock dividends paid in cash in respect of Disqualified Stock of the
Company held by Persons other than the Company or a Restricted Subsidiary and
minus (iii) to the extent otherwise included in such interest expense referred
to in clause (i) above, Receivables Fees and amortization or write-off of
financing costs, in each case under clauses (i) through (iii) as determined on
a Consolidated basis in accordance with GAAP; provided, that gross interest
expense shall be determined after giving effect to any net payments made or
received by the Company and its Restricted Subsidiaries with respect to
Interest Rate Agreements.
"Consolidated Net Income" means, for any period, the net income (loss) of
the Company and its Restricted Subsidiaries, determined on a consolidated
basis in accordance with GAAP and before any reduction in respect of Preferred
Stock dividends; provided, that there shall not be included in such
Consolidated Net Income:
(i) any net income (loss) of any Person if such Person is not a
Restricted Subsidiary, except that (A) subject to the limitations contained
in clause (iv) below, the Company's equity in the net income of any such
Person for such period shall be included in such Consolidated Net Income up
to the aggregate amount actually distributed by such Person during such
period to the Company or a Restricted Subsidiary as a dividend or other
distribution (subject, in the case of a dividend or other distribution to a
Restricted Subsidiary, to the limitations contained in clause (iii) below)
and (B) the Company's equity in the net loss of such Person shall be
included to the extent of the aggregate Investment of the Company or any of
its Restricted Subsidiaries in such Person,
(ii) any net income (loss) of any Person acquired by the Company or a
Restricted Subsidiary in a pooling of interests transaction for any period
prior to the date of such acquisition,
(iii) any net income (loss) of any Restricted Subsidiary that is not a
Note Guarantor if such Restricted Subsidiary is subject to restrictions,
directly or indirectly, on the payment of dividends or the making of
similar distributions by such Restricted Subsidiary, directly or
indirectly, to the Company by operation of the terms of such Restricted
Subsidiary's charter or any agreement, instrument, judgment, decree, order,
102
<PAGE>
statute or governmental rule or regulation applicable to such Restricted
Subsidiary or its stockholders (other than (x) restrictions that have been
waived or otherwise released, (y) restrictions pursuant to the Notes or the
Indenture and (z) restrictions in effect on the Issue Date with respect to
a Restricted Subsidiary and other restrictions with respect to such
Restricted Subsidiary that taken as a whole are not materially less
favorable to the Noteholders than such restrictions in effect on the Issue
Date), except that (A) subject to the limitations contained in clause (iv)
below, the Company's equity in the net income of any such Restricted
Subsidiary for such period shall be included in such Consolidated Net
Income up to the aggregate amount of any dividend or distribution that was
or that could have been made by such Restricted Subsidiary during such
period to the Company or another Restricted Subsidiary (subject, in the
case of a dividend that could have been made to another Restricted
Subsidiary, to the limitation contained in this clause) and (B) the net
loss of such Restricted Subsidiary shall be included to the extent of the
aggregate Investment of the Company or any of its other Restricted
Subsidiaries in such Restricted Subsidiary,
(iv) any gain or loss realized upon the sale or other disposition of any
asset of the Company or any Restricted Subsidiary (including pursuant to
any sale/leaseback transaction) that is not sold or otherwise disposed of
in the ordinary course of business (as determined in good faith by the
Board of Directors),
(v) any item classified as an extraordinary, unusual or nonrecurring
gain, loss or charge (including without limitation (a) any compensation
expense for stock options that will be cashed out, converted, exchanged or
otherwise retired in connection with the Recapitalization, (b) any charge
or expense incurred for employee bonuses in connection with the
Recapitalization, and (c) fees, expenses and charges associated with the
Recapitalization or any acquisition, merger or consolidation after the
Issue Date),
(vi) the cumulative effect of a change in accounting principles,
(vii) all deferred financing costs written off and premiums paid in
connection with any early extinguishment of Indebtedness,
(viii) any unrealized gains or losses in respect of Currency Agreements,
(ix) any unrealized foreign currency transaction gains or losses in
respect of Indebtedness of any Person denominated in a currency other than
the functional currency of such Person, and
(x) any non-cash compensation charge arising from any grant of stock,
stock options or other equity based awards.
In the case of any unusual or nonrecurring gain, loss or charge not included
in Consolidated Net Income pursuant to clause (v) above in any determination
thereof, the Company will deliver an Officer's Certificate to the Trustee
promptly after the date on which Consolidated Net Income is so determined,
setting forth the nature and amount of such unusual or nonrecurring gain, loss
or charge.
"Consolidated Total Assets" means, as of any date of determination, the
total assets shown on the consolidated balance sheet of the Company and its
Restricted Subsidiaries as of the most recent date for which such a balance
sheet is available, determined on a consolidated basis in accordance with GAAP
(and, in the case of any determination relating to any Incurrence of
Indebtedness or any Investment, on a pro forma basis including any property or
assets being acquired in connection therewith), provided that for purposes of
paragraph (b) of the covenant described in "--Certain Covenants--Limitation on
Indebtedness" and the definition of "Permitted Investment," Consolidated Total
Assets shall not be less than $285.3 million. At December 31, 1997, on a pro
forma basis giving effect to the Recapitalization and the issuance of the
Notes, Consolidated Total Assets was $285.3 million. See "Unaudited Pro Forma
Condensed Consolidated Financial Information."
"Consolidation" means the consolidation of the accounts of each of the
Restricted Subsidiaries with those of the Company in accordance with GAAP;
provided that "Consolidation" will not include consolidation of the accounts
of any Unrestricted Subsidiary, but the interest of the Company or any
Restricted Subsidiary in any Unrestricted Subsidiary will be accounted for as
an investment. The term "Consolidated" has a correlative meaning.
103
<PAGE>
"Currency Agreement" means, in respect of a Person, any foreign exchange
contract, currency swap agreement or other similar agreement or arrangements
(including derivative agreements or arrangements), as to which such Person is
a party or a beneficiary.
"Default" means any event or condition that is, or after notice or passage
of time or both would be, an Event of Default.
"Designated Senior Indebtedness" means (i) the Bank Indebtedness and (ii)
any other Senior Indebtedness that, at the date of determination, has an
aggregate principal amount equal to or under which, at the date of
determination, the holders thereof are committed to lend up to, at least $10.0
million and is specifically designated by the Company in an agreement or
instrument evidencing or governing such Senior Indebtedness as "Designated
Senior Indebtedness" for purposes of the Indenture.
"Disinterested Director" means, with respect to any Affiliate Transaction, a
member of the Board of Directors having no material direct or indirect
financial interest in or with respect to such Affiliate Transaction. A member
of the Board of Directors shall not be deemed to have such a financial
interest by reason of such member's holding Capital Stock of the Company or
Holding or any options, warrants or other rights in respect of such Capital
Stock.
"Disqualified Stock" means, with respect to any Person, any Capital Stock
(other than Management Stock) that by its terms (or by the terms of any
security into which it is convertible or for which it is exchangeable or
exercisable) or upon the happening of any event (other than following the
occurrence of a Change of Control or other similar event described under such
terms as a "change of control," or an Asset Disposition) (i) matures or is
mandatorily redeemable pursuant to a sinking fund obligation or otherwise,
(ii) is convertible or exchangeable for Indebtedness or Disqualified Stock or
(iii) is redeemable at the option of the holder thereof (other than following
the occurrence of a Change of Control or other similar event described under
such terms as a "change of control," or an Asset Disposition), in whole or in
part, in each case on or prior to the final Stated Maturity of the Notes.
"Domestic Subsidiary" means any Restricted Subsidiary of the Company other
than a Foreign Subsidiary.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Contribution" means Net Cash Proceeds, or the fair value, as
determined in good faith by the Board of Directors, of property or assets,
received by the Company as capital contributions to the Company after the
Issue Date or from the issuance or sale (other than to a Restricted
Subsidiary) of Capital Stock (other than Disqualified Stock) of the Company,
in each case to the extent designated as an Excluded Contribution pursuant to
an Officer's Certificate of the Company and not previously included in the
calculation set forth in subparagraph (a)(3)(B)(x) of the covenant described
under "--Certain Covenants--Limitation on Restricted Payments" for purposes of
determining whether a Restricted Payment may be made.
"Financing Disposition" means any sale, transfer, conveyance or other
disposition of property or assets by the Company or any Subsidiary thereof to
any Receivables Entity, or by any Receivables Subsidiary, in each case in
connection with the Incurrence by a Receivables Entity of Indebtedness, or
obligations to make payments to the obligor on Indebtedness, which may be
secured by a Lien in respect of such property or assets.
"Foreign Subsidiary" means (a) any Restricted Subsidiary of the Company that
is not organized under the laws of the United States of America or any state
thereof or the District of Columbia and (b) any Restricted Subsidiary of the
Company that has no material assets other than securities of one or more
Foreign Subsidiaries, and other assets relating to an ownership interest in
any such securities or Subsidiaries.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect on the Issue Date (for purposes of the definitions of
the terms "Consolidated Coverage Ratio," "Consolidated
104
<PAGE>
EBITDA," "Consolidated Interest Expense," "Consolidated Net Income" and
"Consolidated Total Assets," all defined terms in the Indenture to the extent
used in or relating to any of the foregoing definitions, and all ratios and
computations based on any of the foregoing definitions) and as in effect from
time to time (for all other purposes of the Indenture), including those set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession. All ratios and computations based on GAAP contained in
the Indenture shall be computed in conformity with GAAP.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness or other obligation of
any other Person; provided that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.
"Guarantor Senior Indebtedness" means, with respect to any Note Guarantor,
the following obligations, whether outstanding on the date of the Indenture or
thereafter issued, without duplication: (i) any Guarantee of Bank Indebtedness
by such Note Guarantor and all other Guarantees by such Note Guarantor of
Senior Indebtedness of the Company or Guarantor Senior Indebtedness of any
other Note Guarantor; (ii) all obligations in respect of any Receivables
Financing; and (iii) all obligations consisting of the principal of and
premium, if any, and accrued and unpaid interest (including interest accruing
on or after the filing of any petition in bankruptcy or for reorganization
relating to the Note Guarantor regardless of whether post-filing interest is
allowed in such proceeding) on, and fees and other amounts owing in respect
of, all other Indebtedness of the Note Guarantor, unless, in the instrument
creating or evidencing the same or pursuant to which the same is outstanding,
it is expressly provided that the obligations in respect of such Indebtedness
are not senior in right of payment to the obligations of such Note Guarantor
under its Note Guarantee; provided, however, that Guarantor Senior
Indebtedness shall not include (1) any obligations of such Note Guarantor to
the Company or any other Subsidiary of the Company, (2) any liability for
Federal, state, local, foreign or other taxes owed or owing by such Note
Guarantor, (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 of such Note
Guarantor (or Guarantee by such Note Guarantor of Indebtedness) that is
expressly subordinated in right of payment to any other Indebtedness of such
Note Guarantor (or Guarantee by such Note Guarantor of Indebtedness), (5) any
Capital Stock of such Note Guarantor or (6) that portion of any Indebtedness
of such Note Guarantor that is Incurred by such Note Guarantor in violation of
the covenant described under "--Certain Covenants--Limitation on Indebtedness"
(but no such violation shall be deemed to exist for purposes of this clause
(6) if any holder of such Indebtedness or such holder's representative shall
have received an Officer's Certificate to the effect that such Incurrence of
such Indebtedness does not (or that the Incurrence by such Note Guarantor of
the entire committed amount thereof at the date on which the initial borrowing
thereunder is made would not) violate such covenant). If any Guarantor 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 Guarantor Senior Indebtedness nevertheless
will constitute Guarantor Senior Indebtedness.
"Guarantor Senior Subordinated Indebtedness" means, with respect to a Note
Guarantor, (i) the obligations of such Note Guarantor under its Note Guarantee
and (ii) any other Indebtedness of such Note Guarantor that ranks pari passu
in right of payment with the obligations of such Note Guarantor under its Note
Guarantee.
"Guarantor Subordinated Obligations" means, with respect to a Note
Guarantor, any Indebtedness of such Note Guarantor (whether outstanding on the
Issue Date or thereafter Incurred) that is expressly subordinated in right of
payment to the obligations of such Note Guarantor under the Note Guarantee
pursuant to a written agreement.
"Hedging Obligations" of any Person means the obligations of such Person
pursuant to any Interest Rate Agreement or Currency Agreement.
105
<PAGE>
"Holder" or "Noteholder" means the Person in whose name a Note is registered
in the Note Register.
"Holding" means Dynatech Corporation, a Massachusetts corporation, and any
successor in interest thereto.
"Holding Expenses" means (i) costs (including all professional fees and
expenses) incurred by Holding to comply with its reporting obligations under
federal or state laws or under the Indenture, including any reports filed with
respect to the Securities Act, Exchange Act or the respective rules and
regulations promulgated thereunder, (ii) indemnification obligations of
Holding owing to directors, officers, employees or other Persons under its
charter or by-laws or pursuant to written agreements with any such Person,
(iii) fees and expenses payable by Holding in connection with the
Transactions, (iv) other operational expenses of Holding incurred in the
ordinary course of business, and (v) expenses incurred by Holding in
connection with any public offering of Capital Stock or Indebtedness (x) where
the net proceeds of such offering are intended to be received by or
contributed or loaned to the Company or a Restricted Subsidiary, or (y) in a
prorated amount of such expenses in proportion to the amount of such net
proceeds intended to be so received, contributed or loaned, or (z) otherwise
on an interim basis prior to completion of such offering so long as Holding
shall cause the amount of such expenses to be repaid to the Company or the
relevant Restricted Subsidiary out of the proceeds of such offering promptly
if completed.
"Incur" means issue, assume, enter into any Guarantee of, incur or otherwise
become liable for; provided, however, that any Indebtedness or Capital Stock
of a Person existing at the time such Person becomes a Subsidiary (whether by
merger, consolidation, acquisition or otherwise) shall be deemed to be
Incurred by such Subsidiary at the time it becomes a Subsidiary. Accrual of
interest, the accretion of accreted value and the payment of interest in the
form of additional Indebtedness will not be deemed to be an Incurrence of
Indebtedness. Any Indebtedness issued at a discount (including Indebtedness on
which interest is payable through the issuance of additional Indebtedness)
shall be deemed Incurred at the time of original issuance of the Indebtedness
at the initial accreted amount thereof.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication):
(i) the principal of indebtedness of such Person for borrowed money,
(ii) the principal of obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments,
(iii) all reimbursement obligations of such Person in respect of letters
of credit or other similar instruments (the amount of such obligations
being equal at any time to the aggregate then undrawn and unexpired amount
of such letters of credit or other instruments plus the aggregate amount of
drawings thereunder that have not then been reimbursed),
(iv) all obligations of such Person to pay the deferred and unpaid
purchase price of property (except Trade Payables), which purchase price is
due more than one year after the date of placing such property in final
service or taking final delivery and title thereto,
(v) all Capitalized Lease Obligations of such Person,
(vi) the redemption, repayment or other repurchase amount of such Person
with respect to any Disqualified Stock of such Person or (if such Person is
a Subsidiary of the Company other than a Note Guarantor) any Preferred
Stock of such Subsidiary, but excluding, in each case, any accrued
dividends (the amount of such obligation to be equal at any time to the
maximum fixed involuntary redemption, repayment or repurchase price for
such Capital Stock, or if less (or if such Capital Stock has no such fixed
price), to the involuntary redemption, repayment or repurchase price
therefor calculated in accordance with the terms thereof as if then
redeemed, repaid or repurchased, and if such price is based upon or
measured by the fair market value of such Capital Stock, such fair market
value shall be as determined in good faith by the Board of Directors or the
board of directors or other governing body of the issuer of such Capital
Stock),
106
<PAGE>
(vii) all Indebtedness of other Persons secured by a Lien on any asset of
such Person, whether or not such Indebtedness is assumed by such Person;
provided that the amount of Indebtedness of such Person shall be the lesser
of (A) the fair market value of such asset at such date of determination
(as determined in good faith by the Company) and (B) the amount of such
Indebtedness of such other Persons,
(viii) all Indebtedness of other Persons to the extent Guaranteed by such
Person, and
(ix) to the extent not otherwise included in this definition, net Hedging
Obligations of such Person (the amount of any such obligation to be equal
at any time to the termination value of such agreement or arrangement
giving rise to such Hedging Obligation that would be payable by such Person
at such time).
The amount of Indebtedness of any Person at any date shall be determined as
set forth above or otherwise provided in the Indenture, or otherwise shall
equal the amount thereof that would appear on a balance sheet of such Person
(excluding any notes thereto) prepared in accordance with GAAP.
"Interest Rate Agreement" means, with respect to any Person, any interest
rate protection agreement, interest rate future agreement, interest rate
option agreement, interest rate swap agreement, interest rate cap agreement,
interest rate collar agreement, interest rate hedge agreement or other similar
agreement or arrangement (including derivative agreements or arrangements), as
to which such Person is party or a beneficiary.
"Inventory" means goods held for sale or lease by a Person in the ordinary
course of business, net of any reserve for goods that have been segregated by
such Person to be returned to the applicable vendor for credit, as determined
in accordance with GAAP.
"Investment" in any Person by any other Person means any direct or indirect
advance, loan or other extension of credit (other than to customers,
suppliers, directors, officers or employees of any Person in the ordinary
course of business) or capital contribution (by means of any transfer of cash
or other property to others or any payment for property or services for the
account or use of others) to, or any purchase or acquisition of Capital Stock,
Indebtedness or other similar instruments issued by, such Person. For purposes
of the definition of "Unrestricted Subsidiary" and the covenant described
under "--Certain Covenants--Limitation on Restricted Payments," (i)
"Investment" shall include the portion (proportionate to the Company's equity
interest in such Subsidiary) of the fair market value of the net assets of any
Subsidiary of the Company at the time that such Subsidiary is designated an
Unrestricted Subsidiary, provided that upon a redesignation of such Subsidiary
as a Restricted Subsidiary, the Company shall be deemed to continue to have a
permanent "Investment" in an Unrestricted Subsidiary in an amount (if
positive) equal to (x) the Company's "Investment" in such Subsidiary at the
time of such redesignation less (y) the portion (proportionate to the
Company's equity interest in such Subsidiary) of the fair market value of the
net assets of such Subsidiary at the time of such redesignation, (ii) any
property transferred to or from an Unrestricted Subsidiary shall be valued at
its fair market value at the time of such transfer, and (iii) in each case
under clause (i) or (ii) above, fair market value shall be as determined in
good faith by the Board of Directors. Guarantees shall not be deemed to be
Investments. The amount of any Investment outstanding at any time shall be the
original cost of such Investment, reduced (at the Company's option) by any
dividend, distribution, interest payment, return of capital, repayment or
other amount or value received in respect of such Investment; provided, that
to the extent that the amount of Restricted Payments outstanding at any time
is so reduced by any portion of any such amount or value that would otherwise
be included in the calculation of Consolidated Net Income, such portion of
such amount or value shall not be so included for purposes of calculating the
amount of Restricted Payments that may be made pursuant to paragraph (a) of
the covenant described under "--Certain Covenants--Limitation on Restricted
Payments."
"Investors" means CDR Fund V and John F. Reno or his family members or
relatives, or trusts for the benefit of any of the foregoing, or any of their
heirs, executors, successors and legal representatives.
"Issue Date" means the first date on which Notes are issued.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
107
<PAGE>
"Management Advances" means (1) loans or advances made to directors,
officers or employees of Holding, the Company or any Restricted Subsidiary (x)
in respect of travel, entertainment or moving-related expenses incurred in the
ordinary course of business, (y) in respect of moving-related expenses
incurred in connection with any closing or consolidation of any facility, or
(z) in the ordinary course of business and (in the case of this clause (z))
not exceeding $2.5 million in the aggregate outstanding at any time, (2)
promissory notes of Management Investors acquired in connection with the
issuance of Management Stock to such Management Investors, (3) Management
Guarantees, or (4) other Guarantees of borrowings by Management Investors in
connection with the purchase of Management Stock, which Guarantees are
permitted under the covenant described under "--Certain Covenants--Limitation
on Indebtedness."
"Management Agreements" means, collectively, the Consulting Agreement and
the Indemnification Agreement, each dated as of May 21, 1998, each between the
Company and CDR (and its permitted successors and assigns thereunder), as each
may be amended, supplemented, waived or otherwise modified from time to time
in accordance with the terms thereof and of the Indenture.
"Management Guarantees" means guarantees (x) of up to an aggregate principal
amount of $20.0 million of borrowings by Management Investors in connection
with their purchase of Management Stock or (y) made on behalf of, or in
respect of loans or advances made to, directors, officers or employees of
Holding, the Company or any Restricted Subsidiary (1) in respect of travel,
entertainment and moving-related expenses incurred in the ordinary course of
business, or (2) in the ordinary course of business and (in the case of this
clause (2)) not exceeding $2.5 million in the aggregate outstanding at any
time.
"Management Investors" means the officers, directors, employees and other
members of the management of Holding, the Company or any of their respective
Subsidiaries, or family members or relatives thereof, or trusts or
partnerships for the benefit of any of the foregoing, or any of their heirs,
executors, successors and legal representatives, who at any date beneficially
own or have the right to acquire, directly or indirectly, Capital Stock of the
Company or Holding.
"Management Stock" means Capital Stock of the Company or Holding (including
any options, warrants or other rights in respect thereof) held by any of the
Management Investors.
"Merger" means the merger of MergerCo with and into Holding, with Holding
the surviving corporation, on the date of the Recapitalization.
"Moody's" means Moody's Investors Service, Inc., and its successors.
"Net Available Cash" from an Asset Disposition means cash payments received
(including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or otherwise, but only as and
when received, but excluding any other consideration received in the form of
assumption by the acquiring person of Indebtedness or other obligations
relating to the properties or assets that are the subject of such Asset
Disposition or received in any other non-cash form) therefrom, in each case
net of (i) all legal, title and recording tax expenses, commissions and other
fees and expenses incurred, and all Federal, state, provincial, foreign and
local taxes required to be paid or accrued as a liability under GAAP, as a
consequence of such Asset Disposition (including as a consequence of any
transfer of funds in connection with the application thereof in accordance
with the covenant described under "--Certain Covenants--Limitation on Sales of
Assets and Subsidiary Stock"), (ii) all payments made, and all installment
payments required to be made, on any Indebtedness that is secured by any
assets subject to such Asset Disposition, in accordance with the terms of any
Lien upon such assets, or that must by its terms, or in order to obtain a
necessary consent to such Asset Disposition, or by applicable law, be repaid
out of the proceeds from such Asset Disposition, (iii) all distributions and
other payments required to be made to minority interest holders in
Subsidiaries or joint ventures as a result of such Asset Disposition, or to
any other Person (other than the Company or a Restricted Subsidiary) owning a
beneficial interest in the assets disposed of in such Asset Disposition and
(iv) any liabilities or obligations associated with the assets disposed of in
such Asset Disposition and retained by the Company or any
108
<PAGE>
Restricted Subsidiary after such Asset Disposition, including without
limitation pension and other post-employment benefit liabilities, liabilities
related to environmental matters, and liabilities relating to any
indemnification obligations associated with such Asset Disposition.
"Net Cash Proceeds," with respect to any issuance or sale of any securities
of the Company or any Subsidiary by the Company or any Subsidiary, or any
capital contribution, means the cash proceeds of such issuance, sale or
contribution net of attorneys' fees, accountants' fees, underwriters' or
placement agents' fees, discounts or commissions and brokerage, consultant and
other fees actually incurred in connection with such issuance, sale or
contribution and net of taxes paid or payable as a result thereof.
"Note Guarantee" means any guarantee that may from time to time be entered
into by a Restricted Subsidiary of the Company pursuant to the covenant
described under "--Certain Covenants--Future Note Guarantors."
"Note Guarantor" means any Restricted Subsidiary of the Company that enters
into a Note Guarantee.
"Officer" means, with respect to the Company or any other obligor upon the
Notes, the Chairman of the Board, the President, the Chief Executive Officer,
the Chief Financial Officer, any Vice President, the Controller, the Treasurer
or the Secretary (a) of such Person or (b) if such Person is owned or managed
by a single entity, of such entity (or any other individual designated as an
"Officer" for the purposes of the Indenture by the Board of Directors).
"Officer's Certificate" means, with respect to the Company or any other
obligor upon the Notes, a certificate signed by one Officer of such Person.
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee.
"Parent Guarantee" means the Guarantee executed and delivered by Holding as
described under "--Holding Guarantee."
"Parent Senior Indebtedness" means, with respect to Holding, the following
obligations, whether outstanding on the date of the Indenture or thereafter
issued, without duplication: (i) any Guarantee of Bank Indebtedness by Holding
and all other Guarantees by Holding of Senior Indebtedness of the Company or
Guarantor Senior Indebtedness of any Note Guarantor; (ii) all obligations in
respect of any Receivables Financing; and (iii) all obligations consisting of
the principal of and premium, if any, and accrued and unpaid interest
(including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to Holding regardless of whether
post-filing interest is allowed in such proceeding) on, and fees and other
amounts owing in respect of, all other Indebtedness of Holding, unless, in the
instrument creating or evidencing the same or pursuant to which the same is
outstanding, it is expressly provided that the obligations in respect of such
Indebtedness are not senior in right of payment to the obligations of Holding
under the Parent Guarantee.
"Parent Senior Subordinated Indebtedness" means (i) the obligations of
Holding under the Parent Guarantee and (ii) any other Indebtedness of Holding
that ranks pari passu in right of payment with the obligations of Holding
under the Parent Guarantee.
"Parent Subordinated Obligations" means any Indebtedness of Holding (whether
outstanding on the Issue Date or thereafter Incurred) that is expressly
subordinated in right of payment to the obligations of Holding under the
Parent Guarantee pursuant to a written agreement.
"Permitted Holder" means any of the following: (i) any of the Investors,
Management Investors, CDR and their respective Affiliates; (ii) any investment
fund or vehicle managed, sponsored or advised by CDR; (iii) any
109
<PAGE>
limited or general partners of, or other investors in, any of the Investors
and their respective Affiliates, or any such investment fund or vehicle; and
(iv) any Person acting in the capacity of an underwriter in connection with a
public or private offering of Capital Stock of Holding or the Company.
"Permitted Investment" means an Investment by the Company or any Restricted
Subsidiary in, or consisting of, any of the following:
(i) a Restricted Subsidiary, the Company, or a Person that will, upon the
making of such Investment, become a Restricted Subsidiary;
(ii) another Person if as a result of such Investment such other Person
is merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, or is liquidated into, the Company or a
Restricted Subsidiary;
(iii) Temporary Cash Investments or Cash Equivalents;
(iv) receivables owing to the Company or any Restricted Subsidiary, if
created or acquired in the ordinary course of business;
(v) any securities or other Investments received as consideration in, or
retained in connection with, sales or other dispositions of property or
assets, including Asset Dispositions made in compliance with the covenant
described under "--Certain Covenants--Limitation on Sales of Assets and
Subsidiary Stock";
(vi) securities or other Investments received in settlement of debts
created in the ordinary course of business and owing to the Company or any
Restricted Subsidiary, or as a result of foreclosure, perfection or
enforcement of any Lien, or in satisfaction of judgments, including in
connection with any bankruptcy proceeding or other reorganization of
another Person;
(vii) Investments in existence or made pursuant to legally binding
written commitments in existence on the Issue Date;
(viii) Currency Agreements, Interest Rate Agreements and related Hedging
Obligations, which obligations are Incurred in compliance with the covenant
described under "--Certain Covenants--Limitation on Indebtedness";
(ix) pledges or deposits (x) with respect to leases or utilities provided
to third parties in the ordinary course of business or (y) otherwise
described in the definition of "Permitted Liens" or made in connection with
Liens permitted under the covenant described under "--Certain Covenants--
Limitation on Liens";
(x) any Investment in a joint venture or similar entity that is not a
Restricted Subsidiary, or in any Related Business, in an aggregate amount
outstanding at any time not to exceed 7% of Consolidated Total Assets;
(xi) (1) Investments in any Receivables Subsidiary, or in connection with
a Financing Disposition by or to any Receivables Entity, including
Investments of funds held in accounts permitted or required by the
arrangements governing such Financing Disposition or any related
Indebtedness, or (2) any promissory note issued by the Company or Holding,
provided that if Holding receives cash from the relevant Receivables Entity
in exchange for such note, an equal cash amount is contributed by Holding
to the Company;
(xii) bonds secured by assets leased to and operated by the Company or
any Restricted Subsidiary that were issued in connection with the financing
of such assets so long as the Company or any Restricted Subsidiary may
obtain title to such assets at any time by paying a nominal fee, canceling
such bonds and terminating the transaction;
(xiii) Notes;
(xiv) any Investment to the extent made using Capital Stock of the
Company (other than Disqualified Stock), or Capital Stock of Holding, as
consideration;
(xv) Management Advances; and
(xvi) other Investments in an aggregate amount outstanding at any time
not to exceed 10% of Consolidated Total Assets.
110
<PAGE>
"Permitted Liens" means:
(a) Liens for taxes, assessments or other governmental charges not yet
delinquent or the nonpayment of which in the aggregate would not reasonably be
expected to have a material adverse effect on the Company and its Restricted
Subsidiaries, or that are being contested in good faith and by appropriate
proceedings if adequate reserves with respect thereto are maintained on the
books of the Company or a Subsidiary thereof, as the case may be, in
accordance with GAAP;
(b) carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business in
respect of obligations that are not overdue for a period of more than 60 days,
or that are bonded or that are being contested in good faith and by
appropriate proceedings;
(c) pledges, deposits or Liens in connection with workers' compensation,
unemployment insurance and other social security and other similar legislation
or other insurance-related obligations (including, without limitation, pledges
or deposits securing liability to insurance carriers under insurance or self-
insurance arrangements);
(d) pledges, deposits or Liens to secure the performance of bids, tenders,
trade, government or other contracts (other than for borrowed money),
obligations for utilities, leases, licenses, statutory obligations, completion
guarantees, surety, judgment, appeal or performance bonds, other similar
bonds, instruments or obligations, and other obligations of a like nature
incurred in the ordinary course of business;
(e) easements (including reciprocal easement agreements), rights-of-way,
building, zoning and similar restrictions, utility agreements, covenants,
reservations, restrictions, encroachments, changes, and other similar
encumbrances or title defects incurred, or leases or subleases granted to
others, in the ordinary course of business, which do not in the aggregate
materially interfere with the ordinary conduct of the business of the Company
and its Subsidiaries, taken as a whole;
(f) Liens existing on, or provided for under written arrangements existing
on, the Issue Date, or (in the case of any such Liens securing Indebtedness of
the Company or any of its Subsidiaries existing or arising under written
arrangements existing on the Issue Date) securing any Refinancing Indebtedness
in respect of such Indebtedness so long as the Lien securing such Refinancing
Indebtedness is limited to all or part of the same property or assets (plus
improvements, accessions, proceeds or dividends or distributions in respect
thereof) that secured (or under such written arrangements could secure) the
original Indebtedness;
(g) (i) mortgages, liens, security interests, restrictions, encumbrances or
any other matters of record that have been placed by any developer, landlord
or other third party on property over which the Company or any Restricted
Subsidiary of the Company has easement rights or on any leased property and
subordination or similar agreements relating thereto and (ii) any condemnation
or eminent domain proceedings affecting any real property;
(h) Liens securing Hedging Obligations, Purchase Money Obligations or
Capitalized Lease Obligations Incurred in compliance with the covenant
described under "--Certain Covenants--Limitation on Indebtedness";
(i) Liens arising out of judgments, decrees, orders or awards in respect of
which the Company shall in good faith be prosecuting an appeal or proceedings
for review, which appeal or proceedings shall not have been finally
terminated, or if the period within which such appeal or proceedings may be
initiated shall not have expired;
(j) leases, subleases, licenses or sublicenses to third parties;
(k) Liens securing (1) Indebtedness Incurred in compliance with clause
(b)(i), (b)(iv), (b)(v), (b)(vii), (b)(viii)(E) or (b)(x), of the covenant
described under "--Certain Covenants--Limitation on Indebtedness," or clause
(b)(iii) thereof (other than Refinancing Indebtedness Incurred in respect of
Indebtedness described in
111
<PAGE>
paragraph (a) thereof), (2) Bank Indebtedness, (3) commercial bank
Indebtedness, (4) Indebtedness of any Restricted Subsidiary that is not a Note
Guarantor, (5) the Notes or (6) Indebtedness or other obligations of any
Receivables Entity;
(l) Liens existing on property or assets of a Person at the time such Person
becomes a Subsidiary of the Company (or at the time the Company or a
Restricted Subsidiary acquires such property or assets); provided, however,
that such Liens are not created in connection with, or in contemplation of,
such other Person becoming such a Subsidiary (or such acquisition of such
property or assets), and that such Liens are limited to all or part of the
same property or assets (plus improvements, accessions, proceeds or dividends
or distributions in respect thereof) that secured (or, under the written
arrangements under which such Liens arose, could secure) the obligations to
which such Liens relate;
(m) Liens on Capital Stock or other securities of an Unrestricted Subsidiary
that secure Indebtedness or other obligations of such Unrestricted Subsidiary;
(n) any encumbrance or restriction (including, but not limited to, put and
call agreements) with respect to Capital Stock of any joint venture or similar
arrangement pursuant to any joint venture or similar agreement; and
(o) Liens securing Refinancing Indebtedness Incurred in respect of any
Indebtedness secured by, or securing any refinancing, refunding, extension,
renewal or replacement (in whole or in part) of any other obligation secured
by, any other Permitted Liens, provided that any such new Lien is limited to
all or part of the same property or assets (plus improvements, accessions,
proceeds or dividends or distributions in respect thereof) that secured (or,
under the written arrangements under which the original Lien arose, could
secure) the obligations to which such Liens relate.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Preferred Stock" as applied to the Capital Stock of any corporation means
Capital Stock of any class or classes (however designated) that by its terms
is preferred as to the payment of dividends, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"Purchase Money Obligations" means any Indebtedness Incurred to finance or
refinance the acquisition, leasing, construction or improvement of property
(real or personal) or assets, and whether acquired through the direct
acquisition of such property or assets or the acquisition of the Capital Stock
of any Person owning such property or assets, or otherwise.
"Recapitalization" means the recapitalization of Holding pursuant to the
Agreement and Plan of Merger, dated as of December 20, 1997, between MergerCo
and Holding whereby MergerCo will be merged with and into Holding, with
Holding being the surviving corporation.
"Receivable" means a right to receive payment arising from a sale or lease
of goods or services by a Person pursuant to an arrangement with another
Person pursuant to which such other Person is obligated to pay for goods or
services under terms that permit the purchase of such goods and services on
credit, as determined in accordance with GAAP.
"Receivables Entity" means (x) any Receivables Subsidiary or (y) any other
Person that is engaged in the business of acquiring, selling, collecting,
financing or refinancing Receivables, accounts (as defined in the Uniform
Commercial Code as in effect in any jurisdiction from time to time), other
accounts and/or other receivables, and/or related assets.
112
<PAGE>
"Receivables Fees" means distributions or payments made directly or by means
of discounts with respect to any participation interest issued or sold in
connection with, and other fees paid to a Person that is not a Restricted
Subsidiary in connection with, any Receivables Financing.
"Receivables Financing" means any financing of Receivables of the Company or
any Restricted Subsidiary that have been transferred to a Receivables Entity
in a Financing Disposition.
"Receivables Subsidiary" means a Subsidiary of the Company that (a) is
engaged solely in the business of acquiring, selling, collecting, financing or
refinancing Receivables, accounts (as defined in the Uniform Commercial Code
as in effect in any jurisdiction from time to time) and other accounts and
receivables (including any thereof constituting or evidenced by chattel paper,
instruments or general intangibles), all proceeds thereof and all rights
(contractual and other), collateral and other assets relating thereto, and any
business or activities incidental or related to such business, and (b) is
designated as a "Receivables Subsidiary" by the Board of Directors.
"refinance" means refinance, refund, replace, renew, repay, modify, restate,
defer, substitute, supplement, reissue, resell or extend (including pursuant
to any defeasance or discharge mechanism); and the terms "refinances,"
"refinanced" and "refinancing" as used for any purpose in the Indenture shall
have a correlative meaning.
"Refinancing Indebtedness" means Indebtedness that is Incurred to refinance
any Indebtedness existing on the date of the Indenture or Incurred in
compliance with the Indenture (including Indebtedness of the Company that
refinances Indebtedness of any Restricted Subsidiary (to the extent permitted
in the Indenture) and Indebtedness of any Restricted Subsidiary that
refinances Indebtedness of another Restricted Subsidiary) including
Indebtedness that refinances Refinancing Indebtedness; provided, that (1) if
the Indebtedness being refinanced is Subordinated Obligations or Guarantor
Subordinated Obligations, the Refinancing Indebtedness has an Average Life at
the time such Refinancing Indebtedness is Incurred that is equal to or greater
than the Average Life of the Indebtedness being refinanced, (2) such
Refinancing Indebtedness is Incurred in an aggregate principal amount (or if
issued with original issue discount, an aggregate issue price) that is equal
to or less than the sum of (x) the aggregate principal amount (or if issued
with original issue discount, the aggregate accreted value) then outstanding
of the Indebtedness being refinanced, plus (y) fees, underwriting discounts,
premiums and other costs and expenses incurred in connection with such
Refinancing Indebtedness and (3) Refinancing Indebtedness shall not include
(x) Indebtedness of a Restricted Subsidiary that is not a Note Guarantor that
refinances Indebtedness of the Company that was incurred by the Company
pursuant to paragraph (a) of the covenant described under "--Certain
Covenants--Limitation on Indebtedness" or (y) Indebtedness of the Company or a
Restricted Subsidiary that refinances Indebtedness of an Unrestricted
Subsidiary.
"Related Business" means those businesses in which the Company or any of its
Subsidiaries is engaged on the date of the Indenture, or that are related,
complementary, incidental or ancillary thereto or extensions, developments or
expansions thereof.
"Related Taxes" means (x) any taxes, charges or assessments, including but
not limited to sales, use, transfer, rental, ad valorem, value-added, stamp,
property, consumption, franchise, license, capital, net worth, gross receipts,
excise, occupancy, intangibles or similar taxes, charges or assessments (other
than federal, state or local taxes measured by income and federal, state or
local withholding imposed on payments made by Holding), required to be paid by
Holding by virtue of its being incorporated or having Capital Stock
outstanding (but not by virtue of owning stock or other equity interests of
any corporation or other entity other than the Company or any of its
Subsidiaries), or being a holding company parent of the Company or receiving
dividends from or other distributions in respect of the Capital Stock of the
Company, or having guaranteed any obligations of the Company or any Subsidiary
thereof, or having made any payment in respect of any of the items for which
the Company is permitted to make payments to Holding pursuant to the covenant
described under "--Certain Covenants--Limitation on Restricted Payments," or
(y) any other federal, state, foreign, provincial or local taxes measured by
income for which Holding is liable up to an amount not to exceed with respect
to such federal
113
<PAGE>
taxes the amount of any such taxes that the Company would have been required
to pay on a separate company basis or on a consolidated basis if the Company
had filed a consolidated return on behalf of an affiliated group (as defined
in Section 1504 of the Code or an analogous provision of state, local or
foreign law) of which it were the common parent, or with respect to state and
local taxes, on a combined basis if the Company had filed a combined return on
behalf of an affiliated group consisting only of the Company and its
Subsidiaries.
"Representative" means the trustee, agent or representative (if any) for an
issue of Senior Indebtedness.
"Restricted Payment Transaction" means any Restricted Payment permitted
pursuant to the covenant described under "--Certain Covenants--Limitation on
Restricted Payments," any Permitted Payment, any Permitted Investment, or any
transaction specifically excluded from the definition of the term "Restricted
Payment."
"Restricted Subsidiary" means any Subsidiary of the Company other than an
Unrestricted Subsidiary.
"SEC" means the Securities and Exchange Commission.
"Secured Indebtedness" means any Indebtedness of the Company secured by a
Lien.
"Senior Credit Agreement" means the credit agreement dated as of May 21,
1998, among the Company (after giving effect to the Second Merger), the banks
and other financial institutions party thereto from time to time, Credit
Suisse First Boston, as syndication agent, The Chase Manhattan Bank, as
documentation agent, and Morgan Guaranty Trust Company of New York, as
administrative agent, as such agreement may be assumed by any successor in
interest, and as such agreement may be amended, supplemented, waived or
otherwise modified from time to time, or refunded, refinanced, restructured,
replaced, renewed, repaid, increased or extended from time to time (whether in
whole or in part, whether with the original agent and lenders or other agents
and lenders or otherwise, and whether provided under the original Senior
Credit Agreement or otherwise).
"Senior Credit Facility" means the collective reference to the Senior Credit
Agreement, any Credit Documents (as defined therein), any notes and letters of
credit issued pursuant thereto and any guarantee and collateral agreement,
patent and trademark security agreement, mortgages, letter of credit
applications and other guarantees, pledge agreements, security agreements and
collateral documents, and other instruments and documents, executed and
delivered pursuant to or in connection with any of the foregoing, in each case
as the same may be amended, supplemented, waived or otherwise modified from
time to time, or refunded, refinanced, restructured, replaced, renewed,
repaid, increased or extended from time to time (whether in whole or in part,
whether with the original agent and lenders or other agents and lenders or
otherwise, and whether provided under the original Senior Credit Agreement or
one or more other credit agreements, indentures (including the Indenture) or
financing agreements or otherwise). Without limiting the generality of the
foregoing, the term "Senior Credit Facility" shall include any agreement (i)
changing the maturity of any Indebtedness incurred thereunder or contemplated
thereby, (ii) adding Subsidiaries of the Company as additional borrowers or
guarantors thereunder, (iii) increasing the amount of Indebtedness incurred
thereunder or available to be borrowed thereunder or (iv) otherwise altering
the terms and conditions thereof.
"Senior Subordinated Indebtedness" means the Notes and any other
Indebtedness of the Company that ranks pari passu with the Notes.
"Significant Domestic Subsidiary" means any Domestic Subsidiary that is a
Significant Subsidiary.
"Significant Subsidiary" means any Restricted Subsidiary that would be a
"significant subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC, as in effect on the Issue Date.
"S&P" means Standard & Poor's Ratings Service, a division of The McGraw-Hill
Companies, Inc., and its successors.
114
<PAGE>
"Stated Maturity" means, with respect to any security, the date specified in
such security as the fixed date on which the payment of principal of such
security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency beyond the control of the issuer unless such contingency has
occurred).
"Subordinated Obligations" means any Indebtedness of the Company (whether
outstanding on the date of the Indenture or thereafter Incurred) that is
expressly subordinated in right of payment to the Notes pursuant to a written
agreement.
"Subsidiary" of any Person means any corporation, association, partnership
or other business entity of which more than 50% of the total voting power of
shares of Capital Stock or other equity interests (including partnership
interests) entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by (i) such Person or (ii) one or
more Subsidiaries of such Person.
"Successor Company" shall have the meaning assigned thereto in clause (i)
under "--Merger and Consolidation."
"Tax Sharing Agreement" means the Tax Sharing Agreement, dated as of May 21,
1998, between the Company and Holding, as the same may be amended,
supplemented, waived or otherwise modified from time to time in accordance
with the terms thereof and of the Indenture.
"Temporary Cash Investments" means any of the following: (i) any investment
in (x) direct obligations of the United States of America or any agency or
instrumentality thereof or obligations Guaranteed by the United States of
America or any agency or instrumentality thereof or (y) direct obligations of
any foreign country recognized by the United States of America rated at least
"A" by S&P or "A-1" by Moody's (or, in either case, the equivalent of such
rating by such organization or, if no rating of S&P or Moody's then exists,
the equivalent of such rating by any nationally recognized rating
organization), (ii) overnight bank deposits, and investments in time deposit
accounts, certificates of deposit, bankers' acceptances and money market
deposits (or, with respect to foreign banks, similar instruments) maturing not
more than one year after the date of acquisition thereof issued by (x) any
lender under the Senior Credit Agreement or (y) a bank or trust company that
is organized under the laws of the United States of America, any state thereof
or any foreign country recognized by the United States of America having
capital and surplus aggregating in excess of $250 million (or the foreign
currency equivalent thereof) and whose long term debt is rated at least "A" by
S&P or "A-1" by Moody's (or, in either case, the equivalent of such rating by
such organization or, if no rating of S&P or Moody's then exists, the
equivalent of such rating by any nationally recognized rating organization) at
the time such Investment is made, (iii) repurchase obligations with a term of
not more than 30 days for underlying securities of the types described in
clause (i) or (ii) above entered into with a bank meeting the qualifications
described in clause (ii) above, (iv) Investments in commercial paper, maturing
not more than 270 days after the date of acquisition, issued by a Person
(other than of the Company or any of its Subsidiaries), with a rating at the
time as of which any Investment therein is made of "P-2" (or higher) according
to Moody's or "A-2" (or higher) according to S&P (or, in either case, the
equivalent of such rating by such organization or, if no rating of S&P or
Moody's then exists, the equivalent of such rating by any nationally
recognized rating organization), (v) Investments in securities maturing not
more than one year after the date of acquisition issued or fully guaranteed by
any state, commonwealth or territory of the United States of America, or by
any political subdivision or taxing authority thereof, and rated at least "A"
by S&P or "A" by Moody's (or, in either case, the equivalent of such rating by
such organization or, if no rating of S&P or Moody's then exists, the
equivalent of such rating by any nationally recognized rating organization),
(vi) Preferred Stock (other than of the Company or any of its Subsidiaries)
having a rating of "A" or higher by S&P or "A2" or higher by Moody's (or, in
either case, the equivalent of such rating by such organization or, if no
rating of S&P or Moody's then exists, the equivalent of such rating by any
nationally recognized rating organization), (vii) investment funds investing
95% of their assets in securities of the type described in clauses (i)-(vi)
above (which funds may also hold
115
<PAGE>
reasonable amounts of cash pending investment and/or distribution), (viii) any
money market deposit accounts issued or offered by a domestic commercial bank
or a commercial bank organized and located in a country recognized by the
United States of America, in each case, having capital and surplus in excess
of $250 million (or the foreign currency equivalent thereof), or investments
in money market funds complying with the risk limiting conditions of Rule 2a-7
(or any successor rule) of the SEC under the Investment Company Act of 1940,
as amended, and (ix) similar short-term investments approved by the Board of
Directors in the ordinary course of business.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-7bbbb)
as in effect on the date of the Indenture.
"Trade Payables" means, with respect to any Person, any accounts payable or
any indebtedness or monetary obligation to trade creditors created, assumed or
guaranteed by such Person arising in the ordinary course of business in
connection with the acquisition of goods or services.
"Transactions" means, collectively, the Recapitalization, the Merger, the
Second Merger, the initial equity investment by the Investors, the offering
and issuance of the Notes, the initial borrowings under the Senior Credit
Facility, the assumption by the Company of obligations under the Indenture and
the Notes and under the Senior Credit Facility, and all other transactions
relating to the Recapitalization or the financing thereof.
"Trustee" means the party named as such in the Indenture until a successor
replaces it and, thereafter, means the successor.
"Trust Officer" means the Chairman of the Board, the President or any other
officer or assistant officer of the Trustee assigned by the Trustee to
administer its corporate trust matters.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that at
the time of determination is an Unrestricted Subsidiary, as designated by the
Board of Directors in the manner provided below, and (ii) any Subsidiary of an
Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary
of the Company (including any newly acquired or newly formed Subsidiary of the
Company) to be an Unrestricted Subsidiary unless such Subsidiary or any of its
Subsidiaries owns any Capital Stock or Indebtedness of, or owns or holds any
Lien on any property of, the Company or any other Restricted Subsidiary of the
Company that is not a Subsidiary of the Subsidiary to be so designated;
provided, that either (A) the Subsidiary to be so designated has total
consolidated assets of $1,000 or less or (B) if such Subsidiary has
consolidated assets greater than $1,000, then such designation would be
permitted under the covenant described under "--Certain Covenants--Limitation
on Restricted Payments." The Board of Directors may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided, that immediately after
giving effect to such designation either (x) the Company could incur at least
$1.00 of additional Indebtedness under paragraph (a) in the covenant described
under "--Certain Covenants--Limitation on Indebtedness" or (y) the
Consolidated Coverage Ratio would be greater than it was immediately prior to
giving effect to such designation. Any such designation by the Board of
Directors shall be evidenced to the Trustee by promptly filing with the
Trustee a copy of the resolution of the Company's Board of Directors giving
effect to such designation and an Officer's Certificate of the Company
certifying that such designation complied with the foregoing provisions.
"Voting Stock" of an entity means all classes of Capital Stock of such
entity then outstanding and normally entitled to vote in the election of
directors or all interests in such entity with the ability to control the
management or actions of such entity.
116
<PAGE>
BOOK-ENTRY; DELIVERY AND FORM
The Existing Notes were issued and the New Notes will be issued in fully
registered form without interest coupons. The Existing Notes are represented
by and the New Notes will be represented by one or more permanent global Notes
in definitive, fully registered form without coupons (the "Global Security")
and registered in the name of a nominee of The Depository Trust company
("DTC") and deposited with the Trustee as custodian for DTC for credit to the
respective accounts of the purchasers (or to such other accounts as they may
direct). The Global Security that represents the Existing Notes is subject to
certain restrictions on transfer set forth therein and in the Indenture and
bears a legend regarding such restrictions.
DTC is a limited purpose trust company organized under the laws of the State
of New York, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the Uniform Commercial Code and a "Clearing Agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
was created to hold securities for its participants and facilitate the
clearance and settlement of securities transactions between participants
through electronic book-entry changes in accounts of its participants, thereby
eliminating the need for physical movement of certificates. Participants
include securities brokers and dealers, banks, trust companies and clearing
corporations and certain other organizations. Indirect access to the DTC
system is available to others such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly ("indirect participants").
Upon the issuance of the Global Security, DTC or its custodian will credit,
on its internal system, the respective principal amount of the individual
beneficial interests represented by such Global Security to the accounts of
persons who have accounts with such depositary. Ownership of beneficial
interests in the Global Security will be limited to persons who have accounts
with DTC ("participants") or persons who hold interests through participants.
Ownership of beneficial interests in the Global Security will be shown on, and
the transfer of that ownership will be effected only through, records
maintained by DTC or its nominee (with respect to interests of participants)
and the records of participants (with respect to interests of persons other
than participants). QIBs may hold their interests in the Global Security
directly through DTC if they are participants in such system, or indirectly
through organizations which are participants in such system.
The Indenture does not provide for issuance of Notes in definitive form
except in limited circumstances, described below under "--Certificated Notes."
The Company expects that pursuant to procedures established by DTC (i) upon
deposit of the Global Security representing New Notes, DTC will credit the
account of participants tendering Existing Notes in exchange for New Notes
with an interest in the Global Security and (ii) ownership of beneficial
interests therein will be effected only through records maintained by DTC
(with respect to interests of participants), participants and indirect
participants. The laws of some states require that certain persons take
physical delivery in definitive form of securities that they own and that
security interests in negotiable instruments can only be perfected by delivery
of certificates representing the instruments. Consequently, the ability to
transfer the Notes or to pledge the Notes as collateral to persons in such
states will be limited to such extent.
So long as DTC or its nominee is the registered owner or holder of the
Global Security, DTC or such nominee, as the case may be, will be considered
the sole record owner or holder of the Notes represented by such Global
Security for all purposes under the Indenture and the Notes. No beneficial
owners of an interest in the Global Security will be able to transfer that
interest except in accordance with the applicable procedures of DTC or
Euroclear, in addition to those provided for under the Indenture. Beneficial
owners of an interest in a Global Security will not be entitled to have Notes
represented by such Global Security registered in their names, will not
receive or be entitled to receive physical delivery of Notes in definitive
form, and will not be considered the owners or holders thereof under the
Indenture for any purpose, including with respect to the giving of any
direction, instruction or approval to the Trustee thereunder. As a result, the
ability of a person having a beneficial interest in Notes represented by a
Global Security to pledge or transfer such interest to persons or entities
that do
117
<PAGE>
not participate in DTC's system or otherwise to take action with respect to
such interest, may be affected by lack of a physical certificate evidencing
such interest.
Accordingly, each holder owning a beneficial interest in a Global Security
must rely on the procedures of DTC or Euroclear and, if such holder is not a
participant or an indirect participant, on the procedures of the participant
through which such holder owns its interest, to exercise any rights of a
holder of Notes under the Indenture or such Global Security. The Company
understands that under existing practice, in the event the Company requests
any action of holders of Notes or a holder that is an owner of a beneficial
interest in a Global Security requests any action of holders of Notes or a
holder that is an owner of a beneficial interest in a Global Security desires
to take any action that DTC as the holder of such Global Security, is entitled
to take, DTC would authorize the participants to take such action and the
participant would authorize holders owning through such participants to take
such action or would otherwise act upon the instruction of such holders.
Payments of the principal of, premium, if any, and interest on the Global
Security will be made to DTC or its nominee, as the case may be, as the
registered owner thereof. Neither the Company, the Trustee, nor any paying
agent will have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests in
the Global Security or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
The Company expects that DTC or its nominee, upon receipt of any payment of
principal, premium, if any, or interest in respect of the Global Security,
will credit participants' accounts with payments in amounts proportionate to
their respective beneficial ownership interests in the principal amount of
such Global Security, as shown on the records of DTC or its nominee. The
Company also expects that payments by participants to owners of beneficial
interests in such Global Security held through such participants will be
governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers registered in the names of
nominees for such customers. Such payments will be the responsibility of such
participants.
Transfers between participants in DTC will be effected in the ordinary way
in accordance with DTC rules and will be settled in immediately available
funds.
Neither the Company nor the Trustee will have any responsibility for the
performance by DTC or its participants or indirect participants of their
respective obligations under the rules and procedures governing their
operations. Although DTC and its participants have agreed to the foregoing
procedures to facilitate transfers of interests in the Global Security among
participants, it is under no obligation to perform such procedures, and such
procedures may be discontinued at any time. Neither the Company nor the
Trustee will have any responsibility for the performance by DTC or its
participants or indirect participants of their respective obligations under
the rules and procedures governing their operations.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company believes to be reliable, but
the Company takes no responsibility for the accuracy thereof.
CERTIFICATED NOTES
If (i) the Company notifies the Trustee in writing that DTC is no longer
willing or able to act as a depository or DTC ceases to be registered as a
clearing agency under the Exchange Act and the Company is unable to locate a
qualified successor within 90 days, (ii) the Company, at its option, notifies
the Trustee in writing that it elects to cause the issuance of Notes in
definitive form under the Indenture or (iii) upon the occurrence of certain
other events, then, upon surrender by DTC of its Global Securities, definitive
Notes in registered form without coupons ("Certificated Securities") will be
issued, subject to certain certification requirements, to each person that DTC
identifies as the beneficial owner of the Notes represented by the Global
Security. All such Certificated Securities representing Existing Notes would
be subject to certain transfer restrictions.
118
<PAGE>
UNITED STATES FEDERAL TAX CONSIDERATIONS
The following is a summary of certain United States federal income tax
consequences of the acquisition, ownership and disposition of the Notes to the
initial acquirors, and the principal U.S. federal estate tax consequences of
the ownership of the Notes to acquirors who are Non-U.S. Holders (as defined
below).
This summary is based on provisions of the Code, existing and proposed
Treasury regulations promulgated thereunder (the "Treasury Regulations") and
administrative and judicial interpretations thereof, all as of the date hereof
and all of which are subject to change, possibly on a retroactive basis.
This summary does not address the tax consequences to subsequent purchasers
of the Notes, and is limited to acquirors who hold the Notes as capital
assets. This summary is for general information only, and does not address all
of the tax consequences that may be relevant to particular acquirors in light
of their personal circumstances, or to certain types of acquirors (such as
banks and other financial institutions, real estate investment trusts,
regulated investment companies, insurance companies, tax-exempt organizations,
dealers in securities, persons who have hedged the interest rate on the Notes
or persons whose functional currency is not the U.S. dollar). In addition,
this summary does not include any description of the tax laws of any state,
local or non-U.S. government that may be applicable to a particular acquiror.
PROSPECTIVE ACQUIRORS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS WITH
RESPECT TO THE PARTICULAR U.S. FEDERAL INCOME AND ESTATE TAX CONSEQUENCES TO
THEM OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF THE NOTES, AS WELL AS
THE TAX CONSEQUENCES UNDER STATE, LOCAL, NON-U.S. AND OTHER U.S. FEDERAL TAX
LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN TAX LAWS.
EXCHANGE OFFER
The exchange of any Existing Note for a New Note should not constitute a
taxable exchange of the Existing Note. As a result, the New Notes should have
the same issue price (and adjusted issue price immediately after the exchange)
and the same amount of original issue discount, if any, as the Existing Notes,
and each holder should have the same adjusted basis and holding period in the
New Notes as it had in the Existing Notes immediately before the exchange. The
following discussion assumes that the exchange of Existing Notes for New Notes
pursuant to the Exchange Offer will not be treated as a taxable exchange and
that the Existing Notes and the New Notes will be treated as the same security
for federal income tax purposes.
TAXATION OF U.S. HOLDERS
As used herein, the term "U.S. Holder" means a holder of a Note that is, for
U.S. federal income tax purposes, (a) a citizen or resident of the United
States, (b) a corporation or partnership created or organized in the United
States or under the laws of the United States or of any state of the United
States, (c) an estate whose income is includable in gross income for U.S.
federal income tax purposes regardless of its source or (d) a trust if (i) a
court within the United States is able to exercise primary supervision over
the administration of the trust and (ii) at least one U.S. person has
authority to control all substantial decisions of the trust. Recently enacted
legislation authorizes the issuance of Treasury Regulations that, under
certain circumstances, could reclassify as a non-U.S. partnership a
partnership that would otherwise be treated as a U.S. partnership, or could
reclassify as a U.S. partnership a partnership that would otherwise be treated
as a non-U.S. partnership. Such regulations would apply only to partnerships
created or organized after the date that proposed Treasury Regulations are
filed with the Federal Register (or, if earlier, the date of issuance of a
notice substantially describing the expected contents of the regulations).
Payment of Interest on the Notes Other than Payments upon Registration
Default. In general, interest paid on a Note (other than payments upon a
Registration Default discussed below) will be taxable to a U.S. Holder as
ordinary interest income, as received or accrued, in accordance with such
holder's method of accounting for
119
<PAGE>
federal income tax purposes. If original issue discount on a Note is not
greater than a de minimis amount equal to 0.25% of its stated principal amount
multiplied by the number of complete years to its maturity, any such discount
will be deemed to be equal to zero, and a holder will not be required to
accrue a portion of such discount as income in each taxable year. See,
however, the discussion below under "--Payments upon Registration Default."
Holders should consult their tax advisors as to the possible effect of
payments upon a Registration Default on the treatment of original issue
discount on the Notes, if any.
Payments upon Registration Default. Because the Notes provide for the
payment of additional interest under the circumstances described below under
"Registration Rights," the Notes could be subject to certain Treasury
Regulations relating to debt instruments that provide for one or more
contingent payments (the "Contingent Payment Regulations"). Under the
Contingent Payment Regulations, however, a payment is not a contingent payment
merely because of a contingency that, as of the issue date, is either "remote"
or "incidental." The Company intends to take the position that, for purposes
of the Contingent Payment Regulations, the payment of such additional interest
is a remote or incidental contingency as of the issue date. Accordingly, the
Contingent Payment Regulations should not apply to the Notes.
If, as of the date of issuance, the payment of such additional interest were
not a "remote" or "incidental" contingency for purposes of the Contingent
Payment Regulations, then (i) all payments (including any projected payments
of such additional interest) on a Note in excess of its issue price would
effectively be treated as original issue discount, and (ii) in each taxable
year, a holder would be required to include an allocable portion of such
amounts in gross income on a constant yield basis whether or not the payment
of such additional interest were fixed or determinable in the taxable year.
The Company's position for purposes of the Contingent Payment Regulations
that the payment of such additional interest is a remote contingency as of the
issue date is binding on each holder for federal income tax purposes, unless
such holder discloses in the proper manner to the Internal Revenue Service
("IRS") that it is taking a different position.
Prospective acquirors should consult their tax advisors as to the tax
considerations relating to debt instruments providing for payments such as the
additional interest payable upon a Registration Default, particularly in
connection with the possible application of the Contingent Payment
Regulations.
Sale, Exchange or Retirement of the Notes. Upon the sale, exchange,
redemption, retirement at maturity or other disposition of a Note, a U.S.
Holder will generally recognize taxable gain or loss equal to the difference
between the sum of the cash and the fair market value of all other property
received on such disposition (except to the extent such cash or property is
attributable to accrued interest, which will be taxable as ordinary income)
and such holder's adjusted tax basis in the New Note.
Gain or loss recognized on the disposition of a Note generally will be
capital gain or loss (except to the extent the gain is attributable to accrued
market discount, as described below), and will be long-term capital gain or
loss if, at the time of such disposition, the holder's holding period for the
Note is more than one year. A reduced tax rate on capital gain will apply to
an individual U.S. Holder if such holder's holding period for the Note is more
than eighteen months at the time of disposition.
Market Discount. A U.S. Holder (other than a holder who makes the election
described below) that acquires a Note with market discount that is not de
minimis, except in certain non-recognition transactions, generally will be
required to treat any gain realized upon the disposition of the Note as
interest income to the extent of the market discount that accrued during the
period such holder held such Note. (For this purpose, a person disposing of a
market discount Note in a transaction other than a sale, exchange or
involuntary conversion generally is treated as realizing an amount equal to
the fair market value of the Note.) A holder may also be required to recognize
as ordinary income any principal payments with respect to a Note to the extent
such payments do not exceed the accrued market discount on the Note. For these
purposes, market discount generally equals the excess of the stated redemption
price of the Note over the tax basis of the Note in the hands of the
120
<PAGE>
holder immediately after its acquisition. However, market discount is deemed
not to exist if the market discount is less than a de minimis amount equal to
0.25% of the Note's redemption price at maturity multiplied by the number of
complete years to the Note's maturity after the holder acquired the Note (or,
in the case of a holder that acquires a New Note pursuant to the Exchange
Offer, the Existing Note exchanged for such New Note).
The market discount rules also provide that any holder of Notes that were
acquired at a market discount may be required to defer the deduction of a
portion of the interest on any indebtedness incurred or maintained to acquire
or carry the Notes, until the Notes are disposed of.
A holder of a Note acquired at a market discount may elect to include market
discount in income as the discount accrues. In such a case, the foregoing
rules with respect to the recognition of ordinary income on dispositions and
with respect to the deferral of interest deductions on indebtedness related to
such Note would not apply. The current inclusion election applies to all
market discount obligations acquired on or after the first day of the first
taxable year to which the election applies, and may not be revoked without the
consent of the IRS.
Amortizable Bond Premium. Generally, if the tax basis of an obligation held
as a capital asset exceeds the amount payable at maturity of the obligation,
such excess may constitute amortizable bond premium that the holder of such
obligation may elect to amortize under the constant interest rate method and
deduct over the period from the holder's acquisition date to the obligation's
maturity date. A holder that elects to amortize bond premium must reduce its
tax basis in the related obligation by the amount of the aggregate deductions
allowable for the amortizable bond premium. Any election to amortize bond
premium applies to all bonds (other than bonds the interest on which is
excludible from gross income) held by the holder at the beginning of the first
taxable year to which the election applies or thereafter acquired by the
holder. The election may not be revoked without the consent of the IRS.
In the case of an obligation, such as a Note, that may be called at a
premium prior to maturity, an earlier call date is treated as its maturity
date, and the amount of bond premium is determined by treating the amount
payable on such call date as the amount payable at maturity if such a
calculation produces a smaller amortizable bond premium than any other call
date or the method described in the preceding paragraph. For purposes of
amortizing bond premium, if a holder of a Note is required to amortize and
deduct bond premium by reference to a call date, the Note will be treated as
maturing on such date for the amount payable, and, if not redeemed on such
date, the Note will be treated as reissued on such date for the amount so
payable. If a Note purchased at a premium is redeemed pursuant to a call prior
to such early call date or its maturity, a purchaser who has elected to deduct
bond premium may deduct the excess of its adjusted tax basis in the Note over
the amount received on redemption (or, if greater, the amount payable on
maturity) as an ordinary loss in the taxable year of redemption.
The amortizable bond premium deduction is treated as a reduction of interest
on the bond instead of as a deduction. The offset of amortizable bond premium
against interest income on the bond occurs when income is taxable to a holder
as received or accrued, in accordance with such holder's method of accounting
for such income.
Backup Withholding and Information Reporting. In general, a U.S. Holder will
be subject to backup withholding at the rate of 31% with respect to interest,
principal and premium, if any, paid on a Note, unless the holder (a) is an
entity that is exempt from withholding (including corporations, tax-exempt
organizations and certain qualified nominees) and, when required, demonstrates
this fact, or (b) provides the Company with its taxpayer identification number
("TIN") (which for an individual would be the holder's social security
number), certifies that the TIN provided to the Company is correct and that
the holder has not been notified by the IRS that it is subject to backup
withholding due to underreporting of interest or dividends, and otherwise
complies with applicable requirements of the backup withholding rules. In
addition, such payments of principal, premium and interest to U.S. Holders
that are not exempt entities will generally be subject to information
reporting requirements. A U.S. Holder who does not provide the Company with
his correct TIN may be subject to penalties imposed by the IRS.
121
<PAGE>
The Company will report to U.S. Holders and the IRS the amount of any
"reportable payments" (including any interest paid) and any amounts withheld
with respect to the Notes during the calendar year.
The amount of any backup withholding from a payment to a U.S. Holder will be
allowed as a credit against such holder's federal income tax liability and may
entitle such holder to a refund, provided that the required information is
furnished to the IRS.
TAXATION OF NON-U.S. HOLDERS
Payment of Interest on the Notes. In general, payments of interest received
by any holder of a Note that is not a U.S. Holder (a "Non-U.S. Holder") will
not be subject to a U.S. federal income tax (or any withholding thereof,
except as described below under "--Backup Withholding and Information
Reporting"), provided that (a) under an exemption for certain portfolio
interest, (i) the Non-U.S. Holder does not actually or constructively own 10%
or more of the total combined voting power of all classes of stock of the
Company entitled to vote, (ii) the holder is not a "controlled foreign
corporation" (generally, a non-U.S. corporation controlled by U.S.
shareholders) that is related to the Company actually or constructively
through stock ownership and (iii) either (x) the beneficial owner of the Note,
under penalties of perjury, provides the Company or its agent with the
beneficial owner's name and address and certifies that it is not a U.S. person
on IRS Form W-8 (or a suitable substitute form) or (y) a securities clearing
organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business holds the Note and
certifies to the Company or its agent under penalties of perjury that such a
Form W-8 (or suitable substitute form) has been received by it from the
beneficial owner or qualifying intermediary and furnishes the payor a copy
thereof, (b) the Non-U.S. Holder is subject to U.S. federal income tax with
respect to the Note on a net basis because payments received with respect to
the Note are effectively connected with the conduct of a trade or business
within the United States by the holder (in which case the holder may also be
subject to U.S. "branch profits tax") and provides the Company with a properly
executed IRS Form 4224, or (c) the Non-U.S. Holder is entitled to the benefits
of an income tax treaty under which the interest is exempt from U.S.
withholding tax and the holder or such holder's agent provides a properly
executed IRS Form 1001 claiming the exemption. Payments of interest not exempt
from U.S. federal income tax as described above will be subject to withholding
at the rate of 30% (subject to reduction under an applicable income tax
treaty).
Recently issued Treasury Regulations (the "New Withholding Regulations")
generally will, pursuant to a recent notice issued by the IRS, be effective
with respect to payments made after December 31, 1999, regardless of the issue
date of the instrument with respect to which such payments are made. The New
Withholding Regulations generally will not affect the certification rules
described in the preceding paragraph, but will provide alternative methods for
satisfying such requirements. The New Withholding Regulations also generally
will require, in the case of Notes held by a non-U.S. partnership, that (a)
the certification described in the preceding paragraph be provided by the
partners rather than the foreign partnership and (b) the partnership provide
certain information. A look-through rule will apply in the case of tiered
partnerships. In addition, the New Withholding Regulations may require that a
Non-U.S. Holder (including a non-U.S. partnership or a partner thereof) obtain
a taxpayer identification number and make certain certifications if interest
in respect of a Note is not portfolio interest and the Non-U.S. Holder wishes
to claim a reduced rate of withholding under an income tax treaty. Each Non-
U.S. Holder should consult its own tax advisor regarding the application of
the New Withholding Regulations.
Sale, Exchange or Retirement of the Notes. A Non-U.S. Holder generally will
not be subject to U.S. federal income tax (or withholding thereof) in respect
of gain realized on the sale, exchange, redemption, retirement at maturity or
other disposition of Notes, unless (a) the gain is effectively connected with
the conduct of a trade or business within the United States by the holder, or
(b) the holder is an individual who is present in the United States for a
period or periods aggregating 183 or more days in the taxable year of the
disposition and certain other conditions are met.
122
<PAGE>
With respect to a Non-U.S. Holder subject to U.S. federal income tax as
described in the preceding paragraph, an exchange of a Note for an Exchange
Note should not be treated as a taxable exchange of the Note. As described
under "--Taxation of U.S. Holders--Payments upon Registration Default," the
Notes provide for the payment of additional interest upon a Registration
Default. Non-U.S. Holders should consult their tax advisors as to the tax
considerations relating to debt instruments providing for payments such as the
additional interest, in particular as to the availability of the exemption for
portfolio interest, and the ability of holders to claim the benefits of income
tax treaty exemptions from U.S. withholding tax on interest, in respect of
such additional interest.
Backup Withholding and Information Reporting. Under current Treasury
Regulations, backup withholding and information reporting do not apply to
payments made by the Company or a paying agent to Non-U.S. Holders if the
certification described under "--Payment of Interest on the Notes" is
received, provided that the payor does not have actual knowledge that the
holder is a U.S. person. If any payments of principal and interest are made to
the beneficial owner of a Note by or through the non-U.S. office of a non-U.S.
custodian, non-U.S. nominee or other non-U.S. agent of such beneficial owner,
or if the non-U.S. office of a non-U.S. "broker" (as defined in applicable
Treasury Regulations) pays the proceeds of the sale of a Note or a coupon to
the seller thereof, backup withholding and information reporting will not
apply. Information reporting requirements (but not backup withholding) will
apply, however, to a payment by a non-U.S. office of a broker that is a U.S.
person, that derives 50% or more of its gross income for certain periods from
the conduct of a trade or business in the United States, or that is a
"controlled foreign corporation" (generally, a non-U.S. corporation controlled
by U.S. shareholders) with respect to the United States, unless the broker has
documentary evidence in its records that the holder is a non-U.S. person and
certain other conditions are met, or the holder otherwise establishes an
exemption. Payment by a U.S. office of a broker is subject to both backup
withholding at a rate of 31% and information reporting unless the holder
certifies under penalties of perjury that it is a non-U.S. person, or
otherwise establishes an exemption. A Non-U.S. Holder may obtain a refund or a
credit against such Holder's U.S. federal income tax liability of any amounts
withheld under the backup withholding rules, provided the required information
is furnished to the IRS.
In addition, in certain circumstances, interest on a Note owned by a Non-
U.S. Holder will be required to be reported annually on IRS Form 1042S, in
which case such form will be filed with the IRS and furnished to the holder.
The New Withholding Regulations revise (substantially in certain respects)
the procedures that withholding agents and payees must follow to comply with,
or to establish an exemption, from these information reporting and backup
withholding provisions for payments after December 31, 1999. Each Non-U.S.
Holder should consult its own tax advisor regarding the application to such
holder of the New Withholding Regulations.
Estate Tax. Subject to applicable estate tax treaty provisions, Notes held
at the time of death (or theretofore transferred subject to certain retained
rights or powers) by an individual who at the time of death is a Non-U.S.
Holder will not be included in such holder's gross estate for U.S. federal
estate tax purposes, provided that (a) the individual does not actually or
constructively own 10% or more of the total combined voting power of all
classes of stock of the Company entitled to vote and (b) the income on the
Notes is not effectively connected with the conduct of a U.S. trade or
business by the individual.
123
<PAGE>
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Existing Notes
where such Existing Notes were acquired as a result of market-making
activities or other trading activities. The Company has agreed that, for a
period of up to 90 days after the Expiration Date, it will make this
Prospectus, as amended or supplemented, available to any such broker-dealer
for use in connection with any such resale. In addition, until , all
dealers effecting transactions in the New Notes may be required to deliver a
prospectus.
The Company will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the New Notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at
prices related to such prevailing market prices or negotiated prices. Any such
resale may be made directly to purchasers or to or through brokers or dealers
who may receive compensation in the form of commissions or concessions from
any such broker-dealer or the purchasers of any such New Notes. Any broker-
dealer that resells New Notes that were received by it for its own account
pursuant to the Exchange Offer and any broker or dealer that participates in a
distribution of such New Notes may be deemed to be an "underwriter" within the
meaning of the Securities Act and any profit or any such resale of New Notes
and any commissions or concessions received by any such persons may be deemed
to be underwriting compensation under the Securities Act. The Letter of
Transmittal states that, by acknowledging that it will deliver and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
For a period of up to 90 days after the Expiration Date the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any participating broker-dealer that is
entitled to use such documents and that requests such documents in the Letter
of Transmittal. The Company has agreed to pay all expenses incident to the
Exchange Offer other than commissions or concessions of any brokers-dealers
and will indemnify the Holders of the Existing Notes (including any broker-
dealers) against certain liabilities, including liabilities under the
Securities Act.
Each of the Initial Purchasers or their affiliates from time to time perform
general financing and banking services and participate in financing and
banking transactions for the Company and CDR, including in connection with the
Senior Credit Facility. See "Description of Senior Credit Facility."
REGISTRATION RIGHTS
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified
in its entirety by reference to, all the provisions of the Registration Rights
Agreement, a copy of which is filed as an exhibit to the Registration
Statement of which the Prospectus is a part and which is available as set
forth under the heading "Available Information."
The Company and the Initial Purchasers entered into a registration rights
agreement (the "Registration Rights Agreement") on May 21, 1998 (the "Issue
Date"). Pursuant to the Registration Rights Agreement, the Company agreed, for
the benefit of the holders of the Notes, that it will, at its own expense, use
its reasonable best efforts (i) to file a registration statement (the
"Exchange Offer Registration Statement") with the Securities and Exchange
Commission (the "SEC") with respect to a registered offer (the "Exchange
Offer") to exchange the Notes for notes of the Company (the "Exchange Notes")
having terms identical in all material respects to the Notes (except that the
New Notes will not contain terms with respect to transfer restrictions),
within 120 days after the Issue Date and (ii) to cause the Exchange Offer
Registration Statement to be declared effective under the Securities Act
within 150 days after the Issue Date. Upon the effectiveness of the Exchange
Offer
124
<PAGE>
Registration Statement, the Company will offer the New Notes in exchange for
surrender of the Existing Notes. The Company will keep the Exchange Offer open
for the period required by applicable law (including pursuant to any
applicable interpretation by the staff of the SEC), but in any event for at
least 10 business days, after the date that notice of the Exchange Offer is
mailed to holders of the New Notes.
For each Existing Note surrendered to the Company pursuant to the Exchange
Offer, the holder of such Note will receive a New Note issued in substitution
therefor having a principal amount equal to that of the surrendered Existing
Note. The New Notes will be issued as substituted evidence of indebtedness and
will not represent the incurrence of new indebtedness. Interest on each New
Note will accrue from the last interest payment date on which interest was
paid on the Existing Note surrendered in exchange therefor, or, if no interest
has been paid on such Existing Note, from the Issue Date, provided, that if an
Existing Note is surrendered for exchange on or after a record date for an
interest payment date that will occur on or after the date of such exchange
and as to which interest will be paid, interest on the New Note received in
exchange therefor will accrue from the date of such interest payment date.
Under existing SEC interpretations contained in several no action letters to
third parties, the New Notes would generally be freely transferable by holders
thereof (other than affiliates of the Company) after the Exchange Offer
without further registration under the Securities Act (subject to certain
representations required to be made by each holder of Notes participating in
the Exchange Offer, as set forth below). However, any purchaser of Existing
Notes who is an "affiliate" of the Company or who intends to participate in
the Exchange Offer for the purpose of distributing the New Notes (i) will not
be able to rely on such SEC interpretations, (ii) will not be able to tender
its Existing Notes in the Exchange Offer and (iii) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any sale or transfer of the Notes unless such sale or transfer
is made pursuant to an exemption from such requirements. In addition, in
connection with any resales of New Notes, any broker-dealer that acquired the
Existing Notes for its own account as a result of market making or other
trading activities (a "Participating Broker-Dealer") must deliver a prospectus
meeting the requirements of the Securities Act. The SEC has taken the position
that Participating Broker-Dealers may fulfill their prospectus delivery
requirements with respect to New Notes (other than a resale of an unsold
allotment from the original sale of Existing Notes) with the prospectus
contained in the Exchange Offer Registration Statement. Under the Registration
Rights Agreement, the Company will be required to allow any Participating
Broker-Dealer to use, for a period of 90 days after the consummation of the
Exchange Offer, the prospectus contained in the Exchange Offer Registration
Statement in connection with the resale of such New Notes.
A holder of Existing Notes who wishes to exchange such Existing Notes for
New Notes in the Exchange Offer will be required to make representations to
the effect (i) that any New Notes to be received by it will be acquired in the
ordinary course of its business, (ii) that at the time of the commencement of
the Exchange Offer it has no arrangement or understanding with any person to
participate in the distribution (within the meaning of the Securities Act) of
the New Notes, (iii) that it is not an "affiliate" of the Company, as defined
in Rule 405 of the Securities Act, or if it is an affiliate, that it will
comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable, (iv) if such holder is not a broker-
dealer, that it is not engaged in, and does not intend to engage in, the
distribution of New Notes, (v) if such holder is a Participating Broker-
Dealer, that it will deliver a prospectus in connection with any resale of
such New Notes, and (vi) that it is not acting on behalf of any person who
could not truthfully make the foregoing representations.
Shelf Registration. The Company will file a shelf registration statement
covering resales of Existing Notes or New Notes, as the case may be (a "Shelf
Registration Statement"), if (i) any changes in the applicable interpretations
of the staff of the SEC do not permit the Company to effect such an Exchange
Offer, (ii) the Exchange Offer is not consummated within 180 days of the Issue
Date, (iii) under certain circumstances, the Initial Purchasers so request
with respect to Existing Notes not eligible to be exchanged for New Notes in
the Exchange Offer, or (iv) if any holder of Existing Notes (other than an
Initial Purchaser) is not permitted by applicable law to participate in the
Exchange Offer or does not receive freely tradeable New Notes in the Exchange
Offer (other than, in either case, due solely to the status of such holder as
an affiliate of the Company or due to such holder's inability to make the
representations referred to above). If any of these events occur, the
125
<PAGE>
Company will, at its own expense, use its reasonable best efforts (a) as
promptly as reasonably practicable, to file a Shelf Registration Statement
covering resales of Notes or Exchange Notes, as the case may be, and (b) to
cause the Shelf Registration Statement to be declared effective under the
Securities Act within 210 days after the Issue Date. After such Shelf
Registration Statement is declared effective, the Company will use its
reasonable best efforts to keep the Shelf Registration Statement in effect
until the earlier of two years from the Issue Date (or one year in the case of
a shelf registration effected at the request of the Initial Purchasers) or
such shorter period that will terminate when all the Existing Notes or New
Notes covered by the Shelf Registration Statement (i) have been sold pursuant
thereto or (ii) are distributed to the public pursuant to Rule 144 or become
eligible for resale pursuant to Rule 144 without volume restriction, if any.
Under certain circumstances, the Company may suspend the availability of the
Shelf Registration Statement for certain periods of time.
The Company will, in the event a Shelf Registration Statement is filed,
among other things, provide to each holder for whom such Shelf Registration
Statement was filed copies of the prospectus that is a part of the Shelf
Registration Statement, notify each such holder when the Shelf Registration
Statement has become effective and take certain other actions as are required
to permit unrestricted resales of the Notes or the Exchange Notes, as the case
may be. A holder of Notes selling such Notes pursuant to the Shelf
Registration Statement generally would be required to be named as a selling
security holder in the related prospectus and to deliver a prospectus to
purchasers, will be subject to certain of the civil liability provisions under
the Securities Act in connection with such sales and will be bound by certain
provisions of the Registration Rights Agreement (including certain
indemnification obligations). In addition, each such holder of Notes will be
required, among other things, to deliver information to be used in connection
with the Shelf Registration Statement within the time periods set forth in the
Registration Rights Agreement in order to benefit from the provisions
regarding additional interest set forth in the following paragraph.
Additional Interest. Although the Company intends to file one or more
registration statements described above, as required, there can be no
assurance that any such registration statement will be filed, or if filed,
that any thereof will become effective. From the date of a Registration
Default (as defined below) to the date on which such Registration Default has
been cured, additional interest will accrue on the Transfer Restricted Notes
(as defined below) at the rate of (a) prior to the 91st day of such period
(for so long as such period is continuing), 0.25% per annum and (b) thereafter
(so long as such period is continuing), 0.50% per annum. Any such additional
interest shall not exceed such respective rates for such respective periods,
and shall not in any event exceed 0.50% per annum in the aggregate, regardless
of the number of Registration Defaults that shall have occurred and be
continuing. Any such additional interest shall be paid in the same manner and
on the same dates as interest payments in respect of Transfer Restricted
Notes. Following the cure of all Registration Defaults, the accrual of such
additional interest will cease. All Registration Defaults shall be deemed
cured upon consummation of the Exchange Offer.
For purposes of the foregoing, each of the following events is a
"Registration Default": (i) neither the Exchange Offer Registration Statement
nor a Shelf Registration Statement has been filed with the SEC on or before
the 120th day after the Issue Date; (ii) the Exchange Offer is not consummated
on or before the 180th day after the Issue Date; (iii) if a Shelf Registration
Statement is required to be filed under the Registration Rights Agreement, (A)
the Shelf Registration Statement is not declared effective by the SEC on or
before the 210th day after the Issue Date (or, in the case of a Shelf
Registration Statement required to be filed in response to any change in
applicable interpretations of the staff of the SEC, if later, on or before the
90th day after publication of such change) or (B) during the time the Company
is required to use its reasonable best efforts to keep the Shelf Registration
in effect, the Company shall have suspended and be continuing to suspend the
availability of the Shelf Registration Statement for more than 30 days in the
aggregate in any consecutive twelve-month period.
For purposes of the foregoing, "Transfer Restricted Notes" means each
Existing Note until (i) the date on which such Existing Note has been
exchanged for a freely transferable New Note in the Exchange Offer, (ii) the
date on which such Existing Note has been effectively registered under the
Securities Act and disposed of in accordance with a Shelf Registration
Statement, or (iii) the date on which such Existing Note is distributed to the
public pursuant to Rule 144 of the Securities Act or is eligible for resale
pursuant to Rule 144 without volume restriction, if any.
126
<PAGE>
LEGAL MATTERS
The validity of the New Notes offered hereby will be passed upon for the
Company by Debevoise & Plimpton, New York, New York. Franci J. Blassberg,
Esq., a member of Debevoise & Plimpton, is married to Joseph L. Rice, III, who
is a shareholder of the managing general partner of the general partner of CDR
Fund V.
EXPERTS
The consolidated balance sheets as of March 31, 1998 and 1997 and the
consolidated statements of operations, shareholders' equity and cash flows for
each of the three fiscal years in the period ended March 31, 1998, included in
this Prospectus have been included herein in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
that firm as experts in accounting and auditing.
127
<PAGE>
DYNATECH CORPORATION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
REPORT OF INDEPENDENT ACCOUNTANTS......................................... F-2
FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 1998 AND 1997............... F-3
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE FISCAL YEARS ENDED MARCH
31, 1998, 1997 AND 1996................................................ F-4
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY FOR THE FISCAL YEARS
ENDED MARCH 31, 1998, 1997 AND 1996.................................... F-5
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE FISCAL YEARS ENDED MARCH
31, 1998, 1997 AND 1996................................................ F-6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.............................. F-7
REPORT OF INDEPENDENT ACCOUNTANTS ON SCHEDULE............................. F-25
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS............................ F-26
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Dynatech Corporation:
We have audited the accompanying consolidated balance sheets of Dynatech
Corporation as of March 31, 1998 and 1997, and the related consolidated
statements of operations, shareholders' equity and cash flows for each of the
three fiscal years in the period ended March 31, 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Dynatech
Corporation as of March 31, 1998 and 1997, and the consolidated results of its
operations and its cash flows for each of the three fiscal years in the period
ended March 31, 1998 in conformity with generally accepted accounting
principles.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
April 28, 1998, except as to the information in the "Subsequent Event" Note
for which the date is May 21, 1998.
F-2
<PAGE>
DYNATECH CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31,
------------------
1998 1997
-------- --------
(AMOUNTS IN
THOUSANDS EXCEPT
SHARE DATA)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................ $ 64,904 $ 39,782
Accounts receivable (net of allowance of $1,764 and
$1,872, respectively)................................... 69,988 70,930
Inventories:
Raw materials.......................................... 24,263 19,423
Work in process........................................ 11,769 11,376
Finished goods......................................... 12,850 9,326
-------- --------
Total inventory........................................ 48,882 40,125
Other current assets..................................... 16,823 11,074
-------- --------
Total current assets................................. 200,597 161,911
Property and equipment:
Land, building and leasehold improvements................ 4,904 4,141
Machinery and equipment.................................. 51,220 47,020
Furniture and fixtures................................... 12,351 9,940
-------- --------
68,475 61,101
Less accumulated depreciation and amortization........... (42,110) (37,268)
-------- --------
26,365 23,833
Other assets:
Intangible assets, net................................... 39,595 43,813
Other.................................................... 21,573 19,453
-------- --------
$288,130 $249,010
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable and current portion of long-term debt...... $ 150 $ 201
Accounts payable......................................... 22,933 16,900
Accrued expenses:
Compensation and benefits.............................. 21,750 23,912
Taxes, other than income taxes......................... 2,071 1,850
Deferred revenue....................................... 13,868 8,876
Other.................................................. 16,082 19,948
Accrued income taxes..................................... 5,196 657
Net liabilities of discontinued operations............... 756 9,173
-------- --------
Total current liabilities............................ 82,806 81,517
Long-term debt............................................. 83 5,226
Deferred compensation...................................... 3,122 1,581
Commitments and contingencies..............................
Shareholders' equity:
Serial preference stock, par value $1 per share; autho-
rized 100,000 shares; none issued.......................
Common stock, par value $0.20 per share; authorized
50,000,000 shares; issued 18,605,689.................... 3,721 3,721
Additional paid-in capital............................... 7,647 9,887
Retained earnings........................................ 237,282 195,506
Cumulative translation adjustments....................... (1,600) (1,247)
Treasury stock, at cost; 1,741,265 and 1,812,287 shares,
respectively............................................ (44,931) (47,181)
-------- --------
Total shareholders' equity........................... 202,119 160,686
-------- --------
$288,130 $249,010
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-3
<PAGE>
DYNATECH CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED MARCH 31,
----------------------------------------------
1998 1997 1996
-------------- -------------- --------------
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Sales.......................... $ 472,948 $ 362,412 $ 293,042
Cost of sales.................. 205,522 137,254 111,436
-------------- -------------- --------------
Gross profit................... 267,426 225,158 181,606
Selling, general and adminis-
trative expense............... 138,310 114,479 98,487
Product development expense.... 54,995 43,267 36,456
Nonrecurring charges........... -- 27,776 16,852
Amortization of intangibles.... 5,835 6,793 5,136
-------------- -------------- --------------
Operating income........... 68,286 32,843 24,675
Interest expense............... (1,221) (828) (1,723)
Interest income................ 3,012 2,785 2,181
Other income, net.............. 730 634 975
-------------- -------------- --------------
Income from continuing opera-
tions before income taxes..... 70,807 35,434 26,108
Provision for income taxes..... 29,031 17,585 10,394
-------------- -------------- --------------
Income from continuing opera-
tions......................... 41,776 17,849 15,714
Discontinued operations:
Gain on sale of businesses
net of income tax provision
of $22,692.................. -- 12,000 --
Operating loss, net of income
tax benefit of $(1,009) in
1996... -- -- (1,471)
-------------- -------------- --------------
Net income..................... $ 41,776 $ 29,849 $ 14,243
============== ============== ==============
Income (loss) per common
share--basic:
Continuing operations........ $ 2.49 $ 1.04 $ 0.87
Discontinued operations...... -- 0.70 (0.08)
-------------- -------------- --------------
$ 2.49 $ 1.74 $ 0.79
============== ============== ==============
Income (loss) per common
share--diluted:
Continuing operations........ $ 2.40 $ 0.99 $ 0.86
Discontinued operations...... -- 0.67 (0.08)
-------------- -------------- --------------
$ 2.40 $ 1.66 $ 0.78
============== ============== ==============
Weighted average number of com-
mon shares
Basic........................ 16,795 17,200 17,969
Diluted...................... 17,434 18,028 18,315
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-4
<PAGE>
DYNATECH CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
NUMBER OF SHARES
------------------ ADDITIONAL CUMULATIVE TOTAL
COMMON TREASURY COMMON PAID-IN RETAINED TRANSLATION TREASURY SHAREHOLDERS'
STOCK STOCK STOCK CAPITAL EARNINGS ADJUSTMENTS STOCK EQUITY
-------- --------- ------ ---------- -------- ----------- -------- -------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, March 31,
1995................... 18,605 (1,033) $3,721 $ 7,432 $151,414 $ 2,659 $(10,906) $154,320
Net income--1996........ 14,243 14,243
Purchases of treasury
stock.................. (800) (19,367) (19,367)
Translation
adjustments............ (2,317) (2,317)
Exercise of stock
options and other
issuances.............. 812 3,688 9,170 12,858
Tax benefit from
exercise of stock
options................ 982 982
-------- -------- ------ ------- -------- ------- -------- --------
Balance, March 31,
1996................... 18,605 (1,021) 3,721 12,102 165,657 342 (21,103) 160,719
Net income--1997........ 29,849 29,849
Purchases of treasury
stock.................. (1,021) (32,695) (32,695)
Translation
adjustments............ (1,589) (1,589)
Exercise of stock
options and other
issuances.............. 230 (3,533) 6,617 3,084
Tax benefit from
exercise of stock
options................ 1,318 1,318
-------- -------- ------ ------- -------- ------- -------- --------
Balance, March 31,
1997................... 18,605 (1,812) 3,721 9,887 195,506 (1,247) (47,181) 160,686
Net income--1998........ 41,776 41,776
Purchases of treasury
stock.................. (163) (5,330) (5,330)
Translation
adjustments............ (353) (353)
Exercise of stock
options and other
issuances.............. 234 (2,919) 7,580 4,661
Tax benefit from
exercise of stock
options................ 679 679
-------- -------- ------ ------- -------- ------- -------- --------
Balance, March 31,
1998................... 18,605 (1,741) $3,721 $ 7,647 $237,282 $(1,600) $(44,931) $202,119
======== ======== ====== ======= ======== ======= ======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-5
<PAGE>
DYNATECH CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
----------------------------
1998 1997 1996
-------- -------- --------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Operating activities:
Net income from operations...................... $ 41,776 $ 29,849 $ 15,714
Adjustment for noncash items included in net
income:
Gain on discontinued operations................. -- (12,000) --
Depreciation.................................... 12,066 9,280 8,279
Amortization of intangibles..................... 5,835 6,793 5,136
Purchased incomplete technology................. -- 20,627 16,852
Intangibles writeoff............................ -- 7,149 --
Change in net deferred income tax asset......... (5,575) (7,617) (5,173)
Other........................................... 580 797 457
Changes in operating assets and liabilities, net
of effects of purchase acquisitions and
divestitures................................... 4,380 4,926 (19,556)
-------- -------- --------
Net cash provided by continuing operations...... 59,062 59,804 21,709
Net cash provided by (used in) discontinued
operations..................................... (13,717) (52,313) 699
-------- -------- --------
Net cash flows provided by operating
activities..................................... 45,345 7,491 22,408
Investing activities:
Purchases of property and equipment............. (15,879) (10,176) (8,198)
Disposals of property and equipment............. 219 214 308
Proceeds from sales of businesses............... -- 96,682 48,901
Businesses acquired in purchase transactions,
Net of cash acquired........................... -- (68,930) (17,143)
Other........................................... 144 290 5,597
-------- -------- --------
Net cash flows provided by (used in) continuing
operations..................................... (15,516) 18,080 29,465
Net cash flows provided by (used in)
discontinued operations........................ 507 (951) (5,487)
-------- -------- --------
Net cash flows provided by (used in) investing
activities..................................... (15,009) 17,129 23,978
Financing activities:
Net borrowings (repayment) of debt.............. (5,195) 2,522 (9,400)
Proceeds from issuance of common stock.......... 4,513 1,693 952
Purchases of treasury stock..................... (5,330) (32,695) (19,367)
-------- -------- --------
Net cash flows used in financing activities..... (6,012) (28,480) (27,815)
Effect of exchange rate on cash.................. 798 (2,452) (272)
-------- -------- --------
Increase (decrease) in cash and cash
equivalents..................................... 25,122 (6,312) 18,299
Cash and cash equivalents at beginning of year... 39,782 46,094 27,795
-------- -------- --------
Cash and cash equivalents at end of year......... $ 64,904 $ 39,782 $ 46,094
======== ======== ========
Change in operating asset and liability
components:
Decrease (increase) in trade accounts
receivable..................................... $ 994 $(15,833) $(10,287)
Decrease (increase) in inventories.............. (8,739) 450 (2,007)
Increase in other current assets................ (2,431) (3,341) (297)
Increase (decrease) in accounts payable......... 6,009 2,059 (402)
Increase (decrease) in accrued expenses and
taxes.......................................... 8,547 21,591 (6,563)
-------- -------- --------
Change in operating assets and liabilities...... $ 4,380 $ 4,926 $(19,556)
======== ======== ========
Supplemental disclosures of cash flow
information:
Cash paid during the year for:
Interest........................................ $ 934 $ 889 $ 1,739
Income taxes.................................... 24,307 42,340 13,798
Tax benefit of disqualifying dispositions of
stock options.................................. 679 1,318 982
Noncash proceeds from sale of businesses:
Promissory notes................................ -- 7,200 --
Preferred stock................................. -- 6,300 --
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-6
<PAGE>
DYNATECH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business Dynatech Corporation ("Dynatech" or the "Company") is a global
communications equipment company focused on network technology solutions. Its
products address communications test, industrial computing and communications,
and visual communications applications.
Subsequent/Merger Recapitalization On May 21, 1998, the Company completed
its management-led merger with Clayton, Dubilier & Rice, Inc. ("CDR") ("the
Merger"). The Merger and related transactions were treated as a
recapitalization for financial reporting purposes. Accordingly, the historical
basis of the Company's assets and liabilities were not affected by these
transactions.
Principles of Consolidation The consolidated financial statements include
the accounts of the parent company and its wholly owned domestic and
international subsidiaries. Intercompany accounts and transactions have been
eliminated. Certain prior year amounts have been reclassified to conform with
the current year.
Use of Estimates The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make certain
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reported period. Significant estimates in these financial
statements include allowances for accounts receivable, net realizable value of
inventories, tax valuation reserves, nonrecurring charges, and the carrying
values of discontinued operations. Actual results could differ from those
estimates.
Interest Rate Swap Agreements The Company may, from time to time, enter into
interest rate swap agreements to reduce the impact of interest rate changes on
its debt. The interest rate swap agreements involve exchanges of fixed or
floating rate interest payments without the exchange of the underlying
notional amounts. The notional amounts of such agreements are used to measure
the interest to be paid or received and do not represent the amount of
exposure to loss. The Company did not enter into any interest swap agreements
during fiscal 1998, 1997 or 1996.
Cash Equivalents Cash equivalents represent highly liquid debt instruments
with a maturity of three months or less at the time of purchase. Financial
instruments, which potentially subject the Company to concentrations of credit
risk, consist primarily of short-term deposits in Europe with major banks,
with investment levels and debt ratings set to limit exposure from any one
institution.
Inventories Inventories are carried and charged to revenue at standard
costs, which is updated regularly and which approximates the lower of cost
(first-in, first-out or average) or market.
Property and Equipment Property and equipment are carried at cost and
include expenditures for major improvements which substantially increase their
useful life. Repairs and maintenance are expensed as incurred. When assets are
retired or otherwise disposed of, the assets and related allowances for
depreciation and amortization are eliminated from the accounts and any
resulting gain or loss is recognized in the Statement of Operations.
Depreciation and Amortization For financial reporting purposes, depreciation
of machinery, equipment, and fixtures is computed on the straight-line method
over estimated useful lives of two to ten years. Leasehold improvements are
amortized over the lesser of the lives of the leases or estimated useful lives
of the improvements.
F-7
<PAGE>
DYNATECH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Intangible Assets Intangible assets acquired primarily from business
acquisitions are summarized as follows:
<TABLE>
<CAPTION>
1998 1997
---------- ----------
AMOUNTS IN THOUSANDS
<S> <C> <C>
Product technology.................................... $ 17,042 $ 17,042
Excess of cost over net assets required............... 32,478 30,861
Other intangible assets............................... 13,307 13,307
---------- ----------
62,827 61,210
Less accumulated amortization......................... 23,232 17,397
---------- ----------
Total............................................... $ 39,595 $ 43,813
========== ==========
</TABLE>
At each balance sheet date, management evaluates whether there has been a
permanent impairment in the value of goodwill or intangible assets by
assessing the carrying value of the asset against the anticipated future cash
flows from related operating activities. Factors which management considers in
performing this assessment include current operating results, trends, product
transition, distribution channels and prospects, and, in addition, demand,
competition, and other economic factors. In March 1997, the Company recorded a
$7.1 million charge related to product and distribution transitions.
Product technology and other intangible assets are amortized on a straight-
line basis primarily over two to ten years, but in no event longer than their
expected useful lives. Amortization expense related to product technology was
$3.1 million in fiscal 1998, $3.1 million in fiscal 1997, and $1.9 million in
fiscal 1996, and was excluded from cost of sales. Excess of cost over fair
market value of net assets is being amortized on a straight-line basis
primarily over 15 years.
Foreign Currency Translation The functional currency for the majority of the
Company's foreign operations is the applicable local currency. The translation
from the applicable foreign currencies to U.S. dollars is performed for
balance sheet accounts using the exchange rates in effect at the balance sheet
date and for revenue and expense accounts using a weighted average exchange
rate during the period. The gains or losses resulting from such translation
are included in shareholders' equity. Gains or losses resulting from foreign
currency transactions are included in other income.
Treasury Stock The Company delivers treasury shares upon the exercise of
stock options and issuance of shares for the Company's Employee Stock Purchase
Plan and the difference between the cost of the treasury shares, on a last-in,
first-out basis, and the exercise price of the option is reflected in
additional paid-in capital. Repurchase of treasury stock is accounted for by
using the cost method of accounting.
Revenue Recognition Sales of products and services are recorded based on
product shipment and performance of service, respectively. Proceeds received
in advance of product shipment or performance of service are recorded as
deferred revenue in the balance sheet.
Research and Development Costs relating to research and development are
expensed as incurred. Internal software development costs that qualify for
capitalization are not material.
Warranty Costs The Company generally warrants its products for one year
after delivery. A provision for estimated warranty costs is recorded at the
time revenue is recognized.
Income Taxes The Company provides for income taxes in accordance with
Statement of Financial Accounting Standard No. 109, "Accounting for Income
Taxes." Under this method, deferred tax assets and
F-8
<PAGE>
DYNATECH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
liabilities are determined based on the differences between the financial
reporting and tax basis of assets and liabilities and are measured using the
enacted tax rates and laws that will be in effect when the differences are
expected to reverse.
New Pronouncements During the quarter ended December 31, 1997, the Company
adopted Statement of Financial Accounting Standards No. 128, "Earnings per
Share," which modifies the calculation of earnings per share ("EPS"). The
Standard replaces the previous presentation of primary and fully diluted EPS
to basic and diluted EPS. Basic EPS excludes dilution and is computed by
dividing income available to common stockholders by the weighted average
number of common shares outstanding for the period. Diluted EPS includes the
dilution of common stock equivalents, and is computed similarly to fully
diluted EPS pursuant to APB Opinion 15. All prior periods presented have been
restated to reflect this adoption.
<TABLE>
<CAPTION>
YEARS ENDED MARCH 31,
-------------------------
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Basic:
Common stock outstanding beginning of year.... 16,803 17,594 17,577
Weighted average treasury stock issued during
the period................................... 134 144 461
Weighted average treasury stock repurchased... (142) (538) (69)
------- ------- -------
Weighted average common stock outstanding end
of year...................................... 16,795 17,200 17,969
======= ======= =======
Diluted:
Common stock outstanding beginning of year.... 16,803 17,594 17,577
Weighted average treasury stock issued during
the period................................... 134 144 461
Weighted average common stock equivalents..... 639 828 346
Weighted average treasury stock repurchased... (142) (538) (69)
------- ------- -------
Weighted average common stock outstanding end
of year...................................... 17,434 18,028 18,315
======= ======= =======
</TABLE>
The Financial Accounting Standards Board issued Statement No. 130,
"Reporting Comprehensive Income" which establishes standards for the reporting
and display of comprehensive income in general-purpose financial statements.
This Standard is effective for fiscal periods beginning after December 15,
1997 and its adoption is not expected to have a material impact on the
Company's disclosures.
The Financial Accounting Standards Board issued Statement No. 131,
"Disclosures about Segments of an Enterprise and Related Information," which
establishes standards for the reporting of operating segments in the financial
statements. This Standard is effective for fiscal periods beginning after
December 15, 1997 and its adoption is not expected to have a material impact
on the Company's historical financial data.
In October, 1997, Statement of Position 97-2, "Software Revenue Recognition"
("SOP 97-2"), was issued which provides guidance on applying generally
accepted accounting principles in recognizing revenue on software
transactions. SOP 97-2 is effective for transactions entered into in fiscal
years beginning after December 15, 1997. The Company adopted the guidelines of
SOP 97-2 as of April 1, 1998 and does not expect adoption to have a material
impact on the Company's financial results.
DISCONTINUED OPERATIONS
A formal plan to discontinue noncore businesses was approved by the Board of
Directors on February 7, 1996. In fiscal 1997, the Company essentially
completed its disposition of the noncore businesses. Proceeds from these sales
in fiscal 1997 and 1996 were $96.7 million in cash, $7.2 million in long-term
promissory notes, and Class A Preferred Stock of CMSI Holdings Corporation
with an aggregate liquidation preference of $6.3 million, and $48.9 million in
cash, respectively, which resulted in an aftertax gain of $12 million or $0.67
per share on a diluted basis.
F-9
<PAGE>
DYNATECH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
In connection with the sale of one of its subsidiaries, the Company agreed
to guarantee the purchaser's payment obligations under a credit facility
obtained by the purchaser. The guaranteed portion of the principal amount of
this facility is $3 million for a period of seven years from the closing date
of March 1997 and is to be used to fund the purchaser's capital expenditures.
Summary operating results of noncore businesses prior to the formal plan to
discontinue operations are as follows:
<TABLE>
<CAPTION>
1996
--------------------
AMOUNTS IN THOUSANDS
<S> <C>
Sales................................................... $182,040
Gross margin............................................ 79,571
Income (loss) before taxes.............................. (3,460)
Net income (loss)....................................... $ (1,471)
</TABLE>
In connection with the disposition of these subsidiaries, the Company had
net liabilities of $756 thousand and $9.2 million at March 31, 1998 and 1997,
respectively. Included in these amounts are liabilities related to severance,
legal, lease runout, taxes and warranty accruals, most of which were paid in
fiscal 1998, offset by noncash investments.
LONG-TERM DEBT
Long-term debt is summarized below:
<TABLE>
<CAPTION>
1998 1997
--------------------
AMOUNTS IN THOUSANDS
<S> <C> <C>
Revolving credit and term bank loan.................... $ -- $ 5,000
Capital lease obligations.............................. 233 427
--------- ----------
Total debt........................................... 233 5,427
Less current portion............................... 150 201
--------- ----------
Long-term debt....................................... $ 83 $ 5,226
========= ==========
</TABLE>
In 1997, the Company had an unsecured $70 million revolving credit and term
bank loan agreement ("Old Agreement") with several commercial banks which
allowed for borrowings in various currencies and provided for interest to be
payable at the Eurocurrency rate, or base or money market rate quoted by the
lender, depending upon the currencies borrowed and the form of borrowing.
Under the terms of the Old Agreement, the principal borrowings would have
converted to a term loan payable in eight equal quarterly installments
beginning September 30, 1998.
In April 1997, the Company entered into a new $150 million revolving credit
and term loan agreement ("New Agreement") with several commercial banks. This
agreement allows for borrowings using various instruments with interest
payable at Eurodollar rate plus an applicable margin based on the Company's
leverage ratio or base rate, quoted by the lender. Under the terms of the New
Agreement, the principal borrowings may convert to a term loan payable in
eight equal quarterly installments beginning June 30, 2000.
The terms of both the Old and New Agreement require, among other things,
specific levels of current ratio, fixed-charge coverage ratio, and minimum
tangible net worth. The Company was in compliance with all covenants at March
31, 1998.
F-10
<PAGE>
DYNATECH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
After the Merger. After completion of the Merger and related financings, the
Company had $575.2 million of indebtedness, primarily consisting of $275
million principal amount of the Notes, $260 million in term loan borrowings
under the Term Loan Facility and $40 million in revolving credit borrowings
under the new Revolving Credit Facility. On May 21, 1998, the Company
terminated its Old and New Agreements.
Debt Service. Principal and interest payments under the new Senior Credit
Facility and interest payments on the Notes will represent significant
liquidity requirements for the Company. It is expected that with respect to
the $260.0 million borrowed under the Term Loan Facility, in which the
facility is divided into tranches, of which each tranche has a different term
and repayment schedule, the Company will be required to make scheduled
principal payments of the $50.0 million of tranche A term loan thereunder over
its six-year term, with substantial amortization of the $70.0 million of
tranche B term loan, $70.0 million of tranche C term loan and $70.0 million
tranche D term loan thereunder occurring after six, seven and eight years,
respectively. The Notes will mature in 2008, and bear interest at 9 3/4%.
Total interest expense is expected to be $51.0 million in fiscal 1999. The
Senior Credit Facility are also subject to mandatory prepayment and reduction
in an amount equal to, subject to certain exceptions, (a) 100% of the net
proceeds of (i) certain debt offerings by the Company and any of its
subsidiaries, (ii) certain asset sales by the Company or any of its
subsidiaries, and (iii) casualty insurance, condemnation awards or other
recoveries received by the Company or any of its subsidiaries and (b) 50% of
the Company's excess cash flow (as to be defined) for each fiscal year in
which the Company exceeds a certain leverage ratio. The Notes are subject to
certain mandatory prepayments under certain circumstances. The Revolving
Credit Facility matures in 2004, with all amounts then outstanding becoming
due. The Company expects that its working capital needs will require it to
obtain new revolving credit facilities at the time that the Revolving Credit
Facility matures, whether by extending, renewing, replacing or otherwise
refinancing the Revolving Credit Facility. No assurance can be given that any
such extension, renewal, replacement or refinancing can be successfully
accomplished. The loans under the Senior Credit Facility bear interest at
floating rates based upon the interest rate option elected by the Company. As
a result of the substantial indebtedness incurred in connection with the
Merger, it is expected that the Company's interest expense will be higher and
will have a greater proportionate impact on net income in comparison to
preceding periods.
Future Financing Sources and Cash Flows. The amount under the Revolving
Credit Facility that remained undrawn following the closing of the Merger was
$70.0 million. The undrawn portion of this facility will be available to meet
future working capital and other business needs of the Company and replaces
the Company's previously outstanding credit facilities totaling $180.0
million. The Company believes that cash generated from operations, together
with amounts available under the Revolving Credit Facility and any other
available sources of liquidity, will be adequate to permit the Company to meet
its debt service obligations, capital expenditure program requirements,
ongoing operating costs and working capital needs, although no assurance can
be given in this regard. The Company's future operating performance and
ability to service or refinance the Notes and to repay, extend or refinance
the Senior Credit Facility (including the Revolving Credit Facility) will be,
among other things, subject to future economic conditions and to financial,
business and other factors, many of which are beyond the Company's control.
INCOME TAXES
The components of income (loss) from continuing operations before taxes are
as follows:
<TABLE>
<CAPTION>
1998 1997 1996
------- ------- -------
AMOUNTS IN THOUSANDS
<S> <C> <C> <C>
Domestic........................................... $69,772 $38,486 $26,657
Foreign............................................ 1,035 (3,052) (549)
------- ------- -------
Total............................................ $70,807 $35,434 $26,108
======= ======= =======
</TABLE>
F-11
<PAGE>
DYNATECH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The components of the provision (benefit) for income taxes from continuing
operations are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
------- ------- -------
AMOUNTS IN THOUSANDS
<S> <C> <C> <C>
Provision for income taxes:
United States.................................. $22,810 $11,729 $ 9,092
Foreign........................................ 327 234 (428)
State.......................................... 5,894 5,622 1,730
------- ------- -------
Total........................................ $29,031 $17,585 $10,394
======= ======= =======
Components of income tax provision:
Current:
Federal........................................ $21,248 $19,297 $15,247
Foreign........................................ (978) 234 (423)
State.......................................... 6,123 5,671 3,072
------- ------- -------
Total Current................................ 26,393 25,202 17,896
======= ======= =======
Deferred:
Federal........................................ 1,562 (7,568) (6,155)
Foreign........................................ 1,305 -- (5)
State.......................................... (229) (49) (1,342)
------- ------- -------
Total deferred............................... 2,638 (7,617) (7,502)
Total........................................ $29,031 $17,585 $10,394
======= ======= =======
</TABLE>
Reconciliations between U.S. federal statutory rate and the effective tax
rate of continuing operations follow:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Tax at U.S. federal statutory rate....................... 35.0% 35.0% 35.0%
Increases (reductions) to statutory tax rate resulting
from:
Foreign income subject to tax at a rate different
than U.S. rate...................................... -- 0.6 (0.5)
State income taxes, net of federal income tax bene-
fit................................................. 5.1 3.8 4.3
Research and development tax credit.................. (1.3) (0.7) (0.7)
Nondeductible amortization........................... 1.2 1.1 1.9
Other................................................ 1.0 0.7 (0.2)
---- ---- ----
Effective tax rate before certain charges............ 41.0% 40.5% 39.8%
Nondeductible purchased research and development..... -- 8.2 --
Nondeductible writeoff of intangibles................ -- 0.9 --
---- ---- ----
Total effective tax rate on continuing operations.. 41.0% 49.6% 39.8%
---- ---- ----
</TABLE>
F-12
<PAGE>
DYNATECH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The principal components of the deferred tax assets and liabilities follow:
<TABLE>
<CAPTION>
1998 1997
---------- ----------
AMOUNTS IN THOUSANDS
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards................... $ 4,608 $ 3,291
Vacation benefits.................................. 1,556 792
Bad debt allowance................................. -- 364
Inventory capitalization........................... 403 363
Depreciation and amortization........................ 16,343 16,767
Other deferred assets.............................. 8,976 4,434
---------- ----------
31,886 26,011
Valuation allowance.................................. (4,608) (3,291)
---------- ----------
27,278 22,720
Deferred tax liabilities:
Depreciation and amortization...................... 431 1,025
Other deferred liabilities......................... 1,068 1,491
---------- ----------
1,499 2,516
---------- ----------
Net deferred tax assets.............................. $ 25,779 $ 20,204
========== ==========
</TABLE>
Deferred income taxes are included in the following balance sheet accounts:
<TABLE>
<CAPTION>
1998 1997
---------- ----------
AMOUNTS IN THOUSANDS
<S> <C> <C>
Other current assets................................... $ 8,695 $ 3,846
Other assets........................................... 17,084 16,358
---------- ----------
$ 25,779 $ 20,204
========== ==========
</TABLE>
The valuation allowance applies to state and foreign net operating loss
carryforwards that may not be fully utilized by the Company. The increase in
the valuation reserve relates to the increase in these net loss carryforwards.
EMPLOYEE RETIREMENT PLANS
The Company has a trusteed employee retirement profit sharing and 401(k)
savings plan for eligible U.S. employees. The Plan does not provide for stated
benefits upon retirement. Employees outside the U.S. are covered principally
by government-sponsored plans that are deferred contribution plans. The cost
of Company-provided plans is not material.
The Company has a nonqualified deferred compensation plan which permits
certain key employees to annually elect to defer a portion of their
compensation for their retirement. The amount of compensation deferred and
related investment earnings will be placed in an irrevocable rabbi trust and
presented as assets in the Company's balance sheet because they will be
available to the general creditors of the Company in the event of the
Company's insolvency. An offsetting liability will reflect amounts due
employees.
Corporate contributions to employee retirement plans were $4.5 million in
fiscal 1998, $4.0 million in fiscal 1997, and $3.3 million in 1996.
F-13
<PAGE>
DYNATECH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
STOCK COMPENSATION AND PURCHASE PLANS
On July 30, 1996 the shareholders adopted the 1996 Employee Stock Purchase
Plan under which eligible employees may contribute up to 10% of their salary
toward semi-annual purchases of the Company's capital stock. The plan
commenced October 1, 1996 and each plan period lasts six months beginning on
October 1 and April 1 of each year. The purchase price for each share of stock
is the lesser of 85% of the market price on the first or last day of the plan
period. A total of 600,000 shares are available for purchase under the plan.
There were 44,840 shares issued under the plan in October, 1997 and 38,692
shares were reserved for issuance at March 31, 1998. Pursuant to the Merger,
the plan has been amended to provide that there will be no new stock purchase
periods after March 31, 1998. The Employee Stock Purchase Plan terminated on
May 21, 1998.
The Company maintains two Stock Option plans in which common stock is
available for grant to key employees at prices not less than fair market value
(110% of fair market value for employees holding more than 10% of the
outstanding common stock) at the date of grant determined by the Board of
Directors. Incentive or nonqualified options may be issued under the plans and
are exercisable from one to ten years after grant.
A summary of activity in the Company's option plans is as follows:
<TABLE>
<CAPTION>
1998 1997 1996
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
1998 EXERCISE 1997 EXERCISE 1996 EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
--------- -------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Shares under option, be-
ginning of year........ 1,770,560 $21.87 1,684,580 $15.17 1,296,720 $12.09
Options granted (at an
exercise price of $35
to $44 in 1998, $32 to
$54 in 1997, and $15.50
to $20.25 in 1996)..... 634,800 36.25 607,550 34.51 673,700 20.01
Options exercised....... (148,941) 17.20 (255,690) 11.99 (126,500) 10.26
Options canceled........ (120,700) 24.26 (265,880) 17.82 (159,340) 14.44
--------- --------- ---------
Shares under option, end
of year................ 2,135,719 26.33 1,770,560 21.87 1,684,580 15.17
========= ========= =========
Shares exercisable...... 512,999 $18.79 300,710 $14.77 261,780 $11.52
</TABLE>
Options available for future grants under the plans were 497 thousand, 1.0
million, and 1.4 million at March 31, 1998, 1997, and 1996, respectively.
The fair market value of each option granted during 1998, 1997, and 1996 is
estimated on the date of grant using the Black-Scholes option-pricing model
with the following weighted average assumptions: expected volatility of 40%,
risk-free interest rate of 6% in 1998, 6.59% in 1997, and 6.27% in 1996,
expected life of 7 years and a dividend yield of 0%. The Weighted Average Fair
Value of options granted, net of forfeitures, during the years 1998, 1997, and
1996 was $19.20, $18.68, and $10.68, respectively.
The following table summarizes information about currently outstanding and
exercisable stock options at March 31, 1998:
<TABLE>
<CAPTION>
WEIGHTED
NUMBER OF AVERAGE WEIGHTED
OPTIONS REMAINING AVERAGE
OUTSTANDING CONTRACTUAL EXERCISE
RANGE OF EXERCISE PRICE AT 3/31/98 LIFE PRICE
- ----------------------- ----------- ----------- --------
<S> <C> <C> <C>
$ 9.00--$15.00................................. 437,540 4.62 $11.05
$15.00--$30.00................................. 542,860 7.14 19.08
$30.00--$54.00................................. 1,155,319 8.85 35.93
---------
Total........................................ 2,135,719 7.55 $26.33
=========
</TABLE>
F-14
<PAGE>
DYNATECH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The Company applies ABP Opinion 25 and related interpretations in accounting
for its plans. In October 1995, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" ("FAS123"), which is effective for transactions
entered into for fiscal years that begin after December 15, 1995. FAS123
established a fair value-based method of accounting for stock-based
compensation plans. In adopting FAS123 in 1997, the Company elected footnote
disclosure only. Accordingly, no compensation cost has been recognized for its
stock option plans and its stock purchase plan under FAS123. Had compensation
cost for the Company's stock-based compensation plans been recorded based on
the fair value of awards or grant date consistent with the method prescribed
by FAS123, the Company's net income and earnings per share would have been
changed to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
1998 1997 1996
---------------- ---------------- ----------------
AS PRO AS PRO AS PRO
REPORTED FORMA REPORTED FORMA REPORTED FORMA
-------- ------- -------- ------- -------- -------
AMOUNTS IN THOUSANDS EXCEPT PER SHARE
<S> <C> <C> <C> <C> <C> <C>
Net income............... $41,776 $38,441 $29,849 $27,863 $14,243 $13,464
Net income per share:
Basic.................. $ 2.49 $ 2.29 $ 1.74 $ 1.62 $ 0.79 $ 0.75
Diluted................ $ 2.40 $ 2.20 $ 1.66 $ 1.55 $ 0.78 $ 0.74
</TABLE>
The effect of applying FAS123 in this pro forma disclosure is not indicative
of future amounts. FAS123 does not apply to awards prior to 1995; and
additional awards in future years are anticipated.
SHAREHOLDER RIGHTS PLAN
In February 1989 the Board of Directors adopted a Shareholder Rights Plan
and declared a dividend distribution of one Right for each outstanding share
of Dynatech's common stock. The Plan was amended in March 1990. Each Right,
when exercisable, entitles a qualifying shareholder to buy shares of Dynatech
junior participating cumulative preferred stock. The Rights would only become
exercisable (i) ten days after a person has become the beneficial owner of 15%
or more of Dynatech's common stock, or (ii) ten business days after the
commencement of a tender offer that would result in the ownership of 15% or
more of the common stock, or (iii) upon determination by the Board of
Directors that a person who holds 10% or more of Dynatech's common stock
intends to, or is likely to, act in certain specified manners adverse to the
interests of Dynatech and its shareholders.
In the event Dynatech is acquired and is not the surviving corporation in a
merger, or in the event of the acquisition of 50% or more of the assets or
earning power of Dynatech, each Right would then entitle the qualified holder
to purchase, at the then-current exercise price, shares of common stock of the
acquiring company having a value of twice the exercise price of the Right.
Furthermore, if any party were to acquire 15% or more of Dynatech's common
stock or were determined to be an adverse person as described above, qualified
holders of the Rights would be entitled to acquire shares of Dynatech junior
participating cumulative preferred stock having a value of twice the then-
current exercise price. At the option of the Board of Directors, all of the
Rights could be exchanged into shares of common or preferred stock.
The Board of Directors of the Company has contemporaneously with the
execution of the Merger Agreement amended the Rights Agreement so that (i)
none of CDR, Fund or MergerCo will become an "Acquiring Person" as a result of
the consummation of the transactions contemplated by this Agreement, (ii) no
"Stock Acquisition Date," "Triggering Event" or "Distribution Date" (as such
terms are defined in the Rights Agreement) will have occurred as a result of
the consummation of the transactions contemplated by this Agreement, and (iii)
all outstanding Rights issued and outstanding under the Rights Agreement and
the Rights
F-15
<PAGE>
DYNATECH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Agreement will terminate immediately prior to the effective time of the Merger
and no shares of Recapitalized Common Stock issued on or after the effective
time of the Merger will have any Rights associated with them under the Rights
Agreement.
COMMITMENTS AND CONTINGENCIES
The Company has operating leases from continuing operations covering plant,
office facilities, and equipment which expire at various dates through 2006.
Future minimum annual fixed rentals required during the years ending in fiscal
1999 through 2003 under noncancelable operating leases having an original term
of more than one year are $8.9 million, $7.4 million, $5.6 million, $4.9
million, and $4.2 million, respectively. The aggregate obligation subsequent
to fiscal 2003 is $6.2 million. Rent expense from continuing operations was
approximately $8.1 million, $6.2 million, and $5.7 million in fiscal 1998,
1997, and 1996, respectively.
The Company is a party to several pending legal proceedings and claims.
Although the outcome of such proceedings and claims cannot be determined with
certainty, the Company's counsel and management are of the opinion that the
final outcome should not have a material adverse effect on the Company's
operations or financial position.
On June 27, 1996, Cincinnati Microwave, Inc. ("CMI") filed an action in the
United States District Court for the Southern District of Ohio against the
Company and Whistler Corporation of Massachusetts ("Whistler"), alleging
willful infringement of CMI's patent for a mute function in radar detectors.
In 1994, the Company sold its radar detector business to Whistler. The Company
and Whistler have asserted in response that they have not infringed, and that
the patent is invalid and unenforceable. The Company obtained an opinion of
counsel from Bromberg & Sunstein LLP in connection with the manufacture and
sale of the Company's Whistler series radar detectors and will be offering the
opinion, among other things, as evidence that any alleged infringement was not
willful. On March 24, 1998, CMI, together with its co-plaintiff and patent
assignee Escort, Inc., moved for summary judgment. The Company and Whistler
have opposed the motion for summary judgment. The Company intends to defend
the lawsuit vigorously and does not believe that the outcome of the litigation
is likely to have a material adverse effect on the Company's financial
condition, results of operations or liquidity.
NONRECURRING CHARGES
The components of nonrecurring expenses include the following:
<TABLE>
<CAPTION>
1997 1996
---------- ----------
AMOUNTS IN THOUSANDS
<S> <C> <C>
Incomplete technology.................................. $ 20,627 $ 16,852
Intangible writeoffs................................... 7,149 --
---------- ----------
Total................................................ $ 27,776 $ 16,852
========== ==========
</TABLE>
ACQUISITIONS
1997 Acquisitions In March of 1997, the Company acquired the net assets of
Advent Design, Inc. ("Advent") for $3.5 million in cash. Advent designs and
manufactures high-performance microprocessor-based systems for the computer,
medical and communications markets. This acquisition generated $3.4 million of
goodwill which is being amortized over 15 years. During fiscal 1998, the
Company incurred a $1.6 million increase in goodwill, related to a targeted
three-year earnout based on, among other things, a positive operating income.
F-16
<PAGE>
DYNATECH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
On December 31, 1996, the Company acquired substantially all of the assets
and assumed certain liabilities of Itronix Corporation ("Itronix") located in
Spokane, Washington, for $65.4 million in cash. Approximately $40 million of
the purchase price was borrowed pursuant to the terms of the Company's
revolving credit and term loan agreement in effect at that time. A significant
portion of the borrowed funds was repaid during the fourth quarter of 1997.
Itronix is a manufacturer of mobile computing and communications devices,
including ruggedized laptop computers, which increase the efficiency of large,
mission-critical service groups.
Incident to this acquisition was the purchase of incomplete technology
activities which resulted in a one-time pretax charge of $20.6 million or
($0.74) per share on a diluted basis. This purchased incomplete technology
that had not reached technological feasibility and which had no alternative
future use was valued using a risk adjusted cash flow model, both in 1997 and
1996, under which future cash flows associated with in-process research and
development were discounted considering risks and uncertainties related to the
viability of potential changes in future target markets and to the completion
of the products that will ultimately be marketed by the Company. Acquired
complete technology of $8.4 million is being amortized over two to seven
years, and goodwill of $17.9 million is being amortized over 15 years.
As a percentage of sales, the gross margin and selling, general and
administrative expenses of Itronix are lower than the consolidated financial
results of the Company prior to the acquisition. Therefore, the pro forma
income statements below reflect a lower gross margin and selling, general and
administrative expenses as a percent of consolidated sales. Hence, in order to
demonstrate the Company's operating performance versus the previous years, the
following unaudited pro forma information presents a summary of consolidated
results of operations of the Company as if the acquisition had occurred at the
beginning of fiscal 1996, with pro forma adjustments to give effect to
amortization of goodwill and intangibles, interest expense on acquisition
debt, and certain other adjustments, together with related income tax effects.
(In thousands except per share data).
<TABLE>
<CAPTION>
FISCAL YEAR ENDED FISCAL YEAR ENDED
MARCH 31, 1997 MARCH 31, 1996
----------------- -----------------
<S> <C> <C>
Sales.................................. $426,234 $355,886
Cost of sales.......................... 183,076 158,602
-------- --------
Gross profit........................... 243,158 197,284
Selling, general & administrative ex-
pense................................. 122,232 105,383
Product development expense............ 48,515 40,913
Nonrecurring charges................... 7,149 16,852
Amortization of intangibles............ 8,853 7,886
-------- --------
Operating income....................... 56,409 26,250
Interest expense....................... (3,284) (4,998)
Interest income........................ 2,785 2,181
Other income, net...................... 633 975
-------- --------
Income from continuing operations be-
fore income taxes..................... 56,543 24,408
Provision for income taxes............. 24,974 9,799
-------- --------
Income from continuing operations...... $ 31,569 $ 14,609
======== ========
Income per share:
Basic................................ $ 1.84 $ 0.81
Diluted.............................. $ 1.74 $ 0.80
Weighted average shares:
Basic................................ 17,200 17,969
Diluted.............................. 18,028 18,315
</TABLE>
F-17
<PAGE>
DYNATECH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
1996 Acquisitions On February 20, 1996 Dynatech acquired the stock of
Synergistic Solutions, Inc. ("SSI"), of Atlanta, Georgia, for approximately
$5.5 million. Acquired technology and other intangible assets of approximately
$4.3 million are being amortized over four to seven years. The investment in
excess of fair market value of assets purchased of $964.0 thousand is being
amortized over 15 years.
On September 1, 1995 Dynatech acquired substantially all of the business and
assets of Tele-Path Industries, Inc. ("TPI"), of Salem, Virginia, for $23.6
million. Approximately $12.6 million was cash, including a $2.6 million
contingent adjustment for the stock price, and 688,096 shares of the Company's
common stock at $19.91 per share. Acquired complete technology and other
intangible assets of approximately $6.7 million are being amortized over five
years.
Incident to this acquisition, the Company purchased the incomplete
technology activities of TPI, resulting in a one-time pretax charge in the
second quarter of approximately $16.9 million, or ($0.56) per share on a
diluted basis. This purchased incomplete technology that had not reached
technological feasibility and which had no alternative future use was valued
using a risk adjusted cash flow model.
Acquisitions, both in fiscal 1997 and 1996, were recorded using the purchase
method of accounting.
SUBSEQUENT EVENTS
On June 19, 1998, the Company acquired the stock of Pacific Systems
Corporation of Kirkland, Washington ("Pacific") for a total purchase price of
$20 million, including an incentive earnout. Pacific designs and manufactures
customer specified avionics and integrated cabin management equipment for the
corporate and general aviation market.
On May 21, 1998, the Company completed its management-led recapitalization
with Clayton, Dubilier & Rice, Inc. In connection with the Merger, the
Company's shareholders received consideration consisting of $47.75 per share
in cash and a 0.5 share of recapitalized common stock. In connection with the
Merger, the Company entered into a credit agreement (the "Senior Credit
Facility") with certain lenders providing for the Senior Credit Facility
including a $260.0 million term loan facility (the "Term Loan Facility") and a
$110.0 million revolving credit facility (the "Revolving Credit Facility"). In
connection with the Merger, the Company also completed the offering of $275.0
million aggregate principal amount of the Notes. On May 31, 1998 the Company
had a total of $575.2 million of debt which consisted primarily of $275.0
million principal amount of the Notes, $260.0 million in term loan borrowings
under the Term Loan Facility and $40.0 million in revolving credit borrowings
under the Revolving Credit Facility.
Debt Service Principal and interest payments under the new Senior Credit
Facility and interest payments on the Notes will represent significant
liquidity requirements for the Company. It is expected that with respect to
the $260.0 million borrowed under the Term Loan Facility, in which the
facility is divided into tranches, of which each tranche has a different term
and repayment schedule, the Company will be required to make scheduled
principal payments of the $50.0 million of tranche A term loan thereunder over
its six-year term, with substantial amortization of the $70.0 million of
tranche B term loan, $70.0 million of tranche C term loan and $70.0 million
tranche D term loan thereunder occurring after six, seven and eight years,
respectively. The Notes will mature in 2008, and bear interest at 9 3/4%.
Total interest expense is expected to be $51.0 million in fiscal 1999. The
Senior Credit Facility is also subject to mandatory prepayment and reduction
in an amount equal to, subject to certain exceptions, (a) 100% of the net
proceeds of (i) certain debt offerings by the Company and any of its
subsidiaries, (ii) certain asset sales by the Company or any of its
subsidiaries, and (iii) casualty insurance, condemnation awards or other
recoveries received by the Company or any of its subsidiaries and (b) 50% of
the Company's excess cash flow (as to be defined) for each fiscal year in
which the Company exceeds a certain leverage ratio. The Notes are subject to
certain mandatory prepayments under certain circumstances. The Revolving
Credit
F-18
<PAGE>
DYNATECH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Facility matures in 2004, with all amounts then outstanding becoming due. The
Company expects that its working capital needs will require it to obtain new
revolving credit facilities at the time that the Revolving Credit Facility
matures, whether by extending, renewing, replacing or otherwise refinancing
the Revolving Credit Facility. No assurance can be given that any such
extension, renewal, replacement or refinancing can be successfully
accomplished. The loans under the Senior Credit Facility bear interest at
floating rates based upon the interest rate option elected by the Company. As
a result of the substantial indebtedness incurred in connection with the
Merger, it is expected that the Company's interest expense will be higher and
will have a greater proportionate impact on net income in comparison to
preceding periods.
Future Financing Sources and Cash Flows The amount under the Revolving
Credit Facility that remained undrawn following the closing of the Merger was
$70.0 million. The undrawn portion of this facility will be available to meet
future working capital and other business needs of the Company and replaced
the Company's previously outstanding credit facilities totaling $180.0
million. The Company believes that cash generated from operations, together
with amounts available under the Revolving Credit Facility and any other
available sources of liquidity, will be adequate to permit the Company to meet
its debt service obligations, capital expenditure program requirements,
ongoing operating costs and working capital needs, although no assurance can
be given in this regard. The Company's future operating performance and
ability to service or refinance the Notes and to repay, extend or refinance
the Senior Credit Facility (including the Revolving Credit Facility) will be,
among other things, subject to future economic conditions and to financial,
business and other factors, many of which are beyond the Company's control.
The Senior Credit Facility impose restrictions on the ability of the Company
to make capital expenditures and both the Senior Secured Credit Facilities and
the indenture governing the Notes limit the Company's ability to incur
additional indebtedness. Such restrictions, together with the highly leveraged
nature of the Company, could limit the Company's ability to respond to market
conditions, to meet its capital spending program, to provide for unanticipated
capital investments or to take advantage of business opportunities. The
covenants contained in the Senior Credit Facility also, among other things,
restrict the ability of the Company and its subsidiaries to dispose of assets,
incur guarantee obligations, prepay other indebtedness, make restricted
payments, create liens, make equity or debt investments, make acquisitions,
modify terms of the indenture governing the Notes, engage in mergers or
consolidations, change the business conducted by the Company and its
subsidiaries taken as a whole or engage in certain transactions with
affiliates. In addition, under the Senior Credit Facility, the Company is
required to comply with a minimum interest expense coverage ratio and a
maximum leverage ratio. These financial tests become more restrictive in
future years. The term loans under the Senior Credit Facility (other than the
$50.0 million tranche A term loan) have negative covenants which are
substantially similar to the negative covenants contained in the indenture
governing the Notes, which also impose restrictions on the operation of the
Company's businesses.
Shares of Recapitalized Common Stock trade only in the over-the-counter
market. Although prices in respect of trades may be published by the National
Association of Securities Dealers, Inc. on its electronic bulletin board,
"pink sheets," quotes for such shares may not be as readily available;
accordingly, it is anticipated that the Recapitalized Common Stock will trade
much less frequently than the Common Stock traded prior to the Merger, which
may have a material adverse effect on the market value of shares of
Recapitalized Common Stock. In addition, (depending upon certain factors) the
shares of Recapitalized Common Stock may no longer constitute "margin
securities" for the purposes of the margin regulations of the Federal Reserve
Board and therefore could no longer be used as collateral for loans made by
brokers.
The Company is obligated by the Merger Agreement to continue to be a
reporting company under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and to continue to file periodic reports (including annual and
quarterly reports) for at least five years after the Merger, unless fewer than
100 record
F-19
<PAGE>
DYNATECH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
holders of shares of Recapitalized Common Stock are non-affiliates of the
Surviving Corporation or except as otherwise provided in the Merger Agreement.
After the fifth anniversary of the effective time of the Merger, the Company
may deregister the Recapitalized Common Stock under the Exchange Act if
permitted by applicable law. If the Company were to cease to be a reporting
company under the Exchange Act and to the extent not required in connection
with any other debt or equity securities of the Company registered or required
to be registered under the Exchange Act, the information now available to
stockholders of the Company in the annual, quarterly and other reports
required to be filed by the Company with the Securities and Exchange
Commission would not be available to them as a matter of right.
The following unaudited pro forma condensed consolidated balance sheet of
the Company has been prepared to give effect to the Merger and related
transactions as a recapitalization for financial reporting purposes.
F-20
<PAGE>
DYNATECH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DYNATECH CORPORATION
PRO FORMA BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31,
1998
---------
<S> <C>
Current assets:
Cash and cash equivalents.......................................... $ 43,619
Accounts receivable................................................ 69,988
Inventories:
Raw materials.................................................... 24,263
Work in process.................................................. 11,769
Finished goods................................................... 12,850
---------
Total inventory................................................ 48,882
Other current assets............................................... 16,823
---------
Total current assets........................................... 179,312
Property and equipment:
Land, building and leasehold improvements.......................... 4,904
Machinery and equipment............................................ 51,220
Furniture and fixtures............................................. 12,351
---------
68,475
Less accumulated depreciation and amortization..................... (42,110)
26,365
Other assets:
Intangible assets, net............................................. 39,595
Other.............................................................. 63,508
---------
$ 308,780
=========
Current liabilities:
Notes payable and current portion of long-term debt................ $ 150
Accounts payable................................................... 22,933
Accrued expenses:
Compensation and benefits........................................ 21,750
Taxes, other than income taxes................................... 2,071
Deferred revenue................................................. 13,868
Other............................................................ 16,082
Accrued income taxes............................................... 5,196
Net liabilities of discontinued operations......................... 756
---------
Total current liabilities...................................... 82,806
Long-term debt....................................................... 567,983
Deferred compensation................................................ 3,122
Commitments and contingencies........................................
Shareholders' equity:
Recapitalized common stock, including additional paid-in capital... 304,092
Retained earnings.................................................. (647,623)
Cumulative translation adjustments................................. (1,600)
---------
Total shareholders' equity..................................... (345,131)
---------
$ 308,780
=========
</TABLE>
F-21
<PAGE>
DYNATECH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The pro forma balance sheet reflects:
(i) The issuance of 111,590,528 shares of Recapitalized Common Stock in
exchange for MergerCo Common Stock, net of related issuance costs of
$13,800; MergerCo is a nonsubstantive transitory merger vehicle (which was
merged into the Company at the effective time) and its only tangible assets
were $277,000 of cash and 40,804 shares of Common Stock from the issuance
of its common stock.
(ii) The issuance of Senior Credit Facility, the Notes and borrowings
under the Revolving Credit Facility.
(iii) Deferred issuance costs incurred in connection with the issuance of
Senior Credit Facility, the Notes and the Revolving Credit Facility of
which $2,500 was prepaid by the Company at December 31, 1997.
(iv) The net cash paid in connection with the settlement of certain stock
options in an amount equal to the excess of $49.00 over the exercise price
per share of Common Stock subject to such settled options, and the related
tax benefit.
(v) The assuming of approximately 1,100,000 Company Stock Options by the
Company held by Management Stockholders converted into equivalent options
to purchase shares of Recapitalized Common Stock (the exercise prices of
which preserve the economic value of their current Company Stock Options),
most of which will be fully vested and exercisable. Of the 1,100,000
Company Stock Options, approximately 820,618 Company Stock Options, have
revisions to the original terms, which resulted in a new measurement date
for the Company Stock Options and a non-cash charge of $10.7 million (net
of related tax benefit).
(vi) The conversion of 16,818,945 shares of Common Stock (excluding
shares held by MergerCo and held in treasury assumed to be canceled) into
the right to receive $47.75 per share in cash and the 0.5 shares of
Recapitalized Common Stock per share of Common Stock (totaling 8,409,473
shares of the Recapitalized Common Stock).
Also, see Notes Summary of Significant Accounting Policies, Stock
Compensation and Purchase Plans, and Shareholder Rights Plan for other matters
relating to the Merger.
F-22
<PAGE>
DYNATECH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
SEGMENT INFORMATION AND GEOGRAPHIC AREAS
The Corporation operates predominantly in a single industry as a global
communications equipment manufacturer focused on network technology solutions.
Its products address communications test, industrial computing and
communications, and visual communications applications. Dynatech is a multi-
national corporation with continuing operations outside the United States
consisting of distribution and sales offices in Germany, England, France and
the Pacific Rim.
Net income in fiscal 1998, 1997, and 1996 included currency gains (losses)
of approximately $12,600, $99,300, and $(90,300), respectively.
Information by geographic areas for the years ended March 31, 1998, 1997,
and 1996 is summarized below:
<TABLE>
<CAPTION>
OUTSIDE U.S.
(PRINCIPALLY
UNITED STATES EUROPE) COMBINED
------------- ------------ --------
AMOUNTS IN THOUSANDS
<S> <C> <C> <C>
Sales to unaffiliated customers
1998................................. $451,360* $21,588 $472,948
1997................................. 340,603* 21,809 362,412
1996................................. 268,830* 24,212 293,042
Income (loss) before taxes from contin-
uing operations
1998................................. $ 69,772 $ 1,035 $ 70,807
1997................................. 38,486 (3,052) 35,434
1996................................. 26,657 (549) 26,108
Identifiable assets at
March 31, 1998....................... $250,382 $37,748 $288,130
March 31, 1997....................... 215,218 33,792 249,010
March 31, 1996....................... 186,186 19,003 205,189
</TABLE>
--------
*Includes export sales of $54,552, $48,959, and $35,844 in 1998, 1997 and
1996, respectively.
F-23
<PAGE>
DYNATECH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
SUMMARY OF OPERATIONS BY QUARTER
(UNAUDITED)
<TABLE>
<CAPTION>
1998
---------------------------------------------------
FIRST SECOND THIRD FOURTH YEAR
-------- -------- -------- -------- --------
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Sales................... $104,320 $115,856 $133,138 $119,634 $472,948
Gross profit............ 61,683 65,044 74,873 65,826 267,426
Net income (loss)....... 8,982 10,512 12,735 9,549 41,776
Income (loss) per common
share
Basic................. $ 0.54 $ 0.63 $ 0.76 $ 0.57 $ 2.49
Diluted............... 0.52 0.60 0.73 0.55 2.40
Market Share Price(a)--
High................... $ 41.88 $ 41.94 $ 47.31 $ 48.50
--Low.......... 29.00 34.38 34.00 46.19
<CAPTION>
1997
---------------------------------------------------
FIRST SECOND THIRD FOURTH YEAR
-------- -------- -------- -------- --------
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Sales................... $ 81,122 $ 85,725 $ 92,007 $103,558 $362,412
Gross profit............ 50,874 54,463 58,485 61,336 225,158
Income (loss) from
Continuing operations.. 8,412 9,277 (2,896)(b) 3,056(c) 17,849
Net income (loss)....... 8,412 9,277 (2,896) 15,056(d) 29,849
Income (loss) per share
continuing operations:
Basic................. $ 0.48 $ 0.54 $ (0.16) $ 0.18 $ 1.04
Diluted............... 0.46 0.52 (0.16) 0.17 0.99
Net income (loss) per
share:
Basic................. $ 0.48 $ 0.54 $ (0.16) $ 0.88 $ 1.74
Diluted............... 0.46 0.52 (0.16) 0.84 1.66
Market Share Price(a)--
High................... $ 35.00 $ 46.88 $ 58.00 $ 54.50
--Low.......... 23.00 30.75 40.50 28.00
</TABLE>
--------
(a) From January 28, 1997 to May 21, 1998, shares of Common Stock of the
Company were traded on the New York Stock Exchange. Prior to January
28, 1997, shares of Common Stock of the Company were traded on the
Nasdaq--National Market. No cash dividends were paid on shares of
Common Stock of the Company.
(b) Includes charge for purchased incomplete technology of $20.6 million or
($0.74) per share on a diluted basis in 1997.
(c) Includes a charge of $7.1 million or ($0.36) per share on a diluted
basis relating to the writeoff of certain intangible assets.
(d) Includes gain on discontinued operations of $12.0 million or $0.67 per
share on a diluted basis.
F-24
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Dynatech Corporation:
Our report on the consolidated financial statements of Dynatech Corporation
as of March 31, 1998 and 1997, and for each of the three fiscal years in the
period ended March 31, 1998 has been included in this registration statement.
In connection with our audits of such financial statements, we have also
audited the related financial statement schedule included on page F-26 of this
registration statement.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
April 28, 1998
F-25
<PAGE>
SCHEDULE II
DYNATECH CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED MARCH 31, 1998, 1997 AND 1996
<TABLE>
<S> <C>
RESERVE FOR DOUBTFUL ACCOUNTS (IN THOUSANDS)
Balance, March 31, 1995.............................................. 5,077 (a)
Additions charged to income........................................ 356
Write-off of uncollectible accounts, net........................... (494)
Allowances reclassified, related to discontinued operations........ (3,982)
------
Balance, March 31, 1996.............................................. 957
Additions charged to income........................................ 646
Write-off of uncollectible accounts, net........................... (359)
Allowances reclassified............................................ 628
------
Balance, March 31, 1997.............................................. 1,872
Additions charged to income........................................ 425
Write-off of uncollectible accounts, net........................... (533)
------
Balance, March 31, 1998.............................................. 1,764
======
</TABLE>
- --------
(a)Prior year balances have not been restated to reflect elimination of
discontinued operations.
F-26
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND THE
ACCOMPANYING LETTER OF TRANSMITTAL IN CONNECTION WITH THE OFFER MADE BY THIS
PROSPECTUS AND THE ACCOMPANYING LETTER OF TRANSMITTAL, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. NEITHER THIS PROSPECTUS NOR THE ACCOMPANYING LETTER OF TRANSMITTAL,
OR BOTH TOGETHER, CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY SECURITY OTHER THAN THE NEW NOTES TO WHICH IT RELATES OR AN OFFER TO
SELL, OR THE SOLICITATION OF AN OFFER TO BUY THE NEW NOTES, IN ANY
CIRCUMSTANCES IN WHICH SUCH OFFER IS UNLAWFUL. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR THE ACCOMPANYING LETTER OF TRANSMITTAL, OR BOTH TOGETHER, NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS NOT BEEN A CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR
IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION
CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
TABLE OF CONTENTS
<TABLE>
<S> <C>
Available Information....................................................... ii
Prospectus Summary.......................................................... 1
Risk Factors................................................................ 13
Use of Proceeds............................................................. 22
Capitalization.............................................................. 23
Unaudited Pro Forma Condensed Consolidated Financial Data................... 24
Selected Historical and Pro Forma Consolidated Financial Data............... 30
Management's Discussion and Analysis........................................ 31
The Exchange Offer.......................................................... 44
Business.................................................................... 52
Management.................................................................. 64
Executive Compensation...................................................... 66
Ownership of Capital Stock.................................................. 70
The Recapitalization........................................................ 71
Certain Relationships and Related Transactions.............................. 72
Description of Senior Credit Facility....................................... 73
Description of Notes........................................................ 75
Book-entry; Delivery and Form............................................... 117
United States Federal Tax Considerations.................................... 119
Plan of Distribution........................................................ 124
Registration Rights......................................................... 124
Legal Matters............................................................... 127
Experts..................................................................... 127
Dynatech Corporation
Index to Consolidated Financial Statements................................ F-1
</TABLE>
UNTIL , 1998, ALL DEALERS EFFECTING TRANSACTIONS IN THE NEW NOTES,
WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A
PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(LOGO)
DYNATECH CORPORATION
TELECOMMUNICATIONS
TECHNIQUES CO., LLC
(TO BE RENAMED DYNATECH LLC)
OFFER TO EXCHANGE
$275,000,000
9 3/4% SENIOR SUBORDINATED
NOTES DUE 2008,
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, FOR ANY AND ALL
$275,000,000 9 3/4% SENIOR SUBORDINATED NOTES DUE 2008
---------------
PROSPECTUS
---------------
, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
Capitalized terms used but not defined in Part II have the meanings assigned
ascribed to them in the Prospectus contained in this Registration Statement.
ITEM 20. INDEMNIFICATION OF MEMBERS, DIRECTORS AND OFFICERS
TELECOMMUNICATIONS TECHNIQUES CO., LLC
Telecommunications Techniques Co., LLC ("TTC") is a limited liability
company organized under the laws of the State of Delaware. Section 18-108 of
the Delaware Limited Liability Company Act provides that, subject to such
standards and restrictions , if any, as are set forth in its limited liability
company agreement, a limited liability company may, and shall have the power
to, indemnify and hold harmless any member or manager or other person from and
against any and all claims and demands whatsoever.
Article 18 of TTC's Limited Liability Agreement (the "LLC Agreement")
provides that the Member or any of its respective affiliates, directors,
advisory directors, members, officers or employees (each a "Covered Person")
shall be entitled to indemnification from TTC for any costs and expenses
(including attorneys' fees and disbursements), loss, liability, damage or
claim incurred by such person by reason of any act or omission performed or
omitted by such person in good faith on behalf of TTC. The LLC Agreement
further provides that, to the fullest extent permitted by applicable law,
expenses (including attorneys' fees and disbursements) incurred by a Covered
Person in defending any claim, demand, action, suit or proceeding shall, from
time to time, be advanced by TTC prior to the final disposition of such claim,
demand, action, suit or proceeding, subject to recapture by TTC following a
later determination that such Covered Person was not entitled to be
indemnified thereunder.
DYNATECH CORPORATION
Dynatech Corporation is a company organized under the laws of the
Commonwealth of Massachusetts. Section 67 of the Massachusetts Business
Corporation Law (the "MBCL") provides that a corporation may indemnify its
directors, officers, employees or other agents to the extent specified in the
articles of organization, by-laws, or by a majority vote of the Stockholders.
Except as the articles of organization or bylaws otherwise require and except
as relating to the directors themselves, the corporation may provide
indemnification to the extent authorized by the directors. Such
indemnification may include payment by the corporation of expenses incurred in
defending a civil or criminal action or proceeding in advance of the final
disposition of such action or proceeding, upon receipt of an undertaking by
the person indemnified to repay such payment if he shall be adjudicated to be
not entitled to indemnification. The MBCL bars indemnification for any person
with respect to any matter as to which he or she has been adjudicated in any
proceeding not to have acted in good faith and in the reasonable belief that
his or her action was in the best interest of the corporation. Section 67
grants to corporations the power to purchase and maintain insurance on behalf
of any person who is or was a director, officer, employee or other agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee, or other agent of another organization against
any liability incurred by him or her in any such capacity, or arising out of
his or her status as such, whether or not the corporation would have the power
to indemnify him or her against such liability.
Article 6(b) of Dynatech's Restated Articles of Organization provides
indemnification for Dynatech's directors and officers against all expenses
incurred by them in connection with any proceeding resulting from their
service in such capacities, except that no indemnification shall be provided
regarding any matter in which a director or officer has been adjudicated not
to have acted in good faith and in the reasonable belief that his or her
II-1
<PAGE>
action was in the best interests of Dynatech. The Restated Articles of
Organization direct Dynatech to pay the expenses of a director or officer in
advance of a final determination of a proceeding, unless it is determined by
(i) a majority vote of a quorum consisting of the directors who were not
parties to such proceedings or (ii) by legal counsel in a written opinion,
that the director or officer in question did not act in good faith and in the
reasonable belief that his or her action was in the best interests of
Dynatech.
Article 6(e) of Dynatech's Restated Articles of Organization eliminates the
personal liability of the directors to Dynatech or its Stockholders for
monetary damages for breach of fiduciary duty as directors.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS:
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
3.1 Certificate of Formation of Telecommunications Techniques Co.,
LLC, filed with the Secretary of State of Delaware on May 14,
1998.
3.2 Limited Liability Company Agreement of Telecommunications
Techniques Co., LLC, dated as of May 14, 1998.
3.3 Amended and Restated Articles of Organization of Dynatech
Corporation.*
3.4 By-Laws of Dynatech Corporation.*
4.1 Indenture, dated May 21, 1998, among Dynatech Corporation, TTC
Merger Co. LLC and State Street Bank and Trust Company, as
Trustee.
4.2 Form of 9 3/4% Senior Subordinated Note Due 2008.
4.3 First Supplemental Indenture, dated May 21, 1998, between
Telecommunications Techniques Co., LLC and State Street Bank and
Trust Company, as Trustee.
4.4 Registration Rights Agreement, dated May 21, 1998, by and among
Dynatech Corporation, Telecommunications Techniques Co., LLC,
Credit Suisse First Boston Corporation and J.P. Morgan Securities
Inc.
5 Opinion of Debevoise & Plimpton regarding the legality of the New
Notes being registered.+
10.1 Agreement and Plan of Merger, dated as of December 20, 1997 by and
between CDRD Merger Corporation and Dynatech Corporation.**
10.2 Agreement and Plan of Merger, dated May 18, 1998, between TTC
Reorg Corp. and Telecommunications Techniques Co., LLC.
10.3 Agreement and Plan of Merger, dated May 21, 1998, between TTC
Merger Co. LLC and Telecommunications Techniques Co., LLC.
10.4 Credit Agreement, dated May 21, 1998, among Dynatech Corporation,
TTC Merger Co. LLC, the lenders named therein, Morgan Guaranty and
Trust Company of New York, as administrative agent, Credit Suisse
First Boston, as syndication agent, and The Chase Manhattan Bank,
as documentation agent.
10.5 Guarantee and Collateral Agreement, dated as of May 21, 1998,
among Dynatech Corporation, Telecommunications Techniques Co., LLC
and certain of its subsidiaries and Morgan Guaranty and Trust
Company of New York.
10.6 Form of Amended and Restated Employment Agreement with John F.
Reno.*
10.7 Form of Amended and Restated Employment Agreement with Allan M.
Kline.*
10.8 Form of Amended and Restated Employment Agreement with John R.
Peeler.*
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
10.9 Form of Letter Agreement with John A. Mixon and Certain Other
Officers.*
10.10 Form of Management Equity Agreement with Mr. Reno.*
10.11 Form of Management Equity Agreement with Messrs. Kline and
Peeler.*
10.12 Form of Management Equity Agreement with Mr. Mixon and Certain
Other Officers.*
10.13 Form of Nondisclosure, Noncompetition and Nonsolicitation
Agreement.*
10.14 Indemnification Agreement, dated May 21, 1998, among Dynatech
Corporation, Telecommunications Techniques Co., LLC, Clayton,
Dubilier & Rice, Inc. and Clayton, Dubilier & Rice Fund V Limited
Partnership.
10.15 Consulting Agreement, dated May 21, 1998, by and among Dynatech
Corporation, Telecommunications Techniques Co., LLC and Clayton,
Dubilier & Rice, Inc.
10.16 Tax Sharing Agreement, dated May 21, 1998 between Dynatech
Corporation and Telecommunications Techniques Co., LLC.
10.17 Registration Rights Agreement, dated May 21, 1998, by and among
Dynatech Corporation, Clayton, Dubilier and Rice Fund V Limited
Partnership, Mr. Reno, the Suzanne D. Reno Trust and the John F.
Reno Trust.
10.18 Assignment and Assumption Agreement, dated May 21, 1998, between
Dynatech Corporation and Telecommunications Techniques Co., LLC.
10.19 Purchase Agreement, dated May 14, 1998, among Dynatech
Corporation, TTC Merger Co. LLC, Credit Suisse First Boston
Corporation and J.P. Morgan Securities Inc.
10.20 Purchase Agreement Supplement, dated May 21, 1998, between
Dynatech Corporation, Telecommunications Techniques Co., LLC.,
Credit Suisse First Boston Corporation and J.P. Morgan Securities
Inc.
10.21 Amendment No. 1, dated as of December 20, 1997, to the Shareholder
Rights Agreement, dated as of February 16, 1989, as amended and
restated as of March 12, 1990, between Dynatech Corporation and
BankBoston, N.A., as Rights Agent.
10.22 Assumption Agreement, dated May 21, 1998, among Dynatech
Corporation, TTC Merger Co. LLC, and Telecommunications Techniques
Co., LLC and consented to by Morgan Guaranty Trust Company of New
York, as administrative agent.
12 Statement re computations of ratios.
21 Schedule of Subsidiaries of Telecommunications Techniques Co.,
LLC.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Debevoise & Plimpton (included in Exhibit 5).+
24.1 Power of Attorney from John F. Reno.
24.2 Power of Attorney from Allan M. Kline.
24.3 Power of Attorney from John R. Peeler.
24.4 Power of Attorney from Joseph L. Rice, III.
24.5 Power of Attorney from Brian D. Finn.
24.6 Power of Attorney from Charles P. Pieper.
25 Statement of Eligibility of State Street Bank and Trust Company.
27.1 Financial Data Schedule for Fiscal Year Ended March 31, 1998.*
27.2 Financial Data Schedule for Quarter Ended December 31, 1997
Restated.*
27.3 Financial Data Schedule for Quarter Ended September 30, 1997
Restated.*
27.4 Financial Data Schedule for Quarter Ended June 30, 1997 Restated.*
27.5 Financial Data Schedule for Fiscal Year Ended March 31, 1997
Restated.*
27.6 Financial Data Schedule for Quarter Ended December 31, 1996
Restated.*
27.7 Financial Data Schedule for Quarter Ended September 30, 1996
Restated.*
</TABLE>
II-3
<PAGE>
<TABLE>
<S> <C>
27.8 Financial Data Schedule for Quarter Ended June 30, 1996 Restated.*
27.9 Financial Data Schedule for Fiscal Year Ended March 31, 1996 Restated.*
27.10 Financial Data Schedule for Quarter Ended December 31, 1995 Restated.*
27.11 Financial Data Schedule for Quarter Ended September 30, 1995 Restated.*
27.12 Financial Data Schedule for Quarter Ended June 30, 1995 Restated.*
99.1 Form of Letter of Transmittal for Tender of 9 3/4% Senior Subordinated Notes Due 2008 in exchange
for registered 9 3/4% Senior Subordinated Notes Due 2008.+
99.2 Form of Notice of Guaranteed Delivery for Tender of 9 3/4% Senior Subordinated Notes Due 2008 in
exchange for registered 9 3/4% Senior Subordinated Notes Due 2008.+
99.3 Instruction to Registered Holder and/or Book Entry Transfer Participant from Beneficial Owner for
Tender of 9 3/4% Senior Subordinated Notes Due 2008 in exchange for registered 9 3/4% Senior
Subordinated Notes Due 2008.+
</TABLE>
- --------
* Incorporated by reference to Dynatech Annual Report on Form 10-K for the
fiscal year ended March 31, 1998 (File No. 333-1-12657).
** Incorporated by reference to Dynatech's Registration Statement on Form S-4
(File No. 333-44933).
+ To be filed by amendment.
(B) FINANCIAL STATEMENT SCHEDULES:
Schedule II. Valuation and Qualifying Accounts. See page F-26.
Schedules other than those listed above have been omitted because they are
either not required or not applicable or because the required information has
been included elsewhere in the financial statements or notes thereto.
ITEM 22. UNDERTAKINGS
The undersigned registrants hereby undertake:
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Securities Act") may be permitted to directors, officers
and controlling persons of the registrants pursuant to the provisions
described under item 20 or otherwise, the registrants have been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrants of expenses incurred or paid by a director, officer or
controlling person of the registrants in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrants will, unless in the opinion of their counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by them is against
public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT ON FORM S-4 TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF BURLINGTON, COMMONWEALTH OF MASSACHUSETTS, ON AUGUST 7, 1998.
Telecommunications Techniques Co.,
LLC
By: Dynatech Corporation, as sole
member
By: /s/ John F. Reno
--------------------------------
Name: John F. Reno
Title: Chairman, President & CEO
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
NAME TITLE DATE
/s/ John F. Reno Director of Dynatech August 7,
_________________________________ Corporation, sole member of 1998
JOHN F. RENO the Registrant
/s/ Allan M. Kline Director of Dynatech August 7,
_________________________________ Corporation, sole member of 1998
ALLAN M. KLINE the Registrant
/s/ John R. Peeler Director of Dynatech August 7,
_________________________________ Corporation, sole member of 1998
JOHN R. PEELER the Registrant
/s/ Joseph L. Rice, III Director of Dynatech August 7,
_________________________________ Corporation, sole member of 1998
JOSEPH L. RICE, III the Registrant
/s/ Brian D. Finn Director of Dynatech August 7,
_________________________________ Corporation, sole member of 1998
BRIAN D. FINN the Registrant
/s/ Charles P. Pieper Director of Dynatech August 7,
_________________________________ Corporation, sole member of 1998
CHARLES P. PIEPER the Registrant
II-5
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT ON FORM S-4 TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF BURLINGTON, COMMONWEALTH OF MASSACHUSETTS, ON AUGUST 7, 1998.
Dynatech Corporation
By: /s/ John F. Reno
--------------------------------
Name: John F. Reno
Title: Chairman, President & CEO
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
NAME TITLE DATE
/s/ John F. Reno Chairman, President and August 7,
_________________________________ Chief Executive Officer 1998
JOHN F. RENO (Principal Executive
Officer), Director
/s/ Allan M. Kline Corporate Vice President, August 7,
_________________________________ Chief Financial Officer and 1998
ALLAN M. KLINE Treasurer (Principal
Financial Officer),
Director
/s/ Robert W. Woodbury, Jr. Corporate Vice President, August 7,
_________________________________ Controller (Principal 1998
ROBERT W. WOODBURY, JR. Accounting Officer)
/s/ John R. Peeler Director August 7,
_________________________________ 1998
JOHN R. PEELER
/s/ Joseph L. Rice, III Director August 7,
_________________________________ 1998
JOSEPH L. RICE, III
/s/ Brian D. Finn Director August 7,
_________________________________ 1998
BRIAN D. FINN
/s/ Charles P. Pieper Director August 7,
_________________________________ 1998
CHARLES P. PIEPER
II-6
<PAGE>
EXHIBIT 3.1
CONFORMED COPY
--------------
CERTIFICATION OF FORMATION
OF
TELECOMMUNICATIONS TECHNIQUES CO., LLC
This Certificate of Formation of Telecommunications Techniques Co.,
LLC, dated as of May 14, 1998, is being duly executed and filed by David M.
Appel, as an authorized person, to form a limited liability company under the
Delaware Limited Liability Company Act (6 Del.C. (S)18-101, et seq.)
------ -- ---
FIRST. The name of the limited liability company formed hereby is
-----
Telecommunications Techniques Co., LLC (the "Company").
SECOND. The address of the registered office of the Company in the
------
State of Delaware is c/o Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle County, Delaware 19801.
THIRD. The name and address of the registered agent for service of
-----
process on the Company in the State of Delaware is c/o The Corporation Trust
Company, Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle
County, Delaware 19801.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Formation as of the date first above written.
/s/ David M. Appel
------------------
David M. Appel
Authorized Person
<PAGE>
EXHIBIT 3.2
CONFORMED COPY
--------------
LIABILITY COMPANY AGREEMENT
OF
TELECOMMUNICATIONS TECHNIQUES CO., LLC
--------------------------------------
This Limited Liability Company Agreement (this "Agreement") of
Telecommunications Techniques Co., LLC, is entered into by Dynatech USA, Inc., a
Massachusetts corporation, as sole member (the "Member").
The Member hereby forms a limited liability company pursuant to and in
accordance with the Delaware Limited Liability Company Act (6 Del.C. (S) 18-101,
------
et seq.), as amended from time to time (the "Act"), and hereby agrees as
- -- ---
follows:
1. Name. The name of the limited liability company formed hereby is
----
Telecommunications Techniques Co. LLC (the "Company").
2. Purpose. The Company is formed for the object and purpose of,
-------
and the nature of the business to be conducted and promoted by the Company is,
(a) engaging in any lawful act or activity, including without limitation
- --
commercial acts or activities, for which limited liability companies may be
formed under the Act and (b) engaging in any and all activities necessary or
-
incidental to the foregoing.
3. Registered Office. The address of the registered office of the
-----------------
Company in the State of Delaware is c/o Corporation Trust Center, 1209 Orange
Street, Wilmington, New Castle County, Delaware 19801.
4. Registered Agent. The name and address of the registered agent
----------------
of the Company for service of process on the Company in the State of Delaware is
c/o The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle County, Delaware 19801.
5. Member. The name and the mailing address of the Member are as
------
follows:
<PAGE>
Name Address
---- -------
Dynatech USA, Inc. 20410 Observation Drive
Germantown, MD 20876
(301) 353-1550
6. Powers. The business and affairs of the Company shall be managed
------
by the Member. The Member shall have the power to do any and all acts necessary
or convenient to or for the furtherance of the purposes described herein,
including (a) the opening of bank accounts and (b) all other powers, statutory
- -
or otherwise, possessed by members under the laws of the State of Delaware. The
Member is authorized to execute and deliver any instrument or document on behalf
of the Company. David M. Appel is hereby designated as an authorized person,
within the meaning of the Act, to execute, deliver and file the certificate of
formation of the Company (and any amendments and/or restatements thereof) and
any other certificates (and any amendments and/or restatements thereof)
necessary for the Company to qualify to do business in a jurisdiction in which
the Company may wish to conduct business.
7. Dissolution. The Company shall dissolve, and its affairs shall
-----------
be wound up upon the first to occur of the following: (a) the written consent of
-
the Member, (b) the resignation, expulsion, bankruptcy or dissolution of the
-
Member or (c) the entry of a decree of judicial dissolution under Section 18-802
-
of the Act.
8. Capital Contributions. The Member agrees to contribute $10.00 in
---------------------
cash, and no other property, to the Company.
9. Additional Contributions. The Member shall have the right, but
------------------------
not the obligation, to make additional capital contributions to the Company in
the form of cash, services or otherwise, and upon such contribution the Member's
capital account balance shall be adjusted accordingly.
10. Distributions. Distributions shall be made to the Member at the
-------------
times and in the aggregate amounts determined by the Member. Notwithstanding
anything to the contrary contained herein, the Company, and the Member on behalf
of the Company, shall not make a distribution to the Member on account of the
interest of the Member in the Company if such distribution would violate (S)18-
607 of the Act or any other applicable law.
2
<PAGE>
11. Assignments. The Member shall be permitted to transfer all, and
-----------
no less than all, of its interest in the Company to any person or entity that
assumes all of the Member's obligations under this Agreement.
12. Resignation. The Member may only resign from the Company if it
-----------
has transferred all of its interest in the Company to another person or entity.
13. Admission of Additional Members. No additional members may be
-------------------------------
admitted to the Company.
14. Liability of Member. Except as otherwise provided by the Act or
-------------------
herein, the debts, obligations and liabilities of the Company, whether arising
in contract, tort or otherwise, shall be solely the debts, obligations and
liabilities of the Company, and the Member shall not be obligated personally for
any such debt, obligation or lia bility of the Company solely by reason of
being a member of the Company.
15. Other Business. The Member and any person or entity affiliated
--------------
with the Member may engage in or possess an interest in other business ventures
(unconnected with the Company) of every kind and description, independently or
with others. The Company shall have no rights in or to such independent
ventures or the income or profits therefrom by virtue of this Agreement.
16. Exculpation. (a) Neither the Member nor any of its respective
-----------
affiliates, directors, advisory directors, members, officers or employees (each,
a "Covered Person"), shall be liable to the Company or the Member for any loss,
--------------
liability, damage or claim incurred by reason of any act or omission performed
or omitted by such Covered Person in good faith on behalf of the Company.
Whenever in this Agreement a Covered Person is permitted or required to make
decisions in good faith, the Covered Person shall act under such standard and
shall not be subject to any other or different standard imposed by this
Agreement or any relevant provisions of law or in equity or otherwise.
(b) A Covered Person shall be fully protected in relying in good
faith upon the records of the Company and upon such information, opinions,
reports or statements presented to the Company by any person or entity as to
matters the Covered Person reasonably believes are within such person's or
entity's professional or expert competence.
17. Fiduciary Duty. To the extent that, at law or in equity, a
--------------
Covered Person has duties (including fiduciary duties) and liabilities relating
thereto to the Company
3
<PAGE>
or to the Member, a Covered Person acting under this Agreement shall not be
liable to the Company or to the Member for such Covered Person's good faith
reliance on the provisions of this Agreement. The provisions of this Agreement,
to the extent that they restrict the duties and liabilities of a Covered Person
otherwise existing at law or in equity, are agreed by the parties hereto to
replace such other duties and liabilities of such Covered Person.
18. Indemnification. To the fullest extent permitted by
---------------
applicable law, a Covered Person shall be entitled to indemnification from the
Company for any costs and expenses (including attorneys' fees and
disbursements), loss, liability, damage or claim incurred by such Covered Person
by reason of any act or omission performed or omitted by such Covered Person in
good faith on behalf of the Company.
19. Expenses. To the fullest extent permitted by applicable
--------
law, expenses (including attorneys' fees and disbursements) incurred by a
Covered Person in defending any claim, demand, action, suit or proceeding shall,
from time to time, be advanced by the Company prior to the final disposition of
such claim, demand, action, suit or proceeding, subject to recapture by the
Company following a later determination that such Covered Person was not
entitled to be indemnified hereunder.
20. No Third-Party Beneficiaries. Except as provided in Sections 16
----------------------------
through 19 with respect to the exculpation and indemnification of Covered
Persons, nothing in this Agreement shall confer any rights upon any person or
entity other than the parties hereto and their successors and permitted assigns.
21. Binding Effect. This Agreement shall be binding upon and
--------------
inure to the benefit of all parties hereto and their successors and permitted
assigns.
22. Severability. The invalidity or unenforceability of any
------------
particular provision of this Agreement shall not affect the other provisions
hereof, and this Agreement shall be construed in all respects as if such invalid
or unenforceable provision was omitted.
23. Entire Agreement. The Agreement constitutes the entire agreement
----------------
between the parties hereto with respect to the subject matter hereof, and
supersedes all prior understandings or agreements between the parties.
24. Amendment. This Agreement may not be modified, altered,
---------
supplemented or amended except pursuant to a written agreement executed and
delivered by the Member.
4
<PAGE>
25. Certificates. (a) General. The Member shall be entitled to a
------------ -------
certificate representing its interest in the Company. The certificate shall
contain a legend with respect to any restrictions on transfer.
(b) Application of Article 8 of the Uniform Commercial Code. The
-------------------------------------------------------
Company hereby irrevocably elects that all interests in the Company shall be
securities governed by Article 8 of the Uniform Commercial Code in effect in the
State of Delaware. Each certificate evidencing an interest in the Company shall
bear the following legend
"This Certificate evidences a membership interest in Telecommunications
Techniques Co., LLC and shall be a security for purposes of Article 8 of
the Uniform Commercial Code in effect in the State of Delaware."
No change to this provision shall be effective until all outstanding
certificates have been surrendered for cancellation and nay new certificates
thereafter issued shall not bear the foregoing legend.
26. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
-------------
CONSTRUED UNDER, THE LAW OF THE STATE OF DELAWARE, WITHOUT REGARD TO THE
CONFLICT OF LAWS PRINCIPLES THEREOF.
IN WITNESS WHEREOF, the undersigned, intending to be legally bound
hereby, has duly executed this Agreement as of May 14, 1998.
DYNATECH USA, INC.
By:/s/ John F. Reno
----------------
Name: John F. Reno
Title: President
5
<PAGE>
Exhibit 4.1
DYNATECH CORPORATION,
as an Initial Issuer and, after the assumption
of obligations under this Indenture and the Notes by
Telecommunications Techniques Co., LLC,
as Parent Guarantor
and
TTC MERGER CO., LLC
(a company to be merged into
TELECOMMUNICATIONS TECHNIQUES CO., LLC,
which will succeed to and assume all obligations
under this Indenture and the Notes), as an Initial Issuer
and
STATE STREET BANK AND TRUST COMPANY,
as Trustee
--------------
INDENTURE
Dated as of May 21, 1998
--------------
9 3/4% Senior Subordinated Notes Due 2008
<PAGE>
TABLE OF CONTENTS
=================
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
----------------------
<TABLE>
<CAPTION>
Page
-----
<S> <C> <C>
Section 101. Definitions 1
Section 102. Other Definitions 37
Section 103. Rules of Construction 38
Section 104. Incorporation by Reference of TIA 39
Section 105. Conflict with TIA 39
Section 106. Compliance Certificates and Opinions 39
Section 107. Form of Documents Delivered to Trustee 40
Section 108. Acts of Noteholders; Record Dates 41
Section 109. Notices, etc., to Trustee and Company 43
Section 110. Notices to Holders; Waiver 44
Section 111. Effect of Headings and Table of Contents 44
Section 112. Successors and Assigns 44
Section 113. Separability Clause 44
Section 114. Benefits of Indenture 44
Section 115. GOVERNING LAW 45
Section 116. Legal Holidays 45
Section 117. No Personal Liability of Directors, Officers, Employees, Incorporators
and Stockholders 45
Section 118. Exhibits and Schedules 45
Section 119. Counterparts 45
Section 120. Holding as Agent for TTC Merger Co. 45
ARTICLE 2
NOTE FORMS
----------
Section 201. Forms Generally 46
Section 202. Form of Trustee's Certificate of Authentication 48
Section 203. Restrictive and Global Note Legends 49
</TABLE>
i
<PAGE>
ARTICLE 3
THE NOTES
---------
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 301. Title and Terms 51
Section 302. Denominations 52
Section 303. Execution, Authentication and Delivery and Dating 52
Section 304. Temporary Notes 53
Section 305. Registration, Registration of Transfer and Exchange 53
Section 306. Mutilated, Destroyed, Lost and Stolen Notes 54
Section 307. Payment of Interest Rights Preserved 55
Section 308. Persons Deemed Owners 56
Section 309. Cancellation 56
Section 310. Computation of Interest 56
Section 311. CUSIP Numbers 57
Section 312. Book-Entry Provisions for Global Notes 57
Section 313. Special Transfer Provisions 59
Section 314. Payment of Additional Interest 62
ARTICLE 4
COVENANTS
---------
Section 401. Payment of Principal, Premium and Interest 62
Section 402. Maintenance of Office or Agency 62
Section 403. Money for Payments To Be Held in Trust 63
Section 404. SEC Reports 64
Section 405. Statement as to Default 65
Section 406. Limitation on Indebtedness 65
Section 407. Limitation on Layering 68
Section 408. Limitation on Restricted Payments 69
Section 409. Limitation on Restrictions on Distributions from Restricted Subsidiaries 73
Section 410. Limitation on Sales of Assets and Subsidiary Stock 75
Section 411. Limitation on Transactions with Affiliates 78
Section 412. Limitation on Liens 79
Section 413. Future Note Guarantors 80
Section 414. Purchase of Notes Upon a Change in Control 80
</TABLE>
ii
<PAGE>
ARTICLE 5
SUCCESSOR COMPANY
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 501. When the Company May Merge, etc. 81
Section 502. Successor Company Substituted 82
ARTICLE 6
REMEDIES
--------
Section 601. Events of Default 83
Section 602. Acceleration of Maturity; Rescission and Annulment 85
Section 603. Other Remedies; Collection Suit by Trustee 86
Section 604. Trustee May File Proofs of Claim 86
Section 605. Trustee May Enforce Claims Without Possession of Notes 87
Section 606. Application of Money Collected 87
Section 607. Limitation on Suits 87
Section 608. Unconditional Right of Holders to Receive Principal, Premium and
Interest 88
Section 609. Restoration of Rights and Remedies 88
Section 610. Rights and Remedies Cumulative 88
Section 611. Delay or Omission Not Waiver 89
Section 612. Control by Holders 89
Section 613. Waiver of Past Defaults 89
Section 614. Undertaking for Costs 90
Section 615. Waiver of Stay, Extension or Usury Laws 90
ARTICLE 7
THE TRUSTEE
-----------
Section 701. Certain Duties and Responsibilities 91
Section 702. Notice of Defaults 92
Section 703. Certain Rights of Trustee 92
Section 704. Not Responsible for Recitals or Issuance of Notes 93
Section 705. May Hold Notes 93
Section 706. Money Held in Trust 93
Section 707. Compensation and Reimbursement 94
Section 708. Conflicting Interests 94
Section 709. Corporate Trustee Required; Eligibility 94
Section 710. Resignation and Removal; Appointment of Successor 95
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 711. Acceptance of Appointment by Successor 96
Section 712. Merger, Conversion, Consolidation or Succession to Business 96
Section 713. Preferential Collection of Claims Against the Company 97
Section 714. Appointment of Authenticating Agent 97
ARTICLE 8
HOLDERS' LISTS AND REPORTS BY
TRUSTEE AND THE COMPANY
------------------------------
Section 801. The Company to Furnish Trustee Names and Addresses of Holders 97
Section 802. Preservation of Information; Communications to Holders 98
Section 803. Reports by Trustee 98
ARTICLE 9
AMENDMENT, SUPPLEMENT OR WAIVER
-------------------------------
Section 901. Without Consent of Holders 98
Section 902. With Consent of Holders 99
Section 903. Execution of Amendments, Supplements or Waivers 101
Section 904. Revocation and Effect of Consents 101
Section 905. Conformity with TIA 102
Section 906. Notation on or Exchange of Notes 102
ARTICLE 10
REDEMPTION OF NOTES
-------------------
Section 1001. Right of Redemption 102
Section 1002. Applicability of Article 103
Section 1003. Election to Redeem; Notice to Trustee 103
Section 1004. Selection by Trustee of Notes to Be Redeemed 104
Section 1005. Notice of Redemption 104
Section 1006. Deposit of Redemption Price 105
Section 1007. Notes Payable on Redemption Date 105
Section 1008. Notes Redeemed in Part 106
</TABLE>
iv
<PAGE>
<TABLE>
<CAPTION>
Page
----
ARTICLE 11
SATISFACTION AND DISCHARGE
--------------------------
<S> <C> <C>
Section 1101. Satisfaction and Discharge of Indenture 106
Section 1102. Application of Trust Money 107
ARTICLE 12
DEFEASANCE OR COVENANT DEFEASANCE
---------------------------------
Section 1201. The Company's Option to Elect Defeasance or Covenant Defeasance 108
Section 1202. Defeasance and Discharge 108
Section 1203. Covenant Defeasance 108
Section 1204. Conditions to Defeasance or Covenant Defeasance 109
Section 1205. Deposited Money and U.S. Government Obligations To Be Held in
Trust; Other Miscellaneous Provisions 110
Section 1206. Reinstatement 111
Section 1207. Repayment to the Company 111
ARTICLE 13
PARENT GUARANTEE AND NOTE GUARANTEES
------------------------------------
Section 1301. Guarantees Generally 112
Section 1302. Continuing Guarantees 114
Section 1303. Release of Parent Guarantee and Note Guarantees 114
Section 1304. Agreement to Subordinate 115
Section 1305. Waiver of Subrogation 116
Section 1306. Notation Not Required 116
Section 1307. Successors and Assigns of the Holding or Note Guarantors 116
Section 1308. Execution and Delivery of Note Guarantees 116
Section 1309. Notices 117
ARTICLE 14
SUBORDINATION
-------------
Section 1401. Agreement To Subordinate 117
Section 1402. Liquidation, Dissolution, Bankruptcy 117
Section 1403. Default on Senior Indebtedness 117
Section 1404. Acceleration of Payment of Notes 118
</TABLE>
v
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 1405. When a Distribution Must Be Paid Over 119
Section 1406. Subrogation 119
Section 1407. Relative Rights 119
Section 1408. Subordination May Not Be Impaired by Issuers 119
Section 1409. Rights of Trustee and Paying Agent 119
Section 1410. Distribution or Notice to Representative 120
Section 1411. Article 14 Not To Prevent Events of Default or Limit Right To
Accelerate 120
Section 1412. Trust Moneys Not Subordinated 120
Section 1413. Trustee Entitled To Rely 120
Section 1414. Trustee To Effectuate Subordination 121
Section 1415. Trustee Not Fiduciary for Holders of Senior Indebtedness 121
Section 1416. Reliance by Holders of Senior Indebtedness on Subordination
Provisions 121
Section 1417. Trustee's Compensation Not Prejudiced 122
ARTICLE 15
SUBORDINATION OF PARENT GUARANTEE AND NOTE GUARANTEES
-----------------------------------------------------
Section 1501. Agreement To Subordinate 122
Section 1502. Liquidation, Dissolution, Bankruptcy 122
Section 1503. Default on Obligor Senior Indebtedness 123
Section 1504. Acceleration of Payment of Notes 124
Section 1505. When a Distribution Must Be Paid Over 125
Section 1506. Subrogation 125
Section 1507. Relative Rights 125
Section 1508. Subordination May Not Be Impaired by Guarantors 125
Section 1509. Rights of Trustee and Paying Agent 126
Section 1510. Distribution or Notice to Representative 126
Section 1511. Article 15 Not To Prevent Events of Default or Limit Right To
Accelerate 126
Section 1512. Trust Moneys Not Subordinated 127
Section 1513. Trustee Entitled To Rely 127
Section 1514. Trustee To Effectuate Subordination 127
Section 1515. Trustee Not Fiduciary for Holders of Obligor Senior Indebtedness 127
Section 1516. Reliance by Holders of Senior Indebtedness on Subordination
Provisions 128
Section 1517. Trustee's Compensation Not Prejudiced 128
</TABLE>
vi
<PAGE>
Exhibit A Form of Note
Exhibit B Form of Supplemental Indenture
Exhibit C Form of Regulation S Certificate
Exhibit D Form of Certificate of Beneficial Ownership
Exhibit E Form of First Supplemental Indenture
vii
<PAGE>
Certain Sections of this Indenture relating to Sections 310 through 318
inclusive of the Trust Indenture Act of 1939:
Trust Indenture Act Section Indenture Section
- --------------------------- ----------------
(S) 310(a)(1).............. 709
(a)(2).............. 709
(a)(3).............. Not Applicable
(a)(4).............. Not Applicable
(b)................. 708
(S) 311(a)................. 713
(b)................. 713
(b)(2).............. 803
803
(S) 312(a)................ 801
802
(b)................ 802
(c)................ 802
(S) 313(a)................ 803
(b)................ 803
(c)................ 803
803
(d)................ 803
(S) 314(a)................ 404
(a)(4)............. 102
405
(b)................. Not Applicable
(c)(1).............. 102
(c)(2).............. 102
(c)(3).............. Not Applicable
(d)................. Not Applicable
(e)................. 102
viii
<PAGE>
Trust Indenture Act Section Indenture Section
- --------------------------- ----------------
(S) 315(a)............... 701
(b)............... 702
803
(c)............... 701
(d)............... 701
(d)(1)............ 701
(d)(2)............ 701
(d)(3)............ 701
(e)............... 614
(S) 316(a)............... 101
612
(a)(1)(A)......... 602
612
(a)(1)(B )........ 613
(a)(2)............ Not Applicable
(b)............... 608
(c)............... 104
(S) 317(a)(1)............ 603
(a)(2)............ 604
(b)............... 403
(S) 318(a)............... 107
______________________
This cross-reference table shall not for any purpose be deemed to be part of
this Indenture.
ix
<PAGE>
INDENTURE, dated as of May 21, 1998 (as amended, supplemented or otherwise
modified from time to time, the "Indenture"), among Dynatech Corporation, a
---------
corporation organized under the laws of the Commonwealth of Massachusetts
("Holding") and TTC Merger Co. LLC, a limited liability company organized under
- ---------
the laws of the State of Delaware ("TTC Merger Co." and together with Holding
--------------
the "Initial Issuers"), and State Street Bank and Trust Company, a Massachusetts
---------------
trust company, as trustee (the "Trustee").
-------
RECITALS OF THE INITIAL ISSUERS AND HOLDING
The Initial Issuers have duly authorized the execution and delivery of this
Indenture to provide for the issuance of the Notes. Holding has duly authorized
the execution and delivery of this Indenture to provide for its guarantee of the
Notes, as provided in this Indenture. Holding has received good and valuable
consideration for its execution and delivery of this Indenture and its guarantee
of the Notes.
All things necessary to make the Original Notes, when executed and
delivered by the Initial Issuers and authenticated and delivered by the Trustee
hereunder and duly issued by the Initial Issuers, the valid obligation of the
Initial Issuers, and to make this Indenture a valid agreement of each of the
Initial Issuers and Holding as of the date hereof, in accordance with the terms
of the Original Notes and this Indenture, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Notes by
the Holders thereof, it is mutually agreed, for the equal and ratable benefit of
all Holders of the Notes, as follows:
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
----------------------------------------
Section 101. Definitions.
-----------
"Additional Assets" means (i) any property or assets that replace the
----------------- -
property or assets that are the subject of an Asset Disposition; (ii) any
--
property or assets (other than Indebtedness and Capital Stock) to be used by the
Company or a Restricted Subsidiary in a Related Business; (iii) the Capital
---
Stock of a Person that is engaged in a Related Business and
<PAGE>
becomes a Restricted Subsidiary as a result of the acquisition of such Capital
Stock by the Company or another Restricted Subsidiary; or (iv) Capital Stock of
--
any Person that at such time is a Restricted Subsidiary, acquired from a third
party.
"Additional Notes" means any notes issued under this Indenture in addition
----------------
to the Original Notes (other than any Notes issued pursuant to Section 304, 305,
----------- ---
306, 312(c), 312(d) or 1008).
- --- ----- ------ ----
"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 the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
- --------
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
- ------------ ----------
"all or substantially all" has the meaning given to such phrase in the
------------------------
Revised Model Business Corporation Act and commentary thereto.
"Applicable Premium" means, with respect to a Note at any Redemption Date,
------------------
the greater of (i) 1.0% of the principal amount of such Note and (ii) the excess
- --
of (A) the present value at such Redemption Date of (1) the redemption price of
- -
such Note on May 15, 2003 (such redemption price being that described in
paragraph (a) of Section 1001) plus (2) all required remaining scheduled
------------ -
interest payments due on such Note through May 15, 2003, computed using a
discount rate equal to the Treasury Rate plus 50 basis points, over (B) the
-
principal amount of such Note on such Redemption Date. Calculation of the
Applicable Premium will be made by the Company or on behalf of the Company by
such Person as the Company shall designate, provided, that such calculation
--------
shall not be a duty or obligation of the Trustee.
"Asset Disposition" means any sale, lease, transfer or other disposition of
-----------------
shares of Capital Stock of a Restricted Subsidiary (other than directors'
qualifying shares, or (in the case of a Foreign Subsidiary) to the extent
required by applicable law), property or other assets (each referred to for the
purposes of this definition as a "disposition") by the Company or any of its
-----------
Restricted Subsidiaries (including any disposition by means of a merger,
consolidation or similar transaction), other than (i) a disposition to the
-
Company or a Restricted Subsidiary, (ii) a disposition in the ordinary course of
--
business, (iii) the sale or discount (with or without recourse, and on customary
---
or commercially reasonable terms) of accounts receivable or notes receivable
arising in the ordinary course of business, or the conversion or exchange of
accounts receivable for notes receivable, (iv) any Restricted Payment
--
Transactions, (v) a disposition that is governed by the provisions described
-
under Article 5 hereof, (vi) any
--------- --
2
<PAGE>
Financing Disposition, (vii) any "fee in lieu" or other disposition of assets to
---
any governmental authority or agency that continue in use by the Company or any
Restricted Subsidiary, so long as the Company or any Restricted Subsidiary may
obtain title to such assets upon reasonable notice by paying a nominal fee,
(viii) any exchange of like property pursuant to Section 1031 (or any successor
- -----
section) of the Code, (ix) any financing transaction with respect to property
--
built or acquired by the Company or any Restricted Subsidiary after the Issue
Date, including without limitation any sale/leaseback transaction or asset
securitization, (x) any disposition arising from foreclosure, condemnation or
-
similar action with respect to any property or other assets, (xi) any
--
disposition of Capital Stock, Indebtedness or other securities of an
Unrestricted Subsidiary, (xii) a disposition of Capital Stock of a Restricted
---
Subsidiary pursuant to an agreement or other obligation with or to a Person
(other than the Company or a Restricted Subsidiary) from whom such Restricted
Subsidiary was acquired, or from whom such Restricted Subsidiary acquired its
business and assets (having been newly formed in connection with such
acquisition), entered into in connection with such acquisition, (xiii) a
----
disposition of not more than 5% of the outstanding Capital Stock of a Foreign
Subsidiary that has been approved by the Board of Directors, or (xiv) any
---
disposition or series of related dispositions for aggregate consideration not to
exceed $2.5 million.
"Authenticating Agent" means any Person authorized by the Trustee pursuant
--------------------
to Section 714 to act on behalf of the Trustee to authenticate Notes of one or
-----------
more series.
"Average Life" means, as of the date of determination, with respect to any
------------
Indebtedness or Preferred Stock, the quotient obtained by dividing (i) the sum
-
of the products of the numbers of years from the date of determination to the
dates of each successive scheduled principal payment of such Indebtedness or
redemption or similar payment with respect to such Preferred Stock multiplied by
the amount of such payment by (ii) the sum of all such payments.
--
"Bank Indebtedness" means any and all amounts, whether outstanding on the
-----------------
Issue Date or thereafter incurred, payable under or in respect of the Senior
Credit Facility, including without limitation principal, premium (if any),
interest (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company or any Restricted
Subsidiary whether or not a claim for post-filing interest is allowed in such
proceedings), fees, charges, expenses, reimbursement obligations, guarantees,
other monetary obligations of any nature and all other amounts payable
thereunder or in respect thereof.
"Board of Directors" means the board of directors or other governing body
------------------
of the Company or, if the Company is owned or managed by a single entity, the
board of
3
<PAGE>
directors or other governing body of such entity, or, in either case, any
committee thereof duly authorized to act on behalf of such board or governing
body.
"Borrowing Base" means the sum (determined as of the end of the most
--------------
recently ended fiscal quarter for which consolidated financial statements of the
Company are available) of (1) 60% of Inventory of the Company and its Restricted
-
Subsidiaries and (2) 80% of Receivables of the Company and its Restricted
-
Subsidiaries.
"Business Day" means a day other than a Saturday, Sunday or other day on
------------
which commercial banking institutions are authorized or required by law to close
in New York City.
"Capital Stock" of any Person means any and all shares, interests, rights
-------------
to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
"Capitalized Lease Obligation" means an obligation that is required to be
----------------------------
classified and accounted for as a capitalized lease for financial reporting
purposes in accordance with GAAP. The Stated Maturity of any Capitalized
Lease Obligation shall be the date of the last payment of rent or any other
amount due under the related lease.
"Cash Equivalents" means any of the following: (a) securities issued or
---------------- -
fully guaranteed or insured by the United States Government or any agency or
instrumentality thereof, (b) time deposits, certificates of deposit or bankers'
-
acceptances of (i) any lender under the Senior Credit Agreement or (ii) any
- --
commercial bank having capital and surplus in excess of $500,000,000 and the
commercial paper of the holding company of which is rated at least A-1 or the
equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody's
(or if at such time neither is issuing ratings, then a comparable rating of
another nationally recognized rating agency), (c) commercial paper rated at
-
least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent
thereof by Moody's (or if at such time neither is issuing ratings, then a
comparable rating of another nationally recognized rating agency) and (d)
-
investments in money market funds complying with the risk limiting conditions of
Rule 2a-7 or any successor rule of the SEC under the Investment Company Act of
1940, as amended.
"CDR" means Clayton, Dubilier & Rice, Inc.
---
"CDR Fund V" means Clayton, Dubilier & Rice Fund V Limited Partnership, a
----------
Cayman Islands exempted limited partnership, and any successor in interest
thereto.
4
<PAGE>
"Cedel" means Cedel Bank, societe anonyme.
-----
"Change of Control" means if:
-----------------
(i) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act), other than one or more Permitted Holders or Holding, is
or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5
under the Exchange Act), directly or indirectly, of more than 50% of the
total voting power of the Voting Stock of the Company, provided that so
--------
long as the Company is a Subsidiary of Holding, no Person shall be deemed
to be or become a "beneficial owner" of more than 50% of the total voting
power of the Voting Stock of the Company unless such Person shall be or
become a "beneficial owner" of more than 50% of the total voting power of
the Voting Stock of Holding;
(ii) the Company merges or consolidates with or into, or sells or
transfers (in one or a series of related transactions) all or substantially
all of the assets of the Company and its Restricted Subsidiaries to,
another Person (other than one or more Permitted Holders) and any "person"
(as defined in clause (i) above), other than one or more Permitted Holders
or Holding, is or becomes the "beneficial owner" (as so defined), directly
or indirectly, of more than 50% of the total voting power of the Voting
Stock of the surviving Person in such merger or consolidation, or the
transferee Person in such sale or transfer of assets, as the case may be,
provided that so long as such surviving or transferee Person is a
--------
Subsidiary of a parent Person, no Person shall be deemed to be or become a
"beneficial owner" of more than 50% of the total voting power of the Voting
Stock of such surviving or transferee Person unless such Person shall be or
become a "beneficial owner" of more than 50% of the total voting power of
the Voting Stock of such parent Person; or
(iii) during any period of two consecutive years (during which period
the Company has been a party to this Indenture), individuals who at the
beginning of such period were members of the board of directors of the
Company (together with any new members thereof whose election by such board
of directors or whose nomination for election by holders of Capital Stock
of the Company was approved by one or more Permitted Holders or by a vote
of a majority of the members of such board of directors then still in
office who were either members thereof at the beginning of such period or
whose election or nomination for election was previously so approved) cease
for any reason to constitute a majority of such board of directors then in
office.
"Change of Control Triggering Event" means the occurrence after the
----------------------------------
Issue Date of both (a) a Change of Control and (b) the failure of the Notes to
- -
have, on the 30th day
5
<PAGE>
after such Change of Control, a rating of at least "BBB-" (or equivalent
successor rating) by S&P and a rating of at least "Baa3" (or equivalent
successor rating) by Moody's.
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Company" means, until the consummation of the Second Merger, Holding
-------
and TTC Merger Co., and from and after such consummation, Telecommunications
Techniques Co., LLC, a Delaware limited liability company, and any successor in
interest thereto.
"Company Request," "Company Order" and "Company Consent" mean,
--------------- ------------- ---------------
respectively, a written request, order or consent signed in the name of the
Company by an Officer of the Company.
"Consolidated Coverage Ratio" as of any date of determination means
---------------------------
the ratio of (i) the aggregate amount of Consolidated EBITDA of the Company and
-
its Restricted Subsidiaries for the period of the most recent four consecutive
fiscal quarters ending prior to the date of such determination for which
consolidated financial statements of the Company are available to (ii)
--
Consolidated Interest Expense for such four fiscal quarters (in each case,
determined, for each fiscal quarter (or portion thereof) of the four fiscal
quarters ending prior to the Issue Date, on a pro forma basis to give effect to
the Recapitalization as if it had occurred at the beginning of such four-quarter
period); provided, that
--------
(1) if since the beginning of such period the Company or any
Restricted Subsidiary has Incurred any Indebtedness that remains
outstanding on such date of determination or if the transaction giving rise
to the need to calculate the Consolidated Coverage Ratio is an Incurrence
of Indebtedness, Consolidated EBITDA and Con solidated Interest Expense
for such period shall be calculated after giving effect on a pro forma
basis to such Indebtedness as if such Indebtedness had been Incurred on the
first day of such period (except that in making such computation, the
amount of Indebtedness under any revolving credit facility outstanding on
the date of such calculation shall be computed based on (A) the average
-
daily balance of such In debtedness during such four fiscal quarters or
such shorter period for which such facility was outstanding or (B) if such
-
facility was created after the end of such four fiscal quarters, the
average daily balance of such Indebtedness during the period from the date
of creation of such facility to the date of such calculation),
(2) if since the beginning of such period the Company or any
Restricted Subsidiary has repaid, repurchased, redeemed, defeased or
otherwise acquired, retired or discharged any Indebtedness (each, a
"Discharge") or if the transaction giving rise to the need to calculate the
----------
Consolidated Coverage Ratio involves a Discharge of In-
6
<PAGE>
debtedness (in each case other than Indebtedness Incurred under any
revolving credit facility unless such Indebtedness has been permanently
repaid), Consolidated EBITDA and Consolidated Interest Expense for such
period shall be calculated after giving effect on a pro forma basis to such
--- -----
Discharge of such Indebtedness, including with the proceeds of such new
Indebtedness, as if such Discharge had occurred on the first day of such
period,
(3) if since the beginning of such period the Company or any
Restricted Subsidiary shall have disposed of any company, any business or
any group of assets constituting an operating unit of a business (any such
disposition, a "Sale"), the Consolidated EBITDA for such period shall be
----
reduced by an amount equal to the Consolidated EBITDA (if positive)
attributable to the assets that are the subject of such Sale for such
period or increased by an amount equal to the Consolidated EBITDA (if
negative) attributable thereto for such period and Consolidated Interest
Expense for such period shall be reduced by an amount equal to (A) the
-
Consolidated Interest Expense attributable to any Indebtedness of the
Company or any Restricted Subsidiary repaid, repurchased, redeemed,
defeased or otherwise acquired, retired or discharged with respect to the
Company and its continuing Restricted Subsidiaries in connection with such
Sale for such period (including but not limited to through the assumption
of such Indebtedness by another Person) plus (B) if the Capital Stock of
---- -
any Restricted Subsidiary is sold, the Consolidated Interest Expense for
such period attributable to the Indebtedness of such Restricted Subsidiary
to the extent the Company and its con tinuing Restricted Subsidiaries are
no longer liable for such Indebtedness after such Sale,
(4) if since the beginning of such period the Company or any
Restricted Subsidiary (by merger, consolidation or otherwise) shall have
made an Investment in any Person that thereby becomes a Restricted
Subsidiary, or otherwise acquired any company, any business or any group of
assets constituting an operating unit of a business, including any such
Investment or acquisition occurring in connection with a transaction
causing a calculation to be made hereunder (any such Investment or
acquisition, a "Purchase"), Consolidated EBITDA and Consolidated Interest
--------
Expense for such period shall be calculated after giving pro forma effect
thereto (including the Incurrence of any related Indebtedness) as if such
Purchase occurred on the first day of such period, and
(5) if since the beginning of such period any Person became a
Restricted Subsidiary or was merged or consolidated with or into the
Company or any Restricted Subsidiary, and since the beginning of such
period such Person shall have Discharged any Indebtedness or made any Sale
or Purchase that would have required an adjustment
7
<PAGE>
pursuant to clause (2), (3) or (4) above if made by the Company or a
Restricted Subsidiary during such period, Consolidated EBITDA and
Consolidated Interest Expense for such period shall be calculated after
giving pro forma effect thereto as if such Discharge, Sale or Purchase
occurred on the first day of such period.
For purposes of this definition, whenever pro forma effect is to be
given to any Sale, Purchase or other transaction, or the amount of income or
earnings relating thereto and the amount of Consolidated Interest Expense
associated with any Indebtedness Incurred or repaid, repurchased, redeemed,
defeased or otherwise acquired, retired or discharged in connection therewith,
the pro forma calculations in respect thereof (including without limitation in
respect of anticipated cost savings or synergies relating to any such Sale,
Purchase or other transaction) shall be as determined in good faith by a
responsible financial or accounting Officer of the Company. If any Indebtedness
bears a floating rate of interest and is being given pro forma effect, the
interest expense on such Indebtedness shall be calculated as if the rate in
effect on the date of determination had been the applicable rate for the entire
period (taking into account any Interest Rate Agreement applicable to such
Indebtedness). If any Indebtedness bears, at the option of the Company or a
Restricted Subsidiary, a rate of interest based on a prime or similar rate, a
eurocurrency interbank offered rate or other fixed or floating rate, and such
Indebtedness is being given pro forma effect, the interest expense on such
Indebtedness shall be calculated by applying such optional rate as the Company
or such Restricted Subsidiary may designate. If any Indebtedness that is being
given pro forma effect was Incurred under a revolving credit facility, the
interest expense on such Indebtedness shall be computed based upon the average
daily balance of such Indebtedness during the applicable period. Interest on a
Capitalized Lease Obligation shall be deemed to accrue at an interest rate
determined in good faith by a responsible financial or accounting officer of the
Company to be the rate of interest implicit in such Capitalized Lease Obligation
in accordance with GAAP.
"Consolidated EBITDA" means, for any period, the Consolidated Net
-------------------
Income for such period, plus the following to the extent deducted in calculating
such Consolidated Net Income: (i) provision for all taxes (whether or not paid,
-
estimated or accrued) based on income, profits or capital, (ii) Consolidated
--
Interest Expense and any Receivables Fees, (iii) depreciation, amortization
---
(including but not limited to amortization of goodwill and intangibles and
amortization and write-off of financing costs) and all other non-cash charges or
non-cash losses, (iv) any expenses or charges related to any Equity Offering,
--
Investment or Indebtedness permitted by this Indenture (whether or not
consummated or incurred) and (v) the amount of any minority interest expense.
-
"Consolidated Interest Expense" means, for any period, (i) the total
----------------------------- -
interest expense of the Company and its Restricted Subsidiaries to the extent
deducted in calculating Consolidated Net Income, net of any interest income of
the Company and its Restricted
8
<PAGE>
Subsidiaries, including without limitation any such interest expense consisting
of (a) interest expense attributable to Capitalized Lease Obligations, (b)
- -
amortization of debt discount, (c) interest in respect of Indebtedness of any
-
other Person that has been Guaranteed by the Company or any Restricted
Subsidiary, but only to the extent that such interest is actually paid by the
Company or any Restricted Subsidiary, (d) non-cash interest expense, (e) the
- -
interest portion of any deferred payment obligation, and (f) commissions,
-
discounts and other fees and charges owed with respect to letters of credit and
bankers' acceptance financing, plus (ii) Preferred Stock dividends paid in cash
--
in respect of Disqualified Stock of the Company held by Persons other than the
Company or a Restricted Subsidiary and minus (iii) to the extent otherwise
---
included in such interest expense referred to in clause (i) above, Receivables
Fees and amortization or write-off of financing costs, in each case under
clauses (i) through (iii) as determined on a Consolidated basis in accordance
with GAAP; provided, that gross interest expense shall be determined after
--------
giving effect to any net payments made or received by the Company and its
Restricted Subsidiaries with respect to Interest Rate Agreements.
"Consolidated Net Income" means, for any period, the net income (loss)
-----------------------
of the Company and its Restricted Subsidiaries, determined on a consolidated
basis in accordance with GAAP and before any reduction in respect of Preferred
Stock dividends; provided, that there shall not be included in such Consolidated
--------
Net Income:
(i) any net income (loss) of any Person if such Person is not a
Restricted Subsidiary, except that (A) subject to the limitations contained
-
in clause (iv) below, the Company's equity in the net income of any such
Person for such period shall be included in such Consolidated Net Income up
to the aggregate amount actually distributed by such Person during such
period to the Company or a Restricted Subsidiary as a dividend or other
distribution (subject, in the case of a dividend or other distribution to
a Restricted Subsidiary, to the limitations contained in clause (iii)
below) and (B) the Company's equity in the net loss of such Person shall be
-
included to the extent of the aggregate Investment of the Company or any of
its Restricted Subsidiaries in such Person,
(ii) any net income (loss) of any Person acquired by the Company or a
Restricted Subsidiary in a pooling of interests transaction for any
period prior to the date of such acquisition,
(iii) any net income (loss) of any Restricted Subsidiary that is not
a Note Guarantor if such Restricted Subsidiary is subject to restrictions,
directly or indirectly, on the payment of dividends or the making of
similar distributions by such Restricted Subsidiary, directly or
indirectly, to the Company by operation of the terms of such Restricted
Subsidiary's charter or any agreement, instrument, judgment, decree, order,
9
<PAGE>
statute or governmental rule or regulation applicable to such Restricted
Subsidiary or its stockholders (other than (x) restrictions that have been
-
waived or otherwise released, (y) restrictions pursuant to the Notes or
-
this Indenture and (z) restrictions in effect on the Issue Date with
-
respect to a Restricted Subsidiary and other restrictions with respect to
such Restricted Subsidiary that taken as a whole are not materially less
favorable to the Noteholders than such restrictions in effect on the Issue
Date), except that (A) subject to the limitations contained in clause (iv)
-
below, the Company's equity in the net income of any such Restricted
Subsidiary for such period shall be included in such Consolidated Net
Income up to the aggregate amount of any dividend or distribution that was
or that could have been made by such Restricted Subsidiary during such
period to the Company or another Restricted Subsidiary (subject, in the
case of a dividend that could have been made to another Restricted
Subsidiary, to the limitation contained in this clause) and (B) the net
-
loss of such Restricted Subsidiary shall be included to the extent of the
aggregate Investment of the Company or any of its other Restricted
Subsidiaries in such Restricted Subsidiary,
(iv) any gain or loss realized upon the sale or other disposition of
any asset of the Company or any Restricted Subsidiary (including pursuant
to any sale/leaseback transaction) that is not sold or otherwise disposed
of in the ordinary course of business (as determined in good faith by the
Board of Directors),
(v) any item classified as an extraordinary, unusual or nonrecurring
gain, loss or charge (including without limitation (a) any compensation
-
expense for stock options that will be cashed out, converted, exchanged or
otherwise retired in connection with the Recapitalization, (b) any charge
-
or expense incurred for employee bonuses in connection with the
Recapitalization, and (c) fees, expenses and charges associated with the
-
Recapitalization or any acquisition, merger or consolidation after the
Issue Date),
(vi) the cumulative effect of a change in accounting principles,
(vii) all deferred financing costs written off and premiums paid in
connection with any early extinguishment of Indebtedness,
(viii) any unrealized gains or losses in respect of Currency
Agreements,
(ix) any unrealized foreign currency transaction gains or losses in
respect of Indebtedness of any Person denominated in a currency other than
the functional currency of such Person, and
10
<PAGE>
(x) any non-cash compensation charge arising from any grant of stock,
stock options or other equity-based awards.
In the case of any unusual or nonrecurring gain, loss or charge not
included in Consolidated Net Income pursuant to clause (v) above in any
determination thereof, the Company will deliver an Officer's Certificate to the
Trustee promptly after the date on which Consolidated Net Income is so
determined, setting forth the nature and amount of such unusual or nonrecurring
gain, loss or charge.
"Consolidated Total Assets" means, as of any date of determination,
-------------------------
the total assets shown on the consolidated balance sheet of the Company and its
Restricted Subsidiaries as of the most recent date for which such a balance
sheet is available, determined on a consolidated basis in accordance with GAAP
(and, in the case of any determination relating to any Incurrence of
Indebtedness or any Investment, on a pro forma basis including any property or
assets being acquired in connection therewith), provided that for purposes of
--------
paragraph (b) of Section 406 and the definition of "Permitted Investment,"
-----------
Consolidated Total Assets shall not be less than $285.3 million.
"Consolidation" means the consolidation of the accounts of each of the
-------------
Restricted Subsidiaries with those of the Company in accordance with GAAP;
provided that "Consolidation" will not include consolidation of the accounts of
- --------
any Unrestricted Subsidiary, but the interest of the Company or any Restricted
Subsidiary in any Unrestricted Subsidiary will be accounted for as an
investment. The term "Consolidated" has a correlative meaning.
"Corporate Trust Office" means the office of the Trustee in the
----------------------
Borough of Manhattan, the City of New York, at which at any particular time its
corporate trust business shall be administered, which office on the Issue Date
is located at 61 Broadway, 15th Floor, New York, New York 10006.
"Currency Agreement" means, in respect of a Person, any foreign
------------------
exchange contract, currency swap agreement or other similar agreement or
arrangements (including derivative agreements or arrangements), as to which such
Person is a party or a beneficiary.
"Default" means any event or condition that is, or after notice or
-------
passage of time or both would be, an Event of Default.
"Depositary" means The Depository Trust Company, its nominees and
----------
successors.
11
<PAGE>
"Designated Senior Indebtedness" means (i) the Bank Indebtedness and
------------------------------ -
(ii) any other Senior Indebtedness that, at the date of determination, has an
- ---
aggregate principal amount equal to or under which, at the date of
determination, the holders thereof are committed to lend up to, at least $10.0
million and is specifically designated by the Company in an agreement or
instrument evidencing or governing such Senior Indebtedness as "Designated
Senior Indebtedness" for purposes of this Indenture.
"Disinterested Director" means, with respect to any Affiliate
----------------------
Transaction, a member of the Board of Directors having no material direct or
indirect financial interest in or with respect to such Affiliate Transaction. A
member of the Board of Directors shall not be deemed to have such a financial
interest by reason of such member's holding Capital Stock of the Company or
Holding or any options, warrants or other rights in respect of such Capital
Stock.
"Disqualified Stock" means, with respect to any Person, any Capital
------------------
Stock (other than Management Stock) that by its terms (or by the terms of any
security into which it is convertible or for which it is exchangeable or
exercisable) or upon the happening of any event (other than following the
occurrence of a Change of Control or other similar event described under such
terms as a "change of control," or an Asset Disposition) (i) matures or is
-
mandatorily redeemable pursuant to a sinking fund obligation or otherwise, (ii)
--
is convertible or exchangeable for Indebtedness or Disqualified Stock or (iii)
---
is redeemable at the option of the holder thereof (other than following the
occurrence of a Change of Control or other similar event described under such
terms as a "change of control," or an Asset Disposition), in whole or in part,
in each case on or prior to the final Stated Maturity of the Notes.
"Domestic Subsidiary" means any Restricted Subsidiary of the Company
-------------------
other than a Foreign Subsidiary.
"Equity Offering" means a sale of Capital Stock (other than
---------------
Disqualified Stock) (x) that is a sale of Capital Stock of the Company, or (y)
- -
proceeds of which in an amount equal to or exceeding the Redemption Amount are
contributed to the Company or any of its Restricted Subsidiaries.
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
---------
Office, as operator of the Euroclear System.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
"Exchange Notes" means the Company's 9 3/4% Senior Subordinated Notes
--------------
Due 2008, containing terms substantially identical to the Initial Notes or any
Initial Additional
12
<PAGE>
Notes (except that (i) such Exchange Notes shall not contain terms with respect
-
to transfer restrictions and shall be registered under the Securities Act, and
(ii) certain provisions relating to an increase in the stated rate of interest
--
thereon shall be eliminated), that are issued and exchanged for (a) the Initial
-
Notes, as provided for in a registration rights agreement relating to such
Initial Notes and this Indenture, or (b) such Initial Additional Notes as may be
-
provided in any registration rights agreement relating to such Additional Notes
and this Indenture (including any amendment or supplement hereto).
"Excluded Contribution" means Net Cash Proceeds, or the fair value, as
---------------------
determined in good faith by the Board of Directors, of property or assets,
received by the Company as capital contributions to the Company after the Issue
Date or from the issuance or sale (other than to a Restricted Subsidiary) of
Capital Stock (other than Disqualified Stock) of the Company, in each case to
the extent designated as an Excluded Contribution pursuant to an Officer's
Certificate of the Company and not previously included in the calculation set
forth in subparagraph (a)(3)(B)(x) of Section 408 for purposes of determining
-----------
whether a Restricted Payment may be made.
"Financing Disposition" means any sale, transfer, conveyance or other
---------------------
disposition of property or assets by the Company or any Subsidiary thereof to
any Receivables Entity, or by any Receivables Subsidiary, in each case in
connection with the Incurrence by a Receivables Entity of Indebtedness, or
obligations to make payments to the obligor on Indebtedness, which may be
secured by a Lien in respect of such property or assets.
"First Supplemental Indenture" means the First Supplemental Indenture,
----------------------------
to be entered into substantially in the form attached hereto as Exhibit E.
---------
"Foreign Subsidiary" means (a) any Restricted Subsidiary of the
------------------ -
Company that is not organized under the laws of the United States of America or
any state thereof or the District of Columbia and (b) any Restricted Subsidiary
-
of the Company that has no material assets other than securities of one or more
Foreign Subsidiaries, and other assets relating to an ownership interest in any
such securities or Subsidiaries.
"GAAP" means generally accepted accounting principles in the United
----
States of America as in effect on the Issue Date (for purposes of the
definitions of the terms "Consolidated Coverage Ratio," "Consolidated EBITDA,"
"Consolidated Interest Expense," "Consolidated Net Income" and "Consolidated
Total Assets," all defined terms in this Indenture to the extent used in or
relating to any of the foregoing definitions, and all ratios and computations
based on any of the foregoing definitions) and as in effect from time to time
(for all other purposes of this Indenture), including those set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public
13
<PAGE>
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as approved by
a significant segment of the accounting profession. All ratios and computations
based on GAAP contained in this Indenture shall be computed in conformity with
GAAP.
"Guarantee" means any obligation, contingent or otherwise, of any
---------
Person directly or indirectly guaranteeing any Indebtedness or other obligation
of any other Person; provided that the term "Guarantee" shall not include
--------
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.
"Guarantor Designated Senior Indebtedness" means, with respect to any
----------------------------------------
Guarantor, (i) the Indebtedness of such Guarantor in respect of Bank
-
Indebtedness and (ii) any other Obligor Senior Indebtedness of such Guarantor
--
that, at the date of determination, has an aggregate principal amount equal to
or under which, at the date of determination, the holders thereof are committed
to lend up to, at least $10.0 million and is specifically designated by such
Guarantor in an agreement or instrument evidencing or governing such Obligor
Senior Indebtedness as "Guarantor Designated Senior Indebtedness" for purposes
of this Indenture.
"Guarantor Senior Indebtedness" means, with respect to any Note
-----------------------------
Guarantor, the following obligations, whether outstanding on the date of this
Indenture or thereafter issued, without duplication: (i) any Guarantee of Bank
-
Indebtedness by such Note Guarantor and all other Guarantees by such Note
Guarantor of Senior Indebtedness of the Company or Guarantor Senior Indebtedness
of any other Note Guarantor; (ii) all obligations in respect of any Receivables
--
Financing; and (iii) all obligations consisting of the principal of and premium,
---
if any, and accrued and unpaid interest (including interest accruing on or after
the filing of any petition in bankruptcy or for reorganization relating to the
Note Guarantor regardless of whether post-filing interest is allowed in such
proceeding) on, and fees and other amounts owing in respect of, all other
Indebtedness of the Note Guarantor, unless, in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, it is
expressly provided that the obligations in respect of such Indebtedness are not
senior in right of payment to the obligations of such Note Guarantor under its
Note Guarantee; provided, however, that Guarantor Senior Indebtedness shall not
-------- -------
include (1) any obligations of such Note Guarantor to the Company or any other
-
Subsidiary of the Company, (2) any liability for Federal, state, local, foreign
-
or other taxes owed or owing by such Note Guarantor, (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 of such Note Guarantor (or Guarantee by such Note Guarantor of
Indebtedness) that is expressly subordinated in right of payment to any other
Indebtedness of such Note Guarantor (or Guarantee by such Note Guarantor of
Indebtedness), (5) any Capital Stock of such Note
-
14
<PAGE>
Guarantor or (6) that portion of any Indebtedness of such Note Guarantor that is
-
Incurred by such Note Guarantor in violation of Section 406 (but no such
-----------
violation shall be deemed to exist for purposes of this clause (6) if any holder
of such Indebtedness or such holder's representative shall have received an
Officer's Certificate to the effect that such Incurrence of such Indebtedness
does not (or that the Incurrence by such Note Guarantor of the entire committed
amount thereof at the date on which the initial borrowing thereunder is made
would not) violate such covenant). If any Guarantor 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 Guarantor Senior Indebtedness nevertheless will constitute Guarantor
Senior Indebtedness.
"Guarantor Senior Subordinated Indebtedness" means, with respect to a
------------------------------------------
Note Guarantor, (i) the obligations of such Note Guarantor under its Note
-
Guarantee and (ii) any other Indebtedness of such Note Guarantor that ranks pari
-- ----
passu in right of payment with the obligations of such Note Guarantor under its
- -----
Note Guarantee.
"Guarantor Subordinated Obligations" means, with respect to a Note
----------------------------------
Guarantor, any Indebtedness of such Note Guarantor (whether outstanding on the
Issue Date or thereafter Incurred) that is expressly subordinated in right of
payment to the obligations of such Note Guarantor under the Note Guarantee
pursuant to a written agreement.
"Hedging Obligations" of any Person means the obligations of such
-------------------
Person pursuant to any Interest Rate Agreement or Currency Agreement.
"Holder" or "Noteholder" means the Person in whose name a Note is
------ ----------
registered in the Note Register.
"Holding" means Dynatech Corporation, a Massachusetts corporation, and
-------
any successor in interest thereto.
"Holding Expenses" means (i) costs (including all professional fees
---------------- -
and expenses) incurred by Holding to comply with its reporting obligations under
federal or state laws or under this Indenture, including any reports filed with
respect to the Securities Act, Exchange Act or the respective rules and
regulations promulgated thereunder, (ii) indemnification obligations of Holding
--
owing to directors, officers, employees or other Persons under its charter or
by-laws or pursuant to written agreements with any such Person, (iii) fees and
---
expenses payable by Holding in connection with the Transactions, (iv) other
--
operational expenses of Holding incurred in the ordinary course of business, and
(v) expenses incurred by Holding in connection with any public offering of
-
Capital Stock or Indebtedness (x) where the net proceeds of such offering are
-
intended to be received by or contributed or loaned to the
15
<PAGE>
Company or a Restricted Subsidiary, or (y) in a prorated amount of such expenses
-
in pro portion to the amount of such net proceeds intended to be so received,
contributed or loaned, or (z) otherwise on an interim basis prior to completion
-
of such offering so long as Holding shall cause the amount of such expenses to
be repaid to the Company or the relevant Restricted Subsidiary out of the
proceeds of such offering promptly if completed.
"Incur" means issue, assume, enter into any Guarantee of, incur or
-----
otherwise become liable for; provided, however, that any Indebtedness or Capital
-------- -------
Stock of a Person existing at the time such Person becomes a Subsidiary (whether
by merger, consolidation, acquisition or otherwise) shall be deemed to be
Incurred by such Subsidiary at the time it becomes a Subsidiary. Accrual of
interest, the accretion of accreted value and the payment of interest in the
form of additional Indebtedness will not be deemed to be an Incurrence of
Indebtedness. Any Indebtedness issued at a discount (including Indebtedness on
which interest is payable through the issuance of additional Indebtedness) shall
be deemed Incurred at the time of original issuance of the Indebtedness at the
initial accreted amount thereof.
"Indebtedness" means, with respect to any Person on any date of
------------
determination (without duplication):
(i) the principal of indebtedness of such Person for borrowed money,
(ii) the principal of obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments,
(iii) all reimbursement obligations of such Person in respect of
letters of credit or other similar instruments (the amount of such
obligations being equal at any time to the aggregate then undrawn and
unexpired amount of such letters of credit or other instruments plus the
aggregate amount of drawings thereunder that have not then been
reimbursed),
(iv) all obligations of such Person to pay the deferred and unpaid
purchase price of property (except Trade Payables), which purchase price is
due more than one year after the date of placing such property in final
service or taking final delivery and title thereto,
(v) all Capitalized Lease Obligations of such Person,
(vi) the redemption, repayment or other repurchase amount of such
Person with respect to any Disqualified Stock of such Person or (if such
Person is a Subsidiary of the Company other than a Note Guarantor) any
Preferred Stock of such Subsidiary, but
16
<PAGE>
excluding, in each case, any accrued dividends (the amount of such
obligation to be equal at any time to the maximum fixed involuntary
redemption, repayment or re purchase price for such Capital Stock, or if
less (or if such Capital Stock has no such fixed price), to the involuntary
redemption, repayment or repurchase price therefor calculated in accordance
with the terms thereof as if then redeemed, repaid or re purchased, and if
such price is based upon or measured by the fair market value of such
Capital Stock, such fair market value shall be as determined in good faith
by the Board of Directors or the board of directors or other governing body
of the issuer of such Capital Stock),
(vii) all Indebtedness of other Persons secured by a Lien on any
asset of such Person, whether or not such Indebtedness is assumed by such
Person; provided, that the amount of Indebtedness of such Person shall be
--------
the lesser of (A) the fair market value of such asset at such date of
-
determination (as determined in good faith by the Company) and (B) the
-
amount of such Indebtedness of such other Persons,
(viii) all Indebtedness of other Persons to the extent Guaranteed by
such Person, and
(ix) to the extent not otherwise included in this definition, net
Hedging Obligations of such Person (the amount of any such obligation to be
equal at any time to the termination value of such agreement or arrangement
giving rise to such Hedging Obligation that would be payable by such Person
at such time).
The amount of Indebtedness of any Person at any date shall be
determined as set forth above or otherwise provided in this Indenture, or
otherwise shall equal the amount thereof that would appear on a balance sheet of
such Person (excluding any notes thereto) prepared in accordance with GAAP.
"Initial Additional Notes" means Additional Notes issued in an
------------------------
offering not registered under the Securities Act.
"Initial Notes" means the Company's 9 3/4% Senior Subordinated Notes
-------------
Due 2008, issued on the Issue Date (and any Notes issued in respect thereof
pursuant to Section 304, 305, 306, 312(c), 312(d) or 1008).
------- --- --- --- ------ ------ ----
"Interest Payment Date" means, when used with respect to any Note and
---------------------
any installment of interest thereon, the date specified in such Note as the
fixed date on which such installment of interest is due and payable, as set
forth in such Note.
17
<PAGE>
"Interest Rate Agreement" means, with respect to any Person, any
-----------------------
interest rate protection agreement, interest rate future agreement, interest
rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement (including derivative agreements or
arrangements), as to which such Person is party or a beneficiary.
"Inventory" means goods held for sale or lease by a Person in the
---------
ordinary course of business, net of any reserve for goods that have been
segregated by such Person to be returned to the applicable vendor for credit, as
determined in accordance with GAAP.
"Investment" in any Person by any other Person means any direct or
----------
indirect advance, loan or other extension of credit (other than to customers,
suppliers, directors, officers or employees of any Person in the ordinary course
of business) or capital contribution (by means of any transfer of cash or other
property to others or any payment for property or services for the account or
use of others) to, or any purchase or acquisition of Capital Stock, Indebtedness
or other similar instruments issued by, such Person. For purposes of the
definition of "Unrestricted Subsidiary" and Section 408, (i) "Investment" shall
----------- -
include the portion (proportionate to the Company's equity interest in such
Subsidiary) of the fair market value of the net assets of any Subsidiary of the
Company at the time that such Subsidiary is designated an Unrestricted
Subsidiary, provided that upon a redesignation of such Subsidiary as a
--------
Restricted Subsidiary, the Company shall be deemed to continue to have a
permanent "Investment" in an Unrestricted Subsidiary in an amount (if positive)
equal to (x) the Company's "Investment" in such Subsidiary at the time of such
-
redesignation less (y) the portion (proportionate to the Company's equity
-
interest in such Subsidiary) of the fair market value of the net assets of such
Subsidiary at the time of such redesignation, (ii) any property transferred to
--
or from an Unrestricted Subsidiary shall be valued at its fair market value at
the time of such transfer, and (iii) in each case under clause (i) or (ii)
---
above, fair market value shall be as determined in good faith by the Board of
Directors. Guarantees shall not be deemed to be Investments. The amount of any
Investment outstanding at any time shall be the original cost of such
Investment, reduced (at the Company's option) by any dividend, distribution,
interest payment, return of capital, repayment or other amount or value received
in respect of such Investment; provided, that to the extent that the amount of
--------
Restricted Payments outstanding at any time is so reduced by any portion of any
such amount or value that would otherwise be included in the calculation of
Consolidated Net Income, such portion of such amount or value shall not be so
included for purposes of calculating the amount of Restricted Payments that may
be made pursuant to paragraph (a) of Section 408.
-----------
"Investors" means CDR Fund V and John F. Reno or his family members or
---------
relatives, or trusts for the benefit of any of the foregoing, or any of their
heirs, executors, successors and legal representatives.
18
<PAGE>
"Issue Date" means the first date on which Initial Notes are issued.
----------
"Lien" means any mortgage, pledge, security interest, encumbrance,
----
lien or charge of any kind (including any conditional sale or other title
retention agreement or lease in the nature thereof).
"Management Advances" means (1) loans or advances made to directors,
------------------- -
officers or employees of Holding, the Company or any Restricted Subsidiary (x)
-
in respect of travel, entertainment or moving-related expenses incurred in the
ordinary course of business, (y) in respect of moving-related expenses incurred
-
in connection with any closing or consolidation of any facility, or (z) in the
-
ordinary course of business and (in the case of this clause (z)) not exceeding
$2.5 million in the aggregate outstanding at any time, (2) promissory notes of
-
Management Investors acquired in connection with the issuance of Management
Stock to such Management Investors, (3) Management Guarantees, or (4) other
- -
Guarantees of borrowings by Management Investors in connection with the purchase
of Management Stock, which Guarantees are permitted under Section 406.
-----------
"Management Agreements" means, collectively, the Consulting Agreement
---------------------
and the Indemnification Agreement, each dated as of May 21, 1998, each between
the Company and CDR (and its permitted successors and assigns thereunder), as
each may be amended, supplemented, waived or otherwise modified from time to
time in accordance with the terms thereof and of this Indenture.
"Management Guarantees" means guarantees (x) of up to an aggregate
--------------------- -
principal amount of $20.0 million of borrowings by Management Investors in
connection with their purchase of Management Stock or (y) made on behalf of, or
-
in respect of loans or advances made to, directors, officers or employees of
Holding, the Company or any Restricted Subsidiary (1) in respect of travel,
-
entertainment and moving-related expenses incurred in the ordinary course of
business, or (2) in the ordinary course of business and (in the case of this
-
clause (2)) not exceeding $2.5 million in the aggregate outstanding at any time.
"Management Investors" means the officers, directors, employees and
--------------------
other members of the management of Holding, the Company or any of their
respective Subsidiaries, or family members or relatives thereof, or trusts or
partnerships for the benefit of any of the foregoing, or any of their heirs,
executors, successors and legal representatives, who at any date beneficially
own or have the right to acquire, directly or indirectly, Capital Stock of the
Company or Holding.
19
<PAGE>
"Management Stock" means Capital Stock of the Company or Holding
----------------
(including any options, warrants or other rights in respect thereof) held by any
of the Management Investors.
"Merger" means the merger of MergerCo with and into Holding, with
------
Holding continuing as the surviving corporation, on the date of the
Recapitalization.
"MergerCo" means CDRD Merger Corporation, a Delaware corporation.
--------
"Moody's" means Moody's Investors Service, Inc., and its successors.
-------
"Net Available Cash" from an Asset Disposition means cash payments
------------------
received (including any cash payments received by way of deferred payment of
principal pursuant to a note or installment receivable or otherwise, but only as
and when received, but excluding any other consideration received in the form of
assumption by the acquiring person of Indebtedness or other obligations relating
to the properties or assets that are the subject of such Asset Disposition or
received in any other non-cash form) therefrom, in each case net of (i) all
-
legal, title and recording tax expenses, commissions and other fees and expenses
incurred, and all Federal, state, provincial, foreign and local taxes required
to be paid or accrued as a liability under GAAP, as a consequence of such Asset
Disposition (including as a consequence of any transfer of funds in connection
with the application thereof in accordance with the covenant described in
Section 410), (ii) all payments made, and all installment payments required to
- ----------- --
be made, on any Indebtedness that is secured by any assets subject to such Asset
Disposition, in accordance with the terms of any Lien upon such assets, or that
must by its terms, or in order to obtain a necessary consent to such Asset
Disposition, or by applicable law, be repaid out of the proceeds from such Asset
Disposition, (iii) all distributions and other payments required to be made to
---
minority interest holders in Subsidiaries or joint ventures as a result of such
Asset Disposition, or to any other Person (other than the Company or a
Restricted Subsidiary) owning a beneficial interest in the assets disposed of in
such Asset Disposition and (iv) any liabilities or obligations associated with
--
the assets disposed of in such Asset Disposition and retained by the Company or
any Restricted Subsidiary after such Asset Disposition, including without
limitation pension and other post-employment benefit liabilities, liabilities
related to environmental matters, and liabilities relating to any
indemnification obligations associated with such Asset Disposition.
"Net Cash Proceeds," with respect to any issuance or sale of any
-----------------
securities of the Company or any Subsidiary by the Company or any Subsidiary, or
any capital contribution, means the cash proceeds of such issuance, sale or
contribution net of attorneys' fees, accountants' fees, underwriters' or
placement agents' fees, discounts or commissions and
20
<PAGE>
brokerage, consultant and other fees actually incurred in connection with such
issuance, sale or contribution and net of taxes paid or payable as a result
thereof.
"Non-U.S. Person" means a Person who is not a U.S. person, as defined
---------------
in Regulation S.
"Note Guarantee" means any guarantee that may from time to time be
--------------
entered into by a Restricted Subsidiary of the Company pursuant to Section 413.
-----------
"Note Guarantor" means any Restricted Subsidiary of the Company that
--------------
enters into a Note Guarantee.
"Notes" means the Initial Notes, any Additional Notes, and the
-----
Exchange Notes.
"Obligor Designated Senior Indebtedness" means (a) with respect to the
-------------------------------------- -
Parent Guarantor, Parent Designated Senior Indebtedness and (b) with respect to
-
any Note Guarantor, Guarantor Designated Senior Indebtedness.
"Obligor Senior Indebtedness" means (a) with respect to the Parent
--------------------------- -
Guarantor, Parent Senior Indebtedness and (b) with respect to any Note
-
Guarantor, Guarantor Senior Indebtedness.
"Officer" means, with respect to the Company or any other obligor upon
-------
the Notes, the Chairman of the Board, the President, the Chief Executive
Officer, the Chief Financial Officer, any Vice President, the Controller, the
Treasurer or the Secretary (a) of such Person or (b) if such Person is owned or
- -
managed by a single entity, of such entity or (c) any other individual
-
designated as an "Officer" for the purposes of this Indenture by the Board of
Directors.
"Officer's Certificate" means, with respect to the Company or any
---------------------
other obligor upon the Notes, a certificate signed by one Officer of such
Person.
"Opinion of Counsel" means a written opinion from legal counsel who is
------------------
reasonably acceptable to the Trustee. The counsel may be an employee of or
counsel to Holding, the Company or the Trustee.
"Original Notes" means the Initial Notes and any Exchange Notes issued
--------------
in exchange therefor.
21
<PAGE>
"Outstanding" when used with respect to Notes means, as of the date of
-----------
determination, all Notes theretofore authenticated and delivered under this
Indenture, except:
------
(i) Notes theretofore cancelled by the Trustee or delivered to the
Trustee for cancellation;
(ii) Notes for whose payment or redemption money in the necessary
amount has been theretofore deposited with the Trustee or any Paying Agent
in trust for the Holders of such Notes, provided that, if such Notes are to
--------
be redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor reasonably satisfactory to the Trustee
has been made; and
(iii) Notes in exchange for or in lieu of which other Notes have been
authenticated and delivered pursuant to this Indenture.
A Note does not cease to be Outstanding because the Company or any
Affiliate of the Company holds the Note, provided that in determining whether
--------
the Holders of the requisite amount of Outstanding Notes have given any
request, demand, authorization, direction, notice, consent or waiver hereunder,
Notes owned by the Company or any Affiliate of the Company 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 request, demand,
authorization, direction, notice, consent or waiver, only Notes which the
Trustee actually knows are so owned shall be so disregarded. Notes so owned
that have been pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the reasonable satisfaction of the Trustee the pledgee's
right to act with respect to such Notes and that the pledgee is not the Company
or an Affiliate of the Company.
"Parent Guarantee" means the Guarantee executed and delivered by
----------------
Holding as described in Section 1301(a).
---------------
"Parent Senior Indebtedness" means, with respect to Holding, the
--------------------------
following obligations, whether outstanding on the date of this Indenture or
thereafter issued, without duplication: (i) any Guarantee of Bank Indebtedness
-
by Holding and all other Guarantees by Holding of Senior Indebtedness of the
Company or Guarantor Senior Indebtedness of any Note Guarantor; (ii) all
--
obligations in respect of any Receivables Financing; and (iii) all obligations
---
consisting of the principal of and premium, if any, and accrued and unpaid
interest (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to Holding regardless of whether post-
filing interest is allowed in such proceeding) on, and fees and other amounts
owing in respect of, all other Indebtedness of Holding, unless, in the
instrument creating or evidencing the same or pursuant to which the same is
outstanding, it
22
<PAGE>
is expressly provided that the obligations in respect of such Indebtedness are
not senior in right of payment to the obligations of Holding under the Parent
Guarantee.
"Parent Senior Subordinated Indebtedness" means (i) the obligations of
--------------------------------------- -
Holding under the Parent Guarantee and (ii) any other Indebtedness of Holding
--
that ranks pari passu in right of payment with the obligations of Holding under
---- -----
the Parent Guarantee.
"Parent Subordinated Obligations" means any Indebtedness of Holding
-------------------------------
(whether outstanding on the Issue Date or thereafter Incurred) that is expressly
subordinated in right of payment to the obligations of Holding under the Parent
Guarantee pursuant to a written agreement.
"Paying Agent" means any Person authorized by the Company to pay the
------------
principal of (and premium, if any) or interest on any Notes on behalf of the
Company.
"Permitted Holder" means any of the following: (i) any of the
---------------- -
Investors, Management Investors, CDR and their respective Affiliates; (ii) any
--
investment fund or vehicle managed, sponsored or advised by CDR; (iii) any
---
limited or general partners of, or other investors in, any of the Investors and
their respective Affiliates, or any such investment fund or vehicle; and (iv)
--
any Person acting in the capacity of an underwriter in connection with a public
or private offering of Capital Stock of Holding or the Company.
"Permitted Investment" means an Investment by the Company or any
--------------------
Restricted Subsidiary in, or consisting of, any of the following:
(i) a Restricted Subsidiary, the Company, or a Person that will, upon
the making of such Investment, become a Restricted Subsidiary;
(ii) another Person if as a result of such Investment such other
Person is merged or consolidated with or into, or transfers or conveys all
or substantially all its assets to, or is liquidated into, the Company or a
Restricted Subsidiary;
(iii) Temporary Cash Investments or Cash Equivalents;
(iv) receivables owing to the Company or any Restricted Subsidiary,
if created or acquired in the ordinary course of business;
(v) any securities or other Investments received as consideration in,
or retained in connection with, sales or other dispositions of property or
assets, including Asset Dispositions made in compliance with Section 410;
-----------
23
<PAGE>
(vi) securities or other Investments received in settlement of debts
created in the ordinary course of business and owing to the Company or any
Restricted Subsidiary, or as a result of foreclosure, perfection or
enforcement of any Lien, or in satisfaction of judgments, including in
connection with any bankruptcy proceeding or other reorganization of
another Person;
(vii) Investments in existence or made pursuant to legally binding
written commitments in existence on the Issue Date;
(viii) Currency Agreements, Interest Rate Agreements and related
Hedging Obligations, which obligations are Incurred in compliance with
Section 406;
-----------
(ix) pledges or deposits (x) with respect to leases or utilities
-
provided to third parties in the ordinary course of business or (y)
-
otherwise described in the definition of "Permitted Liens" or made in
connection with Liens permitted under Section 412;
-----------
(x) any Investment in a joint venture or similar entity that is not a
Restricted Subsidiary, or in any Related Business, in an aggregate amount
outstanding at any time not to exceed 7% of Consolidated Total Assets;
(xi) (1) Investments in any Receivables Subsidiary, or in connection
-
with a Financing Disposition by or to any Receivables Entity, including
Investments of funds held in accounts permitted or required by the
arrangements governing such Financing Disposition or any related
Indebtedness, or (2) any promissory note issued by the Company or Holding,
-
provided that if Holding receives cash from the relevant Receivables
Entity in exchange for such note, an equal cash amount is contributed by
Holding to the Company;
(xii) bonds secured by assets leased to and operated by the Company
or any Restricted Subsidiary that were issued in connection with the
financing of such assets so long as the Company or any Restricted
Subsidiary may obtain title to such assets at any time by paying a nominal
fee, canceling such bonds and terminating the transaction;
(xiii) Notes;
(xiv) any Investment to the extent made using Capital Stock of the
Company (other than Disqualified Stock), or Capital Stock of Holding, as
consideration;
(xv) Management Advances; and
24
<PAGE>
(xvi) other Investments in an aggregate amount outstanding at any
time not to exceed 10% of Consolidated Total Assets.
"Permitted Liens" means:
---------------
(a) Liens for taxes, assessments or other governmental charges not
yet delinquent or the nonpayment of which in the aggregate would not
reasonably be expected to have a material adverse effect on the Company and
its Restricted Subsidiaries, or that are being contested in good faith and
by appropriate proceedings if adequate reserves with respect thereto are
maintained on the books of the Company or a Subsidiary thereof, as the
case may be, in accordance with GAAP;
(b) carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business in respect of obligations that are not overdue for a period of
more than 60 days, or that are bonded or that are being contested in good
faith and by appropriate proceedings;
(c) pledges, deposits or Liens in connection with workers'
compensation, unemployment insurance and other social security and other
similar legislation or other insurance-related obligations (including,
without limitation, pledges or deposits securing liability to insurance
carriers under insurance or self-insurance arrangements);
(d) pledges, deposits or Liens to secure the performance of bids,
tenders, trade, government or other contracts (other than for borrowed
money), obligations for utilities, leases, licenses, statutory obligations,
completion guarantees, surety, judgment, appeal or performance bonds,
other similar bonds, instruments or obligations, and other obligations of a
like nature incurred in the ordinary course of business;
(e) easements (including reciprocal easement agreements), rights-of-
way, building, zoning and similar restrictions, utility agreements,
covenants, reservations, restrictions, encroachments, changes, and other
similar encumbrances or title defects incurred, or leases or subleases
granted to others, in the ordinary course of business, which do not in the
aggregate materially interfere with the ordinary conduct of the business of
the Company and its Subsidiaries, taken as a whole;
(f) Liens existing on, or provided for under written arrangements
existing on, the Issue Date, or (in the case of any such Liens securing
Indebtedness of the Company or any of its Subsidiaries existing or arising
under written arrangements existing on the Issue Date) securing any
Refinancing Indebtedness in respect of such Indebtedness so long as the
Lien securing such Refinancing Indebtedness is limited to all or part of
the
25
<PAGE>
same property or assets (plus improvements, accessions, proceeds or
dividends or distributions in respect thereof) that secured (or under such
written arrangements could secure) the original Indebtedness;
(g) (i) mortgages, liens, security interests, restrictions,
-
encumbrances or any other matters of record that have been placed by any
developer, landlord or other third party on property over which the Company
or any Restricted Subsidiary of the Company has easement rights or on any
leased property and subordination or similar agreements relating thereto
and (ii) any condemnation or eminent domain proceedings affecting any real
--
property;
(h) Liens securing Hedging Obligations, Purchase Money Obligations or
Capitalized Lease Obligations Incurred in compliance with Section 406;
-----------
(i) Liens arising out of judgments, decrees, orders or awards in
respect of which the Company shall in good faith be prosecuting an appeal
or proceedings for review, which appeal or proceedings shall not have been
finally terminated, or if the period within which such appeal or
proceedings may be initiated shall not have expired;
(j) leases, subleases, licenses or sublicenses to third parties;
(k) Liens securing (1) Indebtedness Incurred in compliance with
-
clause (b)(i), (b)(iv), (b)(v), (b)(vii), (b)(viii)(E) or (b)(x), of
Section 406, or clause (b)(iii) thereof (other than Refinancing
-----------
Indebtedness Incurred in respect of Indebtedness described in paragraph (a)
thereof), (2) Bank Indebtedness, (3) commercial bank Indebtedness, (4)
- - -
Indebtedness of any Restricted Subsidiary that is not a Note Guarantor, (5)
-
the Notes or (6) Indebtedness or other obligations of any Receivables
-
Entity;
(l) Liens existing on property or assets of a Person at the time such
Person becomes a Subsidiary of the Company (or at the time the Company or a
Restricted Subsidiary acquires such property or assets); provided, however,
-------- -------
that such Liens are not created in connection with, or in contemplation of,
such other Person becoming such a Subsidiary (or such acquisition of such
property or assets), and that such Liens are limited to all or part of the
same property or assets (plus improvements, accessions, proceeds or
dividends or distributions in respect thereof) that secured (or, under the
written arrangements under which such Liens arose, could secure) the
obligations to which such Liens relate;
(m) Liens on Capital Stock or other securities of an Unrestricted
Subsidiary that secure Indebtedness or other obligations of such
Unrestricted Subsidiary;
26
<PAGE>
(n) any encumbrance or restriction (including, but not limited to,
put and call agreements) with respect to Capital Stock of any joint venture
or similar arrangement pursuant to any joint venture or similar agreement;
and
(o) Liens securing Refinancing Indebtedness Incurred in respect of
any Indebtedness secured by, or securing any refinancing, refunding,
extension, renewal or replacement (in whole or in part) of any other
obligation secured by, any other Permitted Liens, provided that any such
new Lien is limited to all or part of the same property or assets (plus
improvements, accessions, proceeds or dividends or distributions in
respect thereof) that secured (or, under the written arrangements under
which the original Lien arose, could secure) the obligations to which such
Liens relate.
"Person" means any individual, corporation, partnership, joint
------
venture, association, joint-stock company, limited liability company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Place of Payment" means a city or any political subdivision thereof
----------------
referred to in Article 3 and initially designated under Section 402.
--------- -----------
"Predecessor Notes" of any particular Note means every previous Note
-----------------
evidencing all or a portion of the same debt as that evidenced by such
particular Note; and, for the purposes of this definition, any Note
authenticated and delivered under Section 306 in lieu of a mutilated, destroyed,
-----------
lost or stolen Note shall be deemed to evidence the same debt as the mutilated,
destroyed, lost or stolen Note.
"Preferred Stock" as applied to the Capital Stock of any corporation
---------------
means Capital Stock of any class or classes (however designated) that by its
terms is preferred as to the payment of dividends, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"Purchase Money Obligations" means any Indebtedness Incurred to
--------------------------
finance or refinance the acquisition, leasing, construction or improvement of
property (real or personal) or assets, and whether acquired through the direct
acquisition of such property or assets or the acquisition of the Capital Stock
of any Person owning such property or assets, or otherwise.
"QIB" or "Qualified Institutional Buyer" means a "qualified
--- -----------------------------
institutional buyer," as that term is defined in Rule 144A under the Securities
Act.
27
<PAGE>
"Recapitalization" means the leveraged recapitalization of Holding
----------------
pursuant to the Agreement and Plan of Merger, dated as of December 20, 1997,
between MergerCo and Holding whereby MergerCo will be merged with and into
Holding, with Holding being the surviving corporation.
"Receivable" means a right to receive payment arising from a sale or
----------
lease of goods or services by a Person pursuant to an arrangement with another
Person pursuant to which such other Person is obligated to pay for goods or
services under terms that permit the purchase of such goods and services on
credit, as determined in accordance with GAAP.
"Receivables Entity" means (x) any Receivables Subsidiary or (y) any
------------------ - -
other Person that is engaged in the business of acquiring, selling, collecting,
financing or refinancing Receivables, accounts (as defined in the Uniform
Commercial Code as in effect in any jurisdiction from time to time), other
accounts and/or other receivables, and/or related assets.
"Receivables Fees" means distributions or payments made directly or by
----------------
means of discounts with respect to any participation interest issued or sold in
connection with, and other fees paid to a Person that is not a Restricted
Subsidiary in connection with, any Receivables Financing.
"Receivables Financing" means any financing of Receivables of the
---------------------
Company or any Restricted Subsidiary that have been transferred to a Receivables
Entity in a Financing Disposition.
"Receivables Subsidiary" means a Subsidiary of the Company that (a) is
---------------------- -
engaged solely in the business of acquiring, selling, collecting, financing or
refinancing Receivables, accounts (as defined in the Uniform Commercial Code as
in effect in any jurisdiction from time to time) and other accounts and
receivables (including any thereof constituting or evidenced by chattel paper,
instruments or general intangibles), all proceeds thereof and all rights
(contractual and other), collateral and other assets relating thereto, and any
business or activities incidental or related to such business, and (b) is
-
designated as a "Receivables Subsidiary" by the Board of Directors.
"Redemption Date" when used with respect to any Note to be redeemed or
---------------
purchased means the date fixed for such redemption or purchase by or pursuant to
this Indenture and the Notes.
"Redemption Price" when used with respect to any Note to be redeemed
----------------
or purchased means the price at which it is to be redeemed or purchased pursuant
to this Indenture and the Notes.
28
<PAGE>
"refinance" means refinance, refund, replace, renew, repay, modify,
---------
restate, defer, substitute, supplement, reissue, resell or extend (including
pursuant to any defeasance or discharge mechanism); and the terms "refinances,"
"refinanced" and "refinancing" as used for any purpose in this Indenture shall
have a correlative meaning.
"Refinancing Indebtedness" means Indebtedness that is Incurred to
------------------------
refinance any Indebtedness existing on the date of this Indenture or Incurred in
compliance with this Indenture (including Indebtedness of the Company that
refinances Indebtedness of any Restricted Subsidiary (to the extent permitted in
this Indenture) and Indebtedness of any Restricted Subsidiary that refinances
Indebtedness of another Restricted Subsidiary) including Indebtedness that
refinances Refinancing Indebtedness; provided, that (1) if the Indebtedness
-------- -
being refinanced is Subordinated Obligations or Guarantor Subordinated
Obligations, the Refinancing Indebtedness has an Average Life at the time such
Refinancing Indebtedness is Incurred that is equal to or greater than the
Average Life of the Indebtedness being refinanced, (2) such Refinancing
-
Indebtedness is Incurred in an aggregate principal amount (or if issued with
original issue discount, an aggregate issue price) that is equal to or less than
the sum of (x) the aggregate principal amount (or if issued with original issue
-
discount, the aggregate accreted value) then outstanding of the Indebtedness
being refinanced, plus (y) fees, under writing discounts, premiums and other
-
costs and expenses incurred in connection with such Refinancing Indebtedness and
(3) Refinancing Indebtedness shall not include (x) Indebtedness of a Restricted
- -
Subsidiary that is not a Note Guarantor that refinances Indebtedness of the
Company that was incurred by the Company pursuant to paragraph (a) of Section
-------
406 or (y) Indebtedness of the Company or a Restricted Subsidiary that
- --- -
refinances Indebtedness of an Unrestricted Subsidiary.
"Regular Record Date" for the interest payable on any Interest Payment
-------------------
Date means the date specified for that purpose in Section 301.
-----------
"Regulation S" means Regulation S under the Securities Act.
------------
"Regulation S Certificate" means a certificate substantially in the
------------------------
form attached hereto as Exhibit C.
---------
"Related Business" means those businesses in which the Company or any
----------------
of its Subsidiaries is engaged on the date of this Indenture, or that are
related, complementary, incidental or ancillary thereto or extensions,
developments or expansions thereof.
"Related Taxes" means (x) any taxes, charges or assessments, including
------------- -
but not limited to sales, use, transfer, rental, ad valorem, value-added, stamp,
property, consumption, franchise, license, capital, net worth, gross receipts,
excise, occupancy, intangibles or similar
29
<PAGE>
taxes, charges or assessments (other than federal, state or local taxes measured
by income and federal, state or local withholding imposed on payments made by
Holding), required to be paid by Holding by virtue of its being incorporated or
having Capital Stock outstanding (but not by virtue of owning stock or other
equity interests of any corporation or other entity other than the Company or
any of its Subsidiaries), or being a holding company parent of the Company or
receiving dividends from or other distributions in respect of the Capital Stock
of the Company, or having guaranteed any obligations of the Company or any
Subsidiary thereof, or having made any payment in respect of any of the items
for which the Company is permitted to make payments to Holding pursuant to
Section 408, or (y) any other federal, state, foreign, provincial or local taxes
- ----------- -
measured by income for which Holding is liable up to an amount not to exceed
with respect to such federal taxes the amount of any such taxes that the Company
would have been required to pay on a separate company basis or on a consolidated
basis if the Company had filed a consolidated return on behalf of an affiliated
group (as defined in Section 1504 of the Code, or an analogous provision of
state, local or foreign law) of which it were the common parent, or with respect
to state and local taxes, on a combined basis if the Company had filed a
combined return on behalf of an affiliated group consisting only of the Company
and its Subsidiaries.
"Representative" means the trustee, agent or representative (if any)
--------------
for an issue of (a) Senior Indebtedness (with respect to any Senior
-
Indebtedness) or (b) Obligor Senior Indebtedness (with respect to any Obligor
-
Senior Indebtedness).
"Resale Restriction Termination Date" means, with respect to any Note,
-----------------------------------
the date that is two years (or such other period as may hereafter be provided
under Rule 144(k) under the Securities Act or any successor provision thereto as
permitting the resale by non-affiliates of Restricted Securities without
restriction) after the later of the original issue date in respect of such Note
and the last date on which the Company or any Affiliate of the Company was the
owner of such Note (or any Predecessor Note thereto).
"Responsible Officer" when used with respect to the Trustee means the
-------------------
chairman or vice-chairman of the board of directors, the chairman or vice-
chairman of the executive committee of the board of directors, the president,
any vice president or assistant vice president, the secretary, any assistant
secretary, the treasurer, any assistant treasurer, the cashier, any assistant
cashier, any trust officer or assistant trust officer, the controller and any
assistant controller or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.
30
<PAGE>
"Restricted Payment Transaction" means any Restricted Payment
------------------------------
permitted pursuant to Section 408, any Permitted Payment, any Permitted
-----------
Investment, or any transaction specifically excluded from the definition of the
term "Restricted Payment."
"Restricted Security" has the meaning assigned to such term in Rule
-------------------
144(a)(3) under the Securities Act; provided, however, that the Trustee shall be
-------- -------
entitled to receive, at its request, and conclusively rely on an Opinion of
Counsel with respect to whether any Note constitutes a Restricted Security.
"Restricted Subsidiary" means any Subsidiary of the Company other than
---------------------
an Unrestricted Subsidiary.
"SEC" means the Securities and Exchange Commission.
---
"Second Merger" means the merger of TTC and TTC Merger Co., to occur
-------------
immediately after the issuance of the Notes.
"Secured Indebtedness" means any Indebtedness of the Company secured
--------------------
by a Lien.
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Senior Credit Agreement" means the credit agreement dated as of May
-----------------------
21, 1998, among the Company (after giving effect to the Second Merger), the
banks and other financial institutions party thereto from time to time, Credit
Suisse First Boston, as syndication agent, The Chase Manhattan Bank, as
documentation agent, and Morgan Guaranty Trust Company of New York, as
administrative agent, as such agreement may be assumed by any successor in
interest, and as such agreement may be amended, supplemented, waived or
otherwise modified from time to time, or refunded, refinanced, restructured,
replaced, renewed, repaid, increased or extended from time to time (whether in
whole or in part, whether with the original agent and lenders or other agents
and lenders or otherwise, and whether provided under the original Senior Credit
Agreement or otherwise).
"Senior Credit Facility" means the collective reference to the Senior
----------------------
Credit Agreement, any Credit Documents (as defined therein), any notes and
letters of credit issued pursuant thereto and any guarantee and collateral
agreement, patent and trademark security agreement, mortgages, letter of credit
applications and other guarantees, pledge agreements, security agreements and
collateral documents, and other instruments and documents, executed and
delivered pursuant to or in connection with any of the foregoing, in each case
as the same may be amended, supplemented, waived or otherwise modified from time
to time, or re-
31
<PAGE>
funded, refinanced, restructured, replaced, renewed, repaid, increased or
extended from time to time (whether in whole or in part, whether with the
original agent and lenders or other agents and lenders or otherwise, and whether
provided under the original Senior Credit Agreement or one or more other credit
agreements, indentures (including this Indenture) or financing agreements or
otherwise). Without limiting the generality of the foregoing, the term "Senior
Credit Facility" shall include any agreement (i) changing the maturity of any In
-
debtedness incurred thereunder or contemplated thereby, (ii) adding Subsidiaries
--
of the Company as additional borrowers or guarantors thereunder, (iii)
---
increasing the amount of Indebtedness incurred thereunder or available to be
borrowed thereunder or (iv) otherwise altering the terms and conditions thereof.
--
"Senior Indebtedness" means, with respect to the Company, the
-------------------
following obligations, whether outstanding on the date of this Indenture or
thereafter issued, without duplication: (i) all Bank Indebtedness, (ii) all
- --
obligations in respect of any Receivables Financing, and (iii) all obligations
---
consisting of the principal of and premium, if any, and accrued and unpaid
interest (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company regardless of whether
post-filing interest is allowed in such proceeding) on, and fees and other
amounts owing in respect of, all other Indebtedness of the Company, unless, in
the instrument creating or evidencing the same or pursuant to which the same is
outstanding, it is expressly provided that the obligations in respect of such
Indebtedness are not senior in right of payment to the Notes; provided, however,
-------- -------
that Senior Indebtedness shall not include (1) any obligation of the Company to
-
any Subsidiary, (2) any liability for Federal, state, foreign, local or other
-
taxes owed or owing by the Company, (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 of the Company (or Guarantee by the Company of any Indebtedness)
that is expressly subordinated in right of payment to any other Indebtedness of
the Company (or Guarantee by the Company of any Indebtedness), (5) any Capital
-
Stock of the Company or (6) that portion of any Indebtedness of the Company that
-
is Incurred by the Company in violation of Section 406 (but no such violation
-----------
shall be deemed to exist for purposes of this clause (6) if any holder of such
Indebtedness or such holder's representative shall have received an Officer's
Certificate of the Company to the effect that such Incurrence of such
Indebtedness does not (or that the Incurrence by the Company of the entire
committed amount thereof at the date on which the initial borrowing thereunder
is made would not) violate Section 406). 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.
32
<PAGE>
"Senior Subordinated Indebtedness" means the Notes and any other In
--------------------------------
debtedness of the Company that ranks pari passu with the Notes.
---- -----
"Significant Domestic Subsidiary" means any Domestic Subsidiary that
-------------------------------
is a Significant Subsidiary.
"Significant Subsidiary" means any Restricted Subsidiary that would be
----------------------
a "significant subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC, as in effect on the Issue Date.
"Special Record Date" for the payment of any Defaulted Interest means
-------------------
a date fixed by the Trustee pursuant to Section 307.
-----------
"S&P" means Standard & Poor's Ratings Service, a division of The
---
McGraw-Hill Companies, Inc., and its successors.
"Stated Maturity" means, with respect to any security, the date
---------------
specified in such security as the fixed date on which the payment of principal
of such security is due and payable, including pursuant to any mandatory
redemption provision (but excluding any provision providing for the repurchase
of such security at the option of the holder thereof upon the happening of any
contingency beyond the control of the issuer unless such contingency has
occurred).
"Subordinated Obligations" means any Indebtedness of the Company
------------------------
(whether outstanding on the date of this Indenture or thereafter Incurred) that
is expressly subordinated in right of payment to the Notes pursuant to a written
agreement.
"Subsidiary" of any Person means any corporation, association,
----------
partnership or other business entity of which more than 50% of the total voting
power of shares of Capital Stock or other equity interests (including
partnership interests) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by (i) such Person
-
or (ii) one or more Subsidiaries of such Person.
--
"Tax Sharing Agreement" means the Tax Sharing Agreement, dated as of
---------------------
May 21, 1998, between the Company and Holding, as the same may be amended,
supplemented, waived or otherwise modified from time to time in accordance
with the terms thereof and of this Indenture.
33
<PAGE>
"Temporary Cash Investments" means any of the following: (i) any
-------------------------- -
investment in (x) direct obligations of the United States of America or any
-
agency or instrumentality thereof or obligations Guaranteed by the United States
of America or any agency or instrumentality thereof or (y) direct obligations
-
of any foreign country recognized by the United States of America rated at least
"A" by S&P or "A-1" by Moody's (or, in either case, the equivalent of such
rating by such organization or, if no rating of S&P or Moody's then exists, the
equivalent of such rating by any nationally recognized rating organization),
(ii) overnight bank deposits, and investments in time deposit accounts,
--
certificates of deposit, bankers' acceptances and money market deposits (or,
with respect to foreign banks, similar instruments) maturing not more than one
year after the date of acquisition thereof issued by (x) any lender under the
-
Senior Credit Agreement or (y) a bank or trust company that is organized under
-
the laws of the United States of America, any state thereof or any foreign
country recognized by the United States of America having capital and surplus
aggregating in excess of $250 million (or the foreign currency equivalent
thereof) and whose long term debt is rated at least "A" by S&P or "A-1" by
Moody's (or, in either case, the equivalent of such rating by such organization
or, if no rating of S&P or Moody's then exists, the equivalent of such rating by
any nationally recognized rating organization) at the time such Investment is
made, (iii) repurchase obligations with a term of not more than 30 days for
---
underlying securities of the types described in clause (i) or (ii) above entered
into with a bank meeting the qualifications described in clause (ii) above, (iv)
--
Investments in commercial paper, maturing not more than 270 days after the date
of acquisition, issued by a Person (other than the Company or any of its
Subsidiaries), with a rating at the time as of which any Investment therein is
made of "P-2" (or higher) according to Moody's or "A-2" (or higher) according to
S&P (or, in either case, the equivalent of such rating by such organization or,
if no rating of S&P or Moody's then exists, the equivalent of such rating by any
nationally recognized rating organization), (v) Investments in securities
-
maturing not more than one year after the date of acquisition issued or fully
guaranteed by any state, commonwealth or territory of the United States of
America, or by any political subdivision or taxing authority thereof, and rated
at least "A" by S&P or "A" by Moody's (or, in either case, the equivalent of
such rating by such organization or, if no rating of S&P or Moody's then exists,
the equivalent of such rating by any nationally recognized rating organization),
(vi) Preferred Stock (other than of the Company or any of its Subsidiaries)
--
having a rating of "A" or higher by S&P or "A2" or higher by Moody's (or, in
either case, the equivalent of such rating by such organization or, if no rating
of S&P or Moody's then exists, the equivalent of such rating by any nationally
recognized rating organization), (vii) investment funds investing 95% of their
---
assets in securities of the type described in clauses (i)-(vi) above (which
funds may also hold reasonable amounts of cash pending investment and/or
distribution), (viii) any money market deposit accounts issued or offered by a
----
domestic commercial bank or a commercial bank organized and located in a country
recognized by the United States of America, in each case, having capital and
surplus in excess of $250 million (or the foreign currency equivalent thereof),
or investments in money
34
<PAGE>
market funds complying with the risk limiting conditions of Rule 2a-7 (or any
successor rule) of the SEC under the Investment Company Act of 1940, as amended,
and (ix) similar short-term investments approved by the Board of Directors in
--
the ordinary course of business.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-
---
7bbbb) as in effect on the date of this Indenture.
"Trade Payables" means, with respect to any Person, any accounts
--------------
payable or any indebtedness or monetary obligation to trade creditors created,
assumed or guaranteed by such Person arising in the ordinary course of business
in connection with the acquisition of goods or services.
"Transactions" means, collectively, the Recapitalization, the Merger,
------------
the Second Merger, the initial equity investment by the Investors, the offering
and issuance of the Notes, the initial borrowings under the Senior Credit
Facility, the assumption by the Company of obligations under this Indenture and
the Notes and under the Senior Credit Facility, and all other transactions
relating to the Recapitalization or the financing thereof.
"Treasury Rate" means, with respect to a Redemption Date, the yield to
-------------
maturity at the time of computation 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 or similar market data)) most
nearly equal to the period from such Redemption Date to May 15, 2003; provided,
--------
however, that if the period from such Redemption Date to May 15, 2003 is not
- -------
equal to the constant maturity of the United States Treasury security for which
a weekly average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States securities for which such yields are given,
except that if the period from such Redemption Date to May 15, 2003 is less
than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.
"Trust Officer" means the Chairman of the Board, the President or any
-------------
other officer or assistant officer of the Trustee assigned by the Trustee to
administer its corporate trust matters.
"Trustee" means the Person named as the "Trustee" in the first
-------
paragraph of this Indenture until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
35
<PAGE>
"TTC" means Telecommunications Techniques Co., LLC, a Delaware limited
---
liability company, and any successor interest thereto.
"TTC Merger Co." means TTC Merger Co. LLC, a limited liability company
--------------
organized under the laws of the State of Delaware, and any successor in interest
thereto.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that
----------------------- -
at the time of determination is an Unrestricted Subsidiary, as designated by the
Board of Directors in the manner provided below, and (ii) any Subsidiary of an
--
Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary of
the Company (including any newly acquired or newly formed Subsidiary of the
Company) to be an Unrestricted Subsidiary unless such Subsidiary or any of its
Subsidiaries owns any Capital Stock or Indebtedness of, or owns or holds any
Lien on any property of, the Company or any other Restricted Subsidiary of the
Company that is not a Subsidiary of the Subsidiary to be so designated;
provided, that either (A) the Subsidiary to be so designated has total
- -------- -
consolidated assets of $1,000 or less or (B) if such Subsidiary has consolidated
assets greater than $1,000, then such designation would be permitted under
Section 408. The Board of Directors may designate any Unrestricted Subsidiary
- -----------
to be a Restricted Subsidiary; provided, that immediately after giving effect to
--------
such designation either (x) the Company could incur at least $1.00 of additional
-
Indebtedness under paragraph (a) of Section 406 or (y) the Consolidated Coverage
----------- -
Ratio would be greater than it was immediately prior to giving effect to such
designation. Any such designation by the Board of Directors shall be evidenced
to the Trustee by promptly filing with the Trustee a copy of the resolution of
the Company's Board of Directors giving effect to such designation and an
Officer's Certificate of the Company certifying that such designation complied
with the foregoing provisions.
"U.S. Government Obligation" means (x) any security that is (i) a
-------------------------- - -
direct obligation of the United States of America for the payment of which the
full faith and credit of the United States of America is pledged or (ii) an
--
obligation of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States of America, which, in either case under the preceding clause (i) or (ii),
is not callable or redeemable at the option of the issuer thereof, and (y) any
-
depositary receipt issued by a bank (as defined in Section 3(a)(2) of the
Securities Act) as custodian with respect to any U.S. Government Obligation that
is specified in clause (x) above and held by such bank for the account of the
holder of such depositary receipt, or with respect to any specific payment of
principal of or interest on any U.S. Government Obligation that is so specified
and held, 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
depositary receipt from any amount
36
<PAGE>
received by the custodian in respect of the U.S. Government Obligation or the
specific payment of principal or interest evidenced by such depositary receipt.
"Vice President" when used with respect to any Person means any vice
--------------
president of such Person, whether or not designated by a number or a word or
words added before or after the title "vice president."
"Voting Stock" of an entity means all classes of Capital Stock of such
------------
entity then outstanding and normally entitled to vote in the election of
directors or all interests in such entity with the ability to control the
management or actions of such entity.
Section 102. Other Definitions.
-----------------
Defined in
Term Section
---- ----------
"Act"................................. 108
"Affiliate Transaction"............... 411
"Agent Members"....................... 312
"Amendment"........................... 409
"Authentication Order"................ 303
"Bankruptcy Law"...................... 601
"Blockage Notice"..................... 1403
"Covenant Defeasance"................. 1203
"Custodian"........................... 601
"Defaulted Interest".................. 307
"Defeasance".......................... 1202
"Defeased Notes"...................... 1201
"Event of Default".................... 601
"Expiration Date"..................... 108
"Global Notes"........................ 201
"Guaranteed Note Obligations"......... 1301
"Guaranteed Obligations".............. 1301
"Guarantor"........................... 1301
"Guarantor Blockage Notice"........... 1503
"Guarantor Non-payment Default"....... 1503
"Guarantor Payment Blockage Period"... 1503
"Guarantor Payment Default"........... 1503
"Initial Agreement"................... 409
"Initial Lien"........................ 412
"Non-payment Default"................. 1403
37
<PAGE>
"Note Register" and "Note Registrar".. 305
"Offer"............................... 410
"Offshore Global Note"................ 201
"Offshore Note Exchange Date"......... 313
"Offshore Physical Note".............. 201
"Parent Guaranteed Obligations"....... 1301
"Parent Guarantor".................... 1301
"pay its Obligor Guarantee"........... 1503
"pay the Notes"....................... 1403
"Payment Blockage Period"............. 1403
"Payment Default"..................... 1403
"Permitted Payment"................... 408
"Physical Notes"...................... 201
"Private Placement Legend"............ 203
"Redemption Amount"................... 1001
"Refinancing Agreement"............... 409
"Restricted Payment".................. 408
"Sale"................................ 101
"Successor Company"................... 501
"Unitary Global Note"................. 201
"U.S. Global Note".................... 201
"U.S. Physical Notes"................. 201
Section 103. Rules of Construction. For all purposes of this
---------------------
Indenture, except as otherwise expressly provided or unless the context
otherwise requires:
(1) the terms defined in this Indenture have the meanings assigned to
them in this Indenture;
(2) "or" is not exclusive;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP;
(4) the words "herein," "hereof" and "hereunder" and other words of
------ ------ ---------
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision;
(5) all references to "$" or "dollars" shall refer to the lawful
- -------
currency of the United States of America;
38
<PAGE>
(6) the words "include," "included" and "including" as used herein
------- -------- ---------
shall be deemed in each case to be followed by the phrase "without
-------
limitation," if not expressly followed by such phrase or the phrase "but
---------- ---
not limited to";
--------------
(7) words in the singular include the plural, and words in the plural
include the singular; and
(8) any reference to a Section or Article refers to such Section or
Article of this Indenture.
Section 104. Incorporation by Reference of TIA. Whenever this
---------------------------------
Indenture refers to a provision of the TIA, the provision is incorporated by
reference in and made a part of this Indenture. This Indenture is subject to
the mandatory provisions of the TIA, which are incorporated by reference in and
made a part of this Indenture. Any terms incorporated by reference in this
Indenture that are defined by the TIA, defined by any TIA reference to another
statute or defined by SEC rule under the TIA, have the meanings so assigned to
them therein. The following TIA terms have the following meanings:
"indenture securities" means the Notes.
--------------------
"indenture security holder" means a Noteholder.
-------------------------
"indenture to be qualified" means this Indenture.
-------------------------
"indenture trustee" or "institutional trustee" means the Trustee.
----------------- ---------------------
"obligor" on the indenture securities means Holding, the Company, and
-------
any other obligor on the Notes.
Section 105. Conflict with TIA. If any provision hereof limits,
-----------------
qualifies or conflicts with a provision of the TIA that is required under the
TIA to be a part of and govern this Indenture, the latter provision shall
control. If any provision of this Indenture modifies or excludes any provision
of the TIA that may be so modified or excluded, the latter provision shall be
deemed (i) to apply to this Indenture as so modified or (ii) to be excluded, as
- --
the case may be.
Section 106. Compliance Certificates and Opinions. Upon any
------------------------------------
application or request by the Company or by any other obligor upon the Notes
(including any Note Guarantor) to the Trustee to take any action under any
provision of this Indenture, the Company or such other obligor upon the Notes,
as the case may be, shall furnish to the Trustee such
39
<PAGE>
certificates and opinions as may be required under the TIA. Each such
certificate or opinion shall be given in the form of one or more Officer's
Certificates, if to be given by an Officer, or an Opinion of Counsel, if to be
given by counsel, and shall comply with the requirements of the TIA and any
other requirements set forth in this Indenture. Notwithstanding the foregoing,
in the case of any such request or application as to which the furnishing of any
Officer's Certificate or Opinion of Counsel is specifically required by any
provision of this Indenture relating to such particular request or application,
no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (except for certificates
provided for in Section 405) shall include:
-----------
(1) a statement that the individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he or she
made such examination or investigation as is necessary to enable him or her
to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether, in the opinion of such individual,
such condition or covenant has been complied with.
Section 107. Form of Documents Delivered to Trustee. In any case
--------------------------------------
where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such Persons
as to other matters, and any such Person may certify or give an opinion as to
such matters in one or several documents.
Any certificate or opinion of an Officer may be based, insofar as it
relates to legal matters, upon a certificate or opinion of, or representations
by, counsel, unless such Officer knows that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or opinion of
40
<PAGE>
counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an Officer or Officers to the
effect that the information with respect to such factual matters is in the
possession of the Company, unless such counsel knows that the certificate or
opinion or representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Section 108. Acts of Noteholders; Record Dates. (a) Any request,
---------------------------------
demand, authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be given or taken by Holders may be embodied in
and evidenced by one or more instruments of substantially similar tenor signed
by such Holders in person or by agent duly appointed in writing; and, except as
herein otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Trustee, and, where it is
hereby expressly required, to the Company. Such instrument or instruments (and
the action embodied therein and evidenced thereby) are herein sometimes referred
to as the "Act" of the Holders signing such instrument or instruments. Proof of
---
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Indenture and (subject to Section 701)
-----------
conclusive in favor of the Trustee, the Company and any other obligor upon the
Notes, if made in the manner provided in this Section 108.
-----------
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by an officer of a corporation or a member of a partnership or
other entity, on behalf of such corporation or partnership or other entity, such
certificate or affidavit shall also constitute sufficient proof of such Person's
authority. The fact and date of the execution of any such instrument or
writing, or the authority of the person executing the same, may also be proved
in any other manner that the Trustee deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Note shall bind the Holder of every
Note issued upon the transfer thereof or in exchange therefor or in lieu
thereof, in respect of anything done or suffered to be done by the Trustee,
the Company or any other obligor upon the Notes in reliance thereon, whether or
not notation of such action is made upon such Note.
41
<PAGE>
(e) (i) The Company may set any day as a record date for the purpose
of determining the Holders of Outstanding Notes entitled to give, make or take
any request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Indenture to be given, made or taken by
Holders of Notes, provided that the Company may not set a record date for, and
--------
the provisions of this paragraph shall not apply with respect to, the giving or
making of any notice, declaration, request or direction referred to in subclause
(e)(ii) of this Section 108. If any record date is set pursuant to this
-----------
paragraph, the Holders of Outstanding Notes on such record date (or their duly
designated proxies), and no other Holders, shall be entitled to take the
relevant action, whether or not such Persons remain Holders after such record
date; provided that no such action shall be effective hereunder unless taken on
--------
or prior to the applicable Expiration Date by Holders of the requisite principal
amount of Outstanding Notes on such record date. Nothing in this paragraph
shall be construed to prevent the Company from setting a new record date for any
action for which a record date has previously been set pursuant to this
paragraph (whereupon the record date previously set shall automatically and with
no action by any Person be cancelled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite principal amount of Outstanding Notes on the date such action
is taken. Promptly after any record date is set pursuant to this paragraph, the
Company, at its own expense, shall cause notice of such record date, the
proposed action by Holders and the applicable Expiration Date to be given to the
Trustee in writing and to each Holder of Notes in the manner set forth in
Section 110.
- -----------
(ii) The Trustee may set any day as a record date for the purpose of
deter mining the Holders of Outstanding Notes entitled to join in the giving or
making of (i) any Notice of Default, (ii) any declaration of acceleration
- --
referred to in Section 602, (iii) any request to institute proceedings referred
----------- ---
to in Section 607(2) or (iv) any direction referred to in Section 612, in each
-------------- -- -----------
case with respect to Notes. If any record date is set pursuant to this
paragraph, the Holders of Outstanding Notes on such record date, and no other
Holders, shall be entitled to join in such notice, declaration, request or
direction, whether or not such Holders remain Holders after such record date;
provided that no such action shall be effective hereunder unless taken on or
- --------
prior to the applicable Expiration Date by Holders of the requisite principal
amount of Outstanding Notes on such record date. Nothing in this paragraph
shall be construed to prevent the Trustee from setting a new record date for any
action for which a record date has previously been set pursuant to this
paragraph (whereupon the record date previously set shall automatically and with
no action by any Person be cancelled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite principal amount of Outstanding Notes on the date such action
is taken. Promptly after any record date is set pursuant to this paragraph, the
Trustee, at the Company's expense, shall cause notice of such record date, the
42
<PAGE>
proposed action by Holders and the applicable Expiration Date to be given to the
Company in writing and to each Holder of Notes in the manner set forth in
Section 110.
- -----------
(iii) With respect to any record date set pursuant to this Section
-------
108, the party hereto that sets such record dates may designate any day as the
- ---
"Expiration Date" and from time to time may change the Expiration Date to any
- ----------------
earlier or later day; provided that no such change shall be effective unless
--------
notice of the proposed new Expiration Date is given to the Company or the
Trustee, whichever such party is not setting a record date pursuant to this
Section 108(e) in writing, and to each Holder of Notes in the manner set forth
- --------------
in Section 110, on or prior to the existing Expiration Date. If an Expiration
-----------
Date is not designated with respect to any record date set pursuant to this
Section, the party hereto that set such record date shall be deemed to have
initially designated the 180th day after such record date as the Expiration Date
with respect thereto, subject to its right to change the Expiration Date as
provided in this paragraph. Notwithstanding the foregoing, no Expiration Date
shall be later than the 180th day after the applicable record date.
(iv) Without limiting the foregoing, a Holder entitled hereunder to
take any action hereunder with regard to any particular Note may do so with
regard to all or any part of the principal amount of such Note or by one or more
duly appointed agents each of which may do so pursuant to such appointment with
regard to all or any part of such principal amount.
Section 109. Notices, etc., to Trustee and Company. Any request,
-------------------------------------
demand, authorization, direction, notice, consent, waiver or Act of Holders or
other document provided or permitted by this Indenture to be made upon, given or
furnished to, or filed with,
(1) the Trustee by any Holder or by the Company or any other obligor
upon the Notes shall be sufficient for every purpose hereunder if made,
given, furnished or filed in writing to or with the Trustee at 225 Asylum
Street, 23rd Floor, Hartford, Connecticut 06103, Attention: Corporate
Trust Department (telephone: (860) 244-1842; telecopier: (860) 244-1869)
or at any other address furnished in writing to the Company by the Trustee,
or
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder if in writing and mailed, first-class postage
prepaid, to the Company c/o Dynatech Corporation, 3 New England Executive
Park, Burlington, MA 01803-5087, Attention: Chief Financial Officer
(telephone: (781) 272-6100; telecopier: (781) 272-2304), with copies to
Dynatech Corporation, 3 New England Executive Park, Burlington, MA 01803-
5087, Attention: General Counsel (telephone: (781) 272-6100; telecopier:
(781) 272-2304), and to Debevoise & Plimpton, 875 Third Avenue, New York,
New York 10022, Attention: David Brittenham, Esq. (telephone:
43
<PAGE>
(212) 909-6000; telecopier: (212) 909-6836), or at any other address
previously furnished in writing to the Trustee by the Company.
Section 110. Notices to Holders; Waiver. Where this Indenture
--------------------------
provides for notice to Holders of any event, such notice shall be sufficiently
given (unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such event, at such
Holder's address as it appears in the Note Register, not later than the latest
date, and not earlier than the earliest date, prescribed for the giving of such
notice. In any case where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case, by reason of the suspension of regular mail service, or by
reason of any other cause, it shall be impossible to mail notice of any event as
required by any provision of this Indenture, then such notification as shall be
made with the approval of the Trustee (such approval not to be unreasonably
withheld) shall constitute a sufficient notification for every purpose
hereunder.
Section 111. Effect of Headings and Table of Contents. The Article
----------------------------------------
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
Section 112. Successors and Assigns. All covenants and agreements in
----------------------
this Indenture by the Company shall bind its respective successors and assigns,
whether so expressed or not.
Section 113. Separability Clause. In case any provision in this
-------------------
Indenture or in the Notes shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
Section 114. Benefits of Indenture. Nothing in this Indenture or in
---------------------
the Notes, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, any Paying Agent and the Holders, any
benefit or any legal or equitable right, remedy or claim under this Indenture,
except as provided in Article 14 and Article 15.
---------- ----------
44
<PAGE>
Section 115. GOVERNING LAW. THIS INDENTURE AND THE NOTES SHALL BE
-------------
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, WITHOUT GIVING EFFECT TO ANY PRINCIPLES OF CONFLICT OF LAWS TO THE EXTENT
THAT THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED
THEREBY. THE TRUSTEE, THE COMPANY, ANY OTHER OBLIGOR IN RESPECT OF THE NOTES
AND (BY THEIR ACCEPTANCE OF THE NOTES) THE HOLDERS, AGREE TO SUBMIT TO THE
JURISDICTION OF ANY UNITED STATES FEDERAL OR STATE COURT LOCATED IN THE BOROUGH
OF MANHATTAN, IN THE CITY OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS INDENTURE OR THE NOTES.
Section 116. Legal Holidays. In any case where any Interest Payment
--------------
Date, Redemption Date or Stated Maturity of any Note shall not be a Business Day
at any Place of Payment, then (notwithstanding any other provision of this
Indenture or of the Notes) payment of interest or principal and premium (if any)
need not be made at such Place of Payment on such date, but may be made on the
next succeeding Business Day at such Place of Payment with the same force and
effect as if made on the Interest Payment Date or Redemption Date, or at the
Stated Maturity.
Section 117. No Personal Liability of Directors, Officers, Employees,
--------------------------------------------------------
Incorporators and Stockholders. No director, officer, employee, incorporator,
- ------------------------------
member or stockholder, as such, of the Company, Holding, any Note Guarantor or
any Subsidiary thereof shall have any liability for any obligation of the
Company, Holding, or any Note Guarantor under this Indenture, the Notes, the
Parent Guarantee or any Note Guarantee, or for any claim based on, in respect
of, or by reason of, any such obligation or its creation. Each Noteholder, by
accepting the Notes, waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Notes.
Section 118. Exhibits and Schedules. All exhibits and schedules
----------------------
attached hereto are by this reference made a part hereof with the same effect as
if herein set forth in full.
Section 119. Counterparts. This Indenture may be executed in any
------------
number of counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same instrument.
Section 120. Holding as Agent for TTC Merger Co. To the extent
----------------------------------
permitted by the TIA and any other applicable law, TTC Merger Co. hereby
appoints Holding as its
45
<PAGE>
attorney-in-fact, which appointment is coupled with an interest, to take any
action that this Indenture may require or permit TTC Merger Co. to take,
including
(1) the giving of any certification, opinion, order, request or
consent (whether by Officer's Certificate, Opinion of Counsel, Company
Order, Company Request, Company Consent or otherwise),
(2) the giving of any notice (including under Section 1001), and
------------
(3) the setting of any record date,
such appointment to remain in effect until TTC Merger Co. shall otherwise notify
the Trustee in writing.
ARTICLE 2
NOTE FORMS
----------
Section 201. Forms Generally. (a) The Notes and the Trustee's
---------------
certificate of authentication relating thereto shall be in substantially the
forms set forth, or referenced, in this Article 2 and Exhibit A annexed hereto,
--------- ---------
which Exhibit is hereby incorporated in and expressly made a part of this
Indenture. The Notes may have such appropriate insertions, omissions,
substitutions, notations, legends, endorsements, identifications and other
variations as are required or permitted by law, stock exchange rule or
Depository rule or usage, agreements to which the Company is subject, if any, or
other customary usage, or as may consistently herewith be determined by the
Officer or member of the Company executing such Notes, as evidenced by such
execution (provided always that any such notation, legend, endorsement,
identification or variation is in a form acceptable to the Company). Each Note
shall be dated the date of its authentication. The terms of the Notes set forth
in Exhibit A are part of the terms of this Indenture. Any portion of the text
---------
of any Note may be set forth on the reverse thereof, with an appropriate
reference thereto on the face of the Note.
Initial Notes and any Additional Notes offered and sold in reliance on
Rule 144A under the Securities Act shall, unless the Company otherwise notifies
the Trustee in writing, be issued in the form of one or more permanent global
Notes in substantially the form set forth in Exhibit A (each, a "U.S. Global
--------- -----------
Note"), deposited with the Trustee, as custodian for the Depositary or its
- ----
nominee, duly executed by the Company and authenticated by the Trustee as
hereinafter provided. The aggregate principal amount of a U.S. Global Note may
46
<PAGE>
from time to time be increased or decreased by adjustments made on the records
of the Trustee, as custodian for the Depositary or its nominee, as hereinafter
provided.
Initial Notes and any Additional Notes offered and sold in offshore
transactions in reliance on Regulation S under the Securities Act shall be
issued (a) in the form of one or more permanent global Notes in substantially
-
the form set forth in Exhibit A (each, an "Offshore Global Note"), deposited
--------- --------------------
with the Trustee, as custodian for the Depositary or its nominee, duly executed
by the Company and authenticated by the Trustee as hereinafter provided or (b)
-
at the Company's option, in the form of and as part of a U.S. Global Note that
has been designated by the Company as a "Unitary Global Note" (any U.S. Global
Note that has been so designated, a "Unitary Global Note"). The aggregate
-------------------
principal amount of an Offshore Global Note, if any, may from time to time be
increased or decreased by adjustments made in the records of the Trustee, as
custodian for the Depositary or its nominee, as hereinafter provided. Subject
to the limitations on the issuance of certificated Notes set forth in Sections
--------
312 and 313, Initial Notes and any Initial Additional Notes issued pursuant to
- --- ---
Section 305 in exchange for or upon transfer of beneficial interests (x) in a
- ----------- -
U.S. Global Note shall be in the form of permanent certificated Notes
substantially in the form set forth in Exhibit A and shall contain the Private
---------
Placement Legend as set forth in Section 203 (the "U.S. Physical Notes") or (y)
----------- ------------------- -
in an Offshore Global Note (if any), on or after the Offshore Note Exchange Date
with respect to such Offshore Global Note, shall be in the form of permanent
certificated Notes substantially in the form set forth in Exhibit A (the
---------
"Offshore Physical Notes"), respectively, as hereinafter provided.
- ------------------------
The Offshore Physical Notes and the U.S. Physical Notes are sometimes
collectively herein referred to as the "Physical Notes." The U.S. Global Note
--------------
and the Offshore Global Note are sometimes collectively referred to as the
"Global Notes."
- -------------
Exchange Notes shall be issued substantially in the form set forth in
Exhibit A and, subject to Section 312(b), shall be in the form of one or more
- --------- --------------
Global Notes.
47
<PAGE>
Section 202. Form of Trustee's Certificate of Authentication. This
-----------------------------------------------
is one of the Notes referred to in the within-mentioned Indenture.
________________________________
as Trustee
By______________________________
Authorized Officer
Dated:
If an appointment of an Authenticating Agent is made pursuant to
Section 714, the Notes may have endorsed thereon, in lieu of the Trustee's
- -----------
certificate of authentication, an alternative certificate of authentication in
the following form:
48
<PAGE>
This is one of the Notes referred to in the within-mentioned
Indenture.
STATE STREET BANK AND TRUST COMPANY
___________________________________
As Trustee
By_________________________________
As Authenticating Agent
By_________________________________
Authorized Officer
Dated:
Section 203. Restrictive and Global Note Legends. Each Global Note
-----------------------------------
and Physical Note shall bear the following legend set forth below (the "Private
-------
Placement Legend") on the face thereof until the Private Placement Legend is
- ----------------
removed in accordance with Section 313(4):
--------------
THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") AND HAS NOT BEEN REGISTERED UNDER ANY STATE
--------------
SECURITIES LAWS, AND THIS NOTE (AND ANY INTEREST OR PARTICIPATION HEREIN)
MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED, ENCUMBERED OR OTHERWISE
TRANSFERRED OR DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PUR CHASER 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.
49
<PAGE>
THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A)
IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT ("RULE 144A")) OR (B) IT IS NOT A U.S. PERSON AND IS
---------
ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION AND (2) AGREES FOR THE
BENEFIT OF THE COMPANY THAT (A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED
OR OTHERWISE TRANSFERRED OR DISPOSED OF ONLY (I) INSIDE 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 A TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (IV) PUR-
SUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
(V) TO THE COMPANY, IN EACH OF CASES (I) THROUGH (IV) IN ACCORDANCE WITH
ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND
SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER,
SALE OR TRANSFER (X) PURSUANT TO CLAUSE (II) OR (III) TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM, AND (Y) IN THE CASE OF ANY OF THE FOREGOING
CLAUSES (I) THROUGH (V), TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE
FORM APPEARING ON THE OTHER SIDE OF THIS NOTE IS COMPLETED AND DELIVERED BY
THE TRANSFEROR TO THE COMPANY AND THE TRUSTEE, THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT
OF THE RESALE RESTRICTION REFERRED TO ABOVE. AS USED HEREIN, THE TERMS
"UNITED STATES," "OFFSHORE TRANSACTION" AND "U.S. PERSON" HAVE THE
RESPECTIVE MEANINGS GIVEN TO THEM BY REGULATIONS UNDER THE SECURITIES ACT.
Each Global Note, whether or not an Initial Note, shall also bear the
following legend on the face thereof:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC") TO THE
---
ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS
50
<PAGE>
REGISTERED IN THE NAME OF CEDE & CO. OR IN 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 NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
SECTIONS 312 AND 313 OF THE INDENTURE.
-------- --- ---
ARTICLE 3
THE NOTES
---------
Section 301. Title and Terms. The aggregate principal amount of
---------------
Notes that may be authenticated and delivered and Outstanding under this
Indenture is not limited, except as provided in Section 406 and except as may be
-----------
limited by applicable law. The Initial Notes will be issued in an aggregate
principal amount of $275,000,000. All the Original Notes shall vote and consent
together on all matters as one class, and none of the Original Notes will have
the right to vote or consent as a class separate from one another on any matter.
Additional Notes (including any Exchange Notes issued in exchange therefor) may
vote as a class with the other Notes and otherwise be treated as Notes for
purposes of this Indenture.
The Notes shall be known and designated as the "9 3/4% Senior
Subordinated Notes Due 2008" of the Company. The final Stated Maturity of the
Notes shall be May 15, 2008. Interest on the Outstanding principal amount of
Notes will accrue at the rate of 9 3/4% per annum and will be payable semi-
annually in arrears on May 15 and November 15 in each year, commencing on
November 15, 1998, to holders of record on the immediately preceding May 1 and
November 1, respectively (each such May 1 and November 1, a "Regular Record
--------------
Date"). Interest on the Original Notes will accrue from the most recent date to
- ----
which interest has been paid or duly provided for or, if no interest has been
paid, from the Issue Date; and interest on any Additional Notes (and Exchange
Notes issued in exchange therefor) will accrue from the most recent date to
which interest has been paid or duly provided for or, if no interest has been
paid on such Additional Notes, from the date of issuance of such Additional
Notes;
51
<PAGE>
provided, that if any Note is surrendered for exchange on or after a record date
- --------
for an Interest Payment Date that will occur on or after the date of such
exchange, interest on the Note received in exchange thereof will accrue from the
date of such Interest Payment Date.
The principal of, and premium, if any, and interest, on the Notes
shall be payable at the office or agency of the Company maintained for that
purpose in the Borough of Manhattan, The City of New York (the "Place of
--------
Payment"); provided, however, that at the option of the Company payment of
-------- -------
interest on a Note may be made by check mailed to the address of the Person
entitled thereto as such address shall appear in the Note Register.
Section 302. Denominations. The Notes shall be issuable only in
-------------
registered form without coupons and only in denominations of $1,000 and any
integral multiple thereof.
Section 303. Execution, Authentication and Delivery and Dating. The
-------------------------------------------------
Notes shall be executed on behalf of the Company (x) prior to the Second Merger
-
and execution of the First Supplemental Indenture by one Officer (or, in the
case of TTC Merger Co., by one Officer, or by a member) of each Initial Issuer
and (y) thereafter, by one Officer or a member of the Company. The signature of
-
such Officer or member on the Notes may be manual or facsimile.
Notes bearing the manual or facsimile signatures of individuals who
were at any time the proper Officers of the Company (or of a member of the
Company executing such Note) shall bind the Company, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Notes or did not hold such offices at the
date of such Notes.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Notes executed by the Company to the
Trustee for authentication; and the Trustee shall authenticate and deliver (i)
-
Initial Notes for original issue in the aggregate principal amount not to exceed
$275,000,000 and (ii) Additional Notes from time to time for original issue in
--
aggregate principal amounts specified by the Company and (iii) Exchange Notes
---
from time to time for issue in exchange for a like principal amount of Initial
Notes or Initial Additional Notes, in each case specified in clauses (i) through
(iii) above, upon a written order of the Company in the form of an Officer's
Certificate of the Company (an "Authentication Order"). Such Officer's
--------------------
Certificate shall specify the amount of Notes to be authenticated and the date
on which the Notes are to be authenticated, whether the Notes are to be Initial
Notes, Additional Notes or Exchange Notes and whether the Notes are to be issued
as one or more Global Notes or Physical Notes and such other information as the
Company may include or the Trustee may reasonably request.
52
<PAGE>
All Notes shall be dated the date of their authentication.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any Note
shall be conclusive evidence, and the only evidence, that such Note has been
duly authenticated and delivered hereunder.
Section 304. Temporary Notes. Until definitive Notes are ready for
---------------
delivery, the Company may prepare and upon receipt of an Authentication Order
the Trustee shall authenticate temporary Notes. Temporary Notes shall be
substantially in the form of definitive Notes but may have variations that the
Company considers appropriate for temporary Notes. If temporary Notes are
issued, the Company will cause definitive Notes to be prepared without
unreasonable delay. After the preparation of definitive Notes, the temporary
Notes shall be exchangeable for definitive Notes upon surrender of the temporary
Notes at the office or agency of the Company in a Place of Payment, without
charge to the Holder. Upon surrender for cancellation of any one or more
temporary Notes, the Company shall execute and upon receipt of an Authentication
Order the Trustee shall authenticate and deliver in exchange therefor a like
principal amount of definitive Notes of authorized denominations. Until so
exchanged the temporary Notes shall in all respects be entitled to the same
benefits under this Indenture as definitive Notes of the same series and tenor.
Section 305. Registration, Registration of Transfer and Exchange.
---------------------------------------------------
The Company shall cause to be kept at the Corporate Trust Office of the Trustee
a register (the register maintained in such office and in any other office or
agency of the Company in a Place of Payment being herein sometimes collectively
referred to as the "Note Register") in which, subject to such reasonable
-------------
regulations as it may prescribe, the Company shall provide for the registration
of Notes and of transfers of Notes. The Trustee is hereby appointed "Note
----
Registrar" for the purpose of registering Notes and transfers of Notes as herein
- ---------
provided.
Upon surrender for transfer of any Note at the office or agency of the
Company in a Place of Payment, in compliance with all applicable requirements of
this Indenture and applicable law, the Company shall execute, and the Trustee
shall authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Notes, of any authorized denominations and of a
like aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes,
of any authorized denominations and of a like tenor and aggregate principal
amount, upon surrender of the Notes to be exchanged at such office or agency.
Whenever any Notes are so sur-
53
<PAGE>
rendered for exchange, the Company shall execute, and the Trustee shall
authenticate and deliver, the Notes that the Holder making the exchange is
entitled to receive.
All Notes issued upon any transfer or exchange of Notes shall be the
valid obligations of the Company, evidencing the same debt, and entitled to the
same benefits under this Indenture, as the Notes surrendered upon such transfer
or exchange.
Every Note presented or surrendered for transfer or exchange shall (if
so required by the Company or the Trustee) be duly endorsed, or be accompanied
by a written instrument of transfer in form satisfactory to the Company and the
Note Registrar duly executed, by the Holder thereof or such Holder's attorney
duly authorized in writing.
No service charge shall be made for any transfer or exchange of Notes,
but the Company may require payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection with any transfer or
exchange of Notes under this Section 305.
-----------
The Company shall not be required (i) to issue, transfer or exchange
-
any Note during a period beginning at the opening of business 15 days before the
day of the mailing of a notice of redemption (or purchase) of Notes selected for
redemption (or purchase) under Section 1004 and ending at the close of business
------------
on the day of such mailing, or (ii) to transfer or exchange any Note so selected
--
for redemption (or purchase) in whole or in part.
Section 306. Mutilated, Destroyed, Lost and Stolen Notes. If (i) any
------------------------------------------- -
mutilated Note is surrendered to the Trustee, or the Company and the Trustee
receive evidence to their satisfaction of the destruction, loss or theft of any
Note, and (ii) there is delivered to the Company and the Trustee such security
--
or indemnity as may be required by them to save each of them harmless, then, in
the absence of notice to the Company or the Trustee that such Note has been
acquired by a bona fide purchaser, the Company shall execute and upon receipt of
an Authentication Order the Trustee shall authenticate and deliver, in exchange
for or in lieu of any such mutilated, destroyed, lost or stolen Note, a new Note
of like tenor and principal amount, bearing a number not contemporaneously
outstanding.
In case any such mutilated, destroyed, lost or stolen Note has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Note, pay such Note.
Upon the issuance of any new Note under this Section 306, the Company
-----------
may require the payment of a sum sufficient to cover any tax or other
governmental charge that
54
<PAGE>
may be imposed in relation thereto and any other expenses (including the fees
and expenses of the Trustee) connected therewith.
Every new Note issued pursuant to this Section 306 in lieu of any
-----------
mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Company, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and ratably with
any and all other Notes duly issued hereunder.
The provisions of this Section 306 are exclusive and shall preclude
-----------
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Notes.
Section 307. Payment of Interest Rights Preserved. Interest on any
------------------------------------
Note that is payable, and is punctually paid or duly provided for, on any
Interest Payment Date shall be paid to the Person in whose name that Note (or
one or more Predecessor Notes) is registered at the close of business on the
Regular Record Date for such interest specified in Section 301.
-----------
Any interest on any Note that is payable, but is not punctually paid
or duly provided for, on any Interest Payment Date (herein called "Defaulted
---------
Interest") shall forthwith cease to be payable to the registered Holder on the
- --------
relevant Regular Record Date by virtue of having been such Holder; and such
Defaulted Interest may be paid by the Company, as provided in clause (1) or
clause (2) below:
(1) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Notes (or their respective Predecessor
Notes) are registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest, which shall be fixed in the
following manner. The Company shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on each Note and the date
of the proposed payment, and at the same time the Company shall deposit
with the Trustee an amount of money equal to the aggregate amount proposed
to be paid in respect of such Defaulted Interest or shall make arrangements
reasonably satisfactory to the Trustee for such deposit prior to the date
of the proposed payment, such money when deposited to be held in trust for
the benefit of the Persons entitled to such Defaulted Interest as provided
in this clause (1). Thereupon the Trustee shall fix a Special Record Date
for the payment of such Defaulted Interest which shall be not more than 15
nor less than 10 days prior to the date of the proposed payment and not
less than 10 days after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the Company of such
Special Record Date and, in the name and at the expense of the Company,
shall cause notice of the proposed
55
<PAGE>
payment of such Defaulted Interest and the Special Record Date therefor to
be mailed, first class postage prepaid, to each Holder at such Holder's
address as it appears in the Note Register, not less than 10 days prior to
such Special Record Date. Notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor having been so mailed, such
Defaulted Interest shall be paid to the Persons in whose names the Notes
(or their respective Predecessor Notes) are registered on such Special
Record Date and shall no longer be payable pursuant to the following clause
(2).
(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Notes may be listed, and upon such notice
as may be required by such exchange, if, after notice given by the Company
to the Trustee of the proposed payment pursuant to this clause (2), such
payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section 307, each Note
-----------
delivered under this Indenture upon transfer of or in exchange for or in lieu of
any other Note shall carry the rights to interest accrued and unpaid, and to
accrue, that were carried by such other Note.
Section 308. Persons Deemed Owners. The Company, Holding, any other
---------------------
obligor upon the Notes, the Trustee and any agent of any of them may treat the
Person in whose name any Note is registered as the owner of such Note for the
purpose of receiving payment of principal of (and premium, if any), and (subject
to Section 307) interest on, such Note and for all other purposes whatsoever,
-----------
whether or not such Note be overdue, and neither Holding, the Company, any other
obligor upon the Notes, the Trustee nor any agent of any of them shall be
affected by notice to the contrary.
Section 309. Cancellation. All Notes surrendered for payment,
------------
redemption, transfer, exchange or conversion shall, if surrendered to any Person
other than the Trustee, be delivered to the Trustee and, if not already
cancelled, shall be promptly cancelled by it. The Company may at any time
deliver to the Trustee for cancellation any Notes previously authenticated and
delivered hereunder that the Company may have acquired in any manner whatsoever,
and all Notes so delivered shall be promptly cancelled by the Trustee. No Notes
shall be authenticated in lieu of or in exchange for any Notes cancelled as
provided in this Section 309, except as expressly permitted by this Indenture.
-----------
All cancelled Notes held by the Trustee shall be disposed of as directed by a
Company Order of the Company.
Section 310. Computation of Interest. Interest on the Notes shall be
-----------------------
computed on the basis of a 360-day year of twelve 30-day months.
56
<PAGE>
Section 311. CUSIP Numbers. The Company in issuing the Notes may use
-------------
"CUSIP" numbers (if then generally in use), and if so, the Trustee may use the
CUSIP numbers in notices of redemption or exchange as a convenience to Holders;
provided, however, that any such notice may state that no representation is made
- -------- -------
as to the correctness or accuracy of the CUSIP number printed in the notice or
on the Notes, and that reliance may be placed only on the other identification
numbers printed on the Notes.
Section 312. Book-Entry Provisions for Global Notes. (a) Each
--------------------------------------
Global Note initially shall (i) be registered in the name of the Depositary for
-
such Global Note or the nominee of such Depositary and (ii) be delivered to the
--
Trustee as custodian for such Depositary. Neither the Company nor any agent of
the Company shall have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests of a Global Note, or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
Members of, or participants in, the Depositary ("Agent Members") shall
-------------
have no rights under this Indenture with respect to any Global Note, and the
Depositary may be treated by the Company, any other obligor upon the Notes, the
Trustee and any agent of any of them as the absolute owner of such Global Note
for all purposes whatsoever. Notwithstanding the foregoing, nothing herein
shall prevent the Company, any other obligor upon the Notes, the Trustee or any
agent of any of them from giving effect to any written certification, proxy or
other authorization furnished by the Depositary or impair, as between the
Depositary and its Agent Members, the operation of customary practices governing
the exercise of the rights of a beneficial owner of any Note. The registered
holder of a Global Note may grant proxies and otherwise authorize any Person,
including Agent Members and Persons that may hold interests through Agent
Members, to take any action that a Holder is entitled to take under this
Indenture or the Notes.
(b) Transfers of a Global Note shall be limited to transfers of such
Global Note in whole, but, subject to the immediately succeeding sentence, not
in part, to the Depositary, its successors or their respective nominees.
Interests of beneficial owners in a Global Note may not be transferred or
exchanged for Physical Notes, unless (i) the Company has consented thereto in
-
writing, or such transfer or exchange is made pursuant to the next sentence, and
(ii) such transfer or exchange is in accordance with the applicable rules and
--
procedures of the Depositary and the provisions of Sections 305 and 313.
------------ ---
Subject to the limitation on issuance of Physical Notes set forth in Section
-------
313(3), U.S. Physical Notes or Offshore Physical Notes shall be transferred to
- ------
all beneficial owners in exchange for their beneficial interests in the relevant
U.S. Global Note or the relevant Offshore Global Note, respectively, if (i) the
-
Depositary notifies the Company that it is unwilling or unable to continue as
Depositary for the applicable Global Note or the Depositary ceases to be a
"Clearing Agency" registered under
57
<PAGE>
the Exchange Act and a successor depositary is not appointed by the Company
within 90 days, (ii) the Company, at its option, notifies the Trustee in writing
--
that it elects to cause the issuance of Physical Notes under this Indenture or
(iii) an Event of Default has occurred and is continuing and the Note Registrar
---
has received a written request from the Depositary to issue Physical Notes.
(c) In connection with any transfer or exchange of a portion of the
beneficial interest in any Global Note to beneficial owners for Physical Notes
pursuant to paragraph (b) of this Section 312, the Note Registrar shall record
-----------
on its books and records the date and a decrease in the principal amount of such
Global Note in an amount equal to the beneficial interest in the Global Note
being transferred, and the Company shall execute, and the Trustee shall
authenticate and deliver, one or more Physical Notes of like tenor and principal
amount of authorized denominations.
(d) In connection with a transfer of an entire Global Note to
beneficial owners pursuant to paragraph (b) of this Section 312, the applicable
-----------
Global Note shall be deemed to be surrendered to the Trustee for cancellation,
and the Company shall execute, and the Trustee shall authenticate and deliver,
to each beneficial owner identified by the Depositary in exchange for its
beneficial interest in the applicable Global Note, an equal aggregate principal
amount at maturity of U.S. Physical Notes (in the case of any U.S. Global Note)
or Offshore Physical Notes (in the case of any Offshore Global Note), as the
case may be, of authorized denominations.
(e) The transfer and exchange of a Global Note or beneficial
interests therein shall be effected through the Depositary, in accordance with
this Indenture (including applicable restrictions on transfer set forth in
Section 313) and the procedures of the Depositary therefor. Any beneficial
- -----------
interest in one of the Global Notes that is transferred to a Person who takes
delivery in the form of an interest in a different Global Note will, upon
transfer, cease to be an interest in such Global Note and become an interest in
the other Global Note and, accordingly, will thereafter be subject to all
transfer restrictions, if any, and other procedures applicable to beneficial
interests in such other Global Note for as long as it remains such an interest.
A transferor of a beneficial interest in a Global Note shall deliver to the
Registrar a written order given in accordance with the Depositary's procedures
containing information regarding the participant account of the Depositary to be
credited with a beneficial interest in the relevant Global Note. Subject to
Section 313, the Registrar shall, in accordance with such instructions, instruct
- -----------
the Depositary to credit to the account of the Person specified in such
instructions a beneficial interest in such Global Note and to debit the account
of the Person making the transfer of the beneficial interest in the Global Note
being transferred.
58
<PAGE>
(f) Any Physical Note delivered in exchange for an interest in a
Global Note pursuant to paragraph (b) of this Section 312 shall, unless such
-----------
exchange is made on or after the Resale Restriction Termination Date applicable
to such Note and except as otherwise provided in Section 203 and Section 313,
----------- -----------
bear the Private Placement Legend.
(g) The Company, any other obligor upon the Notes or the Trustee, in
the discretion of any of them, may treat as the Act of a Holder any instrument
or writing of any Person that is identified by the Depositary as the owner of a
beneficial interest in the Global Note, provided that the fact and date of the
--------
execution of such instrument or writing is proved in accordance with Section
-------
108(b).
- ------
Section 313. Special Transfer Provisions. (1) Transfers to Non-U.S.
--------------------------- ---------------------
Persons. The following provisions shall apply with respect to the registration
- -------
of any proposed transfer of a Note that is a Restricted Security to any Non-U.S.
Person: The Note Registrar shall register such transfer if it complies with all
other applicable requirements of this Indenture (including Section 305) and,
-----------
(a) if (x) such transfer is after the relevant Resale Restriction
-
Termination Date with respect to such Note or (y) the distribution
-
compliance period set forth in Regulation S has expired and the proposed
transferor has delivered to the Note Registrar a Regulation S Certificate
and, unless otherwise agreed by the Company and the Trustee, an opinion of
counsel, certifications and other information satisfactory to the Company
and the Trustee, and
(b) if the proposed transferor is or is acting through an Agent
Member holding a beneficial interest in a Global Note, upon receipt by the
Note Registrar of (x) the certificate, opinion, certifications and other
-
information, if any, required by clause (a) above and (y) written
-
instructions given in accordance with the Depositary's and the Note
Registrar's procedures;
whereupon (i) the Note Registrar shall reflect on its books and records the date
-
and (if the transfer does not involve a transfer of any Outstanding Physical
Note) a decrease in the principal amount of the relevant Global Note in an
amount equal to the principal amount of the beneficial interest in the relevant
Global Note to be transferred, and (ii) either (A) if the proposed transferee is
-- -
or is acting through an Agent Member holding a beneficial interest in a relevant
Offshore Global Note, the Trustee shall reflect on its books and records the
date and an increase in the principal amount of such Offshore Global Note in an
amount equal to the principal amount of the beneficial interest being so
transferred or (B) otherwise the Company shall execute and the Trustee shall
-
authenticate and deliver one or more Physical Notes of like tenor and amount.
59
<PAGE>
(2) Transfers to QIBs. The following provisions shall apply with
-----------------
respect to the registration of any proposed transfer of a Note that is a
Restricted Security to a QIB (excluding transfers to Non-U.S. Persons): The
Note Registrar shall register such transfer if it complies with all other
applicable requirements of this Indenture (including Section 305) and,
-----------
(a) if such transfer is being made by a proposed transferor who has
checked the box provided for on the form of such Note stating, or has
otherwise certified to the Company and the Note Registrar in writing, that
the sale has been made in compliance with the provisions of Rule 144A to a
transferee who has signed the certification provided for on the form of
such Note stating, or has otherwise certified to the Company and the Note
Registrar in writing, that it is purchasing such Note 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 QIB within the meaning of Rule 144A,
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
it 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
its foregoing representations in order to claim the exemption from
registration provided by Rule 144A; and
(b) if the proposed transferee is an Agent Member, and the Note to be
transferred consists of a Physical Note that after transfer is to be
evidenced by an interest in a Global Note or consists of a beneficial
interest in a Global Note that after the transfer is to be evidenced by an
interest in a different Global Note, upon receipt by the Note Registrar of
written instructions given in accordance with the Depositary's and the Note
Registrar's procedures, whereupon the Note Registrar shall reflect on its
books and records the date and an increase in the principal amount of the
transferee Global Note in an amount equal to the principal amount of the
Physical Note or such beneficial interest in such transferor Global Note to
be transferred, and the Trustee shall cancel the Physical Note so
transferred or reflect on its books and records the date and a decrease in
the principal amount of such transferor Global Note, as the case may be.
(3) Limitation on Issuance of Physical Notes. No Physical Note shall
----------------------------------------
be exchanged for a beneficial interest in any Global Note, except in accordance
with Section 312 and this Section 313.
----------- -----------
A beneficial owner of an interest in a Unitary Global Note or an
Offshore Global Note shall not be permitted to exchange such interest for a
Physical Note until a date, which must be after the expiration of the
distribution compliance period set forth in Regulation S, on which the Company
receives a certificate of beneficial ownership substantially in the form of
Exhibit D from such beneficial owner (a "Certificate of Beneficial Ownership").
-----------------------------------
Such
60
<PAGE>
date, as it relates to an Offshore Global Note, is herein referred to as the
"Offshore Note Exchange Date."
- ----------------------------
(4) Private Placement Legend. Upon the transfer, exchange or
------------------------
replacement of Notes not bearing the Private Placement Legend, the Note
Registrar shall deliver Notes that do not bear the Private Placement Legend.
Upon the transfer, exchange or replacement of Notes bearing the Private
Placement Legend, the Note Registrar shall deliver only Notes that bear the
Private Placement Legend, unless (i) the requested transfer is after the
-
relevant Resale Restriction Termination Date with respect to such Notes, or (ii)
--
upon written request of the Company after there is delivered to the Note
Registrar an opinion of counsel (which opinion and counsel are satisfactory to
the Company and the Trustee) to the effect that neither such legend nor the
related restrictions on transfer are required in order to maintain compliance
with the provisions of the Securities Act, or (iii) with respect to an Offshore
---
Global Note or Offshore Physical Note only, with the agreement of the Company on
or after the Offshore Note Exchange Date with respect to such Note, or (iv) such
--
Notes are sold or exchanged pursuant to an effective registration statement
under the Securities Act.
(5) Other Transfers. The Note Registrar shall effect and register,
---------------
upon receipt of a written request from the Company so to do, a transfer not
otherwise permitted by this Section 313, such registration to be done in
-----------
accordance with the otherwise applicable pro visions of this Section 313, upon
-----------
the furnishing by the proposed transferor or transferee of a written opinion of
counsel (which opinion and counsel are satisfactory to the Company and the
Trustee) to the effect that, and such other certifications or information as the
Company may require to confirm that, the proposed transfer is being made
pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act.
A Note that is a Restricted Security may not be transferred other than
as provided in this Section 313. A beneficial interest in a Global Note that is
-----------
a Restricted Security may not be exchanged for a beneficial interest in another
Global Note other than through a transfer in compliance with this Section 313.
-----------
(6) General. By its acceptance of any Note bearing the Private
-------
Placement Legend, each Holder of such a Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in this
Indenture.
The Note Registrar shall retain copies of all letters, notices and
other written communications received pursuant to Section 312 or this Section
----------- -------
313 (including all Notes received for transfer pursuant to this Section 313).
- --- -----------
The Company shall have the right to require the Note Registrar to deliver to the
Company, at the Company's expense, copies of all
61
<PAGE>
such letters, notices or other written communications at any reasonable time
upon the giving of reasonable written notice to the Note Registrar.
In connection with any transfer of any Note, the Trustee, the Note
Registrar and the Company shall be entitled to receive, shall be under no duty
to inquire into, may conclusively presume the correctness of, and shall be fully
protected in relying upon the certificates, opinions and other information
referred to herein (or in the forms provided herein, attached hereto or to the
Notes, or otherwise) received from any Holder and any transferee of any Note
regarding the validity, legality and due authorization of any such transfer, the
eligibility of the transferee to receive such Note and any other facts and
circumstances related to such transfer.
Section 314. Payment of Additional Interest. (a) Under certain
------------------------------
circumstances the Company will be obligated to pay certain additional amounts of
interest to the Holders of certain Initial Notes, as more particularly set forth
in such Initial Notes.
(b) Under certain circumstances the Company may be obligated to pay
certain additional amounts of interest to the Holders of certain Initial
Additional Notes, as may be more particularly set forth in such Initial
Additional Notes.
ARTICLE 4
COVENANTS
---------
Section 401. Payment of Principal, Premium and Interest. The Company
------------------------------------------
will duly and punctually pay the principal of (and premium, if any) and interest
on the Notes in accordance with the terms of the Notes and this Indenture.
Section 402. Maintenance of Office or Agency. The Company will
-------------------------------
maintain in the Borough of Manhattan, The City of New York an office or agency
where Notes may be presented or surrendered for payment, where Notes may be
surrendered for transfer or exchange and where notices and demands to or upon
the Company in respect of the Notes and this Indenture may be served. The
Company will give prompt written notice to the Trustee of the location, and of
any change in the location, of such office or agency. If at any time the
Company shall fail to maintain such office or agency or shall fail to furnish
the Trustee with the address thereof, such presentations, surrenders, notices
and demands may be made or served at the Corporate Trust Office of the Trustee.
The Company hereby designates the Corporate Trust Office as the initial Place of
Payment and appoints the Trustee its agent to
62
<PAGE>
receive all such presentations, surrenders, notices and demands so long as such
Corporate Trust Office remains the Place of Payment.
Section 403. Money for Payments To Be Held in Trust. If the Company
--------------------------------------
shall at any time act as its own Paying Agent, it will, on or before each due
date of the principal of (and premium, if any) or interest on, any of the Notes,
segregate and hold in trust for the benefit of the Persons entitled thereto a
sum sufficient to pay the principal (and premium, if any) or interest so
becoming due until such sums shall be paid to such Persons or otherwise disposed
of as herein provided, and will promptly notify the Trustee of its action or
failure so to act.
If the Company is not acting as its own Paying Agent, it will, prior
to each due date of the principal of (and premium, if any) or interest on, any
Notes, deposit with a Paying Agent a sum sufficient to pay the principal (and
premium, if any) or interest, so becoming due, such sum to be held in trust for
the benefit of the Persons entitled to such principal, premium or interest, and
(unless such Paying Agent is the Trustee) the Company will promptly notify the
Trustee of its action or failure so to act.
If the Company is not acting as its own Paying Agent, the Company will
cause any Paying Agent other than the Trustee to execute and deliver to the
Trustee an instrument in which such Paying Agent shall agree with the Trustee,
subject to the provisions of this Section 403, that such Paying Agent will
-----------
(1) hold all sums held by it for the payment of principal of (and
premium, if any) or interest on Notes in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any
other obligor upon the Notes) in the making of any such payment of
principal (and premium, if any) or interest;
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent; and
(4) acknowledge, accept and agree to comply in all respects with the
provisions of this Indenture and TIA relating to the duties, rights and
liabilities of such Paying Agent.
63
<PAGE>
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of (and premium, if
any) or interest on any Note and remaining unclaimed for two years after such
principal (and premium, if any) or interest has become due and payable shall be
paid in the appropriate proportion to the Company on Company Request, or (if
then held by the Company) shall be discharged from such trust; and the Holder of
such Note shall thereafter, as an unsecured general creditor, look only to the
Company for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money, and all liability of the Company as
trustee thereof, shall thereupon cease.
Section 404. SEC Reports. Notwithstanding that the Company may not
-----------
be required to be or remain subject to the reporting requirements of Section
13(a) or 15(d) of the Exchange Act, the Company will file with the SEC (unless
such filing is not permitted under the Exchange Act or by the SEC), so long as
Notes are outstanding, the annual reports, information, documents and other
reports that the Company is required to file with the Commission pursuant to
such Section 13(a) or 15(d) or would be so required to file if the Company were
so subject. The Company will also, within 15 days after the date on which the
Company was so required to file or would be so required to file if the Company
were so subject (or, if later, 120 days after the Issue Date), transmit by mail
to all Holders, as their names and addresses appear in the Note Register, and to
the Trustee copies of any such information, documents and reports (without
exhibits) so required to be filed (or, in lieu of one or more of the annual
report for the fiscal year ended March 31, 1998 and the quarterly reports for
the following fiscal year, a registration statement filed with the SEC under the
Securities Act or any amendment thereto, provided such registration statement or
amendment contains the information that would have been included in each such
report). The Company will be deemed to have satisfied such requirements if
Holding files and provides reports, documents and information of the types
otherwise so required, in each case within the applicable time periods, and the
Company is not required to file such reports, documents and information
separately under the applicable rules and regulations of the SEC (after giving
effect to any exemptive relief) because of the filings by Holding. The Company
also will comply with the other provisions of TIA (S) 314(a).
64
<PAGE>
Section 405. Statement as to Default. The Company will deliver to
-----------------------
the Trustee, within 120 days after the end of each fiscal year of the Company
ending after the date hereof, an Officer's Certificate, to the effect that to
the best knowledge of the signer thereof the Company is or is not in default in
the performance and observance of any of the terms, provisions and conditions of
this Indenture (without regard to any period of grace or requirement of notice
provided hereunder) and, if the Company shall be in default, specifying all such
defaults and the nature and status thereof of which such signer may have
knowledge. To the extent required by the TIA, each Note Guarantor shall comply
with TIA (S) 314(a)(4). The individual signing any certificate given by any
Person pursuant to this Section 405 shall be the principal executive, financial
-----------
or accounting officer of such Person, in compliance with TIA (S) 314(a)(4).
Section 406. Limitation on Indebtedness. (a) The Company will not,
--------------------------
and will not permit any Restricted Subsidiary to, Incur any Indebtedness;
provided, however, that the Company or any Note Guarantor may Incur Indebtedness
- -------- -------
if on the date of the Incurrence of such Indebtedness, after giving effect to
the Incurrence thereof, the Consolidated Coverage Ratio would be greater than
1.75:1.00 if such Indebtedness is Incurred prior to June 1, 2001 or 2.00:1.00 if
such Indebtedness is Incurred thereafter.
(b) Notwithstanding the foregoing paragraph (a) of this Section 406,
-----------
the Company and its Restricted Subsidiaries may Incur the following
Indebtedness:
(i) Indebtedness Incurred pursuant to the Senior Credit Facility
(including but not limited to in respect of letters of credit or bankers'
acceptances issued or created thereunder) and Indebtedness of any Foreign
Subsidiary Incurred other than under the Senior Credit Facility, and
(without limiting the foregoing), in each case, any Re financing
Indebtedness in respect thereof, in a maximum principal amount at any time
outstanding not exceeding in the aggregate the amount equal to (A) $410.0
-
million, plus (B) the amount, if any, by which the Borrowing Base exceeds
---- -
$110.0 million, plus (C) in the case of any refinancing of the Senior
---- -
Credit Facility or any portion thereof, the aggregate amount of fees,
underwriting discounts, premiums and other costs and expenses incurred in
connection with such refinancing;
(ii) Indebtedness (A) of any Restricted Subsidiary to the Company or
-
(B) of the Company or any Restricted Subsidiary to any Restricted
-
Subsidiary; provided, that any subsequent issuance or transfer of any
--------
Capital Stock of such Restricted Subsidiary to which such Indebtedness is
owed, or other event, that results in such Restricted Subsidiary ceasing to
be a Restricted Subsidiary or any other subsequent transfer of such
Indebtedness (except to the Company or a Restricted Subsidiary) will be
deemed, in each case, an Incurrence of such Indebtedness by the issuer
thereof;
65
<PAGE>
(iii) Indebtedness represented by the Notes (other than any
Additional Notes), any Indebtedness (other than the Indebtedness described
in clauses (i) or (ii) above) outstanding on the Issue Date and any
Refinancing Indebtedness Incurred in respect of any Indebtedness described
in this clause (iii) or paragraph (a) of this Section 406;
-----------
(iv) Purchase Money Obligations and Capitalized Lease Obligations,
and any Refinancing Indebtedness with respect thereto, in an aggregate
principal amount at any time outstanding not exceeding an amount equal to
10% of Consolidated Total Assets at any time outstanding;
(v) Indebtedness of any Foreign Subsidiary Incurred for working
capital purposes;
(vi) (A) Guarantees by the Company or any Restricted Subsidiary of In-
-
debtedness or any other obligation or liability of the Company or any
Restricted Subsidiary (other than any Indebtedness incurred by the Company
or such Restricted Subsidiary, as the case may be, in violation of this
Section 406), or (B) without limiting Section 412, Indebtedness of the
----------- - -----------
Company or any Restricted Subsidiary arising by reason of any Lien granted
by or applicable to such Person securing Indebtedness of the Company or any
Restricted Subsidiary (other than any Indebtedness incurred by the Company
or such Restricted Subsidiary, as the case may be, in violation of this
Section 406);
-----------
(vii) Indebtedness of the Company or any Restricted Subsidiary (A)
-
arising from the honoring of a check, draft or similar instrument of such
Person drawn against insufficient funds, provided that such Indebtedness is
extinguished within five Business Days of its incurrence, or (B) consisting
-
of guarantees, indemnities, obligations in respect of earnouts or other
purchase price adjustments, or similar obligations, Incurred in connection
with the acquisition or disposition of any business, assets or Person
(including pursuant to the Recapitalization);
(viii) Indebtedness of the Company or any Restricted Subsidiary in
respect of (A) letters of credit, bankers' acceptances or other similar
-
instruments or obligations issued, or relating to liabilities or
obligations incurred, in the ordinary course of business (including those
issued to governmental entities in connection with self-insurance under
applicable workers' compensation statutes), or (B) completion guarantees,
-
surety, judgment, appeal or performance bonds, or other similar bonds,
instruments or obligations, provided, or relating to liabilities or
obligations incurred, in the ordinary course of business, or (C) Hedging
-
Obligations entered into for bona fide
66
<PAGE>
hedging purposes in the ordinary course of business, or (D) Management
-
Guarantees, or (E) the financing of insurance premiums in the ordinary
-
course of business;
(ix) Indebtedness of a Receivables Subsidiary secured by a Lien on
all or part of the assets disposed of in, or otherwise incurred in
connection with, a Financing Disposition;
(x) Indebtedness of any Person that is assumed by the Company or any
Restricted Subsidiary in connection with its acquisition of assets from
such Person or any Affiliate thereof or is issued and outstanding on or
prior to the date on which such Person was acquired by the Company or any
Restricted Subsidiary or merged or consolidated with or into any Restricted
Subsidiary (other than Indebtedness Incurred to finance, or otherwise in
connection with, such acquisition), provided that on the date of such
--------
acquisition, merger or consolidation, after giving effect thereto, (x) with
-
respect to any such Indebtedness of the Company or any Note Guarantor, (A)
-
the Company could Incur at least $1.00 of additional Indebtedness pursuant
to paragraph (a) of this Section 406 or (B) the Consolidated Coverage Ratio
----------- -
is greater than it was on such date immediately prior to giving effect to
such acquisition and (y) with respect to any such Indebtedness of any
-
Restricted Subsidiary that is not a Note Guarantor, the Company could Incur
at least $1.00 of additional Indebtedness pursuant to paragraph (a) of this
Section 406; and any Refinancing Indebtedness with respect to any such
-----------
Indebtedness;
(xi) Indebtedness of the Company or any Restricted Subsidiary in an
amount at any time outstanding not exceeding twice the amount of Excluded
Contributions made after the Issue Date; provided that the proceeds of such
--------
Indebtedness and the related amount of such Excluded Contributions are used
to finance the acquisition of assets of any Person in a Related Business or
the merger or consolidation of such a Person into or with the Company or
any Restricted Subsidiary (including but not limited to payment of any
related fees and expenses) or to refinance any such acquisition, merger or
consolidation with such Indebtedness being Incurred for such refinancing
within nine months of the closing of such acquisition, merger or
consolidation; and any Re financing Indebtedness with respect to any such
Indebtedness; and
(xii) Indebtedness of the Company or any Restricted Subsidiary in an
aggregate principal amount at any time outstanding not exceeding an amount
equal to 20% of Consolidated Total Assets.
(c) For purposes of determining compliance with, and the outstanding
principal amount of any particular Indebtedness Incurred pursuant to and in
compliance with, this Section 406, (i) any other obligation of the obligor on
----------- -
such Indebtedness (or of any other
67
<PAGE>
Person who could have Incurred such Indebtedness under this Section 406) arising
-----------
under any Guarantee, Lien or letter of credit, bankers' acceptance or other
similar instrument or obligation supporting such Indebtedness shall be
disregarded to the extent that such Guarantee, Lien or letter of credit,
bankers' acceptance or other similar instrument or obligation secures the
principal amount of such Indebtedness; (ii) in the event that Indebtedness meets
--
the criteria of more than one of the types of Indebtedness described in
paragraph (b) of this Section 406, the Company, in its sole discretion, shall
-----------
classify such item of Indebtedness and only be required to include the amount
and type of such Indebtedness in one of such clauses; and (iii) the amount of
---
Indebtedness issued at a price that is less than the principal amount thereof
shall be equal to the amount of the liability in respect thereof determined in
accordance with GAAP.
(d) For purposes of determining compliance with any Dollar-
denominated restriction on the Incurrence of Indebtedness denominated in a
foreign currency, the Dollar-equivalent principal amount of such Indebtedness
Incurred pursuant thereto shall be calculated based on the relevant currency
exchange rate in effect on the date that such Indebtedness was Incurred, in the
case of term Indebtedness, or first committed, in the case of revolving credit
Indebtedness, provided that (x) the Dollar-equivalent principal amount of any
-------- -
such Indebtedness outstanding on the Issue Date shall be calculated based on
the relevant currency exchange rate in effect on the Issue Date, (y) if such
-
Indebtedness is Incurred to refinance other Indebtedness denominated in a
foreign currency, and such refinancing would cause the applicable Dollar-
denominated restriction to be exceeded if calculated at the relevant currency
exchange rate in effect on the date of such refinancing, such Dollar-denominated
restriction shall be deemed not to have been exceeded so long as the principal
amount of such refinancing Indebtedness does not exceed the principal amount of
such Indebtedness being refinanced and (z) the Dollar-equivalent principal
-
amount of Indebtedness denominated in a foreign currency and Incurred pursuant
to the Senior Credit Facility shall be calculated based on the relevant currency
exchange rate in effect on, at the Company's option, (i) the Issue Date, (ii)
- --
any date on which any of the respective commitments under the Senior Credit
Facility shall be reallocated between or among facilities or subfacilities
thereunder, or on which such rate is otherwise calculated for any purpose
thereunder, or (iii) the date of such Incurrence. The principal amount of any
---
Indebtedness Incurred to refinance other Indebtedness, if Incurred in a
different currency from the Indebtedness being refinanced, shall be calculated
based on the currency exchange rate applicable to the currencies in which such
respective Indebtedness is denominated that is in effect on the date of such
refinancing.
Section 407. Limitation on Layering. The Company shall not Incur any
----------------------
Indebtedness that is expressly subordinated in right of payment to any Senior
Indebtedness of the Company, unless such Indebtedness so Incurred ranks pari
----
passu in right of payment with the Notes, or is subordinated in right of payment
- -----
to the Notes. No Note Guarantor shall Incur
68
<PAGE>
any Indebtedness that is expressly subordinated in right of payment to any
Guarantor Senior Indebtedness of such Note Guarantor, unless such Indebtedness
so Incurred ranks pari passu in right of payment with such Note Guarantor's Note
---- -----
Guarantee, or is subordinated in right of payment to such Note Guarantor's Note
Guarantee. Unsecured Indebtedness is not deemed to be subordinate or junior to
secured Indebtedness merely because it is unsecured, and In debtedness that is
not guaranteed by a particular Person is not deemed to be subordinate or junior
to Indebtedness that is so guaranteed merely because it is not so guaranteed.
Section 408. Limitation on Restricted Payments. (a) The Company
---------------------------------
shall not, and shall not permit any Restricted Subsidiary, directly or
indirectly, to (i) declare or pay any dividend or make any distribution on or in
-
respect of its Capital Stock (including any such payment in connection with any
merger or consolidation to which the Company is a party) except (x) dividends or
-
distributions payable solely in its Capital Stock (other than Disqualified
Stock) and (y) dividends or distributions payable to the Company or any
-
Restricted Subsidiary (and, in the case of any such Restricted Subsidiary making
such dividend or distribution, to other holders of its Capital Stock on no more
than a pro rata basis, measured by value), (ii) purchase, redeem, retire or
--- ---- --
otherwise acquire for value any Capital Stock of the Company held by Persons
other than the Company or a Restricted Subsidiary, (iii) purchase, repurchase,
---
redeem, defease or otherwise acquire or retire for value, prior to scheduled
maturity, scheduled repayment or scheduled sinking fund payment, any
Subordinated Obligations (other than a purchase, redemption, defeasance or other
acquisition or retirement for value in anticipation of satisfying a sinking fund
obligation, principal installment or final maturity, in each case due within one
year of the date of such acquisition or retirement) or (iv) make any Investment
--
(other than a Permitted Investment) in any Person (any such dividend,
distribution, purchase, redemption, repurchase, defeasance, other acquisition or
retirement or Investment being herein referred to as a "Restricted Payment"), if
------------------
at the time the Company or such Restricted Subsidiary makes such Restricted
Payment:
(1) a Default shall have occurred and be continuing (or would result
therefrom);
(2) the Company could not incur at least an additional $1.00 of
Indebtedness pursuant to paragraph (a) of Section 406; or
-----------
(3) the aggregate amount of such Restricted Payment and all other
Restricted Payments (the amount so expended, if other than in cash, to be
as determined in good faith by the Board of Directors, whose determination
shall be conclusive) declared or made subsequent to the Issue Date and then
outstanding would exceed the sum of:
69
<PAGE>
(A) 50% of the Consolidated Net Income accrued during the period
(treated as one accounting period) from March 31, 1998 to the end of
the most recent fiscal quarter ending prior to the date of such
Restricted Payment for which consolidated financial statements of the
Company are available (or, in case such Consolidated Net Income shall
be a negative number, 100% of such negative number);
(B) the aggregate Net Cash Proceeds, and fair value (as
determined in good faith by the Board of Directors) of property or
assets, received (x) by the Company as capital contributions to the
-
Company after the Issue Date or from the issuance or sale (other than
to a Restricted Subsidiary) of its Capital Stock (other than
Disqualified Stock) after the Issue Date (other than Excluded
Contributions) or (y) by the Company or any Restricted Subsidiary from
-
the issuance and sale by the Company or any Restricted Subsidiary
after the Issue Date of Indebtedness that shall have been converted
into or exchanged for Capital Stock of the Company (other than
Disqualified Stock), plus the amount of cash, property or assets
----
(determined as provided above) received by the Company or any
Restricted Subsidiary upon such conversion or exchange;
(C) the aggregate amount equal to the net reduction in
Investments in Unrestricted Subsidiaries resulting from (i) dividends,
-
distributions, interest payments, return of capital, repayments of
Investments or other transfers of assets to the Company or any
Restricted Subsidiary from any Unrestricted Subsidiary, or (ii) the
--
redesignation of any Unrestricted Subsidiary as a Restricted
Subsidiary (valued in each case as provided in the definition of "In-
vestment"), not to exceed in the case of any such Unrestricted
Subsidiary the aggregate amount of Investments (other than Permitted
Investments) made by the Company or any Restricted Subsidiary in such
Unrestricted Subsidiary after the Issue Date; and
(D) in the case of any disposition or repayment of any
Investment constituting a Restricted Payment (without duplication of
any amount deducted in calculating the amount of Investments at any
time outstanding included in the amount of Restricted Payments), an
amount in the aggregate equal to the lesser of the return of capital,
repayment or other proceeds with respect to all such Investments and
the initial amount of all such Investments.
70
<PAGE>
(b) The provisions of paragraph (a) of this Section 408 will not
-----------
prohibit any of the following (each, a "Permitted Payment"):
-----------------
(i) any purchase, redemption, repurchase, defeasance or other
acquisition or retirement of Capital Stock of the Company or Subordinated
Obligations made by exchange (including any such exchange pursuant to the
exercise of a conversion right or privilege in connection with which cash
is paid in lieu of the issuance of fractional shares) for, or out of the
proceeds of the substantially concurrent issuance or sale of, Capital Stock
of the Company (other than Disqualified Stock and other than Capital Stock
issued or sold to a Subsidiary) or a substantially concurrent capital
contribution to the Company; provided, that the Net Cash Proceeds from such
--------
issuance, sale or capital contribution shall be excluded in subsequent
calculations under clause (B) of the preceding paragraph (a) of this
Section 408;
-----------
(ii) any purchase, redemption, repurchase, defeasance or other
acquisition or retirement of Subordinated Obligations (x) made by exchange
-
for, or out of the proceeds of the substantially concurrent issuance or
sale of, Indebtedness of the Company or Refinancing Indebtedness Incurred
in compliance with Section 406, (y) from Net Available Cash to the extent
----------- -
permitted by Section 410 or (z) to the extent required by the agreement
----------- -
governing such Subordinated Obligations, following the occurrence of a
Change of Control (or other similar event described therein as a "change of
control"), but only if the Company shall have complied with Section 414
-----------
and, if required, purchased all Notes tendered pursuant to the offer to
repurchase all the Notes required thereby, prior to purchasing or repaying
such Subordinated Obligations;
(iii) dividends paid within 60 days after the date of declaration
thereof if at such date of declaration such dividend would have complied
with the preceding paragraph (a) of this Section 408;
-----------
(iv) Investments or other Restricted Payments in an aggregate amount
out standing at any time not to exceed the amount of Excluded
Contributions, provided that such Excluded Contributions shall not include
--------
any Excluded Contribution the proceeds of which were used to finance the
acquisition of assets from any Person in a Related Business or the merger
or consolidation of such a Person into or with the Company or any
Restricted Subsidiary pursuant to clause (xi) of paragraph (b) of Section
-------
406;
---
(v) loans, advances, dividends or distributions by the Company to
Holding to permit Holding to repurchase or otherwise acquire its Capital
Stock (including any options, warrants or other rights in respect thereof),
or payments by the Company to repurchase or otherwise acquire Capital Stock
(including any options, warrants or other
71
<PAGE>
rights in respect thereof), in each case from Management Investors, such
payments, loans, advances, dividends or distributions not to exceed an
amount (net of repayments of any such loans or advances) equal to (1) $25.0
-
million, plus (2) $5.0 million multiplied by the number of calendar years
-
that have commenced since the Issue Date, plus the Net Cash Proceeds
----
received by the Company since the Issue Date from, or as a capital
contribution from, the issuance or sale to Management Investors of Capital
Stock (including any options, warrants or other rights in respect thereof),
to the extent such Net Cash Proceeds are not included in any calculation
under clause (3)(B)(x) of the preceding paragraph (a) of this Section 408;
-----------
(vi) the payment by the Company of, or loans, advances, dividends or
distributions by the Company to Holding to pay, dividends on the common
stock or equity of the Company or Holding following a public offering of
such common stock or equity, in an amount not to exceed in any fiscal year
6% of the aggregate gross proceeds received by the Company in or from such
public offering;
(vii) Restricted Payments (including loans or advances) in an
aggregate amount outstanding at any time not to exceed $10.0 million (net
of repayments of any such loans or advances);
(viii) loans, advances, dividends or distributions to Holding or
other payments by the Company or any Restricted Subsidiary (A) to satisfy
-
or permit Holding to satisfy obligations under the Management Agreements,
(B) pursuant to the Tax Sharing Agreement, or (C) to pay or permit Holding
-- -
to pay any Holding Expenses or any Related Taxes;
(ix) payments by the Company, or loans, advances, dividends or
distributions by the Company to Holding to make payments, to holders of
Capital Stock of the Company or Holding in lieu of issuance of fractional
shares of such Capital Stock, not to exceed $100,000 in the aggregate
outstanding at any time;
(x) dividends or other distributions of Capital Stock, Indebtedness
or other securities of Unrestricted Subsidiaries; and
(xi) the Transactions;
provided that (A) in the case of clauses (iii), (vi), (vii) and (ix), the net
- -------- -
amount of any such Permitted Payment shall be included in subsequent
calculations of the amount of Restricted Payments, (B) in the case of clause
-
(v), at the time of any calculation of the amount of Restricted Payments, the
net amount of Permitted Payments that have then actually been made
72
<PAGE>
under clause (v) that is in excess of 50% of the total amount of Permitted
Payments then permitted under clause (v) shall be included in such calculation
of the amount of Restricted Payments, (C) in all cases other than pursuant to
-
clauses (A) and (B) immediately above, the net amount of any such Permitted
Payment shall be excluded in subsequent calculations of the amount of Restricted
Payments and (D) solely with respect to clause (vii), no Default or Event of
-
Default shall have occurred or be continuing at the time of any such Permitted
Payment after giving effect thereto.
Section 409. Limitation on Restrictions on Distributions from
------------------------------------------------
Restricted Subsidiaries. The Company will not, and will not permit any
- -----------------------
Restricted Subsidiary to, create or otherwise cause to exist or become effective
any consensual encumbrance or restriction on the ability of any Restricted
Subsidiary to (i) pay dividends or make any other distributions on its Capital
-
Stock or pay any Indebtedness or other obligations owed to the Company, (ii)
--
make any loans or advances to the Company or (iii) transfer any of its property
---
or assets to the Company, except any encumbrance or restriction:
(1) pursuant to an agreement or instrument in effect at or entered
into on the Issue Date (including, without limitation, the Senior Credit
Facility), this Indenture or the Notes;
(2) pursuant to any agreement or instrument of a Person, or relating
to Indebtedness or Capital Stock of a Person, which Person is acquired by
or merged or consolidated with or into the Company or any Restricted
Subsidiary, or which agreement or instrument is assumed by the Company or
any Restricted Subsidiary in connection with an acquisition of assets from
such Person, as in effect at the time of such acquisition, merger or
consolidation (except to the extent that such Indebtedness was incurred to
finance, or otherwise in connection with, such acquisition, merger or
consolidation), provided that for purposes of this clause (2), if another
--------
Person is the Successor Company, any Subsidiary thereof or agreement or
instrument of such Person or any such Subsidiary shall be deemed acquired
or assumed, as the case may be, by the Company or a Restricted Subsidiary,
as the case may be, when such Person becomes the Successor Company;
(3) pursuant to an agreement or instrument (a "Refinancing
-----------
Agreement") effecting a refinancing of Indebtedness Incurred pursuant to,
---------
or that otherwise extends, renews, refunds, refinances or replaces, an
agreement or instrument referred to in clause (1) or (2) of this Section
-------
409 or this clause (3) (an "Initial Agreement") or contained in any
--- -----------------
amendment, supplement or other modification to an Initial Agreement (an
"Amendment"); provided, however, that the encumbrances and restrictions
---------- -------- -------
contained in any such Refinancing Agreement or Amendment are not materially
less
73
<PAGE>
favorable to the Holders of the Notes taken as a whole than encumbrances
and restrictions contained in the Initial Agreement or Initial Agreements
to which such Refinancing Agreement or Amendment relates (as determined in
good faith by the Company);
(4) (A) that restricts in a customary manner the subletting,
-
assignment or transfer of any property or asset that is subject to a lease,
license or similar contract, or the assignment or transfer of any lease,
license or other contract, (B) by virtue of any transfer of, agreement to
-
transfer, option or right with respect to, or Lien on, any property or
assets of the Company or any Restricted Subsidiary not otherwise pro-
hibited by this Indenture, (C) contained in mortgages, pledges or other
-
security agreements securing Indebtedness of a Restricted Subsidiary to the
extent restricting the transfer of the property or assets subject thereto,
(D) pursuant to customary provisions restricting dispositions of real
-
property interests set forth in any reciprocal easement agreements of the
Company or any Restricted Subsidiary, (E) pursuant to Purchase Money
-
Obligations that impose encumbrances or restrictions on the property or
assets so acquired, (F) on cash or other deposits or net worth imposed by
-
customers under agreements entered into in the ordinary course of business,
(G) pursuant to customary provisions contained in agreements and
-
instruments entered into in the ordinary course of business (including but
not limited to leases and joint venture and other similar agreements
entered into in the ordinary course of business) or (H) that arises or is
-
agreed to in the ordinary course of business and does not detract from the
value of property or assets of the Company or any Restricted Subsidiary in
any manner material to the Company or such Restricted Subsidiary;
(5) with respect to a Restricted Subsidiary (or any of its property
or assets) imposed pursuant to an agreement entered into for the direct or
indirect sale or disposition of all or substantially all the Capital Stock
or assets of such Restricted Subsidiary (or the property or assets that are
subject to such restriction) pending the closing of such sale or
disposition;
(6) required by any applicable law, rule, regulation or order or by
any regulatory authority having jurisdiction over the Company or any
Restricted Subsidiary or any of their businesses; or
(7) pursuant to an agreement or instrument (A) relating to any
-
Indebtedness permitted to be Incurred subsequent to the Issue Date pursuant
to the provisions of Section 406 if the Company determines that such
-----------
encumbrance or restriction will not cause the Company not to have the funds
necessary to pay the principal of or interest on the Notes, (B) relating to
-
any sale of receivables by a Foreign Subsidiary or
74
<PAGE>
(C) relating to Indebtedness of or a Financing Disposition to or by any
-
Receivables Entity.
Section 410. Limitation on Sales of Assets and Subsidiary Stock. (a)
--------------------------------------------------
The Company will not, and will not permit any Restricted Subsidiary to, make any
Asset Disposition unless
(i) the Company or such Restricted Subsidiary receives consideration
(including by way of relief from, or by any other Person assuming
responsibility for, any liabilities, contingent or otherwise) at the time
of such Asset Disposition at least equal to the fair market value of the
shares and assets subject to such Asset Disposition, as such fair market
value may be determined (and shall be determined, to the extent such Asset
Disposition or any series of related Asset Dispositions involves aggregate
consideration in excess of $10.0 million) in good faith by the Board of
Directors, whose determination shall be conclusive (including as to the
value of all noncash consideration),
(ii) in the case of any Asset Disposition (or series of related Asset
Dispositions) having a fair market value of $10.0 million or more, at least
75% of the consideration therefor (excluding, in the case of an Asset
Disposition (or series of related Asset Dispositions) of assets, any
consideration by way of relief from, or by any other Person assuming
responsibility for, any liabilities, contingent or otherwise, that are not
Indebtedness) received by the Company or such Restricted Subsidiary is in
the form of cash, and provided that this clause (ii) shall not apply to any
--------
Asset Disposition (or series of related Asset Dispositions), involving
assets that accounted for less than two percent of Consolidated EBITDA
during the period of the most recent four consecutive fiscal quarters
ending prior to the date of such Asset Disposition for which consolidated
financial statements of the Company are available, and
(iii) an amount equal to 100% of the Net Available Cash from such
Asset Disposition is applied by the Company (or any Restricted Subsidiary,
as the case may be) as follows:
(A) first, either (x) to the extent the Company elects (or is
----- -
required by the terms of any Senior Indebtedness or Indebtedness of a
Restricted Subsidiary), to prepay, repay or purchase Senior
Indebtedness or such Indebtedness of a Restricted Subsidiary (in each
case other than Indebtedness owed to the Company or a Restricted
Subsidiary) within 365 days after the date of such Asset Disposition,
or (y) to the extent the Company or such Restricted Subsidiary
-
elects, to reinvest in Additional Assets (including by means of an
75
<PAGE>
investment in Additional Assets by a Restricted Subsidiary with Net
Available Cash received by the Company or another Restricted
Subsidiary) within 365 days from the date of such Asset Disposition,
or, if such reinvestment in Additional Assets is a project that is
authorized by the Board of Directors that will take longer than such
365 days to complete, the period of time necessary to complete such
project;
(B) second, to the extent of the balance of such Net Available
------
Cash after application in accordance with clause (A) above (such
balance, the "Excess Proceeds"), to make an offer to purchase Notes
---------------
and (to the extent the Company or such Restricted Subsidiary elects,
or is required by the terms thereof) to purchase, redeem or repay any
other Senior Subordinated Indebtedness or Guarantor Senior
Subordinated Indebtedness, pursuant and subject to the conditions of
this Indenture and the agreements governing such other Indebtedness;
and
(C) third, to the extent of the balance of such Net Available
-----
Cash after application in accordance with clauses (A) and (B) above,
to fund (to the extent consistent with any other applicable provision
of this Indenture) any general corporate purpose (including but not
limited to the repurchase, repayment or other acquisition or
retirement of any Subordinated Obligations);
provided, however, that in connection with any prepayment, repayment or purchase
- -------- -------
of Indebtedness pursuant to clause (A)(x) or (B) above, the Company or such
Restricted Subsidiary will retire such Indebtedness and will cause the related
loan commitment (if any) to be permanently reduced in an amount equal to the
principal amount so prepaid, repaid or purchased.
Notwithstanding the foregoing provisions of this Section 410, the
-----------
Company and the Restricted Subsidiaries shall not be required to apply any Net
Available Cash in accordance with this Section 410 except to the extent that the
-----------
aggregate Net Available Cash from all Asset Dispositions that is not applied in
accordance with this Section 410 exceeds $15.0 million. If the aggregate
-----------
principal amount of Notes, Senior Subordinated Indebtedness and Guarantor Senior
Subordinated Indebtedness validly tendered and not withdrawn (or otherwise
subject to purchase, redemption or repayment) in connection with an offer
pursuant to clause (B) above exceeds the Excess Proceeds, the Excess Proceeds
will be apportioned between the Notes and such Senior Subordinated Indebtedness
and Guarantor Senior Subordinated Indebtedness, with the portion of the Excess
Proceeds payable in respect of the Notes to equal the lesser of (x) the Excess
-
Proceeds amount multiplied by a fraction, the numerator of which is the
outstanding principal amount of the Notes and the denominator of which is the
sum of the outstanding
76
<PAGE>
principal amount of the Notes and the outstanding principal amount of the
relevant Senior Subordinated Indebtedness and Guarantor Senior Subordinated
Indebtedness, and (y) the aggregate principal amount of Notes validly tendered
-
and not withdrawn.
For the purposes of clause (ii) of the first paragraph of this Section
-------
410, the following are deemed to be cash: (1) Temporary Cash Investments and
- --- -
Cash Equivalents, (2) the assumption of Indebtedness of the Company (other than
-
Disqualified Stock of the Company) or any Restricted Subsidiary and the release
of the Company or such Restricted Subsidiary from all liability on payment of
the principal amount of such Indebtedness in connection with such Asset
Disposition, (3) Indebtedness of any Restricted Subsidiary that is no longer a
-
Restricted Subsidiary as a result of such Asset Disposition, to the extent that
the Company and each other Restricted Subsidiary are released from any Guarantee
of payment of the principal amount of such Indebtedness in connection with such
Asset Disposition, (4) securities received by the Company or any Restricted
-
Subsidiary from the transferee that are converted by the Company or such
Restricted Subsidiary into cash and (5) consideration consisting of Indebtedness
-
of the Company or any Restricted Subsidiary.
(b) In the event of an Asset Disposition that requires the purchase
of Notes pursuant to clause (iii)(B) of the first paragraph of this Section 410,
-----------
the Company will be required to purchase Notes tendered pursuant to an offer by
the Company for the Notes (the "Offer") at a purchase price of 100% of their
-----
principal amount plus accrued and unpaid interest to the Purchase Date in
accordance with the procedures (including prorating in the event of
oversubscription) set forth in paragraph (c) of this Section 410. If the
-----------
aggregate purchase price of the Notes tendered pursuant to the Offer is less
than the Net Available Cash allotted to the purchase of Notes, the remaining Net
Available Cash will be available to the Company for use in accordance with
clause (iii)(B) of the first paragraph of this Section 410 (to repay Senior
-----------
Subordinated Indebtedness or Guarantor Senior Subordinated Indebtedness) or
clause (iii)(C) of the first paragraph of this Section 410. The Company shall
-----------
not be required to make an Offer for Notes pursuant to this Section 410 if the
-----------
Net Available Cash available therefor (after application of the proceeds as
provided in clause (iii)(A) of the first paragraph of this Section 410) is less
-----------
than $15.0 million for any particular Asset Disposition (which lesser amounts
shall be carried forward for purposes of determining whether an Offer is
required with respect to the Net Available Cash from any subsequent Asset
Disposition).
(c) The Company will, not later than 45 days after the Company
becomes obligated to make an Offer pursuant to this Section 410, mail a notice
-----------
to each Holder with a copy to the Trustee stating: (1) that an Asset
Disposition that requires the purchase of a portion of the Notes has occurred
and that such Holder has the right (subject to the prorating described below) to
require the Company, to purchase a portion of such Holder's Notes at a purchase
price in cash equal to 100% of the principal amount thereof, plus accrued and
unpaid interest, if any, to the date of purchase (subject to Section 307); (2)
-----------
the circumstances and relevant facts and financial information regarding such
Asset Disposition; (3) the repurchase date (which shall be no earlier than 30
days nor later than 60 days from the date such notice is mailed); (4) the
instructions determined by the Issuers, consistent with this Section 410, that a
-----------
Holder must follow in order to have its Notes purchased; and (5) the amount of
the Offer. If, upon the expiration of the period for which the Offer remains
open, the aggregate principal
77
<PAGE>
amount of Notes surrendered by Holders exceeds the amount of the Offer, the
Company will select the Notes to be purchased on a pro rata basis (with such
adjustments as may be deemed appropriate by the Issuers so that only Notes in
denominations of $1,000 or integral multiples thereof, shall be purchased).
(d) The Company will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to this
Section 410. To the extent that the provisions of any securities laws or
- -----------
regulations conflict with provisions of this Section 410, the Company will
-----------
comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations under this Section 410 by virtue
-----------
thereof.
Section 411. Limitation on Transactions with Affiliates. (a) The
------------------------------------------
Company will not, and will not permit any Restricted Subsidiary to, directly or
indirectly, enter into or conduct any transaction or series of related
transactions (including the purchase, sale, lease or exchange of any property or
the rendering of any service) with any Affiliate of the Company (an "Affiliate
---------
Transaction") unless (i) the terms of such Affiliate Transaction are not
- ----------- -
materially less favorable to the Company or such Restricted Subsidiary, as the
case may be, than those that could be obtained at the time in a transaction with
a Person who is not such an Affiliate and (ii) if such Affiliate Transaction
--
involves aggregate consideration in excess of $10.0 million, the terms of such
Affiliate Transaction have been approved by a majority of the Disinterested
Directors. For purposes of this paragraph, any Affiliate Transaction shall be
deemed to have satisfied the requirements set forth in this paragraph if (x)
-
such Affiliate Transaction is approved by a majority of the Disinterested
Directors or (y) in the event there are no Disinterested Directors, a fairness
-
opinion is provided by a nationally recognized appraisal or investment banking
firm with respect to such Affiliate Transaction.
(b) The provisions of the preceding paragraph (a) of this Section 411
-----------
will not apply to:
(i) any Restricted Payment Transaction,
(ii) (1) the entering into, maintaining or performance of any
-
employment contract, collective bargaining agreement, benefit plan, program
or arrangement, related trust agreement or any other similar arrangement
for or with any employee, officer or director heretofore or hereafter
entered into in the ordinary course of business, including vacation,
health, insurance, deferred compensation, severance, retirement, savings or
other similar plans, programs or arrangements, (2) the payment of
-
compensation, performance of indemnification or contribution obligations,
or any issuance, grant or award of stock, options, other equity-related
interests or other securities, to employees, officers or directors in the
ordinary course of business, (3) the payment of fees to directors of the
-
Company or any of its Subsidiaries, (4) any transaction with an officer or
-
director in the ordinary course of business not involving more than
$100,000 in any one case, or (5) Management Advances and payments in
-
respect thereof,
78
<PAGE>
(iii) any transaction with the Company, any Restricted Subsidiary, or
any Receivables Entity,
(iv) any transaction arising out of agreements or instruments in
existence on the Issue Date, and any payments made pursuant thereto,
(v) execution, delivery and performance of the Tax Sharing Agreement
and Management Agreements, including (1) payment to CDR or any Affiliate of
-
CDR of a fee of $9.2 million plus out-of-pocket expenses in connection with
the Transactions, and (2) payment to CDR or any Affiliate of CDR of fees of
-
up to $1.0 million in any fiscal year plus all out-of-pocket expenses
incurred by CDR or any such Affiliate in connection with its performance of
management consulting, monitoring, financial advisory or other services
with respect to the Company and its Restricted Subsidiaries,
(vi) the Transactions, all transactions in connection therewith
(including but not limited to the financing thereof), and all fees or
expenses paid or payable in connection with the Transactions,
(vii) any transaction in the ordinary course of business on terms not
materially less favorable to the Company or the relevant Restricted
Subsidiary than those that could be obtained at the time in a transaction
with a Person who is not an Affiliate of the Company, and
(viii) any transaction in the ordinary course of business, or
approved by a majority of the Board of Directors, between the Company or
any Restricted Subsidiary and any Affiliate of the Company controlled by
the Company that is a joint venture or similar entity.
Section 412. Limitation on Liens. The Company shall not, and shall
-------------------
not permit any Restricted Subsidiary to, directly or indirectly, create or
permit to exist any Lien (other than Permitted Liens) on any of its property or
assets (including Capital Stock of any other Person), whether owned on the date
of this Indenture or thereafter acquired, securing any Indebtedness of the
Company or any Note Guarantor that by its terms is expressly subordinated in
right of payment to or ranks pari passu in right of payment with the Notes or
---- -----
such Note Guarantor's Note Guarantee (the "Initial Lien"), unless
------------
contemporaneously therewith effective provision is made to secure the
Indebtedness due under this Indenture and the Notes or, in respect of Liens on
any Restricted Subsidiary's property or assets, any Note Guarantee of such
Restricted Subsidiary, equally and ratably with such obligation for so long as
such obligation is so secured by such Initial Lien. Any such Lien thereby
created in favor of the Notes or any such Note Guarantee will be automatically
and unconditionally released and discharged upon (i) the release and discharge
-
of the Initial Lien to which it relates, or (ii) any sale, exchange or transfer
--
to any Person not an Affiliate of the Company of the property or assets secured
by such Initial Lien, or of all of the Capital Stock held by the Company or any
Restricted Subsidiary in, or all or substantially all the assets of, any Re-
stricted Subsidiary creating such Lien.
79
<PAGE>
Section 413. Future Note Guarantors. After the Issue Date, the
----------------------
Company will cause each Significant Domestic Subsidiary that guarantees payment
by the Company of Indebtedness of the Company (other than Bank Indebtedness), to
execute and deliver to the Trustee a supplemental indenture or other instrument
pursuant to which such Subsidiary will guarantee payment of the Notes, whereupon
such Subsidiary will become a Note Guarantor for all purposes under this
Indenture. In addition, the Company may cause any Subsidiary that is not a Note
Guarantor so to guarantee payment of the Notes and become a Note Guarantor.
Section 414. Purchase of Notes Upon a Change in Control. (a) Upon a
------------------------------------------
Change of Control Triggering Event, each Holder will have the right to require
the Company to repurchase all or any part of such Holder's Notes 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 Section 307);
-----------
provided, however, that, the Company shall not be obligated to repurchase Notes
- -------- -------
pursuant to this Section 414 in the event that it has exercised its right to
-----------
redeem all of the Notes pursuant to Article 10.
----------
(b) In the event that, at the time of such Change of Control
Triggering Event, the terms of the Bank Indebtedness restrict or prohibit the
repurchase of Notes pursuant to this Section 414, then prior to the mailing of
-----------
the notice to Holders provided for in clause (c) of this Section 414 but in any
-----------
event not later than 30 days following the date the Company obtains actual
knowledge of any Change of Control Triggering Event (unless the Company has
exercised its right to redeem all the Notes as provided in Article 10), the
----------
Company shall (i) repay in full all Bank Indebtedness or 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 Notes as
provided for in clause (c) of this Section 414. The Company shall first comply
-----------
with the provisions of the immediately preceding sentence before it shall be
required to repurchase Notes pursuant to the provisions of clause (c) of this
Section 414. The Company's failure to comply with the provisions of (x) the
- ----------- -
first sentence of this clause (b) or (y) clause (c) of this Section 414 shall
- -----------
constitute an Event of Default described in clause (4) and not in clause (2)
under Section 601.
-----------
(c) Unless the Company has exercised its right to redeem all the
Notes as set forth in Article 10, the Company shall, not later than 30 days
----------
following the date the Company obtains actual knowledge of any Change of Control
Triggering Event having occurred, mail a notice to each Holder with a copy to
the Trustee stating: (1) that a Change of Control Triggering Event has occurred
-
or may occur and that such Holder has, or upon such occurrence will have, the
right to require the Company to purchase such Holder's Notes 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 purchase (subject to Section 307); (2) the
----------- -
circumstances and
80
<PAGE>
relevant facts and financial information regarding such Change of Control; (3)
-
the repurchase date (which shall be no earlier than 30 days nor later than 60
days from the date such notice is mailed); (4) the instructions determined by
-
the Company, consistent with this Section 414, that a Holder must follow in
-----------
order to have its Notes purchased; and (5) if such notice is mailed prior to the
-
occurrence of a Change of Control or Change of Control Triggering Event, that
such offer is conditioned on the occurrence of such Change of Control Triggering
Event.
(d) The Company will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to this
Section 414. To the extent that the provisions of any securities laws or
- -----------
regulations conflict with provisions of this Section 414, the Company will
-----------
comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations under this Section 414, by virtue
-----------
thereof.
ARTICLE 5
SUCCESSOR COMPANY
-----------------
Section 501. When the Company May Merge, etc. The Company will not
-------------------------------
consolidate with or merge with or into, or convey, transfer or lease all or
substantially all its assets to, any Person, unless:
(i) the resulting, surviving or transferee Person (the "Successor
---------
Company") will be a Person organized and existing under the laws of the
-------
United States of America, any State thereof or the District of Columbia and
the Successor Company (if not the Company) will expressly assume all the
obligations of the Company under the Notes and this Indenture by executing
and delivering to the Trustee a supplemental indenture or one or more other
documents or instruments in form reasonably satisfactory to the Trustee;
(ii) immediately after giving effect to such transaction (and
treating any Indebtedness that becomes an obligation of the Successor
Company or any Restricted Subsidiary as a result of such transaction as
having been Incurred by the Successor Company or such Restricted Subsidiary
at the time of such transaction), no Default will have occurred and be
continuing;
(iii) immediately after giving effect to such transaction, either
(A) the Successor Company could Incur at least $1.00 of additional
-
Indebtedness pursuant to paragraph (a) of Section 406, or (B) the
----------- -
Consolidated Coverage Ratio of the Successor
81
<PAGE>
Company would equal or exceed the Consolidated Coverage Ratio of the
Company immediately prior to giving effect to such transaction;
(iv) each Note Guarantor (other than any party to any such
consolidation or merger) shall have delivered a supplemental indenture or
other document or instrument in form reasonably satisfactory to the
Trustee, confirming its Note Guarantee; and
(v) the Company will have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each to the effect that such
consolidation, merger or transfer complies with the provisions described in
this paragraph of this Section 501, provided that (x) in giving such
----------- -------- -
opinion such counsel may rely on an Officer's Certificate as to compliance
with the foregoing clauses (ii) and (iii) and as to any matters of fact,
and (y) no Opinion of Counsel will be required for a consolidation, merger
-
or transfer described in the last paragraph of this Section 501.
-----------
Any Indebtedness that becomes an obligation of the Company or any
Restricted Subsidiary (or that is deemed to be Incurred by any Restricted
Subsidiary that becomes a Restricted Subsidiary) as a result of any such
transaction undertaken in compliance with this Section 501, and any Refinancing
-----------
Indebtedness with respect thereto, shall be deemed to have been Incurred in
compliance with Section 406.
-----------
Clauses (ii) and (iii) of the first paragraph of this Section 501 will
-----------
not apply to any transaction in which (1) any Restricted Subsidiary consolidates
-
with, merges into or transfers all or part of its properties and assets to the
Company or (2) the Company consolidates or merges with or into or transfers all
-
or substantially all its assets to (x) an Affiliate incorporated or organized
-
for the purpose of reincorporating or reorganizing the Company in another
jurisdiction or changing its legal structure to a corporation or other entity or
(y) a Restricted Subsidiary of the Company so long as all assets of the Company
-
and the Restricted Subsidiaries immediately prior to such transaction (other
than Capital Stock of such Restricted Subsidiary) are owned by such Restricted
Subsidiary and its Restricted Subsidiaries immediately after the consummation
thereof. The first paragraph of this Section 501 will not apply to the Merger
-----------
or the Second Merger.
Section 502. Successor Company Substituted. Upon any transaction
-----------------------------
involving the Company in accordance with Section 501, in which the Company is
-----------
not the Successor Company, the Successor Company will succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture, and thereafter the predecessor Company shall be relieved of all
obligations and covenants under this Indenture.
82
<PAGE>
ARTICLE 6
REMEDIES
--------
Section 601. Events of Default. An "Event of Default" occurs if:
-----------------
(1) the Company defaults in any payment of interest on any Note when
due, whether or not such payment shall be prohibited by Article 14, and
----------
such default continues for a period of 30 days;
(2) the Company defaults in the payment of the principal of any Note
when the same becomes due at its Stated Maturity, upon optional redemption,
upon required purchase, upon declaration of acceleration or otherwise,
whether or not such payment shall be prohibited by Article 14;
----------
(3) the Company fails to comply with Article 5 and such failure
---------
continues for 30 days after the notice specified in the penultimate
paragraph of this Section 601;
-----------
(4) the Company fails to comply with Section 414 (other than a
-----------
failure to purchase the Notes), and such failure continues for 30 days
after the notice specified in the penultimate paragraph of this Section
-------
601;
(5) the Company fails to comply with any of its agreements in the
Notes or this Indenture (other than those referred to in (1), (2), (3) and
(4) above) and such failure continues for 60 days after the notice
specified in the penultimate paragraph of this Section 601;
-----------
(6) any Note Guarantor fails to comply with its obligations under any
Note Guarantee and such failure continues for 45 days after the notice
specified in the penultimate paragraph of this Section 601;
-----------
(7) the Company or any Significant Subsidiary fails to pay any
Indebtedness within any applicable grace period after final maturity or the
acceleration of any such Indebtedness by the holders thereof because of a
default if the total amount of such Indebtedness unpaid or accelerated
exceeds $15,000,000 or its foreign currency equivalent;
83
<PAGE>
(8) the Company or any Significant Subsidiary pursuant to or within
the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it in
an involuntary case;
(C) consents to the appointment of a Custodian of it or for any
substantial part of its property; or
(D) makes a general assignment for the benefit of its creditors;
(9) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(A) is for relief against the Company or any Significant
Subsidiary in an involuntary case;
(B) appoints a Custodian of the Company or any Significant
Subsidiary or for any substantial part of its property; or
(C) orders the winding up or liquidation of the Company or any
Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60 days;
(10) there is rendered any judgment or decree for the payment of
money in an amount (net of any insurance or indemnity payments actually
received within 90 days from the entry thereof, or to be received in
respect thereof in the event any appeal thereof shall be unsuccessful) in
excess of $15,000,000 or its foreign currency equivalent against the
Company or any Significant Subsidiary by a court or other adjudicatory
authority of competent jurisdiction that is not discharged, or bonded or
insured by a third Person, if such judgment or decree remains outstanding
for a period of 90 days following such judgment or decree and is not
discharged, waived or stayed; or
(11) any Note Guarantee by a Note Guarantor that is a Significant
Subsidiary fails to be in full force and effect (except as contemplated by
the terms thereof or of this Indenture) or any Note Guarantor that is a
Significant Subsidiary denies or disaffirms in writing its obligations
under its Note Guarantee (other than by reason of
84
<PAGE>
the termination of this Indenture or such Note Guarantee or the release of
such Note Guarantee in accordance with such Note Guarantee of this
Indenture), if such Default continues for 10 days.
The foregoing will 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, state or foreign 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 (3), (4), (5) or (6) is not an Event of Default
until the Trustee or the Holders of at least 25% in principal amount of the
Notes notify the Company (and the Trustee in the case of a notice by Holders) of
the Default and the Company does not cure such Default within the time specified
therein 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."
When a Default or an Event of Default is cured, it ceases.
The Company shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice in the form of an Officer's Certificate of
any Event of Default under clause (7) or (10) and any event that with the giving
of notice or the lapse of time would become an Event of Default under clause
(3), (4), (5) or (6), its status and what action the Company is taking or
proposes to take with respect thereto.
Section 602. Acceleration of Maturity; Rescission and Annulment. If
--------------------------------------------------
an Event of Default (other than an Event of Default specified in clause (8) or
(9) of Section 601 with respect to the Company) occurs and is continuing, the
-----------
Trustee by notice to the Company, or the Holders of at least a majority in
principal amount of the outstanding Notes by notice to the Company and the
Trustee, in either case specifying in such notice the respective Event of
Default and that such notice is a "notice of acceleration," may declare the
principal of and accrued but unpaid interest on all the Notes to be due and
payable, provided that so long as any Designated Senior Indebtedness shall be
--------
outstanding, such acceleration shall not be effective until the earlier to occur
of (x) five Business Days following delivery of a written notice of such
-
acceleration of the Notes to the Company and the holders of all Designated
Senior Indebtedness or each Representative thereof and (y) the acceleration of
-
any Designated Senior Indebtedness. Upon the effectiveness of such a
declaration, such principal and interest will be due and payable immediately.
Notwithstanding the foregoing, if an Event of Default specified in clause (8) or
(9) of Section 601 with respect to the Company occurs and is
-----------
85
<PAGE>
continuing, then the principal of and any accrued interest on all the
Outstanding Notes will ipso facto become and be immediately due and payable
---- -----
without any declaration or other act on the part of the Trustee or any Holder.
The Holders of a majority in principal amount of the Outstanding Notes by notice
to the Company and the Trustee may rescind an acceleration and its consequences
if the rescission would not conflict with any judgment or decree and if all
existing Events of Default have been cured or waived except non-payment of
principal or interest that has become due solely because of such acceleration.
No such rescission shall affect any subsequent Default or impair any right
consequent thereto.
Notwithstanding the foregoing, in the event of a declaration of
acceleration in respect of the Notes because an Event of Default specified in
clause (7) of Section 601 shall have occurred and be continuing, such
-----------
declaration of acceleration of the Notes and such Event of Default and all
consequences thereof (including without limitation any acceleration or resulting
payment default) shall be annulled, waived and rescinded, automatically and
without any action by the Trustee or the Holders, and be of no further effect,
if within 60 days after such Event of Default arose (x) the Indebtedness 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 in respect of
-
such Indebtedness that is the basis for such Event of Default has been cured.
Section 603. Other Remedies; Collection Suit by Trustee. If an Event
------------------------------------------
of Default occurs and is continuing, the Trustee may, but is not obligated under
this Section 603 to, pursue any available remedy to collect the payment of
-----------
principal of or interest on the Notes or to enforce the performance of any
provision of the Notes or this Indenture. If an Event of Default specified in
Section 601(1) or 601(2) occurs and is continuing, the Trustee may recover
- -------------- ------
judgment in its own name and as trustee of an express trust against the Company
for the whole amount then due and owing (together with interest on any unpaid
interest to the extent lawful) and the amounts provided for in Section 707.
-----------
Section 604. 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 and the Holders allowed in
any judicial proceedings relative to the Company or any other obligor upon the
Notes, its creditors or its property 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 707.
-----------
86
<PAGE>
No provision of this Indenture shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting the
Notes or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
Section 605. Trustee May Enforce Claims Without Possession of Notes.
------------------------------------------------------
All rights of action and claims under this Indenture or the Notes may be
prosecuted and enforced by the Trustee without the possession of any of the
Notes or the production thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own name as trustee
of an express trust, and any recovery of judgment shall, after provision for the
payment of the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, be for the ratable benefit of the Holders
of the Notes in respect of which such judgment has been recovered.
Section 606. Application of Money Collected. Any money collected by
------------------------------
the Trustee pursuant to this Article 6 shall be applied in the following order,
---------
at the date or dates fixed by the Trustee and, in case of the distribution of
such money on account of principal (or premium, if any) or interest, upon
presentation of the Notes and the notation thereon of the payment if only
partially paid and upon surrender thereof if fully paid:
First: to the payment of all amounts due the Trustee under Section
----- -------
707;
---
Second: to holders of Senior Indebtedness to the extent required by
------
Article 14;
----------
Third: to the payment of the amounts then due and unpaid upon the
-----
Notes for principal (and premium, if any) and interest, in respect of which
or for the benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts due and
payable on such Notes for principal (and premium, if any) and interest,
respectively; and
Fourth: to the Company.
------
Section 607. Limitation on Suits. No Holder may pursue any remedy
-------------------
with respect to this Indenture or the Notes unless:
(1) such Holder has previously given the Trustee written notice that
an Event of Default is continuing;
87
<PAGE>
(2) Holders of at least 25% in principal amount of the Outstanding
Notes have requested the Trustee in writing to pursue the remedy;
(3) such Holder or Holders have offered to the Trustee reasonable
security or indemnity against any loss, liability or expense;
(4) the Trustee has not complied with the request within 60 days after
receipt of the request and the offer of security or indemnity; and
(5) the Holders of a majority in principal amount of the Outstanding
Notes have not given the Trustee a direction inconsistent with the request
during such 60-day period.
A Holder may not use this Indenture to affect, disturb or prejudice
the rights of another Holder, to obtain a preference or priority over another
Holder or to enforce any right under this Indenture except in the manner herein
provided and for the equal and ratable benefit of all Holders.
Section 608. Unconditional Right of Holders to Receive Principal,
----------------------------------------------------
Premium and Interest. Notwithstanding any other provision in this Indenture,
- --------------------
the Holder of any Note shall have the absolute and unconditional right to
receive payment of the principal of and all (subject to Section 307) interest on
-----------
such Note on the respective Stated Maturity or Interest Payment Dates expressed
in such Note and to institute suit for the enforcement of any such payment on or
after such respective Stated Maturity or Interest Payment Dates, and such right
shall not be impaired without the consent of such Holder.
Section 609. Restoration of Rights and Remedies. If the Trustee or
----------------------------------
any Holder has instituted any proceeding to enforce any right or remedy under
this Indenture or any Note and such proceeding has been discontinued or
abandoned for any reason, or has been deter mined adversely to the Trustee or
to such Holder, then and in every such case the Company, any other obligor upon
the Notes, the Trustee and the Holders shall, subject to any determination in
such proceeding, be restored severally and respectively to their former
positions hereunder, and thereafter all rights and remedies of the Trustee and
the Holders shall continue as though no such proceeding had been instituted.
Section 610. Rights and Remedies Cumulative. No right or remedy
------------------------------
herein conferred upon or reserved to the Trustee or to the Holders is intended
to be exclusive of any other right or remedy, and every right and remedy shall,
to the extent permitted by law, be cumulative and in addition to every other
right and remedy given hereunder or now or hereafter existing at law or in
equity or otherwise. The assertion or employment of any right
88
<PAGE>
or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section 611. Delay or Omission Not Waiver. No delay or omission of
----------------------------
the Trustee or of any Holder of any Note to exercise any right or remedy
accruing upon any Event of Default shall impair any such right or remedy or
constitute a waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article 6 or by law to the Trustee or to
---------
the Holders may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders, as the case may be.
Section 612. Control by Holders. The Holders of not less than a
------------------
majority in aggregate principal amount of the Outstanding Notes shall have 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, provided that
--------
(1) such direction shall not be in conflict with any rule of law or
with this Indenture, and
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
However, the Trustee may refuse to follow any direction that conflicts
with law or this Indenture or, subject to Section 701, that the Trustee
-----------
determines is unduly prejudicial to the rights of other Holders or would involve
the Trustee in personal liability; provided, however, that the Trustee may take
-------- -------
any other action deemed proper by the Trustee that is not inconsistent with such
direction. 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. This
Section 612 shall be in lieu of (S) 316(a)(1)(A) of the TIA, and such (S)
- -----------
316(a)(1)(A) of the TIA is hereby expressly excluded from this Indenture and the
Notes, as permitted by the TIA.
Section 613. Waiver of Past Defaults. The Holders of not less than a
-----------------------
majority in aggregate principal amount of the Outstanding Notes may on behalf of
the Holders of all the Notes waive any past Default hereunder and its
consequences, except a Default
(1) in the payment of the principal of (or premium, if any) or
interest on any Note (which may only be waived with the consent of each
Holder of Notes affected), or
89
<PAGE>
(2) in respect of a covenant or provision hereof that pursuant to the
second paragraph of Section 902 cannot be modified or amended without the
-----------
consent of the Holder of each Outstanding Note affected.
Upon any such waiver, such Default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereon. In
case of any such waiver, the Company, any other obligor upon the Notes, the
Trustee and the Holders shall be restored to their former positions and rights
hereunder and under the Notes, respectively. This paragraph of this Section 613
-----------
shall be in lieu of (S) 316(a)(1)(B) of the TIA and such (S) 316(a)(1)(B) of the
TIA is hereby expressly excluded from this Indenture and the Notes, as permitted
by the TIA.
Section 614. Undertaking for Costs. All parties to this Indenture
---------------------
agree, and each Holder of any Note by such Holder's acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture or the Notes, or
in any suit against the Trustee for any action taken, suffered or omitted by it
as Trustee, the filing by any party litigant in such suit of an undertaking to
pay the costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys' fees, against any party
litigant in such suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant. This Section 614 shall not
-----------
apply to any suit instituted by the Trustee, to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more than 10% in principal
amount of the Outstanding Notes, or to any suit instituted by any Holder for the
enforcement of the payment of the principal of (or premium, if any) or interest
on any Note on or after the respective Stated Maturity or Interest Payment Dates
expressed in such Note.
Section 615. Waiver of Stay, Extension or Usury Laws. The Company
---------------------------------------
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law or any usury or other similar
law wherever enacted, now or at any time hereafter in force, that would prohibit
or forgive the Company from paying all or any portion of the principal of (or
premium, if any) or interest on the Notes contemplated herein or in the Notes or
that may affect the covenants or the performance of this Indenture; and the
Company (to the extent that it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law, and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law
had been enacted.
90
<PAGE>
ARTICLE 7
THE TRUSTEE
-----------
Section 701. Certain Duties and
------------------
Responsibilities. (a) Except during the continuance of an Event of Default,
- ----------------
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the re requirements of this Indenture; but
in the case of any such certificates or opinions that by any provision
hereof are specifically required to be furnished to the Trustee, the
Trustee shall be under a duty to examine the same to determine whether or
not they conform to the requirements of this Indenture, but need not verify
the contents thereof.
(b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that (i) this paragraph does not
-
limit the effect of paragraph (a) of this Section 701; (ii) the Trustee shall
----------- --
not be liable for any error of judgment made in good faith by a Trust Officer,
unless it is proved that the Trustee was negligent in ascertaining the pertinent
facts; and (iii) the Trustee shall not be liable with respect to any action it
---
takes or omits to take in good faith in accordance with a direction received by
it pursuant to Section 612.
-----------
(d) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
91
<PAGE>
(e) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of
Sections 701 and 703 hereof.
- ------------ ---
Section 702. Notice of Defaults. Within 90 days after the occurrence
------------------
of any Default, the Trustee shall transmit by mail to all Holders, as their
names and addresses appear in the Note Register, notice of such Default
hereunder known to the Trustee unless such Default shall have been cured or
waived; provided, however, that, except in the case of a Default in the payment
-------- -------
of the principal of, premium, if any, or interest on any Note, the Trustee shall
be protected in withholding such notice if and so long as the board of
directors, the executive committee or a trust committee of Responsible Officers
of the Trustee in good faith determines that the withholding of such notice is
in the interests of the Holders.
Section 703. Certain Rights of Trustee. Subject to the provisions
-------------------------
of Sec tion 701:
------------
(1) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed or presented by the
proper party or parties;
(2) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order thereof, and
any resolution of any Person's board of directors shall be sufficiently
evidenced if certified by an Officer of such Person as having been duly
adopted and being in full force and effect on the date of such certificate;
(3) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically pre scribed) may, in the absence of
bad faith on its part, rely upon an Officer's Certificate of Holding or the
Company;
(4) the Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
92
<PAGE>
(5) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall
have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction;
(6) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, note, other evidence of indebtedness or other paper or document; and
(7) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder.
Section 704. Not Responsible for Recitals or Issuance of Notes. The
-------------------------------------------------
recitals contained herein and in the Notes, except the Trustee's certificates of
authentication, shall be taken as the statements of Holding, the Company and any
other obligor upon the Notes, and neither the Trustee nor any Authenticating
Agent assumes any responsibility for their correct ness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Notes, except that the Trustee represents that it is duly authorized to execute
and deliver this Indenture, authenticate the Notes and perform its obligations
hereunder and that the statements made by it in a Statement of Eligibility and
Qualification on Form T-1 supplied to the Company and any other obligor upon the
Notes in connection with the registration of any Notes and any Note Guarantees
issued hereunder are and will be true and accurate subject to the qualifications
set forth therein. Neither the Trustee nor any Authenticating Agent shall be
accountable for the use or application by the Company of Notes or the proceeds
thereof.
Section 705. May Hold Notes. The Trustee, any Authenticating Agent,
--------------
any Paying Agent, any Note Registrar or any other agent of the Company, in its
individual or any other capacity, may become the owner or pledgee of Notes and,
subject to Section 708 and Section 713, may otherwise deal with the Company or
----------- -----------
its Affiliates with the same rights it would have if it were not Trustee,
Authenticating Agent, Paying Agent, Note Registrar or such other agent.
Section 706. Money Held in Trust. Money held by the Trustee in trust
-------------------
hereunder need not be segregated from other funds except to the extent required
by law. The Trustee shall be under no liability for interest on any money
received by it hereunder except as otherwise agreed with the Company.
93
<PAGE>
Section 707. Compensation and Reimbursement. The Company agrees,
------------------------------
(1) to pay to the Trustee from time to time reasonable compensation
for all services rendered by the Trustee hereunder (which compensation
shall not be limited by any provision of law in regard to the compensation
of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable out-of-pocket expenses incurred
by the Trustee in accordance with any provision of this Indenture
(including the reasonable compensation and the expenses and disbursements
of its agents and counsel), except any such expense, disbursement or
advance as may be attributable to its negligence or bad faith; and
(3) to indemnify the Trustee for, and to hold it harmless against,
any loss, liability or expense incurred without negligence or bad faith on
the Trustee's part, arising out of or in connection with the administration
of the trust or trusts hereunder, including the costs and expenses of
defending itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder.
The Company need not pay for any settlement made without its consent.
Section 708. Conflicting Interests. If the Trustee has or shall
---------------------
acquire a conflicting interest within the meaning of the TIA, the Trustee shall
either eliminate such interest or resign, to the extent and in the manner
provided by, and subject to the provisions of, the TIA and this Indenture. To
the extent permitted by such Act, the Trustee shall not be deemed to have a
conflicting interest by virtue of being a trustee under this Indenture with
respect to Original Notes and Additional Notes, or a trustee under any other
indenture between the Company and the Trustee.
Section 709. Corporate Trustee Required; Eligibility. There shall at
---------------------------------------
all times be one (and only one) Trustee hereunder. The Trustee shall be a
Person that is eligible pursuant to the TIA to act as such and has a combined
capital and surplus of at least $50,000,000. If any such Person publishes
reports of condition at least annually, pursuant to law or to the requirements
of its supervising or examining authority, then for the purposes of this Section
-------
709 and to the extent permitted by the TIA, the combined capital and surplus of
- ---
such Person shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section
-------
709, it shall resign immediately in the manner and with the effect hereinafter
specified in this Article.
94
<PAGE>
Section 710. Resignation and Removal; Appointment of Successor. No
-------------------------------------------------
resignation or removal of the Trustee and no appointment of a successor Trustee
pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee in accordance with the applicable
requirements of Section 711.
-----------
The Trustee may resign at any time by giving written notice thereof to
the Company. If the instrument of acceptance by a successor Trustee required by
Section 711 shall not have been delivered to the Trustee within 30 days after
- -----------
the giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
The Trustee may be removed at any time by Act of the Holders of a
majority in principal amount of the Outstanding Notes, delivered to the Trustee
and to the Company.
If at any time:
(1) the Trustee shall fail to comply with Section 708 after written
-----------
request therefor by the Company or by any Holder who has been a bona fide
Holder of a Note for at least six months, or
(2) the Trustee shall cease to be eligible under Section 709 and
-----------
shall fail to resign after written request therefor by the Company or by
any such Holder, or
(3) the Trustee shall become incapable of acting or shall be adjudged
bankrupt or insolvent or a receiver of the Trustee or of its property shall
be appointed or any public officer shall take charge or control of the
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation,
then, in any such case, (A) the Company may remove the Trustee, or (B) subject
- -
to Section 614, any Holder who has been a bona fide Holder of a Note for at
-----------
least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee or Trustees.
If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause, the Company
shall promptly appoint a successor Trustee and shall comply with the applicable
requirements of Section 711. If, within one year after such resignation,
-----------
removal or incapability, or the occurrence of such vacancy, a successor Trustee
shall be appointed by Act of the Holders of a majority in principal amount of
the Outstanding Notes delivered to the Company and the retiring Trustee, the
successor Trustee so appointed shall, forthwith upon its acceptance of such
appointment in
95
<PAGE>
accordance with the applicable requirements of Section 711, become the successor
-----------
Trustee and to that extent supersede the successor Trustee appointed by the
Company. If no successor Trustee shall have been so appointed by the Company or
the Holders and accepted appointment in the manner required by Section 711,
-----------
then, subject to Section 614, any Holder who has been a bona fide Holder of a
-----------
Note for at least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the appointment of a
successor Trustee.
The Company shall give notice of each resignation and each removal of
the Trustee and each appointment of a successor Trustee to all Holders in the
manner provided in Section 110. Each notice shall include the name of the
-----------
successor Trustee and the address of its Corporate Trust Office.
Section 711. Acceptance of Appointment by Successor. In case of the
--------------------------------------
appointment hereunder of a successor Trustee, every such successor Trustee so
appointed shall execute, acknowledge and deliver to the Company and to the
retiring Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Trustee shall become effective and such
successor Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the retiring Trustee;
but, on the request of the Company or the successor Trustee, such retiring
Trustee shall, upon payment of its charges, execute and deliver an instrument
transferring to such successor Trustee all the rights, powers and trusts of the
retiring Trustee and shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder.
Upon request of any such successor Trustee, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Trustee all such rights, powers and trusts referred to above.
No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article 7.
---------
Section 712. Merger, Conversion, Consolidation or Succession to
--------------------------------------------------
Business. Any corporation into which the Trustee may be merged or converted or
- --------
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article 7,
---------
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Notes shall have been authenticated, but
not delivered, by the Trustee then
96
<PAGE>
in office, any successor by merger, conversion or consolidation to such
authenticating Trustee may adopt such authentication and deliver the Notes so
authenticated with the same effect as if such successor Trustee had itself
authenticated such Notes.
Section 713. Preferential Collection of Claims Against the Company.
-----------------------------------------------------
If and when the Trustee shall be or become a creditor of the Company (or any
other obligor upon the Notes), the Trustee shall be subject to the provisions of
the TIA regarding the collection of claims against the Company (or any such
other obligor).
Section 714. Appointment of Authenticating Agent. The Trustee may
-----------------------------------
appoint an Authenticating Agent acceptable to the Company to authenticate the
Notes. Any such appointment shall be evidenced by an instrument in writing
signed by a Trust Officer, a copy of which instrument shall be promptly
furnished to the Company. Unless limited by the terms of such appointment, an
Authenticating Agent may authenticate Notes whenever the Trustee may do so.
Each reference in this Indenture to authentication (or execution of a
certificate of authentication) by the Trustee includes authentication (or
execution of a certificate of authentication) by such Authenticating Agent.
An Authenticating Agent has the same rights as any Registrar, Paying Agent or
agent for service of notices and demands.
ARTICLE 8
HOLDERS' LISTS AND REPORTS BY
TRUSTEE AND THE COMPANY
-------------------------------
Section 801. The Company to Furnish Trustee Names and Addresses of
-----------------------------------------------------
Holders. The Company will furnish or cause to be furnished to the Trustee
- -------
(1) semi-annually, not more than 15 days after each Regular Record
Date, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders as of such Regular Record Date, and
(2) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the
time such list is furnished;
provided, however, that if and so long as the Trustee shall be the Note
- -------- -------
Registrar, no such list need be furnished pursuant to this Section 801.
-----------
97
<PAGE>
Section 802. Preservation of Information; Communications to Holders.
------------------------------------------------------
The Trustee shall preserve, in as current a form as is reasonably practicable,
the names and addresses of Holders contained in the most recent list, if any,
furnished to the Trustee as provided in Section 801 and the names and addresses
-----------
of Holders received by the Trustee in its capacity as Note Registrar; provided,
--------
however, that if and so long as the Trustee shall be the Note Registrar, the
- -------
Note Register shall satisfy the requirements relating to such list. None of
Holding, the Company, any other obligor upon the Notes or the Trustee or any
other Person shall be under any responsibility with regard to the accuracy of
such list. The Trustee may destroy any list furnished to it as provided in
Section 801 upon receipt of a new list so furnished.
- -----------
The rights of Holders to communicate with other Holders with respect
to their rights under this Indenture or under the Notes, and the corresponding
rights and privileges of the Trustee, shall be as provided by the TIA.
Every Holder of Notes, by receiving and holding the same, agrees with
the Company and the Trustee that neither the Company nor the Trustee nor any
agent of either of them shall be held accountable by reason of any disclosure of
information as to names and addresses of Holders made pursuant to the TIA.
Section 803. Reports by Trustee. The Trustee shall transmit to
------------------
Holders such reports concerning the Trustee and its actions under this Indenture
as may be required pursuant to the TIA at the times and in the manner provided
pursuant thereto. A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange upon
which any Notes are listed, with the SEC and with the Company. The Company will
notify the Trustee when any Notes are listed on any stock exchange.
ARTICLE 9
AMENDMENT, SUPPLEMENT OR WAIVER
-------------------------------
Section 901. Without Consent of Holders. Without the consent of the
--------------------------
Holders of any Notes, Holding, the Company, the Trustee and (as applicable) any
Note Guarantor may enter into one or more indentures supplemental hereto, for
any of the following purposes:
(1) to cure any ambiguity, omission, defect or inconsistency,
(2) to provide for the assumption by a successor of the obligations
of the Company under this Indenture,
98
<PAGE>
(3) to provide for uncertificated Notes in addition to or in place of
certificated Notes,
(4) to add Guarantees with respect to the Notes, to secure the Notes,
to confirm and evidence the release, termination or discharge of any
Guarantee or Lien with respect to or securing the Notes when such release,
termination or discharge is pro vided for under this Indenture,
(5) to add to the covenants of the Company for the benefit of the
Noteholders or to surrender any right or power conferred upon the Company,
(6) to provide that any Indebtedness that becomes or will become an
obligation of a Successor Company or a Note Guarantor pursuant to a
transaction governed by Article 5 (and that is not a Subordinated
---------
Obligation) is Senior Subordinated In debtedness or Guarantor Senior
Subordinated Indebtedness for purposes of this Indenture,
(7) to provide for or confirm the issuance of Additional Notes,
(8) to make any change that does not adversely affect the rights of
any Holder under the Notes or this Indenture, or
(9) to comply with any requirement of the SEC in connection with the
qualification fication of this Indenture under the TIA or otherwise.
Notwithstanding the foregoing provisions of this Section 901 and
-----------
Section 902, on or after the date hereof (but after the execution and delivery
- -----------
of this Indenture and the issuance of the Notes and after or concurrently with
consummation of the Mergers), any or all of Holding, TTC, TTC Merger Co. and the
Trustee may execute and deliver the First Supplemental Indenture, in each case
without notice to or consent of any Holder.
Section 902. With Consent of Holders. Subject to Section 608, the
----------------------- -----------
Company, Holding, the Trustee and (if applicable) any Note Guarantor may amend
or supplement this Indenture or the Notes with the written consent of the
Holders of not less than a majority in aggregate principal amount of the
Outstanding Notes (including consents obtained in con nection with a tender
offer or exchange offer for Notes), and the Holders of not less than a majority
in aggregate principal amount of the Outstanding Notes by written notice to the
Trustee (including consents obtained in connection with a tender offer or
exchange offer for Notes) may waive any existing Default or Event of Default or
compliance by the Company or
99
<PAGE>
any Subsidiary Guarantor with any provision of this Indenture, the Notes or any
Subsidiary Guarantee.
Notwithstanding the provisions of this Section 902, without the
-----------
consent of each Holder affected, an amendment or waiver, including a waiver
pursuant to Section 613, may not:
-----------
(i) reduce the principal amount of the Notes whose Holders must
consent to an amendment or waiver;
(ii) reduce the rate of or extend the time for payment of interest on
any Note;
(iii) reduce the principal or extend the Stated Maturity of any Note;
(iv) reduce the premium payable upon the redemption of any Note or
change the date on which any Note may be redeemed as described in Section
-------
1001;
----
(v) make any Note payable in money other than that stated in the
Note;
(vi) make any change in Article 14 or Article 15 that adversely
---------- ----------
affects the rights of any Holder in any material respect;
(vii) impair the right of any Holder to receive payment of principal
of and interest on such Holder's Notes 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 Notes; or
(viii) make any change in the amendment or waiver provisions
described in this sentence.
Notwithstanding Section 901 and the foregoing provisions of this
-----------
Section 902, no amendment to Article 14 or Article 15 of this Indenture or the
- ----------- ---------- ----------
definitions relating thereto that adversely affects the rights of any Holder of
Senior Indebtedness at the time outstanding (which Senior Indebtedness has been
previously designated in writing by the Company to the Trustee for this purpose)
may be made unless the holders of such Senior Indebtedness (or any group or
representative thereof authorized to give a consent) consent in writing to such
amendment.
It shall not be necessary for the consent of the Holders under this
Section 902 to approve the particular form of any proposed amendment, supplement
- -----------
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
100
<PAGE>
After an amendment, supplement or waiver under this Section 902
-----------
becomes effective, the Company shall mail to the Holders of each Note affected
thereby, with a copy to the Trustee, a notice briefly describing the amendment,
supplement or waiver. Any failure of the Company to mail such notice, or any
defect therein, shall not, however, in any way impair or affect the validity of
any supplemental indenture or effectiveness of any such amendment, supplement or
waiver.
Section 903. Execution of Amendments, Supplements or Waivers. The
-----------------------------------------------
Trustee shall sign any amendment, supplement or waiver authorized pursuant to
this Article 9 if the amendment, supplement or waiver 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 or refusing to sign such
amendment, supplement or waiver, the Trustee shall be entitled to receive, and
shall be fully protected in relying upon, an Officer's Certificate and an
Opinion of Counsel to the effect that the execution of such amendment,
supplement or waiver has been duly authorized, executed and delivered by the
Company and that, subject to applicable bankruptcy, insolvency, fraudulent
transfer, fraudulent conveyance, reorganization, moratorium and other laws now
or hereinafter in effect affecting creditors' rights or remedies generally and
the general principles of equity (including, without limitation, standards of
materiality, good faith, fair dealing and reasonableness), whether considered in
a proceeding at law or at equity, such amendment, supplement or waiver is a
valid and binding agreement of the Company, enforceable against it in accordance
with its terms.
Section 904. Revocation and Effect of Consents. Until an amendment,
---------------------------------
supplement or waiver becomes effective, a consent to it by a Holder is a
continuing consent by the Holder and every subsequent Holder of that Note or any
Note that evidences all or any part of the same debt as the consenting Holder's
Note, even if notation of the consent is not made on any Note. Subject to the
following paragraph of this Section 904, any such Holder or subsequent Holder
-----------
may revoke the consent as to such Holder's Note by notice to the Trustee or the
Company received by the Trustee or the Company, as the case may be, before the
date on which the Trustee receives an Officer's Certificate certifying that the
Holders of the requisite principal amount of Notes have consented (and not
theretofore revoked such consent) to the amendment, supplement or waiver. The
Company may, but shall not be obligated to, fix a record date for the purpose of
determining the Holders entitled to consent to any amendment, supplement or
waiver as set forth in Section 108.
-----------
After an amendment, supplement or waiver becomes effective, it shall
bind every Holder of Notes, unless it makes a change described in any of clauses
(i) through (viii) of the second paragraph of Section 902. In that case, the
-----------
amendment, supplement or waiver shall bind each Holder of a Note who has
consented to it and every subsequent Holder of such
101
<PAGE>
Note or any Note that evidences all or any part of the same debt as the
consenting Holder's Note.
Section 905. Conformity with TIA. Every amendment or supplemental
-------------------
indenture executed pursuant to this Article shall conform to the requirements of
the TIA as then in effect.
Section 906. Notation on or Exchange of Notes. If an amendment,
--------------------------------
supplement or waiver changes the terms of a Note, the Trustee shall (if required
by the Company and in accordance with the specific direction of the Company)
request the Holder of the Note to deliver it to the Trustee. The Trustee shall
(if required by the Company and in accordance with the specific direction of the
Company) place an appropriate notation on the Note about the changed terms and
return it to the Holder. Alternatively, if the Company or the Trustee so
determines, the Company in exchange for the Note shall issue and the Trustee
shall authenticate a new Note that reflects the changed terms. Failure to
make the appropriate notation or issue a new Note shall not affect the validity
and effect of such amendment, supplement or waiver.
ARTICLE 10
REDEMPTION OF NOTES
-------------------
Section 1001. Right of Redemption. (a) Except as set forth in this
-------------------
Section 1001, the Notes will not be redeemable at the option of the Company
- ------------
prior to May 15, 2003. Thereafter, the Notes will be redeemable, at the
Company's option, in whole or in part, and from time to time on and after May
15, 2003 and prior to maturity. Such redemption may be made upon notice mailed
by first-class mail to each Holder's registered address in accordance with
Section 1005. Any such redemption and notice may, in the Company's discretion,
- ------------
be subject to the satisfaction of one or more conditions precedent. The Notes
will be so redeemable at the following Redemption Prices (expressed as a
percentage of principal amount), plus accrued interest, if any, to the relevant
Redemption Date (subject to Section 307), if redeemed during the 12-month period
-----------
commencing on May 15 of the years set forth below:
REDEMPTION
PERIOD PRICE
- ------ ----------
2003 104.875%
2004 103.250%
2005 101.625%
2006 and thereafter 100.000%
102
<PAGE>
(b) In addition, at any time and from time to time prior to May 15,
2001, the Company at its option may redeem the Notes in an aggregate principal
amount equal to up to 35% of the original aggregate principal amount of the
Notes (including the principal amount of any Additional Notes), with funds in an
aggregate amount (the "Redemption Amount") not exceeding the aggregate cash
-----------------
proceeds of one or more Equity Offerings, at a Redemption Price (expressed as a
percentage of principal amount thereof) of 109.75% plus accrued interest, if
any, to the Redemption Date (subject to Section 307); provided, however, that an
----------- -------- -------
aggregate principal amount of the Notes equal to at least 65% of the original
aggregate principal amount of the Notes (including the principal amount of any
Additional Notes) must remain outstanding after each such redemption. The
Company may make such redemption upon notice mailed by first-class mail to each
Holder's registered address in accordance with Section 1005 (but in no event
------------
more than 180 days after the completion of the related Equity Offering). Any
such notice may be given prior to the completion of the related Equity Offering,
and any such redemption or notice may, at the Company's discretion, be subject
to the satisfaction of one or more conditions precedent, including but not
limited to the completion of the related Equity Offering.
(c) At any time on or prior to May 15, 2003, the Notes may also be
redeemed or purchased (by the Company or any other Person) in whole but not in
part, at the Company's option, upon the occurrence of a Change of Control, at a
price equal to 100% of the principal amount thereof plus the Applicable Premium
as of, and accrued but unpaid interest, if any, to, the Redemption Date (subject
to Section 307). Such redemption or purchase may be made upon notice mailed by
-----------
first-class mail to each Holder's registered address in accordance with Section
-------
1005 (but in no event more than 180 days after the occurrence of such Change of
- ----
Control). The Company may provide in such notice that payment of such price and
performance of the Company's obligations with respect to such redemption or
purchase may be performed by another Person. Any such notice may be given prior
to the occurrence of the related Change of Control, and any such redemption,
purchase or notice may, at the Com pany's discretion, be subject to the
satisfaction of one or more conditions precedent, including but not limited to
the occurrence of the related Change of Control.
Section 1002. Applicability of Article. Redemption or purchase of
------------------------
Notes as permitted by Section 1001 shall be made in accordance with this Article
------------ -------
10.
- --
Section 1003. Election to Redeem; Notice to Trustee. In case of any
-------------------------------------
redemption at the election of the Company of less than all of the Notes, the
Company shall, at least 30 days prior to the Redemption Date initially fixed by
the Company (unless a shorter notice shall be satisfactory to the Trustee),
notify the Trustee of such Redemption Date and of the principal amount of Notes
to be redeemed.
103
<PAGE>
Section 1004. Selection by Trustee of Notes to Be Redeemed. In the
--------------------------------------------
case of any partial redemption, selection of the Notes for redemption will be
made not more than 60 days prior to the Redemption Date by the Trustee on a pro
---
rata basis, by lot or by such other method as the Trustee in its sole discretion
- ----
shall deem to be fair and appropriate, although no Note of $1,000 in original
principal amount or less will be redeemed in part.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. On and after the
Redemption Date, interest will cease to accrue on Notes or portions thereof
called for redemption.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Notes shall relate, in
the case of any Note redeemed or to be redeemed only in part, to the portion of
the principal of such Note that has been or is to be redeemed.
Section 1005. Notice of Redemption. Notice of redemption or purchase
--------------------
as provided in Section 1001 shall be given by first class mail, postage prepaid,
------------
mailed not less than 30 nor more than 60 days prior to the Redemption Date, to
each Holder of Notes to be redeemed, at such Holder's address appearing in the
Note Register.
Any such notice shall state:
(1) the expected Redemption Date,
(2) the Redemption Price,
(3) if less than all Outstanding Notes are to be redeemed, the
identification (and, in the case of partial redemption, the respective
principal amounts) of the Notes to be redeemed,
(4) that on the Redemption Date the Redemption Price will become due
and payable upon each such Note, and that, unless the Company defaults in
making such redemption payment or the Paying Agent is prohibited from
making such payment pursuant to the terms of this Indenture, interest
thereon shall cease to accrue from and after said date, and
(5) the place where such Notes are to be surrendered for payment of
the Redemption Price.
104
<PAGE>
In addition, if such redemption, purchase or notice is subject to satisfaction
of one or more conditions precedent, as permitted by Section 1001, such notice
------------
shall describe each such condition, and if applicable, shall state that, in the
Company's discretion, the Redemption Date may be delayed until such time as any
or all such conditions shall be satisfied, or such redemption or purchase may
not occur and such notice may be rescinded in the event that any or all such
conditions shall not have been satisfied by the Redemption Date, or by the
Redemption Date as so delayed.
Notice of such redemption or purchase of Notes to be so redeemed or
purchased at the election of the Company shall be given by the Company or, at
the Company's request, by the Trustee in the name and at the expense of the
Company.
The notice if mailed in the manner herein provided shall be
conclusively presumed to have been given, whether or not the Holder receives
such notice. In any case, failure to give such notice by mail or any defect in
the notice to the Holder of any Note designated for redemption as a whole or in
part shall not affect the validity of the proceedings for the redemption of any
other Note.
Section 1006. Deposit of Redemption Price. On or prior to any
---------------------------
Redemption Date, the Company shall deposit with the Trustee or with a Paying
Agent (or, if the Company is acting as its own Paying Agent, the Company shall
segregate and hold in trust as provided in Section 403) an amount of money
-----------
sufficient to pay the Redemption Price of, and any accrued and unpaid interest
on, all the Notes or portions thereof which are to be redeemed on that date.
Section 1007. Notes Payable on Redemption Date. Notice of redemption
--------------------------------
having been given as provided in this Article 10, the Notes so to be redeemed
----------
shall, on the Redemption Date, become due and payable at the Redemption Price
herein specified and from and after such date (unless Company shall default in
the payment of the Redemption Price or the Paying Agent is prohibited from
paying the Redemption Price pursuant to the terms of this Indenture) such Notes
shall cease to bear interest. Upon surrender of such Notes for redemption in
accordance with such notice, such Notes shall be paid by the Company at the Re
demption Price. Installments of interest whose Interest Payment Date is on or
prior to the Redemption Date shall be payable to the Holders of such Notes
registered as such on the relevant Regular Record Dates according to their terms
and the provisions of Section 307.
-----------
On and after any Redemption Date, if money sufficient to pay the
Redemption Price of and any accrued and unpaid interest on Notes called for
redemption shall have been made available in accordance with Section 1006, the
------------
Notes (or the portions thereof) called for redemption will cease to accrue
interest and the only right of the Holders of such Notes (or
105
<PAGE>
portions thereof) will be to receive payment of the Redemption Price of and
subject to the last sentence of the preceding paragraph of this Section 1007,
------------
any accrued and unpaid interest on such Notes (or portions thereof) to the
Redemption Date. If any Note (or portion thereof) called for redemption shall
not be so paid upon surrender thereof for redemption, the principal (and
premium, if any) shall, until paid, bear interest from the Redemption Date at
the rate borne by the Note (or portion thereof).
Section 1008. Notes Redeemed in Part. Any Note that is to be
----------------------
redeemed only in part shall be surrendered at the Place of Payment (with, if the
Company or the Trustee so requires, due endorsement by, or a written instrument
of transfer in form satisfactory to the Company and the Trustee duly executed
by, the Holder thereof or his attorney duly authorized in writing) and the
Company shall execute and the Trustee shall authenticate and deliver to the
Holder of such Note without service charge, a new Note or Notes, of any
authorized de nomination as requested by such Holder in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Note so surrendered.
ARTICLE 11
SATISFACTION AND DISCHARGE
--------------------------
Section 1101. Satisfaction and Discharge of Indenture. This
---------------------------------------
Indenture shall cease to be of further effect (except as to any surviving rights
of conversion or transfer or exchange of Notes herein expressly provided for),
and the Trustee, on demand of and at the expense of the Company, shall execute
proper instruments acknowledging satisfaction and discharge of this Indenture,
when
(1) either
(A) all Notes theretofore authenticated and delivered (other than (i)
-
Notes that have been destroyed, lost or stolen and that have been replaced
or paid as provided in Section 306, and (ii) Notes for whose payment money
----------- --
has theretofore been deposited in trust or segregated and held in trust by
the Company and thereafter repaid to the Company or discharged from such
trust, as provided in Section 403) have been delivered to the Trustee
-----------
cancelled or for cancellation; or
(B) all such Notes not theretofore delivered to the Trustee cancelled
or for cancellation
(i) have become due and payable, or
106
<PAGE>
(ii) will become due and payable at their Stated Maturity within
one year, or
(iii) are to be called for redemption within one year under
arrangements reasonably satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the name, and at the expense,
of the Company,
(2) the Company has deposited or caused to be deposited with the
Trustee an amount in United States dollars, U.S. Government Obligations, or
a combination thereof, sufficient to pay and discharge the entire
Indebtedness on such Notes not theretofore delivered to the Trustee
cancelled or for cancellation, for principal (and premium, if any) and
interest to the date of such deposit (in the case of Notes that have become
due and payable), or to the Stated Maturity or Redemption Date, as the case
may be;
(3) the Company has paid or caused to be paid all other sums then
payable hereunder by the Company; and
(4) the Company has delivered to the Trustee an Officer's Certificate
and an Opinion of Counsel each to the effect that all conditions precedent
provided for in this Section 1101 relating to the satisfaction and
------------
discharge of this Indenture have been complied with, provided that any such
--------
counsel may rely on any Officer's Certificate as to matters of fact
(including as to compliance with the foregoing clauses (1), (2) and (3)).
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 707 and, if money shall
-----------
have been deposited with the Trustee pursuant to clause (2) of this Section
-------
1101, the obligations of the Trustee under Section 1102, shall survive.
------------
Section 1102. Application of Trust Money. Subject to the provisions
--------------------------
of the last paragraph of Section 403, all money deposited with the Trustee
-----------
pursuant to Section 1101 shall be held in trust and applied by it, in accordance
------------
with the provisions of the Notes and this Indenture, to the payment, either
directly or through any Paying Agent (including the Company acting as its own
Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of
the principal (and premium, if any) and interest on the Notes; but such money
need not be segregated from other funds except to the extent required by law.
107
<PAGE>
ARTICLE 12
DEFEASANCE OR COVENANT DEFEASANCE
---------------------------------
Section 1201. The Company's Option to Elect Defeasance or Covenant
----------------------------------------------------
Defeasance. The Company may, at its option, at any time, elect to have
- ----------
terminated the obligations of the Company with respect to the Outstanding Notes
and to have terminated the obligations of Holding and any or all Note Guarantors
with respect to the Parent Guarantee or the Note Guarantees, as the case may be,
in each case as set forth in this Article 12, and elect to have either Section
---------- -------
1202 or Section 1203 be applied to all of the Outstanding Notes (the "Defeased
- ---- ------------ --------
Notes"), upon compliance with the conditions set forth in Section 1204. Either
- ----- ------------
Section 1202 or Section 1203 may be applied to the Defeased Notes to any
- ------------ ------------
Redemption Date or the Stated Maturity of the Notes.
Section 1202. Defeasance and Discharge. Upon the Company's exercise
------------------------
under Section 1201 of the option applicable to this Section 1202, the Company
------------ ------------
shall be deemed to have been released and discharged from its obligations with
respect to the Defeased Notes on the date the relevant conditions set forth in
Section 1204 below are satisfied (hereinafter, "Defeasance"). For this purpose,
- ------------ ----------
such Defeasance means that the Company shall be deemed to have paid and
discharged the entire indebtedness represented by the Defeased Notes, which
shall thereafter be deemed to be "Outstanding" only for the purposes of Section
-------
1205 and the other Sections of this Indenture referred to in clauses (a) and (b)
- ----
below, and the Company, Holding and each of the Note Guarantors shall be deemed
to have satisfied all other obligations under such Notes and this Indenture
insofar as such Notes are concerned (and the Trustee, at the expense of the
Company, shall execute proper instruments acknowledging the same), except for
the following, which shall survive until otherwise terminated or discharged
hereunder: (a) the rights of Holders of Defeased Notes to receive, solely from
-
the trust fund described in Section 1204 and as more fully set forth in such
------------
Section, payments in respect of the principal of and premium, if any, and
interest on such Notes when such payments are due, (b) the Company's obligations
-
with respect to such Defeased Notes under Sections 304, 305, 306, 402 and 403,
------------ --- --- --- ---
(c) the rights, powers, trusts, duties and immunities of the Trustee hereunder,
- --
including the Trustee's rights under Section 707, and (d) this Article 12.
----------- - ----------
Subject to compliance with this Article 12, the Company may, at its option and
----------
at any time, exercise its option under this Section 1202 notwithstanding the
------------
prior exercise of its option under Section 1203 with respect to the Notes.
------------
Section 1203. Covenant Defeasance. Upon the Company's exercise under
-------------------
Section 1201 of the option applicable to this Section 1203, (a) the Company,
- ------------ ------------ -
Holding and any Note Guarantors shall be released from their respective
obligations under any covenant or provision contained in Section 404 and
-----------
Sections 406 through 414 and the provisions of clauses
- ------------ ---
108
<PAGE>
(iii), (iv) and (v) of Section 501 shall not apply, and (b) the occurrence of
----------- -
any event specified in clause (3) (with respect to clauses (iii), (iv) and (v)
of Section 501), (4) and (5) (with respect to Section 404, Sections 406 through
----------- ----------- --------------------
414, inclusive, and any such covenants provided pursuant to Section 901(5)),
- --- --------------
inclusive, (6), (7), (8) or (9) (with respect to Subsidiaries), or (10) of
Section 601 shall be deemed not to be or result in an Event of Default, in each
- -----------
case with respect to the Defeased Notes on and after the date the conditions set
forth below are satisfied (hereinafter, "Covenant Defeasance"), and the Notes
-------------------
shall thereafter be deemed not to be "Outstanding" for the purposes of any
direction, waiver, consent or declaration or Act of Holders (and the
consequences of any thereof) in connection with such covenants or pro visions,
but shall continue to be deemed "Outstanding" for all other purposes hereunder.
For this purpose, such Covenant Defeasance means that, with respect to the
Outstanding Notes, the Company, Holding and any Note Guarantors may omit to
comply with and shall have no liability in respect of any term, condition or
limitation set forth in any such covenant or provision, whether directly or
indirectly, by reason of any reference elsewhere herein to any such covenant or
provision or by reason of any reference in any such covenant or provision to any
other provision herein or in any other document and such omission to comply
shall not constitute a Default or an Event of Default under Section 601, but,
-----------
except as specified above, the remainder of this Indenture and such Outstanding
Notes shall be unaffected thereby.
Section 1204. Conditions to Defeasance or Covenant Defeasance. The
-----------------------------------------------
following shall be the conditions to application of either Section 1202 or
------------
Section 1203 to the Outstanding Notes:
- ------------
(1) The Company shall have irrevocably deposited or caused to be
deposited with the Trustee in trust cash, in United States dollars, or U.S.
Government Obligations or a combination thereof, in amounts as will be
sufficient, in the opinion of a nationally recognized accounting or investment
banking firm expressed in a written certification thereof delivered to the
Trustee, to pay and discharge the principal of, and premium, if any, and
interest on the Defeased Notes on the Stated Maturity or relevant Redemption
Date in accordance with the terms of this Indenture and the Notes;
(2) No Default or Event of Default shall have occurred and be
continuing on the date of such deposit or, insofar as Section 601(8) or 601(9)
-------------- ------
is concerned, at any time during the period ending on the ninety-first day after
the date of such deposit;
(3) Such deposit shall not result in a breach or violation of, or
constitute a Default or Event of Default under, this Indenture or any other
material agreement or instrument to which the Company is a party or by which
it is bound;
109
<PAGE>
(4) In the case of an election under Section 1202, the Company shall
------------
have delivered to the Trustee an Opinion of Counsel from Debevoise & Plimpton or
other counsel to the effect that (x) the Company has received from, or there has
-
been published by, the Internal Revenue Service a ruling or (y) since the Issue
-
Date, there has been a change in the applicable Federal income tax law, in
either case to the effect that, and based thereon such opinion shall confirm to
the effect that, the Holders of the Outstanding Notes will not recognize income,
gain or loss for Federal income tax purposes as a result of such 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 Defeasance had not
occurred;
(5) In the case of an election under Section 1203, the Company shall
------------
have delivered to the Trustee an Opinion of Counsel from Debevoise & Plimpton or
other counsel to the effect that the Holders of the Outstanding Notes will not
recognize income, gain or loss for Federal income tax purposes as a result of
such Covenant Defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such Covenant Defeasance had not occurred; and
(6) The Company shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each to the effect that all conditions
precedent provided for in this Section 1204 relating to either the Defeasance
------------
under Section 1202 or the Covenant Defeasance under Section 1203, as the case
------------ ------------
may be, have been complied with. In rendering such Opinion of Counsel, counsel
may rely on any Officer's Certificate as to compliance with the foregoing
clauses (1), (2) and (3) of this Section 1204 or as to any matters of fact.
------------
From and after the time of any deposit pursuant to clause (1) of the
first paragraph of this Section 1204, the money or U.S. Government Obligations
------------
so deposited shall not be subject to the rights of the holders of Senior
Indebtedness or Obligor Senior In debtedness pursuant to the subordination
provisions of Article 14 or Article 15.
---------- ----------
Section 1205. Deposited Money and U.S. Government Obligations To Be
-----------------------------------------------------
Held in Trust; Other Miscellaneous Provisions. Subject to the provisions of the
- ---------------------------------------------
last paragraph of Section 403, all money and U.S. Government Obligations
-----------
(including the proceeds thereof) deposited with the Trustee (or such other
Person that would qualify to act as successor trustee under Article 7,
---------
collectively and solely for purposes of this Section 1205, Section 1412 and
------------ ------------
Section 1512, the "Trustee") pursuant to Section 1204 in respect of the Defeased
- ------------ ------- ------------
Notes shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as its own Paying Agent)
as the Trustee may determine, to the Holders of such Notes of all sums due and
to become due thereon in respect of principal, premium, if
110
<PAGE>
any, and interest, but such money need not be segregated from other funds except
to the extent required by law.
The Company shall pay and indemnify the Trustee and its agents and
hold them harmless against any tax, fee or other charge imposed on or assessed
against the U.S. Government Obligations deposited pursuant to Section 1204 or
------------
the principal, premium, if any, and interest received in respect thereof, other
than any such tax, fee or other charge that by law is for the account of the
Holders of the Defeased Notes.
Anything in this Article 12 to the contrary notwithstanding, the
----------
Trustee shall deliver to the Company from time to time upon Company Request any
money or U.S. Government Obligations held by it as provided in Section 1204
------------
hereof that, in the opinion of a nationally recognized accounting or investment
banking firm expressed in a written certification thereof to the Trustee, are
in excess of the amount thereof that would then be required to be deposited to
effect an equivalent Defeasance or Covenant Defeasance. Subject to Article 7,
---------
the Trustee shall not incur any liability to any Person by relying on such
opinion.
Section 1206. Reinstatement. If the Trustee or Paying Agent is
-------------
unable to apply any money or U.S. Government Obligations in accordance with
Section 1202 or 1203, as the case may be, by reason of any order or judgment of
- ------------ ----
any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, then the obligations of the Company and any other
obligor upon the Notes under this Indenture, the Notes, the Parent Guarantee and
any Note Guarantees shall be revived and reinstated as though no deposit had
occurred pursuant to Section 1202 or 1203, as the case may be, until such time
------------ ----
as the Trustee or Paying Agent is permitted to apply all such money and U.S.
Government Obligations in accordance with Section 1202 or 1203, as the case may
------------ ----
be; provided, however, that if either the Company and any other obligor upon the
-------- -------
Notes makes any payment of principal, premium, if any, or interest on any Note
following the reinstatement of its obligations, then the Com pany and any other
obligor upon the Notes shall be subrogated to the rights of the Holders of such
Notes to receive such payment from the money and U.S. Government Obligations
held by the Trustee or Paying Agent.
Section 1207. Repayment to the Company. The Trustee shall pay to the
------------------------
Company upon Company Request any money held by it for the payment of principal
or interest that remains unclaimed for two years. After payment to the Company,
Holders entitled to money must look to the Company for payment as general
creditors unless an applicable abandoned property law designates another Person
and all liability of the Trustee or Paying Agent with respect to such money
shall thereupon cease.
111
<PAGE>
ARTICLE 13
PARENT GUARANTEE AND NOTE GUARANTEES
------------------------------------
Section 1301. Guarantees Generally. (a) Parent Guarantee. Holding,
-------------------- ----------------
as a primary obligor and not merely as surety, hereby irrevocably and fully and
unconditionally Guarantees, on a senior subordinated basis, the punctual payment
when due, whether at Stated Maturity, by acceleration or otherwise, of all
monetary obligations of TTC Merger Co. and, after the Second Merger, of the
Company under this Indenture and the Notes, whether for principal of or interest
on the Notes, expenses, indemnification or otherwise (all such obligations
guaranteed by Holding being herein called the "Parent Guaranteed Obligations").
-----------------------------
(b) Note Guarantees. Any Note Guarantor from time to time party
---------------
hereto, as primary obligor and not merely as surety, hereby jointly and
severally, irrevocably and fully and unconditionally Guarantees, on a senior
subordinated basis, the punctual payment when due, whether at Stated Maturity,
by acceleration or otherwise, of all monetary obligations of the Company under
this Indenture and the Notes, whether for principal of or interest on the Notes,
expenses, indemnification or otherwise (all such obligations guaranteed by such
Note Guarantors being herein called the "Guaranteed Obligations").
----------------------
Any term or provision of this Indenture notwithstanding, each Note
Guarantee shall not exceed the maximum amount that can be guaranteed by the
applicable Note Guarantor without rendering the Note Guarantee, as it relates to
such Note Guarantor, voidable under applicable law relating to fraudulent
conveyance or fraudulent transfer or similar laws affecting the rights of
creditors generally.
(c) Further Agreements of Parent Guarantor and any Note Guarantor.
-------------------------------------------------------------
(i) Holding, in its capacity as guarantor of the Parent Guaranteed Obligations
hereunder (in such capacity, the "Parent Guarantor") and any Note Guarantor from
----------------
time to time party hereto (each of the Parent Guarantor and any Note Guarantor,
a "Guarantor") each hereby agrees that (to the fullest extent permitted by law)
---------
its obligations hereunder shall be unconditional, irrespective of the validity,
regularity or enforceability of this Indenture, the Notes or the obligations of
the Company or any other Guarantor to the Holders or the Trustee hereunder or
thereunder, the absence of any action to enforce the same, any waiver or consent
by any Holder with respect to any provisions hereof or thereof, any release of
any other Guarantor, the recovery of any judgment against the Company, any
action to enforce the same, whether or not a notation concerning its respective
Parent Guarantee or Note Guarantee is made on any particular Note, or any other
circumstance that might otherwise constitute a legal or equitable discharge or
defense of a guarantor.
112
<PAGE>
(ii) Each Guarantor hereby waives (to the fullest extent permitted by
law) the benefit of diligence, presentment, demand of payment, filing of claims
with a court in the event of insolvency or bankruptcy of the Company, any right
to require a proceeding first against the Company, protest, notice and all
demands whatsoever and covenants that (except as otherwise provided in Section
-------
1303) its Parent Guarantee or Note Guarantee, as the case may be, will not be
- ----
discharged except by complete performance of the obligations contained in the
Notes, this Indenture, and its Parent Guarantee or Note Guarantee, as the case
may be. Such Parent Guarantee or Note Guarantee, as the case may be, is a
guarantee of payment and not of collection. Each Guarantor further agrees (to
the fullest extent permitted by law) that, as between it, on the one hand, and
the Holders of Notes and the Trustee, on the other hand, subject to this Article
-------
13 and Article 15, (1) the maturity of the obligations guaranteed by its Parent
- -- ---------- -
Guarantee or Note Guarantee, as the case may be, may be accelerated as and to
the extent provided in Article 6 for the purposes of such Parent Guarantee or
---------
Note Guarantee, as the case may be, notwithstanding any stay, injunction or
other prohibition preventing such acceleration in respect of the obligations
guaranteed by such Parent Guarantee or Note Guarantee, as the case may be, and
(2) in the event of any acceleration of such obligations as provided in Article
- -- -------
6, such obligations (whether or not due and payable) shall forthwith become due
- -
and payable by such Guarantor in accordance with the terms of this Section 1301
------------
for the purpose of such Parent Guarantee or Note Guarantee, as the case may be.
Neither the Trustee nor any other Person shall have any obligation to enforce or
exhaust any rights or remedies or to take any other steps under any security for
the Parent Guaranteed Obligations or the Guaranteed Obligations (collectively,
the "Guaranteed Note Obligations") or against the Company or any other Person or
---------------------------
any property of the Company or any other Person before the Trustee is entitled
to demand payment and performance by any or all Guarantors of their obligations
under their respective Parent Guarantee or Note Guarantees or under this In
denture.
(iii) Until terminated in accordance with Section 1303, the Parent
------------
Guarantee and any Note Guarantee shall remain in full force and effect and
continue to be effective should any petition be filed by or against the Company
for liquidation or reorganization, should the Company become insolvent or make
an assignment for the benefit of creditors or should a receiver or trustee be
appointed for all or any significant part of the Company's assets, and shall, to
the fullest extent permitted by law, continue to be effective or be rein
stated, as the case may be, if at any time payment and performance of the Notes
are, pursuant to applicable law, rescinded or reduced in amount, or must
otherwise be restored or returned by any obligee on such Notes, whether as a
"voidable preference," "fraudulent transfer" or otherwise, all as though such
payment or performance had not been made. In the event that any payment, or any
part thereof, is rescinded, reduced, restored or returned, the Notes shall, to
the fullest extent permitted by law, be reinstated and deemed reduced only by
such amount paid and not so rescinded, reduced, restored or returned.
113
<PAGE>
(d) Each Guarantor that makes a payment or distribution under the
Parent Guarantee or any Note Guarantee, as the case may be, shall have the right
to seek contribution from the Company or any non-paying Guarantor that has also
Guaranteed the Guaranteed Note Obligations in respect of which such payment or
distribution is made, so long as the exercise of such right does not impair the
rights of the Holders under the Parent Guarantee or this Note Guarantee.
(e) Each Guarantor acknowledges that it will receive direct and
indirect benefits from the financing arrangements contemplated by this Indenture
and that its Parent Guarantee or its Note Guarantee, as the case may be, and the
waiver set forth in Section 1305 is knowingly made in contemplation of such
------------
benefits.
(f) Each Guarantor also hereby agrees to pay any and all reasonable
out-of-pocket expenses (including reasonable counsel fees and expenses) incurred
by the Trustee or the Holders in enforcing any rights under its Parent Guarantee
or its Note Guarantee, as the case may be.
Section 1302. Continuing Guarantees. (a) The Parent Guarantee shall
---------------------
be a continuing Guarantee and shall (i) remain in full force and effect until
-
payment in full of the principal amount of all outstanding Notes (whether by
payment at maturity, purchase, redemption, defeasance, retirement or other
acquisition) and all other Parent Guaranteed Obligations then due and owing,
(ii) be binding upon Holding and (iii) inure to the benefit of and be
-- ---
enforceable by the Trustee, the Holders and their permitted successors,
transferees and assigns.
(b) Each Note Guarantee shall be a continuing Guarantee and shall (i)
-
remain in full force and effect until payment in full of the principal amount of
all outstanding Notes (whether by payment at maturity, purchase, redemption,
defeasance, retirement or other acquisition) and all other Guaranteed
Obligations then due and owing, unless earlier terminated as provided in Section
-------
1303, (ii) be binding upon such Note Guarantor and (iii) inure to the benefit of
- ---- -- ---
and be enforceable by the Trustee, the Holders and their permitted successors,
transferees and assigns.
Section 1303. Release of Parent Guarantee and Note Guarantees. Not
-----------------------------------------------
withstanding the provisions of Section 1302 the Parent Guarantee and any Note
------------
Guarantee will be subject to termination and discharge under the circumstances
described in this Section 1303:
------------
(a) Holding will automatically and unconditionally be released from
all obligations under the Parent Guarantee, and the Parent Guarantee shall
thereupon terminate and be discharged and of no further force or effect,
(i) upon any merger or
-
114
<PAGE>
consolidation of Holding with and into the Company, (ii) upon the legal or
--
covenant defeasance of the Company's obligations or satisfaction and
discharge of this Indenture as provided in Article 11 or Article 12, or
---------- ----------
(iii) subject to clause (c)(iii) of Section 1301, upon payment in full of
---- ------------
the aggregate principal amount of all Notes then outstanding and all other
Parent Guaranteed Obligations then due and owing.
(b) Any Note Guarantor will automatically and unconditionally be
released from all obligations under its Note Guarantee, and such Note
Guarantee shall thereupon terminate and be discharged and of no further
force or effect, (i) concurrently with any sale or disposition (by merger
-
or otherwise) of any Note Guarantor or any interest therein in accordance
with the terms of the Indenture (including the Section 410) by the Company
-----------
or a Restricted Subsidiary, following which such Note Guarantor is no
longer a Restricted Subsidiary of the Company, (ii) pursuant to the terms
--
of its Note Guarantee, (iii) at any time that such Note Guarantor is
---
released from all of its obligations under all of its Guarantees of payment
by the Company of Indebtedness (other than Bank Indebtedness) of the
Company, (iv) upon the merger or consolidation of any Note Guarantor with
--
and into the Company or another Note Guarantor that is the surviving Person
in such merger or consolidation, (v) upon legal or covenant defeasance of
-
the Company's obligations, or satisfaction and discharge of the Indenture
as provided in Article 11 or Article 12, or (vi) subject to clause (c)(iii)
---------- ---------- --
of Section 1301, upon payment in full of the aggregate principal amount of
------------
all Notes then outstanding and all other Guaranteed Obligations then due
and owing.
(c) Upon 30 days' notice by the Company to the Trustee, any Note
Guarantor that has not guaranteed payment by the Company of any other
Indebtedness (other than Bank Indebtedness) of the Company shall be
unconditionally released from all obligations under its Note Guarantee,
and such Note Guarantee shall thereupon terminate and be discharged and of
no further force or effect.
Upon any such occurrence specified in this Section 1303, the Trustee
------------
shall execute any documents reasonably required in order to evidence such
release, discharge and termination in respect of such Guarantor's Parent
Guarantee or Note Guarantee, as the case may be.
Section 1304. Agreement to Subordinate. Each of the Parent Guarantee
------------------------
and any Note Guarantee is, to the extent and in the manner set forth in Article
-------
15, subordinated and subject in right of payment to the prior payment in full of
- --
all Parent Senior Indebtedness in the case of the Parent Guarantee or Guarantor
Senior Indebtedness of the relevant Note Guarantor giving such Note Guarantee,
as the case may be, and each of the Parent Guarantee and any Note Guarantee is
made subject to such provisions of this Indenture.
115
<PAGE>
Section 1305. Waiver of Subrogation. Each of the Parent Guarantor
---------------------
and each Note Guarantor hereby irrevocably waives any claim or other rights that
it may now or hereafter acquire against the Company that arise from the
existence, payment, performance or enforcement of the Company's obligations
under the Notes and this Indenture or such Guarantor's obligations under its
Parent Guarantee or Note Guarantee, as the case may be, and this Indenture,
including, without limitation, any right of subrogation, reimbursement,
exoneration, indemnification, and any right to participate in any claim or
remedy of any Holder of Notes against the Company, whether or not such claim,
remedy or right arises in equity, or under contract, statute or common law,
until this Indenture is discharged and all of the Notes are discharged and paid
in full. If any amount shall be paid to a Guarantor in violation of the
preceding sentence and the Notes shall not have been paid in full, such amount
shall have been deemed to have been paid to such Guarantor for the benefit of,
and held in trust for the benefit of, the Holders of the Notes, and shall
forthwith be paid to the Trustee for the benefit of such Holders to be credited
and applied upon the Notes, whether matured or unmatured, in accordance with the
terms of this Indenture.
Section 1306. Notation Not Required. Neither the Company nor any
---------------------
Guarantor shall be required to make a notation on the Notes to reflect the
Parent Guarantee or any Note Guarantee or any such release, termination or
discharge thereof.
Section 1307. Successors and Assigns of the Holding or Note
---------------------------------------------
Guarantors. All covenants and agreements in this Indenture by each Guarantor
- ----------
shall bind its respective successors and assigns, whether so expressed or not.
Section 1308. Execution and Delivery of Note Guarantees. The Company
-----------------------------------------
shall cause each Significant Domestic Subsidiary that is required to become a
Note Guarantor pursuant to Section 413, and each Subsidiary of the Company that
-----------
the Company causes to become a Note Guarantor pursuant to Section 413, to
-----------
promptly execute and deliver to the Trustee a supplemental indenture
substantially in the form set forth in Exhibit B to this Indenture, or otherwise
---------
in form and substance reasonably satisfactory to the Trustee, evi dencing its
Note Guarantee on substantially the terms set forth in this Article 13.
----------
Concurrently therewith, the Company shall deliver to the Trustee an Opinion of
Counsel in form and substance reasonably satisfactory to the Trustee to the
effect that such supplemental indenture has been duly authorized, executed and
delivered by such Restricted Subsidiary and that, subject to the applicable
bankruptcy, insolvency, fraudulent transfer, fraudulent conveyance,
reorganization, moratorium and other laws now or hereafter in effect affecting
creditors' rights or remedies generally and the general principles of equity
(including standards of materiality, good faith, fair dealing and
reasonableness), whether considered in a proceeding at law or at equity such
supplemental indenture is a valid and binding agreement of such Restricted
Subsidiary, enforceable against such Restricted Subsidiary in accordance with
its terms.
116
<PAGE>
Section 1309. Notices. Notice to Holding or any Note Guarantor shall
-------
be sufficient if addressed to Holding or any Note Guarantor care of the Company
at the address, place and manner provided in Section 109.
-----------
ARTICLE 14
SUBORDINATION
-------------
Section 1401. Agreement To Subordinate. The Company agrees, and each
------------------------
Noteholder by accepting a Note agrees, that the Indebtedness evidenced by the
Notes is subordinated in right of payment, to the extent and in the manner
provided in this Article 14, to the prior payment in full (when due) of all
----------
existing and future Senior Indebtedness and that the subordination is for the
benefit of and enforceable by the holders of Senior Indebtedness of the Company.
The Notes shall in all respects rank pari passu with all other Senior Sub
---- -----
ordinated Indebtedness of the Company and only Indebtedness of the Company that
is Senior Indebtedness shall rank senior to the Notes in accordance with the
provisions set forth herein. All provisions of this Article 14 shall be subject
----------
to Section 1412.
------------
Section 1402. Liquidation, Dissolution, Bankruptcy. Upon any payment
------------------------------------
or distribution of the assets of the Company upon a total or partial liquidation
or dissolution or reorganization of or similar proceeding relating to the
Company or its property, or in a bankruptcy, insolvency, receivership or similar
proceeding relating to the Company or its property, (i) the holders of Senior
-
Indebtedness will be entitled to receive payment in full of the Senior
Indebtedness before the Noteholders are entitled to receive any payment, and
(ii) until the Senior Indebtedness is paid in full, any payment or distribution
--
to which Noteholders would be entitled but for this Article 14 will be made to
----------
holders of the Senior Indebtedness as their interests may appear, except that
Noteholders may receive shares of stock and any debt securities that are
subordinated to at least the same extent as the Notes.
Section 1403. Default on Senior Indebtedness. The Company may not
------------------------------
pay principal of, or premium (if any) or interest on, the Notes or make any
deposit pursuant to the provisions of Article 12 and may not otherwise purchase,
----------
redeem or otherwise retire any Notes (collectively, "pay the Notes") if (i) any
------------- -
Senior Indebtedness is not paid when due in cash or Cash Equivalents or (ii) any
--
other default on Senior Indebtedness occurs and the maturity of such Senior
Indebtedness is accelerated in accordance with its terms (either such event, a
"Payment Default") unless, in either case, (x) the Payment Default has been
- ---------------- -
cured or waived and any such acceleration has been rescinded in writing or (y)
-
such Senior Indebtedness has been paid in full in cash or Cash Equivalents;
provided that the Company may pay the Notes without regard to the foregoing if
- --------
the Company and the Trustee receive written notice
117
<PAGE>
approving such payment from the Representative for the Designated Senior
Indebtedness with respect to which the Payment Default has occurred and is
continuing.
In addition, during the continuance of any default (other than a
Payment Default) with respect to any Designated Senior Indebtedness 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 period (a "Non-payment Default"), the Company
-------------------
may not pay the Notes for the period specified as follows (a "Payment Blockage
----------------
Period"). The Payment Blockage Period shall commence upon the receipt by the
- ------
Trustee (with a copy to the Company) of written notice (a "Blockage Notice") of
---------------
such Non-payment Default from the Representative for such Designated Senior
Indebtedness specifying an election to effect a Payment Blockage Period and
shall end on the earliest to occur of the following events: (i) 179 days shall
-
have elapsed since such receipt of such Blockage Notice, (ii) the Non-payment
--
Default giving rise to such Blockage Notice is no longer continuing (and no
other Payment Default or Non-payment Default is then continuing), (iii) such
---
Designated Senior Indebtedness shall have been discharged or repaid in full in
cash or Cash Equivalents or (iv) such Payment Blockage Period shall have been
--
terminated by written notice to the Trustee and the Company from the Person or
Persons who gave such Blockage Notice. The Company shall promptly resume
payments on the Notes, including any missed payments, after such Payment
Blockage Period ends, unless the holders of such Designated Senior Indebtedness
or the Representative of such holders have accelerated the maturity of such
Designated Senior Indebtedness, or any Payment Default otherwise exists. Not
more than one Blockage Notice may be given in any 360 consecutive day period,
irrespective of the number of defaults with respect to Designated Senior
Indebtedness during such period, except that if any Blockage Notice within such
360-day period is given by or on behalf of any holders of Designated Senior
Indebtedness other than Bank Indebtedness, a Representative of holders of Bank
Indebtedness may give another Blockage Notice within such period. In no event
may the total number of days during which any Payment Blockage Period is in
effect extend beyond 179 days from the date of receipt by the Trustee of the
relevant Blockage Notice, and there must be a 181 consecutive day period during
any 360 consecutive day period during which no Payment Blockage Period is in
effect.
Section 1404. Acceleration of Payment of Notes. If payment of the
--------------------------------
Notes is accelerated because of an Event of Default, the Company or the Trustee
shall promptly notify the holders of the Designated Senior Indebtedness or the
Representative of such holders of the acceleration. If any Designated Senior
Indebtedness is outstanding, such acceleration will not be effective until the
time specified in Section 602, and the Company may not pay the Notes until five
-----------
Business Days after such holders or the Representative of each Designated Senior
Indebtedness receive notice of such acceleration and, thereafter, the Company
may pay the Notes only if this Article 14 otherwise permits payment.
----------
118
<PAGE>
Section 1405. When a Distribution Must Be Paid Over. If a
-------------------------------------
distribution is made to Noteholders that because of provisions of this Article
-------
14 should not have been made to them, the Noteholders who received the
- --
distribution are required to hold it in trust for the holders of Senior
Indebtedness and pay it over to them as their interests may appear.
Section 1406. Subrogation. After all Senior Indebtedness of the
-----------
Company is paid in full and until the Notes are paid in full, Holders shall be
subrogated to the rights of holders of Senior Indebtedness to receive
distributions applicable to such Senior Indebtedness. For purposes of such
subrogation, a distribution made under this Article 14 to holders of Senior
----------
Indebtedness that otherwise would have been made to Holders is not, as between
the Company, its creditors other than the holders of such Senior Indebtedness
and Holders, a payment by the Company on such Senior Indebtedness, it being
understood that the provisions of this Article 14 are and are intended solely
----------
for the purpose of defining the relative rights of the Holders, on the one hand,
and the holders of Senior Indebtedness of the Company, on the other hand.
Section 1407. Relative Rights. This Article 14 defines the relative
--------------- ----------
rights of Holders and holders of Senior Indebtedness. Nothing in this Indenture
shall:
(i) impair, as between the Company and Holders, the obligation of the
Company which is absolute and unconditional, to pay principal of and
interest on the Notes in accordance with their terms; or
(ii) prevent the Trustee or any Holder from exercising its available
remedies upon a Default, subject to the rights of holders of Senior
Indebtedness to receive distributions otherwise payable to Holders.
Section 1408. Subordination May Not Be Impaired by Issuers. No right
--------------------------------------------
of any holder of Senior Indebtedness of the Company to enforce the subordination
of the Indebtedness evidenced by the Notes shall be impaired by any act or
failure to act by the Company or by its failure to comply with this Indenture.
Section 1409. Rights of Trustee and Paying Agent. The Company shall
----------------------------------
give prompt written notice to the Trustee of any fact known to the Company that
would prohibit the making of any payment to or by the Trustee in respect of the
Notes. Failure to give such notice shall not affect the subordination of the
Notes to Senior Indebtedness of the Company. Notwithstanding Section 1403, the
------------
Trustee or Paying Agent may continue to make payments on the Notes 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
119
<PAGE>
payments may not be made under this Article 14. The Company, the Registrar or
----------
co-registrar, the Paying Agent, or a Representative or holder of Senior
Indebtedness may give the notice; provided, however, that, if an issue of Senior
-------- -------
Indebtedness has a Representative, only the Representative may give the notice.
The Trustee shall be entitled to rely on the delivery to it of a written notice
by a Person representing himself or itself to be a holder of any Senior
Indebtedness (or a Representative of such holder) to establish that such notice
has been given by a holder of such Senior Indebtedness or Representative
thereof.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness with the same rights it would have if it were not Trustee. The
Registrar and co-registrar and the Paying Agent may do the same with like
rights. The Trustee shall be entitled to all the rights set forth in this
Article 14 with respect to any Senior Indebtedness that may at any time be held
- ----------
by it, to the same extent as any other holder of Senior Indebtedness; and
nothing in Article 7 shall deprive the Trustee of any of its rights as such
---------
holder. Nothing in this Article 14 shall apply to claims of, or payments to,
----------
the Trustee under or pursuant to Section 707.
-----------
Section 1410. Distribution or Notice to Representative. Whenever a
----------------------------------------
distribution is to be made or a notice given to holders of Senior Indebtedness,
the distribution may be made and the notice given to their Representative (if
any).
Section 1411. Article 14 Not To Prevent Events of Default or Limit
----------------------------------------------------
Right To Accelerate. The failure to make a payment pursuant to the Notes by
- -------------------
reason of any provision in this Article 14 shall not be construed as preventing
----------
the occurrence of a Default. Subject to Section 1404, nothing in this Article
------------ -------
14 shall have any effect on the right of the Holders or the Trustee to
- --
accelerate the maturity of the Notes.
Section 1412. Trust Moneys Not Subordinated. Notwithstanding
-----------------------------
anything contained herein to the contrary, payments from money or the proceeds
of U.S. Government Obligations held in trust under Article 12 by the Trustee for
----------
the payment of principal of and premium, if any, and interest on the Notes 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 14, 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 1413. Trustee Entitled To Rely. Upon any payment or
------------------------
distribution pursuant to this Article 14, the Trustee and the Holders shall be
----------
entitled to rely (i) upon any order or decree of a court of competent
-
jurisdiction in which any proceedings of the nature referred to in Section 1402
------------
are pending, (ii) 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
120
<PAGE>
(iii) upon the Representatives for the holders of Senior Indebtedness for the
---
purpose of ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the 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
-------
14. 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 to par ticipate in any payment or distribution pursuant to this
Article 14, the Trustee may request such Person to furnish evidence to the
- ----------
reasonable satisfaction of the Trustee as to the amount of 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 14, 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
--------
701 and 703 shall be applicable to all actions or omissions of actions by the
- --- ---
Trustee pursuant to this Article 14.
----------
Section 1414. Trustee To Effectuate Subordination. Each Holder by
-----------------------------------
accepting a Note authorizes and directs the Trustee on such Holder's 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
the Company as provided in this Article 14 and appoints the Trustee as attorney-
----------
in-fact for any and all such purposes.
Section 1415. 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 Holders or the
Company or any other Person, money or assets to which any holders of Senior
Indebtedness shall be entitled by virtue of this Article 14 or otherwise. With
----------
respect to the holders of Senior Indebtedness of the Company, the Trustee
undertakes to perform or to observe only such of its covenants or obligations as
are specifically set forth in this Article 14 or Article 15 and no implied
---------- ----------
covenants or obligations with respect to holders of Senior Indebtedness of the
Company shall be read into this Indenture against the Trustee.
Section 1416. Reliance by Holders of Senior Indebtedness on
---------------------------------------------
Subordination Provisions. Each Holder by accepting a Note 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 Notes, 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.
121
<PAGE>
Section 1417. Trustee's Compensation Not Prejudiced. Nothing in this
-------------------------------------
Article 14 shall apply to amounts due to the Trustee pursuant to other Sections
- ----------
of this Indenture.
ARTICLE 15
SUBORDINATION OF PARENT GUARANTEE AND NOTE GUARANTEES
-----------------------------------------------------
Section 1501. Agreement To Subordinate. (a) The Parent Guarantor
------------------------
agrees, and each Noteholder by accepting a Note agrees, that all payments
pursuant to the Parent Guarantor's Parent Guarantee made by or on behalf of
Holding are subordinated in right of payment, to the extent and in the manner
provided in this Article 15, to the prior payment in full (when due) of all
----------
existing and future Parent Senior Indebtedness and that the subordination is for
the benefit of and enforceable by the holders of Parent Senior Indebtedness.
The Parent Guarantee shall in all respects rank pari passu with all other Parent
---- -----
Senior Subordinated Indebtedness and only Indebtedness of the Parent Guarantor
that is Parent Senior Indebtedness shall rank senior to such Parent Guarantee in
accordance with the provisions set forth herein.
(b) Each Note Guarantor agrees, and each Noteholder by accepting a
Note agrees, that all payments pursuant to such Note Guarantor's Note Guarantee
made by or on behalf of such Note Guarantor are subordinated in right of
payment, to the extent and in the manner provided in this Article 15, to the
----------
prior payment in full (when due) of all existing and future Guarantor Senior
Indebtedness of such Note Guarantor and that the subordination is for the
benefit of and enforceable by the holders of Guarantor Senior Indebtedness of
such Note Guarantor. Such Note Guarantee shall in all respects rank pari passu
---- -----
with all other Guarantor Senior Subordinated Indebtedness of such Note Guarantor
and only Indebtedness of such Note Guarantor that is Guarantor Senior
Indebtedness shall rank senior to such Note Guarantee in accordance with the
provisions set forth herein.
(c) All provisions of this Article 15 shall be subject to Section
---------- -------
1512.
Section 1502. Liquidation, Dissolution, Bankruptcy. Upon any payment
------------------------------------
or distribution of the assets of a Guarantor upon a total or partial liquidation
or dissolution or reorganization of or similar proceeding relating such
Guarantor or its property, or in a bankruptcy, insolvency, receivership or
similar proceeding relating to such Guarantor or its property,
122
<PAGE>
(i) the holders of Obligor Senior Indebtedness of such Guarantor will
be entitled to receive payment in full of such Obligor Senior Indebtedness
before the Noteholders are entitled to receive any payment from such
Guarantor; and
(ii) until the Obligor Senior Indebtedness of such Guarantor is paid
in full, any payment or distribution from such Guarantor to which
Noteholders would be entitled but for this Article 15 will be made to
----------
holders of such Obligor Senior Indebtedness as their interests may appear
except that Noteholders may receive shares of stock and any debt securities
that are subordinated to such Obligor Senior Indebtedness to at least the
same extent as the Parent Guarantee or Note Guarantee, as the case may be,
of such Guarantor.
Section 1503. Default on Obligor Senior Indebtedness. No Guarantor
--------------------------------------
may make any payment pursuant to its respective Parent Guarantee or Note
Guarantee and may not otherwise purchase, redeem or otherwise retire or defease
any Notes (collectively, "pay its Obligor Guarantee") if (i) any Obligor Senior
-------------------------
Indebtedness of such Guarantor is not paid when due or (ii) any other default on
Obligor Senior Indebtedness of such Guarantor occurs and the maturity of such
Obligor Senior Indebtedness is accelerated in accordance with its terms (either
such event, a "Guarantor Payment Default") unless, in either case, (x) the
-------------------------
Guarantor Payment Default has been cured or waived and any such acceleration has
been rescinded in writing or (y) such Obligor Senior Indebtedness has been paid
in full; provided, however, a Guarantor may pay its Obligor Guarantee without
-------- -------
regard to the foregoing if such Guarantor and the Trustee receive written notice
approving such payment from the Representative for the Designated Senior
Indebtedness with respect to which the Guarantor Payment Default has occurred
and is continuing.
In addition, no Guarantor may pay its Obligor Guarantee during the
continuance of a Payment Blockage Period after receipt by the Company and the
Trustee of a Blockage Notice under Section 1403. Notwithstanding the provisions
------------
described in the immediately preceding sentence (but subject to the provisions
of the first paragraph of this Section 1503), a Guarantor shall promptly resume
------------
payments, if any are required, pursuant to its Parent Guarantee or Note
Guarantee, including any missed payments, after such Payment Blockage Period
ends, unless the holders of such Designated Senior Indebtedness or the
Representative of such holders have accelerated the maturity of such Designated
Senior Indebtedness, or any Payment Default otherwise exists.
In addition, during the continuance of any default (other than a
Guarantor Payment Default) with respect to any Guarantor Designated Senior
Indebtedness of a Guar antor 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
123
<PAGE>
any applicable grace period (a "Guarantor Non-payment Default"), a Guarantor may
-----------------------------
not pay its Parent Guarantee or Note Guarantee for the period specified as
follows (a "Guarantor Payment Blockage Period"). The Guarantor Payment Blockage
---------------------------------
Period shall commence upon the receipt by the Trustee (with copy to such
Guarantor) of written notice (a "Guarantor Blockage Notice") of such Guarantor
-------------------------
Non-payment Default from the Representative for such Guarantor Designated Senior
Indebtedness specifying an election to effect a Guarantor Payment Blockage
Period and shall end on the earliest to occur of the following events: (i) 179
-
days shall have elapsed since such receipt of such Guarantor Blockage Notice,
(ii) the Guarantor Non-payment Default giving rise to such Blockage Notice is no
- ---
longer continuing (and no other Guarantor Payment Default or Guarantor Non-
payment Default is then continuing), (iii) such Guarantor Designated Senior
---
Indebtedness shall have been discharged or repaid in full in cash or Cash
Equivalents or (iv) such Guarantor Payment Blockage Period shall have been
--
terminated by written notice to the Trustee and such Guarantor from the Person
or Persons who gave such Guarantor Blockage Notice. A Guarantor may pay its
Parent Guarantee or Note Guarantee, after such Guarantor Payment Blockage Period
ends, unless the holders of such Guarantor Designated Senior Indebtedness or the
Representative of such holders have accelerated the maturity of such Guarantor
Designated Senior Indebtedness, or any Guarantor Payment Default otherwise
exists. Not more than one Guarantor Blockage Notice to a Guarantor in the
aggregate may be given in any 360 consecutive day period, irrespective of the
number of defaults with respect to Guarantor Designated Senior In debtedness of
such Guarantor during such period, except that if any Guarantor Blockage Notice
within such 360-day period is given by or on behalf of any holders of Guarantor
Designated Senior Indebtedness of such Guarantor other than Bank Indebtedness, a
Representative of holders of Bank Indebtedness that is Guaranteed by such
Guarantor may give another Guarantor Blockage Notice within such period. In no
event may the total number of days during which any Guarantor Payment Blockage
Period is in effect extend beyond 179 days from the date of receipt by the
Trustee of the relevant Guarantor Blockage Notice, and there must be a 181
consecutive day period during any 360 consecutive day period during which no
Guarantor Payment Blockage Period is in effect.
Section 1504. Acceleration of Payment of Notes. If payment of the
--------------------------------
Notes is accelerated because of an Event of Default, the relevant Guarantor or
the Trustee shall promptly notify the holders of the Guarantor Designated Senior
Indebtedness of such Guarantor (or the Representative of such holders) of the
acceleration. If any Guarantor Designated Senior Indebtedness of a Guarantor is
outstanding, any demand for payment under such Guarantor's Parent Guarantee or
Note Guarantee will not be effective with respect to such Guarantor, and such
Guarantor may not pay its Parent Guarantee or Note Guarantee, until five
Business Days after such holders or the Representative of each Designated Senior
Indebtedness of such Guarantor receive notice of such demand and, thereafter,
such Guarantor may pay its Parent Guarantee or Note Guarantee only if this
Article 15 otherwise permits payment. If a
- ----------
124
<PAGE>
demand for payment is made on such Guarantor pursuant to Article 13, the Trustee
----------
shall promptly notify the holders of the Guarantor Designated Senior
Indebtedness of such Guarantor (or their Representatives) of such demand.
Section 1505. When a Distribution Must Be Paid Over. If a
-------------------------------------
distribution from a Guarantor is made to Holders that because of the provisions
of this Article 15 should not have been made to them, the Holders who receive
----------
the distribution shall hold it in trust for holders of Obligor Senior
Indebtedness of such Guarantor and pay it over to them as their interests may
appear.
Section 1506. Subrogation. After all Obligor Senior Indebtedness of
-----------
a Guarantor is paid in full and until the Notes are paid in full, Holders shall
be subrogated to the rights of holders of Obligor Senior Indebtedness of such
Guarantor to receive distributions applicable to such Obligor Senior
Indebtedness. For purposes of such subrogation, a dis tribution made under
this Article 15 to holders of Obligor Senior Indebtedness of a Guarantor that
----------
otherwise would have been made to Holders is not, as between such Guarantor, its
creditors other than the holders of such Obligor Senior Indebtedness, and
Holders, a payment by such Guarantor on such Obligor Senior Indebtedness, it
being understood that the pro visions of this Article 15 are and are intended
----------
solely for the purpose of defining the relative rights of the Holders, on the
one hand, and the holders of Obligor Senior Indebtedness of such Guarantors, on
the other hand.
Section 1507. Relative Rights. This Article 15 defines the relative
--------------- ----------
rights of Holders and holders of Obligor Senior Indebtedness of each Guarantor.
Nothing in this Indenture shall:
(i) impair, as between a Guarantor and Holders, the obligation of
such Guarantor to pay the Guaranteed Note Obligations in accordance with
the terms of its respective Parent Guarantee or Note Guarantee; or
(ii) prevent the Trustee or any Holder from exercising its available
remedies upon a Default, subject to the rights of holders of Obligor Senior
Indebtedness of a Guarantor to receive distributions otherwise payable to
Holders.
Section 1508. Subordination May Not Be Impaired by Guarantors. No
-----------------------------------------------
right of any holder of Obligor Senior Indebtedness of a Guarantor to enforce the
subordination of the payments pursuant to such Guarantor's respective Parent
Guarantee or Note Guarantee shall be impaired by any act or failure to act by
such Guarantor or by its failure to comply with this Indenture.
125
<PAGE>
Section 1509. Rights of Trustee and Paying Agent. A Guarantor shall
----------------------------------
give prompt written notice to the Trustee of any fact known to it that would
prohibit the making of any payment to or by the Trustee in respect of its Parent
Guarantee or Note Guarantee. Failure to give such notice shall not affect the
subordination of the payments pursuant to its Parent Guarantee or Note Guarantee
to Obligor Senior Indebtedness of such Guarantor. Notwithstanding Section 1503,
------------
the Trustee or Paying Agent may continue to make payments pursuant to such
Parent Guarantee or Note Guarantee 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 15. The Company, Holding or any Note
----------
Guarantor, the Registrar or co-registrar, the Paying Agent, or a Representative
or holder of Obligor Senior Indebtedness of Holding or any Note Guarantor may
give the notice; provided, that, if an issue of Obligor Senior Indebtedness of a
--------
Guarantor has a Representative, only the Representative may give the notice.
The Trustee shall be entitled to rely on the delivery to it of a written notice
by a Person representing himself or itself to be a holder of any Obligor Senior
Indebtedness of a Guarantor (or a Representative of such holder) to establish
that such notice has been given by a holder of such Senior In debtedness or
Representative thereof.
The Trustee in its individual or any other capacity may hold Obligor
Senior Indebtedness of a Guarantor with the same rights it would have if it were
not Trustee. The Registrar and co-registrar and the Paying Agent may do the
same with like rights. The Trustee shall be entitled to all the rights set
forth in this Article 15 with respect to any Obligor Senior Indebtedness of a
----------
Guarantor which may at any time be held by it, to the same extent as any other
holder of Obligor 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 15 shall apply to claims of, or payments to, the Trustee under or
----------
pursuant to Section 707.
-----------
Section 1510. Distribution or Notice to Representative. Whenever a
----------------------------------------
distribution is to be made or a notice given to holders of Obligor Senior
Indebtedness of a Note Guarantor, the distribution may be made and the notice
given to their Representative (if any).
Section 1511. Article 15 Not To Prevent Events of Default or Limit
----------------------------------------------------
Right To Accelerate. The failure to make a payment pursuant to the Parent
- -------------------
Guarantee or a Note Guarantee by reason of any provision in this Article 15
----------
shall not be construed as preventing the occurrence of a Default. Nothing in
this Article 15 shall have any effect on the right of the Holders or the Trustee
----------
to accelerate the maturity of the Notes or make a demand for payment on a Note
Guarantor pursuant to Article 13 or the relevant Parent Guarantee or Note
----------
Guarantee.
126
<PAGE>
Section 1512. Trust Moneys Not Subordinated. Notwithstanding
-----------------------------
anything contained herein to the contrary, payments from money or the proceeds
of U.S. Government Obligations held in trust under Article 12 by the Trustee for
----------
the payment of principal, premium, if any, or interest on the Notes shall not be
subordinated to the prior payment of any Obligor Senior Indebtedness of any
Guarantor or subject to the restrictions set forth in this Article 15, and none
----------
of the Holders shall be obligated to pay over any such amount to any Guarantor
or any holder of Senior Indebtedness of any Guarantor or any other creditor of
Holding or any Guarantor.
Section 1513. Trustee Entitled To Rely. Upon any payment or
------------------------
distribution pursuant to this Article 15, the Trustee and the Holders shall be
----------
entitled to rely (i) upon any order or decree of a court of competent
-
jurisdiction in which any proceedings of the nature referred to in Section 1502
------------
are pending, (ii) 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 (iii) upon the Representatives for the holders of Obligor Senior
---
Indebtedness or any Guarantor for the purpose of ascertaining the Persons
entitled to participate in such payment or distribution, the holders of the
Obligor Senior Indebtedness and other Indebtedness of such 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 15. 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 such Obligor Senior Indebtedness to
participate in any payment or distribution pursuant to this Article 15, the
----------
Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of such Obligor 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 15, 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
--------
701 and 703 shall be applicable to all actions or omissions of actions by the
- --- ---
Trustee pursuant to this Article 15.
----------
Section 1514. Trustee To Effectuate Subordination. Each Holder by
-----------------------------------
accepting a Note authorizes and directs the Trustee on such Holder's behalf to
take such action as may be necessary or appropriate to acknowledge or effectuate
the subordination between the Holders and the holders of Obligor Senior
Indebtedness of any Guarantor as provided in this Article 15 and appoints the
----------
Trustee as attorney-in-fact for any and all such purposes.
Section 1515. Trustee Not Fiduciary for Holders of Obligor Senior In
------------------------------------------------------
debtedness. The Trustee shall not be deemed to owe any fiduciary duty to the
- ----------
holders of Obligor Senior Indebtedness of any Guarantor and shall not be liable
to any such holders if it shall mistakenly pay over or distribute to Holders or
the Company or any other Person, money
127
<PAGE>
or assets to which any holders of Obligor Senior Indebtedness shall be entitled
by virtue of this Article 15 or otherwise. With respect to the holders of
----------
Obligor Senior Indebtedness, the Trustee undertakes to perform or to observe
only such of its covenants or obligations as are specifically set forth in this
Article 15 and no implied covenants or obligations with respect to holders of
- ----------
Obligor Senior Indebtedness of any Guarantor shall be read into this Indenture
against the Trustee.
Section 1516. Reliance by Holders of Senior Indebtedness on
---------------------------------------------
Subordination Provisions. Each Holder by accepting a Note acknowledges and
- ------------------------
agrees that the foregoing subordination provisions are, and are intended to be,
an inducement and a consideration to each holder of any Obligor Senior
Indebtedness of any Guarantor, whether such Obligor Senior Indebtedness was
created or acquired before or after the issuance of the Notes, to acquire and
continue to hold, or to continue to hold, such Obligor Senior Indebtedness and
such holder of such Obligor 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 Obligor Senior Indebtedness.
Section 1517. Trustee's Compensation Not Prejudiced. Nothing in this
-------------------------------------
Article 15 shall apply to amounts due to the Trustee pursuant to other Sections
- ----------
of this Indenture.
128
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, all as of the date first written above.
DYNATECH CORPORATION, as Initial Issuer
and as Parent Guarantor
By: /s/ Allan M. Kline
--------------------------------------
Name: Allan M. Kline
Title: Corporate Vice President
TTC MERGER CO. LLC, a company to be
merged into Telecommunications Techniques Co.,
LLC, as Initial Issuer
By: Dynatech Corporation, its sole member
---------------------------------------
By: /s/ Allan M. Kline
--------------------------------------
Name: Allan M. Kline
Title: Corporate Vice President
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By: /s/ Philip G. Kane, Jr.
--------------------------------------
Name: Philip G. Kane, Jr.
Title: Vice President
129
<PAGE>
EXHIBIT A
FORM OF NOTE/1/
------------
[DYNATECH CORPORATION,
as an Initial Issuer until the assumption
of obligations under this Note by
Telecommunications Techniques Co., LLC,
and
TTC MERGER CO. LLC
(a company to be merged into TELECOMMUNICATIONS TECHNIQUES CO., LLC,
which will succeed to and assume all obligations under this Note), as an
Initial Issuer]/2/
[TELECOMMUNICATIONS TECHNIQUES CO., LLC]/3/
9 3/4% Senior Subordinated Notes Due 2008
No. CUSIP No. [87928F AA 0]/4/ [87928F AB 8]/5/
$
--------------
[Dynatech Corporation, a Massachusetts corporation (and its successors
and assigns), and TTC Merger Co. LLC, a Delaware limited liability company (and
its successors and assigns) (collectively, the "Company," which term shall have
the meaning ascribed thereto
- ------------------------------
1. Insert any applicable legends from Article 2.
2. Include prior to the Second Merger and the execution and delivery of
the First Supplemental Indenture.
3. Include after the Second Merger and the execution and delivery of the
First Supplemental Indenture.
4. Include this or other appropriate CUSIP Number for Initial Note that
is not registered under the Securities Act.
5. Include this or other appropriate CUSIP Number for Exchange Note or
Initial Note that is registered under the Securities Act.
A-1
<PAGE>
in the Indenture hereinafter referred to) promise]/6/ [Telecommunications
Techniques Co., LLC, and any successor in interest thereto (the "Company"),
promises]/7/ to pay to , or registered assigns, the principal sum of
$([ ] United States Dollars) on May 15, 2008 [(or such lesser or
-----------
greater amounts as shall be outstanding hereunder from time to time in
accordance with Sections 312 and 313 of the Indenture referred to on the reverse
here)]/8/.
Interest Payment Dates: May 15 and November 15.
Record Dates: May 1 and November 1.
Additional provisions of this Note are set forth on the other side of this
Note.
- ------------------------------
6. Include prior to the Second Merger and the execution and delivery of
the First Supplemental Indenture.
7. Include after the Second Merger and the execution and delivery of the
First Supplemental Indenture.
8. Include only if the Note is issued in global form.
A-2
<PAGE>
IN WITNESS WHEREOF, [each of the Initial Issuers]/9/ [the Company]/10/
has caused this instrument to be duly executed.
[DYNATECH CORPORATION, as Initial Issuer
By:
________________________________
Name:
Title:]/11/
[TTC MERGER CO., LLC (a company to be
merged into Telecommunications
Techniques Co., LLC, which will
succeed to and assume all
obligations under this Note)]/12/
[TELECOMMUNICATIONS TECHNIQUES CO., LLC]/13/
By: Dynatech Corporation, its sole member
By:
________________________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
This is one of the Notes referred to in the within-named Indenture.
- ------------------------------
9. Include prior to the Second Merger and the execution of the First
Supplemental Indenture.
10. Include after the Second Merger and the execution and delivery of the
First Supplemental Indenture.
11. Include prior to the Second Merger and the execution and delivery of
the First Supplemental Indenture.
12. Include prior to the Second Merger and the execution and delivery of
the First Supplemental Indenture.
13. Include after the Second Merger and the execution and delivery of the
First Supplemental Indenture.
A-3
<PAGE>
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:
__________________________
Name:
Title:
Dated:
-----------------
A-4
<PAGE>
[FORM OF REVERSE SIDE OF NOTE]
9 3/4% Senior Subordinated Note Due 2008
1. Interest
The Company promises to pay interest semi-annually on May 15 and
November 15 in each year, commencing November 15, 1998 at the rate of 9 3/4% per
annum [(subject to adjustment as provided below)]/14/ [, except that interest
accrued on this Note for periods prior to the date on which the Initial Note was
surrendered in exchange for this Note will accrue at the rate or rates borne by
such Initial Note from time to time during such periods]/15/, until the
Principal Amount is paid or made available for payment. [Interest on this Note
will accrue from the most recent date to which interest on this Note or any of
its Predecessor Notes has been paid or duly provided for or, if no interest has
been paid, from the Issue Date.]/16/ [Interest on this Note will accrue from the
most recent date to which interest on this Note or any of its Predecessor Notes
has been paid or duly provided for or, if no such interest has been paid, from
[_________, ____]/17/.]/18/ Interest on the Notes shall be computed on the
basis of a 360-day year of twelve 30-day months. The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, as
provided in such Indenture, be paid to the Person in whose name this Note (or
one or more Predecessor Notes) is registered at the close of business on the
Regular Record Date for such interest, which shall be the May 1 or November 1
(whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date. Any such interest not so punctually paid or duly provided
for will forthwith cease to be payable to the Holder on such Regular Record Date
and may either be paid to the Person in whose name this Note (or one or more
Predecessor Notes) is registered at the close of business on a Special Record
Date for the payment of such Defaulted Interest to be fixed by the Trustee,
notice whereof shall be given to Holders of
- ------------------------------
14. Include only for Initial Note when additional interest provisions,
set forth in the next paragraph, are included.
15. Include only for Exchange Note.
16. Include only for Original Notes.
17. Insert first date of issuance of Additional Note and its Predecessor Notes.
18. Include only for Additional Notes (and Exchange Notes issued in the
exchange therefor).
A-5
<PAGE>
Notes not more than 15 days nor less than 10 days prior to such Special Record
Date, or be paid at any time in any other lawful manner not inconsistent with
the requirements of any securities exchange on which the Notes may be listed,
and upon such notice as may be required by such exchange, all as more fully
provided in said Indenture.
[The Holder of this Note is entitled to the benefits of the Registration
Rights Agreement (the " Registration Rights Agreement"), dated May 21, /1998,
among Dynatech Corporation, Telecommunications Techniques Co., LLC, Credit
Suisse First Boston Corporation and J.P. Morgan Securities Inc. Pursuant and
subject to the Registration Rights Agreement, until (i) the date on which this
Note has been exchanged for a freely transferable Exchange Note (as defined in
the Registration Rights Agreement) in the Registered Exchange Offer (as defined
in the Registration Rights Agreement), (ii) the date on which this Note has been
effectively registered under the Securities Act and disposed of in accordance
with the Shelf Registration Statement (as defined in the Registration Rights
Agreement), or (iii) the date on which such Note is distributed to the public
pursuant to Rule 144 of the Securities Act or is saleable pursuant to Rule
144(k) under the Securities Act (or otherwise is eligible for resale pursuant to
Rule 144 (or any successor provision) under the Securities Act without volume
restriction, if any): From and including the date on which a Registration
Default (as defined below) shall occur to but excluding the date on which such
Registration Default has been cured, additional interest will accrue on the Note
at the rate of (a) prior to the 91st day of such period (for so long as such
period is continuing), 0.25% per annum and (b) thereafter (for so long as such
period is continuing), 0.50% per annum. Any such additional interest shall not
exceed such respective rates for such respective periods, and shall not in any
event exceed 0.50% per annum in the aggregate, regardless of the number of
Registration Defaults that shall have occurred and be continuing. Any such
additional interest shall be paid in the same manner and on the same dates as
interest payments in respect of this Note. Following the cure of all
Registration Defaults, the accrual of such additional interest will cease. All
Registration Defaults shall be deemed cured upon the consummation of the
Registered Exchange Offer. For purposes of the foregoing, each of the following
events, as more particularly defined in the Registration Rights Agreement, is a
"Registration Default": (i) neither the Exchange Offer Registration Statement
nor a Shelf Registration Statement (as defined in the Registration Rights
Agreement) has been filed with the SEC on or before the 120th day after the
Issue Date (or if such day is not a business day, the first business day
thereafter); (ii) the Registered Exchange Offer is not consummated on or before
the 180th day after the Issue Date (or if such day is not a business day, the
first business day thereafter), (iii) if a Shelf Registration Statement is
required to be filed under the Registration Rights Agreement, (A) the Shelf
Registration Statement is not declared effective by the SEC on or before the
210th day after the Issue Date (or if such day is not a business day, the first
business day thereafter) (or, in the case of a Shelf Registration Statement
required to be filed in response to any change in applicable interpretation of
the SEC, if later, on or before the
A-6
<PAGE>
90th day after the publication of such change) (B) after such Shelf Registration
Statement is declared effective and during the time that the Company is required
to use its reasonable best efforts to keep the Shelf Registration Statement in
effect, such Shelf Registration Statement ceases to be effective and continues
not to be effective (other than in connection with the consummation of the
Registered Exchange Offer), or the Company shall have suspended and be
continuing to suspend the availability of the Shelf Registration Statement, for
more than 30 days in the aggregate in any consecutive twelve-month period.]/19/
/20/
2. Method of Payment
Payment of the principal of (and premium, if any) and interest on this
Note will be made at the office or agency of the Company maintained for that
purpose in The Borough of Manhattan, The City of New York; provided, however,
that at the option of the Company payment of interest may be made by check
mailed to the address of the Person entitled thereto as such address shall
appear in the Note Register.
3. Paying Agent and Registrar
Initially, State Street Bank and Trust Company, a Massachusetts trust
company, the Trustee, will act as Paying Agent and Registrar. The Company may
appoint and change any Paying Agent, Registrar or co-registrar without notice.
The Company or any domestically incorporated subsidiary of the Company may act
as Paying Agent, Registrar or co-registrar.
4. Indenture
This Note is one of the duly authorized issue of 9 3/4% Senior
Subordinated Notes Due 2008 of the Company (herein called the "Notes"), issued
under an Indenture, dated as of May 21, 1998 (as amended, supplemented or
otherwise modified from time to time, the "Indenture," which term shall have the
meanings assigned to it in such instrument), among Dynatech Corporation, TTC
Merger Co. LLC [(a company to be merged into
- ------------------------------
19. Include only for Initial Note when required by the Registration
Rights Agreement.
20. For an Initial Additional Note, add any similar provision, if any, as
may be agreed by the Company with respect to additional interest on
such Initial Additional Note.
A-7
<PAGE>
Telecommunications Techniques Co., LLC)]/21/ [(predecessor in interest to
Telecommunications Techniques Co., LLC)]/22/ and State Street Bank and Trust
Company as Trustee (herein called the "Trustee," which term includes any
successor trustee under the Indenture) and reference is hereby made to the
Indenture for a statement of the respective rights, limitations of rights,
duties and immunities thereunder of the Company, any other obligor upon this
Note, the Trustee and the Holders of the Notes and of the terms upon which the
Notes are, and are to be, authenticated and delivered. The terms of the Notes
include those stated in the Indenture and those made a part of the Indenture by
reference to the Trust Indenture Act of 1939, as amended, as in effect from time
to time (the "TIA"). The Notes are subject to all such terms, and Holders are
referred to the Indenture and the TIA for a statement of such terms. Additional
Notes may be issued under the Indenture which may vote as a class with the Notes
and otherwise be treated as Notes for purposes of the Indenture.
All terms used in this Note that are defined in the Indenture shall have
the meanings assigned to them in the Indenture.
This Note is entitled to the benefits of a certain senior subordinated
Parent Guarantee of Holding and may hereafter be entitled to certain other
senior subordinated Note Guarantees made for the benefit of the Holders.
Reference is made to Article Thirteen of the Indenture and to the Parent
Guarantee and any Note Guarantees for terms relating to such Parent Guarantee or
Note Guarantees, including the release, termination and discharge thereof.
Neither the Company nor Holding nor any Note Guarantor shall be required to make
any notation on this Note to reflect any Parent Guarantee or Note Guarantee or
any such release, termination or discharge.
5. Optional Redemption
(a) The Notes will be redeemable, at the Company' option, in whole or in
part, and from time to time on and after May 15, 2003 and prior to maturity.
Such redemption may be made upon notice mailed by first-class mail to each
Holder's registered address in accordance with the Indenture. Any such
redemption and notice may, in the Company' discretion, be subject to the
satisfaction of one or more conditions precedent. The Notes will be so
redeemable at the following Redemption Prices (expressed as a percentage of
principal
- ------------------------------
21. Include prior to the Second Merger and the execution and delivery of
the First Supplemental Indenture.
22. Include after the Second Merger and the execution and delivery of the
First Supplemental Indenture.
A-8
<PAGE>
amount), plus accrued interest, if any, to the relevant Redemption Date (subject
to the right of 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 May 15 of the years set forth below:
REDEMPTION
PERIOD PRICE
2003.............................. 104.875%
2004.............................. 103.250
2005.............................. 101.625
2006 and thereafter............... 100.000%
(b) In addition, at any time and from time to time prior to May 15,
2001, the Company at its option may redeem the Notes in an aggregate principal
amount equal to up to 35% of the original aggregate principal amount of the
Notes (including the principal amount of any Additional Notes), with funds in an
aggregate amount (the "Redemption Amount") not exceeding the aggregate cash
-----------------
proceeds of one or more Equity Offerings, at a Redemption Price (expressed as a
percentage of principal amount thereof) of 109.75% plus accrued interest, if
any, to the Redemption Date (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date); provided, however, that an aggregate principal amount of the Notes equal
to at least 65% of the original aggregate principal amount of the Notes
(including the principal amount of any Additional Notes) must remain outstanding
after each such redemption. The Company may make such redemption upon notice
mailed by first-class mail to each Holder's registered address in accordance
with the Indenture (but in no event more than 180 days after the completion of
the related Equity Offering). Any such notice may be given prior to the
completion of the related Equity Offering, and any such redemption or notice
may, at the Company' discretion, be subject to the satisfaction of one or more
conditions precedent, including but not limited to the completion of the related
Equity Offering.
(c) At any time on or prior to May 15, 2003, the Notes may also be
redeemed or purchased (by the Company or any other Person) in whole but not in
part, at the Company's option, upon the occurrence of a Change of Control, at a
price equal to 100% of the principal amount thereof plus the Applicable Premium
as of, and accrued but unpaid interest, if any, to, the Redemption Date (subject
to the right of Holders of record on the relevant record date to receive
interest due on the relevant interest payment date). Such redemption or purchase
may be made upon notice mailed by first-class mail to each Holder's registered
address in accordance with the Indenture (but in no event more than 180 days
after the occurrence of such Change of Control). The Company may provide in such
notice that payment of such price and
A-9
<PAGE>
performance of the Company's obligations with respect to such redemption or
purchase may be performed by another Person. Any such notice may be given prior
to the occurrence of the related Change of Control, and any such redemption,
purchase or notice may, at the Company's discretion, be subject to the
satisfaction of one or more conditions precedent, including but not limited to
the occurrence of the related Change of Control.
6. No Sinking Fund
The Notes will not be entitled to the benefit of a sinking fund.
7. Subordination
The Notes are subordinated to Senior Indebtedness, as defined in the
Indenture. To the extent provided in the Indenture, Senior Indebtedness must be
paid before the Notes may be paid. In addition, the Parent Guarantee and any
Note Guarantees are or shall be, as the case may be, subordinated to Parent
Senior Indebtedness (as defined in the Indenture) and Guarantor Senior
Indebtedness (as defined in the Indenture), as applicable. To the extent
provided in the Indenture, Parent Senior Indebtedness and Guarantor Senior
Indebtedness must be paid before the Parent Guarantee or any Note Guarantee may
be paid. The Company, the Parent Guarantor and any Note Guarantor agree, and
each Holder by accepting a Note agrees, to the subordination provisions
contained in the Indenture and authorizes the Trustee to give such provisions
effect and appoints the Trustee as attorney-in-fact for such purposes.
8. Put Provisions
The Indenture provides that, upon the occurrence of a Change of Control
Triggering Event, each Holder will have the right to require that the Company
repurchase all or any part of such Holder's Notes at a repurchase price in cash
equal to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest, if any, to the date of such repurchase (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date); provided, however, that the Company shall not
be obligated to purchase Notes in the event it has exercised its right to redeem
all of the Notes.
A-10
<PAGE>
9. Denominations; Transfer; Exchange
The Notes are in registered form without coupons in denominations of
$1,000 and whole multiples of $1,000. A Holder may transfer or exchange Notes in
accordance with the Indenture and subject to certain limitations set forth
therein. No service charge shall be made for any transfer or exchange of Notes,
but the Company may require payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection therewith. The
Company shall not be required (i) to issue, transfer or exchange any Note during
a period beginning at the opening of business 15 days before the day of the
mailing of a notice of redemption (or purchase) of Notes selected for redemption
(or purchase) under Section 1004 of the Indenture and ending at the close of
business on the day of such mailing, or (ii) to transfer or exchange any Note so
selected for redemption (or purchase) in whole or in part.
10. Persons Deemed Owners
The registered Holder of this Note may be treated as the owner of it for
all purposes.
11. Unclaimed Money
The Trustee shall pay to the Company upon a Company Request any money
held by it for the payment of principal (and premium, if any) or interest that
remains unclaimed for two years. After payment to the Company, Holders entitled
to money must look to the Company for payment as general creditors and all
liability of the Trustee or Paying Agent with respect to such money shall
thereupon cease.
12. Discharge and Defeasance
Subject to certain conditions, the Company at any time may terminate
some or all of its obligations under the Notes and the Indenture if the Company
deposits with the Trustee money or U.S. Government Obligations for the payment
of principal of, premium (if any) and interest on the Notes to redemption or
maturity, as the case may be.
A-11
<PAGE>
13. Amendment, Waiver
Subject to certain exceptions, (i) the Indenture may be amended with the
consent of the Holders of a majority in principal amount of the Notes then
outstanding and (ii) any past default or compliance with any provisions may be
waived with the consent of the Holders of a majority in principal amount of the
Notes then outstanding (including in each case, consents obtained in connection
with a tender offer or exchange offer for Notes). In certain instances provided
in the Indenture, the Indenture may be amended without the consent of any
Holder.
14. Defaults and Remedies
If an Event of Default with respect to the Notes occurs and is
continuing, the Notes may be declared due and payable immediately in the manner
and with the effect provided in the Indenture.
15. No Recourse Against Others
No director, officer, employee, incorporator, member or stockholder, as
such, of the Company, Holding, any Note Guarantor or any subsidiary thereof
shall have any liability for any obligation of the Company, Holding or any Note
Guarantor on the Notes under this Indenture, the Notes, the Parent Guarantee or
any Note Guarantee, or for any claim based on, in respect of, or by reason of,
any such obligation or its creation. Each Noteholder, by accepting the Notes,
waives and releases all such liability. This waiver and release are part of the
consideration for issuance of the Notes.
16. Governing Law.
THE INDENTURE AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY
PRINCIPLES OF CONFLICT OF LAWS TO THE EXTENT THAT THE APPLICATION OF THE LAW OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. THE TRUSTEE, THE COMPANY, ANY
OTHER OBLIGOR IN RESPECT OF THE NOTES AND (BY THEIR ACCEPTANCE OF THE NOTES) THE
HOLDERS, AGREE TO SUBMIT TO THE JURISDICTION OF ANY UNITED STATES FEDERAL OR
STATE COURT LOCATED IN THE BOROUGH OF
A-12
<PAGE>
MANHATTAN, IN THE CITY OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS INDENTURE OR THE NOTES.
17. Authentication
This Note 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 Note.
18. Abbreviations
Customary abbreviations may be used in the name of a Holder or an
assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
19. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Notes and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Holders. No representation is made as
to the accuracy of such numbers either as printed on the Notes or as contained
in any notice of redemption and reliance may be placed only on the other
identification numbers placed hereon.
A-13
<PAGE>
[FORM OF TRANSFER NOTICE]
To assign this Note, fill in the form below:
I or we assign and transfer this Note 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 Note on the books of the Company. The agent may
substitute another to act for him.
[ [Check One]
[ ] (a) this Note is being transferred in compliance with the exemption
from registration under the Securities Act of 1933, as amended,
provided by Rule 144A thereunder.
or
--
[ ] (b) this Note is being transferred other than in accordance with
(a) above and documents are being furnished which comply with the
conditions of transfer set forth in this Note and the Indenture.
If neither of the foregoing boxes is checked, the Trustee or other Note
Registrar shall not be obligated to register this Note in the name of any Person
other than the Holder hereof unless
A-14
<PAGE>
and until the conditions to any such transfer of registration set forth herein
and in Section 313 of the Indenture shall have been satisfied.]/23/
Date:
------------------------------
------------------------------
NOTICE: The signature to this
assignment must correspond with the name
as written upon the face of the
within-mentioned instrument in every
particular, without alteration or any
change whatsoever.
Signature Guarantee:
----------------------------------
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Note Registrar, which requirements include
membership or participation in the Security Transfer Agent Medallion Program
("STAMP") or such other "signature guarantee program" as may be determined by
the Note Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
[TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Note
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, as amended, 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
- ------------------------------
23. Include only for an Initial Note or an Initial Additional Note that
bears the Private Placement Legend, in accordance with the Indenture.
A-15
<PAGE>
upon the undersigned's foregoing representations in order to claim the exemption
from registration provided by Rule 144A.
Dated:
------------------------- ------------------------------------
NOTICE: To be executed by an
executive officer]/24/
- ------------------------------
24. Include only for an Initial Note or an Initial Additional Note that
bears the Private Placement Legend, in accordance with the Indenture.
A-16
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company pursuant
to Section 410 or 414 of the Indenture, check the box: [ ].
If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 410 or 414 of the Indenture, state the amount (in
principal amount):
$
Date: Signed:
__________________ ___________________________
(Sign exactly as your name appears on the
other side of the Note)
Signature Guarantee:
_______________________________________
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Note Registrar, which requirements include
membership or participation in the Security Transfer Agent Medallion Program
("STAMP") or such other "signature guarantee program" as may be determined by
the Note Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
A-17
<PAGE>
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE
<TABLE>
<CAPTION>
The following increases or decreases in this Global Note have been made:
<S> <C> <C> <C> <C>
Date of Amount of Amount of Principal amount Signature
Exchange decreases in increases in of this Global Note of authorized
Principal Principal following such officer or Trustees
Amount of this Amount of this decreases or of Securities
Global Note Global Note increases Custodian
</TABLE>
A-18
<PAGE>
EXHIBIT B
Form of Supplemental Indenture in Respect of Note Guarantee
SUPPLEMENTAL INDENTURE, dated as of [_________] (this "Supplemental
------------
Indenture"), among [name of [New Note Guarantor[s]/25/] (the "New Note
- --------- --------
Guarantor[s]"), Telecommunications Techniques Co., LLC, a Delaware limited
- ------------
liability Company (the "Company"), [any] [the] [each other] then existing Note
Guarantor[s] under the Indenture referred to below (the "Existing
Guarantor[s]"), Dynatech Corporation, a corporation organized under the laws of
the State of Massachusetts, as Parent Guarantor (the "Parent Guarantor") and
State Street Bank and Trust Company, as Trustee (the "Trustee") under the
Indenture referred to below.
W I T N E S S E T H:
WHEREAS, the Company, [the] [any] Existing Guarantor[s], the Parent
Guarantor and the Trustee have heretofore become parties to an Indenture, dated
as of May 21, 1998, as amended (as amended, supplemented, waived or otherwise
modified, the "Indenture"), providing for the issuance of 9 3/4% Senior
Subordinated Notes Due 2008 of the Company (the "Notes");
WHEREAS, Section 1308 of the Indenture provides that the Company is
required to or may cause the New Note Guarantor[s] to execute and deliver to the
Trustee a supplemental indenture pursuant to which the New Note Guarantor[s]
shall guarantee the Notes pursuant to a Note Guarantee on the terms and
conditions set forth herein and in Article Thirteen of the Indenture;
WHEREAS, [the][each] New Note Guarantor desires to enter into this
Supplemental Indenture for good and valuable consideration, including
substantial economic benefit in that the financial performance and condition of
such New Note Guarantor is dependent on the financial performance and condition
of the Company and on [the] [such] New Note Guarantor's access to working
capital through the Company's access to revolving credit borrowings under the
Senior Credit Agreement; and
WHEREAS, pursuant to Section 901 of the Indenture, the parties hereto
are authorized to execute and deliver this Supplemental Indenture to amend the
Indenture, without the consent of any Holder;
- ------------------------------
25. Insert as appropriate.
B-1
<PAGE>
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the
New Note Guarantor[s], the Company, [the Existing Guarantor[s],] the Parent
Guarantor and the Trustee mutually covenant and agree for the benefit of the
Holders of the Notes 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. 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] [Each] New Note Guarantor hereby
agrees, jointly and severally with [all] [any] other New Note Guarantor[s],
[all] [any] Existing Guarantor[s] and the Parent Guarantor, fully and
unconditionally, to guarantee the Guaranteed Note obligations under the
Indenture and the Notes on the terms and subject to the conditions set forth in
Article Thirteen of the Indenture and to be bound by (and shall be entitled to
the benefits of) all other applicable provisions of the Indenture as a Note
Guarantor. The Note Guarantee of each New Note Guarantor is subject to the
subordination provisions of the Indenture.
3. Termination, Release and Discharge. [The] [Each] New Note Guarantor's
Note Guarantee shall terminate and be of no further force or effect, and [the]
[each] New Note Guarantor shall be released and discharged from all obligations
in respect of such Note Guarantee, as and when provided in Section 1303 of the
Indenture.
4. Parties. Nothing in this Supplemental Indenture is intended or shall
be construed to give any Person, other than the Holders and the Trustee, any
legal or equitable right, remedy or claim under or in respect of [the] [each]
New Note Guarantor's Note Guarantee or any provision contained herein or in
Article Thirteen of the Indenture.
5. Governing Law. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO ANY PRINCIPLES OF CONFLICT OF LAWS TO THE EXTENT THAT THE APPLICATION
OF THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. THE TRUSTEE, THE
COMPANY, ANY OTHER OBLIGOR IN RESPECT OF THE NOTES AND (BY THEIR ACCEPTANCE OF
THE NOTES) THE HOLDERS, AGREE TO SUBMIT TO THE JURISDICTION OF ANY UNITED STATES
FEDERAL OR STATE COURT LOCATED IN THE BOROUGH OF MANHATTAN, IN THE CITY OF NEW
YORK IN ANY ACTION
B-2
<PAGE>
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE OR THE NOTES.
6. 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 Notes heretofore or hereafter
authenticated and delivered shall be bound hereby. The Trustee makes no
representation or warranty as to the validity or sufficiency of this
Supplemental Indenture.
7. Counterparts. The parties hereto may sign one or more copies of this
Supplemental Indenture in counterparts, all of which together shall constitute
one and the same agreement.
8. Headings. The section headings herein are for convenience of
reference only and shall not be deemed to alter or affect the meaning or
interpretation of any provisions hereof.
B-3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the date first above written.
[NAME OF NEW NOTE GUARANTOR],/26/ as New
Note Guarantor
By:
-------------------------------
Name:
Title:
TELECOMMUNICATIONS TECHNIQUES
CO., LLC (successor by merger to TTC
MERGER CO., LLC), as Issuer
By:
-------------------------------
Name:
Title:
DYNATECH CORPORATION, and as Parent
Guarantor
By:
-------------------------------
Name:
Title:
- ------------------------------
26. Add a signature block for each New Note Guarantor.
B-4
<PAGE>
STATE STREET BANK AND TRUST COMPANY, as
Trustee
By:
-------------------------------
Name:
Title:
B-5
<PAGE>
EXHIBIT C
Form of Regulation S Certificate
Regulation S Certificate
State Street Bank and Trust Company
225 Asylum Street
23rd Floor
Hartford, Connecticut 06103
Attention: Corporate Trust Department
Re: TELECOMMUNICATIONS TECHNIQUES CO., LLC (the "Company")
9 3/4% Senior Subordinated Notes Due 2008 (the "Notes")
Ladies and Gentlemen:
In connection with our proposed sale of $ aggregate principal
_____
amount of Notes, we confirm that such sale has been effected pursuant to and in
accordance with Regulation S ("Regulation S") under the Securities Act of 1933,
------------
as amended (the "Securities Act"), and accordingly, we hereby certify as
--------------
follows:
1. The offer of the Notes was not made to a person in the
United States (unless such person or the account held by it for which
it is acting is excluded from the definition of "U.S. person"
pursuant to Rule 902(k) of Regulation S under the circumstances
described in Rule 902(h)(3) of Regulation S) or specifically targeted
at an identifiable group of U.S. citizens abroad.
2. Either (a) at the time the buy order was originated, the
buyer was outside the United States or we and any person acting on
our behalf reasonably believed that the buyer was outside the United
States or (b) the transaction was executed in, on or through the
facilities of a designated offshore securities market, and neither we
nor any person acting on our behalf knows that the transaction was
pre-arranged with a buyer in the United States.
3. No directed selling efforts have been made in the United
States in contravention of the requirements of Rule 903(a)(2) or Rule
904(a)(2) of Regulation S, as applicable.
C-1
<PAGE>
4. The proposed transfer of Notes is not part of a plan or
scheme to evade the registration requirements of the Securities Act.
5. If we are a dealer or a person receiving a selling
concession or other fee or remuneration in respect of the Notes, and
the proposed transfer takes place before the Offshore Note Exchange
Date referred to in the Indenture, dated as of May 21, 1998, among
Dynatech Corporation, the Company (as successor by merger to TTC
Merger Co. LLC) and the Trustee, or we are an officer or director of
the Company or a distributor, we certify that the proposed transfer
is being made in accordance with the provisions of Rules 903 and 904
of Regulation S.
6. We have advised the transferee of the transfer
restrictions applicable to the Notes.
You, the Company and counsel for the Company are entitled to rely upon
this Certificate and are irrevocably authorized to produce this Certificate or a
copy hereof to any interested party in any administrative or legal proceeding or
official inquiry with respect to the matters covered hereby. Terms used in this
certificate have the meanings set forth in Regulation S.
Very truly yours,
[NAME OF SELLER]
By:
-------------------------------
Name:
Title:
Address:
Date of this Certificate: 199
---------------, --
C-2
<PAGE>
EXHIBIT D
Form of Certificate of Beneficial Ownership
On or after July 1, 1998
State Street Bank and Trust Company
225 Asylum Street
23rd Floor
Hartford, Connecticut 06103
Attention: Corporate Trust Department
Re: TELECOMMUNICATIONS TECHNIQUES CO., LLC
(the "Company")
9 3/4% Senior Subordinated Notes Due 2008 (the "Notes")
Ladies and Gentlemen:
This letter relates to $ principal amount of Notes
___________
represented by the offshore global note certificate (the "Offshore Global
Note"). Pursuant to Section 313(4) of the Indenture dated as of May 21, 1998
relating to the Notes (the "Indenture"), we hereby certify that (1) we are the
beneficial owner of such principal amount of Notes represented by the Offshore
Global Note and (2) we are either (i) a Non-U.S. Person to whom the Notes could
be transferred in accordance with Rule 904 of Regulation S ("Regulation S")
promulgated under the Securities Act of 1933, as amended (the "Act") or (ii) a
U.S. Person who purchased securities in a transaction that did not require
registration under the Act. Accordingly, you are hereby requested to issue an
Offshore Physical Note representing the undersigned's interest in the principal
amount of Notes represented by the Offshore Global Note, all in the manner
provided by the Indenture.
You, the Company and counsel for the Company are entitled to rely upon
this letter and are irrevocably authorized to produce this letter or a copy
hereof to any interested
D-1
<PAGE>
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Holder]
By:
------------------------------
Authorized Signature
D-2
<PAGE>
EXHIBIT E
Form of First Supplemental Indenture
FIRST SUPPLEMENTAL INDENTURE dated as of May 21, 1998 (this
"Supplemental Indenture"), among Dynatech Corporation ("Holding"), a corporation
---------------------- -------
organized under the laws of the Commonwealth of Massachusetts,
Telecommunications Techniques Co., LLC ("TTC"), a Delaware limited liability
---
company, and State Street Bank and Trust Company, a Massachusetts trust company,
as trustee (the "Trustee") under the Indenture referred to below.
-------
W I T N E S S E T H:
WHEREAS, Holding and TTC Merger Co. LLC ("TTC Merger Co.") are issuers
--------------
under the Indenture, dated as of the date hereof (as amended, supplemented,
waived or otherwise modified from time to time the "Indenture"), providing for,
---------
inter alia, the issuance of an aggregate principal amount of $275,000,000 of 9
- ----- ----
3/4% Senior Subordinated Notes Due 2008 (the "Notes," which term shall have the
meaning ascribed thereto in the Indenture);
WHEREAS, Holding wishes to transfer to the Company the capital stock of
all of its subsidiaries (other than Holding's interests in the Company) (the
"Subsidiary Transfer"); and
-------------------
WHEREAS, in consideration of, among other things, (i) the making
available to TTC of a revolving credit facility under the Senior Credit
Agreement (as defined in the Indenture), (ii) the Subsidiary Transfer and (iii)
the grant by Holding of the Parent Guarantee (as defined in the Indenture),
Holding wishes to assign, transfer and convey to TTC all of Holding's rights,
and TTC wishes to assume from Holding and TTC Merger Co. all of their respective
rights, obligations, covenants, agreements, duties and liabilities, under the
Indenture and the Notes and any and all agreements, certificates and other
documents executed by Holding and TTC Merger Co., in connection therewith, other
than the Parent Guarantee.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, TTC,
Holding and the Trustee mutually covenant and agree for the benefit of the
Holders of the Notes as follows:
1. Defined Terms. As used in this Supplemental Indenture, terms defined
-------------
in the Indenture or in the preamble or recitals hereto are used herein as
therein defined. 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.
E-1
<PAGE>
2. Assignment of Rights and Obligations. Holding hereby irrevocably
------------------------------------
assigns, transfers and conveys to TTC all of Holding's rights and powers,
obligations, covenants, agreements, duties and liabilities under and with
respect to the Indenture and the Notes and any and all agreements, certificates
and other documents executed by Holding in connection therewith, other than the
Parent Guarantee.
3. Assumption of Agreements and Obligations. The Company hereby
----------------------------------------
expressly assumes and confirms its receipt of all of the rights and powers, and
assumes, confirms and agrees to perform and observe all of the obligations,
covenants, agreements, duties and liabilities of Holding and TTC Merger Co.
under and with respect to the Indenture and the Notes and any and all
agreements, certificates and other documents executed by Holding or TTC Merger
Co. in connection therewith, other than the Parent Guarantee, as fully as if the
Company were originally the obligor in respect thereof and the signatory
thereto.
4. Agreement to Guarantee. Holding hereby confirms its Parent Guarantee
----------------------
and agrees hereby, as a primary obligor and not merely as surety, irrevocably to
fully and unconditionally, guarantee, on a senior subordinated basis, the
obligations of the Company under the Indenture and the Notes on the terms and
subject to the conditions set forth in Article 13 of the Indenture and to be
bound by (and shall be entitled to the benefits of) all other applicable
provisions of the Indenture as the Parent Guarantor. The Parent Guarantee is
subject to the subordination provisions of Article 15 of the Indenture.
5. Termination, Release and Discharge of Parent Guarantee. The Parent
------------------------------------------------------
Guarantee shall terminate and be of no further force or effect, and Holding
shall be released and discharged from all obligations in respect of such Parent
Guarantee, as and when provided in Section 1303 of the Indenture.
6. Parties. Nothing in this Supplemental Indenture is intended or shall
-------
be construed to give any Person, other than the Holders and the Trustee, any
legal or equitable right, remedy or claim under or in respect of Holding's
Parent Guarantee hereunder or any provision contained herein or in Article 13 of
the Indenture.
7. Governing Law. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND
-------------
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO ANY PRINCIPLES OF CONFLICT OF LAWS TO THE EXTENT THAT THE APPLICATION
OF THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. THE TRUSTEE, THE
COMPANY, ANY OTHER OBLIGOR IN RESPECT OF THE NOTES AND (BY THEIR ACCEPTANCE OF
THE NOTES) THE HOLDERS, AGREE TO SUBMIT TO THE
E-2
<PAGE>
JURISDICTION OF ANY UNITED STATES FEDERAL OR STATE COURT LOCATED IN THE BOROUGH
OF MANHATTAN, IN THE CITY OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS INDENTURE OR THE NOTES.
8. 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 Notes heretofore or hereafter
authenticated and delivered shall be bound hereby. The Trustee makes no
representation or warranty as to the validity or sufficiency of this
Supplemental Indenture.
9. Holding as Agent for TTC. To the extent permitted by the TIA and any
------------------------
other applicable law, TTC hereby appoints Holding as its attorney-in-fact, which
appointment is coupled with an interest, to take any action that this Indenture
may require or permit TTC to take, including
(i) the giving of any certification, opinion, order,
request or consent (whether by Officer's Certificate, Opinion of
Counsel, Company Order, Company Request, Company Consent or
otherwise),
(ii) the giving of any notice (including under
Section 1001 of the Indenture), and
------------
(iii) the setting of any record date,
such appointment to remain in effect until TTC shall otherwise notify the
Trustee in writing.
10. Counterparts. The parties hereto may sign one or more copies of this
------------
Supplemental Indenture in counterparts, all of which together shall constitute
one and the same agreement.
11. Headings. The section headings herein are for convenience of
--------
reference only and shall not be deemed to alter or affect the meaning or
interpretation of any provisions hereof.
E-3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the date first above written.
TELECOMMUNICATIONS TECHNIQUES CO., LLC
By: Dynatech Corporation, its sole
member
By:
------------------------------
Name:
Title:
DYNATECH CORPORATION, as Guarantor under
the Parent Guarantee
By:
-----------------------------------------
Name:
Title:
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:
-----------------------------------------
Name:
Title:
E-4
<PAGE>
EXHIBIT 4.2
FORM OF NOTE
------------
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRE SENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK COR PORATION ("DTC") TO THE ISSUER OR ITS
---
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN 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 NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN
PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S
NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTIONS 312 AND
------------
313 OF THE INDENTURE.
- ---
TELECOMMUNICATIONS TECHNIQUES CO., LLC
9 3/4% Senior Subordinated Notes Due 2008
No. CUSIP No. 87928F AB 8
$_________
Telecommunications Techniques Co., LLC, and any successor in interest
thereto (the "Company"), promises to pay to , or
registered assigns, the principal sum of $(_______________ United States
Dollars) on May 15, 2008 (or such lesser or greater amounts as shall be
outstanding hereunder from time to time in accordance with Sections 312 and 313
of the Indenture referred to on the reverse here).
Interest Payment Dates: May 15 and November 15.
Record Dates: May 1 and November 1.
Additional provisions of this Note are set forth on the other side of
this Note.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
TELECOMMUNICATIONS TECHNIQUES CO., LLC
By: Dynatech Corporation, its sole member
By:
--------------------------------
Name:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the within-named Indenture.
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:
--------------------------------
Name:
Title:
Dated:
------------------------
2
<PAGE>
FORM OF REVERSE SIDE OF NOTE
9 3/4% Senior Subordinated Note Due 2008
1. Interest
--------
The Company promises to pay interest semi-annually on May 15 and
November 15 in each year, commencing November 15, 1998 at the rate of 9 3/4% per
annum, except that interest accrued on this Note for periods prior to the date
on which the Initial Note was surrendered in exchange for this Note will accrue
at the rate or rates borne by such Initial Note from time to time during such
periods, until the Principal Amount is paid or made available for payment.
Interest on this Note will accrue from the most recent date to which interest on
this Note or any of its Predecessor Notes has been paid or duly provided for or,
if no interest has been paid, from the Issue Date. Interest on the Notes shall
be computed on the basis of a 360-day year of twelve 30-day months. The
interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date will, as provided in such Indenture, be paid to the Person in whose
name this Note (or one or more Predecessor Notes) is registered at the close of
business on the Regular Record Date for such interest, which shall be the May 1
or November 1 (whether or not a Business Day), as the case may be, next
preceding such Interest Payment Date. Any such interest not so punctually paid
or duly provided for will forthwith cease to be payable to the Holder on such
Regular Record Date and may either be paid to the Person in whose name this Note
(or one or more Predecessor Notes) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed by
the Trustee, notice whereof shall be given to Holders of Notes not more than 15
days nor less than 10 days prior to such Special Record Date, or be paid at any
time in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Notes may be listed, and upon such notice as
may be required by such exchange, all as more fully provided in said Indenture.
2. Method of Payment
-----------------
Payment of the principal of (and premium, if any) and interest on this
Note will be made at the office or agency of the Company maintained for that
purpose in The Borough of Manhattan, The City of New York; provided, however,
-------- -------
that at the option of the Company payment of interest may be made by check
mailed to the address of the Person entitled thereto as such address shall
appear in the Note Register.
3
<PAGE>
3. Paying Agent and Registrar
--------------------------
Initially, State Street Bank and Trust Company, a Massachusetts trust
company, the Trustee, will act as Paying Agent and Registrar. The Company may
appoint and change any Paying Agent, Registrar or co-registrar without notice.
The Company or any domestically incorporated subsidiary of the Company may act
as Paying Agent, Registrar or co-registrar.
4. Indenture
---------
This Note is one of the duly authorized issue of 9 3/4% Senior
Subordinated Notes Due 2008 of the Company (herein called the "Notes"), issued
under an Indenture, dated as of May 21, 1998 (as amended, supplemented or
otherwise modified from time to time, the "Indenture," which term shall have the
meanings assigned to it in such instrument), among Dynatech Corporation, TTC
Merger Co. LLC (predecessor in interest to Telecommunications Techniques Co.,
LLC) and State Street Bank and Trust Company as Trustee (herein called the
"Trustee," which term includes any successor trustee under the Indenture) and
reference is hereby made to the Indenture for a statement of the respective
rights, limitations of rights, duties and immunities thereunder of the Company,
any other obligor upon this Note, the Trustee and the Holders of the Notes and
of the terms upon which the Notes are, and are to be, authenticated and
delivered. The terms of the Notes include those stated in the Indenture and
those made a part of the Indenture by reference to the Trust Indenture Act of
1939, as amended, as in effect from time to time (the "TIA"). The Notes are
subject to all such terms, and Holders are referred to the Indenture and the TIA
for a statement of such terms. Additional Notes may be issued under the
Indenture which may vote as a class with the Notes and otherwise be treated as
Notes for purposes of the Indenture.
All terms used in this Note that are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
This Note is entitled to the benefits of a certain senior subordinated
Parent Guarantee of Holding and may hereafter be entitled to certain other
senior subordinated Note Guarantees made for the benefit of the Holders.
Reference is made to Article Thirteen of the Indenture and to the Parent
Guarantee and any Note Guarantees for terms relating to such Parent Guarantee or
Note Guarantees, including the release, termination and discharge thereof.
Neither the Company nor Holding nor any Note Guarantor shall be required to make
any notation on this Note to reflect any Parent Guarantee or Note Guarantee or
any such release, termination or discharge.
4
<PAGE>
5. Optional Redemption
-------------------
(a) The Notes will be redeemable, at the Company' option, in whole or
in part, and from time to time on and after May 15, 2003 and prior to maturity.
Such redemption may be made upon notice mailed by first-class mail to each
Holder's registered address in accordance with the Indenture. Any such
redemption and notice may, in the Company' discretion, be subject to the
satisfaction of one or more conditions precedent. The Notes will be so
redeemable at the following Redemption Prices (expressed as a percentage of
principal amount), plus accrued interest, if any, to the relevant Redemption
Date (subject to the right of 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 May 15 of the years set forth below:
REDEMPTION
PERIOD PRICE
------ -----------
2003.............................. 104.875%
2004.............................. 103.250
2005.............................. 101.625
2006 and thereafter............... 100.000%
(b) In addition, at any time and from time to time prior to May 15,
2001, the Company at its option may redeem the Notes in an aggregate principal
amount equal to up to 35% of the original aggregate principal amount of the
Notes (including the principal amount of any Additional Notes), with funds in an
aggregate amount (the "Redemption Amount") not exceeding the aggregate cash
-----------------
proceeds of one or more Equity Offerings, at a Redemption Price (expressed as a
percentage of principal amount thereof) of 109.75% plus accrued interest, if
any, to the Redemption Date (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date); provided, however, that an aggregate principal amount of the Notes equal
to at least 65% of the original aggregate principal amount of the Notes
(including the principal amount of any Additional Notes) must remain outstanding
after each such redemption. The Company may make such redemption upon notice
mailed by first-class mail to each Holder's registered address in accordance
with the Indenture (but in no event more than 180 days after the completion of
the related Equity Offering). Any such notice may be given prior to the
completion of the related Equity Offering, and any such redemption or notice
may, at the Company' discretion, be subject to the satisfaction of one or more
conditions precedent, including but not limited to the completion of the related
Equity Offering.
5
<PAGE>
(c) At any time on or prior to May 15, 2003, the Notes may also be
redeemed or purchased (by the Company or any other Person) in whole but not in
part, at the Company's option, upon the occurrence of a Change of Control, at a
price equal to 100% of the principal amount thereof plus the Applicable Premium
as of, and accrued but unpaid interest, if any, to, the Redemption Date (subject
to the right of Holders of record on the relevant record date to receive
interest due on the relevant interest payment date). Such redemption or
purchase may be made upon notice mailed by first-class mail to each Holder's
registered address in accordance with the Indenture (but in no event more than
180 days after the occurrence of such Change of Control). The Company may
provide in such notice that payment of such price and performance of the
Company's obligations with respect to such redemption or purchase may be
performed by another Person. Any such notice may be given prior to the
occurrence of the related Change of Control, and any such redemption, purchase
or notice may, at the Company's discretion, be subject to the satisfaction of
one or more conditions precedent, including but not limited to the occurrence of
the related Change of Control.
6. No Sinking Fund
---------------
The Notes will not be entitled to the benefit of a sinking fund.
7. Subordination
-------------
The Notes are subordinated to Senior Indebtedness, as defined in the
Indenture. To the extent provided in the Indenture, Senior Indebtedness must be
paid before the Notes may be paid. In addition, the Parent Guarantee and any
Note Guarantees are or shall be, as the case may be, subordinated to Parent
Senior Indebtedness (as defined in the Indenture) and Guarantor Senior
Indebtedness (as defined in the Indenture), as applicable. To the extent
provided in the Indenture, Parent Senior Indebtedness and Guarantor Senior
Indebtedness must be paid before the Parent Guarantee or any Note Guarantee may
be paid. The Company, the Parent Guarantor and any Note Guarantor agree, and
each Holder by accepting a Note agrees, to the subordination provisions
contained in the Indenture and authorizes the Trustee to give such provisions
effect and appoints the Trustee as attorney-in-fact for such purposes.
6
<PAGE>
8. Put Provisions
--------------
The Indenture provides that, upon the occurrence of a Change of
Control Triggering Event, each Holder will have the right to require that the
Company repurchase all or any part of such Holder's Notes at a repurchase price
in cash equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest, if any, to the date of such repurchase (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date); provided, however, that the Company shall not
be obligated to purchase Notes in the event it has exercised its right to redeem
all of the Notes.
9. Denominations; Transfer; Exchange
---------------------------------
The Notes are in registered form without coupons in denominations of
$1,000 and whole multiples of $1,000. A Holder may transfer or exchange Notes
in accordance with the Indenture and subject to certain limitations set forth
therein. No service charge shall be made for any transfer or exchange of Notes,
but the Company may require payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection therewith. The
Company shall not be required (i) to issue, transfer or exchange any Note during
a period beginning at the opening of business 15 days before the day of the
mailing of a notice of redemption (or purchase) of Notes selected for redemption
(or purchase) under Section 1004 of the Indenture and ending at the close of
business on the day of such mailing, or (ii) to transfer or exchange any Note so
selected for redemption (or purchase) in whole or in part.
10. Persons Deemed Owners
---------------------
The registered Holder of this Note may be treated as the owner of it
for all purposes.
11. Unclaimed Money
---------------
The Trustee shall pay to the Company upon a Company Request any money
held by it for the payment of principal (and premium, if any) or interest that
remains unclaimed for two years. After payment to the Company, Holders entitled
to money must look to the Company for payment as general creditors and all
liability of the Trustee or Paying Agent with respect to such money shall
thereupon cease.
7
<PAGE>
12. Discharge and Defeasance
------------------------
Subject to certain conditions, the Company at any time may terminate
some or all of its obligations under the Notes and the Indenture if the Company
deposits with the Trustee money or U.S. Government Obligations for the payment
of principal of, premium (if any) and interest on the Notes to redemption or
maturity, as the case may be.
13. Amendment, Waiver
-----------------
Subject to certain exceptions, (i) the Indenture may be amended with
the consent of the Holders of a majority in principal amount of the Notes then
outstanding and (ii) any past default or compliance with any provisions may be
waived with the consent of the Holders of a majority in principal amount of the
Notes then outstanding (including in each case, consents obtained in connection
with a tender offer or exchange offer for Notes). In certain instances provided
in the Indenture, the Indenture may be amended without the consent of any
Holder.
14. Defaults and Remedies
---------------------
If an Event of Default with respect to the Notes occurs and is
continuing, the Notes may be declared due and payable immediately in the manner
and with the effect provided in the Indenture.
15. No Recourse Against Others
--------------------------
No director, officer, employee, incorporator, member or stockholder,
as such, of the Company, Holding, any Note Guarantor or any subsidiary thereof
shall have any liability for any obligation of the Company, Holding or any Note
Guarantor on the Notes under this Indenture, the Notes, the Parent Guarantee or
any Note Guarantee, or for any claim based on, in respect of, or by reason of,
any such obligation or its creation. Each Noteholder, by accepting the Notes,
waives and releases all such liability. This waiver and release are part of the
consideration for issuance of the Notes.
8
<PAGE>
16. Governing Law.
-------------
THE INDENTURE AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY
PRINCIPLES OF CONFLICT OF LAWS TO THE EXTENT THAT THE APPLICATION OF THE LAW OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. THE TRUSTEE, THE COMPANY, ANY
OTHER OBLIGOR IN RESPECT OF THE NOTES AND (BY THEIR ACCEPTANCE OF THE NOTES) THE
HOLDERS, AGREE TO SUBMIT TO THE JURISDICTION OF ANY UNITED STATES FEDERAL OR
STATE COURT LOCATED IN THE BOROUGH OF MANHATTAN, IN THE CITY OF NEW YORK IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE OR THE NOTES.
17. Authentication
--------------
This Note 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 Note.
18. Abbreviations
-------------
Customary abbreviations may be used in the name of a Holder or an
assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
19. CUSIP Numbers
-------------
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Notes and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Holders. No representation is made as
to the accuracy of such numbers either as printed on the Notes or as contained
in any notice of redemption and reliance may be placed only on the other
identification numbers placed hereon.
9
<PAGE>
FORM OF TRANSFER NOTICE
To assign this Note, fill in the form below:
I or we assign and transfer this Note 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 Note on the books of the Company. The agent may
substitute another to act for him.
Date:
----------------------
----------------------------------------
NOTICE: The signature to this assignment
must correspond with the name as written
upon the face of the within-mentioned
instrument in every particular, without
alteration or any change whatsoever.
Signature Guarantee:
---------------------------------
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Note Registrar, which requirements include
membership or participation in the Security Transfer Agent Medallion Program
("STAMP") or such other "signature guarantee program" as may be determined by
-----
the Note Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
10
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 410 or 414 of the Indenture, check the box: [ ].
If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 410 or 414 of the Indenture, state the amount (in
principal amount):
$
Date: Signed:
------------------ ---------------------------
(Sign exactly as your name appears on the
other side of the Note)
Signature Guarantee:
---------------------------------
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Note Registrar, which requirements include
membership or participation in the Security Transfer Agent Medallion Program
("STAMP") or such other "signature guarantee program" as may be determined by
-----
the Note Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
11
<PAGE>
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE
The following increases or decreases in this Global Note have been
made:
<TABLE>
<CAPTION>
Date of Amount of Amount of Principal amount Signature
Exchange decreases in increases in of this Global Note of authorized
Principal Principal following such officer or Trustees
Amount of this Amount of this decreases or of Securities
Global Note Global Note increases Custodian
<S> <C> <C> <C> <C>
</TABLE>
12
<PAGE>
Exhibit 4.3
First Supplemental Indenture
----------------------------
FIRST SUPPLEMENTAL INDENTURE dated as of May 21, 1998 (this "Supplemental
------------
Indenture"), among Dynatech Corporation ("Holding"), a corporation organized
- --------- -------
under the laws of the Commonwealth of Massachusetts, Telecommunications
Techniques Co., LLC ("TTC"), a Delaware limited liability company, and State
---
Street Bank and Trust Company, a Massachusetts trust company, as trustee (the
"Trustee") under the Indenture referred to below.
- --------
W I T N E S S E T H:
WHEREAS, Holding and TTC Merger Co. LLC ("TTC Merger Co.") are issuers
--------------
under the Indenture, dated as of the date hereof (as amended, supplemented,
waived or otherwise modified from time to time the "Indenture"), providing for,
---------
inter alia, the issuance of an aggregate principal amount of $275,000,000 of 9
- ----- ----
3/4% Senior Subordinated Notes Due 2008 (the "Notes," which term shall have the
-----
meaning ascribed thereto in the Indenture);
WHEREAS, Holding wishes to transfer to TTC the capital stock of all of its
subsidiaries (other than Holding's interests in TTC) (the "Subsidiary
----------
Transfer"); and
WHEREAS, in consideration of, among other things, (i) the making available
-
to TTC of a revolving credit facility under the Senior Credit Agreement (as
defined in the Indenture), (ii) the Subsidiary Transfer and (iii) the grant by
-- ---
Holding of the Parent Guarantee (as defined in the Indenture), Holding wishes to
assign, transfer and convey to TTC all of Holding's rights, and TTC wishes to
assume from Holding and TTC Merger Co. all of their respective rights,
obligations, covenants, agreements, duties and liabilities, under the Indenture
and the Notes and any and all agreements, certificates and other documents
executed by Holding and TTC Merger Co., in connection therewith, other than the
Parent Guarantee.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, TTC,
Holding and the Trustee mutually covenant and agree for the benefit of the
Holders of the Notes as follows:
1. Defined Terms. As used in this Supplemental Indenture, terms defined
-------------
in the Indenture or in the preamble or recitals hereto are used herein as
therein defined. The words "herein," "hereof" and "hereby" and other words of
similar import used in this
<PAGE>
Supplemental Indenture refer to this Supplemental Indenture as a whole and not
to any particular section hereof.
2. Assignment of Rights and Obligations. Holding hereby irrevocably
------------------------------------
assigns, transfers and conveys to TTC all of Holding's rights and powers,
obligations, covenants, agreements, duties and liabilities under and with
respect to the Indenture and the Notes and any and all agreements, certificates
and other documents executed by Holding in connection therewith, other than the
Parent Guarantee.
3. Assumption of Agreements and Obligations. TTC hereby expressly assumes
----------------------------------------
and confirms its receipt of all of the rights and powers, and assumes, confirms
and agrees to perform and observe all of the obligations, covenants, agreements,
duties and liabilities of Holding and TTC Merger Co. under and with respect to
the Indenture and the Notes and any and all agreements, certificates and other
documents executed by Holding or TTC Merger Co. in connection therewith, other
than the Parent Guarantee, as fully as if TTC were originally the obligor in
respect thereof and the signatory thereto.
4. Agreement to Guarantee. Holding hereby confirms its Parent Guarantee
----------------------
and agrees hereby, as a primary obligor and not merely as surety, irrevocably to
fully and unconditionally, guarantee, on a senior subordinated basis, the
obligations of TTC under the Indenture and the Notes on the terms and subject to
the conditions set forth in Article 13 of the Indenture and to be bound by (and
shall be entitled to the benefits of) all other applicable provisions of the
Indenture as the Parent Guarantor. The Parent Guarantee is subject to the
subordination provisions of Article 15 of the Indenture.
5. Termination, Release and Discharge of Parent Guarantee. The Parent
------------------------------------------------------
Guarantee shall terminate and be of no further force or effect, and Holding
shall be released and discharged from all obligations in respect of such Parent
Guarantee, as and when provided in Section 1303 of the Indenture.
6. Parties. Nothing in this Supplemental Indenture is intended or shall
-------
be construed to give any Person, other than the Holders and the Trustee, any
legal or equitable right, remedy or claim under or in respect of Holding's
Parent Guarantee hereunder or any provision contained herein or in Article 13 of
the Indenture.
7. Governing Law. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND
-------------
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO ANY PRINCIPLES OF CONFLICT OF LAWS TO THE EXTENT THAT THE APPLICATION
OF THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. THE
2
<PAGE>
TRUSTEE, THE COMPANY, ANY OTHER OBLIGOR IN RESPECT OF THE NOTES AND (BY THEIR
ACCEPTANCE OF THE NOTES) THE HOLDERS, AGREE TO SUBMIT TO THE JURISDICTION OF ANY
UNITED STATES FEDERAL OR STATE COURT LOCATED IN THE BOROUGH OF MANHATTAN, IN THE
CITY OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
INDENTURE OR THE NOTES.
8. 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 Notes heretofore or hereafter
authenticated and delivered shall be bound hereby. The Trustee makes no
representation or warranty as to the validity or sufficiency of this
Supplemental Indenture.
9. Holding as Agent for TTC. To the extent permitted by the TIA and any
------------------------
other applicable law, TTC hereby appoints Holding as its attorney-in-fact, which
appointment is coupled with an interest, to take any action that this Indenture
may require or permit TTC to take, including
(i) the giving of any certification, opinion, order, request or
consent (whether by Officer's Certificate, Opinion of Counsel, Company
Order, Authentication Order, Company Request, Company Consent or
otherwise),
(ii) the giving of any notice (including under Section 1001 of the
------------
Indenture), and
(iii) the setting of any record date,
such appointment to remain in effect until TTC shall otherwise notify the
Trustee in writing.
10. Counterparts. The parties hereto may sign one or more copies of
------------
this Supplemental Indenture in counterparts, all of which together shall
constitute one and the same agreement.
11. Headings. The section headings herein are for convenience of
--------
reference only and shall not be deemed to alter or affect the meaning or
interpretation of any provisions hereof.
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the date first above written.
TELECOMMUNICATIONS TECHNIQUES CO., LLC
By: Dynatech Corporation, its sole member
By:__________________________________________
Name:
Title:
DYNATECH CORPORATION, as Guarantor under the Parent
Guarantee
By:__________________________________________________
Name:
Title:
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:__________________________________________________
Name:
Title:
4
<PAGE>
EXHIBIT 4.4
$275,000,000
TELECOMMUNICATIONS TECHNIQUES CO., LLC
9 3/4% SENIOR SUBORDINATED NOTES DUE 2008
REGISTRATION RIGHTS AGREEMENT
-----------------------------
May 21, 1998
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
c/o Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, New York 10010-3629
Dear Sirs:
After the effective time of the merger of TTC Merger Co. LLC, a
Delaware limited liability company ("TTC Merger Co"), with and into
Telecommunications Techniques Co., LLC, a Delaware limited liability company
("TTC"), and the assumption of obligations of TTC Merger Co by and the
assignment of certain obligations by Dynatech Corporation, a Massachusetts
corporation ("Dynatech", and together with TTC, the "Company"), to TTC, TTC will
be the primary obligor on the $275,000,000 aggregate principal amount of 9 3/4%
Senior Subordinated Notes Due 2008, to be fully and unconditionally guaranteed
by Dynatech (the "Initial Securities") and to be issued to Credit Suisse First
Boston Corporation and J.P. Morgan Securities Inc. (collectively, the "Initial
Purchasers"), upon the terms set forth in a purchase agreement dated May 14,
1998 (the "Purchase Agreement"). The Initial Securities will be issued pursuant
to an Indenture, dated as of May 21, 1998, (the "Indenture") among the Dynatech,
TTC Merger Co and State Street Bank and Trust Company, as trustee (the
"Trustee"), as supplemented by the First Supplemental Indenture, dated as of May
21, 1998, among Dynatech, TTC and the Trustee. The obligations of the Company
hereunder are joint and several obligations of Dynatech and TTC.
The Company agrees with the Initial Purchasers, for the benefit of the
holders of the Initial Securities (including, without limitation, the Initial
Purchasers), the Exchange Securities (as defined below) and the Private Exchange
Securities (as defined below) (collectively the "Holders"), as follows:
1. Registered Exchange Offer. The Company shall, at its own cost,
prepare and use its reasonable best efforts to, not later than 120 days (or if
the 120th day is not a business day, the first business day thereafter) after
the date of original issue of the Initial Securities (the "Issue Date"), file
with the Securities and Exchange Commission (the "Commission") a registration
statement (the "Exchange Offer Registration Statement") on an appropriate form
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to a proposed offer (the "Registered Exchange Offer") to those Holders
of Initial Securities that are Transfer Restricted Securities (as defined in
Section 6 hereof) who are not prohibited by any law or policy or interpretation
of the Commission or its staff from participating in the Registered Exchange
Offer, to issue and deliver to such Holders, in exchange
<PAGE>
for the Initial Securities, a like aggregate principal amount of debt securities
(the "Exchange Securities") of TTC issued under the Indenture and identical in
all material respects to the Initial Securities (except for the transfer
restrictions relating to the Initial Securities and the provisions relating to
the matters described in Section 6 hereof) that would be registered under the
Securities Act. The Company shall use its reasonable best efforts to cause such
Exchange Offer Registration Statement to become effective under the Securities
Act within 150 days (or if the 150th day is not a business day, the first
business day thereafter) after the Issue Date of the Initial Securities and to
keep the Exchange Offer Registration Statement effective for not less than 10
business days (or longer, if required by applicable law) after the date notice
of the Registered Exchange Offer is mailed to the Holders (such period being
called the "Exchange Offer Registration Period"). For purposes hereof,
"business day" shall mean any day other than a Saturday or Sunday, and other
than a holiday on which the Commission shall not be open for the transaction of
business.
If the Company effects the Registered Exchange Offer, the Company will
be entitled to close the Registered Exchange Offer on the last day of the
Exchange Offer Registration Period, provided that the Company has accepted all
the Initial Securities theretofore validly tendered in accordance with the terms
of the Registered Exchange Offer.
Following the declaration of the effectiveness of the Exchange Offer
Registration Statement, the Company shall promptly commence the Registered
Exchange Offer, it being the objective of such Registered Exchange Offer,
subject to the terms and conditions hereof, to enable each Holder of Initial
Securities that are Transfer Restricted Securities electing to exchange the
Initial Securities for Exchange Securities (assuming that such Holder is not an
affiliate of the Company within the meaning of the Securities Act, acquires the
Exchange Securities in the ordinary course of such Holder's business and has no
arrangements with any person to participate in the distribution of the Exchange
Securities and is not prohibited by any law or policy or interpretation of the
Commission or its staff from participating in the Registered Exchange Offer) to
trade such Exchange Securities from and after their receipt without any
limitations or restrictions under the Securities Act.
The Company and the Initial Purchasers acknowledge that, pursuant to
current interpretations by the Commission's staff of Section 5 of the Securities
Act, in the absence of an applicable exemption therefrom, (i) each Holder that
is a broker-dealer electing to exchange Initial Securities in the Registered
Exchange Offer, acquired for its own account as a result of market making
activities or other trading activities, for Exchange Securities (a
"Participating Broker-Dealer"), is required to deliver a prospectus containing
information substantially to the effect set forth in Annex A hereto, Annex B
hereto and Annex C hereto in the appropriate sections of such prospectus in
connection with a sale of any such Exchange Securities received by such
Participating Broker-Dealer pursuant to the Registered Exchange Offer and (ii)
an Initial Purchaser that elects to sell Private Exchange Securities (as defined
below) acquired in exchange for Initial Securities constituting any portion of
an unsold allotment, is required to deliver a prospectus containing the
information required by Items 507 or 508 of Regulation S-K under the Securities
Act, as applicable, in connection with such sale.
The Company shall use its reasonable best efforts to keep the Exchange
Offer Registration Statement effective and to amend and supplement the
prospectus contained therein, in order to permit such prospectus to be delivered
by dealers subject to the prospectus delivery requirements of Section 4(3) of
the Securities Act and Rule 174 thereunder (for such period of time as shall be
required thereby for such delivery in order to resell the Exchange Securities),
and shall make such prospectus and any amendment or supplement thereto available
to any Participating Broker-
2
<PAGE>
Dealer for use in connection with any resale of any Exchange Securities, in
either case for a period of not more than 90 days after the consummation of the
Registered Exchange Offer.
If, upon consummation of the Registered Exchange Offer, any Initial
Purchaser holds Initial Securities acquired by it as part of its initial
distribution, TTC, simultaneously with the delivery of the Exchange Securities
pursuant to the Registered Exchange Offer, shall issue and deliver to such
Initial Purchaser upon the written request of such Initial Purchaser, in
exchange (the "Private Exchange") for the Initial Securities held by such
Initial Purchaser, a like principal amount of debt securities of TTC issued
under the Indenture and identical in all material respects (including the
existence of restrictions on transfer under the Securities Act and the
securities laws of the several states of the United States, but excluding
provisions relating to the matters described in Section 6 hereof) to the Initial
Securities (the "Private Exchange Securities"). The Initial Securities, the
Exchange Securities and the Private Exchange Securities are herein collectively
called the "Securities".
In connection with the Registered Exchange Offer, the Company shall:
(a) mail to each Holder a copy of the prospectus forming part of
the Exchange Offer Registration Statement, together with an
appropriate letter of transmittal and related documents;
(b) keep the Registered Exchange Offer open for not less than 10
business days (or longer, if required by applicable law) after the
date notice thereof is mailed to the Holders;
(c) utilize the services of a depositary for the Registered
Exchange Offer with an address in the Borough of Manhattan, The City
of New York, which may be the Trustee or an affiliate of the Trustee;
(d) permit Holders to withdraw tendered Securities at any time
prior to the close of business, New York time, on the last business
day on which the Registered Exchange Offer shall remain open; and
(e) otherwise comply in all material respects with all applicable
securities laws.
As soon as practicable after the close of the Registered Exchange
Offer or the Private Exchange, as the case may be, the Company shall:
(x) accept for exchange all the Securities validly tendered and
not withdrawn pursuant to the Registered Exchange Offer and the
Private Exchange;
(y) deliver to the Trustee for cancellation all the Initial
Securities so accepted for exchange; and
(z) request the Trustee to authenticate and deliver promptly, to
each Holder of such Initial Securities, Exchange Securities or Private
Exchange Securities, as the case may be, equal in principal amount to
such Initial Securities of such Holder so accepted for exchange.
3
<PAGE>
The Indenture will provide that all the Securities will vote and
consent together on all matters as one class and that none of the Securities
will have the right to vote or consent as a class separate from one another on
any matter.
Interest on each Exchange Security and Private Exchange Security
issued pursuant to the Registered Exchange Offer and in the Private Exchange
will accrue from the last interest payment date to which interest was paid or
duly provided for on the Initial Securities surrendered in exchange therefor
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date) or, if no interest
has been paid on the Initial Securities, from the Issue Date.
Each Holder participating in the Registered Exchange Offer shall be
required to represent to the Company that at the time of the consummation of the
Registered Exchange Offer (i) any Exchange Securities received by such Holder
will be acquired in the ordinary course of business, (ii) such Holder will have
no arrangements or understanding with any person to participate in the
distribution of the Securities or the Exchange Securities within the meaning of
the Securities Act, (iii) such Holder is not an "affiliate," as defined in Rule
405 of the Securities Act, of the Company or if it is an affiliate, such Holder
will comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable, (iv) if such Holder is not a broker-
dealer, that it is not engaged in, and does not intend to engage in, the
distribution of the Exchange Securities, (v) if such Holder is a broker-dealer,
that it will receive Exchange Securities for its own account in exchange for
Initial Securities that were acquired as a result of market-making activities or
other trading activities and that it will deliver a prospectus in connection
with any resale of such Exchange Securities, and (vi) that it is not acting on
behalf of any person who could not truthfully make the foregoing
representations.
Notwithstanding any other provisions hereof, the Company will use its
reasonable best efforts to ensure that (i) any Exchange Offer Registration
Statement and any amendment thereto and any prospectus forming part thereof and
any supplement thereto complies in all material respects with the Securities Act
and the rules and regulations thereunder, (ii) any Exchange Offer Registration
Statement and any amendment thereto does not, when it becomes effective, contain
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
and (iii) any prospectus forming part of any Exchange Offer Registration
Statement, and any supplement to such prospectus, does not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
Upon consummation of the Registered Exchange Offer in accordance with
this Section 1 (whether or not the actions or events specified in the first
sentence of this Section 1 occur within the time periods specified therefor) the
provisions of this Agreement shall continue to apply (to the extent applicable)
solely with respect to Securities that (i) were not eligible to be exchanged in
the Registered Exchange Offer (other than due to the status of the Holder
thereof as an affiliate of the Company or due to such Holder's inability to make
the representations referred to in the third to last paragraph of this Section
1) and have not been exchanged for Private Exchange Securities, (ii) were
received by the Holder thereof (other than a Participating Broker-Dealer) in the
Registered Exchange Offer but are not freely tradeable on the date of such
exchange (other than due to the status of such Holder as an affiliate of the
Company or due to such Holder's inability to make the representations referred
to in the third to last paragraph of this Section 1) or (iii) are Private
Exchange Securities and Exchange Securities held by Participating Broker-
Dealers, and the Company shall have no further obligation to
4
<PAGE>
register Securities (other than those Securities referred to in clause (i) or
(ii) above and Private Exchange Securities) pursuant to Section 2 of this
Agreement.
2. Shelf Registration. If, (i) because of any change in law or in
applicable interpretations thereof by the staff of the Commission, the Company
is not permitted to effect a Registered Exchange Offer, as contemplated by
Section 1 hereof, (ii) the Registered Exchange Offer is not consummated within
180 days of the Issue Date, (iii) any Initial Purchaser so requests with respect
to the Initial Securities (or the Private Exchange Securities) not eligible to
be exchanged for Exchange Securities in the Registered Exchange Offer and held
by it following consummation of the Registered Exchange Offer or (iv) any Holder
(other than a Participating Broker Dealer) is not eligible to participate in the
Registered Exchange Offer or, in the case of any Holder (other than a
Participating Broker Dealer) that participates in the Registered Exchange Offer,
such Holder does not receive freely tradeable Exchange Securities on the date of
the exchange (other than, in either case, due solely to the status of such
Holder as an affiliate of the Company or due to such Holder's inability to make
the representations referred to in the third to last paragraph of Section 1
hereof), the Company shall take the following actions:
(a) The Company shall, at its cost, use its reasonable best efforts to
file with the Commission as promptly as reasonably practicable, and thereafter
shall use its reasonable best efforts to be declared effective, a registration
statement (the "Shelf Registration Statement" and, together with the Exchange
Offer Registration Statement, a "Registration Statement") on an appropriate form
under the Securities Act relating to the offer and sale of the Transfer
Restricted Securities by the Holders thereof from time to time in accordance
with the methods of distribution set forth in the Shelf Registration Statement
and Rule 415 under the Securities Act (hereinafter, the "Shelf Registration");
provided, however, that no Holder (other than an Initial Purchaser) shall be
- -------- -------
entitled to have the Securities held by it covered by such Shelf Registration
Statement unless such Holder agrees in writing to be bound by all the provisions
of this Agreement applicable to such Holder.
(b) The Company shall use its reasonable best efforts to keep the
Shelf Registration Statement continuously effective in order to permit the
prospectus included therein to be lawfully delivered by the Holders of the
relevant Securities, for a period (the "Shelf Registration Period") of two years
(or one year in the case of a shelf registration effected at the request of the
Initial Purchasers) from the date of its effectiveness or such shorter period
that will terminate when all the Securities covered by the Shelf Registration
Statement (i) have been sold pursuant thereto or (ii) are no longer restricted
securities (as defined in Rule 144 under the Securities Act, or any successor
rule thereof). The Company shall be deemed not to have used its reasonable best
efforts to keep the Shelf Registration Statement effective during the requisite
period if it voluntarily takes any action that would result in Holders of
Securities covered thereby not being able to offer and sell such Securities
during that period, unless (i) such action is required by applicable law, (ii)
- --
such action is taken by the Company in good faith and for valid business reasons
(not including avoidance of the Company's obligations hereunder), including the
acquisition or divestiture of assets, so long as the Company promptly thereafter
complies with the requirements of Section 3(j) hereof, if applicable, or (iii)
---
such action occurs following consummation of the Registered Exchange Offer.
(c) Notwithstanding any other provisions of this Agreement to the
contrary, the Company shall use its reasonable best efforts to cause the Shelf
Registration Statement and the related prospectus and any amendment or
supplement thereto, as of the effective date of the Shelf Registration
Statement, amendment or supplement, (i) to comply in all material respects with
the applicable requirements of the Securities Act and the rules and regulations
of the Commission and (ii) not to contain any untrue statement of a material
fact or omit to state a material fact required to be stated
5
<PAGE>
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading (in any such case,
other than with respect to information included therein in reliance upon or in
conformity with written information furnished to the Company by or on behalf of
any Holder specifically for use therein).
3. Registration Procedures. In connection with any Shelf
Registration contemplated by Section 2 hereof and, to the extent applicable, any
Registered Exchange Offer contemplated by Section 1 hereof, the following
provisions shall apply:
(a) The Company shall (i) furnish to each Initial Purchaser, prior to
the filing thereof with the Commission, a copy of the Registration Statement and
each amendment thereof and each supplement, if any, to the prospectus included
therein and, in the event that an Initial Purchaser (with respect to any portion
of an unsold allotment from the original offering) is participating in the Shelf
Registration Statement, the Company shall use its reasonable best efforts to
reflect in each such Shelf Registration Statement or related amendment or
supplement, when so filed with the Commission, such comments as such Initial
Purchaser reasonably may propose, (ii) if applicable, include information
substantially to the effect set forth in Annex A hereto, Annex B hereto and
Annex C hereto in the appropriate sections of the prospectus forming a part of
the Exchange Offer Registration Statement and include information substantially
to the effect set forth in Annex D hereto in the Letter of Transmittal delivered
pursuant to the Registered Exchange Offer, (iii) in the case of any Shelf
Registration Statement, if requested by an Initial Purchaser that proposes to
sell Securities pursuant to the Shelf Registration Statement as a selling
securityholder, include the information required by Items 507 or 508 of
Regulation S-K under the Securities Act, as applicable, in the prospectus
forming a part of the Shelf Registration Statement, (iv) include within the
prospectus contained in the Exchange Offer Registration Statement, in a section
entitled "Plan of Distribution" or other appropriate heading, a summary
statement reasonably acceptable to the Initial Purchasers, of the positions
taken or policies made by the staff of the Commission with respect to the
potential "underwriter" status of any broker-dealer that is the beneficial owner
(as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) of Exchange Securities received by such broker-dealer in
the Registered Exchange Offer, and (v) in the case of a Shelf Registration
Statement, include the names of the Holders who propose to sell Securities
pursuant to the Shelf Registration Statement as selling securityholders (the
"Selling Holders").
(b) The Company shall advise each of the Initial Purchasers, the
Selling Holders (in the case of a Shelf Registration Statement) and any
Participating Broker-Dealer (in the case of any Exchange Offer Registration
Statement) from whom the Company has received prior written notice that it will
be a Participating Broker-Dealer in the Registered Exchange Offer, and, if
requested by any such person, confirm such advice in writing (which advice
pursuant to clauses (ii)-(v) hereof shall be accompanied (if applicable) by an
instruction to suspend the use of the relevant prospectus until the requisite
changes have been made):
(i) when the Registration Statement or any amendment thereto has
been filed with the Commission and when the Registration Statement or
any post-effective amendment thereto has become effective;
(ii) of any request by the Commission for amendments or
supplements to the Registration Statement or the prospectus included
therein or for additional information;
6
<PAGE>
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose;
(iv) of the receipt by the Company or its legal counsel of any
notification with respect to the suspension of the qualification of
the Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and
(v) of the happening of any event that requires the Company to
make changes in the Registration Statement or the prospectus in order
that the Registration Statement (as of its effective date) or the
prospectus do not contain an untrue statement of a material fact nor
omit to state a material fact required to be stated therein or
necessary to make the statements therein (in the case of the
prospectus, in light of the circumstances under which they were made)
not misleading.
(c) The Company shall make every reasonable effort to obtain the
withdrawal at the earliest possible time, of any order suspending the
effectiveness of the Registration Statement.
(d) The Company shall furnish to each Holder of Transfer Restricted
Securities included within the coverage of the Shelf Registration, without
charge, at least one copy of the Shelf Registration Statement and any post-
effective amendment thereto, including financial statements and schedules, and,
if the Holder so requests in writing, all exhibits thereto (including those, if
any, incorporated by reference).
(e) The Company shall deliver to each Participating Broker-Dealer and
each Initial Purchaser, without charge, at least one copy of the Exchange Offer
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules, and, if any Initial Purchaser requests, all
exhibits thereto (including those, if any, incorporated by reference).
(f) The Company shall, during the Shelf Registration Period, deliver
to each Selling Holder of Securities included within the coverage of the Shelf
Registration Statement, without charge, as many copies of the prospectus
(including each preliminary prospectus) included in the Shelf Registration
Statement and any amendment or supplement thereto as such person may reasonably
request. The Company consents, subject to the provisions of this Agreement, to
the use of the prospectus or any amendment or supplement thereto by each of the
Selling Holders of the Transfer Restricted Securities in connection with the
offering and sale of the Transfer Restricted Securities covered by the
prospectus, or any amendment or supplement thereto, included in the Shelf
Registration Statement.
(g) The Company shall, during the Exchange Offer Registration Period,
deliver to each Initial Purchaser, and any Participating Broker-Dealer, without
charge, as many copies of the final prospectus included in the Exchange Offer
Registration Statement and any amendment or supplement thereto as such person
may reasonably request. The Company consents, subject to the provisions of this
Agreement, to the use of such prospectus or any amendment or supplement thereto,
during the 90 days following the consummation of the Registered Exchange Offer,
by any Participating Broker-Dealer required to deliver a prospectus following
the Registered Exchange Offer in connection with the offering and sale of the
Exchange Securities covered by the prospectus, or any amendment or supplement
thereto, included in such Exchange Offer Registration Statement.
7
<PAGE>
(h) Prior to any public offering of the Securities pursuant to any
Shelf Registration Statement, the Company shall use its reasonable best efforts
to register or qualify or cooperate with the Selling Holders of the Securities
included therein and their respective counsel in connection with the
registration or qualification of the Securities for offer and sale under the
securities or "blue sky" laws of such states of the United States as any such
Holder of the Securities reasonably requests in writing and do any and all other
acts or things necessary or advisable to enable the offer and sale in such
jurisdictions of the Securities covered by such Registration Statement;
provided, however, that the Company shall not be required to (i) qualify
- -------- -------
generally to do business in any jurisdiction where it is not then so qualified
or (ii) take any action that would subject it to general service of process or
to taxation in any jurisdiction where it is not then so subject.
(i) The Company shall cooperate with the Selling Holders of the
Securities to facilitate the timely preparation and delivery of certificates
representing the Transfer Restricted Securities to be sold pursuant to any Shelf
Registration Statement free of any restrictive legends relating to transfer
restrictions (and not required by stock exchange rule or depository rule or
usage) and in such denominations and registered in such names as the Holders may
reasonably request in writing a reasonable period of time prior to sales of such
Securities pursuant to such Shelf Registration Statement.
(j) Upon the occurrence of any event contemplated by paragraphs (ii)
through (v) of Section 3(b) above during the period for which the Company is
required to maintain an effective Registration Statement, the Company shall use
its reasonable best efforts to promptly prepare and file a post-effective
amendment to the Registration Statement or a supplement to the related
prospectus and any other required document so that, as thereafter delivered to
Holders of the Securities or purchasers of Securities, the prospectus will not
contain an untrue statement of a material fact or omit to state any 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. If
the Company notifies the Initial Purchasers, the Selling Holders of the
Securities or any known Participating Broker-Dealer in accordance with
paragraphs (ii) through (v) of Section 3(b) above to suspend the use of the
prospectus until the requisite changes to the prospectus have been made, then
the Initial Purchasers, such Holders of the Securities or any such Participating
Broker-Dealer, as applicable, shall suspend use of such prospectus. The period
of effectiveness of the Shelf Registration Statement provided for in Section
2(b) above or the Exchange Offer Registration Statement provided for in Section
1 above, as applicable, shall be extended by the number of days from and
including the date of giving of such notice to and including the date when the
Company shall have mailed to the Selling Holders of the Securities or any known
Participating Broker-Dealer, as applicable, such amended or supplemented
prospectus pursuant to this Section 3(j).
(k) Not later than the effective date of the applicable Registration
Statement, the Company will provide a CUSIP number for the Initial Securities,
the Exchange Securities or the Private Exchange Securities, as the case may be,
and provide the applicable trustee with printed certificates for the Initial
Securities, the Exchange Securities or the Private Exchange Securities, as the
case may be, in a form eligible for deposit with The Depository Trust Company.
(l) The Company will make generally available to its securityholders
(or otherwise provide in accordance with Section 11(a) of the Securities Act) an
earnings statement satisfying the provisions of Section 11(a) of the Securities
Act (which need not be audited), no later than 45 days after the end of a 12-
month period (or 90 days, if such period is a fiscal year) beginning with the
first month of the Company's first fiscal quarter commencing after the effective
date of the Registration Statement, which statement shall cover such 12-month
period.
8
<PAGE>
(m) The Company shall use its reasonable best efforts to cause the
Indenture to be qualified under the Trust Indenture Act of 1939, as amended, in
a timely manner and containing such changes, if any, as shall be necessary for
such qualification. In the event that such qualification would require the
appointment of a new trustee under the Indenture, the Company shall use its
reasonable best efforts to appoint a new trustee thereunder pursuant to the
applicable provision of the Indenture.
(n) The Company may require each Holder of Securities to be sold
pursuant to the Shelf Registration Statement to furnish to the Company such
information regarding the Holder and the distribution of the Securities as the
Company may from time to time reasonably require for inclusion in the Shelf
Registration Statement, and the Company may exclude from such registration the
Securities of any Holder that unreasonably fails to furnish such information
within a reasonable time after receiving such request.
(o) In the case of any Shelf Registration Statement, the Company shall
enter into such customary agreements (including, if requested, an underwriting
agreement in customary form) and use its reasonable best efforts to take all
such other action, if any, as Selling Holders of a majority in aggregate
principal amount of the Securities being sold pursuant to the Shelf Registration
Statement (the "Majority Selling Holders") or the managing underwriters, if any,
in such offering shall reasonably request in order to facilitate the disposition
of the Securities pursuant to such Shelf Registration Statement.
(p) In the case of any Shelf Registration Statement, the Company shall
(i) make reasonably available for inspection by a representative of, and Special
Counsel (as defined below) acting for, the Majority Selling Holders and any
underwriter participating in any disposition of Securities pursuant to the Shelf
Registration Statement (such representative, Special Counsel or underwriter, an
"Inspector"), all relevant financial and other records, pertinent corporate
documents and properties of the Company and (ii) use its reasonable best efforts
to cause the Company's officers, directors, employees, accountants and auditors
to supply all relevant information reasonably requested by such Inspector in
connection with the Shelf Registration Statement, in each case, as shall be
reasonably necessary to enable such persons to conduct a reasonable
investigation within the meaning of Section 11 of the Securities Act; provided,
--------
however, that the foregoing inspection and information gathering shall be
- -------
coordinated by the Inspectors. Each Inspector will be required to agree in
writing, pursuant to a confidentiality agreement in form and substance
reasonably satisfactory to the Company and such Inspector, that (i) information
obtained by such Inspector as a result of such inspections shall be deemed
confidential and shall not be used by such Inspector as the basis for any market
transactions in the securities of any of the Company and its subsidiaries unless
and until such information is made generally available to the public (other than
by or through any Inspector) and (ii) such Inspector will, upon learning that
disclosure of such records is sought in a court of competent jurisdiction, give
notice to the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of the records deemed confidential.
(q) In the case of any Shelf Registration Statement, the Company, if
requested by the Majority Selling Holders of Securities covered thereby, shall
use its reasonable best efforts to cause (i) its counsel to deliver an opinion
relating to the Securities in customary form, addressed to the Selling Holders
of Securities covered thereby, (ii) its officers to execute and deliver all
customary documents and certificates reasonably requested by any managing
underwriters of the applicable Securities and (iii) its independent public
accountants to provide a comfort letter in customary form addressed to the
Selling Holders of Securities covered thereby, subject to receipt of appropriate
documentation as contemplated, and only if permitted, by Statement of Auditing
Standards No. 72.
9
<PAGE>
(r) If a Registered Exchange Offer or a Private Exchange is to be
consummated, upon delivery of the Initial Securities by Holders to the Company
(or to such other Person as directed by the Company) in exchange for the
Exchange Securities or the Private Exchange Securities, as the case may be, the
Company shall mark, or caused to be marked, on the Initial Securities so
exchanged that such Initial Securities are being canceled in exchange for the
Exchange Securities or the Private Exchange Securities, as the case may be; in
no event shall the Initial Securities be marked as paid or otherwise satisfied.
4. Registration Expenses. The Company shall bear all fees and
expenses incurred by it in connection with the performance of its obligations
under Sections 1 through 3 hereof, whether or not the Registered Exchange Offer
or a Shelf Registration Statement is filed or becomes effective, and, in the
event of a Shelf Registration Statement, shall reimburse the Holders of the
Securities covered thereby for the reasonable fees and disbursements of one firm
of counsel designated by the Holders of a majority in principal amount of the
Securities covered thereby (the "Special Counsel") to act as counsel for the
Holders of the Securities in connection therewith. The Initial Purchasers shall
bear any fees and expenses of their counsel incurred in connection with the
Registered Exchange Offer.
5. Indemnification. (a) The Company agrees to indemnify and hold
harmless (in the case of a Shelf Registration Statement) each Selling Holder of
Securities covered thereby and each person, if any, who controls such Holder
within the meaning of the Securities Act or the Exchange Act, and (in the case
of an Exchange Offer Registration Statement, in connection with any delivery of
the prospectus contained therein by a Participating Broker-Dealer) any
Participating Broker-Dealer and each person, if any, who controls such
Participating Broker-Dealer within the meaning of the Securities Act or the
Exchange Act (each such Holder, any such Participating Broker-Dealer and such
controlling persons are referred to collectively as the "Indemnified Parties")
from and against any losses, claims, damages or liabilities, joint or several,
or any actions in respect thereof (including, but not limited to, any losses,
claims, damages, liabilities or actions relating to purchases and sales of the
Securities) to which each Indemnified Party may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such losses, claims,
damages, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in such
applicable Registration Statement or prospectus forming part thereof or in any
amendment or supplement thereto or (in the case of such Shelf Registration
Statement) in any preliminary prospectus relating to a Shelf Registration
Statement, or arise out of, or are based upon, the omission or alleged omission
to state therein 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, and shall reimburse the Indemnified Parties for any legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability or action in respect
thereof; provided, however, that (i) the Company shall not be liable in any such
-------- -------
case to the extent that such loss, claim, damage or liability arises out of or
is based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in a Registration Statement or prospectus forming part
thereof or in any amendment or supplement thereto or in any preliminary
prospectus relating to a Shelf Registration Statement in reliance upon and in
conformity with written information pertaining to such Holder and furnished to
the Company by or on behalf of such Holder specifically for inclusion therein
and (ii) with respect to any untrue statement or omission or alleged untrue
statement or omission made in any prospectus, or any amendment or supplement
thereto, or any preliminary prospectus relating to a Shelf Registration
Statement, the indemnity agreement contained in this subsection (a) shall not
inure to the benefit of any Holder or Participating Broker-Dealer from whom the
person asserting any such losses, claims, damages or liabilities purchased the
Securities concerned to the extent that either (x) a prospectus relating to such
Securities was required to be
10
<PAGE>
delivered by such Holder or Participating Broker-Dealer under the Securities Act
in connection with such purchase and there was not sent or given to such person,
at or prior to the written confirmation of the sale of such Securities to such
person, a copy of the final prospectus (in the case of any such preliminary
prospectus) or a prospectus amendment or supplement (in any other case) if the
Company had previously furnished copies thereof to such Holder or Participating
Broker-Dealer, and such untrue statement or omission or alleged untrue statement
or omission was corrected in such final prospectus or prospectus amendment or
supplement, or (y) at the time of such purchase such Holder or Participating
Broker-Dealer had received advice from the Company that the use of such
prospectus, amendment, supplement or preliminary prospectus was suspended as
provided in Section 3(b); provided further, however, that this indemnity
-------- ------- -------
agreement will be in addition to any liability that the Company may otherwise
have to such Indemnified Party.
(b) Each Holder of the Securities, severally and not jointly, will
indemnify and hold harmless the Company and each person, if any, who controls
the Company within the meaning of the Securities Act or the Exchange Act from
and against any losses, claims, damages or liabilities, joint or several, or any
actions in respect thereof, to which the Company or any such controlling person
may become subject under the Securities Act, the Exchange Act or otherwise,
insofar as such losses, claims, damages, liabilities or actions arise out of or
are based upon any untrue statement or alleged untrue statement of a material
fact contained in a Registration Statement or prospectus forming part thereof or
in any amendment or supplement thereto or in any preliminary prospectus relating
to a Shelf Registration Statement, or arise out of or are based upon the
omission or alleged omission to state therein a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, but in each case only to the extent that the untrue
statement or omission or alleged untrue statement or omission was made in
reliance upon and in conformity with written information pertaining to such
Holder and furnished to the Company by or on behalf of such Holder specifically
for inclusion therein; and, subject to the limitation set forth immediately
preceding this clause, shall reimburse the Company for any legal or other
expenses reasonably incurred by the Company or any such controlling person in
connection with investigating or defending any loss, claim, damage, liability or
action in respect thereof. This indemnity agreement will be in addition to any
liability that such Holder may otherwise have to the Company or any of its
controlling persons.
(c) Promptly after receipt by an indemnified party under this Section
5 of notice of the commencement of any action or proceeding (including a
governmental investigation), such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under this Section 5,
notify the indemnifying party of the commencement thereof, but the omission so
to notify the indemnifying party will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than the
indemnification obligation provided in subsection (a) or (b) above. In case any
such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, 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 will not be
liable to such indemnified party under this Section 5 for any legal or other
expenses, other than reasonable costs of investigation, subsequently incurred by
such indemnified party in connection with the defense thereof. No indemnifying
party shall, without the prior written consent of the indemnified party, effect
any settlement of any pending or threatened action in which any indemnified
party is a party to the extent such settlement is binding upon such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on any claims that are the subject matter
of such action.
11
<PAGE>
(d) If the indemnification provided for in this Section 5 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to in
subsection (a) or (b) above (i) in such proportion as is appropriate to reflect
the relative benefits received by the indemnifying party or parties on the one
hand and the indemnified party on the other, or (ii) if the allocation provided
by the foregoing clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the indemnifying party or
parties on the one hand and the indemnified party on the other in connection
with the statements or omissions that resulted in such losses, claims, damages
or liabilities (or actions in respect thereof) as well as any other relevant
equitable considerations. The relative fault of the parties 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 on the one hand or
such Holder or such other indemnified party, as the case may be, on the other,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount paid
by an indemnified party as a result of the losses, claims, damages or
liabilities referred to in the first sentence of this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any action or
claim that is the subject of this subsection (d). 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. For purposes of this subsection
(d), each person, if any, who controls such indemnified party within the meaning
of the Securities Act or the Exchange Act shall have the same rights to
contribution as such indemnified party and each person, if any, who controls the
Company within the meaning of the Securities Act or the Exchange Act shall have
the same rights to contribution as the Company.
(e) The agreements contained in this Section 5 shall survive the sale
of the Securities pursuant to a Registration Statement and shall remain in full
force and effect, regardless of any termination or cancellation of this
Agreement or any investigation made by or on behalf of any indemnified party.
6. Additional Interest Under Certain Circumstances. (a) Additional
interest (the "Additional Interest") with respect to the Initial Securities that
are Transfer Restricted Securities shall be assessed as follows if any of the
following events occur (each such event in clauses (i) through (ii) below being
herein referred to as a "Registration Default"):
(i) neither the Exchange Offer Registration Statement nor a Shelf
Registration Statement has been filed with the Commission on or before the
120th day after the Issue Date (or if such day is not a business day, the
first business day thereafter), or September 18, 1998;
(ii) the Registered Exchange Offer is not consummated on or before the
180th day after the Issue Date (or if such day is not a business day, the
first business day thereafter), or November 17, 1998;
(iii) if a Shelf Registration Statement is required to be filed under
this Agreement, such Shelf Registration Statement is not declared effective
by the Commission on or before the 210th day after the Issue Date (or if
such day is not a business day, the first business day thereafter), or
December 17, 1998 (or, in the case of a Shelf Registration Statement
required to
12
<PAGE>
be filed in response to any change in applicable interpretation of the
Commission, if later, on or before the 90th day after publication of such
change); or
(iv) if a Shelf Registration Statement is required to be filed under
this Agreement, and after the Shelf Registration Statement is declared
effective and during the period that the Company is required to use its
reasonable best efforts to keep the Shelf Registration Statement effective
as provided in Section 2(a), such Shelf Registration Statement thereafter
ceases to be effective and continues not to be effective (other than in
connection with the consummation of the Registered Exchange Offer, as
contemplated by the last sentence of Section 2(a)), or the Company shall
have suspended and be continuing to suspend the availability of the
prospectus contained in the Shelf Registration Statement, for more than 30
days in the aggregate in any consecutive twelve-month period.
Additional Interest shall accrue on the Initial Securities that are
Transfer Restricted Securities over and above the interest set forth in the
title of the Securities from and including the date on which any such
Registration Default shall occur to but excluding the date on which such
Registration Default has been cured, at a rate of (a) prior to the 91st day of
such period (for so long as such period is continuing), 0.25% per annum and (b)
thereafter (for so long as such period is continuing), 0.50% per annum. Any
such Additional Interest shall not exceed such respective rates for such
respective periods, and shall not in any event exceed 0.50% per annum in the
aggregate, regardless of the number of Registration Defaults that shall have
occurred and be continuing. Following the cure of all Registration Defaults,
the accrual of such Additional Interest will cease. All Registration Defaults
will be deemed cured upon consummation of the Exchange Offer.
Notwithstanding anything to the contrary in this Section 6(a), the
Company shall not be required to pay Additional Interest to any Holder of
Transfer Restricted Securities if such Holder failed to comply with its
obligations to make the representations set forth in the third to last paragraph
of Section 1 or failed to provide the information required to be provided by it,
if any, pursuant to Section 3(n).
(b) Any amounts of Additional Interest due pursuant to clause (i),
(ii), (iii) or (iv) of Section 6(a) above will be payable in cash on the regular
interest payment dates with respect to the Initial Securities. The amount of
Additional Interest will be determined by multiplying the applicable Additional
Interest rate by the principal amount of the Initial Securities that are
Transfer Restricted Securities, multiplied by a fraction, the numerator of which
is the number of days such Additional Interest rate was applicable during such
period (determined on the basis of a 360-day year comprised of twelve 30-day
months), and the denominator of which is 360.
(c) "Transfer Restricted Securities" means each Security until (i) the
date on which such Security has been exchanged by a person for a freely
transferable Exchange Security in the Registered Exchange Offer, (ii) the date
on which such Security has been effectively registered under the Securities Act
and disposed of in accordance with the Shelf Registration Statement or (iii) the
date on which such Security is distributed to the public pursuant to Rule 144
under the Securities Act or is saleable pursuant to Rule 144(k) under the
Securities Act (or otherwise is eligible for resale pursuant to Rule 144 (or any
successor provision) under the Securities Act without volume restriction, if
any).
7. Rules 144 and 144A. So long as any Transfer Restricted
Securities remain outstanding, the Company shall use its reasonable best efforts
to file the reports required to be filed by it under the Securities Act and the
Exchange Act in a timely manner or, upon the request of any Holder of Initial
Securities that are Transfer Restricted Securities, make publicly available
other
13
<PAGE>
information so long as necessary to permit sales of such Securities pursuant to
Rules 144 and 144A under the Securities Act. The Company covenants that it will
use its reasonable best efforts to take such further action as any Holder of
Transfer Restricted Securities may reasonably request, all to the extent
required from time to time to enable such Holder to sell such Securities without
registration under the Securities Act within the limitation of the exemptions
provided by Rules 144 and 144A (including the requirements of Rule 144A(d)(4)).
Upon the written request of any Holder of Initial Securities that are Transfer
Restricted Securities, the Company shall deliver to such Holder a written
statement as to whether it has complied with such requirements. Notwithstanding
the foregoing, nothing in this Section 7 shall be deemed to require the Company
to register any of its securities pursuant to the Exchange Act.
8. Underwritten Registrations. If any of the Transfer Restricted
Securities covered by any Shelf Registration are to be sold in an underwritten
offering, the investment banker or investment bankers and manager or managers
that will administer the offering will be selected by the Holders of a majority
in aggregate principal amount of such Transfer Restricted Securities to be
included in such offering, subject to the consent of the Company (which shall
not be unreasonably withheld or delayed), and such Holders shall be responsible
for all underwriting commissions and discounts in connection therewith.
No person may participate in any underwritten registration hereunder
unless such person (i) agrees to sell such person's Transfer Restricted
Securities on the basis reasonably provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements.
9. Miscellaneous.
(a) Amendments and Waivers. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, except by the Company and the written
consent of the Holders of a majority in principal amount of the Securities
affected by such amendment, modification, supplement, waiver or consents.
Notwithstanding the foregoing, a waiver or consent to depart from the provisions
hereof with respect to a matter that relates exclusively to the rights of the
Holders of Initial Securities, Exchange Securities or Private Exchange
Securities whose Initial Securities, Exchange Securities or Private Exchange
Securities are being sold pursuant to a Registration Statement, and that does
not directly or indirectly affect the rights of other Holders, may be given by
Holders of a majority in aggregate principal amount of the Initial Securities,
Exchange Securities or Private Exchange Securities, as the case may be, being
sold by such Holders pursuant to such Registration Statement.
(b) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, first-class mail,
facsimile transmission, or air courier which guarantees overnight delivery:
(1) if to a Holder of the Securities, at the most current address
given by such Holder to the Company.
14
<PAGE>
(2) if to the Initial Purchasers:
Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, NY 10010-3629
Fax No.: (212) 325-8278
Attention: Transactions Advisory Group
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Fax No.: (212) 455-2502
Attention: D. Rhett Brandon, Esq.
(3) if to the Company, at its address as follows:
c/o Dynatech Corporation
3 New England Executive Park
Burlington, MA 01803-3087
Fax: (781) 221-2304
Attention: Chief Financial Officer
with a copy to:
Dynatech Corporation
3 New England Executive Park
Burlington, MA 01803-3087
Fax: (781) 221-2304
Attention: General Counsel
and to:
Debevoise & Plimpton
875 Third Avenue
New York, NY 10022
Fax No.: (212) 909-6836
Attention: David Brittenham, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; three business
days after being deposited in the mail, postage prepaid, if mailed; when receipt
is acknowledged by recipient's facsimile machine operator, if sent by facsimile
transmission; and on the day delivered, if sent by overnight air courier next
day delivery.
(c) No Inconsistent Agreements. The Company has not, as of the date
hereof, entered into, nor shall it, on or after the date hereof, enter into, any
agreement with respect to its securities that is inconsistent with the rights
granted to the Holders herein or otherwise conflicts with the provisions hereof.
15
<PAGE>
(d) Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Company, each other party hereto and each Holder,
and their respective successors and assigns. Each Holder by its acceptance of a
Security, for itself and its successors and assigns, agrees to be bound hereby.
(e) 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.
(f) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ANY
PRINCIPLES OF CONFLICT OF LAWS TO THE EXTENT THAT THE APPLICATION OF THE LAW OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
(h) Severability. If 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.
(i) Securities Held by the Company. Whenever the consent or approval
of Holders of a specified percentage of principal amount of Securities is
required hereunder, Securities held by the Company or its affiliates (other than
subsequent Holders of Securities if such subsequent Holders are deemed to be
affiliates solely by reason of their holdings of such Securities) shall not be
counted in determining whether such consent or approval was given by the Holders
of such required percentage.
Each party hereto hereby submits to the jurisdiction of the Federal
and state courts in the Borough of Manhattan in the City of New York in any suit
or proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby.
16
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement among
the several Initial Purchasers, Dynatech and TTC in accordance with its terms.
Very truly yours,
TELECOMMUNICATIONS TECHNIQUES
CO., LLC
By /s/ Allan M. Kline
-------------------------------------
Title: Corporate Vice President,
Chief Financial Officer and
Treasurer
DYNATECH CORPORATION
By /s/ Allan M. Kline
-------------------------------------
Title: Corporate Vice President,
Chief Financial Officer and
Treasurer
The foregoing Registration Rights Agreement
is hereby confirmed, accepted and agreed to
as of the date first above written.
CREDIT SUISSE FIRST BOSTON CORPORATION
J.P. MORGAN SECURITIES INC.
By: CREDIT SUISSE FIRST BOSTON CORPORATION
By /s/ ^[Indistinguishable]^
-------------------------------------
Title: Vice President
17
<PAGE>
ANNEX A
Each broker-dealer that receives Exchange Securities for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Securities. The
Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-dealer
in connection with resales of Exchange Securities received in exchange for
Initial Securities where such Initial Securities were acquired by such broker-
dealer as a result of market-making activities or other trading activities. The
Company has agreed that, for a period of 90 days after the Expiration Date (as
defined herein), it will make this Prospectus available to any Participating
Broker-Dealer for use in connection with any such resale. See "Plan of
Distribution."
1
<PAGE>
ANNEX B
Each broker-dealer that receives Exchange Securities for its own account
in exchange for Initial Securities, where such Initial Securities were acquired
by such broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Securities. See "Plan of Distribution."
1
<PAGE>
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Securities for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Securities. This
Prospectus, as it may be amended or supplemented from time to time, may be
used by a Participating Broker-Dealer in connection with resales of Exchange
Securities received in exchange for Initial Securities where such Initial
Securities were acquired as a result of market-making activities or other
trading activities. The Company has agreed that, for a period of 90 days
after the Expiration Date, it will make this prospectus, as amended or
supplemented, available to any Participating Broker-Dealer for use in
connection with any such resale. In addition, until , 199 , all
dealers effecting transactions in the Exchange Securities may be required to
deliver a prospectus.
The Company will not receive any proceeds from any sale of Exchange
Securities by broker-dealers. Exchange Securities received by broker-dealers
for their own account pursuant to the Exchange Offer may be sold from time to
time in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the Exchange Securities or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer or the purchasers of any such Exchange
Securities. Any broker-dealer that resells Exchange Securities that were
received by it for its own account pursuant to the Exchange Offer and any
broker or dealer that participates in a distribution of such Exchange
Securities may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of Exchange Securities and
any commission or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that, by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of 90 days after the Expiration Date the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any Participating Broker-Dealer that requests
such documents in the Letter of Transmittal. The Company has agreed to pay
all expenses incurred by it incident to the Exchange Offer other than
commissions or concessions of any brokers or dealers and will indemnify the
Holders of the Securities (including any broker-dealers) against certain
liabilities, including liabilities under the Securities Act.
1
<PAGE>
ANNEX D
CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name:
-----------------------------------------------------------------
Address:
--------------------------------------------------------------
If the undersigned is not a broker-dealer, the undersigned represents that it
is not engaged in, and does not intend to engage in, a distribution of
Exchange Securities. If the undersigned is a broker-dealer, including a
broker-dealer that will receive Exchange Securities for its own account in
exchange for Initial Securities that were acquired as a result of market-
making activities or other trading activities, it acknowledges that it will
deliver a prospectus in connection with any resale of such Exchange
Securities; however, by so acknowledging and by delivering a prospectus, the
undersigned will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
1
<PAGE>
EXHIBIT 10.2
CONFORMED COPY
--------------
AGREEMENT AND PLAN
OF
MERGER
OF
TELECOMMUNICATIONS TECHNIQUES CO., LLC
AND
TTC REORG CORPORATION
This Agreement and Plan of Merger (the "Agreement") is made and entered
into as of May ___, 1998 by and between Telecommunications Techniques Co., LLC,
a Delaware limited liability company ("TTC, LLC" or the "Surviving Company"),
and TTC Reorg Corporation, a Delaware corporation (the "Disappearing
Corporation").
WHEREAS, TTC, LLC is a limited liability company organized under and
governed by the laws of the State of Delaware, and has its address at
Corporation Trust Center, 1209 Orange Street in the City of Wilmington, County
of New Castle;
WHEREAS, the Disappearing Corporation is a corporation organized under and
governed by the laws of the State of Delaware, and has its address at
Corporation Trust Center, 1209 Orange Street in the City of Wilmington, County
of New Castle;
WHEREAS, TTC, LLC and the Disappearing Corporation have determined that it
is advisable and in the best interests of such entities that the Disappearing
Corporation merge with and into TTC, LLC upon the terms and conditions provided
herein (the "Merger");
WHEREAS, pursuant to the laws of Delaware, the board of directors of the
Disappearing Corporation and the sole member of TTC, LLC have adopted and
recommended this Agreement; and
WHEREAS, Dynatech U.S.A., Inc., the sole shareholder of the outstanding
stock of the Disappearing Corporation, has consented to and approved the
adoption of this Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
agreements herein contained and of the mutual benefits provided hereby, the
parties hereto hereby agree as follows:
1. Merger. The effective date of the Merger shall be May __, 1998 (the
------
"Effective Date"). On the Effective Date, the Disappearing Corporation shall be
merged with and into
<PAGE>
TTC, LLC and the separate existence of the Disappearing Corporation shall
thereupon cease. TTC, LLC shall continue its existence as the surviving company
after the Effective Date.
2. Certificate of Formation. The Certificate of Formation of TTC, LLC,
------------------------
as in effect immediately prior to the Effective Date, shall continue to be the
Certificate of Formation of the Surviving Company without change or amendment
until duly amended in accordance with the provisions thereof and applicable law.
3. Conversion of Shares. Upon the Effective Date, by virtue of the
--------------------
Merger and without any action on the part of any holder thereof, each share and
each certificate representing shares of the capital stock of the Disappearing
Corporation outstanding immediately prior to the Effective Date shall
automatically be canceled, and no interest in the Surviving Company shall be
exchanged therefor.
4. Subsequent Action. If at any time after the Effective Date it shall
-----------------
be necessary or desirable to take any action or execute, deliver or file any
instrument or document in order to vest, perfect or confirm of record in the
Surviving Company the title to any property or any rights of the Disappearing
Corporation, or otherwise to carry out the provisions of this Agreement, the
sole member of the Surviving Company is hereby authorized and empowered on
behalf of the Disappearing Corporation and in its name to take such action and
execute, deliver and file such instruments and documents.
2
<PAGE>
5. Rights and Duties of Surviving Company. On the Effective Date, the
--------------------------------------
Surviving Company shall thereupon and thereafter possess all rights, privileges,
immunities, licenses, and permits (whether of a public or private nature) of the
Disappearing Corporation; and all property (real, personal and mixed), all debts
due on whatever account, all choses in action, and all and every other interest
of or belonging to or due to the Disappearing Corporation shall continue and be
taken and deemed to be transferred to and vested in the Surviving Company,
without further act or deed, and the Surviving Company shall thenceforth be
responsible and liable for all the liabilities and obligations of the
Disappearing Corporation.
6. Termination. At any time prior to the Effective Date, this Agreement
-----------
may be terminated and the Merger abandoned at the election of the sole member of
the Surviving Company.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
TTC REORG CORPORATION
By:/s/ John F. Reno
----------------
Name: John F. Reno
Title: Vice President
TELECOMMUNICATIONS TECHNIQUES
CO., LLC
By: Dynatech USA, Inc., its sole member
By:/s/ John F. Reno
----------------
Name: John F. Reno
Title: President
3
<PAGE>
EXHIBIT 10.3
CONFORMED COPY
--------------
AGREEMENT AND PLAN
OF
MERGER
OF
TTC MERGER CO. LLC
AND
TELECOMMUNICATIONS TECHNIQUES CO., L.L.C.
This Agreement and Plan of Merger (the "Agreement") is made and entered
into as of May 21, 1998 by and between Telecommunications Techniques Co., LLC, a
Delaware limited liability company ("TTC, LLC" or the "Surviving Company"), and
TTC Merger Co. LLC, a Delaware limited liability company (the "Disappearing
Company").
WHEREAS, TTC, LLC is a limited liability company organized under and
governed by the laws of the State of Delaware, and has its address at
Corporation Trust Center, 1209 Orange Street in the City of Wilmington, County
of New Castle;
WHEREAS, the Disappearing Company is a limited liability company organized
under and governed by the laws of the State of Delaware, and has its address at
Corporation Trust Center, 1209 Orange Street in the City of Wilmington, County
of New Castle;
WHEREAS, TTC, LLC and the Disappearing Company have determined that it is
advisable and in the best interests of such entities that the Disappearing
Company merge with and into TTC, LLC upon the terms and conditions provided
herein (the "Merger"); and
WHEREAS, pursuant to the laws of Delaware, the sole member of TTC, LLC and
the sole member of the Disappearing Company have adopted and recommended this
Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
agreements herein contained and of the mutual benefits provided hereby, the
parties hereto hereby agree as follows:
1. Merger. The effective date of the Merger shall be May 21, 1998 (the
------
"Effective Date"). On the Effective Date, the Disappearing Company shall be
merged with and into TTC, LLC and the separate existence of the Disappearing
Company shall thereupon cease. TTC, LLC shall continue its existence as the
surviving company after the Effective Date.
<PAGE>
2. Certificate of Formation. The Certificate of Formation of TTC, LLC,
------------------------
as in effect immediately prior to the Effective Date, shall continue to be the
Certificate of Formation of the Surviving Company without change or amendment
until duly amended in accordance with the provisions thereof and applicable law.
3. Subsequent Action. If at any time after the Effective Date it shall
-----------------
be necessary or desirable to take any action or execute, deliver or file any
instrument or document in order to vest, perfect or confirm of record in the
Surviving Company the title to any property or any rights of the Disappearing
Company, or otherwise to carry out the provisions of this Agreement, the sole
member of the Surviving Company is hereby authorized and empowered on behalf of
the Disappearing Corporation and in its name to take such action and execute,
deliver and file such instruments and documents.
2
<PAGE>
4. Rights and Duties of Surviving Company. On the Effective Date, the
--------------------------------------
Surviving Company shall thereupon and thereafter possess all rights, privileges,
immunities, licenses, and permits (whether of a public or private nature) of the
Disappearing Company; and all property (real, personal and mixed), all debts due
on whatever account, all choses in action, and all and every other of or
belonging to or due to the Disappearing Company shall continue and be taken and
deemed to be transferred to and vested in the Surviving Company, without further
act or deed, and the Surviving Company shall thenceforth be responsible and
liable for all the liabilities and obligations of the Disappearing Corporation.
5. Termination. At any time prior to the Effective Date, this Agreement
-----------
may be terminated and the Merger abandoned at the election of the sole member of
the Surviving Company.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
TTC MERGER CO. LLC
By: Dynatech Corporation, its sole member
By: /s/ Allan M. Kline
------------------
Name: Allan M. Kline
Title: Vice President, Chief Financial
Officer and Treasurer
TELECOMMUNICATIONS TECHNIQUES
CO., LLC
By: Dynatech Corporation, its sole member
By: /s/ Allan M. Kline
------------------
Name: Allan M. Kline
Title: Vice President, Chief Financial
Officer and Treasurer
3
<PAGE>
EXHIBIT 10.4
===========================================================================
DYNATECH CORPORATION
TTC MERGER CO. LLC
-------------------------
$370,000,000
CREDIT AGREEMENT
dated as of May 21, 1998
-------------------------
J.P. MORGAN SECURITIES INC.
and
CREDIT SUISSE FIRST BOSTON,
as Arrangers
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Administrative Agent
CREDIT SUISSE FIRST BOSTON,
as Syndication Agent
THE CHASE MANHATTAN BANK,
as Documentation Agent
CREDIT FIRST
JPMORGAN SUISSE BOSTON
===========================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1. DEFINITIONS..................................................................... 2
1.1 Defined Terms................................................................. 2
1.2 Other Definitional Provisions................................................. 24
SECTION 2. AMOUNT AND TERMS OF TRANCHE A LOAN.............................................. 24
2.1 Tranche A Term Loans.......................................................... 24
2.2 Procedure for Tranche A Loan Borrowing........................................ 24
2.3 Amortization of Tranche A Loans............................................... 25
2.4 Use of Proceeds of Tranche A Loans............................................ 25
SECTION 3. AMOUNT AND TERMS OF TRANCHE B LOAN.............................................. 25
3.1 Tranche B Term Loans.......................................................... 25
3.2 Procedure for Tranche B Loan Borrowing........................................ 26
3.3 Amortization of Tranche B Loans............................................... 26
3.4 Use of Proceeds of Tranche B Loans............................................ 27
SECTION 4. AMOUNT AND TERMS OF TRANCHE C LOAN............................................. 27
4.1 Tranche C Term Loans.......................................................... 27
4.2 Procedure for Tranche C Loan Borrowing........................................ 27
4.3 Amortization of Tranche C Loans............................................... 27
4.4 Use of Proceeds of Tranche C Loans............................................ 28
SECTION 5. AMOUNT AND TERMS OF TRANCHE D LOAN............................................. 28
5.1 Tranche D Term Loans.......................................................... 28
5.2 Procedure for Tranche D Loan Borrowing........................................ 29
5.3 Amortization of Tranche D Loans............................................... 29
5.4 Use of Proceeds of Tranche D Loans............................................ 30
SECTION 6. AMOUNT AND TERMS OF REVOLVING CREDIT
COMMITMENTS........................................................................ 30
6.1 Revolving Credit Commitments.................................................. 30
6.2 Procedure for Revolving Credit Borrowing...................................... 30
6.3 Use of Proceeds of Revolving Credit Loans..................................... 31
SECTION 7. LETTERS OF CREDIT.............................................................. 31
7.1 L/C Commitment................................................................ 31
7.2 Procedure for Issuance of Letters of Credit................................... 32
7.3 Fees, Commissions and Other Charges........................................... 32
7.4 L/C Participations............................................................ 33
7.5 Reimbursement Obligation of the Borrower...................................... 34
7.6 Obligations Absolute.......................................................... 34
7.7 Letter of Credit Payments..................................................... 35
</TABLE>
-i-
<PAGE>
<TABLE>
Page
----
<S> <C>
7.8 Application................................................................... 35
SECTION 8. AMOUNT AND TERMS OF SWING LINE SUB-FACILITY..................................... 35
8.1 Swing Line Commitments........................................................ 35
8.2 Procedure for Swing Line Loan Borrowing....................................... 36
8.3 Refunding of Swing Line Loans................................................. 36
8.4 Unconditional Obligation to Refund Swing Line Loans........................... 37
8.5 Use of Proceeds of Swing Line Loans........................................... 37
SECTION 9. PROVISIONS RELATING TO THE EXTENSIONS OF CREDIT;
FEES AND PAYMENTS................................... 37
9.1 Repayment of Loans; Evidence of Debt.......................................... 37
9.2 Commitment Fee; Other Fees.................................................... 38
9.3 Optional Prepayments.......................................................... 39
9.4 Optional Termination or Reduction of Aggregate Revolving Credit
Commitment................................................................ 40
9.5 Mandatory Reduction of Commitments and Prepayments............................ 40
9.6 Conversion and Continuation Options........................................... 43
9.7 Minimum Amounts and Maximum Number of Tranches................................ 44
9.8 Interest Rates and Payment Dates.............................................. 44
9.9 Computation of Interest and Fees.............................................. 44
9.10 Inability to Determine Interest Rate......................................... 45
9.11 Pro Rata Treatment and Payments.............................................. 45
9.12 Illegality................................................................... 46
9.13 Requirements of Law.......................................................... 47
9.14 Taxes........................................................................ 48
9.15 Indemnity.................................................................... 50
9.16 Certain Fees................................................................. 50
9.17 Certain Rules Relating to the Payment of Additional Amounts.................. 51
SECTION 10. REPRESENTATIONS AND WARRANTIES................................................ 52
10.1 Financial Condition.......................................................... 52
10.2 No Change.................................................................... 53
10.3 Corporate Existence; Compliance with Law..................................... 53
10.4 Corporate Power; Authorization; Enforceable Obligations...................... 54
10.5 No Legal Bar................................................................. 54
10.6 No Material Litigation....................................................... 55
10.7 No Default................................................................... 55
10.8 Ownership of Property; Liens................................................. 55
10.9 Intellectual Property........................................................ 55
10.10 No Burdensome Restrictions.................................................. 55
10.11 Taxes....................................................................... 55
10.12 Federal Regulations......................................................... 56
10.13 ERISA....................................................................... 56
10.14 Investment Company Act; Other Regulations................................... 56
</TABLE>
-ii-
<PAGE>
<TABLE>
Page
----
<S> <C>
10.15 Subsidiaries........................................................... 56
10.16 Environmental Matters.................................................. 56
10.17 Collateral Documents................................................... 58
10.18 Accuracy and Completeness of Information............................... 58
10.19 Solvency............................................................... 58
10.20 Senior Indebtedness.................................................... 58
SECTION 11. CONDITIONS PRECEDENT..................................................... 59
11.1 Conditions to Initial Loans............................................. 59
11.2 Conditions to Each Loan................................................. 62
SECTION 12. AFFIRMATIVE COVENANTS.................................................... 63
12.1 Financial Statements.................................................... 63
12.2 Certificates; Other Information......................................... 64
12.3 Payment of Obligations.................................................. 64
12.4 Conduct of Business and Maintenance of Existence........................ 65
12.5 Maintenance of Property; Insurance...................................... 65
12.6 Inspection of Property; Books and Records; Discussions.................. 65
12.7 Notices................................................................. 65
12.8 Environmental Laws...................................................... 67
12.9 [Reserved].............................................................. 67
12.10 Additional Collateral.................................................. 67
12.11 Assumption Agreement................................................... 69
SECTION 13. FINANCIAL COVENANTS...................................................... 69
13.1 Minimum Interest Coverage Ratio......................................... 69
13.2 Maximum Leverage Ratio.................................................. 69
SECTION 14. NEGATIVE COVENANTS APPLICABLE TO THE TRANCHE A
COMMITMENTS AND REVOLVING CREDIT COMMITMENTS................. 69
14.1 Limitation on Indebtedness.............................................. 70
14.2 Limitation on Liens..................................................... 72
14.3 Limitation on Guarantee Obligations..................................... 74
14.4 Limitation on Fundamental Changes....................................... 75
14.5 Limitation on Sale of Assets............................................ 76
14.6 Limitation on Restricted Payments....................................... 77
14.7 Limitation on Capital Expenditures...................................... 78
14.8 Limitation on Investments, Loans and Advances........................... 79
14.9 Limitation on Transactions with Affiliates.............................. 81
14.10 Limitation on Sales and Leasebacks..................................... 82
14.11 Limitation on Changes in Fiscal Year................................... 82
14.12 Limitation on Optional Payments and Modifications of Debt Instruments
and other Material Agreements........................................ 82
14.13 Limitation on Negative Pledge Clauses.................................. 83
14.14 Limitation on Lines of Business........................................ 83
</TABLE>
-iii-
<PAGE>
<TABLE>
Page
----
<S> <C>
14.15 Limitation on Activities of Holding.................................... 84
SECTION 15. NEGATIVE COVENANTS APPLICABLE TO TRANCHE B
COMMITMENTS, TRANCHE C COMMITMENTS AND
TRANCHE D COMMITMENTS................................................................. 84
SECTION 16. EVENTS OF DEFAULT........................................................ 85
16.1 Certain Bankruptcy Events............................................... 85
16.2 Other Events of Default Applicable to the Tranche A Commitments,
Revolving Credit Commitments and Amounts Owing Thereunder............ 86
16.3 Other Events of Default Applicable to Tranche B Commitments, Tranche C
Commitments, Tranche D Commitments and Amounts Owing
Thereunder........................................................... 89
16.4 Certain Provisions Applicable to Letters of Credit...................... 91
16.5 Certain Waivers......................................................... 91
SECTION 17. THE ADMINISTRATIVE AGENT................................................. 91
17.1 Appointment............................................................. 91
17.2 Delegation of Duties.................................................... 92
17.3 Exculpatory Provisions.................................................. 92
17.4 Reliance by Administrative Agent........................................ 92
17.5 Notice of Default....................................................... 93
17.6 Acknowledgments and Representations by Lenders.......................... 93
17.7 Indemnification......................................................... 93
17.8 Agents in their Individual Capacities................................... 94
17.9 Successor Agents........................................................ 94
SECTION 18. MISCELLANEOUS............................................................ 95
18.1 Amendments and Waivers.................................................. 95
18.2 Notices................................................................. 97
18.3 No Waiver; Cumulative Remedies.......................................... 98
18.4 Survival of Representations and Warranties.............................. 98
18.5 Payment of Expenses and Taxes........................................... 98
18.6 Successors and Assigns; Participations and Assignments.................. 99
18.7 Adjustments; Set-off....................................................102
18.8 Counterparts............................................................103
18.9 Severability............................................................103
18.10 Integration............................................................103
18.11 GOVERNING LAW..........................................................103
18.12 Submission To Jurisdiction; Waivers....................................104
18.13 Acknowledgements.......................................................104
18.14 WAIVERS OF JURY TRIAL..................................................105
18.15 Confidentiality........................................................105
</TABLE>
-iv-
<PAGE>
SCHEDULES
Schedule I Lenders; Commitments
Schedule II Addresses for Notices
Schedule 1.1(a) Inactive Subsidiaries
Schedule 1.1(b) Permitted Investors
Schedule 10.4(a) Required Consents, Authorizations and Filings
Schedule 10.9 Intellectual Property
Schedule 10.15 Subsidiaries
Schedule 11.1(y) Existing Indebtedness
Schedule 14.2(q) Existing Liens
Schedule 14.3 Existing Guarantee Obligations
Schedule 14.5(j) Permitted Dispositions
Schedule 14.8(f) Existing Investments
Schedule 14.9(iv) Permitted Transactions with Guarantor Affiliates
Schedule 15(a) Negative Covenants Applicable to Tranche B Commitments,
Tranche C Commitments and Tranche D Commitments
EXHIBITS
Exhibit A-1 Form of Revolving Credit Note
Exhibit A-2 Form of Tranche [A][B][C][D] Note
Exhibit A-3 Form of Swing Line Note
Exhibit B Form of Guarantee and Collateral Agreement
Exhibit C-1 Form of Opinion of Hale & Dorr
Exhibit C-2 Form of Opinion of Debevoise & Plimpton
Exhibit C-3 Form of Opinion of Mark V.B. Tremallo
Exhibit D Form of Assignment and Acceptance
Exhibit E-1 Form of Notice of Borrowing (Drawings)
Exhibit E-2 Form of Notice of Borrowing (Conversions)
Exhibit E-3 Form of Notice of Borrowing (Continuations)
Exhibit F Form of Assumption Agreement
Exhibit G Form of U.S. Tax Compliance Certificate
-v-
<PAGE>
CREDIT AGREEMENT, dated as of May 21, 1998, among:
(a) DYNATECH CORPORATION, a Massachusetts corporation ("Holding");
-------
(b) TTC MERGER CO. LLC, a Delaware limited liability company wholly owned by
Holding ("Newco");
-----
(c) the Lenders (as hereinafter defined) from time to time parties hereto;
(d) MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as administrative agent (in such
capacity, the "Administrative Agent") for the Lenders;
--------------------
(e) CREDIT SUISSE FIRST BOSTON, as syndication agent (in such capacity, the
"Syndication Agent") for the Lenders; and
------------------
(f) THE CHASE MANHATTAN BANK, as documentation agent (in such capacity, the
"Documentation Agent") for the Lenders.
--------------------
W I T N E S S E T H :
-------------------
WHEREAS, Holding has entered into the Agreement and Plan of Merger,
dated as of December 20, 1997 (as amended, supplemented or otherwise modified
from time to time in accordance with the terms hereof, the "Merger Agreement"),
----------------
with CDRD Merger Corporation, a Delaware corporation ("MergerCorp"), pursuant to
----------
which Holding is to merge with MergerCorp, with Holding to be the survivor of
such merger (the "Merger");
------
WHEREAS, in connection with the Merger, Holding intends to effect a
recapitalization (the "Recapitalization");
----------------
WHEREAS, in connection with the Merger, Holding is organizing TTC
International Holdings, Inc. ("International"), a Delaware corporation, and
-------------
Holding is contributing, assigning and transferring to International all of the
Capital Stock and other securities of Holding's other Foreign Subsidiaries and
other assets relating to an ownership interest in such Capital Stock, securities
and Foreign Subsidiaries, in each instance, owned as of the Closing Date by
Holding;
WHEREAS, immediately following the completion of the Merger and the
Recapitalization, Newco will merge with and into Telecommunications Techniques
Co., LLC, a Delaware limited liability company wholly owned by Holding ("TTC"),
---
with TTC surviving, and TTC will succeed to all the rights and obligations of
Newco under this Agreement and will become the Borrower hereunder, and
substantially contemporaneously therewith, TTC will assume the rights and
obligations of Newco and Holding as Borrower hereunder pursuant to the
Assumption Agreement (the "Assumption");
----------
WHEREAS, upon the effectiveness of the Assumption, Holding will be
released as Borrower under this Agreement and, in consideration of the
Assumption and such release,
<PAGE>
2
will contribute, assign and transfer to TTC all of the capital stock of
Holding's other Active Subsidiaries (the "Transfer", and together with the
--------
Merger, the Recapitalization and the Assumption, the "Transaction") and will
-----------
guarantee TTC's obligations as provided in the Guarantee and Collateral
Agreement;
WHEREAS, Holding and Newco have requested that the Lenders make loans
and other extensions of credit for the purpose of financing the Transaction and
for the other purposes permitted by this Agreement;
WHEREAS, the Lenders are willing to make such loans and other
extensions of credit, and the Administrative Agent is willing to assume its
obligations hereunder, only upon the terms and subject to the conditions set
forth herein;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms
-------------
shall have the following meanings:
"ABR": for any day, a rate per annum equal to the greater of (a) the
---
Prime Rate in effect on such day and (b) the Federal Funds Effective Rate
in effect on such day plus 1/2 of 1%. Any change in the ABR due to a
change in the Prime Rate or the Federal Funds Effective Rate shall be
effective as of the opening of business on the effective day of such change
in the Prime Rate or the Federal Funds Effective Rate, respectively.
"ABR Loans": Loans (including, without limitation, Swing Line Loans)
---------
the rate of interest applicable to which is based upon the ABR.
"Active Subsidiaries": all Subsidiaries of the Guarantor other than
-------------------
those listed on Schedule 1.1(a).
"Administrative Agent": as defined in the preamble hereto.
--------------------
"Affiliate": as to any Person, any other Person (other than a
---------
Subsidiary) which, directly or indirectly, is in control of, is controlled
by, or is under common control with, such Person. For purposes of this
definition, "control" of a Person means the power, directly or indirectly,
either to (a) vote 20% or more of the securities having ordinary voting
power for the election of directors of such Person or (b) direct or cause
the direction of the management and policies of such Person, whether by
contract or otherwise.
"Aggregate Outstanding Extensions of Credit": as to any Revolving
------------------------------------------
Credit Lender at any time, an amount equal to the sum of (a) the aggregate
outstanding principal amount of all Revolving Credit Loans made by such
Revolving Credit Lender and (b) such Revolving Credit Lender's Revolving
Credit Commitment Percentage of
<PAGE>
3
the L/C Obligations and Swing Line Loans then outstanding; provided,
--------
however, that the Swing Line Loans shall be deemed not to be outstanding
--------
for purposes only of determining the commitment fee which is payable from
time to time pursuant to subsection 9.2.
"Aggregate Revolving Credit Commitment": $110,000,000, as such amount
-------------------------------------
may be reduced from time to time pursuant to this Agreement.
"Aggregate Tranche A Commitment": $50,000,000, as such amount may be
------------------------------
reduced from time to time pursuant to this Agreement.
"Aggregate Tranche B Commitment": $70,000,000, as such amount may be
------------------------------
reduced from time to time pursuant to this Agreement.
"Aggregate Tranche C Commitment": $70,000,000, as such amount may be
------------------------------
reduced from time to time pursuant to this Agreement.
"Aggregate Tranche D Commitment": $70,000,000, as such amount may be
------------------------------
reduced from time to time pursuant to this Agreement.
"Agreement": this Credit Agreement, as amended, supplemented or
---------
otherwise modified from time to time.
"Applicable Commitment Fee Rate": at any date, the rate per annum set
------------------------------
forth below opposite the Level then in effect with respect to the Revolving
Credit Facility:
Level Rate
Level I .30%
Level II .375%
Level III .375%
Level IV .375%
Level V .375%
Level VI .50%
; provided that, until the date which is six months after the Closing Date,
--------
the Level in effect shall be deemed to be Level VI.
"Applicable Margin": for each day for each Eurodollar Loan made under
-----------------
a particular Facility, the rate per annum set forth below under the
relevant column heading below opposite the Level then in effect with
respect to such Facility:
<PAGE>
4
Applicable Margin
Tranche Revolving Tranche Tranche Tranche
Level A Loans Credit Loans B Loans C Loans D Loans
Level I 1.00% 1.00% 2.00% 2.25% 2.50%
Level II 1.25% 1.25% 2.25% 2.50% 2.75%
Level III 1.50% 1.50% 2.50% 2.75% 3.00%
Level IV 1.75% 1.75% N/A N/A N/A
Level V 2.00% 2.00% N/A N/A N/A
Level VI 2.25% 2.25% N/A N/A N/A
Notwithstanding the foregoing, (x) the Applicable Margin from time to time
in effect for ABR Loans shall at all times be 1% per annum lower (to the
extent not lower than 0% per annum) than that in effect for Eurodollar
Loans, (y) the "Applicable Margin" from time to time in effect for Swing
Line Loans shall be the rate which would then be applicable to Revolving
Credit Loans which are ABR Loans and (z) for each day prior to the date
which is six months following the Closing Date, the Level in effect shall
be deemed to be Level VI with respect to the Tranche A Facility and the
Revolving Credit Facility, and Level III with respect to the Tranche B
Facility, the Tranche C Facility and the Tranche D Facility.
"Application": an application, in such form as the relevant Issuing
-----------
Lender may reasonably specify from time to time, requesting such Issuing
Lender to open a Letter of Credit.
"Assignee": as defined in subsection 18.6(c).
--------
"Assumption Agreement": the Assumption Agreement executed and
--------------------
delivered by a duly authorized officer of each of Holding, Newco, TTC and
the Administrative Agent in connection with or following the consummation
of the Merger, substantially in the form of Exhibit F with such changes
thereto as shall be approved by the Administrative Agent, providing for the
Assumption.
"Available Revolving Credit Commitment": as to any Revolving Credit
-------------------------------------
Lender, at any time, an amount equal to the excess, if any, of (a) such
Revolving Credit Lender's Revolving Credit Commitment at such time over (b)
such Revolving Credit Lender's Aggregate Outstanding Extensions of Credit.
"Borrower": until the consummation of the Assumption, Holding and
--------
Newco, as co-obligors; and from and after the consummation of the
Assumption, TTC.
"Borrowing Date": any Business Day specified in a Notice of Borrowing
--------------
pursuant to subsection 2.2, 3.2, 4.2, 5.2, 6.2 or 8.2, or in an Application
pursuant to subsection 7.2, as a date on which the Borrower requests the
Lenders to make Loans or issue a Letter of Credit, as applicable,
hereunder.
<PAGE>
5
"Business": as defined in subsection 10.16(b).
--------
"Business Day": a day other than a Saturday, Sunday or other day on
------------
which commercial banks in New York City are authorized or required by law
to close; provided, however, that, with respect to matters relating to
-------- -------
Eurodollar Loans, any day on which commercial banks in London, England are
authorized or required by law to close also shall not constitute a
"Business Day".
"Capital Expenditure": as defined in subsection 14.7.
-------------------
"Capital Stock": any and all shares, interests, participations or
-------------
other equivalents (however designated) of capital stock of a corporation,
any and all equivalent ownership interests in a Person (other than a
corporation) and any and all warrants or options to purchase any of the
foregoing.
"Cash Equivalents": (a) securities with maturities of one year or
----------------
less from the date of acquisition issued or fully guaranteed or insured by
the United States Government or any agency thereof, (b) certificates of
deposit and time deposits, bankers acceptances and overnight bank deposits
of any Lender or of any commercial bank having capital and surplus in
excess of $500,000,000, (c) repurchase obligations of any Lender or of any
commercial bank satisfying the requirements of clause (b) of this
definition, having a term of not more than 30 days with respect to
securities issued or fully guaranteed or insured by the United States
Government or any agency or instrumentality thereof, (d) commercial paper
of a domestic issuer rated at least A-2 or the equivalent thereof by
Standard and Poor's Rating Group or any successor rating agency ("S&P") or
---
P-2 or the equivalent thereof by Moody's Investors Service, Inc. or any
successor rating agency ("Moody's") (or if at such time neither is issuing
-------
ratings, then a comparable rating of such other nationally recognized
rating agency as shall be approved by the Administrative Agent in its
reasonable judgment), (e) securities with maturities of one year or less
from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States, by any political
subdivision or taxing authority of any such state, commonwealth or
territory or by any foreign government, the securities of which state,
commonwealth, territory, political subdivision, taxing authority or foreign
government (as the case may be) are rated at least A by S&P or A by
Moody's, (f) securities with maturities of one year or less from the date
of acquisition backed by standby letters of credit issued by any Lender or
any commercial bank satisfying the requirements of clause (b) of this
definition, (g) shares of money market mutual or similar funds complying
with the risk limiting conditions of Rule 2a-7 or any successor rule of the
Securities and Exchange Commission under the Investment Company Act of
1940, as amended, and (h) investments similar to any of the foregoing
denominated in foreign currencies approved by the board of directors or
comparable body of the Guarantor or the Borrower, in each case provided in
clauses (a), (b) and (d) above, maturing within twelve months after the
date of acquisition.
"CD&R": Clayton, Dubilier & Rice, Inc., a Delaware corporation.
----
"Change of Control": the occurrence of the following: Permitted
-----------------
Investors shall fail to have the power (whether or not exercised) to elect
a majority of the Guarantor's
<PAGE>
6
board of directors, other than following a public offering of the
Guarantor's Voting Stock; provided, however, it shall be a Change of
-------- -------
Control if, following such public offering, (i) any Person or "group"
(within the meaning of Section 13(d) or 14(d) of the Exchange Act), other
than any of the Permitted Investors, shall have acquired a percentage of
shares of Voting Stock that is greater than as held in the aggregate by the
Permitted Investors or (ii) the Permitted Investors shall cease to hold in
the aggregate at least 35% of the outstanding Voting Stock of the
Guarantor. As used in this paragraph, "Voting Stock" shall mean shares of
------ -----
Capital Stock entitled to vote generally in the election of directors and
"Permitted Investors" means any of (i) CD&R, Fund V, any other investment
--------- ---------
fund or vehicle managed, sponsored or advised by CD&R, or any Affiliate of
or successor to CD&R, Fund V or any such other investment fund or vehicle,
(ii) any Person listed on Schedule 1.1(b) or Affiliate thereof, (iii) any
Management Investor and (iv) for a period not exceeding two Business Days,
any Person acting in the capacity of an underwriter in connection with a
public or private offering of Capital Stock of the Guarantor.
"Closing Date": the date on which the conditions precedent set forth
------------
in subsection 11.1 shall be satisfied or waived.
"Code": the Internal Revenue Code of 1986, as amended from time to
----
time.
"Collateral": all assets of the Credit Parties, now owned or
----------
hereinafter acquired, upon which a Lien is purported to be created by any
Security Document.
"Collateral Agreement": the Guarantee and Collateral Agreement to be
--------------------
executed and delivered by the Guarantor, the Borrower and each of its
Domestic Subsidiaries that is an Active Subsidiary, substantially in the
form of Exhibit B, as the same may be amended, supplemented or otherwise
modified from time to time.
"Commitment": as to any Lender, its Tranche A Commitment, Tranche B
----------
Commitment, Tranche C Commitment, Tranche D Commitment or Revolving Credit
Commitment, as the context shall require; as to all Lenders, the
"Commitments".
------------
"Commitment Percentage": as to any Lender at any time, its Tranche A
---------------------
Commitment Percentage, its Tranche B Commitment Percentage, Tranche C
Commitment Percentage, Tranche D Commitment Percentage or its Revolving
Credit Commitment Percentage, as the context shall require.
"Commitment Period": the period from and including the Closing Date
-----------------
to but including the Termination Date or such earlier date on which the
Aggregate Revolving Credit Commitment shall terminate as provided herein.
"Commonly Controlled Entity": an entity, whether or not incorporated,
--------------------------
which is under common control with the Borrower within the meaning of
Section 4001 of ERISA or is part of a group which includes the Borrower and
which is treated as a single employer under Section 414(b) or 414(c) of the
Code.
<PAGE>
7
"Consolidated Net Income" or "Consolidated Net Loss": for any fiscal
----------------------- ---------------------
period, the amount which, in conformity with GAAP, would be set forth
opposite the caption "net income" (or any like caption) or "net loss" (or
any like caption), as the case may be, on a consolidated statement of
earnings of the Guarantor and its Subsidiaries for such fiscal period.
"Contractual Obligation": as to any Person, any provision of any
----------------------
material security issued by such Person or of any material agreement,
instrument or other undertaking to which such Person is a party or by which
it or any of its property is bound.
"Credit Documents": this Agreement, the Notes, the Applications, the
----------------
Security Documents and the Assumption Agreement.
"Credit Parties": the Guarantor, the Borrower and each of their
--------------
Subsidiaries that is a party to a Credit Document.
"Current Assets": at any date, all amounts (other than cash and Cash
--------------
Equivalents) which would, in conformity with GAAP, be set forth opposite
the caption "total current assets" (or any like caption) on a consolidated
balance sheet of the Guarantor and its Subsidiaries at such date.
"Current Liabilities": at any date, all amounts which would, in
-------------------
conformity with GAAP, be set forth opposite the caption "total current
liabilities" (or any like caption) on a consolidated balance sheet of the
Guarantor and its Subsidiaries at such date, but excluding (a) the current
portion of any Funded Debt of the Guarantor and its Subsidiaries and (b)
without duplication of clause (a) above, all Indebtedness consisting of
Revolving Credit Loans or Swing Line Loans to the extent otherwise included
therein.
"Default": any of the events specified in Section 16.1, 16.2 or 16.3,
-------
whether or not any requirement for the giving of notice (other than, in the
case of 16.2(e) and 16.3(d), any Default Notice), the lapse of time, or
both, or any other condition, has been satisfied.
"Default Notice": as defined in subsection 16.2(e).
--------------
"Documentation Agent": as defined in the preamble hereto.
-------------------
"Dollars" and "$": dollars in lawful currency of the United States of
------- -
America.
"Domestic Subsidiary": any Subsidiary of the Borrower organized under
-------------------
the laws of any jurisdiction within the United States (other than any
Foreign Subsidiary Holdco).
"EBITDA" for any period, the Consolidated Net Income or Consolidated
------
Net Loss, as the case may be, for such period adjusted to exclude the
following items to the extent that such items were included in the
calculation of such Consolidated Net Income or Consolidated Net Loss: (a)
depreciation and amortization (including write-offs or write-downs of
amortizable and depreciable items) for such period, (b) the amount of
<PAGE>
8
interest expense (net of interest income) of the Guarantor and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP,
for such period on the aggregate principal amount of their consolidated
Indebtedness, (c) the amount of tax expense of the Guarantor and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP,
for such period, (d) any non cash expenses and charges, in each case, which
represents an accrual for which no cash is expected to be paid in the short
term, (e) any gain or loss associated with the sale or write-down of assets
not in the ordinary course of business, (f) any non-cash provisions for
reserves of discontinued operations, (g) any extraordinary, unusual or non-
recurring gains or losses or charges or credits and (h) any gains or losses
relating to the repatriation of foreign currency denominated investments.
"Environmental Laws": any and all foreign, Federal, state, local or
------------------
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority properly promulgated
and having the force and effect of law, or other Requirements of Law
(including, without limitation, common law) regulating, relating to or
imposing liability or standards of conduct concerning protection of the
environment or human health as related to the environment, as now or may at
any relevant time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to a
---------------------------------
Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements in effect on such
day (including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board of Governors of the
Federal Reserve System or other Governmental Authority having jurisdiction
with respect thereto) dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities"
in Regulation D of such Board) maintained by a member bank of such System.
"Eurodollar Base Rate": with respect to each day during each Interest
--------------------
Period pertaining to a Eurodollar Loan, the rate per annum determined by
the Administrative Agent at approximately 11:00 a.m. (London time) on the
date which is two Business Days prior to the beginning of the relevant
Interest Period (as specified in the applicable Notice of Borrowing) by
reference to the "British Bankers' Association Interest Settlement Rates"
for deposits in Dollars (as set forth by any service selected by the
Administrative Agent which has been nominated by the British Bankers'
Association as an authorized information vendor for the purpose of
displaying such rates) for a period equal to such Interest Period (rounded,
if necessary, upward to the nearest whole multiple of 1/16th of 1%);
provided that, to the extent that an interest rate is not ascertainable
--------
pursuant to the foregoing provisions of this definition, the "Eurodollar
Base Rate" shall be the interest rate per annum determined by the
Administrative Agent to be the average (rounded, if necessary, upward to
the nearest whole multiple of 1/16th of 1% per annum, if such average is
not such a multiple) of the rates per annum at which deposits in Dollars
are offered for such relevant Interest Period to major banks in the London
interbank market in London, England by Morgan Guaranty Trust
<PAGE>
9
Company of New York at approximately 11:00 a.m. (London time) on the date
which is two Business Days prior to the beginning of such Interest Period.
"Eurodollar Loans": Loans the rate of interest applicable to which is
----------------
based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each Interest
---------------
Period pertaining to a Eurodollar Loan, a rate per annum determined for
such day in accordance with the following formula (rounded upward to the
nearest 1/100th of 1%):
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Event of Default": any of the events specified in Section 16.1, 16.2
----------------
or 16.3, provided that any requirement for the giving of notice, the lapse
--------
of time, or both, or any other condition, has been satisfied.
"Excess Cash Flow": for any fiscal year (or, in the case of the
----------------
fiscal year ending March 31, 1999, the portion thereof commencing the first
day of the month next succeeding the Closing Date to March 31, 1999) of the
Guarantor, the amount equal to the excess, if any, of (a) the sum of (i)
EBITDA for such fiscal year and (ii) decreases in Working Capital for such
fiscal year minus (b) the sum, without duplication, of (i) the aggregate
-----
amount actually paid by the Guarantor and its Subsidiaries in cash during
such fiscal year on account of (w) Capital Expenditures, (x) interest
expense on the aggregate principal amount of their consolidated
Indebtedness, (y) tax expense and (z) any investments made pursuant to
subsection 14.8(c), (e) or (j), (ii) the aggregate amount of all principal
payments of Indebtedness (net of any refinancings of any such Indebtedness
to the extent applied to fund such payments) during such fiscal year
resulting in permanent reductions of such Indebtedness (excluding, in the
case of the Loans, any principal payment pursuant to subsection 9.5(c), (d)
or (e) except to the extent that the event giving rise to such payment
causes an increase in EBITDA), (iii) the Net Proceeds from any sale or
other disposition of property or assets of the Guarantor or any of its
Subsidiaries to the extent that such Net Proceeds (A) consist of any
Reinvested Amount or are otherwise applied in accordance with subsection
9.5(d) and (B) are included in the calculation of EBITDA, and (iv)
increases in Working Capital for such fiscal year.
"Excess Cash Flow Recapture Amount": for (a) each fiscal year of the
---------------------------------
Guarantor when the Leverage Ratio at the last day of such fiscal year is
greater than or equal to 4.0 to 1.0, the amount equal to 50% of Excess Cash
Flow for such fiscal year and (b) for each other period, $0.
"Facility": each of (a) the Tranche A Commitments and the Tranche A
--------
Loans made thereunder (the "Tranche A Facility"), (b) the Tranche B
------------------
Commitments and the Tranche B Loans made thereunder (the "Tranche B
---------
Facility"), (c) the Tranche C Commitments and the Tranche C Loans made
--------
thereunder (the "Tranche C Facility"), (d) the Tranche D Commitments and
------------------
the Tranche D Loans made thereunder (the "Tranche
-------
<PAGE>
10
D Facility") and (e) the Revolving Credit Commitments and the extensions
----------
of credit made thereunder (the "Revolving Credit Facility").
-------------------------
"Federal Funds Effective Rate": shall mean, for any day, the weighted
----------------------------
average of the rates on overnight federal funds transactions with members
of the Federal Reserve System arranged by federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for the day of such
transactions received by the Administrative Agent from three federal funds
brokers of recognized standing selected by it.
"Fee Letter": the agreement, dated December 19, 1997, among
----------
MergerCorp, J.P. Morgan Securities Inc., the Administrative Agent and the
Syndication Agent, relating to the payment of certain fees.
"Financing Lease": any lease of property, real or personal, the
---------------
obligations of the lessee in respect of which are required in accordance
with GAAP to be capitalized on a balance sheet of the lessee.
"Foreign Backstop Letters of Credit": any Letter of Credit issued
----------------------------------
under this Agreement to any Person for the account of the Borrower to
provide credit support for Indebtedness of any Foreign Subsidiary to such
Person which is permitted under subsection 14.1.
"Foreign Pledge Agreement": each pledge agreement (or analogous
------------------------
document), which pledge agreement (or analogous document) shall be in form
and substance reasonably satisfactory to the Administrative Agent, pursuant
to which the Borrower or any of its Domestic Subsidiaries purports to grant
a Lien on any portion of the Capital Stock of any Foreign Subsidiary, as
the same may be amended, supplemented or otherwise modified from time to
time.
"Foreign Subsidiary": any Subsidiary of the Borrower that is
------------------
organized under the laws of any jurisdiction outside the United States of
America, or that is a Foreign Subsidiary Holdco.
"Foreign Subsidiary Holdco": any Subsidiary of the Borrower that has
-------------------------
no material assets other than Capital Stock or other securities of one or
more Foreign Subsidiaries or other Foreign Subsidiary Holdcos, and other
assets relating to an ownership interest in such Capital Stock, securities
or Foreign Subsidiaries.
"Former Plan": any employee benefit plan in respect of which the
-----------
Borrower or a Commonly Controlled Entity has engaged in a transaction
described in Section 4069 or Section 4212(c) of ERISA.
"Fund V": Clayton, Dubilier & Rice Fund V Limited Partnership, a
------
Cayman Islands exempted limited partnership managed by CD&R, and its
successors and its assigns who are existing members of the CD&R Group at
the time of any such assignment. For the purposes of this definition,
"CD&R Group" shall mean CD&R, or
-----------
<PAGE>
11
other investment fund or vehicle managed, sponsored or advised by CD&R, or
any Affiliate of or successor to CD&R, Fund V or any such other investment
fund or vehicle.
"Funded Debt": as to any Person, all Indebtedness of such Person that
-----------
matures more than one year from the date of its creation or matures within
one year from such date but is renewable or extendible, at the option of
such Person, to a date more than one year from such date or arises under a
revolving credit or similar agreement that obligates the lender or lenders
to extend credit during a period of more than one year from such date,
including, without limitation, all current maturities and current sinking
fund payments in respect of such Indebtedness whether or not required to be
paid within one year from the date of its creation and, in the case of the
Borrower, Indebtedness in respect of the Loans.
"GAAP": generally accepted accounting principles in the United States
----
of America as in effect from time to time; provided that, for purposes of
--------
determining compliance with the provisions of Section 13 or subsection
14.8(e), "GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect on December 31, 1997.
"Governmental Authority": any nation or government, any state or
----------------------
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guarantee Obligation": as to any Person (the "guaranteeing person"),
-------------------- -------------------
any obligation of (a) the guaranteeing person or (b) another Person
(including, without limitation, any bank under any letter of credit) to
induce the creation of which the guaranteeing person has issued a
reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends
or other obligations (the "primary obligations") of any other third Person
-------------------
(the "primary obligor") in any manner, whether directly or indirectly,
---------------
including, without limitation, any such obligation of the guaranteeing
person, whether or not contingent, (i) to purchase any such primary
obligation or any property constituting direct or indirect security
therefor, (ii) to advance or supply funds (1) for the purchase or payment
of any such primary obligation or (2) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (iii) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such
primary obligation of the ability of the primary obligor to make payment of
such primary obligation or (iv) otherwise to assure or hold harmless the
owner of any such primary obligation against loss in respect thereof;
provided, however, that the term Guarantee Obligation shall not include
-------- -------
endorsements of instruments for deposit or collection in the ordinary
course of business. The amount of any Guarantee Obligation of any
guaranteeing person shall be deemed to be the lower of (a) an amount equal
to the stated or determinable amount of the primary obligation in respect
of which such Guarantee Obligation is made and (b) the maximum amount for
which such guaranteeing person may be liable pursuant to the terms of the
instrument embodying such Guarantee Obligation, unless such primary
obligation and the maximum amount for which such guaranteeing person may be
liable are not stated or determinable, in which case the amount of such
Guarantee Obligation
<PAGE>
12
shall be such guaranteeing person's maximum reasonably anticipated
liability in respect thereof as determined by the Borrower in good faith.
"Guarantor": from and after the consummation of the Assumption,
---------
Holding.
"Hedging Arrangement": means any agreement or arrangement that relates
-------------------
to any interest rate protection, future, option, swap, cap, collar or
hedge, or to any foreign exchange contract or currency swap or hedge, or
any other similar agreement or arrangement (including any derivative
agreement or arrangement), and is entered into, purchased or otherwise
acquired by the Borrower or any of its Subsidiaries in the ordinary course
of business and not for purposes of speculation.
"Historical Period": with respect to any Permitted Acquisition, the
-----------------
period of four consecutive fiscal quarters of the Borrower most recently
ended prior to the consummation of such Permitted Acquisition for which
consolidated financial statements of the Guarantor have been delivered
pursuant to subsection 12.1.
"Historical Pro Forma Compliance": with respect to any Permitted
-------------------------------
Acquisition, the Borrower shall be in Historical Pro Forma Compliance if
the Leverage Ratio as of the end of the relevant Historical Period shall be
less than or equal to the ratio set forth below opposite the period during
which such Historical Period ends, with such compliance determined on a pro
forma basis as if such Permitted Acquisition had been consummated on the
first day of such Historical Period:
Period Ratio
------ -----
September 30, 1998 - September 30, 2000 6.00 to 1.0
October 1, 2000 - September 30, 2001 5.75 to 1.0
October 1, 2001 - September 30, 2002 5.00 to 1.0
October 1, 2002 - thereafter 4.75 to 1.0
"Indebtedness": of any Person at any date, without duplication, (a)
------------
all indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services (other than current trade
liabilities incurred in the ordinary course of business and payable in
accordance with customary practices), (b) any other indebtedness of such
Person which is evidenced by a note, bond, debenture or similar instrument,
(c) all obligations of such Person under Financing Leases, (d) all
reimbursement obligations (contingent or otherwise) of such Person in
respect of letters of credit issued for the account of such Person, (e) all
obligations of such Person in respect of acceptances created for the
account of such Person, (f) all obligations of such Person, contingent or
otherwise, to purchase, redeem, retire or otherwise acquire for value any
preferred stock (or equivalent equity interests) of such Person which is
mandatorily redeemable prior to the scheduled maturity of the Tranche A
Loans (other than any such stock held by Management Investors), and (g) all
obligations of the types referred to in clauses (a) through (f) above
secured by any Lien on any property owned by such Person even though such
Person has not assumed or otherwise become liable for the payment thereof.
<PAGE>
13
"Insolvency": with respect to any Multiemployer Plan, the condition
----------
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
---------
"Intellectual Property" as defined in subsection 10.9.
---------------------
"Interest Coverage Ratio": for any period, the ratio of (i) EBITDA
-----------------------
for such period to (ii) Interest Expense for such period.
"Interest Expense": for any period, the amount equal to the interest
----------------
expense (accrued and paid or payable in cash for such period, and in any
event excluding any amortization or write-off of financing costs otherwise
included therein), net of interest income, of the Borrower and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP,
for such period on the aggregate principal amount of their consolidated
Indebtedness.
"Interest Payment Date": (a) as to any ABR Loan, the last Business
---------------------
Day of each March, June, September and December, (b) as to any Eurodollar
Loan having an Interest Period of three months or less, the last day of
such Interest Period and (c) as to any Eurodollar Loan having an Interest
Period longer than three months, each day which is three months, or a whole
multiple thereof, after the first day of such Interest Period (or, if such
day is not a Business Day, the next succeeding Business Day) and the last
day of such Interest Period.
"Interest Period": with respect to any Eurodollar Loan:
---------------
(a) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such Eurodollar
Loan and ending one, two, three or six months thereafter, as selected
by the Borrower in its Notice of Borrowing given with respect thereto;
and
(b) thereafter, each period commencing on the last day of
the next preceding Interest Period applicable to such Eurodollar Loan
and ending one, two, three or six months thereafter, as selected by
the Borrower by irrevocable notice to the Administrative Agent not
less than three Business Days prior to the last day of the then
current Interest Period with respect thereto;
provided that, all of the foregoing provisions relating to Interest Periods
--------
are subject to the following:
(1) if any Interest Period would otherwise end on a day that is
not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless the result of such extension would be
to carry such Interest Period into another calendar month in which
event such Interest Period shall end on the immediately preceding
Business Day;
<PAGE>
14
(2) any Interest Period that would otherwise extend beyond the
Termination Date or beyond the date final payment is due on the
relevant Tranche A Loan, Tranche B Loan, Tranche C Loan or Tranche D
Loan (as the case may be) shall end on the Termination Date or such
date of final payment, as the case may be;
(3) any Interest Period that begins on the last Business Day of
a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month; and
(4) the Borrower shall select Interest Periods so as not to
require a payment or prepayment of any Eurodollar Loan during an
Interest Period for such Loan.
"Issuing Lender": with respect to any Letter of Credit, BankBoston,
--------------
N.A. or any other Lender appointed by the Administrative Agent (provided
that such other Lender agrees to serve in the capacity of Issuing Lender),
in its capacity as issuer thereof.
"L/C Commitment": $25,000,000.
--------------
"L/C Fee Payment Date": the last Business Day of each March, June,
--------------------
September, and December occurring after the date of issuance thereof.
"L/C Obligations": at any time, an amount equal to the sum of (a) the
---------------
aggregate then undrawn and unexpired amount of the then outstanding Letters
of Credit and (b) the aggregate amount of drawings under Letters of Credit
which have not then been reimbursed pursuant to subsection 7.5.
"L/C Participants": with respect to any Letter of Credit, the
----------------
collective reference to all the Revolving Credit Lenders other than the
Issuing Lender with respect to such Letter of Credit.
"Lenders": the collective reference to the Tranche A Lenders, the
-------
Tranche B Lenders, the Tranche C Lenders, the Tranche D Lenders, the
Revolving Credit Lenders and the Swing Line Lender.
"Letters of Credit": as defined in subsection 7.1.
-----------------
"Level": with respect to the Tranche A Facility, the Revolving Credit
-----
Facility and the Applicable Commitment Fee Rate, the Level set forth below
corresponding to the Leverage Ratio then in effect:
<PAGE>
15
Level Leverage Ratio
I Less than 3.50 to 1.00
II Greater than or equal to 3.50 to 1.00
and less than 4.00 to 1.00
III Greater than or equal to 4.00 to 1.00
and less than 4.50 to 1.00
IV Greater than or equal to 4.50 to 1.00
and less than 5.00 to 1.00
V Greater than or equal to 5.00 to 1.00
and less than 5.50 to 1.00
VI Greater than or equal to 5.50 to 1.00
and, with respect to the Tranche B Facility, the Tranche C Facility and the
Tranche D Facility, the Level set forth below corresponding to the Leverage
Ratio then in effect:
Level Leverage Ratio
I Less than 4.00 to 1.00
II Greater than or equal to 4.00 to 1.00
and less than 5.00 to 1.00
III Greater than or equal to 5.00 to 1.00
; provided that, any change in the Applicable Margin or the Applicable
--------
Commitment Fee Rate resulting from a change in the Level shall become
effective as of the opening of business on the date which is the earlier of
(A) the date upon which the Administrative Agent receives the financial
statements required to be delivered pursuant to subsection 12.1(a) or (b)
which evidence such change in the Level and (B) the date upon which such
financial statements are required to be delivered pursuant to subsection
12.1(a) or (b), as applicable; provided, further, that, in the event that
-------- -------
the financial statements required to be delivered pursuant to subsection
12.1(a) or (b), as applicable, are not delivered when due (after giving
effect to the applicable cure period), then during the period from the date
upon which such financial statements were required to be delivered until
the date upon which they actually are delivered, the Level in effect shall
be deemed for purposes of this definition to be Level VI with respect to
the Tranche A Facility, the Revolving Credit Facility and the Applicable
Commitment Fee Rate, and Level III with respect to the Tranche B Facility,
the Tranche C Facility and the Tranche D Facility.
"Leverage Ratio": at the last day of any fiscal quarter, the ratio of
--------------
(i) total Indebtedness of the Borrower and its Subsidiaries required to be
reflected on a consolidated balance sheet of the Borrower on such date in
accordance with GAAP, net of the actual amount of any cash on the balance
sheet of any of the Borrower's
<PAGE>
16
Subsidiaries located in Europe on such date, up to a maximum of
$28,000,000, to (ii) EBITDA for the period of four consecutive fiscal
quarters ended on such date.
"Lien": any mortgage, pledge, hypothecation, assignment security
----
deposit arrangement, encumbrance, lien (statutory or other), charge or
other security interest or any preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title
retention agreement and any Financing Lease having substantially the same
economic effect as any of the foregoing).
"Loan": any Tranche A Loan, Tranche B Loan, Tranche C Loan, Tranche D
----
Loan, Revolving Credit Loan or any Swing Line Loan, as the context shall
require.
"Majority Basic Lenders": at any time, Tranche A Lenders and
----------------------
Revolving Credit Lenders having Commitments which aggregate more than 50%
of the amount equal to the sum of the Aggregate Tranche A Commitment and
the Aggregate Revolving Credit Commitment then in effect.
"Majority Facility Lenders": with respect to any Facility, the
-------------------------
Lenders having Commitments under such Facility which aggregate more than
50% of the aggregate Commitments with respect to such Facility then in
effect.
"Majority Hybrid Lenders": at any time, Tranche B Lenders, Tranche C
-----------------------
Lenders and Tranche D Lenders having Commitments which aggregate more than
50% of the amount equal to the sum of the Aggregate Tranche B Commitment,
the Aggregate Tranche C Commitment and the Aggregate Tranche D Commitment
then in effect.
"Majority Lenders": at any time, Lenders having Commitments which
----------------
aggregate more than 50% of the amount equal to the sum of the Aggregate
Tranche A Commitment, the Aggregate Tranche B Commitment, the Aggregate
Tranche C Commitment, the Aggregate Tranche D Commitment and the Aggregate
Revolving Credit Commitment then in effect.
"Majority Term Lenders": at any time, Tranche A Lenders, Tranche B
---------------------
Lenders, Tranche C Lenders and Tranche D Lenders having Commitments which
aggregate more than 50% of the amount equal to the sum of the Aggregate
Tranche A Commitment, the Aggregate Tranche B Commitment, the Aggregate
Tranche C Commitment and the Aggregate Tranche D Commitment then in effect.
"Management Investors": the collective reference to the officers,
--------------------
directors, employees and other members of the management of the Guarantor
or any of its Subsidiaries, or immediate family members or relatives
thereof, or trusts or partnerships for the benefit of any of the foregoing,
or any of their heirs, executors or legal representatives, who at any
particular date shall beneficially own or have the right to acquire,
directly or indirectly, common stock of the Guarantor or the Borrower.
"Management Subscription Agreements": one or more stock subscription,
----------------------------------
stock option, grant or other agreements which have been or may be entered
into between the
<PAGE>
17
Guarantor or the Borrower and certain Management Investors, with respect to
the issuance to or ownership by such parties of common stock of the
Guarantor or the Borrower or options, warrants, units or other rights in
respect of common stock of the Guarantor or the Borrower, any agreements
entered into from time to time by transferees of any such stock, options,
warrants or other rights in connection with the sale, transfer or
reissuance thereof, and any assumptions of any of the foregoing by third
parties, as amended, supplemented, waived or otherwise modified from time
to time.
"Material Adverse Effect": a material adverse effect on (a) the
-----------------------
business, operations, property or condition (financial or otherwise) of the
Guarantor and its Subsidiaries (after giving effect to the Transaction)
taken as a whole or (b) the validity or enforceability of the Credit
Documents as to any Credit Parties party thereto or the rights and remedies
of the Administrative Agent or the Lenders hereunder and thereunder taken
as a whole.
"Material Environmental Amount": an amount payable by the Borrower
-----------------------------
and/or its Subsidiaries in respect of or under any Environmental Law for
remedial costs, compliance costs, compensatory damages, punitive damages,
fines, penalties or any combination thereof in an amount that would
reasonably be expected to have a Material Adverse Effect.
"Material Subsidiary": at any date, any Subsidiary of the Borrower
-------------------
which at such date has assets with a market value in excess of $5,000,000
or annual revenues in excess of $5,000,000.
"Materials of Environmental Concern": any hazardous or toxic
----------------------------------
substances, materials, pollutants or wastes, defined or regulated as such
in or under any applicable Environmental Law, including, without
limitation, gasoline or petroleum (including, without limitation, crude oil
or any fraction thereof) or petroleum products, asbestos, polychlorinated
biphenyls and urea-formaldehyde insulation.
"Merger": as defined in the recitals.
------
"Merger Agreement": as defined in the recitals.
----------------
"MergerCorp": as defined in the recitals.
----------
"Multiemployer Plan": a Plan which is a multiemployer plan as defined
------------------
in Section 4001(a)(3) of ERISA.
"Net Proceeds": with respect to any of the events referred to in
------------
subsection 9.5(c) or (d) and the defined terms used therein, (a) the gross
cash consideration, and all cash proceeds (as and when received) of non-
cash consideration (including, without limitation, any such cash proceeds
in the nature of principal and interest payments on account of promissory
notes or similar obligations), received by the Borrower and its
Subsidiaries in connection with such event, minus (b) the sum, without
duplication, of (i) any taxes reasonably estimated to be payable to any
federal, state, local or foreign
<PAGE>
18
taxing authority by the Guarantor and its Subsidiaries as a result thereof,
(ii) the amount of fees and commissions (including reasonable investment
banking fees, legal, accounting, consulting, survey, title and recording
tax expenses and other costs and expenses) actually incurred in connection
with such event which are paid or payable by the Borrower and its
Subsidiaries, (iii) the amount of such net cash proceeds which are
attributable to (and payable to) minority interests, (iv) the amount of any
reserve reasonably maintained by the Borrower and its Subsidiaries with
respect to indemnification obligations owing pursuant to the definitive
documentation pursuant to which such event is consummated (with any unused
portion of such reserve to constitute Net Proceeds on the date upon which
the indemnification obligations terminate or such reserve is reduced other
than in connection with a payment), (v) the amount of Indebtedness (other
than intercompany Indebtedness), if any, which is required to be repaid at
the time or as a result of such event out of the proceeds thereof and (vi)
with respect to the determination of Net Proceeds from a sale or other
disposition of property or assets referred to in subsection 9.5(d),
appropriate amounts to be provided by the Borrower or any of its
Subsidiaries to be applied to satisfy any reasonable expenses and
liabilities associated with any such property or assets and retained by the
Borrower or any such Subsidiary after such sale or other disposition and
other appropriate amounts which shall be used by the Borrower or any of its
Subsidiaries to discharge or pay on a current basis any other reasonable
expenses and liabilities associated with such property or assets.
"Non-Excluded Taxes": as defined in subsection 9.14(a).
------------------
"Note": as defined in subsection 9.1(e); collectively, the "Notes."
---- -----
"Notice of Borrowing": with respect to (a) any borrowing of Loans, a
-------------------
Notice of Borrowing (Drawings), substantially in the form of Exhibit E-1,
(b) any conversion of Loans, a Notice of Borrowing (Conversions),
substantially in the form of Exhibit E-2 and (c) any continuation of
Eurodollar Loans, a Notice of Borrowing (Continuations), substantially in
the form of Exhibit E-3 hereto.
"Participant": as defined in subsection 18.6(b).
-----------
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
----
to Subtitle A of Title IV of ERISA.
"Permitted Acquisition": as defined in subsection 14.8(e).
---------------------
"Person": an individual, partnership, corporation, business trust,
------
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Plan": any employee benefit plan which is covered by ERISA and in
----
respect of which the Borrower or a Commonly Controlled Entity is an
"employer" as defined in Section 3(5) of ERISA.
<PAGE>
19
"Prime Rate" shall mean the rate of interest per annum publicly
----------
announced from time to time by the Administrative Agent as its prime rate
in effect at its principal office in New York City.
"Properties": as defined in subsection 10.16(a).
----------
"Recapitalization": as defined in the recitals.
----------------
"Refunded Swing Line Loans": as defined in subsection 8.3(a).
-------------------------
"Register": as defined in subsection 18.6(d).
--------
"Regulation U": Regulation U of the Board of Governors of the Federal
------------
Reserve System as in effect from time to time.
"Reimbursement Obligation": the obligation of the Borrower to
------------------------
reimburse the Issuing Lender pursuant to subsection 7.5 for amounts drawn
under Letters of Credit issued by it.
"Reinvested Amount": with respect to any sale, transfer or other
-----------------
disposition of property or assets of the Borrower or any of its
Subsidiaries permitted by subsection 14.5(h), (j) or (k) or any recovery of
amounts under any property insurance policies, that portion of the Net
Proceeds thereof as shall, according to a certificate of a Responsible
Officer of the Borrower delivered to the Administrative Agent within 30
days of such sale or other disposition, be reinvested in the business of
the Borrower and its Subsidiaries in a manner consistent with the
requirements of subsection 14.14 and the other provisions hereof within 360
days of the receipt of such Net Proceeds or, if such reinvestment is in a
project authorized by the board of directors or comparable body of the
Borrower that will take longer than such 360 days to complete, the period
of time necessary to complete such project (so long as the Borrower
or the relevant Subsidiary has committed to expend such portion of the
Net Proceeds within, and is diligently pursuing such project during,
the period of 360 days from the receipt of such Net Proceeds); provided
--------
that (i) if any such certificate of a Responsible Officer is not delivered
to the Administrative Agent on the date of such sale or other disposition,
any Net Proceeds of such sale or other disposition shall be promptly (x)
deposited in a cash collateral account established at Morgan Guaranty Trust
Company of New York to be held as collateral in favor of the Administrative
Agent for the benefit of the Lenders on terms reasonably satisfactory to
the Administrative Agent and shall remain on deposit in such cash
collateral account until such certificate of a Responsible Officer is (or
is required to be) delivered to the Administrative Agent or (y) to the
extent that the Borrower has indicated that no such certificate will be
delivered, used to make a prepayment of the Revolving Credit Loans in
accordance with subsection 9.3; provided that, notwithstanding anything in
--------
this Agreement to the contrary, the Borrower may not request any borrowings
under the Revolving Credit Commitments that would reduce the aggregate
amount of the Available Revolving Credit Commitments to an amount that is
less than the amount of any such prepayment until such certificate of a
Responsible Officer is delivered to the Administrative Agent and (ii) any
Net Proceeds
<PAGE>
20
not so reinvested by such 360th day or later day, as applicable, shall be
utilized on such day to prepay the Loans pursuant to subsection 9.5(d).
"Related Fund": with respect to any Lender that is a fund or trust
------------
that invests in loans, either any other fund or trust that invests in loans
and is managed by the same investment advisor as such Lender or by an
Affiliate of such investment advisor.
"Reorganization": with respect to any Multiemployer Plan, the
--------------
condition that such plan is in reorganization within the meaning of Section
4241 of ERISA.
"Reportable Event": any of the events set forth in Section 4043(b) of
----------------
ERISA, other than those events as to which the thirty day notice period is
waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg. (S)
2615.
"Requirement of Law": as to any Person, the Certificate of
------------------
Incorporation and By-Laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject; provided that the
--------
foregoing shall not apply to any non-binding recommendation of any
Governmental Authority.
"Responsible Officer": the chief executive officer and the president
-------------------
of the Borrower or, with respect to financial matters, the chief financial
officer of the Borrower, or, with respect to benefits matters the Corporate
Vice-President--Human Resources of the Borrower;
"Revolving Credit Commitment": as to any Revolving Credit Lender, its
---------------------------
obligation to make Revolving Credit Loans to and/or make, issue or
participate in Swing Line Loans and/or Letters of Credit made or issued on
behalf of the Borrower hereunder in an aggregate principal and/or face
amount at any one time outstanding not to exceed the amount set forth
opposite such Revolving Credit Lender's name on Schedule I (as deemed
amended by any Assignment and Acceptance) under the heading "Revolving
Credit Commitment"; collectively, as to all the Revolving Credit Lenders,
the "Revolving Credit Commitments".
"Revolving Credit Commitment Percentage": as to any Revolving Credit
--------------------------------------
Lender at any time, the percentage which such Revolving Credit Lender's
Revolving Credit Commitment then constitutes of the Aggregate Revolving
Credit Commitment (or, at any time after the Aggregate Revolving Credit
Commitment shall have expired or terminated, the percentage which the
aggregate principal amount of such Revolving Credit Lender's Revolving
Credit Loans then outstanding constitutes of the aggregate principal amount
of the Revolving Credit Loans then outstanding).
"Revolving Credit Lenders": each bank or other financial institution
------------------------
holding a Revolving Credit Commitment hereunder (or, after the last day of
the Commitment Period and subject to the provisions of subsection 18.6(d),
holding any Revolving Credit
<PAGE>
21
Loans or participating interests in Letters of Credit or Swing Line Loans
hereunder); collectively, the "Revolving Credit Lenders".
------------------------
"Revolving Credit Loans": as defined in subsection 6.1.
----------------------
"Security Documents": the collective reference to the Collateral
------------------
Agreement, the Foreign Pledge Agreements, if any, and all other security
documents hereafter delivered to the Administrative Agent granting a Lien
on any asset or assets of any Person to secure the obligations and
liabilities of the Borrower hereunder and under any of the other Credit
Documents or to secure any guarantee of any such obligations and
liabilities.
"Senior Subordinated Note Indenture": the Indenture entered into by
----------------------------------
the Guarantor and Newco in connection with the issuance of the Senior
Subordinated Notes, and thereafter assumed by the Borrower, as the same may
be amended, supplemented or otherwise modified from time to time in
accordance with subsection 14.12.
"Senior Subordinated Notes": the subordinated notes of the Guarantor
-------------------------
and Newco issued on the Closing Date pursuant to the Senior Subordinated
Note Indenture and assumed by the Borrower, as the same may be exchanged in
whole or in part for substantially similar subordinated notes in accordance
with the terms of the Senior Subordinated Note Indenture, and as any such
subordinated notes may be amended, supplemented or otherwise modified from
time to time in accordance with subsection 14.12.
"Single Employer Plan": any Plan which is covered by Title IV of
--------------------
ERISA, but which is not a Multiemployer Plan.
"Solvent": when used with respect to any Person, means that, as of
-------
any date of determination, (a) the amount of the assets of such Person, at
a fair valuation, will, as of such date, exceed the amount of all
liabilities of such Person, contingent or otherwise, as of such date, (b)
the present fair saleable value of the assets of such Person will, as of
such date, be greater than the amount that will be required to pay the
probable liability of such Person on its debts as such debts become
absolute and matured, (c) such Person will not have, as of such date, an
unreasonably small amount of capital with which to conduct its business,
and (d) such Person will be able to pay its debts as they mature. For
purposes of determining whether a Person is Solvent, the amount of any
contingent liability shall be computed as the amount that, in light of all
the facts and circumstances existing at such time, represents the amount
that can reasonably be expected to become an actual or matured liability.
"Specified Change": as defined in subsection 18.1(b).
----------------
"Subsidiary": as to any Person, a corporation, partnership or other
----------
entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests
having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other
<PAGE>
22
managers of such corporation, partnership or other entity are at the time
owned, or the management of which is otherwise controlled, directly or
indirectly through one or more intermediaries, or both, by such Person.
Unless otherwise qualified, all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary or
Subsidiaries of the Borrower.
"Subsidiary Guarantor": any Person (other than the Borrower, the
--------------------
Guarantor and the Administrative Agent) party to the Collateral Agreement
pursuant to this Agreement.
"Swing Line Commitment": at any date, the obligation of the Swing
---------------------
Line Lender to make Swing Line Loans pursuant to subsection 8.1 in the
amount referred to therein.
"Swing Line Lender": Morgan Guaranty Trust Company of New York.
-----------------
"Swing Line Loans": as defined in subsection 8.1(a).
----------------
"Syndication Agent": as defined in the preamble hereto.
-----------------
"Tax Allocation Agreement": the Tax Allocation Agreement among the
------------------------
Guarantor, the Borrower and the Subsidiaries, as amended, modified or
supplemented from time to time.
"Termination Date": March 31, 2004.
----------------
"Term Loan Facilities": the collective reference to the Tranche A
--------------------
Facility, the Tranche B Facility, the Tranche C Facility and the Tranche D
Facility.
"Term Loans": the collective reference to the Tranche A Loans, the
----------
Tranche B Loans, the Tranche C Loans and the Tranche D Loans.
"Tranche": the collective reference to Eurodollar Loans, the then
-------
current Interest Periods with respect to all of which begin on the same
date and end on the same later date (whether or not such Loans shall
originally have been made on the same day); Tranches may be identified as
"Eurodollar Tranches".
--------------------
"Tranche A Commitment": as to any Tranche A Lender, its obligation to
--------------------
make its Tranche A Loan to the Borrower hereunder in an aggregate principal
not to exceed the amount set forth opposite such Lender's name on Schedule
I under the heading "Tranche A Commitment".
"Tranche A Commitment Percentage": as to any Tranche A Lender at any
-------------------------------
time, the percentage which such Tranche A Lender's Tranche A Commitment
then constitutes of the Aggregate Tranche A Commitment (or, at any time
after the Closing Date, the percentage which the aggregate principal amount
of such Tranche A Lender's Tranche A Loans then outstanding constitutes of
the aggregate principal amount of the Tranche A Loans then outstanding).
<PAGE>
23
"Tranche A Lender": each bank or other financial institution holding
----------------
a Tranche A Commitment hereunder (or, after the Closing Date and subject to
the provisions of subsection 18.6(d), holding any Tranche A Loans
hereunder); collectively, the "Tranche A Lenders".
-----------------
"Tranche A Loan": as defined in subsection 2.1.
--------------
"Tranche B Commitment": as to any Tranche B Lender, its obligation to
--------------------
make its Tranche B Loan to the Borrower hereunder in an aggregate principal
not to exceed the amount set forth opposite such Lender's name on Schedule
I under the heading "Tranche B Commitment".
"Tranche B Commitment Percentage": as to any Tranche B Lender at any
-------------------------------
time, the percentage which such Tranche B Lender's Tranche B Commitment
then constitutes of the Aggregate Tranche B Commitment (or, at any time
after the Closing Date, the percentage which the aggregate principal amount
of such Tranche B Lender's Tranche B Loans then outstanding constitutes of
the aggregate principal amount of the Tranche B Loans then outstanding).
"Tranche B Lender": each bank or other financial institution holding
----------------
a Tranche B Commitment hereunder (or, after the Closing Date and subject to
the provisions of subsection 18.6(d), holding any Tranche B Loans
hereunder); collectively, the "Tranche B Lenders".
-----------------
"Tranche B Loan": as defined in subsection 3.1.
--------------
"Tranche C Commitment": as to any Tranche C Lender, its obligation to
--------------------
make its Tranche C Loan to the Borrower hereunder in an aggregate principal
not to exceed the amount set forth opposite such Lender's name on Schedule
I under the heading "Tranche C Commitment".
"Tranche C Commitment Percentage": as to any Tranche C Lender at any
-------------------------------
time, the percentage which such Tranche C Lender's Tranche C Commitment
then constitutes of the Aggregate Tranche C Commitment (or, at any time
after the Closing Date, the percentage which the aggregate principal amount
of such Tranche C Lender's Tranche C Loans then outstanding constitutes of
the aggregate principal amount of the Tranche C Loans then outstanding).
"Tranche C Lender": each bank or other financial institution holding
----------------
a Tranche C Commitment hereunder (or, after the Closing Date and subject to
the provisions of subsection 18.6(d), holding any Tranche C Loans
hereunder); collectively, the "Tranche C Lenders".
-----------------
"Tranche C Loan": as defined in subsection 4.1.
--------------
<PAGE>
24
"Tranche D Commitment": as to any Tranche D Lender, its obligation to
--------------------
make its Tranche D Loan to the Borrower hereunder in an aggregate principal
not to exceed the amount set forth opposite such Lender's name on Schedule
I under the heading "Tranche D Commitment".
"Tranche D Commitment Percentage": as to any Tranche D Lender at any
-------------------------------
time, the percentage which such Tranche D Lender's Tranche D Commitment
then constitutes of the Aggregate Tranche D Commitment (or, at any time
after the Closing Date, the percentage which the aggregate principal amount
of such Tranche D Lender's Tranche D Loans then outstanding constitutes of
the aggregate principal amount of the Tranche D Loans then outstanding).
"Tranche D Lender": each bank or other financial institution holding
----------------
a Tranche D Commitment hereunder (or, after the Closing Date and subject to
the provisions of subsection 18.6(d), holding any Tranche D Loans
hereunder); collectively, the "Tranche D Lenders".
-----------------
"Tranche D Loan": as defined in subsection 5.1.
--------------
"Transaction": as defined in the recitals.
-----------
"Transfer": as defined in the recitals.
--------
"Transaction Documents": the Merger Agreement and any proxy statement
---------------------
relating to the Merger; this Agreement and the other Credit Documents; the
Senior Subordinated Note Indenture, the Senior Subordinated Notes, any
purchase or registration rights agreements or offering circular relating to
the Senior Subordinated Notes; and any subscription, registration rights or
stockholders agreements relating to the equity investment in connection
with the Transaction.
"Transferee": as defined in subsection 18.6(f).
----------
"TTC Guarantee": as defined in subsection 10.19.
-------------
"Type": as to any Loan, its nature as an ABR Loan or a Eurodollar
----
Loan.
"Underfunding": an excess of all accrued benefits under a Plan (based
------------
on those assumptions used to fund such Plan), determined as of the most
recent annual valuation date, over the value of the assets of such Plan
allocable to such accrued benefits.
"Uniform Customs": the Uniform Customs and Practice for Documentary
---------------
Credits (1993 Revision), International Chamber of Commerce Publication No.
500, as the same may be amended from time to time.
"Wholly Owned Subsidiary": as to any Person, any Subsidiary of such
-----------------------
Person of which such Person owns, directly or indirectly through one or
more Wholly Owned Subsidiaries, all of the Capital Stock of such Subsidiary
other than directors qualifying shares or shares held by nominees.
<PAGE>
25
"Working Capital": at any date, Current Assets on such date minus
--------------- -----
Current Liabilities on such date.
1.2 Other Definitional Provisions. (a) Unless otherwise specified
-----------------------------
therein, all terms defined in this Agreement shall have the defined meanings
when used in any Notes or any certificate or other document made or delivered
pursuant hereto.
(b) As used herein and in any Notes, and any certificate or other
document made or delivered pursuant hereto, accounting terms relating to the
Guarantor, the Borrower and their Subsidiaries not defined in subsection 1.1 and
accounting terms partly defined in subsection 1.1, to the extent not defined,
shall have the respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, subsection,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF TRANCHE A LOAN
2.1 Tranche A Term Loans. Subject to the terms and conditions
--------------------
hereof, each Tranche A Lender severally agrees to make a term loan (a "Tranche A
---------
Loan") to the Borrower on the Closing Date in an amount not to exceed the amount
- ----
of the Tranche A Commitment of such Tranche A Lender then in effect. The
Tranche A Loans may from time to time be (a) Eurodollar Loans, (b) ABR Loans or
(c) a combination thereof, as determined by Holding and notified to the
Administrative Agent in accordance with subsections 2.2 and 9.6; provided that
--------
the Tranche A Loans to be made on the Closing Date initially shall be made as
ABR Loans.
2.2 Procedure for Tranche A Loan Borrowing. The Borrower shall give
--------------------------------------
the Administrative Agent its irrevocable Notice of Borrowing (which notice must
be received by the Administrative Agent prior to 12:00 Noon, New York City time,
one Business Day prior to the Closing Date) requesting that the Tranche A
Lenders make the Tranche A Loans on the Closing Date and specifying the amount
to be borrowed. Upon receipt of such Notice of Borrowing, the Administrative
Agent shall promptly notify each Tranche A Lender thereof. Each Tranche A
Lender will make the amount of its pro rata share of the Tranche A Loans
available to the Administrative Agent for the account of Holding at the office
of the Administrative Agent specified in subsection 18.2 prior to 10:00 A.M.,
New York City time, on the Closing Date in funds immediately available to the
Administrative Agent. Such Tranche A Loans will then be made available to
Holding by the Administrative Agent transferring to the account directed by
Holding (which account need not be maintained by the Administrative Agent) with
the aggregate of the amounts made available to the Administrative Agent by the
Tranche A Lenders and in like funds as received by the Administrative Agent.
<PAGE>
26
2.3 Amortization of Tranche A Loans. (a) The Borrower shall repay
-------------------------------
the Tranche A Loans on each date set forth below (or, if such date is not a
Business Day, on the immediately preceding Business Day) by the amount set forth
below opposite such date:
Date Amount
---- ------
June 30, 1998 $1,250,000
September 30, 1998 $1,250,000
December 31, 1998 $1,250,000
March 31, 1999 $1,250,000
June 30, 1999 $1,250,000
September 30, 1999 $1,250,000
December 31, 1999 $1,250,000
March 31, 2000 $1,250,000
June 30, 2000 $1,250,000
September 30, 2000 $1,250,000
December 31, 2000 $1,250,000
March 31, 2001 $1,250,000
June 30, 2001 $2,125,000
September 30, 2001 $2,125,000
December 31, 2001 $2,125,000
March 31, 2002 $2,125,000
June 30, 2002 $2,875,000
September 30, 2002 $2,875,000
December 31, 2002 $2,875,000
March 31, 2003 $2,875,000
June 30, 2003 $3,750,000
September 30, 2003 $3,750,000
December 31, 2003 $3,750,000
March 31, 2004 $3,750,000
(b) The Borrower shall repay any then-outstanding Tranche A Loans on
the Termination Date.
2.4 Use of Proceeds of Tranche A Loans. The proceeds of the Tranche
----------------------------------
A Loans shall be utilized by the Borrower only (a) to finance the Transaction
and (b) to pay any fees and expenses relating thereto.
SECTION 3. AMOUNT AND TERMS OF TRANCHE B LOAN
3.1 Tranche B Term Loans. Subject to the terms and conditions
--------------------
hereof, each Tranche B Lender severally agrees to make a term loan (a "Tranche B
---------
Loan") to the Borrower on the Closing Date in an amount not to exceed the amount
- ----
of the Tranche B Commitment of such Tranche B Lender then in effect. The
Tranche B Loans may from time to time be (a) Eurodollar Loans, (b) ABR Loans or
(c) a combination thereof, as determined by the Borrower and notified to the
Administrative Agent in accordance with subsections 3.2 and 9.6; provided that
--------
the Tranche B Loans to be made on the Closing Date initially shall be made as
ABR Loans.
<PAGE>
27
3.2 Procedure for Tranche B Loan Borrowing. The Borrower shall give
--------------------------------------
the Administrative Agent its irrevocable Notice of Borrowing (which notice must
be received by the Administrative Agent prior to 12:00 Noon, New York City time,
one Business Day prior to the Closing Date) requesting that the Tranche B
Lenders make the Tranche B Loans on the requested Borrowing Date and specifying
the amount to be borrowed. Upon receipt of such Notice of Borrowing, the
Administrative Agent shall promptly notify each Tranche B Lender thereof. Each
Tranche B Lender will make the amount of its pro rata share of the Tranche B
Loans available to the Administrative Agent for the account of Holding at the
office of the Administrative Agent specified in subsection 18.2 prior to 10:00
A.M., New York City time, on the Closing Date in funds immediately available to
the Administrative Agent. Such Tranche B Loans will then be made available to
Holding by the Administrative Agent transferring to the account directed by
Holding (which account need not be maintained by the Administrative Agent) with
the aggregate of the amounts made available to the Administrative Agent by the
Tranche B Lenders and in like funds as received by the Administrative Agent.
3.3 Amortization of Tranche B Loans. (a) The Borrower shall repay
-------------------------------
the Tranche B Loans on each date set forth below (or, if such date is not a
Business Day, on the immediately preceding Business Day) by the amount set forth
below opposite such date:
Date Amount
---- ------
June 30, 1998 $250,000
September 30, 1998 $250,000
December 31, 1998 $250,000
March 31, 1999 $250,000
June 30, 1999 $250,000
September 30, 1999 $250,000
December 31, 1999 $250,000
March 31, 2000 $250,000
June 30, 2000 $250,000
September 30, 2000 $250,000
December 31, 2000 $250,000
March 31, 2001 $250,000
June 30, 2001 $250,000
September 30, 2001 $250,000
December 31, 2001 $250,000
March 31, 2002 $250,000
June 30, 2002 $250,000
September 30, 2002 $250,000
December 31, 2002 $250,000
March 31, 2003 $250,000
June 30, 2003 $250,000
September 30, 2003 $250,000
December 31, 2003 $250,000
March 31, 2004 $250,000
June 30, 2004 $250,000
September 30, 2004 $250,000
December 31, 2004 $250,000
<PAGE>
28
March 31, 2005 $63,250,000
(b) The Borrower shall repay any then-outstanding Tranche B Loans on
March 31, 2005.
3.4 Use of Proceeds of Tranche B Loans. The proceeds of the Tranche
----------------------------------
B Loans shall be utilized by the Borrower only (a) to finance the Transaction
and (b) to pay any fees and expenses relating thereto.
SECTION 4. AMOUNT AND TERMS OF TRANCHE C LOAN
4.1 Tranche C Term Loans. Subject to the terms and conditions
--------------------
hereof, each Tranche C Lender severally agrees to make a term loan (a "Tranche C
---------
Loan") to the Borrower on the Closing Date in an amount not to exceed the amount
- ----
of the Tranche C Commitment of such Tranche C Lender then in effect. The
Tranche C Loans may from time to time be (a) Eurodollar Loans, (b) ABR Loans or
(c) a combination thereof, as determined by the Borrower and notified to the
Administrative Agent in accordance with subsections 4.2 and 9.6; provided that
--------
the Tranche C Loans to be made on the Closing Date initially shall be made as
ABR Loans.
4.2 Procedure for Tranche C Loan Borrowing. The Borrower shall give
--------------------------------------
the Administrative Agent its irrevocable Notice of Borrowing (which notice must
be received by the Administrative Agent prior to 12:00 Noon, New York City time,
one Business Day prior to the Closing Date) requesting that the Tranche C
Lenders make the Tranche C Loans on the requested Borrowing Date and specifying
the amount to be borrowed. Upon receipt of such Notice of Borrowing, the
Administrative Agent shall promptly notify each Tranche C Lender thereof. Each
Tranche C Lender will make the amount of its pro rata share of the Tranche C
Loans available to the Administrative Agent for the account of Holding at the
office of the Administrative Agent specified in subsection 18.2 prior to 10:00
A.M., New York City time, on the Closing Date in funds immediately available to
the Administrative Agent. Such Tranche C Loans will then be made available to
Holding by the Administrative Agent transferring to the account directed by
Holding (which account need not be maintained by the Administrative Agent) with
the aggregate of the amounts made available to the Administrative Agent by the
Tranche C Lenders and in like funds as received by the Administrative Agent.
4.3 Amortization of Tranche C Loans. (a) The Borrower shall repay
-------------------------------
the Tranche C Loans on each date set forth below (or, if such date is not a
Business Day, on the immediately preceding Business Day) by the amount set forth
below opposite such date:
<PAGE>
29
Date Amount
---- ------
June 30, 1998 $250,000
September 30, 1998 $250,000
December 31, 1998 $250,000
March 31, 1999 $250,000
June 30, 1999 $250,000
September 30, 1999 $250,000
December 31, 1999 $250,000
March 31, 2000 $250,000
June 30, 2000 $250,000
September 30, 2000 $250,000
December 31, 2000 $250,000
March 31, 2001 $250,000
June 30, 2001 $250,000
September 30, 2001 $250,000
December 31, 2001 $250,000
March 31, 2002 $250,000
June 30, 2002 $250,000
September 30, 2002 $250,000
December 31, 2002 $250,000
March 31, 2003 $250,000
June 30, 2003 $250,000
September 30, 2003 $250,000
December 31, 2003 $250,000
March 31, 2004 $250,000
June 30, 2004 $250,000
September 30, 2004 $250,000
December 31, 2004 $250,000
March 31, 2005 $250,000
June 30, 2005 $250,000
September 30, 2005 $250,000
December 31, 2005 $250,000
March 31, 2006 $62,250,000
(b) The Borrower shall repay any then-outstanding Tranche C Loans on
March 31, 2006.
4.4 Use of Proceeds of Tranche C Loans. The proceeds of the Tranche
----------------------------------
C Loans shall be utilized by the Borrower only (a) to finance the Transaction
and (b) to pay any fees and expenses relating thereto.
SECTION 5. AMOUNT AND TERMS OF TRANCHE D LOAN
5.1 Tranche D Term Loans. Subject to the terms and conditions
--------------------
hereof, each Tranche D Lender severally agrees to make a term loan (a "Tranche D
---------
Loan") to the Borrower on the Closing Date in an amount not to exceed the amount
- ----
of the Tranche D Commitment of
<PAGE>
30
such Tranche D Lender then in effect. The Tranche D Loans may from time to time
be (a) Eurodollar Loans, (b) ABR Loans or (c) a combination thereof, as
determined by Holding and notified to the Administrative Agent in accordance
with subsections 5.2 and 9.6; provided that the Tranche D Loans to be made on
--------
the Closing Date initially shall be made as ABR Loans.
5.2 Procedure for Tranche D Loan Borrowing. The Borrower shall give
--------------------------------------
the Administrative Agent its irrevocable Notice of Borrowing (which notice must
be received by the Administrative Agent prior to 12:00 Noon, New York City time,
one Business Day prior to the Closing Date) requesting that the Tranche D
Lenders make the Tranche D Loans on the requested Borrowing Date and specifying
the amount to be borrowed. Upon receipt of such Notice of Borrowing, the
Administrative Agent shall promptly notify each Tranche D Lender thereof. Each
Tranche D Lender will make the amount of its pro rata share of the Tranche D
Loans available to the Administrative Agent for the account of Holding at the
office of the Administrative Agent specified in subsection 18.2 prior to 10:00
A.M., New York City time, on the Closing Date in funds immediately available to
the Administrative Agent. Such Tranche D Loans will then be made available to
Holding by the Administrative Agent transferring to the account directed by
Holding (which account need not be maintained by the Administrative Agent) with
the aggregate of the amounts made available to the Administrative Agent by the
Tranche D Lenders and in like funds as received by the Administrative Agent.
5.3 Amortization of Tranche D Loans. (a) The Borrower shall repay
-------------------------------
the Tranche D Loans on each date set forth below (or, if such date is not a
Business Day, on the immediately preceding Business Day) by the amount set forth
below opposite such date:
Period Amount
------ ------
June 30, 1998 $250,000
September 30, 1998 $250,000
December 31, 1998 $250,000
March 31, 1999 $250,000
June 30, 1999 $250,000
September 30, 1999 $250,000
December 31, 1999 $250,000
March 31, 2000 $250,000
June 30, 2000 $250,000
September 30, 2000 $250,000
December 31, 2000 $250,000
March 31, 2001 $250,000
June 30, 2001 $250,000
September 30, 2001 $250,000
December 31, 2001 $250,000
March 31, 2002 $250,000
June 30, 2002 $250,000
September 30, 2002 $250,000
December 31, 2002 $250,000
March 31, 2003 $250,000
June 30, 2003 $250,000
September 30, 2003 $250,000
<PAGE>
31
December 31, 2003 $250,000
March 31, 2004 $250,000
June 30, 2004 $250,000
September 30, 2004 $250,000
December 31, 2004 $250,000
March 31, 2005 $250,000
June 30, 2005 $250,000
September 30, 2005 $250,000
December 31, 2005 $250,000
March 31, 2006 $250,000
June 30, 2006 $250,000
September 30, 2006 $250,000
December 31, 2006 $250,000
March 31, 2007 $61,250,000
(b) The Borrower shall repay Tranche D Loans on March 31, 2007.
5.4 Use of Proceeds of Tranche D Loans. The proceeds of the Tranche
----------------------------------
D Loans shall be utilized by the Borrower only (a) to finance the Transaction
and (b) to pay any fees and expenses relating thereto.
SECTION 6. AMOUNT AND TERMS OF REVOLVING CREDIT COMMITMENTS
6.1 Revolving Credit Commitments. (a) Subject to the terms and
----------------------------
conditions hereof, each Revolving Credit Lender severally agrees to make
revolving credit loans ("Revolving Credit Loans") to the Borrower from time to
----------------------
time during the Commitment Period in an aggregate principal amount at any one
time outstanding which, when added to such Revolving Credit Lender's Revolving
Credit Commitment Percentage of the then outstanding L/C Obligations and Swing
Line Loans, does not exceed the amount of such Revolving Credit Lender's
Revolving Credit Commitment then in effect; provided that, after giving effect
--------
to the making of such Revolving Credit Loan, the Aggregate Outstanding
Extensions of Credit of all Revolving Credit Lenders shall not exceed the
Aggregate Revolving Credit Commitment then in effect. During the Commitment
Period the Borrower may use the Aggregate Revolving Credit Commitment by
borrowing, prepaying the Revolving Credit Loans in whole or in part, and
reborrowing, all in accordance with the terms and conditions hereof.
(b) The Revolving Credit Loans may from time to time be (i) Eurodollar
Loans, (ii) ABR Loans or (iii) a combination thereof, as determined by the
Borrower and notified to the Administrative Agent in accordance with subsections
6.2 and 9.6, provided that (x) no Revolving Credit Loan shall be made as a
--------
Eurodollar Loan after the day that is one month prior to the Termination Date
and (y) any Revolving Credit Loans to be made on the Closing Date initially
shall be made as ABR Loans.
6.2 Procedure for Revolving Credit Borrowing. The Borrower may
----------------------------------------
borrow under the Aggregate Revolving Credit Commitment during the Commitment
Period on any Business Day, provided that the Borrower shall give the
--------
Administrative Agent irrevocable notice (which notice must be received by the
Administrative Agent prior to 12:00 Noon, New
<PAGE>
32
York City time, (a) three Business Days prior to the requested Borrowing Date,
if all or any part of the requested Revolving Credit Loans are to be initially
Eurodollar Loans or (b) one Business Day prior to the requested Borrowing Date,
otherwise), specifying (i) the amount to be borrowed, (ii) the requested
Borrowing Date, (iii) whether the borrowing is to be of Eurodollar Loans, ABR
Loans or a combination thereof and (iv) if the borrowing is to be entirely or
partly of Eurodollar Loans, the amount of such Type of Loan and the length of
the initial Interest Period therefor. Each borrowing under the Aggregate
Revolving Credit Commitment (other than any borrowing of Swing Line Loans or of
Revolving Credit Loans the proceeds of which are used to refund Swing Line
Loans) shall be in an amount equal to (x) in the case of ABR Loans, $5,000,000
or a whole multiple of $1,000,000 in excess thereof (or, if the then Available
Revolving Credit Commitments are less than $5,000,000, such lesser amount) and
(y) in the case of Eurodollar Loans, $5,000,000 or a whole multiple of
$1,000,000 in excess thereof. Upon receipt of any such notice from the Borrower,
the Administrative Agent shall promptly notify each Revolving Credit Lender
thereof. Each Revolving Credit Lender will make the amount of its pro rata share
of each borrowing available to the Administrative Agent for the account of the
Borrower at the office of the Administrative Agent specified in subsection 18.2
prior to 10:00 A.M., New York City time, on the Borrowing Date requested by the
Borrower in funds immediately available to the Administrative Agent. Such
borrowing will then be made available to the Borrower by the Administrative
Agent crediting the account of the Borrower on the books of such office with the
aggregate of the amounts made available to the Administrative Agent by the
Revolving Credit Lenders and in like funds as received by the Administrative
Agent.
6.3 Use of Proceeds of Revolving Credit Loans. The proceeds of the
-----------------------------------------
Revolving Credit Loans shall be utilized by the Borrower only (a) to finance the
Transaction, (b) to pay any fees and expenses relating thereto and (c) for other
general corporate purposes; provided, however, that not more than $34,000,000 in
-------- -------
the aggregate of Revolving Credit Loans may be utilized by the Borrower for the
purposes described in clauses (a) and (b) above.
SECTION 7. LETTERS OF CREDIT
7.1 L/C Commitment. (a) Subject to the terms and conditions hereof,
--------------
the Issuing Lender, in reliance on the agreements of the other Revolving Credit
Lenders set forth in subsection 7.4(a), agrees to issue letters of credit
("Letters of Credit") for the account of the Borrower on any Business Day during
- -------------------
the Commitment Period in such form as may be approved from time to time by the
Issuing Lender; provided that the Issuing Lender shall have no obligation to
--------
issue any Letter of Credit if, after giving effect to such issuance, (i) the L/C
Obligations would exceed the L/C Commitment, (ii) the Available Revolving Credit
Commitment of any Revolving Credit Lender would be less than zero or (iii) the
Aggregate Outstanding Extensions of Credit of all Revolving Credit Lenders would
exceed the Aggregate Revolving Credit Commitment then in effect.
(b) Each Letter of Credit shall (i) be denominated in Dollars, (ii)
be (x) a standby letter of credit issued to support obligations of the Borrower
or any of its Subsidiaries, contingent or otherwise, or to finance the working
capital and business needs of the Borrower or any of its Subsidiaries in the
ordinary course of business or (y) a commercial letter of credit issued in
respect of the purchase of goods or services by the Borrower and its
Subsidiaries in
<PAGE>
33
the ordinary course of business and (iii) expire no later than the earlier of
(x) the date that is 12 months after the date of its issuance and (y) five
Business Days prior to the Termination Date; provided that any Letter
--------
of Credit with an expiration date occurring up to twelve months after such
Letter of Credit's date of issuance may be automatically renewable for
subsequent 12-month periods (but in no event to a date which is later than five
Business Days prior to the Termination Date).
(c) Each Letter of Credit shall be subject to the Uniform Customs
and, to the extent not inconsistent therewith, the laws of the State of New
York.
(d) The Issuing Lender shall not at any time be obligated to issue
any Letter of Credit hereunder if such issuance would conflict with, or cause
the Issuing Lender or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law.
7.2 Procedure for Issuance of Letters of Credit. The Borrower may
-------------------------------------------
request that the Issuing Lender issue a Letter of Credit at any time during the
Commitment Period by delivering to the Issuing Lender (with a copy to the
Administrative Agent) at its address for notices specified herein an Application
therefor, completed to the satisfaction of the Issuing Lender, and such other
certificates, documents and other papers and information as the Issuing Lender
may reasonably request. Upon receipt of any Application, the Issuing Lender
will process such Application and the certificates, documents and other papers
and information delivered to it in connection therewith in accordance with its
customary procedures and shall promptly issue the Letter of Credit requested
thereby (but in no event shall the Issuing Lender be required to issue any
Letter of Credit earlier than three Business Days after its receipt of the
Application therefor and all such other certificates, documents and other papers
and information relating thereto) by issuing the original of such Letter of
Credit to the beneficiary thereof or as otherwise may be agreed by the Issuing
Lender and the Borrower. The Issuing Lender shall furnish a copy of such Letter
of Credit to the Borrower and the Administrative Agent promptly following the
issuance thereof.
7.3 Fees, Commissions and Other Charges. (a) The Borrower shall pay
-----------------------------------
to the Administrative Agent, for the account of the Issuing Lender and the L/C
Participants, a letter of credit fee with respect to each Letter of Credit,
computed for the period from and including the date of issuance of such Letter
of Credit to the expiration date of such Letter of Credit, at a rate per annum
equal to the Applicable Margin then in effect for Revolving Credit Loans which
are Eurodollar Loans (calculated on the basis of the actual number of days
elapsed over a 365 day year or 366 day year, as the case may be) of the
aggregate face amount of Letters of Credit outstanding. Such fee shall be
payable to the Administrative Agent, for the ratable account of the Revolving
Credit Lenders, in arrears on each L/C Fee Payment Date and on the Termination
Date.
(b) The Borrower shall pay to the Administrative Agent, for the
account of the Issuing Lender, a fronting fee with respect to each Letter of
Credit issued by such Issuing Lender, computed for the period from and including
the date of issuance of such Letter of Credit to the expiration date of such
Letter of Credit, at the rate to be agreed upon by the Borrower and the Issuing
Lender (but in any event, not more than 0.25% per annum) of the aggregate face
amount of Letters of Credit outstanding which were issued by such Issuing
<PAGE>
34
Lender. Such fee shall be payable in arrears on each L/C Fee Payment Date and
on the Termination Date.
(c) In addition to the foregoing fees and commissions, the Borrower
shall pay or reimburse the Issuing Lender for such normal and customary costs
and expenses as are incurred or charged by such Issuing Lender in issuing,
effecting payment under, amending or otherwise administering any Letter of
Credit issued by it.
(d) The Administrative Agent shall, promptly following its receipt
thereof, distribute to the relevant Issuing Lender and the L/C Participants all
fees and commissions received by the Administrative Agent for their respective
accounts pursuant to this subsection.
7.4 L/C Participations. (a) The Issuing Lender irrevocably agrees
------------------
to grant and hereby grants to each L/C Participant, and, to induce the Issuing
Lender to issue Letters of Credit hereunder, each L/C Participant irrevocably
agrees to accept and purchase and hereby accepts and purchases from the Issuing
Lender, on the terms and conditions hereinafter stated, for such L/C
Participant's own account and risk an undivided interest equal to such L/C
Participant's Revolving Credit Commitment Percentage from time to time in effect
in the Issuing Lender's obligations and rights under each Letter of Credit
issued hereunder and the amount of each draft paid by the Issuing Lender
thereunder. Each L/C Participant unconditionally and irrevocably agrees with
the Issuing Lender that, if a draft is paid under any Letter of Credit for which
the Issuing Lender is not reimbursed in full by the Borrower in accordance with
the terms of this Agreement, such L/C Participant shall pay to the Issuing
Lender upon demand at the Issuing Lender's address for notices specified herein
an amount equal to such L/C Participant's then Revolving Credit Commitment
Percentage of the amount of such draft, or any part thereof, which is not so
reimbursed; provided that, if such demand is made prior to 12:00 Noon, New York
--------
City time, on a Business Day, such L/C Participant shall make such payment to
the Issuing Lender prior to the end of such Business Day and otherwise such L/C
Participant shall make such payment on the next succeeding Business Day.
(b) If any amount required to be paid by any L/C Participant to the
Issuing Lender pursuant to subsection 7.4(a) in respect of any unreimbursed
portion of any payment made by the Issuing Lender under any Letter of Credit is
paid to the Issuing Lender within three Business Days after the date such
payment is due, such L/C Participant shall pay to the Issuing Lender on demand
an amount equal to the product of (i) such amount, times (i) the daily average
Federal Funds Effective Rate, as quoted by the Issuing Lender, during the period
from and including the date such payment is required to the date on which such
payment is immediately available to the Issuing Lender, times (ii) a fraction
the numerator of which is the number of days that elapse during such period and
the denominator of which is 360. If any such amount required to be paid by any
L/C Participant pursuant to subsection 7.4(a) is not in fact made available to
the Issuing Lender by such L/C Participant within three Business Days after the
date such payment is due, the Issuing Lender shall be entitled to recover from
such L/C Participant, on demand, such amount with interest thereon calculated
from such due date at the rate per annum applicable to ABR Loans hereunder. A
certificate of the Issuing Lender submitted to any L/C Participant with respect
to any amounts owing under this subsection shall be conclusive in the absence of
manifest error.
<PAGE>
35
(c) Whenever, at any time after the Issuing Lender has made payment
under any Letter of Credit issued by it and has received from any L/C
Participant its pro rata share of such payment in accordance with subsection
7.4(a), the Issuing Lender receives any payment related to such Letter of Credit
(whether directly from the Borrower or otherwise, including proceeds of
collateral applied thereto by the Issuing Lender), or any payment of interest on
account thereof, the Issuing Lender will, if such payment is received prior to
12:00 Noon, New York City time, on a Business Day, distribute to such L/C
Participant its pro rata share thereof prior to the end of such Business Day and
otherwise the Issuing Lender will distribute such payment on the next succeeding
Business Day; provided, however, that in the event that any such payment
-------- -------
received by the Issuing Lender and distributed to the L/C Participants shall be
required to be returned by the Issuing Lender, each such L/C Participant shall
return to the Issuing Lender the portion thereof previously distributed by the
Issuing Lender to it.
7.5 Reimbursement Obligation of the Borrower. (a) Upon payment of a
----------------------------------------
draft under a Letter of Credit, the Borrower agrees to reimburse the Issuing
Lender on the same Business Day on which it receives notice that a draft
presented under any Letter of Credit issued by such Issuing Lender has been paid
by such Issuing Lender, provided that such Issuing Lender provides such notice
--------
to the Borrower prior to 11:00 A.M., New York City time, on such Business Day
and otherwise the Borrower will reimburse the Issuing Lender on the next
succeeding Business Day; provided, further, that the failure to provide such
-------- -------
notice shall not affect the Borrower's absolute and unconditional obligation to
reimburse the Issuing Lender for any draft paid under any Letter of Credit
issued by it. Any such notice shall indicate the amount of (i) such draft so
paid and (ii) any taxes, fees, charges or other costs or expenses reasonably
incurred by the Issuing Lender in connection with such payment. Each such
payment shall be made to the Issuing Lender at its address for notices specified
herein in Dollars and in immediately available funds.
(b) Interest shall be payable on any and all amounts remaining unpaid
by the Borrower under this subsection from the date on which a draft presented
under any Letter of Credit issued by such Issuing Lender is paid by such Issuing
Lender until payment in full at the rate which would be payable on any
outstanding Loans that are ABR Loans which were then overdue.
(c) Each drawing under any Letter of Credit shall constitute a
request by the Borrower to the Administrative Agent for a borrowing pursuant to
subsection 6.2 of ABR Loans in the amount of the Reimbursement Obligations in
respect of such drawing but without any requirement for compliance with the
prior notice or minimum borrowing amount provisions of subsection 6.2 or the
conditions set forth in subsection 11.2. The Borrowing Date with respect to
such borrowing shall be the date of such drawing. Any such request or borrowing
shall not relieve the Issuing Lender or L/C Participant of any liability
resulting from the gross negligence or willful misconduct of the Issuing Lender
or any L/C Participant, or otherwise affect any defenses or other right that the
Borrower may have as a result of any such gross negligence or willful
misconduct.
7.6 Obligations Absolute. (a) The Borrower's obligations under
--------------------
subsection 7.5(a) shall be absolute and unconditional under any and all
circumstances and irrespective of any set-off, counterclaim or defense to
payment which the Borrower may have or have had against the Issuing Lender, any
L/C Participant or any beneficiary of a Letter of Credit,
<PAGE>
36
provided that this paragraph shall not relieve the Issuing Lender or any L/C
- --------
Participant of any liability resulting from the gross negligence or willful
misconduct of the Issuing Lender or any L/C Participant, or otherwise affect any
defense or other right that the Borrower may have as a result of any such gross
negligence or willful misconduct.
(b) The Borrower also agrees with the Issuing Lender that the Issuing
Lender shall not be responsible for, and the Borrower's Reimbursement
Obligations under subsection 7.5(a) shall not be affected by, among other
things, (i) the validity or genuineness of documents or of any endorsements
thereon, even though such documents shall in fact prove to be invalid,
fraudulent or forged, or (ii) any dispute between or among the Borrower and any
beneficiary of any Letter of Credit or any other party to which such Letter of
Credit may be transferred or (iii) any claims whatsoever of the Borrower against
any beneficiary of such Letter of Credit or any such transferee, provided that
--------
this paragraph shall not relieve the Issuing Lender of any liability resulting
from the gross negligence or willful misconduct of the Issuing Lender, or
otherwise affect any defense or other right that the Borrower may have as a
result of any such gross negligence or willful misconduct.
(c) Neither the Issuing Lender with respect to any Letter of Credit
nor any L/C Participant with respect thereto shall be liable for any error,
omission, interruption or delay in transmission, dispatch or delivery of any
message or advice, however transmitted, in connection with such Letter of
Credit, except for errors or omissions caused by such Person's gross negligence
or willful misconduct.
(d) The Borrower agrees that any action taken or omitted by the
Issuing Lender under or in connection with any Letter of Credit issued by it or
the related drafts or documents, if done in the absence of gross negligence or
willful misconduct and in accordance with the standards of care specified in the
Uniform Commercial Code of the State of New York, shall be binding on the
Borrower and shall not result in any liability of such Issuing Lender or any L/C
Participant to the Borrower.
7.7 Letter of Credit Payments. If any draft shall be presented for
-------------------------
payment under any Letter of Credit, the Issuing Lender shall promptly notify the
Borrower of the date and amount thereof. The responsibility of the Issuing
Lender thereof to the Borrower in connection with any such draft shall, in
addition to any payment obligation expressly provided for in such Letter of
Credit, be limited to determining that the documents (including each draft)
delivered under such Letter of Credit in connection with such presentment are in
conformity with such Letter of Credit, provided that this paragraph shall not
--------
relieve the Issuing Lender of any liability resulting from the gross negligence
or willful misconduct of the Issuing Lender, or otherwise affect any defense or
other right that such Borrower may have as a result of any such gross negligence
or willful misconduct.
7.8 Application. To the extent that any provision of any Application
-----------
related to any Letter of Credit is inconsistent with the provisions of this
Section 7, the provisions of this Section 7 shall apply.
<PAGE>
37
SECTION 8. AMOUNT AND TERMS OF SWING LINE SUB-FACILITY
8.1 Swing Line Commitments. (a) Subject to the terms and conditions
----------------------
hereof, the Swing Line Lender agrees to make swing line loans (the "Swing Line
----------
Loans") to the Borrower on any Business Day from time to time during the
- -----
Commitment Period in an aggregate principal amount not to exceed $10,000,000 at
any one time outstanding; provided that, after giving effect to the making of
--------
such Swing Line Loan, the Aggregate Outstanding Extensions of Credit of all
Revolving Credit Lenders shall not exceed the Aggregate Revolving Credit
Commitment then in effect. Amounts borrowed under this subsection 8.1 may be
repaid and, to but excluding the Termination Date, reborrowed.
(b) All Swing Line Loans shall be made and maintained as ABR Loans
and shall not be entitled to be converted into Eurodollar Loans; provided that
--------
nothing contained in this subsection 8.1 shall prohibit the conversion into
Eurodollar Loans of any Revolving Credit Loans the proceeds of which are
utilized to refund Swing Line Loans.
8.2 Procedure for Swing Line Loan Borrowing. The Borrower may borrow
---------------------------------------
under the Swing Line Commitment during the Commitment Period on any Business
Day; provided that the Borrower shall give the Administrative Agent irrevocable
--------
Notice of Borrowing (which notice must be received by the Administrative Agent
prior to 1:00 P.M., New York City time), on the requested borrowing date (which
shall be a Business Day) specifying the amount of each requested Swing Line
Loan, which shall be in a minimum amount of $500,000 or a multiple of $100,000
in excess thereof. Upon receipt of any such notice from the Borrower, the
Administrative Agent shall promptly notify the Swing Line Lender thereof. The
Swing Line Lender will make the proceeds of the Swing Line Loan available to the
Administrative Agent by crediting the account of the Borrower with such proceeds
in Dollars, at the office of the Administrative Agent in such manner as may be
agreed upon by the Swing Line Lender and the Borrower prior to 3:30 P.M., New
York City time, on the Borrowing Date requested by the Borrower.
8.3 Refunding of Swing Line Loans. (a) The Administrative Agent, at
-----------------------------
any time in its sole and absolute discretion, may (or, upon the request of the
Swing Line Lender, shall), on behalf of the Borrower (which hereby irrevocably
directs the Administrative Agent to act on its behalf) request that each
Revolving Credit Lender make a Revolving Credit Loan in an amount equal to such
Revolving Credit Lender's Commitment Percentage of the then outstanding
principal amount of Swing Line Loans (the "Refunded Swing Line Loans") on the
-------------------------
date such notice is given (regardless of whether the Refunded Swing Line Loans
comply with the minimum borrowing provisions of subsection 6.2). In the event
that the Swing Line Lender makes its request for refunding of the Swing Line
Loans, each Revolving Credit Lender shall make the proceeds of its Revolving
Credit Loan available in immediately available funds to the Administrative
Agent, for the benefit of the Swing Line Lender, at the office of the
Administrative Agent specified in subsection 18.2 prior to 11:00 A.M., New York
City time, on the first Business Day following such request (or, if such request
is made prior to 10:00 A.M., New York City time, on any date, then the proceeds
of such Revolving Credit Loans shall instead be so made available to the
Administrative Agent prior to 2:00 P.M., New York City time, on the date of such
request); provided that in the event that any of the events described in
--------
subsection 16.1(a) or (b) shall have occurred and be continuing, the Revolving
Credit Lenders shall not make such Revolving Credit Loans and the provisions of
subsection 8.3(b) shall apply.
<PAGE>
38
(b) If, prior to the making of a Revolving Credit Loan pursuant to
subsection 8.3(a), one of the events described in subsection 16.1(a) or (b)
shall have occurred and be continuing, each Revolving Credit Lender will, on the
date such Revolving Credit Loan was to have been made, purchase from the Swing
Line Lender an undivided participating interest in the Swing Line Loan to be
refunded in an amount equal to its Revolving Credit Commitment Percentage of
such Swing Line Loan to be refunded. Each Revolving Credit Lender will
immediately transfer to the Administrative Agent, in immediately available
funds, the amount of its participation.
(c) Whenever, at any time after the Swing Line Lender has received
from any Revolving Credit Lender such Lender's participating interest in a Swing
Line Loan to be refunded pursuant to subsection 8.3(b), the Swing Line Lender
receives any payment on account thereof, the Swing Line Lender will pay to the
Administrative Agent for distribution to such Revolving Credit Lender its
participating interest in such amount (appropriately adjusted, in the case of
interest payments, to reflect the period of time during which such Lender's
participating interest was outstanding and funded) in like funds as received;
provided that in the event that such payment received by the Swing Line Lender
- --------
is required to be returned, such Revolving Credit Lender will return to the
Swing Line Lender any portion thereof previously distributed by the Swing Line
Lender through the Administrative Agent to it in like funds as such payment is
required to be returned by the Swing Line Lender.
8.4 Unconditional Obligation to Refund Swing Line Loans. (a) Each
---------------------------------------------------
Revolving Lender's obligation to make Revolving Credit Loans and to purchase
participating interests in accordance with subsections 8.3(a) and (b) above
shall be absolute and unconditional and shall not be affected by any
circumstance, including, without limitation, (i) any set-off, counterclaim,
recoupment, defense or other right which such Revolving Credit Lender may have
against the Swing Line Lender, the Borrower or any other Person for any reason
whatsoever; (ii) the occurrence or continuance of any Default or Event of
Default; (iii) any adverse change in the condition (financial or otherwise) of
the Borrower or any other Person; (iv) any breach of this Agreement by the
Borrower or any other Person; (v) any inability of the Borrower to satisfy the
conditions precedent to borrowing set forth in this Agreement on the date upon
which such Revolving Credit Loan is to be made or participating interest is to
be purchased or (vi) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing. If any Revolving Credit Lender
does not make available to the Administrative Agent the amount required pursuant
to subsections 8.3(a) and (b) above, as the case may be, the Administrative
Agent shall be entitled to recover such amount on demand from such Revolving
Credit Lender, together with interest thereon for each day from the date of non-
payment until such amount is paid in full at the Federal Funds Effective Rate
for the first two Business Days and at the rate applicable to ABR Loans
thereafter.
8.5 Use of Proceeds of Swing Line Loans. The proceeds of Swing Line
-----------------------------------
Loans hereunder shall be used by the Borrower for any purpose for which the
proceeds of Revolving Credit Loans may be used.
<PAGE>
39
SECTION 9. PROVISIONS RELATING TO THE EXTENSIONS OF CREDIT;
FEES AND PAYMENTS
9.1 Repayment of Loans; Evidence of Debt. (a) The Borrower hereby
------------------------------------
unconditionally promises to pay to the Administrative Agent for the account of
each applicable Lender:
(i) the then unpaid principal amount of each Revolving Credit Loan of
each Revolving Credit Lender on the Termination Date (or such earlier date
on which the Revolving Credit Loans become due and payable pursuant to
Section 16);
(ii) the then unpaid principal amount of the Tranche A Loan of each
Tranche A Lender on the dates and in the amounts set forth in subsection
2.3 (or the then unpaid principal amount of such Tranche A Loan, on the
date that the Tranche A Loans become due and payable pursuant to Section
16);
(iii) the then unpaid principal amount of the Tranche B Loan of each
Tranche B Lender on the dates and in the amounts set forth in subsection
3.3 (or the then unpaid principal amount of such Tranche B Loan, on the
date that the Tranche B Loans become due and payable pursuant to Section
16);
(iv) the then unpaid principal amount of the Tranche C Loan of each
Tranche C Lender on the dates and in the amounts set forth in subsection
4.3 (or the then unpaid principal amount of such Tranche C Loan, on the
date that the Tranche C Loans become due and payable pursuant to Section
16);
(v) the then unpaid principal amount of the Tranche D Loan of each
Tranche D Lender on the dates and in the amounts set forth in subsection
5.3 (or the then unpaid principal amount of such Tranche D Loan, on the
date that the Tranche D Loans become due and payable pursuant to Section
16); and
(vi) the then unpaid principal amount of the Swing Line Loans of the
Swing Line Lender on the Termination Date (or such earlier date on which
the Swing Line Loans become due and payable pursuant to Section 16).
The Borrower hereby further agrees to pay interest on the unpaid principal
amount of the Loans from time to time outstanding from the date hereof until
payment in full thereof at the rates per annum, and on the dates, set forth in
subsection 9.8.
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing indebtedness of the Borrower to such Lender
resulting from each Loan of such Lender from time to time, including the amounts
of principal and interest payable and paid to such Lender from time to time
under this Agreement.
(c) The Administrative Agent shall maintain the Register pursuant to
subsection 18.6(d), and a subaccount therein for each Lender, in which shall be
recorded (i) the amount of each Loan made hereunder, the Type thereof and each
Interest Period applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable from the
<PAGE>
40
Borrower to each Lender hereunder and (iii) both the amount of any sum received
by the Administrative Agent hereunder from the Borrower and each applicable
Lender's share thereof.
(d) The entries made in the Register and the accounts of each Lender
maintained pursuant to subsection 9.1(b) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
----- -----
obligations of the Borrower therein recorded; provided, however, that the
-------- -------
failure of any Lender or the Administrative Agent to maintain the Register or
any such account, or any error therein, shall not in any manner affect the
obligation of the Borrower to repay (with applicable interest) the Loans made to
the Borrower by such Lender in accordance with the terms of this Agreement.
(e) The Borrower agrees that, upon request of any Lender through the
Administrative Agent (which request is made on or prior to the date on which
such Lender becomes a Lender), the Borrower will execute and deliver to such
Lender a promissory note, substantially in the form of Exhibit A (a "Note"),
----
evidencing the Loans made by such Lender to the Borrower.
9.2 Commitment Fee; Other Fees. (a) The Borrower agrees to pay to
--------------------------
the Administrative Agent for the account of each Revolving Credit Lender a
commitment fee for the period from and including the first day of the Commitment
Period to and including the Termination Date, computed at the rate per annum
equal to the Applicable Commitment Fee Rate on the average daily amount of the
Available Revolving Credit Commitment of such Revolving Credit Lender during the
period for which payment is made. Such commitment fee shall be payable
quarterly in arrears on the last Business Day of each March, June, September and
December and on the Termination Date or such earlier date as the Aggregate
Revolving Credit Commitment shall terminate as provided herein, commencing on
the first of such dates to occur after the date hereof; provided that no
--------
commitment fee shall be payable hereunder in the event that the Closing Date
does not occur.
(b) The Borrower shall pay (without duplication, including of any fee
payable under subsection 9.2(a)) to the Administrative Agent, for its account
and, as specified therein, for the account of the Lenders, the other fees
required to be paid pursuant to (i) the Commitment Letter, dated December 19,
1997, among J.P. Morgan Securities, Inc., Morgan Guaranty Trust Company of New
York, Credit Suisse First Boston and MergerCorp and (ii) the Fee Letter, dated
December 19, 1997, among J.P. Morgan Securities, Inc., Morgan Guaranty Trust
Company of New York, Credit Suisse First Boston and MergerCorp , in each case in
the amounts and on the dates set forth therein.
9.3 Optional Prepayments. (a) The Borrower may at any time and from
--------------------
time to time prepay the Loans, in whole or in part, without premium or penalty,
upon at least three Business Days' (or, in the case of prepayments of ABR Loans,
one Business Day's) irrevocable notice to the Administrative Agent (which notice
must be received by the Administrative Agent prior to 12:00 Noon, New York City
time, on the date upon which such notice is due), specifying whether such
prepayment is to be applied to the Revolving Credit Loans or the other Loans
hereunder and, in any event, the date and amount of prepayment and whether the
prepayment is of Eurodollar Loans, ABR Loans or a combination thereof, and, if
of a combination thereof, the amount allocable to each. Upon receipt of any
such notice the Administrative Agent shall promptly notify each affected Lender
thereof. If any such notice is
<PAGE>
41
given, the amount specified in such notice shall be due and payable on the date
specified therein, together with any amounts payable pursuant to subsection 9.15
and, except in the case of prepayments of Revolving Credit Loans which are ABR
Loans and Swing Line Loans, accrued interest to such date on the amount prepaid.
Amounts prepaid on account of the Term Loans may not be reborrowed.
(b) Any partial prepayments of the Term Loans due pursuant to this
subsection 9.3 shall be applied to repay the principal amounts outstanding under
each of the Term Loan Facilities ratably among such Facilities (based upon the
percentage which such Facility constitutes of the aggregate then outstanding
principal amount of all Term Loans) and ratably among the installments owing
under each such Facility (based upon the percentage which each installment of
such Facility then constitutes of the aggregate principal amount then
outstanding under such Facility); provided that:
--------
(i) in lieu of paying all such installments ratably, the Borrower may
(in its sole discretion) prepay any installments of the Term Loans which
are due within 12 months following the date of prepayment ratably (based
upon the percentage which each such installment then constitutes of all
installments of the Term Loans due during such 12 month period); and
(ii) each Tranche B Lender, Tranche C Lender and Tranche D Lender may
(in its sole discretion) elect to decline any such prepayment pursuant to
clause (i) and, if it so declines, the amount so declined shall instead be
used to increase the amount applied to prepay the Term Loans of the non-
declining Lenders under all Term Loan Facilities first, based upon the
-----
method described in clause (i) of this proviso and second, based upon the
------
method described in this paragraph (b) prior to giving effect
to this proviso; provided, however, that if the amount of the Borrower's
-------- -------
desired prepayment exceeds the existing Term Loans of the non-declining
Tranche B Lenders, Tranche C Lenders and Tranche D Lenders (the amount of
such excess desired prepayment, the "Surplus Optional Prepayment Amount"),
----------------------------------
then, first, the Surplus Optional Prepayment Amount shall be applied to
-----
prepay the Tranche A Loans (ratably among the remaining installments
thereof); second, any remaining Surplus Optional Prepayment Amount shall be
------
applied to prepay the Term Loans of the declining Tranche B Lenders
(ratably among the remaining installments thereof) until the Tranche B Term
Loans are fully prepaid; third, any remaining Surplus Optional Prepayment
-----
Amount shall be applied to prepay the Term Loans of the declining Tranche C
Lenders (ratably among the remaining installments thereof) until the
Tranche C Term Loans are fully prepaid; and fourth, any remaining Surplus
------
Optional Prepayment Amount shall be applied to prepay the Term Loans of the
declining Tranche D Lenders (ratably among the remaining installments
thereof).
Partial prepayments of the Term Loans shall be in an aggregate principal amount
of $5,000,000 or a whole multiple of $1,000,000 in excess thereof.
(c) The Borrower may at any time and from time to time prepay, in
whole or in part and without premium or penalty, any Swing Line Loans then owing
by it on any Business Day; provided that such Borrower has given irrevocable
--------
notice to the Administrative Agent not later than 1:00 P.M., New York City time,
on the date of such prepayment. Partial prepayments
<PAGE>
42
of Swing Line Loans shall be in an aggregate principal amount of $500,000 or a
whole multiple in excess thereof (or, if less, the outstanding principal amount
of the Swing Line Loans).
(d) Notwithstanding the foregoing provisions of this subsection 9.3,
any optional prepayment of the Tranche B Loans, the Tranche C Loans or the
Tranche D Loans pursuant to this subsection 9.3 made on or prior to the date
which is 18 months following the Closing Date shall be accompanied by a
prepayment fee (for the ratable account of the Tranche B Lenders, Tranche C
Lenders and Tranche D Lenders accepting such prepayment) in the amount equal to
1% of the aggregate principal amount so prepaid.
9.4 Optional Termination or Reduction of Aggregate Revolving Credit
---------------------------------------------------------------
Commitment. The Borrower shall have the right, upon not less than five Business
- ----------
Days' notice to the Administrative Agent, to terminate the Aggregate Revolving
Credit Commitment or, from time to time, to reduce the amount thereof; provided
--------
that no such termination or reduction shall be permitted if, after giving effect
thereto and to any prepayments of the Revolving Credit Loans and Swing Line
Loans made on the effective date thereof, the aggregate principal amount of the
Revolving Credit Loans and Swing Line Loans then outstanding, when added to the
then outstanding L/C Obligations, would exceed the Aggregate Revolving Credit
Commitment then in effect. Any such reduction shall be in an amount equal to
$5,000,000 or a whole multiple of $1,000,000 in excess thereof and shall reduce
permanently the Aggregate Revolving Credit Commitment then in effect.
9.5 Mandatory Reduction of Commitments and Prepayments. (a) The
--------------------------------------------------
Aggregate Revolving Credit Commitment shall terminate on the Termination Date
and all amounts outstanding thereunder shall be due and payable.
(b) If the Aggregate Outstanding Extensions of Credit of all Lenders
shall at any time exceed the Aggregate Revolving Credit Commitment then in
effect (including, without limitation, as a result of any permanent reduction of
the Aggregate Revolving Credit Commitment pursuant to subsection 9.4 or this
subsection 9.5), the Borrower shall immediately repay the amounts outstanding
under the Aggregate Revolving Credit Commitment by the amount equal to such
excess, with any such repayment being applied, first, to repay any then
-----
outstanding Swing Line Loans, second, to repay any then outstanding Revolving
------
Credit Loans and, third, to cash collateralize the L/C Obligations in a manner
-----
reasonably satisfactory to the Administrative Agent.
(c) The Borrower shall, as promptly as is practicable (and, in any
event, within one Business Day following the receipt thereof), repay the Loans
and reduce the Commitments by the amount equal to the aggregate amount of Net
Proceeds received from the incurrence by the Borrower or any of its Subsidiaries
of any Indebtedness (excluding Indebtedness permitted pursuant to subsection
14.1). Any repayment of Loans and reduction of Commitments required by this
subsection 9.5(c) shall be made in accordance with the provisions of subsection
9.5(f).
(d) The Borrower shall repay the Loans and reduce the Commitments by
the amount equal to the aggregate amount of Net Proceeds (minus any Reinvested
Amount relating thereto) received from (i) the sale, transfer or other
disposition by the Borrower or any of its Subsidiaries of any real or personal,
tangible or intangible, property of the Borrower or such Subsidiary (including,
without limitation, any Capital Stock of a Subsidiary of the
<PAGE>
43
Borrower) to any Person (other than to the Borrower or any of its Subsidiaries)
pursuant to subsection 14.5(h), (j) or (k) or (ii) the recovery by the Borrower
or any of its Subsidiaries of amounts owing to it under property insurance
policies if the Borrower and its Subsidiaries have not commenced replacement of
the property on account of which such amounts were paid within one year of the
later of the date of the casualty to, or condemnation of, such property or the
receipt of such Net Proceeds; provided that, notwithstanding the foregoing, any
--------
such repayment of the Loans or reduction of the Commitments pursuant to this
subsection 9.5(d) shall only be required upon any such sale, transfer, other
disposition or recovery to the extent the Net Proceeds received therefrom, when
aggregated with the Net Proceeds received from all such sales, transfers, other
dispositions or recoveries in the immediately preceding twelve-month period and
minus all applicable Reinvested Amounts relating to all such Net Proceeds,
exceed $5,000,000. The Borrower shall make any prepayment pursuant to this
subsection 9.5(d) as promptly as practicable (and in any event, within three
Business Days) following the date of receipt of any such Net Proceeds (except
that if any such Net Proceeds are eligible to be reinvested in accordance with
the definition of the term "Reinvested Amount" in subsection 1.1 and the
Borrower has not elected to reinvest such proceeds, such prepayment shall be
made on the earlier of (1) the date on which the certificate of a Responsible
Officer of the Borrower to such effect is delivered to the Administrative Agent
in accordance with such definition and (2) the last day of the period within
which a certificate setting forth such election is required to be delivered in
accordance with such definition)).
(e) The Borrower shall repay the Loans and reduce the Commitments
within one Business Day following delivery of the certificate referenced in
subsection 12.2(a) (commencing with the certificate covering the fiscal year
ending on March 31, 1999) by the amount equal to the Excess Cash Flow Recapture
Amount for the fiscal year (or, in the case of the fiscal year ending March 31,
1999, the portion thereof commencing on the first day of the first full fiscal
month after the Closing Date and ending on March 31, 1999) covered by such
certificate, with any such repayment of Loans and reduction of Commitments
being made in accordance with the provisions of subsection 9.5(f).
(f) Any payments of the Loans and reductions of the Commitments made
pursuant to subsection 9.5(c), (d) or (e) shall be applied, first, to the
-----
prepayment of the Term Loans and, second, to reduce the Aggregate Revolving
------
Credit Commitment then in effect. For purposes of this subsection 9.5(f), any
partial prepayment of the Term Loans shall be applied to repay the principal
amounts outstanding under each of the Term Loan Facilities ratably among such
Facilities (based upon the aggregate principal amount then outstanding
thereunder) and ratably among the installments owing under each such Facility
(based upon the aggregate then outstanding principal amount of each such
installment); provided that:
--------
(i) in lieu of paying all such installments ratably, the
Borrower may (in its sole discretion) prepay any installments of the Term
Loans which are due within 12 months following the date of prepayment
ratably (based upon (x) in the case of prepayments due pursuant to
subsection 9.5(c) or (d) with respect to each Term Loan Facility, the
percentage which the aggregate then outstanding principal amount of Term
Loans under such Term Loan Facility then constitutes of the aggregate then
outstanding principal amount of all Term Loans under all Term Loan
Facilities and (y) in the case of prepayments due pursuant to subsection
9.5(e), the percentage which each such
<PAGE>
44
installment then constitutes of all installments of the Term Loans due
during such 12 month period); and
(ii) each Tranche B Lender, Tranche C Lender and Tranche D
Lender may (in its sole discretion) elect to decline any such prepayment
and, if it so declines, the amount so declined shall instead be used to
increase the amount applied to prepay the Term Loans of the non-declining
Lenders under all Term Loan Facilities first, based upon the method
-----
described in clause (i) of this proviso and second, based upon the method
------
described in this paragraph (f) prior to giving effect to this proviso;
provided, however, that if the amount of the Borrower's required prepayment
-------- -------
exceeds the existing Term Loans of the non-declining Tranche B Lenders,
Tranche C Lenders and Tranche D Lenders (the amount of such excess desired
prepayment, the "Surplus Mandatory Prepayment Amount"), then, first, the
----------------------------------- -----
Surplus Mandatory Prepayment Amount shall be applied to prepay the Tranche
A Loans (ratably among the remaining installments thereof); second, any
------
remaining Surplus Mandatory Prepayment Amount shall be applied to prepay
the Term Loans of the declining Tranche B Lenders (ratably among the
remaining installments thereof) until the Tranche B Term Loans are fully
prepaid; third, any remaining Surplus Mandatory Prepayment Amount shall be
-----
applied to prepay the Term Loans of the declining Tranche C Lenders
(ratably among the remaining installments thereof) until the Tranche C Term
Loans are fully prepaid; fourth, any remaining Surplus Mandatory Prepayment
------
Amount shall be applied to prepay the Term Loans of the declining Tranche D
Lenders (ratably among the remaining installments thereof); and fifth, any
-----
remaining Surplus Mandatory Prepayment Amount shall reduce the Aggregate
Revolving Credit Commitment then in effect.
Unless the Borrower otherwise elects, the application of prepayments made
pursuant to this subsection 9.5 shall be made, first, to ABR Loans and, second,
----- ------
to Eurodollar Loans.
(g) Notwithstanding the foregoing provisions of this subsection 9.5
(other than the provisions of subsection 9.5(e) and other than any such
prepayment as a result of the sales or dispositions described in subsection
14.5(j) (as to which the provisions of this subsection 9.5(g) shall not apply)),
any mandatory prepayment of the Tranche B Loans, the Tranche C Loans or the
Tranche D Loans pursuant to this subsection 9.5 made on or prior to the date
which is 18 months following the Closing Date shall be accompanied by a
prepayment fee (for the ratable account of the Tranche B Lenders, the Tranche C
Lenders and the Tranche D Lenders accepting such prepayment) in the amount equal
to 1% of the aggregate principal amount so prepaid.
9.6 Conversion and Continuation Options. (a) The Borrower may elect
-----------------------------------
from time to time to convert Eurodollar Loans to ABR Loans by delivering to the
Administrative Agent an irrevocable Notice of Borrowing by 10:00 A.M., New York
City time, at least one Business Day prior to the requested date of conversion;
provided that any such conversion of Eurodollar Loans may only be made on the
- --------
last day of an Interest Period with respect thereto. The Borrower may elect
from time to time to convert ABR Loans to Eurodollar Loans by delivering to the
Administrative Agent an irrevocable Notice of Borrowing by 10:00 A.M., New York
City time, at least three Business Days' prior to the requested conversion date.
Any such Notice of Borrowing with respect to a conversion to Eurodollar Loans
shall specify the length of
<PAGE>
45
the initial Interest Period or Interest Periods therefor. Upon receipt of any
such Notice of Borrowing, the Administrative Agent shall promptly notify each
Lender thereof. All or any part of outstanding Eurodollar Loans and ABR Loans
may be converted as provided herein, provided that (i) no Loan may be converted
--------
into a Eurodollar Loan when any Event of Default has occurred and is continuing
and the Administrative Agent has or the Majority Term Lenders have determined
that such a conversion is not appropriate and the Administrative Agent has given
notice to the Borrower that no conversion may be made, (ii) no Revolving Credit
Loan may be converted into a Eurodollar Loan after the date that is one month
prior to the Termination Date and (iii) no Tranche A Loan or Tranche B Loan (as
the case may be) may be converted into a Eurodollar Loan after the date that is
one month prior to the date of the final installment of principal thereof.
Notwithstanding anything to the contrary contained herein, Swing Line Loans
shall at all times be maintained as ABR Loans and shall not be converted to
Eurodollar Loans hereunder.
(b) Any Eurodollar Loans may be continued as such upon the expiration
of the then current Interest Period with respect thereto by the Borrower
delivering to the Administrative Agent an irrevocable Notice of Borrowing, in
accordance with the applicable provisions of the term "Interest Period" set
forth in subsection 1.1, setting forth (among other things) the length of the
next Interest Period to be applicable to such Loans, provided that (i) no Loan
--------
may be continued as a Eurodollar Loan when any Event of Default has occurred and
is continuing and the Administrative Agent has or the Majority Basic Lenders
have determined that such a continuation is not appropriate and the
Administrative Agent has given notice to the Borrower that no such continuations
may be made, (ii) no Revolving Credit Loan may be continued as a Eurodollar Loan
after the date that is one month prior to the Termination Date and (iii) no Term
Loan may be continued as a Eurodollar Loan after the date that is one month
prior to the date of the final installment of principal of such Term Loan and
provided, further, that if the Borrower shall fail to give such notice or if
- -------- -------
such continuation is not permitted such Loans shall be automatically converted
to ABR Loans on the last day of such then expiring Interest Period. Upon
receipt of any such Notice of Borrowing, the Administrative Agent shall promptly
notify each Lender thereof.
9.7 Minimum Amounts and Maximum Number of Tranches. All borrowings,
----------------------------------------------
conversions and continuations of Loans hereunder and all selections of Interest
Periods hereunder shall be in such amounts and be made pursuant to such
elections so that, after giving effect thereto, the aggregate principal amount
of the Loans comprising each Tranche of Eurodollar Loans shall be equal to
$5,000,000 or a whole multiple of $1,000,000 in excess thereof. In no event
shall there be more than 15 Eurodollar Tranches outstanding at any time.
9.8 Interest Rates and Payment Dates. (a) Each Eurodollar Loan
--------------------------------
shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurodollar Rate determined for such day
plus the Applicable Margin with respect thereto in effect on such day.
(b) Each ABR Loan (including, without limitation, each Swing Line
Loan) shall bear interest at a rate per annum equal to the ABR plus the
Applicable Margin with respect thereto in effect on such day.
<PAGE>
46
(c) If all or a portion of (i) any principal of any Loan, (ii) any
interest payable thereon, (iii) any commitment fee or (iv) any other amount
payable hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such overdue amount shall bear interest at a rate
per annum which is (x) in the case of principal, the rate that would otherwise
be applicable thereto pursuant to the foregoing provisions of this subsection
plus 2% or (y) in the case of any such overdue interest, commitment fee or other
amount, the rate described in paragraph (b) of this subsection plus 2%, in each
case from the date of such non-payment until such overdue principal, interest,
commitment fee or other amount is paid in full (after as well as before
judgment).
(d) Interest shall be payable in arrears on each Interest Payment
Date, provided that interest accruing pursuant to paragraph (c) of this
--------
subsection shall be payable from time to time on demand.
(e) It is the intention of the parties hereto to comply strictly with
applicable usury laws; accordingly, it is stipulated and agreed that the
aggregate of all amounts which constitute interest under applicable usury laws,
whether contracted for, charged, taken, reserved, or received, in connection
with the indebtedness evidenced by this Agreement or any Notes, or any other
document relating or referring hereto or thereto, now or hereafter existing,
shall never exceed under any circumstance whatsoever the maximum amount of
interest allowed by applicable usury laws.
9.9 Computation of Interest and Fees. (a) Commitment fees and,
--------------------------------
whenever it is calculated on the basis of the Prime Rate, interest shall be
calculated on the basis of a 365-(or 366-, as the case may be) day year for the
actual days elapsed; and, otherwise, interest shall be calculated on the basis
of a 360-day year for the actual days elapsed. The Administrative Agent shall
as soon as practicable notify the Borrower and the affected Lenders of each
determination of a Eurodollar Rate. Any change in the interest rate on a Loan
resulting from a change in the ABR or the Eurocurrency Reserve Requirements
shall become effective as of the opening of business on the day on which such
change becomes effective and (ii) the Leverage Ratio of the Borrower and its
Subsidiaries shall become effective as of the opening of business on the date
upon which the Administrative Agent receives the financial statements required
to be delivered pursuant to subsection 12.1 which evidence such change in the
Leverage Ratio. The Administrative Agent shall as soon as practicable notify
the Borrower and the affected Lenders of the effective date and the amount of
each such change in interest rate.
(b) Each determination of an interest rate by the Administrative
Agent pursuant to any provision of this Agreement shall be conclusive and
binding on the Borrower and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Borrower, deliver to the
Borrower a statement showing the quotations used by the Administrative Agent in
determining any interest rate pursuant to subsection 9.9(a).
9.10 Inability to Determine Interest Rate. If prior to the first day
------------------------------------
of any Interest Period the Administrative Agent shall have reasonably determined
(which determination shall be conclusive and binding upon the Borrower) that, by
reason of circumstances affecting the relevant market, adequate and reasonable
means do not exist for ascertaining the Eurodollar Rate for such Interest
Period, the Administrative Agent shall give telecopy or telephonic notice
thereof to the Borrower and the affected Lenders as soon as practicable
thereafter. If such
<PAGE>
47
notice is given (x) any Eurodollar Loans requested to be made on the first day
of such Interest Period shall be made as ABR Loans and (y) any Loans that were
to have been converted to or continued as Eurodollar Loans on the first day of
such Interest Period shall be converted to ABR Loans. Until such notice has been
withdrawn by the Administrative Agent, no further Eurodollar Loans under such
Commitments shall be made or continued as such, nor shall the Borrower have the
right to convert Loans to Eurodollar Loans.
9.11 Pro Rata Treatment and Payments. (a) Each borrowing (other
-------------------------------
than a borrowing of Swing Line Loans) by the Borrower from the Lenders
hereunder, each payment by the Borrower on account of any commitment fee
hereunder and any reduction of the Commitments of the Lenders shall be allocated
by the Administrative Agent pro rata according to the respective relevant
Commitment Percentages of the Lenders holding obligations in respect of which
such amounts were paid. Except as otherwise contemplated by subsections 9.3(b)
and 9.5(f), each payment (including each prepayment) by the Borrower on account
of principal of and (subject to the provisions of subsection 9.12) interest on
the Loans (other than a payment of Swing Line Loans) shall be allocated by the
Administrative Agent pro rata according to the respective outstanding principal
amounts of such Loans then held by the Lenders. Except as otherwise set forth
herein, all payments (including prepayments) to be made by the Borrower
hereunder, whether on account of principal, interest, fees or otherwise, shall
be made without set off or counterclaim and shall be made prior to 1:00 P.M.,
New York City time, on the due date thereof to the Administrative Agent, for the
account of the applicable Lenders, at the Administrative Agent's office
specified in subsection 18.2, in Dollars and in immediately available funds.
The Administrative Agent shall distribute such payments to the Lenders holding
obligations on account of which such amounts were paid promptly upon receipt in
like funds as received. Except as otherwise set forth herein, if any payment
hereunder (other than payments on Eurodollar Loans) becomes due and payable on a
day other than a Business Day, the maturity of such payment shall be extended to
the next succeeding Business Day (and, with respect to payments of principal,
interest thereon shall be payable at the then applicable rate during such
extension). If any payment on a Eurodollar Loan becomes due and payable on a
day other than a Business Day, the maturity of such payment shall be extended to
the next succeeding Business Day (and, with respect to payments of principal,
interest thereon shall be payable at the then applicable rate during such
extension) unless the result of such extension would be to extend such payment
into another calendar month, in which event such payment shall be made on the
immediately preceding Business Day.
(b) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its relevant Commitment Percentage of such
borrowing available to the Administrative Agent, the Administrative Agent may
assume that such Lender is making such amount available to the Administrative
Agent, and the Administrative Agent may, in reliance upon such assumption, make
available to the Borrower in respect of such borrowing a corresponding amount.
If such amount is not made available to the Administrative Agent by the required
time on the Borrowing Date therefor, such Lender shall pay to the Administrative
Agent, on demand, such amount with interest thereon at a rate equal to the daily
average Federal Funds Effective Rate for the period until such Lender makes such
amount immediately available to the Administrative Agent. A certificate of the
Administrative Agent submitted to any Lender with respect to any amounts owing
under this subsection 9.11 shall be conclusive in the absence of manifest error.
If such Lender's relevant Commitment Percentage of such borrowing is not
<PAGE>
48
made available to the Administrative Agent by such Lender within three Business
Days of such Borrowing Date, the Administrative Agent shall notify the Borrower
of the failure of such Lender to make such amount available to the
Administrative Agent and the Administrative Agent shall also be entitled to
recover such amount with interest thereon at the rate per annum applicable to
ABR Loans hereunder, on demand, from the Borrower.
(c) Notwithstanding anything to the contrary contained herein, in the
event that the Administrative Agent shall make any payment to a Lender on
account of amounts owing to such Lender by the Borrower hereunder and the
Administrative Agent either (i) shall not receive the corresponding amount from
the Borrower or (ii) shall be required to be return such amount to the Borrower,
such Lender shall (upon the request of the Administrative Agent) promptly return
to the Administrative Agent the amount of such payment.
9.12 Illegality. Notwithstanding any other provision herein, if the
----------
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement ("Affected Eurodollar
-------------------
Loans"), (a) such Lender shall promptly give written notice of such
circumstances to the Borrower and the Administrative Agent (which notice shall
be withdrawn whenever such circumstances no longer exist), (b) the commitment of
such Lender hereunder to make Affected Eurodollar Loans, continue Affected
Eurodollar Loans as such and convert ABR Loans to Affected Eurodollar Loans
shall forthwith be cancelled and, until such time as it shall no longer be
unlawful for such Lender to make or maintain such Affected Eurodollar Loans,
such Lender shall then have a commitment only to make an ABR Loan when an
Affected Eurodollar Loan is requested and (c) such Lender's Loans then
outstanding as Affected Eurodollar Loans, if any, shall be converted
automatically to ABR Loans on the respective last days of the then current
Interest Periods with respect to such Loans or within such earlier period as
required by law. If any such conversion of a Eurodollar Loan occurs on a day
which is not the last day of the then current Interest Period with respect
thereto, the Borrower shall pay to such Lender such amounts, if any, as may be
required pursuant to subsection 9.15.
9.13 Requirements of Law. (a) If the adoption of or any change in
-------------------
any Requirement of Law or in the interpretation or application thereof
applicable to any Lender or compliance by any Lender with any request or
directive (whether or not having the force of law) from any central bank or
other Governmental Authority made subsequent to the date hereof (or, if later,
the date on which such Lender becomes a Lender):
(i) shall subject any Lender to any tax of any kind whatsoever
with respect to any Letter of Credit, any Application or any Eurodollar
Loan made by it or its obligation to make Eurodollar Loans or change the
basis of taxation of payments to such Lender in respect thereof (except for
Non-Excluded Taxes covered by subsection 9.14 (including Non-Excluded Taxes
imposed solely by reason of any failure of such Lender to comply with its
obligations under subsection 9.14(b)) and changes in taxes measured by or
imposed upon the overall net income, or franchise taxes, or taxes measured
by or imposed upon overall capital or net worth, or branch taxes (in the
case of such capital, net worth or branch taxes, imposed in lieu of such
net income tax), of such Lender or its applicable lending office, branch,
or any affiliate thereof);
<PAGE>
49
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets held
by, deposits or other liabilities in or for the account of, advances, loans
or other extensions of credit by, or any other acquisition of funds by, any
office of such Lender which is not otherwise included in the determination
of the Eurodollar Rate hereunder; or
(iii) shall impose on such Lender any other condition
excluding any tax of any kind whatsoever;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, upon notice to the Borrower from such Lender,
through the Administrative Agent, in accordance herewith, the Borrower shall
promptly pay such Lender, upon its demand, any additional amount or amounts
necessary to compensate such Lender for such increased cost or reduced amount
receivable with respect to such Eurodollar Loans or Letters of Credit, provided
--------
that, in any such case, the Borrower may elect to convert Eurodollar Loans made
by such Lender hereunder to ABR Loans by giving the Administrative Agent at
least one Business Day's notice of such election, in which case the Borrower
shall promptly pay to such Lender, upon demand, without duplication, amounts
theretofore required to be paid to such Lender pursuant to this subsection
9.13(a) and such amounts, if any, as may be required pursuant to subsection
9.15. If any Lender becomes entitled to claim any additional amounts pursuant
to this subsection, it shall provide prompt notice thereof to the Borrower,
through the Administrative Agent, certifying (x) that one of the events
described in this paragraph (a) has occurred and describing in reasonable detail
the nature of such event, (y) as to the increased cost or reduced amount
resulting from such event and (z) as to the additional amount demanded by such
Lender and a reasonably detailed explanation of the calculation thereof.
(b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority, in each case, made subsequent to the Closing Date (or, if later,
the date on which such Lender becomes a Lender) shall have the effect of
reducing the rate of return on such Lender's or such corporation's capital as a
consequence of such Lender's obligations hereunder or under any Letter of Credit
to a level below that which such Lender or such corporation could have achieved
but for such adoption, change or compliance (taking into consideration such
Lender's or such corporation's policies with respect to capital adequacy) by an
amount deemed by such Lender to be material, then from time to time, within ten
Business Days after submission by such Lender to the Borrower (with a copy to
the Administrative Agent) of a written request therefor certifying (x) that one
of the events described in this paragraph (b) has occurred and describing in
reasonable detail the nature of such event, (y) as to the reduction of the rate
of return on capital resulting from such event and (z) as to the additional
amount or amounts demanded by such Lender or corporation and a reasonably
detailed explanation of the calculation thereof, the Borrower shall pay to such
Lender such additional amount or amounts as will compensate such Lender or
corporation for such reduction.
<PAGE>
50
(c) Any certificate provided pursuant to (a) or (b) above as to any
additional amounts payable pursuant to this subsection submitted by such Lender,
through the Administrative Agent, to the Borrower shall be conclusive in the
absence of manifest error. The agreements in this subsection shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
9.14 Taxes. (a) All payments made by the Borrower under this
-----
Agreement and any Notes shall be made free and clear of, and without deduction
or withholding for or on account of, any present or future income, stamp or
other taxes, levies, imposts, duties, charges, fees, deductions or withholdings,
now or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority excluding taxes measured by or imposed upon the overall
---------
net income of the Administrative Agent or any Lender or its applicable lending
office, or any branch or affiliate of either, and all franchise taxes, branch
taxes, taxes on doing business or taxes measured by or imposed upon the overall
capital or net worth of the Administrative Agent or any Lender or its applicable
lending office, or any branch or affiliate of either, in each case imposed: (i)
by the jurisdiction under the laws of which the Administrative Agent or such
Lender, applicable lending office, branch or affiliate is organized or is
located, or in which the principal executive office of the Administrative Agent
or any Lender is located, or any nation within which such jurisdiction is
located or any political subdivision thereof; or (ii) by reason of any
connection between the jurisdiction imposing such tax and the Administrative
Agent or such Lender, applicable lending office, branch or affiliate other than
a connection arising solely from the Administrative Agent or such Lender having
executed, delivered or performed its obligations under, or received payment
under or enforced, this Agreement or any Note. If any such non-excluded taxes,
levies, imposts, duties, charges, fees deductions or withholdings ("Non-Excluded
------------
Taxes") are required to be withheld from any amounts payable to the
- -----
Administrative Agent or any Lender hereunder or under any Note, the amounts so
payable to the Administrative Agent or such Lender shall be increased to the
extent necessary to yield to the Administrative Agent or such Lender (after
payment of all Non-Excluded Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in this Agreement, provided,
--------
however, that the Borrower shall be entitled to deduct and withhold any Non-
- -------
Excluded Taxes and shall not be required to increase any such amounts payable to
any Lender that is not organized under the laws of the United States of America
or a state thereof if such Lender fails to comply with the requirements of
paragraph (b) of this subsection. Whenever any Non-Excluded Taxes are payable
by the Borrower, as promptly as possible thereafter the Borrower shall send to
the Administrative Agent for its own account or for the account of such Lender,
as the case may be, a certified copy of an original official receipt received by
the Borrower showing payment thereof. If the Borrower fails to pay any Non-
Excluded Taxes when due to the appropriate taxing authority or fails to remit to
the Administrative Agent the required receipts or other required documentary
evidence, the Borrower shall indemnify the Administrative Agent and the Lenders
for any incremental taxes, interest or penalties that may become payable by the
Administrative Agent or any Lender as a result of any such failure. The
agreements in this subsection shall survive the termination of this Agreement
and the payment of the Loans and all other amounts payable hereunder.
(b) Each Lender that is not incorporated under the laws of the United
States of America or a state thereof shall:
<PAGE>
51
(X)(i) on or before the date of any payment by the Borrower
under this Agreement or any Note to such Lender, deliver to the Borrower
and the Administrative Agent (A) two duly completed copies of United States
Internal Revenue Service Form 1001 or 4224, or successor applicable form,
as the case may be, and (B) an Internal Revenue Service Form W-8 or W-9, or
successor applicable form, as the case may be;
(ii) deliver to the Borrower and the Administrative Agent two
further copies of any such form or certification on or before the date that
any such form or certification expires or becomes obsolete and after the
occurrence of any event requiring a change in the most recent form
previously delivered by it to the Borrower; and
(iii) obtain such extensions of time for filing and complete
such forms or certifications as may reasonably be requested by the Borrower
or the Administrative Agent; and
(Y) in the case of any such Lender that is not a "bank" within the
meaning of Section 881(c)(3)(A) of the Code, (i) represent to the Borrower
(for the benefit of the Borrower and the Administrative Agent) that it is
not a bank within the meaning of Section 881(c)(3)(A) of the Code, (ii)
agree to furnish to the Borrower on or before the date of any payment by
the Borrower, with a copy to the Administrative Agent, (A) a certificate
substantially in the form of Exhibit G (any such certificate a "U.S. Tax
--------
Compliance Certificate") and (B) two accurate and complete original signed
----------------------
copies of Internal Revenue Service Form W-8, or successor applicable form
certifying to such Lender's legal entitlement at the date of such
certificate to an exemption from U.S. withholding tax under the provisions
of Section 881(c) of the Code with respect to payments to be made under
this Agreement and any Notes (and to deliver to the Borrower and the
Administrative Agent two further copies of such form on or before the date
it expires or becomes obsolete and after the occurrence of any event
requiring a change in the most recently provided form, and, if necessary,
obtain any extensions of time reasonably requested by the Borrower or the
Administrative Agent for filing and completing such forms), and (iii)
agree, to the extent legally entitled to do so, upon reasonable request by
the Borrower, to provide to the Borrower (for the benefit of the Borrower
and the Administrative Agent) such other forms as may be reasonably
required in order to establish the legal entitlement of such Lender to an
exemption from withholding with respect to payments under this Agreement
and any Notes;
unless in any such case, any change in treaty, law or regulation has occurred
after the date such Person becomes a Lender hereunder which renders all such
forms inapplicable or which would prevent such Lender from duly completing and
delivering any such form with respect to it and such Lender so advises the
Borrower and the Administrative Agent. Such Lender shall certify (i) in the
case of a Form 1001 or 4224, that it is entitled to receive payments under this
Agreement and the Notes without deduction or withholding of any United States
federal income taxes and (ii) in the case of a Form W-8 or W-9, that it is
entitled to an exemption from United States backup withholding tax. Each Person
that shall become a Lender or a Participant pursuant to subsection 18.6 shall,
upon the effectiveness of the related transfer, be required to provide all of
the forms and statements required pursuant to this subsection, provided that in
--------
the case of a Participant such Participant shall furnish all such required forms
and statements to the Lender from which the related participation shall have
been purchased.
<PAGE>
52
9.15 Indemnity. The Borrower agrees to indemnify each Lender and to
---------
hold each Lender harmless from any loss or expense (other than through such
Lender's gross negligence or willful misconduct) which such Lender may sustain
or incur as a consequence of (a) default by the Borrower in making a borrowing
of, conversion into or continuation of Eurodollar Loans after the Borrower has
given a notice requesting the same in accordance with the provisions of this
Agreement, (b) default by the Borrower in making any prepayment after the
Borrower has given a notice thereof in accordance with the provisions of this
Agreement or (c) the making of a prepayment of Eurodollar Loans on a day which
is not the last day of an Interest Period with respect thereto. Such
indemnification may include an amount equal to the excess, if any, of (i) the
amount of interest which would have accrued on the amount so prepaid, or not so
borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of
such Interest Period (or, in the case of a failure to borrow, convert or
continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Loans provided
for herein (excluding, however, the Applicable Margin included therein, if any)
over (ii) the amount of interest (as reasonably determined by such Lender) which
would have accrued to such Lender on such amount by placing such amount on
deposit for a comparable period with leading banks in the interbank eurodollar
market. If any Lender becomes entitled to claim any amounts under the indemnity
contained in this subsection 9.15, it shall provide prompt notice thereof to the
Borrower, through the Administrative Agent, certifying (x) that one of the
events described in clause (a), (b) or (c) has occurred and describing in
reasonable detail the nature of such event, (y) as to the loss or expense
sustained or incurred by such Lender as a consequence thereof and (z) as to the
amount for which such Lender seeks indemnification hereunder and a reasonably
detailed explanation of the calculation thereof. Such a certificate as to any
indemnification pursuant to this subsection submitted by such Lender, through
the Administrative Agent, to the Borrower shall be conclusive in the absence of
manifest error. This covenant shall survive the termination of this Agreement
and the payment of the Loans and all other amounts payable hereunder.
9.16 Certain Fees. The Borrower agrees to pay to the Administrative
------------
Agent, for its own account, a non-refundable administration fee in an amount
previously agreed to with the Administrative Agent in the Fee Letter, payable in
the manner and on the dates set forth therein.
9.17 Certain Rules Relating to the Payment of Additional Amounts.
-----------------------------------------------------------
(a) Upon the request, and at the expense, of the Borrower, each Lender to which
the Borrower is required to pay any additional amount pursuant to subsection
9.13 or 9.14, and any Participant in respect of whose participation such payment
is required, shall reasonably afford the Borrower the opportunity to contest,
and reasonably cooperate with the Borrower in contesting, the imposition of any
Non-Excluded Tax giving rise to such payment; provided that (i) such Lender
--------
shall not be required to afford the Borrower the opportunity to so contest
unless the Borrower shall have confirmed in writing to such Lender its
obligation to pay such amounts pursuant to this Agreement and (ii) the Borrower
shall reimburse such Lender for its reasonable attorneys' and accountants' fees
and disbursements incurred in so cooperating with the Borrower in contesting the
imposition of such Non-Excluded Tax.
(b) If a Lender changes its applicable lending office (other than
pursuant to paragraph (c) below) and the effect of the change, as of the date of
the change, would be to
<PAGE>
53
cause the Borrower to become obligated to pay any additional amount under
subsection 9.13 or 9.14, the Borrower shall not be obligated to pay such
additional amount.
(c) If a condition or an event occurs which would, or would upon the
passage of time or giving of notice, result in the payment of any additional
amount to any Lender by the Borrower pursuant to subsection 9.13 or 9.14 such
Lender shall take such steps as may reasonably be available to it and acceptable
to the Borrower to mitigate the effects of such condition or event (which shall
include efforts to rebook the Loans held by such Lender at another lending
office, or through another branch or an affiliate, of such Lender); provided
--------
that such Lender shall not be required to take any step that, in its reasonable
judgment, would be materially disadvantageous to its business or operations or
would require it to incur additional costs (unless the Borrower agrees to
reimburse such Lender for the reasonable incremental out-of-pocket costs
thereof). If a condition or event occurs which would, or would upon the passage
of time or giving of notice, result in the payment of any additional amount to
any Lender by the Borrower pursuant to subsection 9.13(a)(i) (i.e. increased
costs for taxes) such Lender shall promptly notify the Borrower and the
Administrative Agent; provided that a failure on the part of a Lender to notify
--------
the Borrower shall not result in any liability to such Lender and shall not
reduce the amount of any additional amounts payable hereunder to such Lender to
the extent that such failure to notify the Borrower does not result in the
payment of any additional amount by the Borrower pursuant to Section 9.13(a)(i)
which payment could have been avoided or reduced had the Lender notified the
Borrower in accordance with this subsection 9.17(c).
(d) If the Borrower shall become obligated to pay additional amounts
pursuant to subsection 9.13 or 9.14 and any affected Lender shall not have
promptly taken steps necessary to avoid the need for payments under subsection
9.13 or 9.14, the Borrower shall have the right, for so long as such obligation
remains, (x) with the assistance of the Administrative Agent, to seek one or
more substitute Lenders reasonably satisfactory to the Administrative Agent and
the Borrower to purchase the affected Loan, in whole or in part, at an aggregate
price no less than such Loan's principal amount plus accrued interest, and
assume the affected obligations under this Agreement, or (y) to the extent that
no Default or Event of Default under Section 13 or subsections 16.2(a) or
16.3(a) shall have occurred of which the Borrower has actual knowledge and is
then continuing, upon at least four Business Days irrevocable notice to the
Administrative Agent, to prepay the affected Loan, in whole or in part, subject
to subsection 9.15, without premium or penalty. In the case of the substitution
of a Lender, the Borrower, the Administrative Agent, the affected Lender, and
any substitute Lender shall execute and deliver an appropriately completed
Assignment and Acceptance pursuant to subsection 18.6(c) to effect the
assignment of rights to, and the assumption of obligations by, the substitute
Lender. In the case of a prepayment of an affected Loan, the amount specified in
the notice shall be due and payable on the date specified therein, together with
any accrued interest to such date on the amount prepaid. In the case of each of
the substitution of a Lender and of the prepayment of an affected Loan, the
Borrower shall first pay the affected Lender any additional amounts owing under
subsections 9.13, 9.14 and 9.15 (as well as any commitment fees and other
amounts then due and owing to such Lender) prior to such substitution or
prepayment.
(e) If the Administrative Agent or any Lender receives a refund in
respect of taxes for which the Borrower has made additional payments pursuant to
subsection 9.13(a) or
<PAGE>
54
9.14(a), the Administrative Agent or such Lender, as the case may be, shall
promptly pay such refund (together with any interest with respect thereto
received from the relevant taxing authority) to the Borrower, provided,
--------
however, that the Borrower agrees promptly to return such refund (together with
any interest with respect thereto due to the relevant taxing authority) (free of
all Non-Excluded Taxes) to the Administrative Agent or the applicable Lender, as
the case may be, upon receipt of a notice that such refund is required to be
repaid to the relevant taxing authority. Notwithstanding anything to the
contrary contained in this clause (e), no Lender shall have any obligation to
disclose to the Borrower any of such Lender's books, records or tax filings.
(f) For the purposes of subsections 9.13 and 9.14, a change in
treaty, law, rule or regulation shall not include the ratification or entry into
force of the income tax treaty between Luxembourg and the United States of
America.
(g) The obligations of a Lender or Participant under this subsection
9.17 shall survive the termination of this Agreement and the payment of the
Loans and all amounts payable hereunder.
SECTION 10. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent, each Issuing Lender and the
Lenders to enter into this Agreement and to make the Loans and issue or
participate in the Letters of Credit, the Borrower hereby represents and
warrants to the Administrative Agent, each Issuing Lender and each Lender that:
10.1 Financial Condition. (a) The unaudited pro forma consolidated
------------------- --- -----
balance sheet of the Borrower and its consolidated Subsidiaries as at December
31, 1997 (including the notes thereto) (the "Pro Forma Balance Sheet"), copies
-----------------------
of which have heretofore been furnished to each Lender, has been prepared giving
effect (as if such events had occurred on such date) to (i) the consummation of
the Transaction on the Closing Date, (ii) the Loans to be made and the Senior
Subordinated Notes to be issued on the Closing Date and the use of proceeds
thereof and (iii) the payment of estimated fees, expenses and financing costs in
connection with the foregoing. The Pro Forma Balance Sheet has been prepared
based on the good faith assumptions of the Borrower as of the date of delivery
thereof, and based on such assumptions presents fairly in all material respects
on a pro forma basis the estimated financial position of Borrower and its
--- -----
consolidated Subsidiaries as at December 31, 1997, assuming that the events
specified in the preceding sentence had actually occurred at such date.
(b) The audited consolidated balance sheets of the Guarantor and its
Subsidiaries as at March 31, 1996 and March 31, 1997, and the related
consolidated statements of income and of cash flows for the fiscal years ended
on such dates, reported on by and accompanied by an unqualified report from
Coopers & Lybrand L.L.P., present fairly, in all material respects, the
consolidated financial condition of the Guarantor and its Subsidiaries as at
such date, and the consolidated results of its operations and its consolidated
cash flows for the respective fiscal years then ended. The unaudited
consolidated balance sheet of the Guarantor and its Subsidiaries as at December
31, 1997, and the related unaudited consolidated statements of income and cash
flows for the nine-month period ended on such date, on the
<PAGE>
55
basis disclosed in the footnotes to such financial statements, present fairly,
in all material respects, the consolidated financial condition of the Guarantor
and its Subsidiaries as at such date, and the consolidated results of its
operations and its consolidated cash flows for the nine-month period then ended
(subject to the omission of certain footnotes and normal year-end audit and
other adjustments). All such financial statements, including the related
schedules and notes thereto, have been prepared in accordance with GAAP applied
consistently throughout the periods involved (except as approved by a
Responsible Officer, and disclosed in any such schedules and notes, and except
that such unaudited financial statements do not contain certain footnotes). All
material Guarantee Obligations, material contingent liabilities and liabilities
for taxes, or all material long-term leases or unusual forward or long-term
commitments, including, without limitation, any interest rate or foreign
currency swap or exchange transaction or other obligation in respect of
derivatives, which according to GAAP must be reflected in such financial
statements or the notes thereto are so reflected. During the period from
December 31, 1997 to and including the date hereof there has been no disposition
by the Guarantor or any of its Subsidiaries of any business or property that
would be material to the Guarantor and its Subsidiaries taken as a whole, other
than any such disposition which is reflected in the foregoing financial
statements or in the notes thereto, or which has otherwise been disclosed in
writing to the Lenders on or prior to the Closing Date, or which is pursuant to
the Recapitalization of the business and properties of the Guarantor and its
Subsidiaries.
10.2 No Change. Since March 31, 1997, there has been no development
---------
or event relating to or affecting any Credit Party which has had or would
reasonably be expected to have a Material Adverse Effect (after giving effect to
the Transaction and the transactions related thereto).
10.3 Corporate Existence; Compliance with Law. Each of the Borrower
----------------------------------------
and its Active Subsidiaries (a) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (b) has the
corporate or other organizational power and authority, and the legal right, to
own and operate its property, to lease the property it operates as lessee and to
conduct the business in which it is currently engaged, except to the extent that
the failure to have such legal right would not be reasonably expected to have a
Material Adverse Effect, (c) is duly qualified as a foreign entity and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such
qualification, other than in such jurisdictions where the failure to be so
qualified and in good standing would not be reasonably expected to have a
Material Adverse Effect and (d) is in compliance with all Requirements of Law
except to the extent that the failure to comply therewith would not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.
10.4 Corporate Power; Authorization; Enforceable Obligations. (a)
-------------------------------------------------------
The Borrower and each other Credit Party has the corporate or other
organizational power and authority, and the legal right, to make, deliver and
perform the Credit Documents to which it is a party and, in the case of the
Borrower, to borrow hereunder and has taken all necessary corporate or other
organizational action to authorize the execution, delivery and performance of
the Credit Documents to which it is a party and, in the case of the Borrower,
the borrowings on the terms and conditions of this Agreement and any Notes or
Applications. No consent or authorization of, filing with, notice to or other
similar act by or in respect of, any Governmental Authority or any other Person
is required to be obtained or made by or on behalf of any Credit
<PAGE>
56
Party or any other Subsidiary of the Guarantor in connection with the
borrowings hereunder or with the execution, delivery, performance, validity or
enforceability of the Credit Documents to which the Borrower and each other
Credit Party is a party, except for (i) consents, authorizations, notices and
filings described in Schedule 10.4(a), all of which have been obtained or made
or have the status described therein, (ii) filings to perfect the Liens created
by the Security Documents, (iii) filings pursuant to the Assignment of Claims
Act of 1940, as amended (31 U.S.C. (S) 3737 et seq.), in respect of Accounts of
the Borrower and its Subsidiaries the obligor in respect of which is the United
States of America or any department, agency or instrumentality thereof and (iv)
consents, authorizations, notices and filings which the failure to obtain or
make would not reasonably be expected to have a Material Adverse Effect. This
Agreement has been, and each other Credit Document to which it is a party will
be, duly executed and delivered on behalf of the Borrower. This Agreement
constitutes, and each other Credit Document to which it is a party when executed
and delivered will constitute, a legal, valid and binding obligation of the
Borrower enforceable against the Borrower in accordance with its terms, except
as may be limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether considered in
a proceeding in equity or at law) and an implied covenant of good faith and fair
dealing.
(b) This Agreement has been, and each of the other Credit Documents
and any other agreement to be entered into by any Credit Party pursuant hereto
will be, duly executed and delivered on behalf of such Credit Party that is
party thereto. This Agreement constitutes, and each of the other Credit
Documents and any other agreement to be entered into by any Credit Party
pursuant hereto will constitute upon execution and delivery, the legal, valid
and binding obligation of such Credit Party, enforceable against such Credit
Party in accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium, or
similar laws relating to or affecting creditors' rights generally and by general
equitable principles (regardless of whether enforcement is sought in a
proceeding in equity or at law) and an implied covenant of good faith and fair
dealing.
10.5 No Legal Bar. The execution, delivery and performance of each
------------
Credit Document by each Credit Party party thereto, the incurrence or issuance
of and use of the proceeds of the Loans and of drawings under the Letters of
Credit by the Borrower and the consummation on the Closing Date of the other
transactions contemplated by the Credit Documents (a) will not violate any
Requirement of Law or any Contractual Obligation applicable to or binding upon
the Borrower, any Subsidiary of the Borrower or any of their respective
properties or assets in any respect that would reasonably be expected to have a
Material Adverse Effect and (b) will not result in the creation or imposition of
any Lien on any of their properties or assets pursuant to any Requirement of Law
applicable to it, as the case may be, or any of its Contractual Obligations,
except for the Liens arising under the Security Documents or permitted under
subsection 14.2.
10.6 No Material Litigation. Except as disclosed on Schedule 10.6,
----------------------
no litigation by, investigation by, or proceeding of or before any arbitrator or
any Governmental Authority is pending or, to the knowledge of the Borrower,
threatened by or against the Borrower or any of its Subsidiaries, or against any
of its or their respective properties or revenues (including after giving effect
to the Transaction), which (a) is so pending or threatened at any time on or
prior to the Closing Date and relates to any Credit Document, the Loans made
hereunder, the
<PAGE>
57
use of proceeds thereof, or any drawings under a Letter of Credit and the other
transactions contemplated hereby or (b) would reasonably be expected to have a
Material Adverse Effect.
10.7 No Default. Neither the Borrower nor any of its Subsidiaries is
----------
in default under or with respect to any of its Contractual Obligations in any
respect which would reasonably be expected to have a Material Adverse Effect.
No Default or Event of Default has occurred and is continuing.
10.8 Ownership of Property; Liens. Each of the Borrower and its
----------------------------
Subsidiaries has good record and marketable title in fee simple to, or a valid
leasehold interest in, all its material real property, and good title to, or a
valid leasehold interest in, all its other material property, and none of such
property is subject to any Lien, except for Liens permitted by subsection 14.2.
10.9 Intellectual Property. The Borrower and each of its
---------------------
Subsidiaries owns, or is licensed to use (or otherwise has the legal right), all
United States trademarks, tradenames, copyrights, technology, know-how and
processes necessary for the conduct of its business substantially as currently
conducted except for those the failure to own or license (or otherwise have the
legal right to use) which would not reasonably be expected to have a Material
Adverse Effect (the "Intellectual Property"). Except as set forth on Schedule
---------------------
10.9 no claim has been asserted and is pending by any Person challenging or
questioning the use of any such Intellectual Property or the validity or
effectiveness of any such Intellectual Property, nor does the Borrower know of
any valid basis for any such claim and to the knowledge of the Borrower, the use
of such Intellectual Property by the Borrower and its Subsidiaries does not
infringe on the rights of any Person, except for such claims and infringements
that, in the aggregate, would not reasonably be expected to have a Material
Adverse Effect.
10.10 No Burdensome Restrictions. Except as previously disclosed to
--------------------------
the Lenders in writing prior to the Closing Date, no Requirement of Law
applicable to or Contractual Obligation of the Borrower or any of its
Subsidiaries would reasonably be expected to have a Material Adverse Effect.
10.11 Taxes. Each of the Borrower and its Subsidiaries has filed or
-----
caused to be filed all United States federal income tax returns and all other
material tax returns which, to the knowledge of the Borrower, are required to be
filed and has paid all taxes shown to be due and payable on said returns or on
any assessments made against it or any of its property and all other taxes, fees
or other charges imposed on it or any of its property by any Governmental
Authority (other than any (i) taxes, fees or other charges with respect to which
the failure to pay, in the aggregate, would not have a Material Adverse Effect
or (ii) taxes, fees or other charges the amount or validity of which are
currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been provided on the
books of the Borrower or its Subsidiaries, as the case may be); other than as
disclosed on Schedule 10.11, no tax Lien has been filed, and, to the knowledge
of the Borrower, no claim is being asserted, with respect to any such tax, fee
or other charge.
10.12 Federal Regulations. No part of the proceeds of any Loans will
-------------------
be used for "purchasing" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation G or Regulation U of the
Board of Governors of the Federal
<PAGE>
58
Reserve System as now and from time to time hereafter in effect. If requested by
any Lender or the Administrative Agent, the Borrower will furnish to the
Administrative Agent and each Lender a statement to the foregoing effect in
conformity with the requirements of FR Form G-1 or FR Form U-1 referred to in
said Regulation G or Regulation U, as the case may be.
10.13 ERISA. During the five year period prior to each date as of
-----
which this representation is made, or deemed made, with respect to any Plan (or,
with respect to (vi) or (viii) below, as of the date such representation is made
or deemed made), none of the following events or conditions, either individually
or in the aggregate, has resulted or is reasonably likely to result in a
liability to Holding, the Borrower or any of its Subsidiaries which would be
reasonably expected to have a Material Adverse Effect: (i) a Reportable Event;
(ii) an "accumulated funding deficiency" (within the meaning of Section 412 of
the Code or Section 302 of ERISA); (iii) any material noncompliance with the
applicable provisions of ERISA or the Code; (iv) a termination of a Single
Employer Plan (other than a standard termination pursuant to Section 4041(b) of
ERISA); (v) a Lien in favor of the PBGC or a Plan; (vi) Underfunding with
respect to any Single Employer Plan; (vii) a complete or partial withdrawal from
any Multiemployer Plan by Holding, the Borrower or any Commonly Controlled
Entity; (viii) any liability of Holding, the Borrower or any Commonly Controlled
Entity under ERISA if Holding, the Borrower or any such Commonly Controlled
Entity were to withdraw completely from all Multiemployer Plans as of the annual
valuation date most closely preceding the date on which this representation is
made or deemed made; (ix) the Reorganization or Insolvency of any Multiemployer
Plan; and (x) an event or condition with respect to which Holding, the Borrower
or any Commonly Controlled Entity has incurred or could incur any liability in
respect of a Former Plan.
10.14 Investment Company Act; Other Regulations. The Borrower is not
-----------------------------------------
an "investment company", or a company "controlled" by an "investment company"
required to register as such under the Investment Company Act of 1940, as
amended, within the meaning of such act. The Borrower is not subject to
regulation under any Federal or State statute or regulation (other than
Regulation X of the Board of Governors of the Federal Reserve System) which
limits its ability to incur Indebtedness.
10.15 Subsidiaries. On the Closing Date, the Subsidiaries of the
------------
Borrower and their jurisdiction of incorporation shall be as set forth on
Schedule 10.15.
10.16 Environmental Matters. Other than exceptions to any of the
---------------------
following that would not, individually or in the aggregate, reasonably be
expected to result in the payment of a Material Environmental Amount:
(a) the facilities and properties owned, leased or operated by the
Borrower or any of its Subsidiaries (the "Properties") do not contain any
----------
Materials of Environmental Concern in amounts or concentrations which (i)
constitute a violation of, or (ii) would reasonably be expected to give
rise to liability on the part of the Borrower or any of its Subsidiaries
under, any applicable Environmental Law.
(b) the Properties and all operations at the Properties are in
compliance, and have in the last five years been in compliance, in all
material respects with all applicable Environmental Laws, and there is no
contamination at, under or about the Properties or
<PAGE>
59
violation of any applicable Environmental Law with respect to the
Properties or the business operated by the Borrower or any of its
Subsidiaries (the "Business") which would materially interfere with the
--------
continued operation of the Properties.
(c) neither the Borrower nor any of its Subsidiaries has received any
written notice of violation, alleged violation, non-compliance, liability
or potential liability regarding environmental matters or compliance with
applicable Environmental Laws with regard to any of the Properties or the
Business, nor does the Borrower have knowledge or reason to believe that
any such notice will be received or is being threatened.
(d) Materials of Environmental Concern have not been transported or
disposed of from the Properties, in violation of, or in a manner or to a
location which would reasonably be expected to give rise to liability on
the part of the Borrower or any of its Subsidiaries under, any applicable
Environmental Law, nor have any Materials of Environmental Concern been
generated, treated, stored or disposed of at, on or under any of the
Properties, in violation of, or in a manner that would reasonably be
expected to give rise to liability on the part of the Borrower or any of
its Subsidiaries under, any applicable Environmental Law.
(e) no judicial proceeding or governmental or administrative action
is pending or, to the knowledge of the Borrower, threatened, under any
applicable Environmental Law to which the Borrower or any Subsidiary is or
will be named as a party with respect to the Properties or the Business,
nor are there any consent decrees or other decrees, consent orders,
administrative orders or other orders, or other administrative or judicial
requirements outstanding under any applicable Environmental Law with
respect to the Properties or the Business.
(f) there has been no release or threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related
to the operations of the Borrower or any Subsidiary in connection with the
Properties or otherwise in connection with the Business, in violation of or
in amounts or in a manner that would reasonably be expected to give rise to
liability on the part of the Borrower or any of its Subsidiaries under
applicable Environmental Laws.
(g) Neither the Borrower nor any of its Subsidiaries has assumed or
retained, by contract or, to its knowledge, operation of law, any known or
suspected liabilities of any kind, fixed or contingent, as a result of any
violation or breach of applicable Environmental Law or with respect to any
contamination by any Materials of Environmental Concern.
10.17 Collateral Documents. Upon execution and delivery thereof by
--------------------
the parties thereto, the Collateral Agreement will be effective to create (to
the extent described therein) in favor of the Administrative Agent, for the
ratable benefit of the Lenders, a legal, valid and enforceable security interest
in the Collateral described therein, except as may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith
<PAGE>
60
and fair dealing. When the actions specified in Schedule 9 to the Collateral
Agreement have been duly taken, the security interests granted pursuant thereto
shall constitute (to the extent described therein) a perfected first lien on,
and security interest in, all right, title and interest of each pledgor party
thereto in the Collateral described therein with respect to such pledgor.
10.18 Accuracy and Completeness of Information. The factual
----------------------------------------
statements contained in the financial statements referred to in subsection
10.1(a) and (b), the Credit Documents (including the schedules thereto, but
excluding any statements by the Administrative Agent or any Lender) and any
other certificates or documents furnished by or on behalf of Holding or any of
its Subsidiaries to the Administrative Agent or the Lenders from time to time in
connection with this Agreement, taken as a whole, did not (as of the Closing
Date, to the best knowledge of the Borrower, contain any material misstatement
of fact or omit to state a material fact necessary in order to make the
statements contained therein, in light of the circumstances in which the same
were made, not materially misleading in their presentation of the Transaction or
the other transactions contemplated hereby or by the other Transaction Documents
or of the Borrower and its Subsidiaries taken as a whole; all except as
otherwise qualified herein or therein, and such knowledge qualification being
given only with respect to factual statements made by Persons other than the
Borrower or any of its Subsidiaries. It is understood that no representation or
warranty is made concerning any forecasts, estimates, pro forma information,
--- -----
projections and statements as to anticipated future performance or conditions,
and the assumptions on which they were based, contained in any such financial
statements, certificates or documents except that as of the date such forecasts,
estimates, pro forma information, projections and statements were generated, (i)
--- -----
such forecasts, estimates, pro forma information, projections and statements
--- -----
were based on the good faith assumptions of the management of Holding and (ii)
such assumptions were believed by such management to be reasonable. Such
forecasts, estimates, pro forma information and statements, and the assumptions
--- -----
on which they were based, may or may not prove to be correct.
10.19 Solvency. As of the Closing Date, immediately prior to and
--------
after giving effect to the Transaction and the incurrence of all Indebtedness
and obligations being incurred in connection herewith and therewith and after
giving effect to the guarantee of Holding, guaranteeing the obligations of Newco
(the "TTC Guarantee"), each Credit Party will be, Solvent.
-------------
10.20 Senior Indebtedness. The monetary obligations of the Guarantor
-------------------
and Newco under this Agreement constitute "Senior Indebtedness" of the Borrower
under and as defined in the Senior Subordinated Note Indenture.
SECTION 11. CONDITIONS PRECEDENT
11.1 Conditions to Initial Loans. The agreement of each Lender to
---------------------------
make the initial Loans and other extensions of credit requested to be made by it
is subject to the satisfaction or waiver immediately prior to or concurrently
with the making of such Loan or other extension of credit, of the following
conditions precedent:
<PAGE>
61
(a) Credit Documents. The Administrative Agent shall have received
----------------
(i) this Agreement, executed and delivered by a duly authorized officer of
the Borrower, (ii) the Collateral Agreement and (iii) each of the Foreign
Pledge Agreements, if any, executed and delivered by a duly authorized
officer of each Credit Party thereto.
(b) Related Agreements. The Administrative Agent shall have
------------------
received, with a copy for each Lender, complete and correct copies,
certified as to authenticity by the Borrower, of each of (i) the Merger
Agreement, (ii) the Senior Subordinated Note Indenture and (iii) such other
documents or instruments as may be reasonably requested by the
Administrative Agent.
(c) Corporate Proceedings of the Borrower. The Administrative Agent
-------------------------------------
shall have received, with a photocopy for each Lender, a copy of the
resolutions, in form and substance reasonably satisfactory to the
Administrative Agent, of the Board of Directors or comparable body of the
Borrower authorizing (i) the execution, delivery and performance of this
Agreement and the other Credit Documents to which it is a party, (ii) the
borrowings contemplated hereunder and (iii) the granting by it of Liens
pursuant to the Collateral Agreement, certified by the Secretary or an
Assistant Secretary of the Borrower as of the Closing Date, which
certificate shall be in form and substance reasonably satisfactory to the
Administrative Agent and shall state that the resolutions thereby certified
have not been amended, modified, revoked or rescinded except as any later
such resolution may modify any earlier such resolution.
(d) Borrower Incumbency Certificate. The Administrative Agent shall
-------------------------------
have received, with a photocopy for each Lender, a Certificate of the
Borrower, dated the Closing Date, as to the incumbency and signature of the
officers of the Borrower executing any Credit Document reasonably
satisfactory in form and substance to the Administrative Agent, executed by
a Responsible Officer and the Secretary or any Assistant Secretary of the
Borrower.
(e) Corporate Proceedings of Subsidiaries. The Administrative Agent
-------------------------------------
shall have received, with a photocopy for each Lender, a copy of the
resolutions, in form and substance reasonably satisfactory to the
Administrative Agent, of the Board of Directors of each Subsidiary of the
Borrower which is a party to a Credit Document authorizing (i) the
execution, delivery and performance of the Credit Documents to which it is
a party and (ii) the granting by it of Liens pursuant to the Collateral
Agreement, certified by the Secretary or an Assistant Secretary of each
such Subsidiary as of the Closing Date, which certificate shall be in form
and substance reasonably satisfactory to the Administrative Agent and shall
state that the resolutions thereby certified have not been amended,
modified, revoked or rescinded except as any later such resolution may
modify any earlier such resolution.
(f) Subsidiary Incumbency Certificates. The Administrative Agent
----------------------------------
shall have received, with a photocopy for each Lender, a certificate of
each Subsidiary of the Borrower which is a Credit Party, dated the Closing
Date, as to the incumbency and signature of the officers of such
Subsidiaries executing any Credit Document, reasonably satisfactory in form
and substance to the Administrative Agent, executed by
<PAGE>
62
a Responsible Officer and the Secretary or any Assistant Secretary of each
such Subsidiary.
(g) Corporate Documents. The Administrative Agent shall have
-------------------
received, with a photocopy for each Lender, complete and correct copies of
the certificate of incorporation and by-laws (or analogous documents) of
each Credit Party, certified as of the Closing Date as complete and correct
copies thereof by the Secretary or an Assistant Secretary of such Credit
Party.
(h) Consents, Licenses and Approvals. The Administrative Agent shall
--------------------------------
have received, with a photocopy for each Lender, a certificate of a
Responsible Officer of each of the Guarantor and the Borrower stating that
all consents, authorizations and filings referred to in Schedule 10.4(a)
are in full force and effect or have the status described therein, and the
Administrative Agent shall have received evidence thereof reasonably
satisfactory to it.
(i) Fees. The Administrative Agent shall have received the fees to
----
be received on the Closing Date referred to in subsection 9.16.
(j) Legal Opinions. The Administrative Agent shall have received,
--------------
with a photocopy counterpart for each Lender, the following executed legal
opinions:
(i) the executed legal opinion of Hale & Dorr, counsel to
the Borrower and the other Credit Parties, substantially in the form
of Exhibit C-1;
(ii) the executed legal opinion of Debevoise & Plimpton,
special New York counsel to the Borrower and the other Credit Parties,
substantially in the form of Exhibit C-2; and
(iii) the executed legal opinion of Mark V.B. Tremallo,
Esq., internal counsel to Holding, substantially in the form of
Exhibit C-3.
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Administrative Agent may
reasonably require.
(k) Pledged Stock; Stock Powers; Pledged Notes. The Administrative
------------------------------------------
Agent shall have received the certificates representing the shares pledged
pursuant to the Collateral Agreement and (to the extent that such shares
are evidenced by certificates) each Foreign Pledge Agreement, if any,
together with an undated stock power for each such certificate executed in
blank by a duly authorized officer of the pledgor thereof.
(l) Actions to Perfect Liens. The Administrative Agent shall have
------------------------
received evidence in form and substance reasonably satisfactory to it that
all filings, recordings, registrations and other actions, including,
without limitation, the filing of duly executed financing statements on
form UCC-1, necessary or, in the reasonable opinion of the Administrative
Agent, reasonably desirable to perfect the Liens created by the Security
Documents shall have been completed or shall be ready to be completed
promptly following the Closing Date.
<PAGE>
63
(m) Intentionally Omitted.
---------------------
(n) Intentionally Omitted.
---------------------
(o) Intentionally Omitted.
---------------------
(p) Intentionally Omitted.
---------------------
(q) Intentionally Omitted.
---------------------
(r) Lien Searches. The Administrative Agent shall have received the
-------------
results of a recent search by a Person satisfactory to the Administrative
Agent, of the Uniform Commercial Code, judgement and tax lien filings which
may have been filed with respect to personal property of Holding, TTC and
their Domestic Subsidiaries (including Foreign Subsidiary Holdcos) which
are Credit Parties, and the results of such search shall be reasonably
satisfactory to the Administrative Agent.
(s) Sources and Uses. The Administrative Agent shall have received a
----------------
certificate of a Responsible Officer, dated the Closing Date, stating that,
in connection with the Transactions, (i) Holding (either directly or
through MergerCorp) has issued and sold at least $275,000,000 in cash
equity capital, (ii) certain shareholders and members of management of
Holding and its Subsidiaries have maintained at least $20,000,000 of equity
investments in the common stock of Holding, (iii) Holding has received not
less than $275,000,000 in gross cash proceeds from the offering and sale of
the Senior Subordinated Notes, (iv) before giving effect to any cash
described in this clause (s) to be received by Holding and its Subsidiaries
in connection with the Transactions and after giving effect to the payment
of any accounts payable which are then due, Holding has not less than
$20,000,000 in cash on hand, (v) Holding has received gross proceeds
(including, without limitation, through the reduction of amounts payable to
optionholders as Merger consideration) of not less than $25,000,000 from
the exercise of existing stock options, (vi) the total cost of the
Transaction shall not have exceeded $920,000,000; such certificate also
shall contain a good faith estimate (in reasonable detail) of the fees and
expenses relating to the Transaction (which estimate shall not exceed
$42,500,000 in the aggregate).
(t) The Merger and the Recapitalization. The Administrative Agent
-----------------------------------
and the Lenders shall be reasonably satisfied that (i) the Merger Agreement
shall have been duly executed and delivered by the parties thereto, (ii)
all conditions precedent under the Merger Agreement to the consummation of
the Merger and the Recapitalization (other than the payment of the Merger
consideration) shall have been satisfied in all material respects (except
for any modification or waiver of any such condition made with the consent
of the Administrative Agent) and (iii) the Merger and the Recapitalization
have been, or substantially simultaneously with the funding hereof, will
be, consummated.
<PAGE>
64
(u) No Consents. Holding, TTC and their Subsidiaries shall have
-----------
obtained all consents and approvals of Governmental Authorities and third
parties necessary in connection with the Transaction, the Loans and other
extensions of credit hereunder and the continuing operations of TTC and its
Subsidiaries (after giving effect to the Transaction) except for such
consents and approvals which the failure to obtain would not reasonably be
expected to have a Material Adverse Effect; all such consents and approvals
shall be in full force and effect and all applicable waiting periods under
applicable law shall have expired without any governmental or judicial
action being taken that has had or would be reasonably likely to have the
effect of restraining, preventing or imposing materially burdensome
conditions on the Transaction and the related financing transactions
contemplated hereby.
(v) Corporate Structure. The Administrative Agent and the Lenders
-------------------
shall have received a corporate structure chart of the Guarantor and its
Active Subsidiaries (after giving effect to the Transaction) and shall be
reasonably satisfied with the corporate, capital and legal structure of the
Guarantor and its Active Subsidiaries described therein.
(w) Pro Forma Balance Sheet. The Administrative Agent shall have
-----------------------
received a copy of the Pro Forma Balance Sheet and the related pro forma
income statement, each of which shall be substantially similar to those
provided to the Lenders prior to the date hereof.
(x) Insurance. The Administrative Agent shall have received a
---------
schedule describing all material insurance policies maintained by Holding
and TTC in accordance with the provisions of subsection 12.5, which
schedule shall be in form and substance reasonably satisfactory to the
Administrative Agent.
(y) Existing Indebtedness. All material Indebtedness of Holding and
---------------------
its Subsidiaries (other than the Senior Subordinated Notes and any
intercompany Indebtedness and any Indebtedness described in Schedule
11.1(y)) shall have been paid in full, and all collateral security and
credit support provided by Holding and its Subsidiaries on account of such
material Indebtedness shall have been released and terminated.
(z) Fees. The Administrative Agent shall have received all fees,
----
costs, and expenses due and payable on or prior to the Closing Date,
including, without limitation, the fees referred to in subsection 9.2.
The making of the initial Loans by the Lenders hereunder shall conclusively be
deemed to constitute an acknowledgment by the Administrative Agent and each
Lender that each of the conditions precedent set forth in this subsection 11.1
shall have been satisfied in accordance with its respective terms or shall have
been irrevocably waived by such Person.
11.2 Conditions to Each Loan. The agreement of each Lender to make
-----------------------
any Loan or other extension of credit requested to be made by it on any date
(including, without limitation, any Loan or other extension of credit to be made
on the Closing Date) is subject to the satisfaction or waiver of the following
conditions precedent:
<PAGE>
65
(a) Representations and Warranties. Each of the representations and
------------------------------
warranties made by each Credit Party in or pursuant to the Credit Documents
to which it is a party shall, except to the extent that they relate to a
particular date, be true and correct in all material respects on and as of
such date as if made on and as of such date.
(b) No Default. No Default or Event of Default shall have occurred
----------
and be continuing on such date or after giving effect to the Loans and
other extensions of credit requested to be made on such date.
Each borrowing by the Borrower hereunder shall constitute a representation and
warranty by the Borrower as of the date thereof that the conditions contained in
this subsection have been satisfied.
SECTION 12. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, from and after the Closing Date and
so long as any Commitments remain in effect, and thereafter until payment in
full of the Loans, all Reimbursement Obligations then due and owing, and any
other amount then due and owing to any Lender or the Administrative Agent
hereunder or under any Note, the Borrower shall and (except in the case of
delivery of financial information, reports and notices) shall cause each of its
Subsidiaries to:
12.1 Financial Statements. Furnish to each Lender:
--------------------
(a) as soon as available, but in any event within 90 days after the
end of each fiscal year of the Guarantor, a copy of the consolidated
balance sheet of the Guarantor and its consolidated Subsidiaries as at the
end of such year and the related consolidated statements of income and
retained earnings and of cash flows for such year, setting forth in each
case in comparative form the figures for the previous year, reported on
without a "going concern" or like qualification or exception, or
qualification arising out of the scope of the audit, by Coopers & Lybrand
L.L.P. or other independent certified public accountants of nationally
recognized standing; and
(b) as soon as available, but in any event not later than 45 days
after the end of each of the first three quarterly periods of each fiscal
year of the Guarantor, the unaudited consolidated balance sheet of the
Guarantor and its consolidated Subsidiaries as at the end of such quarter
and the related unaudited consolidated statements of income and retained
earnings and of cash flows of the Guarantor and its consolidated
Subsidiaries for such quarter and the portion of the fiscal year through
the end of such quarter, setting forth in each case in comparative form the
figures for the previous year, certified by a Responsible Officer as being
fairly stated in all material respects (subject to normal year-end audit
and other adjustments);
all such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by a Responsible
<PAGE>
66
Officer and disclosed therein, and except, in the case of any financial
statements delivered pursuant to subsection 12.1(b), for the absence of certain
notes).
12.2 Certificates; Other Information. Furnish to each Lender:
-------------------------------
(a) concurrently with the delivery of the financial statements
referred to in subsection 12.1(a), a certificate of the independent
certified public accountants reporting on such financial statements stating
that in making the audit necessary therefor no knowledge was obtained of
any Default or Event of Default, insofar as the same relates to any
financial accounting matters covered by their audit, except as specified in
such certificate;
(b) concurrently with the delivery of the financial statements
referred to in subsections 12.1(a) and (b), a certificate of a Responsible
Officer stating that, to the best of such Responsible Officer's knowledge,
during such period (i) no Subsidiary has been formed or acquired (or, if
any such Subsidiary has been formed or acquired, the Borrower has complied
with the requirements of subsection 12.10 with respect thereto), (ii)
neither the Borrower nor any other Credit Party has changed its name, its
principal place of business, its chief executive office or the location of
any material item of tangible Collateral without complying with the
requirements of this Agreement and the Security Documents with respect
thereto and (iii) to the best of such Responsible Officer's knowledge, each
of the Borrower and the other Credit Parties has observed or performed all
of its covenants and other agreements, and satisfied every condition,
contained in this Agreement and the other Credit Documents to be observed,
performed or satisfied by it (and including therein a reasonably detailed
calculation of the covenants set forth in Section 13 and, in the case of
the annual financial statements, of Excess Cash Flow as of the last day of
such period), and that such Responsible Officer has obtained no knowledge
of any Default or Event of Default except, in each case as specified in
such certificate;
(c) not later than 60 days after the beginning of each fiscal year of
the Borrower, a copy of the projections by the Borrower of the operating
budget and cash flow budget of the Borrower and its Subsidiaries for such
fiscal year, such projections to be accompanied by a certificate of a
Responsible Officer to the effect that such Responsible Officer believes
such projections have been prepared on the basis of reasonable assumptions;
(d) within five Business Days after the same are sent, copies of all
financial statements and reports which the Borrower sends to its public
stockholders, and within five Business Days after the same are filed,
copies of all financial statements and reports which the Borrower may make
to, or file with, the Securities and Exchange Commission or any successor
or analogous Governmental Authority; and
(e) promptly, such additional financial and other information as the
Administrative Agent or any Lender (acting through the Administrative
Agent) may from time to time reasonably request.
<PAGE>
67
12.3 Payment of Obligations. Pay, discharge or otherwise satisfy at
----------------------
or before maturity or before they become delinquent, as the case may be, all its
material obligations of whatever nature, except where the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
and reserves in conformity with GAAP with respect thereto have been provided on
the books of the Borrower or its Subsidiaries, as the case may be.
12.4 Conduct of Business and Maintenance of Existence. Continue to
------------------------------------------------
engage in business of the same general type as now conducted by the Borrower and
its Subsidiaries taken as a whole and preserve, renew and keep in full force and
effect its corporate existence and take all reasonable action to maintain all
rights, privileges and franchises necessary or desirable in the normal conduct
of the business of the Borrower and its Subsidiaries taken as a whole except as
otherwise permitted pursuant to subsection 14.4; provided that the Borrower and
--------
its Subsidiaries shall not be required to maintain any such rights, privileges
or franchises, if the failure to do so would not reasonably be expected to have
a Material Adverse Effect; and comply with all Contractual Obligations and
Requirements of Law except to the extent that failure to comply therewith would
not, in the aggregate, be reasonably expected to have a Material Adverse Effect.
12.5 Maintenance of Property; Insurance. Keep all property useful
----------------------------------
and necessary in the business of the Borrower and its Subsidiaries taken as a
whole in good working order and condition; maintain with financially sound and
reputable insurance companies insurance on all its property material to the
business of the Borrower and its Subsidiaries taken as a whole in at least such
amounts and against at least such risks as are usually insured against in the
same general area by companies engaged in the same or a similar business; and
furnish to the Administrative Agent, upon written request, full information as
to the insurance carried.
12.6 Inspection of Property; Books and Records; Discussions. Keep
------------------------------------------------------
proper books of records and account in which full, complete and correct entries
in conformity with all material Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities; and permit
representatives of the Administrative Agent or any Lender (acting through the
Administrative Agent), at any reasonable time, upon reasonable notice, and as
often as may reasonably be desired, to visit and inspect any of its properties
and examine and, to the extent reasonable, make abstracts from any of its books
and records and to discuss the business, operations, properties and financial
and other condition of the Borrower and its Subsidiaries with officers and
employees of the Borrower and its Subsidiaries and with its independent
certified public accountants, in each case (i) at the expense of the Borrower
(A) with respect to any such actions by a Lender during the continuance of a
Default or an Event of Default or as otherwise required by subsection 18.5 or
(B) with respect to any such actions by the Administrative Agent and (ii) at the
expense of the relevant Lender in any other case.
12.7 Notices. Promptly give notice to the Administrative Agent and
-------
each Lender of:
(a) as soon as possible after a Responsible Officer of the Borrower
knows or reasonably should know thereof, the occurrence of any Default or
Event of Default;
<PAGE>
68
(b) as soon as possible after a Responsible Officer of the Borrower
knows or reasonably should know thereof, any (i) default or event of
default under any Contractual Obligation of the Borrower or any of its
Subsidiaries other than as previously disclosed to the Lenders, or (ii)
litigation, investigation or proceeding which may exist at any time between
the Borrower or any of its Subsidiaries and any Governmental Authority,
which in either case, if not cured or if adversely determined, as the case
may be, would reasonably be expected to have a Material Adverse Effect;
(c) as soon as possible after a Responsible Officer of the Borrower
knows or reasonably should know thereof, any litigation or proceeding which
has a reasonable possibility of an adverse determination which would result
in a judgment against the Borrower or any of its Subsidiaries of $5,000,000
or more and which is not covered by insurance, or in which injunctive or
similar relief is sought that would reasonably be expected to have a
Material Adverse Effect;
(d) the following events, as soon as possible and in any event within
30 days after a Responsible Officer of the Borrower knows or reasonably
should know thereof: (i) the occurrence or expected occurrence of any
Reportable Event with respect to any Single Employer Plan (other than a
Reportable Event described in Section 4043(c)(9) of ERISA), a failure to
make any required contribution to a Single Employer Plan or Multiemployer
Plan, the creation of any Lien on the property of Holding, the Borrower or
any of its Subsidiaries in favor of the PBGC or a Plan or any withdrawal
from, or the termination, Reorganization or Insolvency of, any
Multiemployer Plan, if, as a result thereof, Holding, the Borrower, or any
of its Subsidiaries could reasonably be expected to incur any material
liability; (ii) the existence of an Underfunding under a Single Employer
Plan that exceeds 10% of the value of the assets of such Single Employer
Plan, determined as of the most recent annual valuation date of such Single
Employer Plan on the basis of the actuarial assumptions used to determine
the funding requirements of such Single Employer Plan as of such date;
(iii) the institution of proceedings or the taking of any other formal
action by the PBGC or Holding, the Borrower or any Commonly Controlled
Entity or any Multiemployer Plan with respect to the withdrawal from, or
the termination, Reorganization or Insolvency of, any Single Employer Plan
or Multiemployer Plan if, as a result thereof, Holding, the Borrower or any
of its Subsidiaries could reasonably be expected to incur any material
liability; or (iv) the occurrence or expected occurrence of any event or
condition under which Holding, the Borrower or any Commonly Controlled
Entity has incurred or could incur any liability in respect of a Former
Plan;
(e) As soon as possible after a Responsible Officer of the Borrower
knows, and except as would not, individually or in the aggregate,
reasonably be expected to result in the payment of a Material Environmental
Amount, that (i) any Governmental Authority has identified the Borrower or
any of its Subsidiaries as a potentially responsible party under the
Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA") or any similar Environmental Law for the cleanup of Materials of
--------
Environmental Concern at any location, whether or not owned, leased or
operated by the Borrower or any of its Subsidiaries; (ii) any Governmental
Authority may revoke any permit pursuant to Environmental Law held by the
Borrower or any of its Subsidiaries, or deny or refuse to renew any such
permit sought by the Borrower or
<PAGE>
69
any of its Subsidiaries; or (iii) any property owned, leased, or operated
by the Borrower or any of its Subsidiaries is being listed on, or proposed
for listing on, the National Priorities List ("NPL") or the Comprehensive
---
Environmental Response, Compensation and Liability Information System
("CERCLIS") maintained by the U.S. Environmental Protection Agency or any
-------
similar list maintained by any Governmental Authority; and
(f) as soon as possible after a Responsible Officer of the Borrower
knows or reasonably should know thereof, any development or event which has
had or would reasonably be expected to have a material adverse change in
the business, operations, property or condition (financial or otherwise) of
the Borrower and its Subsidiaries, taken as a whole.
Each notice pursuant to this subsection shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Borrower proposes to take with respect thereto.
12.8 Environmental Laws. (i) Comply substantially with all
------------------
Environmental Laws applicable to it, and obtain, comply substantially with and
maintain any and all licenses, approvals, notifications, registrations or
permits required by applicable Environmental Laws (collectively, "Environmental
-------------
Permits"); and (ii) take all reasonable efforts to ensure that all of its
- -------
tenants, subtenants, contractors, subcontractors and invitees comply
substantially with all Environmental Laws, and obtain, comply substantially with
and maintain any and all Environmental Permits applicable to any of them insofar
as any failure to so comply, obtain or maintain reasonably would be expected to
adversely affect the Borrower or any of its Subsidiaries. For purposes of this
subsection 12.8, noncompliance shall be deemed not to constitute a breach of
this covenant, provided that, upon learning of any actual or suspected
--------
noncompliance, the Borrower shall in a timely manner undertake all reasonable
efforts to achieve substantial compliance, and provided, further that, in any
-------- -------
case, such noncompliance, and any other such noncompliance with any
Environmental Law or Environmental Permit, individually or in the aggregate,
would not reasonably be expected to give rise to the payment of a Material
Environmental Amount.
12.9 [Reserved].
12.10 Additional Collateral. (a) With respect to any owned real
---------------------
property or fixtures located on owned real property, in each case with a
purchase price or a fair market value of at least $1,000,000, in which the
Borrower or any of its Subsidiaries acquires ownership rights at any time after
the Closing Date, promptly grant to the Administrative Agent, for the benefit of
the Lenders, a Lien of record on all such owned real property and fixtures, upon
terms reasonably satisfactory in form and substance to the Administrative Agent
and in accordance with any applicable requirements of any Governmental Authority
(including, without limitation, any appraisals of such property under the
Financial Institutions Reform, Recovery and Enforcement Act of 1989 which the
Administrative Agent reasonably deems to be required by law); provided that (i)
--------
nothing in this subsection 12.10(a) shall defer or impair the attachment or
perfection of any security interest in any Collateral covered by any of the
Security Documents which would attach or be perfected pursuant to the terms
thereof without action by the Borrower, any of its Subsidiaries or any other
Person and (ii) no such Lien shall be required to be granted as contemplated by
this subsection 12.10(a) on any owned real property
<PAGE>
70
or fixtures the acquisition of which is financed, or is to be financed within
any time period permitted by subsection 14.1, until such Indebtedness is repaid
in full (and not refinanced as permitted by subsection 14.1) or, as the case may
be, the Borrower determines not to proceed with such financing or refinancing.
In connection with any such grant to the Administrative Agent, for the benefit
of the Lenders, of a Lien of record on any such real property in accordance with
this subsection, the Borrower or such Subsidiary shall deliver or cause to be
delivered to the Administrative Agent any surveys, title insurance policies,
environmental reports and other documents in connection with such grant of such
Lien obtained by it in connection with the acquisition of such ownership rights
in such real property or as the Administrative Agent shall reasonably request
(in light of the value of such real property and the cost and availability of
such surveys, title insurance policies, environmental reports and other
documents and whether the delivery of such surveys, title insurance policies,
environmental reports and other documents would be customary in connection with
such grant of such Lien in similar circumstances).
(b) With respect to any Person that, subsequent to the Closing Date,
becomes a Domestic Subsidiary or Foreign Subsidiary Holdco (other than to the
extent that compliance with this subsection 12.10(b) would have an adverse tax
consequence to the Borrower), promptly upon the request of the Administrative
Agent: (i) execute and deliver to the Administrative Agent, for the benefit of
the Lenders, a new pledge agreement or such amendments to the relevant
Collateral Agreement as the Administrative Agent shall reasonably deem necessary
or reasonably advisable to grant to the Administrative Agent, for the benefit of
the Lenders, a Lien on the Capital Stock of such Subsidiary which is owned by
the Borrower or any of its Domestic Subsidiaries (provided that in no event
--------
shall more than 65% of the Capital Stock of any Foreign Subsidiary Holdco be
required to be so pledged), (ii) deliver to the Administrative Agent the
certificates (if any) representing such Capital Stock, together with undated
stock powers executed and delivered in blank by a duly authorized officer of the
Borrower or such Subsidiary, as the case may be, and (iii) cause such new
Subsidiary (A) to become a party to the Collateral Agreement, in each case
pursuant to documentation which is in form and substance reasonably satisfactory
to the Administrative Agent, and (B) to take all actions reasonably deemed by
the Administrative Agent to be necessary or reasonably advisable to cause the
Lien created by the Collateral Agreement to be duly perfected in accordance with
all applicable Requirements of Law, including, without limitation, the filing of
financing statements in such jurisdictions as may be reasonably requested by the
Administrative Agent.
(c) With respect to any Person that, subsequent to the Closing Date,
becomes a Foreign Subsidiary and which has Capital Stock which is owned directly
by the Borrower or a Domestic Subsidiary, promptly upon the request of the
Administrative Agent: (i) execute and deliver to the Administrative Agent a new
Foreign Pledge Agreement or such amendments to the relevant Foreign Pledge
Agreement as the Administrative Agent shall reasonably deem necessary or
reasonably advisable to grant to the Administrative Agent, for the benefit of
the Lenders, a Lien on the Capital Stock of such Subsidiary which is owned
directly by the Borrower or any of its Domestic Subsidiaries (provided that in
--------
no event shall more than 65% of the Capital Stock of any such Subsidiary be
required to be so pledged) and (ii) to the extent reasonably deemed advisable by
the Administrative Agent, deliver to the Administrative Agent any certificates
(if any) representing such Capital Stock, together with undated stock
<PAGE>
71
powers executed and delivered in blank by a duly authorized officer of the
Borrower or such Domestic Subsidiary, as the case may be.
(d) Notwithstanding anything to the contrary contained herein, no
Subsidiary of the Borrower shall be required to comply with the provisions of
this subsection 12.10 until such date as either (i) the consolidated gross
revenues of such Subsidiary and its Subsidiaries for the most recently completed
period of four consecutive fiscal quarters or (ii) the consolidated assets of
such Subsidiary and its Subsidiaries, exceed $10,000,000 (it being understood
that any Subsidiary which achieves such assets or revenues after the date hereof
shall be deemed, for purposes of this subsection 12.10 only, to have been newly
acquired by the Borrower on the date upon which such assets or revenues, as the
case may be, are achieved).
12.11 Assumption Agreement. In the case of Holding, Newco and TTC,
--------------------
execute and deliver the Assumption Agreement within five days of the Closing
Date. Each of the Lenders hereby consents to the provisions of the Assumption
Agreement and irrevocably constitutes and appoints the Administrative Agent as
its attorney-in-fact for the purpose of executing the Assumption Agreement on
such Lender's behalf.
SECTION 13. FINANCIAL COVENANTS
The Borrower hereby agrees that, from and after the Closing Date and
so long as the Revolving Credit Commitments remain in effect, and thereafter
until payment in full of the Revolving Credit Loans, the Tranche A Loans and any
Swing Line Loan, all Reimbursement Obligations then due and owing, and any other
amount then due and owing hereunder or under any Note to any Revolving Credit
Lender, any Tranche A Lender or the Swing Line Lender, the Borrower shall not:
13.1 Minimum Interest Coverage Ratio. Permit, for any period of four
-------------------------------
consecutive fiscal quarters ending during any period set forth below, the
Interest Coverage Ratio at the last day of such four-quarter period to be less
than the ratio set forth opposite such period below:
Period Ratio
------ -----
September 30, 1998 - September 30, 1999 1.50 to 1.0
December 31, 1999 - September 30, 2000 1.75 to 1.0
December 31, 2000 - September 30, 2001 1.90 to 1.0
December 31, 2001 - thereafter 2.00 to 1.0
13.2 Maximum Leverage Ratio. Permit the Leverage Ratio at the last
----------------------
day of any fiscal quarter ending during a period set forth below to be greater
than the ratio set forth opposite such period below:
Period Ratio
------ -----
September 30, 1998 - September 30, 1999 6.75 to 1.0
December 31, 1999 - September 30, 2000 6.50 to 1.0
<PAGE>
72
December 31, 2000 - September 30, 2001 5.75 to 1.0
December 31, 2001 - September 30, 2002 5.00 to 1.0
December 31, 2002 - thereafter 4.75 to 1.0
SECTION 14. NEGATIVE COVENANTS APPLICABLE TO THE TRANCHE A
COMMITMENTS AND REVOLVING CREDIT COMMITMENTS
The Borrower hereby agrees that, from and after the Closing Date and
so long as the Revolving Credit Commitments remain in effect, and thereafter
until payment in full of the Revolving Credit Loans, the Tranche A Loans and any
Swing Line Loan, all Reimbursement Obligations then due and owing, and any other
amount then due and owing hereunder or under any Note to any Revolving Credit
Lender, any Tranche A Lender or the Swing Line Lender, the Borrower shall not,
and shall not permit any of its Subsidiaries to, directly or indirectly:
14.1 Limitation on Indebtedness. Create, incur, assume or suffer to
--------------------------
exist any Indebtedness (including, in any event, any preferred stock which is
mandatorily redeemable prior to the scheduled maturity of the Tranche A Loans,
other than any such stock held by Management Investors), except:
(a) Indebtedness of the Borrower and its Subsidiaries under this
Agreement and the other Credit Documents;
(b) Indebtedness of the Borrower to any Subsidiary and of any
Subsidiary to the Borrower or any other Subsidiary;
(c) Indebtedness of the Borrower and its Subsidiaries incurred to
finance or refinance the acquisition of fixed or capital assets (whether
pursuant to a loan, a Financing Lease or otherwise) and any other Financing
Leases in an aggregate principal amount not exceeding as to the Borrower
and its Subsidiaries $15,000,000 at any time outstanding;
(d) Indebtedness of a Person which becomes a Subsidiary after the
date hereof, provided that (i) such indebtedness existed at the time such
--------
Person became a Subsidiary and was not created in anticipation thereof and
(ii) immediately after giving effect to the acquisition of such Person by
the Borrower no Default or Event of Default shall have occurred and be
continuing;
(e) Indebtedness of the Borrower on account of the Senior
Subordinated Notes;
(f) additional Indebtedness of the Borrower or any of its
Subsidiaries which is subordinated to the obligations of the Credit Parties
hereunder not exceeding $35,000,000 in aggregate principal amount at any
one time outstanding; provided that (i) any such Indebtedness shall have
--------
terms and conditions which are not materially more burdensome to the Credit
Parties than, and subordination provisions substantially similar to, the
Senior Subordinated Notes and (ii) the aggregate principal amount of
Indebtedness owing by Domestic Subsidiaries of the Borrower in reliance
upon the
<PAGE>
73
provisions of this clause (f) and subsection 14.1(o) shall not exceed
$10,000,000 at any one time outstanding;
(g) Indebtedness of the Borrower or any of its Subsidiaries incurred
to finance or refinance the purchase price of, or Indebtedness of the
Borrower and any of its Subsidiaries assumed in connection with, any
Permitted Acquisition permitted by subsection 14.8(e), provided that (i)
--------
such Indebtedness is incurred substantially simultaneously with or within
six months after such acquisition or in connection with a refinancing
thereof, (ii) if such Indebtedness is owed to a Person, other than the
Person from whom such acquisition is made or any Affiliate thereof, such
Indebtedness shall have terms and conditions reasonably satisfactory to the
Administrative Agent and shall not exceed 60% of the purchase price of such
acquisition (including any Indebtedness assumed in connection with such
acquisition but excluding any Indebtedness under this Agreement incurred to
finance such acquisition) and (iii) immediately after giving effect to such
acquisition no Default or Event of Default shall have occurred and be
continuing; and any refinancing, refunding, renewal or extension of any
such Indebtedness; provided, that, the amount of such Indebtedness is not
--------
increased at the time of such refinancing, refunding, renewal
or extension except by an amount equal to the premium or other
amounts paid, and fees and expenses incurred, in connection with such
refinancing, refunding, renewal or extension; provided, further, the
-------- -------
aggregate principal amount of Indebtedness which may be incurred in
reliance on this subsection 14.2(g) shall not exceed $50,000,000 during the
term of this Agreement; provided, further that such amount shall be
-------- -------
increased by an amount equal to $10,000,000 on each anniversary of the
Closing Date, commencing on the first anniversary of the Closing Date, so
long as no Default or Event of Default shall have occurred and be
continuing on any date on which such amount is to be so increased;
(h) to the extent that any Guarantee Obligation permitted under
subsection 14.3 constitutes Indebtedness, such Indebtedness;
(i) Indebtedness of Foreign Subsidiaries of the Borrower for working
capital purposes (including in respect of overdrafts) not exceeding, as to
all such Foreign Subsidiaries, $10,000,000 in aggregate principal amount at
any one time outstanding;
(j) Indebtedness to finance the general working capital needs of the
Borrower and its Subsidiaries incurred after the Termination Date in an
aggregate principal amount not to exceed the amount of the Revolving Credit
Commitments as of the Closing Date, provided that (i) the Tranche A Loans
--------
shall have been repaid in full and the Revolving Credit Commitment shall
have been or shall concurrently be terminated and the Revolving Credit
Loans, the Swing Line Loans and the Reimbursement Obligations shall have
been or shall concurrently be repaid in full and any outstanding L/C
Obligations shall have been or shall concurrently be cash collateralized on
terms reasonably satisfactory to the Administrative Agent and (ii) the
terms and conditions of such replacement working capital facility shall be
substantially similar to, or otherwise not less favorable to the Borrower
in any material respect than, the analogous provisions applicable to the
Revolving Credit Commitments;
<PAGE>
74
(k) Indebtedness of the Borrower or any of its Subsidiaries incurred
to finance insurance premiums in the ordinary course of business;
(l) Indebtedness of any Foreign Subsidiary of the Borrower fully
supported on the date of the incurrence thereof by a Foreign Backstop
Letter of Credit;
(m) Indebtedness arising from the honoring of a check, draft or
similar instrument against insufficient funds; provided that such
--------
Indebtedness is extinguished within two Business Days of its incurrence;
(n) to the extent that any Indebtedness may be incurred or arise
thereunder, Indebtedness of the Borrower and any of its Subsidiaries under
any Hedging Arrangements; and
(o) additional Indebtedness not exceeding $25,000,000 in aggregate
principal amount at any one time outstanding; provided that the aggregate
--------
principal amount of Indebtedness owing by Domestic Subsidiaries of the
Borrower in reliance upon the provisions of this clause (o) and subsection
14.1(f) shall not exceed $10,000,000 at any one time outstanding.
For the purposes of determining compliance with subsection 14.1(i) and
(o), the amount of any Indebtedness denominated in any currency other than U.S.
dollars shall be calculated based on customary currency exchange rates in
effect, in the case of such Indebtedness incurred (in respect of term debt) or
committed (in respect of revolving debt) on or prior to the Closing Date, on the
Closing Date and, in the case of such Indebtedness incurred (in respect of term
debt) or committed (in respect of revolving debt) after the Closing Date, on the
date that such Indebtedness was incurred (in respect of term debt) or committed
(in respect of revolving debt).
14.2 Limitation on Liens. Create, incur, assume or suffer to exist
-------------------
any Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, except for:
(a) Liens for taxes, assessments and similar charges not yet
delinquent or the nonpayment of which in the aggregate would not reasonably
be expected to have a Material Adverse Effect, or which are being contested
in good faith by appropriate proceedings, provided that adequate reserves
--------
with respect thereto are maintained on the books of the Guarantor, the
Borrower or their Subsidiaries, as the case may be, in conformity with GAAP
(or, in the case of Foreign Subsidiaries, generally accepted accounting
principles in effect from time to time in their respective jurisdictions of
incorporation);
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business which are
not overdue for a period of more than 60 days or which are being contested
in good faith by appropriate proceedings;
(c) pledges, deposits or other Liens in connection with workers'
compensation, unemployment insurance and other social security benefits or
other insurance related
<PAGE>
75
obligations (including, without limitation, pledges or deposits or other
Liens securing liability to insurance carriers under insurance or self-
insurance arrangements);
(d) Liens to secure the performance of bids, trade contracts (other
than for borrowed money), obligations for utilities, leases, statutory
obligations, surety and appeal bonds, performance bonds, judgment and like
bonds, replevin and similar bonds and other obligations of a like nature
incurred in the ordinary course of business;
(e) zoning restrictions, easements, rights-of-way, restrictions,
other similar encumbrances incurred in the ordinary course of business and
minor irregularities of title which do not materially interfere with the
ordinary conduct of the business of the Borrower and its Subsidiaries taken
as a whole;
(f) Liens securing or consisting of Indebtedness of the Borrower and
its Subsidiaries permitted by subsection 14.1(c) or 14.1(g), provided that
--------
(i) such Liens shall be created prior to or substantially simultaneously
with or within six months of the acquisition thereby financed or the date
of the incurrence or assumption of such Indebtedness and, (ii) such Liens
do not at any time encumber any property other than the property financed
by such Indebtedness and, in the case of Indebtedness assumed in connection
with any acquisition, the property subject thereto immediately prior to
such acquisition;
(g) Liens on the property or assets of a Person which becomes a Subsidiary
after the date hereof securing Indebtedness permitted by subsection
14.1(d), provided that (i) such Liens existed at the time such Person
--------
became a Subsidiary and were not created in anticipation thereof and (ii)
any such Lien is not spread to cover any property or assets of such Person
after the time such Person becomes a Subsidiary;
(h) Liens (not otherwise permitted hereunder) which secure
obligations not exceeding (as to the Borrower and all Subsidiaries in the
aggregate) $5,000,000 in aggregate amount at any time outstanding;
(i) Liens created pursuant to the Security Documents;
(j) Liens of landlords or of mortgages of landlords arising by
operation of law or pursuant to the terms of real property leases, provided
--------
that the rental payments secured thereby are not yet due and payable;
(k) Liens arising by reason of any judgment, decree or order of any
court or other Governmental Authority, if appropriate legal proceedings
which may have been duly initiated for the review of such judgment, decree
or order, are being diligently prosecuted and shall not have been finally
terminated or the period within which such proceedings may be initiated
shall not have expired;
(l) Liens existing on assets or properties at the time of the
acquisition thereof by the Borrower or any of its Subsidiaries which do not
materially interfere with the use, occupancy, operation and maintenance of
structures existing on the property subject
<PAGE>
76
thereto or extend to or cover any assets or properties of the Borrower or
such Subsidiary other than the assets or property being acquired;
(m) Liens securing Guarantee Obligations permitted under subsection
14.3(j)(i) or (ii);
(n) any encumbrance or restriction (including, without limitation,
put and call agreements) with respect to the Capital Stock of any joint
venture or similar arrangement pursuant to the joint venture or similar
agreement with respect to such joint venture or similar arrangement,
provided that no such encumbrance or restriction affects in any way the
--------
ability of the Borrower or any of its Subsidiaries to comply with
subsection 12.10;
(o) Liens on property subject to Sale and Leaseback Transactions
permitted under subsection 14.10 and general intangibles related thereto;
(p) Liens on property of any Foreign Subsidiary of the Borrower
securing Indebtedness of such Foreign Subsidiary of the Borrower permitted
by subsection 14.1(h) or (o);
(q) Liens in existing on the date hereof and listed on Schedule
14.2(q); and
(r) Liens on Intellectual Property and foreign patents, trademarks,
trade names, service marks, copyrights, technology, know-how and processes
to the extent such Liens arise from the granting of licenses to use such
Intellectual Property and foreign patents, trademarks, trade names, service
marks, copyrights, technology, know-how and processes to any Person in the
ordinary course of business of the Borrower and its Subsidiaries.
14.3 Limitation on Guarantee Obligations. Create, incur, assume or
-----------------------------------
suffer to exist any Guarantee Obligation except:
(a) Guarantee Obligations in existence on the date hereof and listed
on Schedule 14.3 and any refinancings, refundings, extensions or renewals
thereof, provided that the amount of such Guarantee Obligation shall not be
--------
increased at the time of such refinancing, refunding, extension or renewal,
except by an amount equal to the premium or other amounts paid, and fees
and expenses incurred, in connection with such refinancing, refunding,
extension or renewal;
(b) guarantees made in the ordinary course of its business by the
Borrower or any of its Subsidiaries of obligations of the Borrower or any
of its Subsidiaries, which obligations are otherwise permitted under this
Agreement;
(c) the Collateral Agreement or otherwise in respect of Indebtedness
permitted by subsection 14.1(a);
(d) Guarantee Obligations incurred after the date hereof in an
aggregate amount not to exceed $2,500,000 at any one time outstanding;
<PAGE>
77
(e) Guarantee Obligations in connection with up to an aggregate
principal amount of $20,000,000 of Indebtedness outstanding at any time
incurred by any Management Investors in connection with any Management
Subscription Agreements or other purchases by them of Capital Stock of the
Guarantor or the Borrower, and any refinancings, refundings, extensions or
renewals thereof; provided that such amount shall be reduced by the
--------
aggregate then outstanding principal amount of loans and advances made in
reliance upon the provisions of subsection 14.8(l);
(f) Guarantee Obligations for performance, appeal, judgment, replevin
and similar bonds and suretyship arrangements, all in the ordinary course
of business;
(g) Guarantee Obligations in respect of indemnification and
contribution agreements expressly permitted by subsection 14.9(iii) or
similar agreements by the Borrower or any of its Subsidiaries;
(h) Reimbursement Obligations in respect of the Letters of Credit;
(i) obligations to insurers required in connection with worker's
compensation and other insurance coverage incurred in the ordinary course
of business;
(j) Guarantee Obligations in respect of third-party loans and
advances to officers or employees of the Guarantor, the Borrower or any of
their Subsidiaries (i) for travel and entertainment expenses incurred in
the ordinary course of business, (ii) for relocation expenses incurred in
the ordinary course of business, or (iii) for other purposes, and in the
case of this clause (iii), in an aggregate amount (as to the Borrower and
all its Subsidiaries), together with the aggregate amount of all
Investments permitted under subsection 14.8(c)(ii), of up to $2,000,000
outstanding at any time;
(k) (i) Guarantee Obligations of the Borrower or any Domestic
Subsidiary and (ii) Guarantee Obligations of any Foreign Subsidiary (other
than Indebtedness for borrowed money or for reimbursement obligations in
respect of drawn letters of credit), in the case of clauses (i) and (ii),
incurred in connection with Permitted Acquisitions permitted under
subsection 14.8(e), provided that if any such Guarantee Obligation inures
--------
to the benefit of any Person other than the Person from whom such
acquisition is made or any Affiliate thereof, such Guarantee Obligation
shall not exceed, with respect to any such acquisition, 60% of the purchase
price of such acquisition (including any Indebtedness assumed in connection
with any such acquisition) (or such greater percentage as shall be
reasonably satisfactory to the Administrative Agent or, if any such
purchase price shall be greater than $25,000,000, such greater percentage
shall be reasonably satisfactory to the Majority Lenders);
(l) Guarantee Obligations in connection with sales or other
dispositions permitted under subsection 14.5, including indemnification
obligations with respect to leases, and guarantees of collectability in
respect of accounts receivable or notes receivable for up to face value;
(m) (i) Guarantee Obligations represented by contracts entered into
by the Borrower or any of its Subsidiaries for the purchase of equipment,
inventory and
<PAGE>
78
supplies required by the Borrower or such Subsidiary in the ordinary course
of business and (ii) accommodation guarantees for the benefit of trade
creditors of the Borrower or any of its Subsidiaries in the ordinary course
of business;
(n) Guarantee Obligations in respect of Indebtedness of a Person in
connection with joint ventures or similar arrangements in respect of which
no other co-investor or other Person has a greater legal or beneficial
ownership interest than the Borrower or any of its Subsidiaries, and as to
all of such Persons does not at any time exceed $7,500,000 in aggregate
principal amount; provided that (i) such amount shall be increased by an
--------
amount equal to $2,000,000 on each anniversary of the Closing Date,
commencing on the second anniversary of the Closing Date, so long as no
Default or Event of Default shall have occurred and be continuing on any
date on which such amount is to be increased and (ii) such amount and any
increase in such amount permitted by clause (i) shall be reduced by the
aggregate amount of Investments permitted by subsection 14.8(j);
(o) Guarantee Obligations of the Borrower and its Subsidiaries under
any Hedging Arrangements;
(p) Guarantee Obligations by Subsidiaries of the Borrower in respect
of the Senior Subordinated Notes as and when provided therein or in the
Senior Subordinated Note Indenture, which are subordinated as provided in
the Senior Subordinated Note Indenture; and
(q) the TTC Guarantee.
14.4 Limitation on Fundamental Changes. Enter into any merger,
---------------------------------
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially all of its property, business or
assets, except:
(a) any Subsidiary of the Borrower may be merged or consolidated with
or into the Borrower (provided that the Borrower shall be the continuing or
--------
surviving corporation) or with or into any one or more Wholly Owned
Subsidiaries of the Borrower (provided that the Wholly Owned Subsidiary or
--------
Subsidiaries shall be the continuing or surviving corporation);
(b) any Subsidiary may liquidate or sell, lease, transfer or
otherwise dispose of any or all of its assets (upon voluntary liquidation
or otherwise) to the Borrower or any other Wholly Owned Subsidiary of the
Borrower;
(c) pursuant to the Merger, the Recapitalization, the Transfer or the
Assumption; or
(d) as expressly permitted by subsection 14.5.
14.5 Limitation on Sale of Assets. Convey, sell, lease, assign,
----------------------------
transfer or otherwise dispose of any of its property, business or assets
(including, without limitation,
<PAGE>
79
receivables and leasehold interests), whether now owned or hereafter acquired,
or, in the case of any Subsidiary, issue or sell any shares of such Subsidiary's
Capital Stock to any Person other than the Borrower or any Wholly Owned
Subsidiary, except:
(a) the sale or other disposition of inventory, or of surplus,
obsolete or worn-out property or assets, whether now owned or hereafter
acquired, in the ordinary course of business;
(b) the sale or other disposition of any other property or assets in
the ordinary course of business (it being understood that this shall not
include the sale or other disposition of all or substantially all of any
business unit);
(c) the sale or other disposition of any property or assets (other
than assets described in clauses (a) and (b) above), provided that the
--------
aggregate market value of all assets so sold or disposed of in any period
of twelve consecutive months shall not exceed $10,000,000;
(d) the sale or discount without recourse of accounts receivable or
notes receivable arising in the ordinary course of business, or the
conversion or exchange of accounts receivable into or for notes receivable
in connection with the compromise or collection thereof, provided that, in
--------
the case of any Foreign Subsidiary of the Borrower, any such sale or
discount may be with recourse if such sale or discount is consistent with
customary practice in such Foreign Subsidiary's country of business;
(e) the sale or other disposition of any assets or property by the
Borrower or any of its Subsidiaries to the Borrower or any Wholly Owned
Subsidiary of the Borrower;
(f) the sale of the Capital Stock or all or substantially all of the
assets of the Subsidiaries of the Borrower contemplated in the side letter
of the Borrower to the Administrative Agent delivered on the date hereof;
(g) as permitted by subsection 14.4(b) or (c);
(h) pursuant to Sale and Leaseback Transactions permitted by
subsection 14.10;
(i) the abandonment, sale or other disposition of patents, trademarks
or other intellectual property that are, in the reasonable judgment of the
Borrower, no longer economically practicable to maintain or useful in the
conduct of the business of the Borrower and its Subsidiaries taken as a
whole;
(j) any sale or other disposition of the property of the Borrower or
any of its Subsidiaries set forth on Schedule 14.5(j);
(k) any sale or other disposition of the property of the Borrower or
any of its Subsidiaries, so long as the Net Proceeds of any such sale or
other disposition do not exceed $25,000,000 in the aggregate after the
Closing Date, provided that an amount equal to 100% of the Net Proceeds of
--------
such sale or other disposition less the Reinvested Amount is applied in
----
accordance with subsection 9.5(d); and
<PAGE>
80
(l) any issuance, sale or other disposition of preferred stock (or
equivalent equity interest) of any Subsidiary constituting Indebtedness
created, incurred, assumed or existing in compliance with subsection 14.1.
14.6 Limitation on Restricted Payments. Declare or pay any dividend
---------------------------------
(other than dividends payable solely in common stock of the Borrower or options,
warrants or other rights to purchase common stock of the Borrower) on, or make
any payment on account of, or set apart assets for a sinking or other analogous
fund for, the purchase, redemption, defeasance, retirement or other acquisition
of, any shares of any class of Capital Stock of the Borrower that is not
Indebtedness or any warrants or options to purchase any such stock, whether now
or hereafter outstanding, or make any other distribution (other than dividends
payable solely in the common stock of the Borrower or options, warrants or other
rights to purchase common stock of the Borrower) in respect thereof, either
directly or indirectly, whether in cash or property or in obligations of the
Borrower or any Subsidiary (such declarations, payments, setting apart,
purchases, redemptions, defeasances, retirements, acquisitions and distributions
being herein called "Restricted Payments"), except that:
-------------------
(a) the Borrower may pay cash dividends in an amount sufficient to
allow the Guarantor to pay its obligations to CD&R under any agreement with
CD&R for the rendering of management consulting or financial advisory
services, provided that such amount shall not exceed in the aggregate
--------
$750,000 per year plus reasonable out-of-pocket expenses;
(b) the Borrower may pay cash dividends in an amount sufficient to
allow the Guarantor to pay expenses incurred in the ordinary course of
business in an aggregate amount not to exceed $1,000,000 in any fiscal
year;
(c) the Borrower may pay cash dividends in an amount sufficient to
cover reasonable and necessary expenses (including professional fees and
expenses) incurred by the Guarantor in connection with (i) registration,
public offerings and exchange listing of equity or debt securities and
maintenance of the same, (ii) compliance with reporting obligations under
federal or state laws or under this Agreement or any of the other Credit
Documents and (iii) indemnification and reimbursement of directors,
officers and employees in respect of liabilities relating to their serving
in any such capacity;
(d) the Borrower may pay cash dividends in amounts sufficient to pay
tax liabilities of the Guarantor which are paid in cash by the Guarantor to
any taxing authority;
(e) the Borrower may, and may pay cash dividends in an amount
sufficient to allow the Guarantor to, repurchase shares of its common stock
or rights, options or units in respect thereof, from Management Investors,
including as contemplated by the Management Subscription Agreements which
may be entered into between the Guarantor or the Borrower and Management
Investors, for an aggregate purchase price not to exceed $15,000,000 in any
fiscal year and $30,000,000 during the term of this Agreement; provided
--------
that such amount shall be increased by an amount equal to the proceeds of
any resales or new issuances of shares and options to any such Management
Investors, at any time after the initial issuances to any Management
Investors, together with the aggregate amount of deferred compensation owed
by the Guarantor, the Borrower or any of their Subsidiaries to any such
Management
<PAGE>
81
Investor that shall thereafter have been canceled, waived or exchanged in
connection with the grant to such Management Investor of the right to
receive or acquire shares of the Guarantor's or the Borrower's common
stock; and
(f) the Borrower may enter into and consummate the Transaction and
the transactions expressly contemplated by the Transaction Documents, and
may pay cash dividends in an amount sufficient to allow the Guarantor (i)
to pay all fees and expenses incurred in connection with the Transaction
and the transactions expressly contemplated by the Transaction Documents,
(ii) to allow the Guarantor to perform its obligations under or in
connection with the Transaction Documents and (iii) to permit the Guarantor
to pay its Guarantee Obligations on account of the Senior Subordinated
Notes and the Senior Subordinated Note Indenture, to the extent that the
payment of such Guarantee Obligations does not violate the subordination
provisions contained in the Senior Subordinated Notes or the Senior
Subordinated Note Indenture.
14.7 Limitation on Capital Expenditures. Make or commit to make (by
----------------------------------
way of the acquisition of securities of a Person or otherwise) any expenditure
(a "Capital Expenditure") in respect of the purchase or other acquisition of
-------------------
fixed or capital assets (excluding (i) any such asset acquired in connection
with normal replacement and maintenance programs properly charged to current
operations and (ii) any Permitted Acquisition permitted by subsection 14.8(e))
except for (x) Capital Expenditures described in the immediately preceding
parenthetical and (y) additional Capital Expenditures, in the case of this
clause (y) not exceeding, in the aggregate for the Borrower and its
Subsidiaries, during any fiscal year of the Borrower the amount set forth below
opposite such fiscal year:
Fiscal Year Amount
----------- ------
1998 $17,000,000
1999 $18,000,000
2000 $20,000,000
2001 and each fiscal $25,000,000
year thereafter
; provided that any portion of such amount which is not so expended in the
--------
fiscal year for which it is permitted above may be carried-over to increase the
amount permitted for the next fiscal year of the Borrower and shall be deemed to
be the first amounts expended in such next fiscal year; provided, further that
-------- -------
none of the amounts set forth in the table above shall be increased by more than
the greater of (x) 50% of such amount and (y) $10,000,000 by virtue of any such
carry-over.
14.8 Limitation on Investments, Loans and Advances. Make any
---------------------------------------------
advance, loan, extension of credit or capital contribution to, or purchase any
stock, bonds, notes, debentures or other securities of or any assets
constituting a business unit of, or make any other investment (each an
"Investment") in, any Person, except:
- -----------
<PAGE>
82
(a) extensions of trade credit in the ordinary course of business;
(b) Investments in cash and Cash Equivalents;
(c) loans and advances to officers, directors or employees of the
Guarantor, the Borrower or their Subsidiaries (i) for travel, entertainment
and relocation expenses in the ordinary course of business, (ii) for other
purposes in an aggregate amount for the Guarantor, the Borrower and their
Subsidiaries, together with the aggregate amount of all Guarantee
Obligations permitted pursuant to subsection 14.3(j)(iii), not to exceed
$2,000,000 at any one time outstanding, (iii) relating to indemnification
or reimbursement of any officers, directors or employees in respect of
liabilities relating to their serving in any such capacity or as otherwise
specified in subsection 14.9 and (iv) existing on the Closing Date and
described in Schedule 14.8(f);
(d) Investments by the Borrower in, and loans, advances and capital
contributions by the Borrower to, any Wholly Owned Subsidiary and
investments by Subsidiaries in, and loans, advances and capital
contributions by Subsidiaries to, the Borrower and Wholly Owned
Subsidiaries;
(e) the acquisition of all or substantially all of the business or
assets or the Capital Stock of any Person or any business unit thereof or
all or substantially all of the Capital Stock of any Person (a "Permitted
---------
Acquisition"), provided that:
----------- --------
(i) upon giving effect to such Permitted Acquisition on a pro
forma basis, either (A) the Borrower would be in Historical Pro Forma
Compliance with respect to such Permitted Acquisition, or (B) the
Borrower would not be in Historical Pro Forma Compliance but would
otherwise be in compliance on a pro forma basis with each of the
financial covenants contained in Section 13 as if such Permitted
Acquisition had been made on the first day of the Historical
Period, and the aggregate cash purchase price paid by the Borrower and
its Subsidiaries for all Permitted Acquisitions made pursuant to this
subclause (B) does not exceed an amount initially equal to
$25,000,000, which amount shall be increased by $5,000,000 on each
anniversary of the Closing Date, or (C) the Borrower would be in
compliance on a pro forma basis with each of the financial covenants
contained in Section 13 as if such Permitted Acquisition had been made
on the first day of the Historical Period, and such Permitted
Acquisition is financed entirely through the issuance of equity
(excluding any financing through the assumption of Indebtedness not
for borrowed money in connection with the Acquisition);
(ii) no Default or Event of Default has occurred and is
continuing at the time of consummation of such Permitted Acquisition
or will result therefrom; and
(iii) any such acquisition of Capital Stock of any Person may
exclude any Capital stock of such Person to the extent necessary in
the good faith judgment of the Borrower, to permit such acquisition to
be accounted for as a recapitalization;
<PAGE>
83
(f) Investments existing on the Closing Date and described in
Schedule 14.8(f), setting forth the respective amounts of such Investments
as of a recent date;
(g) Investments in notes receivable and other instruments and
securities obtained in connection with transactions permitted by subsection
14.5(d);
(h) Investments in the nature of pledges or deposits with respect to
leases or utilities provided to third parties in the ordinary course of
business or otherwise described in subsection 14.2(c), (d) or (j);
(i) Investments representing non-cash consideration received by the
Borrower or any of its Subsidiaries in connection with any sale or other
disposition of the property of the Borrower or any of its Subsidiaries,
provided that in the case of any sale or other disposition permitted under
--------
subsection 14.5(j), such non-cash consideration constitutes not more than
25% of the aggregate consideration received in connection with such sale or
other disposition and any such non-cash consideration received by the
Borrower or any of its Domestic Subsidiaries is pledged to the
Administrative Agent for the benefit of the Lenders pursuant to the
Security Documents;
(j) Investments by the Borrower or any of its Subsidiaries in one or
more Persons in connection with joint ventures or similar arrangements in
respect of which no other co-investor or other Person has a greater legal
or beneficial ownership interest than the Borrower or such Subsidiary in an
aggregate amount not to exceed $7,500,000 at any one time outstanding;
(k) Investments representing evidences of Indebtedness, securities or
other property received from another Person by the Borrower or any of its
Subsidiaries in connection with any bankruptcy proceeding or other
reorganization of such other Person or as a result of foreclosure,
perfection or enforcement of any Lien or exchange for evidences of
Indebtedness, securities or other property of such other Person held
by the Borrower or any of its Subsidiaries; provided that any such
--------
securities or other property received by the Borrower or any of its
Domestic Subsidiaries is pledged to the Administrative Agent for the
benefit of the Lenders pursuant to the Security Documents;
(l) loans and advances to Management Investors in connection with the
purchase by such Management Investors of Capital Stock of the Guarantor or
the Borrower of up to $20,000,000 outstanding at any one time; provided
--------
that such amount shall be reduced by the aggregate principal amount of
Indebtedness in respect of Guarantee Obligations permitted by subsection
14.3(e);
(m) Investments in the Capital Stock of the Guarantor which is held
by the Guarantor as treasury stock and is restored to unissued status or is
eliminated from authorized shares, or options in respect thereof;
(n) Investments constituting Capital Expenditures, to the extent
permitted by subsection 14.7;
<PAGE>
84
(o) Investments of the Borrower and its Subsidiaries under any
Hedging Arrangements; and
(p) Investments not otherwise permitted by the preceding clauses of
subsection 14.8 in an aggregate amount not to exceed $15,000,000 at any one
time outstanding.
14.9 Limitation on Transactions with Affiliates. Enter into any
------------------------------------------
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate of the
Borrower unless such transaction (a) is otherwise permitted under this Agreement
and, (b) either (i) is upon terms no less favorable to the Borrower or such
Subsidiary, as the case may be, than it would obtain in a comparable arm's
length transaction with a Person which is not such an Affiliate or (ii) has been
approved by a majority of the Disinterested Directors of the Guarantor, or in
the event that at the time of any such transaction, there are no Disinterested
Directors serving on the board of directors or comparable body of the Guarantor,
such transaction shall be approved by a nationally recognized expert with
expertise in appraising the terms and conditions of the type of transaction for
which approval is required; provided that nothing contained in this subsection
--------
14.9 shall be deemed to prohibit:
(i) the Borrower or any of its Subsidiaries from entering into
or performing any consulting, management or employment agreements or other
compensation arrangements with a director, officer or employee of the
Borrower or any of its Subsidiaries that provides for annual aggregate base
compensation not in excess of $1,000,000 for each such director, officer or
employee;
(ii) the payment of transaction expenses in connection with
this Agreement and the Transaction;
(iii) the Borrower or any of its Subsidiaries from entering
into, making payments pursuant to and otherwise performing an
indemnification and contribution agreement in favor of any of the persons
listed on Schedule 1.1(b) and their Affiliates, any Management Investor,
and each person who is or becomes a director, officer, agent or employee of
the Guarantor or any of its Subsidiaries, in respect of liabilities (A)
arising under the Securities Act, the Exchange Act and any other applicable
securities laws or otherwise, in connection with any offering of securities
by the Guarantor or any of its Subsidiaries, (B) incurred to third parties
for any action or failure to act of the Guarantor or any of its
Subsidiaries, predecessors or successors, (C) arising out of the
performance by CD&R of management consulting or financial advisory services
provided to the Guarantor or any of its Subsidiaries, (D) arising out of
the fact that any indemnitee was or is a director, officer, agent or
employee of the Guarantor or any of its Subsidiaries, or is or was serving
at the request of any such corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or
enterprise or (E) to the fullest extent permitted by Delaware or other
applicable state law, arising out of any breach or alleged breach by such
indemnitee of his or her fiduciary duty as a director or officer of the
Guarantor or any of its Subsidiaries;
<PAGE>
85
(iv) the Guarantor or any of its Subsidiaries from performing
any agreements or commitments with or to any Affiliate existing on the
Closing Date and described on Schedule 14.9(iv);
(v) payments pursuant to the Tax Allocation Agreement; or
(vi) any transaction permitted under subsection 14.2(m),
14.3(e), 14.3(g), 14.3(j), 14.4, 14.6, 14.8(c) or 14.8(l), or any
transaction with a Wholly Owned Subsidiary of the Borrower.
For purposes of this subsection 14.9, "Disinterested Director" shall mean, with
----------------------
respect to any Person and transaction, a member of the board of directors or
comparable body of such Person who does not have any material direct or indirect
financial interest in or with respect to such transaction (other than by virtue
of such member's ownership of Capital Stock of the Guarantor).
14.10 Limitation on Sales and Leasebacks. Enter into any arrangement
----------------------------------
with any Person providing for the leasing by the Borrower or any Subsidiary of
real or personal property which has been or is to be sold or transferred by the
Borrower or such Subsidiary to such Person or to any other Person to whom funds
have been or are to be advanced by such Person on the security of such property
or rental obligations of the Borrower or such Subsidiary (any of such
arrangements, a "Sale and Leaseback Transaction") other than in connection with
------------------------------
any sale or other disposition permitted under subsection 14.5 and except for
Sale and Leaseback Transactions entered into by the Borrower or any such
Subsidiary with respect to real or personal property with an aggregate book
value not to exceed $10,000,000 at any one time.
14.11 Limitation on Changes in Fiscal Year. Permit the fiscal year
------------------------------------
of the Borrower to end on a day other than March 31.
14.12 Limitation on Optional Payments and Modifications of Debt
---------------------------------------------------------
Instruments and other Material Agreements. (a) Make any optional payment,
- -----------------------------------------
prepayment, repurchase or redemption of the Senior Subordinated Notes or make
any optional payments on account of or for a sinking or other analogous fund for
the repurchase, redemption, defeasance or other acquisition thereof (other than
mandatory payments of principal and interest and payments of, in each case, fees
and expenses required by the Senior Subordinated Notes or the Senior
Subordinated Note Indenture, only to the extent permitted under the
subordination provisions, if any, applicable thereto); (b) make any amendment,
supplement, modification or waiver of any of the terms of the Senior
Subordinated Notes or the Senior Subordinated Note Indenture (i) which amends or
modifies the subordination provisions contained in the Senior Subordinated Notes
and the Senior Subordinated Note Indenture; (ii) which shortens the fixed
maturity or increases the principal amount of, or increases the rate or shortens
the time of payment of interest on, or increases the amount or shortens the time
of payment of any principal or premium payable whether at maturity, at a date
fixed for prepayment or by acceleration or otherwise of the Indebtedness
evidenced by the Senior Subordinated Notes or increases the amount of, or
accelerates the time of payment of, any fees or other amounts payable in
connection therewith to any holder of the Senior Subordinated Notes; (iii) which
relates to any material affirmative or negative covenants or any events of
default or remedies thereunder and the effect of which is to subject the
Borrower, or any of its Subsidiaries, to any
<PAGE>
86
more onerous or more restrictive provisions; or (iv) which otherwise adversely
affects the interests of the Lenders as senior creditors with respect to the
Senior Subordinated Notes or the interests of the Lenders hereunder in any
material respect or (c) in the event of the occurrence of a Change of Control,
repurchase the Senior Subordinated Notes, unless the Borrower shall have (i)
made payment in full of the Loans, all Reimbursement Obligations and any other
amounts then due and owing to any Lender or the Administrative Agent hereunder
and under any Note and cash collateralized the L/C Obligations on terms
reasonably satisfactory to the Administrative Agent or (ii) made an offer to pay
the Loans, all Reimbursement Obligations and any amounts then due and owing to
each Lender and the Administrative Agent hereunder and under any Note and to
cash collateralize the L/C Obligations in respect of each Lender and shall have
made payment in full thereof to each such Lender or the Administrative Agent
which has accepted such offer and cash collateralized the L/C Obligations in
respect of each such Lender which has accepted such offer.
This subsection 14.12 shall not be deemed to restrict or prohibit (i)
the assumption by TTC of the Senior Subordinated Note Indenture and the Senior
Subordinated Notes, and the rights and obligations thereunder, in connection
with the Assumption or (ii) the exchange after the Closing Date of newly issued
Senior Subordinated Notes for previously issued Senior Subordinated Notes.
14.13 Limitation on Negative Pledge Clauses. Enter into any
-------------------------------------
agreement which prohibits or limits the ability of the Borrower or any of its
Subsidiaries to create, incur, assume or suffer to exist any Lien upon any of
its property or revenues, whether now owned or hereafter acquired, to secure the
obligations hereunder or, in the case of any guarantor, its obligations under
the Collateral Agreement, other than (a) this Agreement and the other Credit
Documents and any related documents and (b) any industrial revenue or
development bonds, agreements governing any purchase money Liens, acquisition
agreements or Financing Leases or operating leases of real property entered into
in the ordinary course of business otherwise permitted hereby (in which case,
any prohibition or limitation shall only be effective against the assets
financed, acquired or leased thereby).
14.14 Limitation on Lines of Business. Enter into any business,
-------------------------------
either directly or through any Subsidiary, except for those businesses of the
same general type as those in which the Borrower and its Subsidiaries are
engaged on the Closing Date or which are related thereto.
14.15 Limitation on Activities of Holding. In the case of Holding
-----------------------------------
and notwithstanding anything to the contrary in this Agreement or any other Loan
Document, Holding shall not conduct or otherwise engage, in any business or
operations other than: (i) the Transactions and the other transactions
contemplated by the Transaction Documents or the provision of administrative,
legal, accounting and management services to or on behalf of any of its
Subsidiaries, (ii) the ownership of the Capital Stock or other interests of its
Subsidiaries, the sale and transfer of such ownership interests (to the extent
not otherwise prohibited by the Credit Agreement), and the exercise of rights
and performance of obligations in connection therewith, (iii) the entry into,
and exercise of rights and performance of obligations in respect of, (A) the
Transaction Documents, the Collateral Agreement and any other Credit Document to
which Holding is a party, any other agreement to which Holding is a party on the
date hereof (which other agreements (other than those contemplated elsewhere in
this paragraph) will be contributed to the Borrower upon the consummation of the
Assumption), the Senior
<PAGE>
87
Subordinated Note Indenture and the Senior Subordinated Notes or any guarantee
thereof, and any guarantee of Indebtedness or other obligations of any of its
Subsidiaries permitted pursuant to the Credit Documents, in each case as
amended, supplemented, waived or otherwise modified from time to time, and any
refinancings, refundings, renewals or extensions thereof, (B) contracts and
agreements with officers, directors and employees of Holding or a Subsidiary
thereof relating to their employment or directorships, (C) insurance policies
and related contracts and agreements, and (D) equity subscription agreements,
registration rights agreements, voting and other stockholder agreements,
engagement letters, underwriting agreements and other agreements in respect of
its equity securities or any offering, issuance or sale thereof, including but
not limited to in respect of the Management Subscription Agreements, (iv) the
offering, issuance, sale and repurchase or redemption of, and dividends or
distributions on, its equity securities, (v) the filing of registration
statements, and compliance with applicable reporting and other obligations,
under federal, state or other securities laws, (vi) the listing of its equity
securities and compliance with applicable reporting and other obligations in
connection therewith, (vii) the retention of (and the entry into, and exercise
of rights and performance of obligations in respect of, contracts and agreements
with) transfer agents, private placement agents, underwriters, counsel,
accountants and other advisors and consultants, (viii) the performance of
obligations under and compliance with its certificate of incorporation and by-
laws, or any applicable law, ordinance, regulation, rule, order, judgment,
decree or permit, including, without limitation, as a result of or in connection
with the activities of its Subsidiaries, (ix) the incurrence and payment of its
operating and business expenses and any taxes for which it may be liable, (x)
making loans to or other Investments in, or incurrence of Indebtedness to, its
Subsidiaries, (xi) the ownership of, and exercise of rights and performance of
obligations in respect of, Intellectual Property and foreign patents,
trademarks, trade names, copyrights, technology, know-how and processes and
licensing such Intellectual Property and foreign patents, trademarks, trade
names, copyrights, technology, know-how and processes (other than Intellectual
Property which is material to the business of the Borrower and its Subsidiaries,
which Intellectual Property shall be owned by the Borrower and its
Subsidiaries), and (xii) other activities incidental or related to the
foregoing.
SECTION 15. NEGATIVE COVENANTS APPLICABLE TO TRANCHE B
COMMITMENTS, TRANCHE C COMMITMENTS AND
TRANCHE D COMMITMENTS
The Borrower hereby agrees that, until payment in full of all Tranche
B Loans, Tranche C Loans or Tranche D Loans and any other amount then due and
owing on account of the Tranche B Loans, Tranche C Loans or Tranche D Loans to
any Tranche B Lender, Tranche C Lender or Tranche D Lender or the Administrative
Agent hereunder or under any Note:
(a) The covenants contained in Sections 406, 408, 409, 410, 411 and
412 of the Senior Subordinated Note Indenture as in effect on the Closing Date
(the "Covenants") (together with the definitions of such terms as may be used
---------
therein) as set forth in Schedule 15(a) are hereby deemed to be incorporated
herein by reference. In the event the Senior Subordinated Note Indenture shall
expire, terminate or be cancelled, such Covenants and definitions as set forth
in Schedule 15(a) shall continue to be deemed to be incorporated herein by
reference, as such provisions were in effect on the Closing Date and as amended,
supplemented or otherwise modified from time to time with the consent of the
Majority Hybrid Lenders. In the event that any such amendment, supplement or
modification is made only to such provisions as so
<PAGE>
88
incorporated, and not to such provisions as contained in the Senior Subordinated
Note Indenture, subsection 14.12 shall not apply to such amendment, supplement
or modification.
(b) The Borrower shall, and shall cause its Restricted Subsidiaries
(as defined in the Senior Subordinated Note Indenture as in effect on the
Closing Date) to, observe and perform the Covenants, as such Covenants may be
amended, supplemented or otherwise modified from time to time with the consent
of the Majority Hybrid Lenders.
SECTION 16. EVENTS OF DEFAULT
16.1 Certain Bankruptcy Events. If any of the following events shall
-------------------------
occur and be continuing:
(a) the Guarantor or the Borrower or any of its Material Subsidiaries
shall commence any case, proceeding or other action (i) under any existing
or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking to
have an order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition
or other relief with respect to it or its debts, or (ii) seeking
appointment of a receiver, trustee, custodian, conservator or other similar
official for it or for all or any substantial part of its assets, or the
Guarantor or the Borrower or any of its Material Subsidiaries shall make a
general assignment for the benefit of its creditors; or
(b) there shall be commenced against the Guarantor or the Borrower or
any of its Material Subsidiaries any case, proceeding or other action of a
nature referred to in clause (a) above which (i) results in the entry of an
order for relief or any such adjudication or appointment or (ii) remains
undismissed, undischarged or unbonded for a period of 60 days; or
(c) there shall be commenced against the Guarantor or the Borrower or
any of its Material Subsidiaries any case, proceeding or other action
seeking issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its assets which
results in the entry of an order for any such relief which shall not have
been vacated, discharged, or stayed or bonded pending appeal within 60 days
from the entry thereof; or
(d) the Guarantor or the Borrower or any of its Material Subsidiaries
shall take any action in furtherance of, or indicating its consent to,
approval of, or acquiescence in, any of the acts set forth in clause (a),
(b), or (c) above; or
(e) the Guarantor or the Borrower or any of its Material Subsidiaries
shall generally not, or shall be unable to, or shall admit in writing its
inability to, pay its debts as they become due;
then, and in any such event:
<PAGE>
89
(A) if such event is an Event of Default specified in clause (a) or
(b) of this subsection 16.1 with respect to the Borrower, automatically the
Commitments shall immediately terminate and the Loans hereunder (with
accrued interest thereon) and all other amounts owing under this Agreement
(including, without limitation, all amounts of L/C Obligations, whether or
not the beneficiaries of the then outstanding Letters of Credit shall have
presented the documents required thereunder) shall immediately become due
and payable; and
(B) if such event is any other Event of Default specified in this
subsection 16.1, any or all of the following actions may be taken: (i)
with the consent of the Majority Basic Lenders, the Administrative Agent
may, or upon the request of the Majority Basic Lenders, the Administrative
Agent shall, by notice to the Borrower declare the Revolving Credit
Commitments and/or the Tranche A Commitments to be terminated forthwith,
whereupon the Revolving Credit Commitments and/or the Tranche A Commitments
(as the case may be) shall immediately terminate; (ii) with the consent of
the Majority Basic Lenders, the Administrative Agent may, or upon the
request of the Majority Basic Lenders, the Administrative Agent shall, by
notice to the Borrower, declare the Swing Line Loans and/or the Revolving
Credit Loans and/or the Tranche A Loans hereunder (with accrued interest
thereon) and all other amounts owing on account thereof under this
Agreement (including, without limitation, all amounts of L/C Obligations,
whether or not the beneficiaries of the then outstanding Letters of Credit
shall have presented the documents required thereunder) to be due and
payable forthwith, whereupon the same shall immediately become due and
payable; (iii) with the consent of the Majority Hybrid Lenders, the
Administrative Agent may, or upon the request of the Majority Hybrid
Lenders, the Administrative Agent shall, by notice to the Borrower declare
the Tranche B Commitments and/or the Tranche C Commitments and/or the
Tranche D Commitments to be terminated forthwith, whereupon the Tranche B
Commitments and/or the Tranche C Commitments and/or the Tranche D
Commitments (as the case may be) shall immediately terminate; and (iv) with
the consent of the Majority Hybrid Lenders, the Administrative Agent may,
or upon the request of the Majority Hybrid Lenders, the Administrative
Agent shall, by notice to the Borrower, declare the Tranche B Loans and/or
the Tranche C Loans and/or the Tranche D Loans (with accrued interest
thereon) and all other amounts owing on account thereof under this
Agreement to be due and payable forthwith, whereupon the same shall
immediately become due and payable.
16.2 Other Events of Default Applicable to the Tranche A Commitments,
----------------------------------------------------------------
Revolving Credit Commitments and Amounts Owing Thereunder. If any of the
- ---------------------------------------------------------
following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan or
Reimbursement Obligation when due in accordance with the terms thereof or
hereof (it being understood that any conversion of a Reimbursement
Obligation into a borrowing pursuant to subsection 7.5(c) shall not
constitute a failure to make a payment in satisfaction of such
Reimbursement Obligation) or the Borrower shall fail to pay any interest on
any Loan, or any other amount payable hereunder, within five days after any
such interest or other amount becomes due in accordance with the terms
thereof or hereof; or
<PAGE>
90
(b) Any representation or warranty made or deemed made by the
Borrower or any other Credit Party herein or in any other Credit Document
or which is contained in any certificate furnished by it at any time under
or pursuant to this Agreement or any such other Credit Document shall prove
to have been incorrect in any material respect on or as of the date made or
deemed made; or
(c) The Borrower or any other Credit Party shall default in the
observance or performance of any agreement contained in Section 13 or 14;
or
(d) The Borrower or any other Credit Party shall default in the
observance or performance of any other agreement contained in this
Agreement or any other Credit Document (other than as provided in
paragraphs (a) through (c) of this subsection 16.2), and such default shall
continue unremedied for a period ending on the earlier of (i) the date 30
days after a Responsible Officer of the Borrower shall have discovered or
should have discovered such default and (ii) the date 15 days after written
notice has been given to the Borrower by the Administrative Agent; or
(e) The Borrower or any of its Subsidiaries shall (i) default in any
payment of principal of or interest of any Indebtedness (other than the
Loans and the Reimbursement Obligations) or in the payment of any Guarantee
Obligation, beyond the period of grace, if any, provided in the instrument
or agreement under which such Indebtedness or Guarantee Obligation was
created; or (ii) default in the observance or performance of any other
agreement or condition relating to any such Indebtedness or Guarantee
Obligation or contained in any instrument or agreement evidencing, securing
or relating thereto, or any other event shall occur or condition exist, the
effect of which default or other event or condition is to cause, or to
permit the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Guarantee Obligation (or a trustee or Administrative
Agent on behalf of such holder or holders or beneficiary or beneficiaries)
to cause, with the giving of notice or lapse of time if required, such
Indebtedness to become due prior to its stated maturity or such Guarantee
Obligation to become payable (an "Acceleration"), and such time shall have
------------
lapsed and, if any notice (a "Default Notice") shall be required to
--------------
commence a grace period or declare the occurrence of an event of default
before notice of Acceleration may be delivered, such Default Notice shall
have been given; provided, however, that no Default or Event of Default
-------- -------
shall exist under this paragraph unless the amount of any such Indebtedness
or Guarantee Obligation in respect of which any default or other event or
condition referred to in this paragraph shall have occurred shall be equal
to at least $15,000,000; or
(f) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any Plan or
any Lien in favor of the PBGC or a Plan shall arise on the assets of the
Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall
occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate,
any Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is reasonably likely to result in
the termination of such Plan for purposes of Title IV of ERISA (other than
a standard termination pursuant to Section
<PAGE>
91
4041(b) of ERISA), (iv) any Single Employer Plan shall terminate for
purposes of Title IV of ERISA, (v) the Borrower or any Commonly Controlled
Entity shall, or is reasonably likely to, incur any liability in connection
with a withdrawal from, or the Insolvency or Reorganization of, a
Multiemployer Plan, (vi) the occurrence or expected occurrence of any event
or condition which results or is reasonably likely to result in the
Borrower's or any Commonly Controlled Entity's becoming responsible for any
liability in respect of a Former Plan, or (vii) any other event or
condition shall occur or exist with respect to a Plan; and in each case in
clauses (i) through (vii) above, such event or condition, together with all
other such events or conditions, if any, would be reasonably expected to
result in liability which would have a Material Adverse Effect; or
(g) One or more judgments or decrees shall be entered against the
Borrower or any of its Active Subsidiaries involving in the aggregate a
liability (net of any insurance or indemnity payments actually received in
respect thereof prior to or within 60 days from the entry thereof, or to be
received in respect thereof, in the event any appeal thereof shall be
unsuccessful) of $15,000,000 or more, and all such judgments or decrees
shall not have been vacated, discharged, stayed or bonded pending appeal
within 60 days from the entry thereof; or
(h) (i) Any of the Security Documents (or any guarantee thereunder by
any Credit Party of the monetary obligations of the Borrower hereunder)
shall cease, for any reason, to be in full force and effect other than
pursuant to the terms hereof and thereof, or the Borrower or any other
Credit Party which is a party to any of the Security Documents shall so
assert in writing or (ii) the Lien created by any of the Security Documents
shall cease to be enforceable and of the same effect as to perfection and
priority purported to be created thereby with respect to any significant
portion of the Collateral (other than in connection with any termination of
such Lien in respect of any Collateral as permitted hereby or by any
Security Document), and such failure of such Lien to be perfected and
enforceable with such priority shall have continued unremedied for a period
of 20 days; or
(i) The Senior Subordinated Notes, for any reason, shall not be or
shall cease to be validly subordinated as provided therein and in the
Senior Subordinated Note Indenture to the obligations of the Borrower under
this Agreement, any Notes and the other Credit Documents; or
(j) a Change of Control shall have occurred or the Guarantor shall
cease to own directly or indirectly 100% of the issued and outstanding
common stock (or equivalent equity interests) of the Borrower; or
(k) the Assumption is not consummated within five days of the Closing
Date;
then, and in any such event, either or both of the following actions may be
taken:
(i) with the consent of the Majority Basic Lenders, the
Administrative Agent may, or upon the request of the Majority Basic
Lenders, the Administrative Agent shall, by notice to the Borrower declare
the Revolving Credit Commitments and/or the Tranche A Commitments to be
terminated forthwith, whereupon the Revolving Credit
<PAGE>
92
Commitments and/or the Tranche A Commitments (as the case may be) shall
immediately terminate; and
(ii) with the consent of the Majority Basic Lenders, the
Administrative Agent may, or upon the request of the Majority Basic
Lenders, the Administrative Agent shall, by notice to the Borrower, declare
the Revolving Credit Loans and/or the Swing Line Loans and/or the Tranche A
Loans hereunder (with accrued interest thereon) and all other amounts owing
on account thereof under this Agreement (including, without limitation, all
amounts of L/C Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents required
thereunder) to be due and payable forthwith, whereupon the same shall
immediately become due and payable.
16.3 Other Events of Default Applicable to Tranche B Commitments,
------------------------------------------------------------
Tranche C Commitments, Tranche D Commitments and Amounts Owing Thereunder. If
- -------------------------------------------------------------------------
any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Tranche B
Loan, Tranche C Loan or Tranche D Loan when due in accordance with the
terms thereof or hereof; or the Borrower shall fail to pay any interest on
any Tranche B Loan, Tranche C Loan or Tranche D Loan, or any other amount
payable on account thereof hereunder, within five days after any such
interest or other amount becomes due in accordance with the terms thereof
or hereof; or
(b) Prior to the termination of the Revolving Credit Commitments and
the payment in full of the Revolving Credit Loans, the Tranche A Loans and
any Swing Line Loan, all Reimbursement Obligations then due and owing, and
any other amount then due and owing hereunder or under any Note to any
Revolving Credit Lender, any Tranche A Lender or the Swing Line Lender on
account of the Revolving Credit Commitments, the Tranche A Commitments, the
Tranche A Loans, the Swing Line Loans or the Letters of Credit, the
Borrower shall default in the observance or performance of any agreement
contained in Section 13 and such default shall continue unremedied for a
period of 20 Business Days after the Borrower has notified the
Administrative Agent in writing of such default pursuant to subsection
12.7(a); or
(c) The Borrower or any other Credit Party shall default in the
observance of performance of any agreement contained in Section 15 (and any
grace period provided in the Senior Subordinated Note Indenture with
respect to the relevant Covenant referred to in Section 15 shall have
expired, with any such grace period that commences upon notice from the
holders of the Senior Subordinated Notes or the trustee with respect to the
Senior Subordinated Notes to commence upon notice from a comparable
percentage of the Tranche B Lenders, Tranche C Lenders and Tranche D
Lenders (voting as a single class)) or subsection 14.12; or
(d) The Borrower or any of its Subsidiaries shall (i) default in any
payment of principal of or interest of any Indebtedness (other than the
Tranche B Loans, the Tranche C Loans or the Tranche D Loans) or in the
payment of any Guarantee Obligation, beyond the period of grace, if any,
provided in the instrument or agreement
<PAGE>
93
under which such Indebtedness or Guarantee Obligation was created; or (ii)
default in the observance or performance of any other agreement or
condition relating to any such Indebtedness or Guarantee Obligation or
contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event shall occur or condition exist, the effect of
which default or other event or condition is to cause, or to permit the
holder or holders of such Indebtedness or beneficiary or beneficiaries of
such Guarantee Obligation (or a trustee or administrative agent on behalf
of such holder or holders or beneficiary or beneficiaries) to cause, with
the giving of notice or the lapse of time if required, an Acceleration, and
such time shall have lapsed and any Default Notice shall have been given;
provided, however, that no Default or Event of Default shall exist
-------- -------
under this paragraph unless (A) the amount of any such Indebtedness or
Guarantee Obligation in respect of which any default or other event or
condition referred to in this paragraph shall have occurred shall be equal
to at least $15,000,000 and (B) in the case of clause (ii) above only, (x)
such default or other event or condition shall have continued for a period
of 60 days and (y) the holder or holders of such Indebtedness or
beneficiary or beneficiaries of such Guarantee Obligation (or a trustee or
administrative agent on behalf of such holder or holders or beneficiary or
beneficiaries) shall not have caused such Indebtedness to become due prior
to its stated maturity or such Guarantee Obligation to become payable; or
(e) (i) Any of the Security Documents (or any guarantee thereunder by
any Credit Party of the monetary obligations of the Borrower hereunder)
shall cease, for any reason, to be in full force and effect other than
pursuant to the terms hereof and thereof or the Borrower or any other
Credit Party which is a party to any of the Security Documents shall so
assert in writing or (ii) the Lien created by any of the Security Documents
shall cease to be enforceable and of the same effect as to perfection and
priority purported to be created thereby with respect to any significant
portion of the Collateral (other than in connection with any termination of
such Lien in respect of any Collateral as permitted hereby or by any
Security Document), and such failure of such Lien to be perfected and
enforceable with such priority shall have continued unremedied for a period
of 20 days; or
(f) The Senior Subordinated Notes, for any reason, shall not be or
shall cease to be validly subordinated as provided therein and in the
Senior Subordinated Note Indenture to the monetary obligations of the
Borrower under this Agreement, any Notes and the other Credit Documents; or
(g) a Change of Control shall have occurred or the Guarantor shall
cease to own directly or indirectly 100% of the issued and outstanding
common stock (or equivalent equity interests) of the Borrower;
then, and in any such event, either or both of the following actions may be
taken:
(i) with the consent of the Majority Hybrid Lenders, the
Administrative Agent may, or upon the request of the Majority Hybrid
Lenders, the Administrative Agent shall, by notice to the Borrower declare
the Tranche B Commitments and/or the Tranche C Commitments and/or the
Tranche D Commitments to be terminated forthwith, whereupon the Tranche B
Commitments and/or the Tranche C
<PAGE>
94
Commitments and/or the Tranche D Commitments (as the case may be) shall
immediately terminate; and
(ii) with the consent of the Majority Hybrid Lenders, the
Administrative Agent may, or upon the request of the Majority Hybrid
Lenders, the Administrative Agent shall, by notice to the Borrower, declare
the Tranche B Loans and/or the Tranche C Loans and/or the Tranche D Loans
(with accrued interest thereon) and all other amounts owing on account
thereof under this Agreement to be due and payable forthwith, whereupon the
same shall immediately become due and payable.
16.4 Certain Provisions Applicable to Letters of Credit. With
--------------------------------------------------
respect to all Letters of Credit with respect to which presentment for honor
shall not have occurred at the time of an acceleration pursuant to subsection
16.1 or 16.2, the Borrower shall at such time deposit in a cash collateral
account opened by the Administrative Agent an amount equal to the aggregate then
undrawn and unexpired amount of such Letters of Credit. The Borrower hereby
grants to the Administrative Agent, for the benefit of the Issuing Lender and
the L/C Participants, a security interest in such cash collateral to secure all
obligations of the Borrower under this Agreement and the other Credit Documents.
Any amounts held in such cash collateral account shall be applied by the
Administrative Agent to the payment of drafts drawn under such Letters of
Credit, and the unused portion thereof after all such Letters of Credit shall
have expired or been fully drawn upon, if any, shall be applied to repay other
obligations of the Borrower hereunder and under the Notes. After all such
Letters of Credit shall have expired or been fully drawn upon, all Reimbursement
Obligations shall have been satisfied and all other obligations of the Borrower
hereunder and under the Notes shall have been paid in full, the balance, if any,
in such cash collateral account shall be returned to the Borrower. The Borrower
shall execute and deliver to the Administrative Agent, for the account of the
Issuing Lender and the L/C Participants, such further documents and instruments
as the Administrative Agent may reasonably request to evidence the creation and
perfection of the within security interest in such cash collateral account.
16.5 Certain Waivers. Except as expressly provided above in this
---------------
Section, presentment, demand, protest and all other notices of any kind are
hereby expressly waived.
SECTION 17. THE ADMINISTRATIVE AGENT
17.1 Appointment. (a) Each Lender hereby irrevocably designates and
-----------
appoints the Administrative Agent as the agent of such Lender under this
Agreement and the other Credit 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 Credit 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 Credit
Documents, together with such other powers as are reasonably incidental thereto.
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 Credit Document or
otherwise exist against the Administrative Agent.
<PAGE>
95
(b) Each Lender hereby irrevocably designates and appoints Credit
Suisse First Boston as the syndication agent and The Chase Manhattan Bank as
documentation agent under this Agreement and the other Credit Documents.
Notwithstanding any provision to the contrary elsewhere in this Agreement,
neither the Syndication Agent nor the Documentation Agent shall have any duties
or responsibilities hereunder, 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 Credit Document or
otherwise exist against the Syndication Agent or the Documentation Agent.
17.2 Delegation of Duties. The Administrative Agent may execute any
--------------------
of its duties under this Agreement and the other Credit Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent
shall not be responsible for the negligence or misconduct of any agent or
attorneys in-fact selected by it with reasonable care.
17.3 Exculpatory Provisions. Neither the Administrative Agent nor
----------------------
any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates shall be (i) 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 Credit Document (except for its or such Person's own gross negligence or
willful misconduct) or (ii) responsible in any manner to any of the Lenders for
any recitals, statements, representations or warranties made by the Borrower or
any officer thereof contained in this Agreement or any other Credit Document or
in any certificate, report, statement or other document referred to or provided
for in, or received by the Administrative Agent under or in connection with,
this Agreement or any other Credit Document or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Credit Document or for any failure of the Borrower to perform its
obligations hereunder or thereunder. The Administrative Agent 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 Credit Document, or to inspect the properties,
books or records of the Borrower.
17.4 Reliance by Administrative Agent. The Administrative Agent
--------------------------------
shall be entitled to rely, and shall be fully protected in relying, upon any
Note, writing, resolution, notice, consent, certificate, affidavit, letter,
telecopy, telex or teletype message, statement, order or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons and upon advice and statements of
legal counsel (including, without limitation, counsel to the Borrower),
independent accountants and other experts selected by the Administrative Agent.
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 Credit Document unless it shall first
receive such advice or concurrence of the Majority Basic Lenders as it deems
appropriate or it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Administrative Agent shall
in all cases be fully protected in acting, or in refraining from acting, under
this Agreement and the other Credit Documents in accordance with a request of
the Majority Basic Lenders (or such larger number of Lenders as may be
explicitly required
<PAGE>
96
hereunder), 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.
17.5 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
hereunder unless the Administrative Agent has received notice from a Lender or
the Borrower 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 Majority Basic Lenders or the Majority Hybrid Lenders
(as the case may be); 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.
17.6 Acknowledgments and Representations by Lenders. Each Lender
----------------------------------------------
expressly acknowledges that neither the Administrative Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates has made
any representations or warranties to it and that no act by the Administrative
Agent hereinafter taken, including any review of the affairs of the Borrower,
shall be deemed to constitute any representation or warranty by the
Administrative Agent to any Lender. Each Lender represents to each other party
hereto that it has, independently and without reliance upon the Administrative
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 Borrower and made its own decision to make its Loans
hereunder and enter into this Agreement. Each Lender also represents to each
other party hereto that it will, independently and without reliance upon the
Administrative 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 Credit 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 Borrower. Each Lender
represents to each other party hereto that it is a bank, savings and loan
association or other similar savings institution, insurance company, investment
fund or company or other financial institution that makes or acquires commercial
loans in the ordinary course of its business, that it is participating hereunder
as a Lender for such commercial purposes, and that it has the knowledge and
experience to be and is capable of evaluating the merits and risks of being a
Lender hereunder. 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 the Borrower which may come into the possession of the
Administrative Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates.
17.7 Indemnification. The Lenders agree to indemnify each of the
---------------
Administrative Agent and Syndication Agent in its respective capacity as such
(to the extent not reimbursed by the Borrower and without limiting the
obligation of the Borrower to do so),
<PAGE>
97
ratably according to their respective Commitment Percentages in effect on the
date on which indemnification is sought, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the Loans)
be imposed on, incurred by or asserted against the Administrative Agent and/or
the Syndication Agent in any way relating to or arising out of, the Commitments,
this Agreement, any of the other Credit 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 the Administrative Agent and/or the
Syndication Agent 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 resulting from the gross negligence or willful
misconduct of the Administrative Agent or the Syndication Agent (as the case may
be). The agreements in this subsection shall survive the payment of the Loans
and all other amounts payable hereunder.
17.8 Agents in their Individual Capacities. Each of the
-------------------------------------
Administrative Agent, the Syndication Agent and the Documentation Agent and
their respective Affiliates may make loans to, accept deposits from and
generally engage in any kind of business with the Borrower or any other Credit
Party as though the Administrative Agent, the Syndication Agent or the
Documentation Agent (as the case may be) were not the Administrative Agent,
Syndication Agent or Documentation Agent hereunder and under the other Credit
Documents. With respect to the Loans made by it, each of the Administrative
Agent, the Syndication Agent and the Documentation Agent shall have the same
rights and powers under this Agreement and the other Credit Documents as any
Lender and may exercise the same as though it were not the Administrative Agent,
the Syndication Agent or the Documentation Agent (as the case may be), and the
terms "Lender" and "Lenders" shall include each of the Administrative Agent, the
Syndication Agent and the Documentation Agent in its respective individual
capacity.
17.9 Successor Agents. (a) Each of the Administrative Agent, the
----------------
Syndication Agent and the Documentation Agent may resign as Administrative
Agent, Syndication Agent or Documentation Agent (as the case may be) upon 10
days' notice to the Lenders.
(b) If the Administrative Agent shall resign as "Administrative
Agent" under this Agreement and the other Credit Documents, then the Majority
Basic Lenders shall appoint from among the Lenders a successor Administrative
Agent (which shall be a bank) for the Lenders, which successor Administrative
Agent (provided that, to the extent that no Default or Event of Default is
--------
continuing at the time of such appointment, such Administrative Agent shall have
been approved by the Borrower), shall succeed to the rights, powers and duties
of the Administrative Agent hereunder. Effective upon such appointment and
approval, the term "Administrative Agent" shall mean such successor
Administrative Agent, 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. After any retiring
Administrative Agent's resignation as Administrative Agent, the provisions of
this Section 17 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 Credit Documents.
<PAGE>
98
(c) Upon appointment of the successor Administrative Agent (the
"Successor Administrative Agent"), the retiring Administrative Agent shall
promptly (i) deliver to the Successor Administrative Agent, all Security
Collateral (as defined in the Guarantee and Collateral Agreement) and any other
collateral held by such retiring Administrative Agent pursuant to a Security
Document, (ii) execute and file uniform commercial code financing statements
prepared by the Borrower and the Successor Administrative Agent, naming the
Successor Administrative Agent as assignee, in each jurisdiction financing
statements have been filed in connection with any Credit Document, (iii) take
all such actions required or requested by the Borrower to name the Successor
Administrative Agent as mortgagee under the mortgages, if any, and (iv) take all
such actions reasonably required or requested by the Borrower to perfect the
pledge or lien pursuant to the Security Documents in the name of the new
Administrative Agent. The Borrower shall pay or reimburse the retiring
Administrative Agent for the reasonable out of pocket costs and expenses
(including, without limitation, reasonable fees and disbursements of counsel to
the retiring Administrative Agent) incurred by the retiring Administrative Agent
in connection with actions pursuant to the foregoing sentence.
(d) If the Syndication Agent shall resign as "Syndication Agent" or
the Documentation Agent shall resign as "Documentation Agent" under this
Agreement and the other Credit Documents, then no successor Syndication Agent or
Documentation Agent, as the case may be, shall be appointed.
SECTION 18. MISCELLANEOUS
18.1 Amendments and Waivers. (a) Neither this Agreement nor any
----------------------
other Credit Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of this
subsection 18.1.
(b) Except as set forth in the succeeding paragraphs of this
subsection 18.1, the Majority Basic Lenders may, or, with the written consent of
the Majority Basic Lenders, the Administrative Agent may, from time to time, (i)
enter into with the relevant Credit Parties written amendments, supplements or
modifications hereto and to the other Credit Documents for the purpose of adding
any provisions to this Agreement or the other Credit Documents or changing in
any manner the rights of the Lenders or of the Credit Parties hereunder or
thereunder or (ii) waive at any Credit Party's request on such terms and
conditions as the Majority Basic Lenders or the Administrative Agent, as the
case may be, may specify in such instrument, any of the requirements of this
Agreement or the other Credit Documents or any Default or Event of Default and
its consequences (any such amendment, supplement, modification or waiver, a
"Specified Change"); provided, that (w) without the written consent of the
- ----------------- --------
Issuing Lender, no Specified Change shall amend, supplement or otherwise modify
any provisions of or directly applicable to any Letter of Credit, (x) without
the written consent of the Swing Line Lender, no Specified Change shall amend,
modify or waive any provision of Section 8 or any other provision of this
Agreement governing the rights or obligations of the Swing Line Lender, (y)
without the written consent of the then Administrative Agent, no Specified
Change shall amend, modify or waive any provision of Section 17 or, without the
prior written consent of the then Administrative Agent or the then Syndication
Agent (as applicable), no Specified Change shall amend, modify or waive any
other provision of this
<PAGE>
99
Agreement governing the rights or obligations of the Administrative Agent or the
Syndication Agent and (z) without the written consent of all the Tranche A
Lenders and Revolving Credit Lenders, no Specified Change shall reduce the
percentage specified in the definition of "Majority Basic Lenders".
(c) Without the written consent of the Majority Hybrid Lenders, no
Specified Change shall (i) waive any Default or Event of Default under
subsection 16.3 and its consequences or (ii) amend, supplement or otherwise
modify any provisions of Section 14.12, Section 15 (or any of the covenants or
definitions incorporated therein by reference) or subsection 16.3.
(d) Without the written consent of all the Tranche B Lenders, Tranche
C Lenders and Tranche D Lenders, no Specified Change shall reduce the percentage
specified in the definition of "Majority Hybrid Lenders".
(e) Without the written consent of the Majority Lenders, no Specified
Change shall (i) waive any of the conditions precedent to the funding of the
initial Loans and extensions of credit set forth in subsection 11.1 (except that
the making of the initial extensions of credit by any Lender on the Closing Date
shall be deemed to constitute a waiver of such conditions precedent by such
Lender), (ii) waive any Default or Event of Default under subsection 16.1 and
its consequences or (iii) amend, supplement or otherwise modify any provisions
of subsection 16.1.
(f) Without the written consent of the Lenders having Commitment
Percentages which aggregate more than 80% of the amount equal to the sum of the
Aggregate Tranche A Commitment, the Aggregate Tranche B Commitment, the
Aggregate Tranche C Commitment, the Aggregate Tranche D Commitment and the
Aggregate Revolving Credit Commitment then in effect, no Specified Change shall
take any action which has the effect of releasing all or substantially all of
the Collateral or all or substantially all of the Subsidiary Guarantors from
their Guarantee Obligations in respect hereof (except as permitted hereby or by
any Security Document).
(g) Without the written consent of each Lender directly affected
thereby, no Specified Change shall reduce the amount or extend the scheduled
date of maturity of any Loan or of any installment thereof, or reduce the stated
rate of any interest or fee payable hereunder or extend the scheduled date of
any payment thereof, or increase the amount or extend the expiration date of any
Lender's Commitments or amend, modify or waive any provision of this subsection
18.1.
(h) Without the written consent of all the Lenders, no Specified
Change shall (i) consent to the assignment or transfer by the Borrower of any of
its rights and obligations under this Agreement and the other Credit Documents
(other than pursuant to the Assumption Agreement or as contemplated by
subsection 18.6) or (ii) reduce the percentage specified in the definition of
"Majority Lenders".
(i) Without the written consent of the Majority Facility Lenders in
respect of any Facility adversely affected thereby, no Specified Change shall
amend or modify subsection 9.5(f) to change the order of applying prepayments
thereunder among the respective Facilities.
<PAGE>
100
(j) Any such waiver and any such amendment, supplement or
modification shall apply equally to each of the Lenders and shall be binding
upon the Credit Parties, the Lenders, the Administrative Agent and all future
holders of the Loans. In the case of any waiver, each of the Credit Parties,
the Lenders and the Administrative Agent shall be restored to their former
positions and rights hereunder and under the other Credit Documents, and any
Default or Event of Default waived shall be deemed to be cured and not
continuing; no such waiver shall extend to any subsequent or other Default or
Event of Default or impair any right consequent thereon.
(k) Notwithstanding anything contained in this subsection 18.1 to the
contrary, neither Holding nor Newco may amend, modify, supplement or waive any
provision of the TTC Guarantee (provided that the TTC Guarantee may be
--------
terminated in accordance with its terms).
18.2 Notices. All notices, requests and demands to or upon the
-------
respective parties hereto to be effective shall be in writing (including by
facsimile transmission) and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made (a) in the case of delivery by hand,
when delivered; (b) in the case of delivery by mail, three days after being
deposited in the mails, postage prepaid; (c) in the case of delivery by a
nationally recognized overnight courier, when received or (d) in the case of
delivery by facsimile transmission, when sent and receipt has been confirmed,
addressed as follows in the case of the Borrower and the Administrative Agent,
and as set forth in Schedule II in the case of the other parties hereto, or to
such other address as may be hereafter notified by the respective parties hereto
and any future holders of the Loans:
Holding or TTC Merger
Co. LLC or TTC: Dynatech Corporation
3 New England Executive Park
Burlington, Massachusetts 01803
Attention: Mark V.B. Tremallo, Corporate Vice President
and General Counsel
Fax: (781) 272-2304
Phone: (781) 221-2008
with a copy to: Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: David A. Brittenham, Esq.
Fax: (212) 909-6836
Phone: (212) 909-6000
with a copy to: Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: David A. Brittenham, Esq.
Fax: (212) 909-6836
Phone: (212) 909-6000
and
<PAGE>
101
Dynatech Corporation
3 New England Executive Park
Burlington, Massachusetts 01803
Attention: Mark V.B. Tremallo, Corporate Vice President
and General Counsel
Fax: (781) 272-2304
Phone: (781) 221-2008
The Administrative
Agent: Morgan Guaranty Trust Company of New York
60 Wall Street
New York, New York 10260
Attention: Steve Hannan
Fax: (212) 648-5005
Phone: (212) 648-7679
with a copy to:
Morgan Guaranty of New York
c/o J.P. Morgan Services Inc.
500 Stanton Christiana Road
Newark, Delaware 19713
Attention: Nicole Pedicone
Fax: (302) 634-4300
Phone: (302) 634-1912
provided that any notice, request or demand to or upon the Administrative Agent
- --------
or the Lenders pursuant to subsections 2.2, 3.2, 4.2, 5.2, 6.2, 7.2, 8.2. 9.3,
9.4, 9.6 or 9.11(b) shall not be effective until received.
18.3 No Waiver; Cumulative Remedies. No failure to exercise and no
------------------------------
delay in exercising, on the part of the Administrative Agent, any Lender or any
Credit Party, any right, remedy, power or privilege hereunder or under the other
Credit Documents shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights, remedies, powers and privileges herein provided
are cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
18.4 Survival of Representations and Warranties. All representations
------------------------------------------
and warranties made hereunder, in the other Credit Documents and in any
certificate delivered pursuant hereto or in connection herewith shall survive
the execution and delivery of this Agreement and the making of the Loans
hereunder.
18.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay
-----------------------------
or reimburse each of the Administrative Agent and the Syndication Agent for all
its reasonable out-of-pocket costs and expenses incurred in connection with the
preparation and execution of, and any amendment, supplement or modification to,
this Agreement and the other Credit Documents and any other documents prepared
in connection herewith or therewith, and the consummation and administration of
the transactions contemplated hereby and thereby,
<PAGE>
102
including, without limitation, the reasonable fees and disbursements of joint
counsel to the Administrative Agent and the Syndication Agent; (b) to pay or
reimburse each Lender and the Administrative Agent for all its reasonable costs
and expenses incurred in connection with the enforcement or preservation of any
rights under this Agreement, the other Credit Documents and any such other
documents, including, without limitation, the reasonable fees and disbursements
of counsel to the Administrative Agent and the several Lenders; (c) to pay,
indemnify, and hold each Lender and the Administrative Agent harmless from, any
and all recording and filing fees and any and all liabilities with respect to,
or resulting from any delay in paying, stamp, excise and other similar taxes, if
any, which may be payable or determined to be payable in connection with the
execution and delivery of, or consummation or administration of any of the
transactions contemplated by, or any amendment, supplement or modification of,
or any waiver or consent under or in respect of, this Agreement, the other
Credit Documents and any such other documents and (d) to pay, indemnify, and
hold harmless each Lender, the Syndication Agent and the Administrative Agent
from and against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement, the other Credit Documents and
any such other documents, or the use of the proceeds of the Loans and other
extensions of credit hereunder, including, without limitation, any of the
foregoing relating to the violation of, noncompliance with or liability under,
any Environmental Law applicable to the operations of the Borrower, any of its
Subsidiaries or any of the Properties (all the foregoing in this clause (d),
collectively, the "indemnified liabilities"), provided that the Borrower shall
----------------------- --------
have no obligation hereunder to the Administrative Agent, the Syndication Agent
or any Lender with respect to indemnified liabilities arising from (i) the gross
negligence or willful misconduct of the Administrative Agent, the Syndication
Agent or such Lender, as the case may be, (or any of their respective directors,
trustees, officers, employees, agents, successors and assigns) or (ii) claims
made or legal proceedings commenced against the Administrative Agent, the
Syndication Agent or any such Lender by any securityholder or creditor thereof
arising out of and based upon rights afforded any such securityholder or
creditor solely in its capacity as such. Notwithstanding the foregoing, except
as provided in clauses (b) and (c) above, the Borrower shall have no obligation
under this subsection 18.5 to the Administrative Agent, the Syndication Agent or
any Lender with respect to any tax, levy, impost, duty, charge, fee, deduction
or withholding imposed, levied, collected, withheld or assessed by any
Governmental Authority. The agreements in this subsection shall survive
repayment of the Loans and all other amounts payable hereunder.
18.6 Successors and Assigns; Participations and Assignments. (a)
------------------------------------------------------
This Agreement shall be binding upon and inure to the benefit of the Borrower,
the Lenders, the Administrative Agent and their respective successors and
assigns, except that the Borrower may not (other than pursuant to the Assumption
Agreement or as contemplated by subsection 14.4(c)) assign or transfer any of
its rights or obligations under this Agreement without the prior written consent
of each Lender. Upon the consummation of the Assumption, Holding shall be
released as the Borrower from all liabilities and obligations under this
Agreement and under any Notes (but not from any obligations and liabilities in
respect thereof under any other Loan Document to which it is a party).
(b) Any Lender may, in the ordinary course of its business and in
accordance with applicable law, at any time sell to one or more banks or other
entities ("Participants")
------------
<PAGE>
103
participating interests in any Loan owing to such Lender, any Commitment of such
Lender or any other interest of such Lender hereunder and under the other Credit
Documents; provided that (unless the Borrower and the Administrative Agent
--------
otherwise consent in writing) no such participating interests shall be in an
aggregate principal amount of less than $5,000,000 in the aggregate (or, if
less, the full amount of such selling Lender's Loans and Commitments). In the
event of any such sale by a Lender of a participating interest to a Participant,
such Lender's obligations under this Agreement to the other parties to this
Agreement shall remain unchanged, such Lender shall remain solely responsible
for the performance thereof, such Lender shall remain the holder of any such
Loan for all purposes under this Agreement and the other Credit Documents, and
the Credit Parties and the Administrative Agent shall continue to deal solely
and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Credit Documents. Any agreement
pursuant to which any Lender shall sell any such participating interest shall
provide that such Lender shall retain the sole right and responsibility to
exercise such Lender's rights and enforce each of the Borrower's obligations
hereunder, including the right to consent to any amendment, supplement,
modification or waiver of any provision of this Agreement or any of the other
Credit Documents, and no Lender shall be entitled to create in favor of any
Participant, in the participation agreement pursuant to which such Participant's
participating interest shall be created or otherwise, any right to vote on,
consent to or approve any matter relating to this Agreement or any other Credit
Document, provided that such participation agreement may provide that, without
--------
the consent of the Participant, such Lender will not agree to any amendment,
supplement, modification or waiver, specified in subsection 18.1(g) or (h). The
Borrower also agrees that each Lender shall be entitled to the benefits of
subsections 9.13, 9.14 and 9.15 without regard to whether it has granted any
participating interests, and that all amounts payable to a Lender under
subsections 9.13, 9.14 and 9.15 shall be determined as if such Lender had not
granted any such participating interests.
(c) Any Lender may, in the ordinary course of its business and in
accordance with applicable law, at any time and from time to time assign to (i)
any Lender or any Affiliate thereof that is a Permitted Affiliate Transferee (as
hereinafter defined), or (ii) with the consent of the Administrative Agent
(which shall not be unreasonably withheld), to any Related Fund or (iii) with
the consent of the Administrative Agent and the Borrower (which, in each case,
shall not be unreasonably withheld), to any additional bank or financial
institution (any assignee described in clause (i), (ii) or (iii), an "Assignee")
--------
all or any part of its rights and obligations under this Agreement and the other
Credit Documents pursuant to an Assignment and Acceptance, substantially in the
form of Exhibit D, executed by such Assignee, such assigning Lender (and, in the
case of an Assignee that is not then a Permitted Affiliate Transferee, by the
Administrative Agent and, to the extent required pursuant to clause (iii) above,
by the Borrower) and delivered to the Administrative Agent for its acceptance
and recording in the Register, provided that (w) in the case of any such
--------
assignment which is not to a Permitted Affiliate Transferee, the sum of the
aggregate principal amount of the Loans, the aggregate amount of the L/C
Obligations and the aggregate amount of the Available Revolving Credit
Commitment being assigned is not less than $5,000,000 (or, if less, the full
amount of such selling Lender's Loans and Commitments), or such lesser amount as
may be agreed to by the Borrower and the Administrative Agent, (x) any
assignment of all or any portion of a Lender's Revolving Credit Commitment or
Tranche A Loans shall be accompanied by the assignment to the same Assignee of a
ratable share of the other, (y) if any Lender proposes to assign all or any part
of its rights and obligations under this Agreement to a special purpose
<PAGE>
104
entity substantially all of the assets of which are, or are expected to be,
assigned or participated interests in commercial loans or which, directly or
indirectly, issues collateralized loan obligations, the Borrower may withhold
its consent to such assignment unless such proposed Assignee has entered into a
binding voting agreement, in form reasonably acceptable to the Borrower,
pursuant to which such proposed Assignee agrees unconditionally to act in
accordance with the decision of the Administrative Agent in voting, or granting
or withholding its consent, on any matter submitted to such proposed Assignee
for a vote or consent under the Credit Documents and (z) if any Lender assigns
all or any part of its rights and obligations under this Agreement to one of its
Affiliates in connection with or in contemplation of the sale or other
disposition of its interest in such Affiliate, the Borrower's prior written
consent shall be required for such assignment. Upon such execution, delivery,
acceptance and recording, from and after the effective date determined pursuant
to such Assignment and Acceptance, (x) the Assignee thereunder shall be a party
hereto and, to the extent provided in such Assignment and Acceptance, have the
rights and obligations of a Lender hereunder with a Commitment as set forth
therein, and (y) the assigning Lender thereunder shall, to the extent provided
in such Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all or the
remaining portion of an assigning Lender's rights and obligations under this
Agreement, such assigning Lender shall cease to be a party hereto).
Notwithstanding the foregoing, no Assignee, which as of the date of any
assignment to it pursuant to this subsection 18.6(c) would be entitled to
receive any greater payment under subsection 9.13 or 9.14 than the assigning
Lender would have been entitled to receive as of such date under such
subsections with respect to the rights assigned, shall be entitled to receive
such payments unless the Borrower has consented in writing to the assignment and
agreed in writing to waive the benefit of this sentence. As used herein, the
term "Permitted Affiliate Transferee" means (i) as to any assigning Tranche A
Lender or Revolving Credit Lender, any Tranche A Lender or Revolving Credit
Lender or any Affiliate thereof and (ii) as to any other assigning Lender, any
Tranche B Lender, Tranche C Lender or Tranche D Lender or any Affiliate thereof.
(d) The Administrative Agent, on behalf of the Borrower, shall
maintain at the address of the Administrative Agent referred to in subsection
18.2 a copy of each Assignment and Acceptance delivered to it and a register
(the "Register") for the recordation of the names and addresses of the Lenders
--------
and the Commitments of, and principal amounts of the Loans owing to, each Lender
from time to time. The entries in the Register shall be conclusive and the
Borrower, the Administrative Agent and the Lenders may (and, in the case of any
Loan or other obligation hereunder not evidenced by a Note, shall) treat each
Person whose name is recorded in the Register as the owner of a Loan or other
obligation hereunder as the owner thereof for all purposes of this Agreement and
the other Credit Documents, notwithstanding any notice to the contrary. Any
assignment of any Loan or other obligation hereunder not evidenced by a Note
shall be effective only upon appropriate entries with respect thereto being made
in the Register. The Register shall be available for inspection by the Borrower
or any Lender at any reasonable time and from time to time upon reasonable prior
notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Assignee (and, in the case of an Assignee that is not
then a Lender or an affiliate thereof, by the Borrower and the Administrative
Agent), together with payment to the Administrative Agent of a registration and
processing fee of $3,500 (provided, however, that no such fee shall be payable
-------- -------
by a Lender in the case of an assignment to an Affiliate of such Lender
<PAGE>
105
or a Related Fund; and provided, further that, in the case of contemporaneous
-------- -------
assignments by a Lender to more than one fund managed by the same investment
advisor (which funds are not then Lenders hereunder), only a single $3,500 such
fee shall be payable for all such contemporaneous assignments), the
Administrative Agent shall (i) promptly accept such Assignment and Acceptance
and (ii) on the effective date determined pursuant thereto record the
information contained therein in the Register and give notice of such acceptance
and recordation to the Lenders and the Borrower. On or prior to such effective
date, the assigning Lender shall surrender any outstanding Notes held by it all
or a portion of which are being assigned, and the Borrower, at its own expense,
shall, upon the request to the Administrative Agent made at the time of such
assignment by the assigning Lender or the Assignee, as applicable, execute and
deliver to the Administrative Agent (in exchange for the outstanding Notes of
the assigning Lender) a new Note to the order of such Assignee in an amount
equal to (i) in the case of an assigned Revolving Credit Loan, the lesser of (A)
the amount of such Assignee's Revolving Credit Commitment and (B) the aggregate
principal amount of all Revolving Credit Loans made by such Assignee, (ii) in
the case of an assigned Tranche A Loan, the amount of such Assignee's Tranche A
Loan, (iii) in the case of an assigned Tranche B Loan, the amount of such
Assignee's Tranche B Loan, (iv) in the case of an assigned Tranche C Loan, the
amount of such Assignee's Tranche C Loan, (v) in the case of an assigned Tranche
D Loan, the amount of such Assignee's Tranche D Loan and (vi) in the case of an
assigned Swing Line Loan, the lesser of (A) the Swing Line Commitment and (B)
the aggregate principal amount of all Swing Line Loans made by such Assignee, in
each case with respect to the relevant Loan after giving effect to such
Assignment and Acceptance and, if the assigning Lender has retained a Loan
hereunder, a new Note, as the case may be, to the order of the assigning Lender
in an amount equal to (i) in the case of a retained Revolving Credit Loan, the
lesser of (A) the amount of such Lender's Revolving Credit Commitment and (B)
the aggregate principal amount of all Revolving Credit Loans made by such
Lender, (ii) in the case of a retained Tranche A Loan, the amount of such
Lender's Tranche A Loan, (iii) in the case of a retained Tranche B Loan, the
amount of such Lender's Tranche B Loan, (iv) in the case of a retained Tranche C
Loan, the amount of such Lender's Tranche C Loan, (v) in the case of a retained
Tranche D Loan, the amount of such Lender's Tranche D Loan and (vi) in the case
of a retained Swing Line Loan, the lesser of (A) the Swing Line Commitment and
(B) the aggregate principal amount of all Swing Line Loans made by such Lender,
in each case with respect to the relevant Loan after giving effect to such
Assignment and Acceptance. Any such new Notes shall be dated the Closing Date
and shall otherwise be in the form of the Note replaced thereby. Any Notes
surrendered by the assigning Lender shall be returned by the Administrative
Agent to the Borrower marked "cancelled".
(f) The Borrower authorizes each Lender to disclose to any
Participant or Assignee (each, a "Transferee") and any prospective Transferee,
----------
subject to the provisions of subsection 18.15, any and all financial information
in such Lender's possession concerning the Borrower and its Affiliates which has
been delivered to such Lender by or on behalf of the Borrower pursuant to this
Agreement or which has been delivered to such Lender by or on behalf of the
Borrower in connection with such Lender's credit evaluation of the Borrower and
its Affiliates prior to becoming a party to this Agreement. No assignment or
participation made or purported to be made to any Transferee shall be effective
without the prior written consent of the Borrower if it would require the
Borrower to make any filing with any Governmental Authority or qualify any Loan
or Note under the laws of any jurisdiction, and the Borrower shall be entitled
to request and receive such information and assurances as it may reasonably
<PAGE>
106
request from any Lender or any Transferee to determine whether any such filing
or qualification is required or whether any assignment or participation is
otherwise in accordance with applicable law.
(g) For avoidance of doubt, the parties to this Agreement acknowledge
that the provisions of this subsection concerning assignments of Loans and Notes
do not prohibit any pledge (i) by a Lender of any Loan or Note to any Federal
Reserve Bank in accordance with applicable law or (ii) by any Tranche B Lender,
Tranche C Lender or Tranche D Lender of any Tranche B Loan, Tranche C Loan or
Tranche D Loan, or any Note evidencing such Loan, to any trustee with respect to
a pool of collateralized loan obligations which includes the obligations owing
to such Lender hereunder, provided that any foreclosure or similar action by
--------
such trustee shall be subject to the provisions of this subsection concerning
assignments and shall be void and of no force or effect unless effected in
compliance with such provisions.
18.7 Adjustments; Set-off. (a) If any Lender (a "benefitted
-------------------- ----------
Lender") shall at any time receive any payment of all or part of any of its
Loans or Reimbursement Obligations owing to it under any Commitment, or interest
thereon, pursuant to a guarantee or otherwise, or receive any collateral in
respect thereof (whether voluntarily or involuntarily, by set-off or otherwise),
in a greater proportion than any such payment to and collateral received by any
other Lender, if any, in respect of such other Lender's Loans or Reimbursement
Obligations owing to it under such Commitment or interest thereon, such
benefitted Lender shall purchase for cash from the other Lender such portion of
each such other Lender's similar Loans or Reimbursement Obligations, or shall
provide such other Lender with the benefits of any such collateral, or the
proceeds thereof, as shall be necessary to cause such benefitted Lender to share
the excess payment or benefits of such collateral or proceeds ratably with each
of the Lenders which hold such Commitment; provided, however, that if all or any
-------- -------
portion of such excess payment or benefits is thereafter recovered from such
benefitted Lender, such purchase shall be rescinded, and the purchase price and
benefits returned, to the extent of such recovery, but without interest. The
Borrower agrees that each Lender so purchasing a portion of another Lender's
Loans or Reimbursement Obligations may exercise all rights of payment
(including, without limitation, rights of set-off) with respect to such portion
as fully as if such purchasing Lender were the direct holder of such portion.
(b) In addition to any rights and remedies of the Lenders provided by
law, each Lender shall have the right, without prior notice to the Borrower, any
such notice being expressly waived by the Borrower to the extent permitted by
applicable law, upon the occurrence of an Event of Default under subsection
16.2(a) or 16.3(a) to set-off and appropriate and apply against any amount then
due and payable under such subsection any and all deposits (general or special,
time or demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Lender or any branch or agency thereof to or for the credit or the
account of the Borrower. Each Lender agrees promptly to notify the Borrower and
the Administrative Agent after any such set-off and application made by such
Lender, provided that the failure to give such notice shall not affect the
--------
validity of such set-off and application.
18.8 Counterparts. This Agreement may be executed by one or more of
------------
the parties to this Agreement on any number of separate counterparts (including
by facsimile
<PAGE>
107
transmission), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. A set of the copies of this Agreement
signed by all the parties shall be delivered to the Borrower and the
Administrative Agent.
18.9 Severability. Any provision of this Agreement which is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
18.10 Integration. This Agreement and the other Credit Documents
-----------
represent the agreement of the Borrower, the Administrative Agent and the
Lenders with respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by the Borrower, the Administrative
Agent or any Lender relative to subject matter hereof not expressly set forth or
referred to herein or in the other Credit Documents.
18.11 GOVERNING LAW. THIS AGREEMENT AND ANY NOTES AND THE RIGHTS AND
-------------
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND ANY NOTES SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK, WITHOUT GIVING EFFECT TO ITS PRINCIPLES OR RULES OF CONFLICTS OF LAWS
TO THE EXTENT SUCH PRINCIPLES OR RULES WOULD REQUIRE THE APPLICATION OF THE LAWS
OF ANOTHER JURISDICTION.
18.12 Submission To Jurisdiction; Waivers. Each party hereto hereby
-----------------------------------
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Credit Documents to
which it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the courts of
the State of New York, the courts of the United States of America for the
Southern District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient forum and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to the
Borrower or the applicable Lender at its address set forth in subsection
18.2 or at such other address of which the Administrative Agent, any such
Lender and the Borrower shall have been notified pursuant thereto;
<PAGE>
108
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to
in this subsection any punitive damages.
18.13 Acknowledgements. The Borrower hereby acknowledges that:
----------------
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Credit Documents;
(b) neither the Administrative Agent nor any Lender has any fiduciary
relationship with or duty to the Borrower arising out of or in connection
with this Agreement or any of the other Credit Documents, and the
relationship between Administrative Agent and Lenders, on one hand, and the
Borrower, on the other hand, in connection herewith or therewith is solely
that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Credit
Documents or otherwise exists by virtue of the transactions contemplated
hereby among the Lenders or among the Borrower and the Lenders.
18.14 WAIVERS OF JURY TRIAL. THE BORROWER, THE ADMINISTRATIVE AGENT
---------------------
AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN
ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
18.15 Confidentiality. Each Lender and the Administrative Agent
---------------
agrees (on behalf of itself and each of its affiliates, directors, officers,
employees, agents, advisors and representatives) to keep confidential any
Confidential Information, and in connection therewith comply with their
customary procedures for handling confidential information of this nature and
with safe and sound lending practices; provided that nothing herein shall limit
--------
its disclosure of any such information (i) to the extent required by statute,
rule, regulation or judicial process, (ii) to counsel for any of the Lenders or
the Administrative Agent, (iii) to bank examiners, insurance commissioners or
other Governmental Authorities, having jurisdiction over the disclosing Lender,
or to such Lender's auditors or accountants, (iv) to the Administrative Agent or
any other Lender, (v) by the Administrative Agent or any Lender to an Affiliate
thereof, (vi) in connection with any enforcement of any of the Credit Documents
or (vii) to any Transferee or prospective Transferee that agrees to comply with
this subsection and (in the case of any such Person that at the time of such
disclosure has not yet become a Lender) executes and delivers to the Borrower a
written instrument in favor of the Borrower confirming such agreement, in form
and substance reasonably satisfactory to the Borrower; provided that (x) in the
--------
case of the preceding clauses (i) and (iii), such Lender shall, to the extent
legally permissible, notify the Borrower of the proposed disclosure as far in
advance as is reasonably practicable under the circumstances, (y) in the case of
the preceding clauses (ii) and (iii), such Lender shall inform each such
counsel, auditor or accountant of the agreement under this
<PAGE>
109
subsection 18.15 and take reasonable actions to cause compliance by any such
Person with this agreement (including, where appropriate, to cause any such
Person to acknowledge its agreement to be bound by the agreement under this
subsection 18.15) and (z) in the case of the preceding clause (v), such Lender
or the Administrative Agent shall be responsible for any failure by such
Affiliate of the Lender or the Administrative Agent to comply with this
subsection. For purposes of this subsection 18.15, "Confidential Information"
------------------------
shall mean, with respect to the Administrative Agent or any Lender (an "Affected
Party"), information delivered--------------to such Affected Party by or on
behalf of any Credit Party, the Administrative Agent or any other Lender in
connection with the transactions contemplated by or otherwise pursuant to this
Agreement or information obtained by the Affected Party in the course of any
review of the books or records of the Guarantor or the Borrower; provided that
--------
such term shall not include information (i) that was publicly known or otherwise
known to such Affected Party prior to the time of such disclosure on a
nonconfidential basis without a duty of confidentiality to any Credit Party or
Subsidiary thereof being violated, (ii) that subsequently becomes publicly known
through no act or omission by any Affected Party or any Person acting on the
Affected Party's behalf, (iii) that becomes known to such Affected Party on a
nonconfidential basis without a duty of confidentiality to any Credit Party or
Subsidiary thereof being violated and, other than through disclosure by or on
behalf of the Borrower or (iv) that constitutes financial information delivered
to any Affected Party that is otherwise publicly available through no act or
omission of any Affected Party or Person acting on such Affected Person's
behalf.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
DYNATECH CORPORATION
By:
------------------------------------
Name:
Title:
TTC MERGER CO. INC.
By:
------------------------------------
Name:
Title:
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as
Administrative Agent and as a Lender
By:
------------------------------------
Name:
Title:
CREDIT SUISSE FIRST BOSTON, as Syndication
Agent and as a Lender
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as
Documentation Agent and as a Lender
<PAGE>
By:
------------------------------------
Name:
Title:
<PAGE>
ABN AMRO BANK, N.V.
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
<PAGE>
BANKBOSTON, N.A.
By:
------------------------------------
Name:
Title:
<PAGE>
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By:
------------------------------------
Name:
Title:
<PAGE>
THE BANK OF NOVA SCOTIA
By:
------------------------------------
Name:
Title:
<PAGE>
BANK OF TOKYO-MITSUBISHI TRUST COMPANY
By:
------------------------------------
Name:
Title:
<PAGE>
MARINE MIDLAND BANK
By:
------------------------------------
Name:
Title:
<PAGE>
NATIONAL CITY BANK
By:
------------------------------------
Name:
Title:
<PAGE>
PRIME INCOME TRUST
By:
------------------------------------
Name:
Title:
<PAGE>
KZH-ING-2 CORPORATION
By:
------------------------------------
Name:
Title:
<PAGE>
MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY
By:
------------------------------------
Name:
Title:
<PAGE>
MASSMUTUAL CORPORATE VALUE
PARTNERS LIMITED
BY: MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY, as
Investment Manager
By:
------------------------------------
Name:
Title:
<PAGE>
MERRILL LYNCH SENIOR FLOATING RATE
FUND, INC.
By:
------------------------------------
Name:
Title:
<PAGE>
ALLSTATE INSURANCE COMPANY
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
<PAGE>
AG CAPITAL FUNDING PARTNERS, L.P.
BY: ANGELO GORDON & CO., L.P., as
Investment Adviser
By:
------------------------------------
Name:
Title:
<PAGE>
CREDIT AGRICOLE INDOSUEZ
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
<PAGE>
KZH-CYPRESS TREE-1 CORPORATION
By:
------------------------------------
Name:
Title:
<PAGE>
TORONTO DOMINION (TEXAS), INC.
By:
------------------------------------
Name:
Title:
<PAGE>
GENERAL ELECTRIC CAPITAL CORPORATION
By:
------------------------------------
Name:
Title:
<PAGE>
ML CLO XV PILGRIM AMERICA (CAYMAN)
LTD. (as assignee)
BY: PILGRIM AMERICA INVESTMENTS, INC.,
as its Investment Manager
By:
------------------------------------
Name:
Title:
<PAGE>
MOUNTAIN CLO TRUST
By:
------------------------------------
Name:
Title:
<PAGE>
OCTAGON LOAN TRUST
BY: OCTAGON CREDIT INVESTORS, as Manager
By:
------------------------------------
Name:
Title:
<PAGE>
BALANCED HIGH-YIELD FUND I LTD.,
BY: BHF-BANK AKTIENGESELLSCHAFT, acting
through its New York Branch, as
attorney-in-fact
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
<PAGE>
DELANO COMPANY
BY: PACIFIC INVESTMENT MANAGEMENT
CO., as its Investment Advisor
By:
------------------------------------
Name:
Title:
<PAGE>
KZH-IV CORPORATION
By:
------------------------------------
Name:
Title:
<PAGE>
KZH HOLDING CORPORATION III
By:
Name:
Title:
<PAGE>
CRESCENT/MACH I PARTNERS, L.P.
BY: TCW ASSET MANAGEMENT COMPANY,
as its Investment Advisor
By:
------------------------------------
Name:
Title:
<PAGE>
SCHEDULE I
LENDERS; COMMITMENTS
<TABLE>
<CAPTION>
Revolving
Tranche A Tranche B Tranche C Tranche D Credit
Lender Commitment Commitment Commitment Commitment Commitment
<S> <C> <C> <C> <C> <C>
Morgan Guaranty Trust Company of New York/1/ $ 6,250,000.00 $28,333,333.34 $28,333,333.32 $28,333,333.34 $ 13,750,000.00
Credit Suisse First Boston $ 6,250,000.00 $ 13,750,000.00
The Chase Manhattan Bank $ 5,625,000.00 $ 12,375,000.00
ABN-AMRO Bank, N.V. $ 5,000,000.00 $ 11,000,000.00
BankBoston, N.A. $ 5,000,000.00 $ 11,000,000.00
Bank of America National Trust & Savings
Association $ 4,687,500.00 $ 10,312,500.00
The Bank of Nova Scotia $ 4,687,500.00 $ 10,312,500.00
Bank of Tokyo-Mitsubishi Trust Company $ 4,687,500.00 $ 10,312,500.00
Marine Midland Bank $ 4,687,500.00 $ 10,312,500.00
</TABLE>
- -------------
/1/ Following the Closing Date, Morgan Guaranty Trust Company of New York
intends to transfer (a) $5,000,000 of each of its Tranche B Commitment,
Tranche C Commitment and Tranche D Commitment to PAM Capital Funding LP,
(b) $5,000,000 of each of its Tranche B Commitment, Tranche C Commitment
and Tranche D Commitment to Senior Debt Portfolio, (c) $1,666,666.66 of its
Tranche B Commitment, $1,666,666.67 of its Tranche C Commitment and
$1,666,666.67 of its Tranche D Commitment to Merrill Lynch Prime Rate
Portfolio, (d) $1,666,666.67 of its Tranche B Commitment, $1,666,666.66 of
its Tranche C Commitment and $1,666,666.67 of its Tranche D Commitment to
Merrill Lynch Global Investment Series: Income Strategies Portfolio, (e)
$3,333,333.34 of its Tranche B Commitment, $3,333,333.33 of its Tranche C
Commitment and $3,333,333.33 of its Tranche D Commitment to AG Capital
Funding Partners, L.P., (f) $3,333,333.33 of its Tranche B Commitment,
$3,333,333.33 of its Tranche C Commitment and $3,333,33.34 of its Tranche D
Commitment to Indosuez Capital Funding IV, L.P., (g) $3,333,333.33 of its
Tranche B Commitment, $3,333,333.33 of its Tranche C Commitment and
$3,333,333.34 of its Tranche D Commitment to ML CLO XV Pilgrim America
(Cayman) Ltd., (h) $3,333,333.33 of its Tranche B Commitment, $3,333,333.33
of its Tranche C Commitment and $3,333,333.34 of its Tranche D Commitment
to Mountain CLO Trust and (i) $1,666,666.66 of its Tranche B Commitment,
$1,666,666.67 of its Tranche C Commitment and $1,666,666.67 of its Tranche
D Commitment to Oppenheimer Funds.
<PAGE>
<TABLE>
<CAPTION>
Revolving
Tranche A Tranche B Tranche C Tranche D Credit
Lender Commitment Commitment Commitment Commitment Commitment
<S> <C> <C> <C> <C> <C>
National City Bank $ 3,125,000.00 $ 6,875,000.00
Prime Income Trust $ 5,000,000.00 $ 5,000,000.00 $ 5,000.000.00
Archimedes Funding L.L.C. $ 5,000,000.00 $ 5,000,000.00 $ 5,000,000.00
MassMutual Corporate Value Partners Limited $ 903,500.00 $ 903,500.00 $ 903,500.00
Massachusetts Mutual Life Insurance Company $ 4,096,500.00 $ 4,096,500.00 $ 4,096,500.00
Merrill Lynch Senior Floating Rate Fund, Inc. $ 1,666,666.67 $ 1,666,666.67 $ 1,666,666.66
Allstate Insurance Company $ 3,333,333.34 $ 3,333,333.33 $ 3,333,333.33
KZH-CypressTree-1 Corporation $ 3,333,333.33 $ 3,333,333.34 $ 3,333,333.33
Toronto Dominion (Texas), Inc. $ 3,333,333.33 $ 3,333,333.33 $ 3,333,333.34
General Electric Capital Corporation $ 3,333,333.33 $ 3,333,333.33 $ 3,333,333.34
Octagon Loan Trust $ 3,333,333.33 $ 3,333,333.33 $ 3,333,333.34
KZH-IV Corporation $ 3,333,333.33 $ 3,333,333.33 $ 3,333,333.34
Balanced High-Yield Fund I Ltd. $ 1,666,666.67 $ 1,666,666.67 $ 1,666,666.66
Delano Company $ 1,666,666.67 $ 1,666,666.67 $ 1,666,666.66
KZH Cresent Corporation $ 833,333.33 $ 833,333.34 $ 833,333.33
KZH Crescent-2 Corporation $ 833,333.33 $ 833,333.34 $ 833,333.33
TOTAL $50,000,000.00 $70,000,000.00 $70,000,000.00 $70,000,000.00 $110,000,000.00
</TABLE>
<PAGE>
SCHEDULE II
ADDRESSES FOR NOTICES
MORGAN GUARANTY TRUST COMPANY
60 Wall Street
New York, NY 10260-0060
Attn: Steve Hannan
Tel: (212) 648-7679
Fax: (212) 648-5005
with a copy to:
MORGAN GUARANTY OF NEW YORK
c/o J.P. Morgan Services Inc.
500 Stanton Christiana Road
Newark, DE 19713
Attn: Nicole Pedicone
Tel: (302) 634-1912
Fax: (302) 634-4300
CREDIT SUISSE FIRST BOSTON
Eleven Madison Avenue
20th Floor
New York, NY 10010-3629
Attn: Robert Hetu
Tel: (212) 325-4542
Fax: (212) 325-8309
THE CHASE MANHATTAN BANK
270 Park Avenue
New York, NY 10017
Attn: William J. Caggiano
Tel: (212) 270-1338
Fax: (212) 972-0009
ABN AMRO BANK, N.V.
135 South LaSalle Street
Suite 2805
Chicago, IL 60603
Attn: Kim O'Brien
Tel: (312) 904-8858
Fax: (312) 904-8840
<PAGE>
with a copy to:
ABN AMRO BANK, N.V.
One Post Office Square
39th Floor
Boston, MA 02109
Attn: Brian Horgan/Carol Levine
Tel: (617) 988-7934
Fax: (617) 988-7910
BANKBOSTON, N.A.
100 Federal Street
Mail stop 01-08-06
Boston, MA 02110
Attn: Debra Del Vecchio
Tel: (617) 434-2815
Fax: (617) 434-0819
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
335 Madison Avenue
New York, NY 10017
Attn: Daniel Rencricca
Tel: (212) 503-7690
Fax: (212) 503-7502
THE BANK OF NOVA SCOTIA
Boston Agency
28 State Street
17th Floor
Boston, MA 02109
Attn: Stephen Foley
Tel: (617) 624-7612
Fax: (617) 624-7607
BANK OF TOKYO-MITSUBISHI TRUST COMPANY
1251 Avenue of the Americas
12th Floor
New York, NY 10020-1104
Attn: Paul Malecki
Tel: (212) 782-4343
Fax: (212) 782-4981
MARINE MIDLAND BANK
140 Broadway
5th Floor
New York, NY 10005-1196
Attn: Christopher French
Tel: (212) 658-2742
<PAGE>
Fax: (212) 658-2586
with a copy to:
O'MELVENY & MYERS
153 East 53rd Street
New York, NY 10022
Attn: Elizabeth Leckie
Tel: (212) 326-2057
Fax: (212) 326-2061
NATIONAL CITY BANK
1900 East 9th Street
Cleveland, OH 44114
Attn: Lisa B. Lisi
Tel: (216) 575-9166
Fax: (216) 222-0003
PRIME INCOME TRUST
c/o Dean Witter
2 World Trade Center
New York, NY 10048
Attn: Sheila Finnerty
Tel: (212) 392-5686
Fax: (212) 392-5345
KZH-ING-2 CORPORATION
c/o The Chase Manhattan Bank
450 West 33rd Street
15th Floor
New York, NY 10001
Attn: Virginia Conway
Tel: (212) 946-7575
Fax: (212) 946-7776
with a copy to:
ING CAPITAL ADVISORS
333 South Grand Avenue
Suite 4250
Los Angeles, CA 90071
Attn: Beth Digatl
Tel: (213) 346-3975
Fax: (213) 626-6552
<PAGE>
and
GIBSON DUNN & CRUTCHER LLP
200 Park Avenue
New York, New York 10166-0193
Attn: Lee Ann Duffy
Tel: (212) 351-3809
Fax: (212) 351-4035
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
1295 State Street
Springfield, MA 01109
Attn: Tom Li
Tel: (413) 744-6228
Fax: (413) 744-6127
Attn: Laura Hamel
Tel: (413) 744-3878
Fax: (413) 744-7922
MASSMUTUAL CORPORATE VALUE PARTNERS LIMITED
c/o Bank of America Trust and Banking
Corporation (Cayman) Limited
P.O. Box 1092
George Town
Grand Cayman
Cayman Islands, B.W.I.
Attn: Michael Carney
Tel:
Fax:
with a copy to:
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
1295 State Street
Springfield, MA 01111-0001
Attn: Roger Crandall/Wallace Rodger
Tel:
Fax:
<PAGE>
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC.
c/o Merrill Lynch Asset Management
800 Scudders Mill Road - Area 1B
Plainsboro, NJ 08536
Attn: Gil Marchand
Tel: (609) 282-3348
Fax: (609) 282-2756
ALLSTATE INSURANCE COMPANY
PRIVATE PLACEMENTS
3075 Sanders Road
Suite G3A
Northbrook, IL 60062-7127
Attn: Jerry Zinkula
Tel: (847) 402-8383
Fax: (847) 402-3092
Attn: Mary Counley
Tel: (847) 402-7048
Fax: (847) 326-5042
CYPRESS INVESTMENT MANAGEMENT COMPANY
125 High Street
Boston, MA 02110
Attn: Peter Merrill
Tel: (617) 946-0600
Fax: (617) 946-5680
FIRST DOMINION CAPITAL, L.L.C.
1330 Avenue of the Americas
10th Floor
New York, NY 10019
Attn: Andy Marshak
Tel: (212) 258-1013
Fax: (212) 258-1019
GENERAL ELECTRIC CAPITAL CORPORATION
201 High Ridge Road
Stamford, CT 06927
Attn: Roger Burns
Tel: (203) 316-7985
Fax: (203) 316-7978
with a copy to:
PAUL HASTINGS JANOFSKY & WALKER
<PAGE>
1055 Washington Blvd.
9th Floor
Stamford, CT 06901
Attn: Christopher Craig
Tel: (203) 961-7496
Fax: (203) 359-3031
OCTAGON CREDIT INVESTORS
c/o Octagon Credit Investors Loan Portfolio
380 Madison Avenue
12th Floor
New York, NY 10017
Attn: Joyce DeLucca
Tel: (212) 622-3104
Fax: (212) 622-3797
THOROUGHBRED LIMITED PARTNERSHIP I
26 Main Street
Chatham, NJ 07928
Attn: Keith Richardson
Tel: (973) 701-8409
Fax: (973) 701-8249
BALANCED HIGH-YIELD FUND I LTD.
c/o BHF-BANK Aktiengesellschaft
590 Madison Avenue
New York, NY 10022
Attn: Hans J. Scholz
Tel: (212) 756-5533
Fax: (212) 756-5536
DELANO COMPANY
c/o Pacific Investment Management Co.
840 Newport Center Drive
Newport Beach, CA 92658
Attn: Jason Rosiak
Tel: (714) 717-7394
Fax: (714) 720-8586
with a copy to:
ROGERS & WELLS
607 14th Street N.W.
10th Floor
Washington, D.C. 20005
Attn: Marianne Caulfield
Tel: (202) 434-0748
Fax: (202) 434-0800
<PAGE>
OPPENHEIMER FUNDS
3410 South Galena Street
Denver, CO 20231
Attn: Art Zimmer
Tel: (303) 768-3510
Fax: (303) 768-3299
TCW ASSET MANAGEMENT COMPANY
200 Park Avenue
Suite 2200
New York, NY 10166-0228
Attn: Mark L. Gold/Justin Driscoll
Tel: (212) 297-4000
Fax: (212) 297-4159
<PAGE>
SCHEDULE 1.1(a)
INACTIVE SUBSIDIARIES
<PAGE>
SCHEDULE 1.1(b)
PERMITTED INVESTORS
<PAGE>
SCHEDULE 10.4(a)
REQUIRED CONSENTS, AUTHORIZATIONS AND FILINGS
<PAGE>
SCHEDULE 10.6
LITIGATION
<PAGE>
SCHEDULE 10.11
TAXES
<PAGE>
SCHEDULE 10.15
SUBSIDIARIES OF THE BORROWER
<PAGE>
SCHEDULE 11.1(y)
EXISTING INDEBTEDNESS
<PAGE>
SCHEDULE 14.2(q)
EXISTING LIENS
<PAGE>
SCHEDULE 14.3
EXISTING GUARANTEE OBLIGATIONS
<PAGE>
SCHEDULE 14.5(j)
PERMITTED DISPOSITIONS
<PAGE>
SCHEDULE 14.8(f)
EXISTING INVESTMENTS
<PAGE>
SCHEDULE 14.9(iv)
PERMITTED TRANSACTIONS WITH GUARANTOR AFFILIATES
<PAGE>
EXHIBIT 10.5
===========================================================================
GUARANTEE AND COLLATERAL AGREEMENT
made by
TELECOMMUNICATIONS TECHNIQUES CO., LLC
and its parent
DYNATECH CORPORATION
and
certain of its Subsidiaries
in favor of
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Administrative Agent
Dated as of May 21, 1998
===========================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1. DEFINED TERMS....................................................... 2
1.1 Definitions........................................................ 2
1.2 Other Definitional Provisions...................................... 8
SECTION 2. GUARANTEE........................................................... 8
2.1 Guarantee.......................................................... 8
2.2 Right of Contribution.............................................. 9
2.3 No Subrogation..................................................... 9
2.4 Amendments, etc. with respect to the Borrower Obligations.......... 10
2.5 Guarantee Absolute and Unconditional............................... 10
2.6 Reinstatement...................................................... 11
2.7 Payments........................................................... 11
SECTION 3. GRANT OF SECURITY INTEREST.......................................... 11
3.1 Grant.............................................................. 11
3.2 Pledged Collateral................................................. 12
3.3 Certain Exceptions................................................. 13
SECTION 4. REPRESENTATIONS AND WARRANTIES...................................... 13
4.1 Representations and Warranties of Each Guarantor................. 13
4.2 Representations and Warranties of Each Grantor................... 13
4.2.1 Title; No Other Liens............................................ 14
4.2.2 Perfected First Priority Liens................................... 14
4.2.3 Chief Executive Office........................................... 16
4.2.4 Inventory and Equipment.......................................... 16
4.2.5 Farm Products.................................................... 16
4.2.6 Accounts......................................................... 16
4.2.7 Intellectual Property............................................ 16
4.3 Representations and Warranties of Each Pledgor................... 16
SECTION 5. COVENANTS........................................................... 17
5.1 Covenants of Each Guarantor...................................... 17
5.2 Covenants of Each Grantor........................................ 18
5.2.1 Delivery of Instruments and Chattel Paper........................ 18
5.2.2 Maintenance of Insurance......................................... 18
5.2.3 Payment of Obligations........................................... 18
5.2.4 Maintenance of Perfected Security Interest; Further Documentation 19
5.2.5 Changes in Locations, Name, etc.................................. 19
5.2.6 Notices.......................................................... 20
5.2.7 Pledged Securities............................................... 20
5.2.8 Accounts......................................................... 20
5.2.9 Maintenance of Records........................................... 20
</TABLE>
i
<PAGE>
<TABLE>
Page
----
<S> <C>
5.2.10 Acquisition of Intellectual Property............................ 20
5.2.11 Protection of Trade Secrets..................................... 21
5.3 Covenants of Each Pledgor......................................... 21
SECTION 6. REMEDIAL PROVISIONS................................................. 22
6.1 Certain Matters Relating to Accounts............................... 22
6.2 Communications with Obligors; Grantors Remain Liable............... 24
6.3 Pledged Stock...................................................... 24
6.4 Proceeds to be Turned Over To Administrative Agent................. 25
6.5 Application of Proceeds............................................ 26
6.6 Code and Other Remedies............................................ 26
6.7 Registration Rights................................................ 27
6.8 Waiver; Deficiency................................................. 28
SECTION 7. THE ADMINISTRATIVE AGENT............................................ 28
7.1 Administrative Agent's Appointment as Attorney-in-Fact, etc........ 28
7.2 Duty of Administrative Agent....................................... 30
7.3 Execution of Financing Statements.................................. 31
7.4 Authority of Administrative Agent.................................. 31
7.5 Right Of Inspection................................................ 31
SECTION 8. MISCELLANEOUS....................................................... 31
8.1 Amendments in Writing.............................................. 31
8.2 Notices............................................................ 32
8.3 No Waiver by Course of Conduct; Cumulative Remedies................ 32
8.4 Enforcement Expenses; Indemnification.............................. 32
8.5 Successors and Assigns............................................. 33
8.6 Set-Off............................................................ 33
8.7 Counterparts....................................................... 33
8.8 Severability....................................................... 33
8.9 Section Headings................................................... 34
8.10 Integration....................................................... 34
8.11 GOVERNING LAW..................................................... 34
8.12 Submission To Jurisdiction; Waivers............................... 34
8.13 Acknowledgements.................................................. 35
8.14 WAIVER OF JURY TRIAL.............................................. 35
8.15 Additional Granting Parties....................................... 35
8.16 Releases.......................................................... 35
</TABLE>
ii
<PAGE>
SCHEDULES
1 Notice Addresses of Guarantors
2 Description of Pledged Securities
3 Location of Jurisdiction of Organization and Chief Executive Office or
Sole Place of Business
4 Location of Inventory and Equipment
5 Copyrights and Copyright Licenses; Patents and Patent Licenses;
Trademarks and Trademark Licenses
6 Existing Prior Liens
7 Accounts
8 Contracts
ANNEXES
1 Assumption Agreement
iii
<PAGE>
GUARANTEE AND COLLATERAL AGREEMENT
GUARANTEE AND COLLATERAL AGREEMENT, dated as of May 21, 1998, made by
Dynatech Corporation, a Massachusetts corporation ("Dynatech"),
--------
Telecommunications Techniques Co., LLC, a Delaware limited liability company
(the "Borrower") and successor by merger to Newco (as defined below), and
--------
certain Subsidiaries of the Borrower that are signatories hereto, in favor of
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as administrative agent (in such
capacity, the "Administrative Agent") for the banks and other financial
--------------------
institutions (collectively, the "Lenders"; individually, a "Lender") from time
------- ------
to time parties to the Credit Agreement, dated as of May 21, 1998 (as amended,
waived, supplemented or otherwise modified from time to time, the "Credit
------
Agreement"), among the Borrower (as successor in interest by merger and
- ---------
assumption), the Lenders, the Administrative Agent, Credit Suisse First Boston,
as syndication agent for the Lenders, and The Chase Manhattan Bank, as
documentation agent for the Lenders.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, on the date hereof, the following transactions have occurred:
(i) Dynatech has contributed, assigned and transferred to its
wholly owned subsidiary, TTC International Holdings, Inc., a Delaware
corporation ("International"), all of the capital stock of Dynatech's other
-------------
Foreign Subsidiaries;
(ii) Dynatech and its wholly owned subsidiary, TTC Merger Co.
LLC, a Delaware limited liability company ("Newco"), have entered into the
-----
Credit Agreement, and pursuant to the Credit Agreement, the Lenders have
severally agreed to make extensions of credit upon the terms and subject to
the conditions set forth therein;
(iii) As contemplated by subsection 12.11 of the Credit
Agreement, Dynatech, Newco, and the Borrower have executed and delivered
the Assumption Agreement, pursuant to which the Borrower has assumed the
rights and obligations of Newco and Dynatech as borrower under the Credit
Agreement, and substantially contemporaneously therewith, Newco has merged
with and into the Borrower, with the Borrower surviving, and the Borrower
has succeeded to all the rights and obligations of Newco under the Credit
Agreement and has become the Borrower thereunder (the "Assumption");
----------
(iv) Following the effectiveness of the Assumption, Dynatech
was released as Borrower under the Credit Agreement, and in consideration
of such assumption and release has contributed, assigned and transferred to
the Borrower, all of the capital stock of Dynatech's other Active
Subsidiaries that are Domestic Subsidiaries and International and has
agreed to guarantee the obligations of the Borrower as provided herein;
WHEREAS, the Borrower is a member of an affiliated group of companies
that includes or will include Dynatech, the Borrower's Active Subsidiaries which
are Domestic Subsidiaries and any Subsidiary of the Borrower that becomes a
party hereto from time to time after the date hereof (the Borrower, Dynatech,
the Borrower's Active Subsidiaries which are Domestic Subsidiaries and each such
other Subsidiary collectively, the "Granting Parties");
----------------
<PAGE>
2
WHEREAS, the proceeds of extensions of credit under the Credit
Agreement will be used in part to make valuable transfers to one or more of the
Granting Parties in connection with the operation of their respective
businesses,
WHEREAS, the Borrower and the other Granting Parties are engaged in
related businesses, and each such Granting Party will derive substantial direct
and indirect benefit from the making of the extensions of credit under the
Credit Agreement; and
WHEREAS, it is a condition to the obligation of the Lenders to make
their respective extensions of credit under the Credit Agreement that the
Granting Parties shall execute and deliver this Agreement to the Administrative
Agent for the benefit of the Secured Parties;
NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective extensions of credit thereunder,
each Granting Party hereby agrees with the Administrative Agent, for the ratable
benefit of the Secured Parties, as follows:
SECTION 1. DEFINED TERMS
1.1 Definitions. (a) Unless otherwise defined herein, terms defined
-----------
in the Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement, and the following terms that are defined in the Code (as
defined below) are used herein as so defined: Chattel Paper, Documents,
Equipment, Farm Products, Fixtures and Inventory.
(b) The following terms shall have the following meanings:
"Accounts": all accounts (as defined in the Code) of each Grantor.
--------
"Active Subsidiaries": as defined in the Credit Agreement.
-------------------
"Agreement": this Guarantee and Collateral Agreement, as the same may
---------
be amended, supplemented or otherwise modified from time to time.
"Borrower Obligations": the collective reference to the unpaid
--------------------
principal of and interest on the Loans and Reimbursement Obligations and
all other obligations and liabilities of the Borrower (including, without
limitation, interest accruing at the then applicable rate provided in the
Credit Agreement after the maturity of the Loans and Reimbursement
Obligations and interest accruing at the then applicable rate provided in
the Credit Agreement after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating
to the Borrower, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding) to the Administrative Agent or any
Lender (or, in the case of any Hedge Agreement referred to below, any
Affiliate of any Lender), whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred,
which may arise under, out of, or in connection with, the Credit Agreement,
this Agreement, the other Credit Documents and any Letter of Credit, or any
Hedge Agreement entered into by the
<PAGE>
3
Borrower with any Lender or any Affiliate of any Lender, any Guarantee
Obligations of Dynatech or any of its Subsidiaries referred to in
subsection 14.3(e) of the Credit Agreement as to which any Lender or any
Affiliate thereof is a beneficiary, or any other document made, delivered
or given in connection therewith, in each case whether on account of
principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses or otherwise (including, without limitation, all reasonable fees
and disbursements of counsel to the Administrative Agent or to the Lenders
that are required to be paid by the Borrower pursuant to the terms of any
of the foregoing agreements).
"Code": the Uniform Commercial Code as from time to time in effect in
----
the State of New York.
"Collateral": as defined in Section 3.
----------
"Collateral Account Bank": Morgan Guaranty Trust Company of New York
-----------------------
or another bank which at all times is a Lender as selected by the relevant
Grantor and notified to the Administrative Agent in writing promptly
following such selection.
"Collateral Proceeds Account": the cash collateral account
---------------------------
established by the relevant Grantor at an office of the Collateral Account
Bank in the name of the Administrative Agent.
"Commitments": the collective reference to the Revolving Credit
-----------
Commitments, the Swing Line Commitments, the Tranche A Commitment, Tranche
B Commitment, Tranche C Commitment, Tranche D Commitment and the L/C
Commitment; individually, a "Commitment".
----------
"Contracts": with respect to any Grantor, all contracts, agreements,
---------
instruments and indentures in any form, and portions thereof (except for
the contracts listed on Schedule 8), to which such Grantor is a party or
----------
under which such Grantor has any right, title or interest or to which such
Grantor or any property of such Grantor is subject, as the same may from
time to time be amended, supplemented or otherwise modified, including,
without limitation, (i) all rights of such Grantor to receive moneys due
and to become due to it thereunder or in connection therewith, (ii) all
rights of such Grantor to damages arising thereunder and (iii) all rights
of such Grantor to perform and to exercise all remedies thereunder.
"Copyright Licenses": with respect to any Grantor, all United States
------------------
written license agreements of such Grantor providing for the grant by or to
such Grantor of any right to use any Copyright of such Grantor, other than
agreements with any Person who is an Affiliate or a Subsidiary of the
Borrower, including, without limitation, any license agreements listed on
Schedule 5 hereto subject, in each case, to the terms of such license
----------
agreements, and the right to prepare for sale, sell and advertise for sale,
all Inventory now or hereafter covered by such licenses.
<PAGE>
4
"Copyrights": with respect to any Grantor, all of such Grantor's
----------
right, title and interest in and to all United States copyrights, whether
or not the underlying works of authorship have been published or
registered, United States copyright registrations and copyright
applications, and (a) all renewals thereof, (b) all income, royalties,
damages and payments now and hereafter due and/or payable with respect
thereto, including, without limitation, payments under all licenses entered
into in connection therewith, and damages and payments for past or future
infringements thereof and (c) the right to sue or otherwise recover for
past, present and future infringements thereof.
"Credit Documents": the collective reference to the "Credit
----------------
Documents" as defined in the Credit Agreement.
"Default": a "Default" as defined in the Credit Agreement.
-------
"Event of Default": an "Event of Default" as defined in the Credit
----------------
Agreement.
"Foreign Subsidiary": as defined in the Credit Agreement.
------------------
"Foreign Subsidiary Holdco": as defined in the Credit Agreement.
-------------------------
"General Fund Account": the general fund account of the relevant
--------------------
Grantor established at the same office of the Collateral Account Bank as
the Collateral Proceeds Account.
"General Intangibles": all "general intangibles" as such term is
-------------------
defined in Section 9-106 of the Uniform Commercial Code in effect in the
State of New York on the date hereof.
"Granting Parties": as defined in the recitals hereto.
----------------
"Grantor": the Borrower and each Domestic Subsidiary of the Borrower
-------
that from time to time becomes a party hereto.
"Guarantor Obligations": with respect to any Guarantor, the
---------------------
collective reference to (i) the Borrower Obligations and (ii) all
obligations and liabilities of such Guarantor that may arise under or in
connection with this Agreement or any other Credit Document to which such
Guarantor is a party, in each case whether on account of guarantee
obligations, reimbursement obligations, fees, indemnities, costs, expenses
or otherwise (including, without limitation, all fees and disbursements of
counsel to the Administrative Agent or to the Lenders that are required to
be paid by such Guarantor pursuant to the terms of this Agreement or any
other Credit Document).
"Guarantors": the collective reference to each Granting Party other
----------
than the Borrower.
<PAGE>
5
"Hedge Agreements": as to any Grantor, all interest rate swaps, caps
----------------
or collar agreements or similar arrangements entered into by such Person
providing for protection against fluctuations in interest rates or currency
exchange rates or the exchange of nominal interest obligations, either
generally or under specific contingencies (including, without limitation,
all Hedging Arrangements with respect to currency exchange rates entered
into in connection with the Credit Agreement).
"Instruments": has the meaning specified in the Code, but excluding
-----------
the Pledged Securities.
"Intellectual Property": with respect to any Grantor, the collective
---------------------
reference to such Grantor's Copyrights, Copyright Licenses, Patents, Patent
Licenses, Trade Secrets, Trademarks and Trademark Licenses.
"Intercompany Note": with respect to any Grantor, any promissory note
-----------------
in a principal amount in excess of $1,000,000 evidencing loans made by such
Grantor to the Borrower or any of its Subsidiaries.
"Issuers": the collective reference to the Persons identified on
-------
Schedule 2 as the issuers of the Pledged Stock.
----------
"Inventory": with respect to any Grantor, all inventory (as defined
---------
in the Code) of such Grantor.
"Loans": the collective reference to the "Loans" as defined in the
-----
Credit Agreement.
"Notes": the collective reference to the "Notes" as defined in the
-----
Credit Agreement.
"Obligations": (i) in the case of the Borrower, the Borrower
-----------
Obligations, and (ii) in the case of each Guarantor, its Guarantor
Obligations.
"Patent Licenses": with respect to any Grantor, all United States
---------------
written license agreements of such Grantor with any Person who is not an
Affiliate or a Subsidiary in connection with any of the Patents of such
Grantor or such other Person's patents, whether such Grantor is a licensor
or a licensee under any such agreement, including, without limitation, the
license agreements listed on Schedule 5, subject, in each case, to the
----------
terms of such license agreements, and the right to prepare for sale, sell
and advertise for sale, all Inventory now or hereafter covered by such
licenses.
"Patents": with respect to any Grantor, all of such Grantor's right,
-------
title and interest in and to all United States patents, patent applications
and patentable inventions, including, without limitation, all patents and
patent applications identified in Schedule 5, and including, without
----------
limitation, (a) all inventions and improvements described and claimed
therein, (b) the right to sue or otherwise recover for any and all past,
present and
<PAGE>
6
future infringement thereof, (c) all income, royalties, damages and other
payments now and hereafter due and/or payable with respect thereto
(including, without limitation, payments under all licenses entered into in
connection therewith, and damages and payments for past or future
infringements thereof), and (d) all other rights corresponding thereto in
the United States and all reissues, divisions, continuations,
continuations-in-part, substitutes, renewals, and extensions thereof, all
improvements thereon, and all other rights of any kind whatsoever of such
Grantor accruing thereunder or pertaining thereto.
"Pledged Collateral": as defined in Section 3.
------------------
"Pledged Notes": with respect to any Pledgor, all Intercompany Notes
-------------
at any time issued to such Pledgor.
"Pledged Securities": the collective reference to the Pledged Notes
------------------
and the Pledged Stock.
"Pledged Stock": with respect to any Pledgor, the shares of Capital
-------------
Stock listed on Schedule 2 as held by such Pledgor, together with any other
----------
shares, stock certificates, options or rights of any nature whatsoever in
respect of the Capital Stock of any Issuer that may be issued or granted
to, or held by, such Pledgor while this Agreement is in effect (provided
--------
that in no event shall there be pledged, nor shall any Pledgor be required
to pledge, directly or indirectly, (x) any Capital Stock of any Subsidiary
other than an Active Subsidiary or (y) more than 65% of any series of the
outstanding Capital Stock of any Foreign Subsidiary pursuant to this
Agreement).
"Pledgor": Dynatech (with respect to the Pledged Stock of the
-------
Borrower), the Borrower (with respect to Pledged Stock of the entities
listed on Schedule 2 hereto under the name of the Borrower and any other
Pledged Securities held by the Borrower) and any other Granting Party (with
respect to Pledged Securities held by such Granting Party).
"Proceeds": all "proceeds" as such term is defined in Section 9-
--------
306(1) of the Uniform Commercial Code in effect in the State of New York on
the date hereof and, in any event, Proceeds of Pledged Securities shall
include, without limitation, all dividends or other income from the Pledged
Securities, collections thereon or distributions or payments with respect
thereto.
"Revolving Credit Commitments": the collective reference to the
----------------------------
"Revolving Credit Commitments" as defined in the Credit Agreement.
"Secured Parties": the collective reference to the Administrative Agent,
---------------
the Lenders (including, without limitation the Issuing Lender) and any
Affiliate of any Lender which has entered into any Hedge Agreement with the
Borrower or any of its Subsidiaries, and their respective successors,
indorsees, transferees and assigns.
"Securities Act": the Securities Act of 1933, as amended from time to
--------------
time.
<PAGE>
7
"Security Collateral": as defined in Section 3.
-------------------
"Trade Secrets": with respect to any Grantor, all of such Grantor's
-------------
right, title and interest in and to all United States trade secrets,
including, without limitation, know-how, processes, formulae, compositions,
designs, and confidential business and technical information, and all
rights of any kind whatsoever accruing thereunder or pertaining thereto,
including, without limitation, (a) all income, royalties, damages and
payments now and hereafter due and/or payable with respect thereto,
including, without limitation, payments under all licenses, non-disclosure
agreements and memoranda of understanding entered into in connection
therewith, and damages and payments for past or future misappropriations
thereof, and (b) the right to sue or otherwise recover for past, present or
future misappropriations thereof.
"Trademark Licenses": with respect to any Grantor, all United States
------------------
written license agreements of such Grantor with any Person who is not an
Affiliate or a Subsidiary in connection with any of the Trademarks of such
Grantor or such other Person's names or trademarks, whether such Grantor is
a licensor or a licensee under any such agreement, including, without
limitation, the license agreements listed on Schedule 5, subject, in each
----------
case, to the terms of such license agreements, and the right to prepare for
sale, sell and advertise for sale, all Inventory now or hereafter covered
by such licenses.
"Trademarks": with respect to any Grantor, all of such Grantor's
----------
right, title and interest in and to all United States trademarks, service
marks, trade names, trade dress or other indicia of trade origin or
business identifiers, trademark and service mark registrations, and
applications for trademark or service mark registrations (except for
"intent to use" applications for trademark or service mark registrations
filed pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. (S) 1051,
unless and until an Amendment to Allege Use or a Statement of Use under
Sections 1(c) and 1(d) of said Act has been filed), and any renewals
thereof, including, without limitation, each registration and application
identified in Schedule 5, and including, without limitation, (a) the right
----------
to sue or otherwise recover for any and all past, present and future
infringements or dilutions thereof, (b) all income, royalties, damages and
other payments now and hereafter due and/or payable with respect thereto
(including, without limitation, payments under all licenses entered into in
connection therewith, and damages and payments for past or future
infringements thereof), and (c) all other rights corresponding thereto in
the United States and all other rights of any kind whatsoever of such
Grantor accruing thereunder or pertaining thereto in the United States,
together in each case with the goodwill of the business connected with the
use of, and symbolized by, each such trademark, service mark, trade name,
trade dress or other indicia of trade origin or business identifiers.
"Vehicles": all cars, trucks, trailers, construction and earth moving
--------
equipment and other vehicles covered by a certificate of title law of any
state and all tires and other appurtenances to any of the foregoing.
<PAGE>
8
1.2 Other Definitional Provisions. (a) The words "hereof,"
-----------------------------
"herein", "hereto" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement, and Section, Schedule and Annex references are to
this Agreement unless otherwise specified.
(b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
(c) Where the context requires, terms relating to the Collateral,
Pledged Collateral or Security Collateral, or any part thereof, when used in
relation to a Granting Party shall refer to such Granting Party's Collateral,
Pledged Collateral or Security Collateral or the relevant part thereof.
(d) All references in this Agreement to any of the property described
in the definition of the term "Collateral" or "Pledged Collateral," or to any
Proceeds thereof, shall be deemed to be references thereto only to the extent
the same constitute Collateral or Pledged Collateral, respectively.
SECTION 2. GUARANTEE
2.1 Guarantee. (a) Each of the Guarantors hereby, jointly and
---------
severally, unconditionally and irrevocably, guarantees to the Administrative
Agent, for the ratable benefit of the Secured Parties, the prompt and complete
payment and performance by the Borrower when due and payable (whether at the
stated maturity, by acceleration or otherwise) of the Borrower Obligations.
(b) Anything herein or in any other Credit Document to the contrary
notwithstanding, the maximum liability of each Guarantor hereunder and under the
other Credit Documents shall in no event exceed the amount that can be
guaranteed by such Guarantor under applicable law, including applicable federal
and state laws relating to the insolvency of debtors.
(c) Each Guarantor agrees that the Borrower Obligations may at any
time and from time to time exceed the amount of the liability of such Guarantor
hereunder without impairing the guarantee contained in this Section 2 or
affecting the rights and remedies of the Administrative Agent or any other
Secured Party hereunder.
(d) The guarantee contained in this Section 2 shall remain in full
force and effect until the earlier to occur of (i) the first date on which all
the Loans, any Reimbursement Obligations, all other Borrower Obligations then
due and owing, and the obligations of each Guarantor under the guarantee
contained in this Section 2 then due and owing shall have been satisfied by
payment in full, no Letter of Credit shall be outstanding and the Commitments
shall be terminated, notwithstanding that from time to time during the term of
the Credit Agreement the Borrower may be free from any Borrower Obligations or
(ii) as to any Guarantor, the sale or other disposition of all of the Capital
Stock of such Guarantor as permitted under the Credit Agreement.
<PAGE>
9
(e) No payment made by the Borrower, any of the Guarantors, any other
guarantor or any other Person or received or collected by the Administrative
Agent or any other Secured Party from the Borrower, any of the Guarantors, any
other guarantor or any other Person by virtue of any action or proceeding or any
set-off or appropriation or application at any time or from time to time in
reduction of or in payment of the Borrower Obligations shall be deemed to
modify, reduce, release or otherwise affect the liability of any Guarantor
hereunder which shall, notwithstanding any such payment (other than any payment
made by such Guarantor in respect of the Borrower Obligations or any payment
received or collected from such Guarantor in respect of the Borrower
Obligations), remain liable for the Borrower Obligations up to the maximum
liability of such Guarantor hereunder until the earlier to occur of (i) the
first date on which the Loans, any Reimbursement Obligations, and all other
Borrower Obligations then due and owing, are paid in full, no Letter of Credit
shall be outstanding and the Commitments are terminated or (ii) the sale or
other disposition of all of the Capital Stock of such Guarantor as permitted
under the Credit Agreement.
2.2 Right of Contribution. Each Guarantor hereby agrees that to the
---------------------
extent that a Guarantor shall have paid more than its proportionate share of any
payment made hereunder, such Guarantor shall be entitled to seek and receive
contribution from and against any other Guarantor hereunder that has not paid
its proportionate share of such payment. Each Guarantor's right of contribution
shall be subject to the terms and conditions of Section 2.3. The provisions of
this Section 2.2 shall in no respect limit the obligations and liabilities of
any Guarantor to the Administrative Agent and the other Secured Parties, and
each Guarantor shall remain liable to the Administrative Agent and the Lenders
for the full amount guaranteed by such Guarantor hereunder.
2.3 No Subrogation. Notwithstanding any payment made by any
--------------
Guarantor hereunder or any set-off or application of funds of any Guarantor by
the Administrative Agent or any other Secured Party, no Guarantor shall be
entitled to be subrogated to any of the rights of the Administrative Agent or
any other Secured Party against the Borrower or any other Guarantor or any
collateral security or guarantee or right of offset held by the Administrative
Agent or any other Secured Party for the payment of the Borrower Obligations,
nor shall any Guarantor seek or be entitled to seek any contribution or
reimbursement from the Borrower or any other Guarantor in respect of payments
made by such Guarantor hereunder, until all amounts owing to the Administrative
Agent and the other Secured Parties by the Borrower on account of the Borrower
Obligations are paid in full, no Letter of Credit shall be outstanding and the
Commitments are terminated. If any amount shall be paid to any Guarantor on
account of such subrogation rights at any time when all of the Borrower
Obligations shall not have been paid in full, such amount shall be held by such
Guarantor in trust for the Administrative Agent and the other Secured Parties,
segregated from other funds of such Guarantor, and shall, forthwith upon receipt
by such Guarantor, be turned over to the Administrative Agent in the exact form
received by such Guarantor (duly indorsed by such Guarantor to the
Administrative Agent, if required), to be applied against the Borrower
Obligations, whether matured or unmatured, in such order as the Administrative
Agent may determine.
<PAGE>
10
2.4 Amendments, etc. with respect to the Borrower Obligations. To
---------------------------------------------------------
the maximum extent permitted by law, each Guarantor shall remain obligated
hereunder notwithstanding that, without any reservation of rights against any
Guarantor and without notice to or further assent by any Guarantor, any demand
for payment of any of the Borrower Obligations made by the Administrative Agent
or any other Secured Party may be rescinded by the Administrative Agent or such
other Secured Party and any of the Borrower Obligations continued, and the
Borrower Obligations, or the liability of any other Person upon or for any part
thereof, or any collateral security or guarantee therefor or right of offset
with respect thereto, may, from time to time, in whole or in part, be renewed,
extended, amended, modified, accelerated, compromised, waived, surrendered or
released by the Administrative Agent or any other Secured Party, and the Credit
Agreement and the other Credit Documents and any other documents executed and
delivered in connection therewith may be amended, modified, supplemented or
terminated, in whole or in part, as the Administrative Agent (or the Required
Lenders, as the case may be) may deem advisable from time to time, and any
collateral security, guarantee or right of offset at any time held by the
Administrative Agent or any other Secured Party for the payment of the Borrower
Obligations may be sold, exchanged, waived, surrendered or released. Neither
the Administrative Agent nor any other Secured Party shall have any obligation
to protect, secure, perfect or insure any Lien at any time held by it as
security for the Borrower Obligations or for the guarantee contained in this
Section 2 or any property subject thereto, except to the extent required by
applicable law.
2.5 Guarantee Absolute and Unconditional. Each Guarantor waives, to
------------------------------------
the maximum extent permitted by applicable law, any and all notice of the
creation, renewal, extension or accrual of any of the Borrower Obligations and
notice of or proof of reliance by the Administrative Agent or any other Secured
Party upon the guarantee contained in this Section 2 or acceptance of the
guarantee contained in this Section 2; the Borrower Obligations, and any of
them, shall conclusively be deemed to have been created, contracted or incurred,
or renewed, extended, amended or waived, in reliance upon the guarantee
contained in this Section 2; and all dealings between the Borrower and any of
the Guarantors, on the one hand, and the Administrative Agent and the other
Secured Parties, on the other hand, likewise shall be conclusively presumed to
have been had or consummated in reliance upon the guarantee contained in this
Section 2. Each Guarantor waives, to the maximum extent permitted by applicable
law, diligence, presentment, protest, demand for payment and notice of default
or nonpayment to or upon the Borrower or any of the other Guarantors with
respect to the Borrower Obligations. Each Guarantor understands and agrees, to
the extent permitted by law, that the guarantee contained in this Section 2
shall be construed as a continuing, absolute and unconditional guarantee of
payment. Each Guarantor hereby waives, to the maximum extent permitted by
applicable law, any and all defenses (other than any suit for breach of a
contractual provision of any of the Loan Documents) that it may have arising out
of or in connection with any and all of the following: (a) the validity or
enforceability of the Credit Agreement or any other Credit Document, any of the
Borrower Obligations or any other collateral security therefor or guarantee or
right of offset with respect thereto at any time or from time to time held by
the Administrative Agent or any other Secured Party, (b) any defense, set-off or
counterclaim (other than a defense of payment or performance) that may at any
time be available to or be asserted by the Borrower against the Administrative
Agent or any other Secured Party, (c) any change in the time, place, manner or
place of payment, amendment, or waiver or increase in the Obligations,
<PAGE>
11
(d) any exchange, taking, or release of Security Collateral, (e) any change in
the limited liability company structure or existence of the Borrower, (f) any
application of Security Collateral to Obligations or (g) any other circumstance
whatsoever (other than payment in full of the Borrower Obligations) (with or
without notice to or knowledge of the Borrower or such Guarantor) that
constitutes, or might be construed to constitute, an equitable or legal
discharge of the Borrower for the Borrower Obligations, or of such Guarantor
under the guarantee contained in this Section 2, in bankruptcy or in any other
instance. When making any demand hereunder or otherwise pursuing its rights and
remedies hereunder against any Guarantor, the Administrative Agent or any other
Secured Party may, but shall be under no obligation to, make a similar demand on
or otherwise pursue such rights and remedies as it may have against the
Borrower, any other Guarantor or any other Person or against any collateral
security or guarantee for the Borrower Obligations or any right of offset with
respect thereto, and any failure by the Administrative Agent or any other
Secured Party to make any such demand, to pursue such other rights or remedies
or to collect any payments from the Borrower, any other Guarantor or any other
Person or to realize upon any such collateral security or guarantee or to
exercise any such right of offset, or any release of the Borrower, any other
Guarantor or any other Person or any such collateral security, guarantee or
right of offset, shall not relieve any Guarantor of any obligation or liability
hereunder, and shall not impair or affect the rights and remedies, whether
express, implied or available as a matter of law, of the Administrative Agent or
any other Secured Party against any Guarantor. For the purposes hereof "demand"
shall include the commencement and continuance of any legal proceedings.
2.6 Reinstatement. The guarantee contained in this Section 2 shall
-------------
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Borrower Obligations is rescinded or
must otherwise be restored or returned by the Administrative Agent or any other
Secured Party upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Borrower or any Guarantor, or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, the Borrower or any Guarantor or any substantial part of its
property, or otherwise, all as though such payments had not been made.
2.7 Payments. Each Guarantor hereby guarantees that payments
--------
hereunder will be paid to the Administrative Agent without set-off or
counterclaim in Dollars at the office of the Administrative Agent located at 60
Wall Street, New York, New York 10260 or such other address of the
Administrative Agent as may be designated in writing to such Guarantor from time
to time in accordance with subsection 18.2 of the Credit Agreement.
SECTION 3. GRANT OF SECURITY INTEREST
3.1 Grant. Each Granting Party (1) that is a Grantor hereby grants
-----
to the Administrative Agent, for the ratable benefit of the Secured Parties, a
security interest in all of the Collateral of the Grantor, as collateral
security for the prompt and complete payment and performance when due (whether
at the stated maturity, by acceleration or otherwise) of the Obligations of such
Grantor, except as provided in Section 3.3 hereof. The term "Collateral", as to
----------
any Grantor, means the following property now owned or at any time hereafter
acquired by
<PAGE>
12
such Grantor or in which such Grantor now has or at any time in the future may
acquire any right, title or interest except as specified in Section 3.3 hereof:
(a) all Accounts;
(b) all Chattel Paper;
(c) all Contracts;
(d) all Documents;
(e) all Equipment (other than Vehicles);
(f) all General Intangibles;
(g) all Instruments;
(h) all Intellectual Property;
(i) all Inventory;
(j) all books and records pertaining to any of the foregoing;
(k) the Collateral Proceeds Account; and
(l) to the extent not otherwise included, all Proceeds and products
of any and all of the foregoing and all collateral security and guarantees
given by any Person with respect to any of the foregoing;
provided that Collateral shall not include any Pledged Collateral, or any
- --------
property or assets specifically excluded from Pledged Collateral (including any
Capital Stock of any Foreign Subsidiary in excess of 65% of any series of such
stock).
3.2 Pledged Collateral. Each Granting Party that is a Pledgor hereby
------------------
grants to the Administrative Agent, for the ratable benefit of the Secured
Parties, a security interest in all of the Pledged Collateral of such Pledgor,
as collateral security for the prompt and complete performance when due (whether
at the stated maturity, by acceleration or otherwise) of the Obligations of such
Pledgor, except as provided in Section 3.3 hereof. The term "Pledged
-------
Collateral", as to any Pledgor, means the Pledged Securities now owned or at any
- ----------
time hereafter acquired by such Pledgor, and any Proceeds thereof. The term
"Security Collateral", as to any Granting Party, means, collectively, the
-------------------
Collateral (if any) and the Pledged Collateral (if any) of such Granting Party.
<PAGE>
13
3.3 Certain Exceptions. No security interest is or will be granted
------------------
pursuant hereto in any right, title or interest of any Granting Party under or
in:
(a) any Instruments, Contracts, Chattel Paper, General Intangibles,
Copyright Licenses, Patent Licenses, Trademark Licenses or other contracts
or agreements with or issued by Persons other than a Subsidiary of the
Borrower (collectively, "Excluded Agreements") that would otherwise be
-------------------
included in the Security Collateral (and such Excluded Agreements shall not
be deemed to constitute a part of the Security Collateral) for so long as,
and to the extent that, the granting of such a security interest pursuant
hereto would result in a breach, default or termination of such Excluded
Agreements, or
(b) any Equipment that would otherwise be included in the Security
Collateral (and such Equipment shall not be deemed to constitute a part of
the Security Collateral) during such time as such Equipment is subject to a
Lien permitted by subsection 14.2(f) of the Credit Agreement.
SECTION 4. REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of Each Guarantor. To induce the
------------------------------------------------
Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective extensions of credit to the Borrower
thereunder, each Guarantor hereby represents and warrants to the Administrative
Agent and each other Secured Party that the representations and warranties set
forth in Section 10 of the Credit Agreement as they relate to such Guarantor or
to the Credit Documents to which such Guarantor is a party, each of which
representations and warranties is hereby incorporated herein by reference, are
true and correct in all material respects, and the Administrative Agent and each
other Secured Party shall be entitled to rely on each of such representations
and warranties as if fully set forth herein; provided that each reference in
--------
each such representation and warranty to the Borrower's knowledge shall, for the
purposes of this Section 4.1, be deemed to be a reference to such Guarantor's
knowledge.
4.2 Representations and Warranties of Each Grantor. To induce the
----------------------------------------------
Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective extensions of credit to the Borrower
thereunder, each Grantor hereby represents and warrants to the Administrative
Agent and each other Secured Party that:
4.2.1 Title; No Other Liens. Except for the security interest
---------------------
granted to the Administrative Agent, for the ratable benefit of the Secured
Parties, pursuant to this Agreement and the other Liens permitted to exist on
such Grantor's Collateral by the Credit Agreement (including without limitation
subsection 14.2 thereof), such Grantor owns each item of such Grantor's
Collateral free and clear of any and all Liens. Except as set forth on
Schedule 6, no currently effective financing statement or other similar public
notice with respect to all or any part of such Grantor's Collateral is on file
or of record in any public office, except such as have been filed in favor of
the Administrative Agent, for the ratable benefit of the Secured Parties,
pursuant to this Agreement or as are permitted by the Credit Agreement
(including without
<PAGE>
14
limitation subsection 14.2 thereof) or any other Credit Document or for which
termination statements will be delivered on the Closing Date.
4.2.2 Perfected First Priority Liens. (i) This Agreement is
------------------------------
effective to create, as collateral security for the Obligations of such Grantor,
valid and enforceable Liens on such Grantor's Collateral in favor of the
Administrative Agent, for the benefit of the Secured Parties, except as
enforceability may be affected by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditor's rights generally, general equitable principles (whether considered in
a proceeding in equity or at law) and an implied covenant of good faith and fair
dealing.
(ii) Except with regard to Liens (if any) on Specified Assets, upon
the completion of the Filings, and the delivery to and continuing possession by
the Administrative Agent of all Instruments, Chattel Paper and Documents a
security interest in which is perfected by possession, the Liens created
pursuant to this Agreement will constitute valid Liens on and (to the extent
provided herein) perfected security interests in such Grantor's Collateral in
favor of the Administrative Agent for the benefit of the Secured Parties, and
will be prior to all other Liens of all other Persons other than Permitted
Liens, and enforceable as such as against all other Persons other than Ordinary
Course Buyers, except to the extent that the recording of an assignment or other
transfer of title to the Administrative Agent or the recording of other
applicable documents in the United States Patent and Trademark Office or United
States Copyright Office may be necessary for perfection or enforceability, and
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law) or by an implied
covenant of good faith and fair dealing. As used in this Section 4.2.2(ii), the
following terms shall have the following meanings:
"Filings": the filing or recording of the Financing Statements, any
-------
Patent and Trademark Security Agreement as set forth in Schedule 9, and any
filings after the Closing Date in any other jurisdiction as may be
necessary under any Requirement of Law.
"Financing Statements": the financing statements delivered to the
--------------------
Administrative Agent by such Grantor on the Closing Date for filing in the
jurisdictions listed in Schedule 9.
"Ordinary Course Buyers": with respect to goods only, buyers in the
----------------------
ordinary course of business to the extent provided in Section 9-307(1) of
the Uniform Commercial Code as in effect from time to time in the relevant
jurisdiction.
"Permitted Liens": Liens permitted pursuant to the Credit Documents,
---------------
including without limitation those permitted to exist pursuant to
subsection 14.2 of the Credit Agreement.
"Specified Assets": the following property and assets of such
----------------
Grantor:
<PAGE>
15
(1) Equipment constituting Fixtures;
(2) Patents, Patent Licenses, Trademarks and Trademark Licenses
to the extent that (a) Liens thereon which cannot be perfected by the
filing of financing statements under the Uniform Commercial Code or by
the filing and acceptance thereof in the United States Patent and
Trademark Office or (b) such Patents, Patent Licenses, Trademarks and
Trademark Licenses are not, individually or in the aggregate, material
to the business of Dynatech and its Subsidiaries taken as a whole;
(3) Copyrights and Copyright Licenses and Accounts or
receivables arising therefrom to the extent that the Uniform
Commercial Code as in effect from time to time in the relevant
jurisdiction is not applicable to the creation or perfection of Liens
thereon;
(4) uncertificated securities;
(5) Collateral for which the perfection of Liens thereon
requires filings in or other actions under the laws of jurisdictions
outside the United States of America, any State, territory or
dependency thereof or the District of Columbia;
(6) contracts, Accounts or receivables subject to the Assignment
of Claims Act;
(7) goods included in Collateral received by any Person for
"sale or return" within the meaning of Section 2-326 of the Uniform
Commercial Code of the applicable jurisdiction, to the extent of
claims of creditors of such Person;
(8) Proceeds of Accounts, receivables or Inventory which do not
themselves constitute Collateral or which have not been transferred to
or deposited in the Collateral Proceeds Account (if any); and
(9) Equipment at various sales offices with a fair market value
of less than $10,000 per sales office and mobile goods.
4.2.3 Chief Executive Office. On the date hereof, such Grantor's
----------------------
jurisdiction of organization and the location of such Grantor's chief executive
office or sole place of business are specified on Schedule 3.
----------
4.2.4 Inventory and Equipment. On the date hereof, such Grantor's
-----------------------
Inventory (other than Inventory held by various Persons (other than a Grantor
and its Affiliates) that is being finished or modified by such Persons and
thereafter returned to the respective Grantor ("WIP Inventory")) and Equipment
-------------
(other than equipment at various sales offices with a fair market value of less
than $10,000 per sales office and mobile goods) are kept at the locations listed
on Schedule 4.
----------
<PAGE>
16
4.2.5 Farm Products. None of such Grantor's Collateral constitutes,
-------------
or is the Proceeds of, Farm Products.
4.2.6 Accounts. The amount represented by such Grantor to the
--------
Administrative Agent or the other Secured Parties from time to time as owing by
each account debtor or by all account debtors in respect of such Grantor's
Accounts will at such time be the correct amount, in all material respects,
actually owing by such account debtor or debtors thereunder, except to the
extent that appropriate reserves therefor have been established on the books of
such Grantor in accordance with GAAP. The places where such Grantor keeps its
records concerning such Grantor's Accounts are listed on Schedule 7 or such
----------
other location or locations of which such Grantor shall have provided prior
written notice to the Administrative Agent pursuant to Section 5.2.5 hereof.
Unless otherwise indicated in writing to the Administrative Agent, each Account
of such Grantor arises out of a bona fide sale and delivery of goods or
rendition of services by such Grantor. Such Grantor has not given any account
debtor any deduction in respect of the amount due under any such Account, except
in the ordinary course of business or as such Grantor may otherwise advise the
Administrative Agent in writing.
4.2.7 Intellectual Property. Schedule 5 lists all material
---------------------
Trademarks and material Patents, in each case, registered in the United States
Patent and Trademark Office and owned by such Grantor in its own name as of the
date hereof, and all material Trademark Licenses and all material Patent
Licenses (including, without limitation, material Trademark Licenses for
registered Trademarks and material Patent Licenses for registered Patents) owned
by such Grantor in its own name as of the date hereof.
4.3 Representations and Warranties of Each Pledgor. To induce the
----------------------------------------------
Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective extensions of credit thereunder,
each Pledgor hereby represents and warrants to the Administrative Agent and each
other Secured Party that:
4.3.1 The shares of Pledged Stock pledged by such Pledgor hereunder
constitute (i) in the case of each Active Subsidiary which is a Domestic
Subsidiary, all the issued and outstanding shares of all classes of the Capital
Stock of each such Active Subsidiary owned by such Pledgor and (ii) in the case
of each Foreign Subsidiary such percentage (not more than 65%) as is specified
on Schedule 2 of all the issued and outstanding shares of all classes of the
----------
Capital Stock of each such Foreign Subsidiary.
4.3.2 All the shares of the Pledged Stock pledged by such Pledgor
hereunder have been duly and validly issued and are fully paid and
nonassessable.
4.3.3 Such Pledgor is the record and beneficial owner of, and has
good title to, the Pledged Securities pledged by it hereunder, free of any and
all Liens or options in favor of, or claims of, any other Person, except the
security interest created by this Agreement and Liens arising by operation of
law or permitted by the Credit Agreement.
4.3.4 Upon delivery to the Administrative Agent of the certificates
evidencing the Pledged Securities held by such Pledgor together with executed
stock or bond powers or other
<PAGE>
17
instruments of transfer, the security interest created by this Agreement in such
Pledged Securities evidenced by certificates, assuming the continuing possession
of such Pledged Securities by the Administrative Agent, will constitute a valid,
perfected first priority security interest in such Pledged Securities to the
extent provided in and governed by the Code, enforceable in accordance with its
terms against all creditors of such Pledgor and any persons purporting to
purchase such Pledged Securities from such Pledgor, except as enforceability may
be affected by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
4.3.5 Upon the filing of financing statements in the appropriate
jurisdictions under the Code, the security interest created by this Agreement in
such Pledged Securities that constitute uncertificated securities, will
constitute a valid, perfected first priority security interest in such Pledged
Securities constituting uncertificated securities to the extent provided in and
governed by the Code, enforceable in accordance with its terms against all
creditors of such Pledgor and any persons purporting to purchase such Pledged
Securities from such Pledgor, except as enforceability may be affected by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing.
SECTION 5. COVENANTS
5.1 Covenants of Each Guarantor. Each Guarantor covenants and agrees
---------------------------
with the Administrative Agent and the other Secured Parties that, from and after
the date of this Agreement until the earlier to occur of (i) the date upon which
the Loans, any Reimbursement Obligations, and all other Obligations then due and
owing, shall have been paid in full, no Letter of Credit shall be outstanding
and the Commitments shall have terminated, or (ii) as to any Guarantor the date
upon which all the Capital Stock of such Guarantor shall have been sold or
otherwise disposed of in accordance with the terms of the Credit Agreement, such
Guarantor shall take, or shall refrain from taking, as the case may be, each
action that is necessary to be taken or not taken, as the case may be, so that
no Default or Event of Default is caused by the failure to take such action or
to refrain from taking such action by such Guarantor or any of its Subsidiaries.
5.2 Covenants of Each Grantor. Each Grantor covenants and agrees
-------------------------
with the Administrative Agent and the other Secured Parties that, from and after
the date of this Agreement until the earlier to occur of (i) the date upon which
the Loans, any Reimbursement Obligations, and all other Obligations then due and
owing, shall have been paid in full, no Letter of Credit shall be outstanding
and the Commitments shall have terminated or (ii) as to any Grantor the date
upon which all the Capital Stock of such Grantor shall have been sold or
otherwise disposed of in accordance with the terms of the Credit Agreement:
5.2.1 Delivery of Instruments and Chattel Paper. If any amount
-----------------------------------------
payable under or in connection with any of such Grantor's Collateral shall be or
become evidenced by any
<PAGE>
18
Instrument or Chattel Paper, such Grantor shall (except as provided in the
following sentence) be entitled to retain possession of all Collateral of such
Grantor evidenced by any Instrument or Chattel Paper, and shall hold all such
Collateral in trust for the Administrative Agent, for the ratable benefit of the
Secured Parties. In the event that an Event of Default shall have occurred and
be continuing, upon the request of the Administrative Agent, such Instrument or
Chattel Paper shall be promptly delivered to the Administrative Agent, duly
indorsed in a manner satisfactory to the Administrative Agent, to be held as
Collateral pursuant to this Agreement. Such Grantor shall not permit any other
Person to possess any such Collateral at any time other than in connection with
any sale or other disposition of such Collateral in a transaction permitted by
the Credit Agreement.
5.2.2 Maintenance of Insurance. (a) Such Grantor will maintain,
------------------------
with financially sound and reputable companies, insurance policies (i) insuring
such Grantor's Inventory and Equipment against loss by fire, explosion, theft
and such other casualties as may be reasonably satisfactory to the
Administrative Agent and (ii) insuring such Grantor, the Administrative Agent
and the other Secured Parties against liability for personal injury and property
damage relating to such Inventory and Equipment, such policies to be in such
form and amounts and having such coverage as may be reasonably satisfactory to
the Administrative Agent.
(b) All such insurance shall (i) provide that no cancellation,
material reduction in amount or material change in coverage thereof shall be
effective until at least 15 days after receipt by the Administrative Agent of
written notice thereof, (ii) name the Administrative Agent as an additional
insured party or loss payee, (iii) include deductibles consistent with past
practice or consistent with industry practice or otherwise reasonably
satisfactory to the Administrative Agent.
5.2.3 Payment of Obligations. Such Grantor will pay and discharge or
----------------------
otherwise satisfy at or before maturity or before they become delinquent, as the
case may be, all material taxes, assessments and governmental charges or levies
imposed upon such Grantor's Collateral or in respect of income or profits
therefrom, as well as all material claims of any kind (including, without
limitation, material claims for labor, materials and supplies) against or with
respect to such Grantor's Collateral, except that no such tax, assessment,
charge or levy need be paid or satisfied if the amount or validity thereof is
currently being contested in good faith by appropriate proceedings and reserves
in conformity with GAAP with respect thereto have been provided on the books of
such Grantor.
5.2.4 Maintenance of Perfected Security Interest; Further
---------------------------------------------------
Documentation. (a) Such Grantor shall maintain the security interest created
- -------------
by this Agreement in such Grantor's Collateral as a perfected security interest
having at least the priority described in Section 4.2.2 and shall defend such
security interest against the claims and demands of all Persons whomsoever.
(b) Such Grantor will furnish to the Administrative Agent from time
to time statements and schedules further identifying and describing such
Grantor's Collateral and such other reports in connection with such Grantor's
Collateral as the Administrative Agent may reasonably request in writing, all in
reasonable detail.
<PAGE>
19
(c) At any time and from time to time, upon the written request of
the Administrative Agent, and at the sole expense of such Grantor, such Grantor
will promptly and duly execute and deliver such further instruments and
documents and take such further actions as the Administrative Agent may
reasonably request for the purpose of obtaining or preserving the full benefits
of this Agreement and of the rights and powers herein granted by such Grantor,
including, without limitation, the filing of any financing or continuation
statements under the Uniform Commercial Code (or other similar laws) in effect
in any jurisdiction with respect to the security interests created hereby.
5.2.5 Changes in Locations, Name, etc. Such Grantor will not, except
--------------------------------
upon not less than 30 days' prior written notice to the Administrative Agent and
delivery to the Administrative Agent, if applicable, of a written supplement to
Schedule 4 showing any additional location at which such Grantor's Inventory or
- ----------
Equipment shall be kept:
(i) permit any of such Grantor's Inventory (other than WIP
Inventory) or Equipment (other than Equipment at various sales offices with
a fair market value of less than $10,000 per sales office and mobile goods)
to be kept at a location other than the location(s) applicable to such
Grantor listed on Schedule 4 (other than Inventory or Equipment being
----------
conveyed, sold, leased, assigned, transferred or otherwise disposed of as
permitted by the Credit Agreement or Inventory having a fair market value
not in excess of $500,000 in the aggregate;
(ii) change the location of its chief executive office or sole
place of business from that referred to in Section 4.2.3; or
(iii) change its name, identity or corporate structure to such
an extent that any financing statement filed by the Administrative Agent in
connection with this Agreement would become seriously misleading;
provided that, prior to taking any such action, or promptly after receiving a
- --------
written request therefor from the Administrative Agent, such Grantor shall
deliver to the Administrative Agent all additional executed financing statements
and other documents reasonably requested by the Administrative Agent to maintain
the validity, perfection and priority of the security interests provided for
herein.
5.2.6 Notices. Such Grantor will advise the Administrative Agent
-------
promptly, in reasonable detail, of:
(a) any Lien (other than security interests created hereby or Liens
permitted under the Credit Agreement) on any of such Grantor's Collateral which
would adversely affect the ability of the Administrative Agent to exercise any
of its remedies hereunder; and
(b) of the occurrence of any other event which would reasonably be
expected to have a material adverse effect on the aggregate value of such
Grantor's Collateral or on the security interests created hereby.
<PAGE>
20
5.2.7 Pledged Securities. In the case of each Grantor that is an
------------------
Issuer, such Issuer agrees that (i) it will be bound by the terms of this
Agreement relating to the Pledged Stock issued by it and will comply with such
terms insofar as such terms are applicable to it, (ii) it will notify the
Administrative Agent promptly in writing of the occurrence of any of the events
described in Section 5.3.1 with respect to the Pledged Stock issued by it and
(iii) the terms of Sections 6.3(c) and 6.7 shall apply to it, mutatis mutandis,
------- --------
with respect to all actions that may be required of it pursuant to Section
6.3(c) or 6.7 with respect to the Pledged Stock issued by it.
5.2.8 Accounts. (a) Other than in the ordinary course of business
--------
or as permitted by the Credit Documents, such Grantor will not (i) grant any
extension of the time of payment of any of such Grantor's Accounts, (ii)
compromise or settle any such Account for less than the full amount thereof,
(iii) release, wholly or partially, any Person liable for the payment of any
Account, (iv) allow any credit or discount whatsoever on any such Account or (v)
amend, supplement or modify any Account unless such extensions, compromises,
settlements, releases, credits or discounts would not reasonably be expected to
materially adversely affect the value of the Accounts constituting Collateral
taken as a whole.
(b) Such Grantor will deliver to the Administrative Agent a copy of
each material demand, notice or document received by it that questions or calls
into doubt the validity or enforceability of more than 10% of the aggregate
amount of the then outstanding Accounts.
5.2.9 Maintenance of Records. Such Grantor will keep and maintain at
----------------------
its own cost and expense reasonably satisfactory and complete records of its
Collateral, including, without limitation, a record of all payments received and
all credits granted with respect to such Collateral, and shall mark such records
to evidence this Agreement and the Liens and the security interests created
hereby.
5.2.10 Acquisition of Intellectual Property. Within 90 days after
------------------------------------
the end of each calendar year, such Grantor will notify the Administrative Agent
of any acquisition by such Grantor of (i) any registration of any material
Copyright, Patent or Trademark or (ii) any exclusive rights under a material
Copyright License, Patent License or Trademark License constituting Collateral,
and shall take such actions as may be reasonably requested by the Administrative
Agent (but only to the extent such actions are within such Grantor's control) to
perfect the security interest granted to the Administrative Agent and the other
Secured Parties therein, to the extent provided in respect of the Copyright
Patent or Trademark constituting Collateral on the date hereof by, (x) the
execution and delivery of a Patent and Trademark Security Agreement (or
amendments to any such agreement previously executed or delivered by such
Grantor) or other comparable agreements with respect to Copyrights or Copyright
Licenses constituting Collateral and/or (y) the making of appropriate filings
(I) of financing statements under the Uniform Commercial Code of any applicable
jurisdiction and/or (II) in the United States Patent and Trademark Office, or
with respect to Copyrights and Copyright Licenses, other applicable office).
5.2.11 Protection of Trade Secrets. Such Grantor shall take all
---------------------------
steps which it deems commercially reasonable to preserve and protect the secrecy
of all material Trade Secrets of such Grantor.
<PAGE>
21
5.3 Covenants of Each Pledgor. Each Pledgor covenants and agrees
-------------------------
with the Administrative Agent and the other Secured Parties that, from and after
the date of this Agreement until the earlier to occur of (i) the Loans, any
Reimbursement Obligations, and all other Obligations then due and owing shall
have been paid in full, no Letter of Credit shall be outstanding and the
Commitments shall have terminated or (ii) as to any Pledgor, all the Capital
Stock of such Pledgor shall have been sold or otherwise disposed of as permitted
under the terms of the Credit Agreement:
5.3.1 If such Pledgor shall, as a result of its ownership of its
Pledged Securities, become entitled to receive or shall receive any stock
certificate (including, without limitation, any stock certificate representing a
stock dividend or a distribution in connection with any reclassification,
increase or reduction of capital or any certificate issued in connection with
any reorganization), stock option or similar rights in respect of the Capital
Stock of any Issuer, whether in addition to, in substitution of, as a conversion
of, or in exchange for, any shares of the Pledged Stock, or otherwise in respect
thereof, such Pledgor shall accept the same as the agent of the Administrative
Agent and the other Secured Parties, hold the same in trust for the
Administrative Agent and deliver the same forthwith to the Administrative Agent
in the exact form received, duly indorsed by such Pledgor to the Administrative
Agent, if required, together with an undated stock power covering such
certificate duly executed in blank by such Grantor, to be held by the
Administrative Agent, subject to the terms hereof, as additional collateral
security for the Obligations (provided that in no event shall there be pledged,
--------
nor shall any Pledgor be required to pledge, more than 65% of any series of the
outstanding Capital Stock of any Foreign Subsidiary Holdco or other Foreign
Subsidiary pursuant to this Agreement). Any sums paid upon or in respect of the
Pledged Securities upon the liquidation or dissolution of any Issuer or maker
(except any liquidation or dissolution of any Subsidiary of the Borrower in
accordance with the Credit Agreement) shall be paid over to the Administrative
Agent to be held by it hereunder as additional collateral security for the
Obligations, and in case any distribution of capital shall be made on or in
respect of the Pledged Stock or any property shall be distributed upon or with
respect to the Pledged Stock pursuant to the recapitalization or
reclassification of the capital of any Issuer or pursuant to the reorganization
thereof, the property so distributed shall, unless otherwise subject to a
perfected security interest in favor of the Administrative Agent, be delivered
to the Administrative Agent to be held by it hereunder as additional collateral
security for the Obligations. If any sums of money or property so paid or
distributed in respect of the Pledged Securities shall be received by such
Pledgor, such Pledgor shall, until such money or property is paid or delivered
to the Administrative Agent, hold such money or property in trust for the
Secured Parties, segregated from other funds of such Pledgor, as additional
collateral security for the Obligations.
5.3.2 Without the prior written consent of the Administrative Agent,
such Pledgor will not (except as permitted by the Credit Agreement) (i) vote to
enable, or take any other action to permit, any Issuer to issue any stock or
other equity securities of any nature or to issue any other securities
convertible into or granting the right to purchase or exchange for any stock or
other equity securities of any nature of any Issuer, (ii) sell, assign,
transfer, exchange, or otherwise dispose of, or grant any option with respect
to, the Pledged Securities or Proceeds thereof or (iii) create, incur or permit
to exist any Lien or option in favor of, or any material
<PAGE>
22
adverse claim of any Person with respect to, any of the Pledged Securities or
Proceeds thereof, or any interest therein, except for the security interests
created by this Agreement or Liens arising by operation of law.
5.3.3 Such Pledgor shall maintain the security interest created by
this Agreement in such Pledgor's Pledged Collateral as a perfected security
interest having at least the priority described in Section 4.3.4 and shall
defend such security interest against the claims and demands of all Persons
whomsoever. At any time and from time to time, upon the written request of the
Administrative Agent, and at the sole expense of such Pledgor, such Pledgor will
promptly and duly execute and deliver such further instruments and documents and
take such further actions as the Administrative Agent may reasonably request for
the purpose of obtaining or preserving the full benefits of this Agreement and
of the rights and powers herein granted by such Pledgor.
SECTION 6. REMEDIAL PROVISIONS
6.1 Certain Matters Relating to Accounts. (a) At any time and from
------------------------------------
time to time after the occurrence and during the continuance of an Event of
Default, the Administrative Agent shall have the right to make test
verifications of the Accounts in any reasonable manner and through any
reasonable medium that it reasonably considers advisable, and the relevant
Grantor shall furnish all such assistance and information as the Administrative
Agent may reasonably require in connection with such test verifications. At any
time and from time to time after the occurrence and during the continuance of an
Event of Default, upon the Administrative Agent's reasonable request and at the
expense of the relevant Grantor, such Grantor shall cause independent public
accountants or others reasonably satisfactory to the Administrative Agent to
furnish to the Administrative Agent reports showing reconciliations, aging and
test verifications of, and trial balances for, the Accounts.
(b) The Administrative Agent hereby authorizes each Grantor to
collect such Grantor's Accounts, and the Administrative Agent may curtail or
terminate said authority at any time after the occurrence and during the
continuance of an Event of Default. If required by the Administrative Agent at
any time after the occurrence and during the continuance of an Event of Default,
any Proceeds constituting collections of such Accounts, when collected by such
Grantor, (i) shall be forthwith (and, in any event, within two Business Days of
receipt by such Grantor) be deposited in or otherwise transferred to the
Collateral Proceeds Account established by such Grantor maintained under the
sole dominion and control of the Administrative Agent, subject to withdrawal by
the Administrative Agent for the account of the Secured Parties only as provided
in Section 65, and (ii) until so turned over, shall be held by such Grantor in
trust for the Administrative Agent and the other Secured Parties, segregated
from other funds of such Grantor. All Proceeds constituting collections of
Accounts while held by the Collateral Account Bank (or by any Guarantor in trust
for the benefit of the Administrative Agent and the other Secured Parties) shall
continue to be collateral security for all of the Obligations and shall not
constitute payment thereof until applied as hereinafter provided. At any time
when an Event of Default has occurred and is continuing, at the Administrative
Agent's election, the Administrative Agent may apply all or any part of the
funds on deposit in the Collateral Proceeds Account established by the relevant
Grantor to the payment of the Obligations of such Grantor
<PAGE>
23
then due and owing, such application to be made as set forth in Section 6.5
hereof. So long as no Event of Default has occurred and is continuing, the funds
on deposit in the Collateral Proceeds Account shall be remitted as provided in
Section 6.1(d) hereof.
(c) At any time and from time to time after the occurrence and during
the continuance of an Event of Default and if the Administrative Agent has
terminated a Grantor's right to collect Accounts pursuant to clause (b) above,
at the Administrative Agent's request, each Grantor shall deliver to the
Administrative Agent all original and other documents evidencing, and relating
to, the agreements and transactions which gave rise to such Grantor's Accounts,
including, without limitation, all original orders, invoices and shipping
receipts.
(d) General Fund Account. So long as no Event of Default has
--------------------
occurred and is continuing, the Administrative Agent shall instruct the
Collateral Account Bank to promptly remit any funds on deposit in each Grantor's
Collateral Proceeds Account to such Grantor's General Fund Account. In the
event that an Event of Default has occurred and is continuing, the
Administrative Agent and the Grantors agree that the Administrative Agent, at
its option, may require that each Collateral Proceeds Account be established at
Morgan Guaranty Trust Company of New York. Each Grantor shall have the right,
at any time and from time to time, to withdraw such of its own funds from its
own General Fund Account, and to maintain such balances in its General Fund
Account, as it shall deem to be necessary or desirable.
(e) Restructuring of Deposit Accounts. If (a) any Collateral
---------------------------------
Proceeds Account is maintained at a Collateral Account Bank located in a state
within the United States in which Article 9 of the Uniform Commercial Code in
effect in such state has been expressly made applicable to (and only for so long
as it is applicable to) demand deposit accounts and all filings have been made
in such state that are necessary to perfect the Secured Parties' security
interest in such Collateral Proceeds Account or (b) after the Closing Date the
relevant Grantor demonstrates to the Administrative Agent, and the
Administrative Agent in its sole discretion agrees, that the costs associated
with maintaining both a Collateral Proceeds Account and a General Fund Account
outweigh any benefits to the Secured Parties in terms of any additional
protection to their rights in such Grantor's Collateral that could not be
achieved with the use of a single account, then upon the request of such
Grantor, the Administrative Agent may amend this Agreement to delete the
requirement that a separate General Fund Account be maintained and provide that
such Grantor be entitled to withdraw funds on deposit in such Collateral
Proceeds Account at any time so long as no Event of Default has occurred and is
continuing.
6.2 Communications with Obligors; Grantors Remain Liable. (a) The
----------------------------------------------------
Administrative Agent in its own name or in the name of others may at any time
and from time to time after the occurrence and during the continuance of an
Event of Default specified in Section 16.2(a) or 16.3(a) of the Credit
Agreement, communicate with obligors under the Accounts and parties to the
Contracts (in each case, to the extent constituting Collateral) to verify with
them to the Administrative Agent's satisfaction the existence, amount and terms
of any Accounts or Contracts.
(b) Upon the request of the Administrative Agent at any time after
the occurrence and during the continuance of an Event of Default specified in
Section 16.2(a) or 16.3(a) of the
<PAGE>
24
Credit Agreement, each Grantor shall notify obligors on such Grantor's Accounts
and parties to such Grantor's Contracts (in each case, to the extent
constituting Collateral) that such Accounts and such Contracts have been
assigned to the Administrative Agent, for the ratable benefit of the Secured
Parties, and that payments in respect thereof shall be made directly to the
Administrative Agent.
(c) Anything herein to the contrary notwithstanding, each Grantor
shall remain liable under each of such Grantor's Accounts to observe and perform
all the conditions and obligations to be observed and performed by it
thereunder, all in accordance with the terms of any agreement giving rise
thereto. Neither the Administrative Agent nor any Lender shall have any
obligation or liability under any Account (or any agreement giving rise thereto)
by reason of or arising out of this Agreement or the receipt by the
Administrative Agent or any other Secured Party of any payment relating thereto,
nor shall the Administrative Agent or any other Secured Party be obligated in
any manner to perform any of the obligations of any Grantor under or pursuant to
any Account (or any agreement giving rise thereto) to make any payment, to make
any inquiry as to the nature or the sufficiency of any payment received by it or
as to the sufficiency of any performance by any party thereunder, to present or
file any claim, to take any action to enforce any performance or to collect the
payment of any amounts that may have been assigned to it or to which it may be
entitled at any time or times.
6.3 Pledged Stock. (a) Unless an Event of Default shall have
-------------
occurred and be continuing and the Administrative Agent shall have given notice
to the relevant Pledgor of the Administrative Agent's intent to exercise its
corresponding rights pursuant to Section 6.3(b), each Pledgor shall be permitted
to receive all cash dividends and distributions paid in respect of the Pledged
Stock and all payments made in respect of the Pledged Notes, to the extent
permitted in the Credit Agreement, and to exercise all voting and corporate
rights with respect to the Pledged Stock; provided, however, that no vote shall
-------- -------
be cast or corporate right exercised or such other action taken (other than in
connection with a transaction expressly permitted by the Credit Agreement)
which, in the Administrative Agent's reasonable judgment, would materially
impair the Pledged Collateral or the related rights or remedies of the Secured
Parties or which would be inconsistent with or result in any violation of any
provision of the Credit Agreement, this Agreement or any other Credit Document.
(b) If an Event of Default shall occur and be continuing and the
Administrative Agent shall give notice of its intent to exercise such rights to
the relevant Pledgor or Pledgors, (i) the Administrative Agent shall have the
right to receive any and all cash dividends, payments or other Proceeds paid in
respect of the Pledged Stock and make application thereof to the Obligations in
such order as is provided in Section 6.5, and (ii) any or all of the Pledged
Stock shall be registered in the name of the Administrative Agent or its
nominee, and the Administrative Agent or its nominee may thereafter exercise (x)
all voting, corporate and other rights pertaining to such Pledged Stock at any
meeting of shareholders of the relevant Issuer or Issuers or otherwise and (y)
any and all rights of conversion, exchange, subscription and any other rights,
privileges or options pertaining to such Pledged Stock as if it were the
absolute owner thereof (including, without limitation, the right to exchange at
its discretion any and all of the Pledged Stock upon the merger, consolidation,
reorganization, recapitalization or other fundamental change in the corporate
structure of any Issuer, or upon the exercise by the relevant
<PAGE>
25
Pledgor or the Administrative Agent of any right, privilege or option pertaining
to such Pledged Stock, and in connection therewith, the right to deposit and
deliver any and all of the Pledged Stock with any committee, depositary,
transfer agent, registrar or other designated agency upon such terms and
conditions as the Administrative Agent may reasonably determine), all without
liability (other than for its gross negligence or willful misconduct) except to
account for property actually received by it, but the Administrative Agent shall
have no duty to any Pledgor to exercise any such right, privilege or option and
shall not be responsible for any failure to do so or delay in so doing, provided
--------
that the Administrative Agent shall not exercise any voting or other consensual
rights pertaining to the Pledged Stock in any way that would constitute an
exercise of the remedies described in Section 6.6 other than in accordance with
Section 6.6.
(c) Each Pledgor hereby authorizes and instructs each Issuer or maker
of any Pledged Securities pledged by such Pledgor hereunder to (i) comply with
any instruction received by it from the Administrative Agent in writing that (x)
states that an Event of Default has occurred and is continuing and (y) is
otherwise in accordance with the terms of this Agreement, without any other or
further instructions from such Pledgor, and each Pledgor agrees that each Issuer
or maker shall be fully protected in so complying, and (ii) unless otherwise
expressly permitted hereby, pay any dividends or other payments with respect to
the Pledged Securities directly to the Administrative Agent.
6.4 Proceeds to be Turned Over To Administrative Agent. In addition
--------------------------------------------------
to the rights of the Administrative Agent and the other Secured Parties
specified in Section 6.1 with respect to payments of Accounts, if an Event of
Default shall occur and be continuing, and the Administrative Agent shall have
instructed any Grantor to do so, all Proceeds received by such Grantor
consisting of cash, checks and other Cash Equivalent items shall be held by such
Grantor in trust for the Administrative Agent and the other Secured Parties,
segregated from other funds of such Grantor, and shall, forthwith upon receipt
by such Grantor, be turned over to the Administrative Agent in the exact form
received by such Grantor (duly indorsed by such Grantor to the Administrative
Agent, if required). All Proceeds received by the Administrative Agent
hereunder shall be held by the Administrative Agent in the relevant Collateral
Proceeds Account maintained under its sole dominion and control. All Proceeds
while held by the Administrative Agent in such Collateral Proceeds Account (or
by such Grantor in trust for the Administrative Agent and the other Secured
Parties) shall continue to be held as collateral security for all the
Obligations and shall not constitute payment thereof until applied as provided
in Section 65.
6.5 Application of Proceeds. It is agreed that if an Event of
-----------------------
Default shall occur and be continuing, any and all Proceeds of the relevant
Granting Party's Security Collateral received by the Administrative Agent
(whether from the relevant Granting Party or otherwise) shall be held by the
Administrative Agent for the benefit of the Secured Parties as collateral
security for the Obligations of the relevant Granting Party (whether matured or
unmatured), and/or then or at any time thereafter may, in the sole discretion of
the Administrative Agent, be applied by the Administrative Agent against the
Obligations of the relevant Granting Party then due and owing in the following
order of priority:
FIRST, to the payment of all reasonable costs and expenses incurred by
the Administrative Agent in connection with this Agreement, the Credit
Agreement, any
<PAGE>
26
other Credit Document or any of the Obligations of the relevant Granting
Party, including, without limitation, all court costs and the reasonable
fees and expenses of its agents and legal counsel, and any other reasonable
costs or expenses incurred in connection with the exercise by the
Administrative Agent of any right or remedy under this Agreement, the
Credit Agreement, or any other Credit Document;
SECOND, to the ratable satisfaction of all other Obligations of the
relevant Granting Party; and
THIRD, to the relevant Granting Party or its successors or assigns, or
to whomsoever may be lawfully entitled to receive the same.
6.6 Code and Other Remedies. If an Event of Default shall occur and
-----------------------
be continuing, the Administrative Agent, on behalf of the Secured Parties, may
exercise, in addition to all other rights and remedies granted to them in this
Agreement and in any other instrument or agreement securing, evidencing or
relating to the Obligations to the extent permitted by applicable law, all
rights and remedies of a secured party under the Code or any other applicable
law. Without limiting the generality of the foregoing, to the extent permitted
by applicable law, the Administrative Agent, without demand of performance or
other demand, presentment, protest, advertisement or notice of any kind (except
any notice required by law referred to below) to or upon any Granting Party or
any other Person (all and each of which demands, defenses, advertisements and
notices are hereby waived), may in such circumstances forthwith collect,
receive, appropriate and realize upon the Security Collateral, or any part
thereof, and/or may forthwith sell, lease, assign, give option or options to
purchase, or otherwise dispose of and deliver the Security Collateral or any
part thereof (or contract to do any of the foregoing), in one or more parcels at
public or private sale or sales, at any exchange, broker's board or office of
the Administrative Agent or any other Secured Party or elsewhere upon such terms
and conditions as it may deem advisable and at such prices as it may deem best,
for cash or on credit or for future delivery without assumption of any credit
risk. The Administrative Agent or any other Secured Party shall have the right
upon any such public sale or sales, and, to the extent permitted by law, upon
any such private sale or sales, to purchase the whole or any part of the
Security Collateral so sold, free of any right or equity of redemption in any
Granting Party, which right or equity is hereby waived or released. Each
Granting Party further agrees, at the Administrative Agent's request, to
assemble the Security Collateral and make it available to the Administrative
Agent at places which the Administrative Agent shall reasonably select, whether
at such Granting Party's premises or elsewhere. The Administrative Agent shall
apply the net proceeds of any action taken by it pursuant to this Section 6.6,
after deducting all reasonable costs and expenses of every kind incurred in
connection therewith or incidental to the care or safekeeping of any of the
Security Collateral or in any way relating to the Security Collateral or the
rights of the Administrative Agent and the other Secured Parties hereunder,
including, without limitation, reasonable attorneys' fees and disbursements, to
the payment in whole or in part of the Obligations of the relevant Granting
Party then due and owing (including, without limitation, to the extent required
by Section 16.4 of the Credit Agreement to cash collateralize L/C Obligations
outstanding at such time), in the order of priority specified in Section 6.5
above, and only after such application and after the payment by the
Administrative Agent of any other amount required by any provision of law,
including, without limitation, Section 9-504(1)(c) of the Code, need the
<PAGE>
27
Administrative Agent account for the surplus, if any, to any Granting Party. To
the extent permitted by applicable law, each Granting Party waives all claims,
damages and demands it may acquire against the Administrative Agent or any other
Secured Party arising out of the repossession, retention or sale of collateral,
except to the extent arising as a result of the gross negligence or willful
misconduct of the Administrative Agent or such other Secured Party. If any
notice of a proposed sale or other disposition of Collateral shall be required
by law, such notice shall be deemed reasonable and proper if given at least 10
days before such sale or other disposition.
6.7 Registration Rights. (a) If the Administrative Agent shall
-------------------
determine to exercise its right to sell any or all of the Pledged Stock pursuant
to Section 6.6, and if in the reasonable opinion of the Administrative Agent it
is necessary or reasonably advisable to have the Pledged Stock, or that portion
thereof to be sold, registered under the provisions of the Securities Act, the
relevant Pledgor will use its reasonable best efforts to cause the Issuer
thereof to (i) execute and deliver, and use its best efforts to cause the
directors and officers of such Issuer to execute and deliver, all such
instruments and documents, and do or cause to be done all such other acts as may
be, in the reasonable opinion of the Administrative Agent, necessary or
advisable to register such Pledged Stock, or that portion thereof to be sold,
under the provisions of the Securities Act, (ii) use its reasonable best efforts
to cause the registration statement relating thereto to become effective and to
remain effective for a period of not more than one year from the date of the
first public offering of such Pledged Stock, or that portion thereof to be sold,
and (iii) make all amendments thereto and/or to the related prospectus which, in
the reasonable opinion of the Administrative Agent, are necessary or advisable,
all in conformity with the requirements of the Securities Act and the rules and
regulations of the Securities and Exchange Commission applicable thereto. Such
Pledgor agrees to cause such Issuer to comply with the provisions of the
securities or "Blue Sky" laws of any and all states and the District of Columbia
that the Administrative Agent shall reasonably designate and to make available
to its security holders, as soon as practicable, an earnings statement (which
need not be audited) that will satisfy the provisions of Section 11(a) of the
Securities Act.
(b) Such Pledgor recognizes that the Administrative Agent may be
unable to effect a public sale of any or all such Pledged Stock, by reason of
certain prohibitions contained in the Securities Act and applicable state
securities laws or otherwise, and may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers which will be obliged
to agree, among other things, to acquire such securities for their own account
for investment and not with a view to the distribution or resale thereof. Such
Pledgor acknowledges and agrees that any such private sale may result in prices
and other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner. The Administrative
Agent shall be under no obligation to delay a sale of any of the Pledged Stock
for the period of time necessary to permit the Issuer thereof to register such
securities for public sale under the Securities Act, or under applicable state
securities laws, even if such Issuer would agree to do so.
(c) Such Pledgor agrees to use its reasonable best efforts to do or
cause to be done all such other acts as may be necessary to make such sale or
sales of all or any portion of
<PAGE>
28
such Pledged Stock pursuant to this Section 6.7 valid and binding and in
compliance with any and all other applicable Requirements of Law. Such Pledgor
further agrees that a breach of any of the covenants contained in this Section
6.7 will cause irreparable injury to the Administrative Agent and the Lenders,
that the Administrative Agent and the Lenders have no adequate remedy at law in
respect of such breach and, as a consequence, that each and every covenant
contained in this Section 6.7 shall be specifically enforceable against such
Pledgor, and to the extent permitted by applicable law, such Pledgor hereby
waives and agrees not to assert any defenses against an action for specific
performance of such covenants except for a defense that no Event of Default has
occurred or is continuing under the Credit Agreement.
6.8 Waiver; Deficiency. Each Granting Party (other than the
------------------
Borrower) waives and agrees not to assert any rights or privileges that it may
acquire under Section 9-112 of the Code, to the extent permitted by applicable
law. Each Granting Party shall remain liable for any deficiency if the proceeds
of any sale or other disposition of the Security Collateral are insufficient to
pay in full, the Loans, Reimbursement Obligations (including, without
limitation, any L/C Obligations which subsequently become Reimbursement
Obligations) and, to the extent then due and owing, all other Obligations of
such Granting Party and the reasonable fees and disbursements of any attorneys
employed by the Administrative Agent or any other Secured Party to collect such
deficiency.
SECTION 7. THE ADMINISTRATIVE AGENT
7.1 Administrative Agent's Appointment as Attorney-in-Fact, etc. (a)
------------------------------------------------------------
Each Granting Party hereby irrevocably constitutes and appoints the
Administrative Agent and any authorized officer or agent thereof, with full
power of substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of such Granting Party
and in the name of such Granting Party or in its own name, for the purpose of
carrying out the terms of this Agreement, to take any and all appropriate action
and to execute any and all documents and instruments that may be reasonably
necessary or desirable to accomplish the purposes of this Agreement to the
extent permitted by applicable law, provided that the Administrative Agent
agrees not to exercise such power except upon the occurrence and during the
continuance of an Event of Default. Without limiting the generality of the
foregoing, at any time when an Event of Default has occurred and is
continuing (in each case to the extent permitted by applicable law), (x) each
Pledgor hereby gives the Administrative Agent the power and right, on behalf of
such Pledgor, without notice or assent by such Pledgor, to execute, in
connection with any sale provided for in Section 6.6 or 6.7, any indorsements,
assessments or other instruments of conveyance or transfer with respect to such
Pledgor's Pledged Collateral, and (y) each Grantor hereby gives the
Administrative Agent the power and right, on behalf of such Grantor, without
notice to or assent by such Grantor, to do any or all of the following:
(i) in the name of such Grantor or its own name, or otherwise, take
possession of and indorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
Account of such Grantor that constitutes Collateral or with respect to any
other Collateral of such Grantor and file any claim or take any other
action or institute any proceeding in any court of law or equity or
otherwise deemed
<PAGE>
29
appropriate by the Administrative Agent for the purpose of collecting any
and all such moneys due under any Account of such Grantor that constitutes
Collateral or with respect to any other Collateral of such Grantor whenever
payable;
(ii) in the case of any Copyright, Patent or Trademark constituting
Collateral of such Grantor, execute and deliver any and all agreements,
instruments, documents and papers as the Administrative Agent may
reasonably request to such Grantor to evidence the Administrative Agent's
and the Lenders' security interest in such Copyright, Patent or Trademark
and the goodwill and general intangibles of such Grantor relating thereto
or represented thereby;
(iii) pay or discharge taxes and Liens, other than Liens permitted
under this Agreement or the other Credit Documents, levied or placed on the
Collateral of such Grantor, effect any repairs or any insurance called for
by the terms of this Agreement and pay all or any part of the premiums
therefor and the costs thereof; and
(iv) (i) direct any party liable for any payment under any of the
Collateral of such Grantor to make payment of any and all moneys due or to
become due thereunder directly to the Administrative Agent or as the
Administrative Agent shall direct; (ii) ask or demand for, collect, receive
payment of and receipt for, any and all moneys, claims and other amounts
due or to become due at any time in respect of or arising out of any
Collateral of such Grantor; (iii) sign and indorse any invoices, freight or
express bills, bills of lading, storage or warehouse receipts, drafts
against debtors, assignments, verifications, notices and other documents in
connection with any of the Collateral of such Grantor; (iv) commence and
prosecute any suits, actions or proceedings at law or in equity in any
court of competent jurisdiction to collect the Collateral of such Grantor
or any portion thereof and to enforce any other right in respect of any
Collateral of such Grantor; (v) defend any suit, action or proceeding
brought against such Grantor with respect to any Collateral of such
Grantor; (vi) settle, compromise or adjust any such suit, action or
proceeding described in clause (v) above and, in connection therewith, to
give such discharges or releases as the Administrative Agent may deem
appropriate; (vii) subject to any existing reserved rights or licenses,
assign any Copyright, Patent or Trademark constituting Collateral of such
Grantor (along with the goodwill of the business to which any such
Copyright, Patent or Trademark pertains), for such term or terms, on such
conditions, and in such manner, as the Administrative Agent shall in its
sole discretion determine; and (viii) generally, sell, transfer, pledge and
make any agreement with respect to or otherwise deal with any of the
Collateral of such Grantor as fully and completely as though the
Administrative Agent were the absolute owner thereof for all purposes, and
do, at the Administrative Agent's option and such Grantor's expense, at any
time, or from time to time, all acts and things which the Administrative
Agent deems necessary to protect, preserve or realize upon the Collateral
of such Grantor and the Administrative Agent's and the other Secured
Parties' security interests therein and to effect the intent of this
Agreement, all as fully and effectively as such Grantor might do.
<PAGE>
30
Anything in this Section 7.1(a) to the contrary notwithstanding, the
Administrative Agent agrees that it will not exercise any rights under the power
of attorney provided for in this Section 7.1(a) unless an Event of Default shall
have occurred and be continuing.
(b) The reasonable expenses of the Administrative Agent incurred in
connection with actions undertaken as provided in this Section 7.1, together
with interest thereon at a rate per annum equal to the rate per annum at which
interest would then be payable on past due ABR Loans that are Term Loans under
the Credit Agreement, from the date of payment by the Administrative Agent to
the date reimbursed by the relevant Granting Party, shall be payable by such
Granting Party to the Administrative Agent on demand.
(c) Each Granting Party hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue hereof. All powers, authorizations
and agencies contained in this Agreement are coupled with an interest and are
irrevocable as to the relevant Granting Party until this Agreement is terminated
as to such Granting Party, and the security interests in the Security Collateral
of such Granting Party created hereby are released.
7.2 Duty of Administrative Agent. The Administrative Agent's sole
----------------------------
duty with respect to the custody, safekeeping and physical preservation of the
Security Collateral in its possession, under Section 9-207 of the Code or
otherwise, shall be to deal with it in the same manner as the Administrative
Agent deals with similar property for its own account. Neither the
Administrative Agent, any other Secured Party nor any of their respective
officers, directors, employees or agents shall be liable for failure to demand,
collect or realize upon any of the Security Collateral or for any delay in doing
so or shall be under any obligation to sell or otherwise dispose of any Security
Collateral upon the request of any Granting Party or any other Person or, except
as otherwise provided herein, to take any other action whatsoever with regard to
the Security Collateral or any part thereof. The powers conferred on the
Administrative Agent and the other Secured Parties hereunder are solely to
protect the Administrative Agent's and the other Secured Parties' interests in
the Security Collateral and shall not impose any duty upon the Administrative
Agent or any other Secured Party to exercise any such powers. The
Administrative Agent and the other Secured Parties shall be accountable only for
amounts that they actually receive as a result of the exercise of such powers,
and neither they nor any of their officers, directors, employees or agents shall
be responsible to any Granting Party for any act or failure to act hereunder,
except as otherwise provided herein or for their own gross negligence or willful
misconduct.
7.3 Execution of Financing Statements. Pursuant to Section 9-402 of
---------------------------------
the Code and any other applicable law, each Granting Party authorizes the
Administrative Agent to file or record financing statements with respect to such
Granting Party's Security Collateral without the signature of such Granting
Party in such form and in such filing offices as the Administrative Agent
reasonably determines appropriate to perfect the security interests of the
Administrative Agent under this Agreement. A photographic or other reproduction
of this Agreement shall be sufficient as a financing statement in any
jurisdiction. The Administrative Agent agrees to notify the Grantor of any
financing or continuation statement filed by it pursuant to this Section 7.4,
provided that any failure to give such notice shall not affect the validity or
- --------
effectiveness of any such filing.
<PAGE>
31
7.4 Authority of Administrative Agent. Each Granting Party
---------------------------------
acknowledges that the rights and responsibilities of the Administrative Agent
under this Agreement with respect to any action taken by the Administrative
Agent or the exercise or non-exercise by the Administrative Agent of any option,
voting right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Agreement or any amendment, supplement or other
modification of this Agreement shall, as between the Administrative Agent and
the Secured Parties, be governed by the Credit Agreement and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the Administrative Agent and the Granting Parties the Administrative
Agent shall be conclusively presumed to be acting as agent for the Secured
Parties with full and valid authority so to act or refrain from acting, and no
Granting Party shall be under any obligation, or entitlement, to make any
inquiry respecting such authority.
7.5 Right Of Inspection. Upon reasonable written advance notice to
-------------------
any Grantor and as often as may reasonably be desired, the Administrative Agent
shall have reasonable access during normal business hours to all the books,
correspondence and records of such Granting Party, and the Administrative Agent
and its representatives may examine the same, and to the extent reasonable, take
extracts therefrom and make photocopies thereof, and such Granting Party agrees
to render to the Administrative Agent, at such Granting Party's reasonable cost
and expense, such clerical and other assistance as may be reasonably requested
with regard thereto. The Administrative Agent and its representatives shall
also have the right, upon reasonable advance written notice to such Granting
Party subject to any lease restrictions to enter during normal business hours
into and upon any premises owned, leased or operated by such Granting Party
where any of such Granting Party's Inventory or Equipment is located for the
purpose of inspecting the same, observing its use or otherwise protecting its
interests therein.
SECTION 8. MISCELLANEOUS
8.1 Amendments in Writing. None of the terms or provisions of this
---------------------
Agreement may be waived, amended, supplemented or otherwise modified except by a
written instrument executed by each affected Granting Party and the
Administrative Agent, provided that any provision of this Agreement imposing
--------
obligations on any Granting Party may be waived by the Administrative Agent in a
written instrument executed by the Administrative Agent.
8.2 Notices. All notices, requests and demands to or upon the
-------
Administrative Agent or any Granting Party hereunder shall be effected in the
manner provided for in subsection 18.2 of the Credit Agreement; provided that
--------
any such notice, request or demand to or upon any Guarantor shall be addressed
to such Guarantor at its notice address set forth on Schedule 1, unless and
----------
until such Guarantor shall change such address by notice to the Administrative
Agent given in accordance with subsection 18.2 of the Credit Agreement.
8.3 No Waiver by Course of Conduct; Cumulative Remedies. Neither the
---------------------------------------------------
Administrative Agent nor any other Secured Party shall by any act (except by a
written instrument pursuant to Section 8.1), delay, indulgence, omission or
otherwise be deemed to have waived any right or remedy hereunder or to have
acquiesced in any Default or Event of Default.
<PAGE>
32
No failure to exercise, nor any delay in exercising, on the part of the
Administrative Agent or any other Secured Party, any right, power or privilege
hereunder shall operate as a waiver thereof. No single or partial exercise of
any right, power or privilege hereunder shall preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. A
waiver by the Administrative Agent or any other Secured Party of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Administrative Agent or such other Secured Party would
otherwise have on any future occasion. The rights and remedies herein provided
are cumulative, may be exercised singly or concurrently and are not exclusive of
any other rights or remedies provided by law.
8.4 Enforcement Expenses; Indemnification. (a) Each Guarantor
-------------------------------------
agrees to pay or reimburse each Secured Party and the Administrative Agent for
all their respective reasonable costs and expenses incurred in collecting
against such Guarantor under the guarantee contained in Section 2 or otherwise
enforcing or preserving any rights under this Agreement against such Guarantor
and the other Credit Documents to which such Guarantor is a party, including,
without limitation, the reasonable fees and disbursements of one firm of counsel
to the Secured Parties and the Administrative Agent.
(b) Each Guarantor agrees to pay, and to save the Administrative
Agent and the Secured Parties harmless from, (x) any and all liabilities with
respect to, or resulting from any delay in paying, any and all stamp, excise,
sales or other similar taxes which may be payable or determined to be payable
with respect to any of the Security Collateral or in connection with any of the
transactions contemplated by this Agreement and (y) any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of this
Agreement (collectively, the "indemnified liabilities"), in each case to the
-----------------------
extent the Borrower would be required to do so pursuant to subsection 18.5 of
the Credit Agreement, and in any event excluding any taxes or other indemnified
liabilities arising from gross negligence or willful misconduct of the
Administrative Agent or any Secured Party.
(c) The agreements in this Section 8.4 shall survive repayment of the
Obligations and all other amounts payable under the Credit Agreement and the
other Credit Documents.
8.5 Successors and Assigns. This Agreement shall be binding upon and
----------------------
shall inure to the benefit of the Granting Parties, the Administrative Agent and
the Secured Parties and their respective successors and assigns; provided that
--------
no Granting Party may assign, transfer or delegate any of its rights or
obligations under this Agreement without the prior written consent of the
Administrative Agent.
8.6 Set-Off. Each Guarantor hereby irrevocably authorizes the
-------
Administrative Agent and each other Secured Party at any time and from time to
time without notice to such Guarantor, any other Guarantor or the Borrower, any
such notice being expressly waived by each Guarantor and by the Borrower, to the
extent permitted by applicable law, upon the occurrence and during the
continuance of an Event of Default under subsection 16.2(a) or 16.3(a) of the
Credit Agreement so long as any amount remains unpaid after it becomes due and
payable by such Guarantor hereunder, to set-off and appropriate and apply
against any such amount any and
<PAGE>
33
all deposits (general or special, time or demand, provisional or final) (other
than the Collateral Proceeds Account and the General Fund Account), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by the Administrative Agent or such other
Secured Party to or for the credit or the account of such Guarantor, or any part
thereof in such amounts as the Administrative Agent or such other Secured Party
may elect. The Administrative Agent and each other Secured Party shall notify
such Guarantor promptly of any such set-off and the application made by the
Administrative Agent or such other Secured Party of the proceeds thereof;
provided that the failure to give such notice shall not affect the validity of
- --------
such set-off and application. The rights of the Administrative Agent and each
other Secured Party under this Section 8.6 are in addition to other rights and
remedies (including, without limitation, other rights of set-off) which the
Administrative Agent or such other Secured Party may have.
8.7 Counterparts. This Agreement may be executed by one or more of
------------
the parties to this Agreement on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument.
8.8 Severability. Any provision of this Agreement which is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction; provided that, with
--------
respect to any Pledged Stock issued by a Foreign Subsidiary, all rights, powers
and remedies provided in this Agreement may be exercised only to the extent that
they do not violate any provision of any law, rule or regulation of any
Governmental Authority applicable to any such Pledged Stock or affecting the
legality, validity or enforceability of any of the provisions of this Agreement
against the Pledgor (such laws, rules or regulations, "Applicable Law") and are
--------------
intended to be limited to extent necessary so that they will not render this
Agreement invalid, unenforceable or not entitled to be recorded, registered or
filed under the provisions of any Applicable Law.
8.9 Section Headings. The Section headings used in this Agreement
----------------
are for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof.
8.10 Integration. This Agreement and the other Credit Documents
-----------
represent the entire agreement of the Granting Parties, the Administrative Agent
and the other Secured Parties with respect to the subject matter hereof, and
there are no promises, undertakings, representations or warranties by the
Granting Parties, the Administrative Agent or any other Secured Party relative
to subject matter hereof not expressly set forth or referred to herein or in the
other Credit Documents.
<PAGE>
34
8.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
-------------
THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ITS
PRINCIPLES OR RULES OF CONFLICT OF LAWS TO THE EXTENT SUCH PRINCIPLES OR RULES
WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
8.12 Submission To Jurisdiction; Waivers. Each party hereto hereby
-----------------------------------
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Credit Documents to
which it is a party, or for recognition and enforcement of any judgement in
respect thereof, to the non-exclusive general jurisdiction of the courts of
the State of New York, the courts of the United States of America for the
Southern District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to such party
at its address referred to in Section 8.2 or at such other address of which
the Administrative Agent (in the case of any other party hereto) or the
Borrower (in the case of the Administrative Agent) shall have been notified
pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to
in this Section any punitive damages.
8.13 Acknowledgements. Each Guarantor hereby acknowledges that:
----------------
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Credit Documents to which it is a
party;
(b) neither the Administrative Agent nor any other Secured Party has
any fiduciary relationship with or duty to any Guarantor arising out of or
in connection with this Agreement or any of the other Credit Documents, and
the relationship between the Guarantors, on the one hand, and the
Administrative Agent and the Secured Parties, on
<PAGE>
35
the other hand, in connection herewith or therewith is solely that of
debtor and creditor; and
(c) no joint venture is created hereby or by the other Credit
Documents or otherwise exists by virtue of the transactions contemplated
hereby among the Secured Parties or among the Guarantors and the Secured
Parties.
8.14 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY AND
--------------------
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
8.15 Additional Granting Parties. Each new Domestic Subsidiary of
---------------------------
the Borrower that is required to become a party to this Agreement pursuant to
subsection 12.10(b) of the Credit Agreement shall become a Granting Party for
all purposes of this Agreement upon execution and delivery by such Subsidiary of
an Assumption Agreement in the form of Annex 1 hereto. Each existing Granting
Party that is required to become a Pledgor with respect to Capital Stock of any
new Subsidiary of the Borrower pursuant to Section 12.10(b) of the Credit
Agreement shall become a Pledgor with respect thereto upon execution and
delivery by such Granting Party of a Supplemental Agreement in the form of Annex
2 hereto.
8.16 Releases. (a) At such time as the Loans, the Reimbursement
--------
Obligations and the other Obligations then due and owing shall have been paid in
full, the Commitments have been terminated and no Letters of Credit shall be
outstanding, all Security Collateral shall be released from the Liens created
hereby, and this Agreement and all obligations (other than those expressly
stated to survive such termination) of the Administrative Agent and each
Granting Party hereunder shall terminate, all without delivery of any instrument
or performance of any act by any party, and all rights to the Security
Collateral shall revert to the Granting Parties. At the request and sole
expense of any Granting Party following any such termination, the Administrative
Agent shall deliver to such Granting Party any Security Collateral held by the
Administrative Agent hereunder, and execute and deliver to such Granting Party
such documents (including without limitation UCC termination statements) as such
Granting Party shall reasonably request to evidence such termination.
(b) In connection with any sale or other disposition of Security
Collateral permitted by the Credit Agreement, the Lien pursuant to this
Agreement on such sold or disposed of Security Collateral shall be automatically
released. In connection with the sale or other disposition of all of the
Capital Stock of any Guarantor or the sale or other disposition of Security
Collateral permitted under the Credit Agreement and the release of such
Guarantor from its Guarantee or the release of the Security Collateral subject
to such sale or other disposition, the Administrative Agent shall upon receipt
from the Borrower of a written request for release identifying such Guarantor or
the relevant Security Collateral and the terms of the sale or other disposition
in reasonable detail, including the price thereof and any expenses in connection
therewith, together with a certification by the Borrower stating that such
transaction is in compliance with the Credit Agreement and the other Credit
Documents, execute and deliver to the relevant Granting Party (at the sole cost
and expense of such Granting Party) all releases or
<PAGE>
36
other documents (including without limitation UCC termination statements)
necessary or reasonably desirable for the release of such Guarantee or the Liens
created hereby on such Security Collateral, as applicable, as such Granting
Party may reasonably request.
<PAGE>
37
IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee
and Collateral Agreement to be duly executed and delivered as of the date first
above written.
DYNATECH CORPORATION
By: ____________________________
Name:
Title
TELECOMMUNICATIONS TECHNIQUES CO., LLC
By: Dynatech Corporation, its sole member
By: ____________________________
Name:
Title
AIRSHOW, INC.
By: ____________________________
Name:
Title
COMCOTEC, INC.
By: ____________________________
Name:
Title
DATAVIEWS CORPORATION
By: ____________________________
Name:
Title
<PAGE>
38
DA VINCI SYSTEMS, INC.
By: ____________________________
Name:
Title
INDUSTRIAL COMPUTER SOURCE
By: ____________________________
Name:
Title
ITRONIX CORPORATION
By: ____________________________
Name:
Title
PARALLAX GRAPHICS, INC.
By: ____________________________
Name:
Title
SYNERGISTIC SOLUTIONS, INC.
By: ____________________________
Name:
Title
TELE-PATH INSTRUMENTS, INC.
By: ____________________________
Name:
Title
<PAGE>
39
Acknowledged and Agreed to as
of the date hereof by:
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Administrative Agent
By: _______________________________
Name:
Title:
<PAGE>
ITRONIX CORPORATION
By: ____________________________
Name:
Title
<PAGE>
Schedule 1
----------
NOTICE ADDRESSES OF GUARANTORS
[Names of Subsidiaries]
[Address]
Attention:
Telephone:
Telecopy:
With copies to:
Attention:
Telephone:
Telecopy:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: David A. Brittenham, Esq.
Telephone: (212) 909-6000
Telecopy: (212) 909-6836
<PAGE>
Schedule 2
----------
DESCRIPTION OF PLEDGED SECURITIES
PLEDGED STOCK:
<PAGE>
Schedule 3
----------
LOCATION OF JURISDICTION OF
ORGANIZATION AND CHIEF EXECUTIVE
OFFICE OR SOLE PLACE OF BUSINESS
Granting Party Location
-------------- --------
<PAGE>
Schedule 4
----------
LOCATION OF INVENTORY AND EQUIPMENT
Granting Party Location
-------------- --------
<PAGE>
Schedule 5
----------
PATENTS AND PATENT LICENSES
TRADEMARKS AND TRADEMARK LICENSES
<PAGE>
Schedule 6
----------
EXISTING PRIOR LIENS
<PAGE>
Schedule 7
----------
ACCOUNTS
<PAGE>
Schedule 8
----------
CONTRACTS
<PAGE>
Annex 1 to
Guarantee and Collateral Agreement
----------------------------------
ASSUMPTION AGREEMENT, dated as of _________ __, ____, made by
______________________________, a ______________ corporation (the "Additional
----------
Granting Party"), in favor of MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as
- --------------
administrative agent (in such capacity, the "Administrative Agent") for the
--------------------
banks and other financial institutions (the "Lenders") from time to time parties
-------
to the Credit Agreement referred to below and the other Secured Parties (as
defined below). All capitalized terms not defined herein shall have the meaning
ascribed to them in such the Guarantee and Collateral Agreement referred to
below, or if not defined therein, in the Credit Agreement.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Dynatech Corporation, a Massachusetts corporation
("Dynatech"), Telecommunications Techniques Co., LLC, a Delaware limited
--------
liability company (the "Borrower"), the Lenders and the Administrative Agent are
--------
parties to a Credit Agreement, dated as of May 21, 1998 (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement");
----------------
WHEREAS, in connection with the Credit Agreement, Dynatech, the
Borrower and certain of its Subsidiaries are, or are to become, parties to the
Guarantee and Collateral Agreement, dated as of May 21, 1998 (as amended,
supplemented or otherwise modified from time to time, the "Guarantee and
-------------
Collateral Agreement") in favor of the Administrative Agent, for the ratable
- --------------------
benefit of the Secured Parties (as defined in the Guarantee and Collateral
Agreement);
WHEREAS, the Additional Grantor is a member of an affiliated group of
companies that includes the Borrower and each other Granting Party to the
Guarantee and Collateral Agreement; the proceeds of the extensions of credit
under the Credit Agreement will be used in part to enable the Borrower to make
valuable transfers to one or more of the other Granting Parties (including the
Additional Grantor) in connection with the operation of their respective
businesses; and the Borrower and the other Granting Parties (including the
Additional Grantor) are engaged in related businesses, and each such Granting
Party (including the Additional Grantor) will derive substantial direct and
indirect benefit from the making of the extensions of credit under the Credit
Agreement;
WHEREAS, the Credit Agreement requires the Additional Granting Party
to become a party to the Guarantee and Collateral Agreement; and
WHEREAS, the Additional Granting Party has agreed to execute and
deliver this Assumption Agreement in order to become a party to the Guarantee
and Collateral Agreement;
NOW, THEREFORE, IT IS AGREED:
<PAGE>
2
1. Guarantee and Collateral Agreement. By executing and delivering
----------------------------------
this Assumption Agreement, the Additional Granting Party, as provided in Section
8.15 of the Guarantee and Collateral Agreement, hereby becomes a party to the
Guarantee and Collateral Agreement as a Granting Party thereunder with the same
force and effect as if originally named therein as a Guarantor [, Grantor and
Pledgor] [and Grantor] [and Pledgor]/1/ and, without limiting the generality of
the foregoing, hereby expressly assumes all obligations and liabilities of a
Guarantor [, Grantor and Pledgor] [and Grantor] [and Pledgor]/2/ thereunder.
The information set forth in Annex 1-A hereto is hereby added to the information
set forth in Schedules ____________ to the Guarantee and Collateral Agreement,
and such Schedules are hereby amended and modified to include such information.
The Additional Granting Party hereby represents and warrants that each of the
representations and warranties of such Additional Grantor, in its capacities as
a Guarantor [, Grantor and Pledgor] [and Grantor] [and Pledgor]/3/, contained in
Section 4 of the Guarantee and Collateral Agreement is true and correct in all
material respects on and as the date hereof (after giving effect to this
Assumption Agreement) as if made on and as of such date.
2. GOVERNING LAW. THIS ASSUMPTION AGREEMENT AND THE RIGHTS AND
-------------
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO ITS PRINCIPLES OR RULES OF CONFLICT OF LAWS TO THE EXTENT SUCH
PRINCIPLES OR RULES WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION.
IN WITNESS WHEREOF, the undersigned has caused this Assumption
Agreement to be duly executed and delivered as of the date first above written.
[ADDITIONAL GRANTING PARTY]
By: _______________________________
Name:
Title:
- -------------
1. Indicate the capacities in which the Additional Grantor is becoming a
Granting Party.
2. Indicate the capacities in which the Additional Grantor is becoming a
Granting Party.
3. Indicate the capacities in which the Additional Grantor is becoming a
Granting Party.
<PAGE>
3
Acknowledged and Agreed to as
of the date hereof by:
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Administrative Agent
By: _______________________________
Name:
Title:
<PAGE>
Annex 1-A to
Assumption Agreement
--------------------
<PAGE>
Annex 2 to
Guarantee and Collateral Agreement
----------------------------------
SUPPLEMENTAL AGREEMENT, dated as of __________ __, ____, made by
_____________________, a ___________ corporation [(the "Additional
----------
Pledgor")][(the "Borrower")]/1/, in favor of MORGAN GUARANTY TRUST COMPANY OF
--------
NEW YORK, as administrative agent (in such capacity, the "Administrative Agent")
--------------------
for the banks and other financial institutions (the "Lenders") from time to time
-------
parties to the Credit Agreement referred to below and the other Secured Parties
(as defined below). All capitalized terms not defined herein shall have the
meaning ascribed to them in the Guarantee and Collateral Agreement referred to
below, or if not defined therein, in the Credit Agreement.
W I T N E S S E T H:
-------------------
WHEREAS, Telecommunications Techniques Co., LLC, a Delaware limited
liability company and successor by assumption to Dynatech Corporation
("Dynatech") and TTC Merger Co. LLC (the "Borrower")][the Borrower]/2/, the
--------
Lenders and the Administrative Agent are parties to a Credit Agreement, dated as
of May 21, 1998 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement");
----------------
WHEREAS, in connection with the Credit Agreement, Dynatech, the
Borrower and certain of its Subsidiaries are parties to the Guarantee and
Collateral Agreement, dated as of May 21, 1998 (as amended, supplemented or
otherwise modified from time to time, the "Guarantee and Collateral Agreement")
----------------------------------
in favor of the Administrative Agent, for the ratable benefit of the Secured
Parties (as defined in the Guarantee and Collateral Agreement);
WHEREAS, the Credit Agreement requires the [Additional
Pledgor][Borrower] to become a Pledgor under the Guarantee and Collateral
Agreement with respect to Capital Stock of a new Subsidiary of the Borrower; and
WHEREAS, the [Additional Pledgor][Borrower] has agreed to execute and
deliver this Supplemental Agreement in order to [supplement/become such a
Pledgor to] the Guarantee and Collateral Agreement;
NOW, THEREFORE, IT IS AGREED:
1. Guarantee and Collateral Agreement. By executing and delivering
----------------------------------
this Supplemental Agreement, the [Additional Pledgor][Borrower], as provided in
Section 8.15 of the Guarantee and Collateral Agreement, hereby becomes a Pledgor
under the Guarantee and
- -------------
1. Use "Additional Pledgor" if other than the Borrower, and "Borrower" if the
Borrower.
2. Use the former if the Additional Pledgor, and the latter if the Borrower.
<PAGE>
2
Collateral Agreement with respect to the shares of Capital Stock of the
Subsidiary of the Borrower listed in Annex 2-A hereto, as a Granting Party
thereunder. The information set forth in Annex 2-A hereto is hereby added to
the information set forth in Schedule 2 to the Guarantee and Collateral
Agreement, and such Schedule 2 is hereby amended and modified to include such
information.
2. GOVERNING LAW. THIS SUPPLEMENTAL AGREEMENT AND RIGHTS AND
-------------
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO ITS PRINCIPLES OR RULES OF CONFLICT OF LAWS TO THE EXTENT SUCH
PRINCIPLES OR RULES WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION.
<PAGE>
3
IN WITNESS WHEREOF, the undersigned has caused this Assumption
Agreement to be duly executed and delivered as of the date first above written.
[ADDITIONAL
PLEDGOR] [BORROWER]
By: _______________________________
Name:
Title:
Acknowledged and Agreed to as
of the date hereof by:
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Administrative Agent
By: _______________________________
Name:
Title:
<PAGE>
EXHIBIT 10.14
CONFORMED COPY
--------------
INDEMNIFICATION AGREEMENT
-------------------------
INDEMNIFICATION AGREEMENT, dated as of May 21, 1998 (the
"Agreement"), by and between Dynatech Corporation, a Massachusetts corporation
---------
(the "Company"), Telecommunications Techniques Co., LLC, a Delaware limited
-------
liability company and a wholly-owned subsidiary of the Company ("TTC"), Clayton,
---
Dubilier & Rice, Inc., a Delaware corporation ("CD&R"), and Clayton, Dubilier &
----
Rice Fund V Limited Partnership, a Cayman Islands exempted limited partnership
(together with any other investment vehicle managed by CD&R, the "CD&R Fund").
---------
Capitalized terms used herein and not otherwise defined have the meanings set
forth in Section 1 of this Agreement.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the CD&R Fund is managed by CD&R, and the general partner of
the CD&R Fund is Clayton, Dubilier & Rice Associates V Limited Partnership, a
Cayman Islands exempted limited partnership (together with any general partner
of any other investment vehicle managed by CD&R, "CD&R Associates"), and the
---------------
general partner of CD&R Associates is CD&R Investment Associates, Inc., a
Delaware corporation (together with any other general partner of CD&R
Associates, "Associates Inc.");
---------------
WHEREAS, CD&R organized CDRD Merger Corporation, a Delaware
corporation ("MergerCo") to effect the recapitalization of the Company and CD&R
--------
performed financial, management advisory and other services for the Company and
MergerCo in connection therewith, including but not limited to participation in
connection with the preparation, negotiation, execution and delivery of the
Agreement and Plan of Merger, dated as of December 20, 1997 (the "Merger
------
Agreement"), by and between the Company and MergerCo and the consummation of the
- ---------
transaction contemplated thereby;
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Company is entering into a Consulting Agreement, dated as of the
date hereof (the "Consulting Agreement"), by and between the Company and CD&R;
--------------------
WHEREAS, pursuant to the Merger Agreement, MergerCo has merged with
and into the Company (the "Merger") on the date hereof, and the Company, as the
------
surviving corporation in the Merger, thereupon succeeded to all of the rights
and obligations of MergerCo;
<PAGE>
WHEREAS, by operation of the Merger, each share of common stock of the
Company issued and outstanding immediately prior to the closing thereof, other
than shares held by the Company as treasury stock, was converted into the right
to receive $47.75 in cash and 0.5 shares of Recapitalized Common Stock (as
defined in the Merger Agreement);
WHEREAS, as contemplated by the Merger Agreement, certain employees of
the Company and its Subsidiaries have retained some or all of their options to
purchase common stock of the Company (the "Management Rollover");
-------------------
WHEREAS, in connection with the offer (the "Exchange Offer") by the
--------------
Company of the Recapitalized Common Stock to the stockholders of the Company and
the solicitation by the Company of proxies of its respective stockholders to
vote in favor of the Merger, (a) the Company prepared and filed with the
-
Securities and Exchange Commission (the "Commission") a registration statement
----------
on Form S-4 (the "S-4") and (b) the Company, MergerCo, the CD&R Fund and certain
--- -
other persons prepared and filed with the Commission a Transaction Statement on
Schedule 13E-3 (the "13E-3");
-----
WHEREAS, prior to the closing of the Merger, the Company effected a
restructuring of its Subsidiaries pursuant to which TTC was converted into a
Delaware limited liability company and the shares of common stock of the
Company's direct subsidiaries were transferred to TTC (the "Restructuring");
-------------
WHEREAS, in order to finance the Merger and related transactions, the
Company and TTC Merger Co., LLC, a Delaware limited liability company and a
wholly-owned subsidiary of the Company ("TTC MergerCo"), entered into a Credit
------------
Agreement, dated as of May 21, 1998, among the Company, TTC MergerCo, the
lenders named therein and J.P. Morgan Securities Inc. and Credit Suisse First
Boston as arrangers, providing for borrowing of up to a maximum principal amount
of $370 million (the "Senior Secured Credit Facilities");
--------------------------------
WHEREAS, in order further to finance the Merger and related
transactions, the Company and TTC MergerCo offered and sold (the "Note
----
Offering"), in an offering to institutional investors pursuant to Rule 144A
under the Securities Act of 1933, as amended (the "Securities Act"),
--------------
$275,000,000 aggregate principal of 9.75% Senior Subordinated Notes due 2008
(the "Senior Subordinated Notes");
-------------------------
WHEREAS, TTC MergerCo merged with and into TTC on the date hereof and
TTC, as the surviving company, thereupon succeeded to, inter alia, the
----- ----
obligations of TTC MergerCo with respect to the Senior Secured Credit Facilities
and the Senior Subordinated Notes;
2
<PAGE>
WHEREAS, the Company has been released as a primary obligor with
respect to the Senior Secured Credit Facilities and the Senior Subordinated
Notes;
WHEREAS, CD&R has performed financial, management advisory and other
services for the Company, including but not limited to providing assistance in
connection with, (i) the preparation, negotiation, execution and delivery of the
-
Merger Agreement, (ii) the preparation, filing and circulation of the S-4, the
--
13E-3 and related materials to the stockholders of the Company in connection
with the Merger, (iii) the retention of legal, accounting, environmental,
---
insurance, investment banking, financial and other advisors and consultants in
connection with the Merger and (iv) the preparation, negotiation, execution and
--
delivery of the commitment, fee and engagement letters, registration rights and
purchase agreements, credit agreements, indentures and indenture supplements,
guarantees, mortgages, pledge agreements and other security agreements,
subscription, registration rights and participation agreements, exchange agent
agreements, and other agreements, instruments and documents, relating to the
Senior Secured Financing, Note Offering, or otherwise relating to the Financing
or the other Transactions, (v) the preparation and circulation of information
-
and offering memoranda and other materials in connection with the Senior Secured
Financing and the Note Offering and (vi) the structuring, implementation and
--
consummation of the Merger (such services collectively, the "Merger Services");
---------------
WHEREAS, it is contemplated that TTC will offer (the "Note Exchange
-------------
Offer") to exchange the Senior Subordinated Notes for substantially identical
- -----
notes to be registered on Form S-4;
WHEREAS, the Company or one or more of its respective Subsidiaries
from time to time in the future (a) may offer and sell or cause to be offered
-
and sold equity or debt securities (such offerings, together with the Note
Exchange Offer, being collectively referred to as the "Subsequent Offerings"),
--------------------
including without limitation (i) offerings of shares of common stock of the
-
Company, and/or options to purchase such shares to employees, directors,
managers and consultants of and to the Company or any Subsidiary (a "Management
----------
Offering"), and (ii) one or more offerings of debt securities for the purpose of
- -------- --
refinancing any indebtedness of the Company or any Subsidiary or for other
corporate purposes, and (b) may repurchase, redeem or otherwise acquire certain
-
securities of the Company or one or more of its Subsidiaries (any such
repurchase or redemption being re ferred to herein as a "Redemption");
----------
WHEREAS, immediately following the Merger, the CD&R Fund will be the
largest stockholder of the Company;
3
<PAGE>
WHEREAS, the parties hereto recognize the possibility that claims
might be made against and liabilities incurred by CD&R, the CD&R Fund, CD&R
Associates, Associates Inc. or related persons or affiliates under applicable
securities laws or otherwise in connection with the Transactions or the
Securities Offerings, or relating to other actions or omissions of or by
MergerCo, the Company or its respective Subsidiaries, or relating to the
provision by CD&R of management consulting, monitoring and financial advisory
ser vices to MergerCo, the Company and its respective Subsidiaries, and the
parties hereto accordingly wish to provide for CD&R, the CD&R Fund, CD&R
Associates, Associates Inc. and related persons and affiliates to be indemnified
in respect of any such claims and liabilities; and
WHEREAS, the parties hereto recognize that claims might be made
against and liabilities incurred by directors and officers of MergerCo, the
Company and any Subsidiary in connection with their acting in such capacity, and
accordingly wish to provide for such directors and officers to be indemnified to
the fullest extent permitted by law in respect of any such claims and
liabilities;
NOW, THEREFORE, in consideration of the foregoing premises, and the
mutual agreements and covenants and provisions herein set forth, the parties
hereto hereby agree as follows:
1. Definitions.
-----------
(a) "Claim" means, with respect to any Indemnitee, any claim against
-----
such Indemnitee involving any Obligation with respect to which such Indemnitee
may be entitled to be defended and indemnified by the Company or TTC under this
Agreement.
(b) "Consulting Agreement" means the Consulting Agreement, dated as of
--------------------
the date hereof, by and among the Company, TTC and CD&R, as the same may be
amended, waived, modified or supplemented from time to time.
(c) "Financing" means the financing provided for by the Senior Secured
---------
Credit Facilities and the Senior Subordinated Notes.
(d) "Indemnitee" means each of CD&R, the CD&R Fund, CD&R Associates,
----------
Associates Inc., CD&R Investment Associates II, Inc. ("Associates II"), their
-------------
respective, affiliates, successors and assigns, and their respective directors,
officers, partners, employees, agents, advisors, representatives and controlling
persons (within the meaning of the Securities Act of 1933), each other person
who is or becomes a director or an officer of the Company or any Subsidiary and
each other person who is or becomes an officer of the communications test
division of TTC.
4
<PAGE>
(e) "Obligations" means, collectively, any and all claims,
-----------
obligations, liabilities, causes of actions, actions, suits, proceedings,
investigations, judgments, decrees, losses, damages, fees, costs and expenses
(including without limitation interest, penalties and fees and disbursements of
attorneys, accountants, investment bankers and other professional advisors), in
each case whether incurred, arising or existing with respect to third parties or
otherwise at any time or from time to time.
(f) "Related Document" means any agreement, certificate, instrument or
----------------
other document to which MergerCo, the Company or any Subsidiary may be a party
or by which it or any of its properties or assets may be bound or affected from
time to time relat ing in any way to the Transactions or any Securities
Offering or any of the transactions contemplated thereby, including without
limitation, in each case as the same may be amended, modified, waived or
supplemented from time to time, (A) any registration statement filed by or on
-
behalf of MergerCo, the Company or any Subsidiary with the Commission in
connection with the Transactions or any Securities Offering, including all
exhibits, financial statements and schedules appended thereto, and any
submissions to the Commission in connection therewith, (B) any prospectus,
-
preliminary or otherwise, included in such registration statements or otherwise
filed by or on behalf of MergerCo, the Company or any Subsidiary in connection
with the Transactions or any Securities Offering or used to offer or confirm
sales of their respective securities in any Securities Offering, (C) any private
-
placement or offering memorandum or circular, or other information or materials
distributed by or on behalf of MergerCo, the Company or any Subsidiary or any
placement agent or underwriter in connection with the Transactions or any
Securities Offering, (D) any federal, state or foreign securities law or other
-
governmental or regulatory filings or applications made in connection with any
Securities Offering, the Transactions or any of the transactions contemplated
thereby, (E) any deal-manager, underwriting, subscription, purchase,
-
stockholders, option or registration rights agreement or plan entered into or
adopted by MergerCo, the Company or any Subsidiary in connection with the
Transactions or any Securities Offering, (F) any quarterly, annual or current
-
reports filed by the Company or any Subsidiary with the Commission or any
prospectus, proxy statement or transaction statements, including the S-4 and the
Schedule 13E-3, filed by or on behalf of MergerCo, the Company, any Subsidiary
or any Indemnitee with the Commission in connection with the Merger, including
all exhibits, financial statements and schedules appended thereto, and any
submission to the Commission in connection therewith.
(g) "Securities Offerings" means any Redemption, the Management
--------------------
Rollover, the Exchange Offer, any Management Offering the Note Exchange Offer
and any other Subsequent Offering.
5
<PAGE>
(h) "Subsidiary" means each corporation or other person or entity in
----------
which the Company owns or controls, directly or indirectly, capital stock or
other equity interests representing at least 25% of the outstanding voting stock
or other equity interests.
(i) "Transactions" means the Merger, the Management Rollover, the
------------
Restructuring, the Exchange Offer and the Financing.
2. Indemnification.
---------------
(a) Each of the Company and TTC (each an "Indemnifying Party" and
------------------
collectively, the "Indemnifying Parties"), jointly and severally agrees to
--------------------
indemnify, defend and hold harmless each Indemnitee:
(i) from and against any and all Obligations, whether incurred with
respect to third parties or otherwise, in any way resulting from, arising
out of or in connection with, based upon or relating to (A) the Securities
-
Act, the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
------------
or any other applicable securities or other laws, in connection with any
Securities Offering, any Related Document or any of the transactions
contemplated thereby, (B) any other action or failure to act of MergerCo,
-
the Company or any Subsidiary or any of their predecessors, whether such
action or failure has occurred or is yet to occur or (C) except to the
-
extent that any such Obligation is found in a final judgment by a court of
competent jurisdiction to have resulted from the gross negligence or
intentional misconduct of CD&R, the performance by CD&R of management
consulting, monitoring, financial advisory or other services for MergerCo,
the Company or any Subsidiary (whether performed prior to the date hereof,
hereafter, pursuant to the Consulting Agreement or otherwise); and
(ii) to the fullest extent permitted by applicable law, from and
against any and all Obligations in any way resulting from, arising out of
or in connection with, based upon or relating to (A) the fact that such
-
Indemnitee is or was a director or an officer of MergerCo, the Company or
any Subsidiary, as the case may be, or is or was serving at the request of
such corporation as a director, officer, employee or agent of or advisor or
consultant to another corporation, partnership, joint venture, trust or
other enterprise or (B) any breach or alleged breach by such Indemnitee of
-
his or her fiduciary duty as a director or an officer of MergerCo, the
Company or any Subsidiary, as the case may be;
in each case including but not limited to any and all fees, costs and expenses
(including without limitation fees and disbursements of attorneys) incurred by
or on behalf of any
6
<PAGE>
Indemnitee in asserting, exercising or enforcing any of its rights, powers,
privileges or remedies in respect of this Agreement or the Consulting Agreement.
(b) Without in any way limiting the foregoing Section 2(a), each of
the Indemnifying Parties agrees, jointly and severally, to indemnify, defend and
hold harmless each Indemnitee from and against any and all Obligations resulting
from, arising out of or in connection with, based upon or relating to
liabilities under the Securities Act, the Exchange Act or any other applicable
securities or other laws, rules or regulations in connection with (i) the
-
inaccuracy or breach of or default under any representation, warranty, covenant
or agreement in any Related Document, (ii) any untrue statement or alleged
--
untrue statement of a material fact contained in any Related Document or (iii)
---
any omission or alleged omission to state in any Related Document a material
fact required to be stated therein or necessary to make the statements therein
not misleading. Notwithstanding the foregoing, the Indemnifying Parties shall
not be obligated to indemnify such Indemnitee from and against any such
Obligation to the extent that such Obligation arises out of or is based upon an
untrue statement or omission made in such Related Document in reliance upon and
in conformity with written information furnished to MergerCo or the Company as
the case may be, in an instrument duly executed by such Indemnitee and
specifically stating that it is for use in the preparation of such Related
Document.
3. Contribution.
------------
(a) Except to the extent that Section 3(b) is applicable, if for any
reason the indemnity provided for in Section 2(a) is unavailable or is
insufficient to hold harmless any Indemnitee from any of the Obligations covered
by such indemnity, then the Indemnifying Parties, jointly and severally, shall
contribute to the amount paid or payable by such Indemnitee as a result of such
Obligation in such proportion as is appropriate to reflect (i) the relative
-
fault of each of MergerCo, the Company and the Subsidiaries, on the one hand,
and such Indemnitee, on the other, in connection with the state of facts giving
rise to such Obligation, (ii) if such Obligation results from, arises out of, is
--
based upon or relates to the Transactions or any Securities Offering, the
relative benefits received by each of MergerCo, the Company and the
Subsidiaries, on the one hand, and such Indemnitee, on the other, from such
Transaction or Securities Offering and (iii) if required by applicable law, any
---
other relevant equitable considerations.
(b) If for any reason the indemnity specifically provided for in
Section 2(b) is unavailable or is insufficient to hold harmless any Indemnitee
from any of the Obligations covered by such indemnity, then the Indemnifying
Parties, jointly and severally, shall contribute to the amount paid or payable
by such Indemnitee as a result of such Obligation in such proportion as is
appropriate to reflect (i) the relative fault of each of MergerCo, the Company
-
and the Subsidiaries, on the one hand, and such indemnitee, on the
7
<PAGE>
other, in connection with the information contained in or omitted from any
Related Document, which inclusion or omission resulted in the inaccuracy or
breach of or default under any representation, warranty, covenant or agreement
therein, or which information is or is alleged to be untrue, required to be
stated therein or necessary to make the statements therein not misleading, (ii)
--
the relative benefits received by MergerCo, the Company and the Subsidiaries, on
the one hand, and such Indemnitee, on the other, from such Transaction or
Securities Offering and (iii) if required by applicable law, any other relevant
---
equitable considerations.
(c) For purposes of Section 3(a), the relative fault of each of
MergerCo, the Company and the Subsidiaries, on the one hand, and of the
Indemnitee, on the other, shall be determined by reference to, among other
things, their respective relative intent, knowledge, access to information and
opportunity to correct the state of facts giving rise to such Obligation. For
purposes of Section 3(b), the relative fault of each of MergerCo, the Company
and the Subsidiaries, on the one hand, and of the Indemnitee, on the other,
shall be determined by reference to, among other things, (i) whether the
-
included or omitted information relates to information supplied by MergerCo, the
Company and the Subsidiaries, on the one hand, or by such Indemnitee, on the
other, and (ii) their respective relative intent, knowledge, access to
--
information and opportunity to correct such inaccuracy, breach, default, untrue
or alleged untrue statement, or omission or alleged omission. For purposes of
Section 3(a) or 3(b), the relative benefits received by each of MergerCo, the
Company and the Subsidiaries, on the one hand, and the Indemnitee, on the other,
shall be determined by weighing the direct monetary proceeds to MergerCo, the
Company and the Subsidiaries, on the one hand, and such Indemnitee, on the
other, from such Transaction or Securities Offering.
(d) The parties hereto acknowledge and agree that it would not be just
and equitable if contributions pursuant to Section 3(a) or 3(b) were determined
by pro rata allocation or by any other method of allocation that does not take
into account the equitable considerations referred to in such respective
Section. The Indemnifying Parties shall not be liable under Section 3(a) or
3(b), as applicable, for contribution to the amount paid or payable by any
Indemnitee except to the extent and under such circumstances the Indemnifying
Parties would have been liable to indemnify, defend and hold harmless such
Indemnitee under the corresponding Section 2(a) or 2(b), as applicable, if such
indemnity were enforceable under applicable law. No Indemnitee shall be
entitled to contribution from the Indemnifying Parties with respect to any
Obligation covered by the indemnity specifically provided for in Section 2(b) in
the event that such Indemnitee is finally determined to be guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act) in
connection with such Obligation and the Indemnifying Parties are not guilty of
such fraudulent misrepresentation.
8
<PAGE>
4. Indemnification Procedures.
--------------------------
(a) Whenever any Indemnitee shall have actual knowledge of the
reasonable likelihood of the assertion of a Claim, CD&R (acting on its own
behalf or, if requested in writing by any such Indemnitee other than itself, on
behalf of such Indemnitee) or such Indemnitee shall notify the Indemnifying
Parties in writing of the Claim (the "Notice of Claim") with reasonable
---------------
promptness after such Indemnitee has such knowledge relating to such Claim and
has notified CD&R thereof. The Notice of Claim shall specify all material facts
known to CD&R (or if given by such Indemnitee, such Indemnitee) that may give
rise to such Claim and the monetary amount or an estimate of the monetary amount
of the Obligation involved if CD&R (or if given by such Indemnitee, such
Indemnitee) has knowledge of such amount or a reasonable basis for making such
an estimate. The failure of CD&R or such Indemnitee to give such Notice of
Claim shall not relieve the Indemnifying Parties of their respective
indemnification obligations under this Agreement except to the extent that such
omission results in a failure of actual notice to the Indemnifying Parties and
they are materially injured as a result of the failure to give such Notice of
Claim. The Indemnifying Parties shall, at their expense, undertake the de
fense of such Claim with attorneys of their own choosing reasonably satisfactory
both to CD&R and to any Indemnitee that, in the exercise of such Indemnitee's
good faith judgement, reasonably determines that the Claim presents an actual or
potential conflict of interest with CD&R. CD&R may participate in such defense
with counsel of CD&R's choosing at the expense of the Indemnifying Parties. If
in the exercise of their good faith judgment any one or more other Indemnitee
reasonably determines that the Claim presents an actual or potential conflict of
interest with CD&R, such Indemnitee or Indemnitees may participate in the
defense of the Claim with one counsel of the Indemnitee or Indemnitees' choosing
at the expense of the Indemnifying Parties. In the event that the Indemnifying
Parties do not undertake the defense of the Claim within a reasonable time after
CD&R has given the Notice of Claim, or in the event that CD&R shall in good
faith determine that the defense of any claim by the Indemnifying Parties is
inadequate or may conflict with the interests of any Indemnitee, CD&R may, at
the expense of the Indemnifying Parties and after giving notice to the
Indemnifying Parties of such action, undertake the defense of the Claim and
compromise or settle the Claim, all for the account of and at the risk of the
Indemnifying Parties. In the defense of any Claim, the Indemnifying Parties
shall not, except with the consent of CD&R (or, in the case of any entry of any
judgment or settlement that is binding on any other Indemnitee, such other
Indemnitee), consent to entry of any judgment or enter into any settlement that
includes any injunctive or other non-monetary relief, or that does not include
as an unconditional term thereof the giving by the person or persons asserting
such Claim to such Indemnitee of a release from all liability with respect to
such Claim. In each case, CD&R and each other Indemnitee seeking
indemnification hereunder will cooperate with the Indemnifying Parties, so long
as the Indemnifying Parties are conducting the defense of the Claim, in the
preparation for and the prosecution of the
9
<PAGE>
defense of such Claim, including making available evidence within the control of
CD&R or such Indemnitee, as the case may be, and persons needed as witnesses who
are employed by CD&R or such Indemnitee, as the case may be, in each case as
reasonably needed for such defense and at cost, which cost, to the extent
reasonably incurred, shall be paid by the Indemnifying Parties.
(b) The Indemnifying Parties hereby agree to advance costs and
expenses, including attorney's fees, incurred by CD&R (acting on its own behalf
or, if requested by any such Indemnitee other than itself, on behalf of such
Indemnitee) or any Indemnitee in defending any Claim in advance of the final
disposition of such Claim upon receipt of an undertaking by or on behalf of CD&R
or such Indemnitee to repay amounts so advanced if it shall ultimately be
determined that CD&R or such Indemnitee is not entitled to be indemnified by the
Indemnifying Parties as authorized by this Agreement.
(c) Each Indemnitee shall notify the Indemnifying Parties in writing
of the amount of any Claim actually paid by such Indemnitee (the "Notice of
---------
Payment"). The amount of any Claim actually paid by an Indemnitee shall bear
- -------
simple interest at the rate equal to Credit Suisse First Boston's prime rate as
of the date of such payment plus 2% per annum, from the date the Indemnifying
Parties receive the Notice of Payment to the date on which the Indemnifying
Parties shall repay the amount of such Claim plus interest thereon to such
Indemnitee.
5. Certain Covenants. The Company and TTC jointly and severally
-----------------
agree to perform their obligations under this Agreement. The rights of each
Indemnitee to be indemnified under any other agreement, document, certificate or
instrument or applicable law are independent of and in addition to any rights of
such Indemnitee to be indemnified under this Agreement. The rights of each
Indemnitee and the obligations of the Company hereunder shall remain in full
force and effect regardless of any investigation made by or on behalf of such
Indemnitee. The Indemnifying Parties shall implement and maintain in full force
and effect any and all corporate articles or charter and by-law provisions that
may be necessary or appropriate to enable them to carry out their obligations
hereunder to the fullest extent permitted by applicable corporate law, including
without limitation a provision of their articles or certificate of incorporation
eliminating liability of a director for breach of fiduciary duty to the fullest
extent permitted by applicable corporate law, as it may be amended from time to
time.
6. Notices. All notices and other communications hereunder shall be
-------
in writing and shall be delivered by certified or registered mail (first class
postage prepaid and return receipt requested), telecopier, overnight courier or
hand delivery, as follows:
10
<PAGE>
If to the Company or TTC, to:
Dynatech Corporation
Corporate Headquarters
3 New England Executive Park
Burlington, Massachusetts 01803
Facsimile: (617) 229-8850
Telephone: (781) 272-6100
Attention: General Counsel
---------
If to the CD&R Fund, to:
Clayton, Dubilier & Rice
Fund V Limited Partnership
1043 Foulk Road
Suite 106
Wilmington, Delaware 19803
Attention: Joseph L. Rice, III
---------
with a copy to:
Clayton, Dubilier & Rice, Inc.
375 Park Avenue
New York, New York 10152
Telephone: (212) 407-5200
Telecopier No.: (212) 407-5252
Attention: Joseph L. Rice, III
---------
If to CD&R or any other Indemnitee, to:
Clayton, Dubilier & Rice, Inc.
375 Park Avenue
18th Floor
New York, New York 10152
Telephone: (212) 407-5200
Telecopy: (212) 407-5252
Attention: Joseph L. Rice, III
---------
11
<PAGE>
with the copy, in the case of any other Indemnitee, to:
Dynatech Corporation
Corporate Headquarters
3 New England Executive Park
Burlington, Massachusetts 01803
Facsimile: (617) 229-8850
Telephone: (781) 272-6100
Attention: Chief Executive Officer
---------
or to such other address or such other person as the Company, TTC, the CD&R Fund
or CD&R, as the case may be, shall have designated by notice to the other
parties hereto. All communications hereunder shall be effective upon receipt by
the party to which they are addressed. A copy of any notice or other
communication given under this Agreement shall also be given to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Telephone: (212) 909-6000
Facsimile: (212) 909-6836
Attention: Franci J. Blassberg, Esq.
---------
7. Governing Law. This Agreement shall be governed in all respects,
-------------
including as to validity, interpretation and effect, by the law of the State of
New York without giving effect to its principles or rules of conflict of laws to
the extent such principles or rules would require or permit the application of
the laws of another jurisdiction, except to the extent that the corporate law of
another jurisdiction specifically and mandatorily applies, in which case such
law shall apply.
8. Severability. If any provision or provisions of this Agreement
------------
shall be held to be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions hereof shall not in any way be
affected or impaired thereby.
9. Miscellaneous. The headings contained in this Agreement are for
-------------
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. This Agreement shall be binding upon and
inure to the benefit of each party hereto and its successors and permitted
assigns, and each other Indemnitee, but neither this Agreement nor any right,
interest or obligation hereunder shall be assigned, whether by operation of law
or otherwise, by the Company or TTC without the prior written consent of
12
<PAGE>
CD&R and the CD&R Fund. This Agreement is not intended to confer any right or
remedy hereunder upon any person other than each of the parties hereto and their
respective successors and permitted assigns and each other Indemnitee. No
amendment, modification, supplement or discharge of this Agreement, and no
waiver hereunder shall be valid and binding unless set forth in writing and duly
executed by the party or other Indemnitee against whom enforcement of the
amendment, modification, supplement or discharge is sought. Neither the waiver
by any of the parties hereto or any other Indemnitee of a breach of or a default
under any of the provisions of this Agreement, nor the failure by any party
hereto or any other Indemnitee on one or more occasions, to enforce any of the
provisions of this Agreement or to exercise any right, powers or privilege
hereunder, shall be construed as a waiver of any other breach or default of a
similar nature, or as a waiver of any provisions hereof, or any rights, powers
or privileges hereunder. The rights and remedies herein provided are cumulative
and are not exclusive of any rights or remedies that any party or other
Indemnitee may otherwise have at law or in equity or otherwise. This Agreement
may be executed in several counterparts, each of which shall be deemed an
original, and all of which together shall constitute one and the same
instrument.
13
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement by their authorized representatives as of the date first above
written.
DYNATECH CORPORATION
By: /s/ Allan M. Kline
------------------
Name: Allan M. Kline
Title: Vice President
TELECOMMUNICATIONS TECHNIQUES
CO., LLC
By: Dynatech Corporation, its sole member
By: /s/ Allan M. Kline
------------------
Name: Allan M. Kline
Title: Vice President
CLAYTON, DUBILIER & RICE, INC.
By: /s/ Joseph L. Rice, III
-----------------------
Name: Joseph L. Rice, III
Title: Chairman
CLAYTON, DUBILIER & RICE
FUND V LIMITED PARTNERSHIP
By: CD&R Associates V Limited
Partnership, the General Partner
By: CD&R Investment Associates II,
Inc., the general partner
By: /s/ Joseph L. Rice, III
-----------------------
Name: Joseph L. Rice, III
Title: Chairman
14
<PAGE>
EXHIBIT 10.15
CONFORMED COPY
--------------
CONSULTING AGREEMENT
--------------------
This CONSULTING AGREEMENT, dated as of May 21, 1998 (the "Agreement"),
---------
by and among Dynatech Corporation, a Massachusetts corporation (the "Company"),
-------
Telecommunications Techniques Company, LLC, a Delaware limited liability company
("TTC") and Clayton, Dubilier & Rice, Inc., a Delaware corporation ("CD&R").
----
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Company is entering into an Indemnification Agreement, dated as
of the date hereof (the "Indemnification Agreement"), by and among the Company,
-------------------------
TTC, CD&R and Clayton, Dubilier & Rice Fund V Limited Partnership, a Cayman
Islands exempted limited partnership (capitalized terms used herein without
definition having the meanings ascribed in the Indemnification Agreement);
WHEREAS, pursuant to an Agreement and Plan of Merger, dated as of
December 20, 1997 (the "Merger Agreement"), by and between the Company and CDRD
----------------
Merger Corporation, a Delaware corporation ("MergerCo") formed by the CD&R Fund,
--------
MergerCo has merged with and into the Company (the "Merger") on the date hereof;
------
WHEREAS, CD&R has performed financial, management advisory and other
services for the Company, including but not limited to assistance in connection
with (i) the preparation, negotiation, execution and delivery of the Merger
-
Agreement, (ii) the preparation, filing and circulation of the S-4, the 13E-3
--
and related materials to the stockholders of the Company in connection with the
Merger, (iii) the retention of legal, accounting, environmental, insurance,
---
investment banking, financial and other advisors and consultants in connection
with the Merger, (iv) the preparation, negotiation, execution and delivery of
--
the commitment, fee and engagement letters, registration rights and purchase
agreements, credit agreements, indentures and indenture supplements, guarantees,
mortgages, pledge agreements and other security agreements, subscription,
registration rights agreements, management equity agreements, exchange agent
agreements, and other agreements, instruments and documents, relating to the
Senior Secured Financing, Note Offering, or otherwise relating to the Financing
or the other Transactions, (v) the preparation and circulation of information
-
and offering memoranda and other materials in connection with the Senior Secured
Financing and the Note
<PAGE>
Offering and (vi) the structuring, implementation and consummation of the Merger
--
(such services collectively, the "Merger Services");
---------------
WHEREAS, the Company desires to receive financial and managerial
advisory services from CD&R, and CD&R desires to provide such services to the
Company;
NOW, THEREFORE, in consideration of the premises and the respective
agreements hereinafter set forth and the mutual benefits to be derived herefrom,
the parties hereto hereby agree as follows:
1. Engagement. The Company hereby engages CD&R as a consultant, and
----------
CD&R hereby agrees to provide financial and managerial advisory ser vices to
the Company, all on the terms and subject to the conditions set forth below.
2. Services, etc. (a) CD&R hereby agrees during the term of this
-------------
Agreement to assist, advise and consult with the respective Boards of Directors
and management of the Company and its Subsidiaries in such manner and on such
business, management and financial matters, and provide such other financial and
managerial advisory services (collectively, the "Continuing Services"), as may
-------------------
be reasonably requested from time to time by the Board of Directors of the
Company, including but not limited to assistance in:
(i) establishing and maintaining banking, legal and other business
relation ships for the Company and its Subsidiaries;
(ii) developing and implementing corporate and business strategy and
planning for the Company and its Subsidiaries, including plans and programs
for improving operating, marketing and financial performance, budgeting of
future corporate investments, acquisition and divestiture strategies, and
reorganizational programs;
(iii) arranging future debt and equity financings and refinancings; and
(iv) providing professional employees to serve as directors or officers
of the Company and its Subsidiaries.
(b) The Company will furnish CD&R with such information as CD&R
believes appropriate to its engagement hereunder (all such information so
furnished being referred to herein as the "Information"). The Company recognizes
-----------
and confirms that (i)
-
2
<PAGE>
CD&R will use and rely primarily on the Information and on information available
from generally recognized public sources in performing the services to be
performed hereunder and (ii) CD&R does not assume responsibility for the
--
accuracy or completeness of the Information and such other information.
3. Compensation; Payment of Expenses. (a) The Company and TTC
---------------------------------
jointly and severally agree to pay to CD&R, concurrent with the execution of
this Agreement, as compensation for the Merger Services, a fee of $9,200,000.
(b) The Company and TTC jointly and severally agree to pay to CD&R, as
compensation for the Continuing Services rendered and to be rendered by CD&R
hereunder, a fee of $500,000 per year (the "Continuing Services Fee"), payable
-----------------------
on the first day of the month in monthly installments of $41,666.66 in arrears
commencing on June 1, 1998. Such Continuing Services Fee may, in the sole
discretion of a majority of the members of the Company's Board of Directors who
are not affiliated with CD&R, be increased but may not be decreased without the
prior written consent of CD&R. If any employee of CD&R shall be elected to
serve on the Board of Directors or as an officer of the Company (a "Designated
----------
Director"), in consideration of the Continuing Services Fee being paid to CD&R,
- --------
CD&R shall cause such Designated Director to waive any and all compensation,
including without limitation, fees, stock options, equity participation and
other incentives, to which such director would otherwise be entitled as a
director for any period for which the Continuing Services Fee or any installment
thereof is paid and for which such Designated Director continues to be employed
by CD&R.
(c) The Company and TTC jointly and severally agree to reimburse CD&R
for such reasonable travel and other out-of-pocket expenses ("Expenses") as may
--------
have been or be incurred by CD&R and its employees, agents and advisors in the
course or on account of rendering of the Merger Services or the Continuing
Services, including but not limited to any reasonable fees and expenses of any
legal, accounting or other professional advisors to CD&R engaged in connection
with the Merger Services and Continuing Services and any reasonable expenses
incurred by any Designated Director in connection with the performance of his
duties. CD&R may submit monthly expense statements, which shall be payable
within thirty days.
4. Term, etc. (a) This Agreement shall be in effect until, and
---------
shall terminate upon, the earlier to occur of (x) the tenth anniversary of the
-
date hereof and (y) the date on which the CD&R Fund no longer owns any shares of
-
the capital stock of the Company, and may be earlier terminated by either party
hereto upon 30 days' prior written notice to the other party hereto. The
provisions of this Agreement shall survive any termination of this Agreement,
except for the provisions of Section 1, Section 2(a),
3
<PAGE>
the first sentence of Section 2(b) and (solely as to any portion of the
Continuing Services Fee or any Expense not paid or reimbursed prior to such
termination and not required to be paid or reimbursed thereafter pursuant to
Section 4(c) hereof) Section 3 hereof.
(b) Upon any consolidation or merger, or any conveyance, transfer or
lease of all or substantially all of the assets of the Company, the successor
corporation formed by such consolidation or into which the Company is merged or
to which such conveyance, transfer or lease is made shall succeed to, and be
substituted for, the Company under this Agreement with the same effect as if
such successor corporation had been a party thereto. No such consolidation,
merger or conveyance, transfer or lease of all or substantially all of the
assets of the Company shall have the effect of terminating this Agreement or of
releasing the Company or any such successor corporation from its obligations
hereunder.
(c) Upon any termination of this Agreement, any accrued and unpaid
installment of the Continuing Services Fee or portion thereof (pro rated, with
respect to the month in which such termination occurs, for the portion of such
month that precedes such termination), and any unpaid and unreimbursed Expenses
that shall have been incurred prior to such termination (whether or not such
Expenses shall then have become payable), shall be immediately paid or
reimbursed, as the case may be, by the Company. In the event of the liquidation
of the Company, all amounts due CD&R hereunder shall be paid to CD&R before any
liquidating distributions or similar payments are made to stockholders of the
Company.
5. Indemnification. (a) The Company confirms and reaffirms its
---------------
obligations pursuant to the Indemnification Agreement. Without limiting the
generality of the foregoing, the Company confirms and agrees that (a) it shall
-
indemnify, defend and hold harmless CD&R, the CD&R Fund, CD&R Associates, CD&R
Investment Associates Inc., Associates II, their respective successors and
assigns and each of the respective directors, officers, partners, employees,
agents, advisors, representatives and controlling persons (within the meaning of
the Securities Act of 1933, as amended) and their respective successors and
assigns (collectively, "Indemnitees") from and against any and all claims,
-----------
obligations, liabilities, causes of action, actions, suits, proceedings,
investigations, judgments, decrees, losses, damages, fees, costs and expenses
(including without limitation interest, penalties and fees and disbursements of
attorneys, accountants, investment bankers and other professional advisors)
(collectively, "Obligations"), whether incurred with respect to third parties or
-----------
otherwise, in any way resulting from, arising out of or in connection with,
based upon or relating to, the performance of the Merger Services or the
Continuing Services, except to the extent that any such Obligation is found in a
final judgment by a court having jurisdiction to have
4
<PAGE>
resulted from the gross negligence or intentional misconduct of an Indemnitee,
(b) no Indemnitee shall have any liability (whether direct or indirect, in
-
contract or tort or otherwise) to the Company or their respective security
holders or creditors with respect to any Obligation in any way resulting from,
arising out of or in connection with, based upon or relating to, the performance
of the Merger Services or the Continuing Services, except to the extent that any
such Obligation is found in a final judgment by a court having jurisdiction to
have resulted from the gross negligence or intentional misconduct of an
Indemnitee, and (c) the rights of each Indemnitee to be indemnified under any
-
agreement, document, certificate or instrument or applicable law are independent
of and in addition to any rights of such Indemnitee under any other agreement,
document, certificate or instrument or applicable law.
(b) The Company hereby agrees to advance costs and expenses,
including attorneys' fees, incurred by CD&R (acting on its own behalf or, if
requested by any such Indemnitee other than itself, on behalf of such
Indemnitee) or any Indemnitee in defending any claim relating to any Obligation
in advance of the final disposition of such claim within 30 days of receipt from
CD&R of (i) a notice setting forth the amount of such costs and expenses (a
-
"Payment Notice") and (ii) an undertaking by or on behalf of CD&R or such
- --------------- --
Indemnitee to repay amounts so advanced if it shall ultimately be determined
that CD&R or such Indemnitee is not entitled to be indemnified by the Company as
authorized by this Agreement. CD&R may submit Payment Notices to the Company
monthly.
6. Independent Contractor Status. The parties agree that CD&R shall
-----------------------------
perform services hereunder as an independent contractor, retaining control over
and responsibility for its own operations and personnel. Neither CD&R nor any
of its employees or agents shall, solely by virtue of this Agreement or the
arrangements hereunder, be considered employees or agents of the Company nor
shall any of them have authority to contract in the name of or bind the Company,
except (a) to the extent that any professional employee of CD&R may be serving
-
as a director or an officer of the Company pursuant to Section 2(a)(iv) hereof
or (b) as expressly agreed to in writing by the Company. The Company hereby
-
acknowledges and agrees that the agreements, arrangements or understandings
entered into by CD&R on behalf of the Company, MergerCo or any of their
respective subsidiaries prior to the date hereof in connection with the Merger
(including, but not limited to, any confidentiality agreements and agreements
with brokers or finders) and set forth on Schedule 6 attached hereto shall be
----------
obligations of the Company binding on it to the same extent as such obligations
may be binding on CD&R, and the Company shall fully perform, and indemnify and
hold harmless CD&R from and against, all such obligations. Any duties of CD&R
arising out of its engagement to perform services hereunder shall be owed solely
to the Company.
5
<PAGE>
7. Notices. Any notice or other communication required or permitted
-------
to be given or made under this Agreement by one party to the other parties shall
be in writing and shall be deemed to have been duly given and effective (i) on
-
the date of delivery if delivered personally or (ii) when sent if sent by
--
prepaid telegram, or mailed first-class, postage prepaid, registered or
certified mail, or facsimile transmission as follows (or to such other address
as shall be given in writing by one party to the other parties in accordance
herewith):
If to the Company or TTC, to:
Dynatech Corporation
Corporate Headquarters
3 New England Executive Park
Burlington, Massachusetts 01803
Facsimile: (617) 229-8850
Telephone: (781) 272-6100
Attention: General Counsel
---------
If to CD&R, to:
Clayton, Dubilier & Rice, Inc.
375 Park Avenue
18th Floor
New York, New York 10152
Telephone: (212) 407-5200
Telecopy: (212) 407-5252
Attention: Joseph L. Rice, III
---------
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Telephone: (212) 909-6000
Telecopy: (212) 909-6836
Attention: Franci J. Blassberg, Esq.
---------
6
<PAGE>
8. Entire Agreement. This Agreement, together with the
----------------
Indemnification Agreement, (a) contains the complete and entire understanding
-
and agreement of CD&R, TTC and the Company with respect to the subject matter
hereof and (b) supersedes all prior and contemporaneous understandings,
-
conditions and agreements, oral or written, express or implied, in respect of
the subject matter hereof, including but not limited to in respect of the
engagement of CD&R in connection with the subject matter hereof. There are no
representations or warranties of CD&R in connection with this Agreement or the
services to be provided hereunder, except as expressly made and contained in
this Agreement.
9. Headings. The headings contained in this Agreement are for
--------
purposes of convenience only and shall not affect the meaning or interpretation
of this Agreement.
10. Counterparts. This Agreement may be executed in several
------------
counterparts, each of which shall be deemed an original and all of which shall
together constitute one and the same instrument.
11. Binding Effect; Assignment. This Agreement shall be binding upon
--------------------------
and inure to the benefit of the parties to this Agreement and their respective
successors and assigns and to each Indemnitee, provided that none of CD&R, the
--------
Company or TTC may assign any of its rights or obligations under this Agreement
without the express written consent of the other party hereto. This Agreement
is not intended to confer any right or remedy hereunder upon any person other
than the parties to this Agreement and their respective successors and permitted
assigns and each Indemnitee.
12. Governing Law. This Agreement shall be governed in all respects
-------------
including as to validity interpretations and effects by the laws of the State of
New York, without giving effect to its principles or rules of conflict of laws
to the extent such principles or rules would require or permit the application
of the laws of another jurisdiction. The Company, TTC and CD&R hereby
irrevocably submit to the jurisdiction of the courts of the State of New York
and the Federal courts of the United States of America, in each case located in
the State, City and County of New York, solely in respect of the interpretation
and enforcement of the provisions of this Agreement, and hereby waive, and agree
not to assert, as a defense in any action, suit or proceeding for the
interpretation or enforcement hereof, that it is not subject thereto or that
such action, suit or proceeding may not be brought or is not maintainable in
such courts or that the venue thereof may not be appropriate or that this
Agreement may not be enforced in or by such courts, and the parties hereto
irrevocably agree that all claims
7
<PAGE>
with respect to such action or proceeding shall be heard and determined in such
a New York State or Federal court. The Company, TTC and CD&R hereby consent to
and grant any such court jurisdiction over the person of such parties and over
the subject matter of any such dispute and agree that mailing of process or
other papers in connection with any such action or proceeding in the manner
provided in Section 7, or in such other manner as may be permitted by law, shall
be valid and sufficient service thereof.
13. Waiver of Jury Trial. Each party hereto acknowledges and agrees
--------------------
that any controversy that may arise under this Agreement is likely to involve
complicated and difficult issues, and therefore it hereby irrevocably and
unconditionally waives any right it may have to a trial by jury in respect of
any litigation directly or indirectly arising out of or relating to this
Agreement, or the breach, termination or validity of this Agreement, or the
transactions contemplated by this Agreement. Each party certifies and
acknowledges that (a) 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, (b) it understands
-
and has considered the implications of this waiver, (c) it makes this waiver
-
voluntarily, and (d) it has been induced to enter into this Agreement by, among
-
other things, the mutual waivers and certifications contained in this Section
13.
14. Amendment; Waivers. No amendment, modification, supplement or
------------------
discharge of this Agreement, and no waiver hereunder, shall be valid or binding
unless set forth in writing and duly executed by the party or Indemnitee against
whom enforcement of the amendment, modification, supplement, discharge or waiver
is sought (and in the case of the Company, approved by resolution of the Board
of Directors of the Company). Any such waiver shall constitute a waiver only
with respect to the specific matter described in such writing and shall in no
way impair the rights of the party or Indemnitee granting such waiver in any
other respect or at any other time. Neither the waiver by any of the parties
hereto or any Indemnitee of a breach of or a default under any of the provisions
of this Agreement, nor the failure by any party hereto or any Indemnitee on one
or more occasions, to enforce any of the provisions of this Agreement or to
exercise any right, powers or privilege hereunder, shall be construed as a
waiver of any other breach or default of a similar nature, or as a waiver of any
of such provisions, rights, power or privileges hereunder. The rights and
remedies herein provided are
8
<PAGE>
cumulative and are not exclusive of any rights or remedies that any party or
Indemnitee may otherwise have at law or in equity or otherwise.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
CLAYTON, DUBILIER & RICE, INC.
By:/s/ Joseph L. Rice, III
-----------------------
Name: Joseph L. Rice, III
Title: Chairman
DYNATECH CORPORATION
By:/s/ Allan M. Kline
------------------
Name: Allan M. Kline
Title: Vice President
TELECOMMUNICATIONS TECHNIQUES CO., LLC
By: Dynatech Corporation, its sole member
By:/s/ Allan M. Kline
------------------
Name: Allan M. Kline
Title: Vice President
9
<PAGE>
EXHIBIT 10.16
CONFORMED COPY
--------------
TAX SHARING AGREEMENT
---------------------
THIS TAX SHARING AGREEMENT, dated as of May 21, 1998, is made and
entered into by and between Dynatech Corporation, a Massachusetts corporation
("Dynatech"), and Telecommunications Techniques Co., LLC, a Delaware limited
liability company ("TTC").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Dynatech is the common parent corporation of an affiliated
group of corporations within the meaning of Section 1504(a) of the Internal
Revenue Code of 1986, as amended (the "Code");
WHEREAS, for federal income tax purposes, TTC, a wholly-owned
subsidiary of Dynatech, is disregarded as an entity separate from Dynatech;
WHEREAS, the affiliated group of which Dynatech is the common parent,
files a consolidated federal income tax return as defined in Section 1501 of the
Code; and
WHEREAS, Dynatech and TTC desire to provide for the allocation of
liabilities, procedures to be followed, and other matters with respect to
certain taxes for tax years beginning after March 31, 1998, in which Dynatech
and its subsidiaries are included in a consolidated federal income tax return
filed for the Combined Consol idated Group.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
-----------
"Code" shall mean the Internal Revenue Code of 1986, as amended.
<PAGE>
"Combined Consolidated Group" shall mean the Dynatech Consolidated
Group together with the TTC Consolidated Group, and any other corporations which
may become members of either.
"Combined Consolidated Return" shall mean a consolidated federal
income tax return filed for the Combined Consolidated Group.
"Dynatech Consolidated Group" shall mean the affiliated group of
corporations of which Dynatech is the common parent, and any other corporations
which may become members of that affiliated group, but excluding the members of
the TTC Consolidated Group.
"Estimated Tax Sharing Payments" shall mean the periodic tax sharing
payments required under Article III, Section 2 of this Agreement.
"Estimated Tax Sharing Payment Date" shall mean the date of the
payment of the balance of the Estimated Tax Sharing Payments as described in
Article III, Section 2 of this Agreement.
"IRS" shall mean the Internal Revenue Service.
"Pro Forma TTC Return" shall mean a pro forma consolidated federal
income tax return prepared pursuant to Article III, Section 1 or 4.
"TTC Consolidated Group" shall mean TTC and the other members of the
affiliated group of corporations of which TTC would be the common parent if (i)
-
TTC were not a subsidiary of Dynatech and (ii) TTC were treated as a association
--
taxable as a corporation for federal income tax purposes, and any other
corporations which may become members of that affiliated group.
ARTICLE II
PROCEDURAL MATTERS
------------------
1. Dynatech shall have the sole and exclusive responsibility for the
preparation and filing of the consolidated federal income tax return of the
Combined Consolidated Group, including any amended returns and any other
returns, documents or statements required to be filed with the IRS with respect
to the determination of the federal income tax liability of the Combined
Consolidated Group. All returns shall be
2
<PAGE>
filed by Dynatech on a timely basis, taking into account extensions of the due
date for the filings of such returns.
2. TTC shall cause each member of the TTC Consolidated Group to
continue to join in filing a consolidated federal income tax return with the
Dynatech Consolidated Group for all taxable years for which such member is
eligible to do so under the Code and the Treasury Regulations, unless Dynatech
shall request otherwise.
3. Dynatech shall make all federal income tax payments, including
estimated payments, with respect to all Combined Consolidated Returns and
Dynatech shall have the right to exercise all powers of a common parent with
respect to filing any Combined Consolidated Return as are conferred on it by the
Treasury Regulations.
4. Dynatech shall be the sole and exclusive agent of the Combined
Consolidated Group and any member of such group in any and all matters relating
to the income tax liability of the Combined Consolidated Group for all
consolidated return years. In its sole discretion, Dynatech shall have the
right with respect to any Combined Consolidated Returns which it files (a) to
-
determine (i) the manner in which such returns shall be prepared and filed,
-
including, without limitation, the manner in which any item of income, gain,
loss, deduction or credit shall be reported and the adoption or change of any
method of accounting, (ii) whether any extensions may be requested and (iii) the
-- ---
elections that will be made by any member of the Combined Consolidated Group,
(b) to contest, compromise or settle any adjustment or deficiency proposed,
-
asserted or assessed as a result of any audit of such returns by the IRS, (c) to
-
file, prosecute, compromise or settle any claim for refund and (d) to determine
-
whether any refunds to which the Combined Consolidated Group may be entitled
shall be paid by way of refund or credited against the tax liability of the
Combined Consolidated Group. TTC hereby irrevocably appoints Dynatech as its
agent and attorney-in-fact to take such action (including the execution of
documents) as Dynatech may deem appropriate to effect the foregoing.
5. TTC shall reimburse Dynatech for any outside legal and accounting
expenses incurred by Dynatech in the course of the conduct of any audit or
contest regarding the tax liability of the Combined Consolidated Group, and for
any other expenses incurred by Dynatech in the course of any litigation relating
thereto, to the extent such costs are reasonably attributable to a TTC
Consolidated Group issue.
6. TTC shall furnish to Dynatech in a timely manner such information
and documents as Dynatech may reasonably request for purposes of preparing the
returns referred to in Section 1 of this Article.
3
<PAGE>
ARTICLE III
CALCULATION AND PAYMENT OF TAX SHARING PAYMENTS
-----------------------------------------------
1. For each taxable year for which Dynatech files a Combined
Consolidated Return, Dynatech shall prepare a Pro Forma TTC Return for the TTC
Consolidated Group taking into account elections, methods of accounting, and
positions with respect to specific items that are consistent with those made or
used by Dynatech for purposes of the Combined Consolidated Return. The Pro
Forma TTC Return shall reflect any carryovers of net operating losses, net
capital losses, excess tax credits or other tax attributes from prior years' Pro
Forma TTC Returns (assuming that members of the TTC Consolidated Group had not
been in existence before April 1, 1998) which could have been utilized by the
TTC Consolidated Group if the TTC Consolidated Group had never been included in
the Combined Consolidated Group, but only to the extent Dynatech utilizes such
carryover. For purposes of this Section 1, a carryover will be treated as
utilized by Dynatech to the extent that the federal income tax liability of the
Combined Consolidated Group determined taking into account such carryover is
less than the federal income tax liability of the Combined Consolidated Group
determined without giving effect to such carryover. The Pro Forma TTC Return
shall not, however, reflect carryovers of any attributes from the Dynatech
Consolidated Group. Any provision of the Code that requires consolidated
computations, such as sections 861 and 1231, shall be applied separately to the
TTC Consolidated Group for purposes of preparing the Pro Forma TTC Return.
Treasury Regulations sec tion 1.1502-13 shall be applied as if the TTC
Consolidated Group and the Dynatech Consolidated Group were separate affiliated
groups. The Pro Forma TTC Return shall be provided to TTC no later than 30 days
after the due date (including extensions) for the return for the Combined
Consolidated Group.
2. For each taxable year in which a Combined Consolidated Return is
filed, TTC shall make periodic payments ("Estimated Tax Sharing Payments") to
Dynatech in such amounts as, and no later than the dates on which, payments of
estimated tax would be due from the TTC Consolidated Group under section 6655 of
the Code if it were not included in the Combined Consolidated Group. The
balance, if any, of the Estimated Tax Sharing Payments due for a taxable year
shall be paid to Dynatech no later than June 15 of the following year. TTC
shall pay to Dynatech no later than 60 days after the date on which a Combined
Consolidated Return for any taxable year is filed, an amount equal to the sum of
(i) the federal income tax liability shown on the Pro Forma TTC Return prepared
-
for that taxable year and (ii) the additions to tax, if any, under section 6655
--
of the Code that would have been imposed upon TTC (treating the amount due to
Dynatech under clause (i) above as TTC's
4
<PAGE>
federal income tax liability and treating any Estimated Tax Sharing Payments as
estimated tax payments with respect to such liability), reduced by the sum of
the Estimated Tax Sharing Payments and interest thereon as determined pursuant
to Article IV of this Agreement running from the Estimated Tax Sharing Payment
Date. If the Estimated Tax Sharing Payments paid to Dynatech for any taxable
year exceed the amount of the liability under the preceding sentence, Dynatech
shall refund such excess to TTC within 45 days after completion of the Pro Forma
TTC Return, together with interest as determined in Article IV of this Agreement
running from the date on which the consolidated federal income tax return of the
Combined Consolidated Group is due, without regard to extensions.
3. If a Pro Forma TTC Return reflects a net operating loss, net
capital loss, excess tax credit or other tax attribute, then Dynatech shall pay
to TTC the amount of any refund, credit or offset of tax liability (including
interest) that Dynatech actually receives as a result of the utilization of such
loss, credit or other tax attribute which the TTC Consolidated Group would have
received as a result of the carryback of such attribute to a Pro Forma TTC
Return for any taxable year or years in which the TTC Consolidated Group is
included in the Combined Consolidated Group. The amount of refund will be
determined as if the TTC Consolidated Group had never been included in the
Combined Consolidated Group, Pro Forma TTC Returns had been ac tual returns and
the members of the TTC Consolidated Group had not been in existence before April
1, 1998. For purposes of this Section 3, a loss, credit or other tax attribute
shall be treated as utilized by Dynatech to the extent that the federal income
tax liability of the Combined Consolidated Group determined taking into account
such loss, credit or other tax attribute is less that the federal income tax
liability of the Combined Consolidated Group determined without giving effect to
such loss, credit or other tax attribute. All calculations of deemed refunds of
the TTC Consolidated Group pursuant to Section 3 of this Article shall include
interest computed as if TTC had filed a claim for refund or an application for a
tentative carryback adjustment pursuant to section 6411(a) of the Code on the
date on which the consolidated federal income tax return of the Combined
Consolidated Group is due, without regard to extensions.
4. To the extent that any audit, litigation, claim or refund with
respect to a Combined Consolidated Return results in an increase or decrease in
taxable income relating to the treatment of a TTC Consolidated Group issue, a
corresponding adjustment shall be made to such item and to TTC's tax liability
reflected on the applicable Pro Forma TTC Return. Within 10 days after any such
adjustment is finally determined, TTC shall make additional tax sharing
payments, including interest and penalties consistent with such adjustment, to
Dynatech, or Dynatech shall refund to
5
<PAGE>
TTC any amounts received by Dynatech in connection with such audit, litigation,
claim or refund, including interest, pursuant to Article IV of this Agreement.
5. All calculations required to be made by Dynatech under this
Agreement shall be binding upon the parties hereto absent manifest error.
ARTICLE IV
INTEREST
--------
Interest required to be paid by or to TTC pursuant to this Agreement
shall, unless otherwise specified, be computed at the rate and in the manner
provided in the Code for interest on underpayments and overpayments,
respectively, of federal income tax for the relevant period.
ARTICLE V
STATE AND LOCAL INCOME AND FRANCHISE TAXES
------------------------------------------
1. The principles expressed with respect to the Combined Consolidated
Group federal income tax matters in Articles I through III shall apply with
equal force to state and local income and franchise tax matters, including the
preparation and filing of state and local income tax and franchise tax returns
by the Combined Consolidated Group.
2. Any interest charge required to be paid by or to TTC pursuant to
this Agreement with respect to any state or local income or franchise tax return
shall be computed at the rate and in the manner as provided under the applicable
state or local statute for interest on underpayments and overpayments of such
tax tor the relevant period.
ARTICLE VI
MISCELLANEOUS PROVISIONS
------------------------
1. Any information furnished by one party to another pursuant to this
Agreement shall be treated as confidential and, except as, and to the extent,
required during the course of an audit or litigation or otherwise required by
law, shall not be disclosed to another person or entity.
6
<PAGE>
2. This Agreement shall be binding upon and inure to the benefit of
any successor to any of the parties, by merger, acquisition of assets or
otherwise, to the same extent as if the successor had been an original party to
this Agreement.
3. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York without giving effect to conflicts of law
prin ciples thereof.
4. This Agreement may be executed simultaneously in two or more
counterparts, each of which will be deemed an original, but all of which when
taken to gether shall constitute one and the same instrument.
5. The headings in this Agreement are for convenience only and shall
not be deemed for any purpose to constitute a part or to affect the
interpretation of this Agreement.
6. This Agreement may be amended from time to time by agreement in
writing executed by all the parties hereto or all of the parties then bound
thereby. This Agreement constitutes the entire agreement with respect to the
subject matter hereof and supersedes all prior written and oral understandings
with respect thereto.
7. Any notice, request or other communication required or permitted
in this Agreement shall be in writing and shall be sufficiently given if
personally delivered or if sent by registered or certified mail, postage
prepaid, addressed as follows:
TO DYNATECH:
3 New England Executive Park
Burlington, MA 01803
Attn.: Mark V. B. Tremallo
TO TTC:
20410 Observation Drive
Germantown, MD 20876
Attn.: Mark V. B. Tremallo
or to such other address as set forth in writing by either party to the other in
accordance with this section.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their authorized representatives.
DYNATECH CORPORATION
By: /s/ Allan M. Kline
------------------
Name: Allan M. Kline
Title: Corporate Vice President, Chief Financial
Officer and Treasurer
TELECOMMUNICATIONS TECHNIQUES
CO., LLC
By: Dynatech Corporation,
its sole member
By: /s/ Allan M. Kline
------------------
Name: Allan M. Kline
Title: Corporate Vice President,
Chief Financial Officer
and Treasurer
8
<PAGE>
EXHIBIT 10.17
DYNATECH CORPORATION
REGISTRATION RIGHTS AGREEMENT
Dated as of May 21, 1998
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
1. Background 1
2. Definitions 1
3. Registration 4
3.1. Registration on Request 4
(a) Requests 4
(b) Obligation to Effect Registration 5
(c) Registration Statement Form 5
(d) Expenses6
(e) Inclusion of Other Securities 6
(f) Effective Registration Statement 6
(g) Pro Rata Allocation 7
3.2. Incidental Registration 7
3.3. Registration Procedures 9
3.4. Underwritten Offerings 13
(a) Underwritten Offerings Exclusive 13
(b) Underwriting Agreement 13
(c) Selection of Underwriters 14
(d) Incidental Underwritten Offerings 14
(e) Hold Back Agreements 14
3.5. Preparation; Reasonable Investigation 15
3.6. Other Registrations 15
3.7. Indemnification 16
(a) Indemnification by the Company 16
(b) Indemnification by the Sellers 17
(c) Notices of Claims, etc. 17
(d) Other Indemnification 18
(e) Other Remedies 18
(f) Officers and Directors 19
4. Miscellaneous 19
4.1. Amendments and Waivers 19
4.2. Nominees for Beneficial Owners 19
i
<PAGE>
Page
----
4.3. Successors, Assigns and Transferees 20
4.4. Notices 20
4.5. No Inconsistent Agreements 21
4.6. Remedies; Attorneys' Fees 21
4.7. Stock Splits, etc. 21
4.8. Term 22
4.9. Severability 22
4.10. Headings 22
4.11. Counterparts 22
4.12. Governing Law 22
4.13. No Third Party Beneficiaries 22
4.14. Consent to Jurisdiction 22
4.15. Waiver of Jury Trial 23
ii
<PAGE>
CONFORMED COPY
--------------
REGISTRATION RIGHTS AGREEMENT
------------------------------
REGISTRATION AND RIGHTS AGREEMENT, dated as of May 21, 1998, among
Dynatech Corporation, a Massachusetts corporation (the "Company"), Clayton,
-------
Dubilier & Rice Fund V Limited Partnership, a Cayman Islands limited partnership
(the "Fund"), Mr. John F. Reno (the "Manager"), The John F. Reno 1997 Qualfied
---- -------
Annuity Trust, under Trust Agreement, dated as of the 28th day of November,
1997, between John F. Reno as Grantor and John F. Reno and John D. Hamilton, Jr.
as Trustees (the "John F. Reno Trust") and The Suzanne M. Reno 1997 Qualfied
Annuity Trust, under Trust Agreement, dated as of the 28th day of November,
1997, between Suzanne D. Reno as Grantor and John F. Reno and John D. Hamilton,
Jr. as Trustees (together with the John F. Reno Trust, the "Trusts") .
1. Background. (a) Pursuant to an Agreement and Plan of Merger,
----------
dated as of December 20, 1997 (the "Merger Agreement"), between the Company and
----------------
CDRD Merger Corporation, a Delaware corporation ("MergerCo"), formed by the
--------
Fund, MergerCo has merged with and into the Company (the "Merger") and shares
------
of MergerCo common stock owned by Fund have been converted into 110,740,720
shares of common stock, no par value (the "Common Stock"), of the Company.
------------
(b) Pursuant to the Merger Agreement, and pursuant to the Employment
Agreements, dated as of December 20, 1997, between the Company and the Manager,
shares of MergerCo common stock owned by the Manager and the Trusts have been
converted into 799,758 shares of Common Stock.
(c) The Company or the Fund may in the future issue or sell directly
or pursuant to option or other rights, additional shares of Common Stock to
Directors of the Company or directors or senior executives of corporations in
which entities managed or sponsored by CD&R (as defined below) have made
substantial equity investments or other individuals with whom CD&R has a
consulting or advisory relationship ("Individual Investors").
--------------------
2. Definitions. For purposes of this Agreement, the following terms
-----------
have the following respective meanings:
"Additional Sale": See Section 4(a).
----------------
<PAGE>
"Affiliate": With respect to any Person, any other Person directly or
---------
indirectly Controlling, Controlled by or under common Control with such first
Person. "Control" means the power to direct the affairs of a Person by reason of
ownership of voting securities, by contract or otherwise. Any director, member
of management or other employee of the Company or any of its Subsidiaries who
would not otherwise be an Affiliate shall not be deemed to be an Affiliate of
the Fund.
"Board": The Board of Directors of the Company.
-----
"Business Day": A day other than a Saturday, Sunday or other day on
------------
which commercial banks in New York City are authorized or required to close.
"CD&R": Clayton, Dubilier & Rice, Inc., a Delaware corporation.
----
"Common Stock": See Section 1(a).
------------
"Company": See the introduction to this Agreement.
-------
"Exchange Act": The Securities Exchange Act of 1934, as amended, or
------------
any successor Federal statute, and the rules and regulations thereunder which
shall be in effect at the time. Any reference to a particular section thereof
shall include a reference to the corresponding section, if any, of any such
successor Federal statute, and the rules and regulations thereunder.
"Fund": See the introduction to this Agreement.
----
"Individual Investors": See Section 1(c).
--------------------
"Manager": See the introduction to this Agreement.
-------
"Merger": See Section 1(a).
------
"Merger Agreement": See Section 1(a).
----------------
"MergerCo": See Section 1(a).
--------
"NASD": National Association of Securities Dealers, Inc.
----
"NASDAQ": The NASD Automated Quotation System.
------
2
<PAGE>
"Offer": See Section 4(a).
-----
"Offered Securities": See Section 4(b).
------------------
"Person": Any natural person, firm, partnership, association,
------
corporation, company, trust, business trust, governmental entity or other
entity.
"Proportionate Share: See Section 4(b).
-------------------
"Public Offering": An underwritten public offering of Common Stock
---------------
led by at least one underwriter of nationally recognized standing.
"Registrable Securities": (a) The Common Stock (i) received by the
---------------------- - -
Fund, the Manager and the Trusts as a result of the Merger or (ii) issued to
--
Individual Investors pursuant to a stock subscription agreement or other
agreement that provides that such Common Stock shall be Registrable Securities,
(b) any shares of Common Stock issued pursuant to the terms of, and under the
-
circumstances set forth in, Section 4, and (c) any securities issued or issuable
-
with respect to any Common Stock referred to in the foregoing clauses (w) upon
-
any conversion or exchange thereof, (x) by way of stock divi dend or stock
-
split, (y) in connection with a combination of shares, recapitalization, merger,
-
consolidation or other reorganization or (z) otherwise, in all cases subject to
-
the last paragraph of Section 3.3. As to any particular Registrable Securities,
once issued such securities shall cease to be Registrable Securities when (A) a
-
registration statement (other than a Special Registration pursuant to which such
securities were issued by the Company) with respect to the sale of such
securities shall have become effective under the Securities Act and such
securities shall have been disposed of in accordance with such registration
statement, (B) such securities shall have been distributed to the public in
-
reliance upon Rule 144, (C) such securities shall have been otherwise
-
transferred, new certificates for such securities not bearing a legend
restricting further transfer shall have been delivered by the Company and
subsequent disposition of such securities shall not require registration or
qualification of such securities under the Securities Act or any similar state
law then in force, or (D) such securities shall have ceased to be outstanding.
-
"Registration Expenses": All expenses incident to the Company's
---------------------
performance of its obligations under or compliance with Section 3, including,
but not limited to, all registration and filing fees, all fees and expenses of
complying with securi ties or blue sky laws, all fees and expenses associated
with listing securities on exchanges or NASDAQ, all fees and other expenses
associated with filings with the NASD (including, if required, the fees and
expenses of any "qualified independent underwriter" and its counsel), all
printing expenses, the fees and disbursements of counsel for the
3
<PAGE>
Company and of its independent public accountants, and the expenses of any
special audits made by such accountants required by or incidental to such
performance and com pliance, but not including (a) fees and disbursements of
-
counsel retained by the holders of Registrable Securities or (b) any
-
underwriting discounts or commissions or any trans fer taxes payable in respect
of the sale of Registrable Securities by the holders thereof.
"Requisite Percentage of Stockholders": The holder or holders of at
------------------------------------
least (a) as to the initial request under Section 3.1, 50% (by number of shares)
-
of the Registrable Securities at the time outstanding or (b) as to any other
-
request, 20% (by number of shares) of the Registrable Securities at the time
outstanding.
"Rule 144": Rule 144 (or any successor provision) under the
--------
Securities Act.
"Rule 144A": Rule 144A (or any successor provision) under the
---------
Securities Act.
"Securities Act": The Securities Act of 1933, as amended, or any
--------------
successor Federal statute, and the rules and regulations thereunder which shall
be in effect at the time. Any reference to a particular section thereof shall
include a reference to the corresponding section, if any, of any such successor
Federal statute, and the rules and regulations thereunder.
"Securities and Exchange Commission": The Securities and Exchange
----------------------------------
Commission or any other Federal agency at the time administering the Securities
Act or the Exchange Act.
"Special Registration": (a) The registration of shares of equity
-------------------- -
securities and/or options or other rights in respect thereof to be offered to
directors, members of management, employees, consultants or sales agents,
distributors or similar representatives of the Company or its direct or indirect
Subsidiaries, and/or Individual Investors or (b) the registration of equity
-
securities and/or options or other rights in respect thereof solely on Form S-4
or S-8 or any successor form.
4
<PAGE>
3. Registration.
------------
3.1 Registration on Request.
-----------------------
(a) Requests. Subject to the provisions of Section 3.6, at any time
--------
or from time to time, the Requisite Percentage of Stockholders shall have the
right to make written requests that the Company effect registrations under the
Securities Act of all or part of the Registrable Securities of the holder or
holders making such request, which requests shall specify the intended method of
disposition thereof by such holder or holders.
(b) Obligation to Effect Registration. Upon receipt by the Company
---------------------------------
of any request for registration pursuant to Section 3.1(a), the Company will
promptly give written notice of such requested registration to all holders of
Registrable Securities, and thereupon will use its best efforts to effect the
registration under the Securities Act of
(i) the Registrable Securities which the Company has been so
requested to register pursuant to Section 3.1(a), and
(ii all other Registrable Securities which the Company has been
requested to register by the holders thereof by written request given to
the Company within 30 days after the Company has given such written notice
(which request shall specify the intended method of disposition of such
Registrable Securities),
all to the extent required to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the Registrable Securities so to be
registered. Notwith standing the preceding sentence:
(x) the Company shall not be required to effect a registration
requested pursuant to Section 3.1(a) if (A) with respect to the first three
-
such requests, the aggregate number of Registrable Securities referred to
in clauses (i) and (ii) of the preceding sentence to be included in such
registration shall be less than 22,300,000 shares and (B) thereafter, the
-
number of Registrable Securities to be so included shall be less than
11,150,000, provided, that in no event shall the Company be required to
--------
effect a registration requested pursuant to Section 3.1(a) if the Board
determines, in its good faith judgment, after consultation with a firm of
nationally recognized underwriters that the aggregate net proceeds from the
disposition of the Registrable Securities for which registration has been
so requested would be less than $15,000,000.00; and
5
<PAGE>
(y) if the Board determines in its good faith judgment, after
consultation with a firm of nationally recognized underwriters, that there
will be an adverse effect on a then contemplated Public Offering, the
Requisite Percentage of Stockholders shall be given notice of such fact and
shall be deemed to have with drawn such request and such registration
shall not be deemed to have been effected or requested pursuant to this
Section 3.1.
(c) Registration Statement Form. Each registration requested
---------------------------
pursuant to this Section 3.1 shall be effected by the filing of a registration
statement on Form S-1, Form S-2 or Form S-3 (or any other form which includes
substantially the same information as would be required to be included in a
registration statement on such forms as presently constituted), the choice of
such form to be made by holders holding at least a majority (by number of
shares) of the Registrable Securities as to which registration has been
requested pursuant to this Section 3.1, unless the use of a specific or
different form is required by law.
(d) Expenses. The Company will pay all Registration Expenses in
--------
connection with the first five registrations effected pursuant to a request
under Sec tion 3.1(a). The Registration Expenses in connection with each other
registration, if any, requested under Section 3.1(a) shall be apportioned among
the holders whose Registrable Securities are then being registered, on the basis
of the respective amounts (by number of shares) of Registrable Securities then
being registered. However, in the case of each registration requested under
Section 3.1(a), the Company shall pay all amounts in respect of (A) any
-
allocation of salaries of personnel of the Company and its Subsidiaries or other
general overhead expenses of the Company and its Subsidiaries or other expenses
for the preparation of financial statements or other data normally prepared by
the Com pany and its Subsidiaries in the ordinary course of its business, (B)
-
the expenses of any officers' and directors' liability insurance, (C) the
-
expenses and fees for listing the securities to be registered on each exchange
on which similar securities issued by the Company are then listed or, if no such
securities are then listed, on an exchange selected by the Company or on NASDAQ
and (D) all fees associated with filings required to be made with the NASD
-
(including, if required, the fees and expenses of any "qualified independent
underwriter" and its counsel). Notwithstanding the provisions of this Section
3.1(d) or of Section 3.2, each seller of Registrable Securities shall pay all
Registration Expenses to the extent required to be paid by such seller by
applicable law.
(e) Inclusion of Other Securities. The Company shall not register
-----------------------------
securities (other than Registrable Securities) for sale for the account of any
Person other than the Company in any registration requested pursuant to Section
3.1(a) unless permitted to do so by the written consent of holders holding at
least a majority (by number
6
<PAGE>
of shares) of the Registrable Securities proposed to be sold in such
registration which consent shall not unreasonably be withheld, it being
understood and agreed that such holders shall not be deemed to be unreasonable
if they in their good faith judgment believe that the inclusion of the
securities of any such other Person will adversely affect the price or
marketability of the shares such holders of Registrable Securities or the
Company propose to sell in such registration.
(f) Effective Registration Statement. A registration requested
--------------------------------
pursuant to Section 3.1(a) will not be deemed to have been effected unless it
has become effective for the period specified in Section 3.3(b).
Notwithstanding the preceding sentence, a registration requested pursuant to
Section 3.1(a) which does not become effective after the Company has filed a
registration statement with respect thereto solely by reason of the refusal to
proceed of the holder or holders of Registrable Securities requesting the
registration shall be deemed to have been effected by the Company at the request
of such holder or holders.
(g) Pro Rata Allocation. If the holders of a majority (by number of
-------------------
shares) of the Registrable Securities for which registration is being requested
pursuant to Section 3.1(a) determine, based on consultation with the managing
underwriters or, in an offering which is not underwritten, with an investment
banker, that the number of securi ties to be sold in any such offering should
be limited due to market conditions or otherwise, holders of Registrable
Securities proposing to sell their securities in such registration shall share
pro rata in the number of securities being offered (as determined by the holders
holding a majority (by number of shares) of the Registrable Securities for which
registration is being requested in consultation with the managing underwriters
or investment banker, as the case may be) and registered for their account, such
sharing to be based on the number of Registrable Securities as to which
registration was requested by such holders and the number of securities that the
Company proposed to sell for its own account in such offering, respectively.
3.2 Incidental Registration. If the Company at any time proposes to
-----------------------
register any of its equity securities (as defined in the Exchange Act) under the
Securities Act (other than pursuant to Section 3.1 or pursuant to a Special
Registration), whether or not for sale for its own account, and the registration
form to be used may be used for the registration of Registrable Securities, it
will at such time give prompt written notice to all holders of Registrable
Securities of its intention to do so and, upon the written request of any holder
of Registrable Securities given to the Company within 30 days after the Company
has given any such notice (which request shall specify the Registrable
Securities intended to be disposed of by such holder and the intended method of
disposition thereof), the Company will use its best efforts to effect the
registration under
7
<PAGE>
the Securities Act of all Registrable Securities which the Company has been so
requested to register by the holders thereof, to the extent required to permit
the disposition (in accordance with the intended methods thereof as aforesaid)
of the Registrable Securities so to be registered, provided that:
--------
(a) if such registration shall be in connection with the first public
offering of Common Stock following the Merger, the Company shall not
include any Registrable Securities in such proposed registration if the
Board shall have deter mined, after consultation with the managing
underwriters for such offering, that it is not in the best interests of the
Company to include any Registrable Securities in such registration,
provided that, if the Board makes such a determination, the Company shall
--------
not include in such registration any securities not being sold for the
account of the Company;
(b) if, at any time after giving written notice of its intention to
register any securities and prior to the effective date of the registration
statement filed in connection with such registration, the Board shall
determine for any reason not to register such securities, the Company may,
at its election, give written notice of such determination to each holder
of Registrable Securities that was previously notified of such registration
and, thereupon, shall not register any Registrable Securities in connection
with such registration (but shall nevertheless pay the Registration
Expenses in connection therewith), without prejudice, however, to the
rights of any holder or holders of Registrable Securities to request that a
registration be effected under Section 3.1; and
(c) if the Company shall be advised in writing by the managing
underwriters (or, in connection with an offering which is not underwritten,
by an investment banker) that in their or its opinion the number of
securities requested to be included in such registration (whether by the
Company, pursuant to this Section 3.2 or pursuant to any other rights
granted by the Company to a holder or holders of its securities to request
or demand such registration or inclusion of any such securities in any such
registration) exceeds the number of such securities which can be sold in
such offering,
(i) the Company shall include in such registration the number
(if any) of Registrable Securities so requested to be included which
in the opinion of such underwriters or investment banker, as the case
may be, can be sold and shall not include in such registration any
securities (other than securities being sold by the Company, which
shall have priority in being included in such registration) so
requested to be included other than
8
<PAGE>
Registrable Securities unless all Registrable Securities requested to
be so included are included therein, and
(ii) if in the opinion of such underwriters or investment
banker, as the case may be, some but not all of the Registrable
Securities may be so included, all holders of Registrable Securities
requested to be included therein shall share pro rata in the number of
shares of Registrable Secur ities included in such public offering on
the basis of the number of Regis trable Securities requested to be
included therein by such holders, provided that, in the case of a
registration initially requested or demanded by a holder or holders of
securities other than Registrable Securities, pursuant to a
contractual registration obligation, the holders of the Registrable
Securities requested to be included therein and the holders of such
other securities shall share pro rata (based on the number of shares
if the requested or demanded registration is to cover only Common
Stock and, if not, based on the proposed offering price of the total
number of securities included in such public offering requested to be
included therein),
and the Company shall so provide in any registration agreement hereinafter
entered into with respect to any of its securities.
The Company will pay all Registration Expenses in connection with each
registration of Registrable Securities requested pursuant to this Section 3.2.
No regis tration effected under this Section 3.2 shall relieve the Company from
its obligation to effect registrations upon request under Section 3.1.
3.3 Registration Procedures. If and whenever the Company is required
-----------------------
to use its best efforts to effect the registration of any Registrable Securities
under the Securities Act as provided in Sections 3.1 and 3.2, the Company will
promptly:
(a) subject to clauses (x), (y) and (z) of Section 3.1(b), prepare
and file with the Securities and Exchange Commission within 120 days, after
receipt of a request pursuant to Section 3.1 a registration statement with
respect to such securities, make all required filings with the NASD and use
best efforts to cause such registration statement to become effective;
(b) prepare and file with the Securities and Exchange Commission such
amendments and supplements to such registration statement and the
prospectus used in connection therewith and such other documents as may be
necessary to
9
<PAGE>
keep such registration statement effective and to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement until such time as all of
such securities have been disposed of in accordance with the intended
methods of disposition by the seller or sellers thereof set forth in such
registration statement, but in no event for a period of more than six
months after such registration statement becomes effective;
(c) furnish to counsel (if any) selected by the holders of a majority
(by number of shares) of the Registrable Securities covered by such
registration statement and to counsel for the underwriters in any
underwritten offering copies of all documents proposed to be filed with the
Securities and Exchange Commission (including all documents to be filed on
a confidential basis) in connection with such registration, which documents
will be subject to the review of such counsel;
(d) furnish to each seller of such securities, without charge, such
number of conformed copies of such registration statement and of each such
amendment and supplement thereto (in each case, including all exhibits and
documents filed therewith (other than those filed on a confidential basis),
except that the Company shall not be obligated to furnish any seller of
securities with more than two copies of such exhibits and documents), such
number of copies of the prospectus included in such registration statement
(including each preliminary prospectus and any summary prospectus) in
conformity with the requirements of the Securities Act, and such other
documents, as such seller may reasonably request in order to facilitate the
disposition of the securities owned by such seller;
(e) use its best efforts to register or qualify the securities
covered by such registration statement under such other securities or blue
sky laws of such jurisdictions as each seller shall request, and do any and
all other acts and things which may be necessary or advisable to enable
such seller to consummate the dis position in such jurisdictions of the
securities owned by such seller, except that the Company shall not for any
such purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction wherein it is not so qualified, subject
itself to taxation in any jurisdiction wherein it is not so subject, or
take any action which would subject it to general service of process in any
jurisdiction wherein it is not so subject;
(f) furnish to each seller a signed counterpart, addressed to the
sellers, of
10
<PAGE>
(i) an opinion of counsel for the Company experienced in
securities law matters, dated the effective date of the registration
statement, and
(ii) a "comfort" letter signed by the independent public
accountants who have issued an audit report on the Company's financial
statements included in the registration statement, subject to such
seller having executed and delivered to the independent public
accountants such certificates and documents as such accountants shall
reasonably request,
covering substantially the same matters with respect to the registration
statement (and the prospectus included therein) and, in the case of such
accountants' letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of issuer's
counsel and in accountants' letters delivered to the underwriters in
underwritten public offerings of securities;
(g) (i) notify each seller of any securities covered by such
-
registration statement if such registration statement, at the time it or
any amendment thereto became effective, 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, and, as
promptly as practicable, prepare and file with the Securities and Exchange
Commission a post-effective amendment to such registration statement and
use best efforts to cause such post-effective amendment to become effective
such that such registration statement, as so amended, shall not contain 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, and (ii) notify each holder of Registrable Securities cov
--
ered by such registration statement, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, if 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, in light of the circumstances under which they were
made, not misleading, and, as promptly as is practicable, prepare and
furnish to such holder a reasonable number of copies of a supplement to or
an amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such securities, 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, in light of the circum stances under which they were made, not
misleading;
11
<PAGE>
(h) otherwise use its best efforts to comply with all applicable
rules and regulations of the Securities and Exchange Commission, and make
available to its security holders, as soon as reasonably practicable, an
earnings statement of the Company complying with the provisions of Section
11(a) of the Securities Act and Rule 158 under the Securities Act;
(i) notify each seller of any securities covered by such registration
statement (i) when such registration statement, or any post-effective
-
amendment to such registration statement, shall have become effective, or
any amendment of or supplement to the prospectus used in connection
therewith shall have been filed, (ii) of any request by the Securities and
--
Exchange Commission to amend such registration statement or to amend or
supplement such prospectus or for additional information, (iii) of the
---
issuance by the Securities and Exchange Commission of any stop order
suspending the effectiveness of such registration statement or of any order
preventing or suspending the use of any preliminary prospectus, and (iv) of
--
the suspension of the qualification of such securities for offering or sale
in any jurisdiction, or of the institution of any proceedings for any of
such purposes;
(j) use its best efforts (i) (A) to list such securities on any
- -
securities exchange on which the Common Stock is then listed or, if no
Common Stock is then listed, on an exchange selected by the Company, if
such listing is then permitted under the rules of such exchange or (B) if
-
such listing is not practicable or the Board determines that quotation as a
NASDAQ National Market System security is preferable, to secure designation
of such securities as a NASDAQ "national market system security" within the
meaning of Rule 11Aa2-1 under the Exchange Act or, failing that, to secure
NASDAQ authorization for such securities, and, without limiting the
foregoing, to arrange for at least two market makers to register as such
with respect to such securities with the NASD, (ii) to provide a transfer
--
agent and registrar for such Registrable Securities not later than the
effective date of such registration statement and (iii) to obtain a CUSIP
---
number for the Registrable Securities; and
(k) use every reasonable effort to obtain the lifting of any stop
order that might be issued suspending the effectiveness of such
registration statement or of any order preventing or suspending the use of
any preliminary prospectus.
The Company may require each seller of any securities as to which any
registration is being effected to furnish to the Company such information
regarding such seller and the distribution of such securities as the Company may
from time to time
12
<PAGE>
reasonably request in writing and as shall be required by law in connection
therewith. Each such holder agrees to furnish promptly to the Company all
information required to be disclosed in order to make the information previously
furnished to the Company by such holder not materially misleading.
The Company agrees not to file or make any amendment to any
registration statement with respect to any Registrable Securities, or any
amendment of or supplement to the prospectus used in connection therewith, which
refers to any seller of any securities covered thereby by name, or otherwise
identifies such seller as the holder of any securities of the Company, without
the consent of such seller, such consent not to be unreasonably withheld, except
that no such consent shall be required for any disclosure that is required by
law.
By acquisition of Registrable Securities, each holder of such
Registrable Securities shall be deemed to have agreed that upon receipt of any
notice from the Com pany pursuant to Section 3.3(g), such holder will promptly
discontinue such holder's disposition of Registrable Securities pursuant to the
registration statement covering such Registrable Securities until such holder
shall have received, in the case of clause (i) of Section 3.3(g), notice from
the Company that such registration statement has been amended, as contemplated
by Section 3.3(g), and, in the case of clause (ii) of Section 3.3(g), copies of
the supplemented or amended prospectus contemplated by Sec tion 3.3(g). If so
directed by the Company, each holder of Registrable Securities will deliver to
the Company (at the Company's expense) all copies, other than permanent file
copies, in such holder's possession of the prospectus covering such Registrable
Securities at the time of receipt of such notice. In the event that the Company
shall give any such notice, the period mentioned in Section 3.3(b) shall be
extended by the number of days during the period from and including the date of
the giving of such notice to and in cluding the date when each seller of any
Registrable Securities covered by such registration statement shall have
received the copies of the supplemented or amended prospectus contemplated by
Section 3.3(g).
Notwithstanding any other provision of this Agreement, the parties
hereto acknowledge that the Company shall have no obligation to prepare or file
any registration statement prior to the time that financial information required
to be included therein is available for inclusion therein.
3.4 Underwritten Offerings. The provisions of this Section 3.4 do
----------------------
not establish additional registration rights but instead set forth procedures
applicable, in addi tion to those set forth in Sections 3.1 through 3.3, to any
registration which is an underwritten offering.
13
<PAGE>
(a) Underwritten Offerings Exclusive. Whenever a registration
--------------------------------
requested pursuant to Section 3.1 is for an underwritten offering, only
securities which are to be distributed by the underwriters may be included in
the registration.
(b) Underwriting Agreement. If requested by the underwriters for any
----------------------
underwritten offering by holders of Registrable Securities pursuant to a
registration re quested under Section 3.1, the Company shall enter into an
underwriting agreement with such underwriters for such offering, such agreement
to be reasonably satisfactory in sub stance and form to the holders of a
majority (by number of shares) of the Registrable Securities to be covered by
such registration and to the underwriters and to contain such representations
and warranties by the Company and such other terms and provisions as are
customarily contained in agreements of this type, including, but not limited to,
indemnities to the effect and to the extent provided in Section 3.7, provisions
for the delivery of officers' certificates, opinions of counsel and accountants'
"comfort" letters and hold-back arrangements. The holders of Registrable
Securities to be distributed by such underwriters shall be parties to such
underwriting agreement and may, at their option, require that any or all of the
representations and warranties by, and the agreements on the part of, the
Company to and for the benefit of such underwriters be made to and for the
benefit of such holders of Registrable Securities and that any or all of the
conditions precedent to the obligations of such underwriters under such
underwriting agreement shall also be conditions precedent to the obligations of
such holders of Registrable Securities. No such holder of Registrable
Securities shall be required by the Company to make any representations or
warranties to, or agreements with, the Company or the underwriters other than as
set forth in Section 3.4(e) and representations, warranties or agreements
regarding such holder and such holder's intended method of distribution.
(c) Selection of Underwriters. Whenever a registration requested
-------------------------
pursuant to Section 3.1 is for an underwritten offering, the holders of a
majority of the shares requested to be included in such registration will have
the right to select one or more underwriters to administer the offering at least
one of which shall be an underwriter of nationally recognized standing
reasonably satisfactory to the Company. If the Company at any time proposes to
register any of its securities under the Securities Act for sale for its own
account and such securities are to be distributed by or through one or more
underwriters, the Company will have the right to select one or more underwriters
to administer the offering at least one of which shall be an underwriter of
nationally recognized standing.
(d) Incidental Underwritten Offerings. Subject to the provisions of
---------------------------------
the proviso to the first sentence of Section 3.2, if the Company at any time
proposes to register
14
<PAGE>
any of its equity securities under the Securities Act (other than pursuant to
Section 3.1 or pursuant to a Special Registration), whether or not for its own
account, and such securities are to be distributed by or through one or more
underwriters, the Company will give prompt written notice to all holders of
Registrable Securities of its intention to do so and, if requested by any holder
of Registrable Securities, will arrange for such underwriters to include the
Registrable Securities to be offered and sold by such holder among those to be
distributed by such underwriters. The holders of Registrable Securities to be
distributed by such underwriters shall be parties to the underwriting agreement
between the Company and such underwriters and may, at their option, require that
any or all of the representations and warranties by, and the other agreements on
the part of, the Company to and for the benefit of such underwriters shall also
be made to and for the benefit of such holders of Registrable Securities and
that any or all of the conditions precedent to the obligations of the
underwriters under such underwriting agreement shall also be conditions
precedent to the obligations of such holders of Regis trable Securities. No such
holder of Registrable Securities shall be required by the Company to make any
representations or warranties to, or agreements with, the Company or the
underwriters other than as set forth in Section 3.4(e) and representations,
warranties or agreements regarding such holder and such holder's intended method
of distribution.
(e) Hold Back Agreements. If and whenever the Company proposes to
--------------------
register any of its equity securities under the Securities Act, whether or not
for its own account (other than pursuant to a Special Registration), or is
required to use its best efforts to effect the registration of any Registrable
Securities under the Securities Act pursuant to Section 3.1 or 3.2, each holder
of Registrable Securities, if required by the managing underwriter, agrees by
acquisition of such Registrable Securities not to effect (other than pursuant to
such registration) any public sale or distribution, including, but not limited
to, any sale pursuant to Rule 144 or Rule 144A, of any Registrable Securities,
any other equity securities of the Company or any securities convertible into or
exchangeable or exercisable for any equity securities of the Company during the
20 day period prior to or the 90 day period following the effective date of such
registration, provided that each holder of Registrable Securities further agrees
that, if required by the managing underwriter for such registered offering, he
shall not effect any such public sale or distribution during the 180 day period
following the effective date of such registration, and the Company agrees to
cause each holder of any equity security, or of any security convertible into or
exchangeable or exercisable for any equity security, of the Company purchased or
acquired from the Company at any time other than in a Public Offering to enter
into a similar agreement with the Company. The Company will continue to file
timely and accurately all reports required by Sections 13(a) and 15(d) of the
Exchange Act, until the earlier to occur of (x) the fifth anniversary of the
date hereof
15
<PAGE>
and (y) such time as the Common Stock is no longer registered under
Section 12 of the Exchange Act.
3.5 Preparation; Reasonable Investigation. In connection with the
-------------------------------------
preparation and filing of each registration statement registering Registrable
Securities under the Securities Act, the Company will give the holders of such
Registrable Securities so to be registered and their underwriters, if any, and
their respective counsel and accountants the opportunity to participate in the
preparation of such registration statement, each prospectus included therein or
filed with the Securities and Exchange Commission, and each amendment thereof or
supplement thereto, and will give each of them such access to its books and
records and such opportunities to discuss the business of the Company with its
officers and the independent public accountants who have issued audit reports on
its financial statements as shall be necessary, in the opinion of such holders'
and such underwriters' respective counsel, to conduct a reasonable investigation
within the meaning of the Securities Act.
3.6 Other Registrations. If and whenever the Company is required to
-------------------
use its best efforts to effect the registration of any Registrable Securities
under the Securities Act pursuant to Section 3.1 or 3.2, and if such
registration shall not have been withdrawn or abandoned, the Company shall not
be obligated to and shall not file any registration statement with respect to
any of its securities (including Registrable Securities) under the Securities
Act (other than a Special Registration), whether of its own accord or at the
request or demand of any holder or holders of such securities, until a period of
six months shall have elapsed from the effective date of such previous
registration.
3.7 Indemnification.
---------------
(a) Indemnification by the Company. In the event of any registration
------------------------------
of any Registrable Securities under the Securities Act pursuant to Section 3.1
or 3.2, the Company will indemnify and hold harmless the seller of such
securities, its directors, officers, and employees, each other person who
participates as an underwriter, broker or dealer in the offering or sale of such
securities and each other person, if any, who con trols such seller or any such
participating person within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act, against any and all losses, claims,
damages or liabilities, joint or several, to which such seller or any such
director, officer, employee, participating person or controlling person may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
-
statement of a fact contained in any registration statement under which such
securities were registered under the Securities Act, any preliminary prospectus,
final prospectus or summary prospectus contained therein or related thereto, or
any amendment or supplement thereto, or (ii) any omission or alleged omission to
--
state a fact required to be stated in any such registration statement,
preliminary
16
<PAGE>
prospectus, final prospectus, summary prospectus, amendment or supplement
or necessary to make the statements therein not misleading; and the
Company will reimburse such seller and each such director, officer, employee,
participating person and controlling person for any legal or any other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, liability, action or pro ceeding, provided that the Company
--------
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability or expense arises out of or is based upon an untrue statement
or omission made in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by such seller or participating person expressly for use in the
preparation thereof and provided, further, that the Company shall not be liable
-------- -------
in any such case to the extent that any such loss, claim, damage, liability or
expense arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission in the prospectus, if such untrue
statement or alleged untrue statement or omission or alleged omission is
completely corrected in an amendment or supplement to the prospectus and the
seller of Registrable Securities thereafter fails to deliver such prospectus as
so amended or supplemented prior to or concurrently with the sale of Registrable
Securities to the person asserting such loss, claim, damage, liability or
expense after the Company had furnished such seller with a sufficient number of
copies of the same or if the seller received notice from the Company of the
existence of such untrue statement or alleged untrue statement or omission or
alleged omission and the seller continued to dispose of Registrable Securities
prior to the time of the receipt of either (A) an amended or sup plemented
-
prospectus which completely corrected such untrue statement or omission or (B) a
-
notice from the Company that the use of the existing prospectus may be resumed.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such seller or any such director, officer,
employee, participating person or controlling person and shall survive the
transfer of such securities by such sell er.
(b) Indemnification by the Sellers. In the event of any registration
------------------------------
of any Registrable Securities under the Securities Act pursuant to Section 3.1
or 3.2, each of the prospective sellers of such securities, will indemnify and
hold harmless the Company, each director of the Company, each officer of the
Company who shall sign such registration statement, each other person who
participates as an underwriter, broker or dealer in the offering or sale of such
securities and each other person, if any, who controls the Company or any such
participating person within the meaning of Section 15
17
<PAGE>
of the Securities Act or Section 20 of the Exchange Act, against any and all
losses, claims, damages or liabilities, joint or several, to which the Company
or any such director, officer, employee, participating person or controlling
person may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) arise out of or are based upon (i) any untrue statement or alleged
-
untrue statement of a fact contained in any registration statement under which
such securities were registered under the Securities Act, any preliminary
prospectus, final prospectus or summary prospectus contained therein or related
thereto, or any amendment or supplement thereto, if such statement or omission
was made in reliance upon and in conformity with written information furnished
to the Company by such seller expressly for use in the preparation of such
registration statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement or (ii) any omission or alleged omission to
--
state a factwith respect to such seller required to be stated in any such
registration statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement or necessary to make the statements therein
not misleading; and the seller will reimburse the Company and each such
director, officer, employee, participating person and controlling person for any
legal or any other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, liability, action or
proceeding, provided that the liability of each such seller will be in
--------
proportion to and limited to the net amount received by such seller (after
deducting any underwriting discount and expenses) from the sale of Registrable
Securities pursuant to such registration statement. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf of
the Company or any such director, officer, participating person or controlling
person and shall survive the transfer of such securities by such seller.
(c) Notices of Claims, etc. Promptly after receipt by an indemnified
----------------------
party of notice of the commencement of any action or proceeding involving a
claim re ferred to in the preceding paragraphs of this Section 3.7, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party hereunder, give written notice to the latter of the
commencement of such action, provided that the failure of any indemnified party
--------
to give notice as provided therein shall not relieve the indemni fying party of
its obligations under the preceding paragraphs of this Section 3.7. In case any
such action is brought against an indemnified party, the indemnifying party will
be entitled to participate therein and to assume the defense thereof, jointly
with any other indemnifying party similarly notified to the extent that it may
wish, with counsel rea sonably 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 will not be
liable to such indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof,
18
<PAGE>
provided that if such indemnified party and the indemnifying party reasonably
- --------
determine, based upon advice of their respective independent counsel, that a
conflict of interest may exist between the indemnified party and the
indemnifying party with respect to such action and that it is advisable for such
indemnified party to be represented by separate counsel, such indemnified party
may retain other counsel, reasonably satisfactory to the indemnifying party, to
represent such indemnified party, and the indemnifying party shall pay all
reasonable fees and expenses of such counsel. No indemnifying party, in the
defense of any such claim or litigation, shall, except with the consent of such
indemnified party, which consent shall not be unreasonably withheld, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation.
(d) Other Indemnification. Indemnification similar to that specified
---------------------
in the preceding paragraphs of this Section 3.7 (with appropriate modifications)
shall be given by the Company and each seller of Registrable Securities with
respect to any required registration or other qualification of such Registrable
Securities under any Federal or state law or regulation of governmental
authority other than the Securities Act.
(e) Other Remedies. If for any reason the foregoing indemnity is
--------------
unavailable, or is insufficient to hold harmless an indemnified party, other
than by reason of the exceptions provided therein, then the indemnifying party
shall contribute to the amount paid or payable by the indemnified party as a
result of such losses, claims, damages, liabilities or expenses (i) in such
-
proportion as is appropriate to reflect the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other from
the offering of Registrable Securities (taking into account the portion of the
proceeds of the offering realized by each such party) or (ii) if the alloca tion
--
provided by clause (i) above is not permitted by applicable law, or provides a
lesser sum to the indemnified party than the amount hereinafter calculated, in
such proportion as is appropriate to reflect not only the relative benefits
received by the indemnifying party on the one hand and the indemnified party on
the other but also the relative fault of the indemnifying party and the
indemnified party as well as any other relevant equitable considerations. 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. No party shall be
liable for contribution under this Section 3.7(e) except to the extent and under
such circumstances as such party would have been liable to indemnify under this
Section 3.7 if such indemnification were enforceable under applicable law.
19
<PAGE>
(f) Officers and Directors. As used in this Section 3.7, the terms
----------------------
"officers" and "directors" shall include the partners of the holders of
Registrable Securi ties which are partnerships and the trustees and
beneficiaries of the holders of Registrable Securities which are trusts.
4. Miscellaneous.
-------------
4.1 Amendments and Waivers. This Agreement may be amended, and the
----------------------
Company may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company shall have obtained the
written consent to such amendment, action or omission to act, of the holder or
holders of at least 66% of the shares then constituting Registrable Securities
provided that this Agreement may not be amended in a manner adversely affecting
- --------
any holder of Registrable Securities which does not adversely affect all holders
of Registrable Securities without the consent of such holder. Each holder of
any Registrable Securities at the time or thereafter outstanding shall be bound
by any consent authorized by this Section 5.1, whether or not such Registrable
Securities shall have been marked to indicate such consent. No amendment ,
modification or discharge of this Agreement, and no waiver hereunder, shall be
valid or binding unless set forth in writing. Any such waiver shall constitute
a waiver only with respect to the specific matter described in such writing and
shall in no way impair the rights of the party or parties granting such waiver
in any other respect or at any other time.
4.2 Nominees for Beneficial Owners. In the event that any
------------------------------
Registrable Securities are held by a nominee for the beneficial owner thereof,
the beneficial owner thereof may, at its election and unless notice is otherwise
given to the Company by the record owner, be treated as the holder of such
Registrable Securities for purposes of any request or other action by any holder
or holders of Registrable Securities pursuant to this Agreement or any
determination of any number or percentage of shares of Registrable Securities
held by any holder or holders of Registrable Securities contemplated by this
Agreement. If the beneficial owner of any Registrable Securities so elects, the
Company may require assurances reasonably satisfactory to it of such owner's
beneficial ownership of such Registrable Securities.
4.3 Successors, Assigns and Transferees. This Agreement shall be
-----------------------------------
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns. In addition, and whether or not any express
assignment shall have been made, the provisions of this Agreement which are for
the benefit of the parties hereto other than the Company shall also be for the
benefit of and enforceable by any subsequent holder of any Registrable
Securities, subject to the provisions respecting the
20
<PAGE>
minimum numbers or percentages of shares of Registrable Securities required in
order to be entitled to certain rights, or take certain actions, contained
herein.
4.4 Notices. All notices and other communications required or
-------
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been given if delivered personally or sent by certified or
express mail, return receipt requested, postage prepaid, or by any recognized
international equivalent of such delivery, to the Company, the Fund or the
Manager, as the case may be, at the following addresses or to such other address
as the Company, the Fund or the Manager, as the case may be, shall specify by
notice to the others:
(i) if to the Company, to it at:
-
Dynatech Corporation
3 New England Executive Park
Burlington, Massachusetts 01803
Attention: General Counsel
---------
(ii) if to the Manager or the Trusts, to the address of the Manager
--
set forth on the signature page hereof.
(iii) if to the Fund, to:
---
The Clayton & Dubilier Private Equity
Fund V Limited Partnership
Foulkstone Plaza, Suite 102
1403 Foulk Road
Wilmington, Delaware 19803
Attention: Joseph L. Rice, III
---------
All such notices and communications shall be deemed to have been received on the
date of delivery if delivered personally or on the third business day after the
mailing thereof. Copies of any notice or other communication given under this
Agreement shall also be given to:
Clayton, Dubilier & Rice, Inc.
375 Park Avenue, 18th Floor
New York, New York 10152
Attention: Joseph L. Rice, III
---------
21
<PAGE>
and
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Franci J. Blassberg, Esq.
---------
and
Hale and Dorr LLP
60 State Street
Boston, MA 02109
Attention: Peter B. Tarr, Esq.
---------
4.5 No Inconsistent Agreements. The Company will not hereafter enter
--------------------------
into any agreement with respect to its securities which is inconsistent with the
rights granted to the holders of Registrable Securities by this Agreement.
4.6 Remedies; Attorneys' Fees. Each holder of Registrable
-------------------------
Securities, in addition to being entitled to exercise all rights provided herein
or granted by law, in cluding recovery of damages, will be entitled to specific
performance of its rights under this Agreement. The Company agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of any provision of this Agreement and hereby agrees to
waive the defense in any action for specific performance that a remedy at law
would be adequate.
4.7 Stock Splits, etc. Each party hereto agrees that it will vote to
-----------------
effect a stock split (forward or reverse, as the case may be) with respect to
any Registrable Securities in connection with any registration of such
Registrable Securities hereunder, or otherwise, if the managing underwriter
shall advise the Company in writing (or, in connection with an offering that is
not underwritten, if an investment banker shall advise the Company in writing)
that in their or its opinion such a stock split would facilitate or increase the
likelihood of success of the offering. Each party hereto agrees that any number
of shares of Common Stock referred to in this Agreement shall be equitably ad
justed to reflect any stock split, stock dividend, stock combination,
recapitalization or similar transaction.
4.8 Term. This Agreement shall be effective as of the date hereof
----
and shall continue in effect thereafter until the earliest of (a) its
-
termination by the consent of the parties hereto or their respective successors
in interest, (b) the date on which no
-
22
<PAGE>
Registrable Securities remain outstanding, (c) the dissolution, liquidation or
-
winding up of the Company and (d) the tenth anniversary of the date hereof.
-
4.9 Severability. If any provision of this Agreement is inoperative
------------
or unenforceable for any reason, such circumstances shall not have the effect of
rendering the provision in question inoperative or unenforceable in any other
case or circumstance, or of rendering any other provision or provisions herein
contained invalid, inoperative, or unenforceable to any extent whatsoever. The
invalidity of any one or more phrases, sentences, clauses, Sections or
subsections of this Agreement shall not affect the remaining portions of this
Agreement.
4.10 Headings. The headings contained in this Agreement are for
--------
purposes of convenience only and shall not affect the meaning or interpretation
of this Agreement.
4.11 Counterparts. This Agreement may be executed in several
------------
counterparts, each of which shall be deemed an original and all of which
together constitute one and the same instrument.
4.12 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO ITS PRINCIPLES OR RULES OF CONFLICT OF LAWS TO THE EXTENT SUCH
PRINCIPLES OR RULES WOULD REQUIRE OR PERMIT
4.13 No Third Party Beneficiaries. Except as provided in Sections
----------------------------
3.7 and 5.3, nothing in this Agreement shall confer any rights upon any
person or entity other than the parties hereto, each such party's respective
successors and permitted assigns.
4.14 Consent to Jurisdiction. Each party irrevocably submits to the
-----------------------
exclusive jurisdiction of (a) the Supreme Court of the State of New York, New
-
York County, and (b) the United States District Court for the Southern District
-
of New York, for the purposes of any suit, action or other proceeding arising
out of this Agreement or any transaction contemplated hereby (and agrees not to
commence any such suit, action or proceeding except in such courts). Each party
further agrees that service of any process, summons, notice or document by U.S.
registered mail to such party's respective address set forth above shall be
effective service of process for any such suit, action or proceeding. Each
party irrevocably and unconditionally waives any objection to the laying of
venue of any such suit, action or proceeding in (i) the Supreme Court of the
-
23
<PAGE>
State of New York, New York County, and (ii) the United States District Court
--
for the Southern District of New York, that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.
4.1 Waiver of Jury Trial. Each party hereby waives, to the fullest
--------------------
extent permitted by applicable law, any right it may have to a trial by jury in
respect of any suit, action or proceeding arising out of this Agreement or any
transaction contemplated hereby. Each party (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 have been induced to enter into the Agreement by, among other things,
the mutual waivers and certifications in this Section 5.15.
IN WITNESS WHEREOF, each of the undersigned has executed this
Agreement or caused this Agreement to be executed on its behalf as of the date
first written above.
DYNATECH CORPORATION
By: /s/ Allan M. Kline
------------------
Name: Allan M. Kline
Title: Corporate Vice President, Chief
Financial Officer and Treasurer
CLAYTON, DUBILIER & RICE
FUND V LIMITED PARTNERSHIP
By: CD&R Associates V
Limited Partnership, its
general partner
By: CD&R Investment Associates II,
Inc., a general partner
By: /s/ Joseph L. Rice, III
-----------------------
Name: Joseph L. Rice, III
Title: Chairman
24
<PAGE>
MR. JOHN F. RENO
/s/ John F. Reno
----------------
Address: 31 Prospect Street
Winchester, MA 01890
THE JOHN F. RENO 1997 QUALIFIED ANNUITY TRUST UNDER
TRUST AGREEMENT DATED AS OF THE 28TH DAY OF NOVEMBER,
1997
By: /s/ John F. Reno
----------------
Name: John F. Reno
Title: Trustee
By: /s/ John D. Hamilton
--------------------
Name: John D. Hamilton, Jr.
Title: Trustee
THE SUZANNE M. RENO 1997 QUALIFIED ANNUITY TRUST UNDER
TRUST AGREEMENT DATED AS OF THE 28TH DAY OF NOVEMBER,
1997
By: /s/ John F. Reno
----------------
Name: John F. Reno
Title: Trustee
By: /s/ John D. Hamilton
--------------------
Name: John D. Hamilton, Jr.
Title: Trustee
25
<PAGE>
EXHIBIT 10.18
CONFORMED COPY
--------------
FIRST ASSIGNMENT AND ASSUMPTION AGREEMENT
FIRST ASSIGNMENT AND ASSUMPTION AGREEMENT, dated as of May 21, 1998
(this "Agreement"), between Dynatech Corporation, a Massachusetts corporation
(the "Assignor") and Telecommunications Techniques Co., LLC, a Delaware limited
liability company (the "Assignee").
WHEREAS, the Assignor is the sole shareholder of the Assignee; and
WHEREAS, the Assignor wishes to transfer certain assets to the
Assignee and the Assignee has agreed to assume certain liabilities from
Assignor.
NOW, THEREFORE, in consideration of the mutual promises made herein
and the mutual benefits to be derived therefrom, the parties hereto agree as
follows:
1. Assignment. Assignor hereby transfers, conveys, assigns and
----------
delivers to Assignee, Assignor's entire right, title and interest in and to all
of the assets of Assignor reflected on the balance sheet of Assignor, other than
Assignor's right, title and interest in and to shares of capital stock and other
equity security interests in the subsidiaries of Assignor.
2. Assumption of Liabilities. Assignee hereby irrevocably and
-------------------------
unconditionally assumes and agrees to pay, honor and discharge, when due and
otherwise in accordance with the relevant governing agreements and instruments,
all of the obligations and liabilities of Assignor reflected on the balance
sheet of Assignor.
3. Further Assurances. Each Assignment and Assignee hereby agrees
------------------
that, from time to time at the other's request, it will execute and deliver such
further instruments of conveyance, transfer and assignment or of assumption and
release, as the case may be, and will take such action as the other may
reasonably request in order to more fully give effect to and implement the
transactions contemplated by this Agreement.
4. Miscellaneous. This Agreement shall be binding upon and shall
-------------
inure to the benefit of the parties hereto and their respective successors and
assigns. This Agreement may be modified only by an instrument executed by each
of the parties hereto. This Agreement shall be construed, performed and
enforced in accordance with the laws of the State of New York. The headings in
this Agreement are for purposes of
<PAGE>
reference only and shall not limit or otherwise affect the meaning hereof. This
Agreement may be executed in any number of counterparts, each of which shall be
an original, but all of which shall constitute one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers as of the date first above
written.
DYNATECH CORPORATION
By /s/ John F. Reno
----------------
Name: John F. Reno
Title: Chairman, President and
Chief Executive Officer
TELECOMMUNICATIONS TECHNIQUES CO.,
LLC
By: Dynatech Corporation, its sole member
By /s/ John F. Reno
----------------
Name:John F. Reno
Title: Chairman, President and
Chief Executive Officer
of Dynatech Corporation, the Sole Member of Telecommunications
Techniques Co., LLC
<PAGE>
Exhibit 10.19
[Execution Copy]
$275,000,000
DYNATECH CORPORATION
TTC MERGER CO. LLC
(A COMPANY TO BE MERGED INTO
TELECOMMUNICATIONS TECHNIQUES CO., LLC)
9 3/4% SENIOR SUBORDINATED NOTES DUE 2008
PURCHASE AGREEMENT
------------------
May 14, 1998
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
c/o Credit Suisse First Boston Corporation
Eleven Madison Avenue,
New York, N.Y. 10010-3629
Dear Sirs:
1. Introductory. Dynatech Corporation, a Massachusetts corporation
("Dynatech" or the "Company") and its wholly owned subsidiary TTC Merger Co.
LLC, a Delaware limited liability company ("TTC Merger Co" and, together with
Dynatech, the "Initial Issuers") propose, subject to the terms and conditions
stated herein, to issue and sell to Credit Suisse First Boston Corporation
("CSFBC") and J.P. Morgan Securities Inc. (the "Initial Purchasers")
U.S.$275,000,000 principal amount of its 9 3/4% Senior Subordinated Notes Due
2008 (the "Notes") to be issued under an indenture dated as of May 21, 1998 (the
"Indenture") among Dynatech, TTC Merger Co, and State Street Bank and Trust
Company, a Massachusetts trust company, as Trustee (the "Trustee"). Immediately
after the issuance of the Notes on the Closing Date (as defined in Section 3
below), (i) TTC Merger Co will be merged into Telecommunications Techniques Co.,
LLC, a Delaware limited liability company to be formed prior to the Closing Date
(as defined below) ("TTC"), with TTC as the surviving company (the "Second
Merger"), (ii) TTC will succeed to and assume all of the obligations under the
Indenture and the Notes and (iii) Dynatech will be released from its obligations
as a primary obligor under the Indenture and the Notes. Dynatech will guarantee
the monetary obligations of TTC Merger Co and TTC under the Indenture, on a
senior subordinated basis (the "Parent Guarantee"). On the Closing Date TTC,
Dynatech and the trustee will enter into a supplement to the Indenture, dated as
of the Closing Date (the "First Supplemental Indenture") whereby TTC will
confirm its assumption of all of the obligations under the Indenture and
Dynatech will confirm its obligations under the Parent Guarantee. As a result
of the Second Merger and other transactions related thereto, TTC will be a
wholly-owned subsidiary of Dynatech and the direct or indirect parent company of
all of Dynatech's other active subsidiaries, including Itronix Corporation, a
Washington corporation ("Itronix"),
<PAGE>
Industrial Computer Source Inc., a California corporation ("ICS"), AIRSHOW Inc.,
a California corporation ("AIRSHOW") and da Vinci Systems, Inc., a Florida
corporation ("da Vinci"). TTC, Itronix ICS, AIRSHOW and da Vinci are
collectively referred to as the "Subsidiaries" of the Company.
The Notes have not been registered under the U.S. Securities Act of 1933,
as amended (the "Securities Act"), and may be offered and sold only (1) outside
the United States in reliance on Regulation S under the Securities Act
("Regulation S") and (2) in the United States to qualified institutional buyers
(as defined in Rule 144A under the Securities Act) in reliance on Rule 144A
under the Securities Act ("Rule 144A") (such Notes to be represented by one or
more global Notes in registered form).
Holders (including the Initial Purchasers and their direct and indirect
transferees) of the Notes will be entitled to the benefits of a Registration
Rights Agreement, substantially in the form attached hereto as Annex I (the
"Registration Rights Agreement"), pursuant to which Dynatech and TTC each will
agree to use its reasonable best efforts to file with the Securities and
Exchange Commission (the "Commission") (i) a registration statement under the
Securities Act (the "Exchange Offer Registration Statement") registering an
issue of senior subordinated notes of TTC (including the Parent Guarantee) (the
"Exchange Securities") which are identical in all material respects to the Notes
(except that the Exchange Securities will not contain terms with respect to
transfer restrictions or with respect to additional interest) and (ii) under
certain circumstances, a shelf registration statement pursuant to Rule 415 under
the Securities Act (the "Shelf Registration Statement").
2. Representations and Warranties of the Company and TTC Merger Co. Each
Initial Issuer represents and warrants to the Initial Purchasers that:
(a) A preliminary offering circular and an offering circular relating
to the Notes has been prepared by the Company. Such preliminary offering
circular and offering circular, as supplemented as of the date of this
Agreement, are hereinafter collectively referred to as the "Offering
Circular". On the date of this Agreement, the Offering Circular does not
include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading. The preceding sentence does not apply to
statements in or omissions from the Offering Circular based upon written
information furnished to the Company by any Initial Purchaser through CSFBC
specifically for use therein, it being understood and agreed that the only
such information is that described as such in Section 7(b).
(b) When the Notes are delivered and paid for pursuant to this
Agreement on the Closing Date, the Indenture will have been duly
authorized, executed and delivered by the Initial Issuers, the First
Supplemental Indenture will have been duly authorized, and (on the Closing
Date after the consummation of the Second Merger) executed and delivered by
Dynatech and TTC, such Notes will have been duly authorized, executed,
issued and delivered by the Initial Issuers and will conform to the
description thereof contained in the Offering Circular in all material
respects, and the Indenture and such Notes will constitute valid and
legally binding obligations of
2
<PAGE>
each Initial Issuer (and, upon the consummation of the Second Merger and
the due authorization of the First Supplemental Indenture by TTC and the
execution and delivery thereof by each party thereto, of TTC), enforceable
in accordance with their terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles.
(c) The Company has been duly incorporated and is a validly existing
corporation in good standing under the laws of the State of Massachusetts,
with corporate power and authority to own its properties and conduct its
business as described in the Offering Circular; and the Company is duly
qualified to do business as a foreign corporation in all other
jurisdictions in which its ownership or lease of property or the conduct of
its business requires such qualification, except in such jurisdiction in
which the failure to so qualify would not reasonably be expected to have a
material adverse effect on the business, properties, results of operations
or condition (financial or other) of the Company and the Company's
consolidated subsidiaries taken as a whole (a "Material Adverse Effect");
TTC Merger Co has been and TTC, on or prior to the Closing Date, will be,
duly organized and is or in the case of TTC will be a validly existing
limited liability company in good standing under the laws of the State of
Delaware, with limited liability company power and authority to own its
properties and conduct its business as described in the Offering Circular;
and each of TTC Merger Co and TTC is or will be on or prior to the Closing
Date duly qualified to do business as a foreign corporation in all other
jurisdictions in which its ownership or lease of property or the conduct of
its business requires such qualification (except as would not reasonably be
expected to have a Material Adverse Effect).
(d) Each Subsidiary of the Company (other than TTC) has been duly
incorporated and is validly existing in good standing under the laws of the
jurisdiction of its incorporation or organization, with corporate power and
authority to own its properties and conduct its business as described in
the Offering Circular; and each such Subsidiary of the Company is duly
qualified to do business as a foreign corporation in all other
jurisdictions in which its ownership or lease of property or the conduct of
its business requires such qualification (except as would not reasonably be
expected to have a Material Adverse Effect); all of the issued and
outstanding capital stock of each such Subsidiary of the Company has been
duly authorized and validly issued and is fully paid and nonassessable; and
the capital stock of each such Subsidiary is owned by the Company, directly
or through subsidiaries, free and clear of any lien, encumbrance, defect,
charge, security interest, restriction upon voting or transfer or any other
claim of any third party, except as (i) would not reasonably be expected to
have a Material Adverse Effect or (ii) may arise pursuant to the Senior
Credit Facility (as defined in the Offering Circular) in connection with
the transactions contemplated thereunder.
(e) This Agreement has been duly authorized, executed and delivered by
each Initial Issuer and on the Closing Date, an agreement or instrument
(the "Purchase Agreement Supplement") by which TTC will assume all
obligations and acquire all
3
<PAGE>
rights of TTC Merger Co under this Agreement and become a party to this
Agreement will be duly authorized, executed and delivered by TTC.
(f) On the Closing Date, the Registration Rights Agreement will have
been duly authorized, executed and delivered by Dynatech and TTC and, upon
such execution and delivery, will constitute the valid and legally binding
obligation of Dynatech and TTC, enforceable in accordance with its terms,
subject to (i) bankruptcy, insolvency, fraudulent transfer, reorganization
moratorium and similar laws relating to or affecting creditors' rights and
to general equitable principles and (ii) limitations with respect to
enforceability of provisions providing for indemnification or contribution,
arising under applicable law (including court decisions) or public policy.
(g) The Offering Circular, as of its respective date, contains all of
the information that, if requested by a prospective purchaser of the Notes,
would be required to be provided to such prospective purchaser pursuant to
Rule 144A(d)(4) under the Securities Act.
(h) No consent, approval, authorization, or order of, or filing,
registration or qualification with, any governmental agency or body or any
court or arbitrator is required for the consummation of the transactions
contemplated by this Agreement in connection with the issuance and sale of
the Notes by the Company, TTC Merger Co or TTC and the Exchange Securities
by TTC, except for (i) such consents, approvals, authorizations, filings,
registrations or qualifications as may be required to be obtained or made
under the Securities Act, the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act") and applicable state securities laws as provided in
the Registration Rights Agreement, (ii) such consents, approvals,
authorizations, orders or filings as have been made or obtained, or (iii)
as disclosed in the Offering Circular.
(i) The execution, delivery and performance of this Agreement, the
Registration Rights Agreement, the Indenture and the First Supplemental
Indenture (collectively, the "Transaction Documents"), and the issuance,
authentication, sale and delivery of the Notes and compliance with the
terms and provisions thereof (A) will not conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, or result in the creation or imposition of any lien, charge
or encumbrance upon any property or assets of the Company or any of its
Subsidiaries pursuant to, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or any of
its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound or to which any of the property or assets of the
Company or any of its Subsidiaries is subject, (B) will not result in any
violation of the provisions of the charter or by-laws, or equivalent
constituent documents, of the Company or any of its Subsidiaries and (C)
will not result in the violation of the provisions of any statute or any
judgment, order, decree, rule or regulation of any court or arbitrator or
governmental agency or body having jurisdiction over the Company or any of
its Subsidiaries or any of their respective properties or assets, except in
each case under clauses (A), (B) and (C) where such breach, violation,
default, lien, charge or encumbrance would not reasonably be expected to
have a Material Adverse Effect; and, on the Closing Date, each of the
4
<PAGE>
Company, TTC Merger Co and TTC will have corporate or limited liability
company power and authority (i) to execute and deliver the Transaction
Documents to which it is a party, (ii) (in the case of the Initial Issuers)
to authorize, issue, sell and (in the case of the Company) guarantee the
Notes as contemplated by this Agreement and (iii) (in the case of TTC) to
succeed to and assume all of the primary obligations of TTC Merger Co and
the Company under the Indenture and the Notes as contemplated by the First
Supplemental Indenture.
(j) Each Transaction Document conforms in all material respects to the
descriptions thereof contained in the Offering Circular.
(k) Except as disclosed in the Offering Circular, the Company and its
Subsidiaries have or (in the case of TTC) on the Closing Date will have
good and marketable title to all real properties and good and valid title
to all other properties and assets owned by them, in each case free from
liens, encumbrances and defects not permitted by the Indenture, except for
such failures to have such title and for such liens, encumbrances and
defects as would not reasonably be expected to have a Material Adverse
Effect; and except as disclosed in the Offering Circular, the Company and
its Subsidiaries hold any leased real or personal property under valid and
enforceable leases, except as would not reasonably be expected to have a
Material Adverse Effect.
(l) The Company and its Subsidiaries possess or (in the case of TTC)
on the Closing Date will possess adequate licenses, certificates,
authorities or permits issued by and have made all material declarations
and filings with, the appropriate governmental agencies or bodies necessary
or desirable for the ownership of their properties or to conduct the
business now operated by them except for any that must be transferred or
reapplied for as a result of the merger of any entity with TTC or the
merger of TTC and TTC Merger Co, and except as would not reasonably be
expected to have a Material Adverse Effect and have not received any notice
of proceedings relating to the revocation or modification of any such
license, certificate, authority or permit that would individually or in the
aggregate reasonably be expected to have a Material Adverse Effect.
(m) No labor dispute with the employees of the Company or any
Subsidiary thereof exists or, to the best knowledge of the Company or TTC
Merger Co is contemplated or threatened that would reasonably be expected
to have a Material Adverse Effect.
(n) Except as disclosed in the Offering Circular, (i) the Company and
its Subsidiaries own, possess or can acquire or (in the case of TTC) on the
Closing Date will own, possess, or be able to acquire all adequate rights
to use all material trademarks, service marks, trademark registrations,
service mark registrations, trade names and other rights to inventions,
know-how, patents, patent applications, copyrights, licenses and other
intellectual property, including (without limitation) trade secrets and
other unpatented and/or patentable proprietary or confidential information,
systems or procedures, (collectively, "intellectual property rights")
necessary to
5
<PAGE>
conduct the business now operated by them, or presently employed by them,
except to the extent that the failure to own, possess or acquire such
adequate rights would not reasonably be expected to have a Material Adverse
Effect and (ii) no claim has been asserted and is pending claiming that the
intellectual property rights infringe on or conflict with asserted rights
of others that would individually or in the aggregate reasonably be
expected to have a Material Adverse Effect.
(o) Except as disclosed in the Offering Circular, neither the Company
nor any of its Subsidiaries is in violation of any applicable statute,
rule, regulation, decision or order of any governmental agency or body or
any court, domestic or foreign, relating to the use, disposal or release of
hazardous or toxic substances or relating to the protection or restoration
of the environment or human exposure to hazardous or toxic substances
(collectively, "environmental laws"), owns or operates any real property
contaminated with any substance that is subject to any applicable
environmental laws, is liable for any off-site disposal or contamination
pursuant to any applicable environmental laws, or is subject to any claim
relating to any applicable environmental laws, which violation,
contamination, liability or claim would individually or in the aggregate
reasonably be expected to have a Material Adverse Effect.
(p) Except as disclosed in the Offering Circular, there are no pending
actions, suits or proceedings against or affecting the Company, any of its
subsidiaries or any of their properties that would individually or in the
aggregate reasonably be expected to have a Material Adverse Effect or would
materially and adversely affect the ability of the Company, TTC Merger Co
or (after the Second Merger) TTC to perform their obligations under the
Indenture (as supplemented by the First Supplemental Indenture in the case
of the Company and TTC) or this Agreement.
(q) The historical consolidated financial statements (including the
related notes) contained in the Offering Circular have been prepared in
accordance with generally accepted accounting principles in the United
States consistently applied throughout the periods covered thereby except
as disclosed in the notes thereto and fairly present in all material
respects the financial position of the entities purported to be covered
thereby at the respective dates indicated and the results of their
operations and their cash flows for the respective periods indicated; the
assumptions used in preparing the pro forma financial statements included
in the Offering Circular provide a reasonable basis for presenting the
estimated effects of the transactions or events described therein; and the
related pro forma adjustments give appropriate effect to those assumptions,
and the pro forma columns therein reflect the proper application of those
adjustments to the corresponding historical financial statement amounts.
(r) Except as disclosed in the Offering Circular, since the date of
the latest audited financial statements included in the Offering Circular,
there has not been any development or event that would reasonably be
expected to have a Material Adverse Effect.
6
<PAGE>
(s) Neither of the Initial Issuers is and TTC will not be an open-end
investment company, unit investment trust or face-amount certificate
company that is required to be registered under Section 8 of the United
States Investment Company Act of 1940, as amended (the "Investment Company
Act"); and neither Initial Issuer is and, after giving effect to the
offering and sale of the Notes and the application of the proceeds thereof
as described in the Offering Circular, neither Initial Issuer nor TTC will
be an "investment company" as defined in the Investment Company Act that is
required to be registered as such thereunder.
(t) No securities of the Initial Issuers of the same class (within the
meaning of Rule 144A(d)(3) under the Securities Act) as the Notes are
listed on any national securities exchange registered under Section 6 of
the Exchange Act or quoted in a U.S. automated inter-dealer quotation
system.
(u) The offer and sale of the Notes by the Initial Issuers to the
Initial Purchasers in the manner contemplated by this Agreement will be
exempt from the registration requirements of the Securities Act by reason
of Section 4(2) thereof and Regulation S thereunder; and it is not
necessary to qualify the Indenture in respect of the Notes under the United
States Trust Indenture Act; provided that the foregoing representation and
warranty assumes the accuracy of the representations, warranties and
agreements of the Initial Purchasers contained in Section 4 hereof.
(v) Neither of the Initial Issuers, nor any of their affiliates, nor
any person acting on their behalf (i) has, within a six-month period prior
to the date hereof, offered or sold in the United States or to any U.S.
person (as such term is defined in Regulation S) the Notes or any security
of the same class or series as the Notes or (ii) has offered or will offer
or sell the Notes (A) in the United States by means of any form of general
solicitation or general advertising within the meaning of Rule 502(c) under
the Securities Act or (B) with respect to any securities sold in reliance
on Rule 903 of Regulation S, by means of any directed selling efforts
within the meaning of Rule 902(c) of Regulation S. Each of the Initial
Issuers, any of their affiliates or any person acting on their behalf has
complied and will comply with the offering restrictions requirement of
Regulation S. The Initial Issuers and TTC have not entered and will not
enter into any contractual arrangement with respect to the distribution of
the Notes except for this Agreement prior to its termination.
(w) On the Closing Date, each of the Company, TTC Merger Co and TTC
(immediately after and giving effect to the issuance and assumption of the
Notes and to the other transactions related thereto as described in the
Offering Circular) will be Solvent. As used in this paragraph, the term
"Solvent" means, with respect to a particular entity and to a particular
date, that on such date (a) on a pro forma basis, the present fair market
value (or present fair saleable value) of such entity's assets is not less
than the Company's probable liabilities (including contingent liabilities);
(b) such entity should be able to pay its debts as they become absolute and
mature; and (c) the capital remaining in such entity would not be
unreasonably small for the business in which such entity is engaged after
giving due consideration to the prevailing practice in the industry in
which such entity is engaged. In computing the
7
<PAGE>
amount of such contingent liabilities at any time, it is intended that such
liabilities will be computed at the amount that, in the light of all the
facts and circumstances existing at such time, represents the amount that
can reasonably be expected to become an actual or matured liability.
(x) Neither the Company nor any of its Subsidiaries is a party to any
contract, agreement or understanding with any person that would give rise
to a valid claim against the Initial Purchasers for a brokerage commission,
finder's fee or like payment in connection with the offering and sale of
the Notes, other than the fees payable to the Initial Purchasers in
connection with the offer and sale of the Notes.
(y) The Initial Issuers, TTC and their affiliates have not taken and
will not take, directly or indirectly, any action prohibited by Regulation
M under the Exchange Act in connection with the offering of the Notes.
(z) Except as disclosed in the Offering Circular, the proceeds to the
Initial Issuers from the offering of the Notes will not be used to purchase
or carry any security.
(aa) Neither the Initial Issuers nor any of the Subsidiaries is (i) in
violation of its charter or by-laws, (ii) in default in any material
respect, and no event has occurred which, with notice or lapse of time or
both, would constitute such a default, in the due performance or observance
of any term, covenant or condition contained in any material indenture,
mortgage, deed of trust, loan agreement or other material agreement or
instrument to which it is a party or by which it is bound or to which any
of its property or assets is subject or (iii) in violation in any material
respect of any law, ordinance, governmental rule, regulation or court
decree to which it or its property or assets may be subject, except in each
case of clauses (i), (ii) and (iii) above, as would not reasonably be
expected to have a Material Adverse Effect.
3. Purchase, Sale and Delivery of Notes. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company and TTC Merger Co agree to
sell to the Initial Purchasers, and the Initial Purchasers agree, severally and
not jointly, to purchase from the Company and TTC Merger Co, at a purchase price
of (x) 97% of the principal amount thereof plus (y) accrued interest from May
21, 1998 to the Closing Date (as hereinafter defined) the respective principal
amounts of Notes set forth opposite the names of the Initial Purchasers in
Schedule A hereto.
The Company and TTC Merger Co will deliver the Notes to CSFBC for the
accounts of the Initial Purchasers against payment of the purchase price in
Federal (same day) funds by wire transfer to an account at a bank acceptable to
CSFBC drawn to such order as the Company may direct, at the office of Debevoise
& Plimpton, at 10:00 A.M., New York time, on May 21, 1998 or at such other time
not later than seven full business days thereafter as CSFBC and the Company
determine, such time being herein referred to as the "Closing Date." The Notes
so to be delivered will be in definitive fully registered, global book entry
form, and will be made available for checking and packaging at the above office
of Debevoise & Plimpton on the Closing Date.
8
<PAGE>
4. Representations by Initial Purchasers; Resale by Initial Purchasers.
(a) Each Initial Purchaser severally, and not jointly, represents and warrants
to the Company that it is an "accredited investor" within the meaning of
Regulation D under the Securities Act.
(b) Each Initial Purchaser severally acknowledges that the Notes have not
been registered under the Securities Act and may not be offered or sold within
the United States or to, or for the account or benefit of, U.S. persons except
in accordance with Regulation S or pursuant to an exemption from the
registration requirements of the Securities Act. Each Initial Purchaser
severally represents and agrees that it has offered and sold the Notes and will
offer and sell the Notes only in accordance with Rule 903 or Rule 144A under the
Securities Act ("Rule 144A"). Accordingly, neither such Initial Purchaser nor
its affiliates, nor any persons acting on its or their behalf, has engaged or
will engage in any directed selling efforts with respect to the Notes, and such
Initial Purchaser, its affiliates and all persons acting on its or their behalf
has complied and will comply with the offering restrictions requirement of
Regulation S. Each Initial Purchaser severally agrees that, at or prior to
confirmation of sale of the Notes, other than a sale pursuant to Rule 144A, such
Initial Purchaser will have sent to each distributor, dealer or person receiving
a selling concession, fee or other remuneration that purchases the Notes from it
during the distribution compliance period a confirmation or notice to
substantially the following effect:
"The Notes covered hereby have not been registered under the U.S.
Securities Act of 1933 (the "Securities Act") and may not be offered
or sold within the United States or to, or for the account or benefit
of, U.S. persons as part of their distribution at any time except in
either case in accordance with Regulation S (or Rule 144A if
available) under the Securities Act. Terms used above have the
meanings given to them by Regulation S."
Terms used in this subsection (b) have the meanings given to them by Regulation
S.
(c) Each Initial Purchaser severally, and not jointly, agrees that it and
each of its affiliates has not entered and will not enter into any contractual
arrangement with respect to the distribution of the Notes except for any such
arrangements with the other Initial Purchaser or affiliates of the other Initial
Purchaser or with the prior written consent of the Company.
(d) Each Initial Purchaser severally, and not jointly, agrees that it and
each of its affiliates will not offer or sell the Notes in the United States by
means of any form of general solicitation or general advertising, within the
meaning of Rule 502(c) under the Securities Act, including, but not limited to
(i) any advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio, or
(ii) any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising. Each Initial Purchaser severally agrees,
with respect to resales made in reliance on Rule 144A of any of the Notes, to
deliver either with the confirmation of such resale or otherwise prior to
settlement of such resale a notice to the effect that the resale of such Notes
has been made in reliance upon the exemption from the registration requirements
of the Securities Act provided by Rule 144A.
9
<PAGE>
(e) Prior to or simultaneously with any confirmation of sale to any
purchaser in the initial resale, each Initial Purchaser will deliver to each
such purchaser of the Notes in connection with its original distribution of the
Notes a copy of the Offering Circular as amended and supplemented at the date of
such delivery.
(f) Each of the Initial Purchasers severally represents and agrees that (i)
it has not offered or sold and prior to the date six months after the date of
issue of the Notes will not offer or sell any Notes to persons in the United
Kingdom except to persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which have not
resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995; (ii) it
has complied and will comply with all applicable provisions of the Financial
Services Act 1986 with respect to anything done by it in relation to the Notes
in, from or otherwise involving the United Kingdom; and (iii) it has only issued
or passed on and will only issue or pass on in the United Kingdom any document
received by it in connection with the issue of the Notes to a person who is of a
kind described in Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1996 or is a person to whom such document may
otherwise lawfully be issued or passed on.
5. Certain Agreements of the Company and TTC Merger Co. Each of the
Initial Issuers, jointly and severally, agrees with the Initial Purchasers that:
(a) The Initial Issuers will advise CSFBC promptly of any proposal to
amend or supplement the Offering Circular and will not effect such
amendment or supplementation without CSFBC's consent (which consent shall
not be reasonably withheld). If, at any time prior to the completion of
the resale of the Notes by the Initial Purchasers any event occurs as a
result of which the Offering Circular as then amended or supplemented 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 the
light of the circumstances under which they were made, not misleading, or
if it is necessary at any such time to amend or supplement the Offering
Circular to comply with any applicable law, the Initial Issuers promptly
will notify CSFBC of such event and promptly will prepare, at their own
expense, an amendment or supplement which will correct such statement or
omission or effect such compliance. Neither CSFBC's consent to, nor the
Initial Purchasers' delivery to offerees or investors of, any such
amendment or supplement shall constitute a waiver of any of the conditions
set forth in Section 6.
(b) The Initial Issuers will furnish to the Initial Purchasers or
their counsel copies of any preliminary offering circular, the Offering
Circular and all amendments and supplements to such documents, in each case
as soon as available and in such quantities as the Initial Purchasers or
their counsel reasonably request. At any time when the Notes are
outstanding and are "restricted securities" within the meaning of Rule
144(a)(3) under the Securities Act and the Company is not subject to
Section 13 or 15(d) of the Exchange Act, the Initial Issuers will promptly
furnish or cause to be furnished to CSFBC (and, upon request, to the other
Initial Purchasers) and, upon
10
<PAGE>
request of holders and prospective purchasers of the Notes, to such holders
and purchasers, copies of the information required to be delivered to
holders and prospective purchasers of the Notes pursuant to Rule 144A(d)(4)
under the Securities Act (or any successor provision thereto) in order to
permit compliance with Rule 144A in connection with resales by such holders
of the Notes. The Initial Issuers will pay the expenses of printing and
distributing to the Initial Purchasers and their counsel all such
documents.
(c) The Initial Issuers will arrange for the qualification of the
Notes for sale and the determination of their eligibility for investment
under the laws of such states in the United States as CSFBC reasonably
designates and will continue such qualifications in effect so long as
reasonably required for the initial resale of the Notes by the Initial
Purchasers; provided that the Initial Issuers will not be required to
qualify as a foreign corporation or to file a general consent to service of
process in any such state or other jurisdiction or to subject themselves to
taxation in respect of doing business in any state or other jurisdiction in
which they are not otherwise so subject.
(d) During the period of two years after the Closing Date, the Company
will, upon request, make available to CSFBC, and the other Initial
Purchasers and any holder of Notes a copy of the restrictions on transfer
applicable to the Notes.
(e) During the period of two years after the Closing Date, the Company
will not, and will not permit any of its affiliates (as defined in Rule 144
under the Securities Act) to, resell any of the Notes that have been
reacquired by any of them, except for Notes purchased by the Company or any
of its affiliates and resold in a transaction registered under the
Securities Act.
(f) The Initial Issuers will pay all reasonable expenses incidental to
the performance of their obligations under this Agreement, the Indenture
(as supplemented by the First Supplemental Indenture) and the Registration
Rights Agreement including (i) the fees and expenses of the Trustee and its
professional advisers; (ii) all expenses in connection with the execution,
issue, authentication, packaging and initial delivery of the Notes, the
preparation, printing and distribution of this Agreement, the Notes, the
Indenture, the First Supplemental Indenture, the Registration Rights
Agreement, the Offering Circular and amendments and supplements thereto,
and any other document relating to the issuance, offer, sale and delivery
of the Notes; (iii) the cost of qualifying the Notes for trading in The
Portal/SM/ Market ("PORTAL") of The Nasdaq Stock Market, Inc. and any
expenses incidental thereto (iv) the cost of any advertising approved by
the Initial Issuers in connection with the issue of the Notes, (v) for any
expenses (including fees and disbursements of counsel) incurred in
connection with qualification of the Notes for sale under the laws of such
jurisdictions in the United States as CSFBC reasonably designates and the
printing of memoranda relating thereto, (vi) for any fees charged by
investment rating agencies for the rating of the Notes, (vii) for expenses
incurred in distributing preliminary offering circulars and the Offering
Circular (including any amendments and supplements thereto) to the Initial
Purchasers, (viii) fees and expenses of the Initial Issuers' counsel and
independent
11
<PAGE>
accountants; (ix) all expenses and application fees incurred in the
approval of the Notes for book-entry transfer by DTC; and (x) all other
costs and expenses incident to the performance of the obligations of the
Company, TTC Merger Co or TTC under this Agreement which are not otherwise
specifically provided for in this Section 5(f); provided, however, that
-------- -------
except as provided in the last sentence of this Section 5(f) and Section 9,
the Initial Purchasers shall pay their own costs and expenses, including
the costs and expenses of their counsel, any taxes on the Notes which they
may sell and the expenses of advertising and offering of the Notes made by
the Initial Purchasers. The Initial Issuers will also pay or reimburse the
Initial Purchasers (to the extent incurred by them prior to the Closing
Date) for all reasonable travel expenses of the Initial Purchasers and the
Initial Issuers officers and employees and any other reasonable expenses of
the Initial Purchasers and the Initial Issuers in connection with attending
or hosting meetings with prospective purchasers of the Notes.
(g) In connection with the initial offering of the Notes, until the
earlier of (i) such time as CSFBC shall have notified the Initial Issuers
and the other Initial Purchasers of the completion by the Initial
Purchasers of the initial resale of the Notes and (ii) 180 days after the
Closing Date, none of the Initial Issuers and their affiliates has or will,
either alone or with one or more other persons, bid for or purchase, for
any account in which it has a beneficial interest, any Notes or attempt to
induce any person to purchase any Notes, in any such case for the purpose
of creating actual, or apparent, active trading in, or of raising the price
of, the Notes. CSFBC agrees to give such notice promptly upon such
completion.
(h) For a period of 180 days after the Closing Date (if the sale of
the Notes by the Initial Issuers to the Initial Purchaser shall have
occurred), the Initial Issuers will not offer, sell, contract to sell,
pledge, or otherwise dispose of, directly or indirectly, any dollar
denominated debt securities issued or guaranteed by the Company or any of
its subsidiaries and having a maturity of more than one year from the date
of issue, except (i) issuances of Exchange Securities pursuant to the
Registration Rights Agreement, (ii) grants of employee stock options
pursuant to the terms of a plan in effect on the date hereof, issuances of
Notes pursuant to the exercise of such options or the exercise of any other
employee stock options outstanding on the date hereof or (iii) promissory
notes or other debt securities issued or guaranteed in immaterial amounts
in the ordinary course of business.
(i) The Initial Issuers will use their reasonable best efforts to
assist the Initial Purchasers in arranging for the Notes to be eligible for
clearance and settlement through the Depository Trust Company ("DTC").
(j) Except following the effectiveness of the Exchange Offer
Registration Statement or the Shelf Registration Statement, as the case may
be, the Initial Issuers will not, and will cause its affiliates not to, nor
will authorize or knowingly permit any person acting on their behalf to,
solicit any offer to buy or offer to sell the Notes by means of any form of
general solicitation or general advertising within the meaning of
Regulation D or in any manner involving a public offering within the
meaning of Section 4(2) of the Securities Act; and each of the Company, TTC
Merger Co and
12
<PAGE>
TTC will not offer, sell, contract to sell or otherwise dispose of,
directly or indirectly, any securities under circumstances where such
offer, sale, contract or disposition would cause the exemption afforded by
Section 4(2) of the Securities Act or the safe harbor afforded by
Regulation S thereunder to cease to be applicable to the offering and sale
of the Notes as contemplated by this Agreement and the Offering Circular.
(k) The Company, TTC Merger Co and TTC will apply the net proceeds
from the sale of the Notes as set forth in the Offering Circular under the
heading "Use of Proceeds".
(l) The Initial Issuers will not, nor will cause their affiliates to,
sell, offer for sale or solicit offers to buy or otherwise negotiate in
respect of any security (as such term is defined in the Securities Act)
which could be integrated with the sale of the Notes in a manner which
would require registration of the Notes under the Securities Act.
(m) On or before the Closing Date, (i) TTC will authorize and execute
and deliver the Purchase Agreement Supplement, in form and substance
reasonably satisfactory to the Initial Purchasers and (ii) TTC and Dynatech
will duly authorize, execute and deliver the Registration Rights Agreement.
6. Conditions of the Obligations of the Initial Purchasers. The
obligations of the Initial Purchasers to purchase and pay for the Notes will be
subject to the accuracy of the representations and warranties on the part of the
Company and TTC Merger Co to the accuracy of the statements of officers of the
Company and TTC Merger Co herein made pursuant to the provisions hereof, to the
performance by each of the Company and TTC Merger Co of its obligations
hereunder and to the following additional conditions precedent:
(a) The Initial Purchasers shall have received a letter, dated the
date of this Agreement, of Coopers & Lybrand confirming that they are
independent public accountants within the meaning of the Securities Act and
the applicable published rules and regulations thereunder ("Rules and
Regulations") and substantially in the form of Exhibit D hereto, or
otherwise in form and substance reasonably satisfactory to the Initial
Purchasers.
(b) The Initial Purchasers shall have received an opinion, dated such
the Closing Date, of Debevoise & Plimpton, counsel for the Initial Issuers
substantially in the form of Exhibit A hereto, or otherwise in form and
substance reasonably satisfactory to the Initial Purchasers.
(c) The Initial Purchasers shall have received an opinion, dated such
the Closing Date, of Hale and Dorr LLP, counsel for the Initial Issuers,
substantially in the form of Exhibit B hereto, or otherwise in form and
substance reasonably satisfactory to the Initial Purchasers.
(d) The Initial Purchasers shall have received an opinion, dated such
the Closing Date, of Mark V. B. Tremallo, Esq., general counsel of the
Company,
13
<PAGE>
substantially in the form of Exhibit C hereto, or otherwise in form and
substance reasonably satisfactory to the Initial Purchasers.
(e) The Initial Purchasers shall have received from Simpson Thacher &
Bartlett, counsel for the Initial Purchasers, such opinion or opinions,
dated the Closing Date, with respect to the validity of the Notes, the
Offering Circular, the exemption from registration for the offer and sale
of the Notes by the Company and TTC Merger Co to the Initial Purchasers and
the resales by the Initial Purchasers as contemplated hereby and other
related matters as CSFBC may reasonably require, and the Company and TTC
Merger Co shall have furnished to such counsel such documents as they
request for the purpose of enabling them to pass upon such matters. In
rendering such opinion, Simpson Thacher & Bartlett may rely as to the
incorporation of the Company and all other matters governed by
Massachusetts law upon the opinion of Hale and Dorr LLP referred to above.
(f) The Company shall have furnished to the Initial Purchasers a
certificate, dated the Closing Date, of their chief executive officer or
any vice president and a principal financial or accounting officer in which
such officers, to the best of their knowledge and after reasonable
investigation shall state that (i) as of the Closing Date, the
representations and warranties of the Company and TTC Merger Co in this
Agreement are true and correct in all material respects, the Company and
TTC Merger Co have in all material respects complied with all agreements
and satisfied all conditions on its part to be performed or satisfied
hereunder on or prior to the Closing Date, (ii) the Offering Circular did
not include any untrue statement of a material fact and did not omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading, and since the date thereof, no event
has occurred which should have been set forth in a supplement or amendment
to the Offering Circular and (iii) subsequent to the date of the most
recent financial statements contained in the Offering Circular, there has
been no material adverse change, nor any development or event that, in his
reasonable judgment, would reasonably be expected to result in a material
adverse change, in the condition (financial or other), business, properties
results of operations or business of the Company and its subsidiaries taken
as a whole, except as set forth in or contemplated by the Offering Circular
or as described in such certificate.
(g) The Initial Purchasers shall have received a letter, dated the
Closing Date, of Coopers & Lybrand which meets the requirements of
subsection (a) of this Section 6, except that the specified date referred
to in such subsection will be a date not more than three business days
prior to the Closing Date for the purposes of this subsection.
(h) The Initial Purchasers shall have received a counterpart of the
Registration Rights Agreement which shall have been executed and delivered
by a duly authorized officer or member of TTC and Dynatech.
14
<PAGE>
(i) The recapitalization of Dynatech and the financings and
transactions related thereto shall have been consummated substantially as
described in the Offering Circular.
(j) Subsequent to the execution of this Agreement, there shall not
have occurred (i) any change, or any development or event that would
reasonably be expected to result in a change, in the condition (financial
or other), business, properties or results of operations of the Company and
its subsidiaries, taken as a whole, which, in the reasonable judgment of
the Initial Purchasers, is material and adverse and makes it impracticable
to proceed with the completion of the offering contemplated herein or the
resale of and payment for the Notes; (ii) any suspension or limitation of
trading in securities generally on the New York Stock Exchange, or any
setting of minimum prices for trading on such exchange or in the over-the-
counter market; (iii) any banking moratorium declared by U.S. Federal or
New York authorities; or (iv) any outbreak or escalation of major
hostilities in which the United States is involved, any declaration of war
by Congress or any other substantial national or international calamity or
emergency if, in the reasonable judgment of the Initial Purchasers, the
effect of any such outbreak, escalation, declaration, calamity or emergency
makes it impracticable to proceed with completion of the offering
contemplated herein or the resale of or payment for the Notes.
(k) The Company and TTC Merger Co shall have furnished to the Initial
Purchasers such additional documents and opinions as they may reasonably
require for the purpose of enabling them to pass upon the issuance and sale
of the Notes as herein contemplated, or in order to evidence the accuracy
of any of the representations or warranties, or the fulfillment of any of
the conditions, herein contained.
The Company, TTC Merger Co and TTC will furnish the Initial Purchasers with
such conformed copies of such opinions, certificates, letters and documents as
the Initial Purchasers reasonably request. CSFBC may in its sole discretion
waive on behalf of the Initial Purchasers compliance with any conditions to the
obligations of the Initial Purchasers hereunder, whether in respect of the
Closing Date or otherwise.
7. Indemnification and Contribution. (a) The Initial Issuers will
jointly and severally indemnify and hold harmless each Initial Purchaser against
any losses, claims, damages or liabilities, joint or several, to which such
Initial Purchaser may become subject, under the Securities Act or the Exchange
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of any untrue statement or alleged untrue
statement of any material fact contained in the Offering Circular, or any
amendment or supplement thereto, or any related preliminary offering circular,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading, and
will reimburse each Initial Purchaser for any legal or other expenses reasonably
incurred by such Initial Purchaser in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, that
-------- -------
neither Initial Issuer will 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 in or omission
15
<PAGE>
or alleged omission from any of such documents in reliance upon and in
conformity with written information furnished to the Initial Issuers by any
Initial Purchaser through CSFBC specifically for use therein, it being
understood and agreed that the only such information consists of the information
described as such in subsection (b) below; and provided further, that the
-------- -------
foregoing indemnity with respect to the preliminary offering circular shall not
inure to the benefit of any Initial Purchaser from whom the person asserting any
such losses, claims, damages or liabilities purchased Notes, to the extent that
any such losses, claims, damages or liabilities of such Initial Purchaser result
from a fact that such Initial Purchaser sold Notes to a person in an initial
resale to whom there was not sent or given at or prior to the written
confirmation of the sale of such Notes, a copy of the final offering circular
(as amended and supplemented), if the Initial Issuers had previously furnished
such amendments or supplements to such Initial Purchaser prior to confirmation
of the sale of such Notes to such person by such Initial Purchaser and the
losses, claims, damages or liabilities of such Initial Purchaser result from an
untrue statement or omission of a material fact contained in the preliminary
offering circular, which was corrected in the final offering circular.
(b) Each Initial Purchaser will severally and not jointly indemnify and
hold harmless the Company, TTC Merger Co and (upon due execution and delivery of
the Purchase Agreement Supplement) TTC against any losses, claims, damages or
liabilities to which the Company, TTC Merger Co and (upon due execution and
delivery of the Purchase Agreement Supplement) TTC may become subject, under the
Securities Act or the Exchange Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in the Offering Circular, or any amendment or supplement thereto, or
any related preliminary offering circular, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company by such
Initial Purchaser through CSFBC specifically for use therein, and will reimburse
any legal or other expenses reasonably incurred by the Company, TTC Merger Co or
(upon due execution and delivery of the Purchase Agreement Supplement) TTC in
connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred, it being understood and
agreed that the only such information furnished by any Initial Purchaser
consists of the following information in the Offering Circular furnished on
behalf of each Initial Purchaser: the last paragraph at the bottom of the cover
page concerning the terms of the offering by the Initial Purchasers; the legend
concerning over-allotments and stabilizing on the top of page (i); and the first
and third sentences of paragraph five, the seventh paragraph and the last
paragraph under the caption "Plan of Distribution".
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
subsection (a) or (b) above, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under subsection (a) or (b) above. In case any such action is brought
16
<PAGE>
against any indemnified party and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party (if such counsel is counsel to the
indemnifying party and the representation of the indemnified party would present
such counsel with a conflict of interest, the indemnified party will have the
right to employ separate counsel, and the indemnifying party will bear the
reasonable fees, costs and expenses of only one such separate counsel for all
indemnified parties) and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action in which any indemnified party is a party to the extent such
settlement is binding upon such indemnified party unless such settlement
includes an unconditional release of such indemnified party from all liability
on any claims that are the subject matter of such action.
(d) If the indemnification provided for in this Section is unavailable or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subsection (a) or (b) above (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company, TTC
Merger Co and TTC on the one hand and the Initial Purchasers on the other from
the offering of the Notes or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Company, TTC Merger Co and TTC on the one hand and the
Initial Purchasers on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities as well as any
other relevant equitable considerations. The relative benefits received by the
Company, TTC Merger Co and TTC on the one hand and the Initial Purchasers on the
other shall be deemed to be in the same proportion as the total net proceeds
from the offering (before deducting expenses) received by the Company, TTC
Merger Co and TTC bear to the total discounts and commissions received by the
Initial Purchasers from the Company and TTC Merger Co under this Agreement. The
relative fault 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, TTC Merger Co or TTC or the Initial Purchasers and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The amount paid by an indemnified
party as a result of the losses, claims, damages or liabilities referred to in
the first sentence of this subsection (d) shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any action or claim which is the subject of this
subsection (d). Notwithstanding the provisions of this subsection (d), no
Initial Purchaser shall be required to contribute any amount in excess of the
amount by which the total price at which the Notes purchased by it were resold
exceeds the amount of any damages which such Initial Purchaser has otherwise
been required to pay by reason of such
17
<PAGE>
untrue or alleged untrue statement or omission or alleged omission. The Initial
Purchasers' obligations in this subsection (d) to contribute are several in
proportion to their respective purchase obligations and not joint.
(e) The obligations of the Company, TTC Merger Co and TTC under this
Section shall be in addition to any liability which the Company, TTC Merger Co
and TTC may otherwise have and shall extend, upon the same terms and conditions,
to each person, if any, who controls any Initial Purchaser within the meaning of
the Securities Act or the Exchange Act; and the obligations of the Initial
Purchasers under this Section shall be in addition to any liability which the
respective Initial Purchasers may otherwise have and shall extend, upon the same
terms and conditions, to each person, if any, who controls the Company, TTC
Merger Co or TTC within the meaning of the Securities Act or the Exchange Act.
(f) 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.
8. Default of Initial Purchasers. If any Initial Purchaser or Initial
Purchasers default in their obligations to purchase Notes hereunder and the
aggregate principal amount of the Notes that such defaulting Initial Purchaser
or Initial Purchasers agreed but failed to purchase does not exceed 10% of the
total principal amount of the Notes, CSFBC may make arrangements satisfactory to
the Company for the purchase of such Notes by other persons, including any of
the Initial Purchasers, but if no such arrangements are made by the Closing
Date, the non-defaulting Initial Purchasers shall be obligated severally, in
proportion to its commitments hereunder, to purchase the Notes that such
defaulting Initial Purchasers agreed but failed to purchase. If any Initial
Purchaser or Initial Purchasers so default and the aggregate principal amount
number of the Notes with respect to which such default or defaults occur exceeds
10% of the total principal amount of the Notes and arrangements satisfactory to
CSFBC and the Company for the purchase of such Notes by other persons are not
made within 36 hours after such default, this Agreement will terminate without
liability on the part of any non-defaulting Initial Purchaser or the Company,
except as provided in Section 9. As used in this Agreement, the term "Initial
Purchaser" includes any person substituted for a Initial Purchaser under this
Section. Nothing herein will relieve a defaulting Initial Purchaser from
liability for its default.
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Company or TTC Merger Co or their respective officers and of the Initial
Purchasers set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation, or statement as to the
results thereof, made by or on behalf of any Initial Purchaser, the Company, TTC
Merger Co or any of their respective representatives, officers or directors or
any controlling person, and will survive delivery of and payment for the Notes.
If this Agreement is terminated pursuant to Section 8 or if for any reason the
purchase of the Notes by the Initial Purchasers is not consummated, the Company,
TTC Merger Co and TTC shall remain responsible for the expenses to be paid or
reimbursed by it pursuant to Section 5 and the respective obligations of the
Company and TTC Merger Co and the Initial Purchasers pursuant to Section 7 shall
remain in effect. If the purchase of the Notes by the Initial
18
<PAGE>
Purchasers is not consummated for any reason other than solely because of the
termination of this Agreement pursuant to Section 8 or the occurrence of any
event specified in Section 6(j), the Company will reimburse the Initial
Purchasers for all reasonable out-of-pocket expenses (including fees and
disbursements of counsel) reasonably incurred by them in connection with the
offering of the Notes.
10. Representation of Initial Purchasers. CSFBC has the authority to, and
will, act for the Initial Purchasers in connection with this purchase, and any
action under this Agreement taken by CSFBC will be binding upon all the Initial
Purchasers.
11. Notices. All communications hereunder will be in writing and, if sent
to the Initial Purchasers will be mailed, delivered or telegraphed and confirmed
to the Initial Purchasers c/o Credit Suisse First Boston Corporation, Eleven
Madison Avenue, New York, N.Y. 10010-3629, Attention: Investment Banking
Department - Transactions Advisory Group, or, if sent to the Company or TTC
Merger Co, will be mailed, delivered or telegraphed and confirmed to it c/o
Dynatech Corporation, 3 New England Executive Park, Burlington, MA 01803-5087
(Telephone: 781-272-6100, Fax: 781-272-2304), Attention: Chief Financial
Officer; provided, however, that any notice to a Initial Purchaser pursuant to
Section 7 will be mailed, delivered or telegraphed and confirmed to such Initial
Purchaser.
12. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
controlling persons referred to in Section 7, and no other person will have any
right or obligation hereunder, except that holders of the Notes shall be
entitled to enforce the agreements for their benefit contained in the second
sentence of Section 5(b) hereof against the Initial Issuers as if such holders
were parties hereto.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
14. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS.
15. Amendments. No amendment or waiver of any provision of this
Agreement, nor any consent or approval to any departure therefrom, shall in any
event be effective unless the same shall be in writing and signed by the parties
hereto.
16. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
Each party hereto hereby submits to the jurisdiction of the Federal and
state courts in the Borough of Manhattan in The City of New York in any suit or
proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby.
19
<PAGE>
If the foregoing is in accordance with the Initial Purchasers'
understanding of our agreement, kindly sign and return to the Company one of the
counterparts hereof, whereupon it will become a binding agreement between the
Company, TTC Merger Co and the Initial Purchasers in accordance with its terms.
Very truly yours,
DYNATECH CORPORATION
By: /s/ Mark V.B. Tremallo
Name: Mark V.B. Tremallo
Title: Vice President and General Counsel
TTC MERGER CO. LLC
By: Dynatech Corporation, its sole member
-------------------------------------
By: Mark V.B. Tremallo
Name: Mark V.B. Tremallo
Title: Vice President and General Counsel
The foregoing Purchase Agreement
is hereby confirmed and accepted as
of the date first above written.
CREDIT SUISSE FIRST BOSTON CORPORATION
J.P. MORGAN SECURITIES INC.
By: CREDIT SUISSE FIRST BOSTON CORPORATION
By: /s/ Harold W. Bagly
-----------------------------------
Name: Harold W. Bagly
Title: Managing Director
20
<PAGE>
SCHEDULE A
INITIAL PURCHASER PRINCIPAL AMOUNT OF
- ---------------------------------------- NOTES
-------------------
Credit Suisse First Boston Corporation.. $137,500,000
J.P. Morgan Securities Inc.............. $137,500,000
____________
Total......................... $275,000,000
============
<PAGE>
Exhibit 10.20
PURCHASE AGREEMENT SUPPLEMENT
Reference is made to the Purchase Agreement dated May 14, 1998 (the
"Purchase Agreement"), among Dynatech Corporation ("Dynatech"), TTC Merger Co.
LLC ("TTC Merger Co"), and Credit Suisse First Boston Corporation and J.P.
Morgan Securities Inc. (the "Initial Purchasers") relating to $275,000,000 in
aggregate principal amount of 9 3/4% Senior Subordinated Notes Due 2008 (the
"Notes") issued by Dynatech and TTC Merger Co under the Indenture dated as of
May 21, 1998, among Dynatech, TTC Merger Co and State Street Bank and Trust
Company, as trustee (the "Trustee"), as supplemented by the First Supplemental
Indenture dated as of May 21, 1998 among Dynatech, Telecommunications Techniques
Co., LLC ("TTC") and the Trustee. All capitalized terms used but not defined
herein shall have the meanings set forth in the Purchase Agreement.
TTC hereby agrees with the Initial Purchasers that it shall hereby
become a party to the Purchase Agreement whereupon it shall become fully liable
for the performance of all obligations of TTC Merger Co contained therein,
including those contained in Section 7 (Indemnification and Contribution), and
shall be entitled to the benefits of all rights of TTC Merger Co contained
therein, in each case to the same extent as if it had been party to the Purchase
Agreement ab initio. Except as supplemented hereby, the Purchase Agreement
shall continue in full force and effect.
This instrument may be executed in counterparts, and shall be governed
by, and shall be construed in accordance with the laws of the State of New York.
TTC hereby submits to the jurisdiction of the Federal and state courts in the
Borough of Manhattan in The City of New York in any suit or proceeding arising
out of or relating to this Agreement or transactions contemplated hereby.
Date: May 21, 1998
TELECOMMUNICATIONS TECHNIQUES CO.,
LLC (on its behalf, and as successor by merger
to TTC MERGER CO. LLC)
By: Dynatech Corporation, as sole member
By /s/ Mark V.B. Tremallo
---------------------------------------
Name: Mark V.B. Tremallo
Title: Corporate Vice President
DYNATECH CORPORATION
By /s/ Mark V.B. Tremallo
----------------------------------------
Name: Mark V.B. Tremallo
Title: Corporate Vice President
<PAGE>
2
The foregoing Purchase Agreement Supplement
is hereby confirmed and accepted
as of the date first above written.
Credit Suisse First Boston Corporation
JP Morgan Securities Inc.
By: Credit Suisse First Boston Corporation
By /s/ Sean P. Madden
------------------------------
Name: Sean P. Madden
Title: Vice President
<PAGE>
EXHIBIT 10.21
Amendment No. 1 to Shareholder Rights Agreement
-----------------------------------------------
This amendment, dated as of December 20, 1997, amends the Shareholder
Rights Agreement dated as of February 16, 1989, as amended and restated as of
March 12, 1990 (the "Rights Agreement") between Dynatech Corporation (the
"Company") and BankBoston, N.A. (formerly The First National Bank of Boston), as
Rights Agent (the "Rights Agent"). Terms defined in the Rights Agreement and
not otherwise defined herein are used herein as so defined.
W I T N E S S E T H
-------------------
WHEREAS, on February 16, 1989 the Board of Directors of the Company
authorized the issuance of Rights to purchase, on the terms and subject to the
provisions of the Rights Agreement, one share of the Company's Common Stock, par
value $.20 per share; and
WHEREAS, on February 16, 1989, the Board of Directors of the Company
authorized and declared a dividend distribution of one Right for every share of
Common Stock of the Company outstanding on the Record Date and authorized the
issuance of one Right (subject to certain adjustments) for each share of Common
Stock of the Company issued between the Record Date and the Distribution Date;
and
WHEREAS, on February 16, 1989, the Company and the Rights Agent
entered into the Rights Agreement, which was amended and restated on March 12,
1990 to set forth the description and terms of the Rights; and
WHEREAS, pursuant to Sections 27 and 29 of the Rights Agreement, the
Company now desires to amend certain provisions of the Rights Agreement in order
to supplement certain provisions therein;
NOW, THEREFORE, the Rights Agreement is hereby amended as follows:
1. Section 1(a) is amended by adding the following at the end
thereof:
"; and, provided, further, that as a result of the execution, delivery
and performance under, or consummation of the transactions relating to
and contemplated by the Agreement and Plan of Merger dated as of
December
<PAGE>
20, 1997 by and among the Company and CDRD Merger Corporation (the
"Merger Agreement") CDRD Merger Corporation shall not be deemed an
Acquiring Person for any purpose of this Agreement."
2. Section 1(b) is amended by adding the following at the end
thereof:
"provided, however, that CDRD Merger Corporation shall not, during the
effectiveness of the Merger Agreement, be declared an Adverse Person
for any purposes of this Agreement."
3. Section 7(a) is amended to read in its entirety as follows:
"(a) Subject to Section 7(e) hereof, the registered holder of any
Right Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein) in whole or in part at any time after the
Distribution Date upon surrender of the Right Certificate, with the
form of election to purchase and the certificate on the reverse side
thereof duly executed, to the Rights Agent at the office or offices of
the Rights Agent designated for such purpose, together with payment of
the aggregate Exercise Price for the total number of one two-
thousandths of a share of Preferred Stock (or other securities, cash
or other assets, as the case may be) as to which such surrender Rights
are then exercised, at or prior to the earlier of (i) the earlier of
the Effective Time (as defined in the Merger Agreement) and the close
of business on February 16, 1999 (the "Final Expiration Date") or (ii)
the time at which the Rights are redeemed as provided in Section 23
hereof (the earlier of (i) or (ii) being herein referred to as the
"Expiration Date"). Except as set forth in Section 7(e) hereof and
notwithstanding any other provision of this Agreement, any Person who
prior to the Distribution Date becomes a record holder of shares of
Common Stock may exercise all of the rights of a registered holder of
a Right Certificate with respect to the Rights associated with such
shares of Common Stock in accordance with the provisions of this
Agreement, as of the date such Person becomes a record holder of
shares of Common Stock.
4. Except, as expressly herein set forth, the remaining provisions
of the Rights Agreement shall remain in full force and effect.
2
<PAGE>
IN WITNESS WHEREOF, this Amendment No. 1 has been signed to be
effective as of the close of business on the 20th day of December, 1997 by
authorized representatives of each of the Company and the Rights Agent.
DYNATECH CORPORATION
By:
-----------------------------------
BANKBOSTON, N.A.
By:
-----------------------------------
3
<PAGE>
DYNATECH CORPORATION
Officer's Certificate
This Certificate is delivered pursuant to Section 27 of the
Shareholder Rights Agreement dated as of February 16, 1989, as amended and
restated as of March 12, 1990 (the "Rights Agreement") between Dynatech
Corporation (the "Company") and BankBoston, N.A. (formerly The First National
Bank of Boston), as Rights Agent (the "Rights Agent"). In delivering this
Certificate the undersigned has examined a copy of the Rights Agreement and a
copy of Amendment No. 1 to Shareholder Rights Agreement ("Amendment No. 1")
dated as of December 20, 1997.
The undersigned does hereby certify that Amendment No. 1 is in
compliance with the terms of Section 27 of the Rights Agreement. Pursuant to
said Section 27 of the Rights Agreement, the undersigned hereby directs the
Rights Agent to execute Amendment No. 1.
IN WITNESS WHEREOF, the undersigned has executed this certificate this
31st day of December, 1997.
DYNATECH CORPORATION
By:
---------------------------------
Title:
<PAGE>
EXHIBIT 10.22
ASSUMPTION AGREEMENT
ASSUMPTION AGREEMENT, dated as of May 21, 1998 (this "Agreement"), among
---------
DYNATECH CORPORATION, a Massachusetts corporation ("Holding"), TTC MERGER CO.
-------
LLC, a Delaware limited liability company wholly owned by Holding ("Newco"), and
-----
TELECOMMUNICATIONS TECHNIQUES CO., LLC, a Delaware limited liability company
wholly owned by Holding ("TTC"), and consented to by Morgan Guaranty Trust
---
Company of New York, as administrative agent (in such capacity, the
"Administrative Agent") for the banks and other financial institutions (the
--------------------
"Lenders") from time to time parties to the Credit Agreement (as hereinafter
-------
defined).
W I T N E S S E T H:
-------------------
WHEREAS, Holding, Newco and the Administrative Agent are parties to the
Credit Agreement, dated as of May 21, 1998 (as amended, supplemented, waived or
otherwise modified from time to time, the "Credit Agreement"), among Holding,
----------------
Newco, the Lenders, the Administrative Agent, Credit Suisse First Boston, as
syndication agent (in such capacity, the "Syndication Agent"), and The Chase
-----------------
Manhattan Bank, as documentation agent (in such capacity, the "Documentation
-------------
Agent"); and
- -----
WHEREAS, each of Holding and Newco wishes to assign, transfer and convey to
TTC all of Holding's and Newco's rights, respectively, as "Borrower" under, and
TTC wishes to assume from Holding and Newco all of Holding's and Newco's
obligations and liabilities as "Borrower" under, the Credit Agreement and any
Notes, any Letters of Credit and the other Credit Documents (as each of such
terms is defined in the Credit Agreement); and
WHEREAS, pursuant to subsection 12.11 of the Credit Agreement, Holding and
Newco have agreed to execute and deliver, and to cause, TTC to execute and
deliver, this Agreement; and
WHEREAS, pursuant to subsection 12.11 of the Credit Agreement, the
Administrative Agent is authorized to consent to this Agreement on behalf of the
Lenders;
NOW, THEREFORE, the parties hereto hereby agree as follows:
I. Defined Terms. Terms defined in the Credit Agreement and used herein
-------------
shall have the meanings given to them in the Credit Agreement.
<PAGE>
2
II. Assignment and Assumption.
-------------------------
1. Assignment of Rights and Obligations. Effective as of 12:01 A.M. (New
------------------------------------
York City time) on May 21, 1998, each of Holding and Newco hereby irrevocably
assigns, transfers and conveys to TTC all of Holding's and Newco's rights,
obligations, covenants, agreements, duties and liabilities as "Borrower" under
or with respect to the Credit Agreement, any Notes, any Letters of Credit, any
of the other Credit Documents (other than this Agreement and the Collateral
Agreement) and any and all certificates and other documents executed by Holding
and Newco in connection therewith; provided, however, that each of Holding and
-------- -------
Newco understands and agrees that such assignment, transfer and conveyance shall
not be effective with respect to, or in any way release Holding or Newco from
any of its obligations, covenants, agreements, duties and liabilities under or
with respect to this Agreement and the Collateral Agreement.
2. Assumption of Agreements and Obligations. Effective as of 12:01 A.M.
----------------------------------------
(New York City time) on May 21, 1998 (the "Effective Date"), TTC hereby
--------------
expressly assumes, confirms and agrees to perform and observe all of the
indebtedness, obligations (including, without limitation, all obligations in
respect of the Loans and the Letters of Credit), covenants, agreements, terms,
conditions, duties and liabilities of Holding and Newco as "Borrower" under and
with respect to the Credit Agreement, any Notes, any Letters of Credit, any of
the other Credit Documents (other than this Agreement and the Collateral
Agreement) and any and all certificates and other documents executed by Holding
and Newco in connection therewith as fully as if TTC were originally the obligor
in respect thereof and the signatory thereto; provided, however, that each of
-------- -------
Holding and Newco understands and agrees that such assumption shall not be
effective with respect to, or in any way obligate TTC to perform and observe any
obligations, covenants, agreements, terms, conditions, duties or liabilities of
Holding or Newco under or with respect to this Agreement and the Collateral
Agreement. At all times after the effectiveness of such assumption, with
respect to all Loans made to or for the account of Holding or Newco prior to the
effectiveness of such assumption, TTC shall have the obligations of, and Holding
and Newco shall no longer be or have the obligations of, the "Borrower" within
the meaning of and for all purposes of the Credit Agreement. In addition, at
all times after the effectiveness of such assumption, all references to the
"Borrower" in the Credit Agreement, any Notes, any Letter of Credit, any of the
other Credit Documents and any and all certificates and other documents executed
by Holding and Newco in connection therewith shall be deemed to be references to
TTC.
3. Amendment to the Credit Agreement. The Credit Agreement is hereby
---------------------------------
deemed to be amended to the extent, but only to the extent, necessary to effect
the assignment and assumption provided for hereby.
4. Replacement Notes. TTC agrees to execute and deliver, on the
-----------------
effective date of the assumption provided for by subsection II.2. hereof, to
each of the Lenders then holding Notes, if any, new Notes payable to the order
of such Lender (such new Notes, "Replacement Notes") in exchange for the Notes
-----------------
of Holding or Newco then held by such Lender (the "Old Notes"). Each Replacement
---------
Note shall be identical in all respects to the corresponding Old Note or Old
Notes, as the case may be, except that the obligor on such Replacement Notes
shall be TTC instead of Holding and Newco.
<PAGE>
3
III. General.
-------
1. Representation and Warranties. To induce the Administrative Agent,
-----------------------------
acting on behalf of the Lenders, to consent to the assignment and assumption
provided for in Section II. above, each of Holding, Newco and TTC hereby
represents and warrants to the Administrative Agent and each Lender as of the
date hereof and as of the date of such assignment and assumption that:
(a) Corporate Power; Authorization; Enforceable Obligations. (i) Such
-------------------------------------------------------
party has the corporate power and authority, and the legal right, to make,
deliver and perform this Agreement and, in the case of TTC, each of the
Replacement Notes, and to perform each of the other Credit Documents to which it
is a party, as amended hereby, and has taken all necessary corporate action to
authorize the execution, delivery and performance of this Agreement and, in the
case of TTC, each of the Replacement Notes, and the performance of such other
Credit Documents, as so amended.
(ii) No consent or authorization of, approval by, notice to, filing with,
or other similar act by or in respect of, any Governmental Authority or any
other Person is required to be obtained or made by or on behalf of Holding,
Newco or TTC in connection with the execution and delivery of this Agreement or,
in the case of TTC, each of the Replacement Notes, or with the performance,
validity or enforceability of each of the other Credit Documents to which it is
a party, as amended hereby, except for (w) consents, authorizations, notices and
filings described in Schedule 10.4(a) to the Credit Agreement, all of which have
been obtained or made or have the status described therein, (x) filings to
perfect the Liens created by the Security Documents, (y) filings pursuant to the
Assignment of Claims Act of 1940, as amended (31 U.S.C. (S) 3727 et seq.), in
respect of Accounts of Holding and its Subsidiaries the obligor on which is the
United States of America or any department, agency or instrumentality thereof
and (z) consents, authorizations, notices and filings which the failure to
obtain or make would not reasonably be expected to have a Material Adverse
Effect.
(iii) This Agreement and, in the case of TTC, each of the Replacement
Notes, has been or will have been duly executed and delivered on behalf of such
party.
(iv) This Agreement, each of the other Credit Documents to which it is a
party, as amended hereby, and, in the case of TTC, each of the Replacement
Notes, constitutes or will constitute, as the case may be, a legal, valid and
binding obligation of such party enforceable against such party in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law).
(b) No Legal Bar. Except as previously disclosed in writing to the
------------
Lenders on or prior to the Effective Date, the execution, delivery and
performance of this Agreement and, in the case of TTC, each of the Replacement
Notes, and the performance of each of the other Credit Documents to which it is
a party, as amended hereby, (i) will not violate any Requirement of Law or
Contractual Obligation of such party or of any of its Subsidiaries in
any respect that
<PAGE>
4
would reasonably be expected to have a Material Adverse Effect and (ii) will not
result in, or require, the creation or imposition of any Lien (other than Liens
created by the Security Documents or permitted under subsection 14.2 of the
Credit Agreement) on any of its or their respective properties or revenues
pursuant to any such Requirement of Law or Contractual Obligation.
(c) Representations and Warranties. TTC hereby represents and warrants
------------------------------
that the representations and warranties made by Holding, Newco and TTC (each in
its capacity as Holding, Newco or TTC, as the case may be, and in its capacity
as the "Borrower") in the Credit Documents are true and correct in all material
respects on and as of the date hereof, before and after giving effect to the
effectiveness of this Agreement, as if made on and as of the date hereof.
2. No Other Amendments; Confirmation. Except as expressly amended,
---------------------------------
modified and supplemented hereby, the provisions of the Credit Agreement and the
other Credit Documents are and shall remain in full force and effect.
3. Affirmation of Credit Documents. Each of the Credit Parties hereby
-------------------------------
consents to the execution and delivery of this Agreement and any Replacement
Notes and confirms, reaffirms and restates its obligations under each of the
Credit Documents to which it is a party pursuant to the terms thereof.
4. GOVERNING LAW; COUNTERPARTS. (a) THIS AGREEMENT AND THE RIGHTS AND
---------------------------
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO ITS PRINCIPLES OR RULES OF CONFLICTS OF LAWS TO THE
EXTENT SUCH PRINCIPLES OR RULES WOULD REQUIRE THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION.
(b) This Agreement may be executed by one or more of the parties to this
Agreement on any number of separate counterparts, and all of said counterparts
taken together shall be deemed to constitute one and the same instrument. A set
of the copies of this Agreement signed by all the parties shall be lodged with
each of Holding, Newco, TTC and the Administrative Agent. This Agreement may be
delivered by facsimile transmission of the relevant signature pages hereof.
5. Integration. This Agreement and the other Credit Documents represent
-----------
the entire agreement of the parties hereto with respect to the subject matter
hereof and there are no promises or representations by the parties hereto
relative to the subject matter hereof not reflected or referred to herein or
therein.
6. Section Headings. The section headings used in this Agreement are for
----------------
convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.
7. Submission To Jurisdiction; Waivers. Each of the parties hereto hereby
-----------------------------------
irrevocably and unconditionally:
<PAGE>
5
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Credit Documents to
which it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the courts of
the State of New York, the courts of the United States of America for the
Southern District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to such party
at its address referred to in the other Credit Documents to which it is a
party or at such other address of which the other parties shall have been
notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to
in this subsection any punitive damages.
8. Successors and Assigns. This Agreement shall be binding upon and inure
----------------------
to the benefit of Holding, Newco and TTC and their respective successors and
assigns, and the Administrative Agent and the Lenders and their respective
successors, indorsees, transferees and assigns.
9. WAIVER OF JURY TRIAL. THE PARTIES HERETO HEREBY IRREVOCABLY AND
--------------------
UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
<PAGE>
6
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective proper and duly authorized
officers as of the day and year first above written.
DYNATECH CORPORATION
By:________________________________
Name:
Title:
TTC MERGER CO. LLC
By: Dynatech Corporation, its sole
member
By:________________________________
Name:
Title:
TELECOMMUNICATIONS TECHNIQUES CO., LLC
By: Dynatech Corporation, its sole
member
By:________________________________
Name:
Title:
<PAGE>
7
Consented and Agreed
(for purposes of subsection III.3. only):
AIRSHOW, INC.
By: _______________________________
Name:
Title:
COMCOTEC, INC.
By: _______________________________
Name:
Title:
DATAVIEWS CORPORATION
By: ________________________________
Name:
Title:
DA VINCI SYSTEMS, INC.
By: ________________________________
Name:
Title:
INDUSTRIAL COMPUTER SOURCE
By: _______________________________
Name:
Title:
<PAGE>
8
ITRONIX CORPORATION
By: _______________________________
Name:
Title:
PARALLAX GRAPHICS, INC.
By: _______________________________
Name:
Title:
SYNERGISTIC SOLUTIONS, INC.
By: _______________________________
Name:
Title:
TELE-PATH INSTRUMENTS, INC.
By: _______________________________
Name:
Title:
Consented to:
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Administrative Agent
By: _______________________________
Name:
Title:
<PAGE>
<TABLE>
<CAPTION>
Exhibit 12
STATEMENT RE COMPUTATION OF RATIOS
(IN THOUSANDS)
YEAR ENDED MARCH 31, PRO FORMA
-------------------------------------- ---------
YEAR
CONSOLIDATED STATEMENT OF ENDED
OPERATIONS DATA 1993 1994 1995 1996 1997 1998 3/31/98
------ ------ ------ ------ ------ ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Income (loss) before income taxes
and extraordinary credit....... 21,220 23,847 28,095 26,108 35,434 70,807 9,096
Add:
Portion of rents representative
of the interest factor......... 1,400 1,533 1,467 1,900 2,067 2,700 2,700
Interest on indebtedness........ 2,229 3,794 3,919 1,723 828 1,221 52,191
Amortization of debt expense and
premium........................ 2,996
------ ------ ------ ------ ------ ------ ------
Income as adjusted.............. 24,849 29,174 33,481 29,731 38,329 74,728 66,983
------ ------ ------ ------ ------ ------ ------
Fixed charges:
Portion of rents representative
of interest factor............. 1,400 1,533 1,467 1,900 2,067 2,700 2,700
Interest on indebtedness........ 2,229 3,794 3,919 1,723 828 1,221 52,191
Amortization of debt expense and
premium........................ 2,996
------ ------ ------ ------ ------ ------ ------
Fixed charges................... 3,629 5,327 5,386 3,623 2,895 3,921 57,887
------ ------ ------ ------ ------ ------ ------
Ratio of earnings to fixed charges 6.8 5.5 6.2 8.2 13.2 19.1 1.2
====== ====== ====== ====== ====== ====== ======
</TABLE>
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
STATE OR OTHER
NAME OF THE PARENT OR SUBSIDIARY ORGANIZATION* JURISDICATION
- ---------------------------------------------- ------------------
Dynatech Corporation--Parent.................... Massachusetts
AIRSHOW, Incorporated........................... California
DataViews Corporation........................... Massachusetts
DataViews Scandanavia A.B....................... Sweden
daVinci Systems, Inc............................ Florida
Industrial Computer Source, Inc................. California
Itronix Corporation............................. Washington
Synergistic Solutions, Inc...................... Georgia
Telecommunications Techniques Co., LLC, Issuer.. Delaware
Dynatech Corporation Ltd........................ England
Dynatech GmbH................................... Germany
Dynatech Holdings Ltd........................... Guernsey, Channel Islands
Pacific Systems Corporation..................... Washington
Tele-Path Industries, Inc....................... Delaware
TTC Asia Pacific Ltd............................ Hong Kong
TTC International Holdings, Inc................. Delaware
Dynatech Investments, Ltd....................... Guernsey, Channel Islands
Industrial Computer Source Europe............... France
TTC Canada Ltd.................................. Canada
TTC Telecommunications Techniques GmbH.......... Germany
TTC Telecommunications Techniques France, SA.... France
Dynatech Export Incorporated.................... British Virgin Islands
- -------------------------------
* Excludes nonmaterial subsidiaries.
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-4 of our
report dated April 28, 1998, except as to the information in the "Subsequent
Event" Note for which the date is May 21, 1998, on our audits of the
consolidated financial statements of Dynatech Corporation, and of our report
dated April 28, 1998, on our audits of the related financial statement schedule
of valuation and qualifying accounts of Dynatech Corporation. We also consent to
the reference to our firm under the caption "Experts."
PricewaterhouseCoopers LLP
Boston, Massachusetts
August 7, 1998
<PAGE>
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned hereby
constitutes and appoints John F. Reno, Allan M. Kline, Mark V.B. Tremallo and
Robert W. Woodbury, Jr. and each of them (with full power to act alone) the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for and in the name and on behalf of the
undersigned, to execute any and all instruments and documents, and to do any and
all other acts and things, that any such attorney-in-fact and agent may deem
necessary or advisable, in compliance with the Securities Act of 1933, as
amended (the "Securities Act"), and any rules, regulations and requirements of
the Securities and Exchange Commission (the "Commission") in respect thereof, in
connection with the registration under the Securities Act of $275,000,000
aggregate principal amount of 9 3/4% Senior Subordinated Notes Due 2008 of
Telecommunications Techniques Co., LLC ("TTC"), payment of which is guaranteed
by Dynatech Corporation ("Dynatech"), pursuant to a Registration Statement on
Form S-4 (the "Registration Statement") to be filed with the Commission relating
to an offer to exchange such Notes for TTC's outstanding $275,000,000 aggregate
principal amount of 9 3/4% Senior Subordinated Notes Due 2008 payment of which
is guaranteed by Dynatech; including specifically, but without limiting the
generality of the foregoing, the power and authority to execute, for and in the
name and on behalf of the undersigned in any and all capacities, the
Registration Statement, any and all supplements and amend ments (including,
without limitation, post-effective amendments) to such Registration Statement,
and any and all other instruments or documents filed as a part of, or in
connection with, such Registration Statement and supplements and amendments
thereto; and the undersigned hereby ratifies and confirms all that such
attorneys-in-fact and agents, or any of them, shall do or cause to be done by
virtue hereof.
Signed this 7th day of August, 1998.
/s/ John F. Reno
-------------------------------
Name: John F. Reno
<PAGE>
EXHIBIT 24.2
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned hereby
constitutes and appoints John F. Reno, Allan M. Kline, Mark V.B. Tremallo and
Robert W. Woodbury, Jr. and each of them (with full power to act alone) the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for and in the name and on behalf of the
undersigned, to execute any and all instruments and documents, and to do any and
all other acts and things, that any such attorney-in-fact and agent may deem
necessary or advisable, in compliance with the Securities Act of 1933, as
amended (the "Securities Act"), and any rules, regulations and requirements of
the Securities and Exchange Commission (the "Commission") in respect thereof, in
connection with the registration under the Securities Act of $275,000,000
aggregate principal amount of 9 3/4% Senior Subordinated Notes Due 2008 of
Telecommunications Techniques Co., LLC ("TTC"), payment of which is guaranteed
by Dynatech Corporation ("Dynatech"), pursuant to a Registration Statement on
Form S-4 (the "Registration Statement") to be filed with the Commission relating
to an offer to exchange such Notes for TTC's outstanding $275,000,000 aggregate
principal amount of 9 3/4% Senior Subordinated Notes Due 2008 payment of which
is guaranteed by Dynatech; including specifically, but without limiting the
generality of the foregoing, the power and authority to execute, for and in the
name and on behalf of the undersigned in any and all capacities, the
Registration Statement, any and all supplements and amend ments (including,
without limitation, post-effective amendments) to such Registration Statement,
and any and all other instruments or documents filed as a part of, or in
connection with, such Registration Statement and supplements and amendments
thereto; and the undersigned hereby ratifies and confirms all that such
attorneys-in-fact and agents, or any of them, shall do or cause to be done by
virtue hereof.
Signed this 7th day of August, 1998.
/s/ Allan M. Kline
-------------------------------
Name: Allan M. Kline
<PAGE>
EXHIBIT 24.3
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned hereby
constitutes and appoints John F. Reno, Allan M. Kline, Mark V.B. Tremallo and
Robert W. Woodbury, Jr. and each of them (with full power to act alone) the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for and in the name and on behalf of the
undersigned, to execute any and all instruments and documents, and to do any and
all other acts and things, that any such attorney-in-fact and agent may deem
necessary or advisable, in compliance with the Securities Act of 1933, as
amended (the "Securities Act"), and any rules, regulations and requirements of
the Securities and Exchange Commission (the "Commission") in respect thereof, in
connection with the registration under the Securities Act of $275,000,000
aggregate principal amount of 9 3/4% Senior Subordinated Notes Due 2008 of
Telecommunications Techniques Co., LLC ("TTC"), payment of which is guaranteed
by Dynatech Corporation ("Dynatech"), pursuant to a Registration Statement on
Form S-4 (the "Registration Statement") to be filed with the Commission relating
to an offer to exchange such Notes for TTC's outstanding $275,000,000 aggregate
principal amount of 9 3/4% Senior Subordinated Notes Due 2008 payment of which
is guaranteed by Dynatech; including specifically, but without limiting the
generality of the foregoing, the power and authority to execute, for and in the
name and on behalf of the undersigned in any and all capacities, the
Registration Statement, any and all supplements and amend ments (including,
without limitation, post-effective amendments) to such Registration Statement,
and any and all other instruments or documents filed as a part of, or in
connection with, such Registration Statement and supplements and amendments
thereto; and the undersigned hereby ratifies and confirms all that such
attorneys-in-fact and agents, or any of them, shall do or cause to be done by
virtue hereof.
Signed this 7th day of August, 1998.
/s/ John R. Peeler
-------------------------------
Name: John R. Peeler
<PAGE>
EXHIBIT 24.4
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned hereby
constitutes and appoints John F. Reno, Allan M. Kline, Mark V.B. Tremallo and
Robert W. Woodbury, Jr. and each of them (with full power to act alone) the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for and in the name and on behalf of the
undersigned, to execute any and all instruments and documents, and to do any and
all other acts and things, that any such attorney-in-fact and agent may deem
necessary or advisable, in compliance with the Securities Act of 1933, as
amended (the "Securities Act"), and any rules, regulations and requirements of
the Securities and Exchange Commission (the "Commission") in respect thereof, in
connection with the registration under the Securities Act of $275,000,000
aggregate principal amount of 9 3/4% Senior Subordinated Notes Due 2008 of
Telecommunications Techniques Co., LLC ("TTC"), payment of which is guaranteed
by Dynatech Corporation ("Dynatech"), pursuant to a Registration Statement on
Form S-4 (the "Registration Statement") to be filed with the Commission relating
to an offer to exchange such Notes for TTC's outstanding $275,000,000 aggregate
principal amount of 9 3/4% Senior Subordinated Notes Due 2008 payment of which
is guaranteed by Dynatech; including specifically, but without limiting the
generality of the foregoing, the power and authority to execute, for and in the
name and on behalf of the undersigned in any and all capacities, the
Registration Statement, any and all supplements and amend ments (including,
without limitation, post-effective amendments) to such Registration Statement,
and any and all other instruments or documents filed as a part of, or in
connection with, such Registration Statement and supplements and amendments
thereto; and the undersigned hereby ratifies and confirms all that such
attorneys-in-fact and agents, or any of them, shall do or cause to be done by
virtue hereof.
Signed this 7th day of August, 1998.
/s/ Joseph L. Rice, III
-------------------------------
Name: Joseph L. Rice, III
<PAGE>
EXHIBIT 24.5
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned hereby
constitutes and appoints John F. Reno, Allan M. Kline, Mark V.B. Tremallo and
Robert W. Woodbury, Jr. and each of them (with full power to act alone) the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for and in the name and on behalf of the
undersigned, to execute any and all instruments and documents, and to do any and
all other acts and things, that any such attorney-in-fact and agent may deem
necessary or advisable, in compliance with the Securities Act of 1933, as
amended (the "Securities Act"), and any rules, regulations and requirements of
the Securities and Exchange Commission (the "Commission") in respect thereof, in
connection with the registration under the Securities Act of $275,000,000
aggregate principal amount of 9 3/4% Senior Subordinated Notes Due 2008 of
Telecommunications Techniques Co., LLC ("TTC"), payment of which is guaranteed
by Dynatech Corporation ("Dynatech"), pursuant to a Registration Statement on
Form S-4 (the "Registration Statement") to be filed with the Commission relating
to an offer to exchange such Notes for TTC's outstanding $275,000,000 aggregate
principal amount of 9 3/4% Senior Subordinated Notes Due 2008 payment of which
is guaranteed by Dynatech; including specifically, but without limiting the
generality of the foregoing, the power and authority to execute, for and in the
name and on behalf of the undersigned in any and all capacities, the
Registration Statement, any and all supplements and amend ments (including,
without limitation, post-effective amendments) to such Registration Statement,
and any and all other instruments or documents filed as a part of, or in
connection with, such Registration Statement and supplements and amendments
thereto; and the undersigned hereby ratifies and confirms all that such
attorneys-in-fact and agents, or any of them, shall do or cause to be done by
virtue hereof.
Signed this 7th day of August, 1998.
/s/ Brian D. Finn
-------------------------------
Name: Brian D. Finn
<PAGE>
EXHIBIT 24.6
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned hereby
constitutes and appoints John F. Reno, Allan M. Kline, Mark V.B. Tremallo and
Robert W. Woodbury, Jr. and each of them (with full power to act alone) the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for and in the name and on behalf of the
undersigned, to execute any and all instruments and documents, and to do any and
all other acts and things, that any such attorney-in-fact and agent may deem
necessary or advisable, in compliance with the Securities Act of 1933, as
amended (the "Securities Act"), and any rules, regulations and requirements of
the Securities and Exchange Commission (the "Commission") in respect thereof, in
connection with the registration under the Securities Act of $275,000,000
aggregate principal amount of 9 3/4% Senior Subordinated Notes Due 2008 of
Telecommunications Techniques Co., LLC ("TTC"), payment of which is guaranteed
by Dynatech Corporation ("Dynatech"), pursuant to a Registration Statement on
Form S-4 (the "Registration Statement") to be filed with the Commission relating
to an offer to exchange such Notes for TTC's outstanding $275,000,000 aggregate
principal amount of 9 3/4% Senior Subordinated Notes Due 2008 payment of which
is guaranteed by Dynatech; including specifically, but without limiting the
generality of the foregoing, the power and authority to execute, for and in the
name and on behalf of the undersigned in any and all capacities, the
Registration Statement, any and all supplements and amend ments (including,
without limitation, post-effective amendments) to such Registration Statement,
and any and all other instruments or documents filed as a part of, or in
connection with, such Registration Statement and supplements and amendments
thereto; and the undersigned hereby ratifies and confirms all that such
attorneys-in-fact and agents, or any of them, shall do or cause to be done by
virtue hereof.
Signed this 7th day of August, 1998.
/s/ Charles P. Pieper
-------------------------------
Name: Charles P. Pieper
<PAGE>
EXHIBIT 25
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an Application to Determine Eligibility
of a Trustee Pursuant to Section 305(b)(2)
STATE STREET BANK AND TRUST COMPANY
(Exact name of trustee as specified in its charter)
MASSACHUSETTS 04-1867445
(Jurisdiction of incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification Number)
225 Franklin Street
Boston, Massachusetts 02110
(Address of principal executive offices)(Zip Code)
Maureen Scannell Bateman, Esq. Executive Vice President and General Counsel
225 Franklin Street
Boston, Massachusetts 02110
(617) 654-3253
TELECOMMUNICATIONS TECHNIQUES CO., LLC,
(NAME OF ISSUER)
(Exact name of obligor as specified in its charter)
DELAWARE 04-225-8582
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
20400 Observation Drive
Germantown, Maryland 20876-4023
(301) 353-1550
(ADDRESS OF ISSUER)
(Address of principal executive offices) (Zip Code)
MASSACHUSETTS 04-225-8582
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3 New England Executive Park
Burlington, MA 01803
(ADDRESS OF ISSUER)
(Address of principal executive offices) (Zip Code)
(TYPE OF SECURITIES)
9 3/4% Senior Subordinated Notes Due 2008
(Title of indenture securities)
================================================================================
<PAGE>
GENERAL
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervisory authority to which
it is subject.
Department of Banking and Insurance of The Commonwealth of
Massachusetts, 100 Cambridge Street, Boston, Massachusetts.
Board of Governors of the Federal Reserve System, Washington, D.C.,
Federal Deposit Insurance Corporation, Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH OBLIGOR.
If the Obligor is an affiliate of the trustee, describe each such
affiliation.
The obligor is not an affiliate of the trustee or of its parent, State
Street Corporation.
(See note on page 2.)
ITEM 3. THROUGH ITEM 15. NOT APPLICABLE.
ITEM 16. LIST OF EXHIBITS.
List below all exhibits filed as part of this statement of eligibility.
1. A copy of the articles of association of the trustee as now in effect.
A copy of the Articles of Association of the trustee, as now in
effect, is on file with the Securities and Exchange Commission as
Exhibit 1 to Amendment No. 1 to the Statement of Eligibility and
Qualification of Trustee (Form T-1) filed with the Registration
Statement of Morse Shoe, Inc. (File No. 22-17940) and is
incorporated herein by reference thereto.
2. A copy of the certificate of authority of the trustee to commence
business, if not contained in the articles of association.
A copy of a Statement from the Commissioner of Banks of
Massachusetts that no certificate of authority for the trustee to
commence business was necessary or issued is on file with the
Securities and Exchange Commission as Exhibit 2 to Amendment No. 1
to the Statement of Eligibility and Qualification of Trustee (Form
T-1) filed with the Registration Statement of Morse Shoe, Inc. (File
No. 22-17940) and is incorporated herein by reference thereto.
2
<PAGE>
3. A copy of the authorization of the trustee to exercise corporate trust
powers, if such authorization is not contained in the documents
specified in paragraph (1) or (2), above.
A copy of the authorization of the trustee to exercise corporate
trust powers is on file with the Securities and Exchange Commission
as Exhibit 3 to Amendment No. 1 to the Statement of Eligibility and
Qualification of Trustee (Form T-1) filed with the Registration
Statement of Morse Shoe, Inc. (File No. 22-17940) and is
incorporated herein by reference thereto.
4. A copy of the existing by-laws of the trustee, or instruments
corresponding thereto.
A copy of the by-laws of the trustee, as now in effect, is on file
with the Securities and Exchange Commission as Exhibit 4 to the
Statement of Eligibility and Qualification of Trustee (Form T-1)
filed with the Registration Statement of Eastern Edison Company
(File No. 33-37823) and is incorporated herein by reference thereto.
5. A copy of each indenture referred to in Item 4. if the obligor is in
default.
Not applicable.
6. The consents of United States institutional trustees required by
Section 321(b) of the Act. The consent of the trustee required by
Section 321(b) of the Act is annexed hereto as Exhibit 6 and made a
part hereof.
7. A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or examining
authority.
A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or examining
authority is annexed hereto as Exhibit 7 and made a part hereof.
NOTES
In answering any item of this Statement of Eligibility which relates to
matters peculiarly within the knowledge of the obligor or any underwriter for
the obligor, the trustee has relied upon information furnished to it by the
obligor and the underwriters, and the trustee disclaims responsibility for the
accuracy or completeness of such information.
The answer furnished to Item 2. of this statement will be amended, if
necessary, to reflect any facts which differ from those stated and which would
have been required to be stated if known at the date hereof.
3
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, State Street Bank and Trust Company, a corporation
organized and existing under the laws of The Commonwealth of Massachusetts, has
duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Boston and The
Commonwealth of Massachusetts, on the 22nd of June, 1998.
STATE STREET BANK AND TRUST COMPANY
By: /s/ Philip G. Kane, Jr.
---------------------------------------
Philip G. Kane, Jr.
Vice President
4
<PAGE>
EXHIBIT 6
CONSENT OF THE TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture Act
of 1939, as amended, in connection with the proposed issuance by
Telecommunications Techniques Co., LLC, of its 9 3/4% Senior Subordinated Notes
Due 2008 , we hereby consent that reports of examination by Federal, State,
Territorial or District authorities may be furnished by such authorities to the
Securities and Exchange Commission upon request therefor.
STATE STREET BANK AND TRUST COMPANY
By: /s/ Philip G. Kane, Jr.
---------------------------------------
Philip G. Kane, Jr.
Vice President
Dated: June 22, 1998
5
<PAGE>
Consolidated Report of Condition of State Street Bank and Trust Company,
Massachusetts and foreign and domestic subsidiaries, a state banking institution
organized and operating under the banking laws of this commonwealth and a member
of the Federal Reserve System, at the close of business March 31, 1998,
--------------
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act and in accordance
with a call made by the Commissioner of Banks under General Laws, Chapter 172,
Section 22(a).
<TABLE>
<CAPTION>
Thousands of
ASSETS Dollars
- ------ -------------
<S> <C>
Cash and balances due from depository institutions:
Non-interest-bearing balances and currency and coin.......................... 1,144,309
Interest-bearing balances.................................................... 9,914,704
Securities...................................................................... 10,062,052
Federal funds sold and securities purchased under agreements to resell in....... 8,073,970
domestic offices of the bank and its Edge subsidiary
Loans and lease financing receivables:
Loans and leases, net of unearned income..................................... 6,433,627
Allowance for loan and lease losses.......................................... 88,820
Allocated transfer risk reserve.............................................. 0
Loans and leases, net of unearned income and allowances...................... 6,344,807
Assets held in trading accounts................................................. 1, 117,547
Premises and fixed assets....................................................... 453,576
Other real estate owned......................................................... 100
Investments in unconsolidated subsidiaries...................................... 44,985
Customers' liability to this bank on acceptances outstanding.................... 66,149
Intangible assets............................................................... 263,249
Other assets.................................................................... 1,066,572
----------
Total assets.................................................................... 38,552,020
==========
LIABILITIES
Deposits:
In domestic offices.......................................................... 9,266,492
Non-interest-bearing..................................................... 6,824,432
Interest-bearing......................................................... 2,442,060
In foreign offices and Edge subsidiary....................................... 14,385,048
Non-interest-bearing..................................................... 75,909
Interest-bearing......................................................... 14,309,139
Federal funds purchased and securities sold under agreements to repurchase in... 9,949,994
domestic offices of the bank and of its Edge subsidiary
Demand notes issued to the U.S. Treasury and Trading Liabilities................ 171,783
Trading liabilities............................................................. 1,078,189
Other borrowed money............................................................ 406,583
Subordinated notes and debentures............................................... 0
Bank's liability on acceptances executed and outstanding........................ 66,149
Other liabilities............................................................... 878,947
Total liabilities............................................................... 36,203,185
----------
EQUITY CAPITAL
Perpetual preferred stock and related surplus................................... 0
Common stock.................................................................... 29,931
Surplus......................................................................... 450,003
Undivided profits and capital reserves/Net unrealized holding gains (losses).... 1,857,021
Net unrealized holding gains (losses) on available-for-sale securities.......... 18,136
Cumulative foreign currency translation adjustments............................. (6,256)
Total equity capital............................................................ 2,348,835
----------
Total liabilities and equity capital............................................ 38,552,020
----------
</TABLE>
<PAGE>
I, Rex S. Schuette, Senior Vice President and Comptroller of the above
named bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Rex S. Schuette
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
David A. Spina
Marshall N. Carter
Truman S. Casner
2
