-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PJSnrB4LgkbRJ0ynDQdYpGFFUfF9a75KxxqzsW2FVqtTaEKTrJCdrKZfEFmc9+rL HugT58R6tKBlbV0PEhtMIw== 0000950130-98-003850.txt : 19980810 0000950130-98-003850.hdr.sgml : 19980810 ACCESSION NUMBER: 0000950130-98-003850 CONFORMED SUBMISSION TYPE: S-4 PUBLIC DOCUMENT COUNT: 30 FILED AS OF DATE: 19980807 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DYNATECH CORP CENTRAL INDEX KEY: 0000030841 STANDARD INDUSTRIAL CLASSIFICATION: INSTRUMENTS FOR MEAS & TESTING OF ELECTRICITY & ELEC SIGNALS [3825] IRS NUMBER: 042258582 STATE OF INCORPORATION: MA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-60893 FILM NUMBER: 98679335 BUSINESS ADDRESS: STREET 1: 3 NEW ENGLAND EXECUTIVE PARK CITY: BURLINGTON STATE: MA ZIP: 01803-5087 BUSINESS PHONE: 6172726100 MAIL ADDRESS: STREET 1: 3 NEW ENGLAND EXECUTIVE PARK CITY: BURLINGTON STATE: MA ZIP: 01803-5087 S-4 1 FORM S-4 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 7, 1998 REGISTRATION NO. 333- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------- FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------- TELECOMMUNICATIONS TECHNIQUES CO., LLC (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 3825 04-225-8582 (STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER JURISDICTION OF INDUSTRIAL CLASSIFICATION IDENTIFICATION NO.) INCORPORATION OR CODE NUMBERS) ORGANIZATION) --------------- 20400 OBSERVATION DRIVE GERMANTOWN, MARYLAND 20876-4023 (301) 353-1550 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) --------------- DYNATECH CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) MASSACHUSETTS 3825 04-225-8582 (STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER JURISDICTION OF INDUSTRIAL CLASSIFICATION IDENTIFICATION NO.) INCORPORATION OR CODE NUMBERS) ORGANIZATION) --------------- 3 NEW ENGLAND EXECUTIVE PARK BURLINGTON, MA 01803-5087 (781) 272-6100 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) --------------- ALLAN M. KLINE VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND TREASURER DYNATECH CORPORATION 3 NEW ENGLAND EXECUTIVE PARK BURLINGTON, MA 01803-5087 (781) 272-6100 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANTS' AGENT FOR SERVICE) WITH COPIES TO: MARK V.B. TREMALLO, ESQ. DAVID A. BRITTENHAM, ESQ. DYNATECH CORPORATION DEBEVOISE & PLIMPTON 3 NEW ENGLAND EXECUTIVE PARK 875 THIRD AVENUE BURLINGTON, MA 01803-5087 NEW YORK, NEW YORK 10022 (781) 272-6100 (212) 909-6347 --------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after this Registration Statement becomes effective. If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. [_] If this form is filed to register additional securities of an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] --------------- CALCULATION OF REGISTRATION FEE - ------------------------------------------------------------------------------- - -------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED TITLE OF EACH CLASS AMOUNT TO BE OFFERING MAXIMUM AGGREGATE AMOUNT OF OF SECURITIES TO BE REGISTERED REGISTERED PRICE PER SECURITY(1) OFFERING PRICE(1) REGISTRATION FEE - ----------------------------------------------------------------------------------------------------- 9 3/4% Senior Subordinated Notes Due 2008................. $275,000,000 100% $275,000,000 $81,125.00 - ----------------------------------------------------------------------------------------------------- Guarantee of 9 3/4% Senior Subordinated Notes Due 2008....... $275,000,000 N/A N/A N/A(2)
- ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- (1) Determined solely for the purpose of calculating the registration fee in accordance with Rule 457 promulgated under the Securities Act of 1933, as amended. (2) Pursuant to Rule 457(n), no separate fee is required. --------------- THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION"), ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ +INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A + +REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE + +SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY + +OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT + +BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR + +THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE + +SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE + +UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF + +ANY SUCH STATE. + ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ SUBJECT TO COMPLETION, DATED AUGUST , 1998 PROSPECTUS TELECOMMUNICATIONS TECHNIQUES CO., LLC (TO BE RENAMED DYNATECH LLC) OFFER TO EXCHANGE 9 3/4% SENIOR SUBORDINATED NOTES DUE 2008 FOR ANY AND ALL EXISTING NOTES (AS DEFINED BELOW) PAYMENT OF PRINCIPAL AND INTEREST GUARANTEED BY DYNATECH CORPORATION THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME ON , 1998, UNLESS EXTENDED AS DESCRIBED HEREIN, WITHDRAWAL RIGHTS WITH RESPECT TO THE EXCHANGE OFFER ARE EXPECTED TO EXPIRE AT THE EXPIRATION OF THE EXCHANGE OFFER. ---------- Telecommunications Techniques Co., LLC, a Delaware limited liability company ("TTC"), hereby offers (the "Exchange Offer"), upon the terms and subject to the conditions set forth in this Prospectus (the "Prospectus") and the accompanying Letter of Transmittal (the "Letter of Transmittal") to exchange up to $275,000,000 aggregate principal amount of its 9 3/4% Senior Subordinated Notes Due 2008 (the "New Notes"), which have been registered under the Securities Act of 1933, as amended (the "Securities Act") pursuant to a Registration Statement of which this Prospectus is a part, for a like principal amount of its issued and outstanding 9 3/4% Senior Subordinated Notes Due 2008 (the "Existing Notes" and together with the New Notes, the "Notes"). The New Notes will be issued in denominations of $1,000. The Existing Notes were originally issued and sold by Dynatech Corporation, TTC's corporate parent ("Dynatech" or "Holding" and, together with its subsidiaries, the "Company"), and TTC Merger Co. LLC, a Delaware limited liability company ("TTC Merger Co."), which merged into TTC, in a transaction that was exempt from registration under the Securities Act (the "Offering") and resold in reliance on, and subject to the restrictions imposed pursuant to, Rule 144A under the Securities Act ("Rule 144A") and other applicable exemptions from the registration requirements of such Act. Immediately following the consummation of the Offering, Holding assigned to TTC, its wholly-owned subsidiary, and TTC assumed, all of Holding's obligations in respect of the Existing Notes and TTC became the primary obligor on the Existing Notes. The terms of the New Notes are identical in all material respects to the terms of the Existing Notes for which they may be exchanged pursuant to the Exchange Offer, except that (i) the New Notes will have been registered under the Securities Act, and thus will not bear restrictive legends restricting their transfer pursuant to the Securities Act and will not contain certain provisions providing for an increase in the interest rate on the Existing Notes under certain circumstances described in the Registration Rights Agreement (as defined), which provisions will terminate upon the consummation of the Exchange Offer and (ii) holders of New Notes will not be entitled to certain registration rights that holders of Existing Notes have under the Registration Rights Agreement, except under limited circumstances. Interest on each of the New Notes issued pursuant to the Exchange Offer will accrue from the last interest payment date to which interest was paid or duly provided for on the Existing Notes surrendered in exchange therefor or, if no interest has been paid or duly provided for, from the original date of issuance of the Existing Notes. Interest on the Notes will be payable semi-annually on May 15 and November 15 of each year, commencing on November 15, 1998. The Notes will mature on May 15, 2008. Except as described below, TTC may not redeem the Notes prior to May 15, 2003. On or after such date, TTC may redeem the Notes, in whole or in part, at any time at the redemption prices set forth herein together with accrued and unpaid interest, if any, to the date of redemption. In addition, at any time and from time to time on or prior to May 15, 2001, TTC may redeem an aggregate principal amount equal to up to 35% of the original aggregate principal amount of the Notes with the proceeds of one or more Equity Offerings (as defined) at a redemption price equal to 109.75% of the principal amount redeemed, together with accrued and unpaid interest, if any, to the date of redemption, provided that an aggregate principal amount of the Notes equal to at least 65% of the original aggregate principal amount of the Notes remains outstanding after each such redemption. The Notes are not subject to any sinking fund requirement. Upon the occurrence of a Change of Control (as defined), (i) TTC will have the option prior to May 15, 2003, to redeem the Notes, in whole, at a redemption price equal to 100% of the principal amount thereof plus the Applicable Premium (as defined), together with accrued and unpaid interest, if any, to the date of redemption, and (ii) if TTC does not redeem the Notes, the holders of the Notes will have the right, subject to certain exceptions, to require TTC to make an offer to repurchase the Notes at a price equal to 101% of the principal amount thereof, together with accrued and unpaid interest, if any, to the date of repurchase. See "Description of Notes." The Notes are guaranteed on a senior subordinated basis by Holding. The Notes are unsecured senior subordinated obligations of TTC and are subordinated in right of payment to all existing and future Senior Indebtedness (as defined herein) of TTC, including borrowings under TTC's Senior Secured Credit Facility (the "Senior Credit Facility"), and are effectively subordinated to all obligations of the subsidiaries of TTC. The Notes rank pari passu in right of payment with all other existing and future senior subordinated indebtedness of TTC and rank senior to all other Subordinated Indebtedness (as defined) of TTC. The indenture governing the terms of the Notes (the "Indenture") permits the Company to incur additional indebtedness, including Senior Indebtedness, subject to certain limitations. At May 31, 1998, the Company had $300.0 million of Senior Indebtedness outstanding and Indebtedness of $575.2 million (excluding a maximum $3.0 million guarantee). The Exchange Offer is not conditioned upon any minimum number of Existing Notes being tendered for exchange. The Exchange Offer will expire at 5:00 p.m., New York City time, on , 1998, unless extended by TTC (such date as it may be so extended, the "Expiration Date"). As soon as practicable after the Expiration Date, TTC will accept all Existing Notes properly tendered and not validly withdrawn for Exchange (the "Exchange Date") and deliver or cause the delivery of New Notes in exchange therefor. Existing Notes tendered pursuant to the Exchange Offer may be withdrawn at any time prior to 5:00 p.m. New York City time on the Expiration Date; otherwise such tenders are irrevocable. New Notes to be issued in exchange for validly tendered Existing Notes will be delivered through the facilities of The Depository Trust Company by the Exchange Agent (as defined herein). SEE "RISK FACTORS" BEGINNING ON PAGE 13 FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS IN EVALUATING AN INVESTMENT IN THE NEW NOTES. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ---------- THE DATE OF THIS PROSPECTUS IS , 1998. The Existing Notes were issued and sold on May 21, 1998 in a transaction not registered under the Securities Act in reliance upon an exemption from the registration requirements thereof. In general, the Existing Notes may not be offered or sold unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act. The New Notes are being offered hereby in order to satisfy certain obligations of Dynatech and TTC contained in the Registration Rights Agreement. Based on interpretations by the Staff of the Commission as set forth in no-action letters issued to third parties, the Company believes that the New Notes issued pursuant to the Exchange Offer may be offered for resale, resold or otherwise transferred by any holder thereof (other than any such holder that is a broker-dealer or an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such holder represents to the Company that (i) any New Notes received by such holder will be acquired in the ordinary course of business, (ii) such holder will have no arrangements or understanding with any person to participate in the distribution of the Securities or the New Notes within the meaning of the Securities Act, (iii) such holder is not an "affiliate," as defined in Rule 405 of the Securities Act, of the Company or if it is an affiliate, such holder will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable, (iv) if such holder is not a broker-dealer, that it is not engaged in, and does not intend to engage in, the distribution of the New Notes, (v) if such holder is a broker-dealer, that it will receive New Notes for its own account in exchange for Existing Notes that were acquired as a result of market-making activities or other trading activities and that it will deliver a prospectus in connection with any resale of such New Notes, and (vi) that it is not acting on behalf of any person who could not truthfully make the foregoing representations. If a holder of Existing Notes is unable to make the foregoing representations, such holder may not rely on the applicable interpretations of the Staff of the Commission as set forth in such no-action letters, and must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any secondary resale transaction. In addition, since the Company has not sought, and does not intend to seek, its own non-action letter, there can be no assurance that the staff of the Commission would make a similar determination with respect to the Exchange Offer. Notwithstanding the foregoing, each broker-dealer that receives New Notes for its own account pursuant to the Exchange Offer in exchange for Existing Notes, where such Existing Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus meeting the requirements of the Securities Act and that it has not entered into any arrangement or understanding with the Company or an affiliate of the Company to distribute the New Notes in connection with any resale of such New Notes. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. A broker-dealer that acquired Existing Notes in a transaction other than as part of its marketmaking activities or other trading activities will not be able to participate in the Exchange Offer. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of New Notes where such Existing Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities (other than Existing Notes acquired directly from the Company). Holding and TTC have agreed that, starting on the Expiration Date, and ending on the close of business 90 days after the Expiration Date, it will make this Prospectus available to any such participating broker-dealer for use in connection with any such resale. Any holder that cannot rely upon such interpretations by the Staff of the Commission as set forth in such no-action letters must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction. See "The Exchange Offer" and "Plan of Distribution." The New Notes will be represented by one or more Global Securities (as defined) registered in the name of a nominee of The Depository Trust Company, as Depositary. Beneficial interest in the Global Securities will be shown on, and transfers will be effected only through, records maintained by the Depositary and its participants. See "Book-Entry, Delivery and Form." There has not previously been any public market for the New Notes. The Issuers do not intend to list the New Notes on any securities exchange or to seek approval for quotation through any automated quotation system. i There can be no assurance that an active market for the New Notes will develop. Moreover, to the extent that Existing Notes are tendered and accepted in the Exchange Offer, a holder's ability to sell untendered, and tendered but unaccepted, Existing Notes could be adversely affected. See "Risk Factors-- Lack of Established Market for the Existing Notes." The Company will not receive any proceeds from the Exchange Offer. The Company has agreed to pay the expenses it incurs for the Exchange Offer. No dealer manager is being utilized in connection with the Exchange Offer. THE EXCHANGE OFFER IS NOT BEING MADE, NOR WILL TTC ACCEPT SURRENDER FOR EXCHANGE FROM HOLDERS OF EXISTING NOTES, IN ANY JURISDICTION IN WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE SECURITIES AND BLUE SKY LAWS OF SUCH JURISDICTION. AVAILABLE INFORMATION Holding and TTC have filed with the Commission a Registration Statement (which term includes any amendments thereto, the "Registration Statement") on Form S-4 under the Securities Act, with respect to the New Notes offered hereby. As permitted by the rules and regulations of the Commission, this Prospectus does not contain all of the information included in the Registration Statement and the exhibits and schedules thereto. Statements contained in this Prospectus as to the contents of any contract or other document referred to herein or therein and filed as an exhibit to the Registration Statement are not necessarily complete and, in each instance, reference is made to the copy of such contract or other document filed as an exhibit to the Registration Statement, each such statement being qualified in all respects by such reference. For further information with respect to Holding and TTC and the New Notes, reference is hereby made to the Registration Statement and the exhibits and schedules thereto. Holding is subject to the information requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and in accordance therewith files reports, proxy statements and other information with the Commission. TTC is not currently subject to the periodic reporting and other informational requirements of the Exchange Act. Pursuant to the Indenture, TTC has agreed to file with the Commission and provide to the holders of the Notes annual reports and the information, documents and other reports that are specified in Sections 13 and 15(d) of the Exchange Act, which agreement may be satisfied by the reports, documents and other information filed by Holding if TTC is not required to file such reports, documents and other information separately. Reports, proxy statements and other information may be inspected and copied at the public reference facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549 and at the regional offices of the Commission located at 7 World Trade Center, 13th Floor, New York, New York 10048 and Suite 1400, Northwestern Atrium Center, 14th Floor, 500 West Madison Street, Chicago, Illinois 60661. Copies of such material can also be obtained at prescribed rates by writing to the Commission, Public Reference Section, 450 Fifth Street, N.W., Washington, D.C. 20549 and such material is contained on the worldwide web site maintained by the Commission at http://www.sec.gov. Reports, proxy statements and other information filed by TTC with the Commission can be inspected and copied at the public reference facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 or at its regional offices located at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and 7 World Trade Center, Suite 1300, New York, New York 10048. Copies of such material can be obtained from the Public References Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. The Commission maintains an Internet "website" that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Commission at http://www.sec.gov. This Prospectus constitutes a part of a Registration Statement on Form S-4 filed by TTC with the Commission under the Securities Act. This Prospectus omits certain of the information contained in the Registration Statement, and reference is hereby made to the Registration Statement and to the exhibits relating thereto for further information with respect to TTC and the New Notes offered hereby. Any statements contained ii herein concerning the provisions of any document are not necessarily complete, and, in each instance, reference is made to such copy filed as an exhibit to the Registration Statement or otherwise filed with the Commission. Each such statement is qualified in its entirety by such reference. The Registration Statement and the exhibits thereto may be inspected without charge at the office of the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and copies thereof may be obtained from the Commission at prescribed rates. FORWARD-LOOKING STATEMENTS Statements in this Prospectus that are forward looking are based on current expectations; actual results may differ materially. Forward looking statements involve numerous risks and uncertainties that could cause actual results to differ materially, including, but not limited to: the timely development and market acceptance of new products; the impact of competitive products and pricing; the effect of changing general and industry specific economic conditions; the Company's ability to access external sources of capital; and such risks and uncertainties detailed under "Risk Factors," "Management's Discussion and Analysis," "Business," and elsewhere in this Prospectus and from time to time in the Securities and Exchange Commission reports and filings of Holding and TTC. DYNATECH CORPORATION and design, FIREBERD 500, FIREBERD 6000, INTERCEPTOR 116, INTERCEPTOR 1402, T-BERD 950, T-BERD 310, T-BERD 2090SP, TPI 550, CENTEST, SSI, DA VINCI SYSTEMS, AIRSHOW, XC 6250, INDUSTRIAL COMPUTER SOURCE and INDUSTRIAL COMPUTER SOURCE-BOOK are trademarks of TTC. Other brand or product names used herein are trademarks or registered trademarks of their respective companies. iii SUMMARY The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information, risk factors and consolidated financial statements and notes thereto appearing elsewhere in this Prospectus. Unless the context otherwise requires, references to "Holding" or "Dynatech" are references to Dynatech Corporation, references to "TTC" are references to Telecommunications Techniques Co., LLC, and references to the "Company" are references to Dynatech and its subsidiaries, including TTC. TTC became the obligor on the Notes, and the borrower under the Senior Credit Facility, on the date of the closing of the offering of the Existing Notes following the effectiveness of the merger of TTC Merger Co. into TTC, in connection with which TTC became a direct subsidiary of Dynatech and the direct or indirect parent of the Company's other active subsidiaries. References herein to a "fiscal" year refer to the Company's fiscal year ended March 31 in the calendar year indicated (e.g., references to fiscal 1997 are references to the Company's fiscal year ended March 31, 1997). See "--Selected Historical and Pro Forma Consolidated Financial Data" and "Unaudited Pro Forma Condensed Consolidated Financial Data." The market share and competitive position data contained in this Prospectus are approximations derived from Company estimates, which the Company believes to be reasonable but which have not been independently verified and, to a lesser extent, from industry sources. Industry publications generally state that the information contained therein has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information is not guaranteed. The Company has not independently verified market and competitive position data provided by third parties or industry or general publications. Although such market and competitive position data are inherently imprecise, based on its understanding of the markets in which the Company competes, management believes that such data are generally indicative of the Company's relative market share and competitive position. See "Risk Factors-- Market Share and Competitive Position Data." THE COMPANY The Company develops, manufactures and sells market-leading test, analysis, communications and computing equipment in three product categories: . Communications Test. The Company believes that TTC, the Company's largest subsidiary, is the second largest U.S. provider of communications test instruments (by U.S. sales). TTC provides products to communications service providers (such as the Regional Bell Operating Companies ("RBOCs"), long-distance companies and competitive access providers), service users (such as large corporate and government network operators), and manufacturers of communications equipment and systems. TTC's broad test and analysis product line ranges from portable units (used by field service technicians to test telephone and data communications lines and services) to centralized test and monitoring systems installed in telephone company central offices. The Company's communications test business accounted for 51% of its sales (or approximately $240.4 million), and a higher percentage of its EBITDA (as defined) for fiscal 1998. . Industrial Computing and Communications. The Company addresses two distinct segments of the North American ruggedized computer market. The Company's Industrial Computer Source, Inc. subsidiary ("ICS") is the only significant direct marketer of computer products and systems designed to withstand excessive temperatures, dust, moisture and vibration in harsh operating environments such as production facilities. ICS markets to engineers, scientists and production managers through its widely recognized Industrial Computer Source-Book catalogs. The Company's Itronix Corporation subsidiary ("Itronix") sells ruggedized portable communications and computing devices used by field-service workers for telephone companies, utilities, insurance companies and other organizations with large field-service workforces. The Company's industrial computing and communications business accounted for 33% of the Company's sales (or approximately $155.0 million), and a lower percentage of its EBITDA, for fiscal 1998. 1 . Visual Communications. The Company's visual communications business consists principally of two market-leading niche-focused subsidiaries: (i) AIRSHOW, Inc. ("AIRSHOW") is the world leader in passenger cabin video information display systems and information services for the general and commercial aviation markets; and (ii) da Vinci Systems, Inc. ("da Vinci") is the world leader in digital color enhancement systems used in the process of transferring film images into electronic signals--a process commonly used to transfer film images to video for use in the production of television commercials and programming. The Company's visual communications business accounted for 16% of the Company's sales (or approximately $77.5 million), and a higher percentage of its EBITDA, for fiscal 1998. For fiscal 1998, the Company generated sales and EBITDA of $472.9 million and $86.9 million, respectively. COMPETITIVE STRENGTHS The following characteristics contribute to the Company's competitive position and outlook. . Leading Market Positions. The Company's principal businesses occupy the #1 or #2 overall position in their respective principal markets. TTC, which is the Company's largest subsidiary and operates the Company's communications test business in a highly fragmented market, has in recent years held the #1 or #2 position in market segments accounting for an estimated 70% of its test instrument sales. ICS is the only significant direct marketer of ruggedized industrial computers, and Itronix is the leading supplier of ruggedized portable notebook computers to U.S. telecommunications companies. AIRSHOW and da Vinci have the #1 shares in their respective niche markets. The Company's market leadership is enhanced by its well-known brand names, including FIREBERD and T-BERD test instruments, the Industrial Computer Source- Book catalogs, and the AIRSHOW map system. . Double-Digit Market Growth. The Company participates in market segments that management believes have been growing at least 10% annually in recent years. Between fiscal 1995 and 1998, the Company increased sales and EBITDA at compound annual growth rates of 25% and 27%, respectively (15% and 20%, respectively, excluding the impact of acquisitions), rates which management believes exceed the composite sales growth rate for the market segments the Company addresses. The growth of the communications test instrument market, the Company's largest, is driven in part by the growth of telecommunications equipment and services. . High-Margin, Cash-Generative Business. The Company's gross profit and EBITDA margins were, as a percent of sales, 56.5% and 18.4%, respectively, for fiscal 1998. Management believes the Company's strong profitability is attributable to its leading market positions, its extensive sales and distribution networks, its entrenched customer relationships and a management culture emphasizing product quality and customer service and support, rather than price-based competition. The Company's strong profitability, combined with relatively low capital expenditure requirements (averaging 3% of sales since 1995), provides cash flow to fund the Company's growth strategy and has facilitated a cumulative investment of approximately $165 million in product development from the beginning of fiscal 1995 through fiscal 1998. . High Installed Base of Products. As leaders in each of their respective served markets, the Company's principal businesses enjoy high installed product bases, which the Company believes generally provide a competitive advantage in selling product enhancements, upgrades, replacements and aftermarket parts and service. For example, the Company has sold over 100,000 of its communications test instruments (representing over $1.0 billion in customer investment), the majority of which the Company believes are currently in service. This installed base also represents a substantial investment by customers in training on the Company's communications test products, a familiarity that the Company capitalizes on in selling and marketing its products and in the development of new products. 2 . Extensive Sales and Distribution Network with Longstanding Customer Relationships. Management believes that each of the Company's principal businesses enjoys one of the most extensive, effective and highly trained sales and distribution networks in its respective principal markets. The communications test business, for example, has a 180-person U.S. sales organization comprised predominantly of engineers and technical professionals, who undergo rigorous, ongoing education and training. The Company has been selling to service providers such as AT&T, MCI, GTE and Bell Atlantic (or their predecessors) since prior to the early 1980s. The Industrial Computer Source-Book (over six million copies distributed in fiscal 1998) is the most widely recognized catalog of ruggedized industrial computer systems by scientists and engineers. These purchasers rely upon ICS's sales staff, comprised predominantly of electrical engineers, to solve compatibility and functionality issues in configuring the systems. . Experienced Management Team with Substantial Equity Ownership. Led by CEO John F. Reno, a 23-year Dynatech veteran, the senior management of each of the Company's businesses has on average more than 15 years of industry experience. As a result of the Recapitalization and related transactions, approximately 350 senior managers and key employees collectively own or have options to acquire approximately 25% of the Dynatech's common stock on a fully diluted basis. BUSINESS STRATEGY The Company intends to pursue the following strategies: . Leverage Leading Market Positions. The Company believes that its leading market positions provide it with several competitive advantages in comparison to smaller market participants, particularly in its communications test business, and position it to expand its business by (i) spreading product development costs over a larger sales and unit base, (ii) leveraging its sales and marketing resources and customer relationships to sell new and enhanced products through established channels, and (iii) taking advantage of its high installed base of instruments to generate incremental sales for product enhancements, upgrades, replacements and service. . Address New Market Segments. The Company intends to continue to develop products to address new market segments in each of its businesses and thereby expand the size of its total served market. For example, the Company currently addresses approximately two-thirds of the $2.1 billion communications test instrument market and is beginning to address segments within the $1.0 billion communications test and monitoring systems market. With product line extensions and additions, the Company can expand the size of its served market while leveraging its extensive sales and distribution network. . Pursue Strategic Acquisitions. Since the end of fiscal 1993, the Company has focused on its higher-growth, more profitable market-leading businesses, selling 25 non-core businesses for gross proceeds of $211 million and acquiring five complementary businesses. The Company intends to continue to pursue strategic acquisitions that complement its existing businesses and further expand its product lines and technological capabilities. The communications test instrument market is highly fragmented, which management believes provides significant opportunities for future strategic acquisitions. With the Company's economies of scale, well-established sales and marketing channels and customer relationships, the Company believes it can, through selective acquisitions, improve profitability while expanding the breadth of its product line and enhancing its technological expertise. . Increase International Penetration. The Company generated approximately 87% of sales for fiscal 1998 in North America, primarily in the United States, where it has established market-leading positions in each of its principal businesses. The Company believes there are significant opportunities to expand its international business. For example, while the Company generated only 11% of its communications test sales from markets outside North America during fiscal 1998, the $900 million international market represents an estimated 43% of the global communications test instrument market for the same period and grew approximately 12% from 1996 to 1997. 3 THE RECAPITALIZATION As of December 20, 1997, Dynatech entered into the Merger Agreement between Dynatech and MergerCo, formed by Clayton, Dubilier & Rice Fund V Limited Partnership ("CDR Fund V"), to effect the recapitalization of Dynatech (the "Recapitalization"). The Recapitalization was accomplished through the merger of MergerCo with and into Dynatech (the "Merger"), with Dynatech continuing as the surviving corporation (the "Surviving Corporation"). Dynatech succeeded to all the rights and obligations of MergerCo. The closing of the Recapitalization occurred simultaneously with the Offering of the Existing Notes (collectively, the "May 1998 Closing"). In the Merger, (i) each outstanding share of common stock, par value $0.20 per share, of Dynatech (the "Common Stock") was converted into the right to receive $47.75 in cash and 0.5 shares of common stock, no par value, of the Surviving Corporation (the "Recapitalized Common Stock"), subject to certain exceptions, and (ii) each outstanding share of common stock, $0.01 par value per share, of MergerCo was converted into one share of Recapitalized Common Stock. As a result of the Merger, CDR Fund V holds approximately 92.3% of the Recapitalized Common Stock, Mr. Reno (together with his family trusts) holds approximately 0.7%, and stockholders of Dynatech ("Stockholders") other than Mr. Reno and his family trusts hold approximately 7%. As a result of the Recapitalization and related transactions, approximately 350 senior managers and key employees collectively own or have options to acquire approximately 25% of the Recapitalized Common Stock on a fully diluted basis. See "The Recapitalization." Dynatech is treating the Merger as a recapitalization for financial reporting purposes. Accordingly, the historical basis of Dynatech's assets and liabilities have not been affected by the transaction. As a result of the Recapitalization and related transactions, Dynatech used approximately $865.3 million to (i) finance the purchase of the Common Stock for $803.1 million, (ii) pay $22.7 million for option cancellation payments and (iii) pay the fees and expenses incurred in connection with the Merger. In addition, (a) $292.9 million of bank financing was drawn down under senior credit facilities, including $260.0 million pursuant to a term loan facility (the "Term Loan Facility") and $32.9 million under a revolving credit facility (the "Revolving Credit Facility," and, together with the Term Loan Facility, the "Senior Credit Facility"), and (b) $275.0 million in gross proceeds was provided through the sale of the Existing Notes (collectively, the "Financing"). Dynatech had $20.4 million of cash on-hand to use in connection with the Merger and approximately $277.0 million of gross proceeds from the sale of MergerCo common stock to CDR Fund V, which proceeds became an asset of Dynatech upon effectiveness of the Merger. 4 The following table illustrates the estimated sources and uses of funds that were necessary to consummate the May 1998 Closing of the Merger and related transactions (including the Financing): SOURCES (DOLLARS IN MILLIONS) Senior Credit Facility: Revolving Credit Facility.. $ 32.9 Tranche A Term Loan........ 50.0 Tranche B Term Loan........ 70.0 Tranche C Term Loan........ 70.0 Tranche D Term Loan........ 70.0 Notes........................ 275.0 CDR Fund V Equity............ 277.0 Cash......................... 20.4 ------ Total Sources............ $865.3 ======
USES (DOLLARS IN MILLIONS) Purchase of Common Stock............................................ $803.1 Option Cancellation Payments........................................ 22.7 Estimated Fees and Expenses......................................... 39.5 ------ Total Uses...................................................... $865.3 ======
Immediately after the issuance of the Existing Notes, TTC and TTC Merger Co. merged, with TTC surviving, TTC succeeded to and assumed all of the obligations under the Indenture and the Existing Notes, and Dynatech was released as a primary obligor from its obligations under the Indenture and the Existing Notes. TTC thereby became the primary obligor on the Existing Notes. Dynatech provided a full and unconditional guaranty of the monetary obligations of TTC Merger Co. and TTC under the Indenture and the Existing Notes on a senior subordinated basis. In connection with the merger of TTC and TTC Merger Co., TTC assumed all of the obligations under the Senior Credit Facility and became the borrower thereunder, and Dynatech transferred to TTC its ownership interests in all of its other subsidiaries. 5 THE EXCHANGE OFFER Registration Rights The Existing Notes were issued on May 21, 1998 to Agreement.................. Credit Suisse First Boston Corporation and J.P. Morgan Securities Inc. (the "Initial Purchasers"). The Initial Purchasers resold the Existing Notes in reliance on and subject to the restrictions imposed pursuant to Rule 144A of the Securities Act and other applicable exemptions from the registration requirements of the Act. In connection therewith, TTC, Dynatech and the Initial Purchasers entered into the Registration Rights Agreement, dated as of May 21, 1998 (the "Registration Rights Agreement"), providing, among other things, for the Exchange Offer. See "Registration Rights" and "The Exchange Offer." The Exchange Offer.......... The New Notes are being offered in exchange for an equal principal amount of Existing Notes. As of the date hereof, $275,000,000 aggregate principal amount of Existing Notes is outstanding. Resale of New Notes......... Based on interpretations by the Staff of the Commission as set forth in no-action letters issued to third parties, the Company believes that the New Notes issued pursuant to the Exchange Offer may be offered for resale, resold or otherwise transferred by any holder thereof (other than any such holder that is a broker- dealer or an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such holder represents to the Company that (i) any New Notes received by such holder will be acquired in the ordinary course of business, (ii) such holder will have no arrangements or understanding with any person to participate in the distribution of the Securities or the New Notes within the meaning of the Securities Act, (iii) such holder is not an "affiliate," as defined in Rule 405 of the Securities Act, of the Company or if it is an affiliate, such holder will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable, (iv) if such holder is not a broker-dealer, that it is not engaged in, and does not intend to engage in, the distribution of the New Notes, (v) if such holder is a broker-dealer, that it will receive New Notes for its own account in exchange for Existing Notes that were acquired as a result of market-making activities or other trading activities and that it will deliver a prospectus in connection with any resale of such New Notes, and (vi) that it is not acting on behalf of any person who could not truthfully make the foregoing representations. If a holder of Existing Notes is unable to make the foregoing representations, such holder may not rely on the applicable interpretations of the Staff of the Commission as set forth in such no-action letters, and must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any secondary resale transaction. In addition, since the Company has not sought, and does not intend to seek, its own no-action letter, there can be no 6 assurance that the staff of the Commission would make a similar determination with respect to the Exchange Offer. Notwithstanding the foregoing, each broker-dealer that receives New Notes for its own account pursuant to the Exchange Offer in exchange for Existing Notes, where such Existing Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus meeting the requirements of the Securities Act and that it has not entered into any arrangement or understanding with the Company or an affiliate of the Company to distribute the New Notes in connection with any resale of such New Notes. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. A broker-dealer that acquired Existing Notes in a transaction other than as part of its market-making activities or other trading activities will not be able to participate in the Exchange Offer. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of New Notes where such Existing Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities (other than Existing Notes acquired directly from the Company). Holding and TTC have agreed that, starting on the Expiration Date, and ending on the close of business 90 days after the Expiration Date, it will make this Prospectus available to any such participating broker-dealer for use in connection with any such resale. Any holder that cannot rely upon such interpretations by the Staff of the Commission as set forth in such no-action letters must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction. See "The Exchange Offer" and "Plan of Distribution." Consequence of Failure to Exchange Existing Notes.... Upon consummation of the Exchange Offer, subject to certain limited exceptions, holders of Existing Notes who do not exchange their Existing Notes for New Notes in the Exchange Offer will no longer be entitled to registration rights and will not be able to offer or sell their Existing Notes, unless such Existing Notes are subsequently registered under the Securities Act (which, subject to certain limited exceptions, the Company will have no obligation to do), except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. See "The Exchange Offer--Terms of the Exchange Offer" and "--Consequences of Failure to Exchange," "Registration Rights" and "Risk Factors-- Consequences of Failure to Exchange and Requirements for Transfer of New Notes." Expiration Date............. 5:00 p.m., New York City time, on ( business days following the commencement of the Exchange Offer), unless the 7 Exchange Offer is extended by the Company in its sole discretion, in which case the term "Expiration Date" means the latest date and time to which the Exchange Offer is extended. Interest on the New Notes... The New Notes will accrue interest at a rate of 9 3/4% per annum from May 21, 1998, the issue date of the Existing Notes, or from the most recent date to which interest has been paid or duly provided for on the Existing Notes. Interest on the New Notes is payable on May 15 and November 15 of each year, commencing on November 15, 1998. See "Registration Rights" and "Description of Notes--Terms of the Notes." Condition to the Exchange The Exchange Offer is not conditioned upon any Offer...................... minimum principal amount of Existing Notes being tendered for exchange. However, the Exchange Offer is subject to certain customary conditions, which may be waived by the Company. See "The Exchange Offer--Conditions." Except for the requirements of applicable federal and state securities laws, there are no federal or state regulatory requirements to be complied with by the Company in connection with the Exchange Offer. Procedures for Tendering Existing Notes............. Each holder of Existing Notes wishing to accept the Exchange Offer must complete, sign and date the Letter of Transmittal, or a facsimile thereof, in accordance with the instructions contained herein and therein, and mail or otherwise deliver such Letter of Transmittal, or such facsimile, together with any other required documentation to the Exchange Agent (as defined herein) at the address set forth herein and effect a tender of Existing Notes pursuant to the procedures for book-entry transfer as provided for herein. See "The Exchange Offer--Procedures for Tendering," "--Book Entry Transfer," and "-- Guaranteed Delivery Procedures." Certain other procedures may apply with respect to certain book-entry transfers. See "The Exchange Offer-- Exchanging Book-Entry Notes." Guaranteed Delivery Holders of Existing Notes who wish to tender Procedures................. their Existing Notes and who cannot deliver their Existing Notes and a properly completed Letter of Transmittal or any other documents required by the Letter of Transmittal to the Exchange Agent prior to the Expiration Date may tender their Existing Notes according to the guaranteed delivery procedures set forth in "The Exchange Offer--Guaranteed Delivery Procedures." Withdrawal Rights........... Tenders of Existing Notes may be withdrawn to any time prior to 5:00 p.m., New York City time, on the Expiration Date. To withdraw a tender of Existing Notes, a written or facsimile transmission notice of withdrawal must be received by the Exchange Agent at its address set forth herein under "The Exchange Offer--Exchange Agent" prior to 5:00 p.m., New York City time, on the Expiration Date. 8 Acceptance of Existing Notes and Delivery of New Subject to certain conditions, any and all Notes...................... Existing Notes that are validly tendered in the Exchange Offer prior to 5:00 p.m., New York City time, on the Expiration Date will be accepted for exchange. The New Notes issued pursuant to the Exchange Offer will be delivered as soon as practicable following the Expiration Date. See "The Exchange Offer--Terms of the Exchange Offer." Certain U.S. Tax Consequences............... The exchange of Existing Notes for New Notes will not constitute a taxable exchange for U.S. federal income tax purposes. See "Certain Federal Income Tax Considerations." Exchange Agent/Trustee...... State Street Bank and Trust Company, the trustee under the indenture governing the Notes (the "Trustee") is serving as exchange agent, (in such capacity the "Exchange Agent"), in connection with the Exchange Offer. See "The Exchange Offer--Exchange Agent." Fees and Expenses........... Expenses incident to the Company's consummation of the Exchange Offer and compliance with the Registration Rights Agreement will be borne by the Company. See "The Exchange Offer--Fees and Expenses." Use of Proceeds............. The Company will not receive any proceeds from the Exchange Offer. The net proceeds from the sale of the Existing Notes comprised a portion of the Financing for the Recapitalization and related transactions. 9 SUMMARY OF TERMS OF THE NEW NOTES The Exchange Offer relates to the exchange of up to $275,000,000 aggregate principal amount of Existing Notes for an equal aggregate principal amount of New Notes. The New Notes will be entitled to the benefits of the same Indenture that governs the Existing Notes and that will govern the New Notes. The form and terms of the New Notes are identical in all material respects to the form and terms of the Existing Notes, except that (i) the New Notes will have been registered under the Securities Act, and thus will not bear restrictive legends restricting their transfer pursuant to the Securities Act and will not contain certain provisions providing for an increase in the interest rate on the Existing Notes under certain circumstances described in the Registration Rights Agreement (as defined), which provisions will terminate upon the consummation of the Exchange Offer and (ii) holders of New Notes will not be entitled to certain registration rights that holders of Existing Notes have under the Registration Rights Agreement, except under limited circumstances. See "Description of Notes." In this summary of the Terms of the New Notes, references to the "Company" are to TTC. Securities Offered.......... U.S. $275.0 million aggregate principal amount of 9 3/4% Senior Subordinated Notes Due 2008 of the Company, which have been registered under the Securities Act. Maturity.................... May 15, 2008. Interest Payment Dates...... May 15 and November 15 of each year, commencing November 15, 1998. Holding Company Guarantee... The Notes will be fully and unconditionally guaranteed on a senior subordinated basis by Dynatech on the terms provided in the Indenture. Optional Redemption......... The Notes will be redeemable at the option of the Company (i) at any time and from time to time prior to May 15, 2001, in an aggregate principal amount equal to up to 35% of the original principal amount of the Notes (including Additional Notes (as defined)) with the proceeds of one or more Equity Offerings by the Company, at a redemption price set forth herein, provided that an aggregate principal amount of Notes equal to at least 65% of the original aggregate principal amount of the Notes (including Additional Notes (as defined)) remain outstanding immediately after each such redemption, (ii) in whole but not in part prior to May 15, 2003 upon a Change of Control, as described below, and (iii) in whole or in part at any time on or after May 15, 2003, at the redemption prices set forth herein in each case plus accrued and unpaid interest, if any, to the date of redemption (subject to the right of holders of record on the relevant record date to receive interest due on the relevant payment date). See "Description of Notes--Optional Redemption." Change of Control........... In the event of a Change of Control, (i) the Company will have the option, at any time on or prior to May 15, 2003, to redeem the Notes, in whole but not in part, at a redemption price equal to 100% of the principal amount thereof plus the Applicable Premium (as defined), together with accrued and unpaid interest, if any, to the date of redemption (subject to the right of holders of record on the relevant record date to receive interest due on the relevant payment 10 date), and (ii) if the Company does not redeem the Notes, the holders of the Notes will have the right, subject to certain exceptions, to require the Company to repurchase such holder's Notes at a purchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of redemption (subject to the right of holders of record on the relevant record date to receive interest due on the relevant payment date). See "Description of Notes--Change of Control." Ranking..................... The Notes will be unsecured Senior Subordinated Indebtedness of the Company. The Notes will be subordinated in right of payment to the payment when due of all existing and future Senior Indebtedness of the Company, including the Company's obligations under the Senior Credit Facility. The Notes will rank pari passu in right of payment with all existing and future Senior Subordinated Indebtedness of the Company, and will be senior in right of payment to all existing and future Subordinated Obligations of the Company. The Notes will also be effectively subordinated to any Secured Indebtedness of the Company, to the extent of the value of the assets securing such Indebtedness. The guarantee by Dynatech of the Notes (the "Parent Guarantee") will be an unsecured obligation of Dynatech, a holding company the only significant asset of which is 100% of the membership interest of TTC. The Parent Guarantee will be subordinated to all existing and future senior indebtedness of Dynatech, including its obligations under its guarantee in respect of the Senior Credit Facility. At May 31, 1998, the aggregate amount of Senior Indebtedness (including indebtedness under the Senior Credit Facility) and indebtedness of subsidiaries (other than intercompany debt) that effectively ranked senior to the Notes was approximately $300.0 million (excluding a maximum $3.0 million guarantee), and the Company had additional availability of $70.0 million for borrowings under the Senior Credit Facility. See "Description of Notes--Ranking." Restrictive Covenants....... The Indenture includes certain covenants that, among other things, limit: (i) the incurrence of additional indebtedness by the Company and its Restricted Subsidiaries (as defined); (ii) the layering of indebtedness; (iii) the payment of dividends on capital stock of the Company and its Restricted Subsidiaries and the redemption of certain capital stock or subordinated obligations of the Company; (iv) investments; (v) creation of restrictions on distributions from Restricted Subsidiaries; (vi) sale of assets and subsidiary stock; (vii) certain transactions with affiliates; (viii) incurrence of liens; and (ix) mergers and consolidations. See "Description of Notes--Certain Covenants" and "Description of Notes--Merger and Consolidation." Exchange Offer and Registration Rights........ Holders of New Notes (other than as set forth below) will not be entitled to any registration rights with respect to the New Notes. 11 Pursuant to the Registration Rights Agreement (the "Registrations Rights Agreement"), the Company agreed to use its reasonable best efforts to file an Exchange Offer Registration Statement (as defined). The Registration Statement of which this Prospectus is a part constitutes the Exchange Offer Registration Statement. Under certain circumstances, certain holders of Notes (including certain holders of Existing Notes who may not participate in the Exchange Offer or who may not freely resell New Notes received in the Exchange Offer) may require the Company to file, and cause to become effective, a Shelf Registration Statement (as defined) under the Securities Act, which would cover resales of Notes by such holders. See "Registration Rights." Absence of a Public Market for the Notes.............. If issued, the New Notes generally will be freely transferable (subject to the restrictions discussed elsewhere herein) but will be new securities for which initially there will not be a market. Although the Initial Purchasers have informed the Company that they currently intend to make a market in the Existing Notes, and if issued, the New Notes, the Initial Purchasers are not obligated to do so and any such market making may be discontinued at any time without notice. In addition, such market making activity may be limited during the pendency of the Exchange Offer or the effectiveness of a Shelf Registration Statement (as defined) in lieu thereof. Accordingly, there can be no assurance as to the development or liquidity of any market for the New Notes. The Existing Notes are eligible for trading by qualified institutional buyers in the PORTAL market. The Company does not intend to apply for listing of the New Notes on any securities exchange or for quotation of the Notes through the National Association of Securities Dealers Automated Quotation System. See "Risk Factors--Absence of Public Market" and "Plan of Distribution." RISK FACTORS Holders of the Existing Notes and prospective purchasers of the New Notes should carefully consider all of the information set forth in this Prospectus and, in particular, should evaluate the specific factors set forth under "Risk Factors" beginning on page 13 for risks involved with an exchange for or an investment in the New Notes. * * * * * TTC's principal executive offices are located at 20400 Observation Drive, Germantown, Maryland 20876, and its telephone number is (301) 353-1550. Dynatech's principal executive offices are located at 3 New England Executive Park, Burlington, Massachusetts 01803, and its telephone number is (781) 272- 6100. 12 RISK FACTORS In addition to the other information in this Prospectus, holders of Existing Notes and prospective purchasers of the New Notes should consider carefully the following factors in evaluating an exchange for or an investment in the New Notes offered hereby. SUBSTANTIAL LEVERAGE; LIQUIDITY The Company incurred substantial indebtedness in connection with the Merger and thereby became highly leveraged, with indebtedness that is very substantial in relation to its shareholders' equity. The Company did not have substantial indebtedness prior to the Merger (approximately $233,000 at March 31, 1998 (excluding a maximum $3.0 million guarantee)). At May 31, 1998 the Company had a total of $575.2 million of consolidated indebtedness (excluding a maximum $3.0 million guarantee). The Senior Credit Facility and the Indenture permit the Company to incur or guarantee certain additional indebtedness, subject to certain limitations. The Company will be required to repay the $260 million in term loans under the Senior Credit Facility over the nine year period following the May 1998 Closing. In addition, the Company will be required to prepay Senior Credit Facility borrowings using the proceeds from certain asset sales, certain casualty insurance, condemnation or similar recoveries by the Company and certain indebtedness by the Company other than indebtedness permitted under the Senior Credit Facility, as well as 50% of its excess cash flow (as defined in the Senior Credit Facility) unless a leverage ratio test is met. All outstanding revolving credit borrowings under the Senior Credit Agreement will become due on the sixth anniversary of the May 1998 Closing. Because of its working capital needs, the Company expects that it will be required at that time to enter into new revolving credit facility arrangements. No assurance can be given that any extension, renewal, replacement or refinancing of the Company's Revolving Credit Facility can be successfully accomplished or accomplished on acceptable terms. See "Selected Historical and Pro Forma Consolidated Financial Data," "Management's Discussion and Analysis--Capital Resources and Liquidity," "Description of Senior Credit Facility" and "Description of Notes." The Company's high leverage may have important consequences to the holders of the Notes, including but not limited to the following: (a) the Company's ability to obtain additional financing for future acquisitions (if any), working capital, capital expenditures or other purposes may be impaired or any such financing may not be on terms favorable to the Company; (b) a substantial amount of the Company's operating cash flow will be dedicated to the payment of principal and interest on its indebtedness, thereby reducing funds that would otherwise be available for the Company's operations and other purposes, including investments in new products, research and development, capital spending and acquisitions; (c) a substantial decrease in net operating cash flows or increase in expenses could make it difficult for the Company to meet its debt service requirements or force it to modify its operations or sell assets; and (d) the Company's highly leveraged capital structure may place it at a competitive disadvantage, hinder its ability to adjust rapidly to market conditions or make it vulnerable to a downturn in its business or the economy generally or changing market conditions and regulations. The Company's ability to repay or to refinance its obligations with respect to its indebtedness will depend on its future financial and operating performance, which, in turn, will be subject to prevailing economic and competitive conditions and to certain financial, business, legislative, regulatory, industry, economic and other factors, many of which are beyond the Company's control. These factors could include general economic conditions, operating difficulties, increased operating costs, product pricing pressures, potential revenue instability arising from cost savings initiatives or otherwise, labor relations, the response of competitors or customers to the Company's business strategy or projects, delays in implementation of the Company's business strategy, telecommunication provider consolidation or strategy changes, and the relative success of new product introductions. The Company's ability to meet its debt service and other obligations may depend in significant part on the extent to which the Company can implement successfully its business and growth strategy. There can be no assurance that the Company will be able to implement its strategy fully or that the anticipated results of its strategy will be realized. See "--Risks Relating to Business and Growth Strategy, Including Acquisitions" and "Business--Business Strategy." 13 If the Company's cash flow and capital resources are insufficient to fund its debt service obligations, the Company may be forced to reduce or delay capital or other expenditures, sell assets, seek to obtain additional equity capital or refinance or restructure its debt. There can be no assurance that the Company's cash flow and capital resources will be sufficient for payment of principal of, premium, if any, and interest on, its indebtedness, including the Notes, in the future, or that any such alternative measures would be successful or would permit the Company to meet its scheduled debt service obligations. In addition, because the Company's obligations under the Senior Credit Facility will bear interest at floating rates, an increase in interest rates could materially adversely affect, among other things, the Company's ability to meet its debt service obligations. SUBORDINATION OF NOTES The Notes are unsecured, senior subordinated obligations of TTC. The Notes are subordinated in right of payment to all existing and future Senior Indebtedness of TTC (which includes all indebtedness under the Senior Credit Facility). The Notes rank pari passu with all senior subordinated indebtedness of TTC, if any, and rank senior to all subordinated indebtedness of TTC, if any. The Notes are also effectively subordinated to all secured indebtedness of TTC to the extent of the value of the assets securing such indebtedness, and to all existing and future obligations and liabilities of TTC's subsidiaries. The obligations under the Senior Credit Facility are secured by a pledge of the equity interest in TTC, by substantially all of the assets of TTC and of each active direct or indirect U.S. subsidiary of TTC, and by a pledge of the capital stock of each such subsidiary and 65% of the capital stock of each subsidiary of TTC that acts as a holding company for TTC's foreign subsidiaries. At May 31, 1998, the aggregate amount of Senior Indebtedness (including indebtedness under the Senior Credit Facility) and indebtedness of subsidiaries (other than intercompany debt) that would have effectively ranked senior to the Notes would have been approximately $300.0 million (excluding a maximum $3.0 million guarantee). In the event of bankruptcy, liquidation, dissolution, reorganization or any similar proceeding regarding TTC, or any default in payment or acceleration of any debt thereof, the assets of TTC will be available to pay obligations on the Notes only after the Senior Indebtedness of TTC has been paid in full, and there may not be sufficient assets remaining to pay amounts due on all or any of the Notes. See "Description of Notes--Ranking." STRUCTURAL SUBORDINATION TTC generated approximately half of the Company's revenues for fiscal 1998. However, the Company conducts a substantial part of its operations through various direct and indirect subsidiaries of TTC. TTC therefore may be dependent in part on dividends or other distributions of funds from its subsidiaries to meet its debt service and other obligations, including obligations under the Senior Credit Facility and the Notes. TTC's subsidiaries are separate and distinct legal entities and will have no obligation, contingent or otherwise, to pay any amounts due pursuant to the Notes or to make any funds available therefor, whether in the form of loans, dividends or otherwise. The rights of TTC and its creditors, including holders of the Notes, to participate in the distribution of the assets of any subsidiary upon such subsidiary's liquidation or reorganization will be subject to the prior claims of such subsidiary's creditors, including trade creditors, except to the extent that TTC itself may be a creditor with enforceable claims against such subsidiary. SUBORDINATION OF DYNATECH GUARANTEE; NO INDEPENDENT OPERATIONS OF DYNATECH Payments in respect of Dynatech's Guarantee of the Notes (the "Parent Guarantee") are subordinated to the prior payment in full of all existing and future senior indebtedness of Dynatech, including all of its obligations under its guarantee in respect of the Senior Credit Facility. At May 31, 1998, the aggregate amount of such senior indebtedness was $300.0 million (excluding a maximum $3.0 million guarantee). In the event of a bankruptcy, liquidation, dissolution, reorganization or similar proceedings with respect to Dynatech, its assets 14 will be available to pay obligations under the Notes only after such senior indebtedness has been paid in full, and there can be no assurance that there will be sufficient assets to pay amounts due in respect of the Parent Guarantee. Dynatech is a holding company with no independent operations and no significant assets other than its membership interest in TTC. Dynatech, therefore, is dependent upon the receipt of dividends or other distributions from TTC to fund any obligations that it incurs, including obligations under the Parent Guarantee. The Indenture does not, however, permit distributions from TTC to Dynatech, other than under certain circumstances or for certain specified purposes. See "Description of Notes--Certain Covenants--Limitation on Restricted Payments." The Senior Credit Facility contains similar or more restrictive provisions. Accordingly, if TTC should at any time be unable to pay interest or premium, if any, on or principal of the Notes, it is unlikely that TTC will be able to distribute the funds necessary to enable Dynatech to meet its obligations under the Parent Guarantee. RESTRICTIVE FINANCING COVENANTS The Senior Credit Facility agreements contain a number of covenants that significantly restrict the operations of the Company, limiting the discretion of the Company's management with respect to certain business matters. These covenants, among other things, restrict the ability of the Company to incur additional indebtedness or guarantee obligations, pay dividends and other distributions, prepay or modify the terms of other indebtedness, create liens, make capital expenditures, make certain investments or acquisitions, enter into mergers or consolidations, make sales of assets, engage in certain transactions with affiliates and otherwise restrict corporate activities. Certain term loans under the Senior Credit Facility are subject to negative covenants similar to those contained in the Indenture. In addition, under the Senior Credit Facility, the Company is required to satisfy a minimum interest expense coverage ratio and a maximum leverage ratio. These financial tests become more restrictive in future years. The Company's ability to comply with the covenants and restrictions contained in the Senior Credit Facility agreements may be affected by events beyond its control, including prevailing economic, financial and industry conditions, and there can be no assurance that the Company will be able to comply with such covenants or restrictions in the future. A breach of the covenants and restrictions contained in the Senior Credit Facility agreements or in any agreements with respect to any additional financing would result in an event of default under such agreements, which would permit acceleration of the related debt and acceleration of debt under other debt agreements that may contain cross-acceleration or cross-default provisions, as well as termination of the commitments of the lenders to make further extensions of credit under the Senior Credit Facility. In addition, if the Company were unable to repay its indebtedness to the lenders under the Senior Credit Facility, such lenders could proceed against the collateral securing such indebtedness, including substantially all of the Company's assets, and the Company could be prohibited from making any payments on the Notes. See "Description of Senior Credit Facility." In addition, the Indenture contains a number of restrictive covenants relating to the Company. See "Description of Notes." DEPENDENCE ON COMMUNICATIONS INDUSTRY The Company's principal customers are RBOCs, competitive access providers, wireless service providers, competitive local exchange carriers, other communications service providers, mobile work forces and industrial engineers and other users of the Company's communications devices and ruggedized computers. The industries of the Company's principal customers are characterized by intense competition and consolidation. Fewer customers as a result of such consolidation could lead to pressure on the Company to lower prices. Competitive pressures among the Company's customers or other communications industry developments could lead to discontinuance or modifications of products manufactured by the Company and could have a material adverse effect on the Company's business, financial condition and results of operations. Regulation in the communications industry could materially adversely affect the Company's customers or otherwise materially limit or restrict the Company's business. Further, these industries are evolving rapidly and it is difficult to predict their potential size or future growth rate. There can be no assurance that the deregulation trend in the 15 telecommunications market that has resulted in increased competition and escalating demand for technologies and services will continue in a manner favorable to the Company or its business strategies. HIGHLY COMPETITIVE MARKETS The markets for the Company's products and services are highly competitive. The Company competes directly or indirectly with Hewlett-Packard Company and Panasonic Industrial Co., among others. See "Business--Industry Overview." Due to the rapidly evolving markets in which the Company competes, additional competitors with significant market presence and financial resources, including large telecommunications equipment manufacturers and computer hardware and software companies, may enter those markets, thereby further intensifying competition. Increased competition could result in price reductions and loss of market share which would materially adversely affect the Company's business, financial condition and results of operations. Certain of the Company's current and potential competitors have greater name recognition and greater financial, selling and marketing, technical, manufacturing and other resources than the Company. Although the Company believes it has certain technological and other advantages over its competitors, realizing and maintaining such advantages will require a continued high level of investment by the Company in research and product development, marketing and customer service and support. The highly leveraged nature of the Company after the Merger could limit the Company's ability to continue to make such investments or other necessary or desirable capital expenditures, to compete effectively and respond to market conditions. There can be no assurance that the Company will be able to compete effectively with its existing competitors or with new competitors, or that such competitors will not succeed in adapting more rapidly and effectively to changes in technology or in the market or in developing or marketing products that will be more widely accepted. RAPID TECHNOLOGICAL CHANGE; CHALLENGES OF NEW PRODUCT INTRODUCTIONS The market for the Company's products and services is characterized by rapidly changing technology, new and evolving industry standards and protocols and new product and service introductions and enhancements that may render existing offerings obsolete or unmarketable. Automation in the Company's addressed markets for communications test instruments or a shift in customer emphasis from communications test instruments to test and monitoring systems could likewise render the Company's existing offerings obsolete or unmarketable or reduce the size of the Company's addressed market. In particular, incorporation of self-testing functions in the equipment currently addressed by the Company's communications test instruments could render the Company's offerings redundant and unmarketable. Failure to anticipate or respond rapidly to advances in technology and to adapt the Company's products appropriately could have a material adverse effect on the success of the Company's products and thus on the Company's business, financial condition and results of operations. The development of new, technologically advanced products is a complex and uncertain process requiring the accurate anticipation of technological and market trends and the expenditure of substantial development costs. From the beginning of fiscal 1995 through fiscal 1998, the Company has expended on average 12.1% of its sales (or approximately $165.3 million) on product development and, although the Company expects to continue product development spending at similar levels, there can be no assurance that the Company will have sufficient free cash flow to do so. There can be no assurance that errors will not be found in new products or upgrades after commencement of commercial shipments, resulting in delays in or loss of market acceptance and sales, diversion of development resources, injury to the Company's reputation, increased service and warranty costs or payment of compensatory or other damages, any of which could have a material adverse effect on the Company's business, financial condition and results of operations. PRODUCT CERTIFICATION AND EVOLVING INDUSTRY STANDARDS Several of the Company's products must meet significant communications regulations, certifications, standards and protocols, some of which are evolving as new technologies are deployed. These regulations, certifications, standards and protocols include those promulgated by the Federal Communications Commission, established by Underwriters Laboratories and imposed by various foreign countries. Compliance with such 16 regulations, certifications, standards and protocols may prove costly and time-consuming for the Company, presenting barriers to entry in particular markets or reducing the profitability of the Company's product offerings. Such regulations, certifications, standards and protocols may also adversely affect the communications industry, limit the number of potential customers for the Company's products and services or otherwise have a material adverse effect on the Company's business. The failure of the Company's products to comply, or delays in compliance, with the various existing and evolving industry regulations, standards and protocols could delay the introduction of the Company's products or cause the Company's existing products to become obsolete. DEPENDENCE ON SOLE SOURCE SUPPLIERS AND LICENSORS The Company purchases certain key components and licenses technology from sole source vendors, including a semiconductor manufacturer of a component utilized in the Company's communications test business and a component manufacturer for the Itronix series of ruggedized laptop computers. There can be no assurance that such components will continue to be produced or that such licensed technology will continue to be made available or that the price for such components and licensed technology may not significantly increase. The inability to develop alternative sources for these components and licensed technology or to obtain sufficient quantities of these components could result in increased costs and delays or reductions in product shipments which could materially adversely affect the Company's business, financial condition and results of operations. In the event of a reduction or interruption of supply, a significant amount of time could be required before the Company would begin receiving adequate supplies from such alternative suppliers. In such event, the Company's business, financial condition and results of operations would be materially adversely affected. In addition, the manufacturer of certain of these sole source components is technologically complex, and the Company's reliance on the suppliers of these components exposes the Company to potential production difficulties and quality variations, which could negatively impact cost and timely delivery of the Company's products. If supply of certain components, including but not limited to application-specific integrated circuits, power supplies, display devices and operating system software, should cease, the Company may be required to redesign certain of its products. No assurance can be given that supply problems will not occur or, if such problems do occur, that satisfactory solutions would be available. RISKS RELATING TO BUSINESS AND GROWTH STRATEGY, INCLUDING ACQUISITIONS The Company's future performance depends in part on the Company's success in implementing its business and growth strategy. The components of the Company's strategy are subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the control of the Company. There can be no assurance that the Company will be able to fully implement its strategy or that the anticipated results of its strategy will be realized. The Company's strategy contemplates, among other things, growth through acquisitions of complementary businesses and entry into new markets. Management cannot predict the availability of appropriate acquisition candidates or the likelihood of an acquisition being completed should any negotiations commence. The Company could have difficulty obtaining financing to pursue acquisitions due to its substantial debt and to the restrictive covenants in its debt instruments, among other things. If the Company does complete any acquisitions, the Company could have difficulties integrating acquired technology and operations, or retaining and integrating key employees of acquired companies. Integrating any acquired business could also divert management attention from ongoing business concerns. In addition, the Company's future growth, whether by acquisition or otherwise, depends in part upon its ability to enter markets in which the Company may have limited experience, including international markets. In conducting business in foreign jurisdictions, the Company may encounter difficulties with, among other things, tariffs and other trade or regulatory barriers, currency controls, hyperinflation, intellectual property protection, potential adverse tax consequences, longer payment cycles, greater difficulty or delay in accounts receivable collection, cultural differences and increased political and economic instability. The Company's planned growth, if achieved, may place significant demands on its management, administrative and operational resources. The Company's ability to manage growth effectively will require the 17 Company to continue to develop and improve its operational, financial and other internal systems, as well as its sales capabilities, and attract, manage and retain its employees. There can be no assurance that the Company will effectively manage any strategic growth it may achieve. RISKS RELATING TO ITRONIX Itronix operated at a modest loss for fiscal 1998 and is currently facing significant manufacturing and marketing challenges, including competition from "semi-rugged" products that constrains pricing of premium, ruggedized products like those manufactured by Itronix. In addition, Itronix's results of operations have varied significantly in the past and may vary significantly in the future, on a quarterly and annual basis, as a result of a variety of factors, many of which are outside the Company's control. These factors include, without limitation: (i) the timing and size of orders which are received and can be shipped in any particular period; (ii) the seasonality of the placement of customer orders; (iii) customer order deferrals in anticipation of product enhancements or new product offerings by Itronix or its competitors; (iv) customer cancellation of orders and the gain or loss of significant customers, including those due to industry combinations and (v) the relative unpredictability of timing of customer orders due to the relative concentration of organizations with large field-service work forces. Moreover, any downturn in general economic conditions could precipitate significant reductions in corporate spending for telecommunications equipment, which could result in delays or cancellations of orders for Itronix's products. Itronix's expense levels are relatively fixed and are based, in significant part, on expectations of future revenues. Currently, costs are much higher as a percentage of revenues for Itronix than for the Company overall. As a result of its unpredictable revenues, costs at times can be disproportionately high as a percentage of Itronix's business. If, as a result of these factors, Itronix's costs continue to exceed its revenues, Itronix's stand-alone financial condition and results of operations would be materially adversely affected. RELIANCE ON KEY PERSONNEL The Company's success depends in large part upon its senior management, as well as its ability to attract and retain its highly-skilled technical, managerial, sales and marketing personnel, particularly engineers skilled and experienced with communications equipment. Competition for such personnel is intense and there can be no assurance that the Company will be successful in retaining its existing key personnel and in attracting and retaining the personnel it requires. Failure to attract and retain key personnel will have a material adverse effect on the Company's business, financial condition and results of operations. In addition, continued labor market shortages of technical personnel may require wage increases well in excess of the growth in the Company's sales and margins, thereby reducing the overall profitability of the Company. CONTROL BY CDR FUND V As a result of the recapitalization, CDR Fund V controls approximately 92.3% of the outstanding shares of Recapitalized Common Stock of Dynatech. As a result of its stock ownership, CDR Fund V controls Dynatech and its subsidiaries and has the power to elect the directors of Dynatech, appoint new management, and approve any action requiring approval by the stockholders of Dynatech, including adopting certain amendments to the articles of organization of Dynatech and approving any merger or sale of all or substantially all the assets of Dynatech. The directors so elected have the authority to effect decisions affecting the capital structure of Dynatech and its subsidiaries, including the incurrence of additional indebtedness, issuance of preferred stock and the declaration of dividends. There can be no assurances that the policies of Dynatech in effect prior to the Recapitalization with respect to such matters or other matters will continue. There can be no assurance that the interests of CDR Fund V will not conflict with the interests of holders of the Notes. CDR Fund V has agreed, pursuant to certain employment agreements with Messrs. Reno, Kline and Peeler, to elect them to serve as directors of Dynatech so long as they are employed by Dynatech. CHANGE OF CONTROL The Indenture provides that, under certain conditions upon the occurrence of a Change of Control, the Company will be required to make an offer to purchase all or any part of the Notes at a price in cash equal to 18 101% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase. The Senior Credit Facility agreements generally prohibit the Company from so repurchasing any Notes and will also provide that certain change of control events with respect to the Company would constitute a default thereunder. Any other agreement relating to Senior Indebtedness to which the Company becomes a party may contain similar provisions. If the Company does not repay or refinance borrowings having such provisions or otherwise obtain consent to purchase the Notes under such agreements, any resulting failure to offer to purchase or to purchase Notes would constitute an Event of Default (as defined) under the Indenture. If, as a result thereof, a default occurs with respect to any Senior Indebtedness, the subordination provisions in the Indenture would likely restrict payments to the holders of the Notes. Moreover, the exercise by the holders of the Notes of their right to require the Company to repurchase the Notes could cause a default under such agreements, even if the Change of Control itself does not, due to the financial effect of such repurchase on the Company. Finally, the Company's ability to pay cash to the holders upon a repurchase may be limited by the Company's then existing financial resources. There can be no assurance that sufficient funds will be available when necessary to make any required repurchases. See "Description of Notes--Change of Control" and "--Ranking" and "Description of Senior Credit Facility." FRAUDULENT TRANSFER CONSIDERATIONS The incurrence of indebtedness by the Company, such as the Notes, may be subject to review under federal or state fraudulent transfer laws in the event the Company is the subject of a bankruptcy filing or lawsuit commenced by or on behalf of unpaid creditors of the Company. Under such laws, if a court in a lawsuit by a creditor or a representative of creditors of the Company, such as a trustee in bankruptcy, were to find that, at the time the Company incurred indebtedness, including indebtedness under the Notes, the Company (i) was insolvent or rendered insolvent thereby, (ii) was engaged in a business or transaction for which its remaining assets constituted an unreasonably small amount of capital, (iii) intended to incur, or believed that it would incur, debts beyond its ability to pay as they matured, or (iv) intended to hinder, delay or defraud current or future creditors and, in the case of clauses (i), (ii) and (iii), that the Company did not receive reasonably equivalent value or fair consideration for incurring such indebtedness, such court could avoid or subordinate the amounts owing under the Notes to presently existing and future indebtedness of the Company and take other actions detrimental to the holders of the Notes. If a court were to find that the Company came within any of clauses (i) through (iv) above, the Company, or its creditors or the trustee in bankruptcy, could seek to avoid the grant of security interests to the lenders under the Senior Credit Facility. This would result in an event of default with respect to indebtedness incurred under the Senior Credit Facility which, under its terms (subject to applicable law), would allow the lenders to terminate their obligations thereunder and to accelerate repayment of such indebtedness. The measure of insolvency for purposes of the foregoing will vary depending upon the law of the jurisdiction which is being applied. Generally, however, a company would be considered insolvent for purposes of the foregoing if, at the time it incurred the indebtedness, (i) the sum of such company's debts including contingent liabilities is greater than all such company's property at a fair valuation, (ii) the present fair saleable value of such company's assets is less than the amount that will be required to pay its probable liability on its existing debts and liabilities (including contingent liabilities) as they become absolute and matured or (iii) the company incurred obligations beyond its ability to pay as such obligations become due. There can be no assurance as to what standards a court would use to determine whether the Company was solvent at the relevant time, or whether, whatever standard were to be used, the Notes would not be avoided or further subordinated on another of the grounds set forth above. In rendering their opinions in connection with the initial borrowings in connection with the Merger, counsel for the Company and counsel for the lenders did not express any opinion as to the applicability of federal or state fraudulent transfer and conveyance laws. Moreover, any solvency analysis conducted in connection with the Merger would not be binding on a court and there can be no assurance that a court would not determine that the Company was insolvent at the time of or after giving effect to the Merger. 19 The Company believes that at the time the indebtedness constituting the Existing Notes was incurred initially by the Company, the Company (i) was (a) neither insolvent nor rendered insolvent thereby, (b) in possession of sufficient capital to run its businesses effectively and (c) incurring debts within its ability to pay as the same mature or become due and (ii) had sufficient assets to satisfy any probable money judgment against it in any pending action. In reaching the foregoing conclusions, the Company relied upon its analyses of internal cash flow projections and estimated values of assets and liabilities of the Company. There can be no assurance, however, that a court passing on such questions would reach the same conclusions. YEAR 2000 COMPLIANCE The Company has commenced a review of its computer systems and products in order to assess its exposure to Year 2000 issues. The Company is currently in the process of determining the full scope, related costs and action plan to ensure that the Company's systems continue to meet its internal needs and those of its customers. The Company expects to make the necessary modifications or changes to its computer information systems to enable proper processing of transactions relating to the Year 2000 and beyond. However, there can be no assurance that Year 2000 costs and expenses will not have a material adverse effect on the Company. In addition, the Company does not currently have complete information concerning the Year 2000 compliance status of its suppliers and customers. In the event that any of the Company's significant suppliers or customers do not successfully and timely achieve Year 2000 compliance, the Company's business or operations could be materially adversely affected. Finally, there can be no assurance that the Company's existing or installed base of products are Year 2000 compliant, or that the Company's products will not be integrated by the Company or its customers with, or otherwise interact with, non-compliant software or other products. Any such product non-compliance may expose the Company to claims from its customers and others, and could impair market acceptance of the Company's products and services, increase service and warranty costs, or result in payment of damages, which in turn could materially adversely affect the Company. MARKET SHARE AND COMPETITIVE POSITION DATA There are no independent third party sources that publicly disseminate market share and competitive position data for all of the markets in which the Company competes. Accordingly, a substantial part of the market share and competitive position data in this Prospectus is based upon data compiled by the Company for use in the ordinary course of its business to assess its competitive position. Data with respect to sales of test, analysis, communications and computing equipment sales by other companies has been derived, where available, from data published by those companies, but has not been independently verified by the Company. Many of the Company's competitors do not publish revenue or other sales data for products sold in competition with the Company's products and, accordingly, the Company has compiled its data based upon estimates of such sales. Although the Company believes that its estimates of its market shares and competitive position data are reasonable, such estimates have not been verified by independent third party sources and there can be no assurance that such data is accurate. FORWARD-LOOKING STATEMENTS MAY NOT PROVE ACCURATE When used in this Prospectus the words "anticipate," "estimate," "project," and similar expressions are intended to identify forward-looking statements. Forward-looking statements are made based upon management's expectations and beliefs concerning future developments and their potential effect upon the Company, and actual results will vary. In addition, such statements are subject to certain risks, uncertainties and assumptions, including but not limited to the risks set forth above in this "Risk Factors" section. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. There can be no assurance that the future developments will be in accordance with management's expectations or that the effect of future developments will be those anticipated by management. See "Management's Discussion and Analysis." The forward-looking statements contained herein are made as of the date of this Prospectus and the Company assumes no obligation to update the forward-looking statements or to update the reasons why the actual results could differ from those in the forward- looking statements. 20 ABSENCE OF PUBLIC MARKET; RESTRICTIONS ON RESALES The New Notes are new securities for which there presently is no established market and none may develop. The Existing Notes have not been registered under the Securities Act and are subject to restrictions on transferability and resale. Although the Initial Purchasers have informed the Company that they intend to make a market in the Existing Notes, and if issued, the New Notes, the Initial Purchasers are not obligated to do so and any such market making may be discontinued at any time without notice, at the sole discretion of the Initial Purchasers. In addition, such market making activity may be limited during the pendency of the Exchange Offer or the effectiveness of a Shelf Registration Statement (as defined) in lieu thereof. Accordingly, there can be no assurance as to the development or liquidity of any market for the Existing Notes or, if issued, the New Notes. If an active market for the Existing Notes or, if issued, the Exchange Notes, fails to develop or be sustained, the trading price of the Existing Notes or New Notes could be materially adversely affected. The Existing Notes are eligible for trading through the PORTAL market. The Company does not intend to apply for listing of the New Notes on any securities exchange or for quotation of the New Notes through the National Association of Securities Dealers Automated Quotation System. See "Plan of Distribution." CONSEQUENCES OF FAILURE TO EXCHANGE AND REQUIREMENTS FOR TRANSFER OF NEW NOTES To the extent that Existing Notes are tendered and accepted in the Exchange Offer, the trading market for the remaining untendered or tendered but not accepted Existing Notes could be adversely affected. Because the Company anticipates that most holders of the Existing Notes will elect to exchange such Existing Notes for New Notes due to the absence of restrictions on the resale of New Notes under the Securities Act, the Company anticipates that the liquidity of the market for any Existing Notes remaining after the consummation of the Exchange Offer may be substantially limited. The liquidity of, and trading market for, the Notes also may be adversely affected by general declines in the market or by declines in the market for similar securities. Such declines may adversely affect such liquidity and trading markets independent of the financial performance of, and prospects for, the Company. Holders of Existing Notes who do not exchange their Existing Notes for New Notes pursuant to the Exchange Offer will continue to be subject to the restrictions on transfer of such Existing Notes as set forth in the legend thereon as a consequence of the issuance of the Existing Notes pursuant to exemptions from or in transactions not subject to, the registration requirements of the Securities Act and applicable state securities laws. In general, the Existing Notes may not be offered or sold, unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. The Company does not currently anticipate that it will register Existing Notes under the Securities Act. Based on interpretations by the staff of the Commission, as set forth in no-action letters issued to third parties, the Company believes that New Notes issued pursuant to the Exchange Offer in exchange for Existing Notes may be offered for resale, resold or otherwise transferred by holders thereof (other than any such holder which is an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such New Notes are acquired in the ordinary course of such holders' business and such holders have no arrangement with any person to participate in the distributions of such New Notes. However, the Commission has not considered the Exchange Offer in the context of a no-action letter and there can be no assurance that the staff of the Commission would make a similar determination with respect to the Exchange Offer as in such other circumstances. Each holder, other than a broker-dealer, must acknowledge that it is not engaged in, and does not intend to engage in, a distribution of New Notes and has no arrangement or understanding to participate in a distribution of New Notes. If any holder is an affiliate of the Company, is engaged in or intends to engage in or has any arrangement or understanding with respect to the distribution of the New Notes to be acquired pursuant to the Exchange Offer, such holder (i) could not rely on the applicable interpretations of the staff of the Commission and (ii) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction. Each broker-dealer that receives New Notes for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such New Notes. The 21 Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker- dealer in connection with resales of New Notes received in exchange for Existing Notes where such Existing Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities. For a period of 90 days after the Expiration Date, the Company will make this Prospectus available to any broker-dealer for use in connection with any such resale. See "Plan of Distribution." However, to comply with the securities laws of certain jurisdictions, if applicable, the New Notes may not be offered or sold unless they have been registered or qualified for sale in such jurisdictions or an exemption from registration or qualification is available and is complied with. See "The Exchange Offer--Consequences of Exchanging Old Notes." USE OF PROCEEDS There will be no cash proceeds payable to the Company from the issuance of New Notes pursuant to the Exchange Offer. The proceeds of the Offering of the Existing Notes were used to fund a portion of the financings for the Recapitalization and related translations, including payments in respect of common stock and options for common stock of Dynatech, and payment of transaction-related fees and expenses. For further discussion of the sources and uses of funds related to the Recapitalization, see "The Recapitalization." 22 CAPITALIZATION The following table sets forth the (i) consolidated cash and equivalents and capitalization of the Company at March 31, 1998 and (ii) the unaudited consolidated cash and equivalents and capitalization of the Company at March 31, 1998 after giving pro forma effect to the Merger and related transactions as if they had occurred on March 31, 1998. This table should be read in conjunction with "Selected Historical and Pro Forma Consolidated Financial Data," "Unaudited Pro Forma Condensed Consolidated Financial Data," "Management's Discussion and Analysis," and the consolidated financial statements (including the notes thereto) appearing elsewhere in this Offering Circular.
MARCH 31, 1998 ------------------------ ACTUAL PRO FORMA ---------- ------------ (DOLLARS IN MILLIONS) Cash and equivalents................................. $ 64.9 $ 43.6 ========== =========== Debt: Existing debt...................................... $ 0.2 $ 0.2 Merger Financings: Senior Credit Facility........................... -- 260.0 Notes............................................ -- 275.0 Revolving Credit Facility........................ -- 32.9 ---------- ----------- Total debt....................................... 0.2 568.1 ---------- ----------- Shareholders' equity (deficit): Dynatech Common Stock, including additional paid- in-capital........................................ 11.3 -- Recapitalized Common Stock, including additional paid-in-capital................................... -- 304.1 Retained earnings (deficit)........................ 237.3 (647.6) Cumulative translation adjustments................. (1.6) (1.6) Treasury stock..................................... (44.9) -- ---------- ----------- Total shareholders' equity (deficit)............. 202.1 (345.1) ---------- ----------- Total capitalization............................. $ 202.3 $ 223.0 ========== ===========
23 UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA The following unaudited pro forma condensed consolidated financial data of the Company has been prepared to give effect to the Merger and related transactions as a recapitalization for financial reporting purposes. Accordingly, the historical basis of the Company's assets and liabilities will not be affected by the transactions. For a discussion of the Merger and related transactions, see "The Recapitalization." The pro forma adjustments presented are based upon available information and certain assumptions that the Company believes are reasonable under the circumstances. The historical condensed consolidated statements of continuing operations data for the year ended March 31, 1998 were derived from the audited consolidated financial statements of the Company included elsewhere herein. The unaudited pro forma condensed consolidated statement of continuing operations data of the Company for the year ended March 31, 1998 give effect to the Merger as if it had occurred on April 1, 1997. The unaudited pro forma condensed consolidated balance sheet data of the Company as of March 31, 1998 give effect to the Merger assuming that it was completed on March 31, 1998. The unaudited pro forma financial data should be read in conjunction with the historical consolidated financial statements of the Company and notes thereto, "Management's Discussion and Analysis" and the other financial data included elsewhere in this Offering Circular, as well as the information concerning the Merger, including the sources and uses therefor, contained in "The Recapitalization." The pro forma financial data and related notes are provided for informational purposes only and do not necessarily reflect the results of operations or financial position of the Company that would have actually resulted had the events referred to above or in the notes to the unaudited pro forma financial data been consummated as of the date and for the period indicated and are not intended to project the Company's financial position or results of operations for any future period. 24 DYNATECH CORPORATION UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF CONTINUING OPERATIONS DATA FOR THE YEAR ENDED MARCH 31, 1998
DYNATECH FOR THE YEAR ENDED RECAPITALIZATION PRO FORMA MARCH 31, 1998 ADJUSTMENTS MARCH 31, 1998 ------------------ ---------------- -------------- (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA) Sales...................... $472,948 $472,948 Cost of sales.............. 205,522 205,522 -------- -------- Gross profit............... 267,426 267,426 Selling, general and admin- istrative expense......... 138,310 138,310 Product development ex- pense..................... 54,995 54,995 Amortization of intangi- bles...................... 5,835 5,835 -------- -------- Operating income........... 68,286 68,286 Interest income............ 3,012 3,012 Interest expense........... (1,221) $(53,966)(a) (55,187) Other income, net.......... 730 (500)(b) 230 -------- -------- -------- Income before income tax- es........................ 70,807 (54,466) 16,341 Provision (benefit) for in- come taxes................ 29,031 (21,786)(c) 7,245 -------- -------- -------- Income from continuing op- erations.................. $ 41,776 $(32,680) $ 9,096 ======== ======== ======== Income per common share(j) Basic.................... $ 2.49 $ 0.08 ======== ======== Diluted.................. $ 2.40 $ 0.08 ======== ======== Weighted average number of common shares Basic.................... 16,795 120,000 Diluted.................. 17,434 120,539
See Notes to Unaudited Pro Forma Condensed Consolidated Statements of Continuing Operations Data. 25 DYNATECH CORPORATION NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF CONTINUING OPERATIONS DATA (AMOUNTS IN THOUSANDS) (a) Reflects the following:
YEAR ENDED MARCH 31, 1998 -------------- Interest resulting from borrowings under the $32.9 million re- volving credit facility at an assumed interest rate of LIBOR + 2.25% (7.9%).................................................. $ 2,632 Interest resulting from $50 million term loan under the Senior Credit Facility at an assumed interest rate of LIBOR + 2.25% (7.9%)........................................................ 3,938 Interest resulting from $70 million term loan under the Senior Credit Facility at an assumed interest rate of LIBOR + 2.50% (8.1%)........................................................ 5,688 Interest resulting from $70 million term loan under the Senior Credit Facility at an assumed interest rate of LIBOR + 2.75% (8.4%)........................................................ 5,863 Interest resulting from $70 million term loan under the Senior Credit Facility at an assumed interest rate of LIBOR + 3.0% (8.6%)........................................................ 6,036 Interest resulting from $275 million of gross proceeds related to the issuance of Notes at an assumed interest rate of 9.75%......................................................... 26,813 Amortization of debt issuance costs associated with the Senior Credit Facility and the issuance of Notes..................... 2,996 ------- $53,966 ------- (b) Reflects the annual fee payable to Clayton Dubilier & Rice, Inc. for management and financial consulting services pro- vided to the Company......................................... $ 500 ------- (c) Reflects the tax effect of the pro forma adjustments assuming an effective tax rate of 40%................................. $21,786 =======
(d) The Unaudited Pro Forma Condensed Consolidated Statements of Continuing Operations Data exclude the following non-recurring items that are directly attributable to the Recapitalization transactions: 1. A compensation charge of $13.6 million associated with the cash settlement (net of related tax benefit) relating to certain stock options that will be retired or canceled as a result of the Merger. 2. A non-cash compensation charge of $10.7 million (net of related tax benefit) relating to the conversion of certain stock options into fully vested and exercisable equivalent options to purchase shares of Recapitalized Common Stock. (e) The Financial Accounting Standards Board has issued Statement No. 128, (titled "Earnings Per Share"), which modifies the way in which earnings per share ("EPS") data is calculated and disclosed. The Company adopted this standard for the interim period ending December 31, 1997, and has restated all prior period EPS data presented. See "Management's Discussion and Analysis--New Pronouncements." 26 DYNATECH CORPORATION UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET DATA AS OF MARCH 31, 1998
RECAPITALIZATION HISTORICAL ADJUSTMENTS PRO FORMA ---------- ---------------- --------- (AMOUNTS IN THOUSANDS) ASSETS Current assets: Cash and cash equivalents........... $ 64,904 $ (21,285)(a) $ 43,619 Accounts receivable, net............ 69,988 69,988 Inventories......................... 48,882 48,882 Other current assets................ 16,823 16,823 -------- --------- --------- Total current assets.............. 200,597 (21,285) 179,312 Property and equipment, net........... 26,365 26,365 Intangible assets, net................ 39,595 39,595 Other assets.......................... 21,573 41,935 (b) 63,508 -------- --------- --------- $288,130 $ 20,650 $ 308,780 ======== ========= ========= LIABILITIES & EQUITY Current liabilities: Notes payable & current portion of long-term debt..................... $ 150 $ 150 Accounts payable.................... 22,933 22,933 Accrued expenses.................... 58,967 58,967 Net liabilities of discontinued op- erations........................... 756 756 -------- --------- Total current liabilities......... 82,806 82,806 Long-term debt...................... 83 $ 567,900 (c) 567,983 Other liabilities................... 3,122 3,122 -------- --------- --------- 3,205 567,900 571,105 SHAREHOLDERS' EQUITY (DEFICIT) Common stock, including additional paid-in-capital...................... 11,368 (11,368)(d) -- Recapitalized common stock, including additional paid-in-capital........... -- 304,092 (e) 304,092 Retained earnings (deficit)........... 237,282 (884,905)(f) (647,623) Cumulative translation adjustments.... (1,600) (1,600) Treasury stock........................ (44,931) 44,931 (g) -- -------- --------- --------- Total Shareholders' equity (defi- cit)............................. 202,119 (547,250) (345,131) -------- --------- --------- $288,130 $ 20,650 $ 308,780 ======== ========= =========
See Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet Data. 27 DYNATECH CORPORATION NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET DATA AS OF MARCH 31, 1998
(AMOUNTS IN THOUSANDS) (a)Reflects the following: Total Sources Borrowings under Term Loan Facility................. $260,000 Borrowing under Revolving Credit Facility........... 32,900 Proceeds of Notes................................... 275,000 Proceeds from issuance of 111,590,528 shares........ 277,000 -------- $844,900 -------- Total Uses Consideration to convert to cash 16,818,945 shares at $47.75 per share................................ $803,105 Consideration to convert to cash certain stock op- tions in an amount equal to the excess of $49 per share over the exercise price per share of Common Stock subject to such settled options, net of re- lated tax benefit.................................. 23,557 Estimated transaction fees and expenses............. 39,523 -------- 866,185 -------- Net Use of Cash..................................... $(21,285) ======== (b)Reflects the following: Deferred issuance costs incurred in connection with the incurrence of the Senior Credit Facility and Notes................................................ $ 25,700 Tax benefit arising from the conversion of certain stock options into equivalent options to purchase shares of Recapitalized Common Stock................. 7,156 Tax benefit asset arising from the conversion to cash of certain stock options in an amount equal to the excess of $49 per share over the exercise price per share of Common stock subject to such settled op- tions................................................ 9,079 -------- $ 41,935 ======== (c)Reflects the following: Borrowings under Revolving Credit Facility............ $ 32,900 Borrowings under Term Loan Facility................... 260,000 Proceeds of Notes..................................... 275,000 -------- $567,900 ======== (d)Reflects the following: Cancellation of 16,864,434 shares and historical addi- tional paid-in-capital............................... $ (9,369) Conversion of 40,804 shares into 799,758 shares in MergerCo............................................. (1,999) -------- $(11,368) ========
28
(AMOUNTS IN THOUSANDS) (e)Reflects the following: Conversion of 799,578 shares of MergerCo common stock into Recapitalized Common Stock...................... $ 1,999 Proceeds from issuance of 111,590,528 shares.......... 276,977 Estimated fees and expenses to be paid by the Company in connection with the Recapitalization.............. (13,800) Conversion of certain stock options into equivalent options to purchase shares of Recapitalized Common Stock................................................ 17,892 Conversion of 16,864,434 shares of Common Stock (excluding shares held by MergerCo and held in treasury assumed to be canceled) into 0.5 shares per share of Recapitalized Common Stock (totaling 8,409,473 shares of Recapitalized Common Stock)...... 21,024 --------- $ 304,092 ========= (f)Reflects the following: Conversion of 16,864,434 shares into $47.75 per share in cash and 0.5 shares of Recapitalized Common Stock................................................ $(860,551) Compensation expense arising from the conversion to cash of certain stock options in an amount equal to the excess of $49 per share over the exercise price per share of Common Stock subject to such settled op- tions................................................ (22,697) Compensation expense arising from the conversion of 1,100,000 stock options held by certain members of management into equivalent options to purchase shares of Recapitalized Common Stock........................ (10,736) Tax benefit arising from the conversion of stock op- tions................................................ 9,079 --------- $(884,905) =========
(g) Reflects the retirement of treasury shares. 29 SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA The selected historical consolidated financial and other data for the five fiscal years ended March 31, 1998 have been derived from, and should be read in conjunction with, the audited historical Consolidated Financial Statements, and related notes thereto, of the Company. The unaudited pro forma balance sheet data reflects the Merger and related transactions as if they had occurred on March 31, 1998. The unaudited pro forma income statement data exclude certain non-recurring items directly attributable to the Merger and related transactions and the acquisition of Itronix. The pro forma adjustments were applied to the historical financial statements to give effect to the Merger and related transactions as a recapitalization for financial reporting purposes. Accordingly, the historical basis of the Company's assets and liabilities will not be affected by the transaction. The pro forma financial and other data are provided for information purposes only and do not necessarily reflect the results of operations or financial position of the Company that would have actually occurred had the events referred to above been consummated as of the date and for the periods indicated and are not intended to project the Company's financial position or results for any future period. The following table should be read in conjunction with "Management's Discussion and Analysis."
PRO FORMA UNAUDITED YEARS ENDED MARCH 31, YEAR ENDED ---------------------------------------------- MARCH 31, 1994 1995 1996(A) 1997(B) 1998 1998 -------- -------- -------- -------- -------- ---------- (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA) INCOME STATEMENT DATA: Sales................... $199,612 $243,078 $293,042 $362,412 $472,948 $472,948 Cost of sales........... 72,103 91,412 111,436 137,254 205,522 205,522 -------- -------- -------- -------- -------- -------- Gross profit............ 127,509 151,666 181,606 225,158 267,426 267,426 Selling, general and ad- ministrative expenses.. 70,719 86,329 98,487 114,479 138,310 138,310 Product development ex- penses................. 26,863 30,585 36,456 43,267 54,995 54,995 Non-recurring charges(c)............. -- -- 16,852 27,776 -- -- Amortization of intangi- bles................... 5,728 5,106 5,136 6,793 5,835 5,835 -------- -------- -------- -------- -------- -------- Operating income........ 24,199 29,646 24,675 32,843 68,286 68,286 Net interest and other income/(expense)....... (352) (1,551) 1,433 2,591 2,521 (51,945) -------- -------- -------- -------- -------- -------- Income from continuing operations before income taxes........... 23,847 28,095 26,108 35,434 70,807 16,341 Provision for income taxes.................. 9,897 11,671 10,394 17,585 29,031 7,245 -------- -------- -------- -------- -------- -------- Income from continuing operations(d).......... $ 13,950 $ 16,424 $ 15,714 $ 17,849 $ 41,796 $ 9,096 ======== ======== ======== ======== ======== ======== Income per common share from continuing operations--basic(e)... $ 0.75 $ 0.92 $ 0.87 $ 1.04 $ 2.49 $ 0.08 Income per common share from continuing operations-- diluted(e)............. $ 0.75 $ 0.91 $ 0.86 $ 0.99 $ 2.40 $ 0.08 Weighted average number of shares Basic.................. 18,579 17,846 17,969 17,200 16,795 120,000 Diluted................ 18,678 17,971 18,315 18,028 17,434 120,539 BALANCE SHEET DATA: Total assets............ $280,553 $256,392 $205,189 $250,035 $288,130 Long term debt.......... 33,006 7,915 1,800 5,226 83 Total stockholders equity/(deficit)....... 142,643 154,320 160,719 160,686 202,119 Shareholders' equity/(deficit) per share.................. $ 7.67 $ 8.78 $ 9.14 $ 9.57 $ 11.99 OTHER DATA: EBITDA(f)............... $ 37,179 $ 42,514 $ 55,917 $ 77,326 $ 86,912 $ 86,912 Depreciation and amorti- zation................. 10,782 12,018 13,415 16,073 17,901 Capital expenditures.... 7,900 8,800 8,198 10,176 15,879 Ratio of earnings to fixed charges(g)....... 5.5x 6.2x 8.2x 13.2x 19.1x 1.2x
30 NOTES TO SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA (a) On September 1, 1995, the Company acquired substantially all of the business and assets of Tele-Path Industries, Inc. for $23.6 million, of which approximately $12.6 million was in cash and the remaining $11.0 million was from the issuance of 688,096 shares of Common Stock. (b) On December 31, 1996, the Company acquired the assets and liabilities and assumed certain liabilities of Itronix, located in Spokane, Washington, for $65.4 million in cash. (c) The 1997 non-recurring charges included a $20.6 million non-cash charge for incomplete technology which had not reached technological feasibility and had no alternative use, purchased as part of the acquisition of Itronix. In addition, the Company recorded a non-cash charge of $7.2 million related to the impairment of intangible assets, principally related to the effects of product and distribution transitions. In 1996 the Company purchased incomplete technology activities as a part of the acquisition of Tele-Path Industries, Inc. resulting in a pretax non-cash charge of $16.9 million. Both the $20.6 million and $16.9 million non-cash charges related to purchased incomplete technology and were not considered in the pro forma income statement data as these amounts resulted directly from such acquisitions and are non-recurring. (d) A formal plan to discontinue non-core businesses was approved by the Board of Directors of Dynatech on February 7, 1996. In fiscal 1997, the Company essentially completed its disposition of the non-core businesses, which resulted in an after-tax gain from discontinued operations of $12.0 million. See "Business--Discontinued Operations and Divested Businesses." (e) The Financial Accounting Standards Board has issued Statement No. 128 (titled "Earnings Per Share"), which modifies the way in which EPS data is calculated and disclosed. The Company adopted this standard for the interim period ending December 31, 1997 and has restated all prior EPS data presented. See "Management's Discussion and Analysis--New Pronouncements." (f) EBITDA represents operating income and other income (expense), before depreciation and amortization and excludes non-recurring charges. While EBITDA is not intended to represent cash flow from operations as defined by generally accepted accounting principles or as a measure of liquidity, it is included herein to provide additional information with respect to the ability of the Company to meet future debt service, capital expenditures and working capital requirements. See "Management's Discussion and Analysis." (g) For the purposes of calculating the ratio of earnings to fixed charges, earnings represent income from continuing operations before income taxes and fixed charges. Fixed charges consist of the total of (i) interest, whether expensed or capitalized, (ii) amortization of debt expense and discount or premium relating to any indebtedness, whether expensed or capitalized and (iii) that portion of rental expense considered to represent interest cost. 31 MANAGEMENT'S DISCUSSION AND ANALYSIS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This discussion contains forward-looking statements concerning the Company's operations, economic performance and financial condition, all of which involve risks and uncertainties. Forward-looking statements are made based upon management's expectations and beliefs concerning future developments and their potential effect upon the Company. The Company's actual results may differ significantly from management's expectations and there can be no assurance that the effects of future developments on the Company will be those anticipated by management. There are certain factors that might cause such a difference. These factors include, but are not limited to, product demand and market acceptance risks, the effect of economic conditions, the impact of competitive products and pricing, product development, commercialization and technological difficulties, capacity and supply constraints or difficulties, availability of capital resources, general business and economic conditions, the effect of the Company's accounting policies, and other risks detailed herein. See "Risk Factors." OVERVIEW The Merger. On May 21, 1998, MergerCo, which was organized at the direction of CDR, was merged with and into the Company with the Company continuing as the surviving corporation. In the Merger, (i) each then outstanding share of Common Stock was converted into the right to receive $47.75 in cash and 0.5 shares of Recapitalized Common Stock and (ii) each then outstanding share of common stock of MergerCo was converted into one share of Recapitalized Common Stock. As a result of the Merger, CDR Fund V holds approximately 92.3% of the Recapitalized Common Stock. Mr. Reno together with two family trusts holds approximately 0.7% of the Recapitalized Common Stock and other Stockholders hold approximately 7.0% of the Recapitalized Common Stock. In connection with the Merger, the Company entered into a senior credit agreement with certain lenders providing for the Senior Credit Facility including a $260 million Term Loan Facility and a $110 million Revolving Credit Facility. In connection with the Merger, the Company also completed the offering of the Existing Notes. On May 31, 1998, the Company had a total of $575.2 million of debt, which consisted primarily of $275 million principal amount of the Existing Notes, $260 million in term loan borrowings under the Term Loan Facility and $40 million in revolving credit borrowings under the Revolving Credit Facility. The Merger was accounted for as a recapitalization of Dynatech, which had no impact on the historical basis of assets and liabilities as reflected in the financial statements of Dynatech. However, the Merger involved a change in the Company's capital structure which will lead to, among other things, higher reported interest expense. As a result, operating results for periods subsequent to the Merger will not be comparable in all material respects to operating results for periods prior to the Merger. General. The Company develops, manufactures and sells test, analysis, communications and computing equipment in three product categories: (i) communications test instruments, (ii) industrial computing and communications, and (iii) visual communications. In its communications test business, the Company provides products that test and analyze communications networks and equipment. In its industrial computing and communications business, the Company addresses two areas of the worldwide ruggedized computer market through two of its subsidiaries: (i) ICS, which provides computer products for use in harsh environments, and (ii) Itronix, which provides ruggedized portable computing and communications devices to field-service organizations such as telephone companies. In its visual communications business, the Company sells visual communications products principally through two of its subsidiaries: (i) AIRSHOW, which provides passenger cabin video information display systems for the general and commercial aviation markets and (ii) da Vinci, which provides digital color enhancement systems used in transferring film images into electronic signals. Since 1993, the Company has sold 25 non- core businesses for gross proceeds of approximately $211 million pursuant to a plan to focus on businesses that enjoy leading positions in their respective markets, strong profitability, and good growth prospects. 32 Current and Historical Trends. The Company believes that overall trends in the communications industry are the most significant trends affecting the Company's sales and results of operations. The 18.3% average annual increase in sales of its communications test instruments products from fiscal 1996 to 1998 was principally driven by market growth and new product introductions by the Company. The Company believes that demand for communications test equipment during that period resulted from the combination of increased competition among existing and new telecommunications service providers, the proliferation of new telecommunications services and the increased usage of technologies related to wireless and internet services. The Company believes that these trends have driven overall communications test instrument industry growth of approximately 10-12% annually in recent years. Growth rates vary widely across segments of the market and are typically higher in segments that support the development of high growth communications services such as Asynchronous Transfer Mode, frame relay and wireless services. The Company believes the communications test and monitoring systems market (in which the Company is now beginning to participate) is growing at approximately 12% annually, driven by the needs of service providers to provider higher quality networks and to reduce costs through efficiency, which may be gained by using test and monitoring systems. The Company's other businesses similarly benefit from growth in their customers' markets. Growth in demand for AIRSHOW's products, for example, is driven in part by growth in the general aviation market, which management projects to grow at approximately 20% in 1998. Operating Profit. From fiscal 1996 to 1998 the Company increased operating profit, excluding non-recurring charges, by a compound annual growth of 28.2%, driven primarily by sales growth and the Company's acquisitions during this period. Excluding non-recurring charges, operating profit margins also increased from 14.2% of consolidated sales to 14.4% of consolidated sales for the same period. The non-recurring charges included a charge of $16.9 million for purchased incomplete technology related to the acquisition of Tele-Path Industries, Inc., and $27.8 million for purchased incomplete technology and impaired intangible asset writeoffs in fiscal 1996 and fiscal 1997, respectively. Itronix, as a manufacturer of ruggedized portable computing and communications hardware, generally has lower margins than the Company's other businesses. As a result, profitability of the Company's industrial computing and communications businesses is lower than the average profitability of the Company's other businesses. Itronix is also currently facing significant manufacturing and marketing challenges, including competition from "semi- rugged" portable computers that constrains pricing of premium ruggedized products like Itronix's. The Company has taken several steps designed to improve the operating performance of Itronix, including programs designed to reduce costs and streamline manufacturing, as well as a change in Itronix senior management. The Company anticipates improvements in Itronix's performance in fiscal 1999, although there can be no assurance that Itronix will return to profitability. See "Risk Factors--Risks Relating to Itronix." Seasonality. As a result of purchasing patterns of its telecommunications customers, which tend to place large orders periodically, typically at the end of the Company's first and third fiscal quarters, the Company expects its results of operations to vary significantly on a quarterly basis, as they have in the past. In addition, growth rates and results of operations for Itronix also have varied widely and are expected to continue to do so because of the relatively small number of potential customers with large field-service work forces, the timing and size of whose orders are irregular. Product Development. The market for the Company's products is characterized by changing technology, evolving industry standards and protocols, and frequent introductions of new products. Automation in the Company's addressed markets for communications test instruments or a shift in customer emphasis from communications test instruments to test and monitoring systems could render the Company's existing product offerings obsolete or unmarketable or reduce the size of the Company's addressed market. In particular, incorporation of self-testing functions in the equipment currently addressed by the Company's communications test instruments could render the Company's offerings redundant and unmarketable. The Company thus faces the challenges of anticipating and responding rapidly to advances in technology and adapting its existing products 33 or developing new products. The development of new, technologically advanced products is a complex and uncertain process requiring the accurate anticipation of technological and market trends and the expenditure of substantial development costs. From the beginning of fiscal 1996 through fiscal 1998, the Company has spent an aggregate of $134.7 million on product development or approximately 11.9% of sales, and the Company expects to continue product development spending at similar levels as a percentage of annual sales, to the extent that the Company has sufficient free cash flow to do so. See "Risk Factors--Rapid Technological Change; Challenges of New Product Introductions" and "--Substantial Leverage; Liquidity." Recent Acquisitions and Dispositions. On December 31, 1996, the Company acquired substantially all of the assets and assumed certain liabilities of Itronix for $65.4 million in cash. Incident to this acquisition was the purchase of incomplete technology activities which resulted in a one-time non- cash charge of $20.6 million reflected in the Company's results for fiscal 1997. This incomplete technology had not reached technological feasibility and had no alternative use. In March 1997, the Company acquired the net assets of Advent Design, Inc. ("Advent"), a supplier to ICS for $3.5 million in cash. Advent designs and manufactures high performance microprocessor-based systems for the computer, medical and communications market. During fiscal 1997, the Company essentially completed the disposition of non-core businesses pursuant to a strategy approved by the Board of Directors of Dynatech in February of 1996. The Company received proceeds of $110.2 million and $48.9 million in 1997 and 1996, respectively, related to these dispositions, which resulted in an after-tax gain of $12.0 million. On June 19, 1998, the Company acquired the stock of Pacific Systems Corporation of Kirkland, Washington ("Pacific") for a total purchase price of $20 million, including an incentive earnout. Pacific designs and manufactures customer specified avionics and integrated cabin management equipment for the corporate and general aviation market. On June 30, 1998 the Company sold the assets and certain liabilities ComCoTec, Inc. for a total sale price of $21.0 million. Recapitalization Accounting; Recapitalization Fees and Expenses; Financial Statement Presentation. The Company is treating the Merger and related transactions as a recapitalization for financial reporting purposes. Accordingly, the historical basis of the Company's assets and liabilities has not been affected by these transactions. Of the approximately $39.5 million of fees and expenses relating to these transactions, (i) approximately $25.7 million of such costs are attributable to costs of the Financing and will be capitalized and amortized over the life of the Financing, and (ii) approximately $13.8 million of such costs are attributable to costs of the Merger and related transactions and will be accounted for as a reduction in the proceeds from the issuance of the Recapitalized Common Stock. The consolidated financial statements and data included in this Prospectus are financial statements and data of Dynatech, which is the direct parent of TTC and which was the initial issuer of the Notes. TTC became the obligor on the Notes, and the borrower under the Senior Credit Facility, on the date of the May 1998 Closing of the Offering of the Existing Notes following the effectiveness of the merger of TTC Merger Co. into TTC. In connection with that merger, TTC became a direct subsidiary of Dynatech and the direct or indirect parent of the Company's remaining active subsidiaries, and Dynatech guaranteed the monetary obligations of TTC Merger Co. and TTC under the Notes as well as the Senior Credit Facility. Dynatech is a holding company with no significant independent operations. Accordingly, the consolidated financial statements of Dynatech are not materially different from those of TTC. 34 SUPPLEMENTARY PRO FORMA FINANCIAL INFORMATION On December 31, 1996, the Company acquired substantially all of the assets and assumed certain liabilities of Itronix, for $65.4 million in cash. Approximately $40 million of the purchase price was borrowed pursuant to the terms of the Company's revolving credit and term loan agreement in effect at that time. A significant portion of the borrowed funds was repaid during the fourth quarter of fiscal 1997. Incident to this acquisition was the purchase of incomplete technology activities which resulted in a one-time pretax charge of $20.6 million or ($0.74) per share on a diluted basis. This purchased incomplete technology that had not reached technological feasibility and which had no alternative future use was valued using a risk adjusted cash flow model, both in 1997 and 1996, under which future cash flows associated with in-process research and development were discounted considering risks and uncertainties related to the viability of potential changes in future target markets and to the completion of the products that will ultimately be marketed by the Company. As a percentage of sales, the gross margin and selling, general and administrative expenses of Itronix are lower than the consolidated financial results of the Company prior to the acquisition. Therefore, the pro forma income statements below reflect a lower gross margin and selling, general and administrative expenses as a percent of consolidated sales. Hence, in order to demonstrate the Company's operating performance versus the previous years, the following unaudited pro forma information presents a summary of consolidated results of operations of the Company as if the acquisition had occurred at the beginning of fiscal 1996, with pro forma adjustments to give effect to amortization of goodwill and intangibles, interest expense on acquisition debt, and certain other adjustments, together with related income tax effects (such pro forma basis, the "Itronix Pro Forma Basis"). (In thousands except per share data).
FISCAL YEAR ENDED FISCAL YEAR ENDED MARCH 31, 1997 MARCH 31, 1996 ----------------- ----------------- Sales..................................... $426,234 $355,886 Cost of sales............................. 183,076 158,602 -------- -------- Gross profit.............................. 243,158 197,284 Selling, general & administrative ex- pense.................................... 122,232 105,383 Product development expense............... 48,515 40,913 Nonrecurring charges...................... 7,149 16,852 Amortization of intangibles............... 8,853 7,886 -------- -------- Operating income.......................... 56,409 26,250 Interest expense.......................... (3,284) (4,998) Interest income........................... 2,785 2,181 Other income, net......................... 633 975 -------- -------- Income from continuing operations before income taxes............................. 56,543 24,408 Provision for income taxes................ 24,974 9,799 -------- -------- Income from continuing operations......... $ 31,569 $ 14,609 ======== ======== Income per share: Basic................................... $ 1.84 $ 0.81 Diluted................................. $ 1.74 $ 0.80 Weighted average shares: Basic................................... 17,200 17,969 Diluted................................. 18,028 18,315
35 The following table and commentary should be read in conjunction with the Consolidated Financial Statements and related Notes to Consolidated Financial Statements located elsewhere in this Prospectus. PERCENT OF SALES
YEARS ENDED MARCH 31, PERCENT CHANGE ------------------- -------------- 1997 (ITRONIX PRO 1998 FORMA BASIS) 1998 VS. 1997 ----- ------------ -------------- Sales........................................ 100.0% 100.0% 11.0% Gross profit................................. 56.5 57.1 10.0 Selling, general & admin. expense............ 29.2 28.7 13.2 Product development expense.................. 11.6 11.4 13.4 Amortization of intangibles.................. 1.2 2.1 (34.1) Operating income............................. 14.4 13.2 21.1 Net income from operations................... 8.8% 7.4% 32.3%
FISCAL 1998 COMPARED TO FISCAL 1997 ON AN ITRONIX PRO FORMA BASIS Sales. For fiscal 1998 consolidated sales increased $46.7 million or 11.0% to $472.9 million as compared to $426.2 million for fiscal 1997 on an Itronix Pro Forma Basis. The increase was primarily attributable to increased demand for communications test products, catalog sales of industrial computing and communications products, and aircraft cabin video information services. Sales of communications test products increased $29.1 million or 13.8% to $240.4 million for fiscal 1998 as compared to $211.3 million for fiscal 1997. The increase is primarily attributable to continued growth in the U.S. market for communications test solutions as a result of network expansions of the local telco service providers. The growth was driven by the needs of communications service providers to provide higher quality networks and to reduce costs through efficiency, which may be gained by using test and monitoring systems. Sales of industrial computing and communications products increased $12.8 million or 9% to $155.0 million for fiscal 1998 as compared to $142.2 million for fiscal 1997 on an Itronix Pro Forma Basis. The increase was primarily attributable to an increase in sales for the Company's catalog-marketed, rack- mounted computers, with a significant portion of sales to customers within the Original Equipment Manufacturer (OEM) market. The overall increase in sales of Industrial Computing and Communication products was partially offset by slightly lower sales of the Company's ruggedized laptop computers. Sales of visual communications products increased $4.7 million or 6.5% to $77.5 million for fiscal 1998 as compared to $72.8 million for fiscal 1997. Sales of the Company's real-time flight information passenger video displays increased as more airlines integrated this product into their in-flight entertainment systems. In addition, the Company has improved its market penetration with additional sales to commercial airline companies. Partially offsetting this increase was a lower sales volume in the video compression and graphical user-interface (GUI) product lines. International sales (defined as sales outside of North America) were $76.1 million or 16% of consolidated sales for fiscal 1998, as compared to $70.8 or 16.6% for fiscal 1997 on an Itronix Pro Forma Basis. Gross profit. Consolidated gross profit increased $24.2 million to $267.4 million or 56.5% of consolidated sales for fiscal 1998 as compared to $243.2 million or 57.1% for fiscal 1997 on an Itronix Pro Forma Basis. The slight decrease in percentage was attributable to a change in the sales mix within the consolidated group along with lower gross margins on the Company's ruggedized laptop computers. Operating expenses. Operating expenses consist of selling, general and administrative expenses; product development expense; amortization of intangibles; and non-recurring expenses. Total operating expenses were $199.1 million or 42.1% of consolidated sales for fiscal 1998 as compared to $186.7 million or 43.8% of 36 consolidated sales for fiscal 1997 on an Itronix Pro Forma Basis. Excluding the impact of the non-recurring charge of $7.1 million related to the impairment of intangible assets during fiscal 1997, operating expenses were $179.6 million or 42.1% of consolidated sales in fiscal 1997, at the same level as fiscal 1998. Selling, general and administrative expense was $138.3 million or 29.2% of consolidated sales for fiscal 1998 as compared to $122.2 million or 28.7% of consolidated sales for fiscal 1997 on an Itronix Pro Forma Basis. The percentage increase was primarily attributable to additional expenses related to information systems upgrades and increased selling expenses due to the increased sales volume within the communications test business. Product development expense was $55.0 million or 11.6% of consolidated sales for fiscal 1998 as compared to $48.5 million or 11.4% of consolidated sales for fiscal 1997 on an Itronix Pro Forma Basis. The Company continues to invest in product development and enhancement within all three product areas. Amortization of intangibles was $5.8 million for fiscal 1998 as compared to $8.9 million for fiscal 1997 on an Itronix Pro Forma Basis. Amortization decreased during fiscal 1998 due to the write-off of goodwill and certain intangibles related to product and distribution transitions at the end of fiscal 1997. Interest. Interest income, net of interest expense, was $1.8 million for fiscal 1998 as compared to net interest expense of $0.5 million for fiscal 1997 on an Itronix Pro Forma Basis. Net interest income increased year to year based on higher average investment balances and lower overall borrowings. Interest expense will increase in future years due to the increase in borrowings. Other income. Other income was $0.7 million for fiscal 1998, essentially at the same level of $0.6 million for fiscal 1997 on an Itronix Pro Forma Basis. Taxes. The effective tax rate, before one time charges, increased for fiscal 1998 to 41% as compared to 40.0% for fiscal 1997, primarily due to increased income in states with higher income tax rates. The effective tax rate after one time charges decreased to 41% for fiscal 1998 from 44.2% for fiscal 1997 due to the limited tax benefits in 1997 of the charges relating to the $20.6 million writeoff of incomplete technology from the Itronix acquisition. Net income. Net income from continuing operations was $41.8 million or $2.40 per share on a diluted basis for fiscal 1998 as compared to $31.6 million or $1.74 per share on a diluted basis and a pro forma basis for fiscal 1997. The increase was primarily attributable to the increase in sales. Net income in future years will be negatively impacted by the rise in interest expense due to the increase in borrowings. Backlog. Backlog at March 31, 1998 was $79.1 million, an increase of 10.3% from $71.7 million at March 31, 1997. 37 HISTORICAL FINANCIAL STATEMENTS The following discussion relates to the actual result of operations of the Company, in which fiscal 1998 includes a full-year of operations of Itronix as compared to fiscal 1997 in which the results of operations included only three months of operations. The following table and commentary should be read in conjunction with the Consolidated Financial Statements and related Notes to Consolidated Financial Statements located elsewhere in this Prospectus.
PERCENT OF PERCENT OF SALES CHANGE ------------------- ------------ YEARS ENDED MARCH 31, 1998 1997 ------------------- VS. VS. 1998 1997 1996 1997 1996 ----- ----- ----- ------ ---- Sales........................................ 100.0% 100.0% 100.0% 30.5% 23.7% Gross profit................................. 56.5 62.1 62.0 18.8 24.0 Selling, general & admin. expense............ 29.2 31.6 33.6 20.8 16.2 Product development expense.................. 11.6 11.9 12.4 27.1 18.7 Nonrecurring charges......................... -- 7.7 5.8 (100.0) 64.8 Amortization of intangibles.................. 1.2 1.9 1.8 (14.1) 32.3 Operating income............................. 14.4 9.1 8.4 107.9 33.1 Net income from continuing operations........ 8.8 4.9 5.4 134.1 13.6
FISCAL 1998 COMPARED TO FISCAL 1997 ON A HISTORICAL BASIS Sales. For fiscal 1998 consolidated sales increased $110.5 million or 30.5% to $472.9 million as compared to $362.4 million for fiscal 1997. The increase was primarily attributable to a full year of operations of Itronix and increased demand for communications test products, catalog sales of industrial computing and communications products, and aircraft cabin video information services. Sales of communications test products increased $29.1 million or 13.8% to $240.4 million for fiscal 1998 as compared to $211.3 million for fiscal 1997. The increase was primarily attributable to continued growth in the U.S. market for communications test solutions as a result of network expansions of the local telco service providers. The growth is driven by the needs of communications service providers to provide higher quality networks and to reduce costs through efficiency, which may be gained by using test and monitoring systems. Sales of industrial computing and communications products increased $76.7 million or 97.8% to $155.0 million for fiscal 1998 as compared to $78.3 million for fiscal 1997. The increase was primarily attributable to a full- year of operations of Itronix in fiscal 1998 as compared to three months of operation in fiscal 1997. In addition, the Company had an increase in sales for its rack-mounted computers. Sales of visual communications products increased $4.7 million or 6.5% to $77.5 million for fiscal 1998 as compared to $72.8 million for fiscal 1997. Sales of the Company's real-time flight information passenger video displays increased as more airlines integrated this product into their in-flight entertainment systems. In addition, the Company has improved its market penetration with additional sales to commercial airline companies. Offsetting this increase was a lower sales volume in the video compression and graphical user-interface (GUI) product lines. Gross profit. Consolidated gross profit increased $42.3 million to $267.4 million or 56.5% of consolidated sales for fiscal 1998 as compared to $225.2 million or 62.1% for fiscal 1997. The decrease in gross margin was attributable to a lower gross margin at Itronix compared with other parts of the Company as well as a change in the sales mix within the consolidated group. Operating expenses. Operating expenses consist of selling, general and administrative expense; product development expense; amortization of intangibles; and non-recurring expenses. Total operating expenses were 38 $199.1 million or 42.1% of consolidated sales for fiscal 1998 as compared to $192.3 million or 53.1% of consolidated sales for fiscal 1997. Excluding the impact of the non-recurring charge of $27.8 million related to the impairment of intangible assets and the write-off of purchased incomplete technology during fiscal 1997, operating expenses were $164.5 million or 45.4% of consolidated sales in fiscal 1997. Selling, general and administrative expense was $138.3 million or 29.2% of consolidated sales for fiscal 1998 as compared to $114.5 million or 31.6% of consolidated sales for fiscal 1997. The percentage decrease was primarily attributable to a full-year of results of Itronix in which the percentage of selling, general and administrative expense to sales for Itronix is less than the consolidated average. Product development expense was $55.0 million or 11.6% of consolidated sales for fiscal 1998 as compared to $43.3 million or 11.9% of consolidated sales for fiscal 1997. The Company continues to invest in product development and enhancement within all three product areas. Amortization of intangibles was $5.8 million for fiscal 1998 as compared to $6.8 million for fiscal 1997. Amortization decreased during fiscal 1998 due to the write-off of goodwill and certain intangibles related to product and distribution transitions at the end of fiscal 1997 and was offset by an increase in goodwill amortization related to the acquisition of Itronix. Interest. Interest income, net of interest expense, was $1.8 million for fiscal 1998 as compared to $2.0 million for fiscal 1997. Interest expense will increase in future years due to the increase in borrowings. Other income. Other income was $0.7 million for fiscal 1998, essentially at the same level of $0.6 million for fiscal 1997. Taxes. The effective tax rate, before one time charges, increased for fiscal 1998 to 41% as compared to 40.5% for fiscal 1997, primarily due to increased income in states with higher income tax rates. The effective tax rate after one time charges decreased to 41% for fiscal 1998 from 49.6% for fiscal 1997 due to the limited tax benefits in 1997 of the charges relating to the $20.6 million writeoff of incomplete technology from the Itronix acquisition. Net income. Net income from continuing operations was $41.8 million or $2.40 per share on a diluted basis for fiscal 1998 as compared to $17.8 million or $0.99 per share on a diluted basis for fiscal 1997. The fiscal 1997 net income included a pretax charge of $27.8 million (with an aftertax effect on earnings per share on a diluted basis of $1.10) related to the write-off of intangible assets and the write-off of purchased incomplete technology. Net income in future years will be negatively impacted by the expected rise in interest expense due to the increase in borrowings. FISCAL 1997 COMPARED TO FISCAL 1996 ON A HISTORICAL BASIS Sales. For fiscal 1997, consolidated sales from continuing operations increased 23.7% to $362.4 million from $293.0 million in fiscal 1996. Sales of communications test products increased 22.8%, or $39.3 million due to increased demand for existing products and a full year of operating results for two acquisitions made in fiscal 1996. Sales of industrial computing and communications products increased 35.3% or $20.4 million primarily driven by revenue at Itronix during the fourth quarter of fiscal 1997. Sales of visual communications products increased 15.3% or $9.7 million principally due to continued strength in aircraft passenger video information systems and color correction products. Backlog from ongoing operations was $71.7 million at March 31, 1997, as compared to $57.3 million at March 31, 1996. International sales were 20% of consolidated sales in fiscal 1997, an increase of 18% over consolidated sales in fiscal 1996. 39 Gross Profit. As a percentage of consolidated sales, gross profit from continuing operations for fiscal 1997 was 62.1%, essentially at the same level as the prior year. Expenses. Selling, general and administrative costs increased 16.2% in fiscal 1997 as compared to fiscal 1996. As a percentage of consolidated sales, selling, general and administrative expenses decreased to 31.6% as compared to 33.6% in the previous year. Administrative and selling expenses increased at a rate slower than revenue growth in the communications test products as a result of the fiscal 1996 acquisitions. Product development expense increased $6.8 million to 11.9% of consolidated sales, compared to 12.4% of sales in fiscal 1996. The increase was a result of additional investment in developing core communications test products as well as the full year effect of product development at Tele-Path Industries, Inc. ("TPI"), a communications test subsidiary which was purchased in September 1995. Additional expense was incurred due to the acquisition of Itronix. Amortization of intangibles increased $1.7 million as a result of the acquisitions in fiscal 1997 and fiscal 1996. During fiscal 1997 nonrecurring charges were $27.8 million as compared to $16.9 million in 1996. The 1997 charges included $20.6 million for incomplete technology which had not reached technological feasibility and had no alternative use, purchased as part of the acquisition of Itronix at the end of the third quarter. In addition, the Company recorded a noncash charge of $7.1 million related to the impairment of intangible assets, principally related to the effects of product and distribution transitions. The charge consisted of a $4.5 million writeoff of goodwill and a $2.6 million writeoff in product technology. Interest expense declined in fiscal 1997 compared to the prior year as a result of lower average borrowings. Interest income increased in fiscal 1997 primarily from higher average cash balances during the year. Taxes. The effective tax rate, before one-time charges, increased in fiscal 1997 to 40.5% as compared to 39.8% in fiscal 1996, primarily due to losses generated in foreign locations without tax benefit. The effective tax rate after one-time charges increased to 49.6% due to limited tax benefits of these charges. These charges included $20.6 million of incomplete technology from the Itronix acquisition which resulted only in a federal tax savings. In addition, the majority of the $7.1 million of intangibles written off represented goodwill which was not deductible for tax purposes. Net Income. Net income from continuing operations in fiscal 1997 was $17.8 million, or $0.99 per share [on a diluted basis], as compared to $0.86 per share on a diluted basis in fiscal 1996. Net income in fiscal 1997 included a pretax charge of $27.8 million for purchased incomplete technology and impaired intangible asset writeoffs with an aftertax effect on earnings per share of ($1.10) on a diluted basis. Net income for the prior fiscal year included a charge for incomplete purchased technology that accounted for $16.9 million with an aftertax effect on earnings per share of ($0.56) on a diluted basis. CAPITAL RESOURCES AND LIQUIDITY The Company broadly defines liquidity as its ability to generate sufficient cash flow from operating activities to meet its obligations and commitments. In addition, liquidity includes the ability to obtain appropriate debt and equity financing and to convert into cash those assets that are no longer required to meet existing strategic and financial objectives. Therefore, liquidity cannot be considered separately from capital resources that consist of current or potentially available funds for use in achieving long-range business objectives and meeting debt service commitments. The Company's liquidity needs arise primarily from debt service on the substantial indebtedness incurred in connection with the Merger and from the funding of working capital and capital expenditures. As of May 31, 1998, the Company had $575.2 million of indebtedness, primarily consisting of $275 million principal amount 40 of the Notes, $260 million in borrowings under the Term Loan Facility and $40 million in borrowings under the new Revolving Credit Facility. On May 21, 1998, the Company terminated its two credit facilities that were in effect prior to the Merger. Cash Flows. The Company's cash and cash equivalents increased $25.1 million during the fiscal year ended March 31, 1998. Net cash provided by operating activities generated $45.3 million after $13.7 million was used for the payment of expenses related to discontinued operations. During the same period, the Company's investing activities totaled $15.0 million primarily for the purchase and replacement of property and equipment. See "--Capital Expenditures" below. Capital Expenditures. The Company's historical capital expenditures since fiscal 1996 have in substantial part resulted from the replacement of existing property and equipment, including computer systems. The Company's capital expenditures (including acquisitions) were $15.9 million, $10.2 million, and $8.2 million for the three fiscal years ended March 31, 1998, 1997 and 1996, respectively. The increase in expenditures for fiscal year 1998 relate principally to the Company continuing to replace existing computer equipment. The Company estimates that for fiscal year 1999, capital expenditures will be similar to historic levels. Working Capital during Fiscal 1998. During fiscal 1998 the Company's working capital was affected as follows. The Company's operating assets and liabilities provided a source of cash of $4.4 million. Inventory levels increased from $40.1 million to $48.9 million, resulting in a $8.7 million use of cash, primarily attributable to the increased volume for the Company's rack-mounted computers. Accounts receivable decreased from $70.9 million to $70.0 million, resulting in a source of cash of approximately $1.0 million. Other current assets increased, resulting in a use of cash of $2.4 million. This increase was primarily attributable to expenses relating to the Merger. Accounts payable increased from $16.9 million to $22.9 million, resulting in a source of cash of $6.0 million as the Company continues to aggressively manage its working capital. Other current liabilities from continuing operations increased $8.5 million due to an increase in deferred revenue due to higher prepaid warranty costs and an increase in accrued income taxes due to the effective tax rate increase. This increase was offset by a decrease in discontinued operations liabilities of $13.7 million, of which approximately $23.0 million was used for the payment of expenses previously provided for offset by an $8.2 million deferred tax adjustment. Other Fiscal 1998 Activities. During fiscal 1998, the Company generated $4.5 million from the exercise of stock options and the issuance of common stock of Dynatech related to the Company's Employee Stock Purchase Plan. The Company repurchased 163,000 shares of its common stock for $5.3 million during the first quarter of fiscal 1998. During the quarter ended December 31, 1997, the Company repaid all of its borrowings under its two then-existing credit facilities. At March 31, 1998, the Company had $180 million in an unused line of credit in those facilities, which were terminated on May 21, 1998 when the Company entered into the Senior Credit Facility. Debt Service. Principal and interest payments under the Senior Credit Facility and interest payments on the Notes represent significant liquidity requirements for the Company. With respect to the $260 million borrowed under the Term Loan Facility (which is divided into four tranches), the Company will be required to make scheduled principal payments of the $50 million tranche A term loan thereunder over its six-year term, with substantial amortization of the $70 million tranche B term loan, $70 million tranche C term loan and $70 million tranche D term loan thereunder occurring after six, seven and eight years, respectively. The $275 million of Notes will mature in 2008 and bear interest at 9 3/4%. The Senior Credit Facility is also subject to mandatory prepayment and reduction in an amount equal to, subject to certain exceptions, (a) 100% of the net proceeds of (i) certain debt offerings by the Company and any of its subsidiaries, (ii) certain asset sales by the Company or any of its subsidiaries, and (iii) casualty insurance, condemnation awards or other recoveries received by the Company or any of its subsidiaries and (b) 50% of the Company's excess cash flow (as defined) for each fiscal year in which the Company exceeds a certain leverage ratio. The Notes are subject to certain mandatory prepayments under certain circumstances. The Revolving Credit Facility matures in 2004, with all amounts then outstanding becoming due. The Company expects that its working capital needs will require it to obtain new 41 revolving credit facilities at the time that the Revolving Credit Facility matures, whether by extending, renewing, replacing or otherwise refinancing the Revolving Credit Facility. No assurance can be given that any such extension, renewal, replacement or refinancing can be successfully accomplished or accomplished on acceptable terms. The loans under the Senior Credit Facility bear interest at floating rates based upon the interest rate option elected by the Company. See "Description of Senior Credit Facility." As a result of the substantial indebtedness incurred in connection with the Merger, the Company's interest expense will be higher and will have a greater proportionate impact on net income in comparison to preceding periods. Total interest expense is expected to be $51 million in fiscal 1999. Covenant Restrictions. The Senior Credit Facility imposes restrictions on the ability of the Company to make capital expenditures and both the Senior Credit Facility and the Indenture governing the Notes limit the Company's ability to incur additional indebtedness. Such restrictions, together with the highly leveraged nature of the Company, could limit the Company's ability to respond to market conditions, to meet its capital spending program, to provide for unanticipated capital investments or to take advantage of business opportunities. The covenants contained in the Senior Credit Facility also, among other things, restrict the ability of the Company (including its subsidiaries) to dispose of assets, incur guarantee obligations, prepay other indebtedness, make restricted payments, create liens, make equity or debt investments, make acquisitions, modify terms of the indenture governing the Notes, engage in mergers or consolidations, change the business conducted by the Company (including its subsidiaries) or engage in certain transactions with affiliates. In addition, under the Senior Credit Facility, the Company is required to satisfy a minimum interest expense coverage ratio and a maximum leverage ratio. These financial tests become more restrictive in future years. The term loans under the Senior Credit Facility (other than the $50 million tranche A term loan) are governed by negative covenants which are substantially similar to the negative covenants contained in the Indenture governing the Notes, which also impose restrictions on the operation of the Company's businesses. See "Description of Senior Credit Facility--Covenants" and "Risk Factors--Restrictive Financing Covenants." Future Financing Sources and Cash Flows. The amount under the Revolving Credit Facility that remained undrawn following the May 1998 Closing of the Merger was $70.0 million. The undrawn portion of this facility will be available to meet future working capital and other business needs of the Company and replaced the Company's previously outstanding credit facilities totaling $180.0 million. The Company believes that cash generated from operations, together with amounts available under the Revolving Credit Facility and any other available sources of liquidity, will be adequate to permit the Company to meet its debt service obligations, capital expenditure program requirements, ongoing operating costs and working capital needs, although no assurance can be given in this regard. The Company's future operating performance and ability to service or refinance the Notes and to repay, extend or refinance the Senior Credit Facility (including the Revolving Credit Facility) will be, among other things, subject to future economic conditions and to financial, business and other factors, many of which are beyond the Company's control. See "Risk Factors--Substantial Leverage; Liquidity." YEAR 2000 The Company has commenced a review of its computer systems and products in order to assess its exposure to Year 2000 issues. The Company is currently in the process of determining the full scope, related costs and action plan to insure that the Company's systems continue to meet its internal needs and those of its customers. The Company expects to make the necessary modifications or changes to its computer information systems to enable proper processing of transactions relating to the Year 2000 and beyond. However, there can be no assurance that Year 2000 costs and expenses will not have a material adverse effect on the Company. In addition, the Company does not currently have complete information concerning the Year 2000 compliance status of its suppliers and customers. In the event that any of the Company's significant suppliers or customers do not successfully and timely achieve Year 2000 compliance, the Company's business or operations could be materially adversely affected. Finally, there can be no assurance that the Company's existing or installed base of products are Year 2000 compliant, or that the Company's products will not be integrated by the Company or its customers with, or otherwise interact with, non-compliant software or other products. Any such product non- 42 compliance may expose the Company to claims from its customers and others, and could impair market acceptance of the Company's products and services, increase service and warranty costs, or result in payment of damages, which in turn could materially adversely affect the Company. NEW PRONOUNCEMENTS During the quarter ended December 31, 1997, the Company adopted Statement of Financial Accounting Standards No. 128, "Earnings per Share," which modifies the calculation of earnings per share ("EPS"). The Standard replaces the previous presentation of primary and fully diluted EPS to basic and diluted EPS. Basic EPS excludes dilution and is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted EPS includes the dilution of common stock equivalents, and is computed similarly to fully diluted EPS pursuant to APB Opinion 15. All prior periods presented have been restated to reflect this adoption. The Financial Accounting Standards Board issued Statement No. 130, "Reporting Comprehensive Income" which establishes standards for the reporting and display of comprehensive income in general- purpose financial statements. This Standard is effective for fiscal periods beginning after December 15, 1997 and its adoption is not expected to have a material impact on the Company's disclosures. The Financial Accounting Standards Board issued Statement No. 131, "Disclosures about Segments of an Enterprise and Related Information," which establishes standards for the reporting of operating segments in the financial statements. This Standard is effective for fiscal periods beginning after December 15, 1997 and its adoption is not expected to have a material impact on the Company's historical financial data. In October, 1997, Statement of Position 97-2, "Software Revenue Recognition" ("SOP 97-2"), was issued which provides guidance on applying generally accepted accounting principles in recognizing revenue on software transactions. SOP 97-2 is effective for transactions entered into in fiscal years beginning after December 15, 1997. The Company will adopt the guidelines of SOP 97-2 as of April 1, 1998 and does not expect adoption to have a material impact on the Company's financial results. 43 THE EXCHANGE OFFER The summary herein of certain provisions of the Registration Rights Agreement does not purport to be complete and reference is made to the provisions of the Registration Rights Agreement, which has been filed as an exhibit to the Registration Statement and a copy of which is available as set forth under the heading "Available Information." TERMS OF THE EXCHANGE OFFER General In connection with the issuance of the Existing Notes pursuant to a Purchase Agreement, dated as of May 14, 1998 between Dynatech, TTC Merger Co. and the Initial Purchasers, the Initial Purchasers and their respective assignees became entitled to the benefits of the Registration Rights Agreement. Under the Registration Rights Agreement, the Company has agreed (i) to file with the Commission within 120 days after May 21, 1998, the date the Existing Notes were issued (the "Issue Date"), the Registration Statement of which this Prospectus is a part with respect to a registered offer to exchange the Existing Notes for the New Notes and (ii) to use its reasonable best efforts to cause the Registration Statement to be declared effective under the Securities Act within 150 days after the Issue Date. The Company will keep the Exchange Offer open for not less than business days after the date notice of the Exchange Offer is mailed to holders of the Existing Notes. The Exchange Offer being made hereby, if commenced and consummated within the time periods described in this paragraph, will satisfy those requirements under the Registration Rights Agreement. Upon the terms and subject to the conditions set forth in this Prospectus and in the Letter of Transmittal, all Existing Notes validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on the Expiration Date will be accepted for exchange. New Notes will be issued in exchange for an equal principal amount of outstanding Existing Notes accepted in the Exchange Offer. Existing Notes may be tendered only in integral multiples of $1,000. This Prospectus, together with the Letter of Transmittal, is being sent to all registered holders of Existing Notes as of . The Exchange Offer is not conditioned upon any minimum principal amount of Existing Notes being tendered for exchange. However, the obligation to accept Existing Notes for exchange pursuant to the Exchange Offer is subject to certain conditions as set forth herein under "--Conditions." Existing Notes shall be deemed to have been accepted as validly tendered when, as and if the Company has given oral or written notice thereof to the Exchange Agent. The Exchange Agent will act as agent for the tendering holders of Existing Notes for the purposes of receiving the New Notes and delivering New Notes to such holders. Based on interpretations by the Staff of the Commission as set forth in no- action letters issued to third parties (including Exxon Capital Holdings Corporation (available May 13, 1988), Morgan Stanley & Co. Incorporated (available June 5, 1991), K-III Communications Corporation (available May 14, 1993) and Shearman & Sterling (available July 2, 1993)), the Company believes that the New Notes issued pursuant to the Exchange Offer may be offered for resale, resold and otherwise transferred by any holder thereof (other than any such holder that is a broker-dealer or an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that (i) such New Notes are acquired in the ordinary course of business, (ii) at the time of the commencement of the Exchange Offer such holder has no arrangement or understanding with any person to participate in a distribution of such New Notes and (iii) such holder is not engaged in, and does not intend to engage in, a distribution of such New Notes. The Company has not sought, and does not intend to seek, a no-action letter from the Commission with respect to the effects of the Exchange Offer, and there can be no assurance that the Staff would make a similar determination with respect to the New Notes as it has in such no-action letters. 44 By tendering Existing Notes in exchange for New Notes and executing the Letter of Transmittal, each holder will represent to the Company that: (i) any New Notes received by such Holder will be acquired in the ordinary course of business, (ii) such Holder will have no arrangements or understanding with any person to participate in the distribution of the Securities or the New Notes within the meaning of the Securities Act, (iii) such Holder is not an "affiliate," as defined in Rule 405 of the Securities Act, of the Company or if it is an affiliate, such Holder will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable, (iv) if such Holder is not a broker-dealer, that it is not engaged in, and does not intend to engage in, the distribution of the New Notes, (v) if such Holder is a broker-dealer, that it will receive New Notes for its own account in exchange for Existing Notes that were acquired as a result of market-making activities or other trading activities and that it will deliver a prospectus in connection with any resale of such New Notes, and (vi) that it is not acting on behalf of any person who could not truthfully make the foregoing representations. Each broker-dealer that receives New Notes for its own account in exchange for Existing Notes where such Existing Notes were acquired by such broker- dealer as a result of market-making or other trading activities, must acknowledge that it will deliver a prospectus meeting the requirements of the Securities Act and that it has not entered into any arrangement or understanding with the Company or an affiliate of the Company to distribute the New Notes in connection with any resale of such New Notes. See "Plan of Distribution." Upon consummation of the Exchange Offer, subject to certain limited exceptions, holders of Existing Notes who do not exchange their Existing Notes for New Notes in the Exchange Offer will no longer be entitled to registration rights and will not be able to offer or sell their Existing Notes, unless such Existing Notes are subsequently registered under the Securities Act (which, subject to certain limited exceptions, the Company will have no obligation to do), except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. Expiration Date; Extensions; Amendments; Termination The term "Expiration Date" shall mean ( business days following the commencement of the Exchange Offer), unless the Company, in its sole discretion, extends the Exchange Offer, in which case the term "Expiration Date" shall mean the latest date to which the Exchange Offer is extended. To extend the Expiration Date, the Company will notify the Exchange Agent of any extension by oral or written notice and will notify the holders of the Existing Notes by means of a press release or other public announcement prior to 9:00 A.M., New York City time, on the next business day after the previously scheduled Expiration Date. Such announcement may state that the Company is extending the Exchange Offer for a specified period of time. The Company reserves the right (i) to delay acceptance of any Existing Notes, to extend the Exchange Offer or to terminate the Exchange Offer and not permit acceptance of Existing Notes not previously accepted if any of the conditions set forth herein under "--Conditions" shall have occurred and shall not have been waived by the Company prior to the Expiration Date, by giving oral or written notice of such delay, extension or termination to the Exchange Agent, or (ii) to amend the terms of the Exchange Offer in any manner deemed by it to be advantageous to the holders of the Existing Notes. Any such delay in acceptance, extension, termination or amendment will be followed as promptly as practicable by oral or written notice thereof to the Exchange Agent. If the Exchange Offer is amended in a manner determined by the Company to constitute a material change, the Company will promptly disclose such amendment in a manner reasonably calculated to inform the holders of the Existing Notes of such amendment. Without limiting the manner in which the Company may choose to make public announcement of any delay, extension, amendment or termination of the Exchange Offer, the Company shall have no obligations to publish, advertise, or otherwise communicate any such public announcement, other than by making a timely release to an appropriate news agency. 45 INTEREST ON THE NEW NOTES The New Notes will accrue interest at the rate of 9 3/4% per annum from the last interest payment date on which interest was paid on the Existing Note surrendered in exchange therefor, or, if no interest has been paid on such Existing Note, from the Issue Date, provided, that if an Existing Note is surrendered for exchange on or after a record date for an interest payment date that will occur on or after the date of such exchange and as to which interest will be paid, interest on the New Note received in exchange therefor will accrue from the date of such interest payment date. Interest on the New Notes is payable on May 15 and November 15 of each year, commencing November 15, 1998. PROCEDURES FOR TENDERING To tender in the Exchange Offer, a holder must complete, sign and date the Letter of Transmittal, or a facsimile thereof, have the signatures thereon guaranteed if required by the Letter of Transmittal, and mail or otherwise deliver such Letter of Transmittal or such facsimile, together with any other required documents, to the Exchange Agent prior to 5:00 p.m., New York City time, on the Expiration Date. In addition, either (i) a timely confirmation of a book-entry transfer (a "Book-Entry Confirmation") of such Existing Notes into the Exchange Agent's account at The Depository Trust Company (the "Book- Entry Transfer Facility") pursuant to the procedure for book-entry transfer described below, must be received by the Exchange Agent prior to the Expiration Date or (ii) the holder must comply with the guaranteed delivery procedures described below. THE METHOD OF DELIVERY OF LETTERS OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDERS. IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. NO LETTERS OF TRANSMITTAL OR OTHER REQUIRED DOCUMENTS SHOULD BE SENT TO THE COMPANY. Delivery of all documents must be made to the Exchange Agent at its address set forth below. Holders may also request their respective brokers, dealers, commercial banks, trust companies or nominees to effect such tender for such holders. The tender by a holder of Existing Notes will constitute an agreement between such holder and the Company in accordance with the terms and subject to the conditions set forth herein and in the Letter of Transmittal. Any beneficial owner whose Existing Notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender should contact such registered holder promptly and instruct such registered holder to tender on his behalf. Signatures on a Letter of Transmittal or a notice of withdrawal, as the case may be, must be guaranteed by any member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States or an "eligible guarantor" institution within the meaning of Rule 17Ad-15 under the Exchange Act (each an "Eligible Institution") unless the Existing Notes tendered pursuant thereto is tendered for the account of an Eligible Institution. If the Letter of Transmittal is signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such person should so indicate when signing, and unless waived by the Company, evidence satisfactory to the Company of their authority to so act must be submitted with the Letter of Transmittal. All questions as to the validity, form, eligibility (including time of receipt) and withdrawal of the tendered Existing Notes will be determined by the Company in its sole discretion, which determination will be final and binding. The Company reserves the absolute right to reject any and all Existing Notes not properly tendered or any Existing Notes which, if accepted, would, in the opinion of counsel for the Company, be unlawful. The Company also reserves the absolute right to waive any irregularities or conditions of tender as to particular Existing Notes. The Company's interpretation of the terms and conditions of the Exchange Offer (including the instructions in the Letter of Transmittal) will be final and binding on all parties. Unless waived, any defects or 46 irregularities in connection with tenders of Existing Notes must be cured within such time as the Company shall determine. Neither the Company, the Exchange Agent nor any other person shall be under any duty to give notification of defects or irregularities with respect to tenders of Existing Notes, nor shall any of them incur any liability for failure to give such notification. Tenders of Existing Notes will not be deemed to have been made until such irregularities have been cured or waived. Any Existing Notes received by the Exchange Agent that is not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned without cost to such holder by the Exchange Agent, unless otherwise provided in the Letter of Transmittal, as soon as practicable following the Expiration Date. In addition, the Company reserves the right in its sole discretion, subject to the provisions of the Indenture, (i) to purchase or make offers for any Existing Notes that remains outstanding subsequent to the Expiration Date or, as set forth under "--Conditions", (ii) to terminate the Exchange Offer in accordance with the terms of the Registration Rights Agreement, (iii) to redeem Existing Notes as a whole or in part at any time and from time to time, as set forth under "Description of Notes--Optional Redemption" and (iv) to the extent permitted by applicable law, to purchase Existing Notes in the open market, in privately negotiated transactions or otherwise. The terms of any such purchases or offers could differ from the terms of the Exchange Offer. ACCEPTANCE OF EXISTING NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES Upon satisfaction or waiver of all of the conditions to the Exchange Offer, all Existing Notes properly tendered will be accepted promptly after the Expiration Date, and the New Notes will be issued promptly after acceptance of the Existing Notes. See "--Conditions." For purposes of the Exchange Offer, Existing Notes shall be deemed to have been accepted as validly tendered for exchange when, as and if the Company has given oral or written notice thereof to the Exchange Agent. In all cases, issuance of New Notes for Existing Notes that are accepted for exchange pursuant to the Exchange Offer will be made only after timely receipt by the Exchange Agent of a Book-Entry Confirmation of such Existing Notes into the Exchange Agent's account at the Book-Entry Transfer Facility, a properly completed and duly executed Letter of Transmittal and all other required documents. If any tendered Existing Notes are not accepted for any reason set forth in the terms and conditions of the Exchange Offer, such unaccepted or such nonexchanged Existing Notes will be credited to an account maintained with such Book-Entry Transfer Facility as promptly as practicable after the expiration or termination of the Exchange Offer. BOOK-ENTRY TRANSFER The Exchange Agent will make a request to establish an account with respect to the Existing Notes at the Book-Entry Transfer Facility for purposes of the Exchange Offer within two business days after the date of this Prospectus. Any financial institution that is a participant in the Book-Entry Transfer Facility's systems may make book-entry delivery of Existing Notes by causing the Book-Entry Transfer Facility to transfer such Existing Notes into the Exchange Agent's account at the Book-Entry Transfer Facility in accordance with such Book-Entry Transfer Facility's procedures for transfer. However, the Letter of Transmittal or facsimile thereof with any required signature guarantees and any other required documents must, in any case, be transmitted to and received by the Exchange Agent at one of the addresses set forth below under "--Exchange Agent" on or prior to the Expiration Date or the guaranteed delivery procedures described below must be complied with. EXCHANGING BOOK-ENTRY NOTES The Exchange Agent and the Book Entry Transfer Facility have confirmed that any financial institution that is a participant in the Book Entry Transfer Facility may utilize the Book-Entry Transfer Facility Automated Tender Offer Program ("ATOP") procedures to tender Existing Notes. Any participant in the Book Entry Transfer Facility may make book-entry delivery of Existing Notes by causing the Book Entry Transfer Facility to transfer such Existing Notes into the Exchange Agent's account in 47 accordance with the Book Entry Transfer Facility's ATOP procedures for transfer. However, the exchange for the Existing Notes so tendered will only be made after a Book-Entry Confirmation of such book-entry transfer of Existing Notes into the Exchange Agent's account, and timely receipt by the Exchange Agent of an Agent's Message (as such term is defined in the next sentence) and any other documents required by the Letter of Transmittal. The term "Agent's Message" means a message, transmitted by the Book Entry Transfer Facility and received by the Exchange Agent and forming part of a Book-Entry Confirmation, which states that the Book Entry Transfer Facility has received an express acknowledgment from a participant tendering Existing Notes that are the subject of such Book-Entry Confirmation that such participant has received and agrees to be bound by the terms of the Letter of Transmittal, and that the Company may enforce such agreement against such participant. GUARANTEED DELIVERY PROCEDURES If the procedures for book-entry transfer cannot be completed on a timely basis, a tender may be effected if (i) the tender is made through an Eligible Institution, (ii) prior to the Expiration Date, the Exchange Agent receives from such Eligible Institution a properly completed and duly executed Letter of Transmittal (or a facsimile thereof) and Notice of Guaranteed Delivery, substantially in the form provided by the Company (by facsimile transmission, mail or hand delivery), setting forth the name and address of the holder of Existing Notes and the amount of Existing Notes tendered, stating that the tender is being made thereby and guaranteeing that within three New York Stock Exchange ("NYSE") trading days after the date of execution of the Notice of Guaranteed Delivery, a Book-Entry Confirmation and any other documents required by the Letter of Transmittal will be deposited by the Eligible Institution with the Exchange Agent and (iii) a Book-Entry Confirmation and all other documents required by the Letter of Transmittal are received by the Exchange Agent within three NYSE trading days after the date of execution of the Notice of Guaranteed Delivery. WITHDRAWAL OF TENDERS Tenders of Existing Notes may be withdrawn at any time prior to 5:00 p.m., New York, City time on the Expiration Date. For a withdrawal to be effective, a written notice of withdrawal must be received by the Exchange Agent prior to 5:00 p.m., New York City time on the Expiration Date at one of the addresses set forth below under "--Exchange Agent." Any such notice of withdrawal must specify the name and number of the account at the Book-Entry Transfer Facility from which the Existing Notes was tendered, identify the principal amount of the Existing Notes to be withdrawn, and specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Existing Notes and otherwise comply with the procedures of such facility. All questions as to the validity, form and eligibility (including time of receipt) of such notice will be determined by the Company, whose determination shall be final and binding on all parties. Any Existing Notes so withdrawn will be deemed not be have been validly tendered for exchange for purposes of the Exchange Offer. Any Existing Notes which have been tendered for exchange but which are not exchanged for any reason will be credited to an account maintained with such Book-Entry Transfer Facility for the Existing Notes as soon as practicable after withdrawal, rejection of tender or termination of the Exchange Offer. Properly withdrawn Existing Notes may be retendered by following one of the procedures described under "--Procedures for Tendering" and "--Book-Entry Transfer" above at any time on or prior to the Expiration Date. CONDITIONS The Company has no obligation to consummate the Exchange Offer if the New Notes to be received by such holder or holders of Existing Notes in the Exchange Offer, upon receipt, will not be tradable by such holder without restriction under the Securities Act and the Exchange Act and without material restrictions under the "blue sky" or securities laws of the several states of the United States. All conditions to the Exchange Offer (with the exception of certain necessary governmental approvals) must be satisfied or waived prior to the Expiration Date. 48 Notwithstanding any other provision of the Exchange Offer, the Company shall not be required to accept for exchange, or to issue New Notes in exchange for, any Existing Notes and may terminate or amend the Exchange Offer, if at any time before the acceptance of such Existing Notes for exchange or the exchange of the New Notes for such Existing Notes, any of the following events shall occur: (a) there shall be threatened, instituted or pending any action or proceeding before, or any injunction, order or decree shall have been issued by, any court or governmental agency or other governmental regulatory or administrative agency or commission (i) seeking to restrain or prohibit the making or consummation of the Exchange Offer or any other transaction contemplated by the Exchange Offer, or assessing or seeking any damages as a result thereof, or (ii) resulting in a material delay in the ability of the Company to accept for exchange or exchange some or all of the Existing Notes pursuant to the Exchange Offer; or any statute, rule, regulation, order or injunction shall be sought, proposed, introduced, enacted, promulgated or deemed applicable to the Exchange Offer or any of the transactions contemplated by the Exchange Offer by any government or governmental authority, domestic or foreign, or any action shall have been taken, proposed or threatened, by any government, governmental authority, agency or court, domestic or foreign, that in the sole judgment of the Company might directly or indirectly result in any of the consequences referred to in clauses (i) or (ii) above or, in the sole judgment of the Company, might result in the holders of New Notes having obligations with respect to resales and transfers of New Notes which are greater than those described in the interpretation of the Commission referred to on the cover page of this Prospectus, or would otherwise make it inadvisable to proceed with the Exchange Offer; or (b) there shall have occurred (i) any general suspension of or general limitation on prices for, or trading in, securities on any national securities exchange or in the over-the-counter market, (ii) any limitation by a governmental agency or authority which may adversely affect the ability of the Company to complete the transactions contemplated by the Exchange Offer, (iii) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States or any limitations by any governmental agency or authority which adversely affects the extension of credit or (iv) a commencement of a war, armed hostilities or other similar international calamity directly or indirectly involving the United States, or, in the case of any of the foregoing existing at the time of the commencement of the Exchange Offer, a material acceleration or worsening thereof; or (c) any changes (or any development involving a prospective change) shall have occurred or be threatened in the business, properties, assets, liabilities, financial condition, operations, results of operations or prospects of the Company and its subsidiaries taken as a whole that, in the sole judgment of the Company is or may be adverse to the Company, or the Company shall have become aware of facts that, in its sole judgment have or may have adverse significance with respect to the value of the Existing Notes or the New Notes; which in the sole judgment of the Company in any case, and regardless of the circumstances (including any action by the Company) giving rise to any such condition, makes it advisable to proceed with the Exchange Offer and/or with such acceptance for exchange or with such exchange. The foregoing conditions are for the sole benefit of the Company and may be asserted by the Company regardless of the circumstances giving rise to any time and from time to time in its sole discretion. The failure by the Company at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right and each such right shall be deemed an ongoing right which may be asserted at any time and from time to time. In addition, the Company will not accept for exchange any Existing Notes tendered, and no New Notes will be issued in exchange for any such Existing Notes, if at such time any stop order shall be threatened or in effect with respect to the Registration Statement of which this Prospectus constitutes a part or the qualification of the Indenture under the Trust Indenture Act of 1939. 49 EXCHANGE AGENT State Street Bank and Trust Company has been appointed as Exchange Agent for the Exchange Offer. Questions and requests for assistance and requests for additional copies of this Prospectus or of the Letter of Transmittal should be directed to the Exchange Agent addressed as follows: By Mail: By Overnight Carrier State Street Bank and Trust Company State Street Bank and Trust Company P.O. Box 778 Two International Place Boston, Massachusetts 02102 Boston, Massachusetts 02110 Attention: Corporate Trust Department Attention: Corporate Trust Department Kellie Mullen Kellie Mullen By Hand: in New York (as Drop Agent) By Hand: in Boston State Street Bank and Trust Company, State Street Bank and Trust Company N.A. Two International Place 61 Broadway, 15th Floor Fourth Floor, Corporate Trust Corporate Trust Window Boston, Massachusetts 02110 New York, New York 10006 For Information Call: (617) 664-5587 By Facsimile Transmission (for Eligible Institutions only): (617) 664-5314 Attention: Corporate Trust Department Confirm by Telephone: (617) 664-5314 FEES AND EXPENSES The expenses of soliciting tenders pursuant to the Exchange Offer will be borne by the Company. The principal solicitation for tenders pursuant to the Exchange Offer is being made by mail; however, additional solicitations may be made by telegraph, telephone, telecopy or in person by officers and regular employees of the Company. The Company will not make any payments to brokers, dealers or other persons soliciting acceptances of the Exchange Offer. The Company, however, will pay the Exchange Agent reasonable and customary fees for its services and will reimburse the Exchange Agent for its reasonable out-of-pocket expenses in connection therewith. The Company may also pay brokerage houses and other custodians, nominees and fiduciaries the reasonable out-of-pocket expenses incurred by them in forwarding copies of the Prospectus and related documents to the beneficial owners of the Existing Notes, and in handling or forwarding tenders for exchange. The expenses to be incurred by the Company in connection with the Exchange Offer will be paid by the Company, including fees and expenses of the Exchange Agent and Trustee and accounting, legal, printing and related fees and expenses. The Company will pay all transfer taxes, if any, applicable to the exchange of Existing Notes pursuant to the Exchange Offer. If, however, New Notes or Existing Notes for principal amounts not tendered or accepted for exchange are to be registered or issued in the name of any person other than the registered holder of the 50 Existing Notes tendered, or if tendered Existing Notes are registered in the name of any person other than the person signing the Letter of Transmittal, or if a transfer tax is imposed for any reason other than the exchange of Existing Notes pursuant to the Exchange Offer, then the amount of any such transfer taxes (whether imposed on the registered holder or any other persons) will be payable by the tendering holder. If satisfactory evidence of payment of such taxes or exemption therefrom is not submitted with the Letter of Transmittal, the amount of such transfer taxes will be billed directly to such tendering holder. CONSEQUENCES OF FAILURE TO EXCHANGE Holders of Existing Notes who do not exchange their Existing Notes for New Notes pursuant to the Exchange Offer will continue to be subject to the restrictions on transfer of such Existing Notes as set forth in the legend thereon as a consequence of the issuance of the Existing Notes pursuant to exemptions from, or in transactions not subject to, the registration requirements of the Securities Act and applicable state securities laws. In general, the Existing Notes may not be offered or sold, unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. The Company does not currently anticipate that it will register the Existing Notes under the Securities Act. To the extent that Existing Notes are tendered and accepted in the Exchange Offer, the trading market for untendered and tendered but unaccepted Existing Notes could be adversely affected. 51 BUSINESS The Company develops, manufactures and sells market-leading test, analysis, communications and computing equipment in three product categories: . Communications Test. The Company believes that TTC is the second largest U.S. provider of communications test instruments (by U.S. sales). TTC provides products to communications service providers (such as the RBOCs, long-distance companies and competitive access providers), service users (such as large corporate and government network operators), and manufacturers of communications equipment and systems. TTC's broad test and analysis product line ranges from portable units (used by field service technicians to test telephone and data communications lines and services) to centralized test and monitoring systems installed in telephone company central offices. The Company's communications test business accounted for 51% of its sales (or approximately $240.4 million), and a higher percentage of its EBITDA (as defined), for fiscal 1998. . Industrial Computing and Communications. The Company addresses two distinct segments of the North American ruggedized computer market. ICS is the only significant direct marketer of computer products and systems designed to withstand excessive temperatures, dust, moisture and vibration in harsh operating environments such as production facilities. ICS markets to engineers, scientists and production managers through its widely recognized Industrial Computer Source-Book catalogs. Itronix sells ruggedized portable communications and computing devices used by field-service workers for telephone companies, utilities, insurance companies and other organizations with large field-service workforces. The Company's industrial computing and communications business accounted for 33% of the Company's sales (or approximately $155.0 million), and a lower percentage of its EBITDA, for fiscal 1998. . Visual Communications. The Company's visual communications business consists principally of two market-leading niche-focused subsidiaries: (i) AIRSHOW is the world leader in passenger cabin video information display systems and information services for the general and commercial aviation markets; and (ii) da Vinci is the world leader in digital color enhancement systems used in the process of transferring film images into electronic signals--a process commonly used to transfer film images to video for use in the production of television commercials and programming. The Company's visual communications business accounted for 16% of the Company's sales (or approximately $77.5 million), and a higher percentage of its EBITDA, for fiscal 1998. For fiscal 1998, the Company generated sales and EBITDA of $472.9 million and $86.9 million, respectively. COMPETITIVE STRENGTHS The following characteristics contribute to the Company's competitive position and outlook. . Leading Market Positions. The Company's principal businesses occupy the #1 or #2 overall position in their respective principal markets. TTC, which is the Company's largest subsidiary and operates the Company's communications test business in a highly fragmented market, has in recent years held the #1 or #2 position in market segments accounting for an estimated 70% of its test instrument sales. ICS is the only significant direct marketer of ruggedized industrial computers and Itronix is the leading supplier of ruggedized portable notebook computers to U.S. telecommunications companies. AIRSHOW and da Vinci have the #1 shares in their respective niche markets. The Company's market leadership is enhanced by its well known brand names, including FIREBERD and T-BERD test instruments, the Industrial Computer Source- Book catalogs, and the AIRSHOW map system. . Double-Digit Market Growth. The Company participates in market segments that management believes have been growing at least 10% annually in recent years. Between fiscal 1995 and 1998, the Company increased sales and EBITDA at compound annual growth rates of 25% and 27%, respectively (15% and 20%, respectively, excluding the impact of acquisitions), rates which management believes 52 exceed the composite sales growth rate for the market segments the Company addresses. The growth of the communications test instrument market, the Company's largest, is driven in part by the growth of telecommunications equipment and services. . High-Margin, Cash-Generative Business. The Company's gross profit and EBITDA margins were, as a percent of sales, 56.5% and 18.4%, respectively, for fiscal 1998. Management believes the Company's strong profitability is attributable to its leading market positions, its extensive sales and distribution networks, its entrenched customer relationships and a management culture emphasizing product quality and customer service and support, rather than price-based competition. The Company's strong profitability, combined with relatively low capital expenditure requirements (averaging 3% of sales since 1995), provides cash flow to fund the Company's growth strategy and has facilitated a cumulative investment of approximately $165 million in product development from the beginning of fiscal 1995 through fiscal 1998. . High Installed Base of Products. As leaders in each of their respective served markets, the Company's principal businesses enjoy high installed product bases, which the Company believes generally provide a competitive advantage in selling product enhancements, upgrades, replacements and aftermarket parts and service. For example, the Company has sold over 100,000 of its communications test instruments (representing over $1.0 billion in customer investment), the majority of which the Company believes are currently in service. This installed base also represents a substantial investment by customers in training on the Company's communications test products, a familiarity that the Company capitalizes on in selling and marketing its products and in the development of new products. . Extensive Sales and Distribution Network with Longstanding Customer Relationships. Management believes that each of the Company's principal businesses enjoys one of the most extensive, effective and highly trained sales and distribution networks in its respective principal markets. The communications test business, for example, has a 180-person U.S. sales organization comprising predominantly engineers and technical professionals, who undergo rigorous, ongoing education and training. The Company has been selling to service providers such as AT&T, MCI, GTE and Bell Atlantic (or their predecessors) since prior to the early 1980s. The Industrial Computer Source-Book (over six million copies distributed in fiscal 1998) is the most widely recognized catalog of ruggedized industrial computer systems by scientists and engineers. These purchasers rely upon ICS's sales staff, comprised predominantly of electrical engineers, to solve compatibility and functionality issues in configuring the systems. . Experienced Management Team with Substantial Equity Ownership. Led by CEO John F. Reno, a 23-year Dynatech veteran, the senior management of each of the Company's businesses has on average more than 15 years of industry experience. As a result of the Recapitalization and related transactions, approximately 350 senior managers and key employees collectively own or have options to acquire approximately 25% of Dynatech's common stock on a fully diluted basis. BUSINESS STRATEGY The Company intends to pursue the following strategies: . Leverage Leading Market Positions. The Company believes that its leading market positions provide it with several competitive advantages in comparison to smaller market participants, particularly in its communications test business, and position it to expand its business by (i) spreading product development costs over a larger sales and unit base, (ii) leveraging its sales and marketing resources and customer relationships to sell new and enhanced products through established channels, and (iii) taking advantage of its high installed base of instruments to generate incremental sales for product enhancements, upgrades, replacements and service. . Address New Market Segments. The Company intends to continue to develop products to address new market segments in each of its businesses and thereby expand the size of its total served market. For 53 example, the Company currently addresses approximately two-thirds of the $2.1 billion communications test instrument market and is beginning to address segments within the $1.0 billion communications test and monitoring systems market. With product line extensions and additions, the Company can expand the size of its served market while leveraging its extensive sales and distribution network. . Pursue Strategic Acquisitions. Since the end of fiscal 1993, the Company has focused on its higher-growth, more profitable market-leading businesses, selling 25 non-core businesses for gross proceeds of $211 million and acquiring five complementary businesses. The Company intends to continue to pursue strategic acquisitions that complement its existing businesses and further expand its product lines and technological capabilities. The communications test instrument market is highly fragmented, which management believes provides significant opportunities for future strategic acquisitions. With the Company's economies of scale, well-established sales and marketing channels and customer relationships, the Company believes it can, through selective acquisitions, improve profitability while expanding the breadth of its product line and enhancing its technological expertise. . Increase International Penetration. The Company generated approximately 87% of sales for fiscal 1998 in North America, primarily in the United States, where it has established market-leading positions in each of its principal businesses. The Company believes there are significant opportunities to expand its international business. For example, while the Company generated only 11% of its communications test sales from markets outside North America during fiscal 1998, the $900 million international market represents an estimated 43% of the global communications test instrument market for the same period and grew approximately 12% from 1996 to 1997. INDUSTRY OVERVIEW Communications Test Market Overview. The Company believes that the worldwide market for communications testing is approximately $3.1 billion, comprising the $2.1 billion communications test instrument market and the $1.0 billion test and monitoring systems market. Test instruments are used in the design, manufacturing, installation and maintenance of communications equipment and networks while test and monitoring systems automate the process of detecting, isolating and resolving faults within a communications network. TTC currently addresses approximately two-thirds of the $2.1 billion test instruments market, primarily in North America, and is beginning to address segments within the $1.0 billion test and monitoring systems market. Given the growth of communications networks, the multiplicity of communications technologies and the broad range of applications at various points in a network, there are numerous different tests and analyses necessary for communications service providers and users to install, maintain and troubleshoot communications networks. As a result, the communications test instrument market is highly fragmented with many competitors, most of which address only selected niches within the overall market. The Company estimates that there are approximately 50 competitors in the communications test instrument market having sales of over $1 million. A small number of larger companies compete in many segments of the overall market, including Hewlett- Packard Company, which the Company believes is the worldwide overall market leader and which competes in many of the same segments as the Company. Other significant participants in the overall market include Tektronix, Inc., Wandel & Goltermann GmbH & Co. and Wavetek Corporation (which have recently announced a proposed merger), and Network General Corporation. The schematic below illustrates some of the applications of communications test instruments in communications networks throughout the overall industry (including applications that the Company does not currently address): 54 [SCHEMATIC] [description for Edgar filing: A schematic showing, in the center, a cloud labeled "PSTN and Backbone" within which are icons representing Telco CO central offices which are labeled as follows: "Customers responsible for production, installation maintenance of packetcell switching" and "Customers responsible for producing, installing, and maintaining transport equipment." Around the periphery of the schematic are the following icons, designations and labels: an office building, designated "Business" and labeled "LAN oriented applications requiring the testing and monitoring of private networks" and "Customers responsible for support of the "service" that interfaces with commercial customers' CPE"; an icon of a house, designated "Residence," with no label; an icon of a building with a satellite dish, designated "CATV Head-End," with no label; an icon of a building designated "Mobil Telephone Switching office," labeled as described below; and an icon of a radio tower, designated "Cell Site," labeled "Customers responsible for installing, maintaining, and manufacturing the RF portion of wireless networks and portable phones." The Mobil Telephone Switching office icon and one of the Telco CO icons are connected by a line and together labeled "Customers who need to provision and test TDM services carried by switches, DCSs, and similar high end equipment" (with the Telco CO icon connected by another line to the Cell Site icon). The Business icon is connected to a Telco CO icon by a line labeled "Customers responsible for constructing, pre-qualifying, and maintaining engineered copper and fiber facilities;" and the Residence icon is connected to that same Telco CO icon by a line labeled "Customers responsible for installing and maintaining residential and small business service." The residence icon is also connected to the CATV Head-End icon by a line labeled "Customers who install and maintain CATV equipment and services."] Industry Trends. Growth in the communications test instrument market is driven in part by growth in the number of service providers, increased demand for communications services and the introduction of new communications protocols. Deregulation and privatization of the worldwide telecommunications industry has produced increased competition and a proliferation of service providers. To compete, communications providers must accelerate their network deployment, maintain and upgrade existing infrastructures, and continue to increase their quality of service, all while also reducing cost structures. In addition, the growth of the volume of voice traffic, LAN backbones and interconnections, high-speed interconnects, Internet access and cellular and other wireless communications systems have led to the deployment of new high- speed transmission technologies such as Synchronous Optical Network ("SONET"), Asynchronous Transfer Mode ("ATM"), frame relay and Integrated Services Digital Network ("ISDN"). The Company believes that these trends have driven overall communications test instrument industry growth of approximately 10-12% annually in recent years. Growth rates vary widely across segments of the market and are typically higher in segments that support the development of high growth communications services such as ATM, frame relay, SONET and wireless services. The Company believes the communications test and monitoring systems market is growing at approximately 12% annually, driven by the needs of service providers to provide higher quality networks and to reduce costs through efficiency, which may be gained by using test and monitoring systems. Industrial Computing and Communications The Company's industrial computing and communications business addresses two markets: (1) the market for ruggedized rack-mounted computers, which is characterized by thousands of smaller customers who typically order fewer than ten units each, and (2) the market for ruggedized portable computers, which is characterized by a more concentrated group of larger customers that typically order large quantities of units. Ruggedized Rack-Mounted Computers. The Company believes that the global market for ruggedized industrial computer products currently exceeds $1.0 billion annually, split roughly evenly between North America and the rest of the world. The Company estimates that this global market has been growing approximately 10% annually in recent years and will grow at approximately 12% through 2001, driven by the 55 increased use of computers in harsh environments. The market consists of sales of (i) modular component products, which include chassis and CPUs sold separately and integrated by the customer, and (ii) fully integrated systems, which consist of a considerably broader product offering that is fully integrated into complete systems prior to sale. The Company believes that modular component products and fully integrated systems each account for approximately half of the total global market. ICS competes primarily in the fully integrated systems segment of the market and focuses on the direct marketing of its products to engineers and scientists, purchasing one to ten units through its catalogs, utilizing a proprietary database developed over many years. In ICS's target market, ICS's principal competitors include Texas Microsystems Inc., the I-Bus Division of Maxwell Technologies, Inc., American Advantech Corp. and Diversified Technology, Inc. Other significant competitors in the overall market include IBM and Siemens AG. Ruggedized Portable Computers. The market for ruggedized portable computers consists of customers with large mobile workforces in industries such as telecommunications, utilities, insurance and others that employ service and maintenance technicians for a variety of products. The Company estimates that the global market for ruggedized portable notebook computers, Itronix's principal market, currently exceeds $400 million, and believes this market has grown approximately 16% in 1997. In this market, because of the relatively small number of customers with large field-service work forces, the timing and size of whose orders are irregular, growth rates vary widely. Ruggedized portable computers provide field workers with the ability to install, diagnose and maintain company and customer equipment and collect critical information from remote locations. The critical feature of ruggedized portable computers is the ability to operate reliably in adverse environments and work conditions while withstanding mechanical shock, vibration, moisture and extreme temperatures. Itronix is the market leader in sales to U.S. telecommunications service providers, whose large field service personnel require portable computers to collect data from various remote locations. Itronix's competitors in the fully-ruggedized portable notebook computer market include Panasonic Industrial Co. (which the Company believes is the worldwide market leader) and a number of smaller competitors, as well as competition from manufacturers of competing mass-market "semi-rugged" mobile computers, which constrains the pricing of premium portable ruggedized products like Itronix's. Producers of ruggedized portable computers also face indirect competition from off-the- shelf portable computers and single-purpose diagnostic and data collection instruments. Visual Communications AIRSHOW. AIRSHOW addresses a segment of the overall market for information and entertainment systems used by passengers of commercial and general aviation aircraft. The market is driven by growth in aircraft production and demand by aircraft passengers to receive real-time video or data information while the aircraft is in the air. Management projects estimated growth in new general aviation aircraft production of 20% in 1998. AIRSHOW has a leadership position in a market niche for passenger cabin video information systems for the general aviation and commercial airline markets. On June 19, 1998 the Company acquired Pacific Systems Corporation, a designer and manufacturer of customer specified avionics and integrated cabin management equipment for the corporate and general aviation market, which is intended to complement AIRSHOW's existing offerings. See "--Products and Services." da Vinci. da Vinci produces digital color correction systems, which are a component of telecine systems used by video post production and commercial production facilities to enhance and color match images as they are transferred from film to video tape for editing and distribution. The principal application of da Vinci's color correction system is to conform and enhance color in the film editing process and to provide color to black and white films and video images. da Vinci's products occupy the leadership position in this small niche market, growth in which is driven primarily by the introduction of new video technologies and standards within the film and video production industry. PRODUCTS AND SERVICES Communications Test Overview. TTC provides a wide range of test and analysis products, service and support that enable customers worldwide to develop, manufacture, install and maintain communications networks and equipment. 56 TTC's products include a broad portfolio of test instruments, test systems, software and professional services that address multiple technologies and applications at various locations in communications networks. TTC's test instrument products address two key categories of applications in communications networks: (i) transmission testing between service providers' central offices ("digital transport") and between a service provider's central office and its customers (the "local loop"), and (ii) network services testing by both service providers and users of a broad range of technologies and services delivered principally to business customers. In addition, TTC is expanding its product offerings for the communications test and monitoring systems market. TTC's sales were $116.1 million in fiscal 1994, $143.1 million in fiscal 1995, $172.0 million in fiscal 1996, $211.3 million in fiscal 1997 and $240.4 million in fiscal 1998, representing a 20% compound annual growth rate. Transmission Testing. TTC produces a wide range of products that test and monitor the physical transmission of voice and data signals across a service provider's network of transmission circuits, cables, connectors and related network components in the central office and local loop. Domestic and international service providers use TTC's transport test products to install and maintain high-speed transmission circuits. Service providers have employed such circuits as inter-office links to connect voice and data transmission between long-distance carriers, local exchange carriers and wireless carriers. More recently, transmission circuits employing newer technologies, such as ISDN, SONET and ATM, have been proliferating as more analog networks are being upgraded as customers demand improvements to facilitate high-speed data transmission. TTC's products cover most widely accepted existing and emerging technologies in its markets, with average selling prices ranging from $5,000 for a handheld unit to $45,000 for a fully-featured portable instrument to $70,000 for a test system. Service providers use TTC's local loop test products to install and maintain voice telephone services, ISDN, digital data system ("DDS"), T1 lines, and fiber optic facilities between the service providers' local central offices and the customers' premises. For example, technicians use products such as the T-BERD 209OSP, a ruggedized field service test set, to perform fault location and data quality testing of voice or data circuits in the local loop. With the increased competition among service providers and the attendant workforce downsizing of incumbent local service providers such as the RBOCs, TTC designs its local loop test products to assist such customers in improving service quality and productivity while reducing costs. Network Services Testing. TTC's network services products test communications technologies and services employed primarily by businesses, including their physical transmission facilities, voice services, and data services such as ATM, frame relay and ISDN. TTC's FIREBERD data communications analyzers, for example, measure performance of a wide range of network transmission equipment utilized on a business customer's premises and have a modular construction to facilitate simple upgrades as new technologies and services are employed. TTC's FIREBERD 500 Internetwork Analyzer monitors and tests network traffic between a LAN and WAN and can analyze numerous communications protocols. In addition, TTC manufactures portable, hand-held test instruments that enable service technicians to install or repair networks. Communications Test and Monitoring Systems. TTC historically has focused on the communications test instrument market, which continues to account for the predominance of TTC's sales. However, TTC has been developing products to address the $1.0 billion communications test and monitoring systems market. For example, the CENTEST 650 was developed to automate the monitoring and testing of DS0, DS1 and DS3 signals so that service providers can identify network trouble spots quickly and direct mobile repair crews more efficiently from a central location. In addition, TTC is devoting significant resources to develop additional products for the communications test and monitoring systems market. Industrial Computing and Communications Overview. The Company's industrial computing and communications business consists of two subsidiaries addressing different segments of the ruggedized computer market: (1) ICS, primarily a direct marketer of rack-mounted computer products and systems used by engineers, scientists and others in industrial or otherwise harsh 57 operating environments, and (2) Itronix, acquired by the Company in December 1996, which produces mobile computing and communications devices used by companies with field service organizations such as telephone companies and utilities. ICS generally sells to thousands of small accounts, which typically order fewer than ten units, whereas Itronix sells to a more concentrated group of large organizations that typically order large quantities of units. Industrial Computer Source. ICS employs a direct marketing strategy with its widely recognized Industrial Computer Source-Book catalogs, proprietary target customer database and highly trained sales force of electrical engineers to sell a broad range of integrated industrial computers, input/output devices, and communication and accessory products. ICS primarily sells fully customized integrated systems that its sales force configures to address a customer's particular computing needs. ICS is geared to serving a large number of customers which typically order fewer than ten units per order. Over the past three years, ICS has sold to over 12,000 customers with an average order size of approximately $3,000. ICS mailed over six million catalogs in fiscal 1998 to a proprietary list of over 250,000 scientists, engineers and production managers. ICS offers rack-mounted personal computers for use in environments other than homes and offices, including a wide range of commercial and communications applications. Products include ruggedized computers and remote terminals designed for operation in adverse environments (exposure to vibration, noise, temperature fluctuations and extremes, dust, moisture, electromagnetic fields and other hazards). ICS designs, configures and assembles its products but generally sources components from third-party vendors and contract manufacturers. ICS also uses its in-house CPU design capabilities to sell customized modular products and subsystems to systems integrators. ICS's sales were $36.6 million in fiscal 1994, $44.8 million in fiscal 1995, $57.9 million in fiscal 1996, $60.5 million in fiscal 1997, and $83.8 million in fiscal 1998, representing a 23% compound annual growth rate. Itronix. Itronix is the leading supplier of portable, networked notebook computing and communications devices used by field-service technicians in the U.S. telecommunications industry. These products are carried by field-service technicians who use them in a broad range of environments to communicate-- either through wireline or wireless connections--to a central office. Customers use Itronix's mobile computing products to automate dispatching, work management and field reporting processes. Itronix also targets utilities, insurance companies, and other organizations seeking to increase the efficiency of their field-service personnel. Service technicians often make multiple service calls to different locations without returning to a base office. The use of networked computing devices allows for more effective dispatching to service sites and provides two-way communications with technicians. Itronix's flagship product provides technicians with the ability to access engineering data and customer service histories, or to collect and transmit key information regarding their service calls to a central database. Itronix currently produces two hardware product lines, the X-C Series of laptop computers and the T Series of smaller handheld computing devices. Itronix's flagship product line, the X-C series, is a rugged laptop computer that features functionality and power that is similar to commodity laptops yet is designed to withstand harsh environments, including heat, cold, rain and the shock and vibration found in service vehicles. The X-C is also an integrated communications device with options for both wired and wireless communications. Other features include intelligent battery-life management and touch screen functionality. Itronix, which the Company acquired on December 31, 1996, is facing significant manufacturing and marketing challenges and operated at a modest loss for fiscal 1998. Management is currently implementing a plan designed to (1) reduce manufacturing costs by renegotiating component costs, outsourcing non-core manufacturing activities and redesigning its products and (2) reposition its premium niche against new market competition from "semi-rugged" and mass market products. See "Risk Factors--Risks Relating to Itronix." Itronix's sales were $62.8 million in fiscal 1996, $81.6 million in fiscal 1997, and $71.2 million in fiscal 1998. 58 Visual Communications Overview. The Company's principal visual communications businesses are AIRSHOW and da Vinci. The Company's total visual communications sales were $46.9 million in fiscal 1994, $55.2 million in fiscal 1995, $63.1 million in fiscal 1996, $72.8 million in fiscal 1997 and $77.5 million in fiscal 1998, representing a 13% compound annual growth rate. AIRSHOW. AIRSHOW primarily manufactures passenger cabin video information display systems for the general and commercial aviation markets, selling its equipment to airlines, aircraft manufacturers, and aircraft electronic system (avionics) installation centers. AIRSHOW also provides information services by collecting data from various information service providers and transmitting news, weather and financial information as text and graphics to aircraft equipped with AIRSHOW Network products. AIRSHOW systems are installed on over 3,000 general aviation aircraft and on approximately 100 commercial airlines. The AIRSHOW moving map system and real-time flight information passenger video displays are offered across general and commercial aviation markets with variations in equipment interface for different aircraft and video systems types. The AIRSHOW Network is an extension of the moving map system and includes a real-time data communications system. AIRSHOW Network is now offered as an option by leading corporate aircraft manufacturers such as Bombardier Inc., The Cessna Aircraft Company, Inc., Dassault Falcon Jet Corp., Gulfstream Aerospace Corporation and Learjet Inc. AIRSHOW recently introduced its AIRSHOW TV service which provides for reception of direct broadcast satellite TV aboard general aviation aircraft which operate within the continental U.S. This service is being primarily marketed to the general aviation market. da Vinci. da Vinci produces digital color correction systems, which are a component of telecine systems used by video post production and commercial production facilities to enhance and color match images as they are transferred from film to video tape for editing and distribution. The principal application of da Vinci's color correction system is to conform and enhance color in the film editing process and to provide color to black and white films and video images. da Vinci products occupy the leadership position in this small niche market, growth in which is driven primarily by the introduction of new video technologies and standards within the film and video production industry. Other Subsidiaries. The Company's other visual communications subsidiaries are: DataViews, which provides tools for software developers; and Parallax Graphics, Inc., which the Company plans to close operations over time. On June 30, 1998, the Company sold the assets and certain liabilities of ComCoTec, Inc. for a total sale price of $21.0 million. PRODUCT DEVELOPMENT For each of the Company's businesses, the development of new and enhanced products is a key element of its strategy, designed to further penetrate served markets, address new markets and reduce costs. From the beginning of fiscal 1994 through fiscal 1998, consolidated product development expense was approximately $192 million, representing an average of 12.2% of sales per year. Consolidated product development expense was 12.6% of sales ($30.6 million) in fiscal 1995, 12.4% of sales ($36.5 million) in fiscal 1996, 11.9% of sales ($43.3 million) in fiscal 1997 and 11.6% of sales ($55.0 million) in fiscal 1998. The Company anticipates product development spending to continue at similar levels as a percentage of sales in the future. See "Risk Factors-- Rapid Technological Change; Challenges of New Product Introductions." From the beginning of fiscal 1994 through fiscal 1998, the Company invested approximately $133 million in the development of communications test products. In fiscal 1998, the Company introduced a significant number of new test instrument products including NetAnalyst, a client/server-based software product that will allow users to centrally test the entire network from the network operations center, the TPI 550E ISDN test set which provides complete ISDN testing in a portable instrument, and the T-BERD 950 multi-service test set. The Company has also made recent Pentium product introductions in its industrial computing and communications product lines and has significantly expanded its AIRSHOW product offerings. 59 The Company uses its customer relationships to focus its product development strategy on customer needs and emerging technologies. CUSTOMERS AND MARKETING Overview. The Company markets its products to a diverse customer base. The Company's products are sold to a broad range of communications service providers, including RBOCs, long-distance carriers, competitive access providers, wireless service companies, independent telephone companies, cable television operations, and a wide array of computer and data communication users, corporate and industrial customers, and scientific organizations. Most of the Company's revenues are generated through direct selling. The Company also uses distributorships and representative relationships to sell its products in areas of the United States and the rest of the world with relatively low sales volume. The Company's sales of goods and services to various agencies of the United States federal government were approximately $12.8 million, $17.5 million and $19.3 million in fiscal 1996, 1997 and 1998, respectively. Sales of goods and services to the agencies of the United States federal government are made pursuant to standard contracts which generally permit such agencies to cancel or revise the contracts at will. No single customer accounted for more than 10% of sales in any of these three years. Communications Test. In the U.S., TTC markets and sells its communications test and analysis products primarily through a 180-person direct sales team comprising predominantly engineers and technical professionals who undergo intensive initial training on TTC's and its competitors' products. Internationally, TTC employs a 60-person direct sales team for key markets along with distributors and representatives to market and sell its products. TTC's principal customers are communications service providers (such as RBOCs, long-distance companies and competitive access providers), service users such as large corporate and government network operators, and manufacturers of communications equipment and systems. Industrial Computing and Communications. ICS sells its ruggedized industrial computer products to engineers and scientists primarily through its catalogs and a telemarketing sales force comprised of highly-trained electrical engineers. Itronix employs a direct sales force of engineers to market and sell its ruggedized mobile computer products to organizations with large field service groups such as telephone and insurance companies and utilities. ICS typically sells to thousands of customers with no significant customer concentration while Itronix's sales tend to be more concentrated on fewer large customers. Visual Communications. The Company's niche visual communications businesses generally sell into niche markets directly through their own sales forces as well as through distributors and representatives. PRODUCT ASSEMBLY The Company outsources most of its manufacturing and mechanical parts fabrication and generally performs its own final assembly and testing of products. COMPETITION The markets in which the Company competes are highly competitive and are characterized by rapidly changing technology. Principal competitors include businesses with significant financial, development, marketing, and manufacturing resources, as well as numerous small, specialized companies. The Company believes it holds a relatively favorable position with respect to the important competitive factors in each of its markets. The Company considers rapid product development, product functionality and features, and highly trained technical sales and support staff to be key competitive factors. See "--Industry Overview" and "Risk Factors--Highly Competitive Markets." 60 INTERNATIONAL The Company maintains sales subsidiaries or branches for its communications test business in major countries in Western Europe and Asia and has distribution agreements in other countries where sales volume does not warrant a direct sales organization. The Company's foreign sales from continuing operations (including exports from the United States directly to foreign customers) were approximately 20%, 20%, and 16% of consolidated net sales in fiscal 1996, 1997, and 1998, respectively. The Company's international business is subject to risks customarily found in foreign operations, such as fluctuations in currency exchange rates, import and export controls, and regulatory policies of foreign governments. A summary of the Company's sales, earnings and identifiable assets by geographic area is found in the Company's financial statements. See the Company's consolidated financial statements (including the notes thereto) appearing elsewhere in this Prospectus. DISCONTINUED OPERATIONS AND DIVESTED BUSINESSES The Company engaged in a business divestiture program beginning in 1994 and ending in fiscal 1997. Through this program, the Company sold 24 non-core businesses, which resulted in total proceeds to the Company of approximately $190 million, including $13.5 million in non-cash proceeds. In addition, on June 30, 1998 the Company sold the assets and certain liabilities ComCoTec, Inc. for a total sale price of $21.0 million dollars. See the notes to the Company's consolidated financial statements appearing elsewhere in this Prospectus. (ComCoTec, Inc. was not considered a discontinued operation in the Company's historical financial statements.) BACKLOG The Company's backlog of orders at March 31, 1997 and 1998 was $71.7 million and $79.1 million, respectively. EMPLOYEES At March 31, 1998, the Company employed approximately 2,249 people. The Company's experience has been that employees having requisite skills for the Company's purposes are generally available in the areas where its facilities are located, although there are constraints on the Company's ability to fill certain engineering positions. The Company's employees are not represented by a labor union, and the Company believes its employee relations are good. LITIGATION The Company is involved from time to time in routine legal matters incidental to its business. The Company believes that the resolution of such matters will not have a material adverse effect on the Company's financial condition or results of operations. On June 27, 1996, Cincinnati Microwave, Inc. ("CMI") filed an action in the United States District Court for the Southern District of Ohio against the Company and Whistler Corporation of Massachusetts ("Whistler"), alleging willful infringement of CMI's patent for a mute function in radar detectors. In 1994, the Company sold its radar detector business to Whistler. The Company and Whistler have asserted in response that they have not infringed, and that the patent is invalid and unenforceable. The Company obtained an opinion of counsel from Bromberg & Sunstein LLP in connection with the manufacture and sale of the Company's Whistler series radar detectors and will be offering the opinion, among other things, as evidence that any alleged infringement was not willful. On March 24, 1998, CMI, together with its co-plaintiff and patent assignee Escort, Inc., moved for summary judgment. The Company and Whistler have opposed the motion for summary judgment. The Company intends to defend the lawsuit vigorously and does not believe that the outcome of the litigation is likely to have a material adverse effect on the Company's financial condition, results of operations or liquidity. 61 INTELLECTUAL PROPERTY The Company relies primarily on trade secrets, trademark laws, confidentiality procedures and contractual restrictions to establish and protect its proprietary rights. The Company generally seeks patent protection for inventions and improvements to its products which it believes to be patentable. It holds numerous United States and foreign patents and patent applications covering many products. The Company does not believe that the expiration of any patent or group of patents would materially affect its business. FIREBERD, T-BERD, CENTEST, INTERCEPTOR, XC 6250, INDUSTRIAL COMPUTER SOURCE- BOOK, DA VINCI SYSTEMS and AIRSHOW are among the registered trademarks which the Company considers valuable assets. DYNATECH (and design) is a registered service mark of the Company in the United States and a registered trade or service mark (issued or applied for) of the Company in most other major industrialized countries of the world. The Company is subject to customary risks of infringement of its proprietary rights. While the Company considers its proprietary rights important, it believes its technical marketing and manufacturing capabilities are of greater competitive significance. SUPPLIERS Materials and components used in the Company's products are normally available stock items or can be obtained to Company specifications from more than one potential supplier, with the exception of certain components which are being sourced from a single supplier. These include certain commercially available and customized microprocessors and application specific integrated circuits, power supplies, display devices and certain operating system software. The Company has not entered into long term contracts for the supply of such components. Although alternative sources generally exist for these materials, a significant amount of time could be required before the Company would begin to receive adequate supplies from such alternative suppliers. The Company also purchases certain key components from sole source vendors, including a semi-conductor manufacturer of a component utilized in the Company's communications test business and a component manufacturer for the Itronix series of ruggedized laptop computers. There can be no assurance that such components will continue to be produced or that the price for such components may not significantly increase. Some components and assemblies are purchased in Asia pursuant to volume contracts. See "Risk Factors--Dependence on Sole Source Suppliers and Licensors." ENVIRONMENTAL MATTERS Federal, state and local laws or regulations which have been enacted or adopted regulating the discharge of materials into the environment have not had, and under present conditions, the Company does not foresee that they will have, a material adverse effect on capital expenditures, earnings, or the competitive position of the Company. 62 PROPERTIES The Company's policy is generally to lease real property for its manufacturing and sales operations. Principal operating facilities for continuing operations are as follows:
LEASE LOCATION SQUARE FEET TERMINATION -------- ----------- ----------- Burlington, Massachusetts............................ 14,600 1999 Ft. Lauderdale, Florida.............................. 16,300 2001 Germantown, Maryland................................. 30,000 2006 Germantown, Maryland................................. 68,400 2001 Germantown, Maryland................................. 30,000 2003 Germantown, Maryland................................. 68,600 2003 Northampton, Massachusetts........................... 22,500 1999 Tustin, California................................... 52,000 2005 Salem, Virginia...................................... 35,900 2004 San Diego, California................................ 135,000 2004 Spokane, Washington.................................. 66,400 1999
The Company has other leases for continuing operations manufacturing space and sales offices, but in each case the total leased space is under 15,000 square feet. The Company has leased approximately 239,000 square feet of space in various leased facilities in discontinued operations at March 31, 1998. YEAR 2000 The Company has commenced a review of its computer systems and products in order to assess its exposure to Year 2000 issues. The Company is currently in the process of determining the full scope, related costs and action plan to insure that the Company's systems continue to meet its internal needs and those of its customers. The Company expects to make the necessary modifications or changes to its computer information systems to enable proper processing of transactions relating to the Year 2000 and beyond. However, there can be no assurance that Year 2000 costs and expenses will not have a material adverse effect on the Company. In addition, the Company does not currently have complete information concerning the Year 2000 compliance status of its suppliers and customers. In the event that any of the Company's significant suppliers or customers do not successfully and timely achieve Year 2000 compliance, the Company's business or operations could be materially adversely affected. Finally, there can be no assurance that the Company's existing or installed base of products are Year 2000 compliant, or that the Company's products will not be integrated by the Company or its customers with, or otherwise interact with, non-compliant software or other products. Any such product non-compliance may expose the Company to claims from its customers and others, and could impair market acceptance of the Company's products and services, increase service and warranty costs, or result in payment of damages, which in turn could materially adversely affect the Company. 63 MANAGEMENT TTC is managed by Dynatech, TTC's sole member, and TTC does not currently have any executive officers or directors. The Company anticipates that, in the future, TTC will have executive officers and directors that are identical to those of Dynatech. The Communications Test Business of TTC will also have a slate of officers. Listed below are the individuals who currently serve as the executive officers and directors (the "New Directors") of Dynatech, each of whom is a citizen of the United States.
NAME AGE POSITION WITH THE COMPANY ---- --- ------------------------- John F. Reno............... 59 Chairman, President, Chief Executive Officer, Director Allan M. Kline............. 53 Corporate Vice President, Chief Financial Officer, Treasurer, Director John R. Peeler............. 43 Corporate Vice President--Communications Test Business, Director Samuel W. Tishler.......... 60 Corporate Vice President, Corporate Development John A. Mixon.............. 52 Corporate Vice President, Human Resources Robert W. Woodbury, Jr..... 41 Corporate Vice President, Corporate Controller Mark V.B. Tremallo......... 41 Corporate Vice President, General Counsel Joseph L. Rice, III........ 66 Director Brian D. Finn.............. 37 Director Charles P. Pieper.......... 51 Director
John F. Reno presently serves as Chairman, President and Chief Executive Officer and a Director of Holding. Mr. Reno has served as Chairman, President and Chief Executive Officer since August 1996 and as President and Chief Executive Officer since January 1993. From July 1991 to January 1993, Mr. Reno was President and Chief Operating Officer. Prior to July 1991, Mr. Reno served as Executive Vice President and Chief Operating Officer. Mr. Reno is also a director of Millipore Corporation. Allan M. Kline presently serves as Corporate Vice President, Chief Financial Officer and Treasurer of Dynatech. Mr. Kline is presently a Director of Dynatech and has served as such since May 21, 1998. Mr. Kline joined Holding in June 1996. From 1995 to 1996, he served as Senior Vice President, Chief Financial Officer of CrossComm Corporation, a manufacturer of networking products. From 1994 to 1995, he was President of TAR Acquisition Corp., a private investment company. From 1989 to 1994, Mr. Kline was also a Director of CrossComm Corporation. From 1990 to 1994, Mr. Kline was Senior Vice President, Chief Financial Officer of Cabot Safety Corporation, a subsidiary of Cabot Corporation. Prior to that, he served at Leggett & Platt, Incorporated and was a partner with Arthur Young & Company. John R. Peeler presently serves as Corporate Vice President--Communications Test Business, and President and Chief Executive Officer of all of the Company's telecommunications test businesses. Mr. Peeler is presently a Director of Dynatech and has served as such since May 21, 1998. Mr. Peeler has been employed by the Company since 1980. Samuel W. Tishler presently serves as Corporate Vice President--Corporate Development of Holding. Mr. Tishler joined Holding in September 1994. From 1988 to 1994, he was Vice President of Raytheon Ventures, the venture capital portfolio of Raytheon Co. From 1977 to 1986, he served as Vice President of ADL Enterprises, a wholly owned subsidiary of Arthur D. Little, Inc. From 1970 to 1977, Mr. Tishler was President of Harnessed Energies, Inc., a manufacturer of scientific instrumentation. John A. Mixon presently serves as Corporate Vice President--Human Resources of Holding. Mr. Mixon has been employed by the Company since 1989. Robert W. Woodbury, Jr. presently serves as Corporate Vice President-- Corporate Controller of Holding. Mr. Woodbury joined Holding in January 1996. From 1992 to January 1996, he served as Vice President and Controller for Kollmorgen Corporation, a manufacturer of motion control devices. From 1990 to 1992, he was Chief Financial Officer of Kidde Fenwal, Inc., a manufacturer of fire suppression equipment. 64 Mark V.B. Tremallo presently serves as Corporate Vice President--General Counsel of Holding. Mr. Tremallo joined Holding in May 1997. From 1995 to 1997 he served as Vice President, General Counsel and Secretary of Aearo Corporation (formerly Cabot Safety Corporation), a manufacturer of industrial safety products. From 1990 to 1995 he was General Counsel of Cabot Safety Corporation, a subsidiary of Cabot Corporation. Joseph L. Rice, III is Chairman of CDR and, since May 21, 1998, a Director of Holding. In addition, Mr. Rice is a director of Uniroyal Holding, Inc. Remington Arms Company, Inc. and Thyssen Schulte Bautechnik, corporations in which an investment partnership managed by CDR has an investment, and serves as a trustee of Williams College and The Manhattan Institute. He is a graduate of Williams College and Harvard Law School. Mr. Rice is a limited partner of CD&R Associates V Limited Partnership, the general partner of CDR Fund V ("Associates V"), and is a Director and President of CD&R Investment Associates II, Inc. ("Associates II Inc."), the managing general partner of Associates V. Brian D. Finn is a principal of CDR and, since May 21, 1998, a Director of Holding. Mr. Finn is also a director of U.S. Office Products Company, a corporation in which CDR Fund V has an investment. Mr. Finn joined CDR in 1997 from Credit Suisse First Boston where he was Managing Director and Co-Head of Mergers & Acquisitions. During his 15 years at Credit Suisse First Boston he advised a large number of corporate clients in various industries in transactions totaling approximately $250 billion. Mr. Finn received his B.S. in Economics from The Wharton School of the University of Pennsylvania. He is a limited partner of Associates V and a Director of Associates II Inc. Charles P. Pieper is a principal of CDR and, since May 21, 1998, a Director of Holding. Mr. Pieper is also Chairman of North American Van Lines, Inc. and U.S. Office Products Company, corporations in which CDR Fund V has an investment. Mr. Pieper joined CDR in 1997. Prior to joining CDR, he was President and Chief Executive Officer of GE Lighting Europe. During his 16- year career at GE, Mr. Pieper was responsible for several key business units, including serving as President and Chief Executive Officer of: GE Japan, Korea, Taiwan; GE Medical Systems Asia; as well as GE Lighting Europe. He joined GE in 1981, from the Boston Consulting Group. Mr. Pieper graduated from Harvard College and holds an M.B.A. from Harvard Business School. He is a limited partner of Associates V and a Director of Associates II Inc. The composition of the Board is subject to change from time to time. CDR Fund V has the right to elect the directors of the Board, except that CDR Fund V has agreed, pursuant to the employment agreements with Messrs. Reno, Kline and Peeler, to elect such officers to serve as members of the Board during the period of their employment with the Company. ELECTION AND COMPENSATION OF DIRECTORS All directors are elected annually and hold office until their successors are elected and qualified, or until their earlier removal or resignation. During fiscal 1998, compensation of non-employee Directors ("Non-Employee Directors") of Holding was at the rate of $1,500 for each Board of Directors or committee meeting attended ($500 for each committee meeting held directly before or after a meeting of the Board of Directors), $750 for a meeting held over the telephone, plus a quarterly retainer fee paid at the rate of 200 shares of Dynatech Common Stock per quarter. Chairmen of all committees other than the Executive Committee also received an additional 25 shares of Dynatech Common Stock per quarter. In addition, the Dynatech Corporation 1994 Stock Option and Incentive Plan provides for the automatic grant of stock options to non-employee Directors of Holding. Each Non-Employee Director is entitled to receive an option to purchase 10,000 shares of Common Stock upon initial election to the Board of Directors and an additional option to purchase 3,000 shares of Common Stock after each Annual Meeting of Stockholders. Non-Employee Directors who have served on the Board for at least five years are also entitled to receive an annual retirement benefit equal to $16,000. Such retirement benefit is payable following the later of the Non-Employee Director's 60th birthday or retirement from the Board (or such later date as the Director shall elect) for a period equal to the number of full years service on the Board, up to a maximum of ten years. None of the New Directors of Holding participate in the programs or receive the compensation described above. 65 EXECUTIVE COMPENSATION The following summary compensation table sets forth information concerning compensation awarded to, earned by, or paid to (i) Holding's Chief Executive Officer, and (ii) the four highest compensated executive officers who were serving as executive officers at the end of fiscal 1998 (collectively, the "Named Executive Officers"), for services rendered in all capacities with respect to Holding's fiscal years ended March 31, 1996, 1997 and 1998 (references to "Common Stock" mean the common stock of Dynatech Corporation prior to the Recapitalization, and not Recapitalized Common Stock):
ANNUAL COMPENSATION(1) LONG TERM ----------------------- COMPENSATION ALL OTHER FISCAL SALARY BONUS AWARDS(2) COMPENSATION NAME AND PRINCIPAL POSITION YEAR ($) ($) OPTIONS # ($)(3) - --------------------------- ------ ----------------------- ------------ ------------ John F. Reno............. 1998 481,250 604,053 56,700 11,857 President and Chief Executive Officer 1997 456,250 1,032,185 55,100 31,892 1996 435,000 372,836 62,000 25,533 John R. Peeler........... 1998 270,000 383,513 24,800 47,870 Corporate Vice President of Dynatech; 1997 244,242 662,214 20,800 18,936 President and Chief Executive Officer of 1996 225,042 293,128 28,000 15,939 all Telecommunications Test Businesses Allan M. Kline(4)........ 1998 218,750 198,108 16,000 23,060 Corporate Vice President, Chief Financial 1997 158,333 218,918 50,000 3,234 Officer and Treasurer John A. Mixon............ 1998 185,591 152,680 12,900 23,828 Corporate Vice President-- 1997 178,500 270,591 13,800 9,910 Human Resources 1996 172,125 94,384 14,000 8,851 Samuel W. Tishler(5)..... 1998 176,667 145,338 31,800 15,834 Corporate Vice President-- 1997 144,167 108,521 5,000 6,701 Corporate Development 1996 130,000 48,227 2,000 4,471
- -------- (1) Perquisites and other personal benefits paid to each Named Executive Officer in each instance aggregated less than 10% of the total annual salary and bonus set forth in the columns entitled "Salary" and "Bonus" for each Named Executive Officer, and accordingly, have been omitted from the table as permitted by the rules of the SEC. (2) Figures in this column show the number of options for Common Stock (not Recapitalized Common Stock) granted. Holding did not grant any restricted stock awards or stock appreciation rights to any of the Named Executive Officers during the years shown. (3) Figures in this column represent Holding's contributions on behalf of each of the Named Executive Officers to Holding's 401(k) plan. These figures also include Holding's contributions to a nonqualified deferred compensation plan, which became effective April 1, 1995. (4) Mr. Kline's employment with Holding commenced in June 1996. (5) Mr. Tishler became an officer of Holding in May 1997. 66 OPTION GRANTS IN LAST FISCAL YEAR The following table sets forth information concerning individual grants of options to purchase Common Stock (not Recapitalized Common Stock) granted to the Named Executive Officers during fiscal 1998:
INDIVIDUAL GRANTS(1) ---------------------- % OF TOTAL POTENTIAL REALIZABLE VALUED NUMBER OF OPTIONS AT ASSUMED ANNUAL RATES SECURITIES GRANTED TO OF STOCK PRICE APPRECIATION UNDERLYING EMPLOYEES EXERCISE OR FOR OPTION TERM(2) OPTIONS IN FISCAL BASE PRICE EXPIRATION ---------------------------- NAME GRANTED (#) YEAR (%) ($/SH)(1) DATE 5% ($) 10% ($) ---- ----------- ---------- ----------- ---------- ------------- -------------- John F. Reno............ 56,700 8.9% $35.9375 7/30/07 $ 1,281,471 $ 3,247,498 John R. Peeler.......... 24,800 3.9% $35.9375 7/30/07 $ 560,502 $ 1,420,422 Allan M. Kline.......... 16,000 2.5% $35.9375 7/30/07 $ 361,614 $ 916,402 John A. Mixon........... 12,900 2.0% $35.9375 7/30/07 $ 291,552 $ 738,849 Samuel W. Tishler....... 20,000 3.2% $38.8750 5/6/07 $ 488,966 $ 1,239,134 Samuel W. Tishler....... 11,800 1.8% $35.9375 7/30/07 $ 266,691 $ 675,846
- -------- (1) Options vest annually in five equal installments beginning on the first anniversary date of grant. The options in this table expire 10 years after grant. In connection with the Merger, all of the options became fully vested and exercisable, other than options to purchase 20,737 shares of Common Stock granted to Mr. Reno. (2) These columns show the hypothetical value of the options granted at the end of the option terms if the price of the Common Stock were to appreciate annually by 5% and 10%, respectively. There is no assurance that the stock price will appreciate at the rates shown. AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES The following table sets forth certain information regarding exercises of options to purchase Common Stock (not Recapitalized Common Stock) by the Named Executive officers during the fiscal year ended, March 31, 1998 and stock options for Common Stock (not Recapitalized Common Stock) held by the Named Executive Officers at March 31, 1998:
NUMBER OF SECURITIES VALUE OF UNEXERCISED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS SHARES OPTIONS AT FY-END(#) AT FY-END(2)($) ACQUIRED ON VALUE ------------------------- ------------------------- NAME EXERCISE(#) REALIZED(1)($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE ---- ----------- -------------- ------------------------- ------------------------- John F. Reno............ 0 0 175,820/237,180 $5,674,711/5,824,895 John R. Peeler.......... 0 0 68,160/ 98,240 2,271,940/2,464,210 Allan M. Kline.......... 0 0 10,000/ 56,000 161,875/ 843,500 John A. Mixon........... 3,250 96,906 30,360/ 52,340 898,303/1,224,860 Samuel W. Tishler....... 0 0 1,800/ 37,000 37,288/ 424,075
- -------- (1) Calculated on the basis of the fair market value of the Common Stock on the date of exercise, less the option exercise price. (2) Calculated on the basis of the fair market value of the Common Stock on March 31, 1998 ($48.1875), less the applicable option exercise price. CONVERSION OF OPTIONS IN CONNECTION WITH THE MERGER Immediately prior to the Merger, all outstanding stock options to purchase shares of Common Stock, including those stock options held by the Named Executive Officers, became fully vested and exercisable except those unvested stock options held by Mr. Reno that qualify as "incentive stock options" under the Internal Revenue Code. At the effective time of the Merger, outstanding options to purchase Common Stock held by each of the Named Executive Officers were converted into equivalent options to purchase shares of Recapitalized Common Stock. As a result of the conversion of the options, Messrs. Reno, Peeler, Kline, Mixon and Tishler 67 hold options to purchase 8,094,800, 2,696,960, 1,293,600, 1,464,119 and 623,279 shares of Recapitalized Common Stock, respectively, at option exercise prices ranging from $0.5357 to $1.9834. The terms of the converted options are substantially similar to those of the prior options except that the period following a termination of employment during which the Named Executive Officer may exercise converted options (other than those that qualify as incentive stock options) has been extended and in the case of Messrs. Reno, Peeler and Kline, such extended period is substantial. SPECIAL TERMINATION AGREEMENTS Each of the Named Executive Officers, as well as certain other key employees of the Company, was, prior to the Merger, party to a special termination agreement with Holding. These agreements provided that if there is a "Change in Control" of Holding (as defined in the Agreements), and if during the two- year period following such Change in Control the officer's employment is terminated for any reason other than on account of death or for "Cause," or the officer terminates his or her own employment following a demotion, reduction in compensation, or similar event, the officer will be entitled to receive a lump sum severance payment from Holding within 15 days after the date of termination and continuance of certain fringe benefits. Under the special termination agreements, the amount of the severance payment is based on an officer's length of service with Holding, ranging incrementally from one times the officer's average annual cash compensation to three times the officer's average annual cash compensation after fifteen years of service. In connection with the Merger, each of the Named Executive Officers entered into the agreements described immediately below that supersede the special termination agreements. EMPLOYMENT AND OTHER AGREEMENTS In connection with the Merger, Holding entered into employment agreements with each of Messrs. Reno, Kline and Peeler that supersede their respective Special Termination Agreements. The employment agreements generally provide for an initial term of five years, commencing at the effective time of the Merger, and for compensation and benefit arrangements that are consistent with the compensation and benefit arrangements of each such Named Executive Officer in effect prior to the Merger. The employment agreements further provide for the election of such officers to serve as directors of Holding during their employment with Holding. Pursuant to his employment agreement, Mr. Reno together with his family trusts, contributed 40,804 shares of Common Stock to MergerCo in exchange for 799,758 shares of MergerCo Common Stock ("MergerCo Common Stock"), which shares of MergerCo Common Stock were converted in the Merger into a like number of shares of Recapitalized Common Stock. In addition, pursuant to their respective other employment agreements, all options to purchase Common Stock held by each of Messrs. Reno and Kline prior to the Merger and a substantial majority of the options held by Mr. Peeler prior to the Merger were converted into equivalent options to purchase shares of Recapitalized Common Stock (the exercise prices of which preserve the economic value of their former options), all of which, other than options to purchase 20,737 shares of Common Stock held by Mr. Reno, became fully vested and exercisable in connection with the Merger. In addition, the employment agreements: (i) restrict the ability of each Named Executive Officer to transfer shares of Recapitalized Common Stock beneficially owned by him (other than certain permitted transfers for estate planning purposes and transfers not exceeding in the aggregate 25% of the Recapitalized Common Stock owned, or subject to options held by each Named Executive Officer, at the effective time of the Merger), (ii) grant each Named Executive Officer certain "tag along" rights which entitle the Named Executive Officer to participate in certain sales of Recapitalized Common Stock by CDR Fund V prior to a Public Offering (as defined in the employment agreements), (iii) grant CDR Fund V certain "drag along" rights which entitle CDR Fund V to require each Named Executive Officer to sell his shares of Recapitalized Common Stock in a proposed sale by CDR Fund V of substantially all of its shares of Recapitalized Common Stock prior to a Public Offering, and (iv) grant Holding and CDR Fund V the right, following any termination of a Named Executive Officer's employment prior to a Public Offering, to purchase the Named Executive Officer's shares of Recapitalized Common Stock and options to purchase Recapitalized Common Stock. 68 The Employment Agreements also provide that, in the event of a termination of any such Named Executive Officer's employment during the term of the agreement by Holding other than for "Cause" (as defined in the employment agreements) or by such Named Executive Officer for "Good Reason" (as so defined), the Named Executive Officer will be entitled to special termination benefits consisting of (i) continued payments of his average annual base salary and average annual bonus until the second anniversary of the date of termination, (ii) continued coverage under Holding's medical insurance plan until his 65th birthday and (iii) a pro rata incentive compensation bonus for the portion of the calendar year preceding such termination. The agreements also contain customary indemnification, confidentiality, noncompetition and nonsolicitation provisions. In connection with the Merger, Holding entered into certain agreements (the "Mixon/Tischler Agreements"), with Messrs. Mixon and Tishler, which supersede their special termination agreements. The Mixon/Tischler Agreements provide that, in the event of a termination of employment prior to the third anniversary of the effective time of the Merger by Holding other than for "Cause" (as defined in such agreements) or by such executive for "Good Reason" (as so defined), each such executive will be entitled to special termination benefits during a salary continuation period which will be based on such executive's period of service with Holding. Such salary continuation benefits will consist of continued payments of such executive's average annual base salary and average annual bonus and continued coverage under Holding's medical insurance and other benefit plans. The Mixon/Tischler Agreements also contain customary indemnification, confidentiality, noncompetition and nonsolicitation provisions. Pursuant to the Mixon/Tischler Agreements, a substantial majority of the options to purchase shares of Common Stock held by Messrs. Mixon and Tishler prior to the Merger were converted into equivalent options to purchase shares of Recapitalized Common Stock (the exercise prices of which preserve the economic value of the former options), all of which became fully vested and exercisable as of the effective time of the Merger. In addition, these Agreements provide for substantially the same call, drag-along and tag-along rights as do the employment agreements of Messrs. Reno, Peeler and Kline. 69 OWNERSHIP OF CAPITAL STOCK The following table sets forth certain information regarding the beneficial ownership of outstanding Recapitalized Common Stock as of June 3, 1998.
SHARES OWNED IMMEDIATELY AFTER MERGER(1) --------------------------------- NAME NUMBER PERCENT(2) ---- ----------------- --------------- Clayton, Dubilier & Rice Fund V Limited Partnership(3).............................. 110,790,770 92.3% John F. Reno(4).............................. 8,491,637 6.6% John R. Peeler(5)............................ 2,708,907 2.2% John A. Mixon(6)............................. 1,624,027 1.3% Allan M. Kline(7)............................ 1,294,769 1.1% Samuel W. Tishler(8)......................... 623,780 * All future Directors and Executive Officers as a group (10 persons)(9).................. 126,777,355 93.8%
- -------- (1) Assumes conversion of each outstanding option to purchase Common Stock ("Company Stock Option") assumes no Stockholders of Dynatech exercise their appraisal rights and no Company Stock Options are exercised prior to the Merger. (2) Based upon 120,021,689 shares of Recapitalized Common Stock outstanding at the time of filing of the Articles of Merger with the Massachusetts Secretary of State and the Certificate of Merger with the Delaware Secretary of State (the "Effective Time") (which assumes no Stockholders exercise their appraisal rights, no Company Stock Options are exercised after April 16, 1998, and the conversion of the Company Stock Options as described above). Recapitalized Common Stock includes all shares of outstanding Recapitalized Common Stock plus, as required for the purpose of determining beneficial ownership (in accordance with Rule 13d-3 promulgated pursuant to the Exchange Act), all shares of Recapitalized Common Stock subject to any right of acquisition by such person, through exercise or conversion of any security, within 60 days of the Effective Time. (3) B. Charles Ames, Michael G. Barbiarz, William A. Barbe, Kevin J. Conway, Brian D. Finn, Donald J. Gogel, Leon J. Hendrix, Jr., Hubbard C. Howe, Thomas E. Ireland, Charles P. Pieper and Joseph L. Rice, III may be deemed to share beneficial ownership of the shares owned of record by CDR Fund V by virtue of their status as stockholders of Associates II, Inc., the managing general partner of Associates V, the general partner of CDR Fund V, but each expressly disclaims such beneficial ownership of the shares owned by CDR Fund V. The voting stockholders of Associates II, Inc. share investment and voting power with respect to securities owned by CDR Fund V. The business address for each of them is 1403 Foulk Road, Suite 106, Wilmington, Delaware 19803. (4) Includes 1,000 shares owned by Mr. Reno's spouse, 294,000 shares owned by The John F. Reno 1997 Qualified Annuity Trust for which Mr. Reno has sole voting power, 294,000 shares owned by The Suzanne M. Reno 1997 Qualified Annuity Trust, of which Mr. Reno is a Trustee and 2,525 shares owned by a relative for which Mr. Reno has power of attorney. Includes 7,688,354 shares of Recapitalized Common Stock issuable upon exercise of stock options which are exercisable within 60 days of the Effective Time. (5) Includes 2,696,690 shares of Recapitalized Common Stock issuable upon exercise of stock options which are exercisable within 60 days of the Effective Time. (6) Includes 1,620,920 shares of Recapitalized Common Stock issuable upon exercise of stock options which are exercisable within 60 days of the Effective Time. (7) Includes 1,293,600 shares of Recapitalized Common Stock issuable upon exercise of stock options which are exercisable with 60 days of the Effective Time. (8) Includes 623,280 shares of Recapitalized Common Stock issuable upon exercise of stock options which are exercisable within 60 days of June 3, 1998. (9) Includes 15,165,754 shares of Recapitalized Common Stock issuable upon exercise of stock options which are exercisable within 60 days of the Effective Time. Brian D. Finn, Charles P. Pieper and Joseph L. Rice, III may be deemed to share beneficial ownership of the shares owned of record by CDR Fund V by virtue of their status as stockholders of Associates II, Inc., the managing general partner of Associates V, the general partner of CDR Fund V, but expressly disclaims such beneficial ownership of the shares owned by CDR Fund V. The voting stockholders of Associates II, Inc. share investment and voting power with respect to securities owned by CDR Fund V. 70 THE RECAPITALIZATION The following is a summary of the structure of the Recapitalization, the Merger and certain provisions of the Merger Agreement. This summary does not purport to be complete and is qualified in its entirety by reference to the Merger Agreement, a copy of which is filed as an exhibit to the Registration Statement of which this Prospectus is a part and a copy of which is available as set forth under the heading "Available Information". As of December 20, 1997, Dynatech entered into the Merger Agreement between Dynatech and MergerCo, formed by CDR Fund V, to effect the Recapitalization of Dynatech. The Recapitalization was accomplished through the Merger of MergerCo with and into Dynatech with Dynatech continuing as the surviving corporation. Dynatech succeeded to all the rights and obligations of MergerCo. The May 1998 closing of the Recapitalization occurred simultaneously with the closing of the offering of the Existing Notes. Immediately after the issuance of the Existing Notes, TTC and TTC Merger Co. merged with TTC surviving, TTC succeeded to and assumed all of the obligations under the Indenture and the Existing Notes, and Dynatech was released as a primary obligor from its obligations under the Indenture and the Existing Notes. TTC thereby became the primary obligor on the Existing Notes. Dynatech agreed to guarantee the monetary obligations of TTC Merger Co. and the Company under the Indenture and the Notes on a senior subordinated basis. In connection with the merger of the Company and TTC Merger Co., TTC assumed all of the obligations under the Senior Credit Facility and became the borrower thereunder, and Dynatech transferred to TTC its ownership interest in all of its other subsidiaries. See "Description of Notes" and "Description of Senior Credit Facility." Immediately prior to the Merger, (a) John F. Reno, together with two family trusts established by Mr. Reno, contributed 40,804 shares of Common Stock to MergerCo in exchange for 799,758 shares of MergerCo Common Stock and (b) CDR Fund V purchased 110,790,770 shares of MergerCo Common Stock for approximately $277 million. Pursuant to the Merger Agreement, the "Effective Time" occurred upon filing the Articles of Merger with the Massachusetts Secretary of State and the Certificate of Merger with the Delaware Secretary of State. At the Effective Time, (i) each share of Common Stock outstanding immediately prior to the Effective Time was converted into the right to receive $47.75 in cash and 0.5 fully paid and nonassessable shares of Recapitalized Common Stock (the "Merger Consideration") (except that any shares held by MergerCo or held in Dynatech's treasury were canceled, and any stockholder that properly dissented from the Merger is entitled to appraisal rights under the Massachusetts Business Corporation Law (the "MBCL")); and (ii) each share of MergerCo Common Stock was converted into one share of Recapitalized Common Stock. Of the 120,021,689 shares of Recapitalized Common Stock outstanding immediately after the Merger, CDR Fund V holds 110,790,770 shares, or approximately 92.3%, Mr. Reno (together with his family trusts) holds 799,758 shares, or approximately 0.7%, and Stockholders, other than Mr. Reno and his family trusts, hold 8,431,161 shares, or approximately 7.0%. Dynatech is treating the Merger as a recapitalization for financial reporting purposes. Accordingly, the historical basis of Dynatech's assets and liabilities will not be affected by the transaction. As a result of the Recapitalization and related transactions, Dynatech used approximately $865.3 million to (i) finance the purchase of Dynatech common stock for $803.1 million, (ii) pay $22.7 million for option cancellation payments and (iii) pay the fees and expenses incurred in connection with the Merger. In addition, (a) $292.9 million of bank financing was drawn down under the Senior Credit Facility, including $260.0 million pursuant to the Term Loan Facility and $32.9 million under the Revolving Credit Facility, and (b) $275.0 million in gross proceeds was provided through the sale of the Existing Notes. Dynatech had $20.4 million of cash on-hand to use in connection with the Merger and approximately $277 million of gross proceeds from the sale of MergerCo common stock to CDR Fund V, which proceeds became an asset of Dynatech upon effectiveness of the Merger. Pursuant to the Merger Agreement, Dynatech's 1996 Employee Stock Purchase Plan (the "ESPP") was amended to provide that there would be no new stock purchase periods after March 31, 1998. The ESPP terminated at the Effective Time. 71 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS CDR FUND V CDR Fund V is a private investment fund managed by CDR. Amounts contributed to CDR Fund V by its limited partners are invested at the discretion of its general partner, Associates V. Associates V has three general partners. The managing general partner of Associates V is Associates II Inc. The other general partners of Associates V are CD&R Cayman Investment Associates, Inc., a Cayman Islands exempted company ("Associates Cayman Inc.") and CD&R Investment Associates Inc., a Delaware corporation ("Associates Inc."). Mr. Rice, who is a principal of CDR and the Chairman of CDR, is a Director and the Chairman of both Associates II Inc. and Associates Inc., is a shareholder and Director of Associates Cayman Inc., and also serves as a Director of Dynatech. Mr. Finn, who is a principal of CDR and is a Director of Associates II Inc., also serves as a Director of Dynatech. Mr. Pieper, who is a principal of CDR and a Director of Associates II Inc., also serves as a Director of Dynatech. See "Management." CDR is a private investment firm which is organized as a Delaware corporation. CDR is the manager of a series of investment funds, including CDR Fund V, formed to invest in equity or equity-related securities of entities formed to effect leveraged acquisition transactions and in the equity of corporations where the infusion of capital, coupled with the provision of managerial assistance by CDR, can be expected to generate returns on investments comparable to returns historically achieved in leveraged acquisition transactions. CDR generally assists in structuring, arranging financing for and negotiating the transactions in which the funds it manages invest. After the consummation of such transactions, CDR generally provides management and financial consulting services to the companies in which its investment funds have invested during the period of such funds' investment. Such services include helping such companies to establish effective banking, legal and other business relationships and assisting management in developing and implementing strategies for improving the operational, marketing and financial performance of such companies. Dynatech and TTC entered into a consulting agreement with CDR which provides for (i) an annual fee initially of $500,000, for providing such management and financial consulting services to the Company and (ii) reimbursement of out-of- pocket expenses it incurs after the Merger, for so long as CDR Fund V has an investment in the Company. At the closing of the Merger, the Company paid CDR a transaction fee of $9.2 million plus reimbursement of out-of-pocket expenses incurred by CDR in consideration for services provided by CDR in arranging the Merger, arranging and negotiating the financing for the Merger and related services. Dynatech and TTC also agreed to indemnify CDR and CDR Fund V and certain related parties, subject to certain limitations, against all claims and liabilities arising out of or in connection with the Securities Act, the Exchange Act or any other applicable securities or other laws in connection with the Merger and related transactions and the operation of the business following the Merger. In addition, Dynatech entered into a registration rights agreement with CDR Fund V, Mr. Reno and certain family trusts which provides that such persons may require Dynatech to register their shares of Recapitalized Common Stock under the Securities Act. EMPLOYMENT AND OTHER AGREEMENTS In connection with the Merger, the Company entered into employment agreements with Messrs. Reno, Kline and Peeler and certain other agreements with Messrs. Mixon and Tishler. See "Executive Compensation--Employment and Other Agreements." In addition, certain other executives and key employees of the Company elected to convert substantially all of their stock options to purchase shares of Common Stock into equivalent options to purchase shares of Recapitalized Common Stock (the exercise prices of which preserved the economic value of their prior Dynatech stock options), all of which became fully vested and exercisable as of the Effective Time. Such other executives and key employees also entered into agreements with Dynatech containing terms that are substantially identical to the terms of the Mixon/Tishler Agreements. 72 DESCRIPTION OF SENIOR CREDIT FACILITY General. In connection with the Recapitalization, Dynatech and TTC Merger Co. entered into the Senior Credit Facility with a syndicate of financial institutions, Morgan Guaranty Trust Company ("Morgan") as administrative agent (the "Administrative Agent"), The Chase Manhattan Bank, as documentation agent, and Credit Suisse First Boston, as syndication agent. The following is a summary of the principal terms of the credit agreement governing the Senior Credit Facility and the related loan documents (the "Credit Documentation") and is subject to and qualified in its entirety by reference to the Credit Documentation, which has been filed as an exhibit to the Registration Statement of which this Prospectus is a part and a copy of which is available as set forth under the heading "Available Information." Immediately after the issuance of the Existing Notes, TTC and TTC Merger Co. merged (the "Second Merger") with TTC surviving, TTC succeeded to and assumed all of the obligations under the Senior Credit Facility, and thereby became the primary obligor under the Senior Credit Facility. Dynatech was released from its obligations under the Senior Credit Facility. The Senior Credit Facility provides for senior secured credit facilities in an aggregate amount of $370.0 million, consisting of (i) a revolving credit facility in the amount of $110.0 million (the "Revolving Credit Facility"), (ii) a 6-year $50.0 million term loan (the "Tranche A Term Loan"), (iii) a 7- year $70.0 million term loan (the "Tranche B Term Loan"), (iv) an 8-year $70.0 million term loan (the "Tranche C Term Loan"), and (v) a 9-year $70.0 million term loan (the "Tranche D Term Loan" and together with the Tranche A Term Loan, the Tranche B Term Loan and the Tranche C Term Loan, the "Term Loans"). The Revolving Credit Facility also provides for a swingline subfacility of $10.0 million and a letter of credit subfacility of $25.0 million. Amortization. The Tranche A Term Loan will be amortized in twelve quarterly installments of $1.250 million commencing on June 30, 1998, four quarterly installments of $2.125 million commencing on June 30, 2001, four quarterly installments of $2.875 million commencing on June 30, 2002 and four quarterly installments of $3.750 million commencing on June 30, 2003. The Tranche B Term Loan will be amortized in 27 equal quarterly installments of $0.250 million, with the balance to be paid on March 31, 2005. The Tranche C Term Loan will be amortized in 31 equal quarterly installments of $0.250 million, with the balance to be paid on March 31, 2006. The Tranche D Term Loan will be amortized in 35 equal quarterly installments of $0.250 million, with the balance to be paid on March 31, 2007. The annual amortizations of the Term Loans are set forth in the following table:
CALENDAR YEAR TRANCHE A TRANCHE B TRANCHE C TRANCHE D TOTAL ------------- ----------- ----------- ----------- ----------- ------------ 1998.............. $ 3,750,000 $ 750,000 $ 750,000 $ 750,000 $ 6,000,000 1999.............. 5,000,000 1,000,000 1,000,000 1,000,000 8,000,000 2000.............. 5,000,000 1,000,000 1,000,000 1,000,000 8,000,000 2001.............. 7,625,000 1,000,000 1,000,000 1,000,000 10,625,000 2002.............. 10,750,000 1,000,000 1,000,000 1,000,000 13,750,000 2003.............. 14,125,000 1,000,000 1,000,000 1,000,000 17,125,000 2004.............. 3,750,000 1,000,000 1,000,000 1,000,000 6,750,000 2005.............. -- 63,250,000 1,000,000 1,000,000 65,250,000 2006.............. -- -- 62,250,000 1,000,000 63,250,000 2007.............. -- -- -- 61,250,000 61,250,000 ----------- ----------- ----------- ----------- ------------ Total........... 50,000,000 70,000,000 70,000,000 70,000,000 260,000,000
Use of Facility. In connection with the Merger, Dynatech drew down the $260.0 million in term loan borrowings under the Senior Credit Facility, and Dynatech drew approximately $40.0 million under the Revolving Credit Facility, as part of the financing for the Recapitalization. See "The Recapitalization." Any unused portion of the Revolving Credit Facility is available to TTC for working capital and general corporate purposes. 73 Guarantee; Security. The obligations of TTC under the Revolving Credit Facility and the Term Loans are guaranteed by each active direct or indirect U.S. subsidiary of TTC and by Dynatech. The obligations under the Senior Credit Facility are secured by a pledge of the equity interest in TTC, by substantially all of the assets of TTC and each active direct or indirect U.S. subsidiary of TTC, and by a pledge of the capital stock of each such direct or indirect U.S. subsidiary, and 65% of the capital stock of each subsidiary of TTC that acts as a holding company of TTC's foreign subsidiaries. Interest; Fees. At TTC's option, the Revolving Credit Facility and the Term Loans bear interest at variable rates equal to either (i) the higher of (A) Morgan's prime rate, or (B) 0.50% per annum over the federal funds rate (the "Base Rate"), or (ii) reserve-adjusted LIBO rate ("LIBOR"), plus, in either case, a borrowing margin ranging from 0% to 3%, based upon (x) whether the loan is a Base Rate loan or LIBOR loan, (y) whether the loan is a Revolving Credit Facility loan, Tranche A Term Loan, Tranche B Term Loan, Tranche C Term Loan, or Tranche D Term Loan and (z) TTC's debt to EBITDA ratio. The transaction fees and expenses set forth in the sources and uses of funds for the Recapitalization (see "The Recapitalization") include transaction fees payable in connection with the provision of the Senior Credit Facility. In addition, a commitment fee is payable quarterly on the daily average unused portion of the Revolving Credit Facility, in an amount from 0.30% to 0.50% per annum on such unused portion, based upon TTC's debt to EBITDA ratio. Prepayments. The Senior Credit Facility generally permits voluntary prepayment of loans thereunder without premium or penalty, subject to certain limitations, including certain rights of holders of the Tranche B Term Loan, Tranche C Term Loan and Tranche D Term Loan under certain circumstances (i) to receive a premium of 1% of the principal amount of any such Term Loans prepaid within 18 months of the May 1998 Closing and (ii) to decline partial prepayments. Mandatory prepayments are required to be made from (a) 100% of net proceeds from certain asset sales, casualty insurance, and condemnation awards or other similar recoveries; (b) 100% of the net proceeds from the issuance of indebtedness by TTC or any of its subsidiaries, other than as permitted by the Senior Credit Facility; and (c) 50% of annual excess cash flow for each fiscal year in which the ratio of TTC's debt on the last day of such fiscal year to its EBITDA for the four fiscal quarters then ended is greater than or equal to 4.0 to 1.0 (the "Excess Cash Flow Recapture"). Subject to certain rights of holders of the Tranche B Term Loan, Tranche C Term Loan and Tranche D Term Loan to decline partial mandatory prepayments, mandatory prepayments will be applied to the Term Loans until all the Term Loans are paid in full, and then to prepay loans and permanently reduce commitments under the Revolving Credit Facility, subject to certain limitations. Covenants. The Revolving Credit Facility and the Tranche A Term Loan are subject to covenants that, among other things, restrict the ability of TTC and its subsidiaries to dispose of assets, incur additional debt, guarantee obligations or contingent liabilities, repay the Notes, pay dividends, create liens on assets, make investments, loans or advances, engage in mergers or consolidations, make capital expenditures or engage in certain transactions with affiliates, and otherwise restrict corporate activities. The Tranche B Term Loan, Tranche C Term Loan and Tranche D Term Loan are subject to negative covenants which are substantially similar to those contained in the Indenture. Events of Default. The Revolving Credit Facility and the Tranche A Term Loan are subject to customary events of default. The events of default applicable to the Tranche B Term Loan, Tranche C Term Loan and Tranche D Term Loan include certain events of default relating to non-financial covenants that are substantially similar to those contained in the Indenture, in lieu of certain non-financial covenant-related defaults applicable to the Revolving Credit Facility and the Tranche A Term Loan, and differ in certain other respects from the events of default applicable to the Revolving Credit Facility and Tranche A Term Loan. 74 DESCRIPTION OF NOTES GENERAL The Existing Notes were issued and the New Notes offered hereby will be issued under an Indenture, dated as of May 21, 1998 (the "Indenture"), among Holding and its wholly owned subsidiary TTC Merger Co. LLC ("TTC Merger Co."), as primary obligors, and State Street Bank and Trust Company, as Trustee (the "Trustee"). Immediately after the issuance of the Existing Notes, TTC and TTC Merger Co. merged (the "Second Merger"), with TTC surviving. TTC thereupon succeeded to and assumed all of the obligations under the Indenture and the Existing Notes, and thereby became the primary obligor on the Existing Notes. Concurrently, Holding was released from its obligations as primary obligor under the Indenture and the Existing Notes. The Indenture has been filed as an exhibit under the Registration Statement of which this Prospectus is a part and is available as set forth under the heading "Available Information." The terms of the New Notes are identical in all material respects to the terms of the Existing Notes for which they may be exchanged pursuant to the Exchange Offer, except that the New Notes will have been registered under the Securities Act, and thus will not bear restrictive legends restricting their transfer pursuant to the Securities Act. The following is a summary of certain provisions of the Indenture and the Notes after giving effect to the Second Merger. It does not purport to be complete and is subject to, and is qualified in its entirety by reference to, all the provisions of the Indenture, including the definitions of certain terms therein and those terms to be made a part thereof by the Trust Indenture Act of 1939, as amended ("TIA"). The term "Company" and the other capitalized terms defined in "--Certain Definitions" below are used in this "Description of Notes" as so defined. As used in this "Description of Notes" section, the term "Notes" means the Existing Notes and the New Notes, collectively. Principal of, and premium, if any, and interest on, the Notes will be payable, and the Notes may be exchanged or transferred, at the office or agency of the Company in the Borough of Manhattan, The City of New York (which initially shall be the corporate trust office of the Trustee, at 61 Broadway, 15th Floor, New York, New York 10006), except that, at the option of the Company, payment of interest may be made by check mailed to the address of the registered holders of the Notes as such address appears in the Note Register. The Notes will be unsecured obligations of the Company, ranking subordinate in right of payment to all Senior Indebtedness of the Company. The Notes will be issued only in fully registered form, without coupons, in denominations of $1,000 and any integral multiple of $1,000. No service charge will be made for any registration of transfer or exchange of Notes, but the Company may require payment of a sum sufficient to cover any transfer tax or other similar governmental charge payable in connection therewith. TERMS OF THE NOTES The Notes will mature on May 15, 2008. Each Note will bear interest at a rate per annum shown on the front cover of this Prospectus from the date of issuance, or from the most recent date to which interest has been paid or provided for, payable semiannually in cash to Holders of record at the close of business on the May 1 or November 1 immediately preceding the interest payment date on May 15 and November 15 of each year, commencing November 15, 1998. Interest will be paid on the basis of a 360-day year consisting of twelve 30-day months. The Existing Notes were issued initially in an aggregate principal amount of $275.0 million. The Company has agreed to use its reasonable best efforts to file a registration statement relating to the Exchange Offer with the Commission, to permit the exchange of Existing Notes for New Notes as described under "Exchange Offer" and "Registration Rights." The Registration Statement of which this Prospectus is a part constitutes the Exchange Offer Registration Statement. The terms of the New Notes will be identical in all material respects to 75 the Existing Notes, except for certain transfer restrictions and other rights relating to the Exchange Offer, and New Notes will otherwise be treated as Notes for purposes of the Indenture. Additional securities may be issued under the Indenture in one or more series from time to time ("Additional Notes"), subject to the limitations set forth under "--Certain Covenants--Limitation on Indebtedness," which may vote as a class with the Notes and otherwise be treated as Notes for purposes of the Indenture. OPTIONAL REDEMPTION The Notes will be redeemable, at the Company's option, in whole or in part, and from time to time on and after May 15, 2003 and prior to maturity. Such redemption may be made upon notice mailed by first-class mail to each Holder's registered address, not less than 30 nor more than 60 days prior to the redemption date. Any such redemption and notice may, in the Company's discretion, be subject to the satisfaction of one or more conditions precedent. The Notes will be so redeemable at the following redemption prices (expressed as a percentage of principal amount), plus accrued interest, if any, to the relevant redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the 12-month period commencing on May 15 of the years set forth below:
REDEMPTION PERIOD PRICE ------ ---------- 2003.............................................................. 104.875% 2004.............................................................. 103.250% 2005.............................................................. 101.625% 2006 and thereafter............................................... 100.000%
In addition, at any time and from time to time prior to May 15, 2001, the Company at its option may redeem Notes in an aggregate principal amount equal to up to 35% of the original aggregate principal amount of the Notes (including the principal amount of any Additional Notes), with funds in an aggregate amount (the "Redemption Amount") not exceeding the aggregate proceeds of one or more Equity Offerings (as defined below) at a redemption price (expressed as a percentage of principal amount thereof) of 109.75% plus accrued interest, if any, to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date); provided, however, that an aggregate principal amount of Notes equal to at least 65% of the original aggregate principal amount of the Notes (including the principal amount of any Additional Notes) must remain outstanding after each such redemption. "Equity Offering" means a sale of Capital Stock (other than Disqualified Stock) (x) that is a sale of Capital Stock of the Company, or (y) proceeds of which in an amount equal to or exceeding the Redemption Amount are contributed to the Company or any of its Restricted Subsidiaries. The Company may make such redemption upon notice mailed by first-class mail to each Holder's registered address, not less than 30 nor more than 60 days prior to the redemption date (but in no event more than 180 days after the completion of the related Equity Offering). Any such notice may be given prior to the completion of the related Equity Offering, and any such redemption or notice may, at the Company's discretion, be subject to the satisfaction of one or more conditions precedent, including but not limited to the completion of the related Equity Offering. At any time on or prior to May 15, 2003, the Notes may also be redeemed or purchased (by the Company or any other Person) in whole but not in part, at the Company's option, upon the occurrence of a Change of Control, at a price (the "Redemption Price") equal to 100% of the principal amount thereof plus the Applicable Premium as of, and accrued but unpaid interest, if any, to, the date of redemption or purchase (the "Redemption Date") (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date). Such redemption or purchase may be made upon notice mailed by first-class mail to each Holder's registered address, not less than 30 nor more than 60 days prior to the Redemption Date (but in no event more than 180 days after the occurrence of such Change of Control). The Company may provide in such notice that payment of the Redemption Price and performance of the Company's obligations with respect to such 76 redemption or purchase may be performed by another Person. Any such notice may be given prior to the occurrence of the related Change of Control, and any such redemption, purchase or notice may, at the Company's discretion, be subject to the satisfaction of one or more conditions precedent, including but not limited to the occurrence of the related Change of Control. "Applicable Premium" means, with respect to a Note at any Redemption Date, the greater of (i) 1.0% of the principal amount of such Note and (ii) the excess of (A) the present value at such Redemption Date of (1) the redemption price of such Note on May 15, 2003 (such redemption price being that described in the first paragraph of this "Optional Redemption" section) plus (2) all required remaining scheduled interest payments due on such Note through May 15, 2003, computed using a discount rate equal to the Treasury Rate plus 50 basis points, over (B) the principal amount of such Note on such Redemption Date. Calculation of the Applicable Premium will be made by the Company or on behalf of the Company by such Person as the Company shall designate, provided, that such calculation shall not be a duty or obligation of the Trustee. "Treasury Rate" means, with respect to a Redemption Date, the yield to maturity at the time of computation of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15(519) that has become publicly available at least two Business Days prior to such Redemption Date (or, if such Statistical Release is no longer published, any publicly available source or similar market data)) most nearly equal to the period from such Redemption Date to May 15, 2003; provided, however, that if the period from the Redemption Date to May 15, 2003 is not equal to the constant maturity of the United States Treasury security for which a weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one- twelfth of a year) from the weekly average yields of United States securities for which such yields are given, except that if the period from the Redemption Date to May 15, 2003 is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used. In addition, as more fully described under "--Change of Control," each Holder will have the right to require the Company to repurchase all or any part of such Holder's Notes following a Change of Control Trigger Event at a purchase price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of repurchase. SELECTION In the case of any partial redemption, selection of the Notes for redemption will be made by the Trustee on a pro rata basis, by lot or by such other method as the Trustee in its sole discretion shall deem to be fair and appropriate, although no Note of $1,000 in original principal amount or less will be redeemed in part. If any Note is to be redeemed in part only, the notice of redemption relating to such Note shall state the portion of the principal amount thereof to be redeemed. A new Note in principal amount equal to the unredeemed portion thereof will be issued in the name of the Holder thereof upon cancellation of the original Note. HOLDING GUARANTEE Holding has, as a primary obligor and not merely as surety, irrevocably and fully and unconditionally Guaranteed (the "Parent Guarantee"), on a senior subordinated basis, the punctual payment when due, whether at Stated Maturity, by acceleration or otherwise, of all monetary obligations of the Company under the Indenture and the Notes, whether for principal of or interest on the Notes, expenses, indemnification or otherwise (all such obligations guaranteed by Holding being herein called the "Parent Guaranteed Obligations"). Holding, pursuant to the Parent Guarantee, has agreed to pay, in addition to the amount stated above, any and all reasonable out-of-pocket expenses (including reasonable counsel fees and expenses) incurred by the Trustee or the Holders in enforcing any rights under the Parent Guarantee. The obligations of Holding will be limited to the maximum amount, as will, after giving effect to all other contingent and fixed liabilities of Holding, result in the obligations of Holding under the Parent Guarantee not constituting a fraudulent conveyance or fraudulent transfer under applicable law, or void or unenforceable under any law relating to the insolvency of debtors. 77 The Parent Guarantee shall be a continuing Guarantee and shall (i) remain in full force and effect until payment in full of the principal amount of all outstanding Notes (whether by payment at maturity, purchase, redemption, defeasance, retirement or other acquisition) and all other Parent Guaranteed Obligations then due and owing, (ii) be binding upon such Note Guarantor and (iii) inure to the benefit of and be enforceable by the Trustee, the Holders and their permitted successors, transferees and assigns. Holding will automatically and unconditionally be released from all obligations under the Parent Guarantee, and the Parent Guarantee shall thereupon terminate and be discharged and of no further force of effect, (i) upon any merger or consolidation of Holding with and into the Company, (ii) upon legal or covenant defeasance of the Company's obligations, or satisfaction and discharge of the Indenture, or (iii) subject to customary contingent reinstatement provisions, upon payment in full of the aggregate principal amount of all Notes then outstanding and all other Parent Guaranteed Obligations then due and owing. Upon any such occurrence specified in this paragraph, the Trustee shall execute any documents reasonably required in order to evidence such release, discharge and termination in respect of the Parent Guarantee. Neither the Company nor Holding shall be required to make a notation on the Notes to reflect the Parent Guarantee or any such release, termination or discharge. NOTE GUARANTEES After the Issue Date, the Company will cause each Significant Domestic Subsidiary that guarantees payment by the Company of Indebtedness of the Company (other than Bank Indebtedness) to execute and deliver to the Trustee a supplemental indenture or other instrument pursuant to which such Subsidiary will guarantee payment of the Notes, whereupon such Subsidiary will become a Note Guarantor for all purposes under the Indenture. The Company will also have the right to cause any other Subsidiary so to guarantee payment of the Notes. No Subsidiaries will be Note Guarantors as of the Issue Date. Note Guarantees will be subject to release and discharge under certain circumstances prior to payment in full of the Notes. See "--Certain Covenants--Future Note Guarantors." RANKING The indebtedness evidenced by the Notes is unsecured Senior Subordinated Indebtedness of the Company, is subordinated in right of payment, as set forth in the Indenture, to the payment when due of all existing and future Senior Indebtedness of the Company, including the Company's obligations under the Senior Credit Facility, ranks pari passu in right of payment with all existing and future Senior Subordinated Indebtedness of the Company and is senior in right of payment to all existing and future Subordinated Obligations of the Company. The Notes are also be effectively subordinated to any Secured Indebtedness of the Company to the extent of the value of the assets securing such Indebtedness. However, payment from the money or the proceeds of U.S. Government Obligations held in any defeasance trust described under "-- Defeasance" below is not subordinated to any Senior Indebtedness or subject to the restrictions described herein. At May 31, 1998, Senior Indebtedness of the Company was $300.0 million (excluding a maximum $3.0 million guarantee) and the Company had additional availability of $70.0 million for borrowings under the Senior Credit Facility, all of which would have been Secured Indebtedness, and no Senior Subordinated Indebtedness (other than the indebtedness represented by the Notes). Although the Indenture contains limitations on the amount of additional Indebtedness that the Company may Incur, under certain circumstances the amount of such Indebtedness could be substantial and, in any case, such Indebtedness may be Senior Indebtedness or Secured Indebtedness. See "--Certain Covenants-- Limitation on Indebtedness" below. The obligations of Holding under the Parent Guarantee are unsecured Parent Senior Subordinated Indebtedness, subordinated in right of payment, as set forth in the Indenture, to the payment when due of all existing and future Parent Senior Indebtedness, including Holding's obligations under or relating to the Senior Credit Facility, rank pari passu in right of payment with all existing and future Parent Senior Subordinated Indebtedness and are senior in right of payment of all existing and future Parent Subordinated Obligations. The Parent Guarantee is also effectively subordinated to any Secured Indebtedness of Holding to the extent of the value of the assets securing such Indebtedness. The terms on which the Parent Guarantee is subordinated to the 78 prior payment in full of Parent Senior Indebtedness are substantially identical to those described below governing the subordination of the Notes to the prior payment in full of Senior Indebtedness. All of the operations of Holding are conducted through Subsidiaries, including the Company. Claims of creditors of such Subsidiaries, including trade creditors, and claims of preferred shareholders (if any) of such Subsidiaries will have priority with respect to the assets and earnings of such Subsidiaries over the claims of creditors of Holding, including claims under the Parent Guarantee. The Parent Guarantee, therefore, is effectively subordinated to creditors (including trade creditors) and preferred shareholders (if any) of such Subsidiaries, including of TTC. Moreover, as a holding company with no assets other than its membership interest in TTC, Holding will depend upon distributions from TTC to fund any obligations under the Parent Guarantee. Accordingly, if TTC should at any time be unable to pay interest or premium, if any, on or principal of the Notes, it is unlikely that TTC will be able to distribute the funds necessary to enable Holding to meet its obligations under the Parent Guarantee. See "Risk Factors--Subordination of Dynatech Guarantee; No Independent Operations of Dynatech." The obligations of each Note Guarantor, if any, under the Note Guarantee to which it is a party will be unsecured Guarantor Senior Subordinated Indebtedness of such Note Guarantor, will be subordinated in right of payment, as set forth in the Indenture, to the payment when due of all existing and future Guarantor Senior Indebtedness of such Note Guarantor, including the Note Guarantor's obligations under or relating to the Senior Credit Facility, will rank pari passu in right of payment with all existing and future Guarantor Senior Subordinated Indebtedness of such Note Guarantor and will be senior in right of payment to all existing and future Guarantor Subordinated Obligations of such Note Guarantor. The Note Guarantee of each Note Guarantor, if any, will also be effectively subordinated to any Secured Indebtedness of such Note Guarantor to the extent of the value of the assets securing such Indebtedness. The terms on which each Note Guarantee, if any, will be subordinated to the prior payment in full of Guarantor Senior Indebtedness will be substantially identical to those described below governing the subordination of the Notes to the prior payment in full of Senior Indebtedness. A substantial part of the operations of the Company are conducted through its Subsidiaries. Claims of creditors of such Subsidiaries, including trade creditors, and claims of preferred shareholders (if any) of such Subsidiaries will have priority with respect to the assets and earnings of such Subsidiaries over the claims of creditors of the Company, including holders of the Notes. The Notes, therefore, will be effectively subordinated to creditors (including trade creditors) and preferred shareholders (if any) of Subsidiaries of the Company (other than Subsidiaries, if any, that may become Note Guarantors in the future). Certain of the operations of a Note Guarantor may be conducted through Subsidiaries thereof that are not also Note Guarantors. Claims of creditors of such Subsidiaries, including trade creditors, and claims of preferred shareholders (if any) of such Subsidiaries will have priority with respect to the assets and earnings of such Subsidiaries over the claims of creditors of such Note Guarantor, including claims under the Note Guarantee of such Note Guarantor. Such Note Guarantee, if any, therefore, will be effectively subordinated to creditors (including trade creditors) and preferred shareholders (if any) of such Subsidiaries. Although the Indenture limits the incurrence of Indebtedness (including preferred stock) by certain of the Company's Subsidiaries, such limitation is subject to a number of significant qualifications. At May 31, 1998, the Company's Subsidiaries had no material outstanding Indebtedness for borrowed money (excluding inter-company indebtedness). No preferred stock of such Subsidiaries was outstanding at such date. See "--Certain Covenants-- Limitation on Indebtedness" below. "Senior Indebtedness" means, with respect to the Company, the following obligations, whether outstanding on the date of the Indenture or thereafter issued, without duplication: (i) all Bank Indebtedness, (ii) all obligations in respect of any Receivables Financing, and (iii) all obligations consisting of the principal of and premium, if any, and accrued and unpaid interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Company regardless of whether post-filing interest is allowed in such proceeding) on, and fees and other amounts owing in respect of, all other Indebtedness of the Company, unless, in the instrument creating or evidencing the same or pursuant to which the same is outstanding, it is expressly provided that the obligations in respect of such Indebtedness are not senior in right of payment to the Notes; provided, however, that Senior Indebtedness shall not include (1) any obligation of the Company to any Subsidiary, (2) any liability for Federal, state, foreign, local or other taxes owed or owing by the Company, 79 (3) any accounts payable or other liability to trade creditors arising in the ordinary course of business (including Guarantees thereof or instruments evidencing such liabilities), (4) any Indebtedness of the Company (or Guarantee by the Company of any Indebtedness) that is expressly subordinated in right of payment to any other Indebtedness of the Company (or Guarantee by the Company of any Indebtedness), (5) any Capital Stock of the Company or (6) that portion of any Indebtedness of the Company that is Incurred by the Company in violation of the covenant described under "--Certain Covenants-- Limitation on Indebtedness" (but no such violation shall be deemed to exist for purposes of this clause (6) if any holder of such Indebtedness or such holder's representative shall have received an Officer's Certificate of the Company to the effect that such Incurrence of such Indebtedness does not (or that the Incurrence by the Company of the entire committed amount thereof at the date on which the initial borrowing thereunder is made would not) violate such covenant). If any Senior Indebtedness is disallowed, avoided or subordinated pursuant to the provisions of Section 548 of Title 11 of the United States Code or any applicable state fraudulent conveyance law, such Senior Indebtedness nevertheless will constitute Senior Indebtedness. Only Indebtedness of the Company that is Senior Indebtedness will rank senior to the Notes in accordance with the provisions of the Indenture. The Notes will in all respects rank pari passu with all other Senior Subordinated Indebtedness of the Company. Only Indebtedness of a Note Guarantor that is Guarantor Senior Indebtedness will rank senior to the Note Guarantee of such Note Guarantor in accordance with the provisions of the Indenture. Such Note Guarantee will in all respects rank pari passu with all other Guarantor Senior Subordinated Indebtedness of such Note Guarantor. The Company has agreed in the Indenture that it will not Incur, directly or indirectly, any Indebtedness that is expressly subordinated in right of payment to Senior Indebtedness of the Company unless such Indebtedness is pari passu with, or subordinated in right of payment to, the Notes. Each Note Guarantor, if any, will agree that it will not Incur, directly or indirectly, any Indebtedness that is expressly subordinated in right of payment to Guarantor Senior Indebtedness of such Note Guarantor unless such Indebtedness is pari passu with, or subordinated in right of payment to, the Note Guarantee of such Note Guarantor. Unsecured Indebtedness is not deemed to be subordinate or junior to Secured Indebtedness merely because it is unsecured, and Indebtedness that is not guaranteed by a particular Person is not deemed to be subordinate or junior to Indebtedness that is so guaranteed merely because it is not so guaranteed. The Company may not pay principal of, or premium (if any) or interest on, the Notes or make any deposit pursuant to the provisions described under "-- Defeasance" below and may not otherwise purchase, redeem or otherwise retire any Notes (collectively, "pay the Notes") if (i) any Senior Indebtedness is not paid when due in cash or Cash Equivalents or (ii) any other default on Senior Indebtedness occurs and the maturity of such Senior Indebtedness is accelerated in accordance with its terms (either such event, a "Payment Default") unless, in either case, (x) the Payment Default has been cured or waived and any such acceleration has been rescinded in writing or (y) such Senior Indebtedness has been paid in full in cash or Cash Equivalents. However, the Company may pay the Notes without regard to the foregoing if the Company and the Trustee receive written notice approving such payment from the Representative for the Designated Senior Indebtedness with respect to which the Payment Default has occurred and is continuing. In addition, during the continuance of any default (other than a Payment Default) with respect to any Designated Senior Indebtedness pursuant to which the maturity thereof may be accelerated immediately without further notice (except such notice as may be required to effect such acceleration) or the expiration of any applicable grace period (a "Non-payment Default"), the Company may not pay the Notes for the period specified as follows (a "Payment Blockage Period"). The Payment Blockage Period shall commence upon the receipt by the Trustee (with a copy to the Company) of written notice (a "Blockage Notice") of such Non-payment Default from the Representative for such Designated Senior Indebtedness specifying an election to effect a Payment Blockage Period and shall end on the earliest to occur of the following events: (i) 179 days shall have elapsed since such receipt of such Blockage Notice, (ii) the Non-payment Default giving rise to such Blockage Notice is no longer continuing (and no other Payment Default or Non-payment Default is then continuing), (iii) such Designated Senior Indebtedness shall have been discharged or repaid in full in cash or 80 Cash Equivalents or (iv) such Payment Blockage Period shall have been terminated by written notice to the Trustee and the Company from the Person or Persons who gave such Blockage Notice. The Company shall promptly resume payments on the Notes, including any missed payments, after such Payment Blockage Period ends, unless the holders of such Designated Senior Indebtedness or the Representative of such holders have accelerated the maturity of such Designated Senior Indebtedness, or any Payment Default otherwise exists. Not more than one Blockage Notice may be given in any 360 consecutive day period, irrespective of the number of defaults with respect to Designated Senior Indebtedness during such period, except that if any Blockage Notice within such 360-day period is given by or on behalf of any holders of Designated Senior Indebtedness other than Bank Indebtedness, a Representative of holders of Bank Indebtedness may give another Blockage Notice within such period. In no event may the total number of days during which any Payment Blockage Period is in effect extend beyond 179 days from the date of receipt by the Trustee of the relevant Blockage Notice, and there must be a 181 consecutive day period during any 360 consecutive day period during which no Payment Blockage Period is in effect. Upon any payment or distribution of the assets of the Company upon a total or partial liquidation or dissolution or reorganization of or similar proceeding relating to the Company or its property, or in a bankruptcy, insolvency, receivership or similar proceeding relating to the Company or its property, the holders of Senior Indebtedness will be entitled to receive payment in full of the Senior Indebtedness before the Noteholders are entitled to receive any payment and until the Senior Indebtedness is paid in full, any payment or distribution to which Noteholders would be entitled but for the subordination provisions of the Indenture will be made to holders of the Senior Indebtedness as their interests may appear. If a distribution is made to Noteholders that due to the subordination provisions should not have been made to them, such Noteholders are required to hold it in trust for the holders of Senior Indebtedness and pay it over to them as their interests may appear. If the Company fails to make any payment on the Notes when due or within any applicable grace period, whether or not on account of the payment blockage provisions referred to above, such failure would constitute an Event of Default under the Indenture and would enable the holders of the Notes to accelerate the maturity thereof. See "--Defaults." If payment of the Notes is accelerated because of an Event of Default, the Company or the Trustee shall promptly notify the holders of the Designated Senior Indebtedness or the Representative of such holders of the acceleration. Such acceleration will not be effective, and the Company may not pay the Notes, until five Business Days after such holders or the Representative of each Designated Senior Indebtedness receive notice of such acceleration and, thereafter, the Company may pay the Notes only if the subordination provisions of the Indenture otherwise permit payment at that time. By reason of such subordination provisions contained in the Indenture, in the event of liquidation, receivership, reorganization or insolvency, (i) creditors of the Company who are holders of Senior Indebtedness may recover more, ratably, than the Noteholders, (ii) trade creditors of the Company who are not holders of Senior Indebtedness or of Senior Subordinated Indebtedness (including the Notes) may recover less, ratably, than holders of Senior Indebtedness and may recover more, ratably, than the holders of Senior Subordinated Indebtedness, and (iii) the Company may be unable to meet its obligations on the Notes. In addition, as described above, the Notes will be effectively subordinated, with respect to the Company's Subsidiaries, to the claims of creditors of those Subsidiaries. CHANGE OF CONTROL Upon the occurrence after the Issue Date of a Change of Control (as defined below) and the failure of the Notes to have, on the 30th day after such Change of Control, a rating of at least BBB- (or equivalent successor rating) by S&P and a rating of at least Baa3 (or equivalent successor rating) by Moody's (a "Change of Control Triggering Event"), each Holder will have the right to require the Company to repurchase all or any part of such Holder's Notes at a purchase price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of repurchase (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date); provided, however, that the Company shall 81 not be obligated to repurchase Notes pursuant to this covenant in the event that it has exercised its right to redeem all of the Notes as described under "--Optional Redemption." The term "Change of Control" means: (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than one or more Permitted Holders or Holding, is or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the total voting power of the Voting Stock of the Company, provided that so long as the Company is a Subsidiary of Holding, no Person shall be deemed to be or become a "beneficial owner" of more than 50% of the total voting power of the Voting Stock of the Company unless such Person shall be or become a "beneficial owner" of more than 50% of the total voting power of the Voting Stock of Holding; (ii) the Company merges or consolidates with or into, or sells or transfers (in one or a series of related transactions) all or substantially all of the assets of the Company and its Restricted Subsidiaries to, another Person (other than one or more Permitted Holders) and any "person" (as defined in clause (i) above), other than one or more Permitted Holders or Holding, is or becomes the "beneficial owner" (as so defined), directly or indirectly, of more than 50% of the total voting power of the Voting Stock of the surviving Person in such merger or consolidation, or the transferee Person in such sale or transfer of assets, as the case may be, provided that so long as such surviving or transferee Person is a Subsidiary of a parent Person, no Person shall be deemed to be or become a "beneficial owner" of more than 50% of the total voting power of the Voting Stock of such surviving or transferee Person unless such Person shall be or become a "beneficial owner" of more than 50% of the total voting power of the Voting Stock of such parent Person; or (iii) during any period of two consecutive years (during which period the Company has been a party to the Indenture), individuals who at the beginning of such period were members of the board of directors of the Company (together with any new members thereof whose election by such board of directors or whose nomination for election by holders of Capital Stock of the Company was approved by one or more Permitted Holders or by a vote of a majority of the members of such board of directors then still in office who were either members thereof at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of such board of directors then in office. In the event that, at the time of such Change of Control Triggering Event, the terms of the Bank Indebtedness restrict or prohibit the repurchase of Notes pursuant to this covenant, then prior to the mailing of the notice to Holders provided for in the immediately following paragraph but in any event not later than 30 days following the date the Company obtains actual knowledge of any Change of Control Triggering Event (unless the Company has exercised its right to redeem all the Notes as described under "--Optional Redemption"), the Company shall (i) repay in full all Bank Indebtedness or offer to repay in full all Bank Indebtedness and repay the Bank Indebtedness of each lender who has accepted such offer or (ii) obtain the requisite consent under the agreements governing the Bank Indebtedness to permit the repurchase of the Notes as provided for in the immediately following paragraph. The Company shall first comply with the provisions of the immediately preceding sentence before it shall be required to repurchase Notes pursuant to the provisions described below. The Company's failure to comply with such provisions or the provisions of the immediately following paragraph shall constitute an Event of Default described in clause (iv) and not in clause (ii) under "--Defaults" below. Unless the Company has exercised its right to redeem all the Notes as described under "--Optional Redemption," the Company shall, not later than 30 days following the date the Company obtains actual knowledge of any Change of Control Triggering Event having occurred, mail a notice to each Holder with a copy to the Trustee stating: (1) that a Change of Control Triggering Event has occurred or may occur and that such Holder has, or upon such occurrence will have, the right to require the Company to purchase such Holder's Notes at a purchase price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of Holders of record on a record date to receive interest on 82 the relevant interest payment date); (2) the circumstances and relevant facts and financial information regarding such Change of Control; (3) the repurchase date (which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed); (4) the instructions determined by the Company, consistent with this covenant, that a Holder must follow in order to have its Notes purchased; and (5) if such notice is mailed prior to the occurrence of a Change of Control or Change of Control Triggering Event, that such offer is conditioned on the occurrence of such Change of Control Triggering Event. The Company will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Notes pursuant to this covenant. To the extent that the provisions of any securities laws or regulations conflict with provisions of this covenant, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this covenant by virtue thereof. The Change of Control Triggering Event purchase feature is a result of negotiations between the Company and the Initial Purchasers. The Company has no present plans to engage in a transaction involving a Change of Control, although it is possible that the Company would decide to do so in the future. Subject to the limitations discussed below, the Company could, in the future, enter into certain transactions, including acquisitions, refinancings or recapitalizations, that would not constitute a Change of Control under the Indenture, but that could increase the amount of Indebtedness outstanding at such time or otherwise affect the Company's capital structure or credit ratings. The occurrence of a Change of Control would constitute a default under the Senior Credit Agreement. Agreements governing future Senior Indebtedness of the Company may contain prohibitions of certain events that would constitute a Change of Control or require such Senior Indebtedness to be repurchased or repaid upon a Change of Control. Moreover, the exercise by the Holders of their right to require the Company to repurchase the Notes could cause a default under such agreements, even if the Change of Control itself does not, due to the financial effect of such repurchase on the Company. Finally, the Company's ability to pay cash to the Holders upon a repurchase may be limited by the Company's then existing financial resources. There can be no assurance that sufficient funds will be available when necessary to make any required repurchases. As described above under "--Optional Redemption," the Company also has the right to redeem the Notes at specified prices, in whole or in part, upon a Change of Control. The definition of Change of Control includes a phrase relating to the sale or other transfer of "all or substantially all" of the Company's assets, as such phrase is used in the Revised Model Business Corporation Act. Although there is a developing body of case law interpreting the phrase "substantially all," there is no precise definition of the phrase under applicable law. Accordingly, in certain circumstances there may be a degree of uncertainty in ascertaining whether a particular transaction would involve a disposition of "all or substantially all" of the assets of the Company, and therefore it may be unclear as to whether a Change of Control has occurred and whether the holders of the Notes have the right to require the Company to repurchase such Notes. CERTAIN COVENANTS The Indenture contains covenants including, among others, the following: Limitation on Indebtedness. (a) The Company will not, and will not permit any Restricted Subsidiary to, Incur any Indebtedness; provided, however, that the Company or any Note Guarantor may Incur Indebtedness if on the date of the Incurrence of such Indebtedness, after giving effect to the Incurrence thereof, the Consolidated Coverage Ratio would be greater than 1.75:1.00 if such Indebtedness is Incurred prior to June 1, 2001 or 2.00:1.00 if such Indebtedness is Incurred thereafter. (b) Notwithstanding the foregoing paragraph (a), the Company and its Restricted Subsidiaries may Incur the following Indebtedness: (i) Indebtedness Incurred pursuant to the Senior Credit Facility (including but not limited to in respect of letters of credit or bankers' acceptances issued or created thereunder) and Indebtedness of any Foreign 83 Subsidiary Incurred other than under the Senior Credit Facility, and (without limiting the foregoing), in each case, any Refinancing Indebtedness in respect thereof, in a maximum principal amount at any time outstanding not exceeding in the aggregate the amount equal to (A) $410.0 million, plus (B) the amount, if any, by which the Borrowing Base exceeds $110.0 million, plus (C) in the case of any refinancing of the Senior Credit Facility or any portion thereof, the aggregate amount of fees, underwriting discounts, premiums and other costs and expenses incurred in connection with such refinancing; (ii) Indebtedness (A) of any Restricted Subsidiary to the Company or (B) of the Company or any Restricted Subsidiary to any Restricted Subsidiary; provided, that any subsequent issuance or transfer of any Capital Stock of such Restricted Subsidiary to which such Indebtedness is owed, or other event, that results in such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of such Indebtedness (except to the Company or a Restricted Subsidiary) will be deemed, in each case, an Incurrence of such Indebtedness by the issuer thereof; (iii) Indebtedness represented by the Notes, any Indebtedness (other than the Indebtedness described in clauses (i) or (ii) above) outstanding on the Issue Date and any Refinancing Indebtedness Incurred in respect of any Indebtedness described in this clause (iii) or paragraph (a) above; (iv) Purchase Money Obligations and Capitalized Lease Obligations, and any Refinancing Indebtedness with respect thereto, in an aggregate principal amount at any time outstanding not exceeding an amount equal to 10% of Consolidated Total Assets at any time outstanding; (v) Indebtedness of any Foreign Subsidiary Incurred for working capital purposes; (vi) (A) Guarantees by the Company or any Restricted Subsidiary of Indebtedness or any other obligation or liability of the Company or any Restricted Subsidiary (other than any Indebtedness incurred by the Company or such Restricted Subsidiary, as the case may be, in violation of the covenant described under "--Limitation on Indebtedness"), or (B) without limiting the covenant described under "--Limitation on Liens," Indebtedness of the Company or any Restricted Subsidiary arising by reason of any Lien granted by or applicable to such Person securing Indebtedness of the Company or any Restricted Subsidiary (other than any Indebtedness incurred by the Company or such Restricted Subsidiary, as the case may be, in violation of the covenant described under "--Limitation on Indebtedness"); (vii) Indebtedness of the Company or any Restricted Subsidiary (A) arising from the honoring of a check, draft or similar instrument of such Person drawn against insufficient funds, provided that such Indebtedness is extinguished within five Business Days of its incurrence, or (B) consisting of guarantees, indemnities, obligations in respect of earnouts or other purchase price adjustments, or similar obligations, Incurred in connection with the acquisition or disposition of any business, assets or Person (including pursuant to the Recapitalization); (viii) Indebtedness of the Company or any Restricted Subsidiary in respect of (A) letters of credit, bankers' acceptances or other similar instruments or obligations issued, or relating to liabilities or obligations incurred, in the ordinary course of business (including those issued to governmental entities in connection with self-insurance under applicable workers' compensation statutes), or (B) completion guarantees, surety, judgment, appeal or performance bonds, or other similar bonds, instruments or obligations, provided, or relating to liabilities or obligations incurred, in the ordinary course of business, or (C) Hedging Obligations entered into for bona fide hedging purposes in the ordinary course of business, or (D) Management Guarantees, or (E) the financing of insurance premiums in the ordinary course of business; (ix) Indebtedness of a Receivables Subsidiary secured by a Lien on all or part of the assets disposed of in, or otherwise incurred in connection with, a Financing Disposition; (x) Indebtedness of any Person that is assumed by the Company or any Restricted Subsidiary in connection with its acquisition of assets from such Person or any Affiliate thereof or is issued and outstanding on or prior to the date on which such Person was acquired by the Company or any Restricted Subsidiary or merged or consolidated with or into any Restricted Subsidiary (other than Indebtedness Incurred to finance, or otherwise in connection with, such acquisition), provided that on the date of such acquisition, merger or consolidation, after giving effect thereto, (x) with respect to any such Indebtedness of 84 the Company or any Note Guarantor, (A) the Company could Incur at least $1.00 of additional Indebtedness pursuant to paragraph (a) above or (B) the Consolidated Coverage Ratio is greater than it was on such date immediately prior to giving effect to such acquisition and (y) with respect to any such Indebtedness of any Restricted Subsidiary that is not a Note Guarantor, the Company could Incur at least $1.00 of additional Indebtedness pursuant to paragraph (a) above; and any Refinancing Indebtedness with respect to any such Indebtedness; (xi) Indebtedness of the Company or any Restricted Subsidiary in an amount at any time outstanding not exceeding twice the amount of Excluded Contributions made after the Issue Date; provided, that the proceeds of such Indebtedness and the related amount of such Excluded Contributions are used to finance the acquisition of assets from any Person in a Related Business or the merger or consolidation of such a Person into or with the Company or any Restricted Subsidiary (including but not limited to payment of any related fees and expenses), or to refinance any such acquisition, merger or consolidation with such Indebtedness being Incurred for such refinancing within nine months of the closing of such acquisition, merger or consolidation; and any Refinancing Indebtedness with respect to any such Indebtedness; and (xii) Indebtedness of the Company or any Restricted Subsidiary in an aggregate principal amount at any time outstanding not exceeding an amount equal to 20% of Consolidated Total Assets. (c) For purposes of determining compliance with, and the outstanding principal amount of any particular Indebtedness Incurred pursuant to and in compliance with, this covenant, (i) any other obligation of the obligor on such Indebtedness (or of any other Person who could have Incurred such Indebtedness under this covenant) arising under any Guarantee, Lien or letter of credit, bankers' acceptance or other similar instrument or obligation supporting such Indebtedness shall be disregarded to the extent that such Guarantee, Lien or letter of credit, bankers' acceptance or other similar instrument or obligation secures the principal amount of such Indebtedness; (ii) in the event that Indebtedness meets the criteria of more than one of the types of Indebtedness described in paragraph (b) above, the Company, in its sole discretion, shall classify such item of Indebtedness and only be required to include the amount and type of such Indebtedness in one of such clauses; and (iii) the amount of Indebtedness issued at a price that is less than the principal amount thereof shall be equal to the amount of the liability in respect thereof determined in accordance with GAAP. (d) For purposes of determining compliance with any Dollar-denominated restriction on the Incurrence of Indebtedness denominated in a foreign currency, the Dollar-equivalent principal amount of such Indebtedness Incurred pursuant thereto shall be calculated based on the relevant currency exchange rate in effect on the date that such Indebtedness was Incurred, in the case of term Indebtedness, or first committed, in the case of revolving credit Indebtedness, provided that (x) the Dollar-equivalent principal amount of any such Indebtedness outstanding on the Issue Date shall be calculated based on the relevant currency exchange rate in effect on the Issue Date, (y) if such Indebtedness is Incurred to refinance other Indebtedness denominated in a foreign currency, and such refinancing would cause the applicable Dollar- denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such Dollar- denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness does not exceed the principal amount of such Indebtedness being refinanced and (z) the Dollar- equivalent principal amount of Indebtedness denominated in a foreign currency and Incurred pursuant to the Senior Credit Facility shall be calculated based on the relevant currency exchange rate in effect on, at the Company's option, (i) the Issue Date, (ii) any date on which any of the respective commitments under the Senior Credit Facility shall be reallocated between or among facilities or subfacilities thereunder, or on which such rate is otherwise calculated for any purpose thereunder, or (iii) the date of such Incurrence. The principal amount of any Indebtedness Incurred to refinance other Indebtedness, if Incurred in a different currency from the Indebtedness being refinanced, shall be calculated based on the currency exchange rate applicable to the currencies in which such respective Indebtedness is denominated that is in effect on the date of such refinancing. Limitation on Layering. The Company shall not Incur any Indebtedness that is expressly subordinated in right of payment to any Senior Indebtedness of the Company, unless such Indebtedness so Incurred ranks pari 85 passu in right of payment with the Notes, or is subordinated in right of payment to the Notes. No Note Guarantor shall Incur any Indebtedness that is expressly subordinated in right of payment to any Guarantor Senior Indebtedness of such Note Guarantor, unless such Indebtedness so Incurred ranks pari passu in right of payment with such Note Guarantor's Note Guarantee, or is subordinated in right of payment to such Note Guarantor's Note Guarantee. Unsecured Indebtedness is not deemed to be subordinate or junior to secured Indebtedness merely because it is unsecured, and Indebtedness that is not guaranteed by a particular Person is not deemed to be subordinate or junior to Indebtedness that is so guaranteed merely because it is not so guaranteed. Limitation on Restricted Payments. (a) The Company shall not, and shall not permit any Restricted Subsidiary, directly or indirectly, to (i) declare or pay any dividend or make any distribution on or in respect of its Capital Stock (including any such payment in connection with any merger or consolidation to which the Company is a party) except (x) dividends or distributions payable solely in its Capital Stock (other than Disqualified Stock) and (y) dividends or distributions payable to the Company or any Restricted Subsidiary (and, in the case of any such Restricted Subsidiary making such dividend or distribution, to other holders of its Capital Stock on no more than a pro rata basis, measured by value), (ii) purchase, redeem, retire or otherwise acquire for value any Capital Stock of the Company held by Persons other than the Company or a Restricted Subsidiary, (iii) purchase, repurchase, redeem, defease or otherwise acquire or retire for value, prior to scheduled maturity, scheduled repayment or scheduled sinking fund payment, any Subordinated Obligations (other than a purchase, redemption, defeasance or other acquisition or retirement for value in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of such acquisition or retirement) or (iv) make any Investment (other than a Permitted Investment) in any Person (any such dividend, distribution, purchase, redemption, repurchase, defeasance, other acquisition or retirement or Investment being herein referred to as a "Restricted Payment"), if at the time the Company or such Restricted Subsidiary makes such Restricted Payment: (1) a Default shall have occurred and be continuing (or would result therefrom); (2) the Company could not incur at least an additional $1.00 of Indebtedness pursuant to paragraph (a) of the covenant described under "-- Limitation on Indebtedness"; or (3) the aggregate amount of such Restricted Payment and all other Restricted Payments (the amount so expended, if other than in cash, to be as determined in good faith by the Board of Directors, whose determination shall be conclusive) declared or made subsequent to the Issue Date and then outstanding would exceed the sum of: (A) 50% of the Consolidated Net Income accrued during the period (treated as one accounting period) from March 31, 1998 to the end of the most recent fiscal quarter ending prior to the date of such Restricted Payment for which consolidated financial statements of the Company are available (or, in case such Consolidated Net Income shall be a negative number, 100% of such negative number); (B) the aggregate Net Cash Proceeds, and fair value (as determined in good faith by the Board of Directors) of property or assets, received (x) by the Company as capital contributions to the Company after the Issue Date or from the issuance or sale (other than to a Restricted Subsidiary) of its Capital Stock (other than Disqualified Stock) after the Issue Date (other than Excluded Contributions) or (y) by the Company or any Restricted Subsidiary from the issuance and sale by the Company or any Restricted Subsidiary after the Issue Date of Indebtedness that shall have been converted into or exchanged for Capital Stock of the Company (other than Disqualified Stock), plus the amount of cash, property or assets (determined as provided above) received by the Company or any Restricted Subsidiary upon such conversion or exchange; (C) the aggregate amount equal to the net reduction in Investments in Unrestricted Subsidiaries resulting from (i) dividends, distributions, interest payments, return of capital, repayments of Investments or other transfers of assets to the Company or any Restricted Subsidiary from any Unrestricted Subsidiary, or (ii) the redesignation of any Unrestricted Subsidiary as a Restricted Subsidiary (valued in each case as provided in the definition of "Investment"), not to exceed in the case of any such Unrestricted Subsidiary the aggregate amount of Investments (other than Permitted 86 Investments) made by the Company or any Restricted Subsidiary in such Unrestricted Subsidiary after the Issue Date; and (D) in the case of any disposition or repayment of any Investment constituting a Restricted Payment (without duplication of any amount deducted in calculating the amount of Investments at any time outstanding included in the amount of Restricted Payments), an amount in the aggregate equal to the lesser of the return of capital, repayment or other proceeds with respect to all such Investments and the initial amount of all such Investments. (b) The provisions of the foregoing paragraph (a) will not prohibit any of the following (each, a "Permitted Payment"): (i) any purchase, redemption, repurchase, defeasance or other acquisition or retirement of Capital Stock of the Company or Subordinated Obligations made by exchange (including any such exchange pursuant to the exercise of a conversion right or privilege in connection with which cash is paid in lieu of the issuance of fractional shares) for, or out of the proceeds of the substantially concurrent issuance or sale of, Capital Stock of the Company (other than Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary) or a substantially concurrent capital contribution to the Company; provided, that the Net Cash Proceeds from such issuance, sale or capital contribution shall be excluded in subsequent calculations under clause (B) of the preceding paragraph (a); (ii) any purchase, redemption, repurchase, defeasance or other acquisition or retirement of Subordinated Obligations (x) made by exchange for, or out of the proceeds of the substantially concurrent issuance or sale of, Indebtedness of the Company or Refinancing Indebtedness Incurred in compliance with the covenant described under "--Limitation on Indebtedness," (y) from Net Available Cash to the extent permitted by the covenant described under "--Limitation on Sales of Assets and Subsidiary Stock" or (z) to the extent required by the agreement governing such Subordinated Obligations, following the occurrence of a Change of Control (or other similar event described therein as a "change of control"), but only if the Company shall have complied with the covenant described under "--Change of Control" and, if required, purchased all Notes tendered pursuant to the offer to repurchase all the Notes required thereby, prior to purchasing or repaying such Subordinated Obligations; (iii) dividends paid within 60 days after the date of declaration thereof if at such date of declaration such dividend would have complied with the preceding paragraph (a); (iv) Investments or other Restricted Payments in an aggregate amount outstanding at any time not to exceed the amount of Excluded Contributions, provided that such Excluded Contributions shall not include any Excluded Contribution the proceeds of which were used to finance the acquisition of assets from any Person in a Related Business or the merger or consolidation of such a Person into or with the Company or any Restricted Subsidiary pursuant to clause (xi) of paragraph (b) of the covenant described under "--Limitation on Indebtedness"; (v) loans, advances, dividends or distributions by the Company to Holding to permit Holding to repurchase or otherwise acquire its Capital Stock (including any options, warrants or other rights in respect thereof), or payments by the Company to repurchase or otherwise acquire Capital Stock (including any options, warrants or other rights in respect thereof), in each case from Management Investors, such payments, loans, advances, dividends or distributions not to exceed an amount (net of repayments of any such loans or advances) equal to (1) $25.0 million, plus (2) $5.0 million multiplied by the number of calendar years that have commenced since the Issue Date, plus the Net Cash Proceeds received by the Company since the Issue Date from, or as a capital contribution from, the issuance or sale to Management Investors of Capital Stock (including any options, warrants or other rights in respect thereof), to the extent such Net Cash Proceeds are not included in any calculation under clause (3)(B)(x) of the preceding paragraph (a); (vi) the payment by the Company of, or loans, advances, dividends or distributions by the Company to Holding to pay, dividends on the common stock or equity of the Company or Holding 87 following a public offering of such common stock or equity, in an amount not to exceed in any fiscal year 6% of the aggregate gross proceeds received by the Company in or from such public offering; (vii) Restricted Payments (including loans or advances) in an aggregate amount outstanding at any time not to exceed $10.0 million (net of repayments of any such loans or advances); (viii) loans, advances, dividends or distributions to Holding or other payments by the Company or any Restricted Subsidiary (A) to satisfy or permit Holding to satisfy obligations under the Management Agreements, (B) pursuant to the Tax Sharing Agreement, or (C) to pay or permit Holding to pay any Holding Expenses or any Related Taxes; (ix) payments by the Company, or loans, advances, dividends or distributions by the Company to Holding to make payments, to holders of Capital Stock of the Company or Holding in lieu of issuance of fractional shares of such Capital Stock, not to exceed $100,000 in the aggregate outstanding at any time; (x) dividends or other distributions of Capital Stock, Indebtedness or other securities of Unrestricted Subsidiaries; and (xi) the Transactions; provided, that (A) in the case of clauses (iii), (vi), (vii) and (ix), the net amount of any such Permitted Payment shall be included in subsequent calculations of the amount of Restricted Payments, (B) in the case of clause (v), at the time of any calculation of the amount of Restricted Payments, the net amount of Permitted Payments that have then actually been made under clause (v) that is in excess of 50% of the total amount of Permitted Payments then permitted under clause (v) shall be included in such calculation of the amount of Restricted Payments, (C) in all cases other than pursuant to clauses (A) and (B) immediately above, the net amount of any such Permitted Payment shall be excluded in subsequent calculations of the amount of Restricted Payments and (D) solely with respect to clause (vii), no Default or Event of Default shall have occurred or be continuing at the time of any such Permitted Payment after giving effect thereto. Limitation on Restrictions on Distributions from Restricted Subsidiaries. The Company will not, and will not permit any Restricted Subsidiary to, create or otherwise cause to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to (i) pay dividends or make any other distributions on its Capital Stock or pay any Indebtedness or other obligations owed to the Company, (ii) make any loans or advances to the Company or (iii) transfer any of its property or assets to the Company, except any encumbrance or restriction: (1) pursuant to an agreement or instrument in effect at or entered into on the Issue Date (including, without limitation, the Senior Credit Facility), the Indenture or the Notes; (2) pursuant to any agreement or instrument of a Person, or relating to Indebtedness or Capital Stock of a Person, which Person is acquired by or merged or consolidated with or into the Company or any Restricted Subsidiary, or which agreement or instrument is assumed by the Company or any Restricted Subsidiary in connection with an acquisition of assets from such Person, as in effect at the time of such acquisition, merger or consolidation (except to the extent that such Indebtedness was incurred to finance, or otherwise in connection with, such acquisition, merger or consolidation), provided that for purposes of this clause (2), if another Person is the Successor Company, any Subsidiary thereof or agreement or instrument of such Person or any such Subsidiary shall be deemed acquired or assumed, as the case may be, by the Company or a Restricted Subsidiary, as the case may be, when such Person becomes the Successor Company; (3) pursuant to an agreement or instrument (a "Refinancing Agreement") effecting a refinancing of Indebtedness Incurred pursuant to, or that otherwise extends, renews, refunds, refinances or replaces, an agreement or instrument referred to in clause (1) or (2) of this covenant or this clause (3) (an "Initial Agreement") or contained in any amendment, supplement or other modification to an Initial Agreement (an "Amendment"); provided, however, that the encumbrances and restrictions contained in any such 88 Refinancing Agreement or Amendment are not materially less favorable to the Holders of the Notes taken as a whole than encumbrances and restrictions contained in the Initial Agreement or Initial Agreements to which such Refinancing Agreement or Amendment relates (as determined in good faith by the Company); (4) (A) that restricts in a customary manner the subletting, assignment or transfer of any property or asset that is subject to a lease, license or similar contract, or the assignment or transfer of any lease, license or other contract, (B) by virtue of any transfer of, agreement to transfer, option or right with respect to, or Lien on, any property or assets of the Company or any Restricted Subsidiary not otherwise prohibited by the Indenture, (C) contained in mortgages, pledges or other security agreements securing Indebtedness of a Restricted Subsidiary to the extent restricting the transfer of the property or assets subject thereto, (D) pursuant to customary provisions restricting dispositions of real property interests set forth in any reciprocal easement agreements of the Company or any Restricted Subsidiary, (E) pursuant to Purchase Money Obligations that impose encumbrances or restrictions on the property or assets so acquired, (F) on cash or other deposits or net worth imposed by customers under agreements entered into in the ordinary course of business, (G) pursuant to customary provisions contained in agreements and instruments entered into in the ordinary course of business (including but not limited to leases and joint venture and other similar agreements entered into in the ordinary course of business) or (H) that arises or is agreed to in the ordinary course of business and does not detract from the value of property or assets of the Company or any Restricted Subsidiary in any manner material to the Company or such Restricted Subsidiary; (5) with respect to a Restricted Subsidiary (or any of its property or assets) imposed pursuant to an agreement entered into for the direct or indirect sale or disposition of all or substantially all the Capital Stock or assets of such Restricted Subsidiary (or the property or assets that are subject to such restriction) pending the closing of such sale or disposition; (6) required by any applicable law, rule, regulation or order or by any regulatory authority having jurisdiction over the Company or any Restricted Subsidiary or any of their businesses; or (7) pursuant to an agreement or instrument (A) relating to any Indebtedness permitted to be Incurred subsequent to the Issue Date pursuant to the provisions of the covenant described under "--Limitation on Indebtedness," if the Company determines that such encumbrance or restriction will not cause the Company not to have the funds necessary to pay the principal of or interest on the Notes, (B) relating to any sale of receivables by a Foreign Subsidiary or (C) relating to Indebtedness of or a Financing Disposition to or by any Receivables Entity. Limitation on Sales of Assets and Subsidiary Stock. (a) The Company will not, and will not permit any Restricted Subsidiary to, make any Asset Disposition unless (i) the Company or such Restricted Subsidiary receives consideration (including by way of relief from, or by any other Person assuming responsibility for, any liabilities, contingent or otherwise) at the time of such Asset Disposition at least equal to the fair market value of the shares and assets subject to such Asset Disposition, as such fair market value may be determined (and shall be determined, to the extent such Asset Disposition or any series of related Asset Dispositions involves aggregate consideration in excess of $10.0 million) in good faith by the Board of Directors, whose determination shall be conclusive (including as to the value of all noncash consideration), (ii) in the case of any Asset Disposition (or series of related Asset Dispositions) having a fair market value of $10.0 million or more, at least 75% of the consideration therefor (excluding, in the case of an Asset Disposition (or series of related Asset Dispositions) of assets, any consideration by way of relief from, or by any other Person assuming responsibility for, any liabilities, contingent or otherwise, that are not Indebtedness) received by the Company or such Restricted Subsidiary is in the form of cash, and provided that this clause (ii) shall not apply to any Asset Disposition (or series of related Asset Dispositions), involving assets that accounted for less than two percent of Consolidated EBITDA during the period of the most recent four consecutive fiscal quarters ending prior to the date of such Asset Disposition for which consolidated financial statements of the Company are available, and 89 (iii) an amount equal to 100% of the Net Available Cash from such Asset Disposition is applied by the Company (or any Restricted Subsidiary, as the case may be) as follows: (A) first, either (x) to the extent the Company elects (or is required by the terms of any Senior Indebtedness or Indebtedness of a Restricted Subsidiary), to prepay, repay or purchase Senior Indebtedness or such Indebtedness of a Restricted Subsidiary (in each case other than Indebtedness owed to the Company or a Restricted Subsidiary) within 365 days after the date of such Asset Disposition, or (y) to the extent the Company or such Restricted Subsidiary elects, to reinvest in Additional Assets (including by means of an investment in Additional Assets by a Restricted Subsidiary with Net Available Cash received by the Company or another Restricted Subsidiary) within 365 days from the date of such Asset Disposition, or, if such reinvestment in Additional Assets is a project authorized by the Board of Directors that will take longer than such 365 days to complete, the period of time necessary to complete such project; (B) second, to the extent of the balance of such Net Available Cash after application in accordance with clause (A) above (such balance, the "Excess Proceeds"), to make an offer to purchase Notes and (to the extent the Company or such Restricted Subsidiary elects, or is required by the terms thereof) to purchase, redeem or repay any other Senior Subordinated Indebtedness or Guarantor Senior Subordinated Indebtedness, pursuant and subject to the conditions of the Indenture and the agreements governing such other Indebtedness; and (C) third, to the extent of the balance of such Net Available Cash after application in accordance with clauses (A) and (B) above, to fund (to the extent consistent with any other applicable provision of the Indenture) any general corporate purpose (including but not limited to the repurchase, repayment or other acquisition or retirement of any Subordinated Obligations); provided, however, that in connection with any prepayment, repayment or purchase of Indebtedness pursuant to clause (A)(x) or (B) above, the Company or such Restricted Subsidiary will retire such Indebtedness and will cause the related loan commitment (if any) to be permanently reduced in an amount equal to the principal amount so prepaid, repaid or purchased. Notwithstanding the foregoing provisions of this covenant, the Company and the Restricted Subsidiaries shall not be required to apply any Net Available Cash in accordance with this covenant except to the extent that the aggregate Net Available Cash from all Asset Dispositions that is not applied in accordance with this covenant exceeds $15.0 million. If the aggregate principal amount of Notes, Senior Subordinated Indebtedness and Guarantor Senior Subordinated Indebtedness validly tendered and not withdrawn (or otherwise subject to purchase, redemption or repayment) in connection with an offer pursuant to clause (B) above exceeds the Excess Proceeds, the Excess Proceeds will be apportioned between the Notes and such Senior Subordinated Indebtedness and Guarantor Senior Subordinated Indebtedness, with the portion of the Excess Proceeds payable in respect of the Notes to equal the lesser of (x) the Excess Proceeds amount multiplied by a fraction, the numerator of which is the outstanding principal amount of the Notes and the denominator of which is the sum of the outstanding principal amount of the Notes and the outstanding principal amount of the relevant Senior Subordinated Indebtedness and Guarantor Senior Subordinated Indebtedness, and (y) the aggregate principal amount of Notes validly tendered and not withdrawn. For the purposes of clause (ii) of paragraph (a) above, the following are deemed to be cash: (1) Temporary Cash Investments and Cash Equivalents, (2) the assumption of Indebtedness of the Company (other than Disqualified Stock of the Company) or any Restricted Subsidiary and the release of the Company or such Restricted Subsidiary from all liability on payment of the principal amount of such Indebtedness in connection with such Asset Disposition, (3) Indebtedness of any Restricted Subsidiary that is no longer a Restricted Subsidiary as a result of such Asset Disposition, to the extent that the Company and each other Restricted Subsidiary are released from any Guarantee of payment of the principal amount of such Indebtedness in connection with such Asset Disposition, (4) securities received by the Company or any Restricted Subsidiary from the transferee that are converted by the Company or such Restricted Subsidiary into cash and (5) consideration consisting of Indebtedness of the Company or any Restricted Subsidiary. 90 (b) In the event of an Asset Disposition that requires the purchase of Notes pursuant to clause (iii)(B) of paragraph (a) above, the Company will be required to purchase Notes tendered pursuant to an offer by the Company for the Notes (the "Offer") at a purchase price of 100% of their principal amount plus accrued and unpaid interest to the Purchase Date in accordance with the procedures (including prorating in the event of oversubscription) set forth in the Indenture. If the aggregate purchase price of the Notes tendered pursuant to the Offer is less than the Net Available Cash allotted to the purchase of Notes, the remaining Net Available Cash will be available to the Company for use in accordance with clause (iii)(B) of paragraph (a) above (to repay Senior Subordinated Indebtedness or Guarantor Senior Subordinated Indebtedness) or clause (iii)(C) of paragraph (a) above. The Company shall not be required to make an Offer for Notes pursuant to this covenant if the Net Available Cash available therefor (after application of the proceeds as provided in clause (iii)(A) of paragraph (a) above) is less than $15.0 million for any particular Asset Disposition (which lesser amounts shall be carried forward for purposes of determining whether an Offer is required with respect to the Net Available Cash from any subsequent Asset Disposition). (c) The Company will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Notes pursuant to this covenant. To the extent that the provisions of any securities laws or regulations conflict with provisions of this covenant, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this covenant by virtue thereof. Limitation on Transactions with Affiliates. (a) The Company will not, and will not permit any Restricted Subsidiary to, directly or indirectly, enter into or conduct any transaction or series of related transactions (including the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate of the Company (an "Affiliate Transaction") unless (i) the terms of such Affiliate Transaction are not materially less favorable to the Company or such Restricted Subsidiary, as the case may be, than those that could be obtained at the time in a transaction with a Person who is not such an Affiliate and (ii) if such Affiliate Transaction involves aggregate consideration in excess of $10.0 million, the terms of such Affiliate Transaction have been approved by a majority of the Disinterested Directors. For purposes of this paragraph, any Affiliate Transaction shall be deemed to have satisfied the requirements set forth in this paragraph if (x) such Affiliate Transaction is approved by a majority of the Disinterested Directors or (y) in the event there are no Disinterested Directors, a fairness opinion is provided by a nationally recognized appraisal or investment banking firm with respect to such Affiliate Transaction. (b) The provisions of the preceding paragraph (a) will not apply to: (i) any Restricted Payment Transaction, (ii) (1) the entering into, maintaining or performance of any employment contract, collective bargaining agreement, benefit plan, program or arrangement, related trust agreement or any other similar arrangement for or with any employee, officer or director heretofore or hereafter entered into in the ordinary course of business, including vacation, health, insurance, deferred compensation, severance, retirement, savings or other similar plans, programs or arrangements, (2) the payment of compensation, performance of indemnification or contribution obligations, or any issuance, grant or award of stock, options, other equity-related interests or other securities, to employees, officers or directors in the ordinary course of business, (3) the payment of fees to directors of the Company or any of its Subsidiaries, (4) any transaction with an officer or director in the ordinary course of business not involving more than $100,000 in any one case, or (5) Management Advances and payments in respect thereof, (iii) any transaction with the Company, any Restricted Subsidiary, or any Receivables Entity, (iv) any transaction arising out of agreements or instruments in existence on the Issue Date, and any payments made pursuant thereto, (v) execution, delivery and performance of the Tax Sharing Agreement and Management Agreements, including (1) payment to CDR or any Affiliate of CDR of a fee of $9.2 million plus out-of-pocket expenses 91 in connection with the Transactions, and (2) payment to CDR or any Affiliate of CDR of fees of up to $1.0 million in any fiscal year plus all out-of-pocket expenses incurred by CDR or any such Affiliate in connection with its performance of management consulting, monitoring, financial advisory or other services with respect to the Company and its Restricted Subsidiaries, (vi) the Transactions, all transactions in connection therewith (including but not limited to the financing thereof), and all fees or expenses paid or payable in connection with the Transactions, (vii) any transaction in the ordinary course of business on terms not materially less favorable to the Company or the relevant Restricted Subsidiary than those that could be obtained at the time in a transaction with a Person who is not an Affiliate of the Company, and (viii) any transaction in the ordinary course of business, or approved by a majority of the Board of Directors, between the Company or any Restricted Subsidiary and any Affiliate of the Company controlled by the Company that is a joint venture or similar entity. Limitation on Liens. The Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, create or permit to exist any Lien (other than Permitted Liens) on any of its property or assets (including Capital Stock of any other Person), whether owned on the date of the Indenture or thereafter acquired, securing any Indebtedness of the Company or any Note Guarantor that by its terms is expressly subordinated in right of payment to or ranks pari passu in right of payment with the Notes or such Note Guarantor's Note Guarantee (the "Initial Lien"), unless contemporaneously therewith effective provision is made to secure the Indebtedness due under the Indenture and the Notes or, in respect of Liens on any Restricted Subsidiary's property or assets, any Note Guarantee of such Restricted Subsidiary, equally and ratably with such obligation for so long as such obligation is so secured by such Initial Lien. Any such Lien thereby created in favor of the Notes or any such Note Guarantee will be automatically and unconditionally released and discharged upon (i) the release and discharge of the Initial Lien to which it relates, or (ii) any sale, exchange or transfer to any Person not an Affiliate of the Company of the property or assets secured by such Initial Lien, or of all of the Capital Stock held by the Company or any Restricted Subsidiary in, or all or substantially all the assets of, any Restricted Subsidiary creating such Lien. Future Note Guarantors. After the Issue Date, the Company will cause each Significant Domestic Subsidiary that guarantees payment by the Company of Indebtedness of the Company (other than Bank Indebtedness), to execute and deliver to the Trustee a supplemental indenture or other instrument pursuant to which such Subsidiary will guarantee payment of the Notes, whereupon such Subsidiary will become a Note Guarantor for all purposes under the Indenture. In addition, the Company may cause any Subsidiary that is not a Note Guarantor so to guarantee payment of the Notes and become a Note Guarantor. Each Note Guarantor, as primary obligor and not merely as surety, will jointly and severally, irrevocably and fully and unconditionally Guarantee, on a senior subordinated basis, the punctual payment when due, whether at Stated Maturity, by acceleration or otherwise, of all monetary obligations of the Company under the Indenture and the Notes, whether for principal of or interest on the Notes, expenses, indemnification or otherwise (all such obligations guaranteed by such Note Guarantors being herein called the "Guaranteed Obligations"). Such Note Guarantor will agree to pay, in addition to the amount stated above, any and all reasonable out-of-pocket expenses (including reasonable counsel fees and expenses) incurred by the Trustee or the Holders in enforcing any rights under its Note Guarantee. The obligations of each Note Guarantor will be limited to the maximum amount, as will, after giving effect to all other contingent and fixed liabilities of such Note Guarantor, result in the obligations of such Note Guarantor under the Note Guarantee not constituting a fraudulent conveyance or fraudulent transfer under applicable law, or being void or unenforceable under any law relating to insolvency of debtors. Each such Note Guarantee shall be a continuing Guarantee and shall (i) remain in full force and effect until payment in full of the principal amount of all outstanding Notes (whether by payment at maturity, purchase, 92 redemption, defeasance, retirement or other acquisition) and all other Guaranteed Obligations then due and owing, unless earlier terminated as described below, (ii) be binding upon such Note Guarantor and (iii) inure to the benefit of and be enforceable by the Trustee, the Holders and their permitted successors, transferees and assigns. Notwithstanding the preceding paragraph, any Note Guarantor will automatically and unconditionally be released from all obligations under its Note Guarantee, and such Note Guarantee shall thereupon terminate and be discharged and of no further force or effect, (i) concurrently with any sale or disposition (by merger or otherwise) of any Note Guarantor or any interest therein in accordance with the terms of the Indenture (including the covenant described under "--Certain Covenants--Limitation on Sales of Assets and Subsidiary Stock") by the Company or a Restricted Subsidiary, following which such Note Guarantor is no longer a Restricted Subsidiary of the Company, (ii) pursuant to the terms of its Note Guarantee, (iii) at any time that such Note Guarantor is released from all of its obligations under all of its Guarantees of payment by the Company of Indebtedness (other than Bank Indebtedness) of the Company, (iv) upon the merger or consolidation of any Note Guarantor with and into the Company or another Note Guarantor that is the surviving Person in such merger or consolidation, (v) upon legal or covenant defeasance of the Company's obligations, or satisfaction and discharge of the Indenture, or (vi) subject to customary contingent reinstatement provisions, upon payment in full of the aggregate principal amount of all Notes then outstanding and all other Guaranteed Obligations then due and owing. In addition, the Company will have the right, upon 30 days' notice to the Trustee, to cause any Note Guarantor that has not guaranteed payment by the Company of any other Indebtedness (other than Bank Indebtedness) of the Company to be unconditionally released from all obligations under its Note Guarantee, and such Note Guarantee shall thereupon terminate and be discharged and of no further force or effect. Upon any such occurrence specified in this paragraph, the Trustee shall execute any documents reasonably required in order to evidence such release, discharge and termination in respect of such Note Guarantee. Neither the Company nor any such Note Guarantor shall be required to make a notation on the Notes to reflect any such Guarantee or any such release, termination or discharge. SEC Reports. Notwithstanding that the Company may not be required to be or remain subject to the reporting requirements of Section 13(a) or 15(d) of the Exchange Act, the Company will file with the SEC (unless such filing is not permitted under the Exchange Act or by the SEC), so long as Notes are outstanding, the annual reports, information, documents and other reports that the Company is required to file with the Commission pursuant to such Section 13(a) or 15(d) or would be so required to file if the Company were so subject. The Company will also, within 15 days after the date on which the Company was so required to file or would be so required to file if the Company were so subject (or, if later, 120 days after the Issue Date), transmit by mail to all Holders, as their names and addresses appear in the Note Register, and to the Trustee copies of any such information, documents and reports (without exhibits) so required to be filed (or, in lieu of one or more of the annual report for the fiscal year ended March 31, 1998 and the quarterly reports for the following fiscal year, a registration statement filed with the SEC under the Securities Act or any amendment thereto, provided such registration statement or amendment contains the information that would have been included in each such report). The Company will be deemed to have satisfied such requirements if Holding files and provides reports, documents and information of the types otherwise so required, in each case within the applicable time periods, and the Company is not required to file such reports, documents and information separately under the applicable rules and regulations of the SEC (after giving effect to any exemptive relief) because of the filings by Holding. The Company also will comply with the other provisions of TIA (S) 314(a). MERGER AND CONSOLIDATION The Company will not consolidate with or merge with or into, or convey, transfer or lease all or substantially all its assets to, any Person, unless: (i) the resulting, surviving or transferee Person (the "Successor Company") will be a Person organized and existing under the laws of the United States of America, any State thereof or the District of Columbia and the Successor Company (if not the Company) will expressly assume all 93 the obligations of the Company under the Notes and the Indenture by executing and delivering to the Trustee a supplemental indenture or one or more other documents or instruments in form reasonably satisfactory to the Trustee; (ii) immediately after giving effect to such transaction (and treating any Indebtedness that becomes an obligation of the Successor Company or any Restricted Subsidiary as a result of such transaction as having been Incurred by the Successor Company or such Restricted Subsidiary at the time of such transaction), no Default will have occurred and be continuing; (iii) immediately after giving effect to such transaction, either (A) the Successor Company could Incur at least $1.00 of additional Indebtedness pursuant to paragraph (a) of the covenant described under "--Certain Covenants--Limitation on Indebtedness," or (B) the Consolidated Coverage Ratio of the Successor Company would equal or exceed the Consolidated Coverage Ratio of the Company immediately prior to giving effect to such transaction; (iv) each Note Guarantor (other than any party to any such consolidation or merger) shall have delivered a supplemental indenture or other document or instrument in form reasonably satisfactory to the Trustee, confirming its Note Guarantee; and (v) the Company will have delivered to the Trustee an Officer's Certificate and an Opinion of Counsel, each to the effect that such consolidation, merger or transfer complies with the provisions described in this paragraph, provided that (x) in giving such opinion such counsel may rely on an Officer's Certificate as to compliance with the foregoing clauses (ii) and (iii) and as to any matters of fact, and (y) no Opinion of Counsel will be required for a consolidation, merger or transfer described in the last paragraph of this covenant. Any Indebtedness that becomes an obligation of the Company or any Restricted Subsidiary (or that is deemed to be Incurred by any Restricted Subsidiary that becomes a Restricted Subsidiary) as a result of any such transaction undertaken in compliance with this covenant, and any Refinancing Indebtedness with respect thereto, shall be deemed to have been Incurred in compliance with the covenant described under "--Certain Covenants--Limitation on Indebtedness." The Successor Company will succeed to, and be substituted for, and may exercise every right and power of, the Company under the Indenture, and thereafter the predecessor Company shall be relieved of all obligations and covenants under the Indenture. Clauses (ii) and (iii) of the first paragraph of this "Merger and Consolidation" section will not apply to any transaction in which (1) any Restricted Subsidiary consolidates with, merges into or transfers all or part of its assets to the Company or (2) the Company consolidates or merges with or into or transfers all or substantially all its properties and assets to (x) an Affiliate incorporated or organized for the purpose of reincorporating or reorganizing the Company in another jurisdiction or changing its legal structure to a corporation or other entity or (y) a Restricted Subsidiary of the Company so long as all assets of the Company and the Restricted Subsidiaries immediately prior to such transaction (other than Capital Stock of such Restricted Subsidiary) are owned by such Restricted Subsidiary and its Restricted Subsidiaries immediately after the consummation thereof. The first paragraph of this "Merger and Consolidation" section will not apply to the Merger or the Second Merger. DEFAULTS An Event of Default is defined in the Indenture as (i) a default in any payment of interest on any Note when due, continued for 30 days, (ii) a default in the payment of principal of any Note when due, whether at its Stated Maturity, upon optional redemption, upon required repurchase, upon declaration or otherwise, whether or not such payment is prohibited by the provisions described under "--Ranking" above, (iii) the failure by the Company to comply for 30 days after notice with its obligations under the covenant described under "--Merger and Consolidation" above, (iv) the failure by the Company to comply for 30 days after notice with any of its obligations under the covenant described under "--Change of Control" above (other than a failure to purchase Notes), (v) the failure by the Company to comply for 60 days after notice with its other agreements contained in the Notes or the Indenture, (vi) the failure by any Note Guarantor to comply for 45 days after notice with its obligations under its Note Guarantee, (vii) the failure by the Company or any Significant Subsidiary to pay any Indebtedness within any applicable grace period after final maturity or the acceleration of any such Indebtedness by the holders thereof because of a default, if the total amount of such Indebtedness so unpaid or accelerated exceeds $15.0 million or its foreign currency equivalent (the "cross acceleration provision"), (viii) certain events 94 of bankruptcy, insolvency or reorganization of the Company or a Significant Subsidiary (the "bankruptcy provisions"), (ix) the rendering of any judgment or decree for the payment of money in an amount (net of any insurance or indemnity payments actually received in respect thereof prior to or within 90 days from the entry thereof, or to be received in respect thereof in the event any appeal thereof shall be unsuccessful) in excess of $15.0 million or its foreign currency equivalent against the Company or a Significant Subsidiary that is not discharged, or bonded or insured by a third Person, if such judgment or decree remains outstanding for a period of 90 days following such judgment or decree and is not discharged, waived or stayed (the "judgment default provision") or (x) the failure of any Note Guarantee by a Note Guarantor that is a Significant Subsidiary to be in full force and effect (except as contemplated by the terms thereof or of the Indenture) or the denial or disaffirmation in writing by any Note Guarantor that is a Significant Subsidiary of its obligations under the Indenture or any Note Guarantee, if such Default continues for 10 days. The foregoing will constitute Events of Default whatever the reason for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body. However, a Default under clause (iii), (iv), (v) or (vi) will not constitute an Event of Default until the Trustee or the Holders of at least 25% in principal amount of the outstanding Notes notify the Company of the Default and the Company does not cure such Default within the time specified in such clause after receipt of such notice. If an Event of Default (other than a Default relating to certain events of bankruptcy, insolvency or reorganization of the Company) occurs and is continuing, the Trustee by notice to the Company, or the Holders of at least a majority in principal amount of the outstanding Notes by notice to the Company and the Trustee, may declare the principal of and accrued but unpaid interest on all the Notes to be due and payable, provided that so long as any Designated Senior Indebtedness shall be outstanding, such acceleration shall not be effective until the earlier to occur of (x) five Business Days following delivery of a written notice of such acceleration of the Notes to the Company and the holders of all Designated Senior Indebtedness or each Representative thereof and (y) the acceleration of any Designated Senior Indebtedness. Upon the effectiveness of such a declaration, such principal and interest will be due and payable immediately. Notwithstanding the foregoing, if an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Company occurs and is continuing, the principal of and accrued interest on all the Notes will become immediately due and payable without any declaration or other act on the part of the Trustee or any Holders. Under certain circumstances, the Holders of a majority in principal amount of the outstanding Notes may rescind any such acceleration with respect to the Notes and its consequences. Notwithstanding the foregoing, in the event of a declaration of acceleration in respect of the Notes because an Event of Default specified in clause (vii) above shall have occurred and be continuing, such declaration of acceleration of the Notes and such Event of Default and all consequences thereof (including without limitation any acceleration or resulting payment default) shall be annulled, waived and rescinded, automatically and without any action by the Trustee or the Holders, and be of no further effect, if within 60 days after such Event of Default arose (x) the Indebtedness that is the basis for such Event of Default has been discharged, or (y) the holders thereof have rescinded or waived the acceleration, notice or action (as the case may be) giving rise to such Event of Default, or (z) the default in respect of such Indebtedness that is the basis for such Event of Default has been cured. Subject to the provisions of the Indenture relating to the duties of the Trustee, in case an Event of Default occurs and is continuing, the Trustee will be under no obligation to exercise any of the rights or powers under the Indenture at the request or direction of any of the Holders unless such Holders have offered to the Trustee reasonable indemnity or security against any loss, liability or expense. Except to enforce the right to receive payment of principal, premium (if any) or interest when due, no Holder may pursue any remedy with respect to the Indenture or the Notes unless (i) such Holder has previously given the Trustee written notice that an Event 95 of Default is continuing, (ii) Holders of at least 25% in principal amount of the outstanding Notes have requested the Trustee in writing to pursue the remedy, (iii) such Holders have offered the Trustee reasonable security or indemnity against any loss, liability or expense, (iv) the Trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity and (v) the Holders of a majority in principal amount of the outstanding Notes have not given the Trustee a direction inconsistent with such request within such 60-day period. Subject to certain restrictions, the Holders of a majority in principal amount of the outstanding Notes are given the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. The Trustee, however, may refuse to follow any direction that conflicts with law or the Indenture or that the Trustee determines is unduly prejudicial to the rights of any other Holder or that would involve the Trustee in personal liability. Prior to taking any action under the Indenture, the Trustee will be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action. The Indenture provides that if a Default occurs and is continuing and is known to the Trustee, the Trustee must mail to each Holder notice of the Default within 90 days after it occurs. Except in the case of a Default in the payment of principal of, or premium (if any) or interest on, any Note, the Trustee may withhold notice if and so long as a committee of its Trust Officers in good faith determines that withholding notice is in the interests of the Noteholders. In addition, the Company is required to deliver to the Trustee, within 120 days after the end of each fiscal year, a certificate indicating whether the signers thereof know of any Default that occurred during the previous year. The Company also is required to deliver to the Trustee, within 30 days after the occurrence thereof, written notice of any event that would constitute certain Defaults, their status and what action the Company is taking or proposes to take in respect thereof. AMENDMENTS AND WAIVERS Subject to certain exceptions, the Indenture may be amended with the consent of the Holders of a majority in principal amount of the Notes then outstanding and any past default or compliance with any provisions may be waived with the consent of the Holders of a majority in principal amount of the Notes then outstanding (including in each case, consents obtained in connection with a tender offer or exchange offer for Notes). However, without the consent of each Holder of an outstanding Note affected, no amendment or waiver may (i) reduce the principal amount of Notes whose Holders must consent to an amendment or waiver, (ii) reduce the rate of or extend the time for payment of interest on any Note, (iii) reduce the principal of or extend the Stated Maturity of any Note, (iv) reduce the premium payable upon the redemption of any Note or change the date on which any Note may be redeemed as described under "Optional Redemption" above, (v) make any Note payable in money other than that stated in the Note, (vi) make any change to the subordination provisions of the Indenture that adversely affects the rights of any Holder in any material respect, (vii) impair the right of any Holder to receive payment of principal of and interest on such Holder's Notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such Holder's Notes or (viii) make any change in the amendment or waiver provisions described in this sentence. Without the consent of any Holder, the Company, the Trustee and (as applicable) any Note Guarantor may amend the Indenture to cure any ambiguity, omission, defect or inconsistency, to provide for the assumption by a successor of the obligations of the Company under the Indenture, to provide for uncertificated Notes in addition to or in place of certificated Notes, to add Guarantees with respect to the Notes, to secure the Notes, to confirm and evidence the release, termination or discharge of any Guarantee or Lien with respect to or securing the Notes when such release, termination or discharge is provided for under the Indenture, to add to the covenants of the Company for the benefit of the Noteholders or to surrender any right or power conferred upon the Company, to provide that any Indebtedness that becomes or will become an obligation of the Successor Company or a Note Guarantor pursuant to a transaction governed by the provisions described under "--Merger and Consolidation" (and that is not a Subordinated Obligation) is Senior Subordinated Indebtedness or Guarantor Senior Subordinated Indebtedness for purposes of this Indenture, to provide for or confirm the issuance of Additional Notes, to make any change that does not adversely affect the rights of any Holder, or to comply with any requirement of the SEC in connection with the qualification of the Indenture under the TIA or otherwise. 96 However, no amendment may be made to the subordination provisions of the Indenture that adversely affects the rights of any holder of Senior Indebtedness then outstanding (which Senior Indebtedness has been previously designated in writing by the Company to the Trustee for this purpose) unless the holders of such Senior Indebtedness (or any group or representative thereof authorized to give a consent) consent to such change. The consent of the Noteholders is not necessary under the Indenture to approve the particular form of any proposed amendment or waiver. It is sufficient if such consent approves the substance of the proposed amendment or waiver. Until an amendment or waiver becomes effective, a consent to it by a Noteholder is a continuing consent by such Noteholder and every subsequent Holder of all or part of the related Note. Any such Noteholder or subsequent holder may revoke such consent as to its Note by written notice to the Trustee or the Company, received thereby before the date on which the Company certifies to the Trustee that the Holders of the requisite principal amount of Notes have consented to such amendment or waiver. After an amendment or waiver under the Indenture becomes effective, the Company is required to mail to Noteholders a notice briefly describing such amendment or waiver. However, the failure to give such notice to all Noteholders, or any defect therein, will not impair or affect the validity of the amendment or waiver. DEFEASANCE The Company at any time may terminate all its obligations under the Notes and the Indenture ("legal defeasance"), except for certain obligations, including those relating to the defeasance trust and obligations to register the transfer or exchange of the Notes, to replace mutilated, destroyed, lost or stolen Notes and to maintain a registrar and paying agent in respect of the Notes. The Company at any time may terminate its obligations under certain covenants under the Indenture, including the covenants described under "-- Certain Covenants" and "--Change of Control," the operation of the default provisions relating to such covenants described under "--Defaults" above, the operation of the cross acceleration provision, the bankruptcy provisions with respect to Subsidiaries and the judgment default provision described under "-- Defaults" above, and the limitations contained in clauses (iii), (iv) and (v) under "--Merger and Consolidation" above ("covenant defeasance"). If the Company exercises its legal defeasance option or its covenant defeasance option, each Note Guarantor will be released from all of its obligations with respect to its Note Guarantee. The Company may exercise its legal defeasance option notwithstanding its prior exercise of its covenant defeasance option. If the Company exercises its legal defeasance option, payment of the Notes may not be accelerated because of an Event of Default with respect thereto. If the Company exercises its covenant defeasance option, payment of the Notes may not be accelerated because of an Event of Default specified in clause (iv), (v) (as it relates to the covenants described under "--Certain Covenants" above), (vi), (vii), (viii) (but only with respect to events of bankruptcy, insolvency or reorganization of a Significant Subsidiary), (ix) or (x) under "Defaults" above or because of the failure of the Company to comply with clause (iii), (iv) or (v) under "--Merger and Consolidation" above. Either defeasance option may be exercised to any redemption date or to the maturity date for the Notes. In order to exercise either defeasance option, the Company must irrevocably deposit in trust (the "defeasance trust") with the Trustee money or U.S. Government Obligations, or a combination thereof, for the payment of principal of, and premium (if any) and interest on, the Notes to redemption or maturity, as the case may be, and must comply with certain other conditions, including delivery to the Trustee of an Opinion of Counsel to the effect that holders of the Notes will not recognize income, gain or loss for Federal income tax purposes as a result of such deposit and defeasance and will be subject to Federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred (and, in the case of legal defeasance only, such Opinion of Counsel must be based on a ruling of the Internal Revenue Service or other change in applicable Federal income tax law since the Issue Date). SATISFACTION AND DISCHARGE The Indenture will be discharged and cease to be of further effect (except as to surviving rights of registration of transfer or exchange of the Notes, as expressly provided for in the Indenture) as to all outstanding 97 Notes when (i) either (a) all the Notes previously authenticated and delivered (other than certain lost, stolen or destroyed Notes, and certain Notes for which provision for payment was previously made and thereafter the funds have been released to the Company) have been delivered to the Trustee for cancellation or (b) all Notes not previously delivered to the Trustee for cancellation (x) have become due and payable, (y) will become due and payable at their Stated Maturity within one year or (z) are to be called for redemption within one year under arrangements reasonably satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company, (ii) the Company has irrevocably deposited or caused to be deposited with the Trustee money, U.S. Government Obligations, or a combination thereof, sufficient to pay and discharge the entire indebtedness on the Notes not previously delivered to the Trustee for cancellation, for principal, premium, if any, and interest to the date of deposit; (iii) the Company has paid or caused to be paid all other sums payable under the Indenture by the Company; and (iv) the Company has delivered to the Trustee an Officer's Certificate and an Opinion of Counsel each to the effect that all conditions precedent under the "Satisfaction and Discharge" section of the Indenture relating to the satisfaction and discharge of the Indenture have been complied with, provided that any such counsel may rely on any Officer's Certificate as to matters of fact (including as to compliance with the foregoing clauses (i), (ii) and (iii)). NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES, INCORPORATORS AND STOCKHOLDERS No director, officer, employee, incorporator or stockholder of the Company, Holding, any Note Guarantor or any Subsidiary of any thereof shall have any liability for any obligation of the Company, Holding or any Note Guarantor under the Indenture, the Notes, the Parent Guarantee or any Note Guarantee, or for any claim based on, in respect of, or by reason of, any such obligation or its creation. Each Noteholder, by accepting the Notes, waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. CONCERNING THE TRUSTEE State Street Bank and Trust Company is the Trustee under the Indenture and has been appointed by the Company as Registrar and Paying Agent with regard to the Notes. The Indenture will provide that, except during the continuance of an Event of Default, the Trustee will perform only such duties as are set forth specifically in the Indenture. During the existence of an Event of Default, the Trustee will exercise such of the rights and powers vested in it under the Indenture and use the same degree of care and skill in its exercise as a prudent person would exercise under the circumstances in the conduct of such person's own affairs. The Indenture and the TIA will impose certain limitations on the rights of the Trustee, should it become a creditor of the Company, to obtain payment of claims in certain cases or to realize on certain property received by it in respect of any such claims, as security or otherwise. The Trustee is permitted to engage in other transactions; provided, that if it acquires any conflicting interest as described in the TIA, it must eliminate such conflict, apply to the SEC for permission to continue as Trustee with such conflict, or resign. GOVERNING LAW The Indenture provides that it and the Notes will be governed by, and construed in accordance with, the laws of the State of New York, without giving effect to any principles of conflict of laws to the extent that the application of the law of another jurisdiction would be required thereby. CERTAIN DEFINITIONS "Additional Assets" means (i) any property or assets that replace the property or assets that are the subject of an Asset Disposition; (ii) any property or assets (other than Indebtedness and Capital Stock) to be used by the Company or a Restricted Subsidiary in a Related Business; (iii) the Capital Stock of a Person that is engaged in 98 a Related Business and becomes a Restricted Subsidiary as a result of the acquisition of such Capital Stock by the Company or another Restricted Subsidiary; or (iv) Capital Stock of any Person that at such time is a Restricted Subsidiary, acquired from a third party. "Affiliate" of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "all or substantially all" has the meaning given to such phrase in the Revised Model Business Corporation Act and commentary thereto. "Asset Disposition" means any sale, lease, transfer or other disposition of shares of Capital Stock of a Restricted Subsidiary (other than directors' qualifying shares, or (in the case of a Foreign Subsidiary) to the extent required by applicable law), property or other assets (each referred to for the purposes of this definition as a "disposition") by the Company or any of its Restricted Subsidiaries (including any disposition by means of a merger, consolidation or similar transaction), other than (i) a disposition to the Company or a Restricted Subsidiary, (ii) a disposition in the ordinary course of business, (iii) the sale or discount (with or without recourse, and on customary or commercially reasonable terms) of accounts receivable or notes receivable arising in the ordinary course of business, or the conversion or exchange of accounts receivable for notes receivable, (iv) any Restricted Payment Transaction, (v) a disposition that is governed by the provisions described under "--Merger and Consolidation", (vi) any Financing Disposition, (vii) any "fee in lieu" or other disposition of assets to any governmental authority or agency that continue in use by the Company or any Restricted Subsidiary, so long as the Company or any Restricted Subsidiary may obtain title to such assets upon reasonable notice by paying a nominal fee, (viii) any exchange of like property pursuant to Section 1031 (or any successor section) of the Code, (ix) any financing transaction with respect to property built or acquired by the Company or any Restricted Subsidiary after the Issue Date, including without limitation any sale/leaseback transaction or asset securitization, (x) any disposition arising from foreclosure, condemnation or similar action with respect to any property or other assets, (xi) any disposition of Capital Stock, Indebtedness or other securities of an Unrestricted Subsidiary, (xii) a disposition of Capital Stock of a Restricted Subsidiary pursuant to an agreement or other obligation with or to a Person (other than the Company or a Restricted Subsidiary) from whom such Restricted Subsidiary was acquired, or from whom such Restricted Subsidiary acquired its business and assets (having been newly formed in connection with such acquisition), entered into in connection with such acquisition, (xiii) a disposition of not more than 5% of the outstanding Capital Stock of a Foreign Subsidiary that has been approved by the Board of Directors, or (xiv) any disposition or series of related dispositions for aggregate consideration not to exceed $2.5 million. "Average Life" means, as of the date of determination, with respect to any Indebtedness or Preferred Stock, the quotient obtained by dividing (i) the sum of the products of the numbers of years from the date of determination to the dates of each successive scheduled principal payment of such Indebtedness or redemption or similar payment with respect to such Preferred Stock multiplied by the amount of such payment by (ii) the sum of all such payments. "Bank Indebtedness" means any and all amounts, whether outstanding on the Issue Date or thereafter incurred, payable under or in respect of the Senior Credit Facility, including without limitation principal, premium (if any), interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Company or any Restricted Subsidiary whether or not a claim for post-filing interest is allowed in such proceedings), fees, charges, expenses, reimbursement obligations, guarantees, other monetary obligations of any nature and all other amounts payable thereunder or in respect thereof. "Board of Directors" means the board of directors or other governing body of the Company or, if the Company is owned or managed by a single entity, the board of directors or other governing body of such entity, or, in either case, any committee thereof duly authorized to act on behalf of such board or governing body. 99 "Borrowing Base" means the sum (determined as of the end of the most recently ended fiscal quarter for which consolidated financial statements of the Company are available) of (1) 60% of Inventory of the Company and its Restricted Subsidiaries and (2) 80% of Receivables of the Company and its Restricted Subsidiaries. "Business Day" means a day other than a Saturday, Sunday or other day on which commercial banking institutions are authorized or required by law to close in New York City. "Capital Stock" of any Person means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including any Preferred Stock, but excluding any debt securities convertible into such equity. "Capitalized Lease Obligation" means an obligation that is required to be classified and accounted for as a capitalized lease for financial reporting purposes in accordance with GAAP. The Stated Maturity of any Capitalized Lease Obligation shall be the date of the last payment of rent or any other amount due under the related lease. "Cash Equivalents" means any of the following: (a) securities issued or fully guaranteed or insured by the United States Government or any agency or instrumentality thereof, (b) time deposits, certificates of deposit or bankers' acceptances of (i) any lender under the Senior Credit Agreement or (ii) any commercial bank having capital and surplus in excess of $500,000,000 and the commercial paper of the holding company of which is rated at least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody's (or if at such time neither is issuing ratings, then a comparable rating of another nationally recognized rating agency), (c) commercial paper rated at least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody's (or if at such time neither is issuing ratings, then a comparable rating of another nationally recognized rating agency) and (d) investments in money market funds complying with the risk limiting conditions of Rule 2a-7 or any successor rule of the SEC under the Investment Company Act of 1940, as amended. "CDR" means Clayton, Dubilier & Rice, Inc. "CDR Fund V" means Clayton, Dubilier & Rice Fund V Limited Partnership, a Cayman Islands exempted limited partnership, and any successor in interest thereto. "Code" means the Internal Revenue Code of 1986, as amended. "Company" means, until the consummation of the Second Merger, Holding and TTC Merger Co., and from and after such consummation, Telecommunications Techniques Co., LLC, a Delaware limited liability company, and any successor in interest thereto. "Consolidated Coverage Ratio" as of any date of determination means the ratio of (i) the aggregate amount of Consolidated EBITDA of the Company and its Restricted Subsidiaries for the period of the most recent four consecutive fiscal quarters ending prior to the date of such determination for which consolidated financial statements of the Company are available to (ii) Consolidated Interest Expense for such four fiscal quarters (in each case, determined, for each fiscal quarter (or portion thereof) of the four fiscal quarters ending prior to the Issue Date, on a pro forma basis to give effect to the Recapitalization as if it had occurred at the beginning of such four- quarter period); provided, that (1) if since the beginning of such period the Company or any Restricted Subsidiary has Incurred any Indebtedness that remains outstanding on such date of determination or if the transaction giving rise to the need to calculate the Consolidated Coverage Ratio is an Incurrence of Indebtedness, Consolidated EBITDA and Consolidated Interest Expense for such period shall be calculated after giving effect on a pro forma basis to such Indebtedness as if such Indebtedness had been Incurred on the first day of such period (except that in making such computation, the amount of Indebtedness under any revolving credit facility outstanding on the date of such calculation shall be computed based on (A) the average daily balance of such 100 Indebtedness during such four fiscal quarters or such shorter period for which such facility was outstanding or (B) if such facility was created after the end of such four fiscal quarters, the average daily balance of such Indebtedness during the period from the date of creation of such facility to the date of such calculation), (2) if since the beginning of such period the Company or any Restricted Subsidiary has repaid, repurchased, redeemed, defeased or otherwise acquired, retired or discharged any Indebtedness (each, a "Discharge") or if the transaction giving rise to the need to calculate the Consolidated Coverage Ratio involves a Discharge of Indebtedness (in each case other than Indebtedness Incurred under any revolving credit facility unless such Indebtedness has been permanently repaid), Consolidated EBITDA and Consolidated Interest Expense for such period shall be calculated after giving effect on a pro forma basis to such Discharge of such Indebtedness, including with the proceeds of such new Indebtedness, as if such Discharge had occurred on the first day of such period, (3) if since the beginning of such period the Company or any Restricted Subsidiary shall have disposed of any company, any business or any group of assets constituting an operating unit of a business (any such disposition, a "Sale"), the Consolidated EBITDA for such period shall be reduced by an amount equal to the Consolidated EBITDA (if positive) attributable to the assets that are the subject of such Sale for such period or increased by an amount equal to the Consolidated EBITDA (if negative) attributable thereto for such period and Consolidated Interest Expense for such period shall be reduced by an amount equal to (A) the Consolidated Interest Expense attributable to any Indebtedness of the Company or any Restricted Subsidiary repaid, repurchased, redeemed, defeased or otherwise acquired, retired or discharged with respect to the Company and its continuing Restricted Subsidiaries in connection with such Sale for such period (including but not limited to through the assumption of such Indebtedness by another Person) plus (B) if the Capital Stock of any Restricted Subsidiary is sold, the Consolidated Interest Expense for such period attributable to the Indebtedness of such Restricted Subsidiary to the extent the Company and its continuing Restricted Subsidiaries are no longer liable for such Indebtedness after such Sale, (4) if since the beginning of such period the Company or any Restricted Subsidiary (by merger, consolidation or otherwise) shall have made an Investment in any Person that thereby becomes a Restricted Subsidiary, or otherwise acquired any company, any business or any group of assets constituting an operating unit of a business, including any such Investment or acquisition occurring in connection with a transaction causing a calculation to be made hereunder (any such Investment or acquisition, a "Purchase"), Consolidated EBITDA and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto (including the Incurrence of any related Indebtedness) as if such Purchase occurred on the first day of such period, and (5) if since the beginning of such period any Person became a Restricted Subsidiary or was merged or consolidated with or into the Company or any Restricted Subsidiary, and since the beginning of such period such Person shall have Discharged any Indebtedness or made any Sale or Purchase that would have required an adjustment pursuant to clause (2), (3) or (4) above if made by the Company or a Restricted Subsidiary during such period, Consolidated EBITDA and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto as if such Discharge, Sale or Purchase occurred on the first day of such period. For purposes of this definition, whenever pro forma effect is to be given to any Sale, Purchase or other transaction, or the amount of income or earnings relating thereto and the amount of Consolidated Interest Expense associated with any Indebtedness Incurred or repaid, repurchased, redeemed, defeased or otherwise acquired, retired or discharged in connection therewith, the pro forma calculations in respect thereof (including without limitation in respect of anticipated cost savings or synergies relating to any such Sale, Purchase or other transaction) shall be as determined in good faith by a responsible financial or accounting Officer of the Company. If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest expense on such Indebtedness shall be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period (taking into account any Interest Rate Agreement applicable to such Indebtedness). If 101 any Indebtedness bears, at the option of the Company or a Restricted Subsidiary, a rate of interest based on a prime or similar rate, a eurocurrency interbank offered rate or other fixed or floating rate, and such Indebtedness is being given pro forma effect, the interest expense on such Indebtedness shall be calculated by applying such optional rate as the Company or such Restricted Subsidiary may designate. If any Indebtedness that is being given pro forma effect was Incurred under a revolving credit facility, the interest expense on such Indebtedness shall be computed based upon the average daily balance of such Indebtedness during the applicable period. Interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate determined in good faith by a responsible financial or accounting officer of the Company to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with GAAP. "Consolidated EBITDA" means, for any period, the Consolidated Net Income for such period, plus the following to the extent deducted in calculating such Consolidated Net Income: (i) provision for all taxes (whether or not paid, estimated or accrued) based on income, profits or capital, (ii) Consolidated Interest Expense and any Receivables Fees, (iii) depreciation, amortization (including but not limited to amortization of goodwill and intangibles and amortization and write-off of financing costs) and all other non-cash charges or non-cash losses, (iv) any expenses or charges related to any Equity Offering, Investment or Indebtedness permitted by the Indenture (whether or not consummated or incurred) and (v) the amount of any minority interest expense. "Consolidated Interest Expense" means, for any period, (i) the total interest expense of the Company and its Restricted Subsidiaries to the extent deducted in calculating Consolidated Net Income, net of any interest income of the Company and its Restricted Subsidiaries, including without limitation any such interest expense consisting of (a) interest expense attributable to Capitalized Lease Obligations, (b) amortization of debt discount, (c) interest in respect of Indebtedness of any other Person that has been Guaranteed by the Company or any Restricted Subsidiary, but only to the extent that such interest is actually paid by the Company or any Restricted Subsidiary, (d) non-cash interest expense, (e) the interest portion of any deferred payment obligation, and (f) commissions, discounts and other fees and charges owed with respect to letters of credit and bankers' acceptance financing, plus (ii) Preferred Stock dividends paid in cash in respect of Disqualified Stock of the Company held by Persons other than the Company or a Restricted Subsidiary and minus (iii) to the extent otherwise included in such interest expense referred to in clause (i) above, Receivables Fees and amortization or write-off of financing costs, in each case under clauses (i) through (iii) as determined on a Consolidated basis in accordance with GAAP; provided, that gross interest expense shall be determined after giving effect to any net payments made or received by the Company and its Restricted Subsidiaries with respect to Interest Rate Agreements. "Consolidated Net Income" means, for any period, the net income (loss) of the Company and its Restricted Subsidiaries, determined on a consolidated basis in accordance with GAAP and before any reduction in respect of Preferred Stock dividends; provided, that there shall not be included in such Consolidated Net Income: (i) any net income (loss) of any Person if such Person is not a Restricted Subsidiary, except that (A) subject to the limitations contained in clause (iv) below, the Company's equity in the net income of any such Person for such period shall be included in such Consolidated Net Income up to the aggregate amount actually distributed by such Person during such period to the Company or a Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution to a Restricted Subsidiary, to the limitations contained in clause (iii) below) and (B) the Company's equity in the net loss of such Person shall be included to the extent of the aggregate Investment of the Company or any of its Restricted Subsidiaries in such Person, (ii) any net income (loss) of any Person acquired by the Company or a Restricted Subsidiary in a pooling of interests transaction for any period prior to the date of such acquisition, (iii) any net income (loss) of any Restricted Subsidiary that is not a Note Guarantor if such Restricted Subsidiary is subject to restrictions, directly or indirectly, on the payment of dividends or the making of similar distributions by such Restricted Subsidiary, directly or indirectly, to the Company by operation of the terms of such Restricted Subsidiary's charter or any agreement, instrument, judgment, decree, order, 102 statute or governmental rule or regulation applicable to such Restricted Subsidiary or its stockholders (other than (x) restrictions that have been waived or otherwise released, (y) restrictions pursuant to the Notes or the Indenture and (z) restrictions in effect on the Issue Date with respect to a Restricted Subsidiary and other restrictions with respect to such Restricted Subsidiary that taken as a whole are not materially less favorable to the Noteholders than such restrictions in effect on the Issue Date), except that (A) subject to the limitations contained in clause (iv) below, the Company's equity in the net income of any such Restricted Subsidiary for such period shall be included in such Consolidated Net Income up to the aggregate amount of any dividend or distribution that was or that could have been made by such Restricted Subsidiary during such period to the Company or another Restricted Subsidiary (subject, in the case of a dividend that could have been made to another Restricted Subsidiary, to the limitation contained in this clause) and (B) the net loss of such Restricted Subsidiary shall be included to the extent of the aggregate Investment of the Company or any of its other Restricted Subsidiaries in such Restricted Subsidiary, (iv) any gain or loss realized upon the sale or other disposition of any asset of the Company or any Restricted Subsidiary (including pursuant to any sale/leaseback transaction) that is not sold or otherwise disposed of in the ordinary course of business (as determined in good faith by the Board of Directors), (v) any item classified as an extraordinary, unusual or nonrecurring gain, loss or charge (including without limitation (a) any compensation expense for stock options that will be cashed out, converted, exchanged or otherwise retired in connection with the Recapitalization, (b) any charge or expense incurred for employee bonuses in connection with the Recapitalization, and (c) fees, expenses and charges associated with the Recapitalization or any acquisition, merger or consolidation after the Issue Date), (vi) the cumulative effect of a change in accounting principles, (vii) all deferred financing costs written off and premiums paid in connection with any early extinguishment of Indebtedness, (viii) any unrealized gains or losses in respect of Currency Agreements, (ix) any unrealized foreign currency transaction gains or losses in respect of Indebtedness of any Person denominated in a currency other than the functional currency of such Person, and (x) any non-cash compensation charge arising from any grant of stock, stock options or other equity based awards. In the case of any unusual or nonrecurring gain, loss or charge not included in Consolidated Net Income pursuant to clause (v) above in any determination thereof, the Company will deliver an Officer's Certificate to the Trustee promptly after the date on which Consolidated Net Income is so determined, setting forth the nature and amount of such unusual or nonrecurring gain, loss or charge. "Consolidated Total Assets" means, as of any date of determination, the total assets shown on the consolidated balance sheet of the Company and its Restricted Subsidiaries as of the most recent date for which such a balance sheet is available, determined on a consolidated basis in accordance with GAAP (and, in the case of any determination relating to any Incurrence of Indebtedness or any Investment, on a pro forma basis including any property or assets being acquired in connection therewith), provided that for purposes of paragraph (b) of the covenant described in "--Certain Covenants--Limitation on Indebtedness" and the definition of "Permitted Investment," Consolidated Total Assets shall not be less than $285.3 million. At December 31, 1997, on a pro forma basis giving effect to the Recapitalization and the issuance of the Notes, Consolidated Total Assets was $285.3 million. See "Unaudited Pro Forma Condensed Consolidated Financial Information." "Consolidation" means the consolidation of the accounts of each of the Restricted Subsidiaries with those of the Company in accordance with GAAP; provided that "Consolidation" will not include consolidation of the accounts of any Unrestricted Subsidiary, but the interest of the Company or any Restricted Subsidiary in any Unrestricted Subsidiary will be accounted for as an investment. The term "Consolidated" has a correlative meaning. 103 "Currency Agreement" means, in respect of a Person, any foreign exchange contract, currency swap agreement or other similar agreement or arrangements (including derivative agreements or arrangements), as to which such Person is a party or a beneficiary. "Default" means any event or condition that is, or after notice or passage of time or both would be, an Event of Default. "Designated Senior Indebtedness" means (i) the Bank Indebtedness and (ii) any other Senior Indebtedness that, at the date of determination, has an aggregate principal amount equal to or under which, at the date of determination, the holders thereof are committed to lend up to, at least $10.0 million and is specifically designated by the Company in an agreement or instrument evidencing or governing such Senior Indebtedness as "Designated Senior Indebtedness" for purposes of the Indenture. "Disinterested Director" means, with respect to any Affiliate Transaction, a member of the Board of Directors having no material direct or indirect financial interest in or with respect to such Affiliate Transaction. A member of the Board of Directors shall not be deemed to have such a financial interest by reason of such member's holding Capital Stock of the Company or Holding or any options, warrants or other rights in respect of such Capital Stock. "Disqualified Stock" means, with respect to any Person, any Capital Stock (other than Management Stock) that by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable or exercisable) or upon the happening of any event (other than following the occurrence of a Change of Control or other similar event described under such terms as a "change of control," or an Asset Disposition) (i) matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise, (ii) is convertible or exchangeable for Indebtedness or Disqualified Stock or (iii) is redeemable at the option of the holder thereof (other than following the occurrence of a Change of Control or other similar event described under such terms as a "change of control," or an Asset Disposition), in whole or in part, in each case on or prior to the final Stated Maturity of the Notes. "Domestic Subsidiary" means any Restricted Subsidiary of the Company other than a Foreign Subsidiary. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Excluded Contribution" means Net Cash Proceeds, or the fair value, as determined in good faith by the Board of Directors, of property or assets, received by the Company as capital contributions to the Company after the Issue Date or from the issuance or sale (other than to a Restricted Subsidiary) of Capital Stock (other than Disqualified Stock) of the Company, in each case to the extent designated as an Excluded Contribution pursuant to an Officer's Certificate of the Company and not previously included in the calculation set forth in subparagraph (a)(3)(B)(x) of the covenant described under "--Certain Covenants--Limitation on Restricted Payments" for purposes of determining whether a Restricted Payment may be made. "Financing Disposition" means any sale, transfer, conveyance or other disposition of property or assets by the Company or any Subsidiary thereof to any Receivables Entity, or by any Receivables Subsidiary, in each case in connection with the Incurrence by a Receivables Entity of Indebtedness, or obligations to make payments to the obligor on Indebtedness, which may be secured by a Lien in respect of such property or assets. "Foreign Subsidiary" means (a) any Restricted Subsidiary of the Company that is not organized under the laws of the United States of America or any state thereof or the District of Columbia and (b) any Restricted Subsidiary of the Company that has no material assets other than securities of one or more Foreign Subsidiaries, and other assets relating to an ownership interest in any such securities or Subsidiaries. "GAAP" means generally accepted accounting principles in the United States of America as in effect on the Issue Date (for purposes of the definitions of the terms "Consolidated Coverage Ratio," "Consolidated 104 EBITDA," "Consolidated Interest Expense," "Consolidated Net Income" and "Consolidated Total Assets," all defined terms in the Indenture to the extent used in or relating to any of the foregoing definitions, and all ratios and computations based on any of the foregoing definitions) and as in effect from time to time (for all other purposes of the Indenture), including those set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as approved by a significant segment of the accounting profession. All ratios and computations based on GAAP contained in the Indenture shall be computed in conformity with GAAP. "Guarantee" means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness or other obligation of any other Person; provided that the term "Guarantee" shall not include endorsements for collection or deposit in the ordinary course of business. The term "Guarantee" used as a verb has a corresponding meaning. "Guarantor Senior Indebtedness" means, with respect to any Note Guarantor, the following obligations, whether outstanding on the date of the Indenture or thereafter issued, without duplication: (i) any Guarantee of Bank Indebtedness by such Note Guarantor and all other Guarantees by such Note Guarantor of Senior Indebtedness of the Company or Guarantor Senior Indebtedness of any other Note Guarantor; (ii) all obligations in respect of any Receivables Financing; and (iii) all obligations consisting of the principal of and premium, if any, and accrued and unpaid interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Note Guarantor regardless of whether post-filing interest is allowed in such proceeding) on, and fees and other amounts owing in respect of, all other Indebtedness of the Note Guarantor, unless, in the instrument creating or evidencing the same or pursuant to which the same is outstanding, it is expressly provided that the obligations in respect of such Indebtedness are not senior in right of payment to the obligations of such Note Guarantor under its Note Guarantee; provided, however, that Guarantor Senior Indebtedness shall not include (1) any obligations of such Note Guarantor to the Company or any other Subsidiary of the Company, (2) any liability for Federal, state, local, foreign or other taxes owed or owing by such Note Guarantor, (3) any accounts payable or other liability to trade creditors arising in the ordinary course of business (including Guarantees thereof or instruments evidencing such liabilities), (4) any Indebtedness of such Note Guarantor (or Guarantee by such Note Guarantor of Indebtedness) that is expressly subordinated in right of payment to any other Indebtedness of such Note Guarantor (or Guarantee by such Note Guarantor of Indebtedness), (5) any Capital Stock of such Note Guarantor or (6) that portion of any Indebtedness of such Note Guarantor that is Incurred by such Note Guarantor in violation of the covenant described under "--Certain Covenants--Limitation on Indebtedness" (but no such violation shall be deemed to exist for purposes of this clause (6) if any holder of such Indebtedness or such holder's representative shall have received an Officer's Certificate to the effect that such Incurrence of such Indebtedness does not (or that the Incurrence by such Note Guarantor of the entire committed amount thereof at the date on which the initial borrowing thereunder is made would not) violate such covenant). If any Guarantor Senior Indebtedness is disallowed, avoided or subordinated pursuant to the provisions of Section 548 of Title 11 of the United States Code or any applicable state fraudulent conveyance law, such Guarantor Senior Indebtedness nevertheless will constitute Guarantor Senior Indebtedness. "Guarantor Senior Subordinated Indebtedness" means, with respect to a Note Guarantor, (i) the obligations of such Note Guarantor under its Note Guarantee and (ii) any other Indebtedness of such Note Guarantor that ranks pari passu in right of payment with the obligations of such Note Guarantor under its Note Guarantee. "Guarantor Subordinated Obligations" means, with respect to a Note Guarantor, any Indebtedness of such Note Guarantor (whether outstanding on the Issue Date or thereafter Incurred) that is expressly subordinated in right of payment to the obligations of such Note Guarantor under the Note Guarantee pursuant to a written agreement. "Hedging Obligations" of any Person means the obligations of such Person pursuant to any Interest Rate Agreement or Currency Agreement. 105 "Holder" or "Noteholder" means the Person in whose name a Note is registered in the Note Register. "Holding" means Dynatech Corporation, a Massachusetts corporation, and any successor in interest thereto. "Holding Expenses" means (i) costs (including all professional fees and expenses) incurred by Holding to comply with its reporting obligations under federal or state laws or under the Indenture, including any reports filed with respect to the Securities Act, Exchange Act or the respective rules and regulations promulgated thereunder, (ii) indemnification obligations of Holding owing to directors, officers, employees or other Persons under its charter or by-laws or pursuant to written agreements with any such Person, (iii) fees and expenses payable by Holding in connection with the Transactions, (iv) other operational expenses of Holding incurred in the ordinary course of business, and (v) expenses incurred by Holding in connection with any public offering of Capital Stock or Indebtedness (x) where the net proceeds of such offering are intended to be received by or contributed or loaned to the Company or a Restricted Subsidiary, or (y) in a prorated amount of such expenses in proportion to the amount of such net proceeds intended to be so received, contributed or loaned, or (z) otherwise on an interim basis prior to completion of such offering so long as Holding shall cause the amount of such expenses to be repaid to the Company or the relevant Restricted Subsidiary out of the proceeds of such offering promptly if completed. "Incur" means issue, assume, enter into any Guarantee of, incur or otherwise become liable for; provided, however, that any Indebtedness or Capital Stock of a Person existing at the time such Person becomes a Subsidiary (whether by merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred by such Subsidiary at the time it becomes a Subsidiary. Accrual of interest, the accretion of accreted value and the payment of interest in the form of additional Indebtedness will not be deemed to be an Incurrence of Indebtedness. Any Indebtedness issued at a discount (including Indebtedness on which interest is payable through the issuance of additional Indebtedness) shall be deemed Incurred at the time of original issuance of the Indebtedness at the initial accreted amount thereof. "Indebtedness" means, with respect to any Person on any date of determination (without duplication): (i) the principal of indebtedness of such Person for borrowed money, (ii) the principal of obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all reimbursement obligations of such Person in respect of letters of credit or other similar instruments (the amount of such obligations being equal at any time to the aggregate then undrawn and unexpired amount of such letters of credit or other instruments plus the aggregate amount of drawings thereunder that have not then been reimbursed), (iv) all obligations of such Person to pay the deferred and unpaid purchase price of property (except Trade Payables), which purchase price is due more than one year after the date of placing such property in final service or taking final delivery and title thereto, (v) all Capitalized Lease Obligations of such Person, (vi) the redemption, repayment or other repurchase amount of such Person with respect to any Disqualified Stock of such Person or (if such Person is a Subsidiary of the Company other than a Note Guarantor) any Preferred Stock of such Subsidiary, but excluding, in each case, any accrued dividends (the amount of such obligation to be equal at any time to the maximum fixed involuntary redemption, repayment or repurchase price for such Capital Stock, or if less (or if such Capital Stock has no such fixed price), to the involuntary redemption, repayment or repurchase price therefor calculated in accordance with the terms thereof as if then redeemed, repaid or repurchased, and if such price is based upon or measured by the fair market value of such Capital Stock, such fair market value shall be as determined in good faith by the Board of Directors or the board of directors or other governing body of the issuer of such Capital Stock), 106 (vii) all Indebtedness of other Persons secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person; provided that the amount of Indebtedness of such Person shall be the lesser of (A) the fair market value of such asset at such date of determination (as determined in good faith by the Company) and (B) the amount of such Indebtedness of such other Persons, (viii) all Indebtedness of other Persons to the extent Guaranteed by such Person, and (ix) to the extent not otherwise included in this definition, net Hedging Obligations of such Person (the amount of any such obligation to be equal at any time to the termination value of such agreement or arrangement giving rise to such Hedging Obligation that would be payable by such Person at such time). The amount of Indebtedness of any Person at any date shall be determined as set forth above or otherwise provided in the Indenture, or otherwise shall equal the amount thereof that would appear on a balance sheet of such Person (excluding any notes thereto) prepared in accordance with GAAP. "Interest Rate Agreement" means, with respect to any Person, any interest rate protection agreement, interest rate future agreement, interest rate option agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedge agreement or other similar agreement or arrangement (including derivative agreements or arrangements), as to which such Person is party or a beneficiary. "Inventory" means goods held for sale or lease by a Person in the ordinary course of business, net of any reserve for goods that have been segregated by such Person to be returned to the applicable vendor for credit, as determined in accordance with GAAP. "Investment" in any Person by any other Person means any direct or indirect advance, loan or other extension of credit (other than to customers, suppliers, directors, officers or employees of any Person in the ordinary course of business) or capital contribution (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others) to, or any purchase or acquisition of Capital Stock, Indebtedness or other similar instruments issued by, such Person. For purposes of the definition of "Unrestricted Subsidiary" and the covenant described under "--Certain Covenants--Limitation on Restricted Payments," (i) "Investment" shall include the portion (proportionate to the Company's equity interest in such Subsidiary) of the fair market value of the net assets of any Subsidiary of the Company at the time that such Subsidiary is designated an Unrestricted Subsidiary, provided that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue to have a permanent "Investment" in an Unrestricted Subsidiary in an amount (if positive) equal to (x) the Company's "Investment" in such Subsidiary at the time of such redesignation less (y) the portion (proportionate to the Company's equity interest in such Subsidiary) of the fair market value of the net assets of such Subsidiary at the time of such redesignation, (ii) any property transferred to or from an Unrestricted Subsidiary shall be valued at its fair market value at the time of such transfer, and (iii) in each case under clause (i) or (ii) above, fair market value shall be as determined in good faith by the Board of Directors. Guarantees shall not be deemed to be Investments. The amount of any Investment outstanding at any time shall be the original cost of such Investment, reduced (at the Company's option) by any dividend, distribution, interest payment, return of capital, repayment or other amount or value received in respect of such Investment; provided, that to the extent that the amount of Restricted Payments outstanding at any time is so reduced by any portion of any such amount or value that would otherwise be included in the calculation of Consolidated Net Income, such portion of such amount or value shall not be so included for purposes of calculating the amount of Restricted Payments that may be made pursuant to paragraph (a) of the covenant described under "--Certain Covenants--Limitation on Restricted Payments." "Investors" means CDR Fund V and John F. Reno or his family members or relatives, or trusts for the benefit of any of the foregoing, or any of their heirs, executors, successors and legal representatives. "Issue Date" means the first date on which Notes are issued. "Lien" means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof). 107 "Management Advances" means (1) loans or advances made to directors, officers or employees of Holding, the Company or any Restricted Subsidiary (x) in respect of travel, entertainment or moving-related expenses incurred in the ordinary course of business, (y) in respect of moving-related expenses incurred in connection with any closing or consolidation of any facility, or (z) in the ordinary course of business and (in the case of this clause (z)) not exceeding $2.5 million in the aggregate outstanding at any time, (2) promissory notes of Management Investors acquired in connection with the issuance of Management Stock to such Management Investors, (3) Management Guarantees, or (4) other Guarantees of borrowings by Management Investors in connection with the purchase of Management Stock, which Guarantees are permitted under the covenant described under "--Certain Covenants--Limitation on Indebtedness." "Management Agreements" means, collectively, the Consulting Agreement and the Indemnification Agreement, each dated as of May 21, 1998, each between the Company and CDR (and its permitted successors and assigns thereunder), as each may be amended, supplemented, waived or otherwise modified from time to time in accordance with the terms thereof and of the Indenture. "Management Guarantees" means guarantees (x) of up to an aggregate principal amount of $20.0 million of borrowings by Management Investors in connection with their purchase of Management Stock or (y) made on behalf of, or in respect of loans or advances made to, directors, officers or employees of Holding, the Company or any Restricted Subsidiary (1) in respect of travel, entertainment and moving-related expenses incurred in the ordinary course of business, or (2) in the ordinary course of business and (in the case of this clause (2)) not exceeding $2.5 million in the aggregate outstanding at any time. "Management Investors" means the officers, directors, employees and other members of the management of Holding, the Company or any of their respective Subsidiaries, or family members or relatives thereof, or trusts or partnerships for the benefit of any of the foregoing, or any of their heirs, executors, successors and legal representatives, who at any date beneficially own or have the right to acquire, directly or indirectly, Capital Stock of the Company or Holding. "Management Stock" means Capital Stock of the Company or Holding (including any options, warrants or other rights in respect thereof) held by any of the Management Investors. "Merger" means the merger of MergerCo with and into Holding, with Holding the surviving corporation, on the date of the Recapitalization. "Moody's" means Moody's Investors Service, Inc., and its successors. "Net Available Cash" from an Asset Disposition means cash payments received (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise, but only as and when received, but excluding any other consideration received in the form of assumption by the acquiring person of Indebtedness or other obligations relating to the properties or assets that are the subject of such Asset Disposition or received in any other non-cash form) therefrom, in each case net of (i) all legal, title and recording tax expenses, commissions and other fees and expenses incurred, and all Federal, state, provincial, foreign and local taxes required to be paid or accrued as a liability under GAAP, as a consequence of such Asset Disposition (including as a consequence of any transfer of funds in connection with the application thereof in accordance with the covenant described under "--Certain Covenants--Limitation on Sales of Assets and Subsidiary Stock"), (ii) all payments made, and all installment payments required to be made, on any Indebtedness that is secured by any assets subject to such Asset Disposition, in accordance with the terms of any Lien upon such assets, or that must by its terms, or in order to obtain a necessary consent to such Asset Disposition, or by applicable law, be repaid out of the proceeds from such Asset Disposition, (iii) all distributions and other payments required to be made to minority interest holders in Subsidiaries or joint ventures as a result of such Asset Disposition, or to any other Person (other than the Company or a Restricted Subsidiary) owning a beneficial interest in the assets disposed of in such Asset Disposition and (iv) any liabilities or obligations associated with the assets disposed of in such Asset Disposition and retained by the Company or any 108 Restricted Subsidiary after such Asset Disposition, including without limitation pension and other post-employment benefit liabilities, liabilities related to environmental matters, and liabilities relating to any indemnification obligations associated with such Asset Disposition. "Net Cash Proceeds," with respect to any issuance or sale of any securities of the Company or any Subsidiary by the Company or any Subsidiary, or any capital contribution, means the cash proceeds of such issuance, sale or contribution net of attorneys' fees, accountants' fees, underwriters' or placement agents' fees, discounts or commissions and brokerage, consultant and other fees actually incurred in connection with such issuance, sale or contribution and net of taxes paid or payable as a result thereof. "Note Guarantee" means any guarantee that may from time to time be entered into by a Restricted Subsidiary of the Company pursuant to the covenant described under "--Certain Covenants--Future Note Guarantors." "Note Guarantor" means any Restricted Subsidiary of the Company that enters into a Note Guarantee. "Officer" means, with respect to the Company or any other obligor upon the Notes, the Chairman of the Board, the President, the Chief Executive Officer, the Chief Financial Officer, any Vice President, the Controller, the Treasurer or the Secretary (a) of such Person or (b) if such Person is owned or managed by a single entity, of such entity (or any other individual designated as an "Officer" for the purposes of the Indenture by the Board of Directors). "Officer's Certificate" means, with respect to the Company or any other obligor upon the Notes, a certificate signed by one Officer of such Person. "Opinion of Counsel" means a written opinion from legal counsel who is reasonably acceptable to the Trustee. The counsel may be an employee of or counsel to the Company or the Trustee. "Parent Guarantee" means the Guarantee executed and delivered by Holding as described under "--Holding Guarantee." "Parent Senior Indebtedness" means, with respect to Holding, the following obligations, whether outstanding on the date of the Indenture or thereafter issued, without duplication: (i) any Guarantee of Bank Indebtedness by Holding and all other Guarantees by Holding of Senior Indebtedness of the Company or Guarantor Senior Indebtedness of any Note Guarantor; (ii) all obligations in respect of any Receivables Financing; and (iii) all obligations consisting of the principal of and premium, if any, and accrued and unpaid interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to Holding regardless of whether post-filing interest is allowed in such proceeding) on, and fees and other amounts owing in respect of, all other Indebtedness of Holding, unless, in the instrument creating or evidencing the same or pursuant to which the same is outstanding, it is expressly provided that the obligations in respect of such Indebtedness are not senior in right of payment to the obligations of Holding under the Parent Guarantee. "Parent Senior Subordinated Indebtedness" means (i) the obligations of Holding under the Parent Guarantee and (ii) any other Indebtedness of Holding that ranks pari passu in right of payment with the obligations of Holding under the Parent Guarantee. "Parent Subordinated Obligations" means any Indebtedness of Holding (whether outstanding on the Issue Date or thereafter Incurred) that is expressly subordinated in right of payment to the obligations of Holding under the Parent Guarantee pursuant to a written agreement. "Permitted Holder" means any of the following: (i) any of the Investors, Management Investors, CDR and their respective Affiliates; (ii) any investment fund or vehicle managed, sponsored or advised by CDR; (iii) any 109 limited or general partners of, or other investors in, any of the Investors and their respective Affiliates, or any such investment fund or vehicle; and (iv) any Person acting in the capacity of an underwriter in connection with a public or private offering of Capital Stock of Holding or the Company. "Permitted Investment" means an Investment by the Company or any Restricted Subsidiary in, or consisting of, any of the following: (i) a Restricted Subsidiary, the Company, or a Person that will, upon the making of such Investment, become a Restricted Subsidiary; (ii) another Person if as a result of such Investment such other Person is merged or consolidated with or into, or transfers or conveys all or substantially all its assets to, or is liquidated into, the Company or a Restricted Subsidiary; (iii) Temporary Cash Investments or Cash Equivalents; (iv) receivables owing to the Company or any Restricted Subsidiary, if created or acquired in the ordinary course of business; (v) any securities or other Investments received as consideration in, or retained in connection with, sales or other dispositions of property or assets, including Asset Dispositions made in compliance with the covenant described under "--Certain Covenants--Limitation on Sales of Assets and Subsidiary Stock"; (vi) securities or other Investments received in settlement of debts created in the ordinary course of business and owing to the Company or any Restricted Subsidiary, or as a result of foreclosure, perfection or enforcement of any Lien, or in satisfaction of judgments, including in connection with any bankruptcy proceeding or other reorganization of another Person; (vii) Investments in existence or made pursuant to legally binding written commitments in existence on the Issue Date; (viii) Currency Agreements, Interest Rate Agreements and related Hedging Obligations, which obligations are Incurred in compliance with the covenant described under "--Certain Covenants--Limitation on Indebtedness"; (ix) pledges or deposits (x) with respect to leases or utilities provided to third parties in the ordinary course of business or (y) otherwise described in the definition of "Permitted Liens" or made in connection with Liens permitted under the covenant described under "--Certain Covenants-- Limitation on Liens"; (x) any Investment in a joint venture or similar entity that is not a Restricted Subsidiary, or in any Related Business, in an aggregate amount outstanding at any time not to exceed 7% of Consolidated Total Assets; (xi) (1) Investments in any Receivables Subsidiary, or in connection with a Financing Disposition by or to any Receivables Entity, including Investments of funds held in accounts permitted or required by the arrangements governing such Financing Disposition or any related Indebtedness, or (2) any promissory note issued by the Company or Holding, provided that if Holding receives cash from the relevant Receivables Entity in exchange for such note, an equal cash amount is contributed by Holding to the Company; (xii) bonds secured by assets leased to and operated by the Company or any Restricted Subsidiary that were issued in connection with the financing of such assets so long as the Company or any Restricted Subsidiary may obtain title to such assets at any time by paying a nominal fee, canceling such bonds and terminating the transaction; (xiii) Notes; (xiv) any Investment to the extent made using Capital Stock of the Company (other than Disqualified Stock), or Capital Stock of Holding, as consideration; (xv) Management Advances; and (xvi) other Investments in an aggregate amount outstanding at any time not to exceed 10% of Consolidated Total Assets. 110 "Permitted Liens" means: (a) Liens for taxes, assessments or other governmental charges not yet delinquent or the nonpayment of which in the aggregate would not reasonably be expected to have a material adverse effect on the Company and its Restricted Subsidiaries, or that are being contested in good faith and by appropriate proceedings if adequate reserves with respect thereto are maintained on the books of the Company or a Subsidiary thereof, as the case may be, in accordance with GAAP; (b) carriers', warehousemen's, mechanics', landlords', materialmen's, repairmen's or other like Liens arising in the ordinary course of business in respect of obligations that are not overdue for a period of more than 60 days, or that are bonded or that are being contested in good faith and by appropriate proceedings; (c) pledges, deposits or Liens in connection with workers' compensation, unemployment insurance and other social security and other similar legislation or other insurance-related obligations (including, without limitation, pledges or deposits securing liability to insurance carriers under insurance or self- insurance arrangements); (d) pledges, deposits or Liens to secure the performance of bids, tenders, trade, government or other contracts (other than for borrowed money), obligations for utilities, leases, licenses, statutory obligations, completion guarantees, surety, judgment, appeal or performance bonds, other similar bonds, instruments or obligations, and other obligations of a like nature incurred in the ordinary course of business; (e) easements (including reciprocal easement agreements), rights-of-way, building, zoning and similar restrictions, utility agreements, covenants, reservations, restrictions, encroachments, changes, and other similar encumbrances or title defects incurred, or leases or subleases granted to others, in the ordinary course of business, which do not in the aggregate materially interfere with the ordinary conduct of the business of the Company and its Subsidiaries, taken as a whole; (f) Liens existing on, or provided for under written arrangements existing on, the Issue Date, or (in the case of any such Liens securing Indebtedness of the Company or any of its Subsidiaries existing or arising under written arrangements existing on the Issue Date) securing any Refinancing Indebtedness in respect of such Indebtedness so long as the Lien securing such Refinancing Indebtedness is limited to all or part of the same property or assets (plus improvements, accessions, proceeds or dividends or distributions in respect thereof) that secured (or under such written arrangements could secure) the original Indebtedness; (g) (i) mortgages, liens, security interests, restrictions, encumbrances or any other matters of record that have been placed by any developer, landlord or other third party on property over which the Company or any Restricted Subsidiary of the Company has easement rights or on any leased property and subordination or similar agreements relating thereto and (ii) any condemnation or eminent domain proceedings affecting any real property; (h) Liens securing Hedging Obligations, Purchase Money Obligations or Capitalized Lease Obligations Incurred in compliance with the covenant described under "--Certain Covenants--Limitation on Indebtedness"; (i) Liens arising out of judgments, decrees, orders or awards in respect of which the Company shall in good faith be prosecuting an appeal or proceedings for review, which appeal or proceedings shall not have been finally terminated, or if the period within which such appeal or proceedings may be initiated shall not have expired; (j) leases, subleases, licenses or sublicenses to third parties; (k) Liens securing (1) Indebtedness Incurred in compliance with clause (b)(i), (b)(iv), (b)(v), (b)(vii), (b)(viii)(E) or (b)(x), of the covenant described under "--Certain Covenants--Limitation on Indebtedness," or clause (b)(iii) thereof (other than Refinancing Indebtedness Incurred in respect of Indebtedness described in 111 paragraph (a) thereof), (2) Bank Indebtedness, (3) commercial bank Indebtedness, (4) Indebtedness of any Restricted Subsidiary that is not a Note Guarantor, (5) the Notes or (6) Indebtedness or other obligations of any Receivables Entity; (l) Liens existing on property or assets of a Person at the time such Person becomes a Subsidiary of the Company (or at the time the Company or a Restricted Subsidiary acquires such property or assets); provided, however, that such Liens are not created in connection with, or in contemplation of, such other Person becoming such a Subsidiary (or such acquisition of such property or assets), and that such Liens are limited to all or part of the same property or assets (plus improvements, accessions, proceeds or dividends or distributions in respect thereof) that secured (or, under the written arrangements under which such Liens arose, could secure) the obligations to which such Liens relate; (m) Liens on Capital Stock or other securities of an Unrestricted Subsidiary that secure Indebtedness or other obligations of such Unrestricted Subsidiary; (n) any encumbrance or restriction (including, but not limited to, put and call agreements) with respect to Capital Stock of any joint venture or similar arrangement pursuant to any joint venture or similar agreement; and (o) Liens securing Refinancing Indebtedness Incurred in respect of any Indebtedness secured by, or securing any refinancing, refunding, extension, renewal or replacement (in whole or in part) of any other obligation secured by, any other Permitted Liens, provided that any such new Lien is limited to all or part of the same property or assets (plus improvements, accessions, proceeds or dividends or distributions in respect thereof) that secured (or, under the written arrangements under which the original Lien arose, could secure) the obligations to which such Liens relate. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, limited liability company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity. "Preferred Stock" as applied to the Capital Stock of any corporation means Capital Stock of any class or classes (however designated) that by its terms is preferred as to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such corporation, over shares of Capital Stock of any other class of such corporation. "Purchase Money Obligations" means any Indebtedness Incurred to finance or refinance the acquisition, leasing, construction or improvement of property (real or personal) or assets, and whether acquired through the direct acquisition of such property or assets or the acquisition of the Capital Stock of any Person owning such property or assets, or otherwise. "Recapitalization" means the recapitalization of Holding pursuant to the Agreement and Plan of Merger, dated as of December 20, 1997, between MergerCo and Holding whereby MergerCo will be merged with and into Holding, with Holding being the surviving corporation. "Receivable" means a right to receive payment arising from a sale or lease of goods or services by a Person pursuant to an arrangement with another Person pursuant to which such other Person is obligated to pay for goods or services under terms that permit the purchase of such goods and services on credit, as determined in accordance with GAAP. "Receivables Entity" means (x) any Receivables Subsidiary or (y) any other Person that is engaged in the business of acquiring, selling, collecting, financing or refinancing Receivables, accounts (as defined in the Uniform Commercial Code as in effect in any jurisdiction from time to time), other accounts and/or other receivables, and/or related assets. 112 "Receivables Fees" means distributions or payments made directly or by means of discounts with respect to any participation interest issued or sold in connection with, and other fees paid to a Person that is not a Restricted Subsidiary in connection with, any Receivables Financing. "Receivables Financing" means any financing of Receivables of the Company or any Restricted Subsidiary that have been transferred to a Receivables Entity in a Financing Disposition. "Receivables Subsidiary" means a Subsidiary of the Company that (a) is engaged solely in the business of acquiring, selling, collecting, financing or refinancing Receivables, accounts (as defined in the Uniform Commercial Code as in effect in any jurisdiction from time to time) and other accounts and receivables (including any thereof constituting or evidenced by chattel paper, instruments or general intangibles), all proceeds thereof and all rights (contractual and other), collateral and other assets relating thereto, and any business or activities incidental or related to such business, and (b) is designated as a "Receivables Subsidiary" by the Board of Directors. "refinance" means refinance, refund, replace, renew, repay, modify, restate, defer, substitute, supplement, reissue, resell or extend (including pursuant to any defeasance or discharge mechanism); and the terms "refinances," "refinanced" and "refinancing" as used for any purpose in the Indenture shall have a correlative meaning. "Refinancing Indebtedness" means Indebtedness that is Incurred to refinance any Indebtedness existing on the date of the Indenture or Incurred in compliance with the Indenture (including Indebtedness of the Company that refinances Indebtedness of any Restricted Subsidiary (to the extent permitted in the Indenture) and Indebtedness of any Restricted Subsidiary that refinances Indebtedness of another Restricted Subsidiary) including Indebtedness that refinances Refinancing Indebtedness; provided, that (1) if the Indebtedness being refinanced is Subordinated Obligations or Guarantor Subordinated Obligations, the Refinancing Indebtedness has an Average Life at the time such Refinancing Indebtedness is Incurred that is equal to or greater than the Average Life of the Indebtedness being refinanced, (2) such Refinancing Indebtedness is Incurred in an aggregate principal amount (or if issued with original issue discount, an aggregate issue price) that is equal to or less than the sum of (x) the aggregate principal amount (or if issued with original issue discount, the aggregate accreted value) then outstanding of the Indebtedness being refinanced, plus (y) fees, underwriting discounts, premiums and other costs and expenses incurred in connection with such Refinancing Indebtedness and (3) Refinancing Indebtedness shall not include (x) Indebtedness of a Restricted Subsidiary that is not a Note Guarantor that refinances Indebtedness of the Company that was incurred by the Company pursuant to paragraph (a) of the covenant described under "--Certain Covenants--Limitation on Indebtedness" or (y) Indebtedness of the Company or a Restricted Subsidiary that refinances Indebtedness of an Unrestricted Subsidiary. "Related Business" means those businesses in which the Company or any of its Subsidiaries is engaged on the date of the Indenture, or that are related, complementary, incidental or ancillary thereto or extensions, developments or expansions thereof. "Related Taxes" means (x) any taxes, charges or assessments, including but not limited to sales, use, transfer, rental, ad valorem, value-added, stamp, property, consumption, franchise, license, capital, net worth, gross receipts, excise, occupancy, intangibles or similar taxes, charges or assessments (other than federal, state or local taxes measured by income and federal, state or local withholding imposed on payments made by Holding), required to be paid by Holding by virtue of its being incorporated or having Capital Stock outstanding (but not by virtue of owning stock or other equity interests of any corporation or other entity other than the Company or any of its Subsidiaries), or being a holding company parent of the Company or receiving dividends from or other distributions in respect of the Capital Stock of the Company, or having guaranteed any obligations of the Company or any Subsidiary thereof, or having made any payment in respect of any of the items for which the Company is permitted to make payments to Holding pursuant to the covenant described under "--Certain Covenants--Limitation on Restricted Payments," or (y) any other federal, state, foreign, provincial or local taxes measured by income for which Holding is liable up to an amount not to exceed with respect to such federal 113 taxes the amount of any such taxes that the Company would have been required to pay on a separate company basis or on a consolidated basis if the Company had filed a consolidated return on behalf of an affiliated group (as defined in Section 1504 of the Code or an analogous provision of state, local or foreign law) of which it were the common parent, or with respect to state and local taxes, on a combined basis if the Company had filed a combined return on behalf of an affiliated group consisting only of the Company and its Subsidiaries. "Representative" means the trustee, agent or representative (if any) for an issue of Senior Indebtedness. "Restricted Payment Transaction" means any Restricted Payment permitted pursuant to the covenant described under "--Certain Covenants--Limitation on Restricted Payments," any Permitted Payment, any Permitted Investment, or any transaction specifically excluded from the definition of the term "Restricted Payment." "Restricted Subsidiary" means any Subsidiary of the Company other than an Unrestricted Subsidiary. "SEC" means the Securities and Exchange Commission. "Secured Indebtedness" means any Indebtedness of the Company secured by a Lien. "Senior Credit Agreement" means the credit agreement dated as of May 21, 1998, among the Company (after giving effect to the Second Merger), the banks and other financial institutions party thereto from time to time, Credit Suisse First Boston, as syndication agent, The Chase Manhattan Bank, as documentation agent, and Morgan Guaranty Trust Company of New York, as administrative agent, as such agreement may be assumed by any successor in interest, and as such agreement may be amended, supplemented, waived or otherwise modified from time to time, or refunded, refinanced, restructured, replaced, renewed, repaid, increased or extended from time to time (whether in whole or in part, whether with the original agent and lenders or other agents and lenders or otherwise, and whether provided under the original Senior Credit Agreement or otherwise). "Senior Credit Facility" means the collective reference to the Senior Credit Agreement, any Credit Documents (as defined therein), any notes and letters of credit issued pursuant thereto and any guarantee and collateral agreement, patent and trademark security agreement, mortgages, letter of credit applications and other guarantees, pledge agreements, security agreements and collateral documents, and other instruments and documents, executed and delivered pursuant to or in connection with any of the foregoing, in each case as the same may be amended, supplemented, waived or otherwise modified from time to time, or refunded, refinanced, restructured, replaced, renewed, repaid, increased or extended from time to time (whether in whole or in part, whether with the original agent and lenders or other agents and lenders or otherwise, and whether provided under the original Senior Credit Agreement or one or more other credit agreements, indentures (including the Indenture) or financing agreements or otherwise). Without limiting the generality of the foregoing, the term "Senior Credit Facility" shall include any agreement (i) changing the maturity of any Indebtedness incurred thereunder or contemplated thereby, (ii) adding Subsidiaries of the Company as additional borrowers or guarantors thereunder, (iii) increasing the amount of Indebtedness incurred thereunder or available to be borrowed thereunder or (iv) otherwise altering the terms and conditions thereof. "Senior Subordinated Indebtedness" means the Notes and any other Indebtedness of the Company that ranks pari passu with the Notes. "Significant Domestic Subsidiary" means any Domestic Subsidiary that is a Significant Subsidiary. "Significant Subsidiary" means any Restricted Subsidiary that would be a "significant subsidiary" of the Company within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC, as in effect on the Issue Date. "S&P" means Standard & Poor's Ratings Service, a division of The McGraw-Hill Companies, Inc., and its successors. 114 "Stated Maturity" means, with respect to any security, the date specified in such security as the fixed date on which the payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision (but excluding any provision providing for the repurchase of such security at the option of the holder thereof upon the happening of any contingency beyond the control of the issuer unless such contingency has occurred). "Subordinated Obligations" means any Indebtedness of the Company (whether outstanding on the date of the Indenture or thereafter Incurred) that is expressly subordinated in right of payment to the Notes pursuant to a written agreement. "Subsidiary" of any Person means any corporation, association, partnership or other business entity of which more than 50% of the total voting power of shares of Capital Stock or other equity interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by (i) such Person or (ii) one or more Subsidiaries of such Person. "Successor Company" shall have the meaning assigned thereto in clause (i) under "--Merger and Consolidation." "Tax Sharing Agreement" means the Tax Sharing Agreement, dated as of May 21, 1998, between the Company and Holding, as the same may be amended, supplemented, waived or otherwise modified from time to time in accordance with the terms thereof and of the Indenture. "Temporary Cash Investments" means any of the following: (i) any investment in (x) direct obligations of the United States of America or any agency or instrumentality thereof or obligations Guaranteed by the United States of America or any agency or instrumentality thereof or (y) direct obligations of any foreign country recognized by the United States of America rated at least "A" by S&P or "A-1" by Moody's (or, in either case, the equivalent of such rating by such organization or, if no rating of S&P or Moody's then exists, the equivalent of such rating by any nationally recognized rating organization), (ii) overnight bank deposits, and investments in time deposit accounts, certificates of deposit, bankers' acceptances and money market deposits (or, with respect to foreign banks, similar instruments) maturing not more than one year after the date of acquisition thereof issued by (x) any lender under the Senior Credit Agreement or (y) a bank or trust company that is organized under the laws of the United States of America, any state thereof or any foreign country recognized by the United States of America having capital and surplus aggregating in excess of $250 million (or the foreign currency equivalent thereof) and whose long term debt is rated at least "A" by S&P or "A-1" by Moody's (or, in either case, the equivalent of such rating by such organization or, if no rating of S&P or Moody's then exists, the equivalent of such rating by any nationally recognized rating organization) at the time such Investment is made, (iii) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clause (i) or (ii) above entered into with a bank meeting the qualifications described in clause (ii) above, (iv) Investments in commercial paper, maturing not more than 270 days after the date of acquisition, issued by a Person (other than of the Company or any of its Subsidiaries), with a rating at the time as of which any Investment therein is made of "P-2" (or higher) according to Moody's or "A-2" (or higher) according to S&P (or, in either case, the equivalent of such rating by such organization or, if no rating of S&P or Moody's then exists, the equivalent of such rating by any nationally recognized rating organization), (v) Investments in securities maturing not more than one year after the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States of America, or by any political subdivision or taxing authority thereof, and rated at least "A" by S&P or "A" by Moody's (or, in either case, the equivalent of such rating by such organization or, if no rating of S&P or Moody's then exists, the equivalent of such rating by any nationally recognized rating organization), (vi) Preferred Stock (other than of the Company or any of its Subsidiaries) having a rating of "A" or higher by S&P or "A2" or higher by Moody's (or, in either case, the equivalent of such rating by such organization or, if no rating of S&P or Moody's then exists, the equivalent of such rating by any nationally recognized rating organization), (vii) investment funds investing 95% of their assets in securities of the type described in clauses (i)-(vi) above (which funds may also hold 115 reasonable amounts of cash pending investment and/or distribution), (viii) any money market deposit accounts issued or offered by a domestic commercial bank or a commercial bank organized and located in a country recognized by the United States of America, in each case, having capital and surplus in excess of $250 million (or the foreign currency equivalent thereof), or investments in money market funds complying with the risk limiting conditions of Rule 2a-7 (or any successor rule) of the SEC under the Investment Company Act of 1940, as amended, and (ix) similar short-term investments approved by the Board of Directors in the ordinary course of business. "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-7bbbb) as in effect on the date of the Indenture. "Trade Payables" means, with respect to any Person, any accounts payable or any indebtedness or monetary obligation to trade creditors created, assumed or guaranteed by such Person arising in the ordinary course of business in connection with the acquisition of goods or services. "Transactions" means, collectively, the Recapitalization, the Merger, the Second Merger, the initial equity investment by the Investors, the offering and issuance of the Notes, the initial borrowings under the Senior Credit Facility, the assumption by the Company of obligations under the Indenture and the Notes and under the Senior Credit Facility, and all other transactions relating to the Recapitalization or the financing thereof. "Trustee" means the party named as such in the Indenture until a successor replaces it and, thereafter, means the successor. "Trust Officer" means the Chairman of the Board, the President or any other officer or assistant officer of the Trustee assigned by the Trustee to administer its corporate trust matters. "Unrestricted Subsidiary" means (i) any Subsidiary of the Company that at the time of determination is an Unrestricted Subsidiary, as designated by the Board of Directors in the manner provided below, and (ii) any Subsidiary of an Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary of the Company (including any newly acquired or newly formed Subsidiary of the Company) to be an Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Capital Stock or Indebtedness of, or owns or holds any Lien on any property of, the Company or any other Restricted Subsidiary of the Company that is not a Subsidiary of the Subsidiary to be so designated; provided, that either (A) the Subsidiary to be so designated has total consolidated assets of $1,000 or less or (B) if such Subsidiary has consolidated assets greater than $1,000, then such designation would be permitted under the covenant described under "--Certain Covenants--Limitation on Restricted Payments." The Board of Directors may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided, that immediately after giving effect to such designation either (x) the Company could incur at least $1.00 of additional Indebtedness under paragraph (a) in the covenant described under "--Certain Covenants--Limitation on Indebtedness" or (y) the Consolidated Coverage Ratio would be greater than it was immediately prior to giving effect to such designation. Any such designation by the Board of Directors shall be evidenced to the Trustee by promptly filing with the Trustee a copy of the resolution of the Company's Board of Directors giving effect to such designation and an Officer's Certificate of the Company certifying that such designation complied with the foregoing provisions. "Voting Stock" of an entity means all classes of Capital Stock of such entity then outstanding and normally entitled to vote in the election of directors or all interests in such entity with the ability to control the management or actions of such entity. 116 BOOK-ENTRY; DELIVERY AND FORM The Existing Notes were issued and the New Notes will be issued in fully registered form without interest coupons. The Existing Notes are represented by and the New Notes will be represented by one or more permanent global Notes in definitive, fully registered form without coupons (the "Global Security") and registered in the name of a nominee of The Depository Trust company ("DTC") and deposited with the Trustee as custodian for DTC for credit to the respective accounts of the purchasers (or to such other accounts as they may direct). The Global Security that represents the Existing Notes is subject to certain restrictions on transfer set forth therein and in the Indenture and bears a legend regarding such restrictions. DTC is a limited purpose trust company organized under the laws of the State of New York, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the Uniform Commercial Code and a "Clearing Agency" registered pursuant to the provisions of Section 17A of the Exchange Act. DTC was created to hold securities for its participants and facilitate the clearance and settlement of securities transactions between participants through electronic book-entry changes in accounts of its participants, thereby eliminating the need for physical movement of certificates. Participants include securities brokers and dealers, banks, trust companies and clearing corporations and certain other organizations. Indirect access to the DTC system is available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly ("indirect participants"). Upon the issuance of the Global Security, DTC or its custodian will credit, on its internal system, the respective principal amount of the individual beneficial interests represented by such Global Security to the accounts of persons who have accounts with such depositary. Ownership of beneficial interests in the Global Security will be limited to persons who have accounts with DTC ("participants") or persons who hold interests through participants. Ownership of beneficial interests in the Global Security will be shown on, and the transfer of that ownership will be effected only through, records maintained by DTC or its nominee (with respect to interests of participants) and the records of participants (with respect to interests of persons other than participants). QIBs may hold their interests in the Global Security directly through DTC if they are participants in such system, or indirectly through organizations which are participants in such system. The Indenture does not provide for issuance of Notes in definitive form except in limited circumstances, described below under "--Certificated Notes." The Company expects that pursuant to procedures established by DTC (i) upon deposit of the Global Security representing New Notes, DTC will credit the account of participants tendering Existing Notes in exchange for New Notes with an interest in the Global Security and (ii) ownership of beneficial interests therein will be effected only through records maintained by DTC (with respect to interests of participants), participants and indirect participants. The laws of some states require that certain persons take physical delivery in definitive form of securities that they own and that security interests in negotiable instruments can only be perfected by delivery of certificates representing the instruments. Consequently, the ability to transfer the Notes or to pledge the Notes as collateral to persons in such states will be limited to such extent. So long as DTC or its nominee is the registered owner or holder of the Global Security, DTC or such nominee, as the case may be, will be considered the sole record owner or holder of the Notes represented by such Global Security for all purposes under the Indenture and the Notes. No beneficial owners of an interest in the Global Security will be able to transfer that interest except in accordance with the applicable procedures of DTC or Euroclear, in addition to those provided for under the Indenture. Beneficial owners of an interest in a Global Security will not be entitled to have Notes represented by such Global Security registered in their names, will not receive or be entitled to receive physical delivery of Notes in definitive form, and will not be considered the owners or holders thereof under the Indenture for any purpose, including with respect to the giving of any direction, instruction or approval to the Trustee thereunder. As a result, the ability of a person having a beneficial interest in Notes represented by a Global Security to pledge or transfer such interest to persons or entities that do 117 not participate in DTC's system or otherwise to take action with respect to such interest, may be affected by lack of a physical certificate evidencing such interest. Accordingly, each holder owning a beneficial interest in a Global Security must rely on the procedures of DTC or Euroclear and, if such holder is not a participant or an indirect participant, on the procedures of the participant through which such holder owns its interest, to exercise any rights of a holder of Notes under the Indenture or such Global Security. The Company understands that under existing practice, in the event the Company requests any action of holders of Notes or a holder that is an owner of a beneficial interest in a Global Security requests any action of holders of Notes or a holder that is an owner of a beneficial interest in a Global Security desires to take any action that DTC as the holder of such Global Security, is entitled to take, DTC would authorize the participants to take such action and the participant would authorize holders owning through such participants to take such action or would otherwise act upon the instruction of such holders. Payments of the principal of, premium, if any, and interest on the Global Security will be made to DTC or its nominee, as the case may be, as the registered owner thereof. Neither the Company, the Trustee, nor any paying agent will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in the Global Security or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. The Company expects that DTC or its nominee, upon receipt of any payment of principal, premium, if any, or interest in respect of the Global Security, will credit participants' accounts with payments in amounts proportionate to their respective beneficial ownership interests in the principal amount of such Global Security, as shown on the records of DTC or its nominee. The Company also expects that payments by participants to owners of beneficial interests in such Global Security held through such participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers registered in the names of nominees for such customers. Such payments will be the responsibility of such participants. Transfers between participants in DTC will be effected in the ordinary way in accordance with DTC rules and will be settled in immediately available funds. Neither the Company nor the Trustee will have any responsibility for the performance by DTC or its participants or indirect participants of their respective obligations under the rules and procedures governing their operations. Although DTC and its participants have agreed to the foregoing procedures to facilitate transfers of interests in the Global Security among participants, it is under no obligation to perform such procedures, and such procedures may be discontinued at any time. Neither the Company nor the Trustee will have any responsibility for the performance by DTC or its participants or indirect participants of their respective obligations under the rules and procedures governing their operations. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that the Company believes to be reliable, but the Company takes no responsibility for the accuracy thereof. CERTIFICATED NOTES If (i) the Company notifies the Trustee in writing that DTC is no longer willing or able to act as a depository or DTC ceases to be registered as a clearing agency under the Exchange Act and the Company is unable to locate a qualified successor within 90 days, (ii) the Company, at its option, notifies the Trustee in writing that it elects to cause the issuance of Notes in definitive form under the Indenture or (iii) upon the occurrence of certain other events, then, upon surrender by DTC of its Global Securities, definitive Notes in registered form without coupons ("Certificated Securities") will be issued, subject to certain certification requirements, to each person that DTC identifies as the beneficial owner of the Notes represented by the Global Security. All such Certificated Securities representing Existing Notes would be subject to certain transfer restrictions. 118 UNITED STATES FEDERAL TAX CONSIDERATIONS The following is a summary of certain United States federal income tax consequences of the acquisition, ownership and disposition of the Notes to the initial acquirors, and the principal U.S. federal estate tax consequences of the ownership of the Notes to acquirors who are Non-U.S. Holders (as defined below). This summary is based on provisions of the Code, existing and proposed Treasury regulations promulgated thereunder (the "Treasury Regulations") and administrative and judicial interpretations thereof, all as of the date hereof and all of which are subject to change, possibly on a retroactive basis. This summary does not address the tax consequences to subsequent purchasers of the Notes, and is limited to acquirors who hold the Notes as capital assets. This summary is for general information only, and does not address all of the tax consequences that may be relevant to particular acquirors in light of their personal circumstances, or to certain types of acquirors (such as banks and other financial institutions, real estate investment trusts, regulated investment companies, insurance companies, tax-exempt organizations, dealers in securities, persons who have hedged the interest rate on the Notes or persons whose functional currency is not the U.S. dollar). In addition, this summary does not include any description of the tax laws of any state, local or non-U.S. government that may be applicable to a particular acquiror. PROSPECTIVE ACQUIRORS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE PARTICULAR U.S. FEDERAL INCOME AND ESTATE TAX CONSEQUENCES TO THEM OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF THE NOTES, AS WELL AS THE TAX CONSEQUENCES UNDER STATE, LOCAL, NON-U.S. AND OTHER U.S. FEDERAL TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN TAX LAWS. EXCHANGE OFFER The exchange of any Existing Note for a New Note should not constitute a taxable exchange of the Existing Note. As a result, the New Notes should have the same issue price (and adjusted issue price immediately after the exchange) and the same amount of original issue discount, if any, as the Existing Notes, and each holder should have the same adjusted basis and holding period in the New Notes as it had in the Existing Notes immediately before the exchange. The following discussion assumes that the exchange of Existing Notes for New Notes pursuant to the Exchange Offer will not be treated as a taxable exchange and that the Existing Notes and the New Notes will be treated as the same security for federal income tax purposes. TAXATION OF U.S. HOLDERS As used herein, the term "U.S. Holder" means a holder of a Note that is, for U.S. federal income tax purposes, (a) a citizen or resident of the United States, (b) a corporation or partnership created or organized in the United States or under the laws of the United States or of any state of the United States, (c) an estate whose income is includable in gross income for U.S. federal income tax purposes regardless of its source or (d) a trust if (i) a court within the United States is able to exercise primary supervision over the administration of the trust and (ii) at least one U.S. person has authority to control all substantial decisions of the trust. Recently enacted legislation authorizes the issuance of Treasury Regulations that, under certain circumstances, could reclassify as a non-U.S. partnership a partnership that would otherwise be treated as a U.S. partnership, or could reclassify as a U.S. partnership a partnership that would otherwise be treated as a non-U.S. partnership. Such regulations would apply only to partnerships created or organized after the date that proposed Treasury Regulations are filed with the Federal Register (or, if earlier, the date of issuance of a notice substantially describing the expected contents of the regulations). Payment of Interest on the Notes Other than Payments upon Registration Default. In general, interest paid on a Note (other than payments upon a Registration Default discussed below) will be taxable to a U.S. Holder as ordinary interest income, as received or accrued, in accordance with such holder's method of accounting for 119 federal income tax purposes. If original issue discount on a Note is not greater than a de minimis amount equal to 0.25% of its stated principal amount multiplied by the number of complete years to its maturity, any such discount will be deemed to be equal to zero, and a holder will not be required to accrue a portion of such discount as income in each taxable year. See, however, the discussion below under "--Payments upon Registration Default." Holders should consult their tax advisors as to the possible effect of payments upon a Registration Default on the treatment of original issue discount on the Notes, if any. Payments upon Registration Default. Because the Notes provide for the payment of additional interest under the circumstances described below under "Registration Rights," the Notes could be subject to certain Treasury Regulations relating to debt instruments that provide for one or more contingent payments (the "Contingent Payment Regulations"). Under the Contingent Payment Regulations, however, a payment is not a contingent payment merely because of a contingency that, as of the issue date, is either "remote" or "incidental." The Company intends to take the position that, for purposes of the Contingent Payment Regulations, the payment of such additional interest is a remote or incidental contingency as of the issue date. Accordingly, the Contingent Payment Regulations should not apply to the Notes. If, as of the date of issuance, the payment of such additional interest were not a "remote" or "incidental" contingency for purposes of the Contingent Payment Regulations, then (i) all payments (including any projected payments of such additional interest) on a Note in excess of its issue price would effectively be treated as original issue discount, and (ii) in each taxable year, a holder would be required to include an allocable portion of such amounts in gross income on a constant yield basis whether or not the payment of such additional interest were fixed or determinable in the taxable year. The Company's position for purposes of the Contingent Payment Regulations that the payment of such additional interest is a remote contingency as of the issue date is binding on each holder for federal income tax purposes, unless such holder discloses in the proper manner to the Internal Revenue Service ("IRS") that it is taking a different position. Prospective acquirors should consult their tax advisors as to the tax considerations relating to debt instruments providing for payments such as the additional interest payable upon a Registration Default, particularly in connection with the possible application of the Contingent Payment Regulations. Sale, Exchange or Retirement of the Notes. Upon the sale, exchange, redemption, retirement at maturity or other disposition of a Note, a U.S. Holder will generally recognize taxable gain or loss equal to the difference between the sum of the cash and the fair market value of all other property received on such disposition (except to the extent such cash or property is attributable to accrued interest, which will be taxable as ordinary income) and such holder's adjusted tax basis in the New Note. Gain or loss recognized on the disposition of a Note generally will be capital gain or loss (except to the extent the gain is attributable to accrued market discount, as described below), and will be long-term capital gain or loss if, at the time of such disposition, the holder's holding period for the Note is more than one year. A reduced tax rate on capital gain will apply to an individual U.S. Holder if such holder's holding period for the Note is more than eighteen months at the time of disposition. Market Discount. A U.S. Holder (other than a holder who makes the election described below) that acquires a Note with market discount that is not de minimis, except in certain non-recognition transactions, generally will be required to treat any gain realized upon the disposition of the Note as interest income to the extent of the market discount that accrued during the period such holder held such Note. (For this purpose, a person disposing of a market discount Note in a transaction other than a sale, exchange or involuntary conversion generally is treated as realizing an amount equal to the fair market value of the Note.) A holder may also be required to recognize as ordinary income any principal payments with respect to a Note to the extent such payments do not exceed the accrued market discount on the Note. For these purposes, market discount generally equals the excess of the stated redemption price of the Note over the tax basis of the Note in the hands of the 120 holder immediately after its acquisition. However, market discount is deemed not to exist if the market discount is less than a de minimis amount equal to 0.25% of the Note's redemption price at maturity multiplied by the number of complete years to the Note's maturity after the holder acquired the Note (or, in the case of a holder that acquires a New Note pursuant to the Exchange Offer, the Existing Note exchanged for such New Note). The market discount rules also provide that any holder of Notes that were acquired at a market discount may be required to defer the deduction of a portion of the interest on any indebtedness incurred or maintained to acquire or carry the Notes, until the Notes are disposed of. A holder of a Note acquired at a market discount may elect to include market discount in income as the discount accrues. In such a case, the foregoing rules with respect to the recognition of ordinary income on dispositions and with respect to the deferral of interest deductions on indebtedness related to such Note would not apply. The current inclusion election applies to all market discount obligations acquired on or after the first day of the first taxable year to which the election applies, and may not be revoked without the consent of the IRS. Amortizable Bond Premium. Generally, if the tax basis of an obligation held as a capital asset exceeds the amount payable at maturity of the obligation, such excess may constitute amortizable bond premium that the holder of such obligation may elect to amortize under the constant interest rate method and deduct over the period from the holder's acquisition date to the obligation's maturity date. A holder that elects to amortize bond premium must reduce its tax basis in the related obligation by the amount of the aggregate deductions allowable for the amortizable bond premium. Any election to amortize bond premium applies to all bonds (other than bonds the interest on which is excludible from gross income) held by the holder at the beginning of the first taxable year to which the election applies or thereafter acquired by the holder. The election may not be revoked without the consent of the IRS. In the case of an obligation, such as a Note, that may be called at a premium prior to maturity, an earlier call date is treated as its maturity date, and the amount of bond premium is determined by treating the amount payable on such call date as the amount payable at maturity if such a calculation produces a smaller amortizable bond premium than any other call date or the method described in the preceding paragraph. For purposes of amortizing bond premium, if a holder of a Note is required to amortize and deduct bond premium by reference to a call date, the Note will be treated as maturing on such date for the amount payable, and, if not redeemed on such date, the Note will be treated as reissued on such date for the amount so payable. If a Note purchased at a premium is redeemed pursuant to a call prior to such early call date or its maturity, a purchaser who has elected to deduct bond premium may deduct the excess of its adjusted tax basis in the Note over the amount received on redemption (or, if greater, the amount payable on maturity) as an ordinary loss in the taxable year of redemption. The amortizable bond premium deduction is treated as a reduction of interest on the bond instead of as a deduction. The offset of amortizable bond premium against interest income on the bond occurs when income is taxable to a holder as received or accrued, in accordance with such holder's method of accounting for such income. Backup Withholding and Information Reporting. In general, a U.S. Holder will be subject to backup withholding at the rate of 31% with respect to interest, principal and premium, if any, paid on a Note, unless the holder (a) is an entity that is exempt from withholding (including corporations, tax-exempt organizations and certain qualified nominees) and, when required, demonstrates this fact, or (b) provides the Company with its taxpayer identification number ("TIN") (which for an individual would be the holder's social security number), certifies that the TIN provided to the Company is correct and that the holder has not been notified by the IRS that it is subject to backup withholding due to underreporting of interest or dividends, and otherwise complies with applicable requirements of the backup withholding rules. In addition, such payments of principal, premium and interest to U.S. Holders that are not exempt entities will generally be subject to information reporting requirements. A U.S. Holder who does not provide the Company with his correct TIN may be subject to penalties imposed by the IRS. 121 The Company will report to U.S. Holders and the IRS the amount of any "reportable payments" (including any interest paid) and any amounts withheld with respect to the Notes during the calendar year. The amount of any backup withholding from a payment to a U.S. Holder will be allowed as a credit against such holder's federal income tax liability and may entitle such holder to a refund, provided that the required information is furnished to the IRS. TAXATION OF NON-U.S. HOLDERS Payment of Interest on the Notes. In general, payments of interest received by any holder of a Note that is not a U.S. Holder (a "Non-U.S. Holder") will not be subject to a U.S. federal income tax (or any withholding thereof, except as described below under "--Backup Withholding and Information Reporting"), provided that (a) under an exemption for certain portfolio interest, (i) the Non-U.S. Holder does not actually or constructively own 10% or more of the total combined voting power of all classes of stock of the Company entitled to vote, (ii) the holder is not a "controlled foreign corporation" (generally, a non-U.S. corporation controlled by U.S. shareholders) that is related to the Company actually or constructively through stock ownership and (iii) either (x) the beneficial owner of the Note, under penalties of perjury, provides the Company or its agent with the beneficial owner's name and address and certifies that it is not a U.S. person on IRS Form W-8 (or a suitable substitute form) or (y) a securities clearing organization, bank or other financial institution that holds customers' securities in the ordinary course of its trade or business holds the Note and certifies to the Company or its agent under penalties of perjury that such a Form W-8 (or suitable substitute form) has been received by it from the beneficial owner or qualifying intermediary and furnishes the payor a copy thereof, (b) the Non-U.S. Holder is subject to U.S. federal income tax with respect to the Note on a net basis because payments received with respect to the Note are effectively connected with the conduct of a trade or business within the United States by the holder (in which case the holder may also be subject to U.S. "branch profits tax") and provides the Company with a properly executed IRS Form 4224, or (c) the Non-U.S. Holder is entitled to the benefits of an income tax treaty under which the interest is exempt from U.S. withholding tax and the holder or such holder's agent provides a properly executed IRS Form 1001 claiming the exemption. Payments of interest not exempt from U.S. federal income tax as described above will be subject to withholding at the rate of 30% (subject to reduction under an applicable income tax treaty). Recently issued Treasury Regulations (the "New Withholding Regulations") generally will, pursuant to a recent notice issued by the IRS, be effective with respect to payments made after December 31, 1999, regardless of the issue date of the instrument with respect to which such payments are made. The New Withholding Regulations generally will not affect the certification rules described in the preceding paragraph, but will provide alternative methods for satisfying such requirements. The New Withholding Regulations also generally will require, in the case of Notes held by a non-U.S. partnership, that (a) the certification described in the preceding paragraph be provided by the partners rather than the foreign partnership and (b) the partnership provide certain information. A look-through rule will apply in the case of tiered partnerships. In addition, the New Withholding Regulations may require that a Non-U.S. Holder (including a non-U.S. partnership or a partner thereof) obtain a taxpayer identification number and make certain certifications if interest in respect of a Note is not portfolio interest and the Non-U.S. Holder wishes to claim a reduced rate of withholding under an income tax treaty. Each Non- U.S. Holder should consult its own tax advisor regarding the application of the New Withholding Regulations. Sale, Exchange or Retirement of the Notes. A Non-U.S. Holder generally will not be subject to U.S. federal income tax (or withholding thereof) in respect of gain realized on the sale, exchange, redemption, retirement at maturity or other disposition of Notes, unless (a) the gain is effectively connected with the conduct of a trade or business within the United States by the holder, or (b) the holder is an individual who is present in the United States for a period or periods aggregating 183 or more days in the taxable year of the disposition and certain other conditions are met. 122 With respect to a Non-U.S. Holder subject to U.S. federal income tax as described in the preceding paragraph, an exchange of a Note for an Exchange Note should not be treated as a taxable exchange of the Note. As described under "--Taxation of U.S. Holders--Payments upon Registration Default," the Notes provide for the payment of additional interest upon a Registration Default. Non-U.S. Holders should consult their tax advisors as to the tax considerations relating to debt instruments providing for payments such as the additional interest, in particular as to the availability of the exemption for portfolio interest, and the ability of holders to claim the benefits of income tax treaty exemptions from U.S. withholding tax on interest, in respect of such additional interest. Backup Withholding and Information Reporting. Under current Treasury Regulations, backup withholding and information reporting do not apply to payments made by the Company or a paying agent to Non-U.S. Holders if the certification described under "--Payment of Interest on the Notes" is received, provided that the payor does not have actual knowledge that the holder is a U.S. person. If any payments of principal and interest are made to the beneficial owner of a Note by or through the non-U.S. office of a non-U.S. custodian, non-U.S. nominee or other non-U.S. agent of such beneficial owner, or if the non-U.S. office of a non-U.S. "broker" (as defined in applicable Treasury Regulations) pays the proceeds of the sale of a Note or a coupon to the seller thereof, backup withholding and information reporting will not apply. Information reporting requirements (but not backup withholding) will apply, however, to a payment by a non-U.S. office of a broker that is a U.S. person, that derives 50% or more of its gross income for certain periods from the conduct of a trade or business in the United States, or that is a "controlled foreign corporation" (generally, a non-U.S. corporation controlled by U.S. shareholders) with respect to the United States, unless the broker has documentary evidence in its records that the holder is a non-U.S. person and certain other conditions are met, or the holder otherwise establishes an exemption. Payment by a U.S. office of a broker is subject to both backup withholding at a rate of 31% and information reporting unless the holder certifies under penalties of perjury that it is a non-U.S. person, or otherwise establishes an exemption. A Non-U.S. Holder may obtain a refund or a credit against such Holder's U.S. federal income tax liability of any amounts withheld under the backup withholding rules, provided the required information is furnished to the IRS. In addition, in certain circumstances, interest on a Note owned by a Non- U.S. Holder will be required to be reported annually on IRS Form 1042S, in which case such form will be filed with the IRS and furnished to the holder. The New Withholding Regulations revise (substantially in certain respects) the procedures that withholding agents and payees must follow to comply with, or to establish an exemption, from these information reporting and backup withholding provisions for payments after December 31, 1999. Each Non-U.S. Holder should consult its own tax advisor regarding the application to such holder of the New Withholding Regulations. Estate Tax. Subject to applicable estate tax treaty provisions, Notes held at the time of death (or theretofore transferred subject to certain retained rights or powers) by an individual who at the time of death is a Non-U.S. Holder will not be included in such holder's gross estate for U.S. federal estate tax purposes, provided that (a) the individual does not actually or constructively own 10% or more of the total combined voting power of all classes of stock of the Company entitled to vote and (b) the income on the Notes is not effectively connected with the conduct of a U.S. trade or business by the individual. 123 PLAN OF DISTRIBUTION Each broker-dealer that receives New Notes for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such New Notes. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of New Notes received in exchange for Existing Notes where such Existing Notes were acquired as a result of market-making activities or other trading activities. The Company has agreed that, for a period of up to 90 days after the Expiration Date, it will make this Prospectus, as amended or supplemented, available to any such broker-dealer for use in connection with any such resale. In addition, until , all dealers effecting transactions in the New Notes may be required to deliver a prospectus. The Company will not receive any proceeds from any sale of New Notes by broker-dealers. New Notes received by broker-dealers for their own account pursuant to the Exchange Offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the New Notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer or the purchasers of any such New Notes. Any broker- dealer that resells New Notes that were received by it for its own account pursuant to the Exchange Offer and any broker or dealer that participates in a distribution of such New Notes may be deemed to be an "underwriter" within the meaning of the Securities Act and any profit or any such resale of New Notes and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The Letter of Transmittal states that, by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. For a period of up to 90 days after the Expiration Date the Company will promptly send additional copies of this Prospectus and any amendment or supplement to this Prospectus to any participating broker-dealer that is entitled to use such documents and that requests such documents in the Letter of Transmittal. The Company has agreed to pay all expenses incident to the Exchange Offer other than commissions or concessions of any brokers-dealers and will indemnify the Holders of the Existing Notes (including any broker- dealers) against certain liabilities, including liabilities under the Securities Act. Each of the Initial Purchasers or their affiliates from time to time perform general financing and banking services and participate in financing and banking transactions for the Company and CDR, including in connection with the Senior Credit Facility. See "Description of Senior Credit Facility." REGISTRATION RIGHTS The summary herein of certain provisions of the Registration Rights Agreement does not purport to be complete and is subject to, and is qualified in its entirety by reference to, all the provisions of the Registration Rights Agreement, a copy of which is filed as an exhibit to the Registration Statement of which the Prospectus is a part and which is available as set forth under the heading "Available Information." The Company and the Initial Purchasers entered into a registration rights agreement (the "Registration Rights Agreement") on May 21, 1998 (the "Issue Date"). Pursuant to the Registration Rights Agreement, the Company agreed, for the benefit of the holders of the Notes, that it will, at its own expense, use its reasonable best efforts (i) to file a registration statement (the "Exchange Offer Registration Statement") with the Securities and Exchange Commission (the "SEC") with respect to a registered offer (the "Exchange Offer") to exchange the Notes for notes of the Company (the "Exchange Notes") having terms identical in all material respects to the Notes (except that the New Notes will not contain terms with respect to transfer restrictions), within 120 days after the Issue Date and (ii) to cause the Exchange Offer Registration Statement to be declared effective under the Securities Act within 150 days after the Issue Date. Upon the effectiveness of the Exchange Offer 124 Registration Statement, the Company will offer the New Notes in exchange for surrender of the Existing Notes. The Company will keep the Exchange Offer open for the period required by applicable law (including pursuant to any applicable interpretation by the staff of the SEC), but in any event for at least 10 business days, after the date that notice of the Exchange Offer is mailed to holders of the New Notes. For each Existing Note surrendered to the Company pursuant to the Exchange Offer, the holder of such Note will receive a New Note issued in substitution therefor having a principal amount equal to that of the surrendered Existing Note. The New Notes will be issued as substituted evidence of indebtedness and will not represent the incurrence of new indebtedness. Interest on each New Note will accrue from the last interest payment date on which interest was paid on the Existing Note surrendered in exchange therefor, or, if no interest has been paid on such Existing Note, from the Issue Date, provided, that if an Existing Note is surrendered for exchange on or after a record date for an interest payment date that will occur on or after the date of such exchange and as to which interest will be paid, interest on the New Note received in exchange therefor will accrue from the date of such interest payment date. Under existing SEC interpretations contained in several no action letters to third parties, the New Notes would generally be freely transferable by holders thereof (other than affiliates of the Company) after the Exchange Offer without further registration under the Securities Act (subject to certain representations required to be made by each holder of Notes participating in the Exchange Offer, as set forth below). However, any purchaser of Existing Notes who is an "affiliate" of the Company or who intends to participate in the Exchange Offer for the purpose of distributing the New Notes (i) will not be able to rely on such SEC interpretations, (ii) will not be able to tender its Existing Notes in the Exchange Offer and (iii) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any sale or transfer of the Notes unless such sale or transfer is made pursuant to an exemption from such requirements. In addition, in connection with any resales of New Notes, any broker-dealer that acquired the Existing Notes for its own account as a result of market making or other trading activities (a "Participating Broker-Dealer") must deliver a prospectus meeting the requirements of the Securities Act. The SEC has taken the position that Participating Broker-Dealers may fulfill their prospectus delivery requirements with respect to New Notes (other than a resale of an unsold allotment from the original sale of Existing Notes) with the prospectus contained in the Exchange Offer Registration Statement. Under the Registration Rights Agreement, the Company will be required to allow any Participating Broker-Dealer to use, for a period of 90 days after the consummation of the Exchange Offer, the prospectus contained in the Exchange Offer Registration Statement in connection with the resale of such New Notes. A holder of Existing Notes who wishes to exchange such Existing Notes for New Notes in the Exchange Offer will be required to make representations to the effect (i) that any New Notes to be received by it will be acquired in the ordinary course of its business, (ii) that at the time of the commencement of the Exchange Offer it has no arrangement or understanding with any person to participate in the distribution (within the meaning of the Securities Act) of the New Notes, (iii) that it is not an "affiliate" of the Company, as defined in Rule 405 of the Securities Act, or if it is an affiliate, that it will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable, (iv) if such holder is not a broker- dealer, that it is not engaged in, and does not intend to engage in, the distribution of New Notes, (v) if such holder is a Participating Broker- Dealer, that it will deliver a prospectus in connection with any resale of such New Notes, and (vi) that it is not acting on behalf of any person who could not truthfully make the foregoing representations. Shelf Registration. The Company will file a shelf registration statement covering resales of Existing Notes or New Notes, as the case may be (a "Shelf Registration Statement"), if (i) any changes in the applicable interpretations of the staff of the SEC do not permit the Company to effect such an Exchange Offer, (ii) the Exchange Offer is not consummated within 180 days of the Issue Date, (iii) under certain circumstances, the Initial Purchasers so request with respect to Existing Notes not eligible to be exchanged for New Notes in the Exchange Offer, or (iv) if any holder of Existing Notes (other than an Initial Purchaser) is not permitted by applicable law to participate in the Exchange Offer or does not receive freely tradeable New Notes in the Exchange Offer (other than, in either case, due solely to the status of such holder as an affiliate of the Company or due to such holder's inability to make the representations referred to above). If any of these events occur, the 125 Company will, at its own expense, use its reasonable best efforts (a) as promptly as reasonably practicable, to file a Shelf Registration Statement covering resales of Notes or Exchange Notes, as the case may be, and (b) to cause the Shelf Registration Statement to be declared effective under the Securities Act within 210 days after the Issue Date. After such Shelf Registration Statement is declared effective, the Company will use its reasonable best efforts to keep the Shelf Registration Statement in effect until the earlier of two years from the Issue Date (or one year in the case of a shelf registration effected at the request of the Initial Purchasers) or such shorter period that will terminate when all the Existing Notes or New Notes covered by the Shelf Registration Statement (i) have been sold pursuant thereto or (ii) are distributed to the public pursuant to Rule 144 or become eligible for resale pursuant to Rule 144 without volume restriction, if any. Under certain circumstances, the Company may suspend the availability of the Shelf Registration Statement for certain periods of time. The Company will, in the event a Shelf Registration Statement is filed, among other things, provide to each holder for whom such Shelf Registration Statement was filed copies of the prospectus that is a part of the Shelf Registration Statement, notify each such holder when the Shelf Registration Statement has become effective and take certain other actions as are required to permit unrestricted resales of the Notes or the Exchange Notes, as the case may be. A holder of Notes selling such Notes pursuant to the Shelf Registration Statement generally would be required to be named as a selling security holder in the related prospectus and to deliver a prospectus to purchasers, will be subject to certain of the civil liability provisions under the Securities Act in connection with such sales and will be bound by certain provisions of the Registration Rights Agreement (including certain indemnification obligations). In addition, each such holder of Notes will be required, among other things, to deliver information to be used in connection with the Shelf Registration Statement within the time periods set forth in the Registration Rights Agreement in order to benefit from the provisions regarding additional interest set forth in the following paragraph. Additional Interest. Although the Company intends to file one or more registration statements described above, as required, there can be no assurance that any such registration statement will be filed, or if filed, that any thereof will become effective. From the date of a Registration Default (as defined below) to the date on which such Registration Default has been cured, additional interest will accrue on the Transfer Restricted Notes (as defined below) at the rate of (a) prior to the 91st day of such period (for so long as such period is continuing), 0.25% per annum and (b) thereafter (so long as such period is continuing), 0.50% per annum. Any such additional interest shall not exceed such respective rates for such respective periods, and shall not in any event exceed 0.50% per annum in the aggregate, regardless of the number of Registration Defaults that shall have occurred and be continuing. Any such additional interest shall be paid in the same manner and on the same dates as interest payments in respect of Transfer Restricted Notes. Following the cure of all Registration Defaults, the accrual of such additional interest will cease. All Registration Defaults shall be deemed cured upon consummation of the Exchange Offer. For purposes of the foregoing, each of the following events is a "Registration Default": (i) neither the Exchange Offer Registration Statement nor a Shelf Registration Statement has been filed with the SEC on or before the 120th day after the Issue Date; (ii) the Exchange Offer is not consummated on or before the 180th day after the Issue Date; (iii) if a Shelf Registration Statement is required to be filed under the Registration Rights Agreement, (A) the Shelf Registration Statement is not declared effective by the SEC on or before the 210th day after the Issue Date (or, in the case of a Shelf Registration Statement required to be filed in response to any change in applicable interpretations of the staff of the SEC, if later, on or before the 90th day after publication of such change) or (B) during the time the Company is required to use its reasonable best efforts to keep the Shelf Registration in effect, the Company shall have suspended and be continuing to suspend the availability of the Shelf Registration Statement for more than 30 days in the aggregate in any consecutive twelve-month period. For purposes of the foregoing, "Transfer Restricted Notes" means each Existing Note until (i) the date on which such Existing Note has been exchanged for a freely transferable New Note in the Exchange Offer, (ii) the date on which such Existing Note has been effectively registered under the Securities Act and disposed of in accordance with a Shelf Registration Statement, or (iii) the date on which such Existing Note is distributed to the public pursuant to Rule 144 of the Securities Act or is eligible for resale pursuant to Rule 144 without volume restriction, if any. 126 LEGAL MATTERS The validity of the New Notes offered hereby will be passed upon for the Company by Debevoise & Plimpton, New York, New York. Franci J. Blassberg, Esq., a member of Debevoise & Plimpton, is married to Joseph L. Rice, III, who is a shareholder of the managing general partner of the general partner of CDR Fund V. EXPERTS The consolidated balance sheets as of March 31, 1998 and 1997 and the consolidated statements of operations, shareholders' equity and cash flows for each of the three fiscal years in the period ended March 31, 1998, included in this Prospectus have been included herein in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of that firm as experts in accounting and auditing. 127 DYNATECH CORPORATION INDEX TO CONSOLIDATED FINANCIAL STATEMENTS REPORT OF INDEPENDENT ACCOUNTANTS......................................... F-2 FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 1998 AND 1997............... F-3 CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE FISCAL YEARS ENDED MARCH 31, 1998, 1997 AND 1996................................................ F-4 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY FOR THE FISCAL YEARS ENDED MARCH 31, 1998, 1997 AND 1996.................................... F-5 CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE FISCAL YEARS ENDED MARCH 31, 1998, 1997 AND 1996................................................ F-6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.............................. F-7 REPORT OF INDEPENDENT ACCOUNTANTS ON SCHEDULE............................. F-25 SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS............................ F-26
F-1 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Shareholders of Dynatech Corporation: We have audited the accompanying consolidated balance sheets of Dynatech Corporation as of March 31, 1998 and 1997, and the related consolidated statements of operations, shareholders' equity and cash flows for each of the three fiscal years in the period ended March 31, 1998. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Dynatech Corporation as of March 31, 1998 and 1997, and the consolidated results of its operations and its cash flows for each of the three fiscal years in the period ended March 31, 1998 in conformity with generally accepted accounting principles. Coopers & Lybrand L.L.P. Boston, Massachusetts April 28, 1998, except as to the information in the "Subsequent Event" Note for which the date is May 21, 1998. F-2 DYNATECH CORPORATION CONSOLIDATED BALANCE SHEETS
MARCH 31, ------------------ 1998 1997 -------- -------- (AMOUNTS IN THOUSANDS EXCEPT SHARE DATA) ASSETS Current assets: Cash and cash equivalents................................ $ 64,904 $ 39,782 Accounts receivable (net of allowance of $1,764 and $1,872, respectively)................................... 69,988 70,930 Inventories: Raw materials.......................................... 24,263 19,423 Work in process........................................ 11,769 11,376 Finished goods......................................... 12,850 9,326 -------- -------- Total inventory........................................ 48,882 40,125 Other current assets..................................... 16,823 11,074 -------- -------- Total current assets................................. 200,597 161,911 Property and equipment: Land, building and leasehold improvements................ 4,904 4,141 Machinery and equipment.................................. 51,220 47,020 Furniture and fixtures................................... 12,351 9,940 -------- -------- 68,475 61,101 Less accumulated depreciation and amortization........... (42,110) (37,268) -------- -------- 26,365 23,833 Other assets: Intangible assets, net................................... 39,595 43,813 Other.................................................... 21,573 19,453 -------- -------- $288,130 $249,010 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Notes payable and current portion of long-term debt...... $ 150 $ 201 Accounts payable......................................... 22,933 16,900 Accrued expenses: Compensation and benefits.............................. 21,750 23,912 Taxes, other than income taxes......................... 2,071 1,850 Deferred revenue....................................... 13,868 8,876 Other.................................................. 16,082 19,948 Accrued income taxes..................................... 5,196 657 Net liabilities of discontinued operations............... 756 9,173 -------- -------- Total current liabilities............................ 82,806 81,517 Long-term debt............................................. 83 5,226 Deferred compensation...................................... 3,122 1,581 Commitments and contingencies.............................. Shareholders' equity: Serial preference stock, par value $1 per share; autho- rized 100,000 shares; none issued....................... Common stock, par value $0.20 per share; authorized 50,000,000 shares; issued 18,605,689.................... 3,721 3,721 Additional paid-in capital............................... 7,647 9,887 Retained earnings........................................ 237,282 195,506 Cumulative translation adjustments....................... (1,600) (1,247) Treasury stock, at cost; 1,741,265 and 1,812,287 shares, respectively............................................ (44,931) (47,181) -------- -------- Total shareholders' equity........................... 202,119 160,686 -------- -------- $288,130 $249,010 ======== ========
The accompanying notes are an integral part of the consolidated financial statements. F-3 DYNATECH CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED MARCH 31, ---------------------------------------------- 1998 1997 1996 -------------- -------------- -------------- (AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA) Sales.......................... $ 472,948 $ 362,412 $ 293,042 Cost of sales.................. 205,522 137,254 111,436 -------------- -------------- -------------- Gross profit................... 267,426 225,158 181,606 Selling, general and adminis- trative expense............... 138,310 114,479 98,487 Product development expense.... 54,995 43,267 36,456 Nonrecurring charges........... -- 27,776 16,852 Amortization of intangibles.... 5,835 6,793 5,136 -------------- -------------- -------------- Operating income........... 68,286 32,843 24,675 Interest expense............... (1,221) (828) (1,723) Interest income................ 3,012 2,785 2,181 Other income, net.............. 730 634 975 -------------- -------------- -------------- Income from continuing opera- tions before income taxes..... 70,807 35,434 26,108 Provision for income taxes..... 29,031 17,585 10,394 -------------- -------------- -------------- Income from continuing opera- tions......................... 41,776 17,849 15,714 Discontinued operations: Gain on sale of businesses net of income tax provision of $22,692.................. -- 12,000 -- Operating loss, net of income tax benefit of $(1,009) in 1996... -- -- (1,471) -------------- -------------- -------------- Net income..................... $ 41,776 $ 29,849 $ 14,243 ============== ============== ============== Income (loss) per common share--basic: Continuing operations........ $ 2.49 $ 1.04 $ 0.87 Discontinued operations...... -- 0.70 (0.08) -------------- -------------- -------------- $ 2.49 $ 1.74 $ 0.79 ============== ============== ============== Income (loss) per common share--diluted: Continuing operations........ $ 2.40 $ 0.99 $ 0.86 Discontinued operations...... -- 0.67 (0.08) -------------- -------------- -------------- $ 2.40 $ 1.66 $ 0.78 ============== ============== ============== Weighted average number of com- mon shares Basic........................ 16,795 17,200 17,969 Diluted...................... 17,434 18,028 18,315
The accompanying notes are an integral part of the consolidated financial statements. F-4 DYNATECH CORPORATION CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
NUMBER OF SHARES ------------------ ADDITIONAL CUMULATIVE TOTAL COMMON TREASURY COMMON PAID-IN RETAINED TRANSLATION TREASURY SHAREHOLDERS' STOCK STOCK STOCK CAPITAL EARNINGS ADJUSTMENTS STOCK EQUITY -------- --------- ------ ---------- -------- ----------- -------- ------------- (AMOUNTS IN THOUSANDS) Balance, March 31, 1995................... 18,605 (1,033) $3,721 $ 7,432 $151,414 $ 2,659 $(10,906) $154,320 Net income--1996........ 14,243 14,243 Purchases of treasury stock.................. (800) (19,367) (19,367) Translation adjustments............ (2,317) (2,317) Exercise of stock options and other issuances.............. 812 3,688 9,170 12,858 Tax benefit from exercise of stock options................ 982 982 -------- -------- ------ ------- -------- ------- -------- -------- Balance, March 31, 1996................... 18,605 (1,021) 3,721 12,102 165,657 342 (21,103) 160,719 Net income--1997........ 29,849 29,849 Purchases of treasury stock.................. (1,021) (32,695) (32,695) Translation adjustments............ (1,589) (1,589) Exercise of stock options and other issuances.............. 230 (3,533) 6,617 3,084 Tax benefit from exercise of stock options................ 1,318 1,318 -------- -------- ------ ------- -------- ------- -------- -------- Balance, March 31, 1997................... 18,605 (1,812) 3,721 9,887 195,506 (1,247) (47,181) 160,686 Net income--1998........ 41,776 41,776 Purchases of treasury stock.................. (163) (5,330) (5,330) Translation adjustments............ (353) (353) Exercise of stock options and other issuances.............. 234 (2,919) 7,580 4,661 Tax benefit from exercise of stock options................ 679 679 -------- -------- ------ ------- -------- ------- -------- -------- Balance, March 31, 1998................... 18,605 (1,741) $3,721 $ 7,647 $237,282 $(1,600) $(44,931) $202,119 ======== ======== ====== ======= ======== ======= ======== ========
The accompanying notes are an integral part of the consolidated financial statements. F-5 DYNATECH CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS
YEAR ENDED MARCH 31, ---------------------------- 1998 1997 1996 -------- -------- -------- (AMOUNTS IN THOUSANDS) Operating activities: Net income from operations...................... $ 41,776 $ 29,849 $ 15,714 Adjustment for noncash items included in net income: Gain on discontinued operations................. -- (12,000) -- Depreciation.................................... 12,066 9,280 8,279 Amortization of intangibles..................... 5,835 6,793 5,136 Purchased incomplete technology................. -- 20,627 16,852 Intangibles writeoff............................ -- 7,149 -- Change in net deferred income tax asset......... (5,575) (7,617) (5,173) Other........................................... 580 797 457 Changes in operating assets and liabilities, net of effects of purchase acquisitions and divestitures................................... 4,380 4,926 (19,556) -------- -------- -------- Net cash provided by continuing operations...... 59,062 59,804 21,709 Net cash provided by (used in) discontinued operations..................................... (13,717) (52,313) 699 -------- -------- -------- Net cash flows provided by operating activities..................................... 45,345 7,491 22,408 Investing activities: Purchases of property and equipment............. (15,879) (10,176) (8,198) Disposals of property and equipment............. 219 214 308 Proceeds from sales of businesses............... -- 96,682 48,901 Businesses acquired in purchase transactions, Net of cash acquired........................... -- (68,930) (17,143) Other........................................... 144 290 5,597 -------- -------- -------- Net cash flows provided by (used in) continuing operations..................................... (15,516) 18,080 29,465 Net cash flows provided by (used in) discontinued operations........................ 507 (951) (5,487) -------- -------- -------- Net cash flows provided by (used in) investing activities..................................... (15,009) 17,129 23,978 Financing activities: Net borrowings (repayment) of debt.............. (5,195) 2,522 (9,400) Proceeds from issuance of common stock.......... 4,513 1,693 952 Purchases of treasury stock..................... (5,330) (32,695) (19,367) -------- -------- -------- Net cash flows used in financing activities..... (6,012) (28,480) (27,815) Effect of exchange rate on cash.................. 798 (2,452) (272) -------- -------- -------- Increase (decrease) in cash and cash equivalents..................................... 25,122 (6,312) 18,299 Cash and cash equivalents at beginning of year... 39,782 46,094 27,795 -------- -------- -------- Cash and cash equivalents at end of year......... $ 64,904 $ 39,782 $ 46,094 ======== ======== ======== Change in operating asset and liability components: Decrease (increase) in trade accounts receivable..................................... $ 994 $(15,833) $(10,287) Decrease (increase) in inventories.............. (8,739) 450 (2,007) Increase in other current assets................ (2,431) (3,341) (297) Increase (decrease) in accounts payable......... 6,009 2,059 (402) Increase (decrease) in accrued expenses and taxes.......................................... 8,547 21,591 (6,563) -------- -------- -------- Change in operating assets and liabilities...... $ 4,380 $ 4,926 $(19,556) ======== ======== ======== Supplemental disclosures of cash flow information: Cash paid during the year for: Interest........................................ $ 934 $ 889 $ 1,739 Income taxes.................................... 24,307 42,340 13,798 Tax benefit of disqualifying dispositions of stock options.................................. 679 1,318 982 Noncash proceeds from sale of businesses: Promissory notes................................ -- 7,200 -- Preferred stock................................. -- 6,300 --
The accompanying notes are an integral part of the consolidated financial statements. F-6 DYNATECH CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Business Dynatech Corporation ("Dynatech" or the "Company") is a global communications equipment company focused on network technology solutions. Its products address communications test, industrial computing and communications, and visual communications applications. Subsequent/Merger Recapitalization On May 21, 1998, the Company completed its management-led merger with Clayton, Dubilier & Rice, Inc. ("CDR") ("the Merger"). The Merger and related transactions were treated as a recapitalization for financial reporting purposes. Accordingly, the historical basis of the Company's assets and liabilities were not affected by these transactions. Principles of Consolidation The consolidated financial statements include the accounts of the parent company and its wholly owned domestic and international subsidiaries. Intercompany accounts and transactions have been eliminated. Certain prior year amounts have been reclassified to conform with the current year. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make certain estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Significant estimates in these financial statements include allowances for accounts receivable, net realizable value of inventories, tax valuation reserves, nonrecurring charges, and the carrying values of discontinued operations. Actual results could differ from those estimates. Interest Rate Swap Agreements The Company may, from time to time, enter into interest rate swap agreements to reduce the impact of interest rate changes on its debt. The interest rate swap agreements involve exchanges of fixed or floating rate interest payments without the exchange of the underlying notional amounts. The notional amounts of such agreements are used to measure the interest to be paid or received and do not represent the amount of exposure to loss. The Company did not enter into any interest swap agreements during fiscal 1998, 1997 or 1996. Cash Equivalents Cash equivalents represent highly liquid debt instruments with a maturity of three months or less at the time of purchase. Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of short-term deposits in Europe with major banks, with investment levels and debt ratings set to limit exposure from any one institution. Inventories Inventories are carried and charged to revenue at standard costs, which is updated regularly and which approximates the lower of cost (first-in, first-out or average) or market. Property and Equipment Property and equipment are carried at cost and include expenditures for major improvements which substantially increase their useful life. Repairs and maintenance are expensed as incurred. When assets are retired or otherwise disposed of, the assets and related allowances for depreciation and amortization are eliminated from the accounts and any resulting gain or loss is recognized in the Statement of Operations. Depreciation and Amortization For financial reporting purposes, depreciation of machinery, equipment, and fixtures is computed on the straight-line method over estimated useful lives of two to ten years. Leasehold improvements are amortized over the lesser of the lives of the leases or estimated useful lives of the improvements. F-7 DYNATECH CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) Intangible Assets Intangible assets acquired primarily from business acquisitions are summarized as follows:
1998 1997 ---------- ---------- AMOUNTS IN THOUSANDS Product technology.................................... $ 17,042 $ 17,042 Excess of cost over net assets required............... 32,478 30,861 Other intangible assets............................... 13,307 13,307 ---------- ---------- 62,827 61,210 Less accumulated amortization......................... 23,232 17,397 ---------- ---------- Total............................................... $ 39,595 $ 43,813 ========== ==========
At each balance sheet date, management evaluates whether there has been a permanent impairment in the value of goodwill or intangible assets by assessing the carrying value of the asset against the anticipated future cash flows from related operating activities. Factors which management considers in performing this assessment include current operating results, trends, product transition, distribution channels and prospects, and, in addition, demand, competition, and other economic factors. In March 1997, the Company recorded a $7.1 million charge related to product and distribution transitions. Product technology and other intangible assets are amortized on a straight- line basis primarily over two to ten years, but in no event longer than their expected useful lives. Amortization expense related to product technology was $3.1 million in fiscal 1998, $3.1 million in fiscal 1997, and $1.9 million in fiscal 1996, and was excluded from cost of sales. Excess of cost over fair market value of net assets is being amortized on a straight-line basis primarily over 15 years. Foreign Currency Translation The functional currency for the majority of the Company's foreign operations is the applicable local currency. The translation from the applicable foreign currencies to U.S. dollars is performed for balance sheet accounts using the exchange rates in effect at the balance sheet date and for revenue and expense accounts using a weighted average exchange rate during the period. The gains or losses resulting from such translation are included in shareholders' equity. Gains or losses resulting from foreign currency transactions are included in other income. Treasury Stock The Company delivers treasury shares upon the exercise of stock options and issuance of shares for the Company's Employee Stock Purchase Plan and the difference between the cost of the treasury shares, on a last-in, first-out basis, and the exercise price of the option is reflected in additional paid-in capital. Repurchase of treasury stock is accounted for by using the cost method of accounting. Revenue Recognition Sales of products and services are recorded based on product shipment and performance of service, respectively. Proceeds received in advance of product shipment or performance of service are recorded as deferred revenue in the balance sheet. Research and Development Costs relating to research and development are expensed as incurred. Internal software development costs that qualify for capitalization are not material. Warranty Costs The Company generally warrants its products for one year after delivery. A provision for estimated warranty costs is recorded at the time revenue is recognized. Income Taxes The Company provides for income taxes in accordance with Statement of Financial Accounting Standard No. 109, "Accounting for Income Taxes." Under this method, deferred tax assets and F-8 DYNATECH CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) liabilities are determined based on the differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. New Pronouncements During the quarter ended December 31, 1997, the Company adopted Statement of Financial Accounting Standards No. 128, "Earnings per Share," which modifies the calculation of earnings per share ("EPS"). The Standard replaces the previous presentation of primary and fully diluted EPS to basic and diluted EPS. Basic EPS excludes dilution and is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted EPS includes the dilution of common stock equivalents, and is computed similarly to fully diluted EPS pursuant to APB Opinion 15. All prior periods presented have been restated to reflect this adoption.
YEARS ENDED MARCH 31, ------------------------- 1998 1997 1996 ------- ------- ------- Basic: Common stock outstanding beginning of year.... 16,803 17,594 17,577 Weighted average treasury stock issued during the period................................... 134 144 461 Weighted average treasury stock repurchased... (142) (538) (69) ------- ------- ------- Weighted average common stock outstanding end of year...................................... 16,795 17,200 17,969 ======= ======= ======= Diluted: Common stock outstanding beginning of year.... 16,803 17,594 17,577 Weighted average treasury stock issued during the period................................... 134 144 461 Weighted average common stock equivalents..... 639 828 346 Weighted average treasury stock repurchased... (142) (538) (69) ------- ------- ------- Weighted average common stock outstanding end of year...................................... 17,434 18,028 18,315 ======= ======= =======
The Financial Accounting Standards Board issued Statement No. 130, "Reporting Comprehensive Income" which establishes standards for the reporting and display of comprehensive income in general-purpose financial statements. This Standard is effective for fiscal periods beginning after December 15, 1997 and its adoption is not expected to have a material impact on the Company's disclosures. The Financial Accounting Standards Board issued Statement No. 131, "Disclosures about Segments of an Enterprise and Related Information," which establishes standards for the reporting of operating segments in the financial statements. This Standard is effective for fiscal periods beginning after December 15, 1997 and its adoption is not expected to have a material impact on the Company's historical financial data. In October, 1997, Statement of Position 97-2, "Software Revenue Recognition" ("SOP 97-2"), was issued which provides guidance on applying generally accepted accounting principles in recognizing revenue on software transactions. SOP 97-2 is effective for transactions entered into in fiscal years beginning after December 15, 1997. The Company adopted the guidelines of SOP 97-2 as of April 1, 1998 and does not expect adoption to have a material impact on the Company's financial results. DISCONTINUED OPERATIONS A formal plan to discontinue noncore businesses was approved by the Board of Directors on February 7, 1996. In fiscal 1997, the Company essentially completed its disposition of the noncore businesses. Proceeds from these sales in fiscal 1997 and 1996 were $96.7 million in cash, $7.2 million in long-term promissory notes, and Class A Preferred Stock of CMSI Holdings Corporation with an aggregate liquidation preference of $6.3 million, and $48.9 million in cash, respectively, which resulted in an aftertax gain of $12 million or $0.67 per share on a diluted basis. F-9 DYNATECH CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) In connection with the sale of one of its subsidiaries, the Company agreed to guarantee the purchaser's payment obligations under a credit facility obtained by the purchaser. The guaranteed portion of the principal amount of this facility is $3 million for a period of seven years from the closing date of March 1997 and is to be used to fund the purchaser's capital expenditures. Summary operating results of noncore businesses prior to the formal plan to discontinue operations are as follows:
1996 -------------------- AMOUNTS IN THOUSANDS Sales................................................... $182,040 Gross margin............................................ 79,571 Income (loss) before taxes.............................. (3,460) Net income (loss)....................................... $ (1,471)
In connection with the disposition of these subsidiaries, the Company had net liabilities of $756 thousand and $9.2 million at March 31, 1998 and 1997, respectively. Included in these amounts are liabilities related to severance, legal, lease runout, taxes and warranty accruals, most of which were paid in fiscal 1998, offset by noncash investments. LONG-TERM DEBT Long-term debt is summarized below:
1998 1997 -------------------- AMOUNTS IN THOUSANDS Revolving credit and term bank loan.................... $ -- $ 5,000 Capital lease obligations.............................. 233 427 --------- ---------- Total debt........................................... 233 5,427 Less current portion............................... 150 201 --------- ---------- Long-term debt....................................... $ 83 $ 5,226 ========= ==========
In 1997, the Company had an unsecured $70 million revolving credit and term bank loan agreement ("Old Agreement") with several commercial banks which allowed for borrowings in various currencies and provided for interest to be payable at the Eurocurrency rate, or base or money market rate quoted by the lender, depending upon the currencies borrowed and the form of borrowing. Under the terms of the Old Agreement, the principal borrowings would have converted to a term loan payable in eight equal quarterly installments beginning September 30, 1998. In April 1997, the Company entered into a new $150 million revolving credit and term loan agreement ("New Agreement") with several commercial banks. This agreement allows for borrowings using various instruments with interest payable at Eurodollar rate plus an applicable margin based on the Company's leverage ratio or base rate, quoted by the lender. Under the terms of the New Agreement, the principal borrowings may convert to a term loan payable in eight equal quarterly installments beginning June 30, 2000. The terms of both the Old and New Agreement require, among other things, specific levels of current ratio, fixed-charge coverage ratio, and minimum tangible net worth. The Company was in compliance with all covenants at March 31, 1998. F-10 DYNATECH CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) After the Merger. After completion of the Merger and related financings, the Company had $575.2 million of indebtedness, primarily consisting of $275 million principal amount of the Notes, $260 million in term loan borrowings under the Term Loan Facility and $40 million in revolving credit borrowings under the new Revolving Credit Facility. On May 21, 1998, the Company terminated its Old and New Agreements. Debt Service. Principal and interest payments under the new Senior Credit Facility and interest payments on the Notes will represent significant liquidity requirements for the Company. It is expected that with respect to the $260.0 million borrowed under the Term Loan Facility, in which the facility is divided into tranches, of which each tranche has a different term and repayment schedule, the Company will be required to make scheduled principal payments of the $50.0 million of tranche A term loan thereunder over its six-year term, with substantial amortization of the $70.0 million of tranche B term loan, $70.0 million of tranche C term loan and $70.0 million tranche D term loan thereunder occurring after six, seven and eight years, respectively. The Notes will mature in 2008, and bear interest at 9 3/4%. Total interest expense is expected to be $51.0 million in fiscal 1999. The Senior Credit Facility are also subject to mandatory prepayment and reduction in an amount equal to, subject to certain exceptions, (a) 100% of the net proceeds of (i) certain debt offerings by the Company and any of its subsidiaries, (ii) certain asset sales by the Company or any of its subsidiaries, and (iii) casualty insurance, condemnation awards or other recoveries received by the Company or any of its subsidiaries and (b) 50% of the Company's excess cash flow (as to be defined) for each fiscal year in which the Company exceeds a certain leverage ratio. The Notes are subject to certain mandatory prepayments under certain circumstances. The Revolving Credit Facility matures in 2004, with all amounts then outstanding becoming due. The Company expects that its working capital needs will require it to obtain new revolving credit facilities at the time that the Revolving Credit Facility matures, whether by extending, renewing, replacing or otherwise refinancing the Revolving Credit Facility. No assurance can be given that any such extension, renewal, replacement or refinancing can be successfully accomplished. The loans under the Senior Credit Facility bear interest at floating rates based upon the interest rate option elected by the Company. As a result of the substantial indebtedness incurred in connection with the Merger, it is expected that the Company's interest expense will be higher and will have a greater proportionate impact on net income in comparison to preceding periods. Future Financing Sources and Cash Flows. The amount under the Revolving Credit Facility that remained undrawn following the closing of the Merger was $70.0 million. The undrawn portion of this facility will be available to meet future working capital and other business needs of the Company and replaces the Company's previously outstanding credit facilities totaling $180.0 million. The Company believes that cash generated from operations, together with amounts available under the Revolving Credit Facility and any other available sources of liquidity, will be adequate to permit the Company to meet its debt service obligations, capital expenditure program requirements, ongoing operating costs and working capital needs, although no assurance can be given in this regard. The Company's future operating performance and ability to service or refinance the Notes and to repay, extend or refinance the Senior Credit Facility (including the Revolving Credit Facility) will be, among other things, subject to future economic conditions and to financial, business and other factors, many of which are beyond the Company's control. INCOME TAXES The components of income (loss) from continuing operations before taxes are as follows:
1998 1997 1996 ------- ------- ------- AMOUNTS IN THOUSANDS Domestic........................................... $69,772 $38,486 $26,657 Foreign............................................ 1,035 (3,052) (549) ------- ------- ------- Total............................................ $70,807 $35,434 $26,108 ======= ======= =======
F-11 DYNATECH CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) The components of the provision (benefit) for income taxes from continuing operations are as follows:
1998 1997 1996 ------- ------- ------- AMOUNTS IN THOUSANDS Provision for income taxes: United States.................................. $22,810 $11,729 $ 9,092 Foreign........................................ 327 234 (428) State.......................................... 5,894 5,622 1,730 ------- ------- ------- Total........................................ $29,031 $17,585 $10,394 ======= ======= ======= Components of income tax provision: Current: Federal........................................ $21,248 $19,297 $15,247 Foreign........................................ (978) 234 (423) State.......................................... 6,123 5,671 3,072 ------- ------- ------- Total Current................................ 26,393 25,202 17,896 ======= ======= ======= Deferred: Federal........................................ 1,562 (7,568) (6,155) Foreign........................................ 1,305 -- (5) State.......................................... (229) (49) (1,342) ------- ------- ------- Total deferred............................... 2,638 (7,617) (7,502) Total........................................ $29,031 $17,585 $10,394 ======= ======= =======
Reconciliations between U.S. federal statutory rate and the effective tax rate of continuing operations follow:
1998 1997 1996 ---- ---- ---- Tax at U.S. federal statutory rate....................... 35.0% 35.0% 35.0% Increases (reductions) to statutory tax rate resulting from: Foreign income subject to tax at a rate different than U.S. rate...................................... -- 0.6 (0.5) State income taxes, net of federal income tax bene- fit................................................. 5.1 3.8 4.3 Research and development tax credit.................. (1.3) (0.7) (0.7) Nondeductible amortization........................... 1.2 1.1 1.9 Other................................................ 1.0 0.7 (0.2) ---- ---- ---- Effective tax rate before certain charges............ 41.0% 40.5% 39.8% Nondeductible purchased research and development..... -- 8.2 -- Nondeductible writeoff of intangibles................ -- 0.9 -- ---- ---- ---- Total effective tax rate on continuing operations.. 41.0% 49.6% 39.8% ---- ---- ----
F-12 DYNATECH CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) The principal components of the deferred tax assets and liabilities follow:
1998 1997 ---------- ---------- AMOUNTS IN THOUSANDS Deferred tax assets: Net operating loss carryforwards................... $ 4,608 $ 3,291 Vacation benefits.................................. 1,556 792 Bad debt allowance................................. -- 364 Inventory capitalization........................... 403 363 Depreciation and amortization........................ 16,343 16,767 Other deferred assets.............................. 8,976 4,434 ---------- ---------- 31,886 26,011 Valuation allowance.................................. (4,608) (3,291) ---------- ---------- 27,278 22,720 Deferred tax liabilities: Depreciation and amortization...................... 431 1,025 Other deferred liabilities......................... 1,068 1,491 ---------- ---------- 1,499 2,516 ---------- ---------- Net deferred tax assets.............................. $ 25,779 $ 20,204 ========== ==========
Deferred income taxes are included in the following balance sheet accounts:
1998 1997 ---------- ---------- AMOUNTS IN THOUSANDS Other current assets................................... $ 8,695 $ 3,846 Other assets........................................... 17,084 16,358 ---------- ---------- $ 25,779 $ 20,204 ========== ==========
The valuation allowance applies to state and foreign net operating loss carryforwards that may not be fully utilized by the Company. The increase in the valuation reserve relates to the increase in these net loss carryforwards. EMPLOYEE RETIREMENT PLANS The Company has a trusteed employee retirement profit sharing and 401(k) savings plan for eligible U.S. employees. The Plan does not provide for stated benefits upon retirement. Employees outside the U.S. are covered principally by government-sponsored plans that are deferred contribution plans. The cost of Company-provided plans is not material. The Company has a nonqualified deferred compensation plan which permits certain key employees to annually elect to defer a portion of their compensation for their retirement. The amount of compensation deferred and related investment earnings will be placed in an irrevocable rabbi trust and presented as assets in the Company's balance sheet because they will be available to the general creditors of the Company in the event of the Company's insolvency. An offsetting liability will reflect amounts due employees. Corporate contributions to employee retirement plans were $4.5 million in fiscal 1998, $4.0 million in fiscal 1997, and $3.3 million in 1996. F-13 DYNATECH CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) STOCK COMPENSATION AND PURCHASE PLANS On July 30, 1996 the shareholders adopted the 1996 Employee Stock Purchase Plan under which eligible employees may contribute up to 10% of their salary toward semi-annual purchases of the Company's capital stock. The plan commenced October 1, 1996 and each plan period lasts six months beginning on October 1 and April 1 of each year. The purchase price for each share of stock is the lesser of 85% of the market price on the first or last day of the plan period. A total of 600,000 shares are available for purchase under the plan. There were 44,840 shares issued under the plan in October, 1997 and 38,692 shares were reserved for issuance at March 31, 1998. Pursuant to the Merger, the plan has been amended to provide that there will be no new stock purchase periods after March 31, 1998. The Employee Stock Purchase Plan terminated on May 21, 1998. The Company maintains two Stock Option plans in which common stock is available for grant to key employees at prices not less than fair market value (110% of fair market value for employees holding more than 10% of the outstanding common stock) at the date of grant determined by the Board of Directors. Incentive or nonqualified options may be issued under the plans and are exercisable from one to ten years after grant. A summary of activity in the Company's option plans is as follows:
1998 1997 1996 WEIGHTED WEIGHTED WEIGHTED AVERAGE AVERAGE AVERAGE 1998 EXERCISE 1997 EXERCISE 1996 EXERCISE SHARES PRICE SHARES PRICE SHARES PRICE --------- -------- --------- -------- --------- -------- Shares under option, be- ginning of year........ 1,770,560 $21.87 1,684,580 $15.17 1,296,720 $12.09 Options granted (at an exercise price of $35 to $44 in 1998, $32 to $54 in 1997, and $15.50 to $20.25 in 1996)..... 634,800 36.25 607,550 34.51 673,700 20.01 Options exercised....... (148,941) 17.20 (255,690) 11.99 (126,500) 10.26 Options canceled........ (120,700) 24.26 (265,880) 17.82 (159,340) 14.44 --------- --------- --------- Shares under option, end of year................ 2,135,719 26.33 1,770,560 21.87 1,684,580 15.17 ========= ========= ========= Shares exercisable...... 512,999 $18.79 300,710 $14.77 261,780 $11.52
Options available for future grants under the plans were 497 thousand, 1.0 million, and 1.4 million at March 31, 1998, 1997, and 1996, respectively. The fair market value of each option granted during 1998, 1997, and 1996 is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions: expected volatility of 40%, risk-free interest rate of 6% in 1998, 6.59% in 1997, and 6.27% in 1996, expected life of 7 years and a dividend yield of 0%. The Weighted Average Fair Value of options granted, net of forfeitures, during the years 1998, 1997, and 1996 was $19.20, $18.68, and $10.68, respectively. The following table summarizes information about currently outstanding and exercisable stock options at March 31, 1998:
WEIGHTED NUMBER OF AVERAGE WEIGHTED OPTIONS REMAINING AVERAGE OUTSTANDING CONTRACTUAL EXERCISE RANGE OF EXERCISE PRICE AT 3/31/98 LIFE PRICE - ----------------------- ----------- ----------- -------- $ 9.00--$15.00................................. 437,540 4.62 $11.05 $15.00--$30.00................................. 542,860 7.14 19.08 $30.00--$54.00................................. 1,155,319 8.85 35.93 --------- Total........................................ 2,135,719 7.55 $26.33 =========
F-14 DYNATECH CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) The Company applies ABP Opinion 25 and related interpretations in accounting for its plans. In October 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("FAS123"), which is effective for transactions entered into for fiscal years that begin after December 15, 1995. FAS123 established a fair value-based method of accounting for stock-based compensation plans. In adopting FAS123 in 1997, the Company elected footnote disclosure only. Accordingly, no compensation cost has been recognized for its stock option plans and its stock purchase plan under FAS123. Had compensation cost for the Company's stock-based compensation plans been recorded based on the fair value of awards or grant date consistent with the method prescribed by FAS123, the Company's net income and earnings per share would have been changed to the pro forma amounts indicated below:
1998 1997 1996 ---------------- ---------------- ---------------- AS PRO AS PRO AS PRO REPORTED FORMA REPORTED FORMA REPORTED FORMA -------- ------- -------- ------- -------- ------- AMOUNTS IN THOUSANDS EXCEPT PER SHARE Net income............... $41,776 $38,441 $29,849 $27,863 $14,243 $13,464 Net income per share: Basic.................. $ 2.49 $ 2.29 $ 1.74 $ 1.62 $ 0.79 $ 0.75 Diluted................ $ 2.40 $ 2.20 $ 1.66 $ 1.55 $ 0.78 $ 0.74
The effect of applying FAS123 in this pro forma disclosure is not indicative of future amounts. FAS123 does not apply to awards prior to 1995; and additional awards in future years are anticipated. SHAREHOLDER RIGHTS PLAN In February 1989 the Board of Directors adopted a Shareholder Rights Plan and declared a dividend distribution of one Right for each outstanding share of Dynatech's common stock. The Plan was amended in March 1990. Each Right, when exercisable, entitles a qualifying shareholder to buy shares of Dynatech junior participating cumulative preferred stock. The Rights would only become exercisable (i) ten days after a person has become the beneficial owner of 15% or more of Dynatech's common stock, or (ii) ten business days after the commencement of a tender offer that would result in the ownership of 15% or more of the common stock, or (iii) upon determination by the Board of Directors that a person who holds 10% or more of Dynatech's common stock intends to, or is likely to, act in certain specified manners adverse to the interests of Dynatech and its shareholders. In the event Dynatech is acquired and is not the surviving corporation in a merger, or in the event of the acquisition of 50% or more of the assets or earning power of Dynatech, each Right would then entitle the qualified holder to purchase, at the then-current exercise price, shares of common stock of the acquiring company having a value of twice the exercise price of the Right. Furthermore, if any party were to acquire 15% or more of Dynatech's common stock or were determined to be an adverse person as described above, qualified holders of the Rights would be entitled to acquire shares of Dynatech junior participating cumulative preferred stock having a value of twice the then- current exercise price. At the option of the Board of Directors, all of the Rights could be exchanged into shares of common or preferred stock. The Board of Directors of the Company has contemporaneously with the execution of the Merger Agreement amended the Rights Agreement so that (i) none of CDR, Fund or MergerCo will become an "Acquiring Person" as a result of the consummation of the transactions contemplated by this Agreement, (ii) no "Stock Acquisition Date," "Triggering Event" or "Distribution Date" (as such terms are defined in the Rights Agreement) will have occurred as a result of the consummation of the transactions contemplated by this Agreement, and (iii) all outstanding Rights issued and outstanding under the Rights Agreement and the Rights F-15 DYNATECH CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) Agreement will terminate immediately prior to the effective time of the Merger and no shares of Recapitalized Common Stock issued on or after the effective time of the Merger will have any Rights associated with them under the Rights Agreement. COMMITMENTS AND CONTINGENCIES The Company has operating leases from continuing operations covering plant, office facilities, and equipment which expire at various dates through 2006. Future minimum annual fixed rentals required during the years ending in fiscal 1999 through 2003 under noncancelable operating leases having an original term of more than one year are $8.9 million, $7.4 million, $5.6 million, $4.9 million, and $4.2 million, respectively. The aggregate obligation subsequent to fiscal 2003 is $6.2 million. Rent expense from continuing operations was approximately $8.1 million, $6.2 million, and $5.7 million in fiscal 1998, 1997, and 1996, respectively. The Company is a party to several pending legal proceedings and claims. Although the outcome of such proceedings and claims cannot be determined with certainty, the Company's counsel and management are of the opinion that the final outcome should not have a material adverse effect on the Company's operations or financial position. On June 27, 1996, Cincinnati Microwave, Inc. ("CMI") filed an action in the United States District Court for the Southern District of Ohio against the Company and Whistler Corporation of Massachusetts ("Whistler"), alleging willful infringement of CMI's patent for a mute function in radar detectors. In 1994, the Company sold its radar detector business to Whistler. The Company and Whistler have asserted in response that they have not infringed, and that the patent is invalid and unenforceable. The Company obtained an opinion of counsel from Bromberg & Sunstein LLP in connection with the manufacture and sale of the Company's Whistler series radar detectors and will be offering the opinion, among other things, as evidence that any alleged infringement was not willful. On March 24, 1998, CMI, together with its co-plaintiff and patent assignee Escort, Inc., moved for summary judgment. The Company and Whistler have opposed the motion for summary judgment. The Company intends to defend the lawsuit vigorously and does not believe that the outcome of the litigation is likely to have a material adverse effect on the Company's financial condition, results of operations or liquidity. NONRECURRING CHARGES The components of nonrecurring expenses include the following:
1997 1996 ---------- ---------- AMOUNTS IN THOUSANDS Incomplete technology.................................. $ 20,627 $ 16,852 Intangible writeoffs................................... 7,149 -- ---------- ---------- Total................................................ $ 27,776 $ 16,852 ========== ==========
ACQUISITIONS 1997 Acquisitions In March of 1997, the Company acquired the net assets of Advent Design, Inc. ("Advent") for $3.5 million in cash. Advent designs and manufactures high-performance microprocessor-based systems for the computer, medical and communications markets. This acquisition generated $3.4 million of goodwill which is being amortized over 15 years. During fiscal 1998, the Company incurred a $1.6 million increase in goodwill, related to a targeted three-year earnout based on, among other things, a positive operating income. F-16 DYNATECH CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) On December 31, 1996, the Company acquired substantially all of the assets and assumed certain liabilities of Itronix Corporation ("Itronix") located in Spokane, Washington, for $65.4 million in cash. Approximately $40 million of the purchase price was borrowed pursuant to the terms of the Company's revolving credit and term loan agreement in effect at that time. A significant portion of the borrowed funds was repaid during the fourth quarter of 1997. Itronix is a manufacturer of mobile computing and communications devices, including ruggedized laptop computers, which increase the efficiency of large, mission-critical service groups. Incident to this acquisition was the purchase of incomplete technology activities which resulted in a one-time pretax charge of $20.6 million or ($0.74) per share on a diluted basis. This purchased incomplete technology that had not reached technological feasibility and which had no alternative future use was valued using a risk adjusted cash flow model, both in 1997 and 1996, under which future cash flows associated with in-process research and development were discounted considering risks and uncertainties related to the viability of potential changes in future target markets and to the completion of the products that will ultimately be marketed by the Company. Acquired complete technology of $8.4 million is being amortized over two to seven years, and goodwill of $17.9 million is being amortized over 15 years. As a percentage of sales, the gross margin and selling, general and administrative expenses of Itronix are lower than the consolidated financial results of the Company prior to the acquisition. Therefore, the pro forma income statements below reflect a lower gross margin and selling, general and administrative expenses as a percent of consolidated sales. Hence, in order to demonstrate the Company's operating performance versus the previous years, the following unaudited pro forma information presents a summary of consolidated results of operations of the Company as if the acquisition had occurred at the beginning of fiscal 1996, with pro forma adjustments to give effect to amortization of goodwill and intangibles, interest expense on acquisition debt, and certain other adjustments, together with related income tax effects. (In thousands except per share data).
FISCAL YEAR ENDED FISCAL YEAR ENDED MARCH 31, 1997 MARCH 31, 1996 ----------------- ----------------- Sales.................................. $426,234 $355,886 Cost of sales.......................... 183,076 158,602 -------- -------- Gross profit........................... 243,158 197,284 Selling, general & administrative ex- pense................................. 122,232 105,383 Product development expense............ 48,515 40,913 Nonrecurring charges................... 7,149 16,852 Amortization of intangibles............ 8,853 7,886 -------- -------- Operating income....................... 56,409 26,250 Interest expense....................... (3,284) (4,998) Interest income........................ 2,785 2,181 Other income, net...................... 633 975 -------- -------- Income from continuing operations be- fore income taxes..................... 56,543 24,408 Provision for income taxes............. 24,974 9,799 -------- -------- Income from continuing operations...... $ 31,569 $ 14,609 ======== ======== Income per share: Basic................................ $ 1.84 $ 0.81 Diluted.............................. $ 1.74 $ 0.80 Weighted average shares: Basic................................ 17,200 17,969 Diluted.............................. 18,028 18,315
F-17 DYNATECH CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 1996 Acquisitions On February 20, 1996 Dynatech acquired the stock of Synergistic Solutions, Inc. ("SSI"), of Atlanta, Georgia, for approximately $5.5 million. Acquired technology and other intangible assets of approximately $4.3 million are being amortized over four to seven years. The investment in excess of fair market value of assets purchased of $964.0 thousand is being amortized over 15 years. On September 1, 1995 Dynatech acquired substantially all of the business and assets of Tele-Path Industries, Inc. ("TPI"), of Salem, Virginia, for $23.6 million. Approximately $12.6 million was cash, including a $2.6 million contingent adjustment for the stock price, and 688,096 shares of the Company's common stock at $19.91 per share. Acquired complete technology and other intangible assets of approximately $6.7 million are being amortized over five years. Incident to this acquisition, the Company purchased the incomplete technology activities of TPI, resulting in a one-time pretax charge in the second quarter of approximately $16.9 million, or ($0.56) per share on a diluted basis. This purchased incomplete technology that had not reached technological feasibility and which had no alternative future use was valued using a risk adjusted cash flow model. Acquisitions, both in fiscal 1997 and 1996, were recorded using the purchase method of accounting. SUBSEQUENT EVENTS On June 19, 1998, the Company acquired the stock of Pacific Systems Corporation of Kirkland, Washington ("Pacific") for a total purchase price of $20 million, including an incentive earnout. Pacific designs and manufactures customer specified avionics and integrated cabin management equipment for the corporate and general aviation market. On May 21, 1998, the Company completed its management-led recapitalization with Clayton, Dubilier & Rice, Inc. In connection with the Merger, the Company's shareholders received consideration consisting of $47.75 per share in cash and a 0.5 share of recapitalized common stock. In connection with the Merger, the Company entered into a credit agreement (the "Senior Credit Facility") with certain lenders providing for the Senior Credit Facility including a $260.0 million term loan facility (the "Term Loan Facility") and a $110.0 million revolving credit facility (the "Revolving Credit Facility"). In connection with the Merger, the Company also completed the offering of $275.0 million aggregate principal amount of the Notes. On May 31, 1998 the Company had a total of $575.2 million of debt which consisted primarily of $275.0 million principal amount of the Notes, $260.0 million in term loan borrowings under the Term Loan Facility and $40.0 million in revolving credit borrowings under the Revolving Credit Facility. Debt Service Principal and interest payments under the new Senior Credit Facility and interest payments on the Notes will represent significant liquidity requirements for the Company. It is expected that with respect to the $260.0 million borrowed under the Term Loan Facility, in which the facility is divided into tranches, of which each tranche has a different term and repayment schedule, the Company will be required to make scheduled principal payments of the $50.0 million of tranche A term loan thereunder over its six-year term, with substantial amortization of the $70.0 million of tranche B term loan, $70.0 million of tranche C term loan and $70.0 million tranche D term loan thereunder occurring after six, seven and eight years, respectively. The Notes will mature in 2008, and bear interest at 9 3/4%. Total interest expense is expected to be $51.0 million in fiscal 1999. The Senior Credit Facility is also subject to mandatory prepayment and reduction in an amount equal to, subject to certain exceptions, (a) 100% of the net proceeds of (i) certain debt offerings by the Company and any of its subsidiaries, (ii) certain asset sales by the Company or any of its subsidiaries, and (iii) casualty insurance, condemnation awards or other recoveries received by the Company or any of its subsidiaries and (b) 50% of the Company's excess cash flow (as to be defined) for each fiscal year in which the Company exceeds a certain leverage ratio. The Notes are subject to certain mandatory prepayments under certain circumstances. The Revolving Credit F-18 DYNATECH CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) Facility matures in 2004, with all amounts then outstanding becoming due. The Company expects that its working capital needs will require it to obtain new revolving credit facilities at the time that the Revolving Credit Facility matures, whether by extending, renewing, replacing or otherwise refinancing the Revolving Credit Facility. No assurance can be given that any such extension, renewal, replacement or refinancing can be successfully accomplished. The loans under the Senior Credit Facility bear interest at floating rates based upon the interest rate option elected by the Company. As a result of the substantial indebtedness incurred in connection with the Merger, it is expected that the Company's interest expense will be higher and will have a greater proportionate impact on net income in comparison to preceding periods. Future Financing Sources and Cash Flows The amount under the Revolving Credit Facility that remained undrawn following the closing of the Merger was $70.0 million. The undrawn portion of this facility will be available to meet future working capital and other business needs of the Company and replaced the Company's previously outstanding credit facilities totaling $180.0 million. The Company believes that cash generated from operations, together with amounts available under the Revolving Credit Facility and any other available sources of liquidity, will be adequate to permit the Company to meet its debt service obligations, capital expenditure program requirements, ongoing operating costs and working capital needs, although no assurance can be given in this regard. The Company's future operating performance and ability to service or refinance the Notes and to repay, extend or refinance the Senior Credit Facility (including the Revolving Credit Facility) will be, among other things, subject to future economic conditions and to financial, business and other factors, many of which are beyond the Company's control. The Senior Credit Facility impose restrictions on the ability of the Company to make capital expenditures and both the Senior Secured Credit Facilities and the indenture governing the Notes limit the Company's ability to incur additional indebtedness. Such restrictions, together with the highly leveraged nature of the Company, could limit the Company's ability to respond to market conditions, to meet its capital spending program, to provide for unanticipated capital investments or to take advantage of business opportunities. The covenants contained in the Senior Credit Facility also, among other things, restrict the ability of the Company and its subsidiaries to dispose of assets, incur guarantee obligations, prepay other indebtedness, make restricted payments, create liens, make equity or debt investments, make acquisitions, modify terms of the indenture governing the Notes, engage in mergers or consolidations, change the business conducted by the Company and its subsidiaries taken as a whole or engage in certain transactions with affiliates. In addition, under the Senior Credit Facility, the Company is required to comply with a minimum interest expense coverage ratio and a maximum leverage ratio. These financial tests become more restrictive in future years. The term loans under the Senior Credit Facility (other than the $50.0 million tranche A term loan) have negative covenants which are substantially similar to the negative covenants contained in the indenture governing the Notes, which also impose restrictions on the operation of the Company's businesses. Shares of Recapitalized Common Stock trade only in the over-the-counter market. Although prices in respect of trades may be published by the National Association of Securities Dealers, Inc. on its electronic bulletin board, "pink sheets," quotes for such shares may not be as readily available; accordingly, it is anticipated that the Recapitalized Common Stock will trade much less frequently than the Common Stock traded prior to the Merger, which may have a material adverse effect on the market value of shares of Recapitalized Common Stock. In addition, (depending upon certain factors) the shares of Recapitalized Common Stock may no longer constitute "margin securities" for the purposes of the margin regulations of the Federal Reserve Board and therefore could no longer be used as collateral for loans made by brokers. The Company is obligated by the Merger Agreement to continue to be a reporting company under the Securities Exchange Act of 1934, as amended (the "Exchange Act") and to continue to file periodic reports (including annual and quarterly reports) for at least five years after the Merger, unless fewer than 100 record F-19 DYNATECH CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) holders of shares of Recapitalized Common Stock are non-affiliates of the Surviving Corporation or except as otherwise provided in the Merger Agreement. After the fifth anniversary of the effective time of the Merger, the Company may deregister the Recapitalized Common Stock under the Exchange Act if permitted by applicable law. If the Company were to cease to be a reporting company under the Exchange Act and to the extent not required in connection with any other debt or equity securities of the Company registered or required to be registered under the Exchange Act, the information now available to stockholders of the Company in the annual, quarterly and other reports required to be filed by the Company with the Securities and Exchange Commission would not be available to them as a matter of right. The following unaudited pro forma condensed consolidated balance sheet of the Company has been prepared to give effect to the Merger and related transactions as a recapitalization for financial reporting purposes. F-20 DYNATECH CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) DYNATECH CORPORATION PRO FORMA BALANCE SHEET (UNAUDITED)
MARCH 31, 1998 --------- Current assets: Cash and cash equivalents.......................................... $ 43,619 Accounts receivable................................................ 69,988 Inventories: Raw materials.................................................... 24,263 Work in process.................................................. 11,769 Finished goods................................................... 12,850 --------- Total inventory................................................ 48,882 Other current assets............................................... 16,823 --------- Total current assets........................................... 179,312 Property and equipment: Land, building and leasehold improvements.......................... 4,904 Machinery and equipment............................................ 51,220 Furniture and fixtures............................................. 12,351 --------- 68,475 Less accumulated depreciation and amortization..................... (42,110) 26,365 Other assets: Intangible assets, net............................................. 39,595 Other.............................................................. 63,508 --------- $ 308,780 ========= Current liabilities: Notes payable and current portion of long-term debt................ $ 150 Accounts payable................................................... 22,933 Accrued expenses: Compensation and benefits........................................ 21,750 Taxes, other than income taxes................................... 2,071 Deferred revenue................................................. 13,868 Other............................................................ 16,082 Accrued income taxes............................................... 5,196 Net liabilities of discontinued operations......................... 756 --------- Total current liabilities...................................... 82,806 Long-term debt....................................................... 567,983 Deferred compensation................................................ 3,122 Commitments and contingencies........................................ Shareholders' equity: Recapitalized common stock, including additional paid-in capital... 304,092 Retained earnings.................................................. (647,623) Cumulative translation adjustments................................. (1,600) --------- Total shareholders' equity..................................... (345,131) --------- $ 308,780 =========
F-21 DYNATECH CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) The pro forma balance sheet reflects: (i) The issuance of 111,590,528 shares of Recapitalized Common Stock in exchange for MergerCo Common Stock, net of related issuance costs of $13,800; MergerCo is a nonsubstantive transitory merger vehicle (which was merged into the Company at the effective time) and its only tangible assets were $277,000 of cash and 40,804 shares of Common Stock from the issuance of its common stock. (ii) The issuance of Senior Credit Facility, the Notes and borrowings under the Revolving Credit Facility. (iii) Deferred issuance costs incurred in connection with the issuance of Senior Credit Facility, the Notes and the Revolving Credit Facility of which $2,500 was prepaid by the Company at December 31, 1997. (iv) The net cash paid in connection with the settlement of certain stock options in an amount equal to the excess of $49.00 over the exercise price per share of Common Stock subject to such settled options, and the related tax benefit. (v) The assuming of approximately 1,100,000 Company Stock Options by the Company held by Management Stockholders converted into equivalent options to purchase shares of Recapitalized Common Stock (the exercise prices of which preserve the economic value of their current Company Stock Options), most of which will be fully vested and exercisable. Of the 1,100,000 Company Stock Options, approximately 820,618 Company Stock Options, have revisions to the original terms, which resulted in a new measurement date for the Company Stock Options and a non-cash charge of $10.7 million (net of related tax benefit). (vi) The conversion of 16,818,945 shares of Common Stock (excluding shares held by MergerCo and held in treasury assumed to be canceled) into the right to receive $47.75 per share in cash and the 0.5 shares of Recapitalized Common Stock per share of Common Stock (totaling 8,409,473 shares of the Recapitalized Common Stock). Also, see Notes Summary of Significant Accounting Policies, Stock Compensation and Purchase Plans, and Shareholder Rights Plan for other matters relating to the Merger. F-22 DYNATECH CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) SEGMENT INFORMATION AND GEOGRAPHIC AREAS The Corporation operates predominantly in a single industry as a global communications equipment manufacturer focused on network technology solutions. Its products address communications test, industrial computing and communications, and visual communications applications. Dynatech is a multi- national corporation with continuing operations outside the United States consisting of distribution and sales offices in Germany, England, France and the Pacific Rim. Net income in fiscal 1998, 1997, and 1996 included currency gains (losses) of approximately $12,600, $99,300, and $(90,300), respectively. Information by geographic areas for the years ended March 31, 1998, 1997, and 1996 is summarized below:
OUTSIDE U.S. (PRINCIPALLY UNITED STATES EUROPE) COMBINED ------------- ------------ -------- AMOUNTS IN THOUSANDS Sales to unaffiliated customers 1998................................. $451,360* $21,588 $472,948 1997................................. 340,603* 21,809 362,412 1996................................. 268,830* 24,212 293,042 Income (loss) before taxes from contin- uing operations 1998................................. $ 69,772 $ 1,035 $ 70,807 1997................................. 38,486 (3,052) 35,434 1996................................. 26,657 (549) 26,108 Identifiable assets at March 31, 1998....................... $250,382 $37,748 $288,130 March 31, 1997....................... 215,218 33,792 249,010 March 31, 1996....................... 186,186 19,003 205,189
-------- *Includes export sales of $54,552, $48,959, and $35,844 in 1998, 1997 and 1996, respectively. F-23 DYNATECH CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) SUMMARY OF OPERATIONS BY QUARTER (UNAUDITED)
1998 --------------------------------------------------- FIRST SECOND THIRD FOURTH YEAR -------- -------- -------- -------- -------- (AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA) Sales................... $104,320 $115,856 $133,138 $119,634 $472,948 Gross profit............ 61,683 65,044 74,873 65,826 267,426 Net income (loss)....... 8,982 10,512 12,735 9,549 41,776 Income (loss) per common share Basic................. $ 0.54 $ 0.63 $ 0.76 $ 0.57 $ 2.49 Diluted............... 0.52 0.60 0.73 0.55 2.40 Market Share Price(a)-- High................... $ 41.88 $ 41.94 $ 47.31 $ 48.50 --Low.......... 29.00 34.38 34.00 46.19 1997 --------------------------------------------------- FIRST SECOND THIRD FOURTH YEAR -------- -------- -------- -------- -------- (AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA) Sales................... $ 81,122 $ 85,725 $ 92,007 $103,558 $362,412 Gross profit............ 50,874 54,463 58,485 61,336 225,158 Income (loss) from Continuing operations.. 8,412 9,277 (2,896)(b) 3,056(c) 17,849 Net income (loss)....... 8,412 9,277 (2,896) 15,056(d) 29,849 Income (loss) per share continuing operations: Basic................. $ 0.48 $ 0.54 $ (0.16) $ 0.18 $ 1.04 Diluted............... 0.46 0.52 (0.16) 0.17 0.99 Net income (loss) per share: Basic................. $ 0.48 $ 0.54 $ (0.16) $ 0.88 $ 1.74 Diluted............... 0.46 0.52 (0.16) 0.84 1.66 Market Share Price(a)-- High................... $ 35.00 $ 46.88 $ 58.00 $ 54.50 --Low.......... 23.00 30.75 40.50 28.00
-------- (a) From January 28, 1997 to May 21, 1998, shares of Common Stock of the Company were traded on the New York Stock Exchange. Prior to January 28, 1997, shares of Common Stock of the Company were traded on the Nasdaq--National Market. No cash dividends were paid on shares of Common Stock of the Company. (b) Includes charge for purchased incomplete technology of $20.6 million or ($0.74) per share on a diluted basis in 1997. (c) Includes a charge of $7.1 million or ($0.36) per share on a diluted basis relating to the writeoff of certain intangible assets. (d) Includes gain on discontinued operations of $12.0 million or $0.67 per share on a diluted basis. F-24 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Shareholders of Dynatech Corporation: Our report on the consolidated financial statements of Dynatech Corporation as of March 31, 1998 and 1997, and for each of the three fiscal years in the period ended March 31, 1998 has been included in this registration statement. In connection with our audits of such financial statements, we have also audited the related financial statement schedule included on page F-26 of this registration statement. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information required to be included therein. COOPERS & LYBRAND L.L.P. Boston, Massachusetts April 28, 1998 F-25 SCHEDULE II DYNATECH CORPORATION VALUATION AND QUALIFYING ACCOUNTS FOR THE YEARS ENDED MARCH 31, 1998, 1997 AND 1996 RESERVE FOR DOUBTFUL ACCOUNTS (IN THOUSANDS) Balance, March 31, 1995.............................................. 5,077 (a) Additions charged to income........................................ 356 Write-off of uncollectible accounts, net........................... (494) Allowances reclassified, related to discontinued operations........ (3,982) ------ Balance, March 31, 1996.............................................. 957 Additions charged to income........................................ 646 Write-off of uncollectible accounts, net........................... (359) Allowances reclassified............................................ 628 ------ Balance, March 31, 1997.............................................. 1,872 Additions charged to income........................................ 425 Write-off of uncollectible accounts, net........................... (533) ------ Balance, March 31, 1998.............................................. 1,764 ======
- -------- (a)Prior year balances have not been restated to reflect elimination of discontinued operations. F-26 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND THE ACCOMPANYING LETTER OF TRANSMITTAL IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND THE ACCOMPANYING LETTER OF TRANSMITTAL, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. NEITHER THIS PROSPECTUS NOR THE ACCOMPANYING LETTER OF TRANSMITTAL, OR BOTH TOGETHER, CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN THE NEW NOTES TO WHICH IT RELATES OR AN OFFER TO SELL, OR THE SOLICITATION OF AN OFFER TO BUY THE NEW NOTES, IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR THE ACCOMPANYING LETTER OF TRANSMITTAL, OR BOTH TOGETHER, NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS NOT BEEN A CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE. TABLE OF CONTENTS Available Information....................................................... ii Prospectus Summary.......................................................... 1 Risk Factors................................................................ 13 Use of Proceeds............................................................. 22 Capitalization.............................................................. 23 Unaudited Pro Forma Condensed Consolidated Financial Data................... 24 Selected Historical and Pro Forma Consolidated Financial Data............... 30 Management's Discussion and Analysis........................................ 31 The Exchange Offer.......................................................... 44 Business.................................................................... 52 Management.................................................................. 64 Executive Compensation...................................................... 66 Ownership of Capital Stock.................................................. 70 The Recapitalization........................................................ 71 Certain Relationships and Related Transactions.............................. 72 Description of Senior Credit Facility....................................... 73 Description of Notes........................................................ 75 Book-entry; Delivery and Form............................................... 117 United States Federal Tax Considerations.................................... 119 Plan of Distribution........................................................ 124 Registration Rights......................................................... 124 Legal Matters............................................................... 127 Experts..................................................................... 127 Dynatech Corporation Index to Consolidated Financial Statements................................ F-1
UNTIL , 1998, ALL DEALERS EFFECTING TRANSACTIONS IN THE NEW NOTES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (LOGO) DYNATECH CORPORATION TELECOMMUNICATIONS TECHNIQUES CO., LLC (TO BE RENAMED DYNATECH LLC) OFFER TO EXCHANGE $275,000,000 9 3/4% SENIOR SUBORDINATED NOTES DUE 2008, WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, FOR ANY AND ALL $275,000,000 9 3/4% SENIOR SUBORDINATED NOTES DUE 2008 --------------- PROSPECTUS --------------- , 1998 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PART II. INFORMATION NOT REQUIRED IN PROSPECTUS Capitalized terms used but not defined in Part II have the meanings assigned ascribed to them in the Prospectus contained in this Registration Statement. ITEM 20. INDEMNIFICATION OF MEMBERS, DIRECTORS AND OFFICERS TELECOMMUNICATIONS TECHNIQUES CO., LLC Telecommunications Techniques Co., LLC ("TTC") is a limited liability company organized under the laws of the State of Delaware. Section 18-108 of the Delaware Limited Liability Company Act provides that, subject to such standards and restrictions , if any, as are set forth in its limited liability company agreement, a limited liability company may, and shall have the power to, indemnify and hold harmless any member or manager or other person from and against any and all claims and demands whatsoever. Article 18 of TTC's Limited Liability Agreement (the "LLC Agreement") provides that the Member or any of its respective affiliates, directors, advisory directors, members, officers or employees (each a "Covered Person") shall be entitled to indemnification from TTC for any costs and expenses (including attorneys' fees and disbursements), loss, liability, damage or claim incurred by such person by reason of any act or omission performed or omitted by such person in good faith on behalf of TTC. The LLC Agreement further provides that, to the fullest extent permitted by applicable law, expenses (including attorneys' fees and disbursements) incurred by a Covered Person in defending any claim, demand, action, suit or proceeding shall, from time to time, be advanced by TTC prior to the final disposition of such claim, demand, action, suit or proceeding, subject to recapture by TTC following a later determination that such Covered Person was not entitled to be indemnified thereunder. DYNATECH CORPORATION Dynatech Corporation is a company organized under the laws of the Commonwealth of Massachusetts. Section 67 of the Massachusetts Business Corporation Law (the "MBCL") provides that a corporation may indemnify its directors, officers, employees or other agents to the extent specified in the articles of organization, by-laws, or by a majority vote of the Stockholders. Except as the articles of organization or bylaws otherwise require and except as relating to the directors themselves, the corporation may provide indemnification to the extent authorized by the directors. Such indemnification may include payment by the corporation of expenses incurred in defending a civil or criminal action or proceeding in advance of the final disposition of such action or proceeding, upon receipt of an undertaking by the person indemnified to repay such payment if he shall be adjudicated to be not entitled to indemnification. The MBCL bars indemnification for any person with respect to any matter as to which he or she has been adjudicated in any proceeding not to have acted in good faith and in the reasonable belief that his or her action was in the best interest of the corporation. Section 67 grants to corporations the power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or other agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee, or other agent of another organization against any liability incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the corporation would have the power to indemnify him or her against such liability. Article 6(b) of Dynatech's Restated Articles of Organization provides indemnification for Dynatech's directors and officers against all expenses incurred by them in connection with any proceeding resulting from their service in such capacities, except that no indemnification shall be provided regarding any matter in which a director or officer has been adjudicated not to have acted in good faith and in the reasonable belief that his or her II-1 action was in the best interests of Dynatech. The Restated Articles of Organization direct Dynatech to pay the expenses of a director or officer in advance of a final determination of a proceeding, unless it is determined by (i) a majority vote of a quorum consisting of the directors who were not parties to such proceedings or (ii) by legal counsel in a written opinion, that the director or officer in question did not act in good faith and in the reasonable belief that his or her action was in the best interests of Dynatech. Article 6(e) of Dynatech's Restated Articles of Organization eliminates the personal liability of the directors to Dynatech or its Stockholders for monetary damages for breach of fiduciary duty as directors. ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (A) EXHIBITS:
EXHIBIT NO. DESCRIPTION ------- ----------- 3.1 Certificate of Formation of Telecommunications Techniques Co., LLC, filed with the Secretary of State of Delaware on May 14, 1998. 3.2 Limited Liability Company Agreement of Telecommunications Techniques Co., LLC, dated as of May 14, 1998. 3.3 Amended and Restated Articles of Organization of Dynatech Corporation.* 3.4 By-Laws of Dynatech Corporation.* 4.1 Indenture, dated May 21, 1998, among Dynatech Corporation, TTC Merger Co. LLC and State Street Bank and Trust Company, as Trustee. 4.2 Form of 9 3/4% Senior Subordinated Note Due 2008. 4.3 First Supplemental Indenture, dated May 21, 1998, between Telecommunications Techniques Co., LLC and State Street Bank and Trust Company, as Trustee. 4.4 Registration Rights Agreement, dated May 21, 1998, by and among Dynatech Corporation, Telecommunications Techniques Co., LLC, Credit Suisse First Boston Corporation and J.P. Morgan Securities Inc. 5 Opinion of Debevoise & Plimpton regarding the legality of the New Notes being registered.+ 10.1 Agreement and Plan of Merger, dated as of December 20, 1997 by and between CDRD Merger Corporation and Dynatech Corporation.** 10.2 Agreement and Plan of Merger, dated May 18, 1998, between TTC Reorg Corp. and Telecommunications Techniques Co., LLC. 10.3 Agreement and Plan of Merger, dated May 21, 1998, between TTC Merger Co. LLC and Telecommunications Techniques Co., LLC. 10.4 Credit Agreement, dated May 21, 1998, among Dynatech Corporation, TTC Merger Co. LLC, the lenders named therein, Morgan Guaranty and Trust Company of New York, as administrative agent, Credit Suisse First Boston, as syndication agent, and The Chase Manhattan Bank, as documentation agent. 10.5 Guarantee and Collateral Agreement, dated as of May 21, 1998, among Dynatech Corporation, Telecommunications Techniques Co., LLC and certain of its subsidiaries and Morgan Guaranty and Trust Company of New York. 10.6 Form of Amended and Restated Employment Agreement with John F. Reno.* 10.7 Form of Amended and Restated Employment Agreement with Allan M. Kline.* 10.8 Form of Amended and Restated Employment Agreement with John R. Peeler.*
II-2
EXHIBIT NO. DESCRIPTION ------- ----------- 10.9 Form of Letter Agreement with John A. Mixon and Certain Other Officers.* 10.10 Form of Management Equity Agreement with Mr. Reno.* 10.11 Form of Management Equity Agreement with Messrs. Kline and Peeler.* 10.12 Form of Management Equity Agreement with Mr. Mixon and Certain Other Officers.* 10.13 Form of Nondisclosure, Noncompetition and Nonsolicitation Agreement.* 10.14 Indemnification Agreement, dated May 21, 1998, among Dynatech Corporation, Telecommunications Techniques Co., LLC, Clayton, Dubilier & Rice, Inc. and Clayton, Dubilier & Rice Fund V Limited Partnership. 10.15 Consulting Agreement, dated May 21, 1998, by and among Dynatech Corporation, Telecommunications Techniques Co., LLC and Clayton, Dubilier & Rice, Inc. 10.16 Tax Sharing Agreement, dated May 21, 1998 between Dynatech Corporation and Telecommunications Techniques Co., LLC. 10.17 Registration Rights Agreement, dated May 21, 1998, by and among Dynatech Corporation, Clayton, Dubilier and Rice Fund V Limited Partnership, Mr. Reno, the Suzanne D. Reno Trust and the John F. Reno Trust. 10.18 Assignment and Assumption Agreement, dated May 21, 1998, between Dynatech Corporation and Telecommunications Techniques Co., LLC. 10.19 Purchase Agreement, dated May 14, 1998, among Dynatech Corporation, TTC Merger Co. LLC, Credit Suisse First Boston Corporation and J.P. Morgan Securities Inc. 10.20 Purchase Agreement Supplement, dated May 21, 1998, between Dynatech Corporation, Telecommunications Techniques Co., LLC., Credit Suisse First Boston Corporation and J.P. Morgan Securities Inc. 10.21 Amendment No. 1, dated as of December 20, 1997, to the Shareholder Rights Agreement, dated as of February 16, 1989, as amended and restated as of March 12, 1990, between Dynatech Corporation and BankBoston, N.A., as Rights Agent. 10.22 Assumption Agreement, dated May 21, 1998, among Dynatech Corporation, TTC Merger Co. LLC, and Telecommunications Techniques Co., LLC and consented to by Morgan Guaranty Trust Company of New York, as administrative agent. 12 Statement re computations of ratios. 21 Schedule of Subsidiaries of Telecommunications Techniques Co., LLC. 23.1 Consent of PricewaterhouseCoopers LLP. 23.2 Consent of Debevoise & Plimpton (included in Exhibit 5).+ 24.1 Power of Attorney from John F. Reno. 24.2 Power of Attorney from Allan M. Kline. 24.3 Power of Attorney from John R. Peeler. 24.4 Power of Attorney from Joseph L. Rice, III. 24.5 Power of Attorney from Brian D. Finn. 24.6 Power of Attorney from Charles P. Pieper. 25 Statement of Eligibility of State Street Bank and Trust Company. 27.1 Financial Data Schedule for Fiscal Year Ended March 31, 1998.* 27.2 Financial Data Schedule for Quarter Ended December 31, 1997 Restated.* 27.3 Financial Data Schedule for Quarter Ended September 30, 1997 Restated.* 27.4 Financial Data Schedule for Quarter Ended June 30, 1997 Restated.* 27.5 Financial Data Schedule for Fiscal Year Ended March 31, 1997 Restated.* 27.6 Financial Data Schedule for Quarter Ended December 31, 1996 Restated.* 27.7 Financial Data Schedule for Quarter Ended September 30, 1996 Restated.*
II-3 27.8 Financial Data Schedule for Quarter Ended June 30, 1996 Restated.* 27.9 Financial Data Schedule for Fiscal Year Ended March 31, 1996 Restated.* 27.10 Financial Data Schedule for Quarter Ended December 31, 1995 Restated.* 27.11 Financial Data Schedule for Quarter Ended September 30, 1995 Restated.* 27.12 Financial Data Schedule for Quarter Ended June 30, 1995 Restated.* 99.1 Form of Letter of Transmittal for Tender of 9 3/4% Senior Subordinated Notes Due 2008 in exchange for registered 9 3/4% Senior Subordinated Notes Due 2008.+ 99.2 Form of Notice of Guaranteed Delivery for Tender of 9 3/4% Senior Subordinated Notes Due 2008 in exchange for registered 9 3/4% Senior Subordinated Notes Due 2008.+ 99.3 Instruction to Registered Holder and/or Book Entry Transfer Participant from Beneficial Owner for Tender of 9 3/4% Senior Subordinated Notes Due 2008 in exchange for registered 9 3/4% Senior Subordinated Notes Due 2008.+
- -------- * Incorporated by reference to Dynatech Annual Report on Form 10-K for the fiscal year ended March 31, 1998 (File No. 333-1-12657). ** Incorporated by reference to Dynatech's Registration Statement on Form S-4 (File No. 333-44933). + To be filed by amendment. (B) FINANCIAL STATEMENT SCHEDULES: Schedule II. Valuation and Qualifying Accounts. See page F-26. Schedules other than those listed above have been omitted because they are either not required or not applicable or because the required information has been included elsewhere in the financial statements or notes thereto. ITEM 22. UNDERTAKINGS The undersigned registrants hereby undertake: Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Securities Act") may be permitted to directors, officers and controlling persons of the registrants pursuant to the provisions described under item 20 or otherwise, the registrants have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrants of expenses incurred or paid by a director, officer or controlling person of the registrants in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrants will, unless in the opinion of their counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by them is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. II-4 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT ON FORM S-4 TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF BURLINGTON, COMMONWEALTH OF MASSACHUSETTS, ON AUGUST 7, 1998. Telecommunications Techniques Co., LLC By: Dynatech Corporation, as sole member By: /s/ John F. Reno -------------------------------- Name: John F. Reno Title: Chairman, President & CEO PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED. NAME TITLE DATE /s/ John F. Reno Director of Dynatech August 7, _________________________________ Corporation, sole member of 1998 JOHN F. RENO the Registrant /s/ Allan M. Kline Director of Dynatech August 7, _________________________________ Corporation, sole member of 1998 ALLAN M. KLINE the Registrant /s/ John R. Peeler Director of Dynatech August 7, _________________________________ Corporation, sole member of 1998 JOHN R. PEELER the Registrant /s/ Joseph L. Rice, III Director of Dynatech August 7, _________________________________ Corporation, sole member of 1998 JOSEPH L. RICE, III the Registrant /s/ Brian D. Finn Director of Dynatech August 7, _________________________________ Corporation, sole member of 1998 BRIAN D. FINN the Registrant /s/ Charles P. Pieper Director of Dynatech August 7, _________________________________ Corporation, sole member of 1998 CHARLES P. PIEPER the Registrant II-5 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT ON FORM S-4 TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF BURLINGTON, COMMONWEALTH OF MASSACHUSETTS, ON AUGUST 7, 1998. Dynatech Corporation By: /s/ John F. Reno -------------------------------- Name: John F. Reno Title: Chairman, President & CEO PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED. NAME TITLE DATE /s/ John F. Reno Chairman, President and August 7, _________________________________ Chief Executive Officer 1998 JOHN F. RENO (Principal Executive Officer), Director /s/ Allan M. Kline Corporate Vice President, August 7, _________________________________ Chief Financial Officer and 1998 ALLAN M. KLINE Treasurer (Principal Financial Officer), Director /s/ Robert W. Woodbury, Jr. Corporate Vice President, August 7, _________________________________ Controller (Principal 1998 ROBERT W. WOODBURY, JR. Accounting Officer) /s/ John R. Peeler Director August 7, _________________________________ 1998 JOHN R. PEELER /s/ Joseph L. Rice, III Director August 7, _________________________________ 1998 JOSEPH L. RICE, III /s/ Brian D. Finn Director August 7, _________________________________ 1998 BRIAN D. FINN /s/ Charles P. Pieper Director August 7, _________________________________ 1998 CHARLES P. PIEPER II-6 EX-3.1 2 CERTIFICATION OF FORMATION EXHIBIT 3.1 CONFORMED COPY -------------- CERTIFICATION OF FORMATION OF TELECOMMUNICATIONS TECHNIQUES CO., LLC This Certificate of Formation of Telecommunications Techniques Co., LLC, dated as of May 14, 1998, is being duly executed and filed by David M. Appel, as an authorized person, to form a limited liability company under the Delaware Limited Liability Company Act (6 Del.C. (S)18-101, et seq.) ------ -- --- FIRST. The name of the limited liability company formed hereby is ----- Telecommunications Techniques Co., LLC (the "Company"). SECOND. The address of the registered office of the Company in the ------ State of Delaware is c/o Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801. THIRD. The name and address of the registered agent for service of ----- process on the Company in the State of Delaware is c/o The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801. IN WITNESS WHEREOF, the undersigned has executed this Certificate of Formation as of the date first above written. /s/ David M. Appel ------------------ David M. Appel Authorized Person EX-3.2 3 LIABILITY COMPANY AGREEMENT EXHIBIT 3.2 CONFORMED COPY -------------- LIABILITY COMPANY AGREEMENT OF TELECOMMUNICATIONS TECHNIQUES CO., LLC -------------------------------------- This Limited Liability Company Agreement (this "Agreement") of Telecommunications Techniques Co., LLC, is entered into by Dynatech USA, Inc., a Massachusetts corporation, as sole member (the "Member"). The Member hereby forms a limited liability company pursuant to and in accordance with the Delaware Limited Liability Company Act (6 Del.C. (S) 18-101, ------ et seq.), as amended from time to time (the "Act"), and hereby agrees as - -- --- follows: 1. Name. The name of the limited liability company formed hereby is ---- Telecommunications Techniques Co. LLC (the "Company"). 2. Purpose. The Company is formed for the object and purpose of, ------- and the nature of the business to be conducted and promoted by the Company is, (a) engaging in any lawful act or activity, including without limitation - -- commercial acts or activities, for which limited liability companies may be formed under the Act and (b) engaging in any and all activities necessary or - incidental to the foregoing. 3. Registered Office. The address of the registered office of the ----------------- Company in the State of Delaware is c/o Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801. 4. Registered Agent. The name and address of the registered agent ---------------- of the Company for service of process on the Company in the State of Delaware is c/o The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801. 5. Member. The name and the mailing address of the Member are as ------ follows: Name Address ---- ------- Dynatech USA, Inc. 20410 Observation Drive Germantown, MD 20876 (301) 353-1550 6. Powers. The business and affairs of the Company shall be managed ------ by the Member. The Member shall have the power to do any and all acts necessary or convenient to or for the furtherance of the purposes described herein, including (a) the opening of bank accounts and (b) all other powers, statutory - - or otherwise, possessed by members under the laws of the State of Delaware. The Member is authorized to execute and deliver any instrument or document on behalf of the Company. David M. Appel is hereby designated as an authorized person, within the meaning of the Act, to execute, deliver and file the certificate of formation of the Company (and any amendments and/or restatements thereof) and any other certificates (and any amendments and/or restatements thereof) necessary for the Company to qualify to do business in a jurisdiction in which the Company may wish to conduct business. 7. Dissolution. The Company shall dissolve, and its affairs shall ----------- be wound up upon the first to occur of the following: (a) the written consent of - the Member, (b) the resignation, expulsion, bankruptcy or dissolution of the - Member or (c) the entry of a decree of judicial dissolution under Section 18-802 - of the Act. 8. Capital Contributions. The Member agrees to contribute $10.00 in --------------------- cash, and no other property, to the Company. 9. Additional Contributions. The Member shall have the right, but ------------------------ not the obligation, to make additional capital contributions to the Company in the form of cash, services or otherwise, and upon such contribution the Member's capital account balance shall be adjusted accordingly. 10. Distributions. Distributions shall be made to the Member at the ------------- times and in the aggregate amounts determined by the Member. Notwithstanding anything to the contrary contained herein, the Company, and the Member on behalf of the Company, shall not make a distribution to the Member on account of the interest of the Member in the Company if such distribution would violate (S)18- 607 of the Act or any other applicable law. 2 11. Assignments. The Member shall be permitted to transfer all, and ----------- no less than all, of its interest in the Company to any person or entity that assumes all of the Member's obligations under this Agreement. 12. Resignation. The Member may only resign from the Company if it ----------- has transferred all of its interest in the Company to another person or entity. 13. Admission of Additional Members. No additional members may be ------------------------------- admitted to the Company. 14. Liability of Member. Except as otherwise provided by the Act or ------------------- herein, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and the Member shall not be obligated personally for any such debt, obligation or lia bility of the Company solely by reason of being a member of the Company. 15. Other Business. The Member and any person or entity affiliated -------------- with the Member may engage in or possess an interest in other business ventures (unconnected with the Company) of every kind and description, independently or with others. The Company shall have no rights in or to such independent ventures or the income or profits therefrom by virtue of this Agreement. 16. Exculpation. (a) Neither the Member nor any of its respective ----------- affiliates, directors, advisory directors, members, officers or employees (each, a "Covered Person"), shall be liable to the Company or the Member for any loss, -------------- liability, damage or claim incurred by reason of any act or omission performed or omitted by such Covered Person in good faith on behalf of the Company. Whenever in this Agreement a Covered Person is permitted or required to make decisions in good faith, the Covered Person shall act under such standard and shall not be subject to any other or different standard imposed by this Agreement or any relevant provisions of law or in equity or otherwise. (b) A Covered Person shall be fully protected in relying in good faith upon the records of the Company and upon such information, opinions, reports or statements presented to the Company by any person or entity as to matters the Covered Person reasonably believes are within such person's or entity's professional or expert competence. 17. Fiduciary Duty. To the extent that, at law or in equity, a -------------- Covered Person has duties (including fiduciary duties) and liabilities relating thereto to the Company 3 or to the Member, a Covered Person acting under this Agreement shall not be liable to the Company or to the Member for such Covered Person's good faith reliance on the provisions of this Agreement. The provisions of this Agreement, to the extent that they restrict the duties and liabilities of a Covered Person otherwise existing at law or in equity, are agreed by the parties hereto to replace such other duties and liabilities of such Covered Person. 18. Indemnification. To the fullest extent permitted by --------------- applicable law, a Covered Person shall be entitled to indemnification from the Company for any costs and expenses (including attorneys' fees and disbursements), loss, liability, damage or claim incurred by such Covered Person by reason of any act or omission performed or omitted by such Covered Person in good faith on behalf of the Company. 19. Expenses. To the fullest extent permitted by applicable -------- law, expenses (including attorneys' fees and disbursements) incurred by a Covered Person in defending any claim, demand, action, suit or proceeding shall, from time to time, be advanced by the Company prior to the final disposition of such claim, demand, action, suit or proceeding, subject to recapture by the Company following a later determination that such Covered Person was not entitled to be indemnified hereunder. 20. No Third-Party Beneficiaries. Except as provided in Sections 16 ---------------------------- through 19 with respect to the exculpation and indemnification of Covered Persons, nothing in this Agreement shall confer any rights upon any person or entity other than the parties hereto and their successors and permitted assigns. 21. Binding Effect. This Agreement shall be binding upon and -------------- inure to the benefit of all parties hereto and their successors and permitted assigns. 22. Severability. The invalidity or unenforceability of any ------------ particular provision of this Agreement shall not affect the other provisions hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provision was omitted. 23. Entire Agreement. The Agreement constitutes the entire agreement ---------------- between the parties hereto with respect to the subject matter hereof, and supersedes all prior understandings or agreements between the parties. 24. Amendment. This Agreement may not be modified, altered, --------- supplemented or amended except pursuant to a written agreement executed and delivered by the Member. 4 25. Certificates. (a) General. The Member shall be entitled to a ------------ ------- certificate representing its interest in the Company. The certificate shall contain a legend with respect to any restrictions on transfer. (b) Application of Article 8 of the Uniform Commercial Code. The ------------------------------------------------------- Company hereby irrevocably elects that all interests in the Company shall be securities governed by Article 8 of the Uniform Commercial Code in effect in the State of Delaware. Each certificate evidencing an interest in the Company shall bear the following legend "This Certificate evidences a membership interest in Telecommunications Techniques Co., LLC and shall be a security for purposes of Article 8 of the Uniform Commercial Code in effect in the State of Delaware." No change to this provision shall be effective until all outstanding certificates have been surrendered for cancellation and nay new certificates thereafter issued shall not bear the foregoing legend. 26. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND ------------- CONSTRUED UNDER, THE LAW OF THE STATE OF DELAWARE, WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES THEREOF. IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, has duly executed this Agreement as of May 14, 1998. DYNATECH USA, INC. By:/s/ John F. Reno ---------------- Name: John F. Reno Title: President 5 EX-4.1 4 INDENTURE DATED MAY 21,1998 Exhibit 4.1 DYNATECH CORPORATION, as an Initial Issuer and, after the assumption of obligations under this Indenture and the Notes by Telecommunications Techniques Co., LLC, as Parent Guarantor and TTC MERGER CO., LLC (a company to be merged into TELECOMMUNICATIONS TECHNIQUES CO., LLC, which will succeed to and assume all obligations under this Indenture and the Notes), as an Initial Issuer and STATE STREET BANK AND TRUST COMPANY, as Trustee -------------- INDENTURE Dated as of May 21, 1998 -------------- 9 3/4% Senior Subordinated Notes Due 2008 TABLE OF CONTENTS ================= ARTICLE 1 DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION ----------------------
Page ----- Section 101. Definitions 1 Section 102. Other Definitions 37 Section 103. Rules of Construction 38 Section 104. Incorporation by Reference of TIA 39 Section 105. Conflict with TIA 39 Section 106. Compliance Certificates and Opinions 39 Section 107. Form of Documents Delivered to Trustee 40 Section 108. Acts of Noteholders; Record Dates 41 Section 109. Notices, etc., to Trustee and Company 43 Section 110. Notices to Holders; Waiver 44 Section 111. Effect of Headings and Table of Contents 44 Section 112. Successors and Assigns 44 Section 113. Separability Clause 44 Section 114. Benefits of Indenture 44 Section 115. GOVERNING LAW 45 Section 116. Legal Holidays 45 Section 117. No Personal Liability of Directors, Officers, Employees, Incorporators and Stockholders 45 Section 118. Exhibits and Schedules 45 Section 119. Counterparts 45 Section 120. Holding as Agent for TTC Merger Co. 45 ARTICLE 2 NOTE FORMS ---------- Section 201. Forms Generally 46 Section 202. Form of Trustee's Certificate of Authentication 48 Section 203. Restrictive and Global Note Legends 49
i ARTICLE 3 THE NOTES ---------
Page ---- Section 301. Title and Terms 51 Section 302. Denominations 52 Section 303. Execution, Authentication and Delivery and Dating 52 Section 304. Temporary Notes 53 Section 305. Registration, Registration of Transfer and Exchange 53 Section 306. Mutilated, Destroyed, Lost and Stolen Notes 54 Section 307. Payment of Interest Rights Preserved 55 Section 308. Persons Deemed Owners 56 Section 309. Cancellation 56 Section 310. Computation of Interest 56 Section 311. CUSIP Numbers 57 Section 312. Book-Entry Provisions for Global Notes 57 Section 313. Special Transfer Provisions 59 Section 314. Payment of Additional Interest 62 ARTICLE 4 COVENANTS --------- Section 401. Payment of Principal, Premium and Interest 62 Section 402. Maintenance of Office or Agency 62 Section 403. Money for Payments To Be Held in Trust 63 Section 404. SEC Reports 64 Section 405. Statement as to Default 65 Section 406. Limitation on Indebtedness 65 Section 407. Limitation on Layering 68 Section 408. Limitation on Restricted Payments 69 Section 409. Limitation on Restrictions on Distributions from Restricted Subsidiaries 73 Section 410. Limitation on Sales of Assets and Subsidiary Stock 75 Section 411. Limitation on Transactions with Affiliates 78 Section 412. Limitation on Liens 79 Section 413. Future Note Guarantors 80 Section 414. Purchase of Notes Upon a Change in Control 80
ii ARTICLE 5 SUCCESSOR COMPANY -----------------
Page ---- Section 501. When the Company May Merge, etc. 81 Section 502. Successor Company Substituted 82 ARTICLE 6 REMEDIES -------- Section 601. Events of Default 83 Section 602. Acceleration of Maturity; Rescission and Annulment 85 Section 603. Other Remedies; Collection Suit by Trustee 86 Section 604. Trustee May File Proofs of Claim 86 Section 605. Trustee May Enforce Claims Without Possession of Notes 87 Section 606. Application of Money Collected 87 Section 607. Limitation on Suits 87 Section 608. Unconditional Right of Holders to Receive Principal, Premium and Interest 88 Section 609. Restoration of Rights and Remedies 88 Section 610. Rights and Remedies Cumulative 88 Section 611. Delay or Omission Not Waiver 89 Section 612. Control by Holders 89 Section 613. Waiver of Past Defaults 89 Section 614. Undertaking for Costs 90 Section 615. Waiver of Stay, Extension or Usury Laws 90 ARTICLE 7 THE TRUSTEE ----------- Section 701. Certain Duties and Responsibilities 91 Section 702. Notice of Defaults 92 Section 703. Certain Rights of Trustee 92 Section 704. Not Responsible for Recitals or Issuance of Notes 93 Section 705. May Hold Notes 93 Section 706. Money Held in Trust 93 Section 707. Compensation and Reimbursement 94 Section 708. Conflicting Interests 94 Section 709. Corporate Trustee Required; Eligibility 94 Section 710. Resignation and Removal; Appointment of Successor 95
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Page ---- Section 711. Acceptance of Appointment by Successor 96 Section 712. Merger, Conversion, Consolidation or Succession to Business 96 Section 713. Preferential Collection of Claims Against the Company 97 Section 714. Appointment of Authenticating Agent 97 ARTICLE 8 HOLDERS' LISTS AND REPORTS BY TRUSTEE AND THE COMPANY ------------------------------ Section 801. The Company to Furnish Trustee Names and Addresses of Holders 97 Section 802. Preservation of Information; Communications to Holders 98 Section 803. Reports by Trustee 98 ARTICLE 9 AMENDMENT, SUPPLEMENT OR WAIVER ------------------------------- Section 901. Without Consent of Holders 98 Section 902. With Consent of Holders 99 Section 903. Execution of Amendments, Supplements or Waivers 101 Section 904. Revocation and Effect of Consents 101 Section 905. Conformity with TIA 102 Section 906. Notation on or Exchange of Notes 102 ARTICLE 10 REDEMPTION OF NOTES ------------------- Section 1001. Right of Redemption 102 Section 1002. Applicability of Article 103 Section 1003. Election to Redeem; Notice to Trustee 103 Section 1004. Selection by Trustee of Notes to Be Redeemed 104 Section 1005. Notice of Redemption 104 Section 1006. Deposit of Redemption Price 105 Section 1007. Notes Payable on Redemption Date 105 Section 1008. Notes Redeemed in Part 106
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Page ---- ARTICLE 11 SATISFACTION AND DISCHARGE -------------------------- Section 1101. Satisfaction and Discharge of Indenture 106 Section 1102. Application of Trust Money 107 ARTICLE 12 DEFEASANCE OR COVENANT DEFEASANCE --------------------------------- Section 1201. The Company's Option to Elect Defeasance or Covenant Defeasance 108 Section 1202. Defeasance and Discharge 108 Section 1203. Covenant Defeasance 108 Section 1204. Conditions to Defeasance or Covenant Defeasance 109 Section 1205. Deposited Money and U.S. Government Obligations To Be Held in Trust; Other Miscellaneous Provisions 110 Section 1206. Reinstatement 111 Section 1207. Repayment to the Company 111 ARTICLE 13 PARENT GUARANTEE AND NOTE GUARANTEES ------------------------------------ Section 1301. Guarantees Generally 112 Section 1302. Continuing Guarantees 114 Section 1303. Release of Parent Guarantee and Note Guarantees 114 Section 1304. Agreement to Subordinate 115 Section 1305. Waiver of Subrogation 116 Section 1306. Notation Not Required 116 Section 1307. Successors and Assigns of the Holding or Note Guarantors 116 Section 1308. Execution and Delivery of Note Guarantees 116 Section 1309. Notices 117 ARTICLE 14 SUBORDINATION ------------- Section 1401. Agreement To Subordinate 117 Section 1402. Liquidation, Dissolution, Bankruptcy 117 Section 1403. Default on Senior Indebtedness 117 Section 1404. Acceleration of Payment of Notes 118
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Page ---- Section 1405. When a Distribution Must Be Paid Over 119 Section 1406. Subrogation 119 Section 1407. Relative Rights 119 Section 1408. Subordination May Not Be Impaired by Issuers 119 Section 1409. Rights of Trustee and Paying Agent 119 Section 1410. Distribution or Notice to Representative 120 Section 1411. Article 14 Not To Prevent Events of Default or Limit Right To Accelerate 120 Section 1412. Trust Moneys Not Subordinated 120 Section 1413. Trustee Entitled To Rely 120 Section 1414. Trustee To Effectuate Subordination 121 Section 1415. Trustee Not Fiduciary for Holders of Senior Indebtedness 121 Section 1416. Reliance by Holders of Senior Indebtedness on Subordination Provisions 121 Section 1417. Trustee's Compensation Not Prejudiced 122 ARTICLE 15 SUBORDINATION OF PARENT GUARANTEE AND NOTE GUARANTEES ----------------------------------------------------- Section 1501. Agreement To Subordinate 122 Section 1502. Liquidation, Dissolution, Bankruptcy 122 Section 1503. Default on Obligor Senior Indebtedness 123 Section 1504. Acceleration of Payment of Notes 124 Section 1505. When a Distribution Must Be Paid Over 125 Section 1506. Subrogation 125 Section 1507. Relative Rights 125 Section 1508. Subordination May Not Be Impaired by Guarantors 125 Section 1509. Rights of Trustee and Paying Agent 126 Section 1510. Distribution or Notice to Representative 126 Section 1511. Article 15 Not To Prevent Events of Default or Limit Right To Accelerate 126 Section 1512. Trust Moneys Not Subordinated 127 Section 1513. Trustee Entitled To Rely 127 Section 1514. Trustee To Effectuate Subordination 127 Section 1515. Trustee Not Fiduciary for Holders of Obligor Senior Indebtedness 127 Section 1516. Reliance by Holders of Senior Indebtedness on Subordination Provisions 128 Section 1517. Trustee's Compensation Not Prejudiced 128
vi Exhibit A Form of Note Exhibit B Form of Supplemental Indenture Exhibit C Form of Regulation S Certificate Exhibit D Form of Certificate of Beneficial Ownership Exhibit E Form of First Supplemental Indenture vii Certain Sections of this Indenture relating to Sections 310 through 318 inclusive of the Trust Indenture Act of 1939: Trust Indenture Act Section Indenture Section - --------------------------- ---------------- (S) 310(a)(1).............. 709 (a)(2).............. 709 (a)(3).............. Not Applicable (a)(4).............. Not Applicable (b)................. 708 (S) 311(a)................. 713 (b)................. 713 (b)(2).............. 803 803 (S) 312(a)................ 801 802 (b)................ 802 (c)................ 802 (S) 313(a)................ 803 (b)................ 803 (c)................ 803 803 (d)................ 803 (S) 314(a)................ 404 (a)(4)............. 102 405 (b)................. Not Applicable (c)(1).............. 102 (c)(2).............. 102 (c)(3).............. Not Applicable (d)................. Not Applicable (e)................. 102 viii Trust Indenture Act Section Indenture Section - --------------------------- ---------------- (S) 315(a)............... 701 (b)............... 702 803 (c)............... 701 (d)............... 701 (d)(1)............ 701 (d)(2)............ 701 (d)(3)............ 701 (e)............... 614 (S) 316(a)............... 101 612 (a)(1)(A)......... 602 612 (a)(1)(B )........ 613 (a)(2)............ Not Applicable (b)............... 608 (c)............... 104 (S) 317(a)(1)............ 603 (a)(2)............ 604 (b)............... 403 (S) 318(a)............... 107 ______________________ This cross-reference table shall not for any purpose be deemed to be part of this Indenture. ix INDENTURE, dated as of May 21, 1998 (as amended, supplemented or otherwise modified from time to time, the "Indenture"), among Dynatech Corporation, a --------- corporation organized under the laws of the Commonwealth of Massachusetts ("Holding") and TTC Merger Co. LLC, a limited liability company organized under - --------- the laws of the State of Delaware ("TTC Merger Co." and together with Holding -------------- the "Initial Issuers"), and State Street Bank and Trust Company, a Massachusetts --------------- trust company, as trustee (the "Trustee"). ------- RECITALS OF THE INITIAL ISSUERS AND HOLDING The Initial Issuers have duly authorized the execution and delivery of this Indenture to provide for the issuance of the Notes. Holding has duly authorized the execution and delivery of this Indenture to provide for its guarantee of the Notes, as provided in this Indenture. Holding has received good and valuable consideration for its execution and delivery of this Indenture and its guarantee of the Notes. All things necessary to make the Original Notes, when executed and delivered by the Initial Issuers and authenticated and delivered by the Trustee hereunder and duly issued by the Initial Issuers, the valid obligation of the Initial Issuers, and to make this Indenture a valid agreement of each of the Initial Issuers and Holding as of the date hereof, in accordance with the terms of the Original Notes and this Indenture, have been done. NOW, THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Notes by the Holders thereof, it is mutually agreed, for the equal and ratable benefit of all Holders of the Notes, as follows: ARTICLE 1 DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION ---------------------------------------- Section 101. Definitions. ----------- "Additional Assets" means (i) any property or assets that replace the ----------------- - property or assets that are the subject of an Asset Disposition; (ii) any -- property or assets (other than Indebtedness and Capital Stock) to be used by the Company or a Restricted Subsidiary in a Related Business; (iii) the Capital --- Stock of a Person that is engaged in a Related Business and becomes a Restricted Subsidiary as a result of the acquisition of such Capital Stock by the Company or another Restricted Subsidiary; or (iv) Capital Stock of -- any Person that at such time is a Restricted Subsidiary, acquired from a third party. "Additional Notes" means any notes issued under this Indenture in addition ---------------- to the Original Notes (other than any Notes issued pursuant to Section 304, 305, ----------- --- 306, 312(c), 312(d) or 1008). - --- ----- ------ ---- "Affiliate" of any specified Person means any other Person, directly or --------- indirectly, controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any Person means the power to direct the - -------- management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. - ------------ ---------- "all or substantially all" has the meaning given to such phrase in the ------------------------ Revised Model Business Corporation Act and commentary thereto. "Applicable Premium" means, with respect to a Note at any Redemption Date, ------------------ the greater of (i) 1.0% of the principal amount of such Note and (ii) the excess - -- of (A) the present value at such Redemption Date of (1) the redemption price of - - such Note on May 15, 2003 (such redemption price being that described in paragraph (a) of Section 1001) plus (2) all required remaining scheduled ------------ - interest payments due on such Note through May 15, 2003, computed using a discount rate equal to the Treasury Rate plus 50 basis points, over (B) the - principal amount of such Note on such Redemption Date. Calculation of the Applicable Premium will be made by the Company or on behalf of the Company by such Person as the Company shall designate, provided, that such calculation -------- shall not be a duty or obligation of the Trustee. "Asset Disposition" means any sale, lease, transfer or other disposition of ----------------- shares of Capital Stock of a Restricted Subsidiary (other than directors' qualifying shares, or (in the case of a Foreign Subsidiary) to the extent required by applicable law), property or other assets (each referred to for the purposes of this definition as a "disposition") by the Company or any of its ----------- Restricted Subsidiaries (including any disposition by means of a merger, consolidation or similar transaction), other than (i) a disposition to the - Company or a Restricted Subsidiary, (ii) a disposition in the ordinary course of -- business, (iii) the sale or discount (with or without recourse, and on customary --- or commercially reasonable terms) of accounts receivable or notes receivable arising in the ordinary course of business, or the conversion or exchange of accounts receivable for notes receivable, (iv) any Restricted Payment -- Transactions, (v) a disposition that is governed by the provisions described - under Article 5 hereof, (vi) any --------- -- 2 Financing Disposition, (vii) any "fee in lieu" or other disposition of assets to --- any governmental authority or agency that continue in use by the Company or any Restricted Subsidiary, so long as the Company or any Restricted Subsidiary may obtain title to such assets upon reasonable notice by paying a nominal fee, (viii) any exchange of like property pursuant to Section 1031 (or any successor - ----- section) of the Code, (ix) any financing transaction with respect to property -- built or acquired by the Company or any Restricted Subsidiary after the Issue Date, including without limitation any sale/leaseback transaction or asset securitization, (x) any disposition arising from foreclosure, condemnation or - similar action with respect to any property or other assets, (xi) any -- disposition of Capital Stock, Indebtedness or other securities of an Unrestricted Subsidiary, (xii) a disposition of Capital Stock of a Restricted --- Subsidiary pursuant to an agreement or other obligation with or to a Person (other than the Company or a Restricted Subsidiary) from whom such Restricted Subsidiary was acquired, or from whom such Restricted Subsidiary acquired its business and assets (having been newly formed in connection with such acquisition), entered into in connection with such acquisition, (xiii) a ---- disposition of not more than 5% of the outstanding Capital Stock of a Foreign Subsidiary that has been approved by the Board of Directors, or (xiv) any --- disposition or series of related dispositions for aggregate consideration not to exceed $2.5 million. "Authenticating Agent" means any Person authorized by the Trustee pursuant -------------------- to Section 714 to act on behalf of the Trustee to authenticate Notes of one or ----------- more series. "Average Life" means, as of the date of determination, with respect to any ------------ Indebtedness or Preferred Stock, the quotient obtained by dividing (i) the sum - of the products of the numbers of years from the date of determination to the dates of each successive scheduled principal payment of such Indebtedness or redemption or similar payment with respect to such Preferred Stock multiplied by the amount of such payment by (ii) the sum of all such payments. -- "Bank Indebtedness" means any and all amounts, whether outstanding on the ----------------- Issue Date or thereafter incurred, payable under or in respect of the Senior Credit Facility, including without limitation principal, premium (if any), interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Company or any Restricted Subsidiary whether or not a claim for post-filing interest is allowed in such proceedings), fees, charges, expenses, reimbursement obligations, guarantees, other monetary obligations of any nature and all other amounts payable thereunder or in respect thereof. "Board of Directors" means the board of directors or other governing body ------------------ of the Company or, if the Company is owned or managed by a single entity, the board of 3 directors or other governing body of such entity, or, in either case, any committee thereof duly authorized to act on behalf of such board or governing body. "Borrowing Base" means the sum (determined as of the end of the most -------------- recently ended fiscal quarter for which consolidated financial statements of the Company are available) of (1) 60% of Inventory of the Company and its Restricted - Subsidiaries and (2) 80% of Receivables of the Company and its Restricted - Subsidiaries. "Business Day" means a day other than a Saturday, Sunday or other day on ------------ which commercial banking institutions are authorized or required by law to close in New York City. "Capital Stock" of any Person means any and all shares, interests, rights ------------- to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including any Preferred Stock, but excluding any debt securities convertible into such equity. "Capitalized Lease Obligation" means an obligation that is required to be ---------------------------- classified and accounted for as a capitalized lease for financial reporting purposes in accordance with GAAP. The Stated Maturity of any Capitalized Lease Obligation shall be the date of the last payment of rent or any other amount due under the related lease. "Cash Equivalents" means any of the following: (a) securities issued or ---------------- - fully guaranteed or insured by the United States Government or any agency or instrumentality thereof, (b) time deposits, certificates of deposit or bankers' - acceptances of (i) any lender under the Senior Credit Agreement or (ii) any - -- commercial bank having capital and surplus in excess of $500,000,000 and the commercial paper of the holding company of which is rated at least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody's (or if at such time neither is issuing ratings, then a comparable rating of another nationally recognized rating agency), (c) commercial paper rated at - least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody's (or if at such time neither is issuing ratings, then a comparable rating of another nationally recognized rating agency) and (d) - investments in money market funds complying with the risk limiting conditions of Rule 2a-7 or any successor rule of the SEC under the Investment Company Act of 1940, as amended. "CDR" means Clayton, Dubilier & Rice, Inc. --- "CDR Fund V" means Clayton, Dubilier & Rice Fund V Limited Partnership, a ---------- Cayman Islands exempted limited partnership, and any successor in interest thereto. 4 "Cedel" means Cedel Bank, societe anonyme. ----- "Change of Control" means if: ----------------- (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than one or more Permitted Holders or Holding, is or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the total voting power of the Voting Stock of the Company, provided that so -------- long as the Company is a Subsidiary of Holding, no Person shall be deemed to be or become a "beneficial owner" of more than 50% of the total voting power of the Voting Stock of the Company unless such Person shall be or become a "beneficial owner" of more than 50% of the total voting power of the Voting Stock of Holding; (ii) the Company merges or consolidates with or into, or sells or transfers (in one or a series of related transactions) all or substantially all of the assets of the Company and its Restricted Subsidiaries to, another Person (other than one or more Permitted Holders) and any "person" (as defined in clause (i) above), other than one or more Permitted Holders or Holding, is or becomes the "beneficial owner" (as so defined), directly or indirectly, of more than 50% of the total voting power of the Voting Stock of the surviving Person in such merger or consolidation, or the transferee Person in such sale or transfer of assets, as the case may be, provided that so long as such surviving or transferee Person is a -------- Subsidiary of a parent Person, no Person shall be deemed to be or become a "beneficial owner" of more than 50% of the total voting power of the Voting Stock of such surviving or transferee Person unless such Person shall be or become a "beneficial owner" of more than 50% of the total voting power of the Voting Stock of such parent Person; or (iii) during any period of two consecutive years (during which period the Company has been a party to this Indenture), individuals who at the beginning of such period were members of the board of directors of the Company (together with any new members thereof whose election by such board of directors or whose nomination for election by holders of Capital Stock of the Company was approved by one or more Permitted Holders or by a vote of a majority of the members of such board of directors then still in office who were either members thereof at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of such board of directors then in office. "Change of Control Triggering Event" means the occurrence after the ---------------------------------- Issue Date of both (a) a Change of Control and (b) the failure of the Notes to - - have, on the 30th day 5 after such Change of Control, a rating of at least "BBB-" (or equivalent successor rating) by S&P and a rating of at least "Baa3" (or equivalent successor rating) by Moody's. "Code" means the Internal Revenue Code of 1986, as amended. ---- "Company" means, until the consummation of the Second Merger, Holding ------- and TTC Merger Co., and from and after such consummation, Telecommunications Techniques Co., LLC, a Delaware limited liability company, and any successor in interest thereto. "Company Request," "Company Order" and "Company Consent" mean, --------------- ------------- --------------- respectively, a written request, order or consent signed in the name of the Company by an Officer of the Company. "Consolidated Coverage Ratio" as of any date of determination means --------------------------- the ratio of (i) the aggregate amount of Consolidated EBITDA of the Company and - its Restricted Subsidiaries for the period of the most recent four consecutive fiscal quarters ending prior to the date of such determination for which consolidated financial statements of the Company are available to (ii) -- Consolidated Interest Expense for such four fiscal quarters (in each case, determined, for each fiscal quarter (or portion thereof) of the four fiscal quarters ending prior to the Issue Date, on a pro forma basis to give effect to the Recapitalization as if it had occurred at the beginning of such four-quarter period); provided, that -------- (1) if since the beginning of such period the Company or any Restricted Subsidiary has Incurred any Indebtedness that remains outstanding on such date of determination or if the transaction giving rise to the need to calculate the Consolidated Coverage Ratio is an Incurrence of Indebtedness, Consolidated EBITDA and Con solidated Interest Expense for such period shall be calculated after giving effect on a pro forma basis to such Indebtedness as if such Indebtedness had been Incurred on the first day of such period (except that in making such computation, the amount of Indebtedness under any revolving credit facility outstanding on the date of such calculation shall be computed based on (A) the average - daily balance of such In debtedness during such four fiscal quarters or such shorter period for which such facility was outstanding or (B) if such - facility was created after the end of such four fiscal quarters, the average daily balance of such Indebtedness during the period from the date of creation of such facility to the date of such calculation), (2) if since the beginning of such period the Company or any Restricted Subsidiary has repaid, repurchased, redeemed, defeased or otherwise acquired, retired or discharged any Indebtedness (each, a "Discharge") or if the transaction giving rise to the need to calculate the ---------- Consolidated Coverage Ratio involves a Discharge of In- 6 debtedness (in each case other than Indebtedness Incurred under any revolving credit facility unless such Indebtedness has been permanently repaid), Consolidated EBITDA and Consolidated Interest Expense for such period shall be calculated after giving effect on a pro forma basis to such --- ----- Discharge of such Indebtedness, including with the proceeds of such new Indebtedness, as if such Discharge had occurred on the first day of such period, (3) if since the beginning of such period the Company or any Restricted Subsidiary shall have disposed of any company, any business or any group of assets constituting an operating unit of a business (any such disposition, a "Sale"), the Consolidated EBITDA for such period shall be ---- reduced by an amount equal to the Consolidated EBITDA (if positive) attributable to the assets that are the subject of such Sale for such period or increased by an amount equal to the Consolidated EBITDA (if negative) attributable thereto for such period and Consolidated Interest Expense for such period shall be reduced by an amount equal to (A) the - Consolidated Interest Expense attributable to any Indebtedness of the Company or any Restricted Subsidiary repaid, repurchased, redeemed, defeased or otherwise acquired, retired or discharged with respect to the Company and its continuing Restricted Subsidiaries in connection with such Sale for such period (including but not limited to through the assumption of such Indebtedness by another Person) plus (B) if the Capital Stock of ---- - any Restricted Subsidiary is sold, the Consolidated Interest Expense for such period attributable to the Indebtedness of such Restricted Subsidiary to the extent the Company and its con tinuing Restricted Subsidiaries are no longer liable for such Indebtedness after such Sale, (4) if since the beginning of such period the Company or any Restricted Subsidiary (by merger, consolidation or otherwise) shall have made an Investment in any Person that thereby becomes a Restricted Subsidiary, or otherwise acquired any company, any business or any group of assets constituting an operating unit of a business, including any such Investment or acquisition occurring in connection with a transaction causing a calculation to be made hereunder (any such Investment or acquisition, a "Purchase"), Consolidated EBITDA and Consolidated Interest -------- Expense for such period shall be calculated after giving pro forma effect thereto (including the Incurrence of any related Indebtedness) as if such Purchase occurred on the first day of such period, and (5) if since the beginning of such period any Person became a Restricted Subsidiary or was merged or consolidated with or into the Company or any Restricted Subsidiary, and since the beginning of such period such Person shall have Discharged any Indebtedness or made any Sale or Purchase that would have required an adjustment 7 pursuant to clause (2), (3) or (4) above if made by the Company or a Restricted Subsidiary during such period, Consolidated EBITDA and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto as if such Discharge, Sale or Purchase occurred on the first day of such period. For purposes of this definition, whenever pro forma effect is to be given to any Sale, Purchase or other transaction, or the amount of income or earnings relating thereto and the amount of Consolidated Interest Expense associated with any Indebtedness Incurred or repaid, repurchased, redeemed, defeased or otherwise acquired, retired or discharged in connection therewith, the pro forma calculations in respect thereof (including without limitation in respect of anticipated cost savings or synergies relating to any such Sale, Purchase or other transaction) shall be as determined in good faith by a responsible financial or accounting Officer of the Company. If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest expense on such Indebtedness shall be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period (taking into account any Interest Rate Agreement applicable to such Indebtedness). If any Indebtedness bears, at the option of the Company or a Restricted Subsidiary, a rate of interest based on a prime or similar rate, a eurocurrency interbank offered rate or other fixed or floating rate, and such Indebtedness is being given pro forma effect, the interest expense on such Indebtedness shall be calculated by applying such optional rate as the Company or such Restricted Subsidiary may designate. If any Indebtedness that is being given pro forma effect was Incurred under a revolving credit facility, the interest expense on such Indebtedness shall be computed based upon the average daily balance of such Indebtedness during the applicable period. Interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate determined in good faith by a responsible financial or accounting officer of the Company to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with GAAP. "Consolidated EBITDA" means, for any period, the Consolidated Net ------------------- Income for such period, plus the following to the extent deducted in calculating such Consolidated Net Income: (i) provision for all taxes (whether or not paid, - estimated or accrued) based on income, profits or capital, (ii) Consolidated -- Interest Expense and any Receivables Fees, (iii) depreciation, amortization --- (including but not limited to amortization of goodwill and intangibles and amortization and write-off of financing costs) and all other non-cash charges or non-cash losses, (iv) any expenses or charges related to any Equity Offering, -- Investment or Indebtedness permitted by this Indenture (whether or not consummated or incurred) and (v) the amount of any minority interest expense. - "Consolidated Interest Expense" means, for any period, (i) the total ----------------------------- - interest expense of the Company and its Restricted Subsidiaries to the extent deducted in calculating Consolidated Net Income, net of any interest income of the Company and its Restricted 8 Subsidiaries, including without limitation any such interest expense consisting of (a) interest expense attributable to Capitalized Lease Obligations, (b) - - amortization of debt discount, (c) interest in respect of Indebtedness of any - other Person that has been Guaranteed by the Company or any Restricted Subsidiary, but only to the extent that such interest is actually paid by the Company or any Restricted Subsidiary, (d) non-cash interest expense, (e) the - - interest portion of any deferred payment obligation, and (f) commissions, - discounts and other fees and charges owed with respect to letters of credit and bankers' acceptance financing, plus (ii) Preferred Stock dividends paid in cash -- in respect of Disqualified Stock of the Company held by Persons other than the Company or a Restricted Subsidiary and minus (iii) to the extent otherwise --- included in such interest expense referred to in clause (i) above, Receivables Fees and amortization or write-off of financing costs, in each case under clauses (i) through (iii) as determined on a Consolidated basis in accordance with GAAP; provided, that gross interest expense shall be determined after -------- giving effect to any net payments made or received by the Company and its Restricted Subsidiaries with respect to Interest Rate Agreements. "Consolidated Net Income" means, for any period, the net income (loss) ----------------------- of the Company and its Restricted Subsidiaries, determined on a consolidated basis in accordance with GAAP and before any reduction in respect of Preferred Stock dividends; provided, that there shall not be included in such Consolidated -------- Net Income: (i) any net income (loss) of any Person if such Person is not a Restricted Subsidiary, except that (A) subject to the limitations contained - in clause (iv) below, the Company's equity in the net income of any such Person for such period shall be included in such Consolidated Net Income up to the aggregate amount actually distributed by such Person during such period to the Company or a Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution to a Restricted Subsidiary, to the limitations contained in clause (iii) below) and (B) the Company's equity in the net loss of such Person shall be - included to the extent of the aggregate Investment of the Company or any of its Restricted Subsidiaries in such Person, (ii) any net income (loss) of any Person acquired by the Company or a Restricted Subsidiary in a pooling of interests transaction for any period prior to the date of such acquisition, (iii) any net income (loss) of any Restricted Subsidiary that is not a Note Guarantor if such Restricted Subsidiary is subject to restrictions, directly or indirectly, on the payment of dividends or the making of similar distributions by such Restricted Subsidiary, directly or indirectly, to the Company by operation of the terms of such Restricted Subsidiary's charter or any agreement, instrument, judgment, decree, order, 9 statute or governmental rule or regulation applicable to such Restricted Subsidiary or its stockholders (other than (x) restrictions that have been - waived or otherwise released, (y) restrictions pursuant to the Notes or - this Indenture and (z) restrictions in effect on the Issue Date with - respect to a Restricted Subsidiary and other restrictions with respect to such Restricted Subsidiary that taken as a whole are not materially less favorable to the Noteholders than such restrictions in effect on the Issue Date), except that (A) subject to the limitations contained in clause (iv) - below, the Company's equity in the net income of any such Restricted Subsidiary for such period shall be included in such Consolidated Net Income up to the aggregate amount of any dividend or distribution that was or that could have been made by such Restricted Subsidiary during such period to the Company or another Restricted Subsidiary (subject, in the case of a dividend that could have been made to another Restricted Subsidiary, to the limitation contained in this clause) and (B) the net - loss of such Restricted Subsidiary shall be included to the extent of the aggregate Investment of the Company or any of its other Restricted Subsidiaries in such Restricted Subsidiary, (iv) any gain or loss realized upon the sale or other disposition of any asset of the Company or any Restricted Subsidiary (including pursuant to any sale/leaseback transaction) that is not sold or otherwise disposed of in the ordinary course of business (as determined in good faith by the Board of Directors), (v) any item classified as an extraordinary, unusual or nonrecurring gain, loss or charge (including without limitation (a) any compensation - expense for stock options that will be cashed out, converted, exchanged or otherwise retired in connection with the Recapitalization, (b) any charge - or expense incurred for employee bonuses in connection with the Recapitalization, and (c) fees, expenses and charges associated with the - Recapitalization or any acquisition, merger or consolidation after the Issue Date), (vi) the cumulative effect of a change in accounting principles, (vii) all deferred financing costs written off and premiums paid in connection with any early extinguishment of Indebtedness, (viii) any unrealized gains or losses in respect of Currency Agreements, (ix) any unrealized foreign currency transaction gains or losses in respect of Indebtedness of any Person denominated in a currency other than the functional currency of such Person, and 10 (x) any non-cash compensation charge arising from any grant of stock, stock options or other equity-based awards. In the case of any unusual or nonrecurring gain, loss or charge not included in Consolidated Net Income pursuant to clause (v) above in any determination thereof, the Company will deliver an Officer's Certificate to the Trustee promptly after the date on which Consolidated Net Income is so determined, setting forth the nature and amount of such unusual or nonrecurring gain, loss or charge. "Consolidated Total Assets" means, as of any date of determination, ------------------------- the total assets shown on the consolidated balance sheet of the Company and its Restricted Subsidiaries as of the most recent date for which such a balance sheet is available, determined on a consolidated basis in accordance with GAAP (and, in the case of any determination relating to any Incurrence of Indebtedness or any Investment, on a pro forma basis including any property or assets being acquired in connection therewith), provided that for purposes of -------- paragraph (b) of Section 406 and the definition of "Permitted Investment," ----------- Consolidated Total Assets shall not be less than $285.3 million. "Consolidation" means the consolidation of the accounts of each of the ------------- Restricted Subsidiaries with those of the Company in accordance with GAAP; provided that "Consolidation" will not include consolidation of the accounts of - -------- any Unrestricted Subsidiary, but the interest of the Company or any Restricted Subsidiary in any Unrestricted Subsidiary will be accounted for as an investment. The term "Consolidated" has a correlative meaning. "Corporate Trust Office" means the office of the Trustee in the ---------------------- Borough of Manhattan, the City of New York, at which at any particular time its corporate trust business shall be administered, which office on the Issue Date is located at 61 Broadway, 15th Floor, New York, New York 10006. "Currency Agreement" means, in respect of a Person, any foreign ------------------ exchange contract, currency swap agreement or other similar agreement or arrangements (including derivative agreements or arrangements), as to which such Person is a party or a beneficiary. "Default" means any event or condition that is, or after notice or ------- passage of time or both would be, an Event of Default. "Depositary" means The Depository Trust Company, its nominees and ---------- successors. 11 "Designated Senior Indebtedness" means (i) the Bank Indebtedness and ------------------------------ - (ii) any other Senior Indebtedness that, at the date of determination, has an - --- aggregate principal amount equal to or under which, at the date of determination, the holders thereof are committed to lend up to, at least $10.0 million and is specifically designated by the Company in an agreement or instrument evidencing or governing such Senior Indebtedness as "Designated Senior Indebtedness" for purposes of this Indenture. "Disinterested Director" means, with respect to any Affiliate ---------------------- Transaction, a member of the Board of Directors having no material direct or indirect financial interest in or with respect to such Affiliate Transaction. A member of the Board of Directors shall not be deemed to have such a financial interest by reason of such member's holding Capital Stock of the Company or Holding or any options, warrants or other rights in respect of such Capital Stock. "Disqualified Stock" means, with respect to any Person, any Capital ------------------ Stock (other than Management Stock) that by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable or exercisable) or upon the happening of any event (other than following the occurrence of a Change of Control or other similar event described under such terms as a "change of control," or an Asset Disposition) (i) matures or is - mandatorily redeemable pursuant to a sinking fund obligation or otherwise, (ii) -- is convertible or exchangeable for Indebtedness or Disqualified Stock or (iii) --- is redeemable at the option of the holder thereof (other than following the occurrence of a Change of Control or other similar event described under such terms as a "change of control," or an Asset Disposition), in whole or in part, in each case on or prior to the final Stated Maturity of the Notes. "Domestic Subsidiary" means any Restricted Subsidiary of the Company ------------------- other than a Foreign Subsidiary. "Equity Offering" means a sale of Capital Stock (other than --------------- Disqualified Stock) (x) that is a sale of Capital Stock of the Company, or (y) - - proceeds of which in an amount equal to or exceeding the Redemption Amount are contributed to the Company or any of its Restricted Subsidiaries. "Euroclear" means Morgan Guaranty Trust Company of New York, Brussels --------- Office, as operator of the Euroclear System. "Exchange Act" means the Securities Exchange Act of 1934, as amended. ------------ "Exchange Notes" means the Company's 9 3/4% Senior Subordinated Notes -------------- Due 2008, containing terms substantially identical to the Initial Notes or any Initial Additional 12 Notes (except that (i) such Exchange Notes shall not contain terms with respect - to transfer restrictions and shall be registered under the Securities Act, and (ii) certain provisions relating to an increase in the stated rate of interest -- thereon shall be eliminated), that are issued and exchanged for (a) the Initial - Notes, as provided for in a registration rights agreement relating to such Initial Notes and this Indenture, or (b) such Initial Additional Notes as may be - provided in any registration rights agreement relating to such Additional Notes and this Indenture (including any amendment or supplement hereto). "Excluded Contribution" means Net Cash Proceeds, or the fair value, as --------------------- determined in good faith by the Board of Directors, of property or assets, received by the Company as capital contributions to the Company after the Issue Date or from the issuance or sale (other than to a Restricted Subsidiary) of Capital Stock (other than Disqualified Stock) of the Company, in each case to the extent designated as an Excluded Contribution pursuant to an Officer's Certificate of the Company and not previously included in the calculation set forth in subparagraph (a)(3)(B)(x) of Section 408 for purposes of determining ----------- whether a Restricted Payment may be made. "Financing Disposition" means any sale, transfer, conveyance or other --------------------- disposition of property or assets by the Company or any Subsidiary thereof to any Receivables Entity, or by any Receivables Subsidiary, in each case in connection with the Incurrence by a Receivables Entity of Indebtedness, or obligations to make payments to the obligor on Indebtedness, which may be secured by a Lien in respect of such property or assets. "First Supplemental Indenture" means the First Supplemental Indenture, ---------------------------- to be entered into substantially in the form attached hereto as Exhibit E. --------- "Foreign Subsidiary" means (a) any Restricted Subsidiary of the ------------------ - Company that is not organized under the laws of the United States of America or any state thereof or the District of Columbia and (b) any Restricted Subsidiary - of the Company that has no material assets other than securities of one or more Foreign Subsidiaries, and other assets relating to an ownership interest in any such securities or Subsidiaries. "GAAP" means generally accepted accounting principles in the United ---- States of America as in effect on the Issue Date (for purposes of the definitions of the terms "Consolidated Coverage Ratio," "Consolidated EBITDA," "Consolidated Interest Expense," "Consolidated Net Income" and "Consolidated Total Assets," all defined terms in this Indenture to the extent used in or relating to any of the foregoing definitions, and all ratios and computations based on any of the foregoing definitions) and as in effect from time to time (for all other purposes of this Indenture), including those set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public 13 Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as approved by a significant segment of the accounting profession. All ratios and computations based on GAAP contained in this Indenture shall be computed in conformity with GAAP. "Guarantee" means any obligation, contingent or otherwise, of any --------- Person directly or indirectly guaranteeing any Indebtedness or other obligation of any other Person; provided that the term "Guarantee" shall not include -------- endorsements for collection or deposit in the ordinary course of business. The term "Guarantee" used as a verb has a corresponding meaning. "Guarantor Designated Senior Indebtedness" means, with respect to any ---------------------------------------- Guarantor, (i) the Indebtedness of such Guarantor in respect of Bank - Indebtedness and (ii) any other Obligor Senior Indebtedness of such Guarantor -- that, at the date of determination, has an aggregate principal amount equal to or under which, at the date of determination, the holders thereof are committed to lend up to, at least $10.0 million and is specifically designated by such Guarantor in an agreement or instrument evidencing or governing such Obligor Senior Indebtedness as "Guarantor Designated Senior Indebtedness" for purposes of this Indenture. "Guarantor Senior Indebtedness" means, with respect to any Note ----------------------------- Guarantor, the following obligations, whether outstanding on the date of this Indenture or thereafter issued, without duplication: (i) any Guarantee of Bank - Indebtedness by such Note Guarantor and all other Guarantees by such Note Guarantor of Senior Indebtedness of the Company or Guarantor Senior Indebtedness of any other Note Guarantor; (ii) all obligations in respect of any Receivables -- Financing; and (iii) all obligations consisting of the principal of and premium, --- if any, and accrued and unpaid interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Note Guarantor regardless of whether post-filing interest is allowed in such proceeding) on, and fees and other amounts owing in respect of, all other Indebtedness of the Note Guarantor, unless, in the instrument creating or evidencing the same or pursuant to which the same is outstanding, it is expressly provided that the obligations in respect of such Indebtedness are not senior in right of payment to the obligations of such Note Guarantor under its Note Guarantee; provided, however, that Guarantor Senior Indebtedness shall not -------- ------- include (1) any obligations of such Note Guarantor to the Company or any other - Subsidiary of the Company, (2) any liability for Federal, state, local, foreign - or other taxes owed or owing by such Note Guarantor, (3) any accounts payable or - other liability to trade creditors arising in the ordinary course of business (including Guarantees thereof or instruments evidencing such liabilities), (4) - any Indebtedness of such Note Guarantor (or Guarantee by such Note Guarantor of Indebtedness) that is expressly subordinated in right of payment to any other Indebtedness of such Note Guarantor (or Guarantee by such Note Guarantor of Indebtedness), (5) any Capital Stock of such Note - 14 Guarantor or (6) that portion of any Indebtedness of such Note Guarantor that is - Incurred by such Note Guarantor in violation of Section 406 (but no such ----------- violation shall be deemed to exist for purposes of this clause (6) if any holder of such Indebtedness or such holder's representative shall have received an Officer's Certificate to the effect that such Incurrence of such Indebtedness does not (or that the Incurrence by such Note Guarantor of the entire committed amount thereof at the date on which the initial borrowing thereunder is made would not) violate such covenant). If any Guarantor Senior Indebtedness is disallowed, avoided or subordinated pursuant to the provisions of Section 548 of Title 11 of the United States Code or any applicable state fraudulent conveyance law, such Guarantor Senior Indebtedness nevertheless will constitute Guarantor Senior Indebtedness. "Guarantor Senior Subordinated Indebtedness" means, with respect to a ------------------------------------------ Note Guarantor, (i) the obligations of such Note Guarantor under its Note - Guarantee and (ii) any other Indebtedness of such Note Guarantor that ranks pari -- ---- passu in right of payment with the obligations of such Note Guarantor under its - ----- Note Guarantee. "Guarantor Subordinated Obligations" means, with respect to a Note ---------------------------------- Guarantor, any Indebtedness of such Note Guarantor (whether outstanding on the Issue Date or thereafter Incurred) that is expressly subordinated in right of payment to the obligations of such Note Guarantor under the Note Guarantee pursuant to a written agreement. "Hedging Obligations" of any Person means the obligations of such ------------------- Person pursuant to any Interest Rate Agreement or Currency Agreement. "Holder" or "Noteholder" means the Person in whose name a Note is ------ ---------- registered in the Note Register. "Holding" means Dynatech Corporation, a Massachusetts corporation, and ------- any successor in interest thereto. "Holding Expenses" means (i) costs (including all professional fees ---------------- - and expenses) incurred by Holding to comply with its reporting obligations under federal or state laws or under this Indenture, including any reports filed with respect to the Securities Act, Exchange Act or the respective rules and regulations promulgated thereunder, (ii) indemnification obligations of Holding -- owing to directors, officers, employees or other Persons under its charter or by-laws or pursuant to written agreements with any such Person, (iii) fees and --- expenses payable by Holding in connection with the Transactions, (iv) other -- operational expenses of Holding incurred in the ordinary course of business, and (v) expenses incurred by Holding in connection with any public offering of - Capital Stock or Indebtedness (x) where the net proceeds of such offering are - intended to be received by or contributed or loaned to the 15 Company or a Restricted Subsidiary, or (y) in a prorated amount of such expenses - in pro portion to the amount of such net proceeds intended to be so received, contributed or loaned, or (z) otherwise on an interim basis prior to completion - of such offering so long as Holding shall cause the amount of such expenses to be repaid to the Company or the relevant Restricted Subsidiary out of the proceeds of such offering promptly if completed. "Incur" means issue, assume, enter into any Guarantee of, incur or ----- otherwise become liable for; provided, however, that any Indebtedness or Capital -------- ------- Stock of a Person existing at the time such Person becomes a Subsidiary (whether by merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred by such Subsidiary at the time it becomes a Subsidiary. Accrual of interest, the accretion of accreted value and the payment of interest in the form of additional Indebtedness will not be deemed to be an Incurrence of Indebtedness. Any Indebtedness issued at a discount (including Indebtedness on which interest is payable through the issuance of additional Indebtedness) shall be deemed Incurred at the time of original issuance of the Indebtedness at the initial accreted amount thereof. "Indebtedness" means, with respect to any Person on any date of ------------ determination (without duplication): (i) the principal of indebtedness of such Person for borrowed money, (ii) the principal of obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all reimbursement obligations of such Person in respect of letters of credit or other similar instruments (the amount of such obligations being equal at any time to the aggregate then undrawn and unexpired amount of such letters of credit or other instruments plus the aggregate amount of drawings thereunder that have not then been reimbursed), (iv) all obligations of such Person to pay the deferred and unpaid purchase price of property (except Trade Payables), which purchase price is due more than one year after the date of placing such property in final service or taking final delivery and title thereto, (v) all Capitalized Lease Obligations of such Person, (vi) the redemption, repayment or other repurchase amount of such Person with respect to any Disqualified Stock of such Person or (if such Person is a Subsidiary of the Company other than a Note Guarantor) any Preferred Stock of such Subsidiary, but 16 excluding, in each case, any accrued dividends (the amount of such obligation to be equal at any time to the maximum fixed involuntary redemption, repayment or re purchase price for such Capital Stock, or if less (or if such Capital Stock has no such fixed price), to the involuntary redemption, repayment or repurchase price therefor calculated in accordance with the terms thereof as if then redeemed, repaid or re purchased, and if such price is based upon or measured by the fair market value of such Capital Stock, such fair market value shall be as determined in good faith by the Board of Directors or the board of directors or other governing body of the issuer of such Capital Stock), (vii) all Indebtedness of other Persons secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person; provided, that the amount of Indebtedness of such Person shall be -------- the lesser of (A) the fair market value of such asset at such date of - determination (as determined in good faith by the Company) and (B) the - amount of such Indebtedness of such other Persons, (viii) all Indebtedness of other Persons to the extent Guaranteed by such Person, and (ix) to the extent not otherwise included in this definition, net Hedging Obligations of such Person (the amount of any such obligation to be equal at any time to the termination value of such agreement or arrangement giving rise to such Hedging Obligation that would be payable by such Person at such time). The amount of Indebtedness of any Person at any date shall be determined as set forth above or otherwise provided in this Indenture, or otherwise shall equal the amount thereof that would appear on a balance sheet of such Person (excluding any notes thereto) prepared in accordance with GAAP. "Initial Additional Notes" means Additional Notes issued in an ------------------------ offering not registered under the Securities Act. "Initial Notes" means the Company's 9 3/4% Senior Subordinated Notes ------------- Due 2008, issued on the Issue Date (and any Notes issued in respect thereof pursuant to Section 304, 305, 306, 312(c), 312(d) or 1008). ------- --- --- --- ------ ------ ---- "Interest Payment Date" means, when used with respect to any Note and --------------------- any installment of interest thereon, the date specified in such Note as the fixed date on which such installment of interest is due and payable, as set forth in such Note. 17 "Interest Rate Agreement" means, with respect to any Person, any ----------------------- interest rate protection agreement, interest rate future agreement, interest rate option agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedge agreement or other similar agreement or arrangement (including derivative agreements or arrangements), as to which such Person is party or a beneficiary. "Inventory" means goods held for sale or lease by a Person in the --------- ordinary course of business, net of any reserve for goods that have been segregated by such Person to be returned to the applicable vendor for credit, as determined in accordance with GAAP. "Investment" in any Person by any other Person means any direct or ---------- indirect advance, loan or other extension of credit (other than to customers, suppliers, directors, officers or employees of any Person in the ordinary course of business) or capital contribution (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others) to, or any purchase or acquisition of Capital Stock, Indebtedness or other similar instruments issued by, such Person. For purposes of the definition of "Unrestricted Subsidiary" and Section 408, (i) "Investment" shall ----------- - include the portion (proportionate to the Company's equity interest in such Subsidiary) of the fair market value of the net assets of any Subsidiary of the Company at the time that such Subsidiary is designated an Unrestricted Subsidiary, provided that upon a redesignation of such Subsidiary as a -------- Restricted Subsidiary, the Company shall be deemed to continue to have a permanent "Investment" in an Unrestricted Subsidiary in an amount (if positive) equal to (x) the Company's "Investment" in such Subsidiary at the time of such - redesignation less (y) the portion (proportionate to the Company's equity - interest in such Subsidiary) of the fair market value of the net assets of such Subsidiary at the time of such redesignation, (ii) any property transferred to -- or from an Unrestricted Subsidiary shall be valued at its fair market value at the time of such transfer, and (iii) in each case under clause (i) or (ii) --- above, fair market value shall be as determined in good faith by the Board of Directors. Guarantees shall not be deemed to be Investments. The amount of any Investment outstanding at any time shall be the original cost of such Investment, reduced (at the Company's option) by any dividend, distribution, interest payment, return of capital, repayment or other amount or value received in respect of such Investment; provided, that to the extent that the amount of -------- Restricted Payments outstanding at any time is so reduced by any portion of any such amount or value that would otherwise be included in the calculation of Consolidated Net Income, such portion of such amount or value shall not be so included for purposes of calculating the amount of Restricted Payments that may be made pursuant to paragraph (a) of Section 408. ----------- "Investors" means CDR Fund V and John F. Reno or his family members or --------- relatives, or trusts for the benefit of any of the foregoing, or any of their heirs, executors, successors and legal representatives. 18 "Issue Date" means the first date on which Initial Notes are issued. ---------- "Lien" means any mortgage, pledge, security interest, encumbrance, ---- lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof). "Management Advances" means (1) loans or advances made to directors, ------------------- - officers or employees of Holding, the Company or any Restricted Subsidiary (x) - in respect of travel, entertainment or moving-related expenses incurred in the ordinary course of business, (y) in respect of moving-related expenses incurred - in connection with any closing or consolidation of any facility, or (z) in the - ordinary course of business and (in the case of this clause (z)) not exceeding $2.5 million in the aggregate outstanding at any time, (2) promissory notes of - Management Investors acquired in connection with the issuance of Management Stock to such Management Investors, (3) Management Guarantees, or (4) other - - Guarantees of borrowings by Management Investors in connection with the purchase of Management Stock, which Guarantees are permitted under Section 406. ----------- "Management Agreements" means, collectively, the Consulting Agreement --------------------- and the Indemnification Agreement, each dated as of May 21, 1998, each between the Company and CDR (and its permitted successors and assigns thereunder), as each may be amended, supplemented, waived or otherwise modified from time to time in accordance with the terms thereof and of this Indenture. "Management Guarantees" means guarantees (x) of up to an aggregate --------------------- - principal amount of $20.0 million of borrowings by Management Investors in connection with their purchase of Management Stock or (y) made on behalf of, or - in respect of loans or advances made to, directors, officers or employees of Holding, the Company or any Restricted Subsidiary (1) in respect of travel, - entertainment and moving-related expenses incurred in the ordinary course of business, or (2) in the ordinary course of business and (in the case of this - clause (2)) not exceeding $2.5 million in the aggregate outstanding at any time. "Management Investors" means the officers, directors, employees and -------------------- other members of the management of Holding, the Company or any of their respective Subsidiaries, or family members or relatives thereof, or trusts or partnerships for the benefit of any of the foregoing, or any of their heirs, executors, successors and legal representatives, who at any date beneficially own or have the right to acquire, directly or indirectly, Capital Stock of the Company or Holding. 19 "Management Stock" means Capital Stock of the Company or Holding ---------------- (including any options, warrants or other rights in respect thereof) held by any of the Management Investors. "Merger" means the merger of MergerCo with and into Holding, with ------ Holding continuing as the surviving corporation, on the date of the Recapitalization. "MergerCo" means CDRD Merger Corporation, a Delaware corporation. -------- "Moody's" means Moody's Investors Service, Inc., and its successors. ------- "Net Available Cash" from an Asset Disposition means cash payments ------------------ received (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise, but only as and when received, but excluding any other consideration received in the form of assumption by the acquiring person of Indebtedness or other obligations relating to the properties or assets that are the subject of such Asset Disposition or received in any other non-cash form) therefrom, in each case net of (i) all - legal, title and recording tax expenses, commissions and other fees and expenses incurred, and all Federal, state, provincial, foreign and local taxes required to be paid or accrued as a liability under GAAP, as a consequence of such Asset Disposition (including as a consequence of any transfer of funds in connection with the application thereof in accordance with the covenant described in Section 410), (ii) all payments made, and all installment payments required to - ----------- -- be made, on any Indebtedness that is secured by any assets subject to such Asset Disposition, in accordance with the terms of any Lien upon such assets, or that must by its terms, or in order to obtain a necessary consent to such Asset Disposition, or by applicable law, be repaid out of the proceeds from such Asset Disposition, (iii) all distributions and other payments required to be made to --- minority interest holders in Subsidiaries or joint ventures as a result of such Asset Disposition, or to any other Person (other than the Company or a Restricted Subsidiary) owning a beneficial interest in the assets disposed of in such Asset Disposition and (iv) any liabilities or obligations associated with -- the assets disposed of in such Asset Disposition and retained by the Company or any Restricted Subsidiary after such Asset Disposition, including without limitation pension and other post-employment benefit liabilities, liabilities related to environmental matters, and liabilities relating to any indemnification obligations associated with such Asset Disposition. "Net Cash Proceeds," with respect to any issuance or sale of any ----------------- securities of the Company or any Subsidiary by the Company or any Subsidiary, or any capital contribution, means the cash proceeds of such issuance, sale or contribution net of attorneys' fees, accountants' fees, underwriters' or placement agents' fees, discounts or commissions and 20 brokerage, consultant and other fees actually incurred in connection with such issuance, sale or contribution and net of taxes paid or payable as a result thereof. "Non-U.S. Person" means a Person who is not a U.S. person, as defined --------------- in Regulation S. "Note Guarantee" means any guarantee that may from time to time be -------------- entered into by a Restricted Subsidiary of the Company pursuant to Section 413. ----------- "Note Guarantor" means any Restricted Subsidiary of the Company that -------------- enters into a Note Guarantee. "Notes" means the Initial Notes, any Additional Notes, and the ----- Exchange Notes. "Obligor Designated Senior Indebtedness" means (a) with respect to the -------------------------------------- - Parent Guarantor, Parent Designated Senior Indebtedness and (b) with respect to - any Note Guarantor, Guarantor Designated Senior Indebtedness. "Obligor Senior Indebtedness" means (a) with respect to the Parent --------------------------- - Guarantor, Parent Senior Indebtedness and (b) with respect to any Note - Guarantor, Guarantor Senior Indebtedness. "Officer" means, with respect to the Company or any other obligor upon ------- the Notes, the Chairman of the Board, the President, the Chief Executive Officer, the Chief Financial Officer, any Vice President, the Controller, the Treasurer or the Secretary (a) of such Person or (b) if such Person is owned or - - managed by a single entity, of such entity or (c) any other individual - designated as an "Officer" for the purposes of this Indenture by the Board of Directors. "Officer's Certificate" means, with respect to the Company or any --------------------- other obligor upon the Notes, a certificate signed by one Officer of such Person. "Opinion of Counsel" means a written opinion from legal counsel who is ------------------ reasonably acceptable to the Trustee. The counsel may be an employee of or counsel to Holding, the Company or the Trustee. "Original Notes" means the Initial Notes and any Exchange Notes issued -------------- in exchange therefor. 21 "Outstanding" when used with respect to Notes means, as of the date of ----------- determination, all Notes theretofore authenticated and delivered under this Indenture, except: ------ (i) Notes theretofore cancelled by the Trustee or delivered to the Trustee for cancellation; (ii) Notes for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent in trust for the Holders of such Notes, provided that, if such Notes are to -------- be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor reasonably satisfactory to the Trustee has been made; and (iii) Notes in exchange for or in lieu of which other Notes have been authenticated and delivered pursuant to this Indenture. A Note does not cease to be Outstanding because the Company or any Affiliate of the Company holds the Note, provided that in determining whether -------- the Holders of the requisite amount of Outstanding Notes have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Notes owned by the Company or any Affiliate of the Company shall be disregarded and deemed not to be Outstanding, except that, for the purpose of determining whether the Trustee shall be protected in relying on any such request, demand, authorization, direction, notice, consent or waiver, only Notes which the Trustee actually knows are so owned shall be so disregarded. Notes so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the reasonable satisfaction of the Trustee the pledgee's right to act with respect to such Notes and that the pledgee is not the Company or an Affiliate of the Company. "Parent Guarantee" means the Guarantee executed and delivered by ---------------- Holding as described in Section 1301(a). --------------- "Parent Senior Indebtedness" means, with respect to Holding, the -------------------------- following obligations, whether outstanding on the date of this Indenture or thereafter issued, without duplication: (i) any Guarantee of Bank Indebtedness - by Holding and all other Guarantees by Holding of Senior Indebtedness of the Company or Guarantor Senior Indebtedness of any Note Guarantor; (ii) all -- obligations in respect of any Receivables Financing; and (iii) all obligations --- consisting of the principal of and premium, if any, and accrued and unpaid interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to Holding regardless of whether post- filing interest is allowed in such proceeding) on, and fees and other amounts owing in respect of, all other Indebtedness of Holding, unless, in the instrument creating or evidencing the same or pursuant to which the same is outstanding, it 22 is expressly provided that the obligations in respect of such Indebtedness are not senior in right of payment to the obligations of Holding under the Parent Guarantee. "Parent Senior Subordinated Indebtedness" means (i) the obligations of --------------------------------------- - Holding under the Parent Guarantee and (ii) any other Indebtedness of Holding -- that ranks pari passu in right of payment with the obligations of Holding under ---- ----- the Parent Guarantee. "Parent Subordinated Obligations" means any Indebtedness of Holding ------------------------------- (whether outstanding on the Issue Date or thereafter Incurred) that is expressly subordinated in right of payment to the obligations of Holding under the Parent Guarantee pursuant to a written agreement. "Paying Agent" means any Person authorized by the Company to pay the ------------ principal of (and premium, if any) or interest on any Notes on behalf of the Company. "Permitted Holder" means any of the following: (i) any of the ---------------- - Investors, Management Investors, CDR and their respective Affiliates; (ii) any -- investment fund or vehicle managed, sponsored or advised by CDR; (iii) any --- limited or general partners of, or other investors in, any of the Investors and their respective Affiliates, or any such investment fund or vehicle; and (iv) -- any Person acting in the capacity of an underwriter in connection with a public or private offering of Capital Stock of Holding or the Company. "Permitted Investment" means an Investment by the Company or any -------------------- Restricted Subsidiary in, or consisting of, any of the following: (i) a Restricted Subsidiary, the Company, or a Person that will, upon the making of such Investment, become a Restricted Subsidiary; (ii) another Person if as a result of such Investment such other Person is merged or consolidated with or into, or transfers or conveys all or substantially all its assets to, or is liquidated into, the Company or a Restricted Subsidiary; (iii) Temporary Cash Investments or Cash Equivalents; (iv) receivables owing to the Company or any Restricted Subsidiary, if created or acquired in the ordinary course of business; (v) any securities or other Investments received as consideration in, or retained in connection with, sales or other dispositions of property or assets, including Asset Dispositions made in compliance with Section 410; ----------- 23 (vi) securities or other Investments received in settlement of debts created in the ordinary course of business and owing to the Company or any Restricted Subsidiary, or as a result of foreclosure, perfection or enforcement of any Lien, or in satisfaction of judgments, including in connection with any bankruptcy proceeding or other reorganization of another Person; (vii) Investments in existence or made pursuant to legally binding written commitments in existence on the Issue Date; (viii) Currency Agreements, Interest Rate Agreements and related Hedging Obligations, which obligations are Incurred in compliance with Section 406; ----------- (ix) pledges or deposits (x) with respect to leases or utilities - provided to third parties in the ordinary course of business or (y) - otherwise described in the definition of "Permitted Liens" or made in connection with Liens permitted under Section 412; ----------- (x) any Investment in a joint venture or similar entity that is not a Restricted Subsidiary, or in any Related Business, in an aggregate amount outstanding at any time not to exceed 7% of Consolidated Total Assets; (xi) (1) Investments in any Receivables Subsidiary, or in connection - with a Financing Disposition by or to any Receivables Entity, including Investments of funds held in accounts permitted or required by the arrangements governing such Financing Disposition or any related Indebtedness, or (2) any promissory note issued by the Company or Holding, - provided that if Holding receives cash from the relevant Receivables Entity in exchange for such note, an equal cash amount is contributed by Holding to the Company; (xii) bonds secured by assets leased to and operated by the Company or any Restricted Subsidiary that were issued in connection with the financing of such assets so long as the Company or any Restricted Subsidiary may obtain title to such assets at any time by paying a nominal fee, canceling such bonds and terminating the transaction; (xiii) Notes; (xiv) any Investment to the extent made using Capital Stock of the Company (other than Disqualified Stock), or Capital Stock of Holding, as consideration; (xv) Management Advances; and 24 (xvi) other Investments in an aggregate amount outstanding at any time not to exceed 10% of Consolidated Total Assets. "Permitted Liens" means: --------------- (a) Liens for taxes, assessments or other governmental charges not yet delinquent or the nonpayment of which in the aggregate would not reasonably be expected to have a material adverse effect on the Company and its Restricted Subsidiaries, or that are being contested in good faith and by appropriate proceedings if adequate reserves with respect thereto are maintained on the books of the Company or a Subsidiary thereof, as the case may be, in accordance with GAAP; (b) carriers', warehousemen's, mechanics', landlords', materialmen's, repairmen's or other like Liens arising in the ordinary course of business in respect of obligations that are not overdue for a period of more than 60 days, or that are bonded or that are being contested in good faith and by appropriate proceedings; (c) pledges, deposits or Liens in connection with workers' compensation, unemployment insurance and other social security and other similar legislation or other insurance-related obligations (including, without limitation, pledges or deposits securing liability to insurance carriers under insurance or self-insurance arrangements); (d) pledges, deposits or Liens to secure the performance of bids, tenders, trade, government or other contracts (other than for borrowed money), obligations for utilities, leases, licenses, statutory obligations, completion guarantees, surety, judgment, appeal or performance bonds, other similar bonds, instruments or obligations, and other obligations of a like nature incurred in the ordinary course of business; (e) easements (including reciprocal easement agreements), rights-of- way, building, zoning and similar restrictions, utility agreements, covenants, reservations, restrictions, encroachments, changes, and other similar encumbrances or title defects incurred, or leases or subleases granted to others, in the ordinary course of business, which do not in the aggregate materially interfere with the ordinary conduct of the business of the Company and its Subsidiaries, taken as a whole; (f) Liens existing on, or provided for under written arrangements existing on, the Issue Date, or (in the case of any such Liens securing Indebtedness of the Company or any of its Subsidiaries existing or arising under written arrangements existing on the Issue Date) securing any Refinancing Indebtedness in respect of such Indebtedness so long as the Lien securing such Refinancing Indebtedness is limited to all or part of the 25 same property or assets (plus improvements, accessions, proceeds or dividends or distributions in respect thereof) that secured (or under such written arrangements could secure) the original Indebtedness; (g) (i) mortgages, liens, security interests, restrictions, - encumbrances or any other matters of record that have been placed by any developer, landlord or other third party on property over which the Company or any Restricted Subsidiary of the Company has easement rights or on any leased property and subordination or similar agreements relating thereto and (ii) any condemnation or eminent domain proceedings affecting any real -- property; (h) Liens securing Hedging Obligations, Purchase Money Obligations or Capitalized Lease Obligations Incurred in compliance with Section 406; ----------- (i) Liens arising out of judgments, decrees, orders or awards in respect of which the Company shall in good faith be prosecuting an appeal or proceedings for review, which appeal or proceedings shall not have been finally terminated, or if the period within which such appeal or proceedings may be initiated shall not have expired; (j) leases, subleases, licenses or sublicenses to third parties; (k) Liens securing (1) Indebtedness Incurred in compliance with - clause (b)(i), (b)(iv), (b)(v), (b)(vii), (b)(viii)(E) or (b)(x), of Section 406, or clause (b)(iii) thereof (other than Refinancing ----------- Indebtedness Incurred in respect of Indebtedness described in paragraph (a) thereof), (2) Bank Indebtedness, (3) commercial bank Indebtedness, (4) - - - Indebtedness of any Restricted Subsidiary that is not a Note Guarantor, (5) - the Notes or (6) Indebtedness or other obligations of any Receivables - Entity; (l) Liens existing on property or assets of a Person at the time such Person becomes a Subsidiary of the Company (or at the time the Company or a Restricted Subsidiary acquires such property or assets); provided, however, -------- ------- that such Liens are not created in connection with, or in contemplation of, such other Person becoming such a Subsidiary (or such acquisition of such property or assets), and that such Liens are limited to all or part of the same property or assets (plus improvements, accessions, proceeds or dividends or distributions in respect thereof) that secured (or, under the written arrangements under which such Liens arose, could secure) the obligations to which such Liens relate; (m) Liens on Capital Stock or other securities of an Unrestricted Subsidiary that secure Indebtedness or other obligations of such Unrestricted Subsidiary; 26 (n) any encumbrance or restriction (including, but not limited to, put and call agreements) with respect to Capital Stock of any joint venture or similar arrangement pursuant to any joint venture or similar agreement; and (o) Liens securing Refinancing Indebtedness Incurred in respect of any Indebtedness secured by, or securing any refinancing, refunding, extension, renewal or replacement (in whole or in part) of any other obligation secured by, any other Permitted Liens, provided that any such new Lien is limited to all or part of the same property or assets (plus improvements, accessions, proceeds or dividends or distributions in respect thereof) that secured (or, under the written arrangements under which the original Lien arose, could secure) the obligations to which such Liens relate. "Person" means any individual, corporation, partnership, joint ------ venture, association, joint-stock company, limited liability company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity. "Place of Payment" means a city or any political subdivision thereof ---------------- referred to in Article 3 and initially designated under Section 402. --------- ----------- "Predecessor Notes" of any particular Note means every previous Note ----------------- evidencing all or a portion of the same debt as that evidenced by such particular Note; and, for the purposes of this definition, any Note authenticated and delivered under Section 306 in lieu of a mutilated, destroyed, ----------- lost or stolen Note shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Note. "Preferred Stock" as applied to the Capital Stock of any corporation --------------- means Capital Stock of any class or classes (however designated) that by its terms is preferred as to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such corporation, over shares of Capital Stock of any other class of such corporation. "Purchase Money Obligations" means any Indebtedness Incurred to -------------------------- finance or refinance the acquisition, leasing, construction or improvement of property (real or personal) or assets, and whether acquired through the direct acquisition of such property or assets or the acquisition of the Capital Stock of any Person owning such property or assets, or otherwise. "QIB" or "Qualified Institutional Buyer" means a "qualified --- ----------------------------- institutional buyer," as that term is defined in Rule 144A under the Securities Act. 27 "Recapitalization" means the leveraged recapitalization of Holding ---------------- pursuant to the Agreement and Plan of Merger, dated as of December 20, 1997, between MergerCo and Holding whereby MergerCo will be merged with and into Holding, with Holding being the surviving corporation. "Receivable" means a right to receive payment arising from a sale or ---------- lease of goods or services by a Person pursuant to an arrangement with another Person pursuant to which such other Person is obligated to pay for goods or services under terms that permit the purchase of such goods and services on credit, as determined in accordance with GAAP. "Receivables Entity" means (x) any Receivables Subsidiary or (y) any ------------------ - - other Person that is engaged in the business of acquiring, selling, collecting, financing or refinancing Receivables, accounts (as defined in the Uniform Commercial Code as in effect in any jurisdiction from time to time), other accounts and/or other receivables, and/or related assets. "Receivables Fees" means distributions or payments made directly or by ---------------- means of discounts with respect to any participation interest issued or sold in connection with, and other fees paid to a Person that is not a Restricted Subsidiary in connection with, any Receivables Financing. "Receivables Financing" means any financing of Receivables of the --------------------- Company or any Restricted Subsidiary that have been transferred to a Receivables Entity in a Financing Disposition. "Receivables Subsidiary" means a Subsidiary of the Company that (a) is ---------------------- - engaged solely in the business of acquiring, selling, collecting, financing or refinancing Receivables, accounts (as defined in the Uniform Commercial Code as in effect in any jurisdiction from time to time) and other accounts and receivables (including any thereof constituting or evidenced by chattel paper, instruments or general intangibles), all proceeds thereof and all rights (contractual and other), collateral and other assets relating thereto, and any business or activities incidental or related to such business, and (b) is - designated as a "Receivables Subsidiary" by the Board of Directors. "Redemption Date" when used with respect to any Note to be redeemed or --------------- purchased means the date fixed for such redemption or purchase by or pursuant to this Indenture and the Notes. "Redemption Price" when used with respect to any Note to be redeemed ---------------- or purchased means the price at which it is to be redeemed or purchased pursuant to this Indenture and the Notes. 28 "refinance" means refinance, refund, replace, renew, repay, modify, --------- restate, defer, substitute, supplement, reissue, resell or extend (including pursuant to any defeasance or discharge mechanism); and the terms "refinances," "refinanced" and "refinancing" as used for any purpose in this Indenture shall have a correlative meaning. "Refinancing Indebtedness" means Indebtedness that is Incurred to ------------------------ refinance any Indebtedness existing on the date of this Indenture or Incurred in compliance with this Indenture (including Indebtedness of the Company that refinances Indebtedness of any Restricted Subsidiary (to the extent permitted in this Indenture) and Indebtedness of any Restricted Subsidiary that refinances Indebtedness of another Restricted Subsidiary) including Indebtedness that refinances Refinancing Indebtedness; provided, that (1) if the Indebtedness -------- - being refinanced is Subordinated Obligations or Guarantor Subordinated Obligations, the Refinancing Indebtedness has an Average Life at the time such Refinancing Indebtedness is Incurred that is equal to or greater than the Average Life of the Indebtedness being refinanced, (2) such Refinancing - Indebtedness is Incurred in an aggregate principal amount (or if issued with original issue discount, an aggregate issue price) that is equal to or less than the sum of (x) the aggregate principal amount (or if issued with original issue - discount, the aggregate accreted value) then outstanding of the Indebtedness being refinanced, plus (y) fees, under writing discounts, premiums and other - costs and expenses incurred in connection with such Refinancing Indebtedness and (3) Refinancing Indebtedness shall not include (x) Indebtedness of a Restricted - - Subsidiary that is not a Note Guarantor that refinances Indebtedness of the Company that was incurred by the Company pursuant to paragraph (a) of Section ------- 406 or (y) Indebtedness of the Company or a Restricted Subsidiary that - --- - refinances Indebtedness of an Unrestricted Subsidiary. "Regular Record Date" for the interest payable on any Interest Payment ------------------- Date means the date specified for that purpose in Section 301. ----------- "Regulation S" means Regulation S under the Securities Act. ------------ "Regulation S Certificate" means a certificate substantially in the ------------------------ form attached hereto as Exhibit C. --------- "Related Business" means those businesses in which the Company or any ---------------- of its Subsidiaries is engaged on the date of this Indenture, or that are related, complementary, incidental or ancillary thereto or extensions, developments or expansions thereof. "Related Taxes" means (x) any taxes, charges or assessments, including ------------- - but not limited to sales, use, transfer, rental, ad valorem, value-added, stamp, property, consumption, franchise, license, capital, net worth, gross receipts, excise, occupancy, intangibles or similar 29 taxes, charges or assessments (other than federal, state or local taxes measured by income and federal, state or local withholding imposed on payments made by Holding), required to be paid by Holding by virtue of its being incorporated or having Capital Stock outstanding (but not by virtue of owning stock or other equity interests of any corporation or other entity other than the Company or any of its Subsidiaries), or being a holding company parent of the Company or receiving dividends from or other distributions in respect of the Capital Stock of the Company, or having guaranteed any obligations of the Company or any Subsidiary thereof, or having made any payment in respect of any of the items for which the Company is permitted to make payments to Holding pursuant to Section 408, or (y) any other federal, state, foreign, provincial or local taxes - ----------- - measured by income for which Holding is liable up to an amount not to exceed with respect to such federal taxes the amount of any such taxes that the Company would have been required to pay on a separate company basis or on a consolidated basis if the Company had filed a consolidated return on behalf of an affiliated group (as defined in Section 1504 of the Code, or an analogous provision of state, local or foreign law) of which it were the common parent, or with respect to state and local taxes, on a combined basis if the Company had filed a combined return on behalf of an affiliated group consisting only of the Company and its Subsidiaries. "Representative" means the trustee, agent or representative (if any) -------------- for an issue of (a) Senior Indebtedness (with respect to any Senior - Indebtedness) or (b) Obligor Senior Indebtedness (with respect to any Obligor - Senior Indebtedness). "Resale Restriction Termination Date" means, with respect to any Note, ----------------------------------- the date that is two years (or such other period as may hereafter be provided under Rule 144(k) under the Securities Act or any successor provision thereto as permitting the resale by non-affiliates of Restricted Securities without restriction) after the later of the original issue date in respect of such Note and the last date on which the Company or any Affiliate of the Company was the owner of such Note (or any Predecessor Note thereto). "Responsible Officer" when used with respect to the Trustee means the ------------------- chairman or vice-chairman of the board of directors, the chairman or vice- chairman of the executive committee of the board of directors, the president, any vice president or assistant vice president, the secretary, any assistant secretary, the treasurer, any assistant treasurer, the cashier, any assistant cashier, any trust officer or assistant trust officer, the controller and any assistant controller or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. 30 "Restricted Payment Transaction" means any Restricted Payment ------------------------------ permitted pursuant to Section 408, any Permitted Payment, any Permitted ----------- Investment, or any transaction specifically excluded from the definition of the term "Restricted Payment." "Restricted Security" has the meaning assigned to such term in Rule ------------------- 144(a)(3) under the Securities Act; provided, however, that the Trustee shall be -------- ------- entitled to receive, at its request, and conclusively rely on an Opinion of Counsel with respect to whether any Note constitutes a Restricted Security. "Restricted Subsidiary" means any Subsidiary of the Company other than --------------------- an Unrestricted Subsidiary. "SEC" means the Securities and Exchange Commission. --- "Second Merger" means the merger of TTC and TTC Merger Co., to occur ------------- immediately after the issuance of the Notes. "Secured Indebtedness" means any Indebtedness of the Company secured -------------------- by a Lien. "Securities Act" means the Securities Act of 1933, as amended. -------------- "Senior Credit Agreement" means the credit agreement dated as of May ----------------------- 21, 1998, among the Company (after giving effect to the Second Merger), the banks and other financial institutions party thereto from time to time, Credit Suisse First Boston, as syndication agent, The Chase Manhattan Bank, as documentation agent, and Morgan Guaranty Trust Company of New York, as administrative agent, as such agreement may be assumed by any successor in interest, and as such agreement may be amended, supplemented, waived or otherwise modified from time to time, or refunded, refinanced, restructured, replaced, renewed, repaid, increased or extended from time to time (whether in whole or in part, whether with the original agent and lenders or other agents and lenders or otherwise, and whether provided under the original Senior Credit Agreement or otherwise). "Senior Credit Facility" means the collective reference to the Senior ---------------------- Credit Agreement, any Credit Documents (as defined therein), any notes and letters of credit issued pursuant thereto and any guarantee and collateral agreement, patent and trademark security agreement, mortgages, letter of credit applications and other guarantees, pledge agreements, security agreements and collateral documents, and other instruments and documents, executed and delivered pursuant to or in connection with any of the foregoing, in each case as the same may be amended, supplemented, waived or otherwise modified from time to time, or re- 31 funded, refinanced, restructured, replaced, renewed, repaid, increased or extended from time to time (whether in whole or in part, whether with the original agent and lenders or other agents and lenders or otherwise, and whether provided under the original Senior Credit Agreement or one or more other credit agreements, indentures (including this Indenture) or financing agreements or otherwise). Without limiting the generality of the foregoing, the term "Senior Credit Facility" shall include any agreement (i) changing the maturity of any In - debtedness incurred thereunder or contemplated thereby, (ii) adding Subsidiaries -- of the Company as additional borrowers or guarantors thereunder, (iii) --- increasing the amount of Indebtedness incurred thereunder or available to be borrowed thereunder or (iv) otherwise altering the terms and conditions thereof. -- "Senior Indebtedness" means, with respect to the Company, the ------------------- following obligations, whether outstanding on the date of this Indenture or thereafter issued, without duplication: (i) all Bank Indebtedness, (ii) all - -- obligations in respect of any Receivables Financing, and (iii) all obligations --- consisting of the principal of and premium, if any, and accrued and unpaid interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Company regardless of whether post-filing interest is allowed in such proceeding) on, and fees and other amounts owing in respect of, all other Indebtedness of the Company, unless, in the instrument creating or evidencing the same or pursuant to which the same is outstanding, it is expressly provided that the obligations in respect of such Indebtedness are not senior in right of payment to the Notes; provided, however, -------- ------- that Senior Indebtedness shall not include (1) any obligation of the Company to - any Subsidiary, (2) any liability for Federal, state, foreign, local or other - taxes owed or owing by the Company, (3) any accounts payable or other liability - to trade creditors arising in the ordinary course of business (including Guarantees thereof or instruments evidencing such liabilities), (4) any - Indebtedness of the Company (or Guarantee by the Company of any Indebtedness) that is expressly subordinated in right of payment to any other Indebtedness of the Company (or Guarantee by the Company of any Indebtedness), (5) any Capital - Stock of the Company or (6) that portion of any Indebtedness of the Company that - is Incurred by the Company in violation of Section 406 (but no such violation ----------- shall be deemed to exist for purposes of this clause (6) if any holder of such Indebtedness or such holder's representative shall have received an Officer's Certificate of the Company to the effect that such Incurrence of such Indebtedness does not (or that the Incurrence by the Company of the entire committed amount thereof at the date on which the initial borrowing thereunder is made would not) violate Section 406). If any Senior Indebtedness is ----------- disallowed, avoided or subordinated pursuant to the provisions of Section 548 of Title 11 of the United States Code or any applicable state fraudulent conveyance law, such Senior Indebtedness nevertheless will constitute Senior Indebtedness. 32 "Senior Subordinated Indebtedness" means the Notes and any other In -------------------------------- debtedness of the Company that ranks pari passu with the Notes. ---- ----- "Significant Domestic Subsidiary" means any Domestic Subsidiary that ------------------------------- is a Significant Subsidiary. "Significant Subsidiary" means any Restricted Subsidiary that would be ---------------------- a "significant subsidiary" of the Company within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC, as in effect on the Issue Date. "Special Record Date" for the payment of any Defaulted Interest means ------------------- a date fixed by the Trustee pursuant to Section 307. ----------- "S&P" means Standard & Poor's Ratings Service, a division of The --- McGraw-Hill Companies, Inc., and its successors. "Stated Maturity" means, with respect to any security, the date --------------- specified in such security as the fixed date on which the payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision (but excluding any provision providing for the repurchase of such security at the option of the holder thereof upon the happening of any contingency beyond the control of the issuer unless such contingency has occurred). "Subordinated Obligations" means any Indebtedness of the Company ------------------------ (whether outstanding on the date of this Indenture or thereafter Incurred) that is expressly subordinated in right of payment to the Notes pursuant to a written agreement. "Subsidiary" of any Person means any corporation, association, ---------- partnership or other business entity of which more than 50% of the total voting power of shares of Capital Stock or other equity interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by (i) such Person - or (ii) one or more Subsidiaries of such Person. -- "Tax Sharing Agreement" means the Tax Sharing Agreement, dated as of --------------------- May 21, 1998, between the Company and Holding, as the same may be amended, supplemented, waived or otherwise modified from time to time in accordance with the terms thereof and of this Indenture. 33 "Temporary Cash Investments" means any of the following: (i) any -------------------------- - investment in (x) direct obligations of the United States of America or any - agency or instrumentality thereof or obligations Guaranteed by the United States of America or any agency or instrumentality thereof or (y) direct obligations - of any foreign country recognized by the United States of America rated at least "A" by S&P or "A-1" by Moody's (or, in either case, the equivalent of such rating by such organization or, if no rating of S&P or Moody's then exists, the equivalent of such rating by any nationally recognized rating organization), (ii) overnight bank deposits, and investments in time deposit accounts, -- certificates of deposit, bankers' acceptances and money market deposits (or, with respect to foreign banks, similar instruments) maturing not more than one year after the date of acquisition thereof issued by (x) any lender under the - Senior Credit Agreement or (y) a bank or trust company that is organized under - the laws of the United States of America, any state thereof or any foreign country recognized by the United States of America having capital and surplus aggregating in excess of $250 million (or the foreign currency equivalent thereof) and whose long term debt is rated at least "A" by S&P or "A-1" by Moody's (or, in either case, the equivalent of such rating by such organization or, if no rating of S&P or Moody's then exists, the equivalent of such rating by any nationally recognized rating organization) at the time such Investment is made, (iii) repurchase obligations with a term of not more than 30 days for --- underlying securities of the types described in clause (i) or (ii) above entered into with a bank meeting the qualifications described in clause (ii) above, (iv) -- Investments in commercial paper, maturing not more than 270 days after the date of acquisition, issued by a Person (other than the Company or any of its Subsidiaries), with a rating at the time as of which any Investment therein is made of "P-2" (or higher) according to Moody's or "A-2" (or higher) according to S&P (or, in either case, the equivalent of such rating by such organization or, if no rating of S&P or Moody's then exists, the equivalent of such rating by any nationally recognized rating organization), (v) Investments in securities - maturing not more than one year after the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States of America, or by any political subdivision or taxing authority thereof, and rated at least "A" by S&P or "A" by Moody's (or, in either case, the equivalent of such rating by such organization or, if no rating of S&P or Moody's then exists, the equivalent of such rating by any nationally recognized rating organization), (vi) Preferred Stock (other than of the Company or any of its Subsidiaries) -- having a rating of "A" or higher by S&P or "A2" or higher by Moody's (or, in either case, the equivalent of such rating by such organization or, if no rating of S&P or Moody's then exists, the equivalent of such rating by any nationally recognized rating organization), (vii) investment funds investing 95% of their --- assets in securities of the type described in clauses (i)-(vi) above (which funds may also hold reasonable amounts of cash pending investment and/or distribution), (viii) any money market deposit accounts issued or offered by a ---- domestic commercial bank or a commercial bank organized and located in a country recognized by the United States of America, in each case, having capital and surplus in excess of $250 million (or the foreign currency equivalent thereof), or investments in money 34 market funds complying with the risk limiting conditions of Rule 2a-7 (or any successor rule) of the SEC under the Investment Company Act of 1940, as amended, and (ix) similar short-term investments approved by the Board of Directors in -- the ordinary course of business. "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa- --- 7bbbb) as in effect on the date of this Indenture. "Trade Payables" means, with respect to any Person, any accounts -------------- payable or any indebtedness or monetary obligation to trade creditors created, assumed or guaranteed by such Person arising in the ordinary course of business in connection with the acquisition of goods or services. "Transactions" means, collectively, the Recapitalization, the Merger, ------------ the Second Merger, the initial equity investment by the Investors, the offering and issuance of the Notes, the initial borrowings under the Senior Credit Facility, the assumption by the Company of obligations under this Indenture and the Notes and under the Senior Credit Facility, and all other transactions relating to the Recapitalization or the financing thereof. "Treasury Rate" means, with respect to a Redemption Date, the yield to ------------- maturity at the time of computation of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15(519) that has become publicly available at least two Business Days prior to such Redemption Date (or, if such Statistical Release is no longer published, any publicly available source or similar market data)) most nearly equal to the period from such Redemption Date to May 15, 2003; provided, -------- however, that if the period from such Redemption Date to May 15, 2003 is not - ------- equal to the constant maturity of the United States Treasury security for which a weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United States securities for which such yields are given, except that if the period from such Redemption Date to May 15, 2003 is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used. "Trust Officer" means the Chairman of the Board, the President or any ------------- other officer or assistant officer of the Trustee assigned by the Trustee to administer its corporate trust matters. "Trustee" means the Person named as the "Trustee" in the first ------- paragraph of this Indenture until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean such successor Trustee. 35 "TTC" means Telecommunications Techniques Co., LLC, a Delaware limited --- liability company, and any successor interest thereto. "TTC Merger Co." means TTC Merger Co. LLC, a limited liability company -------------- organized under the laws of the State of Delaware, and any successor in interest thereto. "Unrestricted Subsidiary" means (i) any Subsidiary of the Company that ----------------------- - at the time of determination is an Unrestricted Subsidiary, as designated by the Board of Directors in the manner provided below, and (ii) any Subsidiary of an -- Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary of the Company (including any newly acquired or newly formed Subsidiary of the Company) to be an Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Capital Stock or Indebtedness of, or owns or holds any Lien on any property of, the Company or any other Restricted Subsidiary of the Company that is not a Subsidiary of the Subsidiary to be so designated; provided, that either (A) the Subsidiary to be so designated has total - -------- - consolidated assets of $1,000 or less or (B) if such Subsidiary has consolidated assets greater than $1,000, then such designation would be permitted under Section 408. The Board of Directors may designate any Unrestricted Subsidiary - ----------- to be a Restricted Subsidiary; provided, that immediately after giving effect to -------- such designation either (x) the Company could incur at least $1.00 of additional - Indebtedness under paragraph (a) of Section 406 or (y) the Consolidated Coverage ----------- - Ratio would be greater than it was immediately prior to giving effect to such designation. Any such designation by the Board of Directors shall be evidenced to the Trustee by promptly filing with the Trustee a copy of the resolution of the Company's Board of Directors giving effect to such designation and an Officer's Certificate of the Company certifying that such designation complied with the foregoing provisions. "U.S. Government Obligation" means (x) any security that is (i) a -------------------------- - - direct obligation of the United States of America for the payment of which the full faith and credit of the United States of America is pledged or (ii) an -- obligation of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case under the preceding clause (i) or (ii), is not callable or redeemable at the option of the issuer thereof, and (y) any - depositary receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act) as custodian with respect to any U.S. Government Obligation that is specified in clause (x) above and held by such bank for the account of the holder of such depositary receipt, or with respect to any specific payment of principal of or interest on any U.S. Government Obligation that is so specified and held, provided that (except as required by law) such custodian is not -------- authorized to make any deduction from the amount payable to the holder of such depositary receipt from any amount 36 received by the custodian in respect of the U.S. Government Obligation or the specific payment of principal or interest evidenced by such depositary receipt. "Vice President" when used with respect to any Person means any vice -------------- president of such Person, whether or not designated by a number or a word or words added before or after the title "vice president." "Voting Stock" of an entity means all classes of Capital Stock of such ------------ entity then outstanding and normally entitled to vote in the election of directors or all interests in such entity with the ability to control the management or actions of such entity. Section 102. Other Definitions. ----------------- Defined in Term Section ---- ---------- "Act"................................. 108 "Affiliate Transaction"............... 411 "Agent Members"....................... 312 "Amendment"........................... 409 "Authentication Order"................ 303 "Bankruptcy Law"...................... 601 "Blockage Notice"..................... 1403 "Covenant Defeasance"................. 1203 "Custodian"........................... 601 "Defaulted Interest".................. 307 "Defeasance".......................... 1202 "Defeased Notes"...................... 1201 "Event of Default".................... 601 "Expiration Date"..................... 108 "Global Notes"........................ 201 "Guaranteed Note Obligations"......... 1301 "Guaranteed Obligations".............. 1301 "Guarantor"........................... 1301 "Guarantor Blockage Notice"........... 1503 "Guarantor Non-payment Default"....... 1503 "Guarantor Payment Blockage Period"... 1503 "Guarantor Payment Default"........... 1503 "Initial Agreement"................... 409 "Initial Lien"........................ 412 "Non-payment Default"................. 1403 37 "Note Register" and "Note Registrar".. 305 "Offer"............................... 410 "Offshore Global Note"................ 201 "Offshore Note Exchange Date"......... 313 "Offshore Physical Note".............. 201 "Parent Guaranteed Obligations"....... 1301 "Parent Guarantor".................... 1301 "pay its Obligor Guarantee"........... 1503 "pay the Notes"....................... 1403 "Payment Blockage Period"............. 1403 "Payment Default"..................... 1403 "Permitted Payment"................... 408 "Physical Notes"...................... 201 "Private Placement Legend"............ 203 "Redemption Amount"................... 1001 "Refinancing Agreement"............... 409 "Restricted Payment".................. 408 "Sale"................................ 101 "Successor Company"................... 501 "Unitary Global Note"................. 201 "U.S. Global Note".................... 201 "U.S. Physical Notes"................. 201 Section 103. Rules of Construction. For all purposes of this --------------------- Indenture, except as otherwise expressly provided or unless the context otherwise requires: (1) the terms defined in this Indenture have the meanings assigned to them in this Indenture; (2) "or" is not exclusive; (3) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP; (4) the words "herein," "hereof" and "hereunder" and other words of ------ ------ --------- similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision; (5) all references to "$" or "dollars" shall refer to the lawful - ------- currency of the United States of America; 38 (6) the words "include," "included" and "including" as used herein ------- -------- --------- shall be deemed in each case to be followed by the phrase "without ------- limitation," if not expressly followed by such phrase or the phrase "but ---------- --- not limited to"; -------------- (7) words in the singular include the plural, and words in the plural include the singular; and (8) any reference to a Section or Article refers to such Section or Article of this Indenture. Section 104. Incorporation by Reference of TIA. Whenever this --------------------------------- Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. This Indenture is subject to the mandatory provisions of the TIA, which are incorporated by reference in and made a part of this Indenture. Any terms incorporated by reference in this Indenture that are defined by the TIA, defined by any TIA reference to another statute or defined by SEC rule under the TIA, have the meanings so assigned to them therein. The following TIA terms have the following meanings: "indenture securities" means the Notes. -------------------- "indenture security holder" means a Noteholder. ------------------------- "indenture to be qualified" means this Indenture. ------------------------- "indenture trustee" or "institutional trustee" means the Trustee. ----------------- --------------------- "obligor" on the indenture securities means Holding, the Company, and ------- any other obligor on the Notes. Section 105. Conflict with TIA. If any provision hereof limits, ----------------- qualifies or conflicts with a provision of the TIA that is required under the TIA to be a part of and govern this Indenture, the latter provision shall control. If any provision of this Indenture modifies or excludes any provision of the TIA that may be so modified or excluded, the latter provision shall be deemed (i) to apply to this Indenture as so modified or (ii) to be excluded, as - -- the case may be. Section 106. Compliance Certificates and Opinions. Upon any ------------------------------------ application or request by the Company or by any other obligor upon the Notes (including any Note Guarantor) to the Trustee to take any action under any provision of this Indenture, the Company or such other obligor upon the Notes, as the case may be, shall furnish to the Trustee such 39 certificates and opinions as may be required under the TIA. Each such certificate or opinion shall be given in the form of one or more Officer's Certificates, if to be given by an Officer, or an Opinion of Counsel, if to be given by counsel, and shall comply with the requirements of the TIA and any other requirements set forth in this Indenture. Notwithstanding the foregoing, in the case of any such request or application as to which the furnishing of any Officer's Certificate or Opinion of Counsel is specifically required by any provision of this Indenture relating to such particular request or application, no additional certificate or opinion need be furnished. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (except for certificates provided for in Section 405) shall include: ----------- (1) a statement that the individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of such individual, he or she made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether, in the opinion of such individual, such condition or covenant has been complied with. Section 107. Form of Documents Delivered to Trustee. In any case -------------------------------------- where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an Officer may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such Officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate or opinion of 40 counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an Officer or Officers to the effect that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows that the certificate or opinion or representations with respect to such matters are erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. Section 108. Acts of Noteholders; Record Dates. (a) Any request, --------------------------------- demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee, and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments. Proof of --- execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 701) ----------- conclusive in favor of the Trustee, the Company and any other obligor upon the Notes, if made in the manner provided in this Section 108. ----------- (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by the certificate of any notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by an officer of a corporation or a member of a partnership or other entity, on behalf of such corporation or partnership or other entity, such certificate or affidavit shall also constitute sufficient proof of such Person's authority. The fact and date of the execution of any such instrument or writing, or the authority of the person executing the same, may also be proved in any other manner that the Trustee deems sufficient. (c) The ownership of Notes shall be proved by the Note Register. (d) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Note shall bind the Holder of every Note issued upon the transfer thereof or in exchange therefor or in lieu thereof, in respect of anything done or suffered to be done by the Trustee, the Company or any other obligor upon the Notes in reliance thereon, whether or not notation of such action is made upon such Note. 41 (e) (i) The Company may set any day as a record date for the purpose of determining the Holders of Outstanding Notes entitled to give, make or take any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given, made or taken by Holders of Notes, provided that the Company may not set a record date for, and -------- the provisions of this paragraph shall not apply with respect to, the giving or making of any notice, declaration, request or direction referred to in subclause (e)(ii) of this Section 108. If any record date is set pursuant to this ----------- paragraph, the Holders of Outstanding Notes on such record date (or their duly designated proxies), and no other Holders, shall be entitled to take the relevant action, whether or not such Persons remain Holders after such record date; provided that no such action shall be effective hereunder unless taken on -------- or prior to the applicable Expiration Date by Holders of the requisite principal amount of Outstanding Notes on such record date. Nothing in this paragraph shall be construed to prevent the Company from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be cancelled and of no effect), and nothing in this paragraph shall be construed to render ineffective any action taken by Holders of the requisite principal amount of Outstanding Notes on the date such action is taken. Promptly after any record date is set pursuant to this paragraph, the Company, at its own expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Trustee in writing and to each Holder of Notes in the manner set forth in Section 110. - ----------- (ii) The Trustee may set any day as a record date for the purpose of deter mining the Holders of Outstanding Notes entitled to join in the giving or making of (i) any Notice of Default, (ii) any declaration of acceleration - -- referred to in Section 602, (iii) any request to institute proceedings referred ----------- --- to in Section 607(2) or (iv) any direction referred to in Section 612, in each -------------- -- ----------- case with respect to Notes. If any record date is set pursuant to this paragraph, the Holders of Outstanding Notes on such record date, and no other Holders, shall be entitled to join in such notice, declaration, request or direction, whether or not such Holders remain Holders after such record date; provided that no such action shall be effective hereunder unless taken on or - -------- prior to the applicable Expiration Date by Holders of the requisite principal amount of Outstanding Notes on such record date. Nothing in this paragraph shall be construed to prevent the Trustee from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be cancelled and of no effect), and nothing in this paragraph shall be construed to render ineffective any action taken by Holders of the requisite principal amount of Outstanding Notes on the date such action is taken. Promptly after any record date is set pursuant to this paragraph, the Trustee, at the Company's expense, shall cause notice of such record date, the 42 proposed action by Holders and the applicable Expiration Date to be given to the Company in writing and to each Holder of Notes in the manner set forth in Section 110. - ----------- (iii) With respect to any record date set pursuant to this Section ------- 108, the party hereto that sets such record dates may designate any day as the - --- "Expiration Date" and from time to time may change the Expiration Date to any - ---------------- earlier or later day; provided that no such change shall be effective unless -------- notice of the proposed new Expiration Date is given to the Company or the Trustee, whichever such party is not setting a record date pursuant to this Section 108(e) in writing, and to each Holder of Notes in the manner set forth - -------------- in Section 110, on or prior to the existing Expiration Date. If an Expiration ----------- Date is not designated with respect to any record date set pursuant to this Section, the party hereto that set such record date shall be deemed to have initially designated the 180th day after such record date as the Expiration Date with respect thereto, subject to its right to change the Expiration Date as provided in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be later than the 180th day after the applicable record date. (iv) Without limiting the foregoing, a Holder entitled hereunder to take any action hereunder with regard to any particular Note may do so with regard to all or any part of the principal amount of such Note or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any part of such principal amount. Section 109. Notices, etc., to Trustee and Company. Any request, ------------------------------------- demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, (1) the Trustee by any Holder or by the Company or any other obligor upon the Notes shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Trustee at 225 Asylum Street, 23rd Floor, Hartford, Connecticut 06103, Attention: Corporate Trust Department (telephone: (860) 244-1842; telecopier: (860) 244-1869) or at any other address furnished in writing to the Company by the Trustee, or (2) the Company by the Trustee or by any Holder shall be sufficient for every purpose hereunder if in writing and mailed, first-class postage prepaid, to the Company c/o Dynatech Corporation, 3 New England Executive Park, Burlington, MA 01803-5087, Attention: Chief Financial Officer (telephone: (781) 272-6100; telecopier: (781) 272-2304), with copies to Dynatech Corporation, 3 New England Executive Park, Burlington, MA 01803- 5087, Attention: General Counsel (telephone: (781) 272-6100; telecopier: (781) 272-2304), and to Debevoise & Plimpton, 875 Third Avenue, New York, New York 10022, Attention: David Brittenham, Esq. (telephone: 43 (212) 909-6000; telecopier: (212) 909-6836), or at any other address previously furnished in writing to the Trustee by the Company. Section 110. Notices to Holders; Waiver. Where this Indenture -------------------------- provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at such Holder's address as it appears in the Note Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case, by reason of the suspension of regular mail service, or by reason of any other cause, it shall be impossible to mail notice of any event as required by any provision of this Indenture, then such notification as shall be made with the approval of the Trustee (such approval not to be unreasonably withheld) shall constitute a sufficient notification for every purpose hereunder. Section 111. Effect of Headings and Table of Contents. The Article ---------------------------------------- and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. Section 112. Successors and Assigns. All covenants and agreements in ---------------------- this Indenture by the Company shall bind its respective successors and assigns, whether so expressed or not. Section 113. Separability Clause. In case any provision in this ------------------- Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 114. Benefits of Indenture. Nothing in this Indenture or in --------------------- the Notes, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, any Paying Agent and the Holders, any benefit or any legal or equitable right, remedy or claim under this Indenture, except as provided in Article 14 and Article 15. ---------- ---------- 44 Section 115. GOVERNING LAW. THIS INDENTURE AND THE NOTES SHALL BE ------------- GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY PRINCIPLES OF CONFLICT OF LAWS TO THE EXTENT THAT THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. THE TRUSTEE, THE COMPANY, ANY OTHER OBLIGOR IN RESPECT OF THE NOTES AND (BY THEIR ACCEPTANCE OF THE NOTES) THE HOLDERS, AGREE TO SUBMIT TO THE JURISDICTION OF ANY UNITED STATES FEDERAL OR STATE COURT LOCATED IN THE BOROUGH OF MANHATTAN, IN THE CITY OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE OR THE NOTES. Section 116. Legal Holidays. In any case where any Interest Payment -------------- Date, Redemption Date or Stated Maturity of any Note shall not be a Business Day at any Place of Payment, then (notwithstanding any other provision of this Indenture or of the Notes) payment of interest or principal and premium (if any) need not be made at such Place of Payment on such date, but may be made on the next succeeding Business Day at such Place of Payment with the same force and effect as if made on the Interest Payment Date or Redemption Date, or at the Stated Maturity. Section 117. No Personal Liability of Directors, Officers, Employees, -------------------------------------------------------- Incorporators and Stockholders. No director, officer, employee, incorporator, - ------------------------------ member or stockholder, as such, of the Company, Holding, any Note Guarantor or any Subsidiary thereof shall have any liability for any obligation of the Company, Holding, or any Note Guarantor under this Indenture, the Notes, the Parent Guarantee or any Note Guarantee, or for any claim based on, in respect of, or by reason of, any such obligation or its creation. Each Noteholder, by accepting the Notes, waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Section 118. Exhibits and Schedules. All exhibits and schedules ---------------------- attached hereto are by this reference made a part hereof with the same effect as if herein set forth in full. Section 119. Counterparts. This Indenture may be executed in any ------------ number of counterparts, each of which shall be an original; but such counterparts shall together constitute but one and the same instrument. Section 120. Holding as Agent for TTC Merger Co. To the extent ---------------------------------- permitted by the TIA and any other applicable law, TTC Merger Co. hereby appoints Holding as its 45 attorney-in-fact, which appointment is coupled with an interest, to take any action that this Indenture may require or permit TTC Merger Co. to take, including (1) the giving of any certification, opinion, order, request or consent (whether by Officer's Certificate, Opinion of Counsel, Company Order, Company Request, Company Consent or otherwise), (2) the giving of any notice (including under Section 1001), and ------------ (3) the setting of any record date, such appointment to remain in effect until TTC Merger Co. shall otherwise notify the Trustee in writing. ARTICLE 2 NOTE FORMS ---------- Section 201. Forms Generally. (a) The Notes and the Trustee's --------------- certificate of authentication relating thereto shall be in substantially the forms set forth, or referenced, in this Article 2 and Exhibit A annexed hereto, --------- --------- which Exhibit is hereby incorporated in and expressly made a part of this Indenture. The Notes may have such appropriate insertions, omissions, substitutions, notations, legends, endorsements, identifications and other variations as are required or permitted by law, stock exchange rule or Depository rule or usage, agreements to which the Company is subject, if any, or other customary usage, or as may consistently herewith be determined by the Officer or member of the Company executing such Notes, as evidenced by such execution (provided always that any such notation, legend, endorsement, identification or variation is in a form acceptable to the Company). Each Note shall be dated the date of its authentication. The terms of the Notes set forth in Exhibit A are part of the terms of this Indenture. Any portion of the text --------- of any Note may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Note. Initial Notes and any Additional Notes offered and sold in reliance on Rule 144A under the Securities Act shall, unless the Company otherwise notifies the Trustee in writing, be issued in the form of one or more permanent global Notes in substantially the form set forth in Exhibit A (each, a "U.S. Global --------- ----------- Note"), deposited with the Trustee, as custodian for the Depositary or its - ---- nominee, duly executed by the Company and authenticated by the Trustee as hereinafter provided. The aggregate principal amount of a U.S. Global Note may 46 from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for the Depositary or its nominee, as hereinafter provided. Initial Notes and any Additional Notes offered and sold in offshore transactions in reliance on Regulation S under the Securities Act shall be issued (a) in the form of one or more permanent global Notes in substantially - the form set forth in Exhibit A (each, an "Offshore Global Note"), deposited --------- -------------------- with the Trustee, as custodian for the Depositary or its nominee, duly executed by the Company and authenticated by the Trustee as hereinafter provided or (b) - at the Company's option, in the form of and as part of a U.S. Global Note that has been designated by the Company as a "Unitary Global Note" (any U.S. Global Note that has been so designated, a "Unitary Global Note"). The aggregate ------------------- principal amount of an Offshore Global Note, if any, may from time to time be increased or decreased by adjustments made in the records of the Trustee, as custodian for the Depositary or its nominee, as hereinafter provided. Subject to the limitations on the issuance of certificated Notes set forth in Sections -------- 312 and 313, Initial Notes and any Initial Additional Notes issued pursuant to - --- --- Section 305 in exchange for or upon transfer of beneficial interests (x) in a - ----------- - U.S. Global Note shall be in the form of permanent certificated Notes substantially in the form set forth in Exhibit A and shall contain the Private --------- Placement Legend as set forth in Section 203 (the "U.S. Physical Notes") or (y) ----------- ------------------- - in an Offshore Global Note (if any), on or after the Offshore Note Exchange Date with respect to such Offshore Global Note, shall be in the form of permanent certificated Notes substantially in the form set forth in Exhibit A (the --------- "Offshore Physical Notes"), respectively, as hereinafter provided. - ------------------------ The Offshore Physical Notes and the U.S. Physical Notes are sometimes collectively herein referred to as the "Physical Notes." The U.S. Global Note -------------- and the Offshore Global Note are sometimes collectively referred to as the "Global Notes." - ------------- Exchange Notes shall be issued substantially in the form set forth in Exhibit A and, subject to Section 312(b), shall be in the form of one or more - --------- -------------- Global Notes. 47 Section 202. Form of Trustee's Certificate of Authentication. This ----------------------------------------------- is one of the Notes referred to in the within-mentioned Indenture. ________________________________ as Trustee By______________________________ Authorized Officer Dated: If an appointment of an Authenticating Agent is made pursuant to Section 714, the Notes may have endorsed thereon, in lieu of the Trustee's - ----------- certificate of authentication, an alternative certificate of authentication in the following form: 48 This is one of the Notes referred to in the within-mentioned Indenture. STATE STREET BANK AND TRUST COMPANY ___________________________________ As Trustee By_________________________________ As Authenticating Agent By_________________________________ Authorized Officer Dated: Section 203. Restrictive and Global Note Legends. Each Global Note ----------------------------------- and Physical Note shall bear the following legend set forth below (the "Private ------- Placement Legend") on the face thereof until the Private Placement Legend is - ---------------- removed in accordance with Section 313(4): -------------- THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND HAS NOT BEEN REGISTERED UNDER ANY STATE -------------- SECURITIES LAWS, AND THIS NOTE (AND ANY INTEREST OR PARTICIPATION HEREIN) MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED, ENCUMBERED OR OTHERWISE TRANSFERRED OR DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PUR CHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. 49 THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT ("RULE 144A")) OR (B) IT IS NOT A U.S. PERSON AND IS --------- ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION AND (2) AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED OR DISPOSED OF ONLY (I) INSIDE THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) OUTSIDE THE UNITED STATES IN A TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (IV) PUR- SUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (V) TO THE COMPANY, IN EACH OF CASES (I) THROUGH (IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (X) PURSUANT TO CLAUSE (II) OR (III) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (Y) IN THE CASE OF ANY OF THE FOREGOING CLAUSES (I) THROUGH (V), TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS NOTE IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE COMPANY AND THE TRUSTEE, THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTION REFERRED TO ABOVE. AS USED HEREIN, THE TERMS "UNITED STATES," "OFFSHORE TRANSACTION" AND "U.S. PERSON" HAVE THE RESPECTIVE MEANINGS GIVEN TO THEM BY REGULATIONS UNDER THE SECURITIES ACT. Each Global Note, whether or not an Initial Note, shall also bear the following legend on the face thereof: UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC") TO THE --- ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS 50 REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTIONS 312 AND 313 OF THE INDENTURE. -------- --- --- ARTICLE 3 THE NOTES --------- Section 301. Title and Terms. The aggregate principal amount of --------------- Notes that may be authenticated and delivered and Outstanding under this Indenture is not limited, except as provided in Section 406 and except as may be ----------- limited by applicable law. The Initial Notes will be issued in an aggregate principal amount of $275,000,000. All the Original Notes shall vote and consent together on all matters as one class, and none of the Original Notes will have the right to vote or consent as a class separate from one another on any matter. Additional Notes (including any Exchange Notes issued in exchange therefor) may vote as a class with the other Notes and otherwise be treated as Notes for purposes of this Indenture. The Notes shall be known and designated as the "9 3/4% Senior Subordinated Notes Due 2008" of the Company. The final Stated Maturity of the Notes shall be May 15, 2008. Interest on the Outstanding principal amount of Notes will accrue at the rate of 9 3/4% per annum and will be payable semi- annually in arrears on May 15 and November 15 in each year, commencing on November 15, 1998, to holders of record on the immediately preceding May 1 and November 1, respectively (each such May 1 and November 1, a "Regular Record -------------- Date"). Interest on the Original Notes will accrue from the most recent date to - ---- which interest has been paid or duly provided for or, if no interest has been paid, from the Issue Date; and interest on any Additional Notes (and Exchange Notes issued in exchange therefor) will accrue from the most recent date to which interest has been paid or duly provided for or, if no interest has been paid on such Additional Notes, from the date of issuance of such Additional Notes; 51 provided, that if any Note is surrendered for exchange on or after a record date - -------- for an Interest Payment Date that will occur on or after the date of such exchange, interest on the Note received in exchange thereof will accrue from the date of such Interest Payment Date. The principal of, and premium, if any, and interest, on the Notes shall be payable at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, The City of New York (the "Place of -------- Payment"); provided, however, that at the option of the Company payment of -------- ------- interest on a Note may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Note Register. Section 302. Denominations. The Notes shall be issuable only in ------------- registered form without coupons and only in denominations of $1,000 and any integral multiple thereof. Section 303. Execution, Authentication and Delivery and Dating. The ------------------------------------------------- Notes shall be executed on behalf of the Company (x) prior to the Second Merger - and execution of the First Supplemental Indenture by one Officer (or, in the case of TTC Merger Co., by one Officer, or by a member) of each Initial Issuer and (y) thereafter, by one Officer or a member of the Company. The signature of - such Officer or member on the Notes may be manual or facsimile. Notes bearing the manual or facsimile signatures of individuals who were at any time the proper Officers of the Company (or of a member of the Company executing such Note) shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Notes or did not hold such offices at the date of such Notes. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Notes executed by the Company to the Trustee for authentication; and the Trustee shall authenticate and deliver (i) - Initial Notes for original issue in the aggregate principal amount not to exceed $275,000,000 and (ii) Additional Notes from time to time for original issue in -- aggregate principal amounts specified by the Company and (iii) Exchange Notes --- from time to time for issue in exchange for a like principal amount of Initial Notes or Initial Additional Notes, in each case specified in clauses (i) through (iii) above, upon a written order of the Company in the form of an Officer's Certificate of the Company (an "Authentication Order"). Such Officer's -------------------- Certificate shall specify the amount of Notes to be authenticated and the date on which the Notes are to be authenticated, whether the Notes are to be Initial Notes, Additional Notes or Exchange Notes and whether the Notes are to be issued as one or more Global Notes or Physical Notes and such other information as the Company may include or the Trustee may reasonably request. 52 All Notes shall be dated the date of their authentication. No Note shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears on such Note a certificate of authentication substantially in the form provided for herein executed by the Trustee by manual signature, and such certificate upon any Note shall be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered hereunder. Section 304. Temporary Notes. Until definitive Notes are ready for --------------- delivery, the Company may prepare and upon receipt of an Authentication Order the Trustee shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of definitive Notes but may have variations that the Company considers appropriate for temporary Notes. If temporary Notes are issued, the Company will cause definitive Notes to be prepared without unreasonable delay. After the preparation of definitive Notes, the temporary Notes shall be exchangeable for definitive Notes upon surrender of the temporary Notes at the office or agency of the Company in a Place of Payment, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Notes, the Company shall execute and upon receipt of an Authentication Order the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Notes of authorized denominations. Until so exchanged the temporary Notes shall in all respects be entitled to the same benefits under this Indenture as definitive Notes of the same series and tenor. Section 305. Registration, Registration of Transfer and Exchange. --------------------------------------------------- The Company shall cause to be kept at the Corporate Trust Office of the Trustee a register (the register maintained in such office and in any other office or agency of the Company in a Place of Payment being herein sometimes collectively referred to as the "Note Register") in which, subject to such reasonable ------------- regulations as it may prescribe, the Company shall provide for the registration of Notes and of transfers of Notes. The Trustee is hereby appointed "Note ---- Registrar" for the purpose of registering Notes and transfers of Notes as herein - --------- provided. Upon surrender for transfer of any Note at the office or agency of the Company in a Place of Payment, in compliance with all applicable requirements of this Indenture and applicable law, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Notes, of any authorized denominations and of a like aggregate principal amount. At the option of the Holder, Notes may be exchanged for other Notes, of any authorized denominations and of a like tenor and aggregate principal amount, upon surrender of the Notes to be exchanged at such office or agency. Whenever any Notes are so sur- 53 rendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Notes that the Holder making the exchange is entitled to receive. All Notes issued upon any transfer or exchange of Notes shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Notes surrendered upon such transfer or exchange. Every Note presented or surrendered for transfer or exchange shall (if so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Note Registrar duly executed, by the Holder thereof or such Holder's attorney duly authorized in writing. No service charge shall be made for any transfer or exchange of Notes, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of Notes under this Section 305. ----------- The Company shall not be required (i) to issue, transfer or exchange - any Note during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption (or purchase) of Notes selected for redemption (or purchase) under Section 1004 and ending at the close of business ------------ on the day of such mailing, or (ii) to transfer or exchange any Note so selected -- for redemption (or purchase) in whole or in part. Section 306. Mutilated, Destroyed, Lost and Stolen Notes. If (i) any ------------------------------------------- - mutilated Note is surrendered to the Trustee, or the Company and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Note, and (ii) there is delivered to the Company and the Trustee such security -- or indemnity as may be required by them to save each of them harmless, then, in the absence of notice to the Company or the Trustee that such Note has been acquired by a bona fide purchaser, the Company shall execute and upon receipt of an Authentication Order the Trustee shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Note, a new Note of like tenor and principal amount, bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost or stolen Note has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Note, pay such Note. Upon the issuance of any new Note under this Section 306, the Company ----------- may require the payment of a sum sufficient to cover any tax or other governmental charge that 54 may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. Every new Note issued pursuant to this Section 306 in lieu of any ----------- mutilated, destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Company, whether or not the mutilated, destroyed, lost or stolen Note shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and ratably with any and all other Notes duly issued hereunder. The provisions of this Section 306 are exclusive and shall preclude ----------- (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes. Section 307. Payment of Interest Rights Preserved. Interest on any ------------------------------------ Note that is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Note (or one or more Predecessor Notes) is registered at the close of business on the Regular Record Date for such interest specified in Section 301. ----------- Any interest on any Note that is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called "Defaulted --------- Interest") shall forthwith cease to be payable to the registered Holder on the - -------- relevant Regular Record Date by virtue of having been such Holder; and such Defaulted Interest may be paid by the Company, as provided in clause (1) or clause (2) below: (1) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Notes (or their respective Predecessor Notes) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Note and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements reasonably satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as provided in this clause (1). Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 nor less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed 55 payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first class postage prepaid, to each Holder at such Holder's address as it appears in the Note Register, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Notes (or their respective Predecessor Notes) are registered on such Special Record Date and shall no longer be payable pursuant to the following clause (2). (2) The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause (2), such payment shall be deemed practicable by the Trustee. Subject to the foregoing provisions of this Section 307, each Note ----------- delivered under this Indenture upon transfer of or in exchange for or in lieu of any other Note shall carry the rights to interest accrued and unpaid, and to accrue, that were carried by such other Note. Section 308. Persons Deemed Owners. The Company, Holding, any other --------------------- obligor upon the Notes, the Trustee and any agent of any of them may treat the Person in whose name any Note is registered as the owner of such Note for the purpose of receiving payment of principal of (and premium, if any), and (subject to Section 307) interest on, such Note and for all other purposes whatsoever, ----------- whether or not such Note be overdue, and neither Holding, the Company, any other obligor upon the Notes, the Trustee nor any agent of any of them shall be affected by notice to the contrary. Section 309. Cancellation. All Notes surrendered for payment, ------------ redemption, transfer, exchange or conversion shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and, if not already cancelled, shall be promptly cancelled by it. The Company may at any time deliver to the Trustee for cancellation any Notes previously authenticated and delivered hereunder that the Company may have acquired in any manner whatsoever, and all Notes so delivered shall be promptly cancelled by the Trustee. No Notes shall be authenticated in lieu of or in exchange for any Notes cancelled as provided in this Section 309, except as expressly permitted by this Indenture. ----------- All cancelled Notes held by the Trustee shall be disposed of as directed by a Company Order of the Company. Section 310. Computation of Interest. Interest on the Notes shall be ----------------------- computed on the basis of a 360-day year of twelve 30-day months. 56 Section 311. CUSIP Numbers. The Company in issuing the Notes may use ------------- "CUSIP" numbers (if then generally in use), and if so, the Trustee may use the CUSIP numbers in notices of redemption or exchange as a convenience to Holders; provided, however, that any such notice may state that no representation is made - -------- ------- as to the correctness or accuracy of the CUSIP number printed in the notice or on the Notes, and that reliance may be placed only on the other identification numbers printed on the Notes. Section 312. Book-Entry Provisions for Global Notes. (a) Each -------------------------------------- Global Note initially shall (i) be registered in the name of the Depositary for - such Global Note or the nominee of such Depositary and (ii) be delivered to the -- Trustee as custodian for such Depositary. Neither the Company nor any agent of the Company shall have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Note, or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. Members of, or participants in, the Depositary ("Agent Members") shall ------------- have no rights under this Indenture with respect to any Global Note, and the Depositary may be treated by the Company, any other obligor upon the Notes, the Trustee and any agent of any of them as the absolute owner of such Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, any other obligor upon the Notes, the Trustee or any agent of any of them from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Agent Members, the operation of customary practices governing the exercise of the rights of a beneficial owner of any Note. The registered holder of a Global Note may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action that a Holder is entitled to take under this Indenture or the Notes. (b) Transfers of a Global Note shall be limited to transfers of such Global Note in whole, but, subject to the immediately succeeding sentence, not in part, to the Depositary, its successors or their respective nominees. Interests of beneficial owners in a Global Note may not be transferred or exchanged for Physical Notes, unless (i) the Company has consented thereto in - writing, or such transfer or exchange is made pursuant to the next sentence, and (ii) such transfer or exchange is in accordance with the applicable rules and -- procedures of the Depositary and the provisions of Sections 305 and 313. ------------ --- Subject to the limitation on issuance of Physical Notes set forth in Section ------- 313(3), U.S. Physical Notes or Offshore Physical Notes shall be transferred to - ------ all beneficial owners in exchange for their beneficial interests in the relevant U.S. Global Note or the relevant Offshore Global Note, respectively, if (i) the - Depositary notifies the Company that it is unwilling or unable to continue as Depositary for the applicable Global Note or the Depositary ceases to be a "Clearing Agency" registered under 57 the Exchange Act and a successor depositary is not appointed by the Company within 90 days, (ii) the Company, at its option, notifies the Trustee in writing -- that it elects to cause the issuance of Physical Notes under this Indenture or (iii) an Event of Default has occurred and is continuing and the Note Registrar --- has received a written request from the Depositary to issue Physical Notes. (c) In connection with any transfer or exchange of a portion of the beneficial interest in any Global Note to beneficial owners for Physical Notes pursuant to paragraph (b) of this Section 312, the Note Registrar shall record ----------- on its books and records the date and a decrease in the principal amount of such Global Note in an amount equal to the beneficial interest in the Global Note being transferred, and the Company shall execute, and the Trustee shall authenticate and deliver, one or more Physical Notes of like tenor and principal amount of authorized denominations. (d) In connection with a transfer of an entire Global Note to beneficial owners pursuant to paragraph (b) of this Section 312, the applicable ----------- Global Note shall be deemed to be surrendered to the Trustee for cancellation, and the Company shall execute, and the Trustee shall authenticate and deliver, to each beneficial owner identified by the Depositary in exchange for its beneficial interest in the applicable Global Note, an equal aggregate principal amount at maturity of U.S. Physical Notes (in the case of any U.S. Global Note) or Offshore Physical Notes (in the case of any Offshore Global Note), as the case may be, of authorized denominations. (e) The transfer and exchange of a Global Note or beneficial interests therein shall be effected through the Depositary, in accordance with this Indenture (including applicable restrictions on transfer set forth in Section 313) and the procedures of the Depositary therefor. Any beneficial - ----------- interest in one of the Global Notes that is transferred to a Person who takes delivery in the form of an interest in a different Global Note will, upon transfer, cease to be an interest in such Global Note and become an interest in the other Global Note and, accordingly, will thereafter be subject to all transfer restrictions, if any, and other procedures applicable to beneficial interests in such other Global Note for as long as it remains such an interest. A transferor of a beneficial interest in a Global Note shall deliver to the Registrar a written order given in accordance with the Depositary's procedures containing information regarding the participant account of the Depositary to be credited with a beneficial interest in the relevant Global Note. Subject to Section 313, the Registrar shall, in accordance with such instructions, instruct - ----------- the Depositary to credit to the account of the Person specified in such instructions a beneficial interest in such Global Note and to debit the account of the Person making the transfer of the beneficial interest in the Global Note being transferred. 58 (f) Any Physical Note delivered in exchange for an interest in a Global Note pursuant to paragraph (b) of this Section 312 shall, unless such ----------- exchange is made on or after the Resale Restriction Termination Date applicable to such Note and except as otherwise provided in Section 203 and Section 313, ----------- ----------- bear the Private Placement Legend. (g) The Company, any other obligor upon the Notes or the Trustee, in the discretion of any of them, may treat as the Act of a Holder any instrument or writing of any Person that is identified by the Depositary as the owner of a beneficial interest in the Global Note, provided that the fact and date of the -------- execution of such instrument or writing is proved in accordance with Section ------- 108(b). - ------ Section 313. Special Transfer Provisions. (1) Transfers to Non-U.S. --------------------------- --------------------- Persons. The following provisions shall apply with respect to the registration - ------- of any proposed transfer of a Note that is a Restricted Security to any Non-U.S. Person: The Note Registrar shall register such transfer if it complies with all other applicable requirements of this Indenture (including Section 305) and, ----------- (a) if (x) such transfer is after the relevant Resale Restriction - Termination Date with respect to such Note or (y) the distribution - compliance period set forth in Regulation S has expired and the proposed transferor has delivered to the Note Registrar a Regulation S Certificate and, unless otherwise agreed by the Company and the Trustee, an opinion of counsel, certifications and other information satisfactory to the Company and the Trustee, and (b) if the proposed transferor is or is acting through an Agent Member holding a beneficial interest in a Global Note, upon receipt by the Note Registrar of (x) the certificate, opinion, certifications and other - information, if any, required by clause (a) above and (y) written - instructions given in accordance with the Depositary's and the Note Registrar's procedures; whereupon (i) the Note Registrar shall reflect on its books and records the date - and (if the transfer does not involve a transfer of any Outstanding Physical Note) a decrease in the principal amount of the relevant Global Note in an amount equal to the principal amount of the beneficial interest in the relevant Global Note to be transferred, and (ii) either (A) if the proposed transferee is -- - or is acting through an Agent Member holding a beneficial interest in a relevant Offshore Global Note, the Trustee shall reflect on its books and records the date and an increase in the principal amount of such Offshore Global Note in an amount equal to the principal amount of the beneficial interest being so transferred or (B) otherwise the Company shall execute and the Trustee shall - authenticate and deliver one or more Physical Notes of like tenor and amount. 59 (2) Transfers to QIBs. The following provisions shall apply with ----------------- respect to the registration of any proposed transfer of a Note that is a Restricted Security to a QIB (excluding transfers to Non-U.S. Persons): The Note Registrar shall register such transfer if it complies with all other applicable requirements of this Indenture (including Section 305) and, ----------- (a) if such transfer is being made by a proposed transferor who has checked the box provided for on the form of such Note stating, or has otherwise certified to the Company and the Note Registrar in writing, that the sale has been made in compliance with the provisions of Rule 144A to a transferee who has signed the certification provided for on the form of such Note stating, or has otherwise certified to the Company and the Note Registrar in writing, that it is purchasing such Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a QIB within the meaning of Rule 144A, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as it has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon its foregoing representations in order to claim the exemption from registration provided by Rule 144A; and (b) if the proposed transferee is an Agent Member, and the Note to be transferred consists of a Physical Note that after transfer is to be evidenced by an interest in a Global Note or consists of a beneficial interest in a Global Note that after the transfer is to be evidenced by an interest in a different Global Note, upon receipt by the Note Registrar of written instructions given in accordance with the Depositary's and the Note Registrar's procedures, whereupon the Note Registrar shall reflect on its books and records the date and an increase in the principal amount of the transferee Global Note in an amount equal to the principal amount of the Physical Note or such beneficial interest in such transferor Global Note to be transferred, and the Trustee shall cancel the Physical Note so transferred or reflect on its books and records the date and a decrease in the principal amount of such transferor Global Note, as the case may be. (3) Limitation on Issuance of Physical Notes. No Physical Note shall ---------------------------------------- be exchanged for a beneficial interest in any Global Note, except in accordance with Section 312 and this Section 313. ----------- ----------- A beneficial owner of an interest in a Unitary Global Note or an Offshore Global Note shall not be permitted to exchange such interest for a Physical Note until a date, which must be after the expiration of the distribution compliance period set forth in Regulation S, on which the Company receives a certificate of beneficial ownership substantially in the form of Exhibit D from such beneficial owner (a "Certificate of Beneficial Ownership"). ----------------------------------- Such 60 date, as it relates to an Offshore Global Note, is herein referred to as the "Offshore Note Exchange Date." - ---------------------------- (4) Private Placement Legend. Upon the transfer, exchange or ------------------------ replacement of Notes not bearing the Private Placement Legend, the Note Registrar shall deliver Notes that do not bear the Private Placement Legend. Upon the transfer, exchange or replacement of Notes bearing the Private Placement Legend, the Note Registrar shall deliver only Notes that bear the Private Placement Legend, unless (i) the requested transfer is after the - relevant Resale Restriction Termination Date with respect to such Notes, or (ii) -- upon written request of the Company after there is delivered to the Note Registrar an opinion of counsel (which opinion and counsel are satisfactory to the Company and the Trustee) to the effect that neither such legend nor the related restrictions on transfer are required in order to maintain compliance with the provisions of the Securities Act, or (iii) with respect to an Offshore --- Global Note or Offshore Physical Note only, with the agreement of the Company on or after the Offshore Note Exchange Date with respect to such Note, or (iv) such -- Notes are sold or exchanged pursuant to an effective registration statement under the Securities Act. (5) Other Transfers. The Note Registrar shall effect and register, --------------- upon receipt of a written request from the Company so to do, a transfer not otherwise permitted by this Section 313, such registration to be done in ----------- accordance with the otherwise applicable pro visions of this Section 313, upon ----------- the furnishing by the proposed transferor or transferee of a written opinion of counsel (which opinion and counsel are satisfactory to the Company and the Trustee) to the effect that, and such other certifications or information as the Company may require to confirm that, the proposed transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. A Note that is a Restricted Security may not be transferred other than as provided in this Section 313. A beneficial interest in a Global Note that is ----------- a Restricted Security may not be exchanged for a beneficial interest in another Global Note other than through a transfer in compliance with this Section 313. ----------- (6) General. By its acceptance of any Note bearing the Private ------- Placement Legend, each Holder of such a Note acknowledges the restrictions on transfer of such Note set forth in this Indenture and in the Private Placement Legend and agrees that it will transfer such Note only as provided in this Indenture. The Note Registrar shall retain copies of all letters, notices and other written communications received pursuant to Section 312 or this Section ----------- ------- 313 (including all Notes received for transfer pursuant to this Section 313). - --- ----------- The Company shall have the right to require the Note Registrar to deliver to the Company, at the Company's expense, copies of all 61 such letters, notices or other written communications at any reasonable time upon the giving of reasonable written notice to the Note Registrar. In connection with any transfer of any Note, the Trustee, the Note Registrar and the Company shall be entitled to receive, shall be under no duty to inquire into, may conclusively presume the correctness of, and shall be fully protected in relying upon the certificates, opinions and other information referred to herein (or in the forms provided herein, attached hereto or to the Notes, or otherwise) received from any Holder and any transferee of any Note regarding the validity, legality and due authorization of any such transfer, the eligibility of the transferee to receive such Note and any other facts and circumstances related to such transfer. Section 314. Payment of Additional Interest. (a) Under certain ------------------------------ circumstances the Company will be obligated to pay certain additional amounts of interest to the Holders of certain Initial Notes, as more particularly set forth in such Initial Notes. (b) Under certain circumstances the Company may be obligated to pay certain additional amounts of interest to the Holders of certain Initial Additional Notes, as may be more particularly set forth in such Initial Additional Notes. ARTICLE 4 COVENANTS --------- Section 401. Payment of Principal, Premium and Interest. The Company ------------------------------------------ will duly and punctually pay the principal of (and premium, if any) and interest on the Notes in accordance with the terms of the Notes and this Indenture. Section 402. Maintenance of Office or Agency. The Company will ------------------------------- maintain in the Borough of Manhattan, The City of New York an office or agency where Notes may be presented or surrendered for payment, where Notes may be surrendered for transfer or exchange and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Company will give prompt written notice to the Trustee of the location, and of any change in the location, of such office or agency. If at any time the Company shall fail to maintain such office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee. The Company hereby designates the Corporate Trust Office as the initial Place of Payment and appoints the Trustee its agent to 62 receive all such presentations, surrenders, notices and demands so long as such Corporate Trust Office remains the Place of Payment. Section 403. Money for Payments To Be Held in Trust. If the Company -------------------------------------- shall at any time act as its own Paying Agent, it will, on or before each due date of the principal of (and premium, if any) or interest on, any of the Notes, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal (and premium, if any) or interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided, and will promptly notify the Trustee of its action or failure so to act. If the Company is not acting as its own Paying Agent, it will, prior to each due date of the principal of (and premium, if any) or interest on, any Notes, deposit with a Paying Agent a sum sufficient to pay the principal (and premium, if any) or interest, so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal, premium or interest, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to act. If the Company is not acting as its own Paying Agent, the Company will cause any Paying Agent other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section 403, that such Paying Agent will ----------- (1) hold all sums held by it for the payment of principal of (and premium, if any) or interest on Notes in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided; (2) give the Trustee notice of any default by the Company (or any other obligor upon the Notes) in the making of any such payment of principal (and premium, if any) or interest; (3) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent; and (4) acknowledge, accept and agree to comply in all respects with the provisions of this Indenture and TIA relating to the duties, rights and liabilities of such Paying Agent. 63 The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of (and premium, if any) or interest on any Note and remaining unclaimed for two years after such principal (and premium, if any) or interest has become due and payable shall be paid in the appropriate proportion to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Note shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease. Section 404. SEC Reports. Notwithstanding that the Company may not ----------- be required to be or remain subject to the reporting requirements of Section 13(a) or 15(d) of the Exchange Act, the Company will file with the SEC (unless such filing is not permitted under the Exchange Act or by the SEC), so long as Notes are outstanding, the annual reports, information, documents and other reports that the Company is required to file with the Commission pursuant to such Section 13(a) or 15(d) or would be so required to file if the Company were so subject. The Company will also, within 15 days after the date on which the Company was so required to file or would be so required to file if the Company were so subject (or, if later, 120 days after the Issue Date), transmit by mail to all Holders, as their names and addresses appear in the Note Register, and to the Trustee copies of any such information, documents and reports (without exhibits) so required to be filed (or, in lieu of one or more of the annual report for the fiscal year ended March 31, 1998 and the quarterly reports for the following fiscal year, a registration statement filed with the SEC under the Securities Act or any amendment thereto, provided such registration statement or amendment contains the information that would have been included in each such report). The Company will be deemed to have satisfied such requirements if Holding files and provides reports, documents and information of the types otherwise so required, in each case within the applicable time periods, and the Company is not required to file such reports, documents and information separately under the applicable rules and regulations of the SEC (after giving effect to any exemptive relief) because of the filings by Holding. The Company also will comply with the other provisions of TIA (S) 314(a). 64 Section 405. Statement as to Default. The Company will deliver to ----------------------- the Trustee, within 120 days after the end of each fiscal year of the Company ending after the date hereof, an Officer's Certificate, to the effect that to the best knowledge of the signer thereof the Company is or is not in default in the performance and observance of any of the terms, provisions and conditions of this Indenture (without regard to any period of grace or requirement of notice provided hereunder) and, if the Company shall be in default, specifying all such defaults and the nature and status thereof of which such signer may have knowledge. To the extent required by the TIA, each Note Guarantor shall comply with TIA (S) 314(a)(4). The individual signing any certificate given by any Person pursuant to this Section 405 shall be the principal executive, financial ----------- or accounting officer of such Person, in compliance with TIA (S) 314(a)(4). Section 406. Limitation on Indebtedness. (a) The Company will not, -------------------------- and will not permit any Restricted Subsidiary to, Incur any Indebtedness; provided, however, that the Company or any Note Guarantor may Incur Indebtedness - -------- ------- if on the date of the Incurrence of such Indebtedness, after giving effect to the Incurrence thereof, the Consolidated Coverage Ratio would be greater than 1.75:1.00 if such Indebtedness is Incurred prior to June 1, 2001 or 2.00:1.00 if such Indebtedness is Incurred thereafter. (b) Notwithstanding the foregoing paragraph (a) of this Section 406, ----------- the Company and its Restricted Subsidiaries may Incur the following Indebtedness: (i) Indebtedness Incurred pursuant to the Senior Credit Facility (including but not limited to in respect of letters of credit or bankers' acceptances issued or created thereunder) and Indebtedness of any Foreign Subsidiary Incurred other than under the Senior Credit Facility, and (without limiting the foregoing), in each case, any Re financing Indebtedness in respect thereof, in a maximum principal amount at any time outstanding not exceeding in the aggregate the amount equal to (A) $410.0 - million, plus (B) the amount, if any, by which the Borrowing Base exceeds ---- - $110.0 million, plus (C) in the case of any refinancing of the Senior ---- - Credit Facility or any portion thereof, the aggregate amount of fees, underwriting discounts, premiums and other costs and expenses incurred in connection with such refinancing; (ii) Indebtedness (A) of any Restricted Subsidiary to the Company or - (B) of the Company or any Restricted Subsidiary to any Restricted - Subsidiary; provided, that any subsequent issuance or transfer of any -------- Capital Stock of such Restricted Subsidiary to which such Indebtedness is owed, or other event, that results in such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of such Indebtedness (except to the Company or a Restricted Subsidiary) will be deemed, in each case, an Incurrence of such Indebtedness by the issuer thereof; 65 (iii) Indebtedness represented by the Notes (other than any Additional Notes), any Indebtedness (other than the Indebtedness described in clauses (i) or (ii) above) outstanding on the Issue Date and any Refinancing Indebtedness Incurred in respect of any Indebtedness described in this clause (iii) or paragraph (a) of this Section 406; ----------- (iv) Purchase Money Obligations and Capitalized Lease Obligations, and any Refinancing Indebtedness with respect thereto, in an aggregate principal amount at any time outstanding not exceeding an amount equal to 10% of Consolidated Total Assets at any time outstanding; (v) Indebtedness of any Foreign Subsidiary Incurred for working capital purposes; (vi) (A) Guarantees by the Company or any Restricted Subsidiary of In- - debtedness or any other obligation or liability of the Company or any Restricted Subsidiary (other than any Indebtedness incurred by the Company or such Restricted Subsidiary, as the case may be, in violation of this Section 406), or (B) without limiting Section 412, Indebtedness of the ----------- - ----------- Company or any Restricted Subsidiary arising by reason of any Lien granted by or applicable to such Person securing Indebtedness of the Company or any Restricted Subsidiary (other than any Indebtedness incurred by the Company or such Restricted Subsidiary, as the case may be, in violation of this Section 406); ----------- (vii) Indebtedness of the Company or any Restricted Subsidiary (A) - arising from the honoring of a check, draft or similar instrument of such Person drawn against insufficient funds, provided that such Indebtedness is extinguished within five Business Days of its incurrence, or (B) consisting - of guarantees, indemnities, obligations in respect of earnouts or other purchase price adjustments, or similar obligations, Incurred in connection with the acquisition or disposition of any business, assets or Person (including pursuant to the Recapitalization); (viii) Indebtedness of the Company or any Restricted Subsidiary in respect of (A) letters of credit, bankers' acceptances or other similar - instruments or obligations issued, or relating to liabilities or obligations incurred, in the ordinary course of business (including those issued to governmental entities in connection with self-insurance under applicable workers' compensation statutes), or (B) completion guarantees, - surety, judgment, appeal or performance bonds, or other similar bonds, instruments or obligations, provided, or relating to liabilities or obligations incurred, in the ordinary course of business, or (C) Hedging - Obligations entered into for bona fide 66 hedging purposes in the ordinary course of business, or (D) Management - Guarantees, or (E) the financing of insurance premiums in the ordinary - course of business; (ix) Indebtedness of a Receivables Subsidiary secured by a Lien on all or part of the assets disposed of in, or otherwise incurred in connection with, a Financing Disposition; (x) Indebtedness of any Person that is assumed by the Company or any Restricted Subsidiary in connection with its acquisition of assets from such Person or any Affiliate thereof or is issued and outstanding on or prior to the date on which such Person was acquired by the Company or any Restricted Subsidiary or merged or consolidated with or into any Restricted Subsidiary (other than Indebtedness Incurred to finance, or otherwise in connection with, such acquisition), provided that on the date of such -------- acquisition, merger or consolidation, after giving effect thereto, (x) with - respect to any such Indebtedness of the Company or any Note Guarantor, (A) - the Company could Incur at least $1.00 of additional Indebtedness pursuant to paragraph (a) of this Section 406 or (B) the Consolidated Coverage Ratio ----------- - is greater than it was on such date immediately prior to giving effect to such acquisition and (y) with respect to any such Indebtedness of any - Restricted Subsidiary that is not a Note Guarantor, the Company could Incur at least $1.00 of additional Indebtedness pursuant to paragraph (a) of this Section 406; and any Refinancing Indebtedness with respect to any such ----------- Indebtedness; (xi) Indebtedness of the Company or any Restricted Subsidiary in an amount at any time outstanding not exceeding twice the amount of Excluded Contributions made after the Issue Date; provided that the proceeds of such -------- Indebtedness and the related amount of such Excluded Contributions are used to finance the acquisition of assets of any Person in a Related Business or the merger or consolidation of such a Person into or with the Company or any Restricted Subsidiary (including but not limited to payment of any related fees and expenses) or to refinance any such acquisition, merger or consolidation with such Indebtedness being Incurred for such refinancing within nine months of the closing of such acquisition, merger or consolidation; and any Re financing Indebtedness with respect to any such Indebtedness; and (xii) Indebtedness of the Company or any Restricted Subsidiary in an aggregate principal amount at any time outstanding not exceeding an amount equal to 20% of Consolidated Total Assets. (c) For purposes of determining compliance with, and the outstanding principal amount of any particular Indebtedness Incurred pursuant to and in compliance with, this Section 406, (i) any other obligation of the obligor on ----------- - such Indebtedness (or of any other 67 Person who could have Incurred such Indebtedness under this Section 406) arising ----------- under any Guarantee, Lien or letter of credit, bankers' acceptance or other similar instrument or obligation supporting such Indebtedness shall be disregarded to the extent that such Guarantee, Lien or letter of credit, bankers' acceptance or other similar instrument or obligation secures the principal amount of such Indebtedness; (ii) in the event that Indebtedness meets -- the criteria of more than one of the types of Indebtedness described in paragraph (b) of this Section 406, the Company, in its sole discretion, shall ----------- classify such item of Indebtedness and only be required to include the amount and type of such Indebtedness in one of such clauses; and (iii) the amount of --- Indebtedness issued at a price that is less than the principal amount thereof shall be equal to the amount of the liability in respect thereof determined in accordance with GAAP. (d) For purposes of determining compliance with any Dollar- denominated restriction on the Incurrence of Indebtedness denominated in a foreign currency, the Dollar-equivalent principal amount of such Indebtedness Incurred pursuant thereto shall be calculated based on the relevant currency exchange rate in effect on the date that such Indebtedness was Incurred, in the case of term Indebtedness, or first committed, in the case of revolving credit Indebtedness, provided that (x) the Dollar-equivalent principal amount of any -------- - such Indebtedness outstanding on the Issue Date shall be calculated based on the relevant currency exchange rate in effect on the Issue Date, (y) if such - Indebtedness is Incurred to refinance other Indebtedness denominated in a foreign currency, and such refinancing would cause the applicable Dollar- denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such Dollar-denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness does not exceed the principal amount of such Indebtedness being refinanced and (z) the Dollar-equivalent principal - amount of Indebtedness denominated in a foreign currency and Incurred pursuant to the Senior Credit Facility shall be calculated based on the relevant currency exchange rate in effect on, at the Company's option, (i) the Issue Date, (ii) - -- any date on which any of the respective commitments under the Senior Credit Facility shall be reallocated between or among facilities or subfacilities thereunder, or on which such rate is otherwise calculated for any purpose thereunder, or (iii) the date of such Incurrence. The principal amount of any --- Indebtedness Incurred to refinance other Indebtedness, if Incurred in a different currency from the Indebtedness being refinanced, shall be calculated based on the currency exchange rate applicable to the currencies in which such respective Indebtedness is denominated that is in effect on the date of such refinancing. Section 407. Limitation on Layering. The Company shall not Incur any ---------------------- Indebtedness that is expressly subordinated in right of payment to any Senior Indebtedness of the Company, unless such Indebtedness so Incurred ranks pari ---- passu in right of payment with the Notes, or is subordinated in right of payment - ----- to the Notes. No Note Guarantor shall Incur 68 any Indebtedness that is expressly subordinated in right of payment to any Guarantor Senior Indebtedness of such Note Guarantor, unless such Indebtedness so Incurred ranks pari passu in right of payment with such Note Guarantor's Note ---- ----- Guarantee, or is subordinated in right of payment to such Note Guarantor's Note Guarantee. Unsecured Indebtedness is not deemed to be subordinate or junior to secured Indebtedness merely because it is unsecured, and In debtedness that is not guaranteed by a particular Person is not deemed to be subordinate or junior to Indebtedness that is so guaranteed merely because it is not so guaranteed. Section 408. Limitation on Restricted Payments. (a) The Company --------------------------------- shall not, and shall not permit any Restricted Subsidiary, directly or indirectly, to (i) declare or pay any dividend or make any distribution on or in - respect of its Capital Stock (including any such payment in connection with any merger or consolidation to which the Company is a party) except (x) dividends or - distributions payable solely in its Capital Stock (other than Disqualified Stock) and (y) dividends or distributions payable to the Company or any - Restricted Subsidiary (and, in the case of any such Restricted Subsidiary making such dividend or distribution, to other holders of its Capital Stock on no more than a pro rata basis, measured by value), (ii) purchase, redeem, retire or --- ---- -- otherwise acquire for value any Capital Stock of the Company held by Persons other than the Company or a Restricted Subsidiary, (iii) purchase, repurchase, --- redeem, defease or otherwise acquire or retire for value, prior to scheduled maturity, scheduled repayment or scheduled sinking fund payment, any Subordinated Obligations (other than a purchase, redemption, defeasance or other acquisition or retirement for value in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of such acquisition or retirement) or (iv) make any Investment -- (other than a Permitted Investment) in any Person (any such dividend, distribution, purchase, redemption, repurchase, defeasance, other acquisition or retirement or Investment being herein referred to as a "Restricted Payment"), if ------------------ at the time the Company or such Restricted Subsidiary makes such Restricted Payment: (1) a Default shall have occurred and be continuing (or would result therefrom); (2) the Company could not incur at least an additional $1.00 of Indebtedness pursuant to paragraph (a) of Section 406; or ----------- (3) the aggregate amount of such Restricted Payment and all other Restricted Payments (the amount so expended, if other than in cash, to be as determined in good faith by the Board of Directors, whose determination shall be conclusive) declared or made subsequent to the Issue Date and then outstanding would exceed the sum of: 69 (A) 50% of the Consolidated Net Income accrued during the period (treated as one accounting period) from March 31, 1998 to the end of the most recent fiscal quarter ending prior to the date of such Restricted Payment for which consolidated financial statements of the Company are available (or, in case such Consolidated Net Income shall be a negative number, 100% of such negative number); (B) the aggregate Net Cash Proceeds, and fair value (as determined in good faith by the Board of Directors) of property or assets, received (x) by the Company as capital contributions to the - Company after the Issue Date or from the issuance or sale (other than to a Restricted Subsidiary) of its Capital Stock (other than Disqualified Stock) after the Issue Date (other than Excluded Contributions) or (y) by the Company or any Restricted Subsidiary from - the issuance and sale by the Company or any Restricted Subsidiary after the Issue Date of Indebtedness that shall have been converted into or exchanged for Capital Stock of the Company (other than Disqualified Stock), plus the amount of cash, property or assets ---- (determined as provided above) received by the Company or any Restricted Subsidiary upon such conversion or exchange; (C) the aggregate amount equal to the net reduction in Investments in Unrestricted Subsidiaries resulting from (i) dividends, - distributions, interest payments, return of capital, repayments of Investments or other transfers of assets to the Company or any Restricted Subsidiary from any Unrestricted Subsidiary, or (ii) the -- redesignation of any Unrestricted Subsidiary as a Restricted Subsidiary (valued in each case as provided in the definition of "In- vestment"), not to exceed in the case of any such Unrestricted Subsidiary the aggregate amount of Investments (other than Permitted Investments) made by the Company or any Restricted Subsidiary in such Unrestricted Subsidiary after the Issue Date; and (D) in the case of any disposition or repayment of any Investment constituting a Restricted Payment (without duplication of any amount deducted in calculating the amount of Investments at any time outstanding included in the amount of Restricted Payments), an amount in the aggregate equal to the lesser of the return of capital, repayment or other proceeds with respect to all such Investments and the initial amount of all such Investments. 70 (b) The provisions of paragraph (a) of this Section 408 will not ----------- prohibit any of the following (each, a "Permitted Payment"): ----------------- (i) any purchase, redemption, repurchase, defeasance or other acquisition or retirement of Capital Stock of the Company or Subordinated Obligations made by exchange (including any such exchange pursuant to the exercise of a conversion right or privilege in connection with which cash is paid in lieu of the issuance of fractional shares) for, or out of the proceeds of the substantially concurrent issuance or sale of, Capital Stock of the Company (other than Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary) or a substantially concurrent capital contribution to the Company; provided, that the Net Cash Proceeds from such -------- issuance, sale or capital contribution shall be excluded in subsequent calculations under clause (B) of the preceding paragraph (a) of this Section 408; ----------- (ii) any purchase, redemption, repurchase, defeasance or other acquisition or retirement of Subordinated Obligations (x) made by exchange - for, or out of the proceeds of the substantially concurrent issuance or sale of, Indebtedness of the Company or Refinancing Indebtedness Incurred in compliance with Section 406, (y) from Net Available Cash to the extent ----------- - permitted by Section 410 or (z) to the extent required by the agreement ----------- - governing such Subordinated Obligations, following the occurrence of a Change of Control (or other similar event described therein as a "change of control"), but only if the Company shall have complied with Section 414 ----------- and, if required, purchased all Notes tendered pursuant to the offer to repurchase all the Notes required thereby, prior to purchasing or repaying such Subordinated Obligations; (iii) dividends paid within 60 days after the date of declaration thereof if at such date of declaration such dividend would have complied with the preceding paragraph (a) of this Section 408; ----------- (iv) Investments or other Restricted Payments in an aggregate amount out standing at any time not to exceed the amount of Excluded Contributions, provided that such Excluded Contributions shall not include -------- any Excluded Contribution the proceeds of which were used to finance the acquisition of assets from any Person in a Related Business or the merger or consolidation of such a Person into or with the Company or any Restricted Subsidiary pursuant to clause (xi) of paragraph (b) of Section ------- 406; --- (v) loans, advances, dividends or distributions by the Company to Holding to permit Holding to repurchase or otherwise acquire its Capital Stock (including any options, warrants or other rights in respect thereof), or payments by the Company to repurchase or otherwise acquire Capital Stock (including any options, warrants or other 71 rights in respect thereof), in each case from Management Investors, such payments, loans, advances, dividends or distributions not to exceed an amount (net of repayments of any such loans or advances) equal to (1) $25.0 - million, plus (2) $5.0 million multiplied by the number of calendar years - that have commenced since the Issue Date, plus the Net Cash Proceeds ---- received by the Company since the Issue Date from, or as a capital contribution from, the issuance or sale to Management Investors of Capital Stock (including any options, warrants or other rights in respect thereof), to the extent such Net Cash Proceeds are not included in any calculation under clause (3)(B)(x) of the preceding paragraph (a) of this Section 408; ----------- (vi) the payment by the Company of, or loans, advances, dividends or distributions by the Company to Holding to pay, dividends on the common stock or equity of the Company or Holding following a public offering of such common stock or equity, in an amount not to exceed in any fiscal year 6% of the aggregate gross proceeds received by the Company in or from such public offering; (vii) Restricted Payments (including loans or advances) in an aggregate amount outstanding at any time not to exceed $10.0 million (net of repayments of any such loans or advances); (viii) loans, advances, dividends or distributions to Holding or other payments by the Company or any Restricted Subsidiary (A) to satisfy - or permit Holding to satisfy obligations under the Management Agreements, (B) pursuant to the Tax Sharing Agreement, or (C) to pay or permit Holding -- - to pay any Holding Expenses or any Related Taxes; (ix) payments by the Company, or loans, advances, dividends or distributions by the Company to Holding to make payments, to holders of Capital Stock of the Company or Holding in lieu of issuance of fractional shares of such Capital Stock, not to exceed $100,000 in the aggregate outstanding at any time; (x) dividends or other distributions of Capital Stock, Indebtedness or other securities of Unrestricted Subsidiaries; and (xi) the Transactions; provided that (A) in the case of clauses (iii), (vi), (vii) and (ix), the net - -------- - amount of any such Permitted Payment shall be included in subsequent calculations of the amount of Restricted Payments, (B) in the case of clause - (v), at the time of any calculation of the amount of Restricted Payments, the net amount of Permitted Payments that have then actually been made 72 under clause (v) that is in excess of 50% of the total amount of Permitted Payments then permitted under clause (v) shall be included in such calculation of the amount of Restricted Payments, (C) in all cases other than pursuant to - clauses (A) and (B) immediately above, the net amount of any such Permitted Payment shall be excluded in subsequent calculations of the amount of Restricted Payments and (D) solely with respect to clause (vii), no Default or Event of - Default shall have occurred or be continuing at the time of any such Permitted Payment after giving effect thereto. Section 409. Limitation on Restrictions on Distributions from ------------------------------------------------ Restricted Subsidiaries. The Company will not, and will not permit any - ----------------------- Restricted Subsidiary to, create or otherwise cause to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to (i) pay dividends or make any other distributions on its Capital - Stock or pay any Indebtedness or other obligations owed to the Company, (ii) -- make any loans or advances to the Company or (iii) transfer any of its property --- or assets to the Company, except any encumbrance or restriction: (1) pursuant to an agreement or instrument in effect at or entered into on the Issue Date (including, without limitation, the Senior Credit Facility), this Indenture or the Notes; (2) pursuant to any agreement or instrument of a Person, or relating to Indebtedness or Capital Stock of a Person, which Person is acquired by or merged or consolidated with or into the Company or any Restricted Subsidiary, or which agreement or instrument is assumed by the Company or any Restricted Subsidiary in connection with an acquisition of assets from such Person, as in effect at the time of such acquisition, merger or consolidation (except to the extent that such Indebtedness was incurred to finance, or otherwise in connection with, such acquisition, merger or consolidation), provided that for purposes of this clause (2), if another -------- Person is the Successor Company, any Subsidiary thereof or agreement or instrument of such Person or any such Subsidiary shall be deemed acquired or assumed, as the case may be, by the Company or a Restricted Subsidiary, as the case may be, when such Person becomes the Successor Company; (3) pursuant to an agreement or instrument (a "Refinancing ----------- Agreement") effecting a refinancing of Indebtedness Incurred pursuant to, --------- or that otherwise extends, renews, refunds, refinances or replaces, an agreement or instrument referred to in clause (1) or (2) of this Section ------- 409 or this clause (3) (an "Initial Agreement") or contained in any --- ----------------- amendment, supplement or other modification to an Initial Agreement (an "Amendment"); provided, however, that the encumbrances and restrictions ---------- -------- ------- contained in any such Refinancing Agreement or Amendment are not materially less 73 favorable to the Holders of the Notes taken as a whole than encumbrances and restrictions contained in the Initial Agreement or Initial Agreements to which such Refinancing Agreement or Amendment relates (as determined in good faith by the Company); (4) (A) that restricts in a customary manner the subletting, - assignment or transfer of any property or asset that is subject to a lease, license or similar contract, or the assignment or transfer of any lease, license or other contract, (B) by virtue of any transfer of, agreement to - transfer, option or right with respect to, or Lien on, any property or assets of the Company or any Restricted Subsidiary not otherwise pro- hibited by this Indenture, (C) contained in mortgages, pledges or other - security agreements securing Indebtedness of a Restricted Subsidiary to the extent restricting the transfer of the property or assets subject thereto, (D) pursuant to customary provisions restricting dispositions of real - property interests set forth in any reciprocal easement agreements of the Company or any Restricted Subsidiary, (E) pursuant to Purchase Money - Obligations that impose encumbrances or restrictions on the property or assets so acquired, (F) on cash or other deposits or net worth imposed by - customers under agreements entered into in the ordinary course of business, (G) pursuant to customary provisions contained in agreements and - instruments entered into in the ordinary course of business (including but not limited to leases and joint venture and other similar agreements entered into in the ordinary course of business) or (H) that arises or is - agreed to in the ordinary course of business and does not detract from the value of property or assets of the Company or any Restricted Subsidiary in any manner material to the Company or such Restricted Subsidiary; (5) with respect to a Restricted Subsidiary (or any of its property or assets) imposed pursuant to an agreement entered into for the direct or indirect sale or disposition of all or substantially all the Capital Stock or assets of such Restricted Subsidiary (or the property or assets that are subject to such restriction) pending the closing of such sale or disposition; (6) required by any applicable law, rule, regulation or order or by any regulatory authority having jurisdiction over the Company or any Restricted Subsidiary or any of their businesses; or (7) pursuant to an agreement or instrument (A) relating to any - Indebtedness permitted to be Incurred subsequent to the Issue Date pursuant to the provisions of Section 406 if the Company determines that such ----------- encumbrance or restriction will not cause the Company not to have the funds necessary to pay the principal of or interest on the Notes, (B) relating to - any sale of receivables by a Foreign Subsidiary or 74 (C) relating to Indebtedness of or a Financing Disposition to or by any - Receivables Entity. Section 410. Limitation on Sales of Assets and Subsidiary Stock. (a) -------------------------------------------------- The Company will not, and will not permit any Restricted Subsidiary to, make any Asset Disposition unless (i) the Company or such Restricted Subsidiary receives consideration (including by way of relief from, or by any other Person assuming responsibility for, any liabilities, contingent or otherwise) at the time of such Asset Disposition at least equal to the fair market value of the shares and assets subject to such Asset Disposition, as such fair market value may be determined (and shall be determined, to the extent such Asset Disposition or any series of related Asset Dispositions involves aggregate consideration in excess of $10.0 million) in good faith by the Board of Directors, whose determination shall be conclusive (including as to the value of all noncash consideration), (ii) in the case of any Asset Disposition (or series of related Asset Dispositions) having a fair market value of $10.0 million or more, at least 75% of the consideration therefor (excluding, in the case of an Asset Disposition (or series of related Asset Dispositions) of assets, any consideration by way of relief from, or by any other Person assuming responsibility for, any liabilities, contingent or otherwise, that are not Indebtedness) received by the Company or such Restricted Subsidiary is in the form of cash, and provided that this clause (ii) shall not apply to any -------- Asset Disposition (or series of related Asset Dispositions), involving assets that accounted for less than two percent of Consolidated EBITDA during the period of the most recent four consecutive fiscal quarters ending prior to the date of such Asset Disposition for which consolidated financial statements of the Company are available, and (iii) an amount equal to 100% of the Net Available Cash from such Asset Disposition is applied by the Company (or any Restricted Subsidiary, as the case may be) as follows: (A) first, either (x) to the extent the Company elects (or is ----- - required by the terms of any Senior Indebtedness or Indebtedness of a Restricted Subsidiary), to prepay, repay or purchase Senior Indebtedness or such Indebtedness of a Restricted Subsidiary (in each case other than Indebtedness owed to the Company or a Restricted Subsidiary) within 365 days after the date of such Asset Disposition, or (y) to the extent the Company or such Restricted Subsidiary - elects, to reinvest in Additional Assets (including by means of an 75 investment in Additional Assets by a Restricted Subsidiary with Net Available Cash received by the Company or another Restricted Subsidiary) within 365 days from the date of such Asset Disposition, or, if such reinvestment in Additional Assets is a project that is authorized by the Board of Directors that will take longer than such 365 days to complete, the period of time necessary to complete such project; (B) second, to the extent of the balance of such Net Available ------ Cash after application in accordance with clause (A) above (such balance, the "Excess Proceeds"), to make an offer to purchase Notes --------------- and (to the extent the Company or such Restricted Subsidiary elects, or is required by the terms thereof) to purchase, redeem or repay any other Senior Subordinated Indebtedness or Guarantor Senior Subordinated Indebtedness, pursuant and subject to the conditions of this Indenture and the agreements governing such other Indebtedness; and (C) third, to the extent of the balance of such Net Available ----- Cash after application in accordance with clauses (A) and (B) above, to fund (to the extent consistent with any other applicable provision of this Indenture) any general corporate purpose (including but not limited to the repurchase, repayment or other acquisition or retirement of any Subordinated Obligations); provided, however, that in connection with any prepayment, repayment or purchase - -------- ------- of Indebtedness pursuant to clause (A)(x) or (B) above, the Company or such Restricted Subsidiary will retire such Indebtedness and will cause the related loan commitment (if any) to be permanently reduced in an amount equal to the principal amount so prepaid, repaid or purchased. Notwithstanding the foregoing provisions of this Section 410, the ----------- Company and the Restricted Subsidiaries shall not be required to apply any Net Available Cash in accordance with this Section 410 except to the extent that the ----------- aggregate Net Available Cash from all Asset Dispositions that is not applied in accordance with this Section 410 exceeds $15.0 million. If the aggregate ----------- principal amount of Notes, Senior Subordinated Indebtedness and Guarantor Senior Subordinated Indebtedness validly tendered and not withdrawn (or otherwise subject to purchase, redemption or repayment) in connection with an offer pursuant to clause (B) above exceeds the Excess Proceeds, the Excess Proceeds will be apportioned between the Notes and such Senior Subordinated Indebtedness and Guarantor Senior Subordinated Indebtedness, with the portion of the Excess Proceeds payable in respect of the Notes to equal the lesser of (x) the Excess - Proceeds amount multiplied by a fraction, the numerator of which is the outstanding principal amount of the Notes and the denominator of which is the sum of the outstanding 76 principal amount of the Notes and the outstanding principal amount of the relevant Senior Subordinated Indebtedness and Guarantor Senior Subordinated Indebtedness, and (y) the aggregate principal amount of Notes validly tendered - and not withdrawn. For the purposes of clause (ii) of the first paragraph of this Section ------- 410, the following are deemed to be cash: (1) Temporary Cash Investments and - --- - Cash Equivalents, (2) the assumption of Indebtedness of the Company (other than - Disqualified Stock of the Company) or any Restricted Subsidiary and the release of the Company or such Restricted Subsidiary from all liability on payment of the principal amount of such Indebtedness in connection with such Asset Disposition, (3) Indebtedness of any Restricted Subsidiary that is no longer a - Restricted Subsidiary as a result of such Asset Disposition, to the extent that the Company and each other Restricted Subsidiary are released from any Guarantee of payment of the principal amount of such Indebtedness in connection with such Asset Disposition, (4) securities received by the Company or any Restricted - Subsidiary from the transferee that are converted by the Company or such Restricted Subsidiary into cash and (5) consideration consisting of Indebtedness - of the Company or any Restricted Subsidiary. (b) In the event of an Asset Disposition that requires the purchase of Notes pursuant to clause (iii)(B) of the first paragraph of this Section 410, ----------- the Company will be required to purchase Notes tendered pursuant to an offer by the Company for the Notes (the "Offer") at a purchase price of 100% of their ----- principal amount plus accrued and unpaid interest to the Purchase Date in accordance with the procedures (including prorating in the event of oversubscription) set forth in paragraph (c) of this Section 410. If the ----------- aggregate purchase price of the Notes tendered pursuant to the Offer is less than the Net Available Cash allotted to the purchase of Notes, the remaining Net Available Cash will be available to the Company for use in accordance with clause (iii)(B) of the first paragraph of this Section 410 (to repay Senior ----------- Subordinated Indebtedness or Guarantor Senior Subordinated Indebtedness) or clause (iii)(C) of the first paragraph of this Section 410. The Company shall ----------- not be required to make an Offer for Notes pursuant to this Section 410 if the ----------- Net Available Cash available therefor (after application of the proceeds as provided in clause (iii)(A) of the first paragraph of this Section 410) is less ----------- than $15.0 million for any particular Asset Disposition (which lesser amounts shall be carried forward for purposes of determining whether an Offer is required with respect to the Net Available Cash from any subsequent Asset Disposition). (c) The Company will, not later than 45 days after the Company becomes obligated to make an Offer pursuant to this Section 410, mail a notice ----------- to each Holder with a copy to the Trustee stating: (1) that an Asset Disposition that requires the purchase of a portion of the Notes has occurred and that such Holder has the right (subject to the prorating described below) to require the Company, to purchase a portion of such Holder's Notes at a purchase price in cash equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of purchase (subject to Section 307); (2) ----------- the circumstances and relevant facts and financial information regarding such Asset Disposition; (3) the repurchase date (which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed); (4) the instructions determined by the Issuers, consistent with this Section 410, that a ----------- Holder must follow in order to have its Notes purchased; and (5) the amount of the Offer. If, upon the expiration of the period for which the Offer remains open, the aggregate principal 77 amount of Notes surrendered by Holders exceeds the amount of the Offer, the Company will select the Notes to be purchased on a pro rata basis (with such adjustments as may be deemed appropriate by the Issuers so that only Notes in denominations of $1,000 or integral multiples thereof, shall be purchased). (d) The Company will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Notes pursuant to this Section 410. To the extent that the provisions of any securities laws or - ----------- regulations conflict with provisions of this Section 410, the Company will ----------- comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this Section 410 by virtue ----------- thereof. Section 411. Limitation on Transactions with Affiliates. (a) The ------------------------------------------ Company will not, and will not permit any Restricted Subsidiary to, directly or indirectly, enter into or conduct any transaction or series of related transactions (including the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate of the Company (an "Affiliate --------- Transaction") unless (i) the terms of such Affiliate Transaction are not - ----------- - materially less favorable to the Company or such Restricted Subsidiary, as the case may be, than those that could be obtained at the time in a transaction with a Person who is not such an Affiliate and (ii) if such Affiliate Transaction -- involves aggregate consideration in excess of $10.0 million, the terms of such Affiliate Transaction have been approved by a majority of the Disinterested Directors. For purposes of this paragraph, any Affiliate Transaction shall be deemed to have satisfied the requirements set forth in this paragraph if (x) - such Affiliate Transaction is approved by a majority of the Disinterested Directors or (y) in the event there are no Disinterested Directors, a fairness - opinion is provided by a nationally recognized appraisal or investment banking firm with respect to such Affiliate Transaction. (b) The provisions of the preceding paragraph (a) of this Section 411 ----------- will not apply to: (i) any Restricted Payment Transaction, (ii) (1) the entering into, maintaining or performance of any - employment contract, collective bargaining agreement, benefit plan, program or arrangement, related trust agreement or any other similar arrangement for or with any employee, officer or director heretofore or hereafter entered into in the ordinary course of business, including vacation, health, insurance, deferred compensation, severance, retirement, savings or other similar plans, programs or arrangements, (2) the payment of - compensation, performance of indemnification or contribution obligations, or any issuance, grant or award of stock, options, other equity-related interests or other securities, to employees, officers or directors in the ordinary course of business, (3) the payment of fees to directors of the - Company or any of its Subsidiaries, (4) any transaction with an officer or - director in the ordinary course of business not involving more than $100,000 in any one case, or (5) Management Advances and payments in - respect thereof, 78 (iii) any transaction with the Company, any Restricted Subsidiary, or any Receivables Entity, (iv) any transaction arising out of agreements or instruments in existence on the Issue Date, and any payments made pursuant thereto, (v) execution, delivery and performance of the Tax Sharing Agreement and Management Agreements, including (1) payment to CDR or any Affiliate of - CDR of a fee of $9.2 million plus out-of-pocket expenses in connection with the Transactions, and (2) payment to CDR or any Affiliate of CDR of fees of - up to $1.0 million in any fiscal year plus all out-of-pocket expenses incurred by CDR or any such Affiliate in connection with its performance of management consulting, monitoring, financial advisory or other services with respect to the Company and its Restricted Subsidiaries, (vi) the Transactions, all transactions in connection therewith (including but not limited to the financing thereof), and all fees or expenses paid or payable in connection with the Transactions, (vii) any transaction in the ordinary course of business on terms not materially less favorable to the Company or the relevant Restricted Subsidiary than those that could be obtained at the time in a transaction with a Person who is not an Affiliate of the Company, and (viii) any transaction in the ordinary course of business, or approved by a majority of the Board of Directors, between the Company or any Restricted Subsidiary and any Affiliate of the Company controlled by the Company that is a joint venture or similar entity. Section 412. Limitation on Liens. The Company shall not, and shall ------------------- not permit any Restricted Subsidiary to, directly or indirectly, create or permit to exist any Lien (other than Permitted Liens) on any of its property or assets (including Capital Stock of any other Person), whether owned on the date of this Indenture or thereafter acquired, securing any Indebtedness of the Company or any Note Guarantor that by its terms is expressly subordinated in right of payment to or ranks pari passu in right of payment with the Notes or ---- ----- such Note Guarantor's Note Guarantee (the "Initial Lien"), unless ------------ contemporaneously therewith effective provision is made to secure the Indebtedness due under this Indenture and the Notes or, in respect of Liens on any Restricted Subsidiary's property or assets, any Note Guarantee of such Restricted Subsidiary, equally and ratably with such obligation for so long as such obligation is so secured by such Initial Lien. Any such Lien thereby created in favor of the Notes or any such Note Guarantee will be automatically and unconditionally released and discharged upon (i) the release and discharge - of the Initial Lien to which it relates, or (ii) any sale, exchange or transfer -- to any Person not an Affiliate of the Company of the property or assets secured by such Initial Lien, or of all of the Capital Stock held by the Company or any Restricted Subsidiary in, or all or substantially all the assets of, any Re- stricted Subsidiary creating such Lien. 79 Section 413. Future Note Guarantors. After the Issue Date, the ---------------------- Company will cause each Significant Domestic Subsidiary that guarantees payment by the Company of Indebtedness of the Company (other than Bank Indebtedness), to execute and deliver to the Trustee a supplemental indenture or other instrument pursuant to which such Subsidiary will guarantee payment of the Notes, whereupon such Subsidiary will become a Note Guarantor for all purposes under this Indenture. In addition, the Company may cause any Subsidiary that is not a Note Guarantor so to guarantee payment of the Notes and become a Note Guarantor. Section 414. Purchase of Notes Upon a Change in Control. (a) Upon a ------------------------------------------ Change of Control Triggering Event, each Holder will have the right to require the Company to repurchase all or any part of such Holder's Notes at a purchase price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of repurchase (subject to Section 307); ----------- provided, however, that, the Company shall not be obligated to repurchase Notes - -------- ------- pursuant to this Section 414 in the event that it has exercised its right to ----------- redeem all of the Notes pursuant to Article 10. ---------- (b) In the event that, at the time of such Change of Control Triggering Event, the terms of the Bank Indebtedness restrict or prohibit the repurchase of Notes pursuant to this Section 414, then prior to the mailing of ----------- the notice to Holders provided for in clause (c) of this Section 414 but in any ----------- event not later than 30 days following the date the Company obtains actual knowledge of any Change of Control Triggering Event (unless the Company has exercised its right to redeem all the Notes as provided in Article 10), the ---------- Company shall (i) repay in full all Bank Indebtedness or offer to repay in full - all Bank Indebtedness and repay the Bank Indebtedness of each lender who has accepted such offer or (ii) obtain the requisite consent under the agreements -- governing the Bank Indebtedness to permit the repurchase of the Notes as provided for in clause (c) of this Section 414. The Company shall first comply ----------- with the provisions of the immediately preceding sentence before it shall be required to repurchase Notes pursuant to the provisions of clause (c) of this Section 414. The Company's failure to comply with the provisions of (x) the - ----------- - first sentence of this clause (b) or (y) clause (c) of this Section 414 shall - ----------- constitute an Event of Default described in clause (4) and not in clause (2) under Section 601. ----------- (c) Unless the Company has exercised its right to redeem all the Notes as set forth in Article 10, the Company shall, not later than 30 days ---------- following the date the Company obtains actual knowledge of any Change of Control Triggering Event having occurred, mail a notice to each Holder with a copy to the Trustee stating: (1) that a Change of Control Triggering Event has occurred - or may occur and that such Holder has, or upon such occurrence will have, the right to require the Company to purchase such Holder's Notes at a purchase price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of purchase (subject to Section 307); (2) the ----------- - circumstances and 80 relevant facts and financial information regarding such Change of Control; (3) - the repurchase date (which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed); (4) the instructions determined by - the Company, consistent with this Section 414, that a Holder must follow in ----------- order to have its Notes purchased; and (5) if such notice is mailed prior to the - occurrence of a Change of Control or Change of Control Triggering Event, that such offer is conditioned on the occurrence of such Change of Control Triggering Event. (d) The Company will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Notes pursuant to this Section 414. To the extent that the provisions of any securities laws or - ----------- regulations conflict with provisions of this Section 414, the Company will ----------- comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this Section 414, by virtue ----------- thereof. ARTICLE 5 SUCCESSOR COMPANY ----------------- Section 501. When the Company May Merge, etc. The Company will not ------------------------------- consolidate with or merge with or into, or convey, transfer or lease all or substantially all its assets to, any Person, unless: (i) the resulting, surviving or transferee Person (the "Successor --------- Company") will be a Person organized and existing under the laws of the ------- United States of America, any State thereof or the District of Columbia and the Successor Company (if not the Company) will expressly assume all the obligations of the Company under the Notes and this Indenture by executing and delivering to the Trustee a supplemental indenture or one or more other documents or instruments in form reasonably satisfactory to the Trustee; (ii) immediately after giving effect to such transaction (and treating any Indebtedness that becomes an obligation of the Successor Company or any Restricted Subsidiary as a result of such transaction as having been Incurred by the Successor Company or such Restricted Subsidiary at the time of such transaction), no Default will have occurred and be continuing; (iii) immediately after giving effect to such transaction, either (A) the Successor Company could Incur at least $1.00 of additional - Indebtedness pursuant to paragraph (a) of Section 406, or (B) the ----------- - Consolidated Coverage Ratio of the Successor 81 Company would equal or exceed the Consolidated Coverage Ratio of the Company immediately prior to giving effect to such transaction; (iv) each Note Guarantor (other than any party to any such consolidation or merger) shall have delivered a supplemental indenture or other document or instrument in form reasonably satisfactory to the Trustee, confirming its Note Guarantee; and (v) the Company will have delivered to the Trustee an Officer's Certificate and an Opinion of Counsel, each to the effect that such consolidation, merger or transfer complies with the provisions described in this paragraph of this Section 501, provided that (x) in giving such ----------- -------- - opinion such counsel may rely on an Officer's Certificate as to compliance with the foregoing clauses (ii) and (iii) and as to any matters of fact, and (y) no Opinion of Counsel will be required for a consolidation, merger - or transfer described in the last paragraph of this Section 501. ----------- Any Indebtedness that becomes an obligation of the Company or any Restricted Subsidiary (or that is deemed to be Incurred by any Restricted Subsidiary that becomes a Restricted Subsidiary) as a result of any such transaction undertaken in compliance with this Section 501, and any Refinancing ----------- Indebtedness with respect thereto, shall be deemed to have been Incurred in compliance with Section 406. ----------- Clauses (ii) and (iii) of the first paragraph of this Section 501 will ----------- not apply to any transaction in which (1) any Restricted Subsidiary consolidates - with, merges into or transfers all or part of its properties and assets to the Company or (2) the Company consolidates or merges with or into or transfers all - or substantially all its assets to (x) an Affiliate incorporated or organized - for the purpose of reincorporating or reorganizing the Company in another jurisdiction or changing its legal structure to a corporation or other entity or (y) a Restricted Subsidiary of the Company so long as all assets of the Company - and the Restricted Subsidiaries immediately prior to such transaction (other than Capital Stock of such Restricted Subsidiary) are owned by such Restricted Subsidiary and its Restricted Subsidiaries immediately after the consummation thereof. The first paragraph of this Section 501 will not apply to the Merger ----------- or the Second Merger. Section 502. Successor Company Substituted. Upon any transaction ----------------------------- involving the Company in accordance with Section 501, in which the Company is ----------- not the Successor Company, the Successor Company will succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture, and thereafter the predecessor Company shall be relieved of all obligations and covenants under this Indenture. 82 ARTICLE 6 REMEDIES -------- Section 601. Events of Default. An "Event of Default" occurs if: ----------------- (1) the Company defaults in any payment of interest on any Note when due, whether or not such payment shall be prohibited by Article 14, and ---------- such default continues for a period of 30 days; (2) the Company defaults in the payment of the principal of any Note when the same becomes due at its Stated Maturity, upon optional redemption, upon required purchase, upon declaration of acceleration or otherwise, whether or not such payment shall be prohibited by Article 14; ---------- (3) the Company fails to comply with Article 5 and such failure --------- continues for 30 days after the notice specified in the penultimate paragraph of this Section 601; ----------- (4) the Company fails to comply with Section 414 (other than a ----------- failure to purchase the Notes), and such failure continues for 30 days after the notice specified in the penultimate paragraph of this Section ------- 601; (5) the Company fails to comply with any of its agreements in the Notes or this Indenture (other than those referred to in (1), (2), (3) and (4) above) and such failure continues for 60 days after the notice specified in the penultimate paragraph of this Section 601; ----------- (6) any Note Guarantor fails to comply with its obligations under any Note Guarantee and such failure continues for 45 days after the notice specified in the penultimate paragraph of this Section 601; ----------- (7) the Company or any Significant Subsidiary fails to pay any Indebtedness within any applicable grace period after final maturity or the acceleration of any such Indebtedness by the holders thereof because of a default if the total amount of such Indebtedness unpaid or accelerated exceeds $15,000,000 or its foreign currency equivalent; 83 (8) the Company or any Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law: (A) commences a voluntary case; (B) consents to the entry of an order for relief against it in an involuntary case; (C) consents to the appointment of a Custodian of it or for any substantial part of its property; or (D) makes a general assignment for the benefit of its creditors; (9) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (A) is for relief against the Company or any Significant Subsidiary in an involuntary case; (B) appoints a Custodian of the Company or any Significant Subsidiary or for any substantial part of its property; or (C) orders the winding up or liquidation of the Company or any Significant Subsidiary; and the order or decree remains unstayed and in effect for 60 days; (10) there is rendered any judgment or decree for the payment of money in an amount (net of any insurance or indemnity payments actually received within 90 days from the entry thereof, or to be received in respect thereof in the event any appeal thereof shall be unsuccessful) in excess of $15,000,000 or its foreign currency equivalent against the Company or any Significant Subsidiary by a court or other adjudicatory authority of competent jurisdiction that is not discharged, or bonded or insured by a third Person, if such judgment or decree remains outstanding for a period of 90 days following such judgment or decree and is not discharged, waived or stayed; or (11) any Note Guarantee by a Note Guarantor that is a Significant Subsidiary fails to be in full force and effect (except as contemplated by the terms thereof or of this Indenture) or any Note Guarantor that is a Significant Subsidiary denies or disaffirms in writing its obligations under its Note Guarantee (other than by reason of 84 the termination of this Indenture or such Note Guarantee or the release of such Note Guarantee in accordance with such Note Guarantee of this Indenture), if such Default continues for 10 days. The foregoing will constitute Events of Default whatever the reason for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body. The term "Bankruptcy Law" means Title 11, United States Code, or any -------------- ------------------ similar Federal, state or foreign law for the relief of debtors. The term "Custodian" means any receiver, trustee, assignee, liquidator, custodian or - ---------- similar official under any Bankruptcy Law. A Default under clause (3), (4), (5) or (6) is not an Event of Default until the Trustee or the Holders of at least 25% in principal amount of the Notes notify the Company (and the Trustee in the case of a notice by Holders) of the Default and the Company does not cure such Default within the time specified therein after receipt of such notice. Such notice must specify the Default, demand that it be remedied and state that such notice is a "Notice of Default." When a Default or an Event of Default is cured, it ceases. The Company shall deliver to the Trustee, within 30 days after the occurrence thereof, written notice in the form of an Officer's Certificate of any Event of Default under clause (7) or (10) and any event that with the giving of notice or the lapse of time would become an Event of Default under clause (3), (4), (5) or (6), its status and what action the Company is taking or proposes to take with respect thereto. Section 602. Acceleration of Maturity; Rescission and Annulment. If -------------------------------------------------- an Event of Default (other than an Event of Default specified in clause (8) or (9) of Section 601 with respect to the Company) occurs and is continuing, the ----------- Trustee by notice to the Company, or the Holders of at least a majority in principal amount of the outstanding Notes by notice to the Company and the Trustee, in either case specifying in such notice the respective Event of Default and that such notice is a "notice of acceleration," may declare the principal of and accrued but unpaid interest on all the Notes to be due and payable, provided that so long as any Designated Senior Indebtedness shall be -------- outstanding, such acceleration shall not be effective until the earlier to occur of (x) five Business Days following delivery of a written notice of such - acceleration of the Notes to the Company and the holders of all Designated Senior Indebtedness or each Representative thereof and (y) the acceleration of - any Designated Senior Indebtedness. Upon the effectiveness of such a declaration, such principal and interest will be due and payable immediately. Notwithstanding the foregoing, if an Event of Default specified in clause (8) or (9) of Section 601 with respect to the Company occurs and is ----------- 85 continuing, then the principal of and any accrued interest on all the Outstanding Notes will ipso facto become and be immediately due and payable ---- ----- without any declaration or other act on the part of the Trustee or any Holder. The Holders of a majority in principal amount of the Outstanding Notes by notice to the Company and the Trustee may rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default have been cured or waived except non-payment of principal or interest that has become due solely because of such acceleration. No such rescission shall affect any subsequent Default or impair any right consequent thereto. Notwithstanding the foregoing, in the event of a declaration of acceleration in respect of the Notes because an Event of Default specified in clause (7) of Section 601 shall have occurred and be continuing, such ----------- declaration of acceleration of the Notes and such Event of Default and all consequences thereof (including without limitation any acceleration or resulting payment default) shall be annulled, waived and rescinded, automatically and without any action by the Trustee or the Holders, and be of no further effect, if within 60 days after such Event of Default arose (x) the Indebtedness that is - the basis for such Event of Default has been discharged, or (y) the holders - thereof have rescinded or waived the acceleration, notice or action (as the case may be) giving rise to such Event of Default, or (z) the default in respect of - such Indebtedness that is the basis for such Event of Default has been cured. Section 603. Other Remedies; Collection Suit by Trustee. If an Event ------------------------------------------ of Default occurs and is continuing, the Trustee may, but is not obligated under this Section 603 to, pursue any available remedy to collect the payment of ----------- principal of or interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture. If an Event of Default specified in Section 601(1) or 601(2) occurs and is continuing, the Trustee may recover - -------------- ------ judgment in its own name and as trustee of an express trust against the Company for the whole amount then due and owing (together with interest on any unpaid interest to the extent lawful) and the amounts provided for in Section 707. ----------- Section 604. Trustee May File Proofs of Claim. The Trustee may file -------------------------------- such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and the Holders allowed in any judicial proceedings relative to the Company or any other obligor upon the Notes, its creditors or its property and, unless prohibited by law or applicable regulations, may vote on behalf of the Holders in any election of a trustee in bankruptcy or other Person performing similar functions, and any Custodian in any such judicial proceeding is hereby authorized by each Holder to make payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and its counsel, and any other amounts due the Trustee under Section 707. ----------- 86 No provision of this Indenture shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. Section 605. Trustee May Enforce Claims Without Possession of Notes. ------------------------------------------------------ All rights of action and claims under this Indenture or the Notes may be prosecuted and enforced by the Trustee without the possession of any of the Notes or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Notes in respect of which such judgment has been recovered. Section 606. Application of Money Collected. Any money collected by ------------------------------ the Trustee pursuant to this Article 6 shall be applied in the following order, --------- at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal (or premium, if any) or interest, upon presentation of the Notes and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: First: to the payment of all amounts due the Trustee under Section ----- ------- 707; --- Second: to holders of Senior Indebtedness to the extent required by ------ Article 14; ---------- Third: to the payment of the amounts then due and unpaid upon the ----- Notes for principal (and premium, if any) and interest, in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Notes for principal (and premium, if any) and interest, respectively; and Fourth: to the Company. ------ Section 607. Limitation on Suits. No Holder may pursue any remedy ------------------- with respect to this Indenture or the Notes unless: (1) such Holder has previously given the Trustee written notice that an Event of Default is continuing; 87 (2) Holders of at least 25% in principal amount of the Outstanding Notes have requested the Trustee in writing to pursue the remedy; (3) such Holder or Holders have offered to the Trustee reasonable security or indemnity against any loss, liability or expense; (4) the Trustee has not complied with the request within 60 days after receipt of the request and the offer of security or indemnity; and (5) the Holders of a majority in principal amount of the Outstanding Notes have not given the Trustee a direction inconsistent with the request during such 60-day period. A Holder may not use this Indenture to affect, disturb or prejudice the rights of another Holder, to obtain a preference or priority over another Holder or to enforce any right under this Indenture except in the manner herein provided and for the equal and ratable benefit of all Holders. Section 608. Unconditional Right of Holders to Receive Principal, ---------------------------------------------------- Premium and Interest. Notwithstanding any other provision in this Indenture, - -------------------- the Holder of any Note shall have the absolute and unconditional right to receive payment of the principal of and all (subject to Section 307) interest on ----------- such Note on the respective Stated Maturity or Interest Payment Dates expressed in such Note and to institute suit for the enforcement of any such payment on or after such respective Stated Maturity or Interest Payment Dates, and such right shall not be impaired without the consent of such Holder. Section 609. Restoration of Rights and Remedies. If the Trustee or ---------------------------------- any Holder has instituted any proceeding to enforce any right or remedy under this Indenture or any Note and such proceeding has been discontinued or abandoned for any reason, or has been deter mined adversely to the Trustee or to such Holder, then and in every such case the Company, any other obligor upon the Notes, the Trustee and the Holders shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted. Section 610. Rights and Remedies Cumulative. No right or remedy ------------------------------ herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right 88 or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. Section 611. Delay or Omission Not Waiver. No delay or omission of ---------------------------- the Trustee or of any Holder of any Note to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article 6 or by law to the Trustee or to --------- the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be. Section 612. Control by Holders. The Holders of not less than a ------------------ majority in aggregate principal amount of the Outstanding Notes shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee, provided that -------- (1) such direction shall not be in conflict with any rule of law or with this Indenture, and (2) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture or, subject to Section 701, that the Trustee ----------- determines is unduly prejudicial to the rights of other Holders or would involve the Trustee in personal liability; provided, however, that the Trustee may take -------- ------- any other action deemed proper by the Trustee that is not inconsistent with such direction. Prior to taking any action under this Indenture, the Trustee shall be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action. This Section 612 shall be in lieu of (S) 316(a)(1)(A) of the TIA, and such (S) - ----------- 316(a)(1)(A) of the TIA is hereby expressly excluded from this Indenture and the Notes, as permitted by the TIA. Section 613. Waiver of Past Defaults. The Holders of not less than a ----------------------- majority in aggregate principal amount of the Outstanding Notes may on behalf of the Holders of all the Notes waive any past Default hereunder and its consequences, except a Default (1) in the payment of the principal of (or premium, if any) or interest on any Note (which may only be waived with the consent of each Holder of Notes affected), or 89 (2) in respect of a covenant or provision hereof that pursuant to the second paragraph of Section 902 cannot be modified or amended without the ----------- consent of the Holder of each Outstanding Note affected. Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon. In case of any such waiver, the Company, any other obligor upon the Notes, the Trustee and the Holders shall be restored to their former positions and rights hereunder and under the Notes, respectively. This paragraph of this Section 613 ----------- shall be in lieu of (S) 316(a)(1)(B) of the TIA and such (S) 316(a)(1)(B) of the TIA is hereby expressly excluded from this Indenture and the Notes, as permitted by the TIA. Section 614. Undertaking for Costs. All parties to this Indenture --------------------- agree, and each Holder of any Note by such Holder's acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture or the Notes, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant. This Section 614 shall not ----------- apply to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of the Outstanding Notes, or to any suit instituted by any Holder for the enforcement of the payment of the principal of (or premium, if any) or interest on any Note on or after the respective Stated Maturity or Interest Payment Dates expressed in such Note. Section 615. Waiver of Stay, Extension or Usury Laws. The Company --------------------------------------- covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury or other similar law wherever enacted, now or at any time hereafter in force, that would prohibit or forgive the Company from paying all or any portion of the principal of (or premium, if any) or interest on the Notes contemplated herein or in the Notes or that may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. 90 ARTICLE 7 THE TRUSTEE ----------- Section 701. Certain Duties and ------------------ Responsibilities. (a) Except during the continuance of an Event of Default, - ---------------- (1) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the re requirements of this Indenture; but in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture, but need not verify the contents thereof. (b) In case an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. (c) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that (i) this paragraph does not - limit the effect of paragraph (a) of this Section 701; (ii) the Trustee shall ----------- -- not be liable for any error of judgment made in good faith by a Trust Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (iii) the Trustee shall not be liable with respect to any action it --- takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 612. ----------- (d) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers, if it shall have reasonable grounds to believe that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. 91 (e) Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of Sections 701 and 703 hereof. - ------------ --- Section 702. Notice of Defaults. Within 90 days after the occurrence ------------------ of any Default, the Trustee shall transmit by mail to all Holders, as their names and addresses appear in the Note Register, notice of such Default hereunder known to the Trustee unless such Default shall have been cured or waived; provided, however, that, except in the case of a Default in the payment -------- ------- of the principal of, premium, if any, or interest on any Note, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of Responsible Officers of the Trustee in good faith determines that the withholding of such notice is in the interests of the Holders. Section 703. Certain Rights of Trustee. Subject to the provisions ------------------------- of Sec tion 701: ------------ (1) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (2) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order thereof, and any resolution of any Person's board of directors shall be sufficiently evidenced if certified by an Officer of such Person as having been duly adopted and being in full force and effect on the date of such certificate; (3) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically pre scribed) may, in the absence of bad faith on its part, rely upon an Officer's Certificate of Holding or the Company; (4) the Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; 92 (5) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (6) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note, other evidence of indebtedness or other paper or document; and (7) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder. Section 704. Not Responsible for Recitals or Issuance of Notes. The ------------------------------------------------- recitals contained herein and in the Notes, except the Trustee's certificates of authentication, shall be taken as the statements of Holding, the Company and any other obligor upon the Notes, and neither the Trustee nor any Authenticating Agent assumes any responsibility for their correct ness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Notes, except that the Trustee represents that it is duly authorized to execute and deliver this Indenture, authenticate the Notes and perform its obligations hereunder and that the statements made by it in a Statement of Eligibility and Qualification on Form T-1 supplied to the Company and any other obligor upon the Notes in connection with the registration of any Notes and any Note Guarantees issued hereunder are and will be true and accurate subject to the qualifications set forth therein. Neither the Trustee nor any Authenticating Agent shall be accountable for the use or application by the Company of Notes or the proceeds thereof. Section 705. May Hold Notes. The Trustee, any Authenticating Agent, -------------- any Paying Agent, any Note Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Notes and, subject to Section 708 and Section 713, may otherwise deal with the Company or ----------- ----------- its Affiliates with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Note Registrar or such other agent. Section 706. Money Held in Trust. Money held by the Trustee in trust ------------------- hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed with the Company. 93 Section 707. Compensation and Reimbursement. The Company agrees, ------------------------------ (1) to pay to the Trustee from time to time reasonable compensation for all services rendered by the Trustee hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (2) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable out-of-pocket expenses incurred by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and (3) to indemnify the Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on the Trustee's part, arising out of or in connection with the administration of the trust or trusts hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. The Company need not pay for any settlement made without its consent. Section 708. Conflicting Interests. If the Trustee has or shall --------------------- acquire a conflicting interest within the meaning of the TIA, the Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the TIA and this Indenture. To the extent permitted by such Act, the Trustee shall not be deemed to have a conflicting interest by virtue of being a trustee under this Indenture with respect to Original Notes and Additional Notes, or a trustee under any other indenture between the Company and the Trustee. Section 709. Corporate Trustee Required; Eligibility. There shall at --------------------------------------- all times be one (and only one) Trustee hereunder. The Trustee shall be a Person that is eligible pursuant to the TIA to act as such and has a combined capital and surplus of at least $50,000,000. If any such Person publishes reports of condition at least annually, pursuant to law or to the requirements of its supervising or examining authority, then for the purposes of this Section ------- 709 and to the extent permitted by the TIA, the combined capital and surplus of - --- such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section ------- 709, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. 94 Section 710. Resignation and Removal; Appointment of Successor. No ------------------------------------------------- resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 711. ----------- The Trustee may resign at any time by giving written notice thereof to the Company. If the instrument of acceptance by a successor Trustee required by Section 711 shall not have been delivered to the Trustee within 30 days after - ----------- the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee. The Trustee may be removed at any time by Act of the Holders of a majority in principal amount of the Outstanding Notes, delivered to the Trustee and to the Company. If at any time: (1) the Trustee shall fail to comply with Section 708 after written ----------- request therefor by the Company or by any Holder who has been a bona fide Holder of a Note for at least six months, or (2) the Trustee shall cease to be eligible under Section 709 and ----------- shall fail to resign after written request therefor by the Company or by any such Holder, or (3) the Trustee shall become incapable of acting or shall be adjudged bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, (A) the Company may remove the Trustee, or (B) subject - - to Section 614, any Holder who has been a bona fide Holder of a Note for at ----------- least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee or Trustees. If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, the Company shall promptly appoint a successor Trustee and shall comply with the applicable requirements of Section 711. If, within one year after such resignation, ----------- removal or incapability, or the occurrence of such vacancy, a successor Trustee shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Notes delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment in 95 accordance with the applicable requirements of Section 711, become the successor ----------- Trustee and to that extent supersede the successor Trustee appointed by the Company. If no successor Trustee shall have been so appointed by the Company or the Holders and accepted appointment in the manner required by Section 711, ----------- then, subject to Section 614, any Holder who has been a bona fide Holder of a ----------- Note for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee. The Company shall give notice of each resignation and each removal of the Trustee and each appointment of a successor Trustee to all Holders in the manner provided in Section 110. Each notice shall include the name of the ----------- successor Trustee and the address of its Corporate Trust Office. Section 711. Acceptance of Appointment by Successor. In case of the -------------------------------------- appointment hereunder of a successor Trustee, every such successor Trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder. Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to above. No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article 7. --------- Section 712. Merger, Conversion, Consolidation or Succession to -------------------------------------------------- Business. Any corporation into which the Trustee may be merged or converted or - -------- with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article 7, --------- without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Notes shall have been authenticated, but not delivered, by the Trustee then 96 in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Notes so authenticated with the same effect as if such successor Trustee had itself authenticated such Notes. Section 713. Preferential Collection of Claims Against the Company. ----------------------------------------------------- If and when the Trustee shall be or become a creditor of the Company (or any other obligor upon the Notes), the Trustee shall be subject to the provisions of the TIA regarding the collection of claims against the Company (or any such other obligor). Section 714. Appointment of Authenticating Agent. The Trustee may ----------------------------------- appoint an Authenticating Agent acceptable to the Company to authenticate the Notes. Any such appointment shall be evidenced by an instrument in writing signed by a Trust Officer, a copy of which instrument shall be promptly furnished to the Company. Unless limited by the terms of such appointment, an Authenticating Agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication (or execution of a certificate of authentication) by the Trustee includes authentication (or execution of a certificate of authentication) by such Authenticating Agent. An Authenticating Agent has the same rights as any Registrar, Paying Agent or agent for service of notices and demands. ARTICLE 8 HOLDERS' LISTS AND REPORTS BY TRUSTEE AND THE COMPANY ------------------------------- Section 801. The Company to Furnish Trustee Names and Addresses of ----------------------------------------------------- Holders. The Company will furnish or cause to be furnished to the Trustee - ------- (1) semi-annually, not more than 15 days after each Regular Record Date, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders as of such Regular Record Date, and (2) at such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished; provided, however, that if and so long as the Trustee shall be the Note - -------- ------- Registrar, no such list need be furnished pursuant to this Section 801. ----------- 97 Section 802. Preservation of Information; Communications to Holders. ------------------------------------------------------ The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list, if any, furnished to the Trustee as provided in Section 801 and the names and addresses ----------- of Holders received by the Trustee in its capacity as Note Registrar; provided, -------- however, that if and so long as the Trustee shall be the Note Registrar, the - ------- Note Register shall satisfy the requirements relating to such list. None of Holding, the Company, any other obligor upon the Notes or the Trustee or any other Person shall be under any responsibility with regard to the accuracy of such list. The Trustee may destroy any list furnished to it as provided in Section 801 upon receipt of a new list so furnished. - ----------- The rights of Holders to communicate with other Holders with respect to their rights under this Indenture or under the Notes, and the corresponding rights and privileges of the Trustee, shall be as provided by the TIA. Every Holder of Notes, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them shall be held accountable by reason of any disclosure of information as to names and addresses of Holders made pursuant to the TIA. Section 803. Reports by Trustee. The Trustee shall transmit to ------------------ Holders such reports concerning the Trustee and its actions under this Indenture as may be required pursuant to the TIA at the times and in the manner provided pursuant thereto. A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange upon which any Notes are listed, with the SEC and with the Company. The Company will notify the Trustee when any Notes are listed on any stock exchange. ARTICLE 9 AMENDMENT, SUPPLEMENT OR WAIVER ------------------------------- Section 901. Without Consent of Holders. Without the consent of the -------------------------- Holders of any Notes, Holding, the Company, the Trustee and (as applicable) any Note Guarantor may enter into one or more indentures supplemental hereto, for any of the following purposes: (1) to cure any ambiguity, omission, defect or inconsistency, (2) to provide for the assumption by a successor of the obligations of the Company under this Indenture, 98 (3) to provide for uncertificated Notes in addition to or in place of certificated Notes, (4) to add Guarantees with respect to the Notes, to secure the Notes, to confirm and evidence the release, termination or discharge of any Guarantee or Lien with respect to or securing the Notes when such release, termination or discharge is pro vided for under this Indenture, (5) to add to the covenants of the Company for the benefit of the Noteholders or to surrender any right or power conferred upon the Company, (6) to provide that any Indebtedness that becomes or will become an obligation of a Successor Company or a Note Guarantor pursuant to a transaction governed by Article 5 (and that is not a Subordinated --------- Obligation) is Senior Subordinated In debtedness or Guarantor Senior Subordinated Indebtedness for purposes of this Indenture, (7) to provide for or confirm the issuance of Additional Notes, (8) to make any change that does not adversely affect the rights of any Holder under the Notes or this Indenture, or (9) to comply with any requirement of the SEC in connection with the qualification fication of this Indenture under the TIA or otherwise. Notwithstanding the foregoing provisions of this Section 901 and ----------- Section 902, on or after the date hereof (but after the execution and delivery - ----------- of this Indenture and the issuance of the Notes and after or concurrently with consummation of the Mergers), any or all of Holding, TTC, TTC Merger Co. and the Trustee may execute and deliver the First Supplemental Indenture, in each case without notice to or consent of any Holder. Section 902. With Consent of Holders. Subject to Section 608, the ----------------------- ----------- Company, Holding, the Trustee and (if applicable) any Note Guarantor may amend or supplement this Indenture or the Notes with the written consent of the Holders of not less than a majority in aggregate principal amount of the Outstanding Notes (including consents obtained in con nection with a tender offer or exchange offer for Notes), and the Holders of not less than a majority in aggregate principal amount of the Outstanding Notes by written notice to the Trustee (including consents obtained in connection with a tender offer or exchange offer for Notes) may waive any existing Default or Event of Default or compliance by the Company or 99 any Subsidiary Guarantor with any provision of this Indenture, the Notes or any Subsidiary Guarantee. Notwithstanding the provisions of this Section 902, without the ----------- consent of each Holder affected, an amendment or waiver, including a waiver pursuant to Section 613, may not: ----------- (i) reduce the principal amount of the Notes whose Holders must consent to an amendment or waiver; (ii) reduce the rate of or extend the time for payment of interest on any Note; (iii) reduce the principal or extend the Stated Maturity of any Note; (iv) reduce the premium payable upon the redemption of any Note or change the date on which any Note may be redeemed as described in Section ------- 1001; ---- (v) make any Note payable in money other than that stated in the Note; (vi) make any change in Article 14 or Article 15 that adversely ---------- ---------- affects the rights of any Holder in any material respect; (vii) impair the right of any Holder to receive payment of principal of and interest on such Holder's Notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such Holder's Notes; or (viii) make any change in the amendment or waiver provisions described in this sentence. Notwithstanding Section 901 and the foregoing provisions of this ----------- Section 902, no amendment to Article 14 or Article 15 of this Indenture or the - ----------- ---------- ---------- definitions relating thereto that adversely affects the rights of any Holder of Senior Indebtedness at the time outstanding (which Senior Indebtedness has been previously designated in writing by the Company to the Trustee for this purpose) may be made unless the holders of such Senior Indebtedness (or any group or representative thereof authorized to give a consent) consent in writing to such amendment. It shall not be necessary for the consent of the Holders under this Section 902 to approve the particular form of any proposed amendment, supplement - ----------- or waiver, but it shall be sufficient if such consent approves the substance thereof. 100 After an amendment, supplement or waiver under this Section 902 ----------- becomes effective, the Company shall mail to the Holders of each Note affected thereby, with a copy to the Trustee, a notice briefly describing the amendment, supplement or waiver. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any supplemental indenture or effectiveness of any such amendment, supplement or waiver. Section 903. Execution of Amendments, Supplements or Waivers. The ----------------------------------------------- Trustee shall sign any amendment, supplement or waiver authorized pursuant to this Article 9 if the amendment, supplement or waiver does not adversely affect --------- the rights, duties, liabilities or immunities of the Trustee. If it does, the Trustee may, but need not, sign it. In signing or refusing to sign such amendment, supplement or waiver, the Trustee shall be entitled to receive, and shall be fully protected in relying upon, an Officer's Certificate and an Opinion of Counsel to the effect that the execution of such amendment, supplement or waiver has been duly authorized, executed and delivered by the Company and that, subject to applicable bankruptcy, insolvency, fraudulent transfer, fraudulent conveyance, reorganization, moratorium and other laws now or hereinafter in effect affecting creditors' rights or remedies generally and the general principles of equity (including, without limitation, standards of materiality, good faith, fair dealing and reasonableness), whether considered in a proceeding at law or at equity, such amendment, supplement or waiver is a valid and binding agreement of the Company, enforceable against it in accordance with its terms. Section 904. Revocation and Effect of Consents. Until an amendment, --------------------------------- supplement or waiver becomes effective, a consent to it by a Holder is a continuing consent by the Holder and every subsequent Holder of that Note or any Note that evidences all or any part of the same debt as the consenting Holder's Note, even if notation of the consent is not made on any Note. Subject to the following paragraph of this Section 904, any such Holder or subsequent Holder ----------- may revoke the consent as to such Holder's Note by notice to the Trustee or the Company received by the Trustee or the Company, as the case may be, before the date on which the Trustee receives an Officer's Certificate certifying that the Holders of the requisite principal amount of Notes have consented (and not theretofore revoked such consent) to the amendment, supplement or waiver. The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to consent to any amendment, supplement or waiver as set forth in Section 108. ----------- After an amendment, supplement or waiver becomes effective, it shall bind every Holder of Notes, unless it makes a change described in any of clauses (i) through (viii) of the second paragraph of Section 902. In that case, the ----------- amendment, supplement or waiver shall bind each Holder of a Note who has consented to it and every subsequent Holder of such 101 Note or any Note that evidences all or any part of the same debt as the consenting Holder's Note. Section 905. Conformity with TIA. Every amendment or supplemental ------------------- indenture executed pursuant to this Article shall conform to the requirements of the TIA as then in effect. Section 906. Notation on or Exchange of Notes. If an amendment, -------------------------------- supplement or waiver changes the terms of a Note, the Trustee shall (if required by the Company and in accordance with the specific direction of the Company) request the Holder of the Note to deliver it to the Trustee. The Trustee shall (if required by the Company and in accordance with the specific direction of the Company) place an appropriate notation on the Note about the changed terms and return it to the Holder. Alternatively, if the Company or the Trustee so determines, the Company in exchange for the Note shall issue and the Trustee shall authenticate a new Note that reflects the changed terms. Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver. ARTICLE 10 REDEMPTION OF NOTES ------------------- Section 1001. Right of Redemption. (a) Except as set forth in this ------------------- Section 1001, the Notes will not be redeemable at the option of the Company - ------------ prior to May 15, 2003. Thereafter, the Notes will be redeemable, at the Company's option, in whole or in part, and from time to time on and after May 15, 2003 and prior to maturity. Such redemption may be made upon notice mailed by first-class mail to each Holder's registered address in accordance with Section 1005. Any such redemption and notice may, in the Company's discretion, - ------------ be subject to the satisfaction of one or more conditions precedent. The Notes will be so redeemable at the following Redemption Prices (expressed as a percentage of principal amount), plus accrued interest, if any, to the relevant Redemption Date (subject to Section 307), if redeemed during the 12-month period ----------- commencing on May 15 of the years set forth below: REDEMPTION PERIOD PRICE - ------ ---------- 2003 104.875% 2004 103.250% 2005 101.625% 2006 and thereafter 100.000% 102 (b) In addition, at any time and from time to time prior to May 15, 2001, the Company at its option may redeem the Notes in an aggregate principal amount equal to up to 35% of the original aggregate principal amount of the Notes (including the principal amount of any Additional Notes), with funds in an aggregate amount (the "Redemption Amount") not exceeding the aggregate cash ----------------- proceeds of one or more Equity Offerings, at a Redemption Price (expressed as a percentage of principal amount thereof) of 109.75% plus accrued interest, if any, to the Redemption Date (subject to Section 307); provided, however, that an ----------- -------- ------- aggregate principal amount of the Notes equal to at least 65% of the original aggregate principal amount of the Notes (including the principal amount of any Additional Notes) must remain outstanding after each such redemption. The Company may make such redemption upon notice mailed by first-class mail to each Holder's registered address in accordance with Section 1005 (but in no event ------------ more than 180 days after the completion of the related Equity Offering). Any such notice may be given prior to the completion of the related Equity Offering, and any such redemption or notice may, at the Company's discretion, be subject to the satisfaction of one or more conditions precedent, including but not limited to the completion of the related Equity Offering. (c) At any time on or prior to May 15, 2003, the Notes may also be redeemed or purchased (by the Company or any other Person) in whole but not in part, at the Company's option, upon the occurrence of a Change of Control, at a price equal to 100% of the principal amount thereof plus the Applicable Premium as of, and accrued but unpaid interest, if any, to, the Redemption Date (subject to Section 307). Such redemption or purchase may be made upon notice mailed by ----------- first-class mail to each Holder's registered address in accordance with Section ------- 1005 (but in no event more than 180 days after the occurrence of such Change of - ---- Control). The Company may provide in such notice that payment of such price and performance of the Company's obligations with respect to such redemption or purchase may be performed by another Person. Any such notice may be given prior to the occurrence of the related Change of Control, and any such redemption, purchase or notice may, at the Com pany's discretion, be subject to the satisfaction of one or more conditions precedent, including but not limited to the occurrence of the related Change of Control. Section 1002. Applicability of Article. Redemption or purchase of ------------------------ Notes as permitted by Section 1001 shall be made in accordance with this Article ------------ ------- 10. - -- Section 1003. Election to Redeem; Notice to Trustee. In case of any ------------------------------------- redemption at the election of the Company of less than all of the Notes, the Company shall, at least 30 days prior to the Redemption Date initially fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date and of the principal amount of Notes to be redeemed. 103 Section 1004. Selection by Trustee of Notes to Be Redeemed. In the -------------------------------------------- case of any partial redemption, selection of the Notes for redemption will be made not more than 60 days prior to the Redemption Date by the Trustee on a pro --- rata basis, by lot or by such other method as the Trustee in its sole discretion - ---- shall deem to be fair and appropriate, although no Note of $1,000 in original principal amount or less will be redeemed in part. The Trustee shall promptly notify the Company in writing of the Notes selected for redemption and, in the case of any Note selected for partial redemption, the principal amount thereof to be redeemed. On and after the Redemption Date, interest will cease to accrue on Notes or portions thereof called for redemption. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Notes shall relate, in the case of any Note redeemed or to be redeemed only in part, to the portion of the principal of such Note that has been or is to be redeemed. Section 1005. Notice of Redemption. Notice of redemption or purchase -------------------- as provided in Section 1001 shall be given by first class mail, postage prepaid, ------------ mailed not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Notes to be redeemed, at such Holder's address appearing in the Note Register. Any such notice shall state: (1) the expected Redemption Date, (2) the Redemption Price, (3) if less than all Outstanding Notes are to be redeemed, the identification (and, in the case of partial redemption, the respective principal amounts) of the Notes to be redeemed, (4) that on the Redemption Date the Redemption Price will become due and payable upon each such Note, and that, unless the Company defaults in making such redemption payment or the Paying Agent is prohibited from making such payment pursuant to the terms of this Indenture, interest thereon shall cease to accrue from and after said date, and (5) the place where such Notes are to be surrendered for payment of the Redemption Price. 104 In addition, if such redemption, purchase or notice is subject to satisfaction of one or more conditions precedent, as permitted by Section 1001, such notice ------------ shall describe each such condition, and if applicable, shall state that, in the Company's discretion, the Redemption Date may be delayed until such time as any or all such conditions shall be satisfied, or such redemption or purchase may not occur and such notice may be rescinded in the event that any or all such conditions shall not have been satisfied by the Redemption Date, or by the Redemption Date as so delayed. Notice of such redemption or purchase of Notes to be so redeemed or purchased at the election of the Company shall be given by the Company or, at the Company's request, by the Trustee in the name and at the expense of the Company. The notice if mailed in the manner herein provided shall be conclusively presumed to have been given, whether or not the Holder receives such notice. In any case, failure to give such notice by mail or any defect in the notice to the Holder of any Note designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Note. Section 1006. Deposit of Redemption Price. On or prior to any --------------------------- Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, the Company shall segregate and hold in trust as provided in Section 403) an amount of money ----------- sufficient to pay the Redemption Price of, and any accrued and unpaid interest on, all the Notes or portions thereof which are to be redeemed on that date. Section 1007. Notes Payable on Redemption Date. Notice of redemption -------------------------------- having been given as provided in this Article 10, the Notes so to be redeemed ---------- shall, on the Redemption Date, become due and payable at the Redemption Price herein specified and from and after such date (unless Company shall default in the payment of the Redemption Price or the Paying Agent is prohibited from paying the Redemption Price pursuant to the terms of this Indenture) such Notes shall cease to bear interest. Upon surrender of such Notes for redemption in accordance with such notice, such Notes shall be paid by the Company at the Re demption Price. Installments of interest whose Interest Payment Date is on or prior to the Redemption Date shall be payable to the Holders of such Notes registered as such on the relevant Regular Record Dates according to their terms and the provisions of Section 307. ----------- On and after any Redemption Date, if money sufficient to pay the Redemption Price of and any accrued and unpaid interest on Notes called for redemption shall have been made available in accordance with Section 1006, the ------------ Notes (or the portions thereof) called for redemption will cease to accrue interest and the only right of the Holders of such Notes (or 105 portions thereof) will be to receive payment of the Redemption Price of and subject to the last sentence of the preceding paragraph of this Section 1007, ------------ any accrued and unpaid interest on such Notes (or portions thereof) to the Redemption Date. If any Note (or portion thereof) called for redemption shall not be so paid upon surrender thereof for redemption, the principal (and premium, if any) shall, until paid, bear interest from the Redemption Date at the rate borne by the Note (or portion thereof). Section 1008. Notes Redeemed in Part. Any Note that is to be ---------------------- redeemed only in part shall be surrendered at the Place of Payment (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing) and the Company shall execute and the Trustee shall authenticate and deliver to the Holder of such Note without service charge, a new Note or Notes, of any authorized de nomination as requested by such Holder in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Note so surrendered. ARTICLE 11 SATISFACTION AND DISCHARGE -------------------------- Section 1101. Satisfaction and Discharge of Indenture. This --------------------------------------- Indenture shall cease to be of further effect (except as to any surviving rights of conversion or transfer or exchange of Notes herein expressly provided for), and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when (1) either (A) all Notes theretofore authenticated and delivered (other than (i) - Notes that have been destroyed, lost or stolen and that have been replaced or paid as provided in Section 306, and (ii) Notes for whose payment money ----------- -- has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 403) have been delivered to the Trustee ----------- cancelled or for cancellation; or (B) all such Notes not theretofore delivered to the Trustee cancelled or for cancellation (i) have become due and payable, or 106 (ii) will become due and payable at their Stated Maturity within one year, or (iii) are to be called for redemption within one year under arrangements reasonably satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company, (2) the Company has deposited or caused to be deposited with the Trustee an amount in United States dollars, U.S. Government Obligations, or a combination thereof, sufficient to pay and discharge the entire Indebtedness on such Notes not theretofore delivered to the Trustee cancelled or for cancellation, for principal (and premium, if any) and interest to the date of such deposit (in the case of Notes that have become due and payable), or to the Stated Maturity or Redemption Date, as the case may be; (3) the Company has paid or caused to be paid all other sums then payable hereunder by the Company; and (4) the Company has delivered to the Trustee an Officer's Certificate and an Opinion of Counsel each to the effect that all conditions precedent provided for in this Section 1101 relating to the satisfaction and ------------ discharge of this Indenture have been complied with, provided that any such -------- counsel may rely on any Officer's Certificate as to matters of fact (including as to compliance with the foregoing clauses (1), (2) and (3)). Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 707 and, if money shall ----------- have been deposited with the Trustee pursuant to clause (2) of this Section ------- 1101, the obligations of the Trustee under Section 1102, shall survive. ------------ Section 1102. Application of Trust Money. Subject to the provisions -------------------------- of the last paragraph of Section 403, all money deposited with the Trustee ----------- pursuant to Section 1101 shall be held in trust and applied by it, in accordance ------------ with the provisions of the Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest on the Notes; but such money need not be segregated from other funds except to the extent required by law. 107 ARTICLE 12 DEFEASANCE OR COVENANT DEFEASANCE --------------------------------- Section 1201. The Company's Option to Elect Defeasance or Covenant ---------------------------------------------------- Defeasance. The Company may, at its option, at any time, elect to have - ---------- terminated the obligations of the Company with respect to the Outstanding Notes and to have terminated the obligations of Holding and any or all Note Guarantors with respect to the Parent Guarantee or the Note Guarantees, as the case may be, in each case as set forth in this Article 12, and elect to have either Section ---------- ------- 1202 or Section 1203 be applied to all of the Outstanding Notes (the "Defeased - ---- ------------ -------- Notes"), upon compliance with the conditions set forth in Section 1204. Either - ----- ------------ Section 1202 or Section 1203 may be applied to the Defeased Notes to any - ------------ ------------ Redemption Date or the Stated Maturity of the Notes. Section 1202. Defeasance and Discharge. Upon the Company's exercise ------------------------ under Section 1201 of the option applicable to this Section 1202, the Company ------------ ------------ shall be deemed to have been released and discharged from its obligations with respect to the Defeased Notes on the date the relevant conditions set forth in Section 1204 below are satisfied (hereinafter, "Defeasance"). For this purpose, - ------------ ---------- such Defeasance means that the Company shall be deemed to have paid and discharged the entire indebtedness represented by the Defeased Notes, which shall thereafter be deemed to be "Outstanding" only for the purposes of Section ------- 1205 and the other Sections of this Indenture referred to in clauses (a) and (b) - ---- below, and the Company, Holding and each of the Note Guarantors shall be deemed to have satisfied all other obligations under such Notes and this Indenture insofar as such Notes are concerned (and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following, which shall survive until otherwise terminated or discharged hereunder: (a) the rights of Holders of Defeased Notes to receive, solely from - the trust fund described in Section 1204 and as more fully set forth in such ------------ Section, payments in respect of the principal of and premium, if any, and interest on such Notes when such payments are due, (b) the Company's obligations - with respect to such Defeased Notes under Sections 304, 305, 306, 402 and 403, ------------ --- --- --- --- (c) the rights, powers, trusts, duties and immunities of the Trustee hereunder, - -- including the Trustee's rights under Section 707, and (d) this Article 12. ----------- - ---------- Subject to compliance with this Article 12, the Company may, at its option and ---------- at any time, exercise its option under this Section 1202 notwithstanding the ------------ prior exercise of its option under Section 1203 with respect to the Notes. ------------ Section 1203. Covenant Defeasance. Upon the Company's exercise under ------------------- Section 1201 of the option applicable to this Section 1203, (a) the Company, - ------------ ------------ - Holding and any Note Guarantors shall be released from their respective obligations under any covenant or provision contained in Section 404 and ----------- Sections 406 through 414 and the provisions of clauses - ------------ --- 108 (iii), (iv) and (v) of Section 501 shall not apply, and (b) the occurrence of ----------- - any event specified in clause (3) (with respect to clauses (iii), (iv) and (v) of Section 501), (4) and (5) (with respect to Section 404, Sections 406 through ----------- ----------- -------------------- 414, inclusive, and any such covenants provided pursuant to Section 901(5)), - --- -------------- inclusive, (6), (7), (8) or (9) (with respect to Subsidiaries), or (10) of Section 601 shall be deemed not to be or result in an Event of Default, in each - ----------- case with respect to the Defeased Notes on and after the date the conditions set forth below are satisfied (hereinafter, "Covenant Defeasance"), and the Notes ------------------- shall thereafter be deemed not to be "Outstanding" for the purposes of any direction, waiver, consent or declaration or Act of Holders (and the consequences of any thereof) in connection with such covenants or pro visions, but shall continue to be deemed "Outstanding" for all other purposes hereunder. For this purpose, such Covenant Defeasance means that, with respect to the Outstanding Notes, the Company, Holding and any Note Guarantors may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant or provision, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or provision or by reason of any reference in any such covenant or provision to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 601, but, ----------- except as specified above, the remainder of this Indenture and such Outstanding Notes shall be unaffected thereby. Section 1204. Conditions to Defeasance or Covenant Defeasance. The ----------------------------------------------- following shall be the conditions to application of either Section 1202 or ------------ Section 1203 to the Outstanding Notes: - ------------ (1) The Company shall have irrevocably deposited or caused to be deposited with the Trustee in trust cash, in United States dollars, or U.S. Government Obligations or a combination thereof, in amounts as will be sufficient, in the opinion of a nationally recognized accounting or investment banking firm expressed in a written certification thereof delivered to the Trustee, to pay and discharge the principal of, and premium, if any, and interest on the Defeased Notes on the Stated Maturity or relevant Redemption Date in accordance with the terms of this Indenture and the Notes; (2) No Default or Event of Default shall have occurred and be continuing on the date of such deposit or, insofar as Section 601(8) or 601(9) -------------- ------ is concerned, at any time during the period ending on the ninety-first day after the date of such deposit; (3) Such deposit shall not result in a breach or violation of, or constitute a Default or Event of Default under, this Indenture or any other material agreement or instrument to which the Company is a party or by which it is bound; 109 (4) In the case of an election under Section 1202, the Company shall ------------ have delivered to the Trustee an Opinion of Counsel from Debevoise & Plimpton or other counsel to the effect that (x) the Company has received from, or there has - been published by, the Internal Revenue Service a ruling or (y) since the Issue - Date, there has been a change in the applicable Federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm to the effect that, the Holders of the Outstanding Notes will not recognize income, gain or loss for Federal income tax purposes as a result of such Defeasance and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Defeasance had not occurred; (5) In the case of an election under Section 1203, the Company shall ------------ have delivered to the Trustee an Opinion of Counsel from Debevoise & Plimpton or other counsel to the effect that the Holders of the Outstanding Notes will not recognize income, gain or loss for Federal income tax purposes as a result of such Covenant Defeasance and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; and (6) The Company shall have delivered to the Trustee an Officer's Certificate and an Opinion of Counsel, each to the effect that all conditions precedent provided for in this Section 1204 relating to either the Defeasance ------------ under Section 1202 or the Covenant Defeasance under Section 1203, as the case ------------ ------------ may be, have been complied with. In rendering such Opinion of Counsel, counsel may rely on any Officer's Certificate as to compliance with the foregoing clauses (1), (2) and (3) of this Section 1204 or as to any matters of fact. ------------ From and after the time of any deposit pursuant to clause (1) of the first paragraph of this Section 1204, the money or U.S. Government Obligations ------------ so deposited shall not be subject to the rights of the holders of Senior Indebtedness or Obligor Senior In debtedness pursuant to the subordination provisions of Article 14 or Article 15. ---------- ---------- Section 1205. Deposited Money and U.S. Government Obligations To Be ----------------------------------------------------- Held in Trust; Other Miscellaneous Provisions. Subject to the provisions of the - --------------------------------------------- last paragraph of Section 403, all money and U.S. Government Obligations ----------- (including the proceeds thereof) deposited with the Trustee (or such other Person that would qualify to act as successor trustee under Article 7, --------- collectively and solely for purposes of this Section 1205, Section 1412 and ------------ ------------ Section 1512, the "Trustee") pursuant to Section 1204 in respect of the Defeased - ------------ ------- ------------ Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium, if 110 any, and interest, but such money need not be segregated from other funds except to the extent required by law. The Company shall pay and indemnify the Trustee and its agents and hold them harmless against any tax, fee or other charge imposed on or assessed against the U.S. Government Obligations deposited pursuant to Section 1204 or ------------ the principal, premium, if any, and interest received in respect thereof, other than any such tax, fee or other charge that by law is for the account of the Holders of the Defeased Notes. Anything in this Article 12 to the contrary notwithstanding, the ---------- Trustee shall deliver to the Company from time to time upon Company Request any money or U.S. Government Obligations held by it as provided in Section 1204 ------------ hereof that, in the opinion of a nationally recognized accounting or investment banking firm expressed in a written certification thereof to the Trustee, are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Defeasance or Covenant Defeasance. Subject to Article 7, --------- the Trustee shall not incur any liability to any Person by relying on such opinion. Section 1206. Reinstatement. If the Trustee or Paying Agent is ------------- unable to apply any money or U.S. Government Obligations in accordance with Section 1202 or 1203, as the case may be, by reason of any order or judgment of - ------------ ---- any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the obligations of the Company and any other obligor upon the Notes under this Indenture, the Notes, the Parent Guarantee and any Note Guarantees shall be revived and reinstated as though no deposit had occurred pursuant to Section 1202 or 1203, as the case may be, until such time ------------ ---- as the Trustee or Paying Agent is permitted to apply all such money and U.S. Government Obligations in accordance with Section 1202 or 1203, as the case may ------------ ---- be; provided, however, that if either the Company and any other obligor upon the -------- ------- Notes makes any payment of principal, premium, if any, or interest on any Note following the reinstatement of its obligations, then the Com pany and any other obligor upon the Notes shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money and U.S. Government Obligations held by the Trustee or Paying Agent. Section 1207. Repayment to the Company. The Trustee shall pay to the ------------------------ Company upon Company Request any money held by it for the payment of principal or interest that remains unclaimed for two years. After payment to the Company, Holders entitled to money must look to the Company for payment as general creditors unless an applicable abandoned property law designates another Person and all liability of the Trustee or Paying Agent with respect to such money shall thereupon cease. 111 ARTICLE 13 PARENT GUARANTEE AND NOTE GUARANTEES ------------------------------------ Section 1301. Guarantees Generally. (a) Parent Guarantee. Holding, -------------------- ---------------- as a primary obligor and not merely as surety, hereby irrevocably and fully and unconditionally Guarantees, on a senior subordinated basis, the punctual payment when due, whether at Stated Maturity, by acceleration or otherwise, of all monetary obligations of TTC Merger Co. and, after the Second Merger, of the Company under this Indenture and the Notes, whether for principal of or interest on the Notes, expenses, indemnification or otherwise (all such obligations guaranteed by Holding being herein called the "Parent Guaranteed Obligations"). ----------------------------- (b) Note Guarantees. Any Note Guarantor from time to time party --------------- hereto, as primary obligor and not merely as surety, hereby jointly and severally, irrevocably and fully and unconditionally Guarantees, on a senior subordinated basis, the punctual payment when due, whether at Stated Maturity, by acceleration or otherwise, of all monetary obligations of the Company under this Indenture and the Notes, whether for principal of or interest on the Notes, expenses, indemnification or otherwise (all such obligations guaranteed by such Note Guarantors being herein called the "Guaranteed Obligations"). ---------------------- Any term or provision of this Indenture notwithstanding, each Note Guarantee shall not exceed the maximum amount that can be guaranteed by the applicable Note Guarantor without rendering the Note Guarantee, as it relates to such Note Guarantor, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally. (c) Further Agreements of Parent Guarantor and any Note Guarantor. ------------------------------------------------------------- (i) Holding, in its capacity as guarantor of the Parent Guaranteed Obligations hereunder (in such capacity, the "Parent Guarantor") and any Note Guarantor from ---------------- time to time party hereto (each of the Parent Guarantor and any Note Guarantor, a "Guarantor") each hereby agrees that (to the fullest extent permitted by law) --------- its obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of this Indenture, the Notes or the obligations of the Company or any other Guarantor to the Holders or the Trustee hereunder or thereunder, the absence of any action to enforce the same, any waiver or consent by any Holder with respect to any provisions hereof or thereof, any release of any other Guarantor, the recovery of any judgment against the Company, any action to enforce the same, whether or not a notation concerning its respective Parent Guarantee or Note Guarantee is made on any particular Note, or any other circumstance that might otherwise constitute a legal or equitable discharge or defense of a guarantor. 112 (ii) Each Guarantor hereby waives (to the fullest extent permitted by law) the benefit of diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever and covenants that (except as otherwise provided in Section ------- 1303) its Parent Guarantee or Note Guarantee, as the case may be, will not be - ---- discharged except by complete performance of the obligations contained in the Notes, this Indenture, and its Parent Guarantee or Note Guarantee, as the case may be. Such Parent Guarantee or Note Guarantee, as the case may be, is a guarantee of payment and not of collection. Each Guarantor further agrees (to the fullest extent permitted by law) that, as between it, on the one hand, and the Holders of Notes and the Trustee, on the other hand, subject to this Article ------- 13 and Article 15, (1) the maturity of the obligations guaranteed by its Parent - -- ---------- - Guarantee or Note Guarantee, as the case may be, may be accelerated as and to the extent provided in Article 6 for the purposes of such Parent Guarantee or --------- Note Guarantee, as the case may be, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed by such Parent Guarantee or Note Guarantee, as the case may be, and (2) in the event of any acceleration of such obligations as provided in Article - -- ------- 6, such obligations (whether or not due and payable) shall forthwith become due - - and payable by such Guarantor in accordance with the terms of this Section 1301 ------------ for the purpose of such Parent Guarantee or Note Guarantee, as the case may be. Neither the Trustee nor any other Person shall have any obligation to enforce or exhaust any rights or remedies or to take any other steps under any security for the Parent Guaranteed Obligations or the Guaranteed Obligations (collectively, the "Guaranteed Note Obligations") or against the Company or any other Person or --------------------------- any property of the Company or any other Person before the Trustee is entitled to demand payment and performance by any or all Guarantors of their obligations under their respective Parent Guarantee or Note Guarantees or under this In denture. (iii) Until terminated in accordance with Section 1303, the Parent ------------ Guarantee and any Note Guarantee shall remain in full force and effect and continue to be effective should any petition be filed by or against the Company for liquidation or reorganization, should the Company become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of the Company's assets, and shall, to the fullest extent permitted by law, continue to be effective or be rein stated, as the case may be, if at any time payment and performance of the Notes are, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee on such Notes, whether as a "voidable preference," "fraudulent transfer" or otherwise, all as though such payment or performance had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Notes shall, to the fullest extent permitted by law, be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned. 113 (d) Each Guarantor that makes a payment or distribution under the Parent Guarantee or any Note Guarantee, as the case may be, shall have the right to seek contribution from the Company or any non-paying Guarantor that has also Guaranteed the Guaranteed Note Obligations in respect of which such payment or distribution is made, so long as the exercise of such right does not impair the rights of the Holders under the Parent Guarantee or this Note Guarantee. (e) Each Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by this Indenture and that its Parent Guarantee or its Note Guarantee, as the case may be, and the waiver set forth in Section 1305 is knowingly made in contemplation of such ------------ benefits. (f) Each Guarantor also hereby agrees to pay any and all reasonable out-of-pocket expenses (including reasonable counsel fees and expenses) incurred by the Trustee or the Holders in enforcing any rights under its Parent Guarantee or its Note Guarantee, as the case may be. Section 1302. Continuing Guarantees. (a) The Parent Guarantee shall --------------------- be a continuing Guarantee and shall (i) remain in full force and effect until - payment in full of the principal amount of all outstanding Notes (whether by payment at maturity, purchase, redemption, defeasance, retirement or other acquisition) and all other Parent Guaranteed Obligations then due and owing, (ii) be binding upon Holding and (iii) inure to the benefit of and be -- --- enforceable by the Trustee, the Holders and their permitted successors, transferees and assigns. (b) Each Note Guarantee shall be a continuing Guarantee and shall (i) - remain in full force and effect until payment in full of the principal amount of all outstanding Notes (whether by payment at maturity, purchase, redemption, defeasance, retirement or other acquisition) and all other Guaranteed Obligations then due and owing, unless earlier terminated as provided in Section ------- 1303, (ii) be binding upon such Note Guarantor and (iii) inure to the benefit of - ---- -- --- and be enforceable by the Trustee, the Holders and their permitted successors, transferees and assigns. Section 1303. Release of Parent Guarantee and Note Guarantees. Not ----------------------------------------------- withstanding the provisions of Section 1302 the Parent Guarantee and any Note ------------ Guarantee will be subject to termination and discharge under the circumstances described in this Section 1303: ------------ (a) Holding will automatically and unconditionally be released from all obligations under the Parent Guarantee, and the Parent Guarantee shall thereupon terminate and be discharged and of no further force or effect, (i) upon any merger or - 114 consolidation of Holding with and into the Company, (ii) upon the legal or -- covenant defeasance of the Company's obligations or satisfaction and discharge of this Indenture as provided in Article 11 or Article 12, or ---------- ---------- (iii) subject to clause (c)(iii) of Section 1301, upon payment in full of ---- ------------ the aggregate principal amount of all Notes then outstanding and all other Parent Guaranteed Obligations then due and owing. (b) Any Note Guarantor will automatically and unconditionally be released from all obligations under its Note Guarantee, and such Note Guarantee shall thereupon terminate and be discharged and of no further force or effect, (i) concurrently with any sale or disposition (by merger - or otherwise) of any Note Guarantor or any interest therein in accordance with the terms of the Indenture (including the Section 410) by the Company ----------- or a Restricted Subsidiary, following which such Note Guarantor is no longer a Restricted Subsidiary of the Company, (ii) pursuant to the terms -- of its Note Guarantee, (iii) at any time that such Note Guarantor is --- released from all of its obligations under all of its Guarantees of payment by the Company of Indebtedness (other than Bank Indebtedness) of the Company, (iv) upon the merger or consolidation of any Note Guarantor with -- and into the Company or another Note Guarantor that is the surviving Person in such merger or consolidation, (v) upon legal or covenant defeasance of - the Company's obligations, or satisfaction and discharge of the Indenture as provided in Article 11 or Article 12, or (vi) subject to clause (c)(iii) ---------- ---------- -- of Section 1301, upon payment in full of the aggregate principal amount of ------------ all Notes then outstanding and all other Guaranteed Obligations then due and owing. (c) Upon 30 days' notice by the Company to the Trustee, any Note Guarantor that has not guaranteed payment by the Company of any other Indebtedness (other than Bank Indebtedness) of the Company shall be unconditionally released from all obligations under its Note Guarantee, and such Note Guarantee shall thereupon terminate and be discharged and of no further force or effect. Upon any such occurrence specified in this Section 1303, the Trustee ------------ shall execute any documents reasonably required in order to evidence such release, discharge and termination in respect of such Guarantor's Parent Guarantee or Note Guarantee, as the case may be. Section 1304. Agreement to Subordinate. Each of the Parent Guarantee ------------------------ and any Note Guarantee is, to the extent and in the manner set forth in Article ------- 15, subordinated and subject in right of payment to the prior payment in full of - -- all Parent Senior Indebtedness in the case of the Parent Guarantee or Guarantor Senior Indebtedness of the relevant Note Guarantor giving such Note Guarantee, as the case may be, and each of the Parent Guarantee and any Note Guarantee is made subject to such provisions of this Indenture. 115 Section 1305. Waiver of Subrogation. Each of the Parent Guarantor --------------------- and each Note Guarantor hereby irrevocably waives any claim or other rights that it may now or hereafter acquire against the Company that arise from the existence, payment, performance or enforcement of the Company's obligations under the Notes and this Indenture or such Guarantor's obligations under its Parent Guarantee or Note Guarantee, as the case may be, and this Indenture, including, without limitation, any right of subrogation, reimbursement, exoneration, indemnification, and any right to participate in any claim or remedy of any Holder of Notes against the Company, whether or not such claim, remedy or right arises in equity, or under contract, statute or common law, until this Indenture is discharged and all of the Notes are discharged and paid in full. If any amount shall be paid to a Guarantor in violation of the preceding sentence and the Notes shall not have been paid in full, such amount shall have been deemed to have been paid to such Guarantor for the benefit of, and held in trust for the benefit of, the Holders of the Notes, and shall forthwith be paid to the Trustee for the benefit of such Holders to be credited and applied upon the Notes, whether matured or unmatured, in accordance with the terms of this Indenture. Section 1306. Notation Not Required. Neither the Company nor any --------------------- Guarantor shall be required to make a notation on the Notes to reflect the Parent Guarantee or any Note Guarantee or any such release, termination or discharge thereof. Section 1307. Successors and Assigns of the Holding or Note --------------------------------------------- Guarantors. All covenants and agreements in this Indenture by each Guarantor - ---------- shall bind its respective successors and assigns, whether so expressed or not. Section 1308. Execution and Delivery of Note Guarantees. The Company ----------------------------------------- shall cause each Significant Domestic Subsidiary that is required to become a Note Guarantor pursuant to Section 413, and each Subsidiary of the Company that ----------- the Company causes to become a Note Guarantor pursuant to Section 413, to ----------- promptly execute and deliver to the Trustee a supplemental indenture substantially in the form set forth in Exhibit B to this Indenture, or otherwise --------- in form and substance reasonably satisfactory to the Trustee, evi dencing its Note Guarantee on substantially the terms set forth in this Article 13. ---------- Concurrently therewith, the Company shall deliver to the Trustee an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee to the effect that such supplemental indenture has been duly authorized, executed and delivered by such Restricted Subsidiary and that, subject to the applicable bankruptcy, insolvency, fraudulent transfer, fraudulent conveyance, reorganization, moratorium and other laws now or hereafter in effect affecting creditors' rights or remedies generally and the general principles of equity (including standards of materiality, good faith, fair dealing and reasonableness), whether considered in a proceeding at law or at equity such supplemental indenture is a valid and binding agreement of such Restricted Subsidiary, enforceable against such Restricted Subsidiary in accordance with its terms. 116 Section 1309. Notices. Notice to Holding or any Note Guarantor shall ------- be sufficient if addressed to Holding or any Note Guarantor care of the Company at the address, place and manner provided in Section 109. ----------- ARTICLE 14 SUBORDINATION ------------- Section 1401. Agreement To Subordinate. The Company agrees, and each ------------------------ Noteholder by accepting a Note agrees, that the Indebtedness evidenced by the Notes is subordinated in right of payment, to the extent and in the manner provided in this Article 14, to the prior payment in full (when due) of all ---------- existing and future Senior Indebtedness and that the subordination is for the benefit of and enforceable by the holders of Senior Indebtedness of the Company. The Notes shall in all respects rank pari passu with all other Senior Sub ---- ----- ordinated Indebtedness of the Company and only Indebtedness of the Company that is Senior Indebtedness shall rank senior to the Notes in accordance with the provisions set forth herein. All provisions of this Article 14 shall be subject ---------- to Section 1412. ------------ Section 1402. Liquidation, Dissolution, Bankruptcy. Upon any payment ------------------------------------ or distribution of the assets of the Company upon a total or partial liquidation or dissolution or reorganization of or similar proceeding relating to the Company or its property, or in a bankruptcy, insolvency, receivership or similar proceeding relating to the Company or its property, (i) the holders of Senior - Indebtedness will be entitled to receive payment in full of the Senior Indebtedness before the Noteholders are entitled to receive any payment, and (ii) until the Senior Indebtedness is paid in full, any payment or distribution -- to which Noteholders would be entitled but for this Article 14 will be made to ---------- holders of the Senior Indebtedness as their interests may appear, except that Noteholders may receive shares of stock and any debt securities that are subordinated to at least the same extent as the Notes. Section 1403. Default on Senior Indebtedness. The Company may not ------------------------------ pay principal of, or premium (if any) or interest on, the Notes or make any deposit pursuant to the provisions of Article 12 and may not otherwise purchase, ---------- redeem or otherwise retire any Notes (collectively, "pay the Notes") if (i) any ------------- - Senior Indebtedness is not paid when due in cash or Cash Equivalents or (ii) any -- other default on Senior Indebtedness occurs and the maturity of such Senior Indebtedness is accelerated in accordance with its terms (either such event, a "Payment Default") unless, in either case, (x) the Payment Default has been - ---------------- - cured or waived and any such acceleration has been rescinded in writing or (y) - such Senior Indebtedness has been paid in full in cash or Cash Equivalents; provided that the Company may pay the Notes without regard to the foregoing if - -------- the Company and the Trustee receive written notice 117 approving such payment from the Representative for the Designated Senior Indebtedness with respect to which the Payment Default has occurred and is continuing. In addition, during the continuance of any default (other than a Payment Default) with respect to any Designated Senior Indebtedness pursuant to which the maturity thereof may be accelerated immediately without further notice (except such notice as may be required to effect such acceleration) or the expiration of any applicable grace period (a "Non-payment Default"), the Company ------------------- may not pay the Notes for the period specified as follows (a "Payment Blockage ---------------- Period"). The Payment Blockage Period shall commence upon the receipt by the - ------ Trustee (with a copy to the Company) of written notice (a "Blockage Notice") of --------------- such Non-payment Default from the Representative for such Designated Senior Indebtedness specifying an election to effect a Payment Blockage Period and shall end on the earliest to occur of the following events: (i) 179 days shall - have elapsed since such receipt of such Blockage Notice, (ii) the Non-payment -- Default giving rise to such Blockage Notice is no longer continuing (and no other Payment Default or Non-payment Default is then continuing), (iii) such --- Designated Senior Indebtedness shall have been discharged or repaid in full in cash or Cash Equivalents or (iv) such Payment Blockage Period shall have been -- terminated by written notice to the Trustee and the Company from the Person or Persons who gave such Blockage Notice. The Company shall promptly resume payments on the Notes, including any missed payments, after such Payment Blockage Period ends, unless the holders of such Designated Senior Indebtedness or the Representative of such holders have accelerated the maturity of such Designated Senior Indebtedness, or any Payment Default otherwise exists. Not more than one Blockage Notice may be given in any 360 consecutive day period, irrespective of the number of defaults with respect to Designated Senior Indebtedness during such period, except that if any Blockage Notice within such 360-day period is given by or on behalf of any holders of Designated Senior Indebtedness other than Bank Indebtedness, a Representative of holders of Bank Indebtedness may give another Blockage Notice within such period. In no event may the total number of days during which any Payment Blockage Period is in effect extend beyond 179 days from the date of receipt by the Trustee of the relevant Blockage Notice, and there must be a 181 consecutive day period during any 360 consecutive day period during which no Payment Blockage Period is in effect. Section 1404. Acceleration of Payment of Notes. If payment of the -------------------------------- Notes is accelerated because of an Event of Default, the Company or the Trustee shall promptly notify the holders of the Designated Senior Indebtedness or the Representative of such holders of the acceleration. If any Designated Senior Indebtedness is outstanding, such acceleration will not be effective until the time specified in Section 602, and the Company may not pay the Notes until five ----------- Business Days after such holders or the Representative of each Designated Senior Indebtedness receive notice of such acceleration and, thereafter, the Company may pay the Notes only if this Article 14 otherwise permits payment. ---------- 118 Section 1405. When a Distribution Must Be Paid Over. If a ------------------------------------- distribution is made to Noteholders that because of provisions of this Article ------- 14 should not have been made to them, the Noteholders who received the - -- distribution are required to hold it in trust for the holders of Senior Indebtedness and pay it over to them as their interests may appear. Section 1406. Subrogation. After all Senior Indebtedness of the ----------- Company is paid in full and until the Notes are paid in full, Holders shall be subrogated to the rights of holders of Senior Indebtedness to receive distributions applicable to such Senior Indebtedness. For purposes of such subrogation, a distribution made under this Article 14 to holders of Senior ---------- Indebtedness that otherwise would have been made to Holders is not, as between the Company, its creditors other than the holders of such Senior Indebtedness and Holders, a payment by the Company on such Senior Indebtedness, it being understood that the provisions of this Article 14 are and are intended solely ---------- for the purpose of defining the relative rights of the Holders, on the one hand, and the holders of Senior Indebtedness of the Company, on the other hand. Section 1407. Relative Rights. This Article 14 defines the relative --------------- ---------- rights of Holders and holders of Senior Indebtedness. Nothing in this Indenture shall: (i) impair, as between the Company and Holders, the obligation of the Company which is absolute and unconditional, to pay principal of and interest on the Notes in accordance with their terms; or (ii) prevent the Trustee or any Holder from exercising its available remedies upon a Default, subject to the rights of holders of Senior Indebtedness to receive distributions otherwise payable to Holders. Section 1408. Subordination May Not Be Impaired by Issuers. No right -------------------------------------------- of any holder of Senior Indebtedness of the Company to enforce the subordination of the Indebtedness evidenced by the Notes shall be impaired by any act or failure to act by the Company or by its failure to comply with this Indenture. Section 1409. Rights of Trustee and Paying Agent. The Company shall ---------------------------------- give prompt written notice to the Trustee of any fact known to the Company that would prohibit the making of any payment to or by the Trustee in respect of the Notes. Failure to give such notice shall not affect the subordination of the Notes to Senior Indebtedness of the Company. Notwithstanding Section 1403, the ------------ Trustee or Paying Agent may continue to make payments on the Notes and shall not be charged with knowledge of the existence of facts that would prohibit the making of any such payments unless, not less than two Business Days prior to the date of such payment, a Trust Officer of the Trustee receives notice satisfactory to it that 119 payments may not be made under this Article 14. The Company, the Registrar or ---------- co-registrar, the Paying Agent, or a Representative or holder of Senior Indebtedness may give the notice; provided, however, that, if an issue of Senior -------- ------- Indebtedness has a Representative, only the Representative may give the notice. The Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself or itself to be a holder of any Senior Indebtedness (or a Representative of such holder) to establish that such notice has been given by a holder of such Senior Indebtedness or Representative thereof. The Trustee in its individual or any other capacity may hold Senior Indebtedness with the same rights it would have if it were not Trustee. The Registrar and co-registrar and the Paying Agent may do the same with like rights. The Trustee shall be entitled to all the rights set forth in this Article 14 with respect to any Senior Indebtedness that may at any time be held - ---------- by it, to the same extent as any other holder of Senior Indebtedness; and nothing in Article 7 shall deprive the Trustee of any of its rights as such --------- holder. Nothing in this Article 14 shall apply to claims of, or payments to, ---------- the Trustee under or pursuant to Section 707. ----------- Section 1410. Distribution or Notice to Representative. Whenever a ---------------------------------------- distribution is to be made or a notice given to holders of Senior Indebtedness, the distribution may be made and the notice given to their Representative (if any). Section 1411. Article 14 Not To Prevent Events of Default or Limit ---------------------------------------------------- Right To Accelerate. The failure to make a payment pursuant to the Notes by - ------------------- reason of any provision in this Article 14 shall not be construed as preventing ---------- the occurrence of a Default. Subject to Section 1404, nothing in this Article ------------ ------- 14 shall have any effect on the right of the Holders or the Trustee to - -- accelerate the maturity of the Notes. Section 1412. Trust Moneys Not Subordinated. Notwithstanding ----------------------------- anything contained herein to the contrary, payments from money or the proceeds of U.S. Government Obligations held in trust under Article 12 by the Trustee for ---------- the payment of principal of and premium, if any, and interest on the Notes shall not be subordinated to the prior payment of any Senior Indebtedness of the Company or subject to the restrictions set forth in this Article 14, and none of ---------- the Holders shall be obligated to pay over any such amount to the Company or any holder of Senior Indebtedness of the Company or any other creditor of the Company. Section 1413. Trustee Entitled To Rely. Upon any payment or ------------------------ distribution pursuant to this Article 14, the Trustee and the Holders shall be ---------- entitled to rely (i) upon any order or decree of a court of competent - jurisdiction in which any proceedings of the nature referred to in Section 1402 ------------ are pending, (ii) upon a certificate of the liquidating trustee or agent or -- other Person making such payment or distribution to the Trustee or to the Holders or 120 (iii) upon the Representatives for the holders of Senior Indebtedness for the --- purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Indebtedness and other Indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article ------- 14. In the event that the Trustee determines, in good faith, that evidence is - -- required with respect to the right of any Person as a holder of Senior Indebtedness to par ticipate in any payment or distribution pursuant to this Article 14, the Trustee may request such Person to furnish evidence to the - ---------- reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and other facts pertinent to the rights of such Person under this Article 14, and, if such evidence is not furnished, the ---------- Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. The provisions of Sections -------- 701 and 703 shall be applicable to all actions or omissions of actions by the - --- --- Trustee pursuant to this Article 14. ---------- Section 1414. Trustee To Effectuate Subordination. Each Holder by ----------------------------------- accepting a Note authorizes and directs the Trustee on such Holder's behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination between the Holders and the holders of Senior Indebtedness of the Company as provided in this Article 14 and appoints the Trustee as attorney- ---------- in-fact for any and all such purposes. Section 1415. Trustee Not Fiduciary for Holders of Senior ------------------------------------------- Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the - ------------ holders of Senior Indebtedness of the Company and shall not be liable to any such holders if it shall mistakenly pay over or distribute to Holders or the Company or any other Person, money or assets to which any holders of Senior Indebtedness shall be entitled by virtue of this Article 14 or otherwise. With ---------- respect to the holders of Senior Indebtedness of the Company, the Trustee undertakes to perform or to observe only such of its covenants or obligations as are specifically set forth in this Article 14 or Article 15 and no implied ---------- ---------- covenants or obligations with respect to holders of Senior Indebtedness of the Company shall be read into this Indenture against the Trustee. Section 1416. Reliance by Holders of Senior Indebtedness on --------------------------------------------- Subordination Provisions. Each Holder by accepting a Note acknowledges and - ------------------------ agrees that the foregoing subordination provisions are, and are intended to be, an inducement and a consideration to each holder of any Senior Indebtedness of the Company, whether such Senior Indebtedness was created or acquired before or after the issuance of the Notes, to acquire and continue to hold, or to continue to hold, such Senior Indebtedness and such holder of Senior Indebtedness shall be deemed conclusively to have relied on such subordination provisions in acquiring and continuing to hold, or in continuing to hold, such Senior Indebtedness. 121 Section 1417. Trustee's Compensation Not Prejudiced. Nothing in this ------------------------------------- Article 14 shall apply to amounts due to the Trustee pursuant to other Sections - ---------- of this Indenture. ARTICLE 15 SUBORDINATION OF PARENT GUARANTEE AND NOTE GUARANTEES ----------------------------------------------------- Section 1501. Agreement To Subordinate. (a) The Parent Guarantor ------------------------ agrees, and each Noteholder by accepting a Note agrees, that all payments pursuant to the Parent Guarantor's Parent Guarantee made by or on behalf of Holding are subordinated in right of payment, to the extent and in the manner provided in this Article 15, to the prior payment in full (when due) of all ---------- existing and future Parent Senior Indebtedness and that the subordination is for the benefit of and enforceable by the holders of Parent Senior Indebtedness. The Parent Guarantee shall in all respects rank pari passu with all other Parent ---- ----- Senior Subordinated Indebtedness and only Indebtedness of the Parent Guarantor that is Parent Senior Indebtedness shall rank senior to such Parent Guarantee in accordance with the provisions set forth herein. (b) Each Note Guarantor agrees, and each Noteholder by accepting a Note agrees, that all payments pursuant to such Note Guarantor's Note Guarantee made by or on behalf of such Note Guarantor are subordinated in right of payment, to the extent and in the manner provided in this Article 15, to the ---------- prior payment in full (when due) of all existing and future Guarantor Senior Indebtedness of such Note Guarantor and that the subordination is for the benefit of and enforceable by the holders of Guarantor Senior Indebtedness of such Note Guarantor. Such Note Guarantee shall in all respects rank pari passu ---- ----- with all other Guarantor Senior Subordinated Indebtedness of such Note Guarantor and only Indebtedness of such Note Guarantor that is Guarantor Senior Indebtedness shall rank senior to such Note Guarantee in accordance with the provisions set forth herein. (c) All provisions of this Article 15 shall be subject to Section ---------- ------- 1512. Section 1502. Liquidation, Dissolution, Bankruptcy. Upon any payment ------------------------------------ or distribution of the assets of a Guarantor upon a total or partial liquidation or dissolution or reorganization of or similar proceeding relating such Guarantor or its property, or in a bankruptcy, insolvency, receivership or similar proceeding relating to such Guarantor or its property, 122 (i) the holders of Obligor Senior Indebtedness of such Guarantor will be entitled to receive payment in full of such Obligor Senior Indebtedness before the Noteholders are entitled to receive any payment from such Guarantor; and (ii) until the Obligor Senior Indebtedness of such Guarantor is paid in full, any payment or distribution from such Guarantor to which Noteholders would be entitled but for this Article 15 will be made to ---------- holders of such Obligor Senior Indebtedness as their interests may appear except that Noteholders may receive shares of stock and any debt securities that are subordinated to such Obligor Senior Indebtedness to at least the same extent as the Parent Guarantee or Note Guarantee, as the case may be, of such Guarantor. Section 1503. Default on Obligor Senior Indebtedness. No Guarantor -------------------------------------- may make any payment pursuant to its respective Parent Guarantee or Note Guarantee and may not otherwise purchase, redeem or otherwise retire or defease any Notes (collectively, "pay its Obligor Guarantee") if (i) any Obligor Senior ------------------------- Indebtedness of such Guarantor is not paid when due or (ii) any other default on Obligor Senior Indebtedness of such Guarantor occurs and the maturity of such Obligor Senior Indebtedness is accelerated in accordance with its terms (either such event, a "Guarantor Payment Default") unless, in either case, (x) the ------------------------- Guarantor Payment Default has been cured or waived and any such acceleration has been rescinded in writing or (y) such Obligor Senior Indebtedness has been paid in full; provided, however, a Guarantor may pay its Obligor Guarantee without -------- ------- regard to the foregoing if such Guarantor and the Trustee receive written notice approving such payment from the Representative for the Designated Senior Indebtedness with respect to which the Guarantor Payment Default has occurred and is continuing. In addition, no Guarantor may pay its Obligor Guarantee during the continuance of a Payment Blockage Period after receipt by the Company and the Trustee of a Blockage Notice under Section 1403. Notwithstanding the provisions ------------ described in the immediately preceding sentence (but subject to the provisions of the first paragraph of this Section 1503), a Guarantor shall promptly resume ------------ payments, if any are required, pursuant to its Parent Guarantee or Note Guarantee, including any missed payments, after such Payment Blockage Period ends, unless the holders of such Designated Senior Indebtedness or the Representative of such holders have accelerated the maturity of such Designated Senior Indebtedness, or any Payment Default otherwise exists. In addition, during the continuance of any default (other than a Guarantor Payment Default) with respect to any Guarantor Designated Senior Indebtedness of a Guar antor pursuant to which the maturity thereof may be accelerated immediately without further notice except such notice as may be required to effect such acceleration) or the expiration of 123 any applicable grace period (a "Guarantor Non-payment Default"), a Guarantor may ----------------------------- not pay its Parent Guarantee or Note Guarantee for the period specified as follows (a "Guarantor Payment Blockage Period"). The Guarantor Payment Blockage --------------------------------- Period shall commence upon the receipt by the Trustee (with copy to such Guarantor) of written notice (a "Guarantor Blockage Notice") of such Guarantor ------------------------- Non-payment Default from the Representative for such Guarantor Designated Senior Indebtedness specifying an election to effect a Guarantor Payment Blockage Period and shall end on the earliest to occur of the following events: (i) 179 - days shall have elapsed since such receipt of such Guarantor Blockage Notice, (ii) the Guarantor Non-payment Default giving rise to such Blockage Notice is no - --- longer continuing (and no other Guarantor Payment Default or Guarantor Non- payment Default is then continuing), (iii) such Guarantor Designated Senior --- Indebtedness shall have been discharged or repaid in full in cash or Cash Equivalents or (iv) such Guarantor Payment Blockage Period shall have been -- terminated by written notice to the Trustee and such Guarantor from the Person or Persons who gave such Guarantor Blockage Notice. A Guarantor may pay its Parent Guarantee or Note Guarantee, after such Guarantor Payment Blockage Period ends, unless the holders of such Guarantor Designated Senior Indebtedness or the Representative of such holders have accelerated the maturity of such Guarantor Designated Senior Indebtedness, or any Guarantor Payment Default otherwise exists. Not more than one Guarantor Blockage Notice to a Guarantor in the aggregate may be given in any 360 consecutive day period, irrespective of the number of defaults with respect to Guarantor Designated Senior In debtedness of such Guarantor during such period, except that if any Guarantor Blockage Notice within such 360-day period is given by or on behalf of any holders of Guarantor Designated Senior Indebtedness of such Guarantor other than Bank Indebtedness, a Representative of holders of Bank Indebtedness that is Guaranteed by such Guarantor may give another Guarantor Blockage Notice within such period. In no event may the total number of days during which any Guarantor Payment Blockage Period is in effect extend beyond 179 days from the date of receipt by the Trustee of the relevant Guarantor Blockage Notice, and there must be a 181 consecutive day period during any 360 consecutive day period during which no Guarantor Payment Blockage Period is in effect. Section 1504. Acceleration of Payment of Notes. If payment of the -------------------------------- Notes is accelerated because of an Event of Default, the relevant Guarantor or the Trustee shall promptly notify the holders of the Guarantor Designated Senior Indebtedness of such Guarantor (or the Representative of such holders) of the acceleration. If any Guarantor Designated Senior Indebtedness of a Guarantor is outstanding, any demand for payment under such Guarantor's Parent Guarantee or Note Guarantee will not be effective with respect to such Guarantor, and such Guarantor may not pay its Parent Guarantee or Note Guarantee, until five Business Days after such holders or the Representative of each Designated Senior Indebtedness of such Guarantor receive notice of such demand and, thereafter, such Guarantor may pay its Parent Guarantee or Note Guarantee only if this Article 15 otherwise permits payment. If a - ---------- 124 demand for payment is made on such Guarantor pursuant to Article 13, the Trustee ---------- shall promptly notify the holders of the Guarantor Designated Senior Indebtedness of such Guarantor (or their Representatives) of such demand. Section 1505. When a Distribution Must Be Paid Over. If a ------------------------------------- distribution from a Guarantor is made to Holders that because of the provisions of this Article 15 should not have been made to them, the Holders who receive ---------- the distribution shall hold it in trust for holders of Obligor Senior Indebtedness of such Guarantor and pay it over to them as their interests may appear. Section 1506. Subrogation. After all Obligor Senior Indebtedness of ----------- a Guarantor is paid in full and until the Notes are paid in full, Holders shall be subrogated to the rights of holders of Obligor Senior Indebtedness of such Guarantor to receive distributions applicable to such Obligor Senior Indebtedness. For purposes of such subrogation, a dis tribution made under this Article 15 to holders of Obligor Senior Indebtedness of a Guarantor that ---------- otherwise would have been made to Holders is not, as between such Guarantor, its creditors other than the holders of such Obligor Senior Indebtedness, and Holders, a payment by such Guarantor on such Obligor Senior Indebtedness, it being understood that the pro visions of this Article 15 are and are intended ---------- solely for the purpose of defining the relative rights of the Holders, on the one hand, and the holders of Obligor Senior Indebtedness of such Guarantors, on the other hand. Section 1507. Relative Rights. This Article 15 defines the relative --------------- ---------- rights of Holders and holders of Obligor Senior Indebtedness of each Guarantor. Nothing in this Indenture shall: (i) impair, as between a Guarantor and Holders, the obligation of such Guarantor to pay the Guaranteed Note Obligations in accordance with the terms of its respective Parent Guarantee or Note Guarantee; or (ii) prevent the Trustee or any Holder from exercising its available remedies upon a Default, subject to the rights of holders of Obligor Senior Indebtedness of a Guarantor to receive distributions otherwise payable to Holders. Section 1508. Subordination May Not Be Impaired by Guarantors. No ----------------------------------------------- right of any holder of Obligor Senior Indebtedness of a Guarantor to enforce the subordination of the payments pursuant to such Guarantor's respective Parent Guarantee or Note Guarantee shall be impaired by any act or failure to act by such Guarantor or by its failure to comply with this Indenture. 125 Section 1509. Rights of Trustee and Paying Agent. A Guarantor shall ---------------------------------- give prompt written notice to the Trustee of any fact known to it that would prohibit the making of any payment to or by the Trustee in respect of its Parent Guarantee or Note Guarantee. Failure to give such notice shall not affect the subordination of the payments pursuant to its Parent Guarantee or Note Guarantee to Obligor Senior Indebtedness of such Guarantor. Notwithstanding Section 1503, ------------ the Trustee or Paying Agent may continue to make payments pursuant to such Parent Guarantee or Note Guarantee and shall not be charged with knowledge of the existence of facts that would prohibit the making of any such payments unless, not less than two Business Days prior to the date of such payment, a Trust Officer of the Trustee receives notice satisfactory to it that payments may not be made under this Article 15. The Company, Holding or any Note ---------- Guarantor, the Registrar or co-registrar, the Paying Agent, or a Representative or holder of Obligor Senior Indebtedness of Holding or any Note Guarantor may give the notice; provided, that, if an issue of Obligor Senior Indebtedness of a -------- Guarantor has a Representative, only the Representative may give the notice. The Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself or itself to be a holder of any Obligor Senior Indebtedness of a Guarantor (or a Representative of such holder) to establish that such notice has been given by a holder of such Senior In debtedness or Representative thereof. The Trustee in its individual or any other capacity may hold Obligor Senior Indebtedness of a Guarantor with the same rights it would have if it were not Trustee. The Registrar and co-registrar and the Paying Agent may do the same with like rights. The Trustee shall be entitled to all the rights set forth in this Article 15 with respect to any Obligor Senior Indebtedness of a ---------- Guarantor which may at any time be held by it, to the same extent as any other holder of Obligor Senior Indebtedness of such Guarantor; and nothing in Article ------- 7 shall deprive the Trustee of any of its rights as such holder. Nothing in - - this Article 15 shall apply to claims of, or payments to, the Trustee under or ---------- pursuant to Section 707. ----------- Section 1510. Distribution or Notice to Representative. Whenever a ---------------------------------------- distribution is to be made or a notice given to holders of Obligor Senior Indebtedness of a Note Guarantor, the distribution may be made and the notice given to their Representative (if any). Section 1511. Article 15 Not To Prevent Events of Default or Limit ---------------------------------------------------- Right To Accelerate. The failure to make a payment pursuant to the Parent - ------------------- Guarantee or a Note Guarantee by reason of any provision in this Article 15 ---------- shall not be construed as preventing the occurrence of a Default. Nothing in this Article 15 shall have any effect on the right of the Holders or the Trustee ---------- to accelerate the maturity of the Notes or make a demand for payment on a Note Guarantor pursuant to Article 13 or the relevant Parent Guarantee or Note ---------- Guarantee. 126 Section 1512. Trust Moneys Not Subordinated. Notwithstanding ----------------------------- anything contained herein to the contrary, payments from money or the proceeds of U.S. Government Obligations held in trust under Article 12 by the Trustee for ---------- the payment of principal, premium, if any, or interest on the Notes shall not be subordinated to the prior payment of any Obligor Senior Indebtedness of any Guarantor or subject to the restrictions set forth in this Article 15, and none ---------- of the Holders shall be obligated to pay over any such amount to any Guarantor or any holder of Senior Indebtedness of any Guarantor or any other creditor of Holding or any Guarantor. Section 1513. Trustee Entitled To Rely. Upon any payment or ------------------------ distribution pursuant to this Article 15, the Trustee and the Holders shall be ---------- entitled to rely (i) upon any order or decree of a court of competent - jurisdiction in which any proceedings of the nature referred to in Section 1502 ------------ are pending, (ii) upon a certificate of the liquidating trustee or agent or -- other Person making such payment or distribution to the Trustee or to the Holders or (iii) upon the Representatives for the holders of Obligor Senior --- Indebtedness or any Guarantor for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Obligor Senior Indebtedness and other Indebtedness of such Guarantor, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article 15. In the event that ---------- the Trustee determines, in good faith, that evidence is required with respect to the right of any Person as a holder of such Obligor Senior Indebtedness to participate in any payment or distribution pursuant to this Article 15, the ---------- Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of such Obligor Senior Indebtedness held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and other facts pertinent to the rights of such Person under this Article 15, and, if such evidence is not furnished, the ---------- Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. The provisions of Sections -------- 701 and 703 shall be applicable to all actions or omissions of actions by the - --- --- Trustee pursuant to this Article 15. ---------- Section 1514. Trustee To Effectuate Subordination. Each Holder by ----------------------------------- accepting a Note authorizes and directs the Trustee on such Holder's behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination between the Holders and the holders of Obligor Senior Indebtedness of any Guarantor as provided in this Article 15 and appoints the ---------- Trustee as attorney-in-fact for any and all such purposes. Section 1515. Trustee Not Fiduciary for Holders of Obligor Senior In ------------------------------------------------------ debtedness. The Trustee shall not be deemed to owe any fiduciary duty to the - ---------- holders of Obligor Senior Indebtedness of any Guarantor and shall not be liable to any such holders if it shall mistakenly pay over or distribute to Holders or the Company or any other Person, money 127 or assets to which any holders of Obligor Senior Indebtedness shall be entitled by virtue of this Article 15 or otherwise. With respect to the holders of ---------- Obligor Senior Indebtedness, the Trustee undertakes to perform or to observe only such of its covenants or obligations as are specifically set forth in this Article 15 and no implied covenants or obligations with respect to holders of - ---------- Obligor Senior Indebtedness of any Guarantor shall be read into this Indenture against the Trustee. Section 1516. Reliance by Holders of Senior Indebtedness on --------------------------------------------- Subordination Provisions. Each Holder by accepting a Note acknowledges and - ------------------------ agrees that the foregoing subordination provisions are, and are intended to be, an inducement and a consideration to each holder of any Obligor Senior Indebtedness of any Guarantor, whether such Obligor Senior Indebtedness was created or acquired before or after the issuance of the Notes, to acquire and continue to hold, or to continue to hold, such Obligor Senior Indebtedness and such holder of such Obligor Senior Indebtedness shall be deemed conclusively to have relied on such subordination provisions in acquiring and continuing to hold, or in continuing to hold, such Obligor Senior Indebtedness. Section 1517. Trustee's Compensation Not Prejudiced. Nothing in this ------------------------------------- Article 15 shall apply to amounts due to the Trustee pursuant to other Sections - ---------- of this Indenture. 128 IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, all as of the date first written above. DYNATECH CORPORATION, as Initial Issuer and as Parent Guarantor By: /s/ Allan M. Kline -------------------------------------- Name: Allan M. Kline Title: Corporate Vice President TTC MERGER CO. LLC, a company to be merged into Telecommunications Techniques Co., LLC, as Initial Issuer By: Dynatech Corporation, its sole member --------------------------------------- By: /s/ Allan M. Kline -------------------------------------- Name: Allan M. Kline Title: Corporate Vice President STATE STREET BANK AND TRUST COMPANY, as Trustee By: /s/ Philip G. Kane, Jr. -------------------------------------- Name: Philip G. Kane, Jr. Title: Vice President 129 EXHIBIT A FORM OF NOTE/1/ ------------ [DYNATECH CORPORATION, as an Initial Issuer until the assumption of obligations under this Note by Telecommunications Techniques Co., LLC, and TTC MERGER CO. LLC (a company to be merged into TELECOMMUNICATIONS TECHNIQUES CO., LLC, which will succeed to and assume all obligations under this Note), as an Initial Issuer]/2/ [TELECOMMUNICATIONS TECHNIQUES CO., LLC]/3/ 9 3/4% Senior Subordinated Notes Due 2008 No. CUSIP No. [87928F AA 0]/4/ [87928F AB 8]/5/ $ -------------- [Dynatech Corporation, a Massachusetts corporation (and its successors and assigns), and TTC Merger Co. LLC, a Delaware limited liability company (and its successors and assigns) (collectively, the "Company," which term shall have the meaning ascribed thereto - ------------------------------ 1. Insert any applicable legends from Article 2. 2. Include prior to the Second Merger and the execution and delivery of the First Supplemental Indenture. 3. Include after the Second Merger and the execution and delivery of the First Supplemental Indenture. 4. Include this or other appropriate CUSIP Number for Initial Note that is not registered under the Securities Act. 5. Include this or other appropriate CUSIP Number for Exchange Note or Initial Note that is registered under the Securities Act. A-1 in the Indenture hereinafter referred to) promise]/6/ [Telecommunications Techniques Co., LLC, and any successor in interest thereto (the "Company"), promises]/7/ to pay to , or registered assigns, the principal sum of $([ ] United States Dollars) on May 15, 2008 [(or such lesser or ----------- greater amounts as shall be outstanding hereunder from time to time in accordance with Sections 312 and 313 of the Indenture referred to on the reverse here)]/8/. Interest Payment Dates: May 15 and November 15. Record Dates: May 1 and November 1. Additional provisions of this Note are set forth on the other side of this Note. - ------------------------------ 6. Include prior to the Second Merger and the execution and delivery of the First Supplemental Indenture. 7. Include after the Second Merger and the execution and delivery of the First Supplemental Indenture. 8. Include only if the Note is issued in global form. A-2 IN WITNESS WHEREOF, [each of the Initial Issuers]/9/ [the Company]/10/ has caused this instrument to be duly executed. [DYNATECH CORPORATION, as Initial Issuer By: ________________________________ Name: Title:]/11/ [TTC MERGER CO., LLC (a company to be merged into Telecommunications Techniques Co., LLC, which will succeed to and assume all obligations under this Note)]/12/ [TELECOMMUNICATIONS TECHNIQUES CO., LLC]/13/ By: Dynatech Corporation, its sole member By: ________________________________ Name: Title: TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Notes referred to in the within-named Indenture. - ------------------------------ 9. Include prior to the Second Merger and the execution of the First Supplemental Indenture. 10. Include after the Second Merger and the execution and delivery of the First Supplemental Indenture. 11. Include prior to the Second Merger and the execution and delivery of the First Supplemental Indenture. 12. Include prior to the Second Merger and the execution and delivery of the First Supplemental Indenture. 13. Include after the Second Merger and the execution and delivery of the First Supplemental Indenture. A-3 STATE STREET BANK AND TRUST COMPANY, as Trustee By: __________________________ Name: Title: Dated: ----------------- A-4 [FORM OF REVERSE SIDE OF NOTE] 9 3/4% Senior Subordinated Note Due 2008 1. Interest The Company promises to pay interest semi-annually on May 15 and November 15 in each year, commencing November 15, 1998 at the rate of 9 3/4% per annum [(subject to adjustment as provided below)]/14/ [, except that interest accrued on this Note for periods prior to the date on which the Initial Note was surrendered in exchange for this Note will accrue at the rate or rates borne by such Initial Note from time to time during such periods]/15/, until the Principal Amount is paid or made available for payment. [Interest on this Note will accrue from the most recent date to which interest on this Note or any of its Predecessor Notes has been paid or duly provided for or, if no interest has been paid, from the Issue Date.]/16/ [Interest on this Note will accrue from the most recent date to which interest on this Note or any of its Predecessor Notes has been paid or duly provided for or, if no such interest has been paid, from [_________, ____]/17/.]/18/ Interest on the Notes shall be computed on the basis of a 360-day year of twelve 30-day months. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Note (or one or more Predecessor Notes) is registered at the close of business on the Regular Record Date for such interest, which shall be the May 1 or November 1 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Note (or one or more Predecessor Notes) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of - ------------------------------ 14. Include only for Initial Note when additional interest provisions, set forth in the next paragraph, are included. 15. Include only for Exchange Note. 16. Include only for Original Notes. 17. Insert first date of issuance of Additional Note and its Predecessor Notes. 18. Include only for Additional Notes (and Exchange Notes issued in the exchange therefor). A-5 Notes not more than 15 days nor less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. [The Holder of this Note is entitled to the benefits of the Registration Rights Agreement (the " Registration Rights Agreement"), dated May 21, /1998, among Dynatech Corporation, Telecommunications Techniques Co., LLC, Credit Suisse First Boston Corporation and J.P. Morgan Securities Inc. Pursuant and subject to the Registration Rights Agreement, until (i) the date on which this Note has been exchanged for a freely transferable Exchange Note (as defined in the Registration Rights Agreement) in the Registered Exchange Offer (as defined in the Registration Rights Agreement), (ii) the date on which this Note has been effectively registered under the Securities Act and disposed of in accordance with the Shelf Registration Statement (as defined in the Registration Rights Agreement), or (iii) the date on which such Note is distributed to the public pursuant to Rule 144 of the Securities Act or is saleable pursuant to Rule 144(k) under the Securities Act (or otherwise is eligible for resale pursuant to Rule 144 (or any successor provision) under the Securities Act without volume restriction, if any): From and including the date on which a Registration Default (as defined below) shall occur to but excluding the date on which such Registration Default has been cured, additional interest will accrue on the Note at the rate of (a) prior to the 91st day of such period (for so long as such period is continuing), 0.25% per annum and (b) thereafter (for so long as such period is continuing), 0.50% per annum. Any such additional interest shall not exceed such respective rates for such respective periods, and shall not in any event exceed 0.50% per annum in the aggregate, regardless of the number of Registration Defaults that shall have occurred and be continuing. Any such additional interest shall be paid in the same manner and on the same dates as interest payments in respect of this Note. Following the cure of all Registration Defaults, the accrual of such additional interest will cease. All Registration Defaults shall be deemed cured upon the consummation of the Registered Exchange Offer. For purposes of the foregoing, each of the following events, as more particularly defined in the Registration Rights Agreement, is a "Registration Default": (i) neither the Exchange Offer Registration Statement nor a Shelf Registration Statement (as defined in the Registration Rights Agreement) has been filed with the SEC on or before the 120th day after the Issue Date (or if such day is not a business day, the first business day thereafter); (ii) the Registered Exchange Offer is not consummated on or before the 180th day after the Issue Date (or if such day is not a business day, the first business day thereafter), (iii) if a Shelf Registration Statement is required to be filed under the Registration Rights Agreement, (A) the Shelf Registration Statement is not declared effective by the SEC on or before the 210th day after the Issue Date (or if such day is not a business day, the first business day thereafter) (or, in the case of a Shelf Registration Statement required to be filed in response to any change in applicable interpretation of the SEC, if later, on or before the A-6 90th day after the publication of such change) (B) after such Shelf Registration Statement is declared effective and during the time that the Company is required to use its reasonable best efforts to keep the Shelf Registration Statement in effect, such Shelf Registration Statement ceases to be effective and continues not to be effective (other than in connection with the consummation of the Registered Exchange Offer), or the Company shall have suspended and be continuing to suspend the availability of the Shelf Registration Statement, for more than 30 days in the aggregate in any consecutive twelve-month period.]/19/ /20/ 2. Method of Payment Payment of the principal of (and premium, if any) and interest on this Note will be made at the office or agency of the Company maintained for that purpose in The Borough of Manhattan, The City of New York; provided, however, that at the option of the Company payment of interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Note Register. 3. Paying Agent and Registrar Initially, State Street Bank and Trust Company, a Massachusetts trust company, the Trustee, will act as Paying Agent and Registrar. The Company may appoint and change any Paying Agent, Registrar or co-registrar without notice. The Company or any domestically incorporated subsidiary of the Company may act as Paying Agent, Registrar or co-registrar. 4. Indenture This Note is one of the duly authorized issue of 9 3/4% Senior Subordinated Notes Due 2008 of the Company (herein called the "Notes"), issued under an Indenture, dated as of May 21, 1998 (as amended, supplemented or otherwise modified from time to time, the "Indenture," which term shall have the meanings assigned to it in such instrument), among Dynatech Corporation, TTC Merger Co. LLC [(a company to be merged into - ------------------------------ 19. Include only for Initial Note when required by the Registration Rights Agreement. 20. For an Initial Additional Note, add any similar provision, if any, as may be agreed by the Company with respect to additional interest on such Initial Additional Note. A-7 Telecommunications Techniques Co., LLC)]/21/ [(predecessor in interest to Telecommunications Techniques Co., LLC)]/22/ and State Street Bank and Trust Company as Trustee (herein called the "Trustee," which term includes any successor trustee under the Indenture) and reference is hereby made to the Indenture for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, any other obligor upon this Note, the Trustee and the Holders of the Notes and of the terms upon which the Notes are, and are to be, authenticated and delivered. The terms of the Notes include those stated in the Indenture and those made a part of the Indenture by reference to the Trust Indenture Act of 1939, as amended, as in effect from time to time (the "TIA"). The Notes are subject to all such terms, and Holders are referred to the Indenture and the TIA for a statement of such terms. Additional Notes may be issued under the Indenture which may vote as a class with the Notes and otherwise be treated as Notes for purposes of the Indenture. All terms used in this Note that are defined in the Indenture shall have the meanings assigned to them in the Indenture. This Note is entitled to the benefits of a certain senior subordinated Parent Guarantee of Holding and may hereafter be entitled to certain other senior subordinated Note Guarantees made for the benefit of the Holders. Reference is made to Article Thirteen of the Indenture and to the Parent Guarantee and any Note Guarantees for terms relating to such Parent Guarantee or Note Guarantees, including the release, termination and discharge thereof. Neither the Company nor Holding nor any Note Guarantor shall be required to make any notation on this Note to reflect any Parent Guarantee or Note Guarantee or any such release, termination or discharge. 5. Optional Redemption (a) The Notes will be redeemable, at the Company' option, in whole or in part, and from time to time on and after May 15, 2003 and prior to maturity. Such redemption may be made upon notice mailed by first-class mail to each Holder's registered address in accordance with the Indenture. Any such redemption and notice may, in the Company' discretion, be subject to the satisfaction of one or more conditions precedent. The Notes will be so redeemable at the following Redemption Prices (expressed as a percentage of principal - ------------------------------ 21. Include prior to the Second Merger and the execution and delivery of the First Supplemental Indenture. 22. Include after the Second Merger and the execution and delivery of the First Supplemental Indenture. A-8 amount), plus accrued interest, if any, to the relevant Redemption Date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date) if redeemed during the 12- month period commencing on May 15 of the years set forth below: REDEMPTION PERIOD PRICE 2003.............................. 104.875% 2004.............................. 103.250 2005.............................. 101.625 2006 and thereafter............... 100.000% (b) In addition, at any time and from time to time prior to May 15, 2001, the Company at its option may redeem the Notes in an aggregate principal amount equal to up to 35% of the original aggregate principal amount of the Notes (including the principal amount of any Additional Notes), with funds in an aggregate amount (the "Redemption Amount") not exceeding the aggregate cash ----------------- proceeds of one or more Equity Offerings, at a Redemption Price (expressed as a percentage of principal amount thereof) of 109.75% plus accrued interest, if any, to the Redemption Date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date); provided, however, that an aggregate principal amount of the Notes equal to at least 65% of the original aggregate principal amount of the Notes (including the principal amount of any Additional Notes) must remain outstanding after each such redemption. The Company may make such redemption upon notice mailed by first-class mail to each Holder's registered address in accordance with the Indenture (but in no event more than 180 days after the completion of the related Equity Offering). Any such notice may be given prior to the completion of the related Equity Offering, and any such redemption or notice may, at the Company' discretion, be subject to the satisfaction of one or more conditions precedent, including but not limited to the completion of the related Equity Offering. (c) At any time on or prior to May 15, 2003, the Notes may also be redeemed or purchased (by the Company or any other Person) in whole but not in part, at the Company's option, upon the occurrence of a Change of Control, at a price equal to 100% of the principal amount thereof plus the Applicable Premium as of, and accrued but unpaid interest, if any, to, the Redemption Date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date). Such redemption or purchase may be made upon notice mailed by first-class mail to each Holder's registered address in accordance with the Indenture (but in no event more than 180 days after the occurrence of such Change of Control). The Company may provide in such notice that payment of such price and A-9 performance of the Company's obligations with respect to such redemption or purchase may be performed by another Person. Any such notice may be given prior to the occurrence of the related Change of Control, and any such redemption, purchase or notice may, at the Company's discretion, be subject to the satisfaction of one or more conditions precedent, including but not limited to the occurrence of the related Change of Control. 6. No Sinking Fund The Notes will not be entitled to the benefit of a sinking fund. 7. Subordination The Notes are subordinated to Senior Indebtedness, as defined in the Indenture. To the extent provided in the Indenture, Senior Indebtedness must be paid before the Notes may be paid. In addition, the Parent Guarantee and any Note Guarantees are or shall be, as the case may be, subordinated to Parent Senior Indebtedness (as defined in the Indenture) and Guarantor Senior Indebtedness (as defined in the Indenture), as applicable. To the extent provided in the Indenture, Parent Senior Indebtedness and Guarantor Senior Indebtedness must be paid before the Parent Guarantee or any Note Guarantee may be paid. The Company, the Parent Guarantor and any Note Guarantor agree, and each Holder by accepting a Note agrees, to the subordination provisions contained in the Indenture and authorizes the Trustee to give such provisions effect and appoints the Trustee as attorney-in-fact for such purposes. 8. Put Provisions The Indenture provides that, upon the occurrence of a Change of Control Triggering Event, each Holder will have the right to require that the Company repurchase all or any part of such Holder's Notes at a repurchase price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, to the date of such repurchase (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date); provided, however, that the Company shall not be obligated to purchase Notes in the event it has exercised its right to redeem all of the Notes. A-10 9. Denominations; Transfer; Exchange The Notes are in registered form without coupons in denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange Notes in accordance with the Indenture and subject to certain limitations set forth therein. No service charge shall be made for any transfer or exchange of Notes, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith. The Company shall not be required (i) to issue, transfer or exchange any Note during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption (or purchase) of Notes selected for redemption (or purchase) under Section 1004 of the Indenture and ending at the close of business on the day of such mailing, or (ii) to transfer or exchange any Note so selected for redemption (or purchase) in whole or in part. 10. Persons Deemed Owners The registered Holder of this Note may be treated as the owner of it for all purposes. 11. Unclaimed Money The Trustee shall pay to the Company upon a Company Request any money held by it for the payment of principal (and premium, if any) or interest that remains unclaimed for two years. After payment to the Company, Holders entitled to money must look to the Company for payment as general creditors and all liability of the Trustee or Paying Agent with respect to such money shall thereupon cease. 12. Discharge and Defeasance Subject to certain conditions, the Company at any time may terminate some or all of its obligations under the Notes and the Indenture if the Company deposits with the Trustee money or U.S. Government Obligations for the payment of principal of, premium (if any) and interest on the Notes to redemption or maturity, as the case may be. A-11 13. Amendment, Waiver Subject to certain exceptions, (i) the Indenture may be amended with the consent of the Holders of a majority in principal amount of the Notes then outstanding and (ii) any past default or compliance with any provisions may be waived with the consent of the Holders of a majority in principal amount of the Notes then outstanding (including in each case, consents obtained in connection with a tender offer or exchange offer for Notes). In certain instances provided in the Indenture, the Indenture may be amended without the consent of any Holder. 14. Defaults and Remedies If an Event of Default with respect to the Notes occurs and is continuing, the Notes may be declared due and payable immediately in the manner and with the effect provided in the Indenture. 15. No Recourse Against Others No director, officer, employee, incorporator, member or stockholder, as such, of the Company, Holding, any Note Guarantor or any subsidiary thereof shall have any liability for any obligation of the Company, Holding or any Note Guarantor on the Notes under this Indenture, the Notes, the Parent Guarantee or any Note Guarantee, or for any claim based on, in respect of, or by reason of, any such obligation or its creation. Each Noteholder, by accepting the Notes, waives and releases all such liability. This waiver and release are part of the consideration for issuance of the Notes. 16. Governing Law. THE INDENTURE AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY PRINCIPLES OF CONFLICT OF LAWS TO THE EXTENT THAT THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. THE TRUSTEE, THE COMPANY, ANY OTHER OBLIGOR IN RESPECT OF THE NOTES AND (BY THEIR ACCEPTANCE OF THE NOTES) THE HOLDERS, AGREE TO SUBMIT TO THE JURISDICTION OF ANY UNITED STATES FEDERAL OR STATE COURT LOCATED IN THE BOROUGH OF A-12 MANHATTAN, IN THE CITY OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE OR THE NOTES. 17. Authentication This Note shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of authentication on the other side of this Note. 18. Abbreviations Customary abbreviations may be used in the name of a Holder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act). 19. CUSIP Numbers Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes and has directed the Trustee to use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed hereon. A-13 [FORM OF TRANSFER NOTICE] To assign this Note, fill in the form below: I or we assign and transfer this Note to (Print or type assignee's name, address and zip code) (Insert assignee's soc. sec. or tax I.D. No.) and irrevocably appoint -------------------------------------------------------- agent to transfer this Note on the books of the Company. The agent may substitute another to act for him. [ [Check One] [ ] (a) this Note is being transferred in compliance with the exemption from registration under the Securities Act of 1933, as amended, provided by Rule 144A thereunder. or -- [ ] (b) this Note is being transferred other than in accordance with (a) above and documents are being furnished which comply with the conditions of transfer set forth in this Note and the Indenture. If neither of the foregoing boxes is checked, the Trustee or other Note Registrar shall not be obligated to register this Note in the name of any Person other than the Holder hereof unless A-14 and until the conditions to any such transfer of registration set forth herein and in Section 313 of the Indenture shall have been satisfied.]/23/ Date: ------------------------------ ------------------------------ NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within-mentioned instrument in every particular, without alteration or any change whatsoever. Signature Guarantee: ---------------------------------- Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Note Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Note Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. [TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED. The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, as amended, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying - ------------------------------ 23. Include only for an Initial Note or an Initial Additional Note that bears the Private Placement Legend, in accordance with the Indenture. A-15 upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated: ------------------------- ------------------------------------ NOTICE: To be executed by an executive officer]/24/ - ------------------------------ 24. Include only for an Initial Note or an Initial Additional Note that bears the Private Placement Legend, in accordance with the Indenture. A-16 OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Company pursuant to Section 410 or 414 of the Indenture, check the box: [ ]. If you want to elect to have only part of this Note purchased by the Company pursuant to Section 410 or 414 of the Indenture, state the amount (in principal amount): $ Date: Signed: __________________ ___________________________ (Sign exactly as your name appears on the other side of the Note) Signature Guarantee: _______________________________________ Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Note Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Note Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. A-17 SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE
The following increases or decreases in this Global Note have been made: Date of Amount of Amount of Principal amount Signature Exchange decreases in increases in of this Global Note of authorized Principal Principal following such officer or Trustees Amount of this Amount of this decreases or of Securities Global Note Global Note increases Custodian
A-18 EXHIBIT B Form of Supplemental Indenture in Respect of Note Guarantee SUPPLEMENTAL INDENTURE, dated as of [_________] (this "Supplemental ------------ Indenture"), among [name of [New Note Guarantor[s]/25/] (the "New Note - --------- -------- Guarantor[s]"), Telecommunications Techniques Co., LLC, a Delaware limited - ------------ liability Company (the "Company"), [any] [the] [each other] then existing Note Guarantor[s] under the Indenture referred to below (the "Existing Guarantor[s]"), Dynatech Corporation, a corporation organized under the laws of the State of Massachusetts, as Parent Guarantor (the "Parent Guarantor") and State Street Bank and Trust Company, as Trustee (the "Trustee") under the Indenture referred to below. W I T N E S S E T H: WHEREAS, the Company, [the] [any] Existing Guarantor[s], the Parent Guarantor and the Trustee have heretofore become parties to an Indenture, dated as of May 21, 1998, as amended (as amended, supplemented, waived or otherwise modified, the "Indenture"), providing for the issuance of 9 3/4% Senior Subordinated Notes Due 2008 of the Company (the "Notes"); WHEREAS, Section 1308 of the Indenture provides that the Company is required to or may cause the New Note Guarantor[s] to execute and deliver to the Trustee a supplemental indenture pursuant to which the New Note Guarantor[s] shall guarantee the Notes pursuant to a Note Guarantee on the terms and conditions set forth herein and in Article Thirteen of the Indenture; WHEREAS, [the][each] New Note Guarantor desires to enter into this Supplemental Indenture for good and valuable consideration, including substantial economic benefit in that the financial performance and condition of such New Note Guarantor is dependent on the financial performance and condition of the Company and on [the] [such] New Note Guarantor's access to working capital through the Company's access to revolving credit borrowings under the Senior Credit Agreement; and WHEREAS, pursuant to Section 901 of the Indenture, the parties hereto are authorized to execute and deliver this Supplemental Indenture to amend the Indenture, without the consent of any Holder; - ------------------------------ 25. Insert as appropriate. B-1 NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the New Note Guarantor[s], the Company, [the Existing Guarantor[s],] the Parent Guarantor and the Trustee mutually covenant and agree for the benefit of the Holders of the Notes as follows: 1. Defined Terms. As used in this Supplemental Indenture, terms defined in the Indenture or in the preamble or recital hereto are used herein as therein defined. The words "herein," "hereof" and "hereby" and other words of similar import used in this Supplemental Indenture refer to this Supplemental Indenture as a whole and not to any particular section hereof. 2. Agreement to Guarantee. [The] [Each] New Note Guarantor hereby agrees, jointly and severally with [all] [any] other New Note Guarantor[s], [all] [any] Existing Guarantor[s] and the Parent Guarantor, fully and unconditionally, to guarantee the Guaranteed Note obligations under the Indenture and the Notes on the terms and subject to the conditions set forth in Article Thirteen of the Indenture and to be bound by (and shall be entitled to the benefits of) all other applicable provisions of the Indenture as a Note Guarantor. The Note Guarantee of each New Note Guarantor is subject to the subordination provisions of the Indenture. 3. Termination, Release and Discharge. [The] [Each] New Note Guarantor's Note Guarantee shall terminate and be of no further force or effect, and [the] [each] New Note Guarantor shall be released and discharged from all obligations in respect of such Note Guarantee, as and when provided in Section 1303 of the Indenture. 4. Parties. Nothing in this Supplemental Indenture is intended or shall be construed to give any Person, other than the Holders and the Trustee, any legal or equitable right, remedy or claim under or in respect of [the] [each] New Note Guarantor's Note Guarantee or any provision contained herein or in Article Thirteen of the Indenture. 5. Governing Law. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY PRINCIPLES OF CONFLICT OF LAWS TO THE EXTENT THAT THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. THE TRUSTEE, THE COMPANY, ANY OTHER OBLIGOR IN RESPECT OF THE NOTES AND (BY THEIR ACCEPTANCE OF THE NOTES) THE HOLDERS, AGREE TO SUBMIT TO THE JURISDICTION OF ANY UNITED STATES FEDERAL OR STATE COURT LOCATED IN THE BOROUGH OF MANHATTAN, IN THE CITY OF NEW YORK IN ANY ACTION B-2 OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE OR THE NOTES. 6. Ratification of Indenture; Supplemental Indentures Part of Indenture. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Notes heretofore or hereafter authenticated and delivered shall be bound hereby. The Trustee makes no representation or warranty as to the validity or sufficiency of this Supplemental Indenture. 7. Counterparts. The parties hereto may sign one or more copies of this Supplemental Indenture in counterparts, all of which together shall constitute one and the same agreement. 8. Headings. The section headings herein are for convenience of reference only and shall not be deemed to alter or affect the meaning or interpretation of any provisions hereof. B-3 IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed as of the date first above written. [NAME OF NEW NOTE GUARANTOR],/26/ as New Note Guarantor By: ------------------------------- Name: Title: TELECOMMUNICATIONS TECHNIQUES CO., LLC (successor by merger to TTC MERGER CO., LLC), as Issuer By: ------------------------------- Name: Title: DYNATECH CORPORATION, and as Parent Guarantor By: ------------------------------- Name: Title: - ------------------------------ 26. Add a signature block for each New Note Guarantor. B-4 STATE STREET BANK AND TRUST COMPANY, as Trustee By: ------------------------------- Name: Title: B-5 EXHIBIT C Form of Regulation S Certificate Regulation S Certificate State Street Bank and Trust Company 225 Asylum Street 23rd Floor Hartford, Connecticut 06103 Attention: Corporate Trust Department Re: TELECOMMUNICATIONS TECHNIQUES CO., LLC (the "Company") 9 3/4% Senior Subordinated Notes Due 2008 (the "Notes") Ladies and Gentlemen: In connection with our proposed sale of $ aggregate principal _____ amount of Notes, we confirm that such sale has been effected pursuant to and in accordance with Regulation S ("Regulation S") under the Securities Act of 1933, ------------ as amended (the "Securities Act"), and accordingly, we hereby certify as -------------- follows: 1. The offer of the Notes was not made to a person in the United States (unless such person or the account held by it for which it is acting is excluded from the definition of "U.S. person" pursuant to Rule 902(k) of Regulation S under the circumstances described in Rule 902(h)(3) of Regulation S) or specifically targeted at an identifiable group of U.S. citizens abroad. 2. Either (a) at the time the buy order was originated, the buyer was outside the United States or we and any person acting on our behalf reasonably believed that the buyer was outside the United States or (b) the transaction was executed in, on or through the facilities of a designated offshore securities market, and neither we nor any person acting on our behalf knows that the transaction was pre-arranged with a buyer in the United States. 3. No directed selling efforts have been made in the United States in contravention of the requirements of Rule 903(a)(2) or Rule 904(a)(2) of Regulation S, as applicable. C-1 4. The proposed transfer of Notes is not part of a plan or scheme to evade the registration requirements of the Securities Act. 5. If we are a dealer or a person receiving a selling concession or other fee or remuneration in respect of the Notes, and the proposed transfer takes place before the Offshore Note Exchange Date referred to in the Indenture, dated as of May 21, 1998, among Dynatech Corporation, the Company (as successor by merger to TTC Merger Co. LLC) and the Trustee, or we are an officer or director of the Company or a distributor, we certify that the proposed transfer is being made in accordance with the provisions of Rules 903 and 904 of Regulation S. 6. We have advised the transferee of the transfer restrictions applicable to the Notes. You, the Company and counsel for the Company are entitled to rely upon this Certificate and are irrevocably authorized to produce this Certificate or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby. Terms used in this certificate have the meanings set forth in Regulation S. Very truly yours, [NAME OF SELLER] By: ------------------------------- Name: Title: Address: Date of this Certificate: 199 ---------------, -- C-2 EXHIBIT D Form of Certificate of Beneficial Ownership On or after July 1, 1998 State Street Bank and Trust Company 225 Asylum Street 23rd Floor Hartford, Connecticut 06103 Attention: Corporate Trust Department Re: TELECOMMUNICATIONS TECHNIQUES CO., LLC (the "Company") 9 3/4% Senior Subordinated Notes Due 2008 (the "Notes") Ladies and Gentlemen: This letter relates to $ principal amount of Notes ___________ represented by the offshore global note certificate (the "Offshore Global Note"). Pursuant to Section 313(4) of the Indenture dated as of May 21, 1998 relating to the Notes (the "Indenture"), we hereby certify that (1) we are the beneficial owner of such principal amount of Notes represented by the Offshore Global Note and (2) we are either (i) a Non-U.S. Person to whom the Notes could be transferred in accordance with Rule 904 of Regulation S ("Regulation S") promulgated under the Securities Act of 1933, as amended (the "Act") or (ii) a U.S. Person who purchased securities in a transaction that did not require registration under the Act. Accordingly, you are hereby requested to issue an Offshore Physical Note representing the undersigned's interest in the principal amount of Notes represented by the Offshore Global Note, all in the manner provided by the Indenture. You, the Company and counsel for the Company are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested D-1 party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Terms used in this certificate have the meanings set forth in Regulation S. Very truly yours, [Name of Holder] By: ------------------------------ Authorized Signature D-2 EXHIBIT E Form of First Supplemental Indenture FIRST SUPPLEMENTAL INDENTURE dated as of May 21, 1998 (this "Supplemental Indenture"), among Dynatech Corporation ("Holding"), a corporation ---------------------- ------- organized under the laws of the Commonwealth of Massachusetts, Telecommunications Techniques Co., LLC ("TTC"), a Delaware limited liability --- company, and State Street Bank and Trust Company, a Massachusetts trust company, as trustee (the "Trustee") under the Indenture referred to below. ------- W I T N E S S E T H: WHEREAS, Holding and TTC Merger Co. LLC ("TTC Merger Co.") are issuers -------------- under the Indenture, dated as of the date hereof (as amended, supplemented, waived or otherwise modified from time to time the "Indenture"), providing for, --------- inter alia, the issuance of an aggregate principal amount of $275,000,000 of 9 - ----- ---- 3/4% Senior Subordinated Notes Due 2008 (the "Notes," which term shall have the meaning ascribed thereto in the Indenture); WHEREAS, Holding wishes to transfer to the Company the capital stock of all of its subsidiaries (other than Holding's interests in the Company) (the "Subsidiary Transfer"); and ------------------- WHEREAS, in consideration of, among other things, (i) the making available to TTC of a revolving credit facility under the Senior Credit Agreement (as defined in the Indenture), (ii) the Subsidiary Transfer and (iii) the grant by Holding of the Parent Guarantee (as defined in the Indenture), Holding wishes to assign, transfer and convey to TTC all of Holding's rights, and TTC wishes to assume from Holding and TTC Merger Co. all of their respective rights, obligations, covenants, agreements, duties and liabilities, under the Indenture and the Notes and any and all agreements, certificates and other documents executed by Holding and TTC Merger Co., in connection therewith, other than the Parent Guarantee. NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, TTC, Holding and the Trustee mutually covenant and agree for the benefit of the Holders of the Notes as follows: 1. Defined Terms. As used in this Supplemental Indenture, terms defined ------------- in the Indenture or in the preamble or recitals hereto are used herein as therein defined. The words "herein," "hereof" and "hereby" and other words of similar import used in this Supplemental Indenture refer to this Supplemental Indenture as a whole and not to any particular section hereof. E-1 2. Assignment of Rights and Obligations. Holding hereby irrevocably ------------------------------------ assigns, transfers and conveys to TTC all of Holding's rights and powers, obligations, covenants, agreements, duties and liabilities under and with respect to the Indenture and the Notes and any and all agreements, certificates and other documents executed by Holding in connection therewith, other than the Parent Guarantee. 3. Assumption of Agreements and Obligations. The Company hereby ---------------------------------------- expressly assumes and confirms its receipt of all of the rights and powers, and assumes, confirms and agrees to perform and observe all of the obligations, covenants, agreements, duties and liabilities of Holding and TTC Merger Co. under and with respect to the Indenture and the Notes and any and all agreements, certificates and other documents executed by Holding or TTC Merger Co. in connection therewith, other than the Parent Guarantee, as fully as if the Company were originally the obligor in respect thereof and the signatory thereto. 4. Agreement to Guarantee. Holding hereby confirms its Parent Guarantee ---------------------- and agrees hereby, as a primary obligor and not merely as surety, irrevocably to fully and unconditionally, guarantee, on a senior subordinated basis, the obligations of the Company under the Indenture and the Notes on the terms and subject to the conditions set forth in Article 13 of the Indenture and to be bound by (and shall be entitled to the benefits of) all other applicable provisions of the Indenture as the Parent Guarantor. The Parent Guarantee is subject to the subordination provisions of Article 15 of the Indenture. 5. Termination, Release and Discharge of Parent Guarantee. The Parent ------------------------------------------------------ Guarantee shall terminate and be of no further force or effect, and Holding shall be released and discharged from all obligations in respect of such Parent Guarantee, as and when provided in Section 1303 of the Indenture. 6. Parties. Nothing in this Supplemental Indenture is intended or shall ------- be construed to give any Person, other than the Holders and the Trustee, any legal or equitable right, remedy or claim under or in respect of Holding's Parent Guarantee hereunder or any provision contained herein or in Article 13 of the Indenture. 7. Governing Law. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND ------------- CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY PRINCIPLES OF CONFLICT OF LAWS TO THE EXTENT THAT THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. THE TRUSTEE, THE COMPANY, ANY OTHER OBLIGOR IN RESPECT OF THE NOTES AND (BY THEIR ACCEPTANCE OF THE NOTES) THE HOLDERS, AGREE TO SUBMIT TO THE E-2 JURISDICTION OF ANY UNITED STATES FEDERAL OR STATE COURT LOCATED IN THE BOROUGH OF MANHATTAN, IN THE CITY OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE OR THE NOTES. 8. Ratification of Indenture; Supplemental Indentures Part of Indenture. -------------------------------------------------------------------- Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Notes heretofore or hereafter authenticated and delivered shall be bound hereby. The Trustee makes no representation or warranty as to the validity or sufficiency of this Supplemental Indenture. 9. Holding as Agent for TTC. To the extent permitted by the TIA and any ------------------------ other applicable law, TTC hereby appoints Holding as its attorney-in-fact, which appointment is coupled with an interest, to take any action that this Indenture may require or permit TTC to take, including (i) the giving of any certification, opinion, order, request or consent (whether by Officer's Certificate, Opinion of Counsel, Company Order, Company Request, Company Consent or otherwise), (ii) the giving of any notice (including under Section 1001 of the Indenture), and ------------ (iii) the setting of any record date, such appointment to remain in effect until TTC shall otherwise notify the Trustee in writing. 10. Counterparts. The parties hereto may sign one or more copies of this ------------ Supplemental Indenture in counterparts, all of which together shall constitute one and the same agreement. 11. Headings. The section headings herein are for convenience of -------- reference only and shall not be deemed to alter or affect the meaning or interpretation of any provisions hereof. E-3 IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed as of the date first above written. TELECOMMUNICATIONS TECHNIQUES CO., LLC By: Dynatech Corporation, its sole member By: ------------------------------ Name: Title: DYNATECH CORPORATION, as Guarantor under the Parent Guarantee By: ----------------------------------------- Name: Title: STATE STREET BANK AND TRUST COMPANY, as Trustee By: ----------------------------------------- Name: Title: E-4 EX-4.2 5 FORM OF 9-3/4 SENIOR SUBORDINATED NOTE DUE 2008 EXHIBIT 4.2 FORM OF NOTE ------------ UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRE SENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK COR PORATION ("DTC") TO THE ISSUER OR ITS --- AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTIONS 312 AND ------------ 313 OF THE INDENTURE. - --- TELECOMMUNICATIONS TECHNIQUES CO., LLC 9 3/4% Senior Subordinated Notes Due 2008 No. CUSIP No. 87928F AB 8 $_________ Telecommunications Techniques Co., LLC, and any successor in interest thereto (the "Company"), promises to pay to , or registered assigns, the principal sum of $(_______________ United States Dollars) on May 15, 2008 (or such lesser or greater amounts as shall be outstanding hereunder from time to time in accordance with Sections 312 and 313 of the Indenture referred to on the reverse here). Interest Payment Dates: May 15 and November 15. Record Dates: May 1 and November 1. Additional provisions of this Note are set forth on the other side of this Note. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed. TELECOMMUNICATIONS TECHNIQUES CO., LLC By: Dynatech Corporation, its sole member By: -------------------------------- Name: Title: TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Notes referred to in the within-named Indenture. STATE STREET BANK AND TRUST COMPANY, as Trustee By: -------------------------------- Name: Title: Dated: ------------------------ 2 FORM OF REVERSE SIDE OF NOTE 9 3/4% Senior Subordinated Note Due 2008 1. Interest -------- The Company promises to pay interest semi-annually on May 15 and November 15 in each year, commencing November 15, 1998 at the rate of 9 3/4% per annum, except that interest accrued on this Note for periods prior to the date on which the Initial Note was surrendered in exchange for this Note will accrue at the rate or rates borne by such Initial Note from time to time during such periods, until the Principal Amount is paid or made available for payment. Interest on this Note will accrue from the most recent date to which interest on this Note or any of its Predecessor Notes has been paid or duly provided for or, if no interest has been paid, from the Issue Date. Interest on the Notes shall be computed on the basis of a 360-day year of twelve 30-day months. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Note (or one or more Predecessor Notes) is registered at the close of business on the Regular Record Date for such interest, which shall be the May 1 or November 1 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Note (or one or more Predecessor Notes) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Notes not more than 15 days nor less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. 2. Method of Payment ----------------- Payment of the principal of (and premium, if any) and interest on this Note will be made at the office or agency of the Company maintained for that purpose in The Borough of Manhattan, The City of New York; provided, however, -------- ------- that at the option of the Company payment of interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Note Register. 3 3. Paying Agent and Registrar -------------------------- Initially, State Street Bank and Trust Company, a Massachusetts trust company, the Trustee, will act as Paying Agent and Registrar. The Company may appoint and change any Paying Agent, Registrar or co-registrar without notice. The Company or any domestically incorporated subsidiary of the Company may act as Paying Agent, Registrar or co-registrar. 4. Indenture --------- This Note is one of the duly authorized issue of 9 3/4% Senior Subordinated Notes Due 2008 of the Company (herein called the "Notes"), issued under an Indenture, dated as of May 21, 1998 (as amended, supplemented or otherwise modified from time to time, the "Indenture," which term shall have the meanings assigned to it in such instrument), among Dynatech Corporation, TTC Merger Co. LLC (predecessor in interest to Telecommunications Techniques Co., LLC) and State Street Bank and Trust Company as Trustee (herein called the "Trustee," which term includes any successor trustee under the Indenture) and reference is hereby made to the Indenture for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, any other obligor upon this Note, the Trustee and the Holders of the Notes and of the terms upon which the Notes are, and are to be, authenticated and delivered. The terms of the Notes include those stated in the Indenture and those made a part of the Indenture by reference to the Trust Indenture Act of 1939, as amended, as in effect from time to time (the "TIA"). The Notes are subject to all such terms, and Holders are referred to the Indenture and the TIA for a statement of such terms. Additional Notes may be issued under the Indenture which may vote as a class with the Notes and otherwise be treated as Notes for purposes of the Indenture. All terms used in this Note that are defined in the Indenture shall have the meanings assigned to them in the Indenture. This Note is entitled to the benefits of a certain senior subordinated Parent Guarantee of Holding and may hereafter be entitled to certain other senior subordinated Note Guarantees made for the benefit of the Holders. Reference is made to Article Thirteen of the Indenture and to the Parent Guarantee and any Note Guarantees for terms relating to such Parent Guarantee or Note Guarantees, including the release, termination and discharge thereof. Neither the Company nor Holding nor any Note Guarantor shall be required to make any notation on this Note to reflect any Parent Guarantee or Note Guarantee or any such release, termination or discharge. 4 5. Optional Redemption ------------------- (a) The Notes will be redeemable, at the Company' option, in whole or in part, and from time to time on and after May 15, 2003 and prior to maturity. Such redemption may be made upon notice mailed by first-class mail to each Holder's registered address in accordance with the Indenture. Any such redemption and notice may, in the Company' discretion, be subject to the satisfaction of one or more conditions precedent. The Notes will be so redeemable at the following Redemption Prices (expressed as a percentage of principal amount), plus accrued interest, if any, to the relevant Redemption Date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date) if redeemed during the 12-month period commencing on May 15 of the years set forth below: REDEMPTION PERIOD PRICE ------ ----------- 2003.............................. 104.875% 2004.............................. 103.250 2005.............................. 101.625 2006 and thereafter............... 100.000% (b) In addition, at any time and from time to time prior to May 15, 2001, the Company at its option may redeem the Notes in an aggregate principal amount equal to up to 35% of the original aggregate principal amount of the Notes (including the principal amount of any Additional Notes), with funds in an aggregate amount (the "Redemption Amount") not exceeding the aggregate cash ----------------- proceeds of one or more Equity Offerings, at a Redemption Price (expressed as a percentage of principal amount thereof) of 109.75% plus accrued interest, if any, to the Redemption Date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date); provided, however, that an aggregate principal amount of the Notes equal to at least 65% of the original aggregate principal amount of the Notes (including the principal amount of any Additional Notes) must remain outstanding after each such redemption. The Company may make such redemption upon notice mailed by first-class mail to each Holder's registered address in accordance with the Indenture (but in no event more than 180 days after the completion of the related Equity Offering). Any such notice may be given prior to the completion of the related Equity Offering, and any such redemption or notice may, at the Company' discretion, be subject to the satisfaction of one or more conditions precedent, including but not limited to the completion of the related Equity Offering. 5 (c) At any time on or prior to May 15, 2003, the Notes may also be redeemed or purchased (by the Company or any other Person) in whole but not in part, at the Company's option, upon the occurrence of a Change of Control, at a price equal to 100% of the principal amount thereof plus the Applicable Premium as of, and accrued but unpaid interest, if any, to, the Redemption Date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date). Such redemption or purchase may be made upon notice mailed by first-class mail to each Holder's registered address in accordance with the Indenture (but in no event more than 180 days after the occurrence of such Change of Control). The Company may provide in such notice that payment of such price and performance of the Company's obligations with respect to such redemption or purchase may be performed by another Person. Any such notice may be given prior to the occurrence of the related Change of Control, and any such redemption, purchase or notice may, at the Company's discretion, be subject to the satisfaction of one or more conditions precedent, including but not limited to the occurrence of the related Change of Control. 6. No Sinking Fund --------------- The Notes will not be entitled to the benefit of a sinking fund. 7. Subordination ------------- The Notes are subordinated to Senior Indebtedness, as defined in the Indenture. To the extent provided in the Indenture, Senior Indebtedness must be paid before the Notes may be paid. In addition, the Parent Guarantee and any Note Guarantees are or shall be, as the case may be, subordinated to Parent Senior Indebtedness (as defined in the Indenture) and Guarantor Senior Indebtedness (as defined in the Indenture), as applicable. To the extent provided in the Indenture, Parent Senior Indebtedness and Guarantor Senior Indebtedness must be paid before the Parent Guarantee or any Note Guarantee may be paid. The Company, the Parent Guarantor and any Note Guarantor agree, and each Holder by accepting a Note agrees, to the subordination provisions contained in the Indenture and authorizes the Trustee to give such provisions effect and appoints the Trustee as attorney-in-fact for such purposes. 6 8. Put Provisions -------------- The Indenture provides that, upon the occurrence of a Change of Control Triggering Event, each Holder will have the right to require that the Company repurchase all or any part of such Holder's Notes at a repurchase price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, to the date of such repurchase (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date); provided, however, that the Company shall not be obligated to purchase Notes in the event it has exercised its right to redeem all of the Notes. 9. Denominations; Transfer; Exchange --------------------------------- The Notes are in registered form without coupons in denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange Notes in accordance with the Indenture and subject to certain limitations set forth therein. No service charge shall be made for any transfer or exchange of Notes, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith. The Company shall not be required (i) to issue, transfer or exchange any Note during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption (or purchase) of Notes selected for redemption (or purchase) under Section 1004 of the Indenture and ending at the close of business on the day of such mailing, or (ii) to transfer or exchange any Note so selected for redemption (or purchase) in whole or in part. 10. Persons Deemed Owners --------------------- The registered Holder of this Note may be treated as the owner of it for all purposes. 11. Unclaimed Money --------------- The Trustee shall pay to the Company upon a Company Request any money held by it for the payment of principal (and premium, if any) or interest that remains unclaimed for two years. After payment to the Company, Holders entitled to money must look to the Company for payment as general creditors and all liability of the Trustee or Paying Agent with respect to such money shall thereupon cease. 7 12. Discharge and Defeasance ------------------------ Subject to certain conditions, the Company at any time may terminate some or all of its obligations under the Notes and the Indenture if the Company deposits with the Trustee money or U.S. Government Obligations for the payment of principal of, premium (if any) and interest on the Notes to redemption or maturity, as the case may be. 13. Amendment, Waiver ----------------- Subject to certain exceptions, (i) the Indenture may be amended with the consent of the Holders of a majority in principal amount of the Notes then outstanding and (ii) any past default or compliance with any provisions may be waived with the consent of the Holders of a majority in principal amount of the Notes then outstanding (including in each case, consents obtained in connection with a tender offer or exchange offer for Notes). In certain instances provided in the Indenture, the Indenture may be amended without the consent of any Holder. 14. Defaults and Remedies --------------------- If an Event of Default with respect to the Notes occurs and is continuing, the Notes may be declared due and payable immediately in the manner and with the effect provided in the Indenture. 15. No Recourse Against Others -------------------------- No director, officer, employee, incorporator, member or stockholder, as such, of the Company, Holding, any Note Guarantor or any subsidiary thereof shall have any liability for any obligation of the Company, Holding or any Note Guarantor on the Notes under this Indenture, the Notes, the Parent Guarantee or any Note Guarantee, or for any claim based on, in respect of, or by reason of, any such obligation or its creation. Each Noteholder, by accepting the Notes, waives and releases all such liability. This waiver and release are part of the consideration for issuance of the Notes. 8 16. Governing Law. ------------- THE INDENTURE AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY PRINCIPLES OF CONFLICT OF LAWS TO THE EXTENT THAT THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. THE TRUSTEE, THE COMPANY, ANY OTHER OBLIGOR IN RESPECT OF THE NOTES AND (BY THEIR ACCEPTANCE OF THE NOTES) THE HOLDERS, AGREE TO SUBMIT TO THE JURISDICTION OF ANY UNITED STATES FEDERAL OR STATE COURT LOCATED IN THE BOROUGH OF MANHATTAN, IN THE CITY OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE OR THE NOTES. 17. Authentication -------------- This Note shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of authentication on the other side of this Note. 18. Abbreviations ------------- Customary abbreviations may be used in the name of a Holder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act). 19. CUSIP Numbers ------------- Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes and has directed the Trustee to use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed hereon. 9 FORM OF TRANSFER NOTICE To assign this Note, fill in the form below: I or we assign and transfer this Note to (Print or type assignee's name, address and zip code) (Insert assignee's soc. sec. or tax I.D. No.) and irrevocably appoint agent to transfer this Note on the books of the Company. The agent may substitute another to act for him. Date: ---------------------- ---------------------------------------- NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within-mentioned instrument in every particular, without alteration or any change whatsoever. Signature Guarantee: --------------------------------- Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Note Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by ----- the Note Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. 10 OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Company pursuant to Section 410 or 414 of the Indenture, check the box: [ ]. If you want to elect to have only part of this Note purchased by the Company pursuant to Section 410 or 414 of the Indenture, state the amount (in principal amount): $ Date: Signed: ------------------ --------------------------- (Sign exactly as your name appears on the other side of the Note) Signature Guarantee: --------------------------------- Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Note Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by ----- the Note Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. 11 SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE The following increases or decreases in this Global Note have been made:
Date of Amount of Amount of Principal amount Signature Exchange decreases in increases in of this Global Note of authorized Principal Principal following such officer or Trustees Amount of this Amount of this decreases or of Securities Global Note Global Note increases Custodian
12 EX-4.3 6 FIRST SUPPLEMENTAL INDENTURE Exhibit 4.3 First Supplemental Indenture ---------------------------- FIRST SUPPLEMENTAL INDENTURE dated as of May 21, 1998 (this "Supplemental ------------ Indenture"), among Dynatech Corporation ("Holding"), a corporation organized - --------- ------- under the laws of the Commonwealth of Massachusetts, Telecommunications Techniques Co., LLC ("TTC"), a Delaware limited liability company, and State --- Street Bank and Trust Company, a Massachusetts trust company, as trustee (the "Trustee") under the Indenture referred to below. - -------- W I T N E S S E T H: WHEREAS, Holding and TTC Merger Co. LLC ("TTC Merger Co.") are issuers -------------- under the Indenture, dated as of the date hereof (as amended, supplemented, waived or otherwise modified from time to time the "Indenture"), providing for, --------- inter alia, the issuance of an aggregate principal amount of $275,000,000 of 9 - ----- ---- 3/4% Senior Subordinated Notes Due 2008 (the "Notes," which term shall have the ----- meaning ascribed thereto in the Indenture); WHEREAS, Holding wishes to transfer to TTC the capital stock of all of its subsidiaries (other than Holding's interests in TTC) (the "Subsidiary ---------- Transfer"); and WHEREAS, in consideration of, among other things, (i) the making available - to TTC of a revolving credit facility under the Senior Credit Agreement (as defined in the Indenture), (ii) the Subsidiary Transfer and (iii) the grant by -- --- Holding of the Parent Guarantee (as defined in the Indenture), Holding wishes to assign, transfer and convey to TTC all of Holding's rights, and TTC wishes to assume from Holding and TTC Merger Co. all of their respective rights, obligations, covenants, agreements, duties and liabilities, under the Indenture and the Notes and any and all agreements, certificates and other documents executed by Holding and TTC Merger Co., in connection therewith, other than the Parent Guarantee. NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, TTC, Holding and the Trustee mutually covenant and agree for the benefit of the Holders of the Notes as follows: 1. Defined Terms. As used in this Supplemental Indenture, terms defined ------------- in the Indenture or in the preamble or recitals hereto are used herein as therein defined. The words "herein," "hereof" and "hereby" and other words of similar import used in this Supplemental Indenture refer to this Supplemental Indenture as a whole and not to any particular section hereof. 2. Assignment of Rights and Obligations. Holding hereby irrevocably ------------------------------------ assigns, transfers and conveys to TTC all of Holding's rights and powers, obligations, covenants, agreements, duties and liabilities under and with respect to the Indenture and the Notes and any and all agreements, certificates and other documents executed by Holding in connection therewith, other than the Parent Guarantee. 3. Assumption of Agreements and Obligations. TTC hereby expressly assumes ---------------------------------------- and confirms its receipt of all of the rights and powers, and assumes, confirms and agrees to perform and observe all of the obligations, covenants, agreements, duties and liabilities of Holding and TTC Merger Co. under and with respect to the Indenture and the Notes and any and all agreements, certificates and other documents executed by Holding or TTC Merger Co. in connection therewith, other than the Parent Guarantee, as fully as if TTC were originally the obligor in respect thereof and the signatory thereto. 4. Agreement to Guarantee. Holding hereby confirms its Parent Guarantee ---------------------- and agrees hereby, as a primary obligor and not merely as surety, irrevocably to fully and unconditionally, guarantee, on a senior subordinated basis, the obligations of TTC under the Indenture and the Notes on the terms and subject to the conditions set forth in Article 13 of the Indenture and to be bound by (and shall be entitled to the benefits of) all other applicable provisions of the Indenture as the Parent Guarantor. The Parent Guarantee is subject to the subordination provisions of Article 15 of the Indenture. 5. Termination, Release and Discharge of Parent Guarantee. The Parent ------------------------------------------------------ Guarantee shall terminate and be of no further force or effect, and Holding shall be released and discharged from all obligations in respect of such Parent Guarantee, as and when provided in Section 1303 of the Indenture. 6. Parties. Nothing in this Supplemental Indenture is intended or shall ------- be construed to give any Person, other than the Holders and the Trustee, any legal or equitable right, remedy or claim under or in respect of Holding's Parent Guarantee hereunder or any provision contained herein or in Article 13 of the Indenture. 7. Governing Law. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND ------------- CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY PRINCIPLES OF CONFLICT OF LAWS TO THE EXTENT THAT THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. THE 2 TRUSTEE, THE COMPANY, ANY OTHER OBLIGOR IN RESPECT OF THE NOTES AND (BY THEIR ACCEPTANCE OF THE NOTES) THE HOLDERS, AGREE TO SUBMIT TO THE JURISDICTION OF ANY UNITED STATES FEDERAL OR STATE COURT LOCATED IN THE BOROUGH OF MANHATTAN, IN THE CITY OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE OR THE NOTES. 8. Ratification of Indenture; Supplemental Indentures Part of Indenture. -------------------------------------------------------------------- Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Notes heretofore or hereafter authenticated and delivered shall be bound hereby. The Trustee makes no representation or warranty as to the validity or sufficiency of this Supplemental Indenture. 9. Holding as Agent for TTC. To the extent permitted by the TIA and any ------------------------ other applicable law, TTC hereby appoints Holding as its attorney-in-fact, which appointment is coupled with an interest, to take any action that this Indenture may require or permit TTC to take, including (i) the giving of any certification, opinion, order, request or consent (whether by Officer's Certificate, Opinion of Counsel, Company Order, Authentication Order, Company Request, Company Consent or otherwise), (ii) the giving of any notice (including under Section 1001 of the ------------ Indenture), and (iii) the setting of any record date, such appointment to remain in effect until TTC shall otherwise notify the Trustee in writing. 10. Counterparts. The parties hereto may sign one or more copies of ------------ this Supplemental Indenture in counterparts, all of which together shall constitute one and the same agreement. 11. Headings. The section headings herein are for convenience of -------- reference only and shall not be deemed to alter or affect the meaning or interpretation of any provisions hereof. 3 IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed as of the date first above written. TELECOMMUNICATIONS TECHNIQUES CO., LLC By: Dynatech Corporation, its sole member By:__________________________________________ Name: Title: DYNATECH CORPORATION, as Guarantor under the Parent Guarantee By:__________________________________________________ Name: Title: STATE STREET BANK AND TRUST COMPANY, as Trustee By:__________________________________________________ Name: Title: 4 EX-4.4 7 REGISTRATION RIGHTS AGREEMENT - CSFB & JP MORGAN EXHIBIT 4.4 $275,000,000 TELECOMMUNICATIONS TECHNIQUES CO., LLC 9 3/4% SENIOR SUBORDINATED NOTES DUE 2008 REGISTRATION RIGHTS AGREEMENT ----------------------------- May 21, 1998 Credit Suisse First Boston Corporation J.P. Morgan Securities Inc. c/o Credit Suisse First Boston Corporation Eleven Madison Avenue New York, New York 10010-3629 Dear Sirs: After the effective time of the merger of TTC Merger Co. LLC, a Delaware limited liability company ("TTC Merger Co"), with and into Telecommunications Techniques Co., LLC, a Delaware limited liability company ("TTC"), and the assumption of obligations of TTC Merger Co by and the assignment of certain obligations by Dynatech Corporation, a Massachusetts corporation ("Dynatech", and together with TTC, the "Company"), to TTC, TTC will be the primary obligor on the $275,000,000 aggregate principal amount of 9 3/4% Senior Subordinated Notes Due 2008, to be fully and unconditionally guaranteed by Dynatech (the "Initial Securities") and to be issued to Credit Suisse First Boston Corporation and J.P. Morgan Securities Inc. (collectively, the "Initial Purchasers"), upon the terms set forth in a purchase agreement dated May 14, 1998 (the "Purchase Agreement"). The Initial Securities will be issued pursuant to an Indenture, dated as of May 21, 1998, (the "Indenture") among the Dynatech, TTC Merger Co and State Street Bank and Trust Company, as trustee (the "Trustee"), as supplemented by the First Supplemental Indenture, dated as of May 21, 1998, among Dynatech, TTC and the Trustee. The obligations of the Company hereunder are joint and several obligations of Dynatech and TTC. The Company agrees with the Initial Purchasers, for the benefit of the holders of the Initial Securities (including, without limitation, the Initial Purchasers), the Exchange Securities (as defined below) and the Private Exchange Securities (as defined below) (collectively the "Holders"), as follows: 1. Registered Exchange Offer. The Company shall, at its own cost, prepare and use its reasonable best efforts to, not later than 120 days (or if the 120th day is not a business day, the first business day thereafter) after the date of original issue of the Initial Securities (the "Issue Date"), file with the Securities and Exchange Commission (the "Commission") a registration statement (the "Exchange Offer Registration Statement") on an appropriate form under the Securities Act of 1933, as amended (the "Securities Act"), with respect to a proposed offer (the "Registered Exchange Offer") to those Holders of Initial Securities that are Transfer Restricted Securities (as defined in Section 6 hereof) who are not prohibited by any law or policy or interpretation of the Commission or its staff from participating in the Registered Exchange Offer, to issue and deliver to such Holders, in exchange for the Initial Securities, a like aggregate principal amount of debt securities (the "Exchange Securities") of TTC issued under the Indenture and identical in all material respects to the Initial Securities (except for the transfer restrictions relating to the Initial Securities and the provisions relating to the matters described in Section 6 hereof) that would be registered under the Securities Act. The Company shall use its reasonable best efforts to cause such Exchange Offer Registration Statement to become effective under the Securities Act within 150 days (or if the 150th day is not a business day, the first business day thereafter) after the Issue Date of the Initial Securities and to keep the Exchange Offer Registration Statement effective for not less than 10 business days (or longer, if required by applicable law) after the date notice of the Registered Exchange Offer is mailed to the Holders (such period being called the "Exchange Offer Registration Period"). For purposes hereof, "business day" shall mean any day other than a Saturday or Sunday, and other than a holiday on which the Commission shall not be open for the transaction of business. If the Company effects the Registered Exchange Offer, the Company will be entitled to close the Registered Exchange Offer on the last day of the Exchange Offer Registration Period, provided that the Company has accepted all the Initial Securities theretofore validly tendered in accordance with the terms of the Registered Exchange Offer. Following the declaration of the effectiveness of the Exchange Offer Registration Statement, the Company shall promptly commence the Registered Exchange Offer, it being the objective of such Registered Exchange Offer, subject to the terms and conditions hereof, to enable each Holder of Initial Securities that are Transfer Restricted Securities electing to exchange the Initial Securities for Exchange Securities (assuming that such Holder is not an affiliate of the Company within the meaning of the Securities Act, acquires the Exchange Securities in the ordinary course of such Holder's business and has no arrangements with any person to participate in the distribution of the Exchange Securities and is not prohibited by any law or policy or interpretation of the Commission or its staff from participating in the Registered Exchange Offer) to trade such Exchange Securities from and after their receipt without any limitations or restrictions under the Securities Act. The Company and the Initial Purchasers acknowledge that, pursuant to current interpretations by the Commission's staff of Section 5 of the Securities Act, in the absence of an applicable exemption therefrom, (i) each Holder that is a broker-dealer electing to exchange Initial Securities in the Registered Exchange Offer, acquired for its own account as a result of market making activities or other trading activities, for Exchange Securities (a "Participating Broker-Dealer"), is required to deliver a prospectus containing information substantially to the effect set forth in Annex A hereto, Annex B hereto and Annex C hereto in the appropriate sections of such prospectus in connection with a sale of any such Exchange Securities received by such Participating Broker-Dealer pursuant to the Registered Exchange Offer and (ii) an Initial Purchaser that elects to sell Private Exchange Securities (as defined below) acquired in exchange for Initial Securities constituting any portion of an unsold allotment, is required to deliver a prospectus containing the information required by Items 507 or 508 of Regulation S-K under the Securities Act, as applicable, in connection with such sale. The Company shall use its reasonable best efforts to keep the Exchange Offer Registration Statement effective and to amend and supplement the prospectus contained therein, in order to permit such prospectus to be delivered by dealers subject to the prospectus delivery requirements of Section 4(3) of the Securities Act and Rule 174 thereunder (for such period of time as shall be required thereby for such delivery in order to resell the Exchange Securities), and shall make such prospectus and any amendment or supplement thereto available to any Participating Broker- 2 Dealer for use in connection with any resale of any Exchange Securities, in either case for a period of not more than 90 days after the consummation of the Registered Exchange Offer. If, upon consummation of the Registered Exchange Offer, any Initial Purchaser holds Initial Securities acquired by it as part of its initial distribution, TTC, simultaneously with the delivery of the Exchange Securities pursuant to the Registered Exchange Offer, shall issue and deliver to such Initial Purchaser upon the written request of such Initial Purchaser, in exchange (the "Private Exchange") for the Initial Securities held by such Initial Purchaser, a like principal amount of debt securities of TTC issued under the Indenture and identical in all material respects (including the existence of restrictions on transfer under the Securities Act and the securities laws of the several states of the United States, but excluding provisions relating to the matters described in Section 6 hereof) to the Initial Securities (the "Private Exchange Securities"). The Initial Securities, the Exchange Securities and the Private Exchange Securities are herein collectively called the "Securities". In connection with the Registered Exchange Offer, the Company shall: (a) mail to each Holder a copy of the prospectus forming part of the Exchange Offer Registration Statement, together with an appropriate letter of transmittal and related documents; (b) keep the Registered Exchange Offer open for not less than 10 business days (or longer, if required by applicable law) after the date notice thereof is mailed to the Holders; (c) utilize the services of a depositary for the Registered Exchange Offer with an address in the Borough of Manhattan, The City of New York, which may be the Trustee or an affiliate of the Trustee; (d) permit Holders to withdraw tendered Securities at any time prior to the close of business, New York time, on the last business day on which the Registered Exchange Offer shall remain open; and (e) otherwise comply in all material respects with all applicable securities laws. As soon as practicable after the close of the Registered Exchange Offer or the Private Exchange, as the case may be, the Company shall: (x) accept for exchange all the Securities validly tendered and not withdrawn pursuant to the Registered Exchange Offer and the Private Exchange; (y) deliver to the Trustee for cancellation all the Initial Securities so accepted for exchange; and (z) request the Trustee to authenticate and deliver promptly, to each Holder of such Initial Securities, Exchange Securities or Private Exchange Securities, as the case may be, equal in principal amount to such Initial Securities of such Holder so accepted for exchange. 3 The Indenture will provide that all the Securities will vote and consent together on all matters as one class and that none of the Securities will have the right to vote or consent as a class separate from one another on any matter. Interest on each Exchange Security and Private Exchange Security issued pursuant to the Registered Exchange Offer and in the Private Exchange will accrue from the last interest payment date to which interest was paid or duly provided for on the Initial Securities surrendered in exchange therefor (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date) or, if no interest has been paid on the Initial Securities, from the Issue Date. Each Holder participating in the Registered Exchange Offer shall be required to represent to the Company that at the time of the consummation of the Registered Exchange Offer (i) any Exchange Securities received by such Holder will be acquired in the ordinary course of business, (ii) such Holder will have no arrangements or understanding with any person to participate in the distribution of the Securities or the Exchange Securities within the meaning of the Securities Act, (iii) such Holder is not an "affiliate," as defined in Rule 405 of the Securities Act, of the Company or if it is an affiliate, such Holder will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable, (iv) if such Holder is not a broker- dealer, that it is not engaged in, and does not intend to engage in, the distribution of the Exchange Securities, (v) if such Holder is a broker-dealer, that it will receive Exchange Securities for its own account in exchange for Initial Securities that were acquired as a result of market-making activities or other trading activities and that it will deliver a prospectus in connection with any resale of such Exchange Securities, and (vi) that it is not acting on behalf of any person who could not truthfully make the foregoing representations. Notwithstanding any other provisions hereof, the Company will use its reasonable best efforts to ensure that (i) any Exchange Offer Registration Statement and any amendment thereto and any prospectus forming part thereof and any supplement thereto complies in all material respects with the Securities Act and the rules and regulations thereunder, (ii) any Exchange Offer Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (iii) any prospectus forming part of any Exchange Offer Registration Statement, and any supplement to such prospectus, does not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. Upon consummation of the Registered Exchange Offer in accordance with this Section 1 (whether or not the actions or events specified in the first sentence of this Section 1 occur within the time periods specified therefor) the provisions of this Agreement shall continue to apply (to the extent applicable) solely with respect to Securities that (i) were not eligible to be exchanged in the Registered Exchange Offer (other than due to the status of the Holder thereof as an affiliate of the Company or due to such Holder's inability to make the representations referred to in the third to last paragraph of this Section 1) and have not been exchanged for Private Exchange Securities, (ii) were received by the Holder thereof (other than a Participating Broker-Dealer) in the Registered Exchange Offer but are not freely tradeable on the date of such exchange (other than due to the status of such Holder as an affiliate of the Company or due to such Holder's inability to make the representations referred to in the third to last paragraph of this Section 1) or (iii) are Private Exchange Securities and Exchange Securities held by Participating Broker- Dealers, and the Company shall have no further obligation to 4 register Securities (other than those Securities referred to in clause (i) or (ii) above and Private Exchange Securities) pursuant to Section 2 of this Agreement. 2. Shelf Registration. If, (i) because of any change in law or in applicable interpretations thereof by the staff of the Commission, the Company is not permitted to effect a Registered Exchange Offer, as contemplated by Section 1 hereof, (ii) the Registered Exchange Offer is not consummated within 180 days of the Issue Date, (iii) any Initial Purchaser so requests with respect to the Initial Securities (or the Private Exchange Securities) not eligible to be exchanged for Exchange Securities in the Registered Exchange Offer and held by it following consummation of the Registered Exchange Offer or (iv) any Holder (other than a Participating Broker Dealer) is not eligible to participate in the Registered Exchange Offer or, in the case of any Holder (other than a Participating Broker Dealer) that participates in the Registered Exchange Offer, such Holder does not receive freely tradeable Exchange Securities on the date of the exchange (other than, in either case, due solely to the status of such Holder as an affiliate of the Company or due to such Holder's inability to make the representations referred to in the third to last paragraph of Section 1 hereof), the Company shall take the following actions: (a) The Company shall, at its cost, use its reasonable best efforts to file with the Commission as promptly as reasonably practicable, and thereafter shall use its reasonable best efforts to be declared effective, a registration statement (the "Shelf Registration Statement" and, together with the Exchange Offer Registration Statement, a "Registration Statement") on an appropriate form under the Securities Act relating to the offer and sale of the Transfer Restricted Securities by the Holders thereof from time to time in accordance with the methods of distribution set forth in the Shelf Registration Statement and Rule 415 under the Securities Act (hereinafter, the "Shelf Registration"); provided, however, that no Holder (other than an Initial Purchaser) shall be - -------- ------- entitled to have the Securities held by it covered by such Shelf Registration Statement unless such Holder agrees in writing to be bound by all the provisions of this Agreement applicable to such Holder. (b) The Company shall use its reasonable best efforts to keep the Shelf Registration Statement continuously effective in order to permit the prospectus included therein to be lawfully delivered by the Holders of the relevant Securities, for a period (the "Shelf Registration Period") of two years (or one year in the case of a shelf registration effected at the request of the Initial Purchasers) from the date of its effectiveness or such shorter period that will terminate when all the Securities covered by the Shelf Registration Statement (i) have been sold pursuant thereto or (ii) are no longer restricted securities (as defined in Rule 144 under the Securities Act, or any successor rule thereof). The Company shall be deemed not to have used its reasonable best efforts to keep the Shelf Registration Statement effective during the requisite period if it voluntarily takes any action that would result in Holders of Securities covered thereby not being able to offer and sell such Securities during that period, unless (i) such action is required by applicable law, (ii) - -- such action is taken by the Company in good faith and for valid business reasons (not including avoidance of the Company's obligations hereunder), including the acquisition or divestiture of assets, so long as the Company promptly thereafter complies with the requirements of Section 3(j) hereof, if applicable, or (iii) --- such action occurs following consummation of the Registered Exchange Offer. (c) Notwithstanding any other provisions of this Agreement to the contrary, the Company shall use its reasonable best efforts to cause the Shelf Registration Statement and the related prospectus and any amendment or supplement thereto, as of the effective date of the Shelf Registration Statement, amendment or supplement, (i) to comply in all material respects with the applicable requirements of the Securities Act and the rules and regulations of the Commission and (ii) not to contain any untrue statement of a material fact or omit to state a material fact required to be stated 5 therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading (in any such case, other than with respect to information included therein in reliance upon or in conformity with written information furnished to the Company by or on behalf of any Holder specifically for use therein). 3. Registration Procedures. In connection with any Shelf Registration contemplated by Section 2 hereof and, to the extent applicable, any Registered Exchange Offer contemplated by Section 1 hereof, the following provisions shall apply: (a) The Company shall (i) furnish to each Initial Purchaser, prior to the filing thereof with the Commission, a copy of the Registration Statement and each amendment thereof and each supplement, if any, to the prospectus included therein and, in the event that an Initial Purchaser (with respect to any portion of an unsold allotment from the original offering) is participating in the Shelf Registration Statement, the Company shall use its reasonable best efforts to reflect in each such Shelf Registration Statement or related amendment or supplement, when so filed with the Commission, such comments as such Initial Purchaser reasonably may propose, (ii) if applicable, include information substantially to the effect set forth in Annex A hereto, Annex B hereto and Annex C hereto in the appropriate sections of the prospectus forming a part of the Exchange Offer Registration Statement and include information substantially to the effect set forth in Annex D hereto in the Letter of Transmittal delivered pursuant to the Registered Exchange Offer, (iii) in the case of any Shelf Registration Statement, if requested by an Initial Purchaser that proposes to sell Securities pursuant to the Shelf Registration Statement as a selling securityholder, include the information required by Items 507 or 508 of Regulation S-K under the Securities Act, as applicable, in the prospectus forming a part of the Shelf Registration Statement, (iv) include within the prospectus contained in the Exchange Offer Registration Statement, in a section entitled "Plan of Distribution" or other appropriate heading, a summary statement reasonably acceptable to the Initial Purchasers, of the positions taken or policies made by the staff of the Commission with respect to the potential "underwriter" status of any broker-dealer that is the beneficial owner (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of Exchange Securities received by such broker-dealer in the Registered Exchange Offer, and (v) in the case of a Shelf Registration Statement, include the names of the Holders who propose to sell Securities pursuant to the Shelf Registration Statement as selling securityholders (the "Selling Holders"). (b) The Company shall advise each of the Initial Purchasers, the Selling Holders (in the case of a Shelf Registration Statement) and any Participating Broker-Dealer (in the case of any Exchange Offer Registration Statement) from whom the Company has received prior written notice that it will be a Participating Broker-Dealer in the Registered Exchange Offer, and, if requested by any such person, confirm such advice in writing (which advice pursuant to clauses (ii)-(v) hereof shall be accompanied (if applicable) by an instruction to suspend the use of the relevant prospectus until the requisite changes have been made): (i) when the Registration Statement or any amendment thereto has been filed with the Commission and when the Registration Statement or any post-effective amendment thereto has become effective; (ii) of any request by the Commission for amendments or supplements to the Registration Statement or the prospectus included therein or for additional information; 6 (iii) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose; (iv) of the receipt by the Company or its legal counsel of any notification with respect to the suspension of the qualification of the Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and (v) of the happening of any event that requires the Company to make changes in the Registration Statement or the prospectus in order that the Registration Statement (as of its effective date) or the prospectus do not contain an untrue statement of a material fact nor omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of the prospectus, in light of the circumstances under which they were made) not misleading. (c) The Company shall make every reasonable effort to obtain the withdrawal at the earliest possible time, of any order suspending the effectiveness of the Registration Statement. (d) The Company shall furnish to each Holder of Transfer Restricted Securities included within the coverage of the Shelf Registration, without charge, at least one copy of the Shelf Registration Statement and any post- effective amendment thereto, including financial statements and schedules, and, if the Holder so requests in writing, all exhibits thereto (including those, if any, incorporated by reference). (e) The Company shall deliver to each Participating Broker-Dealer and each Initial Purchaser, without charge, at least one copy of the Exchange Offer Registration Statement and any post-effective amendment thereto, including financial statements and schedules, and, if any Initial Purchaser requests, all exhibits thereto (including those, if any, incorporated by reference). (f) The Company shall, during the Shelf Registration Period, deliver to each Selling Holder of Securities included within the coverage of the Shelf Registration Statement, without charge, as many copies of the prospectus (including each preliminary prospectus) included in the Shelf Registration Statement and any amendment or supplement thereto as such person may reasonably request. The Company consents, subject to the provisions of this Agreement, to the use of the prospectus or any amendment or supplement thereto by each of the Selling Holders of the Transfer Restricted Securities in connection with the offering and sale of the Transfer Restricted Securities covered by the prospectus, or any amendment or supplement thereto, included in the Shelf Registration Statement. (g) The Company shall, during the Exchange Offer Registration Period, deliver to each Initial Purchaser, and any Participating Broker-Dealer, without charge, as many copies of the final prospectus included in the Exchange Offer Registration Statement and any amendment or supplement thereto as such person may reasonably request. The Company consents, subject to the provisions of this Agreement, to the use of such prospectus or any amendment or supplement thereto, during the 90 days following the consummation of the Registered Exchange Offer, by any Participating Broker-Dealer required to deliver a prospectus following the Registered Exchange Offer in connection with the offering and sale of the Exchange Securities covered by the prospectus, or any amendment or supplement thereto, included in such Exchange Offer Registration Statement. 7 (h) Prior to any public offering of the Securities pursuant to any Shelf Registration Statement, the Company shall use its reasonable best efforts to register or qualify or cooperate with the Selling Holders of the Securities included therein and their respective counsel in connection with the registration or qualification of the Securities for offer and sale under the securities or "blue sky" laws of such states of the United States as any such Holder of the Securities reasonably requests in writing and do any and all other acts or things necessary or advisable to enable the offer and sale in such jurisdictions of the Securities covered by such Registration Statement; provided, however, that the Company shall not be required to (i) qualify - -------- ------- generally to do business in any jurisdiction where it is not then so qualified or (ii) take any action that would subject it to general service of process or to taxation in any jurisdiction where it is not then so subject. (i) The Company shall cooperate with the Selling Holders of the Securities to facilitate the timely preparation and delivery of certificates representing the Transfer Restricted Securities to be sold pursuant to any Shelf Registration Statement free of any restrictive legends relating to transfer restrictions (and not required by stock exchange rule or depository rule or usage) and in such denominations and registered in such names as the Holders may reasonably request in writing a reasonable period of time prior to sales of such Securities pursuant to such Shelf Registration Statement. (j) Upon the occurrence of any event contemplated by paragraphs (ii) through (v) of Section 3(b) above during the period for which the Company is required to maintain an effective Registration Statement, the Company shall use its reasonable best efforts to promptly prepare and file a post-effective amendment to the Registration Statement or a supplement to the related prospectus and any other required document so that, as thereafter delivered to Holders of the Securities or purchasers of Securities, the prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. If the Company notifies the Initial Purchasers, the Selling Holders of the Securities or any known Participating Broker-Dealer in accordance with paragraphs (ii) through (v) of Section 3(b) above to suspend the use of the prospectus until the requisite changes to the prospectus have been made, then the Initial Purchasers, such Holders of the Securities or any such Participating Broker-Dealer, as applicable, shall suspend use of such prospectus. The period of effectiveness of the Shelf Registration Statement provided for in Section 2(b) above or the Exchange Offer Registration Statement provided for in Section 1 above, as applicable, shall be extended by the number of days from and including the date of giving of such notice to and including the date when the Company shall have mailed to the Selling Holders of the Securities or any known Participating Broker-Dealer, as applicable, such amended or supplemented prospectus pursuant to this Section 3(j). (k) Not later than the effective date of the applicable Registration Statement, the Company will provide a CUSIP number for the Initial Securities, the Exchange Securities or the Private Exchange Securities, as the case may be, and provide the applicable trustee with printed certificates for the Initial Securities, the Exchange Securities or the Private Exchange Securities, as the case may be, in a form eligible for deposit with The Depository Trust Company. (l) The Company will make generally available to its securityholders (or otherwise provide in accordance with Section 11(a) of the Securities Act) an earnings statement satisfying the provisions of Section 11(a) of the Securities Act (which need not be audited), no later than 45 days after the end of a 12- month period (or 90 days, if such period is a fiscal year) beginning with the first month of the Company's first fiscal quarter commencing after the effective date of the Registration Statement, which statement shall cover such 12-month period. 8 (m) The Company shall use its reasonable best efforts to cause the Indenture to be qualified under the Trust Indenture Act of 1939, as amended, in a timely manner and containing such changes, if any, as shall be necessary for such qualification. In the event that such qualification would require the appointment of a new trustee under the Indenture, the Company shall use its reasonable best efforts to appoint a new trustee thereunder pursuant to the applicable provision of the Indenture. (n) The Company may require each Holder of Securities to be sold pursuant to the Shelf Registration Statement to furnish to the Company such information regarding the Holder and the distribution of the Securities as the Company may from time to time reasonably require for inclusion in the Shelf Registration Statement, and the Company may exclude from such registration the Securities of any Holder that unreasonably fails to furnish such information within a reasonable time after receiving such request. (o) In the case of any Shelf Registration Statement, the Company shall enter into such customary agreements (including, if requested, an underwriting agreement in customary form) and use its reasonable best efforts to take all such other action, if any, as Selling Holders of a majority in aggregate principal amount of the Securities being sold pursuant to the Shelf Registration Statement (the "Majority Selling Holders") or the managing underwriters, if any, in such offering shall reasonably request in order to facilitate the disposition of the Securities pursuant to such Shelf Registration Statement. (p) In the case of any Shelf Registration Statement, the Company shall (i) make reasonably available for inspection by a representative of, and Special Counsel (as defined below) acting for, the Majority Selling Holders and any underwriter participating in any disposition of Securities pursuant to the Shelf Registration Statement (such representative, Special Counsel or underwriter, an "Inspector"), all relevant financial and other records, pertinent corporate documents and properties of the Company and (ii) use its reasonable best efforts to cause the Company's officers, directors, employees, accountants and auditors to supply all relevant information reasonably requested by such Inspector in connection with the Shelf Registration Statement, in each case, as shall be reasonably necessary to enable such persons to conduct a reasonable investigation within the meaning of Section 11 of the Securities Act; provided, -------- however, that the foregoing inspection and information gathering shall be - ------- coordinated by the Inspectors. Each Inspector will be required to agree in writing, pursuant to a confidentiality agreement in form and substance reasonably satisfactory to the Company and such Inspector, that (i) information obtained by such Inspector as a result of such inspections shall be deemed confidential and shall not be used by such Inspector as the basis for any market transactions in the securities of any of the Company and its subsidiaries unless and until such information is made generally available to the public (other than by or through any Inspector) and (ii) such Inspector will, upon learning that disclosure of such records is sought in a court of competent jurisdiction, give notice to the Company and allow the Company, at its expense, to undertake appropriate action to prevent disclosure of the records deemed confidential. (q) In the case of any Shelf Registration Statement, the Company, if requested by the Majority Selling Holders of Securities covered thereby, shall use its reasonable best efforts to cause (i) its counsel to deliver an opinion relating to the Securities in customary form, addressed to the Selling Holders of Securities covered thereby, (ii) its officers to execute and deliver all customary documents and certificates reasonably requested by any managing underwriters of the applicable Securities and (iii) its independent public accountants to provide a comfort letter in customary form addressed to the Selling Holders of Securities covered thereby, subject to receipt of appropriate documentation as contemplated, and only if permitted, by Statement of Auditing Standards No. 72. 9 (r) If a Registered Exchange Offer or a Private Exchange is to be consummated, upon delivery of the Initial Securities by Holders to the Company (or to such other Person as directed by the Company) in exchange for the Exchange Securities or the Private Exchange Securities, as the case may be, the Company shall mark, or caused to be marked, on the Initial Securities so exchanged that such Initial Securities are being canceled in exchange for the Exchange Securities or the Private Exchange Securities, as the case may be; in no event shall the Initial Securities be marked as paid or otherwise satisfied. 4. Registration Expenses. The Company shall bear all fees and expenses incurred by it in connection with the performance of its obligations under Sections 1 through 3 hereof, whether or not the Registered Exchange Offer or a Shelf Registration Statement is filed or becomes effective, and, in the event of a Shelf Registration Statement, shall reimburse the Holders of the Securities covered thereby for the reasonable fees and disbursements of one firm of counsel designated by the Holders of a majority in principal amount of the Securities covered thereby (the "Special Counsel") to act as counsel for the Holders of the Securities in connection therewith. The Initial Purchasers shall bear any fees and expenses of their counsel incurred in connection with the Registered Exchange Offer. 5. Indemnification. (a) The Company agrees to indemnify and hold harmless (in the case of a Shelf Registration Statement) each Selling Holder of Securities covered thereby and each person, if any, who controls such Holder within the meaning of the Securities Act or the Exchange Act, and (in the case of an Exchange Offer Registration Statement, in connection with any delivery of the prospectus contained therein by a Participating Broker-Dealer) any Participating Broker-Dealer and each person, if any, who controls such Participating Broker-Dealer within the meaning of the Securities Act or the Exchange Act (each such Holder, any such Participating Broker-Dealer and such controlling persons are referred to collectively as the "Indemnified Parties") from and against any losses, claims, damages or liabilities, joint or several, or any actions in respect thereof (including, but not limited to, any losses, claims, damages, liabilities or actions relating to purchases and sales of the Securities) to which each Indemnified Party may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in such applicable Registration Statement or prospectus forming part thereof or in any amendment or supplement thereto or (in the case of such Shelf Registration Statement) in any preliminary prospectus relating to a Shelf Registration Statement, or arise out of, or are based upon, the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and shall reimburse the Indemnified Parties for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action in respect thereof; provided, however, that (i) the Company shall not be liable in any such -------- ------- case to the extent that such loss, claim, damage or liability arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made in a Registration Statement or prospectus forming part thereof or in any amendment or supplement thereto or in any preliminary prospectus relating to a Shelf Registration Statement in reliance upon and in conformity with written information pertaining to such Holder and furnished to the Company by or on behalf of such Holder specifically for inclusion therein and (ii) with respect to any untrue statement or omission or alleged untrue statement or omission made in any prospectus, or any amendment or supplement thereto, or any preliminary prospectus relating to a Shelf Registration Statement, the indemnity agreement contained in this subsection (a) shall not inure to the benefit of any Holder or Participating Broker-Dealer from whom the person asserting any such losses, claims, damages or liabilities purchased the Securities concerned to the extent that either (x) a prospectus relating to such Securities was required to be 10 delivered by such Holder or Participating Broker-Dealer under the Securities Act in connection with such purchase and there was not sent or given to such person, at or prior to the written confirmation of the sale of such Securities to such person, a copy of the final prospectus (in the case of any such preliminary prospectus) or a prospectus amendment or supplement (in any other case) if the Company had previously furnished copies thereof to such Holder or Participating Broker-Dealer, and such untrue statement or omission or alleged untrue statement or omission was corrected in such final prospectus or prospectus amendment or supplement, or (y) at the time of such purchase such Holder or Participating Broker-Dealer had received advice from the Company that the use of such prospectus, amendment, supplement or preliminary prospectus was suspended as provided in Section 3(b); provided further, however, that this indemnity -------- ------- ------- agreement will be in addition to any liability that the Company may otherwise have to such Indemnified Party. (b) Each Holder of the Securities, severally and not jointly, will indemnify and hold harmless the Company and each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act from and against any losses, claims, damages or liabilities, joint or several, or any actions in respect thereof, to which the Company or any such controlling person may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement or prospectus forming part thereof or in any amendment or supplement thereto or in any preliminary prospectus relating to a Shelf Registration Statement, or arise out of or are based upon the omission or alleged omission to state therein a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, but in each case only to the extent that the untrue statement or omission or alleged untrue statement or omission was made in reliance upon and in conformity with written information pertaining to such Holder and furnished to the Company by or on behalf of such Holder specifically for inclusion therein; and, subject to the limitation set forth immediately preceding this clause, shall reimburse the Company for any legal or other expenses reasonably incurred by the Company or any such controlling person in connection with investigating or defending any loss, claim, damage, liability or action in respect thereof. This indemnity agreement will be in addition to any liability that such Holder may otherwise have to the Company or any of its controlling persons. (c) Promptly after receipt by an indemnified party under this Section 5 of notice of the commencement of any action or proceeding (including a governmental investigation), such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 5, notify the indemnifying party of the commencement thereof, but the omission so to notify the indemnifying party will not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided in subsection (a) or (b) above. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof the indemnifying party will not be liable to such indemnified party under this Section 5 for any legal or other expenses, other than reasonable costs of investigation, subsequently incurred by such indemnified party in connection with the defense thereof. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened action in which any indemnified party is a party to the extent such settlement is binding upon such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on any claims that are the subject matter of such action. 11 (d) If the indemnification provided for in this Section 5 is unavailable or insufficient to hold harmless an indemnified party under subsection (a) or (b) above, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to in subsection (a) or (b) above (i) in such proportion as is appropriate to reflect the relative benefits received by the indemnifying party or parties on the one hand and the indemnified party on the other, or (ii) if the allocation provided by the foregoing clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the indemnifying party or parties on the one hand and the indemnified party on the other in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities (or actions in respect thereof) as well as any other relevant equitable considerations. The relative fault of the parties shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or such Holder or such other indemnified party, as the case may be, on the other, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim that is the subject of this subsection (d). No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this subsection (d), each person, if any, who controls such indemnified party within the meaning of the Securities Act or the Exchange Act shall have the same rights to contribution as such indemnified party and each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act shall have the same rights to contribution as the Company. (e) The agreements contained in this Section 5 shall survive the sale of the Securities pursuant to a Registration Statement and shall remain in full force and effect, regardless of any termination or cancellation of this Agreement or any investigation made by or on behalf of any indemnified party. 6. Additional Interest Under Certain Circumstances. (a) Additional interest (the "Additional Interest") with respect to the Initial Securities that are Transfer Restricted Securities shall be assessed as follows if any of the following events occur (each such event in clauses (i) through (ii) below being herein referred to as a "Registration Default"): (i) neither the Exchange Offer Registration Statement nor a Shelf Registration Statement has been filed with the Commission on or before the 120th day after the Issue Date (or if such day is not a business day, the first business day thereafter), or September 18, 1998; (ii) the Registered Exchange Offer is not consummated on or before the 180th day after the Issue Date (or if such day is not a business day, the first business day thereafter), or November 17, 1998; (iii) if a Shelf Registration Statement is required to be filed under this Agreement, such Shelf Registration Statement is not declared effective by the Commission on or before the 210th day after the Issue Date (or if such day is not a business day, the first business day thereafter), or December 17, 1998 (or, in the case of a Shelf Registration Statement required to 12 be filed in response to any change in applicable interpretation of the Commission, if later, on or before the 90th day after publication of such change); or (iv) if a Shelf Registration Statement is required to be filed under this Agreement, and after the Shelf Registration Statement is declared effective and during the period that the Company is required to use its reasonable best efforts to keep the Shelf Registration Statement effective as provided in Section 2(a), such Shelf Registration Statement thereafter ceases to be effective and continues not to be effective (other than in connection with the consummation of the Registered Exchange Offer, as contemplated by the last sentence of Section 2(a)), or the Company shall have suspended and be continuing to suspend the availability of the prospectus contained in the Shelf Registration Statement, for more than 30 days in the aggregate in any consecutive twelve-month period. Additional Interest shall accrue on the Initial Securities that are Transfer Restricted Securities over and above the interest set forth in the title of the Securities from and including the date on which any such Registration Default shall occur to but excluding the date on which such Registration Default has been cured, at a rate of (a) prior to the 91st day of such period (for so long as such period is continuing), 0.25% per annum and (b) thereafter (for so long as such period is continuing), 0.50% per annum. Any such Additional Interest shall not exceed such respective rates for such respective periods, and shall not in any event exceed 0.50% per annum in the aggregate, regardless of the number of Registration Defaults that shall have occurred and be continuing. Following the cure of all Registration Defaults, the accrual of such Additional Interest will cease. All Registration Defaults will be deemed cured upon consummation of the Exchange Offer. Notwithstanding anything to the contrary in this Section 6(a), the Company shall not be required to pay Additional Interest to any Holder of Transfer Restricted Securities if such Holder failed to comply with its obligations to make the representations set forth in the third to last paragraph of Section 1 or failed to provide the information required to be provided by it, if any, pursuant to Section 3(n). (b) Any amounts of Additional Interest due pursuant to clause (i), (ii), (iii) or (iv) of Section 6(a) above will be payable in cash on the regular interest payment dates with respect to the Initial Securities. The amount of Additional Interest will be determined by multiplying the applicable Additional Interest rate by the principal amount of the Initial Securities that are Transfer Restricted Securities, multiplied by a fraction, the numerator of which is the number of days such Additional Interest rate was applicable during such period (determined on the basis of a 360-day year comprised of twelve 30-day months), and the denominator of which is 360. (c) "Transfer Restricted Securities" means each Security until (i) the date on which such Security has been exchanged by a person for a freely transferable Exchange Security in the Registered Exchange Offer, (ii) the date on which such Security has been effectively registered under the Securities Act and disposed of in accordance with the Shelf Registration Statement or (iii) the date on which such Security is distributed to the public pursuant to Rule 144 under the Securities Act or is saleable pursuant to Rule 144(k) under the Securities Act (or otherwise is eligible for resale pursuant to Rule 144 (or any successor provision) under the Securities Act without volume restriction, if any). 7. Rules 144 and 144A. So long as any Transfer Restricted Securities remain outstanding, the Company shall use its reasonable best efforts to file the reports required to be filed by it under the Securities Act and the Exchange Act in a timely manner or, upon the request of any Holder of Initial Securities that are Transfer Restricted Securities, make publicly available other 13 information so long as necessary to permit sales of such Securities pursuant to Rules 144 and 144A under the Securities Act. The Company covenants that it will use its reasonable best efforts to take such further action as any Holder of Transfer Restricted Securities may reasonably request, all to the extent required from time to time to enable such Holder to sell such Securities without registration under the Securities Act within the limitation of the exemptions provided by Rules 144 and 144A (including the requirements of Rule 144A(d)(4)). Upon the written request of any Holder of Initial Securities that are Transfer Restricted Securities, the Company shall deliver to such Holder a written statement as to whether it has complied with such requirements. Notwithstanding the foregoing, nothing in this Section 7 shall be deemed to require the Company to register any of its securities pursuant to the Exchange Act. 8. Underwritten Registrations. If any of the Transfer Restricted Securities covered by any Shelf Registration are to be sold in an underwritten offering, the investment banker or investment bankers and manager or managers that will administer the offering will be selected by the Holders of a majority in aggregate principal amount of such Transfer Restricted Securities to be included in such offering, subject to the consent of the Company (which shall not be unreasonably withheld or delayed), and such Holders shall be responsible for all underwriting commissions and discounts in connection therewith. No person may participate in any underwritten registration hereunder unless such person (i) agrees to sell such person's Transfer Restricted Securities on the basis reasonably provided in any underwriting arrangements approved by the persons entitled hereunder to approve such arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements. 9. Miscellaneous. (a) Amendments and Waivers. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, except by the Company and the written consent of the Holders of a majority in principal amount of the Securities affected by such amendment, modification, supplement, waiver or consents. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of the Holders of Initial Securities, Exchange Securities or Private Exchange Securities whose Initial Securities, Exchange Securities or Private Exchange Securities are being sold pursuant to a Registration Statement, and that does not directly or indirectly affect the rights of other Holders, may be given by Holders of a majority in aggregate principal amount of the Initial Securities, Exchange Securities or Private Exchange Securities, as the case may be, being sold by such Holders pursuant to such Registration Statement. (b) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand delivery, first-class mail, facsimile transmission, or air courier which guarantees overnight delivery: (1) if to a Holder of the Securities, at the most current address given by such Holder to the Company. 14 (2) if to the Initial Purchasers: Credit Suisse First Boston Corporation Eleven Madison Avenue New York, NY 10010-3629 Fax No.: (212) 325-8278 Attention: Transactions Advisory Group with a copy to: Simpson Thacher & Bartlett 425 Lexington Avenue New York, NY 10017 Fax No.: (212) 455-2502 Attention: D. Rhett Brandon, Esq. (3) if to the Company, at its address as follows: c/o Dynatech Corporation 3 New England Executive Park Burlington, MA 01803-3087 Fax: (781) 221-2304 Attention: Chief Financial Officer with a copy to: Dynatech Corporation 3 New England Executive Park Burlington, MA 01803-3087 Fax: (781) 221-2304 Attention: General Counsel and to: Debevoise & Plimpton 875 Third Avenue New York, NY 10022 Fax No.: (212) 909-6836 Attention: David Brittenham, Esq. All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; three business days after being deposited in the mail, postage prepaid, if mailed; when receipt is acknowledged by recipient's facsimile machine operator, if sent by facsimile transmission; and on the day delivered, if sent by overnight air courier next day delivery. (c) No Inconsistent Agreements. The Company has not, as of the date hereof, entered into, nor shall it, on or after the date hereof, enter into, any agreement with respect to its securities that is inconsistent with the rights granted to the Holders herein or otherwise conflicts with the provisions hereof. 15 (d) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Company, each other party hereto and each Holder, and their respective successors and assigns. Each Holder by its acceptance of a Security, for itself and its successors and assigns, agrees to be bound hereby. (e) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (f) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (g) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ANY PRINCIPLES OF CONFLICT OF LAWS TO THE EXTENT THAT THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. (h) Severability. If any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. (i) Securities Held by the Company. Whenever the consent or approval of Holders of a specified percentage of principal amount of Securities is required hereunder, Securities held by the Company or its affiliates (other than subsequent Holders of Securities if such subsequent Holders are deemed to be affiliates solely by reason of their holdings of such Securities) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage. Each party hereto hereby submits to the jurisdiction of the Federal and state courts in the Borough of Manhattan in the City of New York in any suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. 16 If the foregoing is in accordance with your understanding of our agreement, please sign and return to the counterpart hereof, whereupon this instrument, along with all counterparts, will become a binding agreement among the several Initial Purchasers, Dynatech and TTC in accordance with its terms. Very truly yours, TELECOMMUNICATIONS TECHNIQUES CO., LLC By /s/ Allan M. Kline ------------------------------------- Title: Corporate Vice President, Chief Financial Officer and Treasurer DYNATECH CORPORATION By /s/ Allan M. Kline ------------------------------------- Title: Corporate Vice President, Chief Financial Officer and Treasurer The foregoing Registration Rights Agreement is hereby confirmed, accepted and agreed to as of the date first above written. CREDIT SUISSE FIRST BOSTON CORPORATION J.P. MORGAN SECURITIES INC. By: CREDIT SUISSE FIRST BOSTON CORPORATION By /s/ ^[Indistinguishable]^ ------------------------------------- Title: Vice President 17 ANNEX A Each broker-dealer that receives Exchange Securities for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Securities received in exchange for Initial Securities where such Initial Securities were acquired by such broker- dealer as a result of market-making activities or other trading activities. The Company has agreed that, for a period of 90 days after the Expiration Date (as defined herein), it will make this Prospectus available to any Participating Broker-Dealer for use in connection with any such resale. See "Plan of Distribution." 1 ANNEX B Each broker-dealer that receives Exchange Securities for its own account in exchange for Initial Securities, where such Initial Securities were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. See "Plan of Distribution." 1 ANNEX C PLAN OF DISTRIBUTION Each broker-dealer that receives Exchange Securities for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. This Prospectus, as it may be amended or supplemented from time to time, may be used by a Participating Broker-Dealer in connection with resales of Exchange Securities received in exchange for Initial Securities where such Initial Securities were acquired as a result of market-making activities or other trading activities. The Company has agreed that, for a period of 90 days after the Expiration Date, it will make this prospectus, as amended or supplemented, available to any Participating Broker-Dealer for use in connection with any such resale. In addition, until , 199 , all dealers effecting transactions in the Exchange Securities may be required to deliver a prospectus. The Company will not receive any proceeds from any sale of Exchange Securities by broker-dealers. Exchange Securities received by broker-dealers for their own account pursuant to the Exchange Offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the Exchange Securities or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer or the purchasers of any such Exchange Securities. Any broker-dealer that resells Exchange Securities that were received by it for its own account pursuant to the Exchange Offer and any broker or dealer that participates in a distribution of such Exchange Securities may be deemed to be an "underwriter" within the meaning of the Securities Act and any profit on any such resale of Exchange Securities and any commission or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The Letter of Transmittal states that, by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. For a period of 90 days after the Expiration Date the Company will promptly send additional copies of this Prospectus and any amendment or supplement to this Prospectus to any Participating Broker-Dealer that requests such documents in the Letter of Transmittal. The Company has agreed to pay all expenses incurred by it incident to the Exchange Offer other than commissions or concessions of any brokers or dealers and will indemnify the Holders of the Securities (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act. 1 ANNEX D CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO. Name: ----------------------------------------------------------------- Address: -------------------------------------------------------------- If the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of Exchange Securities. If the undersigned is a broker-dealer, including a broker-dealer that will receive Exchange Securities for its own account in exchange for Initial Securities that were acquired as a result of market- making activities or other trading activities, it acknowledges that it will deliver a prospectus in connection with any resale of such Exchange Securities; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. 1 EX-10.2 8 AGREEMENT AND PLAN OF MERGER - TTC REORG CORP EXHIBIT 10.2 CONFORMED COPY -------------- AGREEMENT AND PLAN OF MERGER OF TELECOMMUNICATIONS TECHNIQUES CO., LLC AND TTC REORG CORPORATION This Agreement and Plan of Merger (the "Agreement") is made and entered into as of May ___, 1998 by and between Telecommunications Techniques Co., LLC, a Delaware limited liability company ("TTC, LLC" or the "Surviving Company"), and TTC Reorg Corporation, a Delaware corporation (the "Disappearing Corporation"). WHEREAS, TTC, LLC is a limited liability company organized under and governed by the laws of the State of Delaware, and has its address at Corporation Trust Center, 1209 Orange Street in the City of Wilmington, County of New Castle; WHEREAS, the Disappearing Corporation is a corporation organized under and governed by the laws of the State of Delaware, and has its address at Corporation Trust Center, 1209 Orange Street in the City of Wilmington, County of New Castle; WHEREAS, TTC, LLC and the Disappearing Corporation have determined that it is advisable and in the best interests of such entities that the Disappearing Corporation merge with and into TTC, LLC upon the terms and conditions provided herein (the "Merger"); WHEREAS, pursuant to the laws of Delaware, the board of directors of the Disappearing Corporation and the sole member of TTC, LLC have adopted and recommended this Agreement; and WHEREAS, Dynatech U.S.A., Inc., the sole shareholder of the outstanding stock of the Disappearing Corporation, has consented to and approved the adoption of this Agreement. NOW, THEREFORE, in consideration of the foregoing recitals and the mutual agreements herein contained and of the mutual benefits provided hereby, the parties hereto hereby agree as follows: 1. Merger. The effective date of the Merger shall be May __, 1998 (the ------ "Effective Date"). On the Effective Date, the Disappearing Corporation shall be merged with and into TTC, LLC and the separate existence of the Disappearing Corporation shall thereupon cease. TTC, LLC shall continue its existence as the surviving company after the Effective Date. 2. Certificate of Formation. The Certificate of Formation of TTC, LLC, ------------------------ as in effect immediately prior to the Effective Date, shall continue to be the Certificate of Formation of the Surviving Company without change or amendment until duly amended in accordance with the provisions thereof and applicable law. 3. Conversion of Shares. Upon the Effective Date, by virtue of the -------------------- Merger and without any action on the part of any holder thereof, each share and each certificate representing shares of the capital stock of the Disappearing Corporation outstanding immediately prior to the Effective Date shall automatically be canceled, and no interest in the Surviving Company shall be exchanged therefor. 4. Subsequent Action. If at any time after the Effective Date it shall ----------------- be necessary or desirable to take any action or execute, deliver or file any instrument or document in order to vest, perfect or confirm of record in the Surviving Company the title to any property or any rights of the Disappearing Corporation, or otherwise to carry out the provisions of this Agreement, the sole member of the Surviving Company is hereby authorized and empowered on behalf of the Disappearing Corporation and in its name to take such action and execute, deliver and file such instruments and documents. 2 5. Rights and Duties of Surviving Company. On the Effective Date, the -------------------------------------- Surviving Company shall thereupon and thereafter possess all rights, privileges, immunities, licenses, and permits (whether of a public or private nature) of the Disappearing Corporation; and all property (real, personal and mixed), all debts due on whatever account, all choses in action, and all and every other interest of or belonging to or due to the Disappearing Corporation shall continue and be taken and deemed to be transferred to and vested in the Surviving Company, without further act or deed, and the Surviving Company shall thenceforth be responsible and liable for all the liabilities and obligations of the Disappearing Corporation. 6. Termination. At any time prior to the Effective Date, this Agreement ----------- may be terminated and the Merger abandoned at the election of the sole member of the Surviving Company. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. TTC REORG CORPORATION By:/s/ John F. Reno ---------------- Name: John F. Reno Title: Vice President TELECOMMUNICATIONS TECHNIQUES CO., LLC By: Dynatech USA, Inc., its sole member By:/s/ John F. Reno ---------------- Name: John F. Reno Title: President 3 EX-10.3 9 AGREEMENT AND PLAN OF MERGER - TTC MERGER CO. EXHIBIT 10.3 CONFORMED COPY -------------- AGREEMENT AND PLAN OF MERGER OF TTC MERGER CO. LLC AND TELECOMMUNICATIONS TECHNIQUES CO., L.L.C. This Agreement and Plan of Merger (the "Agreement") is made and entered into as of May 21, 1998 by and between Telecommunications Techniques Co., LLC, a Delaware limited liability company ("TTC, LLC" or the "Surviving Company"), and TTC Merger Co. LLC, a Delaware limited liability company (the "Disappearing Company"). WHEREAS, TTC, LLC is a limited liability company organized under and governed by the laws of the State of Delaware, and has its address at Corporation Trust Center, 1209 Orange Street in the City of Wilmington, County of New Castle; WHEREAS, the Disappearing Company is a limited liability company organized under and governed by the laws of the State of Delaware, and has its address at Corporation Trust Center, 1209 Orange Street in the City of Wilmington, County of New Castle; WHEREAS, TTC, LLC and the Disappearing Company have determined that it is advisable and in the best interests of such entities that the Disappearing Company merge with and into TTC, LLC upon the terms and conditions provided herein (the "Merger"); and WHEREAS, pursuant to the laws of Delaware, the sole member of TTC, LLC and the sole member of the Disappearing Company have adopted and recommended this Agreement. NOW, THEREFORE, in consideration of the foregoing recitals and the mutual agreements herein contained and of the mutual benefits provided hereby, the parties hereto hereby agree as follows: 1. Merger. The effective date of the Merger shall be May 21, 1998 (the ------ "Effective Date"). On the Effective Date, the Disappearing Company shall be merged with and into TTC, LLC and the separate existence of the Disappearing Company shall thereupon cease. TTC, LLC shall continue its existence as the surviving company after the Effective Date. 2. Certificate of Formation. The Certificate of Formation of TTC, LLC, ------------------------ as in effect immediately prior to the Effective Date, shall continue to be the Certificate of Formation of the Surviving Company without change or amendment until duly amended in accordance with the provisions thereof and applicable law. 3. Subsequent Action. If at any time after the Effective Date it shall ----------------- be necessary or desirable to take any action or execute, deliver or file any instrument or document in order to vest, perfect or confirm of record in the Surviving Company the title to any property or any rights of the Disappearing Company, or otherwise to carry out the provisions of this Agreement, the sole member of the Surviving Company is hereby authorized and empowered on behalf of the Disappearing Corporation and in its name to take such action and execute, deliver and file such instruments and documents. 2 4. Rights and Duties of Surviving Company. On the Effective Date, the -------------------------------------- Surviving Company shall thereupon and thereafter possess all rights, privileges, immunities, licenses, and permits (whether of a public or private nature) of the Disappearing Company; and all property (real, personal and mixed), all debts due on whatever account, all choses in action, and all and every other of or belonging to or due to the Disappearing Company shall continue and be taken and deemed to be transferred to and vested in the Surviving Company, without further act or deed, and the Surviving Company shall thenceforth be responsible and liable for all the liabilities and obligations of the Disappearing Corporation. 5. Termination. At any time prior to the Effective Date, this Agreement ----------- may be terminated and the Merger abandoned at the election of the sole member of the Surviving Company. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. TTC MERGER CO. LLC By: Dynatech Corporation, its sole member By: /s/ Allan M. Kline ------------------ Name: Allan M. Kline Title: Vice President, Chief Financial Officer and Treasurer TELECOMMUNICATIONS TECHNIQUES CO., LLC By: Dynatech Corporation, its sole member By: /s/ Allan M. Kline ------------------ Name: Allan M. Kline Title: Vice President, Chief Financial Officer and Treasurer 3 EX-10.4 10 CREDIT AGREEMENT DATED MAY 21, 1998 EXHIBIT 10.4 =========================================================================== DYNATECH CORPORATION TTC MERGER CO. LLC ------------------------- $370,000,000 CREDIT AGREEMENT dated as of May 21, 1998 ------------------------- J.P. MORGAN SECURITIES INC. and CREDIT SUISSE FIRST BOSTON, as Arrangers MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent CREDIT SUISSE FIRST BOSTON, as Syndication Agent THE CHASE MANHATTAN BANK, as Documentation Agent CREDIT FIRST JPMORGAN SUISSE BOSTON =========================================================================== TABLE OF CONTENTS
Page ---- SECTION 1. DEFINITIONS..................................................................... 2 1.1 Defined Terms................................................................. 2 1.2 Other Definitional Provisions................................................. 24 SECTION 2. AMOUNT AND TERMS OF TRANCHE A LOAN.............................................. 24 2.1 Tranche A Term Loans.......................................................... 24 2.2 Procedure for Tranche A Loan Borrowing........................................ 24 2.3 Amortization of Tranche A Loans............................................... 25 2.4 Use of Proceeds of Tranche A Loans............................................ 25 SECTION 3. AMOUNT AND TERMS OF TRANCHE B LOAN.............................................. 25 3.1 Tranche B Term Loans.......................................................... 25 3.2 Procedure for Tranche B Loan Borrowing........................................ 26 3.3 Amortization of Tranche B Loans............................................... 26 3.4 Use of Proceeds of Tranche B Loans............................................ 27 SECTION 4. AMOUNT AND TERMS OF TRANCHE C LOAN............................................. 27 4.1 Tranche C Term Loans.......................................................... 27 4.2 Procedure for Tranche C Loan Borrowing........................................ 27 4.3 Amortization of Tranche C Loans............................................... 27 4.4 Use of Proceeds of Tranche C Loans............................................ 28 SECTION 5. AMOUNT AND TERMS OF TRANCHE D LOAN............................................. 28 5.1 Tranche D Term Loans.......................................................... 28 5.2 Procedure for Tranche D Loan Borrowing........................................ 29 5.3 Amortization of Tranche D Loans............................................... 29 5.4 Use of Proceeds of Tranche D Loans............................................ 30 SECTION 6. AMOUNT AND TERMS OF REVOLVING CREDIT COMMITMENTS........................................................................ 30 6.1 Revolving Credit Commitments.................................................. 30 6.2 Procedure for Revolving Credit Borrowing...................................... 30 6.3 Use of Proceeds of Revolving Credit Loans..................................... 31 SECTION 7. LETTERS OF CREDIT.............................................................. 31 7.1 L/C Commitment................................................................ 31 7.2 Procedure for Issuance of Letters of Credit................................... 32 7.3 Fees, Commissions and Other Charges........................................... 32 7.4 L/C Participations............................................................ 33 7.5 Reimbursement Obligation of the Borrower...................................... 34 7.6 Obligations Absolute.......................................................... 34 7.7 Letter of Credit Payments..................................................... 35
-i- Page ---- 7.8 Application................................................................... 35 SECTION 8. AMOUNT AND TERMS OF SWING LINE SUB-FACILITY..................................... 35 8.1 Swing Line Commitments........................................................ 35 8.2 Procedure for Swing Line Loan Borrowing....................................... 36 8.3 Refunding of Swing Line Loans................................................. 36 8.4 Unconditional Obligation to Refund Swing Line Loans........................... 37 8.5 Use of Proceeds of Swing Line Loans........................................... 37 SECTION 9. PROVISIONS RELATING TO THE EXTENSIONS OF CREDIT; FEES AND PAYMENTS................................... 37 9.1 Repayment of Loans; Evidence of Debt.......................................... 37 9.2 Commitment Fee; Other Fees.................................................... 38 9.3 Optional Prepayments.......................................................... 39 9.4 Optional Termination or Reduction of Aggregate Revolving Credit Commitment................................................................ 40 9.5 Mandatory Reduction of Commitments and Prepayments............................ 40 9.6 Conversion and Continuation Options........................................... 43 9.7 Minimum Amounts and Maximum Number of Tranches................................ 44 9.8 Interest Rates and Payment Dates.............................................. 44 9.9 Computation of Interest and Fees.............................................. 44 9.10 Inability to Determine Interest Rate......................................... 45 9.11 Pro Rata Treatment and Payments.............................................. 45 9.12 Illegality................................................................... 46 9.13 Requirements of Law.......................................................... 47 9.14 Taxes........................................................................ 48 9.15 Indemnity.................................................................... 50 9.16 Certain Fees................................................................. 50 9.17 Certain Rules Relating to the Payment of Additional Amounts.................. 51 SECTION 10. REPRESENTATIONS AND WARRANTIES................................................ 52 10.1 Financial Condition.......................................................... 52 10.2 No Change.................................................................... 53 10.3 Corporate Existence; Compliance with Law..................................... 53 10.4 Corporate Power; Authorization; Enforceable Obligations...................... 54 10.5 No Legal Bar................................................................. 54 10.6 No Material Litigation....................................................... 55 10.7 No Default................................................................... 55 10.8 Ownership of Property; Liens................................................. 55 10.9 Intellectual Property........................................................ 55 10.10 No Burdensome Restrictions.................................................. 55 10.11 Taxes....................................................................... 55 10.12 Federal Regulations......................................................... 56 10.13 ERISA....................................................................... 56 10.14 Investment Company Act; Other Regulations................................... 56
-ii- Page ---- 10.15 Subsidiaries........................................................... 56 10.16 Environmental Matters.................................................. 56 10.17 Collateral Documents................................................... 58 10.18 Accuracy and Completeness of Information............................... 58 10.19 Solvency............................................................... 58 10.20 Senior Indebtedness.................................................... 58 SECTION 11. CONDITIONS PRECEDENT..................................................... 59 11.1 Conditions to Initial Loans............................................. 59 11.2 Conditions to Each Loan................................................. 62 SECTION 12. AFFIRMATIVE COVENANTS.................................................... 63 12.1 Financial Statements.................................................... 63 12.2 Certificates; Other Information......................................... 64 12.3 Payment of Obligations.................................................. 64 12.4 Conduct of Business and Maintenance of Existence........................ 65 12.5 Maintenance of Property; Insurance...................................... 65 12.6 Inspection of Property; Books and Records; Discussions.................. 65 12.7 Notices................................................................. 65 12.8 Environmental Laws...................................................... 67 12.9 [Reserved].............................................................. 67 12.10 Additional Collateral.................................................. 67 12.11 Assumption Agreement................................................... 69 SECTION 13. FINANCIAL COVENANTS...................................................... 69 13.1 Minimum Interest Coverage Ratio......................................... 69 13.2 Maximum Leverage Ratio.................................................. 69 SECTION 14. NEGATIVE COVENANTS APPLICABLE TO THE TRANCHE A COMMITMENTS AND REVOLVING CREDIT COMMITMENTS................. 69 14.1 Limitation on Indebtedness.............................................. 70 14.2 Limitation on Liens..................................................... 72 14.3 Limitation on Guarantee Obligations..................................... 74 14.4 Limitation on Fundamental Changes....................................... 75 14.5 Limitation on Sale of Assets............................................ 76 14.6 Limitation on Restricted Payments....................................... 77 14.7 Limitation on Capital Expenditures...................................... 78 14.8 Limitation on Investments, Loans and Advances........................... 79 14.9 Limitation on Transactions with Affiliates.............................. 81 14.10 Limitation on Sales and Leasebacks..................................... 82 14.11 Limitation on Changes in Fiscal Year................................... 82 14.12 Limitation on Optional Payments and Modifications of Debt Instruments and other Material Agreements........................................ 82 14.13 Limitation on Negative Pledge Clauses.................................. 83 14.14 Limitation on Lines of Business........................................ 83
-iii- Page ---- 14.15 Limitation on Activities of Holding.................................... 84 SECTION 15. NEGATIVE COVENANTS APPLICABLE TO TRANCHE B COMMITMENTS, TRANCHE C COMMITMENTS AND TRANCHE D COMMITMENTS................................................................. 84 SECTION 16. EVENTS OF DEFAULT........................................................ 85 16.1 Certain Bankruptcy Events............................................... 85 16.2 Other Events of Default Applicable to the Tranche A Commitments, Revolving Credit Commitments and Amounts Owing Thereunder............ 86 16.3 Other Events of Default Applicable to Tranche B Commitments, Tranche C Commitments, Tranche D Commitments and Amounts Owing Thereunder........................................................... 89 16.4 Certain Provisions Applicable to Letters of Credit...................... 91 16.5 Certain Waivers......................................................... 91 SECTION 17. THE ADMINISTRATIVE AGENT................................................. 91 17.1 Appointment............................................................. 91 17.2 Delegation of Duties.................................................... 92 17.3 Exculpatory Provisions.................................................. 92 17.4 Reliance by Administrative Agent........................................ 92 17.5 Notice of Default....................................................... 93 17.6 Acknowledgments and Representations by Lenders.......................... 93 17.7 Indemnification......................................................... 93 17.8 Agents in their Individual Capacities................................... 94 17.9 Successor Agents........................................................ 94 SECTION 18. MISCELLANEOUS............................................................ 95 18.1 Amendments and Waivers.................................................. 95 18.2 Notices................................................................. 97 18.3 No Waiver; Cumulative Remedies.......................................... 98 18.4 Survival of Representations and Warranties.............................. 98 18.5 Payment of Expenses and Taxes........................................... 98 18.6 Successors and Assigns; Participations and Assignments.................. 99 18.7 Adjustments; Set-off....................................................102 18.8 Counterparts............................................................103 18.9 Severability............................................................103 18.10 Integration............................................................103 18.11 GOVERNING LAW..........................................................103 18.12 Submission To Jurisdiction; Waivers....................................104 18.13 Acknowledgements.......................................................104 18.14 WAIVERS OF JURY TRIAL..................................................105 18.15 Confidentiality........................................................105
-iv- SCHEDULES Schedule I Lenders; Commitments Schedule II Addresses for Notices Schedule 1.1(a) Inactive Subsidiaries Schedule 1.1(b) Permitted Investors Schedule 10.4(a) Required Consents, Authorizations and Filings Schedule 10.9 Intellectual Property Schedule 10.15 Subsidiaries Schedule 11.1(y) Existing Indebtedness Schedule 14.2(q) Existing Liens Schedule 14.3 Existing Guarantee Obligations Schedule 14.5(j) Permitted Dispositions Schedule 14.8(f) Existing Investments Schedule 14.9(iv) Permitted Transactions with Guarantor Affiliates Schedule 15(a) Negative Covenants Applicable to Tranche B Commitments, Tranche C Commitments and Tranche D Commitments EXHIBITS Exhibit A-1 Form of Revolving Credit Note Exhibit A-2 Form of Tranche [A][B][C][D] Note Exhibit A-3 Form of Swing Line Note Exhibit B Form of Guarantee and Collateral Agreement Exhibit C-1 Form of Opinion of Hale & Dorr Exhibit C-2 Form of Opinion of Debevoise & Plimpton Exhibit C-3 Form of Opinion of Mark V.B. Tremallo Exhibit D Form of Assignment and Acceptance Exhibit E-1 Form of Notice of Borrowing (Drawings) Exhibit E-2 Form of Notice of Borrowing (Conversions) Exhibit E-3 Form of Notice of Borrowing (Continuations) Exhibit F Form of Assumption Agreement Exhibit G Form of U.S. Tax Compliance Certificate -v- CREDIT AGREEMENT, dated as of May 21, 1998, among: (a) DYNATECH CORPORATION, a Massachusetts corporation ("Holding"); ------- (b) TTC MERGER CO. LLC, a Delaware limited liability company wholly owned by Holding ("Newco"); ----- (c) the Lenders (as hereinafter defined) from time to time parties hereto; (d) MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as administrative agent (in such capacity, the "Administrative Agent") for the Lenders; -------------------- (e) CREDIT SUISSE FIRST BOSTON, as syndication agent (in such capacity, the "Syndication Agent") for the Lenders; and ------------------ (f) THE CHASE MANHATTAN BANK, as documentation agent (in such capacity, the "Documentation Agent") for the Lenders. -------------------- W I T N E S S E T H : ------------------- WHEREAS, Holding has entered into the Agreement and Plan of Merger, dated as of December 20, 1997 (as amended, supplemented or otherwise modified from time to time in accordance with the terms hereof, the "Merger Agreement"), ---------------- with CDRD Merger Corporation, a Delaware corporation ("MergerCorp"), pursuant to ---------- which Holding is to merge with MergerCorp, with Holding to be the survivor of such merger (the "Merger"); ------ WHEREAS, in connection with the Merger, Holding intends to effect a recapitalization (the "Recapitalization"); ---------------- WHEREAS, in connection with the Merger, Holding is organizing TTC International Holdings, Inc. ("International"), a Delaware corporation, and ------------- Holding is contributing, assigning and transferring to International all of the Capital Stock and other securities of Holding's other Foreign Subsidiaries and other assets relating to an ownership interest in such Capital Stock, securities and Foreign Subsidiaries, in each instance, owned as of the Closing Date by Holding; WHEREAS, immediately following the completion of the Merger and the Recapitalization, Newco will merge with and into Telecommunications Techniques Co., LLC, a Delaware limited liability company wholly owned by Holding ("TTC"), --- with TTC surviving, and TTC will succeed to all the rights and obligations of Newco under this Agreement and will become the Borrower hereunder, and substantially contemporaneously therewith, TTC will assume the rights and obligations of Newco and Holding as Borrower hereunder pursuant to the Assumption Agreement (the "Assumption"); ---------- WHEREAS, upon the effectiveness of the Assumption, Holding will be released as Borrower under this Agreement and, in consideration of the Assumption and such release, 2 will contribute, assign and transfer to TTC all of the capital stock of Holding's other Active Subsidiaries (the "Transfer", and together with the -------- Merger, the Recapitalization and the Assumption, the "Transaction") and will ----------- guarantee TTC's obligations as provided in the Guarantee and Collateral Agreement; WHEREAS, Holding and Newco have requested that the Lenders make loans and other extensions of credit for the purpose of financing the Transaction and for the other purposes permitted by this Agreement; WHEREAS, the Lenders are willing to make such loans and other extensions of credit, and the Administrative Agent is willing to assume its obligations hereunder, only upon the terms and subject to the conditions set forth herein; NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, the parties hereto hereby agree as follows: SECTION 1. DEFINITIONS 1.1 Defined Terms. As used in this Agreement, the following terms ------------- shall have the following meanings: "ABR": for any day, a rate per annum equal to the greater of (a) the --- Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. Any change in the ABR due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective as of the opening of business on the effective day of such change in the Prime Rate or the Federal Funds Effective Rate, respectively. "ABR Loans": Loans (including, without limitation, Swing Line Loans) --------- the rate of interest applicable to which is based upon the ABR. "Active Subsidiaries": all Subsidiaries of the Guarantor other than ------------------- those listed on Schedule 1.1(a). "Administrative Agent": as defined in the preamble hereto. -------------------- "Affiliate": as to any Person, any other Person (other than a --------- Subsidiary) which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, "control" of a Person means the power, directly or indirectly, either to (a) vote 20% or more of the securities having ordinary voting power for the election of directors of such Person or (b) direct or cause the direction of the management and policies of such Person, whether by contract or otherwise. "Aggregate Outstanding Extensions of Credit": as to any Revolving ------------------------------------------ Credit Lender at any time, an amount equal to the sum of (a) the aggregate outstanding principal amount of all Revolving Credit Loans made by such Revolving Credit Lender and (b) such Revolving Credit Lender's Revolving Credit Commitment Percentage of 3 the L/C Obligations and Swing Line Loans then outstanding; provided, -------- however, that the Swing Line Loans shall be deemed not to be outstanding -------- for purposes only of determining the commitment fee which is payable from time to time pursuant to subsection 9.2. "Aggregate Revolving Credit Commitment": $110,000,000, as such amount ------------------------------------- may be reduced from time to time pursuant to this Agreement. "Aggregate Tranche A Commitment": $50,000,000, as such amount may be ------------------------------ reduced from time to time pursuant to this Agreement. "Aggregate Tranche B Commitment": $70,000,000, as such amount may be ------------------------------ reduced from time to time pursuant to this Agreement. "Aggregate Tranche C Commitment": $70,000,000, as such amount may be ------------------------------ reduced from time to time pursuant to this Agreement. "Aggregate Tranche D Commitment": $70,000,000, as such amount may be ------------------------------ reduced from time to time pursuant to this Agreement. "Agreement": this Credit Agreement, as amended, supplemented or --------- otherwise modified from time to time. "Applicable Commitment Fee Rate": at any date, the rate per annum set ------------------------------ forth below opposite the Level then in effect with respect to the Revolving Credit Facility: Level Rate Level I .30% Level II .375% Level III .375% Level IV .375% Level V .375% Level VI .50% ; provided that, until the date which is six months after the Closing Date, -------- the Level in effect shall be deemed to be Level VI. "Applicable Margin": for each day for each Eurodollar Loan made under ----------------- a particular Facility, the rate per annum set forth below under the relevant column heading below opposite the Level then in effect with respect to such Facility: 4 Applicable Margin Tranche Revolving Tranche Tranche Tranche Level A Loans Credit Loans B Loans C Loans D Loans Level I 1.00% 1.00% 2.00% 2.25% 2.50% Level II 1.25% 1.25% 2.25% 2.50% 2.75% Level III 1.50% 1.50% 2.50% 2.75% 3.00% Level IV 1.75% 1.75% N/A N/A N/A Level V 2.00% 2.00% N/A N/A N/A Level VI 2.25% 2.25% N/A N/A N/A Notwithstanding the foregoing, (x) the Applicable Margin from time to time in effect for ABR Loans shall at all times be 1% per annum lower (to the extent not lower than 0% per annum) than that in effect for Eurodollar Loans, (y) the "Applicable Margin" from time to time in effect for Swing Line Loans shall be the rate which would then be applicable to Revolving Credit Loans which are ABR Loans and (z) for each day prior to the date which is six months following the Closing Date, the Level in effect shall be deemed to be Level VI with respect to the Tranche A Facility and the Revolving Credit Facility, and Level III with respect to the Tranche B Facility, the Tranche C Facility and the Tranche D Facility. "Application": an application, in such form as the relevant Issuing ----------- Lender may reasonably specify from time to time, requesting such Issuing Lender to open a Letter of Credit. "Assignee": as defined in subsection 18.6(c). -------- "Assumption Agreement": the Assumption Agreement executed and -------------------- delivered by a duly authorized officer of each of Holding, Newco, TTC and the Administrative Agent in connection with or following the consummation of the Merger, substantially in the form of Exhibit F with such changes thereto as shall be approved by the Administrative Agent, providing for the Assumption. "Available Revolving Credit Commitment": as to any Revolving Credit ------------------------------------- Lender, at any time, an amount equal to the excess, if any, of (a) such Revolving Credit Lender's Revolving Credit Commitment at such time over (b) such Revolving Credit Lender's Aggregate Outstanding Extensions of Credit. "Borrower": until the consummation of the Assumption, Holding and -------- Newco, as co-obligors; and from and after the consummation of the Assumption, TTC. "Borrowing Date": any Business Day specified in a Notice of Borrowing -------------- pursuant to subsection 2.2, 3.2, 4.2, 5.2, 6.2 or 8.2, or in an Application pursuant to subsection 7.2, as a date on which the Borrower requests the Lenders to make Loans or issue a Letter of Credit, as applicable, hereunder. 5 "Business": as defined in subsection 10.16(b). -------- "Business Day": a day other than a Saturday, Sunday or other day on ------------ which commercial banks in New York City are authorized or required by law to close; provided, however, that, with respect to matters relating to -------- ------- Eurodollar Loans, any day on which commercial banks in London, England are authorized or required by law to close also shall not constitute a "Business Day". "Capital Expenditure": as defined in subsection 14.7. ------------------- "Capital Stock": any and all shares, interests, participations or ------------- other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants or options to purchase any of the foregoing. "Cash Equivalents": (a) securities with maturities of one year or ---------------- less from the date of acquisition issued or fully guaranteed or insured by the United States Government or any agency thereof, (b) certificates of deposit and time deposits, bankers acceptances and overnight bank deposits of any Lender or of any commercial bank having capital and surplus in excess of $500,000,000, (c) repurchase obligations of any Lender or of any commercial bank satisfying the requirements of clause (b) of this definition, having a term of not more than 30 days with respect to securities issued or fully guaranteed or insured by the United States Government or any agency or instrumentality thereof, (d) commercial paper of a domestic issuer rated at least A-2 or the equivalent thereof by Standard and Poor's Rating Group or any successor rating agency ("S&P") or --- P-2 or the equivalent thereof by Moody's Investors Service, Inc. or any successor rating agency ("Moody's") (or if at such time neither is issuing ------- ratings, then a comparable rating of such other nationally recognized rating agency as shall be approved by the Administrative Agent in its reasonable judgment), (e) securities with maturities of one year or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least A by S&P or A by Moody's, (f) securities with maturities of one year or less from the date of acquisition backed by standby letters of credit issued by any Lender or any commercial bank satisfying the requirements of clause (b) of this definition, (g) shares of money market mutual or similar funds complying with the risk limiting conditions of Rule 2a-7 or any successor rule of the Securities and Exchange Commission under the Investment Company Act of 1940, as amended, and (h) investments similar to any of the foregoing denominated in foreign currencies approved by the board of directors or comparable body of the Guarantor or the Borrower, in each case provided in clauses (a), (b) and (d) above, maturing within twelve months after the date of acquisition. "CD&R": Clayton, Dubilier & Rice, Inc., a Delaware corporation. ---- "Change of Control": the occurrence of the following: Permitted ----------------- Investors shall fail to have the power (whether or not exercised) to elect a majority of the Guarantor's 6 board of directors, other than following a public offering of the Guarantor's Voting Stock; provided, however, it shall be a Change of -------- ------- Control if, following such public offering, (i) any Person or "group" (within the meaning of Section 13(d) or 14(d) of the Exchange Act), other than any of the Permitted Investors, shall have acquired a percentage of shares of Voting Stock that is greater than as held in the aggregate by the Permitted Investors or (ii) the Permitted Investors shall cease to hold in the aggregate at least 35% of the outstanding Voting Stock of the Guarantor. As used in this paragraph, "Voting Stock" shall mean shares of ------ ----- Capital Stock entitled to vote generally in the election of directors and "Permitted Investors" means any of (i) CD&R, Fund V, any other investment --------- --------- fund or vehicle managed, sponsored or advised by CD&R, or any Affiliate of or successor to CD&R, Fund V or any such other investment fund or vehicle, (ii) any Person listed on Schedule 1.1(b) or Affiliate thereof, (iii) any Management Investor and (iv) for a period not exceeding two Business Days, any Person acting in the capacity of an underwriter in connection with a public or private offering of Capital Stock of the Guarantor. "Closing Date": the date on which the conditions precedent set forth ------------ in subsection 11.1 shall be satisfied or waived. "Code": the Internal Revenue Code of 1986, as amended from time to ---- time. "Collateral": all assets of the Credit Parties, now owned or ---------- hereinafter acquired, upon which a Lien is purported to be created by any Security Document. "Collateral Agreement": the Guarantee and Collateral Agreement to be -------------------- executed and delivered by the Guarantor, the Borrower and each of its Domestic Subsidiaries that is an Active Subsidiary, substantially in the form of Exhibit B, as the same may be amended, supplemented or otherwise modified from time to time. "Commitment": as to any Lender, its Tranche A Commitment, Tranche B ---------- Commitment, Tranche C Commitment, Tranche D Commitment or Revolving Credit Commitment, as the context shall require; as to all Lenders, the "Commitments". ------------ "Commitment Percentage": as to any Lender at any time, its Tranche A --------------------- Commitment Percentage, its Tranche B Commitment Percentage, Tranche C Commitment Percentage, Tranche D Commitment Percentage or its Revolving Credit Commitment Percentage, as the context shall require. "Commitment Period": the period from and including the Closing Date ----------------- to but including the Termination Date or such earlier date on which the Aggregate Revolving Credit Commitment shall terminate as provided herein. "Commonly Controlled Entity": an entity, whether or not incorporated, -------------------------- which is under common control with the Borrower within the meaning of Section 4001 of ERISA or is part of a group which includes the Borrower and which is treated as a single employer under Section 414(b) or 414(c) of the Code. 7 "Consolidated Net Income" or "Consolidated Net Loss": for any fiscal ----------------------- --------------------- period, the amount which, in conformity with GAAP, would be set forth opposite the caption "net income" (or any like caption) or "net loss" (or any like caption), as the case may be, on a consolidated statement of earnings of the Guarantor and its Subsidiaries for such fiscal period. "Contractual Obligation": as to any Person, any provision of any ---------------------- material security issued by such Person or of any material agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound. "Credit Documents": this Agreement, the Notes, the Applications, the ---------------- Security Documents and the Assumption Agreement. "Credit Parties": the Guarantor, the Borrower and each of their -------------- Subsidiaries that is a party to a Credit Document. "Current Assets": at any date, all amounts (other than cash and Cash -------------- Equivalents) which would, in conformity with GAAP, be set forth opposite the caption "total current assets" (or any like caption) on a consolidated balance sheet of the Guarantor and its Subsidiaries at such date. "Current Liabilities": at any date, all amounts which would, in ------------------- conformity with GAAP, be set forth opposite the caption "total current liabilities" (or any like caption) on a consolidated balance sheet of the Guarantor and its Subsidiaries at such date, but excluding (a) the current portion of any Funded Debt of the Guarantor and its Subsidiaries and (b) without duplication of clause (a) above, all Indebtedness consisting of Revolving Credit Loans or Swing Line Loans to the extent otherwise included therein. "Default": any of the events specified in Section 16.1, 16.2 or 16.3, ------- whether or not any requirement for the giving of notice (other than, in the case of 16.2(e) and 16.3(d), any Default Notice), the lapse of time, or both, or any other condition, has been satisfied. "Default Notice": as defined in subsection 16.2(e). -------------- "Documentation Agent": as defined in the preamble hereto. ------------------- "Dollars" and "$": dollars in lawful currency of the United States of ------- - America. "Domestic Subsidiary": any Subsidiary of the Borrower organized under ------------------- the laws of any jurisdiction within the United States (other than any Foreign Subsidiary Holdco). "EBITDA" for any period, the Consolidated Net Income or Consolidated ------ Net Loss, as the case may be, for such period adjusted to exclude the following items to the extent that such items were included in the calculation of such Consolidated Net Income or Consolidated Net Loss: (a) depreciation and amortization (including write-offs or write-downs of amortizable and depreciable items) for such period, (b) the amount of 8 interest expense (net of interest income) of the Guarantor and its Subsidiaries, determined on a consolidated basis in accordance with GAAP, for such period on the aggregate principal amount of their consolidated Indebtedness, (c) the amount of tax expense of the Guarantor and its Subsidiaries, determined on a consolidated basis in accordance with GAAP, for such period, (d) any non cash expenses and charges, in each case, which represents an accrual for which no cash is expected to be paid in the short term, (e) any gain or loss associated with the sale or write-down of assets not in the ordinary course of business, (f) any non-cash provisions for reserves of discontinued operations, (g) any extraordinary, unusual or non- recurring gains or losses or charges or credits and (h) any gains or losses relating to the repatriation of foreign currency denominated investments. "Environmental Laws": any and all foreign, Federal, state, local or ------------------ municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees, requirements of any Governmental Authority properly promulgated and having the force and effect of law, or other Requirements of Law (including, without limitation, common law) regulating, relating to or imposing liability or standards of conduct concerning protection of the environment or human health as related to the environment, as now or may at any relevant time hereafter be in effect. "ERISA": the Employee Retirement Income Security Act of 1974, as ----- amended from time to time. "Eurocurrency Reserve Requirements": for any day as applied to a --------------------------------- Eurodollar Loan, the aggregate (without duplication) of the rates (expressed as a decimal fraction) of reserve requirements in effect on such day (including, without limitation, basic, supplemental, marginal and emergency reserves under any regulations of the Board of Governors of the Federal Reserve System or other Governmental Authority having jurisdiction with respect thereto) dealing with reserve requirements prescribed for eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of such Board) maintained by a member bank of such System. "Eurodollar Base Rate": with respect to each day during each Interest -------------------- Period pertaining to a Eurodollar Loan, the rate per annum determined by the Administrative Agent at approximately 11:00 a.m. (London time) on the date which is two Business Days prior to the beginning of the relevant Interest Period (as specified in the applicable Notice of Borrowing) by reference to the "British Bankers' Association Interest Settlement Rates" for deposits in Dollars (as set forth by any service selected by the Administrative Agent which has been nominated by the British Bankers' Association as an authorized information vendor for the purpose of displaying such rates) for a period equal to such Interest Period (rounded, if necessary, upward to the nearest whole multiple of 1/16th of 1%); provided that, to the extent that an interest rate is not ascertainable -------- pursuant to the foregoing provisions of this definition, the "Eurodollar Base Rate" shall be the interest rate per annum determined by the Administrative Agent to be the average (rounded, if necessary, upward to the nearest whole multiple of 1/16th of 1% per annum, if such average is not such a multiple) of the rates per annum at which deposits in Dollars are offered for such relevant Interest Period to major banks in the London interbank market in London, England by Morgan Guaranty Trust 9 Company of New York at approximately 11:00 a.m. (London time) on the date which is two Business Days prior to the beginning of such Interest Period. "Eurodollar Loans": Loans the rate of interest applicable to which is ---------------- based upon the Eurodollar Rate. "Eurodollar Rate": with respect to each day during each Interest --------------- Period pertaining to a Eurodollar Loan, a rate per annum determined for such day in accordance with the following formula (rounded upward to the nearest 1/100th of 1%): Eurodollar Base Rate ---------------------------------------- 1.00 - Eurocurrency Reserve Requirements "Event of Default": any of the events specified in Section 16.1, 16.2 ---------------- or 16.3, provided that any requirement for the giving of notice, the lapse -------- of time, or both, or any other condition, has been satisfied. "Excess Cash Flow": for any fiscal year (or, in the case of the ---------------- fiscal year ending March 31, 1999, the portion thereof commencing the first day of the month next succeeding the Closing Date to March 31, 1999) of the Guarantor, the amount equal to the excess, if any, of (a) the sum of (i) EBITDA for such fiscal year and (ii) decreases in Working Capital for such fiscal year minus (b) the sum, without duplication, of (i) the aggregate ----- amount actually paid by the Guarantor and its Subsidiaries in cash during such fiscal year on account of (w) Capital Expenditures, (x) interest expense on the aggregate principal amount of their consolidated Indebtedness, (y) tax expense and (z) any investments made pursuant to subsection 14.8(c), (e) or (j), (ii) the aggregate amount of all principal payments of Indebtedness (net of any refinancings of any such Indebtedness to the extent applied to fund such payments) during such fiscal year resulting in permanent reductions of such Indebtedness (excluding, in the case of the Loans, any principal payment pursuant to subsection 9.5(c), (d) or (e) except to the extent that the event giving rise to such payment causes an increase in EBITDA), (iii) the Net Proceeds from any sale or other disposition of property or assets of the Guarantor or any of its Subsidiaries to the extent that such Net Proceeds (A) consist of any Reinvested Amount or are otherwise applied in accordance with subsection 9.5(d) and (B) are included in the calculation of EBITDA, and (iv) increases in Working Capital for such fiscal year. "Excess Cash Flow Recapture Amount": for (a) each fiscal year of the --------------------------------- Guarantor when the Leverage Ratio at the last day of such fiscal year is greater than or equal to 4.0 to 1.0, the amount equal to 50% of Excess Cash Flow for such fiscal year and (b) for each other period, $0. "Facility": each of (a) the Tranche A Commitments and the Tranche A -------- Loans made thereunder (the "Tranche A Facility"), (b) the Tranche B ------------------ Commitments and the Tranche B Loans made thereunder (the "Tranche B --------- Facility"), (c) the Tranche C Commitments and the Tranche C Loans made -------- thereunder (the "Tranche C Facility"), (d) the Tranche D Commitments and ------------------ the Tranche D Loans made thereunder (the "Tranche ------- 10 D Facility") and (e) the Revolving Credit Commitments and the extensions ---------- of credit made thereunder (the "Revolving Credit Facility"). ------------------------- "Federal Funds Effective Rate": shall mean, for any day, the weighted ---------------------------- average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for the day of such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by it. "Fee Letter": the agreement, dated December 19, 1997, among ---------- MergerCorp, J.P. Morgan Securities Inc., the Administrative Agent and the Syndication Agent, relating to the payment of certain fees. "Financing Lease": any lease of property, real or personal, the --------------- obligations of the lessee in respect of which are required in accordance with GAAP to be capitalized on a balance sheet of the lessee. "Foreign Backstop Letters of Credit": any Letter of Credit issued ---------------------------------- under this Agreement to any Person for the account of the Borrower to provide credit support for Indebtedness of any Foreign Subsidiary to such Person which is permitted under subsection 14.1. "Foreign Pledge Agreement": each pledge agreement (or analogous ------------------------ document), which pledge agreement (or analogous document) shall be in form and substance reasonably satisfactory to the Administrative Agent, pursuant to which the Borrower or any of its Domestic Subsidiaries purports to grant a Lien on any portion of the Capital Stock of any Foreign Subsidiary, as the same may be amended, supplemented or otherwise modified from time to time. "Foreign Subsidiary": any Subsidiary of the Borrower that is ------------------ organized under the laws of any jurisdiction outside the United States of America, or that is a Foreign Subsidiary Holdco. "Foreign Subsidiary Holdco": any Subsidiary of the Borrower that has ------------------------- no material assets other than Capital Stock or other securities of one or more Foreign Subsidiaries or other Foreign Subsidiary Holdcos, and other assets relating to an ownership interest in such Capital Stock, securities or Foreign Subsidiaries. "Former Plan": any employee benefit plan in respect of which the ----------- Borrower or a Commonly Controlled Entity has engaged in a transaction described in Section 4069 or Section 4212(c) of ERISA. "Fund V": Clayton, Dubilier & Rice Fund V Limited Partnership, a ------ Cayman Islands exempted limited partnership managed by CD&R, and its successors and its assigns who are existing members of the CD&R Group at the time of any such assignment. For the purposes of this definition, "CD&R Group" shall mean CD&R, or ----------- 11 other investment fund or vehicle managed, sponsored or advised by CD&R, or any Affiliate of or successor to CD&R, Fund V or any such other investment fund or vehicle. "Funded Debt": as to any Person, all Indebtedness of such Person that ----------- matures more than one year from the date of its creation or matures within one year from such date but is renewable or extendible, at the option of such Person, to a date more than one year from such date or arises under a revolving credit or similar agreement that obligates the lender or lenders to extend credit during a period of more than one year from such date, including, without limitation, all current maturities and current sinking fund payments in respect of such Indebtedness whether or not required to be paid within one year from the date of its creation and, in the case of the Borrower, Indebtedness in respect of the Loans. "GAAP": generally accepted accounting principles in the United States ---- of America as in effect from time to time; provided that, for purposes of -------- determining compliance with the provisions of Section 13 or subsection 14.8(e), "GAAP" shall mean generally accepted accounting principles in the United States of America as in effect on December 31, 1997. "Governmental Authority": any nation or government, any state or ---------------------- other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "Guarantee Obligation": as to any Person (the "guaranteeing person"), -------------------- ------------------- any obligation of (a) the guaranteeing person or (b) another Person (including, without limitation, any bank under any letter of credit) to induce the creation of which the guaranteeing person has issued a reimbursement, counterindemnity or similar obligation, in either case guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends or other obligations (the "primary obligations") of any other third Person ------------------- (the "primary obligor") in any manner, whether directly or indirectly, --------------- including, without limitation, any such obligation of the guaranteeing person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (1) for the purchase or payment of any such primary obligation or (2) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof; provided, however, that the term Guarantee Obligation shall not include -------- ------- endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Guarantee Obligation of any guaranteeing person shall be deemed to be the lower of (a) an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee Obligation is made and (b) the maximum amount for which such guaranteeing person may be liable pursuant to the terms of the instrument embodying such Guarantee Obligation, unless such primary obligation and the maximum amount for which such guaranteeing person may be liable are not stated or determinable, in which case the amount of such Guarantee Obligation 12 shall be such guaranteeing person's maximum reasonably anticipated liability in respect thereof as determined by the Borrower in good faith. "Guarantor": from and after the consummation of the Assumption, --------- Holding. "Hedging Arrangement": means any agreement or arrangement that relates ------------------- to any interest rate protection, future, option, swap, cap, collar or hedge, or to any foreign exchange contract or currency swap or hedge, or any other similar agreement or arrangement (including any derivative agreement or arrangement), and is entered into, purchased or otherwise acquired by the Borrower or any of its Subsidiaries in the ordinary course of business and not for purposes of speculation. "Historical Period": with respect to any Permitted Acquisition, the ----------------- period of four consecutive fiscal quarters of the Borrower most recently ended prior to the consummation of such Permitted Acquisition for which consolidated financial statements of the Guarantor have been delivered pursuant to subsection 12.1. "Historical Pro Forma Compliance": with respect to any Permitted ------------------------------- Acquisition, the Borrower shall be in Historical Pro Forma Compliance if the Leverage Ratio as of the end of the relevant Historical Period shall be less than or equal to the ratio set forth below opposite the period during which such Historical Period ends, with such compliance determined on a pro forma basis as if such Permitted Acquisition had been consummated on the first day of such Historical Period: Period Ratio ------ ----- September 30, 1998 - September 30, 2000 6.00 to 1.0 October 1, 2000 - September 30, 2001 5.75 to 1.0 October 1, 2001 - September 30, 2002 5.00 to 1.0 October 1, 2002 - thereafter 4.75 to 1.0 "Indebtedness": of any Person at any date, without duplication, (a) ------------ all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services (other than current trade liabilities incurred in the ordinary course of business and payable in accordance with customary practices), (b) any other indebtedness of such Person which is evidenced by a note, bond, debenture or similar instrument, (c) all obligations of such Person under Financing Leases, (d) all reimbursement obligations (contingent or otherwise) of such Person in respect of letters of credit issued for the account of such Person, (e) all obligations of such Person in respect of acceptances created for the account of such Person, (f) all obligations of such Person, contingent or otherwise, to purchase, redeem, retire or otherwise acquire for value any preferred stock (or equivalent equity interests) of such Person which is mandatorily redeemable prior to the scheduled maturity of the Tranche A Loans (other than any such stock held by Management Investors), and (g) all obligations of the types referred to in clauses (a) through (f) above secured by any Lien on any property owned by such Person even though such Person has not assumed or otherwise become liable for the payment thereof. 13 "Insolvency": with respect to any Multiemployer Plan, the condition ---------- that such Plan is insolvent within the meaning of Section 4245 of ERISA. "Insolvent": pertaining to a condition of Insolvency. --------- "Intellectual Property" as defined in subsection 10.9. --------------------- "Interest Coverage Ratio": for any period, the ratio of (i) EBITDA ----------------------- for such period to (ii) Interest Expense for such period. "Interest Expense": for any period, the amount equal to the interest ---------------- expense (accrued and paid or payable in cash for such period, and in any event excluding any amortization or write-off of financing costs otherwise included therein), net of interest income, of the Borrower and its Subsidiaries, determined on a consolidated basis in accordance with GAAP, for such period on the aggregate principal amount of their consolidated Indebtedness. "Interest Payment Date": (a) as to any ABR Loan, the last Business --------------------- Day of each March, June, September and December, (b) as to any Eurodollar Loan having an Interest Period of three months or less, the last day of such Interest Period and (c) as to any Eurodollar Loan having an Interest Period longer than three months, each day which is three months, or a whole multiple thereof, after the first day of such Interest Period (or, if such day is not a Business Day, the next succeeding Business Day) and the last day of such Interest Period. "Interest Period": with respect to any Eurodollar Loan: --------------- (a) initially, the period commencing on the borrowing or conversion date, as the case may be, with respect to such Eurodollar Loan and ending one, two, three or six months thereafter, as selected by the Borrower in its Notice of Borrowing given with respect thereto; and (b) thereafter, each period commencing on the last day of the next preceding Interest Period applicable to such Eurodollar Loan and ending one, two, three or six months thereafter, as selected by the Borrower by irrevocable notice to the Administrative Agent not less than three Business Days prior to the last day of the then current Interest Period with respect thereto; provided that, all of the foregoing provisions relating to Interest Periods -------- are subject to the following: (1) if any Interest Period would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such Interest Period into another calendar month in which event such Interest Period shall end on the immediately preceding Business Day; 14 (2) any Interest Period that would otherwise extend beyond the Termination Date or beyond the date final payment is due on the relevant Tranche A Loan, Tranche B Loan, Tranche C Loan or Tranche D Loan (as the case may be) shall end on the Termination Date or such date of final payment, as the case may be; (3) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of a calendar month; and (4) the Borrower shall select Interest Periods so as not to require a payment or prepayment of any Eurodollar Loan during an Interest Period for such Loan. "Issuing Lender": with respect to any Letter of Credit, BankBoston, -------------- N.A. or any other Lender appointed by the Administrative Agent (provided that such other Lender agrees to serve in the capacity of Issuing Lender), in its capacity as issuer thereof. "L/C Commitment": $25,000,000. -------------- "L/C Fee Payment Date": the last Business Day of each March, June, -------------------- September, and December occurring after the date of issuance thereof. "L/C Obligations": at any time, an amount equal to the sum of (a) the --------------- aggregate then undrawn and unexpired amount of the then outstanding Letters of Credit and (b) the aggregate amount of drawings under Letters of Credit which have not then been reimbursed pursuant to subsection 7.5. "L/C Participants": with respect to any Letter of Credit, the ---------------- collective reference to all the Revolving Credit Lenders other than the Issuing Lender with respect to such Letter of Credit. "Lenders": the collective reference to the Tranche A Lenders, the ------- Tranche B Lenders, the Tranche C Lenders, the Tranche D Lenders, the Revolving Credit Lenders and the Swing Line Lender. "Letters of Credit": as defined in subsection 7.1. ----------------- "Level": with respect to the Tranche A Facility, the Revolving Credit ----- Facility and the Applicable Commitment Fee Rate, the Level set forth below corresponding to the Leverage Ratio then in effect: 15 Level Leverage Ratio I Less than 3.50 to 1.00 II Greater than or equal to 3.50 to 1.00 and less than 4.00 to 1.00 III Greater than or equal to 4.00 to 1.00 and less than 4.50 to 1.00 IV Greater than or equal to 4.50 to 1.00 and less than 5.00 to 1.00 V Greater than or equal to 5.00 to 1.00 and less than 5.50 to 1.00 VI Greater than or equal to 5.50 to 1.00 and, with respect to the Tranche B Facility, the Tranche C Facility and the Tranche D Facility, the Level set forth below corresponding to the Leverage Ratio then in effect: Level Leverage Ratio I Less than 4.00 to 1.00 II Greater than or equal to 4.00 to 1.00 and less than 5.00 to 1.00 III Greater than or equal to 5.00 to 1.00 ; provided that, any change in the Applicable Margin or the Applicable -------- Commitment Fee Rate resulting from a change in the Level shall become effective as of the opening of business on the date which is the earlier of (A) the date upon which the Administrative Agent receives the financial statements required to be delivered pursuant to subsection 12.1(a) or (b) which evidence such change in the Level and (B) the date upon which such financial statements are required to be delivered pursuant to subsection 12.1(a) or (b), as applicable; provided, further, that, in the event that -------- ------- the financial statements required to be delivered pursuant to subsection 12.1(a) or (b), as applicable, are not delivered when due (after giving effect to the applicable cure period), then during the period from the date upon which such financial statements were required to be delivered until the date upon which they actually are delivered, the Level in effect shall be deemed for purposes of this definition to be Level VI with respect to the Tranche A Facility, the Revolving Credit Facility and the Applicable Commitment Fee Rate, and Level III with respect to the Tranche B Facility, the Tranche C Facility and the Tranche D Facility. "Leverage Ratio": at the last day of any fiscal quarter, the ratio of -------------- (i) total Indebtedness of the Borrower and its Subsidiaries required to be reflected on a consolidated balance sheet of the Borrower on such date in accordance with GAAP, net of the actual amount of any cash on the balance sheet of any of the Borrower's 16 Subsidiaries located in Europe on such date, up to a maximum of $28,000,000, to (ii) EBITDA for the period of four consecutive fiscal quarters ended on such date. "Lien": any mortgage, pledge, hypothecation, assignment security ---- deposit arrangement, encumbrance, lien (statutory or other), charge or other security interest or any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement and any Financing Lease having substantially the same economic effect as any of the foregoing). "Loan": any Tranche A Loan, Tranche B Loan, Tranche C Loan, Tranche D ---- Loan, Revolving Credit Loan or any Swing Line Loan, as the context shall require. "Majority Basic Lenders": at any time, Tranche A Lenders and ---------------------- Revolving Credit Lenders having Commitments which aggregate more than 50% of the amount equal to the sum of the Aggregate Tranche A Commitment and the Aggregate Revolving Credit Commitment then in effect. "Majority Facility Lenders": with respect to any Facility, the ------------------------- Lenders having Commitments under such Facility which aggregate more than 50% of the aggregate Commitments with respect to such Facility then in effect. "Majority Hybrid Lenders": at any time, Tranche B Lenders, Tranche C ----------------------- Lenders and Tranche D Lenders having Commitments which aggregate more than 50% of the amount equal to the sum of the Aggregate Tranche B Commitment, the Aggregate Tranche C Commitment and the Aggregate Tranche D Commitment then in effect. "Majority Lenders": at any time, Lenders having Commitments which ---------------- aggregate more than 50% of the amount equal to the sum of the Aggregate Tranche A Commitment, the Aggregate Tranche B Commitment, the Aggregate Tranche C Commitment, the Aggregate Tranche D Commitment and the Aggregate Revolving Credit Commitment then in effect. "Majority Term Lenders": at any time, Tranche A Lenders, Tranche B --------------------- Lenders, Tranche C Lenders and Tranche D Lenders having Commitments which aggregate more than 50% of the amount equal to the sum of the Aggregate Tranche A Commitment, the Aggregate Tranche B Commitment, the Aggregate Tranche C Commitment and the Aggregate Tranche D Commitment then in effect. "Management Investors": the collective reference to the officers, -------------------- directors, employees and other members of the management of the Guarantor or any of its Subsidiaries, or immediate family members or relatives thereof, or trusts or partnerships for the benefit of any of the foregoing, or any of their heirs, executors or legal representatives, who at any particular date shall beneficially own or have the right to acquire, directly or indirectly, common stock of the Guarantor or the Borrower. "Management Subscription Agreements": one or more stock subscription, ---------------------------------- stock option, grant or other agreements which have been or may be entered into between the 17 Guarantor or the Borrower and certain Management Investors, with respect to the issuance to or ownership by such parties of common stock of the Guarantor or the Borrower or options, warrants, units or other rights in respect of common stock of the Guarantor or the Borrower, any agreements entered into from time to time by transferees of any such stock, options, warrants or other rights in connection with the sale, transfer or reissuance thereof, and any assumptions of any of the foregoing by third parties, as amended, supplemented, waived or otherwise modified from time to time. "Material Adverse Effect": a material adverse effect on (a) the ----------------------- business, operations, property or condition (financial or otherwise) of the Guarantor and its Subsidiaries (after giving effect to the Transaction) taken as a whole or (b) the validity or enforceability of the Credit Documents as to any Credit Parties party thereto or the rights and remedies of the Administrative Agent or the Lenders hereunder and thereunder taken as a whole. "Material Environmental Amount": an amount payable by the Borrower ----------------------------- and/or its Subsidiaries in respect of or under any Environmental Law for remedial costs, compliance costs, compensatory damages, punitive damages, fines, penalties or any combination thereof in an amount that would reasonably be expected to have a Material Adverse Effect. "Material Subsidiary": at any date, any Subsidiary of the Borrower ------------------- which at such date has assets with a market value in excess of $5,000,000 or annual revenues in excess of $5,000,000. "Materials of Environmental Concern": any hazardous or toxic ---------------------------------- substances, materials, pollutants or wastes, defined or regulated as such in or under any applicable Environmental Law, including, without limitation, gasoline or petroleum (including, without limitation, crude oil or any fraction thereof) or petroleum products, asbestos, polychlorinated biphenyls and urea-formaldehyde insulation. "Merger": as defined in the recitals. ------ "Merger Agreement": as defined in the recitals. ---------------- "MergerCorp": as defined in the recitals. ---------- "Multiemployer Plan": a Plan which is a multiemployer plan as defined ------------------ in Section 4001(a)(3) of ERISA. "Net Proceeds": with respect to any of the events referred to in ------------ subsection 9.5(c) or (d) and the defined terms used therein, (a) the gross cash consideration, and all cash proceeds (as and when received) of non- cash consideration (including, without limitation, any such cash proceeds in the nature of principal and interest payments on account of promissory notes or similar obligations), received by the Borrower and its Subsidiaries in connection with such event, minus (b) the sum, without duplication, of (i) any taxes reasonably estimated to be payable to any federal, state, local or foreign 18 taxing authority by the Guarantor and its Subsidiaries as a result thereof, (ii) the amount of fees and commissions (including reasonable investment banking fees, legal, accounting, consulting, survey, title and recording tax expenses and other costs and expenses) actually incurred in connection with such event which are paid or payable by the Borrower and its Subsidiaries, (iii) the amount of such net cash proceeds which are attributable to (and payable to) minority interests, (iv) the amount of any reserve reasonably maintained by the Borrower and its Subsidiaries with respect to indemnification obligations owing pursuant to the definitive documentation pursuant to which such event is consummated (with any unused portion of such reserve to constitute Net Proceeds on the date upon which the indemnification obligations terminate or such reserve is reduced other than in connection with a payment), (v) the amount of Indebtedness (other than intercompany Indebtedness), if any, which is required to be repaid at the time or as a result of such event out of the proceeds thereof and (vi) with respect to the determination of Net Proceeds from a sale or other disposition of property or assets referred to in subsection 9.5(d), appropriate amounts to be provided by the Borrower or any of its Subsidiaries to be applied to satisfy any reasonable expenses and liabilities associated with any such property or assets and retained by the Borrower or any such Subsidiary after such sale or other disposition and other appropriate amounts which shall be used by the Borrower or any of its Subsidiaries to discharge or pay on a current basis any other reasonable expenses and liabilities associated with such property or assets. "Non-Excluded Taxes": as defined in subsection 9.14(a). ------------------ "Note": as defined in subsection 9.1(e); collectively, the "Notes." ---- ----- "Notice of Borrowing": with respect to (a) any borrowing of Loans, a ------------------- Notice of Borrowing (Drawings), substantially in the form of Exhibit E-1, (b) any conversion of Loans, a Notice of Borrowing (Conversions), substantially in the form of Exhibit E-2 and (c) any continuation of Eurodollar Loans, a Notice of Borrowing (Continuations), substantially in the form of Exhibit E-3 hereto. "Participant": as defined in subsection 18.6(b). ----------- "PBGC": the Pension Benefit Guaranty Corporation established pursuant ---- to Subtitle A of Title IV of ERISA. "Permitted Acquisition": as defined in subsection 14.8(e). --------------------- "Person": an individual, partnership, corporation, business trust, ------ joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature. "Plan": any employee benefit plan which is covered by ERISA and in ---- respect of which the Borrower or a Commonly Controlled Entity is an "employer" as defined in Section 3(5) of ERISA. 19 "Prime Rate" shall mean the rate of interest per annum publicly ---------- announced from time to time by the Administrative Agent as its prime rate in effect at its principal office in New York City. "Properties": as defined in subsection 10.16(a). ---------- "Recapitalization": as defined in the recitals. ---------------- "Refunded Swing Line Loans": as defined in subsection 8.3(a). ------------------------- "Register": as defined in subsection 18.6(d). -------- "Regulation U": Regulation U of the Board of Governors of the Federal ------------ Reserve System as in effect from time to time. "Reimbursement Obligation": the obligation of the Borrower to ------------------------ reimburse the Issuing Lender pursuant to subsection 7.5 for amounts drawn under Letters of Credit issued by it. "Reinvested Amount": with respect to any sale, transfer or other ----------------- disposition of property or assets of the Borrower or any of its Subsidiaries permitted by subsection 14.5(h), (j) or (k) or any recovery of amounts under any property insurance policies, that portion of the Net Proceeds thereof as shall, according to a certificate of a Responsible Officer of the Borrower delivered to the Administrative Agent within 30 days of such sale or other disposition, be reinvested in the business of the Borrower and its Subsidiaries in a manner consistent with the requirements of subsection 14.14 and the other provisions hereof within 360 days of the receipt of such Net Proceeds or, if such reinvestment is in a project authorized by the board of directors or comparable body of the Borrower that will take longer than such 360 days to complete, the period of time necessary to complete such project (so long as the Borrower or the relevant Subsidiary has committed to expend such portion of the Net Proceeds within, and is diligently pursuing such project during, the period of 360 days from the receipt of such Net Proceeds); provided -------- that (i) if any such certificate of a Responsible Officer is not delivered to the Administrative Agent on the date of such sale or other disposition, any Net Proceeds of such sale or other disposition shall be promptly (x) deposited in a cash collateral account established at Morgan Guaranty Trust Company of New York to be held as collateral in favor of the Administrative Agent for the benefit of the Lenders on terms reasonably satisfactory to the Administrative Agent and shall remain on deposit in such cash collateral account until such certificate of a Responsible Officer is (or is required to be) delivered to the Administrative Agent or (y) to the extent that the Borrower has indicated that no such certificate will be delivered, used to make a prepayment of the Revolving Credit Loans in accordance with subsection 9.3; provided that, notwithstanding anything in -------- this Agreement to the contrary, the Borrower may not request any borrowings under the Revolving Credit Commitments that would reduce the aggregate amount of the Available Revolving Credit Commitments to an amount that is less than the amount of any such prepayment until such certificate of a Responsible Officer is delivered to the Administrative Agent and (ii) any Net Proceeds 20 not so reinvested by such 360th day or later day, as applicable, shall be utilized on such day to prepay the Loans pursuant to subsection 9.5(d). "Related Fund": with respect to any Lender that is a fund or trust ------------ that invests in loans, either any other fund or trust that invests in loans and is managed by the same investment advisor as such Lender or by an Affiliate of such investment advisor. "Reorganization": with respect to any Multiemployer Plan, the -------------- condition that such plan is in reorganization within the meaning of Section 4241 of ERISA. "Reportable Event": any of the events set forth in Section 4043(b) of ---------------- ERISA, other than those events as to which the thirty day notice period is waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg. (S) 2615. "Requirement of Law": as to any Person, the Certificate of ------------------ Incorporation and By-Laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject; provided that the -------- foregoing shall not apply to any non-binding recommendation of any Governmental Authority. "Responsible Officer": the chief executive officer and the president ------------------- of the Borrower or, with respect to financial matters, the chief financial officer of the Borrower, or, with respect to benefits matters the Corporate Vice-President--Human Resources of the Borrower; "Revolving Credit Commitment": as to any Revolving Credit Lender, its --------------------------- obligation to make Revolving Credit Loans to and/or make, issue or participate in Swing Line Loans and/or Letters of Credit made or issued on behalf of the Borrower hereunder in an aggregate principal and/or face amount at any one time outstanding not to exceed the amount set forth opposite such Revolving Credit Lender's name on Schedule I (as deemed amended by any Assignment and Acceptance) under the heading "Revolving Credit Commitment"; collectively, as to all the Revolving Credit Lenders, the "Revolving Credit Commitments". "Revolving Credit Commitment Percentage": as to any Revolving Credit -------------------------------------- Lender at any time, the percentage which such Revolving Credit Lender's Revolving Credit Commitment then constitutes of the Aggregate Revolving Credit Commitment (or, at any time after the Aggregate Revolving Credit Commitment shall have expired or terminated, the percentage which the aggregate principal amount of such Revolving Credit Lender's Revolving Credit Loans then outstanding constitutes of the aggregate principal amount of the Revolving Credit Loans then outstanding). "Revolving Credit Lenders": each bank or other financial institution ------------------------ holding a Revolving Credit Commitment hereunder (or, after the last day of the Commitment Period and subject to the provisions of subsection 18.6(d), holding any Revolving Credit 21 Loans or participating interests in Letters of Credit or Swing Line Loans hereunder); collectively, the "Revolving Credit Lenders". ------------------------ "Revolving Credit Loans": as defined in subsection 6.1. ---------------------- "Security Documents": the collective reference to the Collateral ------------------ Agreement, the Foreign Pledge Agreements, if any, and all other security documents hereafter delivered to the Administrative Agent granting a Lien on any asset or assets of any Person to secure the obligations and liabilities of the Borrower hereunder and under any of the other Credit Documents or to secure any guarantee of any such obligations and liabilities. "Senior Subordinated Note Indenture": the Indenture entered into by ---------------------------------- the Guarantor and Newco in connection with the issuance of the Senior Subordinated Notes, and thereafter assumed by the Borrower, as the same may be amended, supplemented or otherwise modified from time to time in accordance with subsection 14.12. "Senior Subordinated Notes": the subordinated notes of the Guarantor ------------------------- and Newco issued on the Closing Date pursuant to the Senior Subordinated Note Indenture and assumed by the Borrower, as the same may be exchanged in whole or in part for substantially similar subordinated notes in accordance with the terms of the Senior Subordinated Note Indenture, and as any such subordinated notes may be amended, supplemented or otherwise modified from time to time in accordance with subsection 14.12. "Single Employer Plan": any Plan which is covered by Title IV of -------------------- ERISA, but which is not a Multiemployer Plan. "Solvent": when used with respect to any Person, means that, as of ------- any date of determination, (a) the amount of the assets of such Person, at a fair valuation, will, as of such date, exceed the amount of all liabilities of such Person, contingent or otherwise, as of such date, (b) the present fair saleable value of the assets of such Person will, as of such date, be greater than the amount that will be required to pay the probable liability of such Person on its debts as such debts become absolute and matured, (c) such Person will not have, as of such date, an unreasonably small amount of capital with which to conduct its business, and (d) such Person will be able to pay its debts as they mature. For purposes of determining whether a Person is Solvent, the amount of any contingent liability shall be computed as the amount that, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability. "Specified Change": as defined in subsection 18.1(b). ---------------- "Subsidiary": as to any Person, a corporation, partnership or other ---------- entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other 22 managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise qualified, all references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower. "Subsidiary Guarantor": any Person (other than the Borrower, the -------------------- Guarantor and the Administrative Agent) party to the Collateral Agreement pursuant to this Agreement. "Swing Line Commitment": at any date, the obligation of the Swing --------------------- Line Lender to make Swing Line Loans pursuant to subsection 8.1 in the amount referred to therein. "Swing Line Lender": Morgan Guaranty Trust Company of New York. ----------------- "Swing Line Loans": as defined in subsection 8.1(a). ---------------- "Syndication Agent": as defined in the preamble hereto. ----------------- "Tax Allocation Agreement": the Tax Allocation Agreement among the ------------------------ Guarantor, the Borrower and the Subsidiaries, as amended, modified or supplemented from time to time. "Termination Date": March 31, 2004. ---------------- "Term Loan Facilities": the collective reference to the Tranche A -------------------- Facility, the Tranche B Facility, the Tranche C Facility and the Tranche D Facility. "Term Loans": the collective reference to the Tranche A Loans, the ---------- Tranche B Loans, the Tranche C Loans and the Tranche D Loans. "Tranche": the collective reference to Eurodollar Loans, the then ------- current Interest Periods with respect to all of which begin on the same date and end on the same later date (whether or not such Loans shall originally have been made on the same day); Tranches may be identified as "Eurodollar Tranches". -------------------- "Tranche A Commitment": as to any Tranche A Lender, its obligation to -------------------- make its Tranche A Loan to the Borrower hereunder in an aggregate principal not to exceed the amount set forth opposite such Lender's name on Schedule I under the heading "Tranche A Commitment". "Tranche A Commitment Percentage": as to any Tranche A Lender at any ------------------------------- time, the percentage which such Tranche A Lender's Tranche A Commitment then constitutes of the Aggregate Tranche A Commitment (or, at any time after the Closing Date, the percentage which the aggregate principal amount of such Tranche A Lender's Tranche A Loans then outstanding constitutes of the aggregate principal amount of the Tranche A Loans then outstanding). 23 "Tranche A Lender": each bank or other financial institution holding ---------------- a Tranche A Commitment hereunder (or, after the Closing Date and subject to the provisions of subsection 18.6(d), holding any Tranche A Loans hereunder); collectively, the "Tranche A Lenders". ----------------- "Tranche A Loan": as defined in subsection 2.1. -------------- "Tranche B Commitment": as to any Tranche B Lender, its obligation to -------------------- make its Tranche B Loan to the Borrower hereunder in an aggregate principal not to exceed the amount set forth opposite such Lender's name on Schedule I under the heading "Tranche B Commitment". "Tranche B Commitment Percentage": as to any Tranche B Lender at any ------------------------------- time, the percentage which such Tranche B Lender's Tranche B Commitment then constitutes of the Aggregate Tranche B Commitment (or, at any time after the Closing Date, the percentage which the aggregate principal amount of such Tranche B Lender's Tranche B Loans then outstanding constitutes of the aggregate principal amount of the Tranche B Loans then outstanding). "Tranche B Lender": each bank or other financial institution holding ---------------- a Tranche B Commitment hereunder (or, after the Closing Date and subject to the provisions of subsection 18.6(d), holding any Tranche B Loans hereunder); collectively, the "Tranche B Lenders". ----------------- "Tranche B Loan": as defined in subsection 3.1. -------------- "Tranche C Commitment": as to any Tranche C Lender, its obligation to -------------------- make its Tranche C Loan to the Borrower hereunder in an aggregate principal not to exceed the amount set forth opposite such Lender's name on Schedule I under the heading "Tranche C Commitment". "Tranche C Commitment Percentage": as to any Tranche C Lender at any ------------------------------- time, the percentage which such Tranche C Lender's Tranche C Commitment then constitutes of the Aggregate Tranche C Commitment (or, at any time after the Closing Date, the percentage which the aggregate principal amount of such Tranche C Lender's Tranche C Loans then outstanding constitutes of the aggregate principal amount of the Tranche C Loans then outstanding). "Tranche C Lender": each bank or other financial institution holding ---------------- a Tranche C Commitment hereunder (or, after the Closing Date and subject to the provisions of subsection 18.6(d), holding any Tranche C Loans hereunder); collectively, the "Tranche C Lenders". ----------------- "Tranche C Loan": as defined in subsection 4.1. -------------- 24 "Tranche D Commitment": as to any Tranche D Lender, its obligation to -------------------- make its Tranche D Loan to the Borrower hereunder in an aggregate principal not to exceed the amount set forth opposite such Lender's name on Schedule I under the heading "Tranche D Commitment". "Tranche D Commitment Percentage": as to any Tranche D Lender at any ------------------------------- time, the percentage which such Tranche D Lender's Tranche D Commitment then constitutes of the Aggregate Tranche D Commitment (or, at any time after the Closing Date, the percentage which the aggregate principal amount of such Tranche D Lender's Tranche D Loans then outstanding constitutes of the aggregate principal amount of the Tranche D Loans then outstanding). "Tranche D Lender": each bank or other financial institution holding ---------------- a Tranche D Commitment hereunder (or, after the Closing Date and subject to the provisions of subsection 18.6(d), holding any Tranche D Loans hereunder); collectively, the "Tranche D Lenders". ----------------- "Tranche D Loan": as defined in subsection 5.1. -------------- "Transaction": as defined in the recitals. ----------- "Transfer": as defined in the recitals. -------- "Transaction Documents": the Merger Agreement and any proxy statement --------------------- relating to the Merger; this Agreement and the other Credit Documents; the Senior Subordinated Note Indenture, the Senior Subordinated Notes, any purchase or registration rights agreements or offering circular relating to the Senior Subordinated Notes; and any subscription, registration rights or stockholders agreements relating to the equity investment in connection with the Transaction. "Transferee": as defined in subsection 18.6(f). ---------- "TTC Guarantee": as defined in subsection 10.19. ------------- "Type": as to any Loan, its nature as an ABR Loan or a Eurodollar ---- Loan. "Underfunding": an excess of all accrued benefits under a Plan (based ------------ on those assumptions used to fund such Plan), determined as of the most recent annual valuation date, over the value of the assets of such Plan allocable to such accrued benefits. "Uniform Customs": the Uniform Customs and Practice for Documentary --------------- Credits (1993 Revision), International Chamber of Commerce Publication No. 500, as the same may be amended from time to time. "Wholly Owned Subsidiary": as to any Person, any Subsidiary of such ----------------------- Person of which such Person owns, directly or indirectly through one or more Wholly Owned Subsidiaries, all of the Capital Stock of such Subsidiary other than directors qualifying shares or shares held by nominees. 25 "Working Capital": at any date, Current Assets on such date minus --------------- ----- Current Liabilities on such date. 1.2 Other Definitional Provisions. (a) Unless otherwise specified ----------------------------- therein, all terms defined in this Agreement shall have the defined meanings when used in any Notes or any certificate or other document made or delivered pursuant hereto. (b) As used herein and in any Notes, and any certificate or other document made or delivered pursuant hereto, accounting terms relating to the Guarantor, the Borrower and their Subsidiaries not defined in subsection 1.1 and accounting terms partly defined in subsection 1.1, to the extent not defined, shall have the respective meanings given to them under GAAP. (c) The words "hereof", "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, subsection, Schedule and Exhibit references are to this Agreement unless otherwise specified. (d) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms. SECTION 2. AMOUNT AND TERMS OF TRANCHE A LOAN 2.1 Tranche A Term Loans. Subject to the terms and conditions -------------------- hereof, each Tranche A Lender severally agrees to make a term loan (a "Tranche A --------- Loan") to the Borrower on the Closing Date in an amount not to exceed the amount - ---- of the Tranche A Commitment of such Tranche A Lender then in effect. The Tranche A Loans may from time to time be (a) Eurodollar Loans, (b) ABR Loans or (c) a combination thereof, as determined by Holding and notified to the Administrative Agent in accordance with subsections 2.2 and 9.6; provided that -------- the Tranche A Loans to be made on the Closing Date initially shall be made as ABR Loans. 2.2 Procedure for Tranche A Loan Borrowing. The Borrower shall give -------------------------------------- the Administrative Agent its irrevocable Notice of Borrowing (which notice must be received by the Administrative Agent prior to 12:00 Noon, New York City time, one Business Day prior to the Closing Date) requesting that the Tranche A Lenders make the Tranche A Loans on the Closing Date and specifying the amount to be borrowed. Upon receipt of such Notice of Borrowing, the Administrative Agent shall promptly notify each Tranche A Lender thereof. Each Tranche A Lender will make the amount of its pro rata share of the Tranche A Loans available to the Administrative Agent for the account of Holding at the office of the Administrative Agent specified in subsection 18.2 prior to 10:00 A.M., New York City time, on the Closing Date in funds immediately available to the Administrative Agent. Such Tranche A Loans will then be made available to Holding by the Administrative Agent transferring to the account directed by Holding (which account need not be maintained by the Administrative Agent) with the aggregate of the amounts made available to the Administrative Agent by the Tranche A Lenders and in like funds as received by the Administrative Agent. 26 2.3 Amortization of Tranche A Loans. (a) The Borrower shall repay ------------------------------- the Tranche A Loans on each date set forth below (or, if such date is not a Business Day, on the immediately preceding Business Day) by the amount set forth below opposite such date: Date Amount ---- ------ June 30, 1998 $1,250,000 September 30, 1998 $1,250,000 December 31, 1998 $1,250,000 March 31, 1999 $1,250,000 June 30, 1999 $1,250,000 September 30, 1999 $1,250,000 December 31, 1999 $1,250,000 March 31, 2000 $1,250,000 June 30, 2000 $1,250,000 September 30, 2000 $1,250,000 December 31, 2000 $1,250,000 March 31, 2001 $1,250,000 June 30, 2001 $2,125,000 September 30, 2001 $2,125,000 December 31, 2001 $2,125,000 March 31, 2002 $2,125,000 June 30, 2002 $2,875,000 September 30, 2002 $2,875,000 December 31, 2002 $2,875,000 March 31, 2003 $2,875,000 June 30, 2003 $3,750,000 September 30, 2003 $3,750,000 December 31, 2003 $3,750,000 March 31, 2004 $3,750,000 (b) The Borrower shall repay any then-outstanding Tranche A Loans on the Termination Date. 2.4 Use of Proceeds of Tranche A Loans. The proceeds of the Tranche ---------------------------------- A Loans shall be utilized by the Borrower only (a) to finance the Transaction and (b) to pay any fees and expenses relating thereto. SECTION 3. AMOUNT AND TERMS OF TRANCHE B LOAN 3.1 Tranche B Term Loans. Subject to the terms and conditions -------------------- hereof, each Tranche B Lender severally agrees to make a term loan (a "Tranche B --------- Loan") to the Borrower on the Closing Date in an amount not to exceed the amount - ---- of the Tranche B Commitment of such Tranche B Lender then in effect. The Tranche B Loans may from time to time be (a) Eurodollar Loans, (b) ABR Loans or (c) a combination thereof, as determined by the Borrower and notified to the Administrative Agent in accordance with subsections 3.2 and 9.6; provided that -------- the Tranche B Loans to be made on the Closing Date initially shall be made as ABR Loans. 27 3.2 Procedure for Tranche B Loan Borrowing. The Borrower shall give -------------------------------------- the Administrative Agent its irrevocable Notice of Borrowing (which notice must be received by the Administrative Agent prior to 12:00 Noon, New York City time, one Business Day prior to the Closing Date) requesting that the Tranche B Lenders make the Tranche B Loans on the requested Borrowing Date and specifying the amount to be borrowed. Upon receipt of such Notice of Borrowing, the Administrative Agent shall promptly notify each Tranche B Lender thereof. Each Tranche B Lender will make the amount of its pro rata share of the Tranche B Loans available to the Administrative Agent for the account of Holding at the office of the Administrative Agent specified in subsection 18.2 prior to 10:00 A.M., New York City time, on the Closing Date in funds immediately available to the Administrative Agent. Such Tranche B Loans will then be made available to Holding by the Administrative Agent transferring to the account directed by Holding (which account need not be maintained by the Administrative Agent) with the aggregate of the amounts made available to the Administrative Agent by the Tranche B Lenders and in like funds as received by the Administrative Agent. 3.3 Amortization of Tranche B Loans. (a) The Borrower shall repay ------------------------------- the Tranche B Loans on each date set forth below (or, if such date is not a Business Day, on the immediately preceding Business Day) by the amount set forth below opposite such date: Date Amount ---- ------ June 30, 1998 $250,000 September 30, 1998 $250,000 December 31, 1998 $250,000 March 31, 1999 $250,000 June 30, 1999 $250,000 September 30, 1999 $250,000 December 31, 1999 $250,000 March 31, 2000 $250,000 June 30, 2000 $250,000 September 30, 2000 $250,000 December 31, 2000 $250,000 March 31, 2001 $250,000 June 30, 2001 $250,000 September 30, 2001 $250,000 December 31, 2001 $250,000 March 31, 2002 $250,000 June 30, 2002 $250,000 September 30, 2002 $250,000 December 31, 2002 $250,000 March 31, 2003 $250,000 June 30, 2003 $250,000 September 30, 2003 $250,000 December 31, 2003 $250,000 March 31, 2004 $250,000 June 30, 2004 $250,000 September 30, 2004 $250,000 December 31, 2004 $250,000 28 March 31, 2005 $63,250,000 (b) The Borrower shall repay any then-outstanding Tranche B Loans on March 31, 2005. 3.4 Use of Proceeds of Tranche B Loans. The proceeds of the Tranche ---------------------------------- B Loans shall be utilized by the Borrower only (a) to finance the Transaction and (b) to pay any fees and expenses relating thereto. SECTION 4. AMOUNT AND TERMS OF TRANCHE C LOAN 4.1 Tranche C Term Loans. Subject to the terms and conditions -------------------- hereof, each Tranche C Lender severally agrees to make a term loan (a "Tranche C --------- Loan") to the Borrower on the Closing Date in an amount not to exceed the amount - ---- of the Tranche C Commitment of such Tranche C Lender then in effect. The Tranche C Loans may from time to time be (a) Eurodollar Loans, (b) ABR Loans or (c) a combination thereof, as determined by the Borrower and notified to the Administrative Agent in accordance with subsections 4.2 and 9.6; provided that -------- the Tranche C Loans to be made on the Closing Date initially shall be made as ABR Loans. 4.2 Procedure for Tranche C Loan Borrowing. The Borrower shall give -------------------------------------- the Administrative Agent its irrevocable Notice of Borrowing (which notice must be received by the Administrative Agent prior to 12:00 Noon, New York City time, one Business Day prior to the Closing Date) requesting that the Tranche C Lenders make the Tranche C Loans on the requested Borrowing Date and specifying the amount to be borrowed. Upon receipt of such Notice of Borrowing, the Administrative Agent shall promptly notify each Tranche C Lender thereof. Each Tranche C Lender will make the amount of its pro rata share of the Tranche C Loans available to the Administrative Agent for the account of Holding at the office of the Administrative Agent specified in subsection 18.2 prior to 10:00 A.M., New York City time, on the Closing Date in funds immediately available to the Administrative Agent. Such Tranche C Loans will then be made available to Holding by the Administrative Agent transferring to the account directed by Holding (which account need not be maintained by the Administrative Agent) with the aggregate of the amounts made available to the Administrative Agent by the Tranche C Lenders and in like funds as received by the Administrative Agent. 4.3 Amortization of Tranche C Loans. (a) The Borrower shall repay ------------------------------- the Tranche C Loans on each date set forth below (or, if such date is not a Business Day, on the immediately preceding Business Day) by the amount set forth below opposite such date: 29 Date Amount ---- ------ June 30, 1998 $250,000 September 30, 1998 $250,000 December 31, 1998 $250,000 March 31, 1999 $250,000 June 30, 1999 $250,000 September 30, 1999 $250,000 December 31, 1999 $250,000 March 31, 2000 $250,000 June 30, 2000 $250,000 September 30, 2000 $250,000 December 31, 2000 $250,000 March 31, 2001 $250,000 June 30, 2001 $250,000 September 30, 2001 $250,000 December 31, 2001 $250,000 March 31, 2002 $250,000 June 30, 2002 $250,000 September 30, 2002 $250,000 December 31, 2002 $250,000 March 31, 2003 $250,000 June 30, 2003 $250,000 September 30, 2003 $250,000 December 31, 2003 $250,000 March 31, 2004 $250,000 June 30, 2004 $250,000 September 30, 2004 $250,000 December 31, 2004 $250,000 March 31, 2005 $250,000 June 30, 2005 $250,000 September 30, 2005 $250,000 December 31, 2005 $250,000 March 31, 2006 $62,250,000 (b) The Borrower shall repay any then-outstanding Tranche C Loans on March 31, 2006. 4.4 Use of Proceeds of Tranche C Loans. The proceeds of the Tranche ---------------------------------- C Loans shall be utilized by the Borrower only (a) to finance the Transaction and (b) to pay any fees and expenses relating thereto. SECTION 5. AMOUNT AND TERMS OF TRANCHE D LOAN 5.1 Tranche D Term Loans. Subject to the terms and conditions -------------------- hereof, each Tranche D Lender severally agrees to make a term loan (a "Tranche D --------- Loan") to the Borrower on the Closing Date in an amount not to exceed the amount - ---- of the Tranche D Commitment of 30 such Tranche D Lender then in effect. The Tranche D Loans may from time to time be (a) Eurodollar Loans, (b) ABR Loans or (c) a combination thereof, as determined by Holding and notified to the Administrative Agent in accordance with subsections 5.2 and 9.6; provided that the Tranche D Loans to be made on -------- the Closing Date initially shall be made as ABR Loans. 5.2 Procedure for Tranche D Loan Borrowing. The Borrower shall give -------------------------------------- the Administrative Agent its irrevocable Notice of Borrowing (which notice must be received by the Administrative Agent prior to 12:00 Noon, New York City time, one Business Day prior to the Closing Date) requesting that the Tranche D Lenders make the Tranche D Loans on the requested Borrowing Date and specifying the amount to be borrowed. Upon receipt of such Notice of Borrowing, the Administrative Agent shall promptly notify each Tranche D Lender thereof. Each Tranche D Lender will make the amount of its pro rata share of the Tranche D Loans available to the Administrative Agent for the account of Holding at the office of the Administrative Agent specified in subsection 18.2 prior to 10:00 A.M., New York City time, on the Closing Date in funds immediately available to the Administrative Agent. Such Tranche D Loans will then be made available to Holding by the Administrative Agent transferring to the account directed by Holding (which account need not be maintained by the Administrative Agent) with the aggregate of the amounts made available to the Administrative Agent by the Tranche D Lenders and in like funds as received by the Administrative Agent. 5.3 Amortization of Tranche D Loans. (a) The Borrower shall repay ------------------------------- the Tranche D Loans on each date set forth below (or, if such date is not a Business Day, on the immediately preceding Business Day) by the amount set forth below opposite such date: Period Amount ------ ------ June 30, 1998 $250,000 September 30, 1998 $250,000 December 31, 1998 $250,000 March 31, 1999 $250,000 June 30, 1999 $250,000 September 30, 1999 $250,000 December 31, 1999 $250,000 March 31, 2000 $250,000 June 30, 2000 $250,000 September 30, 2000 $250,000 December 31, 2000 $250,000 March 31, 2001 $250,000 June 30, 2001 $250,000 September 30, 2001 $250,000 December 31, 2001 $250,000 March 31, 2002 $250,000 June 30, 2002 $250,000 September 30, 2002 $250,000 December 31, 2002 $250,000 March 31, 2003 $250,000 June 30, 2003 $250,000 September 30, 2003 $250,000 31 December 31, 2003 $250,000 March 31, 2004 $250,000 June 30, 2004 $250,000 September 30, 2004 $250,000 December 31, 2004 $250,000 March 31, 2005 $250,000 June 30, 2005 $250,000 September 30, 2005 $250,000 December 31, 2005 $250,000 March 31, 2006 $250,000 June 30, 2006 $250,000 September 30, 2006 $250,000 December 31, 2006 $250,000 March 31, 2007 $61,250,000 (b) The Borrower shall repay Tranche D Loans on March 31, 2007. 5.4 Use of Proceeds of Tranche D Loans. The proceeds of the Tranche ---------------------------------- D Loans shall be utilized by the Borrower only (a) to finance the Transaction and (b) to pay any fees and expenses relating thereto. SECTION 6. AMOUNT AND TERMS OF REVOLVING CREDIT COMMITMENTS 6.1 Revolving Credit Commitments. (a) Subject to the terms and ---------------------------- conditions hereof, each Revolving Credit Lender severally agrees to make revolving credit loans ("Revolving Credit Loans") to the Borrower from time to ---------------------- time during the Commitment Period in an aggregate principal amount at any one time outstanding which, when added to such Revolving Credit Lender's Revolving Credit Commitment Percentage of the then outstanding L/C Obligations and Swing Line Loans, does not exceed the amount of such Revolving Credit Lender's Revolving Credit Commitment then in effect; provided that, after giving effect -------- to the making of such Revolving Credit Loan, the Aggregate Outstanding Extensions of Credit of all Revolving Credit Lenders shall not exceed the Aggregate Revolving Credit Commitment then in effect. During the Commitment Period the Borrower may use the Aggregate Revolving Credit Commitment by borrowing, prepaying the Revolving Credit Loans in whole or in part, and reborrowing, all in accordance with the terms and conditions hereof. (b) The Revolving Credit Loans may from time to time be (i) Eurodollar Loans, (ii) ABR Loans or (iii) a combination thereof, as determined by the Borrower and notified to the Administrative Agent in accordance with subsections 6.2 and 9.6, provided that (x) no Revolving Credit Loan shall be made as a -------- Eurodollar Loan after the day that is one month prior to the Termination Date and (y) any Revolving Credit Loans to be made on the Closing Date initially shall be made as ABR Loans. 6.2 Procedure for Revolving Credit Borrowing. The Borrower may ---------------------------------------- borrow under the Aggregate Revolving Credit Commitment during the Commitment Period on any Business Day, provided that the Borrower shall give the -------- Administrative Agent irrevocable notice (which notice must be received by the Administrative Agent prior to 12:00 Noon, New 32 York City time, (a) three Business Days prior to the requested Borrowing Date, if all or any part of the requested Revolving Credit Loans are to be initially Eurodollar Loans or (b) one Business Day prior to the requested Borrowing Date, otherwise), specifying (i) the amount to be borrowed, (ii) the requested Borrowing Date, (iii) whether the borrowing is to be of Eurodollar Loans, ABR Loans or a combination thereof and (iv) if the borrowing is to be entirely or partly of Eurodollar Loans, the amount of such Type of Loan and the length of the initial Interest Period therefor. Each borrowing under the Aggregate Revolving Credit Commitment (other than any borrowing of Swing Line Loans or of Revolving Credit Loans the proceeds of which are used to refund Swing Line Loans) shall be in an amount equal to (x) in the case of ABR Loans, $5,000,000 or a whole multiple of $1,000,000 in excess thereof (or, if the then Available Revolving Credit Commitments are less than $5,000,000, such lesser amount) and (y) in the case of Eurodollar Loans, $5,000,000 or a whole multiple of $1,000,000 in excess thereof. Upon receipt of any such notice from the Borrower, the Administrative Agent shall promptly notify each Revolving Credit Lender thereof. Each Revolving Credit Lender will make the amount of its pro rata share of each borrowing available to the Administrative Agent for the account of the Borrower at the office of the Administrative Agent specified in subsection 18.2 prior to 10:00 A.M., New York City time, on the Borrowing Date requested by the Borrower in funds immediately available to the Administrative Agent. Such borrowing will then be made available to the Borrower by the Administrative Agent crediting the account of the Borrower on the books of such office with the aggregate of the amounts made available to the Administrative Agent by the Revolving Credit Lenders and in like funds as received by the Administrative Agent. 6.3 Use of Proceeds of Revolving Credit Loans. The proceeds of the ----------------------------------------- Revolving Credit Loans shall be utilized by the Borrower only (a) to finance the Transaction, (b) to pay any fees and expenses relating thereto and (c) for other general corporate purposes; provided, however, that not more than $34,000,000 in -------- ------- the aggregate of Revolving Credit Loans may be utilized by the Borrower for the purposes described in clauses (a) and (b) above. SECTION 7. LETTERS OF CREDIT 7.1 L/C Commitment. (a) Subject to the terms and conditions hereof, -------------- the Issuing Lender, in reliance on the agreements of the other Revolving Credit Lenders set forth in subsection 7.4(a), agrees to issue letters of credit ("Letters of Credit") for the account of the Borrower on any Business Day during - ------------------- the Commitment Period in such form as may be approved from time to time by the Issuing Lender; provided that the Issuing Lender shall have no obligation to -------- issue any Letter of Credit if, after giving effect to such issuance, (i) the L/C Obligations would exceed the L/C Commitment, (ii) the Available Revolving Credit Commitment of any Revolving Credit Lender would be less than zero or (iii) the Aggregate Outstanding Extensions of Credit of all Revolving Credit Lenders would exceed the Aggregate Revolving Credit Commitment then in effect. (b) Each Letter of Credit shall (i) be denominated in Dollars, (ii) be (x) a standby letter of credit issued to support obligations of the Borrower or any of its Subsidiaries, contingent or otherwise, or to finance the working capital and business needs of the Borrower or any of its Subsidiaries in the ordinary course of business or (y) a commercial letter of credit issued in respect of the purchase of goods or services by the Borrower and its Subsidiaries in 33 the ordinary course of business and (iii) expire no later than the earlier of (x) the date that is 12 months after the date of its issuance and (y) five Business Days prior to the Termination Date; provided that any Letter -------- of Credit with an expiration date occurring up to twelve months after such Letter of Credit's date of issuance may be automatically renewable for subsequent 12-month periods (but in no event to a date which is later than five Business Days prior to the Termination Date). (c) Each Letter of Credit shall be subject to the Uniform Customs and, to the extent not inconsistent therewith, the laws of the State of New York. (d) The Issuing Lender shall not at any time be obligated to issue any Letter of Credit hereunder if such issuance would conflict with, or cause the Issuing Lender or any L/C Participant to exceed any limits imposed by, any applicable Requirement of Law. 7.2 Procedure for Issuance of Letters of Credit. The Borrower may ------------------------------------------- request that the Issuing Lender issue a Letter of Credit at any time during the Commitment Period by delivering to the Issuing Lender (with a copy to the Administrative Agent) at its address for notices specified herein an Application therefor, completed to the satisfaction of the Issuing Lender, and such other certificates, documents and other papers and information as the Issuing Lender may reasonably request. Upon receipt of any Application, the Issuing Lender will process such Application and the certificates, documents and other papers and information delivered to it in connection therewith in accordance with its customary procedures and shall promptly issue the Letter of Credit requested thereby (but in no event shall the Issuing Lender be required to issue any Letter of Credit earlier than three Business Days after its receipt of the Application therefor and all such other certificates, documents and other papers and information relating thereto) by issuing the original of such Letter of Credit to the beneficiary thereof or as otherwise may be agreed by the Issuing Lender and the Borrower. The Issuing Lender shall furnish a copy of such Letter of Credit to the Borrower and the Administrative Agent promptly following the issuance thereof. 7.3 Fees, Commissions and Other Charges. (a) The Borrower shall pay ----------------------------------- to the Administrative Agent, for the account of the Issuing Lender and the L/C Participants, a letter of credit fee with respect to each Letter of Credit, computed for the period from and including the date of issuance of such Letter of Credit to the expiration date of such Letter of Credit, at a rate per annum equal to the Applicable Margin then in effect for Revolving Credit Loans which are Eurodollar Loans (calculated on the basis of the actual number of days elapsed over a 365 day year or 366 day year, as the case may be) of the aggregate face amount of Letters of Credit outstanding. Such fee shall be payable to the Administrative Agent, for the ratable account of the Revolving Credit Lenders, in arrears on each L/C Fee Payment Date and on the Termination Date. (b) The Borrower shall pay to the Administrative Agent, for the account of the Issuing Lender, a fronting fee with respect to each Letter of Credit issued by such Issuing Lender, computed for the period from and including the date of issuance of such Letter of Credit to the expiration date of such Letter of Credit, at the rate to be agreed upon by the Borrower and the Issuing Lender (but in any event, not more than 0.25% per annum) of the aggregate face amount of Letters of Credit outstanding which were issued by such Issuing 34 Lender. Such fee shall be payable in arrears on each L/C Fee Payment Date and on the Termination Date. (c) In addition to the foregoing fees and commissions, the Borrower shall pay or reimburse the Issuing Lender for such normal and customary costs and expenses as are incurred or charged by such Issuing Lender in issuing, effecting payment under, amending or otherwise administering any Letter of Credit issued by it. (d) The Administrative Agent shall, promptly following its receipt thereof, distribute to the relevant Issuing Lender and the L/C Participants all fees and commissions received by the Administrative Agent for their respective accounts pursuant to this subsection. 7.4 L/C Participations. (a) The Issuing Lender irrevocably agrees ------------------ to grant and hereby grants to each L/C Participant, and, to induce the Issuing Lender to issue Letters of Credit hereunder, each L/C Participant irrevocably agrees to accept and purchase and hereby accepts and purchases from the Issuing Lender, on the terms and conditions hereinafter stated, for such L/C Participant's own account and risk an undivided interest equal to such L/C Participant's Revolving Credit Commitment Percentage from time to time in effect in the Issuing Lender's obligations and rights under each Letter of Credit issued hereunder and the amount of each draft paid by the Issuing Lender thereunder. Each L/C Participant unconditionally and irrevocably agrees with the Issuing Lender that, if a draft is paid under any Letter of Credit for which the Issuing Lender is not reimbursed in full by the Borrower in accordance with the terms of this Agreement, such L/C Participant shall pay to the Issuing Lender upon demand at the Issuing Lender's address for notices specified herein an amount equal to such L/C Participant's then Revolving Credit Commitment Percentage of the amount of such draft, or any part thereof, which is not so reimbursed; provided that, if such demand is made prior to 12:00 Noon, New York -------- City time, on a Business Day, such L/C Participant shall make such payment to the Issuing Lender prior to the end of such Business Day and otherwise such L/C Participant shall make such payment on the next succeeding Business Day. (b) If any amount required to be paid by any L/C Participant to the Issuing Lender pursuant to subsection 7.4(a) in respect of any unreimbursed portion of any payment made by the Issuing Lender under any Letter of Credit is paid to the Issuing Lender within three Business Days after the date such payment is due, such L/C Participant shall pay to the Issuing Lender on demand an amount equal to the product of (i) such amount, times (i) the daily average Federal Funds Effective Rate, as quoted by the Issuing Lender, during the period from and including the date such payment is required to the date on which such payment is immediately available to the Issuing Lender, times (ii) a fraction the numerator of which is the number of days that elapse during such period and the denominator of which is 360. If any such amount required to be paid by any L/C Participant pursuant to subsection 7.4(a) is not in fact made available to the Issuing Lender by such L/C Participant within three Business Days after the date such payment is due, the Issuing Lender shall be entitled to recover from such L/C Participant, on demand, such amount with interest thereon calculated from such due date at the rate per annum applicable to ABR Loans hereunder. A certificate of the Issuing Lender submitted to any L/C Participant with respect to any amounts owing under this subsection shall be conclusive in the absence of manifest error. 35 (c) Whenever, at any time after the Issuing Lender has made payment under any Letter of Credit issued by it and has received from any L/C Participant its pro rata share of such payment in accordance with subsection 7.4(a), the Issuing Lender receives any payment related to such Letter of Credit (whether directly from the Borrower or otherwise, including proceeds of collateral applied thereto by the Issuing Lender), or any payment of interest on account thereof, the Issuing Lender will, if such payment is received prior to 12:00 Noon, New York City time, on a Business Day, distribute to such L/C Participant its pro rata share thereof prior to the end of such Business Day and otherwise the Issuing Lender will distribute such payment on the next succeeding Business Day; provided, however, that in the event that any such payment -------- ------- received by the Issuing Lender and distributed to the L/C Participants shall be required to be returned by the Issuing Lender, each such L/C Participant shall return to the Issuing Lender the portion thereof previously distributed by the Issuing Lender to it. 7.5 Reimbursement Obligation of the Borrower. (a) Upon payment of a ---------------------------------------- draft under a Letter of Credit, the Borrower agrees to reimburse the Issuing Lender on the same Business Day on which it receives notice that a draft presented under any Letter of Credit issued by such Issuing Lender has been paid by such Issuing Lender, provided that such Issuing Lender provides such notice -------- to the Borrower prior to 11:00 A.M., New York City time, on such Business Day and otherwise the Borrower will reimburse the Issuing Lender on the next succeeding Business Day; provided, further, that the failure to provide such -------- ------- notice shall not affect the Borrower's absolute and unconditional obligation to reimburse the Issuing Lender for any draft paid under any Letter of Credit issued by it. Any such notice shall indicate the amount of (i) such draft so paid and (ii) any taxes, fees, charges or other costs or expenses reasonably incurred by the Issuing Lender in connection with such payment. Each such payment shall be made to the Issuing Lender at its address for notices specified herein in Dollars and in immediately available funds. (b) Interest shall be payable on any and all amounts remaining unpaid by the Borrower under this subsection from the date on which a draft presented under any Letter of Credit issued by such Issuing Lender is paid by such Issuing Lender until payment in full at the rate which would be payable on any outstanding Loans that are ABR Loans which were then overdue. (c) Each drawing under any Letter of Credit shall constitute a request by the Borrower to the Administrative Agent for a borrowing pursuant to subsection 6.2 of ABR Loans in the amount of the Reimbursement Obligations in respect of such drawing but without any requirement for compliance with the prior notice or minimum borrowing amount provisions of subsection 6.2 or the conditions set forth in subsection 11.2. The Borrowing Date with respect to such borrowing shall be the date of such drawing. Any such request or borrowing shall not relieve the Issuing Lender or L/C Participant of any liability resulting from the gross negligence or willful misconduct of the Issuing Lender or any L/C Participant, or otherwise affect any defenses or other right that the Borrower may have as a result of any such gross negligence or willful misconduct. 7.6 Obligations Absolute. (a) The Borrower's obligations under -------------------- subsection 7.5(a) shall be absolute and unconditional under any and all circumstances and irrespective of any set-off, counterclaim or defense to payment which the Borrower may have or have had against the Issuing Lender, any L/C Participant or any beneficiary of a Letter of Credit, 36 provided that this paragraph shall not relieve the Issuing Lender or any L/C - -------- Participant of any liability resulting from the gross negligence or willful misconduct of the Issuing Lender or any L/C Participant, or otherwise affect any defense or other right that the Borrower may have as a result of any such gross negligence or willful misconduct. (b) The Borrower also agrees with the Issuing Lender that the Issuing Lender shall not be responsible for, and the Borrower's Reimbursement Obligations under subsection 7.5(a) shall not be affected by, among other things, (i) the validity or genuineness of documents or of any endorsements thereon, even though such documents shall in fact prove to be invalid, fraudulent or forged, or (ii) any dispute between or among the Borrower and any beneficiary of any Letter of Credit or any other party to which such Letter of Credit may be transferred or (iii) any claims whatsoever of the Borrower against any beneficiary of such Letter of Credit or any such transferee, provided that -------- this paragraph shall not relieve the Issuing Lender of any liability resulting from the gross negligence or willful misconduct of the Issuing Lender, or otherwise affect any defense or other right that the Borrower may have as a result of any such gross negligence or willful misconduct. (c) Neither the Issuing Lender with respect to any Letter of Credit nor any L/C Participant with respect thereto shall be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with such Letter of Credit, except for errors or omissions caused by such Person's gross negligence or willful misconduct. (d) The Borrower agrees that any action taken or omitted by the Issuing Lender under or in connection with any Letter of Credit issued by it or the related drafts or documents, if done in the absence of gross negligence or willful misconduct and in accordance with the standards of care specified in the Uniform Commercial Code of the State of New York, shall be binding on the Borrower and shall not result in any liability of such Issuing Lender or any L/C Participant to the Borrower. 7.7 Letter of Credit Payments. If any draft shall be presented for ------------------------- payment under any Letter of Credit, the Issuing Lender shall promptly notify the Borrower of the date and amount thereof. The responsibility of the Issuing Lender thereof to the Borrower in connection with any such draft shall, in addition to any payment obligation expressly provided for in such Letter of Credit, be limited to determining that the documents (including each draft) delivered under such Letter of Credit in connection with such presentment are in conformity with such Letter of Credit, provided that this paragraph shall not -------- relieve the Issuing Lender of any liability resulting from the gross negligence or willful misconduct of the Issuing Lender, or otherwise affect any defense or other right that such Borrower may have as a result of any such gross negligence or willful misconduct. 7.8 Application. To the extent that any provision of any Application ----------- related to any Letter of Credit is inconsistent with the provisions of this Section 7, the provisions of this Section 7 shall apply. 37 SECTION 8. AMOUNT AND TERMS OF SWING LINE SUB-FACILITY 8.1 Swing Line Commitments. (a) Subject to the terms and conditions ---------------------- hereof, the Swing Line Lender agrees to make swing line loans (the "Swing Line ---------- Loans") to the Borrower on any Business Day from time to time during the - ----- Commitment Period in an aggregate principal amount not to exceed $10,000,000 at any one time outstanding; provided that, after giving effect to the making of -------- such Swing Line Loan, the Aggregate Outstanding Extensions of Credit of all Revolving Credit Lenders shall not exceed the Aggregate Revolving Credit Commitment then in effect. Amounts borrowed under this subsection 8.1 may be repaid and, to but excluding the Termination Date, reborrowed. (b) All Swing Line Loans shall be made and maintained as ABR Loans and shall not be entitled to be converted into Eurodollar Loans; provided that -------- nothing contained in this subsection 8.1 shall prohibit the conversion into Eurodollar Loans of any Revolving Credit Loans the proceeds of which are utilized to refund Swing Line Loans. 8.2 Procedure for Swing Line Loan Borrowing. The Borrower may borrow --------------------------------------- under the Swing Line Commitment during the Commitment Period on any Business Day; provided that the Borrower shall give the Administrative Agent irrevocable -------- Notice of Borrowing (which notice must be received by the Administrative Agent prior to 1:00 P.M., New York City time), on the requested borrowing date (which shall be a Business Day) specifying the amount of each requested Swing Line Loan, which shall be in a minimum amount of $500,000 or a multiple of $100,000 in excess thereof. Upon receipt of any such notice from the Borrower, the Administrative Agent shall promptly notify the Swing Line Lender thereof. The Swing Line Lender will make the proceeds of the Swing Line Loan available to the Administrative Agent by crediting the account of the Borrower with such proceeds in Dollars, at the office of the Administrative Agent in such manner as may be agreed upon by the Swing Line Lender and the Borrower prior to 3:30 P.M., New York City time, on the Borrowing Date requested by the Borrower. 8.3 Refunding of Swing Line Loans. (a) The Administrative Agent, at ----------------------------- any time in its sole and absolute discretion, may (or, upon the request of the Swing Line Lender, shall), on behalf of the Borrower (which hereby irrevocably directs the Administrative Agent to act on its behalf) request that each Revolving Credit Lender make a Revolving Credit Loan in an amount equal to such Revolving Credit Lender's Commitment Percentage of the then outstanding principal amount of Swing Line Loans (the "Refunded Swing Line Loans") on the ------------------------- date such notice is given (regardless of whether the Refunded Swing Line Loans comply with the minimum borrowing provisions of subsection 6.2). In the event that the Swing Line Lender makes its request for refunding of the Swing Line Loans, each Revolving Credit Lender shall make the proceeds of its Revolving Credit Loan available in immediately available funds to the Administrative Agent, for the benefit of the Swing Line Lender, at the office of the Administrative Agent specified in subsection 18.2 prior to 11:00 A.M., New York City time, on the first Business Day following such request (or, if such request is made prior to 10:00 A.M., New York City time, on any date, then the proceeds of such Revolving Credit Loans shall instead be so made available to the Administrative Agent prior to 2:00 P.M., New York City time, on the date of such request); provided that in the event that any of the events described in -------- subsection 16.1(a) or (b) shall have occurred and be continuing, the Revolving Credit Lenders shall not make such Revolving Credit Loans and the provisions of subsection 8.3(b) shall apply. 38 (b) If, prior to the making of a Revolving Credit Loan pursuant to subsection 8.3(a), one of the events described in subsection 16.1(a) or (b) shall have occurred and be continuing, each Revolving Credit Lender will, on the date such Revolving Credit Loan was to have been made, purchase from the Swing Line Lender an undivided participating interest in the Swing Line Loan to be refunded in an amount equal to its Revolving Credit Commitment Percentage of such Swing Line Loan to be refunded. Each Revolving Credit Lender will immediately transfer to the Administrative Agent, in immediately available funds, the amount of its participation. (c) Whenever, at any time after the Swing Line Lender has received from any Revolving Credit Lender such Lender's participating interest in a Swing Line Loan to be refunded pursuant to subsection 8.3(b), the Swing Line Lender receives any payment on account thereof, the Swing Line Lender will pay to the Administrative Agent for distribution to such Revolving Credit Lender its participating interest in such amount (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender's participating interest was outstanding and funded) in like funds as received; provided that in the event that such payment received by the Swing Line Lender - -------- is required to be returned, such Revolving Credit Lender will return to the Swing Line Lender any portion thereof previously distributed by the Swing Line Lender through the Administrative Agent to it in like funds as such payment is required to be returned by the Swing Line Lender. 8.4 Unconditional Obligation to Refund Swing Line Loans. (a) Each --------------------------------------------------- Revolving Lender's obligation to make Revolving Credit Loans and to purchase participating interests in accordance with subsections 8.3(a) and (b) above shall be absolute and unconditional and shall not be affected by any circumstance, including, without limitation, (i) any set-off, counterclaim, recoupment, defense or other right which such Revolving Credit Lender may have against the Swing Line Lender, the Borrower or any other Person for any reason whatsoever; (ii) the occurrence or continuance of any Default or Event of Default; (iii) any adverse change in the condition (financial or otherwise) of the Borrower or any other Person; (iv) any breach of this Agreement by the Borrower or any other Person; (v) any inability of the Borrower to satisfy the conditions precedent to borrowing set forth in this Agreement on the date upon which such Revolving Credit Loan is to be made or participating interest is to be purchased or (vi) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing. If any Revolving Credit Lender does not make available to the Administrative Agent the amount required pursuant to subsections 8.3(a) and (b) above, as the case may be, the Administrative Agent shall be entitled to recover such amount on demand from such Revolving Credit Lender, together with interest thereon for each day from the date of non- payment until such amount is paid in full at the Federal Funds Effective Rate for the first two Business Days and at the rate applicable to ABR Loans thereafter. 8.5 Use of Proceeds of Swing Line Loans. The proceeds of Swing Line ----------------------------------- Loans hereunder shall be used by the Borrower for any purpose for which the proceeds of Revolving Credit Loans may be used. 39 SECTION 9. PROVISIONS RELATING TO THE EXTENSIONS OF CREDIT; FEES AND PAYMENTS 9.1 Repayment of Loans; Evidence of Debt. (a) The Borrower hereby ------------------------------------ unconditionally promises to pay to the Administrative Agent for the account of each applicable Lender: (i) the then unpaid principal amount of each Revolving Credit Loan of each Revolving Credit Lender on the Termination Date (or such earlier date on which the Revolving Credit Loans become due and payable pursuant to Section 16); (ii) the then unpaid principal amount of the Tranche A Loan of each Tranche A Lender on the dates and in the amounts set forth in subsection 2.3 (or the then unpaid principal amount of such Tranche A Loan, on the date that the Tranche A Loans become due and payable pursuant to Section 16); (iii) the then unpaid principal amount of the Tranche B Loan of each Tranche B Lender on the dates and in the amounts set forth in subsection 3.3 (or the then unpaid principal amount of such Tranche B Loan, on the date that the Tranche B Loans become due and payable pursuant to Section 16); (iv) the then unpaid principal amount of the Tranche C Loan of each Tranche C Lender on the dates and in the amounts set forth in subsection 4.3 (or the then unpaid principal amount of such Tranche C Loan, on the date that the Tranche C Loans become due and payable pursuant to Section 16); (v) the then unpaid principal amount of the Tranche D Loan of each Tranche D Lender on the dates and in the amounts set forth in subsection 5.3 (or the then unpaid principal amount of such Tranche D Loan, on the date that the Tranche D Loans become due and payable pursuant to Section 16); and (vi) the then unpaid principal amount of the Swing Line Loans of the Swing Line Lender on the Termination Date (or such earlier date on which the Swing Line Loans become due and payable pursuant to Section 16). The Borrower hereby further agrees to pay interest on the unpaid principal amount of the Loans from time to time outstanding from the date hereof until payment in full thereof at the rates per annum, and on the dates, set forth in subsection 9.8. (b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing indebtedness of the Borrower to such Lender resulting from each Loan of such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement. (c) The Administrative Agent shall maintain the Register pursuant to subsection 18.6(d), and a subaccount therein for each Lender, in which shall be recorded (i) the amount of each Loan made hereunder, the Type thereof and each Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the 40 Borrower to each Lender hereunder and (iii) both the amount of any sum received by the Administrative Agent hereunder from the Borrower and each applicable Lender's share thereof. (d) The entries made in the Register and the accounts of each Lender maintained pursuant to subsection 9.1(b) shall, to the extent permitted by applicable law, be prima facie evidence of the existence and amounts of the ----- ----- obligations of the Borrower therein recorded; provided, however, that the -------- ------- failure of any Lender or the Administrative Agent to maintain the Register or any such account, or any error therein, shall not in any manner affect the obligation of the Borrower to repay (with applicable interest) the Loans made to the Borrower by such Lender in accordance with the terms of this Agreement. (e) The Borrower agrees that, upon request of any Lender through the Administrative Agent (which request is made on or prior to the date on which such Lender becomes a Lender), the Borrower will execute and deliver to such Lender a promissory note, substantially in the form of Exhibit A (a "Note"), ---- evidencing the Loans made by such Lender to the Borrower. 9.2 Commitment Fee; Other Fees. (a) The Borrower agrees to pay to -------------------------- the Administrative Agent for the account of each Revolving Credit Lender a commitment fee for the period from and including the first day of the Commitment Period to and including the Termination Date, computed at the rate per annum equal to the Applicable Commitment Fee Rate on the average daily amount of the Available Revolving Credit Commitment of such Revolving Credit Lender during the period for which payment is made. Such commitment fee shall be payable quarterly in arrears on the last Business Day of each March, June, September and December and on the Termination Date or such earlier date as the Aggregate Revolving Credit Commitment shall terminate as provided herein, commencing on the first of such dates to occur after the date hereof; provided that no -------- commitment fee shall be payable hereunder in the event that the Closing Date does not occur. (b) The Borrower shall pay (without duplication, including of any fee payable under subsection 9.2(a)) to the Administrative Agent, for its account and, as specified therein, for the account of the Lenders, the other fees required to be paid pursuant to (i) the Commitment Letter, dated December 19, 1997, among J.P. Morgan Securities, Inc., Morgan Guaranty Trust Company of New York, Credit Suisse First Boston and MergerCorp and (ii) the Fee Letter, dated December 19, 1997, among J.P. Morgan Securities, Inc., Morgan Guaranty Trust Company of New York, Credit Suisse First Boston and MergerCorp , in each case in the amounts and on the dates set forth therein. 9.3 Optional Prepayments. (a) The Borrower may at any time and from -------------------- time to time prepay the Loans, in whole or in part, without premium or penalty, upon at least three Business Days' (or, in the case of prepayments of ABR Loans, one Business Day's) irrevocable notice to the Administrative Agent (which notice must be received by the Administrative Agent prior to 12:00 Noon, New York City time, on the date upon which such notice is due), specifying whether such prepayment is to be applied to the Revolving Credit Loans or the other Loans hereunder and, in any event, the date and amount of prepayment and whether the prepayment is of Eurodollar Loans, ABR Loans or a combination thereof, and, if of a combination thereof, the amount allocable to each. Upon receipt of any such notice the Administrative Agent shall promptly notify each affected Lender thereof. If any such notice is 41 given, the amount specified in such notice shall be due and payable on the date specified therein, together with any amounts payable pursuant to subsection 9.15 and, except in the case of prepayments of Revolving Credit Loans which are ABR Loans and Swing Line Loans, accrued interest to such date on the amount prepaid. Amounts prepaid on account of the Term Loans may not be reborrowed. (b) Any partial prepayments of the Term Loans due pursuant to this subsection 9.3 shall be applied to repay the principal amounts outstanding under each of the Term Loan Facilities ratably among such Facilities (based upon the percentage which such Facility constitutes of the aggregate then outstanding principal amount of all Term Loans) and ratably among the installments owing under each such Facility (based upon the percentage which each installment of such Facility then constitutes of the aggregate principal amount then outstanding under such Facility); provided that: -------- (i) in lieu of paying all such installments ratably, the Borrower may (in its sole discretion) prepay any installments of the Term Loans which are due within 12 months following the date of prepayment ratably (based upon the percentage which each such installment then constitutes of all installments of the Term Loans due during such 12 month period); and (ii) each Tranche B Lender, Tranche C Lender and Tranche D Lender may (in its sole discretion) elect to decline any such prepayment pursuant to clause (i) and, if it so declines, the amount so declined shall instead be used to increase the amount applied to prepay the Term Loans of the non- declining Lenders under all Term Loan Facilities first, based upon the ----- method described in clause (i) of this proviso and second, based upon the ------ method described in this paragraph (b) prior to giving effect to this proviso; provided, however, that if the amount of the Borrower's -------- ------- desired prepayment exceeds the existing Term Loans of the non-declining Tranche B Lenders, Tranche C Lenders and Tranche D Lenders (the amount of such excess desired prepayment, the "Surplus Optional Prepayment Amount"), ---------------------------------- then, first, the Surplus Optional Prepayment Amount shall be applied to ----- prepay the Tranche A Loans (ratably among the remaining installments thereof); second, any remaining Surplus Optional Prepayment Amount shall be ------ applied to prepay the Term Loans of the declining Tranche B Lenders (ratably among the remaining installments thereof) until the Tranche B Term Loans are fully prepaid; third, any remaining Surplus Optional Prepayment ----- Amount shall be applied to prepay the Term Loans of the declining Tranche C Lenders (ratably among the remaining installments thereof) until the Tranche C Term Loans are fully prepaid; and fourth, any remaining Surplus ------ Optional Prepayment Amount shall be applied to prepay the Term Loans of the declining Tranche D Lenders (ratably among the remaining installments thereof). Partial prepayments of the Term Loans shall be in an aggregate principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof. (c) The Borrower may at any time and from time to time prepay, in whole or in part and without premium or penalty, any Swing Line Loans then owing by it on any Business Day; provided that such Borrower has given irrevocable -------- notice to the Administrative Agent not later than 1:00 P.M., New York City time, on the date of such prepayment. Partial prepayments 42 of Swing Line Loans shall be in an aggregate principal amount of $500,000 or a whole multiple in excess thereof (or, if less, the outstanding principal amount of the Swing Line Loans). (d) Notwithstanding the foregoing provisions of this subsection 9.3, any optional prepayment of the Tranche B Loans, the Tranche C Loans or the Tranche D Loans pursuant to this subsection 9.3 made on or prior to the date which is 18 months following the Closing Date shall be accompanied by a prepayment fee (for the ratable account of the Tranche B Lenders, Tranche C Lenders and Tranche D Lenders accepting such prepayment) in the amount equal to 1% of the aggregate principal amount so prepaid. 9.4 Optional Termination or Reduction of Aggregate Revolving Credit --------------------------------------------------------------- Commitment. The Borrower shall have the right, upon not less than five Business - ---------- Days' notice to the Administrative Agent, to terminate the Aggregate Revolving Credit Commitment or, from time to time, to reduce the amount thereof; provided -------- that no such termination or reduction shall be permitted if, after giving effect thereto and to any prepayments of the Revolving Credit Loans and Swing Line Loans made on the effective date thereof, the aggregate principal amount of the Revolving Credit Loans and Swing Line Loans then outstanding, when added to the then outstanding L/C Obligations, would exceed the Aggregate Revolving Credit Commitment then in effect. Any such reduction shall be in an amount equal to $5,000,000 or a whole multiple of $1,000,000 in excess thereof and shall reduce permanently the Aggregate Revolving Credit Commitment then in effect. 9.5 Mandatory Reduction of Commitments and Prepayments. (a) The -------------------------------------------------- Aggregate Revolving Credit Commitment shall terminate on the Termination Date and all amounts outstanding thereunder shall be due and payable. (b) If the Aggregate Outstanding Extensions of Credit of all Lenders shall at any time exceed the Aggregate Revolving Credit Commitment then in effect (including, without limitation, as a result of any permanent reduction of the Aggregate Revolving Credit Commitment pursuant to subsection 9.4 or this subsection 9.5), the Borrower shall immediately repay the amounts outstanding under the Aggregate Revolving Credit Commitment by the amount equal to such excess, with any such repayment being applied, first, to repay any then ----- outstanding Swing Line Loans, second, to repay any then outstanding Revolving ------ Credit Loans and, third, to cash collateralize the L/C Obligations in a manner ----- reasonably satisfactory to the Administrative Agent. (c) The Borrower shall, as promptly as is practicable (and, in any event, within one Business Day following the receipt thereof), repay the Loans and reduce the Commitments by the amount equal to the aggregate amount of Net Proceeds received from the incurrence by the Borrower or any of its Subsidiaries of any Indebtedness (excluding Indebtedness permitted pursuant to subsection 14.1). Any repayment of Loans and reduction of Commitments required by this subsection 9.5(c) shall be made in accordance with the provisions of subsection 9.5(f). (d) The Borrower shall repay the Loans and reduce the Commitments by the amount equal to the aggregate amount of Net Proceeds (minus any Reinvested Amount relating thereto) received from (i) the sale, transfer or other disposition by the Borrower or any of its Subsidiaries of any real or personal, tangible or intangible, property of the Borrower or such Subsidiary (including, without limitation, any Capital Stock of a Subsidiary of the 43 Borrower) to any Person (other than to the Borrower or any of its Subsidiaries) pursuant to subsection 14.5(h), (j) or (k) or (ii) the recovery by the Borrower or any of its Subsidiaries of amounts owing to it under property insurance policies if the Borrower and its Subsidiaries have not commenced replacement of the property on account of which such amounts were paid within one year of the later of the date of the casualty to, or condemnation of, such property or the receipt of such Net Proceeds; provided that, notwithstanding the foregoing, any -------- such repayment of the Loans or reduction of the Commitments pursuant to this subsection 9.5(d) shall only be required upon any such sale, transfer, other disposition or recovery to the extent the Net Proceeds received therefrom, when aggregated with the Net Proceeds received from all such sales, transfers, other dispositions or recoveries in the immediately preceding twelve-month period and minus all applicable Reinvested Amounts relating to all such Net Proceeds, exceed $5,000,000. The Borrower shall make any prepayment pursuant to this subsection 9.5(d) as promptly as practicable (and in any event, within three Business Days) following the date of receipt of any such Net Proceeds (except that if any such Net Proceeds are eligible to be reinvested in accordance with the definition of the term "Reinvested Amount" in subsection 1.1 and the Borrower has not elected to reinvest such proceeds, such prepayment shall be made on the earlier of (1) the date on which the certificate of a Responsible Officer of the Borrower to such effect is delivered to the Administrative Agent in accordance with such definition and (2) the last day of the period within which a certificate setting forth such election is required to be delivered in accordance with such definition)). (e) The Borrower shall repay the Loans and reduce the Commitments within one Business Day following delivery of the certificate referenced in subsection 12.2(a) (commencing with the certificate covering the fiscal year ending on March 31, 1999) by the amount equal to the Excess Cash Flow Recapture Amount for the fiscal year (or, in the case of the fiscal year ending March 31, 1999, the portion thereof commencing on the first day of the first full fiscal month after the Closing Date and ending on March 31, 1999) covered by such certificate, with any such repayment of Loans and reduction of Commitments being made in accordance with the provisions of subsection 9.5(f). (f) Any payments of the Loans and reductions of the Commitments made pursuant to subsection 9.5(c), (d) or (e) shall be applied, first, to the ----- prepayment of the Term Loans and, second, to reduce the Aggregate Revolving ------ Credit Commitment then in effect. For purposes of this subsection 9.5(f), any partial prepayment of the Term Loans shall be applied to repay the principal amounts outstanding under each of the Term Loan Facilities ratably among such Facilities (based upon the aggregate principal amount then outstanding thereunder) and ratably among the installments owing under each such Facility (based upon the aggregate then outstanding principal amount of each such installment); provided that: -------- (i) in lieu of paying all such installments ratably, the Borrower may (in its sole discretion) prepay any installments of the Term Loans which are due within 12 months following the date of prepayment ratably (based upon (x) in the case of prepayments due pursuant to subsection 9.5(c) or (d) with respect to each Term Loan Facility, the percentage which the aggregate then outstanding principal amount of Term Loans under such Term Loan Facility then constitutes of the aggregate then outstanding principal amount of all Term Loans under all Term Loan Facilities and (y) in the case of prepayments due pursuant to subsection 9.5(e), the percentage which each such 44 installment then constitutes of all installments of the Term Loans due during such 12 month period); and (ii) each Tranche B Lender, Tranche C Lender and Tranche D Lender may (in its sole discretion) elect to decline any such prepayment and, if it so declines, the amount so declined shall instead be used to increase the amount applied to prepay the Term Loans of the non-declining Lenders under all Term Loan Facilities first, based upon the method ----- described in clause (i) of this proviso and second, based upon the method ------ described in this paragraph (f) prior to giving effect to this proviso; provided, however, that if the amount of the Borrower's required prepayment -------- ------- exceeds the existing Term Loans of the non-declining Tranche B Lenders, Tranche C Lenders and Tranche D Lenders (the amount of such excess desired prepayment, the "Surplus Mandatory Prepayment Amount"), then, first, the ----------------------------------- ----- Surplus Mandatory Prepayment Amount shall be applied to prepay the Tranche A Loans (ratably among the remaining installments thereof); second, any ------ remaining Surplus Mandatory Prepayment Amount shall be applied to prepay the Term Loans of the declining Tranche B Lenders (ratably among the remaining installments thereof) until the Tranche B Term Loans are fully prepaid; third, any remaining Surplus Mandatory Prepayment Amount shall be ----- applied to prepay the Term Loans of the declining Tranche C Lenders (ratably among the remaining installments thereof) until the Tranche C Term Loans are fully prepaid; fourth, any remaining Surplus Mandatory Prepayment ------ Amount shall be applied to prepay the Term Loans of the declining Tranche D Lenders (ratably among the remaining installments thereof); and fifth, any ----- remaining Surplus Mandatory Prepayment Amount shall reduce the Aggregate Revolving Credit Commitment then in effect. Unless the Borrower otherwise elects, the application of prepayments made pursuant to this subsection 9.5 shall be made, first, to ABR Loans and, second, ----- ------ to Eurodollar Loans. (g) Notwithstanding the foregoing provisions of this subsection 9.5 (other than the provisions of subsection 9.5(e) and other than any such prepayment as a result of the sales or dispositions described in subsection 14.5(j) (as to which the provisions of this subsection 9.5(g) shall not apply)), any mandatory prepayment of the Tranche B Loans, the Tranche C Loans or the Tranche D Loans pursuant to this subsection 9.5 made on or prior to the date which is 18 months following the Closing Date shall be accompanied by a prepayment fee (for the ratable account of the Tranche B Lenders, the Tranche C Lenders and the Tranche D Lenders accepting such prepayment) in the amount equal to 1% of the aggregate principal amount so prepaid. 9.6 Conversion and Continuation Options. (a) The Borrower may elect ----------------------------------- from time to time to convert Eurodollar Loans to ABR Loans by delivering to the Administrative Agent an irrevocable Notice of Borrowing by 10:00 A.M., New York City time, at least one Business Day prior to the requested date of conversion; provided that any such conversion of Eurodollar Loans may only be made on the - -------- last day of an Interest Period with respect thereto. The Borrower may elect from time to time to convert ABR Loans to Eurodollar Loans by delivering to the Administrative Agent an irrevocable Notice of Borrowing by 10:00 A.M., New York City time, at least three Business Days' prior to the requested conversion date. Any such Notice of Borrowing with respect to a conversion to Eurodollar Loans shall specify the length of 45 the initial Interest Period or Interest Periods therefor. Upon receipt of any such Notice of Borrowing, the Administrative Agent shall promptly notify each Lender thereof. All or any part of outstanding Eurodollar Loans and ABR Loans may be converted as provided herein, provided that (i) no Loan may be converted -------- into a Eurodollar Loan when any Event of Default has occurred and is continuing and the Administrative Agent has or the Majority Term Lenders have determined that such a conversion is not appropriate and the Administrative Agent has given notice to the Borrower that no conversion may be made, (ii) no Revolving Credit Loan may be converted into a Eurodollar Loan after the date that is one month prior to the Termination Date and (iii) no Tranche A Loan or Tranche B Loan (as the case may be) may be converted into a Eurodollar Loan after the date that is one month prior to the date of the final installment of principal thereof. Notwithstanding anything to the contrary contained herein, Swing Line Loans shall at all times be maintained as ABR Loans and shall not be converted to Eurodollar Loans hereunder. (b) Any Eurodollar Loans may be continued as such upon the expiration of the then current Interest Period with respect thereto by the Borrower delivering to the Administrative Agent an irrevocable Notice of Borrowing, in accordance with the applicable provisions of the term "Interest Period" set forth in subsection 1.1, setting forth (among other things) the length of the next Interest Period to be applicable to such Loans, provided that (i) no Loan -------- may be continued as a Eurodollar Loan when any Event of Default has occurred and is continuing and the Administrative Agent has or the Majority Basic Lenders have determined that such a continuation is not appropriate and the Administrative Agent has given notice to the Borrower that no such continuations may be made, (ii) no Revolving Credit Loan may be continued as a Eurodollar Loan after the date that is one month prior to the Termination Date and (iii) no Term Loan may be continued as a Eurodollar Loan after the date that is one month prior to the date of the final installment of principal of such Term Loan and provided, further, that if the Borrower shall fail to give such notice or if - -------- ------- such continuation is not permitted such Loans shall be automatically converted to ABR Loans on the last day of such then expiring Interest Period. Upon receipt of any such Notice of Borrowing, the Administrative Agent shall promptly notify each Lender thereof. 9.7 Minimum Amounts and Maximum Number of Tranches. All borrowings, ---------------------------------------------- conversions and continuations of Loans hereunder and all selections of Interest Periods hereunder shall be in such amounts and be made pursuant to such elections so that, after giving effect thereto, the aggregate principal amount of the Loans comprising each Tranche of Eurodollar Loans shall be equal to $5,000,000 or a whole multiple of $1,000,000 in excess thereof. In no event shall there be more than 15 Eurodollar Tranches outstanding at any time. 9.8 Interest Rates and Payment Dates. (a) Each Eurodollar Loan -------------------------------- shall bear interest for each day during each Interest Period with respect thereto at a rate per annum equal to the Eurodollar Rate determined for such day plus the Applicable Margin with respect thereto in effect on such day. (b) Each ABR Loan (including, without limitation, each Swing Line Loan) shall bear interest at a rate per annum equal to the ABR plus the Applicable Margin with respect thereto in effect on such day. 46 (c) If all or a portion of (i) any principal of any Loan, (ii) any interest payable thereon, (iii) any commitment fee or (iv) any other amount payable hereunder shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), such overdue amount shall bear interest at a rate per annum which is (x) in the case of principal, the rate that would otherwise be applicable thereto pursuant to the foregoing provisions of this subsection plus 2% or (y) in the case of any such overdue interest, commitment fee or other amount, the rate described in paragraph (b) of this subsection plus 2%, in each case from the date of such non-payment until such overdue principal, interest, commitment fee or other amount is paid in full (after as well as before judgment). (d) Interest shall be payable in arrears on each Interest Payment Date, provided that interest accruing pursuant to paragraph (c) of this -------- subsection shall be payable from time to time on demand. (e) It is the intention of the parties hereto to comply strictly with applicable usury laws; accordingly, it is stipulated and agreed that the aggregate of all amounts which constitute interest under applicable usury laws, whether contracted for, charged, taken, reserved, or received, in connection with the indebtedness evidenced by this Agreement or any Notes, or any other document relating or referring hereto or thereto, now or hereafter existing, shall never exceed under any circumstance whatsoever the maximum amount of interest allowed by applicable usury laws. 9.9 Computation of Interest and Fees. (a) Commitment fees and, -------------------------------- whenever it is calculated on the basis of the Prime Rate, interest shall be calculated on the basis of a 365-(or 366-, as the case may be) day year for the actual days elapsed; and, otherwise, interest shall be calculated on the basis of a 360-day year for the actual days elapsed. The Administrative Agent shall as soon as practicable notify the Borrower and the affected Lenders of each determination of a Eurodollar Rate. Any change in the interest rate on a Loan resulting from a change in the ABR or the Eurocurrency Reserve Requirements shall become effective as of the opening of business on the day on which such change becomes effective and (ii) the Leverage Ratio of the Borrower and its Subsidiaries shall become effective as of the opening of business on the date upon which the Administrative Agent receives the financial statements required to be delivered pursuant to subsection 12.1 which evidence such change in the Leverage Ratio. The Administrative Agent shall as soon as practicable notify the Borrower and the affected Lenders of the effective date and the amount of each such change in interest rate. (b) Each determination of an interest rate by the Administrative Agent pursuant to any provision of this Agreement shall be conclusive and binding on the Borrower and the Lenders in the absence of manifest error. The Administrative Agent shall, at the request of the Borrower, deliver to the Borrower a statement showing the quotations used by the Administrative Agent in determining any interest rate pursuant to subsection 9.9(a). 9.10 Inability to Determine Interest Rate. If prior to the first day ------------------------------------ of any Interest Period the Administrative Agent shall have reasonably determined (which determination shall be conclusive and binding upon the Borrower) that, by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the Eurodollar Rate for such Interest Period, the Administrative Agent shall give telecopy or telephonic notice thereof to the Borrower and the affected Lenders as soon as practicable thereafter. If such 47 notice is given (x) any Eurodollar Loans requested to be made on the first day of such Interest Period shall be made as ABR Loans and (y) any Loans that were to have been converted to or continued as Eurodollar Loans on the first day of such Interest Period shall be converted to ABR Loans. Until such notice has been withdrawn by the Administrative Agent, no further Eurodollar Loans under such Commitments shall be made or continued as such, nor shall the Borrower have the right to convert Loans to Eurodollar Loans. 9.11 Pro Rata Treatment and Payments. (a) Each borrowing (other ------------------------------- than a borrowing of Swing Line Loans) by the Borrower from the Lenders hereunder, each payment by the Borrower on account of any commitment fee hereunder and any reduction of the Commitments of the Lenders shall be allocated by the Administrative Agent pro rata according to the respective relevant Commitment Percentages of the Lenders holding obligations in respect of which such amounts were paid. Except as otherwise contemplated by subsections 9.3(b) and 9.5(f), each payment (including each prepayment) by the Borrower on account of principal of and (subject to the provisions of subsection 9.12) interest on the Loans (other than a payment of Swing Line Loans) shall be allocated by the Administrative Agent pro rata according to the respective outstanding principal amounts of such Loans then held by the Lenders. Except as otherwise set forth herein, all payments (including prepayments) to be made by the Borrower hereunder, whether on account of principal, interest, fees or otherwise, shall be made without set off or counterclaim and shall be made prior to 1:00 P.M., New York City time, on the due date thereof to the Administrative Agent, for the account of the applicable Lenders, at the Administrative Agent's office specified in subsection 18.2, in Dollars and in immediately available funds. The Administrative Agent shall distribute such payments to the Lenders holding obligations on account of which such amounts were paid promptly upon receipt in like funds as received. Except as otherwise set forth herein, if any payment hereunder (other than payments on Eurodollar Loans) becomes due and payable on a day other than a Business Day, the maturity of such payment shall be extended to the next succeeding Business Day (and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension). If any payment on a Eurodollar Loan becomes due and payable on a day other than a Business Day, the maturity of such payment shall be extended to the next succeeding Business Day (and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension) unless the result of such extension would be to extend such payment into another calendar month, in which event such payment shall be made on the immediately preceding Business Day. (b) Unless the Administrative Agent shall have been notified in writing by any Lender prior to a borrowing that such Lender will not make the amount that would constitute its relevant Commitment Percentage of such borrowing available to the Administrative Agent, the Administrative Agent may assume that such Lender is making such amount available to the Administrative Agent, and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower in respect of such borrowing a corresponding amount. If such amount is not made available to the Administrative Agent by the required time on the Borrowing Date therefor, such Lender shall pay to the Administrative Agent, on demand, such amount with interest thereon at a rate equal to the daily average Federal Funds Effective Rate for the period until such Lender makes such amount immediately available to the Administrative Agent. A certificate of the Administrative Agent submitted to any Lender with respect to any amounts owing under this subsection 9.11 shall be conclusive in the absence of manifest error. If such Lender's relevant Commitment Percentage of such borrowing is not 48 made available to the Administrative Agent by such Lender within three Business Days of such Borrowing Date, the Administrative Agent shall notify the Borrower of the failure of such Lender to make such amount available to the Administrative Agent and the Administrative Agent shall also be entitled to recover such amount with interest thereon at the rate per annum applicable to ABR Loans hereunder, on demand, from the Borrower. (c) Notwithstanding anything to the contrary contained herein, in the event that the Administrative Agent shall make any payment to a Lender on account of amounts owing to such Lender by the Borrower hereunder and the Administrative Agent either (i) shall not receive the corresponding amount from the Borrower or (ii) shall be required to be return such amount to the Borrower, such Lender shall (upon the request of the Administrative Agent) promptly return to the Administrative Agent the amount of such payment. 9.12 Illegality. Notwithstanding any other provision herein, if the ---------- adoption of or any change in any Requirement of Law or in the interpretation or application thereof shall make it unlawful for any Lender to make or maintain Eurodollar Loans as contemplated by this Agreement ("Affected Eurodollar ------------------- Loans"), (a) such Lender shall promptly give written notice of such circumstances to the Borrower and the Administrative Agent (which notice shall be withdrawn whenever such circumstances no longer exist), (b) the commitment of such Lender hereunder to make Affected Eurodollar Loans, continue Affected Eurodollar Loans as such and convert ABR Loans to Affected Eurodollar Loans shall forthwith be cancelled and, until such time as it shall no longer be unlawful for such Lender to make or maintain such Affected Eurodollar Loans, such Lender shall then have a commitment only to make an ABR Loan when an Affected Eurodollar Loan is requested and (c) such Lender's Loans then outstanding as Affected Eurodollar Loans, if any, shall be converted automatically to ABR Loans on the respective last days of the then current Interest Periods with respect to such Loans or within such earlier period as required by law. If any such conversion of a Eurodollar Loan occurs on a day which is not the last day of the then current Interest Period with respect thereto, the Borrower shall pay to such Lender such amounts, if any, as may be required pursuant to subsection 9.15. 9.13 Requirements of Law. (a) If the adoption of or any change in ------------------- any Requirement of Law or in the interpretation or application thereof applicable to any Lender or compliance by any Lender with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority made subsequent to the date hereof (or, if later, the date on which such Lender becomes a Lender): (i) shall subject any Lender to any tax of any kind whatsoever with respect to any Letter of Credit, any Application or any Eurodollar Loan made by it or its obligation to make Eurodollar Loans or change the basis of taxation of payments to such Lender in respect thereof (except for Non-Excluded Taxes covered by subsection 9.14 (including Non-Excluded Taxes imposed solely by reason of any failure of such Lender to comply with its obligations under subsection 9.14(b)) and changes in taxes measured by or imposed upon the overall net income, or franchise taxes, or taxes measured by or imposed upon overall capital or net worth, or branch taxes (in the case of such capital, net worth or branch taxes, imposed in lieu of such net income tax), of such Lender or its applicable lending office, branch, or any affiliate thereof); 49 (ii) shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of such Lender which is not otherwise included in the determination of the Eurodollar Rate hereunder; or (iii) shall impose on such Lender any other condition excluding any tax of any kind whatsoever; and the result of any of the foregoing is to increase the cost to such Lender, by an amount which such Lender deems to be material, of making, converting into, continuing or maintaining Eurodollar Loans or issuing or participating in Letters of Credit or to reduce any amount receivable hereunder in respect thereof, then, in any such case, upon notice to the Borrower from such Lender, through the Administrative Agent, in accordance herewith, the Borrower shall promptly pay such Lender, upon its demand, any additional amount or amounts necessary to compensate such Lender for such increased cost or reduced amount receivable with respect to such Eurodollar Loans or Letters of Credit, provided -------- that, in any such case, the Borrower may elect to convert Eurodollar Loans made by such Lender hereunder to ABR Loans by giving the Administrative Agent at least one Business Day's notice of such election, in which case the Borrower shall promptly pay to such Lender, upon demand, without duplication, amounts theretofore required to be paid to such Lender pursuant to this subsection 9.13(a) and such amounts, if any, as may be required pursuant to subsection 9.15. If any Lender becomes entitled to claim any additional amounts pursuant to this subsection, it shall provide prompt notice thereof to the Borrower, through the Administrative Agent, certifying (x) that one of the events described in this paragraph (a) has occurred and describing in reasonable detail the nature of such event, (y) as to the increased cost or reduced amount resulting from such event and (z) as to the additional amount demanded by such Lender and a reasonably detailed explanation of the calculation thereof. (b) If any Lender shall have determined that the adoption of or any change in any Requirement of Law regarding capital adequacy or in the interpretation or application thereof or compliance by such Lender or any corporation controlling such Lender with any request or directive regarding capital adequacy (whether or not having the force of law) from any Governmental Authority, in each case, made subsequent to the Closing Date (or, if later, the date on which such Lender becomes a Lender) shall have the effect of reducing the rate of return on such Lender's or such corporation's capital as a consequence of such Lender's obligations hereunder or under any Letter of Credit to a level below that which such Lender or such corporation could have achieved but for such adoption, change or compliance (taking into consideration such Lender's or such corporation's policies with respect to capital adequacy) by an amount deemed by such Lender to be material, then from time to time, within ten Business Days after submission by such Lender to the Borrower (with a copy to the Administrative Agent) of a written request therefor certifying (x) that one of the events described in this paragraph (b) has occurred and describing in reasonable detail the nature of such event, (y) as to the reduction of the rate of return on capital resulting from such event and (z) as to the additional amount or amounts demanded by such Lender or corporation and a reasonably detailed explanation of the calculation thereof, the Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender or corporation for such reduction. 50 (c) Any certificate provided pursuant to (a) or (b) above as to any additional amounts payable pursuant to this subsection submitted by such Lender, through the Administrative Agent, to the Borrower shall be conclusive in the absence of manifest error. The agreements in this subsection shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder. 9.14 Taxes. (a) All payments made by the Borrower under this ----- Agreement and any Notes shall be made free and clear of, and without deduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority excluding taxes measured by or imposed upon the overall --------- net income of the Administrative Agent or any Lender or its applicable lending office, or any branch or affiliate of either, and all franchise taxes, branch taxes, taxes on doing business or taxes measured by or imposed upon the overall capital or net worth of the Administrative Agent or any Lender or its applicable lending office, or any branch or affiliate of either, in each case imposed: (i) by the jurisdiction under the laws of which the Administrative Agent or such Lender, applicable lending office, branch or affiliate is organized or is located, or in which the principal executive office of the Administrative Agent or any Lender is located, or any nation within which such jurisdiction is located or any political subdivision thereof; or (ii) by reason of any connection between the jurisdiction imposing such tax and the Administrative Agent or such Lender, applicable lending office, branch or affiliate other than a connection arising solely from the Administrative Agent or such Lender having executed, delivered or performed its obligations under, or received payment under or enforced, this Agreement or any Note. If any such non-excluded taxes, levies, imposts, duties, charges, fees deductions or withholdings ("Non-Excluded ------------ Taxes") are required to be withheld from any amounts payable to the - ----- Administrative Agent or any Lender hereunder or under any Note, the amounts so payable to the Administrative Agent or such Lender shall be increased to the extent necessary to yield to the Administrative Agent or such Lender (after payment of all Non-Excluded Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Agreement, provided, -------- however, that the Borrower shall be entitled to deduct and withhold any Non- - ------- Excluded Taxes and shall not be required to increase any such amounts payable to any Lender that is not organized under the laws of the United States of America or a state thereof if such Lender fails to comply with the requirements of paragraph (b) of this subsection. Whenever any Non-Excluded Taxes are payable by the Borrower, as promptly as possible thereafter the Borrower shall send to the Administrative Agent for its own account or for the account of such Lender, as the case may be, a certified copy of an original official receipt received by the Borrower showing payment thereof. If the Borrower fails to pay any Non- Excluded Taxes when due to the appropriate taxing authority or fails to remit to the Administrative Agent the required receipts or other required documentary evidence, the Borrower shall indemnify the Administrative Agent and the Lenders for any incremental taxes, interest or penalties that may become payable by the Administrative Agent or any Lender as a result of any such failure. The agreements in this subsection shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder. (b) Each Lender that is not incorporated under the laws of the United States of America or a state thereof shall: 51 (X)(i) on or before the date of any payment by the Borrower under this Agreement or any Note to such Lender, deliver to the Borrower and the Administrative Agent (A) two duly completed copies of United States Internal Revenue Service Form 1001 or 4224, or successor applicable form, as the case may be, and (B) an Internal Revenue Service Form W-8 or W-9, or successor applicable form, as the case may be; (ii) deliver to the Borrower and the Administrative Agent two further copies of any such form or certification on or before the date that any such form or certification expires or becomes obsolete and after the occurrence of any event requiring a change in the most recent form previously delivered by it to the Borrower; and (iii) obtain such extensions of time for filing and complete such forms or certifications as may reasonably be requested by the Borrower or the Administrative Agent; and (Y) in the case of any such Lender that is not a "bank" within the meaning of Section 881(c)(3)(A) of the Code, (i) represent to the Borrower (for the benefit of the Borrower and the Administrative Agent) that it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (ii) agree to furnish to the Borrower on or before the date of any payment by the Borrower, with a copy to the Administrative Agent, (A) a certificate substantially in the form of Exhibit G (any such certificate a "U.S. Tax -------- Compliance Certificate") and (B) two accurate and complete original signed ---------------------- copies of Internal Revenue Service Form W-8, or successor applicable form certifying to such Lender's legal entitlement at the date of such certificate to an exemption from U.S. withholding tax under the provisions of Section 881(c) of the Code with respect to payments to be made under this Agreement and any Notes (and to deliver to the Borrower and the Administrative Agent two further copies of such form on or before the date it expires or becomes obsolete and after the occurrence of any event requiring a change in the most recently provided form, and, if necessary, obtain any extensions of time reasonably requested by the Borrower or the Administrative Agent for filing and completing such forms), and (iii) agree, to the extent legally entitled to do so, upon reasonable request by the Borrower, to provide to the Borrower (for the benefit of the Borrower and the Administrative Agent) such other forms as may be reasonably required in order to establish the legal entitlement of such Lender to an exemption from withholding with respect to payments under this Agreement and any Notes; unless in any such case, any change in treaty, law or regulation has occurred after the date such Person becomes a Lender hereunder which renders all such forms inapplicable or which would prevent such Lender from duly completing and delivering any such form with respect to it and such Lender so advises the Borrower and the Administrative Agent. Such Lender shall certify (i) in the case of a Form 1001 or 4224, that it is entitled to receive payments under this Agreement and the Notes without deduction or withholding of any United States federal income taxes and (ii) in the case of a Form W-8 or W-9, that it is entitled to an exemption from United States backup withholding tax. Each Person that shall become a Lender or a Participant pursuant to subsection 18.6 shall, upon the effectiveness of the related transfer, be required to provide all of the forms and statements required pursuant to this subsection, provided that in -------- the case of a Participant such Participant shall furnish all such required forms and statements to the Lender from which the related participation shall have been purchased. 52 9.15 Indemnity. The Borrower agrees to indemnify each Lender and to --------- hold each Lender harmless from any loss or expense (other than through such Lender's gross negligence or willful misconduct) which such Lender may sustain or incur as a consequence of (a) default by the Borrower in making a borrowing of, conversion into or continuation of Eurodollar Loans after the Borrower has given a notice requesting the same in accordance with the provisions of this Agreement, (b) default by the Borrower in making any prepayment after the Borrower has given a notice thereof in accordance with the provisions of this Agreement or (c) the making of a prepayment of Eurodollar Loans on a day which is not the last day of an Interest Period with respect thereto. Such indemnification may include an amount equal to the excess, if any, of (i) the amount of interest which would have accrued on the amount so prepaid, or not so borrowed, converted or continued, for the period from the date of such prepayment or of such failure to borrow, convert or continue to the last day of such Interest Period (or, in the case of a failure to borrow, convert or continue, the Interest Period that would have commenced on the date of such failure) in each case at the applicable rate of interest for such Loans provided for herein (excluding, however, the Applicable Margin included therein, if any) over (ii) the amount of interest (as reasonably determined by such Lender) which would have accrued to such Lender on such amount by placing such amount on deposit for a comparable period with leading banks in the interbank eurodollar market. If any Lender becomes entitled to claim any amounts under the indemnity contained in this subsection 9.15, it shall provide prompt notice thereof to the Borrower, through the Administrative Agent, certifying (x) that one of the events described in clause (a), (b) or (c) has occurred and describing in reasonable detail the nature of such event, (y) as to the loss or expense sustained or incurred by such Lender as a consequence thereof and (z) as to the amount for which such Lender seeks indemnification hereunder and a reasonably detailed explanation of the calculation thereof. Such a certificate as to any indemnification pursuant to this subsection submitted by such Lender, through the Administrative Agent, to the Borrower shall be conclusive in the absence of manifest error. This covenant shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder. 9.16 Certain Fees. The Borrower agrees to pay to the Administrative ------------ Agent, for its own account, a non-refundable administration fee in an amount previously agreed to with the Administrative Agent in the Fee Letter, payable in the manner and on the dates set forth therein. 9.17 Certain Rules Relating to the Payment of Additional Amounts. ----------------------------------------------------------- (a) Upon the request, and at the expense, of the Borrower, each Lender to which the Borrower is required to pay any additional amount pursuant to subsection 9.13 or 9.14, and any Participant in respect of whose participation such payment is required, shall reasonably afford the Borrower the opportunity to contest, and reasonably cooperate with the Borrower in contesting, the imposition of any Non-Excluded Tax giving rise to such payment; provided that (i) such Lender -------- shall not be required to afford the Borrower the opportunity to so contest unless the Borrower shall have confirmed in writing to such Lender its obligation to pay such amounts pursuant to this Agreement and (ii) the Borrower shall reimburse such Lender for its reasonable attorneys' and accountants' fees and disbursements incurred in so cooperating with the Borrower in contesting the imposition of such Non-Excluded Tax. (b) If a Lender changes its applicable lending office (other than pursuant to paragraph (c) below) and the effect of the change, as of the date of the change, would be to 53 cause the Borrower to become obligated to pay any additional amount under subsection 9.13 or 9.14, the Borrower shall not be obligated to pay such additional amount. (c) If a condition or an event occurs which would, or would upon the passage of time or giving of notice, result in the payment of any additional amount to any Lender by the Borrower pursuant to subsection 9.13 or 9.14 such Lender shall take such steps as may reasonably be available to it and acceptable to the Borrower to mitigate the effects of such condition or event (which shall include efforts to rebook the Loans held by such Lender at another lending office, or through another branch or an affiliate, of such Lender); provided -------- that such Lender shall not be required to take any step that, in its reasonable judgment, would be materially disadvantageous to its business or operations or would require it to incur additional costs (unless the Borrower agrees to reimburse such Lender for the reasonable incremental out-of-pocket costs thereof). If a condition or event occurs which would, or would upon the passage of time or giving of notice, result in the payment of any additional amount to any Lender by the Borrower pursuant to subsection 9.13(a)(i) (i.e. increased costs for taxes) such Lender shall promptly notify the Borrower and the Administrative Agent; provided that a failure on the part of a Lender to notify -------- the Borrower shall not result in any liability to such Lender and shall not reduce the amount of any additional amounts payable hereunder to such Lender to the extent that such failure to notify the Borrower does not result in the payment of any additional amount by the Borrower pursuant to Section 9.13(a)(i) which payment could have been avoided or reduced had the Lender notified the Borrower in accordance with this subsection 9.17(c). (d) If the Borrower shall become obligated to pay additional amounts pursuant to subsection 9.13 or 9.14 and any affected Lender shall not have promptly taken steps necessary to avoid the need for payments under subsection 9.13 or 9.14, the Borrower shall have the right, for so long as such obligation remains, (x) with the assistance of the Administrative Agent, to seek one or more substitute Lenders reasonably satisfactory to the Administrative Agent and the Borrower to purchase the affected Loan, in whole or in part, at an aggregate price no less than such Loan's principal amount plus accrued interest, and assume the affected obligations under this Agreement, or (y) to the extent that no Default or Event of Default under Section 13 or subsections 16.2(a) or 16.3(a) shall have occurred of which the Borrower has actual knowledge and is then continuing, upon at least four Business Days irrevocable notice to the Administrative Agent, to prepay the affected Loan, in whole or in part, subject to subsection 9.15, without premium or penalty. In the case of the substitution of a Lender, the Borrower, the Administrative Agent, the affected Lender, and any substitute Lender shall execute and deliver an appropriately completed Assignment and Acceptance pursuant to subsection 18.6(c) to effect the assignment of rights to, and the assumption of obligations by, the substitute Lender. In the case of a prepayment of an affected Loan, the amount specified in the notice shall be due and payable on the date specified therein, together with any accrued interest to such date on the amount prepaid. In the case of each of the substitution of a Lender and of the prepayment of an affected Loan, the Borrower shall first pay the affected Lender any additional amounts owing under subsections 9.13, 9.14 and 9.15 (as well as any commitment fees and other amounts then due and owing to such Lender) prior to such substitution or prepayment. (e) If the Administrative Agent or any Lender receives a refund in respect of taxes for which the Borrower has made additional payments pursuant to subsection 9.13(a) or 54 9.14(a), the Administrative Agent or such Lender, as the case may be, shall promptly pay such refund (together with any interest with respect thereto received from the relevant taxing authority) to the Borrower, provided, -------- however, that the Borrower agrees promptly to return such refund (together with any interest with respect thereto due to the relevant taxing authority) (free of all Non-Excluded Taxes) to the Administrative Agent or the applicable Lender, as the case may be, upon receipt of a notice that such refund is required to be repaid to the relevant taxing authority. Notwithstanding anything to the contrary contained in this clause (e), no Lender shall have any obligation to disclose to the Borrower any of such Lender's books, records or tax filings. (f) For the purposes of subsections 9.13 and 9.14, a change in treaty, law, rule or regulation shall not include the ratification or entry into force of the income tax treaty between Luxembourg and the United States of America. (g) The obligations of a Lender or Participant under this subsection 9.17 shall survive the termination of this Agreement and the payment of the Loans and all amounts payable hereunder. SECTION 10. REPRESENTATIONS AND WARRANTIES To induce the Administrative Agent, each Issuing Lender and the Lenders to enter into this Agreement and to make the Loans and issue or participate in the Letters of Credit, the Borrower hereby represents and warrants to the Administrative Agent, each Issuing Lender and each Lender that: 10.1 Financial Condition. (a) The unaudited pro forma consolidated ------------------- --- ----- balance sheet of the Borrower and its consolidated Subsidiaries as at December 31, 1997 (including the notes thereto) (the "Pro Forma Balance Sheet"), copies ----------------------- of which have heretofore been furnished to each Lender, has been prepared giving effect (as if such events had occurred on such date) to (i) the consummation of the Transaction on the Closing Date, (ii) the Loans to be made and the Senior Subordinated Notes to be issued on the Closing Date and the use of proceeds thereof and (iii) the payment of estimated fees, expenses and financing costs in connection with the foregoing. The Pro Forma Balance Sheet has been prepared based on the good faith assumptions of the Borrower as of the date of delivery thereof, and based on such assumptions presents fairly in all material respects on a pro forma basis the estimated financial position of Borrower and its --- ----- consolidated Subsidiaries as at December 31, 1997, assuming that the events specified in the preceding sentence had actually occurred at such date. (b) The audited consolidated balance sheets of the Guarantor and its Subsidiaries as at March 31, 1996 and March 31, 1997, and the related consolidated statements of income and of cash flows for the fiscal years ended on such dates, reported on by and accompanied by an unqualified report from Coopers & Lybrand L.L.P., present fairly, in all material respects, the consolidated financial condition of the Guarantor and its Subsidiaries as at such date, and the consolidated results of its operations and its consolidated cash flows for the respective fiscal years then ended. The unaudited consolidated balance sheet of the Guarantor and its Subsidiaries as at December 31, 1997, and the related unaudited consolidated statements of income and cash flows for the nine-month period ended on such date, on the 55 basis disclosed in the footnotes to such financial statements, present fairly, in all material respects, the consolidated financial condition of the Guarantor and its Subsidiaries as at such date, and the consolidated results of its operations and its consolidated cash flows for the nine-month period then ended (subject to the omission of certain footnotes and normal year-end audit and other adjustments). All such financial statements, including the related schedules and notes thereto, have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as approved by a Responsible Officer, and disclosed in any such schedules and notes, and except that such unaudited financial statements do not contain certain footnotes). All material Guarantee Obligations, material contingent liabilities and liabilities for taxes, or all material long-term leases or unusual forward or long-term commitments, including, without limitation, any interest rate or foreign currency swap or exchange transaction or other obligation in respect of derivatives, which according to GAAP must be reflected in such financial statements or the notes thereto are so reflected. During the period from December 31, 1997 to and including the date hereof there has been no disposition by the Guarantor or any of its Subsidiaries of any business or property that would be material to the Guarantor and its Subsidiaries taken as a whole, other than any such disposition which is reflected in the foregoing financial statements or in the notes thereto, or which has otherwise been disclosed in writing to the Lenders on or prior to the Closing Date, or which is pursuant to the Recapitalization of the business and properties of the Guarantor and its Subsidiaries. 10.2 No Change. Since March 31, 1997, there has been no development --------- or event relating to or affecting any Credit Party which has had or would reasonably be expected to have a Material Adverse Effect (after giving effect to the Transaction and the transactions related thereto). 10.3 Corporate Existence; Compliance with Law. Each of the Borrower ---------------------------------------- and its Active Subsidiaries (a) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (b) has the corporate or other organizational power and authority, and the legal right, to own and operate its property, to lease the property it operates as lessee and to conduct the business in which it is currently engaged, except to the extent that the failure to have such legal right would not be reasonably expected to have a Material Adverse Effect, (c) is duly qualified as a foreign entity and in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification, other than in such jurisdictions where the failure to be so qualified and in good standing would not be reasonably expected to have a Material Adverse Effect and (d) is in compliance with all Requirements of Law except to the extent that the failure to comply therewith would not, in the aggregate, reasonably be expected to have a Material Adverse Effect. 10.4 Corporate Power; Authorization; Enforceable Obligations. (a) ------------------------------------------------------- The Borrower and each other Credit Party has the corporate or other organizational power and authority, and the legal right, to make, deliver and perform the Credit Documents to which it is a party and, in the case of the Borrower, to borrow hereunder and has taken all necessary corporate or other organizational action to authorize the execution, delivery and performance of the Credit Documents to which it is a party and, in the case of the Borrower, the borrowings on the terms and conditions of this Agreement and any Notes or Applications. No consent or authorization of, filing with, notice to or other similar act by or in respect of, any Governmental Authority or any other Person is required to be obtained or made by or on behalf of any Credit 56 Party or any other Subsidiary of the Guarantor in connection with the borrowings hereunder or with the execution, delivery, performance, validity or enforceability of the Credit Documents to which the Borrower and each other Credit Party is a party, except for (i) consents, authorizations, notices and filings described in Schedule 10.4(a), all of which have been obtained or made or have the status described therein, (ii) filings to perfect the Liens created by the Security Documents, (iii) filings pursuant to the Assignment of Claims Act of 1940, as amended (31 U.S.C. (S) 3737 et seq.), in respect of Accounts of the Borrower and its Subsidiaries the obligor in respect of which is the United States of America or any department, agency or instrumentality thereof and (iv) consents, authorizations, notices and filings which the failure to obtain or make would not reasonably be expected to have a Material Adverse Effect. This Agreement has been, and each other Credit Document to which it is a party will be, duly executed and delivered on behalf of the Borrower. This Agreement constitutes, and each other Credit Document to which it is a party when executed and delivered will constitute, a legal, valid and binding obligation of the Borrower enforceable against the Borrower in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. (b) This Agreement has been, and each of the other Credit Documents and any other agreement to be entered into by any Credit Party pursuant hereto will be, duly executed and delivered on behalf of such Credit Party that is party thereto. This Agreement constitutes, and each of the other Credit Documents and any other agreement to be entered into by any Credit Party pursuant hereto will constitute upon execution and delivery, the legal, valid and binding obligation of such Credit Party, enforceable against such Credit Party in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium, or similar laws relating to or affecting creditors' rights generally and by general equitable principles (regardless of whether enforcement is sought in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. 10.5 No Legal Bar. The execution, delivery and performance of each ------------ Credit Document by each Credit Party party thereto, the incurrence or issuance of and use of the proceeds of the Loans and of drawings under the Letters of Credit by the Borrower and the consummation on the Closing Date of the other transactions contemplated by the Credit Documents (a) will not violate any Requirement of Law or any Contractual Obligation applicable to or binding upon the Borrower, any Subsidiary of the Borrower or any of their respective properties or assets in any respect that would reasonably be expected to have a Material Adverse Effect and (b) will not result in the creation or imposition of any Lien on any of their properties or assets pursuant to any Requirement of Law applicable to it, as the case may be, or any of its Contractual Obligations, except for the Liens arising under the Security Documents or permitted under subsection 14.2. 10.6 No Material Litigation. Except as disclosed on Schedule 10.6, ---------------------- no litigation by, investigation by, or proceeding of or before any arbitrator or any Governmental Authority is pending or, to the knowledge of the Borrower, threatened by or against the Borrower or any of its Subsidiaries, or against any of its or their respective properties or revenues (including after giving effect to the Transaction), which (a) is so pending or threatened at any time on or prior to the Closing Date and relates to any Credit Document, the Loans made hereunder, the 57 use of proceeds thereof, or any drawings under a Letter of Credit and the other transactions contemplated hereby or (b) would reasonably be expected to have a Material Adverse Effect. 10.7 No Default. Neither the Borrower nor any of its Subsidiaries is ---------- in default under or with respect to any of its Contractual Obligations in any respect which would reasonably be expected to have a Material Adverse Effect. No Default or Event of Default has occurred and is continuing. 10.8 Ownership of Property; Liens. Each of the Borrower and its ---------------------------- Subsidiaries has good record and marketable title in fee simple to, or a valid leasehold interest in, all its material real property, and good title to, or a valid leasehold interest in, all its other material property, and none of such property is subject to any Lien, except for Liens permitted by subsection 14.2. 10.9 Intellectual Property. The Borrower and each of its --------------------- Subsidiaries owns, or is licensed to use (or otherwise has the legal right), all United States trademarks, tradenames, copyrights, technology, know-how and processes necessary for the conduct of its business substantially as currently conducted except for those the failure to own or license (or otherwise have the legal right to use) which would not reasonably be expected to have a Material Adverse Effect (the "Intellectual Property"). Except as set forth on Schedule --------------------- 10.9 no claim has been asserted and is pending by any Person challenging or questioning the use of any such Intellectual Property or the validity or effectiveness of any such Intellectual Property, nor does the Borrower know of any valid basis for any such claim and to the knowledge of the Borrower, the use of such Intellectual Property by the Borrower and its Subsidiaries does not infringe on the rights of any Person, except for such claims and infringements that, in the aggregate, would not reasonably be expected to have a Material Adverse Effect. 10.10 No Burdensome Restrictions. Except as previously disclosed to -------------------------- the Lenders in writing prior to the Closing Date, no Requirement of Law applicable to or Contractual Obligation of the Borrower or any of its Subsidiaries would reasonably be expected to have a Material Adverse Effect. 10.11 Taxes. Each of the Borrower and its Subsidiaries has filed or ----- caused to be filed all United States federal income tax returns and all other material tax returns which, to the knowledge of the Borrower, are required to be filed and has paid all taxes shown to be due and payable on said returns or on any assessments made against it or any of its property and all other taxes, fees or other charges imposed on it or any of its property by any Governmental Authority (other than any (i) taxes, fees or other charges with respect to which the failure to pay, in the aggregate, would not have a Material Adverse Effect or (ii) taxes, fees or other charges the amount or validity of which are currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided on the books of the Borrower or its Subsidiaries, as the case may be); other than as disclosed on Schedule 10.11, no tax Lien has been filed, and, to the knowledge of the Borrower, no claim is being asserted, with respect to any such tax, fee or other charge. 10.12 Federal Regulations. No part of the proceeds of any Loans will ------------------- be used for "purchasing" or "carrying" any "margin stock" within the respective meanings of each of the quoted terms under Regulation G or Regulation U of the Board of Governors of the Federal 58 Reserve System as now and from time to time hereafter in effect. If requested by any Lender or the Administrative Agent, the Borrower will furnish to the Administrative Agent and each Lender a statement to the foregoing effect in conformity with the requirements of FR Form G-1 or FR Form U-1 referred to in said Regulation G or Regulation U, as the case may be. 10.13 ERISA. During the five year period prior to each date as of ----- which this representation is made, or deemed made, with respect to any Plan (or, with respect to (vi) or (viii) below, as of the date such representation is made or deemed made), none of the following events or conditions, either individually or in the aggregate, has resulted or is reasonably likely to result in a liability to Holding, the Borrower or any of its Subsidiaries which would be reasonably expected to have a Material Adverse Effect: (i) a Reportable Event; (ii) an "accumulated funding deficiency" (within the meaning of Section 412 of the Code or Section 302 of ERISA); (iii) any material noncompliance with the applicable provisions of ERISA or the Code; (iv) a termination of a Single Employer Plan (other than a standard termination pursuant to Section 4041(b) of ERISA); (v) a Lien in favor of the PBGC or a Plan; (vi) Underfunding with respect to any Single Employer Plan; (vii) a complete or partial withdrawal from any Multiemployer Plan by Holding, the Borrower or any Commonly Controlled Entity; (viii) any liability of Holding, the Borrower or any Commonly Controlled Entity under ERISA if Holding, the Borrower or any such Commonly Controlled Entity were to withdraw completely from all Multiemployer Plans as of the annual valuation date most closely preceding the date on which this representation is made or deemed made; (ix) the Reorganization or Insolvency of any Multiemployer Plan; and (x) an event or condition with respect to which Holding, the Borrower or any Commonly Controlled Entity has incurred or could incur any liability in respect of a Former Plan. 10.14 Investment Company Act; Other Regulations. The Borrower is not ----------------------------------------- an "investment company", or a company "controlled" by an "investment company" required to register as such under the Investment Company Act of 1940, as amended, within the meaning of such act. The Borrower is not subject to regulation under any Federal or State statute or regulation (other than Regulation X of the Board of Governors of the Federal Reserve System) which limits its ability to incur Indebtedness. 10.15 Subsidiaries. On the Closing Date, the Subsidiaries of the ------------ Borrower and their jurisdiction of incorporation shall be as set forth on Schedule 10.15. 10.16 Environmental Matters. Other than exceptions to any of the --------------------- following that would not, individually or in the aggregate, reasonably be expected to result in the payment of a Material Environmental Amount: (a) the facilities and properties owned, leased or operated by the Borrower or any of its Subsidiaries (the "Properties") do not contain any ---------- Materials of Environmental Concern in amounts or concentrations which (i) constitute a violation of, or (ii) would reasonably be expected to give rise to liability on the part of the Borrower or any of its Subsidiaries under, any applicable Environmental Law. (b) the Properties and all operations at the Properties are in compliance, and have in the last five years been in compliance, in all material respects with all applicable Environmental Laws, and there is no contamination at, under or about the Properties or 59 violation of any applicable Environmental Law with respect to the Properties or the business operated by the Borrower or any of its Subsidiaries (the "Business") which would materially interfere with the -------- continued operation of the Properties. (c) neither the Borrower nor any of its Subsidiaries has received any written notice of violation, alleged violation, non-compliance, liability or potential liability regarding environmental matters or compliance with applicable Environmental Laws with regard to any of the Properties or the Business, nor does the Borrower have knowledge or reason to believe that any such notice will be received or is being threatened. (d) Materials of Environmental Concern have not been transported or disposed of from the Properties, in violation of, or in a manner or to a location which would reasonably be expected to give rise to liability on the part of the Borrower or any of its Subsidiaries under, any applicable Environmental Law, nor have any Materials of Environmental Concern been generated, treated, stored or disposed of at, on or under any of the Properties, in violation of, or in a manner that would reasonably be expected to give rise to liability on the part of the Borrower or any of its Subsidiaries under, any applicable Environmental Law. (e) no judicial proceeding or governmental or administrative action is pending or, to the knowledge of the Borrower, threatened, under any applicable Environmental Law to which the Borrower or any Subsidiary is or will be named as a party with respect to the Properties or the Business, nor are there any consent decrees or other decrees, consent orders, administrative orders or other orders, or other administrative or judicial requirements outstanding under any applicable Environmental Law with respect to the Properties or the Business. (f) there has been no release or threat of release of Materials of Environmental Concern at or from the Properties, or arising from or related to the operations of the Borrower or any Subsidiary in connection with the Properties or otherwise in connection with the Business, in violation of or in amounts or in a manner that would reasonably be expected to give rise to liability on the part of the Borrower or any of its Subsidiaries under applicable Environmental Laws. (g) Neither the Borrower nor any of its Subsidiaries has assumed or retained, by contract or, to its knowledge, operation of law, any known or suspected liabilities of any kind, fixed or contingent, as a result of any violation or breach of applicable Environmental Law or with respect to any contamination by any Materials of Environmental Concern. 10.17 Collateral Documents. Upon execution and delivery thereof by -------------------- the parties thereto, the Collateral Agreement will be effective to create (to the extent described therein) in favor of the Administrative Agent, for the ratable benefit of the Lenders, a legal, valid and enforceable security interest in the Collateral described therein, except as may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith 60 and fair dealing. When the actions specified in Schedule 9 to the Collateral Agreement have been duly taken, the security interests granted pursuant thereto shall constitute (to the extent described therein) a perfected first lien on, and security interest in, all right, title and interest of each pledgor party thereto in the Collateral described therein with respect to such pledgor. 10.18 Accuracy and Completeness of Information. The factual ---------------------------------------- statements contained in the financial statements referred to in subsection 10.1(a) and (b), the Credit Documents (including the schedules thereto, but excluding any statements by the Administrative Agent or any Lender) and any other certificates or documents furnished by or on behalf of Holding or any of its Subsidiaries to the Administrative Agent or the Lenders from time to time in connection with this Agreement, taken as a whole, did not (as of the Closing Date, to the best knowledge of the Borrower, contain any material misstatement of fact or omit to state a material fact necessary in order to make the statements contained therein, in light of the circumstances in which the same were made, not materially misleading in their presentation of the Transaction or the other transactions contemplated hereby or by the other Transaction Documents or of the Borrower and its Subsidiaries taken as a whole; all except as otherwise qualified herein or therein, and such knowledge qualification being given only with respect to factual statements made by Persons other than the Borrower or any of its Subsidiaries. It is understood that no representation or warranty is made concerning any forecasts, estimates, pro forma information, --- ----- projections and statements as to anticipated future performance or conditions, and the assumptions on which they were based, contained in any such financial statements, certificates or documents except that as of the date such forecasts, estimates, pro forma information, projections and statements were generated, (i) --- ----- such forecasts, estimates, pro forma information, projections and statements --- ----- were based on the good faith assumptions of the management of Holding and (ii) such assumptions were believed by such management to be reasonable. Such forecasts, estimates, pro forma information and statements, and the assumptions --- ----- on which they were based, may or may not prove to be correct. 10.19 Solvency. As of the Closing Date, immediately prior to and -------- after giving effect to the Transaction and the incurrence of all Indebtedness and obligations being incurred in connection herewith and therewith and after giving effect to the guarantee of Holding, guaranteeing the obligations of Newco (the "TTC Guarantee"), each Credit Party will be, Solvent. ------------- 10.20 Senior Indebtedness. The monetary obligations of the Guarantor ------------------- and Newco under this Agreement constitute "Senior Indebtedness" of the Borrower under and as defined in the Senior Subordinated Note Indenture. SECTION 11. CONDITIONS PRECEDENT 11.1 Conditions to Initial Loans. The agreement of each Lender to --------------------------- make the initial Loans and other extensions of credit requested to be made by it is subject to the satisfaction or waiver immediately prior to or concurrently with the making of such Loan or other extension of credit, of the following conditions precedent: 61 (a) Credit Documents. The Administrative Agent shall have received ---------------- (i) this Agreement, executed and delivered by a duly authorized officer of the Borrower, (ii) the Collateral Agreement and (iii) each of the Foreign Pledge Agreements, if any, executed and delivered by a duly authorized officer of each Credit Party thereto. (b) Related Agreements. The Administrative Agent shall have ------------------ received, with a copy for each Lender, complete and correct copies, certified as to authenticity by the Borrower, of each of (i) the Merger Agreement, (ii) the Senior Subordinated Note Indenture and (iii) such other documents or instruments as may be reasonably requested by the Administrative Agent. (c) Corporate Proceedings of the Borrower. The Administrative Agent ------------------------------------- shall have received, with a photocopy for each Lender, a copy of the resolutions, in form and substance reasonably satisfactory to the Administrative Agent, of the Board of Directors or comparable body of the Borrower authorizing (i) the execution, delivery and performance of this Agreement and the other Credit Documents to which it is a party, (ii) the borrowings contemplated hereunder and (iii) the granting by it of Liens pursuant to the Collateral Agreement, certified by the Secretary or an Assistant Secretary of the Borrower as of the Closing Date, which certificate shall be in form and substance reasonably satisfactory to the Administrative Agent and shall state that the resolutions thereby certified have not been amended, modified, revoked or rescinded except as any later such resolution may modify any earlier such resolution. (d) Borrower Incumbency Certificate. The Administrative Agent shall ------------------------------- have received, with a photocopy for each Lender, a Certificate of the Borrower, dated the Closing Date, as to the incumbency and signature of the officers of the Borrower executing any Credit Document reasonably satisfactory in form and substance to the Administrative Agent, executed by a Responsible Officer and the Secretary or any Assistant Secretary of the Borrower. (e) Corporate Proceedings of Subsidiaries. The Administrative Agent ------------------------------------- shall have received, with a photocopy for each Lender, a copy of the resolutions, in form and substance reasonably satisfactory to the Administrative Agent, of the Board of Directors of each Subsidiary of the Borrower which is a party to a Credit Document authorizing (i) the execution, delivery and performance of the Credit Documents to which it is a party and (ii) the granting by it of Liens pursuant to the Collateral Agreement, certified by the Secretary or an Assistant Secretary of each such Subsidiary as of the Closing Date, which certificate shall be in form and substance reasonably satisfactory to the Administrative Agent and shall state that the resolutions thereby certified have not been amended, modified, revoked or rescinded except as any later such resolution may modify any earlier such resolution. (f) Subsidiary Incumbency Certificates. The Administrative Agent ---------------------------------- shall have received, with a photocopy for each Lender, a certificate of each Subsidiary of the Borrower which is a Credit Party, dated the Closing Date, as to the incumbency and signature of the officers of such Subsidiaries executing any Credit Document, reasonably satisfactory in form and substance to the Administrative Agent, executed by 62 a Responsible Officer and the Secretary or any Assistant Secretary of each such Subsidiary. (g) Corporate Documents. The Administrative Agent shall have ------------------- received, with a photocopy for each Lender, complete and correct copies of the certificate of incorporation and by-laws (or analogous documents) of each Credit Party, certified as of the Closing Date as complete and correct copies thereof by the Secretary or an Assistant Secretary of such Credit Party. (h) Consents, Licenses and Approvals. The Administrative Agent shall -------------------------------- have received, with a photocopy for each Lender, a certificate of a Responsible Officer of each of the Guarantor and the Borrower stating that all consents, authorizations and filings referred to in Schedule 10.4(a) are in full force and effect or have the status described therein, and the Administrative Agent shall have received evidence thereof reasonably satisfactory to it. (i) Fees. The Administrative Agent shall have received the fees to ---- be received on the Closing Date referred to in subsection 9.16. (j) Legal Opinions. The Administrative Agent shall have received, -------------- with a photocopy counterpart for each Lender, the following executed legal opinions: (i) the executed legal opinion of Hale & Dorr, counsel to the Borrower and the other Credit Parties, substantially in the form of Exhibit C-1; (ii) the executed legal opinion of Debevoise & Plimpton, special New York counsel to the Borrower and the other Credit Parties, substantially in the form of Exhibit C-2; and (iii) the executed legal opinion of Mark V.B. Tremallo, Esq., internal counsel to Holding, substantially in the form of Exhibit C-3. Each such legal opinion shall cover such other matters incident to the transactions contemplated by this Agreement as the Administrative Agent may reasonably require. (k) Pledged Stock; Stock Powers; Pledged Notes. The Administrative ------------------------------------------ Agent shall have received the certificates representing the shares pledged pursuant to the Collateral Agreement and (to the extent that such shares are evidenced by certificates) each Foreign Pledge Agreement, if any, together with an undated stock power for each such certificate executed in blank by a duly authorized officer of the pledgor thereof. (l) Actions to Perfect Liens. The Administrative Agent shall have ------------------------ received evidence in form and substance reasonably satisfactory to it that all filings, recordings, registrations and other actions, including, without limitation, the filing of duly executed financing statements on form UCC-1, necessary or, in the reasonable opinion of the Administrative Agent, reasonably desirable to perfect the Liens created by the Security Documents shall have been completed or shall be ready to be completed promptly following the Closing Date. 63 (m) Intentionally Omitted. --------------------- (n) Intentionally Omitted. --------------------- (o) Intentionally Omitted. --------------------- (p) Intentionally Omitted. --------------------- (q) Intentionally Omitted. --------------------- (r) Lien Searches. The Administrative Agent shall have received the ------------- results of a recent search by a Person satisfactory to the Administrative Agent, of the Uniform Commercial Code, judgement and tax lien filings which may have been filed with respect to personal property of Holding, TTC and their Domestic Subsidiaries (including Foreign Subsidiary Holdcos) which are Credit Parties, and the results of such search shall be reasonably satisfactory to the Administrative Agent. (s) Sources and Uses. The Administrative Agent shall have received a ---------------- certificate of a Responsible Officer, dated the Closing Date, stating that, in connection with the Transactions, (i) Holding (either directly or through MergerCorp) has issued and sold at least $275,000,000 in cash equity capital, (ii) certain shareholders and members of management of Holding and its Subsidiaries have maintained at least $20,000,000 of equity investments in the common stock of Holding, (iii) Holding has received not less than $275,000,000 in gross cash proceeds from the offering and sale of the Senior Subordinated Notes, (iv) before giving effect to any cash described in this clause (s) to be received by Holding and its Subsidiaries in connection with the Transactions and after giving effect to the payment of any accounts payable which are then due, Holding has not less than $20,000,000 in cash on hand, (v) Holding has received gross proceeds (including, without limitation, through the reduction of amounts payable to optionholders as Merger consideration) of not less than $25,000,000 from the exercise of existing stock options, (vi) the total cost of the Transaction shall not have exceeded $920,000,000; such certificate also shall contain a good faith estimate (in reasonable detail) of the fees and expenses relating to the Transaction (which estimate shall not exceed $42,500,000 in the aggregate). (t) The Merger and the Recapitalization. The Administrative Agent ----------------------------------- and the Lenders shall be reasonably satisfied that (i) the Merger Agreement shall have been duly executed and delivered by the parties thereto, (ii) all conditions precedent under the Merger Agreement to the consummation of the Merger and the Recapitalization (other than the payment of the Merger consideration) shall have been satisfied in all material respects (except for any modification or waiver of any such condition made with the consent of the Administrative Agent) and (iii) the Merger and the Recapitalization have been, or substantially simultaneously with the funding hereof, will be, consummated. 64 (u) No Consents. Holding, TTC and their Subsidiaries shall have ----------- obtained all consents and approvals of Governmental Authorities and third parties necessary in connection with the Transaction, the Loans and other extensions of credit hereunder and the continuing operations of TTC and its Subsidiaries (after giving effect to the Transaction) except for such consents and approvals which the failure to obtain would not reasonably be expected to have a Material Adverse Effect; all such consents and approvals shall be in full force and effect and all applicable waiting periods under applicable law shall have expired without any governmental or judicial action being taken that has had or would be reasonably likely to have the effect of restraining, preventing or imposing materially burdensome conditions on the Transaction and the related financing transactions contemplated hereby. (v) Corporate Structure. The Administrative Agent and the Lenders ------------------- shall have received a corporate structure chart of the Guarantor and its Active Subsidiaries (after giving effect to the Transaction) and shall be reasonably satisfied with the corporate, capital and legal structure of the Guarantor and its Active Subsidiaries described therein. (w) Pro Forma Balance Sheet. The Administrative Agent shall have ----------------------- received a copy of the Pro Forma Balance Sheet and the related pro forma income statement, each of which shall be substantially similar to those provided to the Lenders prior to the date hereof. (x) Insurance. The Administrative Agent shall have received a --------- schedule describing all material insurance policies maintained by Holding and TTC in accordance with the provisions of subsection 12.5, which schedule shall be in form and substance reasonably satisfactory to the Administrative Agent. (y) Existing Indebtedness. All material Indebtedness of Holding and --------------------- its Subsidiaries (other than the Senior Subordinated Notes and any intercompany Indebtedness and any Indebtedness described in Schedule 11.1(y)) shall have been paid in full, and all collateral security and credit support provided by Holding and its Subsidiaries on account of such material Indebtedness shall have been released and terminated. (z) Fees. The Administrative Agent shall have received all fees, ---- costs, and expenses due and payable on or prior to the Closing Date, including, without limitation, the fees referred to in subsection 9.2. The making of the initial Loans by the Lenders hereunder shall conclusively be deemed to constitute an acknowledgment by the Administrative Agent and each Lender that each of the conditions precedent set forth in this subsection 11.1 shall have been satisfied in accordance with its respective terms or shall have been irrevocably waived by such Person. 11.2 Conditions to Each Loan. The agreement of each Lender to make ----------------------- any Loan or other extension of credit requested to be made by it on any date (including, without limitation, any Loan or other extension of credit to be made on the Closing Date) is subject to the satisfaction or waiver of the following conditions precedent: 65 (a) Representations and Warranties. Each of the representations and ------------------------------ warranties made by each Credit Party in or pursuant to the Credit Documents to which it is a party shall, except to the extent that they relate to a particular date, be true and correct in all material respects on and as of such date as if made on and as of such date. (b) No Default. No Default or Event of Default shall have occurred ---------- and be continuing on such date or after giving effect to the Loans and other extensions of credit requested to be made on such date. Each borrowing by the Borrower hereunder shall constitute a representation and warranty by the Borrower as of the date thereof that the conditions contained in this subsection have been satisfied. SECTION 12. AFFIRMATIVE COVENANTS The Borrower hereby agrees that, from and after the Closing Date and so long as any Commitments remain in effect, and thereafter until payment in full of the Loans, all Reimbursement Obligations then due and owing, and any other amount then due and owing to any Lender or the Administrative Agent hereunder or under any Note, the Borrower shall and (except in the case of delivery of financial information, reports and notices) shall cause each of its Subsidiaries to: 12.1 Financial Statements. Furnish to each Lender: -------------------- (a) as soon as available, but in any event within 90 days after the end of each fiscal year of the Guarantor, a copy of the consolidated balance sheet of the Guarantor and its consolidated Subsidiaries as at the end of such year and the related consolidated statements of income and retained earnings and of cash flows for such year, setting forth in each case in comparative form the figures for the previous year, reported on without a "going concern" or like qualification or exception, or qualification arising out of the scope of the audit, by Coopers & Lybrand L.L.P. or other independent certified public accountants of nationally recognized standing; and (b) as soon as available, but in any event not later than 45 days after the end of each of the first three quarterly periods of each fiscal year of the Guarantor, the unaudited consolidated balance sheet of the Guarantor and its consolidated Subsidiaries as at the end of such quarter and the related unaudited consolidated statements of income and retained earnings and of cash flows of the Guarantor and its consolidated Subsidiaries for such quarter and the portion of the fiscal year through the end of such quarter, setting forth in each case in comparative form the figures for the previous year, certified by a Responsible Officer as being fairly stated in all material respects (subject to normal year-end audit and other adjustments); all such financial statements shall be complete and correct in all material respects and shall be prepared in reasonable detail and in accordance with GAAP applied consistently throughout the periods reflected therein and with prior periods (except as approved by a Responsible 66 Officer and disclosed therein, and except, in the case of any financial statements delivered pursuant to subsection 12.1(b), for the absence of certain notes). 12.2 Certificates; Other Information. Furnish to each Lender: ------------------------------- (a) concurrently with the delivery of the financial statements referred to in subsection 12.1(a), a certificate of the independent certified public accountants reporting on such financial statements stating that in making the audit necessary therefor no knowledge was obtained of any Default or Event of Default, insofar as the same relates to any financial accounting matters covered by their audit, except as specified in such certificate; (b) concurrently with the delivery of the financial statements referred to in subsections 12.1(a) and (b), a certificate of a Responsible Officer stating that, to the best of such Responsible Officer's knowledge, during such period (i) no Subsidiary has been formed or acquired (or, if any such Subsidiary has been formed or acquired, the Borrower has complied with the requirements of subsection 12.10 with respect thereto), (ii) neither the Borrower nor any other Credit Party has changed its name, its principal place of business, its chief executive office or the location of any material item of tangible Collateral without complying with the requirements of this Agreement and the Security Documents with respect thereto and (iii) to the best of such Responsible Officer's knowledge, each of the Borrower and the other Credit Parties has observed or performed all of its covenants and other agreements, and satisfied every condition, contained in this Agreement and the other Credit Documents to be observed, performed or satisfied by it (and including therein a reasonably detailed calculation of the covenants set forth in Section 13 and, in the case of the annual financial statements, of Excess Cash Flow as of the last day of such period), and that such Responsible Officer has obtained no knowledge of any Default or Event of Default except, in each case as specified in such certificate; (c) not later than 60 days after the beginning of each fiscal year of the Borrower, a copy of the projections by the Borrower of the operating budget and cash flow budget of the Borrower and its Subsidiaries for such fiscal year, such projections to be accompanied by a certificate of a Responsible Officer to the effect that such Responsible Officer believes such projections have been prepared on the basis of reasonable assumptions; (d) within five Business Days after the same are sent, copies of all financial statements and reports which the Borrower sends to its public stockholders, and within five Business Days after the same are filed, copies of all financial statements and reports which the Borrower may make to, or file with, the Securities and Exchange Commission or any successor or analogous Governmental Authority; and (e) promptly, such additional financial and other information as the Administrative Agent or any Lender (acting through the Administrative Agent) may from time to time reasonably request. 67 12.3 Payment of Obligations. Pay, discharge or otherwise satisfy at ---------------------- or before maturity or before they become delinquent, as the case may be, all its material obligations of whatever nature, except where the amount or validity thereof is currently being contested in good faith by appropriate proceedings and reserves in conformity with GAAP with respect thereto have been provided on the books of the Borrower or its Subsidiaries, as the case may be. 12.4 Conduct of Business and Maintenance of Existence. Continue to ------------------------------------------------ engage in business of the same general type as now conducted by the Borrower and its Subsidiaries taken as a whole and preserve, renew and keep in full force and effect its corporate existence and take all reasonable action to maintain all rights, privileges and franchises necessary or desirable in the normal conduct of the business of the Borrower and its Subsidiaries taken as a whole except as otherwise permitted pursuant to subsection 14.4; provided that the Borrower and -------- its Subsidiaries shall not be required to maintain any such rights, privileges or franchises, if the failure to do so would not reasonably be expected to have a Material Adverse Effect; and comply with all Contractual Obligations and Requirements of Law except to the extent that failure to comply therewith would not, in the aggregate, be reasonably expected to have a Material Adverse Effect. 12.5 Maintenance of Property; Insurance. Keep all property useful ---------------------------------- and necessary in the business of the Borrower and its Subsidiaries taken as a whole in good working order and condition; maintain with financially sound and reputable insurance companies insurance on all its property material to the business of the Borrower and its Subsidiaries taken as a whole in at least such amounts and against at least such risks as are usually insured against in the same general area by companies engaged in the same or a similar business; and furnish to the Administrative Agent, upon written request, full information as to the insurance carried. 12.6 Inspection of Property; Books and Records; Discussions. Keep ------------------------------------------------------ proper books of records and account in which full, complete and correct entries in conformity with all material Requirements of Law shall be made of all dealings and transactions in relation to its business and activities; and permit representatives of the Administrative Agent or any Lender (acting through the Administrative Agent), at any reasonable time, upon reasonable notice, and as often as may reasonably be desired, to visit and inspect any of its properties and examine and, to the extent reasonable, make abstracts from any of its books and records and to discuss the business, operations, properties and financial and other condition of the Borrower and its Subsidiaries with officers and employees of the Borrower and its Subsidiaries and with its independent certified public accountants, in each case (i) at the expense of the Borrower (A) with respect to any such actions by a Lender during the continuance of a Default or an Event of Default or as otherwise required by subsection 18.5 or (B) with respect to any such actions by the Administrative Agent and (ii) at the expense of the relevant Lender in any other case. 12.7 Notices. Promptly give notice to the Administrative Agent and ------- each Lender of: (a) as soon as possible after a Responsible Officer of the Borrower knows or reasonably should know thereof, the occurrence of any Default or Event of Default; 68 (b) as soon as possible after a Responsible Officer of the Borrower knows or reasonably should know thereof, any (i) default or event of default under any Contractual Obligation of the Borrower or any of its Subsidiaries other than as previously disclosed to the Lenders, or (ii) litigation, investigation or proceeding which may exist at any time between the Borrower or any of its Subsidiaries and any Governmental Authority, which in either case, if not cured or if adversely determined, as the case may be, would reasonably be expected to have a Material Adverse Effect; (c) as soon as possible after a Responsible Officer of the Borrower knows or reasonably should know thereof, any litigation or proceeding which has a reasonable possibility of an adverse determination which would result in a judgment against the Borrower or any of its Subsidiaries of $5,000,000 or more and which is not covered by insurance, or in which injunctive or similar relief is sought that would reasonably be expected to have a Material Adverse Effect; (d) the following events, as soon as possible and in any event within 30 days after a Responsible Officer of the Borrower knows or reasonably should know thereof: (i) the occurrence or expected occurrence of any Reportable Event with respect to any Single Employer Plan (other than a Reportable Event described in Section 4043(c)(9) of ERISA), a failure to make any required contribution to a Single Employer Plan or Multiemployer Plan, the creation of any Lien on the property of Holding, the Borrower or any of its Subsidiaries in favor of the PBGC or a Plan or any withdrawal from, or the termination, Reorganization or Insolvency of, any Multiemployer Plan, if, as a result thereof, Holding, the Borrower, or any of its Subsidiaries could reasonably be expected to incur any material liability; (ii) the existence of an Underfunding under a Single Employer Plan that exceeds 10% of the value of the assets of such Single Employer Plan, determined as of the most recent annual valuation date of such Single Employer Plan on the basis of the actuarial assumptions used to determine the funding requirements of such Single Employer Plan as of such date; (iii) the institution of proceedings or the taking of any other formal action by the PBGC or Holding, the Borrower or any Commonly Controlled Entity or any Multiemployer Plan with respect to the withdrawal from, or the termination, Reorganization or Insolvency of, any Single Employer Plan or Multiemployer Plan if, as a result thereof, Holding, the Borrower or any of its Subsidiaries could reasonably be expected to incur any material liability; or (iv) the occurrence or expected occurrence of any event or condition under which Holding, the Borrower or any Commonly Controlled Entity has incurred or could incur any liability in respect of a Former Plan; (e) As soon as possible after a Responsible Officer of the Borrower knows, and except as would not, individually or in the aggregate, reasonably be expected to result in the payment of a Material Environmental Amount, that (i) any Governmental Authority has identified the Borrower or any of its Subsidiaries as a potentially responsible party under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") or any similar Environmental Law for the cleanup of Materials of -------- Environmental Concern at any location, whether or not owned, leased or operated by the Borrower or any of its Subsidiaries; (ii) any Governmental Authority may revoke any permit pursuant to Environmental Law held by the Borrower or any of its Subsidiaries, or deny or refuse to renew any such permit sought by the Borrower or 69 any of its Subsidiaries; or (iii) any property owned, leased, or operated by the Borrower or any of its Subsidiaries is being listed on, or proposed for listing on, the National Priorities List ("NPL") or the Comprehensive --- Environmental Response, Compensation and Liability Information System ("CERCLIS") maintained by the U.S. Environmental Protection Agency or any ------- similar list maintained by any Governmental Authority; and (f) as soon as possible after a Responsible Officer of the Borrower knows or reasonably should know thereof, any development or event which has had or would reasonably be expected to have a material adverse change in the business, operations, property or condition (financial or otherwise) of the Borrower and its Subsidiaries, taken as a whole. Each notice pursuant to this subsection shall be accompanied by a statement of a Responsible Officer setting forth details of the occurrence referred to therein and stating what action the Borrower proposes to take with respect thereto. 12.8 Environmental Laws. (i) Comply substantially with all ------------------ Environmental Laws applicable to it, and obtain, comply substantially with and maintain any and all licenses, approvals, notifications, registrations or permits required by applicable Environmental Laws (collectively, "Environmental ------------- Permits"); and (ii) take all reasonable efforts to ensure that all of its - ------- tenants, subtenants, contractors, subcontractors and invitees comply substantially with all Environmental Laws, and obtain, comply substantially with and maintain any and all Environmental Permits applicable to any of them insofar as any failure to so comply, obtain or maintain reasonably would be expected to adversely affect the Borrower or any of its Subsidiaries. For purposes of this subsection 12.8, noncompliance shall be deemed not to constitute a breach of this covenant, provided that, upon learning of any actual or suspected -------- noncompliance, the Borrower shall in a timely manner undertake all reasonable efforts to achieve substantial compliance, and provided, further that, in any -------- ------- case, such noncompliance, and any other such noncompliance with any Environmental Law or Environmental Permit, individually or in the aggregate, would not reasonably be expected to give rise to the payment of a Material Environmental Amount. 12.9 [Reserved]. 12.10 Additional Collateral. (a) With respect to any owned real --------------------- property or fixtures located on owned real property, in each case with a purchase price or a fair market value of at least $1,000,000, in which the Borrower or any of its Subsidiaries acquires ownership rights at any time after the Closing Date, promptly grant to the Administrative Agent, for the benefit of the Lenders, a Lien of record on all such owned real property and fixtures, upon terms reasonably satisfactory in form and substance to the Administrative Agent and in accordance with any applicable requirements of any Governmental Authority (including, without limitation, any appraisals of such property under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 which the Administrative Agent reasonably deems to be required by law); provided that (i) -------- nothing in this subsection 12.10(a) shall defer or impair the attachment or perfection of any security interest in any Collateral covered by any of the Security Documents which would attach or be perfected pursuant to the terms thereof without action by the Borrower, any of its Subsidiaries or any other Person and (ii) no such Lien shall be required to be granted as contemplated by this subsection 12.10(a) on any owned real property 70 or fixtures the acquisition of which is financed, or is to be financed within any time period permitted by subsection 14.1, until such Indebtedness is repaid in full (and not refinanced as permitted by subsection 14.1) or, as the case may be, the Borrower determines not to proceed with such financing or refinancing. In connection with any such grant to the Administrative Agent, for the benefit of the Lenders, of a Lien of record on any such real property in accordance with this subsection, the Borrower or such Subsidiary shall deliver or cause to be delivered to the Administrative Agent any surveys, title insurance policies, environmental reports and other documents in connection with such grant of such Lien obtained by it in connection with the acquisition of such ownership rights in such real property or as the Administrative Agent shall reasonably request (in light of the value of such real property and the cost and availability of such surveys, title insurance policies, environmental reports and other documents and whether the delivery of such surveys, title insurance policies, environmental reports and other documents would be customary in connection with such grant of such Lien in similar circumstances). (b) With respect to any Person that, subsequent to the Closing Date, becomes a Domestic Subsidiary or Foreign Subsidiary Holdco (other than to the extent that compliance with this subsection 12.10(b) would have an adverse tax consequence to the Borrower), promptly upon the request of the Administrative Agent: (i) execute and deliver to the Administrative Agent, for the benefit of the Lenders, a new pledge agreement or such amendments to the relevant Collateral Agreement as the Administrative Agent shall reasonably deem necessary or reasonably advisable to grant to the Administrative Agent, for the benefit of the Lenders, a Lien on the Capital Stock of such Subsidiary which is owned by the Borrower or any of its Domestic Subsidiaries (provided that in no event -------- shall more than 65% of the Capital Stock of any Foreign Subsidiary Holdco be required to be so pledged), (ii) deliver to the Administrative Agent the certificates (if any) representing such Capital Stock, together with undated stock powers executed and delivered in blank by a duly authorized officer of the Borrower or such Subsidiary, as the case may be, and (iii) cause such new Subsidiary (A) to become a party to the Collateral Agreement, in each case pursuant to documentation which is in form and substance reasonably satisfactory to the Administrative Agent, and (B) to take all actions reasonably deemed by the Administrative Agent to be necessary or reasonably advisable to cause the Lien created by the Collateral Agreement to be duly perfected in accordance with all applicable Requirements of Law, including, without limitation, the filing of financing statements in such jurisdictions as may be reasonably requested by the Administrative Agent. (c) With respect to any Person that, subsequent to the Closing Date, becomes a Foreign Subsidiary and which has Capital Stock which is owned directly by the Borrower or a Domestic Subsidiary, promptly upon the request of the Administrative Agent: (i) execute and deliver to the Administrative Agent a new Foreign Pledge Agreement or such amendments to the relevant Foreign Pledge Agreement as the Administrative Agent shall reasonably deem necessary or reasonably advisable to grant to the Administrative Agent, for the benefit of the Lenders, a Lien on the Capital Stock of such Subsidiary which is owned directly by the Borrower or any of its Domestic Subsidiaries (provided that in -------- no event shall more than 65% of the Capital Stock of any such Subsidiary be required to be so pledged) and (ii) to the extent reasonably deemed advisable by the Administrative Agent, deliver to the Administrative Agent any certificates (if any) representing such Capital Stock, together with undated stock 71 powers executed and delivered in blank by a duly authorized officer of the Borrower or such Domestic Subsidiary, as the case may be. (d) Notwithstanding anything to the contrary contained herein, no Subsidiary of the Borrower shall be required to comply with the provisions of this subsection 12.10 until such date as either (i) the consolidated gross revenues of such Subsidiary and its Subsidiaries for the most recently completed period of four consecutive fiscal quarters or (ii) the consolidated assets of such Subsidiary and its Subsidiaries, exceed $10,000,000 (it being understood that any Subsidiary which achieves such assets or revenues after the date hereof shall be deemed, for purposes of this subsection 12.10 only, to have been newly acquired by the Borrower on the date upon which such assets or revenues, as the case may be, are achieved). 12.11 Assumption Agreement. In the case of Holding, Newco and TTC, -------------------- execute and deliver the Assumption Agreement within five days of the Closing Date. Each of the Lenders hereby consents to the provisions of the Assumption Agreement and irrevocably constitutes and appoints the Administrative Agent as its attorney-in-fact for the purpose of executing the Assumption Agreement on such Lender's behalf. SECTION 13. FINANCIAL COVENANTS The Borrower hereby agrees that, from and after the Closing Date and so long as the Revolving Credit Commitments remain in effect, and thereafter until payment in full of the Revolving Credit Loans, the Tranche A Loans and any Swing Line Loan, all Reimbursement Obligations then due and owing, and any other amount then due and owing hereunder or under any Note to any Revolving Credit Lender, any Tranche A Lender or the Swing Line Lender, the Borrower shall not: 13.1 Minimum Interest Coverage Ratio. Permit, for any period of four ------------------------------- consecutive fiscal quarters ending during any period set forth below, the Interest Coverage Ratio at the last day of such four-quarter period to be less than the ratio set forth opposite such period below: Period Ratio ------ ----- September 30, 1998 - September 30, 1999 1.50 to 1.0 December 31, 1999 - September 30, 2000 1.75 to 1.0 December 31, 2000 - September 30, 2001 1.90 to 1.0 December 31, 2001 - thereafter 2.00 to 1.0 13.2 Maximum Leverage Ratio. Permit the Leverage Ratio at the last ---------------------- day of any fiscal quarter ending during a period set forth below to be greater than the ratio set forth opposite such period below: Period Ratio ------ ----- September 30, 1998 - September 30, 1999 6.75 to 1.0 December 31, 1999 - September 30, 2000 6.50 to 1.0 72 December 31, 2000 - September 30, 2001 5.75 to 1.0 December 31, 2001 - September 30, 2002 5.00 to 1.0 December 31, 2002 - thereafter 4.75 to 1.0 SECTION 14. NEGATIVE COVENANTS APPLICABLE TO THE TRANCHE A COMMITMENTS AND REVOLVING CREDIT COMMITMENTS The Borrower hereby agrees that, from and after the Closing Date and so long as the Revolving Credit Commitments remain in effect, and thereafter until payment in full of the Revolving Credit Loans, the Tranche A Loans and any Swing Line Loan, all Reimbursement Obligations then due and owing, and any other amount then due and owing hereunder or under any Note to any Revolving Credit Lender, any Tranche A Lender or the Swing Line Lender, the Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly: 14.1 Limitation on Indebtedness. Create, incur, assume or suffer to -------------------------- exist any Indebtedness (including, in any event, any preferred stock which is mandatorily redeemable prior to the scheduled maturity of the Tranche A Loans, other than any such stock held by Management Investors), except: (a) Indebtedness of the Borrower and its Subsidiaries under this Agreement and the other Credit Documents; (b) Indebtedness of the Borrower to any Subsidiary and of any Subsidiary to the Borrower or any other Subsidiary; (c) Indebtedness of the Borrower and its Subsidiaries incurred to finance or refinance the acquisition of fixed or capital assets (whether pursuant to a loan, a Financing Lease or otherwise) and any other Financing Leases in an aggregate principal amount not exceeding as to the Borrower and its Subsidiaries $15,000,000 at any time outstanding; (d) Indebtedness of a Person which becomes a Subsidiary after the date hereof, provided that (i) such indebtedness existed at the time such -------- Person became a Subsidiary and was not created in anticipation thereof and (ii) immediately after giving effect to the acquisition of such Person by the Borrower no Default or Event of Default shall have occurred and be continuing; (e) Indebtedness of the Borrower on account of the Senior Subordinated Notes; (f) additional Indebtedness of the Borrower or any of its Subsidiaries which is subordinated to the obligations of the Credit Parties hereunder not exceeding $35,000,000 in aggregate principal amount at any one time outstanding; provided that (i) any such Indebtedness shall have -------- terms and conditions which are not materially more burdensome to the Credit Parties than, and subordination provisions substantially similar to, the Senior Subordinated Notes and (ii) the aggregate principal amount of Indebtedness owing by Domestic Subsidiaries of the Borrower in reliance upon the 73 provisions of this clause (f) and subsection 14.1(o) shall not exceed $10,000,000 at any one time outstanding; (g) Indebtedness of the Borrower or any of its Subsidiaries incurred to finance or refinance the purchase price of, or Indebtedness of the Borrower and any of its Subsidiaries assumed in connection with, any Permitted Acquisition permitted by subsection 14.8(e), provided that (i) -------- such Indebtedness is incurred substantially simultaneously with or within six months after such acquisition or in connection with a refinancing thereof, (ii) if such Indebtedness is owed to a Person, other than the Person from whom such acquisition is made or any Affiliate thereof, such Indebtedness shall have terms and conditions reasonably satisfactory to the Administrative Agent and shall not exceed 60% of the purchase price of such acquisition (including any Indebtedness assumed in connection with such acquisition but excluding any Indebtedness under this Agreement incurred to finance such acquisition) and (iii) immediately after giving effect to such acquisition no Default or Event of Default shall have occurred and be continuing; and any refinancing, refunding, renewal or extension of any such Indebtedness; provided, that, the amount of such Indebtedness is not -------- increased at the time of such refinancing, refunding, renewal or extension except by an amount equal to the premium or other amounts paid, and fees and expenses incurred, in connection with such refinancing, refunding, renewal or extension; provided, further, the -------- ------- aggregate principal amount of Indebtedness which may be incurred in reliance on this subsection 14.2(g) shall not exceed $50,000,000 during the term of this Agreement; provided, further that such amount shall be -------- ------- increased by an amount equal to $10,000,000 on each anniversary of the Closing Date, commencing on the first anniversary of the Closing Date, so long as no Default or Event of Default shall have occurred and be continuing on any date on which such amount is to be so increased; (h) to the extent that any Guarantee Obligation permitted under subsection 14.3 constitutes Indebtedness, such Indebtedness; (i) Indebtedness of Foreign Subsidiaries of the Borrower for working capital purposes (including in respect of overdrafts) not exceeding, as to all such Foreign Subsidiaries, $10,000,000 in aggregate principal amount at any one time outstanding; (j) Indebtedness to finance the general working capital needs of the Borrower and its Subsidiaries incurred after the Termination Date in an aggregate principal amount not to exceed the amount of the Revolving Credit Commitments as of the Closing Date, provided that (i) the Tranche A Loans -------- shall have been repaid in full and the Revolving Credit Commitment shall have been or shall concurrently be terminated and the Revolving Credit Loans, the Swing Line Loans and the Reimbursement Obligations shall have been or shall concurrently be repaid in full and any outstanding L/C Obligations shall have been or shall concurrently be cash collateralized on terms reasonably satisfactory to the Administrative Agent and (ii) the terms and conditions of such replacement working capital facility shall be substantially similar to, or otherwise not less favorable to the Borrower in any material respect than, the analogous provisions applicable to the Revolving Credit Commitments; 74 (k) Indebtedness of the Borrower or any of its Subsidiaries incurred to finance insurance premiums in the ordinary course of business; (l) Indebtedness of any Foreign Subsidiary of the Borrower fully supported on the date of the incurrence thereof by a Foreign Backstop Letter of Credit; (m) Indebtedness arising from the honoring of a check, draft or similar instrument against insufficient funds; provided that such -------- Indebtedness is extinguished within two Business Days of its incurrence; (n) to the extent that any Indebtedness may be incurred or arise thereunder, Indebtedness of the Borrower and any of its Subsidiaries under any Hedging Arrangements; and (o) additional Indebtedness not exceeding $25,000,000 in aggregate principal amount at any one time outstanding; provided that the aggregate -------- principal amount of Indebtedness owing by Domestic Subsidiaries of the Borrower in reliance upon the provisions of this clause (o) and subsection 14.1(f) shall not exceed $10,000,000 at any one time outstanding. For the purposes of determining compliance with subsection 14.1(i) and (o), the amount of any Indebtedness denominated in any currency other than U.S. dollars shall be calculated based on customary currency exchange rates in effect, in the case of such Indebtedness incurred (in respect of term debt) or committed (in respect of revolving debt) on or prior to the Closing Date, on the Closing Date and, in the case of such Indebtedness incurred (in respect of term debt) or committed (in respect of revolving debt) after the Closing Date, on the date that such Indebtedness was incurred (in respect of term debt) or committed (in respect of revolving debt). 14.2 Limitation on Liens. Create, incur, assume or suffer to exist ------------------- any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, except for: (a) Liens for taxes, assessments and similar charges not yet delinquent or the nonpayment of which in the aggregate would not reasonably be expected to have a Material Adverse Effect, or which are being contested in good faith by appropriate proceedings, provided that adequate reserves -------- with respect thereto are maintained on the books of the Guarantor, the Borrower or their Subsidiaries, as the case may be, in conformity with GAAP (or, in the case of Foreign Subsidiaries, generally accepted accounting principles in effect from time to time in their respective jurisdictions of incorporation); (b) carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like Liens arising in the ordinary course of business which are not overdue for a period of more than 60 days or which are being contested in good faith by appropriate proceedings; (c) pledges, deposits or other Liens in connection with workers' compensation, unemployment insurance and other social security benefits or other insurance related 75 obligations (including, without limitation, pledges or deposits or other Liens securing liability to insurance carriers under insurance or self- insurance arrangements); (d) Liens to secure the performance of bids, trade contracts (other than for borrowed money), obligations for utilities, leases, statutory obligations, surety and appeal bonds, performance bonds, judgment and like bonds, replevin and similar bonds and other obligations of a like nature incurred in the ordinary course of business; (e) zoning restrictions, easements, rights-of-way, restrictions, other similar encumbrances incurred in the ordinary course of business and minor irregularities of title which do not materially interfere with the ordinary conduct of the business of the Borrower and its Subsidiaries taken as a whole; (f) Liens securing or consisting of Indebtedness of the Borrower and its Subsidiaries permitted by subsection 14.1(c) or 14.1(g), provided that -------- (i) such Liens shall be created prior to or substantially simultaneously with or within six months of the acquisition thereby financed or the date of the incurrence or assumption of such Indebtedness and, (ii) such Liens do not at any time encumber any property other than the property financed by such Indebtedness and, in the case of Indebtedness assumed in connection with any acquisition, the property subject thereto immediately prior to such acquisition; (g) Liens on the property or assets of a Person which becomes a Subsidiary after the date hereof securing Indebtedness permitted by subsection 14.1(d), provided that (i) such Liens existed at the time such Person -------- became a Subsidiary and were not created in anticipation thereof and (ii) any such Lien is not spread to cover any property or assets of such Person after the time such Person becomes a Subsidiary; (h) Liens (not otherwise permitted hereunder) which secure obligations not exceeding (as to the Borrower and all Subsidiaries in the aggregate) $5,000,000 in aggregate amount at any time outstanding; (i) Liens created pursuant to the Security Documents; (j) Liens of landlords or of mortgages of landlords arising by operation of law or pursuant to the terms of real property leases, provided -------- that the rental payments secured thereby are not yet due and payable; (k) Liens arising by reason of any judgment, decree or order of any court or other Governmental Authority, if appropriate legal proceedings which may have been duly initiated for the review of such judgment, decree or order, are being diligently prosecuted and shall not have been finally terminated or the period within which such proceedings may be initiated shall not have expired; (l) Liens existing on assets or properties at the time of the acquisition thereof by the Borrower or any of its Subsidiaries which do not materially interfere with the use, occupancy, operation and maintenance of structures existing on the property subject 76 thereto or extend to or cover any assets or properties of the Borrower or such Subsidiary other than the assets or property being acquired; (m) Liens securing Guarantee Obligations permitted under subsection 14.3(j)(i) or (ii); (n) any encumbrance or restriction (including, without limitation, put and call agreements) with respect to the Capital Stock of any joint venture or similar arrangement pursuant to the joint venture or similar agreement with respect to such joint venture or similar arrangement, provided that no such encumbrance or restriction affects in any way the -------- ability of the Borrower or any of its Subsidiaries to comply with subsection 12.10; (o) Liens on property subject to Sale and Leaseback Transactions permitted under subsection 14.10 and general intangibles related thereto; (p) Liens on property of any Foreign Subsidiary of the Borrower securing Indebtedness of such Foreign Subsidiary of the Borrower permitted by subsection 14.1(h) or (o); (q) Liens in existing on the date hereof and listed on Schedule 14.2(q); and (r) Liens on Intellectual Property and foreign patents, trademarks, trade names, service marks, copyrights, technology, know-how and processes to the extent such Liens arise from the granting of licenses to use such Intellectual Property and foreign patents, trademarks, trade names, service marks, copyrights, technology, know-how and processes to any Person in the ordinary course of business of the Borrower and its Subsidiaries. 14.3 Limitation on Guarantee Obligations. Create, incur, assume or ----------------------------------- suffer to exist any Guarantee Obligation except: (a) Guarantee Obligations in existence on the date hereof and listed on Schedule 14.3 and any refinancings, refundings, extensions or renewals thereof, provided that the amount of such Guarantee Obligation shall not be -------- increased at the time of such refinancing, refunding, extension or renewal, except by an amount equal to the premium or other amounts paid, and fees and expenses incurred, in connection with such refinancing, refunding, extension or renewal; (b) guarantees made in the ordinary course of its business by the Borrower or any of its Subsidiaries of obligations of the Borrower or any of its Subsidiaries, which obligations are otherwise permitted under this Agreement; (c) the Collateral Agreement or otherwise in respect of Indebtedness permitted by subsection 14.1(a); (d) Guarantee Obligations incurred after the date hereof in an aggregate amount not to exceed $2,500,000 at any one time outstanding; 77 (e) Guarantee Obligations in connection with up to an aggregate principal amount of $20,000,000 of Indebtedness outstanding at any time incurred by any Management Investors in connection with any Management Subscription Agreements or other purchases by them of Capital Stock of the Guarantor or the Borrower, and any refinancings, refundings, extensions or renewals thereof; provided that such amount shall be reduced by the -------- aggregate then outstanding principal amount of loans and advances made in reliance upon the provisions of subsection 14.8(l); (f) Guarantee Obligations for performance, appeal, judgment, replevin and similar bonds and suretyship arrangements, all in the ordinary course of business; (g) Guarantee Obligations in respect of indemnification and contribution agreements expressly permitted by subsection 14.9(iii) or similar agreements by the Borrower or any of its Subsidiaries; (h) Reimbursement Obligations in respect of the Letters of Credit; (i) obligations to insurers required in connection with worker's compensation and other insurance coverage incurred in the ordinary course of business; (j) Guarantee Obligations in respect of third-party loans and advances to officers or employees of the Guarantor, the Borrower or any of their Subsidiaries (i) for travel and entertainment expenses incurred in the ordinary course of business, (ii) for relocation expenses incurred in the ordinary course of business, or (iii) for other purposes, and in the case of this clause (iii), in an aggregate amount (as to the Borrower and all its Subsidiaries), together with the aggregate amount of all Investments permitted under subsection 14.8(c)(ii), of up to $2,000,000 outstanding at any time; (k) (i) Guarantee Obligations of the Borrower or any Domestic Subsidiary and (ii) Guarantee Obligations of any Foreign Subsidiary (other than Indebtedness for borrowed money or for reimbursement obligations in respect of drawn letters of credit), in the case of clauses (i) and (ii), incurred in connection with Permitted Acquisitions permitted under subsection 14.8(e), provided that if any such Guarantee Obligation inures -------- to the benefit of any Person other than the Person from whom such acquisition is made or any Affiliate thereof, such Guarantee Obligation shall not exceed, with respect to any such acquisition, 60% of the purchase price of such acquisition (including any Indebtedness assumed in connection with any such acquisition) (or such greater percentage as shall be reasonably satisfactory to the Administrative Agent or, if any such purchase price shall be greater than $25,000,000, such greater percentage shall be reasonably satisfactory to the Majority Lenders); (l) Guarantee Obligations in connection with sales or other dispositions permitted under subsection 14.5, including indemnification obligations with respect to leases, and guarantees of collectability in respect of accounts receivable or notes receivable for up to face value; (m) (i) Guarantee Obligations represented by contracts entered into by the Borrower or any of its Subsidiaries for the purchase of equipment, inventory and 78 supplies required by the Borrower or such Subsidiary in the ordinary course of business and (ii) accommodation guarantees for the benefit of trade creditors of the Borrower or any of its Subsidiaries in the ordinary course of business; (n) Guarantee Obligations in respect of Indebtedness of a Person in connection with joint ventures or similar arrangements in respect of which no other co-investor or other Person has a greater legal or beneficial ownership interest than the Borrower or any of its Subsidiaries, and as to all of such Persons does not at any time exceed $7,500,000 in aggregate principal amount; provided that (i) such amount shall be increased by an -------- amount equal to $2,000,000 on each anniversary of the Closing Date, commencing on the second anniversary of the Closing Date, so long as no Default or Event of Default shall have occurred and be continuing on any date on which such amount is to be increased and (ii) such amount and any increase in such amount permitted by clause (i) shall be reduced by the aggregate amount of Investments permitted by subsection 14.8(j); (o) Guarantee Obligations of the Borrower and its Subsidiaries under any Hedging Arrangements; (p) Guarantee Obligations by Subsidiaries of the Borrower in respect of the Senior Subordinated Notes as and when provided therein or in the Senior Subordinated Note Indenture, which are subordinated as provided in the Senior Subordinated Note Indenture; and (q) the TTC Guarantee. 14.4 Limitation on Fundamental Changes. Enter into any merger, --------------------------------- consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer or otherwise dispose of, all or substantially all of its property, business or assets, except: (a) any Subsidiary of the Borrower may be merged or consolidated with or into the Borrower (provided that the Borrower shall be the continuing or -------- surviving corporation) or with or into any one or more Wholly Owned Subsidiaries of the Borrower (provided that the Wholly Owned Subsidiary or -------- Subsidiaries shall be the continuing or surviving corporation); (b) any Subsidiary may liquidate or sell, lease, transfer or otherwise dispose of any or all of its assets (upon voluntary liquidation or otherwise) to the Borrower or any other Wholly Owned Subsidiary of the Borrower; (c) pursuant to the Merger, the Recapitalization, the Transfer or the Assumption; or (d) as expressly permitted by subsection 14.5. 14.5 Limitation on Sale of Assets. Convey, sell, lease, assign, ---------------------------- transfer or otherwise dispose of any of its property, business or assets (including, without limitation, 79 receivables and leasehold interests), whether now owned or hereafter acquired, or, in the case of any Subsidiary, issue or sell any shares of such Subsidiary's Capital Stock to any Person other than the Borrower or any Wholly Owned Subsidiary, except: (a) the sale or other disposition of inventory, or of surplus, obsolete or worn-out property or assets, whether now owned or hereafter acquired, in the ordinary course of business; (b) the sale or other disposition of any other property or assets in the ordinary course of business (it being understood that this shall not include the sale or other disposition of all or substantially all of any business unit); (c) the sale or other disposition of any property or assets (other than assets described in clauses (a) and (b) above), provided that the -------- aggregate market value of all assets so sold or disposed of in any period of twelve consecutive months shall not exceed $10,000,000; (d) the sale or discount without recourse of accounts receivable or notes receivable arising in the ordinary course of business, or the conversion or exchange of accounts receivable into or for notes receivable in connection with the compromise or collection thereof, provided that, in -------- the case of any Foreign Subsidiary of the Borrower, any such sale or discount may be with recourse if such sale or discount is consistent with customary practice in such Foreign Subsidiary's country of business; (e) the sale or other disposition of any assets or property by the Borrower or any of its Subsidiaries to the Borrower or any Wholly Owned Subsidiary of the Borrower; (f) the sale of the Capital Stock or all or substantially all of the assets of the Subsidiaries of the Borrower contemplated in the side letter of the Borrower to the Administrative Agent delivered on the date hereof; (g) as permitted by subsection 14.4(b) or (c); (h) pursuant to Sale and Leaseback Transactions permitted by subsection 14.10; (i) the abandonment, sale or other disposition of patents, trademarks or other intellectual property that are, in the reasonable judgment of the Borrower, no longer economically practicable to maintain or useful in the conduct of the business of the Borrower and its Subsidiaries taken as a whole; (j) any sale or other disposition of the property of the Borrower or any of its Subsidiaries set forth on Schedule 14.5(j); (k) any sale or other disposition of the property of the Borrower or any of its Subsidiaries, so long as the Net Proceeds of any such sale or other disposition do not exceed $25,000,000 in the aggregate after the Closing Date, provided that an amount equal to 100% of the Net Proceeds of -------- such sale or other disposition less the Reinvested Amount is applied in ---- accordance with subsection 9.5(d); and 80 (l) any issuance, sale or other disposition of preferred stock (or equivalent equity interest) of any Subsidiary constituting Indebtedness created, incurred, assumed or existing in compliance with subsection 14.1. 14.6 Limitation on Restricted Payments. Declare or pay any dividend --------------------------------- (other than dividends payable solely in common stock of the Borrower or options, warrants or other rights to purchase common stock of the Borrower) on, or make any payment on account of, or set apart assets for a sinking or other analogous fund for, the purchase, redemption, defeasance, retirement or other acquisition of, any shares of any class of Capital Stock of the Borrower that is not Indebtedness or any warrants or options to purchase any such stock, whether now or hereafter outstanding, or make any other distribution (other than dividends payable solely in the common stock of the Borrower or options, warrants or other rights to purchase common stock of the Borrower) in respect thereof, either directly or indirectly, whether in cash or property or in obligations of the Borrower or any Subsidiary (such declarations, payments, setting apart, purchases, redemptions, defeasances, retirements, acquisitions and distributions being herein called "Restricted Payments"), except that: ------------------- (a) the Borrower may pay cash dividends in an amount sufficient to allow the Guarantor to pay its obligations to CD&R under any agreement with CD&R for the rendering of management consulting or financial advisory services, provided that such amount shall not exceed in the aggregate -------- $750,000 per year plus reasonable out-of-pocket expenses; (b) the Borrower may pay cash dividends in an amount sufficient to allow the Guarantor to pay expenses incurred in the ordinary course of business in an aggregate amount not to exceed $1,000,000 in any fiscal year; (c) the Borrower may pay cash dividends in an amount sufficient to cover reasonable and necessary expenses (including professional fees and expenses) incurred by the Guarantor in connection with (i) registration, public offerings and exchange listing of equity or debt securities and maintenance of the same, (ii) compliance with reporting obligations under federal or state laws or under this Agreement or any of the other Credit Documents and (iii) indemnification and reimbursement of directors, officers and employees in respect of liabilities relating to their serving in any such capacity; (d) the Borrower may pay cash dividends in amounts sufficient to pay tax liabilities of the Guarantor which are paid in cash by the Guarantor to any taxing authority; (e) the Borrower may, and may pay cash dividends in an amount sufficient to allow the Guarantor to, repurchase shares of its common stock or rights, options or units in respect thereof, from Management Investors, including as contemplated by the Management Subscription Agreements which may be entered into between the Guarantor or the Borrower and Management Investors, for an aggregate purchase price not to exceed $15,000,000 in any fiscal year and $30,000,000 during the term of this Agreement; provided -------- that such amount shall be increased by an amount equal to the proceeds of any resales or new issuances of shares and options to any such Management Investors, at any time after the initial issuances to any Management Investors, together with the aggregate amount of deferred compensation owed by the Guarantor, the Borrower or any of their Subsidiaries to any such Management 81 Investor that shall thereafter have been canceled, waived or exchanged in connection with the grant to such Management Investor of the right to receive or acquire shares of the Guarantor's or the Borrower's common stock; and (f) the Borrower may enter into and consummate the Transaction and the transactions expressly contemplated by the Transaction Documents, and may pay cash dividends in an amount sufficient to allow the Guarantor (i) to pay all fees and expenses incurred in connection with the Transaction and the transactions expressly contemplated by the Transaction Documents, (ii) to allow the Guarantor to perform its obligations under or in connection with the Transaction Documents and (iii) to permit the Guarantor to pay its Guarantee Obligations on account of the Senior Subordinated Notes and the Senior Subordinated Note Indenture, to the extent that the payment of such Guarantee Obligations does not violate the subordination provisions contained in the Senior Subordinated Notes or the Senior Subordinated Note Indenture. 14.7 Limitation on Capital Expenditures. Make or commit to make (by ---------------------------------- way of the acquisition of securities of a Person or otherwise) any expenditure (a "Capital Expenditure") in respect of the purchase or other acquisition of ------------------- fixed or capital assets (excluding (i) any such asset acquired in connection with normal replacement and maintenance programs properly charged to current operations and (ii) any Permitted Acquisition permitted by subsection 14.8(e)) except for (x) Capital Expenditures described in the immediately preceding parenthetical and (y) additional Capital Expenditures, in the case of this clause (y) not exceeding, in the aggregate for the Borrower and its Subsidiaries, during any fiscal year of the Borrower the amount set forth below opposite such fiscal year: Fiscal Year Amount ----------- ------ 1998 $17,000,000 1999 $18,000,000 2000 $20,000,000 2001 and each fiscal $25,000,000 year thereafter ; provided that any portion of such amount which is not so expended in the -------- fiscal year for which it is permitted above may be carried-over to increase the amount permitted for the next fiscal year of the Borrower and shall be deemed to be the first amounts expended in such next fiscal year; provided, further that -------- ------- none of the amounts set forth in the table above shall be increased by more than the greater of (x) 50% of such amount and (y) $10,000,000 by virtue of any such carry-over. 14.8 Limitation on Investments, Loans and Advances. Make any --------------------------------------------- advance, loan, extension of credit or capital contribution to, or purchase any stock, bonds, notes, debentures or other securities of or any assets constituting a business unit of, or make any other investment (each an "Investment") in, any Person, except: - ----------- 82 (a) extensions of trade credit in the ordinary course of business; (b) Investments in cash and Cash Equivalents; (c) loans and advances to officers, directors or employees of the Guarantor, the Borrower or their Subsidiaries (i) for travel, entertainment and relocation expenses in the ordinary course of business, (ii) for other purposes in an aggregate amount for the Guarantor, the Borrower and their Subsidiaries, together with the aggregate amount of all Guarantee Obligations permitted pursuant to subsection 14.3(j)(iii), not to exceed $2,000,000 at any one time outstanding, (iii) relating to indemnification or reimbursement of any officers, directors or employees in respect of liabilities relating to their serving in any such capacity or as otherwise specified in subsection 14.9 and (iv) existing on the Closing Date and described in Schedule 14.8(f); (d) Investments by the Borrower in, and loans, advances and capital contributions by the Borrower to, any Wholly Owned Subsidiary and investments by Subsidiaries in, and loans, advances and capital contributions by Subsidiaries to, the Borrower and Wholly Owned Subsidiaries; (e) the acquisition of all or substantially all of the business or assets or the Capital Stock of any Person or any business unit thereof or all or substantially all of the Capital Stock of any Person (a "Permitted --------- Acquisition"), provided that: ----------- -------- (i) upon giving effect to such Permitted Acquisition on a pro forma basis, either (A) the Borrower would be in Historical Pro Forma Compliance with respect to such Permitted Acquisition, or (B) the Borrower would not be in Historical Pro Forma Compliance but would otherwise be in compliance on a pro forma basis with each of the financial covenants contained in Section 13 as if such Permitted Acquisition had been made on the first day of the Historical Period, and the aggregate cash purchase price paid by the Borrower and its Subsidiaries for all Permitted Acquisitions made pursuant to this subclause (B) does not exceed an amount initially equal to $25,000,000, which amount shall be increased by $5,000,000 on each anniversary of the Closing Date, or (C) the Borrower would be in compliance on a pro forma basis with each of the financial covenants contained in Section 13 as if such Permitted Acquisition had been made on the first day of the Historical Period, and such Permitted Acquisition is financed entirely through the issuance of equity (excluding any financing through the assumption of Indebtedness not for borrowed money in connection with the Acquisition); (ii) no Default or Event of Default has occurred and is continuing at the time of consummation of such Permitted Acquisition or will result therefrom; and (iii) any such acquisition of Capital Stock of any Person may exclude any Capital stock of such Person to the extent necessary in the good faith judgment of the Borrower, to permit such acquisition to be accounted for as a recapitalization; 83 (f) Investments existing on the Closing Date and described in Schedule 14.8(f), setting forth the respective amounts of such Investments as of a recent date; (g) Investments in notes receivable and other instruments and securities obtained in connection with transactions permitted by subsection 14.5(d); (h) Investments in the nature of pledges or deposits with respect to leases or utilities provided to third parties in the ordinary course of business or otherwise described in subsection 14.2(c), (d) or (j); (i) Investments representing non-cash consideration received by the Borrower or any of its Subsidiaries in connection with any sale or other disposition of the property of the Borrower or any of its Subsidiaries, provided that in the case of any sale or other disposition permitted under -------- subsection 14.5(j), such non-cash consideration constitutes not more than 25% of the aggregate consideration received in connection with such sale or other disposition and any such non-cash consideration received by the Borrower or any of its Domestic Subsidiaries is pledged to the Administrative Agent for the benefit of the Lenders pursuant to the Security Documents; (j) Investments by the Borrower or any of its Subsidiaries in one or more Persons in connection with joint ventures or similar arrangements in respect of which no other co-investor or other Person has a greater legal or beneficial ownership interest than the Borrower or such Subsidiary in an aggregate amount not to exceed $7,500,000 at any one time outstanding; (k) Investments representing evidences of Indebtedness, securities or other property received from another Person by the Borrower or any of its Subsidiaries in connection with any bankruptcy proceeding or other reorganization of such other Person or as a result of foreclosure, perfection or enforcement of any Lien or exchange for evidences of Indebtedness, securities or other property of such other Person held by the Borrower or any of its Subsidiaries; provided that any such -------- securities or other property received by the Borrower or any of its Domestic Subsidiaries is pledged to the Administrative Agent for the benefit of the Lenders pursuant to the Security Documents; (l) loans and advances to Management Investors in connection with the purchase by such Management Investors of Capital Stock of the Guarantor or the Borrower of up to $20,000,000 outstanding at any one time; provided -------- that such amount shall be reduced by the aggregate principal amount of Indebtedness in respect of Guarantee Obligations permitted by subsection 14.3(e); (m) Investments in the Capital Stock of the Guarantor which is held by the Guarantor as treasury stock and is restored to unissued status or is eliminated from authorized shares, or options in respect thereof; (n) Investments constituting Capital Expenditures, to the extent permitted by subsection 14.7; 84 (o) Investments of the Borrower and its Subsidiaries under any Hedging Arrangements; and (p) Investments not otherwise permitted by the preceding clauses of subsection 14.8 in an aggregate amount not to exceed $15,000,000 at any one time outstanding. 14.9 Limitation on Transactions with Affiliates. Enter into any ------------------------------------------ transaction, including, without limitation, any purchase, sale, lease or exchange of property or the rendering of any service, with any Affiliate of the Borrower unless such transaction (a) is otherwise permitted under this Agreement and, (b) either (i) is upon terms no less favorable to the Borrower or such Subsidiary, as the case may be, than it would obtain in a comparable arm's length transaction with a Person which is not such an Affiliate or (ii) has been approved by a majority of the Disinterested Directors of the Guarantor, or in the event that at the time of any such transaction, there are no Disinterested Directors serving on the board of directors or comparable body of the Guarantor, such transaction shall be approved by a nationally recognized expert with expertise in appraising the terms and conditions of the type of transaction for which approval is required; provided that nothing contained in this subsection -------- 14.9 shall be deemed to prohibit: (i) the Borrower or any of its Subsidiaries from entering into or performing any consulting, management or employment agreements or other compensation arrangements with a director, officer or employee of the Borrower or any of its Subsidiaries that provides for annual aggregate base compensation not in excess of $1,000,000 for each such director, officer or employee; (ii) the payment of transaction expenses in connection with this Agreement and the Transaction; (iii) the Borrower or any of its Subsidiaries from entering into, making payments pursuant to and otherwise performing an indemnification and contribution agreement in favor of any of the persons listed on Schedule 1.1(b) and their Affiliates, any Management Investor, and each person who is or becomes a director, officer, agent or employee of the Guarantor or any of its Subsidiaries, in respect of liabilities (A) arising under the Securities Act, the Exchange Act and any other applicable securities laws or otherwise, in connection with any offering of securities by the Guarantor or any of its Subsidiaries, (B) incurred to third parties for any action or failure to act of the Guarantor or any of its Subsidiaries, predecessors or successors, (C) arising out of the performance by CD&R of management consulting or financial advisory services provided to the Guarantor or any of its Subsidiaries, (D) arising out of the fact that any indemnitee was or is a director, officer, agent or employee of the Guarantor or any of its Subsidiaries, or is or was serving at the request of any such corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or enterprise or (E) to the fullest extent permitted by Delaware or other applicable state law, arising out of any breach or alleged breach by such indemnitee of his or her fiduciary duty as a director or officer of the Guarantor or any of its Subsidiaries; 85 (iv) the Guarantor or any of its Subsidiaries from performing any agreements or commitments with or to any Affiliate existing on the Closing Date and described on Schedule 14.9(iv); (v) payments pursuant to the Tax Allocation Agreement; or (vi) any transaction permitted under subsection 14.2(m), 14.3(e), 14.3(g), 14.3(j), 14.4, 14.6, 14.8(c) or 14.8(l), or any transaction with a Wholly Owned Subsidiary of the Borrower. For purposes of this subsection 14.9, "Disinterested Director" shall mean, with ---------------------- respect to any Person and transaction, a member of the board of directors or comparable body of such Person who does not have any material direct or indirect financial interest in or with respect to such transaction (other than by virtue of such member's ownership of Capital Stock of the Guarantor). 14.10 Limitation on Sales and Leasebacks. Enter into any arrangement ---------------------------------- with any Person providing for the leasing by the Borrower or any Subsidiary of real or personal property which has been or is to be sold or transferred by the Borrower or such Subsidiary to such Person or to any other Person to whom funds have been or are to be advanced by such Person on the security of such property or rental obligations of the Borrower or such Subsidiary (any of such arrangements, a "Sale and Leaseback Transaction") other than in connection with ------------------------------ any sale or other disposition permitted under subsection 14.5 and except for Sale and Leaseback Transactions entered into by the Borrower or any such Subsidiary with respect to real or personal property with an aggregate book value not to exceed $10,000,000 at any one time. 14.11 Limitation on Changes in Fiscal Year. Permit the fiscal year ------------------------------------ of the Borrower to end on a day other than March 31. 14.12 Limitation on Optional Payments and Modifications of Debt --------------------------------------------------------- Instruments and other Material Agreements. (a) Make any optional payment, - ----------------------------------------- prepayment, repurchase or redemption of the Senior Subordinated Notes or make any optional payments on account of or for a sinking or other analogous fund for the repurchase, redemption, defeasance or other acquisition thereof (other than mandatory payments of principal and interest and payments of, in each case, fees and expenses required by the Senior Subordinated Notes or the Senior Subordinated Note Indenture, only to the extent permitted under the subordination provisions, if any, applicable thereto); (b) make any amendment, supplement, modification or waiver of any of the terms of the Senior Subordinated Notes or the Senior Subordinated Note Indenture (i) which amends or modifies the subordination provisions contained in the Senior Subordinated Notes and the Senior Subordinated Note Indenture; (ii) which shortens the fixed maturity or increases the principal amount of, or increases the rate or shortens the time of payment of interest on, or increases the amount or shortens the time of payment of any principal or premium payable whether at maturity, at a date fixed for prepayment or by acceleration or otherwise of the Indebtedness evidenced by the Senior Subordinated Notes or increases the amount of, or accelerates the time of payment of, any fees or other amounts payable in connection therewith to any holder of the Senior Subordinated Notes; (iii) which relates to any material affirmative or negative covenants or any events of default or remedies thereunder and the effect of which is to subject the Borrower, or any of its Subsidiaries, to any 86 more onerous or more restrictive provisions; or (iv) which otherwise adversely affects the interests of the Lenders as senior creditors with respect to the Senior Subordinated Notes or the interests of the Lenders hereunder in any material respect or (c) in the event of the occurrence of a Change of Control, repurchase the Senior Subordinated Notes, unless the Borrower shall have (i) made payment in full of the Loans, all Reimbursement Obligations and any other amounts then due and owing to any Lender or the Administrative Agent hereunder and under any Note and cash collateralized the L/C Obligations on terms reasonably satisfactory to the Administrative Agent or (ii) made an offer to pay the Loans, all Reimbursement Obligations and any amounts then due and owing to each Lender and the Administrative Agent hereunder and under any Note and to cash collateralize the L/C Obligations in respect of each Lender and shall have made payment in full thereof to each such Lender or the Administrative Agent which has accepted such offer and cash collateralized the L/C Obligations in respect of each such Lender which has accepted such offer. This subsection 14.12 shall not be deemed to restrict or prohibit (i) the assumption by TTC of the Senior Subordinated Note Indenture and the Senior Subordinated Notes, and the rights and obligations thereunder, in connection with the Assumption or (ii) the exchange after the Closing Date of newly issued Senior Subordinated Notes for previously issued Senior Subordinated Notes. 14.13 Limitation on Negative Pledge Clauses. Enter into any ------------------------------------- agreement which prohibits or limits the ability of the Borrower or any of its Subsidiaries to create, incur, assume or suffer to exist any Lien upon any of its property or revenues, whether now owned or hereafter acquired, to secure the obligations hereunder or, in the case of any guarantor, its obligations under the Collateral Agreement, other than (a) this Agreement and the other Credit Documents and any related documents and (b) any industrial revenue or development bonds, agreements governing any purchase money Liens, acquisition agreements or Financing Leases or operating leases of real property entered into in the ordinary course of business otherwise permitted hereby (in which case, any prohibition or limitation shall only be effective against the assets financed, acquired or leased thereby). 14.14 Limitation on Lines of Business. Enter into any business, ------------------------------- either directly or through any Subsidiary, except for those businesses of the same general type as those in which the Borrower and its Subsidiaries are engaged on the Closing Date or which are related thereto. 14.15 Limitation on Activities of Holding. In the case of Holding ----------------------------------- and notwithstanding anything to the contrary in this Agreement or any other Loan Document, Holding shall not conduct or otherwise engage, in any business or operations other than: (i) the Transactions and the other transactions contemplated by the Transaction Documents or the provision of administrative, legal, accounting and management services to or on behalf of any of its Subsidiaries, (ii) the ownership of the Capital Stock or other interests of its Subsidiaries, the sale and transfer of such ownership interests (to the extent not otherwise prohibited by the Credit Agreement), and the exercise of rights and performance of obligations in connection therewith, (iii) the entry into, and exercise of rights and performance of obligations in respect of, (A) the Transaction Documents, the Collateral Agreement and any other Credit Document to which Holding is a party, any other agreement to which Holding is a party on the date hereof (which other agreements (other than those contemplated elsewhere in this paragraph) will be contributed to the Borrower upon the consummation of the Assumption), the Senior 87 Subordinated Note Indenture and the Senior Subordinated Notes or any guarantee thereof, and any guarantee of Indebtedness or other obligations of any of its Subsidiaries permitted pursuant to the Credit Documents, in each case as amended, supplemented, waived or otherwise modified from time to time, and any refinancings, refundings, renewals or extensions thereof, (B) contracts and agreements with officers, directors and employees of Holding or a Subsidiary thereof relating to their employment or directorships, (C) insurance policies and related contracts and agreements, and (D) equity subscription agreements, registration rights agreements, voting and other stockholder agreements, engagement letters, underwriting agreements and other agreements in respect of its equity securities or any offering, issuance or sale thereof, including but not limited to in respect of the Management Subscription Agreements, (iv) the offering, issuance, sale and repurchase or redemption of, and dividends or distributions on, its equity securities, (v) the filing of registration statements, and compliance with applicable reporting and other obligations, under federal, state or other securities laws, (vi) the listing of its equity securities and compliance with applicable reporting and other obligations in connection therewith, (vii) the retention of (and the entry into, and exercise of rights and performance of obligations in respect of, contracts and agreements with) transfer agents, private placement agents, underwriters, counsel, accountants and other advisors and consultants, (viii) the performance of obligations under and compliance with its certificate of incorporation and by- laws, or any applicable law, ordinance, regulation, rule, order, judgment, decree or permit, including, without limitation, as a result of or in connection with the activities of its Subsidiaries, (ix) the incurrence and payment of its operating and business expenses and any taxes for which it may be liable, (x) making loans to or other Investments in, or incurrence of Indebtedness to, its Subsidiaries, (xi) the ownership of, and exercise of rights and performance of obligations in respect of, Intellectual Property and foreign patents, trademarks, trade names, copyrights, technology, know-how and processes and licensing such Intellectual Property and foreign patents, trademarks, trade names, copyrights, technology, know-how and processes (other than Intellectual Property which is material to the business of the Borrower and its Subsidiaries, which Intellectual Property shall be owned by the Borrower and its Subsidiaries), and (xii) other activities incidental or related to the foregoing. SECTION 15. NEGATIVE COVENANTS APPLICABLE TO TRANCHE B COMMITMENTS, TRANCHE C COMMITMENTS AND TRANCHE D COMMITMENTS The Borrower hereby agrees that, until payment in full of all Tranche B Loans, Tranche C Loans or Tranche D Loans and any other amount then due and owing on account of the Tranche B Loans, Tranche C Loans or Tranche D Loans to any Tranche B Lender, Tranche C Lender or Tranche D Lender or the Administrative Agent hereunder or under any Note: (a) The covenants contained in Sections 406, 408, 409, 410, 411 and 412 of the Senior Subordinated Note Indenture as in effect on the Closing Date (the "Covenants") (together with the definitions of such terms as may be used --------- therein) as set forth in Schedule 15(a) are hereby deemed to be incorporated herein by reference. In the event the Senior Subordinated Note Indenture shall expire, terminate or be cancelled, such Covenants and definitions as set forth in Schedule 15(a) shall continue to be deemed to be incorporated herein by reference, as such provisions were in effect on the Closing Date and as amended, supplemented or otherwise modified from time to time with the consent of the Majority Hybrid Lenders. In the event that any such amendment, supplement or modification is made only to such provisions as so 88 incorporated, and not to such provisions as contained in the Senior Subordinated Note Indenture, subsection 14.12 shall not apply to such amendment, supplement or modification. (b) The Borrower shall, and shall cause its Restricted Subsidiaries (as defined in the Senior Subordinated Note Indenture as in effect on the Closing Date) to, observe and perform the Covenants, as such Covenants may be amended, supplemented or otherwise modified from time to time with the consent of the Majority Hybrid Lenders. SECTION 16. EVENTS OF DEFAULT 16.1 Certain Bankruptcy Events. If any of the following events shall ------------------------- occur and be continuing: (a) the Guarantor or the Borrower or any of its Material Subsidiaries shall commence any case, proceeding or other action (i) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (ii) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or the Guarantor or the Borrower or any of its Material Subsidiaries shall make a general assignment for the benefit of its creditors; or (b) there shall be commenced against the Guarantor or the Borrower or any of its Material Subsidiaries any case, proceeding or other action of a nature referred to in clause (a) above which (i) results in the entry of an order for relief or any such adjudication or appointment or (ii) remains undismissed, undischarged or unbonded for a period of 60 days; or (c) there shall be commenced against the Guarantor or the Borrower or any of its Material Subsidiaries any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within 60 days from the entry thereof; or (d) the Guarantor or the Borrower or any of its Material Subsidiaries shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (a), (b), or (c) above; or (e) the Guarantor or the Borrower or any of its Material Subsidiaries shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due; then, and in any such event: 89 (A) if such event is an Event of Default specified in clause (a) or (b) of this subsection 16.1 with respect to the Borrower, automatically the Commitments shall immediately terminate and the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement (including, without limitation, all amounts of L/C Obligations, whether or not the beneficiaries of the then outstanding Letters of Credit shall have presented the documents required thereunder) shall immediately become due and payable; and (B) if such event is any other Event of Default specified in this subsection 16.1, any or all of the following actions may be taken: (i) with the consent of the Majority Basic Lenders, the Administrative Agent may, or upon the request of the Majority Basic Lenders, the Administrative Agent shall, by notice to the Borrower declare the Revolving Credit Commitments and/or the Tranche A Commitments to be terminated forthwith, whereupon the Revolving Credit Commitments and/or the Tranche A Commitments (as the case may be) shall immediately terminate; (ii) with the consent of the Majority Basic Lenders, the Administrative Agent may, or upon the request of the Majority Basic Lenders, the Administrative Agent shall, by notice to the Borrower, declare the Swing Line Loans and/or the Revolving Credit Loans and/or the Tranche A Loans hereunder (with accrued interest thereon) and all other amounts owing on account thereof under this Agreement (including, without limitation, all amounts of L/C Obligations, whether or not the beneficiaries of the then outstanding Letters of Credit shall have presented the documents required thereunder) to be due and payable forthwith, whereupon the same shall immediately become due and payable; (iii) with the consent of the Majority Hybrid Lenders, the Administrative Agent may, or upon the request of the Majority Hybrid Lenders, the Administrative Agent shall, by notice to the Borrower declare the Tranche B Commitments and/or the Tranche C Commitments and/or the Tranche D Commitments to be terminated forthwith, whereupon the Tranche B Commitments and/or the Tranche C Commitments and/or the Tranche D Commitments (as the case may be) shall immediately terminate; and (iv) with the consent of the Majority Hybrid Lenders, the Administrative Agent may, or upon the request of the Majority Hybrid Lenders, the Administrative Agent shall, by notice to the Borrower, declare the Tranche B Loans and/or the Tranche C Loans and/or the Tranche D Loans (with accrued interest thereon) and all other amounts owing on account thereof under this Agreement to be due and payable forthwith, whereupon the same shall immediately become due and payable. 16.2 Other Events of Default Applicable to the Tranche A Commitments, ---------------------------------------------------------------- Revolving Credit Commitments and Amounts Owing Thereunder. If any of the - --------------------------------------------------------- following events shall occur and be continuing: (a) The Borrower shall fail to pay any principal of any Loan or Reimbursement Obligation when due in accordance with the terms thereof or hereof (it being understood that any conversion of a Reimbursement Obligation into a borrowing pursuant to subsection 7.5(c) shall not constitute a failure to make a payment in satisfaction of such Reimbursement Obligation) or the Borrower shall fail to pay any interest on any Loan, or any other amount payable hereunder, within five days after any such interest or other amount becomes due in accordance with the terms thereof or hereof; or 90 (b) Any representation or warranty made or deemed made by the Borrower or any other Credit Party herein or in any other Credit Document or which is contained in any certificate furnished by it at any time under or pursuant to this Agreement or any such other Credit Document shall prove to have been incorrect in any material respect on or as of the date made or deemed made; or (c) The Borrower or any other Credit Party shall default in the observance or performance of any agreement contained in Section 13 or 14; or (d) The Borrower or any other Credit Party shall default in the observance or performance of any other agreement contained in this Agreement or any other Credit Document (other than as provided in paragraphs (a) through (c) of this subsection 16.2), and such default shall continue unremedied for a period ending on the earlier of (i) the date 30 days after a Responsible Officer of the Borrower shall have discovered or should have discovered such default and (ii) the date 15 days after written notice has been given to the Borrower by the Administrative Agent; or (e) The Borrower or any of its Subsidiaries shall (i) default in any payment of principal of or interest of any Indebtedness (other than the Loans and the Reimbursement Obligations) or in the payment of any Guarantee Obligation, beyond the period of grace, if any, provided in the instrument or agreement under which such Indebtedness or Guarantee Obligation was created; or (ii) default in the observance or performance of any other agreement or condition relating to any such Indebtedness or Guarantee Obligation or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders of such Indebtedness or beneficiary or beneficiaries of such Guarantee Obligation (or a trustee or Administrative Agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice or lapse of time if required, such Indebtedness to become due prior to its stated maturity or such Guarantee Obligation to become payable (an "Acceleration"), and such time shall have ------------ lapsed and, if any notice (a "Default Notice") shall be required to -------------- commence a grace period or declare the occurrence of an event of default before notice of Acceleration may be delivered, such Default Notice shall have been given; provided, however, that no Default or Event of Default -------- ------- shall exist under this paragraph unless the amount of any such Indebtedness or Guarantee Obligation in respect of which any default or other event or condition referred to in this paragraph shall have occurred shall be equal to at least $15,000,000; or (f) (i) Any Person shall engage in any "prohibited transaction" (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302 of ERISA), whether or not waived, shall exist with respect to any Plan or any Lien in favor of the PBGC or a Plan shall arise on the assets of the Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall occur with respect to, or proceedings shall commence to have a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any Single Employer Plan, which Reportable Event or commencement of proceedings or appointment of a trustee is reasonably likely to result in the termination of such Plan for purposes of Title IV of ERISA (other than a standard termination pursuant to Section 91 4041(b) of ERISA), (iv) any Single Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the Borrower or any Commonly Controlled Entity shall, or is reasonably likely to, incur any liability in connection with a withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan, (vi) the occurrence or expected occurrence of any event or condition which results or is reasonably likely to result in the Borrower's or any Commonly Controlled Entity's becoming responsible for any liability in respect of a Former Plan, or (vii) any other event or condition shall occur or exist with respect to a Plan; and in each case in clauses (i) through (vii) above, such event or condition, together with all other such events or conditions, if any, would be reasonably expected to result in liability which would have a Material Adverse Effect; or (g) One or more judgments or decrees shall be entered against the Borrower or any of its Active Subsidiaries involving in the aggregate a liability (net of any insurance or indemnity payments actually received in respect thereof prior to or within 60 days from the entry thereof, or to be received in respect thereof, in the event any appeal thereof shall be unsuccessful) of $15,000,000 or more, and all such judgments or decrees shall not have been vacated, discharged, stayed or bonded pending appeal within 60 days from the entry thereof; or (h) (i) Any of the Security Documents (or any guarantee thereunder by any Credit Party of the monetary obligations of the Borrower hereunder) shall cease, for any reason, to be in full force and effect other than pursuant to the terms hereof and thereof, or the Borrower or any other Credit Party which is a party to any of the Security Documents shall so assert in writing or (ii) the Lien created by any of the Security Documents shall cease to be enforceable and of the same effect as to perfection and priority purported to be created thereby with respect to any significant portion of the Collateral (other than in connection with any termination of such Lien in respect of any Collateral as permitted hereby or by any Security Document), and such failure of such Lien to be perfected and enforceable with such priority shall have continued unremedied for a period of 20 days; or (i) The Senior Subordinated Notes, for any reason, shall not be or shall cease to be validly subordinated as provided therein and in the Senior Subordinated Note Indenture to the obligations of the Borrower under this Agreement, any Notes and the other Credit Documents; or (j) a Change of Control shall have occurred or the Guarantor shall cease to own directly or indirectly 100% of the issued and outstanding common stock (or equivalent equity interests) of the Borrower; or (k) the Assumption is not consummated within five days of the Closing Date; then, and in any such event, either or both of the following actions may be taken: (i) with the consent of the Majority Basic Lenders, the Administrative Agent may, or upon the request of the Majority Basic Lenders, the Administrative Agent shall, by notice to the Borrower declare the Revolving Credit Commitments and/or the Tranche A Commitments to be terminated forthwith, whereupon the Revolving Credit 92 Commitments and/or the Tranche A Commitments (as the case may be) shall immediately terminate; and (ii) with the consent of the Majority Basic Lenders, the Administrative Agent may, or upon the request of the Majority Basic Lenders, the Administrative Agent shall, by notice to the Borrower, declare the Revolving Credit Loans and/or the Swing Line Loans and/or the Tranche A Loans hereunder (with accrued interest thereon) and all other amounts owing on account thereof under this Agreement (including, without limitation, all amounts of L/C Obligations, whether or not the beneficiaries of the then outstanding Letters of Credit shall have presented the documents required thereunder) to be due and payable forthwith, whereupon the same shall immediately become due and payable. 16.3 Other Events of Default Applicable to Tranche B Commitments, ------------------------------------------------------------ Tranche C Commitments, Tranche D Commitments and Amounts Owing Thereunder. If - ------------------------------------------------------------------------- any of the following events shall occur and be continuing: (a) The Borrower shall fail to pay any principal of any Tranche B Loan, Tranche C Loan or Tranche D Loan when due in accordance with the terms thereof or hereof; or the Borrower shall fail to pay any interest on any Tranche B Loan, Tranche C Loan or Tranche D Loan, or any other amount payable on account thereof hereunder, within five days after any such interest or other amount becomes due in accordance with the terms thereof or hereof; or (b) Prior to the termination of the Revolving Credit Commitments and the payment in full of the Revolving Credit Loans, the Tranche A Loans and any Swing Line Loan, all Reimbursement Obligations then due and owing, and any other amount then due and owing hereunder or under any Note to any Revolving Credit Lender, any Tranche A Lender or the Swing Line Lender on account of the Revolving Credit Commitments, the Tranche A Commitments, the Tranche A Loans, the Swing Line Loans or the Letters of Credit, the Borrower shall default in the observance or performance of any agreement contained in Section 13 and such default shall continue unremedied for a period of 20 Business Days after the Borrower has notified the Administrative Agent in writing of such default pursuant to subsection 12.7(a); or (c) The Borrower or any other Credit Party shall default in the observance of performance of any agreement contained in Section 15 (and any grace period provided in the Senior Subordinated Note Indenture with respect to the relevant Covenant referred to in Section 15 shall have expired, with any such grace period that commences upon notice from the holders of the Senior Subordinated Notes or the trustee with respect to the Senior Subordinated Notes to commence upon notice from a comparable percentage of the Tranche B Lenders, Tranche C Lenders and Tranche D Lenders (voting as a single class)) or subsection 14.12; or (d) The Borrower or any of its Subsidiaries shall (i) default in any payment of principal of or interest of any Indebtedness (other than the Tranche B Loans, the Tranche C Loans or the Tranche D Loans) or in the payment of any Guarantee Obligation, beyond the period of grace, if any, provided in the instrument or agreement 93 under which such Indebtedness or Guarantee Obligation was created; or (ii) default in the observance or performance of any other agreement or condition relating to any such Indebtedness or Guarantee Obligation or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders of such Indebtedness or beneficiary or beneficiaries of such Guarantee Obligation (or a trustee or administrative agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice or the lapse of time if required, an Acceleration, and such time shall have lapsed and any Default Notice shall have been given; provided, however, that no Default or Event of Default shall exist -------- ------- under this paragraph unless (A) the amount of any such Indebtedness or Guarantee Obligation in respect of which any default or other event or condition referred to in this paragraph shall have occurred shall be equal to at least $15,000,000 and (B) in the case of clause (ii) above only, (x) such default or other event or condition shall have continued for a period of 60 days and (y) the holder or holders of such Indebtedness or beneficiary or beneficiaries of such Guarantee Obligation (or a trustee or administrative agent on behalf of such holder or holders or beneficiary or beneficiaries) shall not have caused such Indebtedness to become due prior to its stated maturity or such Guarantee Obligation to become payable; or (e) (i) Any of the Security Documents (or any guarantee thereunder by any Credit Party of the monetary obligations of the Borrower hereunder) shall cease, for any reason, to be in full force and effect other than pursuant to the terms hereof and thereof or the Borrower or any other Credit Party which is a party to any of the Security Documents shall so assert in writing or (ii) the Lien created by any of the Security Documents shall cease to be enforceable and of the same effect as to perfection and priority purported to be created thereby with respect to any significant portion of the Collateral (other than in connection with any termination of such Lien in respect of any Collateral as permitted hereby or by any Security Document), and such failure of such Lien to be perfected and enforceable with such priority shall have continued unremedied for a period of 20 days; or (f) The Senior Subordinated Notes, for any reason, shall not be or shall cease to be validly subordinated as provided therein and in the Senior Subordinated Note Indenture to the monetary obligations of the Borrower under this Agreement, any Notes and the other Credit Documents; or (g) a Change of Control shall have occurred or the Guarantor shall cease to own directly or indirectly 100% of the issued and outstanding common stock (or equivalent equity interests) of the Borrower; then, and in any such event, either or both of the following actions may be taken: (i) with the consent of the Majority Hybrid Lenders, the Administrative Agent may, or upon the request of the Majority Hybrid Lenders, the Administrative Agent shall, by notice to the Borrower declare the Tranche B Commitments and/or the Tranche C Commitments and/or the Tranche D Commitments to be terminated forthwith, whereupon the Tranche B Commitments and/or the Tranche C 94 Commitments and/or the Tranche D Commitments (as the case may be) shall immediately terminate; and (ii) with the consent of the Majority Hybrid Lenders, the Administrative Agent may, or upon the request of the Majority Hybrid Lenders, the Administrative Agent shall, by notice to the Borrower, declare the Tranche B Loans and/or the Tranche C Loans and/or the Tranche D Loans (with accrued interest thereon) and all other amounts owing on account thereof under this Agreement to be due and payable forthwith, whereupon the same shall immediately become due and payable. 16.4 Certain Provisions Applicable to Letters of Credit. With -------------------------------------------------- respect to all Letters of Credit with respect to which presentment for honor shall not have occurred at the time of an acceleration pursuant to subsection 16.1 or 16.2, the Borrower shall at such time deposit in a cash collateral account opened by the Administrative Agent an amount equal to the aggregate then undrawn and unexpired amount of such Letters of Credit. The Borrower hereby grants to the Administrative Agent, for the benefit of the Issuing Lender and the L/C Participants, a security interest in such cash collateral to secure all obligations of the Borrower under this Agreement and the other Credit Documents. Any amounts held in such cash collateral account shall be applied by the Administrative Agent to the payment of drafts drawn under such Letters of Credit, and the unused portion thereof after all such Letters of Credit shall have expired or been fully drawn upon, if any, shall be applied to repay other obligations of the Borrower hereunder and under the Notes. After all such Letters of Credit shall have expired or been fully drawn upon, all Reimbursement Obligations shall have been satisfied and all other obligations of the Borrower hereunder and under the Notes shall have been paid in full, the balance, if any, in such cash collateral account shall be returned to the Borrower. The Borrower shall execute and deliver to the Administrative Agent, for the account of the Issuing Lender and the L/C Participants, such further documents and instruments as the Administrative Agent may reasonably request to evidence the creation and perfection of the within security interest in such cash collateral account. 16.5 Certain Waivers. Except as expressly provided above in this --------------- Section, presentment, demand, protest and all other notices of any kind are hereby expressly waived. SECTION 17. THE ADMINISTRATIVE AGENT 17.1 Appointment. (a) Each Lender hereby irrevocably designates and ----------- appoints the Administrative Agent as the agent of such Lender under this Agreement and the other Credit Documents, and each such Lender irrevocably authorizes the Administrative Agent, in such capacity, to take such action on its behalf under the provisions of this Agreement and the other Credit Documents and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of this Agreement and the other Credit Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Credit Document or otherwise exist against the Administrative Agent. 95 (b) Each Lender hereby irrevocably designates and appoints Credit Suisse First Boston as the syndication agent and The Chase Manhattan Bank as documentation agent under this Agreement and the other Credit Documents. Notwithstanding any provision to the contrary elsewhere in this Agreement, neither the Syndication Agent nor the Documentation Agent shall have any duties or responsibilities hereunder, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Credit Document or otherwise exist against the Syndication Agent or the Documentation Agent. 17.2 Delegation of Duties. The Administrative Agent may execute any -------------------- of its duties under this Agreement and the other Credit Documents by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Administrative Agent shall not be responsible for the negligence or misconduct of any agent or attorneys in-fact selected by it with reasonable care. 17.3 Exculpatory Provisions. Neither the Administrative Agent nor ---------------------- any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be (i) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with this Agreement or any other Credit Document (except for its or such Person's own gross negligence or willful misconduct) or (ii) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by the Borrower or any officer thereof contained in this Agreement or any other Credit Document or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent under or in connection with, this Agreement or any other Credit Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Credit Document or for any failure of the Borrower to perform its obligations hereunder or thereunder. The Administrative Agent shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Credit Document, or to inspect the properties, books or records of the Borrower. 17.4 Reliance by Administrative Agent. The Administrative Agent -------------------------------- shall be entitled to rely, and shall be fully protected in relying, upon any Note, writing, resolution, notice, consent, certificate, affidavit, letter, telecopy, telex or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to the Borrower), independent accountants and other experts selected by the Administrative Agent. The Administrative Agent may deem and treat the payee of any Note as the owner thereof for all purposes unless a written notice of assignment, negotiation or transfer thereof shall have been filed with the Administrative Agent. The Administrative Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Credit Document unless it shall first receive such advice or concurrence of the Majority Basic Lenders as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Credit Documents in accordance with a request of the Majority Basic Lenders (or such larger number of Lenders as may be explicitly required 96 hereunder), and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Loans. 17.5 Notice of Default. The Administrative Agent shall not be deemed ----------------- to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless the Administrative Agent has received notice from a Lender or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default". In the event that the Administrative Agent receives such a notice, the Administrative Agent shall give notice thereof to the Lenders. The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Majority Basic Lenders or the Majority Hybrid Lenders (as the case may be); provided that unless and until the Administrative Agent -------- shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders. 17.6 Acknowledgments and Representations by Lenders. Each Lender ---------------------------------------------- expressly acknowledges that neither the Administrative Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates has made any representations or warranties to it and that no act by the Administrative Agent hereinafter taken, including any review of the affairs of the Borrower, shall be deemed to constitute any representation or warranty by the Administrative Agent to any Lender. Each Lender represents to each other party hereto that it has, independently and without reliance upon the Administrative Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, financial and other condition and creditworthiness of the Borrower and made its own decision to make its Loans hereunder and enter into this Agreement. Each Lender also represents to each other party hereto that it will, independently and without reliance upon the Administrative Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Credit Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Borrower. Each Lender represents to each other party hereto that it is a bank, savings and loan association or other similar savings institution, insurance company, investment fund or company or other financial institution that makes or acquires commercial loans in the ordinary course of its business, that it is participating hereunder as a Lender for such commercial purposes, and that it has the knowledge and experience to be and is capable of evaluating the merits and risks of being a Lender hereunder. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder, the Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, property, condition (financial or otherwise), prospects or creditworthiness of the Borrower which may come into the possession of the Administrative Agent or any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates. 17.7 Indemnification. The Lenders agree to indemnify each of the --------------- Administrative Agent and Syndication Agent in its respective capacity as such (to the extent not reimbursed by the Borrower and without limiting the obligation of the Borrower to do so), 97 ratably according to their respective Commitment Percentages in effect on the date on which indemnification is sought, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever which may at any time (including, without limitation, at any time following the payment of the Loans) be imposed on, incurred by or asserted against the Administrative Agent and/or the Syndication Agent in any way relating to or arising out of, the Commitments, this Agreement, any of the other Credit Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by the Administrative Agent and/or the Syndication Agent under or in connection with any of the foregoing; provided -------- that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the gross negligence or willful misconduct of the Administrative Agent or the Syndication Agent (as the case may be). The agreements in this subsection shall survive the payment of the Loans and all other amounts payable hereunder. 17.8 Agents in their Individual Capacities. Each of the ------------------------------------- Administrative Agent, the Syndication Agent and the Documentation Agent and their respective Affiliates may make loans to, accept deposits from and generally engage in any kind of business with the Borrower or any other Credit Party as though the Administrative Agent, the Syndication Agent or the Documentation Agent (as the case may be) were not the Administrative Agent, Syndication Agent or Documentation Agent hereunder and under the other Credit Documents. With respect to the Loans made by it, each of the Administrative Agent, the Syndication Agent and the Documentation Agent shall have the same rights and powers under this Agreement and the other Credit Documents as any Lender and may exercise the same as though it were not the Administrative Agent, the Syndication Agent or the Documentation Agent (as the case may be), and the terms "Lender" and "Lenders" shall include each of the Administrative Agent, the Syndication Agent and the Documentation Agent in its respective individual capacity. 17.9 Successor Agents. (a) Each of the Administrative Agent, the ---------------- Syndication Agent and the Documentation Agent may resign as Administrative Agent, Syndication Agent or Documentation Agent (as the case may be) upon 10 days' notice to the Lenders. (b) If the Administrative Agent shall resign as "Administrative Agent" under this Agreement and the other Credit Documents, then the Majority Basic Lenders shall appoint from among the Lenders a successor Administrative Agent (which shall be a bank) for the Lenders, which successor Administrative Agent (provided that, to the extent that no Default or Event of Default is -------- continuing at the time of such appointment, such Administrative Agent shall have been approved by the Borrower), shall succeed to the rights, powers and duties of the Administrative Agent hereunder. Effective upon such appointment and approval, the term "Administrative Agent" shall mean such successor Administrative Agent, and the former Administrative Agent's rights, powers and duties as Administrative Agent shall be terminated, without any other or further act or deed on the part of such former Administrative Agent or any of the parties to this Agreement or any holders of the Loans. After any retiring Administrative Agent's resignation as Administrative Agent, the provisions of this Section 17 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement and the other Credit Documents. 98 (c) Upon appointment of the successor Administrative Agent (the "Successor Administrative Agent"), the retiring Administrative Agent shall promptly (i) deliver to the Successor Administrative Agent, all Security Collateral (as defined in the Guarantee and Collateral Agreement) and any other collateral held by such retiring Administrative Agent pursuant to a Security Document, (ii) execute and file uniform commercial code financing statements prepared by the Borrower and the Successor Administrative Agent, naming the Successor Administrative Agent as assignee, in each jurisdiction financing statements have been filed in connection with any Credit Document, (iii) take all such actions required or requested by the Borrower to name the Successor Administrative Agent as mortgagee under the mortgages, if any, and (iv) take all such actions reasonably required or requested by the Borrower to perfect the pledge or lien pursuant to the Security Documents in the name of the new Administrative Agent. The Borrower shall pay or reimburse the retiring Administrative Agent for the reasonable out of pocket costs and expenses (including, without limitation, reasonable fees and disbursements of counsel to the retiring Administrative Agent) incurred by the retiring Administrative Agent in connection with actions pursuant to the foregoing sentence. (d) If the Syndication Agent shall resign as "Syndication Agent" or the Documentation Agent shall resign as "Documentation Agent" under this Agreement and the other Credit Documents, then no successor Syndication Agent or Documentation Agent, as the case may be, shall be appointed. SECTION 18. MISCELLANEOUS 18.1 Amendments and Waivers. (a) Neither this Agreement nor any ---------------------- other Credit Document, nor any terms hereof or thereof may be amended, supplemented or modified except in accordance with the provisions of this subsection 18.1. (b) Except as set forth in the succeeding paragraphs of this subsection 18.1, the Majority Basic Lenders may, or, with the written consent of the Majority Basic Lenders, the Administrative Agent may, from time to time, (i) enter into with the relevant Credit Parties written amendments, supplements or modifications hereto and to the other Credit Documents for the purpose of adding any provisions to this Agreement or the other Credit Documents or changing in any manner the rights of the Lenders or of the Credit Parties hereunder or thereunder or (ii) waive at any Credit Party's request on such terms and conditions as the Majority Basic Lenders or the Administrative Agent, as the case may be, may specify in such instrument, any of the requirements of this Agreement or the other Credit Documents or any Default or Event of Default and its consequences (any such amendment, supplement, modification or waiver, a "Specified Change"); provided, that (w) without the written consent of the - ----------------- -------- Issuing Lender, no Specified Change shall amend, supplement or otherwise modify any provisions of or directly applicable to any Letter of Credit, (x) without the written consent of the Swing Line Lender, no Specified Change shall amend, modify or waive any provision of Section 8 or any other provision of this Agreement governing the rights or obligations of the Swing Line Lender, (y) without the written consent of the then Administrative Agent, no Specified Change shall amend, modify or waive any provision of Section 17 or, without the prior written consent of the then Administrative Agent or the then Syndication Agent (as applicable), no Specified Change shall amend, modify or waive any other provision of this 99 Agreement governing the rights or obligations of the Administrative Agent or the Syndication Agent and (z) without the written consent of all the Tranche A Lenders and Revolving Credit Lenders, no Specified Change shall reduce the percentage specified in the definition of "Majority Basic Lenders". (c) Without the written consent of the Majority Hybrid Lenders, no Specified Change shall (i) waive any Default or Event of Default under subsection 16.3 and its consequences or (ii) amend, supplement or otherwise modify any provisions of Section 14.12, Section 15 (or any of the covenants or definitions incorporated therein by reference) or subsection 16.3. (d) Without the written consent of all the Tranche B Lenders, Tranche C Lenders and Tranche D Lenders, no Specified Change shall reduce the percentage specified in the definition of "Majority Hybrid Lenders". (e) Without the written consent of the Majority Lenders, no Specified Change shall (i) waive any of the conditions precedent to the funding of the initial Loans and extensions of credit set forth in subsection 11.1 (except that the making of the initial extensions of credit by any Lender on the Closing Date shall be deemed to constitute a waiver of such conditions precedent by such Lender), (ii) waive any Default or Event of Default under subsection 16.1 and its consequences or (iii) amend, supplement or otherwise modify any provisions of subsection 16.1. (f) Without the written consent of the Lenders having Commitment Percentages which aggregate more than 80% of the amount equal to the sum of the Aggregate Tranche A Commitment, the Aggregate Tranche B Commitment, the Aggregate Tranche C Commitment, the Aggregate Tranche D Commitment and the Aggregate Revolving Credit Commitment then in effect, no Specified Change shall take any action which has the effect of releasing all or substantially all of the Collateral or all or substantially all of the Subsidiary Guarantors from their Guarantee Obligations in respect hereof (except as permitted hereby or by any Security Document). (g) Without the written consent of each Lender directly affected thereby, no Specified Change shall reduce the amount or extend the scheduled date of maturity of any Loan or of any installment thereof, or reduce the stated rate of any interest or fee payable hereunder or extend the scheduled date of any payment thereof, or increase the amount or extend the expiration date of any Lender's Commitments or amend, modify or waive any provision of this subsection 18.1. (h) Without the written consent of all the Lenders, no Specified Change shall (i) consent to the assignment or transfer by the Borrower of any of its rights and obligations under this Agreement and the other Credit Documents (other than pursuant to the Assumption Agreement or as contemplated by subsection 18.6) or (ii) reduce the percentage specified in the definition of "Majority Lenders". (i) Without the written consent of the Majority Facility Lenders in respect of any Facility adversely affected thereby, no Specified Change shall amend or modify subsection 9.5(f) to change the order of applying prepayments thereunder among the respective Facilities. 100 (j) Any such waiver and any such amendment, supplement or modification shall apply equally to each of the Lenders and shall be binding upon the Credit Parties, the Lenders, the Administrative Agent and all future holders of the Loans. In the case of any waiver, each of the Credit Parties, the Lenders and the Administrative Agent shall be restored to their former positions and rights hereunder and under the other Credit Documents, and any Default or Event of Default waived shall be deemed to be cured and not continuing; no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon. (k) Notwithstanding anything contained in this subsection 18.1 to the contrary, neither Holding nor Newco may amend, modify, supplement or waive any provision of the TTC Guarantee (provided that the TTC Guarantee may be -------- terminated in accordance with its terms). 18.2 Notices. All notices, requests and demands to or upon the ------- respective parties hereto to be effective shall be in writing (including by facsimile transmission) and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made (a) in the case of delivery by hand, when delivered; (b) in the case of delivery by mail, three days after being deposited in the mails, postage prepaid; (c) in the case of delivery by a nationally recognized overnight courier, when received or (d) in the case of delivery by facsimile transmission, when sent and receipt has been confirmed, addressed as follows in the case of the Borrower and the Administrative Agent, and as set forth in Schedule II in the case of the other parties hereto, or to such other address as may be hereafter notified by the respective parties hereto and any future holders of the Loans: Holding or TTC Merger Co. LLC or TTC: Dynatech Corporation 3 New England Executive Park Burlington, Massachusetts 01803 Attention: Mark V.B. Tremallo, Corporate Vice President and General Counsel Fax: (781) 272-2304 Phone: (781) 221-2008 with a copy to: Debevoise & Plimpton 875 Third Avenue New York, New York 10022 Attention: David A. Brittenham, Esq. Fax: (212) 909-6836 Phone: (212) 909-6000 with a copy to: Debevoise & Plimpton 875 Third Avenue New York, New York 10022 Attention: David A. Brittenham, Esq. Fax: (212) 909-6836 Phone: (212) 909-6000 and 101 Dynatech Corporation 3 New England Executive Park Burlington, Massachusetts 01803 Attention: Mark V.B. Tremallo, Corporate Vice President and General Counsel Fax: (781) 272-2304 Phone: (781) 221-2008 The Administrative Agent: Morgan Guaranty Trust Company of New York 60 Wall Street New York, New York 10260 Attention: Steve Hannan Fax: (212) 648-5005 Phone: (212) 648-7679 with a copy to: Morgan Guaranty of New York c/o J.P. Morgan Services Inc. 500 Stanton Christiana Road Newark, Delaware 19713 Attention: Nicole Pedicone Fax: (302) 634-4300 Phone: (302) 634-1912 provided that any notice, request or demand to or upon the Administrative Agent - -------- or the Lenders pursuant to subsections 2.2, 3.2, 4.2, 5.2, 6.2, 7.2, 8.2. 9.3, 9.4, 9.6 or 9.11(b) shall not be effective until received. 18.3 No Waiver; Cumulative Remedies. No failure to exercise and no ------------------------------ delay in exercising, on the part of the Administrative Agent, any Lender or any Credit Party, any right, remedy, power or privilege hereunder or under the other Credit Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. 18.4 Survival of Representations and Warranties. All representations ------------------------------------------ and warranties made hereunder, in the other Credit Documents and in any certificate delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the making of the Loans hereunder. 18.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay ----------------------------- or reimburse each of the Administrative Agent and the Syndication Agent for all its reasonable out-of-pocket costs and expenses incurred in connection with the preparation and execution of, and any amendment, supplement or modification to, this Agreement and the other Credit Documents and any other documents prepared in connection herewith or therewith, and the consummation and administration of the transactions contemplated hereby and thereby, 102 including, without limitation, the reasonable fees and disbursements of joint counsel to the Administrative Agent and the Syndication Agent; (b) to pay or reimburse each Lender and the Administrative Agent for all its reasonable costs and expenses incurred in connection with the enforcement or preservation of any rights under this Agreement, the other Credit Documents and any such other documents, including, without limitation, the reasonable fees and disbursements of counsel to the Administrative Agent and the several Lenders; (c) to pay, indemnify, and hold each Lender and the Administrative Agent harmless from, any and all recording and filing fees and any and all liabilities with respect to, or resulting from any delay in paying, stamp, excise and other similar taxes, if any, which may be payable or determined to be payable in connection with the execution and delivery of, or consummation or administration of any of the transactions contemplated by, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, this Agreement, the other Credit Documents and any such other documents and (d) to pay, indemnify, and hold harmless each Lender, the Syndication Agent and the Administrative Agent from and against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Agreement, the other Credit Documents and any such other documents, or the use of the proceeds of the Loans and other extensions of credit hereunder, including, without limitation, any of the foregoing relating to the violation of, noncompliance with or liability under, any Environmental Law applicable to the operations of the Borrower, any of its Subsidiaries or any of the Properties (all the foregoing in this clause (d), collectively, the "indemnified liabilities"), provided that the Borrower shall ----------------------- -------- have no obligation hereunder to the Administrative Agent, the Syndication Agent or any Lender with respect to indemnified liabilities arising from (i) the gross negligence or willful misconduct of the Administrative Agent, the Syndication Agent or such Lender, as the case may be, (or any of their respective directors, trustees, officers, employees, agents, successors and assigns) or (ii) claims made or legal proceedings commenced against the Administrative Agent, the Syndication Agent or any such Lender by any securityholder or creditor thereof arising out of and based upon rights afforded any such securityholder or creditor solely in its capacity as such. Notwithstanding the foregoing, except as provided in clauses (b) and (c) above, the Borrower shall have no obligation under this subsection 18.5 to the Administrative Agent, the Syndication Agent or any Lender with respect to any tax, levy, impost, duty, charge, fee, deduction or withholding imposed, levied, collected, withheld or assessed by any Governmental Authority. The agreements in this subsection shall survive repayment of the Loans and all other amounts payable hereunder. 18.6 Successors and Assigns; Participations and Assignments. (a) ------------------------------------------------------ This Agreement shall be binding upon and inure to the benefit of the Borrower, the Lenders, the Administrative Agent and their respective successors and assigns, except that the Borrower may not (other than pursuant to the Assumption Agreement or as contemplated by subsection 14.4(c)) assign or transfer any of its rights or obligations under this Agreement without the prior written consent of each Lender. Upon the consummation of the Assumption, Holding shall be released as the Borrower from all liabilities and obligations under this Agreement and under any Notes (but not from any obligations and liabilities in respect thereof under any other Loan Document to which it is a party). (b) Any Lender may, in the ordinary course of its business and in accordance with applicable law, at any time sell to one or more banks or other entities ("Participants") ------------ 103 participating interests in any Loan owing to such Lender, any Commitment of such Lender or any other interest of such Lender hereunder and under the other Credit Documents; provided that (unless the Borrower and the Administrative Agent -------- otherwise consent in writing) no such participating interests shall be in an aggregate principal amount of less than $5,000,000 in the aggregate (or, if less, the full amount of such selling Lender's Loans and Commitments). In the event of any such sale by a Lender of a participating interest to a Participant, such Lender's obligations under this Agreement to the other parties to this Agreement shall remain unchanged, such Lender shall remain solely responsible for the performance thereof, such Lender shall remain the holder of any such Loan for all purposes under this Agreement and the other Credit Documents, and the Credit Parties and the Administrative Agent shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement and the other Credit Documents. Any agreement pursuant to which any Lender shall sell any such participating interest shall provide that such Lender shall retain the sole right and responsibility to exercise such Lender's rights and enforce each of the Borrower's obligations hereunder, including the right to consent to any amendment, supplement, modification or waiver of any provision of this Agreement or any of the other Credit Documents, and no Lender shall be entitled to create in favor of any Participant, in the participation agreement pursuant to which such Participant's participating interest shall be created or otherwise, any right to vote on, consent to or approve any matter relating to this Agreement or any other Credit Document, provided that such participation agreement may provide that, without -------- the consent of the Participant, such Lender will not agree to any amendment, supplement, modification or waiver, specified in subsection 18.1(g) or (h). The Borrower also agrees that each Lender shall be entitled to the benefits of subsections 9.13, 9.14 and 9.15 without regard to whether it has granted any participating interests, and that all amounts payable to a Lender under subsections 9.13, 9.14 and 9.15 shall be determined as if such Lender had not granted any such participating interests. (c) Any Lender may, in the ordinary course of its business and in accordance with applicable law, at any time and from time to time assign to (i) any Lender or any Affiliate thereof that is a Permitted Affiliate Transferee (as hereinafter defined), or (ii) with the consent of the Administrative Agent (which shall not be unreasonably withheld), to any Related Fund or (iii) with the consent of the Administrative Agent and the Borrower (which, in each case, shall not be unreasonably withheld), to any additional bank or financial institution (any assignee described in clause (i), (ii) or (iii), an "Assignee") -------- all or any part of its rights and obligations under this Agreement and the other Credit Documents pursuant to an Assignment and Acceptance, substantially in the form of Exhibit D, executed by such Assignee, such assigning Lender (and, in the case of an Assignee that is not then a Permitted Affiliate Transferee, by the Administrative Agent and, to the extent required pursuant to clause (iii) above, by the Borrower) and delivered to the Administrative Agent for its acceptance and recording in the Register, provided that (w) in the case of any such -------- assignment which is not to a Permitted Affiliate Transferee, the sum of the aggregate principal amount of the Loans, the aggregate amount of the L/C Obligations and the aggregate amount of the Available Revolving Credit Commitment being assigned is not less than $5,000,000 (or, if less, the full amount of such selling Lender's Loans and Commitments), or such lesser amount as may be agreed to by the Borrower and the Administrative Agent, (x) any assignment of all or any portion of a Lender's Revolving Credit Commitment or Tranche A Loans shall be accompanied by the assignment to the same Assignee of a ratable share of the other, (y) if any Lender proposes to assign all or any part of its rights and obligations under this Agreement to a special purpose 104 entity substantially all of the assets of which are, or are expected to be, assigned or participated interests in commercial loans or which, directly or indirectly, issues collateralized loan obligations, the Borrower may withhold its consent to such assignment unless such proposed Assignee has entered into a binding voting agreement, in form reasonably acceptable to the Borrower, pursuant to which such proposed Assignee agrees unconditionally to act in accordance with the decision of the Administrative Agent in voting, or granting or withholding its consent, on any matter submitted to such proposed Assignee for a vote or consent under the Credit Documents and (z) if any Lender assigns all or any part of its rights and obligations under this Agreement to one of its Affiliates in connection with or in contemplation of the sale or other disposition of its interest in such Affiliate, the Borrower's prior written consent shall be required for such assignment. Upon such execution, delivery, acceptance and recording, from and after the effective date determined pursuant to such Assignment and Acceptance, (x) the Assignee thereunder shall be a party hereto and, to the extent provided in such Assignment and Acceptance, have the rights and obligations of a Lender hereunder with a Commitment as set forth therein, and (y) the assigning Lender thereunder shall, to the extent provided in such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender's rights and obligations under this Agreement, such assigning Lender shall cease to be a party hereto). Notwithstanding the foregoing, no Assignee, which as of the date of any assignment to it pursuant to this subsection 18.6(c) would be entitled to receive any greater payment under subsection 9.13 or 9.14 than the assigning Lender would have been entitled to receive as of such date under such subsections with respect to the rights assigned, shall be entitled to receive such payments unless the Borrower has consented in writing to the assignment and agreed in writing to waive the benefit of this sentence. As used herein, the term "Permitted Affiliate Transferee" means (i) as to any assigning Tranche A Lender or Revolving Credit Lender, any Tranche A Lender or Revolving Credit Lender or any Affiliate thereof and (ii) as to any other assigning Lender, any Tranche B Lender, Tranche C Lender or Tranche D Lender or any Affiliate thereof. (d) The Administrative Agent, on behalf of the Borrower, shall maintain at the address of the Administrative Agent referred to in subsection 18.2 a copy of each Assignment and Acceptance delivered to it and a register (the "Register") for the recordation of the names and addresses of the Lenders -------- and the Commitments of, and principal amounts of the Loans owing to, each Lender from time to time. The entries in the Register shall be conclusive and the Borrower, the Administrative Agent and the Lenders may (and, in the case of any Loan or other obligation hereunder not evidenced by a Note, shall) treat each Person whose name is recorded in the Register as the owner of a Loan or other obligation hereunder as the owner thereof for all purposes of this Agreement and the other Credit Documents, notwithstanding any notice to the contrary. Any assignment of any Loan or other obligation hereunder not evidenced by a Note shall be effective only upon appropriate entries with respect thereto being made in the Register. The Register shall be available for inspection by the Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice. (e) Upon its receipt of an Assignment and Acceptance executed by an assigning Lender and an Assignee (and, in the case of an Assignee that is not then a Lender or an affiliate thereof, by the Borrower and the Administrative Agent), together with payment to the Administrative Agent of a registration and processing fee of $3,500 (provided, however, that no such fee shall be payable -------- ------- by a Lender in the case of an assignment to an Affiliate of such Lender 105 or a Related Fund; and provided, further that, in the case of contemporaneous -------- ------- assignments by a Lender to more than one fund managed by the same investment advisor (which funds are not then Lenders hereunder), only a single $3,500 such fee shall be payable for all such contemporaneous assignments), the Administrative Agent shall (i) promptly accept such Assignment and Acceptance and (ii) on the effective date determined pursuant thereto record the information contained therein in the Register and give notice of such acceptance and recordation to the Lenders and the Borrower. On or prior to such effective date, the assigning Lender shall surrender any outstanding Notes held by it all or a portion of which are being assigned, and the Borrower, at its own expense, shall, upon the request to the Administrative Agent made at the time of such assignment by the assigning Lender or the Assignee, as applicable, execute and deliver to the Administrative Agent (in exchange for the outstanding Notes of the assigning Lender) a new Note to the order of such Assignee in an amount equal to (i) in the case of an assigned Revolving Credit Loan, the lesser of (A) the amount of such Assignee's Revolving Credit Commitment and (B) the aggregate principal amount of all Revolving Credit Loans made by such Assignee, (ii) in the case of an assigned Tranche A Loan, the amount of such Assignee's Tranche A Loan, (iii) in the case of an assigned Tranche B Loan, the amount of such Assignee's Tranche B Loan, (iv) in the case of an assigned Tranche C Loan, the amount of such Assignee's Tranche C Loan, (v) in the case of an assigned Tranche D Loan, the amount of such Assignee's Tranche D Loan and (vi) in the case of an assigned Swing Line Loan, the lesser of (A) the Swing Line Commitment and (B) the aggregate principal amount of all Swing Line Loans made by such Assignee, in each case with respect to the relevant Loan after giving effect to such Assignment and Acceptance and, if the assigning Lender has retained a Loan hereunder, a new Note, as the case may be, to the order of the assigning Lender in an amount equal to (i) in the case of a retained Revolving Credit Loan, the lesser of (A) the amount of such Lender's Revolving Credit Commitment and (B) the aggregate principal amount of all Revolving Credit Loans made by such Lender, (ii) in the case of a retained Tranche A Loan, the amount of such Lender's Tranche A Loan, (iii) in the case of a retained Tranche B Loan, the amount of such Lender's Tranche B Loan, (iv) in the case of a retained Tranche C Loan, the amount of such Lender's Tranche C Loan, (v) in the case of a retained Tranche D Loan, the amount of such Lender's Tranche D Loan and (vi) in the case of a retained Swing Line Loan, the lesser of (A) the Swing Line Commitment and (B) the aggregate principal amount of all Swing Line Loans made by such Lender, in each case with respect to the relevant Loan after giving effect to such Assignment and Acceptance. Any such new Notes shall be dated the Closing Date and shall otherwise be in the form of the Note replaced thereby. Any Notes surrendered by the assigning Lender shall be returned by the Administrative Agent to the Borrower marked "cancelled". (f) The Borrower authorizes each Lender to disclose to any Participant or Assignee (each, a "Transferee") and any prospective Transferee, ---------- subject to the provisions of subsection 18.15, any and all financial information in such Lender's possession concerning the Borrower and its Affiliates which has been delivered to such Lender by or on behalf of the Borrower pursuant to this Agreement or which has been delivered to such Lender by or on behalf of the Borrower in connection with such Lender's credit evaluation of the Borrower and its Affiliates prior to becoming a party to this Agreement. No assignment or participation made or purported to be made to any Transferee shall be effective without the prior written consent of the Borrower if it would require the Borrower to make any filing with any Governmental Authority or qualify any Loan or Note under the laws of any jurisdiction, and the Borrower shall be entitled to request and receive such information and assurances as it may reasonably 106 request from any Lender or any Transferee to determine whether any such filing or qualification is required or whether any assignment or participation is otherwise in accordance with applicable law. (g) For avoidance of doubt, the parties to this Agreement acknowledge that the provisions of this subsection concerning assignments of Loans and Notes do not prohibit any pledge (i) by a Lender of any Loan or Note to any Federal Reserve Bank in accordance with applicable law or (ii) by any Tranche B Lender, Tranche C Lender or Tranche D Lender of any Tranche B Loan, Tranche C Loan or Tranche D Loan, or any Note evidencing such Loan, to any trustee with respect to a pool of collateralized loan obligations which includes the obligations owing to such Lender hereunder, provided that any foreclosure or similar action by -------- such trustee shall be subject to the provisions of this subsection concerning assignments and shall be void and of no force or effect unless effected in compliance with such provisions. 18.7 Adjustments; Set-off. (a) If any Lender (a "benefitted -------------------- ---------- Lender") shall at any time receive any payment of all or part of any of its Loans or Reimbursement Obligations owing to it under any Commitment, or interest thereon, pursuant to a guarantee or otherwise, or receive any collateral in respect thereof (whether voluntarily or involuntarily, by set-off or otherwise), in a greater proportion than any such payment to and collateral received by any other Lender, if any, in respect of such other Lender's Loans or Reimbursement Obligations owing to it under such Commitment or interest thereon, such benefitted Lender shall purchase for cash from the other Lender such portion of each such other Lender's similar Loans or Reimbursement Obligations, or shall provide such other Lender with the benefits of any such collateral, or the proceeds thereof, as shall be necessary to cause such benefitted Lender to share the excess payment or benefits of such collateral or proceeds ratably with each of the Lenders which hold such Commitment; provided, however, that if all or any -------- ------- portion of such excess payment or benefits is thereafter recovered from such benefitted Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest. The Borrower agrees that each Lender so purchasing a portion of another Lender's Loans or Reimbursement Obligations may exercise all rights of payment (including, without limitation, rights of set-off) with respect to such portion as fully as if such purchasing Lender were the direct holder of such portion. (b) In addition to any rights and remedies of the Lenders provided by law, each Lender shall have the right, without prior notice to the Borrower, any such notice being expressly waived by the Borrower to the extent permitted by applicable law, upon the occurrence of an Event of Default under subsection 16.2(a) or 16.3(a) to set-off and appropriate and apply against any amount then due and payable under such subsection any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by such Lender or any branch or agency thereof to or for the credit or the account of the Borrower. Each Lender agrees promptly to notify the Borrower and the Administrative Agent after any such set-off and application made by such Lender, provided that the failure to give such notice shall not affect the -------- validity of such set-off and application. 18.8 Counterparts. This Agreement may be executed by one or more of ------------ the parties to this Agreement on any number of separate counterparts (including by facsimile 107 transmission), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the copies of this Agreement signed by all the parties shall be delivered to the Borrower and the Administrative Agent. 18.9 Severability. Any provision of this Agreement which is ------------ prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 18.10 Integration. This Agreement and the other Credit Documents ----------- represent the agreement of the Borrower, the Administrative Agent and the Lenders with respect to the subject matter hereof, and there are no promises, undertakings, representations or warranties by the Borrower, the Administrative Agent or any Lender relative to subject matter hereof not expressly set forth or referred to herein or in the other Credit Documents. 18.11 GOVERNING LAW. THIS AGREEMENT AND ANY NOTES AND THE RIGHTS AND ------------- OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND ANY NOTES SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ITS PRINCIPLES OR RULES OF CONFLICTS OF LAWS TO THE EXTENT SUCH PRINCIPLES OR RULES WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION. 18.12 Submission To Jurisdiction; Waivers. Each party hereto hereby ----------------------------------- irrevocably and unconditionally: (a) submits for itself and its property in any legal action or proceeding relating to this Agreement and the other Credit Documents to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of the courts of the State of New York, the courts of the United States of America for the Southern District of New York, and appellate courts from any thereof; (b) consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient forum and agrees not to plead or claim the same; (c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to the Borrower or the applicable Lender at its address set forth in subsection 18.2 or at such other address of which the Administrative Agent, any such Lender and the Borrower shall have been notified pursuant thereto; 108 (d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and (e) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this subsection any punitive damages. 18.13 Acknowledgements. The Borrower hereby acknowledges that: ---------------- (a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Credit Documents; (b) neither the Administrative Agent nor any Lender has any fiduciary relationship with or duty to the Borrower arising out of or in connection with this Agreement or any of the other Credit Documents, and the relationship between Administrative Agent and Lenders, on one hand, and the Borrower, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and (c) no joint venture is created hereby or by the other Credit Documents or otherwise exists by virtue of the transactions contemplated hereby among the Lenders or among the Borrower and the Lenders. 18.14 WAIVERS OF JURY TRIAL. THE BORROWER, THE ADMINISTRATIVE AGENT --------------------- AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN. 18.15 Confidentiality. Each Lender and the Administrative Agent --------------- agrees (on behalf of itself and each of its affiliates, directors, officers, employees, agents, advisors and representatives) to keep confidential any Confidential Information, and in connection therewith comply with their customary procedures for handling confidential information of this nature and with safe and sound lending practices; provided that nothing herein shall limit -------- its disclosure of any such information (i) to the extent required by statute, rule, regulation or judicial process, (ii) to counsel for any of the Lenders or the Administrative Agent, (iii) to bank examiners, insurance commissioners or other Governmental Authorities, having jurisdiction over the disclosing Lender, or to such Lender's auditors or accountants, (iv) to the Administrative Agent or any other Lender, (v) by the Administrative Agent or any Lender to an Affiliate thereof, (vi) in connection with any enforcement of any of the Credit Documents or (vii) to any Transferee or prospective Transferee that agrees to comply with this subsection and (in the case of any such Person that at the time of such disclosure has not yet become a Lender) executes and delivers to the Borrower a written instrument in favor of the Borrower confirming such agreement, in form and substance reasonably satisfactory to the Borrower; provided that (x) in the -------- case of the preceding clauses (i) and (iii), such Lender shall, to the extent legally permissible, notify the Borrower of the proposed disclosure as far in advance as is reasonably practicable under the circumstances, (y) in the case of the preceding clauses (ii) and (iii), such Lender shall inform each such counsel, auditor or accountant of the agreement under this 109 subsection 18.15 and take reasonable actions to cause compliance by any such Person with this agreement (including, where appropriate, to cause any such Person to acknowledge its agreement to be bound by the agreement under this subsection 18.15) and (z) in the case of the preceding clause (v), such Lender or the Administrative Agent shall be responsible for any failure by such Affiliate of the Lender or the Administrative Agent to comply with this subsection. For purposes of this subsection 18.15, "Confidential Information" ------------------------ shall mean, with respect to the Administrative Agent or any Lender (an "Affected Party"), information delivered--------------to such Affected Party by or on behalf of any Credit Party, the Administrative Agent or any other Lender in connection with the transactions contemplated by or otherwise pursuant to this Agreement or information obtained by the Affected Party in the course of any review of the books or records of the Guarantor or the Borrower; provided that -------- such term shall not include information (i) that was publicly known or otherwise known to such Affected Party prior to the time of such disclosure on a nonconfidential basis without a duty of confidentiality to any Credit Party or Subsidiary thereof being violated, (ii) that subsequently becomes publicly known through no act or omission by any Affected Party or any Person acting on the Affected Party's behalf, (iii) that becomes known to such Affected Party on a nonconfidential basis without a duty of confidentiality to any Credit Party or Subsidiary thereof being violated and, other than through disclosure by or on behalf of the Borrower or (iv) that constitutes financial information delivered to any Affected Party that is otherwise publicly available through no act or omission of any Affected Party or Person acting on such Affected Person's behalf. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written. DYNATECH CORPORATION By: ------------------------------------ Name: Title: TTC MERGER CO. INC. By: ------------------------------------ Name: Title: MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent and as a Lender By: ------------------------------------ Name: Title: CREDIT SUISSE FIRST BOSTON, as Syndication Agent and as a Lender By: ------------------------------------ Name: Title: By: ------------------------------------ Name: Title: THE CHASE MANHATTAN BANK, as Documentation Agent and as a Lender By: ------------------------------------ Name: Title: ABN AMRO BANK, N.V. By: ------------------------------------ Name: Title: By: ------------------------------------ Name: Title: BANKBOSTON, N.A. By: ------------------------------------ Name: Title: BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION By: ------------------------------------ Name: Title: THE BANK OF NOVA SCOTIA By: ------------------------------------ Name: Title: BANK OF TOKYO-MITSUBISHI TRUST COMPANY By: ------------------------------------ Name: Title: MARINE MIDLAND BANK By: ------------------------------------ Name: Title: NATIONAL CITY BANK By: ------------------------------------ Name: Title: PRIME INCOME TRUST By: ------------------------------------ Name: Title: KZH-ING-2 CORPORATION By: ------------------------------------ Name: Title: MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY By: ------------------------------------ Name: Title: MASSMUTUAL CORPORATE VALUE PARTNERS LIMITED BY: MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY, as Investment Manager By: ------------------------------------ Name: Title: MERRILL LYNCH SENIOR FLOATING RATE FUND, INC. By: ------------------------------------ Name: Title: ALLSTATE INSURANCE COMPANY By: ------------------------------------ Name: Title: By: ------------------------------------ Name: Title: AG CAPITAL FUNDING PARTNERS, L.P. BY: ANGELO GORDON & CO., L.P., as Investment Adviser By: ------------------------------------ Name: Title: CREDIT AGRICOLE INDOSUEZ By: ------------------------------------ Name: Title: By: ------------------------------------ Name: Title: KZH-CYPRESS TREE-1 CORPORATION By: ------------------------------------ Name: Title: TORONTO DOMINION (TEXAS), INC. By: ------------------------------------ Name: Title: GENERAL ELECTRIC CAPITAL CORPORATION By: ------------------------------------ Name: Title: ML CLO XV PILGRIM AMERICA (CAYMAN) LTD. (as assignee) BY: PILGRIM AMERICA INVESTMENTS, INC., as its Investment Manager By: ------------------------------------ Name: Title: MOUNTAIN CLO TRUST By: ------------------------------------ Name: Title: OCTAGON LOAN TRUST BY: OCTAGON CREDIT INVESTORS, as Manager By: ------------------------------------ Name: Title: BALANCED HIGH-YIELD FUND I LTD., BY: BHF-BANK AKTIENGESELLSCHAFT, acting through its New York Branch, as attorney-in-fact By: ------------------------------------ Name: Title: By: ------------------------------------ Name: Title: DELANO COMPANY BY: PACIFIC INVESTMENT MANAGEMENT CO., as its Investment Advisor By: ------------------------------------ Name: Title: KZH-IV CORPORATION By: ------------------------------------ Name: Title: KZH HOLDING CORPORATION III By: Name: Title: CRESCENT/MACH I PARTNERS, L.P. BY: TCW ASSET MANAGEMENT COMPANY, as its Investment Advisor By: ------------------------------------ Name: Title: SCHEDULE I LENDERS; COMMITMENTS
Revolving Tranche A Tranche B Tranche C Tranche D Credit Lender Commitment Commitment Commitment Commitment Commitment Morgan Guaranty Trust Company of New York/1/ $ 6,250,000.00 $28,333,333.34 $28,333,333.32 $28,333,333.34 $ 13,750,000.00 Credit Suisse First Boston $ 6,250,000.00 $ 13,750,000.00 The Chase Manhattan Bank $ 5,625,000.00 $ 12,375,000.00 ABN-AMRO Bank, N.V. $ 5,000,000.00 $ 11,000,000.00 BankBoston, N.A. $ 5,000,000.00 $ 11,000,000.00 Bank of America National Trust & Savings Association $ 4,687,500.00 $ 10,312,500.00 The Bank of Nova Scotia $ 4,687,500.00 $ 10,312,500.00 Bank of Tokyo-Mitsubishi Trust Company $ 4,687,500.00 $ 10,312,500.00 Marine Midland Bank $ 4,687,500.00 $ 10,312,500.00
- ------------- /1/ Following the Closing Date, Morgan Guaranty Trust Company of New York intends to transfer (a) $5,000,000 of each of its Tranche B Commitment, Tranche C Commitment and Tranche D Commitment to PAM Capital Funding LP, (b) $5,000,000 of each of its Tranche B Commitment, Tranche C Commitment and Tranche D Commitment to Senior Debt Portfolio, (c) $1,666,666.66 of its Tranche B Commitment, $1,666,666.67 of its Tranche C Commitment and $1,666,666.67 of its Tranche D Commitment to Merrill Lynch Prime Rate Portfolio, (d) $1,666,666.67 of its Tranche B Commitment, $1,666,666.66 of its Tranche C Commitment and $1,666,666.67 of its Tranche D Commitment to Merrill Lynch Global Investment Series: Income Strategies Portfolio, (e) $3,333,333.34 of its Tranche B Commitment, $3,333,333.33 of its Tranche C Commitment and $3,333,333.33 of its Tranche D Commitment to AG Capital Funding Partners, L.P., (f) $3,333,333.33 of its Tranche B Commitment, $3,333,333.33 of its Tranche C Commitment and $3,333,33.34 of its Tranche D Commitment to Indosuez Capital Funding IV, L.P., (g) $3,333,333.33 of its Tranche B Commitment, $3,333,333.33 of its Tranche C Commitment and $3,333,333.34 of its Tranche D Commitment to ML CLO XV Pilgrim America (Cayman) Ltd., (h) $3,333,333.33 of its Tranche B Commitment, $3,333,333.33 of its Tranche C Commitment and $3,333,333.34 of its Tranche D Commitment to Mountain CLO Trust and (i) $1,666,666.66 of its Tranche B Commitment, $1,666,666.67 of its Tranche C Commitment and $1,666,666.67 of its Tranche D Commitment to Oppenheimer Funds.
Revolving Tranche A Tranche B Tranche C Tranche D Credit Lender Commitment Commitment Commitment Commitment Commitment National City Bank $ 3,125,000.00 $ 6,875,000.00 Prime Income Trust $ 5,000,000.00 $ 5,000,000.00 $ 5,000.000.00 Archimedes Funding L.L.C. $ 5,000,000.00 $ 5,000,000.00 $ 5,000,000.00 MassMutual Corporate Value Partners Limited $ 903,500.00 $ 903,500.00 $ 903,500.00 Massachusetts Mutual Life Insurance Company $ 4,096,500.00 $ 4,096,500.00 $ 4,096,500.00 Merrill Lynch Senior Floating Rate Fund, Inc. $ 1,666,666.67 $ 1,666,666.67 $ 1,666,666.66 Allstate Insurance Company $ 3,333,333.34 $ 3,333,333.33 $ 3,333,333.33 KZH-CypressTree-1 Corporation $ 3,333,333.33 $ 3,333,333.34 $ 3,333,333.33 Toronto Dominion (Texas), Inc. $ 3,333,333.33 $ 3,333,333.33 $ 3,333,333.34 General Electric Capital Corporation $ 3,333,333.33 $ 3,333,333.33 $ 3,333,333.34 Octagon Loan Trust $ 3,333,333.33 $ 3,333,333.33 $ 3,333,333.34 KZH-IV Corporation $ 3,333,333.33 $ 3,333,333.33 $ 3,333,333.34 Balanced High-Yield Fund I Ltd. $ 1,666,666.67 $ 1,666,666.67 $ 1,666,666.66 Delano Company $ 1,666,666.67 $ 1,666,666.67 $ 1,666,666.66 KZH Cresent Corporation $ 833,333.33 $ 833,333.34 $ 833,333.33 KZH Crescent-2 Corporation $ 833,333.33 $ 833,333.34 $ 833,333.33 TOTAL $50,000,000.00 $70,000,000.00 $70,000,000.00 $70,000,000.00 $110,000,000.00
SCHEDULE II ADDRESSES FOR NOTICES MORGAN GUARANTY TRUST COMPANY 60 Wall Street New York, NY 10260-0060 Attn: Steve Hannan Tel: (212) 648-7679 Fax: (212) 648-5005 with a copy to: MORGAN GUARANTY OF NEW YORK c/o J.P. Morgan Services Inc. 500 Stanton Christiana Road Newark, DE 19713 Attn: Nicole Pedicone Tel: (302) 634-1912 Fax: (302) 634-4300 CREDIT SUISSE FIRST BOSTON Eleven Madison Avenue 20th Floor New York, NY 10010-3629 Attn: Robert Hetu Tel: (212) 325-4542 Fax: (212) 325-8309 THE CHASE MANHATTAN BANK 270 Park Avenue New York, NY 10017 Attn: William J. Caggiano Tel: (212) 270-1338 Fax: (212) 972-0009 ABN AMRO BANK, N.V. 135 South LaSalle Street Suite 2805 Chicago, IL 60603 Attn: Kim O'Brien Tel: (312) 904-8858 Fax: (312) 904-8840 with a copy to: ABN AMRO BANK, N.V. One Post Office Square 39th Floor Boston, MA 02109 Attn: Brian Horgan/Carol Levine Tel: (617) 988-7934 Fax: (617) 988-7910 BANKBOSTON, N.A. 100 Federal Street Mail stop 01-08-06 Boston, MA 02110 Attn: Debra Del Vecchio Tel: (617) 434-2815 Fax: (617) 434-0819 BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION 335 Madison Avenue New York, NY 10017 Attn: Daniel Rencricca Tel: (212) 503-7690 Fax: (212) 503-7502 THE BANK OF NOVA SCOTIA Boston Agency 28 State Street 17th Floor Boston, MA 02109 Attn: Stephen Foley Tel: (617) 624-7612 Fax: (617) 624-7607 BANK OF TOKYO-MITSUBISHI TRUST COMPANY 1251 Avenue of the Americas 12th Floor New York, NY 10020-1104 Attn: Paul Malecki Tel: (212) 782-4343 Fax: (212) 782-4981 MARINE MIDLAND BANK 140 Broadway 5th Floor New York, NY 10005-1196 Attn: Christopher French Tel: (212) 658-2742 Fax: (212) 658-2586 with a copy to: O'MELVENY & MYERS 153 East 53rd Street New York, NY 10022 Attn: Elizabeth Leckie Tel: (212) 326-2057 Fax: (212) 326-2061 NATIONAL CITY BANK 1900 East 9th Street Cleveland, OH 44114 Attn: Lisa B. Lisi Tel: (216) 575-9166 Fax: (216) 222-0003 PRIME INCOME TRUST c/o Dean Witter 2 World Trade Center New York, NY 10048 Attn: Sheila Finnerty Tel: (212) 392-5686 Fax: (212) 392-5345 KZH-ING-2 CORPORATION c/o The Chase Manhattan Bank 450 West 33rd Street 15th Floor New York, NY 10001 Attn: Virginia Conway Tel: (212) 946-7575 Fax: (212) 946-7776 with a copy to: ING CAPITAL ADVISORS 333 South Grand Avenue Suite 4250 Los Angeles, CA 90071 Attn: Beth Digatl Tel: (213) 346-3975 Fax: (213) 626-6552 and GIBSON DUNN & CRUTCHER LLP 200 Park Avenue New York, New York 10166-0193 Attn: Lee Ann Duffy Tel: (212) 351-3809 Fax: (212) 351-4035 MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY 1295 State Street Springfield, MA 01109 Attn: Tom Li Tel: (413) 744-6228 Fax: (413) 744-6127 Attn: Laura Hamel Tel: (413) 744-3878 Fax: (413) 744-7922 MASSMUTUAL CORPORATE VALUE PARTNERS LIMITED c/o Bank of America Trust and Banking Corporation (Cayman) Limited P.O. Box 1092 George Town Grand Cayman Cayman Islands, B.W.I. Attn: Michael Carney Tel: Fax: with a copy to: MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY 1295 State Street Springfield, MA 01111-0001 Attn: Roger Crandall/Wallace Rodger Tel: Fax: MERRILL LYNCH SENIOR FLOATING RATE FUND, INC. c/o Merrill Lynch Asset Management 800 Scudders Mill Road - Area 1B Plainsboro, NJ 08536 Attn: Gil Marchand Tel: (609) 282-3348 Fax: (609) 282-2756 ALLSTATE INSURANCE COMPANY PRIVATE PLACEMENTS 3075 Sanders Road Suite G3A Northbrook, IL 60062-7127 Attn: Jerry Zinkula Tel: (847) 402-8383 Fax: (847) 402-3092 Attn: Mary Counley Tel: (847) 402-7048 Fax: (847) 326-5042 CYPRESS INVESTMENT MANAGEMENT COMPANY 125 High Street Boston, MA 02110 Attn: Peter Merrill Tel: (617) 946-0600 Fax: (617) 946-5680 FIRST DOMINION CAPITAL, L.L.C. 1330 Avenue of the Americas 10th Floor New York, NY 10019 Attn: Andy Marshak Tel: (212) 258-1013 Fax: (212) 258-1019 GENERAL ELECTRIC CAPITAL CORPORATION 201 High Ridge Road Stamford, CT 06927 Attn: Roger Burns Tel: (203) 316-7985 Fax: (203) 316-7978 with a copy to: PAUL HASTINGS JANOFSKY & WALKER 1055 Washington Blvd. 9th Floor Stamford, CT 06901 Attn: Christopher Craig Tel: (203) 961-7496 Fax: (203) 359-3031 OCTAGON CREDIT INVESTORS c/o Octagon Credit Investors Loan Portfolio 380 Madison Avenue 12th Floor New York, NY 10017 Attn: Joyce DeLucca Tel: (212) 622-3104 Fax: (212) 622-3797 THOROUGHBRED LIMITED PARTNERSHIP I 26 Main Street Chatham, NJ 07928 Attn: Keith Richardson Tel: (973) 701-8409 Fax: (973) 701-8249 BALANCED HIGH-YIELD FUND I LTD. c/o BHF-BANK Aktiengesellschaft 590 Madison Avenue New York, NY 10022 Attn: Hans J. Scholz Tel: (212) 756-5533 Fax: (212) 756-5536 DELANO COMPANY c/o Pacific Investment Management Co. 840 Newport Center Drive Newport Beach, CA 92658 Attn: Jason Rosiak Tel: (714) 717-7394 Fax: (714) 720-8586 with a copy to: ROGERS & WELLS 607 14th Street N.W. 10th Floor Washington, D.C. 20005 Attn: Marianne Caulfield Tel: (202) 434-0748 Fax: (202) 434-0800 OPPENHEIMER FUNDS 3410 South Galena Street Denver, CO 20231 Attn: Art Zimmer Tel: (303) 768-3510 Fax: (303) 768-3299 TCW ASSET MANAGEMENT COMPANY 200 Park Avenue Suite 2200 New York, NY 10166-0228 Attn: Mark L. Gold/Justin Driscoll Tel: (212) 297-4000 Fax: (212) 297-4159 SCHEDULE 1.1(a) INACTIVE SUBSIDIARIES SCHEDULE 1.1(b) PERMITTED INVESTORS SCHEDULE 10.4(a) REQUIRED CONSENTS, AUTHORIZATIONS AND FILINGS SCHEDULE 10.6 LITIGATION SCHEDULE 10.11 TAXES SCHEDULE 10.15 SUBSIDIARIES OF THE BORROWER SCHEDULE 11.1(y) EXISTING INDEBTEDNESS SCHEDULE 14.2(q) EXISTING LIENS SCHEDULE 14.3 EXISTING GUARANTEE OBLIGATIONS SCHEDULE 14.5(j) PERMITTED DISPOSITIONS SCHEDULE 14.8(f) EXISTING INVESTMENTS SCHEDULE 14.9(iv) PERMITTED TRANSACTIONS WITH GUARANTOR AFFILIATES EX-10.5 11 GUARANTEE AND COLLATERAL AGREEMENT - MAY 21, 1998 EXHIBIT 10.5 =========================================================================== GUARANTEE AND COLLATERAL AGREEMENT made by TELECOMMUNICATIONS TECHNIQUES CO., LLC and its parent DYNATECH CORPORATION and certain of its Subsidiaries in favor of MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent Dated as of May 21, 1998 =========================================================================== TABLE OF CONTENTS
Page ---- SECTION 1. DEFINED TERMS....................................................... 2 1.1 Definitions........................................................ 2 1.2 Other Definitional Provisions...................................... 8 SECTION 2. GUARANTEE........................................................... 8 2.1 Guarantee.......................................................... 8 2.2 Right of Contribution.............................................. 9 2.3 No Subrogation..................................................... 9 2.4 Amendments, etc. with respect to the Borrower Obligations.......... 10 2.5 Guarantee Absolute and Unconditional............................... 10 2.6 Reinstatement...................................................... 11 2.7 Payments........................................................... 11 SECTION 3. GRANT OF SECURITY INTEREST.......................................... 11 3.1 Grant.............................................................. 11 3.2 Pledged Collateral................................................. 12 3.3 Certain Exceptions................................................. 13 SECTION 4. REPRESENTATIONS AND WARRANTIES...................................... 13 4.1 Representations and Warranties of Each Guarantor................. 13 4.2 Representations and Warranties of Each Grantor................... 13 4.2.1 Title; No Other Liens............................................ 14 4.2.2 Perfected First Priority Liens................................... 14 4.2.3 Chief Executive Office........................................... 16 4.2.4 Inventory and Equipment.......................................... 16 4.2.5 Farm Products.................................................... 16 4.2.6 Accounts......................................................... 16 4.2.7 Intellectual Property............................................ 16 4.3 Representations and Warranties of Each Pledgor................... 16 SECTION 5. COVENANTS........................................................... 17 5.1 Covenants of Each Guarantor...................................... 17 5.2 Covenants of Each Grantor........................................ 18 5.2.1 Delivery of Instruments and Chattel Paper........................ 18 5.2.2 Maintenance of Insurance......................................... 18 5.2.3 Payment of Obligations........................................... 18 5.2.4 Maintenance of Perfected Security Interest; Further Documentation 19 5.2.5 Changes in Locations, Name, etc.................................. 19 5.2.6 Notices.......................................................... 20 5.2.7 Pledged Securities............................................... 20 5.2.8 Accounts......................................................... 20 5.2.9 Maintenance of Records........................................... 20
i Page ---- 5.2.10 Acquisition of Intellectual Property............................ 20 5.2.11 Protection of Trade Secrets..................................... 21 5.3 Covenants of Each Pledgor......................................... 21 SECTION 6. REMEDIAL PROVISIONS................................................. 22 6.1 Certain Matters Relating to Accounts............................... 22 6.2 Communications with Obligors; Grantors Remain Liable............... 24 6.3 Pledged Stock...................................................... 24 6.4 Proceeds to be Turned Over To Administrative Agent................. 25 6.5 Application of Proceeds............................................ 26 6.6 Code and Other Remedies............................................ 26 6.7 Registration Rights................................................ 27 6.8 Waiver; Deficiency................................................. 28 SECTION 7. THE ADMINISTRATIVE AGENT............................................ 28 7.1 Administrative Agent's Appointment as Attorney-in-Fact, etc........ 28 7.2 Duty of Administrative Agent....................................... 30 7.3 Execution of Financing Statements.................................. 31 7.4 Authority of Administrative Agent.................................. 31 7.5 Right Of Inspection................................................ 31 SECTION 8. MISCELLANEOUS....................................................... 31 8.1 Amendments in Writing.............................................. 31 8.2 Notices............................................................ 32 8.3 No Waiver by Course of Conduct; Cumulative Remedies................ 32 8.4 Enforcement Expenses; Indemnification.............................. 32 8.5 Successors and Assigns............................................. 33 8.6 Set-Off............................................................ 33 8.7 Counterparts....................................................... 33 8.8 Severability....................................................... 33 8.9 Section Headings................................................... 34 8.10 Integration....................................................... 34 8.11 GOVERNING LAW..................................................... 34 8.12 Submission To Jurisdiction; Waivers............................... 34 8.13 Acknowledgements.................................................. 35 8.14 WAIVER OF JURY TRIAL.............................................. 35 8.15 Additional Granting Parties....................................... 35 8.16 Releases.......................................................... 35
ii SCHEDULES 1 Notice Addresses of Guarantors 2 Description of Pledged Securities 3 Location of Jurisdiction of Organization and Chief Executive Office or Sole Place of Business 4 Location of Inventory and Equipment 5 Copyrights and Copyright Licenses; Patents and Patent Licenses; Trademarks and Trademark Licenses 6 Existing Prior Liens 7 Accounts 8 Contracts ANNEXES 1 Assumption Agreement iii GUARANTEE AND COLLATERAL AGREEMENT GUARANTEE AND COLLATERAL AGREEMENT, dated as of May 21, 1998, made by Dynatech Corporation, a Massachusetts corporation ("Dynatech"), -------- Telecommunications Techniques Co., LLC, a Delaware limited liability company (the "Borrower") and successor by merger to Newco (as defined below), and -------- certain Subsidiaries of the Borrower that are signatories hereto, in favor of MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as administrative agent (in such capacity, the "Administrative Agent") for the banks and other financial -------------------- institutions (collectively, the "Lenders"; individually, a "Lender") from time ------- ------ to time parties to the Credit Agreement, dated as of May 21, 1998 (as amended, waived, supplemented or otherwise modified from time to time, the "Credit ------ Agreement"), among the Borrower (as successor in interest by merger and - --------- assumption), the Lenders, the Administrative Agent, Credit Suisse First Boston, as syndication agent for the Lenders, and The Chase Manhattan Bank, as documentation agent for the Lenders. W I T N E S S E T H: - - - - - - - - - - WHEREAS, on the date hereof, the following transactions have occurred: (i) Dynatech has contributed, assigned and transferred to its wholly owned subsidiary, TTC International Holdings, Inc., a Delaware corporation ("International"), all of the capital stock of Dynatech's other ------------- Foreign Subsidiaries; (ii) Dynatech and its wholly owned subsidiary, TTC Merger Co. LLC, a Delaware limited liability company ("Newco"), have entered into the ----- Credit Agreement, and pursuant to the Credit Agreement, the Lenders have severally agreed to make extensions of credit upon the terms and subject to the conditions set forth therein; (iii) As contemplated by subsection 12.11 of the Credit Agreement, Dynatech, Newco, and the Borrower have executed and delivered the Assumption Agreement, pursuant to which the Borrower has assumed the rights and obligations of Newco and Dynatech as borrower under the Credit Agreement, and substantially contemporaneously therewith, Newco has merged with and into the Borrower, with the Borrower surviving, and the Borrower has succeeded to all the rights and obligations of Newco under the Credit Agreement and has become the Borrower thereunder (the "Assumption"); ---------- (iv) Following the effectiveness of the Assumption, Dynatech was released as Borrower under the Credit Agreement, and in consideration of such assumption and release has contributed, assigned and transferred to the Borrower, all of the capital stock of Dynatech's other Active Subsidiaries that are Domestic Subsidiaries and International and has agreed to guarantee the obligations of the Borrower as provided herein; WHEREAS, the Borrower is a member of an affiliated group of companies that includes or will include Dynatech, the Borrower's Active Subsidiaries which are Domestic Subsidiaries and any Subsidiary of the Borrower that becomes a party hereto from time to time after the date hereof (the Borrower, Dynatech, the Borrower's Active Subsidiaries which are Domestic Subsidiaries and each such other Subsidiary collectively, the "Granting Parties"); ---------------- 2 WHEREAS, the proceeds of extensions of credit under the Credit Agreement will be used in part to make valuable transfers to one or more of the Granting Parties in connection with the operation of their respective businesses, WHEREAS, the Borrower and the other Granting Parties are engaged in related businesses, and each such Granting Party will derive substantial direct and indirect benefit from the making of the extensions of credit under the Credit Agreement; and WHEREAS, it is a condition to the obligation of the Lenders to make their respective extensions of credit under the Credit Agreement that the Granting Parties shall execute and deliver this Agreement to the Administrative Agent for the benefit of the Secured Parties; NOW, THEREFORE, in consideration of the premises and to induce the Administrative Agent and the Lenders to enter into the Credit Agreement and to induce the Lenders to make their respective extensions of credit thereunder, each Granting Party hereby agrees with the Administrative Agent, for the ratable benefit of the Secured Parties, as follows: SECTION 1. DEFINED TERMS 1.1 Definitions. (a) Unless otherwise defined herein, terms defined ----------- in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement, and the following terms that are defined in the Code (as defined below) are used herein as so defined: Chattel Paper, Documents, Equipment, Farm Products, Fixtures and Inventory. (b) The following terms shall have the following meanings: "Accounts": all accounts (as defined in the Code) of each Grantor. -------- "Active Subsidiaries": as defined in the Credit Agreement. ------------------- "Agreement": this Guarantee and Collateral Agreement, as the same may --------- be amended, supplemented or otherwise modified from time to time. "Borrower Obligations": the collective reference to the unpaid -------------------- principal of and interest on the Loans and Reimbursement Obligations and all other obligations and liabilities of the Borrower (including, without limitation, interest accruing at the then applicable rate provided in the Credit Agreement after the maturity of the Loans and Reimbursement Obligations and interest accruing at the then applicable rate provided in the Credit Agreement after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) to the Administrative Agent or any Lender (or, in the case of any Hedge Agreement referred to below, any Affiliate of any Lender), whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, the Credit Agreement, this Agreement, the other Credit Documents and any Letter of Credit, or any Hedge Agreement entered into by the 3 Borrower with any Lender or any Affiliate of any Lender, any Guarantee Obligations of Dynatech or any of its Subsidiaries referred to in subsection 14.3(e) of the Credit Agreement as to which any Lender or any Affiliate thereof is a beneficiary, or any other document made, delivered or given in connection therewith, in each case whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including, without limitation, all reasonable fees and disbursements of counsel to the Administrative Agent or to the Lenders that are required to be paid by the Borrower pursuant to the terms of any of the foregoing agreements). "Code": the Uniform Commercial Code as from time to time in effect in ---- the State of New York. "Collateral": as defined in Section 3. ---------- "Collateral Account Bank": Morgan Guaranty Trust Company of New York ----------------------- or another bank which at all times is a Lender as selected by the relevant Grantor and notified to the Administrative Agent in writing promptly following such selection. "Collateral Proceeds Account": the cash collateral account --------------------------- established by the relevant Grantor at an office of the Collateral Account Bank in the name of the Administrative Agent. "Commitments": the collective reference to the Revolving Credit ----------- Commitments, the Swing Line Commitments, the Tranche A Commitment, Tranche B Commitment, Tranche C Commitment, Tranche D Commitment and the L/C Commitment; individually, a "Commitment". ---------- "Contracts": with respect to any Grantor, all contracts, agreements, --------- instruments and indentures in any form, and portions thereof (except for the contracts listed on Schedule 8), to which such Grantor is a party or ---------- under which such Grantor has any right, title or interest or to which such Grantor or any property of such Grantor is subject, as the same may from time to time be amended, supplemented or otherwise modified, including, without limitation, (i) all rights of such Grantor to receive moneys due and to become due to it thereunder or in connection therewith, (ii) all rights of such Grantor to damages arising thereunder and (iii) all rights of such Grantor to perform and to exercise all remedies thereunder. "Copyright Licenses": with respect to any Grantor, all United States ------------------ written license agreements of such Grantor providing for the grant by or to such Grantor of any right to use any Copyright of such Grantor, other than agreements with any Person who is an Affiliate or a Subsidiary of the Borrower, including, without limitation, any license agreements listed on Schedule 5 hereto subject, in each case, to the terms of such license ---------- agreements, and the right to prepare for sale, sell and advertise for sale, all Inventory now or hereafter covered by such licenses. 4 "Copyrights": with respect to any Grantor, all of such Grantor's ---------- right, title and interest in and to all United States copyrights, whether or not the underlying works of authorship have been published or registered, United States copyright registrations and copyright applications, and (a) all renewals thereof, (b) all income, royalties, damages and payments now and hereafter due and/or payable with respect thereto, including, without limitation, payments under all licenses entered into in connection therewith, and damages and payments for past or future infringements thereof and (c) the right to sue or otherwise recover for past, present and future infringements thereof. "Credit Documents": the collective reference to the "Credit ---------------- Documents" as defined in the Credit Agreement. "Default": a "Default" as defined in the Credit Agreement. ------- "Event of Default": an "Event of Default" as defined in the Credit ---------------- Agreement. "Foreign Subsidiary": as defined in the Credit Agreement. ------------------ "Foreign Subsidiary Holdco": as defined in the Credit Agreement. ------------------------- "General Fund Account": the general fund account of the relevant -------------------- Grantor established at the same office of the Collateral Account Bank as the Collateral Proceeds Account. "General Intangibles": all "general intangibles" as such term is ------------------- defined in Section 9-106 of the Uniform Commercial Code in effect in the State of New York on the date hereof. "Granting Parties": as defined in the recitals hereto. ---------------- "Grantor": the Borrower and each Domestic Subsidiary of the Borrower ------- that from time to time becomes a party hereto. "Guarantor Obligations": with respect to any Guarantor, the --------------------- collective reference to (i) the Borrower Obligations and (ii) all obligations and liabilities of such Guarantor that may arise under or in connection with this Agreement or any other Credit Document to which such Guarantor is a party, in each case whether on account of guarantee obligations, reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel to the Administrative Agent or to the Lenders that are required to be paid by such Guarantor pursuant to the terms of this Agreement or any other Credit Document). "Guarantors": the collective reference to each Granting Party other ---------- than the Borrower. 5 "Hedge Agreements": as to any Grantor, all interest rate swaps, caps ---------------- or collar agreements or similar arrangements entered into by such Person providing for protection against fluctuations in interest rates or currency exchange rates or the exchange of nominal interest obligations, either generally or under specific contingencies (including, without limitation, all Hedging Arrangements with respect to currency exchange rates entered into in connection with the Credit Agreement). "Instruments": has the meaning specified in the Code, but excluding ----------- the Pledged Securities. "Intellectual Property": with respect to any Grantor, the collective --------------------- reference to such Grantor's Copyrights, Copyright Licenses, Patents, Patent Licenses, Trade Secrets, Trademarks and Trademark Licenses. "Intercompany Note": with respect to any Grantor, any promissory note ----------------- in a principal amount in excess of $1,000,000 evidencing loans made by such Grantor to the Borrower or any of its Subsidiaries. "Issuers": the collective reference to the Persons identified on ------- Schedule 2 as the issuers of the Pledged Stock. ---------- "Inventory": with respect to any Grantor, all inventory (as defined --------- in the Code) of such Grantor. "Loans": the collective reference to the "Loans" as defined in the ----- Credit Agreement. "Notes": the collective reference to the "Notes" as defined in the ----- Credit Agreement. "Obligations": (i) in the case of the Borrower, the Borrower ----------- Obligations, and (ii) in the case of each Guarantor, its Guarantor Obligations. "Patent Licenses": with respect to any Grantor, all United States --------------- written license agreements of such Grantor with any Person who is not an Affiliate or a Subsidiary in connection with any of the Patents of such Grantor or such other Person's patents, whether such Grantor is a licensor or a licensee under any such agreement, including, without limitation, the license agreements listed on Schedule 5, subject, in each case, to the ---------- terms of such license agreements, and the right to prepare for sale, sell and advertise for sale, all Inventory now or hereafter covered by such licenses. "Patents": with respect to any Grantor, all of such Grantor's right, ------- title and interest in and to all United States patents, patent applications and patentable inventions, including, without limitation, all patents and patent applications identified in Schedule 5, and including, without ---------- limitation, (a) all inventions and improvements described and claimed therein, (b) the right to sue or otherwise recover for any and all past, present and 6 future infringement thereof, (c) all income, royalties, damages and other payments now and hereafter due and/or payable with respect thereto (including, without limitation, payments under all licenses entered into in connection therewith, and damages and payments for past or future infringements thereof), and (d) all other rights corresponding thereto in the United States and all reissues, divisions, continuations, continuations-in-part, substitutes, renewals, and extensions thereof, all improvements thereon, and all other rights of any kind whatsoever of such Grantor accruing thereunder or pertaining thereto. "Pledged Collateral": as defined in Section 3. ------------------ "Pledged Notes": with respect to any Pledgor, all Intercompany Notes ------------- at any time issued to such Pledgor. "Pledged Securities": the collective reference to the Pledged Notes ------------------ and the Pledged Stock. "Pledged Stock": with respect to any Pledgor, the shares of Capital ------------- Stock listed on Schedule 2 as held by such Pledgor, together with any other ---------- shares, stock certificates, options or rights of any nature whatsoever in respect of the Capital Stock of any Issuer that may be issued or granted to, or held by, such Pledgor while this Agreement is in effect (provided -------- that in no event shall there be pledged, nor shall any Pledgor be required to pledge, directly or indirectly, (x) any Capital Stock of any Subsidiary other than an Active Subsidiary or (y) more than 65% of any series of the outstanding Capital Stock of any Foreign Subsidiary pursuant to this Agreement). "Pledgor": Dynatech (with respect to the Pledged Stock of the ------- Borrower), the Borrower (with respect to Pledged Stock of the entities listed on Schedule 2 hereto under the name of the Borrower and any other Pledged Securities held by the Borrower) and any other Granting Party (with respect to Pledged Securities held by such Granting Party). "Proceeds": all "proceeds" as such term is defined in Section 9- -------- 306(1) of the Uniform Commercial Code in effect in the State of New York on the date hereof and, in any event, Proceeds of Pledged Securities shall include, without limitation, all dividends or other income from the Pledged Securities, collections thereon or distributions or payments with respect thereto. "Revolving Credit Commitments": the collective reference to the ---------------------------- "Revolving Credit Commitments" as defined in the Credit Agreement. "Secured Parties": the collective reference to the Administrative Agent, --------------- the Lenders (including, without limitation the Issuing Lender) and any Affiliate of any Lender which has entered into any Hedge Agreement with the Borrower or any of its Subsidiaries, and their respective successors, indorsees, transferees and assigns. "Securities Act": the Securities Act of 1933, as amended from time to -------------- time. 7 "Security Collateral": as defined in Section 3. ------------------- "Trade Secrets": with respect to any Grantor, all of such Grantor's ------------- right, title and interest in and to all United States trade secrets, including, without limitation, know-how, processes, formulae, compositions, designs, and confidential business and technical information, and all rights of any kind whatsoever accruing thereunder or pertaining thereto, including, without limitation, (a) all income, royalties, damages and payments now and hereafter due and/or payable with respect thereto, including, without limitation, payments under all licenses, non-disclosure agreements and memoranda of understanding entered into in connection therewith, and damages and payments for past or future misappropriations thereof, and (b) the right to sue or otherwise recover for past, present or future misappropriations thereof. "Trademark Licenses": with respect to any Grantor, all United States ------------------ written license agreements of such Grantor with any Person who is not an Affiliate or a Subsidiary in connection with any of the Trademarks of such Grantor or such other Person's names or trademarks, whether such Grantor is a licensor or a licensee under any such agreement, including, without limitation, the license agreements listed on Schedule 5, subject, in each ---------- case, to the terms of such license agreements, and the right to prepare for sale, sell and advertise for sale, all Inventory now or hereafter covered by such licenses. "Trademarks": with respect to any Grantor, all of such Grantor's ---------- right, title and interest in and to all United States trademarks, service marks, trade names, trade dress or other indicia of trade origin or business identifiers, trademark and service mark registrations, and applications for trademark or service mark registrations (except for "intent to use" applications for trademark or service mark registrations filed pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. (S) 1051, unless and until an Amendment to Allege Use or a Statement of Use under Sections 1(c) and 1(d) of said Act has been filed), and any renewals thereof, including, without limitation, each registration and application identified in Schedule 5, and including, without limitation, (a) the right ---------- to sue or otherwise recover for any and all past, present and future infringements or dilutions thereof, (b) all income, royalties, damages and other payments now and hereafter due and/or payable with respect thereto (including, without limitation, payments under all licenses entered into in connection therewith, and damages and payments for past or future infringements thereof), and (c) all other rights corresponding thereto in the United States and all other rights of any kind whatsoever of such Grantor accruing thereunder or pertaining thereto in the United States, together in each case with the goodwill of the business connected with the use of, and symbolized by, each such trademark, service mark, trade name, trade dress or other indicia of trade origin or business identifiers. "Vehicles": all cars, trucks, trailers, construction and earth moving -------- equipment and other vehicles covered by a certificate of title law of any state and all tires and other appurtenances to any of the foregoing. 8 1.2 Other Definitional Provisions. (a) The words "hereof," ----------------------------- "herein", "hereto" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, Schedule and Annex references are to this Agreement unless otherwise specified. (b) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms. (c) Where the context requires, terms relating to the Collateral, Pledged Collateral or Security Collateral, or any part thereof, when used in relation to a Granting Party shall refer to such Granting Party's Collateral, Pledged Collateral or Security Collateral or the relevant part thereof. (d) All references in this Agreement to any of the property described in the definition of the term "Collateral" or "Pledged Collateral," or to any Proceeds thereof, shall be deemed to be references thereto only to the extent the same constitute Collateral or Pledged Collateral, respectively. SECTION 2. GUARANTEE 2.1 Guarantee. (a) Each of the Guarantors hereby, jointly and --------- severally, unconditionally and irrevocably, guarantees to the Administrative Agent, for the ratable benefit of the Secured Parties, the prompt and complete payment and performance by the Borrower when due and payable (whether at the stated maturity, by acceleration or otherwise) of the Borrower Obligations. (b) Anything herein or in any other Credit Document to the contrary notwithstanding, the maximum liability of each Guarantor hereunder and under the other Credit Documents shall in no event exceed the amount that can be guaranteed by such Guarantor under applicable law, including applicable federal and state laws relating to the insolvency of debtors. (c) Each Guarantor agrees that the Borrower Obligations may at any time and from time to time exceed the amount of the liability of such Guarantor hereunder without impairing the guarantee contained in this Section 2 or affecting the rights and remedies of the Administrative Agent or any other Secured Party hereunder. (d) The guarantee contained in this Section 2 shall remain in full force and effect until the earlier to occur of (i) the first date on which all the Loans, any Reimbursement Obligations, all other Borrower Obligations then due and owing, and the obligations of each Guarantor under the guarantee contained in this Section 2 then due and owing shall have been satisfied by payment in full, no Letter of Credit shall be outstanding and the Commitments shall be terminated, notwithstanding that from time to time during the term of the Credit Agreement the Borrower may be free from any Borrower Obligations or (ii) as to any Guarantor, the sale or other disposition of all of the Capital Stock of such Guarantor as permitted under the Credit Agreement. 9 (e) No payment made by the Borrower, any of the Guarantors, any other guarantor or any other Person or received or collected by the Administrative Agent or any other Secured Party from the Borrower, any of the Guarantors, any other guarantor or any other Person by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Borrower Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of any Guarantor hereunder which shall, notwithstanding any such payment (other than any payment made by such Guarantor in respect of the Borrower Obligations or any payment received or collected from such Guarantor in respect of the Borrower Obligations), remain liable for the Borrower Obligations up to the maximum liability of such Guarantor hereunder until the earlier to occur of (i) the first date on which the Loans, any Reimbursement Obligations, and all other Borrower Obligations then due and owing, are paid in full, no Letter of Credit shall be outstanding and the Commitments are terminated or (ii) the sale or other disposition of all of the Capital Stock of such Guarantor as permitted under the Credit Agreement. 2.2 Right of Contribution. Each Guarantor hereby agrees that to the --------------------- extent that a Guarantor shall have paid more than its proportionate share of any payment made hereunder, such Guarantor shall be entitled to seek and receive contribution from and against any other Guarantor hereunder that has not paid its proportionate share of such payment. Each Guarantor's right of contribution shall be subject to the terms and conditions of Section 2.3. The provisions of this Section 2.2 shall in no respect limit the obligations and liabilities of any Guarantor to the Administrative Agent and the other Secured Parties, and each Guarantor shall remain liable to the Administrative Agent and the Lenders for the full amount guaranteed by such Guarantor hereunder. 2.3 No Subrogation. Notwithstanding any payment made by any -------------- Guarantor hereunder or any set-off or application of funds of any Guarantor by the Administrative Agent or any other Secured Party, no Guarantor shall be entitled to be subrogated to any of the rights of the Administrative Agent or any other Secured Party against the Borrower or any other Guarantor or any collateral security or guarantee or right of offset held by the Administrative Agent or any other Secured Party for the payment of the Borrower Obligations, nor shall any Guarantor seek or be entitled to seek any contribution or reimbursement from the Borrower or any other Guarantor in respect of payments made by such Guarantor hereunder, until all amounts owing to the Administrative Agent and the other Secured Parties by the Borrower on account of the Borrower Obligations are paid in full, no Letter of Credit shall be outstanding and the Commitments are terminated. If any amount shall be paid to any Guarantor on account of such subrogation rights at any time when all of the Borrower Obligations shall not have been paid in full, such amount shall be held by such Guarantor in trust for the Administrative Agent and the other Secured Parties, segregated from other funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over to the Administrative Agent in the exact form received by such Guarantor (duly indorsed by such Guarantor to the Administrative Agent, if required), to be applied against the Borrower Obligations, whether matured or unmatured, in such order as the Administrative Agent may determine. 10 2.4 Amendments, etc. with respect to the Borrower Obligations. To --------------------------------------------------------- the maximum extent permitted by law, each Guarantor shall remain obligated hereunder notwithstanding that, without any reservation of rights against any Guarantor and without notice to or further assent by any Guarantor, any demand for payment of any of the Borrower Obligations made by the Administrative Agent or any other Secured Party may be rescinded by the Administrative Agent or such other Secured Party and any of the Borrower Obligations continued, and the Borrower Obligations, or the liability of any other Person upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by the Administrative Agent or any other Secured Party, and the Credit Agreement and the other Credit Documents and any other documents executed and delivered in connection therewith may be amended, modified, supplemented or terminated, in whole or in part, as the Administrative Agent (or the Required Lenders, as the case may be) may deem advisable from time to time, and any collateral security, guarantee or right of offset at any time held by the Administrative Agent or any other Secured Party for the payment of the Borrower Obligations may be sold, exchanged, waived, surrendered or released. Neither the Administrative Agent nor any other Secured Party shall have any obligation to protect, secure, perfect or insure any Lien at any time held by it as security for the Borrower Obligations or for the guarantee contained in this Section 2 or any property subject thereto, except to the extent required by applicable law. 2.5 Guarantee Absolute and Unconditional. Each Guarantor waives, to ------------------------------------ the maximum extent permitted by applicable law, any and all notice of the creation, renewal, extension or accrual of any of the Borrower Obligations and notice of or proof of reliance by the Administrative Agent or any other Secured Party upon the guarantee contained in this Section 2 or acceptance of the guarantee contained in this Section 2; the Borrower Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon the guarantee contained in this Section 2; and all dealings between the Borrower and any of the Guarantors, on the one hand, and the Administrative Agent and the other Secured Parties, on the other hand, likewise shall be conclusively presumed to have been had or consummated in reliance upon the guarantee contained in this Section 2. Each Guarantor waives, to the maximum extent permitted by applicable law, diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon the Borrower or any of the other Guarantors with respect to the Borrower Obligations. Each Guarantor understands and agrees, to the extent permitted by law, that the guarantee contained in this Section 2 shall be construed as a continuing, absolute and unconditional guarantee of payment. Each Guarantor hereby waives, to the maximum extent permitted by applicable law, any and all defenses (other than any suit for breach of a contractual provision of any of the Loan Documents) that it may have arising out of or in connection with any and all of the following: (a) the validity or enforceability of the Credit Agreement or any other Credit Document, any of the Borrower Obligations or any other collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by the Administrative Agent or any other Secured Party, (b) any defense, set-off or counterclaim (other than a defense of payment or performance) that may at any time be available to or be asserted by the Borrower against the Administrative Agent or any other Secured Party, (c) any change in the time, place, manner or place of payment, amendment, or waiver or increase in the Obligations, 11 (d) any exchange, taking, or release of Security Collateral, (e) any change in the limited liability company structure or existence of the Borrower, (f) any application of Security Collateral to Obligations or (g) any other circumstance whatsoever (other than payment in full of the Borrower Obligations) (with or without notice to or knowledge of the Borrower or such Guarantor) that constitutes, or might be construed to constitute, an equitable or legal discharge of the Borrower for the Borrower Obligations, or of such Guarantor under the guarantee contained in this Section 2, in bankruptcy or in any other instance. When making any demand hereunder or otherwise pursuing its rights and remedies hereunder against any Guarantor, the Administrative Agent or any other Secured Party may, but shall be under no obligation to, make a similar demand on or otherwise pursue such rights and remedies as it may have against the Borrower, any other Guarantor or any other Person or against any collateral security or guarantee for the Borrower Obligations or any right of offset with respect thereto, and any failure by the Administrative Agent or any other Secured Party to make any such demand, to pursue such other rights or remedies or to collect any payments from the Borrower, any other Guarantor or any other Person or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of the Borrower, any other Guarantor or any other Person or any such collateral security, guarantee or right of offset, shall not relieve any Guarantor of any obligation or liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of the Administrative Agent or any other Secured Party against any Guarantor. For the purposes hereof "demand" shall include the commencement and continuance of any legal proceedings. 2.6 Reinstatement. The guarantee contained in this Section 2 shall ------------- continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Borrower Obligations is rescinded or must otherwise be restored or returned by the Administrative Agent or any other Secured Party upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Borrower or any Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Borrower or any Guarantor or any substantial part of its property, or otherwise, all as though such payments had not been made. 2.7 Payments. Each Guarantor hereby guarantees that payments -------- hereunder will be paid to the Administrative Agent without set-off or counterclaim in Dollars at the office of the Administrative Agent located at 60 Wall Street, New York, New York 10260 or such other address of the Administrative Agent as may be designated in writing to such Guarantor from time to time in accordance with subsection 18.2 of the Credit Agreement. SECTION 3. GRANT OF SECURITY INTEREST 3.1 Grant. Each Granting Party (1) that is a Grantor hereby grants ----- to the Administrative Agent, for the ratable benefit of the Secured Parties, a security interest in all of the Collateral of the Grantor, as collateral security for the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations of such Grantor, except as provided in Section 3.3 hereof. The term "Collateral", as to ---------- any Grantor, means the following property now owned or at any time hereafter acquired by 12 such Grantor or in which such Grantor now has or at any time in the future may acquire any right, title or interest except as specified in Section 3.3 hereof: (a) all Accounts; (b) all Chattel Paper; (c) all Contracts; (d) all Documents; (e) all Equipment (other than Vehicles); (f) all General Intangibles; (g) all Instruments; (h) all Intellectual Property; (i) all Inventory; (j) all books and records pertaining to any of the foregoing; (k) the Collateral Proceeds Account; and (l) to the extent not otherwise included, all Proceeds and products of any and all of the foregoing and all collateral security and guarantees given by any Person with respect to any of the foregoing; provided that Collateral shall not include any Pledged Collateral, or any - -------- property or assets specifically excluded from Pledged Collateral (including any Capital Stock of any Foreign Subsidiary in excess of 65% of any series of such stock). 3.2 Pledged Collateral. Each Granting Party that is a Pledgor hereby ------------------ grants to the Administrative Agent, for the ratable benefit of the Secured Parties, a security interest in all of the Pledged Collateral of such Pledgor, as collateral security for the prompt and complete performance when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations of such Pledgor, except as provided in Section 3.3 hereof. The term "Pledged ------- Collateral", as to any Pledgor, means the Pledged Securities now owned or at any - ---------- time hereafter acquired by such Pledgor, and any Proceeds thereof. The term "Security Collateral", as to any Granting Party, means, collectively, the ------------------- Collateral (if any) and the Pledged Collateral (if any) of such Granting Party. 13 3.3 Certain Exceptions. No security interest is or will be granted ------------------ pursuant hereto in any right, title or interest of any Granting Party under or in: (a) any Instruments, Contracts, Chattel Paper, General Intangibles, Copyright Licenses, Patent Licenses, Trademark Licenses or other contracts or agreements with or issued by Persons other than a Subsidiary of the Borrower (collectively, "Excluded Agreements") that would otherwise be ------------------- included in the Security Collateral (and such Excluded Agreements shall not be deemed to constitute a part of the Security Collateral) for so long as, and to the extent that, the granting of such a security interest pursuant hereto would result in a breach, default or termination of such Excluded Agreements, or (b) any Equipment that would otherwise be included in the Security Collateral (and such Equipment shall not be deemed to constitute a part of the Security Collateral) during such time as such Equipment is subject to a Lien permitted by subsection 14.2(f) of the Credit Agreement. SECTION 4. REPRESENTATIONS AND WARRANTIES 4.1 Representations and Warranties of Each Guarantor. To induce the ------------------------------------------------ Administrative Agent and the Lenders to enter into the Credit Agreement and to induce the Lenders to make their respective extensions of credit to the Borrower thereunder, each Guarantor hereby represents and warrants to the Administrative Agent and each other Secured Party that the representations and warranties set forth in Section 10 of the Credit Agreement as they relate to such Guarantor or to the Credit Documents to which such Guarantor is a party, each of which representations and warranties is hereby incorporated herein by reference, are true and correct in all material respects, and the Administrative Agent and each other Secured Party shall be entitled to rely on each of such representations and warranties as if fully set forth herein; provided that each reference in -------- each such representation and warranty to the Borrower's knowledge shall, for the purposes of this Section 4.1, be deemed to be a reference to such Guarantor's knowledge. 4.2 Representations and Warranties of Each Grantor. To induce the ---------------------------------------------- Administrative Agent and the Lenders to enter into the Credit Agreement and to induce the Lenders to make their respective extensions of credit to the Borrower thereunder, each Grantor hereby represents and warrants to the Administrative Agent and each other Secured Party that: 4.2.1 Title; No Other Liens. Except for the security interest --------------------- granted to the Administrative Agent, for the ratable benefit of the Secured Parties, pursuant to this Agreement and the other Liens permitted to exist on such Grantor's Collateral by the Credit Agreement (including without limitation subsection 14.2 thereof), such Grantor owns each item of such Grantor's Collateral free and clear of any and all Liens. Except as set forth on Schedule 6, no currently effective financing statement or other similar public notice with respect to all or any part of such Grantor's Collateral is on file or of record in any public office, except such as have been filed in favor of the Administrative Agent, for the ratable benefit of the Secured Parties, pursuant to this Agreement or as are permitted by the Credit Agreement (including without 14 limitation subsection 14.2 thereof) or any other Credit Document or for which termination statements will be delivered on the Closing Date. 4.2.2 Perfected First Priority Liens. (i) This Agreement is ------------------------------ effective to create, as collateral security for the Obligations of such Grantor, valid and enforceable Liens on such Grantor's Collateral in favor of the Administrative Agent, for the benefit of the Secured Parties, except as enforceability may be affected by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditor's rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. (ii) Except with regard to Liens (if any) on Specified Assets, upon the completion of the Filings, and the delivery to and continuing possession by the Administrative Agent of all Instruments, Chattel Paper and Documents a security interest in which is perfected by possession, the Liens created pursuant to this Agreement will constitute valid Liens on and (to the extent provided herein) perfected security interests in such Grantor's Collateral in favor of the Administrative Agent for the benefit of the Secured Parties, and will be prior to all other Liens of all other Persons other than Permitted Liens, and enforceable as such as against all other Persons other than Ordinary Course Buyers, except to the extent that the recording of an assignment or other transfer of title to the Administrative Agent or the recording of other applicable documents in the United States Patent and Trademark Office or United States Copyright Office may be necessary for perfection or enforceability, and except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law) or by an implied covenant of good faith and fair dealing. As used in this Section 4.2.2(ii), the following terms shall have the following meanings: "Filings": the filing or recording of the Financing Statements, any ------- Patent and Trademark Security Agreement as set forth in Schedule 9, and any filings after the Closing Date in any other jurisdiction as may be necessary under any Requirement of Law. "Financing Statements": the financing statements delivered to the -------------------- Administrative Agent by such Grantor on the Closing Date for filing in the jurisdictions listed in Schedule 9. "Ordinary Course Buyers": with respect to goods only, buyers in the ---------------------- ordinary course of business to the extent provided in Section 9-307(1) of the Uniform Commercial Code as in effect from time to time in the relevant jurisdiction. "Permitted Liens": Liens permitted pursuant to the Credit Documents, --------------- including without limitation those permitted to exist pursuant to subsection 14.2 of the Credit Agreement. "Specified Assets": the following property and assets of such ---------------- Grantor: 15 (1) Equipment constituting Fixtures; (2) Patents, Patent Licenses, Trademarks and Trademark Licenses to the extent that (a) Liens thereon which cannot be perfected by the filing of financing statements under the Uniform Commercial Code or by the filing and acceptance thereof in the United States Patent and Trademark Office or (b) such Patents, Patent Licenses, Trademarks and Trademark Licenses are not, individually or in the aggregate, material to the business of Dynatech and its Subsidiaries taken as a whole; (3) Copyrights and Copyright Licenses and Accounts or receivables arising therefrom to the extent that the Uniform Commercial Code as in effect from time to time in the relevant jurisdiction is not applicable to the creation or perfection of Liens thereon; (4) uncertificated securities; (5) Collateral for which the perfection of Liens thereon requires filings in or other actions under the laws of jurisdictions outside the United States of America, any State, territory or dependency thereof or the District of Columbia; (6) contracts, Accounts or receivables subject to the Assignment of Claims Act; (7) goods included in Collateral received by any Person for "sale or return" within the meaning of Section 2-326 of the Uniform Commercial Code of the applicable jurisdiction, to the extent of claims of creditors of such Person; (8) Proceeds of Accounts, receivables or Inventory which do not themselves constitute Collateral or which have not been transferred to or deposited in the Collateral Proceeds Account (if any); and (9) Equipment at various sales offices with a fair market value of less than $10,000 per sales office and mobile goods. 4.2.3 Chief Executive Office. On the date hereof, such Grantor's ---------------------- jurisdiction of organization and the location of such Grantor's chief executive office or sole place of business are specified on Schedule 3. ---------- 4.2.4 Inventory and Equipment. On the date hereof, such Grantor's ----------------------- Inventory (other than Inventory held by various Persons (other than a Grantor and its Affiliates) that is being finished or modified by such Persons and thereafter returned to the respective Grantor ("WIP Inventory")) and Equipment ------------- (other than equipment at various sales offices with a fair market value of less than $10,000 per sales office and mobile goods) are kept at the locations listed on Schedule 4. ---------- 16 4.2.5 Farm Products. None of such Grantor's Collateral constitutes, ------------- or is the Proceeds of, Farm Products. 4.2.6 Accounts. The amount represented by such Grantor to the -------- Administrative Agent or the other Secured Parties from time to time as owing by each account debtor or by all account debtors in respect of such Grantor's Accounts will at such time be the correct amount, in all material respects, actually owing by such account debtor or debtors thereunder, except to the extent that appropriate reserves therefor have been established on the books of such Grantor in accordance with GAAP. The places where such Grantor keeps its records concerning such Grantor's Accounts are listed on Schedule 7 or such ---------- other location or locations of which such Grantor shall have provided prior written notice to the Administrative Agent pursuant to Section 5.2.5 hereof. Unless otherwise indicated in writing to the Administrative Agent, each Account of such Grantor arises out of a bona fide sale and delivery of goods or rendition of services by such Grantor. Such Grantor has not given any account debtor any deduction in respect of the amount due under any such Account, except in the ordinary course of business or as such Grantor may otherwise advise the Administrative Agent in writing. 4.2.7 Intellectual Property. Schedule 5 lists all material --------------------- Trademarks and material Patents, in each case, registered in the United States Patent and Trademark Office and owned by such Grantor in its own name as of the date hereof, and all material Trademark Licenses and all material Patent Licenses (including, without limitation, material Trademark Licenses for registered Trademarks and material Patent Licenses for registered Patents) owned by such Grantor in its own name as of the date hereof. 4.3 Representations and Warranties of Each Pledgor. To induce the ---------------------------------------------- Administrative Agent and the Lenders to enter into the Credit Agreement and to induce the Lenders to make their respective extensions of credit thereunder, each Pledgor hereby represents and warrants to the Administrative Agent and each other Secured Party that: 4.3.1 The shares of Pledged Stock pledged by such Pledgor hereunder constitute (i) in the case of each Active Subsidiary which is a Domestic Subsidiary, all the issued and outstanding shares of all classes of the Capital Stock of each such Active Subsidiary owned by such Pledgor and (ii) in the case of each Foreign Subsidiary such percentage (not more than 65%) as is specified on Schedule 2 of all the issued and outstanding shares of all classes of the ---------- Capital Stock of each such Foreign Subsidiary. 4.3.2 All the shares of the Pledged Stock pledged by such Pledgor hereunder have been duly and validly issued and are fully paid and nonassessable. 4.3.3 Such Pledgor is the record and beneficial owner of, and has good title to, the Pledged Securities pledged by it hereunder, free of any and all Liens or options in favor of, or claims of, any other Person, except the security interest created by this Agreement and Liens arising by operation of law or permitted by the Credit Agreement. 4.3.4 Upon delivery to the Administrative Agent of the certificates evidencing the Pledged Securities held by such Pledgor together with executed stock or bond powers or other 17 instruments of transfer, the security interest created by this Agreement in such Pledged Securities evidenced by certificates, assuming the continuing possession of such Pledged Securities by the Administrative Agent, will constitute a valid, perfected first priority security interest in such Pledged Securities to the extent provided in and governed by the Code, enforceable in accordance with its terms against all creditors of such Pledgor and any persons purporting to purchase such Pledged Securities from such Pledgor, except as enforceability may be affected by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. 4.3.5 Upon the filing of financing statements in the appropriate jurisdictions under the Code, the security interest created by this Agreement in such Pledged Securities that constitute uncertificated securities, will constitute a valid, perfected first priority security interest in such Pledged Securities constituting uncertificated securities to the extent provided in and governed by the Code, enforceable in accordance with its terms against all creditors of such Pledgor and any persons purporting to purchase such Pledged Securities from such Pledgor, except as enforceability may be affected by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. SECTION 5. COVENANTS 5.1 Covenants of Each Guarantor. Each Guarantor covenants and agrees --------------------------- with the Administrative Agent and the other Secured Parties that, from and after the date of this Agreement until the earlier to occur of (i) the date upon which the Loans, any Reimbursement Obligations, and all other Obligations then due and owing, shall have been paid in full, no Letter of Credit shall be outstanding and the Commitments shall have terminated, or (ii) as to any Guarantor the date upon which all the Capital Stock of such Guarantor shall have been sold or otherwise disposed of in accordance with the terms of the Credit Agreement, such Guarantor shall take, or shall refrain from taking, as the case may be, each action that is necessary to be taken or not taken, as the case may be, so that no Default or Event of Default is caused by the failure to take such action or to refrain from taking such action by such Guarantor or any of its Subsidiaries. 5.2 Covenants of Each Grantor. Each Grantor covenants and agrees ------------------------- with the Administrative Agent and the other Secured Parties that, from and after the date of this Agreement until the earlier to occur of (i) the date upon which the Loans, any Reimbursement Obligations, and all other Obligations then due and owing, shall have been paid in full, no Letter of Credit shall be outstanding and the Commitments shall have terminated or (ii) as to any Grantor the date upon which all the Capital Stock of such Grantor shall have been sold or otherwise disposed of in accordance with the terms of the Credit Agreement: 5.2.1 Delivery of Instruments and Chattel Paper. If any amount ----------------------------------------- payable under or in connection with any of such Grantor's Collateral shall be or become evidenced by any 18 Instrument or Chattel Paper, such Grantor shall (except as provided in the following sentence) be entitled to retain possession of all Collateral of such Grantor evidenced by any Instrument or Chattel Paper, and shall hold all such Collateral in trust for the Administrative Agent, for the ratable benefit of the Secured Parties. In the event that an Event of Default shall have occurred and be continuing, upon the request of the Administrative Agent, such Instrument or Chattel Paper shall be promptly delivered to the Administrative Agent, duly indorsed in a manner satisfactory to the Administrative Agent, to be held as Collateral pursuant to this Agreement. Such Grantor shall not permit any other Person to possess any such Collateral at any time other than in connection with any sale or other disposition of such Collateral in a transaction permitted by the Credit Agreement. 5.2.2 Maintenance of Insurance. (a) Such Grantor will maintain, ------------------------ with financially sound and reputable companies, insurance policies (i) insuring such Grantor's Inventory and Equipment against loss by fire, explosion, theft and such other casualties as may be reasonably satisfactory to the Administrative Agent and (ii) insuring such Grantor, the Administrative Agent and the other Secured Parties against liability for personal injury and property damage relating to such Inventory and Equipment, such policies to be in such form and amounts and having such coverage as may be reasonably satisfactory to the Administrative Agent. (b) All such insurance shall (i) provide that no cancellation, material reduction in amount or material change in coverage thereof shall be effective until at least 15 days after receipt by the Administrative Agent of written notice thereof, (ii) name the Administrative Agent as an additional insured party or loss payee, (iii) include deductibles consistent with past practice or consistent with industry practice or otherwise reasonably satisfactory to the Administrative Agent. 5.2.3 Payment of Obligations. Such Grantor will pay and discharge or ---------------------- otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all material taxes, assessments and governmental charges or levies imposed upon such Grantor's Collateral or in respect of income or profits therefrom, as well as all material claims of any kind (including, without limitation, material claims for labor, materials and supplies) against or with respect to such Grantor's Collateral, except that no such tax, assessment, charge or levy need be paid or satisfied if the amount or validity thereof is currently being contested in good faith by appropriate proceedings and reserves in conformity with GAAP with respect thereto have been provided on the books of such Grantor. 5.2.4 Maintenance of Perfected Security Interest; Further --------------------------------------------------- Documentation. (a) Such Grantor shall maintain the security interest created - ------------- by this Agreement in such Grantor's Collateral as a perfected security interest having at least the priority described in Section 4.2.2 and shall defend such security interest against the claims and demands of all Persons whomsoever. (b) Such Grantor will furnish to the Administrative Agent from time to time statements and schedules further identifying and describing such Grantor's Collateral and such other reports in connection with such Grantor's Collateral as the Administrative Agent may reasonably request in writing, all in reasonable detail. 19 (c) At any time and from time to time, upon the written request of the Administrative Agent, and at the sole expense of such Grantor, such Grantor will promptly and duly execute and deliver such further instruments and documents and take such further actions as the Administrative Agent may reasonably request for the purpose of obtaining or preserving the full benefits of this Agreement and of the rights and powers herein granted by such Grantor, including, without limitation, the filing of any financing or continuation statements under the Uniform Commercial Code (or other similar laws) in effect in any jurisdiction with respect to the security interests created hereby. 5.2.5 Changes in Locations, Name, etc. Such Grantor will not, except -------------------------------- upon not less than 30 days' prior written notice to the Administrative Agent and delivery to the Administrative Agent, if applicable, of a written supplement to Schedule 4 showing any additional location at which such Grantor's Inventory or - ---------- Equipment shall be kept: (i) permit any of such Grantor's Inventory (other than WIP Inventory) or Equipment (other than Equipment at various sales offices with a fair market value of less than $10,000 per sales office and mobile goods) to be kept at a location other than the location(s) applicable to such Grantor listed on Schedule 4 (other than Inventory or Equipment being ---------- conveyed, sold, leased, assigned, transferred or otherwise disposed of as permitted by the Credit Agreement or Inventory having a fair market value not in excess of $500,000 in the aggregate; (ii) change the location of its chief executive office or sole place of business from that referred to in Section 4.2.3; or (iii) change its name, identity or corporate structure to such an extent that any financing statement filed by the Administrative Agent in connection with this Agreement would become seriously misleading; provided that, prior to taking any such action, or promptly after receiving a - -------- written request therefor from the Administrative Agent, such Grantor shall deliver to the Administrative Agent all additional executed financing statements and other documents reasonably requested by the Administrative Agent to maintain the validity, perfection and priority of the security interests provided for herein. 5.2.6 Notices. Such Grantor will advise the Administrative Agent ------- promptly, in reasonable detail, of: (a) any Lien (other than security interests created hereby or Liens permitted under the Credit Agreement) on any of such Grantor's Collateral which would adversely affect the ability of the Administrative Agent to exercise any of its remedies hereunder; and (b) of the occurrence of any other event which would reasonably be expected to have a material adverse effect on the aggregate value of such Grantor's Collateral or on the security interests created hereby. 20 5.2.7 Pledged Securities. In the case of each Grantor that is an ------------------ Issuer, such Issuer agrees that (i) it will be bound by the terms of this Agreement relating to the Pledged Stock issued by it and will comply with such terms insofar as such terms are applicable to it, (ii) it will notify the Administrative Agent promptly in writing of the occurrence of any of the events described in Section 5.3.1 with respect to the Pledged Stock issued by it and (iii) the terms of Sections 6.3(c) and 6.7 shall apply to it, mutatis mutandis, ------- -------- with respect to all actions that may be required of it pursuant to Section 6.3(c) or 6.7 with respect to the Pledged Stock issued by it. 5.2.8 Accounts. (a) Other than in the ordinary course of business -------- or as permitted by the Credit Documents, such Grantor will not (i) grant any extension of the time of payment of any of such Grantor's Accounts, (ii) compromise or settle any such Account for less than the full amount thereof, (iii) release, wholly or partially, any Person liable for the payment of any Account, (iv) allow any credit or discount whatsoever on any such Account or (v) amend, supplement or modify any Account unless such extensions, compromises, settlements, releases, credits or discounts would not reasonably be expected to materially adversely affect the value of the Accounts constituting Collateral taken as a whole. (b) Such Grantor will deliver to the Administrative Agent a copy of each material demand, notice or document received by it that questions or calls into doubt the validity or enforceability of more than 10% of the aggregate amount of the then outstanding Accounts. 5.2.9 Maintenance of Records. Such Grantor will keep and maintain at ---------------------- its own cost and expense reasonably satisfactory and complete records of its Collateral, including, without limitation, a record of all payments received and all credits granted with respect to such Collateral, and shall mark such records to evidence this Agreement and the Liens and the security interests created hereby. 5.2.10 Acquisition of Intellectual Property. Within 90 days after ------------------------------------ the end of each calendar year, such Grantor will notify the Administrative Agent of any acquisition by such Grantor of (i) any registration of any material Copyright, Patent or Trademark or (ii) any exclusive rights under a material Copyright License, Patent License or Trademark License constituting Collateral, and shall take such actions as may be reasonably requested by the Administrative Agent (but only to the extent such actions are within such Grantor's control) to perfect the security interest granted to the Administrative Agent and the other Secured Parties therein, to the extent provided in respect of the Copyright Patent or Trademark constituting Collateral on the date hereof by, (x) the execution and delivery of a Patent and Trademark Security Agreement (or amendments to any such agreement previously executed or delivered by such Grantor) or other comparable agreements with respect to Copyrights or Copyright Licenses constituting Collateral and/or (y) the making of appropriate filings (I) of financing statements under the Uniform Commercial Code of any applicable jurisdiction and/or (II) in the United States Patent and Trademark Office, or with respect to Copyrights and Copyright Licenses, other applicable office). 5.2.11 Protection of Trade Secrets. Such Grantor shall take all --------------------------- steps which it deems commercially reasonable to preserve and protect the secrecy of all material Trade Secrets of such Grantor. 21 5.3 Covenants of Each Pledgor. Each Pledgor covenants and agrees ------------------------- with the Administrative Agent and the other Secured Parties that, from and after the date of this Agreement until the earlier to occur of (i) the Loans, any Reimbursement Obligations, and all other Obligations then due and owing shall have been paid in full, no Letter of Credit shall be outstanding and the Commitments shall have terminated or (ii) as to any Pledgor, all the Capital Stock of such Pledgor shall have been sold or otherwise disposed of as permitted under the terms of the Credit Agreement: 5.3.1 If such Pledgor shall, as a result of its ownership of its Pledged Securities, become entitled to receive or shall receive any stock certificate (including, without limitation, any stock certificate representing a stock dividend or a distribution in connection with any reclassification, increase or reduction of capital or any certificate issued in connection with any reorganization), stock option or similar rights in respect of the Capital Stock of any Issuer, whether in addition to, in substitution of, as a conversion of, or in exchange for, any shares of the Pledged Stock, or otherwise in respect thereof, such Pledgor shall accept the same as the agent of the Administrative Agent and the other Secured Parties, hold the same in trust for the Administrative Agent and deliver the same forthwith to the Administrative Agent in the exact form received, duly indorsed by such Pledgor to the Administrative Agent, if required, together with an undated stock power covering such certificate duly executed in blank by such Grantor, to be held by the Administrative Agent, subject to the terms hereof, as additional collateral security for the Obligations (provided that in no event shall there be pledged, -------- nor shall any Pledgor be required to pledge, more than 65% of any series of the outstanding Capital Stock of any Foreign Subsidiary Holdco or other Foreign Subsidiary pursuant to this Agreement). Any sums paid upon or in respect of the Pledged Securities upon the liquidation or dissolution of any Issuer or maker (except any liquidation or dissolution of any Subsidiary of the Borrower in accordance with the Credit Agreement) shall be paid over to the Administrative Agent to be held by it hereunder as additional collateral security for the Obligations, and in case any distribution of capital shall be made on or in respect of the Pledged Stock or any property shall be distributed upon or with respect to the Pledged Stock pursuant to the recapitalization or reclassification of the capital of any Issuer or pursuant to the reorganization thereof, the property so distributed shall, unless otherwise subject to a perfected security interest in favor of the Administrative Agent, be delivered to the Administrative Agent to be held by it hereunder as additional collateral security for the Obligations. If any sums of money or property so paid or distributed in respect of the Pledged Securities shall be received by such Pledgor, such Pledgor shall, until such money or property is paid or delivered to the Administrative Agent, hold such money or property in trust for the Secured Parties, segregated from other funds of such Pledgor, as additional collateral security for the Obligations. 5.3.2 Without the prior written consent of the Administrative Agent, such Pledgor will not (except as permitted by the Credit Agreement) (i) vote to enable, or take any other action to permit, any Issuer to issue any stock or other equity securities of any nature or to issue any other securities convertible into or granting the right to purchase or exchange for any stock or other equity securities of any nature of any Issuer, (ii) sell, assign, transfer, exchange, or otherwise dispose of, or grant any option with respect to, the Pledged Securities or Proceeds thereof or (iii) create, incur or permit to exist any Lien or option in favor of, or any material 22 adverse claim of any Person with respect to, any of the Pledged Securities or Proceeds thereof, or any interest therein, except for the security interests created by this Agreement or Liens arising by operation of law. 5.3.3 Such Pledgor shall maintain the security interest created by this Agreement in such Pledgor's Pledged Collateral as a perfected security interest having at least the priority described in Section 4.3.4 and shall defend such security interest against the claims and demands of all Persons whomsoever. At any time and from time to time, upon the written request of the Administrative Agent, and at the sole expense of such Pledgor, such Pledgor will promptly and duly execute and deliver such further instruments and documents and take such further actions as the Administrative Agent may reasonably request for the purpose of obtaining or preserving the full benefits of this Agreement and of the rights and powers herein granted by such Pledgor. SECTION 6. REMEDIAL PROVISIONS 6.1 Certain Matters Relating to Accounts. (a) At any time and from ------------------------------------ time to time after the occurrence and during the continuance of an Event of Default, the Administrative Agent shall have the right to make test verifications of the Accounts in any reasonable manner and through any reasonable medium that it reasonably considers advisable, and the relevant Grantor shall furnish all such assistance and information as the Administrative Agent may reasonably require in connection with such test verifications. At any time and from time to time after the occurrence and during the continuance of an Event of Default, upon the Administrative Agent's reasonable request and at the expense of the relevant Grantor, such Grantor shall cause independent public accountants or others reasonably satisfactory to the Administrative Agent to furnish to the Administrative Agent reports showing reconciliations, aging and test verifications of, and trial balances for, the Accounts. (b) The Administrative Agent hereby authorizes each Grantor to collect such Grantor's Accounts, and the Administrative Agent may curtail or terminate said authority at any time after the occurrence and during the continuance of an Event of Default. If required by the Administrative Agent at any time after the occurrence and during the continuance of an Event of Default, any Proceeds constituting collections of such Accounts, when collected by such Grantor, (i) shall be forthwith (and, in any event, within two Business Days of receipt by such Grantor) be deposited in or otherwise transferred to the Collateral Proceeds Account established by such Grantor maintained under the sole dominion and control of the Administrative Agent, subject to withdrawal by the Administrative Agent for the account of the Secured Parties only as provided in Section 65, and (ii) until so turned over, shall be held by such Grantor in trust for the Administrative Agent and the other Secured Parties, segregated from other funds of such Grantor. All Proceeds constituting collections of Accounts while held by the Collateral Account Bank (or by any Guarantor in trust for the benefit of the Administrative Agent and the other Secured Parties) shall continue to be collateral security for all of the Obligations and shall not constitute payment thereof until applied as hereinafter provided. At any time when an Event of Default has occurred and is continuing, at the Administrative Agent's election, the Administrative Agent may apply all or any part of the funds on deposit in the Collateral Proceeds Account established by the relevant Grantor to the payment of the Obligations of such Grantor 23 then due and owing, such application to be made as set forth in Section 6.5 hereof. So long as no Event of Default has occurred and is continuing, the funds on deposit in the Collateral Proceeds Account shall be remitted as provided in Section 6.1(d) hereof. (c) At any time and from time to time after the occurrence and during the continuance of an Event of Default and if the Administrative Agent has terminated a Grantor's right to collect Accounts pursuant to clause (b) above, at the Administrative Agent's request, each Grantor shall deliver to the Administrative Agent all original and other documents evidencing, and relating to, the agreements and transactions which gave rise to such Grantor's Accounts, including, without limitation, all original orders, invoices and shipping receipts. (d) General Fund Account. So long as no Event of Default has -------------------- occurred and is continuing, the Administrative Agent shall instruct the Collateral Account Bank to promptly remit any funds on deposit in each Grantor's Collateral Proceeds Account to such Grantor's General Fund Account. In the event that an Event of Default has occurred and is continuing, the Administrative Agent and the Grantors agree that the Administrative Agent, at its option, may require that each Collateral Proceeds Account be established at Morgan Guaranty Trust Company of New York. Each Grantor shall have the right, at any time and from time to time, to withdraw such of its own funds from its own General Fund Account, and to maintain such balances in its General Fund Account, as it shall deem to be necessary or desirable. (e) Restructuring of Deposit Accounts. If (a) any Collateral --------------------------------- Proceeds Account is maintained at a Collateral Account Bank located in a state within the United States in which Article 9 of the Uniform Commercial Code in effect in such state has been expressly made applicable to (and only for so long as it is applicable to) demand deposit accounts and all filings have been made in such state that are necessary to perfect the Secured Parties' security interest in such Collateral Proceeds Account or (b) after the Closing Date the relevant Grantor demonstrates to the Administrative Agent, and the Administrative Agent in its sole discretion agrees, that the costs associated with maintaining both a Collateral Proceeds Account and a General Fund Account outweigh any benefits to the Secured Parties in terms of any additional protection to their rights in such Grantor's Collateral that could not be achieved with the use of a single account, then upon the request of such Grantor, the Administrative Agent may amend this Agreement to delete the requirement that a separate General Fund Account be maintained and provide that such Grantor be entitled to withdraw funds on deposit in such Collateral Proceeds Account at any time so long as no Event of Default has occurred and is continuing. 6.2 Communications with Obligors; Grantors Remain Liable. (a) The ---------------------------------------------------- Administrative Agent in its own name or in the name of others may at any time and from time to time after the occurrence and during the continuance of an Event of Default specified in Section 16.2(a) or 16.3(a) of the Credit Agreement, communicate with obligors under the Accounts and parties to the Contracts (in each case, to the extent constituting Collateral) to verify with them to the Administrative Agent's satisfaction the existence, amount and terms of any Accounts or Contracts. (b) Upon the request of the Administrative Agent at any time after the occurrence and during the continuance of an Event of Default specified in Section 16.2(a) or 16.3(a) of the 24 Credit Agreement, each Grantor shall notify obligors on such Grantor's Accounts and parties to such Grantor's Contracts (in each case, to the extent constituting Collateral) that such Accounts and such Contracts have been assigned to the Administrative Agent, for the ratable benefit of the Secured Parties, and that payments in respect thereof shall be made directly to the Administrative Agent. (c) Anything herein to the contrary notwithstanding, each Grantor shall remain liable under each of such Grantor's Accounts to observe and perform all the conditions and obligations to be observed and performed by it thereunder, all in accordance with the terms of any agreement giving rise thereto. Neither the Administrative Agent nor any Lender shall have any obligation or liability under any Account (or any agreement giving rise thereto) by reason of or arising out of this Agreement or the receipt by the Administrative Agent or any other Secured Party of any payment relating thereto, nor shall the Administrative Agent or any other Secured Party be obligated in any manner to perform any of the obligations of any Grantor under or pursuant to any Account (or any agreement giving rise thereto) to make any payment, to make any inquiry as to the nature or the sufficiency of any payment received by it or as to the sufficiency of any performance by any party thereunder, to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts that may have been assigned to it or to which it may be entitled at any time or times. 6.3 Pledged Stock. (a) Unless an Event of Default shall have ------------- occurred and be continuing and the Administrative Agent shall have given notice to the relevant Pledgor of the Administrative Agent's intent to exercise its corresponding rights pursuant to Section 6.3(b), each Pledgor shall be permitted to receive all cash dividends and distributions paid in respect of the Pledged Stock and all payments made in respect of the Pledged Notes, to the extent permitted in the Credit Agreement, and to exercise all voting and corporate rights with respect to the Pledged Stock; provided, however, that no vote shall -------- ------- be cast or corporate right exercised or such other action taken (other than in connection with a transaction expressly permitted by the Credit Agreement) which, in the Administrative Agent's reasonable judgment, would materially impair the Pledged Collateral or the related rights or remedies of the Secured Parties or which would be inconsistent with or result in any violation of any provision of the Credit Agreement, this Agreement or any other Credit Document. (b) If an Event of Default shall occur and be continuing and the Administrative Agent shall give notice of its intent to exercise such rights to the relevant Pledgor or Pledgors, (i) the Administrative Agent shall have the right to receive any and all cash dividends, payments or other Proceeds paid in respect of the Pledged Stock and make application thereof to the Obligations in such order as is provided in Section 6.5, and (ii) any or all of the Pledged Stock shall be registered in the name of the Administrative Agent or its nominee, and the Administrative Agent or its nominee may thereafter exercise (x) all voting, corporate and other rights pertaining to such Pledged Stock at any meeting of shareholders of the relevant Issuer or Issuers or otherwise and (y) any and all rights of conversion, exchange, subscription and any other rights, privileges or options pertaining to such Pledged Stock as if it were the absolute owner thereof (including, without limitation, the right to exchange at its discretion any and all of the Pledged Stock upon the merger, consolidation, reorganization, recapitalization or other fundamental change in the corporate structure of any Issuer, or upon the exercise by the relevant 25 Pledgor or the Administrative Agent of any right, privilege or option pertaining to such Pledged Stock, and in connection therewith, the right to deposit and deliver any and all of the Pledged Stock with any committee, depositary, transfer agent, registrar or other designated agency upon such terms and conditions as the Administrative Agent may reasonably determine), all without liability (other than for its gross negligence or willful misconduct) except to account for property actually received by it, but the Administrative Agent shall have no duty to any Pledgor to exercise any such right, privilege or option and shall not be responsible for any failure to do so or delay in so doing, provided -------- that the Administrative Agent shall not exercise any voting or other consensual rights pertaining to the Pledged Stock in any way that would constitute an exercise of the remedies described in Section 6.6 other than in accordance with Section 6.6. (c) Each Pledgor hereby authorizes and instructs each Issuer or maker of any Pledged Securities pledged by such Pledgor hereunder to (i) comply with any instruction received by it from the Administrative Agent in writing that (x) states that an Event of Default has occurred and is continuing and (y) is otherwise in accordance with the terms of this Agreement, without any other or further instructions from such Pledgor, and each Pledgor agrees that each Issuer or maker shall be fully protected in so complying, and (ii) unless otherwise expressly permitted hereby, pay any dividends or other payments with respect to the Pledged Securities directly to the Administrative Agent. 6.4 Proceeds to be Turned Over To Administrative Agent. In addition -------------------------------------------------- to the rights of the Administrative Agent and the other Secured Parties specified in Section 6.1 with respect to payments of Accounts, if an Event of Default shall occur and be continuing, and the Administrative Agent shall have instructed any Grantor to do so, all Proceeds received by such Grantor consisting of cash, checks and other Cash Equivalent items shall be held by such Grantor in trust for the Administrative Agent and the other Secured Parties, segregated from other funds of such Grantor, and shall, forthwith upon receipt by such Grantor, be turned over to the Administrative Agent in the exact form received by such Grantor (duly indorsed by such Grantor to the Administrative Agent, if required). All Proceeds received by the Administrative Agent hereunder shall be held by the Administrative Agent in the relevant Collateral Proceeds Account maintained under its sole dominion and control. All Proceeds while held by the Administrative Agent in such Collateral Proceeds Account (or by such Grantor in trust for the Administrative Agent and the other Secured Parties) shall continue to be held as collateral security for all the Obligations and shall not constitute payment thereof until applied as provided in Section 65. 6.5 Application of Proceeds. It is agreed that if an Event of ----------------------- Default shall occur and be continuing, any and all Proceeds of the relevant Granting Party's Security Collateral received by the Administrative Agent (whether from the relevant Granting Party or otherwise) shall be held by the Administrative Agent for the benefit of the Secured Parties as collateral security for the Obligations of the relevant Granting Party (whether matured or unmatured), and/or then or at any time thereafter may, in the sole discretion of the Administrative Agent, be applied by the Administrative Agent against the Obligations of the relevant Granting Party then due and owing in the following order of priority: FIRST, to the payment of all reasonable costs and expenses incurred by the Administrative Agent in connection with this Agreement, the Credit Agreement, any 26 other Credit Document or any of the Obligations of the relevant Granting Party, including, without limitation, all court costs and the reasonable fees and expenses of its agents and legal counsel, and any other reasonable costs or expenses incurred in connection with the exercise by the Administrative Agent of any right or remedy under this Agreement, the Credit Agreement, or any other Credit Document; SECOND, to the ratable satisfaction of all other Obligations of the relevant Granting Party; and THIRD, to the relevant Granting Party or its successors or assigns, or to whomsoever may be lawfully entitled to receive the same. 6.6 Code and Other Remedies. If an Event of Default shall occur and ----------------------- be continuing, the Administrative Agent, on behalf of the Secured Parties, may exercise, in addition to all other rights and remedies granted to them in this Agreement and in any other instrument or agreement securing, evidencing or relating to the Obligations to the extent permitted by applicable law, all rights and remedies of a secured party under the Code or any other applicable law. Without limiting the generality of the foregoing, to the extent permitted by applicable law, the Administrative Agent, without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required by law referred to below) to or upon any Granting Party or any other Person (all and each of which demands, defenses, advertisements and notices are hereby waived), may in such circumstances forthwith collect, receive, appropriate and realize upon the Security Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give option or options to purchase, or otherwise dispose of and deliver the Security Collateral or any part thereof (or contract to do any of the foregoing), in one or more parcels at public or private sale or sales, at any exchange, broker's board or office of the Administrative Agent or any other Secured Party or elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk. The Administrative Agent or any other Secured Party shall have the right upon any such public sale or sales, and, to the extent permitted by law, upon any such private sale or sales, to purchase the whole or any part of the Security Collateral so sold, free of any right or equity of redemption in any Granting Party, which right or equity is hereby waived or released. Each Granting Party further agrees, at the Administrative Agent's request, to assemble the Security Collateral and make it available to the Administrative Agent at places which the Administrative Agent shall reasonably select, whether at such Granting Party's premises or elsewhere. The Administrative Agent shall apply the net proceeds of any action taken by it pursuant to this Section 6.6, after deducting all reasonable costs and expenses of every kind incurred in connection therewith or incidental to the care or safekeeping of any of the Security Collateral or in any way relating to the Security Collateral or the rights of the Administrative Agent and the other Secured Parties hereunder, including, without limitation, reasonable attorneys' fees and disbursements, to the payment in whole or in part of the Obligations of the relevant Granting Party then due and owing (including, without limitation, to the extent required by Section 16.4 of the Credit Agreement to cash collateralize L/C Obligations outstanding at such time), in the order of priority specified in Section 6.5 above, and only after such application and after the payment by the Administrative Agent of any other amount required by any provision of law, including, without limitation, Section 9-504(1)(c) of the Code, need the 27 Administrative Agent account for the surplus, if any, to any Granting Party. To the extent permitted by applicable law, each Granting Party waives all claims, damages and demands it may acquire against the Administrative Agent or any other Secured Party arising out of the repossession, retention or sale of collateral, except to the extent arising as a result of the gross negligence or willful misconduct of the Administrative Agent or such other Secured Party. If any notice of a proposed sale or other disposition of Collateral shall be required by law, such notice shall be deemed reasonable and proper if given at least 10 days before such sale or other disposition. 6.7 Registration Rights. (a) If the Administrative Agent shall ------------------- determine to exercise its right to sell any or all of the Pledged Stock pursuant to Section 6.6, and if in the reasonable opinion of the Administrative Agent it is necessary or reasonably advisable to have the Pledged Stock, or that portion thereof to be sold, registered under the provisions of the Securities Act, the relevant Pledgor will use its reasonable best efforts to cause the Issuer thereof to (i) execute and deliver, and use its best efforts to cause the directors and officers of such Issuer to execute and deliver, all such instruments and documents, and do or cause to be done all such other acts as may be, in the reasonable opinion of the Administrative Agent, necessary or advisable to register such Pledged Stock, or that portion thereof to be sold, under the provisions of the Securities Act, (ii) use its reasonable best efforts to cause the registration statement relating thereto to become effective and to remain effective for a period of not more than one year from the date of the first public offering of such Pledged Stock, or that portion thereof to be sold, and (iii) make all amendments thereto and/or to the related prospectus which, in the reasonable opinion of the Administrative Agent, are necessary or advisable, all in conformity with the requirements of the Securities Act and the rules and regulations of the Securities and Exchange Commission applicable thereto. Such Pledgor agrees to cause such Issuer to comply with the provisions of the securities or "Blue Sky" laws of any and all states and the District of Columbia that the Administrative Agent shall reasonably designate and to make available to its security holders, as soon as practicable, an earnings statement (which need not be audited) that will satisfy the provisions of Section 11(a) of the Securities Act. (b) Such Pledgor recognizes that the Administrative Agent may be unable to effect a public sale of any or all such Pledged Stock, by reason of certain prohibitions contained in the Securities Act and applicable state securities laws or otherwise, and may be compelled to resort to one or more private sales thereof to a restricted group of purchasers which will be obliged to agree, among other things, to acquire such securities for their own account for investment and not with a view to the distribution or resale thereof. Such Pledgor acknowledges and agrees that any such private sale may result in prices and other terms less favorable than if such sale were a public sale and, notwithstanding such circumstances, agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner. The Administrative Agent shall be under no obligation to delay a sale of any of the Pledged Stock for the period of time necessary to permit the Issuer thereof to register such securities for public sale under the Securities Act, or under applicable state securities laws, even if such Issuer would agree to do so. (c) Such Pledgor agrees to use its reasonable best efforts to do or cause to be done all such other acts as may be necessary to make such sale or sales of all or any portion of 28 such Pledged Stock pursuant to this Section 6.7 valid and binding and in compliance with any and all other applicable Requirements of Law. Such Pledgor further agrees that a breach of any of the covenants contained in this Section 6.7 will cause irreparable injury to the Administrative Agent and the Lenders, that the Administrative Agent and the Lenders have no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained in this Section 6.7 shall be specifically enforceable against such Pledgor, and to the extent permitted by applicable law, such Pledgor hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants except for a defense that no Event of Default has occurred or is continuing under the Credit Agreement. 6.8 Waiver; Deficiency. Each Granting Party (other than the ------------------ Borrower) waives and agrees not to assert any rights or privileges that it may acquire under Section 9-112 of the Code, to the extent permitted by applicable law. Each Granting Party shall remain liable for any deficiency if the proceeds of any sale or other disposition of the Security Collateral are insufficient to pay in full, the Loans, Reimbursement Obligations (including, without limitation, any L/C Obligations which subsequently become Reimbursement Obligations) and, to the extent then due and owing, all other Obligations of such Granting Party and the reasonable fees and disbursements of any attorneys employed by the Administrative Agent or any other Secured Party to collect such deficiency. SECTION 7. THE ADMINISTRATIVE AGENT 7.1 Administrative Agent's Appointment as Attorney-in-Fact, etc. (a) ------------------------------------------------------------ Each Granting Party hereby irrevocably constitutes and appoints the Administrative Agent and any authorized officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of such Granting Party and in the name of such Granting Party or in its own name, for the purpose of carrying out the terms of this Agreement, to take any and all appropriate action and to execute any and all documents and instruments that may be reasonably necessary or desirable to accomplish the purposes of this Agreement to the extent permitted by applicable law, provided that the Administrative Agent agrees not to exercise such power except upon the occurrence and during the continuance of an Event of Default. Without limiting the generality of the foregoing, at any time when an Event of Default has occurred and is continuing (in each case to the extent permitted by applicable law), (x) each Pledgor hereby gives the Administrative Agent the power and right, on behalf of such Pledgor, without notice or assent by such Pledgor, to execute, in connection with any sale provided for in Section 6.6 or 6.7, any indorsements, assessments or other instruments of conveyance or transfer with respect to such Pledgor's Pledged Collateral, and (y) each Grantor hereby gives the Administrative Agent the power and right, on behalf of such Grantor, without notice to or assent by such Grantor, to do any or all of the following: (i) in the name of such Grantor or its own name, or otherwise, take possession of and indorse and collect any checks, drafts, notes, acceptances or other instruments for the payment of moneys due under any Account of such Grantor that constitutes Collateral or with respect to any other Collateral of such Grantor and file any claim or take any other action or institute any proceeding in any court of law or equity or otherwise deemed 29 appropriate by the Administrative Agent for the purpose of collecting any and all such moneys due under any Account of such Grantor that constitutes Collateral or with respect to any other Collateral of such Grantor whenever payable; (ii) in the case of any Copyright, Patent or Trademark constituting Collateral of such Grantor, execute and deliver any and all agreements, instruments, documents and papers as the Administrative Agent may reasonably request to such Grantor to evidence the Administrative Agent's and the Lenders' security interest in such Copyright, Patent or Trademark and the goodwill and general intangibles of such Grantor relating thereto or represented thereby; (iii) pay or discharge taxes and Liens, other than Liens permitted under this Agreement or the other Credit Documents, levied or placed on the Collateral of such Grantor, effect any repairs or any insurance called for by the terms of this Agreement and pay all or any part of the premiums therefor and the costs thereof; and (iv) (i) direct any party liable for any payment under any of the Collateral of such Grantor to make payment of any and all moneys due or to become due thereunder directly to the Administrative Agent or as the Administrative Agent shall direct; (ii) ask or demand for, collect, receive payment of and receipt for, any and all moneys, claims and other amounts due or to become due at any time in respect of or arising out of any Collateral of such Grantor; (iii) sign and indorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications, notices and other documents in connection with any of the Collateral of such Grantor; (iv) commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Collateral of such Grantor or any portion thereof and to enforce any other right in respect of any Collateral of such Grantor; (v) defend any suit, action or proceeding brought against such Grantor with respect to any Collateral of such Grantor; (vi) settle, compromise or adjust any such suit, action or proceeding described in clause (v) above and, in connection therewith, to give such discharges or releases as the Administrative Agent may deem appropriate; (vii) subject to any existing reserved rights or licenses, assign any Copyright, Patent or Trademark constituting Collateral of such Grantor (along with the goodwill of the business to which any such Copyright, Patent or Trademark pertains), for such term or terms, on such conditions, and in such manner, as the Administrative Agent shall in its sole discretion determine; and (viii) generally, sell, transfer, pledge and make any agreement with respect to or otherwise deal with any of the Collateral of such Grantor as fully and completely as though the Administrative Agent were the absolute owner thereof for all purposes, and do, at the Administrative Agent's option and such Grantor's expense, at any time, or from time to time, all acts and things which the Administrative Agent deems necessary to protect, preserve or realize upon the Collateral of such Grantor and the Administrative Agent's and the other Secured Parties' security interests therein and to effect the intent of this Agreement, all as fully and effectively as such Grantor might do. 30 Anything in this Section 7.1(a) to the contrary notwithstanding, the Administrative Agent agrees that it will not exercise any rights under the power of attorney provided for in this Section 7.1(a) unless an Event of Default shall have occurred and be continuing. (b) The reasonable expenses of the Administrative Agent incurred in connection with actions undertaken as provided in this Section 7.1, together with interest thereon at a rate per annum equal to the rate per annum at which interest would then be payable on past due ABR Loans that are Term Loans under the Credit Agreement, from the date of payment by the Administrative Agent to the date reimbursed by the relevant Granting Party, shall be payable by such Granting Party to the Administrative Agent on demand. (c) Each Granting Party hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. All powers, authorizations and agencies contained in this Agreement are coupled with an interest and are irrevocable as to the relevant Granting Party until this Agreement is terminated as to such Granting Party, and the security interests in the Security Collateral of such Granting Party created hereby are released. 7.2 Duty of Administrative Agent. The Administrative Agent's sole ---------------------------- duty with respect to the custody, safekeeping and physical preservation of the Security Collateral in its possession, under Section 9-207 of the Code or otherwise, shall be to deal with it in the same manner as the Administrative Agent deals with similar property for its own account. Neither the Administrative Agent, any other Secured Party nor any of their respective officers, directors, employees or agents shall be liable for failure to demand, collect or realize upon any of the Security Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Security Collateral upon the request of any Granting Party or any other Person or, except as otherwise provided herein, to take any other action whatsoever with regard to the Security Collateral or any part thereof. The powers conferred on the Administrative Agent and the other Secured Parties hereunder are solely to protect the Administrative Agent's and the other Secured Parties' interests in the Security Collateral and shall not impose any duty upon the Administrative Agent or any other Secured Party to exercise any such powers. The Administrative Agent and the other Secured Parties shall be accountable only for amounts that they actually receive as a result of the exercise of such powers, and neither they nor any of their officers, directors, employees or agents shall be responsible to any Granting Party for any act or failure to act hereunder, except as otherwise provided herein or for their own gross negligence or willful misconduct. 7.3 Execution of Financing Statements. Pursuant to Section 9-402 of --------------------------------- the Code and any other applicable law, each Granting Party authorizes the Administrative Agent to file or record financing statements with respect to such Granting Party's Security Collateral without the signature of such Granting Party in such form and in such filing offices as the Administrative Agent reasonably determines appropriate to perfect the security interests of the Administrative Agent under this Agreement. A photographic or other reproduction of this Agreement shall be sufficient as a financing statement in any jurisdiction. The Administrative Agent agrees to notify the Grantor of any financing or continuation statement filed by it pursuant to this Section 7.4, provided that any failure to give such notice shall not affect the validity or - -------- effectiveness of any such filing. 31 7.4 Authority of Administrative Agent. Each Granting Party --------------------------------- acknowledges that the rights and responsibilities of the Administrative Agent under this Agreement with respect to any action taken by the Administrative Agent or the exercise or non-exercise by the Administrative Agent of any option, voting right, request, judgment or other right or remedy provided for herein or resulting or arising out of this Agreement or any amendment, supplement or other modification of this Agreement shall, as between the Administrative Agent and the Secured Parties, be governed by the Credit Agreement and by such other agreements with respect thereto as may exist from time to time among them, but, as between the Administrative Agent and the Granting Parties the Administrative Agent shall be conclusively presumed to be acting as agent for the Secured Parties with full and valid authority so to act or refrain from acting, and no Granting Party shall be under any obligation, or entitlement, to make any inquiry respecting such authority. 7.5 Right Of Inspection. Upon reasonable written advance notice to ------------------- any Grantor and as often as may reasonably be desired, the Administrative Agent shall have reasonable access during normal business hours to all the books, correspondence and records of such Granting Party, and the Administrative Agent and its representatives may examine the same, and to the extent reasonable, take extracts therefrom and make photocopies thereof, and such Granting Party agrees to render to the Administrative Agent, at such Granting Party's reasonable cost and expense, such clerical and other assistance as may be reasonably requested with regard thereto. The Administrative Agent and its representatives shall also have the right, upon reasonable advance written notice to such Granting Party subject to any lease restrictions to enter during normal business hours into and upon any premises owned, leased or operated by such Granting Party where any of such Granting Party's Inventory or Equipment is located for the purpose of inspecting the same, observing its use or otherwise protecting its interests therein. SECTION 8. MISCELLANEOUS 8.1 Amendments in Writing. None of the terms or provisions of this --------------------- Agreement may be waived, amended, supplemented or otherwise modified except by a written instrument executed by each affected Granting Party and the Administrative Agent, provided that any provision of this Agreement imposing -------- obligations on any Granting Party may be waived by the Administrative Agent in a written instrument executed by the Administrative Agent. 8.2 Notices. All notices, requests and demands to or upon the ------- Administrative Agent or any Granting Party hereunder shall be effected in the manner provided for in subsection 18.2 of the Credit Agreement; provided that -------- any such notice, request or demand to or upon any Guarantor shall be addressed to such Guarantor at its notice address set forth on Schedule 1, unless and ---------- until such Guarantor shall change such address by notice to the Administrative Agent given in accordance with subsection 18.2 of the Credit Agreement. 8.3 No Waiver by Course of Conduct; Cumulative Remedies. Neither the --------------------------------------------------- Administrative Agent nor any other Secured Party shall by any act (except by a written instrument pursuant to Section 8.1), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default. 32 No failure to exercise, nor any delay in exercising, on the part of the Administrative Agent or any other Secured Party, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by the Administrative Agent or any other Secured Party of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which the Administrative Agent or such other Secured Party would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any other rights or remedies provided by law. 8.4 Enforcement Expenses; Indemnification. (a) Each Guarantor ------------------------------------- agrees to pay or reimburse each Secured Party and the Administrative Agent for all their respective reasonable costs and expenses incurred in collecting against such Guarantor under the guarantee contained in Section 2 or otherwise enforcing or preserving any rights under this Agreement against such Guarantor and the other Credit Documents to which such Guarantor is a party, including, without limitation, the reasonable fees and disbursements of one firm of counsel to the Secured Parties and the Administrative Agent. (b) Each Guarantor agrees to pay, and to save the Administrative Agent and the Secured Parties harmless from, (x) any and all liabilities with respect to, or resulting from any delay in paying, any and all stamp, excise, sales or other similar taxes which may be payable or determined to be payable with respect to any of the Security Collateral or in connection with any of the transactions contemplated by this Agreement and (y) any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Agreement (collectively, the "indemnified liabilities"), in each case to the ----------------------- extent the Borrower would be required to do so pursuant to subsection 18.5 of the Credit Agreement, and in any event excluding any taxes or other indemnified liabilities arising from gross negligence or willful misconduct of the Administrative Agent or any Secured Party. (c) The agreements in this Section 8.4 shall survive repayment of the Obligations and all other amounts payable under the Credit Agreement and the other Credit Documents. 8.5 Successors and Assigns. This Agreement shall be binding upon and ---------------------- shall inure to the benefit of the Granting Parties, the Administrative Agent and the Secured Parties and their respective successors and assigns; provided that -------- no Granting Party may assign, transfer or delegate any of its rights or obligations under this Agreement without the prior written consent of the Administrative Agent. 8.6 Set-Off. Each Guarantor hereby irrevocably authorizes the ------- Administrative Agent and each other Secured Party at any time and from time to time without notice to such Guarantor, any other Guarantor or the Borrower, any such notice being expressly waived by each Guarantor and by the Borrower, to the extent permitted by applicable law, upon the occurrence and during the continuance of an Event of Default under subsection 16.2(a) or 16.3(a) of the Credit Agreement so long as any amount remains unpaid after it becomes due and payable by such Guarantor hereunder, to set-off and appropriate and apply against any such amount any and 33 all deposits (general or special, time or demand, provisional or final) (other than the Collateral Proceeds Account and the General Fund Account), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by the Administrative Agent or such other Secured Party to or for the credit or the account of such Guarantor, or any part thereof in such amounts as the Administrative Agent or such other Secured Party may elect. The Administrative Agent and each other Secured Party shall notify such Guarantor promptly of any such set-off and the application made by the Administrative Agent or such other Secured Party of the proceeds thereof; provided that the failure to give such notice shall not affect the validity of - -------- such set-off and application. The rights of the Administrative Agent and each other Secured Party under this Section 8.6 are in addition to other rights and remedies (including, without limitation, other rights of set-off) which the Administrative Agent or such other Secured Party may have. 8.7 Counterparts. This Agreement may be executed by one or more of ------------ the parties to this Agreement on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. 8.8 Severability. Any provision of this Agreement which is ------------ prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction; provided that, with -------- respect to any Pledged Stock issued by a Foreign Subsidiary, all rights, powers and remedies provided in this Agreement may be exercised only to the extent that they do not violate any provision of any law, rule or regulation of any Governmental Authority applicable to any such Pledged Stock or affecting the legality, validity or enforceability of any of the provisions of this Agreement against the Pledgor (such laws, rules or regulations, "Applicable Law") and are -------------- intended to be limited to extent necessary so that they will not render this Agreement invalid, unenforceable or not entitled to be recorded, registered or filed under the provisions of any Applicable Law. 8.9 Section Headings. The Section headings used in this Agreement ---------------- are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof. 8.10 Integration. This Agreement and the other Credit Documents ----------- represent the entire agreement of the Granting Parties, the Administrative Agent and the other Secured Parties with respect to the subject matter hereof, and there are no promises, undertakings, representations or warranties by the Granting Parties, the Administrative Agent or any other Secured Party relative to subject matter hereof not expressly set forth or referred to herein or in the other Credit Documents. 34 8.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF ------------- THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ITS PRINCIPLES OR RULES OF CONFLICT OF LAWS TO THE EXTENT SUCH PRINCIPLES OR RULES WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION. 8.12 Submission To Jurisdiction; Waivers. Each party hereto hereby ----------------------------------- irrevocably and unconditionally: (a) submits for itself and its property in any legal action or proceeding relating to this Agreement and the other Credit Documents to which it is a party, or for recognition and enforcement of any judgement in respect thereof, to the non-exclusive general jurisdiction of the courts of the State of New York, the courts of the United States of America for the Southern District of New York, and appellate courts from any thereof; (b) consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same; (c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such party at its address referred to in Section 8.2 or at such other address of which the Administrative Agent (in the case of any other party hereto) or the Borrower (in the case of the Administrative Agent) shall have been notified pursuant thereto; (d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and (e) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this Section any punitive damages. 8.13 Acknowledgements. Each Guarantor hereby acknowledges that: ---------------- (a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Credit Documents to which it is a party; (b) neither the Administrative Agent nor any other Secured Party has any fiduciary relationship with or duty to any Guarantor arising out of or in connection with this Agreement or any of the other Credit Documents, and the relationship between the Guarantors, on the one hand, and the Administrative Agent and the Secured Parties, on 35 the other hand, in connection herewith or therewith is solely that of debtor and creditor; and (c) no joint venture is created hereby or by the other Credit Documents or otherwise exists by virtue of the transactions contemplated hereby among the Secured Parties or among the Guarantors and the Secured Parties. 8.14 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY AND -------------------- UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN. 8.15 Additional Granting Parties. Each new Domestic Subsidiary of --------------------------- the Borrower that is required to become a party to this Agreement pursuant to subsection 12.10(b) of the Credit Agreement shall become a Granting Party for all purposes of this Agreement upon execution and delivery by such Subsidiary of an Assumption Agreement in the form of Annex 1 hereto. Each existing Granting Party that is required to become a Pledgor with respect to Capital Stock of any new Subsidiary of the Borrower pursuant to Section 12.10(b) of the Credit Agreement shall become a Pledgor with respect thereto upon execution and delivery by such Granting Party of a Supplemental Agreement in the form of Annex 2 hereto. 8.16 Releases. (a) At such time as the Loans, the Reimbursement -------- Obligations and the other Obligations then due and owing shall have been paid in full, the Commitments have been terminated and no Letters of Credit shall be outstanding, all Security Collateral shall be released from the Liens created hereby, and this Agreement and all obligations (other than those expressly stated to survive such termination) of the Administrative Agent and each Granting Party hereunder shall terminate, all without delivery of any instrument or performance of any act by any party, and all rights to the Security Collateral shall revert to the Granting Parties. At the request and sole expense of any Granting Party following any such termination, the Administrative Agent shall deliver to such Granting Party any Security Collateral held by the Administrative Agent hereunder, and execute and deliver to such Granting Party such documents (including without limitation UCC termination statements) as such Granting Party shall reasonably request to evidence such termination. (b) In connection with any sale or other disposition of Security Collateral permitted by the Credit Agreement, the Lien pursuant to this Agreement on such sold or disposed of Security Collateral shall be automatically released. In connection with the sale or other disposition of all of the Capital Stock of any Guarantor or the sale or other disposition of Security Collateral permitted under the Credit Agreement and the release of such Guarantor from its Guarantee or the release of the Security Collateral subject to such sale or other disposition, the Administrative Agent shall upon receipt from the Borrower of a written request for release identifying such Guarantor or the relevant Security Collateral and the terms of the sale or other disposition in reasonable detail, including the price thereof and any expenses in connection therewith, together with a certification by the Borrower stating that such transaction is in compliance with the Credit Agreement and the other Credit Documents, execute and deliver to the relevant Granting Party (at the sole cost and expense of such Granting Party) all releases or 36 other documents (including without limitation UCC termination statements) necessary or reasonably desirable for the release of such Guarantee or the Liens created hereby on such Security Collateral, as applicable, as such Granting Party may reasonably request. 37 IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee and Collateral Agreement to be duly executed and delivered as of the date first above written. DYNATECH CORPORATION By: ____________________________ Name: Title TELECOMMUNICATIONS TECHNIQUES CO., LLC By: Dynatech Corporation, its sole member By: ____________________________ Name: Title AIRSHOW, INC. By: ____________________________ Name: Title COMCOTEC, INC. By: ____________________________ Name: Title DATAVIEWS CORPORATION By: ____________________________ Name: Title 38 DA VINCI SYSTEMS, INC. By: ____________________________ Name: Title INDUSTRIAL COMPUTER SOURCE By: ____________________________ Name: Title ITRONIX CORPORATION By: ____________________________ Name: Title PARALLAX GRAPHICS, INC. By: ____________________________ Name: Title SYNERGISTIC SOLUTIONS, INC. By: ____________________________ Name: Title TELE-PATH INSTRUMENTS, INC. By: ____________________________ Name: Title 39 Acknowledged and Agreed to as of the date hereof by: MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent By: _______________________________ Name: Title: ITRONIX CORPORATION By: ____________________________ Name: Title Schedule 1 ---------- NOTICE ADDRESSES OF GUARANTORS [Names of Subsidiaries] [Address] Attention: Telephone: Telecopy: With copies to: Attention: Telephone: Telecopy: Debevoise & Plimpton 875 Third Avenue New York, New York 10022 Attention: David A. Brittenham, Esq. Telephone: (212) 909-6000 Telecopy: (212) 909-6836 Schedule 2 ---------- DESCRIPTION OF PLEDGED SECURITIES PLEDGED STOCK: Schedule 3 ---------- LOCATION OF JURISDICTION OF ORGANIZATION AND CHIEF EXECUTIVE OFFICE OR SOLE PLACE OF BUSINESS Granting Party Location -------------- -------- Schedule 4 ---------- LOCATION OF INVENTORY AND EQUIPMENT Granting Party Location -------------- -------- Schedule 5 ---------- PATENTS AND PATENT LICENSES TRADEMARKS AND TRADEMARK LICENSES Schedule 6 ---------- EXISTING PRIOR LIENS Schedule 7 ---------- ACCOUNTS Schedule 8 ---------- CONTRACTS Annex 1 to Guarantee and Collateral Agreement ---------------------------------- ASSUMPTION AGREEMENT, dated as of _________ __, ____, made by ______________________________, a ______________ corporation (the "Additional ---------- Granting Party"), in favor of MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as - -------------- administrative agent (in such capacity, the "Administrative Agent") for the -------------------- banks and other financial institutions (the "Lenders") from time to time parties ------- to the Credit Agreement referred to below and the other Secured Parties (as defined below). All capitalized terms not defined herein shall have the meaning ascribed to them in such the Guarantee and Collateral Agreement referred to below, or if not defined therein, in the Credit Agreement. W I T N E S S E T H : - - - - - - - - - - WHEREAS, Dynatech Corporation, a Massachusetts corporation ("Dynatech"), Telecommunications Techniques Co., LLC, a Delaware limited -------- liability company (the "Borrower"), the Lenders and the Administrative Agent are -------- parties to a Credit Agreement, dated as of May 21, 1998 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"); ---------------- WHEREAS, in connection with the Credit Agreement, Dynatech, the Borrower and certain of its Subsidiaries are, or are to become, parties to the Guarantee and Collateral Agreement, dated as of May 21, 1998 (as amended, supplemented or otherwise modified from time to time, the "Guarantee and ------------- Collateral Agreement") in favor of the Administrative Agent, for the ratable - -------------------- benefit of the Secured Parties (as defined in the Guarantee and Collateral Agreement); WHEREAS, the Additional Grantor is a member of an affiliated group of companies that includes the Borrower and each other Granting Party to the Guarantee and Collateral Agreement; the proceeds of the extensions of credit under the Credit Agreement will be used in part to enable the Borrower to make valuable transfers to one or more of the other Granting Parties (including the Additional Grantor) in connection with the operation of their respective businesses; and the Borrower and the other Granting Parties (including the Additional Grantor) are engaged in related businesses, and each such Granting Party (including the Additional Grantor) will derive substantial direct and indirect benefit from the making of the extensions of credit under the Credit Agreement; WHEREAS, the Credit Agreement requires the Additional Granting Party to become a party to the Guarantee and Collateral Agreement; and WHEREAS, the Additional Granting Party has agreed to execute and deliver this Assumption Agreement in order to become a party to the Guarantee and Collateral Agreement; NOW, THEREFORE, IT IS AGREED: 2 1. Guarantee and Collateral Agreement. By executing and delivering ---------------------------------- this Assumption Agreement, the Additional Granting Party, as provided in Section 8.15 of the Guarantee and Collateral Agreement, hereby becomes a party to the Guarantee and Collateral Agreement as a Granting Party thereunder with the same force and effect as if originally named therein as a Guarantor [, Grantor and Pledgor] [and Grantor] [and Pledgor]/1/ and, without limiting the generality of the foregoing, hereby expressly assumes all obligations and liabilities of a Guarantor [, Grantor and Pledgor] [and Grantor] [and Pledgor]/2/ thereunder. The information set forth in Annex 1-A hereto is hereby added to the information set forth in Schedules ____________ to the Guarantee and Collateral Agreement, and such Schedules are hereby amended and modified to include such information. The Additional Granting Party hereby represents and warrants that each of the representations and warranties of such Additional Grantor, in its capacities as a Guarantor [, Grantor and Pledgor] [and Grantor] [and Pledgor]/3/, contained in Section 4 of the Guarantee and Collateral Agreement is true and correct in all material respects on and as the date hereof (after giving effect to this Assumption Agreement) as if made on and as of such date. 2. GOVERNING LAW. THIS ASSUMPTION AGREEMENT AND THE RIGHTS AND ------------- OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ITS PRINCIPLES OR RULES OF CONFLICT OF LAWS TO THE EXTENT SUCH PRINCIPLES OR RULES WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION. IN WITNESS WHEREOF, the undersigned has caused this Assumption Agreement to be duly executed and delivered as of the date first above written. [ADDITIONAL GRANTING PARTY] By: _______________________________ Name: Title: - ------------- 1. Indicate the capacities in which the Additional Grantor is becoming a Granting Party. 2. Indicate the capacities in which the Additional Grantor is becoming a Granting Party. 3. Indicate the capacities in which the Additional Grantor is becoming a Granting Party. 3 Acknowledged and Agreed to as of the date hereof by: MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent By: _______________________________ Name: Title: Annex 1-A to Assumption Agreement -------------------- Annex 2 to Guarantee and Collateral Agreement ---------------------------------- SUPPLEMENTAL AGREEMENT, dated as of __________ __, ____, made by _____________________, a ___________ corporation [(the "Additional ---------- Pledgor")][(the "Borrower")]/1/, in favor of MORGAN GUARANTY TRUST COMPANY OF -------- NEW YORK, as administrative agent (in such capacity, the "Administrative Agent") -------------------- for the banks and other financial institutions (the "Lenders") from time to time ------- parties to the Credit Agreement referred to below and the other Secured Parties (as defined below). All capitalized terms not defined herein shall have the meaning ascribed to them in the Guarantee and Collateral Agreement referred to below, or if not defined therein, in the Credit Agreement. W I T N E S S E T H: ------------------- WHEREAS, Telecommunications Techniques Co., LLC, a Delaware limited liability company and successor by assumption to Dynatech Corporation ("Dynatech") and TTC Merger Co. LLC (the "Borrower")][the Borrower]/2/, the -------- Lenders and the Administrative Agent are parties to a Credit Agreement, dated as of May 21, 1998 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"); ---------------- WHEREAS, in connection with the Credit Agreement, Dynatech, the Borrower and certain of its Subsidiaries are parties to the Guarantee and Collateral Agreement, dated as of May 21, 1998 (as amended, supplemented or otherwise modified from time to time, the "Guarantee and Collateral Agreement") ---------------------------------- in favor of the Administrative Agent, for the ratable benefit of the Secured Parties (as defined in the Guarantee and Collateral Agreement); WHEREAS, the Credit Agreement requires the [Additional Pledgor][Borrower] to become a Pledgor under the Guarantee and Collateral Agreement with respect to Capital Stock of a new Subsidiary of the Borrower; and WHEREAS, the [Additional Pledgor][Borrower] has agreed to execute and deliver this Supplemental Agreement in order to [supplement/become such a Pledgor to] the Guarantee and Collateral Agreement; NOW, THEREFORE, IT IS AGREED: 1. Guarantee and Collateral Agreement. By executing and delivering ---------------------------------- this Supplemental Agreement, the [Additional Pledgor][Borrower], as provided in Section 8.15 of the Guarantee and Collateral Agreement, hereby becomes a Pledgor under the Guarantee and - ------------- 1. Use "Additional Pledgor" if other than the Borrower, and "Borrower" if the Borrower. 2. Use the former if the Additional Pledgor, and the latter if the Borrower. 2 Collateral Agreement with respect to the shares of Capital Stock of the Subsidiary of the Borrower listed in Annex 2-A hereto, as a Granting Party thereunder. The information set forth in Annex 2-A hereto is hereby added to the information set forth in Schedule 2 to the Guarantee and Collateral Agreement, and such Schedule 2 is hereby amended and modified to include such information. 2. GOVERNING LAW. THIS SUPPLEMENTAL AGREEMENT AND RIGHTS AND ------------- OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ITS PRINCIPLES OR RULES OF CONFLICT OF LAWS TO THE EXTENT SUCH PRINCIPLES OR RULES WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION. 3 IN WITNESS WHEREOF, the undersigned has caused this Assumption Agreement to be duly executed and delivered as of the date first above written. [ADDITIONAL PLEDGOR] [BORROWER] By: _______________________________ Name: Title: Acknowledged and Agreed to as of the date hereof by: MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent By: _______________________________ Name: Title: EX-10.14 12 INDEMNIFICATION AGREEMENT DATED MAY 21, 1998 EXHIBIT 10.14 CONFORMED COPY -------------- INDEMNIFICATION AGREEMENT ------------------------- INDEMNIFICATION AGREEMENT, dated as of May 21, 1998 (the "Agreement"), by and between Dynatech Corporation, a Massachusetts corporation --------- (the "Company"), Telecommunications Techniques Co., LLC, a Delaware limited ------- liability company and a wholly-owned subsidiary of the Company ("TTC"), Clayton, --- Dubilier & Rice, Inc., a Delaware corporation ("CD&R"), and Clayton, Dubilier & ---- Rice Fund V Limited Partnership, a Cayman Islands exempted limited partnership (together with any other investment vehicle managed by CD&R, the "CD&R Fund"). --------- Capitalized terms used herein and not otherwise defined have the meanings set forth in Section 1 of this Agreement. W I T N E S S E T H: - - - - - - - - - - WHEREAS, the CD&R Fund is managed by CD&R, and the general partner of the CD&R Fund is Clayton, Dubilier & Rice Associates V Limited Partnership, a Cayman Islands exempted limited partnership (together with any general partner of any other investment vehicle managed by CD&R, "CD&R Associates"), and the --------------- general partner of CD&R Associates is CD&R Investment Associates, Inc., a Delaware corporation (together with any other general partner of CD&R Associates, "Associates Inc."); --------------- WHEREAS, CD&R organized CDRD Merger Corporation, a Delaware corporation ("MergerCo") to effect the recapitalization of the Company and CD&R -------- performed financial, management advisory and other services for the Company and MergerCo in connection therewith, including but not limited to participation in connection with the preparation, negotiation, execution and delivery of the Agreement and Plan of Merger, dated as of December 20, 1997 (the "Merger ------ Agreement"), by and between the Company and MergerCo and the consummation of the - --------- transaction contemplated thereby; WHEREAS, concurrently with the execution and delivery of this Agreement, the Company is entering into a Consulting Agreement, dated as of the date hereof (the "Consulting Agreement"), by and between the Company and CD&R; -------------------- WHEREAS, pursuant to the Merger Agreement, MergerCo has merged with and into the Company (the "Merger") on the date hereof, and the Company, as the ------ surviving corporation in the Merger, thereupon succeeded to all of the rights and obligations of MergerCo; WHEREAS, by operation of the Merger, each share of common stock of the Company issued and outstanding immediately prior to the closing thereof, other than shares held by the Company as treasury stock, was converted into the right to receive $47.75 in cash and 0.5 shares of Recapitalized Common Stock (as defined in the Merger Agreement); WHEREAS, as contemplated by the Merger Agreement, certain employees of the Company and its Subsidiaries have retained some or all of their options to purchase common stock of the Company (the "Management Rollover"); ------------------- WHEREAS, in connection with the offer (the "Exchange Offer") by the -------------- Company of the Recapitalized Common Stock to the stockholders of the Company and the solicitation by the Company of proxies of its respective stockholders to vote in favor of the Merger, (a) the Company prepared and filed with the - Securities and Exchange Commission (the "Commission") a registration statement ---------- on Form S-4 (the "S-4") and (b) the Company, MergerCo, the CD&R Fund and certain --- - other persons prepared and filed with the Commission a Transaction Statement on Schedule 13E-3 (the "13E-3"); ----- WHEREAS, prior to the closing of the Merger, the Company effected a restructuring of its Subsidiaries pursuant to which TTC was converted into a Delaware limited liability company and the shares of common stock of the Company's direct subsidiaries were transferred to TTC (the "Restructuring"); ------------- WHEREAS, in order to finance the Merger and related transactions, the Company and TTC Merger Co., LLC, a Delaware limited liability company and a wholly-owned subsidiary of the Company ("TTC MergerCo"), entered into a Credit ------------ Agreement, dated as of May 21, 1998, among the Company, TTC MergerCo, the lenders named therein and J.P. Morgan Securities Inc. and Credit Suisse First Boston as arrangers, providing for borrowing of up to a maximum principal amount of $370 million (the "Senior Secured Credit Facilities"); -------------------------------- WHEREAS, in order further to finance the Merger and related transactions, the Company and TTC MergerCo offered and sold (the "Note ---- Offering"), in an offering to institutional investors pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), -------------- $275,000,000 aggregate principal of 9.75% Senior Subordinated Notes due 2008 (the "Senior Subordinated Notes"); ------------------------- WHEREAS, TTC MergerCo merged with and into TTC on the date hereof and TTC, as the surviving company, thereupon succeeded to, inter alia, the ----- ---- obligations of TTC MergerCo with respect to the Senior Secured Credit Facilities and the Senior Subordinated Notes; 2 WHEREAS, the Company has been released as a primary obligor with respect to the Senior Secured Credit Facilities and the Senior Subordinated Notes; WHEREAS, CD&R has performed financial, management advisory and other services for the Company, including but not limited to providing assistance in connection with, (i) the preparation, negotiation, execution and delivery of the - Merger Agreement, (ii) the preparation, filing and circulation of the S-4, the -- 13E-3 and related materials to the stockholders of the Company in connection with the Merger, (iii) the retention of legal, accounting, environmental, --- insurance, investment banking, financial and other advisors and consultants in connection with the Merger and (iv) the preparation, negotiation, execution and -- delivery of the commitment, fee and engagement letters, registration rights and purchase agreements, credit agreements, indentures and indenture supplements, guarantees, mortgages, pledge agreements and other security agreements, subscription, registration rights and participation agreements, exchange agent agreements, and other agreements, instruments and documents, relating to the Senior Secured Financing, Note Offering, or otherwise relating to the Financing or the other Transactions, (v) the preparation and circulation of information - and offering memoranda and other materials in connection with the Senior Secured Financing and the Note Offering and (vi) the structuring, implementation and -- consummation of the Merger (such services collectively, the "Merger Services"); --------------- WHEREAS, it is contemplated that TTC will offer (the "Note Exchange ------------- Offer") to exchange the Senior Subordinated Notes for substantially identical - ----- notes to be registered on Form S-4; WHEREAS, the Company or one or more of its respective Subsidiaries from time to time in the future (a) may offer and sell or cause to be offered - and sold equity or debt securities (such offerings, together with the Note Exchange Offer, being collectively referred to as the "Subsequent Offerings"), -------------------- including without limitation (i) offerings of shares of common stock of the - Company, and/or options to purchase such shares to employees, directors, managers and consultants of and to the Company or any Subsidiary (a "Management ---------- Offering"), and (ii) one or more offerings of debt securities for the purpose of - -------- -- refinancing any indebtedness of the Company or any Subsidiary or for other corporate purposes, and (b) may repurchase, redeem or otherwise acquire certain - securities of the Company or one or more of its Subsidiaries (any such repurchase or redemption being re ferred to herein as a "Redemption"); ---------- WHEREAS, immediately following the Merger, the CD&R Fund will be the largest stockholder of the Company; 3 WHEREAS, the parties hereto recognize the possibility that claims might be made against and liabilities incurred by CD&R, the CD&R Fund, CD&R Associates, Associates Inc. or related persons or affiliates under applicable securities laws or otherwise in connection with the Transactions or the Securities Offerings, or relating to other actions or omissions of or by MergerCo, the Company or its respective Subsidiaries, or relating to the provision by CD&R of management consulting, monitoring and financial advisory ser vices to MergerCo, the Company and its respective Subsidiaries, and the parties hereto accordingly wish to provide for CD&R, the CD&R Fund, CD&R Associates, Associates Inc. and related persons and affiliates to be indemnified in respect of any such claims and liabilities; and WHEREAS, the parties hereto recognize that claims might be made against and liabilities incurred by directors and officers of MergerCo, the Company and any Subsidiary in connection with their acting in such capacity, and accordingly wish to provide for such directors and officers to be indemnified to the fullest extent permitted by law in respect of any such claims and liabilities; NOW, THEREFORE, in consideration of the foregoing premises, and the mutual agreements and covenants and provisions herein set forth, the parties hereto hereby agree as follows: 1. Definitions. ----------- (a) "Claim" means, with respect to any Indemnitee, any claim against ----- such Indemnitee involving any Obligation with respect to which such Indemnitee may be entitled to be defended and indemnified by the Company or TTC under this Agreement. (b) "Consulting Agreement" means the Consulting Agreement, dated as of -------------------- the date hereof, by and among the Company, TTC and CD&R, as the same may be amended, waived, modified or supplemented from time to time. (c) "Financing" means the financing provided for by the Senior Secured --------- Credit Facilities and the Senior Subordinated Notes. (d) "Indemnitee" means each of CD&R, the CD&R Fund, CD&R Associates, ---------- Associates Inc., CD&R Investment Associates II, Inc. ("Associates II"), their ------------- respective, affiliates, successors and assigns, and their respective directors, officers, partners, employees, agents, advisors, representatives and controlling persons (within the meaning of the Securities Act of 1933), each other person who is or becomes a director or an officer of the Company or any Subsidiary and each other person who is or becomes an officer of the communications test division of TTC. 4 (e) "Obligations" means, collectively, any and all claims, ----------- obligations, liabilities, causes of actions, actions, suits, proceedings, investigations, judgments, decrees, losses, damages, fees, costs and expenses (including without limitation interest, penalties and fees and disbursements of attorneys, accountants, investment bankers and other professional advisors), in each case whether incurred, arising or existing with respect to third parties or otherwise at any time or from time to time. (f) "Related Document" means any agreement, certificate, instrument or ---------------- other document to which MergerCo, the Company or any Subsidiary may be a party or by which it or any of its properties or assets may be bound or affected from time to time relat ing in any way to the Transactions or any Securities Offering or any of the transactions contemplated thereby, including without limitation, in each case as the same may be amended, modified, waived or supplemented from time to time, (A) any registration statement filed by or on - behalf of MergerCo, the Company or any Subsidiary with the Commission in connection with the Transactions or any Securities Offering, including all exhibits, financial statements and schedules appended thereto, and any submissions to the Commission in connection therewith, (B) any prospectus, - preliminary or otherwise, included in such registration statements or otherwise filed by or on behalf of MergerCo, the Company or any Subsidiary in connection with the Transactions or any Securities Offering or used to offer or confirm sales of their respective securities in any Securities Offering, (C) any private - placement or offering memorandum or circular, or other information or materials distributed by or on behalf of MergerCo, the Company or any Subsidiary or any placement agent or underwriter in connection with the Transactions or any Securities Offering, (D) any federal, state or foreign securities law or other - governmental or regulatory filings or applications made in connection with any Securities Offering, the Transactions or any of the transactions contemplated thereby, (E) any deal-manager, underwriting, subscription, purchase, - stockholders, option or registration rights agreement or plan entered into or adopted by MergerCo, the Company or any Subsidiary in connection with the Transactions or any Securities Offering, (F) any quarterly, annual or current - reports filed by the Company or any Subsidiary with the Commission or any prospectus, proxy statement or transaction statements, including the S-4 and the Schedule 13E-3, filed by or on behalf of MergerCo, the Company, any Subsidiary or any Indemnitee with the Commission in connection with the Merger, including all exhibits, financial statements and schedules appended thereto, and any submission to the Commission in connection therewith. (g) "Securities Offerings" means any Redemption, the Management -------------------- Rollover, the Exchange Offer, any Management Offering the Note Exchange Offer and any other Subsequent Offering. 5 (h) "Subsidiary" means each corporation or other person or entity in ---------- which the Company owns or controls, directly or indirectly, capital stock or other equity interests representing at least 25% of the outstanding voting stock or other equity interests. (i) "Transactions" means the Merger, the Management Rollover, the ------------ Restructuring, the Exchange Offer and the Financing. 2. Indemnification. --------------- (a) Each of the Company and TTC (each an "Indemnifying Party" and ------------------ collectively, the "Indemnifying Parties"), jointly and severally agrees to -------------------- indemnify, defend and hold harmless each Indemnitee: (i) from and against any and all Obligations, whether incurred with respect to third parties or otherwise, in any way resulting from, arising out of or in connection with, based upon or relating to (A) the Securities - Act, the Securities Exchange Act of 1934, as amended (the "Exchange Act"), ------------ or any other applicable securities or other laws, in connection with any Securities Offering, any Related Document or any of the transactions contemplated thereby, (B) any other action or failure to act of MergerCo, - the Company or any Subsidiary or any of their predecessors, whether such action or failure has occurred or is yet to occur or (C) except to the - extent that any such Obligation is found in a final judgment by a court of competent jurisdiction to have resulted from the gross negligence or intentional misconduct of CD&R, the performance by CD&R of management consulting, monitoring, financial advisory or other services for MergerCo, the Company or any Subsidiary (whether performed prior to the date hereof, hereafter, pursuant to the Consulting Agreement or otherwise); and (ii) to the fullest extent permitted by applicable law, from and against any and all Obligations in any way resulting from, arising out of or in connection with, based upon or relating to (A) the fact that such - Indemnitee is or was a director or an officer of MergerCo, the Company or any Subsidiary, as the case may be, or is or was serving at the request of such corporation as a director, officer, employee or agent of or advisor or consultant to another corporation, partnership, joint venture, trust or other enterprise or (B) any breach or alleged breach by such Indemnitee of - his or her fiduciary duty as a director or an officer of MergerCo, the Company or any Subsidiary, as the case may be; in each case including but not limited to any and all fees, costs and expenses (including without limitation fees and disbursements of attorneys) incurred by or on behalf of any 6 Indemnitee in asserting, exercising or enforcing any of its rights, powers, privileges or remedies in respect of this Agreement or the Consulting Agreement. (b) Without in any way limiting the foregoing Section 2(a), each of the Indemnifying Parties agrees, jointly and severally, to indemnify, defend and hold harmless each Indemnitee from and against any and all Obligations resulting from, arising out of or in connection with, based upon or relating to liabilities under the Securities Act, the Exchange Act or any other applicable securities or other laws, rules or regulations in connection with (i) the - inaccuracy or breach of or default under any representation, warranty, covenant or agreement in any Related Document, (ii) any untrue statement or alleged -- untrue statement of a material fact contained in any Related Document or (iii) --- any omission or alleged omission to state in any Related Document a material fact required to be stated therein or necessary to make the statements therein not misleading. Notwithstanding the foregoing, the Indemnifying Parties shall not be obligated to indemnify such Indemnitee from and against any such Obligation to the extent that such Obligation arises out of or is based upon an untrue statement or omission made in such Related Document in reliance upon and in conformity with written information furnished to MergerCo or the Company as the case may be, in an instrument duly executed by such Indemnitee and specifically stating that it is for use in the preparation of such Related Document. 3. Contribution. ------------ (a) Except to the extent that Section 3(b) is applicable, if for any reason the indemnity provided for in Section 2(a) is unavailable or is insufficient to hold harmless any Indemnitee from any of the Obligations covered by such indemnity, then the Indemnifying Parties, jointly and severally, shall contribute to the amount paid or payable by such Indemnitee as a result of such Obligation in such proportion as is appropriate to reflect (i) the relative - fault of each of MergerCo, the Company and the Subsidiaries, on the one hand, and such Indemnitee, on the other, in connection with the state of facts giving rise to such Obligation, (ii) if such Obligation results from, arises out of, is -- based upon or relates to the Transactions or any Securities Offering, the relative benefits received by each of MergerCo, the Company and the Subsidiaries, on the one hand, and such Indemnitee, on the other, from such Transaction or Securities Offering and (iii) if required by applicable law, any --- other relevant equitable considerations. (b) If for any reason the indemnity specifically provided for in Section 2(b) is unavailable or is insufficient to hold harmless any Indemnitee from any of the Obligations covered by such indemnity, then the Indemnifying Parties, jointly and severally, shall contribute to the amount paid or payable by such Indemnitee as a result of such Obligation in such proportion as is appropriate to reflect (i) the relative fault of each of MergerCo, the Company - and the Subsidiaries, on the one hand, and such indemnitee, on the 7 other, in connection with the information contained in or omitted from any Related Document, which inclusion or omission resulted in the inaccuracy or breach of or default under any representation, warranty, covenant or agreement therein, or which information is or is alleged to be untrue, required to be stated therein or necessary to make the statements therein not misleading, (ii) -- the relative benefits received by MergerCo, the Company and the Subsidiaries, on the one hand, and such Indemnitee, on the other, from such Transaction or Securities Offering and (iii) if required by applicable law, any other relevant --- equitable considerations. (c) For purposes of Section 3(a), the relative fault of each of MergerCo, the Company and the Subsidiaries, on the one hand, and of the Indemnitee, on the other, shall be determined by reference to, among other things, their respective relative intent, knowledge, access to information and opportunity to correct the state of facts giving rise to such Obligation. For purposes of Section 3(b), the relative fault of each of MergerCo, the Company and the Subsidiaries, on the one hand, and of the Indemnitee, on the other, shall be determined by reference to, among other things, (i) whether the - included or omitted information relates to information supplied by MergerCo, the Company and the Subsidiaries, on the one hand, or by such Indemnitee, on the other, and (ii) their respective relative intent, knowledge, access to -- information and opportunity to correct such inaccuracy, breach, default, untrue or alleged untrue statement, or omission or alleged omission. For purposes of Section 3(a) or 3(b), the relative benefits received by each of MergerCo, the Company and the Subsidiaries, on the one hand, and the Indemnitee, on the other, shall be determined by weighing the direct monetary proceeds to MergerCo, the Company and the Subsidiaries, on the one hand, and such Indemnitee, on the other, from such Transaction or Securities Offering. (d) The parties hereto acknowledge and agree that it would not be just and equitable if contributions pursuant to Section 3(a) or 3(b) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in such respective Section. The Indemnifying Parties shall not be liable under Section 3(a) or 3(b), as applicable, for contribution to the amount paid or payable by any Indemnitee except to the extent and under such circumstances the Indemnifying Parties would have been liable to indemnify, defend and hold harmless such Indemnitee under the corresponding Section 2(a) or 2(b), as applicable, if such indemnity were enforceable under applicable law. No Indemnitee shall be entitled to contribution from the Indemnifying Parties with respect to any Obligation covered by the indemnity specifically provided for in Section 2(b) in the event that such Indemnitee is finally determined to be guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) in connection with such Obligation and the Indemnifying Parties are not guilty of such fraudulent misrepresentation. 8 4. Indemnification Procedures. -------------------------- (a) Whenever any Indemnitee shall have actual knowledge of the reasonable likelihood of the assertion of a Claim, CD&R (acting on its own behalf or, if requested in writing by any such Indemnitee other than itself, on behalf of such Indemnitee) or such Indemnitee shall notify the Indemnifying Parties in writing of the Claim (the "Notice of Claim") with reasonable --------------- promptness after such Indemnitee has such knowledge relating to such Claim and has notified CD&R thereof. The Notice of Claim shall specify all material facts known to CD&R (or if given by such Indemnitee, such Indemnitee) that may give rise to such Claim and the monetary amount or an estimate of the monetary amount of the Obligation involved if CD&R (or if given by such Indemnitee, such Indemnitee) has knowledge of such amount or a reasonable basis for making such an estimate. The failure of CD&R or such Indemnitee to give such Notice of Claim shall not relieve the Indemnifying Parties of their respective indemnification obligations under this Agreement except to the extent that such omission results in a failure of actual notice to the Indemnifying Parties and they are materially injured as a result of the failure to give such Notice of Claim. The Indemnifying Parties shall, at their expense, undertake the de fense of such Claim with attorneys of their own choosing reasonably satisfactory both to CD&R and to any Indemnitee that, in the exercise of such Indemnitee's good faith judgement, reasonably determines that the Claim presents an actual or potential conflict of interest with CD&R. CD&R may participate in such defense with counsel of CD&R's choosing at the expense of the Indemnifying Parties. If in the exercise of their good faith judgment any one or more other Indemnitee reasonably determines that the Claim presents an actual or potential conflict of interest with CD&R, such Indemnitee or Indemnitees may participate in the defense of the Claim with one counsel of the Indemnitee or Indemnitees' choosing at the expense of the Indemnifying Parties. In the event that the Indemnifying Parties do not undertake the defense of the Claim within a reasonable time after CD&R has given the Notice of Claim, or in the event that CD&R shall in good faith determine that the defense of any claim by the Indemnifying Parties is inadequate or may conflict with the interests of any Indemnitee, CD&R may, at the expense of the Indemnifying Parties and after giving notice to the Indemnifying Parties of such action, undertake the defense of the Claim and compromise or settle the Claim, all for the account of and at the risk of the Indemnifying Parties. In the defense of any Claim, the Indemnifying Parties shall not, except with the consent of CD&R (or, in the case of any entry of any judgment or settlement that is binding on any other Indemnitee, such other Indemnitee), consent to entry of any judgment or enter into any settlement that includes any injunctive or other non-monetary relief, or that does not include as an unconditional term thereof the giving by the person or persons asserting such Claim to such Indemnitee of a release from all liability with respect to such Claim. In each case, CD&R and each other Indemnitee seeking indemnification hereunder will cooperate with the Indemnifying Parties, so long as the Indemnifying Parties are conducting the defense of the Claim, in the preparation for and the prosecution of the 9 defense of such Claim, including making available evidence within the control of CD&R or such Indemnitee, as the case may be, and persons needed as witnesses who are employed by CD&R or such Indemnitee, as the case may be, in each case as reasonably needed for such defense and at cost, which cost, to the extent reasonably incurred, shall be paid by the Indemnifying Parties. (b) The Indemnifying Parties hereby agree to advance costs and expenses, including attorney's fees, incurred by CD&R (acting on its own behalf or, if requested by any such Indemnitee other than itself, on behalf of such Indemnitee) or any Indemnitee in defending any Claim in advance of the final disposition of such Claim upon receipt of an undertaking by or on behalf of CD&R or such Indemnitee to repay amounts so advanced if it shall ultimately be determined that CD&R or such Indemnitee is not entitled to be indemnified by the Indemnifying Parties as authorized by this Agreement. (c) Each Indemnitee shall notify the Indemnifying Parties in writing of the amount of any Claim actually paid by such Indemnitee (the "Notice of --------- Payment"). The amount of any Claim actually paid by an Indemnitee shall bear - ------- simple interest at the rate equal to Credit Suisse First Boston's prime rate as of the date of such payment plus 2% per annum, from the date the Indemnifying Parties receive the Notice of Payment to the date on which the Indemnifying Parties shall repay the amount of such Claim plus interest thereon to such Indemnitee. 5. Certain Covenants. The Company and TTC jointly and severally ----------------- agree to perform their obligations under this Agreement. The rights of each Indemnitee to be indemnified under any other agreement, document, certificate or instrument or applicable law are independent of and in addition to any rights of such Indemnitee to be indemnified under this Agreement. The rights of each Indemnitee and the obligations of the Company hereunder shall remain in full force and effect regardless of any investigation made by or on behalf of such Indemnitee. The Indemnifying Parties shall implement and maintain in full force and effect any and all corporate articles or charter and by-law provisions that may be necessary or appropriate to enable them to carry out their obligations hereunder to the fullest extent permitted by applicable corporate law, including without limitation a provision of their articles or certificate of incorporation eliminating liability of a director for breach of fiduciary duty to the fullest extent permitted by applicable corporate law, as it may be amended from time to time. 6. Notices. All notices and other communications hereunder shall be ------- in writing and shall be delivered by certified or registered mail (first class postage prepaid and return receipt requested), telecopier, overnight courier or hand delivery, as follows: 10 If to the Company or TTC, to: Dynatech Corporation Corporate Headquarters 3 New England Executive Park Burlington, Massachusetts 01803 Facsimile: (617) 229-8850 Telephone: (781) 272-6100 Attention: General Counsel --------- If to the CD&R Fund, to: Clayton, Dubilier & Rice Fund V Limited Partnership 1043 Foulk Road Suite 106 Wilmington, Delaware 19803 Attention: Joseph L. Rice, III --------- with a copy to: Clayton, Dubilier & Rice, Inc. 375 Park Avenue New York, New York 10152 Telephone: (212) 407-5200 Telecopier No.: (212) 407-5252 Attention: Joseph L. Rice, III --------- If to CD&R or any other Indemnitee, to: Clayton, Dubilier & Rice, Inc. 375 Park Avenue 18th Floor New York, New York 10152 Telephone: (212) 407-5200 Telecopy: (212) 407-5252 Attention: Joseph L. Rice, III --------- 11 with the copy, in the case of any other Indemnitee, to: Dynatech Corporation Corporate Headquarters 3 New England Executive Park Burlington, Massachusetts 01803 Facsimile: (617) 229-8850 Telephone: (781) 272-6100 Attention: Chief Executive Officer --------- or to such other address or such other person as the Company, TTC, the CD&R Fund or CD&R, as the case may be, shall have designated by notice to the other parties hereto. All communications hereunder shall be effective upon receipt by the party to which they are addressed. A copy of any notice or other communication given under this Agreement shall also be given to: Debevoise & Plimpton 875 Third Avenue New York, New York 10022 Telephone: (212) 909-6000 Facsimile: (212) 909-6836 Attention: Franci J. Blassberg, Esq. --------- 7. Governing Law. This Agreement shall be governed in all respects, ------------- including as to validity, interpretation and effect, by the law of the State of New York without giving effect to its principles or rules of conflict of laws to the extent such principles or rules would require or permit the application of the laws of another jurisdiction, except to the extent that the corporate law of another jurisdiction specifically and mandatorily applies, in which case such law shall apply. 8. Severability. If any provision or provisions of this Agreement ------------ shall be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby. 9. Miscellaneous. The headings contained in this Agreement are for ------------- reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. This Agreement shall be binding upon and inure to the benefit of each party hereto and its successors and permitted assigns, and each other Indemnitee, but neither this Agreement nor any right, interest or obligation hereunder shall be assigned, whether by operation of law or otherwise, by the Company or TTC without the prior written consent of 12 CD&R and the CD&R Fund. This Agreement is not intended to confer any right or remedy hereunder upon any person other than each of the parties hereto and their respective successors and permitted assigns and each other Indemnitee. No amendment, modification, supplement or discharge of this Agreement, and no waiver hereunder shall be valid and binding unless set forth in writing and duly executed by the party or other Indemnitee against whom enforcement of the amendment, modification, supplement or discharge is sought. Neither the waiver by any of the parties hereto or any other Indemnitee of a breach of or a default under any of the provisions of this Agreement, nor the failure by any party hereto or any other Indemnitee on one or more occasions, to enforce any of the provisions of this Agreement or to exercise any right, powers or privilege hereunder, shall be construed as a waiver of any other breach or default of a similar nature, or as a waiver of any provisions hereof, or any rights, powers or privileges hereunder. The rights and remedies herein provided are cumulative and are not exclusive of any rights or remedies that any party or other Indemnitee may otherwise have at law or in equity or otherwise. This Agreement may be executed in several counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. 13 IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement by their authorized representatives as of the date first above written. DYNATECH CORPORATION By: /s/ Allan M. Kline ------------------ Name: Allan M. Kline Title: Vice President TELECOMMUNICATIONS TECHNIQUES CO., LLC By: Dynatech Corporation, its sole member By: /s/ Allan M. Kline ------------------ Name: Allan M. Kline Title: Vice President CLAYTON, DUBILIER & RICE, INC. By: /s/ Joseph L. Rice, III ----------------------- Name: Joseph L. Rice, III Title: Chairman CLAYTON, DUBILIER & RICE FUND V LIMITED PARTNERSHIP By: CD&R Associates V Limited Partnership, the General Partner By: CD&R Investment Associates II, Inc., the general partner By: /s/ Joseph L. Rice, III ----------------------- Name: Joseph L. Rice, III Title: Chairman 14 EX-10.15 13 CONSULTING AGREEMENT DATED MAY 21, 1998 EXHIBIT 10.15 CONFORMED COPY -------------- CONSULTING AGREEMENT -------------------- This CONSULTING AGREEMENT, dated as of May 21, 1998 (the "Agreement"), --------- by and among Dynatech Corporation, a Massachusetts corporation (the "Company"), ------- Telecommunications Techniques Company, LLC, a Delaware limited liability company ("TTC") and Clayton, Dubilier & Rice, Inc., a Delaware corporation ("CD&R"). ---- W I T N E S S E T H: - - - - - - - - - - WHEREAS, concurrently with the execution and delivery of this Agreement, the Company is entering into an Indemnification Agreement, dated as of the date hereof (the "Indemnification Agreement"), by and among the Company, ------------------------- TTC, CD&R and Clayton, Dubilier & Rice Fund V Limited Partnership, a Cayman Islands exempted limited partnership (capitalized terms used herein without definition having the meanings ascribed in the Indemnification Agreement); WHEREAS, pursuant to an Agreement and Plan of Merger, dated as of December 20, 1997 (the "Merger Agreement"), by and between the Company and CDRD ---------------- Merger Corporation, a Delaware corporation ("MergerCo") formed by the CD&R Fund, -------- MergerCo has merged with and into the Company (the "Merger") on the date hereof; ------ WHEREAS, CD&R has performed financial, management advisory and other services for the Company, including but not limited to assistance in connection with (i) the preparation, negotiation, execution and delivery of the Merger - Agreement, (ii) the preparation, filing and circulation of the S-4, the 13E-3 -- and related materials to the stockholders of the Company in connection with the Merger, (iii) the retention of legal, accounting, environmental, insurance, --- investment banking, financial and other advisors and consultants in connection with the Merger, (iv) the preparation, negotiation, execution and delivery of -- the commitment, fee and engagement letters, registration rights and purchase agreements, credit agreements, indentures and indenture supplements, guarantees, mortgages, pledge agreements and other security agreements, subscription, registration rights agreements, management equity agreements, exchange agent agreements, and other agreements, instruments and documents, relating to the Senior Secured Financing, Note Offering, or otherwise relating to the Financing or the other Transactions, (v) the preparation and circulation of information - and offering memoranda and other materials in connection with the Senior Secured Financing and the Note Offering and (vi) the structuring, implementation and consummation of the Merger -- (such services collectively, the "Merger Services"); --------------- WHEREAS, the Company desires to receive financial and managerial advisory services from CD&R, and CD&R desires to provide such services to the Company; NOW, THEREFORE, in consideration of the premises and the respective agreements hereinafter set forth and the mutual benefits to be derived herefrom, the parties hereto hereby agree as follows: 1. Engagement. The Company hereby engages CD&R as a consultant, and ---------- CD&R hereby agrees to provide financial and managerial advisory ser vices to the Company, all on the terms and subject to the conditions set forth below. 2. Services, etc. (a) CD&R hereby agrees during the term of this ------------- Agreement to assist, advise and consult with the respective Boards of Directors and management of the Company and its Subsidiaries in such manner and on such business, management and financial matters, and provide such other financial and managerial advisory services (collectively, the "Continuing Services"), as may ------------------- be reasonably requested from time to time by the Board of Directors of the Company, including but not limited to assistance in: (i) establishing and maintaining banking, legal and other business relation ships for the Company and its Subsidiaries; (ii) developing and implementing corporate and business strategy and planning for the Company and its Subsidiaries, including plans and programs for improving operating, marketing and financial performance, budgeting of future corporate investments, acquisition and divestiture strategies, and reorganizational programs; (iii) arranging future debt and equity financings and refinancings; and (iv) providing professional employees to serve as directors or officers of the Company and its Subsidiaries. (b) The Company will furnish CD&R with such information as CD&R believes appropriate to its engagement hereunder (all such information so furnished being referred to herein as the "Information"). The Company recognizes ----------- and confirms that (i) - 2 CD&R will use and rely primarily on the Information and on information available from generally recognized public sources in performing the services to be performed hereunder and (ii) CD&R does not assume responsibility for the -- accuracy or completeness of the Information and such other information. 3. Compensation; Payment of Expenses. (a) The Company and TTC --------------------------------- jointly and severally agree to pay to CD&R, concurrent with the execution of this Agreement, as compensation for the Merger Services, a fee of $9,200,000. (b) The Company and TTC jointly and severally agree to pay to CD&R, as compensation for the Continuing Services rendered and to be rendered by CD&R hereunder, a fee of $500,000 per year (the "Continuing Services Fee"), payable ----------------------- on the first day of the month in monthly installments of $41,666.66 in arrears commencing on June 1, 1998. Such Continuing Services Fee may, in the sole discretion of a majority of the members of the Company's Board of Directors who are not affiliated with CD&R, be increased but may not be decreased without the prior written consent of CD&R. If any employee of CD&R shall be elected to serve on the Board of Directors or as an officer of the Company (a "Designated ---------- Director"), in consideration of the Continuing Services Fee being paid to CD&R, - -------- CD&R shall cause such Designated Director to waive any and all compensation, including without limitation, fees, stock options, equity participation and other incentives, to which such director would otherwise be entitled as a director for any period for which the Continuing Services Fee or any installment thereof is paid and for which such Designated Director continues to be employed by CD&R. (c) The Company and TTC jointly and severally agree to reimburse CD&R for such reasonable travel and other out-of-pocket expenses ("Expenses") as may -------- have been or be incurred by CD&R and its employees, agents and advisors in the course or on account of rendering of the Merger Services or the Continuing Services, including but not limited to any reasonable fees and expenses of any legal, accounting or other professional advisors to CD&R engaged in connection with the Merger Services and Continuing Services and any reasonable expenses incurred by any Designated Director in connection with the performance of his duties. CD&R may submit monthly expense statements, which shall be payable within thirty days. 4. Term, etc. (a) This Agreement shall be in effect until, and --------- shall terminate upon, the earlier to occur of (x) the tenth anniversary of the - date hereof and (y) the date on which the CD&R Fund no longer owns any shares of - the capital stock of the Company, and may be earlier terminated by either party hereto upon 30 days' prior written notice to the other party hereto. The provisions of this Agreement shall survive any termination of this Agreement, except for the provisions of Section 1, Section 2(a), 3 the first sentence of Section 2(b) and (solely as to any portion of the Continuing Services Fee or any Expense not paid or reimbursed prior to such termination and not required to be paid or reimbursed thereafter pursuant to Section 4(c) hereof) Section 3 hereof. (b) Upon any consolidation or merger, or any conveyance, transfer or lease of all or substantially all of the assets of the Company, the successor corporation formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, the Company under this Agreement with the same effect as if such successor corporation had been a party thereto. No such consolidation, merger or conveyance, transfer or lease of all or substantially all of the assets of the Company shall have the effect of terminating this Agreement or of releasing the Company or any such successor corporation from its obligations hereunder. (c) Upon any termination of this Agreement, any accrued and unpaid installment of the Continuing Services Fee or portion thereof (pro rated, with respect to the month in which such termination occurs, for the portion of such month that precedes such termination), and any unpaid and unreimbursed Expenses that shall have been incurred prior to such termination (whether or not such Expenses shall then have become payable), shall be immediately paid or reimbursed, as the case may be, by the Company. In the event of the liquidation of the Company, all amounts due CD&R hereunder shall be paid to CD&R before any liquidating distributions or similar payments are made to stockholders of the Company. 5. Indemnification. (a) The Company confirms and reaffirms its --------------- obligations pursuant to the Indemnification Agreement. Without limiting the generality of the foregoing, the Company confirms and agrees that (a) it shall - indemnify, defend and hold harmless CD&R, the CD&R Fund, CD&R Associates, CD&R Investment Associates Inc., Associates II, their respective successors and assigns and each of the respective directors, officers, partners, employees, agents, advisors, representatives and controlling persons (within the meaning of the Securities Act of 1933, as amended) and their respective successors and assigns (collectively, "Indemnitees") from and against any and all claims, ----------- obligations, liabilities, causes of action, actions, suits, proceedings, investigations, judgments, decrees, losses, damages, fees, costs and expenses (including without limitation interest, penalties and fees and disbursements of attorneys, accountants, investment bankers and other professional advisors) (collectively, "Obligations"), whether incurred with respect to third parties or ----------- otherwise, in any way resulting from, arising out of or in connection with, based upon or relating to, the performance of the Merger Services or the Continuing Services, except to the extent that any such Obligation is found in a final judgment by a court having jurisdiction to have 4 resulted from the gross negligence or intentional misconduct of an Indemnitee, (b) no Indemnitee shall have any liability (whether direct or indirect, in - contract or tort or otherwise) to the Company or their respective security holders or creditors with respect to any Obligation in any way resulting from, arising out of or in connection with, based upon or relating to, the performance of the Merger Services or the Continuing Services, except to the extent that any such Obligation is found in a final judgment by a court having jurisdiction to have resulted from the gross negligence or intentional misconduct of an Indemnitee, and (c) the rights of each Indemnitee to be indemnified under any - agreement, document, certificate or instrument or applicable law are independent of and in addition to any rights of such Indemnitee under any other agreement, document, certificate or instrument or applicable law. (b) The Company hereby agrees to advance costs and expenses, including attorneys' fees, incurred by CD&R (acting on its own behalf or, if requested by any such Indemnitee other than itself, on behalf of such Indemnitee) or any Indemnitee in defending any claim relating to any Obligation in advance of the final disposition of such claim within 30 days of receipt from CD&R of (i) a notice setting forth the amount of such costs and expenses (a - "Payment Notice") and (ii) an undertaking by or on behalf of CD&R or such - --------------- -- Indemnitee to repay amounts so advanced if it shall ultimately be determined that CD&R or such Indemnitee is not entitled to be indemnified by the Company as authorized by this Agreement. CD&R may submit Payment Notices to the Company monthly. 6. Independent Contractor Status. The parties agree that CD&R shall ----------------------------- perform services hereunder as an independent contractor, retaining control over and responsibility for its own operations and personnel. Neither CD&R nor any of its employees or agents shall, solely by virtue of this Agreement or the arrangements hereunder, be considered employees or agents of the Company nor shall any of them have authority to contract in the name of or bind the Company, except (a) to the extent that any professional employee of CD&R may be serving - as a director or an officer of the Company pursuant to Section 2(a)(iv) hereof or (b) as expressly agreed to in writing by the Company. The Company hereby - acknowledges and agrees that the agreements, arrangements or understandings entered into by CD&R on behalf of the Company, MergerCo or any of their respective subsidiaries prior to the date hereof in connection with the Merger (including, but not limited to, any confidentiality agreements and agreements with brokers or finders) and set forth on Schedule 6 attached hereto shall be ---------- obligations of the Company binding on it to the same extent as such obligations may be binding on CD&R, and the Company shall fully perform, and indemnify and hold harmless CD&R from and against, all such obligations. Any duties of CD&R arising out of its engagement to perform services hereunder shall be owed solely to the Company. 5 7. Notices. Any notice or other communication required or permitted ------- to be given or made under this Agreement by one party to the other parties shall be in writing and shall be deemed to have been duly given and effective (i) on - the date of delivery if delivered personally or (ii) when sent if sent by -- prepaid telegram, or mailed first-class, postage prepaid, registered or certified mail, or facsimile transmission as follows (or to such other address as shall be given in writing by one party to the other parties in accordance herewith): If to the Company or TTC, to: Dynatech Corporation Corporate Headquarters 3 New England Executive Park Burlington, Massachusetts 01803 Facsimile: (617) 229-8850 Telephone: (781) 272-6100 Attention: General Counsel --------- If to CD&R, to: Clayton, Dubilier & Rice, Inc. 375 Park Avenue 18th Floor New York, New York 10152 Telephone: (212) 407-5200 Telecopy: (212) 407-5252 Attention: Joseph L. Rice, III --------- with a copy to: Debevoise & Plimpton 875 Third Avenue New York, New York 10022 Telephone: (212) 909-6000 Telecopy: (212) 909-6836 Attention: Franci J. Blassberg, Esq. --------- 6 8. Entire Agreement. This Agreement, together with the ---------------- Indemnification Agreement, (a) contains the complete and entire understanding - and agreement of CD&R, TTC and the Company with respect to the subject matter hereof and (b) supersedes all prior and contemporaneous understandings, - conditions and agreements, oral or written, express or implied, in respect of the subject matter hereof, including but not limited to in respect of the engagement of CD&R in connection with the subject matter hereof. There are no representations or warranties of CD&R in connection with this Agreement or the services to be provided hereunder, except as expressly made and contained in this Agreement. 9. Headings. The headings contained in this Agreement are for -------- purposes of convenience only and shall not affect the meaning or interpretation of this Agreement. 10. Counterparts. This Agreement may be executed in several ------------ counterparts, each of which shall be deemed an original and all of which shall together constitute one and the same instrument. 11. Binding Effect; Assignment. This Agreement shall be binding upon -------------------------- and inure to the benefit of the parties to this Agreement and their respective successors and assigns and to each Indemnitee, provided that none of CD&R, the -------- Company or TTC may assign any of its rights or obligations under this Agreement without the express written consent of the other party hereto. This Agreement is not intended to confer any right or remedy hereunder upon any person other than the parties to this Agreement and their respective successors and permitted assigns and each Indemnitee. 12. Governing Law. This Agreement shall be governed in all respects ------------- including as to validity interpretations and effects by the laws of the State of New York, without giving effect to its principles or rules of conflict of laws to the extent such principles or rules would require or permit the application of the laws of another jurisdiction. The Company, TTC and CD&R hereby irrevocably submit to the jurisdiction of the courts of the State of New York and the Federal courts of the United States of America, in each case located in the State, City and County of New York, solely in respect of the interpretation and enforcement of the provisions of this Agreement, and hereby waive, and agree not to assert, as a defense in any action, suit or proceeding for the interpretation or enforcement hereof, that it is not subject thereto or that such action, suit or proceeding may not be brought or is not maintainable in such courts or that the venue thereof may not be appropriate or that this Agreement may not be enforced in or by such courts, and the parties hereto irrevocably agree that all claims 7 with respect to such action or proceeding shall be heard and determined in such a New York State or Federal court. The Company, TTC and CD&R hereby consent to and grant any such court jurisdiction over the person of such parties and over the subject matter of any such dispute and agree that mailing of process or other papers in connection with any such action or proceeding in the manner provided in Section 7, or in such other manner as may be permitted by law, shall be valid and sufficient service thereof. 13. Waiver of Jury Trial. Each party hereto acknowledges and agrees -------------------- that any controversy that may arise under this Agreement is likely to involve complicated and difficult issues, and therefore it hereby irrevocably and unconditionally waives any right it may have to a trial by jury in respect of any litigation directly or indirectly arising out of or relating to this Agreement, or the breach, termination or validity of this Agreement, or the transactions contemplated by this Agreement. Each party certifies and acknowledges that (a) no representative, agent or attorney of any other party - has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waiver, (b) it understands - and has considered the implications of this waiver, (c) it makes this waiver - voluntarily, and (d) it has been induced to enter into this Agreement by, among - other things, the mutual waivers and certifications contained in this Section 13. 14. Amendment; Waivers. No amendment, modification, supplement or ------------------ discharge of this Agreement, and no waiver hereunder, shall be valid or binding unless set forth in writing and duly executed by the party or Indemnitee against whom enforcement of the amendment, modification, supplement, discharge or waiver is sought (and in the case of the Company, approved by resolution of the Board of Directors of the Company). Any such waiver shall constitute a waiver only with respect to the specific matter described in such writing and shall in no way impair the rights of the party or Indemnitee granting such waiver in any other respect or at any other time. Neither the waiver by any of the parties hereto or any Indemnitee of a breach of or a default under any of the provisions of this Agreement, nor the failure by any party hereto or any Indemnitee on one or more occasions, to enforce any of the provisions of this Agreement or to exercise any right, powers or privilege hereunder, shall be construed as a waiver of any other breach or default of a similar nature, or as a waiver of any of such provisions, rights, power or privileges hereunder. The rights and remedies herein provided are 8 cumulative and are not exclusive of any rights or remedies that any party or Indemnitee may otherwise have at law or in equity or otherwise. IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above written. CLAYTON, DUBILIER & RICE, INC. By:/s/ Joseph L. Rice, III ----------------------- Name: Joseph L. Rice, III Title: Chairman DYNATECH CORPORATION By:/s/ Allan M. Kline ------------------ Name: Allan M. Kline Title: Vice President TELECOMMUNICATIONS TECHNIQUES CO., LLC By: Dynatech Corporation, its sole member By:/s/ Allan M. Kline ------------------ Name: Allan M. Kline Title: Vice President 9 EX-10.16 14 TAX SHARING AGREEMENT EXHIBIT 10.16 CONFORMED COPY -------------- TAX SHARING AGREEMENT --------------------- THIS TAX SHARING AGREEMENT, dated as of May 21, 1998, is made and entered into by and between Dynatech Corporation, a Massachusetts corporation ("Dynatech"), and Telecommunications Techniques Co., LLC, a Delaware limited liability company ("TTC"). W I T N E S S E T H: - - - - - - - - - - WHEREAS, Dynatech is the common parent corporation of an affiliated group of corporations within the meaning of Section 1504(a) of the Internal Revenue Code of 1986, as amended (the "Code"); WHEREAS, for federal income tax purposes, TTC, a wholly-owned subsidiary of Dynatech, is disregarded as an entity separate from Dynatech; WHEREAS, the affiliated group of which Dynatech is the common parent, files a consolidated federal income tax return as defined in Section 1501 of the Code; and WHEREAS, Dynatech and TTC desire to provide for the allocation of liabilities, procedures to be followed, and other matters with respect to certain taxes for tax years beginning after March 31, 1998, in which Dynatech and its subsidiaries are included in a consolidated federal income tax return filed for the Combined Consol idated Group. NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: ARTICLE I DEFINITIONS ----------- "Code" shall mean the Internal Revenue Code of 1986, as amended. "Combined Consolidated Group" shall mean the Dynatech Consolidated Group together with the TTC Consolidated Group, and any other corporations which may become members of either. "Combined Consolidated Return" shall mean a consolidated federal income tax return filed for the Combined Consolidated Group. "Dynatech Consolidated Group" shall mean the affiliated group of corporations of which Dynatech is the common parent, and any other corporations which may become members of that affiliated group, but excluding the members of the TTC Consolidated Group. "Estimated Tax Sharing Payments" shall mean the periodic tax sharing payments required under Article III, Section 2 of this Agreement. "Estimated Tax Sharing Payment Date" shall mean the date of the payment of the balance of the Estimated Tax Sharing Payments as described in Article III, Section 2 of this Agreement. "IRS" shall mean the Internal Revenue Service. "Pro Forma TTC Return" shall mean a pro forma consolidated federal income tax return prepared pursuant to Article III, Section 1 or 4. "TTC Consolidated Group" shall mean TTC and the other members of the affiliated group of corporations of which TTC would be the common parent if (i) - TTC were not a subsidiary of Dynatech and (ii) TTC were treated as a association -- taxable as a corporation for federal income tax purposes, and any other corporations which may become members of that affiliated group. ARTICLE II PROCEDURAL MATTERS ------------------ 1. Dynatech shall have the sole and exclusive responsibility for the preparation and filing of the consolidated federal income tax return of the Combined Consolidated Group, including any amended returns and any other returns, documents or statements required to be filed with the IRS with respect to the determination of the federal income tax liability of the Combined Consolidated Group. All returns shall be 2 filed by Dynatech on a timely basis, taking into account extensions of the due date for the filings of such returns. 2. TTC shall cause each member of the TTC Consolidated Group to continue to join in filing a consolidated federal income tax return with the Dynatech Consolidated Group for all taxable years for which such member is eligible to do so under the Code and the Treasury Regulations, unless Dynatech shall request otherwise. 3. Dynatech shall make all federal income tax payments, including estimated payments, with respect to all Combined Consolidated Returns and Dynatech shall have the right to exercise all powers of a common parent with respect to filing any Combined Consolidated Return as are conferred on it by the Treasury Regulations. 4. Dynatech shall be the sole and exclusive agent of the Combined Consolidated Group and any member of such group in any and all matters relating to the income tax liability of the Combined Consolidated Group for all consolidated return years. In its sole discretion, Dynatech shall have the right with respect to any Combined Consolidated Returns which it files (a) to - determine (i) the manner in which such returns shall be prepared and filed, - including, without limitation, the manner in which any item of income, gain, loss, deduction or credit shall be reported and the adoption or change of any method of accounting, (ii) whether any extensions may be requested and (iii) the -- --- elections that will be made by any member of the Combined Consolidated Group, (b) to contest, compromise or settle any adjustment or deficiency proposed, - asserted or assessed as a result of any audit of such returns by the IRS, (c) to - file, prosecute, compromise or settle any claim for refund and (d) to determine - whether any refunds to which the Combined Consolidated Group may be entitled shall be paid by way of refund or credited against the tax liability of the Combined Consolidated Group. TTC hereby irrevocably appoints Dynatech as its agent and attorney-in-fact to take such action (including the execution of documents) as Dynatech may deem appropriate to effect the foregoing. 5. TTC shall reimburse Dynatech for any outside legal and accounting expenses incurred by Dynatech in the course of the conduct of any audit or contest regarding the tax liability of the Combined Consolidated Group, and for any other expenses incurred by Dynatech in the course of any litigation relating thereto, to the extent such costs are reasonably attributable to a TTC Consolidated Group issue. 6. TTC shall furnish to Dynatech in a timely manner such information and documents as Dynatech may reasonably request for purposes of preparing the returns referred to in Section 1 of this Article. 3 ARTICLE III CALCULATION AND PAYMENT OF TAX SHARING PAYMENTS ----------------------------------------------- 1. For each taxable year for which Dynatech files a Combined Consolidated Return, Dynatech shall prepare a Pro Forma TTC Return for the TTC Consolidated Group taking into account elections, methods of accounting, and positions with respect to specific items that are consistent with those made or used by Dynatech for purposes of the Combined Consolidated Return. The Pro Forma TTC Return shall reflect any carryovers of net operating losses, net capital losses, excess tax credits or other tax attributes from prior years' Pro Forma TTC Returns (assuming that members of the TTC Consolidated Group had not been in existence before April 1, 1998) which could have been utilized by the TTC Consolidated Group if the TTC Consolidated Group had never been included in the Combined Consolidated Group, but only to the extent Dynatech utilizes such carryover. For purposes of this Section 1, a carryover will be treated as utilized by Dynatech to the extent that the federal income tax liability of the Combined Consolidated Group determined taking into account such carryover is less than the federal income tax liability of the Combined Consolidated Group determined without giving effect to such carryover. The Pro Forma TTC Return shall not, however, reflect carryovers of any attributes from the Dynatech Consolidated Group. Any provision of the Code that requires consolidated computations, such as sections 861 and 1231, shall be applied separately to the TTC Consolidated Group for purposes of preparing the Pro Forma TTC Return. Treasury Regulations sec tion 1.1502-13 shall be applied as if the TTC Consolidated Group and the Dynatech Consolidated Group were separate affiliated groups. The Pro Forma TTC Return shall be provided to TTC no later than 30 days after the due date (including extensions) for the return for the Combined Consolidated Group. 2. For each taxable year in which a Combined Consolidated Return is filed, TTC shall make periodic payments ("Estimated Tax Sharing Payments") to Dynatech in such amounts as, and no later than the dates on which, payments of estimated tax would be due from the TTC Consolidated Group under section 6655 of the Code if it were not included in the Combined Consolidated Group. The balance, if any, of the Estimated Tax Sharing Payments due for a taxable year shall be paid to Dynatech no later than June 15 of the following year. TTC shall pay to Dynatech no later than 60 days after the date on which a Combined Consolidated Return for any taxable year is filed, an amount equal to the sum of (i) the federal income tax liability shown on the Pro Forma TTC Return prepared - for that taxable year and (ii) the additions to tax, if any, under section 6655 -- of the Code that would have been imposed upon TTC (treating the amount due to Dynatech under clause (i) above as TTC's 4 federal income tax liability and treating any Estimated Tax Sharing Payments as estimated tax payments with respect to such liability), reduced by the sum of the Estimated Tax Sharing Payments and interest thereon as determined pursuant to Article IV of this Agreement running from the Estimated Tax Sharing Payment Date. If the Estimated Tax Sharing Payments paid to Dynatech for any taxable year exceed the amount of the liability under the preceding sentence, Dynatech shall refund such excess to TTC within 45 days after completion of the Pro Forma TTC Return, together with interest as determined in Article IV of this Agreement running from the date on which the consolidated federal income tax return of the Combined Consolidated Group is due, without regard to extensions. 3. If a Pro Forma TTC Return reflects a net operating loss, net capital loss, excess tax credit or other tax attribute, then Dynatech shall pay to TTC the amount of any refund, credit or offset of tax liability (including interest) that Dynatech actually receives as a result of the utilization of such loss, credit or other tax attribute which the TTC Consolidated Group would have received as a result of the carryback of such attribute to a Pro Forma TTC Return for any taxable year or years in which the TTC Consolidated Group is included in the Combined Consolidated Group. The amount of refund will be determined as if the TTC Consolidated Group had never been included in the Combined Consolidated Group, Pro Forma TTC Returns had been ac tual returns and the members of the TTC Consolidated Group had not been in existence before April 1, 1998. For purposes of this Section 3, a loss, credit or other tax attribute shall be treated as utilized by Dynatech to the extent that the federal income tax liability of the Combined Consolidated Group determined taking into account such loss, credit or other tax attribute is less that the federal income tax liability of the Combined Consolidated Group determined without giving effect to such loss, credit or other tax attribute. All calculations of deemed refunds of the TTC Consolidated Group pursuant to Section 3 of this Article shall include interest computed as if TTC had filed a claim for refund or an application for a tentative carryback adjustment pursuant to section 6411(a) of the Code on the date on which the consolidated federal income tax return of the Combined Consolidated Group is due, without regard to extensions. 4. To the extent that any audit, litigation, claim or refund with respect to a Combined Consolidated Return results in an increase or decrease in taxable income relating to the treatment of a TTC Consolidated Group issue, a corresponding adjustment shall be made to such item and to TTC's tax liability reflected on the applicable Pro Forma TTC Return. Within 10 days after any such adjustment is finally determined, TTC shall make additional tax sharing payments, including interest and penalties consistent with such adjustment, to Dynatech, or Dynatech shall refund to 5 TTC any amounts received by Dynatech in connection with such audit, litigation, claim or refund, including interest, pursuant to Article IV of this Agreement. 5. All calculations required to be made by Dynatech under this Agreement shall be binding upon the parties hereto absent manifest error. ARTICLE IV INTEREST -------- Interest required to be paid by or to TTC pursuant to this Agreement shall, unless otherwise specified, be computed at the rate and in the manner provided in the Code for interest on underpayments and overpayments, respectively, of federal income tax for the relevant period. ARTICLE V STATE AND LOCAL INCOME AND FRANCHISE TAXES ------------------------------------------ 1. The principles expressed with respect to the Combined Consolidated Group federal income tax matters in Articles I through III shall apply with equal force to state and local income and franchise tax matters, including the preparation and filing of state and local income tax and franchise tax returns by the Combined Consolidated Group. 2. Any interest charge required to be paid by or to TTC pursuant to this Agreement with respect to any state or local income or franchise tax return shall be computed at the rate and in the manner as provided under the applicable state or local statute for interest on underpayments and overpayments of such tax tor the relevant period. ARTICLE VI MISCELLANEOUS PROVISIONS ------------------------ 1. Any information furnished by one party to another pursuant to this Agreement shall be treated as confidential and, except as, and to the extent, required during the course of an audit or litigation or otherwise required by law, shall not be disclosed to another person or entity. 6 2. This Agreement shall be binding upon and inure to the benefit of any successor to any of the parties, by merger, acquisition of assets or otherwise, to the same extent as if the successor had been an original party to this Agreement. 3. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without giving effect to conflicts of law prin ciples thereof. 4. This Agreement may be executed simultaneously in two or more counterparts, each of which will be deemed an original, but all of which when taken to gether shall constitute one and the same instrument. 5. The headings in this Agreement are for convenience only and shall not be deemed for any purpose to constitute a part or to affect the interpretation of this Agreement. 6. This Agreement may be amended from time to time by agreement in writing executed by all the parties hereto or all of the parties then bound thereby. This Agreement constitutes the entire agreement with respect to the subject matter hereof and supersedes all prior written and oral understandings with respect thereto. 7. Any notice, request or other communication required or permitted in this Agreement shall be in writing and shall be sufficiently given if personally delivered or if sent by registered or certified mail, postage prepaid, addressed as follows: TO DYNATECH: 3 New England Executive Park Burlington, MA 01803 Attn.: Mark V. B. Tremallo TO TTC: 20410 Observation Drive Germantown, MD 20876 Attn.: Mark V. B. Tremallo or to such other address as set forth in writing by either party to the other in accordance with this section. 7 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their authorized representatives. DYNATECH CORPORATION By: /s/ Allan M. Kline ------------------ Name: Allan M. Kline Title: Corporate Vice President, Chief Financial Officer and Treasurer TELECOMMUNICATIONS TECHNIQUES CO., LLC By: Dynatech Corporation, its sole member By: /s/ Allan M. Kline ------------------ Name: Allan M. Kline Title: Corporate Vice President, Chief Financial Officer and Treasurer 8 EX-10.17 15 REGISTRATION RIGHTS AGREEMENT EXHIBIT 10.17 DYNATECH CORPORATION REGISTRATION RIGHTS AGREEMENT Dated as of May 21, 1998 TABLE OF CONTENTS ----------------- Page ---- 1. Background 1 2. Definitions 1 3. Registration 4 3.1. Registration on Request 4 (a) Requests 4 (b) Obligation to Effect Registration 5 (c) Registration Statement Form 5 (d) Expenses6 (e) Inclusion of Other Securities 6 (f) Effective Registration Statement 6 (g) Pro Rata Allocation 7 3.2. Incidental Registration 7 3.3. Registration Procedures 9 3.4. Underwritten Offerings 13 (a) Underwritten Offerings Exclusive 13 (b) Underwriting Agreement 13 (c) Selection of Underwriters 14 (d) Incidental Underwritten Offerings 14 (e) Hold Back Agreements 14 3.5. Preparation; Reasonable Investigation 15 3.6. Other Registrations 15 3.7. Indemnification 16 (a) Indemnification by the Company 16 (b) Indemnification by the Sellers 17 (c) Notices of Claims, etc. 17 (d) Other Indemnification 18 (e) Other Remedies 18 (f) Officers and Directors 19 4. Miscellaneous 19 4.1. Amendments and Waivers 19 4.2. Nominees for Beneficial Owners 19 i Page ---- 4.3. Successors, Assigns and Transferees 20 4.4. Notices 20 4.5. No Inconsistent Agreements 21 4.6. Remedies; Attorneys' Fees 21 4.7. Stock Splits, etc. 21 4.8. Term 22 4.9. Severability 22 4.10. Headings 22 4.11. Counterparts 22 4.12. Governing Law 22 4.13. No Third Party Beneficiaries 22 4.14. Consent to Jurisdiction 22 4.15. Waiver of Jury Trial 23 ii CONFORMED COPY -------------- REGISTRATION RIGHTS AGREEMENT ------------------------------ REGISTRATION AND RIGHTS AGREEMENT, dated as of May 21, 1998, among Dynatech Corporation, a Massachusetts corporation (the "Company"), Clayton, ------- Dubilier & Rice Fund V Limited Partnership, a Cayman Islands limited partnership (the "Fund"), Mr. John F. Reno (the "Manager"), The John F. Reno 1997 Qualfied ---- ------- Annuity Trust, under Trust Agreement, dated as of the 28th day of November, 1997, between John F. Reno as Grantor and John F. Reno and John D. Hamilton, Jr. as Trustees (the "John F. Reno Trust") and The Suzanne M. Reno 1997 Qualfied Annuity Trust, under Trust Agreement, dated as of the 28th day of November, 1997, between Suzanne D. Reno as Grantor and John F. Reno and John D. Hamilton, Jr. as Trustees (together with the John F. Reno Trust, the "Trusts") . 1. Background. (a) Pursuant to an Agreement and Plan of Merger, ---------- dated as of December 20, 1997 (the "Merger Agreement"), between the Company and ---------------- CDRD Merger Corporation, a Delaware corporation ("MergerCo"), formed by the -------- Fund, MergerCo has merged with and into the Company (the "Merger") and shares ------ of MergerCo common stock owned by Fund have been converted into 110,740,720 shares of common stock, no par value (the "Common Stock"), of the Company. ------------ (b) Pursuant to the Merger Agreement, and pursuant to the Employment Agreements, dated as of December 20, 1997, between the Company and the Manager, shares of MergerCo common stock owned by the Manager and the Trusts have been converted into 799,758 shares of Common Stock. (c) The Company or the Fund may in the future issue or sell directly or pursuant to option or other rights, additional shares of Common Stock to Directors of the Company or directors or senior executives of corporations in which entities managed or sponsored by CD&R (as defined below) have made substantial equity investments or other individuals with whom CD&R has a consulting or advisory relationship ("Individual Investors"). -------------------- 2. Definitions. For purposes of this Agreement, the following terms ----------- have the following respective meanings: "Additional Sale": See Section 4(a). ---------------- "Affiliate": With respect to any Person, any other Person directly or --------- indirectly Controlling, Controlled by or under common Control with such first Person. "Control" means the power to direct the affairs of a Person by reason of ownership of voting securities, by contract or otherwise. Any director, member of management or other employee of the Company or any of its Subsidiaries who would not otherwise be an Affiliate shall not be deemed to be an Affiliate of the Fund. "Board": The Board of Directors of the Company. ----- "Business Day": A day other than a Saturday, Sunday or other day on ------------ which commercial banks in New York City are authorized or required to close. "CD&R": Clayton, Dubilier & Rice, Inc., a Delaware corporation. ---- "Common Stock": See Section 1(a). ------------ "Company": See the introduction to this Agreement. ------- "Exchange Act": The Securities Exchange Act of 1934, as amended, or ------------ any successor Federal statute, and the rules and regulations thereunder which shall be in effect at the time. Any reference to a particular section thereof shall include a reference to the corresponding section, if any, of any such successor Federal statute, and the rules and regulations thereunder. "Fund": See the introduction to this Agreement. ---- "Individual Investors": See Section 1(c). -------------------- "Manager": See the introduction to this Agreement. ------- "Merger": See Section 1(a). ------ "Merger Agreement": See Section 1(a). ---------------- "MergerCo": See Section 1(a). -------- "NASD": National Association of Securities Dealers, Inc. ---- "NASDAQ": The NASD Automated Quotation System. ------ 2 "Offer": See Section 4(a). ----- "Offered Securities": See Section 4(b). ------------------ "Person": Any natural person, firm, partnership, association, ------ corporation, company, trust, business trust, governmental entity or other entity. "Proportionate Share: See Section 4(b). ------------------- "Public Offering": An underwritten public offering of Common Stock --------------- led by at least one underwriter of nationally recognized standing. "Registrable Securities": (a) The Common Stock (i) received by the ---------------------- - - Fund, the Manager and the Trusts as a result of the Merger or (ii) issued to -- Individual Investors pursuant to a stock subscription agreement or other agreement that provides that such Common Stock shall be Registrable Securities, (b) any shares of Common Stock issued pursuant to the terms of, and under the - circumstances set forth in, Section 4, and (c) any securities issued or issuable - with respect to any Common Stock referred to in the foregoing clauses (w) upon - any conversion or exchange thereof, (x) by way of stock divi dend or stock - split, (y) in connection with a combination of shares, recapitalization, merger, - consolidation or other reorganization or (z) otherwise, in all cases subject to - the last paragraph of Section 3.3. As to any particular Registrable Securities, once issued such securities shall cease to be Registrable Securities when (A) a - registration statement (other than a Special Registration pursuant to which such securities were issued by the Company) with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been disposed of in accordance with such registration statement, (B) such securities shall have been distributed to the public in - reliance upon Rule 144, (C) such securities shall have been otherwise - transferred, new certificates for such securities not bearing a legend restricting further transfer shall have been delivered by the Company and subsequent disposition of such securities shall not require registration or qualification of such securities under the Securities Act or any similar state law then in force, or (D) such securities shall have ceased to be outstanding. - "Registration Expenses": All expenses incident to the Company's --------------------- performance of its obligations under or compliance with Section 3, including, but not limited to, all registration and filing fees, all fees and expenses of complying with securi ties or blue sky laws, all fees and expenses associated with listing securities on exchanges or NASDAQ, all fees and other expenses associated with filings with the NASD (including, if required, the fees and expenses of any "qualified independent underwriter" and its counsel), all printing expenses, the fees and disbursements of counsel for the 3 Company and of its independent public accountants, and the expenses of any special audits made by such accountants required by or incidental to such performance and com pliance, but not including (a) fees and disbursements of - counsel retained by the holders of Registrable Securities or (b) any - underwriting discounts or commissions or any trans fer taxes payable in respect of the sale of Registrable Securities by the holders thereof. "Requisite Percentage of Stockholders": The holder or holders of at ------------------------------------ least (a) as to the initial request under Section 3.1, 50% (by number of shares) - of the Registrable Securities at the time outstanding or (b) as to any other - request, 20% (by number of shares) of the Registrable Securities at the time outstanding. "Rule 144": Rule 144 (or any successor provision) under the -------- Securities Act. "Rule 144A": Rule 144A (or any successor provision) under the --------- Securities Act. "Securities Act": The Securities Act of 1933, as amended, or any -------------- successor Federal statute, and the rules and regulations thereunder which shall be in effect at the time. Any reference to a particular section thereof shall include a reference to the corresponding section, if any, of any such successor Federal statute, and the rules and regulations thereunder. "Securities and Exchange Commission": The Securities and Exchange ---------------------------------- Commission or any other Federal agency at the time administering the Securities Act or the Exchange Act. "Special Registration": (a) The registration of shares of equity -------------------- - securities and/or options or other rights in respect thereof to be offered to directors, members of management, employees, consultants or sales agents, distributors or similar representatives of the Company or its direct or indirect Subsidiaries, and/or Individual Investors or (b) the registration of equity - securities and/or options or other rights in respect thereof solely on Form S-4 or S-8 or any successor form. 4 3. Registration. ------------ 3.1 Registration on Request. ----------------------- (a) Requests. Subject to the provisions of Section 3.6, at any time -------- or from time to time, the Requisite Percentage of Stockholders shall have the right to make written requests that the Company effect registrations under the Securities Act of all or part of the Registrable Securities of the holder or holders making such request, which requests shall specify the intended method of disposition thereof by such holder or holders. (b) Obligation to Effect Registration. Upon receipt by the Company --------------------------------- of any request for registration pursuant to Section 3.1(a), the Company will promptly give written notice of such requested registration to all holders of Registrable Securities, and thereupon will use its best efforts to effect the registration under the Securities Act of (i) the Registrable Securities which the Company has been so requested to register pursuant to Section 3.1(a), and (ii all other Registrable Securities which the Company has been requested to register by the holders thereof by written request given to the Company within 30 days after the Company has given such written notice (which request shall specify the intended method of disposition of such Registrable Securities), all to the extent required to permit the disposition (in accordance with the intended methods thereof as aforesaid) of the Registrable Securities so to be registered. Notwith standing the preceding sentence: (x) the Company shall not be required to effect a registration requested pursuant to Section 3.1(a) if (A) with respect to the first three - such requests, the aggregate number of Registrable Securities referred to in clauses (i) and (ii) of the preceding sentence to be included in such registration shall be less than 22,300,000 shares and (B) thereafter, the - number of Registrable Securities to be so included shall be less than 11,150,000, provided, that in no event shall the Company be required to -------- effect a registration requested pursuant to Section 3.1(a) if the Board determines, in its good faith judgment, after consultation with a firm of nationally recognized underwriters that the aggregate net proceeds from the disposition of the Registrable Securities for which registration has been so requested would be less than $15,000,000.00; and 5 (y) if the Board determines in its good faith judgment, after consultation with a firm of nationally recognized underwriters, that there will be an adverse effect on a then contemplated Public Offering, the Requisite Percentage of Stockholders shall be given notice of such fact and shall be deemed to have with drawn such request and such registration shall not be deemed to have been effected or requested pursuant to this Section 3.1. (c) Registration Statement Form. Each registration requested --------------------------- pursuant to this Section 3.1 shall be effected by the filing of a registration statement on Form S-1, Form S-2 or Form S-3 (or any other form which includes substantially the same information as would be required to be included in a registration statement on such forms as presently constituted), the choice of such form to be made by holders holding at least a majority (by number of shares) of the Registrable Securities as to which registration has been requested pursuant to this Section 3.1, unless the use of a specific or different form is required by law. (d) Expenses. The Company will pay all Registration Expenses in -------- connection with the first five registrations effected pursuant to a request under Sec tion 3.1(a). The Registration Expenses in connection with each other registration, if any, requested under Section 3.1(a) shall be apportioned among the holders whose Registrable Securities are then being registered, on the basis of the respective amounts (by number of shares) of Registrable Securities then being registered. However, in the case of each registration requested under Section 3.1(a), the Company shall pay all amounts in respect of (A) any - allocation of salaries of personnel of the Company and its Subsidiaries or other general overhead expenses of the Company and its Subsidiaries or other expenses for the preparation of financial statements or other data normally prepared by the Com pany and its Subsidiaries in the ordinary course of its business, (B) - the expenses of any officers' and directors' liability insurance, (C) the - expenses and fees for listing the securities to be registered on each exchange on which similar securities issued by the Company are then listed or, if no such securities are then listed, on an exchange selected by the Company or on NASDAQ and (D) all fees associated with filings required to be made with the NASD - (including, if required, the fees and expenses of any "qualified independent underwriter" and its counsel). Notwithstanding the provisions of this Section 3.1(d) or of Section 3.2, each seller of Registrable Securities shall pay all Registration Expenses to the extent required to be paid by such seller by applicable law. (e) Inclusion of Other Securities. The Company shall not register ----------------------------- securities (other than Registrable Securities) for sale for the account of any Person other than the Company in any registration requested pursuant to Section 3.1(a) unless permitted to do so by the written consent of holders holding at least a majority (by number 6 of shares) of the Registrable Securities proposed to be sold in such registration which consent shall not unreasonably be withheld, it being understood and agreed that such holders shall not be deemed to be unreasonable if they in their good faith judgment believe that the inclusion of the securities of any such other Person will adversely affect the price or marketability of the shares such holders of Registrable Securities or the Company propose to sell in such registration. (f) Effective Registration Statement. A registration requested -------------------------------- pursuant to Section 3.1(a) will not be deemed to have been effected unless it has become effective for the period specified in Section 3.3(b). Notwithstanding the preceding sentence, a registration requested pursuant to Section 3.1(a) which does not become effective after the Company has filed a registration statement with respect thereto solely by reason of the refusal to proceed of the holder or holders of Registrable Securities requesting the registration shall be deemed to have been effected by the Company at the request of such holder or holders. (g) Pro Rata Allocation. If the holders of a majority (by number of ------------------- shares) of the Registrable Securities for which registration is being requested pursuant to Section 3.1(a) determine, based on consultation with the managing underwriters or, in an offering which is not underwritten, with an investment banker, that the number of securi ties to be sold in any such offering should be limited due to market conditions or otherwise, holders of Registrable Securities proposing to sell their securities in such registration shall share pro rata in the number of securities being offered (as determined by the holders holding a majority (by number of shares) of the Registrable Securities for which registration is being requested in consultation with the managing underwriters or investment banker, as the case may be) and registered for their account, such sharing to be based on the number of Registrable Securities as to which registration was requested by such holders and the number of securities that the Company proposed to sell for its own account in such offering, respectively. 3.2 Incidental Registration. If the Company at any time proposes to ----------------------- register any of its equity securities (as defined in the Exchange Act) under the Securities Act (other than pursuant to Section 3.1 or pursuant to a Special Registration), whether or not for sale for its own account, and the registration form to be used may be used for the registration of Registrable Securities, it will at such time give prompt written notice to all holders of Registrable Securities of its intention to do so and, upon the written request of any holder of Registrable Securities given to the Company within 30 days after the Company has given any such notice (which request shall specify the Registrable Securities intended to be disposed of by such holder and the intended method of disposition thereof), the Company will use its best efforts to effect the registration under 7 the Securities Act of all Registrable Securities which the Company has been so requested to register by the holders thereof, to the extent required to permit the disposition (in accordance with the intended methods thereof as aforesaid) of the Registrable Securities so to be registered, provided that: -------- (a) if such registration shall be in connection with the first public offering of Common Stock following the Merger, the Company shall not include any Registrable Securities in such proposed registration if the Board shall have deter mined, after consultation with the managing underwriters for such offering, that it is not in the best interests of the Company to include any Registrable Securities in such registration, provided that, if the Board makes such a determination, the Company shall -------- not include in such registration any securities not being sold for the account of the Company; (b) if, at any time after giving written notice of its intention to register any securities and prior to the effective date of the registration statement filed in connection with such registration, the Board shall determine for any reason not to register such securities, the Company may, at its election, give written notice of such determination to each holder of Registrable Securities that was previously notified of such registration and, thereupon, shall not register any Registrable Securities in connection with such registration (but shall nevertheless pay the Registration Expenses in connection therewith), without prejudice, however, to the rights of any holder or holders of Registrable Securities to request that a registration be effected under Section 3.1; and (c) if the Company shall be advised in writing by the managing underwriters (or, in connection with an offering which is not underwritten, by an investment banker) that in their or its opinion the number of securities requested to be included in such registration (whether by the Company, pursuant to this Section 3.2 or pursuant to any other rights granted by the Company to a holder or holders of its securities to request or demand such registration or inclusion of any such securities in any such registration) exceeds the number of such securities which can be sold in such offering, (i) the Company shall include in such registration the number (if any) of Registrable Securities so requested to be included which in the opinion of such underwriters or investment banker, as the case may be, can be sold and shall not include in such registration any securities (other than securities being sold by the Company, which shall have priority in being included in such registration) so requested to be included other than 8 Registrable Securities unless all Registrable Securities requested to be so included are included therein, and (ii) if in the opinion of such underwriters or investment banker, as the case may be, some but not all of the Registrable Securities may be so included, all holders of Registrable Securities requested to be included therein shall share pro rata in the number of shares of Registrable Secur ities included in such public offering on the basis of the number of Regis trable Securities requested to be included therein by such holders, provided that, in the case of a registration initially requested or demanded by a holder or holders of securities other than Registrable Securities, pursuant to a contractual registration obligation, the holders of the Registrable Securities requested to be included therein and the holders of such other securities shall share pro rata (based on the number of shares if the requested or demanded registration is to cover only Common Stock and, if not, based on the proposed offering price of the total number of securities included in such public offering requested to be included therein), and the Company shall so provide in any registration agreement hereinafter entered into with respect to any of its securities. The Company will pay all Registration Expenses in connection with each registration of Registrable Securities requested pursuant to this Section 3.2. No regis tration effected under this Section 3.2 shall relieve the Company from its obligation to effect registrations upon request under Section 3.1. 3.3 Registration Procedures. If and whenever the Company is required ----------------------- to use its best efforts to effect the registration of any Registrable Securities under the Securities Act as provided in Sections 3.1 and 3.2, the Company will promptly: (a) subject to clauses (x), (y) and (z) of Section 3.1(b), prepare and file with the Securities and Exchange Commission within 120 days, after receipt of a request pursuant to Section 3.1 a registration statement with respect to such securities, make all required filings with the NASD and use best efforts to cause such registration statement to become effective; (b) prepare and file with the Securities and Exchange Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith and such other documents as may be necessary to 9 keep such registration statement effective and to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement until such time as all of such securities have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof set forth in such registration statement, but in no event for a period of more than six months after such registration statement becomes effective; (c) furnish to counsel (if any) selected by the holders of a majority (by number of shares) of the Registrable Securities covered by such registration statement and to counsel for the underwriters in any underwritten offering copies of all documents proposed to be filed with the Securities and Exchange Commission (including all documents to be filed on a confidential basis) in connection with such registration, which documents will be subject to the review of such counsel; (d) furnish to each seller of such securities, without charge, such number of conformed copies of such registration statement and of each such amendment and supplement thereto (in each case, including all exhibits and documents filed therewith (other than those filed on a confidential basis), except that the Company shall not be obligated to furnish any seller of securities with more than two copies of such exhibits and documents), such number of copies of the prospectus included in such registration statement (including each preliminary prospectus and any summary prospectus) in conformity with the requirements of the Securities Act, and such other documents, as such seller may reasonably request in order to facilitate the disposition of the securities owned by such seller; (e) use its best efforts to register or qualify the securities covered by such registration statement under such other securities or blue sky laws of such jurisdictions as each seller shall request, and do any and all other acts and things which may be necessary or advisable to enable such seller to consummate the dis position in such jurisdictions of the securities owned by such seller, except that the Company shall not for any such purpose be required to qualify generally to do business as a foreign corporation in any jurisdiction wherein it is not so qualified, subject itself to taxation in any jurisdiction wherein it is not so subject, or take any action which would subject it to general service of process in any jurisdiction wherein it is not so subject; (f) furnish to each seller a signed counterpart, addressed to the sellers, of 10 (i) an opinion of counsel for the Company experienced in securities law matters, dated the effective date of the registration statement, and (ii) a "comfort" letter signed by the independent public accountants who have issued an audit report on the Company's financial statements included in the registration statement, subject to such seller having executed and delivered to the independent public accountants such certificates and documents as such accountants shall reasonably request, covering substantially the same matters with respect to the registration statement (and the prospectus included therein) and, in the case of such accountants' letter, with respect to events subsequent to the date of such financial statements, as are customarily covered in opinions of issuer's counsel and in accountants' letters delivered to the underwriters in underwritten public offerings of securities; (g) (i) notify each seller of any securities covered by such - registration statement if such registration statement, at the time it or any amendment thereto became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and, as promptly as practicable, prepare and file with the Securities and Exchange Commission a post-effective amendment to such registration statement and use best efforts to cause such post-effective amendment to become effective such that such registration statement, as so amended, shall not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and (ii) notify each holder of Registrable Securities cov -- ered by such registration statement, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, if the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and, as promptly as is practicable, prepare and furnish to such holder a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such securities, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circum stances under which they were made, not misleading; 11 (h) otherwise use its best efforts to comply with all applicable rules and regulations of the Securities and Exchange Commission, and make available to its security holders, as soon as reasonably practicable, an earnings statement of the Company complying with the provisions of Section 11(a) of the Securities Act and Rule 158 under the Securities Act; (i) notify each seller of any securities covered by such registration statement (i) when such registration statement, or any post-effective - amendment to such registration statement, shall have become effective, or any amendment of or supplement to the prospectus used in connection therewith shall have been filed, (ii) of any request by the Securities and -- Exchange Commission to amend such registration statement or to amend or supplement such prospectus or for additional information, (iii) of the --- issuance by the Securities and Exchange Commission of any stop order suspending the effectiveness of such registration statement or of any order preventing or suspending the use of any preliminary prospectus, and (iv) of -- the suspension of the qualification of such securities for offering or sale in any jurisdiction, or of the institution of any proceedings for any of such purposes; (j) use its best efforts (i) (A) to list such securities on any - - securities exchange on which the Common Stock is then listed or, if no Common Stock is then listed, on an exchange selected by the Company, if such listing is then permitted under the rules of such exchange or (B) if - such listing is not practicable or the Board determines that quotation as a NASDAQ National Market System security is preferable, to secure designation of such securities as a NASDAQ "national market system security" within the meaning of Rule 11Aa2-1 under the Exchange Act or, failing that, to secure NASDAQ authorization for such securities, and, without limiting the foregoing, to arrange for at least two market makers to register as such with respect to such securities with the NASD, (ii) to provide a transfer -- agent and registrar for such Registrable Securities not later than the effective date of such registration statement and (iii) to obtain a CUSIP --- number for the Registrable Securities; and (k) use every reasonable effort to obtain the lifting of any stop order that might be issued suspending the effectiveness of such registration statement or of any order preventing or suspending the use of any preliminary prospectus. The Company may require each seller of any securities as to which any registration is being effected to furnish to the Company such information regarding such seller and the distribution of such securities as the Company may from time to time 12 reasonably request in writing and as shall be required by law in connection therewith. Each such holder agrees to furnish promptly to the Company all information required to be disclosed in order to make the information previously furnished to the Company by such holder not materially misleading. The Company agrees not to file or make any amendment to any registration statement with respect to any Registrable Securities, or any amendment of or supplement to the prospectus used in connection therewith, which refers to any seller of any securities covered thereby by name, or otherwise identifies such seller as the holder of any securities of the Company, without the consent of such seller, such consent not to be unreasonably withheld, except that no such consent shall be required for any disclosure that is required by law. By acquisition of Registrable Securities, each holder of such Registrable Securities shall be deemed to have agreed that upon receipt of any notice from the Com pany pursuant to Section 3.3(g), such holder will promptly discontinue such holder's disposition of Registrable Securities pursuant to the registration statement covering such Registrable Securities until such holder shall have received, in the case of clause (i) of Section 3.3(g), notice from the Company that such registration statement has been amended, as contemplated by Section 3.3(g), and, in the case of clause (ii) of Section 3.3(g), copies of the supplemented or amended prospectus contemplated by Sec tion 3.3(g). If so directed by the Company, each holder of Registrable Securities will deliver to the Company (at the Company's expense) all copies, other than permanent file copies, in such holder's possession of the prospectus covering such Registrable Securities at the time of receipt of such notice. In the event that the Company shall give any such notice, the period mentioned in Section 3.3(b) shall be extended by the number of days during the period from and including the date of the giving of such notice to and in cluding the date when each seller of any Registrable Securities covered by such registration statement shall have received the copies of the supplemented or amended prospectus contemplated by Section 3.3(g). Notwithstanding any other provision of this Agreement, the parties hereto acknowledge that the Company shall have no obligation to prepare or file any registration statement prior to the time that financial information required to be included therein is available for inclusion therein. 3.4 Underwritten Offerings. The provisions of this Section 3.4 do ---------------------- not establish additional registration rights but instead set forth procedures applicable, in addi tion to those set forth in Sections 3.1 through 3.3, to any registration which is an underwritten offering. 13 (a) Underwritten Offerings Exclusive. Whenever a registration -------------------------------- requested pursuant to Section 3.1 is for an underwritten offering, only securities which are to be distributed by the underwriters may be included in the registration. (b) Underwriting Agreement. If requested by the underwriters for any ---------------------- underwritten offering by holders of Registrable Securities pursuant to a registration re quested under Section 3.1, the Company shall enter into an underwriting agreement with such underwriters for such offering, such agreement to be reasonably satisfactory in sub stance and form to the holders of a majority (by number of shares) of the Registrable Securities to be covered by such registration and to the underwriters and to contain such representations and warranties by the Company and such other terms and provisions as are customarily contained in agreements of this type, including, but not limited to, indemnities to the effect and to the extent provided in Section 3.7, provisions for the delivery of officers' certificates, opinions of counsel and accountants' "comfort" letters and hold-back arrangements. The holders of Registrable Securities to be distributed by such underwriters shall be parties to such underwriting agreement and may, at their option, require that any or all of the representations and warranties by, and the agreements on the part of, the Company to and for the benefit of such underwriters be made to and for the benefit of such holders of Registrable Securities and that any or all of the conditions precedent to the obligations of such underwriters under such underwriting agreement shall also be conditions precedent to the obligations of such holders of Registrable Securities. No such holder of Registrable Securities shall be required by the Company to make any representations or warranties to, or agreements with, the Company or the underwriters other than as set forth in Section 3.4(e) and representations, warranties or agreements regarding such holder and such holder's intended method of distribution. (c) Selection of Underwriters. Whenever a registration requested ------------------------- pursuant to Section 3.1 is for an underwritten offering, the holders of a majority of the shares requested to be included in such registration will have the right to select one or more underwriters to administer the offering at least one of which shall be an underwriter of nationally recognized standing reasonably satisfactory to the Company. If the Company at any time proposes to register any of its securities under the Securities Act for sale for its own account and such securities are to be distributed by or through one or more underwriters, the Company will have the right to select one or more underwriters to administer the offering at least one of which shall be an underwriter of nationally recognized standing. (d) Incidental Underwritten Offerings. Subject to the provisions of --------------------------------- the proviso to the first sentence of Section 3.2, if the Company at any time proposes to register 14 any of its equity securities under the Securities Act (other than pursuant to Section 3.1 or pursuant to a Special Registration), whether or not for its own account, and such securities are to be distributed by or through one or more underwriters, the Company will give prompt written notice to all holders of Registrable Securities of its intention to do so and, if requested by any holder of Registrable Securities, will arrange for such underwriters to include the Registrable Securities to be offered and sold by such holder among those to be distributed by such underwriters. The holders of Registrable Securities to be distributed by such underwriters shall be parties to the underwriting agreement between the Company and such underwriters and may, at their option, require that any or all of the representations and warranties by, and the other agreements on the part of, the Company to and for the benefit of such underwriters shall also be made to and for the benefit of such holders of Registrable Securities and that any or all of the conditions precedent to the obligations of the underwriters under such underwriting agreement shall also be conditions precedent to the obligations of such holders of Regis trable Securities. No such holder of Registrable Securities shall be required by the Company to make any representations or warranties to, or agreements with, the Company or the underwriters other than as set forth in Section 3.4(e) and representations, warranties or agreements regarding such holder and such holder's intended method of distribution. (e) Hold Back Agreements. If and whenever the Company proposes to -------------------- register any of its equity securities under the Securities Act, whether or not for its own account (other than pursuant to a Special Registration), or is required to use its best efforts to effect the registration of any Registrable Securities under the Securities Act pursuant to Section 3.1 or 3.2, each holder of Registrable Securities, if required by the managing underwriter, agrees by acquisition of such Registrable Securities not to effect (other than pursuant to such registration) any public sale or distribution, including, but not limited to, any sale pursuant to Rule 144 or Rule 144A, of any Registrable Securities, any other equity securities of the Company or any securities convertible into or exchangeable or exercisable for any equity securities of the Company during the 20 day period prior to or the 90 day period following the effective date of such registration, provided that each holder of Registrable Securities further agrees that, if required by the managing underwriter for such registered offering, he shall not effect any such public sale or distribution during the 180 day period following the effective date of such registration, and the Company agrees to cause each holder of any equity security, or of any security convertible into or exchangeable or exercisable for any equity security, of the Company purchased or acquired from the Company at any time other than in a Public Offering to enter into a similar agreement with the Company. The Company will continue to file timely and accurately all reports required by Sections 13(a) and 15(d) of the Exchange Act, until the earlier to occur of (x) the fifth anniversary of the date hereof 15 and (y) such time as the Common Stock is no longer registered under Section 12 of the Exchange Act. 3.5 Preparation; Reasonable Investigation. In connection with the ------------------------------------- preparation and filing of each registration statement registering Registrable Securities under the Securities Act, the Company will give the holders of such Registrable Securities so to be registered and their underwriters, if any, and their respective counsel and accountants the opportunity to participate in the preparation of such registration statement, each prospectus included therein or filed with the Securities and Exchange Commission, and each amendment thereof or supplement thereto, and will give each of them such access to its books and records and such opportunities to discuss the business of the Company with its officers and the independent public accountants who have issued audit reports on its financial statements as shall be necessary, in the opinion of such holders' and such underwriters' respective counsel, to conduct a reasonable investigation within the meaning of the Securities Act. 3.6 Other Registrations. If and whenever the Company is required to ------------------- use its best efforts to effect the registration of any Registrable Securities under the Securities Act pursuant to Section 3.1 or 3.2, and if such registration shall not have been withdrawn or abandoned, the Company shall not be obligated to and shall not file any registration statement with respect to any of its securities (including Registrable Securities) under the Securities Act (other than a Special Registration), whether of its own accord or at the request or demand of any holder or holders of such securities, until a period of six months shall have elapsed from the effective date of such previous registration. 3.7 Indemnification. --------------- (a) Indemnification by the Company. In the event of any registration ------------------------------ of any Registrable Securities under the Securities Act pursuant to Section 3.1 or 3.2, the Company will indemnify and hold harmless the seller of such securities, its directors, officers, and employees, each other person who participates as an underwriter, broker or dealer in the offering or sale of such securities and each other person, if any, who con trols such seller or any such participating person within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, against any and all losses, claims, damages or liabilities, joint or several, to which such seller or any such director, officer, employee, participating person or controlling person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue - statement of a fact contained in any registration statement under which such securities were registered under the Securities Act, any preliminary prospectus, final prospectus or summary prospectus contained therein or related thereto, or any amendment or supplement thereto, or (ii) any omission or alleged omission to -- state a fact required to be stated in any such registration statement, preliminary 16 prospectus, final prospectus, summary prospectus, amendment or supplement or necessary to make the statements therein not misleading; and the Company will reimburse such seller and each such director, officer, employee, participating person and controlling person for any legal or any other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, liability, action or pro ceeding, provided that the Company -------- shall not be liable in any such case to the extent that any such loss, claim, damage, liability or expense arises out of or is based upon an untrue statement or omission made in such registration statement, any such preliminary prospectus, final prospectus, summary prospectus, amendment or supplement in reliance upon and in conformity with written information furnished to the Company by such seller or participating person expressly for use in the preparation thereof and provided, further, that the Company shall not be liable -------- ------- in any such case to the extent that any such loss, claim, damage, liability or expense arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission in the prospectus, if such untrue statement or alleged untrue statement or omission or alleged omission is completely corrected in an amendment or supplement to the prospectus and the seller of Registrable Securities thereafter fails to deliver such prospectus as so amended or supplemented prior to or concurrently with the sale of Registrable Securities to the person asserting such loss, claim, damage, liability or expense after the Company had furnished such seller with a sufficient number of copies of the same or if the seller received notice from the Company of the existence of such untrue statement or alleged untrue statement or omission or alleged omission and the seller continued to dispose of Registrable Securities prior to the time of the receipt of either (A) an amended or sup plemented - prospectus which completely corrected such untrue statement or omission or (B) a - notice from the Company that the use of the existing prospectus may be resumed. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such seller or any such director, officer, employee, participating person or controlling person and shall survive the transfer of such securities by such sell er. (b) Indemnification by the Sellers. In the event of any registration ------------------------------ of any Registrable Securities under the Securities Act pursuant to Section 3.1 or 3.2, each of the prospective sellers of such securities, will indemnify and hold harmless the Company, each director of the Company, each officer of the Company who shall sign such registration statement, each other person who participates as an underwriter, broker or dealer in the offering or sale of such securities and each other person, if any, who controls the Company or any such participating person within the meaning of Section 15 17 of the Securities Act or Section 20 of the Exchange Act, against any and all losses, claims, damages or liabilities, joint or several, to which the Company or any such director, officer, employee, participating person or controlling person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise out of or are based upon (i) any untrue statement or alleged - untrue statement of a fact contained in any registration statement under which such securities were registered under the Securities Act, any preliminary prospectus, final prospectus or summary prospectus contained therein or related thereto, or any amendment or supplement thereto, if such statement or omission was made in reliance upon and in conformity with written information furnished to the Company by such seller expressly for use in the preparation of such registration statement, preliminary prospectus, final prospectus, summary prospectus, amendment or supplement or (ii) any omission or alleged omission to -- state a factwith respect to such seller required to be stated in any such registration statement, preliminary prospectus, final prospectus, summary prospectus, amendment or supplement or necessary to make the statements therein not misleading; and the seller will reimburse the Company and each such director, officer, employee, participating person and controlling person for any legal or any other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, liability, action or proceeding, provided that the liability of each such seller will be in -------- proportion to and limited to the net amount received by such seller (after deducting any underwriting discount and expenses) from the sale of Registrable Securities pursuant to such registration statement. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Company or any such director, officer, participating person or controlling person and shall survive the transfer of such securities by such seller. (c) Notices of Claims, etc. Promptly after receipt by an indemnified ---------------------- party of notice of the commencement of any action or proceeding involving a claim re ferred to in the preceding paragraphs of this Section 3.7, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party hereunder, give written notice to the latter of the commencement of such action, provided that the failure of any indemnified party -------- to give notice as provided therein shall not relieve the indemni fying party of its obligations under the preceding paragraphs of this Section 3.7. In case any such action is brought against an indemnified party, the indemnifying party will be entitled to participate therein and to assume the defense thereof, jointly with any other indemnifying party similarly notified to the extent that it may wish, with counsel rea sonably satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party for any legal or other expenses subsequently incurred by the latter in connection with the defense thereof, 18 provided that if such indemnified party and the indemnifying party reasonably - -------- determine, based upon advice of their respective independent counsel, that a conflict of interest may exist between the indemnified party and the indemnifying party with respect to such action and that it is advisable for such indemnified party to be represented by separate counsel, such indemnified party may retain other counsel, reasonably satisfactory to the indemnifying party, to represent such indemnified party, and the indemnifying party shall pay all reasonable fees and expenses of such counsel. No indemnifying party, in the defense of any such claim or litigation, shall, except with the consent of such indemnified party, which consent shall not be unreasonably withheld, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation. (d) Other Indemnification. Indemnification similar to that specified --------------------- in the preceding paragraphs of this Section 3.7 (with appropriate modifications) shall be given by the Company and each seller of Registrable Securities with respect to any required registration or other qualification of such Registrable Securities under any Federal or state law or regulation of governmental authority other than the Securities Act. (e) Other Remedies. If for any reason the foregoing indemnity is -------------- unavailable, or is insufficient to hold harmless an indemnified party, other than by reason of the exceptions provided therein, then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such losses, claims, damages, liabilities or expenses (i) in such - proportion as is appropriate to reflect the relative benefits received by the indemnifying party on the one hand and the indemnified party on the other from the offering of Registrable Securities (taking into account the portion of the proceeds of the offering realized by each such party) or (ii) if the alloca tion -- provided by clause (i) above is not permitted by applicable law, or provides a lesser sum to the indemnified party than the amount hereinafter calculated, in such proportion as is appropriate to reflect not only the relative benefits received by the indemnifying party on the one hand and the indemnified party on the other but also the relative fault of the indemnifying party and the indemnified party as well as any other relevant equitable considerations. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. No party shall be liable for contribution under this Section 3.7(e) except to the extent and under such circumstances as such party would have been liable to indemnify under this Section 3.7 if such indemnification were enforceable under applicable law. 19 (f) Officers and Directors. As used in this Section 3.7, the terms ---------------------- "officers" and "directors" shall include the partners of the holders of Registrable Securi ties which are partnerships and the trustees and beneficiaries of the holders of Registrable Securities which are trusts. 4. Miscellaneous. ------------- 4.1 Amendments and Waivers. This Agreement may be amended, and the ---------------------- Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company shall have obtained the written consent to such amendment, action or omission to act, of the holder or holders of at least 66% of the shares then constituting Registrable Securities provided that this Agreement may not be amended in a manner adversely affecting - -------- any holder of Registrable Securities which does not adversely affect all holders of Registrable Securities without the consent of such holder. Each holder of any Registrable Securities at the time or thereafter outstanding shall be bound by any consent authorized by this Section 5.1, whether or not such Registrable Securities shall have been marked to indicate such consent. No amendment , modification or discharge of this Agreement, and no waiver hereunder, shall be valid or binding unless set forth in writing. Any such waiver shall constitute a waiver only with respect to the specific matter described in such writing and shall in no way impair the rights of the party or parties granting such waiver in any other respect or at any other time. 4.2 Nominees for Beneficial Owners. In the event that any ------------------------------ Registrable Securities are held by a nominee for the beneficial owner thereof, the beneficial owner thereof may, at its election and unless notice is otherwise given to the Company by the record owner, be treated as the holder of such Registrable Securities for purposes of any request or other action by any holder or holders of Registrable Securities pursuant to this Agreement or any determination of any number or percentage of shares of Registrable Securities held by any holder or holders of Registrable Securities contemplated by this Agreement. If the beneficial owner of any Registrable Securities so elects, the Company may require assurances reasonably satisfactory to it of such owner's beneficial ownership of such Registrable Securities. 4.3 Successors, Assigns and Transferees. This Agreement shall be ----------------------------------- binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns. In addition, and whether or not any express assignment shall have been made, the provisions of this Agreement which are for the benefit of the parties hereto other than the Company shall also be for the benefit of and enforceable by any subsequent holder of any Registrable Securities, subject to the provisions respecting the 20 minimum numbers or percentages of shares of Registrable Securities required in order to be entitled to certain rights, or take certain actions, contained herein. 4.4 Notices. All notices and other communications required or ------- permitted to be given under this Agreement shall be in writing and shall be deemed to have been given if delivered personally or sent by certified or express mail, return receipt requested, postage prepaid, or by any recognized international equivalent of such delivery, to the Company, the Fund or the Manager, as the case may be, at the following addresses or to such other address as the Company, the Fund or the Manager, as the case may be, shall specify by notice to the others: (i) if to the Company, to it at: - Dynatech Corporation 3 New England Executive Park Burlington, Massachusetts 01803 Attention: General Counsel --------- (ii) if to the Manager or the Trusts, to the address of the Manager -- set forth on the signature page hereof. (iii) if to the Fund, to: --- The Clayton & Dubilier Private Equity Fund V Limited Partnership Foulkstone Plaza, Suite 102 1403 Foulk Road Wilmington, Delaware 19803 Attention: Joseph L. Rice, III --------- All such notices and communications shall be deemed to have been received on the date of delivery if delivered personally or on the third business day after the mailing thereof. Copies of any notice or other communication given under this Agreement shall also be given to: Clayton, Dubilier & Rice, Inc. 375 Park Avenue, 18th Floor New York, New York 10152 Attention: Joseph L. Rice, III --------- 21 and Debevoise & Plimpton 875 Third Avenue New York, New York 10022 Attention: Franci J. Blassberg, Esq. --------- and Hale and Dorr LLP 60 State Street Boston, MA 02109 Attention: Peter B. Tarr, Esq. --------- 4.5 No Inconsistent Agreements. The Company will not hereafter enter -------------------------- into any agreement with respect to its securities which is inconsistent with the rights granted to the holders of Registrable Securities by this Agreement. 4.6 Remedies; Attorneys' Fees. Each holder of Registrable ------------------------- Securities, in addition to being entitled to exercise all rights provided herein or granted by law, in cluding recovery of damages, will be entitled to specific performance of its rights under this Agreement. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of any provision of this Agreement and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate. 4.7 Stock Splits, etc. Each party hereto agrees that it will vote to ----------------- effect a stock split (forward or reverse, as the case may be) with respect to any Registrable Securities in connection with any registration of such Registrable Securities hereunder, or otherwise, if the managing underwriter shall advise the Company in writing (or, in connection with an offering that is not underwritten, if an investment banker shall advise the Company in writing) that in their or its opinion such a stock split would facilitate or increase the likelihood of success of the offering. Each party hereto agrees that any number of shares of Common Stock referred to in this Agreement shall be equitably ad justed to reflect any stock split, stock dividend, stock combination, recapitalization or similar transaction. 4.8 Term. This Agreement shall be effective as of the date hereof ---- and shall continue in effect thereafter until the earliest of (a) its - termination by the consent of the parties hereto or their respective successors in interest, (b) the date on which no - 22 Registrable Securities remain outstanding, (c) the dissolution, liquidation or - winding up of the Company and (d) the tenth anniversary of the date hereof. - 4.9 Severability. If any provision of this Agreement is inoperative ------------ or unenforceable for any reason, such circumstances shall not have the effect of rendering the provision in question inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions herein contained invalid, inoperative, or unenforceable to any extent whatsoever. The invalidity of any one or more phrases, sentences, clauses, Sections or subsections of this Agreement shall not affect the remaining portions of this Agreement. 4.10 Headings. The headings contained in this Agreement are for -------- purposes of convenience only and shall not affect the meaning or interpretation of this Agreement. 4.11 Counterparts. This Agreement may be executed in several ------------ counterparts, each of which shall be deemed an original and all of which together constitute one and the same instrument. 4.12 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND ------------- CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ITS PRINCIPLES OR RULES OF CONFLICT OF LAWS TO THE EXTENT SUCH PRINCIPLES OR RULES WOULD REQUIRE OR PERMIT 4.13 No Third Party Beneficiaries. Except as provided in Sections ---------------------------- 3.7 and 5.3, nothing in this Agreement shall confer any rights upon any person or entity other than the parties hereto, each such party's respective successors and permitted assigns. 4.14 Consent to Jurisdiction. Each party irrevocably submits to the ----------------------- exclusive jurisdiction of (a) the Supreme Court of the State of New York, New - York County, and (b) the United States District Court for the Southern District - of New York, for the purposes of any suit, action or other proceeding arising out of this Agreement or any transaction contemplated hereby (and agrees not to commence any such suit, action or proceeding except in such courts). Each party further agrees that service of any process, summons, notice or document by U.S. registered mail to such party's respective address set forth above shall be effective service of process for any such suit, action or proceeding. Each party irrevocably and unconditionally waives any objection to the laying of venue of any such suit, action or proceeding in (i) the Supreme Court of the - 23 State of New York, New York County, and (ii) the United States District Court -- for the Southern District of New York, that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. 4.1 Waiver of Jury Trial. Each party hereby waives, to the fullest -------------------- extent permitted by applicable law, any right it may have to a trial by jury in respect of any suit, action or proceeding arising out of this Agreement or any transaction contemplated hereby. Each party (a) certifies that no - representative, agent or attorney of any other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waiver and (b) acknowledges that it and the other - parties have been induced to enter into the Agreement by, among other things, the mutual waivers and certifications in this Section 5.15. IN WITNESS WHEREOF, each of the undersigned has executed this Agreement or caused this Agreement to be executed on its behalf as of the date first written above. DYNATECH CORPORATION By: /s/ Allan M. Kline ------------------ Name: Allan M. Kline Title: Corporate Vice President, Chief Financial Officer and Treasurer CLAYTON, DUBILIER & RICE FUND V LIMITED PARTNERSHIP By: CD&R Associates V Limited Partnership, its general partner By: CD&R Investment Associates II, Inc., a general partner By: /s/ Joseph L. Rice, III ----------------------- Name: Joseph L. Rice, III Title: Chairman 24 MR. JOHN F. RENO /s/ John F. Reno ---------------- Address: 31 Prospect Street Winchester, MA 01890 THE JOHN F. RENO 1997 QUALIFIED ANNUITY TRUST UNDER TRUST AGREEMENT DATED AS OF THE 28TH DAY OF NOVEMBER, 1997 By: /s/ John F. Reno ---------------- Name: John F. Reno Title: Trustee By: /s/ John D. Hamilton -------------------- Name: John D. Hamilton, Jr. Title: Trustee THE SUZANNE M. RENO 1997 QUALIFIED ANNUITY TRUST UNDER TRUST AGREEMENT DATED AS OF THE 28TH DAY OF NOVEMBER, 1997 By: /s/ John F. Reno ---------------- Name: John F. Reno Title: Trustee By: /s/ John D. Hamilton -------------------- Name: John D. Hamilton, Jr. Title: Trustee 25 EX-10.18 16 ASSIGNMENT AND ASSUMPTION AGREEMENT EXHIBIT 10.18 CONFORMED COPY -------------- FIRST ASSIGNMENT AND ASSUMPTION AGREEMENT FIRST ASSIGNMENT AND ASSUMPTION AGREEMENT, dated as of May 21, 1998 (this "Agreement"), between Dynatech Corporation, a Massachusetts corporation (the "Assignor") and Telecommunications Techniques Co., LLC, a Delaware limited liability company (the "Assignee"). WHEREAS, the Assignor is the sole shareholder of the Assignee; and WHEREAS, the Assignor wishes to transfer certain assets to the Assignee and the Assignee has agreed to assume certain liabilities from Assignor. NOW, THEREFORE, in consideration of the mutual promises made herein and the mutual benefits to be derived therefrom, the parties hereto agree as follows: 1. Assignment. Assignor hereby transfers, conveys, assigns and ---------- delivers to Assignee, Assignor's entire right, title and interest in and to all of the assets of Assignor reflected on the balance sheet of Assignor, other than Assignor's right, title and interest in and to shares of capital stock and other equity security interests in the subsidiaries of Assignor. 2. Assumption of Liabilities. Assignee hereby irrevocably and ------------------------- unconditionally assumes and agrees to pay, honor and discharge, when due and otherwise in accordance with the relevant governing agreements and instruments, all of the obligations and liabilities of Assignor reflected on the balance sheet of Assignor. 3. Further Assurances. Each Assignment and Assignee hereby agrees ------------------ that, from time to time at the other's request, it will execute and deliver such further instruments of conveyance, transfer and assignment or of assumption and release, as the case may be, and will take such action as the other may reasonably request in order to more fully give effect to and implement the transactions contemplated by this Agreement. 4. Miscellaneous. This Agreement shall be binding upon and shall ------------- inure to the benefit of the parties hereto and their respective successors and assigns. This Agreement may be modified only by an instrument executed by each of the parties hereto. This Agreement shall be construed, performed and enforced in accordance with the laws of the State of New York. The headings in this Agreement are for purposes of reference only and shall not limit or otherwise affect the meaning hereof. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which shall constitute one instrument. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized officers as of the date first above written. DYNATECH CORPORATION By /s/ John F. Reno ---------------- Name: John F. Reno Title: Chairman, President and Chief Executive Officer TELECOMMUNICATIONS TECHNIQUES CO., LLC By: Dynatech Corporation, its sole member By /s/ John F. Reno ---------------- Name:John F. Reno Title: Chairman, President and Chief Executive Officer of Dynatech Corporation, the Sole Member of Telecommunications Techniques Co., LLC EX-10.19 17 PURCHASE AGREEMENT DATED MAY 14, 1998 Exhibit 10.19 [Execution Copy] $275,000,000 DYNATECH CORPORATION TTC MERGER CO. LLC (A COMPANY TO BE MERGED INTO TELECOMMUNICATIONS TECHNIQUES CO., LLC) 9 3/4% SENIOR SUBORDINATED NOTES DUE 2008 PURCHASE AGREEMENT ------------------ May 14, 1998 Credit Suisse First Boston Corporation J.P. Morgan Securities Inc. c/o Credit Suisse First Boston Corporation Eleven Madison Avenue, New York, N.Y. 10010-3629 Dear Sirs: 1. Introductory. Dynatech Corporation, a Massachusetts corporation ("Dynatech" or the "Company") and its wholly owned subsidiary TTC Merger Co. LLC, a Delaware limited liability company ("TTC Merger Co" and, together with Dynatech, the "Initial Issuers") propose, subject to the terms and conditions stated herein, to issue and sell to Credit Suisse First Boston Corporation ("CSFBC") and J.P. Morgan Securities Inc. (the "Initial Purchasers") U.S.$275,000,000 principal amount of its 9 3/4% Senior Subordinated Notes Due 2008 (the "Notes") to be issued under an indenture dated as of May 21, 1998 (the "Indenture") among Dynatech, TTC Merger Co, and State Street Bank and Trust Company, a Massachusetts trust company, as Trustee (the "Trustee"). Immediately after the issuance of the Notes on the Closing Date (as defined in Section 3 below), (i) TTC Merger Co will be merged into Telecommunications Techniques Co., LLC, a Delaware limited liability company to be formed prior to the Closing Date (as defined below) ("TTC"), with TTC as the surviving company (the "Second Merger"), (ii) TTC will succeed to and assume all of the obligations under the Indenture and the Notes and (iii) Dynatech will be released from its obligations as a primary obligor under the Indenture and the Notes. Dynatech will guarantee the monetary obligations of TTC Merger Co and TTC under the Indenture, on a senior subordinated basis (the "Parent Guarantee"). On the Closing Date TTC, Dynatech and the trustee will enter into a supplement to the Indenture, dated as of the Closing Date (the "First Supplemental Indenture") whereby TTC will confirm its assumption of all of the obligations under the Indenture and Dynatech will confirm its obligations under the Parent Guarantee. As a result of the Second Merger and other transactions related thereto, TTC will be a wholly-owned subsidiary of Dynatech and the direct or indirect parent company of all of Dynatech's other active subsidiaries, including Itronix Corporation, a Washington corporation ("Itronix"), Industrial Computer Source Inc., a California corporation ("ICS"), AIRSHOW Inc., a California corporation ("AIRSHOW") and da Vinci Systems, Inc., a Florida corporation ("da Vinci"). TTC, Itronix ICS, AIRSHOW and da Vinci are collectively referred to as the "Subsidiaries" of the Company. The Notes have not been registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and may be offered and sold only (1) outside the United States in reliance on Regulation S under the Securities Act ("Regulation S") and (2) in the United States to qualified institutional buyers (as defined in Rule 144A under the Securities Act) in reliance on Rule 144A under the Securities Act ("Rule 144A") (such Notes to be represented by one or more global Notes in registered form). Holders (including the Initial Purchasers and their direct and indirect transferees) of the Notes will be entitled to the benefits of a Registration Rights Agreement, substantially in the form attached hereto as Annex I (the "Registration Rights Agreement"), pursuant to which Dynatech and TTC each will agree to use its reasonable best efforts to file with the Securities and Exchange Commission (the "Commission") (i) a registration statement under the Securities Act (the "Exchange Offer Registration Statement") registering an issue of senior subordinated notes of TTC (including the Parent Guarantee) (the "Exchange Securities") which are identical in all material respects to the Notes (except that the Exchange Securities will not contain terms with respect to transfer restrictions or with respect to additional interest) and (ii) under certain circumstances, a shelf registration statement pursuant to Rule 415 under the Securities Act (the "Shelf Registration Statement"). 2. Representations and Warranties of the Company and TTC Merger Co. Each Initial Issuer represents and warrants to the Initial Purchasers that: (a) A preliminary offering circular and an offering circular relating to the Notes has been prepared by the Company. Such preliminary offering circular and offering circular, as supplemented as of the date of this Agreement, are hereinafter collectively referred to as the "Offering Circular". On the date of this Agreement, the Offering Circular does not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The preceding sentence does not apply to statements in or omissions from the Offering Circular based upon written information furnished to the Company by any Initial Purchaser through CSFBC specifically for use therein, it being understood and agreed that the only such information is that described as such in Section 7(b). (b) When the Notes are delivered and paid for pursuant to this Agreement on the Closing Date, the Indenture will have been duly authorized, executed and delivered by the Initial Issuers, the First Supplemental Indenture will have been duly authorized, and (on the Closing Date after the consummation of the Second Merger) executed and delivered by Dynatech and TTC, such Notes will have been duly authorized, executed, issued and delivered by the Initial Issuers and will conform to the description thereof contained in the Offering Circular in all material respects, and the Indenture and such Notes will constitute valid and legally binding obligations of 2 each Initial Issuer (and, upon the consummation of the Second Merger and the due authorization of the First Supplemental Indenture by TTC and the execution and delivery thereof by each party thereto, of TTC), enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. (c) The Company has been duly incorporated and is a validly existing corporation in good standing under the laws of the State of Massachusetts, with corporate power and authority to own its properties and conduct its business as described in the Offering Circular; and the Company is duly qualified to do business as a foreign corporation in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification, except in such jurisdiction in which the failure to so qualify would not reasonably be expected to have a material adverse effect on the business, properties, results of operations or condition (financial or other) of the Company and the Company's consolidated subsidiaries taken as a whole (a "Material Adverse Effect"); TTC Merger Co has been and TTC, on or prior to the Closing Date, will be, duly organized and is or in the case of TTC will be a validly existing limited liability company in good standing under the laws of the State of Delaware, with limited liability company power and authority to own its properties and conduct its business as described in the Offering Circular; and each of TTC Merger Co and TTC is or will be on or prior to the Closing Date duly qualified to do business as a foreign corporation in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification (except as would not reasonably be expected to have a Material Adverse Effect). (d) Each Subsidiary of the Company (other than TTC) has been duly incorporated and is validly existing in good standing under the laws of the jurisdiction of its incorporation or organization, with corporate power and authority to own its properties and conduct its business as described in the Offering Circular; and each such Subsidiary of the Company is duly qualified to do business as a foreign corporation in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification (except as would not reasonably be expected to have a Material Adverse Effect); all of the issued and outstanding capital stock of each such Subsidiary of the Company has been duly authorized and validly issued and is fully paid and nonassessable; and the capital stock of each such Subsidiary is owned by the Company, directly or through subsidiaries, free and clear of any lien, encumbrance, defect, charge, security interest, restriction upon voting or transfer or any other claim of any third party, except as (i) would not reasonably be expected to have a Material Adverse Effect or (ii) may arise pursuant to the Senior Credit Facility (as defined in the Offering Circular) in connection with the transactions contemplated thereunder. (e) This Agreement has been duly authorized, executed and delivered by each Initial Issuer and on the Closing Date, an agreement or instrument (the "Purchase Agreement Supplement") by which TTC will assume all obligations and acquire all 3 rights of TTC Merger Co under this Agreement and become a party to this Agreement will be duly authorized, executed and delivered by TTC. (f) On the Closing Date, the Registration Rights Agreement will have been duly authorized, executed and delivered by Dynatech and TTC and, upon such execution and delivery, will constitute the valid and legally binding obligation of Dynatech and TTC, enforceable in accordance with its terms, subject to (i) bankruptcy, insolvency, fraudulent transfer, reorganization moratorium and similar laws relating to or affecting creditors' rights and to general equitable principles and (ii) limitations with respect to enforceability of provisions providing for indemnification or contribution, arising under applicable law (including court decisions) or public policy. (g) The Offering Circular, as of its respective date, contains all of the information that, if requested by a prospective purchaser of the Notes, would be required to be provided to such prospective purchaser pursuant to Rule 144A(d)(4) under the Securities Act. (h) No consent, approval, authorization, or order of, or filing, registration or qualification with, any governmental agency or body or any court or arbitrator is required for the consummation of the transactions contemplated by this Agreement in connection with the issuance and sale of the Notes by the Company, TTC Merger Co or TTC and the Exchange Securities by TTC, except for (i) such consents, approvals, authorizations, filings, registrations or qualifications as may be required to be obtained or made under the Securities Act, the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act") and applicable state securities laws as provided in the Registration Rights Agreement, (ii) such consents, approvals, authorizations, orders or filings as have been made or obtained, or (iii) as disclosed in the Offering Circular. (i) The execution, delivery and performance of this Agreement, the Registration Rights Agreement, the Indenture and the First Supplemental Indenture (collectively, the "Transaction Documents"), and the issuance, authentication, sale and delivery of the Notes and compliance with the terms and provisions thereof (A) will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its Subsidiaries pursuant to, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound or to which any of the property or assets of the Company or any of its Subsidiaries is subject, (B) will not result in any violation of the provisions of the charter or by-laws, or equivalent constituent documents, of the Company or any of its Subsidiaries and (C) will not result in the violation of the provisions of any statute or any judgment, order, decree, rule or regulation of any court or arbitrator or governmental agency or body having jurisdiction over the Company or any of its Subsidiaries or any of their respective properties or assets, except in each case under clauses (A), (B) and (C) where such breach, violation, default, lien, charge or encumbrance would not reasonably be expected to have a Material Adverse Effect; and, on the Closing Date, each of the 4 Company, TTC Merger Co and TTC will have corporate or limited liability company power and authority (i) to execute and deliver the Transaction Documents to which it is a party, (ii) (in the case of the Initial Issuers) to authorize, issue, sell and (in the case of the Company) guarantee the Notes as contemplated by this Agreement and (iii) (in the case of TTC) to succeed to and assume all of the primary obligations of TTC Merger Co and the Company under the Indenture and the Notes as contemplated by the First Supplemental Indenture. (j) Each Transaction Document conforms in all material respects to the descriptions thereof contained in the Offering Circular. (k) Except as disclosed in the Offering Circular, the Company and its Subsidiaries have or (in the case of TTC) on the Closing Date will have good and marketable title to all real properties and good and valid title to all other properties and assets owned by them, in each case free from liens, encumbrances and defects not permitted by the Indenture, except for such failures to have such title and for such liens, encumbrances and defects as would not reasonably be expected to have a Material Adverse Effect; and except as disclosed in the Offering Circular, the Company and its Subsidiaries hold any leased real or personal property under valid and enforceable leases, except as would not reasonably be expected to have a Material Adverse Effect. (l) The Company and its Subsidiaries possess or (in the case of TTC) on the Closing Date will possess adequate licenses, certificates, authorities or permits issued by and have made all material declarations and filings with, the appropriate governmental agencies or bodies necessary or desirable for the ownership of their properties or to conduct the business now operated by them except for any that must be transferred or reapplied for as a result of the merger of any entity with TTC or the merger of TTC and TTC Merger Co, and except as would not reasonably be expected to have a Material Adverse Effect and have not received any notice of proceedings relating to the revocation or modification of any such license, certificate, authority or permit that would individually or in the aggregate reasonably be expected to have a Material Adverse Effect. (m) No labor dispute with the employees of the Company or any Subsidiary thereof exists or, to the best knowledge of the Company or TTC Merger Co is contemplated or threatened that would reasonably be expected to have a Material Adverse Effect. (n) Except as disclosed in the Offering Circular, (i) the Company and its Subsidiaries own, possess or can acquire or (in the case of TTC) on the Closing Date will own, possess, or be able to acquire all adequate rights to use all material trademarks, service marks, trademark registrations, service mark registrations, trade names and other rights to inventions, know-how, patents, patent applications, copyrights, licenses and other intellectual property, including (without limitation) trade secrets and other unpatented and/or patentable proprietary or confidential information, systems or procedures, (collectively, "intellectual property rights") necessary to 5 conduct the business now operated by them, or presently employed by them, except to the extent that the failure to own, possess or acquire such adequate rights would not reasonably be expected to have a Material Adverse Effect and (ii) no claim has been asserted and is pending claiming that the intellectual property rights infringe on or conflict with asserted rights of others that would individually or in the aggregate reasonably be expected to have a Material Adverse Effect. (o) Except as disclosed in the Offering Circular, neither the Company nor any of its Subsidiaries is in violation of any applicable statute, rule, regulation, decision or order of any governmental agency or body or any court, domestic or foreign, relating to the use, disposal or release of hazardous or toxic substances or relating to the protection or restoration of the environment or human exposure to hazardous or toxic substances (collectively, "environmental laws"), owns or operates any real property contaminated with any substance that is subject to any applicable environmental laws, is liable for any off-site disposal or contamination pursuant to any applicable environmental laws, or is subject to any claim relating to any applicable environmental laws, which violation, contamination, liability or claim would individually or in the aggregate reasonably be expected to have a Material Adverse Effect. (p) Except as disclosed in the Offering Circular, there are no pending actions, suits or proceedings against or affecting the Company, any of its subsidiaries or any of their properties that would individually or in the aggregate reasonably be expected to have a Material Adverse Effect or would materially and adversely affect the ability of the Company, TTC Merger Co or (after the Second Merger) TTC to perform their obligations under the Indenture (as supplemented by the First Supplemental Indenture in the case of the Company and TTC) or this Agreement. (q) The historical consolidated financial statements (including the related notes) contained in the Offering Circular have been prepared in accordance with generally accepted accounting principles in the United States consistently applied throughout the periods covered thereby except as disclosed in the notes thereto and fairly present in all material respects the financial position of the entities purported to be covered thereby at the respective dates indicated and the results of their operations and their cash flows for the respective periods indicated; the assumptions used in preparing the pro forma financial statements included in the Offering Circular provide a reasonable basis for presenting the estimated effects of the transactions or events described therein; and the related pro forma adjustments give appropriate effect to those assumptions, and the pro forma columns therein reflect the proper application of those adjustments to the corresponding historical financial statement amounts. (r) Except as disclosed in the Offering Circular, since the date of the latest audited financial statements included in the Offering Circular, there has not been any development or event that would reasonably be expected to have a Material Adverse Effect. 6 (s) Neither of the Initial Issuers is and TTC will not be an open-end investment company, unit investment trust or face-amount certificate company that is required to be registered under Section 8 of the United States Investment Company Act of 1940, as amended (the "Investment Company Act"); and neither Initial Issuer is and, after giving effect to the offering and sale of the Notes and the application of the proceeds thereof as described in the Offering Circular, neither Initial Issuer nor TTC will be an "investment company" as defined in the Investment Company Act that is required to be registered as such thereunder. (t) No securities of the Initial Issuers of the same class (within the meaning of Rule 144A(d)(3) under the Securities Act) as the Notes are listed on any national securities exchange registered under Section 6 of the Exchange Act or quoted in a U.S. automated inter-dealer quotation system. (u) The offer and sale of the Notes by the Initial Issuers to the Initial Purchasers in the manner contemplated by this Agreement will be exempt from the registration requirements of the Securities Act by reason of Section 4(2) thereof and Regulation S thereunder; and it is not necessary to qualify the Indenture in respect of the Notes under the United States Trust Indenture Act; provided that the foregoing representation and warranty assumes the accuracy of the representations, warranties and agreements of the Initial Purchasers contained in Section 4 hereof. (v) Neither of the Initial Issuers, nor any of their affiliates, nor any person acting on their behalf (i) has, within a six-month period prior to the date hereof, offered or sold in the United States or to any U.S. person (as such term is defined in Regulation S) the Notes or any security of the same class or series as the Notes or (ii) has offered or will offer or sell the Notes (A) in the United States by means of any form of general solicitation or general advertising within the meaning of Rule 502(c) under the Securities Act or (B) with respect to any securities sold in reliance on Rule 903 of Regulation S, by means of any directed selling efforts within the meaning of Rule 902(c) of Regulation S. Each of the Initial Issuers, any of their affiliates or any person acting on their behalf has complied and will comply with the offering restrictions requirement of Regulation S. The Initial Issuers and TTC have not entered and will not enter into any contractual arrangement with respect to the distribution of the Notes except for this Agreement prior to its termination. (w) On the Closing Date, each of the Company, TTC Merger Co and TTC (immediately after and giving effect to the issuance and assumption of the Notes and to the other transactions related thereto as described in the Offering Circular) will be Solvent. As used in this paragraph, the term "Solvent" means, with respect to a particular entity and to a particular date, that on such date (a) on a pro forma basis, the present fair market value (or present fair saleable value) of such entity's assets is not less than the Company's probable liabilities (including contingent liabilities); (b) such entity should be able to pay its debts as they become absolute and mature; and (c) the capital remaining in such entity would not be unreasonably small for the business in which such entity is engaged after giving due consideration to the prevailing practice in the industry in which such entity is engaged. In computing the 7 amount of such contingent liabilities at any time, it is intended that such liabilities will be computed at the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability. (x) Neither the Company nor any of its Subsidiaries is a party to any contract, agreement or understanding with any person that would give rise to a valid claim against the Initial Purchasers for a brokerage commission, finder's fee or like payment in connection with the offering and sale of the Notes, other than the fees payable to the Initial Purchasers in connection with the offer and sale of the Notes. (y) The Initial Issuers, TTC and their affiliates have not taken and will not take, directly or indirectly, any action prohibited by Regulation M under the Exchange Act in connection with the offering of the Notes. (z) Except as disclosed in the Offering Circular, the proceeds to the Initial Issuers from the offering of the Notes will not be used to purchase or carry any security. (aa) Neither the Initial Issuers nor any of the Subsidiaries is (i) in violation of its charter or by-laws, (ii) in default in any material respect, and no event has occurred which, with notice or lapse of time or both, would constitute such a default, in the due performance or observance of any term, covenant or condition contained in any material indenture, mortgage, deed of trust, loan agreement or other material agreement or instrument to which it is a party or by which it is bound or to which any of its property or assets is subject or (iii) in violation in any material respect of any law, ordinance, governmental rule, regulation or court decree to which it or its property or assets may be subject, except in each case of clauses (i), (ii) and (iii) above, as would not reasonably be expected to have a Material Adverse Effect. 3. Purchase, Sale and Delivery of Notes. On the basis of the representations, warranties and agreements herein contained, but subject to the terms and conditions herein set forth, the Company and TTC Merger Co agree to sell to the Initial Purchasers, and the Initial Purchasers agree, severally and not jointly, to purchase from the Company and TTC Merger Co, at a purchase price of (x) 97% of the principal amount thereof plus (y) accrued interest from May 21, 1998 to the Closing Date (as hereinafter defined) the respective principal amounts of Notes set forth opposite the names of the Initial Purchasers in Schedule A hereto. The Company and TTC Merger Co will deliver the Notes to CSFBC for the accounts of the Initial Purchasers against payment of the purchase price in Federal (same day) funds by wire transfer to an account at a bank acceptable to CSFBC drawn to such order as the Company may direct, at the office of Debevoise & Plimpton, at 10:00 A.M., New York time, on May 21, 1998 or at such other time not later than seven full business days thereafter as CSFBC and the Company determine, such time being herein referred to as the "Closing Date." The Notes so to be delivered will be in definitive fully registered, global book entry form, and will be made available for checking and packaging at the above office of Debevoise & Plimpton on the Closing Date. 8 4. Representations by Initial Purchasers; Resale by Initial Purchasers. (a) Each Initial Purchaser severally, and not jointly, represents and warrants to the Company that it is an "accredited investor" within the meaning of Regulation D under the Securities Act. (b) Each Initial Purchaser severally acknowledges that the Notes have not been registered under the Securities Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except in accordance with Regulation S or pursuant to an exemption from the registration requirements of the Securities Act. Each Initial Purchaser severally represents and agrees that it has offered and sold the Notes and will offer and sell the Notes only in accordance with Rule 903 or Rule 144A under the Securities Act ("Rule 144A"). Accordingly, neither such Initial Purchaser nor its affiliates, nor any persons acting on its or their behalf, has engaged or will engage in any directed selling efforts with respect to the Notes, and such Initial Purchaser, its affiliates and all persons acting on its or their behalf has complied and will comply with the offering restrictions requirement of Regulation S. Each Initial Purchaser severally agrees that, at or prior to confirmation of sale of the Notes, other than a sale pursuant to Rule 144A, such Initial Purchaser will have sent to each distributor, dealer or person receiving a selling concession, fee or other remuneration that purchases the Notes from it during the distribution compliance period a confirmation or notice to substantially the following effect: "The Notes covered hereby have not been registered under the U.S. Securities Act of 1933 (the "Securities Act") and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons as part of their distribution at any time except in either case in accordance with Regulation S (or Rule 144A if available) under the Securities Act. Terms used above have the meanings given to them by Regulation S." Terms used in this subsection (b) have the meanings given to them by Regulation S. (c) Each Initial Purchaser severally, and not jointly, agrees that it and each of its affiliates has not entered and will not enter into any contractual arrangement with respect to the distribution of the Notes except for any such arrangements with the other Initial Purchaser or affiliates of the other Initial Purchaser or with the prior written consent of the Company. (d) Each Initial Purchaser severally, and not jointly, agrees that it and each of its affiliates will not offer or sell the Notes in the United States by means of any form of general solicitation or general advertising, within the meaning of Rule 502(c) under the Securities Act, including, but not limited to (i) any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over television or radio, or (ii) any seminar or meeting whose attendees have been invited by any general solicitation or general advertising. Each Initial Purchaser severally agrees, with respect to resales made in reliance on Rule 144A of any of the Notes, to deliver either with the confirmation of such resale or otherwise prior to settlement of such resale a notice to the effect that the resale of such Notes has been made in reliance upon the exemption from the registration requirements of the Securities Act provided by Rule 144A. 9 (e) Prior to or simultaneously with any confirmation of sale to any purchaser in the initial resale, each Initial Purchaser will deliver to each such purchaser of the Notes in connection with its original distribution of the Notes a copy of the Offering Circular as amended and supplemented at the date of such delivery. (f) Each of the Initial Purchasers severally represents and agrees that (i) it has not offered or sold and prior to the date six months after the date of issue of the Notes will not offer or sell any Notes to persons in the United Kingdom except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995; (ii) it has complied and will comply with all applicable provisions of the Financial Services Act 1986 with respect to anything done by it in relation to the Notes in, from or otherwise involving the United Kingdom; and (iii) it has only issued or passed on and will only issue or pass on in the United Kingdom any document received by it in connection with the issue of the Notes to a person who is of a kind described in Article 11(3) of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996 or is a person to whom such document may otherwise lawfully be issued or passed on. 5. Certain Agreements of the Company and TTC Merger Co. Each of the Initial Issuers, jointly and severally, agrees with the Initial Purchasers that: (a) The Initial Issuers will advise CSFBC promptly of any proposal to amend or supplement the Offering Circular and will not effect such amendment or supplementation without CSFBC's consent (which consent shall not be reasonably withheld). If, at any time prior to the completion of the resale of the Notes by the Initial Purchasers any event occurs as a result of which the Offering Circular as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it is necessary at any such time to amend or supplement the Offering Circular to comply with any applicable law, the Initial Issuers promptly will notify CSFBC of such event and promptly will prepare, at their own expense, an amendment or supplement which will correct such statement or omission or effect such compliance. Neither CSFBC's consent to, nor the Initial Purchasers' delivery to offerees or investors of, any such amendment or supplement shall constitute a waiver of any of the conditions set forth in Section 6. (b) The Initial Issuers will furnish to the Initial Purchasers or their counsel copies of any preliminary offering circular, the Offering Circular and all amendments and supplements to such documents, in each case as soon as available and in such quantities as the Initial Purchasers or their counsel reasonably request. At any time when the Notes are outstanding and are "restricted securities" within the meaning of Rule 144(a)(3) under the Securities Act and the Company is not subject to Section 13 or 15(d) of the Exchange Act, the Initial Issuers will promptly furnish or cause to be furnished to CSFBC (and, upon request, to the other Initial Purchasers) and, upon 10 request of holders and prospective purchasers of the Notes, to such holders and purchasers, copies of the information required to be delivered to holders and prospective purchasers of the Notes pursuant to Rule 144A(d)(4) under the Securities Act (or any successor provision thereto) in order to permit compliance with Rule 144A in connection with resales by such holders of the Notes. The Initial Issuers will pay the expenses of printing and distributing to the Initial Purchasers and their counsel all such documents. (c) The Initial Issuers will arrange for the qualification of the Notes for sale and the determination of their eligibility for investment under the laws of such states in the United States as CSFBC reasonably designates and will continue such qualifications in effect so long as reasonably required for the initial resale of the Notes by the Initial Purchasers; provided that the Initial Issuers will not be required to qualify as a foreign corporation or to file a general consent to service of process in any such state or other jurisdiction or to subject themselves to taxation in respect of doing business in any state or other jurisdiction in which they are not otherwise so subject. (d) During the period of two years after the Closing Date, the Company will, upon request, make available to CSFBC, and the other Initial Purchasers and any holder of Notes a copy of the restrictions on transfer applicable to the Notes. (e) During the period of two years after the Closing Date, the Company will not, and will not permit any of its affiliates (as defined in Rule 144 under the Securities Act) to, resell any of the Notes that have been reacquired by any of them, except for Notes purchased by the Company or any of its affiliates and resold in a transaction registered under the Securities Act. (f) The Initial Issuers will pay all reasonable expenses incidental to the performance of their obligations under this Agreement, the Indenture (as supplemented by the First Supplemental Indenture) and the Registration Rights Agreement including (i) the fees and expenses of the Trustee and its professional advisers; (ii) all expenses in connection with the execution, issue, authentication, packaging and initial delivery of the Notes, the preparation, printing and distribution of this Agreement, the Notes, the Indenture, the First Supplemental Indenture, the Registration Rights Agreement, the Offering Circular and amendments and supplements thereto, and any other document relating to the issuance, offer, sale and delivery of the Notes; (iii) the cost of qualifying the Notes for trading in The Portal/SM/ Market ("PORTAL") of The Nasdaq Stock Market, Inc. and any expenses incidental thereto (iv) the cost of any advertising approved by the Initial Issuers in connection with the issue of the Notes, (v) for any expenses (including fees and disbursements of counsel) incurred in connection with qualification of the Notes for sale under the laws of such jurisdictions in the United States as CSFBC reasonably designates and the printing of memoranda relating thereto, (vi) for any fees charged by investment rating agencies for the rating of the Notes, (vii) for expenses incurred in distributing preliminary offering circulars and the Offering Circular (including any amendments and supplements thereto) to the Initial Purchasers, (viii) fees and expenses of the Initial Issuers' counsel and independent 11 accountants; (ix) all expenses and application fees incurred in the approval of the Notes for book-entry transfer by DTC; and (x) all other costs and expenses incident to the performance of the obligations of the Company, TTC Merger Co or TTC under this Agreement which are not otherwise specifically provided for in this Section 5(f); provided, however, that -------- ------- except as provided in the last sentence of this Section 5(f) and Section 9, the Initial Purchasers shall pay their own costs and expenses, including the costs and expenses of their counsel, any taxes on the Notes which they may sell and the expenses of advertising and offering of the Notes made by the Initial Purchasers. The Initial Issuers will also pay or reimburse the Initial Purchasers (to the extent incurred by them prior to the Closing Date) for all reasonable travel expenses of the Initial Purchasers and the Initial Issuers officers and employees and any other reasonable expenses of the Initial Purchasers and the Initial Issuers in connection with attending or hosting meetings with prospective purchasers of the Notes. (g) In connection with the initial offering of the Notes, until the earlier of (i) such time as CSFBC shall have notified the Initial Issuers and the other Initial Purchasers of the completion by the Initial Purchasers of the initial resale of the Notes and (ii) 180 days after the Closing Date, none of the Initial Issuers and their affiliates has or will, either alone or with one or more other persons, bid for or purchase, for any account in which it has a beneficial interest, any Notes or attempt to induce any person to purchase any Notes, in any such case for the purpose of creating actual, or apparent, active trading in, or of raising the price of, the Notes. CSFBC agrees to give such notice promptly upon such completion. (h) For a period of 180 days after the Closing Date (if the sale of the Notes by the Initial Issuers to the Initial Purchaser shall have occurred), the Initial Issuers will not offer, sell, contract to sell, pledge, or otherwise dispose of, directly or indirectly, any dollar denominated debt securities issued or guaranteed by the Company or any of its subsidiaries and having a maturity of more than one year from the date of issue, except (i) issuances of Exchange Securities pursuant to the Registration Rights Agreement, (ii) grants of employee stock options pursuant to the terms of a plan in effect on the date hereof, issuances of Notes pursuant to the exercise of such options or the exercise of any other employee stock options outstanding on the date hereof or (iii) promissory notes or other debt securities issued or guaranteed in immaterial amounts in the ordinary course of business. (i) The Initial Issuers will use their reasonable best efforts to assist the Initial Purchasers in arranging for the Notes to be eligible for clearance and settlement through the Depository Trust Company ("DTC"). (j) Except following the effectiveness of the Exchange Offer Registration Statement or the Shelf Registration Statement, as the case may be, the Initial Issuers will not, and will cause its affiliates not to, nor will authorize or knowingly permit any person acting on their behalf to, solicit any offer to buy or offer to sell the Notes by means of any form of general solicitation or general advertising within the meaning of Regulation D or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act; and each of the Company, TTC Merger Co and 12 TTC will not offer, sell, contract to sell or otherwise dispose of, directly or indirectly, any securities under circumstances where such offer, sale, contract or disposition would cause the exemption afforded by Section 4(2) of the Securities Act or the safe harbor afforded by Regulation S thereunder to cease to be applicable to the offering and sale of the Notes as contemplated by this Agreement and the Offering Circular. (k) The Company, TTC Merger Co and TTC will apply the net proceeds from the sale of the Notes as set forth in the Offering Circular under the heading "Use of Proceeds". (l) The Initial Issuers will not, nor will cause their affiliates to, sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as such term is defined in the Securities Act) which could be integrated with the sale of the Notes in a manner which would require registration of the Notes under the Securities Act. (m) On or before the Closing Date, (i) TTC will authorize and execute and deliver the Purchase Agreement Supplement, in form and substance reasonably satisfactory to the Initial Purchasers and (ii) TTC and Dynatech will duly authorize, execute and deliver the Registration Rights Agreement. 6. Conditions of the Obligations of the Initial Purchasers. The obligations of the Initial Purchasers to purchase and pay for the Notes will be subject to the accuracy of the representations and warranties on the part of the Company and TTC Merger Co to the accuracy of the statements of officers of the Company and TTC Merger Co herein made pursuant to the provisions hereof, to the performance by each of the Company and TTC Merger Co of its obligations hereunder and to the following additional conditions precedent: (a) The Initial Purchasers shall have received a letter, dated the date of this Agreement, of Coopers & Lybrand confirming that they are independent public accountants within the meaning of the Securities Act and the applicable published rules and regulations thereunder ("Rules and Regulations") and substantially in the form of Exhibit D hereto, or otherwise in form and substance reasonably satisfactory to the Initial Purchasers. (b) The Initial Purchasers shall have received an opinion, dated such the Closing Date, of Debevoise & Plimpton, counsel for the Initial Issuers substantially in the form of Exhibit A hereto, or otherwise in form and substance reasonably satisfactory to the Initial Purchasers. (c) The Initial Purchasers shall have received an opinion, dated such the Closing Date, of Hale and Dorr LLP, counsel for the Initial Issuers, substantially in the form of Exhibit B hereto, or otherwise in form and substance reasonably satisfactory to the Initial Purchasers. (d) The Initial Purchasers shall have received an opinion, dated such the Closing Date, of Mark V. B. Tremallo, Esq., general counsel of the Company, 13 substantially in the form of Exhibit C hereto, or otherwise in form and substance reasonably satisfactory to the Initial Purchasers. (e) The Initial Purchasers shall have received from Simpson Thacher & Bartlett, counsel for the Initial Purchasers, such opinion or opinions, dated the Closing Date, with respect to the validity of the Notes, the Offering Circular, the exemption from registration for the offer and sale of the Notes by the Company and TTC Merger Co to the Initial Purchasers and the resales by the Initial Purchasers as contemplated hereby and other related matters as CSFBC may reasonably require, and the Company and TTC Merger Co shall have furnished to such counsel such documents as they request for the purpose of enabling them to pass upon such matters. In rendering such opinion, Simpson Thacher & Bartlett may rely as to the incorporation of the Company and all other matters governed by Massachusetts law upon the opinion of Hale and Dorr LLP referred to above. (f) The Company shall have furnished to the Initial Purchasers a certificate, dated the Closing Date, of their chief executive officer or any vice president and a principal financial or accounting officer in which such officers, to the best of their knowledge and after reasonable investigation shall state that (i) as of the Closing Date, the representations and warranties of the Company and TTC Merger Co in this Agreement are true and correct in all material respects, the Company and TTC Merger Co have in all material respects complied with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder on or prior to the Closing Date, (ii) the Offering Circular did not include any untrue statement of a material fact and did not omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and since the date thereof, no event has occurred which should have been set forth in a supplement or amendment to the Offering Circular and (iii) subsequent to the date of the most recent financial statements contained in the Offering Circular, there has been no material adverse change, nor any development or event that, in his reasonable judgment, would reasonably be expected to result in a material adverse change, in the condition (financial or other), business, properties results of operations or business of the Company and its subsidiaries taken as a whole, except as set forth in or contemplated by the Offering Circular or as described in such certificate. (g) The Initial Purchasers shall have received a letter, dated the Closing Date, of Coopers & Lybrand which meets the requirements of subsection (a) of this Section 6, except that the specified date referred to in such subsection will be a date not more than three business days prior to the Closing Date for the purposes of this subsection. (h) The Initial Purchasers shall have received a counterpart of the Registration Rights Agreement which shall have been executed and delivered by a duly authorized officer or member of TTC and Dynatech. 14 (i) The recapitalization of Dynatech and the financings and transactions related thereto shall have been consummated substantially as described in the Offering Circular. (j) Subsequent to the execution of this Agreement, there shall not have occurred (i) any change, or any development or event that would reasonably be expected to result in a change, in the condition (financial or other), business, properties or results of operations of the Company and its subsidiaries, taken as a whole, which, in the reasonable judgment of the Initial Purchasers, is material and adverse and makes it impracticable to proceed with the completion of the offering contemplated herein or the resale of and payment for the Notes; (ii) any suspension or limitation of trading in securities generally on the New York Stock Exchange, or any setting of minimum prices for trading on such exchange or in the over-the- counter market; (iii) any banking moratorium declared by U.S. Federal or New York authorities; or (iv) any outbreak or escalation of major hostilities in which the United States is involved, any declaration of war by Congress or any other substantial national or international calamity or emergency if, in the reasonable judgment of the Initial Purchasers, the effect of any such outbreak, escalation, declaration, calamity or emergency makes it impracticable to proceed with completion of the offering contemplated herein or the resale of or payment for the Notes. (k) The Company and TTC Merger Co shall have furnished to the Initial Purchasers such additional documents and opinions as they may reasonably require for the purpose of enabling them to pass upon the issuance and sale of the Notes as herein contemplated, or in order to evidence the accuracy of any of the representations or warranties, or the fulfillment of any of the conditions, herein contained. The Company, TTC Merger Co and TTC will furnish the Initial Purchasers with such conformed copies of such opinions, certificates, letters and documents as the Initial Purchasers reasonably request. CSFBC may in its sole discretion waive on behalf of the Initial Purchasers compliance with any conditions to the obligations of the Initial Purchasers hereunder, whether in respect of the Closing Date or otherwise. 7. Indemnification and Contribution. (a) The Initial Issuers will jointly and severally indemnify and hold harmless each Initial Purchaser against any losses, claims, damages or liabilities, joint or several, to which such Initial Purchaser may become subject, under the Securities Act or the Exchange Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of any untrue statement or alleged untrue statement of any material fact contained in the Offering Circular, or any amendment or supplement thereto, or any related preliminary offering circular, or arise out of or are based upon the omission or alleged omission to state therein a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, and will reimburse each Initial Purchaser for any legal or other expenses reasonably incurred by such Initial Purchaser in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that -------- ------- neither Initial Issuer will be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement in or omission 15 or alleged omission from any of such documents in reliance upon and in conformity with written information furnished to the Initial Issuers by any Initial Purchaser through CSFBC specifically for use therein, it being understood and agreed that the only such information consists of the information described as such in subsection (b) below; and provided further, that the -------- ------- foregoing indemnity with respect to the preliminary offering circular shall not inure to the benefit of any Initial Purchaser from whom the person asserting any such losses, claims, damages or liabilities purchased Notes, to the extent that any such losses, claims, damages or liabilities of such Initial Purchaser result from a fact that such Initial Purchaser sold Notes to a person in an initial resale to whom there was not sent or given at or prior to the written confirmation of the sale of such Notes, a copy of the final offering circular (as amended and supplemented), if the Initial Issuers had previously furnished such amendments or supplements to such Initial Purchaser prior to confirmation of the sale of such Notes to such person by such Initial Purchaser and the losses, claims, damages or liabilities of such Initial Purchaser result from an untrue statement or omission of a material fact contained in the preliminary offering circular, which was corrected in the final offering circular. (b) Each Initial Purchaser will severally and not jointly indemnify and hold harmless the Company, TTC Merger Co and (upon due execution and delivery of the Purchase Agreement Supplement) TTC against any losses, claims, damages or liabilities to which the Company, TTC Merger Co and (upon due execution and delivery of the Purchase Agreement Supplement) TTC may become subject, under the Securities Act or the Exchange Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Offering Circular, or any amendment or supplement thereto, or any related preliminary offering circular, or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company by such Initial Purchaser through CSFBC specifically for use therein, and will reimburse any legal or other expenses reasonably incurred by the Company, TTC Merger Co or (upon due execution and delivery of the Purchase Agreement Supplement) TTC in connection with investigating or defending any such loss, claim, damage, liability or action as such expenses are incurred, it being understood and agreed that the only such information furnished by any Initial Purchaser consists of the following information in the Offering Circular furnished on behalf of each Initial Purchaser: the last paragraph at the bottom of the cover page concerning the terms of the offering by the Initial Purchasers; the legend concerning over-allotments and stabilizing on the top of page (i); and the first and third sentences of paragraph five, the seventh paragraph and the last paragraph under the caption "Plan of Distribution". (c) Promptly after receipt by an indemnified party under this Section of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under subsection (a) or (b) above, notify the indemnifying party of the commencement thereof; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party otherwise than under subsection (a) or (b) above. In case any such action is brought 16 against any indemnified party and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party (if such counsel is counsel to the indemnifying party and the representation of the indemnified party would present such counsel with a conflict of interest, the indemnified party will have the right to employ separate counsel, and the indemnifying party will bear the reasonable fees, costs and expenses of only one such separate counsel for all indemnified parties) and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party under this Section for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened action in which any indemnified party is a party to the extent such settlement is binding upon such indemnified party unless such settlement includes an unconditional release of such indemnified party from all liability on any claims that are the subject matter of such action. (d) If the indemnification provided for in this Section is unavailable or insufficient to hold harmless an indemnified party under subsection (a) or (b) above, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities referred to in subsection (a) or (b) above (i) in such proportion as is appropriate to reflect the relative benefits received by the Company, TTC Merger Co and TTC on the one hand and the Initial Purchasers on the other from the offering of the Notes or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company, TTC Merger Co and TTC on the one hand and the Initial Purchasers on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities as well as any other relevant equitable considerations. The relative benefits received by the Company, TTC Merger Co and TTC on the one hand and the Initial Purchasers on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Company, TTC Merger Co and TTC bear to the total discounts and commissions received by the Initial Purchasers from the Company and TTC Merger Co under this Agreement. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company, TTC Merger Co or TTC or the Initial Purchasers and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim which is the subject of this subsection (d). Notwithstanding the provisions of this subsection (d), no Initial Purchaser shall be required to contribute any amount in excess of the amount by which the total price at which the Notes purchased by it were resold exceeds the amount of any damages which such Initial Purchaser has otherwise been required to pay by reason of such 17 untrue or alleged untrue statement or omission or alleged omission. The Initial Purchasers' obligations in this subsection (d) to contribute are several in proportion to their respective purchase obligations and not joint. (e) The obligations of the Company, TTC Merger Co and TTC under this Section shall be in addition to any liability which the Company, TTC Merger Co and TTC may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls any Initial Purchaser within the meaning of the Securities Act or the Exchange Act; and the obligations of the Initial Purchasers under this Section shall be in addition to any liability which the respective Initial Purchasers may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls the Company, TTC Merger Co or TTC within the meaning of the Securities Act or the Exchange Act. (f) no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. 8. Default of Initial Purchasers. If any Initial Purchaser or Initial Purchasers default in their obligations to purchase Notes hereunder and the aggregate principal amount of the Notes that such defaulting Initial Purchaser or Initial Purchasers agreed but failed to purchase does not exceed 10% of the total principal amount of the Notes, CSFBC may make arrangements satisfactory to the Company for the purchase of such Notes by other persons, including any of the Initial Purchasers, but if no such arrangements are made by the Closing Date, the non-defaulting Initial Purchasers shall be obligated severally, in proportion to its commitments hereunder, to purchase the Notes that such defaulting Initial Purchasers agreed but failed to purchase. If any Initial Purchaser or Initial Purchasers so default and the aggregate principal amount number of the Notes with respect to which such default or defaults occur exceeds 10% of the total principal amount of the Notes and arrangements satisfactory to CSFBC and the Company for the purchase of such Notes by other persons are not made within 36 hours after such default, this Agreement will terminate without liability on the part of any non-defaulting Initial Purchaser or the Company, except as provided in Section 9. As used in this Agreement, the term "Initial Purchaser" includes any person substituted for a Initial Purchaser under this Section. Nothing herein will relieve a defaulting Initial Purchaser from liability for its default. 9. Survival of Certain Representations and Obligations. The respective indemnities, agreements, representations, warranties and other statements of the Company or TTC Merger Co or their respective officers and of the Initial Purchasers set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation, or statement as to the results thereof, made by or on behalf of any Initial Purchaser, the Company, TTC Merger Co or any of their respective representatives, officers or directors or any controlling person, and will survive delivery of and payment for the Notes. If this Agreement is terminated pursuant to Section 8 or if for any reason the purchase of the Notes by the Initial Purchasers is not consummated, the Company, TTC Merger Co and TTC shall remain responsible for the expenses to be paid or reimbursed by it pursuant to Section 5 and the respective obligations of the Company and TTC Merger Co and the Initial Purchasers pursuant to Section 7 shall remain in effect. If the purchase of the Notes by the Initial 18 Purchasers is not consummated for any reason other than solely because of the termination of this Agreement pursuant to Section 8 or the occurrence of any event specified in Section 6(j), the Company will reimburse the Initial Purchasers for all reasonable out-of-pocket expenses (including fees and disbursements of counsel) reasonably incurred by them in connection with the offering of the Notes. 10. Representation of Initial Purchasers. CSFBC has the authority to, and will, act for the Initial Purchasers in connection with this purchase, and any action under this Agreement taken by CSFBC will be binding upon all the Initial Purchasers. 11. Notices. All communications hereunder will be in writing and, if sent to the Initial Purchasers will be mailed, delivered or telegraphed and confirmed to the Initial Purchasers c/o Credit Suisse First Boston Corporation, Eleven Madison Avenue, New York, N.Y. 10010-3629, Attention: Investment Banking Department - Transactions Advisory Group, or, if sent to the Company or TTC Merger Co, will be mailed, delivered or telegraphed and confirmed to it c/o Dynatech Corporation, 3 New England Executive Park, Burlington, MA 01803-5087 (Telephone: 781-272-6100, Fax: 781-272-2304), Attention: Chief Financial Officer; provided, however, that any notice to a Initial Purchaser pursuant to Section 7 will be mailed, delivered or telegraphed and confirmed to such Initial Purchaser. 12. Successors. This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and the controlling persons referred to in Section 7, and no other person will have any right or obligation hereunder, except that holders of the Notes shall be entitled to enforce the agreements for their benefit contained in the second sentence of Section 5(b) hereof against the Initial Issuers as if such holders were parties hereto. 13. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same Agreement. 14. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. 15. Amendments. No amendment or waiver of any provision of this Agreement, nor any consent or approval to any departure therefrom, shall in any event be effective unless the same shall be in writing and signed by the parties hereto. 16. Headings. The headings herein are inserted for convenience of reference only and are not intended to be part of, or to affect the meaning or interpretation of, this Agreement. Each party hereto hereby submits to the jurisdiction of the Federal and state courts in the Borough of Manhattan in The City of New York in any suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. 19 If the foregoing is in accordance with the Initial Purchasers' understanding of our agreement, kindly sign and return to the Company one of the counterparts hereof, whereupon it will become a binding agreement between the Company, TTC Merger Co and the Initial Purchasers in accordance with its terms. Very truly yours, DYNATECH CORPORATION By: /s/ Mark V.B. Tremallo Name: Mark V.B. Tremallo Title: Vice President and General Counsel TTC MERGER CO. LLC By: Dynatech Corporation, its sole member ------------------------------------- By: Mark V.B. Tremallo Name: Mark V.B. Tremallo Title: Vice President and General Counsel The foregoing Purchase Agreement is hereby confirmed and accepted as of the date first above written. CREDIT SUISSE FIRST BOSTON CORPORATION J.P. MORGAN SECURITIES INC. By: CREDIT SUISSE FIRST BOSTON CORPORATION By: /s/ Harold W. Bagly ----------------------------------- Name: Harold W. Bagly Title: Managing Director 20 SCHEDULE A INITIAL PURCHASER PRINCIPAL AMOUNT OF - ---------------------------------------- NOTES ------------------- Credit Suisse First Boston Corporation.. $137,500,000 J.P. Morgan Securities Inc.............. $137,500,000 ____________ Total......................... $275,000,000 ============ EX-10.20 18 PURCHASE AGREEMENT SUPPLEMENT DATED MAY 21, 1998 Exhibit 10.20 PURCHASE AGREEMENT SUPPLEMENT Reference is made to the Purchase Agreement dated May 14, 1998 (the "Purchase Agreement"), among Dynatech Corporation ("Dynatech"), TTC Merger Co. LLC ("TTC Merger Co"), and Credit Suisse First Boston Corporation and J.P. Morgan Securities Inc. (the "Initial Purchasers") relating to $275,000,000 in aggregate principal amount of 9 3/4% Senior Subordinated Notes Due 2008 (the "Notes") issued by Dynatech and TTC Merger Co under the Indenture dated as of May 21, 1998, among Dynatech, TTC Merger Co and State Street Bank and Trust Company, as trustee (the "Trustee"), as supplemented by the First Supplemental Indenture dated as of May 21, 1998 among Dynatech, Telecommunications Techniques Co., LLC ("TTC") and the Trustee. All capitalized terms used but not defined herein shall have the meanings set forth in the Purchase Agreement. TTC hereby agrees with the Initial Purchasers that it shall hereby become a party to the Purchase Agreement whereupon it shall become fully liable for the performance of all obligations of TTC Merger Co contained therein, including those contained in Section 7 (Indemnification and Contribution), and shall be entitled to the benefits of all rights of TTC Merger Co contained therein, in each case to the same extent as if it had been party to the Purchase Agreement ab initio. Except as supplemented hereby, the Purchase Agreement shall continue in full force and effect. This instrument may be executed in counterparts, and shall be governed by, and shall be construed in accordance with the laws of the State of New York. TTC hereby submits to the jurisdiction of the Federal and state courts in the Borough of Manhattan in The City of New York in any suit or proceeding arising out of or relating to this Agreement or transactions contemplated hereby. Date: May 21, 1998 TELECOMMUNICATIONS TECHNIQUES CO., LLC (on its behalf, and as successor by merger to TTC MERGER CO. LLC) By: Dynatech Corporation, as sole member By /s/ Mark V.B. Tremallo --------------------------------------- Name: Mark V.B. Tremallo Title: Corporate Vice President DYNATECH CORPORATION By /s/ Mark V.B. Tremallo ---------------------------------------- Name: Mark V.B. Tremallo Title: Corporate Vice President 2 The foregoing Purchase Agreement Supplement is hereby confirmed and accepted as of the date first above written. Credit Suisse First Boston Corporation JP Morgan Securities Inc. By: Credit Suisse First Boston Corporation By /s/ Sean P. Madden ------------------------------ Name: Sean P. Madden Title: Vice President EX-10.21 19 AMEND #1 TO THE SHAREHOLDERS RIGHTS AGREEMENT EXHIBIT 10.21 Amendment No. 1 to Shareholder Rights Agreement ----------------------------------------------- This amendment, dated as of December 20, 1997, amends the Shareholder Rights Agreement dated as of February 16, 1989, as amended and restated as of March 12, 1990 (the "Rights Agreement") between Dynatech Corporation (the "Company") and BankBoston, N.A. (formerly The First National Bank of Boston), as Rights Agent (the "Rights Agent"). Terms defined in the Rights Agreement and not otherwise defined herein are used herein as so defined. W I T N E S S E T H ------------------- WHEREAS, on February 16, 1989 the Board of Directors of the Company authorized the issuance of Rights to purchase, on the terms and subject to the provisions of the Rights Agreement, one share of the Company's Common Stock, par value $.20 per share; and WHEREAS, on February 16, 1989, the Board of Directors of the Company authorized and declared a dividend distribution of one Right for every share of Common Stock of the Company outstanding on the Record Date and authorized the issuance of one Right (subject to certain adjustments) for each share of Common Stock of the Company issued between the Record Date and the Distribution Date; and WHEREAS, on February 16, 1989, the Company and the Rights Agent entered into the Rights Agreement, which was amended and restated on March 12, 1990 to set forth the description and terms of the Rights; and WHEREAS, pursuant to Sections 27 and 29 of the Rights Agreement, the Company now desires to amend certain provisions of the Rights Agreement in order to supplement certain provisions therein; NOW, THEREFORE, the Rights Agreement is hereby amended as follows: 1. Section 1(a) is amended by adding the following at the end thereof: "; and, provided, further, that as a result of the execution, delivery and performance under, or consummation of the transactions relating to and contemplated by the Agreement and Plan of Merger dated as of December 20, 1997 by and among the Company and CDRD Merger Corporation (the "Merger Agreement") CDRD Merger Corporation shall not be deemed an Acquiring Person for any purpose of this Agreement." 2. Section 1(b) is amended by adding the following at the end thereof: "provided, however, that CDRD Merger Corporation shall not, during the effectiveness of the Merger Agreement, be declared an Adverse Person for any purposes of this Agreement." 3. Section 7(a) is amended to read in its entirety as follows: "(a) Subject to Section 7(e) hereof, the registered holder of any Right Certificate may exercise the Rights evidenced thereby (except as otherwise provided herein) in whole or in part at any time after the Distribution Date upon surrender of the Right Certificate, with the form of election to purchase and the certificate on the reverse side thereof duly executed, to the Rights Agent at the office or offices of the Rights Agent designated for such purpose, together with payment of the aggregate Exercise Price for the total number of one two- thousandths of a share of Preferred Stock (or other securities, cash or other assets, as the case may be) as to which such surrender Rights are then exercised, at or prior to the earlier of (i) the earlier of the Effective Time (as defined in the Merger Agreement) and the close of business on February 16, 1999 (the "Final Expiration Date") or (ii) the time at which the Rights are redeemed as provided in Section 23 hereof (the earlier of (i) or (ii) being herein referred to as the "Expiration Date"). Except as set forth in Section 7(e) hereof and notwithstanding any other provision of this Agreement, any Person who prior to the Distribution Date becomes a record holder of shares of Common Stock may exercise all of the rights of a registered holder of a Right Certificate with respect to the Rights associated with such shares of Common Stock in accordance with the provisions of this Agreement, as of the date such Person becomes a record holder of shares of Common Stock. 4. Except, as expressly herein set forth, the remaining provisions of the Rights Agreement shall remain in full force and effect. 2 IN WITNESS WHEREOF, this Amendment No. 1 has been signed to be effective as of the close of business on the 20th day of December, 1997 by authorized representatives of each of the Company and the Rights Agent. DYNATECH CORPORATION By: ----------------------------------- BANKBOSTON, N.A. By: ----------------------------------- 3 DYNATECH CORPORATION Officer's Certificate This Certificate is delivered pursuant to Section 27 of the Shareholder Rights Agreement dated as of February 16, 1989, as amended and restated as of March 12, 1990 (the "Rights Agreement") between Dynatech Corporation (the "Company") and BankBoston, N.A. (formerly The First National Bank of Boston), as Rights Agent (the "Rights Agent"). In delivering this Certificate the undersigned has examined a copy of the Rights Agreement and a copy of Amendment No. 1 to Shareholder Rights Agreement ("Amendment No. 1") dated as of December 20, 1997. The undersigned does hereby certify that Amendment No. 1 is in compliance with the terms of Section 27 of the Rights Agreement. Pursuant to said Section 27 of the Rights Agreement, the undersigned hereby directs the Rights Agent to execute Amendment No. 1. IN WITNESS WHEREOF, the undersigned has executed this certificate this 31st day of December, 1997. DYNATECH CORPORATION By: --------------------------------- Title: EX-10.22 20 ASSUMPTION AGREEMENT EXHIBIT 10.22 ASSUMPTION AGREEMENT ASSUMPTION AGREEMENT, dated as of May 21, 1998 (this "Agreement"), among --------- DYNATECH CORPORATION, a Massachusetts corporation ("Holding"), TTC MERGER CO. ------- LLC, a Delaware limited liability company wholly owned by Holding ("Newco"), and ----- TELECOMMUNICATIONS TECHNIQUES CO., LLC, a Delaware limited liability company wholly owned by Holding ("TTC"), and consented to by Morgan Guaranty Trust --- Company of New York, as administrative agent (in such capacity, the "Administrative Agent") for the banks and other financial institutions (the -------------------- "Lenders") from time to time parties to the Credit Agreement (as hereinafter ------- defined). W I T N E S S E T H: ------------------- WHEREAS, Holding, Newco and the Administrative Agent are parties to the Credit Agreement, dated as of May 21, 1998 (as amended, supplemented, waived or otherwise modified from time to time, the "Credit Agreement"), among Holding, ---------------- Newco, the Lenders, the Administrative Agent, Credit Suisse First Boston, as syndication agent (in such capacity, the "Syndication Agent"), and The Chase ----------------- Manhattan Bank, as documentation agent (in such capacity, the "Documentation ------------- Agent"); and - ----- WHEREAS, each of Holding and Newco wishes to assign, transfer and convey to TTC all of Holding's and Newco's rights, respectively, as "Borrower" under, and TTC wishes to assume from Holding and Newco all of Holding's and Newco's obligations and liabilities as "Borrower" under, the Credit Agreement and any Notes, any Letters of Credit and the other Credit Documents (as each of such terms is defined in the Credit Agreement); and WHEREAS, pursuant to subsection 12.11 of the Credit Agreement, Holding and Newco have agreed to execute and deliver, and to cause, TTC to execute and deliver, this Agreement; and WHEREAS, pursuant to subsection 12.11 of the Credit Agreement, the Administrative Agent is authorized to consent to this Agreement on behalf of the Lenders; NOW, THEREFORE, the parties hereto hereby agree as follows: I. Defined Terms. Terms defined in the Credit Agreement and used herein ------------- shall have the meanings given to them in the Credit Agreement. 2 II. Assignment and Assumption. ------------------------- 1. Assignment of Rights and Obligations. Effective as of 12:01 A.M. (New ------------------------------------ York City time) on May 21, 1998, each of Holding and Newco hereby irrevocably assigns, transfers and conveys to TTC all of Holding's and Newco's rights, obligations, covenants, agreements, duties and liabilities as "Borrower" under or with respect to the Credit Agreement, any Notes, any Letters of Credit, any of the other Credit Documents (other than this Agreement and the Collateral Agreement) and any and all certificates and other documents executed by Holding and Newco in connection therewith; provided, however, that each of Holding and -------- ------- Newco understands and agrees that such assignment, transfer and conveyance shall not be effective with respect to, or in any way release Holding or Newco from any of its obligations, covenants, agreements, duties and liabilities under or with respect to this Agreement and the Collateral Agreement. 2. Assumption of Agreements and Obligations. Effective as of 12:01 A.M. ---------------------------------------- (New York City time) on May 21, 1998 (the "Effective Date"), TTC hereby -------------- expressly assumes, confirms and agrees to perform and observe all of the indebtedness, obligations (including, without limitation, all obligations in respect of the Loans and the Letters of Credit), covenants, agreements, terms, conditions, duties and liabilities of Holding and Newco as "Borrower" under and with respect to the Credit Agreement, any Notes, any Letters of Credit, any of the other Credit Documents (other than this Agreement and the Collateral Agreement) and any and all certificates and other documents executed by Holding and Newco in connection therewith as fully as if TTC were originally the obligor in respect thereof and the signatory thereto; provided, however, that each of -------- ------- Holding and Newco understands and agrees that such assumption shall not be effective with respect to, or in any way obligate TTC to perform and observe any obligations, covenants, agreements, terms, conditions, duties or liabilities of Holding or Newco under or with respect to this Agreement and the Collateral Agreement. At all times after the effectiveness of such assumption, with respect to all Loans made to or for the account of Holding or Newco prior to the effectiveness of such assumption, TTC shall have the obligations of, and Holding and Newco shall no longer be or have the obligations of, the "Borrower" within the meaning of and for all purposes of the Credit Agreement. In addition, at all times after the effectiveness of such assumption, all references to the "Borrower" in the Credit Agreement, any Notes, any Letter of Credit, any of the other Credit Documents and any and all certificates and other documents executed by Holding and Newco in connection therewith shall be deemed to be references to TTC. 3. Amendment to the Credit Agreement. The Credit Agreement is hereby --------------------------------- deemed to be amended to the extent, but only to the extent, necessary to effect the assignment and assumption provided for hereby. 4. Replacement Notes. TTC agrees to execute and deliver, on the ----------------- effective date of the assumption provided for by subsection II.2. hereof, to each of the Lenders then holding Notes, if any, new Notes payable to the order of such Lender (such new Notes, "Replacement Notes") in exchange for the Notes ----------------- of Holding or Newco then held by such Lender (the "Old Notes"). Each Replacement --------- Note shall be identical in all respects to the corresponding Old Note or Old Notes, as the case may be, except that the obligor on such Replacement Notes shall be TTC instead of Holding and Newco. 3 III. General. ------- 1. Representation and Warranties. To induce the Administrative Agent, ----------------------------- acting on behalf of the Lenders, to consent to the assignment and assumption provided for in Section II. above, each of Holding, Newco and TTC hereby represents and warrants to the Administrative Agent and each Lender as of the date hereof and as of the date of such assignment and assumption that: (a) Corporate Power; Authorization; Enforceable Obligations. (i) Such ------------------------------------------------------- party has the corporate power and authority, and the legal right, to make, deliver and perform this Agreement and, in the case of TTC, each of the Replacement Notes, and to perform each of the other Credit Documents to which it is a party, as amended hereby, and has taken all necessary corporate action to authorize the execution, delivery and performance of this Agreement and, in the case of TTC, each of the Replacement Notes, and the performance of such other Credit Documents, as so amended. (ii) No consent or authorization of, approval by, notice to, filing with, or other similar act by or in respect of, any Governmental Authority or any other Person is required to be obtained or made by or on behalf of Holding, Newco or TTC in connection with the execution and delivery of this Agreement or, in the case of TTC, each of the Replacement Notes, or with the performance, validity or enforceability of each of the other Credit Documents to which it is a party, as amended hereby, except for (w) consents, authorizations, notices and filings described in Schedule 10.4(a) to the Credit Agreement, all of which have been obtained or made or have the status described therein, (x) filings to perfect the Liens created by the Security Documents, (y) filings pursuant to the Assignment of Claims Act of 1940, as amended (31 U.S.C. (S) 3727 et seq.), in respect of Accounts of Holding and its Subsidiaries the obligor on which is the United States of America or any department, agency or instrumentality thereof and (z) consents, authorizations, notices and filings which the failure to obtain or make would not reasonably be expected to have a Material Adverse Effect. (iii) This Agreement and, in the case of TTC, each of the Replacement Notes, has been or will have been duly executed and delivered on behalf of such party. (iv) This Agreement, each of the other Credit Documents to which it is a party, as amended hereby, and, in the case of TTC, each of the Replacement Notes, constitutes or will constitute, as the case may be, a legal, valid and binding obligation of such party enforceable against such party in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law). (b) No Legal Bar. Except as previously disclosed in writing to the ------------ Lenders on or prior to the Effective Date, the execution, delivery and performance of this Agreement and, in the case of TTC, each of the Replacement Notes, and the performance of each of the other Credit Documents to which it is a party, as amended hereby, (i) will not violate any Requirement of Law or Contractual Obligation of such party or of any of its Subsidiaries in any respect that 4 would reasonably be expected to have a Material Adverse Effect and (ii) will not result in, or require, the creation or imposition of any Lien (other than Liens created by the Security Documents or permitted under subsection 14.2 of the Credit Agreement) on any of its or their respective properties or revenues pursuant to any such Requirement of Law or Contractual Obligation. (c) Representations and Warranties. TTC hereby represents and warrants ------------------------------ that the representations and warranties made by Holding, Newco and TTC (each in its capacity as Holding, Newco or TTC, as the case may be, and in its capacity as the "Borrower") in the Credit Documents are true and correct in all material respects on and as of the date hereof, before and after giving effect to the effectiveness of this Agreement, as if made on and as of the date hereof. 2. No Other Amendments; Confirmation. Except as expressly amended, --------------------------------- modified and supplemented hereby, the provisions of the Credit Agreement and the other Credit Documents are and shall remain in full force and effect. 3. Affirmation of Credit Documents. Each of the Credit Parties hereby ------------------------------- consents to the execution and delivery of this Agreement and any Replacement Notes and confirms, reaffirms and restates its obligations under each of the Credit Documents to which it is a party pursuant to the terms thereof. 4. GOVERNING LAW; COUNTERPARTS. (a) THIS AGREEMENT AND THE RIGHTS AND --------------------------- OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ITS PRINCIPLES OR RULES OF CONFLICTS OF LAWS TO THE EXTENT SUCH PRINCIPLES OR RULES WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION. (b) This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the copies of this Agreement signed by all the parties shall be lodged with each of Holding, Newco, TTC and the Administrative Agent. This Agreement may be delivered by facsimile transmission of the relevant signature pages hereof. 5. Integration. This Agreement and the other Credit Documents represent ----------- the entire agreement of the parties hereto with respect to the subject matter hereof and there are no promises or representations by the parties hereto relative to the subject matter hereof not reflected or referred to herein or therein. 6. Section Headings. The section headings used in this Agreement are for ---------------- convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof. 7. Submission To Jurisdiction; Waivers. Each of the parties hereto hereby ----------------------------------- irrevocably and unconditionally: 5 (a) submits for itself and its property in any legal action or proceeding relating to this Agreement and the other Credit Documents to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of the courts of the State of New York, the courts of the United States of America for the Southern District of New York, and appellate courts from any thereof; (b) consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same; (c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such party at its address referred to in the other Credit Documents to which it is a party or at such other address of which the other parties shall have been notified pursuant thereto; (d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and (e) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this subsection any punitive damages. 8. Successors and Assigns. This Agreement shall be binding upon and inure ---------------------- to the benefit of Holding, Newco and TTC and their respective successors and assigns, and the Administrative Agent and the Lenders and their respective successors, indorsees, transferees and assigns. 9. WAIVER OF JURY TRIAL. THE PARTIES HERETO HEREBY IRREVOCABLY AND -------------------- UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN. 6 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective proper and duly authorized officers as of the day and year first above written. DYNATECH CORPORATION By:________________________________ Name: Title: TTC MERGER CO. LLC By: Dynatech Corporation, its sole member By:________________________________ Name: Title: TELECOMMUNICATIONS TECHNIQUES CO., LLC By: Dynatech Corporation, its sole member By:________________________________ Name: Title: 7 Consented and Agreed (for purposes of subsection III.3. only): AIRSHOW, INC. By: _______________________________ Name: Title: COMCOTEC, INC. By: _______________________________ Name: Title: DATAVIEWS CORPORATION By: ________________________________ Name: Title: DA VINCI SYSTEMS, INC. By: ________________________________ Name: Title: INDUSTRIAL COMPUTER SOURCE By: _______________________________ Name: Title: 8 ITRONIX CORPORATION By: _______________________________ Name: Title: PARALLAX GRAPHICS, INC. By: _______________________________ Name: Title: SYNERGISTIC SOLUTIONS, INC. By: _______________________________ Name: Title: TELE-PATH INSTRUMENTS, INC. By: _______________________________ Name: Title: Consented to: MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent By: _______________________________ Name: Title: EX-12 21 STATEMENT RE COMPUTATION OF RATIOS
Exhibit 12 STATEMENT RE COMPUTATION OF RATIOS (IN THOUSANDS) YEAR ENDED MARCH 31, PRO FORMA -------------------------------------- --------- YEAR CONSOLIDATED STATEMENT OF ENDED OPERATIONS DATA 1993 1994 1995 1996 1997 1998 3/31/98 ------ ------ ------ ------ ------ ------ --------- Income (loss) before income taxes and extraordinary credit....... 21,220 23,847 28,095 26,108 35,434 70,807 9,096 Add: Portion of rents representative of the interest factor......... 1,400 1,533 1,467 1,900 2,067 2,700 2,700 Interest on indebtedness........ 2,229 3,794 3,919 1,723 828 1,221 52,191 Amortization of debt expense and premium........................ 2,996 ------ ------ ------ ------ ------ ------ ------ Income as adjusted.............. 24,849 29,174 33,481 29,731 38,329 74,728 66,983 ------ ------ ------ ------ ------ ------ ------ Fixed charges: Portion of rents representative of interest factor............. 1,400 1,533 1,467 1,900 2,067 2,700 2,700 Interest on indebtedness........ 2,229 3,794 3,919 1,723 828 1,221 52,191 Amortization of debt expense and premium........................ 2,996 ------ ------ ------ ------ ------ ------ ------ Fixed charges................... 3,629 5,327 5,386 3,623 2,895 3,921 57,887 ------ ------ ------ ------ ------ ------ ------ Ratio of earnings to fixed charges 6.8 5.5 6.2 8.2 13.2 19.1 1.2 ====== ====== ====== ====== ====== ====== ======
EX-21 22 SCHEDULE OF SUBSIDIARIES EXHIBIT 21 SUBSIDIARIES OF THE REGISTRANT STATE OR OTHER NAME OF THE PARENT OR SUBSIDIARY ORGANIZATION* JURISDICATION - ---------------------------------------------- ------------------ Dynatech Corporation--Parent.................... Massachusetts AIRSHOW, Incorporated........................... California DataViews Corporation........................... Massachusetts DataViews Scandanavia A.B....................... Sweden daVinci Systems, Inc............................ Florida Industrial Computer Source, Inc................. California Itronix Corporation............................. Washington Synergistic Solutions, Inc...................... Georgia Telecommunications Techniques Co., LLC, Issuer.. Delaware Dynatech Corporation Ltd........................ England Dynatech GmbH................................... Germany Dynatech Holdings Ltd........................... Guernsey, Channel Islands Pacific Systems Corporation..................... Washington Tele-Path Industries, Inc....................... Delaware TTC Asia Pacific Ltd............................ Hong Kong TTC International Holdings, Inc................. Delaware Dynatech Investments, Ltd....................... Guernsey, Channel Islands Industrial Computer Source Europe............... France TTC Canada Ltd.................................. Canada TTC Telecommunications Techniques GmbH.......... Germany TTC Telecommunications Techniques France, SA.... France Dynatech Export Incorporated.................... British Virgin Islands - ------------------------------- * Excludes nonmaterial subsidiaries. EX-23.1 23 CONSENT OF PRICEWATERHOUSECOOPERS LLP Exhibit 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the inclusion in this registration statement on Form S-4 of our report dated April 28, 1998, except as to the information in the "Subsequent Event" Note for which the date is May 21, 1998, on our audits of the consolidated financial statements of Dynatech Corporation, and of our report dated April 28, 1998, on our audits of the related financial statement schedule of valuation and qualifying accounts of Dynatech Corporation. We also consent to the reference to our firm under the caption "Experts." PricewaterhouseCoopers LLP Boston, Massachusetts August 7, 1998 EX-24.1 24 POWER OF ATTORNEY FROM JOHN F. RENO EXHIBIT 24.1 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned hereby constitutes and appoints John F. Reno, Allan M. Kline, Mark V.B. Tremallo and Robert W. Woodbury, Jr. and each of them (with full power to act alone) the undersigned's true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for and in the name and on behalf of the undersigned, to execute any and all instruments and documents, and to do any and all other acts and things, that any such attorney-in-fact and agent may deem necessary or advisable, in compliance with the Securities Act of 1933, as amended (the "Securities Act"), and any rules, regulations and requirements of the Securities and Exchange Commission (the "Commission") in respect thereof, in connection with the registration under the Securities Act of $275,000,000 aggregate principal amount of 9 3/4% Senior Subordinated Notes Due 2008 of Telecommunications Techniques Co., LLC ("TTC"), payment of which is guaranteed by Dynatech Corporation ("Dynatech"), pursuant to a Registration Statement on Form S-4 (the "Registration Statement") to be filed with the Commission relating to an offer to exchange such Notes for TTC's outstanding $275,000,000 aggregate principal amount of 9 3/4% Senior Subordinated Notes Due 2008 payment of which is guaranteed by Dynatech; including specifically, but without limiting the generality of the foregoing, the power and authority to execute, for and in the name and on behalf of the undersigned in any and all capacities, the Registration Statement, any and all supplements and amend ments (including, without limitation, post-effective amendments) to such Registration Statement, and any and all other instruments or documents filed as a part of, or in connection with, such Registration Statement and supplements and amendments thereto; and the undersigned hereby ratifies and confirms all that such attorneys-in-fact and agents, or any of them, shall do or cause to be done by virtue hereof. Signed this 7th day of August, 1998. /s/ John F. Reno ------------------------------- Name: John F. Reno EX-24.2 25 POWER OF ATTORNEY FROM ALLAN M. KLINE EXHIBIT 24.2 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned hereby constitutes and appoints John F. Reno, Allan M. Kline, Mark V.B. Tremallo and Robert W. Woodbury, Jr. and each of them (with full power to act alone) the undersigned's true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for and in the name and on behalf of the undersigned, to execute any and all instruments and documents, and to do any and all other acts and things, that any such attorney-in-fact and agent may deem necessary or advisable, in compliance with the Securities Act of 1933, as amended (the "Securities Act"), and any rules, regulations and requirements of the Securities and Exchange Commission (the "Commission") in respect thereof, in connection with the registration under the Securities Act of $275,000,000 aggregate principal amount of 9 3/4% Senior Subordinated Notes Due 2008 of Telecommunications Techniques Co., LLC ("TTC"), payment of which is guaranteed by Dynatech Corporation ("Dynatech"), pursuant to a Registration Statement on Form S-4 (the "Registration Statement") to be filed with the Commission relating to an offer to exchange such Notes for TTC's outstanding $275,000,000 aggregate principal amount of 9 3/4% Senior Subordinated Notes Due 2008 payment of which is guaranteed by Dynatech; including specifically, but without limiting the generality of the foregoing, the power and authority to execute, for and in the name and on behalf of the undersigned in any and all capacities, the Registration Statement, any and all supplements and amend ments (including, without limitation, post-effective amendments) to such Registration Statement, and any and all other instruments or documents filed as a part of, or in connection with, such Registration Statement and supplements and amendments thereto; and the undersigned hereby ratifies and confirms all that such attorneys-in-fact and agents, or any of them, shall do or cause to be done by virtue hereof. Signed this 7th day of August, 1998. /s/ Allan M. Kline ------------------------------- Name: Allan M. Kline EX-24.3 26 POWER OF ATTORNEY FROM JOHN R. PEELER EXHIBIT 24.3 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned hereby constitutes and appoints John F. Reno, Allan M. Kline, Mark V.B. Tremallo and Robert W. Woodbury, Jr. and each of them (with full power to act alone) the undersigned's true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for and in the name and on behalf of the undersigned, to execute any and all instruments and documents, and to do any and all other acts and things, that any such attorney-in-fact and agent may deem necessary or advisable, in compliance with the Securities Act of 1933, as amended (the "Securities Act"), and any rules, regulations and requirements of the Securities and Exchange Commission (the "Commission") in respect thereof, in connection with the registration under the Securities Act of $275,000,000 aggregate principal amount of 9 3/4% Senior Subordinated Notes Due 2008 of Telecommunications Techniques Co., LLC ("TTC"), payment of which is guaranteed by Dynatech Corporation ("Dynatech"), pursuant to a Registration Statement on Form S-4 (the "Registration Statement") to be filed with the Commission relating to an offer to exchange such Notes for TTC's outstanding $275,000,000 aggregate principal amount of 9 3/4% Senior Subordinated Notes Due 2008 payment of which is guaranteed by Dynatech; including specifically, but without limiting the generality of the foregoing, the power and authority to execute, for and in the name and on behalf of the undersigned in any and all capacities, the Registration Statement, any and all supplements and amend ments (including, without limitation, post-effective amendments) to such Registration Statement, and any and all other instruments or documents filed as a part of, or in connection with, such Registration Statement and supplements and amendments thereto; and the undersigned hereby ratifies and confirms all that such attorneys-in-fact and agents, or any of them, shall do or cause to be done by virtue hereof. Signed this 7th day of August, 1998. /s/ John R. Peeler ------------------------------- Name: John R. Peeler EX-24.4 27 POWER OF ATTORNEY FROM JOSEPH L. RICE EXHIBIT 24.4 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned hereby constitutes and appoints John F. Reno, Allan M. Kline, Mark V.B. Tremallo and Robert W. Woodbury, Jr. and each of them (with full power to act alone) the undersigned's true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for and in the name and on behalf of the undersigned, to execute any and all instruments and documents, and to do any and all other acts and things, that any such attorney-in-fact and agent may deem necessary or advisable, in compliance with the Securities Act of 1933, as amended (the "Securities Act"), and any rules, regulations and requirements of the Securities and Exchange Commission (the "Commission") in respect thereof, in connection with the registration under the Securities Act of $275,000,000 aggregate principal amount of 9 3/4% Senior Subordinated Notes Due 2008 of Telecommunications Techniques Co., LLC ("TTC"), payment of which is guaranteed by Dynatech Corporation ("Dynatech"), pursuant to a Registration Statement on Form S-4 (the "Registration Statement") to be filed with the Commission relating to an offer to exchange such Notes for TTC's outstanding $275,000,000 aggregate principal amount of 9 3/4% Senior Subordinated Notes Due 2008 payment of which is guaranteed by Dynatech; including specifically, but without limiting the generality of the foregoing, the power and authority to execute, for and in the name and on behalf of the undersigned in any and all capacities, the Registration Statement, any and all supplements and amend ments (including, without limitation, post-effective amendments) to such Registration Statement, and any and all other instruments or documents filed as a part of, or in connection with, such Registration Statement and supplements and amendments thereto; and the undersigned hereby ratifies and confirms all that such attorneys-in-fact and agents, or any of them, shall do or cause to be done by virtue hereof. Signed this 7th day of August, 1998. /s/ Joseph L. Rice, III ------------------------------- Name: Joseph L. Rice, III EX-24.5 28 POWER OF ATTORNEY FROM BRIAN D. FINN EXHIBIT 24.5 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned hereby constitutes and appoints John F. Reno, Allan M. Kline, Mark V.B. Tremallo and Robert W. Woodbury, Jr. and each of them (with full power to act alone) the undersigned's true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for and in the name and on behalf of the undersigned, to execute any and all instruments and documents, and to do any and all other acts and things, that any such attorney-in-fact and agent may deem necessary or advisable, in compliance with the Securities Act of 1933, as amended (the "Securities Act"), and any rules, regulations and requirements of the Securities and Exchange Commission (the "Commission") in respect thereof, in connection with the registration under the Securities Act of $275,000,000 aggregate principal amount of 9 3/4% Senior Subordinated Notes Due 2008 of Telecommunications Techniques Co., LLC ("TTC"), payment of which is guaranteed by Dynatech Corporation ("Dynatech"), pursuant to a Registration Statement on Form S-4 (the "Registration Statement") to be filed with the Commission relating to an offer to exchange such Notes for TTC's outstanding $275,000,000 aggregate principal amount of 9 3/4% Senior Subordinated Notes Due 2008 payment of which is guaranteed by Dynatech; including specifically, but without limiting the generality of the foregoing, the power and authority to execute, for and in the name and on behalf of the undersigned in any and all capacities, the Registration Statement, any and all supplements and amend ments (including, without limitation, post-effective amendments) to such Registration Statement, and any and all other instruments or documents filed as a part of, or in connection with, such Registration Statement and supplements and amendments thereto; and the undersigned hereby ratifies and confirms all that such attorneys-in-fact and agents, or any of them, shall do or cause to be done by virtue hereof. Signed this 7th day of August, 1998. /s/ Brian D. Finn ------------------------------- Name: Brian D. Finn EX-24.6 29 POWER OF ATTORNEY FROM CHARLES P. PIEPER EXHIBIT 24.6 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned hereby constitutes and appoints John F. Reno, Allan M. Kline, Mark V.B. Tremallo and Robert W. Woodbury, Jr. and each of them (with full power to act alone) the undersigned's true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for and in the name and on behalf of the undersigned, to execute any and all instruments and documents, and to do any and all other acts and things, that any such attorney-in-fact and agent may deem necessary or advisable, in compliance with the Securities Act of 1933, as amended (the "Securities Act"), and any rules, regulations and requirements of the Securities and Exchange Commission (the "Commission") in respect thereof, in connection with the registration under the Securities Act of $275,000,000 aggregate principal amount of 9 3/4% Senior Subordinated Notes Due 2008 of Telecommunications Techniques Co., LLC ("TTC"), payment of which is guaranteed by Dynatech Corporation ("Dynatech"), pursuant to a Registration Statement on Form S-4 (the "Registration Statement") to be filed with the Commission relating to an offer to exchange such Notes for TTC's outstanding $275,000,000 aggregate principal amount of 9 3/4% Senior Subordinated Notes Due 2008 payment of which is guaranteed by Dynatech; including specifically, but without limiting the generality of the foregoing, the power and authority to execute, for and in the name and on behalf of the undersigned in any and all capacities, the Registration Statement, any and all supplements and amend ments (including, without limitation, post-effective amendments) to such Registration Statement, and any and all other instruments or documents filed as a part of, or in connection with, such Registration Statement and supplements and amendments thereto; and the undersigned hereby ratifies and confirms all that such attorneys-in-fact and agents, or any of them, shall do or cause to be done by virtue hereof. Signed this 7th day of August, 1998. /s/ Charles P. Pieper ------------------------------- Name: Charles P. Pieper EX-25 30 STATEMENT OF ELIGIBILITY OF STATE STREET B&T CO. EXHIBIT 25 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE Check if an Application to Determine Eligibility of a Trustee Pursuant to Section 305(b)(2) STATE STREET BANK AND TRUST COMPANY (Exact name of trustee as specified in its charter) MASSACHUSETTS 04-1867445 (Jurisdiction of incorporation or (I.R.S. Employer organization if not a U.S. national bank) Identification Number) 225 Franklin Street Boston, Massachusetts 02110 (Address of principal executive offices)(Zip Code) Maureen Scannell Bateman, Esq. Executive Vice President and General Counsel 225 Franklin Street Boston, Massachusetts 02110 (617) 654-3253 TELECOMMUNICATIONS TECHNIQUES CO., LLC, (NAME OF ISSUER) (Exact name of obligor as specified in its charter) DELAWARE 04-225-8582 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 20400 Observation Drive Germantown, Maryland 20876-4023 (301) 353-1550 (ADDRESS OF ISSUER) (Address of principal executive offices) (Zip Code) MASSACHUSETTS 04-225-8582 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 3 New England Executive Park Burlington, MA 01803 (ADDRESS OF ISSUER) (Address of principal executive offices) (Zip Code) (TYPE OF SECURITIES) 9 3/4% Senior Subordinated Notes Due 2008 (Title of indenture securities) ================================================================================ GENERAL ITEM 1. GENERAL INFORMATION. Furnish the following information as to the trustee: (a) Name and address of each examining or supervisory authority to which it is subject. Department of Banking and Insurance of The Commonwealth of Massachusetts, 100 Cambridge Street, Boston, Massachusetts. Board of Governors of the Federal Reserve System, Washington, D.C., Federal Deposit Insurance Corporation, Washington, D.C. (b) Whether it is authorized to exercise corporate trust powers. Trustee is authorized to exercise corporate trust powers. ITEM 2. AFFILIATIONS WITH OBLIGOR. If the Obligor is an affiliate of the trustee, describe each such affiliation. The obligor is not an affiliate of the trustee or of its parent, State Street Corporation. (See note on page 2.) ITEM 3. THROUGH ITEM 15. NOT APPLICABLE. ITEM 16. LIST OF EXHIBITS. List below all exhibits filed as part of this statement of eligibility. 1. A copy of the articles of association of the trustee as now in effect. A copy of the Articles of Association of the trustee, as now in effect, is on file with the Securities and Exchange Commission as Exhibit 1 to Amendment No. 1 to the Statement of Eligibility and Qualification of Trustee (Form T-1) filed with the Registration Statement of Morse Shoe, Inc. (File No. 22-17940) and is incorporated herein by reference thereto. 2. A copy of the certificate of authority of the trustee to commence business, if not contained in the articles of association. A copy of a Statement from the Commissioner of Banks of Massachusetts that no certificate of authority for the trustee to commence business was necessary or issued is on file with the Securities and Exchange Commission as Exhibit 2 to Amendment No. 1 to the Statement of Eligibility and Qualification of Trustee (Form T-1) filed with the Registration Statement of Morse Shoe, Inc. (File No. 22-17940) and is incorporated herein by reference thereto. 2 3. A copy of the authorization of the trustee to exercise corporate trust powers, if such authorization is not contained in the documents specified in paragraph (1) or (2), above. A copy of the authorization of the trustee to exercise corporate trust powers is on file with the Securities and Exchange Commission as Exhibit 3 to Amendment No. 1 to the Statement of Eligibility and Qualification of Trustee (Form T-1) filed with the Registration Statement of Morse Shoe, Inc. (File No. 22-17940) and is incorporated herein by reference thereto. 4. A copy of the existing by-laws of the trustee, or instruments corresponding thereto. A copy of the by-laws of the trustee, as now in effect, is on file with the Securities and Exchange Commission as Exhibit 4 to the Statement of Eligibility and Qualification of Trustee (Form T-1) filed with the Registration Statement of Eastern Edison Company (File No. 33-37823) and is incorporated herein by reference thereto. 5. A copy of each indenture referred to in Item 4. if the obligor is in default. Not applicable. 6. The consents of United States institutional trustees required by Section 321(b) of the Act. The consent of the trustee required by Section 321(b) of the Act is annexed hereto as Exhibit 6 and made a part hereof. 7. A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority. A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority is annexed hereto as Exhibit 7 and made a part hereof. NOTES In answering any item of this Statement of Eligibility which relates to matters peculiarly within the knowledge of the obligor or any underwriter for the obligor, the trustee has relied upon information furnished to it by the obligor and the underwriters, and the trustee disclaims responsibility for the accuracy or completeness of such information. The answer furnished to Item 2. of this statement will be amended, if necessary, to reflect any facts which differ from those stated and which would have been required to be stated if known at the date hereof. 3 SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, State Street Bank and Trust Company, a corporation organized and existing under the laws of The Commonwealth of Massachusetts, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Boston and The Commonwealth of Massachusetts, on the 22nd of June, 1998. STATE STREET BANK AND TRUST COMPANY By: /s/ Philip G. Kane, Jr. --------------------------------------- Philip G. Kane, Jr. Vice President 4 EXHIBIT 6 CONSENT OF THE TRUSTEE Pursuant to the requirements of Section 321(b) of the Trust Indenture Act of 1939, as amended, in connection with the proposed issuance by Telecommunications Techniques Co., LLC, of its 9 3/4% Senior Subordinated Notes Due 2008 , we hereby consent that reports of examination by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon request therefor. STATE STREET BANK AND TRUST COMPANY By: /s/ Philip G. Kane, Jr. --------------------------------------- Philip G. Kane, Jr. Vice President Dated: June 22, 1998 5 Consolidated Report of Condition of State Street Bank and Trust Company, Massachusetts and foreign and domestic subsidiaries, a state banking institution organized and operating under the banking laws of this commonwealth and a member of the Federal Reserve System, at the close of business March 31, 1998, -------------- published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act and in accordance with a call made by the Commissioner of Banks under General Laws, Chapter 172, Section 22(a).
Thousands of ASSETS Dollars - ------ ------------- Cash and balances due from depository institutions: Non-interest-bearing balances and currency and coin.......................... 1,144,309 Interest-bearing balances.................................................... 9,914,704 Securities...................................................................... 10,062,052 Federal funds sold and securities purchased under agreements to resell in....... 8,073,970 domestic offices of the bank and its Edge subsidiary Loans and lease financing receivables: Loans and leases, net of unearned income..................................... 6,433,627 Allowance for loan and lease losses.......................................... 88,820 Allocated transfer risk reserve.............................................. 0 Loans and leases, net of unearned income and allowances...................... 6,344,807 Assets held in trading accounts................................................. 1, 117,547 Premises and fixed assets....................................................... 453,576 Other real estate owned......................................................... 100 Investments in unconsolidated subsidiaries...................................... 44,985 Customers' liability to this bank on acceptances outstanding.................... 66,149 Intangible assets............................................................... 263,249 Other assets.................................................................... 1,066,572 ---------- Total assets.................................................................... 38,552,020 ========== LIABILITIES Deposits: In domestic offices.......................................................... 9,266,492 Non-interest-bearing..................................................... 6,824,432 Interest-bearing......................................................... 2,442,060 In foreign offices and Edge subsidiary....................................... 14,385,048 Non-interest-bearing..................................................... 75,909 Interest-bearing......................................................... 14,309,139 Federal funds purchased and securities sold under agreements to repurchase in... 9,949,994 domestic offices of the bank and of its Edge subsidiary Demand notes issued to the U.S. Treasury and Trading Liabilities................ 171,783 Trading liabilities............................................................. 1,078,189 Other borrowed money............................................................ 406,583 Subordinated notes and debentures............................................... 0 Bank's liability on acceptances executed and outstanding........................ 66,149 Other liabilities............................................................... 878,947 Total liabilities............................................................... 36,203,185 ---------- EQUITY CAPITAL Perpetual preferred stock and related surplus................................... 0 Common stock.................................................................... 29,931 Surplus......................................................................... 450,003 Undivided profits and capital reserves/Net unrealized holding gains (losses).... 1,857,021 Net unrealized holding gains (losses) on available-for-sale securities.......... 18,136 Cumulative foreign currency translation adjustments............................. (6,256) Total equity capital............................................................ 2,348,835 ---------- Total liabilities and equity capital............................................ 38,552,020 ----------
I, Rex S. Schuette, Senior Vice President and Comptroller of the above named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Rex S. Schuette We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. David A. Spina Marshall N. Carter Truman S. Casner 2 -----END PRIVACY-ENHANCED MESSAGE-----