Document:

Exhibit 4.2

 

[Form of Subordinated Indenture]

 

	
 
    
	
 
    
	
 
    

EXTERRAN PARTNERS, L.P.

 

and

 

EXLP FINANCE CORP.,

 

as Issuers,

 

any Subsidiary Guarantors party hereto,

 

and

 

                            ,

 

as Trustee

 

INDENTURE

 

Dated as of                  

 

Debt Securities

	
 
    
	
 
    
	
 
    

 

CROSS-REFERENCE TABLE

 

	
TIA Section
    	
 
    	
Indenture Section
    
	
310   
    	
(a)
    	
 
    	
7.10
    
	
 
    	
(b)
    	
 
    	
7.10
    
	
 
    	
(c)
    	
 
    	
N.A.
    
	
311   
    	
(a)
    	
 
    	
7.11
    
	
 
    	
(b)
    	
 
    	
7.11
    
	
 
    	
(c)
    	
 
    	
N.A.
    
	
312   
    	
(a)
    	
 
    	
5.01
    
	
 
    	
(b)
    	
 
    	
5.02
    
	
 
    	
(c)
    	
 
    	
5.02
    
	
313   
    	
(a)
    	
 
    	
5.03
    
	
 
    	
(b)
    	
 
    	
5.03
    
	
 
    	
(c)
    	
 
    	
13.03
    
	
 
    	
(d)
    	
 
    	
5.03
    
	
314   
    	
(a)
    	
 
    	
4.05
    
	
 
    	
(b)
    	
 
    	
N.A.
    
	
 
    	
(c)(1)
    	
 
    	
13.05
    
	
 
    	
(c)(2)
    	
 
    	
13.05
    
	
 
    	
(c)(3)
    	
 
    	
N.A.
    
	
 
    	
(d)
    	
 
    	
N.A.
    
	
 
    	
(e)
    	
 
    	
13.05
    
	
 
    	
(f)
    	
 
    	
N.A.
    
	
315   
    	
(a)
    	
 
    	
7.01
    
	
 
    	
(b)
    	
 
    	
6.07 &   13.03
    
	
 
    	
(c)
    	
 
    	
7.01
    
	
 
    	
(d)
    	
 
    	
7.01
    
	
 
    	
(e)
    	
 
    	
6.08
    
	
316   
    	
(a) (last   sentence)
    	
 
    	
1.01
    
	
 
    	
(a)(1)(A)
    	
 
    	
6.06
    
	
 
    	
(a)(1)(B)
    	
 
    	
6.06
    
	
 
    	
(a)(2)
    	
 
    	
9.01(d)
    
	
 
    	
(b)
    	
 
    	
6.04
    
	
 
    	
(c)
    	
 
    	
5.04
    
	
317   
    	
(a)(1)
    	
 
    	
6.02
    
	
 
    	
(a)(2)
    	
 
    	
6.02
    
	
 
    	
(b)
    	
 
    	
4.04
    
	
318   
    	
(a)
    	
 
    	
13.07
    

 

N.A. means Not Applicable

 

NOTE:  This Cross-Reference table shall not, for any purpose, be deemed part of this Indenture.

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    
	
ARTICLE I
    	
 
    
	
DEFINITIONS AND INCORPORATION BY REFERENCE
    	
 
    
	
 
    	
 
    	
 
    
	
Section 1.01
    	
Definitions
    	
1
    
	
Section 1.02
    	
Other   Definitions
    	
7
    
	
Section 1.03
    	
Incorporation   by Reference of Trust Indenture Act
    	
7
    
	
Section 1.04
    	
Rules of   Construction
    	
7
    
	
 
    
	
ARTICLE II
    	
 
    
	
DEBT SECURITIES
    	
 
    
	
 
    	
 
    	
 
    
	
Section 2.01
    	
Forms   Generally
    	
8
    
	
Section 2.02
    	
Form of   Trustee’s Certificate of Authentication
    	
8
    
	
Section 2.03
    	
Principal   Amount; Issuable in Series
    	
9
    
	
Section 2.04
    	
Execution   of Debt Securities
    	
11
    
	
Section 2.05
    	
Authentication   and Delivery of Debt Securities
    	
11
    
	
Section 2.06
    	
Denomination   of Debt Securities
    	
13
    
	
Section 2.07
    	
Registration   of Transfer and Exchange
    	
13
    
	
Section 2.08
    	
Temporary   Debt Securities
    	
14
    
	
Section 2.09
    	
Mutilated,   Destroyed, Lost or Stolen Debt Securities
    	
15
    
	
Section 2.10
    	
Cancellation   of Surrendered Debt Securities
    	
16
    
	
Section 2.11
    	
Provisions   of the Indenture and Debt Securities for the Sole Benefit of the Parties and   the Holders
    	
16
    
	
Section 2.12
    	
Payment   of Interest; Interest Rights Preserved
    	
16
    
	
Section 2.13
    	
Securities   Denominated in Dollars
    	
17
    
	
Section 2.14
    	
Wire   Transfers
    	
17
    
	
Section 2.15
    	
Securities   Issuable in the Form of a Global Security
    	
17
    
	
Section 2.16
    	
Medium   Term Securities
    	
19
    
	
Section 2.17
    	
Defaulted   Interest
    	
20
    
	
Section 2.18
    	
CUSIP   and ISIN Numbers
    	
21
    
	
 
    
	
ARTICLE III
    	
 
    
	
REDEMPTION OF DEBT SECURITIES
    	
 
    
	
 
    	
 
    	
 
    
	
Section 3.01
    	
Applicability   of Article
    	
21
    
	
Section 3.02
    	
Notice   of Redemption; Selection of Debt Securities
    	
21
    
	
Section 3.03
    	
Payment   of Debt Securities Called for Redemption
    	
23
    
	
Section 3.04
    	
Mandatory   and Optional Sinking Funds
    	
23
    
	
Section 3.05
    	
Redemption   of Debt Securities for Sinking Fund
    	
24
    
	
 
    
	
ARTICLE IV
    	
 
    
	
PARTICULAR COVENANTS OF THE ISSUERS
    	
 
    
	
 
    	
 
    	
 
    
	
Section 4.01
    	
Payment   of Principal of, and Premium, If Any, and Interest on, Debt Securities
    	
25
    

 

ii

 

	
Section 4.02
    	
Maintenance of Offices or Agencies for Registration of   Transfer, Exchange and Payment of Debt Securities
    	
25
    
	
Section 4.03
    	
Appointment to Fill a Vacancy in the Office of Trustee
    	
26
    
	
Section 4.04
    	
Duties of Paying Agents, etc.
    	
26
    
	
Section 4.05
    	
SEC Reports; Financial Statements
    	
27
    
	
Section 4.06
    	
Compliance Certificate
    	
28
    
	
Section 4.07
    	
Further Instruments and Acts
    	
28
    
	
Section 4.08
    	
Existence
    	
28
    
	
Section 4.09
    	
Maintenance of Properties
    	
28
    
	
Section 4.10
    	
Payment of Taxes and Other Claims
    	
28
    
	
Section 4.11
    	
Waiver of Certain Covenants
    	
29
    
	
 
    
	
ARTICLE V
    	
 
    
	
HOLDERS’ LISTS AND REPORTS BY THE TRUSTEE
    	
 
    
	
 
    	
 
    	
 
    
	
Section 5.01
    	
Issuers to Furnish Trustee Information as to Names and   Addresses of Holders; Preservation of Information
    	
29
    
	
Section 5.02
    	
Communications to Holders
    	
29
    
	
Section 5.03
    	
Reports by Trustee
    	
29
    
	
Section 5.04
    	
Record Dates for Action by Holders
    	
30
    
	
 
    
	
ARTICLE VI
    	
 
    
	
REMEDIES OF THE TRUSTEE AND HOLDERS IN EVENT OF   DEFAULT
    	
 
    
	
 
    	
 
    	
 
    
	
Section 6.01
    	
Events of Default
    	
30
    
	
Section 6.02
    	
Collection of Debt by Trustee, etc.
    	
32
    
	
Section 6.03
    	
Application of Moneys Collected by Trustee
    	
34
    
	
Section 6.04
    	
Limitation on Suits by Holders
    	
34
    
	
Section 6.05
    	
Remedies Cumulative; Delay or Omission in Exercise of   Rights Not a Waiver of Default
    	
35
    
	
Section 6.06
    	
Rights of Holders of Majority in Principal Amount of Debt   Securities to Direct Trustee and to Waive Default
    	
35
    
	
Section 6.07
    	
Trustee to Give Notice of Events of Defaults Known to It,   but May Withhold Such Notice in Certain Circumstances
    	
36
    
	
Section 6.08
    	
Requirement of an Undertaking to Pay Costs in Certain Suits   under the Indenture or Against the Trustee
    	
36
    
	
 
    
	
ARTICLE VII
    	
 
    
	
CONCERNING THE TRUSTEE
    	
 
    
	
 
    	
 
    	
 
    
	
Section 7.01
    	
Certain Duties and Responsibilities
    	
37
    
	
Section 7.02
    	
Certain Rights of Trustee
    	
38
    
	
Section 7.03
    	
Trustee Not Liable for Recitals in Indenture or in Debt   Securities
    	
39
    
	
Section 7.04
    	
Trustee, Paying Agent or Registrar May Own Debt   Securities
    	
39
    
	
Section 7.05
    	
Moneys Received by Trustee to Be Held in Trust
    	
39
    
	
Section 7.06
    	
Compensation and Reimbursement
    	
39
    
	
Section 7.07
    	
Right of Trustee to Rely on an Officers’ Certificate Where   No Other Evidence Specifically Prescribed
    	
40
    
	
Section 7.08
    	
Separate Trustee; Replacement of Trustee
    	
40
    
	
Section 7.09
    	
Successor Trustee by Merger
    	
41
    

 

iii

 

	
Section 7.10
    	
Eligibility; Disqualification
    	
42
    
	
Section 7.11
    	
Preferential Collection of Claims Against Issuers
    	
42
    
	
Section 7.12
    	
Compliance with Tax Laws
    	
42
    
	
 
    
	
ARTICLE VIII
    	
 
    
	
CONCERNING THE HOLDERS
    	
 
    
	
 
    	
 
    	
 
    
	
Section 8.01
    	
Evidence of Action by Holders
    	
42
    
	
Section 8.02
    	
Proof of Execution of Instruments and of Holding of Debt   Securities
    	
43
    
	
Section 8.03
    	
Who May Be Deemed Owner of Debt Securities
    	
43
    
	
Section 8.04
    	
Instruments Executed by Holders Bind Future Holders
    	
43
    
	
 
    
	
ARTICLE IX
    	
 
    
	
SUPPLEMENTAL INDENTURES
    	
 
    
	
 
    	
 
    	
 
    
	
Section 9.01
    	
Purposes for Which Supplemental Indenture May Be   Entered into Without Consent of Holders
    	
44
    
	
Section 9.02
    	
Modification of Indenture with Consent of Holders of Debt   Securities
    	
46
    
	
Section 9.03
    	
Effect of Supplemental Indentures
    	
47
    
	
Section 9.04
    	
Debt Securities May Bear Notation of Changes by   Supplemental Indentures
    	
47
    
	
 
    
	
ARTICLE X
    	
 
    
	
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
    	
 
    
	
 
    	
 
    	
 
    
	
Section 10.01
    	
Consolidations and Mergers of the Issuers
    	
47
    
	
Section 10.02
    	
Rights and Duties of Successor Company
    	
48
    
	
 
    
	
ARTICLE XI
    	
 
    
	
SATISFACTION AND DISCHARGE OF INDENTURE;
    	
 
    
	
DEFEASANCE; UNCLAIMED MONEYS
    	
 
    
	
 
    	
 
    	
 
    
	
Section 11.01
    	
Applicability of Article
    	
49
    
	
Section 11.02
    	
Satisfaction and Discharge of Indenture; Defeasance
    	
49
    
	
Section 11.03
    	
Conditions of Defeasance
    	
50
    
	
Section 11.04
    	
Application of Trust Money
    	
51
    
	
Section 11.05
    	
Repayment to Issuers
    	
51
    
	
Section 11.06
    	
Indemnity for U.S. Government Obligations
    	
51
    
	
Section 11.07
    	
Reinstatement
    	
51
    
	
 
    
	
ARTICLE XII
    	
 
    
	
SUBORDINATION OF DEBT SECURITIES AND GUARANTEE
    	
 
    
	
 
    	
 
    	
 
    
	
Section 12.01
    	
Applicability of Article; Agreement to Subordinate
    	
52
    
	
Section 12.02
    	
Liquidation, Dissolution, Bankruptcy
    	
52
    
	
Section 12.03
    	
Default on Senior Indebtedness
    	
52
    
	
Section 12.04
    	
Acceleration of Payment of Debt Securities
    	
53
    
	
Section 12.05
    	
When Distribution Must Be Paid Over
    	
53
    
	
Section 12.06
    	
Subrogation
    	
54
    
	
Section 12.07
    	
Relative Rights
    	
54
    
	
Section 12.08
    	
Subordination May Not Be Impaired by Issuers
    	
54
    
	
Section 12.09
    	
Rights of Trustee and Paying Agent
    	
54
    

 

iv

 

	
Section 12.10
    	
Distribution or Notice to Representative
    	
55
    
	
Section 12.11
    	
Article XII Not to Prevent Defaults or Limit Right to   Accelerate
    	
55
    
	
Section 12.12
    	
Trust Moneys Not Subordinated
    	
55
    
	
Section 12.13
    	
Trustee Entitled to Rely
    	
55
    
	
Section 12.14
    	
Trustee to Effectuate Subordination
    	
55
    
	
Section 12.15
    	
Trustee Not Fiduciary for Holders of Senior Indebtedness
    	
56
    
	
Section 12.16
    	
Reliance by Holders of Senior Indebtedness on Subordination   Provisions
    	
56
    
	
 
    
	
ARTICLE XIII
    	
 
    
	
MISCELLANEOUS PROVISIONS
    	
 
    
	
 
    	
 
    	
 
    
	
Section 13.01
    	
Successors and Assigns of Issuers Bound by Indenture
    	
56
    
	
Section 13.02
    	
Acts of Board, Committee or Officer of Successor Issuer   Valid
    	
56
    
	
Section 13.03
    	
Required Notices or Demands
    	
56
    
	
Section 13.04
    	
Indenture and Debt Securities to Be Construed in Accordance   with the Laws of the State of New York
    	
57
    
	
Section 13.05
    	
Officers’ Certificate and Opinion of Counsel to Be   Furnished upon Application or Demand by the Issuers
    	
57
    
	
Section 13.06
    	
Payments Due on Legal Holidays
    	
58
    
	
Section 13.07
    	
Provisions Required by TIA to Control
    	
58
    
	
Section 13.08
    	
Computation of Interest on Debt Securities
    	
58
    
	
Section 13.09
    	
Rules by Trustee, Paying Agent and Registrar
    	
58
    
	
Section 13.10
    	
No Recourse Against Others
    	
58
    
	
Section 13.11
    	
Severability
    	
59
    
	
Section 13.12
    	
Effect of Headings
    	
59
    
	
Section 13.13
    	
Indenture May Be Executed in Counterparts
    	
59
    
	
 
    
	
ARTICLE XIV
    	
 
    
	
GUARANTEE
    	
 
    
	
 
    	
 
    	
 
    
	
Section 14.01
    	
Unconditional Guarantee
    	
59
    
	
Section 14.02
    	
Execution and Delivery of Guarantee
    	
61
    
	
Section 14.03
    	
Limitation on Subsidiary Guarantors’ Liability
    	
61
    
	
Section 14.04
    	
Release of Subsidiary Guarantors from Guarantee
    	
62
    
	
Section 14.05
    	
Subsidiary Guarantor Contribution
    	
62
    

 

	
Notation of Guarantee 
    	
Annex A
    

 

v

 

THIS INDENTURE dated as of                      is among Exterran Partners, L.P., a Delaware limited partnership (the “Partnership”), EXLP Finance Corp., a Delaware corporation (“Finance Corp.,” and together with the Partnership, the “Issuers”), any Subsidiary Guarantors (as defined herein party hereto and                                        , a                                        , as trustee (the “Trustee”).

 

RECITALS OF THE ISSUERS AND ANY SUBSIDIARY GUARANTORS

 

The Issuers and any Subsidiary Guarantors have duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of the Issuers’ debentures, notes, bonds or other evidences of indebtedness to be issued in one or more series unlimited as to principal amount (herein called the “Debt Securities”), which Debt Securities may be guaranteed by each of the Subsidiary Guarantors and may be subordinated in right of payment to Senior Indebtedness, as in this Indenture provided.

 

All things necessary to make this Indenture a valid agreement of the Issuers and any Subsidiary Guarantors, in accordance with its terms, have been done.

 

NOW, THEREFORE, THIS INDENTURE WITNESSETH

 

That in order to declare the terms and conditions upon which the Debt Securities are authenticated, issued and delivered, and in consideration of the premises, and of the purchase and acceptance of the Debt Securities by the Holders thereof, the Issuers, any Subsidiary Guarantor and the Trustee covenant and agree with each other, for the benefit of the respective Holders from time to time of the Debt Securities or any series thereof, as follows:

 

ARTICLE I
 DEFINITIONS AND INCORPORATION BY REFERENCE

 

Section 1.01          Definitions.

 

“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, “control” when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing. The Trustee may request and may conclusively rely upon an Officers’ Certificate to determine whether any Person is an Affiliate of any specified Person.

 

“Agent” means any Registrar or paying agent.

 

“Bankruptcy Law” means Title 11, U.S. Code or any similar federal or state law for the relief of debtors.

 

“Board of Directors” means, (i) with respect to Finance Corp., the board of directors of the corporation or any committee thereof duly authorized to act on behalf of such board, (ii) with respect to the Partnership, the Board of Directors of the General Partner or any authorized

 

1

 

committee of the Board of Directors of the General Partner or any directors and/or officers of the General Partner to whom such Board of Directors or such committee shall have duly delegated its authority to act hereunder.  If the Partnership shall change its form of entity to other than a limited partnership, the references to the Board of Directors of the General Partner shall mean the Board of Directors (or other comparable governing body) of the Partnership.

 

“Business Day” means any day other than a Legal Holiday.

 

“capital stock” of any Person means and includes any and all shares, rights to purchase, warrants or options (whether or not currently exercisable), participations or other equivalents of or interests in (however designated) the equity (which includes, but is not limited to, common stock, preferred stock and partnership and joint venture interests) of such Person (excluding any debt securities that are convertible into, or exchangeable for, such equity).

 

“Custodian” means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law.

 

“Debt” of any Person at any date means any obligation created or assumed by such Person for the repayment of borrowed money and any guarantee thereof.

 

“Debt Security” or “Debt Securities” has the meaning stated in the first recital of this Indenture and more particularly means any debt security or debt securities, as the case may be of any series authenticated and delivered under this Indenture.

 

“Default” means any event, act or condition that is, or after notice or the passage of time or both would be, an Event of Default.

 

“Depositary” means, unless otherwise specified by the Issuers pursuant to either Section 2.03 or 2.15, with respect to Debt Securities of any series issuable or issued in whole or in part in the form of one or more Global Securities, The Depository Trust Company, New York, New York, or any successor thereto registered as a clearing agency under the Exchange Act or other applicable statute or regulations.

 

“Designated Senior Indebtedness” means (i) any Senior Indebtedness which, at the date of determination, has an aggregate principal amount outstanding of, or under which, at the date of determination, the holders thereof are committed to lend up to, at least $100 million and (ii) any other Senior Indebtedness designated, as provided in Section 2.03, in respect of any series of Debt Securities.

 

“Dollar” or “$” means such currency of the United States as at the time of payment is legal tender for the payment of public and private debts.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and any successor statute.

 

“Finance Corp.” means the Person named as “Finance Corp.” in the first paragraph of this instrument until a successor Person shall have become such pursuant to the applicable terms of this Indenture, and thereafter “Finance Corp.” shall mean such successor Person.

 

2

 

“Floating Rate Security” means a Debt Security that provides for the payment of interest at a variable rate determined periodically by reference to an interest rate index specified pursuant to Section 2.03.

 

“GAAP” means generally accepted accounting principles in the United States, as in effect from time to time.

 

“General Partner” means Exterran GP LLC, a Delaware limited liability company, and its successors and permitted assigns as general partner of the general partner of the Partnership or as the business entity with the ultimate authority to manage the business and operations of the Partnership.

 

“Global Security” means with respect to any series of Debt Securities issued hereunder, a Debt Security which is executed by the Issuers and authenticated and delivered by the Trustee to the Depositary or pursuant to the Depositary’s instruction, all in accordance with this Indenture and any indentures supplemental hereto, or resolution of the Board of Directors and set forth in an Officers’ Certificate, which shall be registered in the name of the Depositary or its nominee and which shall represent, and shall be denominated in an amount equal to the aggregate principal amount of, all the Outstanding Debt Securities of such series or any portion thereof, in either case having the same terms, including, without limitation, the same original issue date, date or dates on which principal is due and interest rate or method of determining interest.

 

“guarantee” means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Debt or other obligation of any other Person and any obligation, direct or indirect, contingent or otherwise, of such Person (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or other obligation of such other Person (whether arising by virtue of partnership arrangements, or by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise) or (b) entered into for purposes of assuring in any other manner the obligee of such Debt or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); provided, however, that the term “guarantee” shall not include endorsements for collection or deposit in the ordinary course of business.  The term “guarantee” used as a verb has a corresponding meaning.

 

“Holder,” “Holder of Debt Securities” or other similar terms means, a Person in whose name a Debt Security is registered in the Debt Security Register (as defined in Section 2.07(a)).

 

“Indenture” means this instrument as originally executed, or, if amended or supplemented as herein provided, as so amended or supplemented and shall include the form and terms of particular series of Debt Securities as contemplated hereunder, whether or not a supplemental indenture is entered into with respect thereto.

 

“Issuers” means the Partnership and Finance Corp.

 

“Issuer Order” means a written request or order signed on behalf of each of the Issuers by one of its Officers and delivered to the Trustee.

 

3

 

“Legal Holiday” means a Saturday, a Sunday or a day on which banking institutions in the City of Houston, Texas, the City of New York, New York or at a Place of Payment are authorized by law, regulation or executive order to remain closed.  If a payment date is a Legal Holiday at a Place of Payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period.

 

“Lien” means, with respect to any asset, any mortgage, lien, security interest, pledge, charge or other encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law.

 

“Officer” means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the Secretary or any Vice President of such Person (or, if such Person is a limited partnership, the general partner of such Person, except it shall be the General Partner in the case of the Partnership so long as it is a limited partnership).

 

“Officers’ Certificate” means a certificate signed on behalf of each Issuer by any two of its Officers, one of whom must be the principal executive officer, the principal financial officer or the principal accounting officer of such Issuer, that meets the requirements of Section 13.05 hereof.

 

“Opinion of Counsel” means a written opinion from legal counsel who is acceptable to the Trustee.  The counsel may be an employee of or counsel to the Partnership or the Trustee.

 

“Original Issue Discount Debt Security” means any Debt Security which provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the maturity thereof pursuant to Section 6.01.

 

“Outstanding,” when used with respect to any series of Debt Securities, means, as of the date of determination, all Debt Securities of that series theretofore authenticated and delivered under this Indenture, except:

 

(a)                                 Debt Securities of that series theretofore canceled by the Trustee or delivered to the Trustee for cancellation;

 

(b)                                 Debt Securities of that series for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any paying agent (other than an Issuer) in trust or set aside and segregated in trust by the Issuers (if an Issuer shall act as its own paying agent) for the Holders of such Debt Securities; provided, that, if such Debt Securities 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; and

 

(c)                                  Debt Securities of that series which have been paid pursuant to Section 2.09 or in exchange for or in lieu of which other Debt Securities have been authenticated and delivered pursuant to this Indenture, other than any such Debt Securities in respect of which there shall have been presented to the Trustee proof satisfactory

 

4

 

to it that such Debt Securities are held by a protected purchaser in whose hands such Debt Securities are valid obligations of the Issuers;

 

provided, however, that in determining whether the Holders of the requisite principal amount of the Outstanding Debt Securities of any series have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Debt Securities owned by either of the Issuers or any other obligor upon the Debt Securities or any Affiliate of the Partnership or of such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Debt Securities which a Trust Officer actually knows to be so owned shall be so disregarded.  Debt Securities 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 Debt Securities and that the pledgee is not an Issuer or any other obligor upon the Debt Securities or an Affiliate of the Partnership or of such other obligor.  In determining whether the Holders of the requisite principal amount of Outstanding Debt Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, the principal amount of an Original Issue Discount Debt Security that shall be deemed to be Outstanding for such purposes shall be the amount of the principal thereof that would be due and payable as of the date of such determination upon a declaration of acceleration of the maturity thereof pursuant to Section 6.01.

 

“Partnership” means the Person named as the “Partnership” in the first paragraph of this instrument until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “Partnership” shall mean such successor Person.

 

“Person” means any individual, corporation, partnership, joint venture, limited liability company, incorporated or unincorporated association, joint-stock company, trust, unincorporated organization or government or other agency or political subdivision thereof or other entity of any kind.

 

“Redemption Date,” when used with respect to any Debt Security to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture.

 

“Reporting Failure” means the failure of the Partnership to file with the Trustee the information, documents, reports, financial statements or “Management’s Discussion and Analysis of Financial Condition and Results of Operations” required by Section 4.05.

 

“Representative” means the trustee, agent or representative (if any) for an issue of Senior Indebtedness.

 

“SEC” means the Securities and Exchange Commission.

 

“Securities Act” means the Securities Act of 1933, as amended, and any successor statute.

 

“Senior Indebtedness,” unless otherwise provided with respect to the Debt Securities of a series as contemplated by Section 2.03, means (1) all Debt of the Subsidiary Guarantors or the Issuers, whether currently outstanding or hereafter issued, unless, by the terms of the instrument

 

5

 

creating or evidencing such Debt, it is provided that such Debt is subordinate or not superior in right of payment to the Debt Securities, in the case of the Issuers, or the Guarantee, in the case of the Subsidiary Guarantors, or to other Debt which is pari passu with or subordinated to the Debt Securities, in the case of the Issuers, or the Guarantee, in the case of the Subsidiary Guarantors, and (2) any modifications, refunding, deferrals, renewals, or extensions of any such Debt or securities, notes or other evidence of Debt issued in exchange for such Debt; provided that in no event shall “Senior Indebtedness” include (a) Debt evidenced by the Debt Securities or any Guarantee, (b) Debt of any of the Subsidiary Guarantors or the Issuers owed or owing to any Subsidiary of the Partnership, (c) Debt of any of the Subsidiary Guarantors owed or owing to the Issuers, (d) any liability to trade creditors, (e) any liability for taxes owed or owing by any of the Subsidiary Guarantors or the Issuers or (f) Debt of any Subsidiary Guarantor in the event there is no series of Debt Securities Outstanding that is entitled to the benefits of a Guarantee.

 

“Stated Maturity” means, with respect to any security, the date specified in such security as the fixed date on which the payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision (but excluding any provision providing for the repurchase of such security at the option of the holder thereof upon the happening of any contingency beyond the control of the issuer unless such contingency has occurred).

 

“Subsidiary” of any Person means:

 

(1)                                 any corporation, association or other business entity of which more than 50% of the total voting power of equity interests entitled, without regard to the occurrence of any contingency, to vote in the election of directors, managers, trustees or equivalent Persons 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 such Person or combination thereof; or

 

(2)                                 in the case of a partnership, more than 50% of the partners’ equity interests, considering all partners’ equity interests as a single class, is at such time of determination owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person or combination thereof.

 

“Subsidiary Guarantors” means any Subsidiary of the Partnership (except Finance Corp.) who may execute this Indenture, or a supplement hereto, for the purpose of providing a Guarantee of Debt Securities pursuant to this Indenture until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “Subsidiary Guarantors” shall mean such successor Person.

 

“TIA” means the Trust Indenture Act of 1939, as amended (15 U.S.C. §§ 77aaa-77bbbb), as in effect on the date of this Indenture as originally executed and, to the extent required by law, as amended.

 

“Trustee” initially means                                        and any other Person or Persons appointed as such from time to time pursuant to Section 7.08, and, subject to the provisions of Article VII, includes its or their successors and assigns.  If at any time there is more than one

 

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such Person, “Trustee” as used with respect to the Debt Securities of any series shall mean the Trustee with respect to the Debt Securities of that series.

 

“Trust Officer” means any officer or assistant officer of the Trustee assigned by the Trustee to administer its corporate trust matters.

 

“United States” means the United States of America (including the States and the District of Columbia), its territories, its possessions and other areas subject to its jurisdiction.

 

“U.S. Government Obligations” means direct obligations of the United States of America, obligations on which the payment of principal and interest is fully guaranteed by the United States of America or obligations or guarantees for the payment of which the full faith and credit of the United States of America is pledged.

 

“Yield to Maturity” means the yield to maturity, calculated at the time of issuance of a series of Debt Securities, or, if applicable, at the most recent redetermination of interest on such series and calculated in accordance with accepted financial practice.

 

Section 1.02          Other Definitions.

 

	
Term
    	
 
    	
Defined in Section
    
	
“Debt   Security Register”
    	
 
    	
2.07
    
	
“Defaulted   Interest”
    	
 
    	
2.17
    
	
“Event   of Default”
    	
 
    	
6.01
    
	
“Funding   Guarantor”
    	
 
    	
14.05
    
	
“Guarantee”
    	
 
    	
14.01
    
	
“Place   of Payment”
    	
 
    	
2.03
    
	
“Registrar”
    	
 
    	
2.07
    
	
“Subordinated   Debt Securities”
    	
 
    	
12.01
    
	
“Successor   Company”
    	
 
    	
10.01
    

 

Section 1.03          Incorporation by Reference of Trust Indenture Act.  Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture.

 

All terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule under the TIA have the meanings so assigned to them.

 

Section 1.04          Rules of Construction.  Unless the context otherwise requires:

 

(a)           a term has the meaning assigned to it;

 

(b)           an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;

 

(c)           “or” is not exclusive;

 

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(d)           words in the singular include the plural, and in the plural include the singular;

 

(e)           provisions apply to successive events and transactions;

 

(f)            if the applicable series of Debt Securities are subordinated pursuant to Article XII, unsecured Debt shall not be deemed to be subordinate or junior to secured Debt merely by virtue of its nature as unsecured Debt; and

 

(g)           the principal amount of any noninterest bearing or other discount security at any date shall be the principal amount thereof that would be shown on a balance sheet of the issuer dated such date prepared in accordance with GAAP.

 

ARTICLE II
 DEBT SECURITIES

 

Section 2.01          Forms Generally.  The Debt Securities of each series shall be in substantially the form established without the approval of any Holder by or pursuant to a resolution of the Board of Directors of each Issuer or in one or more indentures supplemental hereto, in each case 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 the Issuers may deem appropriate (and, if not contained in a supplemental indenture entered into in accordance with Article IX, as are not prohibited by the provisions of this Indenture) or as may be required or appropriate to comply with any law or with any rules made pursuant thereto or with any rules of any securities exchange on which such series of Debt Securities may be listed, or to conform to general usage, or as may, consistently herewith, be determined by the officers executing such Debt Securities as evidenced by their execution of the Debt Securities.

 

The definitive Debt Securities of each series shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the Officers executing such Debt Securities, as evidenced by their execution of such Debt Securities.

 

Section 2.02          Form of Trustee’s Certificate of Authentication.  The Trustee’s certificate of authentication on all Debt Securities authenticated by the Trustee shall be in substantially the following form:

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

 

This is one of the Debt Securities of the series designated therein referred to in the within-mentioned Indenture.

 

	
 
    	
                                  ,
    
	
 
    	
As   Trustee
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Authorized   Signatory
    
				

 

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Section 2.03          Principal Amount; Issuable in Series.  The aggregate principal amount of Debt Securities which may be issued, executed, authenticated, delivered and outstanding under this Indenture is unlimited.

 

The Debt Securities may be issued in one or more series in fully registered form.  There shall be established, without the approval of any Holders, in or pursuant to a resolution of the Board of Directors of each Issuer and set forth in an Officers’ Certificate, or established in one or more indentures supplemental hereto, prior to the issuance of Debt Securities of any series any or all of the following:

 

(a)           the title of the Debt Securities of the series (which shall distinguish the Debt Securities of the series from all other Debt Securities);

 

(b)           any limit upon the aggregate principal amount of the Debt Securities of the series which may be authenticated and delivered under this Indenture (except for Debt Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Debt Securities of the series pursuant to this Article II);

 

(c)           the date or dates on which the principal of and premium, if any, on the Debt Securities of the series are payable;

 

(d)           the rate or rates (which may be fixed or variable) at which the Debt Securities of the series shall bear interest, if any, or the method of determining such rate or rates, the date or dates from which such interest shall accrue, the interest payment dates on which such interest shall be payable, or the method by which such date will be determined, the record dates for the determination of Holders thereof to whom such interest is payable; and the basis upon which interest will be calculated if other than that of a 360-day year of twelve thirty-day months;

 

(e)           the place or places, if any, in addition to or instead of the corporate trust office of the Trustee, where the principal of, and premium, if any, and interest on, Debt Securities of the series shall be payable (“Place of Payment”);

 

(f)            the price or prices at which, the period or periods within which and the terms and conditions upon which Debt Securities of the series may be redeemed, in whole or in part, at the option of the Issuers or otherwise;

 

(g)           whether Debt Securities of the series are entitled to the benefits of any Guarantee of any Subsidiary Guarantors pursuant to this Indenture;

 

(h)           the obligation, if any, of the Issuers to redeem, purchase or repay Debt Securities of the series pursuant to any sinking fund or analogous provisions or at the option of a Holder thereof, and the price or prices at which and the period or periods within which and the terms and conditions upon which Debt Securities of the series shall be redeemed, purchased or repaid, in whole or in part, pursuant to such obligations;

 

(i)            the terms, if any, upon which the Debt Securities of the series may be convertible into or exchanged for capital stock (which may be represented by depositary shares), other Debt Securities or warrants for capital stock or Debt or other securities of any kind of either of the

 

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Issuers or any other obligor and the terms and conditions upon which such conversion or exchange shall be effected, including the initial conversion or exchange price or rate, the conversion or exchange period and any other provision in addition to or in lieu of those described herein;

 

(j)            if other than denominations of $1,000 and any integral multiple thereof, the denominations in which Debt Securities of the series shall be issuable;

 

(k)           if the amount of principal of or any premium or interest on Debt Securities of the series may be determined with reference to an index or pursuant to a formula, the manner in which such amounts will be determined;

 

(l)            if the principal amount payable at the Stated Maturity of Debt Securities of the series will not be determinable as of any one or more dates prior to such Stated Maturity, the amount which will be deemed to be such principal amount as of any such date for any purpose, including the principal amount thereof which will be due and payable upon any maturity other than the Stated Maturity or which will be deemed to be Outstanding as of any such date (or, in any such case, the manner in which such deemed principal amount is to be determined);

 

(m)          any changes or additions to Article XI, including the addition of additional covenants that may be subject to the covenant defeasance option pursuant to Section 11.02(b);

 

(n)           if other than the principal amount thereof, the portion of the principal amount of Debt Securities of the series which shall be payable upon declaration of acceleration of the maturity thereof pursuant to Section 6.01 or provable in bankruptcy pursuant to Section 6.02;

 

(o)           the terms, if any, of the transfer, mortgage, pledge or assignment as security for the Debt Securities of the series of any properties, assets, moneys, proceeds, securities or other collateral, including whether certain provisions of the TIA are applicable and any corresponding changes to provisions of this Indenture as currently in effect;

 

(p)           any addition to or change in the Events of Default with respect to the Debt Securities of the series and any change in the right of the Trustee or the Holders to declare the principal of, and premium and interest on, such Debt Securities due and payable;

 

(q)           if the Debt Securities of the series shall be issued in whole or in part in the form of a Global Security or Securities, the terms and conditions, if any, upon which such Global Security or Securities may be exchanged in whole or in part for other individual Debt Securities in definitive registered form; and the Depositary for such Global Security or Securities and the form of any legend or legends to be borne by any such Global Security or Securities in addition to or in lieu of the legend referred to in Section 2.15(a);

 

(r)            any trustees, authenticating or paying agents, transfer agents or registrars;

 

(s)            the applicability of, and any addition to or change in the covenants and definitions currently set forth in this Indenture or in the terms currently set forth in Article X, including conditioning any merger, conveyance, transfer or lease permitted by Article X upon the

 

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satisfaction of any Debt coverage standard by the Issuers and Successor Company (as defined in Article X);

 

(t)            the subordination, if any, of the Debt Securities of the series pursuant to Article XII and any changes or additions to Article XII or designation of any Designated Senior Indebtedness;

 

(u)           with regard to Debt Securities of the series that do not bear interest, the dates for certain required reports to the Trustee; and

 

(v)           any other terms of the Debt Securities of the series (which terms shall not be prohibited by the provisions of this Indenture).

 

All Debt Securities of any one series shall be substantially identical except as to denomination and except as may otherwise be provided in or pursuant to such resolution of the Board of Directors and as set forth in such Officers’ Certificate or in any such indenture supplemental hereto.

 

Section 2.04          Execution of Debt Securities.  The Debt Securities shall be signed on behalf of each of the Issuers by at least one of its Officers.  Such signatures upon the Debt Securities may be the manual or facsimile signatures of the present or any future such authorized officers and may be imprinted or otherwise reproduced on the Debt Securities.

 

Only such Debt Securities as shall bear thereon a certificate of authentication substantially in the form hereinbefore recited, signed manually by the Trustee, shall be entitled to the benefits of this Indenture or be valid or obligatory for any purpose.  Such certificate by the Trustee upon any Debt Security executed on behalf of each of the Issuers by at least one of its Officers shall be conclusive evidence that the Debt Security so authenticated has been duly authenticated and delivered hereunder.

 

In case any Officer of either Issuer who shall have signed any of the Debt Securities shall cease to be such Officer before the Debt Securities so signed shall have been authenticated and delivered by the Trustee, or disposed of by the Issuers, such Debt Securities nevertheless may be authenticated and delivered or disposed of as though the Person who signed such Debt Securities had not ceased to be such Officer; and any Debt Security may be signed on behalf of either Issuer by such Persons as, at the actual date of the execution of such Debt Security, shall be the proper Officers of such Issuer, although at the date of such Debt Security or of the execution of this Indenture any such Person was not such Officer.

 

Section 2.05          Authentication and Delivery of Debt Securities.  At any time and from time to time after the execution and delivery of this Indenture, the Issuers may deliver to the Trustee for authentication Debt Securities of any series executed by the Issuers, and the Trustee shall thereupon authenticate and deliver said Debt Securities to or upon an Issuer Order.  In authenticating such Debt Securities, and accepting the additional responsibilities under this Indenture in relation to such Debt Securities, the Trustee shall be entitled to receive, and (subject to Section 7.01) shall be fully protected in relying upon:

 

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(a)           a copy of any resolution or resolutions of the Board of Directors of each Issuer, certified by the Secretary or Assistant Secretary of each of the General Partner and Finance Corp., authorizing the terms of issuance of any series of Debt Securities;

 

(b)           an executed supplemental indenture, if any;

 

(c)           an Officers’ Certificate; and

 

(d)           an Opinion of Counsel prepared in accordance with Section 13.05 which shall also state:

 

(i)           that the form of such Debt Securities has been established by or pursuant to a resolution of the Board of Directors of each Issuer or by a supplemental indenture as permitted by Section 2.01 in conformity with the provisions of this Indenture;

 

(ii)          that the terms of such Debt Securities have been established by or pursuant to a resolution of the Board of Directors or by a supplemental indenture as permitted by Section 2.03 in conformity with the provisions of this Indenture;

 

(iii)         that such Debt Securities, when authenticated and delivered by the Trustee and issued by the Issuers in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and legally binding obligations of the Issuers, enforceable in accordance with their terms except as the enforceability thereof may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally and rights of acceleration and the availability of equitable remedies may be limited by equitable principles of general applicability;

 

(iv)        that the Issuers have the power to issue such Debt Securities and has duly taken all necessary action with respect to such issuance;

 

(v)         that the issuance of such Debt Securities will not contravene the organizational documents of the Issuers or result in any material violation of any of the terms or provisions of any law or regulation or of any material indenture, mortgage or other agreement known to such counsel by which the Issuers are bound;

 

(vi)        that authentication and delivery of such Debt Securities and the execution and delivery of any supplemental indenture will not violate the terms of this Indenture; and

 

(vii)       such other matters as the Trustee may reasonably request.

 

Such Opinion of Counsel need express no opinion as to whether a court in the United States would render a money judgment in a currency other than that of the United States.

 

The Trustee shall have the right to decline to authenticate and deliver any Debt Securities under this Section 2.05 if the Trustee, being advised by counsel, determines that such action may not lawfully be taken or if the Trustee in good faith by its board of directors or trustees, executive committee or a trust committee of directors, trustees or Officers (or any combination

 

12

 

thereof) shall determine that such action would expose the Trustee to personal liability to existing Holders.

 

The Trustee may appoint an authenticating agent reasonably acceptable to the Issuers to authenticate Debt Securities of any series.  Unless limited by the terms of such appointment, an authenticating agent may authenticate Debt Securities whenever the Trustee may do so.  Each reference in this Indenture to authentication by the Trustee includes authentication by such agent.  An authenticating agent has the same rights as any Registrar, paying agent or agent for service of notices and demands.

 

Unless otherwise provided in the form of Debt Security for any series, each Debt Security shall be dated the date of its authentication.

 

Section 2.06          Denomination of Debt Securities.  Unless otherwise provided in the form of Debt Security for any series, the Debt Securities of each series shall be issuable only as fully registered Debt Securities in such Dollar denominations as shall be specified or contemplated by Section 2.03.  In the absence of any such specification with respect to the Debt Securities of any series, the Debt Securities of such series shall be issuable in denominations of $1,000 and any integral multiple thereof.

 

Section 2.07          Registration of Transfer and Exchange.

 

(a)           The Issuers shall keep or cause to be kept a register for each series of Debt Securities issued hereunder (hereinafter collectively referred to as the “Debt Security Register”), in which, subject to such reasonable regulations as it may prescribe, the Issuers shall provide for the registration of all Debt Securities and the registration of transfer and exchange of Debt Securities as in this Article II provided.  At all reasonable times the Debt Security Register shall be open for inspection by the Trustee.  Subject to Section 2.15, upon due presentment for registration of transfer of any Debt Security at any office or agency to be maintained by the Issuers in accordance with the provisions of Section 4.02, the Issuers shall execute and the Trustee shall authenticate and deliver in the name of the transferee or transferees a new Debt Security or Debt Securities of authorized denominations for a like aggregate principal amount.  In no event may Debt Securities be issued as, or exchanged for, bearer securities.

 

Unless and until otherwise determined by the Issuers by resolutions of each Issuer’s Board of Directors, the Debt Security Register shall be kept at the corporate trust office of the Trustee referred to in Section 13.03 and, for this purpose, the Trustee referred to in Section 13.03 shall be designated “Registrar.”

 

Debt Securities of any series (other than a Global Security, except as set forth below) may be exchanged for a like aggregate principal amount of Debt Securities of the same series of other authorized denominations.  Subject to Section 2.15, Debt Securities to be exchanged shall be surrendered at the office or agency to be maintained by the Issuers as provided in Section 4.02, and the Issuers shall execute and the Trustee shall authenticate and deliver in exchange therefor the Debt Security or Debt Securities which the Holder making the exchange shall be entitled to receive.

 

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(b)           All Debt Securities presented or surrendered for registration of transfer, exchange or payment shall (if so required by the Issuers, the Trustee or the Registrar) be duly endorsed or be accompanied by a written instrument or instruments of transfer, in form satisfactory to the Issuers, the Trustee and the Registrar, duly executed by the Holder or his attorney duly authorized in writing.

 

All Debt Securities issued in exchange for or upon registration of transfer of Debt Securities shall be the valid obligations of the Issuers, evidencing the same debt, and entitled to the same benefits under this Indenture as the Debt Securities surrendered for such exchange or transfer.

 

No service charge shall be made for any exchange or registration of transfer of Debt Securities (except as provided by Section 2.09), but the Issuers may require payment of a sum sufficient to cover any tax, fee, assessment or other governmental charge that may be imposed in relation thereto, other than those expressly provided in this Indenture to be made at the Issuers’ own expense or without expense or without charge to the Holders.

 

The Issuers shall not be required to (i) issue, register the transfer of or exchange any Debt Securities for a period of 15 days next preceding any mailing of notice of redemption of Debt Securities of such series or (ii) register the transfer of or exchange any Debt Securities selected, called or being called for redemption; except the portion of any such Debt Security not so selected or called.

 

Prior to the due presentation for registration of transfer of any Debt Security, the Issuers, the Subsidiary Guarantors, the Trustee, any paying agent or any Registrar may deem and treat the Person in whose name a Debt Security is registered as the absolute owner of such Debt Security for the purpose of receiving payment of or on account of the principal of, and premium, if any, and (subject to Section 2.12) interest on, such Debt Security and for all other purposes whatsoever, whether or not such Debt Security is overdue, and none of the Issuers, the Subsidiary Guarantors, the Trustee, any paying agent or any Registrar shall be affected by notice to the contrary.

 

None of the Issuers, the Subsidiary Guarantors, the Trustee, any agent of the Trustee, any paying agent or any Registrar will have any responsibility or liability for any aspect of the records relating to, or payments made on account of, beneficial ownership interests of a Global Security or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests.

 

Section 2.08          Temporary Debt Securities.  Pending the preparation of definitive Debt Securities of any series, the Issuers may execute and the Trustee shall authenticate and deliver temporary Debt Securities (printed, lithographed, photocopied, typewritten or otherwise produced) of any authorized denomination, and substantially in the form of the definitive Debt Securities in lieu of which they are issued, in registered form with such omissions, insertions and variations as may be appropriate for temporary Debt Securities, all as may be determined by the Issuers with the concurrence of the Trustee.  Temporary Debt Securities may contain such reference to any provisions of this Indenture as may be appropriate.  Every temporary Debt Security shall be executed by the Issuers and be authenticated by the Trustee upon the same

 

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conditions and in substantially the same manner, and with like effect, as the definitive Debt Securities.

 

If temporary Debt Securities of any series are issued, the Issuers will cause definitive Debt Securities of such series to be prepared without unreasonable delay.  After the preparation of definitive Debt Securities of such series, the temporary Debt Securities of such series shall be exchangeable for definitive Debt Securities of such series upon surrender of the temporary Debt Securities of such series at the office or agency of the Issuers at a Place of Payment for such series, without charge to the Holder thereof, except as provided in Section 2.07 in connection with a transfer. Upon surrender for cancellation of any one or more temporary Debt Securities of any series, the Issuers shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Debt Securities of the same series of authorized denominations and of like tenor.  Until so exchanged, temporary Debt Securities of any series shall in all respects be entitled to the same benefits under this Indenture as definitive Debt Securities of such series.

 

Upon any exchange of a portion of a temporary Global Security for a definitive Global Security or for the individual Debt Securities represented thereby pursuant to Section 2.07 or this Section 2.08, the temporary Global Security shall be endorsed by the Trustee to reflect the reduction of the principal amount evidenced thereby, whereupon the principal amount of such temporary Global Security shall be reduced for all purposes by the amount to be exchanged and endorsed.

 

Section 2.09          Mutilated, Destroyed, Lost or Stolen Debt Securities.  If (a) any mutilated Debt Security is surrendered to the Trustee at its corporate trust office or (b) the Issuers and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Debt Security, and there is delivered to the Issuers and the Trustee such security or indemnity as may be required by them to save each of them and any paying agent harmless, and neither the Issuers nor the Trustee receives notice that such Debt Security has been acquired by a protected purchaser, then the Issuers shall execute and, upon an Issuer Order, the Trustee shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Debt Security, a new Debt Security of the same series of like tenor, form, terms and principal amount, bearing a number not contemporaneously Outstanding.  Upon the issuance of any substituted Debt Security, the Issuers or the Trustee may require the payment of a sum sufficient to cover any tax, fee, assessment or other governmental charge that may be imposed in relation thereto and any other expenses connected therewith.  In case any Debt Security which has matured or is about to mature or which has been called for redemption shall become mutilated or be destroyed, lost or stolen, the Issuers may, instead of issuing a substituted Debt Security, pay or authorize the payment of the same (without surrender thereof except in the case of a mutilated Debt Security) if the applicant for such payment shall furnish the Issuers and the Trustee with such security or indemnity as either may require to save it harmless from all risk, however remote, and, in case of destruction, loss or theft, evidence to the satisfaction of the Issuers and the Trustee of the destruction, loss or theft of such Debt Security and of the ownership thereof.

 

Every substituted Debt Security of any series issued pursuant to the provisions of this Section 2.09 by virtue of the fact that any Debt Security is destroyed, lost or stolen shall constitute an original additional contractual obligation of the Issuers, whether or not the

 

15

 

destroyed, lost or stolen Debt Security shall be found at any time, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Debt Securities of that series duly issued hereunder.  All Debt Securities shall be held and owned upon the express condition that the foregoing provisions are exclusive with respect to the replacement or payment of mutilated, destroyed, lost or stolen Debt Securities, and shall preclude any and all other rights or remedies, notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement or payment of negotiable instruments or other securities without their surrender.

 

Section 2.10          Cancellation of Surrendered Debt Securities.  All Debt Securities surrendered for payment, redemption, registration of transfer or exchange shall, if surrendered to an Issuer or any paying agent or a Registrar, be delivered to the Trustee for cancellation by it, or if surrendered to the Trustee, shall be canceled by it, and no Debt Securities shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Indenture.  All canceled Debt Securities held by the Trustee shall be destroyed (subject to the record retention requirements of the Exchange Act) and certification of their destruction delivered to the Issuers, unless otherwise directed.  On request of the Issuers, the Trustee shall deliver to the Issuers canceled Debt Securities held by the Trustee.  If either of the Issuers shall acquire any of the Debt Securities, however, such acquisition shall not operate as a redemption or satisfaction of the Debt represented thereby unless and until the same are delivered or surrendered to the Trustee for cancellation.  The Issuers may not issue new Debt Securities to replace Debt Securities that have been redeemed, paid or delivered to the Trustee for cancellation.

 

Section 2.11          Provisions of the Indenture and Debt Securities for the Sole Benefit of the Parties and the Holders.  Nothing in this Indenture or in the Debt Securities, expressed or implied, shall give or be construed to give to any Person, other than the parties hereto, the holders of any Senior Indebtedness, the Holders or any Registrar or paying agent, any legal or equitable right, remedy or claim under or in respect of this Indenture, or under any covenant, condition or provision herein contained; all its covenants, conditions and provisions being for the sole benefit of the parties hereto, the Holders and any Registrar and paying agents.

 

Section 2.12          Payment of Interest; Interest Rights Preserved.

 

(a)           Interest on any Debt Security that is payable and is punctually paid or duly provided for on any interest payment date shall be paid to the Person in whose name such Debt Security is registered at the close of business on the regular record date for such interest notwithstanding the cancellation of such Debt Security upon any transfer or exchange subsequent to the regular record date.  Payment of interest on Debt Securities shall be made at the corporate trust office of the Trustee specified in Section 13.03 (except as otherwise specified pursuant to Section 2.03), or at the option of the Issuers, by check mailed to the address of the Person entitled thereto as such address shall appear in the Debt Security Register or, if provided pursuant to Section 2.03 and in accordance with arrangements satisfactory to the Trustee, at the option of the Holder by wire transfer to an account designated by the Holder.

 

(b)           Subject to the foregoing provisions of this Section 2.12 and Section 2.17, each Debt Security of a particular series delivered under this Indenture upon registration of transfer of

 

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or in exchange for or in lieu of any other Debt Security of the same series shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Debt Security.

 

Section 2.13          Securities Denominated in Dollars.  Except as otherwise specified pursuant to Section 2.03 for Debt Securities of any series, payment of the principal of, and premium, if any, and interest on, Debt Securities of such series will be made in Dollars.

 

Section 2.14          Wire Transfers.  Notwithstanding any other provision to the contrary in this Indenture, the Issuers may make any payment of moneys required to be deposited with the Trustee on account of principal of, or premium, if any, or interest on, the Debt Securities (whether pursuant to optional or mandatory redemption payments, interest payments or otherwise) by wire transfer in immediately available funds to an account designated by the Trustee before 11:00 a.m., New York City time, on the date such moneys are to be paid to the Holders of the Debt Securities in accordance with the terms hereof.

 

Section 2.15          Securities Issuable in the Form of a Global Security.

 

(a)           If the Issuers shall establish pursuant to Sections 2.01 and 2.03 that the Debt Securities of a particular series are to be issued in whole or in part in the form of one or more Global Securities, then the Issuers shall execute and the Trustee or its agent shall, in accordance with Section 2.05, authenticate and deliver, such Global Security or Securities, which shall represent, and shall be denominated in an amount equal to the aggregate principal amount of, the Outstanding Debt Securities of such series to be represented by such Global Security or Securities, or such portion thereof as the Issuers shall specify in an Officers’ Certificate,  shall be registered in the name of the Depositary for such Global Security or Securities or its nominee,  shall be delivered by the Trustee or its agent to the Depositary or pursuant to the Depositary’s instruction and shall bear a legend substantially to the following effect:

 

“UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THE ISSUERS OR THEIR AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

 

TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO HEREIN.”

 

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or such other legend as may then be required by the Depositary for such Global Security or Securities.

 

(b)           Notwithstanding any other provision of this Section 2.15 or of Section 2.07 to the contrary, and subject to the provisions of paragraph (c) below, unless the terms of a Global Security expressly permit such Global Security to be exchanged in whole or in part for definitive Debt Securities in registered form, a Global Security may be transferred, in whole but not in part and in the manner provided in Section 2.07, only by the Depositary to a nominee of the Depositary for such Global Security, or by a nominee of the Depositary to the Depositary or another nominee of the Depositary, or by the Depositary or a nominee of the Depositary to a successor Depositary for such Global Security selected or approved by the Issuers, or to a nominee of such successor Depositary.

 

(c)           (i)            If at any time the Depositary for a Global Security or Securities notifies the Issuers that it is unwilling or unable to continue as Depositary for such Global Security or Securities or if at any time the Depositary for the Debt Securities for such series shall no longer be eligible or in good standing under the Exchange Act or other applicable statute, rule or regulation, the Issuers shall appoint a successor Depositary with respect to such Global Security or Securities.  If a successor Depositary for such Global Security or Securities is not appointed by the Issuers within 90 days after the Issuers receive such notice or become aware of such ineligibility, the Issuers shall execute, and the Trustee or its agent, upon receipt of an Issuer Order for the authentication and delivery of such individual Debt Securities of such series in exchange for such Global Security or Securities, will authenticate and deliver, individual Debt Securities of such series of like tenor and terms in definitive form in an aggregate principal amount equal to the principal amount of the Global Security or Securities in exchange for such Global Security or Securities.

 

(ii)          If an Event of Default occurs and the Depositary for a Global Security or Securities notifies the Trustee of its decision to require that the Debt Securities of any series or portion thereof issued or issuable in the form of one or more Global Securities shall no longer be represented by such Global Security or Securities, the Issuers shall appoint a successor Depositary with respect to such Global Security or Securities.  In such event the Issuers will execute, and the Trustee, upon receipt of an Issuer Order for the authentication and delivery of individual Debt Securities of such series in exchange in whole or in part for such Global Security or Securities, will authenticate and deliver individual Debt Securities of such series of like tenor and terms in definitive form in an aggregate principal amount equal to the principal amount of such series or portion thereof in exchange for such Global Security or Securities.

 

(iii)         If specified by the Issuers pursuant to Sections 2.01 and 2.03 with respect to Debt Securities issued or issuable in the form of a Global Security, the Depositary for such Global Security may surrender such Global Security in exchange in whole or in part for individual Debt Securities of such series of like tenor and terms in definitive form on such terms as are acceptable to the Issuers, the Trustee and such Depositary.  Thereupon the Issuers shall execute, and the Trustee or its agent upon receipt of an Issuer Order for the authentication and delivery of definitive Debt Securities of such series shall authenticate and deliver, without service charge,  to each Person specified by such

 

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Depositary a new Debt Security or Securities of the same series of like tenor and terms and of any authorized denomination as requested by such Person in aggregate principal amount equal to and in exchange for such Person’s beneficial interest in the Global Security; and to such Depositary a new Global Security of like tenor and terms and in an authorized denomination equal to the difference, if any, between the principal amount of the surrendered Global Security and the aggregate principal amount of Debt Securities delivered to Holders thereof.

 

(iv)        In any exchange provided for in any of the preceding three paragraphs, the Issuers will execute and the Trustee or its agent will authenticate and deliver individual Debt Securities. Upon the exchange of the entire principal amount of a Global Security for individual Debt Securities, such Global Security shall be canceled by the Trustee or its agent.  Except as provided in the preceding paragraph, Debt Securities issued in exchange for a Global Security pursuant to this Section 2.15 shall be registered in such names and in such authorized denominations as the Depositary for such Global Security, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee or the Registrar.  The Trustee or the Registrar shall deliver such Debt Securities to the Persons in whose names such Debt Securities are so registered.

 

(v)         Payments in respect of the principal of, premium, if any, and interest on any Debt Securities registered in the name of the Depositary or its nominee will be payable to the Depositary or such nominee in its capacity as the registered owner of such Global Security.  The Issuers, any Subsidiary Guarantors and the Trustee may treat the Person in whose name the Debt Securities, including the Global Security, are registered as the owner thereof for the purpose of receiving such payments and for any and all other purposes whatsoever.  None of the Issuers, any Subsidiary Guarantors, the Trustee, any Registrar, the paying agent or any other agent of the Issuers, any Subsidiary Guarantors or the Trustee will have any responsibility or liability for any aspect of the records relating to or payments made on account of the beneficial ownership interests of the Global Security by the Depositary or its nominee or any of the Depositary’s direct or indirect participants, or for maintaining, supervising or reviewing any records of the Depositary, its nominee or any of its direct or indirect participants relating to the beneficial ownership interests of the Global Security,  the payments to the beneficial owners of the Global Security of amounts paid to the Depositary or its nominee, or any other matter relating to the actions and practices of the Depositary, its nominee or any of its direct or indirect participants.  None of the Issuers, any Subsidiary Guarantors, the Trustee or any such agent will be liable for any delay by the Depositary, its nominee, or any of its direct or indirect participants in identifying the beneficial owners of the Debt Securities, and the Issuers, any Subsidiary Guarantors, the Trustee and any such agents may conclusively rely on, and will be protected in relying on, instructions from the Depositary or its nominee for all purposes (including with respect to the registration and delivery, and the respective principal amounts, of the Debt Securities to be issued).

 

Section 2.16          Medium Term Securities.  Notwithstanding any contrary provision herein, if all Debt Securities of a series are not to be originally issued at one time, it shall not be necessary for either of the Issuers to deliver to the Trustee an Officers’ Certificate, resolutions of each such Issuer’s Board of Directors, supplemental indenture, Opinion of Counsel or written

 

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order or any other document otherwise required pursuant to Section 2.01, 2.03, 2.05 or 13.05 at or prior to the time of authentication of each Debt Security of such series if such documents are delivered to the Trustee or its agent at or prior to the authentication upon original issuance of the first such Debt Security of such series to be issued; provided, that any subsequent request by the Issuers to the Trustee to authenticate Debt Securities of such series upon original issuance shall constitute a representation and warranty by the Issuers that, as of the date of such request, the statements made in the Officers’ Certificate delivered pursuant to Section 2.05 or 13.05 shall be true and correct as if made on such date and that the Opinion of Counsel delivered at or prior to such time of authentication of an original issuance of Debt Securities shall specifically state that it shall relate to all subsequent issuances of Debt Securities of such series that are identical to the Debt Securities issued in the first issuance of Debt Securities of such series.

 

An Issuer Order delivered by the Issuers to the Trustee in the circumstances set forth in the preceding paragraph, may provide that Debt Securities which are the subject thereof will be authenticated and delivered by the Trustee or its agent on original issue from time to time upon the telephonic or written order of Persons designated in such written order (any such telephonic instructions to be promptly confirmed in writing by such Person) and that such Persons are authorized to determine, consistent with the Officers’ Certificate, supplemental indenture or resolution of the Board of Directors relating to such written order, such terms and conditions of such Debt Securities as are specified in such Officers’ Certificate, supplemental indenture or such resolution.

 

Section 2.17          Defaulted Interest.  Any interest on any Debt Security of a particular series which is payable, but is not punctually paid or duly provided for, on the dates and in the manner provided in the Debt Securities of such series and in this Indenture (herein called “Defaulted Interest”) shall forthwith cease to be payable to the Holder thereof on the relevant record date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Issuers, at their election in each case, as provided in clause (i) or (ii) below:

 

(i)           The Issuers may elect to make payment of any Defaulted Interest to the Persons in whose names the Debt Securities of such series 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 Issuers shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each such Debt Security of such series and the date of the proposed payment, and at the same time the Issuers 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 date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment.  The Trustee shall promptly notify the Issuers of such special record date and, in the name and at the expense of the Issuers, shall cause notice of the proposed payment of such Defaulted Interest and the special record date therefor to be mailed, first class postage pre-paid, to each Holder thereof at its address as it appears in the Debt Security Register, not less than

 

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10 days prior to such special record date.  Notice of the proposed payment of such Defaulted Interest and the special record date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Debt Securities of such series are registered at the close of business on such special record date.

 

(ii)          The Issuers may make payment of any Defaulted Interest on the Debt Securities of such series in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Debt Securities of such series may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Issuers to the Trustee of the proposed payment pursuant to this clause, such manner of payment shall be deemed practicable by the Trustee.

 

Section 2.18          CUSIP and ISIN Numbers.  The Issuers in issuing the Debt Securities may use “CUSIP” and “ISIN” numbers (if then generally in use), and, if so, the Trustee shall use such numbers in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is made as to the accuracy of such numbers either as printed on the Debt Securities or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Debt Securities, and any such redemption shall not be affected by any defect in or omission of such numbers.  The Issuers will promptly notify the Trustee in writing of any change in the “CUSIP” or “ISIN” numbers.

 

ARTICLE III

REDEMPTION OF DEBT SECURITIES

 

Section 3.01          Applicability of Article.  The provisions of this Article shall be applicable to the Debt Securities of any series which are redeemable before their Stated Maturity except as otherwise specified as contemplated by Section 2.03 for Debt Securities of such series.

 

Section 3.02          Notice of Redemption; Selection of Debt Securities.  In case the Issuers shall desire to exercise the right to redeem all or, as the case may be, any part of the Debt Securities of any series in accordance with their terms, by resolution of the Board of Directors of each Issuer or a supplemental indenture, the Issuers shall fix a date for redemption and shall give notice of such redemption at least 30 and not more than 60 days prior to the date fixed for redemption to the Holders of Debt Securities of such series so to be redeemed as a whole or in part, in the manner provided in Section 13.03.  The notice if given in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the Holder receives such notice.  In any case, failure to give such notice or any defect in the notice to the Holder of any Debt Security of a series designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Debt Security of such series.

 

Each such notice of redemption shall specify (i) the date fixed for redemption, (ii) the redemption price at which Debt Securities of such series are to be redeemed (or the method of calculating such redemption price), (iii) the Place or Places of Payment that payment will be made upon presentation and surrender of such Debt Securities, (iv) that any interest accrued to the date fixed for redemption will be paid as specified in said notice, (v) that the redemption is for a sinking fund payment (if applicable), (vi) that, unless otherwise specified in such notice, if the Issuers default in making such redemption payment or if such payment is prohibited by the

 

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terms of Article XII, the paying agent is prohibited from making such payment pursuant to the terms of this Indenture, (vii) that on and after said date any interest thereon or on the portions thereof to be redeemed will cease to accrue, (viii) that in the case of Original Issue Discount Securities original issue discount accrued after the date fixed for redemption will cease to accrue, (ix) the terms of the Debt Securities of that series pursuant to which the Debt Securities of that series are being redeemed and (x) that no representation is made as to the correctness or accuracy of any CUSIP or ISIN number, if any, listed in such notice or printed on the Debt Securities of that series.  If less than all the Debt Securities of a series are to be redeemed the notice of redemption shall specify the certificate numbers of any Debt Securities of that series to be redeemed that are not in global form.  In case any Debt Security of a series is to be redeemed in part only, the notice of redemption shall state the portion of the principal amount thereof to be redeemed and shall state that on and after the date fixed for redemption, upon surrender of such Debt Security, a new Debt Security or Debt Securities of that series in principal amount equal to the unredeemed portion thereof, will be issued.

 

At least five days before the giving of any notice of redemption, unless the Trustee consents to a shorter period, the Issuers shall give written notice to the Trustee of the Redemption Date, the principal amount of Debt Securities to be redeemed and the series and terms of the Debt Securities pursuant to which such redemption will occur.  Such notice shall be accompanied by an Officers’ Certificate and an Opinion of Counsel from the Issuers to the effect that such redemption will comply with the conditions herein, and such notice may be revoked at any time prior to the giving of a notice of redemption to the Holders pursuant to this Section 3.02.  If fewer than all the Debt Securities of a series are to be redeemed, the record date relating to such redemption shall be selected by the Issuers and given in writing to the Trustee, which record date shall be not less than three days after the date of notice to the Trustee.

 

By 11 a.m., New York City time, on the Redemption Date for any Debt Securities, the Issuers shall deposit with the Trustee or with a paying agent (or, if an Issuer is acting as its own paying agent, segregate and hold in trust) an amount of money in Dollars (except as provided pursuant to Section 2.03) sufficient to pay the redemption price of such Debt Securities or any portions thereof that are to be redeemed on that date, together with any interest accrued to the Redemption Date.

 

If less than all the Debt Securities of like tenor and terms of a series are to be redeemed (other than pursuant to mandatory sinking fund redemptions), the Trustee shall select, on a pro rata basis, by lot or by such other method as in its sole discretion it shall deem appropriate and fair, the Debt Securities of that series or portions thereof (in multiples of $1,000) to be redeemed.  In any case where more than one Debt Security of such series is registered in the same name, the Trustee in its discretion may treat the aggregate principal amount so registered as if it were represented by one Debt Security of such series.  The Trustee shall promptly notify the Issuers in writing of the Debt Securities selected for redemption and, in the case of any Debt Securities selected for partial redemption, the principal amount thereof to be redeemed.  If any Debt Security called for redemption shall not be so paid upon surrender thereof on such Redemption Date, the principal, premium, if any, and interest shall bear interest until paid from the Redemption Date at the rate borne by the Debt Securities of that series.  If less than all the Debt Securities of unlike tenor and terms of a series are to be redeemed, the particular Debt Securities

 

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to be redeemed shall be selected by the Issuers.  Provisions of this Indenture that apply to Debt Securities called for redemption also apply to portions of Debt Securities called for redemption.

 

Section 3.03          Payment of Debt Securities Called for Redemption.  If notice of redemption has been given as provided in Section 3.02, the Debt Securities or portions of Debt Securities of the series with respect to which such notice has been given shall become due and payable on the date and at the Place or Places of Payment stated in such notice at the applicable redemption price, together with any interest accrued to the date fixed for redemption, and on and after said date (unless the Issuers shall default in the payment of such Debt Securities at the applicable redemption price, together with any interest accrued to said date, or the terms of Article XII shall prohibit such payment) any interest on the Debt Securities or portions of Debt Securities of any series so called for redemption shall cease to accrue, and any original issue discount in the case of Original Issue Discount Securities shall cease to accrue.  On presentation and surrender of such Debt Securities at the Place or Places of Payment in said notice specified, the said Debt Securities or the specified portions thereof shall be paid and redeemed by the Issuers at the applicable redemption price, together with any interest accrued thereon to the date fixed for redemption.

 

Any Debt Security that is to be redeemed only in part shall be surrendered at the Place of Payment with, if the Issuers, the Registrar or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Issuers, the Registrar and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing, and the Issuers shall execute, and the Trustee shall authenticate and deliver to the Holder of such Debt Security without service charge, a new Debt Security or Debt Securities of the same series, of like tenor and form, of any authorized denomination as requested by such Holder in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Debt Security so surrendered; except that if a Global Security is so surrendered, the Issuers shall execute, and the Trustee shall authenticate and deliver to the Depositary for such Global Security, without service charge, a new Global Security in a denomination equal to and in exchange for the unredeemed portion of the principal of the Global Security so surrendered.  In the case of a Debt Security providing appropriate space for such notation, at the option of the Holder thereof, the Trustee, in lieu of delivering a new Debt Security or Debt Securities as aforesaid, may make a notation on such Debt Security of the payment of the redeemed portion thereof.

 

Section 3.04          Mandatory and Optional Sinking Funds.  The minimum amount of any sinking fund payment provided for by the terms of Debt Securities of any series, resolution of the Board of Directors or a supplemental indenture is herein referred to as a “mandatory sinking fund payment,” and any payment in excess of such minimum amount provided for by the terms of Debt Securities of any series, resolution of the Board of Directors or a supplemental indenture is herein referred to as an “optional sinking fund payment.”

 

In lieu of making all or any part of any mandatory sinking fund payment with respect to any Debt Securities of a series in cash, the Issuers may at their option (a) deliver to the Trustee Debt Securities of that series theretofore purchased or otherwise acquired by the Issuers or (b) receive credit for the principal amount of Debt Securities of that series which have been redeemed either at the election of the Issuers pursuant to the terms of such Debt Securities or

 

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through the application of permitted optional sinking fund payments pursuant to the terms of such Debt Securities, resolution or supplemental indenture; provided, that such Debt Securities have not been previously so credited.  Such Debt Securities shall be received and credited for such purpose by the Trustee at the redemption price specified in such Debt Securities, resolution or supplemental indenture for redemption through operation of the sinking fund and the amount of such mandatory sinking fund payment shall be reduced accordingly.

 

Section 3.05          Redemption of Debt Securities for Sinking Fund.  Not less than 60 days prior to each sinking fund payment date for any series of Debt Securities, the Issuers will deliver to the Trustee an Officers’ Certificate specifying the amount of the next ensuing sinking fund payment for that series pursuant to the terms of that series, any resolution or supplemental indenture, the portion thereof, if any, which is to be satisfied by payment of cash and the portion thereof, if any, which is to be satisfied by delivering and crediting Debt Securities of that series pursuant to this Section 3.05 (which Debt Securities, if not previously redeemed, will accompany such certificate) and whether the Issuers intend to exercise its right to make any permitted optional sinking fund payment with respect to such series.  Such certificate shall also state that no Event of Default has occurred and is continuing with respect to such series.  Such certificate shall be irrevocable and upon its delivery the Issuers shall be obligated to make the cash payment or payments therein referred to, if any, by 11 a.m., New York City time, on the next succeeding sinking fund payment date.  Failure of the Issuers to deliver such certificate (or to deliver the Debt Securities specified in this paragraph) shall not constitute a Default, but such failure shall require that the sinking fund payment due on the next succeeding sinking fund payment date for that series shall be paid entirely in cash and shall be sufficient to redeem the principal amount of such Debt Securities subject to a mandatory sinking fund payment without the option to deliver or credit Debt Securities as provided in this Section 3.05 and without the right to make any optional sinking fund payment, if any, with respect to such series.

 

Any sinking fund payment or payments (mandatory or optional) made in cash plus any unused balance of any preceding sinking fund payments made in cash which shall equal or exceed $100,000 (or a lesser sum if the Issuers shall so request) with respect to the Debt Securities of any particular series shall be applied by the Trustee on the sinking fund payment date on which such payment is made (or, if such payment is made before a sinking fund payment date, on the sinking fund payment date following the date of such payment) to the redemption of such Debt Securities at the redemption price specified in such Debt Securities, resolution or supplemental indenture for operation of the sinking fund together with any accrued interest to the date fixed for redemption.  Any sinking fund moneys not so applied or allocated by the Trustee to the redemption of Debt Securities shall be added to the next cash sinking fund payment received by the Trustee for such series and, together with such payment, shall be applied in accordance with the provisions of this Section 3.05.  Any and all sinking fund moneys with respect to the Debt Securities of any particular series held by the Trustee on the last sinking fund payment date with respect to Debt Securities of such series and not held for the payment or redemption of particular Debt Securities shall be applied by the Trustee, together with other moneys, if necessary, to be deposited sufficient for the purpose, to the payment of the principal of the Debt Securities of that series at its Stated Maturity.

 

The Trustee shall select the Debt Securities to be redeemed upon such sinking fund payment date in the manner specified in the last paragraph of Section 3.02 and the Issuers shall

 

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cause notice of the redemption thereof to be given in the manner provided in Section 3.02 except that the notice of redemption shall also state that the Debt Securities are being redeemed by operation of the sinking fund.  Such notice having been duly given, the redemption of such Debt Securities shall be made upon the terms and in the manner stated in Section 3.03.

 

The Trustee shall not redeem any Debt Securities of a series with sinking fund moneys or mail any notice of redemption of such Debt Securities by operation of the sinking fund for such series during the continuance of a Default in payment of interest on such Debt Securities or of any Event of Default (other than an Event of Default occurring as a consequence of this paragraph) with respect to such Debt Securities, except that if the notice of redemption of any such Debt Securities shall theretofore have been mailed in accordance with the provisions hereof, the Trustee shall redeem such Debt Securities if cash sufficient for that purpose shall be deposited with the Trustee for that purpose in accordance with the terms of this Article III.  Except as aforesaid, any moneys in the sinking fund for such series at the time when any such Default or Event of Default shall occur and any moneys thereafter paid into such sinking fund shall, during the continuance of such Default or Event of Default, be held as security for the payment of such Debt Securities; provided, however, that in case such Default or Event of Default shall have been cured or waived as provided herein, such moneys shall thereafter be applied on the next sinking fund payment date for such Debt Securities on which such moneys may be applied pursuant to the provisions of this Section 3.05.

 

ARTICLE IV

PARTICULAR COVENANTS OF THE ISSUERS

 

Section 4.01          Payment of Principal of, and Premium, If Any, and Interest on, Debt Securities.  The Issuers, for the benefit of each series of Debt Securities, will duly and punctually pay or cause to be paid the principal of, and premium, if any, and interest on, each of the Debt Securities at the place, at the respective times and in the manner provided herein or in the Debt Securities.  Each installment of interest on any Debt Securities not in global form may at the Issuers’ option be paid by mailing checks for such interest payable to the Person entitled thereto pursuant to Section 2.07(a) to the address of such Person as it appears on the Debt Security Register.

 

Principal of and premium and interest on Debt Securities of any series shall be considered paid on the date due if, by 11 a.m., New York City time, on such date the Trustee or any paying agent holds in accordance with this Indenture money sufficient to pay all principal, premium and interest then due and, in the case of Debt Securities subordinated pursuant to the terms of Article XII, the Trustee or such paying agent, as the case may be, is not prohibited from paying such money to the Holders on that date pursuant to the terms of this Indenture.

 

The Issuers shall pay interest on overdue principal or premium, if any, at the rate specified therefor in the Debt Securities, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful.

 

Section 4.02          Maintenance of Offices or Agencies for Registration of Transfer, Exchange and Payment of Debt Securities.  The Issuers will maintain in each Place of Payment for any series of Debt Securities an office or agency where Debt Securities of such series may be

 

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presented or surrendered for payment, and it shall also maintain (in or outside such Place of Payment) an office or agency where Debt Securities of such series may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Issuers in respect of the Debt Securities of such series and this Indenture may be served.  The Issuers will 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 Issuers 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 office of the Trustee referred to in Section 13.03 hereof, and the Issuers hereby appoint the Trustee as their agent to receive all presentations, surrenders, notices and demands.

 

The Issuers may also from time to time designate different or additional offices or agencies to be maintained for such purposes (in or outside of such Place of Payment), and may from time to time rescind any such designation; provided, however, that no such designation or rescission shall in any manner relieve the Issuers of their obligations described in the preceding paragraph.  The Issuers will give prompt written notice to the Trustee of any such additional designation or rescission of designation and any change in the location of any such different or additional office or agency.

 

Section 4.03          Appointment to Fill a Vacancy in the Office of Trustee.  The Issuers, whenever necessary to avoid or fill a vacancy in the office of Trustee, will appoint, in the manner provided in Section 7.08, a Trustee, so that there shall at all times be a Trustee hereunder with respect to each series of Debt Securities.

 

Section 4.04          Duties of Paying Agents, etc.

 

(a)           The Issuers shall cause each paying agent, if any, other than the Trustee, to execute and deliver to the Trustee an instrument in which such agent shall agree with the Trustee, subject to the provisions of this Section 4.04,

 

(i)           that it will hold all sums held by it as such agent for the payment of the principal of, and premium, if any, or interest on, the Debt Securities of any series (whether such sums have been paid to it by the Issuers or by any other obligor on the Debt Securities of such series) in trust for the benefit of the Holders of the Debt Securities of such series;

 

(ii)          that it will give the Trustee notice of any failure by the Issuers (or by any other obligor on the Debt Securities of such series) to make any payment of the principal of, and premium, if any, or interest on, the Debt Securities of such series when the same shall be due and payable; and

 

(iii)         that it will at any time during the continuance of an Event of Default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held by it as such agent.

 

(b)           If either of the Issuers shall act as its own paying agent, it will, on or before each due date of the principal of, and premium, if any, or interest on, the Debt Securities of any series, set aside, segregate and hold in trust for the benefit of the Holders of the Debt Securities of such

 

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series a sum sufficient to pay such principal, premium, if any, or interest so becoming due.  The Issuers will promptly notify the Trustee of any failure by either of the Issuers to take such action or the failure by any other obligor on such Debt Securities to make any payment of the principal of, and premium, if any, or interest on, such Debt Securities when the same shall be due and payable.

 

(c)           Anything in this Section 4.04 to the contrary notwithstanding, either of the Issuers may, at any time, for the purpose of obtaining a satisfaction and discharge of this Indenture, or for any other reason, pay or cause to be paid to the Trustee all sums held in trust by it or any paying agent, as required by this Section 4.04, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by such Issuer or such paying agent.

 

(d)           Whenever the Issuers shall have one or more paying agents with respect to any series of Debt Securities, they will, prior to each due date of the principal of, and premium, if any, or interest on, any Debt Securities of such series, deposit with any such paying agent a sum sufficient to pay the principal, premium or interest so becoming due, such sum to be held in trust for the benefit of the Persons entitled thereto, and (unless any such paying agent is the Trustee) the Issuers will promptly notify the Trustee of its action or failure so to act.

 

(e)           Anything in this Section 4.04 to the contrary notwithstanding, the agreement to hold sums in trust as provided in this Section 4.04 is subject to the provisions of Section 11.05.

 

Section 4.05          SEC Reports; Financial Statements.

 

(a)           The Partnership shall, so long as any of the Debt Securities are Outstanding, file with the Trustee, within 30 days after it files the same with the SEC, copies of the annual reports and the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may by rules and regulations prescribe) that the Partnership is required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act.  If the Partnership is not subject to the requirements of such Section 13 or 15(d), the Partnership shall file with the Trustee, within 30 days after it would have been required to file the same with the SEC, financial statements, including any notes thereto (and with respect to annual reports, an auditors’ report by a firm of established national reputation), and a “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” both comparable to that which the Partnership would have been required to include in such annual reports, information, documents or other reports if the Partnership had been subject to the requirements of such Section 13 or 15 (d).  The Issuers shall also comply with the provisions of TIA Section 314 (a).

 

(b)           The Partnership shall provide the Trustee with a sufficient number of copies of all reports and other documents and information that the Trustee may be required to deliver to Holders under this Section.

 

(c)           The Partnership shall, so long as any of the Debt Securities are Outstanding, deliver to the Trustee, within 30 days of any Officer of the Partnership becoming aware of the occurrence of any Event of Default, an Officers’ Certificate specifying such Event of Default, the status thereof and what action the Partnership is taking or proposes to take with respect thereto.

 

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Section 4.06          Compliance Certificate.  Each of the Issuers and any Subsidiary Guarantor shall, so long as any of the Debt Securities are Outstanding, deliver to the Trustee, within 120 days after the end of each fiscal year of the Partnership, an Officers’ Certificate stating that a review of the activities of the Partnership and its Subsidiaries during the preceding fiscal year has been made under the supervision of the Officers signing the certificate with a view to determining whether each of the Issuers and any Subsidiary Guarantor 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 knowledge each of the Issuers and any Subsidiary Guarantor has kept, observed, performed and fulfilled each and every covenant contained in this Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions hereof, without regard to any grace period or requirement of notice required by this Indenture (or, if a Default or Event of Default shall have occurred, describing all such Defaults or Events of Default of which such Officer may have knowledge and what action the Issuers or any Subsidiary Guarantor is taking or proposes to take with respect thereto) and that to the best of his knowledge no event has occurred and remains in existence by reason of which payments on account of the principal of, or premium, if any, or interest, if any, on the Debt Securities are prohibited or, if such event has occurred, a description of the event and what action the Partnership or any Subsidiary Guarantor is taking or proposes to take with respect thereto.

 

Section 4.07          Further Instruments and Acts.  The Issuers will, upon request of the Trustee, execute and deliver such further instruments and do such further acts as may reasonably be necessary or proper to carry out more effectually the purposes of this Indenture.

 

Section 4.08          Existence.  Except as permitted by Article X hereof, each Issuer shall do or cause to be done all things necessary to preserve and keep in full force and effect its existence.

 

Section 4.09          Maintenance of Properties.  The Partnership shall cause all properties owned by the Partnership or any of its Subsidiaries or used or held for use in the conduct of its business or the business of any such Subsidiary to be maintained and kept in good condition, repair and working order (reasonable wear and tear excepted) and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Partnership may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided that nothing in this Section shall prevent the Partnership from discontinuing the operation or maintenance of any of such properties if such discontinuance is, in the judgment of the Partnership, desirable in the conduct of its business or the business of any such Subsidiary and not disadvantageous in any material respect to the Holders.

 

Section 4.10          Payment of Taxes and Other Claims.  The Partnership shall pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (i) all taxes, assessments and governmental charges levied or imposed upon the Partnership or any of its Subsidiaries or upon the income, profits or property of the Partnership or any of its Subsidiaries, and (ii) all lawful claims for labor, materials and supplies which, if unpaid, might by law become a Lien upon the property of the Partnership or any of its Subsidiaries; provided that the Partnership shall not be required to pay or discharge or cause to be paid or discharged

 

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any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings.

 

Section 4.11          Waiver of Certain Covenants.  The Issuers and the Subsidiary Guarantors may, with respect to the Debt Securities of any series, omit in any particular instance to comply with any covenant set forth in this Article IV (except Sections 4.01 through 4.08) or made applicable to such Debt Securities pursuant to Section 2.03, if, before or after the time for such compliance, the Holders of at least a majority in principal amount of the Outstanding Debt Securities of each series affected, waive such compliance in such instance with such covenant, but no such waiver shall extend to or affect such covenant except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Issuers and the Subsidiary Guarantors and the duties of the Trustee in respect of any such covenant shall remain in full force and effect.

 

ARTICLE V

HOLDERS’ LISTS AND REPORTS BY THE TRUSTEE

 

Section 5.01          Issuers to Furnish Trustee Information as to Names and Addresses of Holders; Preservation of Information.  The Issuers covenant and agree that they will furnish or cause to be furnished to the Trustee with respect to the Debt Securities of each series:

 

(a)           not more than 10 days after each record date with respect to the payment of interest, if any, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders as of such record date, and

 

(b)           at such other times as the Trustee may request in writing, within 30 days after the receipt by the Issuers of any such request, a list of similar form and contents as of a date not more than 15 days prior to the time such list is furnished;

 

provided, however, that so long as the Trustee shall be the Registrar, such lists shall not be required to be furnished.

 

The Trustee shall preserve, in as current a form as is reasonably practicable, all information as to the names and addresses of the Holders (i) contained in the most recent list furnished to it as provided in this Section 5.01 or (ii) received by it in the capacity of paying agent or Registrar (if so acting) hereunder.

 

The Trustee may destroy any list furnished to it as provided in this Section 5.01 upon receipt of a new list so furnished.

 

Section 5.02          Communications to Holders.  Holders may communicate pursuant to Section 312(b) of the TIA with other Holders with respect to their rights under this Indenture or the Debt Securities.  The Issuers, the Trustee, the Registrar and anyone else shall have the protection of Section 312(c) of the TIA.

 

Section 5.03          Reports by Trustee.  Within 60 days after each January 31, beginning with the first January 31 following the date of this Indenture, and in any event on or before April 1 in each year, the Trustee shall mail to Holders a brief report dated as of such January 31 that

 

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complies with TIA Section 313 (a); provided, however, that if no event described in TIA Section 313 (a) has occurred within the twelve months preceding the reporting date, no report need be transmitted.  The Trustee also shall comply with TIA Section 313 (b).

 

Reports pursuant to this Section 5.03 shall be transmitted by mail:

 

(a)           to all Holders, as the names and addresses of such Holders appear in the Debt Security Register; and

 

(b)           except in the cases of reports under Section 313(b)(2) of the TIA, to each Holder of a Debt Security of any series whose name and address appear in the information preserved at the time by the Trustee in accordance with Section 5.01.

 

A copy of each report at the time of its mailing to Holders shall be filed with the SEC and each stock exchange (if any) on which the Debt Securities of any series are listed.  The Issuers agree to notify promptly the Trustee whenever the Debt Securities of any series become listed on any stock exchange and of any delisting thereof.

 

Section 5.04          Record Dates for Action by Holders.  If the Issuers shall solicit from the Holders of Debt Securities of any series any action (including the making of any demand or request, the giving of any direction, notice, consent or waiver or the taking of any other action), the Issuers may, at their option, by resolution of their respective Boards of Directors, fix in advance a record date for the determination of Holders of Debt Securities entitled to take such action, but the Issuers shall have no obligation to do so.  Any such record date shall be fixed at the Issuers’ discretion.  If such a record date is fixed, such action may be sought or given before or after the record date, but only the Holders of Debt Securities of record at the close of business on such record date shall be deemed to be Holders of Debt Securities for the purpose of determining whether Holders of the requisite proportion of Debt Securities of such series Outstanding have authorized or agreed or consented to such action, and for that purpose the Debt Securities of such series Outstanding shall be computed as of such record date.

 

ARTICLE VI

REMEDIES OF THE TRUSTEE AND HOLDERS IN EVENT OF DEFAULT

 

Section 6.01          Events of Default.  If any one or more of the following shall have occurred and be continuing with respect to Debt Securities of any series (each of the following, an “Event of Default”):

 

(a)           default in the payment of any installment of interest upon any Debt Securities of that series as and when the same shall become due and payable, whether or not such payment shall be prohibited by Article XII, if applicable, and continuance of such default for a period of 30 days; or

 

(b)           default in the payment of the principal of or premium, if any, on any Debt Securities of that series as and when the same shall become due and payable, whether at Stated Maturity, upon redemption, by declaration, upon required repurchase or otherwise, whether or not such payment shall be prohibited by Article XII, if applicable; or

 

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(c)           default in the payment of any sinking fund payment with respect to any Debt Securities of that series as and when the same shall become due and payable, whether or not such payment is prohibited by Article XII, if applicable; or

 

(d)           failure on the part of the Issuers, or if any series of Debt Securities Outstanding under this Indenture is entitled to the benefits of the Guarantee, any of the Subsidiary Guarantors, duly to observe or perform (i) any of its covenants or agreements under Article X or (ii) any other of the covenants or agreements on the part of the Issuers, or if applicable, any of the Subsidiary Guarantors, in the Debt Securities of that series, in any resolution of the Board of Directors of each Issuer authorizing the issuance of that series of Debt Securities, in this Indenture with respect to such series or in any supplemental indenture with respect to such series (other than a covenant a default in the performance of which is elsewhere in this Section specifically dealt with), and in the case of clause (ii) continuing for a period of 60 days (or 180 days in the case of a Reporting Failure) after the date on which written notice specifying such failure and requiring the Issuers, or if applicable, the Subsidiary Guarantors, to remedy the same shall have been given to the Issuers, or if applicable, the Subsidiary Guarantors, by the Trustee or to the Issuers, or if applicable, the Subsidiary Guarantors, and the Trustee by the Holders of at least 25% in aggregate principal amount of the Debt Securities of that series at the time Outstanding; or

 

(e)           either of the Issuers, or if any series of Debt Securities Outstanding under this Indenture is entitled to the benefits of the Guarantee, any of the Subsidiary Guarantors, pursuant to or within the meaning of any Bankruptcy Law,

 

(i)                                commences a voluntary case,

 

(ii)                             consents to the entry of an order for relief against it in an involuntary case,

 

(iii)                          consents to the appointment of a Custodian of it or for all or substantially all of its property; or

 

(iv)                         makes a general assignment for the benefit of its creditors;

 

(f)            a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

 

(i)           is for relief against either of the Issuers, or if any series of Debt Securities Outstanding under this Indenture is entitled to the benefits of the Guarantee, any of the Subsidiary Guarantors, as debtor in an involuntary case,

 

(ii)          appoints a Custodian of either of the Issuers, or if any series of Debt Securities Outstanding under this Indenture is entitled to the benefits of the Guarantee,  any of the Subsidiary Guarantors, or a Custodian for all or substantially all of the property of either of the Issuers, or if applicable, any of the Subsidiary Guarantors, or

 

(iii)         orders the liquidation of either of the Issuers, or if any series of Debt Securities Outstanding under this Indenture is entitled to the benefits of the Guarantee, any of the Subsidiary Guarantors,

 

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and the order or decree remains unstayed and in effect for 60 days;

 

(g)           if any series of Debt Securities Outstanding under this Indenture is entitled to the benefits of the Guarantee, the Guarantee of any of the Subsidiary Guarantors ceases to be in full force and effect with respect to Debt Securities of that series (except as otherwise provided in this Indenture) or is declared null and void in a judicial proceeding or any of the Subsidiary Guarantors denies or disaffirms its obligations under this Indenture or such Guarantee; or

 

(h)           any other Event of Default provided with respect to Debt Securities of that series;

 

then and in each and every case that an Event of Default described in clause (a), (b), (c), (d), (g) or (h) with respect to Debt Securities of that series at the time Outstanding occurs and is continuing, unless the principal of, premium, if any, and accrued and unpaid interest on all the Debt Securities of that series shall have already become due and payable, either the Trustee or the Holders of not less than 25% in aggregate principal amount of the Debt Securities of that series then Outstanding hereunder, by notice in writing to the Issuers (and to the Trustee if given by Holders), may declare the principal of (or, if the Debt Securities of that series are Original Issue Discount Debt Securities, such portion of the principal amount as may be specified in the terms of that series), premium, if any, and interest on all the Debt Securities of that series to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable, anything in this Indenture or in the Debt Securities of that series contained to the contrary notwithstanding.  If an Event of Default described in clause (e) or (f) occurs with respect to either of the Issuers, then and in each and every such case, unless the principal of and accrued and unpaid interest on all the Debt Securities shall have become due and payable, the principal of (or, if the Debt Securities of that series are Original Issue Discount Debt Securities, such portion of the principal amount as may be specified in the terms thereof), premium, if any, and interest on all the Debt Securities then Outstanding hereunder shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holders, anything in this Indenture or in the Debt Securities contained to the contrary notwithstanding.

 

The Holders of a majority in aggregate principal amount of the Debt Securities of a particular series by written notice to the Trustee may rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree of a court of competent jurisdiction already rendered and if all existing Events of Default with respect to that series have been cured or waived except nonpayment of principal, premium, if any, or interest that has become due solely because of acceleration.  Upon any such rescission, the parties hereto shall be restored respectively to their several positions and rights hereunder, and all rights, remedies and powers of the parties hereto shall continue as though no such proceeding had been taken.

 

Section 6.02          Collection of Debt by Trustee, etc.  If an Event of Default occurs and is continuing, the Trustee, in its own name and as trustee of an express trust, shall be entitled and empowered to institute any action or proceedings at law or in equity for the collection of the sums so due and unpaid or enforce the performance of any provision of the Debt Securities of the affected series or this Indenture, and may prosecute any such action or proceedings to judgment or final decree, and may enforce any such judgment or final decree against any of the Subsidiary

 

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Guarantors or the Issuers or any other obligor upon the Debt Securities of such series (and collect in the manner provided by law out of the property of any of the Subsidiary Guarantors or the Issuers or any other obligor upon the Debt Securities of such series wherever situated the moneys adjudged or decreed to be payable).

 

In case there shall be pending proceedings for the bankruptcy or for the reorganization of any of the Subsidiary Guarantors or the Issuers or any other obligor upon the Debt Securities of any series under any Bankruptcy Law, or in case a Custodian shall have been appointed for its property, or in case of any other similar judicial proceedings relative to any of the Subsidiary Guarantors or the Issuers or any other obligor upon the Debt Securities of any series, its creditors or its property, the Trustee, irrespective of whether the principal of Debt Securities of any series 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 pursuant to the provisions of this Section 6.02, shall be entitled and empowered, by intervention in such proceedings or otherwise, to file and prove a claim or claims for the whole amount of principal, premium, if any, and interest (or, if the Debt Securities of such series are Original Issue Discount Debt Securities, such portion of the principal amount as may be specified in the terms of such series) owing and unpaid in respect of the Debt Securities of such series, 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 reasonable compensation to the Trustee, its agents, attorneys and counsel, and for reimbursement of all expenses and liabilities incurred, and all advances made, by the Trustee except as a result of its negligence or bad faith) and of the Holders thereof allowed in any such judicial proceedings relative to any of the Subsidiary Guarantors or the Issuers, or any other obligor upon the Debt Securities of such series, its creditors or its property, and to collect and receive any moneys or other property payable or deliverable on any such claims, and to distribute all amounts received with respect to the claims of such Holders and of the Trustee on their behalf, and any receiver, assignee or trustee in bankruptcy or reorganization is hereby authorized by each of such Holders to make payments to the Trustee, and, in the event that the Trustee shall consent to the making of payments directly to such Holders, to pay to the Trustee such amount as shall be sufficient to cover reasonable compensation to the Trustee, its agents, attorneys and counsel, and all other reasonable expenses and liabilities incurred, and all advances made, by the Trustee except as a result of its negligence or bad faith.

 

All rights of action and of asserting claims under this Indenture, or under any of the Debt Securities of any series, may be enforced by the Trustee without the possession of any such Debt Securities, or the production thereof in any trial or other proceedings relative thereto, and any such action or proceedings instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment (except for any amounts payable to the Trustee pursuant to Section 7.06) shall be for the ratable benefit of the Holders of all the Debt Securities in respect of which such action was taken.

 

In case of an Event of Default hereunder the Trustee may in its discretion proceed to protect and enforce the rights vested in it by this Indenture by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any of such rights, either at law or in equity or in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in this Indenture or in aid of the exercise of any power

 

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granted in this Indenture, or to enforce any other legal or equitable right vested in the Trustee by this Indenture or by law.

 

Section 6.03          Application of Moneys Collected by Trustee.  Any moneys or other property collected by the Trustee pursuant to Section 6.02 with respect to Debt Securities of any series shall be applied, after giving effect to the provisions of Article XII, if applicable, in the order following, at the date or dates fixed by the Trustee for the distribution of such moneys or other property, upon presentation of the several Debt Securities of such series in respect of which moneys or other property have been collected, and the notation thereon of the payment, if only partially paid, and upon surrender thereof if fully paid:

 

FIRST:  To the payment of all money due the Trustee pursuant to Section 7.06;

 

SECOND:  In case the principal of the Outstanding Debt Securities in respect of which such moneys have been collected shall not have become due, to the payment of interest on the Debt Securities of such series in the order of the maturity of the installments of such interest, with interest (to the extent that such interest has been collected by the Trustee) upon the overdue installments of interest at the rate or Yield to Maturity (in the case of Original Issue Discount Debt Securities) borne by the Debt Securities of such series, such payments to be made ratably to the Persons entitled thereto, without discrimination or preference;

 

THIRD:  In case the principal of the Outstanding Debt Securities in respect of which such moneys have been collected shall have become due, by declaration or otherwise, to the payment of the whole amount then owing and unpaid upon the Debt Securities of such series for principal and premium, if any, and interest, with interest on the overdue principal and premium, if any, and (to the extent that such interest has been collected by the Trustee) upon overdue installments of interest at the rate or Yield to Maturity (in the case of Original Issue Discount Debt Securities) borne by the Debt Securities of such series; and, in case such moneys shall be insufficient to pay in full the whole amount so due and unpaid upon the Debt Securities of such series, then to the payment of such principal and premium, if any, and interest, without preference or priority of principal and premium, if any, over interest, or of interest over principal and premium, if any, or of any installment of interest over any other installment of interest, or of any Debt Security of such series over any Debt Security of such series, ratably to the aggregate of such principal and premium, if any, and interest; and

 

FOURTH:  The remainder, if any, shall be paid to the Subsidiary Guarantors or the Issuers, as applicable, or to whomsoever may be lawfully entitled to receive the same, or as a court of competent jurisdiction may direct.

 

The Trustee may fix a record date and payment date for any payment to Holders pursuant to this Section 6.03.  At least 15 days before such record date, the Issuers shall mail to each Holder and the Trustee a notice that states the record date, the payment date and amount to be paid.

 

Section 6.04          Limitation on Suits by Holders.  No Holder of any Debt Security of any series shall have any right by virtue or by availing of any provision of this Indenture to institute any action or proceeding at law or in equity or in bankruptcy or otherwise, upon or under or with

 

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respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless such Holder previously shall have given to the Trustee written notice of an Event of Default with respect to Debt Securities of that same series and of the continuance thereof and unless the Holders of not less than 25% in aggregate principal amount of the Outstanding Debt Securities of that series shall have made written request upon the Trustee to institute such action or proceedings in respect of such Event of Default in its own name as Trustee hereunder and shall have offered to the Trustee such reasonable indemnity or security as it may require against the costs, expenses and liabilities to be incurred therein or thereby, and the Trustee, for 60 days after its receipt of such notice, request and offer of indemnity or security shall have failed to institute any such action or proceedings and no direction inconsistent with such written request shall have been given to the Trustee pursuant to Section 6.06; it being understood and intended, and being expressly covenanted by the Holder of every Debt Security with every other Holder and the Trustee, that no one or more Holders shall have any right in any manner whatever by virtue or by availing of any provision of this Indenture to affect, disturb or prejudice the rights of any Holders, or to obtain or seek to obtain priority over or preference to any other such Holder, or to enforce any right under this Indenture, except in the manner herein provided and for the equal, ratable and common benefit of all such Holders.  For the protection and enforcement of the provisions of this Section 6.04, each and every Holder and the Trustee shall be entitled to such relief as can be given either at law or in equity.

 

Notwithstanding any other provision in this Indenture, however, the right of any Holder of any Debt Security to receive payment of the principal of, and premium, if any, and (subject to Section 2.12) interest on, such Debt Security, on or after the respective due dates expressed in such Debt Security, and to institute suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder.

 

Section 6.05          Remedies Cumulative; Delay or Omission in Exercise of Rights Not a Waiver of Default.  All powers and remedies given by this Article VI to the Trustee or to the Holders shall, to the extent permitted by law, be deemed cumulative and not exclusive of any thereof or of any other powers and remedies available to the Trustee or the Holders, by judicial proceedings or otherwise, to enforce the performance or observance of the covenants and agreements contained in this Indenture, and no delay or omission of the Trustee or of any Holder to exercise any right or power accruing upon any Default occurring and continuing as aforesaid, shall impair any such right or power, or shall be construed to be a waiver of any such Default or an acquiescence therein; and, subject to the provisions of Section 6.04, every power and remedy given by this Article VI or by law to the Trustee or to the Holders may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee or by the Holders.

 

Section 6.06          Rights of Holders of Majority in Principal Amount of Debt Securities to Direct Trustee and to Waive Default.  The Holders of not less than a majority in aggregate principal amount of the Debt Securities of any series at the time Outstanding shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or of exercising any right, trust or power conferred on the Trustee, with respect to the Debt Securities of such series; provided, however, that such direction shall not be otherwise than in accordance with law and the provisions of this Indenture, and that subject to the provisions of Section 7.01, the Trustee shall have the right to decline to follow any such direction if the Trustee being advised by counsel shall determine that the action so directed may not

 

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lawfully be taken or is inconsistent with any provision of this Indenture, or if the Trustee shall by a responsible officer or officers determine that the action so directed would involve it in personal liability or would be unduly prejudicial to Holders of Debt Securities of such series not taking part in such direction; and provided, further, however, that nothing in this Indenture contained shall impair the right of the Trustee to take any action deemed proper by the Trustee and which is not inconsistent with such direction by such Holders.  The Holders of not less than a majority in aggregate principal amount of the Debt Securities of any series at the time Outstanding may on behalf of the Holders of all the Debt Securities of that series waive any past Default or Event of Default and its consequences for that series, except a Default or Event of Default in the payment of the principal of, and premium, if any, or interest on, any of the Debt Securities and a Default or Event of Default in respect of a provision that under Section 9.02 cannot be amended without the consent of each Holder affected thereby.  In case of any such waiver, such Default shall cease to exist, any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture, and the Subsidiary Guarantors, the Issuers, the Trustee and the Holders of the Debt Securities of that series shall be restored to their former positions and rights hereunder, respectively; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon.

 

Section 6.07          Trustee to Give Notice of Events of Defaults Known to It, but May Withhold Such Notice in Certain Circumstances.  The Trustee shall, within 90 days after the occurrence of an Event of Default, or if later, within 30 days after the Trustee obtains actual knowledge of the Event of Default, with respect to a series of Debt Securities give to the Holders thereof, in the manner provided in Section 13.03, notice of all Events of Default with respect to such series known to the Trustee, unless such Events of Default shall have been cured or waived before the giving of such notice; provided, that, except in the case of an Event of Default in the payment of the principal of, or premium, if any, or interest on, any of the Debt Securities of such series or in the making of any sinking fund payment with respect to the Debt Securities of such series, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a committee of directors or responsible officers of the Trustee in good faith determines that the withholding of such notice is in the interests of the Holders thereof.

 

Section 6.08          Requirement of an Undertaking to Pay Costs in Certain Suits under the Indenture or Against the Trustee.  All parties to this Indenture agree, and each Holder of any Debt Security 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 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 in the manner and to the extent provided in the TIA, and that such court 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 6.08 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 25 percent in principal amount of the Outstanding Debt Securities of that series 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 Debt Security on or after the due date for such payment expressed in such Debt Security.

 

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ARTICLE VII
 CONCERNING THE TRUSTEE

 

Section 7.01          Certain Duties and Responsibilities.  The Trustee, prior to the occurrence of an Event of Default and after the curing or waiving of all Events of Default which may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in this Indenture.  In case an Event of Default has occurred (which has not been cured or waived), the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs.

 

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, its own bad faith or its own willful misconduct, except that:

 

(a)           this paragraph shall not be construed to limit the effect of the first paragraph of this Section 7.01;

 

(b)           prior to the occurrence of an Event of Default with respect to the Debt Securities of a series and after the curing or waiving of all Events of Default with respect to such series which may have occurred:

 

(i)           the duties and obligations of the Trustee with respect to Debt Securities of any series shall be determined solely by the express provisions of this Indenture, and the Trustee shall not be liable except for the performance of such duties and obligations with respect to such series as are specifically set forth in this Indenture, and no implied covenants or obligations with respect to such series shall be read into this Indenture against the Trustee;

 

(ii)          in the absence of bad faith on the part of the Trustee, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any 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 which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture; but the Trustee shall examine the evidence furnished to it pursuant to Sections 4.05 and 4.06 to determine whether or not such evidence conforms to the requirement of this Indenture;

 

(iii)         the Trustee shall not be liable for an error of judgment made in good faith by a responsible officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; and

 

(iv)        the Trustee shall not be liable with respect to any action taken or omitted to be taken by it with respect to Debt Securities of any series in good faith in accordance with the direction of the Holders of not less than a majority in aggregate principal amount of the Outstanding Debt Securities of that series relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any

 

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trust or power conferred upon the Trustee, under this Indenture with respect to Debt Securities of such series.

 

None of the provisions of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any personal financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if there shall be reasonable grounds for believing that repayment of such funds or adequate security or indemnity against such risk or liability is not reasonably assured to it.

 

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 7.02          Certain Rights of Trustee.  Except as otherwise provided in Section 7.01:

 

(a)           the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note or other paper or document (whether in its original or facsimile form) believed by it to be genuine and to have been signed or presented by the proper party or parties;

 

(b)           any request, direction, order or demand of either of the Issuers mentioned herein shall be sufficiently evidenced by an Issuer Order (unless other evidence in respect thereof be herein specifically prescribed); and any resolution of the Board of Directors of an Issuer may be evidenced to the Trustee by a copy thereof certified by its Secretary or an Assistant Secretary;

 

(c)           the Trustee may consult with counsel, and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken or suffered or omitted by it hereunder in good faith and in accordance with such advice or Opinion of Counsel;

 

(d)           the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request, order or direction of any of the Holders of Debt Securities of any series pursuant to the provisions of this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which may be incurred therein or thereby;

 

(e)           the Trustee shall not be liable for any action taken or omitted by it in good faith and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture;

 

(f)            prior to the occurrence of an Event of Default and after the curing of all Events of Default which may have occurred, 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, approval or other paper or document, unless requested in writing to do so by the Holders of a majority in aggregate principal amount of the then Outstanding Debt Securities of a series affected by such matter; provided, however, that if the payment within a reasonable time to the Trustee of the costs, expenses or liabilities likely to be

 

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incurred by it in the making of such investigation is not, in the opinion of the Trustee, reasonably assured to the Trustee by the security afforded to it by the terms of this Indenture, the Trustee may require reasonable indemnity against such costs, expenses or liabilities as a condition to so proceeding, and the reasonable expense of every such investigation shall be paid by the Issuers or, if paid by the Trustee, shall be repaid by the Issuers upon demand;

 

(g)           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 by it with due care hereunder; and

 

(h)           if any property other than cash shall at any time be subject to a Lien in favor of the Holders, the Trustee, if and to the extent authorized by a receivership or bankruptcy court of competent jurisdiction or by the supplemental instrument subjecting such property to such Lien, shall be entitled to make advances for the purpose of preserving such property or of discharging tax Liens or other prior Liens or encumbrances thereon.

 

Section 7.03          Trustee Not Liable for Recitals in Indenture or in Debt Securities.  The recitals contained herein, in the Debt Securities (except the Trustee’s certificate of authentication) shall be taken as the statements of the Issuers, and the Trustee assumes no responsibility for the correctness of the same.  The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Debt Securities of any series, except that the Trustee represents that it is duly authorized to execute and deliver this Indenture, authenticate the Debt Securities and perform its obligations hereunder, and that the statements made by it or to be made by it in a Statement of Eligibility and Qualification on Form T-1 supplied to the Issuers are true and accurate.  The Trustee shall not be accountable for the use or application by the Issuers of any of the Debt Securities or of the proceeds thereof.

 

Section 7.04          Trustee, Paying Agent or Registrar May Own Debt Securities.  The Trustee or any paying agent or Registrar, in its individual or any other capacity, may become the owner or pledgee of Debt Securities and subject to the provisions of the TIA relating to conflicts of interest and preferential claims may otherwise deal with the Issuers with the same rights it would have if it were not Trustee, paying agent or Registrar.

 

Section 7.05          Moneys Received by Trustee to Be Held in Trust.  Subject to the provisions of Section 11.05, all moneys received by the Trustee shall, until used or applied as herein provided, be held in trust 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 moneys received by it hereunder.  So long as no Event of Default shall have occurred and be continuing, all interest allowed on any such moneys shall be paid from time to time to the Issuers upon an Issuer Order.

 

Section 7.06          Compensation and Reimbursement.  The Issuers covenant and agree to pay in Dollars to the Trustee from time to time, and the Trustee shall be entitled to, reasonable compensation for all services rendered by it hereunder (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust), and, except as otherwise expressly provided herein, the Issuers will pay or reimburse in Dollars the Trustee

 

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upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any of the provisions of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents, attorneys and counsel and of all Persons not regularly in its employ), including without limitation, Section 6.02, except any such expense, disbursement or advances as may arise from its negligence, willful misconduct or bad faith.  The Issuers also covenant to indemnify in Dollars the Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence, willful misconduct or bad faith on the part of the Trustee, arising out of or in connection with the acceptance or administration of this trust or trusts hereunder, including the reasonable costs and expenses of defending itself against any claim of liability in connection with the exercise or performance of any of its powers or duties hereunder.  The obligations of the Issuers under this Section 7.06 to compensate and indemnify the Trustee and to pay or reimburse the Trustee for expenses, disbursements and advances shall constitute additional Debt hereunder and shall survive the satisfaction and discharge of this Indenture.  The Issuers and the Holders agree that such additional Debt shall be secured by a Lien prior to that of the Debt Securities 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 Debt Securities.

 

When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(e) or (f) occurs, the expenses and the compensation for the services are intended to constitute expenses of administration under any Bankruptcy Law.

 

Section 7.07          Right of Trustee to Rely on an Officers’ Certificate Where No Other Evidence Specifically Prescribed.  Except as otherwise provided in Section 7.01, whenever in the administration of the provisions of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering or omitting any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of negligence or bad faith on the part of the Trustee, be deemed to be conclusively proved and established by an Officers’ Certificate delivered to the Trustee and such certificate, in the absence of negligence or bad faith on the part of the Trustee, shall be full warrant to the Trustee for any action taken, suffered or omitted by it under the provisions of this Indenture upon the faith thereof.

 

Section 7.08          Separate Trustee; Replacement of Trustee.  The Issuers may, but need not, appoint a separate Trustee for any one or more series of Debt Securities.  The Trustee may resign with respect to one or more or all series of Debt Securities at any time by giving notice to the Issuers.  The Holders of a majority in aggregate principal amount of the Debt Securities of a particular series may remove the Trustee for such series and only such series by so notifying the Trustee and may appoint a successor Trustee.  The Issuers shall remove the Trustee if:

 

(a)           the Trustee fails to comply with Section 7.10;

 

(b)           the Trustee is adjudged bankrupt or insolvent;

 

(c)           a Custodian takes charge of the Trustee or its property; or

 

(d)           the Trustee otherwise becomes incapable of acting.

 

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If the Trustee resigns, is removed by the Issuers or by the Holders of a majority in aggregate principal amount of the Debt Securities of a particular series and such Holders do not reasonably promptly appoint a successor Trustee, or if a vacancy exists in the office of Trustee for any reason (the Trustee in such event being referred to herein as the retiring Trustee), the Issuers shall promptly appoint a successor Trustee.  No resignation or removal of the Trustee and no appointment of a successor Trustee shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of this Section 7.08.

 

A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Issuers.  Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture.  The successor Trustee shall mail a notice of its succession to Holders of Debt Securities of each applicable series.  The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, subject to the Lien provided for in Section 7.06.

 

If a successor Trustee does not take office within 60 days after the retiring Trustee gives notice of resignation or is removed, the retiring Trustee or the Holders of 25% in aggregate principal amount of the Debt Securities of any applicable series may petition any court of competent jurisdiction for the appointment of a successor Trustee for the Debt Securities of such series.

 

If the Trustee fails to comply with Section 7.10, any Holder of Debt Securities of any applicable series may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee for the Debt Securities of such series.

 

Notwithstanding the replacement of the Trustee pursuant to this Section 7.08, the Issuers’ obligations under Section 7.06 shall continue for the benefit of the retiring Trustee.

 

In the case of the appointment hereunder of a separate or successor Trustee with respect to the Debt Securities of one or more series, the Issuers, any retiring Trustee and each successor or separate Trustee with respect to the Debt Securities of any applicable series shall execute and deliver an indenture supplemental hereto (i) which shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of any retiring Trustee with respect to the Debt Securities of any series as to which any such retiring Trustee is not retiring shall continue to be vested in such retiring Trustee and (ii) that shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same trust and that each such separate, retiring or successor Trustee shall be Trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee.

 

Section 7.09          Successor Trustee by Merger.  If the Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, another

 

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corporation or banking association, the resulting, surviving or transferee corporation or banking association without any further act shall be the successor Trustee.

 

In case at the time such successor or successors to the Trustee by merger, conversion, consolidation or transfer shall succeed to the trusts created by this Indenture any of the Debt Securities shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor Trustee, and deliver such Debt Securities so authenticated; and in case at that time any of the Debt Securities shall not have been authenticated, any successor to the Trustee may authenticate such Debt Securities either in the name of any predecessor hereunder or in the name of the successor to the Trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Debt Securities or in this Indenture provided that the certificate of the Trustee shall have.

 

Section 7.10          Eligibility; Disqualification.  The Trustee shall at all times satisfy the requirements of Section 310(a) of the TIA.  The Trustee shall have a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition.  No obligor upon the Debt Securities of a particular series or Person directly or indirectly controlling, controlled by or under common control with such obligor shall serve as Trustee for the Debt Securities of such series.  The Trustee shall comply with Section 310(b) of the TIA; provided, however, that there shall be excluded from the operation of Section 310(b)(1) of the TIA this Indenture or any indenture or indentures under which other securities or certificates of interest or participation in other securities of the Issuers are outstanding if the requirements for such exclusion set forth in Section 310(b)(1) of the TIA are met.

 

Section 7.11          Preferential Collection of Claims Against Issuers.  The Trustee shall comply with Section 311(a) of the TIA, excluding any creditor relationship listed in Section 311(b) of the TIA.  A Trustee who has resigned or been removed shall be subject to Section 311(a) of the TIA to the extent indicated therein.

 

Section 7.12          Compliance with Tax Laws.  The Trustee hereby agrees to comply with all U.S. Federal income tax information reporting and withholding requirements applicable to it with respect to payments of premium (if any) and interest on the Debt Securities, whether acting as Trustee, Registrar, paying agent or otherwise with respect to the Debt Securities.

 

ARTICLE VIII
 CONCERNING THE HOLDERS

 

Section 8.01          Evidence of Action by Holders.  Whenever in this Indenture it is provided that the Holders of a specified percentage in aggregate principal amount of the Debt Securities of any or all series may take action (including the making of any demand or request, the giving of any direction, notice, consent or waiver or the taking of any other action) the fact that at the time of taking any such action the Holders of such specified percentage have joined therein may be evidenced (a) by any instrument or any number of instruments of similar tenor executed by Holders in Person or by agent or proxy appointed in writing, (b) by the record of the Holders voting in favor thereof at any meeting of Holders duly called and held in accordance with the provisions of Section 5.02, (c) by a combination of such instrument or instruments and any such record of such a meeting of Holders or (d) in the case of Debt Securities evidenced by a Global

 

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Security, by any electronic transmission or other message, whether or not in written format, that complies with the Depositary’s applicable procedures.

 

Section 8.02          Proof of Execution of Instruments and of Holding of Debt Securities.  Subject to the provisions of Sections 7.01, 7.02 and 13.09, proof of the execution of any instrument by a Holder or his agent or proxy shall be sufficient if made in accordance with such reasonable rules and regulations as may be prescribed by the Trustee or in such manner as shall be satisfactory to the Trustee. The ownership of Debt Securities of any series shall be proved by the Debt Security Register or by a certificate of the Registrar for such series. The Trustee may require such additional proof of any matter referred to in this Section 8.02 as it shall deem necessary.

 

Section 8.03          Who May Be Deemed Owner of Debt Securities.  Prior to due presentment for registration of transfer of any Debt Security, the Issuers, the Subsidiary Guarantors, the Trustee, any paying agent and any Registrar may deem and treat the Person in whose name any Debt Security shall be registered upon the books of the Issuers as the absolute owner of such Debt Security (whether or not such Debt Security shall be overdue and notwithstanding any notation of ownership or other writing thereon) for the purpose of receiving payment of or on account of the principal of and premium, if any, and (subject to Section 2.12) interest on such Debt Security and for all other purposes, and none of the Issuers, the Subsidiary Guarantors or the Trustee nor any paying agent nor any Registrar shall be affected by any notice to the contrary; and all such payments so made to any such Holder for the time being, or upon his order, shall be valid and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for moneys payable upon any such Debt Security.

 

Section 8.04          Instruments Executed by Holders Bind Future Holders.  At any time prior to (but not after) the evidencing to the Trustee, as provided in Section 8.01, of the taking of any action by the Holders of the percentage in aggregate principal amount of the Debt Securities of any series specified in this Indenture in connection with such action and subject to the following paragraph, any Holder of a Debt Security which is shown by the evidence to be included in the Debt Securities the Holders of which have consented to such action may, by filing written notice with the Trustee at its corporate trust office referred to in Section 13.03 and upon proof of holding as provided in Section 8.02, revoke such action so far as concerns such Debt Security.  Except as aforesaid any such action taken by the Holder of any Debt Security shall be conclusive and binding upon such Holder and upon all future Holders and owners of such Debt Security and of any Debt Security issued upon transfer thereof or in exchange or substitution therefor, irrespective of whether or not any notation in regard thereto is made upon such Debt Security or such other Debt Securities.  Any action taken by the Holders of the percentage in aggregate principal amount of the Debt Securities of any series specified in this Indenture in connection with such action shall be conclusively binding upon the Issuers, the Subsidiary Guarantors, the Trustee and the Holders of all the Debt Securities of such series.

 

The Issuers may, but shall not be obligated to, fix a record date for the purpose of determining the Holders of Debt Securities entitled to give their consent or take any other action required or permitted to be taken pursuant to this Indenture.  If a record date is fixed, then notwithstanding the immediately preceding paragraph, those Persons who were Holders of Debt Securities at such record date (or their duly designated proxies), and only those Persons, shall be

 

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entitled to give such consent or to revoke any consent previously given or to take any such action, whether or not such Persons continue to be Holders of Debt Securities after such record date.  No such consent shall be valid or effective for more than 120 days after such record date unless the consent of the Holders of the percentage in aggregate principal amount of the Debt Securities of such series specified in this Indenture shall have been received within such 120-day period.

 

ARTICLE IX
 SUPPLEMENTAL INDENTURES

 

Section 9.01          Purposes for Which Supplemental Indenture May Be Entered into Without Consent of Holders.  The Issuers and any Subsidiary Guarantors, when authorized by resolutions of each Issuer’s Board of Directors, and the Trustee may from time to time and at any time, without the consent of Holders, enter into an indenture or indentures supplemental hereto (which shall conform to the provisions of the TIA as in force at the date of the execution thereof) for one or more of the following purposes:

 

(a)           to evidence the succession pursuant to Article X of another Person to either of the Issuers, or successive successions, and the assumption by the Successor Company (as defined in Section 10.01) of the covenants, agreements and obligations of its predecessor Issuer in this Indenture and in the Debt Securities;

 

(b)           to surrender any right or power herein conferred upon the Issuers or the Subsidiary Guarantors, to add to the covenants of the Issuers or the Subsidiary Guarantors such further covenants, restrictions, conditions or provisions for the protection of the Holders of all or any series of Debt Securities (and if such covenants are to be for the benefit of less than all series of Debt Securities, stating that such covenants are expressly being included solely for the benefit of such series) as the Board of Directors shall consider to be for the protection of the Holders of such Debt Securities, and to make the occurrence, or the occurrence and continuance, of a Default in any of such additional covenants, restrictions, conditions or provisions a Default or an Event of Default permitting the enforcement of all or any of the several remedies provided in this Indenture; provided, that in respect of any such additional covenant, restriction, condition or provision such supplemental indenture may provide for a particular period of grace after Default (which period may be shorter or longer than that allowed in the case of other Defaults) or may provide for an immediate enforcement upon such Default or may limit the remedies available to the Trustee upon such Default or may limit the right of the Holders of a majority in aggregate principal amount of any or all series of Debt Securities to waive such Default;

 

(c)           to cure any ambiguity or omission or to correct or supplement any provision contained herein, in any supplemental indenture or in any Debt Securities of any series that may be defective or inconsistent with any other provision contained herein, in any supplemental indenture or in the Debt Securities of such series; or to convey, transfer, assign, mortgage or pledge any property to or with the Trustee;

 

(d)           to permit the qualification of this Indenture or any indenture supplemental hereto under the TIA as then in effect, except that nothing herein contained shall permit or authorize the

 

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inclusion in any indenture supplemental hereto of the provisions referred to in Section 316(a)(2) of the TIA;

 

(e)           to change or eliminate any restrictions on the payment of principal of or premium, if any, on Debt Securities; provided, that any such action shall not adversely affect the interests of the Holders of Debt Securities of any series in any material respect or permit or facilitate the issuance of Debt Securities of any series in uncertificated form;

 

(f)            to reflect the release of any Subsidiary Guarantor in accordance with Article XIV;

 

(g)           in the case of any Debt Securities subordinated pursuant to Article XII, to make any change in Article XII that would limit or terminate the benefits available to any holder of Senior Indebtedness (or Representatives therefor) under Article XII;

 

(h)           to add Subsidiary Guarantors with respect to any or all of the Debt Securities or to secure any or all of the Debt Securities or the Guarantee;

 

(i)            to make any change that does not adversely affect the rights hereunder of any Holder;

 

(j)            to add to, change or eliminate any of the provisions of this Indenture in respect of one or more series of Debt Securities; provided, however, that any such addition, change or elimination not otherwise permitted under this Section 9.01 shall neither apply to any Debt Security of any series created prior to the execution of such supplemental indenture and entitled to the benefit of such provision nor modify the rights of the Holder of any such Debt Security with respect to such provision or shall become effective only when there is no such Debt Security Outstanding;

 

(k)           to evidence and provide for the acceptance of appointment hereunder by a successor or separate Trustee with respect to the Debt Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee; and

 

(l)            to establish the form or terms of Debt Securities of any series as permitted by Sections 2.01 and 2.03.

 

The Trustee is hereby authorized to join with the Issuers and the Subsidiary Guarantors in the execution of any such supplemental indenture, to make any further appropriate agreements and stipulations which may be therein contained and to accept the conveyance, transfer, assignment, mortgage or pledge of any property thereunder, but the Trustee shall not be obligated to enter into any such supplemental indenture which affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise.

 

Any supplemental indenture authorized by the provisions of this Section 9.01 may be executed by the Issuers, the Subsidiary Guarantors and the Trustee without the consent of the Holders of any of the Debt Securities at the time Outstanding, notwithstanding any of the provisions of Section 9.02.

 

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In the case of Debt Securities subordinated pursuant to Article XII, an amendment under this Section 9.01 may not make any change that adversely affects the rights under Article XII of any holder of Senior Indebtedness then outstanding unless the holders of such Senior Indebtedness (or any group or Representative thereof authorized to give a consent) consent to such change.

 

Section 9.02          Modification of Indenture with Consent of Holders of Debt Securities.  Without notice to any Holder but with the consent (evidenced as provided in Section 8.01) of the Holders of not less than a majority in aggregate principal amount of the Outstanding Debt Securities of each series affected by such supplemental indenture (including consents obtained in connection with a tender offer or exchange offer for any such series of Debt Securities), the Issuers and the Subsidiary Guarantors, when authorized by resolutions of each Issuer’s Board of Directors, and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto (which shall conform to the provisions of the TIA as in force at the date of execution thereof) for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of any supplemental indenture or of modifying in any manner the rights of the Holders of the Debt Securities of such series; provided, that no such supplemental indenture, without the consent of the Holders of each Debt Security so affected, shall: reduce the percentage in principal amount of Debt Securities of any series whose Holders must consent to an amendment or waiver;  reduce the rate of or extend the time for payment of interest on any Debt Security;  reduce the principal of or extend the Stated Maturity of any Debt Security;  reduce any premium payable upon the redemption of any Debt Security or change the time at which any Debt Security may or shall be redeemed in accordance with Article III;  make any Debt Security payable in currency other than that stated in such Debt Security; impair the right of any Holder to receive payment of premium, if any, principal of and interest on such Holder’s Debt Securities on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such Holder’s Debt Securities; in the case of any Debt Security subordinated pursuant to Article XII, make any change in Article XII that adversely affects the rights of any Holder under Article XII;  release any security that may have been granted in respect of the Debt Securities, other than in accordance with this Indenture; make any change in Section 6.06 or this Section 9.02; or release the Subsidiary Guarantors other than as provided in this Indenture or modify the Guarantee in any manner adverse to the Holders.

 

A supplemental indenture which changes or eliminates any covenant or other provision of this Indenture which has been expressly included solely for the benefit of one or more particular series of Debt Securities or which modifies the rights of the Holders of Debt Securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the Holders of Debt Securities of any other series.

 

Upon the request of the Issuers, accompanied by a copy of resolutions of the Board of Directors of each Issuer authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of Holders as aforesaid, the Trustee shall join with the Issuers and the Subsidiary Guarantors in the execution of such supplemental indenture unless such supplemental indenture affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion but shall not be obligated to enter into such supplemental indenture.

 

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It shall not be necessary for the consent of the Holders under this Section 9.02 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof.

 

In the case of any Debt Securities subordinated pursuant to Article XII, an amendment under this Section 9.02 may not make any change that adversely affects the rights under Article XII of any holder of Senior Indebtedness then outstanding unless the holders of such Senior Indebtedness (or any group or Representative thereof authorized to give a consent) consent to such change.

 

After an amendment under this Section 9.02 requiring the consent of the Holders of any series of Debt Securities becomes effective, the Issuers shall mail to Holders of that series of Debt Securities a notice briefly describing such amendment.  The failure to give such notice to any such Holders, or any defect therein, shall not impair or affect the validity of an amendment under this Section 9.02 with respect to other Holders.

 

Section 9.03          Effect of Supplemental Indentures.  Upon the execution of any supplemental indenture pursuant to the provisions of this Article IX, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities under this Indenture of the Trustee, the Issuers, the Subsidiary Guarantors and the Holders shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes.

 

The Trustee, subject to the provisions of Sections 7.01 and 7.02, shall be entitled to receive an Officers’ Certificate and an Opinion of Counsel as conclusive evidence that any such supplemental indenture complies with the provisions of this Article IX.

 

Section 9.04          Debt Securities May Bear Notation of Changes by Supplemental Indentures.  Debt Securities of any series authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article IX 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.  New Debt Securities of any series so modified as to conform, in the opinion of the Trustee and the Issuers, to any modification of this Indenture contained in any such supplemental indenture may be prepared and executed by the Issuers, authenticated by the Trustee and delivered in exchange for the Debt Securities of such series then Outstanding.  Failure to make the appropriate notation or to issue a new Debt Security of such series shall not affect the validity of such amendment.

 

ARTICLE X
 CONSOLIDATION, MERGER, SALE OR CONVEYANCE

 

Section 10.01       Consolidations and Mergers of the Issuers.  Neither of the Issuers may consolidate or amalgamate with or merge with or into any Person, or sell, convey, transfer, lease or otherwise dispose of all or substantially all its assets to any Person, whether in a single transaction or a series of related transactions, unless: (a) either (i) such Issuer shall be the

 

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surviving Person in the case of a merger or (ii) the resulting, surviving or transferee Person if other than such Issuer (the “Successor Company”), shall be a partnership, limited liability company or corporation organized in the case of the Partnership (and a corporation in the case of Finance Corp. so long as the Partnership is not a corporation), and existing under the laws of the United States, any State thereof or the District of Columbia and the Successor Company shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, all the obligations of such Issuer under this Indenture and the Debt Securities according to their tenor; (b) immediately after giving effect to such transaction or series of transactions (and treating any Debt which becomes an obligation of the Successor Company or any Subsidiary of such Issuer as a result of such transaction as having been incurred by the Successor Company or such Subsidiary at the time of such transaction or series of transactions), no Default or Event of Default would occur or be continuing; (c) if such Issuer is not the continuing Person, then each Subsidiary Guarantor, unless it has become the Successor Company, shall confirm that its Guarantee shall continue to apply to the obligations under the Debt Securities and this Indenture; and (d) the Issuers shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, amalgamation, merger or disposition and such supplemental indenture (if any) comply with this Indenture.

 

Section 10.02       Rights and Duties of Successor Company.  In case of any consolidation, amalgamation or merger where such Issuer is not the continuing Person, or disposition of all or substantially all of the assets of such Issuer in accordance with Section 10.01, the Successor Company shall succeed to and be substituted for such Issuer with the same effect as if it had been named herein as the respective party to this Indenture, and the predecessor entity shall be released from all liabilities and obligations under this Indenture and the Debt Securities, except that no such release will occur in the case of a lease of all or substantially all of such Issuer’s assets.  The Successor Company thereupon may cause to be signed, and may issue either in its own name or in the name of such Issuer, any or all the Debt Securities issuable hereunder which theretofore shall not have been signed by or on behalf of such Issuer and delivered to the Trustee; and, upon the order of the Successor Company, instead of such Issuer, and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall deliver any Debt Securities which previously shall have been signed and delivered by or on behalf of such Issuer to the Trustee for authentication, and any Debt Securities which the Successor Company thereafter shall cause to be signed and delivered to the Trustee for that purpose.  All the Debt Securities so issued shall in all respects have the same legal rank and benefit under this Indenture as the Debt Securities theretofore or thereafter issued in accordance with the terms of this Indenture as though all such Debt Securities had been issued at the date of the execution hereof.

 

In case of any such consolidation, amalgamation, merger, sale or disposition such changes in phraseology and form (but not in substance) may be made in the Debt Securities thereafter to be issued as may be appropriate.

 

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ARTICLE XI
 SATISFACTION AND DISCHARGE OF
 INDENTURE; DEFEASANCE; UNCLAIMED MONEYS

 

Section 11.01       Applicability of Article.  The provisions of this Article XI relating to discharge or defeasance of Debt Securities shall be applicable to each series of Debt Securities except as otherwise specified pursuant to Section 2.03 for Debt Securities of such series.

 

Section 11.02       Satisfaction and Discharge of Indenture; Defeasance.

 

(a)           If at any time the Issuers shall have delivered to the Trustee for cancellation all Debt Securities of any series theretofore authenticated and delivered (other than any Debt Securities of such series which shall have been destroyed, lost or stolen and which shall have been replaced or paid as provided in Section 2.09 and Debt Securities for whose payment money has theretofore been deposited in trust and thereafter repaid to the Issuers as provided in Section 11.05) or all Debt Securities of such series not theretofore delivered to the Trustee for cancellation shall have become due and payable, or are by their terms to become due and payable within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption, and the Issuers shall have deposited or caused to be deposited with the Trustee as trust funds the entire amount in cash sufficient to pay at final maturity or upon redemption all Debt Securities of such series not theretofore delivered to the Trustee for cancellation, including principal and premium, if any, and interest due or to become due on such date of maturity or Redemption Date, as the case may be, and if in either case the Issuers shall also have paid or caused to be paid all other sums payable hereunder by the Issuers with respect to the Debt Securities of such series, then this Indenture shall cease to be of further effect (except as provided in Section 11.02(c)) with respect to the Debt Securities of such series, and the Trustee, on demand of the Issuers accompanied by an Officers’ Certificate and an Opinion of Counsel and at the cost and expense of the Issuers, shall execute proper instruments acknowledging satisfaction of and discharging this Indenture with respect to the Debt Securities of such series.

 

(b)           Subject to Sections 11.02(c), 11.03 and 11.07, the Issuers at any time may terminate, with respect to Debt Securities of a particular series,  all of their respective obligations under the Debt Securities of such series and this Indenture with respect to the Debt Securities of such series (“legal defeasance option”) or the operation of (w) Sections 4.09 and 4.10, (x) any covenant made applicable to such Debt Securities pursuant to Section 2.03, (y) Sections 6.01(d), (g) and (h) and (z) as they relate to the Subsidiary Guarantors only, Sections 6.01(e) and (f) (“covenant defeasance option”).  If the Issuers exercise either their legal defeasance option or their covenant defeasance option with respect to Debt Securities of a particular series that are entitled to the benefit of the Guarantee, the Guarantee will terminate with respect to that series of Debt Securities.  The Issuers may exercise their legal defeasance option notwithstanding their prior exercise of its covenant defeasance option.

 

If the Issuers exercise their legal defeasance option, payment of the Debt Securities of the defeased series may not be accelerated because of an Event of Default.  If the Issuers exercise their covenant defeasance option, payment of the Debt Securities of the defeased series may not

 

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be accelerated because of an Event of Default specified in Sections 6.01(d), (g) and (h) and, with respect to the Subsidiary Guarantors only, Sections 6.01(e) and (f).

 

Upon satisfaction of the conditions set forth herein and upon request of the Issuers, the Trustee shall acknowledge in writing the discharge of those obligations that the Issuers terminate.

 

(c)           Notwithstanding clauses (a) and (b) above, the Issuers’ obligations in Sections 2.07, 2.09, 4.02, 4.03, 4.04, the last sentence of 4.05(a), 4.06, 5.01, 7.06, 11.05, 11.06 and 11.07 shall survive until the Debt Securities of the defeased series have been paid in full.  Thereafter, the Issuers’ obligations in Sections 7.06, 11.05 and 11.06 shall survive.

 

Section 11.03       Conditions of Defeasance.  The Issuers may exercise their legal defeasance option or their covenant defeasance option with respect to Debt Securities of a particular series only if:

 

(a)           the Issuers irrevocably deposit in trust with the Trustee money or U.S. Government Obligations for the payment of principal of, and premium, if any, and interest on, the Debt Securities of such series to final maturity or redemption, as the case may be;

 

(b)           the Issuers deliver to the Trustee a certificate from a nationally recognized firm of independent accountants expressing their opinion that the payments of principal and interest when due and without reinvestment on the deposited U.S. Government Obligations plus any deposited money without investment will provide cash at such times and in such amounts as will be sufficient to pay the principal, premium, if any, and interest when due on all the Debt Securities of such series to final maturity or redemption, as the case may be;

 

(c)           91 days pass after the deposit is made and during the 91-day period no Default specified in Section 6.01(e) or (f) with respect to the Issuers occurs which is continuing at the end of the period;

 

(d)           no Default has occurred and is continuing on the date of such deposit and after giving effect thereto;

 

(e)           the deposit does not constitute a default under any other material agreement binding on the Issuers and, if the Debt Securities of such series are subordinated pursuant to Article XII, is not prohibited by Article XII;

 

(f)            the Issuers deliver to the Trustee an Opinion of Counsel to the effect that the trust resulting from the deposit does not constitute, or is qualified as, a regulated investment company under the Investment Company Act of 1940;

 

(g)           in the event of the legal defeasance option, the Issuers shall have delivered to the Trustee an Opinion of Counsel stating that the Issuers have received from the Internal Revenue Service a ruling, or since the date of this Indenture there has been a change in the applicable Federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of Debt Securities of such series will not recognize income, gain or loss for Federal income tax purposes as a result of such defeasance and will be

 

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subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such defeasance had not occurred;

 

(h)           in the event of the covenant defeasance option, the Issuers shall have delivered to the Trustee an Opinion of Counsel to the effect that the Holders of Debt Securities of such series will not recognize income, gain or loss for Federal income tax purposes as a result of such covenant defeasance and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; and

 

(i)            the Issuers deliver to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent to the defeasance of the Debt Securities of such series as contemplated by this Article XI have been complied with.

 

Before or after a deposit, the Issuers may make arrangements satisfactory to the Trustee for the redemption of Debt Securities of such series at a future date in accordance with Article III.

 

Section 11.04       Application of Trust Money.  The Trustee shall hold in trust money or U.S. Government Obligations deposited with it pursuant to this Article XI.  It shall apply the deposited money and the money from U.S. Government Obligations through any paying agent and in accordance with this Indenture to the payment of principal of, and premium, if any, and interest on, the Debt Securities of the defeased series.  In the event the Debt Securities of the defeased series are subordinated pursuant to Article XII, money and securities so held in trust are not subject to Article XII.

 

Section 11.05       Repayment to Issuers.  The Trustee and any paying agent shall promptly turn over to the Issuers upon request any excess money or securities held by them at any time.

 

Subject to any applicable abandoned property law, the Trustee and any paying agent shall pay to the Issuers upon request any money held by them for the payment of principal, premium or interest that remains unclaimed for two years, and, thereafter, Holders entitled to such money must look to the Issuers for payment as general creditors.

 

Section 11.06       Indemnity for U.S. Government Obligations.  The Issuers shall pay and shall indemnify the Trustee and the Holders against any tax, fee or other charge imposed on or assessed against deposited U.S. Government Obligations or the principal and interest received on such U.S. Government Obligations.

 

Section 11.07       Reinstatement.  If the Trustee or any paying agent is unable to apply any money or U.S. Government Obligations in accordance with this Article XI by reason of any legal proceeding or by reason of any order or judgment of any court or government authority enjoining, restraining or otherwise prohibiting such application, the Issuers’ obligations under this Indenture and the Debt Securities of the defeased series shall be revived and reinstated as though no deposit had occurred pursuant to this Article XI until such time as the Trustee or any paying agent is permitted to apply all such money or U.S. Government Obligations in accordance with this Article XI.

 

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ARTICLE XII
 SUBORDINATION OF DEBT SECURITIES AND GUARANTEE

 

Section 12.01       Applicability of Article; Agreement to Subordinate.  The provisions of this Article XII shall only be applicable to the Debt Securities of any series (Debt Securities of such series referred to in this Article XII as “Subordinated Debt Securities”) designated, pursuant to Section 2.03, as subordinated to Senior Indebtedness and any related Guarantee of such Subordinated Debt Securities.  Each Holder by accepting a Subordinated Debt Security agrees that the Debt evidenced by such Subordinated Debt Security and any related Guarantee of such Subordinated Debt Security is subordinated in right of payment, to the extent and in the manner provided in this Article XII, to the prior payment of all Senior Indebtedness and that the subordination is for the benefit of and enforceable by the holders of Senior Indebtedness.  All provisions of this Article XII shall be subject to Section 12.12.

 

Section 12.02       Liquidation, Dissolution, Bankruptcy.  Upon any payment or distribution of the assets of any of the Issuers or the Subsidiary Guarantors to creditors (i) upon a liquidation or a dissolution of any of the Issuers or the Subsidiary Guarantors or (ii) in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to any of the Issuers or the Subsidiary Guarantors or its property:

 

(a)           holders of Senior Indebtedness of the Issuers or any Subsidiary Guarantor, as the case may be, shall be entitled to receive payment in full in cash of such Senior Indebtedness of such Person (including interest (if any), accruing on or after the commencement of a proceeding in bankruptcy, whether or not allowed as a claim against any of the Issuers or the Subsidiary Guarantors, as the case may be, in such bankruptcy proceeding) before Holders of Subordinated Debt Securities and any related Guarantee shall be entitled to receive any payment of principal of, or premium, if any, or interest on, the Subordinated Debt Securities from the Issuers, or any payment in respect of the Guarantee from the Subsidiary Guarantors; and

 

(b)           until the Senior Indebtedness of the Issuers or any Subsidiary Guarantor, as the case may be, is paid in full, any distribution to which Holders of Subordinated Debt Securities and any related Guarantee would be entitled but for this Article XII shall be made to holders of Senior Indebtedness of the Issuers or the Subsidiary Guarantors, as the case may be, as their interests may appear, except that such Holders may receive capital stock and any debt securities that are subordinated to Senior Indebtedness of any of the Issuers or the Subsidiary Guarantors, as the case may be, to at least the same extent as the Subordinated Debt Securities of the Issuers or the related Guarantee of any Subsidiary Guarantor, respectively.

 

Section 12.03       Default on Senior Indebtedness.  The Issuers and the Subsidiary Guarantors may not pay the principal of, or premium, if any, or interest on, the Subordinated Debt Securities or any related Guarantee or make any deposit pursuant to Article XI and may not repurchase, redeem or otherwise retire (except, in the case of Subordinated Debt Securities that provide for a mandatory sinking fund pursuant to Section 3.05, by the delivery of Subordinated Debt Securities by the Issuers to the Trustee pursuant to the first paragraph of Section 3.05) any Subordinated Debt Securities (collectively, “pay the Subordinated Debt Securities”) if any principal, premium or interest in respect of Senior Indebtedness of such Person is not paid within any applicable grace period (including at maturity) or any other default on Senior Indebtedness

 

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of such Person occurs and the maturity of such Senior Indebtedness is accelerated in accordance with its terms unless and until the default has been cured or waived and any such acceleration has been rescinded or such Senior Indebtedness has been paid in full in cash; provided, however, that the Issuers and the Subsidiary Guarantors may make payments on the Subordinated Debt Securities or any related Guarantee without regard to the foregoing if the Issuers and the Trustee receive written notice approving such payment from the Representative of each issue of Designated Senior Indebtedness. During the continuance of any other default with respect to any Designated Senior Indebtedness pursuant to which the maturity thereof may be accelerated immediately without further notice (except such notice as may be required to effect such acceleration) or the expiration of any applicable grace periods, the Issuers and the Subsidiary Guarantors may not make payments on the Subordinated Debt Securities or any related Guarantee for a period (a “Payment Blockage Period”) commencing upon the receipt by the Issuers and the Trustee (and if such Designated Senior Indebtedness is Debt of a Subsidiary Guarantor, the Subsidiary Guarantor) of written notice of such default from the Representative of any Designated Senior Indebtedness specifying an election to effect a Payment Blockage Period (a “Blockage Notice”) and ending 179 days thereafter (or earlier if such Payment Blockage Period is terminated by written notice to the Trustee and the Issuers (and if such Designated Senior Indebtedness is Debt of a Subsidiary Guarantor, the Subsidiary Guarantor) from the Person or Persons who gave such Blockage Notice, by repayment in full in cash of such Designated Senior Indebtedness or  because the default giving rise to such Blockage Notice is no longer continuing).  Notwithstanding the provisions described in the immediately preceding sentence (but subject to the provisions contained in Section 12.02 and the first sentence of this Section 12.03), unless the holders of such Designated Senior Indebtedness or the Representative of such holders shall have accelerated the maturity of such Designated Senior Indebtedness, the Issuers and the Subsidiary Guarantors may resume payments on the Subordinated Debt Securities and related Guarantee after such Payment Blockage Period.  Not more than one Blockage Notice may be given in any consecutive 360-day period, irrespective of the number of defaults with respect to any number of issues of Designated Senior Indebtedness during such period, unless otherwise specified pursuant to Section 2.03 for the Subordinated Debt Securities of a series; provided, however, that in no event 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 360 consecutive day period.  For purposes of this Section 12.03, no default or event of default which existed or was continuing on the date of the commencement of any Payment Blockage Period with respect to the Designated Senior Indebtedness initiating such Payment Blockage Period shall be, or be made, the basis of the commencement of a subsequent Payment Blockage Period by the Representative of such Designated Senior Indebtedness, whether or not within a period of 360 consecutive days, unless such default or event of default shall have been cured or waived for a period of not less than 90 consecutive days.

 

Section 12.04       Acceleration of Payment of Debt Securities.  If payment of the Subordinated Debt Securities is accelerated because of an Event of Default, the Issuers shall promptly notify the holders of the Designated Senior Indebtedness (or their Representatives) of the acceleration.

 

Section 12.05       When Distribution Must Be Paid Over.  If a distribution is made to Holders of Subordinated Debt Securities or a related Guarantee that because of this Article XII

 

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should not have been made to them, the Holders who receive such distribution shall hold it in trust for holders of Senior Indebtedness and pay it over to them as their interests may appear.

 

Section 12.06       Subrogation.  After all Senior Indebtedness is paid in full and until the Subordinated Debt Securities are paid in full, Holders thereof shall be subrogated to the rights of holders of Senior Indebtedness to receive distributions applicable to Senior Indebtedness.  A distribution made under this Article XII to holders of Senior Indebtedness which otherwise would have been made to Holders of Subordinated Debt Securities is not, as between the Issuers or the Subsidiary Guarantors, as the case may be, and such Holders, a payment by the Issuers or the Subsidiary Guarantors, as the case may be, on Senior Indebtedness.

 

Section 12.07       Relative Rights.  This Article XII defines the relative rights of Holders of Subordinated Debt Securities and holders of Senior Indebtedness.  Nothing in this Indenture shall:

 

(a)           impair, as between the Issuers or the Subsidiary Guarantors, as the case may be, and Holders of Subordinated Debt Securities, the obligation of the Issuers or the Subsidiary Guarantors, as the case may be, which is absolute and unconditional, to pay principal of, and premium, if any, and interest on, the Subordinated Debt Securities in accordance with their terms; or

 

(b)           prevent the Trustee or any Holder of Subordinated Debt Securities from exercising its available remedies upon an Event of Default, subject to the rights of holders of Senior Indebtedness to receive distributions otherwise payable to Holders of Subordinated Debt Securities.

 

Section 12.08       Subordination May Not Be Impaired by Issuers.  No right of any holder of Senior Indebtedness to enforce the subordination of the Debt evidenced by the Subordinated Debt Securities and the Guarantee in respect thereof shall be impaired by any act or failure to act by any of the Issuers or the Subsidiary Guarantors or by its failure to comply with this Indenture.

 

Section 12.09       Rights of Trustee and Paying Agent.  Notwithstanding Sections 12.02 and 12.03, the Trustee or any paying agent may continue to make payments on Subordinated Debt Securities and shall not be charged with knowledge of the existence of facts that would prohibit the making of any such payments unless, not less than two Business Days prior to the date of such payment, a responsible officer of the Trustee receives notice satisfactory to it that payments may not be made under this Article XII.  The Issuers, the Registrar, any paying agent, a Representative or a holder of Senior Indebtedness may give the notice; provided, however, that, if an issue of Senior Indebtedness has a Representative, only the Representative may give the notice on behalf of the Holders of the Senior Indebtedness of that issue.

 

The Trustee in its individual or any other capacity may hold Senior Indebtedness with the same rights it would have if it were not Trustee.  The Registrar and any paying agent may do the same with like rights.  The Trustee shall be entitled to all the rights set forth in this Article XII 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 Article VII shall deprive the Trustee

 

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of any of its rights as such holder.  Nothing in this Article XII shall apply to claims of, or payments to, the Trustee under or pursuant to Section 7.06.

 

Section 12.10       Distribution or Notice to Representative.  Whenever a distribution is to be made or a notice given to holders of Senior Indebtedness, the distribution may be made and the notice given to their Representative (if any).

 

Section 12.11       Article XII Not to Prevent Defaults or Limit Right to Accelerate.  The failure to make a payment pursuant to the Subordinated Debt Securities, whether directly or pursuant to the Guarantee, by reason of any provision in this Article XII shall not be construed as preventing the occurrence of a Default.  Nothing in this Article XII shall have any effect on the right of the Holders or the Trustee to accelerate the maturity of either the Subordinated Debt Securities or the Debt Securities, as the case may be.

 

Section 12.12       Trust Moneys Not Subordinated.  Notwithstanding anything contained herein to the contrary, payments from money or the proceeds of U.S. Government Obligations held in trust under Article XI by the Trustee for the payment of principal of, and premium, if any, and interest on, the Subordinated Debt Securities or the Debt Securities shall not be subordinated to the prior payment of any Senior Indebtedness or subject to the restrictions set forth in this Article XII, and none of the Holders thereof shall be obligated to pay over any such amount to the Issuers, the Subsidiary Guarantors or any holder of Senior Indebtedness of the Issuers or the Subsidiary Guarantors or any other creditor of the Issuers or the Guarantor.

 

Section 12.13       Trustee Entitled to Rely.  Upon any payment or distribution pursuant to this Article XII, the Trustee and the Holders shall be entitled to rely  upon any order or decree of a court of competent jurisdiction in which any proceedings of the nature referred to in Section 12.02 are pending,  upon a certificate of the liquidating trustee or agent or other Person making such payment or distribution to the Trustee or to such Holders or  upon the Representatives for the holders of Senior Indebtedness for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Indebtedness and other Debt of any of the Issuers or the Subsidiary Guarantors, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article XII.  In the event that the Trustee determines, in good faith, that evidence is required with respect to the right of any Person as a holder of Senior Indebtedness to participate in any payment or distribution pursuant to this Article XII, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and other facts pertinent to the rights of such Person under this Article XII, and, if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment.  The provisions of Sections 7.01 and 7.02 shall be applicable to all actions or omissions of actions by the Trustee pursuant to this Article XII.

 

Section 12.14       Trustee to Effectuate Subordination.  Each Holder by accepting a Subordinated Debt Security authorizes and directs the Trustee on his behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination between the

 

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Holders of Subordinated Debt Securities and the holders of Senior Indebtedness as provided in this Article XII and appoints the Trustee as attorney-in-fact for any and all such purposes.

 

Section 12.15       Trustee Not Fiduciary for Holders of Senior Indebtedness.  The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness and shall not be liable to any such holders if it shall mistakenly pay over or distribute to Holders of Subordinated Debt Securities or any of the Issuers or the Subsidiary Guarantors or any other Person, money or assets to which any holders of Senior Indebtedness shall be entitled by virtue of this Article XII or otherwise.

 

Section 12.16       Reliance by Holders of Senior Indebtedness on Subordination Provisions.  Each Holder by accepting a Subordinated Debt Security acknowledges and agrees that the foregoing subordination provisions are, and are intended to be, an inducement and a consideration to each holder of any Senior Indebtedness, whether such Senior Indebtedness was created or acquired before or after the issuance of the Subordinated Debt Securities, to acquire and continue to hold, or to continue to hold, such Senior Indebtedness and such holder of Senior Indebtedness shall be deemed conclusively to have relied on such subordination provisions in acquiring and continuing to hold, or in continuing to hold, such Senior Indebtedness.

 

ARTICLE XIII
 MISCELLANEOUS PROVISIONS

 

Section 13.01       Successors and Assigns of Issuers Bound by Indenture.  All the covenants, stipulations, promises and agreements in this Indenture contained by or in behalf of the Issuers, the Subsidiary Guarantors or the Trustee shall bind their respective successors and assigns, whether so expressed or not.

 

Section 13.02       Acts of Board, Committee or Officer of Successor Issuer Valid.  Any act or proceeding by any provision of this Indenture authorized or required to be done or performed by any board, committee or officer of either of the Issuers shall and may be done and performed with like force and effect by the like board, committee or officer of any Successor Company.

 

Section 13.03       Required Notices or Demands.  Any notice or communication by the Issuers, the Subsidiary Guarantors or the Trustee to the others is duly given if in writing in the English language and delivered in Person or mailed by registered or certified mail (return receipt requested), telecopier or overnight air courier guaranteeing next day delivery, to the other’s address:

 

If to the Issuers or any Subsidiary Guarantor:

 

Exterran Partners, L.P.

16666 Northchase Drive

Houston, Texas 77060

Attention:  Chief Financial Officer

Telecopy No.                       

 

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If to the Trustee:

                           

 

The Issuers, any Subsidiary Guarantor or the Trustee by notice to the others may designate additional or different addresses for subsequent notices or communications.

 

All notices and communications shall be deemed to have been duly given:  at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; on the first Business Day on or after being sent, if telecopied and the sender receives confirmation of successful transmission; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery.

 

Any notice required or permitted to a Holder by the Issuers, any Subsidiary Guarantor or the Trustee pursuant to the provisions of this Indenture shall be deemed to be properly mailed by being deposited postage prepaid in a post office letter box in the United States addressed to such Holder at the address of such Holder as shown on the Debt Security Register.  Any report pursuant to Section 313 of the TIA shall be transmitted in compliance with subsection (c) therein.

 

Notwithstanding the foregoing, any notice to Holders of Floating Rate Securities regarding the determination of a periodic rate of interest, if such notice is required pursuant to Section 2.03, shall be sufficiently given if given in the manner specified pursuant to Section 2.03.

 

In the event of suspension of regular mail service or by reason of any other cause it shall be impracticable to give notice by mail, then such notification as shall be given with the approval of the Trustee shall constitute sufficient notice for every purpose hereunder.

 

In the event it shall be impracticable to give notice by publication, then such notification as shall be given with the approval of the Trustee shall constitute sufficient notice for every purpose hereunder.

 

Failure to mail a notice or communication to a Holder or any defect in it or any defect in any notice by publication as to a Holder shall not affect the sufficiency of such notice with respect to other Holders.  If a notice or communication is mailed or published in the manner provided above, it is conclusively presumed duly given.

 

Section 13.04       Indenture and Debt Securities to Be Construed in Accordance with the Laws of the State of New York.  THIS INDENTURE, EACH DEBT SECURITY AND THE GUARANTEE SHALL BE DEEMED TO BE NEW YORK CONTRACTS, AND FOR ALL PURPOSES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID STATE.

 

Section 13.05       Officers’ Certificate and Opinion of Counsel to Be Furnished upon Application or Demand by the Issuers.  Upon any application or demand by the Issuers to the Trustee to take any action under any of the provisions of this Indenture, each of the Issuers shall furnish to the Trustee an Officers’ Certificate stating that all conditions precedent provided for in

 

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this Indenture 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 have been complied with, except that in the case of any such application or demand as to which the furnishing of such document is specifically required by any provision of this Indenture relating to such particular application or demand, no additional certificate or opinion need be furnished.

 

Each certificate or opinion provided for in this Indenture and delivered to the Trustee with respect to compliance with a condition or covenant provided for in this Indenture shall include (a) a statement that the person making such certificate or opinion has read such covenant or condition, (b) 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, (c) a statement that, in the opinion of such person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with and (d) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with.

 

Section 13.06       Payments Due on Legal Holidays.  In any case where the date of maturity of interest on or principal of and premium, if any, on the Debt Securities of a series or the date fixed for redemption or repayment of any Debt Security or the making of any sinking fund payment shall not be a Business Day at any Place of Payment for the Debt Securities of such series, then payment of interest or principal and premium, if any, or the making of such sinking fund payment need not be made on such date at such Place of Payment, but may be made on the next succeeding Business Day at such Place of Payment with the same force and effect as if made on the date of maturity or the date fixed for redemption, and no interest shall accrue for the period after such date.  If a record date is not a Business Day, the record date shall not be affected.

 

Section 13.07       Provisions Required by TIA to Control.  If and to the extent that any provision of this Indenture limits, qualifies or conflicts with another provision included in this Indenture which is required to be included in this Indenture by any of Sections 310 to 318, inclusive, of the TIA, such required provision shall control.

 

Section 13.08       Computation of Interest on Debt Securities.  Interest, if any, on the Debt Securities shall be computed on the basis of a 360-day year of twelve 30-day months, except as may otherwise be provided pursuant to Section 2.03.

 

Section 13.09       Rules by Trustee, Paying Agent and Registrar.  The Trustee may make reasonable rules for action by or a meeting of Holders.  The Registrar and any paying agent may make reasonable rules for their functions.

 

Section 13.10       No Recourse Against Others.  None of the past, present or future partners, incorporators, managers, members, directors, officers, employees, unitholders or stockholders of either Issuer or any Subsidiary Guarantor, as such, shall have any liability for any obligations of the Subsidiary Guarantors or the Issuers under the Debt Securities, this Indenture or the Guarantee or for any claim based on, in respect of, or by reason of, such obligations or their creation.  By accepting a Debt Security, each Holder shall be deemed to have waived and

 

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released all such liability.  The waiver and release shall be part of the consideration for the issue of the Debt Securities.

 

Section 13.11       Severability.  In case any provision in this Indenture or the Debt Securities 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 13.12       Effect of Headings.  The article and section headings herein and in the Table of Contents are for convenience only and shall not affect the construction hereof.

 

Section 13.13       Indenture May Be Executed in Counterparts.  This Indenture may be executed in any number of counterparts, each of which shall be an original; but such counterparts shall together constitute but one and the same instrument.

 

ARTICLE XIV
 GUARANTEE

 

Section 14.01       Unconditional Guarantee.

 

(a)           Notwithstanding any provision of this Article XIV to the contrary, the provisions of this Article XIV shall be applicable only to, and inure solely to the benefit of, the Debt Securities of any series designated, pursuant to Section 2.03, as entitled to the benefits of the Guarantee of each of the Subsidiary Guarantors.

 

(b)           For value received, each of the Subsidiary Guarantors hereby fully, unconditionally and absolutely guarantees (the “Guarantee”) to the Holders and to the Trustee the due and punctual payment of the principal of, and premium, if any, and interest on the Debt Securities and all other amounts due and payable under this Indenture and the Debt Securities by the Issuers, when and as such principal, premium, if any, and interest shall become due and payable, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise, according to the terms of the Debt Securities and this Indenture, subject to (i) the limitations set forth in Section 14.03 and (ii) in the case of the Guarantee of the Subordinated Debt Securities, to the subordination provisions contained in Article XII.

 

(c)           Failing payment when due of any amount guaranteed pursuant to the Guarantee, for whatever reason, each of the Subsidiary Guarantors will be jointly and severally obligated to pay the same immediately, subject, in the case of the Guarantee of the Subordinated Debt Securities, to the subordination provisions contained in Article XII.  The Guarantee hereunder (other than the Guarantee of Subordinated Debt Securities) is intended to be a general, unsecured, senior obligation of each of the Subsidiary Guarantors and will rank pari passu in right of payment with all Debt of each Subsidiary Guarantor that is not, by its terms, expressly subordinated in right of payment to the Guarantee.  Each of the Subsidiary Guarantors hereby agrees that its obligations hereunder shall be full, unconditional and absolute, irrespective of the validity, regularity or enforceability of the Debt Securities, the Guarantee (including the Guarantee of any other Subsidiary Guarantor) or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Debt Securities with respect to any provisions hereof or thereof, the recovery of any judgment against either of the Issuers or any other Subsidiary Guarantor, or any action to enforce the same or any other circumstances which

 

59

 

might otherwise constitute a legal or equitable discharge or defense of any of the Subsidiary Guarantors.  Each of the Subsidiary Guarantors hereby agrees that in the event of a default in payment of the principal of, or premium, if any, or interest on the Debt Securities, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise, legal proceedings may be instituted by the Trustee on behalf of the Holders or, subject to Section 6.04, by the Holders, on the terms and conditions set forth in this Indenture, directly against such Subsidiary Guarantor to enforce the Guarantee without first proceeding against either of the Issuers or any other Subsidiary Guarantor.

 

(d)           The obligations of each of the Subsidiary Guarantors under this Article XIV shall be as aforesaid full, unconditional and absolute and shall not be impaired, modified, released or limited by any occurrence or condition whatsoever, including, without limitation, (A) any compromise, settlement, release, waiver, renewal, extension, indulgence or modification of, or any change in, any of the obligations and liabilities of any of the Issuers or the Subsidiary Guarantors contained in the Debt Securities or this Indenture, (B) any impairment, modification, release or limitation of the liability of any of the Issuers or the Subsidiary Guarantors or any of their estates in bankruptcy, or any remedy for the enforcement thereof, resulting from the operation of any present or future provision of any applicable Bankruptcy Law, as amended, or other statute or from the decision of any court, (C) the assertion or exercise by any of the Issuers, the Subsidiary Guarantors or the Trustee of any rights or remedies under the Debt Securities or this Indenture or their delay in or failure to assert or exercise any such rights or remedies, (D) the assignment or the purported assignment of any property as security for the Debt Securities, including all or any part of the rights of any of the Issuers or the Subsidiary Guarantors under this Indenture, (E) the extension of the time for payment by any of the Issuers or the Subsidiary Guarantors of any payments or other sums or any part thereof owing or payable under any of the terms and provisions of the Debt Securities or this Indenture or of the time for performance by any of the Issuers or the Subsidiary Guarantors of any other obligations under or arising out of any such terms and provisions or the extension or the renewal of any thereof, (F) the modification or amendment (whether material or otherwise) of any duty, agreement or obligation of any of the Issuers or the Subsidiary Guarantors set forth in this Indenture, (G) the voluntary or involuntary liquidation, dissolution, sale or other disposition of all or substantially all of the  assets, marshaling of assets and liabilities, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of, or other similar proceeding affecting, any of the Issuers or the Subsidiary Guarantors or any of their respective assets, or the disaffirmance of the Debt Securities, the Guarantee or this Indenture in any such proceeding, (H) the release or discharge of any of the Issuers or the Subsidiary Guarantors from the performance or observance of any agreement, covenant, term or condition contained in any of such instruments by operation of law, (I) the unenforceability of the Debt Securities, the Guarantee or this Indenture or (J) any other circumstances (other than payment in full or discharge of all amounts guaranteed pursuant to the Guarantee) which might otherwise constitute a legal or equitable discharge of a surety or guarantor.

 

(e)           Each of the Subsidiary Guarantors hereby (A) waives diligence, presentment, demand of payment, filing of claims with a court in the event of the merger, insolvency or bankruptcy of any of the Issuers or the Subsidiary Guarantors, and all demands whatsoever, (B) acknowledges that any agreement, instrument or document evidencing the Guarantee may be transferred and that the benefit of its obligations hereunder shall extend to each holder of any

 

60

 

agreement, instrument or document evidencing the Guarantee without notice to it and (C) covenants that the Guarantee will not be discharged except by complete performance of the Guarantee.  Each of the Subsidiary Guarantors further agrees that if at any time all or any part of any payment theretofore applied by any Person to the Guarantee is, or must be, rescinded or returned for any reason whatsoever, including without limitation, the insolvency, bankruptcy or reorganization of any of the Issuers or the Subsidiary Guarantors, the Guarantee shall, to the extent that such payment is or must be rescinded or returned, be deemed to have continued in existence notwithstanding such application, and the Guarantee shall continue to be effective or be reinstated, as the case may be, as though such application had not been made.

 

(f)            Each of the Subsidiary Guarantors shall be subrogated to all rights of the Holders and the Trustee against the Issuers in respect of any amounts paid by such Subsidiary Guarantor pursuant to the provisions of this Indenture, provided, however, that such Subsidiary Guarantor, shall not be entitled to enforce or to receive any payments arising out of, or based upon, such right of subrogation until all of the Debt Securities and the Guarantee shall have been paid in full or discharged.

 

Section 14.02       Execution and Delivery of Guarantee.  To further evidence the Guarantee set forth in Section 14.01, each of the Subsidiary Guarantors hereby agrees that a notation relating to such Guarantee, substantially in the form attached hereto as Annex A, shall be endorsed on each Debt Security entitled to the benefits of the Guarantee authenticated and delivered by the Trustee and executed by either manual or facsimile signature of an Officer of such Subsidiary Guarantor.  Each of the Subsidiary Guarantors hereby agrees that the Guarantee set forth in Section 14.01 shall remain in full force and effect notwithstanding any failure to endorse on each Debt Security a notation relating to the Guarantee.  If any Officer of any Subsidiary Guarantor whose signature is on this Indenture or a Debt Security no longer holds that office at the time the Trustee authenticates such Debt Security or at any time thereafter, the Guarantee of such Debt Security shall be valid nevertheless.  The delivery of any Debt Security by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Guarantee set forth in this Indenture on behalf of the Subsidiary Guarantors.

 

Section 14.03       Limitation on Subsidiary Guarantors’ Liability. Each Subsidiary Guarantor and by its acceptance hereof each Holder of a Debt Security entitled to the benefits of the Guarantee hereby confirm that it is the intention of all such parties that the guarantee by such Subsidiary Guarantor pursuant to the Guarantee not constitute a fraudulent transfer or conveyance for purposes of any Federal or state law.  To effectuate the foregoing intention, the Holders of a Debt Security entitled to the benefits of the Guarantee and the Subsidiary Guarantors hereby irrevocably agree that the obligations of each Subsidiary Guarantor under the Guarantee shall be limited to the maximum amount as will, after giving effect to all other contingent and fixed liabilities of such Subsidiary Guarantor and to any collections from or payments made by or on behalf of any other Subsidiary Guarantor in respect of the obligations of such other Subsidiary Guarantor under the Guarantee, not result in the obligations of such Subsidiary Guarantor under the Guarantee constituting a fraudulent conveyance or fraudulent transfer under Federal or state law.

 

61

 

Section 14.04       Release of Subsidiary Guarantors from Guarantee.

 

(a)           Notwithstanding any other provisions of this Indenture, the Guarantee of any Subsidiary Guarantor may be released upon the terms and subject to the conditions set forth in Section 11.02(b) and in this Section 14.04. Provided that no Default shall have occurred and shall be continuing under this Indenture, the Guarantee incurred by a Subsidiary Guarantor pursuant to this Article XIV shall be unconditionally released and discharged (i) automatically upon (A) any sale, exchange or transfer, whether by way of merger or otherwise, to any Person that is not an Affiliate of the Partnership, of all of the Partnership’s direct or indirect limited partnership or other equity interests in such Subsidiary Guarantor (provided such sale, exchange or transfer is not prohibited by this Indenture) or (B) the merger of such Subsidiary Guarantor into either of the Issuers or any other Subsidiary Guarantor or the liquidation and dissolution of such Subsidiary Guarantor (in each case to the extent not prohibited by this Indenture) or (ii) upon the Issuers’ delivery of a written notice to the Trustee of the release or discharge of all guarantees by such Subsidiary Guarantor of any Debt of the Issuers other than obligations arising under this Indenture and any Debt Securities issued hereunder, except a discharge or release by or as a result of payment under such guarantees.

 

(b)           The Trustee shall deliver an appropriate instrument evidencing any release of a Subsidiary Guarantor from the Guarantee upon receipt of a written request of the Issuers accompanied by an Officers’ Certificate and an Opinion of Counsel to the effect that the Subsidiary Guarantor is entitled to such release in accordance with the provisions of this Indenture.  Any Subsidiary Guarantor not so released shall remain liable for the full amount of principal of (and premium, if any) and interest on the Debt Securities entitled to the benefits of the Guarantee as provided in this Indenture, subject to the limitations of Section 14.03.

 

Section 14.05       Subsidiary Guarantor Contribution.  In order to provide for just and equitable contribution among the Subsidiary Guarantors, the Subsidiary Guarantors hereby agree, inter se, that in the event any payment or distribution is made by any Subsidiary Guarantor (a “Funding Guarantor”) under the Guarantee, such Funding Guarantor shall be entitled to a contribution from each other Subsidiary Guarantor (if any) in a pro rata amount based on the net assets of each Subsidiary Guarantor (including the Funding Guarantor) for all payments, damages and expenses incurred by that Funding Guarantor in discharging the Issuers’ obligations with respect to the Debt Securities or any other Subsidiary Guarantor’s obligations with respect to the Guarantee.

 

 

The Trustee hereby accepts the trusts in this Indenture upon the terms and conditions herein set forth.

 

[Remainder of This Page Intentionally Left Blank.]

 

62

 

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, all as of the day and year first above written.

 

	
 
    	
EXTERRAN   PARTNERS, L.P.
    
	
 
    	
 
    
	
 
    	
By:
    	
Exterran   General Partner, L.P.
    
	
 
    	
 
    	
its   general partner
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
Exterran   GP LLC
    
	
 
    	
 
    	
its   General Partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
EXLP   FINANCE CORP.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
[NAME   OF SUBSIDIARY GUARANTOR(S)]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
                                     ,   as Trustee
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

[Signature Page to Subordinated Indenture]

 

 

ANNEX A

 

NOTATION OF GUARANTEE

 

Each of the Subsidiary Guarantors (which term includes any successor Person under the Indenture), has fully, unconditionally and absolutely guaranteed, to the extent set forth in the Indenture and subject to the provisions in the Indenture, the due and punctual payment of the principal of, and premium, if any, and interest on the Debt Securities and all other amounts due and payable under the Indenture and the Debt Securities by the Issuers.

 

The obligations of the Subsidiary Guarantors to the Holders of Debt Securities and to the Trustee pursuant to the Guarantee and the Indenture are expressly set forth in Article XIV of the Indenture and reference is hereby made to the Indenture for the precise terms of the Guarantee.

 

 

	
 
    	
[NAME   OF SUBSIDIARY GUARANTOR(S)]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

A-1Exhibit 4.10

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS DOCUMENT. THE CONFIDENTIAL PORTIONS HAVE BEEN REDACTED AND ARE DENOTED BY AN ASTERISK *. THE CONFIDENTIAL PORTIONS HAVE BEEN SEPERATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

STOCK PURCHASE AGREEMENT 

 

AMONG

 

CELESTICA (USA) INC.,

 

THE CROSSBOW GROUP, LLC,

 

AND

 

D&H MANUFACTURING COMPANY

 

JULY 26, 2012

 

 

TABLE OF CONTENTS

 

	
Section 1.      Purchase and Sale of Target Shares
    	
1
    
	
(a)    Basic Transaction
    	
1
    
	
(b)   Purchase Price
    	
1
    
	
(c)    Holdback
    	
2
    
	
(d)    Closing
    	
2
    
	
(e)    Deliveries at Closing
    	
2
    
	
(f)    Withholding
    	
2
    
	
(g)    Post Closing Adjustments
    	
2
    
	
 
    	
 
    
	
Section 2.      Representations   and Warranties Concerning Transaction
    	
4
    
	
(a)    Seller’s Representations and Warranties
    	
4
    
	
(b)    Buyer’s Representations and Warranties
    	
5
    
	
 
    	
 
    
	
Section 3.      Representations   and Warranties Concerning Target and Its Subsidiaries
    	
6
    
	
(a)    Organization, Qualification, and Corporate Power
    	
7
    
	
(b)    Capitalization
    	
7
    
	
(c)    Non-contravention
    	
7
    
	
(d)    Brokers’ Fees
    	
8
    
	
(e)    Title to Assets
    	
8
    
	
(f)    Target Subsidiaries
    	
8
    
	
(g)    Financial Statements
    	
8
    
	
(h)    Events Subsequent to Most Recent Fiscal Year End
    	
9
    
	
(i)    Undisclosed Liabilities
    	
10
    
	
(j)    Legal Compliance
    	
11
    
	
(k)    Tax Matters
    	
12
    
	
(l)    Real Property
    	
15
    
	
(m)    Intellectual Property
    	
17
    
	
(n)    Tangible Assets
    	
17
    
	
(o)    Inventory
    	
18
    
	
(p)    Contracts
    	
18
    
	
(q)    Notes and Accounts Receivable
    	
19
    
	
(r)    Powers of Attorney
    	
19
    
	
(s)    Insurance
    	
19
    
	
(t)    Litigation
    	
20
    
	
(u)    Product Warranty
    	
20
    
	
(v)    Product Liability
    	
20
    
	
(x)    Employee Benefits
    	
22
    
	
(y)    Guaranties
    	
24
    
	
(z)    Environmental, Health, and Safety Matters
    	
25
    
	
(aa)   Business Continuity
    	
26
    
	
(bb)   Computer and Technology Security
    	
26
    
	
(cc)   Certain Business Relationships
    	
26
    
	
(dd)   Customers and Suppliers
    	
26
    
	
(ee)   D&H Vietnam Charter Capital
    	
26
    
	
 
    	
 
    
	
Section 4.      Pre-Closing   Covenants
    	
27
    
	
(a)    General
    	
27
    
	
(b)    Notices and Consents
    	
27
    
	
(c)    Operation of Business
    	
27
    
	
(d)    Preservation of Business
    	
27
    
	
(e)    Full Access
    	
27
    
	
(f)    Notice of Developments
    	
28
    
	
(g)    Maintenance of Leased Real Property
    	
28
    

 

i

 

	
(h)    Leases
    	
28
    
	
(i)    Tax Matters
    	
28
    
	
(j)    Notice of Breach
    	
28
    
	
(k)    Purchase of Equipment
    	
28
    
	
(l)    Employee Testing
    	
28
    
	
(m)    Termination of Intercompany Agreements
    	
29
    
	
(n)    Customers
    	
29
    
	
(o)    Singapore Employees
    	
29
    
	
 
    	
 
    
	
Section 5.      Post-Closing   Covenants
    	
29
    
	
(a)    General
    	
29
    
	
(b)    Litigation Support
    	
29
    
	
(c)    Transition
    	
29
    
	
(d)    Confidentiality
    	
29
    
	
(e)    Use of Names
    	
30
    
	
 
    	
 
    
	
Section 6.      Conditions   to Obligation to Close
    	
31
    
	
(a)    Conditions to Buyer’s Obligation
    	
31
    
	
(b)    Conditions to Seller’s Obligation
    	
33
    
	
 
    	
 
    
	
Section 7.      Remedies   for Breaches of This Agreement
    	
34
    
	
(a)    Survival of Representations and Warranties
    	
34
    
	
(b)    Indemnification Provisions for Buyer’s Benefit
    	
35
    
	
(c)    Matters Involving Third Parties
    	
36
    
	
(d)    Determination of Adverse Consequences
    	
37
    
	
(e)    Recoupment Against Holdback Amount
    	
37
    
	
(f)    Holdback Amount Adjustment
    	
37
    
	
(g)    Limitation on Indemnification Amount
    	
37
    
	
(h)    Continuing Indemnification Obligations
    	
37
    
	
(i)    Indemnity by Buyer
    	
38
    
	
 
    	
 
    
	
Section 8.      Tax   Matters
    	
38
    
	
(a)    Tax Indemnification
    	
38
    
	
(b)    Straddle Period
    	
38
    
	
(c)    Responsibility for Filing Tax Returns
    	
38
    
	
(d)    Cooperation on Tax Matters
    	
39
    
	
(e)    Tax-Sharing Agreements
    	
39
    
	
(f)    Transfer Taxes
    	
39
    
	
(g)    Tax Treatment of Stock Options
    	
39
    
	
 
    	
 
    
	
Section 9.      Termination
    	
39
    
	
(a)    Termination of Agreement
    	
39
    
	
(b)    Effect of Termination
    	
40
    
	
 
    	
 
    
	
Section 10.      Miscellaneous
    	
40
    
	
(a)    Incorporation of Exhibits, Annexes, and Schedules
    	
40
    
	
(b)    Press Releases and Public Announcements
    	
40
    
	
(c)    No Third-Party Beneficiaries
    	
41
    
	
(d)    Entire Agreement
    	
41
    
	
(e)    Succession and Assignment
    	
41
    
	
(f)    Counterparts
    	
41
    
	
(g)    Headings
    	
41
    
	
(h)    Notices
    	
41
    
	
(i)    Governing Law
    	
42
    
	
(j)    Amendments and Waivers
    	
42
    
	
(k)    Severability
    	
42
    

 

ii

 

	
(l)    Expenses
    	
42
    
	
(m)    Construction
    	
42
    
	
(n)    Specific Performance
    	
43
    
	
(o)    Dispute Resolution
    	
43
    
	
(o)    Dispute Resolution
    	
45
    
	
(o)    Dispute Resolution
    	
45
    
	
(o)    Dispute Resolution
    	
45
    
	
 
    	
 
    
	
Section 11.      Definitions   
    	
45
    

 

EXHIBITS AND ANNEX

 

	
EXHIBIT A
    	
 
    	
Indebtedness of Target and Target   Subsidiaries
    
	
EXHIBIT B
    	
 
    	
[Intentionally Omitted]
    
	
EXHIBIT C
    	
 
    	
Reserve for Obsolete and Excess Inventory   Calculation
    
	
EXHIBIT D
    	
 
    	
Financial Statements
    
	
EXHIBIT E
    	
 
    	
Purchased Equipment
    
	
EXHIBIT F
    	
 
    	
CIG Consulting Agreement
    
	
EXHIBIT G
    	
 
    	
Non-Compete Provisions
    
	
EXHIBIT H
    	
 
    	
Smith Consulting Agreement
    
	
EXHIBIT I
    	
 
    	
Continuing Indemnification Agreement
    
	
EXHIBIT J
    	
 
    	
Shareholders Representative Agreement
    
	
EXHIBIT K
    	
 
    	
Continuing Customers
    
	
EXHIBIT L
    	
 
    	
Guidelines for Dealing With Designated   Liabilities
    
	
EXHIBIT M
    	
 
    	
Option Holders
    
	
EXHIBIT N
    	
 
    	
Target Subsidiaries
    
	
 
    	
 
    	
 
    
	
ANNEX I
    	
 
    	
Seller and Target Disclosure Schedule
    

 

iii

 

STOCK PURCHASE AGREEMENT

 

This Stock Purchase Agreement (this “Agreement”) is entered into on July 26, 2012 (the “Execution Date”), by and among Celestica (USA) Inc., a Delaware corporation (“Buyer”), The Crossbow Group, LLC, a California limited liability company (“Seller”) and D & H Manufacturing Company, a California corporation (“Target”).  Buyer, Seller and Target are each referred to herein as a “Party” and are referred to collectively herein as the “Parties.”  Certain capitalized terms used in this Agreement are defined in Section 11 of this Agreement.

 

RECITALS

 

WHEREAS, *, * and * indirectly own Seller *;

 

WHEREAS, Seller owns all of the issued and outstanding capital stock of Target;

 

WHEREAS, * and * hold options which have vested or will vest on or prior to the Closing to purchase * shares and * shares of Target common stock, respectively;

 

WHEREAS, this Agreement sets forth a transaction pursuant to which Buyer will purchase from Seller, and Seller will sell to Buyer, all of the issued and outstanding capital stock of Target in return for cash and other consideration; and

 

WHEREAS, concurrently with the Closing, Target will purchase the equipment it and any Target Subsidiary leases from Catapult Equipment Co., LLC (“CEC”) at Fair Market Value.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the premises and the mutual promises herein made, and in consideration of the representations, warranties, and covenants herein contained, the Parties agree as follows

 

Section 1.             Purchase and Sale of Target Shares.

 

(a) Basic Transaction.  On and subject to the terms and conditions of this Agreement, Buyer agrees to purchase from Seller, and Seller agrees to sell to Buyer, all of Target Shares for the consideration specified below in this Section 1.

 

(b) Purchase Price. Buyer agrees to pay to Seller at the Closing, by delivery of cash payable by wire transfer of immediately available funds to the account specified in writing by Seller, an amount equal to the Base Cash Price, minus the sum of clauses (A) through (E) below, plus clause (F) below:

 

(A)          the amount of any long-term or short-term indebtedness for borrowed money of Target (including any related accrued interest thereon), as determined as of the end of business on the Closing Date and as set forth on EXHIBIT A attached hereto, which is to be paid by Buyer at the direction of Seller,

 

(B)          the Holdback Amount (as hereinafter defined),

 

(C)          the amount, if any, by which the Pre-Closing Net Working Capital is less than the Target Net Working Capital,

 

(D)          the Estimated Pre-Closing Tax Obligation, subject to the adjustments, if any, set forth in Section 8(b) of this Agreement, plus

 

* Certain confidential information contained in this document, marked with an asterisk has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

 

(E)           the amount, if any, by which the Pre-Closing Net Working Capital exceeds the Target Net Working Capital.

 

The amount resulting from the above adjustments to the Base Cash Price shall be the “Purchase Price.”

 

(c) Holdback. An amount equal to $* million shall constitute the “Holdback Amount” which will serve as the first source of funds to satisfy any amounts due to Buyer or any other Buyer Indemnified Person under Section 7 of this Agreement. Buyer shall deposit the Holdback Amount with Wells Fargo Bank (the “Escrow Agent”), and the Holdback Amount shall be distributed by the Escrow Agent pursuant to and in accordance with the provisions of Section 7 of this Agreement.  An amount equal to $* million of the Holdback Amount shall constitute the Designated Amount.  Fees payable to the Escrow Agent shall be paid in equal part by each of Buyer and Seller.

 

(d) Closing.  The closing of the transactions contemplated by this Agreement (the “Closing”) shall take place remotely via the exchange of documents and signatures and the bank wire transfer of funds, commencing at 9:00 a.m. Pacific Daylight Time on the second business day following the satisfaction or waiver of all conditions to the obligations of the Parties to consummate the transactions contemplated hereby (other than conditions with respect to actions the respective Parties will take at the Closing itself) or such other date as Buyer and Seller may mutually determine, but in no event later than November 30, 2012 (the “Closing Date”).

 

(e) Deliveries at Closing.  At the Closing, (i) Seller will deliver to Buyer the various certificates, instruments, and documents referred to in Section 6(a) below, (ii) Buyer will deliver to Seller the various certificates, instruments, and documents referred to in Section 6(b) below, (iii) Seller will deliver to Buyer stock certificates representing all of Target Shares, endorsed in blank or accompanied by duly executed assignment documents, and (iv) Buyer will deliver to Seller the consideration specified in Section 1(b) above.

 

(f) Withholding.   Buyer shall withhold and remit to Target, from any cash consideration payable pursuant to this Agreement to any former holder of Target options, such amounts as Target is required to withhold from such consideration under the Code or any provision of state or non-U.S. tax law.  Target shall take all action that may be necessary to ensure that any such amounts are timely withheld and promptly and properly remitted to the appropriate Governmental Entity.  Notwithstanding any other provision of this Agreement, any payments to be made under this Agreement that are subject to withholding may be made through the payroll systems of Target or a Target Subsidiary.

 

(g) Post Closing Adjustments.  Not less than two (2) days nor more than five (5) days prior to Closing, Seller will deliver to Buyer a complete balance sheet and a statement of the Net Working Capital as of Closing (“Pre-Closing Net Working Capital”).  The Parties agree that the Pre-Closing Net Working Capital has (a) cash up to $* million in amount plus (b) accounts receivable that (i) includes only invoices dated 90 or fewer days from closing and (ii) is no greater than $* million in amount plus  (c) a net inventory balance that is no greater than $* million in amount with a reserve for obsolete and excess inventory calculated in accordance with EXHIBIT C  plus (d) prepaid expenses that are no greater than $* minus (e) accounts payable up to $* million in amount minus (f) accrued liabilities other than Taxes (which includes but is not limited to any accrued compensated absences, payroll, employee bonuses, rent, warranties, interest and insurance) no greater than $* million in amount, consolidated for Target and Target Subsidiaries in accordance with U.S. GAAP.  Seller agrees to consult, in good faith, with Buyer in connection with the calculation of the Pre-Closing Net Working Capital.

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

2

 

Within thirty (30) days after Closing, Buyer may in good faith dispute the Pre-Closing Net Working Capital by providing to Seller a statement (the “Dispute Notice”) setting forth Buyer’s calculation of the Net Working Capital as of Closing (“Post-Closing Net Working Capital”) and describing in reasonable detail the basis for the determination.  Buyer agrees to consult, in good faith, with Seller in connection with the preparation of the Post-Closing Net Working Capital should such a dispute arise.

 

The Parties shall use reasonable efforts to resolve such differences regarding the determination of the actual Net Working Capital at Closing for a period of thirty (30) days after Seller’s receipt of the Dispute Notice.  If the Parties resolve such differences, the Net Working Capital at Closing they agree to shall be deemed to be the “Final Net Working Capital.”

 

If the Parties do not reach a final resolution on the actual Net Working Capital within thirty (30) days after Buyer has given the Dispute Notice, unless the Parties mutually agree to continue their efforts to resolve such differences, the Parties will select a nationally recognized independent auditing firm (the “Neutral Accountant”) which shall resolve such differences, pursuant to an engagement agreement executed by the Parties and the Neutral Accountant, in the manner provided below.  The Parties shall each be entitled to make a presentation to the Neutral Accountant, pursuant to procedures to be agreed to among Seller, Buyer and the Neutral Accountant (or, if they cannot agree on such procedures, pursuant to procedures determined by the Neutral Accountant), regarding their calculation of the Post-Closing Net Working Capital; and the Neutral Accountant shall be required to resolve the differences between the Parties and determine the Post-Closing Net Working Capital within twenty (20) Business Days thereafter.  The Post-Closing Net Working Capital determined by the Neutral Accountant shall be deemed to be the Final Net Working Capital.  Such determination by the Neutral Accountant shall be conclusive and binding upon the Parties, absent gross negligence, fraud or manifest error.

 

The Neutral Accountant shall not be authorized or permitted to (i) determine any questions or matters whatsoever under or in connection with this Agreement except for the resolution of differences between the Parties regarding the determination of the Net Working Capital in accordance with this Section 1(g); (ii) resolve any such differences by making an adjustment to the balance sheet and a statement of the Net Working Capital as of Closing delivered by Seller that is outside of the range defined by amounts as finally proposed by the Parties; or (iii) apply any accounting methods, treatments, principles or procedures other than those agreed to by the Parties.

 

Seller and Buyer, joint and severally, shall each pay one half of the fees and expenses of the Neutral Accountant; provided that if the Neutral Accountant determines that either Seller or Buyer has adopted a position or positions that is or are frivolous or clearly without merit, the Neutral Accountant (i) may, in its discretion, assign a greater portion of any such fees and expenses to such Party and (ii) shall provide to Seller and Buyer a written explanation of its reasons for making such a determination.

 

If the Pre-Closing Net Working Capital exceeds the Final Net Working Capital, then Seller will make a payment to Buyer for the difference.  If the Pre-Closing Net Working Capital is less than the Final Net Working, then Buyer will make a payment to Seller for the difference, in each case, within five (5) days of the final determination, as an adjustment to the Purchase Price.

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

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Section 2.             Representations and Warranties Concerning Transaction.

 

(a) Seller’s Representations and Warranties.   Seller represents and warrants to Buyer that the statements contained in this Section 2(a) are correct and complete as of the Execution Date and will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Section 2(a)), except as set forth in ANNEX I attached hereto (the “Disclosure Schedule”).  For purposes of the representations and warranties of Seller contained herein, disclosure in the Disclosure Schedule of any facts or circumstances or any exceptions in the Disclosure Schedule must specifically reference the section to which it relates. The inclusion of any information in any section of the Disclosure Schedule or other document delivered by Seller pursuant to this Agreement shall not be deemed to be an admission or evidence of the materiality of such item, nor shall it establish a standard of materiality for any purpose whatsoever.

 

(i) Organization of Seller. Seller is duly organized, validly existing, and in good standing under the laws of the State of California.

 

(ii) Authorization of Transaction. Seller has full power and authority (including full corporate or other entity power and authority) to execute and deliver this Agreement and to perform its obligations hereunder. Assuming due and valid authorization, execution and delivery hereof by Buyer, this Agreement constitutes the valid and legally binding obligation of Seller, enforceable in accordance with its terms and conditions, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws of general application affecting enforcement of creditors’ rights generally and (b) the availability of the remedy of specific performance or injunctive or other forms of equitable relief. Except for the filings, permits, authorizations, consents and approvals as may be required under, and other applicable requirements of, the Exchange Act and state or foreign securities laws, Seller need not give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or Governmental Entity in order to consummate the transactions contemplated by this Agreement.  The execution, delivery, and performance of this Agreement and all other agreements contemplated hereby have been duly authorized by Seller.

 

(iii) Non-contravention. Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (A) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, Governmental Entity, or court to which Seller is subject or any provision of its governing documents, (B) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which Seller is a party or by which it is bound or to which any of its assets are subject, or (C) result in the imposition or creation of a Lien upon or with respect to Target Shares, except in each case with respect to clauses (A) and (B) above, for such violations, breaches or defaults which (1) would not have individually or in the aggregate, a Material Adverse Effect on Seller or (2) would become applicable as a result of the business or activities in which Buyer is or proposes to be engaged or as a result of any acts or omissions by, or the status of any facts pertaining to, Buyer.

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

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(iv) Brokers’ Fees.  Except as set forth in Schedule 2(a)(iv) of the Disclosure Schedule, Seller has no Liability to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement.

 

(v) Target Shares.  Except as set forth in Schedule 2(a)(v) of the Disclosure Schedule, Seller holds of record and owns beneficially all of the issued and outstanding Target Shares, free and clear of any restrictions on transfer (other than any restrictions under the Securities Act and state securities laws), Taxes, Liens, options, warrants, purchase rights, contracts, commitments, equities, claims and demands. Seller is not a party to any option, warrant, purchase right, or other contract or commitment (other than this Agreement) that could require Seller to sell, transfer, or otherwise dispose of any capital stock of Target. Seller is not a party to any voting trust, proxy, or other agreement or understanding with respect to the voting of any capital stock of Target.

 

(vi) Target LLC Interests.  Target holds of record and owns beneficially all of the LLC membership interests of D&H Vietnam, free and clear of any restrictions on transfer (other than any restrictions under the Securities Act and state securities laws), Taxes, Liens, options, warrants, purchase rights, contracts, commitments, equities, claims and demands.  Seller is not a party to any option, warrant, purchase right, or other contract or commitment (other than this Agreement) that could require Target to sell, transfer, or otherwise dispose of any of the LLC membership interests of D&H Vietnam.  Target is not a party to any voting trust, proxy, or other agreement or understanding with respect to the voting of any of the LLC membership interests of D&H Vietnam.

 

(vii) Target and Target Subsidiary Representations.  Seller represents that Target’s representations and warranties are correct and complete.

 

(b) Buyer’s Representations and Warranties.  Buyer represents and warrants to Seller that the statements contained in this Section 2(b) are correct and complete as of the Execution Date and will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Section 2(b)).

 

(i) Organization of Buyer.  Buyer is a corporation (or other entity) duly organized, validly existing, and in good standing under the laws of the State of Delaware.

 

(ii) Authorization of Transaction.  Buyer has full power and authority (including full corporate or other entity power and authority) to execute and deliver this Agreement and to perform its obligations hereunder. Assuming due and valid authorization, execution and delivery hereof by Seller and Target, this Agreement constitutes the valid and legally binding obligation of Buyer, enforceable in accordance with its terms and conditions, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws of general application affecting enforcement of creditors’ rights generally and (b) the availability of the remedy of specific performance or injunctive or other forms of equitable relief.  Except for the filings, permits, authorizations, consents and approvals as may be required under, and other applicable requirements of, the Exchange Act and state or foreign securities laws, Buyer need not give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or Governmental Entity in order to consummate the transactions contemplated by this Agreement.  The execution, delivery, and performance of this Agreement and all other agreements contemplated hereby have been duly authorized by Buyer.

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

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(iii) Non-contravention. Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (A) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, Governmental Entity, or court to which Buyer is subject or any provision of its charter, bylaws, or other governing documents or (B) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which Buyer is a party or by which it is bound or to which any of its assets are subject, except in each case with respect to clauses (A) and (B) above, for such violations, breaches or defaults which would not have individually or in the aggregate, a Material Adverse Effect on Buyer.

 

(iv) Brokers’ Fees.  Buyer has no Liability to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which Seller could become liable or obligated.

 

(v) Investment.  Buyer is not acquiring Target Shares with a view to or for sale in connection with any distribution thereof within the meaning of the Securities Act.

 

(vi) Available Funds.  Buyer will at the Closing have sufficient immediately available funds, in cash, to pay the Purchase Price and to pay any other amounts payable pursuant to this Agreement and to effect the transactions hereunder.

 

(vii) Litigation.  There is no claim, action, suit, proceeding or, to the knowledge of Buyer, governmental investigation pending or, to the knowledge of Buyer, threatened against Buyer by or before any court or Governmental Entity that, individually or in the aggregate, would reasonably be expected to impede the ability of Buyer to consummate the transactions contemplated hereby.

 

(viii)  Buyer Investigation.  Buyer has conducted its own independent investigation, review and analysis of the Business, operations, assets, liabilities, results of operations, financial condition, software, technology, and prospects of Target, which investigation, review and analysis was done by Buyer and, to the extent deemed appropriate by Buyer’s representatives.  Buyer acknowledges that it and its representatives have been provided access to the personnel, properties, premises and records of Target for such purpose.  In entering into this Agreement, Buyer acknowledges that it has relied solely upon the aforementioned investigation, review and analysis and not on any factual representations or opinions of Seller or its representatives (except the specific representations, warranties and covenants of Target and Seller set forth in Sections 2, 3, 4 and 5 of this Agreement).

 

Section 3.              Target  Representations and Warranties.  Target represents and warrants to Buyer that the statements contained in this Section 3 are correct and complete as of the Execution Date and will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Section 3) (or, if made as of a specified date, as of such date), except as set forth in the Disclosure Schedule.  For purposes of the representations and warranties of Target contained herein, disclosure in the Disclosure Schedule of any facts or circumstances or any exceptions in the Disclosure Schedule must specifically reference the section to which it relates.  The inclusion of any information in any section of the Disclosure Schedule or other document delivered by Target pursuant to this

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

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Agreement shall not be deemed to be an admission or evidence of the materiality of such item, nor shall it establish a standard of materiality for any purpose whatsoever.

 

(a) Organization, Qualification and Corporate Power.   Target and each Target Subsidiary: (i) are corporations or limited liability companies (as applicable) duly organized, validly existing, and in good standing under the laws of the jurisdiction of their incorporation or formation; (ii) are duly authorized to conduct business and are in good standing under the laws of each jurisdiction where such qualification is required; and (iii) have full corporate or company power and authority and all licenses, permits, and authorizations necessary to carry on the Business in which they are engaged and in which they presently propose to engage and to own and use the properties owned and used by them, except, in the case of clauses (ii) and (iii) above, as would not, individually or in the aggregate, result in a Material Adverse Effect.  Schedule 3(a) of the Disclosure Schedule lists the directors and officers of Target and each Target Subsidiary.  Seller has delivered to Buyer correct and complete copies of the charter and bylaws for Target and each Target Subsidiary (as amended to date).  Except as set forth in Schedule 3(a) of the Disclosure Schedule, the minute books (containing the records of all meetings of the stockholders, the board of directors, and any committees of the board of directors), the stock certificate books, and the stock record books for Target and each Target Subsidiary are correct and complete and will be made available for Buyer’s review.  Neither Target nor any Target Subsidiary is in default under or in violation of any provision of its charter or bylaws.

 

(b) Capitalization.   The entire authorized capital stock of Target consists of 200,000,000 shares of common stock of Target Shares, of which 666,667 Target Shares are issued and outstanding.  In addition, there are options outstanding and vested which are exercisable for * shares of common stock Target Shares.  The options will be exercised concurrently with the Closing.  All of the issued and outstanding Target Shares as of the date hereof have been duly authorized, are validly issued, fully paid, and non-assessable, and are held of record and beneficially by Seller.  Upon the exercise of the options concurrently with the Closing, the Target Shares issued upon the exercise of the options will be duly authorized, validly issued, fully-paid and non-assessable and will be held of record and beneficially by the individuals identified on Schedule 3(b) of the Disclosure Schedule.  Except for the unexercised stock options totaling * shares of common stock of Target Shares, there are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion rights, exchange rights, or other contracts or commitments that could require Target to issue, sell, or otherwise cause to become outstanding any of its capital stock.  Upon exercise of the options, the shares issued upon such exercise will be duly authorized, validly issued, fully paid and non-assessable.  There are no outstanding or authorized stock appreciation, phantom stock, profit participation, or similar rights with respect to Target. There are no voting trusts, proxies, or other agreements or understandings with respect to the voting of the capital stock of Target.

 

(c) Non-contravention.   Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (A) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any Governmental Entity, or court to which Target or any Target Subsidiary is subject or any provision of its charter, bylaws, or other governing documents, (B) except as set forth in Schedule 3(c) of the Disclosure Schedule, conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which Target or any Target Subsidiary is a party or by which it or any Target Subsidiary is bound or to which any of its or a Target Subsidiary’s assets are subject, or (C) result in the imposition or

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

7

 

creation of a Lien upon or with respect to Target Shares, except in each case with respect to clauses (A) and  (B) above for such violations, breaches or defaults which (1) would not have individually or in the aggregate, a Material Adverse Effect on Seller or (2) would become applicable solely as a result of the business or activities in which Buyer is or proposes to be engaged or as a result of any acts or omissions by, or the status of any facts pertaining to, Buyer.

 

(d) Brokers’ Fees.   Neither Target nor any Target Subsidiary has any Liability to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement.

 

(e) Title to Assets.    Target and each Target Subsidiary has good and marketable title to, or a valid leasehold interest in, the properties and assets used by them, located on their premises, or shown on the Most Recent Fiscal Month End balance sheet provided for Buyer’s review and attached hereto as a part of EXHIBIT D or acquired after the date thereof, free and clear of all Liens, except (i) for inventory disposed of in the Ordinary Course of Business since the date of such balance sheet, and (ii) Permitted Encumbrances.

 

(f) Target Subsidiaries.    The Disclosure Schedule sets forth for Target Subsidiaries (i) the number of authorized shares for each class of their capital stock, (ii) the number of issued and outstanding shares of each class of their capital stock, the names of the holders thereof, and the number of shares held by each such holder, and (iii) the number of shares of capital stock held in treasury, if any.  All of the issued and outstanding shares of capital stock of each Target Subsidiary have been duly authorized and are validly issued, fully paid, and non-assessable.  Target holds of record and owns beneficially all of the outstanding shares of Target Subsidiaries, free and clear of any restrictions on transfer (other than restrictions under the Securities Act and state securities laws), Taxes, Liens, options, warrants, purchase rights, contracts, commitments, equities, claims, and demands.  There are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion rights, exchange rights, or other contracts or commitments that could require Target Subsidiaries to sell, transfer, or otherwise dispose of any capital stock of Target Subsidiaries or that could require Target Subsidiaries to issue, sell, or otherwise cause to become outstanding any of its own capital stock.  There are no outstanding stock appreciation, phantom stock, profit participation, or similar rights with respect to Target Subsidiaries. There are no voting trusts, proxies, or other agreements or understandings with respect to the voting of any capital stock of Target Subsidiaries.  Neither Target nor any Target Subsidiary owns or has any right to acquire, directly or indirectly, any outstanding capital stock of, or other equity interests in, any Person.

 

(g) Financial Statements.    Attached hereto as EXHIBIT D are the following financial statements (collectively the “Financial Statements”): (i) unaudited, reviewed consolidated and consolidating balance sheets and statements of income, changes in stockholders’ equity, and cash flow as of and for the fiscal years ended September 30, 2009, September 30, 2010 and September 30, 2011 (the “Most Recent Fiscal Year End”), for Target; and (ii) unaudited, unreviewed consolidated and consolidating balance sheets and statements of income, changes in stockholders’ equity, and cash flow (the “Most Recent Financial Statements”) as of and for the nine months ended June 30, 2012 (the “Most Recent Fiscal Month End”) for Target. The Financial Statements (including the notes thereto) present fairly the financial condition of Target as of such dates and the results of operations of Target for such periods, are prepared in accordance with U.S. GAAP, correct and complete, and are consistent with the books and records of Target (which books and records are correct and complete); provided, however, that the Most Recent Financial Statements are subject to normal year-end adjustments (which will not be material individually or in the aggregate), have not been reviewed and lack footnotes and other presentation items.

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

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(h) Events Subsequent to Most Recent Fiscal Year End.   There has not been any Material Adverse Change since the Most Recent Fiscal Year End.  Without limiting the generality of the foregoing, since that date:

 

(i)           neither Target nor any Target Subsidiary has sold, leased, transferred, or assigned any of its assets, tangible or intangible, other than for a fair consideration in the Ordinary Course of Business;

 

(ii)           except as set forth in Schedule 3(h)(ii) of the Disclosure Schedule, neither Target nor any Target Subsidiary has entered into any agreement, contract, lease, or license (or series of related agreements, contracts, leases, and licenses) either requiring payments of more than $100,000, individually, or $300,000 in the aggregate, or outside the Ordinary Course of Business;

 

(iii)          except as set forth in Schedule 3(h)(iii) of the Disclosure Schedule, no Seller Party has accelerated, terminated, modified, or cancelled any agreement, contract, lease, or license (or series of related agreements, contracts, leases, and licenses) requiring payments of more than $100,000 to which Target or any Target Subsidiary is a party or by which any of them is bound;

 

(iv)          neither Target nor any Target Subsidiary has imposed any Liens upon any of its assets, tangible or intangible;

 

(v)           except as set forth in Schedule 3(h)(v) of the Disclosure Schedule, neither Target nor any Target Subsidiary has made any capital expenditure (or series of related capital expenditures) either requiring payments of more than $100,000 or outside the Ordinary Course of Business;

 

(vi)          neither Target nor any Target Subsidiary has made any capital investment in, any loan to, or any acquisition of the securities or assets of, any other Person (or series of related capital investments, loans, and acquisitions) either requiring payments of more than $100,000 or outside the Ordinary Course of Business;

 

(vii)         neither Target nor any Target Subsidiary has issued any note, bond, or other debt security or created, incurred, assumed, or guaranteed any indebtedness for borrowed money or capitalized lease obligation either in a face amount of or which could require payments of more than $100,000 or outside the Ordinary Course of Business;

 

(viii)        neither Target nor any Target Subsidiary has delayed or postponed its payment of accounts payable and other Liabilities outside the Ordinary Course of Business;

 

(ix)          neither Target nor any Target Subsidiary has cancelled, compromised, waived, or released any right or claim (or series of related rights and claims) either requiring payments of more than $100,000 or outside the Ordinary Course of Business;

 

(x)           neither Target nor any Target Subsidiary has transferred, assigned, or granted any license or sublicense of any rights under or with respect to any Intellectual Property;

 

(xi)          except as set forth in Schedule 3(h)(xi) of the Disclosure Schedule, there has been no change made or authorized in the charter or bylaws of any of Target or any Target Subsidiary;

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

9

 

(xii)         neither Target nor any Target Subsidiary has issued, sold, or otherwise disposed of any of its capital stock, or granted any options, warrants, or other rights to purchase or obtain (including upon conversion, exchange, or exercise) any of its capital stock;

 

(xiii)        neither Target nor any Target Subsidiary has declared, set aside, or paid any dividend or made any distribution with respect to its capital stock (whether in cash or in kind) or redeemed, purchased, or otherwise acquired any of its capital stock;

 

(xiv)        neither Target nor any Target Subsidiary has experienced any damage, destruction, or loss (whether or not covered by insurance) to its property, except for damage resulting from ordinary wear and tear;

 

(xv)         except as set forth in Schedule3(h)(xv) of the Disclosure Schedule, neither Target nor any Target Subsidiary has made any loan to, or entered into any other transaction with, any of its directors, officers or employees;

 

(xvi)        neither Target nor any Target Subsidiary has entered into or terminated any employment contract or collective bargaining agreement, written or oral, or modified the terms of any existing such contract or agreement;

 

(xvii)       except as set forth in Schedule 3(h)(xvii) of the Disclosure Schedule, neither Target nor any Target Subsidiary has granted any increase in the base compensation of any of its directors, officers, or employees, individually, in excess of $10,000 on an annual basis;

 

(xviii)      neither Target nor any Target Subsidiary has adopted, amended, modified, or terminated any bonus, profit sharing, incentive, severance, or other plan, contract, or commitment for the benefit of any of its directors, officers, and employees (or taken any such action with respect to any other Employee Benefit Plan);

 

(xix)        neither Target nor any Target Subsidiary has terminated the employment of any management employee or has made any other change in employment terms for (a) any of its directors or officers, or (b) any of its employees other than terminations or changes in the Ordinary Course of Business;

 

(xx)         neither Target nor any Target Subsidiary has made or pledged to make any charitable or other capital contribution;

 

(xxi)        there has not been any other material occurrence, event, incident, action, failure to act, or transaction outside the Ordinary Course of Business involving Target or any Target Subsidiary;

 

(xxii)       neither Target nor any Target Subsidiary has discharged a material Liability or Lien outside the Ordinary Course of Business;

 

(xxiii)      neither Target nor any Target Subsidiary has made any loans or advances of money; and

 

(xxiv)     neither Target nor any Target Subsidiary has committed to any of the foregoing.

 

(i) Undisclosed Liabilities.    To the Knowledge of Seller, neither Target nor any Target Subsidiary have any Liability (and there is no basis for any present or future action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand against any of them giving

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

10

 

rise to any Liability), except for (i) Liabilities set forth on the face of the Most Recent Balance Sheet or in any notes thereto) and (ii) Liabilities that have arisen after the Most Recent Fiscal Month End in the Ordinary Course of Business that would not reasonably be expected, individually or in the aggregate, to be material to Target.

 

(j) Legal Compliance.

 

(i)            Each of Target, each Target Subsidiary, and their respective predecessors and Affiliates has complied in all material respects with all applicable laws (including rules, regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and charges thereunder and including the Foreign Corrupt Practices Act (the “FCPA,” 15 U.S.C. 78dd-1 et seq.)) of each Governmental Entity and all international trade laws and regulations (“Laws”), and no action, suit, proceeding, hearing, investigation, charge, complaint, claim, demand, or notice has been filed or commenced against any of them alleging any failure so to comply.

 

(ii)           Neither Target nor any Target Subsidiary has manufactured “defense articles,” exported “defense articles” or furnished “defense services” or “technical data” to foreign persons in the U.S. or abroad, as those terms are defined in 22 C.F.R. part 120, except pursuant to valid licenses or approvals and otherwise in accordance with applicable Law.

 

(iii)          Except as set forth in Schedule 3(j)(iii) of the Disclosure Schedule, Target and each Target Subsidiary is currently in compliance, in all material respects, with, and at all times have been in compliance with, all applicable Laws and there is no action, suit, or proceeding pending or threatened before any court or quasi-judicial or Governmental Entity expected or, to the Knowledge of Target, threatened between Target or any Target Subsidiary and any Governmental Entity under any of the Laws.

 

(iv)          Target and each Target Subsidiary has prepared and timely applied for all import and export licenses required in accordance with all Laws for the conduct of Target’s and each Target Subsidiary’s Business.

 

(v)           Target and Target Subsidiaries have made available to Buyer true and complete copies of all issued and pending import and export licenses, and all documentation required by, and necessary to evidence compliance with, all Laws, if any.

 

(vi)          Except as set forth in Schedule 3(j)(vi) of the Disclosure Schedule, neither Target nor any Target Subsidiary currently maintains, nor has it at any time maintained, employees, brokers, distributors, resellers, agents, sales or marketing representatives or assets of any kind in any jurisdiction outside of the U.S.

 

(vii)         Target and each Target Subsidiary is currently in compliance, in all material respects, with, and have at all times been in compliance, in all material respects with, all applicable Laws relating to export control and trade embargoes, and neither Target nor any Target Subsidiary has, directly or indirectly, exported, re-exported, sold or otherwise transferred (including transfers to non-U.S. Persons located in the U.S.) any goods, software, technology or services in violation of the Laws.

 

(viii)        Neither Target nor any Target Subsidiary has engaged in any transactions, or otherwise dealt with any country, or other Person with whom U.S. Persons are prohibited from dealing under applicable Laws, including countries subject to economic sanctions maintained by the Treasury Department’s Office of Foreign Assets Control, any

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

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Person designated by the Treasury Department’s Office of Foreign Assets Control on the list of Specially Designated Nationals and Blocked Persons (or entities directly owned or controlled by or acting for or on behalf of a Specially Designated National), any Person designated by the U.S. Commerce Department’s Bureau of Industry and Security on the Denied Persons List, Unverified List or Entity List, any Person designated by the State Department’s Directorate of Defense Trade Controls on the List of Statutorily Debarred Parties or any instrumentality, agent, entity or individual that is acting on behalf of, or directly or indirectly owned or controlled by, any of the countries or Persons described above.

 

(ix)          Neither Target nor any Target Subsidiary or any other Person associated with Target or any Target Subsidiary, has offered or given, and Target has no Knowledge of any Person that has offered or given on its behalf, anything of value to: (a) any official or employee of a Governmental Entity, any political party or official thereof, or any candidate for political office; or (b) any other Person, in any such case while knowing, or being aware of a high probability that all or a portion of such money or thing of value may be offered, given or promised, directly or indirectly, to any official or employee of a Governmental Entity, political party or official thereof or candidate for political office: (i) for the purpose of influencing any action or decision of such Person, in his, her or its official capacity, including a decision to fail to perform his, her or its official function; (ii) for the purpose of inducing such Person to use his, her or its influence with any government or instrumentality thereof to affect or influence any act or decision of such government or instrumentality; (iii) for the purpose of securing any improper advantage; in the case of each of clauses (i), (ii) and (iii), in order to assist Target or any Target Subsidiary in obtaining or retaining business for or with, or directing business to, any Person; or (iv) where such payment would constitute a bribe, kickback or illegal or improper payment.  Neither Target nor any Target Subsidiary has violated or is in violation of any provision of the FCPA, or any applicable Law of similar effect, and Target and Target Subsidiaries have made all payments to third parties by check mailed to each such third party’s principal place of business or by wire transfer to a bank located in the same jurisdiction as each such third party’s principal place of business.  With respect to its compliance with the provisions of the FCPA, all transactions have been and are properly and accurately recorded on the books and records of Target and Target Subsidiaries, and each document upon which entries in Target and Target Subsidiaries’ books and records are based has been and is complete and accurate in all respects.

 

(k) Tax Matters.

 

(i)            Each of Target and Target Subsidiaries have filed all Tax Returns that they were required to file for all periods ending on or before the Closing Date, either separately or as a member of an Affiliated Group of corporations, under applicable U.S. and non-U.S. laws and regulations.  All such Tax Returns were, when filed, and continue to be, true, correct and complete in all respects (including, without limitation, providing a disclosure of “uncertain tax positions,” as required by Treasury Regulations Section 1.6012-2(a)(4)), were timely filed and were prepared in substantial compliance with all applicable laws and regulations. All Taxes due and owing by Target or Target Subsidiaries (whether or not shown on any Tax Return) have been timely paid. Neither Target nor any Target Subsidiary is the beneficiary of any extension of time within which to file any Tax Return. No claim has ever been made by an authority in a jurisdiction where Target or any Target Subsidiary does not file Tax Returns, or pay and collect Taxes in respect of a particular type of Tax

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

12

 

imposed by that jurisdiction, that Target or any Target Subsidiary is or may be subject to taxation, or to pay or collect Taxes, in respect of any such Tax, by that jurisdiction. There are no Liens for Taxes (other than Taxes not yet due and payable) upon any of the assets of Target or any Target Subsidiary.

 

(ii)           Each of Target and any Target Subsidiary has withheld, or collected, and paid to the proper Governmental Entities all Taxes required to have been withheld, or collected, including, without limitation, sales taxes and Taxes paid in connection with any amounts paid or owing to any employee, independent contractor, creditor, stockholder, or other third party.

 

(iii)          No Seller or director or officer (or employee responsible for Tax matters) of Target or any Target Subsidiary expects any authority to assess any additional Taxes for any period for which Tax Returns have been filed.  No non-U.S., U.S. federal, state, or local tax audits or administrative or judicial Tax proceedings are pending or being conducted with respect to Target or any Target Subsidiary.  Neither Target nor any Target Subsidiary has received from any non-U.S., U.S. federal, state, or local taxing authority (including jurisdictions where Target or any Target Subsidiary have not filed Tax Returns) any (i) notice indicating an intent to open an audit or other review, (ii) request for information related to Tax matters, or (iii) notice of deficiency or proposed adjustment for any amount of Tax proposed, asserted, or assessed by any taxing authority against Target or any Target Subsidiary.  Schedule 3(k)(iii) of the Disclosure Schedule lists all U.S. federal, state, local, and non-U.S. Tax Returns filed with respect to any of Target or any Target Subsidiary for all taxable periods ended on or after September 30, 2009 and for any other taxable period for which the applicable statute of limitations in respect of the assessment of a Tax, or the assertion of a Tax deficiency, has not expired, indicates those Tax Returns that have been audited, and indicates those Tax Returns that currently are the subject of audit. Seller has delivered to Buyer (i) correct and complete copies of all U.S. and non-U.S. federal, state and local Tax Returns, examination reports, and statements of deficiencies assessed against or agreed to by Target or any Target Subsidiary filed or received since September 30, 2009, and (ii) any such other Tax Returns, examination reports and statements of deficiencies assessed against or agreed to by Target or any Target Subsidiary filed or received with respect to any taxable period for which the applicable statute of limitations in respect of the assessment of a Tax, or the assertion of a Tax deficiency, has not expired.

 

(iv)          Neither Target nor any Target Subsidiary has waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency.

 

(v)           Neither Target nor any Target Subsidiary is a party to any agreement, contract, arrangement or plan that has resulted or could result, separately or in the aggregate, in the payment of (i) any “excess parachute payment” within the meaning of Code Section 280G (or any corresponding provision of state, local or non-U.S. Tax law) and (ii) any amount that will not be fully deductible as a result of Code Section 162(m) (or any corresponding provision of state, local or foreign Tax law). Neither Target nor any Target Subsidiary has been a United States real property holding corporation within the meaning of Code Section 897(c)(2) during the applicable period specified in Code Section 897(c)(1)(A)(ii). Neither Target nor any Target Subsidiary has entered into any “reportable transaction,” within the meaning of Treasury Regulations Section 1.6011-4(b). Each of Target and Target Subsidiaries have disclosed on their U.S. federal income Tax Returns all

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

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positions taken therein that could give rise to a substantial understatement of U.S. federal income Tax within the meaning of Code Section 6662. Neither Target nor any Target Subsidiary is a party to or bound by any Tax allocation or sharing agreement. Neither Target nor any Target Subsidiary (A) has been a member of an Affiliated Group filing a consolidated U.S. federal income Tax Return (other than a group the common parent of which was Target) or (B) has any Liability for the Taxes of any Person (other than Target or any Target Subsidiary) under Treasury Regulations Section 1.1502-6 (or any similar provision of state, local, or non-U.S. law), as a transferee or successor, by contract, or otherwise.

 

(vi)         Neither Target nor any Target Subsidiary will be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any:

 

(A)          change in method of accounting, or any other adjustment pursuant to Section 481(a) of the Code, for a taxable period ending on or prior to the Closing Date;

 

(B)          “closing agreement” as described in Code Section 7121 (or any corresponding or similar provision of state, local or non-U.S. income Tax law) executed on or prior to the Closing Date;

 

(C)          intercompany transaction or excess loss account described in Treasury Regulations under Code Section 1502 (or any corresponding or similar provision of state, local or foreign income Tax law);

 

(D)          election under Section 108(i) of the Code;

 

(E)           installment sale or open transaction disposition made on or prior to the Closing Date; or

 

(F)           prepaid amount received on or prior to the Closing Date.

 

(vii)         Neither Target nor any Target Subsidiary has distributed stock of another Person, or has had its stock distributed by another Person, in a transaction that was purported or intended to be governed in whole or in part by Code Section 355 or Code Section 361.

 

(viii)        Neither Target nor any Target Subsidiary (i) has entered into any advance pricing agreement or (ii) enjoys any Tax exemption, Tax holiday or reduced Tax rate granted by a Governmental Entity outside of the United States that is not generally available to Persons without specific application therefor.

 

(ix)          Neither Target nor any Target Subsidiary owns, directly or indirectly, any interests in an entity that is or has been a “passive foreign investment company” within the meaning of Section 1297 of the Code and Target and each Target Subsidiary is treated as a corporation for U.S. and non-U.S. tax purposes.

 

(x)           The charges, accruals and reserves with respect to Taxes on the Most Recent Financial Statements of Target and Target Subsidiaries are adequate in all material respects.

 

(xi)          Neither Target nor any Target Subsidiary (i) has participated in, or cooperated with, an international boycott within the meaning of Section 999 of the Code or has been requested to do so in connection with any transaction or proposed transaction, (ii)

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

14

 

is subject to a limitation on the deductibility of any interest expense under Section 279 of the Code (or any similar provision of state, local or non-U.S. income tax law), or (iii) has sustained an “overall foreign loss” for purposes of Section 904(f) of the Code.

 

(l) Real Property.

 

(i)            Except as set forth in Schedule 3(l)(i) of the Disclosure Schedule, neither Target nor any Target Subsidiary has, or has ever had, any Owned Real Property.

 

(ii)           Schedule 3(l)(ii) of the Disclosure Schedule sets forth the address of each parcel of Leased Real Property, and a true and complete list of all Leases for each such Leased Real Property (including the date and name of the parties to such Lease document). Target and Target Subsidiaries have delivered to Buyer a true and complete copy of each such Lease document. With respect to each of the Leases:

 

(A)          such Lease is legal, valid, binding, enforceable, fully paid to date and in full force and effect, except (1) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws of general application affecting enforcement of creditors’ rights generally and (2) the availability of the remedy of specific performance or injunctive or other forms of equitable relief;

 

(B)          except as set forth on Schedule 3(l)(ii)(B) of the Disclosure Schedule, the transactions contemplated by this Agreement do not require the consent of any other party to such Lease (except for those Leases for which Lease Consents (as hereinafter defined) are obtained), will not result in a breach of or default under such Lease (other than rent arrearages, if any, that must be paid due to the consummation of the transactions contemplated by this Agreement, which will be paid in full), and will not otherwise cause such Lease to cease to be legal, valid, binding, enforceable and in full force and effect on identical terms following the Closing;

 

(C)          neither Target’s nor any Target Subsidiary’s possession and quiet enjoyment of the Leased Real Property under such Lease has been disturbed and there are no disputes with respect to such Lease;

 

(D)          neither Target nor any Target Subsidiary, nor any other party to a Lease is in breach of or default under such Lease, and no event has occurred or circumstance exists that, with the delivery of notice, the passage of time or both, would constitute such a breach or default, or permit the termination, modification or acceleration of rent under such Lease;

 

(E)           no security deposit or portion thereof deposited with respect to such Lease has been applied in respect of a breach of or default under such Lease that has not been redeposited in full;

 

(F)           neither Target nor any Target Subsidiary owes, or will owe in the future, any brokerage commissions or finder’s fees with respect to such Lease;

 

(G)          the other party to such Lease is not an Affiliate of, and otherwise does not have any economic interest in, Target or any Target Subsidiary;

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

15

 

(H)          neither Target nor any Target Subsidiary has subleased, licensed or otherwise granted any Person the right to use or occupy the Leased Real Property or any portion thereof;

 

(I)            neither Target nor any Target Subsidiary has collaterally assigned or granted any other Lien in such Lease or any interest therein; and

 

(J)            there are no Liens on the estate or interest created by such Lease other than Permitted Encumbrances.

 

(iii)          The Leased Real Property identified in Schedule 3(1)(ii) of the Disclosure Schedule comprises all of the real property used or intended to be used in, or otherwise related to, Target’s and any Target Subsidiary’s Business; and neither Target nor any Target Subsidiary is a party to any agreement or option to purchase any real property or interest therein;

 

(iv)          To the Knowledge of Seller, all buildings, structures, fixtures, building systems and equipment, and all components thereof, including the roof, foundation, load-bearing walls and other structural elements thereof, heating, ventilation, air conditioning, mechanical, electrical, plumbing and other building systems, environmental control, remediation and abatement systems, sewer, storm and waste water systems, irrigation and other water distribution systems, parking facilities, fire protection, security and surveillance systems, and telecommunications, computer, wiring and cable installations, included in the Leased Real Property (the “Improvements”) are, subject to ordinary wear and tear, in operational condition and sufficient for the operation of Target’s and Target Subsidiaries’ Business.  To the Knowledge of Seller, there are no structural deficiencies or latent defects affecting any of the Improvements and, to the Knowledge of Seller, there are no facts or conditions affecting any of the Improvements that would, individually or in the aggregate, interfere in any material respect with the use or occupancy of the Improvements in the operation of Target’s or Target Subsidiaries’ Business as currently conducted thereon.

 

(v)           To Knowledge of Seller, there is no condemnation, expropriation or other proceeding in eminent domain threatened affecting any parcel of Leased Real Property or any portion thereof or interest therein. There is no injunction, decree, order, writ or judgment outstanding, or, to the Knowledge of Seller, any claim, litigation, administrative action or similar proceeding threatened relating to the ownership, lease, use or occupancy of the Leased Real Property or any portion thereof, or the operation of Target’s or Target Subsidiaries’ Business as currently conducted thereon.

 

(vi)          To the Knowledge of Seller, the Leased Real Property is in compliance with all applicable building, zoning, subdivision, health and safety and other land use laws, including the Americans with Disabilities Act of 1990, as amended, and all insurance requirements affecting the Leased Real Property (collectively, the “Real Property Laws”), in all material respects, and the current use and occupancy of the Leased Real Property and operation of Target’s and Target Subsidiaries’ Business thereon do not materially violate any Real Property Laws. Neither Target nor any Target Subsidiary has received any notice of violation of any Real Property Law and, to the Knowledge of Seller, there is no Basis for the issuance of any such notice or the taking of any action for such violation.

 

(vii)         Except as set forth on Schedule 3(l)(vii) of the Disclosure Schedule, each parcel of Leased Real Property has direct vehicular and pedestrian access to a public street adjoining the Leased Real Property.

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

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(viii)        To the Knowledge of Seller, all water, oil, gas, electrical, steam, compressed air, telecommunications, sewer, storm and waste water systems and other utility services or systems for the Leased Real Property have been installed and are operational and sufficient for the operation of Target’s or Target Subsidiaries’ Business as currently conducted thereon.

 

(ix)          To the Knowledge of Seller, all certificates of occupancy, permits, licenses, franchises, approvals and authorizations (collectively, the “Real Property Permits”) of all Governmental Entities, boards of fire underwriters, associations or any other entity having jurisdiction over the Leased Real Property that are required or appropriate to use or occupy the Leased Real Property or operate Target’s or Target Subsidiaries’ Business as currently conducted thereon, have been issued and are in full force and effect. Schedule 3(l)(ix) of the Disclosure Schedule lists all material Real Property Permits held by Target or any Target Subsidiary with respect to each parcel of Leased Real Property. Neither Target nor any Target Subsidiary has received any notice from any governmental authority or other entity having jurisdiction over the Leased Real Property threatening a suspension, revocation, modification or cancellation of any Real Property Permit and, to the Knowledge of Seller, there is no Basis for the issuance of any such notice or the taking of any such action.

 

(m) Intellectual Property.

 

(i)            Schedule 3(m)(i) of the Disclosure Schedule lists all Intellectual Property owned or used by Target or any Target Subsidiary.  To the Knowledge of Seller, Target and Target Subsidiaries own and possess or have the right to use pursuant to a valid and enforceable written license, sublicense, agreement, or permission all Intellectual Property sufficient for the operation of the Business of Target and Target Subsidiaries as presently conducted and as presently proposed to be conducted. Each item of Intellectual Property owned or used by Target or Target Subsidiaries immediately prior to the Closing will be owned or available for use by Target or Target Subsidiaries on identical terms and conditions immediately subsequent to the Closing.

 

(ii)           Neither Target nor Target Subsidiaries owns or holds any pending patent application or application for patent registration that Target or Target Subsidiaries has made with respect to any of its Intellectual Property.  Schedule 3(m)(ii) of the Disclosure Schedule identifies each unregistered trademark, service mark, trade name, corporate name or Internet domain name, computer software item (other than commercially available off-the-shelf software purchased or licensed for less than a total cost of $250,000 in the aggregate) and each material unregistered copyright used by Target or any Target Subsidiary in connection with any of its Businesses.

 

(iii)          Seller has taken reasonable actions to maintain and protect all of the Intellectual Property of Target and any Target Subsidiary and will continue to maintain and protect all of the Intellectual Property of Target and any Target Subsidiary prior to Closing so as not to adversely affect the validity or enforceability thereof.

 

(n) Tangible Assets.   Target and each Target Subsidiary owns or leases all buildings, machinery, equipment, and other tangible assets reasonably sufficient for the conduct of their Business as presently conducted.  Each such tangible asset has been maintained in accordance with industry practice, is in operating condition and repair (subject to normal wear and tear).  Except as set forth in Schedule 3(n) of the Disclosure Schedule, the machinery used in the Business is used or is being used in a manner for which it was intended, has not been used in any way which would

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

17

 

void any manufacturer warranty and is sufficient for the purposes for which it presently is used.  As of the Closing, no payments will be required to be made with respect to any equipment owned or used by the Business.

 

(o) Inventory.    All the inventory of Target and each Target Subsidiary is suitable, usable and saleable, in the case of finished goods and products, at applicable contract prices and, in the case of raw materials and work-in-process, at no less than the value reflected on the books of Target and each Target Subsidiary, in the Ordinary Course of Business except to the extent written down or reserved against.  To the Knowledge of Seller, Target or each Target Subsidiary there is no adverse condition affecting a material source of materials available to Target and each Target Subsidiary.

 

(p) Contracts.    Schedule 3(p) of the Disclosure Schedule lists the following contracts and other agreements to which Target or a Target Subsidiary is a party:

 

(i)            any agreement (or group of related agreements) for the lease of personal property to or from any Person providing for lease payments in excess of $100,000 per annum;

 

(ii)           any agreement (or group of related agreements) for the purchase or sale of raw materials, commodities, supplies, products, or other personal property, or for the furnishing or receipt of services (other than purchase orders for raw materials, supplies and outside services entered into by Target or Target Subsidiary in the Ordinary Course of Business), the performance of which will extend over a period of more than one year, result in a material loss to Target or any Target Subsidiary, or involve consideration in excess of $250,000;

 

(iii)          any agreement concerning a partnership or joint venture;

 

(iv)          except as set forth in Schedule 3(p)(iv) of the Disclosure Schedule, any agreement (or group of related agreements) under which it has created, incurred, assumed, or guaranteed any indebtedness for borrowed money, or any capitalized lease obligation, in excess of $100,000 or under which it has imposed a Lien on any of its assets, tangible or intangible;

 

(v)           any agreement concerning confidentiality or non-competition;

 

(vi)          any agreement with Seller and its Affiliates;

 

(vii)         any profit sharing, stock option, stock purchase, stock appreciation, deferred compensation, severance, or other plan or arrangement for the benefit of its current or former directors, officers, and employees;

 

(viii)        any collective bargaining agreement;

 

(ix)          any agreement for the employment of any individual on a full-time, part-time, consulting, or other basis providing annual compensation in excess of $100,000 or providing severance benefits;

 

(x)           any agreement under which it has advanced or loaned any amount to any of its directors, officers, and employees;

 

(xi)          any agreement under which the consequences of a default or termination could have a Material Adverse Effect;

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

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(xii)         any agreement under which it has granted any Person any registration rights (including, without limitation, demand and piggyback registration rights);

 

(xiii)        any settlement, conciliation or similar agreement, the performance of which will involve payment after the Most Recent Fiscal Year End of consideration in excess of $100,000, or imposition of monitoring or reporting obligations to any Governmental Entity;

 

(xiv)        any agreement under which Target or any Target Subsidiary has advanced or loaned any other Person amounts in the aggregate exceeding $100,000; or

 

(xv)         any other agreement (or group of related agreements) the performance of which involves consideration in excess of $250.000.

 

Seller has delivered to Buyer a correct and complete copy of each written agreement (as amended to date) listed in Schedule 3(p) of the Disclosure Schedule and a written summary setting forth the terms and conditions of each oral agreement referred to in Schedule 3(p) of the Disclosure Schedule.  With respect to each such agreement, to the Knowledge of Seller: (A) the agreement is legal, valid, binding, enforceable, and in full force and effect, except (1) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws of general application affecting enforcement of creditors’ rights generally and (2) the availability of the remedy of specific performance or injunctive or other forms of equitable relief; (B) no party is in breach or default, and no event has occurred that with notice or lapse of time would constitute a breach or default, or permit termination, modification, or acceleration, under the agreement, except as would not result in a Material Adverse Effect; and (C), no party has repudiated any provision of the agreement.

 

(q) Notes and Accounts Receivable.    All notes and accounts receivable of Target and any Target Subsidiary reflected on their books and records (i) are bona fide accounts and notes receivable created in the Ordinary Course of Business in connection with bona fide transactions and consistent with past practice, (ii) are no more than 90 days old, and (iii) are fully collectible when due at their face amounts, except to the extent of any allowance for doubtful accounts and sales adjustments set forth in Schedule 3(q) of the Disclosure Schedule, which allowance has been fairly determined consistent with past practices in accordance with U.S. GAAP.

 

(r) Powers of Attorney.    Except as set forth in Schedule 3(r) of the Disclosure Schedule, there are no outstanding powers of attorney executed on behalf of Target or any Target Subsidiary.

 

(s) Insurance.   Schedule 3(s) of the Disclosure Schedule includes the declaration pages of each material insurance policy (including policies providing property, casualty, liability, and workers’ compensation coverage and bond and surety arrangements) to which Target or any Target Subsidiary has been a party, a named insured, or otherwise the beneficiary of coverage at any time within the past three (3) years.  The declaration pages indicate:

 

(i)            the name, address, and telephone number of the agent;

 

(ii)           the name of the insurer, the name of the policyholder, and the name of each covered insured;

 

(iii)          the policy number and the period of coverage; and

 

(iv)          the scope and amount (including a description of how deductibles and ceilings are calculated and operate) of coverage.

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

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All insurance policies are (and were) issued on an “occurrence” basis and there are no retroactive premium adjustments or other loss sharing arrangements; provided, however, that each such policy may subject the Target and any Target Subsidiary to policy year end audits of Target and Target Subsidiaries’ operations.   With respect to each such insurance policy, to the Knowledge of Seller: (A) the policy provides adequate coverage for the Business conducted by Target or Target Subsidiary which such policy covers; (B) neither Target, nor any Target Subsidiary, nor any other party to the policy is in breach or default (including with respect to the payment of premiums or the giving of notices), and no event has occurred that, with notice or the lapse of time, would constitute such a breach or default, or permit termination, modification, or acceleration, under the policy; and (C) Target has not repudiated any provision thereof.  Each of Target and any Target Subsidiary have been covered during the past 10 years by insurance in scope and amount customary and reasonable for the Businesses in which they have engaged during the aforementioned period.  The Disclosure Schedule describes any self-insurance arrangements affecting Target or any Target Subsidiary.

 

(t) Litigation.    Schedule 3(t) of the Disclosure Schedule sets forth each instance in which Target or any Target Subsidiary (i) is subject to any outstanding injunction, judgment, order, decree, ruling, or charge or (ii) is a party or, to the Knowledge of Seller and the directors and officers (and employees with responsibility for litigation matters) of Target and any Target Subsidiary, is threatened to be made a party to any action, suit, proceeding, hearing, or investigation of, in, or before (or that could come before) any court or quasi-judicial or Governmental Entity or before (or that could come before) any Arbitrator.  None of the actions, suits, proceedings, hearings, and investigations set forth in Section 3(t) of the Disclosure Schedule could result in any Material Adverse Change.

 

(u) Product Warranty.    To the Knowledge of Seller, each product manufactured, sold, leased, or delivered by Target or any Target Subsidiary has been in conformity with all applicable contractual commitments and all express warranties, and neither Target nor any Target Subsidiary has any material Liability (and, to the Knowledge of Target and any Target Subsidiary, there is no Basis for any present or future action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand against any of them giving rise to any material Liability) for replacement or repair thereof or other damages in connection therewith, subject only to the reserve for product warranty claims set forth on the face of the Most Recent Balance Sheet as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of Target and any Target Subsidiary.  Schedule 3(u) of the Disclosure Schedule includes copies of the standard terms and conditions of sale or lease for each of Target and each Target Subsidiary (containing applicable guaranty, warranty, and indemnity provisions). No product manufactured, sold, leased, or delivered by Target or any Target Subsidiary is subject to any guaranty, warranty, or other indemnity beyond the applicable standard terms and conditions of sale or lease set forth in Schedule 3(u) of the Disclosure Schedule.

 

(v) Product Liability.    To the Knowledge of Seller, neither Target nor any Target Subsidiary has any Liability and, to the Knowledge of Target and each Target Subsidiary, there is no Basis for any present or future action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand against any of them giving rise to any Liability arising out of any injury to individuals or property as a result of the ownership, possession, or use of any product manufactured, sold, leased, or delivered by Target or any Target Subsidiary, except for any such action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand that has been adequately reserved for in Target or Target Subsidiary’s Most Recent Balance Sheet.

 

(w) Employees.  For purposes of this Section 3(w) only, as used herein, the term “Knowledge of Seller” means the actual knowledge of *, * and *.

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

20

 

(i)           With respect to the Business of Target and any Target Subsidiary:

 

(A)          there is no collective bargaining agreement or relationship with any labor organization;

 

(B)          to the Knowledge of Seller, no executive or manager of Target or any Target Subsidiary (1) has any present intention to terminate his or her employment, or (2) is a party to any confidentiality, non-competition, proprietary rights or other such agreement between such employee and any Person besides such entity that would be material to the performance of such employee’s employment duties, or the ability of such entity or Buyer to conduct the Business of such entity;

 

(C)          no labor organization or group of employees has filed any representation petition or made any written or oral demand for recognition;

 

(D)          to the Knowledge of Seller, no union organizing or decertification efforts are underway or threatened and no other question concerning representation exists;

 

(E)           no labor strike, work stoppage, slowdown, or other material labor dispute has occurred, and, to the Knowledge of Seller, none is underway or threatened;

 

(F)           except as set forth on Schedule 3(w)(i)(F) of the Disclosure Schedule, there is no workmen’s compensation Liability, experience, or matter outside the Ordinary Course of Business;

 

(G)          except as set forth on Schedule 3(w)(i)(G) of the Disclosure Schedule, there is no employment-related charge, complaint, grievance, investigation, inquiry or obligation of any kind, pending either currently or within the preceding twelve (12) months, or, to the Knowledge of Seller, threatened in any forum, relating to an alleged violation or breach by Target or any Target Subsidiary (or its or their officers or directors) of any law, regulation or contract;

 

(H)          to the Knowledge of Seller, no employee or agent of Target or any Target Subsidiary has committed any act or omission giving rise to material Liability for any violation or breach identified in subsection (G) above;

 

(I)            Target and Target Subsidiaries have complied in all material respects with all applicable Laws relating to labor, labor relations or employment, including, without limitation, any provisions thereof relating to equal employment opportunity, wages, hours, overtime regulation, employee safety and health, immigration control, drug testing, background checks, termination pay, vacation pay, fringe benefits, collective bargaining and the payment and/or accrual of the same and all taxes, insurance and all other costs and expenses applicable thereto, and neither Target nor any Target Subsidiary is liable for any arrearage, or any taxes, costs or penalties for failure to comply with any of the foregoing.  Target and each Target Subsidiary have complied with, and have not incurred any liabilities, penalties or other charges under, the Worker Adjustment and Retraining Notification Act or any similar state law (collectively referred to as “WARN”);

 

(J)            each person whom Target and any Target Subsidiary has retained as an independent contractor qualifies or qualified as an independent contractor

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

21

 

and not as an employee of Target or any Target Subsidiary under all applicable laws.  Neither the execution of this Agreement nor the consummation of the transactions contemplated hereby shall cause Target or any Target Subsidiary to be in breach of any agreement with any employee, contractor or consultant;

 

(K)          at Closing, no Seasonal Employee of Target or any Target Subsidiary other than those listed on Schedule 3(w)(i)(K) of the Disclosure Schedule (i) has or will have worked for eighteen (18) or more consecutive months or (ii) has or will have worked for eighteen (18) months in the aggregate during the immediately preceding twenty-four (24) months;

 

(L)           no Seasonal Employee of Target or any Target Subsidiary is entitled to participate in Target or any Target Subsidiary’s voluntary benefit plans or programs in accordance with the terms of such plans or programs, nor is any Seasonal Employee of Target or any Target Subsidiary entitled to severance benefits.

 

(ii)           Schedule 3(w)(ii) of the Disclosure Schedule sets forth the following: a true, complete and accurate list of each employee and independent contractor of Target and each Target Subsidiary, his or her position and title (if any), current rate of compensation (including bonuses, commissions and incentive compensation, if any), and in the case of an employee, whether such employee is hourly or salaried, whether such employee is full-time or part-time, a Seasonal Employee, exempt or non-exempt, the number of such employee’s accrued sick days and vacation days, whether such employee is absent from active employment and, if so, the date such employee became inactive, the reason for such inactive status and, if applicable, the anticipated date of return to active employment.  Except as disclosed in Schedule 3(w)(ii) of the Disclosure Schedule, neither Target nor any Target Subsidiary has any unsatisfied liability to any previously terminated employee or independent contractor.

 

(iii)          Except as set forth in Schedule 3(w)(iii) of the Disclosure Schedule, (A) there are no employment contracts or severance agreements with any employees of Target or any Target Subsidiary and all such employees are employees at-will, and (B) there are no written personnel policies, rules, or procedures applicable to employees of Target or any Target Subsidiary.  True and complete copies of all such documents have been provided to Buyer prior to the date of this Agreement.

 

(iv)          All employees of Target and each United States Target Subsidiary are eligible to work in the United States.  Target has on file for each of the employees of Target and each United States Target Subsidiary, and their Seasonal Employees, a Form I-9 (Employment Eligibility Verification).

 

(v)           Except as set forth in Schedule 3(w)(v) of the Disclosure Schedule, all employees of Target and Target Subsidiaries have undergone drug testing.

 

(x) Employee Benefits.

 

(i)              Schedule 3(x)(i) of the Disclosure Schedule lists each Employee Benefit Plan that Target or any Target Subsidiary maintains, to which Target or any Target Subsidiary contributes or has any obligation to contribute, or with respect to which Target or any Target Subsidiary has any Liability.

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

22

 

(A)          Each such Employee Benefit Plan (and each related trust, insurance contract, or fund) has been maintained, funded and administered in accordance with the terms of such Employee Benefit Plan and the terms of any applicable collective bargaining agreement and complies in form and in operation in all material respects with the applicable requirements of ERISA, the Code, and other applicable U.S. Laws.

 

(B)          Except as set forth on Schedule 3(x)(i)(B) of the Disclosure Schedule, all required reports and descriptions (including Form 5500 annual reports, summary annual reports, and summary plan descriptions) have been filed and/or distributed in accordance with the applicable requirements of ERISA and the Code with respect to each such Employee Benefit Plan.  The requirements of COBRA have been met in all material respects with respect to each such Employee Benefit Plan and each Employee Benefit Plan maintained by an ERISA Affiliate that is an Employee Welfare Benefit Plan subject to COBRA.

 

(C)          All contributions (including all employer contributions and employee salary reduction contributions) that are due have been made within the time periods prescribed by ERISA and the Code to each such Employee Benefit Plan that is an Employee Pension Benefit Plan and all contributions for any period ending on or before the Closing Date that are not yet due have been made to each such Employee Pension Benefit Plan or accrued in accordance with the past custom and practice of Target and Target Subsidiaries.  All premiums or other payments for all periods ending on or before the Closing Date have been paid with respect to each such Employee Benefit Plan.

 

(D)          Each such Employee Benefit Plan that is intended to meet the requirements of a qualified plan under Code Section 401(a) has received a determination from the Internal Revenue Service that such Employee Benefit Plan is so qualified, and nothing has occurred since the date of such determination that could adversely affect the qualified status of any such Employee Benefit Plan. All such Employee Benefit Plans have been timely amended for the requirements of the Tax legislation commonly known as GUST and EGTRRA and have been submitted to the Internal Revenue Service for a favorable determination letter on the GUST and EGTRRA requirements within the remedial amendment periods prescribed by GUST and EGTRRA.

 

(E)           There have been no Prohibited Transactions with respect to any such Employee Benefit Plan or any Employee Benefit Plan maintained by an ERISA Affiliate.  No Fiduciary has any Liability for breach of fiduciary duty or any other failure to act or comply in connection with the administration or investment of the assets of any such Employee Benefit Plan.  No action, suit, proceeding, hearing, or investigation with respect to the administration or the investment of the assets of any such Employee Benefit Plan (other than routine claims for benefits) is pending or, to the Knowledge of Seller and the directors and officers (and employees with responsibility for employee benefits matters) of Target and Target Subsidiaries, threatened. None of Seller and the directors and officers (and employees with responsibility for employee benefits matters) of Target and Target Subsidiaries has any Knowledge of any Basis for any such action, suit, proceeding, hearing, or investigation.

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

23

 

(F)           Seller has delivered to Buyer correct and complete copies of the plan documents and summary plan descriptions, the most recent determination letter received from the Internal Revenue Service, the most recent annual report (Form 5500, with all applicable attachments), and all related trust agreements, insurance contracts, and other funding arrangements that implement each such Employee Benefit Plan.

 

(G)          The execution and performance of this Agreement will not (i) constitute a stated triggering event under any Employee Benefit Plan or employment or other agreement that will result in any payment (whether of severance pay or otherwise) becoming due to any employee of Target or any Target Subsidiary, (ii) accelerate the time of payment or vesting or increase the amount of compensation due under any Employee Benefit Plan, employment or other agreement, (iii) cause any individual to accrue or receive additional benefits, service or accelerated rights to payment of benefits under any Employee Benefit Plan, employment or other agreement, or (iv) directly or indirectly cause Target or any ERISA Affiliate of Target to transfer or set aside any assets to fund or otherwise provide for benefits for any individual.

 

(H)          With respect to every group health plan (as defined in Section 5000 of the Code and Section 607 of ERISA) maintained by or contributed to by Target or any Target Subsidiary, neither Target nor any Target Subsidiary nor any of their officers, directors, employees or agents has engaged in any action or failed to act in such a manner that, as a result of such act the ability of any employee of Target or any Target Subsidiary to exclude from income for federal income tax purposes employer-provided benefits under such a plan would be materially impaired.

 

(ii)           Neither Target, nor any Target Subsidiary, nor any ERISA Affiliate contributes to or, has any obligation to contribute to or has any Liability under or with respect to any Employee Pension Benefit Plan that is a “defined benefit plan” (as defined in ERISA §3(35)) and that no asset of Target or any Target Subsidiary is subject to any Lien under ERISA or the Code.

 

(iii)          Neither Target, nor any Target Subsidiary, nor any ERISA Affiliate contributes to, has any obligation to contribute to, or has any Liability (including withdrawal liability as defined in ERISA §4201) under or with respect to any Multiemployer Plan.

 

(iv)          Neither Target nor any Target Subsidiary maintains, contributes to or, has an obligation to contribute to, or has any Liability with respect to, any Employee Welfare Benefit Plan providing health or life insurance or other welfare-type benefits for current or future retired or terminated directors, officers or employees (or any spouse or other dependent thereof) of Target or any Target Subsidiary or of any other Person other than in accordance with COBRA.

 

(y) Guaranties.    Except as set forth in Schedule 3(y) of the Disclosure Schedule, neither Target nor any Target Subsidiary is a guarantor or otherwise is liable for any material Liability (including indebtedness) of any other Person.

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

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(z) Environmental, Health, and Safety Matters.

 

(i)                                     Each of Target, each Target Subsidiary, and their respective predecessors and Affiliates has complied and is in compliance with all Environmental, Health, and Safety Requirements in all material respects.

 

(ii)                                  Without limiting the generality of the foregoing, Target and each Target Subsidiary and their respective Affiliates has obtained and complied with, and is in compliance in all material respects with, all permits, licenses and other authorizations that, are required pursuant to Environmental, Health, and Safety Requirements for the occupation of their facilities and the operation of their Business. A list of all such permits, licenses and other authorizations is set forth in Schedule 3(z)(ii) of the Disclosure Schedule.

 

(iii)                               Except as set forth in Schedule 3(z)(iii) of the Disclosure Schedule, none of Target, any Target Subsidiary or their respective predecessors or Affiliates has received any written or oral notice, report or other information regarding any actual or alleged material violation of Environmental, Health, and Safety Requirements, or any material Environmental Liabilities relating to any of them or their facilities.

 

(iv)                              None of the following exists at any property or facility owned, leased or operated by Target or any Target Subsidiary:  (A) underground storage tanks, (B) asbestos-containing material in any form or condition, (C) materials or equipment containing polychlorinated biphenyls, or (D) landfills, surface impoundments, or disposal areas, and none of Target, any Target Subsidiary or any of their respective predecessors has owned or operated any underground storage tanks at any other location.

 

(v)                                 None of Target, any Target Subsidiary, or any of their respective predecessors or Affiliates has treated, stored, disposed of, arranged for or permitted the disposal of, transported, handled, manufactured, distributed, or released any Hazardous Material so as to give rise to any current or future Environmental Liabilities.

 

(vi)                              Neither this Agreement nor the consummation of the transactions that are the subject of this Agreement will result in any material obligations for site investigation or cleanup, or notification to or consent of government agencies or third parties, pursuant to any of the so-called transaction-triggered or responsible property transfer Environmental, Health, and Safety Requirements.

 

(vii)                           Neither Target, nor any Target Subsidiary or their respective predecessors or Affiliates has designed, manufactured, sold, marketed, installed, or distributed products or other items containing asbestos and none of such entities is or will become subject to any Asbestos Liabilities.

 

(viii)                        None of Target, any Target Subsidiary, or their respective predecessors or Affiliates, to the Knowledge of Seller, has assumed, or otherwise become subject to, any Environmental Liability of any other Person.

 

(ix)                              No facts, events or conditions relating to the present or, past facilities, properties or operations of Target, any Target Subsidiary or their respective predecessors or Affiliates will prevent, materially hinder or materially limit continued compliance with Environmental, Health, and Safety Requirements, give rise to any material investigatory, remedial or corrective obligations pursuant to Environmental, Health, and Safety Requirements, or give rise to any other Environmental Liabilities, including any Liability with respect to on-site or off-site Release or threatened Release of Hazardous Materials.

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

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(x)                                 Target has furnished to Buyer all environmental audits, reports and other material environmental documents relating to Target’s past and current properties, facilities, or operations that are in the possession or under the reasonable control of Seller, Target or any Target Subsidiary.

 

(aa)  Business Continuity.   The business continuity and disaster recovery activities plan of Target is set forth in Schedule 3(aa) of the Disclosure Schedule.

 

(bb) Computer and Technology Security.  To the Knowledge of Seller, Target has taken all reasonable steps to safeguard the information technology systems utilized in the operation of the Business of Target, including the implementation of procedures to ensure that such information technology systems are free from any disabling codes or instructions, timer, copy protection device, clock, counter or other limiting design or routing and any “back door,” “time bomb,” “Trojan horse,” “worm,” “drop dead device,” “virus,” or other software routines or hardware components that in each case permit unauthorized access or the unauthorized disablement or unauthorized erasure of data or other software by a third party, and, to the Knowledge of Seller, to date there have been no successful unauthorized intrusions or breaches of the security of the information technology systems.

 

(cc) Certain Business Relationships.   Except as set forth in Schedule 3(cc) of the Disclosure Schedule, none of Seller, its Affiliates, Seller’s directors, officers, employees and shareholders and Target’s and any Target Subsidiary’s directors, officers, employees, and shareholders has been involved in any business arrangement or relationship with Target or any Target Subsidiary during the period covered by the Financial Statements or any other financial statements provided for Buyer’s review, and none of Seller, its Affiliates, Seller’s directors, officers, employees and shareholders and Target’s and any Target Subsidiary’s directors, officers, employees, and shareholders owns any asset, tangible or intangible, that is used in the Business of Target or any Target Subsidiary.

 

(dd) Customers and Suppliers.

 

(i)                                     Schedule 3(dd)(i) of the Disclosure Schedule lists the five (5) largest customers of Target by consolidated net sales (on a consolidated basis) for the Most Recent Fiscal Year End, the immediately preceding fiscal year end and for the period ending as of the Most Recent Fiscal Month and sets forth opposite the name of each such customer the percentage of consolidated net sales attributable to such customer. The Disclosure Schedule also lists any additional current customers that Target anticipates appear to be likely to be among the five (5) largest customers for Target’s current fiscal year.

 

(ii)                                  To the Knowledge of Seller, since the date of the Most Recent Fiscal Year, no material supplier of Target or any Target Subsidiary has indicated that it shall stop, or materially decrease the rate of, supplying materials, products or services to Target or any Target Subsidiary, and no customer listed on the Disclosure Schedule has indicated that it shall stop, or materially decrease the rate of, buying materials, products or services from Target or any Target Subsidiary.

 

(ee) D&H Vietnam Charter Capital.  The required charter capital for D&H Vietnam has been paid in full.

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

26

 

Section 4.                                          Pre-Closing Covenants.   The Parties agree as follows with respect to the period between the Execution Date and the Closing:

 

(a) General.   Each of the Parties will use its commercially reasonable efforts to take all actions and to do all things necessary, proper, or advisable in order to consummate and make effective the transactions contemplated by this Agreement (including satisfaction, but not waiver, of the Closing conditions set forth in Section 6 below).

 

(b) Notices and Consents.   Seller will cause each of Target and any Target Subsidiary to give any required notices to third parties, and will cause each of Target and any Target Subsidiary to use their commercially reasonable efforts to obtain any required third-party consents referred to in Section 3(c) above, the Lease Consents (as defined herein), and the items set forth in the Disclosure Schedule.  Each of the Parties will give any notices to, make any filings with, and use its commercially reasonable efforts to obtain any required authorizations, consents, and approvals of Government Entities in connection with the matters referred to in Section 2(a)(ii), Section 2(b)(ii), and Section 3(c) above.

 

(c) Operation of Business.   Target and each Target Subsidiary will continue to operate the Business in the Ordinary Course of Business and use its commercially reasonable efforts to preserve its existing relationships with its employees, customers and suppliers.  In addition, neither Target nor any Target Subsidiary will, without first obtaining the written approval of Buyer (which approval shall not be unreasonably withheld or delayed): (i) enter into any transaction or agreement or take any action out of the ordinary course, including any single transaction or commitment greater than $100,000 (other than purchase orders for raw materials, supplies and other outside services entered into by Target or Target Subsidiaries in the Ordinary Course of Business), (ii) declare any dividends, grant or modify any stock options, (iii) issue new shares of stock (except on exercise of outstanding options), (iv) increase its indebtedness for borrowed money, (v) terminate or increase existing compensation levels or arrangements for any Key Employees or (vi) amend any charter or bylaw provision.  In addition to the foregoing, Target shall not, and shall not permit any Target Subsidiary to, take any action of the type referred to in Section 3(h) without first obtaining the written approval of Buyer (which approval shall not be unreasonably withheld or delayed).

 

(d) Preservation of Business.   Seller will cause each of Target and any Target Subsidiary to keep their Business and properties substantially intact, including its present operations, physical facilities, working conditions, insurance policies, and relationships with lessors, licensors, suppliers, customers, and employees.

 

(e) Full Access.   Seller will permit, and Seller will cause each of Target and any Target Subsidiary to permit, representatives of Buyer (including legal counsel, accountants and environmental consultants) to have full access, at all reasonable times, upon reasonable notice, and in a manner so as not to unreasonably interfere with the normal Business operations of Target and Target Subsidiaries, to all premises, properties, personnel, books, records (including Tax records), contracts, and documents of or pertaining to each of Target and any Target Subsidiary, including access to conduct Phase I and Phase II environmental assessments and audits; provided, however, that Seller, shall not contact any of Target’s customers before Buyer informs Seller that (i) it is fully satisfied with the due diligence materials provided to it by Seller and Target and (ii) other than the results of any Phase II environmental assessment and audit, if one has been commissioned, the only due diligence that remains to be conducted by Buyer is to contact Target’s customers. Provided further, any contact by Buyer of any of Target’s customers shall be coordinated with Seller and begun only after Seller has authorized such contact to begin.

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

27

 

(f) Notice of Developments.   Seller will give prompt written notice to Buyer of any material adverse development that might cause a breach of any of the representations and warranties in Section 3 above. Each Party will give prompt written notice to the others of any material adverse development causing a breach of any of its own representations and warranties in Section 2 above. No disclosure by any Party pursuant to this Section 4(f), however, shall be deemed to amend or supplement the Disclosure Schedule or to prevent or cure any misrepresentation, breach of warranty, or breach of covenant.

 

(g) Maintenance of Leased Real Property.   Seller will cause each of Target and any Target Subsidiary to maintain any Leased Real Property, including all of the Improvements and the property in Vietnam, in substantially the same condition as existed on the date of this Agreement, ordinary wear and tear excepted, and shall not demolish or remove any of the existing Improvements, or, except in the Ordinary Course of Business, erect new Improvements on any owned property and any Leased Real Property or any portion thereof, without the prior written consent of Buyer, which consent will not be unreasonably withheld or delayed.

 

(h) Leases.   Except as otherwise contemplated by this Agreement, Target and Target Subsidiaries will not cause or permit any of Target’s or Target Subsidiaries’ Leases to be amended, modified, extended, renewed or terminated, nor shall Target or any Target Subsidiary enter into any new lease, sublease, license or other agreement for the use or occupancy of any Leased Real Property, without the prior written consent of Buyer.

 

(i) Tax Matters.   Without the prior written consent of Buyer, neither Target nor any Target Subsidiary shall make or change any election, change an annual accounting period, adopt or change any accounting method, file any amended Tax Return, enter into any closing agreement, settle any Tax claim or assessment relating to Target or any Target Subsidiary, surrender any right to claim a refund of Taxes, consent to any extension or waiver of the limitation period applicable to any Tax claim or assessment relating to Target or any Target Subsidiary, or take any other similar action relating to the filing of any Tax Return or the payment of any Tax, if such election, adoption, change, amendment, agreement, settlement, surrender, consent or other action would have the effect of increasing the liability for Taxes of Target or any Target Subsidiary for any period ending after the Closing Date or decreasing any Tax attribute of Target or any Target Subsidiary otherwise existing on the Closing Date.  Seller agrees that it will prepare, in good faith, and deliver to Buyer a schedule containing the Estimated Pre-Closing Tax Obligation at least fifteen (15) days prior to the Closing Date.

 

(j) Notice of Breach.  If, prior to the Closing, Buyer shall have actual knowledge of any breach of a representation or warranty of Seller, Target or any Target Subsidiary, Buyer shall promptly notify Seller of such knowledge, in reasonable detail, including the amount that it believes, based on the facts actually known to it, would be payable by Seller pursuant to the indemnification provisions hereof without reference to any indemnification limitations set forth in Section 7 hereof).

 

(k) Purchase of Equipment.  Concurrently with the Closing, Target and C.D.S., Inc. will purchase the equipment specified on the bills of sale in substantially the forms set forth on EXHIBIT E hereto that Target and C.D.S., Inc. lease from CEC at an amount equal to the equipment’s Fair Market Value.

 

(l) Employee Testing.  All Key Employees have, or prior to Closing will have, in their employee files, the results of criminal background checks and drug testing, and such results shall have been made available for Buyer for its review prior to Closing.  For the avoidance of doubt,

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

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Buyer will arrange for and pay the entire cost associated with such criminal background checks and drug testing of all Key Employees.

 

(m) Termination of Intercompany Agreements.  Prior to Closing, Seller will cause Target and each Target Subsidiary to terminate all Intercompany Agreements.

 

(n) Termination of Singapore Employees.  Target shall, concurrently with Closing, terminate its Singapore employees and obtain releases from them with respect to any further obligations between such employees and Target or any Target Subsidiary.

 

(o) Hiring Singapore Employees.  Prior to Closing, Buyer shall have offered the Target’s Singapore employees employment on substantially similar terms to the terms of such employees with Target or a Target Subsidiary.

 

Section 5.                                          Post-Closing Covenants.  The Parties agree as follows with respect to the period following the Closing:

 

(a) General.   In case at any time after the Closing any further actions are necessary or desirable to carry out the purposes of this Agreement, each of the Parties will take such further actions (including the execution and delivery of such further instruments and documents) as any other Party may reasonably request, all at the sole cost and expense of the requesting Party (unless the requesting Party is entitled to indemnification therefor under Section 7 below).  Seller acknowledges and agrees that from and after the Closing Buyer will be entitled to possession of all documents, books, records (including Tax records), agreements, and financial data of any sort relating to Target and any Target Subsidiary.

 

(b) Litigation Support.   In the event and for as long as any Party actively is contesting or defending against any action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand in connection with any transaction contemplated under this Agreement, each of the other Parties will cooperate with it and its counsel in the contest or defense, make available its personnel, and provide such testimony and access to its books and records as shall be necessary in connection with the contest or defense, all at the sole cost and expense of the contesting or defending Party.

 

(c) Transition.   Seller will not take any action that is designed or intended to have the effect of discouraging any lessor, licensor, customer, supplier, or other business associate of Target or any Target Subsidiary from maintaining the same business relationships with Target and any Target Subsidiary after the Closing as it maintained with Target and any Target Subsidiary prior to the Closing. Seller will refer all customer inquiries relating to the Business of Target and any Target Subsidiary to Buyer from and after the Closing.

 

(d) Confidentiality.  That certain Confidentiality Agreement, dated January 30, 2012, by and between Celestica Inc. and Seller is terminated and superseded in its entirety by this Section 5(d).

 

Seller shall hold, and shall use commercially reasonable efforts to cause its Affiliates, consultants and advisors to hold, in strict confidence all Business Confidential Information.  “Business Confidential Information” means all information of a confidential or proprietary nature (whether or not specifically labeled or identified as “confidential”), in any form or medium, that relates primarily to the Business of Target or any Target Subsidiary or primarily to their suppliers, distributors, customers, independent contractors or other business relations in their respective capacities as such and includes, in each case, to the extent the Business obtains a material commercial benefit from the secret nature of such information: (i) internal business information (including information relating to strategic and staffing plans and practices, business, training,

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

29

 

marketing, promotional and sales plans and practices, cost, rate and pricing structures, accounting and business methods); (ii) identities of, individual requirements of, and specific contractual arrangements with, the Business’ suppliers, distributors, customers, independent contractors or other business relations and their confidential information; (iii) trade secrets, know-how, compilations of data and analyses, techniques, systems, formulae, research, records, reports, manuals, documentation, models, data and databases relating thereto; (iv) inventions, innovations, improvements, developments, methods, designs, analyses, drawings, and reports; and (v) any non-public documents, correspondence, records, data and other information furnished by or on behalf of Buyer prior to Closing or otherwise in connection with the transactions described herein.  Notwithstanding the foregoing, Business Confidential Information does not include such information which: (A) at the time of disclosure is publicly available or thereafter becomes publicly available through no act or omission of Seller or its Affiliates, consultants or advisors, (B) is learned developed or otherwise obtained by Seller or any of its Affiliates after the Closing, without reliance on any Business Confidential Information or (C) is thereafter disclosed, furnished or otherwise made available to Seller by a third party (other than Seller’s Affiliates, consultants and advisors) who is not known by Seller at the time of receipt to be bound by a confidentiality agreement with or other contractual, legal or fiduciary obligation of confidentiality to either of Buyer or any other party with respect to such information.  Seller shall deliver promptly to Buyer or destroy, at the request and option of Buyer, all tangible embodiments (and all copies) of the Business Confidential Information that are in its possession.

 

Seller shall not use, release or disclose the Business Confidential Information to any other Person, except its Affiliates, consultants and advisors who are subject to a contractual, legal, fiduciary or similar (such as obligations imposed by applicable rules of professional conduct) obligation of confidentiality to Seller and except as required to comply with its obligations under this Agreement, unless requested to disclose the Business Confidential Information by judicial, administrative or investigative process or required to do so by other requirements of law or so as not to violate the rules of any stock market or exchange; provided, however, that in the case of disclosure requested by judicial, administrative or investigative process or by applicable law or the rules of any stock market or exchange, Seller shall (to the extent permitted by applicable law and such rules) notify Buyer promptly of the request or requirement so that Buyer may seek an appropriate protective order or waive compliance with the provisions of this Section 5(d).  If, in the absence of a protective order or the receipt of a waiver hereunder, Seller is requested to disclose any Business Confidential Information by judicial, administrative or investigative process, or required to do so by applicable law or the rules of any stock market or exchange Seller may so disclose the Business Confidential Information; provided, however, that at the written request of Buyer and to the extent that the procedures for obtaining such are available, Seller shall use reasonable efforts to obtain, at the expense of Buyer, an order or other assurance that confidential treatment will be accorded to such portion of the Business Confidential Information requested or required to be disclosed.

 

(e) Use of Names.  Following the Closing, Seller shall have no rights to use any trademarks, trade names, logos or any contraction, abbreviation or simulation of Target or any Target Subsidiary and will not hold itself out as having any affiliation with Target or any Target Subsidiary and will as soon as practicable take any necessary action to change the names of D&H Manufacturing (Singapore) Pte Ltd. and D and H Asia Holdings, LLC to names which could not reasonably be confused with Target or any Target Subsidiary.

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

30

 

Section 6.                                          Conditions to Obligation to Close.

 

(a) Conditions to Buyer’s Obligation.  Buyer’s obligation to consummate the transactions to be performed by it in connection with the Closing is subject to satisfaction of the following conditions:

 

(i)                                     the representations and warranties set forth in Section 3 above shall be true and correct in all material respects both when made and at and as of the Closing Date (or if made as of a specified date, only as of such date), except to the extent that such representations and warranties are qualified by the term “material,” or contain terms such as “Material Adverse Effect” or “Material Adverse Change,” in which case such representations and warranties (as so written, and without giving effect to any materiality qualification related thereto, except as would not have, individually or in the aggregate, a Material Adverse Effect) shall be true and correct in all respects at and as of the Closing Date (or if made as of a specified date, only as of such date);

 

(ii)                                  Seller shall have performed and complied with all of its covenants hereunder in all material respects through the Closing, except to the extent that such covenants are qualified by the term “material,” or contain terms such as “Material Adverse Effect” or “Material Adverse Change,” in which case Seller shall have performed and complied with all of such covenants (as so written and without giving effect to any materiality qualification related thereto, except as would not have, individually or in the aggregate, a Material Adverse Effect) in all respects through the Closing;

 

(iii)                               Target and Target Subsidiaries shall have procured all of the third-party consents specified in Section 4(b) above;

 

(iv)                              no action, suit, or proceeding shall be pending or threatened before (or that could come before) any court or quasi-judicial or Governmental Entity (or that could come before) any Arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling, or charge would (A) prevent consummation of any of the transactions contemplated by this Agreement, (B) cause any of the transactions contemplated by this Agreement to be rescinded following consummation, (C) adversely affect the right of a Buyer to own Target Shares and to control Target and Target Subsidiaries, or (D) adversely affect the right of Target or Target Subsidiaries to own their assets and to operate their Businesses (and no such injunction, judgment, order, decree, ruling, or charge shall be in effect);

 

(v)                                 Target shall have delivered to Buyer a certificate to the effect that each of the conditions specified above in Section 6(a)(i)-(iv) is satisfied in all respects;

 

(vi)                              Seller, Target, and Target Subsidiaries shall have received all authorizations, consents, and approvals of Governmental Entities referred to in Section 2(a)(ii), Section 2(b)(ii), and Section 3(c) above;

 

(vii)                           Buyer shall have entered into a one year consulting agreement with * in the form of Consulting Agreement attached hereto as EXHIBIT F pursuant to which * and *, representatives of * (“*”) will provide certain consulting services to Buyer in accordance with such agreement.

 

(viii)                        Buyer shall have received the resignations, effective as of the Closing, of each director and officer of Target and Target Subsidiaries other than those whom Buyer shall have specified in writing at least five business days prior to the Closing;

 

(ix)                              all actions to be taken by Target in connection with consummation of the transactions contemplated hereby and all certificates, opinions, instruments, and other

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

31

 

documents required to effect the transactions contemplated hereby shall be reasonably satisfactory in form and substance to Buyer;

 

(x)                                 Target and Target Subsidiaries shall have obtained and delivered to Buyer a written consent for the assignment of each of the Leases from the landlord or other party whose consent thereto is required under such Lease (the “Lease Consents”), in form and substance satisfactory to Buyer;

 

(xi)                              Seller shall deliver to Buyer a non-foreign affidavit dated as of the Closing Date, sworn under penalty of perjury and in form and substance required under the Treasury Regulations issued pursuant to Code Section 1445 stating that Seller is not a “Foreign Person” as defined in Code Section 1445;

 

(xii)                           each of *, *, *, Seller, * and * shall have entered into non-compete agreements with Buyer in form satisfactory to Buyer and containing the Non-Compete Provisions attached hereto as EXHIBIT G;

 

(xiii)                        each of *, *, *, *, *, *, *, * and * (collectively, the “Key Employees”) shall have accepted offers of employment from Buyer on terms reasonably satisfactory to Buyer;

 

(xiv)                       Seller shall have delivered to Buyer copies of the articles of incorporation (or other applicable governing document) of Seller, Target, and Target Subsidiaries certified on or soon before the Closing Date by the Secretary of State (or comparable officer) of the jurisdiction of each such Person’s incorporation (or formation);

 

(xv)                          Seller shall have delivered to Buyer copies of the certificate of good standing of Seller, Target and Target Subsidiaries issued on or soon before the Closing Date by the Secretary of State (or comparable officer) of the jurisdiction of each such Person’s organization and of each jurisdiction in which each such Person is qualified to do business;

 

(xvi)                       Seller shall have delivered to Buyer a certificate of the secretary or an assistant secretary of Seller, dated the Closing Date, in form and substance reasonably satisfactory to Buyer, as to: (i) no amendments to the certificate of incorporation (or formation) of Seller since the date of the certificate of good standing of Seller, Target and Target Subsidiaries issued on the Execution Date; (ii) the bylaws (or other governing documents) of Seller; (iii) the resolutions of the board of directors or other authorizing body (or a duly authorized committee thereof) of Seller authorizing the execution, delivery, and performance of this Agreement and the transactions contemplated hereby; and (iv) incumbency and signatures of the officers of Seller executing this Agreement or any other agreement contemplated by this Agreement;

 

(xvii)                    Target shall have delivered to Buyer a certificate of the secretary or an assistant secretary of each of Target and Target Subsidiaries, dated the Closing Date, in form and substance reasonably satisfactory to Buyer, as to: (i) no amendments to the certificate of incorporation (or formation) of such Person since the date specified in clause (xvii) above; (ii) the bylaws (or other governing documents) of such Person; and (iii) any resolutions of the board of directors or other authorizing body (or a duly authorized committee thereof) of such Person relating to this Agreement and the transactions contemplated hereby;

 

(xviii)                 Target and C.D.S., Inc. (a Target Subsidiary) shall have purchased from CEC certain equipment and other assets identified on EXHIBIT E attached hereto at Fair Market Value;

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

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(xix)                       there shall not have been any Material Adverse Change;

 

(xx)                          the results of the criminal background checks and drug testing of the Key Employees shall be satisfactory to Buyer in its sole discretion;

 

(xxi)                       prior to Closing, *’s employment shall have been terminated, any severance or any other obligations owed to him (other than COBRA, if applicable) will have been satisfied and a release satisfactory to Buyer shall have been obtained.  * shall have entered into a six month consulting agreement at Closing in the form attached hereto as EXHIBIT H;

 

(xxii)                    should Buyer elect to conduct Phase II Environmental Site Assessments of the leased properties in California and Vietnam, the results of such assessments have been deemed satisfactory to Buyer;

 

(xxiii)                 each of the *, *, *, * and * shall have entered into the Continuing Indemnification Agreement in the form attached as EXHIBIT I;

 

(xxiv)                each Intercompany Agreement shall have been terminated at or prior to Closing; and

 

(xxv)                   each of *, *, *, * and * shall have entered into a Shareholder Representative Agreement in the form attached as EXHIBIT J, appointing * to act as their Representative in connection with this Agreement.

 

(xxvi)                each of the customers set forth on EXHIBIT K shall have confirmed that it will continue to do business with Target after the Closing.

 

Buyer may waive any condition specified in this Section 6(a) if it executes a waiver in writing so stating at or prior to the Closing.

 

(b) Conditions to Seller’s Obligation.  The obligation of Seller to consummate the transactions to be performed by it in connection with the Closing is subject to satisfaction of the following conditions:

 

(i)                                     the representations and warranties set forth in Section 2(b) above shall be true and correct in all material respects at and as of the Closing Date (or if made as of a specified date, only as of such date), except to the extent that such representations and warranties are qualified by the term “material,” or contain terms such as “Material Adverse Effect” or “Material Adverse Change,” in which case such representations and warranties (as so written, and without giving effect to any materiality qualification related thereto, except as would not have, individually or in the aggregate, a Material Adverse Effect) shall be true and correct in all respects at and as of the Closing Date (or if made as of a specified date, only as of such date);

 

(ii)                                  Buyer shall have performed and complied with all of their covenants hereunder in all material respects through the Closing, except to the extent that such covenants are qualified by the term “material,” or contain terms such as “Material Adverse Effect” or “Material Adverse Change,” in which case Buyer shall have performed and complied with all of such covenants (as so written” and without giving effect to any materiality qualification related thereto, except as would not have, individually or in the aggregate, a Material Adverse Effect) in all respects through the Closing;

 

(iii)                               no action, suit, or proceeding shall be pending or threatened before any court or quasi-judicial or administrative agency of any federal, state, local, or foreign

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

33

 

jurisdiction or before any Arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling, or charge would (A) prevent consummation of any of the transactions contemplated by this Agreement or (B) cause any of the transactions contemplated by this Agreement to be rescinded following consummation (and no such injunction, judgment, order, decree, ruling, or charge shall be in effect);

 

(iv)                              no action, suit, or proceeding shall be pending or threatened before (or that could come before) any court or quasi-judicial or administrative agency of any federal, state, local, or foreign jurisdiction or before (or that could come before) any Arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling, or charge would (A) prevent consummation of any of the transactions contemplated by this Agreement, (B) cause any of the transactions contemplated by this Agreement to be rescinded following consummation, (C) adversely affect the right of Buyer to own Target Shares and to control Target and Target Subsidiaries, or (D) adversely affect the right of Target or Target Subsidiaries to own its assets and to operate its Business (and no such injunction, judgment, order, decree, ruling, or charge shall be in effect);

 

(v)                                 Buyer shall have delivered to Seller a certificate to the effect that each of the conditions specified above in Section 6(b)(i)-(v) is satisfied in all respects;

 

(vi)                              Buyer shall have delivered to Seller and Target a certificate of the secretary or an assistant secretary, dated the Closing Date, in form and substance reasonably satisfactory to Seller and Target, as to: (i) no amendments to the certificate of incorporation (or formation) of Buyer since the date specified in clause (iv) above; (ii) the bylaws (or other governing documents) of Buyer; (iii) the resolutions of the board of directors or other authorizing body (or a duly authorized committee thereof) of Buyer authorizing the execution, delivery, and performance of this Agreement and the transactions contemplated hereby; and (iv) incumbency and signatures of the officers of Buyer executing this Agreement or any other agreement contemplated by this Agreement;

 

(vii)                           Seller, Target and Target Subsidiaries shall have received all authorizations, consents, and approvals of governments and governmental agencies referred to in Section 2(a)(ii), Section 2(b)(ii), and Section 3(c) above; and

 

(viii)                        all actions to be taken by Buyer in connection with consummation of the transactions contemplated hereby and all certificates, opinions, instruments, and other documents required to effect the transactions contemplated hereby will be reasonably satisfactory in form and substance to Seller.

 

Seller or Target, as applicable, may waive any condition specified in this Section 6(b) if it executes a writing so stating at or prior to the Closing.

 

Section 7.                                        Remedies for Breaches of This Agreement.

 

(a) Survival of Representations and Warranties.  Except as set forth below, all of the representations and warranties of Seller and Target contained in Sections 2 and 3 (and related rights to indemnification) and the covenants of Seller and Target (including, without limitation, those contained in Section 4(i) and Section 8 hereof), shall survive the Closing hereunder and continue in full force and effect for a period of * years following the Closing Date.  Notwithstanding the foregoing, (i) representations and warranties of Target contained in Section 3(k) (Tax Matters) (and related rights to indemnification) shall survive the Closing hereunder and continue in full force and effect until * days following the expiration of the applicable statute of limitations; (ii) representations and warranties of Target contained in Section 3(z) (Environmental, Health and

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

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Safety Matters) (and related rights to indemnification) shall survive the Closing hereunder and continue in full force and effect for a period of * years from the Closing Date and (iii) representations and warranties of Seller and Target contained in Sections 2(a)(ii) (Authorization of Transaction), 2(a)(v) (Target Shares), 3(a) (Organization, Qualification and Corporate Power), 3(b) (Capitalization), Section 3(e) (Title to Assets), 3(f) (Target Subsidiaries) (and related rights to indemnification), shall survive for * years following the Closing Date.  The representations and warranties referred to in clause (iii) above are collectively referred to as the “Fundamental Representations”.  Notwithstanding the foregoing, the personal obligations of *, * and * regarding the Fundamental Representations shall be subject to those certain time limits which are more specifically set forth herein.

 

Except as set forth herein, the representations and warranties of Buyer contained in Section 2(b) of this Agreement and the covenants of the Buyer contained in Section 4 and 5(d) this Agreement shall survive the Closing hereunder and continue in full force and effect for a period of * years following the Closing Date.

 

(b) Indemnification Provisions for Buyer’s Benefit.

 

(i)                                     In the event Seller or Target breaches any of its representations, warranties, covenants and agreements contained herein and, provided that Buyer makes a written claim for indemnification against Seller pursuant to Section 10(h) below within the survival period, then Seller shall be obligated to indemnify Buyer and its Affiliates, and each of their respective officers, directors, managers, members, partners, shareholders, subsidiaries, employees, successors, heirs, assigns, agents and representatives, in each case other than Seller (each, a “Buyer Indemnified Person”) from and against the entirety of any Adverse Consequences a Buyer Indemnified Person may suffer resulting from, arising out of, relating to, in the nature of, or caused by the breach.

 

(ii)                                  In addition to the indemnification obligations of Seller in Section 7(b)(i) above, Seller shall indemnify and hold harmless each Buyer Indemnified Person from and against the entirety of any Adverse Consequences a Buyer Indemnified Person may suffer resulting from, arising out of, relating to, in the nature of, or caused by:

 

(A)                               any matter disclosed in Schedule 3(h)(iii) of the Disclosure Schedule;

 

(B)                               any matter disclosed in Schedule 3(t) of the Disclosure Schedule;

 

(C)                               any matter disclosed in Schedule 3(z)(iii) of the Disclosure Schedule;

 

(D)                               the matter disclosed in paragraph 2 of Schedule 3(w)(i)(F) or any matter disclosed in Schedule 3(w)(i)(G) of the Disclosure Schedule; and

 

(E)                                any matter disclosed in Schedule 3(x)(i)(B) of the Disclosure Schedule.

 

The matters referenced to in the Section 7(b)(ii) are referred to herein as the “Designated Liabilities”.  The Parties will cooperate with each other as specified in EXHIBIT L to facilitate the resolution and payment of the Designated Liabilities.

 

(iii)                               No claim of indemnification for breach of representations, warranties, covenants and agreements contained herein shall be made under Section 7(b)(i) unless and until the aggregate losses of Buyer shall have exceeded the Threshold; notwithstanding the

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

35

 

foregoing, the Threshold shall not be applicable with respect to indemnification claims involving severance costs for Seasonal Employees, Environmental Liabilities, and Tax Liabilities or for claims under Section 7(b)(ii).  Once the aggregate losses of Buyer have exceeded the Threshold (or immediately for any losses not subject to the Threshold), all claims for indemnification against Seller within the applicable survival period shall be fully indemnified, starting with the first dollar without regard to the Threshold.

 

(c) Matters Involving Third Parties.

 

(i)                                     If any third party notifies Buyer or any of Buyer Indemnified Persons (the “Indemnified Party”) with respect to any matter (a “Third-Party Claim”) that may give rise to a claim for indemnification against Seller (the “Indemnifying Party”) under this Section 7, then the Indemnified Party shall promptly notify the Indemnifying Party thereof in writing; provided, however, that any delay on the part of the Indemnified Party in notifying any Indemnifying Party may affect the Indemnifying Party’s obligation hereunder but only to the extent the Indemnifying Party is thereby actually prejudiced.

 

(ii)                                  Any Indemnifying Party will have the right to defend the Indemnified Party against the Third-Party Claim with counsel of its choice reasonably satisfactory to the Indemnified Party so long as (A) the Indemnifying Party provides the Indemnified Party with evidence reasonably acceptable to the Indemnified Party that the Indemnifying Party will have the financial resources to defend against the Third-Party Claim and fulfill its indemnification obligations hereunder, (B) the Third-Party Claim involves only money damages and does not seek an injunction or other equitable relief, (C) settlement of, or an adverse judgment with respect to, the Third-Party Claim is not, in the good faith judgment of the Indemnified Party, likely to establish a precedential custom or practice adverse to the continuing business interests or the reputation of the Indemnified Party, and (D) the Indemnifying Party conducts the defense of the Third-Party Claim actively and diligently.

 

(iii)                               So long as the Indemnifying Party is conducting the defense of the Third-Party Claim in accordance with Section 7(c)(ii) above with counsel acceptable to the Indemnified Party, (A) the Indemnified Party may retain separate co-counsel at its sole cost and expense and participate in the defense of the Third-Party Claim, (B) the Indemnified Party will not consent to the entry of any judgment on or enter into any settlement with respect to the Third-Party Claim without the prior written consent of the Indemnifying Party, and (C) the Indemnifying Party will not consent to the entry of any judgment on or enter into any settlement with respect to the Third-Party Claim without the prior written consent of the Indemnified Party (not to be unreasonably withheld).

 

(iv)                              In the event any of the conditions in Section 7(c)(ii) above is or becomes unsatisfied, however, (A) the Indemnified Party may defend against, and consent to the entry of any judgment on or enter into any settlement with respect to, the Third-Party Claim in any manner it may reasonably deem appropriate (and the Indemnified Party need not consult with, or obtain any consent from, any Indemnifying Party in connection therewith), (B) the Indemnifying Parties will reimburse the Indemnified Party promptly and periodically for the costs of defending against the Third-Party Claim (including reasonable attorneys’ fees and expenses), and (C) the Indemnifying Parties will remain responsible for any Adverse Consequences the Indemnified Party may suffer resulting from, arising out of, relating to, in the nature of, or caused by the Third-Party Claim to the fullest extent provided in this Section 7.

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

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(d) Determination of Adverse Consequences.  All indemnification payments under this Section 7 and Section 8(a) shall be deemed adjustments to the Purchase Price.

 

(e) Recoupment Against Holdback Amount.

 

(i)                                     The Holdback Amount, less (A) any amounts that have been previously paid to Buyer from the Holdback Amount to compensate Buyer Indemnified Persons for Adverse Consequences under this Section 7, (B) any amounts for claims that have been previously made by Buyer that are not yet resolved and (C) the Designated Amount, if it has not yet been released, together with interest accrued on such amount, if any, shall be released and paid to Seller on the date that is the later of (a) * years after the Closing Date and (b) 90 days after the expiration of the last to expire of the applicable statute of limitations for the types of Tax Returns listed in Schedule 3(k)(iii) of the Disclosure Schedule for the jurisdictions specified therein (assuming for the purposes of determining such statute of limitations the absence of fraud and excluding any jurisdiction in which no Tax Returns were filed); provided, however, that such statute of limitations shall not be deemed to have expired if any of such Tax Returns is in the process of being audited (including any Tax Returns with respect to which the Target or a Target Subsidiary had received written notification from a Governmental Entity that it intends to commence a Tax audit), if any tax assessment shall have been asserted by a Governmental Entity, or if any extension of any such statute of limitations has been granted or any tolling shall have occurred.  In the event that the provision in the preceding sentence shall be applicable, the statute of limitations shall not be deemed to expire (and the 90-day period shall not commence to begin) until the actual expiration of the applicable statute of limitations.  Notwithstanding the above, in no event, other than as specified in clauses (B) and (C) above, shall the release date be later than * years after the Closing Date (the release date as determined above being the “Holdback Release Date”).  The release of the Holdback Amount will in no way affect Buyer’s rights to seek indemnification under the Continuing Indemnification Agreement (as defined herein) with respect to claims for breaches of the Fundamental Representations.  The Designated Amount, less any amount that has been previously paid to Buyer from the Holdback Amount to compensate Buyer Indemnified Persons, or any amount of claims that have been previously made by Buyer that are not yet resolved with respect to the Designated Liabilities, shall be released at such time as Seller has obtained, on behalf of Target and Buyer, settlement agreements with full releases with respect to all Adverse Consequences for all of the Designated Liabilities.

 

(ii)                                  The Parties hereby acknowledge and agree that the disbursement of the Holdback Amount shall not be deemed to modify the obligations of Seller with respect to indemnification or the survival of representations and warranties.

 

(f) Holdback Amount Adjustment.  Any part of the Holdback Amount that is paid to Seller on the Holdback Release Date or thereafter shall be deemed an adjustment to the Purchase Price.

 

(g) Limitation on Indemnification Amount.  With respect to any claim by Buyer for indemnification for breaches of representations, warranties and covenants under Section 7(b)(i) other than claims for breaches of the Fundamental Representations, Seller’s aggregate liability shall be limited to the Holdback Amount.  Seller’s aggregate liability for a breach of the Fundamental Representations shall be limited to the Purchase Price.

 

(h) Continuing Indemnification Obligations.  In the event Seller or Target breaches any of the Fundamental Representations and Buyer properly makes a written claim for indemnification against Seller subsequent to the Holdback Release Date, but within the applicable survival period pursuant to Section 7(a) above (each a “Continuing Indemnification Obligation”), Buyer shall have the right to be indemnified in accordance with the Continuing Indemnification Agreement,

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

37

 

attached hereto as EXHIBIT I (the “Continuing Indemnification Agreement”), from and against the entirety of any Adverse Consequences Buyer may suffer resulting from, arising out of, relating to, in the nature of, or caused by the breach, subject to the indemnification limitations set forth in Section 7(g) above.

 

(i) Indemnity by Buyer.  In the event Buyer breaches any of its representations, warranties, covenants and agreements contained herein and, provided that Seller makes a written claim for indemnification against Buyer pursuant to Section 10(h) below, then Buyer shall be obligated to indemnify Seller and its Affiliates, and each of their respective officers, directors, managers, members, partners, shareholders, subsidiaries, employees, successors, heirs, assigns, agents and representatives, in each case other than Buyer (each, a “Seller Indemnified Person”) from and against the entirety of any Adverse Consequences Seller may suffer resulting from, arising out of, relating to, in the nature of, or caused by the breach.

 

Section 8.                                          Tax Matters. The following provisions shall govern the allocation of responsibility as between Buyer and Seller for certain Tax matters following the Closing Date:

 

(a) Tax Indemnification.  Seller shall indemnify Target, Target Subsidiaries, Buyer, and each other Buyer Indemnified Person and hold them harmless, on an after-Tax basis and free and clear of, and without reduction for any withholding Tax or similar Tax on such indemnity from and against, any loss, claim, Liability, expense, or other damage attributable to (i) all Taxes payable (or the non-payment thereof) to any Governmental Entity for all taxable periods  ending on or before the Closing Date including, without limitation, Taxes attributable to the Straddle Period (“Pre-Closing Tax Periods”), (ii) all Taxes resulting from any breach of any representation or warranty set forth in Section 3(k), (iii) all Taxes resulting from a breach of covenants contained in Section 4(i) or in this Section 8, and (iv) any and all Taxes of any Person imposed on Target or any Target Subsidiary as a transferee or successor, by contract or pursuant to any law, rule, or regulation, relating to an event or transaction occurring on or before the Closing.  Seller shall reimburse Buyer for any Taxes of Target or any Target Subsidiary that are the responsibility of Seller pursuant to this Section 8(a) within fifteen (15) business days after payment of such Taxes by Buyer, Target, or Target Subsidiaries.

 

(b) Straddle Period.  For Taxes other than those based on or measured by income or revenue, in the case of any taxable period that includes (but does not end on) the Closing Date (a “Straddle Period”), the amount of any such Taxes of Target and any Target Subsidiary allocable to a Pre-Closing Tax Period shall be deemed to be the amount of such Tax for the entire taxable period multiplied by a fraction the numerator of which is the number of days in the taxable period ending on the Closing Date and the denominator of which is the number of days in such Straddle Period.  For Taxes based on or measured by income or revenue, in the case of any Straddle Period, the amount of any such Taxes of Target and any Target Subsidiary allocable to a Pre-Closing Tax Period shall be deemed to be the amount of such Tax that is determined by a closing of the books at the end of the Closing Date.  Notwithstanding the foregoing, if any adjustments are made to the Pre-Closing Net Working Capital following the Closing, which adjustment results in either an increase or decrease in the Purchase Price, the Seller will make such adjustments to the Estimated Pre-Closing Tax Obligation as are necessary to reflect the effects of the increase or decrease in the Purchase Price (the “Post-Closing Tax Obligation”).

 

(c) Responsibility for Filing Tax Returns.   Except as set forth in Section 8(f) below, Buyer shall prepare or cause to be prepared and file or cause to be filed all Tax Returns for Target and Target Subsidiaries that are filed after the Closing Date, subject to and in accordance with Section 8(f) below and subject to the indemnification provisions of Sections 8(a) and 8(b), above.

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

38

 

(d) Cooperation on Tax Matters.

 

(i)                                     Buyer, Target and Target Subsidiaries, and Seller shall cooperate fully, as and to the extent reasonably requested by the other Party, in connection with the filing of Tax Returns pursuant to Section 8(c) and any audit, litigation or other proceeding with respect to Taxes. Such cooperation shall include the retention and (upon the other Party’s request) the provision of records and information that are reasonably relevant to any such audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. Target and Target Subsidiaries agree (A) to retain all books and records with respect to Tax matters pertinent to Target and Target Subsidiaries relating to any taxable period beginning before the Closing Date until the expiration of the statute of limitations (and, to the extent notified by notified by the other Party, any extensions thereof) of the respective taxable periods, and to abide by all record retention agreements entered into with any taxing authority, and (B) to give the other Party reasonable written notice prior to transferring, destroying or discarding any such books and records and, if the other Party so requests, Target and any Target Subsidiaries or Seller, as the case may be, shall allow the other Party to take possession of such books and records.

 

(ii)                                  Buyer and Seller further agree, upon request, to use their commercially reasonable efforts to obtain any certificate or other document from any Governmental Entity or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed (including, but not limited to, with respect to the transactions contemplated hereby).

 

(iii)                               Buyer and Seller further agree, upon request, to provide the other Party with all information that either Party may be required to report pursuant to Code Section 6043, or Code Section 6043A, or Treasury Regulations promulgated thereunder.

 

(e) Tax-Sharing Agreements.  All tax-sharing agreements or similar agreements with respect to or involving Target and any Target Subsidiary shall be terminated as of the Closing Date and, after the Closing Date, Target and Target Subsidiaries shall not be bound thereby or have any Liability thereunder.

 

(f) Transfer Taxes.  Notwithstanding Section 8(c), all Transfer Taxes, if any, incurred in connection with consummation of the transactions contemplated by this Agreement shall be paid by Seller when due, and Seller will, at its own expense, file all necessary Tax Returns and other documentation with respect to all such Transfer Taxes, and, if required by applicable law, Buyer will, and will cause its Affiliates to, join in the execution of any such Tax Returns and other documentation.

 

(g) Tax Treatment of Stock Options.  The Parties agree that, for Tax Return reporting purposes, the amount of income realized by the Option Holders on the Closing Date, as a result of the exercise of options with respect to Target Shares shall be reported as compensation income realized by such option holders and shall be reported as so realized in the year of such exercise.  The Tax Returns of Target shall be prepared in a manner consistent with this treatment, and the cash payments from Buyer with respect to Target Shares acquired upon the exercise of such options shall be subject to withholding as provided in Section 1(f) hereof.

 

Section 9.                                        Termination.

 

(a) Termination of Agreement.  Certain of the Parties may terminate this Agreement as provided below:

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

39

 

(i) By mutual consent:  Buyer, Seller and Target may terminate this Agreement by written consent of each Party at any time prior to the Closing;

 

(ii) For Seller Breach: Buyer may terminate this Agreement by giving written notice to Seller at any time prior to the Closing (A) in the event Seller has breached any material representation, warranty, or covenant contained in this Agreement, Buyer has notified Seller of the breach, and the breach has continued without cure for a period of thirty (30) days after the notice of breach or (B) if the Closing shall not have occurred on or before November 30, 2012,  by reason of the failure of any condition precedent under Section 6(a) hereof (unless the failure results primarily from Buyer itself breaching any representation, warranty, or covenant contained in this Agreement); (C) in the event that (1) all of the conditions set forth in Section 6(b) have been satisfied or waived in writing (other than those conditions that by their nature are to be satisfied by actions taken at Closing, provided that Buyer is then able to satisfy such conditions) and (2) Seller fails to consummate the transaction on the Closing Date as set forth in Section 1(d); and

 

(iii) For Buyer Breach:  Seller and Target may terminate this Agreement by giving written notice to Buyer at any time prior to the Closing (A) in the event Buyer has breached any material representation, warranty, or covenant contained in this Agreement, Seller has notified Buyer of the breach, and the breach has continued without cure for a period of 30 days after the notice of breach;(B) if the Closing shall not have occurred on or before November 30, 2012, by reason of the failure of any condition precedent under Section 6(b) hereof (unless the failure results primarily from Seller breaching any representation, warranty, or covenant contained in this Agreement); or (C) in the event that (1) all of the conditions set forth in Section 6(a) have been satisfied or waived in writing (other than those conditions that by their nature are to be satisfied by actions taken at Closing, provided that Seller or Target, as applicable, is then able to satisfy such conditions) and (2) Buyer fails to consummate the transaction on the Closing Date as set forth in Section 1(d).

 

(b) Effect of Termination.  If any Party terminates this Agreement pursuant to Section 9(a) above, all rights and obligations of the Parties hereunder shall terminate without any Liability of any Party to any other Party (except for any Liability of any Party then in breach).

 

Section 10.                                 Miscellaneous.

 

(a) Incorporation of Exhibits, Annexes, and Schedules.  The Exhibits, Annexes, and Disclosure Schedules identified in this Agreement are incorporated herein by reference and made a part hereof.

 

(b) Press Releases and Public Announcements.  Seller shall not issue any press release or make any public announcement relating to the subject matter of this Agreement prior to the Closing without the prior written approval of Buyer; provided, however, that any Party may make any public disclosure it believes in good faith, in reliance upon counsel’s advice, is required by applicable law or any listing or trading agreement concerning its publicly traded securities (in which case the disclosing Party will use its reasonable efforts to advise the other Party prior to making the disclosure) ), and provided, further, that Buyer may issue a press release upon the Parties’ execution of this Agreement and the Closing under this Agreement.  Buyer shall provide a copy of the execution press release to Seller for its review prior to its issuance.  It is the expectation of the parties that Buyer will include input from Seller in Buyer’s execution press release.

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

40

 

(c) No Third-Party Beneficiaries.  This Agreement shall not confer any rights or remedies upon any Person other than the Parties and their respective successors and permitted assigns.

 

(d) Entire Agreement.  Except as otherwise specifically set forth herein, this Agreement (including the documents referred to herein), together with the NDA, constitute the entire agreement among the Parties and supersedes any prior understandings, agreements, or representations by or among the Parties, written or oral, to the extent they relate in any way to the subject matter hereof.

 

(e) Succession and Assignment.  This Agreement shall be binding upon and inure to the benefit of the Parties named herein and their respective successors and permitted assigns. No Party may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of Buyer and Seller; provided, however, that Buyer may (i) assign any or all of its rights and interests hereunder to one or more of its Affiliates and (ii) designate one or more of its Affiliates to perform its obligations hereunder (in any or all of which cases Buyer nonetheless shall remain responsible for the performance of all of its obligations hereunder).

 

(f) Counterparts.  This Agreement may be executed in one or more counterparts (including by means of facsimile), each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

 

(g) Headings.  The section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement.

 

(h) Notices.  All notices, requests, demands, claims, and other communications hereunder shall be in writing. Any notice, request, demand, claim, or other communication hereunder shall be deemed duly given (i) when delivered personally to the recipient, (ii) one business day after being sent to the recipient by reputable overnight courier service (charges prepaid), (iii) one business day after being sent to the recipient by facsimile transmission or electronic mail, or (iv) four business days after being mailed to the recipient by certified or registered mail, return receipt requested and postage prepaid, and addressed to the intended recipient as set forth below:

 

if to Seller or Target or any Target Subsidiary:

 

The Crossbow Group, LLC

PO Box 32900

San Jose, CA 95152-2900

Attention:                                         *

*

*

 

with a copy to (which shall not constitute compliance with notice requirements specified in clause (h) above):

 

Heffernan Seubert & French LLP

1075 Curtis Street

Menlo Park, California 94025

Attention:                                         Tom French

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

41

 

If to Buyer:

 

Celestica (USA) Inc.

844 Don Mills Road

Toronto, Ontario

Canada M3C 1V7

Fax: (416) 448-2817

Attention:                                         Legal Department

 

with a copy to (which shall not constitute compliance with notice requirements specified in clause (h) above):

 

Kaye Scholer LLP

425 Park Avenue

New York, New York 10022

Fax:  (212) 836-6556

Attention:                                         William E. Wallace, Jr.

 

Any Party may change the address to which notices, requests, demands, claims, and other communications hereunder are to be delivered by giving the other Parties notice in the manner herein set forth.

 

(i) Governing Law.  This Agreement shall be governed by and construed in accordance with the domestic laws of the State of California without giving effect to any choice or conflict of law provision or rule (whether of the State of California or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of California.

 

(j)  Amendments and Waivers.  No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed by Buyer and Seller. No waiver by any Party of any provision of this Agreement or any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be valid unless the same shall be in writing and signed by the Party making such waiver nor shall such waiver be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such default, misrepresentation, or breach of warranty or covenant.

 

(k)  Severability.  Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction.

 

(l)  Expenses.  Except as otherwise specifically provided herein, each of Buyer, Seller, Target, and any Target Subsidiary shall bear its own costs and expenses (including legal fees and expenses) incurred in connection with this Agreement and the transactions contemplated hereby.

 

(m)  Construction.   The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state, local, or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word “including” shall mean including without limitation.

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

42

 

(n)  Specific Performance.  Each Party acknowledges and agrees that the other Parties would be damaged irreparably in the event any provision of this Agreement is not performed in accordance with its specific terms or otherwise is breached, so that a Party shall be entitled to injunctive relief to prevent breaches of this Agreement and to enforce specifically this Agreement and the terms and provisions hereof in addition to any other remedy to which such Party may be entitled, at law or in equity. In particular, the Parties acknowledge that the Business of Target and the any Target Subsidiary is unique and recognize and affirm that in the event Seller breaches this Agreement, money damages would be inadequate and Buyer would have no adequate remedy at law, so that Buyer shall have the right, in addition to any other rights and remedies existing in its favor, to enforce its rights and the other Parties’ obligations hereunder not only by action for damages but also by action for specific performance, injunctive, and/or other equitable relief.

 

(o)  Dispute Resolution.

 

(i)                                     Except as otherwise provided in this Agreement, the following binding dispute resolution procedures shall be the exclusive means used by the Parties to resolve all disputes, differences, controversies and claims of Buyer, Seller and Target arising out of or relating to this Agreement or any other aspect of the transactions contemplated herein or their respective Affiliates (collectively, “Disputes”).  Either Party may, by written notice to the other Party, refer any Disputes for resolution in the manner set forth below.

 

(ii)                                  Any and all Disputes shall be referred to arbitration under the rules and procedures of JAMS or its successor, who shall act as the arbitration administrator (the “Arbitration Firm”).

 

(iii)                               The Parties shall agree on a single Arbitrator (the “JAMS  Arbitrator”).  The JAMS Arbitrator shall be a retired judge selected by the Parties from a roster of arbitrators provided by the Arbitration Firm.  If the Parties cannot agree on a JAMS Arbitrator within 7 days of delivery of the demand for arbitration (or such other time period as the Parties may agree), the Arbitration Firm will select an independent JAMS Arbitrator.

 

(iv)                              Unless otherwise mutually agreed to by the parties, the place of arbitration shall be San Jose, California, although the arbitrator may be selected from rosters outside California.

 

(v)                                 The Federal Arbitration Act shall govern the arbitrability of all Disputes.  The Federal Rules of Civil Procedure and the Federal Rules of Evidence (the “Federal  Rules”), to the extent not inconsistent with this Agreement, govern the conduct of the arbitration.  To the extent that the Federal Arbitration Act and Federal Rules do not provide an applicable procedure, California law shall govern the procedures for arbitration and enforcement of an award, and then only to the extent not inconsistent with the terms of this Section 10(o).  Disputes between the Parties shall be subject to arbitration notwithstanding that a Party to this Agreement is also a party to a pending court action or special proceeding with a third party, arising out of the same transaction or series of related transactions and there is a possibility of conflicting rulings on a common issue of law or fact.

 

(vi)                              Unless otherwise mutually agreed to by the Parties, each Party shall allow and participate in discovery as follows:

 

(A)                               Non-Expert Discovery.  Each Party may (1) conduct 3 non-expert depositions of no more than 5 hours of testimony each, with any deponents

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

43

 

employed by any Party to appear for deposition in San Jose, California; (2) propound a single set of requests for production of documents containing no more than 20 individual requests; (3) propound up to 20 written interrogatories; and (4) propound up to 10 requests for admission.

 

(B)                               Expert Discovery. Each Party may select a witness who is retained or specially employed to provide expert testimony and an additional expert witness to testify with respect to damages issues, if any. The Parties shall exchange expert reports and documents under the same requirements as Federal Rules of Civil Procedure 26(a)(2) &(4).

 

(C)                               Additional Discovery.  The JAMS Arbitrator may, on application by either Party, authorize additional discovery only if deemed essential to avoid injustice.  In the event that remote witnesses might otherwise be unable to attend the arbitration, arrangements shall be made to allow their live testimony by videoconference during the arbitration hearing.

 

(vii)                           The JAMS Arbitrator shall render an award within 6 months after the date of appointment, unless the Parties agree to extend such time. The award shall be accompanied by a written opinion setting forth the findings of fact and conclusions of law.  The JAMS Arbitrator shall have authority to award compensatory damages only, and shall not award any punitive, exemplary, or multiple damages.  The award (subject to clarification or correction by the JAMS Arbitrator as allowed by statute and/or the Federal Rules) shall be final and binding upon the Parties.

 

(viii)                        This Agreement’s arbitration provisions are to be performed in San Jose, California.  Any judicial proceeding arising out of or relating to this Agreement or the relationship of the Parties, including without limitation any proceeding to enforce this Section 10(o), to review or confirm the award in arbitration, or for preliminary injunctive relief as set forth in Section 10(p), shall be brought exclusively in a court of competent jurisdiction in the county of San Jose, California (the “Enforcing Court”).  By execution and delivery of this Agreement, each Party accepts the jurisdiction of the Enforcing Court.

 

(ix)                              Each Party shall pay its own expenses in connection with the resolution of Disputes pursuant to this Section 10(o), including attorneys’ fees.

 

(x)                                 Notwithstanding anything contained in this Section 10(o) to the contrary, in the event of any Dispute, prior to referring such Dispute to arbitration pursuant to Section 10(o)(i), the Parties shall attempt in good faith to resolve any and all controversies or claims relating to such Disputes promptly by negotiation commencing within 10 calendar days of the written notice of such Disputes by either Party, including referring such matter to the Shareholder Representative for the Seller and Buyer’s then-current executive in charge of the Semiconductor Segment.  The representatives of the Parties shall meet at a mutually acceptable time and place and thereafter as often as they reasonably deem necessary to exchange relevant information and to attempt to resolve the Dispute for a period of 4 weeks.  In the event that the Parties are unable to resolve such Dispute pursuant to this Section 10(o)(x), the provisions of subsections (i) through (x) hereof, inclusive, as well as subsection (xi) hereof, shall apply.

 

(xi)                              The Parties agree that the existence, conduct and content of any arbitration pursuant to this Section 10(o) shall be kept confidential and no Party shall disclose to any Person any information about such arbitration, except as may be required by law or by any

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

44

 

governmental authority or for financial reporting purposes in each Party’s financial statements.

 

(p)   Waiver Of Jury Trial. TO THE FULLEST EXTENT PERMITTED BY LAW, THE PARTIES HERETO HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION.  THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.  THE PARTIES HERETO ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN ITS RELATED FUTURE DEALINGS.  THE PARTIES HERETO FURTHER WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.  THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY.  IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

 

(q)  Time of Essence.   Time is of the essence with respect to all provisions of this Agreement that specify a time for performance; provided, however, that the foregoing shall not be construed to limit or deprive a Party of the benefits of any grace or use period allowed in this Agreement.

 

(r)  Construction.  The meaning assigned to each term defined herein shall be equally applicable to both the singular and the plural forms of such term, and words denoting any gender shall include all genders. Where a word or phrase is defined herein, each of its other grammatical forms shall have a corresponding meaning.

 

Section 11.           Definitions.

 

“Adverse Consequences” means all actions, suits, proceedings, hearings, investigations, charges, complaints, claims, demands, injunctions, judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid in settlement, Liabilities, obligations, Taxes, Liens, losses, expenses, and fees, including court costs and reasonable attorneys’ fees and expenses.

 

“Affiliate” means, with respect to any Person, (i) any Person which directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such other Person (for the purposes of this definition, “control”, including, with correlative meanings, the terms “controlling”, “controlled by” and “under common control with,” as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through ownership of voting securities, by agreement or otherwise) and (ii) with respect to any natural Person, also means any member of such natural Person’s immediate family (meaning each parent, spouse or child (including those adopted) of such natural Person and each custodian or guardian of any property of one or more of such Persons in his or her capacity as such custodian), any Affiliate of any such immediate family member and any trust, limited partnership or limited liability company created

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

45

 

for the benefit of such natural Person or member of such natural Person’s immediate family).  For the avoidance of doubt, *, * and * shall each be deemed an Affiliate of Seller.

 

“Affiliated Group” means any affiliated group within the meaning of Code Section 1504(a) or any similar group defined under a similar provision of state, local or foreign law.

 

“Arbitration Firm” has the meaning set forth in Section 10(o)(ii) above.

 

“Asbestos Liabilities” means any Liabilities arising from, relating to, or based on the presence or alleged presence of asbestos or asbestos-containing materials in any product or item designed, manufactured, sold, marketed, installed, stored, transported, handled, or distributed at any time, or otherwise based on the presence or alleged presence of asbestos or asbestos-containing materials at any property or facility or in any structure, including without limitation, any Liabilities arising from, relating to or based on any personal or bodily injury or illness.

 

“Base Cash Price” means $73,000,000.

 

“Basis” means any past or present fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident, action, failure to act, or transaction that would reasonably form the basis for any specified consequence.

 

“Business” means Target and each Target Subsidiary’s precision machining of components, fabricated parts and assemblies for the semiconductor industry and other industries.

 

“Business Confidential Information” has the meaning set for in Section 5(d) above.

 

“Buyer” has the meaning set forth in the preface above.

 

“Buyer Indemnified Person” has the meaning set forth in Section 7(b)(i) above.

 

“C.D.S., Inc.” means C.D.S. Engineering, Inc.

 

“Closing” has the meaning set forth in Section 1(d) above.

 

“Closing Date” has the meaning set forth in Section 1(d) above.

 

“Closing Date Balance Sheet” means the unaudited balance sheet of Target as at the close of business on the day prior to the Closing Date, including the notes thereto.

 

“COBRA” means the requirements of Part 6 of Subtitle B of Title I of ERISA and Code Section 4980B and of any similar state law.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Continuing Indemnification Agreement” has the meaning set forth in Section 7(h) above.

 

“Continuing Indemnification Obligation” has the meaning set forth in Section 7(h) above.

 

“D&H Vietnam” means D&H Manufacturing (Vietnam) Limited, a Vietnamese limited liability company.

 

“Disclosure Schedule” has the meaning set forth in Section 2(a) above.

 

“Employee Benefit Plan” means any “employee benefit plan” (as such term is defined in ERISA Section 3(3)) and any other benefit plan, program or arrangement of any kind, whether written or oral, qualified or nonqualified, which pertain to any employee, former employee, shareholder, director or consultant of Target or any Target Subsidiary or pursuant to which Target or any Target Subsidiary may have any liability.

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

46

 

“Employee Pension Benefit Plan” has the meaning set forth in ERISA Section 3(2).

 

“Employee Welfare Benefit Plan” has the meaning set forth in ERISA Section 3(1).

 

“Enforcing Court” has the meaning set forth in Section 10(p)(viii) above.

 

“Environmental, Health, and Safety Requirements” means, as amended and as now and hereafter in effect, all federal, state, local, and foreign statutes, regulations, ordinances, and other provisions having the force or effect of Law, all judicial and administrative orders and determinations, all contractual obligations, and all common law concerning public health and safety, worker health and safety, pollution, or protection or restoration of the environment and natural resources, including, without limitation, all those relating to the presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, labeling, testing, processing, discharge, Release, threatened Release, control, or cleanup of any Hazardous Materials.

 

“Environmental Liabilities” means any Liabilities arising under Environmental, Health and Safety Requirements, including any investigatory, remedial or corrective obligations or costs, natural resource damages, fines, penalties, claims of personal injury or property damage and attorney’s fees.

 

“Escrow Agent” has the meaning set forth in Section 1(c) above.

 

“Estimated Pre-Closing Tax Obligation” means the estimate, prepared by Seller, of all Taxes owed by Target or any Target Subsidiary for the Pre-Closing Tax Period, including any Taxes relating to the sale of the Equipment (as such term is defined in Exhibit E hereto) specified on Exhibit E, delivered to Buyer no later than five (5) days prior to Closing.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

“ERISA Affiliate” means each entity that is treated as a single employer with Target for purposes of Code Section 414.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Fair Market Value” means the amount of consideration that would be paid by a willing buyer to a willing seller for property (where neither party is under a compulsion to sell or to buy).

 

“Federal Rules” has the meaning set forth in Section 10(o)(v) above.

 

“FCPA” has the meaning set forth in Section 3(j)(i) above.

 

“Fiduciary” has the meaning set forth in ERISA Section 3(21).

 

“Financial Statements” has the meaning set forth in Section 3(g) above.

 

“Governmental Entity” shall mean a federal, state, local or foreign court, arbitral tribunal, administrative agency or commission or other governmental or other regulatory authority or agency.

 

“Hazardous Material” means any substance material or waste defined, regulated or otherwise characterized by any Governmental Entity as hazardous, toxic, dangerous, radioactive, a pollutant or contaminant, or words of similar meaning and effect, and including petroleum products or byproducts, asbestos, polychlorinated biphenyls, noise and radiation.

 

“Holdback Amount” has the meaning set forth in Section 1(c) above.

 

“Holdback Release Date” has the meaning set forth in Section 7(e)(i) above.

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

47

 

“Improvements” has the meaning set forth in Section 3(l)(iv) above.

 

“Indemnified Party” has the meaning set forth in Section 7(c)(i) above.

 

“Indemnifying Party” has the meaning set forth in Section 7(c)(i) above.

 

“Intellectual Property” means all of the following in any jurisdiction throughout the world: (a) all inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all patents, patent applications, and patent disclosures, together with all reissuances, continuations, continuations-in-part, revisions, extensions, and reexaminations thereof, (b) all trademarks, service marks, trade dress, logos, slogans, trade names, corporate names, Internet domain names, and rights in telephone numbers, together with all translations, adaptations, derivations, and combinations thereof and including all goodwill associated therewith, and all applications, registrations, and renewals in connection therewith, (c) all copyrightable works, all copyrights, and all applications, registrations, and renewals in connection therewith, (d) all mask works and all applications, registrations, and renewals in connection therewith, (e) all trade secrets and confidential business information (including ideas, research and development, know-how, formulas, compositions, manufacturing and production processes and techniques, technical data, designs, drawings, specifications, customer and supplier lists, pricing and cost information, and business and marketing plans and proposals), (f) all computer software (including source code, executable code, data, databases, and related documentation), (g) all advertising and promotional materials, (h) all other proprietary rights, and (i) all copies and tangible embodiments thereof (in whatever form or medium).

 

“Intercompany Agreements” mean all agreements between Target or any Target Subsidiary, on the one hand, and, on the other hand, any of (i) CEC, or (ii) Seller or any company controlled by, or Affiliated with, Seller, or (iii) Catapult Investment Group, any of *, * or * or any Affiliate of any of them.  Intercompany Agreements shall not include the consulting agreement referenced in Section 6(a)(vii) hereof.

 

“JAMS” means Judicial Arbitration and Mediation Services, Inc.

 

“JAMS Arbitrator” has the meaning set forth in Section 10(o)(iii) above.

 

“Key Employees” means the individuals specified in Section 6(a)(xiii).

 

“Knowledge” of Seller or Target means, with respect to Target, the actual knowledge of *, *, *, *, *, *, *, *, *, * and *, after reasonable inquiry of the appropriate people responsible for the relevant matter.

 

“Laws” has the meaning set forth in Section 3(j)(i) above.

 

“Lease Consents” has the meaning set forth in Section 6(a)(x) above.

 

“Leased Real Property” means all leasehold or subleasehold estates and other rights to use or occupy any land, buildings, structures, Improvements, fixtures, or other interest in real property held by Target or any Target Subsidiary, together with all Leased Real Property Subleases, including the right to all security deposits and other amounts and instruments deposited by or on behalf of Target or any Target Subsidiary thereunder.

 

“Leased Real Property Subleases” means all subleases, licenses, or other agreements pursuant to which Target or any Target Subsidiary conveys or grants to any Person a subleasehold estate in, or the right to use or occupy, any Leased Real Property or portion thereof.

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

48

 

“Leases” means all leases, subleases, licenses, concessions and other agreements (written or oral), including all amendments, extensions, renewals, guaranties, and other agreements with respect thereto, pursuant to which Target or any Target Subsidiary holds any Leased Real Property, including the right to all security deposits and other amounts and instruments deposited by or on behalf of Target or any Target Subsidiary thereunder.

 

“Liability” means any liability or obligation of whatever kind or nature (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due), including any liability for Taxes.

 

“Lien” means any mortgage, pledge, lien, encumbrance, charge, or other security interest, other than (a) liens for Taxes not yet due and payable, and (b) purchase money liens and liens securing rental payments under capital lease arrangements.

 

“Material Adverse Effect” or “Material Adverse Change” means any effect or change that would be (or could reasonably be expected to be) materially adverse to (i) the business, assets, financial condition, operating results or operations of Target and any Target Subsidiary, taken as a whole, or to (ii) the ability of Seller to consummate timely the transactions contemplated hereby (regardless of whether or not such adverse effect or change can be or has been cured at any time or whether Buyer has knowledge of such effect or change on the date hereof) other than, in the case of clause (i), any effect or change resulting from (a) events affecting the United States or global economy or capital or financial markets generally, (b) changes in the laws of any Governmental Entity or any interpretation thereof, (c) war, conflicts, any acts of terrorism or change in geopolitical condition, except, in the cases of clauses (a), (b), and (c), to the extent Target is materially and disproportionately affected by such effect as compared to other businesses engaged in the semiconductor equipment contract manufacturing business.

 

“Most Recent Balance Sheet” means the balance sheet contained within the Most Recent Financial Statements.

 

“Most Recent Financial Statements” has the meaning set forth in Section 3(g) above.

 

“Most Recent Fiscal Month End” has the meaning set forth in Section 3(g) above.

 

“Most Recent Fiscal Year End” has the meaning set forth in Section 3(g) above.

 

“Multiemployer Plan” has the meaning set forth in ERISA Section 3(37).

 

“Net Working Capital” means an amount equal to (a) cash plus (b) accounts receivable that (i) includes only invoices dated 90 or fewer days from closing plus  (c) net inventory with a reserve for obsolete and excess inventory calculated in accordance with EXHIBIT C  plus (d) prepaid expenses minus (e) accounts payable minus (f) accrued liabilities other than Taxes (which includes but is not limited to any accrued compensated absences, payroll, employee bonuses, rent, warranties, interest and insurance), consolidated for Target and Target Subsidiaries in accordance with U.S. GAAP.

 

“Option Holders” means those current optionees of Target Shares who purchase their shares of Target in anticipation of the Closing pursuant to the exercise of options granted by Target and who are identified by name and amount of shares owned in EXHIBIT M, hereto.

 

“Ordinary Course of Business” means the ordinary course of business consistent with past custom and practice (including with respect to quantity and frequency).

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

49

 

“Owned Real Property” means all land, together with all buildings, structures, Improvements, and fixtures located thereon, including all electrical, mechanical, plumbing and other building systems, fire protection, security and surveillance systems, telecommunications, computer, wiring, and cable installations, utility installations, water distribution systems, and landscaping, together with all easements and other rights and interests appurtenant thereto (including air, oil, gas, mineral, and water rights), owned by Target or any Target Subsidiary.

 

“Party” has the meaning set forth in the preface above.

 

“Permitted Encumbrances” means (i) Liens for Taxes and other governmental charges and assessments which are not yet due and payable and for which adequate reserves have been established; (ii) Liens of landlords and Liens of carriers, warehousemen, mechanics and materialmen and other similar Liens imposed by law arising in the Ordinary Course of Business for sums not yet due and payable and (iii) other Liens or imperfections on property which do not adversely affect title to, detract from the value of, or impair the existing use of, the property affected by such Lien or imperfection.

 

“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, any other business entity, or a Governmental Entity (or any department, agency, or political subdivision thereof).

 

“Pre-Closing Tax Obligation” means the actual amount of all Taxes owed by Target or any Target Subsidiary for a Pre-Closing Tax Period, including any Taxes relating to the sale of the Equipment (as such term is defined in Exhibit E hereto) specified on Exhibit E.

 

“Pre-Closing Tax Periods” has the meaning set forth in Section 8(a)(i) above.

 

“Prohibited Transaction” has the meaning set forth in ERISA Section 406 and Code Section 4975.

 

“Purchase Price” has the meaning set forth in Section 1(b) above.

 

“Real Property Laws” has the meaning set forth in Section 3(l)(vi) above.

 

“Release” means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching dumping of disposing into the indoor or outdoor environment, including the abandonment or discarding of barrels, containers, and other closed receptacles containing any Hazardous Material.

 

“Seasonal Employee” means any worker who is not  a full-time employee of Target or a United States Target Subsidiary and who is not entitled to participate in the Employee Benefit Plans listed on Schedule 3(x) of the Disclosure Schedule in accordance with the terms of those plans.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Seller” has the meaning set forth in the preface above.

 

“Seller Party” shall mean each of Seller, Target and any Target Subsidiary.

 

“Seller Indemnified Person” has the meaning set forth in Section 7(i) above.

 

“Straddle Period” has the meaning set forth in Section 8(b) above.

 

“Target” has the meaning set forth in the preface above.

 

“Target Shares” means any share of the common stock of Target.

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

50

 

“Target Net Working Capital” means the Net Working Capital expected as of the Closing in the amount of $*.

 

“Target Subsidiaries” means Target owned corporations and companies set forth at EXHIBIT N, hereto.

 

“Tax” or “Taxes” means any U.S. federal, state, local, or non-U.S. taxes, charges, fees, imposts, levies or other assessments, including, without limitation, those imposed on or related to any income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Code Section 59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto and any fees and expenses of a Tax professional incurred in connection with preparation of Tax Returns or incurred in connection with any items described above or any contest or dispute related to any of the foregoing, whether disputed or not and including any obligations to indemnify or otherwise assume or succeed to the Tax liability of any other Person.

 

“Tax Return” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

 

“Third-Party Claim” has the meaning set forth in Section 7(c)(i) above.

 

“Threshold” shall mean an amount equal to $*.

 

“Transfer Tax” means any sales, use, value-added, business, goods and services, transfer (including any stamp duty or other similar Tax chargeable in respect of any instrument transferring property), documentary, conveyancing or similar tax or expense or any recording fee, in each case that is imposed as a result of any transaction contemplated herein, together with any penalty, interest and addition to any such item with respect to such item.

 

“U.S. GAAP” means, generally accepted accounting principles in the United States as applied by Target in accordance with its current accounting policies, on a basis consistent with past practice and the practices and procedures used in preparing the Most Recent Fiscal Year End Financial Statements.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

* Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

51

 

IN WITNESS WHEREOF, the Parties hereto have duly executed this Agreement on the date first above written.

 

	
 
    	
 
    	
CELESTICA (USA) INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    	
/s/ Paul Nicoletti
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    	
Paul Nicoletti
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    	
President
    
	
 
    	
 
    
	
 
    	
 
    	
THE CROSSBOW GROUP, LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    	
/s/ *
    
	
 
    	
 
    	
 
    	
*, Member-Manager
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    	
/s/ *
    
	
 
    	
 
    	
 
    	
*, Member-Manger
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    	
/s/ *
    
	
 
    	
 
    	
 
    	
*, Member-Manager
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
D&H MANUFACTURING COMPANY
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    	
/s/ Angelo Grestoni
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    	
Angelo Grestoni
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    	
President & CEO
    

 

 

[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]

 

[*] Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

 

 

IN WITNESS WHEREOF, the Parties hereto have duly executed this Agreement on the date first above written.

 

* and * hereby represent and warrant that they, immediately prior to the Closing, will own options (the “Options”) to purchase * shares and * shares of Target common stock, respectively, free and clear of any Liens.  * and * further agree to be bound to the terms of this Agreement as Sellers, to exercise their respective Options at, or prior to, the time of Closing and to sell the shares of Target common stock issued upon such exercise of the Options to Buyer as contemplated by this Agreement.  * and  * further agree that their respective pro rata portions (based on the number of shares they will own as of the Closing Date) of the Holdback Amount will be withheld from their share of the Purchase Price and placed in escrow and such amounts will be subject to the terms of this Agreement.

 

 

	
 
    	
 
    	
*
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ *
    

 

 

	
 
    	
 
    	
*
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ *
    

 

 

[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]

 

[*] Certain confidential information contained in this document, marked with asterisks has been redacted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission.

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