-----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, LGqRvZiyqz7+JPXyIGqreJ2R9m8MxtEoW3mUMJDGgoRSi5r+JJijKZtK4MXvpuI/ jFzcVb1Nh7VD8jRH1TttnQ== 0000912057-97-014576.txt : 19970430 0000912057-97-014576.hdr.sgml : 19970430 ACCESSION NUMBER: 0000912057-97-014576 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19970429 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMPHENOL CORP /DE/ CENTRAL INDEX KEY: 0000820313 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC CONNECTORS [3678] IRS NUMBER: 222785165 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-22521 FILM NUMBER: 97590279 BUSINESS ADDRESS: STREET 1: 358 HALL AVE CITY: WALLINGFORD STATE: CT ZIP: 06492 BUSINESS PHONE: 2032658900 S-3/A 1 FORM S-3/A AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 29, 1997 REGISTRATION NO. 333-22521 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ AMENDMENT NO. 2 TO FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------ AMPHENOL CORPORATION (Exact name of registrant as specified in its charter) DELAWARE (State or other jurisdiction of incorporation) 22-2785165 (I.R.S. Employer Identification No.) 358 HALL AVENUE WALLINGFORD, CONNECTICUT 06492 (203) 265-8900 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) ------------------------------ EDWARD C. WETMORE AMPHENOL CORPORATION 358 HALL AVENUE WALLINGFORD, CONNECTICUT 06492 (203) 265-8900 (Name, address, including zip code, and telephone number, including area code, of agent for service) ------------------------------ COPIES TO: JOHN B. TEHAN, ESQ. KIRK A. DAVENPORT, ESQ. SIMPSON THACHER & BARTLETT LATHAM & WATKINS 425 LEXINGTON AVENUE 885 THIRD AVENUE NEW YORK, NEW YORK 10017 NEW YORK, NEW YORK 10022
------------------------ APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after this Registration Statement becomes effective. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. / / If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. / / If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. / / ------------------------ THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Subject to Completion, dated April 29, 1997 INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. PROSPECTUS , 1997 $240,000,000 AMPHENOL CORPORATION % SENIOR SUBORDINATED NOTES DUE 2007 The % Senior Subordinated Notes due 2007 (the "Notes") are being offered (the "Offering") by Amphenol Corporation, a Delaware corporation (the "Company" or "Amphenol"). On January 23, 1997, the Company entered into an agreement and plan of merger (as amended, the "Merger Agreement") with NXS Acquisition Corp. ("NXS Acquisition"). NXS Acquisition is, as of the date hereof, a wholly owned subsidiary of KKR 1996 Fund L.P., a limited partnership formed at the direction of Kohlberg Kravis Roberts & Co. L.P. ("KKR"). Upon the approval of the stockholders of the Company at a special meeting to be held on May 14, 1997 and the satisfaction of certain other conditions, NXS Acquisition will be merged with and into the Company, with the Company being the surviving corporation (the "Merger"). The Notes are being issued as part of the financings necessary to consummate the Merger. The Notes will mature on , 2007. Interest on the Notes will be payable semi-annually on and of each year, commencing on , 1997. The Notes will be redeemable at the option of the Company, in whole or in part, at any time on or after , 2002, in cash at the redemption prices set forth herein, plus accrued and unpaid interest, if any, thereon to the redemption date. In addition, at any time on or prior to , 2000, the Company may, at its option, redeem up to 40% of the aggregate principal amount of the Notes originally issued at a redemption price equal to % of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, thereon to the redemption date, with the net cash proceeds of one or more Equity Offerings (as defined); provided that at least 60% of the aggregate principal amount of the Notes originally issued remains outstanding immediately after the occurrence of each such redemption. The Notes will not be subject to any sinking fund requirements. Upon the occurrence of a Change of Control (as defined), the Company will be required to make an offer to purchase the Notes at a price equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, thereon to the date of purchase. See "Description of the Notes." The Notes will be general unsecured obligations of the Company, will be subordinated in right of payment to all existing and future Senior Indebtedness (as defined) of the Company and will be effectively subordinated to all obligations of the subsidiaries of the Company. The Notes will rank PARI PASSU with any future senior subordinated indebtedness of the Company and will rank senior to all other Subordinated Indebtedness (as defined) of the Company. The Indenture (as defined) permits the Company to incur additional indebtedness, including up to $1.0 billion of Senior Indebtedness under the Credit Facilities (as defined), subject to certain limitations. See "Description of the Notes." As of December 31, 1996, on a pro forma basis, after giving effect to the Merger and the Financings (as defined) (including the Offering), the aggregate amount of the Company's outstanding Senior Indebtedness would have been approximately $763.0 million (excluding $3.0 million of outstanding letters of credit and unused commitments), and, assuming the repurchase of all of the Company's outstanding 12 3/4% Senior Subordinated Notes due 2002 in the Debt Tender Offer (as defined), the Company would have had no senior subordinated indebtedness outstanding other than the Notes and no subordinated indebtedness outstanding. In addition, as of December 31, 1996, on a pro forma basis, after giving effect to the Merger and the Financings (including the Offering), the aggregate amount of outstanding Indebtedness (as defined) of the Company's subsidiaries would have been approximately $8.3 million. See "Pro Forma Consolidated Financial Statements" and "Description of the Notes-- Subordination." SEE "RISK FACTORS" BEGINNING ON PAGE 13 OF THIS PROSPECTUS FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE NOTES. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR BY ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PRICE TO UNDERWRITING PROCEEDS TO PUBLIC (1) DISCOUNT (2) COMPANY(1)(3) Per Note........................................... % % % Total.............................................. $ $ $
(1) PLUS ACCRUED INTEREST, IF ANY, FROM THE DATE OF ISSUANCE. (2) AMPHENOL HAS AGREED TO INDEMNIFY THE UNDERWRITERS (AS DEFINED) AGAINST CERTAIN LIABILITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SEE "UNDERWRITING." (3) BEFORE DEDUCTING EXPENSES PAYABLE BY AMPHENOL ESTIMATED AT $ . The Notes are being offered by the Underwriters, subject to prior sale, when, as and if delivered to and accepted by them, and subject to various prior conditions, including the right to reject orders in whole or in part. It is expected that delivery of the Notes will be made in New York, New York on or about , 1997. -------------------------- JOINT BOOK-RUNNING MANAGERS DONALDSON, LUFKIN & JENRETTE LEHMAN BROTHERS SECURITIES CORPORATION ------------------------ CO-MANAGERS BT SECURITIES CORPORATION CHASE SECURITIES INC. PHOTOS FOR INSIDE FRONT COVER TO PROSPECTUS AMPHENOL--INTERCONNECT TECHNOLOGY APPLICATIONS TOP LEFT OF PAGE AEROSPACE HIGH DENSITY PCB CONNECTORS USED IN AEROSPACE APPLICATIONS TOP RIGHT OF PAGE AUTOMOTIVE INTERCONNECT SYSTEMS FOR AUTOMOTIVE AIRBAGS AND PRETENSIONER SEATBELTS CENTER OF PAGE WIRELESS COMMUNICATIONS SMART CARD INTERCONNECT TECHNOLOGY USED IN MOBILE PHONES BOTTOM LEFT OF PAGE FIBER OPTIC COMMUNICATIONS 4-CHANNEL FIBER OPTIC DENSE WAVELENGTH DIVISION MULTIPLEXER ("DWDM") FOR MULTIPLEXING IN FIBER OPTIC COMMUNICATION NETWORKS BOTTOM RIGHT OF PAGE BROADBAND COMMUNICATIONS COAXIAL CABLES USED IN VARIOUS BROADBAND APPLICATIONS IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY ENGAGE IN TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NOTES. SPECIFICALLY, THE UNDERWRITERS MAY OVERALLOT IN CONNECTION WITH THE OFFERING AND MAY BID FOR AND PURCHASE NOTES IN THE OPEN MARKET. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING." 2 AVAILABLE INFORMATION Amphenol is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Reports, proxy statements and other information filed by the Company with the Commission can be inspected and copied at the public reference facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's regional offices at Seven World Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can be obtained from the Public Reference Section of the Commission at prescribed rates. Such material may also be accessed electronically by means of the Commission's home page on the Internet (http://www.sec.gov). Amphenol's Class A Common Stock, $.001 par value per share (the "Common Stock"), is traded on the New York Stock Exchange (the "NYSE"), and reports, proxy statements and other information can also be inspected at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005. Amphenol has filed with the Commission a registration statement on Form S-3 (together with all amendments, supplements and exhibits thereto, the "Registration Statement") under the Securities Act of 1933, as amended (the "Securities Act") with respect to the securities offered hereby. This Prospectus, which forms a part of the Registration Statement, does not contain all the information set forth in the Registration Statement, certain parts of which are omitted in accordance with the rules and regulations of the Commission. Statements contained in this Prospectus as to the contents of any contract or other document that is filed as an exhibit to the Registration Statement are qualified by reference to the full text of such contract or document. INCORPORATION OF CERTAIN INFORMATION BY REFERENCE The following documents filed by the Company with the Commission (File No. 1-10879) are incorporated herein by reference and shall be deemed to be a part hereof: 1. Annual Report of the Company on Form 10-K for the year ended December 31, 1996 (filed with the Commission on February 19, 1997), as amended by Amendment No. 1 thereto on Form 10K/A (filed with the Commission on March 31, 1997); and 2. Current Report of the Company on Form 8-K dated January 23, 1997. All documents and reports filed by the Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to the termination of the Offering shall be deemed to be incorporated herein by reference and shall be deemed to be a part hereof from the date of filing of such documents and reports. Any statement contained in a document or report incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any subsequently filed document or report that also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The Company will provide, without charge to each person, including any beneficial owner, to whom this Prospectus is delivered, upon written or oral request of such person, a copy of any or all of the documents or reports incorporated herein by reference (other than exhibits thereto, unless such exhibits specifically are incorporated by reference into such documents or reports or this Prospectus). Requests for such documents or reports should be submitted in writing, addressed to the Secretary, Amphenol Corporation, 358 Hall Avenue, Wallingford, Connecticut 06492, telephone (203) 265-8900. 3 PROSPECTUS SUMMARY THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ IN CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND CONSOLIDATED FINANCIAL STATEMENTS, INCLUDING THE NOTES THERETO, CONTAINED ELSEWHERE IN THIS PROSPECTUS AND INCORPORATED HEREIN BY REFERENCE. UNLESS THE CONTEXT INDICATES OTHERWISE, ALL REFERENCES TO THE "COMPANY" OR "AMPHENOL" SHALL MEAN AMPHENOL CORPORATION AND ITS CONSOLIDATED SUBSIDIARIES. THE COMPANY Amphenol is a leading designer, manufacturer and marketer of electrical, electronic and fiber optic connectors, interconnect systems and coaxial and flat-ribbon cable. The primary end markets for the Company's products are telephone, wireless and data communications systems; cable television systems; commercial and military aerospace electronics; automotive and mass transportation applications; and industrial factory automation equipment. For the year ended December 31, 1996, approximately 52% of the Company's net sales were to the worldwide communications market (including 23% for the cable television market), 26% were for commercial and military aerospace and other military electronics applications and 22% were for industrial, transportation and other applications. The Company focuses on optimizing its mix of higher margin application-specific products in its product offerings and has enhanced the cost controls in its operations. As a result of these initiatives, the Company's operating profit margin has increased from 13.5% in fiscal year 1993 to 17.8% in fiscal year 1996. For fiscal year 1996, the Company had net sales, EBITDA (as defined) and net income of $776.2 million, $166.1 million and $67.6 million, respectively. The Company designs and manufactures connectors and interconnect systems, which are used primarily to conduct electrical and optical signals, for a wide range of sophisticated electronic applications. The Company believes, based primarily on published market research, that it is one of the largest connector manufacturers in the world and the leading supplier of high performance environmental connectors that require superior performance and reliability under conditions of stress and in hostile environments. Such conditions are frequently encountered in commercial and military aerospace applications and other demanding industrial applications such as natural resource exploration, medical instrumentation and off-road construction. In addition, the Company has developed a broad range of interconnect products to serve the rapidly growing markets of wireless communications including cellular and personal communication networks and fiber optic networks; electronic commerce including smart cards and electronic purse applications; and automotive safety products including airbags, pretensioner seatbelts and anti-lock braking systems. The Company is also one of the leaders in developing interconnect products for factory automation and machine tools and develops interconnect products for mass transportation applications. The Company believes that the worldwide industry for interconnect products and systems is highly fragmented with over 1,000 producers of connectors worldwide, of which the 10 largest producers accounted for a combined market share of approximately 36% in 1996. The Company estimates that the total sales for the industry were approximately $27.0 billion in 1996. The Company's Times Fiber subsidiary is the world's second largest producer of coaxial cable for the cable television market. The Company believes that Times Fiber is one of the lowest cost producers of coaxial cable for the cable television market, and that it is one of the technological leaders in increasing the bandwidth of coaxial cable products to accommodate increased channel capacity for full service cable television/telecommunication systems. In addition, the Company is beginning to supply the developing market for high bandwidth coaxial cable and related interconnect products used in full service cable television/telecommunication systems being installed by cable operators and telecommunication companies. The Company has also become a major supplier of coaxial cable to the emerging international cable television markets. The Company estimates that the total sales for the worldwide market for coaxial cable for cable television were approximately $800.0 million in 1996. 4 The Company is a global manufacturer employing advanced manufacturing processes. The Company's products are manufactured and assembled at facilities in the United States, Canada, Mexico, Germany, France, the United Kingdom, the Czech Republic, Hong Kong, Taiwan, Japan, India and the People's Republic of China. The Company's connector products are sold through its global sales force and independent manufacturers' representatives to thousands of original equipment manufacturers ("OEMs") in 52 countries throughout the world as well as through a global network of electronics distributors. The Company's coaxial cable products are primarily sold to cable television operators and to telecommunication companies who have entered the broadband communications market. In 1996, approximately 55% of the Company's net sales were in North America, 33% were in Europe and 12% were in Asia and other countries. COMPETITIVE STRENGTHS - LEADER IN ATTRACTIVE MARKET SEGMENTS. The Company serves diverse markets within the connector industry such as the worldwide communications, aerospace, automotive and industrial markets and growing segments within these markets. For instance, the Company has a broad product offering of communications-related interconnect products such as sophisticated wavelength division multiplexers used in fiber optic networks, radio frequency connector products used in base stations and handheld sets in wireless communications, and interconnect acceptor devices used in smart card systems. The Company, in conjunction with a significant OEM customer, has also developed sophisticated interconnect coupler technology for advanced commercial aircraft flight control systems. In addition, the Company has pioneered the development of interconnect products for automotive safety systems such as airbags and pretensioner seatbelts and has been an innovator in the development of motion control connector products for factory automation. With respect to its coaxial cable products for cable television, the Company has been one of the technological leaders in expanding the bandwidth characteristics of coaxial cable so as to permit greater channel capacity for cable television systems. - CLOSE RELATIONSHIPS WITH OEMS. Due in part to its 60 year history in the connector business and its reputation for innovative, high quality interconnection products, the Company has developed close relationships with many of its OEM customers in its various product segments. To this end, the Company has achieved preferred supplier designations from many OEMs, enabling the Company to work closely with these OEMs through product design teams and collaborative arrangements to design and manufacture application-specific products. The Company's key account managers enhance the Company's role as a supplier of application-specific products for OEMs by directing customer relationships on a global basis and bringing to bear the Company's global resources to satisfy the worldwide needs of its multinational OEM customers. - GLOBAL PRESENCE. Approximately 49% of the Company's sales for fiscal year 1996 were outside of the United States. The Company has 31 manufacturing and assembly facilities on three continents and sales and distribution organizations and relationships in 52 countries throughout the world. The Company's global presence enables it to serve the expanding global needs and requirements of its existing multinational and international OEM customers and to position itself to develop new customer relationships with other multinational and international OEMs. The Company believes that having a local presence in foreign markets in which its OEM customers operate is an important factor in its ability to provide high quality products on a timely and efficient basis. Moreover, the Company attains important operational advantages by developing and sharing "best practices" across its vast international design and manufacturing network. - EXTENSIVE PRODUCT LINE. Through its advanced technological and design capabilities, the Company has developed an extensive line of interconnect products for its customers worldwide which resulted in sales of approximately 83,000 stock keeping units ("SKUs") in 1996. By offering a broad array of 5 high quality products, the Company strives to provide highly-engineered, reliable and value-added solutions for all of its customers' interconnection needs. For example, based on Amphenol's position as the leading supplier in the high performance environmental connector market, the Company performed certain research and development for, and is now producing, a family of connectors comprising approximately 1,000 SKUs for use in the international space station program. The Company believes that the breadth of its product line combined with its global presence is an important competitive advantage in an environment in which many OEMs and other customers are reducing the size of their supplier bases. - BROAD CUSTOMER BASE. The Company's products are used in a wide variety of applications by numerous customers, none of whom accounted for more than 5% of the Company's sales in 1996 (except for sales under contract with the U.S. Government and its subcontractors, which accounted for 8% of 1996 sales). In 1996, the Company sold its products to approximately 11,500 customer locations worldwide. The Company's products are also sold to additional customer locations through eight of the 10 largest (based on sales) U.S. electronics distributors, which the Company believes is an important competitive advantage in effectively marketing its products. By servicing a broad array of customers in a variety of different industries and countries, the Company strives to develop opportunities to cross-market products and technologies. BUSINESS STRATEGY The Company's strategic objective is to further enhance its position as a leading global designer and manufacturer of interconnect solutions and coaxial cable products. The Company seeks to achieve this objective by pursuing the following strategies: - INCREASE DEVELOPMENT OF APPLICATION-SPECIFIC PRODUCTS FOR OEMS. The Company intends to expand the scope and number of preferred supplier designations and application-specific assignments it has with OEM customers. The Company works closely with its network of OEM customers at the design stage to create and manufacture innovative connector solutions to meet its customers' specific interconnection needs. The Company's application-specific products designed and manufactured for OEMs in this manner generally have higher margins than the Company's other interconnection products and have been developed across all of the Company's product lines. In addition to developing further its relationship with these OEMs and providing a source of high margin sales, this product development strategy has a number of important ancillary benefits. For instance, once an application-specific product has been developed for a specific OEM customer, such new product often becomes widely accepted in the industry for similar applications and products manufactured by other potential customers, thereby providing additional sources of future revenue. For example, the Company developed an application-specific interconnect system for automotive safety devices for a European luxury automobile manufacturer that became broadly used by other European automobile manufacturers for standard car models. - EXPAND PRODUCT LINES. The Company's current product lines encompass market segments comprising approximately 50% of the $27.0 billion connector industry. The Company continuously strives to expand its product lines in order to become a primary source supplier of interconnect solutions for many of its customers. By expanding its product lines, the Company intends to leverage its extensive customer relationships to cross-sell additional connector products. For example, in 1995, the Company developed and is now producing a broad line of radio frequency coaxial and fiber optic connectors for the cable television industry, which the Company markets to its large base of existing coaxial cable customers. Moreover, in an environment in which many OEMs and other customers are reducing the size of their supplier bases, the Company believes that the expansion of its product lines will further solidify its importance to existing customers and enable the Company to effectively market products to new customers. 6 - FOCUS ON RAPIDLY GROWING COMMUNICATIONS SEGMENT. The Company intends to capitalize on its advanced technological capabilities and products in the emerging and rapidly expanding communications segment of the connector industry, which has displayed strong growth in recent years in connection with the proliferation of wireless communications including cellular telephones and personal communication networks. For instance, the Company has developed a broad range of radio frequency connector products for the wireless communications market, and the Company's technology for smart card acceptor devices is used in many of the hand held cellular telephones in Europe and elsewhere. The Company also believes that many of the advanced technologies developed through its product development activity in the commercial and military aerospace segment provide it with significant competitive advantages in the development of new commercial communications connector products. For example, by using the technological capabilities that it developed in designing filtered connectors for the aerospace segment, the Company was able to develop a line of filtered connectors for the commercial communications segment. - EXPAND GLOBAL PRESENCE. The Company intends to further expand its global manufacturing, sales and service operations to better serve its existing client base, penetrate developing markets and establish new customer relationships. As the Company's multinational OEM customers expand their international operations to take advantage of developing markets and the lower manufacturing and labor costs of such markets, the Company intends to similarly expand its international capabilities in order to provide just-in-time facilities near these customers. Such international expansion also enables the Company to further reduce its reliance on the U.S. economy and to take advantage of the lower manufacturing costs in certain countries. The Company has recently increased its presence in the Asia-Pacific region through the expansion of its sales force, the expansion of its manufacturing facilities in the People's Republic of China and the acquisition of 51% of Kai-Jack Industrial Co., Ltd. ("Kai-Jack"), one of the leading Taiwanese radio frequency connector manufacturers. - EXPAND INTERNATIONAL SALES OF COAXIAL CABLE. The Company believes that the relatively low penetration rate for cable television in countries outside of the United States provides significant opportunity for future growth in international sales of coaxial cable. For example, it is estimated that in 1996 only 25% of the television households in Western Europe, 15% of such households in Asia, and 11% of such households in Latin America subscribed to some form of multichannel television service as compared to an estimated subscription rate of 64% in the United States. Cable system developments are currently planned in a number of different countries, including large portions of Europe, Asia and Latin America. The Company believes that it is well positioned to take advantage of this opportunity because it is the second largest provider of coaxial cable for cable television in the world and because it has extensive relationships with many of the foreign and multinational multiple system operators ("MSOs") planning system developments, including United International Holdings, Inc., Telewest Communications Plc and Continental Cablevision, Inc. - PURSUE STRATEGIC ACQUISITIONS AND INVESTMENTS. The Company intends to continue to pursue strategic acquisitions that complement its existing business and further expand its product lines and technological capabilities. The interconnection industry is highly fragmented with over 1,000 producers of connectors worldwide, of which the 10 largest producers accounted for a combined market share of approximately 36% in 1996. The Company believes that the fragmented nature of the connector industry provides significant opportunities for future strategic acquisitions. Furthermore, the Company believes that it can improve the profitability of the acquired companies through economies of scale. The Company's recent acquisitions of The Sine Companies, Inc. ("Sine") and Kai-Jack, which expanded the Company's capabilities in the factory automation and radio frequency segments, respectively, and, in the case of Kai-Jack, increased the Company's presence in the growing Asia-Pacific market, are examples of the type of synergistic acquisitions the Company plans to continue to pursue. 7 THE MERGER AND THE FINANCINGS On January 23, 1997, the Company entered into an agreement and plan of merger (as amended as of April 9, 1997, the "Merger Agreement") with NXS Acquisition Corp. ("NXS Acquisition"). NXS Acquisition, as of the date hereof, is a wholly owned subsidiary of KKR 1996 Fund L.P. (the "Partnership"), a limited partnership formed at the direction of Kohlberg Kravis Roberts & Co. L.P. ("KKR"). Pursuant to the Merger Agreement, upon the approval of the stockholders of the Company at the special meeting to be held on May 14, 1997 and the satisfaction of certain other conditions, NXS Acquisition will be merged with and into the Company, with the Company being the surviving corporation (the "Merger"). The Merger contemplates that approximately 90% of the presently issued and outstanding shares of the Company's Common Stock will be converted, at the election of the holder, into $26.00 in cash per share (the "Cash Consideration"), and that approximately 10% of such shares will be retained by stockholders. As a result of the Merger, the Company's existing stockholders will own approximately 25% of the shares issued and outstanding immediately after the Merger and stockholders of NXS Acquisition will own approximately 75% of the shares issued and outstanding immediately after the Merger, in each case, before giving effect to the exercise of the NXS Option or the Stockholders Option (each as defined) granted with respect to the shares of Common Stock owned by the DeGeorge Stockholders (as defined) pursuant to the Stockholders Agreement (as defined) and before giving effect to any purchase of shares from Messrs. Loeffler, Jepsen and Cohane. Assuming all stockholders elect to convert all of their shares into the right to receive the Cash Consideration, which would maximize the number of shares subject to the NXS Option and the Stockholders Option after the Merger, then upon exercise of either such option, the stockholders of NXS Acquisition would own, directly or indirectly, approximately 82% of the shares issued and outstanding immediately after the Merger and the remaining stockholders would own, in the aggregate, approximately 18% of such shares. In addition, if Messrs. Loeffler, Jepsen and Cohane determine to sell a portion of their shares which may be retained by them following the Merger to such stockholders of NXS Acquisition, such stockholders of NXS Acquisition could own, indirectly, up to an additional 1.5% of such shares. See "The Merger" and "Management--Stock Purchase and Stock Option Agreements." The transactions contemplated by the Merger Agreement will be funded by (i) $750.0 million of bank borrowings by the Company pursuant to a senior secured term loan facility (the "Term Loan Facility"), (ii) the offering of $240.0 million aggregate principal amount of the Notes (the "Offering"), (iii) an equity investment in the Company by the Partnership (and by one or more other partnerships organized at the direction of KKR) of approximately $341.0 million and (iv) available cash of the Company. Such amounts will be used to (a) pay approximately $1,048.3 million of cash merger consideration, (b) repay indebtedness of the Company under its existing bank credit facility (the "Existing Bank Credit Facility") ($24.0 million at December 31, 1996), (c) redeem the $100.0 million outstanding aggregate principal amount of the Company's 10.45% Senior Notes due 2001 (the "Existing Senior Notes"), (d) repurchase the $95.0 million outstanding aggregate principal amount of the Company's 12 3/4% Senior Subordinated Notes due 2002 (the "12 3/4% Notes" and, together with the Existing Senior Notes, the "Existing Notes") in the Company's tender offer for the 12 3/4% Notes (the "Debt Tender Offer"), (e) pay an estimated $19.3 million of premiums in connection with the retirement of the Existing Notes, and (f) pay an estimated $58.4 million in transaction fees and expenses incurred in connection with the Merger. The Company also expects to enter into a $150.0 million senior secured revolving credit facility (the "Revolving Credit Facility") to provide for the Company's working capital requirements following the Merger. The Revolving Credit Facility and the Term Loan Facility (collectively the "Credit Facilities") will be provided by a group of banks led by Bankers Trust Company ("BTCo"). The Credit Facilities and the Offering are collectively referred to herein as the "Financings." On January 21, 1997, the Company received an executed commitment from BTCo to provide the Credit Facilities. The commitment is subject to customary conditions, including the negotiation, execution and delivery of definitive documentation with respect to the commitment. See "Use of Proceeds," "Capitalization" and "Description of Credit Facilities." 8 The sources and uses of the funds for the Merger and the related transactions (including the Financings and the Debt Tender Offer), which assume that the Merger occurred on December 31, 1996, are as follows (dollars in millions):
SOURCES OF FUNDS Revolving Credit Facility.......................................................... $ 13.0 Term Loan Facility................................................................. 750.0 Senior Subordinated Notes offered hereby........................................... 240.0 Equity investment.................................................................. 341.0 Available cash..................................................................... 1.0 --------- Total Sources.................................................................. $ 1,345.0 --------- --------- USES OF FUNDS Repayment of Existing Bank Credit Facility......................................... $ 24.0 Redemption of Existing Senior Notes................................................ 100.0 Repurchase of 12 3/4% Notes (a).................................................... 95.0 Payment of cash merger consideration............................................... 1,048.3 Estimated debt retirement premiums (a)............................................. 19.3 Estimated transaction fees and expenses (b)........................................ 58.4 --------- Total Uses..................................................................... $ 1,345.0 --------- ---------
- ------------------------ (a) Assumes all of the outstanding 12 3/4% Notes are repurchased in the Debt Tender Offer; however, there can be no assurance that all of such 12 3/4% Notes will be repurchased. At least 51% (the "Minimum Condition") of the outstanding aggregate principal amount of such 12 3/4% Notes must be repurchased in the Debt Tender Offer. If less than all of the holders of the 12 3/4% Notes tender, the 12 3/4% Notes that are not repurchased will remain outstanding at least until December 15, 1997, the earliest date on which such 12 3/4% Notes may be optionally redeemed by the Company. The Debt Tender Offer was commenced by the Company on April 15, 1997 and, on April 29, 1997, the Minimum Condition was achieved. (b) Includes aggregate cash consideration of up to $2.4 million related to the Company stock options to be canceled in conjunction with the Merger. RECENT DEVELOPMENTS The Company reported sales and net income of $211.8 million and $17.5 million, respectively, for the first quarter of 1997 compared to sales and net income of $194.8 million and $16.9 million, respectively, for the first quarter of 1996. Currency translation had the effect of decreasing sales by approximately $4.7 milllion in the first quarter of 1997 compared to the first quarter of 1996. 9 THE OFFERING Securities Offered.............. $240,000,000 in aggregate principal amount of % Senior Subordinated Notes due 2007. Maturity Date................... , 2007. Interest Payment Dates.......... and of each year, commencing , 1997. Optional Redemption............. The Notes will be redeemable at the option of the Company, in whole or in part, at any time on or after , 2002, in cash at the redemption prices set forth herein, plus accrued and unpaid interest, if any, thereon to the date of redemption. In addition, at any time on or prior to , 2000, the Company may, at its option, redeem up to 40% of the aggregate principal amount of the Notes originally issued at a redemption price equal to % of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, thereon to the redemption date, with the net cash proceeds of one or more Equity Offerings (as defined); provided that at least 60% of the aggregate principal amount of the Notes originally issued remains outstanding immediately after the occurrence of each such redemption. See "Description of the Notes-- Optional Redemption." Change of Control............... Upon the occurrence of a Change of Control (as defined), the Company will be required to make an offer to purchase the Notes at a price in cash equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, thereon to the date of purchase. See "Description of the Notes--Repurchase at the Option of Holders--Change of Control." There can be no assurance that, in the event of a Change of Control, the Company would have sufficient funds to purchase all Notes tendered. See "Risk Factors--Change of Control." Ranking......................... The Notes will be general unsecured obligations of the Company, will be subordinated in right of payment to all existing and future Senior Indebtedness (as defined) of the Company and will be effectively subordinated to all Indebtedness and other obligations (including trade payables) of the Company's subsidiaries. The Notes will rank PARI PASSU with any future senior subordinated indebtedness of the Company and will rank senior to all other Subordinated Indebtedness (as defined) of the Company. The Indenture permits the Company to incur additional indebtedness, including up to $1.0 billion of Senior Indebtedness under the Credit Facilities, subject to certain limitations. At December 31, 1996, on a pro forma basis after giving effect to the Merger and the Financings (including the Offering), the aggregate amount of the Company's outstanding Senior Indebtedness would have been approximately $763.0 million (excluding $3.0 million of outstanding letters of credit and unused commitments), and, assuming the repurchase of all of the Company's 12 3/4% Notes in the Debt Tender Offer, the Company would have had no senior subordinated indebtedness outstanding other than the Notes and no subordinated indebtedness outstanding. In addition, as of December 31, 1996, on a pro forma basis after giving effect to the Merger and the Financings (including the Offering), the aggregate
10 amount of the outstanding Indebtedness of the Company's subsidiaries would have been approximately $8.3 million. See "Pro Forma Consolidated Financial Statements" and "Description of the Notes--Subordination." Certain Covenants............... The indenture under which the Notes will be issued (the "Indenture") will contain covenants that will, subject to certain exceptions, limit, among other things, the ability of the Company and/or its Restricted Subsidiaries (as defined) to (i) pay dividends or make certain other restricted payments or investments; (ii) incur additional Indebtedness and issue disqualified stock and preferred stock; (iii) create liens on assets; (iv) merge, consolidate, or sell all or substantially all of their assets; (v) enter into certain transactions with affiliates; (vi) create restrictions on dividends or other payments by Restricted Subsidiaries to the Company; (vii) create guarantees of indebtedness by Restricted Subsidiaries; and (viii) incur other senior subordinated indebtedness. See "Description of the Notes." Use of Proceeds................. The gross proceeds from the Offering, together with borrowings under the Credit Facilities, the equity contribution by the Partnership and certain available cash of the Company, will be used upon consummation of the Merger to pay approximately $1,048.3 million of cash merger consideration, repay indebtedness of the Company under the Existing Bank Credit Facility ($24.0 million at December 31, 1996), retire $195.0 million of the Existing Notes, pay estimated debt retirement premiums of $19.3 million in connection with the retirement of the Existing Notes, and pay an estimated $58.4 million in transaction fees and expenses. See "The Merger" and "Use of Proceeds." Conditions...................... The closing of the Offering is conditioned upon consummation of the Merger and the Financings (other than the Offering).
RISK FACTORS Prospective investors should carefully consider the following factors before purchasing the Notes offered hereby. Following the Merger, the Company will (i) have substantial leverage, (ii) be subject to significant operating and financial restrictions pursuant to the Indenture and the Credit Facilities, and (iii) be controlled by affiliates of KKR. In addition, (i) the Notes offered hereby will be subordinated to all existing and future Senior Indebtedness of the Company, including all Indebtedness under the Credit Facilities, (ii) the Notes will not be secured; therefore, lenders of secured indebtedness, including the lenders under the Credit Facilities, will have a prior claim with respect to the assets securing such indebtedness, and (iii) there can be no assurance that the Company will be able to purchase the Notes upon a Change of Control. The Company's business entails certain risks relating to (i) the possibility of fluctuations in demand for the Company's coaxial cable products, particularly as a result of changes in the demand for such products in the cable television industry, (ii) the possibility that diminished military expenditures will adversely affect the Company's sales, (iii) competition, (iv) the possible adverse effect of foreign exchange rates fluctuations and other risks of conducting business abroad, and (v) certain union organizing activities. See "Risk Factors" for a discussion of certain factors that should be considered in connection with an investment in the Notes. 11 SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA The following table sets forth summary consolidated financial and other data of the Company. The historical consolidated financial data for the three fiscal years ended December 31, 1996 have been derived from, and should be read in conjunction with, the audited consolidated financial statements of Amphenol and related notes thereto included elsewhere in this Prospectus. The historical consolidated financial data for the two fiscal years ended December 31, 1993 have been derived from audited consolidated financial statements of the Company which are not contained herein. The pro forma consolidated financial data have been derived from the Pro Forma Consolidated Financial Statements and the related notes thereto included elsewhere herein. The pro forma statement of income data for the period presented give effect to the Merger and the Financings and related transactions (including the redemption of the Existing Senior Notes and the repurchase of all of the outstanding 12 3/4% Notes in the Debt Tender Offer) as if such transactions were consummated on January 1, 1996. The pro forma balance sheet data give effect to the Merger and the Financings and related transactions (including the redemption of the Existing Senior Notes and the repurchase of all of the outstanding 12 3/4% Notes in the Debt Tender Offer) as if such transactions had occurred as of December 31, 1996. See "Pro Forma Consolidated Financial Statements," "Selected Historical Consolidated Financial and Other Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the historical consolidated financial statements and the related notes thereto included elsewhere in this Prospectus.
YEAR ENDED DECEMBER 31, ------------------------------------------ 1992 1993 1994 1995 --------- --------- --------- --------- (DOLLARS IN THOUSANDS) STATEMENT OF INCOME DATA: Net sales.................................................................... $ 457,677 $ 603,967 $ 692,651 $ 783,233 Cost of sales, excluding depreciation and amortization expense............... 313,322 404,709 458,318 506,707 Depreciation and amortization expense........................................ 26,048 28,614 28,099 27,795 Selling, general and administrative expense.................................. 75,107 89,386 102,183 114,041 --------- --------- --------- --------- Operating income............................................................. $ 43,200 $ 81,258 $ 104,051 $ 134,690 --------- --------- --------- --------- --------- --------- --------- --------- Net income before extraordinary item......................................... $ 8,639 $ 24,749 $ 42,400 $ 62,858 --------- --------- --------- --------- --------- --------- --------- --------- OTHER DATA: EBITDA (a)................................................................... $ 70,080 $ 109,035 $ 131,209 $ 162,145 EBITDA margin (b)............................................................ 15.3% 18.1% 18.9% 20.7% Capital expenditures......................................................... $ 6,695 $ 5,988 $ 10,936 $ 20,381 Ratio of earnings to fixed charges (c)....................................... 1.5x 1.8x 2.9x 4.1x Cash flow provided by operations............................................. $ 23,538 $ 56,471 $ 88,871 $ 79,227 Cash flow used by investing activities....................................... (21,793) (7,752) (13,460) (21,411) Cash flow used by financing activities....................................... (3,779) (51,039) (73,714) (50,370) PRO FORMA DATA: EBITDA (a)................................................................... Cash interest expense (d).................................................... Ratio of EBITDA to cash interest expense..................................... Ratio of earnings to fixed charges (c)....................................... 1996 --------- STATEMENT OF INCOME DATA: Net sales.................................................................... $ 776,221 Cost of sales, excluding depreciation and amortization expense............... 494,689 Depreciation and amortization expense........................................ 28,808 Selling, general and administrative expense.................................. 114,746 --------- Operating income............................................................. $ 137,978 --------- --------- Net income before extraordinary item......................................... $ 67,578 --------- --------- OTHER DATA: EBITDA (a)................................................................... $ 166,061 EBITDA margin (b)............................................................ 21.4% Capital expenditures......................................................... $ 20,374 Ratio of earnings to fixed charges (c)....................................... 4.4x Cash flow provided by operations............................................. $ 68,207 Cash flow used by investing activities....................................... (49,835) Cash flow used by financing activities....................................... (26,416) PRO FORMA DATA: EBITDA (a)................................................................... $ 166,061 Cash interest expense (d).................................................... 88,544 Ratio of EBITDA to cash interest expense..................................... 1.9x Ratio of earnings to fixed charges (c)....................................... 1.4x
AS OF DECEMBER 31, 1996 ------------------------ HISTORICAL PRO FORMA ----------- ----------- (DOLLARS IN THOUSANDS) BALANCE SHEET DATA: Working capital........................................................................................ $ 136,864 $ 153,395 Total assets........................................................................................... 710,662 754,421 Total debt (e)......................................................................................... 227,243 1,011,195 Total shareholders' equity (deficit)................................................................... 360,548 (379,645)
- ------------------------ (a) "EBITDA" represents earnings before interest expense, other financing fees associated with program fees on sale of accounts receivable, interest income, income taxes, and depreciation and amortization expense, and excludes minority interest. EBITDA is not intended to represent cash flow from operations as defined by generally accepted accounting principles and should not be used as an alternative to net income as an indicator of the Company's operating performance or to cash flow as a measure of liquidity. EBITDA is included in the Prospectus as it is a basis upon which the Company assesses its financial performance, and certain covenants in the Company's borrowing arrangements will be tied to similar measures. EBITDA and EBITDA margin, as presented, represent useful measures of assessing the Company's ongoing operating activities without the impact of financing activity and non-recurring charges. While EBITDA is frequently used as a measure of operations and the ability to meet debt service requirements, it is not necessarily comparable to other similarly titled captions of other companies due to the potential inconsistencies in the method of calculation. EBITDA in fiscal 1992 excludes the effects of a non-recurring charge of $4.13 million associated with an acquisition. (b) EBITDA margin represents EBITDA divided by net sales. (c) For purposes of determining the ratio of earnings to fixed charges, earnings are defined as earnings before income taxes and extraordinary items, plus fixed charges. Fixed charges includes interest expenses on all indebtedness, other financing fees associated with program fees on sale of accounts receivable, amortization of deferred debt issuance costs, and one-third of rental expenses on operating leases, representing that portion of rental expense deemed by the Company to be attributable to interest. (d) Pro forma cash interest expense is defined as interest expense exclusive of bank agency fees, commitment fees, and amortization of deferred debt issuance costs. (e) Total debt includes long-term debt and the current portion of long-term debt. 12 RISK FACTORS PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY THE FOLLOWING FACTORS BEFORE PURCHASING THE NOTES OFFERED HEREBY. SUBSTANTIAL LEVERAGE AND DEBT SERVICE The Company will incur substantial indebtedness in connection with the Merger. See "The Merger" and "Capitalization." As of December 31, 1996, after giving pro forma effect to the Merger and the Financings (including the Offering), the Company would have had $1,011.3 million (excluding $3.0 million of outstanding letters of credit) of consolidated indebtedness and $379.7 million of consolidated shareholders' deficit. Upon completion of the Financings, the Company will have consolidated long-term indebtedness substantially greater than the Company's pre-Merger long-term indebtedness. As of December 31, 1996, after giving pro forma effect to the Merger and the Financings, the Company would have had $134.0 million (after giving effect to $3.0 million of outstanding letters of credit) available to be borrowed under the $150.0 million Revolving Credit Facility. Also after giving pro forma effect to such transactions, the Company's ratio of earnings to fixed charges would have been 1.4 to 1.0 for the fiscal year ended December 31, 1996. Pro forma net income for the fiscal year ended December 31, 1996 would have been $23.4 million, as compared to $67.6 million for the same period on an historical basis, and pro forma cash interest expense for the fiscal year ended December 31, 1996 would have been $88.5 million ($95.6 million of total interest expense), as compared to $23.9 million ($24.6 million of total interest expense) for the same period on an historical basis. See "Capitalization" and "Pro Forma Consolidated Financial Statements." The Company and its subsidiaries may incur additional indebtedness in the future, subject to certain limitations contained in the instruments governing their indebtedness. Accordingly, the Company will have significant debt service obligations. The Company's debt service obligations could have important consequences to holders of the Notes, including the following: (i) a substantial portion of the Company's cash flow available from operations after satisfying certain liabilities arising in the ordinary course of business will be dedicated to the payment of principal and interest on its indebtedness, thereby reducing the funds that would otherwise be available to the Company, including for acquisitions and future business opportunities; (ii) the Company's ability to obtain additional financing in the future may be limited; (iii) certain of the Company's borrowings (including, but not limited to, the amounts borrowed under the Credit Facilities) will be at variable rates of interest, which could cause the Company to be vulnerable to increases in interest rates; (iv) the Company's flexibility in planning for, or reacting to, changes in its business and the industry may be limited; (v) the Company's higher degree of leverage may make it relatively more vulnerable to economic downturns and competitive pressures; (vi) a substantial decrease in net operating cash flows or an increase in expenses of the Company could make it difficult for the Company to meet its debt service requirements or force it to modify its operations; and (vii) all of the indebtedness incurred in connection with the Credit Facilities will become due prior to the time the principal payment on the Notes will become due. The Company's ability to make scheduled payments of the principal of, or to pay interest on, or to refinance its indebtedness (including the Notes) and to make scheduled payments under its operating leases depends on its future performance, which to a certain extent is subject to economic, financial, competitive and other factors beyond its control. Based upon the current level of operations and anticipated growth, management believes that future cash flow from operations, together with available borrowings under the Revolving Credit Facility, will be adequate to meet the Company's anticipated requirements for capital expenditures, working capital, interest payments and scheduled principal payments. See "Management's Discussion and Analysis of Financial Condition and Results of Operations-- Liquidity and Capital Resources." There can be no assurance, however, that the Company's business will continue to generate sufficient cash flow from operations in the future to service its debt and make necessary capital expenditures after satisfying certain liabilities arising in the ordinary course of business. If unable to do so, the Company may be required to refinance all or a portion of its existing debt, including 13 the Notes, to sell assets or to obtain additional financing. There can be no assurance that any such refinancing would be possible or that any such sales of assets or additional financing could be achieved. RESTRICTIVE LOAN COVENANTS The Credit Facilities and the Indenture will contain numerous financial and operating covenants that will limit the discretion of the Company's management with respect to certain business matters. These covenants will place significant restrictions on, among other things, the ability of the Company to incur additional indebtedness, to create liens or other encumbrances, to make certain payments and investments, to sell or otherwise dispose of assets, and to merge or consolidate with other entities. See "Description of Credit Facilities" and "Description of the Notes--Certain Covenants." The Credit Facilities will also require the Company to meet certain financial ratios and tests. A failure to comply with the obligations contained in the Credit Facilities or the Indenture could result in an event of default under either the Credit Facilities or the Indenture, which could result in acceleration of the related debt and the acceleration of debt under other instruments evidencing indebtedness that may contain cross-acceleration or cross-default provisions. If, as a result thereof, a default occurs with respect to Senior Indebtedness, the provisions in the Credit Facilities or the subordination provisions in the Indenture would likely restrict payments to the holders of the Notes. SUBORDINATION OF NOTES TO SENIOR INDEBTEDNESS The Company's obligations under the Notes are subordinate and junior in right of payment to all existing and future Senior Indebtedness of the Company, including all Indebtedness under the Credit Facilities. As of December 31, 1996, on a pro forma basis after giving effect to the Merger and the Financings (including the Offering), the aggregate amount of the Company's outstanding Senior Indebtedness would have been approximately $763.0 million (excluding $3.0 million of outstanding letters of credit, unused commitments and subsidiary Indebtedness of approximately $8.3 million). Additional Senior Indebtedness may be incurred by the Company from time to time, subject to certain restrictions. By reason of such subordination, in the event of an insolvency, liquidation, or other reorganization of the Company, the lenders under the Credit Facilities and other creditors who are holders of Senior Indebtedness must be paid in full before the holders of the Notes may be paid. Accordingly, there may be insufficient assets remaining after payment of prior claims to pay amounts due on the Notes. In addition, under certain circumstances, no payments may be made with respect to the Notes if a default exists with respect to Senior Indebtedness. The Notes are also effectively subordinated to the obligations of the Company's subsidiaries, including trade payables. The Notes will not be guaranteed by any of the Company's subsidiaries. All of the Company's significant domestic subsidiaries will guarantee all obligations outstanding under the Credit Facilities. In the event of an insolvency, liquidation or other reorganization of any of the subsidiaries of the Company, the creditors of the Company (including the holders of the Notes), as well as stockholders of the Company, will have no right to proceed against the assets of such subsidiaries or to cause the liquidation or bankruptcy of such subsidiaries under federal bankruptcy laws. Creditors of such subsidiaries would be entitled to payment in full from such assets before the Company would be entitled to receive any distribution therefrom. Except to the extent that the Company may itself be a creditor with recognized claims against such subsidiaries, claims of creditors of such subsidiaries will have priority with respect to the assets and earnings of such subsidiaries over the claims of creditors of the Company, including claims under the Notes. Certain operations of the Company are conducted through its subsidiaries and, therefore, the Company is dependent upon the cash flow of its subsidiaries to meet its obligations, including its obligations under the Notes. As of December 31, 1996, the Company's subsidiaries had outstanding Indebtedness of approximately $8.3 million and other obligations (including trade payables) of approximately $82.0 million. See "Description of Credit Facilities" and "Description of the Notes-- Subordination." 14 ENCUMBRANCES TO SECURE CREDIT FACILITIES In addition to being subordinated to all existing and future Senior Indebtedness of the Company, the Notes will not be secured by any of the Company's assets. The Company's obligations under the Credit Facilities will be secured by a first priority pledge of and security interest in 100% of the common stock of certain of the Company's direct domestic subsidiaries and 65% of the common stock of certain of the Company's material direct foreign subsidiaries. If the Company becomes insolvent or is liquidated, or if payment under any of the Credit Facilities is accelerated, the lenders under the Credit Facilities will be entitled to exercise the remedies available to a secured lender under applicable law. Accordingly, such lenders will have a prior claim with respect to the assets securing such indebtedness. See "Description of Credit Facilities." CHANGE OF CONTROL The Indenture will provide that, upon the occurrence of a Change of Control, the Company will make an offer to purchase all or any part of the Notes at a price in cash equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, thereon to the date of purchase. There can be no assurance that, in the event of a Change of Control, the Company would have sufficient funds to purchase all Notes tendered. In addition, the Credit Facilities will prohibit the Company from repurchasing any Notes, except with certain proceeds of one or more Equity Offerings and certain funds from other sources. The Credit Facilities will also provide that certain change of control events with respect to the Company would constitute a default thereunder. Any future credit agreements or other agreements relating to Senior Indebtedness to which the Company becomes a party may contain similar restrictions and provisions. In the event a Change of Control occurs at a time when the Company is prohibited from purchasing the Notes, or if the Company is required to make an Asset Sale Offer (as defined) pursuant to the terms of the Notes, the Company could seek the consent of its lenders to purchase the Notes or could attempt to refinance the borrowings that contain such prohibition. If the Company does not obtain such a consent or refinance such borrowings, the Company will remain prohibited from purchasing the Notes except to the extent permitted under such provisions. In such case, the Company's failure to purchase tendered Notes would constitute an Event of Default (as defined) under the Indenture. If, as a result thereof, a default occurs with respect to any Senior Indebtedness, the subordination provisions in the Indenture would likely restrict payments to the holders of the Notes. The provisions relating to a Change of Control included in the Indenture may increase the difficulty of a potential acquiror obtaining control of the Company. See "Description of the Notes--Repurchase at the Option of Holders--Change of Control." FACTORS AFFECTING SALES TO THE CABLE TELEVISION INDUSTRY Demand for domestic coaxial cable television products has historically depended primarily upon capital spending cycles by cable operators for constructing, rebuilding, upgrading and maintaining their systems. Such capital spending is affected by a variety of factors, including general economic conditions, access by cable operators to financing, changes in governmental regulation of the cable television industry, competitive pressures and advances in technology. Beginning in late 1992, capital spending by the U.S. cable television industry increased from previously depressed levels as a result of generally better credit markets, allowing the cable television industry to take advantage of technological developments for offering enhanced services and to address a perceived competitive challenge from regional Bell operating companies ("RBOCs"). Capital spending began to decrease in 1995 and continued to slow in 1996 as cable operators perceived a diminished immediate competitive threat from RBOCs, the unavailability of some technological advancements, such as digital converters and cable modems, and the higher cost of capital due to the generally depressed equity values of cable operators. A number of MSOs are highly leveraged entities with substantial indebtedness. There can be no assurance that the capital spending by cable 15 operators will not be further reduced in the future, adversely affecting demand for the Company's cable products. The Company's sales of coaxial cable for the U.S. cable television market were $94.5 million, $115.4 million and $116.8 million for 1996, 1995 and 1994, respectively. The Company's sales declined in 1996 primarily because (i) certain RBOCs that began purchasing coaxial cable from the Company in 1994 and 1995 to install full service communications systems significantly slowed their purchases in 1996 in an effort to work down inventory levels and to reassess their plans with respect to building broadband communications systems and (ii) in the fall of 1996, Tele-Communications, Inc. ("TCI"), a major MSO, announced that it was slowing down its equipment spending for rebuilding and upgrading many of its cable television systems and that it would concentrate on developing compression technology to offer expanded digital channel capacity to such systems. The Company's sales to RBOCs and TCI declined by a total of $18.4 million in 1996 compared to 1995. The Company's sales of coaxial cable products to international markets increased each year from 1989 through 1995 and will continue to be an important focus for the Company. In 1996, however, international sales of coaxial cable declined to $84.7 million from $122.9 million in 1995. While sales to any individual country may vary from year-to-year, the decline in 1996 was primarily because (i) a system operator for the major cities in Australia made the decision to change purchases of coaxial cable from the Company to a newly formed Australian joint venture between an international coaxial cable supplier and a local cable manufacturer and (ii) Taiwan is moving from an unregulated cable television environment to regulation through the awarding of franchises, which has slowed down the building of cable television systems. Sales to Australia and Taiwan declined by a total of $29.1 million in 1996 compared to 1995. U.S. cable television system designs are increasingly being employed in other countries where cable television penetration is currently low. However, there can be no assurance that international markets will continue to expand, or that growth and profitability in the Company's international sales will not be affected by political uncertainties, currency exchange rate fluctuations or variations in capital spending cycles in international markets. Technological developments which may impact the future designs of cable television systems are occurring rapidly in the communications industry. For example, under certain conditions, direct broadcast satellite services to consumers with satellite receiving dishes are being pursued, and certain cable distribution architectures that make greater use of fiber optic cable than current hybrid fiber optic/coaxial cable systems are being investigated. While the Company believes that for the foreseeable future cable system operators will continue to employ systems using a combination of fiber optic cable and high performance coaxial cable, any successful development, financing and implementation of alternative technologies may adversely affect demand for the Company's coaxial cable products. EXPOSURE TO CHANGES IN MILITARY EXPENDITURES The Company is a major supplier of high performance environmental connectors for military applications. The U.S. defense budget has been declining in real terms since the mid-1980s, resulting in some delays in new program starts, program deferrals and program cancellations. Sales under contracts with the U.S. Government or under contracts with subcontractors that identified the U.S. Government as the ultimate purchaser represented approximately 8.0% of the Company's sales for the year ended December 31, 1996, compared to 7.1% for 1995 and 9.1% for 1994. Additionally, there are sales of the Company's products to the U.S. Government through its distributors. The Company's participation across a broad spectrum of defense programs is such that the Company believes that no one military program accounted for more than 1% of 1996 net sales. A significant further decline in U.S. military expenditures might adversely affect the Company's sales. The Company believes, however, that to the extent a higher proportion of available defense budget funds will be allocated to improvements of existing defense systems, rather than to new program starts, the impact on the Company of declining military budgets would be mitigated because of its substantial incumbency in existing programs and its experience in system upgrades. 16 COMPETITION The Company encounters competition in substantially all areas of its business. The Company competes primarily on the basis of product quality, price, engineering, customer service and delivery time. Competitors include large, diversified companies, some of which have substantially greater assets and financial resources than the Company, as well as medium to smaller companies. In the area of coaxial cable for cable television, the Company believes that it and CommScope, a division of General Instrument Corporation, are the primary providers of such cable; however, CommScope is larger than the Company in this market. In addition, the Company faces competition from small companies that have concentrated their efforts in one or more areas of the coaxial cable market. There can be no assurance that additional competitors will not enter the Company's existing markets, nor can there be any assurance that the Company will be able to compete successfully against existing or new competition. RISKS ASSOCIATED WITH FOREIGN OPERATIONS; EXCHANGE RATE FLUCTUATIONS The Company's products are manufactured and assembled at facilities in the United States, Canada, Mexico, Germany, France, the United Kingdom, the Czech Republic, Hong Kong, Taiwan, Japan, India and the People's Republic of China. Sales and expenses are frequently denominated in local currencies and are, therefore, subject to changes in currency exchange rates in relation to the U.S. dollar. There can be no assurance that measures taken by the Company to mitigate its exchange rate risk, including manufacturing and procuring its products in the same country or region in which products are sold and periodically engaging in hedging transactions such as forward exchange contracts, will eliminate or substantially reduce such risk. International manufacturing and sales are subject to inherent risks, including changes in local economic or political conditions, the imposition of currency exchange restrictions, unexpected changes in regulatory environments, potentially adverse tax consequences and the exchange rate risk discussed above. There can be no assurance that these factors will not have a material adverse impact on the Company's production capabilities or otherwise adversely affect the Company's business and operating results. LABOR RELATIONS Approximately 2,300 of the Company's 4,500 hourly employees were represented by labor unions as of December 31, 1996. Beginning October 21, 1995, the Company experienced a seven day work stoppage at its plant in Sidney, New York when approximately 1,000 hourly employees represented by the International Association of Machinists and Aerospace Workers rejected a Company proposal for a collective bargaining agreement and voted to strike upon the expiration of their then current contract. A new three-year contract was approved and the work stoppage ended on October 28, 1995. In 1996, the United Steelworkers International Union, AFL-CIO attempted to organize approximately 500 hourly employees at the Company's plant in Chatham, Virginia. The union organizing effort was defeated by a vote of the hourly employees. A Regional Director of the National Labor Relations Board subsequently found that unfair labor practices had been committed by the Company prior to the election and ordered that a new election be held. The Company's appeal of such finding and order was denied by the National Labor Relations Board on March 19, 1997. The Company expects that a new election will be held at the Chatham, Virginia plant prior to May 30, 1997. If the union is certified, the Company would be required to bargain in good faith with the union, and its operations at such facility could be subject to the risks associated with unionized employees generally, including the risk of work stoppages. CONTROL BY AFFILIATES OF KKR Upon completion of the Merger, approximately 75% of the outstanding shares of Common Stock will be held by the stockholders of NXS Acquisition (before taking into account the effect of any exercise of the NXS Option or the Stockholders Option, the exercise of either of which could result in the stockholders of 17 NXS Acquisition owning, directly or indirectly, up to 82% of the shares of Common Stock, and before taking into account any purchase of shares from Messrs. Loeffler, Jepsen and Cohane, which could result in such stockholders of NXS Acquisition owning, indirectly, up to an additional 1.5% of such shares). As of the date hereof, the sole stockholder of NXS Acquisition is the Partnership, of which KKR Associates 1996 L.P., a Delaware limited partnership ("KKR Associates 1996"), is the general partner. The sole general partner of KKR Associates 1996 is KKR 1996 GP LLC, a limited liability company organized under Delaware law. The members of KKR 1996 GP LLC are also the members of the limited liability company which is the general partner of KKR (and are expected to be the members of any limited liability company which would act as a general partner of a partnership organized at the direction of KKR to acquire interests in NXS Acquisition and/or NXS LLC). Accordingly, the members of KKR 1996 GP LLC will control the Company and have the power to elect all of its directors, appoint new management and approve any action requiring the approval of the Company's stockholders, including adopting certain amendments to the Company's certificate of incorporation and approving mergers or sales of substantially all of the Company's assets. The directors elected by the Partnership will have the authority to effect decisions affecting the capital structure of the Company, including the issuance of additional capital stock, the implementation of stock repurchase programs and the declaration of dividends. There can be no assurance that the capital policies of the Company in effect prior to the Merger will continue after the Merger. In addition, there can be no assurance that the interests of the members of KKR 1996 GP LLC will not conflict with the interests of holders of the Notes. See "Management," "Ownership of Common Stock" and "Related Party Transactions." FRAUDULENT TRANSFER CONSIDERATIONS Under applicable provisions of the United States Bankruptcy Code or comparable provisions of state fraudulent transfer or conveyance law, if the Company, at the time it issued the Notes, (a) incurred such indebtedness with the intent to hinder, delay or defraud creditors, or (b)(i) received less than reasonably equivalent value or fair consideration, and (ii) (A) was insolvent at the time of such incurrence, (B) was rendered insolvent by reason of such incurrence (and the application of the proceeds thereof), (C) was engaged or was about to engage in a business or transaction for which the assets remaining with the Company constituted unreasonably small capital to carry on its business, or (D) intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they mature, then, in each such case, a court of competent jurisdiction could void, in whole or in part, the Notes or, in the alternative, subordinate the Notes to existing and future indebtedness of the Company. The measure of insolvency for purposes of the foregoing would likely vary depending upon the law applied in such case. Generally, however, a debtor would be considered insolvent if the sum of its debts, including contingent liabilities, was greater than all of its assets at a fair valuation, or if the present fair saleable value of its assets was less than the amount that would be required to pay the probable liabilities on its existing debts, including contingent liabilities, as such debts become absolute and matured. Management of the Company believes that, for purposes of the United States Bankruptcy Code and state fraudulent transfer or conveyance laws, the Notes are being issued without the intent to hinder, delay or defraud creditors and for proper purposes and in good faith, and that the Company will receive reasonably equivalent value or fair consideration therefor, and that after the issuance of the Notes and the application of the net proceeds therefrom, the Company will be solvent, will have sufficient capital for carrying on its business and will be able to pay its debts as they mature. However, there can be no assurance that a court passing on such issues would agree with the determination of the Company's management. LACK OF PRIOR MARKET FOR THE NOTES There is currently no public market for the Notes and the Company has no present plan to list any of the Notes on a national securities exchange or to include any of the Notes for quotation through an interdealer quotation system. There can be no assurance that such a market will develop or, if such a market develops, as to the liquidity of such market. The Company has been advised by the Underwriters 18 that the Underwriters intend to make a market in the Notes after consummation of the Offering, as permitted by applicable laws and regulations; however, the Underwriters are not obligated to do so and any such market making activities may be discontinued at any time without notice. See "Underwriting." FORWARD-LOOKING STATEMENTS This Prospectus contains certain forward-looking statements (including, without limitation, the statements under "Business--Competitive Strengths" and "--Business Strategy") within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act concerning the Company's future operations, economic performances and financial condition, including such things as business strategy and measures to implement strategy, competitive strengths, goals, expansion and growth of the Company's business and operations and references to future success. These statements are based on certain assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments as well as other factors it believes are appropriate in the circumstances. However, whether actual results and developments will conform with the Company's expectations and predictions is subject to a number of risks and uncertainties, in addition to the risk factors discussed above, including a global economic slowdown in any one, or all, of the Company's market segments, unpredictable difficulties or delays in the development of new product programs, increased difficulties in obtaining a consistent supply of basic materials like steel, aluminum, copper, gold or plastic resins at stable pricing levels, difficulties and unanticipated expense of assimilating newly-acquired businesses, technological shifts away from the Company's technologies and core competencies, unforeseen interruptions to the Company's business with its largest customers and distributors resulting from, but not limited to, strikes, financial instabilities or inventory excesses, unexpected government policies and regulations affecting the Company or its significant customers, the effects of extreme changes in monetary and fiscal policies in the United States and abroad, including extreme currency fluctuations and unforeseen inflationary pressures, drastic and unforeseen price pressures on the Company's products or significant cost increases that cannot be recovered through price increases or productivity improvements, significant changes in interest rates or in the availability of financing for the Company or certain of its customers, rapid escalation of the cost of regulatory compliance and litigation, unforeseen intergovernmental conflicts or actions, including but not limited to armed conflict and trade wars, any difficulties in obtaining or retaining the management or other human resource competencies that the Company needs to achieve its business objectives, and other factors, many of which are beyond the control of the Company. Consequently, all of the forward-looking statements made in this Prospectus are qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by the Company will be realized or, even if substantially realized, that they will have the expected consequences to or effects on the Company and its subsidiaries or their business or operations. 19 THE MERGER The statements made under this heading relating to the Merger summarize the material provisions of the agreements described therein. Such summary is qualified in its entirety by reference to such agreements, which are incorporated herein by reference. See "Available Information" and "Incorporation of Certain Information by Reference." MERGER AGREEMENT The Company and NXS Acquisition, which as of the date hereof is a wholly owned subsidiary of the Partnership, have entered into the Merger Agreement, dated as of January 23, 1997 and amended as of April 9, 1997. The Merger Agreement provides, among other things, for the merger of NXS Acquisition with and into the Company, with the Company being the surviving corporation. Pursuant to the Merger Agreement, upon consummation of the Merger (the "Effective Time"), each share of Common Stock issued and outstanding immediately prior to the Effective Time (other than shares of Common Stock held by the Company, any subsidiary of the Company, the Partnership, NXS Acquisition or any subsidiary of the Partnership, which will be canceled and retired, and fractional shares and shares of Common Stock subject to dissenters' rights) will be converted into either (a) the right to receive $26.00 in cash or (b) the right to retain one share of Common Stock. The Merger contemplates that approximately 90% of the presently issued and outstanding shares of the Company's Common Stock will be converted, at the election of the holder, into cash, as described above, and that approximately 10% of such shares will be retained by stockholders. Because 25% (or 4.4 million) of the shares outstanding after the Merger must be retained by existing stockholders of the Company, the right to receive $26.00 in cash per share or retain shares of Common Stock is subject to proration. The total number of outstanding shares of Common Stock will decrease from approximately 44.7 million to approximately 17.5 million, approximately 13.1 million of which will be held by the stockholders of NXS Acquisition upon conversion of NXS Acquisition common stock into Common Stock in the Merger and 4.4 million of which will be retained by the existing stockholders of the Company. The 4.4 million shares (representing approximately 10%) of the outstanding Common Stock to be retained by existing stockholders in the Merger will represent approximately 25% of the shares outstanding immediately after the Merger, and the approximately 13.1 million shares to be owned by the stockholders of NXS Acquisition will represent approximately 75% of the shares outstanding immediately after the Merger, in each case, before giving effect to the exercise after the Merger of the NXS Option or the Stockholders Option granted with respect to shares of Common Stock owned by the DeGeorge Stockholders pursuant to the Stockholders Agreement and before giving effect to any purchase of shares from Messrs. Loeffler, Jepsen and Cohane. See "--The Stockholders Agreement" and "Management--Stock Purchase and Option Agreements." Assuming all stockholders elected to convert all of their shares into the right to receive the Cash Consideration, which would maximize the number of shares subject to the NXS Option and the Stockholders Option, then upon exercise of either such option, the stockholders of NXS Acquisition would own, directly or indirectly, approximately 82% of the shares issued and outstanding immediately after the Merger and the remaining stockholders would own, in the aggregate, approximately 18% of such shares. In addition, if Messrs. Loeffler, Jepsen and Cohane determine to sell a portion of their shares which may be retained by them following the Merger to such stockholders of NXS Acquisition, such stockholders of NXS Acquisition could own, indirectly, up to an additional 1.5% of such shares. See "Management--Stock Purchase and Stock Option Agreements." The Company will submit the Merger Agreement to its stockholders for approval and adoption at a special meeting of stockholders of the Company in lieu of the 1997 Annual Meeting, which is expected to be held on May 14, 1997 (the "Special Meeting"). Approval and adoption of the Merger Agreement requires the affirmative vote of a majority of the outstanding shares of Common Stock. Lawrence J. DeGeorge, Chairman of the Board of Amphenol, Florence A. DeGeorge, his wife, Lawrence F. DeGeorge, one of their sons, and the Lawrence J. and Florence A. DeGeorge Charitable Trust, a charitable trust funded by Lawrence J. DeGeorge and Florence A. DeGeorge (collectively, the "DeGeorge Stockholders") 20 owned, beneficially and/or of record, an aggregate of 13,487,453 shares of Common Stock on March 24, 1997, constituting approximately 30.2% of the outstanding shares of Common Stock entitled to vote at the Special Meeting. Pursuant to a Stockholders Agreement by and among NXS I, L.L.C., a Delaware limited liability company ("NXS LLC"), which as of the date hereof is a wholly owned subsidiary of the Partnership, and the DeGeorge Stockholders, dated as of January 23, 1997 (the "Stockholders Agreement"), the DeGeorge Stockholders, in their capacity as such, have agreed, among other things, to vote such shares and all other shares of Common Stock that the DeGeorge Stockholders acquire beneficial ownership of after January 23, 1997 and during the term of the Stockholders Agreement, if any (such shares collectively, the "Subject Shares"), in favor of the approval and the adoption of the Merger Agreement. See "--The Stockholders Agreement." The obligations of NXS Acquisition to effect the Merger are further subject to, among other things, the Company (i) amending the terms of the 12 3/4% Notes in a manner agreed to by NXS Acquisition and the Company and purchasing at least an aggregate principal amount of the 12 3/4% Notes equal to the minimum condition of the Debt Tender Offer, (ii) calling the Existing Senior Notes for redemption, and (iii) receiving the proceeds of the Financings, on terms and conditions contemplated by the Merger Agreement, or upon terms and conditions which are substantially equivalent thereto and, to the extent any of the terms and conditions are not contemplated by the Merger Agreement, such other terms and conditions which are reasonably satisfactory to NXS Acquisition. It is also a condition to the Merger that NXS Acquisition is reasonably satisfied that the Merger will be recorded as a recapitalization for financial reporting purposes. The Merger Agreement contains customary representations, warranties and covenants of the Company and may be terminated at any time prior to the Effective Time, whether before or after approval of the Merger by the stockholders of the Company, by (a) mutual written consent of NXS Acquisition and the Company, (b) either NXS Acquisition or the Company, if any governmental entity has issued an order, decree or ruling or taken any other action permanently enjoining, restraining or otherwise prohibiting the Merger or the Debt Tender Offer, and such order or other action has become final and nonappealable, or the Merger has not been consummated on or before June 30, 1997 (other than due to the failure of the party seeking to terminate the Merger Agreement to perform its obligations under the Merger Agreement), (c) either NXS Acquisition or the Company if the required approval of the stockholders of the Company shall not have been obtained at a duly held meeting of stockholders or at any adjournment thereof, (d) NXS Acquisition upon the withdrawal, modification or amendment in any respect adverse to NXS Acquisition of the Company's recommendation of the Merger to its stockholders, or the failure of the Company either to mail the proxy statement relating to the Annual Meeting as required by the Merger Agreement or to include such recommendation therein, or the taking of certain actions by the Company with respect to a third-party transaction proposal or the failure by the Company to take certain actions during the pendency of such a proposal or in pursuance of the Merger Agreement or (e) the Company if, pursuant to the Merger Agreement, the Board of Directors of the Company concludes in good faith, based on written advice from outside counsel, that the Board of Directors must not make or must withdraw or modify its recommendation of the Merger and the Board does not make or withdraws or modifies such recommendation. THE STOCKHOLDERS AGREEMENT Pursuant to the Stockholders Agreement, the DeGeorge Stockholders, in their capacity as such, have agreed, among other things, to vote their respective Subject Shares, constituting an aggregate of approximately 30.2% of the outstanding shares of Common Stock entitled to vote at the Special Meeting, in favor of the Merger. Subject to the terms and conditions of the Stockholders Agreement, the DeGeorge Stockholders have agreed to vote, and have appointed NXS LLC and its officers, Michael Michelson and Marc Lipschultz, as their irrevocable proxies to vote, the Subject Shares in favor of the Merger and of certain related actions and against certain other enumerated actions or agreements. Subject to the terms 21 and conditions of the Stockholders Agreement, all of the DeGeorge Stockholders have agreed to elect to convert all of their Subject Shares into cash in the Merger, to refrain from soliciting or responding to certain inquiries or proposals regarding the Company, to refrain from engaging in certain competitive activities with the Company, to comply with certain restrictions upon the transfer of the Subject Shares, to waive any rights of appraisal available in the Merger and to take or refrain from taking certain other actions. If the Merger is consummated, (i) the DeGeorge Stockholders may exercise an option (the "Stockholders Option") granted to the DeGeorge Stockholders by NXS LLC pursuant to the Stockholders Agreement to sell the Subject Shares to NXS LLC and (ii) NXS LLC may exercise an option (the "NXS Option") granted by the DeGeorge Stockholders pursuant to the Stockholders Agreement to purchase the Subject Shares during the period commencing upon the Effective Time and ending 30 days thereafter. If the Merger Agreement has been terminated by reason of the occurrence of certain events and either of the following shall have occurred: (A) any person, other than NXS Acquisition or any of its affiliates and other than any party to the Stockholders Agreement (and certain permitted transferees), shall have become the beneficial owner of more than 20% of the outstanding shares of Common Stock or (B) certain competing transaction proposals shall have been publicly made, proposed, communicated or disclosed, then NXS LLC may exercise the NXS Option to purchase the Subject Shares during the period commencing on the date of such termination and ending on the date which is six months later. In addition, if the Merger Agreement is terminated by reason of the occurrence of certain events, and, upon or following any such termination, either (i) one or more of the DeGeorge Stockholders or (ii) NXS LLC receives any cash or noncash consideration in respect of all or any portion of the Subject Shares in connection with certain third-party business combinations during the period commencing on January 23, 1997 and ending one year from the date the Merger Agreement is terminated, the party or parties in clause (i) or (ii) receiving such consideration shall promptly pay over to the other party or its designee certain amounts. Upon the Effective Time of the Merger or the date the Merger Agreement is terminated in accordance with its terms, whichever occurs first, the obligations of the DeGeorge Stockholders (i) to vote their shares as specified in the Stockholders Agreement, (ii) to refrain from soliciting or responding to certain inquiries or proposals regarding the Company, and (iii) to comply with certain restrictions upon the transfer of the Subject Shares shall terminate in accordance with the Stockholders Agreement. If the Merger Agreement is terminated, the obligations of the DeGeorge Stockholders to refrain from competing with the Company shall also terminate. Subject to the foregoing, the obligations of the parties to the Stockholders Agreement otherwise survive termination of the Merger Agreement. USE OF PROCEEDS The gross proceeds received by the Company from the Offering, together with borrowings under the Credit Facilities, the equity contribution by the Partnership, and certain available cash of the Company, will be used upon consummation of the Merger to (i) pay approximately $1,048.3 million of cash merger consideration, (ii) repay indebtedness of the Company under the Existing Bank Credit Facility (approximately $24.0 million at an interest rate of 6.0% at December 31, 1996 and which matures on November 30, 2000), (iii) redeem $100.0 million of the Existing Senior Notes (with an interest rate of 10.45% and which mature at various dates throughout 1999-2001), (iv) repurchase $95.0 million of the 12 3/4% Notes (which mature on December 15, 2002), (v) pay estimated debt retirement premiums of $19.3 million in connection with the retirement of the Existing Notes and (vi) pay an estimated $58.4 million in transaction fees and expenses. See "The Merger" and "Capitalization." 22 CAPITALIZATION The following table sets forth as of December 31, 1996 the (i) consolidated historical capitalization of the Company and (ii) unaudited consolidated pro forma capitalization of the Company, as adjusted to give effect to the transactions contemplated by the Merger Agreement and the Financings, including the sale of the Notes pursuant to the Offering. The following table should be read in conjunction with the "Pro Forma Consolidated Financial Statements" and the notes thereto and the consolidated financial statements of the Company and its subsidiaries and the related notes thereto included elsewhere herein.
DECEMBER 31, 1996 ------------------------ HISTORICAL PRO FORMA ---------- ------------ (DOLLARS IN MILLIONS) Cash and short-term cash investments.................................................... $ 4.0 $ 3.0 ---------- ------------ ---------- ------------ Long-term debt (including current portion): Existing Bank Credit Facility......................................................... 24.0 -- Existing Senior Notes................................................................. 100.0 -- 12 3/4% Notes (a)..................................................................... 95.0 -- Revolving Credit Facility (b) ........................................................ -- 13.0 Term Loan Facility.................................................................... -- 750.0 Notes offered hereby.................................................................. -- 240.0 Other debt (c)........................................................................ 8.3 8.3 ---------- ------------ Total long-term debt.................................................................... 227.3 1,011.3 Total shareholders' equity (deficit) (d)................................................ 360.5 (379.7) ---------- ------------ Total capitalization................................................................ $ 587.8 $ 631.6 ---------- ------------ ---------- ------------
- ------------------------ (a) Assumes all of the outstanding 12 3/4% Notes are repurchased in the Debt Tender Offer; however, there can be no assurance that all of such 12 3/4% Notes will be repurchased. If less than all of the holders of such 12 3/4% Notes tender, the 12 3/4% Notes that are not repurchased will remain outstanding at least until December 15, 1997, the earliest date on which such 12 3/4% Notes may be optionally redeemed by the Company. The Debt Tender Offer was commenced by the Company on April 15, 1997 and, on April 29, 1997, the Minimum Condition was achieved. (b) At December 31, 1996, on a pro forma basis after giving effect to the Merger and the Financings, the Company would have had additional availability of approximately $134.0 million under the $150.0 million Revolving Credit Facility (after giving effect to $3.0 million of outstanding letters of credit). See "Description of Credit Facilities." (c) Represents debt of foreign subsidiaries. (d) As part of the Merger and related transactions, KKR, through NXS Acquisition, will invest no less than $341.0 million in common equity for approximately 75% of the shares outstanding immediately after the Merger, and existing stockholders will retain approximately 25% of the shares outstanding immediately after the Merger (before taking into account the effect of any exercise of the NXS Option or the Stockholders' Option). Based on the Cash Consideration paid in the Merger, existing stockholders will retain $114.4 million of equity value, and the implied value of shareholders' equity to be purchased and retained immediately after the Merger and related transactions is approximately $455.4 million. 23 PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The following Pro Forma Consolidated Financial Statements have been derived by the application of pro forma adjustments to the Company's historical consolidated financial statements included elsewhere herein. The pro forma consolidated statement of income for the period presented gives effect to the Merger and related transactions as if such transactions were consummated as of January 1, 1996 for the fiscal year ended December 31, 1996. The pro forma consolidated balance sheet gives effect to the Merger and related transactions as if such transactions had occurred as of December 31, 1996. The adjustments are described in the accompanying notes. The Pro Forma Consolidated Financial Statements should not be considered indicative of actual results that would have been achieved had the Merger and related transactions been consummated on the date or for the periods indicated and do not purport to indicate balance sheet data or results of operations as of any future date or for any future period. The Pro Forma Consolidated Financial Statements should be read in conjunction with the Company's historical consolidated financial statements and the notes thereto included elsewhere herein. The pro forma adjustments were applied to the respective historical consolidated financial statements to reflect and account for the Merger as a recapitalization. Accordingly, the historical basis of the Company's assets and liabilities has not been impacted by the transaction. 24 PRO FORMA CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1996 (UNAUDITED)
PRO FORMA PRO HISTORICAL ADJUSTMENTS FORMA ----------- ----------- --------- (DOLLARS IN MILLIONS) ASSETS Current Assets: Cash and short-term cash investments..................................... $ 4.0 $ (1.0)(a) $ 3.0 Accounts receivable...................................................... 64.9 -- 64.9 Inventories.............................................................. 153.3 -- 153.3 Prepaid expenses and other assets........................................ 11.6 9.8(b) 21.4 ----------- ----------- --------- Total current assets................................................... 233.8 8.8 242.6 Land and depreciable assets, net......................................... 102.1 -- 102.1 Deferred debt issuance costs............................................. 3.7 (3.7)(c) 38.7 -- 38.7(d) -- Excess of cost over fair value of net assets acquired.................... 346.6 -- 346.6 Other assets............................................................. 24.5 -- 24.5 ----------- ----------- --------- $ 710.7 $ 43.8 $ 754.5 ----------- ----------- --------- ----------- ----------- --------- LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Current portion of long-term debt........................................ $ 7.8 $ (7.8)(a) -- Accounts payable......................................................... 49.5 -- $ 49.5 Other accrued expenses................................................... 39.7 -- 39.7 ----------- ----------- --------- Total current liabilities.............................................. 97.0 (7.8) 89.2 Long-term debt........................................................... 219.5 (211.2)(a) 8.3 Term Loan Facility....................................................... -- 750.0(a) 750.0 Revolving Credit Facility................................................ -- 13.0(a) 13.0 Notes offered hereby..................................................... -- 240.0(a) 240.0 Deferred taxes and other liabilities..................................... 18.7 -- 18.7 Accrued pension and post employment benefit obligations.................. 15.0 -- 15.0 ----------- ----------- --------- Total liabilities...................................................... 350.2 784.0 1,134.2 Total shareholders' equity (deficit)..................................... 360.5 (740.2)(e) (379.7) ----------- ----------- --------- $ 710.7 $ 43.8 $ 754.5 ----------- ----------- --------- ----------- ----------- ---------
See Notes to Pro Forma Consolidated Balance Sheet 25 NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET The pro forma financial data have been derived by the application of pro forma adjustments to the Company's historical financial statements as of the date noted. The Merger has been accounted for as a recapitalization which will have no impact on the historical basis of the Company's assets and liabilities. The pro forma financial data assumes that there are no dissenting shareholders to the Merger. (a) The net effect of $1.0 million reflects the following:
(DOLLARS IN TOTAL SOURCES MILLIONS) - ------------------------------------------------------------------------- ------------------- Term Loan Facility proceeds.............................................. $ 750.0 Revolving Credit Facility proceeds....................................... 13.0 Notes proceeds........................................................... 240.0 Equity investment........................................................ 341.0 -------- Total sources.......................................................... $ 1,344.0 -------- TOTAL USES Payment of cash merger consideration..................................... $ 1,048.3 Refinancing of existing debt: Current maturities of long-term debt................................... 7.8 Long-term debt......................................................... 211.2 Estimated debt retirement premiums....................................... 19.3 Options canceled......................................................... 2.4 Estimated transaction fees and expenses.................................. 56.0 -------- Total uses............................................................. $ 1,345.0 -------- Net.................................................................... $ (1.0) -------- --------
(b) The adjustment represents the tax benefit, at a 38.5% effective rate, of deductible expenses reflected in footnote (e) hereto. (c) The adjustment reflects the write-off of deferred debt issuance costs associated with the Existing Notes being retired and the termination of the Existing Bank Credit Facility. (d) The adjustment represents the portion of estimated transaction fees and expenses attributable to the Term Loan Facility, Revolving Credit Facility and Notes offered hereby, which will be recorded as deferred debt issuance costs and will be amortized over the life of the debt to be issued. Such estimated deferred debt issuance costs include estimated fees and expenses payable to banks, underwriters and related advisors. (e) The adjustment represents the net change as a result of the Merger and related transactions:
(DOLLARS IN MILLIONS) ------------------- Convert to cash 40.3 million shares of Common Stock...................... $ (1,048.3) Issue 13.1 million shares of Common Stock................................ 341.0 Transaction fees and expenses (1)........................................ (17.3) Write-off of deferred debt issuance costs................................ (3.7) Options canceled......................................................... (2.4) Estimated debt retirement premiums....................................... (19.3) Tax benefit of above expense adjustments at a 38.5% effective rate....... 9.8 -------- Total.................................................................. $ (740.2) -------- --------
- ------------------------ (1) Represents the portion of the total $56.0 million of estimated transaction fees and expenses (excluding $2.4 million of cash consideration related to the Company stock options to be canceled in connection with the Merger) which will be recorded as an expense in connection with the Merger and related transations; the remainder of such transaction fees and expenses are recorded in Note (d) above as deferred debt issuance costs. The expensed portion of estimated transaction fees and expenses are anticipated to consist of: (i) professional, advisory and investment banking fees and expenses and (ii) miscellaneous fees and expenses such as printing and filing fees. 26 PRO FORMA CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1996 (UNAUDITED)
PRO FORMA PRO HISTORICAL ADJUSTMENTS(A) FORMA ----------- --------------- --------- (DOLLARS IN MILLIONS) Net sales.................................................................... $ 776.2 $ 776.2 Costs and expenses: Cost of sales, excluding depreciation and amortization..................... 494.7 494.7 Depreciation and amortization expense...................................... 28.8 28.8 Selling, general and administration expense................................ 114.7 114.7 ----------- --------- Operating income............................................................. 138.0 138.0 Interest expense............................................................. (24.6) $ (71.0)(b) (95.6) Other expense, net........................................................... (3.7) (0.8)(c) (4.5) ----------- ------ --------- Income before income taxes................................................... 109.7 (71.8) 37.9 Provision for income taxes................................................... 42.1 (27.6)(d) 14.5 ----------- ------ --------- Net income................................................................... $ 67.6 $ (44.2) $ 23.4 ----------- --------- ----------- --------- Ratio of earnings to fixed charges (e)....................................... 4.4x 1.4x ----------- --------- ----------- ---------
- ------------------------ The pro forma financial data have been derived by the application of pro forma adjustments to the Company's historical financial statements for the period noted. The Merger has been accounted for as a recapitalization which will have no impact on the historical basis of the Company's assets and liabilities. The pro forma financial data assume that there are no dissenting shareholders to the Merger. (a) As described in note (e) to the Pro Forma Consolidated Balance Sheet, the pro forma adjustments exclude (i) $2.4 million of compensation expense related to the Company stock options to be canceled in conjunction with the Merger, (ii) the write-off of $3.7 million of deferred debt issuance costs associated with the Existing Notes being retired and the termination of the Existing Bank Credit Facility, (iii) the estimated $19.3 million of premiums on retirement of the Existing Notes, (iv) $17.3 million of estimated transaction fees and expenses incurred in connection with the Merger and (v) $9.8 million of tax benefit of such expenses. Such amounts represent non-recurring expenses which the Company anticipates will be recorded in the Consolidated Statement of Income for the period including the Merger. (b) The pro forma adjustments to interest expense reflect the following:
(DOLLARS IN MILLIONS) ------------------- Interest expense on historical debt repaid in Merger..................... $ (23.6) Interest expense with respect to the Credit Facilities and the Notes at an assumed weighted average interest rate of 8.8%....................... 88.6 Amortization of deferred debt issuance costs............................. 6.0 ------ Total adjustment....................................................... $ 71.0 ------ ------
A 0.125% increase or decrease in the assumed weighted average interest rate would change the pro forma interest expense by $1.3 million. The pro forma net income would change by $0.8 million. For the year ended December 31, 1996, each $1.0 million increase or decrease in the Credit Facilities and Notes would change pro forma interest expense by $0.09 million. The pro forma net income would change by $0.05 million. 27 (c) The adjustment eliminates interest income on cash and short-term investments not expected to be received after the Merger and related transactions. (d) The adjustment reflects the tax effect of the pro forma adjustments at a 38.5% effective income tax rate. (e) For purposes of determining the pro forma ratio of earnings to fixed charges, earnings are defined as earnings before income taxes and extraordinary items, plus fixed charges. Fixed charges include interest expense on all indebtedness, other financing fees associated with program fees on sale of accounts receivable, amortization of deferred debt issuance costs, and one-third of rental expense on operating leases representing that portion of rental expense deemed by the Company to be attributable to interest. 28 SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA The following table sets forth selected historical consolidated financial and other data of the Company. The historical consolidated financial data for the three fiscal years ended December 31, 1996 have been derived from, and should be read in conjunction with, the audited consolidated financial statements of Amphenol and related notes thereto included elsewhere in this Prospectus. The historical consolidated financial data for the two fiscal years ended December 31, 1993 have been derived from audited consolidated financial statements of the Company which are not contained herein. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the historical consolidated financial statements and the related notes thereto included elsewhere in this Prospectus.
YEAR ENDED DECEMBER 31, -------------------------------------------------- 1992 1993 1994 1995 ----------- ----------- ----------- ----------- (DOLLARS IN THOUSANDS) STATEMENT OF INCOME DATA: Net sales............................................................ $ 457,677 $ 603,967 $ 692,651 $ 783,233 Cost of sales, excluding depreciation and amortization expense....... 313,322 404,709 458,318 506,707 Depreciation and amortization expense................................ 26,048 28,614 28,099 27,795 Selling, general and administrative expense.......................... 75,107 89,386 102,183 114,041 ----------- ----------- ----------- ----------- Operating income..................................................... 43,200 81,258 104,051 134,690 Interest expense..................................................... (29,285) (41,184) (30,382) (25,548) Nonrecurring acquisition expense..................................... (4,130) -- -- -- Other income (expense), net.......................................... 1,582 (1,998) (4,160) (4,515) ----------- ----------- ----------- ----------- Income before income taxes and extraordinary item.................... 11,367 38,076 69,509 104,627 Provision for income taxes........................................... (2,728) (13,327) (27,109) (41,769) ----------- ----------- ----------- ----------- Net income before extraordinary item................................. 8,639 24,749 42,400 62,858 Extraordinary item (a)............................................... -- -- (4,087) -- ----------- ----------- ----------- ----------- Net income........................................................... $ 8,639 $ 24,749 $ 38,313 $ 62,858 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- OTHER DATA: EBITDA (b)........................................................... $ 70,080 $ 109,035 $ 131,209 $ 162,145 EBITDA margin (c).................................................... 15.3% 18.1% 18.9% 20.7% Capital expenditures................................................. $ 6,695 $ 5,988 $ 10,936 $ 20,381 Ratio of earnings to fixed charges (d)............................... 1.5x 1.8x 2.9x 4.1x Cash flow provided by operations..................................... $ 23,538 $ 56,471 $ 88,871 $ 79,227 Cash flow used by investing activities............................... (21,793) (7,752) (13,460) (21,411) Cash flow used by financing activities............................... (3,779) (51,039) (73,714) (50,370) 1996 ----------- STATEMENT OF INCOME DATA: Net sales............................................................ $ 776,221 Cost of sales, excluding depreciation and amortization expense....... 494,689 Depreciation and amortization expense................................ 28,808 Selling, general and administrative expense.......................... 114,746 ----------- Operating income..................................................... 137,978 Interest expense..................................................... (24,617) Nonrecurring acquisition expense..................................... -- Other income (expense), net.......................................... (3,696) ----------- Income before income taxes and extraordinary item.................... 109,665 Provision for income taxes........................................... (42,087) ----------- Net income before extraordinary item................................. 67,578 Extraordinary item (a)............................................... -- ----------- Net income........................................................... $ 67,578 ----------- ----------- OTHER DATA: EBITDA (b)........................................................... $ 166,061 EBITDA margin (c).................................................... 21.4% Capital expenditures................................................. $ 20,374 Ratio of earnings to fixed charges (d)............................... 4.4x Cash flow provided by operations..................................... $ 68,207 Cash flow used by investing activities............................... (49,835) Cash flow used by financing activities............................... (26,416)
AS OF DECEMBER 31, -------------------------------------------------- 1992 1993 1994 1995 ----------- ----------- ----------- ----------- (DOLLARS IN THOUSANDS) BALANCE SHEET DATA: Working capital...................................................... $ 151,544 $ 90,463 $ 95,590 $ 121,313 Total assets......................................................... 766,397 691,277 677,055 689,924 Total debt (e)....................................................... 488,069 391,839 248,176 197,865 Total shareholders' equity........................................... 149,688 173,292 278,640 344,085 1996 ----------- BALANCE SHEET DATA: Working capital...................................................... $ 136,864 Total assets......................................................... 710,662 Total debt (e)....................................................... 227,243 Total shareholders' equity........................................... 360,548
- ------------------------ (a) Represents an extraordinary charge related to the write-off of deferred debt issuance costs in conjunction with the prepayment of certain bank debt. (b) "EBITDA" represents earnings before interest expense, other financing fees associated with program fees on sale of accounts receivable, interest income, income taxes, and depreciation and amortization expense, and excludes minority interest. EBITDA is not intended to represent cash flow from operations as defined by generally accepted accounting principles and should not be used as an alternative to net income as an indicator of the Company's operating performance or to cash flow as a measure of liquidity. EBITDA is included in the Prospectus as it is a basis upon which the Company assesses its financial performance, and certain covenants in the Company's borrowing arrangements will be tied to similar measures. EBITDA and EBITDA margin, as presented, represent useful measures of assessing the Company's ongoing operating activities without the impact of financing activity and non-recurring charges. While EBITDA is frequently used as a measure of operations and the ability to meet debt service requirements, it is not necessarily comparable to other similarly titled captions of other companies due to potential inconsistencies in the method of calculation. EBITDA in fiscal 1992 excludes the effects of a non-recurring charge of $4.13 million associated with an acquisition. (c) EBITDA margin represents EBITDA divided by net sales. (d) For purposes of determining the ratio of earnings to fixed charges, earnings are defined as earnings before income taxes and extraordinary items, plus fixed charges. Fixed charges includes interest expenses on all indebtedness, other financing fees associated with program fees on sale of accounts receivable, amortization of deferred debt issuance costs, and one-third of rental expenses on operating leases, representing that portion of rental expense deemed by the Company to be attributable to interest. (e) Total debt includes long-term debt and the current portion of long-term debt. 29 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS INTRODUCTION The following discussion and analysis of the results of operations of the Company should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere in this Prospectus. RESULTS OF OPERATIONS The following table sets forth the components of net income before extraordinary item as a percentage of net sales for the periods indicated.
YEAR ENDED DECEMBER 31, ------------------------------- 1994 1995 1996 --------- --------- --------- Net sales................................................................................ 100.0% 100.0% 100.0% Cost of sales, excluding depreciation and amortization................................... 66.2 64.7 63.7 Depreciation and amortization expense.................................................... 4.1 3.5 3.7 Selling, general and administrative expense.............................................. 14.7 14.6 14.8 --------- --------- --------- Operating income......................................................................... 15.0 17.2 17.8 Interest expense......................................................................... (4.4) (3.3) (3.2) Other expense, net....................................................................... (.6) (.6) (.5) --------- --------- --------- Income before income taxes and extraordinary item........................................ 10.0 13.3 14.1 Provision for income taxes............................................................... (3.9) (5.3) (5.4) --------- --------- --------- Net income before extraordinary item..................................................... 6.1% 8.0% 8.7% --------- --------- --------- --------- --------- ---------
1996 COMPARED TO 1995 Net sales were $776.2 million for the year ended December 31, 1996 compared to $783.2 million for 1995. Sales of commercial, radio frequency and industrial interconnect products, cable assemblies and flat-ribbon cable for 1996 increased 4.9% compared to 1995 ($388.9 million--1996; $370.6 million--1995). Such increase is primarily due to increased sales of cable assembly and interconnect products, including fiber optics, smart card reader devices, automotive safety devices (airbags and pretensioner seatbelts) and communications related interconnect products. Sales of high performance environmental connectors for 1996 increased 19.4% compared to 1995 ($208.1 million--1996; $174.3 million--1995). The increase is primarily attributable to strong demand for the Company's application-specific products for new and enhanced electronic aerospace and avionics interconnect systems for space, military and commercial aviation applications. Sales of coaxial cable products primarily for cable television applications for 1996 declined 24.8% ($179.2 million--1996; $238.3 million--1995) primarily due to: (1) a decline in U.S. coaxial cable sales from $115.4 million in 1995 to $94.5 million in 1996, of which $18.4 million is attributable to diminished sales of coaxial cable to RBOCs that slowed their construction of broadband systems in 1996 and reduced sales to a major U.S. cable operator in the latter part of 1996 as that operator reduced expenditures for the rebuilding of its systems; and (2) a decline in international coaxial cable sales from $122.9 million in 1995 to $84.7 million in 1996, of which $29.1 million of the decline is attributable to reduced sales to a foreign cable operator as that operator selected local sourcing for its cable requirements and reduced sales to companies in a foreign country as that country is undergoing a regulation of cable television franchises which slowed the construction of new systems. Geographically, sales in the United States in 1996 increased 0.6% compared to 1995 ($397.0 million-- 1996; $394.6 million--1995); international sales for 1996, including export sales, declined 2.4% in U.S. 30 dollars ($379.2 million--1996; $388.7 million--1995) and increased approximately 0.5% in local currencies compared to 1995. The comparatively stronger U.S. dollar in 1996 had the currency translation effect of decreasing net sales by approximately $11.4 million when compared to foreign currency translation rates in 1995. Changes in net sales for 1996 compared to 1995 are primarily due to changes in unit volume and product mix as opposed to changes in unit prices. The gross profit margin as a percentage of net sales (including depreciation in cost of sales) increased to 34% in 1996 from 33% in 1995. The increase is generally attributable to increased sales of higher margin application-specific connector products, increased efficiencies due to increased production rates for certain connector products, and continuing cost control programs, the effect of which was partially offset by lower coaxial cable sales. Selling, general and administrative expenses as a percentage of sales for 1996 remained constant at approximately 15% when compared to 1995. Interest expense was $24.6 million for 1996 compared to $25.5 million for 1995. The decrease is due to generally lower average debt outstanding during the year. Other expenses, net for 1996 was $3.7 million, a decrease of $.8 million from 1995. See Note 8 to the Company's Consolidated Financial Statements included elsewhere herein for details of the components of other expenses, net. The provision for income taxes for 1996 was at an effective rate of 38.4% compared to an effective rate of 40.0% in 1995. 1995 COMPARED TO 1994 Net sales were $783.2 million for the year ended December 31, 1995 compared to $692.7 million for 1994. Sales of commercial, radio frequency and industrial interconnect products, cable assemblies and flat-ribbon cable for 1995 increased 15.3% ($370.6 million--1995; $321.5 million--1994). Such increase is primarily due to strong demand, especially internationally, for connectors and interconnect systems used in telecommunications applications, automotive safety devices (airbags and pretensioner seatbelts), machine tool and factory automation equipment, and smart card reader devices. Sales of high-performance environmental connectors for 1995 increased 11.0% compared to 1994 ($174.3 million--1995; $157.0 million--1994). The increase is primarily attributable to strong demand for the Company's application-specific products for new and enhanced electronic aerospace and avionics interconnect systems. Sales of coaxial cable products primarily for cable television applications for 1995 increased 11.3% ($238.3 million--1995; $214.1 million--1994) primarily due to increased international sales; U.S. sales of coaxial cable were approximately even with 1994 with increased sales to certain RBOCs as they began initial construction of broadband systems offsetting a decline in sales to traditional cable television operators. Geographically, sales in the United States in 1995 increased 3.6% compared to 1994 ($394.6 million-- 1995; $381.0 million--1994); international sales for 1995, including export sales, increased 24.7% in U.S. dollars ($388.7 million--1995; $311.6 million--1994) and increased approximately 19% in local currencies compared to 1994. The comparatively weaker U.S. dollar in 1995 had the currency translation effect of increasing net sales by approximately $19.2 million when compared to foreign currency translation rates in 1994. Changes in net sales for 1995 compared to 1994 are primarily due to changes in unit volume and product mix as opposed to changes in unit prices. The gross profit margin as a percentage of net sales (including depreciation in cost of sales) increased to 33% in 1995 from 31% in 1994. The increase is generally attributable to increased sales of higher margin application-specific connector products, increased sales of the relatively higher gross margin coaxial cable products and continuing cost control programs. 31 Selling, general and administrative expenses as a percentage of sales for 1995 remained even with 1994 at approximately 15%. Interest expense was $25.5 million for 1995 compared to $30.4 million for 1994. The decrease is due to decreased debt outstanding. Other expenses, net for 1995 was $4.5 million, an increase of $.3 million from 1994. See Note 8 to the Company's Consolidated Financial Statements included elsewhere herein for details of the components of other expenses, net. The provision for income taxes for 1995 was at an effective rate of 40% compared to an effective rate of 39% in 1994. LIQUIDITY AND CAPITAL RESOURCES POST-MERGER (INCLUDING THE FINANCINGS) Following the Merger (including the Financings), the Company's principal sources of liquidity will be from cash flow generated from operations and borrowings under the $150.0 million Revolving Credit Facility. The Company's principal uses of liquidity will be to meet debt service requirements, finance the Company's capital expenditures and provide working capital. The Company expects that capital expenditures in 1997 will not exceed $25.0 million. The Company expects that ongoing requirements for debt service, capital expenditures and working capital will be funded by internally generated cash flow and borrowings under the Revolving Credit Facility. The Company will incur substantial indebtedness in connection with the Merger. On a pro forma basis to reflect the Merger, the Company expects to have approximately $1,011.3 million of consolidated indebtedness as compared to $227.3 million of consolidated indebtedness at December 31, 1996 (in each case excluding $3.0 million of outstanding letters of credit). The Company's debt service obligations could have important consequences to holders of the Notes. See "Risk Factors." The Financings will include $750.0 million under the $900.0 million Credit Facilities and the Offering of $240.0 million of Notes. The gross proceeds from the Offering, together with borrowings of $750.0 million under the Term Loan Facility, the equity investment by the Partnership and available cash of the Company, will be used upon consummation of the Merger to pay cash merger consideration, repay and repurchase indebtedness of the Company, and pay transaction fees and expenses (including debt retirement premiums) in connection therewith. At December 31, 1996, on a pro forma basis after giving effect to the Merger, the Company would have borrowed $750.0 million under the Term Loan Facility, borrowed approximately $13.0 million under the Revolving Credit Facility, issued $240.0 million of the Notes, and would have had additional availability of approximately $134.0 million under the Revolving Credit Facility (after giving effect to $3.0 million of outstanding letters of credit). 32 The $750.0 million Term Loan Facility will consist of (i) a $350.0 million seven year Term Loan A, (ii) a $200.0 million eight year Term Loan B and (iii) a $200.0 million nine year Term Loan C. These Term Loans will amortize as follows:
DATE FROM CLOSING TERM LOAN A TERM LOAN B TERM LOAN C - --------------------------------------------- ------------- ------------------- ------------- (DOLLARS IN MILLIONS) 24 Mos....................................... $ 25.0 $ 0.5 $ 0.5 36 Mos....................................... 37.5 0.5 0.5 48 Mos....................................... 47.5 0.5 0.5 60 Mos....................................... 60.0 0.5 0.5 72 Mos....................................... 80.0 0.5 0.5 84 Mos....................................... 100.0 0.5 0.5 96 Mos....................................... -- 197.0 0.5 108 Mos...................................... -- -- 196.5 ------ ------ ------ $ 350.0 $ 200.0 $ 200.0 ------ ------ ------ ------ ------ ------
The Term Loan Facility is also subject to mandatory prepayment with the proceeds of certain asset sales and a portion of Excess Cash Flow (as defined in the Credit Facilities). The Revolving Credit Facility will terminate seven years after the Effective Time. See "Description of Credit Facilities." In December 1993, a subsidiary of the Company entered into an asset-backed securitization program whereby the subsidiary can sell to a financial institution up to $50.0 million of trade accounts receivable. See Note 9 to the Company's Consolidated Financial Statements included elsewhere herein. The program costs approximate rates charged on high quality commercial paper, plus certain administrative expenses. At December 31, 1996, sales under the program were approximately $50.0 million. The program expires in December 1997. The Company expects to modify or replace such program with a similar facility in connection with the Merger. Based upon the current level of operations and anticipated growth, management believes that future cash flow from operations, together with available borrowings under the Revolving Credit Facility, will be adequate to meet the Company's anticipated requirements for capital expenditures, working capital, interest payments and scheduled principal payments. There can be no assurance, however, that the Company's business will continue to generate sufficient cash flow from operations in the future to service its debt and make necessary capital expenditures after satisfying certain liabilities arising in the ordinary course of business. If unable to do so, the Company may be required to refinance all or a portion of its existing debt, including the Notes, to sell assets or to obtain additional financing. There can be no assurance that any such refinancing would be possible or that any such sales of assets or additional financing could be achieved. See "Risk Factors." HISTORICAL Cash provided by operating activities totaled $68.2 million, $79.2 million and $88.9 million for 1996, 1995 and 1994, respectively. The decrease in cash from operating activities in 1996 compared to 1995 is primarily attributable to increased cash tax payments in certain foreign jurisdictions, increased cash payments to the Company's pension plans and increases in inventory. In 1995, the cash from operating activities was lower than 1994 primarily because of changes in the noncash components of working capital primarily reflecting higher sales levels and a reduction in accrued liabilities. Cash from operating activities was used primarily for capital expenditures: $20.4 million, $20.4 million and $10.9 million in 1996, 1995 and 1994, respectively. In 1996, cash from operating activities was also used for acquisitions ($29.5 million) and to repurchase in the open market the Company's Common Stock ($52.7 million). In 1995 and 1994, the Company also used the cash flow from operations for debt reduction ($50.4 million--1995; $145.6 million--1994); the 1994 debt reduction also included approximately $67.0 33 million net proceeds from the sale of 4.4 million shares of Common Stock. In 1996, the Company increased its net borrowings by approximately $26.3 million to supplement the cash flow from operations to fund the expenditures described above. In 1996, the Company's Board of Directors authorized an open market share repurchase program of up to 5.0 million shares of the Company's Common Stock. At December 31, 1996, the Company had repurchased in the open market approximately 2.6 million shares of its Common Stock at an average price of $20.01 per share. ENVIRONMENTAL MATTERS Subsequent to the acquisition of Amphenol from Allied Corporation ("Allied") in 1987, Amphenol and Allied have been named jointly and severally liable as potentially responsible parties in relation to several environmental cleanup sites. Amphenol and Allied have jointly consented to perform certain investigations and remedial and monitoring activities at two sites and they have been jointly ordered to perform work at another site. The responsibility for costs incurred relating to these sites is apportioned between Amphenol and Allied based on an agreement entered into in connection with the acquisition. For sites covered by this agreement, to the extent that conditions or circumstances occurred or existed at the time of or prior to the acquisition, the first $13.0 million of costs are borne by Amphenol and have been incurred as of December 31, 1996. Allied is obligated to pay 80% of the excess over $13.0 million and 100% of the excess over $30.0 million. Management does not believe that the costs associated with resolution of these or any other environmental matters will have a material adverse effect on the Company's financial position or results of operations. See "Business--Legal Proceedings." INFLATION AND COSTS The cost of the Company's products is influenced by the cost of a wide variety of raw materials, including precious metals such as gold and silver used in plating; aluminum, copper, brass and steel used for contacts, shells and cable; and plastic materials used in molding connector bodies, inserts and cable. In general, increases in the cost of raw materials, labor and services have been offset by price increases, productivity improvements and cost saving programs. RISK MANAGEMENT The Company has to a significant degree mitigated its exposure to currency risk in its business operations by manufacturing and procuring its products in the same country or region in which the products are sold so that costs reflect local economic conditions. In other cases involving U.S. export sales, raw materials are a significant component of product costs for the majority of such sales and raw material costs are generally dollar based on a worldwide scale, such as basic metals and petroleum derived materials. The Company does have credit agreements which allow it to borrow at variable rates. In such cases the Company may use financial instruments, primarily LIBOR contracts and interest rate swap contracts to fix such variable rates for varying periods, generally not longer than one year. See "Risk Factors--Substantial Leverage and Debt Service" and "--Risks Associated with Foreign Operations; Exchange Rate Fluctuations." FUTURE ACCOUNTING CHANGES In June 1996, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 125 (FAS 125), "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities." Management has reviewed the statement and believes that implementation of the statement will not have a material effect on the Company's financial position or results of operations. The Company is required to adopt the statement effective January 1, 1997. 34 BUSINESS GENERAL Amphenol is a leading designer, manufacturer and marketer of electrical, electronic and fiber optic connectors, interconnect systems and coaxial and flat-ribbon cable. The primary end markets for the Company's products are telephone, wireless and data communications systems; cable television systems; commercial and military aerospace electronics; automotive and mass transportation applications; and industrial factory automation equipment. For the year ended December 31, 1996, approximately 52% of the Company's net sales were to the worldwide communications market (including 23% for the cable television market), 26% were for commercial and military aerospace and other military electronics applications and 22% were for industrial, transportation and other applications. The Company focuses on optimizing its mix of higher margin application-specific products in its product offerings and has enhanced the cost controls in its operations. As a result of these initiatives, the Company's operating profit margin has increased from 13.5% in fiscal year 1993 to 17.8% in fiscal year 1996. For fiscal year 1996, the Company had net sales, EBITDA and net income of $776.2 million, $166.1 million and $67.6 million, respectively. The Company designs and manufactures connectors and interconnect systems, which are used primarily to conduct electrical and optical signals, for a wide range of sophisticated electronic applications. The Company believes, based primarily on published market research, that it is one of the largest connector manufacturers in the world and the leading supplier of high performance environmental connectors that require superior performance and reliability under conditions of stress and in hostile environments. Such conditions are frequently encountered in commercial and military aerospace applications and other demanding industrial applications such as natural resource exploration, medical instrumentation and off-road construction. In addition, the Company has developed a broad range of interconnect products to serve the rapidly growing markets of wireless communications including cellular and personal communication networks and fiber optic networks; electronic commerce including smart cards and electronic purse applications; and automotive safety products including airbags, pretensioner seatbelts and anti-lock braking systems. The Company is also one of the leaders in developing interconnect products for factory automation and machine tools and develops interconnect products for mass transportation applications. The Company believes that the worldwide industry for interconnect products and systems is highly fragmented with over 1,000 producers of connectors worldwide, of which the 10 largest producers accounted for a combined market share of approximately 36% in 1996. The Company estimates that the total sales for the industry were approximately $27.0 billion in 1996. The Company's Times Fiber subsidiary is the world's second largest producer of coaxial cable for the cable television market. The Company believes that Times Fiber is one of the lowest cost producers of coaxial cable for the cable television market, and that it is one of the technological leaders in increasing the bandwidth of coaxial cable products to accommodate increased channel capacity for full service cable television/telecommunication systems. In addition, the Company is beginning to supply the developing market for high bandwidth coaxial cable and related interconnect products used in full service cable television/telecommunication systems being installed by cable operators and telecommunication companies. The Company has also become a major supplier of coaxial cable to the emerging international cable television markets. The Company estimates that the total sales for the worldwide market for coaxial cable for cable television were approximately $800.0 million in 1996. The Company is a global manufacturer employing advanced manufacturing processes. The Company's products are manufactured and assembled at facilities in the United States, Canada, Mexico, Germany, France, the United Kingdom, the Czech Republic, Hong Kong, Taiwan, Japan, India and the People's Republic of China. The Company's connector products are sold through its global sales force and independent manufacturers' representatives to thousands of OEMs in 52 countries throughout the world as well as through a global network of electronics distributors. The Company's coaxial cable products are 35 primarily sold to cable television operators and to telecommunication companies who have entered the broadband communications market. In 1996, approximately 55% of the Company's net sales were in North America, 33% were in Europe and 12% were in Asia and other countries. The Company was incorporated in Delaware in 1986. The Company's principal executive offices are located at 358 Hall Avenue, Wallingford, Connecticut 06492 and its telephone number is (203) 265-8900. INDUSTRY OVERVIEW Connectors and interconnect systems are devices that make connections that allow electronic and optical signals to travel from point to point. They are used to connect wires, cables, printed circuit boards, and other electronic components to each other and to related equipment. Connectors and interconnect systems are found in virtually every electronic product including voice, video and data communications equipment and networks, aerospace and military electronics systems, medical and instrumentation equipment, automobiles, manufacturing machines and equipment, mass transportation systems and consumer electronics and appliances. OEMs in these industries use connectors in the manufacture of their products and typically collaborate with connector manufacturers in the design of the OEM's interconnect needs and requirements. The Company primarily competes in the wireless, telecom and data communications, broadband communications, commercial and military aerospace, and certain industrial and automotive electronics markets. It is estimated that overall sales for the connector industry were approximately $27.0 billion in 1996. Information regarding the major end-user markets for connectors is presented in the table below.
1996 SALES (IN PERCENT OF BILLIONS) TOTAL ----------- ----------- Telecommunications............................................................. $ 6.2 23.0% Computer....................................................................... 6.0 22.2 Datacom........................................................................ 3.4 12.6 Consumer....................................................................... 2.6 9.6 Auto........................................................................... 2.5 9.3 Military and Commercial Aircraft............................................... 2.0 7.4 Test and measurement........................................................... 1.1 4.1 Industrial..................................................................... 1.6 5.9 Medical........................................................................ 1.0 3.7 Other.......................................................................... 0.6 2.2 ----------- ----------- Total........................................................................ $ 27.0 100.0%
Source: Fleck Research, February 26, 1997. Demand for connector products has experienced growth in recent years and is expected to continue to grow in the future. The Company attributes the expected growth in the demand for electronic and fiber optic connectors and interconnect devices to the proliferation of electronic and fiber optic systems and the development of new electronic products and applications. 36 PRODUCT GROUPS The following table sets forth the dollar amounts of the Company's net sales for each major product group. For a discussion of factors affecting changes in sales by product category, see "Management's Discussion and Analysis of Financial Condition and Results of Operations."
YEAR ENDED DECEMBER 31, ---------------------------------- 1994 1995 1996 ---------- ---------- ---------- (DOLLARS IN THOUSANDS) NET SALES BY PRODUCT GROUP: Commercial, radio frequency and industrial interconnect products, cable assemblies and flat-ribbon cable........................................... $ 321,511 $ 370,619 $ 388,941 High performance environmental connectors.................................... 156,995 174,329 208,071 Coaxial cable................................................................ 214,145 238,285 179,209 ---------- ---------- ---------- $ 692,651 $ 783,233 $ 776,221 ---------- ---------- ---------- ---------- ---------- ---------- NET SALES BY GEOGRAPHIC AREA: United States operations................................................... $ 381,016 $ 394,563 $ 397,023 International operations(1)................................................ 311,635 388,670 379,198 ---------- ---------- ---------- $ 692,651 $ 783,233 $ 776,221 ---------- ---------- ---------- ---------- ---------- ----------
- ------------------------ (1) Includes international coaxial cable sales, which are primarily export sales. COMMERCIAL, RADIO FREQUENCY AND INDUSTRIAL INTERCONNECT PRODUCTS, CABLE ASSEMBLIES AND FLAT-RIBBON CABLE. The Company produces a broad range of commercial and industrial interconnect products. Such products include: fiber optic interconnect products and systems used in fiber optic networks for voice, video and data communications; chip card acceptor interconnect devices and readers used in conjunction with smart cards and electronic purses (a system for cashless monetary transactions); industrial interconnect products used in a variety of applications such as factory automation equipment, mass transportation applications including railroads and marine transportation; and automotive safety products including interconnect devices and systems used in automotive airbags, pretensioner seatbelts and anti-lock braking systems. The Company designs and produces a broad range of radio frequency connector products used in telecommunications, computer and office equipment, instrumentation equipment, local area networks, aerospace and military electronic applications. The Company's radio frequency connectors are used in base stations, hand held sets and other components of cellular and personal communications networks. The Company has also developed a broad line of radio frequency connectors for coaxial cable for full service cable television/telecommunication networks. The Company also designs and produces highly-engineered cable assemblies. Such assemblies are specially designed by the Company in conjunction with OEM customers for specific applications, primarily for computer, communications and office equipment systems. The cable assemblies utilize the Company's connector and cable products as well as components purchased from others. The Company is also a leading producer of flat-ribbon cable, a cable made of wires assembled side by side such that the finished cable is flat. Flat-ribbon cable is used to connect internal components in systems with space and component configuration limitations. The product is used in computer and office equipment components as well as in a variety of telecommunications applications. HIGH PERFORMANCE ENVIRONMENTAL CONNECTORS. The Company believes, based primarily on published market research, that it is the largest supplier of circular, military-specification connectors; such connectors require superior performance and reliability under conditions of stress and in hostile environments. Such connectors are generally used to interconnect electronic and fiber optic systems in sophisticated aerospace, military, commercial and industrial equipment. These applications present demanding technological requirements in that such connectors are subject to rapid and severe temperature changes, vibration, humidity or nuclear radiation. Frequent applications of these connectors include aircraft, guided missiles, 37 radar, military vehicles, equipment for spacecraft, energy and geophysical applications and off-road construction equipment. Specially designed high performance environmental connectors, which include fiber optic, filtered, nonmetallic, diode and breakaway connectors, are manufactured to specific customer input/output configurations. COAXIAL CABLE. The Company designs, manufactures and markets coaxial cable primarily for use in the cable television industry. The Company manufactures two primary types of coaxial cable: semi-flexible, which has an aluminum tubular shield, and flexible, which has one or more braided metallic shields. Semi- flexible coaxial cable is used in the trunk and feeder distribution portion of cable television systems, and flexible cable (also known as drop cable) is used primarily for hookups from the feeder cable to the cable television subscriber's residence. Flexible cable is also used in other communications applications. The rapid developments in fiber optic technologies, digital compression (which allows several channels to be transmitted within the same bandwidth that a single analog channel currently requires) and other communication technologies, including the Company's development of higher capacity coaxial cable, have resulted in technologies which are expected to give cable television systems channel capacity in excess of 500 channels. Such expanded channel capacity, along with other component additions, will permit cable operators to offer full service networks with a variety of capabilities, including near video-on-demand, pay-per-view special events, home shopping networks, interactive entertainment and education services, telephone services, and high-speed access to data resources such as the Internet. With respect to expanded channel capacity systems, cable operators have generally adopted, and the Company believes that for the foreseeable future will continue to adopt, a cable system using both fiber optic cable and coaxial cable. Such systems combine the advantages of fiber optic cable in transmitting clear signals over a long distance without amplification with the advantages of coaxial cable in ease of installation, low cost and compatibility with the receiving components of the customer's communications devices. The Company believes that while system operators are likely to increase their use of fiber optic cable for the trunk and feeder portions of the cable systems, there will be an ongoing need for high capacity coaxial cable for the local distribution and street-to-the-home portions of the cable system. U.S. cable system designs are increasingly being employed in international markets where cable television penetration is low. For example, it is estimated that in 1996 only 25% of the television households in Western Europe subscribed to some form of multichannel television service as compared to an estimated subscription rate of 64% in the United States. The estimated subscription rates in the Asian and Latin American markets were even lower at approximately 15% and 11%, respectively. In terms of television households, it is estimated that there were 178 million television households in Western Europe, 398 million in Asia and 81 million in Latin America. This compares to an estimated 97 million television households in the U.S. In 1996, the Company had sales of coaxial cable in approximately 40 countries, and the Company believes the development of cable television systems in international markets presents a significant opportunity to increase sales of its coaxial cable products. See "Risk Factors--Risks Associated with Foreign Operations; Exchange Rate Fluctuations." PRODUCT DEVELOPMENT The Company's product development strategy is to offer a broad range of products to meet the specific interconnect requirements of its customers in its target markets. The Company's market focus is primarily in interconnect products for the (i) wireless, telecom and data communications market; (ii) broadband communications, primarily cable television and the developing markets for full service television, telephone and data communication broadband networks; (iii) commercial and military aerospace markets; (iv) industrial markets, primarily factory automation and mass transportation; and (v) automotive electronics, primarily automotive safety devices such as airbags, pretensioner seatbelts and anti-lock braking systems. The Company implements its product development strategy through product 38 design teams and collaboration arrangements with customers which result in obtaining approved vendor status for the customer's new products and programs. The Company further seeks to have its products become widely accepted within the industry for similar applications and products manufactured by other potential customers, thereby providing additional sources of future revenue. The development of application-specific products has decreased the significance of standard products which generally experience greater pricing pressure. In addition to product design teams and customer collaboration arrangements, the Company uses key account managers to direct customer relationships on a global basis such that the Company can bring to bear its total resources to meet the worldwide needs of its multinational customers. The Company is also focused on making strategic acquisitions in certain markets to further broaden and enhance its product offerings and expand its global capabilities. The following examples illustrate the Company's market and product development strategy: - The use of fiber optics in communications systems has been increasing in recent years, including fiber optic applications in long distance telephone systems and local area networks. The Company has developed a broad line of fiber optic interconnect components for fiber optic systems including sophisticated narrowband wavelength division multiplexers, which permit greater transmission capability, and fiber optic management systems, which facilitate the organizing and management of a fiber optic network. - Radio frequency/microwave electronics technology has been characterized by developments that expand circuit capacity with increasingly smaller electronic devices. These technologies have expanded into the growing markets of cellular and personal communication networks. The Company has developed a broad line of interconnect products and systems used in base stations for such wireless communication systems. - Smart cards, where data is stored in a chip on a plastic card, are increasingly being used in banking systems (including electronic purses), telephone credit cards, security systems and other applications. The Company is one of the leaders in developing acceptor devices used in readers that transmit the information stored on smart cards or as components of the electronic purse. - Performance, reliability and ability to withstand harsh environments are essential to products and systems for the commercial and military aerospace market. The Company, in conjunction with a significant OEM customer, has developed a sophisticated interconnect coupler technology for advanced commercial aircraft flight control systems. The Company also performed certain research and development studies and is now producing a family of connectors comprising approximately 1,000 SKUs for use in the international space station program. - The use of electronics and sensing devices in automobiles has been increasing for the past several years. The Company, in conjunction with major European automobile manufacturers, has developed a broad line of interconnect products used in automotive airbags and pretensioner seatbelts. Such products, which were originally used primarily in European luxury cars, have evolved in technology and availability to standard European car models and are being used in a wider array of applications such as passenger side and side impact protection. - The Company has been one of the technology leaders in expanding the bandwidth characteristics of coaxial cable for cable television. The Company produces 1 gigahertz coaxial cable which is used in hybrid fiber coaxial cable ("HFC") full service networks for offering video, voice and data services. In addition, in 1995 the Company developed and is now producing a broad line of radio frequency coaxial connectors for the cable television industry. - The Company also seeks to expand its product offering and global presence in its chosen markets through strategic acquisitions. In 1996, for example, the Company acquired Sine, one of the leading 39 suppliers of interconnect products and assemblies for the factory automation market. This acquisition complemented the Company's existing line of industrial interconnect products and further positioned the Company for growth in factory motion control equipment. The Company also acquired a 51% interest in Kai-Jack, one of the leading Taiwanese radio frequency connector manufacturers. The acquisition strengthens the Company's manufacturing capabilities and worldwide sourcing of radio frequency products as well as expands the Company's presence in the growing Asian markets. INTERNATIONAL OPERATIONS The Company believes that its global presence is an important advantage over competitors that do not have comparable international activities as it allows the Company to provide quality products on a timely and worldwide basis to its multinational customers. Approximately 49% of the Company's sales for the year ended December 31, 1996 were outside of the United States. Approximately 68% of such international sales were in Europe. The Company has manufacturing facilities in the United Kingdom, Germany, France, the Czech Republic and sales offices in most other European markets. The European operations generally have strong positions in their respective local markets. Local operations coordinate product design and manufacturing responsibility with the Company's other operations around the world. The balance of the Company's international activities are located primarily in Canada, Mexico and the Far East, which includes manufacturing facilities in Hong Kong, Taiwan, India, Japan and the People's Republic of China. The Hong Kong, Taiwan, India, People's Republic of China and Mexico facilities generally serve their respective local markets as well as provide low cost manufacturing and assembly sources for world markets. CUSTOMERS The Company's products are used in a wide variety of applications by numerous customers, none of whom accounted for more than 5% of the Company's sales for 1996 (except for sales under contract with the U.S. Government and its subcontractors, which accounted for 8% of 1996 sales). The Company's participation across a broad spectrum of defense programs is such that the Company believes that no one military program accounted for more than 1% of 1996 net sales. See "Risk Factors--Exposure to Changes in Military Expenditures." The Company's products are sold directly to OEMs, cable system operators, telecommunication companies and through distributors. There has been a trend on the part of OEM customers to consolidate their lists of qualified suppliers to companies that have a global presence, can meet quality and delivery standards, have a broad product portfolio and design capability, and have competitive prices. The Company has focused its global resources to position itself to compete effectively in this environment. The Company has concentrated its efforts on service and productivity improvements, including advanced computer aided design and manufacturing systems, statistical process controls and just- in-time inventory programs to increase product quality and shorten product delivery schedules. The Company's strategy is to provide a broad selection of products in the areas in which it competes. The Company has achieved a preferred supplier designation from many of its OEM customers. Cable television services in the United States are provided primarily by MSOs. It is estimated that in 1996 the twenty largest MSOs served 85% of the estimated 62 million cable television subscribers in the United States. The major MSOs include such companies as TCI, Time Warner Companies Inc., Continental Cablevision, Inc., Comcast Corporation and Cablevision Systems Corporation. Many of the major MSOs are customers of the Company, including those listed above. The Company's sales to distributors represented approximately 26% of the Company's 1996 sales. The Company's recognized brand names, including "Amphenol," "Times Fiber," "Pyle-National," "Spectra-Strip," "Sine," "Tuchel" and "Socapex," together with the Company's strong connector design-in position 40 (products that are specified in the plans and are qualified by the OEM), enhance its ability to reach the secondary market through its network of distributors. The Company's products are sold by eight of the 10 largest (based on sales) electronics distributors in the United States, and the Company believes that its distributor network represents a competitive advantage. MANUFACTURING The Company employs advanced manufacturing processes including molding, stamping, plating, turning, extruding, die casting and assembly operations as well as proprietary process technology for flat-ribbon and coaxial cable production. The Company's manufacturing facilities are generally vertically integrated operations from the initial design stage through final design and manufacturing. Outsourcing of certain fabrication processes is used when cost-effective. Substantially all of the Company's manufacturing facilities are certified to the ISO9000 series of quality standards. The Company employs a global manufacturing strategy to lower its production costs and to improve service to customers. The Company sources its products on a worldwide basis with manufacturing and assembly operations in the United States, Canada, Mexico, the United Kingdom, France, Germany, the Czech Republic, Hong Kong, Taiwan, India, Japan and the People's Republic of China. To better serve high volume OEM customers, the Company has established just-in-time facilities near major customers. The Company's policy is to maintain strong cost controls in its manufacturing and assembly operations. The Company has undertaken programs to rationalize its production facilities, reduce plant and corporate overhead expense and maximize the return on capital expenditures. The programs to improve productivity are ongoing. The Company purchases a wide variety of raw materials for the manufacture of its products, including precious metals such as gold and silver used in plating; brass, copper, aluminum and steel used for cable, contacts and connector shells; and plastic materials used for cable and connector bodies and inserts. All such raw materials are readily available throughout the world and are purchased locally from a variety of suppliers. The Company is not dependent upon any one source for raw materials or if one source is used, alternate sources of supply are available. RESEARCH AND DEVELOPMENT The Company's research, development and engineering expenditures for the creation and application of new and improved products and processes were $14.6 million, $15.7 million and $14.3 million (excluding customer sponsored programs representing expenditures of $0.9 million, $1.3 million and $0.8 million) for 1996, 1995 and 1994, respectively. The Company's research and development activities focus on selected product areas and are performed by individual operating divisions. Generally, the operating divisions work closely with OEM customers to develop highly engineered products that meet the customer's needs. The Company continues to focus its research and development efforts primarily on those product areas that it believes have the potential for broad market applications and significant sales within a one- to three-year period. TRADEMARKS AND PATENTS The Company owns a number of active patents worldwide. While the Company considers its patents to be valuable assets, the Company does not believe that its competitive position is dependent on patent protection or that its operations are dependent on any individual patent. Allied Corporation has granted to the Company a worldwide non-exclusive license to use all trademarks, service marks, trade names and corporate names relating to "Bendix" which the Company has used in its sales and marketing of high performance environmental connectors. The license will expire on 41 June 2, 1997. The Company has been increasing its use of other trade names in its marketing of high performance connectors and accordingly does not believe that its operations will be materially adversely affected by the expiration of this license. The Company regards its trademarks "Amphenol," "Pyle-National," "Tuchel," "Socapex," "Spectra-Strip," "Sine" and "Times Fiber" to be of value in its businesses. The Company has exclusive rights in all its major markets to use these registered trademarks. COMPETITION The Company encounters competition in substantially all areas of its business. The Company competes primarily on the basis of product quality, price, engineering, customer service and delivery time. Competitors include large, diversified companies, some of which have substantially greater assets and financial resources than the Company, as well as medium to small companies. In the area of coaxial cable for cable television, the Company believes that it and CommScope, a division of General Instrument Corporation, are the primary providers of such cable; however, CommScope is larger than the Company in this market. In addition, the Company faces competition from smaller companies that have concentrated their efforts in one or more areas of the coaxial cable market. See "Risk Factors--Competition." BACKLOG The Company estimates that its backlog of unfilled orders was $207.4 million and $203.4 million at December 31, 1996 and 1995, respectively. Orders typically fluctuate from quarter to quarter based on customer demands and general business conditions. Unfilled orders may be cancelled prior to shipment of goods; however, such cancellations historically have not been material. It is expected that all or a substantial portion of the backlog will be filled within the next 12 months. However, significant elements of the Company's business, such as sales to the cable television industry, distributors, the computer industry, and other commercial customers generally have short lead times. Therefore, backlog may not be indicative of future demand. EMPLOYEES As of December 31, 1996, the Company had approximately 6,200 full-time employees worldwide. Of these employees, approximately 4,500 were hourly employees, of which approximately 2,300 were represented by labor unions and the remainder were salaried. Beginning on October 21, 1995, the Company experienced a seven day work stoppage at its plant in Sidney, New York when approximately 1,000 hourly employees represented by the International Association of Machinists and Aerospace Workers rejected a Company proposal and voted to strike upon the expiration of their then current collective bargaining contract. A new three year contract was approved and the work stoppage ended on October 28, 1995. The Sidney, New York plant manufactures interconnect products used primarily in the aerospace industry and other commercial and industrial markets. The one week work stoppage did not involve any other operation of the Company. The Company has not had any other work stoppages in the past ten years. In 1996, the United Steelworkers International Union, AFL-CIO attempted to organize approximately 500 employees of the Company's plant in Chatham, Virginia, the Company's primary plant for the production of coaxial cable. The union organizing effort was defeated by a vote of the hourly employees. A Regional Director of the National Labor Relations Board subsequently found that unfair labor practices had been committed by the Company prior to the election and ordered that a new election be held. The Company's appeal of such finding and order was denied by the National Labor Relations Board on March 19, 1997. The Company expects that a new election will be held at the Chatham, Virginia plant prior to May 30, 1997. If the union is certified, the Company would be required to bargain in good faith with the union, and its operations at such facility could be subject to the risks associated with unionized employees generally, including the risk of work stoppages. The Company believes that it has a good relationship with its unionized and nonunionized employees. 42 PROPERTIES The table below presents the location, size and function of the Company's principal manufacturing and assembly facilities as of January 31, 1997. The Company's principal executive offices are located at 358 Hall Avenue, Wallingford, Connecticut 06492.
LOCATION SQUARE FEET FUNCTION - ------------------------------------ ------------- ------------------------------------------------------------ UNITED STATES: Chatham, VA 175,000 coaxial cable manufacturing Chatham, VA(1) 100,000 coaxial cable warehousing Chatham, VA(1) 40,000 coaxial cable manufacturing and warehousing Chicago, IL 270,000 industrial connector manufacturing and assembly Danbury, CT(1) 170,000 RF connector manufacturing Danville, VA(1) 80,000 coaxial cable warehousing Endicott, NY 125,000 cable assembly Hamden, CT 60,000 cable manufacturing Hamden, CT(1) 25,000 cable warehousing Lisle, IL(1) 28,000 fiber optic connector manufacturing Mt. Clemens, MI(1) 71,360 industrial connector manufacturing and assembly Nogales, AZ(1) 20,250 connector warehousing and assembly Parsippany, NJ(1) 32,500 RF connector manufacturing Phoenix, AZ(1) 12,000 coaxial cable warehousing Sidney, NY 685,000 high performance environmental connector manufacturing and assembly Wallingford, CT(1) 28,800 executive offices CANADA: Renfrew, Ontario(1) 26,000 coaxial cable manufacturing Scarborough, Ontario(1) 88,000 high performance connector manufacturing MEXICO: Nogales(1) 27,558 connector assembly Nogales(1) 12,700 connector assembly Nogales(1) 57,884 connector assembly UNITED KINGDOM: Greenock, Scotland(1) 10,000 connector manufacturing and cable assembly Nottingham, England(1) 11,000 high performance environmental connector manufacturing and cable assembly Romsey, England(1) 24,000 cable manufacturing and cable assembly Whitstable, England 135,000 connector manufacturing, cable assembly and coaxial cable warehousing GERMANY: Heilbronn 130,000 connector manufacturing and cable assembly CZECH REPUBLIC: Klucouska 16,300 connector assembly FRANCE: Dole 121,000 connector manufacturing Thyez 125,000 connector manufacturing
43
LOCATION SQUARE FEET FUNCTION - ------------------------------------ ------------- ------------------------------------------------------------ HONG KONG: Fotan Shatin(1) 70,000 cable manufacturing and assembly TAIWAN: Taoyuan Hsien(1) 15,700 cable assembly Tainan(1) 64,600 RF connector manufacturing and assembly JAPAN: Ritto-cho, Shiga(1) 15,700 assembly, warehousing INDIA: Pune(2) 53,400 connector manufacturing and assembly Bangalore 12,200 connector manufacturing and assembly CHINA: Changzhou 65,000 coaxial cable manufacturing and warehousing
- ------------------------ (1) These facilities are leased. Such leases expire at various times through 2007. (2) This facility is owned but is situated on property subject to a long-term lease arrangement expiring in 2065. The Company estimates that during 1996 its principal manufacturing facilities operated at between 70% and 95% of capacity. In addition to the facilities described above, the Company leases various warehouses and sales and administrative offices. LEGAL PROCEEDINGS On January 23, 1997, the Board of Directors approved, subject to shareholder approval and certain other closing conditions, and the Company entered into the Merger Agreement with NXS Acquisition. See "The Merger." The proposed transaction was announced to the public on January 23, 1997 and on that same date and on January 29, 1997, the Company and its directors (four of whom are also executive officers of the Company) were named as defendants in complaints filed in the Court of Chancery in the State of Delaware by two persons and one person, respectively, claiming to be stockholders of the Company, individually and purportedly as a class action on behalf of stockholders of the Company. In general, the complaints allege that the Company's directors have breached their fiduciary duties by, among other things, resolving to approve of the Merger Agreement at an allegedly inadequate price and by allegedly failing to take adequate steps to enhance the value of the Company and/or its attractiveness as a merger or acquisition candidate, including failing to conduct an auction. The complaints seek injunctive relief prohibiting the Company from, among other things, consummating the Merger Agreement. The complaints also seek unspecified damages, attorney's fees and other relief. The Company believes that the allegations contained in the complaints are without merit and intends to contest the actions vigorously, on behalf of itself and its directors, if the plaintiffs elect to proceed with their actions. The Company and its subsidiaries have been named as defendants in several other legal actions in which various amounts are claimed arising from normal business activities. Although the amount of any ultimate liability with respect to such matters cannot be precisely determined, in the opinion of management, such matters are not expected to have a material effect on the Company's financial condition or results of operations. Certain operations of the Company are subject to federal, state and local environmental laws and regulations which govern the discharge of pollutants into the air and water, as well as the handling and disposal of solid and hazardous wastes. The Company believes that its operations are currently in substantial compliance with all applicable environmental laws and regulations and that the costs of continuing compliance will not be material to the Company's financial condition or results of operations. Subsequent to the acquisition of Amphenol from Allied in 1987, Amphenol and Allied have been named jointly and severally liable as potentially responsible parties in relation to several environmental cleanup sites. Amphenol and Allied have jointly consented to perform certain investigations and remedial 44 and monitoring activities at two sites and they have been jointly ordered to perform work at another site. The responsibility for costs incurred relating to these sites is apportioned between Amphenol and Allied based on an agreement entered into in connection with the acquisition. For sites covered by this agreement, to the extent that conditions or circumstances occurred or existed at the time of or prior to the acquisition, the first $13.0 million of costs are borne by Amphenol and have been incurred as of December 31, 1996. Allied is obligated to pay 80% of the excess over $13.0 million and 100% of the excess over $30.0 million. Allied representatives are presently working closely with the Company in addressing the most significant potential environmental liabilities including the Sidney Center Landfill and the Richardson Hill landfill project, as described below. Owners and occupiers of sites containing hazardous substances, as well as generators of hazardous substances, are subject to broad liability under various federal and state environmental laws and regulations, including expenditures for cleanup costs and damages arising out of past disposal activities. Such liability in many cases may be imposed regardless of fault or the legality of the original disposal activity. The Company is currently performing investigative and monitoring activities at its manufacturing site in Sidney, New York. In addition, the Company is currently voluntarily performing monitoring, investigation, design and cleanup activities at two local public off-site disposal sites previously utilized by the Sidney facility and others. The Company is also performing proposed remedial design activities and is currently negotiating with respect to a third site. The Company and Allied have entered into an administrative consent order with the United States Environmental Protection Agency (the "EPA") and are presently determining necessary and appropriate remedial measures for one such site (the "Richardson Hill" landfill) used by Amphenol and other companies, which has been designated a "Superfund" site on the National Priorities List under the Comprehensive Environmental Response, Compensation and Liability Act of 1980. With respect to the second site (the "Route 8" landfill), used exclusively by Amphenol, the Company initiated a remediation program pursuant to a Consent Order with the New York Department of Environmental Protection and is continuing to monitor the results of those remediation efforts. In December 1995, the Company and Allied received a letter from the EPA demanding that the Company and Allied accept responsibility for the investigation and cleanup of the Sidney Center Landfill, another Superfund Site. The Sidney Center Landfill was a municipal landfill site utilized by the Company's Sidney facility and other local towns and businesses. The Company has acknowledged that it sent general plant refuse but no hazardous waste to the Sidney Center Landfill site. Allied and the Company offered to prepare a remedial design and to assist the EPA in identifying other potentially responsible parties for the Sidney Center Landfill site. In July 1996, the Company and Allied received a unilateral order from the EPA directing the Company and Allied to perform certain investigation, design and cleanup activities at the Sidney Center Landfill site. The Company and Allied responded to the unilateral order by agreeing to undertake certain remedial design activities. In March 1997, the EPA filed a lawsuit by which it seeks to recover from Allied and the Company $2.7 million in alleged past response costs relating to the Sidney Landfill Center site. To date the Company and Allied have not accepted any responsibility for the cleanup of the Sidney Center Landfill site. The Company also is engaged in remediating or monitoring environmental conditions at several of its other manufacturing facilities and has been named as a potentially responsible party for cleanup costs at several other off-site disposal sites. During 1996, the Company spent approximately $1.4 million in connection with investigating, remediating and monitoring environmental conditions at these facilities and sites. Amphenol expects such expenditures, net of indemnification payments expected from Allied, to be less than $0.5 million in 1997. Since 1987, the Company has not been identified nor has it been named as a potentially responsible party with respect to any other significant on-site or off-site hazardous waste matters. In addition, the Company believes that all of its manufacturing activities and disposal practices since 1987 have been in material compliance with all applicable environmental laws and regulations. Nonetheless, it is possible that the Company will be named as a potentially responsible party in the future with respect to additional Superfund or other sites. Although the Company is unable to predict with any reasonable certainty the extent of its ultimate liability with respect to any pending or future environmental matters, the Company believes, based upon all information currently known by management about the Company's manufacturing activities, disposal practices and estimates of liability with respect to all known environmental matters, that any such liability will not be material to its financial condition or results of operations. 45 MANAGEMENT DIRECTORS AND EXECUTIVE OFFICERS The following table sets forth the name, age as of April 15, 1997 and position with the Company of each person who is expected to serve as a director or executive officer of Amphenol after the Effective Time. After the Effective Time, the Board of Directors will be subject to change from time to time.
NAME AGE POSITION - ---------------------------------- --- -------------------------------------------------------------------- Martin H. Loeffler................ 52 Chairman of the Board, Chief Executive Officer, President and Director Edward G. Jepsen.................. 53 Executive Vice President and Chief Financial Officer Timothy F. Cohane................. 44 Senior Vice President Edward C. Wetmore................. 40 Secretary and General Counsel Diana G. Reardon.................. 37 Controller and Treasurer Henry R. Kravis................... 53 Director George R. Roberts................. 53 Director Michael W. Michelson.............. 45 Director Marc S. Lipschultz................ 28 Director
MARTIN H. LOEFFLER has been a Director of Amphenol since December 1987 and Chief Executive Officer since May 1996. He has also served as President and Chief Operating Officer of Amphenol since July 1987. He was a Vice President of LPL Technologies Inc. ("LPL") from May 1989 to December 1992. LPL merged into a subsidiary of the Company in December 1992. EDWARD G. JEPSEN has been Executive Vice President and Chief Financial Officer of Amphenol since May 1989 and Senior Vice President and Director of Finance since November 1988. He was a Director, Executive Vice President, Chief Financial Officer and Controller of LPL, and is also a director of TRC Company, Inc. and United International Holdings, Inc. TIMOTHY F. COHANE has been Vice President of Amphenol since December 1991. He was a Director and Vice President of LPL. EDWARD C. WETMORE has been Secretary and General Counsel of Amphenol since 1987. He was also Secretary and General Counsel of LPL. DIANA G. REARDON has been Treasurer of Amphenol since March 1992 and Controller since July 1994. From June 1988 until her appointment as Treasurer she served as Assistant Controller of Amphenol and LPL. HENRY R. KRAVIS is a Founding Partner of KKR and effective January 1, 1996 he became a managing member of the Executive Committee of the limited liability company which serves as the general partner of KKR. He is also a director of AutoZone, Inc., Borden, Inc., Bruno's, Inc., Evenflo & Spalding Holdings Corporation, Flagstar Companies Inc., Flagstar Corporation, The Gillette Company, IDEX Corporation, K-III Communications Corporation, KinderCare Learning Centers, Inc., Merit Behavioral Care Corporation, Newsquest Capital plc, Owens-Illinois Group, Inc., Owens-Illinois, Inc., Safeway, Inc., Sotheby's Holdings Inc., Union Texas Petroleum Holdings, Inc., and World Color Press, Inc. 46 GEORGE R. ROBERTS is a Founding Partner of KKR and effective January 1, 1996 he became a managing member of the Executive Committee of the limited liability company which serves as the general partner of KKR. He is also a director of AutoZone, Inc., Borden, Inc., Bruno's, Inc., Evenflo & Spalding Holdings Corporation, Flagstar Companies Inc., Flagstar Corporation, IDEX Corporation, K-III Communications Corporation, KinderCare Learning Centers, Inc., Merit Behavioral Care Corporation, Newsquest Capital plc, Owens-Illinois Group, Inc., Owens-Illinois, Inc., Safeway, Inc., Union Texas Petroleum Holdings, Inc., and World Color Press, Inc. MICHAEL W. MICHELSON was a General Partner of KKR from January 1, 1987 until January 1, 1996 when he became a member of the limited liability company which serves as the general partner of KKR. Prior to 1987, Mr. Michelson was an Executive at KKR. He is also a director of AutoZone, Inc., Doubletree Corporation, Owens-Illinois Group, Inc., Owens-Illinois, Inc., and Union Texas Petroleum Holdings, Inc. MARC S. LIPSCHULTZ has been an Executive at KKR since 1995. From 1993 to 1995, Mr. Lipschultz attended Harvard Business School. Prior thereto, he was an investment banker with Goldman, Sachs & Co. He is also a director of Evenflo & Spalding Holdings Corporation. Messrs. Kravis and Roberts are first cousins. The business address of Messrs. Kravis and Lipschultz is 9 West 57th Street, New York, New York 10019 and of Messrs. Roberts and Michelson is 2800 Sand Hill Road, Suite 200, Menlo Park, California 94025. In addition to the directors named above, it is expected that two independent persons will become directors of the Company upon the consummation of the Merger. COMPENSATION OF DIRECTORS All directors will be reimbursed for their usual and customary expenses incurred in attending all Board and committee meetings. It is anticipated that each director who is not an employee of the Company will receive an aggregate annual fee of $30,000, payable in quarterly installments. Directors who are also employees of the Company will receive no remuneration for serving as directors. STOCK OPTION PLANS Immediately prior to the Effective Time, each employee or director stock option to purchase Common Stock ("Company Stock Options") granted under any stock option or stock purchase plan, program or arrangement of the Company (the "Stock Plans") will be cancelled, whether or not then exercisable, and each holder of any such Company Stock Option having an exercise price of less than $26.00 (which constitutes all Company Stock Options except for Company Stock Options to purchase an aggregate of 110,000 shares of Common Stock at an exercise price of $26 5/8 per share) will receive, in consideration of such cancellation, a payment from the Company (subject to applicable withholding taxes) equal to the product of (1) the total number of shares of Common Stock subject to such Company Stock Option and (2) the excess of $26.00 over the exercise price per share of Common Stock subject to such Company Stock Option, payable in cash at the Effective Time or as soon as practicable thereafter, representing approximately $2.4 million in the aggregate. It is anticipated that the Stock Plans will terminate as of the Effective Time, and that following the Effective Time no holder of a Company Stock Option nor any participant in any Stock Plan will have any right thereunder to acquire equity securities of the Company. See "--Stock Purchase and Option Agreements." STOCK PURCHASE AND OPTION AGREEMENTS It is expected that Messrs. Martin H. Loeffler, Edward G. Jepsen and Timothy F. Cohane, each of whom is an officer and director of the Company, will elect to retain all of their shares in the Merger. 47 However, Messrs. Loeffler, Jepsen and Cohane have agreed in principal with NXS Acquisition and NXS LLC that they will retain 96,154 shares, 76,923 shares and 76,923 shares, respectively, of Common Stock. Accordingly, following the Merger, such persons may sell any such shares which they retain in excess of such amounts. While no decisions have been made concerning any such potential sale, NXS LLC has indicated that it would be prepared to purchase any such excess shares. To the extent that the proration provisions of the Merger Agreement result in Messrs. Loeffler, Jepsen and Cohane retaining fewer shares than contemplated, the Company expects to provide such persons with an opportunity to buy shares in an amount necessary to result in such persons retaining the intended amounts and, in connection therewith, to eliminate for such persons the impact of any adverse tax consequences arising from such purchase. Messrs. Loeffler, Jepsen and Cohane will also be granted options to acquire an additional 336,538 shares, 230,769 shares and 230,769 shares, respectively, of Common Stock following the Merger. It is also expected that options to acquire approximately 555,000 shares will be available for sale, either directly or through grants of options, to other members of the Company's management. No decisions have been reached as to the identities of the persons who would participate in any such sale or grant or as to the terms thereof, other than that to the extent such sale or grant occurs upon or shortly following the Merger, such sale (if any) will be at $26.00 per share and any options granted will be exercisable at $26.00 per share and, subject to certain exceptions, will vest over five years at 20% per year. The sale of any shares or grant of any options to be made in the future may be made at higher or lower prices and on such other terms as may be determined at any time. Messrs. Loeffler, Jepsen and Cohane, as well as other members of the Company's management receiving such shares and options, are expected to enter into agreements with the Company restricting transferability of the shares of Common Stock held by such persons for up to five years after the Effective Time and setting forth, among other things, the limited circumstances in which such shares may be called by or put to the Company. 48 OWNERSHIP OF COMMON STOCK FOLLOWING THE MERGER The following table sets forth certain information regarding the expected ownership of the Company's Common Stock after the Effective Time by (i) persons who, as of the date hereof, own beneficially more than 5% of the outstanding shares of Common Stock and who, after the Effective Time, are expected by the Company to own beneficially or who may possibly own beneficially more than 5% of the outstanding shares of Common Stock, (ii) each person who will become a director of the Company, (iii) the Chairman and each of the other three most highly compensated executive officers of the Company for the year ended December 31, 1996 who are expected to continue to serve as executive officers of Amphenol after the Effective Time and (iv) all directors and executive officers of the Company as a group. The following table assumes that all of the shares of Common Stock owned by the DeGeorge Stockholders are converted into cash in connection with the Merger. See "The Merger--The Stockholders Agreement."
PERCENTAGE NUMBER OF OF CLASS NAME SHARES OWNED OUTSTANDING (A) - ---------------------------------------------------------------------------------- ------------- ------------------- Martin H. Loeffler (b)............................................................ 96,154 * Edward G. Jepsen (b).............................................................. 76,923 * Timothy F. Cohane (b)............................................................. 76,923 * Edward C. Wetmore (c)............................................................. -- -- KKR 1996 GP LLC c/o Kohlberg Kravis Roberts & Co. Inc. L.P. (d)................... 13,116,955 75% 9 West 57th Street New York, New York 10019 All officers and directors as a group (9 persons) (b)(c)(d)....................... -- -- Clover Capital Management, Inc. (e)............................................... -- -- 11 Tobey Village Office Park Pittsford, New York 14534
- ------------------------ * Less than 1%. (a) The amounts and percentage of Common Stock beneficially owned are reported on the basis of regulations of the Commission governing the determination of beneficial ownership of securities. Under the rules of the Commission, a person is deemed to be a "beneficial owner" of a security if that person has or shares "voting power," which includes the power to vote or to direct the voting of such security, or "investment power," which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days. Under these rules, more than one person may be deemed a beneficial owner of the same securities and a person may be deemed to be a beneficial owner of securities as to which he has no economic interest. The percentage of class outstanding after the Effective Time is based on the 17,516,955 shares of Common Stock expected to be outstanding after the Effective Time. (b) It is expected that Messrs. Loeffler, Jepsen and Cohane will elect to retain shares in the Merger with the intention of retaining 96,154 shares, 76,923 shares and 76,923 shares, respectively, of Common Stock. To the extent that the proration provisions of the Merger Agreement result in such persons retaining a different number of shares, the Company expects to permit and/or provide such persons with an opportunity to buy or sell shares in an amount necessary to result in such persons retaining the intended amounts and, in connection therewith, to eliminate for such persons the impact of any adverse tax consequences arising from such purchase or sale. Assuming that Messrs. Loeffler, Jepsen and Cohane own 96,154 shares, 76,923 shares and 76,923 shares, respectively, of Common Stock 49 following the Effective Time, each such person will own less than 1% of the Common Stock outstanding after the Effective Time. (c) Because of the potential effect of proration, it is impossible to determine if any of the directors or executive officers of the Company's Common Stock (except as described in note (b) above) will continue to own shares of Common Stock after the Effective Time. (d) After the Effective Time, shares of Common Stock shown as beneficially owned by KKR 1996 GP LLC will be held by the stockholders of NXS Acquisition. KKR 1996 GP LLC is the sole general partner of KKR Associates 1996. KKR Associates 1996, a limited partnership, is the sole general partner of the Partnership and possesses sole voting and investment power with respect to such shares. KKR 1996 GP LLC is a limited liability company, the members of which are Messrs. Henry R. Kravis, George R. Roberts, Robert I. MacDonnell, Paul E. Raether, Michael W. Michelson, Michael T. Tokarz, James H. Greene, Jr., Perry Golkin, Clifton S. Robbins, Scott M. Stuart and Edward A. Gilhuly. Messrs. Kravis and Roberts are members of the Executive Committee of KKR 1996 GP LLC. Messrs. Kravis, Roberts and Michelson will also be directors of the Company after the Effective Time. Mr. Marc S. Lipschultz is a limited partner of KKR Associates 1996 and will also be a director of the Company. Each of such individuals may be deemed to share beneficial ownership of the shares shown as beneficially owned by KKR 1996 GP LLC. Each of such individuals disclaim beneficial ownership of such shares. It is expected that prior to the Effective Time, one or more other partnerships organized at the direction of KKR may acquire interests in NXS Acquisition and/or NXS LLC. Does not give effect to the exercise of the NXS Option or the Stockholders Option. Assuming all stockholders elected to convert all of their shares into the right to receive cash, then upon exercise of either such option, the stockholders of NXS Acquisition would own, directly or indirectly, 14,443,957 shares, equal to approximately 82% of the shares issued and outstanding immediately after the Merger, before taking into account any purchase of shares from Messrs. Loeffler, Jepsen and Cohane, which could result in the stockholders of NXS Acquisition owning, indirectly, up to an additional 1.5% of such shares. (e) Based solely on a Schedule 13G filed by Clover Capital Management, Inc. and its directors (collectively, "Clover"), Clover beneficially owns an aggregate of 2,779,685 shares (approximately 6.2%) of the Common Stock outstanding as of February 14, 1997. Because the Company does not know whether or not Clover intends to elect to retain any shares in the Merger, and due to the potential effect of proration, the Company cannot predict the number of shares (or percentage) of Common Stock, if any, that will be owned by Clover after the Effective Time. RELATED PARTY TRANSACTIONS KKR 1996 GP LLC will beneficially own approximately 75% of the Company's outstanding shares of Common Stock at the Effective Time (before taking into account the effect of any exercise of the NXS Option or the Stockholders Option, the exercise of either of which could result in the Partnership owning, directly or indirectly, up to approximately 82% of such shares and before taking into account any purchase of shares from Messrs. Loeffler, Jepsen and Cohane, which could result in the stockholders of NXS Acquisition owning, indirectly, up to an additional 1.5% of such shares). The managing members of KKR 1996 GP LLC are Messrs. Henry R. Kravis and George R. Roberts and the other members of which are Messrs. Robert I. MacDonnell, Paul E. Raether, Michael W. Michelson, Michael T. Tokarz, James H. Greene, Jr., Perry Golkin, Clifton S. Robbins, Scott M. Stuart and Edward A. Gilhuly. The sole general partner of KKR Associates 1996 is KKR 1996 GP LLC. Messrs. Kravis, Roberts and Michelson will also be directors of the Company, as will Mr. Marc Lipschultz, who is a limited partner of KKR Associates 1996. Each of the members of KKR 1996 GP LLC is also a member of the limited liability company which serves as the general partner of KKR, and Mr. Lipschultz is an executive of KKR. It is expected that prior to the Effective Time, one or more other partnerships organized at the direction of KKR may acquire interests in NXS Acquisition and/or NXS LLC. KKR, an affiliate of KKR 1996 GP LLC, is expected to receive a fee of 50 $18 million in cash from the Company on the closing date for negotiating the Merger and arranging the financing therefor, and, from time to time in the future, KKR may receive customary fees for advisory services rendered to the Company. Such fees will be negotiated from time to time with the independent members of Amphenol's Board of Directors on an arm's-length basis and will be based on the services performed and the prevalent fees then charged by third-parties for comparable services. In addition, KKR will receive an annual management consulting fee of $1,000,000. See "Management--Directors and Executive Officers" and "Ownership of Common Stock." KKR 1996 GP LLC is the general partner of KKR Associates 1996, a Delaware limited partnership, of which certain past and present employees of KKR and partnerships and trusts for the benefit of the families of such past and present employees and a former partner of KKR are the limited partners. KKR Associates 1996 is the general partner of the Partnership. The Partnership, along with any other partnership organized at the direction of KKR to acquire interests in NXS Acquisition and/or NXS LLC, will own at the Effective Time approximately 75% of the outstanding Common Stock (before taking into account the effect of any exercise of the NXS Option or the Stockholders Option, the exercise of either of which could result in the stockholders of NXS Acquisition owning, directly or indirectly, up to approximately 82% of such shares and before taking into account any purchase of shares from Messrs. Loeffler, Jepsen and Cohane, which could result in the stockholders of NXS Acquisition owning, indirectly, up to an additional 1.5% of such shares). DESCRIPTION OF CREDIT FACILITIES The Credit Facilities will be provided by a syndicate of banks and other financial institutions led by BTCo., as administrative agent (the "Administrative Agent"), The Chase Manhattan Bank, as syndication agent ("Chase"), and The Bank of New York, as documentation agent. The Credit Facilities will provide for $750.0 million in term loans ("Term Loans") and for $150.0 million in revolving credit loans ("Revolving Credit Loans"). The Revolving Credit Facility will include borrowing capacity available for letters of credit and for borrowings on same-day notice ("Swingline Loans"). The Term Loans are comprised of Term Loan A ($350.0 million), which will have a maturity of seven years, Term Loan B ($200.0 million), which will have a maturity of eight years, and Term Loan C ($200.0 million), which will have a maturity of nine years. The Revolving Credit Facility commitment will terminate seven years after the date of initial funding of the Credit Facilities. All Term Loans and Revolving Credit Loans will bear interest, at the Company's option, at either: (a) a "base rate" equal to the higher of (i) the federal funds rate plus 0.50% per annum or (ii) the Administrative Agent's prime rate, plus (A) in the case of Term Loan A, a debt to EBITDA (as defined in the Credit Facilities)-dependent rate ranging from 0.00% to 1.00% per annum, (B) in the case of Term Loan B, a debt (as defined in the Credit Facilities) to EBITDA-dependent rate ranging from 1.00% to 1.50% per annum, (C) in the case of Term Loan C, a debt to EBITDA-dependent rate ranging from 1.50% to 2.00% per annum or (D) in the case of Revolving Credit Loans and Swingline Loans, a debt to EBITDA-dependent rate ranging from 0.00% to 1.00% per annum or (b) a "eurodollar rate" plus (i) in the case of Term Loan A, a debt to EBITDA-dependent rate ranging from 1.00% to 2.25% per annum, (ii) in the case of Term Loan B a debt to EBITDA-dependent rate ranging from 2.25% to 2.75% per annum, (iii) in the case of Term Loan C, a debt to EBITDA-dependent rate ranging from 2.75% to 3.25% per annum or (iv) in the case of Revolving Credit Loans, a debt to EBITDA-dependent rate ranging from 1.00% to 2.25% per annum. Swingline Loans may only be base rate loans. The Company will pay a commitment fee calculated at a debt to EBITDA-dependent rate ranging from 0.25% to 0.50% per annum of the available unused commitment under the Revolving Credit Facility and certain delayed-draw term loan commitments, in each case in effect on each day. Such fee will be payable quarterly in arrears and upon termination of the Revolving Credit Facility. 51 The Company will pay a letter of credit fee calculated at a debt to EBITDA-dependent rate ranging from 1.00% to 2.25% per annum of the face amount of each letter of credit less a fronting fee calculated at a rate equal to 0.125% per annum of the face amount of each letter of credit. Such fees will be payable quarterly in arrears and upon the termination of the Revolving Credit Facility. In addition, the Company will pay customary transaction charges in connection with any letters of credit. The Term Loans will be subject to the following amortization schedule:
DATE FROM CLOSING TERM LOAN A TERM LOAN B TERM LOAN C - --------------------------------------------------- ------------- ------------- ------------- (DOLLARS IN MILLIONS) 24 Mos............................................. $ 25.0 $ 0.5 $ 0.5 36 Mos............................................. 37.5 0.5 0.5 48 Mos............................................. 47.5 0.5 0.5 60 Mos............................................. 60.0 0.5 0.5 72 Mos............................................. 80.0 0.5 0.5 84 Mos............................................. 100.0 0.5 0.5 96 Mos............................................. -- 197.0 0.5 108 Mos............................................ -- -- 196.5 ------ ------ ------ $ 350.0 $ 200.0 $ 200.0 ------ ------ ------ ------ ------ ------
The Term Loans will be subject to mandatory prepayment (i) with the proceeds of certain asset sales and (ii) on an annual basis with 50% of the Company's excess cash flow (as defined in the Credit Facilities) if the ratio of the Company's total debt (as defined in the Credit Facilities) to EBITDA is greater than 4.0 to 1.0 on the last day of any fiscal year. The Company's obligations under the Credit Facilities will be secured by a pledge of 100% of the stock of certain of the Company's direct domestic subsidiaries and 65% of the stock of certain of the Company's material direct foreign subsidiaries. In addition, indebtedness under the Credit Facility will be guaranteed by significant domestic subsidiaries of the Company. See "Description of the Notes--Subordination" and "Risk Factors-- Subordination of Notes to Senior Indebtedness," and "--Encumbrances to Secure Credit Facilities." The Credit Facilities will contain customary covenants and restrictions on the Company's ability to engage in certain activities. In addition, the Credit Facilities provide that the Company must satisfy (i) a minimum ratio of consolidated adjusted EBITDA to consolidated cash interest expense of, initially (commencing with the first quarter of 1998), 1.50:1.00, increasing to 1.75:1.00 in the third quarter of 1999 and to 2.00:1.00 in the third quarter of 2001, and (ii) a maximum ratio of consolidated total debt to consolidated adjusted EBITDA of, initially (commencing with the first quarter of 1998), 6.65:1.00, decreasing to 6.50:1.00 in the second quarter of 1998, to 6.40:1.00 in the third quarter of 1998, to 6.25:1.00 in the fourth quarter of 1998, to 6.00:1.00 in the first quarter of 1999, to 5.75:1.00 in the fourth quarter of 1999, to 5.50:1.00 in the first quarter of 2000, to 5.00:1.00 in the fourth quarter of 2000, to 4.75:1.00 in the first quarter of 2001, to 4.25:1.00 in the first quarter of 2002 and to 4.00:1.00 in the fourth quarter of 2002, in each case determined on a rolling four-quarter basis. The Credit Facilities will include customary events of default. 52 DESCRIPTION OF THE NOTES GENERAL The Notes will be issued pursuant to an Indenture (the "INDENTURE") between the Company and IBJ Schroder Bank & Trust Company, as trustee (the "TRUSTEE"). The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (the "TRUST INDENTURE ACT"). The Notes are subject to all such terms, and Holders of Notes are referred to the Indenture and the Trust Indenture Act for a statement thereof. The following summarizes the material provisions of the Indenture and is qualified in its entirety by reference to the provisions of the Indenture, including the definitions therein of certain terms used below. Copies of the proposed form of Indenture have been filed as an exhibit to the Registration Statement of which this Prospectus is a part. The definitions of certain terms used in the following summary are set forth below under "--Certain Definitions." For purposes of this summary, the term "COMPANY" refers only to Amphenol Corporation and not to any of its Subsidiaries. The Notes will be general unsecured obligations of the Company and will be subordinated in right of payment to all existing and future Senior Indebtedness of the Company. As of December 31, 1996, on a pro forma basis giving effect to the Merger and the Financings (including the Offering), the aggregate amount of the Company's outstanding Senior Indebtedness would have been approximately $763.0 million (excluding $3.0 million of outstanding letters of credit and unused commitments). The Notes will also be effectively subordinated to all Indebtedness and other obligations (including trade payables) of the Company's Subsidiaries. Any right of the Company to receive assets of any of its Subsidiaries upon the latter's liquidation or reorganization (and the consequent right of the Holders of the Notes to participate in those assets) will be effectively subordinated to the claims of that Subsidiary's creditors, except to the extent that the Company is itself recognized as a creditor of such Subsidiary, in which case the claims of the Company would still be subordinate to any security in the assets of such Subsidiary and any indebtedness of such Subsidiary senior to that held by the Company. Certain operations of the Company are conducted through its Subsidiaries and, therefore, the Company is dependent upon the cash flow of its Subsidiaries to meet its obligations, including its obligations under the Notes. As of December 31, 1996, the Company's Subsidiaries would have had approximately $8.3 million of Indebtedness and approximately $82.0 million of other obligations (including trade payables) outstanding after giving pro forma effect to the Merger and the Financings (including the Offering). The Indenture will permit incurrence of additional Senior Indebtedness in the future. See "Risk Factors--Subordination of Notes to Senior Indebtedness." As of the Issuance Date, all of the Company's Subsidiaries other than Amphenol Funding Corp. will be Restricted Subsidiaries. Under certain circumstances, the Company will be able to designate additional current or future Subsidiaries as Unrestricted Subsidiaries. Unrestricted Subsidiaries will not be subject to any of the restrictive covenants set forth in the Indenture. SUBORDINATION The payment of the Subordinated Note Obligations will be subordinated in right of payment, as set forth in the Indenture, to the prior payment in full in cash equivalents of all Senior Indebtedness, whether outstanding on the date of the Indenture or thereafter incurred. Upon any distribution to creditors of the Company in a liquidation or dissolution of the Company or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Company or its property, an assignment for the benefit of creditors or any marshalling of the Company's assets and liabilities, the holders of Senior Indebtedness will be entitled to receive payment in full in cash equivalents of such Senior Indebtedness before the holders of Notes will be entitled to receive any payment with respect to the Subordinated Note Obligations, and until all Senior Indebtedness is paid in full in cash equivalents, any distribution to which the holders of Notes would be entitled shall be made to the holders of Senior Indebtedness (except that holders of Notes may receive (i) shares of stock and any debt securities that are subordinated at least to the same extent as the 53 Notes to (a) Senior Indebtedness and (b) any securities issued in exchange for Senior Indebtedness and (ii) payments made from the trusts described under "--Legal Defeasance and Covenant Defeasance"). The Company also may not make any payment upon or in respect of the Subordinated Note Obligations (except in such subordinated securities or from the trust described under "--Legal Defeasance and Covenant Defeasance") if (i) a default in the payment of the principal of, premium, if any, or interest on, or of unreimbursed amounts under drawn letters of credit or in respect of bankers' acceptances or fees relating to letters of credit or bankers' acceptances constituting, Designated Senior Indebtedness occurs and is continuing beyond any applicable period of grace (a "PAYMENT DEFAULT") or (ii) any other default occurs and is continuing with respect to Designated Senior Indebtedness that permits holders of the Designated Senior Indebtedness as to which such default relates to accelerate its maturity (a "NON-PAYMENT DEFAULT") and the Trustee receives a notice of such default (a "PAYMENT BLOCKAGE NOTICE") from a representative of holders of such Designated Senior Indebtedness. Payments on the Notes, including any missed payments, may and shall be resumed (a) in the case of a payment default, upon the date on which such default is cured or waived or shall have ceased to exist or such Designated Senior Indebtedness shall have been discharged or paid in full in cash equivalents and (b) in case of a nonpayment default, the earlier of (x) the date on which such nonpayment default is cured or waived, (y) 179 days after the date on which the applicable Payment Blockage Notice is received (each such period, the "PAYMENT BLOCKAGE PERIOD") or (z) the date such Payment Blockage Period shall be terminated by written notice to the Trustee from the requisite holders of such Designated Senior Indebtedness necessary to terminate such period or from their representative. No new period of payment blockage may be commenced unless and until 365 days have elapsed since the effectiveness of the immediately preceding Payment Blockage Notice. However, if any Payment Blockage Notice within such 365-day period is given by or on behalf of any holders of Designated Senior Indebtedness (other than the agent under the Senior Credit Facility), the agent under the Senior Credit Facility may give another Payment Blockage Notice within such period. In no event, however, may the total number of days during which any Payment Blockage Period or Periods is in effect exceed 179 days in the aggregate during any 365 consecutive day period. No nonpayment default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the Trustee shall be or be made, the basis for a subsequent Payment Blockage Notice unless such default shall have been cured or waived for a period of not less than 90 days. If the Company fails to make any payment on the Notes when due or within any applicable grace period, whether or not on account of the payment blockage provision referred to above, such failure would constitute an Event of Default under the Indenture and would enable the Holders of the Notes to accelerate the maturity thereof. The Indenture will further require that the Company promptly notify holders of Senior Indebtedness if payment of the Notes is accelerated because of an Event of Default. As a result of the subordination provisions described above, in the event of insolvency, bankruptcy, administration, reorganization, receivership or similar proceedings relating to the Company, holders of Notes may recover less ratably than creditors of the Company who are holders of Senior Indebtedness. At December 31, 1996, on a pro forma basis after giving effect to the Merger and the Financings (including the Offering), the Company would have had approximately $763.0 million of Senior Indebtedness outstanding (excluding $3.0 million of outstanding letters of credit and unused commitments) and the Company would have had additional availability of $134.0 million (after giving effect to $3.0 million of outstanding letters of credit) for borrowings under the Senior Credit Facility, all of which would be Senior Indebtedness of the Company. In addition, the Notes will be structurally subordinated to the liabilities of Subsidiaries of the Company. Although the Indenture contains limitations on the amount of additional Indebtedness that the Company and its Subsidiaries may incur, under certain circumstances the amount of such Indebtedness could be substantial and, in any case, such Indebtedness may be Senior Indebtedness. See "--Certain Covenants--Limitations on Incurrence of Indebtedness and Issuance of Disqualified Stock." 54 "DESIGNATED SENIOR INDEBTEDNESS" means (i) Senior Indebtedness under the Senior Credit Facility and (ii) any other Senior Indebtedness permitted under the Indenture the principal amount of which is $50.0 million or more and that has been designated by the Company as Designated Senior Indebtedness. "SENIOR INDEBTEDNESS" means (i) the Obligations under the Senior Credit Facility and (ii) any other Indebtedness permitted to be incurred by the Company under the terms of the Indenture, unless the instrument under which such Indebtedness is incurred expressly provides that it is on a parity with or subordinated in right of payment to the Notes, including, with respect to (i) and (ii), interest accruing subsequent to the filing of, or which would have accrued but for the filing of, a petition for bankruptcy, whether or not such interest is an allowable claim in such bankruptcy proceeding. Notwithstanding anything to the contrary in the foregoing, Senior Indebtedness will not include (1) any liability for federal, state, local or other taxes owed or owing by the Company, (2) any obligation of the Company to any of its Subsidiaries, (3) any accounts payable or trade liabilities arising in the ordinary course of business (including instruments evidencing such liabilities) other than obligations in respect of bankers' acceptances and letters of credit under the Senior Credit Facility, (4) any Indebtedness that is incurred in violation of the Indenture, (5) Indebtedness which, when incurred and without respect to any election under Section 1111 (b) of Title 11, United States Code, is without recourse to the Company, (6) any Indebtedness, guarantee or obligation of the Company which is subordinate or junior to any other Indebtedness, guarantee or obligation of the Company, (7) Indebtedness evidenced by the Notes and (8) Capital Stock of the Company. "SUBORDINATED NOTE OBLIGATIONS" means any principal of, premium, if any, and interest on the Notes payable pursuant to the terms of the Notes or upon acceleration, together with and including any amounts received upon the exercise of rights of rescission or other rights of action (including claims for damages) or otherwise, to the extent relating to the purchase price of the Notes or amounts corresponding to such principal, premium, if any, or interest on the Notes. The Notes will rank senior in right of payment to all Subordinated Indebtedness of the Company. At the Issuance Date the Company will have no Subordinated Indebtedness. PRINCIPAL, MATURITY AND INTEREST The Notes will be limited in aggregate principal amount to $240.0 million and will mature on , 2007. Interest on the Notes will accrue at the rate of % per annum and will be payable semi-annually in arrears on and , commencing on , 1997, to Holders of record on the immediately preceding and . Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of original issuance. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months. Principal of, premium, if any, and interest on the Notes will be payable at the office or agency of the Company maintained for such purpose within the City and State of New York or, at the option of the Company, payment of interest may be made by check mailed to the Holders of the Notes at their respective addresses set forth in the register of Holders of Notes; PROVIDED that all payments of principal, premium, interest with respect to Notes represented by one or more permanent global Notes registered in the name of or held by The Depository Trust Company or its nominee will be made by wire transfer of immediately available funds to the accounts specified by the Holders thereof. Until otherwise designated by the Company, the Company's office or agency in New York will be the office of the Trustee maintained for such purpose. The Notes will be issued in denominations of $1,000 and integral multiples thereof. MANDATORY REDEMPTION Except as set forth below under "Repurchase at the Option of Holders," the Company is not required to make mandatory redemption or sinking fund payments with respect to the Notes. 55 OPTIONAL REDEMPTION Except as described below, the Notes will not be redeemable at the Company's option prior to , 2002. From and after , 2002, the Notes will be subject to redemption at any time at the option of the Company, in whole or in part, upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest thereon, if any, to the applicable redemption date, if redeemed during the twelve-month period beginning on of each of the years indicated below:
YEAR REDEMPTION PRICE - ---------------------------------------------------------------------------- ----------------- 2002........................................................................ % 2003........................................................................ 2004........................................................................ 2005 and thereafter......................................................... 100.00%
In addition, at any time or from time to time, on or prior to , 2000, the Company may, at its option, redeem up to 40% of the aggregate principal amount of Notes originally issued under the Indenture on the Issuance Date at a redemption price equal to % of the aggregate principal amount thereof, plus accrued and unpaid interest thereon, if any, to the redemption date, with the net cash proceeds of one or more Equity Offerings; PROVIDED that at least 60% of the aggregate principal amount of Notes originally issued under the Indenture on the Issuance Date remains outstanding immediately after the occurrence of each such redemption; PROVIDED FURTHER that each such redemption occurs within 60 days of the date of closing of each such Equity Offering. The Trustee shall select the Notes to be purchased in the manner described under "Repurchase at the Option of Holders--Selection and Notice." REPURCHASE AT THE OPTION OF HOLDERS CHANGE OF CONTROL The Indenture will provide that, upon the occurrence of a Change of Control, the Company will make an offer to purchase all or any part (equal to $1,000 or an integral multiple thereof) of the Notes pursuant to the offer described below (the "CHANGE OF CONTROL OFFER") at a price in cash (the "CHANGE OF CONTROL PAYMENT") equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase. The Indenture will provide that within 30 days following any Change of Control, the Company will mail a notice to each Holder of Notes issued under the Indenture, with a copy to the Trustee, with the following information: (1) a Change of Control Offer is being made pursuant to the covenant entitled "Offer to Repurchase Upon Change of Control," and that all Notes properly tendered pursuant to such Change of Control Offer will be accepted for payment; (2) the purchase price and the purchase date, which will be no earlier than 30 days nor later than 60 days from the date such notice is mailed, except as may be otherwise required by applicable law (the "CHANGE OF CONTROL PAYMENT DATE"); (3) any Note not properly tendered will remain outstanding and continue to accrue interest; (4) unless the Company defaults in the payment of the Change of Control Payment, all Notes accepted for payment pursuant to the Change of Control Offer will cease to accrue interest on the Change of Control Payment Date; (5) Holders electing to have any Notes purchased pursuant to a Change of Control Offer will be required to surrender the Notes, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Notes completed, to the paying agent specified in the notice at the address specified in the notice prior to the close of business on the third Business Day preceding the Change of Control Payment Date; (6) Holders will be entitled to withdraw their tendered Notes and their election to require the Company to purchase such Notes, PROVIDED that the paying agent receives, not later than the close of business on the last day of the Offer Period (as defined in the Indenture), a telegram, telex, facsimile 56 transmission or letter setting forth the name of the Holder, the principal amount of Notes tendered for purchase, and a statement that such Holder is withdrawing his tendered Notes and his election to have such Notes purchased; and (7) that Holders whose Notes are being purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered, which unpurchased portion must be equal to $1,000 in principal amount or an integral multiple thereof. The Indenture will provide that, prior to complying with the provisions of this covenant, but in any event within 30 days following a Change of Control, the Company will either repay all outstanding Senior Indebtedness or obtain the requisite consents, if any, under any outstanding Senior Indebtedness to permit the repurchase of the Notes required by this covenant. The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws or regulations are applicable in connection with the repurchase of the Notes pursuant to a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with the provisions of the Indenture, the Company will comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations described in the Indenture by virtue thereof. The Indenture will provide that on the Change of Control Payment Date, the Company will, to the extent permitted by law, (1) accept for payment all Notes or portions thereof properly tendered pursuant to the Change of Control Offer, (2) deposit with the paying agent an amount equal to the aggregate Change of Control Payment in respect of all Notes or portions thereof so tendered and (3) deliver, or cause to be delivered, to the Trustee for cancellation the Notes so accepted together with an Officers' Certificate stating that such Notes or portions thereof have been tendered to and purchased by the Company. The Indenture will provide that the paying agent will promptly mail to each Holder of Notes the Change of Control Payment for such Notes, and the Trustee will promptly authenticate and mail to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any, PROVIDED, that each such new Note will be in a principal amount of $1,000 or an integral multiple thereof. The Company will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. The Senior Credit Facility will, and future credit agreements or other agreements relating to Senior Indebtedness to which the Company becomes a party may, prohibit the Company from purchasing any Notes as a result of a Change of Control and/or provide that certain change of control events with respect to the Company would constitute a default thereunder. In the event a Change of Control occurs at a time when the Company is prohibited from purchasing the Notes, the Company could seek the consent of its lenders to the purchase of the Notes or could attempt to refinance the borrowings that contain such prohibition. If the Company does not obtain such a consent or repay such borrowings, the Company will remain prohibited from purchasing the Notes. In such case, the Company's failure to purchase tendered Notes would constitute an Event of Default under the Indenture. If, as a result thereof, a default occurs with respect to any Senior Indebtedness, the subordination provisions in the Indenture would likely restrict payments to the Holders of the Notes. The existence of a Holder's right to require the Company to repurchase such Holder's Notes upon the occurrence of a Change of Control may deter a third party from seeking to acquire the Company in a transaction that would constitute a Change of Control. ASSET SALES The Indenture will provide that the Company will not, and will not permit any of its Restricted Subsidiaries to, cause, make or suffer to exist an Asset Sale, unless (x) the Company, or its Restricted Subsidiaries, as the case may be, receives consideration at the time of such Asset Sale at least equal to the fair market value (as determined in good faith by the Company) of the assets sold or otherwise disposed of and (y) at least 75% of the consideration therefor received by the Company, or such Restricted Subsidiary, 57 as the case may be, is in the form of cash or Cash Equivalents; PROVIDED that the amount of (a) any liabilities (as shown on the Company's or such Restricted Subsidiary's most recent balance sheet or in the notes thereto) of the Company or any Restricted Subsidiary (other than liabilities that are by their terms subordinated to the Notes), that are assumed by the transferee of any such assets, (b) any notes or other obligations received by the Company or such Restricted Subsidiary from such transferee that are converted by the Company or such Restricted Subsidiary into cash (to the extent of the cash received) within 180 days following the closing of such Asset Sale and (c) any Designated Noncash Consideration received by the Company or any of its Restricted Subsidiaries in such Asset Sale having an aggregate fair market value, taken together with all other Designated Noncash Consideration received pursuant to this clause (c) that is at that time outstanding, not to exceed 15% of Total Assets at the time of the receipt of such Designated Noncash Consideration (with the fair market value of each item of Designated Noncash Consideration being measured at the time received and without giving effect to subsequent changes in value), shall be deemed to be cash for purposes of this provision and for no other purpose. Within 365 days after the Company's or any Restricted Subsidiary's receipt of the Net Proceeds of any Asset Sale, the Company or such Restricted Subsidiary may apply the Net Proceeds from such Asset Sale, at its option, (i) to permanently reduce Obligations under the Senior Credit Facility (and to correspondingly reduce commitments with respect thereto) or other Senior Indebtedness or Pari Passu Indebtedness (PROVIDED that if the Company shall so reduce Obligations under Pari Passu Indebtedness, it will equally and ratably reduce Obligations under the Notes if the Notes are then prepayable or, if the Notes may not be then prepaid, the Company shall make an offer (in accordance with the procedures set forth below for an Asset Sale Offer) to all Holders to purchase at 100% of the principal amount thereof the amount of Notes that would otherwise be prepaid), (ii) to an investment in any one or more businesses, capital expenditures or acquisitions of other assets in each case, used or useful in a Similar Business and/or (iii) to make an investment in properties or assets that replace the properties and assets that are the subject of such Asset Sale. Pending the final application of any such Net Proceeds, the Company or such Restricted Subsidiary may temporarily reduce Indebtedness under a revolving credit facility, if any, or otherwise invest such Net Proceeds in Cash Equivalents or Investment Grade Securities. The Indenture will provide that any Net Proceeds from the Asset Sale that are not invested as provided and within the time period set forth in the first sentence of this paragraph will be deemed to constitute "EXCESS PROCEEDS." When the aggregate amount of Excess Proceeds exceeds $15.0 million, the Company shall make an offer to all Holders of Notes (an "ASSET SALE OFFER") to purchase the maximum principal amount of Notes, that is an integral multiple of $1,000, that may be purchased out of the Excess Proceeds at an offer price in cash in an amount equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date fixed for the closing of such offer, in accordance with the procedures set forth in the Indenture. The Company will commence an Asset Sale Offer with respect to Excess Proceeds within ten Business Days after the date that Excess Proceeds exceeds $15.0 million by mailing the notice required pursuant to the terms of the Indenture, with a copy to the Trustee. To the extent that the aggregate amount of Notes tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company may use any remaining Excess Proceeds for general corporate purposes. If the aggregate principal amount of Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Notes to be purchased in the manner described under the caption "Selection and Notice" below. Upon completion of any such Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero. The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws or regulations are applicable in connection with the repurchase of the Notes pursuant to an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with the provisions of the Indenture, the Company will comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations described in the Indenture by virtue thereof. 58 SELECTION AND NOTICE If less than all of the Notes are to be redeemed at any time or if more Notes are tendered pursuant to an Asset Sale Offer than the Company is required to purchase, selection of such Notes for redemption or purchase, as the case may be, will be made by the Trustee in compliance with the requirements of the principal national securities exchange, if any, on which such Notes are listed, or, if such Notes are not so listed, on a pro rata basis, by lot or by such other method as the Trustee shall deem fair and appropriate (and in such manner as complies with applicable legal requirements); PROVIDED that no Notes of $1,000 or less shall be purchased or redeemed in part. Notices of purchase or redemption shall be mailed by first class mail, postage prepaid, at least 30 but not more than 60 days before the purchase or redemption date to each Holder of Notes to be purchased or redeemed at such Holder's registered address. If any Note is to be purchased or redeemed in part only, any notice of purchase or redemption that relates to such Note shall state the portion of the principal amount thereof that has been or is to be purchased or redeemed. A new Note in principal amount equal to the unpurchased or unredeemed portion of any Note purchased or redeemed in part will be issued in the name of the Holder thereof upon cancellation of the original Note. On and after the purchase or redemption date unless the Company defaults in payment of the purchase or redemption price, interest shall cease to accrue on Notes or portions thereof purchased or called for redemption. CERTAIN COVENANTS LIMITATION ON RESTRICTED PAYMENTS The Indenture will provide that the Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make any distribution on account of the Company's or any of its Restricted Subsidiaries' Equity Interests, including any dividend or distribution payable in connection with any merger or consolidation (other than (A) dividends or distributions by the Company payable in Equity Interests (other than Disqualified Stock) of the Company or (B) dividends or distributions by a Restricted Subsidiary so long as, in the case of any dividend or distribution payable on or in respect of any class or series of securities issued by a Subsidiary other than a Wholly Owned Subsidiary, the Company or a Restricted Subsidiary receives at least its PRO RATA share of such dividend or distribution in accordance with its Equity Interests in such class or series of securities); (ii) purchase, redeem, defease or otherwise acquire or retire for value any Equity Interests of the Company or any direct or indirect parent of the Company; (iii) make any principal payment on, or redeem, repurchase, defease or otherwise acquire or retire for value in each case, prior to any scheduled repayment, or maturity, any Subordinated Indebtedness (other than Indebtedness permitted under clauses (g) and (i) of the covenant described under "Limitations on Incurrence of Indebtedness and Issuance of Disqualified Stock"); or (iv) make any Restricted Investment (all such payments and other actions set forth in clauses (i) through (iv) above being collectively referred to as "RESTRICTED PAYMENTS"), unless, at the time of such Restricted Payment: (a) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; (b) immediately before and immediately after giving effect to such transaction on a pro forma basis, the Company could incur $1.00 of additional Indebtedness under the provisions of the first paragraph of "--Limitations on Incurrence of Indebtedness and Issuance of Disqualified Stock"; and (c) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Company and its Restricted Subsidiaries after the Issuance Date (including Restricted Payments permitted by clauses (i), (ii) (with respect to the payment of dividends on 59 Refunding Capital Stock pursuant to clause (b) thereof), (v) (only to the extent that amounts paid pursuant to such clause are greater than amounts that would have been paid pursuant to such clause if $5.0 million and $10.0 million were substituted in such clause for $10.0 million and $20.0 million, respectively), (vi), (ix) and (x) of the next succeeding paragraph, but excluding all other Restricted Payments permitted by the next succeeding paragraph), is less than the sum of (i) 50% of the Consolidated Net Income of the Company for the period (taken as one accounting period) from the fiscal quarter that first begins after the Issuance Date to the end of the Company's most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, in the case such Consolidated Net Income for such period is a deficit, minus 100% of such deficit), PLUS (ii) 100% of the aggregate net cash proceeds and the fair market value, as determined in good faith by the Board of Directors, of marketable securities received by the Company since immediately after the closing of the Merger and the Financings from the issue or sale of Equity Interests of the Company (including Refunding Capital Stock (as defined below), but excluding cash proceeds and marketable securities received from the sale of Equity Interests to members of management, directors or consultants of the Company and its Subsidiaries after the Issuance Date to the extent such amounts have been applied to Restricted Payments in accordance with clause (v) of the next succeeding paragraph and excluding Excluded Contributions) or debt securities of the Company that have been converted into such Equity Interests of the Company (other than Refunding Capital Stock (as defined below) or Equity Interests (or convertible debt securities of the Company sold to a Restricted Subsidiary of the Company and other than Disqualified Stock or debt securities that have been converted into Disqualified Stock), PLUS (iii) 100% of the aggregate amount of cash and marketable securities contributed to the capital of the Company following the Issuance Date (excluding Excluded Contributions), PLUS (iv) 100% of the aggregate amount received in cash and the fair market value of marketable securities (other than Restricted Investments) received from (A) the sale or other disposition (other than to the Company or a Restricted Subsidiary) of Restricted Investments made by the Company and its Restricted Subsidiaries or (B) a dividend from, or the sale (other than to the Company or a Restricted Subsidiary) of the stock of, an Unrestricted Subsidiary (other than an Unrestricted Subsidiary the Investment in which was made by the Company or a Restricted Subsidiary pursuant to clauses (vii) or (xii) below). The foregoing provisions will not prohibit: (i) the payment of any dividend within 60 days after the date of declaration thereof, if at the date of declaration such payment would have complied with the provisions of the Indenture; (ii) (a) the redemption, repurchase, retirement or other acquisition of any Equity Interests (the "RETIRED CAPITAL STOCK") or Subordinated Indebtedness of the Company in exchange for, or out of the proceeds of the substantially concurrent sale (other than to a Restricted Subsidiary) of, Equity Interests of the Company (other than any Disqualified Stock) (the "REFUNDING CAPITAL STOCK"), and (b) if immediately prior to the retirement of Retired Capital Stock, the declaration and payment of dividends thereon was permitted under clause (vi) of this paragraph, the declaration and payment of dividends on the Refunding Capital Stock in an aggregate amount per year no greater than the aggregate amount of dividends per annum that was declarable and payable on such Retired Capital Stock immediately prior to such retirement; PROVIDED, HOWEVER, that at the time of the declaration of any such dividends, no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; (iii) distributions or payments of Receivables Fees; (iv) the redemption, repurchase or other acquisition or retirement of Subordinated Indebtedness of the Company made by exchange for, or out of the proceeds of the substantially concurrent sale of, new Indebtedness of the Company so long as (A) the principal amount of such new Indebtedness does not exceed the principal amount of the Subordinated Indebtedness being so redeemed, repurchased, 60 acquired or retired for value (plus the amount of any premium required to be paid under the terms of the instrument governing the Subordinated Indebtedness being so redeemed, repurchased, acquired or retired), (B) such Indebtedness is subordinated to the Senior Indebtedness and the Notes at least to the same extent as such Subordinated Indebtedness so purchased, exchanged, redeemed, repurchased, acquired or retired for value, (C) such Indebtedness has a final scheduled maturity date equal to or later than the final scheduled maturity date of the Subordinated Indebtedness being so redeemed, repurchased, acquired or retired and (D) such Indebtedness has a Weighted Average Life to Maturity equal to or greater than the remaining Weighted Average Life to Maturity of the Subordinated Indebtedness being so redeemed, repurchased, acquired or retired; (v) a Restricted Payment to pay for the repurchase, retirement or other acquisition or retirement for value of common Equity Interests of the Company held by any future, present or former employee, director or consultant of the Company or any Subsidiary pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement; PROVIDED, HOWEVER, that the aggregate Restricted Payments made under this clause (v) does not exceed in any calendar year $10.0 million (with unused amounts in any calendar year being carried over to succeeding calendar years subject to a maximum (without giving effect to the following proviso) of $20.0 million in any calendar year); PROVIDED FURTHER that such amount in any calendar year may be increased by an amount not to exceed (i) the cash proceeds from the sale of Equity Interests of the Company to members of management, directors or consultants of the Company and its Subsidiaries that occurs after the Issuance Date (to the extent the cash proceeds from the sale of such Equity Interest have not otherwise been applied to the payment of Restricted Payments by virtue of the preceding paragraph (c)) plus (ii) the cash proceeds of key man life insurance policies received by the Company and its Restricted Subsidiaries after the Issuance Date less (iii) the amount of any, Restricted Payments previously made pursuant to clauses (i) and (ii) of this subparagraph (v); and PROVIDED FURTHER that cancellation of Indebtedness owing to the Company from members of management of the Company or any of its Restricted Subsidiaries in connection with a repurchase of Equity Interests of the Company will not be deemed to constitute a Restricted Payment for purposes of this covenant or any other provision of the Indenture; (vi) the declaration and payment of dividends to holders of any class or series of Designated Preferred Stock (other than Disqualified Stock) issued after the Issuance Date (including, without limitation, the declaration and payment of dividends on Refunding Capital Stock in excess of the dividends declarable and payable thereon pursuant to clause (ii)); PROVIDED, HOWEVER, that for the most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date of issuance of such Designated Preferred Stock, after giving effect to such issuance on a pro forma basis, the Company and its Restricted Subsidiaries would have had a Fixed Charge Coverage Ratio of at least 1.75 to 1.00; (vii) Investments in Unrestricted Subsidiaries having an aggregate fair market value, taken together with all other Investments made pursuant to this clause (vi) that are at that time outstanding, not to exceed $25.0 million at the time of such Investment (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value); 61 (viii) repurchases of Equity Interests deemed to occur upon exercise of stock options if such Equity Interests represent a portion of the exercise price of such options; (ix) the payment of dividends on the Company's Common Stock, following the first public offering of the Company's Common Stock after the Issuance Date, of up to 6% per annum of the net proceeds received by the Company in such public offering, other than public offerings with respect to the Company's Common Stock registered on Form S-8; (x) a Restricted Payment to pay for the repurchase, retirement or other acquisition or retirement for value of Equity Interests of the Company in existence on the Issuance Date and which are not held by KKR or any of their Affiliates or the Management Group on the Issuance Date (including any Equity Interests issued in respect of such Equity Interests as a result of a stock split, recapitalization, merger, combination, consolidation or otherwise, but excluding any management equity plan or stock option plan or similar agreement), provided that the aggregate Restricted Payments made under this clause (x) shall not exceed $80.0 million, PROVIDED FURTHER that prior to the first anniversary of the consummation of the Merger, the aggregate amount of Restricted Payments made under this clause (x) shall not exceed $40.0 million, PROVIDED FURTHER that notwithstanding the foregoing proviso, the Company shall be permitted to make Restricted Payments under this clause (x) only if after giving effect thereto, the Company would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first sentence of the covenant described under "--Limitations on Incurrence of Indebtedness and Issuance of Disqualified Stock"; (xi) Investments in Unrestricted Subsidiaries that are made with Excluded Contributions; and (xii) other Restricted Payments in an aggregate amount not to exceed $25.0 million; PROVIDED, HOWEVER, that at the time of, and after giving effect to, any Restricted Payment permitted under clauses (iv), (v), (vi), (vii), (viii), (ix), (x), (xi) and (xii), no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; and PROVIDED FURTHER that for purposes of determining the aggregate amount expended for Restricted Payments in accordance with clause (c) of the immediately preceding paragraph, only the amounts expended under clauses (i), (ii) (with respect to the payment of dividends on Refunding Capital Stock pursuant to clause (b) thereof), (v) (only to the extent that amounts paid pursuant to such clause are greater than amounts that would have been paid pursuant to such clause if $5.0 million and $10.0 million were substituted in such clause for $10.0 million and $20.0 million, respectively), (vi), (ix) and (x) shall be included. As of the Issuance Date, all of the Company's Subsidiaries other then Amphenol Funding Corp. will be Restricted Subsidiaries. The Company will not permit any Unrestricted Subsidiary to become a Restricted Subsidiary except pursuant to the second to last sentence of the definition of "Unrestricted Subsidiary." For purposes of designating any Restricted Subsidiary as an Unrestricted Subsidiary, all outstanding Investments by the Company and its Restricted Subsidiaries (except to the extent repaid) in the Subsidiary so designated will be deemed to be Restricted Payments in an amount determined as set forth in the last sentence of the definition of "Investments." Such designation will only be permitted if a Restricted Payment in such amount would be permitted at such time (whether pursuant to the first paragraph of this covenant or under clause (vii) or (xi)) and if such Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. Unrestricted Subsidiaries will not be subject to any of the restrictive covenants set forth in the Indenture. LIMITATIONS ON INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED STOCK The Indenture will provide that the Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "INCUR" and collectively, an "INCURRENCE") any Indebtedness (including Acquired Indebtedness) and that the Company will not issue any shares of Disqualified Stock and will not permit any of its Restricted Subsidiaries to issue any shares of 62 preferred stock; PROVIDED, HOWEVER, that the Company may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock if the Fixed Charge Coverage Ratio for the Company's and the Restricted Subsidiaries' most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock is issued would have been at least 1.75 to 1.00, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred, or the Disqualified Stock had been issued, as the case may be, and the application of proceeds therefrom had occurred at the beginning of such four-quarter period. The foregoing limitations will not apply to: (a) the incurrence by the Company or its Restricted Subsidiaries of Indebtedness under Credit Facilities and the issuance and creation of letters of credit and banker's acceptances thereunder (with letters of credit and banker's acceptances being deemed to have a principal amount equal to the face amount thereof) up to an aggregate principal amount of $1.0 billion outstanding at any one time; PROVIDED, HOWEVER, that Indebtedness incurred by Restricted Subsidiaries pursuant to this clause (a) does not exceed $100.0 million (or the equivalent thereof in any other currency) at any one time outstanding; (b) the incurrence by the Company of Indebtedness represented by the Notes; (c) the Existing Indebtedness (other than Indebtedness described in clauses (a) and (b)); (d) Indebtedness (including Capitalized Lease Obligations) incurred by the Company or any of its Restricted Subsidiaries, to finance the purchase, lease or improvement of property (real or personal) or equipment (whether through the direct purchase of assets or the Capital Stock of any Person owning such assets) in an aggregate principal amount which, when aggregated with the principal amount of all other Indebtedness then outstanding and incurred pursuant to this clause (d) and including all Refinancing Indebtedness incurred to refund, refinance or replace any other Indebtedness incurred pursuant to this clause (d), does not exceed 10% of Total Assets; (e) Indebtedness incurred by the Company or any of its Restricted Subsidiaries constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including without limitation letters of credit in respect of workers' compensation claims or self-insurance, or other Indebtedness with respect to reimbursement type obligations regarding workers' compensation claims; PROVIDED, HOWEVER, that upon the drawing of such letters of credit or the incurrence of such Indebtedness, such obligations are reimbursed within 30 days following such drawing or incurrence; (f) Indebtedness arising from agreements of the Company or a Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligations, in each case, incurred or assumed in connection with the disposition of any business, assets or a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition; PROVIDED, HOWEVER, that (i) such Indebtedness is not reflected on the balance sheet of the Company or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected on such balance sheet for purposes of this clause (i)) and (ii) the maximum assumable liability in respect of all such Indebtedness shall at no time exceed the gross proceeds including noncash proceeds (the fair market value of such noncash proceeds being measured at the time received and without giving effect to any subsequent changes in value) actually received by the Company and its Restricted Subsidiaries in connection with such disposition; (g) Indebtedness of the Company to a Restricted Subsidiary; PROVIDED that any such Indebtedness is made pursuant to an intercompany note and is subordinated in right of payment to the Notes; PROVIDED FURTHER that any subsequent issuance or transfer of any Capital Stock or any other event which 63 results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such Indebtedness (except to the Company or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness; (h) shares of preferred stock of a Restricted Subsidiary issued to the Company or another Restricted Subsidiary; PROVIDED that any subsequent issuance or transfer of any Capital Stock or any other event which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such shares of preferred stock (except to the Company or another Restricted Subsidiary) shall be deemed, in each case to be an issuance of shares of preferred stock; (i) Indebtedness of a Restricted Subsidiary to the Company or another Restricted Subsidiary; PROVIDED that (i) any such Indebtedness is made pursuant to an intercompany note and (ii) if a Guarantor incurs such Indebtedness from a Restricted Subsidiary that is not a Guarantor such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor; PROVIDED FURTHER that any subsequent transfer of any such Indebtedness (except to the Company or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness; (j) Hedging Obligations that are incurred in the ordinary course of business (1) for the purpose of fixing or hedging interest rate risk with respect to any Indebtedness that is permitted by the terms of the Indenture to be outstanding or (2) for the purpose of fixing or hedging currency exchange rate risk with respect to any currency exchanges; (k) obligations in respect of performance and surety bonds and completion guarantees provided by the Company or any Restricted Subsidiary in the ordinary course of business; (l) Indebtedness of any Guarantor in respect of such Guarantor's Guarantee; (m) Indebtedness of the Company and any of its Restricted Subsidiaries not otherwise permitted hereunder in an aggregate principal amount, which when aggregated with the principal amount of all other Indebtedness then outstanding and incurred pursuant to this clause (m), does not exceed $200.0 million at any one time outstanding; PROVIDED, HOWEVER, that (i) Indebtedness of Foreign Subsidiaries, which when aggregated with the principal amount of all other Indebtedness of Foreign Subsidiaries then outstanding and incurred pursuant to this clause (m), does not exceed $100.0 million (or the equivalent thereof in any other currency) at any one time outstanding and (ii) Indebtedness of a Restricted Subsidiary organized under the laws of the United States, any state thereof, the District of Columbia or any territory thereof, which when aggregated with the principal amount of all other Indebtedness of such Restricted Subsidiaries then outstanding and incurred pursuant to this clause (m), does not exceed $100.0 million at any one time outstanding; (n) (i) any guarantee by the Company of Indebtedness or other obligations of any of its Restricted Subsidiaries so long as the incurrence of such Indebtedness incurred by such Restricted Subsidiary is permitted under the terms of the Indenture and (ii) any Excluded Guarantee (as defined below under "--Limitation on Guarantees of Indebtedness by Restricted Subsidiaries") of a Restricted Subsidiary; (o) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness which serves to refund, refinance or restructure any Indebtedness incurred as permitted under the first paragraph of this covenant and clauses (b) and (c) above, or any Indebtedness issued to so refund, refinance or restructure such Indebtedness including additional Indebtedness incurred to pay premiums and fees in connection therewith (the "REFINANCING INDEBTEDNESS") prior to its respective maturity; PROVIDED, HOWEVER, that such Refinancing Indebtedness (i) has a Weighted Average Life to Maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining Weighted Average Life to Maturity of Indebtedness being refunded or refinanced, (ii) to the extent such Refinancing Indebtedness refinances Indebtedness subordinated or pari passu to the Notes, such Refinancing Indebtedness is subordinated or pari passu to the Notes at least to the same extent as the 64 Indebtedness being refinanced or refunded and (iii) shall not include (x) Indebtedness of a Subsidiary that refinances Indebtedness of the Company or (y) Indebtedness of the Company or a Restricted Subsidiary that refinances Indebtedness of an Unrestricted Subsidiary; and PROVIDED FURTHER that subclauses (i) and (ii) of this clause (o) will not apply to any refunding or refinancing of any Senior Indebtedness; and (p) Indebtedness or Disqualified Stock of Persons that are acquired by the Company or any of its Restricted Subsidiaries or merged into a Restricted Subsidiary in accordance with the terms of the Indenture; provided that such Indebtedness or Disqualified Stock is not incurred in contemplation of such acquisition or merger; and PROVIDED FURTHER that after giving effect to such acquisition, either (i) the Company would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first sentence of this covenant or (ii) the Fixed Charge Coverage Ratio is greater than immediately prior to such acquisition. For purposes of determining compliance with this covenant, in the event that an item of Indebtedness meets the criteria of more than one of the categories of permitted Indebtedness described in clauses (a) through (p) above or is entitled to be incurred pursuant to the first paragraph of this covenant, the Company shall, in its sole discretion, classify such item of Indebtedness in any manner that complies with this covenant and such item of Indebtedness will be treated as having been incurred pursuant to only one of such clauses or pursuant to the first paragraph hereof. Accrual of interest, the accretion of accreted value and the payment of interest in the form of additional Indebtedness will not be deemed to be an incurrence of Indebtedness for purposes of this covenant. LIENS The Indenture will provide that the Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly create, incur, assume or suffer to exist any Lien that secures obligations under any Pari Passu Indebtedness or Subordinated Indebtedness on any asset or property of the Company or such Restricted Subsidiary, or any income or profits therefrom, or assign or convey any right to receive income therefrom, unless the Notes are equally and ratably secured with the obligations so secured or until such time as such obligations are no longer secured by a Lien. The Indenture will provide that no Guarantor will directly or indirectly create, incur, assume or suffer to exist any Lien that secures obligations under any Pari Passu Indebtedness or Subordinated Indebtedness of such Guarantor on any asset or property of such Guarantor or any income or profits therefrom, or assign or convey any right to receive income therefrom, unless the Guarantee of such Guarantor is equally and ratably secured with the obligations so secured or until such time as such obligations are no longer secured by a Lien. MERGER, CONSOLIDATION, OR SALE OF ALL OR SUBSTANTIALLY ALL ASSETS The Indenture will provide that the Company may not consolidate or merge with or into or wind up into (whether or not the Company is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions, to any Person unless (i) the Company is the surviving corporation or the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, lease, conveyance or other disposition will have been made is a corporation organized or existing under the laws of the United States, any state thereof, the District of Columbia, or any territory thereof (the Company or such Person, as the case may be, being herein called the "SUCCESSOR COMPANY"); (ii) the Successor Company (if other than the Company) expressly assumes all the obligations of the Company under the Indenture and the Notes pursuant to a supplemental indenture or other documents or instruments in form reasonably satisfactory to the Trustee; (iii) immediately after such transaction no Default or Event of Default shall have occurred and be continuing; (iv) immediately after giving pro forma effect to such transaction, as if such transaction had occurred at the beginning of the applicable four- 65 quarter period, (A) the Successor Company would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first sentence of the covenant described under "--Limitations on Incurrence of Indebtedness and Issuance of Disqualified Stock" or (B) the Fixed Charge Coverage Ratio for the Successor Company and its Restricted Subsidiaries would be greater than such Ratio for the Company and its Restricted Subsidiaries immediately prior to such transaction; (v) each Guarantor, if any, unless it is the other party to the transactions described above, shall have by supplemental indenture confirmed that its Guarantee shall apply to such Person's obligations under the Indenture and the Notes; and (vi) the Company shall have delivered to the Trustee an Officers' Certificate and an opinion of counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with the Indenture. The Successor Company will succeed to, and be substituted for, the Company under the Indenture and the Notes. Notwithstanding the foregoing clause (iv), (a) any Restricted Subsidiary may consolidate with, merge into or transfer all or part of its properties and assets to the Company and (b) the Company may merge with an Affiliate incorporated solely for the purpose of reincorporating the Company in another State of the United States so long as the amount of Indebtedness of the Company and its Restricted Subsidiaries is not increased thereby. Each Guarantor, if any, shall not, and the Company will not permit a Guarantor to, consolidate or merge with or into or wind up into (whether or not such Guarantor is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions to, any Person unless (i) such Guarantor is the surviving corporation or the Person formed by or surviving any such consolidation or merger (if other than such Guarantor) or to which such sale, assignment, transfer, lease, conveyance or other disposition will have been made is a corporation organized or existing under the laws of the United States, any state thereof, the District of Columbia, or any territory thereof (such Guarantor or such Person, as the case may be, being herein called the "SUCCESSOR GUARANTOR"); (ii) the Successor Guarantor (if other than such Guarantor) expressly assumes all the obligations of such Guarantor under the Indenture and such Guarantor's Guarantee pursuant to a supplemental indenture or other documents or instruments in form reasonably satisfactory to the Trustee; (iii) immediately after such transaction no Default or Event of Default shall have occurred and be continuing; and (iv) the Guarantor shall have delivered or caused to be delivered to the Trustee an Officers' Certificate and an opinion of counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with the Indenture. The Successor Guarantor will succeed to, and be substituted for, such Guarantor under the Indenture and such Guarantor's Guarantee. TRANSACTIONS WITH AFFILIATES The Indenture will provide that the Company will not, and will not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate (each of the foregoing, an "AFFILIATE TRANSACTION") involving aggregate consideration in excess of $5.0 million, unless (a) such Affiliate Transaction is on terms that are not materially less favorable to the Company or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unrelated Person and (b) the Company delivers to the Trustee with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $10.0 million, a resolution adopted by the majority of the Board of Directors approving such Affiliate Transaction and set forth in an Officers' Certificate certifying that such Affiliate Transaction complies with clause (a) above. The foregoing provisions will not apply to the following: (i) transactions between or among the Company and/or any of its Restricted Subsidiaries; (ii) Restricted Payments permitted by the provisions of the Indenture described above under the covenant "--Limitation on Restricted Payments"; (iii) the payment of customary annual management, consulting and advisory fees and related expenses to KKR and its Affiliates; (iv) the payment of reasonable and customary fees paid to, and indemnity provided on behalf 66 of, officers, directors, employees or consultants of the Company or any Restricted Subsidiary; (v) payments by the Company or any of its Restricted Subsidiaries to KKR and its Affiliates made for any financial advisory, financing, underwriting or placement services or in respect of other investment banking activities, including, without limitation, in connection with acquisitions or divestitures which payments are approved by a majority of the Board of Directors of the Company in good faith; (vi) transactions in which the Company or any of its Restricted Subsidiaries, as the case may be, delivers to the Trustee a letter from an Independent Financial Advisor stating that such transaction is fair to the Company or such Restricted Subsidiary from a financial point of view or meets the requirements of clause (a) of the preceding paragraph; (vii) payments or loans to employees or consultants which are approved by a majority of the Board of Directors of the Company in good faith; (viii) any agreement as in effect as of the Issuance Date or any amendment thereto (so long as any such amendment is not disadvantageous to the holders of the Notes in any material respect) or any transaction contemplated thereby; (ix) the existence of, or the performance by the Company or any of its Restricted Subsidiaries of its obligations under the terms of, any stockholders agreement (including any registration rights agreement or purchase agreement related thereto) to which it is a party as of the Issuance Date and any similar agreements which it may enter into thereafter; PROVIDED, HOWEVER, that the existence of, or the performance by the Company or any of its Restricted Subsidiaries of obligations under any future amendment to any such existing agreement or under any similar agreement entered into after the Issuance Date shall only be permitted by this clause (ix) to the extent that the terms of any such amendment or new agreement are not otherwise disadvantageous to the Holders of the Notes in any material respect; (x) the payment of all fees and expenses related to the Merger and the Financings; (xi) transactions with customers, clients, suppliers, or purchasers or sellers of goods or services, in each case in the ordinary course of business and otherwise in compliance with the terms of the Indenture which are fair to the Company or its Restricted Subsidiaries, in the reasonable determination of the Board of Directors of the Company or the senior management thereof, or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated party; and (xii) sales of accounts receivable, or participations therein, in connection with any Receivables Facility. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES The Indenture will provide that the Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or consensual restriction on the ability of any Restricted Subsidiary to: (a)(i) pay dividends or make any other distributions to the Company or any of its Restricted Subsidiaries (1) on its Capital Stock or (2) with respect to any other interest or participation in, or measured by, its profits, or (ii) pay any Indebtedness owed to the Company or any of its Restricted Subsidiaries; (b) make loans or advances to the Company or any of its Restricted Subsidiaries; or (c) sell, lease or transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries; except (in each case) for such encumbrances or restrictions existing under or by reason of: (1) contractual encumbrances or restrictions in effect on the Issuance Date, including pursuant to the Senior Credit Facility and its related documentation; (2) the Indenture and the Notes; (3) purchase money obligations for property acquired in the ordinary course of business that impose restrictions of the nature discussed in clause (c) above on the property so acquired; (4) applicable law or any applicable rule, regulation or order; 67 (5) any agreement or other instrument of a Person acquired by the Company or any Restricted Subsidiary in existence at the time of such acquisition (but not created in contemplation thereof), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired; (6) contracts for the sale of assets, including, without limitation customary restrictions with respect to a Subsidiary pursuant to an agreement that has been entered into for the sale or disposition of all or substantially all of the Capital Stock or assets of such Subsidiary; (7) secured Indebtedness otherwise permitted to be incurred pursuant to the covenants described under "Limitations on Incurrence of Indebtedness and Issuance of Disqualified Stock" and "Liens" that limit the right of the debtor to dispose of the assets securing such Indebtedness; (8) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business; (9) other Indebtedness of Restricted Subsidiaries permitted to be incurred subsequent to the Issuance Date pursuant to the provisions of the covenant described under "--Limitations on Incurrence of Indebtedness and Issuance of Disqualified Stock"; (10) customary provisions in joint venture agreements and other similar agreements entered into in the ordinary course of business; (11) customary provisions contained in leases and other agreements entered into in the ordinary course of business; (12) restrictions created in connection with any Receivables Facility that, in the good faith determination of the Board of Directors of the Company, are necessary or advisable to effect such Receivables Facility; or (13) any encumbrances or restrictions of the type referred to in clauses (a), (b) and (c) above imposed by any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in clauses (1) through (11) above, provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are, in the good faith judgment of the Company's Board of Directors, no more restrictive with respect to such dividend and other payment restrictions than those contained in the dividend or other payment restrictions prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing. LIMITATION ON GUARANTEES OF INDEBTEDNESS BY RESTRICTED SUBSIDIARIES (a) The Indenture will provide that the Company will not permit any Restricted Subsidiary to guarantee the payment of any Indebtedness of the Company or any Indebtedness of any other Restricted Subsidiary unless (i) such Restricted Subsidiary simultaneously executes and delivers a supplemental indenture to the Indenture providing for a Guarantee of payment of the Notes by such Restricted Subsidiary except that (A) if the Notes are subordinated in right of payment to such Indebtedness, the Guarantee under the supplemental indenture shall be subordinated to such Restricted Subsidiary's guarantee with respect to such Indebtedness substantially to the same extent as the Notes are subordinated to such Indebtedness under the Indenture and (B) if such Indebtedness is by its express terms subordinated in right of payment to the Notes, any such guarantee of such Restricted Subsidiary with respect to such Indebtedness shall be subordinated in right of payment to such Restricted Subsidiary's Guarantee with respect to the Notes substantially to the same extent as such Indebtedness is subordinated to the Notes; (ii) such Restricted Subsidiary waives and will not in any manner whatsoever claim or take the benefit or advantage of, any rights of reimbursement, indemnity or subrogation or any other rights against 68 the Company or any other Restricted Subsidiary as a result of any payment by such Restricted Subsidiary under its Guarantee; and (iii) such Restricted Subsidiary shall deliver to the Trustee an opinion of counsel to the effect that (A) such Guarantee of the Notes has been duly executed and authorized and (B) such Guarantee of the Notes constitutes a valid, binding and enforceable obligation of such Restricted Subsidiary, except insofar as enforcement thereof may be limited by bankruptcy, insolvency or similar laws (including, without limitation, all laws relating to fraudulent transfers) and except insofar as enforcement thereof is subject to general principles of equity; PROVIDED that this paragraph (a) shall not be applicable to any guarantee of any Restricted Subsidiary (x) that (A) existed at the time such Person became a Restricted Subsidiary of the Company and (B) was not incurred in connection with, or in contemplation of, such Person becoming a Restricted Subsidiary of the Company or (y) that guarantees the payment of Obligations of the Company or any Restricted Subsidiary under the Senior Credit Facility or any other bank facility which is designated as Senior Indebtedness and any refunding, refinancing or replacement thereof, in whole or in part, PROVIDED that such refunding, refinancing or replacement thereof constitutes Senior Indebtedness and is not incurred pursuant to a registered offering of securities under the Securities Act or a private placement of securities (including under Rule 144A) pursuant to an exemption from the registration requirements of the Securities Act, which private placement provides for registration rights under the Securities Act (any guarantee excluded by operations of this clause (y) being an "EXCLUDED GUARANTEE"). (b) Notwithstanding the foregoing and the other provisions of the Indenture, any Guarantee by a Restricted Subsidiary of the Notes shall provide by its terms that it shall be automatically and unconditionally released and discharged upon (i) any sale, exchange or transfer, to any Person not an Affiliate of the Company, of all of the Company's Capital Stock in, or all or substantially all the assets of, such Restricted Subsidiary (which sale, exchange or transfer is not prohibited by the Indenture) or (ii) the release or discharge of the guarantee which resulted in the creation of such Guarantee, except a discharge or release by or as a result of payment under such guarantee. LIMITATION ON OTHER SENIOR SUBORDINATED INDEBTEDNESS The Indenture will provide that the Company will not, and will not permit any Guarantor to, directly or indirectly, incur any Indebtedness (including Acquired Indebtedness) that is subordinate in right of payment to any Indebtedness of the Company or any Indebtedness of any Guarantor, as the case may be, unless such Indebtedness is either (a) pari passu in right of payment with the Notes or such Guarantor's Guarantee, as the case may be or (b) subordinate in right of payment to the Notes, or such Guarantor's Guarantee, as the case may be, in the same manner and at least to the same extent as the Notes are subordinate to Senior Indebtedness or such Guarantor's Guarantee is subordinate to such Guarantor's Senior Indebtedness, as the case may be. REPORTS AND OTHER INFORMATION Notwithstanding that the Company may not be subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act or otherwise report on an annual and quarterly basis on forms provided for such annual and quarterly reporting pursuant to rules and regulations promulgated by the Securities and Exchange Commission (the "COMMISSION"), the Indenture will require the Company to file with the Commission (and provide the Trustee and Holders with copies thereof, without cost to each Holder, within 15 days after it files them with the Commission), (a) within 90 days after the end of each fiscal year, annual reports on Form 1O-K (or any successor or comparable form) containing the information required to be contained therein (or required in such successor or comparable form); (b) within 45 days after the end of each of the first three fiscal quarters of each fiscal year, reports on Form 1O-Q (or any successor or comparable form); (c) promptly from time to time after the occurrence of an event required to be therein reported, such other reports on Form 8-K (or any successor or comparable form); and (d) any other information, documents and other reports which the Company would be required to file with the Commission if it were subject to Section 13 or 15(d) of the Exchange Act; PROVIDED, HOWEVER, the Company 69 shall not be so obligated to file such reports with the Commission if the Commission does not permit such filing, in which event the Company will make available such information to prospective purchasers of Notes, in addition to providing such information to the Trustee and the Holders, in each case within 15 days after the time the Company would be required to file such information with the Commission, if it were subject to Sections 13 or 15(d) of the Exchange Act. EVENTS OF DEFAULT AND REMEDIES The following events constitute Events of Default under the Indenture: (i) default in payment when due and payable, upon redemption, acceleration or otherwise, of principal of, or premium on, if any, the Notes whether or not such payment shall be prohibited by the subordination provisions relating to the Notes; (ii) default for 30 days or more in the payment when due of interest on or with respect to the Notes whether or not such payment shall be prohibited by the subordination provisions relating to the Notes; (iii) failure by the Company or any Guarantor for 30 days after receipt of written notice given by the Trustee or the holders of at least 30% in principal amount of the Notes then outstanding to comply with any of its other agreements in the Indenture or the Notes; (iv) default under any mortgage, indenture or instrument under which there is issued or by which there is secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries (other than Indebtedness owed to the Company or a Restricted Subsidiary), whether such Indebtedness or guarantee now exists or is created after the Issuance Date, if both (A) such default either (1) results from the failure to pay any such Indebtedness at its stated final maturity (after giving effect to any applicable grace periods) or (2) relates to an obligation other than the obligation to pay principal of any such Indebtedness at its stated final maturity and results in the holder or holders of such Indebtedness causing such Indebtedness to become due prior to its stated maturity and (B) the principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness in default for failure to pay principal at stated final maturity (after giving effect to any applicable grace periods), or the maturity of which has been so accelerated, aggregate $25.0 million or more at any one time outstanding; (v) failure by the Company or any of its Significant Subsidiaries to pay final judgments aggregating in excess of $25.0 million, which final judgments remain unpaid, undischarged and unstayed for a period of more than 60 days after such judgment becomes final, and in the event such judgment is covered by insurance, an enforcement proceeding has been commenced by any creditor upon such judgment or decree which is not promptly stayed; (vi) certain events of bankruptcy or insolvency with respect to the Company or any of its Significant Subsidiaries; or (vii) any Guarantee shall for any reason cease to be in full force and effect or be declared null and void or any responsible officer of the Company or any Guarantor denies that it has any further liability under any Guarantee or gives notice to such effect (other than by reason of the termination of the Indenture or the release of any such Guarantee in accordance with the Indenture). If any Event of Default (other than of a type specified in clause (vi) above) occurs and is continuing under the Indenture, the Trustee or the Holders of at least 30% in principal amount of the then outstanding Notes may declare the principal, premium, if any, interest and any other monetary obligations on all the then outstanding Notes to be due and payable immediately; PROVIDED, HOWEVER, that, so long as any Indebtedness permitted to be incurred pursuant to the Senior Credit Facility shall be outstanding, no such acceleration shall be effective until the earlier of (i) acceleration of any such Indebtedness under the 70 Senior Credit Facility or (ii) five business days after the giving of written notice to the Company and the administrative agent under the Senior Credit Facility of such acceleration. Upon the effectiveness of such declaration, such principal and interest will be due and payable immediately. Notwithstanding the foregoing, in the case of an Event of Default arising under clause (vi) of the first paragraph of this section, all outstanding Notes will become due and payable without further action or notice. Holders of the Notes may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Indenture provides that the Trustee may withhold from Holders of Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal, premium, if any, or interest) if it determines that withholding notice is in their interest. The Indenture provides that the Holders of a majority in aggregate principal amount of the then outstanding Notes issued thereunder by notice to the Trustee may on behalf of the Holders of all of such Notes waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of interest on, premium, if any, or the principal of any such Note held by a non-consenting Holder. In the event of any Event of Default specified in clause (iv) above, such Event of Default and all consequences thereof (including without limitation any acceleration or resulting payment default) shall be annulled, waived and rescinded, automatically and without any action by the Trustee or the Holders of the Notes, if within 20 days after such Event of Default arose (x) the Indebtedness or guarantee that is the basis for such Event of Default has been discharged, or (y) the holders thereof have rescinded or waived the acceleration, notice or action (as the case may be) giving rise to such Event of Default, or (z) if the default that is the basis for such Event of Default has been cured. The Indenture provides that the Company is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Company is required, within five Business Days, upon becoming aware of any Default or Event of Default or any default under any document, instrument or agreement representing Indebtedness of the Company or any Guarantor, to deliver to the Trustee a statement specifying such Default or Event of Default. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS No director, officer, employee, incorporator or stockholder of the Company or any Guarantor, shall have any liability for any obligations of the Company or the Guarantors under the Notes, the Guarantees or the Indenture or for any claim based on, in respect of, or by reason of such obligations or their creation. Each Holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the Commission that such a waiver is against public policy. LEGAL DEFEASANCE AND COVENANT DEFEASANCE The obligations of the Company and the Guarantors, if any, under the Indenture will terminate (other than certain obligations) and will be released upon payment in full of all of the Notes. The Company may, at its option and at any time, elect to have all of its obligations discharged with respect to the outstanding Notes and have each Guarantor's obligation discharged with respect to its Guarantee ("LEGAL DEFEASANCE") and cure all then existing Events of Default except for (i) the rights of Holders of outstanding Notes to receive payments in respect of the principal of, premium, if any, and interest on such Notes when such payments are due solely out of the trust created pursuant to the Indenture, (ii) the Company's obligations with respect to Notes concerning issuing temporary Notes, registration of such Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an office or agency for payment and money for security payments held in trust, (iii) the rights, powers, trusts, duties and immunities of the Trustee, and the Company's obligations in connection therewith and (iv) the Legal Defeasance provisions of the Indenture. 71 In addition, the Company may, at its option and at any time, elect to have the obligations of the Company and each Guarantor released with respect to certain covenants that are described in the Indenture ("COVENANT DEFEASANCE") and thereafter any omission to comply with such obligations shall not constitute a Default or Event of Default with respect to the Notes. In the event Covenant Defeasance occurs, certain events (not including non-payment on other indebtedness, bankruptcy, receivership, rehabilitation and insolvency events) described under "Events of Default" will no longer constitute an Event of Default with respect to the Notes. In order to exercise either Legal Defeasance or Covenant Defeasance with respect to the Notes: (i) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders of the Notes, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and interest due on the outstanding Notes on the stated maturity date or on the applicable redemption date, as the case may be, of such principal, premium, if any, or interest on the outstanding Notes; (ii) in the case of Legal Defeasance, the Company shall have delivered to the Trustee an opinion of counsel in the United States reasonably acceptable to the Trustee confirming that, subject to customary assumptions and exclusions, (A) the Company has received from, or there has been published by, the United States Internal Revenue Service a ruling or (B) since the Issuance Date, there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such opinion of counsel in the United States shall confirm that, subject to customary assumptions and exclusions, the Holders of the outstanding Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Legal Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (iii) in the case of Covenant Defeasance, the Company shall have delivered to the Trustee an opinion of counsel in the United States reasonably acceptable to the Trustee confirming that, subject to customary assumptions and exclusions, the Holders of the outstanding Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Covenant Defeasance and will be subject to such tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (iv) no Default or Event of Default shall have occurred and be continuing with respect to certain Events of Default on the date of such deposit; (v) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than the Indenture) to which, the Company or any Guarantor is a party or by which the Company or any Guarantor is bound; (vi) the Company shall have delivered to the Trustee an opinion of counsel to the effect that, as of the date of such opinion and subject to customary assumptions and exclusions following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally under any applicable U.S. federal or state law, and that the Trustee has a perfected security interest in such trust funds for the ratable benefit of the Holders; (vii) the Company shall have delivered to the Trustee an Officers' Certificate stating that the deposit was not made by the Company with the intent of defeating, hindering, delaying or defrauding any creditors of the Company or any Guarantor or others; and (viii) the Company shall have delivered to the Trustee an Officers' Certificate and an opinion of counsel in the United States (which opinion of counsel may be subject to customary assumptions and 72 exclusions) each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance, as the case may be, have been complied with. SATISFACTION AND DISCHARGE The Indenture will be discharged and will cease to be of further effect as to all Notes issued thereunder, when (a) either (i) all such Notes theretofore authenticated and delivered (except lost, stolen or destroyed Notes which have been replaced or paid and Notes for whose payment money has theretofore been deposited in trust and thereafter repaid to the Company) have been delivered to the Trustee for cancellation; or (ii) all such Notes not theretofore delivered to such Trustee for cancellation have become due and payable by reason of the making of a notice of redemption or otherwise or will become due and payable within one year and the Company or any Guarantor has irrevocably deposited or caused to be deposited with such Trustee as trust funds in trust solely for the benefit of the Holders, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient without consideration of any reinvestment of interest, to pay and discharge the entire indebtedness on such Notes not theretofore delivered to the Trustee for cancellation for principal, premium, if any, and accrued interest to the date of maturity or redemption; (b) no Default or Event of Default with respect to the Indenture or the Notes shall have occurred and be continuing on the date of such deposit or shall occur as a result of such deposit and such deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which the Company or any Guarantor is a party or by which the Company or any Guarantor is bound; (c) the Company or any Guarantor has paid or caused to be paid all sums payable by it under such Indenture; and (d) the Company has delivered irrevocable instructions to the Trustee under such Indenture to apply the deposited money toward the payment of such Notes at maturity or the redemption date, as the case may be. In addition, the Company must deliver an Officers' Certificate and an opinion of counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied. TRANSFER AND EXCHANGE A Holder may transfer or exchange Notes in accordance with the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company is not required to transfer or exchange any Note selected for redemption. Also, the Company is not required to transfer or exchange any Note for a period of 15 days before a selection of Notes to be redeemed. The registered Holder of a Note will be treated as the owner of it for all purposes. AMENDMENT, SUPPLEMENT AND WAIVER Except as provided in the next two succeeding paragraphs, the Indenture, any Guarantee and the Notes issued thereunder may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the Notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes), and any existing Default or compliance with any provision of the Indenture or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes (including consents obtained in connection with a tender offer or exchange offer for Notes). 73 The Indenture will provide that without the consent of each Holder affected, an amendment or waiver may not (with respect to any Notes held by a non-consenting Holder of the Notes): (i) reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver, (ii) reduce the principal of or change the fixed maturity of any such Note or alter or waive the provisions with respect to the redemption of the Notes (other than provisions relating to the covenants described above under the caption "--Repurchase at the Option of Holders"), (iii) reduce the rate of or change the time for payment of interest on any Note, (iv) waive a Default or Event of Default in the payment of principal of or premium, if any, or interest on the Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of such Notes and a waiver of the payment default that resulted from such acceleration), or in respect of a covenant or provision contained in the Indenture or any Guarantee which cannot be amended or modified without the consent of all Holders, (v) make any Note payable in money other than that stated in such Notes, (vi) make any change in the provisions of the Indenture relating to waivers of past Defaults or the rights of Holders of Notes to receive payments of principal of or premium, if any, or interest on the Notes, (vii) make any change in the foregoing amendment and waiver provisions, (viii) impair the right of any Holder of the Notes to receive payment of principal of, or interest on such Holder's Notes on or after the due dates therefore or to institute suit for the enforcement of any payment on or with respect to such Holder's Notes or (ix) make any change in the subordination provisions of the Indenture that would adversely affect the Holders of the Notes. The Indenture will provide that, notwithstanding the foregoing, without the consent of any Holder of Notes, the Company, any Guarantor (with respect to a Guarantee or the Indenture to which it is a party) and the Trustee may amend or supplement the Indenture, any Guarantee or the Notes (i) to cure any ambiguity, defect or inconsistency, (ii) to provide for uncertificated Notes in addition to or in place of certificated Notes, (iii) to comply with the covenant relating to mergers, consolidations and sales of assets, (iv) to provide for the assumption of the Company's or any Guarantor's obligations to Holders of such Notes, (v) to make any change that would provide any additional rights or benefits to the Holders of Notes or that does not adversely affect the legal rights under the Indenture of any such Holder, (vi) to add covenants for the benefit of the Holders or to surrender any right or power conferred upon the Company, (vii) to comply with requirements of the Commission in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act, (viii) to evidence and provide for the acceptance of appointment under the Indenture by a successor Trustee pursuant to the requirements thereof, or (ix) to add a Guarantor under the Indenture. The consent of the Holders is not necessary under the Indenture to approve the particular form of any proposed amendment. It is sufficient if such consent approves the substance of the proposed amendment. CONCERNING THE TRUSTEE The Indenture contains certain limitations on the rights of the Trustee, should it become a creditor of the Company, to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The Trustee will be permitted to engage in other transactions; however, if it acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the Commission for permission to continue or resign. The Indenture will provide that the Holders of a majority in principal amount of the outstanding Notes issued thereunder will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee, subject to certain exceptions. The Indenture will provide that in case an Event of Default shall occur (which shall not be cured), the Trustee will be required, in the exercise of its power, to use the degree of care of a prudent person in the conduct of his own affairs. Subject to such provisions, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request of any Holder of such Notes, unless such Holder shall have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense. 74 GOVERNING LAW The Indenture, the Notes and the Guarantees, if any, will be, subject to certain exceptions, governed by and construed in accordance with the internal laws of the State of New York, without regard to the choice of law rules thereof. CERTAIN DEFINITIONS Set forth below are certain defined terms used in the Indenture. Reference is made to the Indenture for a full disclosure of all such terms, as well as any other capitalized terms used herein for which no definition is provided. For purposes of the Indenture, unless otherwise specifically indicated, the term "consolidated" with respect to any Person refers to such Person consolidated with its Restricted Subsidiaries, and excludes from such consolidation any Unrestricted Subsidiary as if such Unrestricted Subsidiary were not an Affiliate of such Person. "ACQUIRED INDEBTEDNESS" means, with respect to any specified Person, (i) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Restricted Subsidiary of such specified Person, including, without limitation, Indebtedness incurred in connection with, or in contemplation of, such other Person merging with or into or becoming a Restricted Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person. "AFFILIATE" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; PROVIDED, HOWEVER, that beneficial ownership of 10% or more of the voting securities of a Person shall be deemed to be control. "ASSET SALE" means (i) the sale, conveyance, transfer or other disposition (whether in a single transaction or a series of related transactions) of property or assets (including by way of a sale and leaseback) of the Company or any Restricted Subsidiary (each referred to in this definition as a "DISPOSITION") or (ii) the issuance or sale of Equity Interests of any Restricted Subsidiary (whether in a single transaction or a series of related transactions), in each case, other than: (a) a disposition of Cash Equivalents or Investment Grade Securities or obsolete equipment in the ordinary course of business; (b) the disposition of all or substantially all of the assets of the Company in a manner permitted pursuant to the provisions described above under "--Merger, Consolidation or Sale of All or Substantially All Assets" or any disposition that constitutes a Change of Control pursuant to the Indenture; (c) any Restricted Payment that is permitted to be made, and is made, under the first paragraph of the covenant described above under "Limitation on Restricted Payments;" (d) any disposition of assets with an aggregate fair market value of less than $1.0 million; (e) any disposition of property or assets by a Restricted Subsidiary to the Company or by the Company or a Restricted Subsidiary to a Wholly Owned Restricted Subsidiary; (f) any exchange of like property pursuant to Section 1031 of the Internal Revenue Code of 1986, as amended, for use in a Similar Business; (g) any financing transaction with respect to property built or acquired by the Company or any Restricted Subsidiary after the Issuance Date including, without limitation, sale-leasebacks and asset securitizations; (h) foreclosures on assets; (i) sales of accounts receivable, or participations therein, in connection with any Receivables Facility; and (j) any sale of Equity Interests in, or Indebtedness or other securities of, an Unrestricted Subsidiary. "CAPITALIZED LEASE OBLIGATION" means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be required to be capitalized and reflected as a liability on a balance sheet (excluding the footnotes thereto) in accordance with GAAP. 75 "CAPITAL STOCK" means (i) in the case of a corporation, corporate stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, (iii) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited) and (iv) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person. "CASH EQUIVALENTS" means (i) U. S. dollars, (ii) securities issued or directly and fully guaranteed or insured by the U. S. Government or any agency or instrumentality thereof, (iii) certificates of deposit, time deposits and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers' acceptances with maturities not exceeding one year and overnight bank deposits, in each case with any commercial bank having capital and surplus in excess of $500.0 million, (iv) repurchase obligations for underlying securities of the types described in clauses (ii) and (iii) entered into with any financial institution meeting the qualifications specified in clause (iii) above, (v) commercial paper rated A-1 or the equivalent thereof by Moody's or S&P and in each case maturing within one year after the date of acquisition, (vi) investment funds investing 95% of their assets in securities of the types described in clauses (i)-(v) above, (vii) readily marketable direct obligations issued by any state of the United States of America or any political subdivision thereof having one of the two highest rating categories obtainable from either Moody's or S&P and (viii) Indebtedness or preferred stock issued by Persons with a rating of "A" or higher from S&P or "A2" or higher from Moody's. "CHANGE OF CONTROL" means the occurrence of any of the following: (i) the sale, lease or transfer, in one or a series of related transactions, of all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole; or (ii) the Company becomes aware of (by way of a report or any other filing pursuant to Section 13(d) of the Exchange Act, proxy, vote, written notice or otherwise) the acquisition by any Person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision), including any group acting for the purpose of acquiring, holding or disposing of securities (within the meaning of Rule 13d-5(b)(1) under the Exchange Act), other than the Permitted Holders and their Related Parties, in a single transaction or in a related series of transactions, by way of merger, consolidation or other business combination or purchase of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any successor provision) of 50% or more of the total voting power of the Voting Stock of the Company. "CONSOLIDATED DEPRECIATION AND AMORTIZATION EXPENSE" means with respect to any Person for any period, the total amount of depreciation and amortization expense of such Person and its Restricted Subsidiaries for such period on a consolidated basis and otherwise determined in accordance with GAAP. "CONSOLIDATED INTEREST EXPENSE" means, with respect to any period, the sum, without duplication, of: (a) consolidated interest expense of such Person and its Restricted Subsidiaries for such period, to the extent such expense was deducted in computing Consolidated Net Income (including amortization of original issue discount, non-cash interest payments, the interest component of Capitalized Lease Obligations, and net payments and receipts (if any) pursuant to Hedging Obligations to the extent included in Consolidated Interest Expense, excluding amortization of deferred financing fees) and (b) consolidated capitalized interest of such Person and its Restricted Subsidiaries for such period, whether paid or accrued; PROVIDED, HOWEVER, that Receivables Fees shall be deemed not to constitute Consolidated Interest Expense. "CONSOLIDATED NET INCOME" means, with respect to any Person for any period, the aggregate of the Net Income, of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, and otherwise determined in accordance with GAAP; PROVIDED, HOWEVER, that (i) any net after-tax extraordinary gains or losses (less all fees and expenses relating thereto) shall be excluded, (ii) the Net Income for such period shall not include the cumulative effect of a change in accounting principles during such period, 76 (iii) any net after-tax income (loss) from discontinued operations and any net after-tax gains or losses on disposal of discontinued operations shall be excluded, (iv) any net after-tax gains or losses (less all fees and expenses relating thereto) attributable to asset dispositions other than in the ordinary course of business (as determined in good faith by the Board of Directors of the Company) shall be excluded, (v) the Net Income for such period of any Person that is not a Subsidiary, or is an Unrestricted Subsidiary, or that is accounted for by the equity method of accounting, shall be included only to the extent of the amount of dividends or distributions or other payments paid in cash (or to the extent converted into cash) to the referent Person or a Wholly Owned Restricted Subsidiary thereof in respect of such period, (vi) the Net Income of any Person acquired in a pooling of interests transaction shall not be included for any period prior to the date of such acquisition and (vii) the Net Income for such period of any Restricted Subsidiary shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of its Net Income is not at the date of determination permitted without any prior governmental approval (which has not been obtained) or, directly or indirectly, by the operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule, or governmental regulation applicable to that Restricted Subsidiary or its stockholders, unless such restriction with respect to the payment of dividends or in similar distributions has been legally waived. "CONTINGENT OBLIGATIONS" means, with respect to any Person, any obligation of such Person guaranteeing any leases, dividends or other obligations that do not constitute Indebtedness ("PRIMARY OBLIGATIONS") of any other Person (the "PRIMARY OBLIGOR") in any manner, whether directly or indirectly, including, without limitation, any obligation of such Person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (A) for the purchase or payment of any such primary obligation or (B) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, or (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation against loss in respect thereof. "CREDIT FACILITIES" means, with respect to the Company, one or more debt facilities (including, without limitation, the Senior Credit Facility) or commercial paper facilities with banks or other institutional lenders providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time. "DEFAULT" means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default. "DESIGNATED NONCASH CONSIDERATION" means the fair market value of noncash consideration received by the Company or one of its Restricted Subsidiaries in connection with an Asset Sale that is so designated as Designated Noncash Consideration pursuant to an Officers' Certificate, setting forth the basis of such valuation, executed by the principal executive officer and the principal financial officer of the Company, less the amount of cash or Cash Equivalents received in connection with a sale of such Designated Noncash Consideration. "DESIGNATED PREFERRED STOCK" means preferred stock of the Company (other than Disqualified Stock) that is issued for cash (other than to a Restricted Subsidiary) and is so designated as Designated Preferred Stock, pursuant to an Officers' Certificate executed by the principal executive officer and the principal financial officer of the Company, on the issuance date thereof, the cash proceeds of which are excluded from the calculation set forth in clause (c) of the covenant described under "Limitation on Restricted Payments." "DISQUALIFIED STOCK" means, with respect to any Person, any Capital Stock of such Person which, by its terms (or by the terms of any security into which it is convertible or for which it is putable or 77 exchangeable), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder thereof, in whole or in part, in each case prior to the date 91 days after the maturity date of the Notes; PROVIDED, HOWEVER, that if such Capital Stock is issued to any employee or to any plan for the benefit of employees of the Company or its Subsidiaries or by any such plan to such employees, such Capital Stock shall not constitute Disqualified Stock solely because it may be required to be repurchased by the Company in order to satisfy applicable statutory or regulatory obligations. "EBITDA" means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period plus (a) provision for taxes based on income or profits of such Person for such period deducted in computing Consolidated Net Income, plus (b) Consolidated Interest Expense of such Person for such period and any Receivables Fees paid by such Person or any of its Restricted Subsidiaries during such period, in each case to the extent the same was deducted in calculating such Consolidated Net Income, plus (c) Consolidated Depreciation and Amortization Expense of such Person for such period to the extent such depreciation and amortization were deducted in computing Consolidated Net Income, plus (d) any expenses or charges related to any Equity Offering, Permitted Investment or Indebtedness permitted to be incurred by the Indenture (including such expenses or charges related to the Merger (including the costs of (i) the cancellation of the stock options and (ii) the retirement of the Existing Notes) and the Financings) and deducted in such period in computing Consolidated Net Income, plus (e) the amount of any restructuring charge deducted in such period in computing Consolidated Net Income, plus (f) without duplication, any other non-cash charges reducing Consolidated Net Income for such period (excluding any such charge which requires an accrual of a cash reserve for anticipated cash charges for any future period), plus (g) the amount of any minority interest expense deducted in calculating Consolidated Net Income, less, without duplication (h) non-cash items increasing Consolidated Net Income of such Person for such period (excluding any items which represent the reversal of any accrual of, or cash reserve for, anticipated cash charges in any prior period). "EQUITY INTERESTS" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "EQUITY OFFERING" means any public or private sale of common stock or preferred stock of the Company (excluding Disqualified Stock), other than (i) public offerings with respect to the Company's Common Stock registered on Form S-8 and (ii) any such public or private sale that constitutes an Excluded Contribution. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder. "EXCLUDED CONTRIBUTIONS" means the net cash proceeds received by the Company after the closing of the Merger from (a) contributions to its common equity capital and (b) the sale (other than to a Subsidiary or to any Company or Subsidiary management equity plan or stock option plan or any other management or employee benefit plan or agreement) of Capital Stock (other than Disqualified Stock) of the Company, in each case designated as Excluded Contributions pursuant to an Officers' Certificate executed by the principal executive officer and the principal financial officer of the Company on the date such capital contributions are made or the date such Equity Interests are sold, as the case may be, the cash proceeds of which are excluded from the calculation set forth in paragraph (c) of the "Limitation on Restricted Payments" covenant. "EXISTING INDEBTEDNESS" means Indebtedness of the Company or its Restricted Subsidiaries in existence on the Issuance Date, plus interest accruing thereon, after application of the net proceeds of the sale of the Notes as described in this Prospectus. 78 "EXISTING NOTES" means the Company's 10.45% Senior Notes due 2001 and the Company's 12 3/4% Senior Subordinated Notes due 2002. "FIXED CHARGE COVERAGE RATIO" means, with respect to any Person for any period, the ratio of EBITDA of such Person for such period to the Fixed Charges of such Person for such period. In the event that the Company or any of its Restricted Subsidiaries incurs, assumes, guarantees or redeems any Indebtedness (other than in the case of revolving credit borrowings, in which case interest expense shall be computed based upon the average daily balance of such Indebtedness during the applicable period) or issues or redeems preferred stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but prior to the event for which the calculation of the Fixed Charge Coverage Ratio is made (the "CALCULATION DATE"), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such incurrence, assumption, guarantee or redemption of Indebtedness, or such issuance or redemption of preferred stock, as if the same had occurred at the beginning of the applicable four-quarter period. For purposes of making the computation referred to above, Investments, acquisitions, dispositions, mergers, consolidations and discontinued operations (as determined in accordance with GAAP) that have been made by the Company or any of its Restricted Subsidiaries during the four-quarter reference period or subsequent to such reference period and on or prior to or simultaneously with the Calculation Date shall be calculated on a pro forma basis assuming that all such Investments, acquisitions, dispositions, discontinued operations, mergers and consolidations (and the reduction of any associated fixed charge obligations and the change in EBITDA resulting therefrom) had occurred on the first day of the four-quarter reference period. If since the beginning of such period any Person (that subsequently became a Restricted Subsidiary or was merged with or into the Company or any Restricted Subsidiary since the beginning of such period) shall have made any Investment, acquisition, disposition, discontinued operation, merger or consolidation that would have required adjustment pursuant to this definition, then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect thereto for such period as if such Investment, acquisition, disposition, discontinued operation, merger or consolidation had occurred at the beginning of the applicable four-quarter period. For purposes of this definition, whenever pro forma effect is to be given to a transaction, the pro forma calculations shall be made in good faith by a responsible financial or accounting officer of the Company. If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the Calculation Date had been the applicable rate for the entire period (taking into account any Hedging Obligations applicable to such Indebtedness). Interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by a responsible financial or accounting officer of the Company to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with GAAP. For purposes of making the computation referred to above, interest on any Indebtedness under a revolving credit facility computed on a pro forma basis shall be computed based upon the average daily balance of such Indebtedness during the applicable period. Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rate, shall be deemed to have been based upon the rate actually chosen, or, if none, then based upon such optional rate chosen as the Company may designate. "FIXED CHARGES" means, with respect to any Person for any period, the sum of (a) Consolidated Interest Expense of such Person for such period and (b) all cash dividend payments (excluding items eliminated in consolidation) on any series of preferred stock of such Person. "FOREIGN SUBSIDIARY" means a Restricted Subsidiary not organized or existing under the laws of the United States, any State thereof, the District of Columbia, or any territory thereof. "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which 79 are in effect on the Issuance Date. For the purposes of the Indenture, the term "consolidated" with respect to any Person shall mean such Person consolidated with its Restricted Subsidiaries, and shall not include any Unrestricted Subsidiary. "GOVERNMENT SECURITIES" means securities that are (a) direct obligations of the United States of America for the timely payment of which its full faith and credit is pledged or (b) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act), as custodian with respect to any such Government Securities or a specific payment of principal of or interest on any such Government Securities held by such custodian for the account of the holder of such depository receipt; PROVIDED that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the Government Securities or the specific payment of principal of or interest on the Government Securities evidenced by such depository receipt. "GUARANTEE" means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including, without limitation, letters of credit and reimbursement agreements in respect thereof), of all or any part of any Indebtedness or other obligations. "GUARANTEE" means any guarantee of the obligations of the Company under the Indenture and the Notes by any Person in accordance with the provisions of the Indenture. When used as a verb, "Guarantee" shall have a corresponding meaning. No Guarantees will be issued in connection with the initial offering and sale of the Notes. "GUARANTOR" means any Person that incurs a Guarantee; PROVIDED that upon the release and discharge of such Person from its Guarantee in accordance with the Indenture, such Person shall cease to be a Guarantor. No Guarantees will be issued in connection with the initial offering and sale of the Notes. "HEDGING OBLIGATIONS" means, with respect to any Person, the obligations of such Person under (i) currency exchange or interest rate swap agreements, currency exchange or interest rate cap agreements and currency exchange or interest rate collar agreements and (ii) other agreements or arrangements designed to protect such Person against fluctuations in currency exchange or interest rates. "HOLDER" means a holder of the Notes. "INDEBTEDNESS" means, with respect to any Person, (a) any indebtedness of such Person, whether or not contingent (i) in respect of borrowed money, (ii) evidenced by bonds, notes, debentures or similar instruments or letters of credit or bankers' acceptances (or, without double counting, reimbursement agreements in respect thereof), (iii) representing the balance deferred and unpaid of the purchase price of any property (including Capitalized Lease Obligations), except any such balance that constitutes a trade payable or similar obligation to a trade creditor, in each case accrued in the ordinary course of business or (iv) representing any Hedging Obligations, if and to the extent of any of the foregoing Indebtedness (other than letters of credit and Hedging Obligations) that would appear as a liability upon a balance sheet (excluding the footnotes thereto) of such Person prepared in accordance with GAAP, (b) to the extent not otherwise included, any obligation by such Person to be liable for, or to pay, as obligor, guarantor or otherwise, on the Indebtedness of another Person (other than by endorsement of negotiable instruments for collection in the ordinary course of business) and (c) to the extent not otherwise included, Indebtedness of another Person secured by a Lien on any asset owned by such Person (whether or not such Indebtedness is assumed by such Person); PROVIDED, HOWEVER, that Contingent Obligations incurred in the ordinary course of business shall be deemed not to constitute Indebtedness and obligations under or in respect of Receivables Facilities shall not be deemed to constitute Indebtedness of a Person. 80 "INDEPENDENT FINANCIAL ADVISOR" means an accounting, appraisal, investment banking firm or consultant to Persons engaged in Similar Businesses of nationally recognized standing that is, in the judgment of the Company's Board of Directors, as evidenced by a board resolution, qualified to perform the task for which it has been engaged. "INVESTMENT GRADE SECURITIES" means (i) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof (other than Cash Equivalents), (ii) debt securities or debt instruments with a rating of BBB- or higher by S&P or Baa3 or higher by Moody's or the equivalent of such rating by such rating organization, or, if no rating of S&P or Moody's then exists, the equivalent of such rating by any other nationally recognized securities rating agency, but excluding any debt securities or instruments constituting loans or advances among the Company and its Subsidiaries, and (iii) investments in any fund that invests exclusively in investments of the type described in clauses (i) and (ii) which fund may also hold immaterial amounts of cash pending investment and/or distribution. "INVESTMENTS" means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the form of loans (including guarantees), advances or capital contributions (excluding advances to customers, commission, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities issued by any other Person and investments that are required by GAAP to be classified on the balance sheet (excluding the footnotes thereto) of the Company in the same manner as the other investments included in this definition to the extent such transactions involve the transfer of cash or other property. For purposes of the definition of "Unrestricted Subsidiary" and the covenant described under "--Certain Covenants--Limitation on Restricted Payments," (i) "Investments" shall include the portion (proportionate to the Company's equity interest in such Subsidiary) of the fair market value of the net assets of a Subsidiary of the Company at the time that such Subsidiary is designated an Unrestricted Subsidiary; PROVIDED, HOWEVER, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue to have a permanent "Investment" in an Unrestricted Subsidiary equal to an amount (if positive) equal to (x) the Company's "Investment" in such Subsidiary at the time of such redesignation less (y) the portion (proportionate to the Company's equity interest in such Subsidiary) of the fair market value of the net assets of such Subsidiary at the time of such redesignation; and (ii) any property transferred to or from an Unrestricted Subsidiary shall be valued at its fair market value at the time of such transfer, in each case as determined in good faith by the Board of Directors. "ISSUANCE DATE" means the closing date for the sale and original issuance of the Notes under the Indenture. "LIEN" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction); provided that in no event shall an operating lease be deemed to constitute a Lien. "MANAGEMENT GROUP" means the group consisting of the Officers of the Company. "MOODY'S" means Moody's Investors Service, Inc. "NET INCOME" means, with respect to any Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends. "NET PROCEEDS" means the aggregate cash proceeds received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any Designated Noncash Consideration received in any Asset Sale), net of the direct 81 costs relating to such Asset Sale and the sale or disposition of such Designated Noncash Consideration (including, without limitation, legal, accounting and investment banking fees, and brokerage and sales commissions), and any relocation expenses incurred as a result thereof, taxes paid or payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements related thereto), amounts required to be applied to the repayment of principal, premium (if any) and interest on Indebtedness required (other than required by clause (i) of the second paragraph of "-- Repurchase at the Option of Holders--Asset Sales") to be paid as a result of such transaction and any deduction of appropriate amounts to be provided by the Company as a reserve in accordance with GAAP against any liabilities associated with the asset disposed of in such transaction and retained by the Company after such sale or other disposition thereof, including, without limitation, pension and other post-employment benefit liabilities and liabilities related to environmental matters or against any indemnification obligations associated with such transaction. "OBLIGATIONS" means any principal, interest, penalties, fees, indemnifications, reimbursements (including, without limitation, reimbursement obligations with respect to letters of credit and banker's acceptances), damages and other liabilities payable under the documentation governing any Indebtedness. "OFFICER" means the Chairman of the Board, the President, any Executive Vice President, Senior Vice President or Vice President, the Treasurer or the Secretary of the Company. "OFFICERS' CERTIFICATE" means a certificate signed on behalf of the Company by two officers of the Company, one of whom must be the principal executive officer, the principal financial officer, the treasurer or the principal accounting officer of the Company that meets the requirements set forth in the Indenture. "PARI PASSU INDEBTEDNESS" means (a) with respect to the Notes, Indebtedness which ranks pari passu in right of payment to the Notes and (b) with respect to any Guarantee, Indebtedness which ranks pari passu in right of payment to such Guarantee. "PERMITTED HOLDERS" means KKR and any of its Affiliates and the Management Group. "PERMITTED INVESTMENTS" means (a) any Investment in the Company or any Restricted Subsidiary; (b) any Investment in cash and Cash Equivalents or Investment Grade Securities; (c) any Investment by the Company or any Restricted Subsidiary of the Company in a Person that is a Similar Business if as a result of such Investment (i) such Person becomes a Restricted Subsidiary or (ii) such Person, in one transaction or a series of related transactions, is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or a Restricted Subsidiary; (d) any Investment in securities or other assets not constituting cash or Cash Equivalents and received in connection with an Asset Sale made pursuant to the provisions of "--Repurchase at the Option of Holders--Asset Sales" or any other disposition of assets not constituting an Asset Sale; (e) any Investment existing on the Issuance Date; (f) advances to employees not in excess of $10.0 million outstanding at any one time, in the aggregate; (g) any Investment acquired by the Company or any of its Restricted Subsidiaries (i) in exchange for any other Investment or accounts receivable held by the Company or any such Restricted Subsidiary in connection with or as a result of a bankruptcy, workout, reorganization or recapitalization of the issuer of such other Investment or accounts receivable or (ii) as a result of a foreclosure by the Company or any of its Restricted Subsidiaries with respect to any secured Investment or other transfer of title with respect to any secured Investment in default; (h) Hedging Obligations permitted under clause (j) of the "Limitation of Incurrence of Indebtedness and Issuance of Disqualified Stock" covenant; (i) loans and advances to officers, directors and employees for business-related travel expenses, moving expenses and other similar expenses, in each case incurred in the ordinary course of business; (j) any Investment in a Similar Business (other than an Investment in an Unrestricted Subsidiary) having an aggregate fair market value, taken together with all other Investments made pursuant to this clause (j) that are at that time outstanding, not to exceed the greater of (x) $100.0 million or (y) 15% of Total Assets at the time of such Investment (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value); (k) 82 Investments the payment for which consists of Equity Interests of the Company (exclusive of Disqualified Stock); PROVIDED, HOWEVER, that such Equity Interests will not increase the amount available for Restricted Payments under clause (c) of the "Limitation on Restricted Payments" covenant; (l) additional Investments having an aggregate fair market value, taken together with all other Investments made pursuant to this clause (l) that are at that time outstanding, not to exceed the greater of (x) $35.0 million or (y) 5% of Total Assets at the time of such Investment (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value); (m) any transaction to the extent it constitutes an investment that is permitted by and made in accordance with the provisions of the second paragraph of the covenant described under "--Certain Covenants--Transactions with Affiliates" (except transactions described in clauses (ii) and (vi) of such paragraph); (n) any Investment by Restricted Subsidiaries in other Restricted Subsidiaries and Investments by Subsidiaries that are not Restricted Subsidiaries in other Subsidiaries that are not Restricted Subsidiaries; and (o) Investments relating to any special purpose Wholly Owned Subsidiary of the Company organized in connection with a Receivables Facility that, in the good faith determination of the Board of Directors of the Company, are necessary or advisable to effect such Receivables Facility. "PERSON" means any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity. "PREFERRED STOCK" means any Equity Interest with preferential right of payment of dividends or upon liquidation, dissolution, or winding up. "RECEIVABLES FACILITY" means one or more receivables financing facilities, as amended from time to time, pursuant to which the Company and/or any of its Restricted Subsidiaries sells its accounts receivable to a Person that is not a Restricted Subsidiary. "RECEIVABLES FEES" means distributions or payments made directly or by means of discounts with respect to any participation interests issued or sold in connection with, and other fees paid to a Person that is not a Restricted Subsidiary in connection with, any Receivables Facility. "RELATED PARTIES" means any Person controlled by a Permitted Holder, including any partnership of which a Permitted Holder or its Affiliates is the general partner. "REPURCHASE OFFER" means an offer made by the Company to purchase all or any portion of a Holder's Notes pursuant to the provisions described under the covenants entitled "--Repurchase at the Option of Holders-Change of Control" or "--Repurchase at the Option of Holders--Asset Sales." "RESTRICTED INVESTMENT" means an Investment other than a Permitted Investment. "RESTRICTED SUBSIDIARY" means, at any time, any direct or indirect Subsidiary of the Company that is not then an Unrestricted Subsidiary; PROVIDED, HOWEVER, that upon the occurrence of an Unrestricted Subsidiary ceasing to be an Unrestricted Subsidiary, such Subsidiary shall be included in the definition of "Restricted Subsidiary." "S&P" means Standard and Poor's Ratings Group. "SECURITIES ACT" means the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder. "SENIOR CREDIT FACILITY" means that certain credit facility described in this Prospectus among the Company and the lenders from time to time party thereto, including any collateral documents, instruments and agreements executed in connection therewith, and the term Senior Credit Facility shall also include any amendments, supplements, modifications, extensions, renewals, restatements or refundings thereof and any credit facilities that replace, refund or refinance any part of the loans, other credit facilities or commitments thereunder, including any such replacement, refunding or refinancing facility that increases 83 the amount borrowable thereunder or alters the maturity thereof, PROVIDED, HOWEVER, that there shall not be more than one facility at any one time that constitutes the Senior Credit Facility and, if at any time there is more than one facility which would constitute the Senior Credit Facility, the Company will designate to the Trustee which one of such facilities will be the Senior Credit Facility for purposes of the Indenture. "SIGNIFICANT SUBSIDIARY" means any Subsidiary that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the date hereof. "SIMILAR BUSINESS" means a business, the majority of whose revenues are derived from the design, manufacture and/or marketing of electrical, electronic and fiber optic connectors, coaxial and flat-ribbon cable, and interconnect systems, or whose revenues are derived from the licensing of the Amphenol name, or any business or activity that is reasonably similar thereto or a reasonable extension, development or expansion thereof or ancillary thereto. "SUBORDINATED INDEBTEDNESS" means (a) with respect to the Notes, any Indebtedness of the Company which is by its terms subordinated in right of payment to the Notes and (b) with respect to any Guarantee, any Indebtedness of the applicable Guarantor which is by its terms subordinated in right of payment to such Guarantee. "SUBSIDIARY" means, with respect to any Person, (i) any corporation, association, or other business entity (other than a partnership) of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time of determination owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof and (ii) any partnership, joint venture, limited liability company or similar entity of which (x) more than 50% of the capital accounts, distribution rights, total equity and voting interests or general or limited partnership interests, as applicable, are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof whether in the form of membership, general, special or limited partnership or otherwise and (y) such Person or any Wholly Owned Restricted Subsidiary of such Person is a controlling general partner or otherwise controls such entity. "TOTAL ASSETS" means the total consolidated assets of the Company and its Restricted Subsidiaries, as shown on the most recent balance sheet (excluding the footnotes thereto) of the Company. "UNRESTRICTED SUBSIDIARY" means (i) any Subsidiary of the Company which at the time of determination is an Unrestricted Subsidiary (as designated by the Board of Directors of the Company, as provided below) and (ii) any Subsidiary of an Unrestricted Subsidiary. The Board of Directors of the Company may designate any Subsidiary of the Company (including any existing Subsidiary and any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Equity Interests of, or owns, or holds any Lien on, any property of, the Company or any Subsidiary of the Company (other than any Subsidiary of the Subsidiary to be so designated), PROVIDED that (a) any Unrestricted Subsidiary must be an entity of which shares of the capital stock or other equity interests (including partnership interests) entitled to cast at least a majority of the votes that may be cast by all shares or equity interests having ordinary voting power for the election of directors or other governing body are owned, directly or indirectly, by the Company, (b) the Company certifies that such designation complies with the covenants described under "--Certain Covenants--Limitation on Restricted Payments" and (c) each of (I) the Subsidiary to be so designated and (II) its Subsidiaries has not at the time of designation, and does not thereafter, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable with respect to any Indebtedness pursuant to which the lender has recourse to any of the assets of the Company or any of its Restricted Subsidiaries. The Board of Directors may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; PROVIDED that, immediately after giving effect to such designation, (i) the Company could incur at least $1.00 of additional Indebtedness pursuant to the Fixed 84 Charge Coverage Ratio test described under "--Certain Covenants--Limitations on Incurrence of Indebtedness and Issuance of Disqualified Stock" or (ii) the Fixed Charge Coverage Ratio for the Company and its Restricted Subsidiaries would be greater than such ratio for the Company and its Restricted Subsidiaries immediately prior to such designation, in each case on a pro forma basis taking into account such designation. Any such designation by the Board of Directors shall be notified by the Company to the Trustee by promptly filing with the Trustee a copy of the board resolution giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing provisions. "VOTING STOCK" of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person. "WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any Indebtedness or Disqualified Stock, as the case may be, at any date, the quotient obtained by dividing (i) the sum of the products of the number of years from the date of determination to the date of each successive scheduled principal payment of such Indebtedness or redemption or similar payment with respect to such Disqualified Stock multiplied by the amount of such payment, by (ii) the sum of all such payments. "WHOLLY OWNED RESTRICTED SUBSIDIARY" is any Wholly Owned Subsidiary that is a Restricted Subsidiary. "WHOLLY OWNED SUBSIDIARY" of any Person means a Subsidiary of such Person 100% of the outstanding Capital Stock or other ownership interests of which (other than directors' qualifying shares) shall at the time be owned by such Person or by one or more Wholly Owned Subsidiaries of such Person and one or more Wholly Owned Subsidiaries of such Person. BOOK-ENTRY; DELIVERY AND FORM The Notes will be issued in the form of one or more fully registered global certificates (the "Global Certificates"). The Global Certificates will be deposited with, or with the Trustee on behalf of, The Depository Trust Company, New York, New York (the "Depositary") and registered in the name of the Depositary's nominee. The Depositary will maintain the Notes in denominations of $1,000 and integral multiples thereof through its book-entry facilities. Except as set forth below, the Global Certificates may be transferred, in whole and not in part, only to the Depositary, another nominee of the Depositary or to a successor of the Depositary or its nominee. The Depositary has advised the Company and the Underwriters as follows: It is a limited-purpose trust company organized under the Banking Law of the State of New York, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Exchange Act. The Depositary was created to hold securities for its participating organizations (the "Participants") and to facilitate the clearance and settlement of transactions in such securities between Participants through electronic book-entry changes in accounts of its Participants. Participants include securities brokers and dealers (including the Underwriters), banks, trust companies, clearing corporations and certain other organizations, some of whom (and/or their representatives) own the Depositary. Access to the Depositary's book-entry system is also available to others, such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Participant, either directly or indirectly ("indirect participants"). Persons who are not Participants may beneficially own securities held by the Depositary only through Participants or indirect participants. The Depositary has also advised that, pursuant to procedures established by it, (i) upon the issuance by the Company of the Notes, the Depositary will credit the accounts of Participants designated by the Underwriters with the principal amount of the Notes purchased by the Underwriters and (ii) ownership of beneficial interests in the Global Certificates will be shown on, and the transfer of that ownership will be effected only through, records maintained by the Depositary (with respect to Participants' interests), the Participants and the indirect participants. A beneficial owner is the person who has the right to sell, 85 transfer or otherwise dispose of an interest in the Notes and the right to receive the proceeds therefrom, as well as principal, premium (if any) and interest payable in respect of the Notes. The beneficial owner must rely on the foregoing arrangements to evidence its interest in the Notes. Beneficial ownership of the Notes may be transferred only by complying with the procedures of a beneficial owner's Participant (e.g., a brokerage firms) and the Depositary. The laws of some states require that certain persons take physical delivery in definitive form of securities which they own. Consequently, the ability to transfer beneficial interests in the Global Certificates is limited to such extent. So long as a nominee of the Depositary or its nominee is the registered owner of the Global Certificates, the Depositary or such nominee will be considered the absolute owner or holder of the Notes for all purposes under the Indenture and any applicable laws. Except as provided below, owners of beneficial interests in the Global Certificates will not be entitled to have Notes registered in their names, will not receive or be entitled to receive physical delivery of Notes in definitive form and will not be considered the owners or holders thereof under the Indenture. All rights of ownership must be exercised through the Depositary and the book-entry system, and notices that are to be given to registered owners by the Company or the Trustee will be given only to the Depositary. It is expected that the Depositary will forward notices to the Participants who will in turn forward notices to the beneficial owners. Neither the Company, the Trustee, the paying agents nor the Notes registrars will have any responsibility or obligation to assure that any notices are forwarded by the Depositary to any Participant or by any Participant to the beneficial owners. Neither the Company, the Trustee, the paying agents nor the Notes registrars will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in the Global Certificates, or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. Principal and interest payments on the Global Certificates registered in the name of the Depositary's nominee will be made by the Company, either directly or through a paying agent, to the Depositary's nominee as the registered owner of the Global Certificates. Under the terms of the Indenture, the Company and the Trustee will treat the persons in whose names the Notes are registered as the owners of such Notes for the purpose of receiving payments of principal and interest on such Notes and for all other purposes whatsoever. Therefore, neither the Company, the Trustee nor any paying agent has any direct responsibility or liability for the payment of principal or interest on the Notes to owners of beneficial interests in the Global Certificates. The Depositary has advised the Company and the Trustee that its present practice upon receipt of any payment of principal or interest is to credit immediately the accounts of the Participants with payment in amounts proportionate to their respective holdings in principal amount of beneficial interests in the Global Certificates as shown on the records of the Depositary. Payments by Participants and indirect participants to owners of beneficial interests in the Global Certificates will be governed by standing instructions and customary practices as is now the case with securities held for the accounts of customers in bearer form or registered in "street name" and will be the responsibility of such Participants or indirect participants. As long as the Notes are represented by the Global Certificates, the Depositary's nominee will be the holder of the Notes and therefore will be the only entity that can exercise a right to repayment or repurchase of the Notes. See "--Repurchase at the Option of Holders--Change of Control" and "--Repurchase at the Option of Holders--Asset Sales." Notice by Participants or indirect participants or by owners of beneficial interests in the Global Certificates held through such Participants or indirect participants of the exercise of the option to elect repayment of beneficial interest in Notes represented by the Global Certificates must be transmitted to the Depositary in accordance with its procedures on a form required by the Depositary and provided to Participants. In order to ensure that the Depositary's nominee will timely exercise a right to repayment with respect to a particular Note, the beneficial owner of such Note must instruct the broker or other Participant or indirect participant through which it holds an interest in such Note to notify the Depositary of its desire to exercise a right to repayment. Different firms have 86 different deadlines for accepting instructions from their customers and, accordingly, each beneficial owner should consult the broker or other Participant or indirect participant through which it holds an interest in a Note in order to ascertain the deadline by which such an instruction must be given in order for timely notice to be delivered to the Depositary. The Company will not be liable for any delay in delivery of notices of the exercise of the option to elect repayment. The Company will issue Notes in definitive form in exchange for the Global Certificates if, and only if, either (i) the Depositary is at any time unwilling or unable to continue as depositary and a successor depositary is not appointed by the Company within 90 days, (ii) the Company executes or delivers to the Trustee and the Notes registrar an Officers' Certificate stating that such Global Certificate shall be so exchangeable or (iii) an Event of Default has occurred and is continuing and the applicable Notes registrar has received a request from the Depositary to issue Notes in definitive form in lieu of all or a portion of the Global Certificates. In either instance, an owner of a beneficial interest in the Global Certificates will be entitled to have the applicable Notes equal in principal amount or principal amount at maturity, as the case may be, to such beneficial interest registered in its name and will be entitled to physical delivery of such Notes in definitive form. Notes so issued in definitive form will be issued in denominations of $1,000 and integral multiples thereof and will be issued in registered form only, without coupons. 87 UNDERWRITING Subject to the terms and conditions of the Underwriting Agreement (the "Underwriting Agreement") among the Company, Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), Lehman Brothers Inc. ("Lehman"), BT Securities Corporation ("BTSC") and Chase Securities Inc. ("CSI") (collectively, the "Underwriters"), the Underwriters have agreed, severally and not jointly, to purchase from the Company, and the Company has agreed to issue and sell to each of the Underwriters, the respective principal amount of Notes set forth opposite its name below, at the public offering price set forth on the cover page of this Prospectus, less the underwriting discounts and commissions:
PRINCIPAL AMOUNT OF NOTES --------------- Donaldson, Lufkin & Jenrette Securities Corporation.......................... Lehman Brothers Inc.......................................................... BT Securities Corporation.................................................... Chase Securities Inc......................................................... Total.................................................................. --------------- $ 240,000,000 --------------- ---------------
The Underwriting Agreement provides that the obligations of the several Underwriters are subject to the approval of certain legal matters by counsel and to certain other conditions precedent. The nature of the Underwriters' obligations under the Underwriting Agreement is such that they are committed to purchase all of the Notes if any of Notes are purchased. The Underwriters have advised the Company that they propose to offer the Notes directly to the public initially at the offering price set forth on the cover page of this Prospectus and to certain dealers at such price less a concession not in excess of % of the principal amount of the Notes. The Underwriters may allow, and such dealers may reallow, a concession to certain other dealers not in excess of % of the principal amount of the Notes. After the initial public offering of the Notes, the public offering price, concession and reallowance may be changed by the Underwriters at any time without notice. The Underwriters have informed the Company that they will not confirm sales to any accounts over which they exercise discretionary authority without prior written approval of such transactions by the customer. There is currently no public market for the Notes, and the Company has no present plan to list any of the Notes on a national securities exchange or to include any of the Notes for quotation through an inter-dealer quotation system. The Underwriters have advised the Company they currently intend to make a market in the Notes. However, the Underwriters are not obligated to do so and may discontinue any such market-making at any time without notice in their sole discretion. Accordingly, there can be no assurance that an active public market will develop for, or as to the liquidity of, the Notes. See "Risk Factors--Lack of Prior Market for the Notes." In connection with the Offering, the Underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of the Notes. Specifically, the Underwriters may overallot the Offering, creating a short position. The Underwriters may bid for and purchase Notes in the open market to cover short positions. In addition, the Underwriters may bid for and purchase Notes in the open market to stabilize the price of the Notes. These activities may stabilize or maintain the market price of the Notes above independent market levels. The Underwriters are not required to engage in these activities, and may end these activities at any time. Certain of the Underwriters or their affiliates have from time to time provided investment banking and financial advisory services to KKR and its affiliates and/or the Company in the ordinary course of business, for which they have received customary fees, and they may continue to provide such services to 88 KKR and its affiliates and/or the Company in the future. DLJ has acted as financial advisor for NXS Acquisition and Lehman has acted as a financial advisor to the Company in connection with the Merger and DLJ and Lehman have acted as Dealer Managers and Solicitation Agents for the Company in connection with the Debt Tender Offer. BTSC is an affiliate of BTCo. which will be administrative agent and a lender to the Company under the Credit Facilities, and CSI is an affiliate of Chase which will be syndication agent and a lender to the Company under the Credit Facilities. In addition, affiliates of BTSC and CSI are limited partners of certain limited partnerships organized by KKR. Furthermore, Chase and BTCo. are lenders under the Existing Revolving Credit Facility being repaid with the proceeds of the Offering. The Company has agreed to indemnify the Underwriters and certain persons controlling the Underwriters against certain liabilities and expenses in connection with the offer and sale by the Company of the Notes, including liabilities under the Securities Act, and to contribute to payments the Underwriters are required to make in respect thereof. LEGAL MATTERS Certain legal matters will be passed upon for the Company by Edward C. Wetmore, Secretary and General Counsel of the Company, Winthrop, Stimson, Putnam & Roberts, New York, New York, special counsel to the Company, and by Simpson Thacher & Bartlett (a partnership which includes professional corporations), New York, New York, special counsel to the Company. Certain legal matters relating to the Offering will be passed upon for the Underwriters by Latham & Watkins, New York, New York. EXPERTS The financial statements as of December 31, 1996 and 1995 and for each of the three years in the period ended December 31, 1996 included in this Prospectus have been so included in reliance on the report of Price Waterhouse LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting. 89 INDEX TO FINANCIAL STATEMENTS Consolidated Financial Statements Report of Independent Accountants..................................................... F-2 Consolidated Statement of Income-- Years Ended December 31, 1996, December 31, 1995 and December 31, 1994.............. F-3 Consolidated Balance Sheet--December 31, 1996 and December 31, 1995................... F-4 Consolidated Statement of Changes in Shareholders' Equity-- Years Ended December 31, 1996, December 31, 1995 and December 31, 1994.............. F-5 Consolidated Statement of Cash Flow-- Years Ended December 31, 1996, December 31, 1995 and December 31, 1994.............. F-6 Notes to Consolidated Financial Statements............................................ F-7
F-1 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Shareholders of Amphenol Corporation In our opinion, the consolidated financial statements listed in the Index appearing on page F-1 present fairly, in all material respects, the financial position of Amphenol Corporation and its subsidiaries at December 31, 1996 and 1995, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. PRICE WATERHOUSE LLP Hartford, Connecticut January 14, 1997, except as to Note 12, which is as of January 23, 1997 F-2 CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, ------------------------------------------- 1996 1995 1994 ------------- ------------- ------------- (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) Net sales........................................................... $ 776,221 $ 783,233 $ 692,651 Costs and expenses: Cost of sales, excluding depreciation and amortization............ 494,689 506,707 458,318 Depreciation and amortization expense............................. 28,808 27,795 28,099 Selling, general and administrative expense....................... 114,746 114,041 102,183 ------------- ------------- ------------- Operating income.................................................... 137,978 134,690 104,051 Interest expense.................................................... (24,617) (25,548) (30,382) Other expenses, net................................................. (3,696) (4,515) (4,160) ------------- ------------- ------------- Income before income taxes and extraordinary item................... 109,665 104,627 69,509 Provision for income taxes.......................................... (42,087) (41,769) (27,109) ------------- ------------- ------------- Net income before extraordinary item................................ 67,578 62,858 42,400 Extraordinary item: Loss on early extinguishment of debt, net of income taxes of $2,613 (Note 1)................................................. (4,087) ------------- ------------- ------------- Net income.......................................................... $ 67,578 $ 62,858 $ 38,313 ------------- ------------- ------------- ------------- ------------- ------------- Net income per share: Income before extraordinary item.................................. $ 1.45 $ 1.33 $ .91 Extraordinary loss................................................ (.09) ------------- ------------- ------------- Net income........................................................ $ 1.45 $ 1.33 $ .82 ------------- ------------- ------------- ------------- ------------- ------------- Average common shares outstanding................................... 46,649,541 47,304,180 46,611,759
See accompanying notes to consolidated financial statements. F-3 CONSOLIDATED BALANCE SHEET
DECEMBER 31, ------------------------ 1996 1995 ----------- ----------- (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) ASSETS Current Assets: Cash and short-term cash investments.................................................. $ 3,984 $ 12,028 Accounts receivable, less allowance for doubtful accounts of $1,868 and $1,758........ 64,904 67,419 Inventories: Raw materials and supplies.......................................................... 21,648 21,094 Work in process..................................................................... 92,771 79,971 Finished goods...................................................................... 38,864 33,688 ----------- ----------- 153,283 134,753 Prepaid expenses and other assets..................................................... 11,611 11,516 ----------- ----------- Total current assets................................................................ 233,782 225,716 ----------- ----------- Land and depreciable assets: Land.................................................................................. 11,090 11,143 Buildings............................................................................. 65,379 64,452 Machinery and equipment............................................................... 188,716 169,624 ----------- ----------- 265,185 245,219 Less accumulated depreciation......................................................... (163,110) (150,560) ----------- ----------- 102,075 94,659 Deferred debt issuance costs............................................................ 3,717 4,332 Excess of cost over fair value of net assets acquired................................... 346,583 342,624 Other assets............................................................................ 24,505 22,593 ----------- ----------- $ 710,662 $ 689,924 ----------- ----------- ----------- ----------- LIABILITIES & SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable...................................................................... $ 49,484 $ 51,684 Accrued interest...................................................................... 2,481 2,701 Accrued salaries, wages and employee benefits......................................... 12,671 11,972 Other accrued expenses................................................................ 24,523 35,376 Current portion of long-term debt..................................................... 7,759 2,670 ----------- ----------- Total current liabilities........................................................... 96,918 104,403 ----------- ----------- Long-term debt.......................................................................... 219,484 195,195 Deferred taxes and other liabilities.................................................... 18,696 18,755 Accrued pension and post employment benefit obligations................................. 15,016 27,486 Commitments and contingent liabilities (Notes 2, 6 and 9) Shareholders' Equity: Class A Common Stock, $.001 par value; 96,250,000 shares authorized; 44,720,287 and 47,320,382 shares outstanding at December 31, 1996 and 1995, respectively........... 47 47 Additional paid-in capital............................................................ 265,425 265,193 Accumulated earnings.................................................................. 151,634 84,056 Cumulative valuation adjustments (Note 5)............................................. (3,887) (5,211) Treasury stock, at cost, 2,625,100 shares............................................. (52,671) ----------- ----------- Total shareholders' equity.......................................................... 360,548 344,085 ----------- ----------- $ 710,662 $ 689,924 ----------- ----------- ----------- -----------
See accompanying notes to consolidated financial statements. F-4 CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
ADDITIONAL ACCUMULATED CUMULATIVE TREASURY TOTAL COMMON PAID-IN EARNINGS VALUATION STOCK SHAREHOLDERS' STOCK CAPITAL (DEFICIT) ADJUSTMENTS AT COST EQUITY ------------- ---------- ------------ ----------- ---------- ------------- (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) BALANCE DECEMBER 31, 1993.................... $ 42 $ 197,424 $ (17,115) $ (7,059) $ 173,292 Net income................................. 38,313 38,313 Translation adjustments.................... 3,786 3,786 Net proceeds from sale of 4,410,689 shares of Class A Common Stock.................. 4 66,913 66,917 Conversion of warrants..................... 1 5 6 Amortization of deferred compensation...... 66 66 Stock options exercised.................... 413 413 Appreciation in market value of marketable securities available for sale, net of tax...................................... 162 162 Minimum pension liability adjustment, net of tax................................... (4,315) (4,315) --- ---------- ------------ ----------- ---------- ------------- BALANCE DECEMBER 31, 1994.................... 47 264,821 21,198 (7,426) 278,640 Net income................................. 62,858 62,858 Translation adjustments.................... 2,246 2,246 Amortization of deferred compensation...... 384 384 Stock options exercised and vesting of restricted stock, net of tax............. (12) (12) Decline in market value of marketable securities available for sale, net of tax...................................... (1,194) (1,194) Minimum pension liability adjustment, net of tax................................... 1,163 1,163 --- ---------- ------------ ----------- ---------- ------------- BALANCE DECEMBER 31, 1995.................... 47 265,193 84,056 (5,211) 344,085 Net income................................. 67,578 67,578 Translation adjustments.................... 647 647 Purchase of Treasury Stock................. (52,671) (52,671) Amortization of deferred compensation...... 65 65 Stock options exercised.................... 167 167 Decline in market value of marketable securities available for sale, net of tax...................................... (1,085) (1,085) Minimum pension liability adjustment, net of tax................................... 1,762 1,762 --- ---------- ------------ ----------- ---------- ------------- BALANCE DECEMBER 31, 1996.................... $ 47 $ 265,425 $ 151,634 $ (3,887) $ (52,671) $ 360,548 --- ---------- ------------ ----------- ---------- ------------- --- ---------- ------------ ----------- ---------- -------------
See accompanying notes to consolidated financial statements. F-5 CONSOLIDATED STATEMENT OF CASH FLOW
YEAR ENDED DECEMBER 31, ---------------------------------- 1996 1995 1994 ---------- ---------- ---------- (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) Net income.................................................................... $ 67,578 $ 62,858 $ 38,313 Adjustments for cash from operations: Depreciation and amortization............................................... 28,808 27,795 28,099 Amortization of deferred debt issuance costs................................ 691 652 674 Net extraordinary charge for write off of deferred debt issuance costs...... 4,087 Net change in: Accounts receivable......................................................... 7,315 (6,954) (14,236) Inventory................................................................... (10,801) (1,790) 13,483 Prepaid expenses and other assets........................................... 604 90 2,152 Accounts payable............................................................ (3,411) 4,121 4,282 Accrued liabilities......................................................... (13,832) 831 11,352 Accrued pension and post employment benefits................................ (7,590) (2,483) (1,492) Deferred taxes and other liabilities........................................ (970) (5,443) 824 Other....................................................................... (185) (450) 1,333 ---------- ---------- ---------- Cash provided by operations................................................... 68,207 79,227 88,871 ---------- ---------- ---------- Cash flow from investing activities: Additions to property, plant and equipment.................................. (20,374) (20,381) (10,936) Net investment in acquisitions and joint ventures........................... (29,461) (1,234) Other....................................................................... (1,030) (1,290) ---------- ---------- ---------- Cash flow used by investing activities........................................ (49,835) (21,411) (13,460) ---------- ---------- ---------- Cash flow from financing activities: Decrease in long-term debt.................................................. (45,368) (97,972) Net increase (decrease) in borrowings under revolving credit facilities..... 26,255 (5,002) (47,659) Net proceeds from issuance of common stock.................................. 66,917 Net proceeds from the sale of accounts receivable........................... 5,000 Treasury stock repurchases.................................................. (52,671) ---------- ---------- ---------- Cash flow used by financing activities........................................ (26,416) (50,370) (73,714) ---------- ---------- ---------- Net change in cash and short-term cash investments............................ (8,044) 7,446 1,697 Cash and short-term cash investments balance, beginning of period............. 12,028 4,582 2,885 ---------- ---------- ---------- Cash and short-term cash investments balance, end of period................... $ 3,984 $ 12,028 $ 4,582 ---------- ---------- ---------- ---------- ---------- ---------- Cash paid during the year for: Interest.................................................................... $ 24,180 $ 25,109 $ 30,139 Income taxes paid, net of refunds........................................... 54,765 37,606 15,624
See accompanying notes to consolidated financial statements. F-6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES OPERATIONS Amphenol Corporation ("Amphenol" or the "Company") is in one business segment which consists of designing, manufacturing and marketing connectors, cable and interconnect systems, principally for telephone, wireless and data communication systems; cable television; commercial and military aerospace electronics equipment; automotive and mass transportation applications; and industrial factory automation equipment. USE OF ESTIMATES The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. PRINCIPLES OF CONSOLIDATION AND INVESTMENTS The consolidated financial statements include the accounts of the Company and its subsidiaries. Other assets includes an investment in equity securities deemed available-for-sale. Such investment is recorded at its market value at December 31, 1996 of $8,187 ($9,857 at December 31, 1995), and the cumulative appreciation in market value over the cost basis of the investment, net of deferred tax, of $3,687 ($4,772 at December 31, 1995) is recorded as a component of shareholders' equity. CASH AND SHORT-TERM CASH INVESTMENTS Cash and short-term cash investments consist of cash and liquid investments with a maturity of less than three months. INVENTORIES Inventories are stated at the lower of standard cost, which approximates average cost, or market. The principal components of cost included in inventories are materials, direct labor and manufacturing overhead. DEPRECIABLE ASSETS Property, plant and equipment are carried at cost. Depreciation and amortization of property, plant and equipment are provided on a straight-line basis over the respective asset lives determined on a composite basis by asset group or on a specific item basis using the estimated useful lives of such assets which range from 3 to 12 years for machinery and equipment and 20 to 40 years for buildings. It is the Company's policy to periodically review fixed asset lives. DEFERRED DEBT ISSUANCE COSTS Deferred debt issuance costs are being amortized on the interest method over the term of the related debt and such amortization is included in interest expense. In 1994, in conjunction with the prepayment of F-7 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) certain bank debt, the Company incurred an extraordinary net charge of approximately $4,087 for the write off of deferred debt issuance costs. EXCESS OF COST OVER FAIR VALUE OF NET ASSETS ACQUIRED The excess of cost over the fair value of net assets acquired (goodwill) is being amortized on the straight-line basis over a period of 40 years. Accumulated amortization was $85,657 and $74,695 at December 31, 1996 and 1995, respectively. Management continually reassesses the appropriateness of both the carrying value and remaining life of goodwill. Such reassessments are based on forecasting cash flows, on an undiscounted basis, and other factors. In the event an impairment is indicated, the amount of the impairment would be based on estimated discounted cash flows. REVENUE RECOGNITION Sales and related cost of sales are recognized upon shipment of products. Sales and related cost of sales under long-term contracts with commercial customers and the U.S. Government are recognized as units are delivered or services provided. RETIREMENT PENSION PLANS Costs for retirement pension plans include current service costs and amortization of prior service costs over periods of up to thirty years. It is the Company's policy to fund current pension costs in conformance with minimum funding requirements and maximum tax deductible limitations. The expense of retiree medical benefit programs is recognized during the employees' service with the Company as well as amortization of a transition obligation recognized on adoption of the accounting principle in 1993. INCOME TAXES Deferred income taxes are provided for revenue and expenses which are recognized in different periods for income tax and financial statement purposes. Deferred income taxes are not provided on undistributed earnings of foreign affiliated companies which are considered to be permanently invested. RESEARCH AND DEVELOPMENT Research, development and engineering expenditures for the creation and application of new and improved products and processes were $14,550, $15,740 and $14,261, excluding customer sponsored programs representing expenditures of $927, $1,272 and $831, for the years 1996, 1995 and 1994, respectively. ENVIRONMENTAL OBLIGATIONS The Company recognizes the potential cost for environmental remediation activities when assessments are made, remedial efforts are probable and related amounts can be reasonably estimated; potential insurance reimbursements are not recorded. The Company regularly assesses its environmental liabilities through reviews of contractual commitments, site assessments, feasibility studies and formal remedial design and action plans. F-8 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) NET INCOME PER SHARE Net income per share is based on the net income for the period divided by the weighted average common shares outstanding. DERIVATIVE FINANCIAL INSTRUMENTS Derivative financial instruments, which are periodically used by the Company in the management of its interest rate and foreign currency exposures, are accounted for on an accrual basis. Income and expense are recorded in the same category as that arising for the related asset or liability. For example, amounts to be paid or received under interest rate swap agreements are recognized as interest income or expense in the periods in which they accrue. NOTE 2--LONG-TERM DEBT Long-term debt consists of the following:
DECEMBER 31, INTEREST RATE AT ------------------------ DECEMBER 31, 1996 MATURITY 1996 1995 ----------------- ----------- ---------- ------------ Senior notes.......................................... 10.45% 1999-2001 $ 100,000 $ 100,000 Senior subordinated debentures........................ 12.75% 2002 95,000 95,000 Revolving credit facility............................. 6.0% 2000 24,000 Notes payable to foreign banks........................ 1.62-9.25% 1997-2000 8,243 2,865 ---------- ------------ 227,243 197,865 Less current portion.................................. 7,759 2,670 ---------- ------------ Total long-term debt.................................. $ 219,484 $ 195,195 ---------- ------------ ---------- ------------
On November 30, 1995, the Company entered into a $150,000 five year unsecured revolving credit agreement with a group of banks. Interest on borrowings under the credit agreement generally accrues at 0.275% over LIBOR or, at the Company's option, at the bank's base rate; in addition, the Company pays a facility fee. The credit agreement requires the Company to meet certain financial tests including minimum net worth, interest coverage and leverage ratios. In addition, the agreement includes limitations with respect to secured borrowings and restricted payments, including dividends on the Company's common stock. The Senior Notes are unsecured and subject to redemption at the option of the Company at any time, in whole or in part, at par plus a make-whole premium determined in relation to the current interest rate on U.S. Government securities at the time of an optional redemption. The Senior Subordinated Debentures are subject to redemption at the option of the Company, in whole or in part, beginning in 1997 at 104.8% and declining to 100% by 2000. The maturity of the Company's long-term debt over each of the next five years ending December 31, is as follows: 1997--$7,759; 1998--$206; 1999--$33,576; 2000--$33,368; and 2001--$33,334. F-9 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) NOTE 3--INCOME TAXES The components of income before income taxes and the provision (benefit) for income taxes are as follows:
YEAR ENDED DECEMBER 31, --------------------------------- 1996 1995 1994 ---------- ---------- --------- Income before taxes and extraordinary item: United States................................................................ $ 67,889 $ 69,694 $ 47,402 Foreign...................................................................... 41,776 34,933 22,107 ---------- ---------- --------- $ 109,665 $ 104,627 $ 69,509 ---------- ---------- --------- ---------- ---------- --------- Current provision: United States................................................................ $ 24,174 $ 18,045 $ 25,771 Foreign...................................................................... 15,993 16,144 3,000 ---------- ---------- --------- 40,167 34,189 28,771 ---------- ---------- --------- ---------- ---------- --------- Deferred provision (benefit): United States................................................................ 1,884 7,122 (1,103) Foreign...................................................................... 36 458 (559) ---------- ---------- --------- 1,920 7,580 (1,662) ---------- ---------- --------- Total provision for income taxes............................................... $ 42,087 $ 41,769 $ 27,109 ---------- ---------- --------- ---------- ---------- ---------
At December 31, 1996, the Company had $15,009 of foreign tax loss carryforwards, of which $2,100 expires at various dates through 2001 and the balance can be carried forward indefinitely, and $380 of tax credit carryforwards that expire in various periods from 1997 to 1999. Accrued income tax liabilities of $11,352 and $24,632 at December 31, 1996 and 1995, respectively, are included in other accrued expenses on the Consolidated Balance Sheet. Differences between the U.S. statutory federal tax rate and the Company's effective income tax rate are analyzed below:
YEAR ENDED DECEMBER 31, ------------------------------- 1996 1995 1994 --------- --------- --------- U.S. statutory federal tax rate...................................................... 35.0% 35.0% 35.0% State and local taxes................................................................ 1.5 1.2 1.8 Non-deductible purchase accounting differences....................................... 3.7 3.6 5.4 Foreign tax provisions at rates different from the U.S. statutory rate............... .5 4.8 .7 Tax cost (benefit) of foreign dividend income, net of related tax credits............ (2.6) (2.8) .2 Valuation allowance.................................................................. (4.1) (1.8) (5.3) Other................................................................................ 4.4 (.1) 1.2 --- --- --- Effective tax rate................................................................... 38.4% 39.9% 39.0% --- --- --- --- --- ---
F-10 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) NOTE 3--INCOME TAXES (CONTINUED) The Company's deferred tax assets and liabilities, prior to valuation allowance, were comprised of the following:
DECEMBER 31, -------------------- 1996 1995 --------- --------- Deferred tax assets: Accrued liabilities and reserves...................................... $ 6,359 $ 9,190 Operating loss carryforwards.......................................... 4,447 5,663 Foreign tax credit carryforwards...................................... 380 1,558 Employee benefits..................................................... 6,459 8,499 --------- --------- $ 17,645 $ 24,910 --------- --------- --------- --------- Deferred tax liabilities: Depreciation.......................................................... $ 9,351 $ 10,262 Marketable securities................................................. 1,985 2,570 Prepaid pension costs................................................. 4,930 3,510 --------- --------- $ 16,266 $ 16,342 --------- --------- --------- ---------
A valuation allowance of $8,184 and $12,628 at December 31, 1996 and 1995, respectively, has been recorded which relates primarily to foreign net operating loss carryforwards, foreign tax credits and certain deferred tax deductions for which a tax benefit is less likely than not to be received. The net change in the valuation allowance for deferred tax assets was a decrease of $4,444 in 1996 and $1,842 in 1995 and reduced income tax expenses each year. The net decrease in the valuation allowance related primarily to benefits arising from utilization of foreign net operating losses and foreign tax credit carryforwards in 1996 and 1995. Changes to certain deferred tax deductions resulted in an increase to the valuation allowance for 1995 and a decrease for 1996. Current and non-current deferred tax assets and liabilities within the same tax jurisdiction are offset for presentation in the consolidated balance sheet. United States income taxes have not been provided on undistributed earnings of international subsidiaries. The Company's intention is to reinvest these earnings permanently or to repatriate the earnings only when it is tax effective to do so. Accordingly, the Company believes that any United States tax on repatriated earnings would be substantially offset by U.S. foreign tax credits. NOTE 4--BENEFIT PLANS AND OTHER POSTRETIREMENT BENEFITS The Company and its domestic subsidiaries have a number of defined benefit plans covering substantially all U.S. employees. Plan benefits are generally based on years of service and compensation. The plans are noncontributory, except for certain salaried employees. Certain foreign subsidiaries have F-11 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) NOTE 4--BENEFIT PLANS AND OTHER POSTRETIREMENT BENEFITS (CONTINUED) defined benefit plans covering their employees. The following is a summary of the defined benefit plans' funded status as of the most recent actuarial valuations (December 31, 1996 and 1995).
DECEMBER 31, 1996 DECEMBER 31, 1995 -------------------------- -------------------------- ACCUMULATED ASSETS ACCUMULATED ASSETS BENEFITS EXCEED BENEFITS EXCEED EXCEED ACCUMULATED EXCEED ACCUMULATED ASSETS BENEFITS ASSETS BENEFITS ------------ ------------ ------------ ------------ Actuarial present value of benefit obligations: Vested benefit obligation................................. $ 72,983 $ 102,685 $ 145,750 $ 26,595 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ Accumulated benefit obligation............................ $ 74,319 $ 104,576 $ 147,390 $ 26,802 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ Projected benefit obligation.............................. $ 76,959 $ 112,777 $ 156,824 $ 28,316 Plan assets at fair value................................. 42,637 136,202 114,485 39,366 ------------ ------------ ------------ ------------ Plan assets over (under) projected benefit obligation..... (34,322) 23,425 (42,339) 11,050 Unrecognized net loss (gain).............................. 11,625 (2,994) 22,986 (2,365) Unrecognized prior service cost........................... 4,116 1,351 6,214 (154) Unrecognized transition asset............................. 241 (3,350) (11) (2,236) ------------ ------------ ------------ ------------ Pension asset (liability) included in the Consolidated Balance Sheet........................................... $ (18,340) $ 18,432 $ (13,150) $ 6,295 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
YEAR ENDED DECEMBER 31, ------------------------------- 1996 1995 1994 --------- --------- --------- Net pension expense included the following components: Service cost benefits earned.................................................... $ 3,551 $ 3,221 $ 3,163 Interest cost on projected benefit obligation................................... 13,707 13,313 12,508 Actual return on plan assets.................................................... (16,193) (33,906) 4,664 Net amortization and deferral of actuarial (gains) losses....................... 1,321 20,045 (17,862) --------- --------- --------- Net pension expense............................................................... $ 2,386 $ 2,673 $ 2,473 --------- --------- --------- --------- --------- ---------
The weighted-average discount rate and rate of increase in future compensation levels used in determining actuarial present value of the projected benefit obligation was 7.5% (7.5% in 1995 and 8.5% in 1994) and 3.50% (3.50% in 1995 and 4.50% in 1994), respectively. The expected long-term rate of return on assets was 10.5%. Plan assets consist primarily of U.S. equity and debt securities. The largest non-U.S. plan, in accordance with local custom, is unfunded and had an accumulated benefit obligation of approximately $20,485 and $20,761 at December 31, 1996 and 1995, respectively. Such obligation is included in the consolidated balance sheet and the tables above. Pension plans of certain of the Company's other international subsidiaries generally do not determine the actuarial value of accumulated benefits and the value of net assets on the basis shown above. The plans, in accordance with local practices, are generally unfunded. The vested benefit obligations of these plans are not significant. In accordance with the provisions of FAS No. 87, the Company recorded a minimum pension liability at December 31, 1996 of 13,572 ($15,558 at December 31, 1995) for circumstances in which a pension F-12 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) NOTE 4--BENEFIT PLANS AND OTHER POSTRETIREMENT BENEFITS (CONTINUED) plan's accumulated benefit obligation exceeded the fair value of the plan's assets and accrued pension liability. Such liability was partially offset by an intangible asset equal to the unrecognized prior service cost, with the balance recorded as a reduction in shareholders' equity, net of related deferred tax benefits. The Company maintains self insurance programs for that portion of its health care and workers compensation costs not covered by insurance. The Company also provides certain health care and life insurance benefits to certain eligible retirees through postretirement benefit programs. Beginning in late 1996, the Company implemented changes in its postretirement medical benefit plans such that the Company's share of the cost of such plans for most participants is fixed, and any increase in the cost of such plans will be the responsibility of the retirees. The cost of postretirement health care and life insurance benefit programs charged to expense was approximately $2,734, $2,088, and $1,831 for the years 1996, 1995 and 1994, respectively. The Company expects to fund the benefit costs principally on a pay-as-you-go basis. Since the Company has modified its postretirement medical plans to hold constant its obligation and since the accumulated postretirement benefit obligation ("APBO") and the net postretirement benefit expense are not material in relation to the Company's financial condition or results of operations, management believes any change in medical costs from that estimated will not have a significant impact on the Company. The discount rate used in determining the APBO at December 31, 1996 and 1995 was 7.5%. Summary information on the Company's postretirement medical plans as of December 31, 1996 and 1995 is as follows:
DECEMBER 31, -------------------- 1996 1995 --------- --------- Accumulated postretirement benefit obligation: Retirees.............................................................. $ 10,710 $ 15,486 Fully eligible, active plan participants.............................. 1,236 832 Other active participants............................................. 1,156 825 --------- --------- Postretirement benefit obligation..................................... 13,102 17,143 Unrecognized gain (loss).............................................. (6,815) (2,891) Unrecognized transition obligation.................................... (933) (7,134) --------- --------- Postretirement benefit liability included in the balance sheet........ $ 5,354 $ 7,118 --------- --------- --------- --------- Components of net postretirement benefit expense are as follows: Service cost.......................................................... $ 36 $ 26 Interest cost......................................................... 1,545 1,535 Amortization of transition obligation................................. 424 424 Net amortization and deferral of actuarial (gains) losses............. 729 103 --------- --------- Net postretirement benefit expense.................................... $ 2,734 $ 2,088 --------- --------- --------- ---------
NOTE 5--SHAREHOLDERS' EQUITY The Company has entered into a Stockholders' Agreement with Lawrence J. DeGeorge, Chairman. The Agreement provides that if Mr. DeGeorge, together with his estate and his spouse, own at least 25% F-13 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) NOTE 5--SHAREHOLDERS' EQUITY (CONTINUED) of the Company's outstanding common stock, the Company will agree to nominate directors designated by Mr. DeGeorge, his estate or his spouse that represent up to 25% of the Board of Directors (but in no event fewer than two directors). If Mr. DeGeorge, together with his estate and his spouse, own less than 25% but at least 10% of the Company's outstanding common stock, the Company will agree to nominate that number of directors designated by Mr. DeGeorge, his estate or his spouse, that represent not less than 10% of the Board of Directors (but in no event fewer than one director). The Agreement also provides for certain registration rights in respect of common stock owned by Mr. DeGeorge. At December 31, 1996, Mr. DeGeorge, his estate and his spouse beneficially owned approximately 25.2% of the Company's common stock on a fully diluted basis. The Company has authorized 3,750,000 shares of Class B Common Stock, par value $.001. Such shares are equivalent to Class A Common Stock except the Class B shares are non-voting. There are no Class B shares outstanding. The Company has adopted a stock option plan which, as amended in 1996, authorized the granting of stock options by the Board of Directors for up to a maximum of 1,000,000 shares of Class A Common Stock. Options will be granted at fair market value at the time of the grant. Options granted under the Stock Option Plan may constitute incentive stock options (within the meaning of Section 422A of the Internal Revenue Code of 1986) or nonstatutory stock options. Such shares vest ratably over a period of three years from date of grant and are exercisable over a period of ten years from date of grant. At December 31, 1996 and 1995, 157,841 and 82,343 options were exercisable, respectively. Stock option plan activity for 1994, 1995, and 1996 was as follows:
OPTIONS AVERAGE PRICE --------- ------------- OPTIONS OUTSTANDING AT DECEMBER 31, 1993............................ 202,667 $ 8.94 Options granted..................................................... 155,000 15.53 Options exercised................................................... (47,787) 8.65 Options cancelled................................................... (38,499) 11.66 --------- OPTIONS OUTSTANDING AT DECEMBER 31, 1994............................ 271,381 12.36 Options granted..................................................... 155,500 26.32 Options exercised................................................... (54,705) 11.40 Options cancelled................................................... (58,332) 18.56 --------- OPTIONS OUTSTANDING AT DECEMBER 31, 1995............................ 313,844 18.48 Options granted..................................................... 173,600 23.82 Options exercised................................................... (15,005) 11.11 Options cancelled................................................... (49,001) 21.53 --------- OPTIONS OUTSTANDING AT DECEMBER 31, 1996............................ 423,438 $ 20.58 --------- ---------
F-14 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) NOTE 5--SHAREHOLDERS' EQUITY (CONTINUED) The following table summarizes information about stock options outstanding at December 31, 1996:
OPTIONS OUTSTANDING OPTIONS EXERCISABLE --------------------------------- -------------------- AVERAGE AVERAGE EXERCISE PRICE SHARES PRICE TERM SHARES PRICE - --------------------- --------- --------- ----- --------- --------- $ 5.00-- $ 10.00 64,003 $ 9.14 5.93 64,003 $ 9.14 10.01-- 15.00 -- -- -- -- -- 15.01-- 20.00 91,335 $ 15.59 7.25 56,838 $ 15.50 20.01-- 25.00 158,100 $ 23.88 9.25 333 $ 25.00 25.01-- 30.00 110,000 $ 26.63 8.25 36,667 $ 26.63
The Company applies APB Opinion 25, "Accounting for Stock Issued to Employees," and related interpretations in accounting for the stock option plan. Accordingly, no compensation cost has been recognized for the plan. Had compensation cost for the stock option plan been determined based on the fair value of the option at date of grant consistent with the requirements of Statement of Financial Accounting Standards No 123, "Accounting for Stock-Based Compensation," the Company's net income and earnings per share would have been reduced to the pro forma amounts indicated below:
1996 1995 --------- --------- Net income As reported........................................................... $ 67,578 $ 62,858 Pro forma............................................................. 66,884 62,366 Net income per share As reported........................................................... $ 1.45 $ 1.33 Pro forma............................................................. 1.43 1.32
The fair value of each stock option has been estimated at the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:
1996 1995 --------- --------- Risk free interest rate............................................... 6.1% 6.6% Expected life......................................................... 4 years 4 years Expected volatility................................................... 30.0% 30.0% Expected dividend yield............................................... -- --
The weighted-average fair values of options granted during 1996 and 1995 were $7.98 and $9.14, respectively. F-15 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) NOTE 5--SHAREHOLDERS' EQUITY (CONTINUED) Activity in the Company's Shareholders' Equity cumulative valuation adjustment accounts for 1994, 1995 and 1996 is as follows:
CUMULATIVE CUMULATIVE MINIMUM TOTAL CUMULATIVE APPRECIATION PENSION CUMULATIVE TRANSLATION IN MARKETABLE LIABILITY VALUATION ADJUSTMENT SECURITIES ADJUSTMENT ADJUSTMENT ----------- ------------- ----------- ----------- Balance December 31, 1993................................... $ (8,444) $ 5,804 $ (4,419) $ (7,059) Translation adjustments................................... 3,786 3,786 Change in appreciation in market value of marketable securities available-for-sale........................... 162 162 Change in minimum pension liability adjustment............ (4,315) (4,315) ----------- ------ ----------- ----------- Balance December 31, 1994................................... (4,658) 5,966 (8,734) (7,426) Translation adjustments................................... 2,246 2,246 Change in appreciation in market value of marketable securities available-for-sale........................... (1,194) (1,194) Change in minimum pension liability adjustment............ 1,163 1,163 ----------- ------ ----------- ----------- Balance December 31, 1995................................... (2,412) 4,772 (7,571) (5,211) Translation adjustments................................... 647 647 Change in appreciation in market value of marketable securities available-for-sale........................... (1,085) (1,085) Change in minimum pension liability adjustment............ 1,762 1,762 ----------- ------ ----------- ----------- Balance December 31, 1996................................... $ (1,765) $ 3,687 $ (5,809) $ (3,887) ----------- ------ ----------- ----------- ----------- ------ ----------- -----------
NOTE 6--LEASES At December 31, 1996, the Company was committed under operating leases which expire at various dates through 2004. Total rent expense under operating leases for the years 1996, 1995, and 1994 was $12,216, $11,594 and $10,108, respectively. MINIMUM LEASE PAYMENTS UNDER NON-CANCELABLE OPERATING LEASES ARE AS FOLLOWS: 1997............................................................... $ 7,249 1998............................................................... 5,974 1999............................................................... 3,849 2000............................................................... 2,851 2001............................................................... 2,002 Beyond 2001........................................................ 2,915 --------- Total minimum obligation..................................... $ 24,840 --------- ---------
F-16 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) NOTE 7--INTERNATIONAL OPERATIONS A portion of the Company's revenues and assets relate to international operations. The Company has manufacturing facilities in Germany, the United Kingdom, France, Canada, Taiwan and Hong Kong and operations of lesser size in a number of other countries. Amounts included in the accompanying consolidated financial statements associated with operations outside the United States consist of the following:
YEAR ENDED DECEMBER 31, ---------------------------------- 1996 1995 1994 ---------- ---------- ---------- Net sales: United States operations................................................... $ 503,385 $ 534,322 $ 494,299 International operations: Europe................................................................. 233,670 217,143 177,549 Other.................................................................. 92,689 78,442 59,744 Eliminations............................................................... (53,523) (46,674) (38,941) ---------- ---------- ---------- Net sales............................................................ $ 776,221 $ 783,233 $ 692,651 ---------- ---------- ---------- ---------- ---------- ---------- Net income before extraordinary item: United States operations................................................... $ 42,614 $ 46,493 $ 25,505 International operations: Europe................................................................. 21,954 16,266 16,679 Other.................................................................. 3,010 99 216 ---------- ---------- ---------- Net income before extraordinary item................................. $ 67,578 $ 62,858 $ 42,400 ---------- ---------- ---------- ---------- ---------- ---------- Identifiable assets: United States operations................................................... $ 473,889 $ 458,313 $ 470,209 International operations: Europe................................................................. 172,640 170,319 155,833 Other.................................................................. 75,560 73,406 65,682 Eliminations............................................................... (11,427) (12,114) (14,669) ---------- ---------- ---------- Total assets......................................................... $ 710,662 $ 689,924 $ 677,055 ---------- ---------- ---------- ---------- ---------- ----------
- ------------------------ Note: Corporate net income (loss) and assets are included in United States operations. The Company had export sales from its United States operations of approximately $80,000, $118,000 and $93,000 in 1996, 1995 and 1994, respectively. The sales were made principally to Asia and the Far East, Europe and Latin America. Pursuant to FAS No. 52, "Foreign Currency Translation," the financial position and results of operations of all of the Company's significant foreign subsidiaries are measured using local currency as the functional currency. Assets and liabilities of such subsidiaries have been translated at current exchange rates, and related revenues and expenses have been translated at weighted average exchange rates. The aggregate effect of translation adjustments so calculated is included as a separate component of shareholders' equity. Transaction gains and losses are included in other expenses, net. The Company periodically enters into foreign exchange contracts to hedge its transaction exposures. At December 31, 1996, the Company had no outstanding foreign exchange contracts. F-17 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) NOTE 8--OTHER EXPENSES, NET Other income (expense) is comprised as follows:
YEAR ENDED DECEMBER 31, ------------------------------- 1996 1995 1994 --------- --------- --------- Royalty income (expense).......................................................... $ 108 $ (59) $ 92 Interest income................................................................... 784 134 66 Foreign currency transaction gains (losses)....................................... 339 205 (357) Equity in net earnings (losses) of investments.................................... (60) 272 Gain (loss) on sale of assets..................................................... (28) 262 (18) Program fees on sale of accounts receivable....................................... (3,504) (3,902) (3,180) Minority interests................................................................ (251) (407) (105) Other............................................................................. (1,144) (688) (930) --------- --------- --------- $ (3,696) $ (4,515) $ (4,160) --------- --------- --------- --------- --------- ---------
NOTE 9--COMMITMENTS AND CONTINGENCIES In the course of pursuing its normal business activities, the Company is involved in various legal proceedings and claims. Management does not expect that amounts, if any, which may be required to be paid by reason of such proceedings or claims will have a material effect on the Company's financial position or results of operations. Subsequent to the acquisition of Amphenol from Allied Signal Corporation ("Allied") in 1987, Amphenol and Allied have been named jointly and severally liable as potentially responsible parties in relation to several environmental cleanup sites. Amphenol and Allied have jointly consented to perform certain investigations and remedial and monitoring activities at two sites and they have been jointly ordered to perform work at another site. The responsibility for costs incurred relating to these sites is apportioned between Amphenol and Allied based on an agreement entered into in connection with the acquisition. For sites covered by this agreement, to the extent that conditions or circumstances occurred or existed at the time of or prior to the acquisition, the first $13.0 million of costs are borne by Amphenol and have been incurred as of December 31, 1996. Allied is obligated to pay 80% of the excess over $13,000 and 100% of the excess over $30,000. Management does not believe that the costs associated with resolution of these or any other environmental matters will have a material adverse effect on the Company's financial position or results of operations. In December 1993, a subsidiary of the Company entered into a four year agreement with a financial institution whereby the subsidiary would sell an undivided interest of up to $50,000 in a designated pool of qualified accounts receivable. Under the terms of the agreement, new receivables are added to the pool as collections reduce previously sold accounts receivable. The Company services, administers and collects the receivables on behalf of the purchaser. Fees payable to the purchaser under this agreement are equivalent to rates afforded high quality commercial paper issuers plus certain administrative expenses and are included in other expense, net in the accompanying Consolidated Statement of Income. The agreement contains certain covenants and provides for various events of termination. In certain circumstances the Company is contingently liable for the collection of the receivables sold; management believes that its allowance for doubtful accounts will be adequate to absorb the expense of any such liability. At December 31, 1996 and 1995, approximately $50,000 in receivables were sold under the agreement and are F-18 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) NOTE 9--COMMITMENTS AND CONTINGENCIES (CONTINUED) therefore not reflected in the accounts receivable balance in the accompanying Consolidated Balance Sheet at that date. NOTE 10--FINANCIAL INSTRUMENTS The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value. CASH AND SHORT-TERM CASH INVESTMENTS: The carrying amount approximates fair value because of the short maturity of those instruments. LONG-TERM DEBT: The fair value of the Company's long-term debt is estimated based on the quoted market prices for the same or similar issues or on the current rates offered to the Company for debt of the same remaining maturities. INVESTMENTS: The fair value of investments is based upon quoted market prices. The fair value equals the carrying value of equity investments, which are classified as available-for-sale. At December 31, 1996 and 1995, based on market quotes for the same or similar securities, it is estimated that the Company's 12.75% subordinated debentures due 2002 and 10.45% senior notes due 2001 were trading at premiums of approximately 10% to 20% over book value. It is estimated that the carrying value of the Company's other financial instruments at December 31, 1996 and 1995 approximates fair value. The Company periodically uses derivative financial instruments. The instruments are primarily used to manage defined interest rate risk, and to a lesser extent foreign exchange and commodity risks arising out of the Company's core activities. During 1994, the Company had interest rate protection agreements that fixed the interest cost relating to the majority of the Company's floating rate debt. During 1995, the Company used forward contracts to hedge certain foreign currency exposures. There were no derivative financial instruments outstanding at December 31, 1996 and 1995. F-19 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) NOTE 11--SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
THREE MONTHS ENDED -------------------------------------------------- MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31 ---------- ---------- ------------ ------------ 1996 Net sales.................................................... $ 194,822 $ 198,921 $ 184,876 $ 197,602 Gross profit, including depreciation......................... 66,639 67,816 63,523 66,539 Net income................................................... 16,940 17,408 16,697 16,533 Net income per share......................................... .36 .37 .36 .37 Stock price - High........................................... 26 27 5/8 22 7/8 23 - Low............................................... 20 1/8 19 7/8 18 3/4 19 1995 Net sales.................................................... $ 197,975 $ 207,584 $ 189,012 $ 188,662 Gross profit, including depreciation......................... 63,840 67,267 64,630 64,771 Net income................................................... 14,221 16,065 16,090 16,482 Net income per share......................................... .30 .34 .34 .35 Stock price - High........................................... 27 1/2 30 3/8 29 1/2 24 1/4 - Low............................................... 20 23 3/4 21 1/2 18 3/4 1994 Net sales.................................................... $ 155,508 $ 173,565 $ 178,172 $ 185,406 Gross profit, including depreciation......................... 46,974 54,431 56,606 59,997 Net income................................................... 7,047(a) 10,620 11,705 13,028 Net income per share......................................... .16(a) .22 .25 .28 Stock price - High........................................... 18 18 1/2 24 25 1/8 - Low............................................... 14 3/8 14 1/8 16 1/4 20 7/8
- ------------------------ (a) Excludes an extraordinary charge for the write off of deferred debt issuance costs of $4,087 or $.09 per share. NOTE 12--SUBSEQUENT EVENT--PROPOSED TRANSACTION On January 23, 1997, the Company announced that it signed an Agreement and Plan of Merger ("Agreement") with an affiliate of Kohlberg Kravis Roberts & Co. L.P. ("KKR"). Upon completion of the transaction, which is expected to be consummated in April 1997, affiliates of KKR will be the majority owner of the Company. The Agreement provides that the owner of each outstanding share of Class A common stock can elect either to receive $26.00 in cash for that share or to retain that share. However, in no event can more than 4.4 million shares of common stock (approximately 10% of the currently outstanding shares) be retained by present Amphenol shareholders. If holders elect to retain more than 4.4 million of the outstanding shares, then the shares available will be prorated among those electing to retain and cash will be paid for all other shares. If holders elect to retain fewer than 4.4 million of the outstanding shares, the remaining available shares will be prorated among those electing cash. Following the merger, affiliates of KKR expect to own in excess of 75% of the Company's outstanding shares. Affiliates of KKR will invest up to $374 million of equity in the transaction. The balance of funds necessary to complete the transaction, estimated at approximately $990 million, including refinancing of the Company's existing indebtedness and obligations, will come from borrowings. F-20 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) NOTE 12--SUBSEQUENT EVENT--PROPOSED TRANSACTION (CONTINUED) Lawrence J. DeGeorge, Chairman of the Board of the Company, and certain members of his family (and a trust founded by them) who hold, in the aggregate, approximately 30% of the outstanding common stock, have agreed to vote their shares in favor of the merger. An affiliate of KKR will also have the option to call the DeGeorge family shares under certain circumstances, and following the recapitalization the DeGeorge interests will have the option to put the shares which they retain following the merger to the affiliate, in each case for $26.00 in cash per share. The merger is subject to certain conditions including the approval of the Company's shareholders at its annual meeting, the expiration of antitrust regulatory waiting periods and the completion of financing arrangements. After the merger, Amphenol will continue to operate as an independent public company under its current name with headquarters in Wallingford, Connecticut. F-21 PHOTOS FOR INSIDE BACK COVER TO PROSPECTUS AMPHENOL LOGO INNOVATIVE APPLICATION--SPECIFIC PRODUCTS HIGH PERFORMANCE ENVIRONMENTAL (AEROSPACE) CONNECTOR PRODUCTS AND EXAMPLES OF THEIR APPLICATIONS. COMMERCIAL, INDUSTRIAL AND AUTOMOTIVE CONNECTOR PRODUCTS AND EXAMPLES OF THEIR APPLICATIONS. COMMUNICATIONS--RELATED CONNECTOR PRODUCTS AND EXAMPLES OF THEIR APPLICATIONS. THE COMPANY OFFERS A BROAD RANGE OF PRODUCTS TO MEET THE SPECIFIC INTERCONNECT REQUIREMENTS OF ITS CUSTOMERS IN PRODUCING PRODUCTS SUCH AS THOSE PICTURED ABOVE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN THOSE TO WHICH IT RELATES IN ANY JURISDICTION WHERE OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THE PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. ------------------------ TABLE OF CONTENTS Available Information................. 3 Incorporation of Certain Information by Reference........................ 3 Prospectus Summary.................... 4 Risk Factors.......................... 13 The Merger............................ 20 Use of Proceeds....................... 22 Capitalization........................ 23 Pro Forma Consolidated Financial Statements (Unaudited).............. 24 Selected Historical Consolidated Financial and Other Data............ 29 Management's Discussion and Analysis of Financial Condition and Results of Operations....................... 30 Business.............................. 35 Management............................ 46 Ownership of Common Stock Following the Merger.......................... 49 Related Party Transactions............ 51 Description of Credit Facilities...... 51 Description of the Notes.............. 53 Underwriting.......................... 88 Legal Matters......................... 89 Experts............................... 89 Index to Financial Statements......... F-1
$240,000,000 AMPHENOL CORPORATION % SENIOR SUBORDINATED NOTES DUE 2007 --------------------- PROSPECTUS --------------------- JOINT BOOK-RUNNING MANAGERS DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION LEHMAN BROTHERS ------------------ CO-MANAGERS BT SECURITIES CORPORATION CHASE SECURITIES INC. , 1997 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The estimated expenses payable by the Company in connection with the offering described in this Registration Statement are as follows: Registration Fee.................................................. $ 72,728 Legal fees and expenses........................................... 300,000 Blue Sky fees and expenses........................................ 7,500 Accounting fees and expenses...................................... 50,000 Trustee fees and expenses......................................... 10,000 Printing and duplicating expenses................................. 250,000 NASD fee.......................................................... 24,500 Miscellaneous expenses............................................ 35,272 --------- Total........................................................... $ 750,000
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Section 145 of the Delaware General Corporation Law (the "DGCL") provides that a corporation may indemnify directors and officers as well as other employees and individuals against expenses (including attorneys' fees), judgments, fines, and amounts paid in settlement in connection with specified actions, suits or proceedings, whether civil, criminal, administrative, or investigative (other than action by or in the right of the corporation a "derivative action"), if they acted in good faith and in a manner they reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceedings, had no reasonable cause to believe their conduct was unlawful. A similar standard is applicable in the case of derivative actions, except that indemnification only extends to expenses (including attorneys' fees) incurred in connection with the defense or settlement of such actions, and the statute requires court approval before there can be any indemnification where the person seeking indemnification has been found liable to the corporation. The statute provides that it is not exclusive of other indemnification that may be granted by a corporation's charter, by-laws, disinterested director vote, stockholder vote, agreement or otherwise. Article VIII of the Registrant's By-laws requires indemnification to the fullest extent permitted by Delaware law. Section 102(b)(7) of the DGCL permits a corporation to provide in its certificate of incorporation that a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duties as a director, except for liability (i) for any transaction from which the director derives an improper personal benefit, (ii) for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, (iii) for improper payment of dividends or redemptions of shares, or (iv) for any breach of a director's duty of loyalty to the company or its stockholders. Article Eighth of the Registrant's Restated Certificate of Incorporation includes such a provision. ITEM 16. EXHIBITS. See Exhibit Index. II-1 ITEM 17. UNDERTAKINGS. The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the Company's annual report pursuant to section 13(a) or section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to section 15(d) of the Exchange Act) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions set forth in response to Item 15, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The undersigned registrant hereby undertakes that: (1) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. (2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial BONA FIDE offering thereof. II-2 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this amendment to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Wallingford, State of Connecticut, on April 29, 1997. AMPHENOL CORPORATION By: /s/ EDWARD G. JEPSEN --------------------------------------------- Pursuant to the requirements of the Securities Act of 1933, as amended, this amendment to the Registration Statement has been signed on April 29, 1997 by the following persons in the capacities indicated. SIGNATURE TITLE - ------------------------------ -------------------------- * - ------------------------------ Chairman of the Board Lawrence J. DeGeorge Director, Chief Financial * Officer (Principal - ------------------------------ Financial and Accounting Edward G. Jepsen Officer) * - ------------------------------ Director Martin H. Loeffler * - ------------------------------ Director Timothy F. Cohane * - ------------------------------ Director Florence A. DeGeorge * - ------------------------------ Director A. Henry Morgan * - ------------------------------ Director Dr. Marcia A. Savage *By: /s/ EDWARD C. WETMORE - ------------------------------ As Attorney in Fact II-3 EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION OF EXHIBIT - ----------- --------------------------------------------------------------------------------------------------------- *1 Form of Underwriting Agreement 2.1 Agreement and Plan of Merger dated as of January 23, 1997 between NXS Acquisition Corp. and Amphenol Corporation (incorporated by reference to Current Report on Form 8-K dated January 23, 1997 (the "Form 8-K")) 2.2 Amendment, dated as of April 9, 1997, to the Agreement and Plan of Merger between NXS Acquisition Corp. and Amphenol Corporation, dated as of January 23, 1997 (incorporated by reference to the Registration Statement on Form S-4 (Registration No. 333-25195) filed on April 15, 1997) 2.3 Stockholders Agreement (incorporated by reference to the Form 8-K) *4.1 Form of Indenture between Amphenol Corporation and IBJ Schroder Bank & Trust Company, as Trustee *4.2 Form of Senior Subordinated Note (included in Exhibit 4.1) +5 Opinion of Simpson Thacher & Bartlett +12 Computation of Ratio of Earnings to Fixed Charges +23.1 Consent of Simpson Thacher & Bartlett (included as part of its opinion filed as Exhibit 5 hereto) *23.2 Consent of Price Waterhouse LLP, independent accountants +24 Powers of Attorney +25 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of IBJ Schroder Bank & Trust Compay, as Trustee +99.1 Consent of Henry R. Kravis +99.2 Consent of George R. Roberts +99.3 Consent of Michael W. Michelson +99.4 Consent of Marc S. Lipschultz
- ------------------------ * Filed herewith + Previously filed EX-1 2 EXHIBIT 1 - FORM OF UNDERWRITING AGREEMENT Exhibit 1 $240,000,000 AMPHENOL CORPORATION ___% SENIOR SUBORDINATED NOTES DUE 2007 FORM OF UNDERWRITING AGREEMENT May __, 1997 DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION LEHMAN BROTHERS INC. BT SECURITIES CORPORATION CHASE SECURITIES INC. c/o Donaldson, Lufkin & Jenrette Securities Corporation 2121 Avenue of the Stars Los Angeles, California 90067 Ladies and Gentlemen: Amphenol Corporation, a Delaware corporation (the "Company"), proposes to issue and sell $240,000,000 in principal amount of its ___% Senior Subordinated Notes due 2007 (the "Securities") to Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), Lehman Brothers Inc. ("Lehman"), BT Securities Corporation ("BT") and Chase Securities Inc. ("CSI" and, together with DLJ, Lehman and BT, the "Underwriters"). The Securities are to be issued pursuant to the provisions of an Indenture to be dated as of May __, 1997, (the "Indenture") between the Company and IBJ Schroder Bank & Trust Company, as Trustee (the "Trustee"). It is understood by the parties hereto that (i) the Company has entered into the Agreement and Plan of Merger, dated as of January 23, 1997 (as amended as of April 9, 1997, the "Merger Agreement"), between the Company and NXS Acquisition Corp., (ii) on the Closing Date (as defined), the Company will purchase for cash, upon the terms of and subject to the Offer to Purchase and Consent Solicitation Statement, dated April 15, 1997 (as supplemented from time to time, the "Statement"), and in the accompanying Consent and Letter 1 of Transmittal ( the "Letter of Transmittal" and, together with the Statement, the "Offer to Purchase") all of its outstanding 12 3/4% Senior Subordinated Notes due 2002 (the "12 3/4% Notes") tendered by the holders thereof pursuant to the Offer to Purchase, (iii) the Company has entered into the Dealer Manager and Solicitation Agent Agreement, dated April 15, 1997, among the Company, DLJ and Lehman relating to the Offer to Purchase (the "Dealer Manager Agreement"), (iv) on or prior to the Closing Date, the Company will enter into a Supplemental Indenture with respect to the 12 3/4% Notes, (v) the Company has entered into a [Consent and Waiver Agreement] with holders of [a majority of] its outstanding 10.45% Senior Notes due 2001 (the "Senior Note Consent") and (vi) on or prior to the Closing Date the Company and the other parties thereto will enter into the Credit Facilities (as defined in the Prospectus (as defined)). [This Agreement, the Merger Agreement, the Senior Note Consent, the Credit Facilities and the Supplemental Indenture], in each case including all the transactions contemplated hereby and thereby, are referred to as the "Transaction Documents." 1. Registration Statement and Prospectus. The Company has prepared and filed with the Securities and Exchange Commission (the "Commission") in accordance with the provisions of the Securities Act of 1933, as amended, and the rules and regulations of the Commission thereunder (collectively called the "Act"), a registration statement on Form S-3 (No. 333-22521), including a prospectus relating to the Securities, which may be amended. The registration statement as amended at the time when it becomes effective, including all financial schedules and exhibits thereto and documents incorporated therein by reference and including a registration statement (if any) filed pursuant to Rule 462(b) under the Act increasing the size of the offering registered under the Act and information (if any) deemed to be part of the registration statement at the time of effectiveness pursuant to Rule 430A or Rule 434 under the Act, is hereinafter referred to as the "Registration Statement"; and the prospectus (including any prospectus subject to completion taken together with any term sheet meeting the requirements of Rule 434(b) or Rule 434(a) under the Act) in the form first used to confirm sales of Securities is hereinafter referred to as the "Prospectus," except that if any revised prospectus shall be provided to you by the Company for use in connection with the offering of the Securities as contemplated by Section 5 hereof which differs from the form of prospectus first used to confirm sales of Securities, the term "Prospectus" shall refer to such revised prospectus from and after the time it is first provided to you for such use. Any reference herein to any preliminary prospectus or the Prospectus shall be deemed to refer to and include the documents incorporated by reference therein pursuant to Item 12 of Form S-3 under the Act, as of the date of such preliminary prospectus or prospectus, as the case may be, and any reference to any amendment or supplement to any preliminary prospectus or Prospectus shall be deemed to refer to and include any documents filed after the date of such preliminary prospectus or Prospectus, as the case may be, under the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder (collectively called the "Exchange Act"), and incorporated by reference in such preliminary prospectus or Prospectus, as the case may be; and any reference to any amendment to the Registration Statement shall be deemed to refer to and include any annual report of the Company filed pursuant to Section 13(a) or 15(d) of the Exchange Act after the effective date of the Registration Statement that is incorporated by reference in the Registration Statement. 2 2. Agreements to Sell and Purchase. On the basis of the representations and warranties contained in this Agreement, and subject to its terms and conditions, (i) the Company agrees to issue and sell to each Underwriter, and each Underwriter agrees, severally and not jointly, to purchase from the Company, the principal amount of Securities set forth opposite the name of such Underwriter in Annex I hereto, at a purchase price of ___% of the principal amount thereof (the "Purchase Price"), plus accrued interest thereon, if any, from May __, 1997 to the date of payment and delivery. 3. Terms of Public Offering. The Company is advised by you that the Underwriters propose (i) to make a public offering of their respective portions of the Securities as soon after the effective date of the Registration Statement as in your judgment is advisable and (ii) initially to offer the Securities upon the terms set forth in the Prospectus. 4. Delivery and Payment. Delivery to the Underwriters of and payment for the Securities shall be made at 10:00 A.M., New York City time, on May __, 1997, (unless postponed in accordance with the provisions of Section 9) following the date of the public offering (the "Closing Date") at the offices of Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New York 10017 or at such place as you and the Company may agree in writing. The Closing Date and the location of delivery of and the form of payment for the Securities may be varied by agreement between you and the Company. Certificates for the Securities shall be registered in such names and issued in such denominations as you shall request in writing not later than two full business days prior to the Closing Date. Such certificates shall be made available to you for inspection not later than 9:30 A.M., New York City time, on the business day next preceding the Closing Date. Certificates in definitive form evidencing the Securities shall be delivered to you on the Closing Date, with any transfer taxes thereon duly paid by the Company, for the respective accounts of the several Underwriters, against payment of the Purchase Price therefor by wire transfer payable in same day funds to the order of the Company or as the Company may direct. 5. Agreements of the Company. The Company agrees with you: (a) If necessary, to (i) file (A) an amendment to the Registration Statement, (B) a post-effective amendment to the Registration Statement pursuant to Rule 430A under the Act or (C) a new or additional registration statement pursuant to Rule 462(b) or (c) under the Act, in each case, as soon as practicable after the execution and delivery of this Agreement; (ii) provide evidence satisfactory to the Underwriters of such timely filing; and (iii) use its best efforts to cause the Registration Statement or such post-effective amendment to become effective at the earliest possible time. (b) To comply fully and in a timely manner with the applicable provisions of Rule 424, Rule 430A and Rule 462 under the Act. (c) To advise you promptly and, if requested by you, to confirm such advice in writing, (i) when the Registration Statement has become effective and when any post- 3 effective amendment to it becomes effective, (ii) of any request by the Commission for amendments to the Registration Statement or amendments or supplements to the Prospectus or for additional information, (iii) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or of the suspension or qualification of the Securities for offering or sale in any jurisdiction, or the initiation of any proceeding for such purposes, and (iv) of the happening of any event during the period referred to in paragraph (f) below which makes any statement of a material fact made in the Registration Statement or the Prospectus untrue or which requires the making of any additions to or changes in the Registration Statement or the Prospectus in order to make the statements therein not misleading, or of the necessity to amend or supplement the Registration Statement or Prospectus (as then amended or supplemented) to comply with the Act or any other law. If at any time the Commission shall issue any stop order suspending the effectiveness of the Registration Statement, the Company will make every reasonable effort to obtain the withdrawal or lifting of such order at the earliest possible time. (d) To furnish to you, without charge, a signed copy of the Registration Statement as first filed with the Commission and each amendment to it, including all exhibits and documents incorporated therein by reference, and to furnish to you such number of conformed copies of the Registration Statement as so filed and of each amendment to it, without exhibits, as you may reasonably request. (e) Not to file any amendment or supplement to the Registration Statement, whether before or after the time when it becomes effective, to make any amendment or supplement to the Prospectus or to make any filing with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act of which you shall not previously have been advised or to which you shall reasonably object; and to prepare and file with the Commission, promptly upon your reasonable request, any amendment to the Registration Statement, supplement to the Prospectus or any filing with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act which may be necessary or advisable in connection with the distribution of the Securities by you, and to use its best efforts to cause the same to become promptly effective. (f) Promptly after the Registration Statement becomes effective, and from time to time thereafter for such period as a prospectus is required by law to be delivered in connection with sales by an Underwriter or a dealer, to furnish to each Underwriter as many copies of the Prospectus (and of any amendment or supplement to the Prospectus) as such Underwriter may reasonably request. (g) If, during the period specified in paragraph (f), any event shall occur as a result of which it becomes necessary to amend or supplement the Prospectus in order to make the statements therein, in the light of the circumstances when the Prospectus is delivered to a purchaser, not misleading, or if it is necessary to amend or supplement the Prospectus to comply with the Act or the Exchange Act, forthwith to (i)(A) prepare and file, subject to the provisions of paragraph (e) above, with the Commission an 4 appropriate amendment or supplement to the Prospectus or (B) file under the Exchange Act a document to be incorporated by reference in the Prospectus, so that in either case, the statements in the Prospectus, as so amended or supplemented, will not in the light of the circumstances when it is so delivered, be misleading, or so that the Prospectus will comply with the Act and the Exchange Act, and (ii) to furnish to each of you, such number of copies of such documents as such Underwriter may reasonably request. (h) Prior to any public offering of the Securities, (i) to cooperate with you and counsel for the Underwriters in connection with the registration or qualification of the Securities for offer and sale by the several Underwriters and by dealers under the state securities or Blue Sky laws of such jurisdictions of the United States as you may request, (ii) to continue such qualification in effect so long as required for distribution of the Securities and (iii) to file such consents to service of process or other documents as may be necessary in order to effect such registration or qualification; provided, however, that the Company shall not be required to register or qualify as a foreign corporation where it is not now so qualified or to take any action that would subject it to the service of process in suits or taxation, other than as to matters and transactions relating to the offer and sale of the Securities, in any jurisdiction where it is not now so subject. (i) To mail and make generally available to its security holders as soon as reasonably practicable an earning statement covering a period of at least twelve months after the effective date (as defined in Rule 158 of the Act) of the Registration Statement (but in no event commencing later than 90 days after such date) which shall satisfy the provisions of Section 11(a) of the Act. (j) Whether or not the transactions contemplated by this Agreement are consummated or this Agreement becomes effective or is terminated, to pay all costs, expenses, fees and taxes incident to (i) the preparation, printing, filing and distribution to the Underwriters of the Registration Statement (including financial statements and exhibits), each preliminary prospectus and all amendments and supplements to any of them prior to or during the period specified in paragraph (f), (ii) the printing and delivery to the Underwriters of the Prospectus and all amendments or supplements to it during the period specified in paragraph (f), (iii) the printing and delivery of this Agreement and the preliminary and final Blue Sky Memoranda (including in each case any disbursements of counsel for the Underwriters relating to such printing and delivery), (iv) the registration with the Commission of the Securities, (v) the registration or qualification of the Securities for offer and sale under the securities or Blue Sky laws of the several states and any foreign jurisdiction (including in each case fees and disbursements of counsel for the Underwriters relating to such registration or qualification and memoranda relating thereto), (vi) filing fees incident to securing any required review by the National Association of Securities Dealers, Inc. ("NASD") in connection with the offering of the Securities, (vii) furnishing such copies of the Registration Statement, the preliminary prospectus, the Prospectus and all amendments and supplements thereto as may be requested for use in connection with the offering or sale of the Securities by the Underwriters, (viii) fees, disbursements and expenses of the 5 Company's counsel and accountants, and (ix) all other reasonable costs and expenses incident to the performance by the Company of its other obligations under this Agreement. 6. Representations and Warranties. The Company represents and warrants to each Underwriter that: (a) The Company either (i) has filed with the Commission prior to the effectiveness of the Registration Statement, a further amendment thereto, including therein a final prospectus, or (ii) will file with the Commission after the effectiveness of such Registration Statement, a final prospectus in accordance with Rules 430A and 424(b) under the Act and (iii) may file with the Commission after the effectiveness of such Registration Statement, a post-effective amendment thereto or a new or additional registration statement in accordance with Rule 462 under the Act; any required filing of the Prospectus, or any supplement thereto, pursuant to Rule 424(b) under the Act has been or will be made in the manner and within the time period required thereunder; any required filing of a post-effective amendment under Rule 430A of the Act or any new or additional registration statement pursuant to Rule 462 under the Act has been or will be made in the manner and within the time period required thereunder; no stop order suspending or preventing the use of the Registration Statement or the Prospectus, or any amendment or supplement thereto, has been issued and no proceedings for such purpose are, to the knowledge of the Company, pending before or threatened by the Commission. (b) (i) The documents incorporated by reference in the Registration Statement, when they became effective or were filed with the Commission, as the case may be, did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; (ii) the documents incorporated by reference in the Registration Statement, when they became effective or were filed with the Commission, as the case may be, conformed in all material respects to the requirements of the Exchange Act; (iii) any further documents so filed and incorporated by reference in the Registration Statement or any further amendment or supplement thereto, when such documents become effective or are filed with the Commission, as the case may be, will conform in all material respects to the requirements of the Exchange Act; and (iv) any further documents so filed and incorporated by reference in the Prospectus or any further amendment or supplement thereto, when such documents become effective or are filed with the Commission, as the case may be, will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, except that the representations and warranties set forth in this paragraph (b) do not apply to statements or omissions in the Registration Statement or the Prospectus based upon information relating to any Underwriter furnished through you expressly for use therein, or to the Statement of Eligibility (Form T-1) under the Trust Indenture Act of 1939, as amended, and the rules and regulations of the Commission thereunder (collectively called the "Trust Indenture Act"), of the Trustee filed as an exhibit to the Registration Statement. 6 (c) (i) The Registration Statement, in the form in which it became or becomes effective, did not or will not contain and the Registration Statement, as amended or supplemented, if applicable, will not contain, an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) the Registration Statement and the Prospectus comply and, as amended or supplemented, if applicable, will comply in all material respects with the Act and (iii) the Prospectus does not contain and, as amended or supplemented, if applicable, will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that the representations and warranties set forth in this paragraph (c) do not apply to statements or omissions in the Registration Statement or the Prospectus, or any amendment or supplement thereto, based upon information relating to any Underwriter furnished to the Company in writing by such Underwriter through you expressly for use therein or to the Statement of Eligibility (Form T-1) under the Trust Indenture Act of the Trustee filed as an exhibit to the Registration Statement. (d) Each preliminary prospectus filed as part of the registration statement as originally filed or as part of any amendment thereto, or filed pursuant to Rule 424 under the Act, and each Registration Statement filed pursuant to Rule 462(b) under the Act, if any, complied when so filed in all material respects with the Act; and did not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that the representations and warranties set forth in this paragraph (d) do not apply to statements or omissions any preliminary prospectus, or any amendment or supplement thereto, based upon information relating to any Underwriter furnished to the Company in writing by such Underwriter through you expressly for use therein or to the Statement of Eligibility (Form T-1) under the Trust Indenture Act of the Trustee filed as an exhibit to the Registration Statement. (e) Each of the Company and its Subsidiaries (as defined) organized under the laws of the United States, any state thereof or the District of Columbia (the "Domestic Subsidiaries") has been duly incorporated, is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation and has the corporate power and authority to carry on its business as it is currently being conducted and to own, lease and operate its properties. The Company is duly qualified and is in good standing as a foreign corporation authorized to do business in each jurisdiction in which the nature of its business or its ownership or leasing of property requires such qualification, except where to failure to be so qualified would not have a material adverse effect on the business, condition (financial or otherwise), results of operations or properties of the Company and its Subsidiaries, taken as a whole (each, a "Material Adverse Effect"). (f) Each Subsidiary of the Company that is not a Domestic Subsidiary and would constitute a "significant subsidiary" (as defined in Section 1-02 of Regulation S-X of the Commission) has been duly incorporated (or the equivalent thereof), is validly 7 existing as a corporation in good standing under the laws of its jurisdiction of incorporation and has the corporate power and required authority to carry on its business as it is currently being conducted and to own, lease and operate its properties. The term "Subsidiary" means each person with at least nominal assets of which a majority of the voting equity securities or other interests is owned, directly or indirectly, by the Company as of the Closing Date, such persons being referred to collectively as the "Subsidiaries." (g) Each of the Domestic Subsidiaries is duly qualified and is in good standing as a foreign corporation authorized to do business in each jurisdiction in which the nature of its business or its ownership or leasing of property requires such qualification, except where the failure to be so qualified would not have a Material Adverse Effect. (h) Each Subsidiary of the Company that is not a Domestic Subsidiary and would constitute a "significant subsidiary" (as defined in Section 1-02 of Regulation S-X of the Commission) is duly qualified and is in good standing (or the equivalent thereof) as a foreign corporation authorized to do business in each jurisdiction in which the nature of its business or its ownership or leasing of property requires such qualification, except where the failure to be so qualified would not have a Material Adverse Effect. (i) All of the outstanding shares of capital stock of, or other ownership interests in, each of the Company's Subsidiaries have been duly authorized and validly issued and are fully paid and non-assessable and are owned by the Company or a Subsidiary of the Company, free and clear of any security interest, claim, lien, encumbrance or adverse interest of any nature, except for nominal shares held pursuant to the requirements of local law, and except as described in the Prospectus; there are no outstanding rights, warrants or options to acquire, or securities convertible into or exchangeable for, any shares of capital stock or other equity interest in any of the Company's Subsidiaries. (j) The Company has the authorized, issued and outstanding capitalization set forth in the Prospectus under the heading "Capitalization" (except for subsequent issuances, if any, pursuant to reservations, agreements or employee benefit plans referred to in the Prospectus). (k) All of the outstanding shares of capital stock of the Company have been duly authorized and validly issued and are fully paid, non-assessable and not subject to any preemptive or similar rights. (l) The Securities have been duly authorized by the Company and, when the Securities are executed by the Company and authenticated by the Trustee in accordance with the provisions of the Indenture and delivered to and paid for by the Underwriters in accordance with the terms of this Agreement, the Securities will be entitled to the benefits of the Indenture and will constitute valid and legally binding obligations of the Company enforceable in accordance with their terms, subject to the effects of (i) 8 bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other similar laws now or hereafter in effect relating to or affecting creditors' rights generally, and (ii) general principles of equity and the discretion of the court before which any proceeding therefor may be brought. (m) The Securities, the Indenture and each of the Merger Agreement and the Credit Facilities conform in all material respects as to legal matters to the description thereof contained in the Prospectus. (n) The Indenture has been or will, at the Closing Date, be duly qualified under the Trust Indenture Act and has been duly and validly authorized by the Company and, when the Securities are delivered and paid for pursuant to this Agreement on the Closing Date, the Indenture will have been duly executed and delivered by the Company and will constitute a valid and legally binding agreement of the Company, enforceable in accordance with its terms except as (i) as such enforcement may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or similar laws now or hereafter in effect relating to or affecting creditors' rights generally; (ii) that the remedies of specific performance and injunctive and other forms of relief are subject to general equitable principles, whether enforcement is sought at law or in equity, and that such enforcement may be subject to the discretion of the court before which any proceedings therefor may be brought; and (iii) as rights to indemnity and contribution may be limited by state or federal laws relating to securities or by the policies underlying such laws. (o) This Agreement has been duly authorized, executed and delivered by the Company. (p) Neither the Company nor any of its Subsidiaries is (i) in violation of its respective charter or by-laws, (ii) in default in any material respect in the performance of any obligation, agreement or condition contained in any bond, debenture, note or any other evidence of indebtedness or in any other agreement, indenture or instrument material to the conduct of the business of the Company and its Subsidiaries, taken as a whole, to which the Company or any of its Subsidiaries is a party or by which it or any of its Subsidiaries or their respective property is bound or (iii) except for violations that, individually or in the aggregate, would not have a Material Adverse Effect or a material adverse effect on the ability of the Company and the Underwriters to consummate the Offering (as defined in the Prospectus), in violation of any law, statute, rule, regulation, judgment or court decree applicable to the Company or any of its Subsidiaries. (q) The execution, delivery and performance of the Transaction Documents by the Company, compliance by the Company with all the provisions hereof and thereof and the consummation of the transactions contemplated hereby and thereby will not conflict with, constitute a default under or violate (i) any of the terms, conditions or provisions of the certificate of incorporation or by-laws of the Company or any of its Subsidiaries, (ii) any of the terms, conditions or provisions of any document, agreement, 9 indenture or other instrument to which the Company or any of its Subsidiaries is a party or by which the Company, any of its Subsidiaries or their respective properties are bound or (iii) any judgment, writ, injunction, decree, order or ruling of any court or governmental authority binding on the Company, any of its Subsidiaries or their respective properties except, in the case of (ii) and (iii), for such conflicts, defaults or violations that would not have a Material Adverse Effect. No consent, approval, waiver, license or authorization or other action by or filing with any governmental authority is required in connection with the execution, delivery and performance by the Company of the Transaction Documents or the consummation by the Company of the transactions contemplated hereby and thereby, except under the Act and the state or foreign securities or blue sky laws or except as shall have been obtained or made on or prior to the Closing Date. (r) The Merger Agreement has been duly authorized, executed and delivered by the Company. (s) [intentionally omitted] (t) The statistical and market-related data included in the Prospectus or incorporated therein by reference are based on or derived from sources which the Company believes to be reliable and accurate in all material respects. (u) Except as otherwise set forth in the Prospectus, there are no legal or governmental proceedings pending to which the Company or any of its Subsidiaries is a party or of which any of their respective property is the subject which are required to be described in the Registration Statement or Prospectus, and to the best of the Company's knowledge, no such proceedings are threatened. No contract or other document of a character required to be filed as an exhibit to the Registration Statement is not so filed as required. (v) (i) The Company and each of its Subsidiaries has such permits, licenses, franchises and authorizations of governmental or regulatory authorities ("permits"), including, without limitation, under any applicable foreign, federal, state or local law or regulation relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants, as are necessary to own, lease and operate its respective properties and to conduct its business in the manner described in the Prospectus; (ii) neither the Company nor any of its Subsidiaries has received notice of any proceedings relating to the revocation or termination of any such permits; except, in the case of clauses (i) and (ii), where failure to have such permits, or the revocation or termination of any such permits would not, individually or in the aggregate, result in a Material Adverse Effect. (w) The Company and each of its Subsidiaries has good and marketable title, free and clear of all liens, claims, encumbrances and restrictions to all property and 10 assets described in the Registration Statement as being owned by it except for any such liens (i) set forth in Annex II hereto, (ii) for taxes not yet due and payable or for taxes being contested in good faith and for which adequate reserves, in accordance with generally accepted accounting principles, have been taken or (iii) as would not, individually or in the aggregate, have a Material Adverse Effect. (x) The Company is not an "investment company" within the meaning of the Investment Company Act of 1940, as amended. (y) Except as set forth in the Prospectus, no holder of any security of the Company has any right to require registration of shares of Class A Common Stock or any other security of the Company. (z) The Company and/or its Subsidiaries owns all rights to or has the right to use the designs embodying all of the patents, trademarks, service marks, trade names, copyrights, licenses and rights presently used by them in the conduct of the Company's business and neither the Company nor any of its Subsidiaries has received notice or is otherwise aware of any conflict with the rights of others, the result of which conflict is reasonably likely to result in a Material Adverse Effect, and to the best of the Company's knowledge, there is no infringement on such patents, trademarks, servicemarks, trade names, copyrights, licenses and right by others the result of which infringement is reasonably likely to result in a Material Adverse Effect. (aa) Price Waterhouse LLP are independent public accountants with respect to the Company as required by the Act. (ab) The financial statements, together with related schedules and notes forming part of the Registration Statement and the Prospectus (and any amendment or supplement thereto), present fairly the consolidated financial position, results of operations and changes in financial position of the Company and its Subsidiaries on the basis stated in the Registration Statement at the respective dates or for the respective periods to which they apply; such statements and related schedules and notes have been prepared in accordance with generally accepted accounting principles consistently applied throughout the periods involved, except as disclosed therein; and the other financial and statistical information and data set forth or incorporated by reference in the Registration Statement and the Prospectus (and any amendment or supplement thereto) is, in all material respects, accurately presented and prepared on a basis consistent with such financial statements and the books and records of the Company and its Subsidiaries. (ac) The pro forma financial information and the related notes thereto included in the Registration Statement (and any amendment or supplement thereto) have been prepared in accordance with the applicable requirements of the Act, include all adjustments necessary to present fairly in all material respects the pro forma financial condition and results of operations at the respective dates and for the respective periods indicated. 11 (ad) The Company has complied with all provisions of Section 517.075, Florida Statutes (Chapter 92-198, Laws of Florida). (ae) Except as set forth in or contemplated by the Registration Statement and the Prospectus, subsequent to the respective dates as of which information is given therein and up to and including the Closing Date, (i) none of the Company or any of its Subsidiaries has incurred any liabilities or obligations, direct or contingent, that are material to the Company and its Subsidiaries, taken as a whole, which have materially changed the financial position of the Company, (ii) none of the Company or any of its Subsidiaries has entered into any transactions that are material to the Company and its Subsidiaries, taken as a whole, outside of the ordinary course of business, (iii) there has not been any material adverse change in the business, condition (financial or otherwise), results of operations, properties or prospects of the Company and its Subsidiaries, taken as a whole (each, a "Material Adverse Change") and (iv) there has not been any change in the capital stock or increase in short-term or long-term debt of the Company or any of its Subsidiaries (other than as a result of revolving borrowings for working capital incurred in the ordinary course of business), or any issuance of options or warrants to purchase capital stock of the Company or any of its Subsidiaries, or any payment of or declaration to pay any dividends or other distribution with respect to the capital stock of the Company. (af) Except as disclosed in the Prospectus (including with respect to this Agreement), neither the Company nor any Subsidiary is a party to any contract, agreement or understanding with any person that would give rise to a valid claim against the Company or any Subsidiary or the Underwriters for a brokerage commission, finder's fee or like payment in connection with the offering of the Securities. 7. Indemnification. (a) The Company agrees to indemnify and hold harmless each Underwriter and each person, if any, who controls any Underwriter within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, from and against any and all losses, claims, damages, liabilities and judgments caused by any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or the Prospectus (as amended or supplemented), any preliminary prospectus, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages, liabilities or judgments are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information relating to any Underwriter furnished in writing to the Company or on behalf of any Underwriter through you expressly for use therein; provided, however, that the foregoing indemnity agreement with respect to any preliminary prospectus shall not inure to the benefit of any Underwriter from whom the person asserting any such losses, claims, damages and liabilities and judgments purchased Securities, or any person controlling such Underwriter, if a copy of the Prospectus (as then amended or supplemented if the Company shall have furnished any amendments or supplements thereto) was not sent or delivered by or on behalf of such Underwriter to such person, 12 if required by law so to have been delivered, at or prior to the written confirmation of the sale of the Securities to such person, and if the Prospectus (as amended and supplemented) would have cured the defect giving rise to such loss, claim, damage, liability or judgment. In addition, the Company agrees to indemnify and hold harmless any Underwriter and each person, if any, who controls any Underwriter within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, from and against all costs of such Underwriter or controlling person (including reasonable fees and expenses of counsel) incurred in connection with the enforcement by the Underwriter or such controlling person of the indemnification provisions of Section 7(a) of this Agreement against the Company. (b) In case any action shall be brought against any Underwriter or any person controlling such Underwriter, based upon any preliminary prospectus, the Registration Statement or the Prospectus, any amendment or supplement thereto or any document incorporated therein by reference and with respect to which indemnity may be sought against the Company, such Underwriter shall promptly notify the Company in writing and the Company shall assume the defense thereof, including the employment of counsel reasonably satisfactory to such indemnified party and payment of all reasonable fees and expenses; provided that the Company shall not be liable to such indemnified party for any legal expenses of other counsel or any other expenses, in each case, subsequently incurred by such indemnified party, in connection with the defense thereof, other than the reasonable cost of the investigation. Any Underwriter or any such controlling person shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Underwriter or such controlling person unless (i) the employment of such counsel has been specifically authorized in writing by the Company, (ii) the Company shall have failed to assume the defense and employ counsel or (iii) the named parties to any such action (including any impleaded parties) include both such Underwriter or such controlling person and the Company and such Underwriter or such controlling person shall have been advised by such counsel that there may be one or more legal defenses available to it which are different from or additional to those available to the Company, in which case the Company shall not have the right to assume the defense of such action on behalf of such Underwriter or such controlling person and the Company shall be liable for the reasonable legal expenses of counsel to such Underwriter or such controlling person in connection with the defense of such action, provided that such counsel to such Underwriter or such controlling person shall use reasonable efforts to coordinate with counsel to the Company on overlapping issues, it being understood, however, that the Company shall not, in connection with any one such action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys (in addition to one separate firm of local counsel in each such jurisdiction) at any time, for all such Underwriters and controlling persons, which firm shall be designated in writing by DLJ and that all such fees and expenses shall be reimbursed promptly upon request. The Company shall not be liable for any settlement of any action subject to indemnification hereunder effected without the written consent 13 of the Company but if settled with the written consent of the Company, the Company agrees to indemnify and hold harmless any Underwriter and any such controlling person from and against any loss or liability by reason of such settlement. In addition, the Company shall be liable for any settlement of any such action effected with the Company's prior written consent, which consent shall not be unreasonably withheld. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding. (c) Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Company, its directors, its officers who sign the Registration Statement and any person controlling the Company within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, to the same extent as the foregoing indemnity from the Company to each Underwriter but only with reference to information relating to such Underwriter furnished in writing by or on behalf of such Underwriter through you expressly for use in the Registration Statement or the Prospectus (as amended or supplemented) or any preliminary prospectus. In case any action shall be brought against the Company, any of its directors, any such officer or any person controlling the Company based on the Registration Statement or the Prospectus (as amended or supplemented) or any preliminary prospectus and in respect of which indemnity may be sought against any Underwriter, the Underwriter shall have the rights and duties given to the Company (except that if the Company shall have assumed the defense thereof, such Underwriter shall not be required to do so, but may employ separate counsel therein and participate in the defense thereof but the fees and expenses of such counsel shall be at the expense of such Underwriter), and the Company, its directors, any such officers and any person controlling the Company shall have the rights and duties given to the Underwriter, by Section 7(b) hereof. (d) If the indemnification provided for in this Section 7 is unavailable to an indemnified party in respect of any losses, claims, damages, liabilities or judgments referred to therein, then each indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities and judgments (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Underwriters on the other hand from the offering of the Securities or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company and the Underwriters in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or judgments, as well as any other relevant equitable considerations. The relative benefits received by the Company and the Underwriters shall be deemed to be in the same proportion as the total proceeds from the offering (before deducting 14 expenses but after deducting underwriting discounts and commissions) received by the Company and the total underwriting discounts and commissions received by the Underwriters, bear to the total price to the public of the Securities, in each case as set forth in the table on the cover page of the Prospectus. The relative fault of the Company and the Underwriters shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Underwriters and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 7(d) were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an indemnified party as a result of the losses, claims, damages, liabilities or judgments referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 7, no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Securities underwritten by it and distributed to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters' obligations to contribute pursuant to this Section 7(b) are several in proportion to the respective number of Securities purchased by each of the Underwriters hereunder and not joint. 8. Conditions of Underwriters' Obligations. The several obligations of the Underwriters to purchase the Securities on the Closing Date are subject to the satisfaction of each of the following conditions: (a) All of the representations and warranties of the Company contained in this Agreement shall be true and correct on the Closing Date, with the same force and effect as if made on and as of the Closing Date. The Company shall have performed or complied in all material respects with all of the agreements herein contained and required to be performed or complied with by the Company at or prior to the Closing Date. (b)(i) The Registration Statement shall have become effective (or if (i) a post-effective amendment thereto (including any such amendment required to be filed pursuant to Rule 430A under the Act) or (ii) a new or additional registration statement pursuant to Rule 462 under the Act has been filed, such post-effective amendment or new or additional registration statement (as applicable) shall become effective) not later than 3:30 15 p.m. New York City time on the date hereof or at such later date and time as you may approve in writing, (ii) at the Closing Date, no stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceedings for that purpose shall have been commenced or shall be pending before or contemplated by the Commission and every comment by or request for additional information on the part of the Commission or any securities commission or regulatory authority of the several states or any foreign jurisdiction shall have been responded to or complied with in all material respects and (iii) no stop order suspending the sale of the Securities in any jurisdiction designated by the Underwriters pursuant to Section 5(h) hereof shall have been issued and no proceeding for that purpose shall have been commenced and be pending before any securities regulators, and the Company shall not have received notice of the contemplation of any such issuance by any such securities regulator. (c) Subsequent to the effective date of this Agreement, except as set forth in the Registration Statement and the Prospectus, (i) there shall not have been any Material Adverse Change, or any development involving a prospective Material Adverse Change, whether or not arising in the ordinary course of business of the Company, (ii) there shall not have been any change, or any development involving a prospective material adverse change, in the capital stock or in the long-term debt of the Company or any of its Subsidiaries (other than as a result of borrowings (revolving or other) for working capital incurred in the ordinary course of business), (iii) the Company and its Subsidiaries shall not have incurred any liability or obligation, direct or contingent, which is material to the Company and its Subsidiaries, taken as a whole and which have materially changed the financial position of the Company and its Subsidiaries, taken as a whole and (iv) on the Closing Date, you shall have received a certificate dated the Closing Date signed by Mr. Martin H. Loeffler and Mr. Edward G. Jepsen, in their capacities as (A) the President and Chief Executive Officer and (B) Executive Vice President and Chief Financial Officer of the Company, respectively, confirming the matters set forth in paragraphs (a), (b), and (c) of this Section 8. (d) You shall have received on the Closing Date an opinion (in the form attached hereto as Annex II), dated the Closing Date of Winthrop, Stimson, Putnam & Roberts, special counsel for the Company, with respect to the Company and its Subsidiaries. The opinion of Winthrop, Stimson, Putnam & Roberts shall be rendered to you at the request of the Company and shall so state therein. (e) You shall have received on the Closing Date an opinion (in the form attached hereto as Annex III), dated the Closing Date of Simpson Thacher & Bartlett, special counsel for the Company, with respect to the Company and its Subsidiaries. The opinion of Simpson Thacher & Bartlett shall be rendered to you at the request of the Company and so state therein. (f) You shall have received on the Closing Date an opinion (in the form attached hereto as Annex IV), dated the Closing Date of Edward C. Wetmore, counsel for the Company, with respect to the Company and its Subsidiaries. The opinion of 16 Edward C. Wetmore shall be rendered to you at the request of the Company and shall so state therein. (g) You shall have received on the Closing Date an opinion, dated the Closing Date of Latham & Watkins, counsel for the Underwriters, in form and substance reasonably satisfactory to the Underwriters. (h) You shall have received a letter concurrently with the execution of this Agreement and on and as of the Closing Date in form and substance reasonably satisfactory to you, from Price Waterhouse LLP, independent public accountants, with respect to the financial statements and certain financial information contained in the Registration Statement and the Prospectus and/or incorporated therein by reference. (i) Latham & Watkins shall have been furnished with such documents as they may reasonably require for the purpose of enabling them to review or pass upon the matters referred to in this Section 8. (j) The Company and the Trustee shall have entered into the Indenture and the Underwriters shall have received counterparts, conformed as executed, thereof. (k) The Merger Agreement shall have been executed and delivered by the parties thereto and shall be in force and effect. (l) The Underwriters shall be satisfied that the Merger and the Credit Facilities shall have been consummated or will be consummated on the Closing Date on the terms described in the Registration Statement. All opinions, certificates, letters and other documents required by this Section 8 to be delivered by the Company will be in compliance with the provisions hereof if and only if they are reasonably satisfactory in form and substance to the Underwriters. The Company will furnish the Underwriters with such conformed copies of such opinions, certificates, letters and other documents as the Underwriters or their counsel shall reasonably request. 9. Effective Date of Agreement and Termination. This Agreement shall become effective upon the later of (i) execution of this Agreement, (ii) when notification of the effectiveness of the Registration Statement has been released by the Commission and (iii) if a post-effective amendment to the Registration Statement has been filed (including any post-effective amendment required to be filed pursuant to Rule 430A) or a new or additional registration statement has been filed (including any new or additional registration statement required to be filed pursuant to Rule 462 under the Act), the effectiveness of such post-effective amendment or new or additional registration statement. Until this Agreement becomes effective 17 as aforesaid, it may be terminated by the Company by notifying the Underwriters or by the Underwriters by notifying the Company. This Agreement may be terminated at any time after it becomes effective and prior to the Closing Date by you by written notice to the Company if any of the following has occurred: (i) any outbreak or escalation of hostilities or other national or international calamity or crisis or change in economic conditions or in the financial markets of the United States or elsewhere that, in your judgment, is material and adverse and would, in your judgment, make it impracticable to market the Securities on the terms and in the manner contemplated in the Prospectus, or (ii) the suspension or material limitation of trading in securities on the New York Stock Exchange, the American Stock Exchange or the Nasdaq National Market or limitation on prices for securities on any such exchange or the Nasdaq National Market or (iii) the declaration of a banking moratorium by either federal or New York State authorities. If on the Closing Date, any one or more of the Underwriters shall fail or refuse to purchase the Securities which it or they have agreed to purchase hereunder on such date and the aggregate number of Securities, which such defaulting Underwriter or Underwriters, as the case may be, agreed but failed or refused to purchase is not more than one-tenth of the total number of Securities to be purchased on such date by all Underwriters, each non-defaulting Underwriter shall be obligated severally, in the proportion which the number of Securities set forth opposite its name in Annex I bears to the total number of Securities which all the non-defaulting Underwriters, as the case may be, have agreed to purchase, or in such other proportion as you may specify, to purchase the Securities which such defaulting Underwriter or Underwriters, as the case may be, agreed but failed or refused to purchase on such date; provided that in no event shall the number of Securities which any Underwriter has agreed to purchase pursuant to Section 2 hereof be increased pursuant to this Section 9 by an amount in excess of one-ninth of such number of Securities without the written consent of such Underwriter. If on the Closing Date any Underwriter or Underwriters shall fail or refuse to purchase Securities and the aggregate number of Securities with respect to which such default occurs is more than one-tenth of the aggregate number of Securities to be purchased on such date by all Underwriters and arrangements satisfactory to you and the Company for purchase of such Securities are not made within 48 hours after such default, this Agreement will terminate without liability on the part of any non-defaulting Underwriter or the Company. In any such case which does not result in termination of this Agreement, either you or the Company shall have the right to postpone the Closing Date, but in no event for longer than seven days, in order that the required changes, if any, in the Registration Statement and the Prospectus or any other documents or arrangements may be effected. Any action taken under this paragraph shall not relieve any defaulting Underwriter from liability in respect of any default of any such Underwriter under this Agreement. 10. Miscellaneous. Notices given pursuant to any provision of this Agreement shall be addressed as follows: (a) if to the Company, to Amphenol Corporation, 358 Hall Avenue, Wallingford, Connecticut, 06492-7530, Attention: President, and (b) if to any Underwriter or to you, to Donaldson, Lufkin & Jenrette Securities Corporation, 2121 Avenue 18 of the Americas, Los Angeles, California, 90067, Attention: Syndicate Department, or in any case to such other address as the person to be notified may have requested in writing. The respective indemnities, contribution agreements, representations, warranties and other statements of the Company and the several Underwriters set forth in or made pursuant to this Agreement shall remain operative and in full force and effect, and will survive delivery of and payment for the Securities, regardless of (i) any investigation, or statement as to the results thereof, made by or on behalf of any Underwriter or by or on behalf of the Company, the officers or directors of the Company or any controlling person of the Company, (ii) acceptance of the Securities and payment for them hereunder and (iii) termination of this Agreement. If this Agreement shall be terminated by the Underwriters because of any failure or refusal on the part of the Company to comply with the terms hereof or to fulfill any of the conditions set forth in Section 8 of this Agreement, other than by reason of a default under this Agreement by an Underwriter, the Company agrees to reimburse the several Underwriters upon demand accompanied by reasonable supporting documentation for all out-of-pocket expenses (including the reasonable fees and disbursements of counsel) reasonably incurred by them in connection with the matters contemplated by this Agreement. Except as otherwise provided, this Agreement has been and is made solely for the benefit of and shall be binding upon the Company, the Underwriters, any controlling persons referred to herein and their respective successors and assigns, all as and to the extent provided in this Agreement, and no other person shall acquire or have any right under or by virtue of this Agreement. The term "successors and assigns" shall not include a purchaser of any of the Securities from any of the several Underwriters merely because of such purchase. This Agreement shall be governed and construed in accordance with the laws of the State of New York. This Agreement may be signed in various counterparts which together shall constitute one and the same instrument. [Signature page follows] 19 Please confirm that the foregoing correctly sets forth the agreement between the Company and the Underwriters. Very truly yours, AMPHENOL CORPORATION By:___________________________ Name: Title: DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION LEHMAN BROTHERS INC. BT SECURITIES CORPORATION CHASE SECURITIES INC. By: DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION By:__________________________ Name: Title: 20 ANNEX I Underwriter Principal Amount of Securities to be Purchased ------------------------ Donaldson, Lufkin & Jenrette Securities Corporation......................... $ Lehman Brothers Inc.............................. BT Securities Corporation........................ Chase Securities Inc............................. ======================== Total $ 240,000,000 I-1 ANNEX II Form of Opinion of Winthrop, Stimson, Putnam & Roberts [See also attached opinion points] II-1 ANNEX III Form of Opinion of Simpson Thacher & Bartlett We have not independently verified the accuracy, completeness or fairness of the statements made or included in the Registration Statement or the Prospectus and take no responsibility therefor. In the course of the preparation by the Company of the Registration Statement and the Prospectus, we participated in conferences with certain officers and employees of the Company, with representatives of Price Waterhouse LLP and with counsel to the Company. We discussed the Registration Statement and the Prospectus with the Company and with counsel to the Company prior to their filing with the Securities and Exchange Commission (the "Commission"). Based upon our examination of the Registration Statement and Prospectus, our investigations made in connection with the preparation of the Registration Statement and the Prospectus and our participation in the conferences referred to above, we have no reason to believe that Registration Statement (or any amendment thereto made prior to the Closing Date as of the date of such amendment), at the time it became effective, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading, or that the Prospectus, at the time it was filed with the Commission pursuant to Rule 424(b) and at the date hereof, contained or contains any untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that we express no belief with respect (i) to the financial statements or other financial or statistical data contained or incorporated by reference in either the Registration Statement of the Prospectus, (ii) that part of the Registration Statement which constitutes the Trustee's Statement of Eligibility under the Trust Indenture Act on Form T-1 or (iii) the statements therein concerning the Depository Trust Company ("DTC") and DTC's book-entry system. [See attached opinion points] V-1 ANNEX IV Form of Opinion of Edward C. Wetmore I have not independently verified the accuracy, completeness or fairness of the statements made or included in the Registration Statement or the Prospectus and take no responsibility therefor. In the course of the preparation by the Company of the Registration Statement and the Prospectus, I participated in conferences with certain officers and employees of the Company, with representatives of Price Waterhouse LLP and with counsel to the Underwriters. We discussed the Registration Statement and the Prospectus with the Company and with counsel to the Underwriters prior to their filing with the Securities and Exchange Commission (the "Commission"). Based upon my examination of the Registration Statement and Prospectus, my investigations made in connection with the preparation of the Registration Statement and the Prospectus and my participation in the conferences referred to above, I have no reason to believe that Registration Statement (or any amendment thereto made prior to the Closing Date as of the date of such amendment), at the time it became effective, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading, or that the Prospectus, at the time it was filed with the Commission pursuant to Rule 424(b) and at the date hereof, contained or contains any untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that I express no belief with respect (i) to the financial statements or other financial or statistical data contained or incorporated by reference in either the Registration Statement of the Prospectus, (ii) that part of the Registration Statement which constitutes the Trustee's Statement of Eligibility under the Trust Indenture Act on Form T-1 or (iii) the statements therein concerning the Depository Trust Company ("DTC") and DTC's book-entry system. [See also attached opinion points] VI-(1) Opinion Points (a) Such counsel has been advised that the Registration Statement has become effective under the Act, the Prospectus either was filed with the Commission pursuant to the Act or was included in the Registration Statement (as the case may be), and no stop order suspending its effectiveness has been issued and no proceedings for that purpose are, to the knowledge of such counsel, pending before, threatened or contemplated by the Commission. (b) The Registration Statement (including any Registration Statement filed under Rule 462(b) of the Act, if any) and the Prospectus and any supplement or amendment thereto (except for financial statements as to which no opinion need be expressed) comply as to form in all material respects with the Act. (c) The Company and each of its Subsidiaries has been duly incorporated, is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation and has the corporate power and authority to carry on its business as it is currently being conducted and to own, lease and operate its properties. The Company is duly qualified and is in good standing as a foreign corporation authorized to do business in each jurisdiction in which the nature of its business or its ownership or leasing of property requires such qualification, except where to failure to be so qualified would not have a material adverse effect on the business, condition (financial or otherwise), results of operations, properties or prospects of the Company and its Subsidiaries, taken as a whole (each, a "Material Adverse Effect"). The term "Subsidiary" means each person with at least nominal assets of which a majority of the voting equity securities or other interests is owned, directly or indirectly, by the Company as of the Closing Date, such persons being referred to collectively as the "Subsidiaries." (d) Each Subsidiary of the Company that is not a Domestic Subsidiary and would constitute a "significant subsidiary" (as defined in Section 1-02 of Regulation S-X of the Commission) has been duly incorporated (or the equivalent thereof), is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation and has the corporate power and required authority to carry on its business as it is currently being conducted and to own, lease and operate its properties. (e) Each of the Domestic Subsidiaries is duly qualified and is in good standing as a foreign corporation authorized to do business in each jurisdiction in which the nature of its business or its ownership or leasing of property requires such qualification, except where the failure to be so qualified would not have a Material Adverse Effect. (f) Each Subsidiary of the Company that is not a Domestic Subsidiary and would constitute a "significant subsidiary" (as defined in Section 1-02 of Regulation S-X of the Commission) is duly qualified and is in good standing (or the equivalent thereof) as a foreign corporation authorized to do business in each jurisdiction in which the nature (i) of its business or its ownership or leasing of property requires such qualification, except where the failure to be so qualified would not have a Material Adverse Effect. (g) The Securities have each been duly authorized by the Company and, when the Securities are executed by the Company and authenticated by the Trustee in accordance with the provisions of the Indenture and delivered to and paid for by the Underwriters in accordance with the terms of the Underwriting Agreement, the Securities will be entitled to the benefits of the Indenture and will constitute valid and legally binding obligations of the Company enforceable in accordance with their terms, subject to the effects of (i) bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other similar laws now or hereafter in effect relating to creditors' rights generally, and (ii) general principles of equity and the discretion of the court before which any proceeding therefor may be brought. (h) The Securities, the Indenture and each of the Transaction Documents conform as to legal matters to the description thereof contained in the Prospectus. (i) The statements under the captions "Related Party Transactions," "Description of Credit Facilities," "Description of the Notes" and "Underwriting" in the Prospectus, as amended or supplemented, and Items 14 and 15 of Part II of the Registration Statement insofar as such statements constitute a summary of legal matters documents or proceedings referred to therein, fairly present the information called for with respect to such legal matters, documents and proceedings; (j) The Indenture has been duly qualified under the Trust Indenture Act, and has been duly authorized, executed and delivered by the Company and is a valid and binding agreement of the Company, enforceable in accordance with its terms except as (i) as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect relating to or affecting creditors' rights generally; (ii) that the remedies of specific performance and injunctive and other forms of relief are subject to general equitable principles, whether enforcement is sought at law or in equity, and that such enforcement may be subject to the discretion of the court before which any proceedings therefor may be brought; and (iii) as rights to indemnity and contribution may be limited by state or federal laws relating to securities or by the policies underlying such laws. (k) This Agreement has been duly authorized, executed and delivered by the Company. [ (l) Neither the Company nor any of its Subsidiaries is in violation or default under (i) its respective charter or by-laws, (ii) in default in any material respect in the performance of any obligation, agreement or condition contained in any bond, debenture, note or any other evidence of indebtedness or in any other agreement, indenture or instrument material to the conduct of the business of the Company and its Subsidiaries, taken as a whole, to which the Company or any of its Subsidiaries is a party or by which (ii) it or any of its Subsidiaries or their respective property is bound or (iii) any law, statute, rule, regulation, judgment or court decree applicable to the Company or any of its Subsidiaries.] (m) The execution, delivery and performance of the Transaction Documents by the Company, compliance by the Company with all the provisions thereof and the consummation of the transactions contemplated thereby will not conflict with, constitute a default under or violate (i) any of the terms, conditions or provisions of the certificate of incorporation or by-laws of the Company or any of its Subsidiaries, (ii) any of the terms, conditions or provisions of any document, agreement, indenture or other instrument to which the Company or any of its Subsidiaries is a party or by which the Company, any of its Subsidiaries or their respective properties are bound [, other than the indenture governing the Existing Senior Notes] or (iii) any judgment, writ, injunction, decree, order or ruling of any court or governmental authority binding on the Company, any of its Subsidiaries or their respective properties. No consent, approval, waiver, license or authorization or other action by or filing with any governmental authority is required in connection with the execution, delivery and performance by the Company of the Transaction Documents or the consummation by the Company of the transactions contemplated hereby and thereby, except under the Act and the state or foreign securities or blue sky laws. (n) The Company has all requisite corporate power and authority to enter into the Merger Agreement and to consummate the transactions contemplated thereby. The Merger Agreement has been duly authorized, executed and delivered by the Company. (o) Except as otherwise set forth in the Prospectus, there are no legal or governmental proceedings pending to which the Company or any of its Subsidiaries is a party or of which any of their respective property is the subject which is required to be described in the Registration Statement or Prospectus, and to the best of such counsel's knowledge after due inquiry, no such proceedings are threatened or contemplated. No contract or other document of a character required to be described in the Registration Statement or the Prospectus or to be filed as an exhibit to the Registration Statement is not so described or filed as required. (p) The Company is not an "investment company" within the meaning of the Investment Company Act of 1940, as amended. (iii) EX-4.1 3 EXHIBIT 4.1 - FORM OF INDENTURE Exhibit 4.1 L&W DRAFT OF APRIL 22, 1997 AMPHENOL CORPORATION as Issuer and IBJ Schroder Bank & Trust Company as Trustee -------------------- Form of Indenture Dated as of May __, 1997 --------------------- $240,000,000 ____% Senior Subordinated Notes due May __, 2007 AMPHENOL CORPORATION* Reconciliation and tie between Trust Indenture Act of 1939 and Indenture, dated as of May __, 1997 Trust Indenture Act Section Indenture Section ss. 310(a)(1) ...................................... 608 (a)(2) ...................................... 608 (b) ...................................... 609 ss. 311 ...................................... 101 ss. 312(a) ...................................... 701 (c) ...................................... 702 ss. 313(a) ...................................... 703 (c) ...................................... 703 ss. 314(a)(4) ...................................... 1010(a) (c)(1) ...................................... 102 (c)(2) ...................................... 102 (e) ...................................... 102 ss.315 (a) ...................................... 601(a) (b) ...................................... 602 (c) ...................................... 601(b) (d) ...................................... 601(c), 603 ss. 316(a)(last sentence) ...................................... 101 (a)(1)(A)...................................... 502, 512 (a)(1)(B)...................................... 513 (b) ...................................... 508 (c) ...................................... 104(d) ss. 317(a)(1) ...................................... 503 (a)(2) ...................................... 504 (b) ...................................... 1003 ss. 318(a) ...................................... 111 - -------- *Note:This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Indenture. TABLE OF CONTENTS* Page PARTIES......................................................................1 RECITALS OF THE COMPANY......................................................1 ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 101. Definitions............................................... 1 Acquired Indebtedness.............................................. 2 Act ............................................................... 2 Affiliate ......................................................... 2 Agent ............................................................. 2 Asset Sale ........................................................ 2 Authenticating Agent............................................... 3 Bank Agent ........................................................ 3 Bankruptcy Law .................................................... 3 Board of Directors................................................. 3 Board Resolution................................................... 3 Business Day ...................................................... 3 Capital Stock ..................................................... 3 Capitalized Lease Obligation....................................... 4 Cash Equivalents................................................... 4 Change of Control.................................................. 4 Commission ........................................................ 4 Common Stock ...................................................... 4 Company ........................................................... 5 Company Request" or "Company Order................................. 5 Consolidated Depreciation and Amortization Expense................. 5 Consolidated Interest Expense...................................... 5 Consolidated Net Income............................................ 5 Contingent Obligations............................................. 6 Corporate Trust Office............................................. 6 Custodian ......................................................... 6 Default ........................................................... 6 Defaulted Interest................................................. 6 Depositary ........................................................ 6 Designated Noncash Consideration................................... 7 Designated Preferred Stock......................................... 7 Designated Senior Indebtedness..................................... 7 - -------- *Note:This table of contents shall not, for any purpose, be deemed to be a part of the Indenture. Page Disqualified Stock................................................. 7 EBITDA ............................................................ 7 Equity Interests................................................... 8 Equity Offering ................................................... 8 Event of Default................................................... 8 Exchange Act ...................................................... 8 Existing Indebtedness.............................................. 8 Existing Notes .................................................... 8 Financings ........................................................ 8 Fixed Charge Coverage Ratio........................................ 8 Fixed Charges ..................................................... 9 Foreign Subsidiary................................................. 9 GAAP" ............................................................. 10 Government Securities.............................................. 10 guarantee ......................................................... 10 Guarantee ......................................................... 10 Guarantor ......................................................... 10 Hedging Obligations................................................ 10 Holder ............................................................ 11 Indebtedness ...................................................... 11 Indenture ......................................................... 11 Independent Financial Advisor...................................... 11 Interest Payment Date.............................................. 11 Investment Grade Securities........................................ 11 Investments ....................................................... 12 Issuance Date ..................................................... 12 KKR ............................................................... 12 Lien .............................................................. 12 Management Group................................................... 12 Maturity .......................................................... 12 Merger ............................................................ 12 Moody's ........................................................... 13 Net Income ........................................................ 13 Net Proceeds ...................................................... 13 Note Register" and "Note Registrar................................. 13 Notes ............................................................. 13 Obligations ....................................................... 13 Officer ........................................................... 13 Officers' Certificate.............................................. 13 Opinion of Counsel................................................. 13 Outstanding ....................................................... 14 Pari Passu Indebtedness............................................ 14 Paying Agent ...................................................... 15 Permitted Holders.................................................. 15 Permitted Investments.............................................. 15 ii Page Person ............................................................ 16 Predecessor Note................................................... 16 preferred stock ................................................... 16 Receivables Facility............................................... 16 Receivables Fees................................................... 16 Redemption Date ................................................... 16 Redemption Price................................................... 16 Regular Record Date................................................ 16 Related Parties ................................................... 16 Representative .................................................... 16 Repurchase Offer................................................... 17 Responsible Officer................................................ 17 Restricted Investment.............................................. 17 Restricted Subsidiary.............................................. 17 S&P .............................................................. 17 Securities Act .................................................... 17 Senior Credit Facility............................................. 17 Senior Indebtedness................................................ 17 Significant Subsidiary............................................. 18 Similar Business................................................... 18 Special Record Date................................................ 18 Stated Maturity ................................................... 18 Subordinated Indebtedness.......................................... 18 Subordinated Note Obligations...................................... 18 Subsidiary ........................................................ 18 Total Assets ...................................................... 19 Trust Indenture Act" or "TIA....................................... 19 Trustee ........................................................... 19 Unrestricted Subsidiary............................................ 19 Vice President .................................................... 20 Voting Stock ...................................................... 20 Weighted Average Life to Maturity.................................. 20 Wholly Owned Restricted Subsidiary................................. 20 Wholly Owned Subsidiary............................................ 20 SECTION 102. Compliance Certificates and Opinions...................... 20 SECTION 103. Form of Documents Delivered to Trustee.................... 21 SECTION 104. Acts of Holders........................................... 21 SECTION 105. Notices, Etc., to Trustee, the Company and any Guarantor.. 23 SECTION 106. Notice to Holders; Waiver................................. 23 SECTION 107. Effect of Headings and Table of Contents.................. 24 SECTION 108. Successors and Assigns.................................... 24 SECTION 109. Separability Clause....................................... 24 SECTION 110. Benefits of Indenture..................................... 24 SECTION 111. Governing Law............................................. 24 SECTION 112. Legal Holidays............................................ 24 iii Page SECTION 113. No Personal Liability of Directors, Officers, Employees, Stockholders or Incorporators............................. 25 SECTION 114. Counterparts.............................................. 25 ARTICLE TWO NOTE FORMS SECTION 201. Forms Generally........................................... 25 SECTION 202. Legend.................................................... 26 SECTION 203. Form of Face of Note...................................... 27 SECTION 204. Form of Reverse of Note................................... 29 SECTION 205. Form of Trustee's Certificate of Authentication........... 34 ARTICLE THREE THE NOTES SECTION 301. Title and Terms........................................... 35 SECTION 302. Denominations............................................. 36 SECTION 303. Execution, Authentication, Delivery and Dating............ 36 SECTION 304. Temporary Notes........................................... 37 SECTION 305. Registration, Registration of Transfer and Exchange....... 38 SECTION 306. Book-Entry Provisions for the Global Note................. 39 SECTION 307. Mutilated, Destroyed, Lost and Stolen Notes............... 40 SECTION 308. Payment of Interest; Interest Rights Preserved............ 41 SECTION 309. Persons Deemed Owners..................................... 42 SECTION 310. Cancellation.............................................. 42 SECTION 311. Computation of Interest................................... 42 SECTION 312. CUSIP Numbers............................................. 42 ARTICLE FOUR SATISFACTION AND DISCHARGE SECTION 401. Satisfaction and Discharge of Indenture................... 43 SECTION 402. Application of Trust Money................................ 44 ARTICLE FIVE REMEDIES SECTION 501. Events of Default......................................... 45 SECTION 502. Acceleration of Maturity; Rescission and Annulment........ 46 SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee ...................................................48 iv Page SECTION 504. Trustee May File Proofs of Claim.......................... 48 SECTION 505. Trustee May Enforce Claims Without Possession of Notes.... 49 SECTION 506. Application of Money Collected............................ 49 SECTION 507. Limitation on Suits....................................... 50 SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and Interest...................................... 50 SECTION 509. Restoration of Rights and Remedies........................ 50 SECTION 510. Rights and Remedies Cumulative............................ 51 SECTION 511. Delay or Omission Not Waiver.............................. 51 SECTION 512. Control by Holders........................................ 51 SECTION 513. Waiver of Past Defaults................................... 52 SECTION 514. Waiver of Stay or Extension Laws.......................... 52 SECTION 515. Undertaking for Costs..................................... 52 ARTICLE SIX THE TRUSTEE SECTION 601. Certain Duties and Responsibilities....................... 53 SECTION 602. Notice of Defaults........................................ 54 SECTION 603. Certain Rights of Trustee................................. 54 SECTION 604. Trustee Not Responsible for Recitals or Issuance of Notes. 56 SECTION 605. May Hold Notes............................................ 56 SECTION 606. Money Held in Trust....................................... 56 SECTION 607. Compensation and Reimbursement............................ 56 SECTION 608. Corporate Trustee Required; Eligibility................... 57 SECTION 609. Resignation and Removal; Appointment of Successor......... 58 SECTION 610. Acceptance of Appointment by Successor.................... 59 SECTION 611. Merger, Conversion, Consolidation or Succession to Business ................................................. 59 ARTICLE SEVEN HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY SECTION 701. Company to Furnish Trustee Names and Addresses............ 60 SECTION 702. Disclosure of Names and Addresses of Holders.............. 60 SECTION 703. Reports by Trustee........................................ 60 ARTICLE EIGHT MERGER, CONSOLIDATION, OR SALE OF ASSETS SECTION 801. Company May Consolidate, Etc., Only on Certain Terms...... 60 SECTION 802. Successor Substituted..................................... 62 v Page ARTICLE NINE SUPPLEMENTS AND AMENDMENTS TO INDENTURE SECTION 901. Supplemental Indentures Without Consent of Holders........ 62 SECTION 902. Supplemental Indentures with Consent of Holders........... 63 SECTION 903. Execution of Supplemental Indentures...................... 64 SECTION 904. Effect of Supplemental Indentures......................... 64 SECTION 905. Conformity with Trust Indenture Act....................... 64 SECTION 906. Reference in Notes to Supplemental Indentures............. 65 SECTION 907. Notice of Supplemental Indentures......................... 65 SECTION 908. Effect on Senior Indebtedness............................. 65 ARTICLE TEN COVENANTS SECTION 1001. Payment of Principal, Premium, if Any, and Interest...... 65 SECTION 1002. Maintenance of Office or Agency.......................... 66 SECTION 1003. Money for Note Payments to Be Held in Trust.............. 66 SECTION 1004. Corporate Existence...................................... 68 SECTION 1005. Taxes.................................................... 68 SECTION 1006. Maintenance of Properties................................ 68 SECTION 1007. Insurance................................................ 68 SECTION 1008. Compliance with Laws..................................... 69 SECTION 1009. Limitation on Restricted Payments........................ 69 SECTION 1010. Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock....................................... 73 SECTION 1011. Liens.................................................... 77 SECTION 1012. Transactions with Affiliates............................. 77 SECTION 1013. Dividend and Other Payment Restrictions Affecting Subsidiaries. ........................................... 78 SECTION 1014. Limitation on Guarantees of Indebtedness by Restricted Subsidiaries............................................. 80 SECTION 1015. Limitation on Other Senior Subordinated Indebtedness..... 81 SECTION 1016. Offer to Repurchase Upon Change of Control............... 81 SECTION 1017. Asset Sales.............................................. 82 SECTION 1018. Compliance Certificate................................... 84 SECTION 1019. Reports.................................................. 85 SECTION 1020. Further Assurances....................................... 85 ARTICLE ELEVEN REDEMPTION OF NOTES SECTION 1101. Redemption............................................... 85 vi Page SECTION 1102. Applicability of Article................................. 86 SECTION 1103. Election to Redeem; Notice to Trustee.................... 86 SECTION 1104. Selection by Trustee of Notes to Be Redeemed............. 86 SECTION 1105. Notice of Redemption..................................... 86 SECTION 1106. Deposit of Redemption Price.............................. 88 SECTION 1107. Notes Payable on Redemption Date......................... 88 SECTION 1108. Notes Redeemed in Part................................... 88 ARTICLE TWELVE LEGAL DEFEASANCE AND COVENANT DEFEASANCE SECTION 1201. Company's Option to Effect Legal Defeasance or Covenant Defeasance............................................... 89 SECTION 1202. Legal Defeasance and Discharge........................... 89 SECTION 1203. Covenant Defeasance...................................... 89 SECTION 1204. Conditions to Legal Defeasance or Covenant Defeasance.... 90 SECTION 1205. Deposited Money and U.S. Government Securities to Be Held in Trust; Other Miscellaneous Provisions.................... 91 SECTION 1206. Reinstatement............................................ 92 ARTICLE THIRTEEN SUBORDINATION OF NOTES SECTION 1301. Notes Subordinate to Senior Indebtedness................. 92 SECTION 1302. Payment over of Proceeds upon Dissolution, Etc........... 92 SECTION 1303. Suspension of Payment When Senior Indebtedness in Default 93 SECTION 1304. Acceleration of Notes.................................... 94 SECTION 1305. When Distribution Must Be Paid Over...................... 94 SECTION 1306. Notice by Company........................................ 95 SECTION 1307. Payment Permitted If No Default.......................... 95 SECTION 1308. Subrogation to Rights of Holders of Senior Indebtedness.. 95 SECTION 1309. Provisions Solely to Define Relative Rights.............. 96 SECTION 1310. Trustee to Effectuate Subordination...................... 96 SECTION 1311. Subordination May Not Be Impaired by Company............. 96 SECTION 1312. Distribution or Notice to Representative................. 96 SECTION 1313. Notice to Trustee........................................ 97 SECTION 1314. Reliance on Judicial Order or Certificate of Liquidating Agent ....................................... 97 SECTION 1315. Rights of Trustee as a Holder of Senior Indebtedness; Preservation of Trustees' Rights........................ 98 SECTION 1316. Article Applicable to Paying Agents...................... 98 SECTION 1317. No Suspension of Remedies................................ 98 SECTION 1318. Modification of Terms of Senior Indebtedness............. 98 SECTION 1319. Certain Terms............................................ 99 vii Page SECTION 1320. Trust Moneys Not Subordinated............................ 99 viii INDENTURE, dated as of May __, 1997, between AMPHENOL CORPORATION, a corporation duly organized and existing under the laws of the State of Delaware (the "Company"), having its principal office at 358 Hall Avenue, Wallingford, Connecticut 06492, and IBJ Schroder Bank & Trust Company, a ______________ corporation, as trustee (the "Trustee"). RECITALS OF THE COMPANY The Company has duly authorized the creation of and issuance of its __ Senior Subordinated Notes due May 2007 (the "Notes") of substantially the tenor and amount hereinafter set forth, and to provide therefor the Company has duly authorized the execution and delivery of this Indenture. This Indenture is subject to, and shall be governed by, the provisions of the Trust Indenture Act of 1939, as amended, that are required or deemed to be part of and to govern indentures qualified thereunder. All things necessary have been done to make the Notes, when executed and duly issued by the Company and authenticated and delivered hereunder by the Trustee or the Authenticating Agent, the valid obligations of the Company and to make this Indenture a valid agreement of the Company in accordance with their and its terms. NOW, THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Notes by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Notes, as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 101. Definitions. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Article have the meanings assigned to them in this Article, and words in the singular include the plural as well as the singular, and words in the plural include the singular as well as the plural; (b) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, or defined by Commission rule and not otherwise 2 defined herein have the meanings assigned to them therein, and the terms "cash transaction" and "self-liquidating paper", as used in TIA Section 311, shall have the meanings assigned to them in the rules of the Commission adopted under the Trust Indenture Act; (c) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with Generally Accepted Accounting Principles; (d) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision; (e) the word "or" is not exclusive; and (f) provisions of this Indenture apply to successive events and transactions. Certain terms, used principally in Articles Two, Ten, Twelve and Thirteen, are defined in those Articles. "Acquired Indebtedness" means, with respect to any specified Person, (i) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Restricted Subsidiary of such specified Person, including, without limitation, Indebtedness incurred in connection with, or in contemplation of, such other Person merging with or into or becoming a Restricted Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person. "Act," when used with respect to any Holder, has the meaning set forth in Section 104. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; provided, however, that beneficial ownership of 10% or more of the voting securities of a Person shall be deemed to be control. "Agent" means any Paying Agent, Authenticating Agent and Note Registrar under this Indenture. "Asset Sale" means (i) the sale, conveyance, transfer or other disposition (whether in a single transaction or a series of related transactions) of property or assets (including by way of a sale and leaseback) of the Company or any Restricted Subsidiary (each referred to in this definition as a "disposition") or (ii) the issuance or sale of Equity Interests of any Restricted Subsidiary (whether in a single transaction or a series of related transactions), 3 in each case, other than: (a) a disposition of Cash Equivalents or Investment Grade Securities or obsolete equipment in the ordinary course of business; (b) the disposition of all or substantially all of the assets of the Company in a manner permitted pursuant to the provisions of Section 801 hereof or any disposition that constitutes a Change of Control pursuant to this Indenture; (c) any Restricted Payment that is permitted to be made, and is made, under the first paragraph of Section 1009 hereof; (d) any disposition of assets with an aggregate fair market value of less than $1.0 million; (e) any disposition of property or assets by a Restricted Subsidiary to the Company or by the Company or a Restricted Subsidiary to a Wholly Owned Restricted Subsidiary; (f) any exchange of like property pursuant to Section 1031 of the Internal Revenue Code of 1986, as amended, for use in a Similar Business; (g) any financing transaction with respect to property built or acquired by the Company or any Restricted Subsidiary after the Issuance Date including, without limitation, sale-leasebacks and asset securitizations; (h) foreclosures on assets; (i) sales of accounts receivable, or participations therein, in connection with any Receivables Facility; and (j) any sale of Equity Interests in, or Indebtedness or other securities of, an Unrestricted Subsidiary. "Authenticating Agent" means the Person appointed, if any, by the Trustee as an authenticating agent pursuant to the last paragraph of Section 303. "Bank Agent" means Bankers Trust Company, in its capacity as administrative agent under the Senior Credit Facility, and any successor administrative agent thereunder. "Bankruptcy Law" means Title 11, United States Bankruptcy Code of 1978, as amended, or any similar United States federal or state or foreign law relating to bankruptcy, insolvency, receivership, winding-up, liquidation, reorganization or relief of debtors or any amendment to, succession to or change in any such law. "Board of Directors" means, with respect to any Person, either the board of directors of such Person or any duly authorized committee thereof. "Board Resolution" means, with respect to any Person, a copy of a resolution certified by the Secretary or an Assistant Secretary of such Person to have been duly adopted by the Board of Directors of such Person and to be in full force and effect on the date of such certification, and delivered to the Trustee. "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in The City of New York are authorized or obligated by law or executive order to close. "Capital Stock" means (i) in the case of a corporation, corporate stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, (iii) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited) and (iv) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person. 4 "Capitalized Lease Obligation" means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be required to be capitalized and reflected as a liability on a balance sheet (excluding the footnotes thereto) in accordance with GAAP. "Cash Equivalents" means (i) U.S. dollars, (ii) securities issued or directly and fully guaranteed or insured by the U.S. Government or any agency or instrumentality thereof, (iii) certificates of deposit, time deposits and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers' acceptances with maturities not exceeding one year and overnight bank deposits, in each case with any commercial bank having capital and surplus in excess of $500.0 million, (iv) repurchase obligations for underlying securities of the types described in clauses (ii) and (iii) entered into with any financial institution meeting the qualifications specified in clause (iii) above, (v) commercial paper rated A-1 or the equivalent thereof by Moody's or S&P and in each case maturing within one year after the date of acquisition, (vi) investment funds investing 95% of their assets in securities of the types described in clauses (i)-(v) above, (vii) readily marketable direct obligations issued by any state of the United States of America or any political subdivision thereof having one of the two highest rating categories obtainable from either Moody's or S&P and (viii) Indebtedness or preferred stock issued by Persons with a rating of "A" or higher from S&P or "A2" or higher from Moody's. "Change of Control" means the occurrence of any of the following: (i) the sale, lease or transfer, in one or a series of related transactions, of all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole; or (ii) the Company becomes aware of (by way of a report or any other filing pursuant to Section 13(d) of the Exchange Act, proxy, vote, written notice or otherwise) the acquisition by any Person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision), including any group acting for the purpose of acquiring, holding or disposing of securities (within the meaning of Rule 13d-5(b)(1) under the Exchange Act), other than the Permitted Holders and their Related Parties, in a single transaction or in a related series of transactions, by way of merger, consolidation or other business combination or purchase of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any successor provision) of 50% or more of the total voting power of the Voting Stock of the Company. "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or, if at any time after the execution of this Indenture such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time. "Common Stock" of any Person means any and all shares, interests or other participations in, and other equivalents (however designated, whether voting or non-voting) of such Person's common stock, whether outstanding on the Issuance Date or issued after the Issuance Date and includes, without limitation, all series and class of such common stock. 5 "Company" means the Person named as the "Company" in the first paragraph of this Indenture, until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor Person. "Company Request" or "Company Order" means a written request or order signed in the name of the Company (a) by its Chairman, a Vice-Chairman, its President or any Vice President and (b) by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary and delivered to the Trustee; provided, however, that such written request or order may be signed by any two of the officers or directors listed in clause (a) above in lieu of being signed by one of such officers or directors listed in such clause (a) and one of the officers listed in clause (b) above. "Consolidated Depreciation and Amortization Expense" means with respect to any Person for any period, the total amount of depreciation and amortization expense of such Person and its Restricted Subsidiaries for such period on a consolidated basis and otherwise determined in accordance with GAAP. "Consolidated Interest Expense" means, with respect to any period, the sum, without duplication, of: (a) consolidated interest expense of such Person and its Restricted Subsidiaries for such period, to the extent, such expense was deducted in computing Consolidated Net Income (including amortization of original issue discount, non-cash interest payments, the interest component of Capitalized Lease Obligations, and net payments and receipts (if any) pursuant to Hedging Obligations to the extent included in Consolidated Interest Expense, excluding amortization of deferred financing fees) and (b) consolidated capitalized interest of such Person and its Restricted Subsidiaries for such period, whether paid or accrued; provided, however, that Receivables Fees shall be deemed not to constitute Consolidated Interest Expense. "Consolidated Net Income" means, with respect to any Person for any period, the aggregate of the Net Income, of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, and otherwise determined in accordance with GAAP; provided, however, that (i) any net after-tax extraordinary gains or losses (less all fees and expenses relating thereto) shall be excluded, (ii) the Net Income for such period shall not include the cumulative effect of a change in accounting principles during such period, (iii) any net after-tax income (loss) from discontinued operations and any net after-tax gains or losses on disposal of discontinued operations shall be excluded, (iv) any net after-tax gains or losses (less all fees and expenses relating thereto) attributable to asset dispositions other than in the ordinary course of business (as determined in good faith by the Board of Directors of the Company) shall be excluded, (v) the Net Income for such period of any Person that is not a Subsidiary, or is an Unrestricted Subsidiary, or that is accounted for by the equity method of accounting, shall be included only to the extent of the amount of dividends or distributions or other payments paid in cash (or to the extent converted into cash) to the referent Person or a Wholly Owned Restricted Subsidiary thereof in respect of such period, (vi) the Net Income of any Person acquired in a pooling of interests transaction shall not be included for any period prior to the date of such acquisition and (vii) the Net Income for such period of any Restricted Subsidiary shall be excluded to the extent that the declaration or payment of dividends or similar 6 distributions by that Restricted Subsidiary of its Net Income is not at the date of determination permitted without any prior governmental approval (which has not been obtained) or, directly or indirectly, by the operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule, or governmental regulation applicable to that Restricted Subsidiary or its stockholders, unless such restriction with respect to the payment of dividends or in similar distributions has been legally waived. "Contingent Obligations" means, with respect to any Person, any obligation of such Person guaranteeing any leases, dividends or other obligations that do not constitute Indebtedness ("primary obligations") of any other Person (the "primary obligor") in any manner, whether directly or indirectly, including, without limitation, any obligation of such Person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (A) for the purchase or payment of any such primary obligation or (B) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, or (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation against loss in respect thereof. "Corporate Trust Office" means the principal corporate trust office of the Trustee, at which at any particular time its corporate trust business shall be administered, which office at the date of execution of this Indenture is located at One State Street, New York, NY 10004, except that with respect to presentation of Notes for payment or for registration of transfer or exchange, such term shall mean any office or agency of the Trustee at which, at any particular time, its corporate agency business shall be conducted. "Credit Facilities" means, with respect to the Company, one or more debt facilities (including, without limitation, the Senior Credit Facility) or commercial paper facilities with banks or other institutional lenders providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time. "Custodian" means any receiver, trustee, assignee, liquidator, sequestrator or similar official under any Bankruptcy Law. "Default" means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default. "Defaulted Interest" has the meaning set forth in Section 308. "Depositary" means The Depository Trust Company, its nominees and successors. 7 "Designated Noncash Consideration" means the fair market value of noncash consideration received by the Company or one of its Restricted Subsidiaries in connection with an Asset Sale that is so designated as Designated Noncash Consideration pursuant to an Officers' Certificate, setting forth the basis of such valuation, executed by the principal executive officer and the principal financial officer of the Company, less the amount of cash or Cash Equivalents received in connection with a sale of such Designated Noncash Consideration. "Designated Preferred Stock" means preferred stock of the Company (other than Disqualified Stock) that is issued for cash (other than to a Restricted Subsidiary) and is so designated as Designated Preferred Stock, pursuant to an Officers' Certificate executed by the principal executive officer and the principal financial officer of the Company, on the issuance date thereof, the cash proceeds of which are excluded from the calculation set forth in clause (C) of paragraph (a) of Section 1009. "Designated Senior Indebtedness" means (i) Senior Indebtedness under the Senior Credit Facility and (ii) any other Senior Indebtedness permitted under this Indenture the principal amount of which is $50.0 million or more and that has been designated by the Company as Designated Senior Indebtedness. "Disqualified Stock" means, with respect to any Person, any Capital Stock of such Person which, by its terms (or by the terms of any security into which it is convertible or for which it is potable or exchangeable), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder thereof, in whole or in part, in each case prior to the date 91 days after the maturity date of the Notes; provided, however, that if such Capital Stock is issued to any employee or to any plan for the benefit of employees of the Company or its Subsidiaries or by any such plan to such employees, such Capital Stock shall not constitute Disqualified Stock solely because it may be required to be repurchased by the Company in order to satisfy applicable statutory or regulatory obligations. "EBITDA" means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period plus (a) provision for taxes based on income or profits of such Person for such period deducted in computing Consolidated Net Income, plus (b) Consolidated Interest Expense of such Person for such period and any Receivables Fees paid by such Person or any of its Restricted Subsidiaries during such period, in each case to the extent the same was deducted in calculating such Consolidated Net Income, plus (c) Consolidated Depreciation and Amortization Expense of such Person for such period to the extent such depreciation and amortization were deducted in computing Consolidated Net Income, plus (d) any expenses or charges related to any Equity Offering, Permitted Investment or Indebtedness permitted to be incurred by this Indenture (including such expenses or charges related to the Merger (including the costs of (i) the cancellation of the stock options and (ii) the retirement of the Existing Notes) and the Financings) and deducted in such period in computing Consolidated Net Income, plus (e) the amount of any restructuring charge deducted in such period in computing Consolidated Net Income, plus (f) without duplication, any other non-cash charges reducing Consolidated Net Income for such period (excluding any such charge which 8 requires an accrual of a cash reserve for anticipated cash charges for any future period), plus (g) the amount of any minority interest expense deducted in calculating Consolidated Net Income, less, without duplication, (h) non-cash items increasing Consolidated Net Income of such Person for such period (excluding any items which represent the reversal of any accrual of, or cash reserve for, anticipated cash charges in any prior period). "Equity Interests" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "Equity Offering" means any public or private sale of common stock or preferred stock of the Company (excluding Disqualified Stock), other than (i) public offerings with respect to the Company's Common Stock registered on Form S-8 and (ii) any such public or private sale that constitutes an Excluded Contribution. "Event of Default" has the meaning set forth in Section 501. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder. "Excluded Contributions" means the net cash proceeds received by the Company after the closing of the Merger from (a) contributions to its common equity capital and (b) the sale (other than to a Subsidiary or to any Company or Subsidiary management equity plan or stock option plan or any other management or employee benefit plan or agreement) of Capital Stock (other than Disqualified Stock) of the Company, in each case designated as Excluded Contributions pursuant to an Officers' Certificate executed by the principal executive officer and the principal financial officer of the Company on the date such capital contributions are made or the date such Equity Interests are sold, as the case may be, the cash proceeds of which are excluded from the calculation set forth in paragraph (C) of Section 1009(a) hereof. "Existing Indebtedness" means Indebtedness of the Company or its Restricted Subsidiaries in existence on the Issuance Date, plus interest accruing thereon, after application of the net proceeds of the sale of the Notes as described in this Prospectus. "Existing Notes" means the Company's 10.45% Senior Notes due 2001 and the Company's 12 3/4% Senior Subordinated Notes due 2002. "Financings" means the financing transactions consummated on the Issuance Date in conjunction with the Merger, and consists of (a) the consummation of the Senior Credit Facility and (b) the issuance and sale of the Notes to the Underwriters. "Fixed Charge Coverage Ratio" means, with respect to any Person for any period, the ratio of EBITDA of such Person for such period to the Fixed Charges of such Person for such period. In the event that the Company or any of its Restricted Subsidiaries incurs, assumes, guarantees or redeems any Indebtedness (other than in the case of revolving credit borrowings, in which case interest expense shall be computed based upon the average 9 daily balance of such Indebtedness during the applicable period) or issues or redeems preferred stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but prior to the event for which the calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such incurrence, assumption, guarantee or redemption of Indebtedness, or such issuance or redemption of preferred stock, as if the same had occurred at the beginning of the applicable four-quarter period. For purposes of making the computation referred to above, Investments, acquisitions, dispositions, mergers, consolidations and discontinued operations (as determined in accordance with GAAP) that have been made by the Company or any of its Restricted Subsidiaries during the four-quarter reference period or subsequent to such reference period and on or prior to or simultaneously with the Calculation Date shall be calculated on a pro forma basis assuming that all such Investments, acquisitions, dispositions, discontinued operations, mergers and consolidations (and the reduction of any associated fixed charge obligations and the change in EBITDA resulting therefrom) had occurred on the first day of the four-quarter reference period. If since the beginning of such period any Person (that subsequently became a Restricted Subsidiary or was merged with or into the Company or any Restricted Subsidiary since the beginning of such period) shall have made any Investment, acquisition, disposition, discontinued operation, merger or consolidation that would have required adjustment pursuant to this definition, then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect thereto for such period as if such Investment, acquisition, disposition, discontinued operation, merger or consolidation had occurred at the beginning of the applicable four-quarter period. For purposes of this definition, whenever pro forma effect is to be given to a transaction, the pro forma calculations shall be made in good faith by a responsible financial or accounting officer of the Company. If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the Calculation Date had been the applicable rate for the entire period (taking into account any Hedging Obligations applicable to such Indebtedness). Interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by a responsible financial or accounting officer of the Company to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with GAAP. For purposes of making the computation referred to above, interest on any Indebtedness under a revolving credit facility computed on a pro forma basis shall be computed based upon the average daily balance of such Indebtedness during the applicable period. Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rate, shall be deemed to have been based upon the rate actually chosen, or, if none, then based upon such optional rate chosen as the Company may designate. "Fixed Charges" means, with respect to any Person for any period, the sum of (a) Consolidated Interest Expense of such Person for such period and (b) all cash dividend payments (excluding items eliminated in consolidation) on any series of preferred stock of such Person. "Foreign Subsidiary" means a Restricted Subsidiary not organized or existing under the laws of the United States, any State thereof, the District of Columbia or any territory thereof. 10 "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect on the Issuance Date. For the purposes of this Indenture, the term "consolidated" with respect to any Person shall mean such Person consolidated with its Restricted Subsidiaries, and shall not include any Unrestricted Subsidiary. "Government Securities" means securities that are (a) direct obligations of the United States of America for the timely payment of which its full faith and credit is pledged or (b) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act), as custodian with respect to any such Government Securities or a specific payment of principal of or interest on any such Government Securities held by such custodian for the account of the holder of such depository receipt; provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the Government Securities or the specific payment of principal of or interest on the Government Securities evidenced by such depository receipt. "guarantee" means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including, without limitation, letters of credit and reimbursement agreements in respect thereof), of all or any part of any Indebtedness or other obligations. "Guarantee" means any guarantee of the obligations of the Company under this Indenture and the Notes by any Person in accordance with the provisions of this Indenture. When used as a verb, "Guarantee" shall have a corresponding meaning. No Guarantees will be issued in connection with the initial offering and sale of the Notes. "Guarantor" means any Person that incurs a Guarantee; provided that upon the release and discharge of such Person from its Guarantee in accordance with this Indenture, such Person shall cease to be a Guarantor. No Guarantees will be issued in connection with the initial offering and sale of the Notes. "Hedging Obligations" means, with respect to any Person, the obligations of such Person under (i) currency exchange or interest rate swap agreements, currency exchange or interest rate cap agreements and currency exchange or interest rate collar agreements and (ii) other agreements or arrangements designed to protect such Person against fluctuations in currency exchange or interest rates. 11 "Holder" means the Person in whose name a Note is registered in the Note Register. "Indebtedness" means, with respect to any Person, (a) any indebtedness of such Person, whether or not contingent (i) in respect of borrowed money, (ii) evidenced by bonds, notes, debentures or similar instruments or letters of credit or bankers' acceptances (or, without double counting, reimbursement agreements in respect thereof), (iii) representing the balance deferred and unpaid of the purchase price of any property (including Capitalized Lease Obligations), except any such balance that constitutes a trade payable or similar obligation to a trade creditor, in each case accrued in the ordinary course of business or (iv) representing any Hedging Obligations, if and to the extent of any of the foregoing Indebtedness (other than letters of credit and Hedging Obligations) that would appear as a liability upon a balance sheet (excluding the footnotes thereto) of such Person prepared in accordance with GAAP, (b) to the extent not otherwise included, any obligation by such Person to be liable for, or to pay, as obligor, guarantor or otherwise, on the Indebtedness of another Person (other than by endorsement of negotiable instruments for collection in the ordinary course of business) and (c) to the extent not otherwise included, Indebtedness of another Person secured by a Lien on any asset owned by such Person (whether or not such Indebtedness is assumed by such Person); provided, however, that Contingent Obligations incurred in the ordinary course of business shall be deemed not to constitute Indebtedness and obligations under or in respect of Receivables Facilities shall not be deemed to constitute Indebtedness of a Person. "Indenture" means this instrument as originally executed and as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof. "Independent Financial Advisor" means an accounting, appraisal, investment banking firm or consultant to Persons engaged in Similar Businesses of nationally recognized standing that is, in the judgment of the Company's Board of Directors, as evidenced by a Board Resolution, qualified to perform the task for which it has been engaged. "Interest Payment Date" means the Stated Maturity of an installment of interest on the Notes. "Investment Grade Securities" means (i) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof (other than Cash Equivalents), (ii) debt securities or debt instruments with a rating of BBB-or higher by S&P or Baa3 or higher by Moody's or the equivalent of such rating by such rating organization, or, if no rating of S&P or Moody's then exists, the equivalent of such rating by any other nationally recognized securities rating agency, but excluding any debt securities or instruments constituting loans or advances among the Company and its Subsidiaries, and (iii) investments in any fund that invests exclusively in investments of the type described in clauses (i) and (ii) which fund may also hold immaterial amounts of cash pending investment and/or distribution. 12 "Investments" means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the form of loans (including guarantees), advances or capital contributions (excluding advances to customers, commission, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities issued by any other Person and investments that are required by GAAP to be classified on the balance sheet (excluding the footnotes thereto) of the Company in the same manner as the other investments included in this definition to the extent such transactions involve the transfer of cash or other property. For purposes of the definition of "Unrestricted Subsidiary" and Section 1009 hereof, (i) "Investments" shall include the portion (proportionate to the Company's equity interest in such Subsidiary) of the fair market value of the net assets of a Subsidiary of the Company at the time that such Subsidiary is designated an Unrestricted Subsidiary; provided, however, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue to have a permanent "Investment" in an Unrestricted Subsidiary equal to an amount (if positive) equal to (x) the Company's "Investment" in such Subsidiary at the time of such redesignation less (y) the portion (proportionate to the Company's equity interest in such Subsidiary) of the fair market value of the net assets of such Subsidiary at the time of such redesignation; and (ii) any property transferred to or from an Unrestricted Subsidiary shall be valued at its fair market value at the time of such transfer, in each case as determined in good faith by the Board of Directors. "Issuance Date" means the closing date for the sale and original issuance of the Notes hereunder. "KKR" means Kohlberg Kravis Roberts & Co. L.P. "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction); provided that in no event shall an operating lease be deemed to constitute a Lien. "Management Group" means the group consisting of the Officers of the Company. "Maturity" means, with respect to any Note, the date on which any principal of such Note becomes due and payable as therein or herein provided, whether at the Stated Maturity by declaration of acceleration, call for redemption or purchase or otherwise. "Merger" means the merger between the Company and NXS Acquisition Corp., with the surviving corporation being the Company, pursuant to an agreement and plan of merger dated as of January 23, 1997 (as amended as of April 9, 1997), between the Company and NXS Acquisition Corp. 13 "Moody's" means Moody's Investors Service, Inc., and its successors. "Net Income" means, with respect to any Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends. "Net Proceeds" means the aggregate cash proceeds received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any Designated Noncash Consideration received in any Asset Sale), net of the direct costs relating to such Asset Sale and the sale or disposition of such Designated Noncash Consideration (including, without limitation, legal, accounting and investment banking fees, and brokerage and sales commissions), and any relocation expenses incurred as a result thereof, taxes paid or payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements related thereto), amounts required to be applied to the repayment of principal, premium (if any) and interest on Indebtedness required (other than required by clause (i) of Section 1017(b) hereof) to be paid as a result of such transaction and any deduction of appropriate amounts to be provided by the Company as a reserve in accordance with GAAP against any liabilities associated with the asset disposed of in such transaction and retained by the Company after such sale or other disposition thereof, including, without limitation, pension and other post-employment benefit liabilities and liabilities related to environmental matters or against any indemnification obligations associated with such transaction. "Note Register" and "Note Registrar" have the respective meanings specified in Section 305. "Notes" has the meaning stated in the first recital of this Indenture and more particularly means any Notes authenticated and delivered under this Indenture. "Obligations" means any principal, interest, penalties, fees, indemnifications, reimbursements (including, without limitation, reimbursement obligations with respect to letters of credit and banker's acceptances), damages and other liabilities payable under the documentation governing any Indebtedness. "Officer" means the Chairman of the Board, the President, any Executive Vice President, Senior Vice President or Vice President, the Treasurer or the Secretary of the Company. "Officers' Certificate" means a certificate signed on behalf of the Company by two officers of the Company, one of whom must be the principal executive officer, the principal financial officer, the treasurer or the principal accounting officer of the Company that meets the requirements set forth in Section 102. "Opinion of Counsel" means a written opinion of counsel, which and who are reasonably acceptable to, and addressed to, the Trustee complying with the requirements of 14 Section 102. Unless otherwise required by the TIA, such legal counsel may be an employee of or counsel to the Company or the Trustee. "Outstanding," when used with respect to Notes, means, as of the date of determination, all Notes theretofore authenticated and delivered under this Indenture, except: (a) Notes theretofore cancelled by the Trustee or delivered to the Trustee for cancellation; (b) Notes, or portions thereof, for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Notes; provided that, if such Notes are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; (c) Notes, except to the extent provided in Sections 1202 and 1203, with respect to which the Company has effected defeasance and/or covenant defeasance as provided in Article Twelve; and (d) Notes in exchange for or in lieu of which other Notes (including pursuant to Section 307) have been authenticated and delivered pursuant to this Indenture, other than any such Notes in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Notes are held by a bona fide purchaser in whose hands the Notes are valid obligations of the Company; provided, however, that in determining whether the Holders of the requisite principal amount of Outstanding Notes have given any request, demand, authorization, direction, consent, notice or waiver hereunder, and for the purpose of making the calculations required by TIA Section 313, Notes owned by the Company or any other obligor upon the Notes or any Affiliate of the Company or such other obligor shall be disregarded and deemed not to be Outstanding (provided, that in connection with any offer by the Company or any obligor to purchase the Notes, Notes tendered for purchase will be deemed to be Outstanding and held by the tendering Holder until the date of purchase), except that, in determining whether the Trustee shall be protected in making such calculation or in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Notes which the Trustee actually knows to be so owned shall be so disregarded. Notes so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Notes and that the pledgee is not the Company or any other obligor upon the Notes or any Affiliate of the Company or such other obligor. "Pari Passu Indebtedness" means (a) with respect to the Notes, Indebtedness which ranks pari passu in right of payment to the Notes and (b) with respect to any Guarantee, Indebtedness which ranks pari passu in right of payment to such Guarantee. 15 "Paying Agent" means any Person (including the Company acting as Paying Agent) authorized by the Company to pay the principal of (and premium, if any) or interest on any Notes on behalf of the Company. "Permitted Holders" means KKR and any of its Affiliates and the Management Group. "Permitted Investments" means (a) any Investment in the Company or any Restricted Subsidiary; (b) any Investment in cash and Cash Equivalents or Investment Grade Securities; (c) any Investment by the Company or any Restricted Subsidiary of the Company in a Person that is a Similar Business if as a result of such Investment (i) such Person becomes a Restricted Subsidiary or (ii) such Person, in one transaction or a series of related transactions, is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or a Restricted Subsidiary; (d) any Investment in securities or other assets not constituting cash or Cash Equivalents and received in connection with an Asset Sale made pursuant to the provisions of Section 1017 hereof or any other disposition of assets not constituting an Asset Sale; (e) any Investment existing on the Issuance Date; (f) advances to employees not in excess of $10.0 million outstanding at any one time, in the aggregate; (g) any Investment acquired by the Company or any of its Restricted Subsidiaries (i) in exchange for any other Investment or accounts receivable held by the Company or any such Restricted Subsidiary in connection with or as a result of a bankruptcy, workout, reorganization or recapitalization of the issuer of such other Investment or accounts receivable or (ii) as a result of a foreclosure by the Company or any of its Restricted Subsidiaries with respect to any secured Investment or other transfer of title with respect to any secured Investment in default; (h) Hedging Obligations permitted under Section 1010(b)(x) hereof; (i) loans and advances to officers, directors and employees for business-related travel expenses, moving expenses and other similar expenses, in each case incurred in the ordinary course of business; (j) any Investment in a Similar Business (other than an Investment in an Unrestricted Subsidiary) having an aggregate fair market value, taken together with all other Investments made pursuant to this clause (j) that are at that time outstanding, not to exceed the greater of (x) $100.0 million or (y) 15% of Total Assets at the time of such Investment (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value); (k) Investments the payment for which consists of Equity Interests of the Company (exclusive of Disqualified Stock); provided, however, that such Equity Interests will not increase the amount available for Restricted Payments under clause (C) of Section 1009(a) hereof; (l) additional Investments having an aggregate fair market value, taken together with all other Investments made pursuant to this clause (l) that are at that time outstanding, not to exceed the greater of (x) $35.0 million or (y) 5% of Total Assets at the time of such Investment (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value); (m) any transaction to the extent it constitutes an investment that is permitted by and made in accordance with the provisions of Section 1012(b) hereof (except transactions described in clauses (ii) and (vi) of such paragraph); (n) any Investment by Restricted Subsidiaries in other Restricted Subsidiaries and Investments by Subsidiaries that are not Restricted Subsidiaries in other Subsidiaries that are not Restricted Subsidiaries; and (o) Investments relating to any special purpose Wholly Owned Subsidiary of the Company 16 organized in connection with a Receivables Facility that, in the good faith determination of the Board of Directors of the Company, are necessary or advisable to effect such Receivables Facility. "Person" means any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity. "Physical Notes" means Notes issued in definitive, certificated form. "Predecessor Note" of any particular Note means every previous Note evidencing all or a portion of the same debt as that evidenced by such particular Note; and, for the purposes of this definition, any Note authenticated and delivered under Section 307 in exchange for a mutilated security or in lieu of a lost, destroyed or stolen Note shall be deemed to evidence the same debt as the mutilated, lost, destroyed or stolen Note. "preferred stock" means any Equity Interest with preferential right of payment of dividends or upon liquidation, dissolution, or winding up. "Receivables Facility" means one or more receivables financing facilities, as amended from time to time, pursuant to which the Company and/or any of its Restricted Subsidiaries sells its accounts receivable to a Person that is not a Restricted Subsidiary. "Receivables Fees" means distributions or payments made directly or by means of discounts with respect to any participation interests issued or sold in connection with, and other fees paid to a Person that is not a Restricted Subsidiary in connection with, any Receivables Facility. "Redemption Date," when used with respect to any Note to be redeemed, in whole or in part, means the date fixed for such redemption by or pursuant to this Indenture. "Redemption Price," when used with respect to any Note to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture. "Regular Record Date" for the interest payable on any Interest Payment Date means the __________ or ________ (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. "Related Parties" means any Person controlled by a Permitted Holder, including any partnership of which a Permitted Holder or its Affiliates is the general partner. "Representative" means (a) with respect to the Senior Credit Facility, the Bank Agent and (b) with respect to any other Senior Indebtedness, the indenture trustee or other trustee, agent or representative for the holders of such Senior Indebtedness. 17 "Repurchase Offer" means an offer made by the Company to purchase all or any portion of a Holder's Notes pursuant to the provisions described under Sections 1016 or 1017 hereof. "Responsible Officer," when used with respect to the Trustee, means the chairman or any vice chairman of the board of directors, the chairman or any vice chairman of the executive committee of the board of directors, the chairman of the trust committee, the president, any vice president, the secretary, any assistant secretary, the treasurer, any assistant treasurer, the cashier, any trust officer or assistant trust officer, the controller or any assistant controller or any other officer of the Trustee customarily performing functions similar to those performed by any of the above-designated officers, and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Restricted Investment" means an Investment other than a Permitted Investment. "Restricted Subsidiary" means, at any time, any direct or indirect Subsidiary of the Company that is not then an Unrestricted Subsidiary; provided, however, that upon the occurrence of an Unrestricted Subsidiary ceasing to be an Unrestricted Subsidiary, such Subsidiary shall be included in the definition of "Restricted Subsidiary." "S&P" means Standard and Poor's Ratings Group and its successors. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder. "Senior Credit Facility" means that certain credit facility described in the Prospectus among the Company and the lenders from time to time party thereto, including any collateral documents, instruments and agreements executed in connection therewith, and the term Senior Credit Facility shall also include any amendments, supplements, modifications, extensions, renewals, restatements or refundings thereof and any credit facilities that replace, refund or refinance any part of the loans, other credit facilities or commitments thereunder, including any such replacement, refunding or refinancing facility that increases the amount borrowable thereunder or alters the maturity thereof, provided, however, that there shall not be more than one facility at any one time that constitutes the Senior Credit Facility and, if at any time there is more than one facility which would constitute the Senior Credit Facility, the Company will designate to the Trustee which one of such facilities will be the Senior Credit Facility for purposes of this Indenture. "Senior Indebtedness" means (i) the Obligations under the Senior Credit Facility and (ii) any other Indebtedness permitted to be incurred by the Company under the terms of this Indenture, unless the instrument under which such Indebtedness is incurred expressly provides that it is on a parity with or subordinated in right of payment to the Notes, including, with respect to (i) and (ii), interest accruing subsequent to the filing of, or which would have accrued but for the filing of, a petition for bankruptcy, whether or not such interest is an allowable claim in such bankruptcy proceeding. Notwithstanding anything to the contrary in 18 the foregoing, Senior Indebtedness will not include (1) any liability for federal, state, local or other taxes owed or owing by the Company, (2) any obligation of the Company to any of its Subsidiaries, (3) any accounts payable or trade liabilities arising in the ordinary course of business (including instruments evidencing such liabilities) other than obligations in respect of bankers' acceptances and letters of credit under the Senior Credit Facility, (4) any Indebtedness that is incurred in violation of this Indenture, (5) Indebtedness which, when incurred and without respect to any election under Section 1111 (b) of Title 11, United States Code, is without recourse to the Company, (6) any Indebtedness, guarantee or obligation of the Company which is subordinate or junior to any other Indebtedness, guarantee or obligation of the Company, (7) Indebtedness evidenced by the Notes and (8) Capital Stock of the Company. "Significant Subsidiary" means any Subsidiary that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the date hereof. "Similar Business" means a business, the majority of whose revenues are derived from the design, manufacture and/or marketing of electrical, electronic and fiber optic connectors, coaxial and flat-ribbon cable, and interconnect systems, or whose revenues are derived from the licensing of the Amphenol name, or any business or activity that is reasonably similar thereto or a reasonable extension, development or expansion thereof or ancillary thereto. "Special Record Date" for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 308. "Stated Maturity" when used with respect to any Note or any installment of interest thereon, means the date specified in such Note as the fixed date on which the principal of such Note or such installment of interest is due and payable, and, when used with respect to any other Indebtedness, means the date specified in the instrument governing such Indebtedness as the fixed date on which the principal of such Indebtedness, or any installment of interest thereon, is due and payable. "Subordinated Indebtedness" means (a) with respect to the Notes, any Indebtedness of the Company which is by its terms subordinated in right of payment to the Notes and (b) with respect to any Guarantee, any Indebtedness of the applicable Guarantor which is by its terms subordinated in right of payment to such Guarantee. "Subordinated Note Obligations" means any principal of, premium, if any, and interest on the Notes payable pursuant to the terms of the Notes or upon acceleration, together with and including any amounts received upon the exercise of rights of rescission or other rights of action (including claims for damages) or otherwise, to the extent relating to the purchase price of the Notes or amounts corresponding to such principal, premium, if any, or interest on the Notes. "Subsidiary" means, with respect to any Person, (i) any corporation, association, or other business entity (other than a partnership) of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) 19 to vote in the election of directors, managers or trustees thereof is at the time of determination owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof and (ii) any partnership, joint venture, limited liability company or similar entity of which (x) more than 50% of the capital accounts, distribution rights, total equity and voting interests or general or limited partnership interests, as applicable, are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof whether in the form of membership, general, special or limited partnership or otherwise and (y) such Person or any Wholly Owned Restricted Subsidiary of such Person is a controlling general partner or otherwise controls such entity. "Total Assets" means the total consolidated assets of the Company and its Restricted Subsidiaries, as shown on the most recent balance sheet (excluding the footnotes thereto) of the Company. "Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939 as in force on the date as of which this Indenture was executed, except as provided in Section 905. "Trustee" means the Person named as the "Trustee" in the first paragraph of this Indenture until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean such successor Trustee. "Unrestricted Subsidiary" means (i) any Subsidiary of the Company which at the time of determination is an Unrestricted Subsidiary (as designated by the Board of Directors of the Company, as provided below) and (ii) any Subsidiary of an Unrestricted Subsidiary. The Board of Directors of the Company may designate any Subsidiary of the Company (including any existing Subsidiary and any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Equity Interests of, or owns, or holds any Lien on, any property of, the Company or any Subsidiary of the Company (other than any Subsidiary of the Subsidiary to be so designated), provided that (a) any Unrestricted Subsidiary must be an entity of which shares of the capital stock or other equity interests (including partnership interests) entitled to cast at least a majority of the votes that may be cast by all shares or equity interests having ordinary voting power for the election of directors or other governing body are owned, directly or indirectly, by the Company, (b) the Company certifies that such designation complies with Section 1009 hereof and (c) each of (1) the Subsidiary to be so designated and (2) its Subsidiaries has not at the time of designation, and does not thereafter, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable with respect to any Indebtedness pursuant to which the lender has recourse to any of the assets of the Company or any of its Restricted Subsidiaries. The Board of Directors may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that, immediately after giving effect to such designation, (i) the Company could incur at least $1.00 of additional Indebtedness under the provisions of Section 1010(a) hereof or (ii) the Fixed Charge Coverage Ratio for the Company and its Restricted Subsidiaries would be greater than such ratio for the Company and its Restricted Subsidiaries immediately prior to such designation, in each case on a pro forma basis taking into account such designation. Any such designation by the Board of Directors shall be notified by the Company 20 to the Trustee by promptly filing with the Trustee a copy of the board resolution giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing provisions. "Vice President," when used with respect to the Company or the Trustee, means any vice president, whether or not designated by a number or a word or words added before or after the title "vice president." "Voting Stock" of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person. "Weighted Average Life to Maturity" means, when applied to any Indebtedness or Disqualified Stock, as the case may be, at any date, the quotient obtained by dividing (i) the sum of the products of the number of years from the date of determination to the date of each successive scheduled principal payment of such Indebtedness or redemption or similar payment with respect to such Disqualified Stock multiplied by the amount of such payment, by (ii) the sum of all such payments. "Wholly Owned Restricted Subsidiary" is any Wholly Owned Subsidiary that is a Restricted Subsidiary. "Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person 100% of the outstanding Capital Stock or other ownership interests of which (other than directors' qualifying shares) shall at the time be owned by such Person or by one or more Wholly Owned Subsidiaries of such Person and one or more Wholly Owned Subsidiaries of such Person. SECTION 102. Compliance Certificates and Opinions. Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company and any Guarantor (if applicable) and any other obligor on the Notes (if applicable) shall furnish to the Trustee an Officers' Certificate in form and substance reasonably acceptable to the Trustee stating that all conditions precedent, if any, provided for in this Indenture (including any covenant compliance with which constitutes a condition precedent) relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of an Officers' Certificate and an Opinion of Counsel is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (including certificates provided pursuant to Section 1018(a)) shall include: 21 (1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of each such individual or such firm, he or it has made such examination or investigation as is necessary to enable him or it to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. SECTION 103. Form of Documents Delivered to Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an Officer of the Company, any Guarantor or other obligor on the Notes may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such Officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an Officer or Officers of the Company, any Guarantor or other obligor on the Notes stating that the information with respect to such factual matters is in the possession of the Company, any Guarantor or other obligor on the Notes unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. SECTION 104. Acts of Holders. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agents duly appointed in writing; and, except as herein otherwise expressly 22 provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section 104. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner that the Trustee deems sufficient. (c) The principal amount and serial numbers of Notes held by any Person, and the date of holding the same, shall be proved by the Note Register. (d) If the Company shall solicit from the Holders of Notes any request, demand, authorization, direction, notice, consent, waiver or other Act, the Company may, at its option, by or pursuant to a Board Resolution, fix in advance a record date for the determination of Holders entitled to give such request, demand, authorization, direction, notice, consent, waiver or other Act, but the Company shall have no obligation to do so. Notwithstanding TIA Section 316(c), such record date shall be the record date specified in or pursuant to such Board Resolution, which shall be a date not earlier than the date 30 days prior to the first solicitation of Holders generally in connection therewith and not later than the date such solicitation is completed. If such a record date is fixed, such request, demand, authorization, direction, notice, consent, waiver or other Act may be given before or after such record date, but only the Holders of record at the close of business on such record date shall be deemed to be Holders for the purposes of determining whether Holders of the requisite proportion of Outstanding Notes have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other Act, and for that purpose the Outstanding Notes shall be computed as of such record date; provided that no such authorization, agreement or consent by the Holders on such record date shall be deemed effective unless it shall become effective pursuant to the provisions of this Indenture not later than six months after the record date. (e) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Note shall bind every future Holder of the same Note and the Holder of every Note issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof (including in accordance with Section 307) in respect of anything done, omitted or suffered to be done by the Trustee, any Paying Agent or the Company or any Guarantor in reliance thereon, whether or not notation of such action is made upon such Note. 23 SECTION 105. Notices, Etc., to Trustee, the Company and any Guarantor. Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, (1) the Trustee by any Holder or by the Company or any Guarantor or any other obligor on the Notes shall be sufficient for every purpose hereunder if made, given, furnished or delivered in writing and mailed, first-class postage prepaid, or delivered by recognized overnight courier, to or with the Trustee and received at its Corporate Trust Office, Attention: Corporate Trust Department, or (2) the Company or any Guarantor by the Trustee or by any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if made, given, furnished or delivered, in writing, or mailed, first-class postage prepaid, or delivered by recognized overnight courier, to the Company or such Guarantor addressed to it at the address of its principal office specified in the first paragraph of this Indenture, or at any other address previously furnished in writing to the Trustee by the Company or such Guarantor. SECTION 106. Notice to Holders; Waiver. Where this Indenture provides for notice of any event to Holders by the Company or the Trustee, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at his address as it appears in the Note Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Any notice mailed to a Holder in the manner herein prescribed shall be conclusively deemed to have been received by such Holder, whether or not such Holder actually receives such notice. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case by reason of the suspension of or irregularities in regular mail service or by reason of any other cause, it shall be impracticable to mail notice of any event to Holders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Trustee shall be deemed to be a sufficient giving of such notice for every purpose hereunder. 24 SECTION 107. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. SECTION 108. Successors and Assigns. All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not. SECTION 109. Separability Clause. In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 110. Benefits of Indenture. Nothing in this Indenture or in the Notes, express or implied, shall give to any Person, (other than the parties hereto, any Agent and their successors hereunder and each of the Holders and, with respect to any provisions hereof relating to the subordination of the Notes or the rights of holders of Senior Indebtedness, the holders of Senior Indebtedness) any benefit or any legal or equitable right, remedy or claim under this Indenture. SECTION 111. Governing Law. THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK EXCLUDING (TO THE GREATEST EXTENT PERMISSIBLE BY LAW) ANY RULE OF LAW THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK. SECTION 112. Legal Holidays. In any case where any Interest Payment Date, any date established for payment of Defaulted Interest pursuant to Section 308 or Redemption Date or Stated Maturity or Maturity of any Note shall not be a Business Day, then (notwithstanding any other provision of this Indenture or of the Notes) payment of principal (or premium, if any) or interest need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the Interest Payment Date or date established for payment of Defaulted Interest pursuant to Section 308, Redemption Date, or at the Stated Maturity or Maturity; provided that no interest shall accrue for the period from and after such Interest Payment Date, Redemption Date or date established for payment of Defaulted Interest pursuant to Section 308, Stated Maturity or Maturity, as the case may be, to the next succeeding Business Day. 25 SECTION 113. No Personal Liability of Directors, Officers, Employees, Stockholders or Incorporators. No director, officer, employee, incorporator or stockholders, as such, of the Company or any Guarantor shall have any liability for any obligations of the Company or such Guarantor under the Notes, this Indenture or any Guarantee or for any claim based on, in respect of, or by reason of, such obligations or their creations. Each Holder by accepting a Note waives and releases all such liability. Such waiver and release are part of the consideration for the issuance of the Notes. SECTION 114. Counterparts. This Indenture may be executed in any number of counterparts, each of which shall be original; but such counterparts shall together constitute but one and the same instrument. ARTICLE TWO NOTE FORMS SECTION 201. Forms Generally. The Notes shall be known as the "____% Senior Subordinated Notes due 2007" of the Company. The Notes and the Trustee's certificate of authentication shall be in substantially the forms set forth in this Article, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such Notes, as evidenced by their execution of the Notes. Any portion of the text of any Note may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Note. Each Note shall be dated the date of its authentication. The definitive Notes shall be printed, lithographed or engraved on steel-engraved borders or may be produced in any other manner, all as determined by the officers of the Company executing such Notes, as evidenced by their execution of such Notes. Notes will be issued on the Issuance Date in the form of a permanent global Note substantially in the form set forth in Sections 203 and 204 (the "Global Note") deposited with the Trustee, as custodian for the Depositary, duly executed by the Company and authenticated by the Trustee as hereinafter provided. The Global Note may be represented by more than one certificate, if so required by the Depositary's rules regarding the maximum principal amount to be represented by a single certificate. 26 SECTION 202. Legend. The Global Note shall bear the following legend on the face thereof: UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY ("DTC") TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER REPRESENTATIVE OF DTC AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTION 306 OF THE INDENTURE. 27 SECTION 203. Form of Face of Note. AMPHENOL CORPORATION ____% Senior Subordinated Note due 2007 CUSIP No. _____ No. __________ $240,000,000.00 AMPHENOL CORPORATION, a Delaware corporation (herein called the "Company", which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to Cede & Co. or registered assigns, the principal sum of $240,000,000.00 U.S. dollars on May __, 2007, at the office or agency of the Company referred to below, and to pay interest thereon on ______ __, 1997 and semi-annually thereafter, on ________ __ and ______ __ in each year, from May __, 1997, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, at the rate of ____% per annum, until the principal hereof is paid or duly provided for, and (to the extent lawful) to pay on demand interest on any overdue interest at the rate borne by the Notes from the date on which such overdue interest becomes payable to the date payment of such interest has been made or duly provided for. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Note (or one or more Predecessor Notes) is registered at the close of business on the Regular Record Date for such interest, which shall be the _______ __ or ______ __ (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date, and such defaulted interest, and (to the extent lawful) interest on such defaulted interest at the rate borne by the Notes, may be paid to the Person in whose name this Note (or one or more Predecessor Notes) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Notes not less than 10 days prior to such Special Record Date, or may be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. Principal of, premium, if any, and interest on the Notes will be payable at the office or agency of the Company maintained for such purpose within the City and State of New York or at such other office or agency of the Company as may be maintained for such purpose, or at the option of the Company, payment of interest may be made by check mailed to the Holders of the Notes at their respective addresses set forth in the register of Holders of Notes; provided that all payments of principal, premium, interest with respect to Notes represented by one or more permanent global Notes registered in the name of or held by The Depository Trust Company or its nominee will be made by wire transfer of immediately available funds to the accounts specified by the Holders thereof. Until otherwise designated by the Company, the Company's office or agency in New York will be the office of the Trustee maintained for such purpose. 28 Reference is hereby made to the further provisions of this Note set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been duly executed by the Trustee or the Authenticating Agent referred to on the reverse hereof by manual signature, this Note shall not be entitled to any benefit under the Indenture, or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal. AMPHENOL CORPORATION By ------------------------------ Name: Title: Attest: [SEAL] - ----------------- Authorized Officer 29 SECTION 204. Form of Reverse of Note. This Note is one of a duly authorized issue of securities of the Company designated as its ____% Senior Subordinated Notes due 2007 (the "Notes"), limited (except as otherwise provided in the Indenture referred to below) in aggregate principal amount to $240,000,000, which may be issued under an indenture (the "Indenture") dated as of May __, 1997 between the Company and IBJ Schroder Bank & Trust Company, as trustee (the "Trustee", which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties, obligations and immunities thereunder of the Company, the Trustee and the Holders of the Notes, and of the terms upon which the Notes are, and are to be, authenticated and delivered. The indebtedness evidenced by the Notes is, to the extent and in the manner provided in the Indenture, subordinate and subject in right of payment to the prior payment in full of all Senior Indebtedness as defined in the Indenture, and this Note is issued subject to such provisions. Each Holder of this Note, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee on his behalf to take such action as may be necessary or appropriate to effectuate the subordination as provided in the Indenture and (c) appoints the Trustee his attorney-in-fact for such purpose. On or before each payment date, the Company shall deliver or cause to be delivered to the Trustee or the Paying Agent an amount in dollars sufficient to pay the amount due on such payment date. Except as described below, the Notes will not be redeemable at the Company's option prior to _______, 2002. From and after ___________, 2002, the Notes will be subject to redemption at any time at the option of the Company, in whole or in part, upon not less than 30 nor more than 60 days' notice, at the Redemption Prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest thereon, if any, to the applicable redemption date, if redeemed during the twelve-month period beginning on ____________ of each of the years indicated below: Redemption Year Price ---- ----- 2002 .............................................. 1__.___% 2003............................................... 1__.___% 2004 .............................................. 1__.___% 2005 and thereafter ............................... 100.000% In addition, at any time or from time to time, on or prior to ________ __, 2000, the Company may, at its option, redeem up to 40% of the aggregate principal amount of Notes originally issued under the Indenture on the Issuance Date at a Redemption Price equal to 1__.___% of the aggregate principal amount thereof, plus accrued and unpaid interest thereon, if any, to the Redemption Date, with the net cash proceeds of one or more Equity Offerings; 30 provided that at least 60% of the aggregate principal amount of Notes originally issued under the Indenture on the Issuance Date remains outstanding immediately after the occurrence of such redemption; provided further that such redemption shall occur within 60 days of the date of the closing of any such Equity Offering. If less than all the Notes are to be redeemed pursuant to the preceding two paragraphs, the Trustee shall select the Notes or portions thereof to be redeemed in compliance with the requirements of the principal national securities exchange, if any, on which the Notes being redeemed are listed, or if the Notes are not so listed, on a pro rata basis, by lot or by such other method the Trustee shall deem fair and appropriate (and in such manner as complies with applicable legal requirements); provided that no such Notes of $1,000 or less shall be redeemed in part. In the case of any redemption of Notes, interest installments whose Stated Maturity is on or prior to the Redemption Date will be payable to the Holders of such Notes, or one or more Predecessor Notes, of record at the close of business on the relevant Regular Record Date or Special Record Date, as the case may be, referred to on the face hereof. Notes (or portions thereof) for whose redemption and payment provision is made in accordance with the Indenture shall cease to bear interest from and after the Redemption Date. In the event of redemption or repurchase of this Note in part only, a new Note or Notes for the unredeemed portion hereof shall be issued in the name of the Holder hereof upon the cancellation hereof. Upon the occurrence of a Change of Control, the Company will be required to make an offer to purchase all or any part (equal to $1,000 in principal amount or an integral multiple thereof Notes at a price in cash equal to 101% of the aggregate principal amount of the Notes thereof, plus accrued and unpaid interest thereon, if any, to the date of purchase, in accordance with the Indenture. Holders of Notes that are subject to an offer to purchase will receive a Change of Control Offer from the Company prior to any related Change of Control Payment Date. Under certain circumstances, in the event the Net Proceeds received by the Company from an Asset Sale, which proceeds are not used (i) to permanently reduce Obligations under the Senior Credit Facility (and to correspondingly reduce commitments with respect thereto) or other Senior Indebtedness or Pari Passu Indebtedness (provided that if the Company shall so reduce Obligations under Pari Passu Indebtedness, it will equally and ratably reduce Obligations under the Notes if the Notes are then prepayable or, if the Notes may not be then prepaid, the Company shall make an offer (in accordance with the procedures set forth below for an Asset Sale Offer) to all Holders to purchase at 100% of the principal amount thereof the amount of Notes that would otherwise be prepaid), (ii) to make an investment in any one or more businesses, capital expenditures or acquisitions of other assets in each case, used or useful in a Similar Business and/or (iii) to make an investment in properties or assets that replace the properties and assets that are the subject of such Asset Sale, equal or exceed a specified amount, the Company will be required to make an offer to all Holders to purchase the maximum principal amount of Notes, in an integral multiple of $1,000, that may be 31 purchased out of such amount at a purchase price in cash equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of purchase, in accordance with the Indenture. Holders of Notes that are subject to any offer to purchase will receive an Asset Sale Offer from the Company prior to any related Asset Sale Purchase Date. In the case of any redemption or repurchase of Notes, interest installments whose Stated Maturity is on or prior to the Redemption Date will be payable to the Holders of such Notes, or one or more Predecessor Notes, of record at the close of business on the relevant Regular Record Date or Special Record Date, as the case may be, referred to on the face hereof. Notes (or portions thereof) for whose redemption and payment provision is made in accordance with the Indenture shall cease to bear interest from and after the Redemption Date. If an Event of Default shall occur and be continuing, the principal of all the Notes may be declared due and payable in the manner and with the effect provided in the Indenture. The Indenture contains provisions for defeasance at any time of (a) the entire indebtedness of the Company on this Note and (b) certain restrictive covenants and the related Defaults and Events of Default, upon compliance by the Company with certain conditions set forth therein, which provisions apply to this Note. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders under the Indenture and the Notes and the Guarantees, if any, at any time by the Company and the Trustee with the consent of the Holders of a specified percentage in aggregate principal amount of the Notes at the time Outstanding. Additionally, the Indenture permits that, without notice to or consent of any Holder, the Company, any Guarantor and the Trustee together may amend or supplement the Indenture, any Guarantee or this Note (i) to cure any ambiguity, defect or inconsistency, (ii) to provide for uncertificated Notes in addition to or in place of certificated Notes, (iii) to comply with the Article Eight of the Indenture, (iv) to provide for the assumption of the Company's or any Guarantor's obligations to Holders of such Notes, (v) to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights under the Indenture of any such Holder, (vi) to add covenants for the benefit of the Holders or to surrender any right or power conferred upon the Company, (vii) to comply with the requirements of the Commission in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act, (viii) to evidence and provide for the acceptance of appointment under this Indenture by a successor Trustee pursuant to the requirements of Section 610, or (ix) to add a Guarantor under the Indenture. The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Notes at the time Outstanding, on behalf of the Holders of all the Notes, to waive compliance by the Company with certain provisions of the Indenture the Notes and the Guarantees, if any, and certain past Defaults under the Indenture and the Notes and the Guarantees, if any, and their consequences. Any such consent or waiver by or on behalf of the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued 32 upon the registration of transfer hereof or in exchange herefor or in lieu hereof whether or not notation of such consent or waiver is made upon this Note. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, any Guarantor or any other obligor on the Notes (in the event such Guarantor or other obligor is obligated to make payments in respect of the Notes), which is absolute and unconditional, to pay the principal of (and premium, if any) and interest on this Note at the times, place, and rate, and in the coin or currency, herein prescribed, subject to the subordination provisions of the Indenture. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note is registerable on the Note Register of the Company, upon surrender of this Note for registration of transfer at the office or agency of the Company maintained for such purpose in The City of New York, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Note Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Notes, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Notes are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, the Notes are exchangeable for a like aggregate principal amount of Notes of a different authorized denomination, as requested by the Holder surrendering the same. No service charge shall be made for any registration of transfer or exchange or redemption of Notes, but the Company may require payment of a sum sufficient to pay all documentary, stamp or similar issue or transfer taxes or other governmental charges payable in connection therewith. Prior to the time of due presentment of this Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Note is registered as the owner hereof for all purposes, whether or not this Note be overdue, and neither the Company, the Trustee nor any agent shall be affected by notice to the contrary. 33 THIS NOTE AND THE INDENTURE SHALL BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK EXCLUDING (TO THE GREATEST EXTENT PERMISSIBLE BY LAW) ANY RULE OF LAW THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK. Interest on this Note shall be computed on the basis of a 360-day year of twelve 30-day months. All terms used in this Note which are defined in the Indenture shall have the meanings assigned to them in the Indenture. FORM OF TRANSFER NOTICE FOR VALUE RECEIVED the undersigned registered holder hereby sell(s), assign(s) and transfer(s) unto Insert Taxpayer Identification No. please print or typewrite name and address including zip code of assignee the within Note and all rights thereunder, hereby irrevocably constituting and appointing attorney to transfer said Note on the books of the Company with full power of substitution in the premises. 34 OPTION OF HOLDER TO ELECT PURCHASE If you wish to have this Note purchased by the Company pursuant to Section[s] [1016] [1017] of the Indenture, check the Box: [ ]. If you wish to have a portion of this Note purchased by the Company pursuant to Section[s] [1016] [1017] of the Indenture, state the amount (in original principal amount) below: $---------------------. Date: Your Signature: (Sign exactly as your name appears on the other side of this Note) Signature Guarantee: SECTION 205. Form of Trustee's Certificate of Authentication. The Trustee's certificate of authentication shall be in substantially the following form: TRUSTEE'S CERTIFICATE OF AUTHENTICATION. This is one of the Notes referred to in the within-mentioned Indenture. -------------------, as Trustee By ---------------------- Authorized Signatory Dated: ____________________ 35 ARTICLE THREE THE NOTES SECTION 301. Title and Terms. The aggregate principal amount of Notes which may be authenticated and delivered under this Indenture is limited to $240,000,000, except for Notes authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Notes pursuant to Section 304, 305, 306, 307, 906, 1015, 1017 or 1108. The Notes shall be known and designated as the "____% Senior Subordinated Notes due 2007" of the Company. The Stated Maturity of the Notes shall be May __, 2007, and they shall bear interest at the rate of ____% per annum from May __, 1997, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, payable on ______ __, 1997 and semi-annually thereafter on ___________ and _________ in each year, until the principal thereof is paid in full and to the Person in whose name the Note (or any predecessor Note) is registered at the close of business on the __________ or ________ next preceding such interest payment date. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months, until the principal thereof is paid or duly provided for. Interest on any overdue principal, interest (to the extent lawful) or premium, if any, shall be payable on demand. Principal of, premium, if any, and interest on the Notes will be payable at the office or agency of the Company maintained for such purpose within the City and State of New York or at such other office or agency of the Company as may be maintained for such purposes, or at the option of the Company, payment of interest may be made by check mailed to the Holders of the Notes at their respective addresses set forth in the register of Holders of Notes; provided that all payments of principal, premium, interest with respect to Notes represented by one or more permanent global Notes registered in the name of or held by The Depository Trust Company or its nominee will be made by wire transfer of immediately available funds to the accounts specified by the Holders thereof. Until otherwise designated by the Company, the Company's office or agency in New York will be the office of the Trustee maintained for such purpose. Holders shall have the right to require the Company to purchase their Notes, in whole or in part, in the event of a Change of Control pursuant to Section 1016. The Notes shall be subject to repurchase by the Company pursuant to an Asset Sale Offer as provided in Section 1017. The Notes shall be redeemable as provided in Article Eleven and in the Notes. 36 The Indebtedness evidenced by the Notes shall be subordinated in right of payment to Senior Indebtedness as provided in Article Thirteen. SECTION 302. Denominations. The Notes shall be issuable only in registered form without coupons and only in denominations of $1,000 and any integral multiple thereof. SECTION 303. Execution, Authentication, Delivery and Dating. The Notes shall be executed on behalf of the Company by its Chief Executive Officer or a Vice President, under its corporate seal reproduced thereon and attested by its Corporate Secretary or an Assistant Secretary. The signature of any of these officers on the Notes may be manual or facsimile signatures of the present or any future such authorized officer and may be imprinted or otherwise reproduced on the Notes. Notes bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Notes or did not hold such offices at the date of such Notes. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Notes executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Notes, directing the Trustee to authenticate the Notes and certifying that all conditions precedent to the issuance of Notes contained herein have been fully complied with, and the Trustee in accordance with such Company Order shall authenticate and deliver such Notes. The Trustee shall be entitled to receive an Officers' Certificate and an Opinion of Counsel of the Company that it may reasonably request in connection with such authentication of Notes. Such order shall specify the amount of Notes to be authenticated and the date on which the original issue of Notes is to be authenticated. Each Note shall be dated the date of its authentication. No Note shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Note a certificate of authentication substantially in the form provided for herein duly executed by the Trustee by manual signature of an authorized signatory, and such certificate upon any Note shall be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered hereunder and is entitled to the benefits of this Indenture. In case the Company or any Guarantor, pursuant to Article Eight, shall be consolidated or merged with or into any other Person or shall convey, transfer, lease or otherwise dispose of its properties and assets substantially as an entirety to any Person, and the successor Person resulting from such consolidation, or surviving such merger, or into which the Company or such Guarantor shall have been merged, or the Person which shall have 37 received a conveyance, transfer, lease or other disposition as aforesaid, shall have executed an indenture supplemental hereto with the Trustee pursuant to Article Eight, any of the Notes authenticated or delivered prior to such consolidation, merger, conveyance, transfer, lease or other disposition may, from time to time, at the request of the successor Person, be exchanged for other Notes executed in the name of the successor Person with such changes in phraseology and form as may be appropriate, but otherwise in substance of like tenor as the Notes surrendered for such exchange and of like principal amount; and the Trustee, upon Company Request of the successor Person, shall authenticate and deliver Notes as specified in such request for the purpose of such exchange. If Notes shall at any time be authenticated and delivered in any new name of a successor Person pursuant to this Section 303 in exchange or substitution for or upon registration of transfer of any Notes, such successor Person, at the option of the Holders but without expense to them, shall provide for the exchange of all Notes at the time Outstanding for Notes authenticated and delivered in such new name. The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Notes on behalf of the Trustee. Unless limited by the terms of such appointment, an authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as any Note Registrar or Paying Agent to deal with the Company and its Affiliates. SECTION 304. Temporary Notes. Pending the preparation of definitive Notes, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Notes which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Notes in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Notes may determine, as conclusively evidenced by their execution of such Notes. If temporary Notes are issued, the Company will cause definitive Notes to be prepared without unreasonable delay. After the preparation of definitive Notes, the temporary Notes shall be exchangeable for definitive Notes upon surrender of the temporary Notes at the office or agency of the Company designated for such purpose pursuant to Section 1002, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Notes, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Notes of authorized denominations. Until so exchanged, the temporary Notes shall in all respects be entitled to the same benefits under this Indenture as definitive Notes. 38 SECTION 305. Registration, Registration of Transfer and Exchange. The Company shall cause to be kept at the Corporate Trust Office of the Trustee a register (the register maintained in such office and in any other office or agency designated pursuant to Section 1002 being herein sometimes referred to as the "Note Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Notes and of transfers of Notes. The Note Register shall be in written form or any other form capable of being converted into written form within a reasonable time. At all reasonable times, the Note Register shall be open to inspection by the Trustee. The Trustee is hereby initially appointed as security registrar (the Trustee in such capacity, together with any successor of the Trustee in such capacity, the "Note Registrar") for the purpose of registering Notes and transfers of Notes as herein provided. Upon surrender for registration of transfer of any Note at the office or agency of the Company designated pursuant to Section 1002, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Notes of any authorized denomination or denominations of a like aggregate principal amount. Furthermore, any Holder of a Global Note shall, by acceptance of such Global Note, agree that transfers of beneficial interest in such Global Note may be effected only through a book-entry system maintained by the Holder of such Global Note (or its agent), and that ownership of a beneficial interest in the Note shall be required to be reflected in a book entry. At the option of the Holder, Notes may be exchanged for other Notes of any authorized denomination and of a like aggregate principal amount, upon surrender of the Notes to be exchanged at such office or agency. Whenever any Notes are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Notes which the Holder making the exchange is entitled to receive. All Notes issued upon any registration of transfer or exchange of Notes shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Notes surrendered upon such registration of transfer or exchange. Every Note presented or surrendered for registration of transfer or for exchange shall (if so required by the Company or the Note Registrar) be duly endorsed, or be accompanied by a written instrument of transfer, in form satisfactory to the Company and the Note Registrar, duly executed by the Holder thereof or his attorney duly authorized in writing. No service charge shall be made for any registration of transfer or exchange or redemption of Notes, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Notes, other than exchanges pursuant to Section 304, 906, 1016, 1017 or 1108, not involving any transfer. 39 SECTION 306. Book-Entry Provisions for the Global Note. (a) The Global Note initially shall (i) be registered in the name of the Depositary for such global Note or the nominee of such Depositary, (ii) be delivered to the Trustee as custodian for such Depositary and (iii) bear the legend as set forth in Section 202. Members of, or participants in, the Depositary ("Agent Members") shall have no rights under this Indenture with respect to the Global Note held on their behalf by the Depositary, or the Trustee as its custodian, or under the Global Note, and the Depositary may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner of such Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or shall impair, as between the Depositary and its Agent Members, the operation of customary practices governing the exercise of the rights of a Holder of any Note. (b) Transfers of the Global Note shall be limited to transfers of such Global Note in whole, but not in part, to the Depositary, its successors or their respective nominees. Interests of beneficial owners in the Global Note may be transferred in accordance with the rules and procedures of the Depositary. If required to do so pursuant to any applicable law or regulation, beneficial owners may obtain Physical Notes in exchange for their beneficial interests in the Global Note upon written request in accordance with the Depositary's and the Registrar's procedures. In addition, Physical Notes shall be transferred to all beneficial owners in exchange for their beneficial interests in the Global Note if (i) the Depositary notifies the Company that it is unwilling or unable to continue as Depositary for such Global Note or the Depositary ceases to be a clearing agency registered under the Exchange Act, at a time when the Depositary is required to be so registered in order to act as Depositary, and in each case a successor depositary is not appointed by the Company within 90 days of such notice or (ii) the Company executes and delivers to the Trustee and Note Registrar an Officers' Certificate stating that such Global Note shall be so exchangeable or (iii) an Event of Default has occurred and is continuing and the Note Registrar has received a request from the Depositary. (c) In connection with any transfer of a portion of the beneficial interest in the Global Note pursuant to subsection (b) of this Section to beneficial owners who are required to hold Physical Notes, the Note Registrar shall reflect on its books and records the date and a decrease in the principal amount of such Global Note in an amount equal to the principal amount of the beneficial interest in the Global Note to be transferred, and the Company shall execute, and the Trustee shall authenticate and deliver, one or more Physical Notes of like tenor and amount. (d) In connection with the transfer of the entire Global Note to beneficial owners pursuant to subsection (b) of this Section, such Global Note shall be deemed to be surrendered to the Trustee for cancellation, and the Company shall execute, and the Trustee shall authenticate and deliver, to each beneficial owner identified by the Depositary in 40 exchange for its beneficial interest in such Global Note, an equal aggregate principal amount of Physical Notes of authorized denominations. (e) The registered holder of the Global Note may grant proxies and otherwise authorize any person, including Agent Members and persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Notes. SECTION 307. Mutilated, Destroyed, Lost and Stolen Notes. If (i) any mutilated Note is surrendered to the Trustee, or (ii) the Company and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Note, and there is delivered to the Company, any Guarantor and the Trustee such security or indemnity, in each case, as may be required by them to save each of them harmless, then, in the absence of notice to the Company any Guarantor or the Trustee that such Note has been acquired by a bona fide purchaser, the Company shall execute and upon Company Order the Trustee shall authenticate and deliver, in exchange for any such mutilated Note or in lieu of any such destroyed, lost or stolen Note, a new Note of like tenor and principal amount, bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost or stolen Note has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Note, pay such Note. Upon the issuance of any new Note under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) in connection therewith. Every new Note issued pursuant to this Section in lieu of any mutilated, destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Company, any Guarantor and any other obligor upon the Notes, whether or not the mutilated, destroyed, lost or stolen Note shall be at any time enforceable by anyone, and shall be entitled to all benefits of this Indenture equally and proportionately with any and all other Notes duly issued hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes. 41 SECTION 308. Payment of Interest; Interest Rights Preserved. Interest on any Note which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name such Note (or one or more Predecessor Notes) is registered at the close of business on the Regular Record Date for such interest at the office or agency of the Company maintained for such purpose pursuant to Section 1002; provided, however, that each installment of interest may at the Company's option be paid by (i) mailing a check for such interest, payable to or upon the written order of the Person entitled thereto pursuant to Section 309, to the address of such Person as it appears in the Note Register or (ii) wire transfer to an account located in the United States maintained by the payee. Any interest on any Note which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date shall forthwith cease to be payable to the Holder on the Regular Record Date by virtue of having been such Holder, and such defaulted interest and (to the extent lawful) interest on such defaulted interest at the rate borne by the Notes (such defaulted interest and interest thereon herein collectively called "Defaulted Interest") shall be paid by the Company, at its election in each case, as provided in clause (1) or (2) below: (1) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Notes (or their respective Predecessor Notes) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Note and the date (not less than 30 days after such notice) of the proposed payment (the "Special Record Date"), and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause provided. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the Special Record Date and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date, and in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be given in the manner provided for in Section 106, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so given, such Defaulted Interest shall be paid to the Persons in whose names the Notes (or their respective Predecessor Notes) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following clause (2). (2) The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on 42 which the Notes may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such manner of payment shall be deemed practicable by the Trustee. Subject to the foregoing provisions of this Section, each Note delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Note shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Note. SECTION 309. Persons Deemed Owners. Prior to the due presentment of a Note for registration of transfer, the Company, the Trustee and any agent of the Company, any Guarantor or the Trustee may treat the Person in whose name such Note is registered as the owner of such Note for the purpose of receiving payment of principal of (and premium, if any) and (subject to Sections 305 and 308) interest on such Note and for all other purposes whatsoever, whether or not such Note be overdue, and none of the Company, any Guarantor, the Trustee nor any agent of the Company, any Guarantor or the Trustee shall be affected by notice to the contrary. SECTION 310. Cancellation. All Notes surrendered for payment, redemption, registration of transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly cancelled by it. If the Company shall acquire any of the Notes other than as set forth in the preceding sentence, the acquisition shall not operate as a redemption or satisfaction of the Indebtedness represented by such Notes unless and until the same are surrendered to the Trustee for cancellation pursuant to this Section 310. No Notes shall be authenticated in lieu of or in exchange for any Notes cancelled as provided in this Section, except as expressly permitted by this Indenture. All cancelled Notes held by the Trustee shall be disposed of by the Trustee in accordance with its customary procedures unless by Company Order the Company shall direct that cancelled Notes be returned to it. SECTION 311. Computation of Interest. Interest on the Notes shall be computed on the basis of a 360-day year of twelve 30-day months. SECTION 312. CUSIP Numbers. The Company in issuing Notes may use "CUSIP" numbers (if then generally in use) in addition to serial numbers; if so, the Trustee shall use such CUSIP numbers in addition to serial numbers in notices of redemption and repurchase as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such CUSIP numbers either as printed on the Notes or as contained in any notice of a redemption or repurchase and that reliance may be placed only on the serial or other 43 identification numbers printed on the Notes, and any such redemption or repurchase shall not be affected by any defect in or omission of such CUSIP numbers. ARTICLE FOUR SATISFACTION AND DISCHARGE SECTION 401. Satisfaction and Discharge of Indenture. This Indenture shall upon Company Request cease to be of further effect (except as to surviving rights of registration of transfer or exchange of Notes expressly provided for herein or pursuant hereto) and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture when (1) either (a) all such Notes theretofore authenticated and delivered (except (i) lost, stolen or destroyed Notes which have been replaced or paid as provided in Section 307 and (ii) Notes for whose payment money has theretofore been deposited in trust and thereafter repaid to the Company) have been delivered to the Trustee for cancellation; or (b) all such Notes not theretofore delivered to such Trustee for cancellation (i) have become due and payable by reason of the making of a notice of redemption or otherwise; (ii) will become due and payable at their Stated Maturity within one year; or (iii) are called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company, and the Company or any Guarantor, in the case of (i), (ii) or (iii) above, has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust solely for the benefit of the Holders, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient without consideration of any reinvestment of interest, to pay and discharge the entire indebtedness on such Notes not theretofore delivered to the Trustee for cancellation, for principal, premium, if any and accrued interest to the date of the Stated Maturity or Redemption Date, as the case may be; 44 (2) no Default or Event of Default with respect to this Indenture or the Notes shall have occurred and be continuing on the date of such deposit or shall occur as a result of such deposit and such deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which the Company or any Guarantor is a party or by which the Company or any Guarantor is bound; (3) the Company or any Guarantor has paid or caused to be paid all sums payable hereunder by the Company or any Guarantor; (4) the Company has delivered irrevocable instructions to the Trustee to apply the deposited money toward the payment of such Notes at maturity or the Redemption Date, as the case may be; and (5) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been satisfied. Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 607 and, if money shall have been deposited with the Trustee pursuant to subclause (b) of clause (1) of this Section, the provisions of Section 402 and the last paragraph of Section 1003 shall survive. SECTION 402. Application of Trust Money. Subject to the provisions of the last paragraph of Section 1003, all money deposited with the Trustee pursuant to Section 401 shall be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest for whose payment such money has been deposited with the Trustee; but such money need not be segregated from other funds except to the extent required by law. If the Trustee or Paying Agent is unable to apply any money or Government Securities in accordance with Section 401 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company's and any Guarantor's obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 401; provided that if the Company has made any payment of principal of, premium, if any, or interest on any Notes because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or Government Securities held by the Trustee or Paying Agent. 45 ARTICLE FIVE REMEDIES SECTION 501. Events of Default. "Event of Default," wherever used herein, means any one of the following events (whatever the reason for such Event of Default and whether it shall be occasioned by the provisions of Article Thirteen or be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (i) default in payment when due and payable, upon redemption, acceleration or otherwise, of principal or premium, if any, on the Notes whether or not such payment shall be prohibited by Article Thirteen; (ii) default for 30 days or more in the payment when due of interest on or with respect to the Notes whether or not such payment shall be prohibited by Article Thirteen; (iii) failure by the Company or any Guarantor for 30 days after receipt of written notice given by the Trustee or the holders of at least 30% in principal amount of the Notes then Outstanding to comply with any of its other agreements in this Indenture or the Notes; (iv) default under any mortgage, indenture or instrument under which there is issued or by which there is secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries (other than Indebtedness owed to the Company or a Restricted Subsidiary), whether such Indebtedness or guarantee now exists or is created after the Issuance Date, if both (A) such default either (1) results from the failure to pay any such Indebtedness at its stated final maturity (after giving effect to any applicable grace periods) or (2) relates to an obligation other than the obligation to pay principal of any such Indebtedness at its stated final maturity and results in the holder or holders of such Indebtedness causing such Indebtedness to become due prior to its stated maturity and (B) the principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness in default for failure to pay principal at stated final maturity (after giving effect to any applicable grace periods), or the maturity of which has been so accelerated, aggregate $25.0 million or more at any one time outstanding; (v) failure by the Company or any of its Significant Subsidiaries to pay final judgments aggregating in excess of $25.0 million, which final judgments remain unpaid, undischarged and unstayed for a period of more than 60 days after such judgment becomes final, and in the event such judgment is covered by insurance, an enforcement 46 proceeding has been commenced by any creditor upon such judgment or decree which is not promptly stayed; (vi) the Company or any of its Significant Subsidiaries pursuant to or within the meaning of Federal Bankruptcy Code: (A) commences a voluntary case; (B) consents to the entry of an order for relief against it in an involuntary case; (C) consents to the appointment of a Custodian of it or for all or substantially all of its property; (D) makes a general assignment for the benefit of its creditors, or (E) admits in writing that it is generally not paying its debts (other than debts which are the subject of a bona fide dispute) as they become due; (vii) a court of competent jurisdiction enters an order or decree under any Federal Bankruptcy Code that remains unstayed and in effect for 60 days and: (A) is for relief against the Company or any of its Significant Subsidiaries in an involuntary case; (B) appoints a Custodian of the Company or any of its Significant Subsidiaries or for all or substantially all of the property of the Company or any of its Significant Subsidiaries; or (C) orders the liquidation of the Company or any of its Significant Subsidiaries; provided that clauses (A), (B) and (C) shall not apply to an Unrestricted Subsidiary, unless such action or proceeding has a material adverse effect on the interests of the Company or any Restricted Subsidiary; or (viii) any Guarantee shall for any reason cease to be in full force and effect or is declared null and void or any Responsible Officer of the Company or any Guarantor denies that it has any further liability under any Guarantee or gives notice to such effect (other than by reason of the termination of this Indenture or the release of any such Guarantee in accordance with this Indenture). The Trustee shall not be charged with knowledge of any Event of Default unless written notice thereof shall have been given to a Responsible Officer of the Trustee at the Corporate Trust Office. SECTION 502. Acceleration of Maturity; Rescission and Annulment. If any Event of Default (other than of a type specified in Section 501(vi) or 501(vii)) occurs and is continuing, the Trustee or the Holders of at least 30% in principal amount of the Notes Outstanding may declare the principal, premium, if any, interest and any other monetary obligations on all the then outstanding Notes to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders); provided, however, that, so long as any Indebtedness permitted to be incurred pursuant to the Senior Credit Facility shall be outstanding, such acceleration shall not be effective until the earlier of (i) acceleration of any such Indebtedness under the Senior Credit Facility or (ii) five Business Days after the giving of written notice to the Company and the Bank Agent of such acceleration. Upon the effectiveness of such declaration, such principal and interest shall be due and payable immediately. Notwithstanding the foregoing, in the case of an Event of Default specified in Section 501(vi) or 501(vii) occurs and is continuing, then the principal 47 amount of all the Notes shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder. At any time after a declaration of acceleration has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter provided in this Article, the Holders of a majority in aggregate principal amount of the Notes Outstanding, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if (1) the Company has paid or deposited with the Trustee a sum sufficient to pay, (A) all overdue interest on all Outstanding Notes, (B) all unpaid principal of (and premium, if any, on) any Outstanding Notes which has become due otherwise than by such declaration of acceleration, and interest on such unpaid principal and premium at the rate borne by the Notes (for purposes of this clause (B) without duplication to amounts to be paid or deposited under clause (A) above); (C) to the extent that payment of such interest is lawful, interest on overdue interest at the rate borne by the Notes; (D) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; (2) all Events of Default, other than the non-payment of amounts of principal of (or premium, if any, on) or interest on Notes which have become due solely by such declaration of acceleration, have been cured or waived as provided in Section 513; (3) if the rescission would not conflict with any judgment or decree; and (4) in the event of the cure or waiver of an Event of Default specified in clause (iv) of Section 501, the Trustee shall have received an Officers' Certificate and, if appropriate, an Opinion of Counsel that such Event of Default has been cured or waived. No such rescission shall affect any subsequent default or impair any right consequent thereon. Upon a determination by the Company that the Senior Credit Facility is no longer in effect, the Company shall promptly give to the Trustee written notice thereof executed by an Officer of the Company, which notice shall be countersigned by the Bank Agent. Unless and until the Trustee shall have received such written notice with respect to the Senior Credit Facility, the Trustee, subject to the TIA Sections 315(a) through 315(d), shall be 48 entitled in all respects to assume that the Senior Credit Facility is in effect (unless a Responsible Officer of the Trustee shall have knowledge to the contrary). SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee. If an Event of Default specified in Section 501(i) or 501(ii) occurs and is continuing, the Trustee, in its own name as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company or any Guarantor (in accordance with the applicable Guarantee) or any other obligor upon the Notes and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company, any Guarantor or any other obligor upon the Notes, wherever situated. If an Event of Default occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders under this Indenture or any Guarantee by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, including, seeking recourse against any Guarantor pursuant to the terms of any Guarantee, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy including, without limitation, seeking recourse against any Guarantor pursuant to the terms of a Guarantee, or to enforce any other proper remedy, subject however to Section 513. No recovery of any such judgment upon any property of the Company or any Guarantor shall affect or impair any rights, powers or remedies of the Trustee or the Holders. SECTION 504. Trustee May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor, including any Guarantor, upon the Notes or the property of the Company or of such other obligor or their creditors, the Trustee (irrespective of whether the principal of the Notes shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of overdue principal, premium, if any, or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise, (i) to file and prove a claim for the whole amount of principal (and premium, if any) and interest owing and unpaid in respect of the Notes, to take such other actions (including participating as a member, voting or otherwise, of any official committee of creditors appointed in such matter) and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Holders allowed in such judicial proceeding, and 49 (ii) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any Custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 607. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding; provided, however, that the Trustee may, on behalf of such Holders, vote for the election of a trustee in bankruptcy or other similar official. SECTION 505. Trustee May Enforce Claims Without Possession of Notes. All rights of action and claims under this Indenture, the Notes or the Guarantees may be prosecuted and enforced by the Trustee without the possession of any of the Notes or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name and as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Notes in respect of which such judgment has been recovered. SECTION 506. Application of Money Collected. Subject to Article Thirteen, any money collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal (or premium, if any) or interest, upon presentation of the Notes and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: FIRST: To the payment of all amounts due the Trustee under Section 607 or otherwise pursuant to this Indenture; SECOND: To the payment of the amounts then due and unpaid for principal of (and premium, if any) and interest on the Notes in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Notes for principal (and premium, if any) and interest, respectively; and THIRD: The balance, if any, to the Person or Persons entitled thereto, including the Company or any other obligor on the Notes, as their interests may appear or as a 50 court of competent jurisdiction may direct, provided that all sums due and owing to the Holders and the Trustee have been paid in full as required by this Indenture. SECTION 507. Limitation on Suits. No Holder of any Notes shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless (1) such Holder has previously given written notice to the Trustee of a continuing Event of Default; (2) the Holders of not less than 30% in principal amount of the Outstanding Notes shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder; (3) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (4) the Trustee for 30 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and (5) no direction inconsistent with such written request has been given to the Trustee during such 30-day period by the Holders of a majority or more in principal amount of the Outstanding Notes; it being understood and intended that no one or more Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture, any Note or any Guarantee to affect, disturb or prejudice the rights of any other Holders, or to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under this Indenture, any Note or any Guarantee, except in the manner herein provided and for the equal and ratable benefit of all the Holders. SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and Interest. Notwithstanding any other provision in this Indenture, the Holder of any Note shall have the right, which is absolute and unconditional, to receive payment, as provided herein (including, if applicable, Article Eleven) and in such Note of the principal of (and premium, if any) and (subject to Section 308) interest on such Note on the respective Stated Maturities expressed in such Note (or, in the case of redemption or repurchase, on the Redemption Date or repurchase) and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder. SECTION 509. Restoration of Rights and Remedies. 51 If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture or any Guarantee and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, any Guarantor, any other obligor on the Notes, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted. SECTION 510. Rights and Remedies Cumulative. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes in the last paragraph of Section 307, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. SECTION 511. Delay or Omission Not Waiver. No delay or omission of the Trustee or of any Holder of any Note to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be. SECTION 512. Control by Holders. The Holders of not less than a majority in principal amount of the Outstanding Notes shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, provided that (1) such direction shall not be in conflict with any rule of law or with this Indenture or any Guarantee, (2) the Trustee need not take any action which might involve it in personal liability or be unjustly prejudicial to the Holders not consenting; and (3) subject to the provisions of Section 315 of the Trust Indenture Act, the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. 52 SECTION 513. Waiver of Past Defaults. Subject to Sections 508 and 902, the Holders of a majority in aggregate principal amount of the Outstanding Notes (including consents obtained in connection with a tender offer or exchange offer for the Notes) may on behalf of the Holders of all of such Notes waive any existing Default or Event of Default and its consequences under this Indenture or any Guarantee except a continuing Default or Event of Default in the payment of interest on, premium, if any, or the principal of, any such Note held by a non-consenting Holder, or in respect of a covenant or a provision which cannot be amended or modified without the consent of all Holders. In the event that any Event of Default specified in Section 501(iv) shall have occurred and be continuing, such Event of Default and all consequences thereof (including without limitation any acceleration or resulting payment default) shall be annulled, waived and rescinded, automatically and without any action by the Trustee or the Holders of the Notes, if within 20 days after such Event of Default arose (x) the Indebtedness or guarantee that is the basis for such Event of Default has been discharged, or (y) the holders thereof have rescinded or waived the acceleration, notice or action (as the case may be) giving rise to such Event of Default, or (z) if the default that is the basis for such Event of Default has been cured. Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon. SECTION 514. Waiver of Stay or Extension Laws. The Company, the Guarantors and any other obligors upon the Notes, covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which would prohibit or forgive the Company, any Guarantor or any such obligor from paying all or any portion of the principal of, premium, if any, or interest on the Notes contemplated herein or in the Notes or which may affect the covenants or the performance of this Indenture; and each of the Company, any Guarantor and any such obligor (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. SECTION 515. Undertaking for Costs. All parties to this Indenture agree, and each Holder of any Note by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court 53 may in its discretion assess reasonable costs, including reasonable attorneys' fees and expenses, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of the Outstanding Notes, or to any suit instituted by any Holder for the enforcement of the payment of the principal of (or premium, if any) or interest on any Note on or after the respective Stated Maturities expressed in such Note (or, in the case of redemption, on or after the Redemption Date). ARTICLE SIX THE TRUSTEE SECTION 601. Certain Duties and Responsibilities. (a) Except during the continuance of a Default or an Event of Default, (1) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (2) in the absence of bad faith or willful misconduct on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions required to be delivered hereunder, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture, but not to verify the contents thereof. (b) In case a Default or an Event of Default has occurred and is continuing of which a Responsible Officer of the Trustee has actual knowledge or of which written notice of such Default or Event of Default shall have been given to the Trustee by the Company, any other obligor of the Notes or by any Holder, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his own affairs. (c) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that (1) this paragraph (c) shall not be construed to limit the effect of paragraph (a) of this Section; 54 (2) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; (3) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of the Outstanding Notes received by the Trustee pursuant to Sections 502, 512 and 513 hereof or in exercising any trust or power conferred upon the Trustee, under this Indenture; and (4) no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (d) Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section. SECTION 602. Notice of Defaults. Within 90 days after the occurrence of any Default hereunder, the Trustee shall transmit in the manner and to the extent provided in TIA Section 313(c), notice of such Default hereunder known to the Trustee, unless such Default shall have been cured or waived; provided, however, that, except in the case of a Default in the payment of the principal of (or premium, if any) or interest on any Note, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determine that the withholding of such notice is in the interest of the Holders; and provided further that in the case of any Default of the character specified in Section 501(iii) no such notice to Holders shall be given until at least 30 days after the occurrence thereof. SECTION 603. Certain Rights of Trustee. (a) Subject to the provisions of TIA Sections 315(a) through 315(d): (1) the Trustee may conclusively rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (2) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution; 55 (3) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee may, in the absence of bad faith on its part, request and rely upon an Officers' Certificate or an Opinion of Counsel or both; (4) the Trustee may consult with counsel of its selection and any written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (5) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (6) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney; (7) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; and (8) the Trustee shall not be liable for any action taken, suffered or omitted by it in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture. (b) The Trustee shall not be required to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. 56 SECTION 604. Trustee Not Responsible for Recitals or Issuance of Notes. The recitals contained herein and in the Notes, except for the Trustee's certificates of authentication, shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Notes and shall not be responsible for any statement of any Person in this Indenture, the Notes or any statement made in connection with the sale of the Notes, provided that the Trustee represents that it is duly authorized to execute and deliver this Indenture, authenticate the Notes and perform its obligations hereunder and that the statements made by it in a Statement of Eligibility on Form T-1 supplied to the Company are true and accurate, subject to the qualifications set forth therein. The Trustee shall not be accountable for the use or application by the Company of Notes or the proceeds thereof. SECTION 605. May Hold Notes. The Trustee, any Paying Agent, any Note Registrar, any Authenticating Agent or any other agent of the Company or of the Trustee, in its individual or any other capacity, may become the owner or pledgee of Notes and, subject to TIA Sections 310(b) and 311, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Paying Agent, Note Registrar, Authenticating Agent or such other agent. SECTION 606. Money Held in Trust. All moneys received by the Trustee shall, until used or applied as herein provided, be held in trust hereunder for the purposes for which they were received, but need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed in writing with the Company. SECTION 607. Compensation and Reimbursement. The Company agrees: (1) to pay to the Trustee from time to time such compensation as shall be agreed to in writing between the Company and the Trustee for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (2) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel and costs and expenses of collection), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and 57 (3) to indemnify each of the Trustee or any predecessor Trustee (and their respective directors, officers, employees and agents) for, and to hold it harmless against, any and all loss, damage, claim, liability or expense, including taxes (other than taxes based on the income of the Trustee) incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. The obligations of the Company under this Section to compensate the Trustee, to pay or reimburse the Trustee for expenses, disbursements and advances and to indemnify and hold harmless the Trustee shall constitute additional indebtedness hereunder and shall survive the satisfaction and discharge of this Indenture. As security for the performance of such obligations of the Company, the Trustee shall have a lien prior to the Holders of the Notes upon all property and funds held or collected by the Trustee as such, except funds held in trust for the payment of principal of (and premium, if any) or interest on particular Notes. When the Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 501(vi) or (vii), the expenses (including the reasonable charges and expenses of its counsel) of and the compensation for such services are intended to constitute expenses of administration under any applicable federal or state bankruptcy, insolvency or other similar law. The provisions of this Section shall also apply to the Trustee in its capacity as Note Registrar and for so long as the Trustee shall remain Note Registrar. The provisions of this Section shall survive the termination of this Indenture. SECTION 608. Corporate Trustee Required; Eligibility. There shall be at all times a Trustee hereunder which shall be eligible to act as Trustee under TIA Section 310(a)(1), and which shall have an office in The City of New York and shall have a combined capital and surplus of at least $50,000,000. If the Trustee does not have an office in The City of New York, the Trustee may appoint an agent in The City of New York reasonably acceptable to the Company to conduct any activities which the Trustee may be required under this Indenture to conduct in The City of New York. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of federal, state, territorial or District of Columbia supervising or examining authority, then for the purposes of this Section 608, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 608, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. 58 SECTION 609. Resignation and Removal; Appointment of Successor. (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of this Section. (b) The Trustee may resign at any time by giving written notice thereof to the Company. Upon receiving such notice of resignation, the Company shall promptly appoint a successor trustee by written instrument executed by authority of the Board of Directors, a copy of which shall be delivered to the resigning Trustee and a copy to the successor trustee. If an instrument of acceptance required by this Section shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee. (c) The Trustee may be removed at any time by Act of the Holders of not less than a majority in principal amount of the Outstanding Notes, delivered to the Trustee and to the Company. (d) If at any time: (1) the Trustee shall fail to comply with the provisions of TIA Section 310(b) after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Note for at least six months, or (2) the Trustee shall cease to be eligible under Section 608 and shall fail to resign after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Note for at least six months, or (3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a Custodian of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, (i) the Company, by a Board Resolution, may remove the Trustee, or (ii) subject to TIA Section 315(e), any Holder who has been a bona fide Holder of a Note for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. (e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, the Company, by a Board Resolution, shall promptly appoint a successor Trustee. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Notes delivered to the Company and the retiring Trustee, the successor Trustee so appointed 59 shall, forthwith upon its acceptance of such appointment, become the successor Trustee and supersede the successor Trustee appointed by the Company. If no successor Trustee shall have been so appointed by the Company or the Holders and accepted appointment in the manner hereinafter provided, any Holder who has been a bona fide Holder of a Note for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee. (f) The Company shall give notice of each resignation and each removal of the Trustee and each appointment of a successor Trustee to the Holders of Notes in the manner provided for in Section 106. Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office. SECTION 610. Acceptance of Appointment by Successor. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder. Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts. No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. SECTION 611. Merger, Conversion, Consolidation or Succession to Business. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Notes shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Notes so authenticated with the same effect as if such successor Trustee had itself authenticated such Notes. In case at that time any of the Notes shall not have been authenticated, any successor Trustee may authenticate such Notes either in the name of any predecessor hereunder or in the name of the successor Trustee. In all such cases such certificates shall have the full force and effect which this Indenture provides for the certificate of authentication of the Trustee shall have; provided, however, that the right to adopt the certificate of authentication of any predecessor Trustee or 60 to authenticate Notes in the name of any predecessor Trustee shall apply only to its successor or successors by merger, conversion or consolidation. ARTICLE SEVEN HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY SECTION 701. Company to Furnish Trustee Names and Addresses. The Company will furnish or cause to be furnished to the Trustee (a) semiannually, not more than 10 days after each Regular Record Date, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders as of such Regular Record Date; and (b) at such other times as the Trustee may reasonably request in writing, within 30 days after receipt by the Company of any such request, a list of similar form and content to that in Subsection (a) hereof as of a date not more than 15 days prior to the time such list is furnished; provided, however that if and so long as the Trustee shall be the Note Registrar, no such list need be furnished. SECTION 702. Disclosure of Names and Addresses of Holders. Every Holder of Notes, by receiving and holding the same, agrees with the Company and the Trustee that none of the Company or the Trustee or any agent of either of them shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders in accordance with TIA Section 312, regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under TIA Section 312(b). SECTION 703. Reports by Trustee. To the extent required by TIA Section 313(a), within 60 days after May 15 of each year commencing with the first May 15 after the first issuance of Notes, the Trustee shall transmit to the Holders, in the manner and to the extent required by TIA Section 313(c), a brief report dated as of such May 15 if required by TIA Section 313(a). ARTICLE EIGHT MERGER, CONSOLIDATION, OR SALE OF ASSETS SECTION 801. Company May Consolidate, Etc., Only on Certain Terms. 61 (1) The Company shall not consolidate or merge with or into or wind up into (whether or not the Company is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions, to any Person unless (i) the Company is the surviving corporation or the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, lease, conveyance or other disposition will have been made is a corporation organized or existing under the laws of the United States, any state thereof, the District of Columbia, or any territory thereof (the Company or such Person, as the case may be, being herein called the "Successor Company"); (ii) the Successor Company (if other than the Company) expressly assumes all the obligations of the Company under this Indenture and the Notes pursuant to a supplemental indenture or other documents or instruments in form reasonably satisfactory to the Trustee; (iii) immediately after such transaction no Default or Event of Default shall have occurred and be continuing; (iv) immediately after giving pro forma effect to such transaction, as if such transaction had occurred at the beginning of the applicable four-quarter period, (A) the Successor Company would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 1010(a) hereof or (B) the Fixed Charge Coverage Ratio for the Successor Company and its Restricted Subsidiaries would be greater than such Ratio for the Company and its Restricted Subsidiaries immediately prior to such transaction; (v) each Guarantor, if any, unless it is the other party to the transactions described above, shall have by supplemental indenture confirmed that its Guarantee shall apply to such Person's obligations under this Indenture and the Notes; and (vi) the Company shall have delivered to the Trustee an Officers' Certificate and an opinion of counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with this Indenture. The Successor Company shall succeed to, and be substituted for, the Company under this Indenture and the Notes. Notwithstanding the foregoing clause (iv), (a) any Restricted Subsidiary may consolidate with, merge into or transfer all or part of its properties and assets to the Company and (b) the Company may merge with an Affiliate incorporated solely for the purpose of reincorporating the Company in another State of the United States so long as the amount of Indebtedness of the Company and its Restricted Subsidiaries is not increased thereby. (2) Each Guarantor, if any, shall not, and the Company shall not permit a Guarantor to, consolidate or merge with or into or wind up into (whether or not such Guarantor is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions, to any Person unless (i) such Guarantor is the surviving corporation or the Person formed by or surviving any such consolidation or merger (if other than such Guarantor) or to which such sale, assignment, transfer, lease, conveyance or other disposition will have been made is a corporation organized or existing under the laws of the United States, any state thereof, the District of Columbia, or any territory thereof (such Guarantor or such Person, as the case may be, being herein called the "Successor Guarantor"); (ii) the Successor Guarantor (if other than such Guarantor) expressly assumes all the obligations of such Guarantor under this Indenture and such Guarantor's Guarantee pursuant to a supplemental indenture or other documents or instruments in form reasonably satisfactory to the Trustee; (iii) immediately after such transaction no Default or Event of Default shall have occurred and be continuing; and (iv) the Guarantor shall 62 have delivered or caused to be delivered to the Trustee an Officers' Certificate and an opinion of counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with this Indenture. The Successor Guarantor shall succeed to, and be substituted for, such Guarantor under this Indenture and such Guarantor's Guarantee. SECTION 802. Successor Substituted. Upon any consolidation of the Company with or merger of the Company with or into or wind up into any other corporation or any sale, assignment, conveyance, transfer, lease or other disposition of the properties and assets of the Company substantially as an entirety to any Person in accordance with Section 801, the successor Person formed by such consolidation or into which the Company is merged or wound up or to which such sale, assignment, conveyance, transfer, lease or other disposition is made will succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company therein, and thereafter (except in the case of a sale, assignment, transfer, lease, conveyance or other disposition) the predecessor corporation will be relieved of all further obligations and covenants under this Indenture and the Notes; provided that, solely with respect to calculating amounts described in clauses (A), (B) and (C) of paragraph (a) of Section 1009, any such surviving entity to the Company shall only be deemed to have succeeded to and be substituted for the Company with respect to periods subsequent to the effective time of such merger, consolidation, combination or transfer of assets. ARTICLE NINE SUPPLEMENTS AND AMENDMENTS TO INDENTURE SECTION 901. Supplemental Indentures Without Consent of Holders. Without the consent of any Holders of Notes, the Company, any Guarantor (with respect to a Guarantee to which it is a party), when authorized by a Board Resolution, and the Trustee may amend or supplement this Indenture, any Guarantee or the Notes: (1) to cure any ambiguity, defect or inconsistency; or (2) to provide for uncertificated Notes in addition to or in place of certificated Notes; or (3) to comply with Article Eight hereof; or (4) to provide for the assumption of the Company's or any Guarantor's obligations to Holders of such Notes; or 63 (5) to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights hereunder of any such Holder; or (6) to add covenants for the benefit of the Holders or to surrender any right or power conferred upon the Company; or (7) to comply with requirements of the Commission in order to effect or maintain the qualification of this Indenture under the Trust Indenture Act; or (8) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee pursuant to the requirements of Section 610; or (9) to add a Guarantor hereunder. SECTION 902. Supplemental Indentures with Consent of Holders. With the consent of the Holders of at least a majority in principal amount of the Outstanding Notes (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, the Notes), by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders under this Indenture; provided, however, that no such supplemental indenture shall, without the consent of each Holder affected thereby (with respect to any Notes held by a nonconsenting Holder of the Notes): (1) reduce the principal amount of the Notes whose Holders must consent to an amendment, supplement or waiver; or (2) reduce the principal of or change or have the effect of changing the Stated Maturity of any such Note or alter or waive the provisions with respect to the redemption of the Notes (other than Sections 1016 and 1017 and the defined terms used therein); or (3) reduce the rate of or change the time for payment of interest on any Note; or (4) waive a Default or Event of Default in the payment of principal of, premium, if any, or interest on the Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of such Notes Outstanding and a waiver of the payment default that resulted from such acceleration), or in respect of a covenant or provision contained in this Indenture or any Guarantee which cannot be amended or modified without the consent of all Holders; or 64 (5) make any Note payable in money other than that stated in such Notes; or (6) make any change in the provisions of this Indenture relating to waivers of past Defaults or the rights of Holders of the Notes to receive payments of principal of or premium, if any, or interest on the Notes; or (7) make any change in the foregoing amendment and waiver provisions; or (8) impair the right of any Holder of the Notes to receive payment of principal of, or interest on such Holder's Notes on or after the due dates theretofore or to institute suit for the enforcement of any payment on or with respect to such Holder's Notes; or (9) make any change in the subordination provisions of this Indenture that would adversely affect the Holders of the Notes. It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. SECTION 903. Execution of Supplemental Indentures. In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustees own rights, duties or immunities under this Indenture or otherwise. SECTION 904. Effect of Supplemental Indentures. Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Notes theretofore or thereafter authenticated and delivered hereunder shall be bound thereby (except as provided in Section 902). SECTION 905. Conformity with Trust Indenture Act. Every supplemental indenture executed pursuant to the Article shall conform to the requirements of the Trust Indenture Act as then in effect. 65 SECTION 906. Reference in Notes to Supplemental Indentures. Notes authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Notes so modified as to conform, in the opinion of the Trustee and the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Notes. SECTION 907. Notice of Supplemental Indentures. Promptly after the execution by the Company and the Trustee of any supplemental indenture pursuant to the provisions of Section 902, the Company shall give notice thereof to the Holders of each Outstanding Note affected, in the manner provided for in Section 106, setting forth in general terms the substance of such supplemental indenture. SECTION 908. Effect on Senior Indebtedness. No supplemental indenture shall adversely affect the rights of any holders of Senior Indebtedness under Article Thirteen unless the requisite holders of each issue of Senior Indebtedness affected thereby shall have consented to such supplemental indenture. ARTICLE TEN COVENANTS SECTION 1001. Payment of Principal, Premium, if Any, and Interest. The Company shall pay or cause to be paid the principal of, premium, if any, and interest on the Notes on the dates and in the manner provided in the Notes. Principal, premium, if any, and interest shall be considered paid on the date due if the Paying Agent, if other than the Company or a Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on the due date money deposited by the Company in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and interest then due. 66 SECTION 1002. Maintenance of Office or Agency. The Company shall maintain in the Borough of Manhattan, the City of New York, an office or agency (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or co-registrar) where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Company shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee. The Company may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, the City of New York for such purposes. The Company shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. The Company hereby designates the Corporate Trust Office of the Trustee as one such office or agency of the Company in accordance with Section 305. SECTION 1003. Money for Note Payments to Be Held in Trust. If the Company shall at any time act as its own Paying Agent, it will, on or before each due date of the principal of (or premium, if any) or interest on any of the Notes, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal of (or premium, if any) or interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of its action or failure to so act. Whenever the Company shall have one or more Paying Agents for the Notes, it will, on or before each due date of the principal of (or premium, if any) or interest on any Notes, deposit with a Paying Agent a sum in same day funds (or New York Clearing House funds if such deposit is made prior to the date on which such deposit is required to be made) sufficient to pay the principal (and premium, if any) or interest so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal, premium or interest, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of such action or any failure to so act. The Company will cause each Paying Agent (other than the Trustee) to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will: 67 (1) hold all sums held by it for the payment of the principal of (and premium, if any) or interest on Notes in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided; (2) give the Trustee notice of any default by the Company (or any other obligor upon the Notes) in the making of any payment of principal (and premium, if any) or interest; and (3) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent. The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such sums. Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of (or premium, if any) or interest on any Note and remaining unclaimed for two years after such principal, premium or interest has become due and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Note shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment to the Company, may at the expense of the Company cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in the Borough of Manhattan, The City of New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company. 68 SECTION 1004. Corporate Existence. Subject to Article Eight hereof, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect (i) its corporate existence, and the corporate, partnership or other existence of each of its Restricted Subsidiaries, in accordance with the respective organizational documents (as the same may be amended from time to time) of the Company or any such Restricted Subsidiary and (ii) the rights (charter and statutory), licenses and franchises of the Company and its Restricted Subsidiaries; provided, however, that the Company shall not be required to preserve any such right, license or franchise, or the corporate, partnership or other existence of any of its Restricted Subsidiaries, if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Restricted Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any material respect to the Holders of the Notes. SECTION 1005. Taxes. The Company shall pay, and shall cause each of its Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and governmental charges except such as are contested in good faith and by appropriate proceedings or where the failure to effect such payment is not adverse in any material respect to the Holders of the Notes. SECTION 1006. Maintenance of Properties. The Company will cause all material properties owned by the Company or any Restricted Subsidiary or used or held for use in the conduct of its business or the business of any Restricted Subsidiary to be maintained and kept in normal condition, repair and working order and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Company may be necessary so that the business carried on in connection therewith may be properly conducted at all times; provided, however, that nothing in this Section shall prevent the Company or any of its Restricted Subsidiaries from discontinuing the maintenance of any of such properties if such discontinuance is, in the judgment of the Company, desirable in the conduct of its business or the business of any Restricted Subsidiary and not adverse in any material respect to the Holders. SECTION 1007. Insurance. To the extent available at commercially reasonable rates, the Company will maintain, and will cause its Subsidiaries to maintain, insurance with responsible carriers against such risks and in such amounts, and with such deductibles, retentions, self-insured amounts and co-insurance provisions, as are customarily carried by similar businesses, of similar size, including professional and general liability, property and casualty loss, workers' compensation and interruption of business insurance. 69 SECTION 1008. Compliance with Laws. The Company shall comply, and shall cause each of its Subsidiaries to comply, with all applicable statutes, rules, regulations, orders and restrictions of the United States of America, all states and municipalities thereof, and of any governmental regulatory authority, in respect of the conduct of their respective businesses and the ownership of their respective properties, except for such noncompliances as would not in the aggregate have a material adverse effect on the financial condition or results of operations of the Company and its Subsidiaries, taken as a whole. SECTION 1009. Limitation on Restricted Payments. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make any distribution on account of the Company's or any of its Restricted Subsidiaries' Equity Interests, including any dividend or distribution payable in connection with any merger or consolidation (other than (A) dividends or distributions by the Company payable in Equity Interests (other than Disqualified Stock) of the Company or (B) dividends or distributions by a Restricted Subsidiary so long as, in the case of any dividend or distribution payable on or in respect of any class or series of securities issued by a Subsidiary other than a Wholly Owned Subsidiary, the Company or a Restricted Subsidiary receives at least its pro rata share of such dividend or distribution in accordance with its Equity Interests in such class or series of securities); (ii) purchase, redeem, defease or otherwise acquire or retire for value any Equity Interests of the Company or any direct or indirect parent of the Company; (iii) make any principal payment on, or redeem, repurchase, defease or otherwise acquire or retire for value in each case, prior to any scheduled repayment, or maturity, any Subordinated Indebtedness (other than Indebtedness permitted under clauses (vii) and (ix) of Section 1010(b) hereof); or (iv) make any Restricted Investment (all such payments and other actions set forth in clauses (i) through (iv) above being collectively referred to as "Restricted Payments"), unless, at the time of such Restricted Payment: (A) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; (B) immediately before and immediately after giving effect to such transaction on a pro forma basis, the Company could incur $1.00 of additional Indebtedness under the provisions of Section 1010(a) hereof; and (C) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Company and its Restricted Subsidiaries after the Issuance Date (including Restricted Payments permitted by clauses (i), (ii) (with respect to the payment of dividends on Refunding Capital Stock pursuant to clause (B) thereof), (v) (only to the extent that amounts paid pursuant to such clause are greater than amounts that would have been paid pursuant to such clause if $5.0 million and $10.0 million were substituted in such clause for $10.0 million and $20.0 million, respectively), (vi), (ix) and (x) of the next succeeding paragraph, but excluding all other Restricted 70 Payments permitted by the next succeeding paragraph), is less than the sum of (i) 50% of the Consolidated Net Income of the Company for the period (taken as one accounting period) from the fiscal quarter that first begins after the Issuance Date to the end of the Company's most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, in the case such Consolidated Net Income for such period is a deficit, minus 100% of such deficit), plus (ii) 100% of the aggregate net cash proceeds and the fair market value, as determined in good faith by the Board of Directors, of marketable securities received by the Company since immediately after the closing of the Merger and the Financings from the issue or sale of Equity Interests of the Company (including Refunding Capital Stock (as defined below), but excluding cash proceeds and marketable securities received from the sale of Equity Interests to members of management, directors or consultants of the Company and its Subsidiaries after the Issuance Date to the extent such amounts have been applied to Restricted Payments in accordance with clause (v) of the next succeeding paragraph and excluding Excluded Contributions) or debt securities of the Company that have been converted into such Equity Interests of the Company (other than Refunding Capital Stock (as defined below) or Equity Interests (or convertible debt securities of the Company sold to a Restricted Subsidiary of the Company and other than Disqualified Stock or debt securities that have been converted into Disqualified Stock), plus (iii) 100% of the aggregate amount of cash and marketable securities contributed to the capital of the Company following the Issuance Date (excluding Excluded Contributions), plus (iv) 100% of the aggregate amount received in cash and the fair market value of marketable securities (other than Restricted Investments) received from (A) the sale or other disposition (other than to the Company or a Restricted Subsidiary) of Restricted Investments made by the Company and its Restricted Subsidiaries or (B) a dividend from, or the sale (other than to the Company or a Restricted Subsidiary) of the stock of, an Unrestricted Subsidiary (other than an Unrestricted Subsidiary the Investment in which was made by the Company or a Restricted Subsidiary pursuant to clauses (vii) or (xii) below). (b) The foregoing provisions will not prohibit: (i) the payment of any dividend within 60 days after the date of declaration thereof, if at the date of declaration such payment would have complied with the provisions of this Indenture; (ii) (A) the redemption, repurchase, retirement or other acquisition of any Equity Interests (the "Retired Capital Stock") or Subordinated Indebtedness of the Company in exchange for, or out of the proceeds of the substantially concurrent sale (other than to a Restricted Subsidiary) of, Equity Interests of the Company (other than any Disqualified Stock) (the "Refunding Capital Stock"), and (B) if immediately prior to the retirement of Retired Capital Stock, the declaration and payment of dividends thereon was permitted under clause (vi) of this paragraph, the declaration and payment of dividends on the Refunding Capital Stock in an aggregate amount per year no greater than the aggregate amount of dividends per annum that was declarable and payable on such Retired Capital Stock immediately prior to such retirement; provided, however, 71 that at the time of the declaration of any such dividends, no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; (iii) distributions or payments of Receivables Fees; (iv) the redemption, repurchase or other acquisition or retirement of Subordinated Indebtedness of the Company made by exchange for, or out of the proceeds of the substantially concurrent sale of, new Indebtedness of the Company so long as (A) the principal amount of such new Indebtedness does not exceed the principal amount of the Subordinated Indebtedness being so redeemed, repurchased, acquired or retired for value (plus the amount of any premium required to be paid under the terms of the instrument governing the Subordinated Indebtedness being so redeemed, repurchased, acquired or retired), (B) such Indebtedness is subordinated to the Senior Indebtedness and the Notes at least to the same extent as such Subordinated Indebtedness so purchased, exchanged, redeemed, repurchased, acquired or retired for value, (C) such Indebtedness has a final scheduled maturity date equal to or later than the final scheduled maturity date of the Subordinated Indebtedness being so redeemed, repurchased, acquired or retired and (D) such Indebtedness has a Weighted Average Life to Maturity equal to or greater than the remaining Weighted Average Life to Maturity of the Subordinated Indebtedness being so redeemed, repurchased, acquired or retired; (v) a Restricted Payment to pay for the repurchase, retirement or other acquisition or retirement for value of common Equity Interests of the Company held by any future, present or former employee, director or consultant of the Company or any Subsidiary pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement; provided, however, that the aggregate Restricted Payments made under this clause (v) does not exceed in any calendar year $10.0 million (with unused amounts in any calendar year being carried over to succeeding calendar years subject to a maximum (without giving effect to the following proviso) of $20.0 million in any calendar year); provided further that such amount in any calendar year may be increased by an amount not to exceed (i) the cash proceeds from the sale of Equity Interests of the Company to members of management, directors or consultants of the Company and its Subsidiaries that occurs after the Issuance Date (to the extent the cash proceeds from the sale of such Equity Interest have not otherwise been applied to the payment of Restricted Payments by virtue of the preceding paragraph (C)) plus (ii) the cash proceeds of key man life insurance policies received by the Company and its Restricted Subsidiaries after the Issuance Date less (iii) the amount of any, Restricted Payments previously made pursuant to clauses (i) and (ii) of this subparagraph (v); and provided further that cancellation of Indebtedness owing to the Company from members of management of the Company or any of its Restricted Subsidiaries in connection with a repurchase of Equity Interests of the Company will not be deemed to constitute a Restricted Payment for purposes of this covenant or any other provision of this Indenture; (vi) the declaration and payment of dividends to holders of any class or series of Designated Preferred Stock (other than Disqualified Stock) issued after the Issuance 72 Date (including, without limitation, the declaration and payment of dividends on Refunding Capital Stock in excess of the dividends declarable and payable thereon pursuant to clause (ii)); provided, however, that for the most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date of issuance of such Designated Preferred Stock, after giving effect to such issuance on a pro forma basis, the Company and its Restricted Subsidiaries would have had a Fixed Charge Coverage Ratio of at least 1.75 to 1.00; (vii) Investments in Unrestricted Subsidiaries having an aggregate fair market value, taken together with all other Investments made pursuant to this clause (vi) that are at that time outstanding, not to exceed $25.0 million at the time of such Investment (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value); (viii) repurchases of Equity Interests deemed to occur upon exercise of stock options if such Equity Interests represent a portion of the exercise price of such options; (ix) the payment of dividends on the Company's Common Stock, following the first public offering of the Company's Common Stock after the Issuance Date, of up to 6% per annum of the net proceeds received by the Company in such public offering, other than public offerings with respect to the Company's Common Stock registered on Form S-8; (x) a Restricted Payment to pay for the repurchase, retirement or other acquisition or retirement for value of Equity Interests of the Company in existence on the Issuance Date and which are not held by KKR or any of their Affiliates or the Management Group on the Issuance Date (including any Equity Interests issued in respect of such Equity Interests as a result of a stock split, recapitalization, merger, combination, consolidation or otherwise, but excluding any management equity plan or stock option plan or similar agreement), provided that the aggregate Restricted Payments made under this clause (x) shall not exceed $80.0 million, provided further that prior to the first anniversary of the consummation of the Merger, the aggregate amount of Restricted Payments made under this clause (x) shall not exceed $40.0 million, provided further that notwithstanding the foregoing proviso, the Company shall be permitted to make Restricted Payments under this clause (x) only if after giving effect thereto, the Company would be permitted to incur at least $1.00 of additional Indebtedness under the provisions of Section 1010(a) hereof; (xi) Investments in Unrestricted Subsidiaries that are made with Excluded Contributions; and (xii) other Restricted Payments in an aggregate amount not to exceed $25.0 million; provided, however, that at the time of, and after giving effect to, any Restricted Payment permitted under clauses (iv), (v), (vi), (vii), (viii), (ix), (x), (xi) and (xii), no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; and provided further that for purposes of determining the 73 aggregate amount expended for Restricted Payments in accordance with clause (C) of the immediately preceding paragraph, only the amounts expended under clauses (i), (ii) (with respect to the payment of dividends on Refunding Capital Stock pursuant to clause (b) thereof), (v) (only to the extent that amounts paid pursuant to such clause are greater than amounts that would have been paid pursuant to such clause if $5.0 million and $10.0 million were substituted in such clause for $10.0 million and $20.0 million, respectively), (vi), (ix) and (x) shall be included. (c) As of the Issuance Date, all of the Company's Subsidiaries other then Amphenol Funding Corp. will be Restricted Subsidiaries. The Company will not permit any Unrestricted Subsidiary to become a Restricted Subsidiary except pursuant to the second to last sentence of the definition of "Unrestricted Subsidiary." For purposes of designating any Restricted Subsidiary as an Unrestricted Subsidiary, all outstanding Investments by the Company and its Restricted Subsidiaries (except to the extent repaid) in the Subsidiary so designated will be deemed to be Restricted Payments in an amount determined as set forth in the last sentence of the definition of "Investments." Such designation will only be permitted if a Restricted Payment in such amount would be permitted at such time (whether pursuant to the first paragraph of this covenant or under clause (vii) or (xi)) and if such Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. Unrestricted Subsidiaries will not be subject to any of the restrictive covenants set forth in this Indenture. SECTION 1010. Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "incur" and collectively, an "incurrence") any Indebtedness (including Acquired Indebtedness) and that the Company will not issue any shares of Disqualified Stock and will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock if the Fixed Charge Coverage Ratio for the Company's and the Restricted Subsidiaries' most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock is issued would have been at least 1.75 to 1.00, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred, or the Disqualified Stock had been issued, as the case may be, and the application of proceeds therefrom had occurred at the beginning of such four-quarter period. (b) Section 1010(a) shall not apply to: (i) the incurrence by the Company or its Restricted Subsidiaries of Indebtedness under Credit Facilities and the issuance and creation of letters of credit and banker's acceptances thereunder (with letters of credit and banker's acceptances being deemed to have a principal amount equal to the face amount thereof) up to an aggregate 74 principal amount of $1.0 billion outstanding at any one time; provided, however, that Indebtedness incurred by Restricted Subsidiaries pursuant to this clause (i) does not exceed $100.0 million (or the equivalent thereof in any other currency) at any one time outstanding; (ii) the incurrence by the Company of Indebtedness represented by the Notes; (iii) the Existing Indebtedness (other than Indebtedness described in clauses (i) and (ii)); (iv) Indebtedness (including Capitalized Lease Obligations) incurred by the Company or any of its Restricted Subsidiaries, to finance the purchase, lease or improvement of property (real or personal) or equipment (whether through the direct purchase of assets or the Capital Stock of any Person owning such assets) in an aggregate principal amount which, when aggregated with the principal amount of all other Indebtedness then outstanding and incurred pursuant to this clause (iv) and including all Refinancing Indebtedness incurred to refund, refinance or replace any other Indebtedness incurred pursuant to this clause (iv), does not exceed 10% of Total Assets; (v) Indebtedness incurred by the Company or any of its Restricted Subsidiaries constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including without limitation letters of credit in respect of workers' compensation claims or self-insurance, or other Indebtedness with respect to reimbursement type obligations regarding workers' compensation claims; provided, however, that upon the drawing of such letters of credit or the incurrence of such Indebtedness, such obligations are reimbursed within 30 days following such drawing or incurrence; (vi) Indebtedness arising from agreements of the Company or a Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligations, in each case, incurred or assumed in connection with the disposition of any business, assets or a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition; provided, however, that (A) such Indebtedness is not reflected on the balance sheet of the Company or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected on such balance sheet for purposes of this clause (A)) and (B) the maximum assumable liability in respect of all such Indebtedness shall at no time exceed the gross proceeds including noncash proceeds (the fair market value of such noncash proceeds being measured at the time received and without giving effect to any subsequent changes in value) actually received by the Company and its Restricted Subsidiaries in connection with such disposition; (vii) Indebtedness of the Company to a Restricted Subsidiary; provided that any such Indebtedness is made pursuant to an intercompany note and is subordinated in right of payment to the Notes; provided further that any subsequent issuance or transfer of any 75 Capital Stock or any other event which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such Indebtedness (except to the Company or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness; (viii) shares of preferred stock of a Restricted Subsidiary issued to the Company or another Restricted Subsidiary; provided that any subsequent issuance or transfer of any Capital Stock or any other event which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such shares of preferred stock (except to the Company or another Restricted Subsidiary) shall be deemed, in each case to be an issuance of shares of preferred stock; (ix) Indebtedness of a Restricted Subsidiary to the Company or another Restricted Subsidiary; provided that (A) any such Indebtedness is made pursuant to an intercompany note and (B) if a Guarantor incurs such Indebtedness from a Restricted Subsidiary that is not a Guarantor such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor; provided further that any subsequent transfer of any such Indebtedness (except to the Company or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness; (x) Hedging Obligations that are incurred in the ordinary course of business (A) for the purpose of fixing or hedging interest rate risk with respect to any Indebtedness that is permitted by the terms of this Indenture to be outstanding or (B) for the purpose of fixing or hedging currency exchange rate risk with respect to any currency exchanges; (xi) obligations in respect of performance and surety bonds and completion guarantees provided by the Company or any Restricted Subsidiary in the ordinary course of business; (xii) Indebtedness of any Guarantor in respect of such Guarantor's Guarantee; (xiii) Indebtedness of the Company and any of its Restricted Subsidiaries not otherwise permitted hereunder in an aggregate principal amount, which when aggregated with the principal amount of all other Indebtedness then outstanding and incurred pursuant to this clause (xiii), does not exceed $200.0 million at any one time outstanding; provided, however, that (A) Indebtedness of Foreign Subsidiaries, which when aggregated with the principal amount of all other Indebtedness of Foreign Subsidiaries then outstanding and incurred pursuant to this clause (xiii), does not exceed $100.0 million (or the equivalent thereof in any other currency) at any one time outstanding and (B) Indebtedness of a Restricted Subsidiary organized under the laws of the United States, any state thereof, the District of Columbia or any territory thereof, which when aggregated with the principal amount of all other Indebtedness of such Restricted Subsidiaries then outstanding and incurred pursuant to this clause (xiii), does not exceed $100.0 million at any one time outstanding; 76 (xiv) (A) any guarantee by the Company of Indebtedness or other obligations of any of its Restricted Subsidiaries so long as the incurrence of such Indebtedness incurred by such Restricted Subsidiary is permitted under the terms of this Indenture and (B) any Excluded Guarantee (as defined in Section 1014 hereof) of a Restricted Subsidiary; (xv) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness which serves to refund, refinance or restructure any Indebtedness incurred as permitted under the first paragraph of this covenant and clauses (ii) and (iii) above, or any Indebtedness issued to so refund, refinance or restructure such Indebtedness including additional Indebtedness incurred to pay premiums and fees in connection therewith (the "Refinancing Indebtedness") prior to its respective maturity; provided, however, that such Refinancing Indebtedness (A) has a Weighted Average Life to Maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining Weighted Average Life to Maturity of Indebtedness being refunded or refinanced, (B) to the extent such Refinancing Indebtedness refinances Indebtedness subordinated or pari passu to the Notes, such Refinancing Indebtedness is subordinated or pari passu to the Notes at least to the same extent as the Indebtedness being refinanced or refunded and (C) shall not include (x) Indebtedness of a Subsidiary that refinances Indebtedness of the Company or (y) Indebtedness of the Company or a Restricted Subsidiary that refinances Indebtedness of an Unrestricted Subsidiary; and provided further that subclauses (A) and (B) of this clause (xv) will not apply to any refunding or refinancing of any Senior Indebtedness; and (xvi) Indebtedness or Disqualified Stock of Persons that are acquired by the Company or any of its Restricted Subsidiaries or merged into a Restricted Subsidiary in accordance with the terms of this Indenture; provided that such Indebtedness or Disqualified Stock is not incurred in contemplation of such acquisition or merger; and provided further that after giving effect to such acquisition, either (A) the Company would be permitted to incur at least $1.00 of additional Indebtedness under the provisions of Section 1010(a) or (B) the Fixed Charge Coverage Ratio is greater than immediately prior to such acquisition. For purposes of determining compliance with this covenant, in the event that an item of Indebtedness meets the criteria of more than one of the categories of permitted Indebtedness described in clauses (i) through (xvi) above or is entitled to be incurred pursuant to the first paragraph of this covenant, the Company shall, in its sole discretion, classify such item of Indebtedness in any manner that complies with this covenant and such item of Indebtedness will be treated as having been incurred pursuant to only one of such clauses or pursuant to the first paragraph hereof. Accrual of interest, the accretion of accreted value and the payment of interest in the form of additional Indebtedness will not be deemed to be an incurrence of Indebtedness for purposes of this Section 1010. 77 SECTION 1011. Liens. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly create, incur, assume or suffer to exist any Lien that secures obligations under any Pari Passu Indebtedness or Subordinated Indebtedness on any asset or property of the Company or such Restricted Subsidiary, or any income or profits therefrom, or assign or convey any right to receive income therefrom, unless the Notes are equally and ratably secured with the obligations so secured or until such time as such obligations are no longer secured by a Lien. (b) No Guarantor shall directly or indirectly create, incur, assume or suffer to exist any Lien that secures obligations under any Pari Passu Indebtedness or Subordinated Indebtedness of such Guarantor on any asset or property of such Guarantor or any income or profits therefrom, or assign or convey any right to receive income therefrom, unless the Guarantee of such Guarantor is equally and ratably secured with the obligations so secured or until such time as such obligations are no longer secured by a Lien. SECTION 1012. Transactions with Affiliates. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction") involving aggregate consideration in excess of $5.0 million, unless (i) such Affiliate Transaction is on terms that are not materially less favorable to the Company or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unrelated Person and (ii) the Company delivers to the Trustee with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $10.0 million, a resolution adopted by the majority of the Board of Directors approving such Affiliate Transaction and set forth in an Officers' Certificate certifying that such Affiliate Transaction complies with clause (i) above. (b) Notwithstanding Section 1012(a), this Section 1012 shall not apply to the following: (i) transactions between or among the Company and/or any of its Restricted Subsidiaries; (ii) Restricted Payments permitted by Section 1009 hereof; (iii) the payment of customary annual management, consulting and advisory fees and related expenses to KKR and its Affiliates; (iv) the payment of reasonable and customary fees paid to, and indemnity provided on behalf of, officers, directors, employees or consultants of the Company or any Restricted Subsidiary; (v) payments by the Company or any of its Restricted Subsidiaries to KKR and its Affiliates made for any financial advisory, financing, underwriting or placement services or in respect of other investment banking activities, including, without limitation, in connection with acquisitions or divestitures which payments are approved by a majority of the Board of Directors of the Company in good faith; (vi) transactions in which the Company or any of its Restricted Subsidiaries, as the case may be, delivers to the Trustee a letter from an Independent Financial Advisor stating that such transaction is fair to the Company or such 78 Restricted Subsidiary from a financial point of view or meets the requirements of clause (a) of the preceding paragraph; (vii) payments or loans to employees or consultants which are approved by a majority of the Board of Directors of the Company in good faith; (viii) any agreement as in effect as of the Issuance Date or any amendment thereto (so long as any such amendment is not disadvantageous to the Holders of the Notes in any material respect) or any transaction contemplated thereby; (ix) the existence of, or the performance by the Company or any of its Restricted Subsidiaries of its obligations under the terms of, any stockholders agreement (including any registration rights agreement or purchase agreement related thereto) to which it is a party as of the Issuance Date and any similar agreements which it may enter into thereafter; provided, however, that the existence of, or the performance by the Company or any of its Restricted Subsidiaries of obligations under any future amendment to any such existing agreement or under any similar agreement entered into after the Issuance Date shall only be permitted by this clause (ix) to the extent that the terms of any such amendment or new agreement are not otherwise disadvantageous to the Holders of the Notes in any material respect; (x) the payment of all fees and expenses related to the Merger and the Financings; (xi) transactions with customers, clients, suppliers, or purchasers or sellers of goods or services, in each case in the ordinary course of business and otherwise in compliance with the terms of this Indenture which are fair to the Company or its Restricted Subsidiaries, in the reasonable determination of the Board of Directors of the Company or the senior management thereof, or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated party; and (xii) sales of accounts receivable, or participations therein, in connection with any Receivables Facility. SECTION 1013. Dividend and Other Payment Restrictions Affecting Subsidiaries. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or consensual restriction on the ability of any Restricted Subsidiary to: (a)(i) pay dividends or make any other distributions to the Company or any of its Restricted Subsidiaries (1) on its Capital Stock or (2) with respect to any other interest or participation in, or measured by, its profits, or (ii) pay any Indebtedness owed to the Company or any of its Restricted Subsidiaries; (b) make loans or advances to the Company or any of its Restricted Subsidiaries; or (c) sell, lease or transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries; except (in each case) for such encumbrances or restrictions existing under or by reason of: (1) contractual encumbrances or restrictions in effect on the Issuance Date, including pursuant to the Senior Credit Facility and its related documentation; (2) this Indenture and the Notes; (3) purchase money obligations for property acquired in the ordinary course of business that impose restrictions of the nature discussed in clause (c) above on the property so acquired; 79 (4) applicable law or any applicable rule, regulation or order; (5) any agreement or other instrument of a Person acquired by the Company or any Restricted Subsidiary in existence at the time of such acquisition (but not created in contemplation thereof), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired; (6) contracts for the sale of assets, including, without limitation customary restrictions with respect to a Subsidiary pursuant to an agreement that has been entered into for the sale or disposition of all or substantially all of the Capital Stock or assets of such Subsidiary; (7) secured Indebtedness otherwise permitted to be incurred pursuant to Sections 1010 and 1011 hereof that limit the right of the debtor to dispose of the assets securing such Indebtedness; (8) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business; (9) other Indebtedness of Restricted Subsidiaries permitted to be incurred subsequent to the Issuance Date pursuant to the provisions of Section 1010 hereof; (10) customary provisions in joint venture agreements and other similar agreements entered into in the ordinary course of business; (11) customary provisions contained in leases and other agreements entered into in the ordinary course of business; (12) restrictions created in connection with any Receivables Facility that, in the good faith determination of the Board of Directors of the Company, are necessary or advisable to effect such Receivables Facility; or (13) any encumbrances or restrictions of the type referred to in clauses (a), (b) and (c) above imposed by any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in clauses (1) through (11) above, provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are, in the good faith judgment of the Company's Board of Directors, no more restrictive with respect to such dividend and other payment restrictions than those contained in the dividend or other payment restrictions prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing. 80 SECTION 1014. Limitation on Guarantees of Indebtedness by Restricted Subsidiaries. (a) The Company shall not permit any Restricted Subsidiary to guarantee the payment of any Indebtedness of the Company or any Indebtedness of any other Restricted Subsidiary unless (i) such Restricted Subsidiary simultaneously executes and delivers a supplemental indenture to this Indenture providing for a Guarantee of payment of the Notes by such Restricted Subsidiary except that (A) if the Notes are subordinated in right of payment to such Indebtedness, the Guarantee under the supplemental indenture shall be subordinated to such Restricted Subsidiary's guarantee with respect to such Indebtedness substantially to the same extent as the Notes are subordinated to such Indebtedness under this Indenture and (B) if such Indebtedness is by its express terms subordinated in right of payment to the Notes, any such guarantee of such Restricted Subsidiary with respect to such Indebtedness shall be subordinated in right of payment to such Restricted Subsidiary's Guarantee with respect to the Notes substantially to the same extent as such Indebtedness is subordinated to the Notes; (ii) such Restricted Subsidiary waives and will not in any manner whatsoever claim or take the benefit or advantage of, any rights of reimbursement, indemnity or subrogation or any other rights against the Company or any other Restricted Subsidiary as a result of any payment by such Restricted Subsidiary under its Guarantee; and (iii) such Restricted Subsidiary shall deliver to the Trustee an opinion of counsel to the effect that (A) such Guarantee of the Notes has been duly executed and authorized and (B) such Guarantee of the Notes constitutes a valid, binding and enforceable obligation of such Restricted Subsidiary, except insofar as enforcement thereof may be limited by bankruptcy, insolvency or similar laws (including, without limitation, all laws relating to fraudulent transfers) and except insofar as enforcement thereof is subject to general principles of equity; provided that this paragraph (a) shall not be applicable to any guarantee of any Restricted Subsidiary (x) that (A) existed at the time such Person became a Restricted Subsidiary of the Company and (B) was not incurred in connection with, or in contemplation of, such Person becoming a Restricted Subsidiary of the Company or (y) that guarantees the payment of Obligations of the Company or any Restricted Subsidiary under the Senior Credit Facility or any other bank facility which is designated as Senior Indebtedness and any refunding, refinancing or replacement thereof, in whole or in part, provided that such refunding, refinancing or replacement thereof constitutes Senior Indebtedness and is not incurred pursuant to a registered offering of securities under the Securities Act or a private placement of securities (including under Rule 144A) pursuant to an exemption from the registration requirements of the Securities Act, which private placement provides for registration rights under the Securities Act (any guarantee excluded by operations of this clause (y) being an "Excluded Guarantee"). (b) Notwithstanding the foregoing and the other provisions herein, any Guarantee by a Restricted Subsidiary of the Notes shall provide by its terms that it shall be automatically and unconditionally released and discharged upon (i) any sale, exchange or transfer, to any Person not an Affiliate of the Company, of all of the Company's Capital Stock in, or all or substantially all the assets of, such Restricted Subsidiary (which sale, exchange or transfer is not prohibited by this Indenture) or (ii) the release or discharge of the guarantee which resulted in the creation of such Guarantee, except a discharge or release by or as a result of payment under such guarantee. 81 SECTION 1015. Limitation on Other Senior Subordinated Indebtedness. The Company shall not, and shall not permit any Guarantor to, directly or indirectly, incur any Indebtedness (including Acquired Indebtedness) that is subordinate in right of payment to any Indebtedness of the Company or any Indebtedness of any Guarantor, as the case may be, unless such Indebtedness is either (a) pari passu in right of payment with the Notes or such Guarantor's Guarantee, as the case may be or (b) subordinate in right of payment to the Notes, or such Guarantor's Guarantee, as the case may be, in the same manner and at least to the same extent as the Notes are subordinate to Senior Indebtedness or such Guarantor's Guarantee is subordinate to such Guarantor's Senior Indebtedness, as the case may be. SECTION 1016. Offer to Repurchase Upon Change of Control. (a) Upon the occurrence of a Change of Control, the Company shall make an offer to purchase all or any part (equal to $1,000 or an integral multiple thereof) of the Notes pursuant to the offer described below (the "Change of Control Offer") at a price in cash (the "Change of Control Payment") equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase. Within 30 days following any Change of Control, the Company shall mail a notice to each Holder of Notes issued hereunder in the manner set forth in Section 106, with a copy to the Trustee, with the following information: (1) a Change of Control Offer is being made pursuant to this Section 1016, and that all Notes properly tendered pursuant to such Change of Control Offer will be accepted for payment; (2) the purchase price and the purchase date, which will be no earlier than 30 days nor later than 60 days from the date such notice is mailed, except as may be otherwise required by applicable law (the "Change of Control Payment Date"); (3) any Note not properly tendered will remain outstanding and continue to accrue interest; (4) unless the Company defaults in the payment of the Change of Control Payment, all Notes accepted for payment pursuant to the Change of Control Offer will cease to accrue interest on the Change of Control Payment Date; (5) Holders electing to have any Notes purchased pursuant to a Change of Control Offer will be required to surrender the Notes, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Notes completed, to the paying agent specified in the notice at the address specified in the notice prior to the close of business on the third Business Day preceding the Change of Control Payment Date; (6) Holders will be entitled to withdraw their tendered Notes and their election to require the Company to purchase such Notes, provided that the paying agent receives, not later than the close of business on the last day of the offer period, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of Notes tendered for purchase, and a statement that such Holder is withdrawing his tendered Notes and his election to have such Notes purchased; and (7) that Holders whose Notes are being purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered, which unpurchased portion must be equal to $1,000 in principal amount or an integral multiple thereof. (b) Prior to complying with the provisions of this Section 1016, but in any event within 30 days following a Change of Control, the Company shall either repay all 82 outstanding Senior Indebtedness or obtain the requisite consents, if any, under any outstanding Senior Indebtedness to permit the repurchase of the Notes required by this Section 1016. (c) On the Change of Control Payment Date, the Company shall, to the extent permitted by law, (1) accept for payment all Notes or portions thereof properly tendered pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an amount equal to the aggregate Change of Control Payment in respect of all Notes or portions thereof so tendered and (3) deliver, or cause to be delivered, to the Trustee for cancellation the Notes so accepted together with an Officers' Certificate stating that such Notes or portions thereof have been tendered to and purchased by the Company. The Paying Agent shall promptly mail to each Holder of Notes the Change of Control Payment for such Notes, and the Trustee shall promptly authenticate and mail to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any, provided, that each such new Note shall be in a principal amount of $1,000 or an integral multiple thereof. The Company shall publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. (d) The Company shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent that such laws or regulations are applicable in connection with the repurchase of Notes pursuant to a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with provisions of this Indenture, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations described herein by virtue thereof. SECTION 1017. Asset Sales. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, cause, make or suffer to exist an Asset Sale, unless (x) the Company, or its Restricted Subsidiaries, as the case may be, receives consideration at the time of such Asset Sale at least equal to the fair market value (as determined in good faith by the Company) of the assets sold or otherwise disposed of and (y) at least 75% of the consideration therefor received by the Company, or such Restricted Subsidiary, as the case may be, is in the form of cash or Cash Equivalents; provided that the amount of (A) any liabilities (as shown on the Company's or such Restricted Subsidiary's most recent balance sheet or in the notes thereto) of the Company or any Restricted Subsidiary (other than liabilities that are by their terms subordinated to the Notes), that are assumed by the transferee of any such assets, (B) any notes or other obligations received by the Company or such Restricted Subsidiary from such transferee that are converted by the Company or such Restricted Subsidiary into cash (to the extent of the cash received) within 180 days following the closing of such Asset Sale and (C) any Designated Noncash Consideration received by the Company or any of its Restricted Subsidiaries in such Asset Sale having an aggregate fair market value, taken together with all other Designated Noncash Consideration received pursuant to this clause (C) that is at that time outstanding, not to exceed 15% of Total Assets at the time of the receipt of such Designated Noncash Consideration (with the fair market value of each item of Designated Noncash Consideration being measured at the time received and without giving effect to subsequent 83 changes in value), shall be deemed to be cash for purposes of this provision and for no other purpose. (b) Within 365 days after the Company's or any Restricted Subsidiary's receipt of the Net Proceeds of any Asset Sale, the Company or such Restricted Subsidiary may apply the Net Proceeds from such Asset Sale, at its option, (i) to permanently reduce Obligations under the Senior Credit Facility (and to correspondingly reduce commitments with respect thereto) or other Senior Indebtedness or Pari Passu Indebtedness (provided that if the Company shall so reduce Obligations under Pari Passu Indebtedness, it will equally and ratably reduce Obligations under the Notes if the Notes are then prepayable or, if the Notes may not be then prepaid, the Company shall make an offer (in accordance with the procedures set forth below for an Asset Sale Offer) to all Holders to purchase at 100% of the principal amount thereof the amount of Notes that would otherwise be prepaid), (ii) to an investment in any one or more businesses, capital expenditures or acquisitions of other assets in each case, used or useful in a Similar Business and/or (iii) to an investment in properties or assets that replace the properties and assets that are the subject of such Asset Sale. Pending the final application of any such Net Proceeds, the Company or such Restricted Subsidiary may temporarily reduce Indebtedness under a revolving credit facility, if any, or otherwise invest such Net Proceeds in Cash Equivalents or Investment Grade Securities. Any Net Proceeds from the Asset Sale that are not invested as provided and within the time period set forth in the first sentence of this paragraph shall be deemed to constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $15.0 million, the Company shall make an offer to all Holders of Notes (an "Asset Sale Offer") to purchase the maximum principal amount of Notes, that is an integral multiple of $1,000, that may be purchased out of the Excess Proceeds at an offer price in cash in an amount equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date fixed for the closing of such offer (the "Offered Price"). Within 10 Business Days after the date on which the aggregate amount of Excess Proceeds exceeds $15.0 million, the Company shall give to each Holder of the Notes, with a copy to the Trustee, in the manner provided in Section 106 a notice stating: (i) that the Holder has the right to require the Company to repurchase such Holder's Notes at the Offered Price, subject to proration in the event the Excess Proceeds are less than the aggregate Offered Price of all Notes tendered; (ii) the date of purchase of Notes pursuant to the Asset Sale Offer (the "Asset Sale Purchase Date"), which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed; (iii) that the Offered Price will be paid to Holders electing to have Notes purchased on the Asset Sale Purchase Date, provided that a Holder must surrender its Note to the Paying Agent at the address specified in the notice prior to the close of business at least five Business Days prior to the Asset Sale Purchase Date; (iv) any Note not tendered will continue to accrue interest pursuant to its terms; 84 (v) that unless the Company defaults in the payment of the Offered Price, any Note accepted for payment pursuant to the Asset Sale Offer shall cease to accrue interest on and after the Asset Sale Purchase Date; (vi) that Holders will be entitled to withdraw their tendered Notes and their election to require the Company to purchase such Notes, provided that the Company receives, not later than the close of business on the third Business Day preceding the Asset Sale Purchase Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Notes tendered for purchase, and a statement that such Holder is withdrawing its election to have such Notes purchased; (vii) that the Holders whose Notes are being purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered; which unpurchased portion must be equal to $1,000 in principal amount or an integral multiple thereof; and (viii) the instructions a Holder must follow in order to have his Notes purchased in accordance with this Section 1017. To the extent that the aggregate amount of Notes tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company may use any remaining Excess Proceeds for general corporate purposes. If the aggregate principal amount of Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Notes to be purchased in the manner described in Section 1104. Upon completion of any such Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero. The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Notes pursuant to an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Section 1017, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Indenture. SECTION 1018. Compliance Certificate. (a) The Company shall deliver to the Trustee, within 120 days after the end of each fiscal year, an Officers' Certificate stating that a review of the activities of the Company and its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Company has kept, observed, performed and fulfilled its obligations under this Indenture, and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge the Company has kept, observed, performed and fulfilled each and every covenant contained in this Indenture and there is no Default or Event of Default which has occurred and is continuing in the performance or observance of any of the terms, provisions and conditions of this Indenture (or, if a Default or Event of Default shall have occurred, describing all such Defaults or Events 85 of Default of which he or she may have knowledge and what action the Company is taking or proposes to take with respect thereto) and that to the best of his or her knowledge no event has occurred and remains in existence by reason of which payments on account of the principal of or interest, if any, on the Notes is prohibited or if such event has occurred, a description of the event and what action the Company is taking or proposes to take with respect thereto. (b) The Company shall, so long as any of the Notes are outstanding, deliver to the Trustee, within 5 Business Days of any Officer becoming aware of any Default or Event of Default, an Officers' Certificate specifying such Default or Event of Default. SECTION 1019. Reports. Notwithstanding that the Company may not be subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act or otherwise report on an annual and quarterly basis on forms provided for such annual and quarterly reporting pursuant to rules and regulations promulgated by the Commission, the Company shall file with the Commission (and provide the Trustee and Holders with copies thereof, without cost to each Holder, within 15 days after it files them with the Commission), (i) within 90 days after the end of each fiscal year, annual reports on Form 1O-K (or any successor or comparable form) containing the information required to be contained therein (or required in such successor or comparable form); (ii) within 45 days after the end of each of the first three fiscal quarters of each fiscal year, reports on Form 1O-Q (or any successor or comparable form); (iii) promptly from time to time after the occurrence of an event required to be therein reported, such other reports on Form 8-K (or any successor or comparable form); and (iv) any other information, documents and other reports which the Company would be required to file with the Commission if it were subject to Section 13 or 15(d) of the Exchange Act; provided, however, the Company shall not be so obligated to file such reports with the Commission if the Commission does not permit such filing, in which event the Company will make available such information to prospective purchasers of Notes, in addition to providing such information to the Trustee and the Holders, in each case within 15 days after the time the Company would be required to file such information with the Commission, if it were subject to Sections 13 or 15(d) of the Exchange Act. The Company shall at all times comply with TIA ss. 314(a). SECTION 1020. Further Assurances. The Company shall, upon the request of the Trustee, execute and deliver such further instruments and perform such further acts as may reasonably be necessary or proper to carry out more effectively the provisions of this Indenture. ARTICLE ELEVEN REDEMPTION OF NOTES SECTION 1101. Redemption. 86 The Notes may or shall, as the case may be, be redeemed, as a whole or from time to time in part, subject to the conditions and at the Redemption Prices specified in the form of Note, together with accrued interest to the Redemption Date specified in the form of the Note. SECTION 1102. Applicability of Article. Redemption of Notes at the election of the Company or otherwise, as permitted or required by any provision of this Indenture, shall be made in accordance with such provision and this Article. SECTION 1103. Election to Redeem; Notice to Trustee. The election of the Company to redeem any Notes pursuant to Section 1101 shall be evidenced by a Board Resolution. In case of any redemption at the election of the Company, the Company shall, at least 60 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date and of the principal amount of Notes to be redeemed and shall deliver to the Trustee such documentation and records as shall enable the Trustee to select the Notes to be redeemed pursuant to Section 1104. SECTION 1104. Selection by Trustee of Notes to Be Redeemed. If less than all the Notes are to be redeemed, selection of such Notes for redemption shall be made by the Trustee not more than 60 days prior to the Redemption Date, from the Outstanding Notes not previously called for redemption, in compliance with the requirements of the principal national securities exchange, if any, on which such Notes are listed, or, if such Notes are not so listed, on a pro rata basis, by lot or by such other method as the Trustee shall deem fair and appropriate (and in such manner as complies with applicable legal requirements) and which may provide for the selection for redemption of portions of the principal of Notes; provided, however, that no Notes of less than $1,000 shall be redeemed in part. The Trustee shall promptly notify the Company in writing of the Notes selected for redemption and, in the case of any Notes selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to redemption of Notes shall relate, in the case of any Note redeemed or to be redeemed only in part, to the portion of the principal amount of such Note which has been or is to be redeemed. SECTION 1105. Notice of Redemption. Notice of redemption shall be given in the manner provided for in Section 106 at least 30 but not more than 60 days prior to the Redemption Date, to each Holder of Notes 87 to be redeemed at such Holder's registered address. The Trustee shall give notice of redemption in the Company's name and at the Company's expense; provided, however, that the Company shall deliver to the Trustee, at least 30 days prior to the Redemption Date, an Officers' Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the following items. All notices of redemption shall state: (1) the Redemption Date, (2) the Redemption Price and the amount of accrued interest to the Redemption Date payable as provided in Section 1107, if any, (3) if less than all Outstanding Notes are to be redeemed, the identification of the particular Notes (or portion thereof) to be redeemed, as well as the aggregate principal amount of Notes to be redeemed and the aggregate principal amount of Notes to be outstanding after such partial redemption, (4) in case any Note is to be redeemed in part only, the notice which relates to such Note shall state that on and after the Redemption Date, upon surrender of such Note, the holder will receive, without charge, a new Note or Notes of authorized denominations for the principal amount thereof remaining unredeemed, (5) that on the Redemption Date the Redemption Price (and accrued interest, if any, to the Redemption Date payable as provided in Section 1107) will become due and payable upon each such Note, or the portion thereof, to be redeemed, and, unless the Company defaults in making the redemption payment, that interest on Notes called for redemption (or the portion thereof) will cease to accrue on and after said date, (6) the place or places where such Notes are to be surrendered for payment of the Redemption Price and accrued interest, if any, (7) the name and address of the Paying Agent, (8) that Notes called for redemption must be surrendered to the Paying Agent to collect the Redemption Price, (9) the CUSIP number, and that no representation is made as to the accuracy or correctness of the CUSIP number, if any, listed in such notice or printed on the Notes, and (10) the paragraph of the Notes pursuant to which the Notes are to be redeemed. 88 SECTION 1106. Deposit of Redemption Price. Prior to any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 1003) an amount of money sufficient to pay the Redemption Price of, and accrued interest on, all the Notes which are to be redeemed on that date. SECTION 1107. Notes Payable on Redemption Date. Notice of redemption having been given as aforesaid, the Notes so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified (together with accrued interest, if any, to the Redemption Date), and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued interest) such Notes shall cease to bear interest. Upon surrender of any such Note for redemption in accordance with said notice, such Note shall be paid by the Company at the Redemption Price, together with accrued interest, if any, to the Redemption Date; provided, however, that installments of interest whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Notes, or one or more Predecessor Notes, registered as such at the close of business on the relevant Regular Record Date or Special Record Date, as the case may be, according to their terms and the provisions of Section 308. If any Note called for redemption shall not be so paid upon surrender thereof for redemption, the principal (and premium, if any) shall, until paid, bear interest from the Redemption Date at the rate borne by the Notes. SECTION 1108. Notes Redeemed in Part. Any Note which is to be redeemed only in part (pursuant to the provisions of this Article) shall be surrendered at the office or agency of the Company maintained for such purpose pursuant to Section 1002 (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or such Holder's attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Note without service charge, a new Note or Notes, of any authorized denomination as requested by such Holder, in an aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Note so surrendered; provided that each such new Note will be in a principal amount of $1,000 or integral multiple thereof. 89 ARTICLE TWELVE LEGAL DEFEASANCE AND COVENANT DEFEASANCE SECTION 1201. Company's Option to Effect Legal Defeasance or Covenant Defeasance. The Company and the Guarantors may, at their option by Board Resolution, at any time, with respect to the Notes, elect to have either Section 1202 or Section 1203 be applied to all Outstanding Notes upon compliance with the conditions set forth below in this Article Twelve. SECTION 1202. Legal Defeasance and Discharge. Upon the Company's exercise under Section 1201 of the option applicable to this Section 1202, the Company shall be deemed to have been discharged from its obligations with respect to all Outstanding Notes and each Guarantor shall be deemed to have been discharged from its obligations with respect to its Guarantee on the date the conditions set forth in Section 1204 are satisfied (hereinafter, "Legal Defeasance"). For this purpose, such Legal Defeasance means that the Company and any such Guarantor shall be deemed to have paid and discharged the entire Indebtedness represented by the Outstanding Notes, which shall thereafter be deemed to be "Outstanding" only for the purposes of Section 1205 and the other Sections of this Indenture referred to in (A) and (B) below, and to have satisfied all its other obligations under such Notes and this Indenture insofar as such Notes are concerned (and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following which shall survive until otherwise terminated or discharged hereunder: (A) the rights of Holders of Outstanding Notes to receive payments in respect of the principal of, premium, if any, and interest on such Notes when such payments are due, solely from the trust fund described in Section 1204 and as more fully set forth in such Section, (B) the Company's obligations with respect to such Notes under Sections 304, 305, 307, 1002 and 1003, (C) the rights, powers, trusts, duties and immunities of the Trustee hereunder, and the Company's obligations in connection therewith and (D) this Article Twelve. Subject to compliance with this Article Twelve, the Company may exercise its option under this Section 1202 notwithstanding the prior exercise of its option under Section 1203 with respect to the Notes. SECTION 1203. Covenant Defeasance. Upon the Company's exercise under Section 1201 of the option applicable to this Section 1203, the Company and each Guarantor shall be released from its obligations under any covenant contained in Section 801 and in Sections 1009 through 1019 with respect to the Outstanding Notes on and after the date the conditions set forth below are satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall thereafter be deemed not to be "Outstanding" for the purposes of any direction, waiver, consent or declaration or Act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be 90 deemed "Outstanding" for all other purposes hereunder (it being understood that such Notes will not be outstanding for accounting purposes). For this purpose, such Covenant Defeasance means that, with respect to the Outstanding Notes, the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 501(iii), but, except as specified above, the remainder of this Indenture and such Notes shall be unaffected thereby. SECTION 1204. Conditions to Legal Defeasance or Covenant Defeasance. The following shall be the conditions to application of either Section 1202 or Section 1203 to the Outstanding Notes: (i) The Company must irrevocably deposit with the Trustee (or another trustee satisfying the requirements of the Indenture who shall agree to comply with the provisions of this Article Twelve applicable to it) as trust funds in trust for the purpose of making the following payments, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of such Notes, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants selected by the Company, to pay the principal of, premium, if any, and interest due on the Outstanding Notes on the Stated Maturity or on the applicable Redemption Date as the case may be, of such principal, premium, if any, or interest on the Outstanding Notes; (ii) in the case of Legal Defeasance, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee (which opinion may be subject to customary assumptions and exclusions) confirming that (A) the Company has received from, or there has been published by, the United States Internal Revenue Service a ruling or (B) since the Issuance Date, there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel in the United States shall confirm that, subject to customary assumptions and exclusions, the Holders of the Outstanding Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Legal Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (iii) in the case of Covenant Defeasance, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that, subject to customary assumptions and exclusions, the Holders of the Outstanding Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Covenant Defeasance and will be subject to 91 such tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (iv) no Default or Event of Default shall have occurred and be continuing on the date of such deposit or insofar as Events of Default from bankruptcy or insolvency events are concerned, at any time in the period ending on the 91st day after the date of deposit; (v) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than this Indenture) to which the Company or any Guarantor is a party or by which the Company or any Guarantor is bound; (vi) the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that, as of the date of such opinion and subject to customary assumptions and exclusions following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally under any applicable U.S. federal or state law, and that the Trustee has a perfected security interest in such trust funds for the ratable benefit of the Holders; (vii) the Company shall have delivered to the Trustee an Officers' Certificate stating that the deposit was not made by the Company with the intent of defeating, hindering, delaying or defrauding any creditors of the Company or any Guarantor or others; and (viii) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel in the United States (which Opinion of Counsel may be subject to customary assumptions and exclusions) each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance, as the case may be, have been complied with. SECTION 1205. Deposited Money and U.S. Government Securities to Be Held in Trust; Other Miscellaneous Provisions. Subject to the provisions of the last paragraph of Section 1003, all money and Government Securities (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 1205, the "Trustee") pursuant to Section 1204 in respect of the Outstanding Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal (and premium, if any) and interest, but such money need not be segregated from other funds except to the extent required by law. Money and Government Securities so held in trust are not subject to Article Thirteen. 92 The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the Government Securities deposited pursuant to Section 1204 or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the Outstanding Notes. Anything in this Article Twelve to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon Company Request any money or U.S. Government Securities held by it as provided in Section 1204 which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, are in excess of the amount thereof which would then be required to be deposited to effect an equivalent legal defeasance or covenant defeasance, as applicable, in accordance with this Article. SECTION 1206. Reinstatement. If the Trustee or any Paying Agent is unable to apply any money or Government Securities in accordance with Section 1205 by reason of any legal proceeding or by any reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company's obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 1202 or 1203, as the case may be, until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 1205; provided, however, that if the Company makes any payment of principal of (or premium, if any) or interest on any Note following the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money and Government Securities held by the Trustee or Paying Agent. ARTICLE THIRTEEN SUBORDINATION OF NOTES SECTION 1301. Notes Subordinate to Senior Indebtedness. The Company covenants and agrees, and each Holder of a Note, by his acceptance thereof, likewise covenants and agrees, for the benefit of the holders, from time to time, of Senior Indebtedness that, to the extent and in the manner hereinafter set forth in this Article, the Indebtedness represented by the Notes and the payment of the principal of (and premium, if any) and interest on each and all of the Notes and all other Subordinated Note Obligations are hereby expressly made subordinate and subject in right of payment as provided in this Article to the prior payment in full in cash equivalents of all Senior Indebtedness, whether outstanding on the date of this Indenture or thereafter incurred. SECTION 1302. Payment over of Proceeds upon Dissolution, Etc. 93 Upon any distribution to creditors of the Company in a liquidation or dissolution of the Company or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Company or its property, an assignment for the benefit of creditors or any marshalling of the Company's assets and liabilities: (1) the holders of Senior Indebtedness shall be entitled to receive payment in full in cash equivalents of such Senior Indebtedness before the Holders of Notes shall be entitled to receive any payment with respect to the Subordinated Note Obligations (except that Holders of Notes may receive (i) shares of stock and any debt securities that are subordinated at least to the same extent as the Notes to (a) Senior Indebtedness and (b) any securities issued in exchange for Senior Indebtedness and (ii) payments and other distributions made from the trusts described in Article Twelve); and (2) until all Obligations with respect to Senior Indebtedness (as provided in subsection (1) above) are paid in full in cash equivalents, any distribution to which Holders would be entitled but for this Article shall be made to holders of Senior Indebtedness (except that Holders of Notes may receive (i) shares of stock and any debt securities that are subordinated to at least the same extent as the Notes to (a) Senior Indebtedness and (b) any securities issued in exchange for Senior Indebtedness and (ii) payments and other distributions made from the trusts described in Article Twelve) as their interests may appear. SECTION 1303. Suspension of Payment When Senior Indebtedness in Default. The Company may not make any payment upon or distribution in respect of the Subordinated Note Obligations (other than (i) securities that are subordinated to at least the same extent as the Notes to (a) Senior Indebtedness and (b) any securities issued in exchange for Senior Indebtedness and (ii) payments and other distributions made from the trusts described in Article Twelve) until all Senior Indebtedness has been paid in full in cash equivalents if: (i) a default in the payment of any principal of, premium, if any, or interest on, or of unreimbursed amounts under drawn letters of credit or in respect of banker's acceptances or fees relating to letters of credit or banker's acceptances constituting, Designated Senior Indebtedness occurs and is continuing beyond any applicable grace period in the agreement, indenture or other document governing such Designated Senior Indebtedness (a "payment default"); or (ii) a default, other than a payment default, on Designated Senior Indebtedness occurs and is continuing that then permits holders of the Designated Senior Indebtedness to accelerate its maturity (a "non-payment default") and the Trustee receives a notice of the default (a "Payment Blockage Notice") from a Person who may give it pursuant to Section 1313 hereof. No new period of payment blockage may be commenced unless and until 365 days have elapsed since the effectiveness of the immediately preceding Payment Blockage Notice. However, if any Payment Blockage Notice within such 365-day period is given by or on behalf of any holders of 94 Designated Senior Indebtedness (other than the Bank Agent under the Senior Credit Facility), the Bank Agent may give another Payment Blockage Notice within such period. In no event, however, may the total number of days during which any Payment Blockage Period or Periods is in effect exceed 179 days in the aggregate during any 365 consecutive day period. No nonpayment default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the Trustee shall be, or be made, the basis for a subsequent Payment Blockage Notice unless such default shall have been cured or waived for a period of not less than 90 days. The Company may and shall resume payments on and distributions in respect of the Notes and may acquire them upon the earlier of: (1) in the case of a payment default, upon the date on which such default is cured or waived or shall have ceased to exist or such Designated Senior Indebtedness shall have been discharged or paid in full in cash equivalents, or (2) in case of a nonpayment default, the earlier of (x) the date on which such nonpayment default is cured or waived, (y) 179 days after the date on which the applicable Payment Blockage Notice is received (each such period, the "Payment Blockage Period") or (z) the date such Payment Blockage Period shall be terminated by written notice to the Trustee from the requisite holders of such Designated Senior Indebtedness necessary to terminate such period or from their Representative, after which the Company shall resume making any and all required payments in respect of the Notes, including any missed payments, if this Article otherwise permits the payment, distribution or acquisition at the time of such payment or acquisition. SECTION 1304. Acceleration of Notes. If payment of the Notes is accelerated because of an Event of Default, the Company shall promptly notify holders of Senior Indebtedness of the acceleration. SECTION 1305. When Distribution Must Be Paid Over. In the event that the Trustee or any Holder receives any payment of any Subordinated Note Obligations at a time when such payment is prohibited by Sections 1302 or 1303, such payment shall be held by the Trustee or such Holder, for the benefit of, and shall be paid forthwith over and delivered, upon written request, to, the holders of Senior Indebtedness as their interests may appear or to their Representative under the indenture or other agreement (if any) pursuant to which such Senior Indebtedness may have been issued, as their respective interests may appear, for application to the payment of all Senior Indebtedness remaining unpaid to the extent necessary to pay such Senior Indebtedness in full in cash equivalents in accordance with their terms, after giving effect to any concurrent payment or distribution to or for the benefit of holders of Senior Indebtedness. 95 With respect to the holders of Senior Indebtedness, the Trustee undertakes to perform only such obligations on the part of the Trustee as are specifically set forth in this Article Thirteen, and no implied covenants or obligations with respect to the holders of Senior Indebtedness shall be read into the Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness, and shall not be liable to any such holders if the Trustee shall pay over or distribute to or on behalf of Holders or the Company or any other Person money or assets to which any holders of Senior Indebtedness shall be entitled by virtue of this Article Thirteen, except if such payment is made as a result of the willful misconduct or gross negligence of the Trustee. SECTION 1306. Notice by Company. The Company shall promptly notify the Trustee and the Paying Agent of any facts known to the Company that would cause a payment of any Obligations with respect to the Notes that violate this Article, but failure to give such notice shall not affect the subordination of the Notes to the Senior Indebtedness as provided in this Article Thirteen. SECTION 1307. Payment Permitted If No Default. Nothing contained in this Article or elsewhere in this Indenture or in any of the Notes shall prevent the Company, at any time except during the pendency of any case, proceeding, dissolution, liquidation or other winding up, assignment for the benefit of creditors or other marshalling of assets and liabilities of the Company referred to in Section 1302 or under the conditions described in Section 1303, from making payments at any time of principal of (and premium, if any, on) or interest on the Notes. SECTION 1308. Subrogation to Rights of Holders of Senior Indebtedness. Subject to the payment in full of all Senior Indebtedness in cash equivalents, the Holders shall be subrogated (equally and ratably with the holders of all Pari Passu Indebtedness of the Company) to the rights of the holders of such Senior Indebtedness to receive payments and distributions of cash, property and securities applicable to the Senior Indebtedness until the Subordinated Note Obligations shall be paid in full. For purposes of such subrogation, no payments or distributions to the holders of Senior Indebtedness of any cash, property or securities to which the Holders of the Notes or the Trustee would be entitled except for the provisions of this Article, and no payments over pursuant to the provisions of this Article to the holders of Senior Indebtedness by Holders of the Notes or on their behalf or by the Trustee, shall, as among the Company, its creditors other than holders of Senior Indebtedness, and the Holders of the Notes, be deemed to be a payment or distribution by the Company to or on account of the Senior Indebtedness; it being understood that the provisions of this Article are intended solely for the purpose of determining the relative rights of the Holders of the Notes, on the one hand, and the holders of Senior Indebtedness, on the other hand. 96 SECTION 1309. Provisions Solely to Define Relative Rights. The provisions of this Article are and are intended solely for the purpose of defining the relative rights of the Holders on the one hand and the holders of Senior Indebtedness on the other hand. Nothing contained in this Article or elsewhere in this Indenture or in the Notes is intended to or shall (a) impair, as between the Company and the Holders, the obligation of the Company, which is absolute and unconditional, to pay to the Holders the principal of (and premium, if any) and interest on the Notes as and when the same shall become due and payable in accordance with their terms; or (b) affect the relative rights against the Company of the Holders and creditors of the Company other than their rights in relation to holders of Senior Indebtedness; or (c) prevent the Trustee or any Holder from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article of the holders of Senior Indebtedness. If the Company fails because of this Article to pay principal (or premium, if any) or interest on a Note on the due date, the failure is still a Default or Event of Default. SECTION 1310. Trustee to Effectuate Subordination. Each Holder of a Note by his acceptance thereof authorizes and directs the Trustee on such Holder's behalf to take such action as may be necessary or appropriate to effectuate the subordination provided in this Article and appoints the Trustee his attorney-in-fact for any and all such purposes. If the Trustee does not file a proper proof of claim or proof of debt in the form required in any proceeding referred to in Section 504 hereof at least 30 days before the expiration of the time to file such claim, the Bank Agent (if the Senior Credit Facility is still outstanding) is hereby authorized to file an appropriate claim for and on behalf of the Holders of the Notes. SECTION 1311. Subordination May Not Be Impaired by Company. No right of any present or future holder of any Senior Indebtedness to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any non-compliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof any such holder may have or be otherwise charged with. SECTION 1312. Distribution or Notice to Representative. Whenever a distribution is to be made or a notice given to holders of Senior Indebtedness, the distribution may be made and the notice given to their Representative. Upon any payment or distribution of assets of the Company referred to in this Article Thirteen, the Trustee and the Holders shall be entitled to rely upon any order or decree made by any court of competent jurisdiction or upon any certificate of such Representative or of the liquidating trustee or agent or other Person making any distribution to the Trustee or to the Holders for the purpose of ascertaining the Persons entitled to participate in such 97 distribution, the holders of the Senior Indebtedness and other Indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other acts pertinent thereto or to this Article Thirteen. SECTION 1313. Notice to Trustee. (a) The Company shall give prompt written notice to the Trustee of any fact known to the Company which would prohibit the making of any payment to or by the Trustee in respect of the Notes. Notwithstanding the provisions of this Article or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts which would prohibit the making of any payment to or by the Trustee in respect of the Notes, unless and until the Trustee shall have received written notice thereof from the Company, the Bank Agent or a holder of Senior Indebtedness or from any trustee, fiduciary or agent therefor; and, prior to the receipt of any such written notice, the Trustee, subject to TIA Sections 315(a) through 315(d), shall be entitled in all respects to assume that no such facts exist; provided, however, that, if the Trustee shall not have received the notice provided for in this Section at least three Business Days prior to the date upon which by the terms hereof any money may become payable for any purpose (including, without limitation, the payment of the principal of (and premium, if any) or interest on any Note), then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such money and to apply the same to the purpose for which such money was received and shall not be affected by any notice to the contrary which may be received by it within three Business Days prior to such date. (b) Subject to TIA Sections 315(a) through 315(d), the Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself to be a holder of Senior Indebtedness (or a trustee, fiduciary or agent therefor) to establish that such notice has been given by a holder of Senior Indebtedness (or a trustee, fiduciary or agent therefor). In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of Senior Indebtedness to participate in any payment or distribution pursuant to this Article, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article and, if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. SECTION 1314. Reliance on Judicial Order or Certificate of Liquidating Agent. Upon any payment or distribution of assets of the Company referred to in this Article, the Trustee, subject to TIA Sections 315(a) through 315(d), and the Holders of the Notes shall be entitled to rely upon any order or decree entered by any court of competent jurisdiction in which such insolvency, bankruptcy, receivership, liquidation, reorganization, dissolution, winding up or similar case or proceeding is pending, or a certificate of the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit of creditors, 98 agent or other Person making such payment or distribution, delivered to the Trustee or to the Holders of Notes, for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of Senior Indebtedness and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article; provided that such court, trustee, receiver, custodian, assignee, agent or other Person has been apprised of, or the order, decree or certificate makes reference to, the provisions of this Article. SECTION 1315. Rights of Trustee as a Holder of Senior Indebtedness; Preservation of Trustees' Rights. The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article with respect to any Senior Indebtedness which may at any time be held by it, to the same extent as any other holder of Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder. Nothing in this Article shall apply to claims of, or payments to, the Trustee under or pursuant to Section 607. SECTION 1316. Article Applicable to Paying Agents. In case at any time any Paying Agent other than the Trustee shall have been appointed by the Company and be then acting hereunder, the term "Trustee" as used in this Article shall in such case (unless the context otherwise requires) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this Article in addition to or in place of the Trustee; provided, however, that Section 1315 shall not apply to the Company or any Affiliate of the Company if it or such Affiliate acts as Paying Agent. SECTION 1317. No Suspension of Remedies. Nothing contained in this Article shall limit the right of the Trustee or the Holders of Notes to take any action to accelerate the maturity of the Notes pursuant to Article Five or to pursue any rights or remedies hereunder or under applicable law, except as provided in Article Five. SECTION 1318. Modification of Terms of Senior Indebtedness. Any renewal or extension of the time of payment of any Senior Indebtedness or the exercise by the holders of Senior Indebtedness of any of their rights under any instrument creating or evidencing Senior Indebtedness, including, without limitation, the waiver of default thereunder, may be made or done all without notice to or assent from the Holders or the Trustee. No compromise, alteration, amendment, modification, extension, renewal or other change of, or waiver, consent or other action in respect of, any liability or obligation under or in respect of, or of any of the terms, covenants or conditions of any indenture or other instrument under which any Senior Indebtedness is outstanding or of such Senior Indebtedness, 99 whether or not such release is in accordance with the provisions of any applicable document, shall in any way alter or affect any of the provisions of this Article Thirteen or of the Notes relating to the subordination thereof. SECTION 1319. Certain Terms. For purposes of this Article Thirteen, (i) "cash equivalents" means Government Securities with maturities of nine months or less and (ii) unless the context clearly indicates otherwise, any payment or distribution to the Trustee or any Holder in respect of any Subordinated Note Obligation shall include any payment or distribution of any kind or character from any source, whether in cash, property or securities, by set-off or otherwise, including any repurchase, redemption or acquisition of the Notes and any direct or indirect payment payable by reason of any other Indebtedness or Obligation being subordinated to the Notes. SECTION 1320. Trust Moneys Not Subordinated. Notwithstanding anything contained herein to the contrary, payments from cash or the proceeds of Government Securities held in trust under Article Twelve hereof by the Trustee (or other qualifying trustee) and which were deposited in accordance with the terms of Article Twelve hereof and not in violation of Section 1303 hereof for the payment of principal of (and premium, if any) and interest on the Notes shall not be subordinated to the prior payment of any Senior Indebtedness or subject to the restrictions set forth in this Article Thirteen, and none of the Holders shall be obligated to pay over any such amount to the Company or any holder of Senior Indebtedness or any other creditor of the Company. This Indenture may be signed in any number of counterparts each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Indenture. 100 IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the day and year first above written. AMPHENOL CORPORATION, a Delaware corporation By: _____________________________ Name: Title: 101 IBJ SCHRODER BANK & TRUST COMPANY, as Trustee By: ____________________________ Name: Title: EX-23.2 4 EXHIBIT 23.2 - CONSENT OF PRICE WATERHOUSE EXHIBIT 23.2 We hereby consent to the use in the Prospectus constituting part of this Registration Statement on Form S-3 of our report dated January 14, 1997, except as to Note 12, which is as of January 23, 1997 relating to the financial statements of Amphenol Corporation, which appears in such Prospectus. We also consent to the reference to us under the heading "Experts" in such Prospectus. /s/ Price Waterhouse LLP PRICE WATERHOUSE LLP Hartford, Connecticut April 28, 1997 -----END PRIVACY-ENHANCED MESSAGE-----