NOTE PURCHASE AGREEMENT

Exhibit 10.1

 

 

NOTE PURCHASE AGREEMENT

HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED,

and, for limited purposes,

KOHLBERG KRAVIS ROBERTS & CO. L.P.

October 22, 2007

 

 

TABLE OF CONTENTS

1.		Definitions					1
2.		Authorization, Purchase and Sale of Notes					5
		2.1		Authorization, Purchase and Sale			6
		2.2		Closing			6
3.		Representations and Warranties of the Company					6
		3.1		Organization and Power			6
		3.2		Capitalization			6
		3.3		Authorization			7
		3.4		Valid Issuance			8
		3.5		No Conflict			8
		3.6		Consents			9
		3.7		SEC Reports; Financial Statements			9
		3.8		Absence of Litigation			10
		3.9		Compliance with Law			10
		3.10		Intellectual Property			10
		3.11		Employee Benefits			11
		3.12		Taxes			11
		3.13		NYSE			11
		3.14		Company Not an “Investment Company”			11
		3.15		General Solicitation; No Integration			11
4.		Representations and Warranties of Each Purchaser					12
		4.1		Organization			12
		4.2		Authorization			12
		4.3		No Conflict			12
		4.4		Consents			13
		4.5		Absence of Litigation			13
		4.6		Purchasers’ Financing			13
		4.7		Brokers			13
		4.8		Purchase Entirely for Own Account			13
		4.9		Investor Status			14
		4.10		Securities Not Registered			14
5.		Covenants					14
		5.1		HSR Approval			14
		5.2		Shares Issuable Upon Conversion			14
		5.3		PORTAL and CUSIPs			15
		5.4		Further Assurances			15
		5.5		Board of Directors Matters			16
		5.6		Standstill			17
		5.7		Use of Proceeds			19
6.		Conditions Precedent					20

		6.1		Conditions to the Obligation of the Purchasers to Consummate the Closing			20
		6.2		Conditions to the Obligation of the Company to Consummate the Closing			21
7.		Transfer of the Securities					21
		7.1		Transfer Restrictions			21
8.		Termination					23
		8.1		Conditions of Termination			23
		8.2		Effect of Termination			24
9.		Miscellaneous Provisions					24
		9.1		Public Statements or Releases			24
		9.2		Interpretation			24
		9.3		Notices			24
		9.4		Severability			26
		9.5		Governing Law			26
		9.6		Waiver			27
		9.7		Expenses; Indemnification			27
		9.8		Assignment			28
		9.9		Confidential Information			28
		9.10		Third Parties			29
		9.11		Counterparts			29
		9.12		Entire Agreement; Amendments			29
		9.13		Survival			29

Exhibits
Exhibit A		Purchasers
Exhibit B		Form of Indenture (including Form of Notes)
Exhibit C		Form of Registration Rights Agreement
Exhibit D		Form of Legal Opinion

INDEX OF DEFINED TERMS

NOTE PURCHASE AGREEMENT

     NOTE PURCHASE AGREEMENT (this “ Agreement ”), dated as of October 22, 2007, by and among HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED, a Delaware corporation (the “ Company ”), the PURCHASERS NAMED IN EXHIBIT A attached hereto (each, a “ Purchaser ” and collectively, the “ Purchasers ”) and, solely for purposes of Article 1, Sections 4.6, 5.5, 5.6 and 7.1 and Article 9 hereof, KOHLBERG KRAVIS ROBERTS & CO. L.P. (“ KKR ”) (each of KKR and GSCP (as defined below) may be hereinafter referred to as, a “ Sponsor ” and KKR and GSCP may be hereinafter referred to collectively, “ Sponsors ”).

     WHEREAS, the Company has authorized the issuance of up to $400 million aggregate principal amount of its 1.25% Convertible Senior Notes due 2012 (the “ Notes ”) to be issued in accordance with the terms and conditions of the Indenture for the Notes substantially in the form attached hereto as Exhibit B (the “ Indenture ”), which Notes shall be convertible in part into authorized but unissued shares of common stock, $0.01 par value per share, of the Company (the “ Common Stock ”);

     WHEREAS, the Company desires to issue and sell to the Purchasers pursuant to this Agreement, and each Purchaser, severally, desires to purchase from the Company the aggregate principal amount of Notes as is set forth opposite its name in Exhibit A hereto;

     NOW THEREFORE, in consideration of the mutual agreements, representations, warranties and covenants herein contained, the parties hereto agree as follows:

     1.  Definitions . As used in this Agreement, the following terms shall have the following respective meanings:

     “ Affiliate ” shall mean, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under direct or indirect common control with such Person, provided , that (i) with respect to KKR, each Affiliated Entity of KKR, each KKR Purchaser and each Affiliate of an Affiliated Entity or a KKR Purchaser shall be deemed (except as specifically provided in Section 5.6(f) and Section 7.1(c) hereof) to be an Affiliate of KKR; and (ii) with respect to GSCP, each Affiliated Entity of GSCP and each Affiliate of an Affiliated Entity of GSCP shall be deemed (except as specifically provided in Section 5.6(f)) to be an Affiliate of GSCP.

     “ Affiliated Entity ” shall mean with respect to a Sponsor, any investment fund or holding company formed for investment purposes that is primarily managed, advised or serviced by such Sponsor or by an Affiliate of such Sponsor.

     “ Bank Purchasers ” means, collectively, Citibank, N.A. and HSBC USA, Inc. (each, individually, a “ Bank Purchaser ”).

     “ Bank Purchaser Transfer Event ” shall mean, with respect to any Bank Purchaser, (i) an exercise of such Bank Purchaser’s rights under Section 6 of the Security Agreement between such Bank Purchaser and the KKR Purchaser, (ii) the occurrence of any Early Settlement Date pursuant to Section 5(b) of the Swap Agreement between such Bank Purchaser and the KKR

Purchaser or (iii) the occurrence of the Scheduled Termination Date under such Swap Agreement.

     “ Beneficially Own ,” “ Beneficially Owned ,” or “ Beneficial Ownership ” shall have the meaning set forth in Rule 13d-3 of the rules and regulations promulgated under the Exchange Act, except that for purposes of this Agreement the words “within sixty days” in Rule 13d-3(d)(1)(i) shall not apply, to the effect that a Person shall be deemed to be the beneficial owner of a security if that Person has the right to acquire beneficial ownership of such security at any time.

     “ Benefit Plan ” or “ Benefit Plans ” shall mean employee benefit plans as defined in Section 3(3) of ERISA and all other employee benefit practices or arrangements, including any such practices or arrangements providing severance pay, sick leave, vacation pay, salary continuation for disability, retirement benefits, deferred compensation, bonus pay, incentive pay, stock options or other stock-based compensation, hospitalization insurance, medical insurance, life insurance, scholarships or tuition reimbursements, maintained by the Company or any of its Subsidiaries or to which the Company or any of its Subsidiaries is obligated to contribute for employees or former employees.

     “ Board of Directors ” means the Board of Directors of the Company.

     “ Code ” means the Internal Revenue Code of 1986, as amended.

     “ Control ” (including the terms “ controlling ” “ controlled by ” and “ under common control with ”) with respect to any Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

     “ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

     “ Exchange Act ” means the Securities Exchange Act of 1934, as amended, and all of the rules and regulations promulgated thereunder.

     “ Governmental Entity ” means any United States or foreign governmental or regulatory agency, commission, court, body, entity or authority.

     “ GSCP means, collectively, GS Capital Partners VI Fund, L.P., GS Capital Partners VI Parallel, L.P., GS Capital Partners VI Offshore Fund, L.P. and GS Capital Partners VI Gmbh & Co. KG.

     “ HSR Act ” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

     “ KKR Purchaser ” means KKR I-H Limited.

     “ Material Adverse Effect ” means any fact, circumstance, event, change, effect or occurrence that, individually or in the aggregate with all other facts, circumstances, events, changes, effects, or occurrences, (1) has or would be reasonably expected to have a material

adverse effect on or with respect to the business, results of operation or financial condition of the Company and its Subsidiaries taken as a whole, or (2) that prevents or materially delays or materially impairs the ability of the Company to consummate the transactions contemplated by the Transaction Agreements, provided, however, that a Material Adverse Effect shall not include facts, circumstances, events, changes, effects or occurrences (i) generally affecting the consumer or professional audio, automotive audio, information, entertainment or infotainment industries, or the economy or the financial, credit or securities markets, in the United States or other countries in which the Company or its Subsidiaries operate, including effects on such industries, economy or markets resulting from any regulatory and political conditions or developments in general, or any outbreak or escalation of hostilities, declared or undeclared acts of war or terrorism (other than any of the foregoing that causes any damage or destruction to or renders physically unusable or inaccessible any facility or property of the Company or any of its Subsidiaries); (ii) reflecting or resulting from changes in Law or GAAP (or authoritative interpretations thereof); (iii) to the extent resulting from the determination of KHI Parent Inc. and KHI Merger Sub Inc. that they were not obligated to proceed with the merger under the Merger Agreement or any of the facts or circumstances underlying that decision, including any lawsuit related thereto (including the pending putative class action in the Federal District Court in the District of Columbia) or any loss or threatened loss of or adverse change or threatened adverse change in, in each case resulting therefrom, the relationship of the Company or its Subsidiaries with its customers, suppliers, employees, shareholders or others; (iv) resulting from actions of the Company or any of its Subsidiaries which a Sponsor or any of their Controlled Affiliates has expressly requested or to which a Sponsor or any of their Controlled Affiliates has expressly consented; (v) to the extent resulting from the announcement of the termination of the Merger Agreement, the purchase of the Notes pursuant to this Agreement, or the proposal thereof, or this Agreement or the Termination and Settlement Agreement and the transactions contemplated hereby or thereby, including any lawsuit related thereto or any loss or threatened loss of or adverse change or threatened adverse change, in each case resulting therefrom, in the relationship of the Company or its Subsidiaries with its customers, suppliers, employees or others; (vi) resulting from changes in the market price or trading volume of the Company’s securities or from the failure of the Company to meet internal or public projections, forecasts or estimates provided that the exceptions in this clause (vi) are strictly limited to any such change or failure in and of itself and shall not prevent or otherwise affect a determination that any fact, circumstance, event, change, effect or occurrence underlying such change or such failure has resulted in, or contributed to, a Material Adverse Effect; or (vii) resulting from the suspension of trading in securities generally on the NYSE; except to the extent that, with respect to clauses (i) and (ii), the impact of such fact, circumstance, event, change, effect or occurrence is disproportionately adverse to the Company and its Subsidiaries, taken as a whole.

     “ Merger Agreement ” means that certain Agreement and Plan of Merger, dated as of April 26, 2007, by and among KHI Parent Inc., KHI Merger Sub Inc. and the Company.

     “ Own ” in the context of Notes shall mean (i) the right to control the voting or direction of the voting of such Notes and (ii) bearing all or substantially all economic risk of loss or appreciation (less a fixed or floating interest rate return) in the value of, and any profit (less a fixed or floating interest rate return) derived from a transaction in, such Notes.

     “ Person ” means an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture or any other entity or organization.

     “ PIA Funds ” means any fund or holding company formed for the purposes of making private equity investments and managed by the principal investment area of Goldman, Sachs & Co. (excluding any investment fund or holding company primarily in the business of acquiring mezzanine securities).

     “ Policy Termination Date ” means the first to occur of:

          (a) if a Designee Termination Date occurs as a result of the events described in clause (v) of the definition of Designee Termination Date, the date that is three months following the occurrence of such Designee Termination Date; and

          (b) if a Designee Termination Date occurs a result of anything other than the events described in clause (v) of the definition of Designee Termination Date, the later of (i) the date that is three months following such Designee Termination Date or (ii) the date of the resignation (other than the conditional resignation required pursuant to Section 5.5(a) hereof), retirement or removal of the Board Designee (or Board Observer, as the case may be) from the Board of Directors.

     “ Securities ” shall mean the Notes and the Common Stock or other securities issuable upon conversion of the Notes.

     “ Securities Act ” shall mean the Securities Act of 1933, as amended, and all of the rules and regulations promulgated thereunder.

     “ Security Agreement ” means each Security Agreement contemplated to be entered into between the KKR Purchaser and each Bank Purchaser in connection with the transactions contemplated hereby, as may be amended from time to time (all such agreements are collectively referred to as “ Security Agreements ”).

     “ Significant Subsidiary ” has the meaning set forth in Rule 1-02(w) of Regulation S-X promulgated by the SEC ( provided that for purposes of this definition, the references to “10%” in the definition of “significant subsidiary” in such Rule 1-02(w) shall be deemed to be references to “5%”).

     “ Sponsor Purchasers ” shall mean the KKR Purchaser and GSCP and, in each case, their Affiliates that acquire Beneficial Ownership of Securities in a Permitted Transfer.

     “ Standstill Termination Date ” means the date that is the earlier of (x) the date that is the fifth anniversary of the Closing Date, and (y) with respect to each Sponsor, the date that is three months following the date at which such Sponsor and its Affiliates cease to hold any Securities; provided, however, with respect to KKR and its Affiliates, if the Standstill Termination Date would otherwise occur and on such date there is a Board Designee or Board Observer on the Board of Directors, the Standstill Termination Date shall be the date that is three months following the date of the resignation (other than the conditional resignation required pursuant to

Section 5.5(a) hereof), retirement or removal of the Board Designee (or Board Observer, as the case may be) from the Board of Directors; provided, further, with respect to GSCP, for purposes of this definition Affiliates of GSCP will include only the PIA Funds and their Affiliates that acquire Beneficial Ownership of Securities in a Permitted Transfer.

     “ Subsidiary ” when used with respect to any party means any corporation or other organization, whether incorporated or unincorporated, at least a majority of the securities or other interests of which having by their terms ordinary voting power to elect a majority of the Board of Directors or others performing similar functions with respect to such corporation or other organization is directly or indirectly owned or controlled by such party or by any one or more of its Subsidiaries, or by such party and one or more of its Subsidiaries.

     “ Swap Agreement ” means each letter agreement of even date herewith referencing “Convertible Note Total Return Swap Transaction” between the KKR Purchaser and each Bank Purchaser, as may be amended from time to time (all such agreements are collectively referred to as “ Swap Agreements ”).

     “ Tax Returns ” shall mean returns, reports, information statements and other documentation (including any additional or supporting material) filed or maintained, or required to be filed or maintained, in connection with the calculation, determination, assessment or collection of any Tax and shall include any amended returns required as a result of examination adjustments made by the Internal Revenue Service or other Tax authority.

     “ Taxes ” shall mean any and all federal, state, local, foreign and other taxes, levies, fees, imposts, duties and charges of whatever kind (including any interest, penalties or additions to the tax imposed in connection therewith or with respect thereto), whether or not imposed on the Company, including, without limitation, taxes imposed on, or measured by, income, franchise, profits or gross receipts, and also ad valorem, value added, sales, use, service, real or personal property, capital stock, license, payroll, withholding, employment, social security, workers’ compensation, unemployment compensation, utility, severance, production, excise, stamp, occupation, premium, windfall profits, transfer and gains taxes and customs duties.

      “Termination and Settlement Agreement ” means the Termination and Settlement Agreement, dated as of the date hereof, by and among Harman International Industries, Incorporated, KHI Parent Inc., KHI Merger Sub Inc., KKR 2006 Fund, L.P., Kohlberg Kravis Roberts & Co. L.P. and GS Capital Partners VI Fund, L.P., GS Capital Partners VI Parallel, L.P., GS Capital Partners VI GmbH & Co. KG, and GS Capital Partners VI Offshore Fund, L.P.

     “ Transaction Agreements ” shall mean this Agreement, the Registration Rights Agreement, the Indenture and the Notes.

     “ Trustee ” shall have the meaning ascribed thereto in the Indenture.

     “ Voting Stock ” means securities of any class or kind ordinarily having the power to vote generally for the election of directors, managers or other voting members of the governing body of the Company or any successor thereto.

     2.  Authorization, Purchase and Sale of Notes .

          2.1 Authorization, Purchase and Sale . The Company has authorized (i) the initial sale and issuance to the Purchasers of the Notes and (ii) the issuance of up to 4,629,640 shares of Common Stock to be issued upon the conversion of the Notes. Subject to and upon the terms and conditions set forth in this Agreement, at the Closing, the Company shall issue and sell to each Purchaser, and each Purchaser, severally, shall purchase from the Company the aggregate principal amount of Notes set forth opposite the name of such Purchaser under the heading “Principal Amount of Notes to be Purchased” on Exhibit A hereto, at a purchase price equal to the principal amount of Notes purchased.

          2.2 Closing . Subject to the satisfaction or waiver of the conditions set forth in Section 6 of this Agreement, the closing of the purchase and sale of the Notes (the “ Closing ”) shall take place at the offices of Simpson Thacher & Bartlett LLP, 425 Lexington Avenue, New York, New York on October 23, 2007 (the “ Closing Date ”). At the Closing, the aggregate principal amount of the Notes shall be reflected in one or more global notes representing the Notes and held by The Depository Trust Corporation or its nominee (or a custodian on its behalf) or if such global notes are not available as of the Closing, the Company shall deliver to each Purchaser one or more Note(s) in the aggregate principal amount as set forth opposite such Purchaser’s name on Exhibit A , in each case against payment to the Company of the purchase price therefor by wire transfer to the Company of immediately available funds to an account to be designated by the Company.

     3.  Representations and Warranties of the Company . Except as set forth in the SEC Reports (as defined herein), the Company hereby represents and warrants to each of the Purchasers as follows:

          3.1 Organization and Power .

               (a) Each of the Company and its Significant Subsidiaries is a legal entity duly organized, validly existing and in good standing under the Laws of its respective jurisdiction of organization. Each of the Company and its Significant Subsidiaries has all requisite corporate, partnership or similar power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted.

               (b) Each of the Company and its Subsidiaries is duly qualified to do business and is in good standing as a foreign corporation (or other legal entity) in each jurisdiction where the ownership, leasing or operation of its assets or properties or conduct of its business requires such qualification, except where the failure to be so qualified or in good standing would not, individually or in the aggregate, have a Material Adverse Effect. The organizational or governing documents of the Company and each of its Significant Subsidiaries are in full force and effect. Neither the Company nor any Significant Subsidiary is in violation of its organizational or governing documents.

     3.2 Capitalization .

               (a) As of the date of this Agreement, the authorized shares of capital stock of the Company consist of 200,000,000 shares of Common Stock and 5,000,000 shares of preferred stock, par value $0.001 per share (“ Preferred Stock ”), 500,000 of which have been

designated as Series A Junior Participating Preferred Stock reserved for issuance in connection with the rights issued under the Company’s Rights Agreement, dated as of December 13, 1999, as amended, by and between the Company and Mellon Investor Services LLC (formerly known as ChaseMellon Shareholder Services, L.L.C.), as Rights Agent. As of the close of business on October 18, 2007 (the “ Capitalization Date ”), (i) 65,250,651 shares of Common Stock were issued and outstanding, including 76,579 shares of restricted Common Stock outstanding pursuant to awards granted under the Company’s Benefit Plans, (ii) 18,198,082 shares of Common Stock were held by the Company in its treasury, (iii) (A) there were 2,967,068 shares of Common Stock underlying outstanding options to acquire shares of Common Stock, such outstanding options having a weighted average exercise price as of the Capitalization Date of $59.25, (B) there were 25,000 shares of Common Stock underlying outstanding restricted stock units in respect of shares of Common Stock and (C) 3,397,044 additional shares of Common Stock were reserved for issuance for future grants pursuant to the Company’s Benefit Plans and (iv) no shares of Preferred Stock were issued or outstanding. All outstanding shares of Common Stock, and all shares of Common Stock reserved for issuance as noted in clause (iii) of the foregoing sentence, when issued in accordance with the respective terms thereof, are or will be duly authorized, validly issued, fully paid and non-assessable and free of pre-emptive or similar rights. Since the Capitalization Date through the date hereof, (i) the Company has only issued options or other rights to acquire Common Stock in the ordinary course of business consistent with past practice or pursuant to the Call Option and (ii) the only shares of capital stock issued by the Company were pursuant to outstanding options and other rights to purchase Common Stock. No Subsidiary of the Company owns any Common Stock.

               (b) As of the date of this Agreement, except as set forth in Section 3.2(a), except for certain option arrangements that may be entered into in connection with the transactions contemplated hereby (the “ Call Option ”), and except pursuant to the Company’s Benefit Plans, there are no existing options, warrants, calls, preemptive (or similar) rights, subscriptions or other rights, agreements or commitments obligating the Company to issue, transfer or sell, or cause to be issued, transferred or sold, any capital stock of the Company or any securities convertible into or exchangeable for such capital stock, and there are no outstanding contractual obligations of the Company to repurchase, redeem or otherwise acquire any of its shares of capital stock.

               (c) Except as set forth in the Transaction Agreements and the Call Option, the Company has not granted to any Person the right to require the Company to register Common Stock on or after the date of this Agreement.

          3.3 Authorization . The Company has all requisite corporate power to enter into the Transaction Agreements and to carry out and perform its obligations under the terms of the Transaction Agreements. All corporate action on the part of the Company, its officers, directors and stockholders necessary for the authorization of the Securities, the authorization, execution, delivery and performance of the Transaction Agreements and the consummation of the transactions contemplated herein has been taken. The execution, delivery and performance of the Transaction Agreements by the Company, the issuance of the Common Stock upon conversion of the Notes in accordance with their terms and the consummation of the other transactions contemplated herein do not require any approval of the Company’s stockholders. Assuming this Agreement constitutes the legal and binding agreement of the Purchasers, this

Agreement constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or fraudulent conveyance and similar laws relating to or affecting creditors generally or by general equity principles (regardless of whether such enforceability is considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. Upon their respective execution by the Company and the other parties thereto and assuming that they constitute legal and binding agreements of the other parties thereto, each of the Registration Rights Agreement and the Indenture will constitute a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or fraudulent conveyance and similar laws relating to or affecting creditors generally or by general equity principles, an implied covenant of good faith and fair dealing or, with respect to the Registration Rights Agreement, provisions (A) relating to indemnification, contribution or exculpation that may be violative of the public policy underlying any Law or (B) that impose payment obligations at a rate or in an amount that a court determines in the circumstances under applicable Law to be commercially unreasonable or a penalty or a forfeiture (regardless of whether such enforceability is considered in a proceeding in equity or at law).

          3.4 Valid Issuance . The Notes being purchased by the Purchasers hereunder will, upon issuance pursuant to the terms hereof and the terms of the Indenture and upon payment therefor, be valid and legally binding obligations of the Company, enforceable in accordance with their terms and the terms of the Indenture, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or fraudulent conveyance and similar laws relating to or affecting creditors generally or by general equity principles (regardless of whether such enforceability is considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. At or prior to the Closing, the Company will have available for issuance the Common Stock initially issuable upon conversion of the Notes without giving effect to any anti-dilution provisions contained in the Indenture. The Common Stock to be issued upon conversion of the Notes has been duly authorized, and upon conversion of the Notes and issuance all such Common Stock will be validly issued, fully paid and nonassessable. Subject to the accuracy of the representations made by the Purchasers in Section 4 hereof, the Notes will be issued to the Purchasers in compliance with applicable exemptions from (i) the registration and prospectus delivery requirements of the Securities Act and (ii) the registration and qualification requirements of all applicable securities laws of the states of the United States. Except for a Form 8-K not timely filed as previously disclosed to KKR, the Company would be a Well-Known Seasoned Issuer (as defined in the Registration Rights Agreement) as of the date hereof and would be eligible to file as of the date hereof a registration statement on Form S-3 under the Securities Act.

          3.5 No Conflict . The execution, delivery and performance of the Transaction Agreements by the Company, the issuance of the Common Stock upon conversion of the Notes in accordance with their terms and the consummation of the other transactions contemplated hereby will not (i) conflict with or result in any violation of any provision of the certificate of incorporation or by-laws of the Company, (ii) except for the Merger Agreement, which is being terminated concurrently with the execution hereof, result in any breach or violation of, or default (with or without notice or lapse of time, or both) under, require consent under, or give rise to a

right of termination, cancellation, modification or acceleration of any obligation or to the loss of any benefit under any loan, guarantee of indebtedness or credit agreement, note, bond, mortgage, indenture, lease, agreement, contract, purchase or sale order, instrument, permit, concession, franchise, right or license binding upon the Company or any of its Subsidiaries or result in the creation of any liens, claims, mortgages, encumbrances, pledges, security interests, equities or charges of any kind (each, a “ Lien ”) upon any of the properties, assets or rights of the Company or any of its Subsidiaries, or (iii) conflict with or violate any applicable federal, state, local or foreign or provincial law, statute, code, ordinance, rule, regulation, judgment, order, injunction, decree or agency requirement of or undertaking to or agreement with any Governmental Entity, including common law (collectively, “ Laws ” and each, a “ Law ”), other than, in the case of clauses (ii) and (iii), as would not, individually or in the aggregate, have a Material Adverse Effect.

          3.6 Consents . All consents, approvals, orders and authorizations required on the part of the Company or its Subsidiaries in connection with the execution, delivery or performance of this Agreement and the Notes and the issuance of the Common Stock upon conversion of the Notes in accordance with their terms have been obtained or made, other than (i) the expiration or termination of any applicable waiting periods under the HSR Act or any foreign antitrust requirements in connection with the issuance of Common Stock upon conversion of the Notes, (ii) those to be obtained, in connection with the registration of Securities under the Registration Rights Agreement, under the applicable requirements of the Securities Act and Exchange Act and any related filings and approvals under applicable state securities laws, and (iii) such consents, approvals, orders and authorizations the failure of which to make or obtain would not reasonably be expected to have a Material Adverse Effect.

          3.7 SEC Reports; Financial Statements .

               (a) Except for a Form 8-K as previously disclosed to KKR, the Company has timely filed all forms, documents, statements and reports required to be filed by it with the Securities and Exchange Commission (the “ SEC ”) since July 1, 2005 (the forms, documents, statements and reports filed with the SEC since July 1, 2005, including any amendments thereto, the “ SEC Reports ”). As of their respective dates, or, if amended or superseded by a subsequent filing made prior to the date hereof, as of the date of the last such amendment or superseding filing prior to the date hereof, the SEC Reports complied in all material respects with the requirements of the Securities Act, the Exchange Act and the Sarbanes-Oxley Act of 2002 (the “ Sarbanes-Oxley Act ”), as the case may be, and the applicable rules and regulations promulgated thereunder. As of the time of filing with the SEC, none of the SEC Reports so filed contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, except to the extent that the information in such SEC Report has been amended or superseded by a later SEC Report filed prior to the date hereof. No Subsidiary of the Company is subject to individual periodic reporting requirements of the Exchange Act.

               (b) The financial statements (including all related notes and schedules) of the Company and its Subsidiaries included in the SEC Reports (collectively, the “ Financial Statements ”) complied as to form in all material respects with the published rules and

regulations of the SEC with respect thereto, fairly present in all material respects the consolidated financial position of the Company and its Subsidiaries as of the dates indicated, and the results of their operations and their cash flows for the periods therein specified, all in accordance with United States generally accepted accounting principles applied on a consistent basis (“ GAAP ”) throughout the periods therein specified (except as otherwise noted therein, and in the case of quarterly financial statements except for the absence of footnote disclosure and subject, in the case of interim periods, to normal year-end adjustments).

               (c) Except (i) as reflected or reserved against in the Company’s consolidated balance sheet as of June 30, 2007 (or the notes thereto) included in the SEC Reports filed prior to the date hereof, (ii) for liabilities and obligations incurred in the ordinary course of business consistent with past practice since June 30, 2007, (iii) liabilities of any nature, whether or not accrued, contingent or otherwise related to or arising from the negotiation, execution and performance of the Merger Agreement, the Termination and Settlement Agreement, this Agreement and the transactions contemplated hereby and thereby, (iv) liabilities of a nature not required by GAAP to be set forth on a consolidated balance sheet of the Company and its Subsidiaries or the notes thereto pursuant to any Contract or similar arrangement binding on the Company or any of its Subsidiaries, neither the Company nor any Subsidiary of the Company has any liabilities or obligations of any nature, whether or not accrued, contingent or otherwise and whether due or to become due, that would, individually or in the aggregate, have a Material Adverse Effect.

          3.8 Absence of Litigation . Except as previously disclosed to KKR, there are no (i) investigations or proceedings pending or, to the knowledge of the Company, threatened by any Governmental Entity with respect to the Company or any of its Subsidiaries or any of their properties or assets, (ii) actions, suits, arbitrations, claims or proceedings pending or, to the knowledge of the Company, threatened against or affecting the Company or any of its Subsidiaries, or any of their respective properties or assets, at Law or in equity, or (iii) orders, judgments or decrees of any Governmental Entity against the Company or any of its Subsidiaries, which, in the case of clauses (i) or (ii), individually or in the aggregate, would be reasonably expected to have a Material Adverse Effect, provided, however , that the Company makes no representation or warranty with respect to pending or threatened litigation relating to the negotiation, execution and performance of the Merger Agreement, the Termination and Settlement Agreement, this Agreement and the transactions contemplated hereby and thereby.

          3.9 Compliance with Law . The Company and each of its Subsidiaries is in compliance with and is not in default under or in violation of any Laws, except where such non-compliance, default or violation would not, individually or in the aggregate, have a Material Adverse Effect.

          3.10 Intellectual Property . Except as would not, individually or in the aggregate, have a Material Adverse Effect, either the Company or a Subsidiary of the Company owns, or is licensed or otherwise possesses adequate rights to use, all material trademarks, trade names, service marks, service names, mark registrations, logos, assumed names, domain names, registered and unregistered copyrights, software, patents or other intellectual property, and all applications and registrations used in their respective businesses as currently conducted (collectively, the “ Intellectual Property ”), free and clear of all Liens. Except as would not,

individually or in the aggregate, have a Material Adverse Effect, (i) there are no pending or, to the knowledge of the Company, threatened in writing claims by any person alleging infringement by the Company or any of its Subsidiaries for their use of the Intellectual Property of the Company or any of its Subsidiaries; (ii) the conduct of the business of the Company and its Subsidiaries does not infringe or violate any intellectual property rights of any Person; (iii) to the knowledge of the Company, no Person is infringing any Intellectual Property of the Company or any of its Subsidiaries; (iv) the Company takes reasonable actions to protect its Intellectual Property, its ownership of proprietary Intellectual Property and the security of its software, systems and networks; and (v) the patents and registered Intellectual Property owned by the Company and its Subsidiaries is valid and enforceable.

          3.11 Employee Benefits . Except as would not result in a Material Adverse Effect and except for claims, pending, threatened or otherwise relating to the negotiation, execution and performance of the Merger Agreement, the Termination and Settlement Agreement, this Agreement and the transactions contemplated hereby or thereby, each Benefit Plan has been established and administered in accordance with its terms and in compliance with the applicable provisions of ERISA, the Code and other applicable laws, rules and regulations. Neither the Company nor any of its Subsidiaries is subject to a dispute, strike or work stoppage except as would not, individually or in the aggregate, have a Material Adverse Effect.

          3.12 Taxes . The Company and each of its Subsidiaries have filed all Tax Returns required to have been filed (or extensions have been duly obtained) and have paid all Taxes required to have been paid by any of them, except with respect to matters contested in good faith through appropriate proceedings and for which adequate reserves have been established on the financial statements of the Company and its Subsidiaries in accordance with GAAP, except where failure to file such Tax Returns or pay such Taxes would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

          3.13 NYSE . Shares of the Common Stock are registered pursuant to Section 12(b) of the Exchange Act and are listed on the New York Stock Exchange (“ NYSE &r