SUBSIDIARY AS WOULD BE OBTAINABLE BY THE COMPANY OR SUCH
SUBSIDIARY AT THE TIME IN A COMPARABLE ARM'S LENGTH TRANSACTION WITH A PERSON
OTHER THAN AN AFFILIATE; PROVIDED THAT ANY LOAN PARTY MAY ENTER INTO
TRANSACTIONS RELATING TO ANY PERMITTED RECEIVABLES PURCHASE FACILITY.
7.09
BURDENSOME AGREEMENTS.
ENTER INTO OR BE SUBJECT TO ANY CONTRACTUAL
OBLIGATION (OTHER THAN THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE SENIOR
NOTE DOCUMENTS) THAT (A) LIMITS THE ABILITY (I) OF ANY SUBSIDIARY TO MAKE
RESTRICTED PAYMENTS TO ANY LOAN PARTY OR TO OTHERWISE TRANSFER PROPERTY TO ANY
LOAN PARTY, (II) OF ANY MATERIAL DOMESTIC SUBSIDIARY OR ANY OTHER SUBSIDIARY
GUARANTOR TO GUARANTEE THE INDEBTEDNESS OF THE COMPANY OR (III) 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 (III) 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
77
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 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) $ 350,000,000, (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 JUNE 27, 2004
(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