ANY
LOAN PARTY, (II) OF ANY MATERIAL DOMESTIC SUBSIDIARY OR ANY OTHER DOMESTIC LOAN
PARTY TO GUARANTEE THE INDEBTEDNESS OF THE COMPANY OR ANY DESIGNATED BORROWER,
(III) OF ANY FOREIGN LOAN PARTY TO GUARANTEE THE INDEBTEDNESS OF ANY FOREIGN
DESIGNATED BORROWER OR (IV) OF THE COMPANY OR ANY SUBSIDIARY TO CREATE, INCUR,
ASSUME OR SUFFER TO EXIST LIENS ON PROPERTY OF SUCH PERSON; PROVIDED, HOWEVER,
THAT THIS CLAUSE (IV) SHALL NOT PROHIBIT ANY NEGATIVE PLEDGE INCURRED OR
PROVIDED IN FAVOR OF ANY HOLDER OF INDEBTEDNESS IN RESPECT OF CAPITAL LEASES,
SYNTHETIC LEASE OBLIGATIONS AND PURCHASE MONEY OBLIGATIONS FOR FIXED OR CAPITAL
ASSETS, IN EACH CASE SOLELY TO THE EXTENT ANY SUCH NEGATIVE PLEDGE RELATES TO
THE PROPERTY FINANCED BY OR THE SUBJECT OF SUCH INDEBTEDNESS; OR (B) REQUIRES
THE GRANT OF A LIEN TO SECURE AN OBLIGATION OF SUCH PERSON IF A LIEN IS GRANTED
TO SECURE ANOTHER OBLIGATION OF SUCH PERSON; PROVIDED, THAT THIS SECTION 7.09
SHALL NOT APPLY TO ANY CONTRACTUAL OBLIGATION BINDING SOLELY ON WATTS GERMANY OR
ANY SUBSIDIARY THEREOF.
7.10
USE OF PROCEEDS. USE THE PROCEEDS OF ANY CREDIT EXTENSION, WHETHER
DIRECTLY OR INDIRECTLY, AND WHETHER IMMEDIATELY, INCIDENTALLY OR ULTIMATELY, TO
PURCHASE OR CARRY MARGIN STOCK (WITHIN THE MEANING OF REGULATION U OF THE FRB)
OR TO EXTEND CREDIT TO OTHERS FOR THE PURPOSE OF PURCHASING OR CARRYING MARGIN
STOCK OR TO REFUND INDEBTEDNESS ORIGINALLY INCURRED FOR SUCH PURPOSE.
7.11
MODIFICATION OF ORGANIZATION DOCUMENTS. CONSENT TO OR AGREE TO ANY
AMENDMENT, SUPPLEMENT OR OTHER MODIFICATION TO THE ORGANIZATION DOCUMENTS
WITHOUT THE PRIOR
81
WRITTEN CONSENT OF THE ADMINISTRATIVE AGENT UNLESS SUCH AMENDMENT, SUPPLEMENT OR
MODIFICATION COULD NOT REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT.
7.12
SENIOR NOTE DOCUMENTS. AMEND, SUPPLEMENT OR OTHERWISE MODIFY THE
TERMS OF ANY OF THE SENIOR NOTE DOCUMENTS UNLESS SUCH AMENDMENT, SUPPLEMENT OR
MODIFICATION COULD NOT REASONABLY BE EXPECTED TO (I) HAVE A MATERIAL ADVERSE
EFFECT OR (II) HAVE A MATERIAL ADVERSE EFFECT ON THE RIGHTS AND INTERESTS OF THE
ADMINISTRATIVE AGENT AND THE LENDERS UNDER THE LOAN DOCUMENTS.
7.13
FINANCIAL COVENANTS.
(A)
CONSOLIDATED NET WORTH. PERMIT CONSOLIDATED NET WORTH AT ANY TIME
TO BE LESS THAN THE SUM OF (I) $415,580,000, (II) AN AMOUNT EQUAL TO 50% OF THE
CONSOLIDATED NET INCOME (EXCLUDING THE IMPACT OF FOREIGN CURRENCY TRANSLATION
ADJUSTMENTS) EARNED IN EACH FISCAL QUARTER BEGINNING WITH THE FISCAL QUARTER
ENDING APRIL 2, 2006 (WITH NO DEDUCTION FOR A NET LOSS IN ANY SUCH FISCAL
QUARTER) AND (III) AN AMOUNT EQUAL TO 100% OF THE AGGREGATE INCREASES IN
SHAREHOLDERS' EQUITY OF THE COMPANY AND ITS SUBSIDIARIES AFTER THE DATE HEREOF
BY REASON OF THE ISSUANCE AND SALE OF EQUITY INTERESTS OF THE COMPANY OR ANY
SUBSIDIARY (OTHER THAN ISSUANCES TO THE COMPANY OR A WHOLLY-OWNED SUBSIDIARY),
INCLUDING UPON ANY CONVERSION OF DEBT SECURITIES OF THE COMPANY INTO SUCH EQUITY
INTERESTS.
(B)
CONSOLIDATED INTEREST COVERAGE RATIO. PERMIT THE CONSOLIDATED
INTEREST COVERAGE RATIO AS OF THE END OF ANY FISCAL QUARTER OF THE COMPANY TO BE
LESS THAN 3.50:1:00.
(C)