<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 29, 1997
REGISTRATION NO. 333-22521
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
AMPHENOL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
22-2785165
(I.R.S. Employer Identification No.)
358 HALL AVENUE
WALLINGFORD, CONNECTICUT 06492
(203) 265-8900
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------------------
EDWARD C. WETMORE
AMPHENOL CORPORATION
358 HALL AVENUE
WALLINGFORD, CONNECTICUT 06492
(203) 265-8900
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
COPIES TO:
<TABLE>
<S> <C>
JOHN B. TEHAN, ESQ. KIRK A. DAVENPORT, ESQ.
SIMPSON THACHER & BARTLETT LATHAM & WATKINS
425 LEXINGTON AVENUE 885 THIRD AVENUE
NEW YORK, NEW YORK 10017 NEW YORK, NEW YORK 10022
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please 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(c)
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 delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT 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 COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
Subject to Completion, dated April 29, 1997
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.
<PAGE>
PROSPECTUS
, 1997
$240,000,000
AMPHENOL CORPORATION
% SENIOR SUBORDINATED NOTES DUE 2007
The % Senior Subordinated Notes due 2007 (the "Notes") are being offered
(the "Offering") by Amphenol Corporation, a Delaware corporation (the "Company"
or "Amphenol"). On January 23, 1997, the Company entered into an agreement and
plan of merger (as amended, the "Merger Agreement") with NXS Acquisition Corp.
("NXS Acquisition"). NXS Acquisition is, as of the date hereof, a wholly owned
subsidiary of KKR 1996 Fund L.P., a limited partnership formed at the direction
of Kohlberg Kravis Roberts & Co. L.P. ("KKR"). Upon the approval of the
stockholders of the Company at a special meeting to be held on May 14, 1997 and
the satisfaction of certain other conditions, NXS Acquisition will be merged
with and into the Company, with the Company being the surviving corporation (the
"Merger"). The Notes are being issued as part of the financings necessary to
consummate the Merger.
The Notes will mature on , 2007. Interest on the Notes will be
payable semi-annually on and of each year, commencing on
, 1997. The Notes will be redeemable at the option of the Company, in
whole or in part, at any time on or after , 2002, in cash at the
redemption prices set forth herein, plus accrued and unpaid interest, if any,
thereon to the redemption date. In addition, at any time on or prior to
, 2000, the Company may, at its option, redeem up to 40% of the
aggregate principal amount of the Notes originally issued at a redemption price
equal to % of the aggregate principal amount thereof, plus accrued and unpaid
interest, if any, thereon to the redemption date, with the net cash proceeds of
one or more Equity Offerings (as defined); provided that at least 60% of the
aggregate principal amount of the Notes originally issued remains outstanding
immediately after the occurrence of each such redemption. The Notes will not be
subject to any sinking fund requirements. Upon the occurrence of a Change of
Control (as defined), the Company will be required to make an offer to purchase
the Notes at a price equal to 101% of the aggregate principal amount thereof,
plus accrued and unpaid interest, if any, thereon to the date of purchase. See
"Description of the Notes."
The Notes will be general unsecured obligations of the Company, will be
subordinated in right of payment to all existing and future Senior Indebtedness
(as defined) of the Company and will be effectively subordinated to all
obligations of the subsidiaries of the Company. The Notes will rank PARI PASSU
with any future senior subordinated indebtedness of the Company and will rank
senior to all other Subordinated Indebtedness (as defined) of the Company. The
Indenture (as defined) permits the Company to incur additional indebtedness,
including up to $1.0 billion of Senior Indebtedness under the Credit Facilities
(as defined), subject to certain limitations. See "Description of the Notes." As
of December 31, 1996, on a pro forma basis, after giving effect to the Merger
and the Financings (as defined) (including the Offering), the aggregate amount
of the Company's outstanding Senior Indebtedness would have been approximately
$763.0 million (excluding $3.0 million of outstanding letters of credit and
unused commitments), and, assuming the repurchase of all of the Company's
outstanding 12 3/4% Senior Subordinated Notes due 2002 in the Debt Tender Offer
(as defined), the Company would have had no senior subordinated indebtedness
outstanding other than the Notes and no subordinated indebtedness outstanding.
In addition, as of December 31, 1996, on a pro forma basis, after giving effect
to the Merger and the Financings (including the Offering), the aggregate amount
of outstanding Indebtedness (as defined) of the Company's subsidiaries would
have been approximately $8.3 million. See "Pro Forma Consolidated Financial
Statements" and "Description of the Notes-- Subordination."
SEE "RISK FACTORS" BEGINNING ON PAGE 13 OF THIS PROSPECTUS FOR A DISCUSSION OF
CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN
THE NOTES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR BY 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.
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC (1) DISCOUNT (2) COMPANY(1)(3)
<S> <C> <C> <C>
Per Note........................................... % % %
Total.............................................. $ $ $
</TABLE>
(1) PLUS ACCRUED INTEREST, IF ANY, FROM THE DATE OF ISSUANCE.
(2) AMPHENOL HAS AGREED TO INDEMNIFY THE UNDERWRITERS (AS DEFINED) AGAINST
CERTAIN LIABILITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SEE
"UNDERWRITING."
(3) BEFORE DEDUCTING EXPENSES PAYABLE BY AMPHENOL ESTIMATED AT $ .
The Notes are being offered by the Underwriters, subject to prior sale,
when, as and if delivered to and accepted by them, and subject to various prior
conditions, including the right to reject orders in whole or in part. It is
expected that delivery of the Notes will be made in New York, New York on or
about , 1997.
--------------------------
JOINT BOOK-RUNNING MANAGERS
DONALDSON, LUFKIN & JENRETTE LEHMAN BROTHERS
SECURITIES CORPORATION
------------------------
CO-MANAGERS
BT SECURITIES CORPORATION CHASE SECURITIES INC.
<PAGE>
PHOTOS FOR INSIDE FRONT COVER TO PROSPECTUS
AMPHENOL--INTERCONNECT TECHNOLOGY APPLICATIONS
TOP LEFT OF PAGE
AEROSPACE
HIGH DENSITY PCB CONNECTORS USED IN AEROSPACE APPLICATIONS
TOP RIGHT OF PAGE
AUTOMOTIVE
INTERCONNECT SYSTEMS FOR AUTOMOTIVE AIRBAGS AND PRETENSIONER SEATBELTS
CENTER OF PAGE
WIRELESS COMMUNICATIONS
SMART CARD INTERCONNECT TECHNOLOGY USED IN MOBILE PHONES
BOTTOM LEFT OF PAGE
FIBER OPTIC COMMUNICATIONS
4-CHANNEL FIBER OPTIC DENSE WAVELENGTH DIVISION MULTIPLEXER ("DWDM") FOR
MULTIPLEXING IN FIBER OPTIC COMMUNICATION NETWORKS
BOTTOM RIGHT OF PAGE
BROADBAND COMMUNICATIONS
COAXIAL CABLES USED IN VARIOUS BROADBAND APPLICATIONS
IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NOTES.
SPECIFICALLY, THE UNDERWRITERS MAY OVERALLOT IN CONNECTION WITH THE OFFERING AND
MAY BID FOR AND PURCHASE NOTES IN THE OPEN MARKET. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING."
2
<PAGE>
AVAILABLE INFORMATION
Amphenol is subject to the informational 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
Securities and Exchange Commission (the "Commission"). Reports, proxy statements
and other information filed by the Company 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 and
at the Commission's regional offices at Seven World Trade Center, Suite 1300,
New York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. Copies of such material can be obtained from the
Public Reference Section of the Commission at prescribed rates. Such material
may also be accessed electronically by means of the Commission's home page on
the Internet (http://www.sec.gov). Amphenol's Class A Common Stock, $.001 par
value per share (the "Common Stock"), is traded on the New York Stock Exchange
(the "NYSE"), and reports, proxy statements and other information can also be
inspected at the offices of the New York Stock Exchange, Inc., 20 Broad Street,
New York, New York 10005.
Amphenol has filed with the Commission a registration statement on Form S-3
(together with all amendments, supplements and exhibits thereto, the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act") with respect to the securities offered hereby. This
Prospectus, which forms a part of the Registration Statement, does not contain
all the information set forth in the Registration Statement, certain parts of
which are omitted in accordance with the rules and regulations of the
Commission. Statements contained in this Prospectus as to the contents of any
contract or other document that is filed as an exhibit to the Registration
Statement are qualified by reference to the full text of such contract or
document.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Company with the Commission (File No.
1-10879) are incorporated herein by reference and shall be deemed to be a part
hereof:
1. Annual Report of the Company on Form 10-K for the year ended
December 31, 1996 (filed with the Commission on February 19, 1997), as
amended by Amendment No. 1 thereto on Form 10K/A (filed with the Commission
on March 31, 1997); and
2. Current Report of the Company on Form 8-K dated January 23, 1997.
All documents and reports filed by the Company with the Commission pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of the Offering shall be deemed to be
incorporated herein by reference and shall be deemed to be a part hereof from
the date of filing of such documents and reports. Any statement contained in a
document or report incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein or in any subsequently filed
document or report that also is or is deemed to be incorporated by reference
herein modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company will provide, without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon written or oral
request of such person, a copy of any or all of the documents or reports
incorporated herein by reference (other than exhibits thereto, unless such
exhibits specifically are incorporated by reference into such documents or
reports or this Prospectus). Requests for such documents or reports should be
submitted in writing, addressed to the Secretary, Amphenol Corporation, 358 Hall
Avenue, Wallingford, Connecticut 06492, telephone (203) 265-8900.
3
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ IN
CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND CONSOLIDATED FINANCIAL
STATEMENTS, INCLUDING THE NOTES THERETO, CONTAINED ELSEWHERE IN THIS PROSPECTUS
AND INCORPORATED HEREIN BY REFERENCE. UNLESS THE CONTEXT INDICATES OTHERWISE,
ALL REFERENCES TO THE "COMPANY" OR "AMPHENOL" SHALL MEAN AMPHENOL CORPORATION
AND ITS CONSOLIDATED SUBSIDIARIES.
THE COMPANY
Amphenol is a leading designer, manufacturer and marketer of electrical,
electronic and fiber optic connectors, interconnect systems and coaxial and
flat-ribbon cable. The primary end markets for the Company's products are
telephone, wireless and data communications systems; cable television systems;
commercial and military aerospace electronics; automotive and mass
transportation applications; and industrial factory automation equipment. For
the year ended December 31, 1996, approximately 52% of the Company's net sales
were to the worldwide communications market (including 23% for the cable
television market), 26% were for commercial and military aerospace and other
military electronics applications and 22% were for industrial, transportation
and other applications. The Company focuses on optimizing its mix of higher
margin application-specific products in its product offerings and has enhanced
the cost controls in its operations. As a result of these initiatives, the
Company's operating profit margin has increased from 13.5% in fiscal year 1993
to 17.8% in fiscal year 1996. For fiscal year 1996, the Company had net sales,
EBITDA (as defined) and net income of $776.2 million, $166.1 million and $67.6
million, respectively.
The Company designs and manufactures connectors and interconnect systems,
which are used primarily to conduct electrical and optical signals, for a wide
range of sophisticated electronic applications. The Company believes, based
primarily on published market research, that it is one of the largest connector
manufacturers in the world and the leading supplier of high performance
environmental connectors that require superior performance and reliability under
conditions of stress and in hostile environments. Such conditions are frequently
encountered in commercial and military aerospace applications and other
demanding industrial applications such as natural resource exploration, medical
instrumentation and off-road construction. In addition, the Company has
developed a broad range of interconnect products to serve the rapidly growing
markets of wireless communications including cellular and personal communication
networks and fiber optic networks; electronic commerce including smart cards and
electronic purse applications; and automotive safety products including airbags,
pretensioner seatbelts and anti-lock braking systems. The Company is also one of
the leaders in developing interconnect products for factory automation and
machine tools and develops interconnect products for mass transportation
applications. The Company believes that the worldwide industry for interconnect
products and systems is highly fragmented with over 1,000 producers of
connectors worldwide, of which the 10 largest producers accounted for a combined
market share of approximately 36% in 1996. The Company estimates that the total
sales for the industry were approximately $27.0 billion in 1996.
The Company's Times Fiber subsidiary is the world's second largest producer
of coaxial cable for the cable television market. The Company believes that
Times Fiber is one of the lowest cost producers of coaxial cable for the cable
television market, and that it is one of the technological leaders in increasing
the bandwidth of coaxial cable products to accommodate increased channel
capacity for full service cable television/telecommunication systems. In
addition, the Company is beginning to supply the developing market for high
bandwidth coaxial cable and related interconnect products used in full service
cable television/telecommunication systems being installed by cable operators
and telecommunication companies. The Company has also become a major supplier of
coaxial cable to the emerging international cable television markets. The
Company estimates that the total sales for the worldwide market for coaxial
cable for cable television were approximately $800.0 million in 1996.
4
<PAGE>
The Company is a global manufacturer employing advanced manufacturing
processes. The Company's products are manufactured and assembled at facilities
in the United States, Canada, Mexico, Germany, France, the United Kingdom, the
Czech Republic, Hong Kong, Taiwan, Japan, India and the People's Republic of
China. The Company's connector products are sold through its global sales force
and independent manufacturers' representatives to thousands of original
equipment manufacturers ("OEMs") in 52 countries throughout the world as well as
through a global network of electronics distributors. The Company's coaxial
cable products are primarily sold to cable television operators and to
telecommunication companies who have entered the broadband communications
market. In 1996, approximately 55% of the Company's net sales were in North
America, 33% were in Europe and 12% were in Asia and other countries.
COMPETITIVE STRENGTHS
- LEADER IN ATTRACTIVE MARKET SEGMENTS. The Company serves diverse markets
within the connector industry such as the worldwide communications,
aerospace, automotive and industrial markets and growing segments within
these markets. For instance, the Company has a broad product offering of
communications-related interconnect products such as sophisticated
wavelength division multiplexers used in fiber optic networks, radio
frequency connector products used in base stations and handheld sets in
wireless communications, and interconnect acceptor devices used in smart
card systems. The Company, in conjunction with a significant OEM customer,
has also developed sophisticated interconnect coupler technology for
advanced commercial aircraft flight control systems. In addition, the
Company has pioneered the development of interconnect products for
automotive safety systems such as airbags and pretensioner seatbelts and
has been an innovator in the development of motion control connector
products for factory automation. With respect to its coaxial cable
products for cable television, the Company has been one of the
technological leaders in expanding the bandwidth characteristics of
coaxial cable so as to permit greater channel capacity for cable
television systems.
- CLOSE RELATIONSHIPS WITH OEMS. Due in part to its 60 year history in the
connector business and its reputation for innovative, high quality
interconnection products, the Company has developed close relationships
with many of its OEM customers in its various product segments. To this
end, the Company has achieved preferred supplier designations from many
OEMs, enabling the Company to work closely with these OEMs through product
design teams and collaborative arrangements to design and manufacture
application-specific products. The Company's key account managers enhance
the Company's role as a supplier of application-specific products for OEMs
by directing customer relationships on a global basis and bringing to bear
the Company's global resources to satisfy the worldwide needs of its
multinational OEM customers.
- GLOBAL PRESENCE. Approximately 49% of the Company's sales for fiscal year
1996 were outside of the United States. The Company has 31 manufacturing
and assembly facilities on three continents and sales and distribution
organizations and relationships in 52 countries throughout the world. The
Company's global presence enables it to serve the expanding global needs
and requirements of its existing multinational and international OEM
customers and to position itself to develop new customer relationships
with other multinational and international OEMs. The Company believes that
having a local presence in foreign markets in which its OEM customers
operate is an important factor in its ability to provide high quality
products on a timely and efficient basis. Moreover, the Company attains
important operational advantages by developing and sharing "best
practices" across its vast international design and manufacturing network.
- EXTENSIVE PRODUCT LINE. Through its advanced technological and design
capabilities, the Company has developed an extensive line of interconnect
products for its customers worldwide which resulted in sales of
approximately 83,000 stock keeping units ("SKUs") in 1996. By offering a
broad array of
5
<PAGE>
high quality products, the Company strives to provide highly-engineered,
reliable and value-added solutions for all of its customers'
interconnection needs. For example, based on Amphenol's position as the
leading supplier in the high performance environmental connector market,
the Company performed certain research and development for, and is now
producing, a family of connectors comprising approximately 1,000 SKUs for
use in the international space station program. The Company believes that
the breadth of its product line combined with its global presence is an
important competitive advantage in an environment in which many OEMs and
other customers are reducing the size of their supplier bases.
- BROAD CUSTOMER BASE. The Company's products are used in a wide variety of
applications by numerous customers, none of whom accounted for more than
5% of the Company's sales in 1996 (except for sales under contract with
the U.S. Government and its subcontractors, which accounted for 8% of 1996
sales). In 1996, the Company sold its products to approximately 11,500
customer locations worldwide. The Company's products are also sold to
additional customer locations through eight of the 10 largest (based on
sales) U.S. electronics distributors, which the Company believes is an
important competitive advantage in effectively marketing its products. By
servicing a broad array of customers in a variety of different industries
and countries, the Company strives to develop opportunities to
cross-market products and technologies.
BUSINESS STRATEGY
The Company's strategic objective is to further enhance its position as a
leading global designer and manufacturer of interconnect solutions and coaxial
cable products. The Company seeks to achieve this objective by pursuing the
following strategies:
- INCREASE DEVELOPMENT OF APPLICATION-SPECIFIC PRODUCTS FOR OEMS. The
Company intends to expand the scope and number of preferred supplier
designations and application-specific assignments it has with OEM
customers. The Company works closely with its network of OEM customers at
the design stage to create and manufacture innovative connector solutions
to meet its customers' specific interconnection needs. The Company's
application-specific products designed and manufactured for OEMs in this
manner generally have higher margins than the Company's other
interconnection products and have been developed across all of the
Company's product lines. In addition to developing further its
relationship with these OEMs and providing a source of high margin sales,
this product development strategy has a number of important ancillary
benefits. For instance, once an application-specific product has been
developed for a specific OEM customer, such new product often becomes
widely accepted in the industry for similar applications and products
manufactured by other potential customers, thereby providing additional
sources of future revenue. For example, the Company developed an
application-specific interconnect system for automotive safety devices for
a European luxury automobile manufacturer that became broadly used by
other European automobile manufacturers for standard car models.
- EXPAND PRODUCT LINES. The Company's current product lines encompass market
segments comprising approximately 50% of the $27.0 billion connector
industry. The Company continuously strives to expand its product lines in
order to become a primary source supplier of interconnect solutions for
many of its customers. By expanding its product lines, the Company intends
to leverage its extensive customer relationships to cross-sell additional
connector products. For example, in 1995, the Company developed and is now
producing a broad line of radio frequency coaxial and fiber optic
connectors for the cable television industry, which the Company markets to
its large base of existing coaxial cable customers. Moreover, in an
environment in which many OEMs and other customers are reducing the size
of their supplier bases, the Company believes that the expansion of its
product lines will further solidify its importance to existing customers
and enable the Company to effectively market products to new customers.
6
<PAGE>
- FOCUS ON RAPIDLY GROWING COMMUNICATIONS SEGMENT. The Company intends to
capitalize on its advanced technological capabilities and products in the
emerging and rapidly expanding communications segment of the connector
industry, which has displayed strong growth in recent years in connection
with the proliferation of wireless communications including cellular
telephones and personal communication networks. For instance, the Company
has developed a broad range of radio frequency connector products for the
wireless communications market, and the Company's technology for smart
card acceptor devices is used in many of the hand held cellular telephones
in Europe and elsewhere. The Company also believes that many of the
advanced technologies developed through its product development activity
in the commercial and military aerospace segment provide it with
significant competitive advantages in the development of new commercial
communications connector products. For example, by using the technological
capabilities that it developed in designing filtered connectors for the
aerospace segment, the Company was able to develop a line of filtered
connectors for the commercial communications segment.
- EXPAND GLOBAL PRESENCE. The Company intends to further expand its global
manufacturing, sales and service operations to better serve its existing
client base, penetrate developing markets and establish new customer
relationships. As the Company's multinational OEM customers expand their
international operations to take advantage of developing markets and the
lower manufacturing and labor costs of such markets, the Company intends
to similarly expand its international capabilities in order to provide
just-in-time facilities near these customers. Such international expansion
also enables the Company to further reduce its reliance on the U.S.
economy and to take advantage of the lower manufacturing costs in certain
countries. The Company has recently increased its presence in the
Asia-Pacific region through the expansion of its sales force, the
expansion of its manufacturing facilities in the People's Republic of
China and the acquisition of 51% of Kai-Jack Industrial Co., Ltd.
("Kai-Jack"), one of the leading Taiwanese radio frequency connector
manufacturers.
- EXPAND INTERNATIONAL SALES OF COAXIAL CABLE. The Company believes that the
relatively low penetration rate for cable television in countries outside
of the United States provides significant opportunity for future growth in
international sales of coaxial cable. For example, it is estimated that in
1996 only 25% of the television households in Western Europe, 15% of such
households in Asia, and 11% of such households in Latin America subscribed
to some form of multichannel television service as compared to an
estimated subscription rate of 64% in the United States. Cable system
developments are currently planned in a number of different countries,
including large portions of Europe, Asia and Latin America. The Company
believes that it is well positioned to take advantage of this opportunity
because it is the second largest provider of coaxial cable for cable
television in the world and because it has extensive relationships with
many of the foreign and multinational multiple system operators ("MSOs")
planning system developments, including United International Holdings,
Inc., Telewest Communications Plc and Continental Cablevision, Inc.
- PURSUE STRATEGIC ACQUISITIONS AND INVESTMENTS. The Company intends to
continue to pursue strategic acquisitions that complement its existing
business and further expand its product lines and technological
capabilities. The interconnection industry is highly fragmented with over
1,000 producers of connectors worldwide, of which the 10 largest producers
accounted for a combined market share of approximately 36% in 1996. The
Company believes that the fragmented nature of the connector industry
provides significant opportunities for future strategic acquisitions.
Furthermore, the Company believes that it can improve the profitability of
the acquired companies through economies of scale. The Company's recent
acquisitions of The Sine Companies, Inc. ("Sine") and Kai-Jack, which
expanded the Company's capabilities in the factory automation and radio
frequency segments, respectively, and, in the case of Kai-Jack, increased
the Company's presence in the growing Asia-Pacific market, are examples of
the type of synergistic acquisitions the Company plans to continue to
pursue.
7
<PAGE>
THE MERGER AND THE FINANCINGS
On January 23, 1997, the Company entered into an agreement and plan of
merger (as amended as of April 9, 1997, the "Merger Agreement") with NXS
Acquisition Corp. ("NXS Acquisition"). NXS Acquisition, as of the date hereof,
is a wholly owned subsidiary of KKR 1996 Fund L.P. (the "Partnership"), a
limited partnership formed at the direction of Kohlberg Kravis Roberts & Co.
L.P. ("KKR"). Pursuant to the Merger Agreement, upon the approval of the
stockholders of the Company at the special meeting to be held on May 14, 1997
and the satisfaction of certain other conditions, NXS Acquisition will be merged
with and into the Company, with the Company being the surviving corporation (the
"Merger"). The Merger contemplates that approximately 90% of the presently
issued and outstanding shares of the Company's Common Stock will be converted,
at the election of the holder, into $26.00 in cash per share (the "Cash
Consideration"), and that approximately 10% of such shares will be retained by
stockholders. As a result of the Merger, the Company's existing stockholders
will own approximately 25% of the shares issued and outstanding immediately
after the Merger and stockholders of NXS Acquisition will own approximately 75%
of the shares issued and outstanding immediately after the Merger, in each case,
before giving effect to the exercise of the NXS Option or the Stockholders
Option (each as defined) granted with respect to the shares of Common Stock
owned by the DeGeorge Stockholders (as defined) pursuant to the Stockholders
Agreement (as defined) and before giving effect to any purchase of shares from
Messrs. Loeffler, Jepsen and Cohane. Assuming all stockholders elect to convert
all of their shares into the right to receive the Cash Consideration, which
would maximize the number of shares subject to the NXS Option and the
Stockholders Option after the Merger, then upon exercise of either such option,
the stockholders of NXS Acquisition would own, directly or indirectly,
approximately 82% of the shares issued and outstanding immediately after the
Merger and the remaining stockholders would own, in the aggregate, approximately
18% of such shares. In addition, if Messrs. Loeffler, Jepsen and Cohane
determine to sell a portion of their shares which may be retained by them
following the Merger to such stockholders of NXS Acquisition, such stockholders
of NXS Acquisition could own, indirectly, up to an additional 1.5% of such
shares. See "The Merger" and "Management--Stock Purchase and Stock Option
Agreements."
The transactions contemplated by the Merger Agreement will be funded by (i)
$750.0 million of bank borrowings by the Company pursuant to a senior secured
term loan facility (the "Term Loan Facility"), (ii) the offering of $240.0
million aggregate principal amount of the Notes (the "Offering"), (iii) an
equity investment in the Company by the Partnership (and by one or more other
partnerships organized at the direction of KKR) of approximately $341.0 million
and (iv) available cash of the Company. Such amounts will be used to (a) pay
approximately $1,048.3 million of cash merger consideration, (b) repay
indebtedness of the Company under its existing bank credit facility (the
"Existing Bank Credit Facility") ($24.0 million at December 31, 1996), (c)
redeem the $100.0 million outstanding aggregate principal amount of the
Company's 10.45% Senior Notes due 2001 (the "Existing Senior Notes"), (d)
repurchase the $95.0 million outstanding aggregate principal amount of the
Company's 12 3/4% Senior Subordinated Notes due 2002 (the "12 3/4% Notes" and,
together with the Existing Senior Notes, the "Existing Notes") in the Company's
tender offer for the 12 3/4% Notes (the "Debt Tender Offer"), (e) pay an
estimated $19.3 million of premiums in connection with the retirement of the
Existing Notes, and (f) pay an estimated $58.4 million in transaction fees and
expenses incurred in connection with the Merger. The Company also expects to
enter into a $150.0 million senior secured revolving credit facility (the
"Revolving Credit Facility") to provide for the Company's working capital
requirements following the Merger. The Revolving Credit Facility and the Term
Loan Facility (collectively the "Credit Facilities") will be provided by a group
of banks led by Bankers Trust Company ("BTCo"). The Credit Facilities and the
Offering are collectively referred to herein as the "Financings." On January 21,
1997, the Company received an executed commitment from BTCo to provide the
Credit Facilities. The commitment is subject to customary conditions, including
the negotiation, execution and delivery of definitive documentation with respect
to the commitment. See "Use of Proceeds," "Capitalization" and "Description of
Credit Facilities."
8
<PAGE>
The sources and uses of the funds for the Merger and the related
transactions (including the Financings and the Debt Tender Offer), which assume
that the Merger occurred on December 31, 1996, are as follows (dollars in
millions):
<TABLE>
<CAPTION>
<S> <C>
SOURCES OF FUNDS
Revolving Credit Facility.......................................................... $ 13.0
Term Loan Facility................................................................. 750.0
Senior Subordinated Notes offered hereby........................................... 240.0
Equity investment.................................................................. 341.0
Available cash..................................................................... 1.0
---------
Total Sources.................................................................. $ 1,345.0
---------
---------
USES OF FUNDS
Repayment of Existing Bank Credit Facility......................................... $ 24.0
Redemption of Existing Senior Notes................................................ 100.0
Repurchase of 12 3/4% Notes (a).................................................... 95.0
Payment of cash merger consideration............................................... 1,048.3
Estimated debt retirement premiums (a)............................................. 19.3
Estimated transaction fees and expenses (b)........................................ 58.4
---------
Total Uses..................................................................... $ 1,345.0
---------
---------
</TABLE>
- ------------------------
(a) Assumes all of the outstanding 12 3/4% Notes are repurchased in the Debt
Tender Offer; however, there can be no assurance that all of such 12 3/4%
Notes will be repurchased. At least 51% (the "Minimum Condition") of the
outstanding aggregate principal amount of such 12 3/4% Notes must be
repurchased in the Debt Tender Offer. If less than all of the holders of the
12 3/4% Notes tender, the 12 3/4% Notes that are not repurchased will remain
outstanding at least until December 15, 1997, the earliest date on which
such 12 3/4% Notes may be optionally redeemed by the Company. The Debt
Tender Offer was commenced by the Company on April 15, 1997 and, on April
29, 1997, the Minimum Condition was achieved.
(b) Includes aggregate cash consideration of up to $2.4 million related to the
Company stock options to be canceled in conjunction with the Merger.
RECENT DEVELOPMENTS
The Company reported sales and net income of $211.8 million and $17.5
million, respectively, for the first quarter of 1997 compared to sales and net
income of $194.8 million and $16.9 million, respectively, for the first quarter
of 1996. Currency translation had the effect of decreasing sales by
approximately $4.7 milllion in the first quarter of 1997 compared to the first
quarter of 1996.
9
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Securities Offered.............. $240,000,000 in aggregate principal amount of % Senior
Subordinated Notes due 2007.
Maturity Date................... , 2007.
Interest Payment Dates.......... and of each year, commencing , 1997.
Optional Redemption............. The Notes will be redeemable at the option of the Company,
in whole or in part, at any time on or after , 2002,
in cash at the redemption prices set forth herein, plus
accrued and unpaid interest, if any, thereon to the date
of redemption. In addition, at any time on or prior to
, 2000, the Company may, at its option, redeem up to
40% of the aggregate principal amount of the Notes
originally issued at a redemption price equal to % of
the aggregate principal amount thereof, plus accrued and
unpaid interest, if any, thereon to the redemption date,
with the net cash proceeds of one or more Equity Offerings
(as defined); provided that at least 60% of the aggregate
principal amount of the Notes originally issued remains
outstanding immediately after the occurrence of each such
redemption. See "Description of the Notes-- Optional
Redemption."
Change of Control............... Upon the occurrence of a Change of Control (as defined),
the Company will be required to make an offer to purchase
the Notes at a price in cash equal to 101% of the
aggregate principal amount thereof, plus accrued and
unpaid interest, if any, thereon to the date of purchase.
See "Description of the Notes--Repurchase at the Option of
Holders--Change of Control." There can be no assurance
that, in the event of a Change of Control, the Company
would have sufficient funds to purchase all Notes
tendered. See "Risk Factors--Change of Control."
Ranking......................... The Notes will be general unsecured obligations of the
Company, will be subordinated in right of payment to all
existing and future Senior Indebtedness (as defined) of
the Company and will be effectively subordinated to all
Indebtedness and other obligations (including trade
payables) of the Company's subsidiaries. The Notes will
rank PARI PASSU with any future senior subordinated
indebtedness of the Company and will rank senior to all
other Subordinated Indebtedness (as defined) of the
Company. The Indenture permits the Company to incur
additional indebtedness, including up to $1.0 billion of
Senior Indebtedness under the Credit Facilities, subject
to certain limitations. At December 31, 1996, on a pro
forma basis after giving effect to the Merger and the
Financings (including the Offering), the aggregate amount
of the Company's outstanding Senior Indebtedness would
have been approximately $763.0 million (excluding $3.0
million of outstanding letters of credit and unused
commitments), and, assuming the repurchase of all of the
Company's 12 3/4% Notes in the Debt Tender Offer, the
Company would have had no senior subordinated indebtedness
outstanding other than the Notes and no subordinated
indebtedness outstanding. In addition, as of December 31,
1996, on a pro forma basis after giving effect to the
Merger and the Financings (including the Offering), the
aggregate
</TABLE>
10
<PAGE>
<TABLE>
<S> <C>
amount of the outstanding Indebtedness of the Company's
subsidiaries would have been approximately $8.3 million.
See "Pro Forma Consolidated Financial Statements" and
"Description of the Notes--Subordination."
Certain Covenants............... The indenture under which the Notes will be issued (the
"Indenture") will contain covenants that will, subject to
certain exceptions, limit, among other things, the ability
of the Company and/or its Restricted Subsidiaries (as
defined) to (i) pay dividends or make certain other
restricted payments or investments; (ii) incur additional
Indebtedness and issue disqualified stock and preferred
stock; (iii) create liens on assets; (iv) merge,
consolidate, or sell all or substantially all of their
assets; (v) enter into certain transactions with
affiliates; (vi) create restrictions on dividends or other
payments by Restricted Subsidiaries to the Company; (vii)
create guarantees of indebtedness by Restricted
Subsidiaries; and (viii) incur other senior subordinated
indebtedness. See "Description of the Notes."
Use of Proceeds................. The gross proceeds from the Offering, together with
borrowings under the Credit Facilities, the equity
contribution by the Partnership and certain available cash
of the Company, will be used upon consummation of the
Merger to pay approximately $1,048.3 million of cash
merger consideration, repay indebtedness of the Company
under the Existing Bank Credit Facility ($24.0 million at
December 31, 1996), retire $195.0 million of the Existing
Notes, pay estimated debt retirement premiums of $19.3
million in connection with the retirement of the Existing
Notes, and pay an estimated $58.4 million in transaction
fees and expenses. See "The Merger" and "Use of Proceeds."
Conditions...................... The closing of the Offering is conditioned upon
consummation of the Merger and the Financings (other than
the Offering).
</TABLE>
RISK FACTORS
Prospective investors should carefully consider the following factors before
purchasing the Notes offered hereby. Following the Merger, the Company will (i)
have substantial leverage, (ii) be subject to significant operating and
financial restrictions pursuant to the Indenture and the Credit Facilities, and
(iii) be controlled by affiliates of KKR. In addition, (i) the Notes offered
hereby will be subordinated to all existing and future Senior Indebtedness of
the Company, including all Indebtedness under the Credit Facilities, (ii) the
Notes will not be secured; therefore, lenders of secured indebtedness, including
the lenders under the Credit Facilities, will have a prior claim with respect to
the assets securing such indebtedness, and (iii) there can be no assurance that
the Company will be able to purchase the Notes upon a Change of Control. The
Company's business entails certain risks relating to (i) the possibility of
fluctuations in demand for the Company's coaxial cable products, particularly as
a result of changes in the demand for such products in the cable television
industry, (ii) the possibility that diminished military expenditures will
adversely affect the Company's sales, (iii) competition, (iv) the possible
adverse effect of foreign exchange rates fluctuations and other risks of
conducting business abroad, and (v) certain union organizing activities. See
"Risk Factors" for a discussion of certain factors that should be considered in
connection with an investment in the Notes.
11
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA
The following table sets forth summary consolidated financial and other data
of the Company. The historical consolidated financial data for the three fiscal
years ended December 31, 1996 have been derived from, and should be read in
conjunction with, the audited consolidated financial statements of Amphenol and
related notes thereto included elsewhere in this Prospectus. The historical
consolidated financial data for the two fiscal years ended December 31, 1993
have been derived from audited consolidated financial statements of the Company
which are not contained herein. The pro forma consolidated financial data have
been derived from the Pro Forma Consolidated Financial Statements and the
related notes thereto included elsewhere herein. The pro forma statement of
income data for the period presented give effect to the Merger and the
Financings and related transactions (including the redemption of the Existing
Senior Notes and the repurchase of all of the outstanding 12 3/4% Notes in the
Debt Tender Offer) as if such transactions were consummated on January 1, 1996.
The pro forma balance sheet data give effect to the Merger and the Financings
and related transactions (including the redemption of the Existing Senior Notes
and the repurchase of all of the outstanding 12 3/4% Notes in the Debt Tender
Offer) as if such transactions had occurred as of December 31, 1996. See "Pro
Forma Consolidated Financial Statements," "Selected Historical Consolidated
Financial and Other Data," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the historical consolidated financial
statements and the related notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------
<S> <C> <C> <C> <C>
1992 1993 1994 1995
--------- --------- --------- ---------
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales.................................................................... $ 457,677 $ 603,967 $ 692,651 $ 783,233
Cost of sales, excluding depreciation and amortization expense............... 313,322 404,709 458,318 506,707
Depreciation and amortization expense........................................ 26,048 28,614 28,099 27,795
Selling, general and administrative expense.................................. 75,107 89,386 102,183 114,041
--------- --------- --------- ---------
Operating income............................................................. $ 43,200 $ 81,258 $ 104,051 $ 134,690
--------- --------- --------- ---------
--------- --------- --------- ---------
Net income before extraordinary item......................................... $ 8,639 $ 24,749 $ 42,400 $ 62,858
--------- --------- --------- ---------
--------- --------- --------- ---------
OTHER DATA:
EBITDA (a)................................................................... $ 70,080 $ 109,035 $ 131,209 $ 162,145
EBITDA margin (b)............................................................ 15.3% 18.1% 18.9% 20.7%
Capital expenditures......................................................... $ 6,695 $ 5,988 $ 10,936 $ 20,381
Ratio of earnings to fixed charges (c)....................................... 1.5x 1.8x 2.9x 4.1x
Cash flow provided by operations............................................. $ 23,538 $ 56,471 $ 88,871 $ 79,227
Cash flow used by investing activities....................................... (21,793) (7,752) (13,460) (21,411)
Cash flow used by financing activities....................................... (3,779) (51,039) (73,714) (50,370)
PRO FORMA DATA:
EBITDA (a)...................................................................
Cash interest expense (d)....................................................
Ratio of EBITDA to cash interest expense.....................................
Ratio of earnings to fixed charges (c).......................................
<CAPTION>
<S> <C>
1996
---------
<S> <C>
STATEMENT OF INCOME DATA:
Net sales.................................................................... $ 776,221
Cost of sales, excluding depreciation and amortization expense............... 494,689
Depreciation and amortization expense........................................ 28,808
Selling, general and administrative expense.................................. 114,746
---------
Operating income............................................................. $ 137,978
---------
---------
Net income before extraordinary item......................................... $ 67,578
---------
---------
OTHER DATA:
EBITDA (a)................................................................... $ 166,061
EBITDA margin (b)............................................................ 21.4%
Capital expenditures......................................................... $ 20,374
Ratio of earnings to fixed charges (c)....................................... 4.4x
Cash flow provided by operations............................................. $ 68,207
Cash flow used by investing activities....................................... (49,835)
Cash flow used by financing activities....................................... (26,416)
PRO FORMA DATA:
EBITDA (a)................................................................... $ 166,061
Cash interest expense (d).................................................... 88,544
Ratio of EBITDA to cash interest expense..................................... 1.9x
Ratio of earnings to fixed charges (c)....................................... 1.4x
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1996
------------------------
<S> <C> <C>
HISTORICAL PRO FORMA
----------- -----------
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Working capital........................................................................................ $ 136,864 $ 153,395
Total assets........................................................................................... 710,662 754,421
Total debt (e)......................................................................................... 227,243 1,011,195
Total shareholders' equity (deficit)................................................................... 360,548 (379,645)
</TABLE>
- ------------------------
(a) "EBITDA" represents earnings before interest expense, other financing fees
associated with program fees on sale of accounts receivable, interest
income, income taxes, and depreciation and amortization expense, and
excludes minority interest. EBITDA is not intended to represent cash flow
from operations as defined by generally accepted accounting principles and
should not be used as an alternative to net income as an indicator of the
Company's operating performance or to cash flow as a measure of liquidity.
EBITDA is included in the Prospectus as it is a basis upon which the Company
assesses its financial performance, and certain covenants in the Company's
borrowing arrangements will be tied to similar measures. EBITDA and EBITDA
margin, as presented, represent useful measures of assessing the Company's
ongoing operating activities without the impact of financing activity and
non-recurring charges. While EBITDA is frequently used as a measure of
operations and the ability to meet debt service requirements, it is not
necessarily comparable to other similarly titled captions of other companies
due to the potential inconsistencies in the method of calculation. EBITDA in
fiscal 1992 excludes the effects of a non-recurring charge of $4.13 million
associated with an acquisition.
(b) EBITDA margin represents EBITDA divided by net sales.
(c) For purposes of determining the ratio of earnings to fixed charges, earnings
are defined as earnings before income taxes and extraordinary items, plus
fixed charges. Fixed charges includes interest expenses on all indebtedness,
other financing fees associated with program fees on sale of accounts
receivable, amortization of deferred debt issuance costs, and one-third of
rental expenses on operating leases, representing that portion of rental
expense deemed by the Company to be attributable to interest.
(d) Pro forma cash interest expense is defined as interest expense exclusive of
bank agency fees, commitment fees, and amortization of deferred debt
issuance costs.
(e) Total debt includes long-term debt and the current portion of long-term
debt.
12
<PAGE>
RISK FACTORS
PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY THE FOLLOWING FACTORS BEFORE
PURCHASING THE NOTES OFFERED HEREBY.
SUBSTANTIAL LEVERAGE AND DEBT SERVICE
The Company will incur substantial indebtedness in connection with the
Merger. See "The Merger" and "Capitalization." As of December 31, 1996, after
giving pro forma effect to the Merger and the Financings (including the
Offering), the Company would have had $1,011.3 million (excluding $3.0 million
of outstanding letters of credit) of consolidated indebtedness and $379.7
million of consolidated shareholders' deficit. Upon completion of the
Financings, the Company will have consolidated long-term indebtedness
substantially greater than the Company's pre-Merger long-term indebtedness. As
of December 31, 1996, after giving pro forma effect to the Merger and the
Financings, the Company would have had $134.0 million (after giving effect to
$3.0 million of outstanding letters of credit) available to be borrowed under
the $150.0 million Revolving Credit Facility. Also after giving pro forma effect
to such transactions, the Company's ratio of earnings to fixed charges would
have been 1.4 to 1.0 for the fiscal year ended December 31, 1996. Pro forma net
income for the fiscal year ended December 31, 1996 would have been $23.4
million, as compared to $67.6 million for the same period on an historical
basis, and pro forma cash interest expense for the fiscal year ended December
31, 1996 would have been $88.5 million ($95.6 million of total interest
expense), as compared to $23.9 million ($24.6 million of total interest expense)
for the same period on an historical basis. See "Capitalization" and "Pro Forma
Consolidated Financial Statements." The Company and its subsidiaries may incur
additional indebtedness in the future, subject to certain limitations contained
in the instruments governing their indebtedness. Accordingly, the Company will
have significant debt service obligations.
The Company's debt service obligations could have important consequences to
holders of the Notes, including the following: (i) a substantial portion of the
Company's cash flow available from operations after satisfying certain
liabilities arising in the ordinary course of business will be dedicated to the
payment of principal and interest on its indebtedness, thereby reducing the
funds that would otherwise be available to the Company, including for
acquisitions and future business opportunities; (ii) the Company's ability to
obtain additional financing in the future may be limited; (iii) certain of the
Company's borrowings (including, but not limited to, the amounts borrowed under
the Credit Facilities) will be at variable rates of interest, which could cause
the Company to be vulnerable to increases in interest rates; (iv) the Company's
flexibility in planning for, or reacting to, changes in its business and the
industry may be limited; (v) the Company's higher degree of leverage may make it
relatively more vulnerable to economic downturns and competitive pressures; (vi)
a substantial decrease in net operating cash flows or an increase in expenses of
the Company could make it difficult for the Company to meet its debt service
requirements or force it to modify its operations; and (vii) all of the
indebtedness incurred in connection with the Credit Facilities will become due
prior to the time the principal payment on the Notes will become due.
The Company's ability to make scheduled payments of the principal of, or to
pay interest on, or to refinance its indebtedness (including the Notes) and to
make scheduled payments under its operating leases depends on its future
performance, which to a certain extent is subject to economic, financial,
competitive and other factors beyond its control. Based upon the current level
of operations and anticipated growth, management believes that future cash flow
from operations, together with available borrowings under the Revolving Credit
Facility, will be adequate to meet the Company's anticipated requirements for
capital expenditures, working capital, interest payments and scheduled principal
payments. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations-- Liquidity and Capital Resources." There can be no
assurance, however, that the Company's business will continue to generate
sufficient cash flow from operations in the future to service its debt and make
necessary capital expenditures after satisfying certain liabilities arising in
the ordinary course of business. If unable to do so, the Company may be required
to refinance all or a portion of its existing debt, including
13
<PAGE>
the Notes, to sell assets or to obtain additional financing. There can be no
assurance that any such refinancing would be possible or that any such sales of
assets or additional financing could be achieved.
RESTRICTIVE LOAN COVENANTS
The Credit Facilities and the Indenture will contain numerous financial and
operating covenants that will limit the discretion of the Company's management
with respect to certain business matters. These covenants will place significant
restrictions on, among other things, the ability of the Company to incur
additional indebtedness, to create liens or other encumbrances, to make certain
payments and investments, to sell or otherwise dispose of assets, and to merge
or consolidate with other entities. See "Description of Credit Facilities" and
"Description of the Notes--Certain Covenants." The Credit Facilities will also
require the Company to meet certain financial ratios and tests. A failure to
comply with the obligations contained in the Credit Facilities or the Indenture
could result in an event of default under either the Credit Facilities or the
Indenture, which could result in acceleration of the related debt and the
acceleration of debt under other instruments evidencing indebtedness that may
contain cross-acceleration or cross-default provisions. If, as a result thereof,
a default occurs with respect to Senior Indebtedness, the provisions in the
Credit Facilities or the subordination provisions in the Indenture would likely
restrict payments to the holders of the Notes.
SUBORDINATION OF NOTES TO SENIOR INDEBTEDNESS
The Company's obligations under the Notes are subordinate and junior in
right of payment to all existing and future Senior Indebtedness of the Company,
including all Indebtedness under the Credit Facilities. As of December 31, 1996,
on a pro forma basis after giving effect to the Merger and the Financings
(including the Offering), the aggregate amount of the Company's outstanding
Senior Indebtedness would have been approximately $763.0 million (excluding $3.0
million of outstanding letters of credit, unused commitments and subsidiary
Indebtedness of approximately $8.3 million). Additional Senior Indebtedness may
be incurred by the Company from time to time, subject to certain restrictions.
By reason of such subordination, in the event of an insolvency, liquidation, or
other reorganization of the Company, the lenders under the Credit Facilities and
other creditors who are holders of Senior Indebtedness must be paid in full
before the holders of the Notes may be paid. Accordingly, there may be
insufficient assets remaining after payment of prior claims to pay amounts due
on the Notes. In addition, under certain circumstances, no payments may be made
with respect to the Notes if a default exists with respect to Senior
Indebtedness.
The Notes are also effectively subordinated to the obligations of the
Company's subsidiaries, including trade payables. The Notes will not be
guaranteed by any of the Company's subsidiaries. All of the Company's
significant domestic subsidiaries will guarantee all obligations outstanding
under the Credit Facilities. In the event of an insolvency, liquidation or other
reorganization of any of the subsidiaries of the Company, the creditors of the
Company (including the holders of the Notes), as well as stockholders of the
Company, will have no right to proceed against the assets of such subsidiaries
or to cause the liquidation or bankruptcy of such subsidiaries under federal
bankruptcy laws. Creditors of such subsidiaries would be entitled to payment in
full from such assets before the Company would be entitled to receive any
distribution therefrom. Except to the extent that the Company may itself be a
creditor with recognized claims against such subsidiaries, claims of creditors
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
claims under the Notes. Certain operations of the Company are conducted through
its subsidiaries and, therefore, the Company is dependent upon the cash flow of
its subsidiaries to meet its obligations, including its obligations under the
Notes. As of December 31, 1996, the Company's subsidiaries had outstanding
Indebtedness of approximately $8.3 million and other obligations (including
trade payables) of approximately $82.0 million. See "Description of Credit
Facilities" and "Description of the Notes-- Subordination."
14
<PAGE>
ENCUMBRANCES TO SECURE CREDIT FACILITIES
In addition to being subordinated to all existing and future Senior
Indebtedness of the Company, the Notes will not be secured by any of the
Company's assets. The Company's obligations under the Credit Facilities will be
secured by a first priority pledge of and security interest in 100% of the
common stock of certain of the Company's direct domestic subsidiaries and 65% of
the common stock of certain of the Company's material direct foreign
subsidiaries. If the Company becomes insolvent or is liquidated, or if payment
under any of the Credit Facilities is accelerated, the lenders under the Credit
Facilities will be entitled to exercise the remedies available to a secured
lender under applicable law. Accordingly, such lenders will have a prior claim
with respect to the assets securing such indebtedness. See "Description of
Credit Facilities."
CHANGE OF CONTROL
The Indenture will provide that, upon the occurrence of a Change of Control,
the Company will make an offer to purchase all or any part of the Notes at a
price in cash equal to 101% of the aggregate principal amount thereof, plus
accrued and unpaid interest, if any, thereon to the date of purchase. There can
be no assurance that, in the event of a Change of Control, the Company would
have sufficient funds to purchase all Notes tendered. In addition, the Credit
Facilities will prohibit the Company from repurchasing any Notes, except with
certain proceeds of one or more Equity Offerings and certain funds from other
sources. The Credit Facilities will also provide that certain change of control
events with respect to the Company would constitute a default thereunder. Any
future credit agreements or other agreements relating to Senior Indebtedness to
which the Company becomes a party may contain similar restrictions and
provisions. In the event a Change of Control occurs at a time when the Company
is prohibited from purchasing the Notes, or if the Company is required to make
an Asset Sale Offer (as defined) pursuant to the terms of the Notes, the Company
could seek the consent of its lenders to purchase the Notes or could attempt to
refinance the borrowings that contain such prohibition. If the Company does not
obtain such a consent or refinance such borrowings, the Company will remain
prohibited from purchasing the Notes except to the extent permitted under such
provisions. In such case, the Company's failure to purchase tendered 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. The provisions relating to a Change of Control included in
the Indenture may increase the difficulty of a potential acquiror obtaining
control of the Company. See "Description of the Notes--Repurchase at the Option
of Holders--Change of Control."
FACTORS AFFECTING SALES TO THE CABLE TELEVISION INDUSTRY
Demand for domestic coaxial cable television products has historically
depended primarily upon capital spending cycles by cable operators for
constructing, rebuilding, upgrading and maintaining their systems. Such capital
spending is affected by a variety of factors, including general economic
conditions, access by cable operators to financing, changes in governmental
regulation of the cable television industry, competitive pressures and advances
in technology. Beginning in late 1992, capital spending by the U.S. cable
television industry increased from previously depressed levels as a result of
generally better credit markets, allowing the cable television industry to take
advantage of technological developments for offering enhanced services and to
address a perceived competitive challenge from regional Bell operating companies
("RBOCs"). Capital spending began to decrease in 1995 and continued to slow in
1996 as cable operators perceived a diminished immediate competitive threat from
RBOCs, the unavailability of some technological advancements, such as digital
converters and cable modems, and the higher cost of capital due to the generally
depressed equity values of cable operators. A number of MSOs are highly
leveraged entities with substantial indebtedness. There can be no assurance that
the capital spending by cable
15
<PAGE>
operators will not be further reduced in the future, adversely affecting demand
for the Company's cable products.
The Company's sales of coaxial cable for the U.S. cable television market
were $94.5 million, $115.4 million and $116.8 million for 1996, 1995 and 1994,
respectively. The Company's sales declined in 1996 primarily because (i) certain
RBOCs that began purchasing coaxial cable from the Company in 1994 and 1995 to
install full service communications systems significantly slowed their purchases
in 1996 in an effort to work down inventory levels and to reassess their plans
with respect to building broadband communications systems and (ii) in the fall
of 1996, Tele-Communications, Inc. ("TCI"), a major MSO, announced that it was
slowing down its equipment spending for rebuilding and upgrading many of its
cable television systems and that it would concentrate on developing compression
technology to offer expanded digital channel capacity to such systems. The
Company's sales to RBOCs and TCI declined by a total of $18.4 million in 1996
compared to 1995.
The Company's sales of coaxial cable products to international markets
increased each year from 1989 through 1995 and will continue to be an important
focus for the Company. In 1996, however, international sales of coaxial cable
declined to $84.7 million from $122.9 million in 1995. While sales to any
individual country may vary from year-to-year, the decline in 1996 was primarily
because (i) a system operator for the major cities in Australia made the
decision to change purchases of coaxial cable from the Company to a newly formed
Australian joint venture between an international coaxial cable supplier and a
local cable manufacturer and (ii) Taiwan is moving from an unregulated cable
television environment to regulation through the awarding of franchises, which
has slowed down the building of cable television systems. Sales to Australia and
Taiwan declined by a total of $29.1 million in 1996 compared to 1995. U.S. cable
television system designs are increasingly being employed in other countries
where cable television penetration is currently low. However, there can be no
assurance that international markets will continue to expand, or that growth and
profitability in the Company's international sales will not be affected by
political uncertainties, currency exchange rate fluctuations or variations in
capital spending cycles in international markets.
Technological developments which may impact the future designs of cable
television systems are occurring rapidly in the communications industry. For
example, under certain conditions, direct broadcast satellite services to
consumers with satellite receiving dishes are being pursued, and certain cable
distribution architectures that make greater use of fiber optic cable than
current hybrid fiber optic/coaxial cable systems are being investigated. While
the Company believes that for the foreseeable future cable system operators will
continue to employ systems using a combination of fiber optic cable and high
performance coaxial cable, any successful development, financing and
implementation of alternative technologies may adversely affect demand for the
Company's coaxial cable products.
EXPOSURE TO CHANGES IN MILITARY EXPENDITURES
The Company is a major supplier of high performance environmental connectors
for military applications. The U.S. defense budget has been declining in real
terms since the mid-1980s, resulting in some delays in new program starts,
program deferrals and program cancellations. Sales under contracts with the U.S.
Government or under contracts with subcontractors that identified the U.S.
Government as the ultimate purchaser represented approximately 8.0% of the
Company's sales for the year ended December 31, 1996, compared to 7.1% for 1995
and 9.1% for 1994. Additionally, there are sales of the Company's products to
the U.S. Government through its distributors. The Company's participation across
a broad spectrum of defense programs is such that the Company believes that no
one military program accounted for more than 1% of 1996 net sales. A significant
further decline in U.S. military expenditures might adversely affect the
Company's sales. The Company believes, however, that to the extent a higher
proportion of available defense budget funds will be allocated to improvements
of existing defense systems, rather than to new program starts, the impact on
the Company of declining military budgets would be mitigated because of its
substantial incumbency in existing programs and its experience in system
upgrades.
16
<PAGE>
COMPETITION
The Company encounters competition in substantially all areas of its
business. The Company competes primarily on the basis of product quality, price,
engineering, customer service and delivery time. Competitors include large,
diversified companies, some of which have substantially greater assets and
financial resources than the Company, as well as medium to smaller companies. In
the area of coaxial cable for cable television, the Company believes that it and
CommScope, a division of General Instrument Corporation, are the primary
providers of such cable; however, CommScope is larger than the Company in this
market. In addition, the Company faces competition from small companies that
have concentrated their efforts in one or more areas of the coaxial cable
market. There can be no assurance that additional competitors will not enter the
Company's existing markets, nor can there be any assurance that the Company will
be able to compete successfully against existing or new competition.
RISKS ASSOCIATED WITH FOREIGN OPERATIONS; EXCHANGE RATE FLUCTUATIONS
The Company's products are manufactured and assembled at facilities in the
United States, Canada, Mexico, Germany, France, the United Kingdom, the Czech
Republic, Hong Kong, Taiwan, Japan, India and the People's Republic of China.
Sales and expenses are frequently denominated in local currencies and are,
therefore, subject to changes in currency exchange rates in relation to the U.S.
dollar. There can be no assurance that measures taken by the Company to mitigate
its exchange rate risk, including manufacturing and procuring its products in
the same country or region in which products are sold and periodically engaging
in hedging transactions such as forward exchange contracts, will eliminate or
substantially reduce such risk.
International manufacturing and sales are subject to inherent risks,
including changes in local economic or political conditions, the imposition of
currency exchange restrictions, unexpected changes in regulatory environments,
potentially adverse tax consequences and the exchange rate risk discussed above.
There can be no assurance that these factors will not have a material adverse
impact on the Company's production capabilities or otherwise adversely affect
the Company's business and operating results.
LABOR RELATIONS
Approximately 2,300 of the Company's 4,500 hourly employees were represented
by labor unions as of December 31, 1996. Beginning October 21, 1995, the Company
experienced a seven day work stoppage at its plant in Sidney, New York when
approximately 1,000 hourly employees represented by the International
Association of Machinists and Aerospace Workers rejected a Company proposal for
a collective bargaining agreement and voted to strike upon the expiration of
their then current contract. A new three-year contract was approved and the work
stoppage ended on October 28, 1995. In 1996, the United Steelworkers
International Union, AFL-CIO attempted to organize approximately 500 hourly
employees at the Company's plant in Chatham, Virginia. The union organizing
effort was defeated by a vote of the hourly employees. A Regional Director of
the National Labor Relations Board subsequently found that unfair labor
practices had been committed by the Company prior to the election and ordered
that a new election be held. The Company's appeal of such finding and order was
denied by the National Labor Relations Board on March 19, 1997. The Company
expects that a new election will be held at the Chatham, Virginia plant prior to
May 30, 1997. If the union is certified, the Company would be required to
bargain in good faith with the union, and its operations at such facility could
be subject to the risks associated with unionized employees generally, including
the risk of work stoppages.
CONTROL BY AFFILIATES OF KKR
Upon completion of the Merger, approximately 75% of the outstanding shares
of Common Stock will be held by the stockholders of NXS Acquisition (before
taking into account the effect of any exercise of the NXS Option or the
Stockholders Option, the exercise of either of which could result in the
stockholders of
17
<PAGE>
NXS Acquisition owning, directly or indirectly, up to 82% of the shares of
Common Stock, and before taking into account any purchase of shares from Messrs.
Loeffler, Jepsen and Cohane, which could result in such stockholders of NXS
Acquisition owning, indirectly, up to an additional 1.5% of such shares). As of
the date hereof, the sole stockholder of NXS Acquisition is the Partnership, of
which KKR Associates 1996 L.P., a Delaware limited partnership ("KKR Associates
1996"), is the general partner. The sole general partner of KKR Associates 1996
is KKR 1996 GP LLC, a limited liability company organized under Delaware law.
The members of KKR 1996 GP LLC are also the members of the limited liability
company which is the general partner of KKR (and are expected to be the members
of any limited liability company which would act as a general partner of a
partnership organized at the direction of KKR to acquire interests in NXS
Acquisition and/or NXS LLC). Accordingly, the members of KKR 1996 GP LLC will
control the Company and have the power to elect all of its directors, appoint
new management and approve any action requiring the approval of the Company's
stockholders, including adopting certain amendments to the Company's certificate
of incorporation and approving mergers or sales of substantially all of the
Company's assets. The directors elected by the Partnership will have the
authority to effect decisions affecting the capital structure of the Company,
including the issuance of additional capital stock, the implementation of stock
repurchase programs and the declaration of dividends. There can be no assurance
that the capital policies of the Company in effect prior to the Merger will
continue after the Merger. In addition, there can be no assurance that the
interests of the members of KKR 1996 GP LLC will not conflict with the interests
of holders of the Notes. See "Management," "Ownership of Common Stock" and
"Related Party Transactions."
FRAUDULENT TRANSFER CONSIDERATIONS
Under applicable provisions of the United States Bankruptcy Code or
comparable provisions of state fraudulent transfer or conveyance law, if the
Company, at the time it issued the Notes, (a) incurred such indebtedness with
the intent to hinder, delay or defraud creditors, or (b)(i) received less than
reasonably equivalent value or fair consideration, and (ii) (A) was insolvent at
the time of such incurrence, (B) was rendered insolvent by reason of such
incurrence (and the application of the proceeds thereof), (C) was engaged or was
about to engage in a business or transaction for which the assets remaining with
the Company constituted unreasonably small capital to carry on its business, or
(D) intended to incur, or believed that it would incur, debts beyond its ability
to pay such debts as they mature, then, in each such case, a court of competent
jurisdiction could void, in whole or in part, the Notes or, in the alternative,
subordinate the Notes to existing and future indebtedness of the Company. The
measure of insolvency for purposes of the foregoing would likely vary depending
upon the law applied in such case. Generally, however, a debtor would be
considered insolvent if the sum of its debts, including contingent liabilities,
was greater than all of its assets at a fair valuation, or if the present fair
saleable value of its assets was less than the amount that would be required to
pay the probable liabilities on its existing debts, including contingent
liabilities, as such debts become absolute and matured. Management of the
Company believes that, for purposes of the United States Bankruptcy Code and
state fraudulent transfer or conveyance laws, the Notes are being issued without
the intent to hinder, delay or defraud creditors and for proper purposes and in
good faith, and that the Company will receive reasonably equivalent value or
fair consideration therefor, and that after the issuance of the Notes and the
application of the net proceeds therefrom, the Company will be solvent, will
have sufficient capital for carrying on its business and will be able to pay its
debts as they mature. However, there can be no assurance that a court passing on
such issues would agree with the determination of the Company's management.
LACK OF PRIOR MARKET FOR THE NOTES
There is currently no public market for the Notes and the Company has no
present plan to list any of the Notes on a national securities exchange or to
include any of the Notes for quotation through an interdealer quotation system.
There can be no assurance that such a market will develop or, if such a market
develops, as to the liquidity of such market. The Company has been advised by
the Underwriters
18
<PAGE>
that the Underwriters intend to make a market in the Notes after consummation of
the Offering, as permitted by applicable laws and regulations; however, the
Underwriters are not obligated to do so and any such market making activities
may be discontinued at any time without notice. See "Underwriting."
FORWARD-LOOKING STATEMENTS
This Prospectus contains certain forward-looking statements (including,
without limitation, the statements under "Business--Competitive Strengths" and
"--Business Strategy") within the meaning of Section 27A of the Securities Act
and Section 21E of the Exchange Act concerning the Company's future operations,
economic performances and financial condition, including such things as business
strategy and measures to implement strategy, competitive strengths, goals,
expansion and growth of the Company's business and operations and references to
future success. These statements are based on certain assumptions and analyses
made by the Company in light of its experience and its perception of historical
trends, current conditions and expected future developments as well as other
factors it believes are appropriate in the circumstances. However, whether
actual results and developments will conform with the Company's expectations and
predictions is subject to a number of risks and uncertainties, in addition to
the risk factors discussed above, including a global economic slowdown in any
one, or all, of the Company's market segments, unpredictable difficulties or
delays in the development of new product programs, increased difficulties in
obtaining a consistent supply of basic materials like steel, aluminum, copper,
gold or plastic resins at stable pricing levels, difficulties and unanticipated
expense of assimilating newly-acquired businesses, technological shifts away
from the Company's technologies and core competencies, unforeseen interruptions
to the Company's business with its largest customers and distributors resulting
from, but not limited to, strikes, financial instabilities or inventory
excesses, unexpected government policies and regulations affecting the Company
or its significant customers, the effects of extreme changes in monetary and
fiscal policies in the United States and abroad, including extreme currency
fluctuations and unforeseen inflationary pressures, drastic and unforeseen price
pressures on the Company's products or significant cost increases that cannot be
recovered through price increases or productivity improvements, significant
changes in interest rates or in the availability of financing for the Company or
certain of its customers, rapid escalation of the cost of regulatory compliance
and litigation, unforeseen intergovernmental conflicts or actions, including but
not limited to armed conflict and trade wars, any difficulties in obtaining or
retaining the management or other human resource competencies that the Company
needs to achieve its business objectives, and other factors, many of which are
beyond the control of the Company. Consequently, all of the forward-looking
statements made in this Prospectus are qualified by these cautionary statements,
and there can be no assurance that the actual results or developments
anticipated by the Company will be realized or, even if substantially realized,
that they will have the expected consequences to or effects on the Company and
its subsidiaries or their business or operations.
19
<PAGE>
THE MERGER
The statements made under this heading relating to the Merger summarize the
material provisions of the agreements described therein. Such summary is
qualified in its entirety by reference to such agreements, which are
incorporated herein by reference. See "Available Information" and "Incorporation
of Certain Information by Reference."
MERGER AGREEMENT
The Company and NXS Acquisition, which as of the date hereof is a wholly
owned subsidiary of the Partnership, have entered into the Merger Agreement,
dated as of January 23, 1997 and amended as of April 9, 1997. The Merger
Agreement provides, among other things, for the merger of NXS Acquisition with
and into the Company, with the Company being the surviving corporation. Pursuant
to the Merger Agreement, upon consummation of the Merger (the "Effective Time"),
each share of Common Stock issued and outstanding immediately prior to the
Effective Time (other than shares of Common Stock held by the Company, any
subsidiary of the Company, the Partnership, NXS Acquisition or any subsidiary of
the Partnership, which will be canceled and retired, and fractional shares and
shares of Common Stock subject to dissenters' rights) will be converted into
either (a) the right to receive $26.00 in cash or (b) the right to retain one
share of Common Stock. The Merger contemplates that approximately 90% of the
presently issued and outstanding shares of the Company's Common Stock will be
converted, at the election of the holder, into cash, as described above, and
that approximately 10% of such shares will be retained by stockholders. Because
25% (or 4.4 million) of the shares outstanding after the Merger must be retained
by existing stockholders of the Company, the right to receive $26.00 in cash per
share or retain shares of Common Stock is subject to proration. The total number
of outstanding shares of Common Stock will decrease from approximately 44.7
million to approximately 17.5 million, approximately 13.1 million of which will
be held by the stockholders of NXS Acquisition upon conversion of NXS
Acquisition common stock into Common Stock in the Merger and 4.4 million of
which will be retained by the existing stockholders of the Company. The 4.4
million shares (representing approximately 10%) of the outstanding Common Stock
to be retained by existing stockholders in the Merger will represent
approximately 25% of the shares outstanding immediately after the Merger, and
the approximately 13.1 million shares to be owned by the stockholders of NXS
Acquisition will represent approximately 75% of the shares outstanding
immediately after the Merger, in each case, before giving effect to the exercise
after the Merger of the NXS Option or the Stockholders Option granted with
respect to shares of Common Stock owned by the DeGeorge Stockholders pursuant to
the Stockholders Agreement and before giving effect to any purchase of shares
from Messrs. Loeffler, Jepsen and Cohane. See "--The Stockholders Agreement" and
"Management--Stock Purchase and Option Agreements." Assuming all stockholders
elected to convert all of their shares into the right to receive the Cash
Consideration, which would maximize the number of shares subject to the NXS
Option and the Stockholders Option, then upon exercise of either such option,
the stockholders of NXS Acquisition would own, directly or indirectly,
approximately 82% of the shares issued and outstanding immediately after the
Merger and the remaining stockholders would own, in the aggregate, approximately
18% of such shares. In addition, if Messrs. Loeffler, Jepsen and Cohane
determine to sell a portion of their shares which may be retained by them
following the Merger to such stockholders of NXS Acquisition, such stockholders
of NXS Acquisition could own, indirectly, up to an additional 1.5% of such
shares. See "Management--Stock Purchase and Stock Option Agreements."
The Company will submit the Merger Agreement to its stockholders for
approval and adoption at a special meeting of stockholders of the Company in
lieu of the 1997 Annual Meeting, which is expected to be held on May 14, 1997
(the "Special Meeting"). Approval and adoption of the Merger Agreement requires
the affirmative vote of a majority of the outstanding shares of Common Stock.
Lawrence J. DeGeorge, Chairman of the Board of Amphenol, Florence A. DeGeorge,
his wife, Lawrence F. DeGeorge, one of their sons, and the Lawrence J. and
Florence A. DeGeorge Charitable Trust, a charitable trust funded by Lawrence J.
DeGeorge and Florence A. DeGeorge (collectively, the "DeGeorge Stockholders")
20
<PAGE>
owned, beneficially and/or of record, an aggregate of 13,487,453 shares of
Common Stock on March 24, 1997, constituting approximately 30.2% of the
outstanding shares of Common Stock entitled to vote at the Special Meeting.
Pursuant to a Stockholders Agreement by and among NXS I, L.L.C., a Delaware
limited liability company ("NXS LLC"), which as of the date hereof is a wholly
owned subsidiary of the Partnership, and the DeGeorge Stockholders, dated as of
January 23, 1997 (the "Stockholders Agreement"), the DeGeorge Stockholders, in
their capacity as such, have agreed, among other things, to vote such shares and
all other shares of Common Stock that the DeGeorge Stockholders acquire
beneficial ownership of after January 23, 1997 and during the term of the
Stockholders Agreement, if any (such shares collectively, the "Subject Shares"),
in favor of the approval and the adoption of the Merger Agreement. See "--The
Stockholders Agreement."
The obligations of NXS Acquisition to effect the Merger are further subject
to, among other things, the Company (i) amending the terms of the 12 3/4% Notes
in a manner agreed to by NXS Acquisition and the Company and purchasing at least
an aggregate principal amount of the 12 3/4% Notes equal to the minimum
condition of the Debt Tender Offer, (ii) calling the Existing Senior Notes for
redemption, and (iii) receiving the proceeds of the Financings, on terms and
conditions contemplated by the Merger Agreement, or upon terms and conditions
which are substantially equivalent thereto and, to the extent any of the terms
and conditions are not contemplated by the Merger Agreement, such other terms
and conditions which are reasonably satisfactory to NXS Acquisition. It is also
a condition to the Merger that NXS Acquisition is reasonably satisfied that the
Merger will be recorded as a recapitalization for financial reporting purposes.
The Merger Agreement contains customary representations, warranties and
covenants of the Company and may be terminated at any time prior to the
Effective Time, whether before or after approval of the Merger by the
stockholders of the Company, by (a) mutual written consent of NXS Acquisition
and the Company, (b) either NXS Acquisition or the Company, if any governmental
entity has issued an order, decree or ruling or taken any other action
permanently enjoining, restraining or otherwise prohibiting the Merger or the
Debt Tender Offer, and such order or other action has become final and
nonappealable, or the Merger has not been consummated on or before June 30, 1997
(other than due to the failure of the party seeking to terminate the Merger
Agreement to perform its obligations under the Merger Agreement), (c) either NXS
Acquisition or the Company if the required approval of the stockholders of the
Company shall not have been obtained at a duly held meeting of stockholders or
at any adjournment thereof, (d) NXS Acquisition upon the withdrawal,
modification or amendment in any respect adverse to NXS Acquisition of the
Company's recommendation of the Merger to its stockholders, or the failure of
the Company either to mail the proxy statement relating to the Annual Meeting as
required by the Merger Agreement or to include such recommendation therein, or
the taking of certain actions by the Company with respect to a third-party
transaction proposal or the failure by the Company to take certain actions
during the pendency of such a proposal or in pursuance of the Merger Agreement
or (e) the Company if, pursuant to the Merger Agreement, the Board of Directors
of the Company concludes in good faith, based on written advice from outside
counsel, that the Board of Directors must not make or must withdraw or modify
its recommendation of the Merger and the Board does not make or withdraws or
modifies such recommendation.
THE STOCKHOLDERS AGREEMENT
Pursuant to the Stockholders Agreement, the DeGeorge Stockholders, in their
capacity as such, have agreed, among other things, to vote their respective
Subject Shares, constituting an aggregate of approximately 30.2% of the
outstanding shares of Common Stock entitled to vote at the Special Meeting, in
favor of the Merger. Subject to the terms and conditions of the Stockholders
Agreement, the DeGeorge Stockholders have agreed to vote, and have appointed NXS
LLC and its officers, Michael Michelson and Marc Lipschultz, as their
irrevocable proxies to vote, the Subject Shares in favor of the Merger and of
certain related actions and against certain other enumerated actions or
agreements. Subject to the terms
21
<PAGE>
and conditions of the Stockholders Agreement, all of the DeGeorge Stockholders
have agreed to elect to convert all of their Subject Shares into cash in the
Merger, to refrain from soliciting or responding to certain inquiries or
proposals regarding the Company, to refrain from engaging in certain competitive
activities with the Company, to comply with certain restrictions upon the
transfer of the Subject Shares, to waive any rights of appraisal available in
the Merger and to take or refrain from taking certain other actions.
If the Merger is consummated, (i) the DeGeorge Stockholders may exercise an
option (the "Stockholders Option") granted to the DeGeorge Stockholders by NXS
LLC pursuant to the Stockholders Agreement to sell the Subject Shares to NXS LLC
and (ii) NXS LLC may exercise an option (the "NXS Option") granted by the
DeGeorge Stockholders pursuant to the Stockholders Agreement to purchase the
Subject Shares during the period commencing upon the Effective Time and ending
30 days thereafter.
If the Merger Agreement has been terminated by reason of the occurrence of
certain events and either of the following shall have occurred: (A) any person,
other than NXS Acquisition or any of its affiliates and other than any party to
the Stockholders Agreement (and certain permitted transferees), shall have
become the beneficial owner of more than 20% of the outstanding shares of Common
Stock or (B) certain competing transaction proposals shall have been publicly
made, proposed, communicated or disclosed, then NXS LLC may exercise the NXS
Option to purchase the Subject Shares during the period commencing on the date
of such termination and ending on the date which is six months later. In
addition, if the Merger Agreement is terminated by reason of the occurrence of
certain events, and, upon or following any such termination, either (i) one or
more of the DeGeorge Stockholders or (ii) NXS LLC receives any cash or noncash
consideration in respect of all or any portion of the Subject Shares in
connection with certain third-party business combinations during the period
commencing on January 23, 1997 and ending one year from the date the Merger
Agreement is terminated, the party or parties in clause (i) or (ii) receiving
such consideration shall promptly pay over to the other party or its designee
certain amounts.
Upon the Effective Time of the Merger or the date the Merger Agreement is
terminated in accordance with its terms, whichever occurs first, the obligations
of the DeGeorge Stockholders (i) to vote their shares as specified in the
Stockholders Agreement, (ii) to refrain from soliciting or responding to certain
inquiries or proposals regarding the Company, and (iii) to comply with certain
restrictions upon the transfer of the Subject Shares shall terminate in
accordance with the Stockholders Agreement. If the Merger Agreement is
terminated, the obligations of the DeGeorge Stockholders to refrain from
competing with the Company shall also terminate. Subject to the foregoing, the
obligations of the parties to the Stockholders Agreement otherwise survive
termination of the Merger Agreement.
USE OF PROCEEDS
The gross proceeds received by the Company from the Offering, together with
borrowings under the Credit Facilities, the equity contribution by the
Partnership, and certain available cash of the Company, will be used upon
consummation of the Merger to (i) pay approximately $1,048.3 million of cash
merger consideration, (ii) repay indebtedness of the Company under the Existing
Bank Credit Facility (approximately $24.0 million at an interest rate of 6.0% at
December 31, 1996 and which matures on November 30, 2000), (iii) redeem $100.0
million of the Existing Senior Notes (with an interest rate of 10.45% and which
mature at various dates throughout 1999-2001), (iv) repurchase $95.0 million of
the 12 3/4% Notes (which mature on December 15, 2002), (v) pay estimated debt
retirement premiums of $19.3 million in connection with the retirement of the
Existing Notes and (vi) pay an estimated $58.4 million in transaction fees and
expenses. See "The Merger" and "Capitalization."
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<PAGE>
CAPITALIZATION
The following table sets forth as of December 31, 1996 the (i) consolidated
historical capitalization of the Company and (ii) unaudited consolidated pro
forma capitalization of the Company, as adjusted to give effect to the
transactions contemplated by the Merger Agreement and the Financings, including
the sale of the Notes pursuant to the Offering. The following table should be
read in conjunction with the "Pro Forma Consolidated Financial Statements" and
the notes thereto and the consolidated financial statements of the Company and
its subsidiaries and the related notes thereto included elsewhere herein.
<TABLE>
<CAPTION>
DECEMBER 31, 1996
------------------------
<S> <C> <C>
HISTORICAL PRO FORMA
---------- ------------
<CAPTION>
(DOLLARS IN MILLIONS)
<S> <C> <C>
Cash and short-term cash investments.................................................... $ 4.0 $ 3.0
---------- ------------
---------- ------------
Long-term debt (including current portion):
Existing Bank Credit Facility......................................................... 24.0 --
Existing Senior Notes................................................................. 100.0 --
12 3/4% Notes (a)..................................................................... 95.0 --
Revolving Credit Facility (b) ........................................................ -- 13.0
Term Loan Facility.................................................................... -- 750.0
Notes offered hereby.................................................................. -- 240.0
Other debt (c)........................................................................ 8.3 8.3
---------- ------------
Total long-term debt.................................................................... 227.3 1,011.3
Total shareholders' equity (deficit) (d)................................................ 360.5 (379.7)
---------- ------------
Total capitalization................................................................ $ 587.8 $ 631.6
---------- ------------
---------- ------------
</TABLE>
- ------------------------
(a) Assumes all of the outstanding 12 3/4% Notes are repurchased in the Debt
Tender Offer; however, there can be no assurance that all of such 12 3/4%
Notes will be repurchased. If less than all of the holders of such 12 3/4%
Notes tender, the 12 3/4% Notes that are not repurchased will remain
outstanding at least until December 15, 1997, the earliest date on which
such 12 3/4% Notes may be optionally redeemed by the Company. The Debt
Tender Offer was commenced by the Company on April 15, 1997 and, on April
29, 1997, the Minimum Condition was achieved.
(b) At December 31, 1996, on a pro forma basis after giving effect to the Merger
and the Financings, the Company would have had additional availability of
approximately $134.0 million under the $150.0 million Revolving Credit
Facility (after giving effect to $3.0 million of outstanding letters of
credit). See "Description of Credit Facilities."
(c) Represents debt of foreign subsidiaries.
(d) As part of the Merger and related transactions, KKR, through NXS
Acquisition, will invest no less than $341.0 million in common equity for
approximately 75% of the shares outstanding immediately after the Merger,
and existing stockholders will retain approximately 25% of the shares
outstanding immediately after the Merger (before taking into account the
effect of any exercise of the NXS Option or the Stockholders' Option). Based
on the Cash Consideration paid in the Merger, existing stockholders will
retain $114.4 million of equity value, and the implied value of
shareholders' equity to be purchased and retained immediately after the
Merger and related transactions is approximately $455.4 million.
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PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The following Pro Forma Consolidated Financial Statements have been derived
by the application of pro forma adjustments to the Company's historical
consolidated financial statements included elsewhere herein. The pro forma
consolidated statement of income for the period presented gives effect to the
Merger and related transactions as if such transactions were consummated as of
January 1, 1996 for the fiscal year ended December 31, 1996. The pro forma
consolidated balance sheet gives effect to the Merger and related transactions
as if such transactions had occurred as of December 31, 1996. The adjustments
are described in the accompanying notes. The Pro Forma Consolidated Financial
Statements should not be considered indicative of actual results that would have
been achieved had the Merger and related transactions been consummated on the
date or for the periods indicated and do not purport to indicate balance sheet
data or results of operations as of any future date or for any future period.
The Pro Forma Consolidated Financial Statements should be read in conjunction
with the Company's historical consolidated financial statements and the notes
thereto included elsewhere herein.
The pro forma adjustments were applied to the respective historical
consolidated financial statements to reflect and account for the Merger as a
recapitalization. Accordingly, the historical basis of the Company's assets and
liabilities has not been impacted by the transaction.
24
<PAGE>
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA PRO
HISTORICAL ADJUSTMENTS FORMA
----------- ----------- ---------
<S> <C> <C> <C>
(DOLLARS IN MILLIONS)
ASSETS
Current Assets:
Cash and short-term cash investments..................................... $ 4.0 $ (1.0)(a) $ 3.0
Accounts receivable...................................................... 64.9 -- 64.9
Inventories.............................................................. 153.3 -- 153.3
Prepaid expenses and other assets........................................ 11.6 9.8(b) 21.4
----------- ----------- ---------
Total current assets................................................... 233.8 8.8 242.6
Land and depreciable assets, net......................................... 102.1 -- 102.1
Deferred debt issuance costs............................................. 3.7 (3.7)(c) 38.7
-- 38.7(d) --
Excess of cost over fair value of net assets acquired.................... 346.6 -- 346.6
Other assets............................................................. 24.5 -- 24.5
----------- ----------- ---------
$ 710.7 $ 43.8 $ 754.5
----------- ----------- ---------
----------- ----------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt........................................ $ 7.8 $ (7.8)(a) --
Accounts payable......................................................... 49.5 -- $ 49.5
Other accrued expenses................................................... 39.7 -- 39.7
----------- ----------- ---------
Total current liabilities.............................................. 97.0 (7.8) 89.2
Long-term debt........................................................... 219.5 (211.2)(a) 8.3
Term Loan Facility....................................................... -- 750.0(a) 750.0
Revolving Credit Facility................................................ -- 13.0(a) 13.0
Notes offered hereby..................................................... -- 240.0(a) 240.0
Deferred taxes and other liabilities..................................... 18.7 -- 18.7
Accrued pension and post employment benefit obligations.................. 15.0 -- 15.0
----------- ----------- ---------
Total liabilities...................................................... 350.2 784.0 1,134.2
Total shareholders' equity (deficit)..................................... 360.5 (740.2)(e) (379.7)
----------- ----------- ---------
$ 710.7 $ 43.8 $ 754.5
----------- ----------- ---------
----------- ----------- ---------
</TABLE>
See Notes to Pro Forma Consolidated Balance Sheet
25
<PAGE>
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
The pro forma financial data have been derived by the application of pro
forma adjustments to the Company's historical financial statements as of the
date noted. The Merger has been accounted for as a recapitalization which will
have no impact on the historical basis of the Company's assets and liabilities.
The pro forma financial data assumes that there are no dissenting shareholders
to the Merger.
(a) The net effect of $1.0 million reflects the following:
<TABLE>
<CAPTION>
(DOLLARS IN
TOTAL SOURCES MILLIONS)
- ------------------------------------------------------------------------- -------------------
<S> <C>
Term Loan Facility proceeds.............................................. $ 750.0
Revolving Credit Facility proceeds....................................... 13.0
Notes proceeds........................................................... 240.0
Equity investment........................................................ 341.0
--------
Total sources.......................................................... $ 1,344.0
--------
TOTAL USES
Payment of cash merger consideration..................................... $ 1,048.3
Refinancing of existing debt:
Current maturities of long-term debt................................... 7.8
Long-term debt......................................................... 211.2
Estimated debt retirement premiums....................................... 19.3
Options canceled......................................................... 2.4
Estimated transaction fees and expenses.................................. 56.0
--------
Total uses............................................................. $ 1,345.0
--------
Net.................................................................... $ (1.0)
--------
--------
</TABLE>
(b) The adjustment represents the tax benefit, at a 38.5% effective rate, of
deductible expenses reflected in footnote (e) hereto.
(c) The adjustment reflects the write-off of deferred debt issuance costs
associated with the Existing Notes being retired and the termination of the
Existing Bank Credit Facility.
(d) The adjustment represents the portion of estimated transaction fees and
expenses attributable to the Term Loan Facility, Revolving Credit Facility
and Notes offered hereby, which will be recorded as deferred debt issuance
costs and will be amortized over the life of the debt to be issued. Such
estimated deferred debt issuance costs include estimated fees and expenses
payable to banks, underwriters and related advisors.
(e) The adjustment represents the net change as a result of the Merger and
related transactions:
<TABLE>
<CAPTION>
(DOLLARS IN
MILLIONS)
-------------------
<S> <C>
Convert to cash 40.3 million shares of Common Stock...................... $ (1,048.3)
Issue 13.1 million shares of Common Stock................................ 341.0
Transaction fees and expenses (1)........................................ (17.3)
Write-off of deferred debt issuance costs................................ (3.7)
Options canceled......................................................... (2.4)
Estimated debt retirement premiums....................................... (19.3)
Tax benefit of above expense adjustments at a 38.5% effective rate....... 9.8
--------
Total.................................................................. $ (740.2)
--------
--------
</TABLE>
- ------------------------
(1) Represents the portion of the total $56.0 million of estimated transaction
fees and expenses (excluding $2.4 million of cash consideration related to
the Company stock options to be canceled in connection with the Merger)
which will be recorded as an expense in connection with the Merger and
related transations; the remainder of such transaction fees and expenses are
recorded in Note (d) above as deferred debt issuance costs. The expensed
portion of estimated transaction fees and expenses are anticipated to
consist of: (i) professional, advisory and investment banking fees and
expenses and (ii) miscellaneous fees and expenses such as printing and
filing fees.
26
<PAGE>
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA PRO
HISTORICAL ADJUSTMENTS(A) FORMA
----------- --------------- ---------
<S> <C> <C> <C>
(DOLLARS IN MILLIONS)
Net sales.................................................................... $ 776.2 $ 776.2
Costs and expenses:
Cost of sales, excluding depreciation and amortization..................... 494.7 494.7
Depreciation and amortization expense...................................... 28.8 28.8
Selling, general and administration expense................................ 114.7 114.7
----------- ---------
Operating income............................................................. 138.0 138.0
Interest expense............................................................. (24.6) $ (71.0)(b) (95.6)
Other expense, net........................................................... (3.7) (0.8)(c) (4.5)
----------- ------ ---------
Income before income taxes................................................... 109.7 (71.8) 37.9
Provision for income taxes................................................... 42.1 (27.6)(d) 14.5
----------- ------ ---------
Net income................................................................... $ 67.6 $ (44.2) $ 23.4
----------- ---------
----------- ---------
Ratio of earnings to fixed charges (e)....................................... 4.4x 1.4x
----------- ---------
----------- ---------
</TABLE>
- ------------------------
The pro forma financial data have been derived by the application of pro
forma adjustments to the Company's historical financial statements for the
period noted. The Merger has been accounted for as a recapitalization which will
have no impact on the historical basis of the Company's assets and liabilities.
The pro forma financial data assume that there are no dissenting shareholders to
the Merger.
(a) As described in note (e) to the Pro Forma Consolidated Balance Sheet, the
pro forma adjustments exclude (i) $2.4 million of compensation expense
related to the Company stock options to be canceled in conjunction with the
Merger, (ii) the write-off of $3.7 million of deferred debt issuance costs
associated with the Existing Notes being retired and the termination of the
Existing Bank Credit Facility, (iii) the estimated $19.3 million of premiums
on retirement of the Existing Notes, (iv) $17.3 million of estimated
transaction fees and expenses incurred in connection with the Merger and (v)
$9.8 million of tax benefit of such expenses. Such amounts represent
non-recurring expenses which the Company anticipates will be recorded in the
Consolidated Statement of Income for the period including the Merger.
(b) The pro forma adjustments to interest expense reflect the following:
<TABLE>
<CAPTION>
(DOLLARS IN
MILLIONS)
-------------------
<S> <C>
Interest expense on historical debt repaid in Merger..................... $ (23.6)
Interest expense with respect to the Credit Facilities and the Notes at
an assumed weighted average interest rate of 8.8%....................... 88.6
Amortization of deferred debt issuance costs............................. 6.0
------
Total adjustment....................................................... $ 71.0
------
------
</TABLE>
A 0.125% increase or decrease in the assumed weighted average interest rate
would change the pro forma interest expense by $1.3 million. The pro forma
net income would change by $0.8 million.
For the year ended December 31, 1996, each $1.0 million increase or decrease
in the Credit Facilities and Notes would change pro forma interest expense
by $0.09 million. The pro forma net income would change by $0.05 million.
27
<PAGE>
(c) The adjustment eliminates interest income on cash and short-term investments
not expected to be received after the Merger and related transactions.
(d) The adjustment reflects the tax effect of the pro forma adjustments at a
38.5% effective income tax rate.
(e) For purposes of determining the pro forma ratio of earnings to fixed
charges, earnings are defined as earnings before income taxes and
extraordinary items, plus fixed charges. Fixed charges include interest
expense on all indebtedness, other financing fees associated with program
fees on sale of accounts receivable, amortization of deferred debt issuance
costs, and one-third of rental expense on operating leases representing that
portion of rental expense deemed by the Company to be attributable to
interest.
28
<PAGE>
SELECTED HISTORICAL CONSOLIDATED FINANCIAL
AND OTHER DATA
The following table sets forth selected historical consolidated financial
and other data of the Company. The historical consolidated financial data for
the three fiscal years ended December 31, 1996 have been derived from, and
should be read in conjunction with, the audited consolidated financial
statements of Amphenol and related notes thereto included elsewhere in this
Prospectus. The historical consolidated financial data for the two fiscal years
ended December 31, 1993 have been derived from audited consolidated financial
statements of the Company which are not contained herein. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the historical consolidated financial statements and the related notes thereto
included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------
<S> <C> <C> <C> <C>
1992 1993 1994 1995
----------- ----------- ----------- -----------
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales............................................................ $ 457,677 $ 603,967 $ 692,651 $ 783,233
Cost of sales, excluding depreciation and amortization expense....... 313,322 404,709 458,318 506,707
Depreciation and amortization expense................................ 26,048 28,614 28,099 27,795
Selling, general and administrative expense.......................... 75,107 89,386 102,183 114,041
----------- ----------- ----------- -----------
Operating income..................................................... 43,200 81,258 104,051 134,690
Interest expense..................................................... (29,285) (41,184) (30,382) (25,548)
Nonrecurring acquisition expense..................................... (4,130) -- -- --
Other income (expense), net.......................................... 1,582 (1,998) (4,160) (4,515)
----------- ----------- ----------- -----------
Income before income taxes and extraordinary item.................... 11,367 38,076 69,509 104,627
Provision for income taxes........................................... (2,728) (13,327) (27,109) (41,769)
----------- ----------- ----------- -----------
Net income before extraordinary item................................. 8,639 24,749 42,400 62,858
Extraordinary item (a)............................................... -- -- (4,087) --
----------- ----------- ----------- -----------
Net income........................................................... $ 8,639 $ 24,749 $ 38,313 $ 62,858
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
OTHER DATA:
EBITDA (b)........................................................... $ 70,080 $ 109,035 $ 131,209 $ 162,145
EBITDA margin (c).................................................... 15.3% 18.1% 18.9% 20.7%
Capital expenditures................................................. $ 6,695 $ 5,988 $ 10,936 $ 20,381
Ratio of earnings to fixed charges (d)............................... 1.5x 1.8x 2.9x 4.1x
Cash flow provided by operations..................................... $ 23,538 $ 56,471 $ 88,871 $ 79,227
Cash flow used by investing activities............................... (21,793) (7,752) (13,460) (21,411)
Cash flow used by financing activities............................... (3,779) (51,039) (73,714) (50,370)
<CAPTION>
<S> <C>
1996
-----------
<S> <C>
STATEMENT OF INCOME DATA:
Net sales............................................................ $ 776,221
Cost of sales, excluding depreciation and amortization expense....... 494,689
Depreciation and amortization expense................................ 28,808
Selling, general and administrative expense.......................... 114,746
-----------
Operating income..................................................... 137,978
Interest expense..................................................... (24,617)
Nonrecurring acquisition expense..................................... --
Other income (expense), net.......................................... (3,696)
-----------
Income before income taxes and extraordinary item.................... 109,665
Provision for income taxes........................................... (42,087)
-----------
Net income before extraordinary item................................. 67,578
Extraordinary item (a)............................................... --
-----------
Net income........................................................... $ 67,578
-----------
-----------
OTHER DATA:
EBITDA (b)........................................................... $ 166,061
EBITDA margin (c).................................................... 21.4%
Capital expenditures................................................. $ 20,374
Ratio of earnings to fixed charges (d)............................... 4.4x
Cash flow provided by operations..................................... $ 68,207
Cash flow used by investing activities............................... (49,835)
Cash flow used by financing activities............................... (26,416)
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
--------------------------------------------------
<S> <C> <C> <C> <C>
1992 1993 1994 1995
----------- ----------- ----------- -----------
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital...................................................... $ 151,544 $ 90,463 $ 95,590 $ 121,313
Total assets......................................................... 766,397 691,277 677,055 689,924
Total debt (e)....................................................... 488,069 391,839 248,176 197,865
Total shareholders' equity........................................... 149,688 173,292 278,640 344,085
<CAPTION>
<S> <C>
1996
-----------
<S> <C>
BALANCE SHEET DATA:
Working capital...................................................... $ 136,864
Total assets......................................................... 710,662
Total debt (e)....................................................... 227,243
Total shareholders' equity........................................... 360,548
</TABLE>
- ------------------------
(a) Represents an extraordinary charge related to the write-off of deferred debt
issuance costs in conjunction with the prepayment of certain bank debt.
(b) "EBITDA" represents earnings before interest expense, other financing fees
associated with program fees on sale of accounts receivable, interest
income, income taxes, and depreciation and amortization expense, and
excludes minority interest. EBITDA is not intended to represent cash flow
from operations as defined by generally accepted accounting principles and
should not be used as an alternative to net income as an indicator of the
Company's operating performance or to cash flow as a measure of liquidity.
EBITDA is included in the Prospectus as it is a basis upon which the Company
assesses its financial performance, and certain covenants in the Company's
borrowing arrangements will be tied to similar measures. EBITDA and EBITDA
margin, as presented, represent useful measures of assessing the Company's
ongoing operating activities without the impact of financing activity and
non-recurring charges. While EBITDA is frequently used as a measure of
operations and the ability to meet debt service requirements, it is not
necessarily comparable to other similarly titled captions of other companies
due to potential inconsistencies in the method of calculation. EBITDA in
fiscal 1992 excludes the effects of a non-recurring charge of $4.13 million
associated with an acquisition.
(c) EBITDA margin represents EBITDA divided by net sales.
(d) For purposes of determining the ratio of earnings to fixed charges, earnings
are defined as earnings before income taxes and extraordinary items, plus
fixed charges. Fixed charges includes interest expenses on all indebtedness,
other financing fees associated with program fees on sale of accounts
receivable, amortization of deferred debt issuance costs, and one-third of
rental expenses on operating leases, representing that portion of rental
expense deemed by the Company to be attributable to interest.
(e) Total debt includes long-term debt and the current portion of long-term
debt.
29
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
The following discussion and analysis of the results of operations of the
Company should be read in conjunction with the consolidated financial statements
and notes thereto included elsewhere in this Prospectus.
RESULTS OF OPERATIONS
The following table sets forth the components of net income before
extraordinary item as a percentage of net sales for the periods indicated.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
<S> <C> <C> <C>
1994 1995 1996
--------- --------- ---------
Net sales................................................................................ 100.0% 100.0% 100.0%
Cost of sales, excluding depreciation and amortization................................... 66.2 64.7 63.7
Depreciation and amortization expense.................................................... 4.1 3.5 3.7
Selling, general and administrative expense.............................................. 14.7 14.6 14.8
--------- --------- ---------
Operating income......................................................................... 15.0 17.2 17.8
Interest expense......................................................................... (4.4) (3.3) (3.2)
Other expense, net....................................................................... (.6) (.6) (.5)
--------- --------- ---------
Income before income taxes and extraordinary item........................................ 10.0 13.3 14.1
Provision for income taxes............................................................... (3.9) (5.3) (5.4)
--------- --------- ---------
Net income before extraordinary item..................................................... 6.1% 8.0% 8.7%
--------- --------- ---------
--------- --------- ---------
</TABLE>
1996 COMPARED TO 1995
Net sales were $776.2 million for the year ended December 31, 1996 compared
to $783.2 million for 1995. Sales of commercial, radio frequency and industrial
interconnect products, cable assemblies and flat-ribbon cable for 1996 increased
4.9% compared to 1995 ($388.9 million--1996; $370.6 million--1995). Such
increase is primarily due to increased sales of cable assembly and interconnect
products, including fiber optics, smart card reader devices, automotive safety
devices (airbags and pretensioner seatbelts) and communications related
interconnect products. Sales of high performance environmental connectors for
1996 increased 19.4% compared to 1995 ($208.1 million--1996; $174.3
million--1995). The increase is primarily attributable to strong demand for the
Company's application-specific products for new and enhanced electronic
aerospace and avionics interconnect systems for space, military and commercial
aviation applications. Sales of coaxial cable products primarily for cable
television applications for 1996 declined 24.8% ($179.2 million--1996; $238.3
million--1995) primarily due to: (1) a decline in U.S. coaxial cable sales from
$115.4 million in 1995 to $94.5 million in 1996, of which $18.4 million is
attributable to diminished sales of coaxial cable to RBOCs that slowed their
construction of broadband systems in 1996 and reduced sales to a major U.S.
cable operator in the latter part of 1996 as that operator reduced expenditures
for the rebuilding of its systems; and (2) a decline in international coaxial
cable sales from $122.9 million in 1995 to $84.7 million in 1996, of which $29.1
million of the decline is attributable to reduced sales to a foreign cable
operator as that operator selected local sourcing for its cable requirements and
reduced sales to companies in a foreign country as that country is undergoing a
regulation of cable television franchises which slowed the construction of new
systems.
Geographically, sales in the United States in 1996 increased 0.6% compared
to 1995 ($397.0 million-- 1996; $394.6 million--1995); international sales for
1996, including export sales, declined 2.4% in U.S.
30
<PAGE>
dollars ($379.2 million--1996; $388.7 million--1995) and increased approximately
0.5% in local currencies compared to 1995. The comparatively stronger U.S.
dollar in 1996 had the currency translation effect of decreasing net sales by
approximately $11.4 million when compared to foreign currency translation rates
in 1995. Changes in net sales for 1996 compared to 1995 are primarily due to
changes in unit volume and product mix as opposed to changes in unit prices.
The gross profit margin as a percentage of net sales (including depreciation
in cost of sales) increased to 34% in 1996 from 33% in 1995. The increase is
generally attributable to increased sales of higher margin application-specific
connector products, increased efficiencies due to increased production rates for
certain connector products, and continuing cost control programs, the effect of
which was partially offset by lower coaxial cable sales.
Selling, general and administrative expenses as a percentage of sales for
1996 remained constant at approximately 15% when compared to 1995.
Interest expense was $24.6 million for 1996 compared to $25.5 million for
1995. The decrease is due to generally lower average debt outstanding during the
year.
Other expenses, net for 1996 was $3.7 million, a decrease of $.8 million
from 1995. See Note 8 to the Company's Consolidated Financial Statements
included elsewhere herein for details of the components of other expenses, net.
The provision for income taxes for 1996 was at an effective rate of 38.4%
compared to an effective rate of 40.0% in 1995.
1995 COMPARED TO 1994
Net sales were $783.2 million for the year ended December 31, 1995 compared
to $692.7 million for 1994. Sales of commercial, radio frequency and industrial
interconnect products, cable assemblies and flat-ribbon cable for 1995 increased
15.3% ($370.6 million--1995; $321.5 million--1994). Such increase is primarily
due to strong demand, especially internationally, for connectors and
interconnect systems used in telecommunications applications, automotive safety
devices (airbags and pretensioner seatbelts), machine tool and factory
automation equipment, and smart card reader devices. Sales of high-performance
environmental connectors for 1995 increased 11.0% compared to 1994 ($174.3
million--1995; $157.0 million--1994). The increase is primarily attributable to
strong demand for the Company's application-specific products for new and
enhanced electronic aerospace and avionics interconnect systems. Sales of
coaxial cable products primarily for cable television applications for 1995
increased 11.3% ($238.3 million--1995; $214.1 million--1994) primarily due to
increased international sales; U.S. sales of coaxial cable were approximately
even with 1994 with increased sales to certain RBOCs as they began initial
construction of broadband systems offsetting a decline in sales to traditional
cable television operators.
Geographically, sales in the United States in 1995 increased 3.6% compared
to 1994 ($394.6 million-- 1995; $381.0 million--1994); international sales for
1995, including export sales, increased 24.7% in U.S. dollars ($388.7
million--1995; $311.6 million--1994) and increased approximately 19% in local
currencies compared to 1994. The comparatively weaker U.S. dollar in 1995 had
the currency translation effect of increasing net sales by approximately $19.2
million when compared to foreign currency translation rates in 1994. Changes in
net sales for 1995 compared to 1994 are primarily due to changes in unit volume
and product mix as opposed to changes in unit prices.
The gross profit margin as a percentage of net sales (including depreciation
in cost of sales) increased to 33% in 1995 from 31% in 1994. The increase is
generally attributable to increased sales of higher margin application-specific
connector products, increased sales of the relatively higher gross margin
coaxial cable products and continuing cost control programs.
31
<PAGE>
Selling, general and administrative expenses as a percentage of sales for
1995 remained even with 1994 at approximately 15%.
Interest expense was $25.5 million for 1995 compared to $30.4 million for
1994. The decrease is due to decreased debt outstanding.
Other expenses, net for 1995 was $4.5 million, an increase of $.3 million
from 1994. See Note 8 to the Company's Consolidated Financial Statements
included elsewhere herein for details of the components of other expenses, net.
The provision for income taxes for 1995 was at an effective rate of 40%
compared to an effective rate of 39% in 1994.
LIQUIDITY AND CAPITAL RESOURCES
POST-MERGER (INCLUDING THE FINANCINGS)
Following the Merger (including the Financings), the Company's principal
sources of liquidity will be from cash flow generated from operations and
borrowings under the $150.0 million Revolving Credit Facility. The Company's
principal uses of liquidity will be to meet debt service requirements, finance
the Company's capital expenditures and provide working capital. The Company
expects that capital expenditures in 1997 will not exceed $25.0 million. The
Company expects that ongoing requirements for debt service, capital expenditures
and working capital will be funded by internally generated cash flow and
borrowings under the Revolving Credit Facility.
The Company will incur substantial indebtedness in connection with the
Merger. On a pro forma basis to reflect the Merger, the Company expects to have
approximately $1,011.3 million of consolidated indebtedness as compared to
$227.3 million of consolidated indebtedness at December 31, 1996 (in each case
excluding $3.0 million of outstanding letters of credit). The Company's debt
service obligations could have important consequences to holders of the Notes.
See "Risk Factors."
The Financings will include $750.0 million under the $900.0 million Credit
Facilities and the Offering of $240.0 million of Notes. The gross proceeds from
the Offering, together with borrowings of $750.0 million under the Term Loan
Facility, the equity investment by the Partnership and available cash of the
Company, will be used upon consummation of the Merger to pay cash merger
consideration, repay and repurchase indebtedness of the Company, and pay
transaction fees and expenses (including debt retirement premiums) in connection
therewith. At December 31, 1996, on a pro forma basis after giving effect to the
Merger, the Company would have borrowed $750.0 million under the Term Loan
Facility, borrowed approximately $13.0 million under the Revolving Credit
Facility, issued $240.0 million of the Notes, and would have had additional
availability of approximately $134.0 million under the Revolving Credit Facility
(after giving effect to $3.0 million of outstanding letters of credit).
32
<PAGE>
The $750.0 million Term Loan Facility will consist of (i) a $350.0 million
seven year Term Loan A, (ii) a $200.0 million eight year Term Loan B and (iii) a
$200.0 million nine year Term Loan C. These Term Loans will amortize as follows:
<TABLE>
<CAPTION>
DATE FROM CLOSING TERM LOAN A TERM LOAN B TERM LOAN C
- --------------------------------------------- ------------- ------------------- -------------
<S> <C> <C> <C>
(DOLLARS IN
MILLIONS)
24 Mos....................................... $ 25.0 $ 0.5 $ 0.5
36 Mos....................................... 37.5 0.5 0.5
48 Mos....................................... 47.5 0.5 0.5
60 Mos....................................... 60.0 0.5 0.5
72 Mos....................................... 80.0 0.5 0.5
84 Mos....................................... 100.0 0.5 0.5
96 Mos....................................... -- 197.0 0.5
108 Mos...................................... -- -- 196.5
------ ------ ------
$ 350.0 $ 200.0 $ 200.0
------ ------ ------
------ ------ ------
</TABLE>
The Term Loan Facility is also subject to mandatory prepayment with the
proceeds of certain asset sales and a portion of Excess Cash Flow (as defined in
the Credit Facilities). The Revolving Credit Facility will terminate seven years
after the Effective Time. See "Description of Credit Facilities."
In December 1993, a subsidiary of the Company entered into an asset-backed
securitization program whereby the subsidiary can sell to a financial
institution up to $50.0 million of trade accounts receivable. See Note 9 to the
Company's Consolidated Financial Statements included elsewhere herein. The
program costs approximate rates charged on high quality commercial paper, plus
certain administrative expenses. At December 31, 1996, sales under the program
were approximately $50.0 million. The program expires in December 1997. The
Company expects to modify or replace such program with a similar facility in
connection with the Merger.
Based upon the current level of operations and anticipated growth,
management believes that future cash flow from operations, together with
available borrowings under the Revolving Credit Facility, will be adequate to
meet the Company's anticipated requirements for capital expenditures, working
capital, interest payments and scheduled principal payments. There can be no
assurance, however, that the Company's business will continue to generate
sufficient cash flow from operations in the future to service its debt and make
necessary capital expenditures after satisfying certain liabilities arising in
the ordinary course of business. If unable to do so, the Company may be required
to refinance all or a portion of its existing debt, including the Notes, to sell
assets or to obtain additional financing. There can be no assurance that any
such refinancing would be possible or that any such sales of assets or
additional financing could be achieved. See "Risk Factors."
HISTORICAL
Cash provided by operating activities totaled $68.2 million, $79.2 million
and $88.9 million for 1996, 1995 and 1994, respectively. The decrease in cash
from operating activities in 1996 compared to 1995 is primarily attributable to
increased cash tax payments in certain foreign jurisdictions, increased cash
payments to the Company's pension plans and increases in inventory. In 1995, the
cash from operating activities was lower than 1994 primarily because of changes
in the noncash components of working capital primarily reflecting higher sales
levels and a reduction in accrued liabilities.
Cash from operating activities was used primarily for capital expenditures:
$20.4 million, $20.4 million and $10.9 million in 1996, 1995 and 1994,
respectively. In 1996, cash from operating activities was also used for
acquisitions ($29.5 million) and to repurchase in the open market the Company's
Common Stock ($52.7 million). In 1995 and 1994, the Company also used the cash
flow from operations for debt reduction ($50.4 million--1995; $145.6
million--1994); the 1994 debt reduction also included approximately $67.0
33
<PAGE>
million net proceeds from the sale of 4.4 million shares of Common Stock. In
1996, the Company increased its net borrowings by approximately $26.3 million to
supplement the cash flow from operations to fund the expenditures described
above.
In 1996, the Company's Board of Directors authorized an open market share
repurchase program of up to 5.0 million shares of the Company's Common Stock. At
December 31, 1996, the Company had repurchased in the open market approximately
2.6 million shares of its Common Stock at an average price of $20.01 per share.
ENVIRONMENTAL MATTERS
Subsequent to the acquisition of Amphenol from Allied Corporation ("Allied")
in 1987, Amphenol and Allied have been named jointly and severally liable as
potentially responsible parties in relation to several environmental cleanup
sites. Amphenol and Allied have jointly consented to perform certain
investigations and remedial and monitoring activities at two sites and they have
been jointly ordered to perform work at another site. The responsibility for
costs incurred relating to these sites is apportioned between Amphenol and
Allied based on an agreement entered into in connection with the acquisition.
For sites covered by this agreement, to the extent that conditions or
circumstances occurred or existed at the time of or prior to the acquisition,
the first $13.0 million of costs are borne by Amphenol and have been incurred as
of December 31, 1996. Allied is obligated to pay 80% of the excess over $13.0
million and 100% of the excess over $30.0 million. Management does not believe
that the costs associated with resolution of these or any other environmental
matters will have a material adverse effect on the Company's financial position
or results of operations. See "Business--Legal Proceedings."
INFLATION AND COSTS
The cost of the Company's products is influenced by the cost of a wide
variety of raw materials, including precious metals such as gold and silver used
in plating; aluminum, copper, brass and steel used for contacts, shells and
cable; and plastic materials used in molding connector bodies, inserts and
cable. In general, increases in the cost of raw materials, labor and services
have been offset by price increases, productivity improvements and cost saving
programs.
RISK MANAGEMENT
The Company has to a significant degree mitigated its exposure to currency
risk in its business operations by manufacturing and procuring its products in
the same country or region in which the products are sold so that costs reflect
local economic conditions. In other cases involving U.S. export sales, raw
materials are a significant component of product costs for the majority of such
sales and raw material costs are generally dollar based on a worldwide scale,
such as basic metals and petroleum derived materials. The Company does have
credit agreements which allow it to borrow at variable rates. In such cases the
Company may use financial instruments, primarily LIBOR contracts and interest
rate swap contracts to fix such variable rates for varying periods, generally
not longer than one year. See "Risk Factors--Substantial Leverage and Debt
Service" and "--Risks Associated with Foreign Operations; Exchange Rate
Fluctuations."
FUTURE ACCOUNTING CHANGES
In June 1996, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 125 (FAS 125), "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities." Management
has reviewed the statement and believes that implementation of the statement
will not have a material effect on the Company's financial position or results
of operations. The Company is required to adopt the statement effective January
1, 1997.
34
<PAGE>
BUSINESS
GENERAL
Amphenol is a leading designer, manufacturer and marketer of electrical,
electronic and fiber optic connectors, interconnect systems and coaxial and
flat-ribbon cable. The primary end markets for the Company's products are
telephone, wireless and data communications systems; cable television systems;
commercial and military aerospace electronics; automotive and mass
transportation applications; and industrial factory automation equipment. For
the year ended December 31, 1996, approximately 52% of the Company's net sales
were to the worldwide communications market (including 23% for the cable
television market), 26% were for commercial and military aerospace and other
military electronics applications and 22% were for industrial, transportation
and other applications. The Company focuses on optimizing its mix of higher
margin application-specific products in its product offerings and has enhanced
the cost controls in its operations. As a result of these initiatives, the
Company's operating profit margin has increased from 13.5% in fiscal year 1993
to 17.8% in fiscal year 1996. For fiscal year 1996, the Company had net sales,
EBITDA and net income of $776.2 million, $166.1 million and $67.6 million,
respectively.
The Company designs and manufactures connectors and interconnect systems,
which are used primarily to conduct electrical and optical signals, for a wide
range of sophisticated electronic applications. The Company believes, based
primarily on published market research, that it is one of the largest connector
manufacturers in the world and the leading supplier of high performance
environmental connectors that require superior performance and reliability under
conditions of stress and in hostile environments. Such conditions are frequently
encountered in commercial and military aerospace applications and other
demanding industrial applications such as natural resource exploration, medical
instrumentation and off-road construction. In addition, the Company has
developed a broad range of interconnect products to serve the rapidly growing
markets of wireless communications including cellular and personal communication
networks and fiber optic networks; electronic commerce including smart cards and
electronic purse applications; and automotive safety products including airbags,
pretensioner seatbelts and anti-lock braking systems. The Company is also one of
the leaders in developing interconnect products for factory automation and
machine tools and develops interconnect products for mass transportation
applications. The Company believes that the worldwide industry for interconnect
products and systems is highly fragmented with over 1,000 producers of
connectors worldwide, of which the 10 largest producers accounted for a combined
market share of approximately 36% in 1996. The Company estimates that the total
sales for the industry were approximately $27.0 billion in 1996.
The Company's Times Fiber subsidiary is the world's second largest producer
of coaxial cable for the cable television market. The Company believes that
Times Fiber is one of the lowest cost producers of coaxial cable for the cable
television market, and that it is one of the technological leaders in increasing
the bandwidth of coaxial cable products to accommodate increased channel
capacity for full service cable television/telecommunication systems. In
addition, the Company is beginning to supply the developing market for high
bandwidth coaxial cable and related interconnect products used in full service
cable television/telecommunication systems being installed by cable operators
and telecommunication companies. The Company has also become a major supplier of
coaxial cable to the emerging international cable television markets. The
Company estimates that the total sales for the worldwide market for coaxial
cable for cable television were approximately $800.0 million in 1996.
The Company is a global manufacturer employing advanced manufacturing
processes. The Company's products are manufactured and assembled at facilities
in the United States, Canada, Mexico, Germany, France, the United Kingdom, the
Czech Republic, Hong Kong, Taiwan, Japan, India and the People's Republic of
China. The Company's connector products are sold through its global sales force
and independent manufacturers' representatives to thousands of OEMs in 52
countries throughout the world as well as through a global network of
electronics distributors. The Company's coaxial cable products are
35
<PAGE>
primarily sold to cable television operators and to telecommunication companies
who have entered the broadband communications market. In 1996, approximately 55%
of the Company's net sales were in North America, 33% were in Europe and 12%
were in Asia and other countries.
The Company was incorporated in Delaware in 1986. The Company's principal
executive offices are located at 358 Hall Avenue, Wallingford, Connecticut 06492
and its telephone number is (203) 265-8900.
INDUSTRY OVERVIEW
Connectors and interconnect systems are devices that make connections that
allow electronic and optical signals to travel from point to point. They are
used to connect wires, cables, printed circuit boards, and other electronic
components to each other and to related equipment. Connectors and interconnect
systems are found in virtually every electronic product including voice, video
and data communications equipment and networks, aerospace and military
electronics systems, medical and instrumentation equipment, automobiles,
manufacturing machines and equipment, mass transportation systems and consumer
electronics and appliances. OEMs in these industries use connectors in the
manufacture of their products and typically collaborate with connector
manufacturers in the design of the OEM's interconnect needs and requirements.
The Company primarily competes in the wireless, telecom and data communications,
broadband communications, commercial and military aerospace, and certain
industrial and automotive electronics markets.
It is estimated that overall sales for the connector industry were
approximately $27.0 billion in 1996. Information regarding the major end-user
markets for connectors is presented in the table below.
<TABLE>
<CAPTION>
1996 SALES
(IN PERCENT OF
BILLIONS) TOTAL
----------- -----------
<S> <C> <C>
Telecommunications............................................................. $ 6.2 23.0%
Computer....................................................................... 6.0 22.2
Datacom........................................................................ 3.4 12.6
Consumer....................................................................... 2.6 9.6
Auto........................................................................... 2.5 9.3
Military and Commercial Aircraft............................................... 2.0 7.4
Test and measurement........................................................... 1.1 4.1
Industrial..................................................................... 1.6 5.9
Medical........................................................................ 1.0 3.7
Other.......................................................................... 0.6 2.2
----------- -----------
Total........................................................................ $ 27.0 100.0%
</TABLE>
Source: Fleck Research, February 26, 1997.
Demand for connector products has experienced growth in recent years and is
expected to continue to grow in the future. The Company attributes the expected
growth in the demand for electronic and fiber optic connectors and interconnect
devices to the proliferation of electronic and fiber optic systems and the
development of new electronic products and applications.
36
<PAGE>
PRODUCT GROUPS
The following table sets forth the dollar amounts of the Company's net sales
for each major product group. For a discussion of factors affecting changes in
sales by product category, see "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
<S> <C> <C> <C>
1994 1995 1996
---------- ---------- ----------
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
NET SALES BY PRODUCT GROUP:
Commercial, radio frequency and industrial interconnect products, cable
assemblies and flat-ribbon cable........................................... $ 321,511 $ 370,619 $ 388,941
High performance environmental connectors.................................... 156,995 174,329 208,071
Coaxial cable................................................................ 214,145 238,285 179,209
---------- ---------- ----------
$ 692,651 $ 783,233 $ 776,221
---------- ---------- ----------
---------- ---------- ----------
NET SALES BY GEOGRAPHIC AREA:
United States operations................................................... $ 381,016 $ 394,563 $ 397,023
International operations(1)................................................ 311,635 388,670 379,198
---------- ---------- ----------
$ 692,651 $ 783,233 $ 776,221
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
- ------------------------
(1) Includes international coaxial cable sales, which are primarily export
sales.
COMMERCIAL, RADIO FREQUENCY AND INDUSTRIAL INTERCONNECT PRODUCTS, CABLE
ASSEMBLIES AND FLAT-RIBBON CABLE. The Company produces a broad range of
commercial and industrial interconnect products. Such products include: fiber
optic interconnect products and systems used in fiber optic networks for voice,
video and data communications; chip card acceptor interconnect devices and
readers used in conjunction with smart cards and electronic purses (a system for
cashless monetary transactions); industrial interconnect products used in a
variety of applications such as factory automation equipment, mass
transportation applications including railroads and marine transportation; and
automotive safety products including interconnect devices and systems used in
automotive airbags, pretensioner seatbelts and anti-lock braking systems. The
Company designs and produces a broad range of radio frequency connector products
used in telecommunications, computer and office equipment, instrumentation
equipment, local area networks, aerospace and military electronic applications.
The Company's radio frequency connectors are used in base stations, hand held
sets and other components of cellular and personal communications networks. The
Company has also developed a broad line of radio frequency connectors for
coaxial cable for full service cable television/telecommunication networks. The
Company also designs and produces highly-engineered cable assemblies. Such
assemblies are specially designed by the Company in conjunction with OEM
customers for specific applications, primarily for computer, communications and
office equipment systems. The cable assemblies utilize the Company's connector
and cable products as well as components purchased from others. The Company is
also a leading producer of flat-ribbon cable, a cable made of wires assembled
side by side such that the finished cable is flat. Flat-ribbon cable is used to
connect internal components in systems with space and component configuration
limitations. The product is used in computer and office equipment components as
well as in a variety of telecommunications applications.
HIGH PERFORMANCE ENVIRONMENTAL CONNECTORS. The Company believes, based
primarily on published market research, that it is the largest supplier of
circular, military-specification connectors; such connectors require superior
performance and reliability under conditions of stress and in hostile
environments. Such connectors are generally used to interconnect electronic and
fiber optic systems in sophisticated aerospace, military, commercial and
industrial equipment. These applications present demanding technological
requirements in that such connectors are subject to rapid and severe temperature
changes, vibration, humidity or nuclear radiation. Frequent applications of
these connectors include aircraft, guided missiles,
37
<PAGE>
radar, military vehicles, equipment for spacecraft, energy and geophysical
applications and off-road construction equipment. Specially designed high
performance environmental connectors, which include fiber optic, filtered,
nonmetallic, diode and breakaway connectors, are manufactured to specific
customer input/output configurations.
COAXIAL CABLE. The Company designs, manufactures and markets coaxial cable
primarily for use in the cable television industry. The Company manufactures two
primary types of coaxial cable: semi-flexible, which has an aluminum tubular
shield, and flexible, which has one or more braided metallic shields. Semi-
flexible coaxial cable is used in the trunk and feeder distribution portion of
cable television systems, and flexible cable (also known as drop cable) is used
primarily for hookups from the feeder cable to the cable television subscriber's
residence. Flexible cable is also used in other communications applications.
The rapid developments in fiber optic technologies, digital compression
(which allows several channels to be transmitted within the same bandwidth that
a single analog channel currently requires) and other communication
technologies, including the Company's development of higher capacity coaxial
cable, have resulted in technologies which are expected to give cable television
systems channel capacity in excess of 500 channels. Such expanded channel
capacity, along with other component additions, will permit cable operators to
offer full service networks with a variety of capabilities, including near
video-on-demand, pay-per-view special events, home shopping networks,
interactive entertainment and education services, telephone services, and
high-speed access to data resources such as the Internet. With respect to
expanded channel capacity systems, cable operators have generally adopted, and
the Company believes that for the foreseeable future will continue to adopt, a
cable system using both fiber optic cable and coaxial cable. Such systems
combine the advantages of fiber optic cable in transmitting clear signals over a
long distance without amplification with the advantages of coaxial cable in ease
of installation, low cost and compatibility with the receiving components of the
customer's communications devices. The Company believes that while system
operators are likely to increase their use of fiber optic cable for the trunk
and feeder portions of the cable systems, there will be an ongoing need for high
capacity coaxial cable for the local distribution and street-to-the-home
portions of the cable system.
U.S. cable system designs are increasingly being employed in international
markets where cable television penetration is low. For example, it is estimated
that in 1996 only 25% of the television households in Western Europe subscribed
to some form of multichannel television service as compared to an estimated
subscription rate of 64% in the United States. The estimated subscription rates
in the Asian and Latin American markets were even lower at approximately 15% and
11%, respectively. In terms of television households, it is estimated that there
were 178 million television households in Western Europe, 398 million in Asia
and 81 million in Latin America. This compares to an estimated 97 million
television households in the U.S. In 1996, the Company had sales of coaxial
cable in approximately 40 countries, and the Company believes the development of
cable television systems in international markets presents a significant
opportunity to increase sales of its coaxial cable products. See "Risk
Factors--Risks Associated with Foreign Operations; Exchange Rate Fluctuations."
PRODUCT DEVELOPMENT
The Company's product development strategy is to offer a broad range of
products to meet the specific interconnect requirements of its customers in its
target markets. The Company's market focus is primarily in interconnect products
for the (i) wireless, telecom and data communications market; (ii) broadband
communications, primarily cable television and the developing markets for full
service television, telephone and data communication broadband networks; (iii)
commercial and military aerospace markets; (iv) industrial markets, primarily
factory automation and mass transportation; and (v) automotive electronics,
primarily automotive safety devices such as airbags, pretensioner seatbelts and
anti-lock braking systems. The Company implements its product development
strategy through product
38
<PAGE>
design teams and collaboration arrangements with customers which result in
obtaining approved vendor status for the customer's new products and programs.
The Company further seeks to have its products become widely accepted within the
industry for similar applications and products manufactured by other potential
customers, thereby providing additional sources of future revenue. The
development of application-specific products has decreased the significance of
standard products which generally experience greater pricing pressure. In
addition to product design teams and customer collaboration arrangements, the
Company uses key account managers to direct customer relationships on a global
basis such that the Company can bring to bear its total resources to meet the
worldwide needs of its multinational customers. The Company is also focused on
making strategic acquisitions in certain markets to further broaden and enhance
its product offerings and expand its global capabilities.
The following examples illustrate the Company's market and product
development strategy:
- The use of fiber optics in communications systems has been increasing in
recent years, including fiber optic applications in long distance
telephone systems and local area networks. The Company has developed a
broad line of fiber optic interconnect components for fiber optic systems
including sophisticated narrowband wavelength division multiplexers, which
permit greater transmission capability, and fiber optic management
systems, which facilitate the organizing and management of a fiber optic
network.
- Radio frequency/microwave electronics technology has been characterized by
developments that expand circuit capacity with increasingly smaller
electronic devices. These technologies have expanded into the growing
markets of cellular and personal communication networks. The Company has
developed a broad line of interconnect products and systems used in base
stations for such wireless communication systems.
- Smart cards, where data is stored in a chip on a plastic card, are
increasingly being used in banking systems (including electronic purses),
telephone credit cards, security systems and other applications. The
Company is one of the leaders in developing acceptor devices used in
readers that transmit the information stored on smart cards or as
components of the electronic purse.
- Performance, reliability and ability to withstand harsh environments are
essential to products and systems for the commercial and military
aerospace market. The Company, in conjunction with a significant OEM
customer, has developed a sophisticated interconnect coupler technology
for advanced commercial aircraft flight control systems. The Company also
performed certain research and development studies and is now producing a
family of connectors comprising approximately 1,000 SKUs for use in the
international space station program.
- The use of electronics and sensing devices in automobiles has been
increasing for the past several years. The Company, in conjunction with
major European automobile manufacturers, has developed a broad line of
interconnect products used in automotive airbags and pretensioner
seatbelts. Such products, which were originally used primarily in European
luxury cars, have evolved in technology and availability to standard
European car models and are being used in a wider array of applications
such as passenger side and side impact protection.
- The Company has been one of the technology leaders in expanding the
bandwidth characteristics of coaxial cable for cable television. The
Company produces 1 gigahertz coaxial cable which is used in hybrid fiber
coaxial cable ("HFC") full service networks for offering video, voice and
data services. In addition, in 1995 the Company developed and is now
producing a broad line of radio frequency coaxial connectors for the cable
television industry.
- The Company also seeks to expand its product offering and global presence
in its chosen markets through strategic acquisitions. In 1996, for
example, the Company acquired Sine, one of the leading
39
<PAGE>
suppliers of interconnect products and assemblies for the factory
automation market. This acquisition complemented the Company's existing
line of industrial interconnect products and further positioned the
Company for growth in factory motion control equipment. The Company also
acquired a 51% interest in Kai-Jack, one of the leading Taiwanese radio
frequency connector manufacturers. The acquisition strengthens the
Company's manufacturing capabilities and worldwide sourcing of radio
frequency products as well as expands the Company's presence in the
growing Asian markets.
INTERNATIONAL OPERATIONS
The Company believes that its global presence is an important advantage over
competitors that do not have comparable international activities as it allows
the Company to provide quality products on a timely and worldwide basis to its
multinational customers. Approximately 49% of the Company's sales for the year
ended December 31, 1996 were outside of the United States. Approximately 68% of
such international sales were in Europe. The Company has manufacturing
facilities in the United Kingdom, Germany, France, the Czech Republic and sales
offices in most other European markets. The European operations generally have
strong positions in their respective local markets. Local operations coordinate
product design and manufacturing responsibility with the Company's other
operations around the world. The balance of the Company's international
activities are located primarily in Canada, Mexico and the Far East, which
includes manufacturing facilities in Hong Kong, Taiwan, India, Japan and the
People's Republic of China. The Hong Kong, Taiwan, India, People's Republic of
China and Mexico facilities generally serve their respective local markets as
well as provide low cost manufacturing and assembly sources for world markets.
CUSTOMERS
The Company's products are used in a wide variety of applications by
numerous customers, none of whom accounted for more than 5% of the Company's
sales for 1996 (except for sales under contract with the U.S. Government and its
subcontractors, which accounted for 8% of 1996 sales). The Company's
participation across a broad spectrum of defense programs is such that the
Company believes that no one military program accounted for more than 1% of 1996
net sales. See "Risk Factors--Exposure to Changes in Military Expenditures." The
Company's products are sold directly to OEMs, cable system operators,
telecommunication companies and through distributors. There has been a trend on
the part of OEM customers to consolidate their lists of qualified suppliers to
companies that have a global presence, can meet quality and delivery standards,
have a broad product portfolio and design capability, and have competitive
prices. The Company has focused its global resources to position itself to
compete effectively in this environment. The Company has concentrated its
efforts on service and productivity improvements, including advanced computer
aided design and manufacturing systems, statistical process controls and just-
in-time inventory programs to increase product quality and shorten product
delivery schedules. The Company's strategy is to provide a broad selection of
products in the areas in which it competes. The Company has achieved a preferred
supplier designation from many of its OEM customers.
Cable television services in the United States are provided primarily by
MSOs. It is estimated that in 1996 the twenty largest MSOs served 85% of the
estimated 62 million cable television subscribers in the United States. The
major MSOs include such companies as TCI, Time Warner Companies Inc.,
Continental Cablevision, Inc., Comcast Corporation and Cablevision Systems
Corporation. Many of the major MSOs are customers of the Company, including
those listed above.
The Company's sales to distributors represented approximately 26% of the
Company's 1996 sales. The Company's recognized brand names, including
"Amphenol," "Times Fiber," "Pyle-National," "Spectra-Strip," "Sine," "Tuchel"
and "Socapex," together with the Company's strong connector design-in position
40
<PAGE>
(products that are specified in the plans and are qualified by the OEM), enhance
its ability to reach the secondary market through its network of distributors.
The Company's products are sold by eight of the 10 largest (based on sales)
electronics distributors in the United States, and the Company believes that its
distributor network represents a competitive advantage.
MANUFACTURING
The Company employs advanced manufacturing processes including molding,
stamping, plating, turning, extruding, die casting and assembly operations as
well as proprietary process technology for flat-ribbon and coaxial cable
production. The Company's manufacturing facilities are generally vertically
integrated operations from the initial design stage through final design and
manufacturing. Outsourcing of certain fabrication processes is used when
cost-effective. Substantially all of the Company's manufacturing facilities are
certified to the ISO9000 series of quality standards.
The Company employs a global manufacturing strategy to lower its production
costs and to improve service to customers. The Company sources its products on a
worldwide basis with manufacturing and assembly operations in the United States,
Canada, Mexico, the United Kingdom, France, Germany, the Czech Republic, Hong
Kong, Taiwan, India, Japan and the People's Republic of China. To better serve
high volume OEM customers, the Company has established just-in-time facilities
near major customers.
The Company's policy is to maintain strong cost controls in its
manufacturing and assembly operations. The Company has undertaken programs to
rationalize its production facilities, reduce plant and corporate overhead
expense and maximize the return on capital expenditures. The programs to improve
productivity are ongoing.
The Company purchases a wide variety of raw materials for the manufacture of
its products, including precious metals such as gold and silver used in plating;
brass, copper, aluminum and steel used for cable, contacts and connector shells;
and plastic materials used for cable and connector bodies and inserts. All such
raw materials are readily available throughout the world and are purchased
locally from a variety of suppliers. The Company is not dependent upon any one
source for raw materials or if one source is used, alternate sources of supply
are available.
RESEARCH AND DEVELOPMENT
The Company's research, development and engineering expenditures for the
creation and application of new and improved products and processes were $14.6
million, $15.7 million and $14.3 million (excluding customer sponsored programs
representing expenditures of $0.9 million, $1.3 million and $0.8 million) for
1996, 1995 and 1994, respectively. The Company's research and development
activities focus on selected product areas and are performed by individual
operating divisions. Generally, the operating divisions work closely with OEM
customers to develop highly engineered products that meet the customer's needs.
The Company continues to focus its research and development efforts primarily on
those product areas that it believes have the potential for broad market
applications and significant sales within a one- to three-year period.
TRADEMARKS AND PATENTS
The Company owns a number of active patents worldwide. While the Company
considers its patents to be valuable assets, the Company does not believe that
its competitive position is dependent on patent protection or that its
operations are dependent on any individual patent.
Allied Corporation has granted to the Company a worldwide non-exclusive
license to use all trademarks, service marks, trade names and corporate names
relating to "Bendix" which the Company has used in its sales and marketing of
high performance environmental connectors. The license will expire on
41
<PAGE>
June 2, 1997. The Company has been increasing its use of other trade names in
its marketing of high performance connectors and accordingly does not believe
that its operations will be materially adversely affected by the expiration of
this license.
The Company regards its trademarks "Amphenol," "Pyle-National," "Tuchel,"
"Socapex," "Spectra-Strip," "Sine" and "Times Fiber" to be of value in its
businesses. The Company has exclusive rights in all its major markets to use
these registered trademarks.
COMPETITION
The Company encounters competition in substantially all areas of its
business. The Company competes primarily on the basis of product quality, price,
engineering, customer service and delivery time. Competitors include large,
diversified companies, some of which have substantially greater assets and
financial resources than the Company, as well as medium to small companies. In
the area of coaxial cable for cable television, the Company believes that it and
CommScope, a division of General Instrument Corporation, are the primary
providers of such cable; however, CommScope is larger than the Company in this
market. In addition, the Company faces competition from smaller companies that
have concentrated their efforts in one or more areas of the coaxial cable
market. See "Risk Factors--Competition."
BACKLOG
The Company estimates that its backlog of unfilled orders was $207.4 million
and $203.4 million at December 31, 1996 and 1995, respectively. Orders typically
fluctuate from quarter to quarter based on customer demands and general business
conditions. Unfilled orders may be cancelled prior to shipment of goods;
however, such cancellations historically have not been material. It is expected
that all or a substantial portion of the backlog will be filled within the next
12 months. However, significant elements of the Company's business, such as
sales to the cable television industry, distributors, the computer industry, and
other commercial customers generally have short lead times. Therefore, backlog
may not be indicative of future demand.
EMPLOYEES
As of December 31, 1996, the Company had approximately 6,200 full-time
employees worldwide. Of these employees, approximately 4,500 were hourly
employees, of which approximately 2,300 were represented by labor unions and the
remainder were salaried. Beginning on October 21, 1995, the Company experienced
a seven day work stoppage at its plant in Sidney, New York when approximately
1,000 hourly employees represented by the International Association of
Machinists and Aerospace Workers rejected a Company proposal and voted to strike
upon the expiration of their then current collective bargaining contract. A new
three year contract was approved and the work stoppage ended on October 28,
1995. The Sidney, New York plant manufactures interconnect products used
primarily in the aerospace industry and other commercial and industrial markets.
The one week work stoppage did not involve any other operation of the Company.
The Company has not had any other work stoppages in the past ten years. In 1996,
the United Steelworkers International Union, AFL-CIO attempted to organize
approximately 500 employees of the Company's plant in Chatham, Virginia, the
Company's primary plant for the production of coaxial cable. The union
organizing effort was defeated by a vote of the hourly employees. A Regional
Director of the National Labor Relations Board subsequently found that unfair
labor practices had been committed by the Company prior to the election and
ordered that a new election be held. The Company's appeal of such finding and
order was denied by the National Labor Relations Board on March 19, 1997. The
Company expects that a new election will be held at the Chatham, Virginia plant
prior to May 30, 1997. If the union is certified, the Company would be required
to bargain in good faith with the union, and its operations at such facility
could be subject to the risks associated with unionized employees generally,
including the risk of work stoppages. The Company believes that it has a good
relationship with its unionized and nonunionized employees.
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PROPERTIES
The table below presents the location, size and function of the Company's
principal manufacturing and assembly facilities as of January 31, 1997. The
Company's principal executive offices are located at 358 Hall Avenue,
Wallingford, Connecticut 06492.
<TABLE>
<CAPTION>
LOCATION SQUARE FEET FUNCTION
- ------------------------------------ ------------- ------------------------------------------------------------
<S> <C> <C>
UNITED STATES:
Chatham, VA 175,000 coaxial cable manufacturing
Chatham, VA(1) 100,000 coaxial cable warehousing
Chatham, VA(1) 40,000 coaxial cable manufacturing and warehousing
Chicago, IL 270,000 industrial connector manufacturing and assembly
Danbury, CT(1) 170,000 RF connector manufacturing
Danville, VA(1) 80,000 coaxial cable warehousing
Endicott, NY 125,000 cable assembly
Hamden, CT 60,000 cable manufacturing
Hamden, CT(1) 25,000 cable warehousing
Lisle, IL(1) 28,000 fiber optic connector manufacturing
Mt. Clemens, MI(1) 71,360 industrial connector manufacturing and assembly
Nogales, AZ(1) 20,250 connector warehousing and assembly
Parsippany, NJ(1) 32,500 RF connector manufacturing
Phoenix, AZ(1) 12,000 coaxial cable warehousing
Sidney, NY 685,000 high performance environmental connector manufacturing and
assembly
Wallingford, CT(1) 28,800 executive offices
CANADA:
Renfrew, Ontario(1) 26,000 coaxial cable manufacturing
Scarborough, Ontario(1) 88,000 high performance connector manufacturing
MEXICO:
Nogales(1) 27,558 connector assembly
Nogales(1) 12,700 connector assembly
Nogales(1) 57,884 connector assembly
UNITED KINGDOM:
Greenock, Scotland(1) 10,000 connector manufacturing and cable assembly
Nottingham, England(1) 11,000 high performance environmental connector manufacturing and
cable assembly
Romsey, England(1) 24,000 cable manufacturing and cable assembly
Whitstable, England 135,000 connector manufacturing, cable assembly and coaxial cable
warehousing
GERMANY:
Heilbronn 130,000 connector manufacturing and cable assembly
CZECH REPUBLIC:
Klucouska 16,300 connector assembly
FRANCE:
Dole 121,000 connector manufacturing
Thyez 125,000 connector manufacturing
</TABLE>
43
<PAGE>
<TABLE>
<CAPTION>
LOCATION SQUARE FEET FUNCTION
- ------------------------------------ ------------- ------------------------------------------------------------
<S> <C> <C>
HONG KONG:
Fotan Shatin(1) 70,000 cable manufacturing and assembly
TAIWAN:
Taoyuan Hsien(1) 15,700 cable assembly
Tainan(1) 64,600 RF connector manufacturing and assembly
JAPAN:
Ritto-cho, Shiga(1) 15,700 assembly, warehousing
INDIA:
Pune(2) 53,400 connector manufacturing and assembly
Bangalore 12,200 connector manufacturing and assembly
CHINA:
Changzhou 65,000 coaxial cable manufacturing and warehousing
</TABLE>
- ------------------------
(1) These facilities are leased. Such leases expire at various times through
2007.
(2) This facility is owned but is situated on property subject to a long-term
lease arrangement expiring in 2065.
The Company estimates that during 1996 its principal manufacturing
facilities operated at between 70% and 95% of capacity.
In addition to the facilities described above, the Company leases various
warehouses and sales and administrative offices.
LEGAL PROCEEDINGS
On January 23, 1997, the Board of Directors approved, subject to shareholder
approval and certain other closing conditions, and the Company entered into the
Merger Agreement with NXS Acquisition. See "The Merger." The proposed
transaction was announced to the public on January 23, 1997 and on that same
date and on January 29, 1997, the Company and its directors (four of whom are
also executive officers of the Company) were named as defendants in complaints
filed in the Court of Chancery in the State of Delaware by two persons and one
person, respectively, claiming to be stockholders of the Company, individually
and purportedly as a class action on behalf of stockholders of the Company. In
general, the complaints allege that the Company's directors have breached their
fiduciary duties by, among other things, resolving to approve of the Merger
Agreement at an allegedly inadequate price and by allegedly failing to take
adequate steps to enhance the value of the Company and/or its attractiveness as
a merger or acquisition candidate, including failing to conduct an auction. The
complaints seek injunctive relief prohibiting the Company from, among other
things, consummating the Merger Agreement. The complaints also seek unspecified
damages, attorney's fees and other relief. The Company believes that the
allegations contained in the complaints are without merit and intends to contest
the actions vigorously, on behalf of itself and its directors, if the plaintiffs
elect to proceed with their actions.
The Company and its subsidiaries have been named as defendants in several
other legal actions in which various amounts are claimed arising from normal
business activities. Although the amount of any ultimate liability with respect
to such matters cannot be precisely determined, in the opinion of management,
such matters are not expected to have a material effect on the Company's
financial condition or results of operations.
Certain operations of the Company are subject to federal, state and local
environmental laws and regulations which govern the discharge of pollutants into
the air and water, as well as the handling and disposal of solid and hazardous
wastes. The Company believes that its operations are currently in substantial
compliance with all applicable environmental laws and regulations and that the
costs of continuing compliance will not be material to the Company's financial
condition or results of operations.
Subsequent to the acquisition of Amphenol from Allied in 1987, Amphenol and
Allied have been named jointly and severally liable as potentially responsible
parties in relation to several environmental cleanup sites. Amphenol and Allied
have jointly consented to perform certain investigations and remedial
44
<PAGE>
and monitoring activities at two sites and they have been jointly ordered to
perform work at another site. The responsibility for costs incurred relating to
these sites is apportioned between Amphenol and Allied based on an agreement
entered into in connection with the acquisition. For sites covered by this
agreement, to the extent that conditions or circumstances occurred or existed at
the time of or prior to the acquisition, the first $13.0 million of costs are
borne by Amphenol and have been incurred as of December 31, 1996. Allied is
obligated to pay 80% of the excess over $13.0 million and 100% of the excess
over $30.0 million. Allied representatives are presently working closely with
the Company in addressing the most significant potential environmental
liabilities including the Sidney Center Landfill and the Richardson Hill
landfill project, as described below.
Owners and occupiers of sites containing hazardous substances, as well as
generators of hazardous substances, are subject to broad liability under various
federal and state environmental laws and regulations, including expenditures for
cleanup costs and damages arising out of past disposal activities. Such
liability in many cases may be imposed regardless of fault or the legality of
the original disposal activity. The Company is currently performing
investigative and monitoring activities at its manufacturing site in Sidney, New
York. In addition, the Company is currently voluntarily performing monitoring,
investigation, design and cleanup activities at two local public off-site
disposal sites previously utilized by the Sidney facility and others. The
Company is also performing proposed remedial design activities and is currently
negotiating with respect to a third site. The Company and Allied have entered
into an administrative consent order with the United States Environmental
Protection Agency (the "EPA") and are presently determining necessary and
appropriate remedial measures for one such site (the "Richardson Hill" landfill)
used by Amphenol and other companies, which has been designated a "Superfund"
site on the National Priorities List under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980. With respect to the second
site (the "Route 8" landfill), used exclusively by Amphenol, the Company
initiated a remediation program pursuant to a Consent Order with the New York
Department of Environmental Protection and is continuing to monitor the results
of those remediation efforts. In December 1995, the Company and Allied received
a letter from the EPA demanding that the Company and Allied accept
responsibility for the investigation and cleanup of the Sidney Center Landfill,
another Superfund Site. The Sidney Center Landfill was a municipal landfill site
utilized by the Company's Sidney facility and other local towns and businesses.
The Company has acknowledged that it sent general plant refuse but no hazardous
waste to the Sidney Center Landfill site. Allied and the Company offered to
prepare a remedial design and to assist the EPA in identifying other potentially
responsible parties for the Sidney Center Landfill site. In July 1996, the
Company and Allied received a unilateral order from the EPA directing the
Company and Allied to perform certain investigation, design and cleanup
activities at the Sidney Center Landfill site. The Company and Allied responded
to the unilateral order by agreeing to undertake certain remedial design
activities. In March 1997, the EPA filed a lawsuit by which it seeks to recover
from Allied and the Company $2.7 million in alleged past response costs relating
to the Sidney Landfill Center site. To date the Company and Allied have not
accepted any responsibility for the cleanup of the Sidney Center Landfill site.
The Company also is engaged in remediating or monitoring environmental
conditions at several of its other manufacturing facilities and has been named
as a potentially responsible party for cleanup costs at several other off-site
disposal sites. During 1996, the Company spent approximately $1.4 million in
connection with investigating, remediating and monitoring environmental
conditions at these facilities and sites. Amphenol expects such expenditures,
net of indemnification payments expected from Allied, to be less than $0.5
million in 1997.
Since 1987, the Company has not been identified nor has it been named as a
potentially responsible party with respect to any other significant on-site or
off-site hazardous waste matters. In addition, the Company believes that all of
its manufacturing activities and disposal practices since 1987 have been in
material compliance with all applicable environmental laws and regulations.
Nonetheless, it is possible that the Company will be named as a potentially
responsible party in the future with respect to additional Superfund or other
sites. Although the Company is unable to predict with any reasonable certainty
the extent of its ultimate liability with respect to any pending or future
environmental matters, the Company believes, based upon all information
currently known by management about the Company's manufacturing activities,
disposal practices and estimates of liability with respect to all known
environmental matters, that any such liability will not be material to its
financial condition or results of operations.
45
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the name, age as of April 15, 1997 and
position with the Company of each person who is expected to serve as a director
or executive officer of Amphenol after the Effective Time. After the Effective
Time, the Board of Directors will be subject to change from time to time.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---------------------------------- --- --------------------------------------------------------------------
<S> <C> <C>
Martin H. Loeffler................ 52 Chairman of the Board, Chief Executive Officer, President and
Director
Edward G. Jepsen.................. 53 Executive Vice President and Chief Financial Officer
Timothy F. Cohane................. 44 Senior Vice President
Edward C. Wetmore................. 40 Secretary and General Counsel
Diana G. Reardon.................. 37 Controller and Treasurer
Henry R. Kravis................... 53 Director
George R. Roberts................. 53 Director
Michael W. Michelson.............. 45 Director
Marc S. Lipschultz................ 28 Director
</TABLE>
MARTIN H. LOEFFLER has been a Director of Amphenol since December 1987 and
Chief Executive Officer since May 1996. He has also served as President and
Chief Operating Officer of Amphenol since July 1987. He was a Vice President of
LPL Technologies Inc. ("LPL") from May 1989 to December 1992. LPL merged into a
subsidiary of the Company in December 1992.
EDWARD G. JEPSEN has been Executive Vice President and Chief Financial
Officer of Amphenol since May 1989 and Senior Vice President and Director of
Finance since November 1988. He was a Director, Executive Vice President, Chief
Financial Officer and Controller of LPL, and is also a director of TRC Company,
Inc. and United International Holdings, Inc.
TIMOTHY F. COHANE has been Vice President of Amphenol since December 1991.
He was a Director and Vice President of LPL.
EDWARD C. WETMORE has been Secretary and General Counsel of Amphenol since
1987. He was also Secretary and General Counsel of LPL.
DIANA G. REARDON has been Treasurer of Amphenol since March 1992 and
Controller since July 1994. From June 1988 until her appointment as Treasurer
she served as Assistant Controller of Amphenol and LPL.
HENRY R. KRAVIS is a Founding Partner of KKR and effective January 1, 1996
he became a managing member of the Executive Committee of the limited liability
company which serves as the general partner of KKR. He is also a director of
AutoZone, Inc., Borden, Inc., Bruno's, Inc., Evenflo & Spalding Holdings
Corporation, Flagstar Companies Inc., Flagstar Corporation, The Gillette
Company, IDEX Corporation, K-III Communications Corporation, KinderCare Learning
Centers, Inc., Merit Behavioral Care Corporation, Newsquest Capital plc,
Owens-Illinois Group, Inc., Owens-Illinois, Inc., Safeway, Inc., Sotheby's
Holdings Inc., Union Texas Petroleum Holdings, Inc., and World Color Press, Inc.
46
<PAGE>
GEORGE R. ROBERTS is a Founding Partner of KKR and effective January 1,
1996 he became a managing member of the Executive Committee of the limited
liability company which serves as the general partner of KKR. He is also a
director of AutoZone, Inc., Borden, Inc., Bruno's, Inc., Evenflo & Spalding
Holdings Corporation, Flagstar Companies Inc., Flagstar Corporation, IDEX
Corporation, K-III Communications Corporation, KinderCare Learning Centers,
Inc., Merit Behavioral Care Corporation, Newsquest Capital plc, Owens-Illinois
Group, Inc., Owens-Illinois, Inc., Safeway, Inc., Union Texas Petroleum
Holdings, Inc., and World Color Press, Inc.
MICHAEL W. MICHELSON was a General Partner of KKR from January 1, 1987
until January 1, 1996 when he became a member of the limited liability company
which serves as the general partner of KKR. Prior to 1987, Mr. Michelson was an
Executive at KKR. He is also a director of AutoZone, Inc., Doubletree
Corporation, Owens-Illinois Group, Inc., Owens-Illinois, Inc., and Union Texas
Petroleum Holdings, Inc.
MARC S. LIPSCHULTZ has been an Executive at KKR since 1995. From 1993 to
1995, Mr. Lipschultz attended Harvard Business School. Prior thereto, he was an
investment banker with Goldman, Sachs & Co. He is also a director of Evenflo &
Spalding Holdings Corporation.
Messrs. Kravis and Roberts are first cousins.
The business address of Messrs. Kravis and Lipschultz is 9 West 57th Street,
New York, New York 10019 and of Messrs. Roberts and Michelson is 2800 Sand Hill
Road, Suite 200, Menlo Park, California 94025.
In addition to the directors named above, it is expected that two
independent persons will become directors of the Company upon the consummation
of the Merger.
COMPENSATION OF DIRECTORS
All directors will be reimbursed for their usual and customary expenses
incurred in attending all Board and committee meetings. It is anticipated that
each director who is not an employee of the Company will receive an aggregate
annual fee of $30,000, payable in quarterly installments. Directors who are also
employees of the Company will receive no remuneration for serving as directors.
STOCK OPTION PLANS
Immediately prior to the Effective Time, each employee or director stock
option to purchase Common Stock ("Company Stock Options") granted under any
stock option or stock purchase plan, program or arrangement of the Company (the
"Stock Plans") will be cancelled, whether or not then exercisable, and each
holder of any such Company Stock Option having an exercise price of less than
$26.00 (which constitutes all Company Stock Options except for Company Stock
Options to purchase an aggregate of 110,000 shares of Common Stock at an
exercise price of $26 5/8 per share) will receive, in consideration of such
cancellation, a payment from the Company (subject to applicable withholding
taxes) equal to the product of (1) the total number of shares of Common Stock
subject to such Company Stock Option and (2) the excess of $26.00 over the
exercise price per share of Common Stock subject to such Company Stock Option,
payable in cash at the Effective Time or as soon as practicable thereafter,
representing approximately $2.4 million in the aggregate. It is anticipated that
the Stock Plans will terminate as of the Effective Time, and that following the
Effective Time no holder of a Company Stock Option nor any participant in any
Stock Plan will have any right thereunder to acquire equity securities of the
Company. See "--Stock Purchase and Option Agreements."
STOCK PURCHASE AND OPTION AGREEMENTS
It is expected that Messrs. Martin H. Loeffler, Edward G. Jepsen and Timothy
F. Cohane, each of whom is an officer and director of the Company, will elect to
retain all of their shares in the Merger.
47
<PAGE>
However, Messrs. Loeffler, Jepsen and Cohane have agreed in principal with NXS
Acquisition and NXS LLC that they will retain 96,154 shares, 76,923 shares and
76,923 shares, respectively, of Common Stock. Accordingly, following the Merger,
such persons may sell any such shares which they retain in excess of such
amounts. While no decisions have been made concerning any such potential sale,
NXS LLC has indicated that it would be prepared to purchase any such excess
shares. To the extent that the proration provisions of the Merger Agreement
result in Messrs. Loeffler, Jepsen and Cohane retaining fewer shares than
contemplated, the Company expects to provide such persons with an opportunity to
buy shares in an amount necessary to result in such persons retaining the
intended amounts and, in connection therewith, to eliminate for such persons the
impact of any adverse tax consequences arising from such purchase. Messrs.
Loeffler, Jepsen and Cohane will also be granted options to acquire an
additional 336,538 shares, 230,769 shares and 230,769 shares, respectively, of
Common Stock following the Merger. It is also expected that options to acquire
approximately 555,000 shares will be available for sale, either directly or
through grants of options, to other members of the Company's management. No
decisions have been reached as to the identities of the persons who would
participate in any such sale or grant or as to the terms thereof, other than
that to the extent such sale or grant occurs upon or shortly following the
Merger, such sale (if any) will be at $26.00 per share and any options granted
will be exercisable at $26.00 per share and, subject to certain exceptions, will
vest over five years at 20% per year. The sale of any shares or grant of any
options to be made in the future may be made at higher or lower prices and on
such other terms as may be determined at any time. Messrs. Loeffler, Jepsen and
Cohane, as well as other members of the Company's management receiving such
shares and options, are expected to enter into agreements with the Company
restricting transferability of the shares of Common Stock held by such persons
for up to five years after the Effective Time and setting forth, among other
things, the limited circumstances in which such shares may be called by or put
to the Company.
48
<PAGE>
OWNERSHIP OF COMMON STOCK FOLLOWING THE MERGER
The following table sets forth certain information regarding the expected
ownership of the Company's Common Stock after the Effective Time by (i) persons
who, as of the date hereof, own beneficially more than 5% of the outstanding
shares of Common Stock and who, after the Effective Time, are expected by the
Company to own beneficially or who may possibly own beneficially more than 5% of
the outstanding shares of Common Stock, (ii) each person who will become a
director of the Company, (iii) the Chairman and each of the other three most
highly compensated executive officers of the Company for the year ended December
31, 1996 who are expected to continue to serve as executive officers of Amphenol
after the Effective Time and (iv) all directors and executive officers of the
Company as a group. The following table assumes that all of the shares of Common
Stock owned by the DeGeorge Stockholders are converted into cash in connection
with the Merger. See "The Merger--The Stockholders Agreement."
<TABLE>
<CAPTION>
PERCENTAGE
NUMBER OF OF CLASS
NAME SHARES OWNED OUTSTANDING (A)
- ---------------------------------------------------------------------------------- ------------- -------------------
<S> <C> <C>
Martin H. Loeffler (b)............................................................ 96,154 *
Edward G. Jepsen (b).............................................................. 76,923 *
Timothy F. Cohane (b)............................................................. 76,923 *
Edward C. Wetmore (c)............................................................. -- --
KKR 1996 GP LLC c/o Kohlberg Kravis Roberts & Co. Inc. L.P. (d)................... 13,116,955 75%
9 West 57th Street
New York, New York 10019
All officers and directors as a group (9 persons) (b)(c)(d)....................... -- --
Clover Capital Management, Inc. (e)............................................... -- --
11 Tobey Village Office Park
Pittsford, New York 14534
</TABLE>
- ------------------------
* Less than 1%.
(a) The amounts and percentage of Common Stock beneficially owned are reported
on the basis of regulations of the Commission governing the determination of
beneficial ownership of securities. Under the rules of the Commission, a
person is deemed to be a "beneficial owner" of a security if that person has
or shares "voting power," which includes the power to vote or to direct the
voting of such security, or "investment power," which includes the power to
dispose of or to direct the disposition of such security. A person is also
deemed to be a beneficial owner of any securities of which that person has a
right to acquire beneficial ownership within 60 days. Under these rules,
more than one person may be deemed a beneficial owner of the same securities
and a person may be deemed to be a beneficial owner of securities as to
which he has no economic interest. The percentage of class outstanding after
the Effective Time is based on the 17,516,955 shares of Common Stock
expected to be outstanding after the Effective Time.
(b) It is expected that Messrs. Loeffler, Jepsen and Cohane will elect to retain
shares in the Merger with the intention of retaining 96,154 shares, 76,923
shares and 76,923 shares, respectively, of Common Stock. To the extent that
the proration provisions of the Merger Agreement result in such persons
retaining a different number of shares, the Company expects to permit and/or
provide such persons with an opportunity to buy or sell shares in an amount
necessary to result in such persons retaining the intended amounts and, in
connection therewith, to eliminate for such persons the impact of any
adverse tax consequences arising from such purchase or sale. Assuming that
Messrs. Loeffler, Jepsen and Cohane own 96,154 shares, 76,923 shares and
76,923 shares, respectively, of Common Stock
49
<PAGE>
following the Effective Time, each such person will own less than 1% of the
Common Stock outstanding after the Effective Time.
(c) Because of the potential effect of proration, it is impossible to determine
if any of the directors or executive officers of the Company's Common Stock
(except as described in note (b) above) will continue to own shares of
Common Stock after the Effective Time.
(d) After the Effective Time, shares of Common Stock shown as beneficially owned
by KKR 1996 GP LLC will be held by the stockholders of NXS Acquisition. KKR
1996 GP LLC is the sole general partner of KKR Associates 1996. KKR
Associates 1996, a limited partnership, is the sole general partner of the
Partnership and possesses sole voting and investment power with respect to
such shares. KKR 1996 GP LLC is a limited liability company, the members of
which are Messrs. Henry R. Kravis, George R. Roberts, Robert I. MacDonnell,
Paul E. Raether, Michael W. Michelson, Michael T. Tokarz, James H. Greene,
Jr., Perry Golkin, Clifton S. Robbins, Scott M. Stuart and Edward A.
Gilhuly. Messrs. Kravis and Roberts are members of the Executive Committee
of KKR 1996 GP LLC. Messrs. Kravis, Roberts and Michelson will also be
directors of the Company after the Effective Time. Mr. Marc S. Lipschultz is
a limited partner of KKR Associates 1996 and will also be a director of the
Company. Each of such individuals may be deemed to share beneficial
ownership of the shares shown as beneficially owned by KKR 1996 GP LLC. Each
of such individuals disclaim beneficial ownership of such shares. It is
expected that prior to the Effective Time, one or more other partnerships
organized at the direction of KKR may acquire interests in NXS Acquisition
and/or NXS LLC. Does not give effect to the exercise of the NXS Option or
the Stockholders Option. Assuming all stockholders elected to convert all of
their shares into the right to receive cash, then upon exercise of either
such option, the stockholders of NXS Acquisition would own, directly or
indirectly, 14,443,957 shares, equal to approximately 82% of the shares
issued and outstanding immediately after the Merger, before taking into
account any purchase of shares from Messrs. Loeffler, Jepsen and Cohane,
which could result in the stockholders of NXS Acquisition owning,
indirectly, up to an additional 1.5% of such shares.
(e) Based solely on a Schedule 13G filed by Clover Capital Management, Inc. and
its directors (collectively, "Clover"), Clover beneficially owns an
aggregate of 2,779,685 shares (approximately 6.2%) of the Common Stock
outstanding as of February 14, 1997. Because the Company does not know
whether or not Clover intends to elect to retain any shares in the Merger,
and due to the potential effect of proration, the Company cannot predict the
number of shares (or percentage) of Common Stock, if any, that will be owned
by Clover after the Effective Time.
RELATED PARTY TRANSACTIONS
KKR 1996 GP LLC will beneficially own approximately 75% of the Company's
outstanding shares of Common Stock at the Effective Time (before taking into
account the effect of any exercise of the NXS Option or the Stockholders Option,
the exercise of either of which could result in the Partnership owning, directly
or indirectly, up to approximately 82% of such shares and before taking into
account any purchase of shares from Messrs. Loeffler, Jepsen and Cohane, which
could result in the stockholders of NXS Acquisition owning, indirectly, up to an
additional 1.5% of such shares). The managing members of KKR 1996 GP LLC are
Messrs. Henry R. Kravis and George R. Roberts and the other members of which are
Messrs. Robert I. MacDonnell, Paul E. Raether, Michael W. Michelson, Michael T.
Tokarz, James H. Greene, Jr., Perry Golkin, Clifton S. Robbins, Scott M. Stuart
and Edward A. Gilhuly. The sole general partner of KKR Associates 1996 is KKR
1996 GP LLC. Messrs. Kravis, Roberts and Michelson will also be directors of the
Company, as will Mr. Marc Lipschultz, who is a limited partner of KKR Associates
1996. Each of the members of KKR 1996 GP LLC is also a member of the limited
liability company which serves as the general partner of KKR, and Mr. Lipschultz
is an executive of KKR. It is expected that prior to the Effective Time, one or
more other partnerships organized at the direction of KKR may acquire interests
in NXS Acquisition and/or NXS LLC. KKR, an affiliate of KKR 1996 GP LLC, is
expected to receive a fee of
50
<PAGE>
$18 million in cash from the Company on the closing date for negotiating the
Merger and arranging the financing therefor, and, from time to time in the
future, KKR may receive customary fees for advisory services rendered to the
Company. Such fees will be negotiated from time to time with the independent
members of Amphenol's Board of Directors on an arm's-length basis and will be
based on the services performed and the prevalent fees then charged by
third-parties for comparable services. In addition, KKR will receive an annual
management consulting fee of $1,000,000. See "Management--Directors and
Executive Officers" and "Ownership of Common Stock."
KKR 1996 GP LLC is the general partner of KKR Associates 1996, a Delaware
limited partnership, of which certain past and present employees of KKR and
partnerships and trusts for the benefit of the families of such past and present
employees and a former partner of KKR are the limited partners. KKR Associates
1996 is the general partner of the Partnership. The Partnership, along with any
other partnership organized at the direction of KKR to acquire interests in NXS
Acquisition and/or NXS LLC, will own at the Effective Time approximately 75% of
the outstanding Common Stock (before taking into account the effect of any
exercise of the NXS Option or the Stockholders Option, the exercise of either of
which could result in the stockholders of NXS Acquisition owning, directly or
indirectly, up to approximately 82% of such shares and before taking into
account any purchase of shares from Messrs. Loeffler, Jepsen and Cohane, which
could result in the stockholders of NXS Acquisition owning, indirectly, up to an
additional 1.5% of such shares).
DESCRIPTION OF CREDIT FACILITIES
The Credit Facilities will be provided by a syndicate of banks and other
financial institutions led by BTCo., as administrative agent (the
"Administrative Agent"), The Chase Manhattan Bank, as syndication agent
("Chase"), and The Bank of New York, as documentation agent. The Credit
Facilities will provide for $750.0 million in term loans ("Term Loans") and for
$150.0 million in revolving credit loans ("Revolving Credit Loans"). The
Revolving Credit Facility will include borrowing capacity available for letters
of credit and for borrowings on same-day notice ("Swingline Loans"). The Term
Loans are comprised of Term Loan A ($350.0 million), which will have a maturity
of seven years, Term Loan B ($200.0 million), which will have a maturity of
eight years, and Term Loan C ($200.0 million), which will have a maturity of
nine years. The Revolving Credit Facility commitment will terminate seven years
after the date of initial funding of the Credit Facilities.
All Term Loans and Revolving Credit Loans will bear interest, at the
Company's option, at either: (a) a "base rate" equal to the higher of (i) the
federal funds rate plus 0.50% per annum or (ii) the Administrative Agent's prime
rate, plus (A) in the case of Term Loan A, a debt to EBITDA (as defined in the
Credit Facilities)-dependent rate ranging from 0.00% to 1.00% per annum, (B) in
the case of Term Loan B, a debt (as defined in the Credit Facilities) to
EBITDA-dependent rate ranging from 1.00% to 1.50% per annum, (C) in the case of
Term Loan C, a debt to EBITDA-dependent rate ranging from 1.50% to 2.00% per
annum or (D) in the case of Revolving Credit Loans and Swingline Loans, a debt
to EBITDA-dependent rate ranging from 0.00% to 1.00% per annum or (b) a
"eurodollar rate" plus (i) in the case of Term Loan A, a debt to
EBITDA-dependent rate ranging from 1.00% to 2.25% per annum, (ii) in the case of
Term Loan B a debt to EBITDA-dependent rate ranging from 2.25% to 2.75% per
annum, (iii) in the case of Term Loan C, a debt to EBITDA-dependent rate ranging
from 2.75% to 3.25% per annum or (iv) in the case of Revolving Credit Loans, a
debt to EBITDA-dependent rate ranging from 1.00% to 2.25% per annum. Swingline
Loans may only be base rate loans.
The Company will pay a commitment fee calculated at a debt to
EBITDA-dependent rate ranging from 0.25% to 0.50% per annum of the available
unused commitment under the Revolving Credit Facility and certain delayed-draw
term loan commitments, in each case in effect on each day. Such fee will be
payable quarterly in arrears and upon termination of the Revolving Credit
Facility.
51
<PAGE>
The Company will pay a letter of credit fee calculated at a debt to
EBITDA-dependent rate ranging from 1.00% to 2.25% per annum of the face amount
of each letter of credit less a fronting fee calculated at a rate equal to
0.125% per annum of the face amount of each letter of credit. Such fees will be
payable quarterly in arrears and upon the termination of the Revolving Credit
Facility. In addition, the Company will pay customary transaction charges in
connection with any letters of credit.
The Term Loans will be subject to the following amortization schedule:
<TABLE>
<CAPTION>
DATE FROM CLOSING TERM LOAN A TERM LOAN B TERM LOAN C
- --------------------------------------------------- ------------- ------------- -------------
<S> <C> <C> <C>
(DOLLARS IN MILLIONS)
24 Mos............................................. $ 25.0 $ 0.5 $ 0.5
36 Mos............................................. 37.5 0.5 0.5
48 Mos............................................. 47.5 0.5 0.5
60 Mos............................................. 60.0 0.5 0.5
72 Mos............................................. 80.0 0.5 0.5
84 Mos............................................. 100.0 0.5 0.5
96 Mos............................................. -- 197.0 0.5
108 Mos............................................ -- -- 196.5
------ ------ ------
$ 350.0 $ 200.0 $ 200.0
------ ------ ------
------ ------ ------
</TABLE>
The Term Loans will be subject to mandatory prepayment (i) with the proceeds
of certain asset sales and (ii) on an annual basis with 50% of the Company's
excess cash flow (as defined in the Credit Facilities) if the ratio of the
Company's total debt (as defined in the Credit Facilities) to EBITDA is greater
than 4.0 to 1.0 on the last day of any fiscal year. The Company's obligations
under the Credit Facilities will be secured by a pledge of 100% of the stock of
certain of the Company's direct domestic subsidiaries and 65% of the stock of
certain of the Company's material direct foreign subsidiaries. In addition,
indebtedness under the Credit Facility will be guaranteed by significant
domestic subsidiaries of the Company. See "Description of the
Notes--Subordination" and "Risk Factors-- Subordination of Notes to Senior
Indebtedness," and "--Encumbrances to Secure Credit Facilities."
The Credit Facilities will contain customary covenants and restrictions on
the Company's ability to engage in certain activities. In addition, the Credit
Facilities provide that the Company must satisfy (i) a minimum ratio of
consolidated adjusted EBITDA to consolidated cash interest expense of, initially
(commencing with the first quarter of 1998), 1.50:1.00, increasing to 1.75:1.00
in the third quarter of 1999 and to 2.00:1.00 in the third quarter of 2001, and
(ii) a maximum ratio of consolidated total debt to consolidated adjusted EBITDA
of, initially (commencing with the first quarter of 1998), 6.65:1.00, decreasing
to 6.50:1.00 in the second quarter of 1998, to 6.40:1.00 in the third quarter of
1998, to 6.25:1.00 in the fourth quarter of 1998, to 6.00:1.00 in the first
quarter of 1999, to 5.75:1.00 in the fourth quarter of 1999, to 5.50:1.00 in the
first quarter of 2000, to 5.00:1.00 in the fourth quarter of 2000, to 4.75:1.00
in the first quarter of 2001, to 4.25:1.00 in the first quarter of 2002 and to
4.00:1.00 in the fourth quarter of 2002, in each case determined on a rolling
four-quarter basis.
The Credit Facilities will include customary events of default.
52
<PAGE>
DESCRIPTION OF THE NOTES
GENERAL
The Notes will be issued pursuant to an Indenture (the "INDENTURE") between
the Company and IBJ Schroder Bank & Trust Company, as trustee (the "TRUSTEE").
The terms of the Notes include those stated in the Indenture and those made part
of the Indenture by reference to the Trust Indenture Act of 1939 (the "TRUST
INDENTURE ACT"). The Notes are subject to all such terms, and Holders of Notes
are referred to the Indenture and the Trust Indenture Act for a statement
thereof. The following summarizes the material provisions of the Indenture and
is qualified in its entirety by reference to the provisions of the Indenture,
including the definitions therein of certain terms used below. Copies of the
proposed form of Indenture have been filed as an exhibit to the Registration
Statement of which this Prospectus is a part. The definitions of certain terms
used in the following summary are set forth below under "--Certain Definitions."
For purposes of this summary, the term "COMPANY" refers only to Amphenol
Corporation and not to any of its Subsidiaries.
The Notes will be general unsecured obligations of the Company and will be
subordinated in right of payment to all existing and future Senior Indebtedness
of the Company. As of December 31, 1996, on a pro forma basis giving effect to
the Merger and the Financings (including the Offering), the aggregate amount of
the Company's outstanding Senior Indebtedness would have been approximately
$763.0 million (excluding $3.0 million of outstanding letters of credit and
unused commitments). The Notes will also be effectively subordinated to all
Indebtedness and other obligations (including trade payables) of the Company's
Subsidiaries. Any right of the Company to receive assets of any of its
Subsidiaries upon the latter's liquidation or reorganization (and the consequent
right of the Holders of the Notes to participate in those assets) will be
effectively subordinated to the claims of that Subsidiary's creditors, except to
the extent that the Company is itself recognized as a creditor of such
Subsidiary, in which case the claims of the Company would still be subordinate
to any security in the assets of such Subsidiary and any indebtedness of such
Subsidiary senior to that held by the Company. Certain operations of the Company
are conducted through its Subsidiaries and, therefore, the Company is dependent
upon the cash flow of its Subsidiaries to meet its obligations, including its
obligations under the Notes. As of December 31, 1996, the Company's Subsidiaries
would have had approximately $8.3 million of Indebtedness and approximately
$82.0 million of other obligations (including trade payables) outstanding after
giving pro forma effect to the Merger and the Financings (including the
Offering). The Indenture will permit incurrence of additional Senior
Indebtedness in the future. See "Risk Factors--Subordination of Notes to Senior
Indebtedness."
As of the Issuance Date, all of the Company's Subsidiaries other than
Amphenol Funding Corp. will be Restricted Subsidiaries. Under certain
circumstances, the Company will be able to designate additional current or
future Subsidiaries as Unrestricted Subsidiaries. Unrestricted Subsidiaries will
not be subject to any of the restrictive covenants set forth in the Indenture.
SUBORDINATION
The payment of the Subordinated Note Obligations will be subordinated in
right of payment, as set forth in the Indenture, to the prior payment in full in
cash equivalents of all Senior Indebtedness, whether outstanding on the date of
the Indenture or thereafter incurred. Upon any distribution to creditors of the
Company in a liquidation or dissolution of the Company or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to the
Company or its property, an assignment for the benefit of creditors or any
marshalling of the Company's assets and liabilities, the holders of Senior
Indebtedness will be entitled to receive payment in full in cash equivalents of
such Senior Indebtedness before the holders of Notes will be entitled to receive
any payment with respect to the Subordinated Note Obligations, and until all
Senior Indebtedness is paid in full in cash equivalents, any distribution to
which the holders of Notes would be entitled shall be made to the holders of
Senior Indebtedness (except that holders of Notes may receive (i) shares of
stock and any debt securities that are subordinated at least to the same extent
as the
53
<PAGE>
Notes to (a) Senior Indebtedness and (b) any securities issued in exchange for
Senior Indebtedness and (ii) payments made from the trusts described under
"--Legal Defeasance and Covenant Defeasance").
The Company also may not make any payment upon or in respect of the
Subordinated Note Obligations (except in such subordinated securities or from
the trust described under "--Legal Defeasance and Covenant Defeasance") if (i) a
default in the payment of the principal of, premium, if any, or interest on, or
of unreimbursed amounts under drawn letters of credit or in respect of bankers'
acceptances or fees relating to letters of credit or bankers' acceptances
constituting, Designated Senior Indebtedness occurs and is continuing beyond any
applicable period of grace (a "PAYMENT DEFAULT") or (ii) any other default
occurs and is continuing with respect to Designated Senior Indebtedness that
permits holders of the Designated Senior Indebtedness as to which such default
relates to accelerate its maturity (a "NON-PAYMENT DEFAULT") and the Trustee
receives a notice of such default (a "PAYMENT BLOCKAGE NOTICE") from a
representative of holders of such Designated Senior Indebtedness. Payments on
the Notes, including any missed payments, may and shall be resumed (a) in the
case of a payment default, upon the date on which such default is cured or
waived or shall have ceased to exist or such Designated Senior Indebtedness
shall have been discharged or paid in full in cash equivalents and (b) in case
of a nonpayment default, the earlier of (x) the date on which such nonpayment
default is cured or waived, (y) 179 days after the date on which the applicable
Payment Blockage Notice is received (each such period, the "PAYMENT BLOCKAGE
PERIOD") or (z) the date such Payment Blockage Period shall be terminated by
written notice to the Trustee from the requisite holders of such Designated
Senior Indebtedness necessary to terminate such period or from their
representative. No new period of payment blockage may be commenced unless and
until 365 days have elapsed since the effectiveness of the immediately preceding
Payment Blockage Notice. However, if any Payment Blockage Notice within such
365-day period is given by or on behalf of any holders of Designated Senior
Indebtedness (other than the agent under the Senior Credit Facility), the agent
under the Senior Credit Facility may give another Payment Blockage Notice within
such period. In no event, however, may the total number of days during which any
Payment Blockage Period or Periods is in effect exceed 179 days in the aggregate
during any 365 consecutive day period. No nonpayment default that existed or was
continuing on the date of delivery of any Payment Blockage Notice to the Trustee
shall be or be made, the basis for a subsequent Payment Blockage Notice unless
such default shall have been cured or waived for a period of not less than 90
days.
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
provision 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.
The Indenture will further require that the Company promptly notify holders
of Senior Indebtedness if payment of the Notes is accelerated because of an
Event of Default.
As a result of the subordination provisions described above, in the event of
insolvency, bankruptcy, administration, reorganization, receivership or similar
proceedings relating to the Company, holders of Notes may recover less ratably
than creditors of the Company who are holders of Senior Indebtedness. At
December 31, 1996, on a pro forma basis after giving effect to the Merger and
the Financings (including the Offering), the Company would have had
approximately $763.0 million of Senior Indebtedness outstanding (excluding $3.0
million of outstanding letters of credit and unused commitments) and the Company
would have had additional availability of $134.0 million (after giving effect to
$3.0 million of outstanding letters of credit) for borrowings under the Senior
Credit Facility, all of which would be Senior Indebtedness of the Company. In
addition, the Notes will be structurally subordinated to the liabilities of
Subsidiaries of the Company. Although the Indenture contains limitations on the
amount of additional Indebtedness that the Company and its Subsidiaries may
incur, under certain circumstances the amount of such Indebtedness could be
substantial and, in any case, such Indebtedness may be Senior Indebtedness. See
"--Certain Covenants--Limitations on Incurrence of Indebtedness and Issuance of
Disqualified Stock."
54
<PAGE>
"DESIGNATED SENIOR INDEBTEDNESS" means (i) Senior Indebtedness under the
Senior Credit Facility and (ii) any other Senior Indebtedness permitted under
the Indenture the principal amount of which is $50.0 million or more and that
has been designated by the Company as Designated Senior Indebtedness.
"SENIOR INDEBTEDNESS" means (i) the Obligations under the Senior Credit
Facility and (ii) any other Indebtedness permitted to be incurred by the Company
under the terms of the Indenture, unless the instrument under which such
Indebtedness is incurred expressly provides that it is on a parity with or
subordinated in right of payment to the Notes, including, with respect to (i)
and (ii), interest accruing subsequent to the filing of, or which would have
accrued but for the filing of, a petition for bankruptcy, whether or not such
interest is an allowable claim in such bankruptcy proceeding. Notwithstanding
anything to the contrary in the foregoing, Senior Indebtedness will not include
(1) any liability for federal, state, local or other taxes owed or owing by the
Company, (2) any obligation of the Company to any of its Subsidiaries, (3) any
accounts payable or trade liabilities arising in the ordinary course of business
(including instruments evidencing such liabilities) other than obligations in
respect of bankers' acceptances and letters of credit under the Senior Credit
Facility, (4) any Indebtedness that is incurred in violation of the Indenture,
(5) Indebtedness which, when incurred and without respect to any election under
Section 1111 (b) of Title 11, United States Code, is without recourse to the
Company, (6) any Indebtedness, guarantee or obligation of the Company which is
subordinate or junior to any other Indebtedness, guarantee or obligation of the
Company, (7) Indebtedness evidenced by the Notes and (8) Capital Stock of the
Company.
"SUBORDINATED NOTE OBLIGATIONS" means any principal of, premium, if any, and
interest on the Notes payable pursuant to the terms of the Notes or upon
acceleration, together with and including any amounts received upon the exercise
of rights of rescission or other rights of action (including claims for damages)
or otherwise, to the extent relating to the purchase price of the Notes or
amounts corresponding to such principal, premium, if any, or interest on the
Notes.
The Notes will rank senior in right of payment to all Subordinated
Indebtedness of the Company. At the Issuance Date the Company will have no
Subordinated Indebtedness.
PRINCIPAL, MATURITY AND INTEREST
The Notes will be limited in aggregate principal amount to $240.0 million
and will mature on , 2007. Interest on the Notes will accrue at the rate
of % per annum and will be payable semi-annually in arrears on and
, commencing on , 1997, to Holders of record on the immediately
preceding and . Interest on the Notes will accrue from the most
recent date to which interest has been paid or, if no interest has been paid,
from the date of original issuance. Interest will be computed on the basis of a
360-day year comprised of twelve 30-day months. Principal of, premium, if any,
and interest on the Notes will be payable at the office or agency of the Company
maintained for such purpose within the City and State of New York or, at the
option of the Company, payment of interest may be made by check mailed to the
Holders of the Notes at their respective addresses set forth in the register of
Holders of Notes; PROVIDED that all payments of principal, premium, interest
with respect to Notes represented by one or more permanent global Notes
registered in the name of or held by The Depository Trust Company or its nominee
will be made by wire transfer of immediately available funds to the accounts
specified by the Holders thereof. Until otherwise designated by the Company, the
Company's office or agency in New York will be the office of the Trustee
maintained for such purpose. The Notes will be issued in denominations of $1,000
and integral multiples thereof.
MANDATORY REDEMPTION
Except as set forth below under "Repurchase at the Option of Holders," the
Company is not required to make mandatory redemption or sinking fund payments
with respect to the Notes.
55
<PAGE>
OPTIONAL REDEMPTION
Except as described below, the Notes will not be redeemable at the Company's
option prior to , 2002. From and after , 2002, the Notes will be
subject to redemption at any time at the option of the Company, in whole or in
part, upon not less than 30 nor more than 60 days' notice, at the redemption
prices (expressed as percentages of principal amount) set forth below, plus
accrued and unpaid interest thereon, if any, to the applicable redemption date,
if redeemed during the twelve-month period beginning on of each of the
years indicated below:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
- ---------------------------------------------------------------------------- -----------------
<S> <C>
2002........................................................................ %
2003........................................................................
2004........................................................................
2005 and thereafter......................................................... 100.00%
</TABLE>
In addition, at any time or from time to time, on or prior to ,
2000, the Company may, at its option, redeem up to 40% of the aggregate
principal amount of Notes originally issued under the Indenture on the Issuance
Date at a redemption price equal to % of the aggregate principal amount
thereof, plus accrued and unpaid interest thereon, if any, to the redemption
date, with the net cash proceeds of one or more Equity Offerings; PROVIDED that
at least 60% of the aggregate principal amount of Notes originally issued under
the Indenture on the Issuance Date remains outstanding immediately after the
occurrence of each such redemption; PROVIDED FURTHER that each such redemption
occurs within 60 days of the date of closing of each such Equity Offering. The
Trustee shall select the Notes to be purchased in the manner described under
"Repurchase at the Option of Holders--Selection and Notice."
REPURCHASE AT THE OPTION OF HOLDERS
CHANGE OF CONTROL
The Indenture will provide that, upon the occurrence of a Change of Control,
the Company will make an offer to purchase all or any part (equal to $1,000 or
an integral multiple thereof) of the Notes pursuant to the offer described below
(the "CHANGE OF CONTROL OFFER") at a price in cash (the "CHANGE OF CONTROL
PAYMENT") equal to 101% of the aggregate principal amount thereof plus accrued
and unpaid interest, if any, to the date of purchase. The Indenture will provide
that within 30 days following any Change of Control, the Company will mail a
notice to each Holder of Notes issued under the Indenture, with a copy to the
Trustee, with the following information: (1) a Change of Control Offer is being
made pursuant to the covenant entitled "Offer to Repurchase Upon Change of
Control," and that all Notes properly tendered pursuant to such Change of
Control Offer will be accepted for payment; (2) the purchase price and the
purchase date, which will be no earlier than 30 days nor later than 60 days from
the date such notice is mailed, except as may be otherwise required by
applicable law (the "CHANGE OF CONTROL PAYMENT DATE"); (3) any Note not properly
tendered will remain outstanding and continue to accrue interest; (4) unless the
Company defaults in the payment of the Change of Control Payment, all Notes
accepted for payment pursuant to the Change of Control Offer will cease to
accrue interest on the Change of Control Payment Date; (5) Holders electing to
have any Notes purchased pursuant to a Change of Control Offer will be required
to surrender the Notes, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Notes completed, to the paying agent specified
in the notice at the address specified in the notice prior to the close of
business on the third Business Day preceding the Change of Control Payment Date;
(6) Holders will be entitled to withdraw their tendered Notes and their election
to require the Company to purchase such Notes, PROVIDED that the paying agent
receives, not later than the close of business on the last day of the Offer
Period (as defined in the Indenture), a telegram, telex, facsimile
56
<PAGE>
transmission or letter setting forth the name of the Holder, the principal
amount of Notes tendered for purchase, and a statement that such Holder is
withdrawing his tendered Notes and his election to have such Notes purchased;
and (7) that Holders whose Notes are being purchased only in part will be issued
new Notes equal in principal amount to the unpurchased portion of the Notes
surrendered, which unpurchased portion must be equal to $1,000 in principal
amount or an integral multiple thereof.
The Indenture will provide that, prior to complying with the provisions of
this covenant, but in any event within 30 days following a Change of Control,
the Company will either repay all outstanding Senior Indebtedness or obtain the
requisite consents, if any, under any outstanding Senior Indebtedness to permit
the repurchase of the Notes required by this covenant.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws or regulations are applicable in connection with the repurchase
of the Notes pursuant to a Change of Control Offer. To the extent that the
provisions of any securities laws or regulations conflict with the provisions of
the Indenture, the Company will comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations described
in the Indenture by virtue thereof.
The Indenture will provide that on the Change of Control Payment Date, the
Company will, to the extent permitted by law, (1) accept for payment all Notes
or portions thereof properly tendered pursuant to the Change of Control Offer,
(2) deposit with the paying agent an amount equal to the aggregate Change of
Control Payment in respect of all Notes or portions thereof so tendered and (3)
deliver, or cause to be delivered, to the Trustee for cancellation the Notes so
accepted together with an Officers' Certificate stating that such Notes or
portions thereof have been tendered to and purchased by the Company. The
Indenture will provide that the paying agent will promptly mail to each Holder
of Notes the Change of Control Payment for such Notes, and the Trustee will
promptly authenticate and mail to each Holder a new Note equal in principal
amount to any unpurchased portion of the Notes surrendered, if any, PROVIDED,
that each such new Note will be in a principal amount of $1,000 or an integral
multiple thereof. The Company will publicly announce the results of the Change
of Control Offer on or as soon as practicable after the Change of Control
Payment Date.
The Senior Credit Facility will, and future credit agreements or other
agreements relating to Senior Indebtedness to which the Company becomes a party
may, prohibit the Company from purchasing any Notes as a result of a Change of
Control and/or provide that certain change of control events with respect to the
Company would constitute a default thereunder. In the event a Change of Control
occurs at a time when the Company is prohibited from purchasing the Notes, the
Company could seek the consent of its lenders to the purchase of the Notes or
could attempt to refinance the borrowings that contain such prohibition. If the
Company does not obtain such a consent or repay such borrowings, the Company
will remain prohibited from purchasing the Notes. In such case, the Company's
failure to purchase tendered Notes would constitute an Event of Default 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.
The existence of a Holder's right to require the Company to repurchase such
Holder's Notes upon the occurrence of a Change of Control may deter a third
party from seeking to acquire the Company in a transaction that would constitute
a Change of Control.
ASSET SALES
The Indenture will provide that the Company will not, and will not permit
any of its Restricted Subsidiaries to, cause, make or suffer to exist an Asset
Sale, unless (x) the Company, or its Restricted Subsidiaries, as the case may
be, receives consideration at the time of such Asset Sale at least equal to the
fair market value (as determined in good faith by the Company) of the assets
sold or otherwise disposed of and (y) at least 75% of the consideration therefor
received by the Company, or such Restricted Subsidiary,
57
<PAGE>
as the case may be, is in the form of cash or Cash Equivalents; PROVIDED that
the amount of (a) any liabilities (as shown on the Company's or such Restricted
Subsidiary's most recent balance sheet or in the notes thereto) of the Company
or any Restricted Subsidiary (other than liabilities that are by their terms
subordinated to the Notes), that are assumed by the transferee of any such
assets, (b) any notes or other obligations received by the Company or such
Restricted Subsidiary from such transferee that are converted by the Company or
such Restricted Subsidiary into cash (to the extent of the cash received) within
180 days following the closing of such Asset Sale and (c) any Designated Noncash
Consideration received by the Company or any of its Restricted Subsidiaries in
such Asset Sale having an aggregate fair market value, taken together with all
other Designated Noncash Consideration received pursuant to this clause (c) that
is at that time outstanding, not to exceed 15% of Total Assets at the time of
the receipt of such Designated Noncash Consideration (with the fair market value
of each item of Designated Noncash Consideration being measured at the time
received and without giving effect to subsequent changes in value), shall be
deemed to be cash for purposes of this provision and for no other purpose.
Within 365 days after the Company's or any Restricted Subsidiary's receipt
of the Net Proceeds of any Asset Sale, the Company or such Restricted Subsidiary
may apply the Net Proceeds from such Asset Sale, at its option, (i) to
permanently reduce Obligations under the Senior Credit Facility (and to
correspondingly reduce commitments with respect thereto) or other Senior
Indebtedness or Pari Passu Indebtedness (PROVIDED that if the Company shall so
reduce Obligations under Pari Passu Indebtedness, it will equally and ratably
reduce Obligations under the Notes if the Notes are then prepayable or, if the
Notes may not be then prepaid, the Company shall make an offer (in accordance
with the procedures set forth below for an Asset Sale Offer) to all Holders to
purchase at 100% of the principal amount thereof the amount of Notes that would
otherwise be prepaid), (ii) to an investment in any one or more businesses,
capital expenditures or acquisitions of other assets in each case, used or
useful in a Similar Business and/or (iii) to make an investment in properties or
assets that replace the properties and assets that are the subject of such Asset
Sale. Pending the final application of any such Net Proceeds, the Company or
such Restricted Subsidiary may temporarily reduce Indebtedness under a revolving
credit facility, if any, or otherwise invest such Net Proceeds in Cash
Equivalents or Investment Grade Securities. The Indenture will provide that any
Net Proceeds from the Asset Sale that are not invested as provided and within
the time period set forth in the first sentence of this paragraph will be deemed
to constitute "EXCESS PROCEEDS." When the aggregate amount of Excess Proceeds
exceeds $15.0 million, the Company shall make an offer to all Holders of Notes
(an "ASSET SALE OFFER") to purchase the maximum principal amount of Notes, that
is an integral multiple of $1,000, that may be purchased out of the Excess
Proceeds at an offer price in cash in an amount equal to 100% of the principal
amount thereof, plus accrued and unpaid interest, if any, to the date fixed for
the closing of such offer, in accordance with the procedures set forth in the
Indenture. The Company will commence an Asset Sale Offer with respect to Excess
Proceeds within ten Business Days after the date that Excess Proceeds exceeds
$15.0 million by mailing the notice required pursuant to the terms of the
Indenture, with a copy to the Trustee. To the extent that the aggregate amount
of Notes tendered pursuant to an Asset Sale Offer is less than the Excess
Proceeds, the Company may use any remaining Excess Proceeds for general
corporate purposes. If the aggregate principal amount of Notes surrendered by
Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select
the Notes to be purchased in the manner described under the caption "Selection
and Notice" below. Upon completion of any such Asset Sale Offer, the amount of
Excess Proceeds shall be reset at zero.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws or regulations are applicable in connection with the repurchase
of the Notes pursuant to an Asset Sale Offer. To the extent that the provisions
of any securities laws or regulations conflict with the provisions of the
Indenture, the Company will comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations described
in the Indenture by virtue thereof.
58
<PAGE>
SELECTION AND NOTICE
If less than all of the Notes are to be redeemed at any time or if more
Notes are tendered pursuant to an Asset Sale Offer than the Company is required
to purchase, selection of such Notes for redemption or purchase, as the case may
be, will be made by the Trustee in compliance with the requirements of the
principal national securities exchange, if any, on which such Notes are listed,
or, if such Notes are not so listed, on a pro rata basis, by lot or by such
other method as the Trustee shall deem fair and appropriate (and in such manner
as complies with applicable legal requirements); PROVIDED that no Notes of
$1,000 or less shall be purchased or redeemed in part.
Notices of purchase or redemption shall be mailed by first class mail,
postage prepaid, at least 30 but not more than 60 days before the purchase or
redemption date to each Holder of Notes to be purchased or redeemed at such
Holder's registered address. If any Note is to be purchased or redeemed in part
only, any notice of purchase or redemption that relates to such Note shall state
the portion of the principal amount thereof that has been or is to be purchased
or redeemed.
A new Note in principal amount equal to the unpurchased or unredeemed
portion of any Note purchased or redeemed in part will be issued in the name of
the Holder thereof upon cancellation of the original Note. On and after the
purchase or redemption date unless the Company defaults in payment of the
purchase or redemption price, interest shall cease to accrue on Notes or
portions thereof purchased or called for redemption.
CERTAIN COVENANTS
LIMITATION ON RESTRICTED PAYMENTS
The Indenture will provide that the Company will not, and will not permit
any of its Restricted Subsidiaries to, directly or indirectly: (i) declare or
pay any dividend or make any distribution on account of the Company's or any of
its Restricted Subsidiaries' Equity Interests, including any dividend or
distribution payable in connection with any merger or consolidation (other than
(A) dividends or distributions by the Company payable in Equity Interests (other
than Disqualified Stock) of the Company or (B) dividends or distributions by a
Restricted Subsidiary so long as, in the case of any dividend or distribution
payable on or in respect of any class or series of securities issued by a
Subsidiary other than a Wholly Owned Subsidiary, the Company or a Restricted
Subsidiary receives at least its PRO RATA share of such dividend or distribution
in accordance with its Equity Interests in such class or series of securities);
(ii) purchase, redeem, defease or otherwise acquire or retire for value any
Equity Interests of the Company or any direct or indirect parent of the Company;
(iii) make any principal payment on, or redeem, repurchase, defease or otherwise
acquire or retire for value in each case, prior to any scheduled repayment, or
maturity, any Subordinated Indebtedness (other than Indebtedness permitted under
clauses (g) and (i) of the covenant described under "Limitations on Incurrence
of Indebtedness and Issuance of Disqualified Stock"); or (iv) make any
Restricted Investment (all such payments and other actions set forth in clauses
(i) through (iv) above being collectively referred to as "RESTRICTED PAYMENTS"),
unless, at the time of such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be continuing
or would occur as a consequence thereof;
(b) immediately before and immediately after giving effect to such
transaction on a pro forma basis, the Company could incur $1.00 of
additional Indebtedness under the provisions of the first paragraph of
"--Limitations on Incurrence of Indebtedness and Issuance of Disqualified
Stock"; and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Restricted
Subsidiaries after the Issuance Date (including Restricted Payments
permitted by clauses (i), (ii) (with respect to the payment of dividends on
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Refunding Capital Stock pursuant to clause (b) thereof), (v) (only to the
extent that amounts paid pursuant to such clause are greater than amounts
that would have been paid pursuant to such clause if $5.0 million and $10.0
million were substituted in such clause for $10.0 million and $20.0 million,
respectively), (vi), (ix) and (x) of the next succeeding paragraph, but
excluding all other Restricted Payments permitted by the next succeeding
paragraph), is less than the sum of (i) 50% of the Consolidated Net Income
of the Company for the period (taken as one accounting period) from the
fiscal quarter that first begins after the Issuance Date to the end of the
Company's most recently ended fiscal quarter for which internal financial
statements are available at the time of such Restricted Payment (or, in the
case such Consolidated Net Income for such period is a deficit, minus 100%
of such deficit), PLUS (ii) 100% of the aggregate net cash proceeds and the
fair market value, as determined in good faith by the Board of Directors, of
marketable securities received by the Company since immediately after the
closing of the Merger and the Financings from the issue or sale of Equity
Interests of the Company (including Refunding Capital Stock (as defined
below), but excluding cash proceeds and marketable securities received from
the sale of Equity Interests to members of management, directors or
consultants of the Company and its Subsidiaries after the Issuance Date to
the extent such amounts have been applied to Restricted Payments in
accordance with clause (v) of the next succeeding paragraph and excluding
Excluded Contributions) or debt securities of the Company that have been
converted into such Equity Interests of the Company (other than Refunding
Capital Stock (as defined below) or Equity Interests (or convertible debt
securities of the Company sold to a Restricted Subsidiary of the Company and
other than Disqualified Stock or debt securities that have been converted
into Disqualified Stock), PLUS (iii) 100% of the aggregate amount of cash
and marketable securities contributed to the capital of the Company
following the Issuance Date (excluding Excluded Contributions), PLUS (iv)
100% of the aggregate amount received in cash and the fair market value of
marketable securities (other than Restricted Investments) received from (A)
the sale or other disposition (other than to the Company or a Restricted
Subsidiary) of Restricted Investments made by the Company and its Restricted
Subsidiaries or (B) a dividend from, or the sale (other than to the Company
or a Restricted Subsidiary) of the stock of, an Unrestricted Subsidiary
(other than an Unrestricted Subsidiary the Investment in which was made by
the Company or a Restricted Subsidiary pursuant to clauses (vii) or (xii)
below).
The foregoing provisions will not prohibit:
(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at the date of declaration such payment would have
complied with the provisions of the Indenture;
(ii) (a) the redemption, repurchase, retirement or other acquisition of
any Equity Interests (the "RETIRED CAPITAL STOCK") or Subordinated
Indebtedness of the Company in exchange for, or out of the proceeds of the
substantially concurrent sale (other than to a Restricted Subsidiary) of,
Equity Interests of the Company (other than any Disqualified Stock) (the
"REFUNDING CAPITAL STOCK"), and (b) if immediately prior to the retirement
of Retired Capital Stock, the declaration and payment of dividends thereon
was permitted under clause (vi) of this paragraph, the declaration and
payment of dividends on the Refunding Capital Stock in an aggregate amount
per year no greater than the aggregate amount of dividends per annum that
was declarable and payable on such Retired Capital Stock immediately prior
to such retirement; PROVIDED, HOWEVER, that at the time of the declaration
of any such dividends, no Default or Event of Default shall have occurred
and be continuing or would occur as a consequence thereof;
(iii) distributions or payments of Receivables Fees;
(iv) the redemption, repurchase or other acquisition or retirement of
Subordinated Indebtedness of the Company made by exchange for, or out of the
proceeds of the substantially concurrent sale of, new Indebtedness of the
Company so long as (A) the principal amount of such new Indebtedness does
not exceed the principal amount of the Subordinated Indebtedness being so
redeemed, repurchased,
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acquired or retired for value (plus the amount of any premium required to be
paid under the terms of the instrument governing the Subordinated
Indebtedness being so redeemed, repurchased, acquired or retired), (B) such
Indebtedness is subordinated to the Senior Indebtedness and the Notes at
least to the same extent as such Subordinated Indebtedness so purchased,
exchanged, redeemed, repurchased, acquired or retired for value, (C) such
Indebtedness has a final scheduled maturity date equal to or later than the
final scheduled maturity date of the Subordinated Indebtedness being so
redeemed, repurchased, acquired or retired and (D) such Indebtedness has a
Weighted Average Life to Maturity equal to or greater than the remaining
Weighted Average Life to Maturity of the Subordinated Indebtedness being so
redeemed, repurchased, acquired or retired;
(v) a Restricted Payment to pay for the repurchase, retirement or other
acquisition or retirement for value of common Equity Interests of the
Company held by any future, present or former employee, director or
consultant of the Company or any Subsidiary pursuant to any management
equity plan or stock option plan or any other management or employee benefit
plan or agreement; PROVIDED, HOWEVER, that the aggregate Restricted Payments
made under this clause (v) does not exceed in any calendar year $10.0
million (with unused amounts in any calendar year being carried over to
succeeding calendar years subject to a maximum (without giving effect to the
following proviso) of $20.0 million in any calendar year); PROVIDED FURTHER
that such amount in any calendar year may be increased by an amount not to
exceed (i) the cash proceeds from the sale of Equity Interests of the
Company to members of management, directors or consultants of the Company
and its Subsidiaries that occurs after the Issuance Date (to the extent the
cash proceeds from the sale of such Equity Interest have not otherwise been
applied to the payment of Restricted Payments by virtue of the preceding
paragraph (c)) plus (ii) the cash proceeds of key man life insurance
policies received by the Company and its Restricted Subsidiaries after the
Issuance Date less (iii) the amount of any, Restricted Payments previously
made pursuant to clauses (i) and (ii) of this subparagraph (v); and PROVIDED
FURTHER that cancellation of Indebtedness owing to the Company from members
of management of the Company or any of its Restricted Subsidiaries in
connection with a repurchase of Equity Interests of the Company will not be
deemed to constitute a Restricted Payment for purposes of this covenant or
any other provision of the Indenture;
(vi) the declaration and payment of dividends to holders of any class or
series of Designated Preferred Stock (other than Disqualified Stock) issued
after the Issuance Date (including, without limitation, the declaration and
payment of dividends on Refunding Capital Stock in excess of the dividends
declarable and payable thereon pursuant to clause (ii)); PROVIDED, HOWEVER,
that for the most recently ended four full fiscal quarters for which
internal financial statements are available immediately preceding the date
of issuance of such Designated Preferred Stock, after giving effect to such
issuance on a pro forma basis, the Company and its Restricted Subsidiaries
would have had a Fixed Charge Coverage Ratio of at least 1.75 to 1.00;
(vii) Investments in Unrestricted Subsidiaries having an aggregate fair
market value, taken together with all other Investments made pursuant to
this clause (vi) that are at that time outstanding, not to exceed $25.0
million at the time of such Investment (with the fair market value of each
Investment being measured at the time made and without giving effect to
subsequent changes in value);
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(viii) repurchases of Equity Interests deemed to occur upon exercise of
stock options if such Equity Interests represent a portion of the exercise
price of such options;
(ix) the payment of dividends on the Company's Common Stock, following
the first public offering of the Company's Common Stock after the Issuance
Date, of up to 6% per annum of the net proceeds received by the Company in
such public offering, other than public offerings with respect to the
Company's Common Stock registered on Form S-8;
(x) a Restricted Payment to pay for the repurchase, retirement or other
acquisition or retirement for value of Equity Interests of the Company in
existence on the Issuance Date and which are not held by KKR or any of their
Affiliates or the Management Group on the Issuance Date (including any
Equity Interests issued in respect of such Equity Interests as a result of a
stock split, recapitalization, merger, combination, consolidation or
otherwise, but excluding any management equity plan or stock option plan or
similar agreement), provided that the aggregate Restricted Payments made
under this clause (x) shall not exceed $80.0 million, PROVIDED FURTHER that
prior to the first anniversary of the consummation of the Merger, the
aggregate amount of Restricted Payments made under this clause (x) shall not
exceed $40.0 million, PROVIDED FURTHER that notwithstanding the foregoing
proviso, the Company shall be permitted to make Restricted Payments under
this clause (x) only if after giving effect thereto, the Company would be
permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in the first sentence of the
covenant described under "--Limitations on Incurrence of Indebtedness and
Issuance of Disqualified Stock";
(xi) Investments in Unrestricted Subsidiaries that are made with
Excluded Contributions; and
(xii) other Restricted Payments in an aggregate amount not to exceed
$25.0 million; PROVIDED, HOWEVER, that at the time of, and after giving
effect to, any Restricted Payment permitted under clauses (iv), (v), (vi),
(vii), (viii), (ix), (x), (xi) and (xii), no Default or Event of Default
shall have occurred and be continuing or would occur as a consequence
thereof; and PROVIDED FURTHER that for purposes of determining the aggregate
amount expended for Restricted Payments in accordance with clause (c) of the
immediately preceding paragraph, only the amounts expended under clauses
(i), (ii) (with respect to the payment of dividends on Refunding Capital
Stock pursuant to clause (b) thereof), (v) (only to the extent that amounts
paid pursuant to such clause are greater than amounts that would have been
paid pursuant to such clause if $5.0 million and $10.0 million were
substituted in such clause for $10.0 million and $20.0 million,
respectively), (vi), (ix) and (x) shall be included.
As of the Issuance Date, all of the Company's Subsidiaries other then
Amphenol Funding Corp. will be Restricted Subsidiaries. The Company will not
permit any Unrestricted Subsidiary to become a Restricted Subsidiary except
pursuant to the second to last sentence of the definition of "Unrestricted
Subsidiary." For purposes of designating any Restricted Subsidiary as an
Unrestricted Subsidiary, all outstanding Investments by the Company and its
Restricted Subsidiaries (except to the extent repaid) in the Subsidiary so
designated will be deemed to be Restricted Payments in an amount determined as
set forth in the last sentence of the definition of "Investments." Such
designation will only be permitted if a Restricted Payment in such amount would
be permitted at such time (whether pursuant to the first paragraph of this
covenant or under clause (vii) or (xi)) and if such Subsidiary otherwise meets
the definition of an Unrestricted Subsidiary. Unrestricted Subsidiaries will not
be subject to any of the restrictive covenants set forth in the Indenture.
LIMITATIONS ON INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED STOCK
The Indenture will provide that the Company will not, and will not permit
any of its Restricted Subsidiaries to, directly or indirectly, create, incur,
issue, assume, guarantee or otherwise become directly or indirectly liable,
contingently or otherwise, with respect to (collectively, "INCUR" and
collectively, an "INCURRENCE") any Indebtedness (including Acquired
Indebtedness) and that the Company will not issue any shares of Disqualified
Stock and will not permit any of its Restricted Subsidiaries to issue any shares
of
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preferred stock; PROVIDED, HOWEVER, that the Company may incur Indebtedness
(including Acquired Indebtedness) or issue shares of Disqualified Stock if the
Fixed Charge Coverage Ratio for the Company's and the Restricted Subsidiaries'
most recently ended four full fiscal quarters for which internal financial
statements are available immediately preceding the date on which such additional
Indebtedness is incurred or such Disqualified Stock is issued would have been at
least 1.75 to 1.00, determined on a pro forma basis (including a pro forma
application of the net proceeds therefrom), as if the additional Indebtedness
had been incurred, or the Disqualified Stock had been issued, as the case may
be, and the application of proceeds therefrom had occurred at the beginning of
such four-quarter period.
The foregoing limitations will not apply to:
(a) the incurrence by the Company or its Restricted Subsidiaries of
Indebtedness under Credit Facilities and the issuance and creation of
letters of credit and banker's acceptances thereunder (with letters of
credit and banker's acceptances being deemed to have a principal amount
equal to the face amount thereof) up to an aggregate principal amount of
$1.0 billion outstanding at any one time; PROVIDED, HOWEVER, that
Indebtedness incurred by Restricted Subsidiaries pursuant to this clause (a)
does not exceed $100.0 million (or the equivalent thereof in any other
currency) at any one time outstanding;
(b) the incurrence by the Company of Indebtedness represented by the
Notes;
(c) the Existing Indebtedness (other than Indebtedness described in
clauses (a) and (b));
(d) Indebtedness (including Capitalized Lease Obligations) incurred by
the Company or any of its Restricted Subsidiaries, to finance the purchase,
lease or improvement of property (real or personal) or equipment (whether
through the direct purchase of assets or the Capital Stock of any Person
owning such assets) in an aggregate principal amount which, when aggregated
with the principal amount of all other Indebtedness then outstanding and
incurred pursuant to this clause (d) and including all Refinancing
Indebtedness incurred to refund, refinance or replace any other Indebtedness
incurred pursuant to this clause (d), does not exceed 10% of Total Assets;
(e) Indebtedness incurred by the Company or any of its Restricted
Subsidiaries constituting reimbursement obligations with respect to letters
of credit issued in the ordinary course of business, including without
limitation letters of credit in respect of workers' compensation claims or
self-insurance, or other Indebtedness with respect to reimbursement type
obligations regarding workers' compensation claims; PROVIDED, HOWEVER, that
upon the drawing of such letters of credit or the incurrence of such
Indebtedness, such obligations are reimbursed within 30 days following such
drawing or incurrence;
(f) Indebtedness arising from agreements of the Company or a Restricted
Subsidiary providing for indemnification, adjustment of purchase price or
similar obligations, in each case, incurred or assumed in connection with
the disposition of any business, assets or a Subsidiary, other than
guarantees of Indebtedness incurred by any Person acquiring all or any
portion of such business, assets or a Subsidiary for the purpose of
financing such acquisition; PROVIDED, HOWEVER, that (i) such Indebtedness is
not reflected on the balance sheet of the Company or any Restricted
Subsidiary (contingent obligations referred to in a footnote to financial
statements and not otherwise reflected on the balance sheet will not be
deemed to be reflected on such balance sheet for purposes of this clause
(i)) and (ii) the maximum assumable liability in respect of all such
Indebtedness shall at no time exceed the gross proceeds including noncash
proceeds (the fair market value of such noncash proceeds being measured at
the time received and without giving effect to any subsequent changes in
value) actually received by the Company and its Restricted Subsidiaries in
connection with such disposition;
(g) Indebtedness of the Company to a Restricted Subsidiary; PROVIDED
that any such Indebtedness is made pursuant to an intercompany note and is
subordinated in right of payment to the Notes; PROVIDED FURTHER that any
subsequent issuance or transfer of any Capital Stock or any other event
which
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results in any such Restricted Subsidiary ceasing to be a Restricted
Subsidiary or any other subsequent transfer of any such Indebtedness (except
to the Company or another Restricted Subsidiary) shall be deemed, in each
case to be an incurrence of such Indebtedness;
(h) shares of preferred stock of a Restricted Subsidiary issued to the
Company or another Restricted Subsidiary; PROVIDED that any subsequent
issuance or transfer of any Capital Stock or any other event which results
in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or
any other subsequent transfer of any such shares of preferred stock (except
to the Company or another Restricted Subsidiary) shall be deemed, in each
case to be an issuance of shares of preferred stock;
(i) Indebtedness of a Restricted Subsidiary to the Company or another
Restricted Subsidiary; PROVIDED that (i) any such Indebtedness is made
pursuant to an intercompany note and (ii) if a Guarantor incurs such
Indebtedness from a Restricted Subsidiary that is not a Guarantor such
Indebtedness is subordinated in right of payment to the Guarantee of such
Guarantor; PROVIDED FURTHER that any subsequent transfer of any such
Indebtedness (except to the Company or another Restricted Subsidiary) shall
be deemed, in each case to be an incurrence of such Indebtedness;
(j) Hedging Obligations that are incurred in the ordinary course of
business (1) for the purpose of fixing or hedging interest rate risk with
respect to any Indebtedness that is permitted by the terms of the Indenture
to be outstanding or (2) for the purpose of fixing or hedging currency
exchange rate risk with respect to any currency exchanges;
(k) obligations in respect of performance and surety bonds and
completion guarantees provided by the Company or any Restricted Subsidiary
in the ordinary course of business;
(l) Indebtedness of any Guarantor in respect of such Guarantor's
Guarantee;
(m) Indebtedness of the Company and any of its Restricted Subsidiaries
not otherwise permitted hereunder in an aggregate principal amount, which
when aggregated with the principal amount of all other Indebtedness then
outstanding and incurred pursuant to this clause (m), does not exceed $200.0
million at any one time outstanding; PROVIDED, HOWEVER, that (i)
Indebtedness of Foreign Subsidiaries, which when aggregated with the
principal amount of all other Indebtedness of Foreign Subsidiaries then
outstanding and incurred pursuant to this clause (m), does not exceed $100.0
million (or the equivalent thereof in any other currency) at any one time
outstanding and (ii) Indebtedness of a Restricted Subsidiary organized under
the laws of the United States, any state thereof, the District of Columbia
or any territory thereof, which when aggregated with the principal amount of
all other Indebtedness of such Restricted Subsidiaries then outstanding and
incurred pursuant to this clause (m), does not exceed $100.0 million at any
one time outstanding;
(n) (i) any guarantee by the Company of Indebtedness or other
obligations of any of its Restricted Subsidiaries so long as the incurrence
of such Indebtedness incurred by such Restricted Subsidiary is permitted
under the terms of the Indenture and (ii) any Excluded Guarantee (as defined
below under "--Limitation on Guarantees of Indebtedness by Restricted
Subsidiaries") of a Restricted Subsidiary;
(o) the incurrence by the Company or any of its Restricted Subsidiaries
of Indebtedness which serves to refund, refinance or restructure any
Indebtedness incurred as permitted under the first paragraph of this
covenant and clauses (b) and (c) above, or any Indebtedness issued to so
refund, refinance or restructure such Indebtedness including additional
Indebtedness incurred to pay premiums and fees in connection therewith (the
"REFINANCING INDEBTEDNESS") prior to its respective maturity; PROVIDED,
HOWEVER, that such Refinancing Indebtedness (i) has a Weighted Average Life
to Maturity at the time such Refinancing Indebtedness is incurred which is
not less than the remaining Weighted Average Life to Maturity of
Indebtedness being refunded or refinanced, (ii) to the extent such
Refinancing Indebtedness refinances Indebtedness subordinated or pari passu
to the Notes, such Refinancing Indebtedness is subordinated or pari passu to
the Notes at least to the same extent as the
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Indebtedness being refinanced or refunded and (iii) shall not include (x)
Indebtedness of a Subsidiary that refinances Indebtedness of the Company or
(y) Indebtedness of the Company or a Restricted Subsidiary that refinances
Indebtedness of an Unrestricted Subsidiary; and PROVIDED FURTHER that
subclauses (i) and (ii) of this clause (o) will not apply to any refunding
or refinancing of any Senior Indebtedness; and
(p) Indebtedness or Disqualified Stock of Persons that are acquired by
the Company or any of its Restricted Subsidiaries or merged into a
Restricted Subsidiary in accordance with the terms of the Indenture;
provided that such Indebtedness or Disqualified Stock is not incurred in
contemplation of such acquisition or merger; and PROVIDED FURTHER that after
giving effect to such acquisition, either (i) the Company would be permitted
to incur at least $1.00 of additional Indebtedness pursuant to the Fixed
Charge Coverage Ratio test set forth in the first sentence of this covenant
or (ii) the Fixed Charge Coverage Ratio is greater than immediately prior to
such acquisition.
For purposes of determining compliance with this covenant, in the event that
an item of Indebtedness meets the criteria of more than one of the categories of
permitted Indebtedness described in clauses (a) through (p) above or is entitled
to be incurred pursuant to the first paragraph of this covenant, the Company
shall, in its sole discretion, classify such item of Indebtedness in any manner
that complies with this covenant and such item of Indebtedness will be treated
as having been incurred pursuant to only one of such clauses or pursuant to the
first paragraph hereof. 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 for purposes of this covenant.
LIENS
The Indenture will provide that the Company will not, and will not permit
any of its Restricted Subsidiaries to, directly or indirectly create, incur,
assume or suffer to exist any Lien that secures obligations under any Pari Passu
Indebtedness or Subordinated Indebtedness on any asset or property of the
Company or such Restricted Subsidiary, or any income or profits therefrom, or
assign or convey any right to receive income therefrom, unless the Notes are
equally and ratably secured with the obligations so secured or until such time
as such obligations are no longer secured by a Lien.
The Indenture will provide that no Guarantor will directly or indirectly
create, incur, assume or suffer to exist any Lien that secures obligations under
any Pari Passu Indebtedness or Subordinated Indebtedness of such Guarantor on
any asset or property of such Guarantor or any income or profits therefrom, or
assign or convey any right to receive income therefrom, unless the Guarantee of
such Guarantor is equally and ratably secured with the obligations so secured or
until such time as such obligations are no longer secured by a Lien.
MERGER, CONSOLIDATION, OR SALE OF ALL OR SUBSTANTIALLY ALL ASSETS
The Indenture will provide that the Company may not consolidate or merge
with or into or wind up into (whether or not the Company is the surviving
corporation), or sell, assign, transfer, lease, convey or otherwise dispose of
all or substantially all of its properties or assets in one or more related
transactions, to any Person unless (i) the Company is the surviving corporation
or the Person formed by or surviving any such consolidation or merger (if other
than the Company) or to which such sale, assignment, transfer, lease, conveyance
or other disposition will have been made is a corporation organized or existing
under the laws of the United States, any state thereof, the District of
Columbia, or any territory thereof (the Company or such Person, as the case may
be, being herein called the "SUCCESSOR COMPANY"); (ii) the Successor Company (if
other than the Company) expressly assumes all the obligations of the Company
under the Indenture and the Notes pursuant to a supplemental indenture or other
documents or instruments in form reasonably satisfactory to the Trustee; (iii)
immediately after such transaction no Default or Event of Default shall have
occurred and be continuing; (iv) immediately after giving pro forma effect to
such transaction, as if such transaction had occurred at the beginning of the
applicable four-
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quarter period, (A) the Successor Company would be permitted to incur at least
$1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio
test set forth in the first sentence of the covenant described under
"--Limitations on Incurrence of Indebtedness and Issuance of Disqualified Stock"
or (B) the Fixed Charge Coverage Ratio for the Successor Company and its
Restricted Subsidiaries would be greater than such Ratio for the Company and its
Restricted Subsidiaries immediately prior to such transaction; (v) each
Guarantor, if any, unless it is the other party to the transactions described
above, shall have by supplemental indenture confirmed that its Guarantee shall
apply to such Person's obligations under the Indenture and the Notes; and (vi)
the Company shall have delivered to the Trustee an Officers' Certificate and an
opinion of counsel, each stating that such consolidation, merger or transfer and
such supplemental indenture (if any) comply with the Indenture. The Successor
Company will succeed to, and be substituted for, the Company under the Indenture
and the Notes. Notwithstanding the foregoing clause (iv), (a) any Restricted
Subsidiary may consolidate with, merge into or transfer all or part of its
properties and assets to the Company and (b) the Company may merge with an
Affiliate incorporated solely for the purpose of reincorporating the Company in
another State of the United States so long as the amount of Indebtedness of the
Company and its Restricted Subsidiaries is not increased thereby.
Each Guarantor, if any, shall not, and the Company will not permit a
Guarantor to, consolidate or merge with or into or wind up into (whether or not
such Guarantor is the surviving corporation), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions to, any Person unless (i) such
Guarantor is the surviving corporation or the Person formed by or surviving any
such consolidation or merger (if other than such Guarantor) or to which such
sale, assignment, transfer, lease, conveyance or other disposition will have
been made is a corporation organized or existing under the laws of the United
States, any state thereof, the District of Columbia, or any territory thereof
(such Guarantor or such Person, as the case may be, being herein called the
"SUCCESSOR GUARANTOR"); (ii) the Successor Guarantor (if other than such
Guarantor) expressly assumes all the obligations of such Guarantor under the
Indenture and such Guarantor's Guarantee pursuant to a supplemental indenture or
other documents or instruments in form reasonably satisfactory to the Trustee;
(iii) immediately after such transaction no Default or Event of Default shall
have occurred and be continuing; and (iv) the Guarantor shall have delivered or
caused to be delivered to the Trustee an Officers' Certificate and an opinion of
counsel, each stating that such consolidation, merger or transfer and such
supplemental indenture (if any) comply with the Indenture. The Successor
Guarantor will succeed to, and be substituted for, such Guarantor under the
Indenture and such Guarantor's Guarantee.
TRANSACTIONS WITH AFFILIATES
The Indenture will provide that the Company will not, and will not permit
any of its Restricted Subsidiaries to, make any payment to, or sell, lease,
transfer or otherwise dispose of any of its properties or assets to, or purchase
any property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate (each of the foregoing, an "AFFILIATE TRANSACTION")
involving aggregate consideration in excess of $5.0 million, unless (a) such
Affiliate Transaction is on terms that are not materially less favorable to the
Company or the relevant Restricted Subsidiary than those that would have been
obtained in a comparable transaction by the Company or such Restricted
Subsidiary with an unrelated Person and (b) the Company delivers to the Trustee
with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $10.0 million, a
resolution adopted by the majority of the Board of Directors approving such
Affiliate Transaction and set forth in an Officers' Certificate certifying that
such Affiliate Transaction complies with clause (a) above.
The foregoing provisions will not apply to the following: (i) transactions
between or among the Company and/or any of its Restricted Subsidiaries; (ii)
Restricted Payments permitted by the provisions of the Indenture described above
under the covenant "--Limitation on Restricted Payments"; (iii) the payment of
customary annual management, consulting and advisory fees and related expenses
to KKR and its Affiliates; (iv) the payment of reasonable and customary fees
paid to, and indemnity provided on behalf
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of, officers, directors, employees or consultants of the Company or any
Restricted Subsidiary; (v) payments by the Company or any of its Restricted
Subsidiaries to KKR and its Affiliates made for any financial advisory,
financing, underwriting or placement services or in respect of other investment
banking activities, including, without limitation, in connection with
acquisitions or divestitures which payments are approved by a majority of the
Board of Directors of the Company in good faith; (vi) transactions in which the
Company or any of its Restricted Subsidiaries, as the case may be, delivers to
the Trustee a letter from an Independent Financial Advisor stating that such
transaction is fair to the Company or such Restricted Subsidiary from a
financial point of view or meets the requirements of clause (a) of the preceding
paragraph; (vii) payments or loans to employees or consultants which are
approved by a majority of the Board of Directors of the Company in good faith;
(viii) any agreement as in effect as of the Issuance Date or any amendment
thereto (so long as any such amendment is not disadvantageous to the holders of
the Notes in any material respect) or any transaction contemplated thereby; (ix)
the existence of, or the performance by the Company or any of its Restricted
Subsidiaries of its obligations under the terms of, any stockholders agreement
(including any registration rights agreement or purchase agreement related
thereto) to which it is a party as of the Issuance Date and any similar
agreements which it may enter into thereafter; PROVIDED, HOWEVER, that the
existence of, or the performance by the Company or any of its Restricted
Subsidiaries of obligations under any future amendment to any such existing
agreement or under any similar agreement entered into after the Issuance Date
shall only be permitted by this clause (ix) to the extent that the terms of any
such amendment or new agreement are not otherwise disadvantageous to the Holders
of the Notes in any material respect; (x) the payment of all fees and expenses
related to the Merger and the Financings; (xi) transactions with customers,
clients, suppliers, or purchasers or sellers of goods or services, in each case
in the ordinary course of business and otherwise in compliance with the terms of
the Indenture which are fair to the Company or its Restricted Subsidiaries, in
the reasonable determination of the Board of Directors of the Company or the
senior management thereof, or are on terms at least as favorable as might
reasonably have been obtained at such time from an unaffiliated party; and (xii)
sales of accounts receivable, or participations therein, in connection with any
Receivables Facility.
DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES
The Indenture will provide that the Company will not, and will not permit
any of its Restricted Subsidiaries to, directly or indirectly, create or
otherwise cause or suffer to exist or become effective any consensual
encumbrance or consensual restriction on the ability of any Restricted
Subsidiary to:
(a)(i) pay dividends or make any other distributions to the Company or
any of its Restricted Subsidiaries (1) on its Capital Stock or (2) with
respect to any other interest or participation in, or measured by, its
profits, or (ii) pay any Indebtedness owed to the Company or any of its
Restricted Subsidiaries;
(b) make loans or advances to the Company or any of its Restricted
Subsidiaries; or
(c) sell, lease or transfer any of its properties or assets to the
Company or any of its Restricted Subsidiaries; except (in each case) for
such encumbrances or restrictions existing under or by reason of:
(1) contractual encumbrances or restrictions in effect on the
Issuance Date, including pursuant to the Senior Credit Facility and its
related documentation;
(2) the Indenture and the Notes;
(3) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions of the nature discussed in
clause (c) above on the property so acquired;
(4) applicable law or any applicable rule, regulation or order;
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(5) any agreement or other instrument of a Person acquired by the
Company or any Restricted Subsidiary in existence at the time of such
acquisition (but not created in contemplation thereof), which encumbrance
or restriction is not applicable to any Person, or the properties or
assets of any Person, other than the Person, or the property or assets of
the Person, so acquired;
(6) contracts for the sale of assets, including, without limitation
customary restrictions with respect to a Subsidiary pursuant to an
agreement that has been entered into for the sale or disposition of all
or substantially all of the Capital Stock or assets of such Subsidiary;
(7) secured Indebtedness otherwise permitted to be incurred pursuant
to the covenants described under "Limitations on Incurrence of
Indebtedness and Issuance of Disqualified Stock" and "Liens" that limit
the right of the debtor to dispose of the assets securing such
Indebtedness;
(8) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of
business;
(9) other Indebtedness of Restricted Subsidiaries permitted to be
incurred subsequent to the Issuance Date pursuant to the provisions of
the covenant described under "--Limitations on Incurrence of Indebtedness
and Issuance of Disqualified Stock";
(10) customary provisions in joint venture agreements and other
similar agreements entered into in the ordinary course of business;
(11) customary provisions contained in leases and other agreements
entered into in the ordinary course of business;
(12) restrictions created in connection with any Receivables Facility
that, in the good faith determination of the Board of Directors of the
Company, are necessary or advisable to effect such Receivables Facility;
or
(13) any encumbrances or restrictions of the type referred to in
clauses (a), (b) and (c) above imposed by any amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements
or refinancings of the contracts, instruments or obligations referred to
in clauses (1) through (11) above, provided that such amendments,
modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings are, in the good faith judgment
of the Company's Board of Directors, no more restrictive with respect to
such dividend and other payment restrictions than those contained in the
dividend or other payment restrictions prior to such amendment,
modification, restatement, renewal, increase, supplement, refunding,
replacement or refinancing.
LIMITATION ON GUARANTEES OF INDEBTEDNESS BY RESTRICTED SUBSIDIARIES
(a) The Indenture will provide that the Company will not permit any
Restricted Subsidiary to guarantee the payment of any Indebtedness of the
Company or any Indebtedness of any other Restricted Subsidiary unless (i) such
Restricted Subsidiary simultaneously executes and delivers a supplemental
indenture to the Indenture providing for a Guarantee of payment of the Notes by
such Restricted Subsidiary except that (A) if the Notes are subordinated in
right of payment to such Indebtedness, the Guarantee under the supplemental
indenture shall be subordinated to such Restricted Subsidiary's guarantee with
respect to such Indebtedness substantially to the same extent as the Notes are
subordinated to such Indebtedness under the Indenture and (B) if such
Indebtedness is by its express terms subordinated in right of payment to the
Notes, any such guarantee of such Restricted Subsidiary with respect to such
Indebtedness shall be subordinated in right of payment to such Restricted
Subsidiary's Guarantee with respect to the Notes substantially to the same
extent as such Indebtedness is subordinated to the Notes; (ii) such Restricted
Subsidiary waives and will not in any manner whatsoever claim or take the
benefit or advantage of, any rights of reimbursement, indemnity or subrogation
or any other rights against
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the Company or any other Restricted Subsidiary as a result of any payment by
such Restricted Subsidiary under its Guarantee; and (iii) such Restricted
Subsidiary shall deliver to the Trustee an opinion of counsel to the effect that
(A) such Guarantee of the Notes has been duly executed and authorized and (B)
such Guarantee of the Notes constitutes a valid, binding and enforceable
obligation of such Restricted Subsidiary, except insofar as enforcement thereof
may be limited by bankruptcy, insolvency or similar laws (including, without
limitation, all laws relating to fraudulent transfers) and except insofar as
enforcement thereof is subject to general principles of equity; PROVIDED that
this paragraph (a) shall not be applicable to any guarantee of any Restricted
Subsidiary (x) that (A) existed at the time such Person became a Restricted
Subsidiary of the Company and (B) was not incurred in connection with, or in
contemplation of, such Person becoming a Restricted Subsidiary of the Company or
(y) that guarantees the payment of Obligations of the Company or any Restricted
Subsidiary under the Senior Credit Facility or any other bank facility which is
designated as Senior Indebtedness and any refunding, refinancing or replacement
thereof, in whole or in part, PROVIDED that such refunding, refinancing or
replacement thereof constitutes Senior Indebtedness and is not incurred pursuant
to a registered offering of securities under the Securities Act or a private
placement of securities (including under Rule 144A) pursuant to an exemption
from the registration requirements of the Securities Act, which private
placement provides for registration rights under the Securities Act (any
guarantee excluded by operations of this clause (y) being an "EXCLUDED
GUARANTEE").
(b) Notwithstanding the foregoing and the other provisions of the Indenture,
any Guarantee by a Restricted Subsidiary of the Notes shall provide by its terms
that it shall be automatically and unconditionally released and discharged upon
(i) any sale, exchange or transfer, to any Person not an Affiliate of the
Company, of all of the Company's Capital Stock in, or all or substantially all
the assets of, such Restricted Subsidiary (which sale, exchange or transfer is
not prohibited by the Indenture) or (ii) the release or discharge of the
guarantee which resulted in the creation of such Guarantee, except a discharge
or release by or as a result of payment under such guarantee.
LIMITATION ON OTHER SENIOR SUBORDINATED INDEBTEDNESS
The Indenture will provide that the Company will not, and will not permit
any Guarantor to, directly or indirectly, incur any Indebtedness (including
Acquired Indebtedness) that is subordinate in right of payment to any
Indebtedness of the Company or any Indebtedness of any Guarantor, as the case
may be, unless such Indebtedness is either (a) pari passu in right of payment
with the Notes or such Guarantor's Guarantee, as the case may be or (b)
subordinate in right of payment to the Notes, or such Guarantor's Guarantee, as
the case may be, in the same manner and at least to the same extent as the Notes
are subordinate to Senior Indebtedness or such Guarantor's Guarantee is
subordinate to such Guarantor's Senior Indebtedness, as the case may be.
REPORTS AND OTHER INFORMATION
Notwithstanding that the Company may not be subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act or otherwise report on
an annual and quarterly basis on forms provided for such annual and quarterly
reporting pursuant to rules and regulations promulgated by the Securities and
Exchange Commission (the "COMMISSION"), the Indenture will require the Company
to file with the Commission (and provide the Trustee and Holders with copies
thereof, without cost to each Holder, within 15 days after it files them with
the Commission), (a) within 90 days after the end of each fiscal year, annual
reports on Form 1O-K (or any successor or comparable form) containing the
information required to be contained therein (or required in such successor or
comparable form); (b) within 45 days after the end of each of the first three
fiscal quarters of each fiscal year, reports on Form 1O-Q (or any successor or
comparable form); (c) promptly from time to time after the occurrence of an
event required to be therein reported, such other reports on Form 8-K (or any
successor or comparable form); and (d) any other information, documents and
other reports which the Company would be required to file with the Commission if
it were subject to Section 13 or 15(d) of the Exchange Act; PROVIDED, HOWEVER,
the Company
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shall not be so obligated to file such reports with the Commission if the
Commission does not permit such filing, in which event the Company will make
available such information to prospective purchasers of Notes, in addition to
providing such information to the Trustee and the Holders, in each case within
15 days after the time the Company would be required to file such information
with the Commission, if it were subject to Sections 13 or 15(d) of the Exchange
Act.
EVENTS OF DEFAULT AND REMEDIES
The following events constitute Events of Default under the Indenture:
(i) default in payment when due and payable, upon redemption,
acceleration or otherwise, of principal of, or premium on, if any, the Notes
whether or not such payment shall be prohibited by the subordination
provisions relating to the Notes;
(ii) default for 30 days or more in the payment when due of interest on
or with respect to the Notes whether or not such payment shall be prohibited
by the subordination provisions relating to the Notes;
(iii) failure by the Company or any Guarantor for 30 days after receipt
of written notice given by the Trustee or the holders of at least 30% in
principal amount of the Notes then outstanding to comply with any of its
other agreements in the Indenture or the Notes;
(iv) default under any mortgage, indenture or instrument under which
there is issued or by which there is secured or evidenced any Indebtedness
for money borrowed by the Company or any of its Restricted Subsidiaries or
the payment of which is guaranteed by the Company or any of its Restricted
Subsidiaries (other than Indebtedness owed to the Company or a Restricted
Subsidiary), whether such Indebtedness or guarantee now exists or is created
after the Issuance Date, if both (A) such default either (1) results from
the failure to pay any such Indebtedness at its stated final maturity (after
giving effect to any applicable grace periods) or (2) relates to an
obligation other than the obligation to pay principal of any such
Indebtedness at its stated final maturity and results in the holder or
holders of such Indebtedness causing such Indebtedness to become due prior
to its stated maturity and (B) the principal amount of such Indebtedness,
together with the principal amount of any other such Indebtedness in default
for failure to pay principal at stated final maturity (after giving effect
to any applicable grace periods), or the maturity of which has been so
accelerated, aggregate $25.0 million or more at any one time outstanding;
(v) failure by the Company or any of its Significant Subsidiaries to pay
final judgments aggregating in excess of $25.0 million, which final
judgments remain unpaid, undischarged and unstayed for a period of more than
60 days after such judgment becomes final, and in the event such judgment is
covered by insurance, an enforcement proceeding has been commenced by any
creditor upon such judgment or decree which is not promptly stayed;
(vi) certain events of bankruptcy or insolvency with respect to the
Company or any of its Significant Subsidiaries; or
(vii) any Guarantee shall for any reason cease to be in full force and
effect or be declared null and void or any responsible officer of the
Company or any Guarantor denies that it has any further liability under any
Guarantee or gives notice to such effect (other than by reason of the
termination of the Indenture or the release of any such Guarantee in
accordance with the Indenture).
If any Event of Default (other than of a type specified in clause (vi)
above) occurs and is continuing under the Indenture, the Trustee or the Holders
of at least 30% in principal amount of the then outstanding Notes may declare
the principal, premium, if any, interest and any other monetary obligations on
all the then outstanding Notes to be due and payable immediately; PROVIDED,
HOWEVER, that, so long as any Indebtedness permitted to be incurred pursuant to
the Senior Credit Facility shall be outstanding, no such acceleration shall be
effective until the earlier of (i) acceleration of any such Indebtedness under
the
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Senior Credit Facility or (ii) five business days after the giving of written
notice to the Company and the administrative agent under the Senior Credit
Facility of such acceleration. Upon the effectiveness of such declaration, such
principal and interest will be due and payable immediately. Notwithstanding the
foregoing, in the case of an Event of Default arising under clause (vi) of the
first paragraph of this section, all outstanding Notes will become due and
payable without further action or notice. Holders of the Notes may not enforce
the Indenture or the Notes except as provided in the Indenture. Subject to
certain limitations, Holders of a majority in principal amount of the then
outstanding Notes may direct the Trustee in its exercise of any trust or power.
The Indenture provides that the Trustee may withhold from Holders of Notes
notice of any continuing Default or Event of Default (except a Default or Event
of Default relating to the payment of principal, premium, if any, or interest)
if it determines that withholding notice is in their interest.
The Indenture provides that the Holders of a majority in aggregate principal
amount of the then outstanding Notes issued thereunder by notice to the Trustee
may on behalf of the Holders of all of such Notes waive any existing Default or
Event of Default and its consequences under the Indenture except a continuing
Default or Event of Default in the payment of interest on, premium, if any, or
the principal of any such Note held by a non-consenting Holder. In the event of
any Event of Default specified in clause (iv) above, 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 of the Notes,
if within 20 days after such Event of Default arose (x) the Indebtedness or
guarantee that is the basis for such Event of Default has been discharged, or
(y) the holders thereof have rescinded or waived the acceleration, notice or
action (as the case may be) giving rise to such Event of Default, or (z) if the
default that is the basis for such Event of Default has been cured.
The Indenture provides that the Company is required to deliver to the
Trustee annually a statement regarding compliance with the Indenture, and the
Company is required, within five Business Days, upon becoming aware of any
Default or Event of Default or any default under any document, instrument or
agreement representing Indebtedness of the Company or any Guarantor, to deliver
to the Trustee a statement specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of the Company
or any Guarantor, shall have any liability for any obligations of the Company or
the Guarantors under the Notes, the Guarantees or the Indenture or for any claim
based on, in respect of, or by reason of such obligations or their creation.
Each Holder of Notes by accepting a Note waives and releases all such liability.
The waiver and release are part of the consideration for issuance of the Notes.
Such waiver may not be effective to waive liabilities under the federal
securities laws and it is the view of the Commission that such a waiver is
against public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The obligations of the Company and the Guarantors, if any, under the
Indenture will terminate (other than certain obligations) and will be released
upon payment in full of all of the Notes. The Company may, at its option and at
any time, elect to have all of its obligations discharged with respect to the
outstanding Notes and have each Guarantor's obligation discharged with respect
to its Guarantee ("LEGAL DEFEASANCE") and cure all then existing Events of
Default except for (i) the rights of Holders of outstanding Notes to receive
payments in respect of the principal of, premium, if any, and interest on such
Notes when such payments are due solely out of the trust created pursuant to the
Indenture, (ii) the Company's obligations with respect to Notes concerning
issuing temporary Notes, registration of such Notes, mutilated, destroyed, lost
or stolen Notes and the maintenance of an office or agency for payment and money
for security payments held in trust, (iii) the rights, powers, trusts, duties
and immunities of the Trustee, and the Company's obligations in connection
therewith and (iv) the Legal Defeasance provisions of the Indenture.
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In addition, the Company may, at its option and at any time, elect to have the
obligations of the Company and each Guarantor released with respect to certain
covenants that are described in the Indenture ("COVENANT DEFEASANCE") and
thereafter any omission to comply with such obligations shall not constitute a
Default or Event of Default with respect to the Notes. In the event Covenant
Defeasance occurs, certain events (not including non-payment on other
indebtedness, bankruptcy, receivership, rehabilitation and insolvency events)
described under "Events of Default" will no longer constitute an Event of
Default with respect to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance with
respect to the Notes:
(i) the Company must irrevocably deposit with the Trustee, in trust, for
the benefit of the Holders of the Notes, cash in U.S. dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent
public accountants, to pay the principal of, premium, if any, and interest
due on the outstanding Notes on the stated maturity date or on the
applicable redemption date, as the case may be, of such principal, premium,
if any, or interest on the outstanding Notes;
(ii) in the case of Legal Defeasance, the Company shall have delivered
to the Trustee an opinion of counsel in the United States reasonably
acceptable to the Trustee confirming that, subject to customary assumptions
and exclusions, (A) the Company has received from, or there has been
published by, the United States Internal Revenue Service a ruling or (B)
since the Issuance Date, there has been a change in the applicable U.S.
federal income tax law, in either case to the effect that, and based thereon
such opinion of counsel in the United States shall confirm that, subject to
customary assumptions and exclusions, the Holders of the outstanding Notes
will not recognize income, gain or loss for U.S. federal income tax purposes
as a result of such Legal Defeasance and will be subject to U.S. federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not occurred;
(iii) in the case of Covenant Defeasance, the Company shall have
delivered to the Trustee an opinion of counsel in the United States
reasonably acceptable to the Trustee confirming that, subject to customary
assumptions and exclusions, the Holders of the outstanding Notes will not
recognize income, gain or loss for U.S. federal income tax purposes as a
result of such Covenant Defeasance and will be subject to such 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;
(iv) no Default or Event of Default shall have occurred and be
continuing with respect to certain Events of Default on the date of such
deposit;
(v) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any material
agreement or instrument (other than the Indenture) to which, the Company or
any Guarantor is a party or by which the Company or any Guarantor is bound;
(vi) the Company shall have delivered to the Trustee an opinion of
counsel to the effect that, as of the date of such opinion and subject to
customary assumptions and exclusions following the deposit, the trust funds
will not be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally under
any applicable U.S. federal or state law, and that the Trustee has a
perfected security interest in such trust funds for the ratable benefit of
the Holders;
(vii) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of defeating, hindering, delaying or defrauding any creditors of the
Company or any Guarantor or others; and
(viii) the Company shall have delivered to the Trustee an Officers'
Certificate and an opinion of counsel in the United States (which opinion of
counsel may be subject to customary assumptions and
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exclusions) each stating that all conditions precedent provided for or
relating to the Legal Defeasance or the Covenant Defeasance, as the case may
be, have been complied with.
SATISFACTION AND DISCHARGE
The Indenture will be discharged and will cease to be of further effect as
to all Notes issued thereunder, when (a) either (i) all such Notes theretofore
authenticated and delivered (except lost, stolen or destroyed Notes which have
been replaced or paid and Notes for whose payment money has theretofore been
deposited in trust and thereafter repaid to the Company) have been delivered to
the Trustee for cancellation; or (ii) all such Notes not theretofore delivered
to such Trustee for cancellation have become due and payable by reason of the
making of a notice of redemption or otherwise or will become due and payable
within one year and the Company or any Guarantor has irrevocably deposited or
caused to be deposited with such Trustee as trust funds in trust solely for the
benefit of the Holders, cash in U.S. dollars, non-callable Government
Securities, or a combination thereof, in such amounts as will be sufficient
without consideration of any reinvestment of interest, to pay and discharge the
entire indebtedness on such Notes not theretofore delivered to the Trustee for
cancellation for principal, premium, if any, and accrued interest to the date of
maturity or redemption; (b) no Default or Event of Default with respect to the
Indenture or the Notes shall have occurred and be continuing on the date of such
deposit or shall occur as a result of such deposit and such deposit will not
result in a breach or violation of, or constitute a default under, any other
instrument to which the Company or any Guarantor is a party or by which the
Company or any Guarantor is bound; (c) the Company or any Guarantor has paid or
caused to be paid all sums payable by it under such Indenture; and (d) the
Company has delivered irrevocable instructions to the Trustee under such
Indenture to apply the deposited money toward the payment of such Notes at
maturity or the redemption date, as the case may be. In addition, the Company
must deliver an Officers' Certificate and an opinion of counsel to the Trustee
stating that all conditions precedent to satisfaction and discharge have been
satisfied.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange Notes in accordance with the Indenture.
The Registrar and the Trustee may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and the Company may
require a Holder to pay any taxes and fees required by law or permitted by the
Indenture. The Company is not required to transfer or exchange any Note selected
for redemption. Also, the Company is not required to transfer or exchange any
Note for a period of 15 days before a selection of Notes to be redeemed.
The registered Holder of a Note will be treated as the owner of it for all
purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the Indenture, any
Guarantee and the Notes issued thereunder may be amended or supplemented with
the consent of the Holders of at least a majority in principal amount of the
Notes then outstanding (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, Notes),
and any existing Default or compliance with any provision of the Indenture or
the Notes may be waived with the consent of the Holders of a majority in
principal amount of the then outstanding Notes (including consents obtained in
connection with a tender offer or exchange offer for Notes).
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The Indenture will provide that without the consent of each Holder affected,
an amendment or waiver may not (with respect to any Notes held by a
non-consenting Holder of the Notes): (i) reduce the principal amount of Notes
whose Holders must consent to an amendment, supplement or waiver, (ii) reduce
the principal of or change the fixed maturity of any such Note or alter or waive
the provisions with respect to the redemption of the Notes (other than
provisions relating to the covenants described above under the caption
"--Repurchase at the Option of Holders"), (iii) reduce the rate of or change the
time for payment of interest on any Note, (iv) waive a Default or Event of
Default in the payment of principal of or premium, if any, or interest on the
Notes (except a rescission of acceleration of the Notes by the Holders of at
least a majority in aggregate principal amount of such Notes and a waiver of the
payment default that resulted from such acceleration), or in respect of a
covenant or provision contained in the Indenture or any Guarantee which cannot
be amended or modified without the consent of all Holders, (v) make any Note
payable in money other than that stated in such Notes, (vi) make any change in
the provisions of the Indenture relating to waivers of past Defaults or the
rights of Holders of Notes to receive payments of principal of or premium, if
any, or interest on the Notes, (vii) make any change in the foregoing amendment
and waiver provisions, (viii) impair the right of any Holder of the Notes to
receive payment of principal of, or interest on such Holder's Notes on or after
the due dates therefore or to institute suit for the enforcement of any payment
on or with respect to such Holder's Notes or (ix) make any change in the
subordination provisions of the Indenture that would adversely affect the
Holders of the Notes.
The Indenture will provide that, notwithstanding the foregoing, without the
consent of any Holder of Notes, the Company, any Guarantor (with respect to a
Guarantee or the Indenture to which it is a party) and the Trustee may amend or
supplement the Indenture, any Guarantee or the Notes (i) to cure any ambiguity,
defect or inconsistency, (ii) to provide for uncertificated Notes in addition to
or in place of certificated Notes, (iii) to comply with the covenant relating to
mergers, consolidations and sales of assets, (iv) to provide for the assumption
of the Company's or any Guarantor's obligations to Holders of such Notes, (v) to
make any change that would provide any additional rights or benefits to the
Holders of Notes or that does not adversely affect the legal rights under the
Indenture of any such Holder, (vi) to add covenants for the benefit of the
Holders or to surrender any right or power conferred upon the Company, (vii) to
comply with requirements of the Commission in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act, (viii) to evidence
and provide for the acceptance of appointment under the Indenture by a successor
Trustee pursuant to the requirements thereof, or (ix) to add a Guarantor under
the Indenture.
The consent of the Holders is not necessary under the Indenture to approve
the particular form of any proposed amendment. It is sufficient if such consent
approves the substance of the proposed amendment.
CONCERNING THE TRUSTEE
The Indenture contains 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 in respect of any such
claim as security or otherwise. The Trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the Commission for permission to continue
or resign.
The Indenture will provide that the Holders of a majority in principal
amount of the outstanding Notes issued thereunder will have the right to direct
the time, method and place of conducting any proceeding for exercising any
remedy available to the Trustee, subject to certain exceptions. The Indenture
will provide that in case an Event of Default shall occur (which shall not be
cured), the Trustee will be required, in the exercise of its power, to use the
degree of care of a prudent person in the conduct of his own affairs. Subject to
such provisions, the Trustee will be under no obligation to exercise any of its
rights or powers under the Indenture at the request of any Holder of such Notes,
unless such Holder shall have offered to the Trustee security and indemnity
satisfactory to it against any loss, liability or expense.
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GOVERNING LAW
The Indenture, the Notes and the Guarantees, if any, will be, subject to
certain exceptions, governed by and construed in accordance with the internal
laws of the State of New York, without regard to the choice of law rules
thereof.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided. For
purposes of the Indenture, unless otherwise specifically indicated, the term
"consolidated" with respect to any Person refers to such Person consolidated
with its Restricted Subsidiaries, and excludes from such consolidation any
Unrestricted Subsidiary as if such Unrestricted Subsidiary were not an Affiliate
of such Person.
"ACQUIRED INDEBTEDNESS" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Restricted Subsidiary of such specified Person,
including, without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Restricted Subsidiary of such specified Person, and (ii) Indebtedness secured by
a Lien encumbering any asset acquired by such specified Person.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; PROVIDED, HOWEVER,
that beneficial ownership of 10% or more of the voting securities of a Person
shall be deemed to be control.
"ASSET SALE" means (i) the sale, conveyance, transfer or other disposition
(whether in a single transaction or a series of related transactions) of
property or assets (including by way of a sale and leaseback) of the Company or
any Restricted Subsidiary (each referred to in this definition as a
"DISPOSITION") or (ii) the issuance or sale of Equity Interests of any
Restricted Subsidiary (whether in a single transaction or a series of related
transactions), in each case, other than: (a) a disposition of Cash Equivalents
or Investment Grade Securities or obsolete equipment in the ordinary course of
business; (b) the disposition of all or substantially all of the assets of the
Company in a manner permitted pursuant to the provisions described above under
"--Merger, Consolidation or Sale of All or Substantially All Assets" or any
disposition that constitutes a Change of Control pursuant to the Indenture; (c)
any Restricted Payment that is permitted to be made, and is made, under the
first paragraph of the covenant described above under "Limitation on Restricted
Payments;" (d) any disposition of assets with an aggregate fair market value of
less than $1.0 million; (e) any disposition of property or assets by a
Restricted Subsidiary to the Company or by the Company or a Restricted
Subsidiary to a Wholly Owned Restricted Subsidiary; (f) any exchange of like
property pursuant to Section 1031 of the Internal Revenue Code of 1986, as
amended, for use in a Similar Business; (g) any financing transaction with
respect to property built or acquired by the Company or any Restricted
Subsidiary after the Issuance Date including, without limitation,
sale-leasebacks and asset securitizations; (h) foreclosures on assets; (i) sales
of accounts receivable, or participations therein, in connection with any
Receivables Facility; and (j) any sale of Equity Interests in, or Indebtedness
or other securities of, an Unrestricted Subsidiary.
"CAPITALIZED LEASE OBLIGATION" means, at the time any determination thereof
is to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized and reflected as a liability on
a balance sheet (excluding the footnotes thereto) in accordance with GAAP.
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"CAPITAL STOCK" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or limited) and
(iv) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of, the
issuing Person.
"CASH EQUIVALENTS" means (i) U. S. dollars, (ii) securities issued or
directly and fully guaranteed or insured by the U. S. Government or any agency
or instrumentality thereof, (iii) certificates of deposit, time deposits and
eurodollar time deposits with maturities of one year or less from the date of
acquisition, bankers' acceptances with maturities not exceeding one year and
overnight bank deposits, in each case with any commercial bank having capital
and surplus in excess of $500.0 million, (iv) repurchase obligations for
underlying securities of the types described in clauses (ii) and (iii) entered
into with any financial institution meeting the qualifications specified in
clause (iii) above, (v) commercial paper rated A-1 or the equivalent thereof by
Moody's or S&P and in each case maturing within one year after the date of
acquisition, (vi) investment funds investing 95% of their assets in securities
of the types described in clauses (i)-(v) above, (vii) readily marketable direct
obligations issued by any state of the United States of America or any political
subdivision thereof having one of the two highest rating categories obtainable
from either Moody's or S&P and (viii) Indebtedness or preferred stock issued by
Persons with a rating of "A" or higher from S&P or "A2" or higher from Moody's.
"CHANGE OF CONTROL" means the occurrence of any of the following:
(i) the sale, lease or transfer, in one or a series of related
transactions, of all or substantially all of the assets of the Company and
its Subsidiaries, taken as a whole; or
(ii) the Company becomes aware of (by way of a report or any other
filing pursuant to Section 13(d) of the Exchange Act, proxy, vote, written
notice or otherwise) the acquisition by any Person or group (within the
meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any
successor provision), including any group acting for the purpose of
acquiring, holding or disposing of securities (within the meaning of Rule
13d-5(b)(1) under the Exchange Act), other than the Permitted Holders and
their Related Parties, in a single transaction or in a related series of
transactions, by way of merger, consolidation or other business combination
or purchase of beneficial ownership (within the meaning of Rule 13d-3 under
the Exchange Act, or any successor provision) of 50% or more of the total
voting power of the Voting Stock of the Company.
"CONSOLIDATED DEPRECIATION AND AMORTIZATION EXPENSE" means with respect to
any Person for any period, the total amount of depreciation and amortization
expense of such Person and its Restricted Subsidiaries for such period on a
consolidated basis and otherwise determined in accordance with GAAP.
"CONSOLIDATED INTEREST EXPENSE" means, with respect to any period, the sum,
without duplication, of: (a) consolidated interest expense of such Person and
its Restricted Subsidiaries for such period, to the extent such expense was
deducted in computing Consolidated Net Income (including amortization of
original issue discount, non-cash interest payments, the interest component of
Capitalized Lease Obligations, and net payments and receipts (if any) pursuant
to Hedging Obligations to the extent included in Consolidated Interest Expense,
excluding amortization of deferred financing fees) and (b) consolidated
capitalized interest of such Person and its Restricted Subsidiaries for such
period, whether paid or accrued; PROVIDED, HOWEVER, that Receivables Fees shall
be deemed not to constitute Consolidated Interest Expense.
"CONSOLIDATED NET INCOME" means, with respect to any Person for any period,
the aggregate of the Net Income, of such Person and its Restricted Subsidiaries
for such period, on a consolidated basis, and otherwise determined in accordance
with GAAP; PROVIDED, HOWEVER, that (i) any net after-tax extraordinary gains or
losses (less all fees and expenses relating thereto) shall be excluded, (ii) the
Net Income for such period shall not include the cumulative effect of a change
in accounting principles during such period,
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(iii) any net after-tax income (loss) from discontinued operations and any net
after-tax gains or losses on disposal of discontinued operations shall be
excluded, (iv) any net after-tax gains or losses (less all fees and expenses
relating thereto) attributable to asset dispositions other than in the ordinary
course of business (as determined in good faith by the Board of Directors of the
Company) shall be excluded, (v) the Net Income for such period of any Person
that is not a Subsidiary, or is an Unrestricted Subsidiary, or that is accounted
for by the equity method of accounting, shall be included only to the extent of
the amount of dividends or distributions or other payments paid in cash (or to
the extent converted into cash) to the referent Person or a Wholly Owned
Restricted Subsidiary thereof in respect of such period, (vi) the Net Income of
any Person acquired in a pooling of interests transaction shall not be included
for any period prior to the date of such acquisition and (vii) the Net Income
for such period of any Restricted Subsidiary shall be excluded to the extent
that the declaration or payment of dividends or similar distributions by that
Restricted Subsidiary of its Net Income is not at the date of determination
permitted without any prior governmental approval (which has not been obtained)
or, directly or indirectly, by the operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule, or governmental
regulation applicable to that Restricted Subsidiary or its stockholders, unless
such restriction with respect to the payment of dividends or in similar
distributions has been legally waived.
"CONTINGENT OBLIGATIONS" means, with respect to any Person, any obligation
of such Person guaranteeing any leases, dividends or other obligations that do
not constitute Indebtedness ("PRIMARY OBLIGATIONS") of any other Person (the
"PRIMARY OBLIGOR") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not contingent,
(i) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (ii) to advance or supply funds (A) for the
purchase or payment of any such primary obligation or (B) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, or (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 against loss in respect thereof.
"CREDIT FACILITIES" means, with respect to the Company, one or more debt
facilities (including, without limitation, the Senior Credit Facility) or
commercial paper facilities with banks or other institutional lenders providing
for revolving credit loans, term loans, receivables financing (including through
the sale of receivables to such lenders or to special purpose entities formed to
borrow from such lenders against such receivables) or letters of credit, in each
case, as amended, restated, modified, renewed, refunded, replaced or refinanced
in whole or in part from time to time.
"DEFAULT" means any event that is, or with the passage of time or the giving
of notice or both would be, an Event of Default.
"DESIGNATED NONCASH CONSIDERATION" means the fair market value of noncash
consideration received by the Company or one of its Restricted Subsidiaries in
connection with an Asset Sale that is so designated as Designated Noncash
Consideration pursuant to an Officers' Certificate, setting forth the basis of
such valuation, executed by the principal executive officer and the principal
financial officer of the Company, less the amount of cash or Cash Equivalents
received in connection with a sale of such Designated Noncash Consideration.
"DESIGNATED PREFERRED STOCK" means preferred stock of the Company (other
than Disqualified Stock) that is issued for cash (other than to a Restricted
Subsidiary) and is so designated as Designated Preferred Stock, pursuant to an
Officers' Certificate executed by the principal executive officer and the
principal financial officer of the Company, on the issuance date thereof, the
cash proceeds of which are excluded from the calculation set forth in clause (c)
of the covenant described under "Limitation on Restricted Payments."
"DISQUALIFIED STOCK" means, with respect to any Person, any Capital Stock of
such Person which, by its terms (or by the terms of any security into which it
is convertible or for which it is putable or
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exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, in each case prior to the
date 91 days after the maturity date of the Notes; PROVIDED, HOWEVER, that if
such Capital Stock is issued to any employee or to any plan for the benefit of
employees of the Company or its Subsidiaries or by any such plan to such
employees, such Capital Stock shall not constitute Disqualified Stock solely
because it may be required to be repurchased by the Company in order to satisfy
applicable statutory or regulatory obligations.
"EBITDA" means, with respect to any Person for any period, the Consolidated
Net Income of such Person for such period plus (a) provision for taxes based on
income or profits of such Person for such period deducted in computing
Consolidated Net Income, plus (b) Consolidated Interest Expense of such Person
for such period and any Receivables Fees paid by such Person or any of its
Restricted Subsidiaries during such period, in each case to the extent the same
was deducted in calculating such Consolidated Net Income, plus (c) Consolidated
Depreciation and Amortization Expense of such Person for such period to the
extent such depreciation and amortization were deducted in computing
Consolidated Net Income, plus (d) any expenses or charges related to any Equity
Offering, Permitted Investment or Indebtedness permitted to be incurred by the
Indenture (including such expenses or charges related to the Merger (including
the costs of (i) the cancellation of the stock options and (ii) the retirement
of the Existing Notes) and the Financings) and deducted in such period in
computing Consolidated Net Income, plus (e) the amount of any restructuring
charge deducted in such period in computing Consolidated Net Income, plus (f)
without duplication, any other non-cash charges reducing Consolidated Net Income
for such period (excluding any such charge which requires an accrual of a cash
reserve for anticipated cash charges for any future period), plus (g) the amount
of any minority interest expense deducted in calculating Consolidated Net
Income, less, without duplication (h) non-cash items increasing Consolidated Net
Income of such Person for such period (excluding any items which represent the
reversal of any accrual of, or cash reserve for, anticipated cash charges in any
prior period).
"EQUITY INTERESTS" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"EQUITY OFFERING" means any public or private sale of common stock or
preferred stock of the Company (excluding Disqualified Stock), other than (i)
public offerings with respect to the Company's Common Stock registered on Form
S-8 and (ii) any such public or private sale that constitutes an Excluded
Contribution.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"EXCLUDED CONTRIBUTIONS" means the net cash proceeds received by the Company
after the closing of the Merger from (a) contributions to its common equity
capital and (b) the sale (other than to a Subsidiary or to any Company or
Subsidiary management equity plan or stock option plan or any other management
or employee benefit plan or agreement) of Capital Stock (other than Disqualified
Stock) of the Company, in each case designated as Excluded Contributions
pursuant to an Officers' Certificate executed by the principal executive officer
and the principal financial officer of the Company on the date such capital
contributions are made or the date such Equity Interests are sold, as the case
may be, the cash proceeds of which are excluded from the calculation set forth
in paragraph (c) of the "Limitation on Restricted Payments" covenant.
"EXISTING INDEBTEDNESS" means Indebtedness of the Company or its Restricted
Subsidiaries in existence on the Issuance Date, plus interest accruing thereon,
after application of the net proceeds of the sale of the Notes as described in
this Prospectus.
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"EXISTING NOTES" means the Company's 10.45% Senior Notes due 2001 and the
Company's 12 3/4% Senior Subordinated Notes due 2002.
"FIXED CHARGE COVERAGE RATIO" means, with respect to any Person for any
period, the ratio of EBITDA of such Person for such period to the Fixed Charges
of such Person for such period. In the event that the Company or any of its
Restricted Subsidiaries incurs, assumes, guarantees or redeems any Indebtedness
(other than in the case of revolving credit borrowings, in which case interest
expense shall be computed based upon the average daily balance of such
Indebtedness during the applicable period) or issues or redeems preferred stock
subsequent to the commencement of the period for which the Fixed Charge Coverage
Ratio is being calculated but prior to the event for which the calculation of
the Fixed Charge Coverage Ratio is made (the "CALCULATION DATE"), then the Fixed
Charge Coverage Ratio shall be calculated giving pro forma effect to such
incurrence, assumption, guarantee or redemption of Indebtedness, or such
issuance or redemption of preferred stock, as if the same had occurred at the
beginning of the applicable four-quarter period. For purposes of making the
computation referred to above, Investments, acquisitions, dispositions, mergers,
consolidations and discontinued operations (as determined in accordance with
GAAP) that have been made by the Company or any of its Restricted Subsidiaries
during the four-quarter reference period or subsequent to such reference period
and on or prior to or simultaneously with the Calculation Date shall be
calculated on a pro forma basis assuming that all such Investments,
acquisitions, dispositions, discontinued operations, mergers and consolidations
(and the reduction of any associated fixed charge obligations and the change in
EBITDA resulting therefrom) had occurred on the first day of the four-quarter
reference period. If since the beginning of such period any Person (that
subsequently became a Restricted Subsidiary or was merged with or into the
Company or any Restricted Subsidiary since the beginning of such period) shall
have made any Investment, acquisition, disposition, discontinued operation,
merger or consolidation that would have required adjustment pursuant to this
definition, then the Fixed Charge Coverage Ratio shall be calculated giving pro
forma effect thereto for such period as if such Investment, acquisition,
disposition, discontinued operation, merger or consolidation had occurred at the
beginning of the applicable four-quarter period. For purposes of this
definition, whenever pro forma effect is to be given to a transaction, the pro
forma calculations shall be made 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 on such Indebtedness
shall be calculated as if the rate in effect on the Calculation Date had been
the applicable rate for the entire period (taking into account any Hedging
Obligations applicable to such Indebtedness). Interest on a Capitalized Lease
Obligation shall be deemed to accrue at an interest rate reasonably determined
by a responsible financial or accounting officer of the Company to be the rate
of interest implicit in such Capitalized Lease Obligation in accordance with
GAAP. For purposes of making the computation referred to above, interest on any
Indebtedness under a revolving credit facility computed on a pro forma basis
shall be computed based upon the average daily balance of such Indebtedness
during the applicable period. Interest on Indebtedness that may optionally be
determined at an interest rate based upon a factor of a prime or similar rate, a
eurocurrency interbank offered rate, or other rate, shall be deemed to have been
based upon the rate actually chosen, or, if none, then based upon such optional
rate chosen as the Company may designate.
"FIXED CHARGES" means, with respect to any Person for any period, the sum of
(a) Consolidated Interest Expense of such Person for such period and (b) all
cash dividend payments (excluding items eliminated in consolidation) on any
series of preferred stock of such Person.
"FOREIGN SUBSIDIARY" means a Restricted Subsidiary not organized or existing
under the laws of the United States, any State thereof, the District of
Columbia, or any territory thereof.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which
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are in effect on the Issuance Date. For the purposes of the Indenture, the term
"consolidated" with respect to any Person shall mean such Person consolidated
with its Restricted Subsidiaries, and shall not include any Unrestricted
Subsidiary.
"GOVERNMENT SECURITIES" means securities that are (a) direct obligations of
the United States of America for the timely payment of which its full faith and
credit is pledged or (b) obligations of a Person controlled or supervised by and
acting as an agency or instrumentality of the United States of America the
timely payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America, which, in either case, are not
callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act), as custodian with respect to any such Government Securities
or a specific payment of principal of or interest on any such Government
Securities held by such custodian for the account of the holder of such
depository receipt; PROVIDED that (except as required by law) such custodian is
not authorized to make any deduction from the amount payable to the holder of
such depository receipt from any amount received by the custodian in respect of
the Government Securities or the specific payment of principal of or interest on
the Government Securities evidenced by such depository receipt.
"GUARANTEE" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness or other obligations.
"GUARANTEE" means any guarantee of the obligations of the Company under the
Indenture and the Notes by any Person in accordance with the provisions of the
Indenture. When used as a verb, "Guarantee" shall have a corresponding meaning.
No Guarantees will be issued in connection with the initial offering and sale of
the Notes.
"GUARANTOR" means any Person that incurs a Guarantee; PROVIDED that upon the
release and discharge of such Person from its Guarantee in accordance with the
Indenture, such Person shall cease to be a Guarantor. No Guarantees will be
issued in connection with the initial offering and sale of the Notes.
"HEDGING OBLIGATIONS" means, with respect to any Person, the obligations of
such Person under (i) currency exchange or interest rate swap agreements,
currency exchange or interest rate cap agreements and currency exchange or
interest rate collar agreements and (ii) other agreements or arrangements
designed to protect such Person against fluctuations in currency exchange or
interest rates.
"HOLDER" means a holder of the Notes.
"INDEBTEDNESS" means, with respect to any Person, (a) any indebtedness of
such Person, whether or not contingent (i) in respect of borrowed money, (ii)
evidenced by bonds, notes, debentures or similar instruments or letters of
credit or bankers' acceptances (or, without double counting, reimbursement
agreements in respect thereof), (iii) representing the balance deferred and
unpaid of the purchase price of any property (including Capitalized Lease
Obligations), except any such balance that constitutes a trade payable or
similar obligation to a trade creditor, in each case accrued in the ordinary
course of business or (iv) representing any Hedging Obligations, if and to the
extent of any of the foregoing Indebtedness (other than letters of credit and
Hedging Obligations) that would appear as a liability upon a balance sheet
(excluding the footnotes thereto) of such Person prepared in accordance with
GAAP, (b) to the extent not otherwise included, any obligation by such Person to
be liable for, or to pay, as obligor, guarantor or otherwise, on the
Indebtedness of another Person (other than by endorsement of negotiable
instruments for collection in the ordinary course of business) and (c) to the
extent not otherwise included, Indebtedness of another Person secured by a Lien
on any asset owned by such Person (whether or not such Indebtedness is assumed
by such Person); PROVIDED, HOWEVER, that Contingent Obligations incurred in the
ordinary course of business shall be deemed not to constitute Indebtedness and
obligations under or in respect of Receivables Facilities shall not be deemed to
constitute Indebtedness of a Person.
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"INDEPENDENT FINANCIAL ADVISOR" means an accounting, appraisal, investment
banking firm or consultant to Persons engaged in Similar Businesses of
nationally recognized standing that is, in the judgment of the Company's Board
of Directors, as evidenced by a board resolution, qualified to perform the task
for which it has been engaged.
"INVESTMENT GRADE SECURITIES" means (i) securities issued or directly and
fully guaranteed or insured by the United States government or any agency or
instrumentality thereof (other than Cash Equivalents), (ii) debt securities or
debt instruments with a rating of BBB- or higher by S&P or Baa3 or higher by
Moody's or the equivalent of such rating by such rating organization, or, if no
rating of S&P or Moody's then exists, the equivalent of such rating by any other
nationally recognized securities rating agency, but excluding any debt
securities or instruments constituting loans or advances among the Company and
its Subsidiaries, and (iii) investments in any fund that invests exclusively in
investments of the type described in clauses (i) and (ii) which fund may also
hold immaterial amounts of cash pending investment and/or distribution.
"INVESTMENTS" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the form of loans (including
guarantees), advances or capital contributions (excluding advances to customers,
commission, travel and similar advances to officers and employees made in the
ordinary course of business), purchases or other acquisitions for consideration
of Indebtedness, Equity Interests or other securities issued by any other Person
and investments that are required by GAAP to be classified on the balance sheet
(excluding the footnotes thereto) of the Company in the same manner as the other
investments included in this definition to the extent such transactions involve
the transfer of cash or other property. For purposes of the definition of
"Unrestricted Subsidiary" and the covenant described under "--Certain
Covenants--Limitation on Restricted Payments," (i) "Investments" shall include
the portion (proportionate to the Company's equity interest in such Subsidiary)
of the fair market value of the net assets of a Subsidiary of the Company at the
time that such Subsidiary is designated an Unrestricted Subsidiary; PROVIDED,
HOWEVER, that upon a redesignation of such Subsidiary as a Restricted
Subsidiary, the Company shall be deemed to continue to have a permanent
"Investment" in an Unrestricted Subsidiary equal to an amount (if positive)
equal to (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; and (ii) any property transferred
to or from an Unrestricted Subsidiary shall be valued at its fair market value
at the time of such transfer, in each case as determined in good faith by the
Board of Directors.
"ISSUANCE DATE" means the closing date for the sale and original issuance of
the Notes under the Indenture.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected under applicable law (including
any conditional sale or other title retention agreement, any lease in the nature
thereof, any option or other agreement to sell or give a security interest in
and any filing of or agreement to give any financing statement under the Uniform
Commercial Code (or equivalent statutes) of any jurisdiction); provided that in
no event shall an operating lease be deemed to constitute a Lien.
"MANAGEMENT GROUP" means the group consisting of the Officers of the
Company.
"MOODY'S" means Moody's Investors Service, Inc.
"NET INCOME" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends.
"NET PROCEEDS" means the aggregate cash proceeds received by the Company or
any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
Designated Noncash Consideration received in any Asset Sale), net of the direct
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costs relating to such Asset Sale and the sale or disposition of such Designated
Noncash Consideration (including, without limitation, legal, accounting and
investment banking fees, and brokerage and sales commissions), and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements related thereto), amounts required
to be applied to the repayment of principal, premium (if any) and interest on
Indebtedness required (other than required by clause (i) of the second paragraph
of "-- Repurchase at the Option of Holders--Asset Sales") to be paid as a result
of such transaction and any deduction of appropriate amounts to be provided by
the Company as a reserve in accordance with GAAP against any liabilities
associated with the asset disposed of in such transaction and retained by the
Company after such sale or other disposition thereof, including, without
limitation, pension and other post-employment benefit liabilities and
liabilities related to environmental matters or against any indemnification
obligations associated with such transaction.
"OBLIGATIONS" means any principal, interest, penalties, fees,
indemnifications, reimbursements (including, without limitation, reimbursement
obligations with respect to letters of credit and banker's acceptances), damages
and other liabilities payable under the documentation governing any
Indebtedness.
"OFFICER" means the Chairman of the Board, the President, any Executive Vice
President, Senior Vice President or Vice President, the Treasurer or the
Secretary of the Company.
"OFFICERS' CERTIFICATE" means a certificate signed on behalf of the Company
by two officers of the Company, one of whom must be the principal executive
officer, the principal financial officer, the treasurer or the principal
accounting officer of the Company that meets the requirements set forth in the
Indenture.
"PARI PASSU INDEBTEDNESS" means (a) with respect to the Notes, Indebtedness
which ranks pari passu in right of payment to the Notes and (b) with respect to
any Guarantee, Indebtedness which ranks pari passu in right of payment to such
Guarantee.
"PERMITTED HOLDERS" means KKR and any of its Affiliates and the Management
Group.
"PERMITTED INVESTMENTS" means (a) any Investment in the Company or any
Restricted Subsidiary; (b) any Investment in cash and Cash Equivalents or
Investment Grade Securities; (c) any Investment by the Company or any Restricted
Subsidiary of the Company in a Person that is a Similar Business if as a result
of such Investment (i) such Person becomes a Restricted Subsidiary or (ii) such
Person, in one transaction or a series of related transactions, is merged,
consolidated or amalgamated with or into, or transfers or conveys substantially
all of its assets to, or is liquidated into, the Company or a Restricted
Subsidiary; (d) any Investment in securities or other assets not constituting
cash or Cash Equivalents and received in connection with an Asset Sale made
pursuant to the provisions of "--Repurchase at the Option of Holders--Asset
Sales" or any other disposition of assets not constituting an Asset Sale; (e)
any Investment existing on the Issuance Date; (f) advances to employees not in
excess of $10.0 million outstanding at any one time, in the aggregate; (g) any
Investment acquired by the Company or any of its Restricted Subsidiaries (i) in
exchange for any other Investment or accounts receivable held by the Company or
any such Restricted Subsidiary in connection with or as a result of a
bankruptcy, workout, reorganization or recapitalization of the issuer of such
other Investment or accounts receivable or (ii) as a result of a foreclosure by
the Company or any of its Restricted Subsidiaries with respect to any secured
Investment or other transfer of title with respect to any secured Investment in
default; (h) Hedging Obligations permitted under clause (j) of the "Limitation
of Incurrence of Indebtedness and Issuance of Disqualified Stock" covenant; (i)
loans and advances to officers, directors and employees for business-related
travel expenses, moving expenses and other similar expenses, in each case
incurred in the ordinary course of business; (j) any Investment in a Similar
Business (other than an Investment in an Unrestricted Subsidiary) having an
aggregate fair market value, taken together with all other Investments made
pursuant to this clause (j) that are at that time outstanding, not to exceed the
greater of (x) $100.0 million or (y) 15% of Total Assets at the time of such
Investment (with the fair market value of each Investment being measured at the
time made and without giving effect to subsequent changes in value); (k)
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<PAGE>
Investments the payment for which consists of Equity Interests of the Company
(exclusive of Disqualified Stock); PROVIDED, HOWEVER, that such Equity Interests
will not increase the amount available for Restricted Payments under clause (c)
of the "Limitation on Restricted Payments" covenant; (l) additional Investments
having an aggregate fair market value, taken together with all other Investments
made pursuant to this clause (l) that are at that time outstanding, not to
exceed the greater of (x) $35.0 million or (y) 5% of Total Assets at the time of
such Investment (with the fair market value of each Investment being measured at
the time made and without giving effect to subsequent changes in value); (m) any
transaction to the extent it constitutes an investment that is permitted by and
made in accordance with the provisions of the second paragraph of the covenant
described under "--Certain Covenants--Transactions with Affiliates" (except
transactions described in clauses (ii) and (vi) of such paragraph); (n) any
Investment by Restricted Subsidiaries in other Restricted Subsidiaries and
Investments by Subsidiaries that are not Restricted Subsidiaries in other
Subsidiaries that are not Restricted Subsidiaries; and (o) Investments relating
to any special purpose Wholly Owned Subsidiary of the Company organized in
connection with a Receivables Facility that, in the good faith determination of
the Board of Directors of the Company, are necessary or advisable to effect such
Receivables Facility.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof or any other entity.
"PREFERRED STOCK" means any Equity Interest with preferential right of
payment of dividends or upon liquidation, dissolution, or winding up.
"RECEIVABLES FACILITY" means one or more receivables financing facilities,
as amended from time to time, pursuant to which the Company and/or any of its
Restricted Subsidiaries sells its accounts receivable to a Person that is not a
Restricted Subsidiary.
"RECEIVABLES FEES" means distributions or payments made directly or by means
of discounts with respect to any participation interests issued or sold in
connection with, and other fees paid to a Person that is not a Restricted
Subsidiary in connection with, any Receivables Facility.
"RELATED PARTIES" means any Person controlled by a Permitted Holder,
including any partnership of which a Permitted Holder or its Affiliates is the
general partner.
"REPURCHASE OFFER" means an offer made by the Company to purchase all or any
portion of a Holder's Notes pursuant to the provisions described under the
covenants entitled "--Repurchase at the Option of Holders-Change of Control" or
"--Repurchase at the Option of Holders--Asset Sales."
"RESTRICTED INVESTMENT" means an Investment other than a Permitted
Investment.
"RESTRICTED SUBSIDIARY" means, at any time, any direct or indirect
Subsidiary of the Company that is not then an Unrestricted Subsidiary; PROVIDED,
HOWEVER, that upon the occurrence of an Unrestricted Subsidiary ceasing to be an
Unrestricted Subsidiary, such Subsidiary shall be included in the definition of
"Restricted Subsidiary."
"S&P" means Standard and Poor's Ratings Group.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the rules
and regulations of the Commission promulgated thereunder.
"SENIOR CREDIT FACILITY" means that certain credit facility described in
this Prospectus among the Company and the lenders from time to time party
thereto, including any collateral documents, instruments and agreements executed
in connection therewith, and the term Senior Credit Facility shall also include
any amendments, supplements, modifications, extensions, renewals, restatements
or refundings thereof and any credit facilities that replace, refund or
refinance any part of the loans, other credit facilities or commitments
thereunder, including any such replacement, refunding or refinancing facility
that increases
83
<PAGE>
the amount borrowable thereunder or alters the maturity thereof, PROVIDED,
HOWEVER, that there shall not be more than one facility at any one time that
constitutes the Senior Credit Facility and, if at any time there is more than
one facility which would constitute the Senior Credit Facility, the Company will
designate to the Trustee which one of such facilities will be the Senior Credit
Facility for purposes of the Indenture.
"SIGNIFICANT SUBSIDIARY" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act, as such Regulation is in effect on the date
hereof.
"SIMILAR BUSINESS" means a business, the majority of whose revenues are
derived from the design, manufacture and/or marketing of electrical, electronic
and fiber optic connectors, coaxial and flat-ribbon cable, and interconnect
systems, or whose revenues are derived from the licensing of the Amphenol name,
or any business or activity that is reasonably similar thereto or a reasonable
extension, development or expansion thereof or ancillary thereto.
"SUBORDINATED INDEBTEDNESS" means (a) with respect to the Notes, any
Indebtedness of the Company which is by its terms subordinated in right of
payment to the Notes and (b) with respect to any Guarantee, any Indebtedness of
the applicable Guarantor which is by its terms subordinated in right of payment
to such Guarantee.
"SUBSIDIARY" means, with respect to any Person, (i) any corporation,
association, or other business entity (other than a partnership) of which more
than 50% of the total voting power of shares of Capital Stock entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time of determination owned or
controlled, directly or indirectly, by such Person or one or more of the other
Subsidiaries of that Person or a combination thereof and (ii) any partnership,
joint venture, limited liability company or similar entity of which (x) more
than 50% of the capital accounts, distribution rights, total equity and voting
interests or general or limited partnership interests, as applicable, are owned
or controlled, directly or indirectly, by such Person or one or more of the
other Subsidiaries of that Person or a combination thereof whether in the form
of membership, general, special or limited partnership or otherwise and (y) such
Person or any Wholly Owned Restricted Subsidiary of such Person is a controlling
general partner or otherwise controls such entity.
"TOTAL ASSETS" means the total consolidated assets of the Company and its
Restricted Subsidiaries, as shown on the most recent balance sheet (excluding
the footnotes thereto) of the Company.
"UNRESTRICTED SUBSIDIARY" means (i) any Subsidiary of the Company which at
the time of determination is an Unrestricted Subsidiary (as designated by the
Board of Directors of the Company, as provided below) and (ii) any Subsidiary of
an Unrestricted Subsidiary. The Board of Directors of the Company may designate
any Subsidiary of the Company (including any existing Subsidiary and any newly
acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless
such Subsidiary or any of its Subsidiaries owns any Equity Interests of, or
owns, or holds any Lien on, any property of, the Company or any Subsidiary of
the Company (other than any Subsidiary of the Subsidiary to be so designated),
PROVIDED that (a) any Unrestricted Subsidiary must be an entity of which shares
of the capital stock or other equity interests (including partnership interests)
entitled to cast at least a majority of the votes that may be cast by all shares
or equity interests having ordinary voting power for the election of directors
or other governing body are owned, directly or indirectly, by the Company, (b)
the Company certifies that such designation complies with the covenants
described under "--Certain Covenants--Limitation on Restricted Payments" and (c)
each of (I) the Subsidiary to be so designated and (II) its Subsidiaries has not
at the time of designation, and does not thereafter, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly liable with respect
to any Indebtedness pursuant to which the lender has recourse to any of the
assets of the Company or any of its Restricted Subsidiaries. The Board of
Directors may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; PROVIDED that, immediately after giving effect to such designation,
(i) the Company could incur at least $1.00 of additional Indebtedness pursuant
to the Fixed
84
<PAGE>
Charge Coverage Ratio test described under "--Certain Covenants--Limitations on
Incurrence of Indebtedness and Issuance of Disqualified Stock" or (ii) the Fixed
Charge Coverage Ratio for the Company and its Restricted Subsidiaries would be
greater than such ratio for the Company and its Restricted Subsidiaries
immediately prior to such designation, in each case on a pro forma basis taking
into account such designation. Any such designation by the Board of Directors
shall be notified by the Company to the Trustee by promptly filing with the
Trustee a copy of the board resolution giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing provisions.
"VOTING STOCK" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any Indebtedness
or Disqualified Stock, as the case may be, at any date, the quotient obtained by
dividing (i) the sum of the products of the number of years from the date of
determination to the date of each successive scheduled principal payment of such
Indebtedness or redemption or similar payment with respect to such Disqualified
Stock multiplied by the amount of such payment, by (ii) the sum of all such
payments.
"WHOLLY OWNED RESTRICTED SUBSIDIARY" is any Wholly Owned Subsidiary that is
a Restricted Subsidiary.
"WHOLLY OWNED SUBSIDIARY" of any Person means a Subsidiary of such Person
100% of the outstanding Capital Stock or other ownership interests of which
(other than directors' qualifying shares) shall at the time be owned by such
Person or by one or more Wholly Owned Subsidiaries of such Person and one or
more Wholly Owned Subsidiaries of such Person.
BOOK-ENTRY; DELIVERY AND FORM
The Notes will be issued in the form of one or more fully registered global
certificates (the "Global Certificates"). The Global Certificates will be
deposited with, or with the Trustee on behalf of, The Depository Trust Company,
New York, New York (the "Depositary") and registered in the name of the
Depositary's nominee. The Depositary will maintain the Notes in denominations of
$1,000 and integral multiples thereof through its book-entry facilities.
Except as set forth below, the Global Certificates may be transferred, in
whole and not in part, only to the Depositary, another nominee of the Depositary
or to a successor of the Depositary or its nominee.
The Depositary has advised the Company and the Underwriters as follows: It
is a limited-purpose trust company organized under the Banking Law of the State
of New York, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Exchange
Act. The Depositary was created to hold securities for its participating
organizations (the "Participants") and to facilitate the clearance and
settlement of transactions in such securities between Participants through
electronic book-entry changes in accounts of its Participants. Participants
include securities brokers and dealers (including the Underwriters), banks,
trust companies, clearing corporations and certain other organizations, some of
whom (and/or their representatives) own the Depositary. Access to the
Depositary's book-entry system is also 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"). Persons who are not Participants may beneficially own securities
held by the Depositary only through Participants or indirect participants.
The Depositary has also advised that, pursuant to procedures established by
it, (i) upon the issuance by the Company of the Notes, the Depositary will
credit the accounts of Participants designated by the Underwriters with the
principal amount of the Notes purchased by the Underwriters and (ii) ownership
of beneficial interests in the Global Certificates will be shown on, and the
transfer of that ownership will be effected only through, records maintained by
the Depositary (with respect to Participants' interests), the Participants and
the indirect participants. A beneficial owner is the person who has the right to
sell,
85
<PAGE>
transfer or otherwise dispose of an interest in the Notes and the right to
receive the proceeds therefrom, as well as principal, premium (if any) and
interest payable in respect of the Notes. The beneficial owner must rely on the
foregoing arrangements to evidence its interest in the Notes. Beneficial
ownership of the Notes may be transferred only by complying with the procedures
of a beneficial owner's Participant (e.g., a brokerage firms) and the
Depositary. The laws of some states require that certain persons take physical
delivery in definitive form of securities which they own. Consequently, the
ability to transfer beneficial interests in the Global Certificates is limited
to such extent.
So long as a nominee of the Depositary or its nominee is the registered
owner of the Global Certificates, the Depositary or such nominee will be
considered the absolute owner or holder of the Notes for all purposes under the
Indenture and any applicable laws. Except as provided below, owners of
beneficial interests in the Global Certificates will not be entitled to have
Notes 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.
All rights of ownership must be exercised through the Depositary and the
book-entry system, and notices that are to be given to registered owners by the
Company or the Trustee will be given only to the Depositary. It is expected that
the Depositary will forward notices to the Participants who will in turn forward
notices to the beneficial owners. Neither the Company, the Trustee, the paying
agents nor the Notes registrars will have any responsibility or obligation to
assure that any notices are forwarded by the Depositary to any Participant or by
any Participant to the beneficial owners. Neither the Company, the Trustee, the
paying agents nor the Notes registrars 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 Certificates, or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
Principal and interest payments on the Global Certificates registered in the
name of the Depositary's nominee will be made by the Company, either directly or
through a paying agent, to the Depositary's nominee as the registered owner of
the Global Certificates. Under the terms of the Indenture, the Company and the
Trustee will treat the persons in whose names the Notes are registered as the
owners of such Notes for the purpose of receiving payments of principal and
interest on such Notes and for all other purposes whatsoever. Therefore, neither
the Company, the Trustee nor any paying agent has any direct responsibility or
liability for the payment of principal or interest on the Notes to owners of
beneficial interests in the Global Certificates. The Depositary has advised the
Company and the Trustee that its present practice upon receipt of any payment of
principal or interest is to credit immediately the accounts of the Participants
with payment in amounts proportionate to their respective holdings in principal
amount of beneficial interests in the Global Certificates as shown on the
records of the Depositary. Payments by Participants and indirect participants to
owners of beneficial interests in the Global Certificates will be governed by
standing instructions and customary practices as is now the case with securities
held for the accounts of customers in bearer form or registered in "street name"
and will be the responsibility of such Participants or indirect participants.
As long as the Notes are represented by the Global Certificates, the
Depositary's nominee will be the holder of the Notes and therefore will be the
only entity that can exercise a right to repayment or repurchase of the Notes.
See "--Repurchase at the Option of Holders--Change of Control" and
"--Repurchase at the Option of Holders--Asset Sales." Notice by Participants or
indirect participants or by owners of beneficial interests in the Global
Certificates held through such Participants or indirect participants of the
exercise of the option to elect repayment of beneficial interest in Notes
represented by the Global Certificates must be transmitted to the Depositary in
accordance with its procedures on a form required by the Depositary and provided
to Participants. In order to ensure that the Depositary's nominee will timely
exercise a right to repayment with respect to a particular Note, the beneficial
owner of such Note must instruct the broker or other Participant or indirect
participant through which it holds an interest in such Note to notify the
Depositary of its desire to exercise a right to repayment. Different firms have
86
<PAGE>
different deadlines for accepting instructions from their customers and,
accordingly, each beneficial owner should consult the broker or other
Participant or indirect participant through which it holds an interest in a Note
in order to ascertain the deadline by which such an instruction must be given in
order for timely notice to be delivered to the Depositary. The Company will not
be liable for any delay in delivery of notices of the exercise of the option to
elect repayment.
The Company will issue Notes in definitive form in exchange for the Global
Certificates if, and only if, either (i) the Depositary is at any time unwilling
or unable to continue as depositary and a successor depositary is not appointed
by the Company within 90 days, (ii) the Company executes or delivers to the
Trustee and the Notes registrar an Officers' Certificate stating that such
Global Certificate shall be so exchangeable or (iii) an Event of Default has
occurred and is continuing and the applicable Notes registrar has received a
request from the Depositary to issue Notes in definitive form in lieu of all or
a portion of the Global Certificates. In either instance, an owner of a
beneficial interest in the Global Certificates will be entitled to have the
applicable Notes equal in principal amount or principal amount at maturity, as
the case may be, to such beneficial interest registered in its name and will be
entitled to physical delivery of such Notes in definitive form. Notes so issued
in definitive form will be issued in denominations of $1,000 and integral
multiples thereof and will be issued in registered form only, without coupons.
87
<PAGE>
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement (the
"Underwriting Agreement") among the Company, Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJ"), Lehman Brothers Inc. ("Lehman"), BT Securities
Corporation ("BTSC") and Chase Securities Inc. ("CSI") (collectively, the
"Underwriters"), the Underwriters have agreed, severally and not jointly, to
purchase from the Company, and the Company has agreed to issue and sell to each
of the Underwriters, the respective principal amount of Notes set forth opposite
its name below, at the public offering price set forth on the cover page of this
Prospectus, less the underwriting discounts and commissions:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF NOTES
---------------
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation..........................
Lehman Brothers Inc..........................................................
BT Securities Corporation....................................................
Chase Securities Inc.........................................................
Total..................................................................
---------------
$ 240,000,000
---------------
---------------
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters are subject to the approval of certain legal matters by counsel and
to certain other conditions precedent. The nature of the Underwriters'
obligations under the Underwriting Agreement is such that they are committed to
purchase all of the Notes if any of Notes are purchased.
The Underwriters have advised the Company that they propose to offer the
Notes directly to the public initially at the offering price set forth on the
cover page of this Prospectus and to certain dealers at such price less a
concession not in excess of % of the principal amount of the Notes. The
Underwriters may allow, and such dealers may reallow, a concession to certain
other dealers not in excess of % of the principal amount of the Notes. After
the initial public offering of the Notes, the public offering price, concession
and reallowance may be changed by the Underwriters at any time without notice.
The Underwriters have informed the Company that they will not confirm sales
to any accounts over which they exercise discretionary authority without prior
written approval of such transactions by the customer.
There is currently no public market for the Notes, and the Company has no
present plan to list any of the Notes on a national securities exchange or to
include any of the Notes for quotation through an inter-dealer quotation system.
The Underwriters have advised the Company they currently intend to make a market
in the Notes. However, the Underwriters are not obligated to do so and may
discontinue any such market-making at any time without notice in their sole
discretion. Accordingly, there can be no assurance that an active public market
will develop for, or as to the liquidity of, the Notes. See "Risk Factors--Lack
of Prior Market for the Notes."
In connection with the Offering, the Underwriters may engage in transactions
that stabilize, maintain or otherwise affect the price of the Notes.
Specifically, the Underwriters may overallot the Offering, creating a short
position. The Underwriters may bid for and purchase Notes in the open market to
cover short positions. In addition, the Underwriters may bid for and purchase
Notes in the open market to stabilize the price of the Notes. These activities
may stabilize or maintain the market price of the Notes above independent market
levels. The Underwriters are not required to engage in these activities, and may
end these activities at any time.
Certain of the Underwriters or their affiliates have from time to time
provided investment banking and financial advisory services to KKR and its
affiliates and/or the Company in the ordinary course of business, for which they
have received customary fees, and they may continue to provide such services to
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<PAGE>
KKR and its affiliates and/or the Company in the future. DLJ has acted as
financial advisor for NXS Acquisition and Lehman has acted as a financial
advisor to the Company in connection with the Merger and DLJ and Lehman have
acted as Dealer Managers and Solicitation Agents for the Company in connection
with the Debt Tender Offer. BTSC is an affiliate of BTCo. which will be
administrative agent and a lender to the Company under the Credit Facilities,
and CSI is an affiliate of Chase which will be syndication agent and a lender to
the Company under the Credit Facilities. In addition, affiliates of BTSC and CSI
are limited partners of certain limited partnerships organized by KKR.
Furthermore, Chase and BTCo. are lenders under the Existing Revolving Credit
Facility being repaid with the proceeds of the Offering.
The Company has agreed to indemnify the Underwriters and certain persons
controlling the Underwriters against certain liabilities and expenses in
connection with the offer and sale by the Company of the Notes, including
liabilities under the Securities Act, and to contribute to payments the
Underwriters are required to make in respect thereof.
LEGAL MATTERS
Certain legal matters will be passed upon for the Company by Edward C.
Wetmore, Secretary and General Counsel of the Company, Winthrop, Stimson, Putnam
& Roberts, New York, New York, special counsel to the Company, and by Simpson
Thacher & Bartlett (a partnership which includes professional corporations), New
York, New York, special counsel to the Company. Certain legal matters relating
to the Offering will be passed upon for the Underwriters by Latham & Watkins,
New York, New York.
EXPERTS
The financial statements as of December 31, 1996 and 1995 and for each of
the three years in the period ended December 31, 1996 included in this
Prospectus have been so included in reliance on the report of Price Waterhouse
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
89
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Consolidated Financial Statements
Report of Independent Accountants..................................................... F-2
Consolidated Statement of Income--
Years Ended December 31, 1996, December 31, 1995 and December 31, 1994.............. F-3
Consolidated Balance Sheet--December 31, 1996 and December 31, 1995................... F-4
Consolidated Statement of Changes in Shareholders' Equity--
Years Ended December 31, 1996, December 31, 1995 and December 31, 1994.............. F-5
Consolidated Statement of Cash Flow--
Years Ended December 31, 1996, December 31, 1995 and December 31, 1994.............. F-6
Notes to Consolidated Financial Statements............................................ F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Amphenol Corporation
In our opinion, the consolidated financial statements listed in the Index
appearing on page F-1 present fairly, in all material respects, the financial
position of Amphenol Corporation and its subsidiaries at December 31, 1996 and
1995, and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 1996, in conformity with generally
accepted accounting principles. 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 of these statements in accordance with generally accepted auditing
standards which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Hartford, Connecticut
January 14, 1997, except as to Note 12, which is as of January 23, 1997
F-2
<PAGE>
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------
<S> <C> <C> <C>
1996 1995 1994
------------- ------------- -------------
<CAPTION>
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE
DATA)
<S> <C> <C> <C>
Net sales........................................................... $ 776,221 $ 783,233 $ 692,651
Costs and expenses:
Cost of sales, excluding depreciation and amortization............ 494,689 506,707 458,318
Depreciation and amortization expense............................. 28,808 27,795 28,099
Selling, general and administrative expense....................... 114,746 114,041 102,183
------------- ------------- -------------
Operating income.................................................... 137,978 134,690 104,051
Interest expense.................................................... (24,617) (25,548) (30,382)
Other expenses, net................................................. (3,696) (4,515) (4,160)
------------- ------------- -------------
Income before income taxes and extraordinary item................... 109,665 104,627 69,509
Provision for income taxes.......................................... (42,087) (41,769) (27,109)
------------- ------------- -------------
Net income before extraordinary item................................ 67,578 62,858 42,400
Extraordinary item:
Loss on early extinguishment of debt, net of income taxes of
$2,613 (Note 1)................................................. (4,087)
------------- ------------- -------------
Net income.......................................................... $ 67,578 $ 62,858 $ 38,313
------------- ------------- -------------
------------- ------------- -------------
Net income per share:
Income before extraordinary item.................................. $ 1.45 $ 1.33 $ .91
Extraordinary loss................................................ (.09)
------------- ------------- -------------
Net income........................................................ $ 1.45 $ 1.33 $ .82
------------- ------------- -------------
------------- ------------- -------------
Average common shares outstanding................................... 46,649,541 47,304,180 46,611,759
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1996 1995
----------- -----------
<S> <C> <C>
(DOLLARS IN THOUSANDS,
EXCEPT PER SHARE DATA)
ASSETS
Current Assets:
Cash and short-term cash investments.................................................. $ 3,984 $ 12,028
Accounts receivable, less allowance for doubtful accounts of $1,868 and $1,758........ 64,904 67,419
Inventories:
Raw materials and supplies.......................................................... 21,648 21,094
Work in process..................................................................... 92,771 79,971
Finished goods...................................................................... 38,864 33,688
----------- -----------
153,283 134,753
Prepaid expenses and other assets..................................................... 11,611 11,516
----------- -----------
Total current assets................................................................ 233,782 225,716
----------- -----------
Land and depreciable assets:
Land.................................................................................. 11,090 11,143
Buildings............................................................................. 65,379 64,452
Machinery and equipment............................................................... 188,716 169,624
----------- -----------
265,185 245,219
Less accumulated depreciation......................................................... (163,110) (150,560)
----------- -----------
102,075 94,659
Deferred debt issuance costs............................................................ 3,717 4,332
Excess of cost over fair value of net assets acquired................................... 346,583 342,624
Other assets............................................................................ 24,505 22,593
----------- -----------
$ 710,662 $ 689,924
----------- -----------
----------- -----------
LIABILITIES & SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable...................................................................... $ 49,484 $ 51,684
Accrued interest...................................................................... 2,481 2,701
Accrued salaries, wages and employee benefits......................................... 12,671 11,972
Other accrued expenses................................................................ 24,523 35,376
Current portion of long-term debt..................................................... 7,759 2,670
----------- -----------
Total current liabilities........................................................... 96,918 104,403
----------- -----------
Long-term debt.......................................................................... 219,484 195,195
Deferred taxes and other liabilities.................................................... 18,696 18,755
Accrued pension and post employment benefit obligations................................. 15,016 27,486
Commitments and contingent liabilities (Notes 2, 6 and 9)
Shareholders' Equity:
Class A Common Stock, $.001 par value; 96,250,000 shares authorized; 44,720,287 and
47,320,382 shares outstanding at December 31, 1996 and 1995, respectively........... 47 47
Additional paid-in capital............................................................ 265,425 265,193
Accumulated earnings.................................................................. 151,634 84,056
Cumulative valuation adjustments (Note 5)............................................. (3,887) (5,211)
Treasury stock, at cost, 2,625,100 shares............................................. (52,671)
----------- -----------
Total shareholders' equity.......................................................... 360,548 344,085
----------- -----------
$ 710,662 $ 689,924
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
ADDITIONAL ACCUMULATED CUMULATIVE TREASURY TOTAL
COMMON PAID-IN EARNINGS VALUATION STOCK SHAREHOLDERS'
STOCK CAPITAL (DEFICIT) ADJUSTMENTS AT COST EQUITY
------------- ---------- ------------ ----------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
BALANCE DECEMBER 31, 1993.................... $ 42 $ 197,424 $ (17,115) $ (7,059) $ 173,292
Net income................................. 38,313 38,313
Translation adjustments.................... 3,786 3,786
Net proceeds from sale of 4,410,689 shares
of Class A Common Stock.................. 4 66,913 66,917
Conversion of warrants..................... 1 5 6
Amortization of deferred compensation...... 66 66
Stock options exercised.................... 413 413
Appreciation in market value of marketable
securities available for sale, net of
tax...................................... 162 162
Minimum pension liability adjustment, net
of tax................................... (4,315) (4,315)
--- ---------- ------------ ----------- ---------- -------------
BALANCE DECEMBER 31, 1994.................... 47 264,821 21,198 (7,426) 278,640
Net income................................. 62,858 62,858
Translation adjustments.................... 2,246 2,246
Amortization of deferred compensation...... 384 384
Stock options exercised and vesting of
restricted stock, net of tax............. (12) (12)
Decline in market value of marketable
securities available for sale, net of
tax...................................... (1,194) (1,194)
Minimum pension liability adjustment, net
of tax................................... 1,163 1,163
--- ---------- ------------ ----------- ---------- -------------
BALANCE DECEMBER 31, 1995.................... 47 265,193 84,056 (5,211) 344,085
Net income................................. 67,578 67,578
Translation adjustments.................... 647 647
Purchase of Treasury Stock................. (52,671) (52,671)
Amortization of deferred compensation...... 65 65
Stock options exercised.................... 167 167
Decline in market value of marketable
securities available for sale, net of
tax...................................... (1,085) (1,085)
Minimum pension liability adjustment, net
of tax................................... 1,762 1,762
--- ---------- ------------ ----------- ---------- -------------
BALANCE DECEMBER 31, 1996.................... $ 47 $ 265,425 $ 151,634 $ (3,887) $ (52,671) $ 360,548
--- ---------- ------------ ----------- ---------- -------------
--- ---------- ------------ ----------- ---------- -------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOW
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
(DOLLARS IN THOUSANDS,
EXCEPT PER SHARE DATA)
Net income.................................................................... $ 67,578 $ 62,858 $ 38,313
Adjustments for cash from operations:
Depreciation and amortization............................................... 28,808 27,795 28,099
Amortization of deferred debt issuance costs................................ 691 652 674
Net extraordinary charge for write off of deferred debt issuance costs...... 4,087
Net change in:
Accounts receivable......................................................... 7,315 (6,954) (14,236)
Inventory................................................................... (10,801) (1,790) 13,483
Prepaid expenses and other assets........................................... 604 90 2,152
Accounts payable............................................................ (3,411) 4,121 4,282
Accrued liabilities......................................................... (13,832) 831 11,352
Accrued pension and post employment benefits................................ (7,590) (2,483) (1,492)
Deferred taxes and other liabilities........................................ (970) (5,443) 824
Other....................................................................... (185) (450) 1,333
---------- ---------- ----------
Cash provided by operations................................................... 68,207 79,227 88,871
---------- ---------- ----------
Cash flow from investing activities:
Additions to property, plant and equipment.................................. (20,374) (20,381) (10,936)
Net investment in acquisitions and joint ventures........................... (29,461) (1,234)
Other....................................................................... (1,030) (1,290)
---------- ---------- ----------
Cash flow used by investing activities........................................ (49,835) (21,411) (13,460)
---------- ---------- ----------
Cash flow from financing activities:
Decrease in long-term debt.................................................. (45,368) (97,972)
Net increase (decrease) in borrowings under revolving credit facilities..... 26,255 (5,002) (47,659)
Net proceeds from issuance of common stock.................................. 66,917
Net proceeds from the sale of accounts receivable........................... 5,000
Treasury stock repurchases.................................................. (52,671)
---------- ---------- ----------
Cash flow used by financing activities........................................ (26,416) (50,370) (73,714)
---------- ---------- ----------
Net change in cash and short-term cash investments............................ (8,044) 7,446 1,697
Cash and short-term cash investments balance, beginning of period............. 12,028 4,582 2,885
---------- ---------- ----------
Cash and short-term cash investments balance, end of period................... $ 3,984 $ 12,028 $ 4,582
---------- ---------- ----------
---------- ---------- ----------
Cash paid during the year for:
Interest.................................................................... $ 24,180 $ 25,109 $ 30,139
Income taxes paid, net of refunds........................................... 54,765 37,606 15,624
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
OPERATIONS
Amphenol Corporation ("Amphenol" or the "Company") is in one business
segment which consists of designing, manufacturing and marketing connectors,
cable and interconnect systems, principally for telephone, wireless and data
communication systems; cable television; commercial and military aerospace
electronics equipment; automotive and mass transportation applications; and
industrial factory automation equipment.
USE OF ESTIMATES
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
PRINCIPLES OF CONSOLIDATION AND INVESTMENTS
The consolidated financial statements include the accounts of the Company
and its subsidiaries. Other assets includes an investment in equity securities
deemed available-for-sale. Such investment is recorded at its market value at
December 31, 1996 of $8,187 ($9,857 at December 31, 1995), and the cumulative
appreciation in market value over the cost basis of the investment, net of
deferred tax, of $3,687 ($4,772 at December 31, 1995) is recorded as a component
of shareholders' equity.
CASH AND SHORT-TERM CASH INVESTMENTS
Cash and short-term cash investments consist of cash and liquid investments
with a maturity of less than three months.
INVENTORIES
Inventories are stated at the lower of standard cost, which approximates
average cost, or market. The principal components of cost included in
inventories are materials, direct labor and manufacturing overhead.
DEPRECIABLE ASSETS
Property, plant and equipment are carried at cost. Depreciation and
amortization of property, plant and equipment are provided on a straight-line
basis over the respective asset lives determined on a composite basis by asset
group or on a specific item basis using the estimated useful lives of such
assets which range from 3 to 12 years for machinery and equipment and 20 to 40
years for buildings. It is the Company's policy to periodically review fixed
asset lives.
DEFERRED DEBT ISSUANCE COSTS
Deferred debt issuance costs are being amortized on the interest method over
the term of the related debt and such amortization is included in interest
expense. In 1994, in conjunction with the prepayment of
F-7
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
certain bank debt, the Company incurred an extraordinary net charge of
approximately $4,087 for the write off of deferred debt issuance costs.
EXCESS OF COST OVER FAIR VALUE OF NET ASSETS ACQUIRED
The excess of cost over the fair value of net assets acquired (goodwill) is
being amortized on the straight-line basis over a period of 40 years.
Accumulated amortization was $85,657 and $74,695 at December 31, 1996 and 1995,
respectively. Management continually reassesses the appropriateness of both the
carrying value and remaining life of goodwill. Such reassessments are based on
forecasting cash flows, on an undiscounted basis, and other factors. In the
event an impairment is indicated, the amount of the impairment would be based on
estimated discounted cash flows.
REVENUE RECOGNITION
Sales and related cost of sales are recognized upon shipment of products.
Sales and related cost of sales under long-term contracts with commercial
customers and the U.S. Government are recognized as units are delivered or
services provided.
RETIREMENT PENSION PLANS
Costs for retirement pension plans include current service costs and
amortization of prior service costs over periods of up to thirty years. It is
the Company's policy to fund current pension costs in conformance with minimum
funding requirements and maximum tax deductible limitations. The expense of
retiree medical benefit programs is recognized during the employees' service
with the Company as well as amortization of a transition obligation recognized
on adoption of the accounting principle in 1993.
INCOME TAXES
Deferred income taxes are provided for revenue and expenses which are
recognized in different periods for income tax and financial statement purposes.
Deferred income taxes are not provided on undistributed earnings of foreign
affiliated companies which are considered to be permanently invested.
RESEARCH AND DEVELOPMENT
Research, development and engineering expenditures for the creation and
application of new and improved products and processes were $14,550, $15,740 and
$14,261, excluding customer sponsored programs representing expenditures of
$927, $1,272 and $831, for the years 1996, 1995 and 1994, respectively.
ENVIRONMENTAL OBLIGATIONS
The Company recognizes the potential cost for environmental remediation
activities when assessments are made, remedial efforts are probable and related
amounts can be reasonably estimated; potential insurance reimbursements are not
recorded. The Company regularly assesses its environmental liabilities through
reviews of contractual commitments, site assessments, feasibility studies and
formal remedial design and action plans.
F-8
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
NET INCOME PER SHARE
Net income per share is based on the net income for the period divided by
the weighted average common shares outstanding.
DERIVATIVE FINANCIAL INSTRUMENTS
Derivative financial instruments, which are periodically used by the Company
in the management of its interest rate and foreign currency exposures, are
accounted for on an accrual basis. Income and expense are recorded in the same
category as that arising for the related asset or liability. For example,
amounts to be paid or received under interest rate swap agreements are
recognized as interest income or expense in the periods in which they accrue.
NOTE 2--LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
INTEREST RATE AT ------------------------
DECEMBER 31, 1996 MATURITY 1996 1995
----------------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Senior notes.......................................... 10.45% 1999-2001 $ 100,000 $ 100,000
Senior subordinated debentures........................ 12.75% 2002 95,000 95,000
Revolving credit facility............................. 6.0% 2000 24,000
Notes payable to foreign banks........................ 1.62-9.25% 1997-2000 8,243 2,865
---------- ------------
227,243 197,865
Less current portion.................................. 7,759 2,670
---------- ------------
Total long-term debt.................................. $ 219,484 $ 195,195
---------- ------------
---------- ------------
</TABLE>
On November 30, 1995, the Company entered into a $150,000 five year
unsecured revolving credit agreement with a group of banks. Interest on
borrowings under the credit agreement generally accrues at 0.275% over LIBOR or,
at the Company's option, at the bank's base rate; in addition, the Company pays
a facility fee. The credit agreement requires the Company to meet certain
financial tests including minimum net worth, interest coverage and leverage
ratios. In addition, the agreement includes limitations with respect to secured
borrowings and restricted payments, including dividends on the Company's common
stock.
The Senior Notes are unsecured and subject to redemption at the option of
the Company at any time, in whole or in part, at par plus a make-whole premium
determined in relation to the current interest rate on U.S. Government
securities at the time of an optional redemption. The Senior Subordinated
Debentures are subject to redemption at the option of the Company, in whole or
in part, beginning in 1997 at 104.8% and declining to 100% by 2000.
The maturity of the Company's long-term debt over each of the next five
years ending December 31, is as follows: 1997--$7,759; 1998--$206;
1999--$33,576; 2000--$33,368; and 2001--$33,334.
F-9
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
NOTE 3--INCOME TAXES
The components of income before income taxes and the provision (benefit) for
income taxes are as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------
<S> <C> <C> <C>
1996 1995 1994
---------- ---------- ---------
Income before taxes and extraordinary item:
United States................................................................ $ 67,889 $ 69,694 $ 47,402
Foreign...................................................................... 41,776 34,933 22,107
---------- ---------- ---------
$ 109,665 $ 104,627 $ 69,509
---------- ---------- ---------
---------- ---------- ---------
Current provision:
United States................................................................ $ 24,174 $ 18,045 $ 25,771
Foreign...................................................................... 15,993 16,144 3,000
---------- ---------- ---------
40,167 34,189 28,771
---------- ---------- ---------
---------- ---------- ---------
Deferred provision (benefit):
United States................................................................ 1,884 7,122 (1,103)
Foreign...................................................................... 36 458 (559)
---------- ---------- ---------
1,920 7,580 (1,662)
---------- ---------- ---------
Total provision for income taxes............................................... $ 42,087 $ 41,769 $ 27,109
---------- ---------- ---------
---------- ---------- ---------
</TABLE>
At December 31, 1996, the Company had $15,009 of foreign tax loss
carryforwards, of which $2,100 expires at various dates through 2001 and the
balance can be carried forward indefinitely, and $380 of tax credit
carryforwards that expire in various periods from 1997 to 1999. Accrued income
tax liabilities of $11,352 and $24,632 at December 31, 1996 and 1995,
respectively, are included in other accrued expenses on the Consolidated Balance
Sheet.
Differences between the U.S. statutory federal tax rate and the Company's
effective income tax rate are analyzed below:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-------------------------------
<S> <C> <C> <C>
1996 1995 1994
--------- --------- ---------
U.S. statutory federal tax rate...................................................... 35.0% 35.0% 35.0%
State and local taxes................................................................ 1.5 1.2 1.8
Non-deductible purchase accounting differences....................................... 3.7 3.6 5.4
Foreign tax provisions at rates different from the U.S. statutory rate............... .5 4.8 .7
Tax cost (benefit) of foreign dividend income, net of related tax credits............ (2.6) (2.8) .2
Valuation allowance.................................................................. (4.1) (1.8) (5.3)
Other................................................................................ 4.4 (.1) 1.2
--- --- ---
Effective tax rate................................................................... 38.4% 39.9% 39.0%
--- --- ---
--- --- ---
</TABLE>
F-10
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
NOTE 3--INCOME TAXES (CONTINUED)
The Company's deferred tax assets and liabilities, prior to valuation
allowance, were comprised of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
<S> <C> <C>
1996 1995
--------- ---------
Deferred tax assets:
Accrued liabilities and reserves...................................... $ 6,359 $ 9,190
Operating loss carryforwards.......................................... 4,447 5,663
Foreign tax credit carryforwards...................................... 380 1,558
Employee benefits..................................................... 6,459 8,499
--------- ---------
$ 17,645 $ 24,910
--------- ---------
--------- ---------
Deferred tax liabilities:
Depreciation.......................................................... $ 9,351 $ 10,262
Marketable securities................................................. 1,985 2,570
Prepaid pension costs................................................. 4,930 3,510
--------- ---------
$ 16,266 $ 16,342
--------- ---------
--------- ---------
</TABLE>
A valuation allowance of $8,184 and $12,628 at December 31, 1996 and 1995,
respectively, has been recorded which relates primarily to foreign net operating
loss carryforwards, foreign tax credits and certain deferred tax deductions for
which a tax benefit is less likely than not to be received. The net change in
the valuation allowance for deferred tax assets was a decrease of $4,444 in 1996
and $1,842 in 1995 and reduced income tax expenses each year. The net decrease
in the valuation allowance related primarily to benefits arising from
utilization of foreign net operating losses and foreign tax credit carryforwards
in 1996 and 1995. Changes to certain deferred tax deductions resulted in an
increase to the valuation allowance for 1995 and a decrease for 1996. Current
and non-current deferred tax assets and liabilities within the same tax
jurisdiction are offset for presentation in the consolidated balance sheet.
United States income taxes have not been provided on undistributed earnings
of international subsidiaries. The Company's intention is to reinvest these
earnings permanently or to repatriate the earnings only when it is tax effective
to do so. Accordingly, the Company believes that any United States tax on
repatriated earnings would be substantially offset by U.S. foreign tax credits.
NOTE 4--BENEFIT PLANS AND OTHER POSTRETIREMENT BENEFITS
The Company and its domestic subsidiaries have a number of defined benefit
plans covering substantially all U.S. employees. Plan benefits are generally
based on years of service and compensation. The plans are noncontributory,
except for certain salaried employees. Certain foreign subsidiaries have
F-11
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
NOTE 4--BENEFIT PLANS AND OTHER POSTRETIREMENT BENEFITS (CONTINUED)
defined benefit plans covering their employees. The following is a summary of
the defined benefit plans' funded status as of the most recent actuarial
valuations (December 31, 1996 and 1995).
<TABLE>
<CAPTION>
DECEMBER 31, 1996 DECEMBER 31, 1995
-------------------------- --------------------------
<S> <C> <C> <C> <C>
ACCUMULATED ASSETS ACCUMULATED ASSETS
BENEFITS EXCEED BENEFITS EXCEED
EXCEED ACCUMULATED EXCEED ACCUMULATED
ASSETS BENEFITS ASSETS BENEFITS
------------ ------------ ------------ ------------
Actuarial present value of benefit obligations:
Vested benefit obligation................................. $ 72,983 $ 102,685 $ 145,750 $ 26,595
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Accumulated benefit obligation............................ $ 74,319 $ 104,576 $ 147,390 $ 26,802
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Projected benefit obligation.............................. $ 76,959 $ 112,777 $ 156,824 $ 28,316
Plan assets at fair value................................. 42,637 136,202 114,485 39,366
------------ ------------ ------------ ------------
Plan assets over (under) projected benefit obligation..... (34,322) 23,425 (42,339) 11,050
Unrecognized net loss (gain).............................. 11,625 (2,994) 22,986 (2,365)
Unrecognized prior service cost........................... 4,116 1,351 6,214 (154)
Unrecognized transition asset............................. 241 (3,350) (11) (2,236)
------------ ------------ ------------ ------------
Pension asset (liability) included in the Consolidated
Balance Sheet........................................... $ (18,340) $ 18,432 $ (13,150) $ 6,295
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
<S> <C> <C> <C>
1996 1995 1994
--------- --------- ---------
Net pension expense included the following components:
Service cost benefits earned.................................................... $ 3,551 $ 3,221 $ 3,163
Interest cost on projected benefit obligation................................... 13,707 13,313 12,508
Actual return on plan assets.................................................... (16,193) (33,906) 4,664
Net amortization and deferral of actuarial (gains) losses....................... 1,321 20,045 (17,862)
--------- --------- ---------
Net pension expense............................................................... $ 2,386 $ 2,673 $ 2,473
--------- --------- ---------
--------- --------- ---------
</TABLE>
The weighted-average discount rate and rate of increase in future
compensation levels used in determining actuarial present value of the projected
benefit obligation was 7.5% (7.5% in 1995 and 8.5% in 1994) and 3.50% (3.50% in
1995 and 4.50% in 1994), respectively. The expected long-term rate of return on
assets was 10.5%. Plan assets consist primarily of U.S. equity and debt
securities. The largest non-U.S. plan, in accordance with local custom, is
unfunded and had an accumulated benefit obligation of approximately $20,485 and
$20,761 at December 31, 1996 and 1995, respectively. Such obligation is included
in the consolidated balance sheet and the tables above. Pension plans of certain
of the Company's other international subsidiaries generally do not determine the
actuarial value of accumulated benefits and the value of net assets on the basis
shown above. The plans, in accordance with local practices, are generally
unfunded. The vested benefit obligations of these plans are not significant.
In accordance with the provisions of FAS No. 87, the Company recorded a
minimum pension liability at December 31, 1996 of 13,572 ($15,558 at December
31, 1995) for circumstances in which a pension
F-12
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
NOTE 4--BENEFIT PLANS AND OTHER POSTRETIREMENT BENEFITS (CONTINUED)
plan's accumulated benefit obligation exceeded the fair value of the plan's
assets and accrued pension liability. Such liability was partially offset by an
intangible asset equal to the unrecognized prior service cost, with the balance
recorded as a reduction in shareholders' equity, net of related deferred tax
benefits.
The Company maintains self insurance programs for that portion of its health
care and workers compensation costs not covered by insurance. The Company also
provides certain health care and life insurance benefits to certain eligible
retirees through postretirement benefit programs. Beginning in late 1996, the
Company implemented changes in its postretirement medical benefit plans such
that the Company's share of the cost of such plans for most participants is
fixed, and any increase in the cost of such plans will be the responsibility of
the retirees. The cost of postretirement health care and life insurance benefit
programs charged to expense was approximately $2,734, $2,088, and $1,831 for the
years 1996, 1995 and 1994, respectively. The Company expects to fund the benefit
costs principally on a pay-as-you-go basis. Since the Company has modified its
postretirement medical plans to hold constant its obligation and since the
accumulated postretirement benefit obligation ("APBO") and the net
postretirement benefit expense are not material in relation to the Company's
financial condition or results of operations, management believes any change in
medical costs from that estimated will not have a significant impact on the
Company. The discount rate used in determining the APBO at December 31, 1996 and
1995 was 7.5%.
Summary information on the Company's postretirement medical plans as of
December 31, 1996 and 1995 is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
<S> <C> <C>
1996 1995
--------- ---------
Accumulated postretirement benefit obligation:
Retirees.............................................................. $ 10,710 $ 15,486
Fully eligible, active plan participants.............................. 1,236 832
Other active participants............................................. 1,156 825
--------- ---------
Postretirement benefit obligation..................................... 13,102 17,143
Unrecognized gain (loss).............................................. (6,815) (2,891)
Unrecognized transition obligation.................................... (933) (7,134)
--------- ---------
Postretirement benefit liability included in the balance sheet........ $ 5,354 $ 7,118
--------- ---------
--------- ---------
Components of net postretirement benefit expense are as follows:
Service cost.......................................................... $ 36 $ 26
Interest cost......................................................... 1,545 1,535
Amortization of transition obligation................................. 424 424
Net amortization and deferral of actuarial (gains) losses............. 729 103
--------- ---------
Net postretirement benefit expense.................................... $ 2,734 $ 2,088
--------- ---------
--------- ---------
</TABLE>
NOTE 5--SHAREHOLDERS' EQUITY
The Company has entered into a Stockholders' Agreement with Lawrence J.
DeGeorge, Chairman. The Agreement provides that if Mr. DeGeorge, together with
his estate and his spouse, own at least 25%
F-13
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
NOTE 5--SHAREHOLDERS' EQUITY (CONTINUED)
of the Company's outstanding common stock, the Company will agree to nominate
directors designated by Mr. DeGeorge, his estate or his spouse that represent up
to 25% of the Board of Directors (but in no event fewer than two directors). If
Mr. DeGeorge, together with his estate and his spouse, own less than 25% but at
least 10% of the Company's outstanding common stock, the Company will agree to
nominate that number of directors designated by Mr. DeGeorge, his estate or his
spouse, that represent not less than 10% of the Board of Directors (but in no
event fewer than one director). The Agreement also provides for certain
registration rights in respect of common stock owned by Mr. DeGeorge. At
December 31, 1996, Mr. DeGeorge, his estate and his spouse beneficially owned
approximately 25.2% of the Company's common stock on a fully diluted basis.
The Company has authorized 3,750,000 shares of Class B Common Stock, par
value $.001. Such shares are equivalent to Class A Common Stock except the Class
B shares are non-voting. There are no Class B shares outstanding.
The Company has adopted a stock option plan which, as amended in 1996,
authorized the granting of stock options by the Board of Directors for up to a
maximum of 1,000,000 shares of Class A Common Stock. Options will be granted at
fair market value at the time of the grant. Options granted under the Stock
Option Plan may constitute incentive stock options (within the meaning of
Section 422A of the Internal Revenue Code of 1986) or nonstatutory stock
options. Such shares vest ratably over a period of three years from date of
grant and are exercisable over a period of ten years from date of grant. At
December 31, 1996 and 1995, 157,841 and 82,343 options were exercisable,
respectively.
Stock option plan activity for 1994, 1995, and 1996 was as follows:
<TABLE>
<CAPTION>
OPTIONS AVERAGE PRICE
--------- -------------
<S> <C> <C>
OPTIONS OUTSTANDING AT DECEMBER 31, 1993............................ 202,667 $ 8.94
Options granted..................................................... 155,000 15.53
Options exercised................................................... (47,787) 8.65
Options cancelled................................................... (38,499) 11.66
---------
OPTIONS OUTSTANDING AT DECEMBER 31, 1994............................ 271,381 12.36
Options granted..................................................... 155,500 26.32
Options exercised................................................... (54,705) 11.40
Options cancelled................................................... (58,332) 18.56
---------
OPTIONS OUTSTANDING AT DECEMBER 31, 1995............................ 313,844 18.48
Options granted..................................................... 173,600 23.82
Options exercised................................................... (15,005) 11.11
Options cancelled................................................... (49,001) 21.53
---------
OPTIONS OUTSTANDING AT DECEMBER 31, 1996............................ 423,438 $ 20.58
---------
---------
</TABLE>
F-14
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
NOTE 5--SHAREHOLDERS' EQUITY (CONTINUED)
The following table summarizes information about stock options outstanding
at December 31, 1996:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
--------------------------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
AVERAGE AVERAGE
EXERCISE PRICE SHARES PRICE TERM SHARES PRICE
- --------------------- --------- --------- ----- --------- ---------
$ 5.00-- $ 10.00 64,003 $ 9.14 5.93 64,003 $ 9.14
10.01-- 15.00 -- -- -- -- --
15.01-- 20.00 91,335 $ 15.59 7.25 56,838 $ 15.50
20.01-- 25.00 158,100 $ 23.88 9.25 333 $ 25.00
25.01-- 30.00 110,000 $ 26.63 8.25 36,667 $ 26.63
</TABLE>
The Company applies APB Opinion 25, "Accounting for Stock Issued to
Employees," and related interpretations in accounting for the stock option plan.
Accordingly, no compensation cost has been recognized for the plan. Had
compensation cost for the stock option plan been determined based on the fair
value of the option at date of grant consistent with the requirements of
Statement of Financial Accounting Standards No 123, "Accounting for Stock-Based
Compensation," the Company's net income and earnings per share would have been
reduced to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Net income
As reported........................................................... $ 67,578 $ 62,858
Pro forma............................................................. 66,884 62,366
Net income per share
As reported........................................................... $ 1.45 $ 1.33
Pro forma............................................................. 1.43 1.32
</TABLE>
The fair value of each stock option has been estimated at the date of grant
using the Black-Scholes option pricing model with the following weighted-average
assumptions:
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Risk free interest rate............................................... 6.1% 6.6%
Expected life......................................................... 4 years 4 years
Expected volatility................................................... 30.0% 30.0%
Expected dividend yield............................................... -- --
</TABLE>
The weighted-average fair values of options granted during 1996 and 1995
were $7.98 and $9.14, respectively.
F-15
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
NOTE 5--SHAREHOLDERS' EQUITY (CONTINUED)
Activity in the Company's Shareholders' Equity cumulative valuation
adjustment accounts for 1994, 1995 and 1996 is as follows:
<TABLE>
<CAPTION>
CUMULATIVE
CUMULATIVE MINIMUM TOTAL
CUMULATIVE APPRECIATION PENSION CUMULATIVE
TRANSLATION IN MARKETABLE LIABILITY VALUATION
ADJUSTMENT SECURITIES ADJUSTMENT ADJUSTMENT
----------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
Balance December 31, 1993................................... $ (8,444) $ 5,804 $ (4,419) $ (7,059)
Translation adjustments................................... 3,786 3,786
Change in appreciation in market value of marketable
securities available-for-sale........................... 162 162
Change in minimum pension liability adjustment............ (4,315) (4,315)
----------- ------ ----------- -----------
Balance December 31, 1994................................... (4,658) 5,966 (8,734) (7,426)
Translation adjustments................................... 2,246 2,246
Change in appreciation in market value of marketable
securities available-for-sale........................... (1,194) (1,194)
Change in minimum pension liability adjustment............ 1,163 1,163
----------- ------ ----------- -----------
Balance December 31, 1995................................... (2,412) 4,772 (7,571) (5,211)
Translation adjustments................................... 647 647
Change in appreciation in market value of marketable
securities available-for-sale........................... (1,085) (1,085)
Change in minimum pension liability adjustment............ 1,762 1,762
----------- ------ ----------- -----------
Balance December 31, 1996................................... $ (1,765) $ 3,687 $ (5,809) $ (3,887)
----------- ------ ----------- -----------
----------- ------ ----------- -----------
</TABLE>
NOTE 6--LEASES
At December 31, 1996, the Company was committed under operating leases which
expire at various dates through 2004. Total rent expense under operating leases
for the years 1996, 1995, and 1994 was $12,216, $11,594 and $10,108,
respectively.
MINIMUM LEASE PAYMENTS UNDER NON-CANCELABLE OPERATING LEASES ARE AS FOLLOWS:
<TABLE>
<S> <C>
1997............................................................... $ 7,249
1998............................................................... 5,974
1999............................................................... 3,849
2000............................................................... 2,851
2001............................................................... 2,002
Beyond 2001........................................................ 2,915
---------
Total minimum obligation..................................... $ 24,840
---------
---------
</TABLE>
F-16
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
NOTE 7--INTERNATIONAL OPERATIONS
A portion of the Company's revenues and assets relate to international
operations. The Company has manufacturing facilities in Germany, the United
Kingdom, France, Canada, Taiwan and Hong Kong and operations of lesser size in a
number of other countries. Amounts included in the accompanying consolidated
financial statements associated with operations outside the United States
consist of the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
<S> <C> <C> <C>
1996 1995 1994
---------- ---------- ----------
Net sales:
United States operations................................................... $ 503,385 $ 534,322 $ 494,299
International operations:
Europe................................................................. 233,670 217,143 177,549
Other.................................................................. 92,689 78,442 59,744
Eliminations............................................................... (53,523) (46,674) (38,941)
---------- ---------- ----------
Net sales............................................................ $ 776,221 $ 783,233 $ 692,651
---------- ---------- ----------
---------- ---------- ----------
Net income before extraordinary item:
United States operations................................................... $ 42,614 $ 46,493 $ 25,505
International operations:
Europe................................................................. 21,954 16,266 16,679
Other.................................................................. 3,010 99 216
---------- ---------- ----------
Net income before extraordinary item................................. $ 67,578 $ 62,858 $ 42,400
---------- ---------- ----------
---------- ---------- ----------
Identifiable assets:
United States operations................................................... $ 473,889 $ 458,313 $ 470,209
International operations:
Europe................................................................. 172,640 170,319 155,833
Other.................................................................. 75,560 73,406 65,682
Eliminations............................................................... (11,427) (12,114) (14,669)
---------- ---------- ----------
Total assets......................................................... $ 710,662 $ 689,924 $ 677,055
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
- ------------------------
Note: Corporate net income (loss) and assets are included in United States
operations.
The Company had export sales from its United States operations of
approximately $80,000, $118,000 and $93,000 in 1996, 1995 and 1994,
respectively. The sales were made principally to Asia and the Far East, Europe
and Latin America.
Pursuant to FAS No. 52, "Foreign Currency Translation," the financial
position and results of operations of all of the Company's significant foreign
subsidiaries are measured using local currency as the functional currency.
Assets and liabilities of such subsidiaries have been translated at current
exchange rates, and related revenues and expenses have been translated at
weighted average exchange rates. The aggregate effect of translation adjustments
so calculated is included as a separate component of shareholders' equity.
Transaction gains and losses are included in other expenses, net.
The Company periodically enters into foreign exchange contracts to hedge its
transaction exposures. At December 31, 1996, the Company had no outstanding
foreign exchange contracts.
F-17
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
NOTE 8--OTHER EXPENSES, NET
Other income (expense) is comprised as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
<S> <C> <C> <C>
1996 1995 1994
--------- --------- ---------
Royalty income (expense).......................................................... $ 108 $ (59) $ 92
Interest income................................................................... 784 134 66
Foreign currency transaction gains (losses)....................................... 339 205 (357)
Equity in net earnings (losses) of investments.................................... (60) 272
Gain (loss) on sale of assets..................................................... (28) 262 (18)
Program fees on sale of accounts receivable....................................... (3,504) (3,902) (3,180)
Minority interests................................................................ (251) (407) (105)
Other............................................................................. (1,144) (688) (930)
--------- --------- ---------
$ (3,696) $ (4,515) $ (4,160)
--------- --------- ---------
--------- --------- ---------
</TABLE>
NOTE 9--COMMITMENTS AND CONTINGENCIES
In the course of pursuing its normal business activities, the Company is
involved in various legal proceedings and claims. Management does not expect
that amounts, if any, which may be required to be paid by reason of such
proceedings or claims will have a material effect on the Company's financial
position or results of operations.
Subsequent to the acquisition of Amphenol from Allied Signal Corporation
("Allied") in 1987, Amphenol and Allied have been named jointly and severally
liable as potentially responsible parties in relation to several environmental
cleanup sites. Amphenol and Allied have jointly consented to perform certain
investigations and remedial and monitoring activities at two sites and they have
been jointly ordered to perform work at another site. The responsibility for
costs incurred relating to these sites is apportioned between Amphenol and
Allied based on an agreement entered into in connection with the acquisition.
For sites covered by this agreement, to the extent that conditions or
circumstances occurred or existed at the time of or prior to the acquisition,
the first $13.0 million of costs are borne by Amphenol and have been incurred as
of December 31, 1996. Allied is obligated to pay 80% of the excess over $13,000
and 100% of the excess over $30,000. Management does not believe that the costs
associated with resolution of these or any other environmental matters will have
a material adverse effect on the Company's financial position or results of
operations.
In December 1993, a subsidiary of the Company entered into a four year
agreement with a financial institution whereby the subsidiary would sell an
undivided interest of up to $50,000 in a designated pool of qualified accounts
receivable. Under the terms of the agreement, new receivables are added to the
pool as collections reduce previously sold accounts receivable. The Company
services, administers and collects the receivables on behalf of the purchaser.
Fees payable to the purchaser under this agreement are equivalent to rates
afforded high quality commercial paper issuers plus certain administrative
expenses and are included in other expense, net in the accompanying Consolidated
Statement of Income. The agreement contains certain covenants and provides for
various events of termination. In certain circumstances the Company is
contingently liable for the collection of the receivables sold; management
believes that its allowance for doubtful accounts will be adequate to absorb the
expense of any such liability. At December 31, 1996 and 1995, approximately
$50,000 in receivables were sold under the agreement and are
F-18
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
NOTE 9--COMMITMENTS AND CONTINGENCIES (CONTINUED)
therefore not reflected in the accounts receivable balance in the accompanying
Consolidated Balance Sheet at that date.
NOTE 10--FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value.
CASH AND SHORT-TERM CASH INVESTMENTS: The carrying amount approximates fair
value because of the short maturity of those instruments.
LONG-TERM DEBT: The fair value of the Company's long-term debt is estimated
based on the quoted market prices for the same or similar issues or on the
current rates offered to the Company for debt of the same remaining maturities.
INVESTMENTS: The fair value of investments is based upon quoted market
prices. The fair value equals the carrying value of equity investments, which
are classified as available-for-sale.
At December 31, 1996 and 1995, based on market quotes for the same or
similar securities, it is estimated that the Company's 12.75% subordinated
debentures due 2002 and 10.45% senior notes due 2001 were trading at premiums of
approximately 10% to 20% over book value. It is estimated that the carrying
value of the Company's other financial instruments at December 31, 1996 and 1995
approximates fair value.
The Company periodically uses derivative financial instruments. The
instruments are primarily used to manage defined interest rate risk, and to a
lesser extent foreign exchange and commodity risks arising out of the Company's
core activities. During 1994, the Company had interest rate protection
agreements that fixed the interest cost relating to the majority of the
Company's floating rate debt. During 1995, the Company used forward contracts to
hedge certain foreign currency exposures. There were no derivative financial
instruments outstanding at December 31, 1996 and 1995.
F-19
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
NOTE 11--SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------------------------
<S> <C> <C> <C> <C>
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
---------- ---------- ------------ ------------
1996
Net sales.................................................... $ 194,822 $ 198,921 $ 184,876 $ 197,602
Gross profit, including depreciation......................... 66,639 67,816 63,523 66,539
Net income................................................... 16,940 17,408 16,697 16,533
Net income per share......................................... .36 .37 .36 .37
Stock price - High........................................... 26 27 5/8 22 7/8 23
- Low............................................... 20 1/8 19 7/8 18 3/4 19
1995
Net sales.................................................... $ 197,975 $ 207,584 $ 189,012 $ 188,662
Gross profit, including depreciation......................... 63,840 67,267 64,630 64,771
Net income................................................... 14,221 16,065 16,090 16,482
Net income per share......................................... .30 .34 .34 .35
Stock price - High........................................... 27 1/2 30 3/8 29 1/2 24 1/4
- Low............................................... 20 23 3/4 21 1/2 18 3/4
1994
Net sales.................................................... $ 155,508 $ 173,565 $ 178,172 $ 185,406
Gross profit, including depreciation......................... 46,974 54,431 56,606 59,997
Net income................................................... 7,047(a) 10,620 11,705 13,028
Net income per share......................................... .16(a) .22 .25 .28
Stock price - High........................................... 18 18 1/2 24 25 1/8
- Low............................................... 14 3/8 14 1/8 16 1/4 20 7/8
</TABLE>
- ------------------------
(a) Excludes an extraordinary charge for the write off of deferred debt issuance
costs of $4,087 or $.09 per share.
NOTE 12--SUBSEQUENT EVENT--PROPOSED TRANSACTION
On January 23, 1997, the Company announced that it signed an Agreement and
Plan of Merger ("Agreement") with an affiliate of Kohlberg Kravis Roberts & Co.
L.P. ("KKR"). Upon completion of the transaction, which is expected to be
consummated in April 1997, affiliates of KKR will be the majority owner of the
Company. The Agreement provides that the owner of each outstanding share of
Class A common stock can elect either to receive $26.00 in cash for that share
or to retain that share. However, in no event can more than 4.4 million shares
of common stock (approximately 10% of the currently outstanding shares) be
retained by present Amphenol shareholders. If holders elect to retain more than
4.4 million of the outstanding shares, then the shares available will be
prorated among those electing to retain and cash will be paid for all other
shares. If holders elect to retain fewer than 4.4 million of the outstanding
shares, the remaining available shares will be prorated among those electing
cash. Following the merger, affiliates of KKR expect to own in excess of 75% of
the Company's outstanding shares. Affiliates of KKR will invest up to $374
million of equity in the transaction. The balance of funds necessary to complete
the transaction, estimated at approximately $990 million, including refinancing
of the Company's existing indebtedness and obligations, will come from
borrowings.
F-20
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
NOTE 12--SUBSEQUENT EVENT--PROPOSED TRANSACTION (CONTINUED)
Lawrence J. DeGeorge, Chairman of the Board of the Company, and certain
members of his family (and a trust founded by them) who hold, in the aggregate,
approximately 30% of the outstanding common stock, have agreed to vote their
shares in favor of the merger. An affiliate of KKR will also have the option to
call the DeGeorge family shares under certain circumstances, and following the
recapitalization the DeGeorge interests will have the option to put the shares
which they retain following the merger to the affiliate, in each case for $26.00
in cash per share.
The merger is subject to certain conditions including the approval of the
Company's shareholders at its annual meeting, the expiration of antitrust
regulatory waiting periods and the completion of financing arrangements. After
the merger, Amphenol will continue to operate as an independent public company
under its current name with headquarters in Wallingford, Connecticut.
F-21
<PAGE>
PHOTOS FOR INSIDE BACK COVER TO PROSPECTUS
AMPHENOL LOGO
INNOVATIVE APPLICATION--SPECIFIC PRODUCTS
HIGH PERFORMANCE ENVIRONMENTAL (AEROSPACE) CONNECTOR PRODUCTS AND EXAMPLES
OF THEIR APPLICATIONS.
COMMERCIAL, INDUSTRIAL AND AUTOMOTIVE CONNECTOR PRODUCTS AND EXAMPLES OF
THEIR APPLICATIONS.
COMMUNICATIONS--RELATED CONNECTOR PRODUCTS AND EXAMPLES OF THEIR
APPLICATIONS.
THE COMPANY OFFERS A BROAD RANGE OF PRODUCTS TO MEET THE SPECIFIC
INTERCONNECT REQUIREMENTS OF ITS CUSTOMERS IN PRODUCING PRODUCTS SUCH AS THOSE
PICTURED ABOVE.
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER
TO BUY ANY SECURITY OTHER THAN THOSE TO WHICH IT RELATES IN ANY JURISDICTION
WHERE OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THE PROSPECTUS OR IN THE AFFAIRS
OF THE COMPANY SINCE THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
Available Information................. 3
Incorporation of Certain Information
by Reference........................ 3
Prospectus Summary.................... 4
Risk Factors.......................... 13
The Merger............................ 20
Use of Proceeds....................... 22
Capitalization........................ 23
Pro Forma Consolidated Financial
Statements (Unaudited).............. 24
Selected Historical Consolidated
Financial and Other Data............ 29
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 30
Business.............................. 35
Management............................ 46
Ownership of Common Stock Following
the Merger.......................... 49
Related Party Transactions............ 51
Description of Credit Facilities...... 51
Description of the Notes.............. 53
Underwriting.......................... 88
Legal Matters......................... 89
Experts............................... 89
Index to Financial Statements......... F-1
</TABLE>
$240,000,000
AMPHENOL CORPORATION
% SENIOR SUBORDINATED
NOTES DUE 2007
---------------------
PROSPECTUS
---------------------
JOINT BOOK-RUNNING MANAGERS
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
LEHMAN BROTHERS
------------------
CO-MANAGERS
BT SECURITIES CORPORATION
CHASE SECURITIES INC.
, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses payable by the Company in connection with the
offering described in this Registration Statement are as follows:
<TABLE>
<S> <C>
Registration Fee.................................................. $ 72,728
Legal fees and expenses........................................... 300,000
Blue Sky fees and expenses........................................ 7,500
Accounting fees and expenses...................................... 50,000
Trustee fees and expenses......................................... 10,000
Printing and duplicating expenses................................. 250,000
NASD fee.......................................................... 24,500
Miscellaneous expenses............................................ 35,272
---------
Total........................................................... $ 750,000
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law (the "DGCL") provides
that a corporation may indemnify directors and officers as well as other
employees and individuals against expenses (including attorneys' fees),
judgments, fines, and amounts paid in settlement in connection with specified
actions, suits or proceedings, whether civil, criminal, administrative, or
investigative (other than action by or in the right of the corporation a
"derivative action"), if they acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceedings, had no
reasonable cause to believe their conduct was unlawful. A similar standard is
applicable in the case of derivative actions, except that indemnification only
extends to expenses (including attorneys' fees) incurred in connection with the
defense or settlement of such actions, and the statute requires court approval
before there can be any indemnification where the person seeking indemnification
has been found liable to the corporation. The statute provides that it is not
exclusive of other indemnification that may be granted by a corporation's
charter, by-laws, disinterested director vote, stockholder vote, agreement or
otherwise. Article VIII of the Registrant's By-laws requires indemnification to
the fullest extent permitted by Delaware law.
Section 102(b)(7) of the DGCL permits a corporation to provide in its
certificate of incorporation that a director of the corporation shall not be
personally liable to the corporation or its stockholders for monetary damages
for breach of fiduciary duties as a director, except for liability (i) for any
transaction from which the director derives an improper personal benefit, (ii)
for acts or omissions not in good faith or that involve intentional misconduct
or a knowing violation of law, (iii) for improper payment of dividends or
redemptions of shares, or (iv) for any breach of a director's duty of loyalty to
the company or its stockholders. Article Eighth of the Registrant's Restated
Certificate of Incorporation includes such a provision.
ITEM 16. EXHIBITS.
See Exhibit Index.
II-1
<PAGE>
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the Company's
annual report pursuant to section 13(a) or section 15(d) of the Exchange Act
(and, where applicable, each filing of an employee benefit plan's annual report
pursuant to section 15(d) of the Exchange Act) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions set forth in response to Item 15, or
otherwise, the registrant has 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 registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant 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 registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial BONA FIDE offering thereof.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this amendment to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized in the City of Wallingford, State of Connecticut, on
April 29, 1997.
AMPHENOL CORPORATION
By: /s/ EDWARD G. JEPSEN
---------------------------------------------
Pursuant to the requirements of the Securities Act of 1933, as amended, this
amendment to the Registration Statement has been signed on April 29, 1997 by the
following persons in the capacities indicated.
SIGNATURE TITLE
- ------------------------------ --------------------------
*
- ------------------------------ Chairman of the Board
Lawrence J. DeGeorge
Director, Chief Financial
* Officer (Principal
- ------------------------------ Financial and Accounting
Edward G. Jepsen Officer)
*
- ------------------------------ Director
Martin H. Loeffler
*
- ------------------------------ Director
Timothy F. Cohane
*
- ------------------------------ Director
Florence A. DeGeorge
*
- ------------------------------ Director
A. Henry Morgan
*
- ------------------------------ Director
Dr. Marcia A. Savage
*By: /s/ EDWARD C.
WETMORE
- ------------------------------
As Attorney in Fact
II-3
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- ----------- ---------------------------------------------------------------------------------------------------------
<C> <S>
*1 Form of Underwriting Agreement
2.1 Agreement and Plan of Merger dated as of January 23, 1997 between NXS Acquisition Corp. and Amphenol
Corporation (incorporated by reference to Current Report on Form 8-K dated January 23, 1997 (the "Form
8-K"))
2.2 Amendment, dated as of April 9, 1997, to the Agreement and Plan of Merger between NXS Acquisition Corp.
and Amphenol Corporation, dated as of January 23, 1997 (incorporated by reference to the Registration
Statement on Form S-4 (Registration No. 333-25195) filed on April 15, 1997)
2.3 Stockholders Agreement (incorporated by reference to the Form 8-K)
*4.1 Form of Indenture between Amphenol Corporation and IBJ Schroder Bank & Trust Company, as Trustee
*4.2 Form of Senior Subordinated Note (included in Exhibit 4.1)
+5 Opinion of Simpson Thacher & Bartlett
+12 Computation of Ratio of Earnings to Fixed Charges
+23.1 Consent of Simpson Thacher & Bartlett (included as part of its opinion filed as Exhibit 5 hereto)
*23.2 Consent of Price Waterhouse LLP, independent accountants
+24 Powers of Attorney
+25 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of IBJ Schroder Bank & Trust
Compay, as Trustee
+99.1 Consent of Henry R. Kravis
+99.2 Consent of George R. Roberts
+99.3 Consent of Michael W. Michelson
+99.4 Consent of Marc S. Lipschultz
</TABLE>
- ------------------------
* Filed herewith
+ Previously filed
<PAGE>
Exhibit 1
$240,000,000
AMPHENOL CORPORATION
___% SENIOR SUBORDINATED NOTES DUE 2007
FORM OF UNDERWRITING AGREEMENT
May __, 1997
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
LEHMAN BROTHERS INC.
BT SECURITIES CORPORATION
CHASE SECURITIES INC.
c/o Donaldson, Lufkin & Jenrette
Securities Corporation
2121 Avenue of the Stars
Los Angeles, California 90067
Ladies and Gentlemen:
Amphenol Corporation, a Delaware corporation (the "Company"),
proposes to issue and sell $240,000,000 in principal amount of its ___% Senior
Subordinated Notes due 2007 (the "Securities") to Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJ"), Lehman Brothers Inc. ("Lehman"), BT Securities
Corporation ("BT") and Chase Securities Inc. ("CSI" and, together with DLJ,
Lehman and BT, the "Underwriters"). The Securities are to be issued pursuant to
the provisions of an Indenture to be dated as of May __, 1997, (the "Indenture")
between the Company and IBJ Schroder Bank & Trust Company, as Trustee (the
"Trustee").
It is understood by the parties hereto that (i) the Company has
entered into the Agreement and Plan of Merger, dated as of January 23, 1997 (as
amended as of April 9, 1997, the "Merger Agreement"), between the Company and
NXS Acquisition Corp., (ii) on the Closing Date (as defined), the Company will
purchase for cash, upon the terms of and subject to the Offer to Purchase and
Consent Solicitation Statement, dated April 15, 1997 (as supplemented from time
to time, the "Statement"), and in the accompanying Consent and Letter
1
<PAGE>
of Transmittal ( the "Letter of Transmittal" and, together with the Statement,
the "Offer to Purchase") all of its outstanding 12 3/4% Senior Subordinated
Notes due 2002 (the "12 3/4% Notes") tendered by the holders thereof pursuant to
the Offer to Purchase, (iii) the Company has entered into the Dealer Manager and
Solicitation Agent Agreement, dated April 15, 1997, among the Company, DLJ and
Lehman relating to the Offer to Purchase (the "Dealer Manager Agreement"), (iv)
on or prior to the Closing Date, the Company will enter into a Supplemental
Indenture with respect to the 12 3/4% Notes, (v) the Company has entered into a
[Consent and Waiver Agreement] with holders of [a majority of] its outstanding
10.45% Senior Notes due 2001 (the "Senior Note Consent") and (vi) on or prior to
the Closing Date the Company and the other parties thereto will enter into the
Credit Facilities (as defined in the Prospectus (as defined)). [This Agreement,
the Merger Agreement, the Senior Note Consent, the Credit Facilities and the
Supplemental Indenture], in each case including all the transactions
contemplated hereby and thereby, are referred to as the "Transaction Documents."
1. Registration Statement and Prospectus. The Company has prepared
and filed with the Securities and Exchange Commission (the "Commission") in
accordance with the provisions of the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder (collectively called the
"Act"), a registration statement on Form S-3 (No. 333-22521), including a
prospectus relating to the Securities, which may be amended. The registration
statement as amended at the time when it becomes effective, including all
financial schedules and exhibits thereto and documents incorporated therein by
reference and including a registration statement (if any) filed pursuant to Rule
462(b) under the Act increasing the size of the offering registered under the
Act and information (if any) deemed to be part of the registration statement at
the time of effectiveness pursuant to Rule 430A or Rule 434 under the Act, is
hereinafter referred to as the "Registration Statement"; and the prospectus
(including any prospectus subject to completion taken together with any term
sheet meeting the requirements of Rule 434(b) or Rule 434(a) under the Act) in
the form first used to confirm sales of Securities is hereinafter referred to as
the "Prospectus," except that if any revised prospectus shall be provided to you
by the Company for use in connection with the offering of the Securities as
contemplated by Section 5 hereof which differs from the form of prospectus first
used to confirm sales of Securities, the term "Prospectus" shall refer to such
revised prospectus from and after the time it is first provided to you for such
use. Any reference herein to any preliminary prospectus or the Prospectus shall
be deemed to refer to and include the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the Act, as of the date of such
preliminary prospectus or prospectus, as the case may be, and any reference to
any amendment or supplement to any preliminary prospectus or Prospectus shall be
deemed to refer to and include any documents filed after the date of such
preliminary prospectus or Prospectus, as the case may be, under the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Commission thereunder (collectively called the "Exchange Act"), and incorporated
by reference in such preliminary prospectus or Prospectus, as the case may be;
and any reference to any amendment to the Registration Statement shall be deemed
to refer to and include any annual report of the Company filed pursuant to
Section 13(a) or 15(d) of the Exchange Act after the effective date of the
Registration Statement that is incorporated by reference in the Registration
Statement.
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2. Agreements to Sell and Purchase. On the basis of the
representations and warranties contained in this Agreement, and subject to its
terms and conditions, (i) the Company agrees to issue and sell to each
Underwriter, and each Underwriter agrees, severally and not jointly, to purchase
from the Company, the principal amount of Securities set forth opposite the name
of such Underwriter in Annex I hereto, at a purchase price of ___% of the
principal amount thereof (the "Purchase Price"), plus accrued interest thereon,
if any, from May __, 1997 to the date of payment and delivery.
3. Terms of Public Offering. The Company is advised by you that the
Underwriters propose (i) to make a public offering of their respective portions
of the Securities as soon after the effective date of the Registration Statement
as in your judgment is advisable and (ii) initially to offer the Securities upon
the terms set forth in the Prospectus.
4. Delivery and Payment. Delivery to the Underwriters of and payment
for the Securities shall be made at 10:00 A.M., New York City time, on May __,
1997, (unless postponed in accordance with the provisions of Section 9)
following the date of the public offering (the "Closing Date") at the offices of
Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New York 10017 or at
such place as you and the Company may agree in writing. The Closing Date and the
location of delivery of and the form of payment for the Securities may be varied
by agreement between you and the Company.
Certificates for the Securities shall be registered in such names
and issued in such denominations as you shall request in writing not later than
two full business days prior to the Closing Date. Such certificates shall be
made available to you for inspection not later than 9:30 A.M., New York City
time, on the business day next preceding the Closing Date. Certificates in
definitive form evidencing the Securities shall be delivered to you on the
Closing Date, with any transfer taxes thereon duly paid by the Company, for the
respective accounts of the several Underwriters, against payment of the Purchase
Price therefor by wire transfer payable in same day funds to the order of the
Company or as the Company may direct.
5. Agreements of the Company. The Company agrees with you:
(a) If necessary, to (i) file (A) an amendment to the Registration
Statement, (B) a post-effective amendment to the Registration Statement
pursuant to Rule 430A under the Act or (C) a new or additional
registration statement pursuant to Rule 462(b) or (c) under the Act, in
each case, as soon as practicable after the execution and delivery of this
Agreement; (ii) provide evidence satisfactory to the Underwriters of such
timely filing; and (iii) use its best efforts to cause the Registration
Statement or such post-effective amendment to become effective at the
earliest possible time.
(b) To comply fully and in a timely manner with the applicable
provisions of Rule 424, Rule 430A and Rule 462 under the Act.
(c) To advise you promptly and, if requested by you, to confirm such
advice in writing, (i) when the Registration Statement has become
effective and when any post-
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effective amendment to it becomes effective, (ii) of any request by the
Commission for amendments to the Registration Statement or amendments or
supplements to the Prospectus or for additional information, (iii) of the
issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or of the suspension or qualification of the
Securities for offering or sale in any jurisdiction, or the initiation of
any proceeding for such purposes, and (iv) of the happening of any event
during the period referred to in paragraph (f) below which makes any
statement of a material fact made in the Registration Statement or the
Prospectus untrue or which requires the making of any additions to or
changes in the Registration Statement or the Prospectus in order to make
the statements therein not misleading, or of the necessity to amend or
supplement the Registration Statement or Prospectus (as then amended or
supplemented) to comply with the Act or any other law. If at any time the
Commission shall issue any stop order suspending the effectiveness of the
Registration Statement, the Company will make every reasonable effort to
obtain the withdrawal or lifting of such order at the earliest possible
time.
(d) To furnish to you, without charge, a signed copy of the
Registration Statement as first filed with the Commission and each
amendment to it, including all exhibits and documents incorporated therein
by reference, and to furnish to you such number of conformed copies of the
Registration Statement as so filed and of each amendment to it, without
exhibits, as you may reasonably request.
(e) Not to file any amendment or supplement to the Registration
Statement, whether before or after the time when it becomes effective, to
make any amendment or supplement to the Prospectus or to make any filing
with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act of which you shall not previously have been advised or to
which you shall reasonably object; and to prepare and file with the
Commission, promptly upon your reasonable request, any amendment to the
Registration Statement, supplement to the Prospectus or any filing with
the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act which may be necessary or advisable in connection with the
distribution of the Securities by you, and to use its best efforts to
cause the same to become promptly effective.
(f) Promptly after the Registration Statement becomes effective, and
from time to time thereafter for such period as a prospectus is required
by law to be delivered in connection with sales by an Underwriter or a
dealer, to furnish to each Underwriter as many copies of the Prospectus
(and of any amendment or supplement to the Prospectus) as such Underwriter
may reasonably request.
(g) If, during the period specified in paragraph (f), any event
shall occur as a result of which it becomes necessary to amend or
supplement the Prospectus in order to make the statements therein, in the
light of the circumstances when the Prospectus is delivered to a
purchaser, not misleading, or if it is necessary to amend or supplement
the Prospectus to comply with the Act or the Exchange Act, forthwith to
(i)(A) prepare and file, subject to the provisions of paragraph (e) above,
with the Commission an
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<PAGE>
appropriate amendment or supplement to the Prospectus or (B) file under
the Exchange Act a document to be incorporated by reference in the
Prospectus, so that in either case, the statements in the Prospectus, as
so amended or supplemented, will not in the light of the circumstances
when it is so delivered, be misleading, or so that the Prospectus will
comply with the Act and the Exchange Act, and (ii) to furnish to each of
you, such number of copies of such documents as such Underwriter may
reasonably request.
(h) Prior to any public offering of the Securities, (i) to cooperate
with you and counsel for the Underwriters in connection with the
registration or qualification of the Securities for offer and sale by the
several Underwriters and by dealers under the state securities or Blue Sky
laws of such jurisdictions of the United States as you may request, (ii)
to continue such qualification in effect so long as required for
distribution of the Securities and (iii) to file such consents to service
of process or other documents as may be necessary in order to effect such
registration or qualification; provided, however, that the Company shall
not be required to register or qualify as a foreign corporation where it
is not now so qualified or to take any action that would subject it to the
service of process in suits or taxation, other than as to matters and
transactions relating to the offer and sale of the Securities, in any
jurisdiction where it is not now so subject.
(i) To mail and make generally available to its security holders as
soon as reasonably practicable an earning statement covering a period of
at least twelve months after the effective date (as defined in Rule 158 of
the Act) of the Registration Statement (but in no event commencing later
than 90 days after such date) which shall satisfy the provisions of
Section 11(a) of the Act.
(j) Whether or not the transactions contemplated by this Agreement
are consummated or this Agreement becomes effective or is terminated, to
pay all costs, expenses, fees and taxes incident to (i) the preparation,
printing, filing and distribution to the Underwriters of the Registration
Statement (including financial statements and exhibits), each preliminary
prospectus and all amendments and supplements to any of them prior to or
during the period specified in paragraph (f), (ii) the printing and
delivery to the Underwriters of the Prospectus and all amendments or
supplements to it during the period specified in paragraph (f), (iii) the
printing and delivery of this Agreement and the preliminary and final Blue
Sky Memoranda (including in each case any disbursements of counsel for the
Underwriters relating to such printing and delivery), (iv) the
registration with the Commission of the Securities, (v) the registration
or qualification of the Securities for offer and sale under the securities
or Blue Sky laws of the several states and any foreign jurisdiction
(including in each case fees and disbursements of counsel for the
Underwriters relating to such registration or qualification and memoranda
relating thereto), (vi) filing fees incident to securing any required
review by the National Association of Securities Dealers, Inc. ("NASD") in
connection with the offering of the Securities, (vii) furnishing such
copies of the Registration Statement, the preliminary prospectus, the
Prospectus and all amendments and supplements thereto as may be requested
for use in connection with the offering or sale of the Securities by the
Underwriters, (viii) fees, disbursements and expenses of the
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<PAGE>
Company's counsel and accountants, and (ix) all other reasonable costs and
expenses incident to the performance by the Company of its other
obligations under this Agreement.
6. Representations and Warranties. The Company represents and
warrants to each Underwriter that:
(a) The Company either (i) has filed with the Commission prior to
the effectiveness of the Registration Statement, a further amendment
thereto, including therein a final prospectus, or (ii) will file with the
Commission after the effectiveness of such Registration Statement, a final
prospectus in accordance with Rules 430A and 424(b) under the Act and
(iii) may file with the Commission after the effectiveness of such
Registration Statement, a post-effective amendment thereto or a new or
additional registration statement in accordance with Rule 462 under the
Act; any required filing of the Prospectus, or any supplement thereto,
pursuant to Rule 424(b) under the Act has been or will be made in the
manner and within the time period required thereunder; any required filing
of a post-effective amendment under Rule 430A of the Act or any new or
additional registration statement pursuant to Rule 462 under the Act has
been or will be made in the manner and within the time period required
thereunder; no stop order suspending or preventing the use of the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, has been issued and no proceedings for such purpose are, to the
knowledge of the Company, pending before or threatened by the Commission.
(b) (i) The documents incorporated by reference in the Registration
Statement, when they became effective or were filed with the Commission,
as the case may be, did 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; (ii) the
documents incorporated by reference in the Registration Statement, when
they became effective or were filed with the Commission, as the case may
be, conformed in all material respects to the requirements of the Exchange
Act; (iii) any further documents so filed and incorporated by reference in
the Registration Statement or any further amendment or supplement thereto,
when such documents become effective or are filed with the Commission, as
the case may be, will conform in all material respects to the requirements
of the Exchange Act; and (iv) any further documents so filed and
incorporated by reference in the Prospectus or any further amendment or
supplement thereto, when such documents become effective or are filed with
the Commission, as the case may be, will 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, except
that the representations and warranties set forth in this paragraph (b) do
not apply to statements or omissions in the Registration Statement or the
Prospectus based upon information relating to any Underwriter furnished
through you expressly for use therein, or to the Statement of Eligibility
(Form T-1) under the Trust Indenture Act of 1939, as amended, and the
rules and regulations of the Commission thereunder (collectively called
the "Trust Indenture Act"), of the Trustee filed as an exhibit to the
Registration Statement.
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(c) (i) The Registration Statement, in the form in which it became
or becomes effective, did not or will not contain and the Registration
Statement, as amended or supplemented, if applicable, will 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, (ii) the Registration Statement and the Prospectus comply
and, as amended or supplemented, if applicable, will comply in all
material respects with the Act and (iii) the Prospectus does not contain
and, as amended or supplemented, if applicable, will not contain an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except that the
representations and warranties set forth in this paragraph (c) do not
apply to statements or omissions in the Registration Statement or the
Prospectus, or any amendment or supplement thereto, based upon information
relating to any Underwriter furnished to the Company in writing by such
Underwriter through you expressly for use therein or to the Statement of
Eligibility (Form T-1) under the Trust Indenture Act of the Trustee filed
as an exhibit to the Registration Statement.
(d) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or
filed pursuant to Rule 424 under the Act, and each Registration Statement
filed pursuant to Rule 462(b) under the Act, if any, complied when so
filed in all material respects with the Act; and did not contain any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that the
representations and warranties set forth in this paragraph (d) do not
apply to statements or omissions any preliminary prospectus, or any
amendment or supplement thereto, based upon information relating to any
Underwriter furnished to the Company in writing by such Underwriter
through you expressly for use therein or to the Statement of Eligibility
(Form T-1) under the Trust Indenture Act of the Trustee filed as an
exhibit to the Registration Statement.
(e) Each of the Company and its Subsidiaries (as defined) organized
under the laws of the United States, any state thereof or the District of
Columbia (the "Domestic Subsidiaries") has been duly incorporated, is
validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation and has the corporate power and authority to
carry on its business as it is currently being conducted and to own, lease
and operate its properties. The Company is duly qualified and is in good
standing as a foreign corporation authorized to do business in each
jurisdiction in which the nature of its business or its ownership or
leasing of property requires such qualification, except where to failure
to be so qualified would not have a material adverse effect on the
business, condition (financial or otherwise), results of operations or
properties of the Company and its Subsidiaries, taken as a whole (each, a
"Material Adverse Effect").
(f) Each Subsidiary of the Company that is not a Domestic Subsidiary
and would constitute a "significant subsidiary" (as defined in Section
1-02 of Regulation S-X of the Commission) has been duly incorporated (or
the equivalent thereof), is validly
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existing as a corporation in good standing under the laws of its
jurisdiction of incorporation and has the corporate power and required
authority to carry on its business as it is currently being conducted and
to own, lease and operate its properties. The term "Subsidiary" means each
person with at least nominal assets of which a majority of the voting
equity securities or other interests is owned, directly or indirectly, by
the Company as of the Closing Date, such persons being referred to
collectively as the "Subsidiaries."
(g) Each of the Domestic Subsidiaries is duly qualified and is in
good standing as a foreign corporation authorized to do business in each
jurisdiction in which the nature of its business or its ownership or
leasing of property requires such qualification, except where the failure
to be so qualified would not have a Material Adverse Effect.
(h) Each Subsidiary of the Company that is not a Domestic Subsidiary
and would constitute a "significant subsidiary" (as defined in Section
1-02 of Regulation S-X of the Commission) is duly qualified and is in good
standing (or the equivalent thereof) as a foreign corporation authorized
to do business in each jurisdiction in which the nature of its business or
its ownership or leasing of property requires such qualification, except
where the failure to be so qualified would not have a Material Adverse
Effect.
(i) All of the outstanding shares of capital stock of, or other
ownership interests in, each of the Company's Subsidiaries have been duly
authorized and validly issued and are fully paid and non-assessable and
are owned by the Company or a Subsidiary of the Company, free and clear of
any security interest, claim, lien, encumbrance or adverse interest of any
nature, except for nominal shares held pursuant to the requirements of
local law, and except as described in the Prospectus; there are no
outstanding rights, warrants or options to acquire, or securities
convertible into or exchangeable for, any shares of capital stock or other
equity interest in any of the Company's Subsidiaries.
(j) The Company has the authorized, issued and outstanding
capitalization set forth in the Prospectus under the heading
"Capitalization" (except for subsequent issuances, if any, pursuant to
reservations, agreements or employee benefit plans referred to in the
Prospectus).
(k) All of the outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid,
non-assessable and not subject to any preemptive or similar rights.
(l) The Securities have been duly authorized by the Company and,
when the Securities are executed by the Company and authenticated by the
Trustee in accordance with the provisions of the Indenture and delivered
to and paid for by the Underwriters in accordance with the terms of this
Agreement, the Securities will be entitled to the benefits of the
Indenture and will constitute valid and legally binding obligations of the
Company enforceable in accordance with their terms, subject to the effects
of (i)
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bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium
or other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally, and (ii) general principles of equity and the
discretion of the court before which any proceeding therefor may be
brought.
(m) The Securities, the Indenture and each of the Merger Agreement
and the Credit Facilities conform in all material respects as to legal
matters to the description thereof contained in the Prospectus.
(n) The Indenture has been or will, at the Closing Date, be duly
qualified under the Trust Indenture Act and has been duly and validly
authorized by the Company and, when the Securities are delivered and paid
for pursuant to this Agreement on the Closing Date, the Indenture will
have been duly executed and delivered by the Company and will constitute a
valid and legally binding agreement of the Company, enforceable in
accordance with its terms except as (i) as such enforcement may be limited
by bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or similar laws now or hereafter in effect relating to or
affecting creditors' rights generally; (ii) that the remedies of specific
performance and injunctive and other forms of relief are subject to
general equitable principles, whether enforcement is sought at law or in
equity, and that such enforcement may be subject to the discretion of the
court before which any proceedings therefor may be brought; and (iii) as
rights to indemnity and contribution may be limited by state or federal
laws relating to securities or by the policies underlying such laws.
(o) This Agreement has been duly authorized, executed and delivered
by the Company.
(p) Neither the Company nor any of its Subsidiaries is (i) in
violation of its respective charter or by-laws, (ii) in default in any
material respect in the performance of any obligation, agreement or
condition contained in any bond, debenture, note or any other evidence of
indebtedness or in any other agreement, indenture or instrument material
to the conduct of the business of the Company and its Subsidiaries, taken
as a whole, to which the Company or any of its Subsidiaries is a party or
by which it or any of its Subsidiaries or their respective property is
bound or (iii) except for violations that, individually or in the
aggregate, would not have a Material Adverse Effect or a material adverse
effect on the ability of the Company and the Underwriters to consummate
the Offering (as defined in the Prospectus), in violation of any law,
statute, rule, regulation, judgment or court decree applicable to the
Company or any of its Subsidiaries.
(q) The execution, delivery and performance of the Transaction
Documents by the Company, compliance by the Company with all the
provisions hereof and thereof and the consummation of the transactions
contemplated hereby and thereby will not conflict with, constitute a
default under or violate (i) any of the terms, conditions or provisions of
the certificate of incorporation or by-laws of the Company or any of its
Subsidiaries, (ii) any of the terms, conditions or provisions of any
document, agreement,
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indenture or other instrument to which the Company or any of its
Subsidiaries is a party or by which the Company, any of its Subsidiaries
or their respective properties are bound or (iii) any judgment, writ,
injunction, decree, order or ruling of any court or governmental authority
binding on the Company, any of its Subsidiaries or their respective
properties except, in the case of (ii) and (iii), for such conflicts,
defaults or violations that would not have a Material Adverse Effect. No
consent, approval, waiver, license or authorization or other action by or
filing with any governmental authority is required in connection with the
execution, delivery and performance by the Company of the Transaction
Documents or the consummation by the Company of the transactions
contemplated hereby and thereby, except under the Act and the state or
foreign securities or blue sky laws or except as shall have been obtained
or made on or prior to the Closing Date.
(r) The Merger Agreement has been duly authorized, executed and
delivered by the Company.
(s) [intentionally omitted]
(t) The statistical and market-related data included in the
Prospectus or incorporated therein by reference are based on or derived
from sources which the Company believes to be reliable and accurate in all
material respects.
(u) Except as otherwise set forth in the Prospectus, there are no
legal or governmental proceedings pending to which the Company or any of
its Subsidiaries is a party or of which any of their respective property
is the subject which are required to be described in the Registration
Statement or Prospectus, and to the best of the Company's knowledge, no
such proceedings are threatened. No contract or other document of a
character required to be filed as an exhibit to the Registration Statement
is not so filed as required.
(v) (i) The Company and each of its Subsidiaries has such permits,
licenses, franchises and authorizations of governmental or regulatory
authorities ("permits"), including, without limitation, under any
applicable foreign, federal, state or local law or regulation relating to
the protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants, as are necessary
to own, lease and operate its respective properties and to conduct its
business in the manner described in the Prospectus; (ii) neither the
Company nor any of its Subsidiaries has received notice of any proceedings
relating to the revocation or termination of any such permits; except, in
the case of clauses (i) and (ii), where failure to have such permits, or
the revocation or termination of any such permits would not, individually
or in the aggregate, result in a Material Adverse Effect.
(w) The Company and each of its Subsidiaries has good and marketable
title, free and clear of all liens, claims, encumbrances and restrictions
to all property and
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assets described in the Registration Statement as being owned by it except
for any such liens (i) set forth in Annex II hereto, (ii) for taxes not
yet due and payable or for taxes being contested in good faith and for
which adequate reserves, in accordance with generally accepted accounting
principles, have been taken or (iii) as would not, individually or in the
aggregate, have a Material Adverse Effect.
(x) The Company is not an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
(y) Except as set forth in the Prospectus, no holder of any security
of the Company has any right to require registration of shares of Class A
Common Stock or any other security of the Company.
(z) The Company and/or its Subsidiaries owns all rights to or has
the right to use the designs embodying all of the patents, trademarks,
service marks, trade names, copyrights, licenses and rights presently used
by them in the conduct of the Company's business and neither the Company
nor any of its Subsidiaries has received notice or is otherwise aware of
any conflict with the rights of others, the result of which conflict is
reasonably likely to result in a Material Adverse Effect, and to the best
of the Company's knowledge, there is no infringement on such patents,
trademarks, servicemarks, trade names, copyrights, licenses and right by
others the result of which infringement is reasonably likely to result in
a Material Adverse Effect.
(aa) Price Waterhouse LLP are independent public accountants with
respect to the Company as required by the Act.
(ab) The financial statements, together with related schedules and
notes forming part of the Registration Statement and the Prospectus (and
any amendment or supplement thereto), present fairly the consolidated
financial position, results of operations and changes in financial
position of the Company and its Subsidiaries on the basis stated in the
Registration Statement at the respective dates or for the respective
periods to which they apply; such statements and related schedules and
notes have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved, except as
disclosed therein; and the other financial and statistical information and
data set forth or incorporated by reference in the Registration Statement
and the Prospectus (and any amendment or supplement thereto) is, in all
material respects, accurately presented and prepared on a basis consistent
with such financial statements and the books and records of the Company
and its Subsidiaries.
(ac) The pro forma financial information and the related notes
thereto included in the Registration Statement (and any amendment or
supplement thereto) have been prepared in accordance with the applicable
requirements of the Act, include all adjustments necessary to present
fairly in all material respects the pro forma financial condition and
results of operations at the respective dates and for the respective
periods indicated.
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(ad) The Company has complied with all provisions of Section
517.075, Florida Statutes (Chapter 92-198, Laws of Florida).
(ae) Except as set forth in or contemplated by the Registration
Statement and the Prospectus, subsequent to the respective dates as of
which information is given therein and up to and including the Closing
Date, (i) none of the Company or any of its Subsidiaries has incurred any
liabilities or obligations, direct or contingent, that are material to the
Company and its Subsidiaries, taken as a whole, which have materially
changed the financial position of the Company, (ii) none of the Company or
any of its Subsidiaries has entered into any transactions that are
material to the Company and its Subsidiaries, taken as a whole, outside of
the ordinary course of business, (iii) there has not been any material
adverse change in the business, condition (financial or otherwise),
results of operations, properties or prospects of the Company and its
Subsidiaries, taken as a whole (each, a "Material Adverse Change") and
(iv) there has not been any change in the capital stock or increase in
short-term or long-term debt of the Company or any of its Subsidiaries
(other than as a result of revolving borrowings for working capital
incurred in the ordinary course of business), or any issuance of options
or warrants to purchase capital stock of the Company or any of its
Subsidiaries, or any payment of or declaration to pay any dividends or
other distribution with respect to the capital stock of the Company.
(af) Except as disclosed in the Prospectus (including with respect
to this Agreement), neither the Company nor any Subsidiary is a party to
any contract, agreement or understanding with any person that would give
rise to a valid claim against the Company or any Subsidiary or the
Underwriters for a brokerage commission, finder's fee or like payment in
connection with the offering of the Securities.
7. Indemnification. (a) The Company agrees to indemnify and hold
harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act, from and against any and all losses, claims, damages,
liabilities and judgments caused by any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or
the Prospectus (as amended or supplemented), any preliminary prospectus,
or caused by any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages,
liabilities or judgments are caused by any such untrue statement or
omission or alleged untrue statement or omission based upon information
relating to any Underwriter furnished in writing to the Company or on
behalf of any Underwriter through you expressly for use therein; provided,
however, that the foregoing indemnity agreement with respect to any
preliminary prospectus shall not inure to the benefit of any Underwriter
from whom the person asserting any such losses, claims, damages and
liabilities and judgments purchased Securities, or any person controlling
such Underwriter, if a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or delivered by or on behalf of such
Underwriter to such person,
12
<PAGE>
if required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Securities to such person, and if the
Prospectus (as amended and supplemented) would have cured the defect
giving rise to such loss, claim, damage, liability or judgment. In
addition, the Company agrees to indemnify and hold harmless any
Underwriter and each person, if any, who controls any Underwriter within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
from and against all costs of such Underwriter or controlling person
(including reasonable fees and expenses of counsel) incurred in connection
with the enforcement by the Underwriter or such controlling person of the
indemnification provisions of Section 7(a) of this Agreement against the
Company.
(b) In case any action shall be brought against any Underwriter or
any person controlling such Underwriter, based upon any preliminary
prospectus, the Registration Statement or the Prospectus, any amendment or
supplement thereto or any document incorporated therein by reference and
with respect to which indemnity may be sought against the Company, such
Underwriter shall promptly notify the Company in writing and the Company
shall assume the defense thereof, including the employment of counsel
reasonably satisfactory to such indemnified party and payment of all
reasonable fees and expenses; provided that the Company shall not be
liable to such indemnified party for any legal expenses of other counsel
or any other expenses, in each case, subsequently incurred by such
indemnified party, in connection with the defense thereof, other than the
reasonable cost of the investigation. Any Underwriter or any such
controlling person shall have the right to employ separate counsel in any
such action and participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Underwriter or
such controlling person unless (i) the employment of such counsel has been
specifically authorized in writing by the Company, (ii) the Company shall
have failed to assume the defense and employ counsel or (iii) the named
parties to any such action (including any impleaded parties) include both
such Underwriter or such controlling person and the Company and such
Underwriter or such controlling person shall have been advised by such
counsel that there may be one or more legal defenses available to it which
are different from or additional to those available to the Company, in
which case the Company shall not have the right to assume the defense of
such action on behalf of such Underwriter or such controlling person and
the Company shall be liable for the reasonable legal expenses of counsel
to such Underwriter or such controlling person in connection with the
defense of such action, provided that such counsel to such Underwriter or
such controlling person shall use reasonable efforts to coordinate with
counsel to the Company on overlapping issues, it being understood,
however, that the Company shall not, in connection with any one such
action or separate but substantially similar or related actions in the
same jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one
separate firm of attorneys (in addition to one separate firm of local
counsel in each such jurisdiction) at any time, for all such Underwriters
and controlling persons, which firm shall be designated in writing by DLJ
and that all such fees and expenses shall be reimbursed promptly upon
request. The Company shall not be liable for any settlement of any action
subject to indemnification hereunder effected without the written consent
13
<PAGE>
of the Company but if settled with the written consent of the Company, the
Company agrees to indemnify and hold harmless any Underwriter and any such
controlling person from and against any loss or liability by reason of
such settlement. In addition, the Company shall be liable for any
settlement of any such action effected with the Company's prior written
consent, which consent shall not be unreasonably withheld. No indemnifying
party shall, without the prior written consent of the indemnified party,
effect any settlement of any pending or threatened proceeding in respect
of which any indemnified party is or could have been a party and indemnity
could have been sought hereunder by such indemnified party, unless such
settlement includes an unconditional release of such indemnified party
from all liability on claims that are the subject matter of such
proceeding.
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement and any person controlling the Company within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, to the
same extent as the foregoing indemnity from the Company to each
Underwriter but only with reference to information relating to such
Underwriter furnished in writing by or on behalf of such Underwriter
through you expressly for use in the Registration Statement or the
Prospectus (as amended or supplemented) or any preliminary prospectus. In
case any action shall be brought against the Company, any of its
directors, any such officer or any person controlling the Company based on
the Registration Statement or the Prospectus (as amended or supplemented)
or any preliminary prospectus and in respect of which indemnity may be
sought against any Underwriter, the Underwriter shall have the rights and
duties given to the Company (except that if the Company shall have assumed
the defense thereof, such Underwriter shall not be required to do so, but
may employ separate counsel therein and participate in the defense thereof
but the fees and expenses of such counsel shall be at the expense of such
Underwriter), and the Company, its directors, any such officers and any
person controlling the Company shall have the rights and duties given to
the Underwriter, by Section 7(b) hereof.
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party in respect of any losses, claims,
damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities and judgments (i) in
such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Underwriters on the other
hand from the offering of the Securities 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
and the Underwriters in connection with the statements or omissions which
resulted in such losses, claims, damages, liabilities or judgments, as
well as any other relevant equitable considerations. The relative benefits
received by the Company and the Underwriters shall be deemed to be in the
same proportion as the total proceeds from the offering (before deducting
14
<PAGE>
expenses but after deducting underwriting discounts and commissions)
received by the Company and the total underwriting discounts and
commissions received by the Underwriters, bear to the total price to the
public of the Securities, in each case as set forth in the table on the
cover page of the Prospectus. The relative fault of the Company and the
Underwriters shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by the Company or the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7(d) were determined by
pro rata allocation (even if the Underwriters were treated as one entity
for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as
a result of the losses, claims, damages, liabilities or judgments referred
to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 7, no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at
which the Securities underwritten by it and distributed to the public
exceeds the amount of any damages which such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement
or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall
be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 7(b) are several in proportion to the respective
number of Securities purchased by each of the Underwriters hereunder and
not joint.
8. Conditions of Underwriters' Obligations. The several obligations
of the Underwriters to purchase the Securities on the Closing Date are
subject to the satisfaction of each of the following conditions:
(a) All of the representations and warranties of the Company
contained in this Agreement shall be true and correct on the Closing Date,
with the same force and effect as if made on and as of the Closing Date.
The Company shall have performed or complied in all material respects with
all of the agreements herein contained and required to be performed or
complied with by the Company at or prior to the Closing Date.
(b)(i) The Registration Statement shall have become effective (or if
(i) a post-effective amendment thereto (including any such amendment
required to be filed pursuant to Rule 430A under the Act) or (ii) a new or
additional registration statement pursuant to Rule 462 under the Act has
been filed, such post-effective amendment or new or additional
registration statement (as applicable) shall become effective) not later
than 3:30
15
<PAGE>
p.m. New York City time on the date hereof or at such later date and time
as you may approve in writing, (ii) at the Closing Date, no stop order
suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been commenced or
shall be pending before or contemplated by the Commission and every
comment by or request for additional information on the part of the
Commission or any securities commission or regulatory authority of the
several states or any foreign jurisdiction shall have been responded to or
complied with in all material respects and (iii) no stop order suspending
the sale of the Securities in any jurisdiction designated by the
Underwriters pursuant to Section 5(h) hereof shall have been issued and no
proceeding for that purpose shall have been commenced and be pending
before any securities regulators, and the Company shall not have received
notice of the contemplation of any such issuance by any such securities
regulator.
(c) Subsequent to the effective date of this Agreement, except as
set forth in the Registration Statement and the Prospectus, (i) there
shall not have been any Material Adverse Change, or any development
involving a prospective Material Adverse Change, whether or not arising in
the ordinary course of business of the Company, (ii) there shall not have
been any change, or any development involving a prospective material
adverse change, in the capital stock or in the long-term debt of the
Company or any of its Subsidiaries (other than as a result of borrowings
(revolving or other) for working capital incurred in the ordinary course
of business), (iii) the Company and its Subsidiaries shall not have
incurred any liability or obligation, direct or contingent, which is
material to the Company and its Subsidiaries, taken as a whole and which
have materially changed the financial position of the Company and its
Subsidiaries, taken as a whole and (iv) on the Closing Date, you shall
have received a certificate dated the Closing Date signed by Mr. Martin H.
Loeffler and Mr. Edward G. Jepsen, in their capacities as (A) the
President and Chief Executive Officer and (B) Executive Vice President and
Chief Financial Officer of the Company, respectively, confirming the
matters set forth in paragraphs (a), (b), and (c) of this Section 8.
(d) You shall have received on the Closing Date an opinion (in the
form attached hereto as Annex II), dated the Closing Date of Winthrop,
Stimson, Putnam & Roberts, special counsel for the Company, with respect
to the Company and its Subsidiaries. The opinion of Winthrop, Stimson,
Putnam & Roberts shall be rendered to you at the request of the Company
and shall so state therein.
(e) You shall have received on the Closing Date an opinion (in the
form attached hereto as Annex III), dated the Closing Date of Simpson
Thacher & Bartlett, special counsel for the Company, with respect to the
Company and its Subsidiaries. The opinion of Simpson Thacher & Bartlett
shall be rendered to you at the request of the Company and so state
therein.
(f) You shall have received on the Closing Date an opinion (in the
form attached hereto as Annex IV), dated the Closing Date of Edward C.
Wetmore, counsel for the Company, with respect to the Company and its
Subsidiaries. The opinion of
16
<PAGE>
Edward C. Wetmore shall be rendered to you at the request of the Company
and shall so state therein.
(g) You shall have received on the Closing Date an opinion, dated
the Closing Date of Latham & Watkins, counsel for the Underwriters, in
form and substance reasonably satisfactory to the Underwriters.
(h) You shall have received a letter concurrently with the execution
of this Agreement and on and as of the Closing Date in form and substance
reasonably satisfactory to you, from Price Waterhouse LLP, independent
public accountants, with respect to the financial statements and certain
financial information contained in the Registration Statement and the
Prospectus and/or incorporated therein by reference.
(i) Latham & Watkins shall have been furnished with such documents
as they may reasonably require for the purpose of enabling them to review
or pass upon the matters referred to in this Section 8.
(j) The Company and the Trustee shall have entered into the
Indenture and the Underwriters shall have received counterparts, conformed
as executed, thereof.
(k) The Merger Agreement shall have been executed and delivered by
the parties thereto and shall be in force and effect.
(l) The Underwriters shall be satisfied that the Merger and the
Credit Facilities shall have been consummated or will be consummated on
the Closing Date on the terms described in the Registration Statement.
All opinions, certificates, letters and other documents required by
this Section 8 to be delivered by the Company will be in compliance with the
provisions hereof if and only if they are reasonably satisfactory in form and
substance to the Underwriters. The Company will furnish the Underwriters with
such conformed copies of such opinions, certificates, letters and other
documents as the Underwriters or their counsel shall reasonably request.
9. Effective Date of Agreement and Termination. This Agreement shall
become effective upon the later of (i) execution of this Agreement, (ii) when
notification of the effectiveness of the Registration Statement has been
released by the Commission and (iii) if a post-effective amendment to the
Registration Statement has been filed (including any post-effective amendment
required to be filed pursuant to Rule 430A) or a new or additional registration
statement has been filed (including any new or additional registration statement
required to be filed pursuant to Rule 462 under the Act), the effectiveness of
such post-effective amendment or new or additional registration statement. Until
this Agreement becomes effective
17
<PAGE>
as aforesaid, it may be terminated by the Company by notifying the Underwriters
or by the Underwriters by notifying the Company.
This Agreement may be terminated at any time after it becomes
effective and prior to the Closing Date by you by written notice to the Company
if any of the following has occurred: (i) any outbreak or escalation of
hostilities or other national or international calamity or crisis or change in
economic conditions or in the financial markets of the United States or
elsewhere that, in your judgment, is material and adverse and would, in your
judgment, make it impracticable to market the Securities on the terms and in the
manner contemplated in the Prospectus, or (ii) the suspension or material
limitation of trading in securities on the New York Stock Exchange, the American
Stock Exchange or the Nasdaq National Market or limitation on prices for
securities on any such exchange or the Nasdaq National Market or (iii) the
declaration of a banking moratorium by either federal or New York State
authorities.
If on the Closing Date, any one or more of the Underwriters shall
fail or refuse to purchase the Securities which it or they have agreed to
purchase hereunder on such date and the aggregate number of Securities, which
such defaulting Underwriter or Underwriters, as the case may be, agreed but
failed or refused to purchase is not more than one-tenth of the total number of
Securities to be purchased on such date by all Underwriters, each non-defaulting
Underwriter shall be obligated severally, in the proportion which the number of
Securities set forth opposite its name in Annex I bears to the total number of
Securities which all the non-defaulting Underwriters, as the case may be, have
agreed to purchase, or in such other proportion as you may specify, to purchase
the Securities which such defaulting Underwriter or Underwriters, as the case
may be, agreed but failed or refused to purchase on such date; provided that in
no event shall the number of Securities which any Underwriter has agreed to
purchase pursuant to Section 2 hereof be increased pursuant to this Section 9 by
an amount in excess of one-ninth of such number of Securities without the
written consent of such Underwriter. If on the Closing Date any Underwriter or
Underwriters shall fail or refuse to purchase Securities and the aggregate
number of Securities with respect to which such default occurs is more than
one-tenth of the aggregate number of Securities to be purchased on such date by
all Underwriters and arrangements satisfactory to you and the Company for
purchase of such Securities are not made within 48 hours after such default,
this Agreement will terminate without liability on the part of any
non-defaulting Underwriter or the Company. In any such case which does not
result in termination of this Agreement, either you or the Company shall have
the right to postpone the Closing Date, but in no event for longer than seven
days, in order that the required changes, if any, in the Registration Statement
and the Prospectus or any other documents or arrangements may be effected. Any
action taken under this paragraph shall not relieve any defaulting Underwriter
from liability in respect of any default of any such Underwriter under this
Agreement.
10. Miscellaneous. Notices given pursuant to any provision of
this Agreement shall be addressed as follows: (a) if to the Company, to
Amphenol Corporation, 358 Hall Avenue, Wallingford, Connecticut, 06492-7530,
Attention: President, and (b) if to any Underwriter or to you, to Donaldson,
Lufkin & Jenrette Securities Corporation, 2121 Avenue
18
<PAGE>
of the Americas, Los Angeles, California, 90067, Attention: Syndicate
Department, or in any case to such other address as the person to be notified
may have requested in writing.
The respective indemnities, contribution agreements,
representations, warranties and other statements of the Company and the several
Underwriters set forth in or made pursuant to this Agreement shall remain
operative and in full force and effect, and will survive delivery of and payment
for the Securities, regardless of (i) any investigation, or statement as to the
results thereof, made by or on behalf of any Underwriter or by or on behalf of
the Company, the officers or directors of the Company or any controlling person
of the Company, (ii) acceptance of the Securities and payment for them hereunder
and (iii) termination of this Agreement.
If this Agreement shall be terminated by the Underwriters because of
any failure or refusal on the part of the Company to comply with the terms
hereof or to fulfill any of the conditions set forth in Section 8 of this
Agreement, other than by reason of a default under this Agreement by an
Underwriter, the Company agrees to reimburse the several Underwriters upon
demand accompanied by reasonable supporting documentation for all out-of-pocket
expenses (including the reasonable fees and disbursements of counsel) reasonably
incurred by them in connection with the matters contemplated by this Agreement.
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company, the
Underwriters, any controlling persons referred to herein and their respective
successors and assigns, all as and to the extent provided in this Agreement, and
no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include a purchaser of
any of the Securities from any of the several Underwriters merely because of
such purchase.
This Agreement shall be governed and construed in accordance with
the laws of the State of New York.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
[Signature page follows]
19
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
between the Company and the Underwriters.
Very truly yours,
AMPHENOL CORPORATION
By:___________________________
Name:
Title:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
LEHMAN BROTHERS INC.
BT SECURITIES CORPORATION
CHASE SECURITIES INC.
By: DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By:__________________________
Name:
Title:
20
<PAGE>
ANNEX I
Underwriter Principal Amount of
Securities to be
Purchased
------------------------
Donaldson, Lufkin & Jenrette
Securities Corporation......................... $
Lehman Brothers Inc..............................
BT Securities Corporation........................
Chase Securities Inc.............................
========================
Total $ 240,000,000
I-1
<PAGE>
ANNEX II
Form of Opinion of Winthrop, Stimson, Putnam & Roberts
[See also attached opinion points]
II-1
<PAGE>
ANNEX III
Form of Opinion of Simpson Thacher & Bartlett
We have not independently verified the accuracy, completeness or
fairness of the statements made or included in the Registration Statement
or the Prospectus and take no responsibility therefor. In the course of
the preparation by the Company of the Registration Statement and the
Prospectus, we participated in conferences with certain officers and
employees of the Company, with representatives of Price Waterhouse LLP and
with counsel to the Company. We discussed the Registration Statement and
the Prospectus with the Company and with counsel to the Company prior to
their filing with the Securities and Exchange Commission (the
"Commission"). Based upon our examination of the Registration Statement
and Prospectus, our investigations made in connection with the preparation
of the Registration Statement and the Prospectus and our participation in
the conferences referred to above, we have no reason to believe that
Registration Statement (or any amendment thereto made prior to the Closing
Date as of the date of such amendment), at the time it became effective,
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make
the statements therein not misleading, or that the Prospectus, at the time
it was filed with the Commission pursuant to Rule 424(b) and at the date
hereof, contained or contains any untrue statement of a material fact or
omitted or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, except that we express no belief with respect
(i) to the financial statements or other financial or statistical data
contained or incorporated by reference in either the Registration
Statement of the Prospectus, (ii) that part of the Registration Statement
which constitutes the Trustee's Statement of Eligibility under the Trust
Indenture Act on Form T-1 or (iii) the statements therein concerning the
Depository Trust Company ("DTC") and DTC's book-entry system.
[See attached opinion points]
V-1
<PAGE>
ANNEX IV
Form of Opinion of Edward C. Wetmore
I have not independently verified the accuracy, completeness or
fairness of the statements made or included in the Registration Statement
or the Prospectus and take no responsibility therefor. In the course of
the preparation by the Company of the Registration Statement and the
Prospectus, I participated in conferences with certain officers and
employees of the Company, with representatives of Price Waterhouse LLP and
with counsel to the Underwriters. We discussed the Registration Statement
and the Prospectus with the Company and with counsel to the Underwriters
prior to their filing with the Securities and Exchange Commission (the
"Commission"). Based upon my examination of the Registration Statement and
Prospectus, my investigations made in connection with the preparation of
the Registration Statement and the Prospectus and my participation in the
conferences referred to above, I have no reason to believe that
Registration Statement (or any amendment thereto made prior to the Closing
Date as of the date of such amendment), at the time it became effective,
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make
the statements therein not misleading, or that the Prospectus, at the time
it was filed with the Commission pursuant to Rule 424(b) and at the date
hereof, contained or contains any untrue statement of a material fact or
omitted or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, except that I express no belief with respect
(i) to the financial statements or other financial or statistical data
contained or incorporated by reference in either the Registration
Statement of the Prospectus, (ii) that part of the Registration Statement
which constitutes the Trustee's Statement of Eligibility under the Trust
Indenture Act on Form T-1 or (iii) the statements therein concerning the
Depository Trust Company ("DTC") and DTC's book-entry system.
[See also attached opinion points]
VI-(1)
<PAGE>
Opinion Points
(a) Such counsel has been advised that the Registration Statement
has become effective under the Act, the Prospectus either was filed with
the Commission pursuant to the Act or was included in the Registration
Statement (as the case may be), and no stop order suspending its
effectiveness has been issued and no proceedings for that purpose are, to
the knowledge of such counsel, pending before, threatened or contemplated
by the Commission.
(b) The Registration Statement (including any Registration Statement
filed under Rule 462(b) of the Act, if any) and the Prospectus and any
supplement or amendment thereto (except for financial statements as to
which no opinion need be expressed) comply as to form in all material
respects with the Act.
(c) The Company and each of its Subsidiaries has been duly
incorporated, is validly existing as a corporation in good standing under
the laws of its jurisdiction of incorporation and has the corporate power
and authority to carry on its business as it is currently being conducted
and to own, lease and operate its properties. The Company is duly
qualified and is in good standing as a foreign corporation authorized to
do business in each jurisdiction in which the nature of its business or
its ownership or leasing of property requires such qualification, except
where to failure to be so qualified would not have a material adverse
effect on the business, condition (financial or otherwise), results of
operations, properties or prospects of the Company and its Subsidiaries,
taken as a whole (each, a "Material Adverse Effect"). The term
"Subsidiary" means each person with at least nominal assets of which a
majority of the voting equity securities or other interests is owned,
directly or indirectly, by the Company as of the Closing Date, such
persons being referred to collectively as the "Subsidiaries."
(d) Each Subsidiary of the Company that is not a Domestic Subsidiary
and would constitute a "significant subsidiary" (as defined in Section
1-02 of Regulation S-X of the Commission) has been duly incorporated (or
the equivalent thereof), is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation and has the
corporate power and required authority to carry on its business as it is
currently being conducted and to own, lease and operate its properties.
(e) Each of the Domestic Subsidiaries is duly qualified and is in
good standing as a foreign corporation authorized to do business in each
jurisdiction in which the nature of its business or its ownership or
leasing of property requires such qualification, except where the failure
to be so qualified would not have a Material Adverse Effect.
(f) Each Subsidiary of the Company that is not a Domestic Subsidiary
and would constitute a "significant subsidiary" (as defined in Section
1-02 of Regulation S-X of the Commission) is duly qualified and is in good
standing (or the equivalent thereof) as a foreign corporation authorized
to do business in each jurisdiction in which the nature
(i)
<PAGE>
of its business or its ownership or leasing of property requires such
qualification, except where the failure to be so qualified would not have
a Material Adverse Effect.
(g) The Securities have each been duly authorized by the Company
and, when the Securities are executed by the Company and authenticated by
the Trustee in accordance with the provisions of the Indenture and
delivered to and paid for by the Underwriters in accordance with the terms
of the Underwriting Agreement, the Securities will be entitled to the
benefits of the Indenture and will constitute valid and legally binding
obligations of the Company enforceable in accordance with their terms,
subject to the effects of (i) bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or other similar laws now or hereafter
in effect relating to creditors' rights generally, and (ii) general
principles of equity and the discretion of the court before which any
proceeding therefor may be brought.
(h) The Securities, the Indenture and each of the Transaction
Documents conform as to legal matters to the description thereof contained
in the Prospectus.
(i) The statements under the captions "Related Party Transactions,"
"Description of Credit Facilities," "Description of the Notes" and
"Underwriting" in the Prospectus, as amended or supplemented, and Items 14
and 15 of Part II of the Registration Statement insofar as such statements
constitute a summary of legal matters documents or proceedings referred to
therein, fairly present the information called for with respect to such
legal matters, documents and proceedings;
(j) The Indenture has been duly qualified under the Trust Indenture
Act, and has been duly authorized, executed and delivered by the Company
and is a valid and binding agreement of the Company, enforceable in
accordance with its terms except as (i) as such enforcement may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws now
or hereafter in effect relating to or affecting creditors' rights
generally; (ii) that the remedies of specific performance and injunctive
and other forms of relief are subject to general equitable principles,
whether enforcement is sought at law or in equity, and that such
enforcement may be subject to the discretion of the court before which any
proceedings therefor may be brought; and (iii) as rights to indemnity and
contribution may be limited by state or federal laws relating to
securities or by the policies underlying such laws.
(k) This Agreement has been duly authorized, executed and delivered
by the Company.
[ (l) Neither the Company nor any of its Subsidiaries is in violation or
default under (i) its respective charter or by-laws, (ii) in default in
any material respect in the performance of any obligation, agreement or
condition contained in any bond, debenture, note or any other evidence of
indebtedness or in any other agreement, indenture or instrument material
to the conduct of the business of the Company and its Subsidiaries, taken
as a whole, to which the Company or any of its Subsidiaries is a party or
by which
(ii)
<PAGE>
it or any of its Subsidiaries or their respective property is bound or
(iii) any law, statute, rule, regulation, judgment or court decree
applicable to the Company or any of its Subsidiaries.]
(m) The execution, delivery and performance of the Transaction
Documents by the Company, compliance by the Company with all the
provisions thereof and the consummation of the transactions contemplated
thereby will not conflict with, constitute a default under or violate (i)
any of the terms, conditions or provisions of the certificate of
incorporation or by-laws of the Company or any of its Subsidiaries, (ii)
any of the terms, conditions or provisions of any document, agreement,
indenture or other instrument to which the Company or any of its
Subsidiaries is a party or by which the Company, any of its Subsidiaries
or their respective properties are bound [, other than the indenture
governing the Existing Senior Notes] or (iii) any judgment, writ,
injunction, decree, order or ruling of any court or governmental authority
binding on the Company, any of its Subsidiaries or their respective
properties. No consent, approval, waiver, license or authorization or
other action by or filing with any governmental authority is required in
connection with the execution, delivery and performance by the Company of
the Transaction Documents or the consummation by the Company of the
transactions contemplated hereby and thereby, except under the Act and the
state or foreign securities or blue sky laws.
(n) The Company has all requisite corporate power and authority to
enter into the Merger Agreement and to consummate the transactions
contemplated thereby. The Merger Agreement has been duly authorized,
executed and delivered by the Company.
(o) Except as otherwise set forth in the Prospectus, there are no
legal or governmental proceedings pending to which the Company or any of
its Subsidiaries is a party or of which any of their respective property
is the subject which is required to be described in the Registration
Statement or Prospectus, and to the best of such counsel's knowledge after
due inquiry, no such proceedings are threatened or contemplated. No
contract or other document of a character required to be described in the
Registration Statement or the Prospectus or to be filed as an exhibit to
the Registration Statement is not so described or filed as required.
(p) The Company is not an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
(iii)
<PAGE>
Exhibit 4.1
L&W DRAFT OF APRIL 22, 1997
AMPHENOL CORPORATION
as Issuer
and
IBJ Schroder Bank & Trust Company
as Trustee
--------------------
Form of Indenture
Dated as of May __, 1997
---------------------
$240,000,000
____% Senior Subordinated Notes due May __, 2007
<PAGE>
AMPHENOL CORPORATION*
Reconciliation and tie between Trust Indenture Act
of 1939 and Indenture, dated as of May __, 1997
Trust Indenture
Act Section Indenture Section
ss. 310(a)(1) ...................................... 608
(a)(2) ...................................... 608
(b) ...................................... 609
ss. 311 ...................................... 101
ss. 312(a) ...................................... 701
(c) ...................................... 702
ss. 313(a) ...................................... 703
(c) ...................................... 703
ss. 314(a)(4) ...................................... 1010(a)
(c)(1) ...................................... 102
(c)(2) ...................................... 102
(e) ...................................... 102
ss.315 (a) ...................................... 601(a)
(b) ...................................... 602
(c) ...................................... 601(b)
(d) ...................................... 601(c), 603
ss. 316(a)(last
sentence) ...................................... 101
(a)(1)(A)...................................... 502, 512
(a)(1)(B)...................................... 513
(b) ...................................... 508
(c) ...................................... 104(d)
ss. 317(a)(1) ...................................... 503
(a)(2) ...................................... 504
(b) ...................................... 1003
ss. 318(a) ...................................... 111
- --------
*Note:This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE>
TABLE OF CONTENTS*
Page
PARTIES......................................................................1
RECITALS OF THE COMPANY......................................................1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions............................................... 1
Acquired Indebtedness.............................................. 2
Act ............................................................... 2
Affiliate ......................................................... 2
Agent ............................................................. 2
Asset Sale ........................................................ 2
Authenticating Agent............................................... 3
Bank Agent ........................................................ 3
Bankruptcy Law .................................................... 3
Board of Directors................................................. 3
Board Resolution................................................... 3
Business Day ...................................................... 3
Capital Stock ..................................................... 3
Capitalized Lease Obligation....................................... 4
Cash Equivalents................................................... 4
Change of Control.................................................. 4
Commission ........................................................ 4
Common Stock ...................................................... 4
Company ........................................................... 5
Company Request" or "Company Order................................. 5
Consolidated Depreciation and Amortization Expense................. 5
Consolidated Interest Expense...................................... 5
Consolidated Net Income............................................ 5
Contingent Obligations............................................. 6
Corporate Trust Office............................................. 6
Custodian ......................................................... 6
Default ........................................................... 6
Defaulted Interest................................................. 6
Depositary ........................................................ 6
Designated Noncash Consideration................................... 7
Designated Preferred Stock......................................... 7
Designated Senior Indebtedness..................................... 7
- --------
*Note:This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
<PAGE>
Page
Disqualified Stock................................................. 7
EBITDA ............................................................ 7
Equity Interests................................................... 8
Equity Offering ................................................... 8
Event of Default................................................... 8
Exchange Act ...................................................... 8
Existing Indebtedness.............................................. 8
Existing Notes .................................................... 8
Financings ........................................................ 8
Fixed Charge Coverage Ratio........................................ 8
Fixed Charges ..................................................... 9
Foreign Subsidiary................................................. 9
GAAP" ............................................................. 10
Government Securities.............................................. 10
guarantee ......................................................... 10
Guarantee ......................................................... 10
Guarantor ......................................................... 10
Hedging Obligations................................................ 10
Holder ............................................................ 11
Indebtedness ...................................................... 11
Indenture ......................................................... 11
Independent Financial Advisor...................................... 11
Interest Payment Date.............................................. 11
Investment Grade Securities........................................ 11
Investments ....................................................... 12
Issuance Date ..................................................... 12
KKR ............................................................... 12
Lien .............................................................. 12
Management Group................................................... 12
Maturity .......................................................... 12
Merger ............................................................ 12
Moody's ........................................................... 13
Net Income ........................................................ 13
Net Proceeds ...................................................... 13
Note Register" and "Note Registrar................................. 13
Notes ............................................................. 13
Obligations ....................................................... 13
Officer ........................................................... 13
Officers' Certificate.............................................. 13
Opinion of Counsel................................................. 13
Outstanding ....................................................... 14
Pari Passu Indebtedness............................................ 14
Paying Agent ...................................................... 15
Permitted Holders.................................................. 15
Permitted Investments.............................................. 15
ii
<PAGE>
Page
Person ............................................................ 16
Predecessor Note................................................... 16
preferred stock ................................................... 16
Receivables Facility............................................... 16
Receivables Fees................................................... 16
Redemption Date ................................................... 16
Redemption Price................................................... 16
Regular Record Date................................................ 16
Related Parties ................................................... 16
Representative .................................................... 16
Repurchase Offer................................................... 17
Responsible Officer................................................ 17
Restricted Investment.............................................. 17
Restricted Subsidiary.............................................. 17
S&P .............................................................. 17
Securities Act .................................................... 17
Senior Credit Facility............................................. 17
Senior Indebtedness................................................ 17
Significant Subsidiary............................................. 18
Similar Business................................................... 18
Special Record Date................................................ 18
Stated Maturity ................................................... 18
Subordinated Indebtedness.......................................... 18
Subordinated Note Obligations...................................... 18
Subsidiary ........................................................ 18
Total Assets ...................................................... 19
Trust Indenture Act" or "TIA....................................... 19
Trustee ........................................................... 19
Unrestricted Subsidiary............................................ 19
Vice President .................................................... 20
Voting Stock ...................................................... 20
Weighted Average Life to Maturity.................................. 20
Wholly Owned Restricted Subsidiary................................. 20
Wholly Owned Subsidiary............................................ 20
SECTION 102. Compliance Certificates and Opinions...................... 20
SECTION 103. Form of Documents Delivered to Trustee.................... 21
SECTION 104. Acts of Holders........................................... 21
SECTION 105. Notices, Etc., to Trustee, the Company and any Guarantor.. 23
SECTION 106. Notice to Holders; Waiver................................. 23
SECTION 107. Effect of Headings and Table of Contents.................. 24
SECTION 108. Successors and Assigns.................................... 24
SECTION 109. Separability Clause....................................... 24
SECTION 110. Benefits of Indenture..................................... 24
SECTION 111. Governing Law............................................. 24
SECTION 112. Legal Holidays............................................ 24
iii
<PAGE>
Page
SECTION 113. No Personal Liability of Directors, Officers, Employees,
Stockholders or Incorporators............................. 25
SECTION 114. Counterparts.............................................. 25
ARTICLE TWO
NOTE FORMS
SECTION 201. Forms Generally........................................... 25
SECTION 202. Legend.................................................... 26
SECTION 203. Form of Face of Note...................................... 27
SECTION 204. Form of Reverse of Note................................... 29
SECTION 205. Form of Trustee's Certificate of Authentication........... 34
ARTICLE THREE
THE NOTES
SECTION 301. Title and Terms........................................... 35
SECTION 302. Denominations............................................. 36
SECTION 303. Execution, Authentication, Delivery and Dating............ 36
SECTION 304. Temporary Notes........................................... 37
SECTION 305. Registration, Registration of Transfer and Exchange....... 38
SECTION 306. Book-Entry Provisions for the Global Note................. 39
SECTION 307. Mutilated, Destroyed, Lost and Stolen Notes............... 40
SECTION 308. Payment of Interest; Interest Rights Preserved............ 41
SECTION 309. Persons Deemed Owners..................................... 42
SECTION 310. Cancellation.............................................. 42
SECTION 311. Computation of Interest................................... 42
SECTION 312. CUSIP Numbers............................................. 42
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture................... 43
SECTION 402. Application of Trust Money................................ 44
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default......................................... 45
SECTION 502. Acceleration of Maturity; Rescission and Annulment........ 46
SECTION 503. Collection of Indebtedness and Suits for Enforcement by
Trustee ...................................................48
iv
<PAGE>
Page
SECTION 504. Trustee May File Proofs of Claim.......................... 48
SECTION 505. Trustee May Enforce Claims Without Possession of Notes.... 49
SECTION 506. Application of Money Collected............................ 49
SECTION 507. Limitation on Suits....................................... 50
SECTION 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest...................................... 50
SECTION 509. Restoration of Rights and Remedies........................ 50
SECTION 510. Rights and Remedies Cumulative............................ 51
SECTION 511. Delay or Omission Not Waiver.............................. 51
SECTION 512. Control by Holders........................................ 51
SECTION 513. Waiver of Past Defaults................................... 52
SECTION 514. Waiver of Stay or Extension Laws.......................... 52
SECTION 515. Undertaking for Costs..................................... 52
ARTICLE SIX
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities....................... 53
SECTION 602. Notice of Defaults........................................ 54
SECTION 603. Certain Rights of Trustee................................. 54
SECTION 604. Trustee Not Responsible for Recitals or Issuance of Notes. 56
SECTION 605. May Hold Notes............................................ 56
SECTION 606. Money Held in Trust....................................... 56
SECTION 607. Compensation and Reimbursement............................ 56
SECTION 608. Corporate Trustee Required; Eligibility................... 57
SECTION 609. Resignation and Removal; Appointment of Successor......... 58
SECTION 610. Acceptance of Appointment by Successor.................... 59
SECTION 611. Merger, Conversion, Consolidation or Succession to
Business ................................................. 59
ARTICLE SEVEN
HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses............ 60
SECTION 702. Disclosure of Names and Addresses of Holders.............. 60
SECTION 703. Reports by Trustee........................................ 60
ARTICLE EIGHT
MERGER, CONSOLIDATION, OR SALE OF ASSETS
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms...... 60
SECTION 802. Successor Substituted..................................... 62
v
<PAGE>
Page
ARTICLE NINE
SUPPLEMENTS AND AMENDMENTS TO INDENTURE
SECTION 901. Supplemental Indentures Without Consent of Holders........ 62
SECTION 902. Supplemental Indentures with Consent of Holders........... 63
SECTION 903. Execution of Supplemental Indentures...................... 64
SECTION 904. Effect of Supplemental Indentures......................... 64
SECTION 905. Conformity with Trust Indenture Act....................... 64
SECTION 906. Reference in Notes to Supplemental Indentures............. 65
SECTION 907. Notice of Supplemental Indentures......................... 65
SECTION 908. Effect on Senior Indebtedness............................. 65
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium, if Any, and Interest...... 65
SECTION 1002. Maintenance of Office or Agency.......................... 66
SECTION 1003. Money for Note Payments to Be Held in Trust.............. 66
SECTION 1004. Corporate Existence...................................... 68
SECTION 1005. Taxes.................................................... 68
SECTION 1006. Maintenance of Properties................................ 68
SECTION 1007. Insurance................................................ 68
SECTION 1008. Compliance with Laws..................................... 69
SECTION 1009. Limitation on Restricted Payments........................ 69
SECTION 1010. Limitation on Incurrence of Indebtedness and Issuance of
Disqualified Stock....................................... 73
SECTION 1011. Liens.................................................... 77
SECTION 1012. Transactions with Affiliates............................. 77
SECTION 1013. Dividend and Other Payment Restrictions Affecting
Subsidiaries. ........................................... 78
SECTION 1014. Limitation on Guarantees of Indebtedness by Restricted
Subsidiaries............................................. 80
SECTION 1015. Limitation on Other Senior Subordinated Indebtedness..... 81
SECTION 1016. Offer to Repurchase Upon Change of Control............... 81
SECTION 1017. Asset Sales.............................................. 82
SECTION 1018. Compliance Certificate................................... 84
SECTION 1019. Reports.................................................. 85
SECTION 1020. Further Assurances....................................... 85
ARTICLE ELEVEN
REDEMPTION OF NOTES
SECTION 1101. Redemption............................................... 85
vi
<PAGE>
Page
SECTION 1102. Applicability of Article................................. 86
SECTION 1103. Election to Redeem; Notice to Trustee.................... 86
SECTION 1104. Selection by Trustee of Notes to Be Redeemed............. 86
SECTION 1105. Notice of Redemption..................................... 86
SECTION 1106. Deposit of Redemption Price.............................. 88
SECTION 1107. Notes Payable on Redemption Date......................... 88
SECTION 1108. Notes Redeemed in Part................................... 88
ARTICLE TWELVE
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1201. Company's Option to Effect Legal Defeasance or Covenant
Defeasance............................................... 89
SECTION 1202. Legal Defeasance and Discharge........................... 89
SECTION 1203. Covenant Defeasance...................................... 89
SECTION 1204. Conditions to Legal Defeasance or Covenant Defeasance.... 90
SECTION 1205. Deposited Money and U.S. Government Securities to Be Held in
Trust; Other Miscellaneous Provisions.................... 91
SECTION 1206. Reinstatement............................................ 92
ARTICLE THIRTEEN
SUBORDINATION OF NOTES
SECTION 1301. Notes Subordinate to Senior Indebtedness................. 92
SECTION 1302. Payment over of Proceeds upon Dissolution, Etc........... 92
SECTION 1303. Suspension of Payment When Senior Indebtedness in Default 93
SECTION 1304. Acceleration of Notes.................................... 94
SECTION 1305. When Distribution Must Be Paid Over...................... 94
SECTION 1306. Notice by Company........................................ 95
SECTION 1307. Payment Permitted If No Default.......................... 95
SECTION 1308. Subrogation to Rights of Holders of Senior Indebtedness.. 95
SECTION 1309. Provisions Solely to Define Relative Rights.............. 96
SECTION 1310. Trustee to Effectuate Subordination...................... 96
SECTION 1311. Subordination May Not Be Impaired by Company............. 96
SECTION 1312. Distribution or Notice to Representative................. 96
SECTION 1313. Notice to Trustee........................................ 97
SECTION 1314. Reliance on Judicial Order or Certificate of
Liquidating Agent ....................................... 97
SECTION 1315. Rights of Trustee as a Holder of Senior Indebtedness;
Preservation of Trustees' Rights........................ 98
SECTION 1316. Article Applicable to Paying Agents...................... 98
SECTION 1317. No Suspension of Remedies................................ 98
SECTION 1318. Modification of Terms of Senior Indebtedness............. 98
SECTION 1319. Certain Terms............................................ 99
vii
<PAGE>
Page
SECTION 1320. Trust Moneys Not Subordinated............................ 99
viii
<PAGE>
INDENTURE, dated as of May __, 1997, between AMPHENOL CORPORATION, a
corporation duly organized and existing under the laws of the State of Delaware
(the "Company"), having its principal office at 358 Hall Avenue, Wallingford,
Connecticut 06492, and IBJ Schroder Bank & Trust Company, a ______________
corporation, as trustee (the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of and issuance of its
__ Senior Subordinated Notes due May 2007 (the "Notes") of substantially the
tenor and amount hereinafter set forth, and to provide therefor the Company has
duly authorized the execution and delivery of this Indenture.
This Indenture is subject to, and shall be governed by, the
provisions of the Trust Indenture Act of 1939, as amended, that are required or
deemed to be part of and to govern indentures qualified thereunder.
All things necessary have been done to make the Notes, when executed
and duly issued by the Company and authenticated and delivered hereunder by the
Trustee or the Authenticating Agent, the valid obligations of the Company and to
make this Indenture a valid agreement of the Company in accordance with their
and its terms.
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 covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Notes, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article, and words in the singular include the plural as well
as the singular, and words in the plural include the singular as well as
the plural;
(b) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, or defined by
Commission rule and not otherwise
<PAGE>
2
defined herein have the meanings assigned to them therein, and the terms
"cash transaction" and "self-liquidating paper", as used in TIA Section
311, shall have the meanings assigned to them in the rules of the
Commission adopted under the Trust Indenture Act;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with Generally Accepted Accounting
Principles;
(d) 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;
(e) the word "or" is not exclusive; and
(f) provisions of this Indenture apply to successive events and
transactions.
Certain terms, used principally in Articles Two, Ten, Twelve and
Thirteen, are defined in those Articles.
"Acquired Indebtedness" means, with respect to any specified Person,
(i) Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Restricted Subsidiary of such specified Person,
including, without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Restricted Subsidiary of such specified Person, and (ii) Indebtedness secured by
a Lien encumbering any asset acquired by such specified Person.
"Act," when used with respect to any Holder, has the meaning set
forth in Section 104.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided, however,
that beneficial ownership of 10% or more of the voting securities of a Person
shall be deemed to be control.
"Agent" means any Paying Agent, Authenticating Agent and Note
Registrar under this Indenture.
"Asset Sale" means (i) the sale, conveyance, transfer or other
disposition (whether in a single transaction or a series of related
transactions) of property or assets (including by way of a sale and leaseback)
of the Company or any Restricted Subsidiary (each referred to in this definition
as a "disposition") or (ii) the issuance or sale of Equity Interests of any
Restricted Subsidiary (whether in a single transaction or a series of related
transactions),
<PAGE>
3
in each case, other than: (a) a disposition of Cash Equivalents or Investment
Grade Securities or obsolete equipment in the ordinary course of business; (b)
the disposition of all or substantially all of the assets of the Company in a
manner permitted pursuant to the provisions of Section 801 hereof or any
disposition that constitutes a Change of Control pursuant to this Indenture; (c)
any Restricted Payment that is permitted to be made, and is made, under the
first paragraph of Section 1009 hereof; (d) any disposition of assets with an
aggregate fair market value of less than $1.0 million; (e) any disposition of
property or assets by a Restricted Subsidiary to the Company or by the Company
or a Restricted Subsidiary to a Wholly Owned Restricted Subsidiary; (f) any
exchange of like property pursuant to Section 1031 of the Internal Revenue Code
of 1986, as amended, for use in a Similar Business; (g) any financing
transaction with respect to property built or acquired by the Company or any
Restricted Subsidiary after the Issuance Date including, without limitation,
sale-leasebacks and asset securitizations; (h) foreclosures on assets; (i) sales
of accounts receivable, or participations therein, in connection with any
Receivables Facility; and (j) any sale of Equity Interests in, or Indebtedness
or other securities of, an Unrestricted Subsidiary.
"Authenticating Agent" means the Person appointed, if any, by the
Trustee as an authenticating agent pursuant to the last paragraph of Section
303.
"Bank Agent" means Bankers Trust Company, in its capacity as
administrative agent under the Senior Credit Facility, and any successor
administrative agent thereunder.
"Bankruptcy Law" means Title 11, United States Bankruptcy Code of
1978, as amended, or any similar United States federal or state or foreign law
relating to bankruptcy, insolvency, receivership, winding-up, liquidation,
reorganization or relief of debtors or any amendment to, succession to or change
in any such law.
"Board of Directors" means, with respect to any Person, either the
board of directors of such Person or any duly authorized committee thereof.
"Board Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in The City of New York
are authorized or obligated by law or executive order to close.
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
<PAGE>
4
"Capitalized Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital lease
that would at such time be required to be capitalized and reflected as a
liability on a balance sheet (excluding the footnotes thereto) in accordance
with GAAP.
"Cash Equivalents" means (i) U.S. dollars, (ii) securities issued or
directly and fully guaranteed or insured by the U.S. Government or any agency or
instrumentality thereof, (iii) certificates of deposit, time deposits and
eurodollar time deposits with maturities of one year or less from the date of
acquisition, bankers' acceptances with maturities not exceeding one year and
overnight bank deposits, in each case with any commercial bank having capital
and surplus in excess of $500.0 million, (iv) repurchase obligations for
underlying securities of the types described in clauses (ii) and (iii) entered
into with any financial institution meeting the qualifications specified in
clause (iii) above, (v) commercial paper rated A-1 or the equivalent thereof by
Moody's or S&P and in each case maturing within one year after the date of
acquisition, (vi) investment funds investing 95% of their assets in securities
of the types described in clauses (i)-(v) above, (vii) readily marketable direct
obligations issued by any state of the United States of America or any political
subdivision thereof having one of the two highest rating categories obtainable
from either Moody's or S&P and (viii) Indebtedness or preferred stock issued by
Persons with a rating of "A" or higher from S&P or "A2" or higher from Moody's.
"Change of Control" means the occurrence of any of the following:
(i) the sale, lease or transfer, in one or a series of related transactions, of
all or substantially all of the assets of the Company and its Subsidiaries,
taken as a whole; or (ii) the Company becomes aware of (by way of a report or
any other filing pursuant to Section 13(d) of the Exchange Act, proxy, vote,
written notice or otherwise) the acquisition by any Person or group (within the
meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any
successor provision), including any group acting for the purpose of acquiring,
holding or disposing of securities (within the meaning of Rule 13d-5(b)(1) under
the Exchange Act), other than the Permitted Holders and their Related Parties,
in a single transaction or in a related series of transactions, by way of
merger, consolidation or other business combination or purchase of beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any
successor provision) of 50% or more of the total voting power of the Voting
Stock of the Company.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act, or, if at any time
after the execution of this Indenture such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Common Stock" of any Person means any and all shares, interests or
other participations in, and other equivalents (however designated, whether
voting or non-voting) of such Person's common stock, whether outstanding on the
Issuance Date or issued after the Issuance Date and includes, without
limitation, all series and class of such common stock.
<PAGE>
5
"Company" means the Person named as the "Company" in the first
paragraph of this Indenture, until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request or
order signed in the name of the Company (a) by its Chairman, a Vice-Chairman,
its President or any Vice President and (b) by its Treasurer, an Assistant
Treasurer, its Secretary or an Assistant Secretary and delivered to the Trustee;
provided, however, that such written request or order may be signed by any two
of the officers or directors listed in clause (a) above in lieu of being signed
by one of such officers or directors listed in such clause (a) and one of the
officers listed in clause (b) above.
"Consolidated Depreciation and Amortization Expense" means with
respect to any Person for any period, the total amount of depreciation and
amortization expense of such Person and its Restricted Subsidiaries for such
period on a consolidated basis and otherwise determined in accordance with GAAP.
"Consolidated Interest Expense" means, with respect to any period,
the sum, without duplication, of: (a) consolidated interest expense of such
Person and its Restricted Subsidiaries for such period, to the extent, such
expense was deducted in computing Consolidated Net Income (including
amortization of original issue discount, non-cash interest payments, the
interest component of Capitalized Lease Obligations, and net payments and
receipts (if any) pursuant to Hedging Obligations to the extent included in
Consolidated Interest Expense, excluding amortization of deferred financing
fees) and (b) consolidated capitalized interest of such Person and its
Restricted Subsidiaries for such period, whether paid or accrued; provided,
however, that Receivables Fees shall be deemed not to constitute Consolidated
Interest Expense.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income, of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, and otherwise determined
in accordance with GAAP; provided, however, that (i) any net after-tax
extraordinary gains or losses (less all fees and expenses relating thereto)
shall be excluded, (ii) the Net Income for such period shall not include the
cumulative effect of a change in accounting principles during such period, (iii)
any net after-tax income (loss) from discontinued operations and any net
after-tax gains or losses on disposal of discontinued operations shall be
excluded, (iv) any net after-tax gains or losses (less all fees and expenses
relating thereto) attributable to asset dispositions other than in the ordinary
course of business (as determined in good faith by the Board of Directors of the
Company) shall be excluded, (v) the Net Income for such period of any Person
that is not a Subsidiary, or is an Unrestricted Subsidiary, or that is accounted
for by the equity method of accounting, shall be included only to the extent of
the amount of dividends or distributions or other payments paid in cash (or to
the extent converted into cash) to the referent Person or a Wholly Owned
Restricted Subsidiary thereof in respect of such period, (vi) the Net Income of
any Person acquired in a pooling of interests transaction shall not be included
for any period prior to the date of such acquisition and (vii) the Net Income
for such period of any Restricted Subsidiary shall be excluded to the extent
that the declaration or payment of dividends or similar
<PAGE>
6
distributions by that Restricted Subsidiary of its Net Income is not at the date
of determination permitted without any prior governmental approval (which has
not been obtained) or, directly or indirectly, by the operation of the terms of
its charter or any agreement, instrument, judgment, decree, order, statute,
rule, or governmental regulation applicable to that Restricted Subsidiary or its
stockholders, unless such restriction with respect to the payment of dividends
or in similar distributions has been legally waived.
"Contingent Obligations" means, with respect to any Person, any
obligation of such Person guaranteeing any leases, dividends or other
obligations that do not constitute Indebtedness ("primary obligations") of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, any obligation of such Person,
whether or not contingent, (i) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (ii) to advance or
supply funds (A) for the purchase or payment of any such primary obligation or
(B) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, or (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 against loss in respect
thereof.
"Corporate Trust Office" means the principal corporate trust office
of the Trustee, at which at any particular time its corporate trust business
shall be administered, which office at the date of execution of this Indenture
is located at One State Street, New York, NY 10004, except that with respect to
presentation of Notes for payment or for registration of transfer or exchange,
such term shall mean any office or agency of the Trustee at which, at any
particular time, its corporate agency business shall be conducted.
"Credit Facilities" means, with respect to the Company, one or more
debt facilities (including, without limitation, the Senior Credit Facility) or
commercial paper facilities with banks or other institutional lenders providing
for revolving credit loans, term loans, receivables financing (including through
the sale of receivables to such lenders or to special purpose entities formed to
borrow from such lenders against such receivables) or letters of credit, in each
case, as amended, restated, modified, renewed, refunded, replaced or refinanced
in whole or in part from time to time.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Default" means any event that is, or with the passage of time or
the giving of notice or both would be, an Event of Default.
"Defaulted Interest" has the meaning set forth in Section 308.
"Depositary" means The Depository Trust Company, its nominees and
successors.
<PAGE>
7
"Designated Noncash Consideration" means the fair market value of
noncash consideration received by the Company or one of its Restricted
Subsidiaries in connection with an Asset Sale that is so designated as
Designated Noncash Consideration pursuant to an Officers' Certificate, setting
forth the basis of such valuation, executed by the principal executive officer
and the principal financial officer of the Company, less the amount of cash or
Cash Equivalents received in connection with a sale of such Designated Noncash
Consideration.
"Designated Preferred Stock" means preferred stock of the Company
(other than Disqualified Stock) that is issued for cash (other than to a
Restricted Subsidiary) and is so designated as Designated Preferred Stock,
pursuant to an Officers' Certificate executed by the principal executive officer
and the principal financial officer of the Company, on the issuance date
thereof, the cash proceeds of which are excluded from the calculation set forth
in clause (C) of paragraph (a) of Section 1009.
"Designated Senior Indebtedness" means (i) Senior Indebtedness under
the Senior Credit Facility and (ii) any other Senior Indebtedness permitted
under this Indenture the principal amount of which is $50.0 million or more and
that has been designated by the Company as Designated Senior Indebtedness.
"Disqualified Stock" means, with respect to any Person, any Capital
Stock of such Person which, by its terms (or by the terms of any security into
which it is convertible or for which it is potable or exchangeable), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, in each case prior to the date 91 days after the
maturity date of the Notes; provided, however, that if such Capital Stock is
issued to any employee or to any plan for the benefit of employees of the
Company or its Subsidiaries or by any such plan to such employees, such Capital
Stock shall not constitute Disqualified Stock solely because it may be required
to be repurchased by the Company in order to satisfy applicable statutory or
regulatory obligations.
"EBITDA" means, with respect to any Person for any period, the
Consolidated Net Income of such Person for such period plus (a) provision for
taxes based on income or profits of such Person for such period deducted in
computing Consolidated Net Income, plus (b) Consolidated Interest Expense of
such Person for such period and any Receivables Fees paid by such Person or any
of its Restricted Subsidiaries during such period, in each case to the extent
the same was deducted in calculating such Consolidated Net Income, plus (c)
Consolidated Depreciation and Amortization Expense of such Person for such
period to the extent such depreciation and amortization were deducted in
computing Consolidated Net Income, plus (d) any expenses or charges related to
any Equity Offering, Permitted Investment or Indebtedness permitted to be
incurred by this Indenture (including such expenses or charges related to the
Merger (including the costs of (i) the cancellation of the stock options and
(ii) the retirement of the Existing Notes) and the Financings) and deducted in
such period in computing Consolidated Net Income, plus (e) the amount of any
restructuring charge deducted in such period in computing Consolidated Net
Income, plus (f) without duplication, any other non-cash charges reducing
Consolidated Net Income for such period (excluding any such charge which
<PAGE>
8
requires an accrual of a cash reserve for anticipated cash charges for any
future period), plus (g) the amount of any minority interest expense deducted in
calculating Consolidated Net Income, less, without duplication, (h) non-cash
items increasing Consolidated Net Income of such Person for such period
(excluding any items which represent the reversal of any accrual of, or cash
reserve for, anticipated cash charges in any prior period).
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Equity Offering" means any public or private sale of common stock
or preferred stock of the Company (excluding Disqualified Stock), other than (i)
public offerings with respect to the Company's Common Stock registered on Form
S-8 and (ii) any such public or private sale that constitutes an Excluded
Contribution.
"Event of Default" has the meaning set forth in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder.
"Excluded Contributions" means the net cash proceeds received by the
Company after the closing of the Merger from (a) contributions to its common
equity capital and (b) the sale (other than to a Subsidiary or to any Company or
Subsidiary management equity plan or stock option plan or any other management
or employee benefit plan or agreement) of Capital Stock (other than Disqualified
Stock) of the Company, in each case designated as Excluded Contributions
pursuant to an Officers' Certificate executed by the principal executive officer
and the principal financial officer of the Company on the date such capital
contributions are made or the date such Equity Interests are sold, as the case
may be, the cash proceeds of which are excluded from the calculation set forth
in paragraph (C) of Section 1009(a) hereof.
"Existing Indebtedness" means Indebtedness of the Company or its
Restricted Subsidiaries in existence on the Issuance Date, plus interest
accruing thereon, after application of the net proceeds of the sale of the Notes
as described in this Prospectus.
"Existing Notes" means the Company's 10.45% Senior Notes due 2001
and the Company's 12 3/4% Senior Subordinated Notes due 2002.
"Financings" means the financing transactions consummated on the
Issuance Date in conjunction with the Merger, and consists of (a) the
consummation of the Senior Credit Facility and (b) the issuance and sale of the
Notes to the Underwriters.
"Fixed Charge Coverage Ratio" means, with respect to any Person for
any period, the ratio of EBITDA of such Person for such period to the Fixed
Charges of such Person for such period. In the event that the Company or any of
its Restricted Subsidiaries incurs, assumes, guarantees or redeems any
Indebtedness (other than in the case of revolving credit borrowings, in which
case interest expense shall be computed based upon the average
<PAGE>
9
daily balance of such Indebtedness during the applicable period) or issues or
redeems preferred stock subsequent to the commencement of the period for which
the Fixed Charge Coverage Ratio is being calculated but prior to the event for
which the calculation of the Fixed Charge Coverage Ratio is made (the
"Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated
giving pro forma effect to such incurrence, assumption, guarantee or redemption
of Indebtedness, or such issuance or redemption of preferred stock, as if the
same had occurred at the beginning of the applicable four-quarter period. For
purposes of making the computation referred to above, Investments, acquisitions,
dispositions, mergers, consolidations and discontinued operations (as determined
in accordance with GAAP) that have been made by the Company or any of its
Restricted Subsidiaries during the four-quarter reference period or subsequent
to such reference period and on or prior to or simultaneously with the
Calculation Date shall be calculated on a pro forma basis assuming that all such
Investments, acquisitions, dispositions, discontinued operations, mergers and
consolidations (and the reduction of any associated fixed charge obligations and
the change in EBITDA resulting therefrom) had occurred on the first day of the
four-quarter reference period. If since the beginning of such period any Person
(that subsequently became a Restricted Subsidiary or was merged with or into the
Company or any Restricted Subsidiary since the beginning of such period) shall
have made any Investment, acquisition, disposition, discontinued operation,
merger or consolidation that would have required adjustment pursuant to this
definition, then the Fixed Charge Coverage Ratio shall be calculated giving pro
forma effect thereto for such period as if such Investment, acquisition,
disposition, discontinued operation, merger or consolidation had occurred at the
beginning of the applicable four-quarter period. For purposes of this
definition, whenever pro forma effect is to be given to a transaction, the pro
forma calculations shall be made 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 on such Indebtedness
shall be calculated as if the rate in effect on the Calculation Date had been
the applicable rate for the entire period (taking into account any Hedging
Obligations applicable to such Indebtedness). Interest on a Capitalized Lease
Obligation shall be deemed to accrue at an interest rate reasonably determined
by a responsible financial or accounting officer of the Company to be the rate
of interest implicit in such Capitalized Lease Obligation in accordance with
GAAP. For purposes of making the computation referred to above, interest on any
Indebtedness under a revolving credit facility computed on a pro forma basis
shall be computed based upon the average daily balance of such Indebtedness
during the applicable period. Interest on Indebtedness that may optionally be
determined at an interest rate based upon a factor of a prime or similar rate, a
eurocurrency interbank offered rate, or other rate, shall be deemed to have been
based upon the rate actually chosen, or, if none, then based upon such optional
rate chosen as the Company may designate.
"Fixed Charges" means, with respect to any Person for any period,
the sum of (a) Consolidated Interest Expense of such Person for such period and
(b) all cash dividend payments (excluding items eliminated in consolidation) on
any series of preferred stock of such Person.
"Foreign Subsidiary" means a Restricted Subsidiary not organized or
existing under the laws of the United States, any State thereof, the District of
Columbia or any territory thereof.
<PAGE>
10
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect on the Issuance Date. For the
purposes of this Indenture, the term "consolidated" with respect to any Person
shall mean such Person consolidated with its Restricted Subsidiaries, and shall
not include any Unrestricted Subsidiary.
"Government Securities" means securities that are (a) direct
obligations of the United States of America for the timely payment of which its
full faith and credit is pledged or (b) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the timely payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States of America, which, in either
case, are not callable or redeemable at the option of the issuer thereof, and
shall also include a depository receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act), as custodian with respect to any such Government
Securities or a specific payment of principal of or interest on any such
Government Securities held by such custodian for the account of the holder of
such depository receipt; provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the custodian in
respect of the Government Securities or the specific payment of principal of or
interest on the Government Securities evidenced by such depository receipt.
"guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Indebtedness or other obligations.
"Guarantee" means any guarantee of the obligations of the Company
under this Indenture and the Notes by any Person in accordance with the
provisions of this Indenture. When used as a verb, "Guarantee" shall have a
corresponding meaning. No Guarantees will be issued in connection with the
initial offering and sale of the Notes.
"Guarantor" means any Person that incurs a Guarantee; provided that
upon the release and discharge of such Person from its Guarantee in accordance
with this Indenture, such Person shall cease to be a Guarantor. No Guarantees
will be issued in connection with the initial offering and sale of the Notes.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) currency exchange or interest rate swap
agreements, currency exchange or interest rate cap agreements and currency
exchange or interest rate collar agreements and (ii) other agreements or
arrangements designed to protect such Person against fluctuations in currency
exchange or interest rates.
<PAGE>
11
"Holder" means the Person in whose name a Note is registered in the
Note Register.
"Indebtedness" means, with respect to any Person, (a) any
indebtedness of such Person, whether or not contingent (i) in respect of
borrowed money, (ii) evidenced by bonds, notes, debentures or similar
instruments or letters of credit or bankers' acceptances (or, without double
counting, reimbursement agreements in respect thereof), (iii) representing the
balance deferred and unpaid of the purchase price of any property (including
Capitalized Lease Obligations), except any such balance that constitutes a trade
payable or similar obligation to a trade creditor, in each case accrued in the
ordinary course of business or (iv) representing any Hedging Obligations, if and
to the extent of any of the foregoing Indebtedness (other than letters of credit
and Hedging Obligations) that would appear as a liability upon a balance sheet
(excluding the footnotes thereto) of such Person prepared in accordance with
GAAP, (b) to the extent not otherwise included, any obligation by such Person to
be liable for, or to pay, as obligor, guarantor or otherwise, on the
Indebtedness of another Person (other than by endorsement of negotiable
instruments for collection in the ordinary course of business) and (c) to the
extent not otherwise included, Indebtedness of another Person secured by a Lien
on any asset owned by such Person (whether or not such Indebtedness is assumed
by such Person); provided, however, that Contingent Obligations incurred in the
ordinary course of business shall be deemed not to constitute Indebtedness and
obligations under or in respect of Receivables Facilities shall not be deemed to
constitute Indebtedness of a Person.
"Indenture" means this instrument as originally executed and as it
may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof.
"Independent Financial Advisor" means an accounting, appraisal,
investment banking firm or consultant to Persons engaged in Similar Businesses
of nationally recognized standing that is, in the judgment of the Company's
Board of Directors, as evidenced by a Board Resolution, qualified to perform the
task for which it has been engaged.
"Interest Payment Date" means the Stated Maturity of an installment
of interest on the Notes.
"Investment Grade Securities" means (i) securities issued or
directly and fully guaranteed or insured by the United States government or any
agency or instrumentality thereof (other than Cash Equivalents), (ii) debt
securities or debt instruments with a rating of BBB-or higher by S&P or Baa3 or
higher by Moody's or the equivalent of such rating by such rating organization,
or, if no rating of S&P or Moody's then exists, the equivalent of such rating by
any other nationally recognized securities rating agency, but excluding any debt
securities or instruments constituting loans or advances among the Company and
its Subsidiaries, and (iii) investments in any fund that invests exclusively in
investments of the type described in clauses (i) and (ii) which fund may also
hold immaterial amounts of cash pending investment and/or distribution.
<PAGE>
12
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the form of loans
(including guarantees), advances or capital contributions (excluding advances to
customers, commission, travel and similar advances to officers and employees
made in the ordinary course of business), purchases or other acquisitions for
consideration of Indebtedness, Equity Interests or other securities issued by
any other Person and investments that are required by GAAP to be classified on
the balance sheet (excluding the footnotes thereto) of the Company in the same
manner as the other investments included in this definition to the extent such
transactions involve the transfer of cash or other property. For purposes of the
definition of "Unrestricted Subsidiary" and Section 1009 hereof, (i)
"Investments" shall include the portion (proportionate to the Company's equity
interest in such Subsidiary) of the fair market value of the net assets of a
Subsidiary of the Company at the time that such Subsidiary is designated an
Unrestricted Subsidiary; provided, however, that upon a redesignation of such
Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue
to have a permanent "Investment" in an Unrestricted Subsidiary equal to an
amount (if positive) equal to (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; and (ii) any
property transferred to or from an Unrestricted Subsidiary shall be valued at
its fair market value at the time of such transfer, in each case as determined
in good faith by the Board of Directors.
"Issuance Date" means the closing date for the sale and original
issuance of the Notes hereunder.
"KKR" means Kohlberg Kravis Roberts & Co. L.P.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction);
provided that in no event shall an operating lease be deemed to constitute a
Lien.
"Management Group" means the group consisting of the Officers of the
Company.
"Maturity" means, with respect to any Note, the date on which any
principal of such Note becomes due and payable as therein or herein provided,
whether at the Stated Maturity by declaration of acceleration, call for
redemption or purchase or otherwise.
"Merger" means the merger between the Company and NXS Acquisition
Corp., with the surviving corporation being the Company, pursuant to an
agreement and plan of merger dated as of January 23, 1997 (as amended as of
April 9, 1997), between the Company and NXS Acquisition Corp.
<PAGE>
13
"Moody's" means Moody's Investors Service, Inc., and its successors.
"Net Income" means, with respect to any Person, the net income
(loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends.
"Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any Designated Noncash Consideration received in any Asset Sale),
net of the direct costs relating to such Asset Sale and the sale or disposition
of such Designated Noncash Consideration (including, without limitation, legal,
accounting and investment banking fees, and brokerage and sales commissions),
and any relocation expenses incurred as a result thereof, taxes paid or payable
as a result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements related thereto), amounts required
to be applied to the repayment of principal, premium (if any) and interest on
Indebtedness required (other than required by clause (i) of Section 1017(b)
hereof) to be paid as a result of such transaction and any deduction of
appropriate amounts to be provided by the Company as a reserve in accordance
with GAAP against any liabilities associated with the asset disposed of in such
transaction and retained by the Company after such sale or other disposition
thereof, including, without limitation, pension and other post-employment
benefit liabilities and liabilities related to environmental matters or against
any indemnification obligations associated with such transaction.
"Note Register" and "Note Registrar" have the respective meanings
specified in Section 305.
"Notes" has the meaning stated in the first recital of this
Indenture and more particularly means any Notes authenticated and delivered
under this Indenture.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements (including, without limitation, reimbursement
obligations with respect to letters of credit and banker's acceptances), damages
and other liabilities payable under the documentation governing any
Indebtedness.
"Officer" means the Chairman of the Board, the President, any
Executive Vice President, Senior Vice President or Vice President, the Treasurer
or the Secretary of the Company.
"Officers' Certificate" means a certificate signed on behalf of the
Company by two officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company that meets the requirements set
forth in Section 102.
"Opinion of Counsel" means a written opinion of counsel, which and
who are reasonably acceptable to, and addressed to, the Trustee complying with
the requirements of
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14
Section 102. Unless otherwise required by the TIA, such legal counsel may be an
employee of or counsel to the Company or the Trustee.
"Outstanding," when used with respect to Notes, means, as of the
date of determination, all Notes theretofore authenticated and delivered under
this Indenture, except:
(a) Notes theretofore cancelled by the Trustee or delivered to the
Trustee for cancellation;
(b) Notes, or portions thereof, for whose payment or redemption
money in the necessary amount has been theretofore deposited with the
Trustee or any Paying Agent (other than the Company) in trust or set aside
and segregated in trust by the Company (if the Company shall act as its
own Paying Agent) 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 satisfactory to the
Trustee has been made;
(c) Notes, except to the extent provided in Sections 1202 and 1203,
with respect to which the Company has effected defeasance and/or covenant
defeasance as provided in Article Twelve; and
(d) Notes in exchange for or in lieu of which other Notes (including
pursuant to Section 307) have been authenticated and delivered pursuant to
this Indenture, other than any such Notes in respect of which there shall
have been presented to the Trustee proof satisfactory to it that such
Notes are held by a bona fide purchaser in whose hands the Notes are valid
obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Notes have given any request, demand,
authorization, direction, consent, notice or waiver hereunder, and for the
purpose of making the calculations required by TIA Section 313, Notes owned by
the Company or any other obligor upon the Notes or any Affiliate of the Company
or such other obligor shall be disregarded and deemed not to be Outstanding
(provided, that in connection with any offer by the Company or any obligor to
purchase the Notes, Notes tendered for purchase will be deemed to be Outstanding
and held by the tendering Holder until the date of purchase), except that, in
determining whether the Trustee shall be protected in making such calculation or
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Notes which the Trustee actually knows to be so owned
shall be so disregarded. Notes so owned which have been pledged in good faith
may be regarded as Outstanding if the pledgee establishes to the satisfaction of
the Trustee the pledgee's right so to act with respect to such Notes and that
the pledgee is not the Company or any other obligor upon the Notes or any
Affiliate of the Company or such other obligor.
"Pari Passu Indebtedness" means (a) with respect to the Notes,
Indebtedness which ranks pari passu in right of payment to the Notes and (b)
with respect to any Guarantee, Indebtedness which ranks pari passu in right of
payment to such Guarantee.
<PAGE>
15
"Paying Agent" means any Person (including the Company acting as
Paying Agent) authorized by the Company to pay the principal of (and premium, if
any) or interest on any Notes on behalf of the Company.
"Permitted Holders" means KKR and any of its Affiliates and the
Management Group.
"Permitted Investments" means (a) any Investment in the Company or
any Restricted Subsidiary; (b) any Investment in cash and Cash Equivalents or
Investment Grade Securities; (c) any Investment by the Company or any Restricted
Subsidiary of the Company in a Person that is a Similar Business if as a result
of such Investment (i) such Person becomes a Restricted Subsidiary or (ii) such
Person, in one transaction or a series of related transactions, is merged,
consolidated or amalgamated with or into, or transfers or conveys substantially
all of its assets to, or is liquidated into, the Company or a Restricted
Subsidiary; (d) any Investment in securities or other assets not constituting
cash or Cash Equivalents and received in connection with an Asset Sale made
pursuant to the provisions of Section 1017 hereof or any other disposition of
assets not constituting an Asset Sale; (e) any Investment existing on the
Issuance Date; (f) advances to employees not in excess of $10.0 million
outstanding at any one time, in the aggregate; (g) any Investment acquired by
the Company or any of its Restricted Subsidiaries (i) in exchange for any other
Investment or accounts receivable held by the Company or any such Restricted
Subsidiary in connection with or as a result of a bankruptcy, workout,
reorganization or recapitalization of the issuer of such other Investment or
accounts receivable or (ii) as a result of a foreclosure by the Company or any
of its Restricted Subsidiaries with respect to any secured Investment or other
transfer of title with respect to any secured Investment in default; (h) Hedging
Obligations permitted under Section 1010(b)(x) hereof; (i) loans and advances to
officers, directors and employees for business-related travel expenses, moving
expenses and other similar expenses, in each case incurred in the ordinary
course of business; (j) any Investment in a Similar Business (other than an
Investment in an Unrestricted Subsidiary) having an aggregate fair market value,
taken together with all other Investments made pursuant to this clause (j) that
are at that time outstanding, not to exceed the greater of (x) $100.0 million or
(y) 15% of Total Assets at the time of such Investment (with the fair market
value of each Investment being measured at the time made and without giving
effect to subsequent changes in value); (k) Investments the payment for which
consists of Equity Interests of the Company (exclusive of Disqualified Stock);
provided, however, that such Equity Interests will not increase the amount
available for Restricted Payments under clause (C) of Section 1009(a) hereof;
(l) additional Investments having an aggregate fair market value, taken together
with all other Investments made pursuant to this clause (l) that are at that
time outstanding, not to exceed the greater of (x) $35.0 million or (y) 5% of
Total Assets at the time of such Investment (with the fair market value of each
Investment being measured at the time made and without giving effect to
subsequent changes in value); (m) any transaction to the extent it constitutes
an investment that is permitted by and made in accordance with the provisions of
Section 1012(b) hereof (except transactions described in clauses (ii) and (vi)
of such paragraph); (n) any Investment by Restricted Subsidiaries in other
Restricted Subsidiaries and Investments by Subsidiaries that are not Restricted
Subsidiaries in other Subsidiaries that are not Restricted Subsidiaries; and (o)
Investments relating to any special purpose Wholly Owned Subsidiary of the
Company
<PAGE>
16
organized in connection with a Receivables Facility that, in the good faith
determination of the Board of Directors of the Company, are necessary or
advisable to effect such Receivables Facility.
"Person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity.
"Physical Notes" means Notes issued in definitive, certificated
form.
"Predecessor Note" 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 307 in exchange for a mutilated
security or in lieu of a lost, destroyed or stolen Note shall be deemed to
evidence the same debt as the mutilated, lost, destroyed or stolen Note.
"preferred stock" means any Equity Interest with preferential right
of payment of dividends or upon liquidation, dissolution, or winding up.
"Receivables Facility" means one or more receivables financing
facilities, as amended from time to time, pursuant to which the Company and/or
any of its Restricted Subsidiaries sells its accounts receivable to a Person
that is not a Restricted Subsidiary.
"Receivables Fees" means distributions or payments made directly or
by means of discounts with respect to any participation interests issued or sold
in connection with, and other fees paid to a Person that is not a Restricted
Subsidiary in connection with, any Receivables Facility.
"Redemption Date," when used with respect to any Note to be
redeemed, in whole or in part, means the date fixed for such redemption by or
pursuant to this Indenture.
"Redemption Price," when used with respect to any Note to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the __________ or ________ (whether or not a Business Day),
as the case may be, next preceding such Interest Payment Date.
"Related Parties" means any Person controlled by a Permitted Holder,
including any partnership of which a Permitted Holder or its Affiliates is the
general partner.
"Representative" means (a) with respect to the Senior Credit
Facility, the Bank Agent and (b) with respect to any other Senior Indebtedness,
the indenture trustee or other trustee, agent or representative for the holders
of such Senior Indebtedness.
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17
"Repurchase Offer" means an offer made by the Company to purchase
all or any portion of a Holder's Notes pursuant to the provisions described
under Sections 1016 or 1017 hereof.
"Responsible Officer," when used with respect to the Trustee, means
the chairman or any vice chairman of the board of directors, the chairman or any
vice chairman of the executive committee of the board of directors, the chairman
of the trust committee, the president, any vice president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, the cashier, any
trust officer or assistant trust officer, the controller or 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.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" means, at any time, any direct or indirect
Subsidiary of the Company that is not then an Unrestricted Subsidiary; provided,
however, that upon the occurrence of an Unrestricted Subsidiary ceasing to be an
Unrestricted Subsidiary, such Subsidiary shall be included in the definition of
"Restricted Subsidiary."
"S&P" means Standard and Poor's Ratings Group and its successors.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"Senior Credit Facility" means that certain credit facility
described in the Prospectus among the Company and the lenders from time to time
party thereto, including any collateral documents, instruments and agreements
executed in connection therewith, and the term Senior Credit Facility shall also
include any amendments, supplements, modifications, extensions, renewals,
restatements or refundings thereof and any credit facilities that replace,
refund or refinance any part of the loans, other credit facilities or
commitments thereunder, including any such replacement, refunding or refinancing
facility that increases the amount borrowable thereunder or alters the maturity
thereof, provided, however, that there shall not be more than one facility at
any one time that constitutes the Senior Credit Facility and, if at any time
there is more than one facility which would constitute the Senior Credit
Facility, the Company will designate to the Trustee which one of such facilities
will be the Senior Credit Facility for purposes of this Indenture.
"Senior Indebtedness" means (i) the Obligations under the Senior
Credit Facility and (ii) any other Indebtedness permitted to be incurred by the
Company under the terms of this Indenture, unless the instrument under which
such Indebtedness is incurred expressly provides that it is on a parity with or
subordinated in right of payment to the Notes, including, with respect to (i)
and (ii), interest accruing subsequent to the filing of, or which would have
accrued but for the filing of, a petition for bankruptcy, whether or not such
interest is an allowable claim in such bankruptcy proceeding. Notwithstanding
anything to the contrary in
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18
the foregoing, Senior Indebtedness will not include (1) any liability for
federal, state, local or other taxes owed or owing by the Company, (2) any
obligation of the Company to any of its Subsidiaries, (3) any accounts payable
or trade liabilities arising in the ordinary course of business (including
instruments evidencing such liabilities) other than obligations in respect of
bankers' acceptances and letters of credit under the Senior Credit Facility, (4)
any Indebtedness that is incurred in violation of this Indenture, (5)
Indebtedness which, when incurred and without respect to any election under
Section 1111 (b) of Title 11, United States Code, is without recourse to the
Company, (6) any Indebtedness, guarantee or obligation of the Company which is
subordinate or junior to any other Indebtedness, guarantee or obligation of the
Company, (7) Indebtedness evidenced by the Notes and (8) Capital Stock of the
Company.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof.
"Similar Business" means a business, the majority of whose revenues
are derived from the design, manufacture and/or marketing of electrical,
electronic and fiber optic connectors, coaxial and flat-ribbon cable, and
interconnect systems, or whose revenues are derived from the licensing of the
Amphenol name, or any business or activity that is reasonably similar thereto or
a reasonable extension, development or expansion thereof or ancillary thereto.
"Special Record Date" for the payment of any Defaulted Interest
means a date fixed by the Trustee pursuant to Section 308.
"Stated Maturity" when used with respect to any Note or any
installment of interest thereon, means the date specified in such Note as the
fixed date on which the principal of such Note or such installment of interest
is due and payable, and, when used with respect to any other Indebtedness, means
the date specified in the instrument governing such Indebtedness as the fixed
date on which the principal of such Indebtedness, or any installment of interest
thereon, is due and payable.
"Subordinated Indebtedness" means (a) with respect to the Notes, any
Indebtedness of the Company which is by its terms subordinated in right of
payment to the Notes and (b) with respect to any Guarantee, any Indebtedness of
the applicable Guarantor which is by its terms subordinated in right of payment
to such Guarantee.
"Subordinated Note Obligations" means any principal of, premium, if
any, and interest on the Notes payable pursuant to the terms of the Notes or
upon acceleration, together with and including any amounts received upon the
exercise of rights of rescission or other rights of action (including claims for
damages) or otherwise, to the extent relating to the purchase price of the Notes
or amounts corresponding to such principal, premium, if any, or interest on the
Notes.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association, or other business entity (other than a partnership) of which more
than 50% of the total voting power of shares of Capital Stock entitled (without
regard to the occurrence of any contingency)
<PAGE>
19
to vote in the election of directors, managers or trustees thereof is at the
time of determination owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person or a combination
thereof and (ii) any partnership, joint venture, limited liability company or
similar entity of which (x) more than 50% of the capital accounts, distribution
rights, total equity and voting interests or general or limited partnership
interests, as applicable, are owned or controlled, directly or indirectly, by
such Person or one or more of the other Subsidiaries of that Person or a
combination thereof whether in the form of membership, general, special or
limited partnership or otherwise and (y) such Person or any Wholly Owned
Restricted Subsidiary of such Person is a controlling general partner or
otherwise controls such entity.
"Total Assets" means the total consolidated assets of the Company
and its Restricted Subsidiaries, as shown on the most recent balance sheet
(excluding the footnotes thereto) of the Company.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939
as in force on the date as of which this Indenture was executed, except as
provided in Section 905.
"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.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company
which at the time of determination is an Unrestricted Subsidiary (as designated
by the Board of Directors of the Company, as provided below) and (ii) any
Subsidiary of an Unrestricted Subsidiary. The Board of Directors of the Company
may designate any Subsidiary of the Company (including any existing Subsidiary
and any newly acquired or newly formed Subsidiary) to be an Unrestricted
Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Equity
Interests of, or owns, or holds any Lien on, any property of, the Company or any
Subsidiary of the Company (other than any Subsidiary of the Subsidiary to be so
designated), provided that (a) any Unrestricted Subsidiary must be an entity of
which shares of the capital stock or other equity interests (including
partnership interests) entitled to cast at least a majority of the votes that
may be cast by all shares or equity interests having ordinary voting power for
the election of directors or other governing body are owned, directly or
indirectly, by the Company, (b) the Company certifies that such designation
complies with Section 1009 hereof and (c) each of (1) the Subsidiary to be so
designated and (2) its Subsidiaries has not at the time of designation, and does
not thereafter, create, incur, issue, assume, guarantee or otherwise become
directly or indirectly liable with respect to any Indebtedness pursuant to which
the lender has recourse to any of the assets of the Company or any of its
Restricted Subsidiaries. The Board of Directors may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided that, immediately after
giving effect to such designation, (i) the Company could incur at least $1.00 of
additional Indebtedness under the provisions of Section 1010(a) hereof or (ii)
the Fixed Charge Coverage Ratio for the Company and its Restricted Subsidiaries
would be greater than such ratio for the Company and its Restricted Subsidiaries
immediately prior to such designation, in each case on a pro forma basis taking
into account such designation. Any such designation by the Board of Directors
shall be notified by the Company
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20
to the Trustee by promptly filing with the Trustee a copy of the board
resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing provisions.
"Vice President," when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president."
"Voting Stock" of any Person as of any date means the Capital Stock
of such Person that is at the time entitled to vote in the election of the Board
of Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness or Disqualified Stock, as the case may be, at any date, the
quotient obtained by dividing (i) the sum of the products of the number of years
from the date of determination to the date of each successive scheduled
principal payment of such Indebtedness or redemption or similar payment with
respect to such Disqualified Stock multiplied by the amount of such payment, by
(ii) the sum of all such payments.
"Wholly Owned Restricted Subsidiary" is any Wholly Owned Subsidiary
that is a Restricted Subsidiary.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such
Person 100% of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares) shall at the time be owned by
such Person or by one or more Wholly Owned Subsidiaries of such Person and one
or more Wholly Owned Subsidiaries of such Person.
SECTION 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to
take any action under any provision of this Indenture, the Company and any
Guarantor (if applicable) and any other obligor on the Notes (if applicable)
shall furnish to the Trustee an Officers' Certificate in form and substance
reasonably acceptable to the Trustee stating that all conditions precedent, if
any, provided for in this Indenture (including any covenant compliance with
which constitutes a condition precedent) relating to the proposed action have
been complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of an Officers' Certificate and an Opinion of Counsel is specifically required
by any provision of this Indenture relating to such particular application or
request, no additional certificate or opinion need be furnished.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (including certificates
provided pursuant to Section 1018(a)) shall include:
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21
(1) a statement that each 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 each such individual or such
firm, he or it has made such examination or investigation as is necessary
to enable him or it 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 each such
individual, such condition or covenant has been complied with.
SECTION 103. 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 of the Company, any
Guarantor or other obligor on the Notes may be based, insofar as it relates to
legal matters, upon a certificate or opinion of, or representations by, counsel,
unless such Officer knows, or in the exercise of reasonable care should know,
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 Counsel may be based, insofar as it relates to factual
matters, upon a certificate or opinion of, or representations by, an Officer or
Officers of the Company, any Guarantor or other obligor on the Notes stating
that the information with respect to such factual matters is in the possession
of the Company, any Guarantor or other obligor on the Notes unless such counsel
knows, or in the exercise of reasonable care should know, 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 104. Acts of Holders.
(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 agents duly
appointed in writing; and, except as herein otherwise expressly
<PAGE>
22
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 conclusive in favor of the Trustee and the
Company, if made in the manner provided in this Section 104.
(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 a certificate of a 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 a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of 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 principal amount and serial numbers of Notes held by any
Person, and the date of holding the same, shall be proved by the Note Register.
(d) If the Company shall solicit from the Holders of Notes any
request, demand, authorization, direction, notice, consent, waiver or other Act,
the Company may, at its option, by or pursuant to a Board Resolution, fix in
advance a record date for the determination of Holders entitled to give such
request, demand, authorization, direction, notice, consent, waiver or other Act,
but the Company shall have no obligation to do so. Notwithstanding TIA Section
316(c), such record date shall be the record date specified in or pursuant to
such Board Resolution, which shall be a date not earlier than the date 30 days
prior to the first solicitation of Holders generally in connection therewith and
not later than the date such solicitation is completed. If such a record date is
fixed, such request, demand, authorization, direction, notice, consent, waiver
or other Act may be given before or after such record date, but only the Holders
of record at the close of business on such record date shall be deemed to be
Holders for the purposes of determining whether Holders of the requisite
proportion of Outstanding Notes have authorized or agreed or consented to such
request, demand, authorization, direction, notice, consent, waiver or other Act,
and for that purpose the Outstanding Notes shall be computed as of such record
date; provided that no such authorization, agreement or consent by the Holders
on such record date shall be deemed effective unless it shall become effective
pursuant to the provisions of this Indenture not later than six months after the
record date.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Note shall bind every future Holder of
the same Note and the Holder of every Note issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof (including in
accordance with Section 307) in respect of anything done, omitted or suffered to
be done by the Trustee, any Paying Agent or the Company or any Guarantor in
reliance thereon, whether or not notation of such action is made upon such Note.
<PAGE>
23
SECTION 105. Notices, Etc., to Trustee, the Company and any
Guarantor.
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 Guarantor or
any other obligor on the Notes shall be sufficient for every purpose
hereunder if made, given, furnished or delivered in writing and mailed,
first-class postage prepaid, or delivered by recognized overnight courier,
to or with the Trustee and received at its Corporate Trust Office,
Attention: Corporate Trust Department, or
(2) the Company or any Guarantor by the Trustee or by any Holder
shall be sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if made, given, furnished or delivered, in writing, or
mailed, first-class postage prepaid, or delivered by recognized overnight
courier, to the Company or such Guarantor addressed to it at the address
of its principal office specified in the first paragraph of this
Indenture, or at any other address previously furnished in writing to the
Trustee by the Company or such Guarantor.
SECTION 106. Notice to Holders; Waiver.
Where this Indenture provides for notice of any event to Holders by
the Company or the Trustee, 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 his 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. Any notice
mailed to a Holder in the manner herein prescribed shall be conclusively deemed
to have been received by such Holder, whether or not such Holder actually
receives such notice. 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 or irregularities in regular
mail service or by reason of any other cause, it shall be impracticable to mail
notice of any event to Holders when such notice is required to be given pursuant
to any provision of this Indenture, then any manner of giving such notice as
shall be satisfactory to the Trustee shall be deemed to be a sufficient giving
of such notice for every purpose hereunder.
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24
SECTION 107. 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 108. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
SECTION 109. 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 110. Benefits of Indenture.
Nothing in this Indenture or in the Notes, express or implied, shall
give to any Person, (other than the parties hereto, any Agent and their
successors hereunder and each of the Holders and, with respect to any provisions
hereof relating to the subordination of the Notes or the rights of holders of
Senior Indebtedness, the holders of Senior Indebtedness) any benefit or any
legal or equitable right, remedy or claim under this Indenture.
SECTION 111. Governing Law.
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY THE LAW OF THE
STATE OF NEW YORK EXCLUDING (TO THE GREATEST EXTENT PERMISSIBLE BY LAW) ANY RULE
OF LAW THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER
THAN THE STATE OF NEW YORK.
SECTION 112. Legal Holidays.
In any case where any Interest Payment Date, any date established
for payment of Defaulted Interest pursuant to Section 308 or Redemption Date or
Stated Maturity or Maturity of any Note shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or of the Notes) payment
of principal (or premium, if any) or interest need not be made on such date, but
may be made on the next succeeding Business Day with the same force and effect
as if made on the Interest Payment Date or date established for payment of
Defaulted Interest pursuant to Section 308, Redemption Date, or at the Stated
Maturity or Maturity; provided that no interest shall accrue for the period from
and after such Interest Payment Date, Redemption Date or date established for
payment of Defaulted Interest pursuant to Section 308, Stated Maturity or
Maturity, as the case may be, to the next succeeding Business Day.
<PAGE>
25
SECTION 113. No Personal Liability of Directors, Officers,
Employees, Stockholders or Incorporators.
No director, officer, employee, incorporator or stockholders, as
such, of the Company or any Guarantor shall have any liability for any
obligations of the Company or such Guarantor under the Notes, this Indenture or
any Guarantee or for any claim based on, in respect of, or by reason of, such
obligations or their creations. Each Holder by accepting a Note waives and
releases all such liability. Such waiver and release are part of the
consideration for the issuance of the Notes.
SECTION 114. Counterparts.
This Indenture may be executed in any number of counterparts, each
of which shall be original; but such counterparts shall together constitute but
one and the same instrument.
ARTICLE TWO
NOTE FORMS
SECTION 201. Forms Generally.
The Notes shall be known as the "____% Senior Subordinated Notes due
2007" of the Company. The Notes and the Trustee's certificate of authentication
shall be in substantially the forms set forth in this Article, with such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture, and may have such letters, numbers or
other marks of identification and such legends or endorsements placed thereon as
may be required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such Notes, as
evidenced by their execution of the Notes. 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. Each Note shall be dated the date of its
authentication.
The definitive Notes shall be printed, lithographed or engraved on
steel-engraved borders or may be produced in any other manner, all as determined
by the officers of the Company executing such Notes, as evidenced by their
execution of such Notes.
Notes will be issued on the Issuance Date in the form of a permanent
global Note substantially in the form set forth in Sections 203 and 204 (the
"Global Note") deposited with the Trustee, as custodian for the Depositary, duly
executed by the Company and authenticated by the Trustee as hereinafter
provided. The Global Note may be represented by more than one certificate, if so
required by the Depositary's rules regarding the maximum principal amount to be
represented by a single certificate.
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26
SECTION 202. Legend.
The Global Note shall bear the following legend on the face thereof:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY ("DTC") TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER REPRESENTATIVE OF
DTC AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT HEREON 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
SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET
FORTH IN SECTION 306 OF THE INDENTURE.
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27
SECTION 203. Form of Face of Note.
AMPHENOL CORPORATION
____% Senior Subordinated Note due 2007
CUSIP No. _____
No. __________ $240,000,000.00
AMPHENOL CORPORATION, a Delaware corporation (herein called the
"Company", which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to Cede &
Co. or registered assigns, the principal sum of $240,000,000.00 U.S. dollars on
May __, 2007, at the office or agency of the Company referred to below, and to
pay interest thereon on ______ __, 1997 and semi-annually thereafter, on
________ __ and ______ __ in each year, from May __, 1997, or from the most
recent Interest Payment Date to which interest has been paid or duly provided
for, at the rate of ____% per annum, until the principal hereof is paid or duly
provided for, and (to the extent lawful) to pay on demand interest on any
overdue interest at the rate borne by the Notes from the date on which such
overdue interest becomes payable to the date payment of such interest has been
made or duly provided for. 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 _______ __ or ______ __ (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 shall forthwith cease to be
payable to the Holder on such Regular Record Date, and such defaulted interest,
and (to the extent lawful) interest on such defaulted interest at the rate borne
by the Notes, may 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 less than 10 days prior to
such Special Record Date, or may 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.
Principal of, premium, if any, and interest on the Notes will be
payable at the office or agency of the Company maintained for such purpose
within the City and State of New York or at such other office or agency of the
Company as may be maintained for such purpose, or at the option of the Company,
payment of interest may be made by check mailed to the Holders of the Notes at
their respective addresses set forth in the register of Holders of Notes;
provided that all payments of principal, premium, interest with respect to Notes
represented by one or more permanent global Notes registered in the name of or
held by The Depository Trust Company or its nominee will be made by wire
transfer of immediately available funds to the accounts specified by the Holders
thereof. Until otherwise designated by the Company, the Company's office or
agency in New York will be the office of the Trustee maintained for such
purpose.
<PAGE>
28
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly
executed by the Trustee or the Authenticating Agent referred to on the reverse
hereof by manual signature, this Note shall not be entitled to any benefit under
the Indenture, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed under its corporate seal.
AMPHENOL CORPORATION
By
------------------------------
Name:
Title:
Attest: [SEAL]
- -----------------
Authorized Officer
<PAGE>
29
SECTION 204. Form of Reverse of Note.
This Note is one of a duly authorized issue of securities of the
Company designated as its ____% Senior Subordinated Notes due 2007 (the
"Notes"), limited (except as otherwise provided in the Indenture referred to
below) in aggregate principal amount to $240,000,000, which may be issued under
an indenture (the "Indenture") dated as of May __, 1997 between the Company and
IBJ Schroder Bank & Trust Company, as trustee (the "Trustee", which term
includes any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties, obligations and immunities
thereunder of the Company, 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 indebtedness evidenced by the Notes is, to the extent and in the
manner provided in the Indenture, subordinate and subject in right of payment to
the prior payment in full of all Senior Indebtedness as defined in the
Indenture, and this Note is issued subject to such provisions. Each Holder of
this Note, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his behalf to take such
action as may be necessary or appropriate to effectuate the subordination as
provided in the Indenture and (c) appoints the Trustee his attorney-in-fact for
such purpose.
On or before each payment date, the Company shall deliver or cause
to be delivered to the Trustee or the Paying Agent an amount in dollars
sufficient to pay the amount due on such payment date.
Except as described below, the Notes will not be redeemable at the
Company's option prior to _______, 2002. From and after ___________, 2002, the
Notes will be subject to redemption at any time at the option of the Company, in
whole or in part, upon not less than 30 nor more than 60 days' notice, at the
Redemption Prices (expressed as percentages of principal amount) set forth
below, plus accrued and unpaid interest thereon, if any, to the applicable
redemption date, if redeemed during the twelve-month period beginning on
____________ of each of the years indicated below:
Redemption
Year Price
---- -----
2002 .............................................. 1__.___%
2003............................................... 1__.___%
2004 .............................................. 1__.___%
2005 and thereafter ............................... 100.000%
In addition, at any time or from time to time, on or prior to
________ __, 2000, the Company may, at its option, redeem up to 40% of the
aggregate principal amount of Notes originally issued under the Indenture on the
Issuance Date at a Redemption Price equal to 1__.___% of the aggregate principal
amount thereof, plus accrued and unpaid interest thereon, if any, to the
Redemption Date, with the net cash proceeds of one or more Equity Offerings;
<PAGE>
30
provided that at least 60% of the aggregate principal amount of Notes originally
issued under the Indenture on the Issuance Date remains outstanding immediately
after the occurrence of such redemption; provided further that such redemption
shall occur within 60 days of the date of the closing of any such Equity
Offering.
If less than all the Notes are to be redeemed pursuant to the
preceding two paragraphs, the Trustee shall select the Notes or portions thereof
to be redeemed in compliance with the requirements of the principal national
securities exchange, if any, on which the Notes being redeemed are listed, or if
the Notes are not so listed, on a pro rata basis, by lot or by such other method
the Trustee shall deem fair and appropriate (and in such manner as complies with
applicable legal requirements); provided that no such Notes of $1,000 or less
shall be redeemed in part.
In the case of any redemption of Notes, interest installments whose
Stated Maturity is on or prior to the Redemption Date will be payable to the
Holders of such Notes, or one or more Predecessor Notes, of record at the close
of business on the relevant Regular Record Date or Special Record Date, as the
case may be, referred to on the face hereof. Notes (or portions thereof) for
whose redemption and payment provision is made in accordance with the Indenture
shall cease to bear interest from and after the Redemption Date.
In the event of redemption or repurchase of this Note in part only,
a new Note or Notes for the unredeemed portion hereof shall be issued in the
name of the Holder hereof upon the cancellation hereof.
Upon the occurrence of a Change of Control, the Company will be
required to make an offer to purchase all or any part (equal to $1,000 in
principal amount or an integral multiple thereof Notes at a price in cash equal
to 101% of the aggregate principal amount of the Notes thereof, plus accrued and
unpaid interest thereon, if any, to the date of purchase, in accordance with the
Indenture. Holders of Notes that are subject to an offer to purchase will
receive a Change of Control Offer from the Company prior to any related Change
of Control Payment Date.
Under certain circumstances, in the event the Net Proceeds received
by the Company from an Asset Sale, which proceeds are not used (i) to
permanently reduce Obligations under the Senior Credit Facility (and to
correspondingly reduce commitments with respect thereto) or other Senior
Indebtedness or Pari Passu Indebtedness (provided that if the Company shall so
reduce Obligations under Pari Passu Indebtedness, it will equally and ratably
reduce Obligations under the Notes if the Notes are then prepayable or, if the
Notes may not be then prepaid, the Company shall make an offer (in accordance
with the procedures set forth below for an Asset Sale Offer) to all Holders to
purchase at 100% of the principal amount thereof the amount of Notes that would
otherwise be prepaid), (ii) to make an investment in any one or more businesses,
capital expenditures or acquisitions of other assets in each case, used or
useful in a Similar Business and/or (iii) to make an investment in properties or
assets that replace the properties and assets that are the subject of such Asset
Sale, equal or exceed a specified amount, the Company will be required to make
an offer to all Holders to purchase the maximum principal amount of Notes, in an
integral multiple of $1,000, that may be
<PAGE>
31
purchased out of such amount 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, in accordance with the Indenture. Holders of Notes that are subject
to any offer to purchase will receive an Asset Sale Offer from the Company prior
to any related Asset Sale Purchase Date.
In the case of any redemption or repurchase of Notes, interest
installments whose Stated Maturity is on or prior to the Redemption Date will be
payable to the Holders of such Notes, or one or more Predecessor Notes, of
record at the close of business on the relevant Regular Record Date or Special
Record Date, as the case may be, referred to on the face hereof. Notes (or
portions thereof) for whose redemption and payment provision is made in
accordance with the Indenture shall cease to bear interest from and after the
Redemption Date.
If an Event of Default shall occur and be continuing, the principal
of all the Notes may be declared due and payable in the manner and with the
effect provided in the Indenture.
The Indenture contains provisions for defeasance at any time of (a)
the entire indebtedness of the Company on this Note and (b) certain restrictive
covenants and the related Defaults and Events of Default, upon compliance by the
Company with certain conditions set forth therein, which provisions apply to
this Note.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders under the Indenture and the Notes and the
Guarantees, if any, at any time by the Company and the Trustee with the consent
of the Holders of a specified percentage in aggregate principal amount of the
Notes at the time Outstanding. Additionally, the Indenture permits that, without
notice to or consent of any Holder, the Company, any Guarantor and the Trustee
together may amend or supplement the Indenture, any Guarantee or this Note (i)
to cure any ambiguity, defect or inconsistency, (ii) to provide for
uncertificated Notes in addition to or in place of certificated Notes, (iii) to
comply with the Article Eight of the Indenture, (iv) to provide for the
assumption of the Company's or any Guarantor's obligations to Holders of such
Notes, (v) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the legal
rights under the Indenture of any such Holder, (vi) to add covenants for the
benefit of the Holders or to surrender any right or power conferred upon the
Company, (vii) to comply with the requirements of the Commission in order to
effect or maintain the qualification of the Indenture under the Trust Indenture
Act, (viii) to evidence and provide for the acceptance of appointment under this
Indenture by a successor Trustee pursuant to the requirements of Section 610, or
(ix) to add a Guarantor under the Indenture. The Indenture also contains
provisions permitting the Holders of specified percentages in aggregate
principal amount of the Notes at the time Outstanding, on behalf of the Holders
of all the Notes, to waive compliance by the Company with certain provisions of
the Indenture the Notes and the Guarantees, if any, and certain past Defaults
under the Indenture and the Notes and the Guarantees, if any, and their
consequences. Any such consent or waiver by or on behalf of the Holder of this
Note shall be conclusive and binding upon such Holder and upon all future
Holders of this Note and of any Note issued
<PAGE>
32
upon the registration of transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent or waiver is made upon this Note.
No reference herein to the Indenture and no provision of this Note
or of the Indenture shall alter or impair the obligation of the Company, any
Guarantor or any other obligor on the Notes (in the event such Guarantor or
other obligor is obligated to make payments in respect of the Notes), which is
absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Note at the times, place, and rate, and in the coin or
currency, herein prescribed, subject to the subordination provisions of the
Indenture.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Note is registerable on the Note
Register of the Company, upon surrender of this Note for registration of
transfer at the office or agency of the Company maintained for such purpose in
The City of New York, duly endorsed by, or accompanied by a written instrument
of transfer in form satisfactory to the Company and the Note Registrar duly
executed by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Notes, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.
The Notes are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, the Notes are
exchangeable for a like aggregate principal amount of Notes of a different
authorized denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any registration of transfer or
exchange or redemption of Notes, but the Company may require payment of a sum
sufficient to pay all documentary, stamp or similar issue or transfer taxes or
other governmental charges payable in connection therewith.
Prior to the time of due presentment of this Note for registration
of transfer, the Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name this Note is registered as the owner
hereof for all purposes, whether or not this Note be overdue, and neither the
Company, the Trustee nor any agent shall be affected by notice to the contrary.
<PAGE>
33
THIS NOTE AND THE INDENTURE SHALL BE GOVERNED BY THE LAW OF THE
STATE OF NEW YORK EXCLUDING (TO THE GREATEST EXTENT PERMISSIBLE BY LAW) ANY RULE
OF LAW THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER
THAN THE STATE OF NEW YORK.
Interest on this Note shall be computed on the basis of a 360-day
year of twelve 30-day months.
All terms used in this Note which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
FORM OF TRANSFER NOTICE
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
please print or typewrite name and address including zip code of assignee
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing
attorney to transfer said Note on the books of the Company with full power of
substitution in the premises.
<PAGE>
34
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Company pursuant to
Section[s] [1016] [1017] of the Indenture, check the Box: [ ].
If you wish to have a portion of this Note purchased by the Company
pursuant to Section[s] [1016] [1017] of the Indenture, state the amount (in
original principal amount) below:
$---------------------.
Date:
Your Signature:
(Sign exactly as your name appears on the other side of this Note)
Signature Guarantee:
SECTION 205. Form of Trustee's Certificate of Authentication.
The Trustee's certificate of authentication shall be in
substantially the following form:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
This is one of the Notes referred to in the within-mentioned
Indenture.
-------------------,
as Trustee
By
----------------------
Authorized Signatory
Dated: ____________________
<PAGE>
35
ARTICLE THREE
THE NOTES
SECTION 301. Title and Terms.
The aggregate principal amount of Notes which may be authenticated
and delivered under this Indenture is limited to $240,000,000, except for Notes
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Notes pursuant to Section 304, 305, 306, 307, 906,
1015, 1017 or 1108.
The Notes shall be known and designated as the "____% Senior
Subordinated Notes due 2007" of the Company. The Stated Maturity of the Notes
shall be May __, 2007, and they shall bear interest at the rate of ____% per
annum from May __, 1997, or from the most recent Interest Payment Date to which
interest has been paid or duly provided for, payable on ______ __, 1997 and
semi-annually thereafter on ___________ and _________ in each year, until the
principal thereof is paid in full and to the Person in whose name the Note (or
any predecessor Note) is registered at the close of business on the __________
or ________ next preceding such interest payment date. Interest will be computed
on the basis of a 360-day year comprised of twelve 30-day months, until the
principal thereof is paid or duly provided for. Interest on any overdue
principal, interest (to the extent lawful) or premium, if any, shall be payable
on demand.
Principal of, premium, if any, and interest on the Notes will be
payable at the office or agency of the Company maintained for such purpose
within the City and State of New York or at such other office or agency of the
Company as may be maintained for such purposes, or at the option of the Company,
payment of interest may be made by check mailed to the Holders of the Notes at
their respective addresses set forth in the register of Holders of Notes;
provided that all payments of principal, premium, interest with respect to Notes
represented by one or more permanent global Notes registered in the name of or
held by The Depository Trust Company or its nominee will be made by wire
transfer of immediately available funds to the accounts specified by the Holders
thereof. Until otherwise designated by the Company, the Company's office or
agency in New York will be the office of the Trustee maintained for such
purpose.
Holders shall have the right to require the Company to purchase
their Notes, in whole or in part, in the event of a Change of Control pursuant
to Section 1016.
The Notes shall be subject to repurchase by the Company pursuant to
an Asset Sale Offer as provided in Section 1017.
The Notes shall be redeemable as provided in Article Eleven and in
the Notes.
<PAGE>
36
The Indebtedness evidenced by the Notes shall be subordinated in
right of payment to Senior Indebtedness as provided in Article Thirteen.
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, Delivery and Dating.
The Notes shall be executed on behalf of the Company by its Chief
Executive Officer or a Vice President, under its corporate seal reproduced
thereon and attested by its Corporate Secretary or an Assistant Secretary. The
signature of any of these officers on the Notes may be manual or facsimile
signatures of the present or any future such authorized officer and may be
imprinted or otherwise reproduced on the Notes.
Notes bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company 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, together with a Company Order for the authentication
and delivery of such Notes, directing the Trustee to authenticate the Notes and
certifying that all conditions precedent to the issuance of Notes contained
herein have been fully complied with, and the Trustee in accordance with such
Company Order shall authenticate and deliver such Notes. The Trustee shall be
entitled to receive an Officers' Certificate and an Opinion of Counsel of the
Company that it may reasonably request in connection with such authentication of
Notes. Such order shall specify the amount of Notes to be authenticated and the
date on which the original issue of Notes is to be authenticated.
Each Note shall be dated the date of its 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 duly
executed by the Trustee by manual signature of an authorized signatory, and such
certificate upon any Note shall be conclusive evidence, and the only evidence,
that such Note has been duly authenticated and delivered hereunder and is
entitled to the benefits of this Indenture.
In case the Company or any Guarantor, pursuant to Article Eight,
shall be consolidated or merged with or into any other Person or shall convey,
transfer, lease or otherwise dispose of its properties and assets substantially
as an entirety to any Person, and the successor Person resulting from such
consolidation, or surviving such merger, or into which the Company or such
Guarantor shall have been merged, or the Person which shall have
<PAGE>
37
received a conveyance, transfer, lease or other disposition as aforesaid, shall
have executed an indenture supplemental hereto with the Trustee pursuant to
Article Eight, any of the Notes authenticated or delivered prior to such
consolidation, merger, conveyance, transfer, lease or other disposition may,
from time to time, at the request of the successor Person, be exchanged for
other Notes executed in the name of the successor Person with such changes in
phraseology and form as may be appropriate, but otherwise in substance of like
tenor as the Notes surrendered for such exchange and of like principal amount;
and the Trustee, upon Company Request of the successor Person, shall
authenticate and deliver Notes as specified in such request for the purpose of
such exchange. If Notes shall at any time be authenticated and delivered in any
new name of a successor Person pursuant to this Section 303 in exchange or
substitution for or upon registration of transfer of any Notes, such successor
Person, at the option of the Holders but without expense to them, shall provide
for the exchange of all Notes at the time Outstanding for Notes authenticated
and delivered in such new name.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes on behalf of the Trustee. 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 by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as any Note Registrar or Paying Agent
to deal with the Company and its Affiliates.
SECTION 304. Temporary Notes.
Pending the preparation of definitive Notes, the Company may
execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Notes which are printed, lithographed, typewritten, mimeographed or
otherwise produced, in any authorized denomination, substantially of the tenor
of the definitive Notes in lieu of which they are issued and with such
appropriate insertions, omissions, substitutions and other variations as the
officers executing such Notes may determine, as conclusively evidenced by their
execution of such 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
designated for such purpose pursuant to Section 1002, without charge to the
Holder. Upon surrender for cancellation of any one or more temporary Notes, the
Company shall execute and 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.
<PAGE>
38
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 designated pursuant to Section 1002 being herein sometimes
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 Note Register shall be in written form
or any other form capable of being converted into written form within a
reasonable time. At all reasonable times, the Note Register shall be open to
inspection by the Trustee. The Trustee is hereby initially appointed as security
registrar (the Trustee in such capacity, together with any successor of the
Trustee in such capacity, the "Note Registrar") for the purpose of registering
Notes and transfers of Notes as herein provided.
Upon surrender for registration of transfer of any Note at the
office or agency of the Company designated pursuant to Section 1002, 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 denomination or denominations of a like aggregate principal amount.
Furthermore, any Holder of a Global Note shall, by acceptance of
such Global Note, agree that transfers of beneficial interest in such Global
Note may be effected only through a book-entry system maintained by the Holder
of such Global Note (or its agent), and that ownership of a beneficial interest
in the Note shall be required to be reflected in a book entry.
At the option of the Holder, Notes may be exchanged for other Notes
of any authorized denomination and of a like aggregate principal amount, upon
surrender of the Notes to be exchanged at such office or agency. Whenever any
Notes are so surrendered for exchange, the Company shall execute, and the
Trustee shall authenticate and deliver, the Notes which the Holder making the
exchange is entitled to receive.
All Notes issued upon any registration of 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 registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
for exchange shall (if so required by the Company or the Note Registrar) 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 his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange or redemption 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 registration of transfer or exchange of Notes, other than
exchanges pursuant to Section 304, 906, 1016, 1017 or 1108, not involving any
transfer.
<PAGE>
39
SECTION 306. Book-Entry Provisions for the Global Note.
(a) The Global Note initially shall (i) be registered in the name of
the Depositary for such global Note or the nominee of such Depositary, (ii) be
delivered to the Trustee as custodian for such Depositary and (iii) bear the
legend as set forth in Section 202.
Members of, or participants in, the Depositary ("Agent Members")
shall have no rights under this Indenture with respect to the Global Note held
on their behalf by the Depositary, or the Trustee as its custodian, or under the
Global Note, and the Depositary may be treated by the Company, the Trustee and
any agent of the Company or the Trustee as the absolute owner of such Global
Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein
shall prevent the Company, the Trustee or any agent of the Company or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depositary or shall impair, as between the
Depositary and its Agent Members, the operation of customary practices governing
the exercise of the rights of a Holder of any Note.
(b) Transfers of the Global Note shall be limited to transfers of
such Global Note in whole, but not in part, to the Depositary, its successors or
their respective nominees. Interests of beneficial owners in the Global Note may
be transferred in accordance with the rules and procedures of the Depositary. If
required to do so pursuant to any applicable law or regulation, beneficial
owners may obtain Physical Notes in exchange for their beneficial interests in
the Global Note upon written request in accordance with the Depositary's and the
Registrar's procedures. In addition, Physical Notes shall be transferred to all
beneficial owners in exchange for their beneficial interests in the Global Note
if (i) the Depositary notifies the Company that it is unwilling or unable to
continue as Depositary for such Global Note or the Depositary ceases to be a
clearing agency registered under the Exchange Act, at a time when the Depositary
is required to be so registered in order to act as Depositary, and in each case
a successor depositary is not appointed by the Company within 90 days of such
notice or (ii) the Company executes and delivers to the Trustee and Note
Registrar an Officers' Certificate stating that such Global Note shall be so
exchangeable or (iii) an Event of Default has occurred and is continuing and the
Note Registrar has received a request from the Depositary.
(c) In connection with any transfer of a portion of the beneficial
interest in the Global Note pursuant to subsection (b) of this Section to
beneficial owners who are required to hold Physical Notes, the Note Registrar
shall reflect on its books and records the date and a decrease in the principal
amount of such Global Note in an amount equal to the principal amount of the
beneficial interest in the Global Note to be transferred, and the Company shall
execute, and the Trustee shall authenticate and deliver, one or more Physical
Notes of like tenor and amount.
(d) In connection with the transfer of the entire Global Note to
beneficial owners pursuant to subsection (b) of this Section, such 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
<PAGE>
40
exchange for its beneficial interest in such Global Note, an equal aggregate
principal amount of Physical Notes of authorized denominations.
(e) The registered holder of the 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 which a Holder is
entitled to take under this Indenture or the Notes.
SECTION 307. Mutilated, Destroyed, Lost and Stolen Notes.
If (i) any mutilated Note is surrendered to the Trustee, or (ii) the
Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Note, and there is delivered to the Company,
any Guarantor and the Trustee such security or indemnity, in each case, as may
be required by them to save each of them harmless, then, in the absence of
notice to the Company any Guarantor or the Trustee that such Note has been
acquired by a bona fide purchaser, the Company shall execute and upon Company
Order the Trustee shall authenticate and deliver, in exchange for any such
mutilated Note or in lieu of any such 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, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) in connection
therewith.
Every new Note issued pursuant to this Section in lieu of any
mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Company, any Guarantor and any other
obligor upon the Notes, whether or not the mutilated, destroyed, lost or stolen
Note shall be at any time enforceable by anyone, and shall be entitled to all
benefits of this Indenture equally and proportionately with any and all other
Notes duly issued hereunder.
The provisions of this Section 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.
<PAGE>
41
SECTION 308. Payment of Interest; Interest Rights Preserved.
Interest on any Note which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name such Note (or one or more Predecessor Notes) is registered at the
close of business on the Regular Record Date for such interest at the office or
agency of the Company maintained for such purpose pursuant to Section 1002;
provided, however, that each installment of interest may at the Company's option
be paid by (i) mailing a check for such interest, payable to or upon the written
order of the Person entitled thereto pursuant to Section 309, to the address of
such Person as it appears in the Note Register or (ii) wire transfer to an
account located in the United States maintained by the payee.
Any interest on any Note which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date shall forthwith cease to
be payable to the Holder on the Regular Record Date by virtue of having been
such Holder, and such defaulted interest and (to the extent lawful) interest on
such defaulted interest at the rate borne by the Notes (such defaulted interest
and interest thereon herein collectively called "Defaulted Interest") shall be
paid by the Company, at its election in each case, as provided in clause (1) or
(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
(not less than 30 days after such notice) of the proposed payment (the
"Special Record Date"), 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 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 in this clause provided. Thereupon the Trustee shall fix a Special
Record Date for the payment of such Defaulted Interest which shall be not
more than 15 days and not less than 10 days prior to the Special Record
Date 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 payment of such Defaulted
Interest and the Special Record Date therefor to be given in the manner
provided for in Section 106, 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 given, such Defaulted
Interest shall be paid to the Persons in whose names the Notes (or their
respective Predecessor Notes) are registered at the close of business 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
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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, such manner of payment shall be
deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Note
delivered under this Indenture upon registration of 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, which were carried by such other Note.
SECTION 309. Persons Deemed Owners.
Prior to the due presentment of a Note for registration of transfer,
the Company, the Trustee and any agent of the Company, any Guarantor or the
Trustee may treat the Person in whose name such 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 Sections 305 and 308) interest on such Note and for all
other purposes whatsoever, whether or not such Note be overdue, and none of the
Company, any Guarantor, the Trustee nor any agent of the Company, any Guarantor
or the Trustee shall be affected by notice to the contrary.
SECTION 310. Cancellation.
All Notes surrendered for payment, redemption, registration of
transfer or exchange shall, if surrendered to any Person other than the Trustee,
be delivered to the Trustee and shall be promptly cancelled by it. If the
Company shall acquire any of the Notes other than as set forth in the preceding
sentence, the acquisition shall not operate as a redemption or satisfaction of
the Indebtedness represented by such Notes unless and until the same are
surrendered to the Trustee for cancellation pursuant to this Section 310. No
Notes shall be authenticated in lieu of or in exchange for any Notes cancelled
as provided in this Section, except as expressly permitted by this Indenture.
All cancelled Notes held by the Trustee shall be disposed of by the Trustee in
accordance with its customary procedures unless by Company Order the Company
shall direct that cancelled Notes be returned to it.
SECTION 311. Computation of Interest.
Interest on the Notes shall be computed on the basis of a 360-day
year of twelve 30-day months.
SECTION 312. CUSIP Numbers.
The Company in issuing Notes may use "CUSIP" numbers (if then
generally in use) in addition to serial numbers; if so, the Trustee shall use
such CUSIP numbers in addition to serial numbers in notices of redemption and
repurchase as a convenience to Holders; provided that any such notice may state
that no representation is made as to the correctness of such CUSIP numbers
either as printed on the Notes or as contained in any notice of a redemption or
repurchase and that reliance may be placed only on the serial or other
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identification numbers printed on the Notes, and any such redemption or
repurchase shall not be affected by any defect in or omission of such CUSIP
numbers.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of further
effect (except as to surviving rights of registration of transfer or exchange of
Notes expressly provided for herein or pursuant hereto) and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture when
(1) either
(a) all such Notes theretofore authenticated and delivered
(except (i) lost, stolen or destroyed Notes which have been replaced
or paid as provided in Section 307 and (ii) Notes for whose payment
money has theretofore been deposited in trust and thereafter repaid
to the Company) have been delivered to the Trustee for cancellation;
or
(b) all such Notes not theretofore delivered to such Trustee
for cancellation
(i) have become due and payable by reason of the making
of a notice of redemption or otherwise;
(ii) will become due and payable at their Stated
Maturity within one year; or
(iii) are called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the name, and at the
expense, of the Company,
and the Company or any Guarantor, in the case of (i), (ii) or (iii)
above, has irrevocably deposited or caused to be deposited with the
Trustee as trust funds in trust solely for the benefit of the
Holders, cash in U.S. dollars, non-callable Government Securities,
or a combination thereof, in such amounts as will be sufficient
without consideration of any reinvestment of interest, to pay and
discharge the entire indebtedness on such Notes not theretofore
delivered to the Trustee for cancellation, for principal, premium,
if any and accrued interest to the date of the Stated Maturity or
Redemption Date, as the case may be;
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(2) no Default or Event of Default with respect to this Indenture or
the Notes shall have occurred and be continuing on the date of such
deposit or shall occur as a result of such deposit and such deposit will
not result in a breach or violation of, or constitute a default under, any
other instrument to which the Company or any Guarantor is a party or by
which the Company or any Guarantor is bound;
(3) the Company or any Guarantor has paid or caused to be paid all
sums payable hereunder by the Company or any Guarantor;
(4) the Company has delivered irrevocable instructions to the
Trustee to apply the deposited money toward the payment of such Notes at
maturity or the Redemption Date, as the case may be; and
(5) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge
of this Indenture have been satisfied.
Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Company to the Trustee under Section 607 and, if money
shall have been deposited with the Trustee pursuant to subclause (b) of clause
(1) of this Section, the provisions of Section 402 and the last paragraph of
Section 1003 shall survive.
SECTION 402. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 1003, all
money deposited with the Trustee pursuant to Section 401 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 for whose payment such money has been deposited with the
Trustee; but such money need not be segregated from other funds except to the
extent required by law.
If the Trustee or Paying Agent is unable to apply any money or
Government Securities in accordance with Section 401 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's and any Guarantor's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 401; provided that if the Company has made any payment of principal of,
premium, if any, or interest on any Notes because of the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of
such Notes to receive such payment from the money or Government Securities held
by the Trustee or Paying Agent.
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ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default.
"Event of Default," wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be occasioned by the provisions of Article Thirteen or be voluntary or
involuntary or be 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):
(i) default in payment when due and payable, upon redemption,
acceleration or otherwise, of principal or premium, if any, on the Notes
whether or not such payment shall be prohibited by Article Thirteen;
(ii) default for 30 days or more in the payment when due of interest
on or with respect to the Notes whether or not such payment shall be
prohibited by Article Thirteen;
(iii) failure by the Company or any Guarantor for 30 days after
receipt of written notice given by the Trustee or the holders of at least
30% in principal amount of the Notes then Outstanding to comply with any
of its other agreements in this Indenture or the Notes;
(iv) default under any mortgage, indenture or instrument under which
there is issued or by which there is secured or evidenced any Indebtedness
for money borrowed by the Company or any of its Restricted Subsidiaries or
the payment of which is guaranteed by the Company or any of its Restricted
Subsidiaries (other than Indebtedness owed to the Company or a Restricted
Subsidiary), whether such Indebtedness or guarantee now exists or is
created after the Issuance Date, if both (A) such default either (1)
results from the failure to pay any such Indebtedness at its stated final
maturity (after giving effect to any applicable grace periods) or (2)
relates to an obligation other than the obligation to pay principal of any
such Indebtedness at its stated final maturity and results in the holder
or holders of such Indebtedness causing such Indebtedness to become due
prior to its stated maturity and (B) the principal amount of such
Indebtedness, together with the principal amount of any other such
Indebtedness in default for failure to pay principal at stated final
maturity (after giving effect to any applicable grace periods), or the
maturity of which has been so accelerated, aggregate $25.0 million or more
at any one time outstanding;
(v) failure by the Company or any of its Significant Subsidiaries to
pay final judgments aggregating in excess of $25.0 million, which final
judgments remain unpaid, undischarged and unstayed for a period of more
than 60 days after such judgment becomes final, and in the event such
judgment is covered by insurance, an enforcement
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proceeding has been commenced by any creditor upon such judgment or decree
which is not promptly stayed;
(vi) the Company or any of its Significant Subsidiaries pursuant to
or within the meaning of Federal Bankruptcy Code: (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 all or substantially all of its property; (D) makes a general
assignment for the benefit of its creditors, or (E) admits in writing that
it is generally not paying its debts (other than debts which are the
subject of a bona fide dispute) as they become due;
(vii) a court of competent jurisdiction enters an order or decree
under any Federal Bankruptcy Code that remains unstayed and in effect for
60 days and: (A) is for relief against the Company or any of its
Significant Subsidiaries in an involuntary case; (B) appoints a Custodian
of the Company or any of its Significant Subsidiaries or for all or
substantially all of the property of the Company or any of its Significant
Subsidiaries; or (C) orders the liquidation of the Company or any of its
Significant Subsidiaries; provided that clauses (A), (B) and (C) shall not
apply to an Unrestricted Subsidiary, unless such action or proceeding has
a material adverse effect on the interests of the Company or any
Restricted Subsidiary; or
(viii) any Guarantee shall for any reason cease to be in full force
and effect or is declared null and void or any Responsible Officer of the
Company or any Guarantor denies that it has any further liability under
any Guarantee or gives notice to such effect (other than by reason of the
termination of this Indenture or the release of any such Guarantee in
accordance with this Indenture).
The Trustee shall not be charged with knowledge of any Event of
Default unless written notice thereof shall have been given to a Responsible
Officer of the Trustee at the Corporate Trust Office.
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
If any Event of Default (other than of a type specified in Section
501(vi) or 501(vii)) occurs and is continuing, the Trustee or the Holders of at
least 30% in principal amount of the Notes Outstanding may declare the
principal, premium, if any, interest and any other monetary obligations on all
the then outstanding Notes to be due and payable immediately, by a notice in
writing to the Company (and to the Trustee if given by Holders); provided,
however, that, so long as any Indebtedness permitted to be incurred pursuant to
the Senior Credit Facility shall be outstanding, such acceleration shall not be
effective until the earlier of (i) acceleration of any such Indebtedness under
the Senior Credit Facility or (ii) five Business Days after the giving of
written notice to the Company and the Bank Agent of such acceleration. Upon the
effectiveness of such declaration, such principal and interest shall be due and
payable immediately. Notwithstanding the foregoing, in the case of an Event of
Default specified in Section 501(vi) or 501(vii) occurs and is continuing, then
the principal
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amount of all the Notes shall ipso facto become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holder.
At any time after a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter provided in this Article, the Holders of a majority
in aggregate principal amount of the Notes Outstanding, by written notice to the
Company and the Trustee, may rescind and annul such declaration and its
consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay,
(A) all overdue interest on all Outstanding Notes,
(B) all unpaid principal of (and premium, if any, on) any
Outstanding Notes which has become due otherwise than by such
declaration of acceleration, and interest on such unpaid principal
and premium at the rate borne by the Notes (for purposes of this
clause (B) without duplication to amounts to be paid or deposited
under clause (A) above);
(C) to the extent that payment of such interest is lawful,
interest on overdue interest at the rate borne by the Notes;
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel;
(2) all Events of Default, other than the non-payment of amounts of
principal of (or premium, if any, on) or interest on Notes which have
become due solely by such declaration of acceleration, have been cured or
waived as provided in Section 513;
(3) if the rescission would not conflict with any judgment or
decree; and
(4) in the event of the cure or waiver of an Event of Default
specified in clause (iv) of Section 501, the Trustee shall have received
an Officers' Certificate and, if appropriate, an Opinion of Counsel that
such Event of Default has been cured or waived.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Upon a determination by the Company that the Senior Credit Facility
is no longer in effect, the Company shall promptly give to the Trustee written
notice thereof executed by an Officer of the Company, which notice shall be
countersigned by the Bank Agent. Unless and until the Trustee shall have
received such written notice with respect to the Senior Credit Facility, the
Trustee, subject to the TIA Sections 315(a) through 315(d), shall be
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entitled in all respects to assume that the Senior Credit Facility is in effect
(unless a Responsible Officer of the Trustee shall have knowledge to the
contrary).
SECTION 503. Collection of Indebtedness and Suits for Enforcement by
Trustee.
If an Event of Default specified in Section 501(i) or 501(ii) occurs
and is continuing, the Trustee, in its own name as trustee of an express trust,
may institute a judicial proceeding for the collection of the sums so due and
unpaid, may prosecute such proceeding to judgment or final decree and may
enforce the same against the Company or any Guarantor (in accordance with the
applicable Guarantee) or any other obligor upon the Notes and collect the moneys
adjudged or decreed to be payable in the manner provided by law out of the
property of the Company, any Guarantor or any other obligor upon the Notes,
wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders under this Indenture or any Guarantee by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce any
such rights, including, seeking recourse against any Guarantor pursuant to the
terms of any Guarantee, whether for the specific enforcement of any covenant or
agreement in this Indenture or in aid of the exercise of any power granted
herein, or to enforce any other proper remedy including, without limitation,
seeking recourse against any Guarantor pursuant to the terms of a Guarantee, or
to enforce any other proper remedy, subject however to Section 513. No recovery
of any such judgment upon any property of the Company or any Guarantor shall
affect or impair any rights, powers or remedies of the Trustee or the Holders.
SECTION 504. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to the Company or any other obligor,
including any Guarantor, upon the Notes or the property of the Company or of
such other obligor or their creditors, the Trustee (irrespective of whether the
principal of the Notes shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall have made
any demand on the Company for the payment of overdue principal, premium, if any,
or interest) shall be entitled and empowered, by intervention in such proceeding
or otherwise,
(i) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest owing and unpaid in respect of the Notes, to
take such other actions (including participating as a member, voting or
otherwise, of any official committee of creditors appointed in such
matter) and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim
for the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel) and of the Holders allowed in such
judicial proceeding, and
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(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any Custodian in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay the
Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 607.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee to vote in respect
of the claim of any Holder in any such proceeding; provided, however, that the
Trustee may, on behalf of such Holders, vote for the election of a trustee in
bankruptcy or other similar official.
SECTION 505. Trustee May Enforce Claims Without Possession of Notes.
All rights of action and claims under this Indenture, the Notes or
the Guarantees 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 and 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 506. Application of Money Collected.
Subject to Article Thirteen, any money collected by the Trustee
pursuant to this Article 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
607 or otherwise pursuant to this Indenture;
SECOND: To the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the Notes 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
THIRD: The balance, if any, to the Person or Persons entitled
thereto, including the Company or any other obligor on the Notes, as their
interests may appear or as a
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court of competent jurisdiction may direct, provided that all sums due and
owing to the Holders and the Trustee have been paid in full as required by
this Indenture.
SECTION 507. Limitation on Suits.
No Holder of any Notes shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the Trustee
of a continuing Event of Default;
(2) the Holders of not less than 30% in principal amount of the
Outstanding Notes shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name
as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 30 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 30-day period by the Holders of a
majority or more in principal amount of the Outstanding Notes;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture, any Note or any Guarantee to affect, disturb or prejudice the
rights of any other Holders, or to obtain or to seek to obtain priority or
preference over any other Holders or to enforce any right under this Indenture,
any Note or any Guarantee, except in the manner herein provided and for the
equal and ratable benefit of all the Holders.
SECTION 508. 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 right, which is absolute and unconditional, to receive
payment, as provided herein (including, if applicable, Article Eleven) and in
such Note of the principal of (and premium, if any) and (subject to Section 308)
interest on such Note on the respective Stated Maturities expressed in such Note
(or, in the case of redemption or repurchase, on the Redemption Date or
repurchase) and to institute suit for the enforcement of any such payment, and
such rights shall not be impaired without the consent of such Holder.
SECTION 509. Restoration of Rights and Remedies.
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If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture or any Guarantee and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Trustee or to such Holder, then and in every such
case, subject to any determination in such proceeding, the Company, any
Guarantor, any other obligor on the Notes, the Trustee and the Holders shall 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 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes in the last paragraph of
Section 307, 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 or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 511. 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 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 512. Control by Holders.
The Holders of not less than a majority in 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 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 or any Guarantee,
(2) the Trustee need not take any action which might involve it in
personal liability or be unjustly prejudicial to the Holders not
consenting; and
(3) subject to the provisions of Section 315 of the Trust Indenture
Act, the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
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SECTION 513. Waiver of Past Defaults.
Subject to Sections 508 and 902, the Holders of a majority in
aggregate principal amount of the Outstanding Notes (including consents obtained
in connection with a tender offer or exchange offer for the Notes) may on behalf
of the Holders of all of such Notes waive any existing Default or Event of
Default and its consequences under this Indenture or any Guarantee except a
continuing Default or Event of Default in the payment of interest on, premium,
if any, or the principal of, any such Note held by a non-consenting Holder, or
in respect of a covenant or a provision which cannot be amended or modified
without the consent of all Holders.
In the event that any Event of Default specified in Section 501(iv)
shall have occurred and be continuing, 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 of the Notes, if within 20 days
after such Event of Default arose (x) the Indebtedness or guarantee that is the
basis for such Event of Default has been discharged, or (y) the holders thereof
have rescinded or waived the acceleration, notice or action (as the case may be)
giving rise to such Event of Default, or (z) if the default that is the basis
for such Event of Default has been cured.
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.
SECTION 514. Waiver of Stay or Extension Laws.
The Company, the Guarantors and any other obligors upon the Notes,
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 wherever enacted, now or at
any time hereafter in force, which would prohibit or forgive the Company, any
Guarantor or any such obligor from paying all or any portion of the principal
of, premium, if any, or interest on the Notes contemplated herein or in the
Notes or which may affect the covenants or the performance of this Indenture;
and each of the Company, any Guarantor and any such obligor (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.
SECTION 515. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Note by
his 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 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
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may in its discretion assess reasonable costs, including reasonable attorneys'
fees and expenses, 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;
but the provisions of this Section 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 Maturities expressed in such Note (or, in the case of
redemption, on or after the Redemption Date).
ARTICLE SIX
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities.
(a) Except during the continuance of a Default or 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 or willful misconduct on its part,
the Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture; but in the case of any such certificates or opinions
required to be delivered hereunder, 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 not to verify the contents thereof.
(b) In case a Default or an Event of Default has occurred and is
continuing of which a Responsible Officer of the Trustee has actual knowledge or
of which written notice of such Default or Event of Default shall have been
given to the Trustee by the Company, any other obligor of the Notes or by any
Holder, 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 person 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
(1) this paragraph (c) shall not be construed to limit the effect of
paragraph (a) of this Section;
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(2) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer of the Trustee, unless it shall be
proved that the Trustee was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the
direction of the Holders of the Outstanding Notes received by the Trustee
pursuant to Sections 502, 512 and 513 hereof or in exercising any trust or
power conferred upon the Trustee, under this Indenture; and
(4) no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise of any
of its rights or powers, if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
(d) 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 this
Section.
SECTION 602. Notice of Defaults.
Within 90 days after the occurrence of any Default hereunder, the
Trustee shall transmit in the manner and to the extent provided in TIA Section
313(c), 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 (or 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 directors and/or Responsible Officers of the Trustee in good faith
determine that the withholding of such notice is in the interest of the Holders;
and provided further that in the case of any Default of the character specified
in Section 501(iii) no such notice to Holders shall be given until at least 30
days after the occurrence thereof.
SECTION 603. Certain Rights of Trustee.
(a) Subject to the provisions of TIA Sections 315(a) through 315(d):
(1) the Trustee may conclusively 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, debenture, 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 and any resolution of the
Board of Directors may be sufficiently evidenced by a Board Resolution;
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(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 may, in
the absence of bad faith on its part, request and rely upon an
Officers' Certificate or an Opinion of Counsel or both;
(4) the Trustee may consult with counsel of its selection and any
written advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection from liability in respect of any
action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon;
(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, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and
premises of the Company, personally or by agent or attorney;
(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; and
(8) the Trustee shall not be liable for any action taken, suffered
or omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this
Indenture.
(b) The Trustee shall not be required to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of
its duties hereunder, or in the exercise of any of its rights or powers if it
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it.
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SECTION 604. Trustee Not Responsible for Recitals or Issuance of
Notes.
The recitals contained herein and in the Notes, except for the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Notes and shall not be responsible for any statement of any
Person in this Indenture, the Notes or any statement made in connection with the
sale of the Notes, provided 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 on Form T-1 supplied to the Company are true and
accurate, subject to the qualifications set forth therein. The Trustee shall not
be accountable for the use or application by the Company of Notes or the
proceeds thereof.
SECTION 605. May Hold Notes.
The Trustee, any Paying Agent, any Note Registrar, any
Authenticating Agent or any other agent of the Company or of the Trustee, in its
individual or any other capacity, may become the owner or pledgee of Notes and,
subject to TIA Sections 310(b) and 311, may otherwise deal with the Company with
the same rights it would have if it were not Trustee, Paying Agent, Note
Registrar, Authenticating Agent or such other agent.
SECTION 606. Money Held in Trust.
All moneys received by the Trustee shall, until used or applied as
herein provided, be held in trust hereunder for the purposes for which they were
received, but 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 in writing with the
Company.
SECTION 607. Compensation and Reimbursement.
The Company agrees:
(1) to pay to the Trustee from time to time such compensation as
shall be agreed to in writing between the Company and the Trustee for all
services rendered by it 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 expenses, disbursements and
advances incurred or made 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 and costs and expenses of
collection), except any such expense, disbursement or advance as may be
attributable to its negligence or bad faith; and
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(3) to indemnify each of the Trustee or any predecessor Trustee (and
their respective directors, officers, employees and agents) for, and to
hold it harmless against, any and all loss, damage, claim, liability or
expense, including taxes (other than taxes based on the income of the
Trustee) incurred without negligence or bad faith on its part, arising out
of or in connection with the acceptance or administration of this trust,
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 obligations of the Company under this Section to compensate the
Trustee, to pay or reimburse the Trustee for expenses, disbursements and
advances and to indemnify and hold harmless the Trustee shall constitute
additional indebtedness hereunder and shall survive the satisfaction and
discharge of this Indenture. As security for the performance of such obligations
of the Company, the Trustee shall have a lien prior to the Holders of the Notes
upon all property and funds held or collected by the Trustee as such, except
funds held in trust for the payment of principal of (and premium, if any) or
interest on particular Notes.
When the Trustee incurs expenses or renders services in connection
with an Event of Default specified in Section 501(vi) or (vii), the expenses
(including the reasonable charges and expenses of its counsel) of and the
compensation for such services are intended to constitute expenses of
administration under any applicable federal or state bankruptcy, insolvency or
other similar law.
The provisions of this Section shall also apply to the Trustee in
its capacity as Note Registrar and for so long as the Trustee shall remain Note
Registrar.
The provisions of this Section shall survive the termination of this
Indenture.
SECTION 608. Corporate Trustee Required; Eligibility.
There shall be at all times a Trustee hereunder which shall be
eligible to act as Trustee under TIA Section 310(a)(1), and which shall have an
office in The City of New York and shall have a combined capital and surplus of
at least $50,000,000. If the Trustee does not have an office in The City of New
York, the Trustee may appoint an agent in The City of New York reasonably
acceptable to the Company to conduct any activities which the Trustee may be
required under this Indenture to conduct in The City of New York. If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of federal, state, territorial or District of Columbia
supervising or examining authority, then for the purposes of this Section 608,
the combined capital and surplus of such corporation 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 608, it shall resign immediately
in the manner and with the effect hereinafter specified in this Article.
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SECTION 609. Resignation and Removal; Appointment of Successor.
(a) 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 this Section.
(b) The Trustee may resign at any time by giving written notice
thereof to the Company. Upon receiving such notice of resignation, the Company
shall promptly appoint a successor trustee by written instrument executed by
authority of the Board of Directors, a copy of which shall be delivered to the
resigning Trustee and a copy to the successor trustee. If an instrument of
acceptance required by this Section 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.
(c) The Trustee may be removed at any time by Act of the Holders of
not less than a majority in principal amount of the Outstanding Notes, delivered
to the Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with the provisions of TIA
Section 310(b) 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 608 and
shall fail to resign 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
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a Custodian 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, (i) the Company, by a Board Resolution, may remove the
Trustee, or (ii) subject to TIA Section 315(e), 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.
(e) 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, by a Board Resolution, shall promptly appoint a successor Trustee. 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
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shall, forthwith upon its acceptance of such appointment, become the successor
Trustee and 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 hereinafter provided, 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.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee to the
Holders of Notes in the manner provided for in Section 106. Each notice shall
include the name of the successor Trustee and the address of its Corporate Trust
Office.
SECTION 610. Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder 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 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.
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.
SECTION 611. 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 of 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, 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 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. In case at
that time any of the Notes shall not have been authenticated, any successor
Trustee may authenticate such Notes either in the name of any predecessor
hereunder or in the name of the successor Trustee. In all such cases such
certificates shall have the full force and effect which this Indenture provides
for the certificate of authentication of the Trustee shall have; provided,
however, that the right to adopt the certificate of authentication of any
predecessor Trustee or
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to authenticate Notes in the name of any predecessor Trustee shall apply only to
its successor or successors by merger, conversion or consolidation.
ARTICLE SEVEN
HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses.
The Company will furnish or cause to be furnished to the Trustee
(a) semiannually, not more than 10 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
(b) at such other times as the Trustee may reasonably request in
writing, within 30 days after receipt by the Company of any such request, a list
of similar form and content to that in Subsection (a) hereof 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.
SECTION 702. Disclosure of Names and Addresses of Holders.
Every Holder of Notes, by receiving and holding the same, agrees
with the Company and the Trustee that none of the Company or the Trustee or any
agent of either of them shall be held accountable by reason of the disclosure of
any such information as to the names and addresses of the Holders in accordance
with TIA Section 312, regardless of the source from which such information was
derived, and that the Trustee shall not be held accountable by reason of mailing
any material pursuant to a request made under TIA Section 312(b).
SECTION 703. Reports by Trustee.
To the extent required by TIA Section 313(a), within 60 days after
May 15 of each year commencing with the first May 15 after the first issuance of
Notes, the Trustee shall transmit to the Holders, in the manner and to the
extent required by TIA Section 313(c), a brief report dated as of such May 15 if
required by TIA Section 313(a).
ARTICLE EIGHT
MERGER, CONSOLIDATION, OR SALE OF ASSETS
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms.
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(1) The Company shall not consolidate or merge with or into or wind
up into (whether or not the Company is the surviving corporation), or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of its properties or assets in one or more related transactions, to any Person
unless (i) the Company is the surviving corporation or the Person formed by or
surviving any such consolidation or merger (if other than the Company) or to
which such sale, assignment, transfer, lease, conveyance or other disposition
will have been made is a corporation organized or existing under the laws of the
United States, any state thereof, the District of Columbia, or any territory
thereof (the Company or such Person, as the case may be, being herein called the
"Successor Company"); (ii) the Successor Company (if other than the Company)
expressly assumes all the obligations of the Company under this Indenture and
the Notes pursuant to a supplemental indenture or other documents or instruments
in form reasonably satisfactory to the Trustee; (iii) immediately after such
transaction no Default or Event of Default shall have occurred and be
continuing; (iv) immediately after giving pro forma effect to such transaction,
as if such transaction had occurred at the beginning of the applicable
four-quarter period, (A) the Successor Company would be permitted to incur at
least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage
Ratio test set forth in Section 1010(a) hereof or (B) the Fixed Charge Coverage
Ratio for the Successor Company and its Restricted Subsidiaries would be greater
than such Ratio for the Company and its Restricted Subsidiaries immediately
prior to such transaction; (v) each Guarantor, if any, unless it is the other
party to the transactions described above, shall have by supplemental indenture
confirmed that its Guarantee shall apply to such Person's obligations under this
Indenture and the Notes; and (vi) the Company shall have delivered to the
Trustee an Officers' Certificate and an opinion of counsel, each stating that
such consolidation, merger or transfer and such supplemental indenture (if any)
comply with this Indenture. The Successor Company shall succeed to, and be
substituted for, the Company under this Indenture and the Notes. Notwithstanding
the foregoing clause (iv), (a) any Restricted Subsidiary may consolidate with,
merge into or transfer all or part of its properties and assets to the Company
and (b) the Company may merge with an Affiliate incorporated solely for the
purpose of reincorporating the Company in another State of the United States so
long as the amount of Indebtedness of the Company and its Restricted
Subsidiaries is not increased thereby.
(2) Each Guarantor, if any, shall not, and the Company shall not
permit a Guarantor to, consolidate or merge with or into or wind up into
(whether or not such Guarantor is the surviving corporation), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets in one or more related transactions, to any Person unless
(i) such Guarantor is the surviving corporation or the Person formed by or
surviving any such consolidation or merger (if other than such Guarantor) or to
which such sale, assignment, transfer, lease, conveyance or other disposition
will have been made is a corporation organized or existing under the laws of the
United States, any state thereof, the District of Columbia, or any territory
thereof (such Guarantor or such Person, as the case may be, being herein called
the "Successor Guarantor"); (ii) the Successor Guarantor (if other than such
Guarantor) expressly assumes all the obligations of such Guarantor under this
Indenture and such Guarantor's Guarantee pursuant to a supplemental indenture or
other documents or instruments in form reasonably satisfactory to the Trustee;
(iii) immediately after such transaction no Default or Event of Default shall
have occurred and be continuing; and (iv) the Guarantor shall
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have delivered or caused to be delivered to the Trustee an Officers' Certificate
and an opinion of counsel, each stating that such consolidation, merger or
transfer and such supplemental indenture (if any) comply with this Indenture.
The Successor Guarantor shall succeed to, and be substituted for, such Guarantor
under this Indenture and such Guarantor's Guarantee.
SECTION 802. Successor Substituted.
Upon any consolidation of the Company with or merger of the Company
with or into or wind up into any other corporation or any sale, assignment,
conveyance, transfer, lease or other disposition of the properties and assets of
the Company substantially as an entirety to any Person in accordance with
Section 801, the successor Person formed by such consolidation or into which the
Company is merged or wound up or to which such sale, assignment, conveyance,
transfer, lease or other disposition is made will succeed to, and be substituted
for, and may exercise every right and power of, the Company under this Indenture
with the same effect as if such successor Person had been named as the Company
therein, and thereafter (except in the case of a sale, assignment, transfer,
lease, conveyance or other disposition) the predecessor corporation will be
relieved of all further obligations and covenants under this Indenture and the
Notes; provided that, solely with respect to calculating amounts described in
clauses (A), (B) and (C) of paragraph (a) of Section 1009, any such surviving
entity to the Company shall only be deemed to have succeeded to and be
substituted for the Company with respect to periods subsequent to the effective
time of such merger, consolidation, combination or transfer of assets.
ARTICLE NINE
SUPPLEMENTS AND AMENDMENTS TO INDENTURE
SECTION 901. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders of Notes, the Company, any
Guarantor (with respect to a Guarantee to which it is a party), when authorized
by a Board Resolution, and the Trustee may amend or supplement this Indenture,
any Guarantee or the Notes:
(1) to cure any ambiguity, defect or inconsistency; or
(2) to provide for uncertificated Notes in addition to or in place
of certificated Notes; or
(3) to comply with Article Eight hereof; or
(4) to provide for the assumption of the Company's or any
Guarantor's obligations to Holders of such Notes; or
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(5) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the
legal rights hereunder of any such Holder; or
(6) to add covenants for the benefit of the Holders or to surrender
any right or power conferred upon the Company; or
(7) to comply with requirements of the Commission in order to effect
or maintain the qualification of this Indenture under the Trust Indenture
Act; or
(8) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee pursuant to the requirements of Section
610; or
(9) to add a Guarantor hereunder.
SECTION 902. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of at least a majority in principal
amount of the Outstanding Notes (including, without limitation, consents
obtained in connection with a purchase of, or tender offer or exchange offer
for, the Notes), by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by a Board Resolution, and the Trustee may
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Holders under this Indenture; provided, however, that no such supplemental
indenture shall, without the consent of each Holder affected thereby (with
respect to any Notes held by a nonconsenting Holder of the Notes):
(1) reduce the principal amount of the Notes whose Holders must
consent to an amendment, supplement or waiver; or
(2) reduce the principal of or change or have the effect of changing
the Stated Maturity of any such Note or alter or waive the provisions with
respect to the redemption of the Notes (other than Sections 1016 and 1017
and the defined terms used therein); or
(3) reduce the rate of or change the time for payment of interest on
any Note; or
(4) waive a Default or Event of Default in the payment of principal
of, premium, if any, or interest on the Notes (except a rescission of
acceleration of the Notes by the Holders of at least a majority in
aggregate principal amount of such Notes Outstanding and a waiver of the
payment default that resulted from such acceleration), or in respect of a
covenant or provision contained in this Indenture or any Guarantee which
cannot be amended or modified without the consent of all Holders; or
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(5) make any Note payable in money other than that stated in such
Notes; or
(6) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of the Notes to receive
payments of principal of or premium, if any, or interest on the Notes; or
(7) make any change in the foregoing amendment and waiver
provisions; or
(8) impair the right of any Holder of the Notes to receive payment
of principal of, or interest on such Holder's Notes on or after the due
dates theretofore or to institute suit for the enforcement of any payment
on or with respect to such Holder's Notes; or
(9) make any change in the subordination provisions of this
Indenture that would adversely affect the Holders of the Notes.
It shall not be necessary for any Act of Holders under this Section
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
SECTION 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and shall be fully protected in relying upon, an Opinion of Counsel stating that
the execution of such supplemental indenture is authorized or permitted by this
Indenture. The Trustee may, but shall not be obligated to, enter into any such
supplemental indenture which affects the Trustees own rights, duties or
immunities under this Indenture or otherwise.
SECTION 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Notes theretofore or thereafter authenticated and delivered hereunder shall
be bound thereby (except as provided in Section 902).
SECTION 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to the Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
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SECTION 906. Reference in Notes to Supplemental Indentures.
Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Notes so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for
Outstanding Notes.
SECTION 907. Notice of Supplemental Indentures.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of Section 902, the Company
shall give notice thereof to the Holders of each Outstanding Note affected, in
the manner provided for in Section 106, setting forth in general terms the
substance of such supplemental indenture.
SECTION 908. Effect on Senior Indebtedness.
No supplemental indenture shall adversely affect the rights of any
holders of Senior Indebtedness under Article Thirteen unless the requisite
holders of each issue of Senior Indebtedness affected thereby shall have
consented to such supplemental indenture.
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium, if Any, and Interest.
The Company shall pay or cause to be paid the principal of, premium,
if any, and interest on the Notes on the dates and in the manner provided in the
Notes. Principal, premium, if any, and interest shall be considered paid on the
date due if the Paying Agent, if other than the Company or a Subsidiary thereof,
holds as of 10:00 a.m. Eastern Time on the due date money deposited by the
Company in immediately available funds and designated for and sufficient to pay
all principal, premium, if any, and interest then due.
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SECTION 1002. Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, the City of
New York, an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. The Company shall give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
305.
SECTION 1003. Money for Note 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 (or 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 of (or 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 to so act.
Whenever the Company shall have one or more Paying Agents for the
Notes, it will, on or before each due date of the principal of (or premium, if
any) or interest on any Notes, deposit with a Paying Agent a sum in same day
funds (or New York Clearing House funds if such deposit is made prior to the
date on which such deposit is required to be made) 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 such action or any failure to so act.
The Company will cause each 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, that
such Paying Agent will:
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(1) hold all sums held by it for the payment of the 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 payment of principal
(and premium, if any) or interest; and
(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.
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 sums.
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 (or premium,
if any) or interest on any Note and remaining unclaimed for two years after such
principal, premium or interest has become due and payable shall be paid 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;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment to the Company, may at the expense of the Company
cause to be published once, in a newspaper published in the English language,
customarily published on each Business Day and of general circulation in the
Borough of Manhattan, The City of New York, notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less than
30 days from the date of such publication, any unclaimed balance of such money
then remaining will be repaid to the Company.
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SECTION 1004. Corporate Existence.
Subject to Article Eight hereof, the Company shall do or cause to be
done all things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of each
of its Restricted Subsidiaries, in accordance with the respective organizational
documents (as the same may be amended from time to time) of the Company or any
such Restricted Subsidiary and (ii) the rights (charter and statutory), licenses
and franchises of the Company and its Restricted Subsidiaries; provided,
however, that the Company shall not be required to preserve any such right,
license or franchise, or the corporate, partnership or other existence of any of
its Restricted Subsidiaries, if the Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and its Restricted Subsidiaries, taken as a whole, and that the loss
thereof is not adverse in any material respect to the Holders of the Notes.
SECTION 1005. Taxes.
The Company shall pay, and shall cause each of its Subsidiaries to
pay, prior to delinquency, all material taxes, assessments, and governmental
charges except such as are contested in good faith and by appropriate
proceedings or where the failure to effect such payment is not adverse in any
material respect to the Holders of the Notes.
SECTION 1006. Maintenance of Properties.
The Company will cause all material properties owned by the Company
or any Restricted Subsidiary or used or held for use in the conduct of its
business or the business of any Restricted Subsidiary to be maintained and kept
in normal condition, repair and working order and will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in the judgment of the Company may be necessary so that the business
carried on in connection therewith may be properly conducted at all times;
provided, however, that nothing in this Section shall prevent the Company or any
of its Restricted Subsidiaries from discontinuing the maintenance of any of such
properties if such discontinuance is, in the judgment of the Company, desirable
in the conduct of its business or the business of any Restricted Subsidiary and
not adverse in any material respect to the Holders.
SECTION 1007. Insurance.
To the extent available at commercially reasonable rates, the
Company will maintain, and will cause its Subsidiaries to maintain, insurance
with responsible carriers against such risks and in such amounts, and with such
deductibles, retentions, self-insured amounts and co-insurance provisions, as
are customarily carried by similar businesses, of similar size, including
professional and general liability, property and casualty loss, workers'
compensation and interruption of business insurance.
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SECTION 1008. Compliance with Laws.
The Company shall comply, and shall cause each of its Subsidiaries
to comply, with all applicable statutes, rules, regulations, orders and
restrictions of the United States of America, all states and municipalities
thereof, and of any governmental regulatory authority, in respect of the conduct
of their respective businesses and the ownership of their respective properties,
except for such noncompliances as would not in the aggregate have a material
adverse effect on the financial condition or results of operations of the
Company and its Subsidiaries, taken as a whole.
SECTION 1009. Limitation on Restricted Payments.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any
dividend or make any distribution on account of the Company's or any of its
Restricted Subsidiaries' Equity Interests, including any dividend or
distribution payable in connection with any merger or consolidation (other than
(A) dividends or distributions by the Company payable in Equity Interests (other
than Disqualified Stock) of the Company or (B) dividends or distributions by a
Restricted Subsidiary so long as, in the case of any dividend or distribution
payable on or in respect of any class or series of securities issued by a
Subsidiary other than a Wholly Owned Subsidiary, the Company or a Restricted
Subsidiary receives at least its pro rata share of such dividend or distribution
in accordance with its Equity Interests in such class or series of securities);
(ii) purchase, redeem, defease or otherwise acquire or retire for value any
Equity Interests of the Company or any direct or indirect parent of the Company;
(iii) make any principal payment on, or redeem, repurchase, defease or otherwise
acquire or retire for value in each case, prior to any scheduled repayment, or
maturity, any Subordinated Indebtedness (other than Indebtedness permitted under
clauses (vii) and (ix) of Section 1010(b) hereof); or (iv) make any Restricted
Investment (all such payments and other actions set forth in clauses (i) through
(iv) above being collectively referred to as "Restricted Payments"), unless, at
the time of such Restricted Payment:
(A) no Default or Event of Default shall have occurred and be continuing
or would occur as a consequence thereof;
(B) immediately before and immediately after giving effect to such
transaction on a pro forma basis, the Company could incur $1.00 of
additional Indebtedness under the provisions of Section 1010(a) hereof;
and
(C) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Restricted
Subsidiaries after the Issuance Date (including Restricted Payments
permitted by clauses (i), (ii) (with respect to the payment of dividends
on Refunding Capital Stock pursuant to clause (B) thereof), (v) (only to
the extent that amounts paid pursuant to such clause are greater than
amounts that would have been paid pursuant to such clause if $5.0 million
and $10.0 million were substituted in such clause for $10.0 million and
$20.0 million, respectively), (vi), (ix) and (x) of the next succeeding
paragraph, but excluding all other Restricted
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Payments permitted by the next succeeding paragraph), is less than the sum
of (i) 50% of the Consolidated Net Income of the Company for the period
(taken as one accounting period) from the fiscal quarter that first begins
after the Issuance Date to the end of the Company's most recently ended
fiscal quarter for which internal financial statements are available at
the time of such Restricted Payment (or, in the case such Consolidated Net
Income for such period is a deficit, minus 100% of such deficit), plus
(ii) 100% of the aggregate net cash proceeds and the fair market value, as
determined in good faith by the Board of Directors, of marketable
securities received by the Company since immediately after the closing of
the Merger and the Financings from the issue or sale of Equity Interests
of the Company (including Refunding Capital Stock (as defined below), but
excluding cash proceeds and marketable securities received from the sale
of Equity Interests to members of management, directors or consultants of
the Company and its Subsidiaries after the Issuance Date to the extent
such amounts have been applied to Restricted Payments in accordance with
clause (v) of the next succeeding paragraph and excluding Excluded
Contributions) or debt securities of the Company that have been converted
into such Equity Interests of the Company (other than Refunding Capital
Stock (as defined below) or Equity Interests (or convertible debt
securities of the Company sold to a Restricted Subsidiary of the Company
and other than Disqualified Stock or debt securities that have been
converted into Disqualified Stock), plus (iii) 100% of the aggregate
amount of cash and marketable securities contributed to the capital of the
Company following the Issuance Date (excluding Excluded Contributions),
plus (iv) 100% of the aggregate amount received in cash and the fair
market value of marketable securities (other than Restricted Investments)
received from (A) the sale or other disposition (other than to the Company
or a Restricted Subsidiary) of Restricted Investments made by the Company
and its Restricted Subsidiaries or (B) a dividend from, or the sale (other
than to the Company or a Restricted Subsidiary) of the stock of, an
Unrestricted Subsidiary (other than an Unrestricted Subsidiary the
Investment in which was made by the Company or a Restricted Subsidiary
pursuant to clauses (vii) or (xii) below).
(b) The foregoing provisions will not prohibit:
(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at the date of declaration such payment would have
complied with the provisions of this Indenture;
(ii) (A) the redemption, repurchase, retirement or other acquisition of
any Equity Interests (the "Retired Capital Stock") or Subordinated
Indebtedness of the Company in exchange for, or out of the proceeds of the
substantially concurrent sale (other than to a Restricted Subsidiary) of,
Equity Interests of the Company (other than any Disqualified Stock) (the
"Refunding Capital Stock"), and (B) if immediately prior to the retirement
of Retired Capital Stock, the declaration and payment of dividends thereon
was permitted under clause (vi) of this paragraph, the declaration and
payment of dividends on the Refunding Capital Stock in an aggregate amount
per year no greater than the aggregate amount of dividends per annum that
was declarable and payable on such Retired Capital Stock immediately prior
to such retirement; provided, however,
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that at the time of the declaration of any such dividends, no Default or
Event of Default shall have occurred and be continuing or would occur as a
consequence thereof;
(iii) distributions or payments of Receivables Fees;
(iv) the redemption, repurchase or other acquisition or retirement of
Subordinated Indebtedness of the Company made by exchange for, or out of
the proceeds of the substantially concurrent sale of, new Indebtedness of
the Company so long as (A) the principal amount of such new Indebtedness
does not exceed the principal amount of the Subordinated Indebtedness
being so redeemed, repurchased, acquired or retired for value (plus the
amount of any premium required to be paid under the terms of the
instrument governing the Subordinated Indebtedness being so redeemed,
repurchased, acquired or retired), (B) such Indebtedness is subordinated
to the Senior Indebtedness and the Notes at least to the same extent as
such Subordinated Indebtedness so purchased, exchanged, redeemed,
repurchased, acquired or retired for value, (C) such Indebtedness has a
final scheduled maturity date equal to or later than the final scheduled
maturity date of the Subordinated Indebtedness being so redeemed,
repurchased, acquired or retired and (D) such Indebtedness has a Weighted
Average Life to Maturity equal to or greater than the remaining Weighted
Average Life to Maturity of the Subordinated Indebtedness being so
redeemed, repurchased, acquired or retired;
(v) a Restricted Payment to pay for the repurchase, retirement or other
acquisition or retirement for value of common Equity Interests of the
Company held by any future, present or former employee, director or
consultant of the Company or any Subsidiary pursuant to any management
equity plan or stock option plan or any other management or employee
benefit plan or agreement; provided, however, that the aggregate
Restricted Payments made under this clause (v) does not exceed in any
calendar year $10.0 million (with unused amounts in any calendar year
being carried over to succeeding calendar years subject to a maximum
(without giving effect to the following proviso) of $20.0 million in any
calendar year); provided further that such amount in any calendar year may
be increased by an amount not to exceed (i) the cash proceeds from the
sale of Equity Interests of the Company to members of management,
directors or consultants of the Company and its Subsidiaries that occurs
after the Issuance Date (to the extent the cash proceeds from the sale of
such Equity Interest have not otherwise been applied to the payment of
Restricted Payments by virtue of the preceding paragraph (C)) plus (ii)
the cash proceeds of key man life insurance policies received by the
Company and its Restricted Subsidiaries after the Issuance Date less (iii)
the amount of any, Restricted Payments previously made pursuant to clauses
(i) and (ii) of this subparagraph (v); and provided further that
cancellation of Indebtedness owing to the Company from members of
management of the Company or any of its Restricted Subsidiaries in
connection with a repurchase of Equity Interests of the Company will not
be deemed to constitute a Restricted Payment for purposes of this covenant
or any other provision of this Indenture;
(vi) the declaration and payment of dividends to holders of any class or
series of Designated Preferred Stock (other than Disqualified Stock)
issued after the Issuance
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72
Date (including, without limitation, the declaration and payment of
dividends on Refunding Capital Stock in excess of the dividends declarable
and payable thereon pursuant to clause (ii)); provided, however, that for
the most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date of
issuance of such Designated Preferred Stock, after giving effect to such
issuance on a pro forma basis, the Company and its Restricted Subsidiaries
would have had a Fixed Charge Coverage Ratio of at least 1.75 to 1.00;
(vii) Investments in Unrestricted Subsidiaries having an aggregate fair
market value, taken together with all other Investments made pursuant to
this clause (vi) that are at that time outstanding, not to exceed $25.0
million at the time of such Investment (with the fair market value of each
Investment being measured at the time made and without giving effect to
subsequent changes in value);
(viii) repurchases of Equity Interests deemed to occur upon exercise of
stock options if such Equity Interests represent a portion of the exercise
price of such options;
(ix) the payment of dividends on the Company's Common Stock, following the
first public offering of the Company's Common Stock after the Issuance
Date, of up to 6% per annum of the net proceeds received by the Company in
such public offering, other than public offerings with respect to the
Company's Common Stock registered on Form S-8;
(x) a Restricted Payment to pay for the repurchase, retirement or other
acquisition or retirement for value of Equity Interests of the Company in
existence on the Issuance Date and which are not held by KKR or any of
their Affiliates or the Management Group on the Issuance Date (including
any Equity Interests issued in respect of such Equity Interests as a
result of a stock split, recapitalization, merger, combination,
consolidation or otherwise, but excluding any management equity plan or
stock option plan or similar agreement), provided that the aggregate
Restricted Payments made under this clause (x) shall not exceed $80.0
million, provided further that prior to the first anniversary of the
consummation of the Merger, the aggregate amount of Restricted Payments
made under this clause (x) shall not exceed $40.0 million, provided
further that notwithstanding the foregoing proviso, the Company shall be
permitted to make Restricted Payments under this clause (x) only if after
giving effect thereto, the Company would be permitted to incur at least
$1.00 of additional Indebtedness under the provisions of Section 1010(a)
hereof;
(xi) Investments in Unrestricted Subsidiaries that are made with Excluded
Contributions; and
(xii) other Restricted Payments in an aggregate amount not to exceed $25.0
million; provided, however, that at the time of, and after giving effect
to, any Restricted Payment permitted under clauses (iv), (v), (vi), (vii),
(viii), (ix), (x), (xi) and (xii), no Default or Event of Default shall
have occurred and be continuing or would occur as a consequence thereof;
and provided further that for purposes of determining the
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aggregate amount expended for Restricted Payments in accordance with
clause (C) of the immediately preceding paragraph, only the amounts
expended under clauses (i), (ii) (with respect to the payment of dividends
on Refunding Capital Stock pursuant to clause (b) thereof), (v) (only to
the extent that amounts paid pursuant to such clause are greater than
amounts that would have been paid pursuant to such clause if $5.0 million
and $10.0 million were substituted in such clause for $10.0 million and
$20.0 million, respectively), (vi), (ix) and (x) shall be included.
(c) As of the Issuance Date, all of the Company's Subsidiaries other then
Amphenol Funding Corp. will be Restricted Subsidiaries. The Company will not
permit any Unrestricted Subsidiary to become a Restricted Subsidiary except
pursuant to the second to last sentence of the definition of "Unrestricted
Subsidiary." For purposes of designating any Restricted Subsidiary as an
Unrestricted Subsidiary, all outstanding Investments by the Company and its
Restricted Subsidiaries (except to the extent repaid) in the Subsidiary so
designated will be deemed to be Restricted Payments in an amount determined as
set forth in the last sentence of the definition of "Investments." Such
designation will only be permitted if a Restricted Payment in such amount would
be permitted at such time (whether pursuant to the first paragraph of this
covenant or under clause (vii) or (xi)) and if such Subsidiary otherwise meets
the definition of an Unrestricted Subsidiary. Unrestricted Subsidiaries will not
be subject to any of the restrictive covenants set forth in this Indenture.
SECTION 1010. Limitation on Incurrence of Indebtedness and Issuance
of Disqualified Stock.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly liable,
contingently or otherwise, with respect to (collectively, "incur" and
collectively, an "incurrence") any Indebtedness (including Acquired
Indebtedness) and that the Company will not issue any shares of Disqualified
Stock and will not permit any of its Restricted Subsidiaries to issue any shares
of preferred stock; provided, however, that the Company may incur Indebtedness
(including Acquired Indebtedness) or issue shares of Disqualified Stock if the
Fixed Charge Coverage Ratio for the Company's and the Restricted Subsidiaries'
most recently ended four full fiscal quarters for which internal financial
statements are available immediately preceding the date on which such additional
Indebtedness is incurred or such Disqualified Stock is issued would have been at
least 1.75 to 1.00, determined on a pro forma basis (including a pro forma
application of the net proceeds therefrom), as if the additional Indebtedness
had been incurred, or the Disqualified Stock had been issued, as the case may
be, and the application of proceeds therefrom had occurred at the beginning of
such four-quarter period.
(b) Section 1010(a) shall not apply to:
(i) the incurrence by the Company or its Restricted Subsidiaries of
Indebtedness under Credit Facilities and the issuance and creation of
letters of credit and banker's acceptances thereunder (with letters of
credit and banker's acceptances being deemed to have a principal amount
equal to the face amount thereof) up to an aggregate
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principal amount of $1.0 billion outstanding at any one time; provided,
however, that Indebtedness incurred by Restricted Subsidiaries pursuant to
this clause (i) does not exceed $100.0 million (or the equivalent thereof
in any other currency) at any one time outstanding;
(ii) the incurrence by the Company of Indebtedness represented by the
Notes;
(iii) the Existing Indebtedness (other than Indebtedness described in
clauses (i) and (ii));
(iv) Indebtedness (including Capitalized Lease Obligations) incurred by
the Company or any of its Restricted Subsidiaries, to finance the
purchase, lease or improvement of property (real or personal) or equipment
(whether through the direct purchase of assets or the Capital Stock of any
Person owning such assets) in an aggregate principal amount which, when
aggregated with the principal amount of all other Indebtedness then
outstanding and incurred pursuant to this clause (iv) and including all
Refinancing Indebtedness incurred to refund, refinance or replace any
other Indebtedness incurred pursuant to this clause (iv), does not exceed
10% of Total Assets;
(v) Indebtedness incurred by the Company or any of its Restricted
Subsidiaries constituting reimbursement obligations with respect to
letters of credit issued in the ordinary course of business, including
without limitation letters of credit in respect of workers' compensation
claims or self-insurance, or other Indebtedness with respect to
reimbursement type obligations regarding workers' compensation claims;
provided, however, that upon the drawing of such letters of credit or the
incurrence of such Indebtedness, such obligations are reimbursed within 30
days following such drawing or incurrence;
(vi) Indebtedness arising from agreements of the Company or a Restricted
Subsidiary providing for indemnification, adjustment of purchase price or
similar obligations, in each case, incurred or assumed in connection with
the disposition of any business, assets or a Subsidiary, other than
guarantees of Indebtedness incurred by any Person acquiring all or any
portion of such business, assets or a Subsidiary for the purpose of
financing such acquisition; provided, however, that (A) such Indebtedness
is not reflected on the balance sheet of the Company or any Restricted
Subsidiary (contingent obligations referred to in a footnote to financial
statements and not otherwise reflected on the balance sheet will not be
deemed to be reflected on such balance sheet for purposes of this clause
(A)) and (B) the maximum assumable liability in respect of all such
Indebtedness shall at no time exceed the gross proceeds including noncash
proceeds (the fair market value of such noncash proceeds being measured at
the time received and without giving effect to any subsequent changes in
value) actually received by the Company and its Restricted Subsidiaries in
connection with such disposition;
(vii) Indebtedness of the Company to a Restricted Subsidiary; provided
that any such Indebtedness is made pursuant to an intercompany note and is
subordinated in right of payment to the Notes; provided further that any
subsequent issuance or transfer of any
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Capital Stock or any other event which results in any such Restricted
Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent
transfer of any such Indebtedness (except to the Company or another
Restricted Subsidiary) shall be deemed, in each case to be an incurrence
of such Indebtedness;
(viii) shares of preferred stock of a Restricted Subsidiary issued to the
Company or another Restricted Subsidiary; provided that any subsequent
issuance or transfer of any Capital Stock or any other event which results
in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or
any other subsequent transfer of any such shares of preferred stock
(except to the Company or another Restricted Subsidiary) shall be deemed,
in each case to be an issuance of shares of preferred stock;
(ix) Indebtedness of a Restricted Subsidiary to the Company or another
Restricted Subsidiary; provided that (A) any such Indebtedness is made
pursuant to an intercompany note and (B) if a Guarantor incurs such
Indebtedness from a Restricted Subsidiary that is not a Guarantor such
Indebtedness is subordinated in right of payment to the Guarantee of such
Guarantor; provided further that any subsequent transfer of any such
Indebtedness (except to the Company or another Restricted Subsidiary)
shall be deemed, in each case to be an incurrence of such Indebtedness;
(x) Hedging Obligations that are incurred in the ordinary course of
business (A) for the purpose of fixing or hedging interest rate risk with
respect to any Indebtedness that is permitted by the terms of this
Indenture to be outstanding or (B) for the purpose of fixing or hedging
currency exchange rate risk with respect to any currency exchanges;
(xi) obligations in respect of performance and surety bonds and completion
guarantees provided by the Company or any Restricted Subsidiary in the
ordinary course of business;
(xii) Indebtedness of any Guarantor in respect of such Guarantor's
Guarantee;
(xiii) Indebtedness of the Company and any of its Restricted Subsidiaries
not otherwise permitted hereunder in an aggregate principal amount, which
when aggregated with the principal amount of all other Indebtedness then
outstanding and incurred pursuant to this clause (xiii), does not exceed
$200.0 million at any one time outstanding; provided, however, that (A)
Indebtedness of Foreign Subsidiaries, which when aggregated with the
principal amount of all other Indebtedness of Foreign Subsidiaries then
outstanding and incurred pursuant to this clause (xiii), does not exceed
$100.0 million (or the equivalent thereof in any other currency) at any
one time outstanding and (B) Indebtedness of a Restricted Subsidiary
organized under the laws of the United States, any state thereof, the
District of Columbia or any territory thereof, which when aggregated with
the principal amount of all other Indebtedness of such Restricted
Subsidiaries then outstanding and incurred pursuant to this clause (xiii),
does not exceed $100.0 million at any one time outstanding;
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(xiv) (A) any guarantee by the Company of Indebtedness or other
obligations of any of its Restricted Subsidiaries so long as the
incurrence of such Indebtedness incurred by such Restricted Subsidiary is
permitted under the terms of this Indenture and (B) any Excluded Guarantee
(as defined in Section 1014 hereof) of a Restricted Subsidiary;
(xv) the incurrence by the Company or any of its Restricted Subsidiaries
of Indebtedness which serves to refund, refinance or restructure any
Indebtedness incurred as permitted under the first paragraph of this
covenant and clauses (ii) and (iii) above, or any Indebtedness issued to
so refund, refinance or restructure such Indebtedness including additional
Indebtedness incurred to pay premiums and fees in connection therewith
(the "Refinancing Indebtedness") prior to its respective maturity;
provided, however, that such Refinancing Indebtedness (A) has a Weighted
Average Life to Maturity at the time such Refinancing Indebtedness is
incurred which is not less than the remaining Weighted Average Life to
Maturity of Indebtedness being refunded or refinanced, (B) to the extent
such Refinancing Indebtedness refinances Indebtedness subordinated or pari
passu to the Notes, such Refinancing Indebtedness is subordinated or pari
passu to the Notes at least to the same extent as the Indebtedness being
refinanced or refunded and (C) shall not include (x) Indebtedness of a
Subsidiary that refinances Indebtedness of the Company or (y) Indebtedness
of the Company or a Restricted Subsidiary that refinances Indebtedness of
an Unrestricted Subsidiary; and provided further that subclauses (A) and
(B) of this clause (xv) will not apply to any refunding or refinancing of
any Senior Indebtedness; and
(xvi) Indebtedness or Disqualified Stock of Persons that are acquired by
the Company or any of its Restricted Subsidiaries or merged into a
Restricted Subsidiary in accordance with the terms of this Indenture;
provided that such Indebtedness or Disqualified Stock is not incurred in
contemplation of such acquisition or merger; and provided further that
after giving effect to such acquisition, either (A) the Company would be
permitted to incur at least $1.00 of additional Indebtedness under the
provisions of Section 1010(a) or (B) the Fixed Charge Coverage Ratio is
greater than immediately prior to such acquisition.
For purposes of determining compliance with this covenant, in the event
that an item of Indebtedness meets the criteria of more than one of the
categories of permitted Indebtedness described in clauses (i) through (xvi)
above or is entitled to be incurred pursuant to the first paragraph of this
covenant, the Company shall, in its sole discretion, classify such item of
Indebtedness in any manner that complies with this covenant and such item of
Indebtedness will be treated as having been incurred pursuant to only one of
such clauses or pursuant to the first paragraph hereof. 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
for purposes of this Section 1010.
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SECTION 1011. Liens.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly create, incur, assume or
suffer to exist any Lien that secures obligations under any Pari Passu
Indebtedness or Subordinated Indebtedness on any asset or property of the
Company or such Restricted Subsidiary, or any income or profits therefrom, or
assign or convey any right to receive income therefrom, unless the Notes are
equally and ratably secured with the obligations so secured or until such time
as such obligations are no longer secured by a Lien.
(b) No Guarantor shall directly or indirectly create, incur, assume
or suffer to exist any Lien that secures obligations under any Pari Passu
Indebtedness or Subordinated Indebtedness of such Guarantor on any asset or
property of such Guarantor or any income or profits therefrom, or assign or
convey any right to receive income therefrom, unless the Guarantee of such
Guarantor is equally and ratably secured with the obligations so secured or
until such time as such obligations are no longer secured by a Lien.
SECTION 1012. Transactions with Affiliates.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction")
involving aggregate consideration in excess of $5.0 million, unless (i) such
Affiliate Transaction is on terms that are not materially less favorable to the
Company or the relevant Restricted Subsidiary than those that would have been
obtained in a comparable transaction by the Company or such Restricted
Subsidiary with an unrelated Person and (ii) the Company delivers to the Trustee
with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $10.0 million, a
resolution adopted by the majority of the Board of Directors approving such
Affiliate Transaction and set forth in an Officers' Certificate certifying that
such Affiliate Transaction complies with clause (i) above.
(b) Notwithstanding Section 1012(a), this Section 1012 shall not
apply to the following: (i) transactions between or among the Company and/or any
of its Restricted Subsidiaries; (ii) Restricted Payments permitted by Section
1009 hereof; (iii) the payment of customary annual management, consulting and
advisory fees and related expenses to KKR and its Affiliates; (iv) the payment
of reasonable and customary fees paid to, and indemnity provided on behalf of,
officers, directors, employees or consultants of the Company or any Restricted
Subsidiary; (v) payments by the Company or any of its Restricted Subsidiaries to
KKR and its Affiliates made for any financial advisory, financing, underwriting
or placement services or in respect of other investment banking activities,
including, without limitation, in connection with acquisitions or divestitures
which payments are approved by a majority of the Board of Directors of the
Company in good faith; (vi) transactions in which the Company or any of its
Restricted Subsidiaries, as the case may be, delivers to the Trustee a letter
from an Independent Financial Advisor stating that such transaction is fair to
the Company or such
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Restricted Subsidiary from a financial point of view or meets the requirements
of clause (a) of the preceding paragraph; (vii) payments or loans to employees
or consultants which are approved by a majority of the Board of Directors of the
Company in good faith; (viii) any agreement as in effect as of the Issuance Date
or any amendment thereto (so long as any such amendment is not disadvantageous
to the Holders of the Notes in any material respect) or any transaction
contemplated thereby; (ix) the existence of, or the performance by the Company
or any of its Restricted Subsidiaries of its obligations under the terms of, any
stockholders agreement (including any registration rights agreement or purchase
agreement related thereto) to which it is a party as of the Issuance Date and
any similar agreements which it may enter into thereafter; provided, however,
that the existence of, or the performance by the Company or any of its
Restricted Subsidiaries of obligations under any future amendment to any such
existing agreement or under any similar agreement entered into after the
Issuance Date shall only be permitted by this clause (ix) to the extent that the
terms of any such amendment or new agreement are not otherwise disadvantageous
to the Holders of the Notes in any material respect; (x) the payment of all fees
and expenses related to the Merger and the Financings; (xi) transactions with
customers, clients, suppliers, or purchasers or sellers of goods or services, in
each case in the ordinary course of business and otherwise in compliance with
the terms of this Indenture which are fair to the Company or its Restricted
Subsidiaries, in the reasonable determination of the Board of Directors of the
Company or the senior management thereof, or are on terms at least as favorable
as might reasonably have been obtained at such time from an unaffiliated party;
and (xii) sales of accounts receivable, or participations therein, in connection
with any Receivables Facility.
SECTION 1013. Dividend and Other Payment Restrictions Affecting
Subsidiaries.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or consensual restriction
on the ability of any Restricted Subsidiary to: (a)(i) pay dividends or make any
other distributions to the Company or any of its Restricted Subsidiaries (1) on
its Capital Stock or (2) with respect to any other interest or participation in,
or measured by, its profits, or (ii) pay any Indebtedness owed to the Company or
any of its Restricted Subsidiaries; (b) make loans or advances to the Company or
any of its Restricted Subsidiaries; or (c) sell, lease or transfer any of its
properties or assets to the Company or any of its Restricted Subsidiaries;
except (in each case) for such encumbrances or restrictions existing under or by
reason of:
(1) contractual encumbrances or restrictions in effect on the Issuance
Date, including pursuant to the Senior Credit Facility and its related
documentation;
(2) this Indenture and the Notes;
(3) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions of the nature discussed in
clause (c) above on the property so acquired;
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(4) applicable law or any applicable rule, regulation or order;
(5) any agreement or other instrument of a Person acquired by the Company
or any Restricted Subsidiary in existence at the time of such acquisition
(but not created in contemplation thereof), which encumbrance or
restriction is not applicable to any Person, or the properties or assets
of any Person, other than the Person, or the property or assets of the
Person, so acquired;
(6) contracts for the sale of assets, including, without limitation
customary restrictions with respect to a Subsidiary pursuant to an
agreement that has been entered into for the sale or disposition of all or
substantially all of the Capital Stock or assets of such Subsidiary;
(7) secured Indebtedness otherwise permitted to be incurred pursuant to
Sections 1010 and 1011 hereof that limit the right of the debtor to
dispose of the assets securing such Indebtedness;
(8) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of business;
(9) other Indebtedness of Restricted Subsidiaries permitted to be incurred
subsequent to the Issuance Date pursuant to the provisions of Section 1010
hereof;
(10) customary provisions in joint venture agreements and other similar
agreements entered into in the ordinary course of business;
(11) customary provisions contained in leases and other agreements entered
into in the ordinary course of business;
(12) restrictions created in connection with any Receivables Facility
that, in the good faith determination of the Board of Directors of the
Company, are necessary or advisable to effect such Receivables Facility;
or
(13) any encumbrances or restrictions of the type referred to in clauses
(a), (b) and (c) above imposed by any amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements
or refinancings of the contracts, instruments or obligations referred to
in clauses (1) through (11) above, provided that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings are, in the good faith judgment of the
Company's Board of Directors, no more restrictive with respect to such
dividend and other payment restrictions than those contained in the
dividend or other payment restrictions prior to such amendment,
modification, restatement, renewal, increase, supplement, refunding,
replacement or refinancing.
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SECTION 1014. Limitation on Guarantees of Indebtedness by Restricted
Subsidiaries.
(a) The Company shall not permit any Restricted Subsidiary to
guarantee the payment of any Indebtedness of the Company or any Indebtedness of
any other Restricted Subsidiary unless (i) such Restricted Subsidiary
simultaneously executes and delivers a supplemental indenture to this Indenture
providing for a Guarantee of payment of the Notes by such Restricted Subsidiary
except that (A) if the Notes are subordinated in right of payment to such
Indebtedness, the Guarantee under the supplemental indenture shall be
subordinated to such Restricted Subsidiary's guarantee with respect to such
Indebtedness substantially to the same extent as the Notes are subordinated to
such Indebtedness under this Indenture and (B) if such Indebtedness is by its
express terms subordinated in right of payment to the Notes, any such guarantee
of such Restricted Subsidiary with respect to such Indebtedness shall be
subordinated in right of payment to such Restricted Subsidiary's Guarantee with
respect to the Notes substantially to the same extent as such Indebtedness is
subordinated to the Notes; (ii) such Restricted Subsidiary waives and will not
in any manner whatsoever claim or take the benefit or advantage of, any rights
of reimbursement, indemnity or subrogation or any other rights against the
Company or any other Restricted Subsidiary as a result of any payment by such
Restricted Subsidiary under its Guarantee; and (iii) such Restricted Subsidiary
shall deliver to the Trustee an opinion of counsel to the effect that (A) such
Guarantee of the Notes has been duly executed and authorized and (B) such
Guarantee of the Notes constitutes a valid, binding and enforceable obligation
of such Restricted Subsidiary, except insofar as enforcement thereof may be
limited by bankruptcy, insolvency or similar laws (including, without
limitation, all laws relating to fraudulent transfers) and except insofar as
enforcement thereof is subject to general principles of equity; provided that
this paragraph (a) shall not be applicable to any guarantee of any Restricted
Subsidiary (x) that (A) existed at the time such Person became a Restricted
Subsidiary of the Company and (B) was not incurred in connection with, or in
contemplation of, such Person becoming a Restricted Subsidiary of the Company or
(y) that guarantees the payment of Obligations of the Company or any Restricted
Subsidiary under the Senior Credit Facility or any other bank facility which is
designated as Senior Indebtedness and any refunding, refinancing or replacement
thereof, in whole or in part, provided that such refunding, refinancing or
replacement thereof constitutes Senior Indebtedness and is not incurred pursuant
to a registered offering of securities under the Securities Act or a private
placement of securities (including under Rule 144A) pursuant to an exemption
from the registration requirements of the Securities Act, which private
placement provides for registration rights under the Securities Act (any
guarantee excluded by operations of this clause (y) being an "Excluded
Guarantee").
(b) Notwithstanding the foregoing and the other provisions herein,
any Guarantee by a Restricted Subsidiary of the Notes shall provide by its terms
that it shall be automatically and unconditionally released and discharged upon
(i) any sale, exchange or transfer, to any Person not an Affiliate of the
Company, of all of the Company's Capital Stock in, or all or substantially all
the assets of, such Restricted Subsidiary (which sale, exchange or transfer is
not prohibited by this Indenture) or (ii) the release or discharge of the
guarantee which resulted in the creation of such Guarantee, except a discharge
or release by or as a result of payment under such guarantee.
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SECTION 1015. Limitation on Other Senior Subordinated Indebtedness.
The Company shall not, and shall not permit any Guarantor to,
directly or indirectly, incur any Indebtedness (including Acquired Indebtedness)
that is subordinate in right of payment to any Indebtedness of the Company or
any Indebtedness of any Guarantor, as the case may be, unless such Indebtedness
is either (a) pari passu in right of payment with the Notes or such Guarantor's
Guarantee, as the case may be or (b) subordinate in right of payment to the
Notes, or such Guarantor's Guarantee, as the case may be, in the same manner and
at least to the same extent as the Notes are subordinate to Senior Indebtedness
or such Guarantor's Guarantee is subordinate to such Guarantor's Senior
Indebtedness, as the case may be.
SECTION 1016. Offer to Repurchase Upon Change of Control.
(a) Upon the occurrence of a Change of Control, the Company shall
make an offer to purchase all or any part (equal to $1,000 or an integral
multiple thereof) of the Notes pursuant to the offer described below (the
"Change of Control Offer") at a price in cash (the "Change of Control Payment")
equal to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest, if any, to the date of purchase. Within 30 days following any Change
of Control, the Company shall mail a notice to each Holder of Notes issued
hereunder in the manner set forth in Section 106, with a copy to the Trustee,
with the following information: (1) a Change of Control Offer is being made
pursuant to this Section 1016, and that all Notes properly tendered pursuant to
such Change of Control Offer will be accepted for payment; (2) the purchase
price and the purchase date, which will be no earlier than 30 days nor later
than 60 days from the date such notice is mailed, except as may be otherwise
required by applicable law (the "Change of Control Payment Date"); (3) any Note
not properly tendered will remain outstanding and continue to accrue interest;
(4) unless the Company defaults in the payment of the Change of Control Payment,
all Notes accepted for payment pursuant to the Change of Control Offer will
cease to accrue interest on the Change of Control Payment Date; (5) Holders
electing to have any Notes purchased pursuant to a Change of Control Offer will
be required to surrender the Notes, with the form entitled "Option of Holder to
Elect Purchase" on the reverse of the Notes completed, to the paying agent
specified in the notice at the address specified in the notice prior to the
close of business on the third Business Day preceding the Change of Control
Payment Date; (6) Holders will be entitled to withdraw their tendered Notes and
their election to require the Company to purchase such Notes, provided that the
paying agent receives, not later than the close of business on the last day of
the offer period, a telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of Notes tendered for
purchase, and a statement that such Holder is withdrawing his tendered Notes and
his election to have such Notes purchased; and (7) that Holders whose Notes are
being purchased only in part will be issued new Notes equal in principal amount
to the unpurchased portion of the Notes surrendered, which unpurchased portion
must be equal to $1,000 in principal amount or an integral multiple thereof.
(b) Prior to complying with the provisions of this Section 1016, but
in any event within 30 days following a Change of Control, the Company shall
either repay all
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outstanding Senior Indebtedness or obtain the requisite consents, if any, under
any outstanding Senior Indebtedness to permit the repurchase of the Notes
required by this Section 1016.
(c) On the Change of Control Payment Date, the Company shall, to the
extent permitted by law, (1) accept for payment all Notes or portions thereof
properly tendered pursuant to the Change of Control Offer, (2) deposit with the
Paying Agent an amount equal to the aggregate Change of Control Payment in
respect of all Notes or portions thereof so tendered and (3) deliver, or cause
to be delivered, to the Trustee for cancellation the Notes so accepted together
with an Officers' Certificate stating that such Notes or portions thereof have
been tendered to and purchased by the Company. The Paying Agent shall promptly
mail to each Holder of Notes the Change of Control Payment for such Notes, and
the Trustee shall promptly authenticate and mail to each Holder a new Note equal
in principal amount to any unpurchased portion of the Notes surrendered, if any,
provided, that each such new Note shall be in a principal amount of $1,000 or an
integral multiple thereof. The Company shall publicly announce the results of
the Change of Control Offer on or as soon as practicable after the Change of
Control Payment Date.
(d) The Company shall comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent that such laws or regulations are applicable in connection with
the repurchase of Notes pursuant to a Change of Control Offer. To the extent
that the provisions of any securities laws or regulations conflict with
provisions of this Indenture, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations described herein by virtue thereof.
SECTION 1017. Asset Sales.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, cause, make or suffer to exist an Asset Sale, unless
(x) the Company, or its Restricted Subsidiaries, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the fair market
value (as determined in good faith by the Company) of the assets sold or
otherwise disposed of and (y) at least 75% of the consideration therefor
received by the Company, or such Restricted Subsidiary, as the case may be, is
in the form of cash or Cash Equivalents; provided that the amount of (A) any
liabilities (as shown on the Company's or such Restricted Subsidiary's most
recent balance sheet or in the notes thereto) of the Company or any Restricted
Subsidiary (other than liabilities that are by their terms subordinated to the
Notes), that are assumed by the transferee of any such assets, (B) any notes or
other obligations received by the Company or such Restricted Subsidiary from
such transferee that are converted by the Company or such Restricted Subsidiary
into cash (to the extent of the cash received) within 180 days following the
closing of such Asset Sale and (C) any Designated Noncash Consideration received
by the Company or any of its Restricted Subsidiaries in such Asset Sale having
an aggregate fair market value, taken together with all other Designated Noncash
Consideration received pursuant to this clause (C) that is at that time
outstanding, not to exceed 15% of Total Assets at the time of the receipt of
such Designated Noncash Consideration (with the fair market value of each item
of Designated Noncash Consideration being measured at the time received and
without giving effect to subsequent
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changes in value), shall be deemed to be cash for purposes of this provision and
for no other purpose.
(b) Within 365 days after the Company's or any Restricted
Subsidiary's receipt of the Net Proceeds of any Asset Sale, the Company or such
Restricted Subsidiary may apply the Net Proceeds from such Asset Sale, at its
option, (i) to permanently reduce Obligations under the Senior Credit Facility
(and to correspondingly reduce commitments with respect thereto) or other Senior
Indebtedness or Pari Passu Indebtedness (provided that if the Company shall so
reduce Obligations under Pari Passu Indebtedness, it will equally and ratably
reduce Obligations under the Notes if the Notes are then prepayable or, if the
Notes may not be then prepaid, the Company shall make an offer (in accordance
with the procedures set forth below for an Asset Sale Offer) to all Holders to
purchase at 100% of the principal amount thereof the amount of Notes that would
otherwise be prepaid), (ii) to an investment in any one or more businesses,
capital expenditures or acquisitions of other assets in each case, used or
useful in a Similar Business and/or (iii) to an investment in properties or
assets that replace the properties and assets that are the subject of such Asset
Sale. Pending the final application of any such Net Proceeds, the Company or
such Restricted Subsidiary may temporarily reduce Indebtedness under a revolving
credit facility, if any, or otherwise invest such Net Proceeds in Cash
Equivalents or Investment Grade Securities. Any Net Proceeds from the Asset Sale
that are not invested as provided and within the time period set forth in the
first sentence of this paragraph shall be deemed to constitute "Excess
Proceeds." When the aggregate amount of Excess Proceeds exceeds $15.0 million,
the Company shall make an offer to all Holders of Notes (an "Asset Sale Offer")
to purchase the maximum principal amount of Notes, that is an integral multiple
of $1,000, that may be purchased out of the Excess Proceeds at an offer price in
cash in an amount equal to 100% of the principal amount thereof, plus accrued
and unpaid interest, if any, to the date fixed for the closing of such offer
(the "Offered Price"). Within 10 Business Days after the date on which the
aggregate amount of Excess Proceeds exceeds $15.0 million, the Company shall
give to each Holder of the Notes, with a copy to the Trustee, in the manner
provided in Section 106 a notice stating:
(i) that the Holder has the right to require the Company to
repurchase such Holder's Notes at the Offered Price, subject to proration
in the event the Excess Proceeds are less than the aggregate Offered Price
of all Notes tendered;
(ii) the date of purchase of Notes pursuant to the Asset Sale Offer
(the "Asset Sale Purchase Date"), which shall be no earlier than 30 days
nor later than 60 days from the date such notice is mailed;
(iii) that the Offered Price will be paid to Holders electing to
have Notes purchased on the Asset Sale Purchase Date, provided that a
Holder must surrender its Note to the Paying Agent at the address
specified in the notice prior to the close of business at least five
Business Days prior to the Asset Sale Purchase Date;
(iv) any Note not tendered will continue to accrue interest pursuant
to its terms;
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(v) that unless the Company defaults in the payment of the Offered
Price, any Note accepted for payment pursuant to the Asset Sale Offer
shall cease to accrue interest on and after the Asset Sale Purchase Date;
(vi) that Holders will be entitled to withdraw their tendered Notes
and their election to require the Company to purchase such Notes, provided
that the Company receives, not later than the close of business on the
third Business Day preceding the Asset Sale Purchase Date, a telegram,
telex, facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Notes tendered for purchase, and a
statement that such Holder is withdrawing its election to have such Notes
purchased;
(vii) that the Holders whose Notes are being purchased only in part
will be issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered; which unpurchased portion must be equal
to $1,000 in principal amount or an integral multiple thereof; and
(viii) the instructions a Holder must follow in order to have his
Notes purchased in accordance with this Section 1017.
To the extent that the aggregate amount of Notes tendered pursuant
to an Asset Sale Offer is less than the Excess Proceeds, the Company may use any
remaining Excess Proceeds for general corporate purposes. If the aggregate
principal amount of Notes surrendered by Holders thereof exceeds the amount of
Excess Proceeds, the Trustee shall select the Notes to be purchased in the
manner described in Section 1104. Upon completion of any such Asset Sale Offer,
the amount of Excess Proceeds shall be reset at zero.
The Company will comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to an Asset Sale Offer. To the extent that the
provisions of any securities laws or regulations conflict with the provisions of
this Section 1017, the Company shall comply with the applicable securities laws
and regulations and shall not be deemed to have breached its obligations under
this Indenture.
SECTION 1018. Compliance Certificate.
(a) The Company shall deliver to the Trustee, within 120 days after
the end of each fiscal year, an Officers' Certificate stating that a review of
the activities of the Company and its Subsidiaries during the preceding fiscal
year has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its
obligations under this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his or her knowledge the Company
has kept, observed, performed and fulfilled each and every covenant contained in
this Indenture and there is no Default or Event of Default which has occurred
and is continuing in the performance or observance of any of the terms,
provisions and conditions of this Indenture (or, if a Default or Event of
Default shall have occurred, describing all such Defaults or Events
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of Default of which he or she may have knowledge and what action the Company is
taking or proposes to take with respect thereto) and that to the best of his or
her knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Notes is
prohibited or if such event has occurred, a description of the event and what
action the Company is taking or proposes to take with respect thereto.
(b) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, within 5 Business Days of any Officer becoming aware of
any Default or Event of Default, an Officers' Certificate specifying such
Default or Event of Default.
SECTION 1019. Reports.
Notwithstanding that the Company may not be subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act or otherwise report on
an annual and quarterly basis on forms provided for such annual and quarterly
reporting pursuant to rules and regulations promulgated by the Commission, the
Company shall file with the Commission (and provide the Trustee and Holders with
copies thereof, without cost to each Holder, within 15 days after it files them
with the Commission), (i) within 90 days after the end of each fiscal year,
annual reports on Form 1O-K (or any successor or comparable form) containing the
information required to be contained therein (or required in such successor or
comparable form); (ii) within 45 days after the end of each of the first three
fiscal quarters of each fiscal year, reports on Form 1O-Q (or any successor or
comparable form); (iii) promptly from time to time after the occurrence of an
event required to be therein reported, such other reports on Form 8-K (or any
successor or comparable form); and (iv) any other information, documents and
other reports which the Company would be required to file with the Commission if
it were subject to Section 13 or 15(d) of the Exchange Act; provided, however,
the Company shall not be so obligated to file such reports with the Commission
if the Commission does not permit such filing, in which event the Company will
make available such information to prospective purchasers of Notes, in addition
to providing such information to the Trustee and the Holders, in each case
within 15 days after the time the Company would be required to file such
information with the Commission, if it were subject to Sections 13 or 15(d) of
the Exchange Act. The Company shall at all times comply with TIA ss. 314(a).
SECTION 1020. Further Assurances.
The Company shall, upon the request of the Trustee, execute and
deliver such further instruments and perform such further acts as may reasonably
be necessary or proper to carry out more effectively the provisions of this
Indenture.
ARTICLE ELEVEN
REDEMPTION OF NOTES
SECTION 1101. Redemption.
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The Notes may or shall, as the case may be, be redeemed, as a whole
or from time to time in part, subject to the conditions and at the Redemption
Prices specified in the form of Note, together with accrued interest to the
Redemption Date specified in the form of the Note.
SECTION 1102. Applicability of Article.
Redemption of Notes at the election of the Company or otherwise, as
permitted or required by any provision of this Indenture, shall be made in
accordance with such provision and this Article.
SECTION 1103. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Notes pursuant to Section
1101 shall be evidenced by a Board Resolution. In case of any redemption at the
election of the Company, the Company shall, at least 60 days prior to the
Redemption Date 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 and shall deliver to the Trustee
such documentation and records as shall enable the Trustee to select the Notes
to be redeemed pursuant to Section 1104.
SECTION 1104. Selection by Trustee of Notes to Be Redeemed.
If less than all the Notes are to be redeemed, selection of such
Notes for redemption shall be made by the Trustee not more than 60 days prior to
the Redemption Date, from the Outstanding Notes not previously called for
redemption, in compliance with the requirements of the principal national
securities exchange, if any, on which such Notes are listed, or, if such Notes
are not so listed, on a pro rata basis, by lot or by such other method as the
Trustee shall deem fair and appropriate (and in such manner as complies with
applicable legal requirements) and which may provide for the selection for
redemption of portions of the principal of Notes; provided, however, that no
Notes of less than $1,000 shall 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 Notes selected for partial
redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to 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 amount of such Note which has been or is to be redeemed.
SECTION 1105. Notice of Redemption.
Notice of redemption shall be given in the manner provided for in
Section 106 at least 30 but not more than 60 days prior to the Redemption Date,
to each Holder of Notes
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to be redeemed at such Holder's registered address. The Trustee shall give
notice of redemption in the Company's name and at the Company's expense;
provided, however, that the Company shall deliver to the Trustee, at least 30
days prior to the Redemption Date, an Officers' Certificate requesting that the
Trustee give such notice and setting forth the information to be stated in such
notice as provided in the following items.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price and the amount of accrued interest to the
Redemption Date payable as provided in Section 1107, if any,
(3) if less than all Outstanding Notes are to be redeemed, the
identification of the particular Notes (or portion thereof) to be
redeemed, as well as the aggregate principal amount of Notes to be
redeemed and the aggregate principal amount of Notes to be outstanding
after such partial redemption,
(4) in case any Note is to be redeemed in part only, the notice
which relates to such Note shall state that on and after the Redemption
Date, upon surrender of such Note, the holder will receive, without
charge, a new Note or Notes of authorized denominations for the principal
amount thereof remaining unredeemed,
(5) that on the Redemption Date the Redemption Price (and accrued
interest, if any, to the Redemption Date payable as provided in Section
1107) will become due and payable upon each such Note, or the portion
thereof, to be redeemed, and, unless the Company defaults in making the
redemption payment, that interest on Notes called for redemption (or the
portion thereof) will cease to accrue on and after said date,
(6) the place or places where such Notes are to be surrendered for
payment of the Redemption Price and accrued interest, if any,
(7) the name and address of the Paying Agent,
(8) that Notes called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price,
(9) the CUSIP number, and that no representation is made as to the
accuracy or correctness of the CUSIP number, if any, listed in such notice
or printed on the Notes, and
(10) the paragraph of the Notes pursuant to which the Notes are to
be redeemed.
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SECTION 1106. Deposit of Redemption Price.
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, segregate and hold in trust as provided in Section 1003) an amount of
money sufficient to pay the Redemption Price of, and accrued interest on, all
the Notes which are to be redeemed on that date.
SECTION 1107. Notes Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Notes so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified (together with accrued interest, if any, to
the Redemption Date), and from and after such date (unless the Company shall
default in the payment of the Redemption Price and accrued interest) such Notes
shall cease to bear interest. Upon surrender of any such Note for redemption in
accordance with said notice, such Note shall be paid by the Company at the
Redemption Price, together with accrued interest, if any, to the Redemption
Date; provided, however, that installments of interest whose Stated Maturity is
on or prior to the Redemption Date shall be payable to the Holders of such
Notes, or one or more Predecessor Notes, registered as such at the close of
business on the relevant Regular Record Date or Special Record Date, as the case
may be, according to their terms and the provisions of Section 308.
If any Note 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
Notes.
SECTION 1108. Notes Redeemed in Part.
Any Note which is to be redeemed only in part (pursuant to the
provisions of this Article) shall be surrendered at the office or agency of the
Company maintained for such purpose pursuant to Section 1002 (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 such Holder's 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 denomination as requested by such Holder, in an aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Note so surrendered; provided that each such new Note will be in a principal
amount of $1,000 or integral multiple thereof.
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ARTICLE TWELVE
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1201. Company's Option to Effect Legal Defeasance or
Covenant Defeasance.
The Company and the Guarantors may, at their option by Board
Resolution, at any time, with respect to the Notes, elect to have either Section
1202 or Section 1203 be applied to all Outstanding Notes upon compliance with
the conditions set forth below in this Article Twelve.
SECTION 1202. Legal 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
discharged from its obligations with respect to all Outstanding Notes and each
Guarantor shall be deemed to have been discharged from its obligations with
respect to its Guarantee on the date the conditions set forth in Section 1204
are satisfied (hereinafter, "Legal Defeasance"). For this purpose, such Legal
Defeasance means that the Company and any such Guarantor shall be deemed to have
paid and discharged the entire Indebtedness represented by the Outstanding
Notes, which shall thereafter be deemed to be "Outstanding" only for the
purposes of Section 1205 and the other Sections of this Indenture referred to in
(A) and (B) below, and to have satisfied all its other obligations under such
Notes and this Indenture 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 Outstanding
Notes to receive payments in respect of the principal of, premium, if any, and
interest on such Notes when such payments are due, solely from the trust fund
described in Section 1204 and as more fully set forth in such Section, (B) the
Company's obligations with respect to such Notes under Sections 304, 305, 307,
1002 and 1003, (C) the rights, powers, trusts, duties and immunities of the
Trustee hereunder, and the Company's obligations in connection therewith and (D)
this Article Twelve.
Subject to compliance with this Article Twelve, the Company may
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, the Company and each Guarantor shall be
released from its obligations under any covenant contained in Section 801 and in
Sections 1009 through 1019 with respect to the Outstanding Notes on and after
the date the conditions set forth below are satisfied (hereinafter, "Covenant
Defeasance"), and the Notes shall thereafter be deemed not 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,
but shall continue to be
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deemed "Outstanding" for all other purposes hereunder (it being understood that
such Notes will not be outstanding for accounting purposes). For this purpose,
such Covenant Defeasance means that, with respect to the Outstanding Notes, the
Company may omit to comply with and shall have no liability in respect of any
term, condition or limitation set forth in any such covenant, whether directly
or indirectly, by reason of any reference elsewhere herein to any such covenant
or by reason of any reference in any such covenant to any other provision herein
or in any other document and such omission to comply shall not constitute a
Default or an Event of Default under Section 501(iii), but, except as specified
above, the remainder of this Indenture and such Notes shall be unaffected
thereby.
SECTION 1204. Conditions to Legal Defeasance or Covenant Defeasance.
The following shall be the conditions to application of either
Section 1202 or Section 1203 to the Outstanding Notes:
(i) The Company must irrevocably deposit with the Trustee (or
another trustee satisfying the requirements of the Indenture who shall
agree to comply with the provisions of this Article Twelve applicable to
it) as trust funds in trust for the purpose of making the following
payments, specifically pledged as security for, and dedicated solely to,
the benefit of the Holders of such Notes, cash in U.S. dollars,
non-callable Government Securities, or a combination thereof, in such
amounts as will be sufficient, in the opinion of a nationally recognized
firm of independent public accountants selected by the Company, to pay the
principal of, premium, if any, and interest due on the Outstanding Notes
on the Stated Maturity or on the applicable Redemption Date as the case
may be, of such principal, premium, if any, or interest on the Outstanding
Notes;
(ii) in the case of Legal Defeasance, the Company shall have
delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee (which opinion may be subject to
customary assumptions and exclusions) confirming that (A) the Company has
received from, or there has been published by, the United States Internal
Revenue Service a ruling or (B) since the Issuance Date, there has been a
change in the applicable U.S. federal income tax law, in either case to
the effect that, and based thereon such Opinion of Counsel in the United
States shall confirm that, subject to customary assumptions and
exclusions, the Holders of the Outstanding Notes will not recognize
income, gain or loss for U.S. federal income tax purposes as a result of
such Legal Defeasance and will be subject to U.S. federal income tax on
the same amounts, in the same manner and at the same times as would have
been the case if such Legal Defeasance had not occurred;
(iii) in the case of Covenant Defeasance, the Company shall have
delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that, subject to customary
assumptions and exclusions, the Holders of the Outstanding Notes will not
recognize income, gain or loss for U.S. federal income tax purposes as a
result of such Covenant Defeasance and will be subject to
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such 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;
(iv) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit or insofar as Events of Default
from bankruptcy or insolvency events are concerned, at any time in the
period ending on the 91st day after the date of deposit;
(v) such Legal Defeasance or Covenant Defeasance shall not result in
a breach or violation of, or constitute a default under, any material
agreement or instrument (other than this Indenture) to which the Company
or any Guarantor is a party or by which the Company or any Guarantor is
bound;
(vi) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that, as of the date of such opinion and subject to
customary assumptions and exclusions following the deposit, the trust
funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally under any applicable U.S. federal or state law, and that the
Trustee has a perfected security interest in such trust funds for the
ratable benefit of the Holders;
(vii) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of defeating, hindering, delaying or defrauding any creditors of
the Company or any Guarantor or others; and
(viii) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel in the United States (which Opinion
of Counsel may be subject to customary assumptions and exclusions) each
stating that all conditions precedent provided for or relating to the
Legal Defeasance or the Covenant Defeasance, as the case may be, have been
complied with.
SECTION 1205. Deposited Money and U.S. Government Securities to Be
Held in Trust; Other Miscellaneous Provisions.
Subject to the provisions of the last paragraph of Section 1003, all
money and Government Securities (including the proceeds thereof) deposited with
the Trustee (or other qualifying trustee, collectively for purposes of this
Section 1205, the "Trustee") pursuant to Section 1204 in respect of the
Outstanding Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Notes and this Indenture, to the payment,
either directly or through any Paying Agent (including the Company acting as 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 (and premium, if
any) and interest, but such money need not be segregated from other funds except
to the extent required by law. Money and Government Securities so held in trust
are not subject to Article Thirteen.
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The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the Government Securities
deposited pursuant to Section 1204 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of the Outstanding Notes.
Anything in this Article Twelve to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or U.S. Government Securities held by it as provided in
Section 1204 which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect an equivalent legal defeasance or covenant
defeasance, as applicable, in accordance with this Article.
SECTION 1206. Reinstatement.
If the Trustee or any Paying Agent is unable to apply any money or
Government Securities in accordance with Section 1205 by reason of any legal
proceeding or by any reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 1202 or 1203, as the case may be, until such time as the Trustee or
Paying Agent is permitted to apply all such money in accordance with Section
1205; provided, however, that if the Company makes any payment of principal of
(or premium, if any) or interest on any Note following the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of
such Notes to receive such payment from the money and Government Securities held
by the Trustee or Paying Agent.
ARTICLE THIRTEEN
SUBORDINATION OF NOTES
SECTION 1301. Notes Subordinate to Senior Indebtedness.
The Company covenants and agrees, and each Holder of a Note, by his
acceptance thereof, likewise covenants and agrees, for the benefit of the
holders, from time to time, of Senior Indebtedness that, to the extent and in
the manner hereinafter set forth in this Article, the Indebtedness represented
by the Notes and the payment of the principal of (and premium, if any) and
interest on each and all of the Notes and all other Subordinated Note
Obligations are hereby expressly made subordinate and subject in right of
payment as provided in this Article to the prior payment in full in cash
equivalents of all Senior Indebtedness, whether outstanding on the date of this
Indenture or thereafter incurred.
SECTION 1302. Payment over of Proceeds upon Dissolution, Etc.
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Upon any distribution to creditors of the Company in a liquidation
or dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, an
assignment for the benefit of creditors or any marshalling of the Company's
assets and liabilities:
(1) the holders of Senior Indebtedness shall be entitled to receive
payment in full in cash equivalents of such Senior Indebtedness before the
Holders of Notes shall be entitled to receive any payment with respect to
the Subordinated Note Obligations (except that Holders of Notes may
receive (i) shares of stock and any debt securities that are subordinated
at least to the same extent as the Notes to (a) Senior Indebtedness and
(b) any securities issued in exchange for Senior Indebtedness and (ii)
payments and other distributions made from the trusts described in Article
Twelve); and
(2) until all Obligations with respect to Senior Indebtedness (as
provided in subsection (1) above) are paid in full in cash equivalents,
any distribution to which Holders would be entitled but for this Article
shall be made to holders of Senior Indebtedness (except that Holders of
Notes may receive (i) shares of stock and any debt securities that are
subordinated to at least the same extent as the Notes to (a) Senior
Indebtedness and (b) any securities issued in exchange for Senior
Indebtedness and (ii) payments and other distributions made from the
trusts described in Article Twelve) as their interests may appear.
SECTION 1303. Suspension of Payment When Senior Indebtedness in
Default.
The Company may not make any payment upon or distribution in respect
of the Subordinated Note Obligations (other than (i) securities that are
subordinated to at least the same extent as the Notes to (a) Senior Indebtedness
and (b) any securities issued in exchange for Senior Indebtedness and (ii)
payments and other distributions made from the trusts described in Article
Twelve) until all Senior Indebtedness has been paid in full in cash equivalents
if:
(i) a default in the payment of any principal of, premium, if any,
or interest on, or of unreimbursed amounts under drawn letters of credit
or in respect of banker's acceptances or fees relating to letters of
credit or banker's acceptances constituting, Designated Senior
Indebtedness occurs and is continuing beyond any applicable grace period
in the agreement, indenture or other document governing such Designated
Senior Indebtedness (a "payment default"); or
(ii) a default, other than a payment default, on Designated Senior
Indebtedness occurs and is continuing that then permits holders of the
Designated Senior Indebtedness to accelerate its maturity (a "non-payment
default") and the Trustee receives a notice of the default (a "Payment
Blockage Notice") from a Person who may give it pursuant to Section 1313
hereof. No new period of payment blockage may be commenced unless and
until 365 days have elapsed since the effectiveness of the immediately
preceding Payment Blockage Notice. However, if any Payment Blockage Notice
within such 365-day period is given by or on behalf of any holders of
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Designated Senior Indebtedness (other than the Bank Agent under the Senior
Credit Facility), the Bank Agent may give another Payment Blockage Notice
within such period. In no event, however, may the total number of days
during which any Payment Blockage Period or Periods is in effect exceed
179 days in the aggregate during any 365 consecutive day period. No
nonpayment default that existed or was continuing on the date of delivery
of any Payment Blockage Notice to the Trustee shall be, or be made, the
basis for a subsequent Payment Blockage Notice unless such default shall
have been cured or waived for a period of not less than 90 days.
The Company may and shall resume payments on and distributions in
respect of the Notes and may acquire them upon the earlier of:
(1) in the case of a payment default, upon the date on which such
default is cured or waived or shall have ceased to exist or such
Designated Senior Indebtedness shall have been discharged or paid in full
in cash equivalents, or
(2) in case of a nonpayment default, the earlier of (x) the date on
which such nonpayment default is cured or waived, (y) 179 days after the
date on which the applicable Payment Blockage Notice is received (each
such period, the "Payment Blockage Period") or (z) the date such Payment
Blockage Period shall be terminated by written notice to the Trustee from
the requisite holders of such Designated Senior Indebtedness necessary to
terminate such period or from their Representative, after which the
Company shall resume making any and all required payments in respect of
the Notes, including any missed payments,
if this Article otherwise permits the payment, distribution or acquisition at
the time of such payment or acquisition.
SECTION 1304. Acceleration of Notes.
If payment of the Notes is accelerated because of an Event of
Default, the Company shall promptly notify holders of Senior Indebtedness of the
acceleration.
SECTION 1305. When Distribution Must Be Paid Over.
In the event that the Trustee or any Holder receives any payment of
any Subordinated Note Obligations at a time when such payment is prohibited by
Sections 1302 or 1303, such payment shall be held by the Trustee or such Holder,
for the benefit of, and shall be paid forthwith over and delivered, upon written
request, to, the holders of Senior Indebtedness as their interests may appear or
to their Representative under the indenture or other agreement (if any) pursuant
to which such Senior Indebtedness may have been issued, as their respective
interests may appear, for application to the payment of all Senior Indebtedness
remaining unpaid to the extent necessary to pay such Senior Indebtedness in full
in cash equivalents in accordance with their terms, after giving effect to any
concurrent payment or distribution to or for the benefit of holders of Senior
Indebtedness.
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With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform only such obligations on the part of the Trustee as are
specifically set forth in this Article Thirteen, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into the Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness, and shall not be
liable to any such holders if the Trustee shall pay over or distribute to or on
behalf of Holders or the Company or any other Person money or assets to which
any holders of Senior Indebtedness shall be entitled by virtue of this Article
Thirteen, except if such payment is made as a result of the willful misconduct
or gross negligence of the Trustee.
SECTION 1306. Notice by Company.
The Company shall promptly notify the Trustee and the Paying Agent
of any facts known to the Company that would cause a payment of any Obligations
with respect to the Notes that violate this Article, but failure to give such
notice shall not affect the subordination of the Notes to the Senior
Indebtedness as provided in this Article Thirteen.
SECTION 1307. Payment Permitted If No Default.
Nothing contained in this Article or elsewhere in this Indenture or
in any of the Notes shall prevent the Company, at any time except during the
pendency of any case, proceeding, dissolution, liquidation or other winding up,
assignment for the benefit of creditors or other marshalling of assets and
liabilities of the Company referred to in Section 1302 or under the conditions
described in Section 1303, from making payments at any time of principal of (and
premium, if any, on) or interest on the Notes.
SECTION 1308. Subrogation to Rights of Holders of Senior
Indebtedness.
Subject to the payment in full of all Senior Indebtedness in cash
equivalents, the Holders shall be subrogated (equally and ratably with the
holders of all Pari Passu Indebtedness of the Company) to the rights of the
holders of such Senior Indebtedness to receive payments and distributions of
cash, property and securities applicable to the Senior Indebtedness until the
Subordinated Note Obligations shall be paid in full. For purposes of such
subrogation, no payments or distributions to the holders of Senior Indebtedness
of any cash, property or securities to which the Holders of the Notes or the
Trustee would be entitled except for the provisions of this Article, and no
payments over pursuant to the provisions of this Article to the holders of
Senior Indebtedness by Holders of the Notes or on their behalf or by the
Trustee, shall, as among the Company, its creditors other than holders of Senior
Indebtedness, and the Holders of the Notes, be deemed to be a payment or
distribution by the Company to or on account of the Senior Indebtedness; it
being understood that the provisions of this Article are intended solely for the
purpose of determining the relative rights of the Holders of the Notes, on the
one hand, and the holders of Senior Indebtedness, on the other hand.
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SECTION 1309. Provisions Solely to Define Relative Rights.
The provisions of this Article 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 on the other hand. Nothing contained in this
Article or elsewhere in this Indenture or in the Notes is intended to or shall
(a) impair, as between the Company and the Holders, the obligation of the
Company, which is absolute and unconditional, to pay to the Holders the
principal of (and premium, if any) and interest on the Notes as and when the
same shall become due and payable in accordance with their terms; or (b) affect
the relative rights against the Company of the Holders and creditors of the
Company other than their rights in relation to holders of Senior Indebtedness;
or (c) prevent the Trustee or any Holder from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture, subject to the
rights, if any, under this Article of the holders of Senior Indebtedness. If the
Company fails because of this Article to pay principal (or premium, if any) or
interest on a Note on the due date, the failure is still a Default or Event of
Default.
SECTION 1310. Trustee to Effectuate Subordination.
Each Holder of a Note by his acceptance thereof authorizes and
directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article and appoints the Trustee his attorney-in-fact for any and all such
purposes. If the Trustee does not file a proper proof of claim or proof of debt
in the form required in any proceeding referred to in Section 504 hereof at
least 30 days before the expiration of the time to file such claim, the Bank
Agent (if the Senior Credit Facility is still outstanding) is hereby authorized
to file an appropriate claim for and on behalf of the Holders of the Notes.
SECTION 1311. Subordination May Not Be Impaired by Company.
No right of any present or future holder of any Senior Indebtedness
to enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
non-compliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof any such holder may have or be
otherwise charged with.
SECTION 1312. 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.
Upon any payment or distribution of assets of the Company referred
to in this Article Thirteen, the Trustee and the Holders shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction or
upon any certificate of such Representative or of the liquidating trustee or
agent or other Person making any distribution to the Trustee or to the Holders
for the purpose of ascertaining the Persons entitled to participate in such
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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 acts pertinent thereto or to this Article
Thirteen.
SECTION 1313. Notice to Trustee.
(a) The Company shall give prompt written notice to the Trustee of
any fact known to the Company which would prohibit the making of any payment to
or by the Trustee in respect of the Notes. Notwithstanding the provisions of
this Article or any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts which would prohibit the
making of any payment to or by the Trustee in respect of the Notes, unless and
until the Trustee shall have received written notice thereof from the Company,
the Bank Agent or a holder of Senior Indebtedness or from any trustee, fiduciary
or agent therefor; and, prior to the receipt of any such written notice, the
Trustee, subject to TIA Sections 315(a) through 315(d), shall be entitled in all
respects to assume that no such facts exist; provided, however, that, if the
Trustee shall not have received the notice provided for in this Section at least
three Business Days prior to the date upon which by the terms hereof any money
may become payable for any purpose (including, without limitation, the payment
of the principal of (and premium, if any) or interest on any Note), then,
anything herein contained to the contrary notwithstanding, the Trustee shall
have full power and authority to receive such money and to apply the same to the
purpose for which such money was received and shall not be affected by any
notice to the contrary which may be received by it within three Business Days
prior to such date.
(b) Subject to TIA Sections 315(a) through 315(d), the Trustee shall
be entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness (or a trustee,
fiduciary or agent therefor) to establish that such notice has been given by a
holder of Senior Indebtedness (or a trustee, fiduciary or agent therefor). In
the event that the Trustee determines in good faith that further evidence is
required with respect to the right of any Person as a holder of Senior
Indebtedness to participate in any payment or distribution pursuant to this
Article, 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 any other facts pertinent to the rights of
such Person under this Article 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.
SECTION 1314. Reliance on Judicial Order or Certificate of
Liquidating Agent.
Upon any payment or distribution of assets of the Company referred
to in this Article, the Trustee, subject to TIA Sections 315(a) through 315(d),
and the Holders of the Notes shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization, dissolution, winding up
or similar case or proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors,
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agent or other Person making such payment or distribution, delivered to the
Trustee or to the Holders of Notes, for the purpose of ascertaining the Persons
entitled to participate in such payment or distribution, the holders of 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; provided that such court, trustee,
receiver, custodian, assignee, agent or other Person has been apprised of, or
the order, decree or certificate makes reference to, the provisions of this
Article.
SECTION 1315. Rights of Trustee as a Holder of Senior Indebtedness;
Preservation of Trustees' Rights.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article with respect to any Senior Indebtedness which
may at any time be held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder. Nothing in this Article shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 607.
SECTION 1316. Article Applicable to Paying Agents.
In case at any time any Paying Agent other than the Trustee shall
have been appointed by the Company and be then acting hereunder, the term
"Trustee" as used in this Article shall in such case (unless the context
otherwise requires) be construed as extending to and including such Paying Agent
within its meaning as fully for all intents and purposes as if such Paying Agent
were named in this Article in addition to or in place of the Trustee; provided,
however, that Section 1315 shall not apply to the Company or any Affiliate of
the Company if it or such Affiliate acts as Paying Agent.
SECTION 1317. No Suspension of Remedies.
Nothing contained in this Article shall limit the right of the
Trustee or the Holders of Notes to take any action to accelerate the maturity of
the Notes pursuant to Article Five or to pursue any rights or remedies hereunder
or under applicable law, except as provided in Article Five.
SECTION 1318. Modification of Terms of Senior Indebtedness.
Any renewal or extension of the time of payment of any Senior
Indebtedness or the exercise by the holders of Senior Indebtedness of any of
their rights under any instrument creating or evidencing Senior Indebtedness,
including, without limitation, the waiver of default thereunder, may be made or
done all without notice to or assent from the Holders or the Trustee.
No compromise, alteration, amendment, modification, extension,
renewal or other change of, or waiver, consent or other action in respect of,
any liability or obligation under or in respect of, or of any of the terms,
covenants or conditions of any indenture or other instrument under which any
Senior Indebtedness is outstanding or of such Senior Indebtedness,
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whether or not such release is in accordance with the provisions of any
applicable document, shall in any way alter or affect any of the provisions of
this Article Thirteen or of the Notes relating to the subordination thereof.
SECTION 1319. Certain Terms.
For purposes of this Article Thirteen, (i) "cash equivalents" means
Government Securities with maturities of nine months or less and (ii) unless the
context clearly indicates otherwise, any payment or distribution to the Trustee
or any Holder in respect of any Subordinated Note Obligation shall include any
payment or distribution of any kind or character from any source, whether in
cash, property or securities, by set-off or otherwise, including any repurchase,
redemption or acquisition of the Notes and any direct or indirect payment
payable by reason of any other Indebtedness or Obligation being subordinated to
the Notes.
SECTION 1320. Trust Moneys Not Subordinated.
Notwithstanding anything contained herein to the contrary, payments
from cash or the proceeds of Government Securities held in trust under Article
Twelve hereof by the Trustee (or other qualifying trustee) and which were
deposited in accordance with the terms of Article Twelve hereof and not in
violation of Section 1303 hereof 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 or subject to the restrictions set forth in this
Article Thirteen, and none of the Holders shall be obligated to pay over any
such amount to the Company or any holder of Senior Indebtedness or any other
creditor of the Company.
This Indenture may be signed in any number of counterparts each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same Indenture.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the day and year first above written.
AMPHENOL CORPORATION,
a Delaware corporation
By: _____________________________
Name:
Title:
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IBJ SCHRODER BANK & TRUST
COMPANY,
as Trustee
By: ____________________________
Name:
Title:
<PAGE>
EXHIBIT 23.2
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-3 of our report dated January 14, 1997, except
as to Note 12, which is as of January 23, 1997 relating to the financial
statements of Amphenol Corporation, which appears in such Prospectus. We also
consent to the reference to us under the heading "Experts" in such Prospectus.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Hartford, Connecticut
April 28, 1997
