Exhibit 4.3
EXECUTION VERSION
SENIOR SUBORDINATED NOTES INDENTURE
Dated as of May 29, 2007
between
BAUBLE ACQUISITION SUB, INC.
and
THE BANK OF NEW YORK
as Trustee
10.50% SENIOR SUBORDINATED NOTES DUE 2017
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01 Definitions...................................................................................1
Section 1.02 Other Definitions............................................................................49
Section 1.03 Incorporation by Reference of Trust Indenture Act............................................50
Section 1.04 Rules of Construction........................................................................50
Section 1.05 Acts of Holders..............................................................................51
ARTICLE II
THE NOTES
Section 2.01 Form and Dating; Terms.......................................................................52
Section 2.02 Execution and Authentication.................................................................54
Section 2.03 Registrar and Paying Agent...................................................................54
Section 2.04 Paying Agent to Hold Money in Trust..........................................................55
Section 2.05 Holder Lists.................................................................................55
Section 2.06 Transfer and Exchange........................................................................55
Section 2.07 Replacement Notes............................................................................70
Section 2.08 Outstanding Notes............................................................................70
Section 2.09 Treasury Notes...............................................................................71
Section 2.10 Temporary Notes..............................................................................71
Section 2.11 Cancellation.................................................................................71
Section 2.12 Defaulted Interest...........................................................................71
Section 2.13 CUSIP/ISIN Numbers...........................................................................72
Section 2.14 Calculation of Principal Amount of Securities................................................72
ARTICLE III
REDEMPTION
Section 3.01 Notices to Trustee...........................................................................73
Section 3.02 Selection of Notes to Be Redeemed............................................................73
Section 3.03 Notice of Redemption.........................................................................73
Section 3.04 Effect of Notice of Redemption...............................................................74
Section 3.05 Deposit of Redemption Price..................................................................75
Section 3.06 Notes Redeemed in Part.......................................................................75
Section 3.07 Optional Redemption..........................................................................75
i
Section 3.08 Mandatory Redemption.........................................................................76
Section 3.09 Offers to Repurchase by Application of Excess Proceeds.......................................76
ARTICLE IV
COVENANTS
Section 4.01 Payment of Notes.............................................................................79
Section 4.02 Maintenance of Office or Agency..............................................................79
Section 4.03 Reports and Other Information................................................................80
Section 4.04 Compliance Certificate.......................................................................82
Section 4.05 Taxes........................................................................................82
Section 4.06 Stay, Extension and Usury Laws...............................................................85
Section 4.07 Limitation on Restricted Payments............................................................85
Section 4.08 Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries....................92
Section 4.09 Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and
Preferred Stock.........................................................................94
Section 4.10 Asset Sales.................................................................................101
Section 4.11 Transactions with Affiliates................................................................103
Section 4.12 Liens.......................................................................................106
Section 4.13 Offer to Repurchase Upon Change of Control..................................................107
Section 4.14 Future Guarantors...........................................................................110
Section 4.15 Company Existence...........................................................................110
Section 4.16 Limitation on Layering......................................................................110
Section 4.17 Suspension of Covenants.....................................................................111
ARTICLE V
SUCCESSORS
Section 5.01 Merger, Amalgamation, Consolidation or Sale of All or Substantially All Assets..............112
Section 5.02 Successor Corporation Substituted...........................................................114
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.01 Events of Default...........................................................................115
Section 6.02 Acceleration................................................................................116
Section 6.03 Other Remedies..............................................................................117
Section 6.04 Waiver of Past Defaults.....................................................................117
Section 6.05 Control by Majority.........................................................................118
Section 6.06 Limitation on Suits.........................................................................118
Section 6.07 Rights of Holders of Notes to Receive Payment...............................................118
Section 6.08 Collection Suit by Trustee..................................................................119
ii
Section 6.09 Restoration of Rights and Remedies..........................................................119
Section 6.10 Rights and Remedies Cumulative..............................................................119
Section 6.11 Delay or Omission Not Waiver................................................................119
Section 6.12 Trustee May File Proofs of Claim............................................................119
Section 6.13 Priorities..................................................................................120
Section 6.14 Undertaking for Costs.......................................................................120
ARTICLE VII
TRUSTEE
Section 7.01 Duties of Trustee...........................................................................121
Section 7.02 Rights of Trustee...........................................................................122
Section 7.03 Individual Rights of Trustee................................................................123
Section 7.04 Trustee's Disclaimer........................................................................123
Section 7.05 Notice of Defaults..........................................................................123
Section 7.06 Reports by Trustee to Holders of the Notes..................................................124
Section 7.07 Compensation and Indemnity..................................................................124
Section 7.08 Replacement of Trustee......................................................................125
Section 7.09 Successor Trustee by Merger, etc............................................................126
Section 7.10 Eligibility; Disqualification...............................................................126
Section 7.11 Preferential Collection of Claims Against Issuer............................................126
ARTICLE VIII
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01 Option to Effect Legal Defeasance or Covenant Defeasance....................................127
Section 8.02 Legal Defeasance and Discharge..............................................................127
Section 8.03 Covenant Defeasance.........................................................................127
Section 8.04 Conditions to Legal or Covenant Defeasance..................................................128
Section 8.05 Deposited Money and Government Securities to Be Held in Trust; Other Miscellaneous
Provisions.............................................................................130
Section 8.06 Repayment to Issuer.........................................................................130
Section 8.07 Reinstatement...............................................................................130
ARTICLE IX
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01 Without Consent of Holders of Notes.........................................................131
Section 9.02 With Consent of Holders of Notes............................................................132
Section 9.03 Compliance with Trust Indenture Act.........................................................133
Section 9.04 Revocation and Effect of Consents...........................................................134
Section 9.05 Notation on or Exchange of Notes............................................................134
Section 9.06 Trustee to Sign Amendments, Etc.............................................................134
Section 9.07 Payment for Consent.........................................................................135
iii
Section 9.08 Additional Voting Terms; Calculation of Principal Amount....................................135
ARTICLE X
SUBORDINATION OF NOTES
Section 10.01 Agreement to Subordinate....................................................................135
Section 10.02 Liquidation, Dissolution, Bankruptcy........................................................135
Section 10.03 Default on Senior Indebtedness of the Issuer................................................136
Section 10.04 Acceleration of Payment of Notes............................................................137
Section 10.05 When Distribution Must Be Paid Over.........................................................137
Section 10.06 Subrogation.................................................................................137
Section 10.07 Relative Rights.............................................................................138
Section 10.08 Subordination May Not Be Impaired by Issuer.................................................138
Section 10.09 Rights of Trustee and Paying Agent..........................................................138
Section 10.10 Distribution or Notice to Representative....................................................138
Section 10.11 Article X Not To Prevent Events of Default or Limit Right To Accelerate.....................139
Section 10.12 Trust Moneys Not Subordinated...............................................................139
Section 10.13 Trustee Entitled To Rely....................................................................139
Section 10.14 Trustee to Effectuate Subordination.........................................................139
Section 10.15 Trustee Not Fiduciary for Holders of Senior Indebtedness of the Issuer......................140
Section 10.16 Reliance by Holders of Senior Indebtedness of the Issuer on Subordination Provisions........140
ARTICLE XI
GUARANTEES
Section 11.01 Guarantee...................................................................................140
Section 11.02 Limitation on Guarantor Liability...........................................................142
Section 11.03 Execution and Delivery......................................................................143
Section 11.04 Subrogation.................................................................................143
Section 11.05 Benefits Acknowledged.......................................................................143
Section 11.06 Release of Guarantees.......................................................................143
ARTICLE XII
SUBORDINATION OF GUARANTEES
Section 12.01 Agreement to Subordinate....................................................................144
Section 12.02 Liquidation, Dissolution, Bankruptcy........................................................144
Section 12.03 Default on Senior Indebtedness of a Guarantor...............................................145
Section 12.04 Acceleration of Payment of Notes............................................................146
Section 12.05 When Distribution Must Be Paid Over.........................................................146
Section 12.06 Subrogation.................................................................................146
Section 12.07 Relative Rights.............................................................................147
Section 12.08 Subordination May Not Be Impaired by a Guarantor............................................147
iv
Section 12.09 Rights of Trustee and Paying Agent..........................................................147
Section 12.10 Distribution or Notice to Representative....................................................148
Section 12.11 Article XII Not To Prevent Events of Default or Limit Right To Demand Payment...............148
Section 12.12 Trust Moneys Not Subordinated...............................................................148
Section 12.13 Trustee Entitled To Rely....................................................................148
Section 12.14 Trustee to Effectuate Subordination.........................................................149
Section 12.15 Trustee Not Fiduciary for Holders of Senior Indebtedness of Guarantors......................149
Section 12.16 Reliance by Holders of Senior Indebtedness of a Guarantor on Subordination Provisions.......149
ARTICLE XIII
SATISFACTION AND DISCHARGE
Section 13.01 Satisfaction and Discharge..................................................................150
Section 13.02 Application of Trust Money..................................................................150
ARTICLE XIV
MISCELLANEOUS
Section 14.01 Trust Indenture Act Controls................................................................151
Section 14.02 Notices.....................................................................................151
Section 14.03 Communication by Holders of Notes with Other Holders of Notes...............................153
Section 14.04 Certificate and Opinion as to Conditions Precedent..........................................153
Section 14.05 Statements Required in Certificate or Opinion...............................................153
Section 14.06 Rules by Trustee and Agents.................................................................154
Section 14.07 No Personal Liability of Directors, Officers, Employees and Stockholders....................154
Section 14.08 Governing Law ..............................................................................154
Section 14.09 Waiver of Jury Trial........................................................................154
Section 14.10 Force Majeure ..............................................................................154
Section 14.11 No Adverse Interpretation of Other Agreements...............................................154
Section 14.12 Successors..................................................................................154
Section 14.13 Severability................................................................................154
Section 14.14 Counterpart Originals.......................................................................154
Section 14.15 Table of Contents, Headings, etc............................................................154
Section 14.16 Qualification of Indenture..................................................................154
Section 14.17 Currency of Account; Conversion of Currency; Foreign Exchange Restrictions..................155
Section 14.18 Consent to Jurisdiction & Service...........................................................157
v
EXHIBITS
Exhibit A Form of Note
Exhibit B Form of Certificate of Transfer
Exhibit C Form of Certificate of Exchange
Exhibit D Form of Supplemental Indenture to Be Delivered by
Subsequent Guarantors
vi
INDENTURE, dated as of May 29, 2007, between Bauble Acquisition Sub, Inc.,
a Florida corporation (the "Issuer"), and The Bank of New York, a New York
banking corporation, as Trustee (the "Trustee").
Each party agrees as follows for the benefit of each other and for the
equal and ratable benefit of the Holders of the 10.50% Senior Subordinated Notes
due 2017 (the "Notes").
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
------------------------------------------
Section 1.01 Definitions.
"144A Global Note" means a Global Note substantially in the form of
Exhibit A hereto bearing the Global Note Legend and the Private Placement
Legend and deposited with or on behalf of, and registered in the name of,
the Depositary or its nominee that will be issued in a denomination equal
to the outstanding principal amount of Notes sold in reliance on Rule
144A.
"Acquired Indebtedness" means, with respect to any specified Person,
(1) Indebtedness of any other Person existing at the time such other
Person is merged, consolidated or amalgamated with or into or became a
Restricted Subsidiary of such specified Person and (2) Indebtedness
secured by a Lien encumbering any asset acquired by such specified Person.
"Acquisition" means the acquisition by Affiliates of the Sponsors of
substantially all of the outstanding shares of capital stock of the
Issuer, pursuant to the Merger Agreement.
"Acquisition Documents" means the Merger Agreement and any other
document entered into in connection therewith, in each case as amended,
supplemented or modified from time to time prior to the Issue Date or
thereafter.
"Additional Interest" means all additional interest then owing
pursuant to the Registration Rights Agreement.
1
"Additional Notes" means additional Notes (other than Exchange
Notes) issued from time to time under this Indenture in accordance with
Sections 2.01 and 4.09 hereof.
"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, means the possession, directly or indirectly,
of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting
securities, by agreement or otherwise.
"Agent" means any Registrar or Paying Agent.
"Applicable Currency Equivalent" means, with respect to any monetary
amount in a currency other than U.S. dollars, at any time for the
determination thereof, the amount of U.S. dollars obtained by converting
such foreign currency involved in such computation into U.S. dollars, at
the spot rate for the purchase of U.S. dollars, with the applicable
foreign currency as quoted by Reuters at approximately 10:00 A.M. (New
York City time) on the date that is two Business Days prior to such
determination.
"Applicable Premium" means, on any applicable Redemption Date, the
greater of:
(1) 1.0% of the then outstanding principal amount of the Notes; and
(2) the excess of:
(a) the present value at such Redemption Date of (i) the
redemption price of the Notes at June 1, 2012 (such redemption price
being set forth in the table in Section 3.07(a)) plus (ii) all
required interest payments due on the Notes through June 1, 2012
(excluding accrued but unpaid interest), computed using a discount
rate equal to the Treasury Rate as of such Redemption Date plus 50
basis points; over
(b) the then outstanding principal amount of the Notes.
2
"Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Note, the rules and
procedures of the Depositary that apply to such transfer or exchange.
"Asset Sale" means:
(1) 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/Leaseback Transaction) outside the
ordinary course of business of the Issuer or any Restricted Subsidiary of
the Issuer (each referred to in this definition as a "disposition"); or
(2) the issuance or sale of Equity Interests (other than directors'
qualifying shares and shares issued to foreign nationals or other third
parties to the extent required by applicable law) of any Restricted
Subsidiary (other than to the Issuer or another Restricted Subsidiary of
the Issuer) (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, damaged or worn out property or equipment in
the ordinary course of business;
(b) the disposition of all or substantially all of the assets
of the Issuer in a manner permitted pursuant to the provisions
described under Section 5.01 hereof or any disposition that
constitutes a Change of Control;
(c) any Restricted Payment or Permitted Investment that is
permitted to be made, and is made, under Section 4.07 hereof;
(d) any disposition of assets of the Issuer or any Restricted
Subsidiary or issuance or sale of Equity Interests of any Restricted
Subsidiary, which assets or Equity Interests so disposed or issued
have an aggregate Fair Market Value (as determined in good faith by
the Issuer) of less than $15 million;
(e) any disposition of property or assets, or the issuance of
securities, by a Restricted Subsidiary of the Issuer to the Issuer
or by the Issuer or a Restricted Subsidiary of the Issuer to a
Restricted Subsidiary of the Issuer;
3
(f) any exchange of assets (including a combination of assets
and Cash Equivalents) for assets related to a Similar Business of
comparable or greater market value or usefulness to the business of
the Issuer and its Restricted Subsidiaries as a whole, as determined
in good faith by the Issuer;
(g) foreclosure on assets of the Issuer or any of its
Restricted Subsidiaries;
(h) any sale of Equity Interests in, or Indebtedness or other
securities of, an Unrestricted Subsidiary;
(i) the lease, assignment or sublease of any real or personal
property in the ordinary course of business;
(j) any sale of inventory or other assets in the ordinary
course of business;
(k) any grant in the ordinary course of business of any
license of patents, trademarks, know-how or any other intellectual
property;
(l) in the ordinary course of business, any swap of assets, or
lease, assignment or sublease of any real or personal property, in
exchange for services (including in connection with any outsourcing
arrangements) of comparable or greater value or usefulness to the
business of the Issuer and its Restricted Subsidiaries as a whole,
as determined in good faith by the Issuer;
(m) a transfer of accounts receivable and related assets of
the type specified in the definition of "Receivables Financing" (or
a fractional undivided interest therein) by a Receivables Subsidiary
in a Qualified Receivables Financing;
(n) any financing transaction with respect to property built
or acquired by the Issuer or any Restricted Subsidiary after the
Issue Date, including any Sale/Leaseback Transaction or asset
securitization permitted by this Indenture;
(o) dispositions in connection with Permitted Liens;
(p) any disposition of Capital Stock of a Restricted
Subsidiary pursuant to an agreement or other obligation with or to a
Person (other than the
4
Issuer or a Restricted Subsidiary) from whom such Restricted
Subsidiary was acquired or from whom such Restricted Subsidiary
acquired its business and assets (having been newly formed in
connection with such acquisition), made as part of such acquisition
and in each case comprising all or a portion of the consideration in
respect of such sale or acquisition; and
(q) any surrender or waiver of contract rights or the
settlement, release, recovery on or surrender of contract, tort or
other claims of any kind.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Bank Indebtedness" means any and all amounts payable under or in
respect of the Credit Agreement and the other Credit Agreement Documents
as amended, restated, supplemented, waived, replaced, restructured,
repaid, refunded, refinanced or otherwise modified from time to time
(including after termination of the Credit Agreement), including
principal, premium (if any), interest (including interest accruing on or
after the filing of any petition in bankruptcy or for reorganization
relating to the Issuer whether or not a claim for post-filing interest is
allowed in such proceedings), fees, charges, expenses, reimbursement
obligations, guarantees and all other amounts payable thereunder or in
respect thereof.
"Board of Directors" means, as to any Person, the board of directors
or managers, as applicable, of such Person (or, if such Person is a
partnership, the board of directors or other governing body of the general
partner of such Person) or any duly authorized committee thereof.
"broker-dealer" has the meaning set forth in the Registration Rights
Agreement.
"Business Day" means a day other than a Saturday, Sunday or other
day on which banking institutions are authorized or required by law to
close in New York City.
"Capital Stock" means:
(1) in the case of a corporation, corporate stock or shares;
5
(2) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock;
(3) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited); and
(4) 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.
"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.
"Capitalized Software Expenditures" shall mean, for any period, the
aggregate of all expenditures (whether paid in cash or accrued as
liabilities) by a Person and its Restricted Subsidiaries during such
period in respect of purchased software or internally developed software
and software enhancements that, in conformity with GAAP, are or are
required to be reflected as capitalized costs on the consolidated balance
sheet of such Person and such Restricted Subsidiaries.
"Cash Equivalents" means:
(1) U.S. dollars, pounds sterling, euros, the national currency of
any member state in the European Union or, in the case of any Foreign
Subsidiary that is a Restricted Subsidiary, such local currencies held by
it from time to time in the ordinary course of business;
(2) securities issued or directly and fully guaranteed or insured by
the U.S. government or any country that is a member of the European Union
or any agency or instrumentality thereof in each case maturing not more
than two years from the date of acquisition;
(3) certificates of deposit, time deposits and eurodollar time
deposits with maturities of one year or less from the date of acquisition,
bankers' acceptances, in each case with maturities not exceeding one year
and overnight bank deposits, in each case with any commercial bank having
capital and surplus in excess of $250.0 million and whose long-term debt
is rated "A" or the equivalent thereof by Moody's or S&P (or reasonably
equivalent ratings of another internationally recognized ratings agency);
6
(4) repurchase obligations for underlying securities of the types
described in clauses (2) and (3) above entered into with any financial
institution meeting the qualifications specified in clause (3) above;
(5) commercial paper issued by a corporation (other than an
Affiliate of the Issuer) rated at least "A-1" or the equivalent thereof by
Moody's or S&P (or reasonably equivalent ratings of another
internationally recognized ratings agency) and in each case maturing
within one year after the date of acquisition;
(6) 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
(or reasonably equivalent ratings of another internationally recognized
ratings agency) in each case with maturities not exceeding two years from
the date of acquisition;
(7) Indebtedness issued by Persons (other than the Sponsors or any
of their Affiliates) with a rating of "A" or higher from S&P or "A-2" or
higher from Moody's (or reasonably equivalent ratings of another
internationally recognized ratings agency) in each case with maturities
not exceeding two years from the date of acquisition; and
(8) investment funds investing at least 95% of their assets in
securities of the types described in clauses (1) through (7) above.
"Change of Control" means the occurrence of either of the following:
(1) the sale, lease or transfer, in one or a series of related
transactions, of all or substantially all the assets of the Issuer and its
Subsidiaries, taken as a whole, to a Person other than any of the
Permitted Holders; or
(2) the Issuer becomes aware (by way of a report or any other filing
pursuant to Section 13(d) of the Exchange Act, proxy, vote, written notice
or otherwise) of 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 any of the Permitted
Holders, in a single transaction or in a related series of transactions,
by way of merger, consolidation, amalgamation 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 more
than 50% of the total voting power of the Voting Stock of the Issuer. For
purposes of calculating the total voting power of the Voting Stock held by
a group, the voting power
7
beneficially owned by a Permitted Holder shall be excluded to the
extent such Permitted Holder retains the sole economic rights with
respect to the subject Voting Stock.
"Clearstream" means Clearstream Banking, Societe Anonyme.
"Code" means the Internal Revenue Code of 1986, as amended.
"Consolidated Depreciation and Amortization Expense" means, with
respect to any Person for any period, the total amount of depreciation and
amortization expense, including the amortization of key money and other
intangible assets, deferred financing fees and Capitalized Software
Expenditures and amortization of unrecognized prior service costs and
actuarial gains and losses related to pensions and other post-employment
benefits, 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 Person
for any period, the sum, without duplication, of:
(1) 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, the interest component of Capitalized Lease Obligations,
and net payments and receipts (if any) pursuant to interest rate Hedging
Obligations and excluding Additional Interest in respect of the Notes,
"additional interest" under any registration rights agreement,
amortization of deferred financing fees, debt issuance costs, commissions,
fees and expenses and expensing of any bridge, commitment or other
financing fees); plus
(2) consolidated capitalized interest of such Person and its
Restricted Subsidiaries for such period, whether paid or accrued; plus
(3) commissions, discounts, yield and other fees and charges
Incurred in connection with any Receivables Financing which are payable to
Persons other than the Issuer and its Restricted Subsidiaries; minus
(4) interest income for such period.
For purposes of this definition, interest on a Capitalized Lease
Obligation shall be deemed to accrue at an interest rate reasonably determined
by the Issuer to be the rate of interest implicit in such Capitalized Lease
Obligation in accordance with GAAP.
8
"Consolidated Leverage Ratio" means, as at any date of
determination, the ratio of (1) the Consolidated Total Indebtedness of the
Issuer and its Restricted Subsidiaries as of the end of the most recent
fiscal quarter for which internal financial statements are available
immediately preceding the date on which such event for which such
calculation is being made shall occur to (2) the Issuer's EBITDA for the
most recently ended four full fiscal quarters for which internal financial
statements are available immediately preceding the date on which such
event for which such calculation is being made shall occur, in each case
with such pro forma adjustments to Consolidated Total Indebtedness and
EBITDA as are appropriate and consistent with the pro forma adjustment
provisions set forth in the definition of Fixed Charge Coverage Ratio.
"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; provided, however,
that:
(1) any net after-tax extraordinary, nonrecurring or unusual gains
or losses (less all fees and expenses relating thereto) or expenses or
charges, any severance or relocation costs or expenses, curtailments or
modifications to pension and post-retirement employee benefit plans, any
expenses related to any reconstruction, decommissioning, recommissioning
or reconfiguration of fixed assets for alternate uses and fees, expenses
or charges relating to new product lines, plant shutdown costs,
acquisition integration costs, expenses, excess pension charges,
acquisition integration charges, facilities opening costs and expenses or
charges related to any issuance of Equity Interests, any Investment,
acquisition, disposition, recapitalization or issuance, repayment,
refinancing, amendment or modification of Indebtedness (in each case,
whether or not successful), and any fees, expenses, charges or change of
control payments, including retention payments, made under the Acquisition
Documents or otherwise related to the Transactions, in each case, shall be
excluded;
(2) effects of purchase accounting adjustments (including the
effects of such adjustments pushed down to such person and its
subsidiaries) in component amounts required or permitted by GAAP,
resulting from the application of purchase accounting in relation to the
Transactions or any acquisition consummated after the Issue Date or the
amortization or write-off of any amounts thereof, net of taxes, shall be
excluded;
(3) the Net Income for such period shall not include the cumulative
effect of a change in accounting principles during such period;
(4) any net after-tax income or loss from disposed, abandoned,
transferred, closed or discontinued operations or store closures and any
net after-tax gain or loss on disposal of disposed, abandoned,
transferred, closed or discontinued operations or store closures shall be
excluded;
9
(5) any net after-tax gains or losses (less all fees and expenses or
charges relating thereto) attributable to business dispositions or asset
dispositions other than in the ordinary course of business (as determined
in good faith by the Issuer) shall be excluded;
(6)(a) any net after-tax gains or losses (less all fees and expenses
or charges relating thereto) attributable to the early extinguishment of
indebtedness, Hedging Obligations or other derivative instruments and (b)
any non-cash gains, losses, income and expenses resulting from fair value
accounting required by the applicable standards under GAAP and related
interpretations shall be excluded;
(7) the equity interest in the Net Income for such period of any
Person that is not a Subsidiary of such Person, 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 Restricted Subsidiary thereof in
respect of such period;
(8) solely for the purpose of determining the amount available for
Restricted Payments under clause (A) of the definition of Cumulative
Credit, the Net Income for such period of any Restricted Subsidiary (other
than any Guarantor) shall be excluded to the extent that the declaration
or payment of dividends or similar distributions by such 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 restrictions with respect to the payment of
dividends or similar distributions have been legally waived; provided that
the Consolidated Net Income of such Person shall be increased by the
amount of dividends or other distributions or other payments actually paid
in cash (or converted into cash) by any such Restricted Subsidiary to such
Person, to the extent not already included therein;
(9) an amount equal to the amount of Tax Distributions actually made
to any parent or equity holder of such Person in respect of such period in
accordance with Section 4.07(b)(xii) shall be included as though such
amounts had been paid as income taxes directly by such Person for such
period;
(10) any non-cash impairment charges or asset write-offs, in each
case pursuant to GAAP, and the amortization of intangibles, including key
money amortization, arising pursuant to GAAP shall be excluded;
10
(11) any non-cash expense realized or resulting from stock option
plans, employee benefit plans or post-employment benefit plans, or grants
or sales of stock, stock appreciation or similar rights, stock options,
restricted stock, preferred stock or other rights shall be excluded;
(12) any (a) one-time non-cash compensation charges, (b) costs and
expenses after the Issue Date related to employment of terminated
employees (including but not limited to change of control payments, "gross
up" payments under Code Sections 280G and 4999 and the acceleration of
options) or (c) costs or expenses realized in connection with or resulting
from stock appreciation or similar rights, stock options or other rights
existing on the Issue Date of officers, directors and employees, in each
case of such Person or any of its Restricted Subsidiaries, shall be
excluded;
(13) expenses associated with additional accruals and reserves that
are established or adjusted within 12 months after the Issue Date and that
are so required to be established or adjusted in accordance with GAAP or
as a result of adoption or modification of accounting policies shall be
excluded;
(14) solely for purposes of calculating EBITDA, (a) the Net Income
of any Person and its Restricted Subsidiaries shall be calculated without
deducting the income attributable to, or adding the losses attributable
to, the minority equity interests of third parties in any non-Wholly-owned
Restricted Subsidiary except to the extent of dividends declared or paid
in respect of such period or any prior period on the shares of Capital
Stock of such Restricted Subsidiary held by such third parties and (b) any
ordinary course dividend, distribution or other payment paid in cash and
received from any Person in excess of amounts included in clause (7) above
shall be included;
(15) (a) the non-cash portion of "straight-line" rent expense shall
be excluded and (b) the cash portion of "straight-line" rent expense which
exceeds the amount expensed in respect of such rent expense shall be
included, (c) the non-cash amortization of tenant allowances shall be
excluded and (d) cash received from landlords for tenant allowances and
shall be included;
(16) to the extent otherwise included in Consolidated Net Income any
currency translation gains and losses related to currency remeasurements
of Indebtedness, and any net loss or gain resulting from Hedging
Obligations for currency exchange risk, shall be excluded; and
(17) solely for the purpose of determining the amount available for
Restricted Payments under clause (A) of the definition of Cumulative
Credit, the difference, if positive, of the Consolidated Taxes of the
Issuer calculated in accordance
11
with GAAP and the actual Consolidated Taxes paid in cash by the Issuer
during any Reference Period shall be included.
Notwithstanding the foregoing, for the purpose of Section 4.07
hereof only, there shall be excluded from Consolidated Net Income any
dividends, repayments of loans or advances or other transfers of assets
from Unrestricted Subsidiaries of the Issuer or a Restricted Subsidiary of
the Issuer to the extent such dividends, repayments or transfers increase
the amount of Restricted Payments permitted pursuant to clauses (D) and
(E) of the definition of Cumulative Credit.
"Consolidated Non-cash Charges" means, with respect to any Person
for any period, the non-cash expenses (other than Consolidated
Depreciation and Amortization Expense) of such Person and its Restricted
Subsidiaries reducing Consolidated Net Income of such Person for such
period on a consolidated basis and otherwise determined in accordance with
GAAP, provided that if any such non-cash expenses represent an accrual or
reserve for potential cash items in any future period, the cash payment in
respect thereof in such future period shall be subtracted from EBITDA in
such future period to the extent paid, but excluding from this proviso,
for the avoidance of doubt, amortization of a prepaid cash item that was
paid in a prior period.
"Consolidated Taxes" means, with respect to any Person for any
period, the provision for taxes based on income, profits or capital,
including, without limitation, state, franchise, property and similar
taxes, foreign withholding taxes, levies, imposts, duties (including stamp
duties), deductions, withholdings or similar charges (including ad valorem
charges) imposed by any governmental authority and any and all interest
and penalties related thereto and any Tax Distributions taken into account
in calculating Consolidated Net Income.
"Consolidated Total Indebtedness" means, as at any date of
determination, an amount equal to (x) the sum of (1) the aggregate amount
of all outstanding Indebtedness of the Issuer and its Restricted
Subsidiaries on a consolidated basis consisting of Indebtedness for
borrowed money, Obligations in respect of Capitalized Lease Obligations
and debt obligations evidenced by promissory notes and similar instruments
(and excluding, for the avoidance of doubt, all obligations relating to
Receivables Facilities) and (2) the aggregate amount of all outstanding
Disqualified Stock of the Issuer and all Preferred Stock of its Restricted
Subsidiaries on a consolidated basis, with the amount of such Disqualified
Stock and Preferred Stock equal to the greater of their respective
voluntary or involuntary liquidation preferences and maximum fixed
repurchase prices, in each case determined on a consolidated basis in
accordance with GAAP, less (y) the aggregate amount of unrestricted cash
and Cash Equivalents included on the consolidated balance sheet of the
Issuer and any Restricted Subsidiaries as of such date; provided that
Indebtedness of the Issuer and its Restricted Subsidiaries under any
revolving credit facility as at any date of determination shall be
determined using the Average Monthly Balance of such Indebtedness for the
most recently ended
12
four fiscal quarters for which internal financial statements are available
as of such date of determination (the "Reference Period"). For purposes of
this definition, (a) the "maximum fixed repurchase price" of any
Disqualified Stock or Preferred Stock that does not have a fixed
repurchase price shall be calculated in accordance with the terms of such
Disqualified Stock or Preferred Stock as if such Disqualified Stock or
Preferred Stock were purchased on any date on which Consolidated Total
Indebtedness shall be required to be determined pursuant to this
Indenture, and if such price is based upon, or measured by, the fair
market value of such Disqualified Stock or Preferred Stock, such fair
market value shall be determined reasonably and in good faith by the
Issuer, (b) "Average Monthly Balance" means, with respect to any
Indebtedness incurred by the Issuer or its Restricted Subsidiaries under a
revolving credit facility, the quotient of (x) the sum of each Individual
Monthly Balance for each fiscal month ended on or prior to such date of
determination and included in the Reference Period divided by (y) 12, and
(c) "Individual Monthly Balance" means, with respect to any Indebtedness
incurred by the Issuer or its Restricted Subsidiaries under a revolving
credit facility during any fiscal month of the Issuer, the quotient of (x)
the sum of the aggregate outstanding principal amount of all such
Indebtedness at the end of each day of such fiscal month divided by (y)
the number of days in such fiscal month.
"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:
(1) to purchase any such primary obligation or any property
constituting direct or indirect security therefor;
(2) 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
(3) 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 of the Trustee" shall be at the address of
the Trustee specified in Section 14.02 hereof or such other address as to
which the Trustee may give notice to the Holders and the Issuer.
13
"Credit Agreement" means (i) the credit agreement entered into in
connection with, and on or prior to, the consummation of the Acquisition,
among the Issuer, the guarantors named therein, the financial institutions
named therein, and Credit Suisse, as Administrative Agent, as amended,
restated, supplemented, waived, replaced (whether or not upon termination,
and whether with the original lenders or otherwise), restructured, repaid,
refunded, refinanced or otherwise modified from time to time, including
any agreement or indenture extending the maturity thereof, refinancing,
replacing or otherwise restructuring all or any portion of the
Indebtedness under such agreement or agreements or indenture or indentures
or any successor or replacement agreement or agreements or indenture or
indentures or increasing the amount loaned or issued thereunder or
altering the maturity thereof and (ii) whether or not the credit agreement
referred to in clause (i) remains outstanding, if designated by the Issuer
to be included in the definition of "Credit Agreement," one or more (A)
debt facilities or commercial paper facilities, providing for revolving
credit loans, term loans, receivables financing (including through the
sale of receivables to lenders or to special purpose entities formed to
borrow from lenders against such receivables) or letters of credit, (B)
debt securities, indentures or other forms of debt financing (including
convertible or exchangeable debt instruments or bank guarantees or
bankers' acceptances), or (C) instruments or agreements evidencing any
other Indebtedness, in each case, with the same or different borrowers or
issuers and, in each case, as amended, supplemented, modified, extended,
restructured, renewed, refinanced, restated, replaced or refunded in whole
or in part from time to time; provided that for purposes of Section
4.09(b)(i) only, the aggregate principal amount of Indebtedness Incurred
under clause (i) and (ii) above (with letters of credit and bankers'
acceptances being deemed to have a principal amount equal to the face
amount thereof) at any one time outstanding shall not exceed the Initial
Commitment Amount plus an aggregate additional principal amount of secured
Indebtedness that does not cause the Secured Indebtedness Leverage Ratio
of the Issuer to exceed 4.75 to 1.00, determined on a pro forma basis
(including a pro forma application of the net proceeds therefrom).
"Credit Agreement Documents" means the collective reference to any
Credit Agreement, any notes issued pursuant thereto and the guarantees
thereof, and the collateral documents relating thereto, as amended,
supplemented, restated, renewed, refunded, replaced, restructured, repaid,
refinanced or otherwise modified, in whole or in part, from time to time.
"Cumulative Credit" means the sum of (without duplication):
(A) 50% of the Consolidated Net Income of the Issuer for the
period (taken as one accounting period, the "Reference Period") from
May 6, 2007 to the end of the Issuer'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
14
(B) 100% of the aggregate net proceeds, including cash and the
Fair Market Value (as determined in good faith by the Issuer) of
property other than cash, received by the Issuer after the Issue
Date (other than net proceeds to the extent such net proceeds have
been used to incur Indebtedness, Disqualified Stock, or Preferred
Stock pursuant to clause (xiii) of Section 4.09(b) hereof) from the
issue or sale of Equity Interests of the Issuer (excluding Refunding
Capital Stock (as defined below), Designated Preferred Stock,
Excluded Contributions, and Disqualified Stock), including Equity
Interests issued upon exercise of warrants or options (other than an
issuance or sale to a Restricted Subsidiary of the Issuer), plus
(C) 100% of the aggregate amount of contributions to the
capital of the Issuer received in cash and the Fair Market Value (as
determined in good faith by the Issuer) of property other than cash
after the Issue Date (other than Excluded Contributions, Refunding
Capital Stock, Designated Preferred Stock, and Disqualified Stock
and other than contributions to the extent such contributions have
been used to incur Indebtedness, Disqualified Stock, or Preferred
Stock pursuant to clause (xiii) of Section 4.09(b) hereof), plus
(D) 100% of the principal amount of any Indebtedness, or the
liquidation preference or maximum fixed repurchase price, as the
case may be, of any Disqualified Stock of the Issuer or any
Restricted Subsidiary thereof issued after the Issue Date (other
than Indebtedness or Disqualified Stock issued to a Restricted
Subsidiary) which has been converted into or exchanged for Equity
Interests in the Issuer (other than Disqualified Stock) or any
direct or indirect parent of the Issuer (provided in the case of any
parent, such Indebtedness or Disqualified Stock is retired or
extinguished), plus
(E) 100% of the aggregate amount received by the Issuer or any
Restricted Subsidiary in cash and the Fair Market Value (as
determined in good faith by the Issuer) of property other than cash
received by the Issuer or any Restricted Subsidiary from:
(1) the sale or other disposition (other than to the
Issuer or a Restricted Subsidiary of the Issuer) of Restricted
Investments made by the Issuer and its Restricted Subsidiaries
and from repurchases and redemptions of such Restricted
Investments from the Issuer and its Restricted Subsidiaries by
any Person (other than the Issuer or any of its Restricted
Subsidiaries) and from repayments of loans or advances, and
releases of guarantees, which constituted Restricted
Investments (other than in each case to the extent that the
Restricted Investment was made pursuant to clause (vii) of
Section 4.07(b) hereof),
(2) the sale (other than to the Issuer or a Restricted
Subsidiary of the Issuer) of the Capital Stock of an
Unrestricted Subsidiary, or
15
(3) a distribution or dividend from an Unrestricted
Subsidiary, plus
(F) in the event any Unrestricted Subsidiary of the Issuer has
been redesignated as a Restricted Subsidiary or has been merged,
consolidated or amalgamated with or into, or transfers or conveys
its assets to, or is liquidated into, the Issuer or a Restricted
Subsidiary, the Fair Market Value (as determined in good faith by
the Issuer) of the Investment of the Issuer in such Unrestricted
Subsidiary at the time of such redesignation, combination or
transfer (or of the assets transferred or conveyed, as applicable)
(other than in each case to the extent that the designation of such
Subsidiary as an Unrestricted Subsidiary was made pursuant to clause
(vii) of Section 4.07(b) hereof to the extent such Investment
constituted a Permitted Investment).
"Custodian" means the Trustee, as custodian with respect to the
Notes, each in global form, or any successor entity.
"Default" means any event which is, or after notice or passage of
time or both would be, an Event of Default.
"Definitive Note" means a certificated Note registered in the name
of the Holder thereof and issued in accordance with Section 2.06(c)
hereof, substantially in the form of Exhibit A hereto except that such
Note shall not bear the Global Note Legend and shall not have the
"Schedule of Exchanges of Interests in the Global Note" attached thereto.
"Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, any Person specified in Section 2.03
hereof as the Depositary with respect to the Notes, and any and all
successors thereto appointed as Depositary hereunder and having become
such pursuant to the applicable provision of this Indenture.
"Designated Non-cash Consideration" means the Fair Market Value (as
determined in good faith by the Issuer) of non-cash consideration received
by the Issuer or one of its Restricted Subsidiaries in connection with an
Asset Sale that is so designated as
16
Designated Non-cash Consideration pursuant to an Officer's Certificate,
setting forth the basis of such valuation, less the amount of Cash
Equivalents received in connection with a subsequent sale of such
Designated Non-cash Consideration.
"Designated Preferred Stock" means Preferred Stock of the Issuer or
any direct or indirect parent of the Issuer (other than Disqualified
Stock), that is issued for cash (other than to the Issuer or any of its
Subsidiaries or an employee stock ownership plan or trust established by
the Issuer or any of its Subsidiaries) and is so designated as Designated
Preferred Stock, pursuant to an Officer's Certificate, on the issuance
date thereof.
"Designated Senior Indebtedness" means:
(1) any Indebtedness outstanding under the Credit Agreement; and
(2) 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 Issuer 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 redeemable or
exchangeable), or upon the happening of any event:
(1) matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise (other than as a result of a change of control or
asset sale),
(2) is convertible or exchangeable for Indebtedness or Disqualified
Stock of such Person, or
(3) is redeemable at the option of the holder thereof, in whole or
in part (other than solely as a result of a change of control or asset
sale),
in each case prior to 91 days after the earlier of the maturity date of
the Notes or the date the Notes are no longer outstanding; provided,
however, that only the portion of Capital Stock which so matures or is
mandatorily redeemable, is so convertible or exchangeable or is so
redeemable at the option of the holder thereof prior to such date shall be
deemed to be Disqualified Stock; provided, further, however, that if such
Capital Stock is issued to any employee or to any plan for the benefit of
employees of the Issuer 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 Issuer in order
to satisfy applicable statutory or regulatory obligations or as a result
of such employee's termination, death or disability; provided, further,
that any class of Capital Stock of such Person that by its terms
authorizes such Person to satisfy its obligations thereunder by delivery
of Capital Stock that is not Disqualified Stock shall not be deemed to be
Disqualified Stock.
17
"Domestic Subsidiary" means a Restricted Subsidiary that is not a
Foreign Subsidiary.
"EBITDA" means, with respect to any Person for any period, the
Consolidated Net Income of such Person for such period plus, without
duplication, to the extent the same was deducted in calculating
Consolidated Net Income:
(1) Consolidated Taxes; plus
(2) Fixed Charges; plus
(3) Consolidated Depreciation and Amortization Expense; plus
(4) Consolidated Non-cash Charges; plus
(5) the amount of any restructuring charges or reserves in such
period; plus
(6) the amount of management, monitoring, consulting, transaction
and advisory fees and related expenses paid to the Sponsors (or any
accruals relating to such fees and related expenses) during such period to
the extent otherwise permitted under Section 4.11 hereof; plus
(7) any costs or expense incurred pursuant to any management equity
plan or stock option plan or any other management or employee benefit plan
or agreement or any stock subscription or shareholder agreement, to the
extent that such cost or expenses are funded with cash proceeds
contributed to the capital of the Issuer or a Guarantor or net cash
proceeds of an issuance of Equity Interests of the Issuer (other than
Disqualified Stock) solely to the extent that such net cash proceeds are
excluded from the calculation of the Cumulative Credit; plus
(8) to the extent covered by insurance and actually reimbursed, or,
so long as such Person has made a determination that there exists
reasonable evidence that such amount will in fact be reimbursed by the
insurer and only to the extent that such amount is (a) not denied by the
applicable carrier in writing within 180 days and (b) in fact reimbursed
within 365 days of the date of such evidence (with a deduction for any
amount so added back to the extent not so reimbursed within 365 days),
expenses with respect to liability or casualty events or business
interruption shall be excluded; provided that any proceeds of such
reimbursement when received shall be excluded from the
18
calculation of EBITDA to the extent the expense reimbursed was previously
excluded pursuant to this clause (8);
less, without duplication,
(9) non-cash items increasing Consolidated Net Income for such
period (excluding the recognition of deferred revenue or any items which
represent the reversal of any accrual of, or cash reserve for, anticipated
cash charges that reduced EBITDA in any prior period and any items for
which cash was received in a 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 after the Issue
Date of common stock or Preferred Stock of the Issuer or any direct or
indirect parent of the Issuer, as applicable (other than Disqualified
Stock), other than: (1) public offerings with respect to the Issuer's or
such direct or indirect parent's common stock registered on Form S-8; and
(2) any such public or private sale that constitutes an Excluded
Contribution.
"Euroclear" means Euroclear S.A./N.V., as operator of the Euroclear
System.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.
"Exchange Notes" means the Notes issued in the Exchange Offer
pursuant to Section 2.06(f) hereof.
"Exchange Offer" has the meaning set forth in the Registration
Rights Agreement.
"Exchange Offer Registration Statement" has the meaning set forth in
the Registration Rights Agreement.
"Excluded Contributions" means the Cash Equivalents or other assets
(valued at their Fair Market Value as determined in good faith by senior
management or the Board of Directors of the Issuer) received by the Issuer
after the Issue Date from: (1)
19
contributions to its common equity capital, and (2) the sale (other than
to a Subsidiary of the Issuer or to any 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 and Designated
Preferred Stock) of the Issuer, in each case designated as Excluded
Contributions pursuant to an Officer's Certificate executed by an Officer
of the Issuer on or promptly after the date such capital contributions are
made or the date such Capital Stock is sold, as the case may be.
"Fair Market Value" means, with respect to any asset or property,
the price which could be negotiated in an arm's-length transaction, for
cash, between a willing seller and a willing and able buyer, neither of
whom is under undue pressure or compulsion to complete the transaction.
"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 Issuer
or any of its Restricted Subsidiaries Incurs, repays, repurchases or
redeems any Indebtedness (other than in the case of revolving credit
borrowings or revolving advances under any Qualified Receivables
Financing, in which case interest expense shall be computed based upon the
average daily balance of such Indebtedness during the applicable period)
or issues, repurchases or redeems Disqualified Stock or 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, repayment, repurchase or redemption
of Indebtedness, or such issuance, repurchase or redemption of
Disqualified Stock or 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, amalgamations,
consolidations (including the Transactions) and discontinued operations
(as determined in accordance with GAAP), in each case with respect to an
operating unit of a business, 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, mergers,
amalgamations, consolidations (including the Transactions) and
discontinued operations (and the change 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 Issuer or any Restricted Subsidiary since
the beginning of such period shall have made any Investment, acquisition,
disposition, merger, consolidation, amalgamation or discontinued
operation, in each case with respect to an operating unit of a business,
that would have required adjustment pursuant to this definition, then the
Fixed
20
Charge Coverage Ratio shall be calculated giving pro forma effect thereto
for such period as if such Investment, acquisition, disposition,
discontinued operation, merger, amalgamation 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 any event, the pro forma calculations shall be made in good faith
by a responsible financial or accounting officer of the Issuer. Any such
pro forma calculation may include adjustments appropriate, in the
reasonable good faith determination of the Issuer as set forth in an
Officer's Certificate, to reflect (1) operating expense reductions and
other operating improvements or synergies reasonably expected to result
from the applicable event (including, to the extent applicable, from the
Transactions), and (2) all adjustments of the nature used in connection
with the calculation of "Adjusted EBITDA" as set forth in footnote 2 to
the "Summary Historical and Unaudited Pro Forma Financial Data" under
"Offering Memorandum Summary" in the Offering Memorandum to the extent
such adjustments, without duplication, continue to be applicable to such
four-quarter period.
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 if such Hedging Obligation has
a remaining term in excess of 12 months). 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 Issuer
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 Issuer may designate.
For purposes of this definition, any amount in a currency than U.S.
dollars will be converted to U.S. dollars based on the average exchange
rate for such currency for the most recent twelve month period immediately
prior to the date of determination in a manner consistent with that used
in calculating EBITDA for the applicable period.
"Fixed Charges" means, with respect to any Person for any period,
the sum, without duplication, of (1) Consolidated Interest Expense of such
Person for such period and (2) all cash dividend payments (excluding items
eliminated in consolidation) on any series of Preferred Stock or
Disqualified Stock of such Person and its Restricted Subsidiaries.
21
"Foreign Subsidiary" means a Restricted Subsidiary not organized or
existing under the laws of the United States of America or any state
thereof or the District of Columbia and any direct or indirect subsidiary
of such Restricted Subsidiary.
"GAAP" means generally accepted accounting principles in the United
States 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 Issue 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, but the interest of such Person in an
Unrestricted Subsidiary will be accounted for as an Investment.
"Global Note Legend" means the legend set forth in Section
2.06(g)(ii) hereof, which is required to be placed on all Global Notes
issued under this Indenture.
"Global Notes" means, individually and collectively, the Restricted
Global Notes and the Unrestricted Global Notes, substantially in the form
of Exhibit A hereto.
"Government Securities" means securities that are:
(1) direct obligations of the United States of America for the
timely payment of which its full faith and credit is pledged; or
(2) 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 issuers 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.
22
"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 Issuer
under this Indenture and the Notes by any Person in accordance with the
provisions herein.
"Guarantor" means any Person that Incurs a Guarantee; provided that
upon the release or discharge of such Person from its Guarantee in
accordance with this Indenture such Person ceases to be a Guarantor.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under:
(1) currency exchange, interest rate or commodity swap agreements,
currency exchange, interest rate or commodity cap agreements and currency
exchange, interest rate or commodity collar agreements; and
(2) other agreements or arrangements designed to protect such Person
against fluctuations in currency exchange, interest rates or commodity
prices.
"Holder" means the Person in whose name a Note is registered on the
Registrar's books.
"Incur" means issue, assume, guarantee, incur or otherwise become
liable for; provided, however, that any Indebtedness or Capital Stock of a
Person existing at the time such person becomes a Subsidiary (whether by
merger, amalgamation, consolidation, acquisition or otherwise) shall be
deemed to be Incurred by such Person at the time it becomes a Subsidiary.
"Indebtedness" means, with respect to any Person:
(1) the principal and premium (if any) of any indebtedness of such
Person, whether or not contingent, (a) in respect of borrowed money, (b)
evidenced by bonds, notes, debentures or similar instruments or letters of
credit or bankers' acceptances (or, without duplication, reimbursement
agreements in respect thereof), (c) representing the deferred and unpaid
purchase price of any property (except any such balance that (i)
constitutes a trade payable or similar obligation to a trade creditor
Incurred in the ordinary course of business, (ii) any earn-out obligations
until such
23
obligation becomes a liability on the balance sheet of such Person in
accordance with GAAP and (iii) liabilities accrued in the ordinary course
of business), which purchase price is due more than six months after the
date of placing the property in service or taking delivery and title
thereto, (d) in respect of Capitalized Lease Obligations, or (e)
representing any Hedging Obligations, if and to the extent that any of the
foregoing indebtedness (other than letters of credit and Hedging
Obligations) would appear as a liability on a balance sheet (excluding the
footnotes thereto) of such Person prepared in accordance with GAAP;
(2) to the extent not otherwise included, any obligation of such
Person to be liable for, or to pay, as obligor, guarantor or otherwise,
the obligations referred to in clause (1) of another Person (other than by
endorsement of negotiable instruments for collection in the ordinary
course of business); and
(3) 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 the
amount of such Indebtedness will be the lesser of: (a) the Fair Market
Value (as determined in good faith by the Issuer) of such asset at such
date of determination, and (b) the amount of such Indebtedness of such
other Person;
provided, however, that notwithstanding the foregoing, Indebtedness shall
be deemed not to include (1) Contingent Obligations incurred in the
ordinary course of business and not in respect of borrowed money; (2)
deferred or prepaid revenues; (3) purchase price holdbacks in respect of a
portion of the purchase price of an asset to satisfy warranty or other
unperformed obligations of the respective seller; (4) Obligations under or
in respect of Qualified Receivables Financing or (5) obligations under the
Acquisition Documents.
Notwithstanding anything in this Indenture to the contrary,
Indebtedness shall not include, and shall be calculated without giving
effect to, the effects of Statement of Financial Accounting Standards No.
133 and related interpretations to the extent such effects would otherwise
increase or decrease an amount of Indebtedness for any purpose under this
Indenture as a result of accounting for any embedded derivatives created
by the terms of such Indebtedness; and any such amounts that would have
constituted Indebtedness under this Indenture but for the application of
this sentence shall not be deemed an Incurrence of Indebtedness under this
Indenture.
"Indenture" means this Indenture, as amended or supplemented from
time to time.
"Independent Financial Advisor" means an accounting, appraisal or
investment banking firm or consultant, in each case of nationally
recognized standing,
24
that is, in the good faith determination of the Issuer, qualified to
perform the task for which it has been engaged.
"Indirect Participant" means a Person who holds a beneficial
interest in a Global Note through a Participant.
"Initial Commitment Amount" means the sum of (i) the aggregate
principal amount of term loans outstanding under the Credit Agreement as
of the Issue Date, (ii) the aggregate principal amount of the revolving
credit facility (whether drawn, in whole or in part, or undrawn) under the
Credit Agreement as of the Issue Date, and (iii) the aggregate principal
amount of delayed draw term loans or incremental term loan or revolving
credit facilities contemplated by the Credit Agreement (as in effect on
the Issue Date) up to a maximum of $250 million pursuant to this clause
(iii).
"Initial Notes" means the Notes issued on the Issue Date and any
Notes issued in replacement thereof, but not including any Exchange Notes
issued in exchange therefore.
"Initial Purchasers" means Bear, Stearns and Co. Inc., Credit Suisse
Securities (USA) LLC, Lehman Brothers Inc., ABN AMRO Incorporated, Mizuho
Securities USA Inc. and Natexis Bleichroeder Inc.
"Interest Payment Date" means June 1 and December 1 of each year to
Stated Maturity.
"Interest Period" means the period commencing on and including an
Interest Payment Date and ending on and including the day immediately
preceding the next succeeding Interest Payment Date, with the exception
that the first Interest Period shall commence on and include the Issue
Date and end on and include November 30, 2007.
"Investment Grade Rating" means a rating equal to or higher than
Baa3 (or the equivalent) by Moody's and BBB- (or the equivalent) by S&P,
or an equivalent rating by any other Rating Agency.
"Investment Grade Securities" means:
(1) securities issued or directly and fully guaranteed or insured by
the U.S. government or any agency or instrumentality thereof (other than
Cash Equivalents);
25
(2) securities that have a rating equal to or higher than Baa3 (or
equivalent) by Moody's or BBB- (or equivalent) by S&P, or an equivalent
rating by any other Rating Agency, but excluding any debt securities or
loans or advances between and among the Issuer and its Subsidiaries;
(3) investments in any fund that invests exclusively in investments
of the type described in clauses (1) and (2) above which fund may also
hold immaterial amounts of cash pending investment and/or distribution;
and
(4) corresponding instruments in countries other than the United
States customarily utilized for high quality investments and in each case
with maturities not exceeding two years from the date of acquisition.
"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
accounts receivable, trade credit and advances to customers and
commission, travel and similar advances to officers, employees and
consultants 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 of the Issuer 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 4.07
hereof:
(1) "Investments" shall include the portion (proportionate to the
Issuer's equity interest in such Subsidiary) of the Fair Market Value (as
determined in good faith by the Issuer) of the net assets of a Subsidiary
of the Issuer 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 Issuer shall be deemed to
continue to have a permanent "Investment" in an Unrestricted Subsidiary
equal to an amount (if positive) equal to:
(a) the Issuer's "Investment" in such Subsidiary at the time
of such redesignation, less
(b) the portion (proportionate to the Issuer's Equity Interest
in such Subsidiary) of the Fair Market Value (as determined in good
faith by the Issuer) of the net assets of such Subsidiary at the
time of such redesignation; and
(2) any property transferred to or from an Unrestricted Subsidiary
shall be valued at its Fair Market Value (as determined in good faith by
the Issuer) at the
26
time of such transfer, in each case as determined in good faith by the
Board of Directors of the Issuer.
"Issue Date" means the date on which the Notes are originally
issued.
"Issuer" means Bauble Acquisition Sub, Inc., a Florida corporation
(and not any of its Subsidiaries), and its successors.
"Issuer Order" means a written request or order signed on behalf of
the Issuer by an Officer of the Issuer, who must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Issuer, and delivered to the Trustee.
"Letter of Transmittal" means the letter of transmittal to be
prepared by the Issuer and sent to all Holders of the Notes for use by
such Holders in connection with the Exchange Offer.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or similar 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 directors,
executive officers and other management personnel of the Issuer or any
direct or indirect parent of the Issuer, as the case may be, on the Issue
Date together with (1) any new directors whose election by such boards of
directors or whose nomination for election by the shareholders of the
Issuer or any direct or indirect parent of the Issuer, as applicable, was
approved by a vote of a majority of the directors of the Issuer or any
direct or indirect parent of the Issuer, as applicable, then still in
office who were either directors on the Issue Date or whose election or
nomination was previously so approved and (2) executive officers and other
management personnel of the Issuer or any direct or indirect parent of the
Issuer, as applicable, hired at a time when the directors on the Issue
Date together with the directors so approved constituted a majority of the
directors of the Issuer or any direct or indirect parent of the Issuer, as
applicable.
"Merger Agreement" means the Agreement and Plan of Merger, dated as
of March 20, 2007, among Claire's Stores, Inc., Bauble Holdings Corp. and
Bauble
27
Acquisition Sub, Inc., as amended, supplemented or modified from time to
time prior to the Issue Date or thereafter.
"Moody's" means Moody's Investors Service, Inc. or any successor to
the rating agency business thereof.
"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
Issuer or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received in respect of or upon
the sale or other disposition of any Designated Non-cash Consideration
received in any Asset Sale and any cash payments received by way of
deferred payment of principal pursuant to a note or installment receivable
or otherwise, but only as and when received, but excluding the assumption
by the acquiring person of Indebtedness relating to the disposed assets or
other consideration received in any other non-cash form), net of the
direct costs relating to such Asset Sale and the sale or disposition of
such Designated Non-cash 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 pursuant to Section 4.10(b) hereof) to be paid as a result of such
transaction, and any deduction of appropriate amounts to be provided by
the Issuer as a reserve in accordance with GAAP against any liabilities
associated with the asset disposed of in such transaction and retained by
the Issuer 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.
"Non-U.S. Person" means a Person who is not a U.S. Person.
"Notes" has the meaning assigned to such term in the recitals
hereto.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements (including, without limitation,
reimbursement obligations with respect to letters of credit and bankers'
acceptances), damages and other liabilities payable under the
documentation governing any Indebtedness; provided that Obligations with
respect to the Notes shall not include fees or indemnifications in favor
of the Trustee and other third parties other than the Holders of the
Notes.
28
"Offering Memorandum" means the confidential Offering Memorandum,
dated May 22, 2007, relating to the sale of the Initial Notes.
"Officer" means the Chairman of the Board, Chief Executive Officer,
Chief Financial Officer, President, any Executive Vice President, Senior
Vice President or Vice President, the Treasurer or the Secretary of the
Issuer.
"Officer's Certificate" means a certificate signed on behalf of the
Issuer by an Officer of the Issuer, who must be the principal executive
officer, the principal financial officer, the treasurer or the principal
accounting officer of the Issuer, which meets the requirements set forth
in this Indenture.
"Opinion of Counsel" means a written opinion from legal counsel who
is acceptable to the Trustee. The counsel may be an employee of or counsel
to the Issuer.
"Pari Passu Indebtedness" means:
(1) with respect to the Issuer, the Notes and any Indebtedness which
ranks pari passu in right of payment to the Notes; and
(2) with respect to any Guarantor, its Guarantee and any
Indebtedness which ranks pari passu in right of payment to such
Guarantor's Guarantee.
"Participant" means, with respect to the Depositary a Person who has
an account with the Depositary (and, with respect to DTC, shall include
Euroclear and Clearstream).
"Permitted Amount" means (a) an aggregate additional principal
amount that does not cause the Secured Indebtedness Leverage Ratio of the
Issuer to exceed 5.0 to 1.00, determined on a pro forma basis (including a
pro forma application of the net proceeds therefrom), or (b) an aggregate
principal amount, which when aggregated with the principal amount of all
other Indebtedness (including Capitalized Lease Obligations), together
with any refinancings or replacements thereof, then outstanding and
Incurred under this clause (b), does not exceed the greater of $75 million
and 2.25% of Total Assets at the time of Incurrence.
"Permitted Holders" means, at any time, each of (i) the Sponsors and
(ii) the Management Group. Any Person or group whose acquisition of
beneficial ownership constitutes a Change of Control in respect of which a
Change of Control Offer is made in
29
accordance with the requirements of this Indenture will thereafter,
together with its Affiliates, constitute an additional Permitted Holder.
"Permitted Investments" means:
(1) any Investment in the Issuer or any Restricted Subsidiary;
(2) any Investment in Cash Equivalents or Investment Grade
Securities;
(3) any Investment by the Issuer or any Restricted Subsidiary of the
Issuer in a Person if as a result of such Investment (a) such Person
becomes a Restricted Subsidiary of the Issuer, or (b) such Person, in one
transaction or a series of related transactions, is merged, consolidated
or amalgamated with or into, or transfers or conveys all or substantially
all of its assets to, or is liquidated into, the Issuer or a Restricted
Subsidiary of the Issuer;
(4) any Investment in securities or other assets not constituting
Cash Equivalents and received in connection with an Asset Sale made
pursuant to Section 4.10 hereof or any other disposition of assets not
constituting an Asset Sale;
(5) any Investment existing on, or made pursuant to binding
commitments existing on, the Issue Date or an Investment consisting of any
extension, modification or renewal of any Investment existing on the Issue
Date; provided that the amount of any such Investment may be increased (x)
as required by the terms of such Investment as in existence on the Issuer
Date or (y) as otherwise permitted under this Indenture;
(6) advances to employees, taken together with all other advances
made pursuant to this clause (6), not to exceed the greater of (x) $5
million and (y) 0.25% of Total Assets at any one time outstanding;
(7) any Investment acquired by the Issuer or any of its Restricted
Subsidiaries (a) in exchange for any other Investment or accounts
receivable held by the Issuer 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 (b) as a result of a foreclosure by the Issuer 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;
30
(8) Hedging Obligations permitted under Section 4.09(b)(x) hereof;
(9) any Investment by the Issuer or any of its Restricted
Subsidiaries in a Similar Business having an aggregate Fair Market Value
(as determined in good faith by the Issuer), taken together with all other
Investments made pursuant to this clause (9) that are at that time
outstanding, not to exceed the greater of (x) $50 million and (y) 1.5% 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); provided, however, that if any Investment
pursuant to this clause (9) is made in any Person that is not a Restricted
Subsidiary of the Issuer at the date of the making of such Investment and
such Person becomes a Restricted Subsidiary of the Issuer after such date,
such Investment shall thereafter be deemed to have been made pursuant to
clause (1) above and shall cease to have been made pursuant to this clause
(9) for so long as such Person continues to be a Restricted Subsidiary;
(10) additional Investments by the Issuer or any of its Restricted
Subsidiaries having an aggregate Fair Market Value (as determined in good
faith by the Issuer), taken together with all other Investments made
pursuant to this clause (10) that are at that time outstanding, not to
exceed the greater of (x) $100 million and (y) 3.0% 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); provided, however, that if any Investment pursuant to
this clause (10) is made in any Person that is not a Restricted Subsidiary
of the Issuer at the date of the making of such Investment and such Person
becomes a Restricted Subsidiary of the Issuer after such date, such
Investment shall thereafter be deemed to have been made pursuant to clause
(1) above and shall cease to have been made pursuant to this clause (10)
for so long as such Person continues to be a Restricted Subsidiary;
(11) loans and advances to officers, directors or employees for
business-related travel expenses, moving expenses and other similar
expenses, in each case Incurred in the ordinary course of business or
consistent with past practice or to fund such person's purchase of Equity
Interests of the Issuer or any direct or indirect parent of the Issuer;
(12) Investments the payment for which consists of Equity Interests
of the Issuer (other than Disqualified Stock) or any direct or indirect
parent of the Issuer, as applicable; provided, however, that such Equity
Interests will not increase the amount available for Restricted Payments
under clause (C) of the definition of Cumulative Credit;
(13) any transaction to the extent it constitutes an Investment that
is permitted by and made in accordance with Section 4.11(b) hereof (except
transactions described in clauses (ii), (vi), (vii) and (xi)(b) thereof);
31
(14) Investments consisting of the licensing or contribution of
intellectual property pursuant to joint marketing arrangements with other
Persons;
(15) guarantees issued in accordance with Section 4.09 and Section
4.14;
(16) Investments consisting of or to finance purchases and
acquisitions of inventory, supplies, materials, services or equipment or
purchases of contract rights or licenses or leases of intellectual
property;
(17) any Investment in a Receivables Subsidiary or any Investment by
a Receivables Subsidiary in any other Person in connection with a
Qualified Receivables Financing, including Investments of funds held in
accounts permitted or required by the arrangements governing such
Qualified Receivables Financing or any related Indebtedness;
(18) additional Investments in joint ventures not to exceed at any
one time in the aggregate outstanding under this clause (18), the greater
of (x) $65 million and (y) 2.0% of Total Assets; provided, however, that
if any Investment pursuant to this clause (18) is made in any Person that
is not a Restricted Subsidiary of the Issuer at the date of the making of
such Investment and such Person becomes a Restricted Subsidiary of the
Issuer after such date, such Investment shall thereafter be deemed to have
been made pursuant to clause (1) above and shall cease to have been made
pursuant to this clause (18) for so long as such Person continues to be a
Restricted Subsidiary; and
(19) Investments of a Restricted Subsidiary of the Issuer acquired
after the Issue Date or of an entity merged into, amalgamated with, or
consolidated with the Issuer or a Restricted Subsidiary of the Issuer in a
transaction that is not prohibited by Section 5.01 after the Issue Date to
the extent that such Investments were not made in contemplation of such
acquisition, merger, amalgamation or consolidation and were in existence
on the date of such acquisition, merger, amalgamation or consolidation.
"Permitted Junior Securities" means:
(1) Equity Interests in the Issuer, any Guarantor or any direct or
indirect parent of the Issuer; or
(2) unsecured debt securities that are subordinated to all Senior
Indebtedness (and any debt securities issued in exchange for Senior
Indebtedness) to substantially the same extent as, or to a greater extent
than, the Notes and the Guarantees are subordinated to Senior Indebtedness
under this Indenture;
32
provided that the term "Permitted Junior Securities" shall not include any
securities distributed pursuant to a plan of reorganization if the
Indebtedness under the Credit Agreement is treated as part of the same
class as the Notes for purposes of such plan of reorganization; provided,
further, that to the extent that any Senior Indebtedness of the Issuer or
the Guarantors outstanding on the date of consummation of any such plan of
reorganization is not paid in full in cash on such date, the holders of
any such Senior Indebtedness not so paid in full in cash have consented to
the terms of such plan of reorganization.
"Permitted Liens" means, with respect to any Person:
(1) pledges or deposits by such Person under workmen's compensation
laws, unemployment insurance laws or similar legislation, or good faith
deposits in connection with bids, tenders, contracts (other than for the
payment of Indebtedness) or leases to which such Person is a party, or
deposits to secure public or statutory obligations of such Person or
deposits of cash or U.S. government bonds to secure surety or appeal bonds
to which such Person is a party, or deposits as security for contested
taxes or import duties or for the payment of rent, in each case Incurred
in the ordinary course of business;
(2) Liens imposed by law, such as carriers', warehousemen's and
mechanics' Liens, in each case for sums not yet due or being contested in
good faith by appropriate proceedings or other Liens arising out of
judgments or awards against such Person with respect to which such Person
shall then be proceeding with an appeal or other proceedings for review;
(3) Liens for taxes, assessments or other governmental charges not
yet due or payable or subject to penalties for nonpayment or which are
being contested in good faith by appropriate proceedings;
(4) Liens in favor of issuers of performance and surety bonds or bid
bonds or with respect to other regulatory requirements or letters of
credit issued pursuant to the request of and for the account of such
Person in the ordinary course of its business;
(5) minor survey exceptions, minor encumbrances, easements or
reservations of, or rights of others for, licenses, rights-of-way, sewers,
electric lines, telegraph and telephone lines and other similar purposes,
or zoning or other restrictions as to the use of real properties or Liens
incidental to the conduct of the business of such Person or to the
ownership of its properties which were not Incurred in connection with
Indebtedness and which do not in the aggregate materially adversely affect
the value of said properties or materially impair their use in the
operation of the business of such Person;
33
(6) (A) Liens securing Indebtedness permitted to be Incurred
pursuant to clause (iv) of Section 4.09(b) hereof;
(7) Liens existing on the Issue Date;
(8) Liens on assets, property or shares of stock of a Person at the
time such Person becomes a Subsidiary; provided, however, that such Liens
are not created or Incurred in connection with, or in contemplation of,
such other Person becoming such a Subsidiary; provided, further, however,
that such Liens may not extend to any other property owned by the Issuer
or any Restricted Subsidiary of the Issuer;
(9) Liens on assets or property at the time the Issuer or a
Restricted Subsidiary of the Issuer acquired the assets or property,
including any acquisition by means of a merger, amalgamation or
consolidation with or into the Issuer or any Restricted Subsidiary of the
Issuer; provided, however, that such Liens are not created or Incurred in
connection with, or in contemplation of, such acquisition; provided,
further, however, that the Liens may not extend to any other property
owned by the Issuer or any Restricted Subsidiary of the Issuer;
(10) Liens securing Indebtedness or other obligations of a
Restricted Subsidiary owing to the Issuer or another Restricted Subsidiary
of the Issuer permitted to be Incurred in accordance with Section 4.09;
(11) Liens securing Hedging Obligations not incurred in violation of
this Indenture; provided that with respect to Hedging Obligations relating
to Indebtedness, such Lien extends only to the property securing such
Indebtedness;
(12) Liens on specific items of inventory or other goods and
proceeds of any Person securing such Person's obligations in respect of
bankers' acceptances issued or created for the account of such Person to
facilitate the purchase, shipment or storage of such inventory or other
goods;
(13) leases and subleases of real property which do not materially
interfere with the ordinary conduct of the business of the Issuer or any
of its Restricted Subsidiaries;
(14) Liens arising from Uniform Commercial Code financing statement
filings regarding operating leases entered into by the Issuer and its
Restricted Subsidiaries in the ordinary course of business;
34
(15) Liens in favor of the Issuer or any Guarantor;
(16) Liens on accounts receivable and related assets of the type
specified in the definition of "Receivables Financing" Incurred in
connection with a Qualified Receivables Financing;
(17) deposits made in the ordinary course of business to secure
liability to insurance carriers;
(18) Liens on the Equity Interests of Unrestricted Subsidiaries;
(19) grants of software and other technology licenses in the
ordinary course of business;
(20) Liens to secure any refinancing, refunding, extension, renewal
or replacement (or successive refinancings, refundings, extensions,
renewals or replacements) as a whole, or in part, of any Indebtedness
secured by any Lien referred to in the foregoing clauses (6), (7), (8),
(9), (10), (11) and (15); provided, however, that (x) such new Lien shall
be limited to all or part of the same property that secured the original
Lien (plus improvements on such property), and (y) the Indebtedness
secured by such Lien at such time is not increased to any amount greater
than the sum of (A) the outstanding principal amount or, if greater,
committed amount of the Indebtedness described under clauses (6), (7),
(8), (9), (10), (11) and (15) at the time the original Lien became a
Permitted Lien under this Indenture, and (B) an amount necessary to pay
any fees and expenses, including premiums, related to such refinancing,
refunding, extension, renewal or replacement;
(21) Liens on equipment of the Issuer or any Restricted Subsidiary
granted in the ordinary course of business to the Issuer's or such
Restricted Subsidiary's client at which such equipment is located;
(22) judgment and attachment Liens not giving rise to an Event of
Default and notices of lis pendens and associated rights related to
litigation being contested in good faith by appropriate proceedings and
for which adequate reserves have been made;
(23) Liens arising out of conditional sale, title retention,
consignment or similar arrangements for the sale of goods entered into in
the ordinary course of business;
35
(24) Liens incurred to secure cash management services in the
ordinary course of business;
(25) other Liens securing obligations incurred in the ordinary
course of business which obligations do not exceed $30 million at any one
time outstanding; and
(26) liens arising by virtue of any statutory or common law
provisions relating to banker's liens, rights of set-off or similar rights
and remedies as to deposit accounts or other funds maintained with a
depository or financial institution.
"Person" means any individual, corporation, partnership, limited
liability company, 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.
"Private Placement Legend" means the legend set forth in Section
2.06(g)(i) hereof to be placed on all Notes issued under this Indenture,
except where otherwise permitted by the provisions of this Indenture.
"QIB" means a "qualified institutional buyer" as defined in Rule
144A.
"Qualified Receivables Financing" means any Receivables Financing of
a Receivables Subsidiary that meets the following conditions:
(1) the Board of Directors of the Issuer shall have determined in
good faith that such Qualified Receivables Financing (including financing
terms, covenants, termination events and other provisions) is in the
aggregate economically fair and reasonable to the Issuer and the
Receivables Subsidiary;
(2) all sales of accounts receivable and related assets to the
Receivables Subsidiary are made at Fair Market Value (as determined in
good faith by the Issuer); and
(3) the financing terms, covenants, termination events and other
provisions thereof shall be market terms (as determined in good faith by
the Issuer) and may include Standard Securitization Undertakings.
36
The grant of a security interest in any accounts receivable of the
Issuer or any of its Restricted Subsidiaries (other than a Receivables
Subsidiary) to secure Bank Indebtedness shall not be deemed a Qualified
Receivables Financing.
"Rating Agency" means (1) each of Moody's and S&P and (2) if Moody's
or S&P ceases to rate the Notes for reasons outside of the Issuer's
control, a "nationally recognized statistical rating organization" within
the meaning of Rule 15cs-1(c)(2)(vi)(F) under the Exchange Act selected by
the Issuer or any direct or indirect parent of the Issuer as a replacement
agency for Moody's or S&P, as the case may be.
"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 all other fees paid to a Person that is
not a Restricted Subsidiary in connection with, any Receivables Financing.
"Receivables Financing" means any transaction or series of
transactions that may be entered into by the Issuer or any of its
Subsidiaries pursuant to which the Issuer or any of its Subsidiaries may
sell, convey or otherwise transfer to (a) a Receivables Subsidiary (in the
case of a transfer by the Issuer or any of its Subsidiaries); and (b) any
other Person (in the case of a transfer by a Receivables Subsidiary), or
may grant a security interest in, any accounts receivable (whether now
existing or arising in the future) of the Issuer or any of its
Subsidiaries, and any assets related thereto including, without
limitation, all collateral securing such accounts receivable, all
contracts and all guarantees or other obligations in respect of such
accounts receivable, proceeds of such accounts receivable and other assets
which are customarily transferred or in respect of which security
interests are customarily granted in connection with asset securitization
transactions involving accounts receivable and any Hedging Obligations
entered into by the Issuer or any such Subsidiary in connection with such
accounts receivable.
"Receivables Repurchase Obligation" means any obligation of a seller
of receivables in a Qualified Receivables Financing to repurchase
receivables arising as a result of a breach of a representation, warranty
or covenant or otherwise, including as a result of a receivable or portion
thereof becoming subject to any asserted defense, dispute, off-set or
counterclaim of any kind as a result of any action taken by, any failure
to take action by or any other event relating to the seller.
"Receivables Subsidiary" means a Wholly-owned Restricted Subsidiary
of the Issuer (or another Person formed for the purposes of engaging in
Qualified Receivables Financing with the Issuer in which the Issuer or any
Subsidiary of the Issuer makes an Investment and to which the Issuer or
any Subsidiary of the Issuer transfers accounts receivable and related
assets) which engages in no activities other than in connection with the
financing of accounts receivable of the Issuer and its Subsidiaries, all
proceeds thereof and all rights (contractual or other), collateral and
other assets relating
37
thereto, and any business or activities incidental or related to such
business, and which is designated by the Board of Directors of the Issuer
(as provided below) as a Receivables Subsidiary and:
(a) no portion of the Indebtedness or any other obligations
(contingent or otherwise) of which (i) is guaranteed by the Issuer
or any other Subsidiary of the Issuer (excluding guarantees of
obligations (other than the principal of and interest on,
Indebtedness) pursuant to Standard Securitization Undertakings),
(ii) is recourse to or obligates the Issuer or any other Subsidiary
of the Issuer in any way other than pursuant to Standard
Securitization Undertakings, or (iii) subjects any property or asset
of the Issuer or any other Subsidiary of the Issuer, directly or
indirectly, contingently or otherwise, to the satisfaction thereof,
other than pursuant to Standard Securitization Undertakings;
(b) with which neither the Issuer nor any other Subsidiary of
the Issuer has any material contract, agreement, arrangement or
understanding other than on terms which the Issuer reasonably
believes to be no less favorable to the Issuer or such Subsidiary
than those that might be obtained at the time from Persons that are
not Affiliates of the Issuer; and
(c) to which neither the Issuer nor any other Subsidiary of
the Issuer has any obligation to maintain or preserve such entity's
financial condition or cause such entity to achieve certain levels
of operating results.
Any such designation by the Board of Directors of the Issuer shall
be evidenced to the Trustee by filing with the Trustee a certified copy of
the resolution of the Board of Directors of the Issuer giving effect to
such designation and an Officer's Certificate certifying that such
designation complied with the foregoing conditions.
"Record Date" for the interest payable on any applicable Interest
Payment Date means the May 15 and November 15 (whether or not a Business
Day) immediately preceding such Interest Payment Date.
"Registration Rights Agreement" means the Registration Rights
Agreement with respect to the Notes dated as of the Issue Date, among
Claire's Stores, Inc., the Guarantors and the Initial Purchasers, as such
agreement may be amended, modified or supplemented from time to time and,
with respect to any Additional Notes, one or more registration rights
agreements between the Issuer and the other parties thereto, as such
agreement(s) may be amended, modified or supplemented from time to time,
relating to rights given by the Issuer to the purchasers of Additional
Notes to register such Additional Notes under the Securities Act.
38
"Regulation S" means Regulation S promulgated under the Securities
Act.
"Regulation S Global Note" means a Regulation S Temporary Global
Note or Regulation S Permanent Global Note, as applicable.
"Regulation S Permanent Global Note" means a permanent Global Note
in the form of Exhibit A bearing the Global Note Legend and the Private
Placement Legend and deposited with or on behalf of and registered in the
name of the Depositary or its nominee, issued in a denomination equal to
the outstanding principal amount of the Regulation S Temporary Global Note
of the applicable series upon expiration of the Restricted Period.
"Regulation S Temporary Global Note" means a temporary Global Note
in the form of Exhibit A bearing the Global Note Legend, the Private
Placement Legend and the Regulation S Temporary Global Note Legend and
deposited with or on behalf of and registered in the name of the
Depositary or its nominee, issued in a denomination equal to the
outstanding principal amount of the Notes of the applicable series
initially sold in reliance on Rule 903.
"Regulation S Temporary Global Note Legend" means the legend set
forth in Section 2.06(g)(iii) hereof.
"Representative" means the trustee, agent or representative (if any)
for an issue of Indebtedness; provided that if, and for so long as, such
Indebtedness lacks such a Representative, then the Representative for such
Indebtedness shall at all times constitute the holder or holders of a
majority in outstanding principal amount of obligations under such
Indebtedness.
"Responsible Officer" means, when used with respect to the Trustee,
any officer within the corporate trust department of the Trustee,
including any vice president, assistant vice president, assistant
secretary, assistant treasurer, trust officer or any other officer of the
Trustee who customarily performs functions similar to those performed by
the Persons who at the time shall be such officers, respectively, or to
whom any corporate trust matter is referred because of such Person's
knowledge of and familiarity with the particular subject and who shall
have direct responsibility for the administration of this Indenture.
"Restricted Definitive Note" means a Definitive Note bearing, or
that is required to bear, the Private Placement Legend.
39
"Restricted Global Note" means a Global Note bearing, or that is
required to bear, the Private Placement Legend.
"Restricted Cash" means cash and Cash Equivalents held by Restricted
Subsidiaries that is contractually restricted from being distributed to
the Issuer, except for such restrictions that are contained in agreements
governing Indebtedness permitted under this Indenture and that is secured
by such cash or Cash Equivalents.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Period" means the 40-day distribution compliance period
as defined in Regulation S.
"Restricted Subsidiary" means, with respect to any Person, any
Subsidiary of such Person other than an Unrestricted Subsidiary of such
Person. Unless otherwise indicated in this Indenture, all references to
Restricted Subsidiaries shall mean Restricted Subsidiaries of the Issuer.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated under the Securities Act.
"Sale/Leaseback Transaction" means an arrangement relating to
property now owned or hereafter acquired by the Issuer or a Restricted
Subsidiary whereby the Issuer or a Restricted Subsidiary transfers such
property to a Person and the Issuer or such Restricted Subsidiary leases
it from such Person, other than leases between the Issuer and a Restricted
Subsidiary of the Issuer or between Restricted Subsidiaries of the Issuer.
"S&P" means Standard & Poor's Ratings Group or any successor to the
rating agency business thereof.
"SEC" means the Securities and Exchange Commission.
40
"Secured Indebtedness" means any Indebtedness secured by a Lien.
"Secured Indebtedness Leverage Ratio" means, with respect to any
Person, at any date the ratio of (i) Secured Indebtedness of such Person
and its Restricted Subsidiaries as of such date of calculation (determined
on a consolidated basis in accordance with GAAP) less the amount of cash
and cash Equivalents in excess of any Restricted Cash that would be stated
on the balance sheet of such Person and its Restricted Subsidiaries and
held by such Person and its Restricted Subsidiaries as of such date of
determination to (ii) EBITDA of such Person for the four full fiscal
quarters for which internal financial statements are available immediately
preceding such date on which such additional Indebtedness is Incurred. In
the event that the Issuer or any of its Restricted Subsidiaries Incurs,
repays, repurchases or redeems any Indebtedness subsequent to the
commencement of the period for which the Secured Indebtedness Leverage
Ratio is being calculated but prior to the event for which the calculation
of the Secured Indebtedness Leverage Ratio is made (the "Secured Leverage
Calculation Date"), then the Secured Indebtedness Leverage Ratio shall be
calculated giving pro forma effect to such Incurrence, repayment,
repurchase or redemption of Indebtedness as if the same had occurred at
the beginning of the applicable four-quarter period; provided that the
Issuer may elect pursuant to an Officer's Certificate delivered to the
Trustee to treat all or any portion of the commitment under any
Indebtedness as being Incurred at such time, in which case any subsequent
Incurrence of Indebtedness under such commitment shall not be deemed, for
purposes of this calculation, to be an Incurrence at such subsequent time.
For purposes of making the computation referred to above,
Investments, acquisitions, dispositions, mergers, amalgamations,
consolidations (including the Transactions) and discontinued operations
(as determined in accordance with GAAP), in each case with respect to an
operating unit of a business, during the four-quarter reference period or
subsequent to such reference period and on or prior to or simultaneously
with the Secured Leverage Calculation Date (each, for purposes of this
calculation, a pro forma event) shall be calculated on a pro forma basis
assuming that all such Investments, acquisitions, dispositions, mergers,
amalgamations, consolidations (including the Transactions) and
discontinued operations (and the change of any associated Indebtedness 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 Issuer or any Restricted Subsidiary since the beginning
of such period shall have made any Investment, acquisition, disposition,
merger, consolidation, amalgamation or discontinued operation, in each
case with respect to an operating unit of a business, that would have
required adjustment pursuant to this definition, then the Secured
Indebtedness Leverage Ratio shall be calculated giving pro forma effect
thereto for such period as if such Investment, acquisition, disposition,
discontinued operation, merger, amalgamation or consolidation had occurred
at the beginning of the applicable four-quarter period.
41
For purposes of this definition, whenever pro forma effect is to be
given to any pro forma event, the pro forma calculations shall be made in
good faith by a responsible financial or accounting officer of the Issuer.
Any such pro forma calculation may include adjustments appropriate, in the
reasonable good faith determination of the Issuer as set forth in an
Officer's Certificate, to reflect (1) operating expense reductions and
other operating improvements or synergies reasonably expected to result
from the applicable event (including, to the extent applicable, from the
Transactions) and (2) all adjustments of the nature used in connection
with the calculation of "Adjusted EBITDA" as set forth in footnote 2 to
the "Summary Historical and Unaudited Pro Forma Financial Data" under
"Offering Memorandum Summary" in the Offering Memorandum to the extent
such adjustments, without duplication, continue to be applicable to such
four-quarter period.
For purposes of this definition, any amount in a currency than U.S.
dollars will be converted to U.S. dollars based on the average exchange
rate for such currency for the most recent twelve month period immediately
prior to the date of determination in a manner consistent with that used
in calculating EBITDA for the applicable period.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.
"Senior Indebtedness" means, with respect to any Person:
(1) all Indebtedness of such Person outstanding under the Credit
Agreement, the Senior Notes, the Senior Toggle Notes and all Hedging
Obligations with respect thereto, whether outstanding on the Issue Date or
Incurred thereafter;
(2) any other Indebtedness or Receivables Repurchase Obligation of
such Person permitted to be Incurred under this Indenture, unless the
instrument creating or evidencing the same or pursuant to which the same
is outstanding expressly provides that such obligations are subordinated
in right of payment to any other Indebtedness of the Issuer or such
Guarantor, as applicable; and
(3) all Obligations with respect to the items listed in the
preceding clauses (1) and (2) (including any interest accruing subsequent
to the filing of a petition of bankruptcy at the rate provided for in the
documentation with respect thereto, whether or not such interest is an
allowed claim under applicable law);
provided that Senior Indebtedness shall not include:
42
(a) any liability for federal, state, local or other taxes owed or
owing by the Issuer or any Guarantor;
(b) any Obligation of the Issuer to any Subsidiary of the Issuer
(other than any Receivables Repurchase Obligation) or of any Subsidiary of
the Issuer to the Issuer or any other Subsidiary of the Issuer;
(c) any accounts payable or other liability to trade creditors
arising in the ordinary course of business (including guarantees thereof
or instruments evidencing such liabilities);
(d) the portion of any Indebtedness that is Incurred in violation of
this Indenture; provided that for purposes of this clause (d), a good
faith determination by the Chief Financial Officer of the Issuer evidenced
by an Officer's Certificate to the effect that any Indebtedness being
incurred under the Credit Agreement is permitted by this Indenture will be
conclusive as to whether any Indebtedness is Incurred in violation of this
Indenture;
(e) any Indebtedness of the Issuer or any Guarantor that, when
Incurred, was without recourse to the Issuer or such Guarantor;
(f) any repurchase, redemption or other obligation in respect of
Disqualified Stock or Preferred Stock;
(g) any Indebtedness owed to any employee of the Issuer or any of
its Subsidiaries; or
(h) any Indebtedness or obligation of the Issuer or any Restricted
Subsidiary that by its terms is subordinate or junior in any respect to
any other Indebtedness or obligation of the Issuer or such Restricted
Subsidiary, as applicable, including any Pari Passu Indebtedness and any
Subordinated Indebtedness.
"Senior Notes" means the 9.25% Senior Notes due 2015 of the Issuer
to be issued on the Issue Date.
"Senior Notes Indenture" means the Indenture governing the Senior
Notes to be dated the Issue Date between the Issuer and the Trustee, as
may be amended or supplemented from time to time.
43
"Senior Toggle Notes" means the 9.625%/10.375% Senior Toggle Notes
due 2015 of the Issuer to be issued on the Issue Date.
"Senior Toggle Notes Indenture" means the Indenture governing the
Senior Toggle Notes to be dated the Issue Date between the Issuer and the
Trustee, as amended or supplemented from time to time.
"Shelf Registration Statement" means the Shelf Registration
Statement as defined in the Registration Rights Agreement.
"Significant Subsidiary" means any Restricted Subsidiary that would
be a "Significant Subsidiary" of the Issuer within the meaning of Rule
1-02 under Regulation S-X promulgated by the SEC (or any successor
provision).
"Similar Business" means a business, the majority of whose revenues
are derived from the activities of the Issuer and its Subsidiaries as of
the Issue Date or any business or activity that is reasonably similar or
complementary thereto or a reasonable extension, development or expansion
thereof or ancillary thereto.
"Sponsors" means (i) one or more funds controlled by Apollo
Management, L.P., any of their respective Affiliates and other affiliated
co-investment partnerships (collectively, the "Apollo Sponsors") and (ii)
any Person that forms a group (within the meaning of Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act, or any successor provision) with any
Apollo Sponsors; provided that any Apollo Sponsor (x) owns a majority of
the voting power and (y) controls a majority of the Board of Directors of
the Issuer.
"Standard Securitization Undertakings" means representations,
warranties, covenants, indemnities and guarantees of performance entered
into by the Issuer or any Subsidiary of the Issuer which the Issuer has
determined in good faith to be customary in a Receivables Financing
including, without limitation, those relating to the servicing of the
assets of a Receivables Subsidiary, it being understood that any
Receivables Repurchase Obligation shall be deemed to be a Standard
Securitization Undertaking.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the final payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for
the repurchase of such security at the option of the holder thereof upon
the happening of any contingency beyond the control of the issuer unless
such contingency has occurred).
44
"Subordinated Indebtedness" means (a) with respect to the Issuer,
any Indebtedness of the Issuer which is by its terms subordinated in right
of payment to the Notes, and (b) with respect to any Guarantor, any
Indebtedness of such Guarantor which is by its terms subordinated in right
of payment to its Guarantee.
"Subsidiary" means, with respect to any Person, (1) any corporation,
association or other business entity (other than a partnership, joint
venture or limited liability company) 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 (2) any
partnership, joint venture or limited liability company of which (x) more
than 50% of the capital accounts, distribution rights, total equity and
voting interests or general and 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 interests or otherwise, and (y) such Person or any
Subsidiary of such Person is a controlling general partner or otherwise
controls such entity.
"Synthetic Lease Obligations" means obligations of a Loan Party, as
defined in the Credit Agreement, as lessee/borrower under any transaction
which is classified as an operating lease under GAAP but as a financing
for tax purposes either currently or when such leases were originally
written.
"Tax Distributions" means any distributions described in clause
(xii) of Section 4.07(b).
"Total Assets" means the total consolidated assets of the Issuer and
its Restricted Subsidiaries, as shown on the most recent balance sheet of
the Issuer, without giving effect to any amortization of the amount of
intangible assets since the Issue Date.
"Transactions" has the meaning set forth under "Offering Memorandum
Summary - The Transactions" in the Offering Memorandum.
"Treasury Rate" means, as of the applicable Redemption Date, the
yield to maturity as of such Redemption Date of United States Treasury
securities with a constant maturity (as compiled and published in the most
recent Federal Reserve Statistical Release H.15 (519) that has become
publicly available at least two business days prior to such Redemption
Date (or, if such Statistical Release is no longer published, any publicly
available source of similar market data)) most nearly equal to the period
from such Redemption Date to June 1, 2012; provided, however, that if the
period from
45
such Redemption Date to June 1, 2012 is less than one year, the weekly
average yield on actually traded United States Treasury securities
adjusted to a constant maturity of one year will be used.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended (15 U.S.C. ss.ss. 77aaa-777bbbb).
"Trustee" means The Bank of New York, as trustee, until a successor
replaces it in accordance with the applicable provisions of this Indenture
and thereafter means the successor serving hereunder.
"Unapplied Proceeds" means net cash proceeds received by the Issuer
and its Restricted Subsidiaries since immediately after the Issue Date
from the issue or sale of Equity Interests of the Issuer or any direct or
indirect parent entity of the Issuer (which proceeds are contributed to
the Issuer or its Restricted Subsidiary) or cash contributed to the
capital of the Issuer (in each case other than proceeds of Disqualified
Stock or sales of Equity Interests to, or contributions received from, the
Issuer or any of its Subsidiaries) as determined in accordance with
clauses (B) and (C) of the definition of Cumulative Credit to the extent
such net cash proceeds or cash have not been applied pursuant to such
clauses to make Restricted Payments or to make other Investments, payments
or exchanges pursuant to Section 4.07(b) hereof or to make Permitted
Investments (other than Permitted Investments specified in clauses (1) and
(3) of the definition thereof).
"Uniform Commercial Code" means the New York Uniform Commercial Code
as in effect from time to time.
"Unrestricted Definitive Note" means one or more Definitive Notes
that do not bear and are not required to bear the Private Placement
Legend.
"Unrestricted Global Note" means a permanent Global Note,
substantially in the form of Exhibit A that bears the Global Note Legend
and that has the "Schedule of Exchanges of Interests in the Global Note"
attached thereto, and that is deposited with or on behalf of and
registered in the name of the Depositary, representing Notes that do not
bear the Private Placement Legend.
"Unrestricted Subsidiary" means:
(1) any Subsidiary of the Issuer that at the time of determination
shall be designated an Unrestricted Subsidiary by the Board of Directors
of such Person in the manner provided below; and
46
(2) any Subsidiary of an Unrestricted Subsidiary.
The Issuer may designate any Subsidiary of the Issuer (including any
newly acquired or newly formed Subsidiary of the Issuer) to be an
Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries
owns any Equity Interests or Indebtedness of, or owns or holds any Lien on
any property of, the Issuer or any other Subsidiary of the Issuer that is
not a Subsidiary of the Subsidiary to be so designated; provided, however,
that the Subsidiary to be so designated and its Subsidiaries do not at the
time of designation have and do not thereafter Incur any Indebtedness
pursuant to which the lender has recourse to any of the assets of the
Issuer or any of its Restricted Subsidiaries; provided, further, however,
that either:
(a) the Subsidiary to be so designated has total consolidated
assets of $1,000 or less; or
(b) if such Subsidiary has consolidated assets greater than
$1,000, then such designation would be permitted under the covenant
described under Section 4.07.
The Issuer may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided, however, that immediately after giving
effect to such designation:
(x) (1) the Issuer could Incur $1.00 of additional Indebtedness
pursuant to Section 4.09(a) or (2) the Fixed Charge Coverage Ratio for the
Issuer and its Restricted Subsidiaries would be equal to or greater than
such ratio for the Issuer and its Restricted Subsidiaries immediately
prior to such designation, in each case on a pro forma basis taking into
account such designation, and
(y) no Event of Default shall have occurred and be continuing.
Any such designation by Issuer shall be evidenced to the Trustee by
promptly filing with the Trustee a copy of the resolution of the Board of
Directors or any committee thereof of the Issuer giving effect to such
designation and an Officer's Certificate certifying that such designation
complied with the foregoing provisions.
"U.S. Dollar Equivalent" means, with respect to any monetary amount
in a currency other than U.S. dollars, at any time for the determination
thereof, the amount of U.S. dollars obtained by converting such foreign
currency involved in such computation into U.S. dollars at the spot rate
for the purchase of U.S. dollars with the applicable foreign currency as
quoted by Reuters at approximately 10:00 A.M. (New
47
York City time) on such date of determination (or if no such quote is
available on such date, on the immediately preceding Business Day for
which such a quote is available).
"U.S. Government Obligations" means securities that are:
(1) direct obligations of the United States of America for the
timely payment of which its full faith and credit is pledged, or
(2) 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 each 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 U.S. Government Obligations or a specific payment
of principal of or interest on any such U.S. Government Obligations 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 U.S. Government Obligations or the specific payment of
principal of or interest on the U.S. Government Obligations evidenced by
such depository receipt.
"U.S. Person" means a U.S. person as defined in Rule 902(k) under
the Securities Act.
"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 or Preferred Stock, as the case may be,
at any date, the quotient obtained by dividing; (1) 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 or
Preferred Stock multiplied by the amount of such payment, by (2) the sum
of all such payments.
"Wholly-owned Restricted Subsidiary" is any Wholly-owned Subsidiary
that is a Restricted Subsidiary.
48
"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 or shares required to be
held by Foreign Subsidiaries) shall at the time be owned by such Person or
by one or more Wholly-owned Subsidiaries of such Person.
Section 1.02 Other Definitions.
Defined in
Term Section
---- -----------
"Additional Amounts"............................. 4.05
"Affiliate Transaction".......................... 4.11
"Asset Sale Offer"............................... 4.10
"Authentication Order"........................... 2.02
"Base Currency".................................. 4.13
"Change of Control Offer"........................ 4.13
"Change of Control Payment"......................
"Change of Control Payment Date"................. 4.13
"Covenant Defeasance"............................ Section 8.03
"Covenant Suspension Event"...................... 4.14
"DTC"............................................ 2.03
"Event of Default"............................... 6.01
"Excess Proceeds"................................ 4.10
"Foreign Payor".................................. 4.05
"Judgment Currency".............................. 4.13
"Legal Defeasance"............................... Section 8.02
"Note Register".................................. 2.03
"Offer Amount"................................... 3.09
"Offer Period"................................... 3.09
"Paying Agent"................................... 2.03
"Purchase Date".................................. 3.09
"Redemption Date"................................ 3.07
"Refinancing Indebtedness"....................... 4.09
"Refunding Capital Stock"........................ 4.07
"Registrar"...................................... 2.03
"Relevant Taxing Jurisdiction"................... 4.05
"Restricted Payments"............................ 4.07
"Retired Capital Stock".......................... 4.07
"Reversion Date"................................. 4.14
"Second Commitment".............................. 4.10
"Successor Company".............................. 5.01
"Successor Guarantor"............................ 5.01
"Suspended Covenants"............................ 4.14
"Taxes".......................................... 4.05
49
Section 1.03 Incorporation by Reference of Trust Indenture Act. Whenever
this Indenture refers to a provision of the Trust Indenture Act, the provision
is incorporated by reference in and made a part of this Indenture.
The following Trust Indenture Act terms used in this Indenture have the
following meanings:
"indenture securities" means the Notes and the Guarantees;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
and
"obligor" on the Notes and the Guarantees means the Issuer and the
Guarantors, respectively, and any successor obligor upon the Notes and the
Guarantees, respectively.
All other terms used in this Indenture that are defined by the Trust
Indenture Act, defined by Trust Indenture Act reference to another statute or
defined by SEC rule under the Trust Indenture Act have the meanings so assigned
to them.
Section 1.04 Rules of Construction. Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(c) "or" is not exclusive;
(d) "including" means including without limitation;
(e) words in the singular include the plural, and in the plural
include the singular;
(f) "will" shall be interpreted to express a command;
(g) provisions apply to successive events and transactions;
50
(h) references to sections of, or rules under, the Securities Act
shall be deemed to include substitute, replacement or successor sections
or rules adopted by the SEC from time to time;
(i) unless the context otherwise requires, any reference to an
"Article," "Section" or "clause" refers to an Article, Section or clause,
as the case may be, of this Indenture;
(j) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not any particular
Article, Section, clause or other subdivision; and
(k) all references to any interest or other amount payable on or
with respect to the Notes shall be deemed to include any Additional
Interest payable pursuant to the Registration Rights Agreement.
Section 1.05 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 an
agent duly appointed in writing. Except as herein otherwise expressly
provided, such action shall become effective when such instrument or
instruments or record or both are delivered to the Trustee and, where it
is hereby expressly required, to the Issuer. Proof of execution of any
such instrument or of a writing appointing any such agent, or the holding
by any Person of a Note, shall be sufficient for any purpose of this
Indenture and (subject to Section 7.01) conclusive in favor of the Trustee
and the Issuer, if made in the manner provided in this Section 1.05.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged to him the
execution thereof. Where such execution is by or on behalf of any legal
entity other than an individual, such certificate or affidavit shall also
constitute proof of the authority of the Person executing the same. The
fact and date of the execution of any such instrument or writing, or the
authority of the Person executing the same, may also be proved in any
other manner that the Trustee deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Note shall bind 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, in respect of any action taken, suffered or omitted by the
Trustee or the Issuer in reliance thereon, whether or not notation of such
action is made upon such Note.
51
(e) The Issuer may, in the circumstances permitted by the Trust
Indenture Act, set a record date for purposes of determining the identity
of Holders entitled to give any request, demand, authorization, direction,
notice, consent, waiver or take any other act, or to vote or consent to
any action by vote or consent authorized or permitted to be given or taken
by Holders.
(f) Without limiting the foregoing, a Holder entitled to take any
action hereunder with regard to any particular Note may do so with regard
to all or any part of the principal amount of such Note or by one or more
duly appointed agents, each of which may do so pursuant to such
appointment with regard to all or any part of such principal amount. Any
notice given or action taken by a Holder or its agents with regard to
different parts of such principal amount pursuant to this paragraph shall
have the same effect as if given or taken by separate Holders of each such
different part.
(g) Without limiting the generality of the foregoing, a Holder,
including DTC, may make, give or take, by a proxy or proxies duly
appointed in writing, any request, demand, authorization, direction,
notice, consent, waiver or other action provided in this Indenture to be
made, given or taken by Holders, and DTC may provide its proxy to the
beneficial owners of interests in any such Global Note through such
depositary's standing instructions and customary practices.
(h) The Issuer may fix a record date for the purpose of determining
the Persons who are beneficial owners of interests in any Global Note held
by DTC entitled under the procedures of such depositary to make, give or
take, by a proxy or proxies duly appointed in writing, any request,
demand, authorization, direction, notice, consent, waiver or other action
provided in this Indenture to be made, given or taken by Holders. If such
a record date is fixed, the Holders on such record date or their duly
appointed proxy or proxies, and only such Persons, shall be entitled to
make, give or take such request, demand, authorization, direction, notice,
consent, waiver or other action, whether or not such Holders remain
Holders after such record date. No such request, demand, authorization,
direction, notice, consent, waiver or other action shall be valid or
effective if made, given or taken more than 90 days after such record
date.
ARTICLE II
THE NOTES
---------
Section 2.01 Form and Dating; Terms.
(a) General. The Notes and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A hereto. The
Notes may have notations, legends or endorsements required by law, stock
exchange rules or usage. Each Note shall be dated the date of its
authentication. The Notes shall be in minimum denominations of $2,000 and
integral multiples of $1,000 in excess thereof.
(b) Global Notes. Notes issued in global form shall be substantially
in the form of Exhibit A hereto (including the Global Note Legend thereon
and the
52
"Schedule of Exchanges of Interests in the Global Note" attached thereto).
Notes issued in definitive form shall be substantially in the form of
Exhibit A hereto (but without the Global Note Legend thereon and without
the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Each Global Note shall represent such of the outstanding Notes
as shall be specified in the "Schedule of Exchanges of Interests in the
Global Note" attached thereto and each shall provide that it shall
represent up to the aggregate principal amount of Notes from time to time
endorsed thereon and that the aggregate principal amount of outstanding
Notes represented thereby may from time to time be reduced or increased,
as applicable, to reflect exchanges and redemptions. Any endorsement of a
Global Note to reflect the amount of any increase or decrease in the
aggregate principal amount of outstanding Notes represented thereby shall
be made by the Trustee or the Custodian, at the direction of the Trustee,
in accordance with Section 2.06 hereof.
(c) Temporary Global Notes. Notes offered and sold in reliance on
Regulation S shall be issued initially in the form of the Regulation S
Temporary Global Note, which shall be deposited on behalf of the
purchasers of the Notes represented thereby with the Custodian and
registered in the name of the Depositary or the nominee of the Depositary
for the accounts of designated agents holding on behalf of Euroclear or
Clearstream, duly executed by the Issuer and authenticated by the Trustee
as hereinafter provided. The Restricted Period shall be terminated upon
the receipt by the Trustee of an Officer's Certificate from the Issuer:
Following the termination of the Restricted Period, beneficial interests
in each Regulation S Temporary Global Note shall be exchanged for
beneficial interests in a Regulation S Permanent Global Note of the same
series pursuant to the Applicable Procedures. Simultaneously with the
authentication of the corresponding Regulation S Permanent Global Note,
the Trustee shall cancel the corresponding Regulation S Temporary Global
Note. The aggregate principal amount of a Regulation S Temporary Global
Note and a Regulation S Permanent Global Note may from time to time be
increased or decreased by adjustments made on the records of the Trustee
and the Depositary or its nominee, as the case may be, in connection with
transfers of interest as hereinafter provided.
(d) Terms. The aggregate principal amount of Notes that may be
authenticated and delivered under this Indenture is unlimited.
The terms and provisions contained in the Notes shall constitute,
and are hereby expressly made, a part of this Indenture and the Issuer,
the Guarantors and the Trustee, by their execution and delivery of this
Indenture, expressly agree to such terms and provisions and to be bound
thereby. However, to the extent any provision of any Note conflicts with
the express provisions of this Indenture, the provisions of this Indenture
shall govern and be controlling.
The Notes shall be subject to repurchase by the Issuer pursuant to
an Asset Sale Offer as provided in Section 4.10 hereof or a Change of
Control Offer as provided in
53
Section 4.13 hereof. The Notes shall not be redeemable, other than as
provided in Article 3 hereof.
Additional Notes ranking pari passu with the Initial Notes may be
created and issued from time to time by the Issuer without notice to or
consent of the Holders and shall be consolidated with and form a single
class with the Initial Notes and shall have the same terms as to status,
redemption or otherwise as the Initial Notes; provided that the Issuer's
ability to issue Additional Notes shall be subject to the Issuer's
compliance with Section 4.09 hereof. Any Additional Notes shall be issued
with the benefit of an indenture supplemental to this Indenture.
Section 2.02 Execution and Authentication. At least one Officer of the
Issuer shall execute the Notes on behalf of the Issuer by manual or facsimile
signature.
If an Officer of the Issuer whose signature is on a Note no longer
holds that office at the time the Trustee authenticates the Note, the Note
shall nevertheless be valid.
A Note shall not be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose until authenticated substantially
in the form of Exhibit A by the manual or facsimile signature of the
Trustee. The signature shall be conclusive evidence that the Note has been
duly authenticated and delivered under this Indenture.
On the Issue Date, the Trustee shall, upon receipt of an Issuer
Order (an "Authentication Order"), authenticate and deliver the Initial
Notes. In addition, at any time, from time to time, the Trustee shall upon
an Authentication Order authenticate and deliver any Additional Notes or
Exchange Notes for an aggregate principal amount specified in such
Authentication Order for such Additional Notes or Exchange Notes issued
hereunder.
The Trustee may appoint an authenticating agent acceptable to the
Issuer to authenticate Notes. 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 an Agent to deal with Holders
or an Affiliate of the Issuer.
Section 2.03 Registrar and Paying Agent. The Issuer shall maintain (i) an
office or agency where Notes may be presented for registration of transfer or
for exchange ("Registrar") and (ii) an office or agency in the Borough of
Manhattan, the City of New York, the State of New York where Notes may be
presented for payment ("Paying Agent"). The Registrar shall keep a register of
the Notes ("Note Register") and of their transfer and exchange. The Issuer may
appoint one or more co-registrars and one or more additional paying agents. The
term "Registrar" includes any co-registrar, and the
54
term "Paying Agent" includes any additional paying agents. The Issuer initially
appoints the Trustee as Paying Agent. The Issuer may change any Paying Agent or
Registrar without prior notice to any Holder. The Issuer shall notify the
Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Issuer fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall, to the extent that it is capable,
act as such. The Issuer or any of its domestic Subsidiaries may act as Paying
Agent or Registrar.
The Issuer initially appoints The Depository Trust Company ("DTC")
to act as Depositary with respect to the Global Notes representing the
Notes.
The Issuer initially appoints the Trustee to act as the Registrar
for the Notes.
Section 2.04 Paying Agent to Hold Money in Trust. The Issuer shall require
each Paying Agent other than the Trustee to agree in writing that the Paying
Agent shall hold in trust for the benefit of Holders or the Trustee all money
held by the Paying Agent for the payment of principal, premium, if any, or
Interest on the Notes, and will notify the Trustee of any default by the Issuer
in making any such payment. While any such default continues, the Trustee may
require a Paying Agent to pay all money held by it to the Trustee. The Issuer at
any time may require a Paying Agent to pay all money held by it to the Trustee.
Upon payment over to the Trustee, the Paying Agent (if other than the Issuer or
a Subsidiary) shall have no further liability for the money. If the Issuer or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent. Upon
any bankruptcy or reorganization proceedings relating to the Issuer, the Trustee
shall serve as Paying Agent for the Notes.
Section 2.05 Holder Lists. The Trustee shall preserve in as current a form
as is reasonably practicable the most recent list available to it of the names
and addresses of all Holders and shall otherwise comply with Trust Indenture Act
Section 312(a). If the Trustee is not the Registrar, the Issuer shall furnish to
the Trustee at least five Business Days before each Interest Payment Date and at
such other times as the Trustee may request in writing, a list in such form and
as of such date as the Trustee may reasonably require of the names and addresses
of the Holders of Notes and the Issuer shall otherwise comply with Trust
Indenture Act Section 312(a).
Section 2.06 Transfer and Exchange.
(a) Transfer and Exchange of Global Notes. Except as otherwise set
forth in this Section 2.06, a Global Note may be transferred, in whole and
not in part, only to another nominee of the Depositary or to a successor
thereto or a nominee of such successor thereto. A beneficial interest in a
Global Note may not be exchanged for a Definitive Note of the same series
unless (A) the Depositary (x) notifies the Issuer that it is unwilling or
unable to continue as Depositary for such Global Note or (y) has ceased to
be a clearing agency registered under the Exchange Act, and, in either
case, a successor
55
Depositary is not appointed by the Issuer within 120 days or (B) there
shall have occurred and be continuing a Default with respect to the Notes.
Upon the occurrence of any of the preceding events in (A) above,
Definitive Notes delivered in exchange for any Global Note of the same
series or beneficial interests therein will be registered in the names,
and issued in any approved denominations, requested by or on behalf of the
Depositary (in accordance with its customary procedures). Global Notes
also may be exchanged or replaced, in whole or in part, as provided in
Sections 2.07 and 2.10 hereof. Every Note authenticated and delivered in
exchange for, or in lieu of, a Global Note of the same series or any
portion thereof, pursuant to this Section 2.06 or Section 2.07 or 2.10
hereof, shall be authenticated and delivered in the form of, and shall be,
a Global Note, except for Definitive Notes issued subsequent to any of the
preceding events in (A) or (B) above and pursuant to Section 2.06(c)
hereof. A Global Note may not be exchanged for another Note other than as
provided in this Section 2.06(a); provided, however, beneficial interests
in a Global Note may be transferred and exchanged as provided in Section
2.06(b), (c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global
Notes. The transfer and exchange of beneficial interests in the Global
Notes shall be effected through the Depositary in accordance with the
provisions of this Indenture and the Applicable Procedures. Beneficial
interests in the Restricted Global Notes shall be subject to restrictions
on transfer comparable to those set forth herein to the extent required by
the Securities Act. Transfers of beneficial interests in the Global Notes
also shall require compliance with either subparagraph (i) or (ii) below,
as applicable, as well as one or more of the other following
subparagraphs, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be
transferred to Persons who take delivery thereof in the form of a
beneficial interest in the same Restricted Global Note in accordance
with the transfer restrictions set forth in the Private Placement
Legend; provided that, prior to the expiration of the Restricted
Period, transfers of beneficial interests in the Regulation S
Temporary Global Note may not be made to a U.S. Person or for the
account or benefit of a U.S. Person other than pursuant to Rule
144A. Beneficial interests in any Unrestricted Global Note may be
transferred to Persons who take delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note. No written
orders or instructions shall be required to be delivered to the
Registrar to effect the transfers described in this Section
2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests
in Global Notes. In connection with all transfers and exchanges of
beneficial interests that are not subject to Section 2.06(b)(i)
hereof, the transferor of such beneficial interest must deliver to
the Registrar either (A) (1) a written order from a Participant or
an Indirect Participant given to the Depositary in accordance with
the Applicable Procedures directing the Depositary to credit or
cause to be credited a beneficial interest in another Global Note in
an amount equal to the beneficial interest to be transferred or
exchanged and (2) instructions given in accordance with the
Applicable Procedures containing information regarding the
56
Participant account to be credited with such increase or (B) (1) a
written order from a Participant or an Indirect Participant given to
the Depositary in accordance with the Applicable Procedures
directing the Depositary to cause to be issued a Definitive Note of
the same series in an amount equal to the beneficial interest to be
transferred or exchanged and (2) instructions given by the
Depositary to the Registrar containing information regarding the
Person in whose name such Definitive Note shall be registered to
effect the transfer or exchange referred to in (1) above; provided
that in no event shall Definitive Notes be issued upon the transfer
or exchange of beneficial interests in a Regulation S Temporary
Global Note prior to (A) the expiration of the Restricted Period and
(B) the receipt by the Registrar of any certificates required
pursuant to Rule 903. Upon consummation of an Exchange Offer by the
Issuer in accordance with Section 2.06(f) hereof, the requirements
of this Section 2.06(b)(ii) shall be deemed to have been satisfied
upon receipt by the Registrar of the instructions contained in the
Letter of Transmittal delivered by the Holder of such beneficial
interests in the Restricted Global Notes. Upon satisfaction of all
of the requirements for transfer or exchange of beneficial interests
in Global Notes contained in this Indenture and the Notes or
otherwise applicable under the Securities Act, the Trustee shall
adjust the principal amount of the relevant Global Note(s) pursuant
to Section 2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted
Global Note. A beneficial interest in any Restricted Global Note may
be transferred to a Person who takes delivery thereof in the form of
a beneficial interest in another Restricted Global Note if the
transfer complies with the requirements of Section 2.06(b)(ii)
hereof and the Registrar receives the following:
(A) if the transferee will take delivery in the form of
a beneficial interest in a 144A Global Note, then the
transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (1) thereof; or
(B) if the transferee will take delivery in the form of
a beneficial interest in a Regulation S Global Note, then the
transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (2) thereof.
(iv) Transfer and Exchange of Beneficial Interests in a
Restricted Global Note for Beneficial Interests in an Unrestricted
Global Note. A beneficial interest in any Restricted Global Note may
be exchanged by any holder thereof for a beneficial interest in an
Unrestricted Global Note or transferred to a Person who takes
delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note if the exchange or transfer complies with
the requirements of Section 2.06(b)(ii) hereof and:
(A) such exchange or transfer is effected pursuant to
the Exchange Offer in accordance with the Registration Rights
Agreement and the
57
holder of the beneficial interest to be transferred, in the
case of an exchange, or the transferee, in the case of a
transfer, certifies in the applicable Letter of Transmittal
that it is not (1) a broker-dealer, (2) a Person participating
in the distribution of the Exchange Notes or (3) a Person who
is an affiliate (as defined in Rule 144) of the Issuer;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration
Rights Agreement;
(C) such transfer is effected by a broker-dealer
pursuant to the Exchange Offer Registration Statement in
accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such
beneficial interest for a beneficial interest in an
Unrestricted Global Note of the same series, a
certificate from such Holder substantially in the form
of Exhibit C hereto, including the certifications in
item (1)(a) thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such
beneficial interest to a Person who shall take delivery
thereof in the form of a beneficial interest in an
Unrestricted Global Note of the same series, a
certificate from such holder in the form of Exhibit B
hereto, including the certifications in item (4)
thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained
herein and in the Private Placement Legend are no longer required in
order to maintain compliance with the Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or (D)
above at a time when an Unrestricted Global Note has not yet been issued,
the Issuer shall issue and, upon receipt of an Authentication Order in
accordance with Section 2.02 hereof, the Trustee shall authenticate one or
more Unrestricted Global Notes in an aggregate principal amount equal to
the aggregate principal amount of beneficial interests transferred
pursuant to subparagraph (B) or (D) above.
Beneficial interests in an Unrestricted Global Note cannot be
exchanged for, or transferred to Persons who take delivery thereof in the
form of, a beneficial interest in a Restricted Global Note.
58
(c) Transfer or Exchange of Beneficial Interests for Definitive
Notes.
(i) Beneficial Interests in Restricted Global Notes to
Restricted Definitive Notes. If any holder of a beneficial interest
in a Restricted Global Note proposes to exchange such beneficial
interest for a Restricted Definitive Note or to transfer such
beneficial interest to a Person who takes delivery thereof in the
form of a Restricted Definitive Note, then, upon the occurrence of
any of the events in subsection (A) of Section 2.06(a) hereof and
receipt by the Registrar of the following documentation:
(A) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a Restricted Definitive Note, a certificate from
such holder substantially in the form of Exhibit C hereto,
including the certifications in item (2)(a) thereof;
(B) if such beneficial interest is being transferred to
a QIB in accordance with Rule 144A, a certificate
substantially in the form of Exhibit B hereto, including the
certifications in item (1) thereof;
(C) if such beneficial interest is being transferred to
a Non-U.S. Person in an offshore transaction in accordance
with Rule 903 or Rule 904, a certificate substantially in the
form of Exhibit B hereto, including the certifications in item
(2) thereof;
(D) if such beneficial interest is being transferred
pursuant to an exemption from the registration requirements of
the Securities Act in accordance with Rule 144, a certificate
substantially in the form of Exhibit B hereto, including the
certifications in item (3)(a) thereof;
(E) if such beneficial interest is being transferred to
the Issuer or any of its Restricted Subsidiaries, a
certificate substantially in the form of Exhibit B hereto,
including the certifications in item (3)(b) thereof; or
(F) if such beneficial interest is being transferred
pursuant to an effective registration statement under the
Securities Act, a certificate substantially in the form of
Exhibit B hereto, including the certifications in item (3)(c)
thereof,
the Trustee shall cause the aggregate principal amount of the
applicable Global Note to be reduced accordingly pursuant to Section
2.06(h) hereof, and the Issuer shall execute and the Trustee shall
authenticate and mail to the Person designated in the instructions a
Definitive Note in the applicable principal amount. Any Definitive
Note issued in exchange for a beneficial interest in a Restricted
Global Note pursuant to this Section 2.06(c) shall be registered in
such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest shall
instruct the Registrar through instructions from the Depositary and
the Participant or Indirect Participant. The Trustee shall mail such
59
Definitive Notes to the Persons in whose names such Notes are so
registered. Any Definitive Note issued in exchange for a beneficial
interest in a Restricted Global Note pursuant to this Section
2.06(c)(i) shall bear the Private Placement Legend and shall be
subject to all restrictions on transfer contained therein.
(ii) Beneficial Interests in Regulation S Temporary Global
Note to Definitive Notes. Notwithstanding Sections 2.06(c)(i)(A) and
(C) hereof, a beneficial interest in the Regulation S Temporary
Global Note may not be exchanged for a Definitive Note or
transferred to a Person who takes delivery thereof in the form of a
Definitive Note prior to (A) the expiration of the Restricted Period
and (B) the receipt by the Registrar of any certificates required
pursuant to Rule 903(b)(3)(ii)(B) of the Securities Act, except in
the case of a transfer pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 903
or Rule 904.
(iii) Beneficial Interests in Restricted Global Notes to
Unrestricted Definitive Notes. A holder of a beneficial interest in
a Restricted Global Note may exchange such beneficial interest for
an Unrestricted Definitive Note or may transfer such beneficial
interest to a Person who takes delivery thereof in the form of an
Unrestricted Definitive Note only upon the occurrence of any of the
events in subsection (A) of Section 2.06(a) hereof and if:
(A) such exchange or transfer is effected pursuant to
the Exchange Offer in accordance with the Registration Rights
Agreement and the holder of such beneficial interest, in the
case of an exchange, or the transferee, in the case of a
transfer, certifies in the applicable Letter of Transmittal
that it is not (1) a broker-dealer, (2) a Person participating
in the distribution of the Exchange Notes or (3) a Person who
is an affiliate (as defined in Rule 144) of the Issuer;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration
Rights Agreement;
(C) such transfer is effected by a broker-dealer
pursuant to the Exchange Offer Registration Statement in
accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such
beneficial interest for an Unrestricted Definitive Note,
a certificate from such holder substantially in the form
of Exhibit C hereto, including the certifications in
item (1)(b) thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such
beneficial interest to a Person who shall take delivery
thereof in the form of an Unrestricted
60
Definitive Note, a certificate from such holder
substantially in the form of Exhibit B hereto, including
the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if
the Registrar so requests or if the Applicable Procedures so
require, an Opinion of Counsel in form reasonably acceptable
to the Registrar to the effect that such exchange or transfer
is in compliance with the Securities Act and that the
restrictions on transfer contained herein and in the Private
Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
(iv) Beneficial Interests in Unrestricted Global Notes to
Unrestricted Definitive Notes. If any holder of a beneficial
interest in an Unrestricted Global Note proposes to exchange such
beneficial interest for a Definitive Note or to transfer such
beneficial interest to a Person who takes delivery thereof in the
form of a Definitive Note, then, upon the occurrence of any of the
events in subsection (A) of Section 2.06(a) hereof and satisfaction
of the conditions set forth in Section 2.06(b)(ii) hereof, the
Trustee shall cause the aggregate principal amount of the applicable
Global Note to be reduced accordingly pursuant to Section 2.06(h)
hereof, and the Issuer shall execute and the Trustee shall
authenticate and mail to the Person designated in the instructions a
Definitive Note in the applicable principal amount. Any Definitive
Note issued in exchange for a beneficial interest pursuant to this
Section 2.06(c)(iv) shall be registered in such name or names and in
such authorized denomination or denominations as the holder of such
beneficial interest shall instruct the Registrar through
instructions from or through the Depositary and the Participant or
Indirect Participant. The Trustee shall mail such Definitive Notes
to the Persons in whose names such Notes are so registered. Any
Definitive Note issued in exchange for a beneficial interest
pursuant to this Section 2.06(c)(iv) shall not bear the Private
Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial
Interests.
(i) Restricted Definitive Notes to Beneficial Interests in
Restricted Global Notes. If any Holder of a Restricted Definitive
Note proposes to exchange such Note for a beneficial interest in a
Restricted Global Note or to transfer such Restricted Definitive
Note to a Person who takes delivery thereof in the form of a
beneficial interest in a Restricted Global Note, then, upon receipt
by the Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive Note
proposes to exchange such Note for a beneficial interest in a
Restricted Global Note, a certificate from such Holder
substantially in the form of Exhibit C hereto, including the
certifications in item (2)(b) thereof;
61
(B) if such Restricted Definitive Note is being
transferred to a QIB in accordance with Rule 144A, a
certificate substantially in the form of Exhibit B hereto,
including the certifications in item (1) thereof;
(C) if such Restricted Definitive Note is being
transferred to a Non-U.S. Person in an offshore transaction in
accordance with Rule 903 or Rule 904, a certificate
substantially in the form of Exhibit B hereto, including the
certifications in item (2) thereof;
(D) if such Restricted Definitive Note is being
transferred pursuant to an exemption from the registration
requirements of the Securities Act in accordance with Rule
144, a certificate substantially in the form of Exhibit B
hereto, including the certifications in item (3)(a) thereof;
(E) if such Restricted Definitive Note is being
transferred to the Issuer or any of its Restricted
Subsidiaries, a certificate substantially in the form of
Exhibit B hereto, including the certifications in item (3)(b)
thereof; or
(F) if such Restricted Definitive Note is being
transferred pursuant to an effective registration statement
under the Securities Act, a certificate substantially in the
form of Exhibit B hereto, including the certifications in item
(3)(c) thereof,
the Trustee shall cancel the Restricted Definitive Note, increase or cause
to be increased the aggregate principal amount of, in the case of clause
(A) above, the applicable Restricted Global Note, in the case of clause
(B) above, the applicable 144A Global Note, and in the case of clause (C)
above, the applicable Regulation S Global Note.
(ii) Restricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of a Restricted Definitive Note
may exchange such Note for a beneficial interest in an Unrestricted
Global Note or transfer such Restricted Definitive Note to a Person
who takes delivery thereof in the form of a beneficial interest in
an Unrestricted Global Note only if:
(A) such exchange or transfer is effected pursuant to
the Exchange Offer in accordance with the Registration Rights
Agreement and the Holder, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the
applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution
of the Exchange Notes or (3) a Person who is an affiliate (as
defined in Rule 144) of the Issuer;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration
Rights Agreement;
62
(C) such transfer is effected by a broker-dealer
pursuant to the Exchange Offer Registration Statement in
accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Definitive Notes
proposes to exchange such Notes for a beneficial
interest in the Unrestricted Global Note, a certificate
from such Holder substantially in the form of Exhibit C
hereto, including the certifications in item (1)(c)
thereof; or
(2) if the Holder of such Definitive Notes
proposes to transfer such Notes to a Person who shall
take delivery thereof in the form of a beneficial
interest in the Unrestricted Global Note, a certificate
from such Holder substantially in the form of Exhibit B
hereto, including the certifications in item (4)
thereof;
and, in each such case set forth in this subparagraph (D), if
the Registrar so requests or if the Applicable Procedures so
require, an Opinion of Counsel in form reasonably acceptable
to the Registrar to the effect that such exchange or transfer
is in compliance with the Securities Act and that the
restrictions on transfer contained herein and in the Private
Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in
this Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes
and increase or cause to be increased the aggregate principal amount of
the Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of an Unrestricted Definitive
Note may exchange such Note for a beneficial interest in an
Unrestricted Global Note or transfer such Definitive Notes to a
Person who takes delivery thereof in the form of a beneficial
interest in an Unrestricted Global Note at any time. Upon receipt of
a request for such an exchange or transfer, the Trustee shall cancel
the applicable Unrestricted Definitive Note and increase or cause to
be increased the aggregate principal amount of one of the
Unrestricted Global Notes.
If any such exchange or transfer from a Definitive Note to a
beneficial interest is effected pursuant to subparagraph (ii)(B), (ii)(D)
or (iii) above at a time when an Unrestricted Global Note has not yet been
issued, the Issuer shall issue and, upon receipt of an Authentication
Order in accordance with Section 2.02 hereof, the Trustee shall
authenticate one or more Unrestricted Global Notes in an aggregate
principal amount equal to the principal amount of Definitive Notes so
transferred.
63
(e) Transfer and Exchange of Definitive Notes for Definitive Notes.
Upon request by a Holder of Definitive Notes and such Holder's compliance
with the provisions of this Section 2.06(e), the Registrar shall register
the transfer or exchange of Definitive Notes. Prior to such registration
of transfer or exchange, the requesting Holder shall present or surrender
to the Registrar the Definitive Notes duly endorsed or accompanied by a
written instruction of transfer in form satisfactory to the Registrar duly
executed by such Holder or by its attorney, duly authorized in writing. In
addition, the requesting Holder shall provide any additional
certifications, documents and information, as applicable, required
pursuant to the following provisions of this Section 2.06(e):
(i) Restricted Definitive Notes to Restricted Definitive
Notes. Any Restricted Definitive Note may be transferred to and
registered in the name of Persons who take delivery thereof in the
form of a Restricted Definitive Note if the Registrar receives the
following:
(A) if the transfer will be made pursuant to a QIB in
accordance with Rule 144A, then the transferor must deliver a
certificate substantially in the form of Exhibit B hereto,
including the certifications in item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903 or
Rule 904 then the transferor must deliver a certificate in the
form of Exhibit B hereto, including the certifications in item
(2) thereof; or
(C) if the transfer will be made pursuant to any other
exemption from the registration requirements of the Securities
Act, then the transferor must deliver a certificate in the
form of Exhibit B hereto, including the certifications
required by item (3) thereof, if applicable.
(ii) Restricted Definitive Notes to Unrestricted Definitive
Notes. Any Restricted Definitive Note may be exchanged by the Holder
thereof for an Unrestricted Definitive Note or transferred to a
Person or Persons who take delivery thereof in the form of an
Unrestricted Definitive Note if:
(A) such exchange or transfer is effected pursuant to
the Exchange Offer in accordance with the Registration Rights
Agreement and the Holder, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the
applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution
of the Exchange Notes or (3) a Person who is an affiliate (as
defined in Rule 144) of the Issuer;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration
Rights Agreement;
(C) any such transfer is effected by a broker-dealer
pursuant to the Exchange Offer Registration Statement in
accordance with the Registration Rights Agreement; or
64
(D) the Registrar receives the following:
(1) if the Holder of such Restricted Definitive
Notes proposes to exchange such Notes for an
Unrestricted Definitive Note, a certificate from such
Holder substantially in the form of Exhibit C hereto,
including the certifications in item (1)(d) thereof; or
(2) if the Holder of such Restricted Definitive
Notes proposes to transfer such Notes to a Person who
shall take delivery thereof in the form of an
Unrestricted Definitive Note, a certificate from such
Holder substantially in the form of Exhibit B hereto,
including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests, an Opinion of Counsel in form reasonably acceptable
to the Registrar to the effect that such exchange or transfer is in
compliance with the Securities Act and that the restrictions on transfer
contained herein and in the Private Placement Legend are no longer
required in order to maintain compliance with the Securities Act.
(iii) Unrestricted Definitive Notes to Unrestricted Definitive
Notes. A Holder of Unrestricted Definitive Notes may transfer such
Notes to a Person who takes delivery thereof in the form of an
Unrestricted Definitive Note. Upon receipt of a request to register
such a transfer, the Registrar shall register the Unrestricted
Definitive Notes pursuant to the instructions from the Holder
thereof.
(f) Exchange Offer. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Issuer shall issue
and, upon receipt of an Authentication Order in accordance with Section
2.02 hereof, the Trustee shall authenticate (i) one or more Unrestricted
Global Notes in an aggregate principal amount equal to the principal
amount of the beneficial interests in the Restricted Global Notes of the
same series tendered for acceptance by Persons that certify in the
applicable Letters of Transmittal that (x) they are not broker-dealers,
(y) they are not participating in a distribution of the Exchange Notes and
(z) they are not affiliates (as defined in Rule 144) of the Issuer, and
accepted for exchange in the Exchange Offer and (ii) Unrestricted
Definitive Notes in an aggregate principal amount equal to the principal
amount of the Restricted Definitive Notes of the same series tendered for
acceptance by Persons that certify in the applicable Letters of
Transmittal that (x) they are not broker-dealers, (y) they are not
participating in a distribution of the Exchange Notes and (z) they are not
affiliates (as defined in Rule 144) of the Issuer, and accepted for
exchange in the Exchange Offer. Concurrently with the issuance of such
Notes, the Trustee shall cause the aggregate principal amount of the
applicable Restricted Global Notes to be reduced accordingly, and the
Issuer shall execute and the Trustee shall authenticate and mail to the
Persons designated by the Holders of Definitive Notes so accepted
Unrestricted Definitive Notes in the applicable principal amount. Any
Notes that remain outstanding after the consummation of the Exchange
Offer, and Exchange Notes issued in connection
65
with the Exchange Offer, shall be treated as a single class of securities
under this Indenture.
(g) Legends. The following legends shall appear on the face of all
Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this
Indenture:
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below, each
Global Note and each Definitive Note (and all Notes issued in
exchange therefor or substitution thereof) shall bear the
legend in substantially the following form:
"THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE
IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING
ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT. THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT
OF THE ISSUER THAT (A) THIS NOTE MAY BE OFFERED, RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED ONLY (1) (a) IN THE UNITED
STATES TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144A UNDER THE SECURITIES ACT, (b) OUTSIDE THE UNITED
STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904
UNDER THE SECURITIES ACT, (c) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (d) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501
(a) (1), (2), (3) OR (7) UNDER THE SECURITIES ACT (AN
"INSTITUTIONAL ACCREDITED INVESTOR")) THAT, PRIOR TO SUCH
TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS (THE FORM OF WHICH CAN
BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN
RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS THAN
$250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER THAT
SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT OR (e)
IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION
OF COUNSEL IF THE ISSUER SO REQUESTS), (2) TO THE
66
ISSUER OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS
NOTE FROM IT OF THE RESALE RESTRICTIONS SET FORTH IN (A)
ABOVE."
(B) Notwithstanding the foregoing, any Global Note or
Definitive Note issued pursuant to subparagraph (b)(iv),
(c)(iii), (c)(iv), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f)
of this Section 2.06 (and all Notes issued in exchange
therefor or substitution thereof) shall not bear the Private
Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend
in substantially the following form (with appropriate changes in the
last sentence if DTC is not the Depositary):
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE
BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO
ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY
MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION
2.06(h) OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN
WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,
(III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS
GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE
PRIOR WRITTEN CONSENT OF THE ISSUER. UNLESS AND UNTIL IT IS
EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS
NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE
DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY
OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER
STREET, NEW YORK, NEW YORK) ("DTC") TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE
67
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN."
(iii) Regulation S Temporary Global Note Legend. The
Regulation S Temporary Global Note shall bear a legend in
substantially the following form:
"THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION ORIGINALLY EXEMPT FROM REGISTRATION UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY
NOT BE TRANSFERRED IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, ANY U.S. PERSON EXCEPT PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND ALL APPLICABLE STATE SECURITIES LAWS. TERMS USED ABOVE HAVE THE
MEANINGS GIVEN TO THEM IN REGULATION S UNDER THE SECURITIES ACT."
(h) Cancellation and/or Adjustment of Global Notes. At such time as
all beneficial interests in a particular Global Note have been exchanged
for Definitive Notes or a particular Global Note has been redeemed,
repurchased or canceled in whole and not in part, each such Global Note
shall be returned to or retained and canceled by the Trustee in accordance
with Section 2.11 hereof. At any time prior to such cancellation, if any
beneficial interest in a Global Note is exchanged for or transferred to a
Person who will take delivery thereof in the form of a beneficial interest
in another Global Note or for Definitive Notes, the principal amount of
Notes represented by such Global Note shall be reduced accordingly and an
endorsement shall be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such reduction; and
if the beneficial interest is being exchanged for or transferred to a
Person who will take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note shall be increased
accordingly and an endorsement shall be made on such Global Note by the
Trustee or by the Depositary at the direction of the Trustee to reflect
such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the
Issuer shall execute and the Trustee shall authenticate Global Notes
and Definitive Notes upon receipt of an Authentication Order in
accordance with Section 2.02 hereof or at the Registrar's request.
(ii) No service charge shall be made to a holder of a
beneficial interest in a Global Note or to a Holder of a Definitive
Note for any registration of transfer or exchange, but the Issuer
may require payment of a sum sufficient to cover any transfer tax or
similar governmental charge payable in connection
68
therewith (other than any such transfer taxes or similar
governmental charge payable upon exchange or transfer pursuant to
Sections 2.07, 2.10, 3.06, 3.09, 4.10, 4.14 and 9.05 hereof).
(iii) Neither the Registrar nor the Issuer shall be required
to register the transfer of or exchange any Note selected for
redemption in whole or in part, except the unredeemed portion of any
Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive
Notes shall be the valid obligations of the Issuer, evidencing the
same debt, and entitled to the same benefits under this Indenture,
as the Global Notes or Definitive Notes surrendered upon such
registration of transfer or exchange.
(v) The Issuer shall not be required (A) to issue, to register
the transfer of or to exchange any Notes during a period beginning
at the opening of business 15 days before the day of any selection
of Notes for redemption under Section 3.02 hereof and ending at the
close of business on the day of selection, (B) to register the
transfer of or to exchange any Note so selected for redemption in
whole or in part, except the unredeemed portion of any Note being
redeemed in part or (C) to register the transfer of or to exchange a
Note between a Record Date with respect to such Note and the next
succeeding Interest Payment Date with respect to such Note.
(vi) Prior to due presentment for the registration of a
transfer of any Note, the Trustee, any Agent and the Issuer may deem
and treat the Person in whose name any Note is registered as the
absolute owner of such Note for the purpose of receiving payment of
principal of (and premium, if any) and interest on such Notes and
for all other purposes, and none of the Trustee, any Agent or the
Issuer shall be affected by notice to the contrary.
(vii) Upon surrender for registration of transfer of any Note
at the office or agency of the Issuer designated pursuant to Section
4.02 hereof, the Issuer shall execute, and the Trustee shall
authenticate and mail, in the name of the designated transferee or
transferees, one or more replacement Notes of any authorized
denomination or denominations of a like aggregate principal amount.
(viii) At the option of the Holder, Notes may be exchanged for
other Notes of any authorized denomination or denominations of a
like aggregate principal amount upon surrender of the Notes to be
exchanged at such office or agency. Whenever any Global Notes or
Definitive Notes are so surrendered for exchange, the Issuer shall
execute, and the Trustee shall authenticate and mail, the
replacement Global Notes and Definitive Notes which the Holder
making the exchange is entitled to in accordance with the provisions
of Section 2.02 hereof.
69
(ix) All certifications, certificates and Opinions of Counsel
required to be submitted to the Registrar pursuant to this Section
2.06 to effect a registration of transfer or exchange may be
submitted by facsimile.
(x) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on
transfer imposed under this Indenture or under applicable law with
respect to any transfer of any interest in any Security (including
any transfers between or among Depositary participants or beneficial
owners of interests in any registered Global Security) other than to
require delivery of such certificates and other documentation or
evidence as are expressly required by, and to do so if and when
expressly required by the terms of, this Indenture, and to examine
the same to determine substantial compliance as to form with the
express requirements hereof.
Section 2.07 Replacement Notes. If any mutilated Note is surrendered to
the Trustee, the Registrar or the Issuer and the Trustee receives evidence to
its satisfaction of the ownership and destruction, loss or theft of any Note,
the Issuer shall issue and the Trustee, upon receipt of an Authentication Order,
shall authenticate a replacement Note if the Trustee's requirements are met. If
required by the Trustee or the Issuer, an indemnity bond must be supplied by the
Holder that is sufficient in the judgment of the Trustee and the Issuer to
protect the Issuer, the Trustee, any Agent and any authenticating agent from any
loss that any of them may suffer if a Note is replaced. The Issuer and the
Trustee may charge the Holder for their expenses in replacing a Note.
Every replacement Note is a contractual obligation of the Issuer and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
Section 2.08 Outstanding Notes. The Notes outstanding at any time are all
the Notes authenticated by the Trustee except for those canceled by it, those
delivered to it for cancellation, those reductions in the interest in a Global
Note effected by the Trustee in accordance with the provisions hereof and those
described in this Section 2.08 as not outstanding. Except as set forth in
Section 2.09 hereof, a Note does not cease to be outstanding because the Issuer,
a Guarantor or an Affiliate of the Issuer or a Guarantor holds the Note.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to
be outstanding unless the Trustee receives proof satisfactory to it that
the replaced Note is held by a protected purchaser (as defined in Section
8-303 of the Uniform Commercial Code).
If the principal amount of any Note is considered paid under Section
4.01 hereof, it ceases to be outstanding and interest on it ceases to
accrue.
70
If the Paying Agent (other than the Issuer, a Guarantor or an
Affiliate of the Issuer or a Guarantor) holds, on a Redemption Date or
maturity date, money sufficient to pay Notes (or portions thereof) payable
on that date and the Paying Agent is not prohibited from paying such money
to the Holders on that date pursuant to the terms of this Indenture, then
on and after that date such Notes (or portions thereof) shall be deemed to
be no longer outstanding and shall cease to accrue interest.
Section 2.09 Treasury Notes. In determining whether the Holders of the
required principal amount of Notes have concurred in any direction, waiver or
consent, Notes owned by the Issuer, a Guarantor or by any Affiliate of the
Issuer or a Guarantor, shall be considered as though not outstanding, except
that for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent, only Notes that a Responsible
Officer of the Trustee knows are so owned shall be so disregarded. Notes so
owned which have been pledged in good faith shall not be disregarded if the
pledgee establishes to the satisfaction of the Trustee the pledgee's right to
deliver any such direction, waiver or consent with respect to the Notes and that
the pledgee is not the Issuer, a Guarantor or any obligor upon the Notes or any
Affiliate of the Issuer, a Guarantor or of such other obligor.
Section 2.10 Temporary Notes. Until certificates representing Notes are
ready for delivery, the Issuer may prepare and the Trustee, upon receipt of an
Authentication Order, shall authenticate temporary Notes. Temporary Notes shall
be substantially in the form of certificated Notes but may have variations that
the Issuer considers appropriate for temporary Notes and as shall be reasonably
acceptable to the Trustee. Without unreasonable delay, the Issuer shall prepare
and the Trustee shall authenticate definitive Notes in exchange for temporary
Notes.
Holders and beneficial holders, as the case may be, of temporary
Notes shall be entitled to all of the benefits accorded to Holders, or
beneficial holders, respectively, of Notes under this Indenture.
Section 2.11 Cancellation. The Issuer at any time may deliver Notes to the
Trustee for cancellation. The Registrar and Paying Agent shall forward to the
Trustee any Notes surrendered to them for registration of transfer, exchange or
payment. The Trustee or, at the direction of the Trustee, the Registrar or the
Paying Agent and no one else shall cancel all Notes surrendered for registration
of transfer, exchange, payment, replacement or cancellation and shall destroy
cancelled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all cancelled Notes shall be delivered
to the Issuer. The Issuer may not issue new Notes to replace Notes that it has
paid or that have been delivered to the Trustee for cancellation.
Section 2.12 Defaulted Interest. If the Issuer defaults in a payment of
interest on the Notes, it shall pay the defaulted interest in any lawful manner
plus, to the extent lawful, interest payable on the defaulted interest, in each
case at the rate provided in the Notes and in Section 4.01 hereof. The Issuer
may pay the defaulted interest to the Persons who are Holders on a subsequent
special record date. The Issuer shall notify the
71
Trustee in writing of the amount of defaulted interest proposed to be paid on
each Note and the date of the proposed payment, and at the same time the Issuer
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 provided in this
Section 2.12. The Trustee shall fix or cause to be fixed any such special record
date and payment date; provided that no such special record date shall be less
than 10 days prior to the related payment date for such defaulted interest. The
Trustee shall promptly notify the Issuer of any such special record date. At
least 15 days before any such special record date, the Issuer (or, upon the
written request of the Issuer, the Trustee in the name and at the expense of the
Issuer) shall mail or cause to be mailed, first-class postage prepaid, to each
Holder, with a copy to the Trustee, a notice at his or her address as it appears
in the Note Register that states the special record date, the related payment
date and the amount of such interest to be paid.
Subject to the foregoing provisions of this Section 2.12 and for
greater certainty, 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 2.13 CUSIP/ISIN Numbers. The Issuer in issuing the Notes may use
CUSIP and ISIN numbers (in each case, if then generally in use) and, if so, the
Trustee shall use CUSIP and ISIN numbers in notices of redemption as a
convenience to Holders; provided, that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Notes or as contained in any notice of redemption and that reliance may
be placed only on the other identification numbers printed on the Notes, and any
such redemption shall not be affected by any defect in or omission of such
numbers. The Issuer will as promptly as practicable notify the Trustee in
writing of any change in the CUSIP and ISIN numbers.
Section 2.14 Calculation of Principal Amount of Securities. With respect
to any matter requiring consent, waiver, approval or other action of the Holders
of a specified percentage of the principal amount of all the Notes, such
percentage shall be calculated, on the relevant date of determination, by
dividing (a) the principal amount, as of such date of determination, of Notes,
the Holders of which have so consented by (b) the aggregate principal amount, as
of such date of determination, of the Notes then outstanding, in each case, as
determined in accordance with the preceding sentence, Section 2.08 and Section
2.09 of this Indenture. Any such calculation made pursuant to this Section 2.14
shall be made by the Issuer and delivered to the Trustee pursuant to an
Officer's Certificate.
72
ARTICLE III
REDEMPTION
----------
Section 3.01 Notices to Trustee. If the Issuer elects to redeem the Notes
pursuant to Section 3.07 hereof, it shall furnish to the Trustee, at least 15
days (unless a shorter period is agreed upon by the Trustee) before notice of
redemption is required to be mailed or caused to be mailed to Holders pursuant
to Section 3.03 hereof but not more than 60 days before a Redemption Date, an
Officer's Certificate of the Issuer setting forth (i) the paragraph or
subparagraph of such Note and/or Section of this Indenture pursuant to which the
redemption shall occur, (ii) the Redemption Date, (iii) the principal amount of
Notes to be redeemed and (iv) the redemption price.
Section 3.02 Selection of Notes to Be Redeemed. If less than all of the
Notes are to be redeemed at any time, the Trustee shall select the Notes to be
redeemed (a) if the Notes are listed on any national securities exchange, in
compliance with the requirements of the principal national securities exchange
on which the Notes are listed or (b) on a pro rata basis to the extent
practicable, or, if the pro rata basis is not practicable for any reason, by lot
or by such other method the Trustee shall deem fair and appropriate. In the
event of partial redemption by lot, the particular Notes to be redeemed shall be
selected, unless otherwise provided herein, not less than 30 nor more than 60
days prior to the Redemption Date by the Trustee from the outstanding Notes not
previously called for redemption.
The Trustee shall promptly notify the Issuer 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. Notes and
portions of Notes selected shall be in amounts of $2,000 or whole
multiples of $1,000 in excess thereof; no Notes of less than $2,000 can be
redeemed in part. Except as provided in the preceding sentence, provisions
of this Indenture that apply to Notes called for redemption also apply to
portions of Notes called for redemption.
Section 3.03 Notice of Redemption. Subject to Section 3.09 hereof, the
Issuer shall mail or cause to be mailed by first-class mail notices of
redemption at least 30 days but not more than 60 days before the Redemption Date
to each Holder of Notes to be redeemed at such Holder's registered address or
otherwise in accordance with Applicable Procedures.
The notice shall identify the Notes to be redeemed and shall state:
(a) the Redemption Date;
(b) the redemption price;
(c) if any Note is to be redeemed in part only, the portion of the
principal amount of that Note that is to be redeemed and that, after the
Redemption Date
73
upon surrender of such Note, a new Note or Notes in principal amount equal
to the unredeemed portion of the original Note representing the same
indebtedness to the extent not redeemed will be issued in the name of the
Holder of the Notes upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(f) that, unless the Issuer defaults in making such redemption
payment or the Paying Agent is prohibited from making such payment
pursuant to the terms of this Indenture, interest on Notes called for
redemption ceases to accrue on and after the Redemption Date;
(g) the paragraph or subparagraph of the Notes and/or Section of
this Indenture pursuant to which the Notes called for redemption are being
redeemed;
(h) the CUSIP and ISIN number, if any, printed on the Notes being
redeemed and that no representation is made as to the correctness or
accuracy of any such CUSIP and ISIN number that is listed in such notice
or printed on the Notes; and
(i) if in connection with a redemption pursuant to Section 3.07(c)
hereof, any condition to such redemption.
At the Issuer's request, the Trustee shall give the notice of
redemption in the Issuer's name and at its expense; provided that the
Issuer shall have delivered to the Trustee, at least 15 days (unless a
shorter period is agreed upon by the Trustee) before notice of redemption
is required to be mailed or caused to be mailed to Holders pursuant to
this Section 3.03 (unless a shorter notice shall be agreed to by the
Trustee), an Officer's Certificate of the Issuer requesting that the
Trustee give such notice and setting forth the information to be stated in
such notice as provided in the preceding paragraph.
Section 3.04 Effect of Notice of Redemption. Subject to Section 3.07(c)
hereof, once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
Redemption Date at the redemption price. The notice, if mailed in a manner
herein provided, shall be conclusively presumed to have been given, whether or
not the Holder receives such notice. In any case, failure to give such notice by
mail or any defect in the notice to the Holder of any Note designated for
redemption in whole or in part shall not affect the validity of the proceedings
for the redemption of any other Note. Subject to Section 3.05 hereof, on and
after the Redemption Date, interest ceases to accrue on Notes or portions of
Notes called for redemption.
74
Section 3.05 Deposit of Redemption Price.
(a) Prior to 11:00 a.m. (New York City time) on the Redemption Date,
the Issuer shall deposit with the Trustee or with the Paying Agent money
sufficient to pay the redemption price of, and accrued and unpaid interest
and Additional Interest, if any, to the Redemption Date on, all Notes to
be redeemed. The Trustee or the Paying Agent shall promptly return to the
Issuer any money deposited with the Trustee or the Paying Agent by the
Issuer in excess of the amounts necessary to pay the redemption price of,
and accrued and unpaid interest and Additional Interest, if any, to the
Redemption Date on, all Notes to be redeemed.
(b) If the Issuer complies with the provisions of the preceding
paragraph (a), on and after the Redemption Date, interest shall cease to
accrue on the Notes or the portions of Notes called for redemption. If a
Note is redeemed on or after a Record Date but on or prior to the related
Interest Payment Date, then any accrued and unpaid interest to the
Redemption Date shall be paid to the Person in whose name such Note was
registered at the close of business on such Record Date. If any Note
called for redemption shall not be so paid upon surrender for redemption
because of the failure of the Issuer to comply with the preceding
paragraph, interest shall be paid on the unpaid principal, from the
Redemption Date until such principal is paid, and to the extent lawful on
any interest and Additional Interest, if any, accrued to the Redemption
Date not paid on such unpaid principal, in each case at the rate provided
in the Notes and in Section 4.01 hereof.
Section 3.06 Notes Redeemed in Part. Upon surrender of a Note that is
redeemed in part, the Issuer shall issue and the Trustee shall authenticate for
the Holder at the expense of the Issuer a new Note equal in principal amount to
the unredeemed portion of the Note surrendered representing the same
indebtedness to the extent not redeemed; provided that each new Note will be in
a principal amount of $2,000 or an integral multiple of $1,000 in excess
thereof.
Section 3.07 Optional Redemption.
(a) On or after June 1, 2012, the Issuer may redeem the Notes at its
option, in whole at any time or in part from time to time, at the
following redemption prices (expressed as a percentage of principal
amount), plus accrued and unpaid interest and Additional Interest, if any,
to the date of redemption (the "Redemption Date") (subject to the right of
Holders of record on the Record Date to receive interest due on the
Interest Payment Date), if redeemed during the 12-month period commencing
on June 1 of the years set forth below:
Period Redemption Price
2012........................................ 105.25%
2013........................................ 103.50%
2014 101.75%
2015 and thereafter......................... 100.000%
75
(b) Prior to June 1, 2012, the Issuer may redeem the Notes at its
option, in whole at any time or in part from time to time, at a redemption
price equal to 100% of the principal amount of the Notes redeemed plus the
Applicable Premium as of, and accrued and unpaid interest and Additional
Interest, if any, to, the Redemption Date (subject to the right of Holders
of record on the Record Date to receive interest due on the Interest
Payment Date).
(c) At any time and from time to time on or prior to June 1, 2010,
the Issuer may redeem in the aggregate up to 35% of the original aggregate
principal amount of the Notes (calculated after giving effect to any
issuance of Additional Notes) with the net cash proceeds of one or more
Equity Offerings (1) by the Issuer or (2) by any direct or indirect parent
of the Issuer, in each case to the extent the net cash proceeds thereof
are contributed to the common equity capital of the Issuer or used to
purchase Capital Stock (other than Disqualified Stock) of the Issuer from
it, at a redemption price (expressed as a percentage of principal amount
thereof) of 110.50%, plus accrued and unpaid interest and Additional
Interest, if any, to the Redemption Date; provided, however, that at least
65% of the original aggregate principal amount of the Notes (calculated
after giving effect to any issuance of Additional Notes) must remain
outstanding after each such redemption; provided, further, that such
redemption shall occur within 90 days after the date on which any such
Equity Offering is consummated.
Notice of any redemption upon any Equity Offering may be given prior
to the completion thereof, and any such redemption or notice may, at the
Issuer's discretion, be subject to one or more conditions precedent,
including, but not limited to, completion of the related Equity Offering.
Section 3.08 Mandatory Redemption. The Issuer shall not be required to
make any mandatory redemption or sinking fund payments with respect to the
Notes.
Section 3.09 Offers to Repurchase by Application of Excess Proceeds.
(a) In the event that, pursuant to Section 4.10 hereof, the Issuer
shall be required to commence an Asset Sale Offer, it shall follow the
procedures specified below.
(b) The Asset Sale Offer shall remain open for a period of twenty
Business Days following its commencement and no longer, except to the
extent that a longer period is required by applicable law (the "Offer
Period"). No later than five Business Days after the termination of the
Offer Period (the "Purchase Date"), the Issuer shall apply all Excess
Proceeds (the "Offer Amount") to the purchase of Notes and, if required,
Pari Passu Indebtedness (on a pro rata basis, if applicable), or, if less
than the Offer Amount has been tendered, all Notes and Pari Passu
Indebtedness tendered in response to the Asset Sale Offer. Payment for any
Notes so purchased shall be made in the same manner as interest payments
are made.
76
(c) If the Purchase Date is on or after a Record Date and on or
before the related Interest Payment Date, any accrued and unpaid interest,
up to but excluding the Purchase Date, shall be paid to the Person in
whose name a Note is registered at the close of business on such Record
Date, and no additional interest shall be payable to Holders who tender
Notes pursuant to the Asset Sale Offer.
(d) Upon the commencement of an Asset Sale Offer, the Issuer shall
send, by first-class mail, postage prepaid, at least 30 but not more than
60 days before the Purchase Date, a notice to each of the Holders, with a
copy to the Trustee. The notice shall contain all instructions and
materials necessary to enable such Holders to tender Notes pursuant to the
Asset Sale Offer. The Asset Sale Offer shall be made to all Holders and
holders of Pari Passu Indebtedness. The notice, which shall govern the
terms of the Asset Sale Offer, shall state:
(i) that the Asset Sale Offer is being made pursuant to this
Section 3.09 and Section 4.10 hereof and the length of time the
Asset Sale Offer shall remain open;
(ii) the Offer Amount, the purchase price and the Purchase
Date;
(iii) that any Note not tendered or accepted for payment shall
continue to accrue interest;
(iv) that, unless the Issuer defaults in making such payment,
any Note accepted for payment pursuant to the Asset Sale Offer shall
cease to accrue interest after the Purchase Date;
(v) that any Holder electing to have less than all of the
aggregate principal amount of its Notes purchased pursuant to an
Asset Sale Offer may elect to have Notes purchased in denominations
of $2,000 or whole multiples of $1,000 in excess thereof;
(vi) that Holders electing to have a Note purchased pursuant
to any Asset Sale Offer shall be required to surrender the Note,
with the form entitled "Option of Holder to Elect Purchase" attached
to the Note completed, or transfer by book-entry transfer, to the
Issuer, the Depositary, if appointed by the Issuer, or a Paying
Agent at the address specified in the notice at least two Business
Days before the Purchase Date;
(vii) that Holders shall be entitled to withdraw their
election if the Issuer, the Depositary or the Paying Agent, as the
case may be, receives, not later than the expiration of the Offer
Period, a facsimile transmission or letter setting forth the name of
the Holder, the principal amount of the Note the Holder delivered
for purchase and a statement that such Holder is withdrawing his
election to have such Note purchased;
77
(viii) that, if the aggregate principal amount of Notes and
Pari Passu Indebtedness surrendered by the holders thereof exceeds
the Offer Amount, the Trustee shall select the Notes and the Company
or its applicable agent shall select such Pari Passu Indebtedness to
be purchased on a pro rata basis based on the accreted value or
principal amount of the Notes or such Pari Passu Indebtedness
tendered (with such adjustments as may be deemed appropriate by the
Trustee so that only Notes in denominations of $2,000 or whole
multiples of $1,000 in excess thereof are purchased); and
(ix) that Holders whose Notes were purchased only in part
shall be issued new Notes equal in principal amount to the
unpurchased portion of the Notes surrendered (or transferred by
book-entry transfer) representing the same indebtedness to the
extent not repurchased.
(e) On or before the Purchase Date, the Issuer shall, to the extent
lawful, (1) accept for payment, on a pro rata basis as described in clause
(d)(viii) of this Section 3.09, the Offer Amount of Notes or portions
thereof validly tendered pursuant to the Asset Sale Offer, or if less than
the Offer Amount has been tendered, all Notes tendered and (2) deliver or
cause to be delivered to the Trustee the Notes properly accepted together
with an Officer's Certificate stating the aggregate principal amount of
Notes or portions thereof so tendered.
(f) The Issuer, the Depositary or the Paying Agent, as the case may
be, shall promptly mail or deliver to each tendering Holder an amount
equal to the purchase price of the Notes properly tendered by such Holder
and accepted by the Issuer for purchase, and the Issuer shall promptly
issue a new Note, and the Trustee, upon receipt of an Authentication
Order, shall authenticate and mail or deliver (or cause to be transferred
by book-entry) such new Note to such Holder (it being understood that,
notwithstanding anything in this Indenture to the contrary, no Opinion of
Counsel or Officer's Certificate of the Issuer is required for the Trustee
to authenticate and mail or deliver such new Note) in a principal amount
equal to any unpurchased portion of the Note surrendered representing the
same indebtedness to the extent not repurchased. Any Note not so accepted
shall be promptly mailed or delivered by the Issuer to the Holder thereof.
The Issuer shall publicly announce the results of the Asset Sale Offer on
or as soon as practicable after the Purchase Date.
(g) Prior to 11:00 a.m. (New York City time) on the purchase date,
the Issuer shall deposit with the Trustee or with the Paying Agent money
sufficient to pay the purchase price of and accrued and unpaid interest on
all Notes to be purchased on that purchase date. The Trustee or the Paying
Agent shall promptly return to the Issuer any money deposited with the
Trustee or the Paying Agent by the Issuer in excess of the amounts
necessary to pay the purchase price of, and accrued and unpaid interest
on, all Notes to be redeemed.
Other than as specifically provided in this Section 3.09 or Section
4.10 hereof, any purchase pursuant to this Section 3.09 shall be made
pursuant to the
78
applicable provisions of Sections 3.01 through 3.06 hereof, and references
therein to "redeem," "redemption" and similar words shall be deemed to
refer to "purchase," "repurchase" and similar words, as applicable.
ARTICLE IV
COVENANTS
---------
Section 4.01 Payment of Notes. The Issuer 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
Issuer, a Guarantor or an Affiliate of the Issuer or a Guarantor, holds as of
11:00 a.m. New York City time, on the due date money deposited by the Issuer in
immediately available funds and designated for and sufficient to pay all
principal, premium, if any, and interest then due.
The Issuer shall pay all Additional Interest, if any, in the same
manner on the dates and in the amounts set forth in the Registration
Rights Agreement.
The Issuer shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the rate
equal to the then applicable interest rate on the Notes to the extent
lawful; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest
(without regard to any applicable grace period) at the same rate to the
extent lawful.
Section 4.02 Maintenance of Office or Agency. The Issuer shall maintain
the offices or agencies (which may be an office of the Trustee or an affiliate
of the Trustee, Registrar or co-registrar) required under Section 2.03 where
Notes may be surrendered for registration of transfer or for exchange and where
notices and demands to or upon the Issuer in respect of the Notes and this
Indenture may be served. The Issuer 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 Issuer 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 Issuer 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 that no such designation or rescission shall in any
manner relieve the Issuer of its obligation to maintain such offices or
agencies as required by Section 2.03 for such purposes. The Issuer 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.
79
The Issuer hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Issuer in accordance with
Section 2.03 hereof.
Section 4.03 Reports and Other Information.
(a) Notwithstanding that the Issuer 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 SEC, after the consummation of the Exchange Offer, the
Issuer shall file with the SEC (and provide the Trustee and Holders with
copies thereof, without cost to each Holder, within 15 days after the
Issuer files such reports with the SEC),
(1) within the time period specified in the SEC's rules and
regulations for non-accelerated filers, annual reports on Form 10-K
(or any successor or comparable form) containing the information
required to be contained therein (or required in such successor or
comparable form),
(2) within the time period specified in the SEC's rules and
regulations for non-accelerated filers, reports on Form 10-Q (or any
successor or comparable form) containing the information required to
be contained therein (or required in such successor or comparable
form),
(3) promptly from time to time after the occurrence of an
event required to be therein reported (and in any event within the
time period specified in the SEC's rules and regulations), such
other reports on Form 8-K (or any successor or comparable form), and
(4) any other information, documents and other reports which
the Issuer would be required to file with the SEC if it were subject
to Section 13 or 15(d) of the Exchange Act;
provided, however, that the Issuer shall not be so obligated to file such
reports with the SEC if the SEC does not permit such filing, in which
event the Issuer shall 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
Issuer would be required to file such information with the SEC, if it were
subject to Sections 13 or 15(d) of the Exchange Act. Delivery of such
reports, information and documents to the Trustee is for informational
purposes only and the Trustee's receipt of such shall not constitute
constructive notice of any information contained therein, including
compliance with any of the covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officer's Certificates). The availability
of the foregoing
80
materials on the SEC's Electronic Data Gathering and Retrieval service or
on the Issuer's website shall be deemed to satisfy the Issuer's delivery
obligation.
(b) Notwithstanding the foregoing, the Issuer shall not be required
to furnish any information, certificates or reports required by Items 307
or 308 of Regulation S-K prior to the effectiveness of the exchange offer
registration statement or shelf registration statement.
(c) In the event that:
(i) the rules and regulations of the SEC permit the Issuer and
any direct or indirect parent of the Issuer to report at such parent
entity's level on a consolidated basis and such parent entity is not
engaged in any business in any material respect other than
incidental to its ownership, directly or indirectly, of the capital
stock of the Issuer, or
(ii) any direct or indirect parent of the Issuer is or becomes
a Guarantor of the Notes,
consolidating reporting at the parent entity's level in a manner
consistent with that described in this Section 4.03 for the Issuer shall
satisfy this Section 4.03, and the Issuer shall satisfy its obligations
under this Section 4.03 with respect to financial information relating to
the Issuer by furnishing financial information relating to such direct or
indirect parent; provided that such financial information is accompanied
by consolidating information that explains in reasonable detail the
differences between the information relating to such direct or indirect
parent and any of its Subsidiaries other than the Issuer and its
Subsidiaries, on the one hand, and the information relating to the Issuer,
the Guarantors and the other Subsidiaries of the Issuer on a standalone
basis, on the other hand.
(d) The Issuer will make the reports and other information required
by this Section 4.03 available to prospective investors upon request. In
addition, the Issuer shall, for so long as any Notes are outstanding
during any period when the Issuer is not subject to Section 13 or 15(d) of
the Exchange Act, or otherwise permitted to furnish the SEC with certain
information pursuant to Rule 12g3-2(b) of the Exchange Act, the Issuer
shall furnish to Holders and to prospective investors, upon their request,
the information required to be delivered pursuant to Rule 144A(d)(4) under
the Securities Act.
(e) Notwithstanding the foregoing, the Issuer will be deemed to have
furnished such reports referred to above to the Trustee and the Holders if
the Issuer has filed such reports with the SEC via the EDGAR filing system
and such reports are publicly available. In addition, such requirements
shall be deemed satisfied prior to the commencement of the exchange offer
contemplated by the Registration Rights Agreement relating to the Notes or
the effectiveness of the shelf registration statement by the filing with
the SEC of the exchange offer registration statement and/or shelf
registration statement in accordance with the provisions of such
Registration Rights Agreement, and any amendments thereto, and such
registration statement and/or
81
amendments thereto are filed at times that otherwise satisfy the time
requirements set forth in Section 4.03(a).
Section 4.04 Compliance Certificate.
(a) The Issuer shall deliver to the Trustee, within 120 days after
the end of each fiscal year ending after the Issue Date, a certificate
from the principal executive officer, principal financial officer or
principal accounting officer stating that a review of the activities of
the Issuer and its Restricted Subsidiaries during the preceding fiscal
year has been made under the supervision of the signing Officer with a
view to determining whether the Issuer and its Restricted Subsidiaries
have kept, observed, performed and fulfilled their obligations under this
Indenture, and further stating, as to such Officer signing such
certificate, that to the best of his or her knowledge the Issuer and its
Restricted Subsidiaries have kept, observed, performed and fulfilled each
and every condition and covenant contained in this Indenture and is not in
default in the performance or observance of any of the terms, provisions,
covenants and conditions of this Indenture (or, if a Default shall have
occurred, describing all such Defaults of which he or she may have
knowledge and what action the Issuer is taking or proposes to take with
respect thereto).
(b) When any Default has occurred and is continuing under this
Indenture, or if the Trustee or the holder of any other evidence of
Indebtedness of the Issuer or any Subsidiary gives any notice or takes any
other action with respect to a claimed Default, the Issuer shall promptly
(which shall be no more than 30 days after becoming aware of such Default)
deliver to the Trustee by registered or certified mail or by facsimile
transmission an Officer's Certificate specifying such event and what
action the Issuer proposes to take with respect thereto.
Section 4.05 Taxes.
(a) The Issuer shall pay, and shall cause each of its Restricted
Subsidiaries to pay, prior to delinquency, all material taxes,
assessments, and governmental levies except such as are contested in good
faith and by appropriate negotiations or proceedings or where the failure
to effect such payment is not adverse in any material respect to the
Holders of the Notes.
(b) All payments that any Guarantor that is not organized or
existing under the laws of the United States, any state thereof, the
District of Columbia, or any territory thereof (each a "Foreign Payor")
makes under or with respect to the Notes or any Guarantee, will be made
free and clear of, and without withholding or deduction for or on account
of, any present or future tax, duty, levy, impost, assessment or other
governmental charges (including penalties, interest and other similar
liabilities related thereto) of whatever nature (collectively, "Taxes")
imposed or levied by or on behalf of any jurisdiction in which any Foreign
Payor is incorporated, organized or otherwise resident for tax purposes or
from or through which any of the foregoing makes any payment on the Notes
or by any taxing authority therein or political subdivision thereof (each,
as applicable, a "Relevant Taxing Jurisdiction"), unless the applicable
Foreign
82
Payor is required to withhold or deduct Taxes by law or by the
interpretation or administration of law. If a Foreign Payor is required to
withhold or deduct any amount for, or on account of, Taxes of a Relevant
Taxing Jurisdiction from any payment made under or with respect to the
Notes or any Guarantee, such Foreign Payor will pay such additional
amounts ("Additional Amounts") as may be necessary to ensure that the net
amount received by each Holder of the Notes after such withholding or
deduction will be not less than the amount such Holder would have received
if such Taxes had not been required to be withheld or deducted.
(c) Notwithstanding the foregoing, no Foreign Payor will be required
to pay Additional Amounts to a Holder of Notes in respect of or on account
of:
(i) any Taxes that are imposed or levied by a Relevant Taxing
Jurisdiction by reason of such Holder's present or former connection
with such Relevant Taxing Jurisdiction, including such Holder being
or having been a citizen, national, or resident, being or having
been engaged in a trade or business, being, or having been,
physically present in or having or having had a permanent
establishment in a Relevant Taxing Jurisdiction (but not including,
in each case, any connection arising from the mere receipt or
holding of Notes or the receipt of payments thereunder or under a
Guarantee or the exercise or enforcement of rights under any Notes
or the Indenture or a Guarantee);
(ii) any Taxes that are imposed or levied by reason of the
failure of such Holder, following the written request of any Foreign
Payor (as the case may be) addressed to such Holder (and made at a
time that would enable such Holder acting reasonably to comply with
that request) made in accordance with the notice procedures set
forth in the Indenture, to comply with any certification,
identification, information or other reporting requirements, whether
required by statute, treaty, regulation or administrative practice
of a Relevant Taxing Jurisdiction, as a precondition to exemption
from, or reduction in the rate of withholding or deduction of, Taxes
imposed by the Relevant Taxing Jurisdiction (including a
certification that such Holder is not resident in the Relevant
Taxing Jurisdiction);
(iii) any estate, inheritance, gift, sales, transfer, personal
property or similar Taxes;
(iv) any Tax that is payable otherwise than by withholding or
deduction from payments made under or with respect to the Notes;
(v) any Tax that is imposed or levied by reason of the
presentation (where presentation is required in order to receive
payment) of the Notes for payment on a date more than 30 days after
the date on which such payment became due and payable or the date on
which payment thereof is duly provided for, whichever is later,
except to the extent that the beneficial owner or holder thereof
would have been entitled to Additional Amounts had the Notes been
presented for payment on any date during such 30 day period;
83
(vi) any Tax except to the extent it exceeds any Tax that
would have been required to be withheld from payments to the Holder
if such payments were made by the Issuer; or
(vii) any combination of items (i) through (vi) above.
(d) Additional Amounts will not be paid with respect to the Notes to
a Holder who is a fiduciary, a partnership, a limited liability company or
other than the sole beneficial owner of the payment under or with respect
to the Notes, to the extent that payment would be required by the laws of
a Relevant Taxing Jurisdiction to be included in the income, for tax
purposes, of a beneficiary or settlor with respect to the fiduciary, a
member of that partnership, an interest holder in that limited liability
company or a beneficial owner who would not have been entitled to the
Additional Amounts had it been the Holder of the Notes.
(e) The relevant Foreign Payor shall (i) make such withholding or
deduction as is required by applicable law and (ii) remit the full amount
withheld or deducted to the relevant taxing authority in accordance with
applicable law.
At least 30 calendar days prior to each date on which any payment
under or with respect to the Notes is due and payable, if the relevant
Foreign Payor will be obligated to pay Additional Amounts with respect to
such payment (unless such obligation to pay Additional Amounts arises
after the 30th day prior to the date on which payment under or with
respect to the Notes is due and payable, in which case it will be promptly
thereafter), the relevant Foreign Payor will deliver to the Trustee an
Officer's Certificate of such Foreign Payor stating that such Additional
Amounts will be payable and the amounts so payable and will set forth such
other information necessary to enable the Trustee to pay such Additional
Amounts to the applicable Holders on the payment date.
The relevant Foreign Payor shall promptly publish a notice in
accordance with the notice provisions set forth in this Indenture stating
that such Additional Amounts will be payable and describing the obligation
to pay such amounts.
(f) Upon written request, the relevant Foreign Payor shall furnish
to the Trustee or to a Holder of the Notes copies of tax receipts
evidencing the payment of any Taxes by such Foreign Payor in such form as
provided in the normal course by the taxing authority imposing such Taxes
and as is reasonably available to such Foreign Payor. If, notwithstanding
the efforts of such Foreign Payor to obtain such receipts, the same are
not obtainable, such Foreign Payor shall provide the Trustee or the
applicable Holder with other evidence reasonably satisfactory to the
Trustee or such Holder.
(g) The Issuer and any Guarantor, as the case may be, will pay any
present or future stamp, issue, registration, court, documentation, excise
or property taxes or other similar taxes, charges and duties, including
interest and penalties with respect thereto, imposed by or in any Relevant
Taxing Jurisdiction in respect of the execution,
84
issue, enforcement or delivery of the Notes or any other document or
instrument referred to thereunder (other than on or in connection with a
transfer of the Notes other than the initial resale by the Initial
Purchasers).
(h) Whenever this Indenture or the Notes refers to, in any context,
the payment of principal, premium, if any, interest or any other amount
payable under or with respect to any Note or with respect to any
Guarantee, such reference includes the payment of Additional Amounts, if
applicable.
Section 4.06 Stay, Extension and Usury Laws. The Issuer and each of the
Guarantors covenant (to the extent that they may lawfully do so) that they shall
not at any time insist upon, plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay, extension or usury law wherever enacted,
now or at any time hereafter in force, that may affect the covenants or the
performance of this Indenture; and the Issuer and each of the Guarantors (to the
extent that they may lawfully do so) hereby expressly waive all benefit or
advantage of any such law, and covenant that they shall not, by resort to any
such law, hinder, delay or impede the execution of any power herein granted to
the Trustee, but shall suffer and permit the execution of every such power as
though no such law has been enacted.
Section 4.07 Limitation on Restricted Payments.
(a) The Issuer 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 Issuer's or any of its Restricted Subsidiaries'
Equity Interests, including any payment made in connection with any
merger, amalgamation or consolidation involving the Issuer, other
than:
(A) dividends or distributions by the Issuer payable
solely in Equity Interests (other than Disqualified Stock) of
the Issuer; 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 Restricted Subsidiary other than a
Wholly-owned Restricted Subsidiary, the Issuer 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 or otherwise acquire or retire for value any
Equity Interests of the Issuer or any direct or indirect parent of
the Issuer;
(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 scheduled maturity, any Subordinated
Indebtedness of the Issuer or any of its Restricted Subsidiaries,
other than the payment, redemption, repurchase, defeasance,
acquisition or retirement of:
85
(A) Subordinated Indebtedness in anticipation of
satisfying a sinking fund obligation, principal installment or
final maturity, in each case due within one year of the date
of such payment, redemption, repurchase, defeasance,
acquisition or retirement; and
(B) Indebtedness permitted under clauses (vii) and (ix)
of Section 4.09(b) hereof; or
(iv) make any Restricted Investment
(all such payments and other actions set forth in clauses (i)
through (iv) of this Section 4.07(a) being collectively referred to
as "Restricted Payments"), unless, at the time of such Restricted
Payment:
(1) no Default shall have occurred and be continuing or would
occur as a consequence thereof;
(2) immediately after giving effect to such transaction on a
pro forma basis, the Issuer could Incur $1.00 of additional
Indebtedness pursuant to Section 4.09(a) hereof;
(3) immediately after giving effect to such transaction on a
pro forma basis, the Issuer's Consolidated Leverage Ratio would be
less than 6.0 to 1.0; and
(4) such Restricted Payment, together with the aggregate
amount of all other Restricted Payments made by the Issuer and its
Restricted Subsidiaries after the Issue Date (including Restricted
Payments permitted by clauses (i), (iv) (only to the extent of
one-half of the amounts paid pursuant to such clause), (vi) and
(viii) of Section 4.07(b) hereof, but excluding all other Restricted
Payments permitted by Section 4.07(b) hereof), is less than the
amount equal to the Cumulative Credit.
(b) Section 4.07(a) hereof will not prohibit:
(i) the payment of any dividend or distribution 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 ("Retired Capital Stock") or
Subordinated Indebtedness of the Issuer, any direct or indirect
parent of the Issuer or any Guarantor in exchange for, or out of the
proceeds of, the substantially concurrent
86
sale of, Equity Interests of the Issuer or any direct or indirect
parent of the Issuer or contributions to the equity capital of the
Issuer (other than any Disqualified Stock or any Equity Interests
sold to a Subsidiary of the Issuer ) (collectively, including any
such contributions, "Refunding Capital Stock") (B) the declaration
and payment of dividends on the Retired Capital Stock out of the
proceeds of the substantially concurrent sale (other than to a
Subsidiary of the Issuer) of Refunding Capital Stock, and (C) if
immediately prior to the retirement of the Retired Capital Stock,
the declaration and payment of dividends thereon was permitted under
clause (vi) of this Section 4.07(b) and not made pursuant to clause
(ii)(B) of this paragraph, the declaration and payment of dividends
on the Refunding Capital Stock (other than Refunding Capital Stock
the proceeds of which were used to redeem, repurchase, retire or
otherwise acquire any Equity Interests of any direct or indirect
parent of the Issuer) in an aggregate amount per year no greater
than the aggregate amount of dividends per annum that were
declarable and payable on such Retired Capital Stock immediately
prior to such retirement;
(iii) the redemption, repurchase, defeasance, or other
acquisition or retirement of Subordinated Indebtedness of the Issuer
or any Guarantor made by exchange for, or out of the proceeds of the
substantially concurrent sale of, new Indebtedness of the Issuer or
a Guarantor which is Incurred in accordance with Section 4.09 hereof
so long as:
(A) the principal amount (or accreted value, if
applicable) of such new Indebtedness does not exceed the
principal amount (or accreted value, if applicable) plus any
accrued and unpaid interest, 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, any tender premiums, plus any defeasance costs, fees
and expenses incurred in connection therewith;
(B) such Indebtedness is subordinated to the Notes or
the related Guarantee, as the case may be, 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 earlier of (x) the final
scheduled maturity date of the Subordinated Indebtedness being
so redeemed, repurchased, acquired or retired and (y) 91 days
following the maturity date of the Notes; and
(D) such Indebtedness has a Weighted Average Life to
Maturity at the time Incurred which is not less than the
shorter of (x) the remaining Weighted Average Life to Maturity
of the Subordinated Indebtedness being so redeemed,
repurchased, acquired or retired and (y) the Weighted Average
Life to Maturity that would result if all payments of
principal on the
87
Subordinated Indebtedness being redeemed, repurchased,
acquired or retired that were due on or after the date that is
one year following the last maturity date of any Notes then
outstanding were instead due on such date one year following
the last date of maturity of the Notes;
(iv) the repurchase, retirement or other acquisition (or
dividends to any direct or indirect parent of the Issuer to finance
any such repurchase, retirement or other acquisition) for value of
Equity Interests of the Issuer or any direct or indirect parent of
the Issuer held by any future, present or former employee, director
or consultant of the Issuer or any direct or indirect parent of the
Issuer or any Subsidiary of the Issuer pursuant to any management
equity plan or stock option plan or any other management or employee
benefit plan or other agreement or arrangement; provided, however,
that the aggregate Restricted Payments made under this clause (iv)
do not exceed $30 million in any calendar year (with unused amounts
in any calendar year being permitted to be carried over to
succeeding calendar years); provided, further, however, that such
amount in any calendar year may be increased by an amount not to
exceed:
(A) the cash proceeds received by the Issuer or any of
its Restricted Subsidiaries from the sale of Equity Interests
(other than Disqualified Stock) of the Issuer or any direct or
indirect parent of the Issuer (to the extent contributed to
the Issuer) to members of management, directors or consultants
of the Issuer and its Restricted Subsidiaries or any direct or
indirect parent of the Issuer that occurs after the Issue Date
(provided that the amount of such cash proceeds utilized for
any such repurchase, retirement, other acquisition or dividend
will not increase the amount available for Restricted Payments
under clause (iii) of Section 4.07(a) hereof; plus
(B) the cash proceeds of key man life insurance policies
received by the Issuer or any direct or indirect parent of the
Issuer (to the extent contributed to the Issuer) or the
Issuer's Restricted Subsidiaries after the Issue Date; plus
(C) the amount of any cash bonuses otherwise payable to
members of management, directors or consultants of the Issuer
and its Restricted Subsidiaries or any direct or indirect
parent of the Issuer in connection with the Transactions that
are foregone in return for the receipt of Equity Interests;
provided that the Issuer may elect to apply all or any portion of
the aggregate increase contemplated by clauses (A), (B) and (C) of
this Section 4.07(b)(iv) in any calendar year; and provided,
further, that cancellation of Indebtedness owing to the Issuer or
any Restricted Subsidiary from members of management of the Issuer,
any of its Restricted Subsidiaries or its direct or indirect parents
in connection with a repurchase of Equity Interests of the Issuer or
any of its direct or indirect parents will not be deemed to
constitute a Restricted Payment for purposes of this Section 4.07 or
any other provision of this Indenture;
88
(v) the declaration and payment of dividends or distributions
to holders of any class or series of Disqualified Stock of the
Issuer or any of its Restricted Subsidiaries issued or incurred in
accordance with Section 4.09 hereof;
(vi) (A) the declaration and payment of dividends or
distributions to holders of any class or series of Designated
Preferred Stock (other than Disqualified Stock) issued after the
Issue Date; provided that the aggregate amount of dividends declared
and paid pursuant to this clause (A) does not exceed the net cash
proceeds actually received by the Issuer from any such sale of
Designated Preferred Stock (other than Disqualified Stock) issued
after the Issue Date;
(B) a Restricted Payment to any direct or indirect
parent of the Issuer, the proceeds of which will be used to
fund the payment of dividends to Holders of any class or
series of Designated Preferred Stock (other than Disqualified
Stock) of any direct or indirect parent of the Issuer issued
after the Issue Date; provided that the aggregate amount of
dividends declared and paid pursuant to this clause (B) does
not exceed the net cash proceeds actually received by the
Issuer from any such sale of Designated Preferred Stock (other
than Disqualified Stock) issued after the Issue Date; or
(C) the declaration and payment of dividends on
Refunding Capital Stock that is Preferred Stock in excess of
the dividends declarable and payable thereon pursuant to
clause (ii) of this Section 4.07(b);
provided, however, in the case of each of (A), (B) and (C) of this
clause (vi), 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 (and the
payment of dividends or distributions) on a pro forma basis, the
Issuer would have had a Fixed Charge Coverage Ratio of at least 2.00
to 1.00;
(vii) so long as immediately after giving effect to such
transaction on a pro forma basis, the Issuer's Consolidated Leverage
Ratio would be less than 6.0 to 1.0, Investments in Unrestricted
Subsidiaries having an aggregate Fair Market Value (as determined in
good faith by the Issuer), taken together with all other Investments
made pursuant to this clause (vii) that are at that time
outstanding, not to exceed the greater of $35 million and 1.0% 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);
(viii) the payment of dividends on the Issuer's common stock
(or a Restricted Payment to any direct or indirect parent of the
Issuer to fund the payment by such direct or indirect parent of the
Issuer of dividends on such entity's common stock) of up to 6.0% per
annum of the net proceeds received by
89
the Issuer from any public offering of common stock of the Issuer or
any direct or indirect parent of the Issuer;
(ix) Restricted Payments that are made with Excluded
Contributions;
(x) other Restricted Payments in an aggregate amount not to
exceed the greater of $50 million and 1.5% of Total Assets at the
time made;
(xi) the distribution, as a dividend or otherwise, of shares
of Capital Stock of, or Indebtedness owed to the Issuer or a
Restricted Subsidiary of the Issuer by, Unrestricted Subsidiaries;
(xii) the payment of dividends or other distributions to any
direct or indirect parent of the Issuer in amounts required for such
parent to pay foreign, federal, state or local income taxes (as the
case may be) imposed directly on such parent to the extent such
income taxes are attributable to the income of the Issuer and its
Restricted Subsidiaries (including, without limitation, by virtue of
such parent being the common parent of a consolidated or combined
tax group of which the Issuer and/or its Restricted Subsidiaries are
members);
(xiii) the payment of dividends, other distributions or other
amounts or the making of loans or advances or any other Restricted
Payment, if applicable:
(A) in amounts required for any direct or indirect
parent of the Issuer, if applicable, to pay fees and expenses
(including franchise or similar taxes) required to maintain
its corporate existence, customary salary, bonus and other
benefits payable to, and indemnities provided on behalf of,
officers and employees of any direct or indirect parent of the
Issuer, if applicable, and general corporate operating and
overhead expenses of any direct or indirect parent of the
Issuer, if applicable, in each case to the extent such fees
and expenses are attributable to the ownership or operation of
the Issuer, if applicable, and its Subsidiaries;
(B) in amounts required for any direct or indirect
parent of the Issuer, if applicable, to pay interest and/or
principal on Indebtedness the proceeds of which have been
contributed to the Issuer or any of its Restricted
Subsidiaries and that has been guaranteed by, or is otherwise
considered Indebtedness of, the Issuer Incurred in accordance
with Section 4.09 hereof; and
(C) in amounts required for any direct or indirect
parent of the Issuer to pay fees and expenses, other than to
Affiliates of the Issuer, related to any unsuccessful equity
or debt offering of such parent;
(xiv) any Restricted Payment used to fund the Transactions and
the payment of fees and expenses incurred in connection with the
Transactions or owed by the Issuer or any direct or indirect parent
of the Issuer or Restricted
90
Subsidiaries of the Issuer to Affiliates, in each case to the extent
permitted under Section 4.11 hereof;
(xv) repurchases of Equity Interests deemed to occur upon
exercise of stock options or warrants if such Equity Interests
represent a portion of the exercise price of such options or
warrants;
(xvi) purchases of receivables pursuant to a Receivables
Repurchase Obligation in connection with a Qualified Receivables
Financing and the payment or distribution of Receivables Fees;
(xvii) payments of cash, or dividends, distributions, advances
or other Restricted Payments by the Issuer or any Restricted
Subsidiary to allow the payment of cash in lieu of the issuance of
fractional shares upon the exercise of options or warrants or upon
the conversion or exchange of Capital Stock of any such Person;
(xviii) the repurchase, redemption or other acquisition or
retirement for value of any Subordinated Indebtedness pursuant to
the provisions similar to those described under Sections 4.10 and
4.13 hereof; provided that all Notes tendered by Holders in
connection with a Change of Control or Asset Sale Offer, as
applicable, have been repurchased, redeemed or acquired for value;
(xix) any payments made, including any such payments made to
any direct or indirect parent of the Issuer to enable it to make
payments, in connection with the consummation of the Transactions or
as contemplated by the Acquisition Documents, whether payable on the
Issue Date or thereafter (other than payments to any Permitted
Holder or any Affiliate thereof which are not permitted by Section
4.11 hereof); and
(xx) payments or distributions to dissenting stockholders
pursuant to applicable law, pursuant to or in connection with a
consolidation, amalgamation, merger or transfer of all or
substantially all of the assets of the Issuer and its Restricted
Subsidiaries, taken as a whole, that complies with Section 5.01;
provided that as a result of such consolidation, amalgamation,
merger or transfer of assets, the Issuer shall have made a Change of
Control Offer (if required by this Indenture) and that all Notes
tendered by Holders in connection with such Change of Control Offer
have been repurchased, redeemed or acquired for value;
provided, however, that at the time of, and after giving effect to, any
Restricted Payment permitted under clauses (x) and (xi) of this Section
4.07(b), no Default shall have occurred and be continuing or would occur
as a consequence thereof.
(c) As of the Issue Date, all of the Issuer's Subsidiaries will be
Restricted Subsidiaries. The Issuer will not permit any Unrestricted Subsidiary
to become a Restricted Subsidiary except pursuant to the definition of
"Unrestricted Subsidiary."
91
For purposes of designating any Restricted Subsidiary as an Unrestricted
Subsidiary, all outstanding Investments by the Issuer 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 and if such Subsidiary otherwise meets the
definition of an Unrestricted Subsidiary.
Section 4.08 Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries.
(a) The Issuer 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:
(i) (A) pay dividends or make any other distributions to the
Issuer 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 (B) pay any Indebtedness owed to
the Issuer or any of its Restricted Subsidiaries;
(ii) make loans or advances to the Issuer or any of its
Restricted Subsidiaries; or
(iii) sell, lease or transfer any of its properties or assets
to the Issuer or any of its Restricted Subsidiaries.
(b) Section 4.08(a) hereof shall not apply to encumbrances or
restrictions existing under or by reason of:
(i) contractual encumbrances or restrictions in effect on the
Issue Date, including pursuant to the Credit Agreement and the other
Credit Agreement Documents;
(ii) (A) this Indenture and the Notes (and any Exchange Notes
and guarantees thereof), (B) the Senior Toggle Notes Indenture and
the Senior Toggle Notes (and any "exchange notes" and guarantees
thereof), and (C) the Senior Notes Indenture and the Senior Notes
(and any "exchange notes" and guarantees thereof);
(iii) applicable law or any applicable rule, regulation or
order;
(iv) any agreement or other instrument of a Person acquired by
the Issuer or any Restricted Subsidiary which was in existence at
the time of such acquisition(but not created in contemplation
thereof or to provide all or any portion of the funds or credit
support utilized to consummate such acquisition), which encumbrance
or restriction is not applicable to any Person, or the properties
92
or assets of any Person, other than the Person and its Subsidiaries,
or the property or assets of the Person and its Subsidiaries, so
acquired;
(v) contracts or agreements for the sale of assets, including
any restriction with respect to a Restricted Subsidiary imposed
pursuant to an agreement entered into for the sale or disposition of
the Capital Stock or assets of such Restricted Subsidiary;
(vi) Secured Indebtedness otherwise permitted to be Incurred
pursuant to Sections 4.09 and 4.12 hereof that limit the right of
the debtor to dispose of the assets securing such Indebtedness;
(vii) restrictions on cash or other deposits or net worth
imposed by customers under contracts entered into in the ordinary
course of business;
(viii) customary provisions in joint venture agreements,
similar agreements relating solely to such joint venture and other
similar agreements entered into in the ordinary course of business;
(ix) purchase money obligations for property acquired and
Capitalized Lease Obligations in the ordinary course of business;
(x) customary provisions contained in leases, licenses and
other similar agreements, entered into in the ordinary course of
business;
(xi) any encumbrance or restriction of a Receivables
Subsidiary effected in connection with a Qualified Receivables
Financing; provided, however, that such restrictions apply only to
such Receivables Subsidiary;
(xii) other Indebtedness, Disqualified Stock or Preferred
Stock of (a) any Restricted Subsidiary of the Issuer that is a
Guarantor or a Foreign Subsidiary or (b) any Restricted Subsidiary
that is not a Guarantor or a Foreign Subsidiary so long as such
encumbrances and restrictions contained in any agreement or
instrument will not materially affect the Issuer's ability to make
anticipated principal or interest payments on the Notes (as
determined in good faith by the Issuer), in the case of each of
clauses (a) and (b) to the extent that such Indebtedness,
Disqualified Stock or Preferred Stock is permitted to be Incurred
subsequent to the Issue Date under Section 4.09 hereof;
(xiii) any Restricted Investment not prohibited by Section
4.07 and any Permitted Investment; or
(xiv) any encumbrances or restrictions of the type referred to
in Section 4.08(a) hereof imposed by any amendments, modifications,
restatements, renewals, increases, supplements, refundings,
replacements or refinancings of the contracts, instruments or
obligations referred to in clauses (i) through (xiii) of this
Section 4.08(b); provided that such amendments, modifications,
restatements, renewals, increases, supplements, refundings,
replacements or refinancings are, in
93
the good faith judgment of the Issuer, no more restrictive with
respect to 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.
For purposes of determining compliance with this covenant, (1) the
priority of any Preferred Stock in receiving dividends or liquidating
distributions prior to dividends or liquidating distributions being paid
on common stock shall not be deemed a restriction on the ability to make
distributions on Capital Stock and (2) the subordination of loans or
advances made to the Issuer or a Restricted Subsidiary of the Issuer to
other Indebtedness Incurred by the Issuer or any such Restricted
Subsidiary shall not be deemed a restriction on the ability to make loans
or advances.
Section 4.09 Limitation on Incurrence of Indebtedness and Issuance of
Disqualified Stock and Preferred Stock.
(a) (i) the Issuer will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, Incur any Indebtedness
(including Acquired Indebtedness) or issue any shares of Disqualified
Stock; and
(ii) the Issuer will not permit any of its Restricted
Subsidiaries (other than a Guarantor) to issue any shares of
Preferred Stock;
provided, however, that the Issuer and any Guarantor may Incur
Indebtedness (including Acquired Indebtedness) or issue shares of
Disqualified Stock, and any Restricted Subsidiary of the Issuer that is
not a Guarantor may Incur Indebtedness (including Acquired Indebtedness),
issue shares of Disqualified Stock or issue shares of Preferred Stock, in
each case if the Fixed Charge Coverage Ratio of the Issuer for the 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 or
Preferred Stock is issued would have been at least 2.00 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 or Preferred 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) The provisions of Section 4.09(a) hereof shall not apply to:
(i) the Incurrence by the Issuer or its Restricted
Subsidiaries of Indebtedness under the Credit Agreement and the
issuance and creation of letters of credit and bankers' acceptances
thereunder;
(ii) the Incurrence by the Issuer and the Guarantors of
Indebtedness represented by (1) the Notes (not including any
Additional Notes)
94
and the Guarantees (including Exchange Notes and related guarantees
thereof), (2) the Senior Notes (not including any additional Senior
Notes) and the related guarantees thereof (including exchange Senior
Notes and the related guarantees thereof) and (3) the Senior Toggle
Notes (not including any additional Senior Toggle Notes) and the
related guarantees thereof (including exchange Senior Toggle Notes
and the related guarantees thereof);
(iii) Indebtedness of the Issuer or any of its Restricted
Subsidiaries existing on the Issue Date (other than Indebtedness
described in clauses (i) and (ii) of this Section 4.09(b));
(iv) Indebtedness (including Capitalized Lease Obligations)
Incurred by the Issuer or any of its Restricted Subsidiaries,
Disqualified Stock issued by the Issuer or any of its Restricted
Subsidiaries and Preferred Stock issued by any Restricted
Subsidiaries of the Issuer to finance (whether prior to or within
270 days after) the purchase, lease, construction 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), and any refinancings or replacements thereof, in an
aggregate principal amount, which when aggregated with the principal
amount of all other Indebtedness (including Capitalized Lease
Obligations), together with any refinancings ore replacements
thereof, then outstanding and Incurred under this clause (iv), does
not exceed the Permitted Amount at the time of Incurrence (it being
understood that any Indebtedness Incurred under this clause (iv)
shall cease to be deemed Incurred or outstanding for purposes of
this clause (iv) but shall be deemed Incurred for purposes of the
first paragraph of this covenant from and after the first date on
which the Issuer, or the Restricted Subsidiary, as the case may be,
could have Incurred such Indebtedness under the first paragraph of
this covenant without reliance upon this clause (iv));
(v) Indebtedness Incurred by the Issuer or any of its
Restricted Subsidiaries constituting reimbursement obligations with
respect to letters of credit and bank guarantees issued in the
ordinary course of business, including without limitation letters of
credit in respect of workers' compensation claims, health,
disability or other benefits to employees or former employees or
their families or property, casualty or liability insurance or
self-insurance, and letters of credit in connection with the
maintenance of, or pursuant to the requirements of, environmental or
other permits or licenses from governmental authorities, or other
Indebtedness with respect to reimbursement type obligations
regarding workers' compensation claims;
(vi) Indebtedness arising from agreements of the Issuer or a
Restricted Subsidiary providing for indemnification, adjustment of
purchase price or similar obligations, in each case, Incurred in
connection with the Transactions or any other acquisition or
disposition of any business, assets or a Subsidiary of the Issuer in
accordance with the terms of this Indenture, other than guarantees
of
95
Indebtedness Incurred by any Person acquiring all or any portion of
such business, assets or Subsidiary for the purpose of financing
such acquisition;
(vii) Indebtedness of the Issuer to a Restricted Subsidiary;
provided that any such Indebtedness owed to a Restricted Subsidiary
that is not a Guarantor is subordinated in right of payment to the
obligations of the Issuer under the Notes; provided, further, 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 Indebtedness (except to the Issuer or another Restricted
Subsidiary or any pledge of such Indebtedness constituting a
Permitted Lien) shall be deemed, in each case, to be an Incurrence
of such Indebtedness not permitted by this clause (vii);
(viii) shares of Preferred Stock of a Restricted Subsidiary
issued to the Issuer or another Restricted Subsidiary; provided that
any subsequent issuance or transfer of any Capital Stock or any
other event which results in any Restricted Subsidiary that holds
such shares of Preferred Stock of another Restricted Subsidiary
ceasing to be a Restricted Subsidiary or any other subsequent
transfer of any such shares of Preferred Stock (except to the Issuer
or another Restricted Subsidiary) shall be deemed, in each case, to
be an issuance of shares of Preferred Stock not permitted by this
clause (viii);
(ix) Indebtedness of a Restricted Subsidiary to the Issuer or
another Restricted Subsidiary; provided that if a Guarantor incurs
such Indebtedness to 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 issuance or transfer of any Capital Stock or any other
event which results in any Restricted Subsidiary holding such
Indebtedness ceasing to be a Restricted Subsidiary or any other
subsequent transfer of any such Indebtedness (except to the Issuer
or another Restricted Subsidiary or any pledge of such Indebtedness
constituting a Permitted Lien) shall be deemed, in each case, to be
an Incurrence of such Indebtedness not permitted by this clause
(ix);
(x) Hedging Obligations that are not incurred for speculative
purposes and are either (1) 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; (2) for
the purpose of fixing or hedging currency exchange rate risk with
respect to any currency exchanges; or (3) for the purpose of fixing
or hedging commodity price risk with respect to any commodity
purchases or sales;
(xi) obligations (including reimbursement obligations with
respect to letters of credit and bank guarantees) in respect of
performance, bid, appeal and surety bonds and completion guarantees
provided by the Issuer or any Restricted Subsidiary in the ordinary
course of business or consistent with past practice or industry
practice;
96
(xii) Indebtedness or Disqualified Stock of the Issuer or any
Restricted Subsidiary of the Issuer and Preferred Stock of any
Restricted Subsidiary of the Issuer not otherwise permitted
hereunder in an aggregate principal amount or liquidation
preference, which when aggregated with the principal amount or
liquidation preference of all other Indebtedness, Disqualified Stock
and Preferred Stock then outstanding and Incurred under this clause
(xii), does not exceed the greater of $100 million and 3.0% of Total
Assets at the time of Incurrence (it being understood that any
Indebtedness Incurred under this clause (xii) shall cease to be
deemed Incurred or outstanding for purposes of this clause (xii) but
shall be deemed Incurred for purposes of the first paragraph of this
covenant from and after the first date on which the Issuer, or the
Restricted Subsidiary, as the case may be, could have Incurred such
Indebtedness under the first paragraph of this covenant without
reliance upon this clause (xii));
(xiii) Indebtedness or Disqualified Stock of the Issuer or any
Restricted Subsidiary of the Issuer and Preferred Stock of any
Restricted Subsidiary of the Issuer not otherwise permitted
hereunder in an aggregate principal amount or liquidation preference
not greater than 200.0% of the Unapplied Proceeds;
(xiv) any guarantee by the Issuer or any Restricted Subsidiary
of the Issuer of Indebtedness or other obligations of the Issuer or
any of its Restricted Subsidiaries so long as the Incurrence of such
Indebtedness Incurred by the Issuer or such Restricted Subsidiary is
permitted under the terms of this Indenture; provided that (i) if
such Indebtedness is by its express terms subordinated in right of
payment to the Notes or the Guarantee of such Restricted Subsidiary,
as applicable, any such guarantee of such Guarantor with respect to
such Indebtedness shall be subordinated in right of payment to such
Guarantor's Guarantee with respect to the Notes substantially to the
same extent as such Indebtedness is subordinated to the Notes or the
Guarantee of such Restricted Subsidiary, as applicable and (ii) if
such guarantee is of Indebtedness of the Issuer, such guarantee is
Incurred in accordance with Section 4.14 hereof solely to the extent
Section 4.14 is applicable;
(xv) the Incurrence by the Issuer or any of its Restricted
Subsidiaries of Indebtedness or Disqualified Stock or Preferred
Stock of a Restricted Subsidiary of the Issuer which serves to
refund, refinance or defease any Indebtedness Incurred or
Disqualified Stock or Preferred Stock issued as permitted under
Section 4.09(a) and clauses (ii), (iii), (xiii), (xv), (xvi) and
(xx) of this Section 4.09(b) or any Indebtedness, Disqualified Stock
or Preferred Stock Incurred to so refund or refinance such
Indebtedness, Disqualified Stock or Preferred Stock, including any
additional Indebtedness, Disqualified Stock or Preferred Stock
Incurred to pay premiums (including tender premiums), defeasance
costs and fees in connection therewith (subject to the following
proviso, "Refinancing Indebtedness") prior to its respective
maturity; provided, however, that such Refinancing Indebtedness:
97
(A) has a Weighted Average Life to Maturity at the time
such Refinancing Indebtedness is Incurred which is not less
than the shorter of (x) the remaining Weighted Average Life to
Maturity of the Indebtedness, Disqualified Stock or Preferred
Stock being refunded, refinanced or defeased and (y) the
Weighted Average Life to Maturity that would result if all
payments of principal on the Indebtedness, Disqualified Stock
and Preferred Stock being refunded or refinanced that were due
on or after the date that is one year following the last
maturity date of any Notes then outstanding were instead due
on such date one year following the last date of maturity of
the Notes;
(B) has a Stated Maturity which is not earlier than the
earlier of (x) the Stated Maturity of the Indebtedness being
refunded or refinanced or (y) 91 days following the maturity
date of the Notes;
(C) to the extent such Refinancing Indebtedness
refinances (a) Indebtedness junior to the Notes or the
Guarantee of such Restricted Subsidiary, as applicable, such
Refinancing Indebtedness is junior to the Notes or the
Guarantee of such Restricted Subsidiary, as applicable, or (b)
Disqualified Stock or Preferred Stock, such Refinancing
Indebtedness is Disqualified Stock or Preferred Stock; and
(D) shall not include (x) Indebtedness of a Restricted
Subsidiary of the Issuer that is not a Guarantor that
refinances Indebtedness of the Issuer or a Guarantor, or (y)
Indebtedness of the Issuer or a Restricted Subsidiary that
refinances Indebtedness of an Unrestricted Subsidiary,
provided, further, that subclauses (A) and (B) of this clause (xv)
will not apply to any refunding or refinancing of any Secured
Indebtedness.
(xvi) Indebtedness, Disqualified Stock or Preferred Stock of
(x) the Issuer or any of its Restricted Subsidiaries incurred to
finance an acquisition or (y) Persons that are acquired by the
Issuer or any of its Restricted Subsidiaries or merged, consolidated
or amalgamated with or into the Issuer or any of its Restricted
Subsidiaries in accordance with the terms of this Indenture;
provided that after giving effect to such acquisition or merger,
consolidation or amalgamation, either:
(A) such Indebtedness, Disqualified Stock or Preferred
Stock (i) is Pari Passu Indebtedness or Subordinated
Indebtedness, (ii) is not Incurred while a Default exists and
no Default shall result therefrom and (iii) matures and does
not require any payment of principal prior to the final
maturity of the Notes (other than in a manner consistent with
the terms of this Indenture; or
(B) the Fixed Charge Coverage Ratio of the Issuer would
be equal to or greater than immediately prior to such
acquisition or merger, consolidation or amalgamation;
98
(xvii) Indebtedness Incurred by a Receivables Subsidiary in a
Qualified Receivables Financing that is not recourse to the Issuer
or any Restricted Subsidiary other than a Receivables Subsidiary
(except for Standard Securitization Undertakings);
(xviii) Indebtedness arising from the honoring by a bank or
other financial institution of a check, draft or similar instrument
drawn against insufficient funds in the ordinary course of business;
provided that such Indebtedness is extinguished within five Business
Days of its Incurrence;
(xix) Indebtedness of the Issuer or any Restricted Subsidiary
supported by a letter of credit or bank guarantee issued pursuant to
the Credit Agreement, in a principal amount not in excess of the
stated amount of such letter of credit;
(xx) Indebtedness of Foreign Subsidiaries; provided, however,
that the aggregate principal amount of Indebtedness Incurred under
this clause (xx), when aggregated with the principal amount of all
other Indebtedness then outstanding and Incurred pursuant to this
clause (xx), does not exceed the greater of $50 million and 1.5% of
Total Assets at any one time outstanding (it being understood that
any Indebtedness incurred pursuant to this clause (xx) shall cease
to be deemed incurred or outstanding for purposes of this clause
(xx) but shall be deemed incurred for the purposes of the first
paragraph of this covenant from and after the first date on which
such Foreign Subsidiary could have incurred such Indebtedness under
the first paragraph of this covenant without reliance upon this
clause (xx));
(xxi) Indebtedness of the Issuer or any Restricted Subsidiary
consisting of the financing of insurance premiums;
(xxii) Indebtedness, Disqualified Stock or Preferred Stock of
the Issuer or a Restricted Subsidiary of the Issuer incurred to
finance or assumed in connection with an acquisition, and any
refinancing or replacement thereof, in a principal amount not to
exceed the greater of (A) $75 million and (B) 2.25% of Total Assets
in the aggregate at any one time outstanding together with all other
Indebtedness, Disqualified Stock and/or Preferred Stock issued under
this clause (xxii) (it being understood that any Indebtedness,
Disqualified Stock or Preferred Stock incurred pursuant to this
clause (xxii) shall cease to be deemed incurred or outstanding for
purposes of this clause (xxii) but shall be deemed incurred for the
purposes of Section 4.09(a) hereof from and after the first date on
which such Restricted Subsidiary could have incurred such
Indebtedness, Disqualified Stock or Preferred Stock under the first
paragraph of this covenant without reliance on this clause (xxii));
(xxiii) Indebtedness consisting of Indebtedness issued by the
Issuer or a Restricted Subsidiary of the Issuer to current or former
officers, directors and employees thereof or any direct or indirect
parent thereof, their
99
respective estates, spouses or former spouses, in each case to
finance the purchase or redemption of Equity Interests of the Issuer
or any of its direct or indirect parent companies to the extent
described in clause (iv) of Section 4.07(b) hereof; and
(xxiv) Indebtedness incurred on behalf of, or representing
Guarantees of Indebtedness of, joint ventures of the Issuer or any
Restricted Subsidiary not in excess, at any one time outstanding, of
the greater of (x) $25 million and (y) 1.0% of Total Assets.
(c) For purposes of determining compliance with this Section 4.09:
(i) in the event that an item of Indebtedness, Disqualified
Stock or Preferred Stock (or any portion thereof) meets the criteria
of more than one of the categories of permitted Indebtedness
described in clauses (i) through (xxiv) of Section 4.09(b) hereof or
is entitled to be Incurred pursuant to Section 4.09(a) hereof, the
Issuer shall, in its sole discretion, classify or reclassify, or
later divide, classify or reclassify, such item of Indebtedness,
Disqualified Stock or Preferred Stock (or any portion thereof) in
any manner and at any time that complies with this Section 4.09; and
(ii) at the time of incurrence, the Issuer will be entitled to
divide and classify an item of Indebtedness in more than one of the
types of Indebtedness described in Sections 4.09(a) and 4.09(b)
hereof without giving pro forma effect to the Indebtedness Incurred
pursuant to Section 4.09(b) hereof when calculating the amount of
Indebtedness that may be Incurred pursuant to Section 4.09(a)
hereof.
Accrual of interest, the accretion of accreted value, the payment of
interest or dividends in the form of additional Indebtedness, Disqualified
Stock or Preferred Stock, as applicable, accretion of original issue
discount, the accretion of liquidation preference and increases in the
amount of Indebtedness outstanding solely as a result of fluctuations in
the exchange rate of currencies will not be deemed to be an Incurrence of
Indebtedness, Disqualified Stock or Preferred Stock for purposes of this
Section 4.09. Guarantees of, or obligations in respect of letters of
credit relating to, Indebtedness which is otherwise included in the
determination of a particular amount of Indebtedness shall not be included
in the determination of such amount of Indebtedness; provided that the
Incurrence of the Indebtedness represented by such guarantee or letter of
credit, as the case may be, was in compliance with this Section 4.09.
For purposes of determining compliance with any U.S.
dollar-denominated restriction on the Incurrence of Indebtedness, the U.S.
dollar equivalent principal amount of Indebtedness denominated in a
foreign currency shall be calculated based on the relevant currency
exchange rate in effect on the date such Indebtedness was incurred, in the
case of term debt, or first committed or first Incurred (whichever yields
the lower U.S. dollar equivalent), in the case of revolving credit debt;
provided that if
100
such Indebtedness is incurred to refinance other Indebtedness denominated
in a foreign currency, and such refinancing would cause the applicable
U.S. dollar-denominated restriction to be exceeded if calculated at the
relevant currency exchange rate in effect on the date of such refinancing,
such U.S. dollar-denominated restriction shall be deemed not to have been
exceeded so long as the principal amount of such refinancing Indebtedness
does not exceed the principal amount of such Indebtedness being
refinanced.
Notwithstanding any other provision of this covenant, the maximum
amount of Indebtedness that the Issuer and its Restricted Subsidiaries may
Incur pursuant to this covenant shall not be deemed to be exceeded, with
respect to any outstanding Indebtedness, solely as a result of
fluctuations in the exchange rate of currencies. The principal amount of
any Indebtedness incurred to refinance other Indebtedness, if incurred in
a different currency from the Indebtedness being refinanced, shall be
calculated based on the currency exchange rate applicable to the
currencies in which such respective Indebtedness is denominated that is in
effect on the date of such refinancing.
Section 4.10 Asset Sales.
(a) The Issuer shall not, and shall not permit any of its Restricted
Subsidiaries to, cause or make an Asset Sale, unless (i) the Issuer or any
of 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 Issuer) of the assets sold or otherwise
disposed of, and (ii) at least 75% of the consideration therefor received
by the Issuer or such Restricted Subsidiary, as the case may be, is in the
form of Cash Equivalents; provided that the amount of:
(A) any liabilities (as shown on the Issuer's or such
Restricted Subsidiary's most recent balance sheet or in the
notes thereto) of the Issuer or any Restricted Subsidiary of
the Issuer (other than liabilities that are by their terms
subordinated to the Notes or any Guarantee) that are assumed
by the transferee of any such assets;
(B) any notes or other obligations or other securities
or assets received by the Issuer or such Restricted Subsidiary
of the Issuer from such transferee that are converted by the
Issuer or such Restricted Subsidiary of the Issuer into cash
within 180 days of the receipt thereof (to the extent of the
cash received); and
(C) any Designated Non-cash Consideration received by
the Issuer or any of its Restricted Subsidiaries in such Asset
Sale having an aggregate Fair Market Value (as determined in
good faith by the Issuer), taken together with all other
Designated Non-cash Consideration received pursuant to this
clause (c) that is at that time outstanding, not to exceed the
greater of 3.0% of Total Assets and $100 million at the time
of the receipt of such Designated Non-cash Consideration (with
the Fair Market Value of each item of Designated Non-
101
cash Consideration being measured at the time received and
without giving effect to subsequent changes in value);
shall be deemed to be Cash Equivalents for the purposes of this
provision.
(b) Within 15 months after the Issuer's or any Restricted Subsidiary
of the Issuer's receipt of the Net Proceeds of any Asset Sale, the Issuer
or such Restricted Subsidiary of the Issuer may apply the Net Proceeds
from such Asset Sale, at its option:
(i) to repay (a) Indebtedness constituting Senior Indebtedness
(and, if the Indebtedness repaid is revolving credit Indebtedness,
to correspondingly reduce commitments with respect thereto), (b)
Indebtedness of a Restricted Subsidiary that is not a Guarantor, (c)
Obligations under the Notes or (d) other Pari Passu Indebtedness
(provided that if the Issuer or any Guarantor shall so reduce
Obligations under Pari Passu Indebtedness, the Issuer will equally
and ratably reduce Obligations under the Notes as provided under
Section 3.07 hereof, through open-market purchases (provided that
such purchases are at or above 100% of the principal amount thereof)
or by making an offer (in accordance with the procedures set forth
below for an Asset Sale Offer) to all Holders to purchase at a
purchase price equal to 100% of the principal amount thereof, plus
accrued and unpaid interest and additional interest, if any, the pro
rata principal amount of Notes), in each case other than
Indebtedness owed to the Issuer or an Affiliate of the Issuer; or
(ii) to make an Investment in any one or more businesses
(provided that if such Investment is in the form of the acquisition
of Capital Stock of a Person, such acquisition results in such
Person becoming a Restricted Subsidiary of the Issuer), assets, or
property or capital expenditures, in each case (a) used or useful in
a Similar Business or (b) that replace the properties and assets
that are the subject of such Asset Sale.
In the case of clause (ii) of this Section 4.10(b), a binding
commitment shall be treated as a permitted application of the Net Proceeds
from the date of such commitment; provided that in the event such binding
commitment is later canceled or terminated for any reason before such Net
Proceeds are so applied, the Issuer or such Restricted Subsidiary enters
into another binding commitment (a "Second Commitment") within nine months
of such cancellation or termination of the prior binding commitment;
provided, further that the Issuer or such Restricted Subsidiary may only
enter into a Second Commitment under the foregoing provision one time with
respect to each Asset Sale.
(c) Pending the final application of any such Net Proceeds, the
Issuer or such Restricted Subsidiary of the Issuer may temporarily reduce
Indebtedness under a revolving credit facility, if any, or otherwise
invest such Net Proceeds in any manner not prohibited by this Indenture.
Any Net Proceeds from any Asset Sale that are not applied as provided and
within the time period set forth in this Section 4.10(b) (it being
102
understood that any portion of such Net Proceeds used to make an offer to
purchase Notes, as described in clause (i) of this Section 4.10(b), shall
be deemed to have been invested whether or not such offer is accepted)
will be deemed to constitute "Excess Proceeds." When the aggregate amount
of Excess Proceeds exceeds $20 million, the Issuer shall make an offer to
all Holders of Notes (and, at the option of the Issuer, to holders of any
Pari Passu Indebtedness) (an "Asset Sale Offer") to purchase the maximum
principal amount of Notes (and such Pari Passu Indebtedness), that is at
least $2,000 and 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 (or, in the event such Pari Passu
Indebtedness was issued with significant original issue discount, 100% of
the accreted value thereof), plus accrued and unpaid interest and
additional interest, if any (or, in respect of such Pari Passu
Indebtedness, such lesser price, if any, as may be provided for by the
terms of such Pari Passu Indebtedness), to the date fixed for the closing
of such offer, in accordance with the procedures set forth in Section 3.09
hereof. The Issuer will commence an Asset Sale Offer with respect to
Excess Proceeds within ten (10) Business Days after the date that Excess
Proceeds exceeds $20 million by mailing the notice required pursuant to
the terms this Indenture, with a copy to the Trustee. To the extent that
the aggregate amount of Notes (and such Pari Passu Indebtedness) tendered
pursuant to an Asset Sale Offer is less than the Excess Proceeds, the
Issuer may use any remaining Excess Proceeds for any purpose that is not
prohibited by this Indenture. If the aggregate principal amount of Notes
(and such Pari Passu Indebtedness) 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 4.10(e) hereof. Upon
completion of any such Asset Sale Offer, the amount of Excess Proceeds
shall be reset at zero.
(d) The Issuer shall comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations 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 this Indenture, the Issuer will comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations described in this Indenture by virtue thereof.
(e) If more Notes (and such Pari Passu Indebtedness) are tendered
pursuant to an Asset Sale Offer than the Issuer is required to purchase,
selection of such Notes for purchase will be made by the Trustee; provided
that no Notes of $2,000 or less shall be purchased in part. Selection of
such Pari Passu Indebtedness will be made pursuant to the terms of such
Pari Passu Indebtedness.
Section 4.11 Transactions with Affiliates.
(a) The Issuer will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, 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 or series of transactions, contract, agreement,
understanding, loan, advance or guarantee with, or for the benefit of, any
103
Affiliate of the Issuer (each of the foregoing, an "Affiliate
Transaction") involving aggregate consideration in excess of $10 million,
unless:
(i) such Affiliate Transaction is on terms that are not
materially less favorable to the Issuer or the relevant Restricted
Subsidiary than those that could have been obtained in a comparable
transaction by the Issuer or such Restricted Subsidiary with an
unrelated Person; and
(ii) with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving aggregate consideration in
excess of $25 million, the Issuer delivers to the Trustee a
resolution adopted in good faith by the majority of the Board of
Directors of the Issuer, approving such Affiliate Transaction and
set forth in an Officer's Certificate certifying that such Affiliate
Transaction complies with clause (i) of this Section 4.11(a).
(b) Section 4.11(a) will not apply to the following:
(i) transactions between or among the Issuer and/or any of its
Restricted Subsidiaries and any merger, consolidation or
amalgamation of the Issuer and any direct parent of the Issuer;
provided that such parent shall have no material liabilities and no
material assets other than cash, Cash Equivalents and the Capital
Stock of the Issuer and such merger, consolidation or amalgamation
is otherwise in compliance with the terms of this Indenture and
effected for a bona fide business purpose;
(ii) Restricted Payments permitted by Section 4.07 hereof and
Permitted Investments;
(iii) (x) the entering into of any agreement (and any
amendment or modification of any such agreement) to pay, and the
payment of, management, consulting, monitoring and advisory fees to
the Sponsors in an aggregate amount in any fiscal year not to exceed
the greater of (A) $6 million and (B) 2.0% of EBITDA of the Issuer
and its Restricted Subsidiaries for the immediately preceding fiscal
year, plus out-of-pocket expense reimbursement; provided, however,
that any payment not made in any fiscal year may be carried forward
and paid in any succeeding fiscal year and (y) the payment of the
present value of all amounts payable pursuant to any agreement
described in clause (x) of this paragraph in connection with the
termination of such agreement;
(iv) the payment of reasonable and customary fees and
reimbursement of expenses paid to, and indemnity provided on behalf
of, officers, directors, employees or consultants of the Issuer or
any Restricted Subsidiary or any direct or indirect parent of the
Issuer;
(v) payments by the Issuer or any of its Restricted
Subsidiaries to the Sponsors 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
104
payments are (x) made pursuant to the agreements with the Sponsors
described in the Offering Memorandum or (y) approved by a majority
of the Board of Directors of the Issuer in good faith;
(vi) transactions in which the Issuer 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 Issuer or such Restricted Subsidiary from a financial
point of view or meets the requirements of Section 4.11(a) hereof;
(vii) payments or loans (or cancellation of loans) to
officers, directors, employees or consultants which are approved by
a majority of the Board of Directors of the Issuer in good faith;
(viii) any agreement as in effect as of the Issue Date or any
amendment thereto (so long as any such agreement together with all
amendments thereto, taken as a whole, is not more disadvantageous to
the Holders of the Notes in any material respect than the original
agreement as in effect on the Issue Date) or any transaction
contemplated thereby as determined in good faith by the Issuer;
(ix) the existence of, or the performance by the Issuer or any
of its Restricted Subsidiaries of its obligations under the terms
of, Acquisition Documents, any stockholders agreement (including any
registration rights agreement or purchase agreement related thereto)
to which it is a party as of the Issue Date, and any transaction,
agreement or arrangement described in the Offering Memorandum and,
in each case, any amendment thereto or similar transactions,
agreements or arrangements which it may enter into thereafter;
provided, however, that the existence of, or the performance by the
Issuer or any of its Restricted Subsidiaries of its obligations
under, any future amendment to any such existing transaction,
agreement or arrangement or under any similar transaction, agreement
or arrangement entered into after the Issue Date shall only be
permitted by this clause (ix) to the extent that the terms of any
such existing transaction, agreement or arrangement together with
all amendments thereto, taken as a whole, or new transaction,
agreement or arrangement are not otherwise more disadvantageous to
the Holders of the Notes in any material respect than the original
transaction, agreement or arrangement as in effect on the Issue
Date;
(x) the execution of the Transactions and the payment of all
fees and expenses related to the Transactions, including fees to the
Sponsors, which are described in the Offering Memorandum or
contemplated by the Acquisition Documents;
(xi) (a) transactions with customers, clients, suppliers or
purchasers or sellers of goods or services, or transactions
otherwise relating to the purchase or sale 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
Issuer and its Restricted Subsidiaries in the reasonable
determination of
105
the Board of Directors or the senior management of the Issuer, or
are on terms at least as favorable as might reasonably have been
obtained at such time from an unaffiliated party or (b) transactions
with joint ventures or Unrestricted Subsidiaries entered into in the
ordinary course of business;
(xii) any transaction effected as part of a Qualified
Receivables Financing;
(xiii) the issuance of Equity Interests (other than
Disqualified Stock) of the Issuer to any Person;
(xiv) the issuances of securities or other payments, awards or
grants in cash, securities or otherwise pursuant to, or the funding
of, employment arrangements, stock option and stock ownership plans
or similar employee benefit plans approved by the Board of Directors
of the Issuer or any direct or indirect parent of the Issuer or of a
Restricted Subsidiary of the Issuer, as appropriate, in good faith;
(xv) the entering into of any tax sharing agreement or
arrangement;
(xvi) any contribution to the capital of the Issuer;
(xvii) transactions permitted by, and complying with, Section
5.01 hereof;
(xviii) transactions between the Issuer or any of its
Restricted Subsidiaries and any Person, a director of which is also
a director of the Issuer or any direct or indirect parent of the
Issuer; provided, however, that such director abstains from voting
as a director of the Issuer or such direct or indirect parent, as
the case may be, on any matter involving such other Person;
(xix) pledges of Equity Interests of Unrestricted
Subsidiaries;
(xx) any employment agreements entered into by the Issuer or
any of its Restricted Subsidiaries in the ordinary course of
business; and
(xxi) transactions undertaken in good faith (as certified by a
responsible financial or accounting officer of the Issuer in an
Officer's Certificate) for the purpose of improving the consolidated
tax efficiency of the Issuer and its Subsidiaries and not for the
purpose of circumventing any provision in this Indenture.
Section 4.12 Liens. The Issuer shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, Incur or suffer to
exist any Lien (except Permitted Liens) on any asset or property of the Issuer
or such Restricted Subsidiary securing Indebtedness that is not Senior
Indebtedness unless the Notes are equally and ratably secured with (or on a
senior basis to, in the case of obligations
106
subordinated in right of payment to the Notes) the obligations so secured until
such time as such obligations are no longer secured by a Lien. Any Lien which is
granted to secure the Notes or Guarantee pursuant to this covenant shall be
automatically released and discharged at the same time as the release of the
Lien that gave rise to the obligation to secure the Notes or the Guarantee.
Section 4.13 Offer to Repurchase Upon Change of Control. (a) If a Change
of Control occurs, unless the Issuer has previously or concurrently mailed a
redemption notice with respect to all the outstanding Notes as described under
Section 3.07 hereof, the Issuer shall make an offer to purchase all of the Notes
(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 and Additional Interest, if any, to the date of repurchase,
subject to the right of Holders of the Notes of record on the relevant Record
Date to receive interest due on the relevant Interest Payment Date. Within 30
days following any Change of Control, except to the extent that the Issuer has
exercised its right to redeem the Notes by delivery of a notice of redemption as
described under Section 3.03 hereof, the Issuer shall send notice of such Change
of Control Offer by first-class mail to each Holder of Notes to the address of
such Holder appearing in the Note Register or otherwise in accordance with
Applicable Procedures, with a copy to the Trustee, with the following
information:
(1) that a Change of Control has occurred and that such Holder has
the right to require the Issuer to repurchase such Holder's Notes at a
repurchase price in cash equal to 101% of the aggregate principal amount
thereof, plus accrued and unpaid interest and Additional Interest, if any,
to the date of repurchase (subject to the right of the Holders of record
on a Record Date to receive interest on the relevant Interest Payment
Date);
(2) the circumstances and relevant facts and financial information
regarding such Change of Control;
(3) the repurchase date, which will be no earlier than 30 days nor
later than 60 days from the date such notice is mailed (the "Change of
Control Payment Date");
(4) that any Note not properly tendered will remain outstanding and
continue to accrue interest;
(5) that unless the Issuer 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;
107
(6) that Holders electing to have any Notes purchased pursuant to a
Change of Control Offer will be required to surrender such Notes, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of such
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
Change of Control Payment Date;
(7) that Holders will be entitled to withdraw their tendered Notes
and their election to require the Issuer to purchase such Notes, provided
that the paying agent receives, not later than the close of business on
the Change of Control Payment Date, a telegram, facsimile transmission or
letter setting forth the name of the Holder of the Notes, the principal
amount of Notes tendered for purchase, and a statement that such Holder is
withdrawing its tendered Notes and its election to have such Notes
purchased;
(8) that if the Holder elects to have less than all of such Holder's
Notes repurchase, the Holder will receive new Notes and such new Notes
will be equal in principal amount to the unpurchased portion of the Notes
surrendered. The unpurchased portion of the Notes must be equal to $2,000
or an integral multiple of $1,000 in excess of $2,000;
(9) if such notice is mailed prior to the occurrence of a Change of
Control, stating that the Change of Control Offer is conditional on the
occurrence of such Change of Control, and that a definitive agreement is
in place for the Change of Control at the time of making of the Change of
Control Offer; and
(10) the other instructions, as determined by the Issuer, consistent
with this Section 4.13, that a Holder must follow in order to have its
Notes repurchased.
The notice, if mailed in a manner herein provided, shall be conclusively
presumed to have been given, whether or not the Holder receives such notice. If
(a) the notice is mailed in a manner herein provided and (b) any Holder fails to
receive such notice or a Holder receives such notice but it is defective, such
Holder's failure to receive such notice or such defect shall not affect the
validity of the proceedings for the purchase of the Notes as to all other
Holders that properly received such notice without defect. The Issuer shall
comply, to the extent applicable, with the requirements of Rule 14(e) under the
Exchange Act and any other securities laws and regulations 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 the
provisions of this Section 4.13, the Issuer shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under this Section 4.13 by virtue thereof.
108
In the event that at the time of such Change of Control the terms of
any Bank Indebtedness and/or Senior Indebtedness restrict or prohibit the
repurchase of Notes pursuant to this Section 4.13, then prior to the
mailing of the notice to Holders provided for in this Section 4.13 but in
any event within 30 days following any Change of Control, the Issuer
shall:
(i) repay in full all Bank Indebtedness and/or Senior
Indebtedness or, if doing so will allow the purchase of Notes, offer
to repay in full all Bank Indebtedness and repay the Bank
Indebtedness of each lender and/or Note Holder who has accepted such
offer; or
(ii) obtain the requisite consent under the agreements
governing the Bank Indebtedness and/or Senior Notes to permit the
repurchase of the Notes as provided for in this Section 4.13.
(b) On the Change of Control Payment Date, the Issuer shall, to the
extent permitted by law:
(i) accept for payment all Notes issued by it or portions
thereof properly tendered pursuant to the Change of Control Offer;
(ii) 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
(iii) deliver, or cause to be delivered, to the Trustee for
cancellation the Notes so accepted together with an Officer's
Certificate to the Trustee stating that such Notes or portions
thereof have been tendered to and purchased by the Issuer.
(c) The Issuer shall not be required to make a Change of Control
Offer following a Change of Control if a third party makes the Change of
Control Offer in the manner, at the times and otherwise in compliance with
the requirements set forth in this Section 4.13 applicable to a Change of
Control Offer made by the Issuer and purchases all Notes validly tendered
and not withdrawn under such Change of Control Offer. Notes repurchased by
the Issuer pursuant to a Change of Control Offer will have the status of
Notes issued but not outstanding or will be retired and canceled at the
option of the Issuer. Notes purchased by a third party will have the
status of Notes issued and outstanding. Notwithstanding anything to the
contrary herein, a Change of Control Offer may be made in advance of a
Change of Control, and conditioned upon such Change of Control, if a
definitive agreement is in place for the Change of Control at the time of
making of the Change of Control Offer.
(d) Other than as specifically provided in this Section 4.14, any
purchase pursuant to this Section 4.14 shall be made pursuant to the
provisions of Sections 3.05 and 3.06 hereof, and references therein to
"redeem," "redemption" and similar words shall be deemed to refer to
"purchase," "repurchase" and similar words, as applicable.
109
Section 4.14 Future Guarantors. The Issuer shall cause each Wholly-owned
Restricted Subsidiary that is a Domestic Subsidiary (unless such Subsidiary is a
Receivables Subsidiary or a Domestic Subsidiary that is wholly-owned by one or
more Foreign Subsidiaries and created to enhance the tax efficiency of the
Issuer and its Subsidiaries) that guarantees any Indebtedness of the Issuer
under the Credit Agreement or issues shares of Disqualified Stock to promptly
execute and deliver to the Trustee a supplemental indenture, the form of which
is attached as Exhibit D hereto, pursuant to which such Subsidiary will
guarantee payment of the Notes and become a Guarantor under Article X hereof.
Each Guarantee will be limited to an amount not to exceed the maximum amount
that can be guaranteed by that Subsidiary without rendering the Guarantee, as it
relates to such Subsidiary, voidable under applicable law relating to fraudulent
conveyance or fraudulent transfer or similar laws affecting the rights of
creditors generally.
Concurrently with the execution and delivery of such supplemental
indenture, the Issuer shall deliver to the Trustee an Opinion of Counsel
and an Officer's Certificate to the effect that such supplemental
indenture has been duly authorized, executed and delivered by such
Subsidiary and that, subject to the application of bankruptcy, insolvency,
moratorium, fraudulent conveyance or transfer and other similar laws
relating to creditors' rights generally and to the principles of equity,
whether considered in a proceeding at law or in equity, the Guarantee of
such Subsidiary is a legal, valid and binding obligation of such
Subsidiary, enforceable against such Subsidiary in accordance with its
terms and to such other matters as the Trustee may reasonably request.
Section 4.15 Company Existence. Subject to Article V hereof, the Issuer
shall do or cause to be done all things necessary to preserve and keep in full
force and effect (i) its company 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 Issuer or any such Restricted Subsidiary and (ii) the rights
(charter and statutory), licenses and franchises of the Issuer and its
Restricted Subsidiaries; provided that the Issuer 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 Issuer in good
faith shall determine that the preservation thereof is no longer desirable in
the conduct of the business of the Issuer and its Restricted Subsidiaries, taken
as a whole.
Section 4.16 Limitation on Layering. Notwithstanding anything in this
Indenture to the contrary, the Issuer 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 Senior Indebtedness
of the Issuer or such Guarantor, as the case may be, unless such Indebtedness is
either:
(a) equal in right of payment with the Notes or such Guarantor's
Guarantee of the Notes, as the case may be; or
110
(b) expressly subordinated in right of payment to the Notes or such
Guarantor's Guarantee of the Notes, as the case may be.
For the purposes of this Indenture, (1) Indebtedness that is
unsecured is not deemed to be subordinated or junior to Secured
Indebtedness merely because it is unsecured, (2) Senior Indebtedness is
not deemed to be subordinated or junior to any other Senior Indebtedness
merely because it has a junior priority with respect to the same
collateral and (3) Indebtedness that is not guaranteed is not deemed to be
subordinated or junior to any other Indebtedness merely because it is not
guaranteed.
Section 4.17 Suspension of Covenants.
(a) If (i) the Notes have Investment Grade Ratings from both Rating
Agencies and (ii) no Default has occurred and is continuing under this
Indenture then, beginning on that day and continuing at all times
thereafter regardless of any subsequent changes in the rating of the
Notes, Sections 4.07, 4.08, 4.09, 4.10, 4.11, 4.14 and 4.16 hereof and
clause (iv) of Section 5.01(a) hereof shall not be applicable to the
Notes.
(b) In addition, during any period of time that (i) the Notes of a
series have Investment Grade Ratings from both Rating Agencies and (ii) no
Default has occurred and is continuing under this Indenture (the
occurrence of the events described in the foregoing clauses (i) and (ii)
being collectively referred to as a "Covenant Suspension Event"), the
Issuer and its Restricted Subsidiaries will not be subject to Section 4.13
herein (the "Suspended Covenant"). In the event that the Issuer and its
Restricted Subsidiaries are not subject to the Suspended Covenant under
this Indenture for any period of time as a result of the foregoing, and on
any subsequent date (the "Reversion Date") one or both of the Rating
Agencies (x) withdraw their Investment Grade Rating or downgrade the
rating assigned to such series of Notes below an Investment Grade Rating
and/or (y) the Issuer or any of its Affiliates enters into an agreement to
effect a transaction that would result in a Change of Control and one or
more of the Rating Agencies indicate that if consummated, such transaction
(alone or together with any related recapitalization or refinancing
transactions) would cause such Rating Agency to withdraw its Investment
Grade Rating or downgrade the ratings assigned to such series of Notes
below an Investment Grade Rating, then the Issuer and its Restricted
Subsidiaries will thereafter again be subject to the Suspended Covenant
under this Indenture with respect to future events, including, without
limitation, a proposed transaction described in clause (y) of this
paragraph.
111
ARTICLE V
SUCCESSORS
----------
Section 5.01 Merger, Amalgamation, Consolidation or Sale of All or
Substantially All Assets.
(a) The Issuer shall not, directly or indirectly, consolidate,
amalgamate or merge with or into or wind up or convert into (whether or
not the Issuer is the surviving Person), 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 Issuer is the surviving person or the Person formed by
or surviving any such consolidation, amalgamation, merger, winding
up or conversion (if other than the Issuer) or to which such sale,
assignment, transfer, lease, conveyance or other disposition will
have been made is a corporation, partnership or limited liability
company organized or existing under the laws of the United States,
any state thereof, the District of Columbia, or any territory
thereof (the Issuer or such Person, as the case may be, being herein
called the "Successor Issuer"); provided that in the case where the
surviving Person is not a corporation, a co-obligor of the Notes is
a corporation;
(ii) the Successor Issuer (if other than the Issuer) expressly
assumes all the obligations of the Issuer under this Indenture and
the Notes pursuant to supplemental indentures or other documents or
instruments in form reasonably satisfactory to the Trustee;
(iii) immediately after giving effect to such transaction (and
treating any Indebtedness which becomes an obligation of the
Successor Issuer or any of its Restricted Subsidiaries as a result
of such transaction as having been Incurred by the Successor Issuer
or such Restricted Subsidiary at the time of such transaction) no
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 (and treating any Indebtedness
which becomes an obligation of the Successor Issuer or any of its
Restricted Subsidiaries as a result of such transaction as having
been Incurred by the Successor Issuer or such Restricted Subsidiary
at the time of such transaction), either
(A) the Successor Issuer would be permitted to Incur at
least $1.00 of additional Indebtedness pursuant to Section
4.09(a) hereof; or
(B) the Fixed Charge Coverage Ratio for the Successor
Issuer and its Restricted Subsidiaries would be equal or
greater than such ratio for the Issuer and its Restricted
Subsidiaries immediately prior to such transaction;
112
(v) if the Issuer is not the Successor Issuer, each Guarantor,
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, the
Registration Rights Agreement and the Notes; and
(vi) the Issuer shall have delivered to the Trustee an
Officer's Certificate and an Opinion of Counsel, each stating that
such consolidation, merger, amalgamation or transfer and such
supplemental indentures, if any, comply with this Indenture. The
requirements of the foregoing clause (vi) of this Section 5.01(a)
shall not apply to the merger of the Issuer with and into Claire's
Stores, Inc., effective on the date hereof in accordance with the
terms of the Merger Agreement, and any supplemental indentures dated
the date hereof and entered into in connection with such merger.
(b) The Successor Issuer (if other than the Issuer) will succeed to,
and be substituted for, the Issuer under this Indenture and the Notes and
in such event the Issuer will automatically be released and discharged
from its obligations under this Indenture and the Notes. Notwithstanding
clauses (iii) and (iv) of Section 5.01(a) hereof, (A) any Restricted
Subsidiary may merge, consolidate or amalgamate with or transfer all or
part of its properties and assets to the Issuer or to another Restricted
Subsidiary, and (B) the Issuer may merge, consolidate or amalgamate with
an Affiliate incorporated solely for the purpose of reincorporating the
Issuer in another state of the United States, the District of Columbia or
any territory of the United States or may convert into a limited liability
company, so long as the amount of Indebtedness of the Issuer and its
Restricted Subsidiaries is not increased thereby. This Section 5.01 will
not apply to a sale, assignment, transfer, conveyance or other disposition
of assets between or among the Issuer and its Restricted Subsidiaries.
(c) Subject to Section 10.04 hereof, no Guarantor shall, and the
Issuer shall not permit any Guarantor to, consolidate, amalgamate or merge
with or into or wind up into (whether or not the Guarantor is the
surviving Person), 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 (other than any such sale,
assignment, transfer, lease, conveyance or disposition in connection with
the Transactions) unless:
(i) Either (A) such Guarantor is the surviving Person or the
Person formed by or surviving any such consolidation, amalgamation
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, partnership or limited liability
company 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") and the Successor Guarantor
(if other than such Guarantor) expressly assumes all the obligations
of such Guarantor under this Indenture, such Guarantor's Guarantees
pursuant to a supplemental indenture or other documents or
instruments in form reasonably satisfactory to the Trustee, or (B)
such sale or
113
disposition or consolidation, amalgamation or merger is not in
violation of Section 4.10 hereof; and
(ii) the Successor Guarantor (if other than such Guarantor),
shall have delivered or caused to be delivered to the Trustee an
Officer's Certificate and an Opinion of Counsel, each stating that
such consolidation, amalgamation, merger or transfer and such
supplemental indenture, if any, comply with this Indenture.
(d) The Successor Guarantor (if other than such Guarantor) will
succeed to, and be substituted for, such Guarantor under this Indenture
and such Guarantor's Guarantees, and such Guarantor will automatically be
released and discharged from its obligations under this Indenture and such
Guarantor's Guarantee. Notwithstanding the foregoing, (i) a Guarantor may
merge, amalgamate or consolidate with an Affiliate incorporated solely for
the purpose of reincorporating such Guarantor in another state of the
United States, the District of Columbia or any territory of the United
States so long as the amount of Indebtedness of such Guarantor is not
increased thereby and (ii) a Guarantor may merge, amalgamate or
consolidate with another Guarantor or the Issuer.
(e) Notwithstanding anything in this Section 5.01 to the contrary,
any Guarantor may consolidate, amalgamate or merge with or into or wind up
into, or sell, assign, transfer, lease, convey or otherwise dispose of all
or substantially all of its properties or assets (collectively, a
"Transfer") to (x) the Issuer or any Guarantor or (y) any Restricted
Subsidiary of the Issuer that is not a Guarantor; provided that at the
time of each such Transfer pursuant to clause (y) the aggregate amount of
all such Transfers pursuant to this clause (y) since the Issue Date shall
not exceed 5.0% of the consolidated assets of the Issuer and the
Guarantors as shown on the most recent available balance sheet of the
Issuer and its Restricted Subsidiaries after giving effect to each such
Transfer and including all such Transfers occurring from and after the
Issue Date (excluding Transfers in connection with the Transactions and
Transfers pursuant to clause (x) of this paragraph).
Section 5.02 Successor Corporation Substituted. Upon any consolidation or
merger, or any sale, assignment, transfer, lease, conveyance or other
disposition of all or substantially all of the assets of the Issuer or a
Guarantor in accordance with Section 5.01 hereof, the successor corporation
formed by such consolidation or into or with which the Issuer or such Guarantor,
as applicable, is merged or to which such sale, assignment, transfer, lease,
conveyance or other disposition is made shall succeed to, and be substituted for
(so that from and after the date of such consolidation, merger, sale, lease,
conveyance or other disposition, the provisions of this Indenture referring to
the Issuer or such Guarantor, as applicable, shall refer instead to the
successor corporation and not to the Issuer or such Guarantor, as applicable),
and may exercise every right and power of the Issuer or such Guarantor, as
applicable, under this Indenture with the same effect as if such successor
Person had been named as the Issuer or a Guarantor, as applicable, herein;
provided that the predecessor Issuer shall not be relieved from the obligation
to pay the principal of and interest on the Notes except in the case of a sale,
assignment, transfer,
114
conveyance or other disposition of all of the Issuer's assets that meets the
requirements of Section 5.01 hereof.
ARTICLE VI
DEFAULTS AND REMEDIES
---------------------
Section 6.01 Events of Default.
(a) An "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 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) a default in any payment of interest (including any
Additional Interest) on any Note when due (whether or not prohibited
by the subordination provisions of this Indenture), continued for 30
days;
(ii) a default in the payment of principal or premium, if any,
of any Note when due at its Stated Maturity (whether or not
prohibited by the subordination provisions of this Indenture), upon
optional redemption, upon required repurchase, upon declaration or
otherwise;
(iii) failure by the Issuer or any Restricted Subsidiary for
60 days after receipt of written notice given by the Trustee or the
Holders of not less than 30% in principal amount of the Notes to
comply with any of its obligations, covenants or agreements (other
than a default referred to in clauses (i) and (ii) above) contained
in this Indenture or the Notes;
(iv) the failure by the Issuer or any Significant Subsidiary
to pay any Indebtedness (other than Indebtedness owing to the Issuer
or a Restricted Subsidiary) within any applicable grace period after
final maturity or the acceleration of any such Indebtedness by the
holders thereof because of a default, in each case, if the total
amount of such Indebtedness unpaid or accelerated exceeds $25
million or its foreign currency equivalent (the "cross-acceleration
provision");
(v) failure by the Issuer or any Significant Subsidiary to pay
final judgments aggregating in excess of $25 million or its foreign
currency equivalent (net of any amounts which are covered by
enforceable insurance policies issued by solvent carriers), which
judgments are not discharged, waived or stayed for a period of 60
days (the "judgment default provision");
(vi) any Guarantee of a Significant Subsidiary with respect to
the Notes ceases to be in full force and effect (except as
contemplated by the terms thereof) or any Guarantor that qualifies
as a Significant Subsidiary denies or
115
disaffirms its obligations under this Indenture or any Guarantee
with respect to the Notes and such Default continues for 10 days;
(vii) the Issuer or any of its Restricted Subsidiaries that is
a Significant Subsidiary (or any group of Restricted Subsidiaries
that, taken together, would constitute a Significant Subsidiary),
pursuant to or within the meaning of any Bankruptcy Law: (i)
commences proceedings to be adjudicated bankrupt or insolvent; (ii)
consents to the institution of bankruptcy or insolvency proceedings
against it, or the filing by it of a petition or answer or consent
seeking reorganization or relief under applicable Bankruptcy Law;
(iii) consents to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator or other similar official of it or
for all or substantially all of its property; (iv) makes a general
assignment for the benefit of its creditors; or (v) generally is not
paying its debts as they become due; or
(viii) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that: (i) is for relief against the
Issuer or any of its Restricted Subsidiaries that is a Significant
Subsidiary (or any group of Restricted Subsidiaries that, taken
together, would constitute a Significant Subsidiary), in a
proceeding in which the Issuer or any such Restricted Subsidiaries,
that is a Significant Subsidiary (or any group of Restricted
Subsidiaries that, taken together, would constitute a Significant
Subsidiary), is to be adjudicated bankrupt or insolvent; (ii)
appoints a receiver, liquidator, assignee, trustee, sequestrator or
other similar official of the Issuer or any of its Restricted
Subsidiaries that is a Significant Subsidiary (or any group of
Restricted Subsidiaries that, taken together, would constitute a
Significant Subsidiary), or for all or substantially all of the
property of the Issuer or any of its Restricted Subsidiaries that is
a Significant Subsidiary (or any group of Restricted Subsidiaries
that, taken together, would constitute a Significant Subsidiary); or
(iii) orders the liquidation of the Issuer or any of its Restricted
Subsidiaries that is a Significant Subsidiary (or any group of
Restricted Subsidiaries that, taken together, would constitute a
Significant Subsidiary); and the order or decree remains unstayed
and in effect for 60 consecutive days.
Section 6.02 Acceleration. If any Event of Default (other than an Event of
Default specified in clause (vii) or (viii) of Section 6.01 hereof) occurs and
is continuing under this Indenture, the Trustee or the Holders of at least 30%
in principal amount of the then total 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 provided, however, that so long
as any Bank Indebtedness remains outstanding, no such acceleration shall be
effective until the earlier of (i) five Business Days after the giving of
written notice to the Issuer and the Representative under the Credit Agreement
and (ii) the day on which any Bank Indebtedness is accelerated. Upon the
effectiveness of such declaration, such principal and interest shall be due and
payable immediately. The Trustee shall have no obligation to accelerate the
Notes if in the best judgment of the Trustee acceleration is not in the best
interests of the Holders of the Notes.
116
Notwithstanding the foregoing, in the case of an Event of Default
arising under clause (vii) or (viii) of Section 6.01 hereof, all
outstanding Notes shall be due and payable immediately without further
action or notice.
The Holders of a majority in aggregate principal amount of the then
outstanding Notes by written notice to the Trustee may on behalf of all of
the Holders of all of the Notes rescind any acceleration with respect to
the Notes and its consequences if such rescission would not conflict with
any judgment or decree of a court of competent jurisdiction and if all
existing Events of Default (except nonpayment of principal, interest or
premium that has become due solely because of the acceleration) have been
cured or waived.
In the event of any Event of Default specified in clause (iv) of
Section 6.01 hereof, such Event of Default and all consequences thereof
(excluding any resulting payment default, other than as a result of
acceleration of the Notes) shall be annulled, waived and rescinded,
automatically and without any action by the Trustee or the Holders, if
within 20 days after such Event of Default arose the Issuer delivers an
Officer's Certificate to the Trustee stating that:
(1) the Indebtedness or guarantee that is the basis for such Event
of Default has been discharged; or
(2) Holders thereof have rescinded or waived the acceleration,
notice or action (as the case may be) giving rise to such Event of
Default; or
(3) the default that is the basis for such Event of Default has been
cured.
Section 6.03 Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of principal, premium, if any, and interest on the Notes or to enforce the
performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Notes or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Holder of a Note in exercising any
right or remedy accruing upon an Event of Default shall not impair the
right or remedy or constitute a waiver of or acquiescence in the Event of
Default. All remedies are cumulative to the extent permitted by law.
Section 6.04 Waiver of Past Defaults. Subject to Section 6.02 hereof,
Holders of not less than a majority in aggregate principal amount of the then
outstanding Notes by
117
notice to the Trustee may on behalf of the Holders of all of the Notes waive any
existing Default and its consequences hereunder (except a continuing Default in
the payment of the principal of, premium, if any, or interest on, any Note held
by a non-consenting Holder) (including in connection with an Asset Sale Offer or
a Change of Control Offer). 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 impair any right consequent thereon.
Section 6.05 Control by Majority. Holders of a majority in principal
amount of the then total outstanding Notes may direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. The Trustee, however,
may refuse to follow any direction that conflicts with law or this Indenture or
that the Trustee determines is unduly prejudicial to the rights of any other
Holder of a Note or that would involve the Trustee in personal liability. Prior
to taking any action under this Indenture, the Trustee will be entitled to
indemnification satisfactory to it in its sole discretion against any losses or
expenses caused by taking or not taking such action.
Section 6.06 Limitation on Suits. Subject to Section 6.07 hereof, no
Holder of a Note may pursue any remedy with respect to this Indenture or the
Notes unless:
(i) such Holder has previously given the Trustee notice that
an Event of Default is continuing;
(ii) Holders of at least 30% in principal amount of the total
outstanding Notes have requested the Trustee to pursue the remedy;
(iii) Holders of the Notes have offered the Trustee reasonable
security or indemnity against any loss, liability or expense;
(iv) the Trustee has not complied with such request within 60
days after the receipt thereof and the offer of security or
indemnity; and
(v) Holders of a majority in principal amount of the total
outstanding Notes have not given the Trustee a direction
inconsistent with such request within such 60 day period.
A Holder of a Note may not use this Indenture to prejudice the
rights of another Holder of a Note or to obtain a preference or priority
over another Holder of a Note.
Section 6.07 Rights of Holders of Notes to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
of a Note to receive payment of principal of, premium, if any, and interest on
the Note, on or after the respective due dates expressed in the Note (including
in connection with an Asset Sale Offer or a Change of Control Offer), or to
bring suit for the enforcement of any such
118
payment on or after such respective dates, shall not be impaired or affected
without the consent of such Holder.
Section 6.08 Collection Suit by Trustee. If an Event of Default specified
in Section 6.01(i) or (ii) hereof occurs and is continuing, the Trustee is
authorized to recover judgment in its own name and as trustee of an express
trust against the Issuer for the whole amount of principal of, premium, if any,
and interest remaining unpaid on the Notes and interest on overdue principal
and, to the extent lawful, interest and such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
Section 6.09 Restoration of Rights and Remedies. If the Trustee or any
Holder has instituted any proceeding to enforce any right or remedy under this
Indenture 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 proceedings, the Issuer,
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 has been
instituted.
Section 6.10 Rights and Remedies Cumulative. Except as otherwise provided
with respect to the replacement or payment of mutilated, destroyed, lost or
stolen Notes in Section 2.07 hereof, 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 6.11 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 6.12 Trustee May File Proofs of Claim. The Trustee is authorized
to file such proofs of claim and other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee (including any claim for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel) and the Holders of the Notes allowed in any
judicial proceedings relative to the Issuer (or any other obligor upon the Notes
including the Guarantors), its creditors or its property and shall be entitled
and empowered to participate as a member in any official committee of creditors
appointed in such matter and to collect, receive and distribute any
119
money or other property payable or deliverable on any such claims 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 to the
Trustee any amount due to 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 7.07 hereof. To the extent that the
payment of any such compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof out of the estate in any such proceeding, shall be denied
for any reason, payment of the same shall be secured by a Lien on, and shall be
paid out of, any and all distributions, dividends, money, securities and other
properties that the Holders may be entitled to receive in such proceeding
whether in liquidation or under any plan of reorganization or arrangement or
otherwise. 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, or to authorize the Trustee to vote in respect of the
claim of any Holder in any such proceeding.
Section 6.13 Priorities. If the Trustee or any Agent collects any money
pursuant to this Article VI, it shall pay out the money in the following order:
(i) to the Trustee, such Agent, their agents and attorneys for
amounts due under Section 7.07 hereof, including payment of all
compensation, expenses and liabilities incurred, and all advances
made, by the Trustee or such Agent and the costs and expenses of
collection;
(ii) to Holders of Notes for amounts due and unpaid on the
Notes for principal, premium, if any, and interest, ratably, without
preference or priority of any kind, according to the amounts due and
payable on the Notes for principal, premium, if any, and interest,
respectively; and
(iii) to the Issuer or to such party as a court of competent
jurisdiction shall direct including a Guarantor, if applicable.
The Trustee may fix a record date and payment date for any payment
to Holders of Notes pursuant to this Section 6.13.
Section 6.14 Undertaking for Costs. In any suit for the enforcement of any
right or remedy under this Indenture or in any suit against the Trustee for any
action taken or omitted by it as a Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section 6.14 does not apply to a suit by the
Trustee, a suit by a Holder of a Note pursuant to Section 6.07 hereof, or a suit
by Holders of more than 10% in principal amount of the then outstanding Notes.
120
ARTICLE VII
TRUSTEE
-------
Section 7.01 Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in its exercise, as a
prudent person would exercise or use under the circumstances in the
conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by
the express provisions of this Indenture and the Trustee need
perform only those duties that are specifically set forth in this
Indenture and no others, and no implied covenants or obligations
shall be read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture. However, in the case of any such certificates or
opinions which by any provision hereof are specifically required to
be furnished to the Trustee, the Trustee shall examine the
certificates and opinions to determine whether or not they conform
to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b)
of this Section 7.01;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is proved in
a court of competent jurisdiction that the Trustee was negligent in
ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.02, 6.04 or 6.05
hereof.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to
paragraphs (a), (b) and (c) of this Section 7.01.
121
(e) The Trustee shall be under no obligation to exercise any of its
rights or powers under this Indenture at the request or direction of any
of the Holders of the Notes unless the Holders have offered to the Trustee
reasonable indemnity or security against any loss, liability or expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Issuer.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
Section 7.02 Rights of Trustee.
(a) The Trustee may conclusively rely upon any document believed by
it to be genuine and to have been signed or presented by the proper
Person. The Trustee need not investigate any fact or matter stated in the
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 Issuer and its Restricted Subsidiaries, personally or by
agent or attorney at the sole cost of the Issuer and shall incur no
liability or additional liability of any kind by reason of such inquiry or
investigation.
(b) Before the Trustee acts or refrains from acting, it may require
an Officer's Certificate of the Issuer or an Opinion of Counsel or both.
The Trustee shall not be liable for any action it takes or omits to take
in good faith in reliance on such Officer's Certificate or Opinion of
Counsel. The Trustee may consult with counsel of its selection and the
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.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent or
attorney appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith that it believes to be authorized or within the
rights or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Issuer shall be sufficient
if signed by an Officer of the Issuer.
(f) None of the provisions of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise to incur any
liability, financial or otherwise, 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
indemnity satisfactory to it against such risk or liability is not assured
to it.
122
(g) The Trustee shall not be deemed to have notice of any Default or
Event of Default unless a Responsible Officer of the Trustee has actual
knowledge thereof or unless written notice of any event which is in fact
such a Default is received by the Trustee at the Corporate Trust Office of
the Trustee, and such notice references the Notes and this Indenture.
(h) In no event shall the Trustee be responsible or liable for
special, indirect, or consequential loss or damage of any kind whatsoever
(including, but not limited to, loss of profit) irrespective of whether
the Trustee has been advised of the likelihood of such loss or damage and
regardless of the form of action.
(i) The rights, privileges, protections, immunities and benefits
given to the Trustee, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Trustee in
each of its capacities hereunder, and each agent, custodian and other
Person employed to act hereunder.
(j) In the event the Issuer is required to pay Additional Interest,
the Issuer will provide written notice to the Trustee of the Issuer's
obligation to pay Additional Interest no later than 15 days prior to the
next Interest Payment Date, which notice shall set forth the amount of the
Additional Interest to be paid by the Issuer. The Trustee shall not at any
time be under any duty or responsibility to any Holders to determine
whether the Additional Interest is payable and the amount thereof.
Section 7.03 Individual Rights of Trustee. The Trustee in its individual
or any other capacity may become the owner or pledgee of Notes and may otherwise
deal with the Issuer or any Affiliate of the Issuer with the same rights it
would have if it were not Trustee. However, in the event that the Trustee
acquires any conflicting interest it must eliminate such conflict within 90
days, apply to the SEC for permission to continue as trustee or resign. Any
Agent may do the same with like rights and duties. The Trustee is also subject
to Sections 7.10 and 7.11 hereof.
Section 7.04 Trustee's Disclaimer. The Trustee shall not be responsible
for and makes no representation as to the validity or adequacy of this Indenture
or the Notes, it shall not be accountable for the Issuer's use of the proceeds
from the Notes or any money paid to the Issuer or upon the Issuer's direction
under any provision of this Indenture, it shall not be responsible for the use
or application of any money received by any Paying Agent other than the Trustee,
and it shall not be responsible for any statement or recital herein or any
statement in the Notes or any other document in connection with the sale of the
Notes or pursuant to this Indenture other than its certificate of
authentication.
Section 7.05 Notice of Defaults. If a Default occurs and is continuing and
if it is known to the Trustee, the Trustee shall mail to Holders of Notes a
notice of the Default within 90 days after it occurs. Except in the case of a
Default relating to the payment of principal, premium, if any, or interest on
any Note, the Trustee may withhold from the Holders notice of any continuing
Default if and so long as a committee of its Responsible Officers in good faith
determines that withholding the notice is in the interests of the Holders of the
Notes. The Trustee shall not be deemed to know of any Default unless a
123
Responsible Officer of the Trustee has actual knowledge thereof or unless
written notice of any event which is such a Default is received by the Trustee
in accordance with Section 12.02 hereof at the Corporate Trust Office of the
Trustee and such notice references the Notes and this Indenture.
Section 7.06 Reports by Trustee to Holders of the Notes. Within 60 days
after each June 15, beginning with the June 15 following the date of this
Indenture, and for so long as Notes remain outstanding, the Trustee shall mail
to the Holders of the Notes a brief report dated as of such reporting date that
complies with Trust Indenture Act Section 313(a) (but if no event described in
Trust Indenture Act Section 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with Trust Indenture Act Section 313(b)(2). The Trustee shall also
transmit by mail all reports as required by Trust Indenture Act Section 313(c).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Issuer and filed with the SEC and each stock
exchange on which the Notes are listed in accordance with Trust Indenture
Act Section 313(d). The Issuer shall promptly notify the Trustee when the
Notes are listed on any stock exchange.
Section 7.07 Compensation and Indemnity. The Issuer shall pay to the
Trustee from time to time such compensation for its acceptance of this Indenture
and services hereunder as the parties shall agree in writing from time to time.
The Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Issuer shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred or
made by it in addition to the compensation for its services. Such expenses shall
include the reasonable compensation, disbursements and expenses of the Trustee's
agents and counsel.
The Issuer and the Guarantors, jointly and severally, shall
indemnify the Trustee and its officers, directors, employees, agents and
any predecessor trustee and its officers, directors, employees and agents
for, and hold the Trustee harmless against, any and all loss, damage,
claims, liability or expense (including attorneys' fees) incurred by it in
connection with the acceptance or administration of this trust and the
performance of its duties hereunder (including the costs and expenses of
enforcing this Indenture against the Issuer or any of the Guarantors
(including this Section 7.07) or defending itself against any claim
whether asserted by any Holder, the Issuer or any Guarantor, or liability
in connective with the acceptance, exercise or performance of any of its
powers or duties hereunder). The Trustee shall notify the Issuer promptly
of any claim for which it may seek indemnity. Failure by the Trustee to so
notify the Issuer shall not relieve the Issuer of its obligations
hereunder. The Issuer shall defend the claim and the Trustee may have
separate counsel and the Issuer shall pay the fees and expenses of such
counsel. The Issuer need not reimburse any expense or indemnify against
any loss, liability or expense incurred by the Trustee through the
Trustee's own willful misconduct, negligence or bad faith.
124
The obligations of the Issuer under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture or the earlier
resignation or removal of the Trustee.
To secure the payment obligations of the Issuer and the Guarantors
in this Section 7.07, the Trustee shall have a Lien prior to the Notes on
all money or property held or collected by the Trustee, except that held
in trust to pay principal and interest on particular Notes. Such Lien
shall survive the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.01(vi) or (vii) hereof occurs, the
expenses and the compensation for the services (including the fees and
expenses of its agents and counsel) are intended to constitute expenses of
administration under any Bankruptcy Law.
The Trustee shall comply with the provisions of Trust Indenture Act
Section 313(b)(2) to the extent applicable.
Section 7.08 Replacement of Trustee. A resignation or removal of the
Trustee and appointment of a successor Trustee shall become effective only upon
the successor Trustee's acceptance of appointment as provided in this Section
7.08. The Trustee may resign in writing at any time and be discharged from the
trust hereby created by so notifying the Issuer. The Holders of a majority in
principal amount of the then outstanding Notes may remove the Trustee by so
notifying the Trustee and the Issuer in writing. The Issuer may remove the
Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof or Section
310 of the Trust Indenture Act;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order
for relief is entered with respect to the Trustee under any Bankruptcy
Law;
(c) a custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Issuer shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes
office, the Holders of a majority in principal amount of the then
outstanding Notes may appoint a successor Trustee to replace the successor
Trustee appointed by the Issuer.
125
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee (at the
Issuer's expense), the Issuer or the Holders of at least 10% in principal
amount of the then outstanding Notes may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee, after written request by any Holder who has been a
Holder for at least six months, fails to comply with Section 7.10 hereof,
such Holder may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuer. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and
the successor Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. The successor Trustee shall mail a notice of
its succession to Holders. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee; provided all
sums owing to the Trustee hereunder have been paid and subject to the Lien
provided for in Section 7.07 hereof. Notwithstanding replacement of the
Trustee pursuant to this Section 7.08, the Issuer's obligations under
Section 7.07 hereof shall continue for the benefit of the retiring
Trustee.
Section 7.09 Successor Trustee by Merger, etc. If the Trustee
consolidates, merges or converts into, or transfers all or substantially all of
its corporate trust business to, another corporation, the successor corporation
without any further act shall be the successor Trustee.
Section 7.10 Eligibility; Disqualification. There shall at all times be a
Trustee hereunder that is a corporation organized and doing business under the
laws of the United States of America or of any state thereof that is authorized
under such laws to exercise corporate trustee power, that is subject to
supervision or examination by federal or state authorities and that has,
together with its parent, a combined capital and surplus of at least $50,000,000
as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of Trust Indenture Act Sections 310(a)(1), (2) and (5). The
Trustee is subject to Trust Indenture Act Section 310(b).
Section 7.11 Preferential Collection of Claims Against Issuer. The Trustee
is subject to Trust Indenture Act Section 311(a), excluding any creditor
relationship listed in Trust Indenture Act Section 311(b). A Trustee who has
resigned or been removed shall be subject to Trust Indenture Act Section 311(a)
to the extent indicated therein.
126
ARTICLE VIII
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
----------------------------------------
Section 8.01 Option to Effect Legal Defeasance or Covenant Defeasance. The
Issuer may, at its option and at any time, elect to have either Section 8.02 or
8.03 hereof applied to all outstanding Notes upon compliance with the conditions
set forth below in this Article 8.
Section 8.02 Legal Defeasance and Discharge. Upon the Issuer's exercise
under Section 8.01 hereof of the option applicable to this Section 8.02, the
Issuer and the Guarantors shall, subject to the satisfaction of the conditions
set forth in Section 8.04 hereof, be deemed to have been discharged from their
obligations with respect to all outstanding Notes and Guarantees on the date the
conditions set forth below are satisfied ("Legal Defeasance"). For this purpose,
Legal Defeasance means that the Issuer 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
8.05 hereof 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 including that of the Guarantors (and the Trustee, on demand of and at
the expense of the Issuer, shall execute proper instruments acknowledging the
same), except for the following provisions which shall survive until otherwise
terminated or discharged hereunder:
(A) the rights of Holders of Notes to receive payments in respect of
the principal of, premium, if any, and interest on the Notes when such
payments are due solely out of the trust created pursuant to this
Indenture referred to in Section 8.04 hereof;
(B) the Issuer's obligations with respect to Notes concerning the
issuance of temporary Notes, the registration of the transfer or exchange
of Notes, the replacement of mutilated, destroyed, lost or stolen Notes
and the maintenance of an office or agency for payment and money for
security payments held in trust;
(C) the rights, powers, trusts, duties and immunities of the
Trustee, and the Issuer's obligations in connection therewith; and
(D) this Section 8.02.
Subject to compliance with this Article VIII, the Issuer may exercise its
option under this Section 8.02 notwithstanding the prior exercise of its
option under Section 8.03 hereof.
Section 8.03 Covenant Defeasance. Upon the Issuer's exercise under Section
8.01 hereof of the option applicable to this Section 8.03, the Issuer and the
Guarantors shall, subject to the satisfaction of the conditions set forth in
Section 8.04 hereof, be released from their obligations under the covenants
contained in Sections 4.03, 4.04, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14
and 4.15 hereof and clauses (iv) and (v) of Section
127
5.01(a) hereof with respect to the outstanding Notes on and after the date the
conditions set forth in Section 8.04 hereof are satisfied ("Covenant
Defeasance"), and the Notes shall thereafter be deemed not "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 deemed "outstanding" for all other purposes hereunder (it being
understood that such Notes shall not be deemed outstanding for accounting
purposes). For this purpose, Covenant Defeasance means that, with respect to the
outstanding Notes, the Issuer 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 6.01
hereof, but, except as specified above, the remainder of this Indenture and such
Notes shall be unaffected thereby. In addition, upon the Issuer's exercise under
Section 8.01 hereof of the option applicable to this Section 8.03 hereof,
subject to the satisfaction of the conditions set forth in Section 8.04 hereof,
Sections 6.01(3) (solely with respect to the covenants that are released upon a
Covenant Defeasance), 6.01(a)(iv), 6.01(a)(v), 6.01(a)(vi), 6.01(a)(vii) (solely
with respect to Significant Subsidiaries) and 6.01(a)(viii) (solely with respect
to Significant Subsidiaries) hereof shall not constitute Events of Default.
Section 8.04 Conditions to Legal or Covenant Defeasance. The following
shall be the conditions to the application of either Section 8.02 or 8.03 hereof
to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance
with respect to the Notes:
(1) the Issuer must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders of the Notes, cash in U.S. dollars, U.S.
Government Obligations, 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 Notes on the Stated Maturity date or on the
Redemption Date, as the case may be, of such principal, premium, if any,
or interest on such Notes and the Issuer must specify whether such Notes
are being defeased to maturity or to a particular Redemption Date.
(2) in the case of Legal Defeasance, the Issuer shall have delivered
to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee
confirming that, subject to customary assumptions and exclusions,
(A) the Issuer has received from, or there has been published
by, the United States Internal Revenue Service a ruling, or
(B) since the issuance of the Notes, there has been a change
in the applicable U.S. federal income tax law,
128
in either case to the effect that, and based thereon such Opinion of
Counsel shall confirm that, subject to customary assumptions and
exclusions, the Holders of the Notes will not recognize income, gain or
loss for U.S. federal income tax purposes, as applicable, 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;
(3) in the case of Covenant Defeasance, the Issuer shall have
delivered to the Trustee an Opinion of Counsel reasonably acceptable to
the Trustee confirming that, subject to customary assumptions and
exclusions, the Holders of the 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;
(4) no Default (other than that resulting from borrowing funds to be
applied to make such deposit and any similar and simultaneous deposit
relating to other Indebtedness and, in each case, the granting of Liens in
connection therewith) shall have occurred and be continuing on the date of
such deposit;
(5) such Legal Defeasance or Covenant Defeasance shall not result in
a breach or violation of, or constitute a default under the Credit
Agreement, the Senior Toggle Notes, the Senior Toggle Notes Indenture, the
Senior Notes, the Senior Notes Indenture or any other material agreement
or instrument (other than this Indenture) to which, the Issuer or any
Guarantor is a party or by which the Issuer or any Guarantor is bound
(other than that resulting from any borrowing of funds to be applied to
make the deposit required to effect such Legal Defeasance or Covenant
Defeasance and any similar and simultaneous deposit relating to other
Indebtedness, and the granting of Liens in connection therewith);
(6) the Issuer 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 (including Section 547 of Title 11 of the United States Code)
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;
(7) the Issuer shall have delivered to the Trustee an Officer's
Certificate stating that the deposit was not made by the Issuer with the
intent of defeating, hindering, delaying or defrauding any creditors of
the Issuer or any Guarantor or others; and
(8) the Issuer shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel (which Opinion of Counsel may be
subject to
129
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 8.05 Deposited Money and Government Securities to Be Held in
Trust; Other Miscellaneous Provisions.Subject to Section 8.06 hereof, all money
and Government Securities (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes of this Section
8.05, the "Trustee") pursuant to Section 8.04 hereof 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 Issuer or a Guarantor
acting as Paying Agent) as the Trustee may determine, to the Holders of such
Notes of all sums due and to become due thereon in respect of principal, premium
and interest, but such money need not be segregated from other funds except to
the extent required by law.
The Issuer shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or Government
Securities deposited pursuant to Section 8.04 hereof 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 VIII to the contrary notwithstanding, the
Trustee shall deliver or pay to the Issuer from time to time upon the
request of the Issuer any money or Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 8.04(a) hereof), are in excess of the amount
thereof that would then be required to be deposited to effect an
equivalent Legal Defeasance or Covenant Defeasance.
Section 8.06 Repayment to Issuer. Subject to any applicable abandoned
property law, any money deposited with the Trustee or any Paying Agent, or then
held by the Issuer, in trust for the payment of the principal of, premium, if
any, or interest on any Note and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall be
paid to the Issuer on its request or (if then held by the Issuer) shall be
discharged from such trust; and the Holder of such Note shall thereafter look
only to the Issuer for payment thereof, and all liability of the Trustee or such
Paying Agent with respect to such trust money, and all liability of the Issuer
as trustee thereof, shall thereupon cease.
Section 8.07 Reinstatement. If the Trustee or Paying Agent is unable to
apply any United States dollars or Government Securities in accordance with
Section 8.02 or 8.03 hereof, as the case may be, by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, then the Issuer's obligations under this
Indenture and the Notes shall be revived and reinstated as though no deposit had
occurred pursuant to Section 8.02 or 8.03 hereof until
130
such time as the Trustee or Paying Agent is permitted to apply all such money in
accordance with Section 8.02 or 8.03 hereof, as the case may be; provided that,
if the Issuer makes any payment of principal of, premium, if any, or interest on
any Note following the reinstatement of its obligations, the Issuer shall be
subrogated to the rights of the Holders of such Notes to receive such payment
from the money held by the Trustee or Paying Agent.
ARTICLE IX
AMENDMENT, SUPPLEMENT AND WAIVER
--------------------------------
Section 9.01 Without Consent of Holders of Notes. Notwithstanding Section
9.02 hereof, the Issuer, the Guarantors and the Trustee may amend or supplement
this Indenture and any Guarantee or the Notes w/o the Consent of any Holder:
(1) to cure any ambiguity, omission, mistake, defect or
inconsistency,
(2) to provide for the assumption by a Successor Company of the
obligations of the Issuer under this Indenture and the Notes,
(3) to provide for the assumption by a Successor Guarantor of the
obligations of a Guarantor under this Indenture and its Guarantee,
(4) to provide for uncertificated Notes in addition to or in place
of certificated Notes (provided that the uncertificated Notes are issued
in registered form for purposes of Section 163(f) of the Code, or in a
manner such that the uncertificated Notes are described in Section
163(f)(2)(B) of the Code),
(5) to add a Guarantee with respect to the Notes,
(6) to secure the Notes,
(7) to add to the covenants of the Issuer for the benefit of the
Holders or to surrender any right or power conferred upon the Issuer,
(8) to make any change that does not adversely affect the rights of
any holder,
(9) to conform the text of this Indenture, Guarantees or the Notes
to any provision of the "Description of Senior Notes" section of the
Offering Memorandum to the extent that such provision under the Offering
Memorandum's heading, "Description of
131
Notes" was intended to be a verbatim recitation of a provision of this
Indenture, the Guarantees or the Notes,
(10) to comply with any requirement of the SEC in connection with
the qualification of this Indenture under the Trust Indenture Act of 1939,
(11) to effect any provision of this Indenture or
(12) to provide for the issuance of Additional Notes in accordance
with the limitations set forth in this Indenture as of the date hereof.
Section 9.02 With Consent of Holders of Notes. Except as provided below in
this Section 9.02, the Issuer, the Guarantors and the Trustee may amend or
supplement this Indenture, the Notes and the Guarantees with the consent of the
Holders of at least a majority in principal amount of the Notes (including
Additional Notes, if any) then outstanding voting as a single class (including
consents obtained in connection with a tender offer or exchange offer for, or
purchase of, the Notes), and, subject to Sections 6.04 and 6.07 hereof, any
existing Default or Event of Default (other than a Default or Event of Default
in the payment of the principal of, premium, if any, or interest on the Notes,
except a payment default resulting from an acceleration that has been rescinded)
or compliance with any provision of this Indenture, the Guarantees or the Notes
may be waived with the consent of the Holders of a majority in principal amount
of the then outstanding Notes (including Additional Notes, if any) voting as a
single class (including consents obtained in connection with a tender offer or
exchange offer for, or purchase of, the Notes).
Upon the request of the Issuer accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or
supplemental indenture, and upon the filing with the Trustee of evidence
satisfactory to the Trustee of the consent of the Holders of Notes as
aforesaid, and upon receipt by the Trustee of the documents described in
Section 7.02 hereof, the Trustee shall join with the Issuer in the
execution of such amended or supplemental indenture unless such amended or
supplemental indenture directly affects the Trustee's own rights, duties
or immunities under this Indenture or otherwise, in which case the Trustee
may in its discretion, but shall not be obligated to, enter into such
amended or supplemental indenture.
It shall not be necessary for the consent of the Holders of Notes
under this Section 9.02 to approve the particular form of any proposed
amendment or waiver, but it shall be sufficient if such consent approves
the substance thereof.
After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Issuer shall mail to the Holders of Notes affected
thereby a notice briefly describing the amendment, supplement or waiver.
Any failure of the Issuer to
132
mail such notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such amended or supplemental
indenture or waiver.
Without the consent of each affected Holder of Notes, an amendment
or waiver under this Section 9.02 may not (with respect to any Notes held
by a non-consenting Holder):
(1) reduce the amount of the Notes whose Holders must consent to an
amendment,
(2) reduce the rate of or extend the time for payment of interest on
the Notes,
(3) reduce the principal of or change the Stated Maturity of the
Notes,
(4) reduce the premium payable upon the redemption of the Notes or
change the time at which the Notes may be redeemed as described under
Section 3.07 herein,
(5) make the Notes payable in money other than that stated in the
Notes,
(6) impair the right of any holder to receive payment of principal
of, premium, if any, and interest on such Holder's Notes on or after the
due dates therefor or to institute suit for the enforcement of any payment
on or with respect to such Holder's Notes,
(7) make any change in the amendment provisions which require each
Holder's consent or in the waiver provisions,
(8) modify any Guarantee in any manner adverse to the Holders, or
(9) make any change in the subordination provisions thereof that
would adversely affect the Holders.
Section 9.03 Compliance with Trust Indenture Act. Every amendment or
supplement to this Indenture or the Notes shall be set forth in an amended or
supplemental indenture that complies in all material respects with the Trust
Indenture Act as then in effect.
133
Section 9.04 Revocation and Effect of Consents. Until an amendment,
supplement or waiver becomes effective, a consent to it by a Holder of a Note is
a continuing consent by the Holder of a Note and every subsequent Holder of a
Note or portion of a Note that evidences the same debt as the consenting
Holder's Note, even if notation of the consent is not made on any Note. However,
any such Holder of a Note or subsequent Holder of a Note may revoke the consent
as to its Note if the Trustee receives written notice of revocation before the
date the waiver, supplement or amendment becomes effective. An amendment,
supplement or waiver becomes effective in accordance with its terms and
thereafter binds every Holder.
The Issuer may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any
amendment, supplement, or waiver. If a record date is fixed, then,
notwithstanding the preceding paragraph, those Persons who were Holders at
such record date (or their duly designated proxies), and only such
Persons, shall be entitled to consent to such amendment, supplement, or
waiver or to revoke any consent previously given, whether or not such
Persons continue to be Holders after such record date. No such consent
shall be valid or effective for more than 120 days after such record date
unless the consent of the requisite number of Holders has been obtained.
Section 9.05 Notation on or Exchange of Notes. The Trustee may place an
appropriate notation about an amendment, supplement or waiver on any Note
thereafter authenticated. The Issuer in exchange for all Notes may issue and the
Trustee shall, upon receipt of an Authentication Order, authenticate new Notes
that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall
not affect the validity and effect of such amendment, supplement or
waiver.
Section 9.06 Trustee to Sign Amendments, Etc. The Trustee shall sign any
amendment, supplement or waiver authorized pursuant to this Article IX if the
amendment or supplement does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. The Issuer may not sign an amendment,
supplement or waiver until the Board of Directors of the Issuer approves it. In
executing any amendment, supplement or waiver, the Trustee shall be entitled to
receive, upon request, and (subject to Section 7.01 hereof) shall be fully
protected in relying upon, in addition to the documents required by Section
14.04 hereof, an Officer's Certificate and an Opinion of Counsel stating that
the execution of such amended or supplemental indenture is authorized or
permitted by this Indenture and that such amendment, supplement or waiver is the
legal, valid and binding obligation of the Issuer and any Guarantors party
thereto, enforceable against them in accordance with its terms, subject to
customary exceptions, and complies with the provisions hereof (including Section
9.03). Notwithstanding the foregoing, except as required by Section 4.15 hereof,
neither an Opinion of Counsel nor an Officer's Certificate will be required for
the Trustee to execute a supplemental indenture to this Indenture, whereby
Claire's Stores, Inc. assumes
134
the obligations of the Issuer under this Indenture in connection with the merger
of the Issuer with and into Claire's Stores, Inc.
Section 9.07 Payment for Consent. Neither the Issuer, the Issuer nor any
Affiliate of the Issuer shall, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any Holder
for or as an inducement to any consent, waiver or amendment of any of the terms
or provisions of this Indenture or the Notes unless such consideration is
offered to all Holders and is paid to all Holders that so consent, waive or
agree to amend in the time frame set forth in solicitation documents relating to
such consent, waiver or agreement.
Section 9.08 Additional Voting Terms; Calculation of Principal Amount.
Except as provided in the proviso to the first sentence of Section 9.02, all
Notes issued under this Indenture shall vote and consent together on all matters
(as to which any of such Notes may vote) as one class and no Notes will have the
right to vote or consent as a separate series on any matter. Determinations as
to whether Holders of the requisite aggregate principal amount of Notes have
concurred in any direction, waiver or consent shall be made in accordance with
this Article IX and Section 2.14.
ARTICLE X
SUBORDINATION OF NOTES
----------------------
Section 10.01 Agreement to Subordinate. The Issuer agrees, and each Holder
by accepting a Note agrees, that the payment of all Obligations owing in respect
of the Notes is subordinated in right of payment, to the extent and in the
manner provided in this Article X, to the prior payment in cash in full of all
existing and future Senior Indebtedness of the Issuer and that the subordination
is for the benefit of and enforceable by the holders of such Senior
Indebtedness. The Notes shall in all respects rank pari passu in right of
payment with all existing and future Pari Passu of the Issuer, and will be
senior in right of payment to all existing and future Subordinated Indebtedness
of the Issuer; and only Indebtedness of the Issuer that is Senior Indebtedness
shall rank senior to the Notes in accordance with the provisions set forth
herein. All provisions of this Article X shall be subject to Section 10.12.
Section 10.02 Liquidation, Dissolution, Bankruptcy. Upon any payment or
distribution of the assets of the Issuer to creditors upon a total or partial
liquidation or dissolution of the Issuer or in a reorganization of, or similar
proceeding relating to, the Issuer or its property:
(a) the holders of Senior Indebtedness of the Issuer shall be
entitled to receive payment in full in cash of such Senior Indebtedness
before Holders shall be entitled to receive any payment;
135
(b) until the Senior Indebtedness of the Issuer is paid in full in
cash, any payment or distribution to which Holders would be entitled but
for the subordination provisions of this Indenture shall be made to
holders of such Senior Indebtedness as their interests may appear, except
that Holders may receive Permitted Junior Securities; and
(c) if a distribution is made to Holders that, due to the
subordination provisions of this Indenture, should not have been made to
them, such Holders will be required to hold it in trust for the holders of
Senior Indebtedness of the Issuer and pay it over to them (or their
Representative) as their interests may appear.
Section 10.03 Default on Senior Indebtedness of the Issuer. The Issuer
shall not pay principal (including any accretion) of, premium, if any, or
interest on the Notes (or pay any other Obligations relating to the Notes,
including Additional Interest, fees, costs, expenses, indemnities and rescission
or damage claims) or make any deposit pursuant to Article VIII or Article XIII
hereof and may not purchase, redeem or otherwise retire any Notes (collectively,
"pay the Notes") (except in the form of Permitted Junior Securities) if either
of the following occurs (a "Payment Default"):
(a) any Obligation on any Designated Senior Indebtedness of the
Issuer is not paid in full in cash when due (after giving effect to any
applicable grace period); or
(b) any other default on Designated Senior Indebtedness of the
Issuer occurs and the maturity of such Designated Senior Indebtedness is
accelerated in accordance with its terms;
unless, in either case, the Payment Default has been cured or waived and any
such acceleration has been rescinded or such Designated Senior Indebtedness has
been discharged or paid in full in cash; provided, however, that the Issuer
shall be entitled to pay the Notes without regard to the foregoing if the Issuer
and the Trustee receive written notice approving such payment from the
Representatives of all Designated Senior Indebtedness with respect to which the
Payment Default has occurred and is continuing.
During the continuance of any default (other than a Payment Default)
(a "Non-Payment Default") with respect to any Designated Senior
Indebtedness of the Issuer pursuant to which the maturity thereof may be
accelerated without further notice (except such notice as may be required
to effect such acceleration) or the expiration of any applicable grace
periods, the Issuer shall not pay the Notes (except in the form of
Permitted Junior Securities) for a period (a "Payment Blockage Period")
commencing upon the receipt by the Trustee (with a copy to the Issuer) of
written notice (a "Blockage Notice") of such Non-Payment Default from the
Representative of such Designated Senior Indebtedness specifying an
election to effect a Payment Blockage Period and ending 179 days
thereafter. The Payment Blockage Period shall end earlier if such
136
Payment Blockage Period is terminated (i) by written notice to the Trustee
and the Issuer from the Person or Persons who gave such Blockage Notice;
(ii) because the default giving rise to such Blockage Notice is cured,
waived or otherwise no longer continuing; or (iii) because such Designated
Senior Indebtedness has been discharged or repaid in full in cash.
Notwithstanding the provisions described in the immediately
preceding paragraph (but subject to the provisions contained in the first
paragraph of this Section 10.03 and Section 10.02 hereof), unless the
holders of such Designated Senior Indebtedness or the Representative of
such Designated Senior Indebtedness shall have accelerated the maturity of
such Designated Senior Indebtedness, the Issuer shall be entitled to
resume paying the Notes after the end of such Payment Blockage Period. The
Notes shall not be subject to more than one Payment Blockage Period in any
consecutive 360-day period irrespective of the number of defaults with
respect to Designated Senior Indebtedness of the Issuer during such
period. However, in no event shall the total number of days during which
any Payment Blockage Period or Periods on the Notes is in effect exceed
179 days in the aggregate during any consecutive 360-day period, and there
must be at least 181 days during any consecutive 360-day period during
which no Payment Blockage Period is in effect. Notwithstanding the
foregoing, however, no default that existed or was continuing on the date
of delivery of any Blockage Notice to the Trustee shall be, or be made,
the basis for a subsequent Blockage Notice unless such default shall have
been waived for a period of not less than 90 consecutive days (it being
acknowledged that any subsequent action, or any breach of any financial
covenants during the period after the date of delivery of a Blockage
Notice, that, in either case, would give rise to a Non-Payment Default
pursuant to any provisions under which a Non-Payment Default previously
existed or was continuing shall constitute a new Non-Payment Default for
this purpose).
Section 10.04 Acceleration of Payment of Notes. If payment of the Notes is
accelerated because of an Event of Default, the Issuer shall promptly notify the
holders of the Designated Senior Indebtedness of the Issuer or the
Representative of such Designated Senior Indebtedness of the acceleration;
provided that any failure to give such notice shall have no effect whatsoever on
the provisions of this Article X.
Section 10.05 When Distribution Must Be Paid Over. If a distribution is
made to Holders that, due to the subordination provisions of this Article X,
should not have been made to them, such Holders are required to hold it in trust
for the holders of Senior Indebtedness of the Issuer and pay it over to them as
their interests may appear.
Section 10.06 Subrogation. After all Senior Indebtedness of the Issuer is
paid in full and until the Notes are paid in full, Holders shall be subrogated
to the rights of holders of such Senior Indebtedness to receive distributions
applicable to such Senior Indebtedness. A distribution made under this Article X
to holders of such Senior Indebtedness which otherwise would have been made to
Holders is not, as between the Issuer and Holders, a payment by the Issuer on
such Senior Indebtedness.
137
Section 10.07 Relative Rights. This Article X defines the relative rights
of Holders and holders of Senior Indebtedness of the Issuer. Nothing in this
Indenture shall:
(a) impair, as between the Issuer and Holders, the obligation of the
Issuer, which is absolute and unconditional, to pay principal (including
any accretion) of and interest on the Notes in accordance with their
terms;
(b) prevent the Trustee or any Holder from exercising its available
remedies upon a Default, subject to the rights of holders of Senior
Indebtedness of the Issuer to receive payments or distributions otherwise
payable to Holders and such other rights of such holders of Senior
Indebtedness as set forth herein; or
(c) affect the relative rights of Holders and creditors of the
Issuer other than their rights in relation to holders of Senior
Indebtedness.
Section 10.08 Subordination May Not Be Impaired by Issuer. No right of any
holder of Senior Indebtedness of the Issuer to enforce the subordination of the
Indebtedness evidenced by the Notes shall be impaired by any act or failure to
act by the Issuer or by its failure to comply with this Indenture.
Section 10.09 Rights of Trustee and Paying Agent. Notwithstanding Section
10.03 hereof, the Trustee or any Paying Agent may continue to make payments on
the Notes and shall not be charged with knowledge of the existence of facts that
would prohibit the making of any payments unless, not less than five Business
Days prior to the date of such payment, a Responsible Officer of the Trustee
receives notice satisfactory to it that payments may not be made under this
Article X. The Issuer, the Registrar, the Paying Agent, a Representative or a
holder of Senior Indebtedness of the Issuer shall be entitled to give the
notice; provided, however, that, if an issue of Senior Indebtedness of the
Issuer has a Representative, only the Representative shall be entitled to give
the notice.
The Trustee in its individual or any other capacity shall be entitled to
hold Senior Indebtedness of the Issuer with the same rights it would have if it
were not Trustee. The Registrar and the Paying Agent shall be entitled to do the
same with like rights. The Trustee shall be entitled to all the rights set forth
in this Article X with respect to any Senior Indebtedness of the Issuer which
may at any time be held by it, to the same extent as any other holder of such
Senior Indebtedness; and nothing in Article VII shall deprive the Trustee of any
of its rights as such holder. Nothing in this Article X shall apply to claims
of, or payments to, the Trustee under or pursuant to Section 7.07 hereof or any
other Section of this Indenture.
Section 10.10 Distribution or Notice to Representative. Whenever any
Person is to make a distribution or give a notice to holders of Senior
Indebtedness of the Issuer, such Person shall be entitled to make such
distribution or give such notice to their
138
Representative (if any). Any such Representative shall provide its contact
information to the Trustee.
Section 10.11 Article X Not To Prevent Events of Default or Limit Right To
Accelerate. The failure to make a payment pursuant to the Notes by reason of any
provision in this Article X shall not be construed as preventing the occurrence
of a Default. Nothing in this Article X shall have any effect on the right of
the Holders or the Trustee to accelerate the maturity of the Notes.
Section 10.12 Trust Moneys Not Subordinated. Notwithstanding anything
contained herein to the contrary, payments from money or the proceeds of
Government Securities held in trust by the Trustee for the payment of principal
of and interest on the Notes pursuant to Article VIII or Article XIII hereof
shall not be subordinated to the prior payment of any Senior Indebtedness of the
Issuer or subject to the restrictions set forth in this Article X, and none of
the Holders shall be obligated to pay over any such amount to the Issuer or any
holder of Senior Indebtedness of the Issuer or any other creditor of the Issuer,
provided that the subordination provisions of this Article X or Article XII
hereof were not violated at the time the applicable amounts were deposited in
trust pursuant to Article VIII or Article XIII hereof, as the case may be.
Section 10.13 Trustee Entitled To Rely. Upon any payment or distribution
pursuant to this Article X, the Trustee and the Holders shall be entitled to
rely (a) upon any order or decree of a court of competent jurisdiction in which
any proceedings of the nature referred to in Section 10.02 hereof are pending,
(b) upon a certificate of the liquidating trustee or agent or other Person
making such payment or distribution to the Trustee or to the Holders or (c) upon
the Representatives of Senior Indebtedness of the Issuer for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of such Senior Indebtedness and other Indebtedness of
the Issuer, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article X.
In the event that the Trustee determines, in good faith, that evidence is
required with respect to the right of any Person as a holder of Senior
Indebtedness of the Issuer to participate in any payment or distribution
pursuant to this Article X, the Trustee shall be entitled to request such Person
to furnish evidence to the reasonable satisfaction of the Trustee as to the
amount of such Senior Indebtedness held by such Person, the extent to which such
Person is entitled to participate in such payment or distribution and other
facts pertinent to the rights of such Person under this Article X, and, if such
evidence is not furnished, the Trustee shall be entitled to defer any payment to
such Person pending judicial determination as to the right of such Person to
receive such payment. The provisions of Sections 7.01 and 7.02 hereof shall be
applicable to all actions or omissions of actions by the Trustee pursuant to
this Article X.
Section 10.14 Trustee to Effectuate Subordination. Each Holder by its
acceptance of a Note agrees to be bound by this Article X and authorizes and
expressly directs the Trustee, on its behalf, to take such action as may be
necessary or appropriate to effectuate the subordination between the Holders and
the holders of Senior
139
Indebtedness of the Issuer as provided in this Article X and appoints the
Trustee as attorney-in-fact for any and all such purposes.
Section 10.15 Trustee Not Fiduciary for Holders of Senior Indebtedness of
the Issuer. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness of the Issuer and shall not be liable to any such
holders if it shall mistakenly pay over or distribute to Holders or the Issuer
or any other Person, money or assets to which any holders of Senior Indebtedness
of the Issuer shall be entitled by virtue of this Article X or otherwise.
Section 10.16 Reliance by Holders of Senior Indebtedness of the Issuer on
Subordination Provisions. Each Holder by accepting a Note acknowledges and
agrees that the foregoing subordination provisions are, and are intended to be,
an inducement and a consideration to each holder of any Senior Indebtedness of
the Issuer, whether such Senior Indebtedness was created or acquired before or
after the issuance of the Notes, to acquire and continue to hold, or to continue
to hold, such Senior Indebtedness and such holder of such Senior Indebtedness
shall be deemed conclusively to have relied on such subordination provisions in
acquiring and continuing to hold, or in continuing to hold, such Senior
Indebtedness.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness of the Issuer may, at any
time and from time to time, without the consent of or notice to the
Trustee or the Holders, without incurring responsibility to the Trustee or
the Holders and without impairing or releasing the subordination provided
in this Article X or the obligations hereunder of the Holders to the
holders of the Senior Indebtedness of the Issuer, do any one or more of
the following: (i) change the manner, place or terms of payment or extend
the time of payment of, or renew or alter, Senior Indebtedness of the
Issuer, or otherwise amend or supplement in any manner Senior Indebtedness
of the Issuer, or any instrument evidencing the same or any agreement
under which Senior Indebtedness of the Issuer is outstanding; (ii) sell,
exchange, release or otherwise deal with any property pledged, mortgaged
or otherwise securing Senior Indebtedness of the Issuer; (iii) release any
Person liable in any manner for the payment or collection of Senior
Indebtedness of the Issuer; and (iv) exercise or refrain from exercising
any rights against the Issuer and any other Person.
ARTICLE XI
GUARANTEES
----------
Section 11.01 Guarantee. Subject to this Article XI, each of the
Guarantors hereby, jointly and severally irrevocably and unconditionally
guarantees on a senior subordinated basis to each Holder of a Note authenticated
and delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of this Indenture, the Notes or
the obligations of the Issuer hereunder or thereunder, that: (a) the principal
of, premium, if any, or interest or Additional Interest on
140
the Notes, expenses, indemnification or otherwise shall be promptly paid in full
when due, whether at Stated Maturity, by acceleration, redemption or otherwise,
and interest on the overdue principal of and interest on the Notes, if any, if
lawful, and all other obligations of the Issuer to the Holders or the Trustee
hereunder or thereunder shall be promptly paid in full or performed, all in
accordance with the terms hereof and thereof; and (b) in case of any extension
of time of payment or renewal of any Notes or any of such other obligations,
that same shall be promptly paid in full when due or performed in accordance
with the terms of the extension or renewal, whether at Stated Maturity, by
acceleration, redemption or otherwise. Failing payment when due of any amount so
guaranteed or any performance so guaranteed for whatever reason, the Guarantors
shall be jointly and severally obligated to pay the same immediately. Each
Guarantor agrees that this is a guarantee of payment and not a guarantee of
collection.
The Guarantors hereby agree that their obligations hereunder shall
be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or this Indenture, the absence of any action
to enforce the same, any waiver or consent by any Holder of the Notes with
respect to any provisions hereof or thereof, the recovery of any judgment
against the Issuer, any action to enforce the same or any other
circumstance which might otherwise constitute a legal or equitable
discharge or defense of a Guarantor. Each Guarantor hereby waives
diligence, presentment, demand of payment, filing of claims with a court
in the event of insolvency or bankruptcy of the Issuer, any right to
require a proceeding first against the Issuer, protest, notice and all
demands whatsoever and covenants that this Guarantee shall not be
discharged except by complete performance of the obligations contained in
the Notes and this Indenture.
Each Guarantor also agrees to pay any and all costs and expenses
(including reasonable attorneys' fees and expenses) incurred by the
Trustee or any Holder in enforcing any rights under this Section 11.01.
If any Holder or the Trustee is required by any court or otherwise
to return to the Issuer, the Guarantors or any custodian, trustee,
liquidator or other similar official acting in relation to either the
Issuer or the Guarantors, any amount paid either to the Trustee or such
Holder, this Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect.
Each Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders in respect of any obligations
guaranteed hereby until payment in full of all obligations guaranteed
hereby. Each Guarantor further agrees that, as between the Guarantors, on
the one hand, and the Holders and the Trustee, on the other hand, (x) the
maturity of the obligations guaranteed hereby may be accelerated as
provided in Article VI hereof for the purposes of this Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and (y) in
the event of any declaration of acceleration of such obligations as
provided in Article VI hereof, such obligations (whether or not due and
payable) shall forthwith become due and payable by the Guarantors for the
purpose of this Guarantee. The Guarantors shall have the right to seek
contribution from any non-
141
paying Guarantor so long as the exercise of such right does not impair the
rights of the Holders under the Guarantees.
Each Guarantee shall remain in full force and effect and continue to
be effective should any petition be filed by or against the Issuer for
liquidation, reorganization, should the Issuer become insolvent or make an
assignment for the benefit of creditors or should a receiver or trustee be
appointed for all or any significant part of the Issuer's assets, and
shall, to the fullest extent permitted by law, continue to be effective or
be reinstated, as the case may be, if at any time payment and performance
of the Notes are, pursuant to applicable law, rescinded or reduced in
amount, or must otherwise be restored or returned by any obligee on the
Notes or Guarantees, whether as a "voidable preference," "fraudulent
transfer" or otherwise, all as though such payment or performance had not
been made. In the event that any payment or any part thereof, is
rescinded, reduced, restored or returned, the Notes shall, to the fullest
extent permitted by law, be reinstated and deemed reduced only by such
amount paid and not so rescinded, reduced, restored or returned.
In case any provision of any Guarantee 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.
Pursuant to the provisions of Article XII hereof, the Guarantee
issued by any Guarantor shall be a general unsecured senior subordinated
obligation of such Guarantor and shall be subordinated in right of payment
to all existing and future Senior Indebtedness of such Guarantor, if any.
Each payment to be made by a Guarantor in respect of its Guarantee
shall be made without set-off, counterclaim, reduction or diminution of
any kind or nature.
Section 11.02 Limitation on Guarantor Liability. Each Guarantor, and by
its acceptance of Notes, each Holder, hereby confirms that it is the intention
of all such parties that the Guarantee of such Guarantor not constitute a
fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform
Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar
federal or state law to the extent applicable to any Guarantee. To effectuate
the foregoing intention, the Trustee, the Holders and the Guarantors hereby
irrevocably agree that the obligations of each Guarantor shall be limited to the
maximum amount as will, after giving effect to such maximum amount and all other
contingent and fixed liabilities of such Guarantor that are relevant under such
laws and after giving effect to any collections from, rights to receive
contribution from or payments made by or on behalf of any other Guarantor in
respect of the obligations of such other Guarantor under this Article XI, result
in the obligations of such Guarantor under its Guarantee not constituting a
fraudulent conveyance or fraudulent transfer under applicable law. Each
Guarantor that makes a payment under its Guarantee shall be entitled upon
payment in full of all guaranteed obligations under this Indenture to a
contribution from each other Guarantor in an amount equal to such other
Guarantor's pro rata portion of such payment based on the respective net assets
of all the Guarantors at the time of such payment determined in accordance with
GAAP.
142
Section 11.03 Execution and Delivery. To evidence its Guarantee set forth
in Section 11.01 hereof, each Guarantor hereby agrees that this Indenture shall
be executed on behalf of such Guarantor by its President, one of its Vice
Presidents or one of its Assistant Vice Presidents.
Each Guarantor hereby agrees that its Guarantee set forth in Section
10.01 hereof shall remain in full force and effect notwithstanding the
absence of the endorsement of any notation of such Guarantee on the Notes.
If an Officer whose signature is on this Indenture no longer holds
that office at the time the Trustee authenticates the Note, the Guarantee
shall be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Guarantee set
forth in this Indenture on behalf of the Guarantors.
If required by Section 4.14 hereof, the Issuer shall cause any newly
created or acquired Restricted Subsidiary to comply with the provisions of
Section 4.14 hereof and this Article XI, to the extent applicable.
Section 11.04 Subrogation. Each Guarantor shall be subrogated to all
rights of Holders of Notes against the Issuer in respect of any amounts paid by
any Guarantor pursuant to the provisions of Section 11.01 hereof; provided that
if an Event of Default has occurred and is continuing, no Guarantor shall be
entitled to enforce or receive any payments arising out of, or based upon, such
right of subrogation until all amounts then due and payable by the Issuer under
this Indenture or the Notes shall have been paid in full.
Section 11.05 Benefits Acknowledged. Each Guarantor acknowledges that it
will receive direct and indirect benefits from the financing arrangements
contemplated by this Indenture and that the guarantee and waivers made by it
pursuant to its Guarantee are knowingly made in contemplation of such benefits.
Section 11.06 Release of Guarantees(a) . A Guarantee of a Guarantor will
be automatically released upon:
(a) the sale, disposition, exchange or other transfer (including
through merger, consolidation, amalgamation or otherwise) of the Capital
Stock (including any sale, disposition or other transfer following which
the applicable Guarantor is no longer a Restricted Subsidiary) of the
applicable Guarantor if such sale, disposition, exchange or other transfer
is made in a manner not in violation of this Indenture;
143
(b) the Issuer designating such Guarantor to be an Unrestricted
Subsidiary in accordance with Section 4.07 and the definition of
"Unrestricted Subsidiary";
(c) the release or discharge of the guarantee by such Restricted
Subsidiary of the Credit Agreement or the guarantee of any other
Indebtedness which resulted in the obligation to guarantee the Notes;
(d) the Issuer's exercise of its legal defeasance option or covenant
defeasance option as described under Article VIII or if the Issuer's
obligations under the this Indenture are discharged in accordance with the
terms of this Indenture; or
(e) the applicable Guarantor ceasing to be a Subsidiary as a result
of any foreclosure of any pledge or security interest securing Bank
Indebtedness or other exercise of remedies in respect thereof.
ARTICLE XII
SUBORDINATION OF GUARANTEES
---------------------------
Section 12.01 Agreement to Subordinate. Each Guarantor agrees, and each
Holder by accepting a Note agrees, that the obligations of such Guarantor under
its Guarantee are subordinated in right of payment, to the extent and in the
manner provided in this Article XII, to the prior payment in cash in full of all
existing and future Senior Indebtedness of such Guarantor and that the
subordination is for the benefit of and enforceable by the holders of such
Senior Indebtedness. A Guarantor's obligations under its Guarantee shall in all
respects rank pari passu in right of payment with all existing and future Pari
Passu of such Guarantor, and will be senior in right of payment to all existing
and future Subordinated Indebtedness of such Guarantor; and only Indebtedness of
such Guarantor that is Senior Indebtedness shall rank senior to the obligations
of such Guarantor under its Guarantee in accordance with the provisions set
forth herein. All provisions of this Article XII shall be subject to Section
12.12.
Section 12.02 Liquidation, Dissolution, Bankruptcy. Upon any payment or
distribution of the assets of a Guarantor to creditors upon a total or partial
liquidation or dissolution of such Guarantor or in a reorganization of, or
similar proceeding relating to, such Guarantor or its property:
(a) the holders of Senior Indebtedness of such Guarantor shall be
entitled to receive payment in full in cash of such Senior Indebtedness
before Holders shall be entitled to receive any payment;
(b) until the Senior Indebtedness of such Guarantor is paid in full
in cash, any payment or distribution to which Holders would be entitled
but for the subordination provisions of this Indenture shall be made to
holders of such Senior Indebtedness as their interests may appear, except
that Holders may receive Permitted Junior Securities; and
(c) if a distribution is made to Holders that, due to the
subordination provisions of this Indenture, should not have been made to
them, such Holders will be required to hold it in trust for the holders of
Senior
144
Indebtedness of such Guarantor and pay it over to them (or their
Representative) as their interests may appear.
Section 12.03 Default on Senior Indebtedness of a Guarantor. A Guarantor
shall not make any payment pursuant to its Guarantee (or pay any other
Obligations relating to its Guarantee, including Additional Interest, fees,
costs, expenses, indemnities and rescission or damage claims) and may not
purchase, redeem or otherwise retire any Notes (collectively, "pay its
Guarantee") (except in the form of Permitted Junior Securities) if either of the
following occurs (a "Guarantor Payment Default"):
(a) any Obligation on any Designated Senior Indebtedness of such
Guarantor is not paid in full in cash when due (after giving effect to any
applicable grace period); or
(b) any other default on Designated Senior Indebtedness of such
Guarantor occurs and the maturity of such Designated Senior Indebtedness
is accelerated in accordance with its terms;
unless, in either case, the Guarantor Payment Default has been cured or waived
and any such acceleration has been rescinded or such Designated Senior
Indebtedness has been discharged or paid in full in cash; provided, however,
that such Guarantor shall be entitled to pay its Guarantee without regard to the
foregoing if such Guarantor and the Trustee receive written notice approving
such payment from the Representatives of all Designated Senior Indebtedness with
respect to which the Guarantor Payment Default has occurred and is continuing.
During the continuance of any default (other than a Guarantor
Payment Default) (a "Guarantor Non-Payment Default") with respect to any
Designated Senior Indebtedness of a Guarantor pursuant to which the
maturity thereof may be accelerated without further notice (except such
notice as may be required to effect such acceleration) or the expiration
of any applicable grace periods, such Guarantor shall not pay its
Guarantee (except in the form of Permitted Junior Securities) for a period
(a "Guarantee Payment Blockage Period") commencing upon the receipt by the
Trustee (with a copy to such Guarantor and the Issuer) of written notice
(a "Guarantee Blockage Notice") of such Guarantor Non-Payment Default from
the Representative of such Designated Senior Indebtedness specifying an
election to effect a Guarantee Payment Blockage Period and ending 179 days
thereafter. The Guarantee Payment Blockage Period shall end earlier if
such Guarantee Payment Blockage Period is terminated (i) by written notice
to the
145
Trustee, the relevant Guarantor and the Issuer from the Person or Persons
who gave such Guarantee Blockage Notice; (ii) because the default giving
rise to such Guarantee Blockage Notice is cured, waived or otherwise no
longer continuing; or (iii) because such Designated Senior Indebtedness
has been discharged or repaid in full in cash.
Notwithstanding the provisions described in the immediately
preceding paragraph (but subject to the provisions contained in the first
sentence of this Section 12.03 and Section 12.02 hereof), unless the
holders of such Designated Senior Indebtedness or the Representative of
such Designated Senior Indebtedness shall have accelerated the maturity of
such Designated Senior Indebtedness, the relevant Guarantor shall be
entitled to resume paying its Guarantee after the end of such Guarantee
Payment Blockage Period. Each Guarantee shall not be subject to more than
one Guarantee Payment Blockage Period in any consecutive 360-day period
irrespective of the number of defaults with respect to Designated Senior
Indebtedness of the relevant Guarantor during such period. However, in no
event shall the total number of days during which any Guarantee Payment
Blockage Period or Periods on a Guarantee is in effect exceed 179 days in
the aggregate during any consecutive 360-day period, and there must be at
least 181 days during any consecutive 360-day period during which no
Guarantee Payment Blockage Period is in effect. Notwithstanding the
foregoing, however, no default that existed or was continuing on the date
of delivery of any Guarantee Blockage Notice to the Trustee shall be, or
be made, the basis for a subsequent Guarantee Blockage Notice unless such
default shall have been waived for a period of not less than consecutive
90 days (it being acknowledged that any subsequent action, or any breach
of any financial covenants during the period after the date of delivery of
a Guarantee Blockage Notice, that, in either case, would give rise to a
Guarantor Non-Payment Default pursuant to any provisions under which a
Guarantor Non-Payment Default previously existed or was continuing shall
constitute a new Guarantor Non-Payment Default for this purpose).
Section 12.04 Acceleration of Payment of Notes. If payment of the Notes is
accelerated because of an Event of Default, the Issuer or such Guarantor shall
promptly notify the holders of the Designated Senior Indebtedness of such
Guarantor or the Representative of such Designated Senior Indebtedness of the
acceleration; provided that any failure to give such notice shall have no effect
whatsoever on the provisions of this Article XII.
Section 12.05 When Distribution Must Be Paid Over.If a distribution is
made to Holders that, due to the subordination provisions of this Article XII,
should not have been made to them, such Holders are required to hold it in trust
for the holders of Senior Indebtedness of the relevant Guarantor and pay it over
to them as their interests may appear.
Section 12.06 Subrogation. After all Senior Indebtedness of a Guarantor is
paid in full and until the Notes are paid in full, Holders shall be subrogated
to the rights of holders of such Senior Indebtedness to receive distributions
applicable to such Senior Indebtedness. A distribution made under this Article
XII to holders of such Senior
146
Indebtedness which otherwise would have been made to Holders is not, as between
the relevant Guarantor and Holders, a payment by such Guarantor on such Senior
Indebtedness.
Section 12.07 Relative Rights. This Article XII defines the relative
rights of Holders and holders of Senior Indebtedness of a Guarantor. Nothing in
this Indenture shall:
(a) impair, as between such Guarantor and Holders, the obligation of
such Guarantor, which is absolute and unconditional, to make payments
under its Guarantee in accordance with its terms;
(b) prevent the Trustee or any Holder from exercising its available
remedies upon a default by such Guarantor under its obligations with
respect to its Guarantee, subject to the rights of holders of Senior
Indebtedness of such Guarantor to receive payments or distributions
otherwise payable to Holders and such other rights of such holders of
Senior Indebtedness as set forth herein; or
(c) affect the relative rights of Holders and creditors of such
Guarantor other than their rights in relation to holders of Senior
Indebtedness.
Section 12.08 Subordination May Not Be Impaired by a Guarantor. No right
of any holder of Senior Indebtedness of a Guarantor to enforce the subordination
of the obligations of such Guarantor under its Guarantee shall be impaired by
any act or failure to act by such Guarantor or by its failure to comply with
this Indenture.
Section 12.09 Rights of Trustee and Paying Agent. Notwithstanding Section
12.03 hereof, the Trustee or any Paying Agent may continue to make payments on
the Notes and shall not be charged with knowledge of the existence of facts that
would prohibit the making of any payments unless, not less than five Business
Days prior to the date of such payment, a Responsible Officer of the Trustee
receives notice satisfactory to him that payments may not be made under this
Article XII. Each Guarantor, the Registrar, the Paying Agent, a Representative
or a holder of Senior Indebtedness of such Guarantor shall be entitled to give
the notice; provided, however, that, if an issue of Senior Indebtedness of such
Guarantor has a Representative, only the Representative shall be entitled to
give the notice.
The Trustee in its individual or any other capacity shall be
entitled to hold Senior Indebtedness of any Guarantor with the same rights
it would have if it were not Trustee. The Registrar and the Paying Agent
shall be entitled to do the same with like rights. The Trustee shall be
entitled to all the rights set forth in this Article XII with respect to
any Senior Indebtedness of any Guarantor which may at any time be held by
it, to the same extent as any other holder of such Senior Indebtedness;
and nothing in Article VII shall deprive the Trustee of any of its rights
as such holder. Nothing in this Article
147
XII shall apply to claims of, or payments to, the Trustee under or
pursuant to Section 7.07 hereof or any other Section of this Indenture.
Section 12.10 Distribution or Notice to Representative. Whenever any
Person is to make a distribution or give a notice to holders of Senior
Indebtedness of a Guarantor, such Person shall be entitled to make such
distribution or give such notice given to their Representative (if any).
Section 12.11 Article XII Not To Prevent Events of Default or Limit Right
To Demand Payment. The failure of a Guarantor to make a payment pursuant its
Guarantee by reason of any provision in this Article XII shall not be construed
as preventing the occurrence of a default by such Guarantor under its Guarantee.
Nothing in this Article XII shall have any effect on the right of the Holders or
the Trustee to make a demand for payment on a Guarantor pursuant to Article XI
hereof.
Section 12.12 Trust Moneys Not Subordinated. Notwithstanding anything
contained herein to the contrary, payments from money or the proceeds of
Government Securities held in trust by the Trustee for the payment of principal
of and interest on the Notes pursuant to Article VIII or Article XIII hereof
shall not be subordinated to the prior payment of any Senior Indebtedness of any
Guarantor or subject to the restrictions set forth in this Article XII, and none
of the Holders shall be obligated to pay over any such amount to such Guarantor
or any holder of Senior Indebtedness of such Guarantor or any other creditor of
such Guarantor, provided that the subordination provisions of Article X hereof
or this Article XII were not violated at the time the applicable amounts were
deposited in trust pursuant to Article VIII or Article XIII hereof, as the case
may be.
Section 12.13 Trustee Entitled To Rely. Upon any payment or distribution
pursuant to this Article XII, the Trustee and the Holders shall be entitled to
rely (a) upon any order or decree of a court of competent jurisdiction in which
any proceedings of the nature referred to in Section 12.02 hereof are pending,
(b) upon a certificate of the liquidating trustee or agent or other Person
making such payment or distribution to the Trustee or to the Holders or (c) upon
the Representatives of Senior Indebtedness of a Guarantor for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of such Senior Indebtedness and other Indebtedness of
such Guarantor, the amount thereof or payable thereon, the amount or amounts
paid or distributed thereon and all other facts pertinent thereto or to this
Article XII. In the event that the Trustee determines, in good faith, that
evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness of a Guarantor to participate in any payment or distribution
pursuant to this Article XII, the Trustee shall be entitled to request such
Person to furnish evidence to the reasonable satisfaction of the Trustee as to
the amount of such Senior Indebtedness held by such Person, the extent to which
such Person is entitled to participate in such payment or distribution and other
facts pertinent to the rights of such Person under this Article XII, and, if
such evidence is not furnished, the Trustee shall be entitled to defer any
payment to such Person pending judicial determination as to the right of such
Person to receive such payment. The provisions of Sections 7.01 and 7.02 hereof
shall be applicable to all actions or omissions of actions by the Trustee
pursuant to this Article XII.
148
Section 12.14 Trustee to Effectuate Subordination. Each Holder by its
acceptance of a Note agrees to be bound by this Article XII and authorizes and
expressly directs the Trustee, on its behalf, to take such action as may be
necessary or appropriate to effectuate the subordination between the Holders and
the holders of Senior Indebtedness of a Guarantor as provided in this Article
XII and appoints the Trustee as attorney-in-fact for any and all such purposes.
Section 12.15 Trustee Not Fiduciary for Holders of Senior Indebtedness of
Guarantors. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness of any Guarantor and shall not be liable to any
such holders if it shall mistakenly pay over or distribute to Holders or such
Guarantor or any other Person, money or assets to which any holders of Senior
Indebtedness of such Guarantor shall be entitled by virtue of this Article XII
or otherwise.
Section 12.16 Reliance by Holders of Senior Indebtedness of a Guarantor on
Subordination Provisions. Each Holder by accepting a Note acknowledges and
agrees that the foregoing subordination provisions are, and are intended to be,
an inducement and a consideration to each holder of any Senior Indebtedness of a
Guarantor, whether such Senior Indebtedness was created or acquired before or
after the issuance of the Notes, to acquire and continue to hold, or to continue
to hold, such Senior Indebtedness and such holder of such Senior Indebtedness
shall be deemed conclusively to have relied on such subordination provisions in
acquiring and continuing to hold, or in continuing to hold, such Senior
Indebtedness.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness of any Guarantor may, at any
time and from time to time, without the consent of or notice to the
Trustee or the Holders, without incurring responsibility to the Trustee or
the Holders and without impairing or releasing the subordination provided
in this Article XII or the obligations hereunder of the Holders to the
holders of the Senior Indebtedness of such Guarantor, do any one or more
of the following: (i) change the manner, place or terms of payment or
extend the time of payment of, or renew or alter, Senior Indebtedness of
such Guarantor, or otherwise amend or supplement in any manner Senior
Indebtedness of such Guarantor, or any instrument evidencing the same or
any agreement under which Senior Indebtedness of such Guarantor is
outstanding; (ii) sell, exchange, release or otherwise deal with any
property pledged, mortgaged or otherwise securing Senior Indebtedness of
such Guarantor; (iii) release any Person liable in any manner for the
payment or collection of Senior Indebtedness of such Guarantor; and (iv)
exercise or refrain from exercising any rights against such Guarantor and
any other Person.
149
ARTICLE XIII
SATISFACTION AND DISCHARGE
--------------------------
Section 13.01 Satisfaction and Discharge. This Indenture shall be
discharged and shall cease to be of further effect (except as to surviving
rights of registration or transfer or exchange of Notes as expressly provided
for in this Indenture) as to all Notes, when either:
(1) all Notes heretofore authenticated and delivered, except lost,
stolen or destroyed Notes which have been replaced or paid and Notes for
whose payment money has heretofore been deposited in trust, have been
delivered to the Trustee for cancellation; or
(2) (A) all Notes not heretofore delivered to the Trustee for
cancellation have become due and payable by reason of the making of a
notice of redemption or otherwise, will become due and payable within one
year or are to be called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of redemption by the
Trustee in the name, and at the expense, of the Issuer, and the Issuer or
any Guarantor has irrevocably deposited or caused to be deposited with the
Trustee as trust funds in trust solely for the benefit of the Holders of
the Notes, cash in U.S. dollars, U.S. dollar-denominated 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 the Notes not heretofore
delivered to the Trustee for cancellation for principal, premium, if any,
and accrued interest to the date of maturity or redemption;
(B) the Issuer has paid or caused to be paid all sums payable
by it under this Indenture; and
(C) the Issuer has delivered irrevocable instructions to the
Trustee to apply the deposited money toward the payment of the Notes
at maturity or the Redemption Date, as the case may be.
In addition, the Issuer must deliver an Officer's Certificate and an
Opinion of Counsel to the Trustee stating that all conditions precedent to
satisfaction and discharge have been satisfied.
Notwithstanding the satisfaction and discharge of this Indenture, if
money shall have been deposited with the Trustee pursuant to subclause (A)
of clause (2) of this Section 13.01, the provisions of Section 7.07,
Section 8.06 and 13.02 hereof shall survive.
Section 13.02 Application of Trust Money. Subject to the provisions of
Section 8.06 hereof, all money deposited with the Trustee pursuant to Section
13.01 hereof 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 Issuer acting as its own Paying Agent)
as the Trustee may determine, to the Persons
150
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 Government
Securities in accordance with Section 13.01 hereof 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 Issuer'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 13.01 hereof; provided that if
the Issuer has made any payment of principal of, premium, if any, or
interest on any Notes because of the reinstatement of its obligations, the
Issuer 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.
ARTICLE XIV
MISCELLANEOUS
-------------
Section 14.01 Trust Indenture Act Controls. If any provision of this
Indenture limits, qualifies or conflicts with the duties imposed by Trust
Indenture Act Section 318(c), the imposed duties shall control.
Section 14.02 Notices. Any notice or communication by the Issuer, any
Guarantor or the Trustee to the others is duly given if in writing and delivered
in person or mailed by first-class mail (registered or certified, return receipt
requested), fax or overnight air courier guaranteeing next day delivery, to the
others' address:
If to the Issuer and/or any Guarantor:
Bauble Acquisition Sub, Inc.
c/o Apollo Management, L.P.
10250 Constellation Boulevard
Suite 2900
Los Angeles, California 90067
Fax No.: 310-843-1950
Attention: Lance A. Milken
151
If to the Trustee:
The Bank of New York
101 Barclay Street
Corporate Trust Administration
Floor 8W
New York, New York 10286
Fax No.: 212-815-5704
Attn: Claire's Stores, Inc. Trustee
The Issuer, any Guarantor or the Trustee, by notice to the others,
may designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five calendar days after being deposited in the
mail, postage prepaid, if mailed by first-class mail; when receipt
acknowledged, if faxed; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day
delivery; provided that any notice or communication delivered to the
Trustee shall be deemed effective upon actual receipt thereof.
Any notice or communication to a Holder shall be mailed by
first-class mail, certified or registered, return receipt requested, or by
overnight air courier guaranteeing next day delivery to its address shown
on the Note Register kept by the Registrar. Any notice or communication
shall also be so mailed to any Person described in Trust Indenture Act
Section 313(c), to the extent required by the Trust Indenture Act. Failure
to mail a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Issuer mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
Section 14.03 Communication by Holders of Notes with Other Holders of
Notes. Holders may communicate pursuant to Trust Indenture Act Section 312(b)
with other Holders with respect to their rights under this Indenture or the
Notes. The Issuer, the Trustee, the Registrar and anyone else shall have the
protection of Trust Indenture Act Section 312(c).
Section 14.04 Certificate and Opinion as to Conditions Precedent. Upon any
request or application by the Issuer or any of the Guarantors to the Trustee to
take any
152
action under this Indenture, the Issuer or such Guarantor, as the case may be,
shall furnish to the Trustee:
(a) An Officer's Certificate of the Issuer in form and substance
reasonably satisfactory to the Trustee (which shall include the statements
set forth in Section 14.05 hereof) stating that, in the opinion of the
signers, all conditions precedent and covenants, if any, provided for in
this Indenture relating to the proposed action have been satisfied; and
(b) An Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 14.05 hereof) stating that, in the opinion of such counsel, all
such conditions precedent and covenants have been satisfied.
Section 14.05 Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture (other than a certificate provided pursuant to
Section 4.04 hereof or Trust Indenture Act Section 314(a)(4)) shall comply with
the provisions of Trust Indenture Act Section 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with (and, in the case of an Opinion of
Counsel, may be limited to reliance on an Officer's Certificate as to
matters of fact); and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been complied with.
Section 14.06 Rules by Trustee and Agents. The Trustee may make reasonable
rules for action by or at a meeting of Holders. The Registrar or Paying Agent
may make reasonable rules and set reasonable requirements for its functions.
Section 14.07 No Personal Liability of Directors, Officers, Employees and
Stockholders. No director, officer, employee, incorporator or stockholder, the
Issuer or any other Guarantor (other than in the case of stockholders of the
Issuer, any Parent Guarantor or any Subsidiary Guarantor, any Parent Guarantor,
the Issuer or another Subsidiary Guarantor) or any of their parent companies
shall have any liability for any obligations of the Issuer or the Guarantors
under the Notes, the Guarantees or this Indenture or for any claim based on, in
respect of, or by reason of such obligations or
153
their creation. Each Holder by accepting Notes waives and releases all such
liability. The waiver and release are part of the consideration for issuance of
the Notes.
Section 14.08 Governing Law. THIS INDENTURE, THE NOTES AND ANY GUARANTEE
WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK.
Section 14.09 Waiver of Jury Trial. EACH OF THE ISSUER, THE GUARANTORS AND
THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
Section 14.10 Force Majeure. In no event shall the Trustee be responsible
or liable for any failure or delay in the performance of its obligations under
this Indenture arising out of or caused by, directly or indirectly, forces
beyond its reasonable control, including without limitation strikes, work
stoppages, accidents, acts of war or terrorism, civil or military disturbances,
nuclear or natural catastrophes or acts of God, and interruptions, loss or
malfunctions of utilities, communications or computer (software or hardware)
services.
Section 14.11 No Adverse Interpretation of Other Agreements. this
Indenture may not be used to interpret any other indenture, loan or debt
agreement of the Issuer or its Restricted Subsidiaries or of any other Person.
Any such indenture, loan or debt agreement may not be used to interpret this
Indenture.
Section 14.12 Successors. All agreements of the Issuer in this Indenture
and the Notes shall bind its successors. All agreements of the Trustee in this
Indenture shall bind its successors. All agreements of each Guarantor in this
Indenture shall bind its successors, except as otherwise provided in Section
11.05 hereof.
Section 14.13 Severability. 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 14.14 Counterpart Originals. The parties may sign any number of
copies of this Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
Section 14.15 Table of Contents, Headings, etc. The Table of Contents,
Cross-Reference Table and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not to be
considered a part of this Indenture and shall in no way modify or restrict any
of the terms or provisions hereof.
Section 14.16 Qualification of Indenture. The Issuer and the Guarantors
shall qualify this Indenture under the Trust Indenture Act in accordance with
the terms and conditions of the Registration Rights Agreement and shall pay all
reasonable costs and
154
expenses (including attorneys' fees and expenses for the Issuer, the Guarantors
and the Trustee) incurred in connection therewith, including, but not limited
to, costs and expenses of qualification of this Indenture and the Notes and
printing this Indenture and the Notes. The Trustee shall be entitled to receive
from the Issuer and the Guarantors any such Officer's Certificates, Opinions of
Counsel or other documentation as it may reasonably request in connection with
any such qualification of this Indenture under the Trust Indenture Act.
Section 14.17 Currency of Account; Conversion of Currency; Foreign
Exchange Restrictions.
(a) U.S. dollars are the sole currency of account and payment for
all sums payable by the Issuer and the Guarantors under or in connection
with the Notes, the Guarantees of the Notes or this Indenture, including
damages related thereto or hereto. Any amount received or recovered in a
currency other than U.S. dollars by a Holder of Notes (whether as a result
of, or of the enforcement of, a judgment or order of a court of any
jurisdiction, in the winding-up or dissolution of the Issuer or otherwise)
in respect of any sum expressed to be due to it from the Issuer shall only
constitute a discharge to the Issuer to the extent of the U.S. dollar
amount, which the recipient is able to purchase with the amount so
received or recovered in that other currency on the date of that receipt
or recovery (or, if it is not practicable to make that purchase on that
date, on the first date on which it is practicable to do so). If that U.S.
dollar amount is less than the U.S. dollar amount expressed to be due to
the recipient under the applicable Notes, the Issuer shall indemnify it
against any loss sustained by it as a result as set forth in Section
14.17(b) hereof. In any event, the Issuer and the Guarantors shall
indemnify the recipient against the cost of making any such purchase. For
the purposes of this Section 14.17, it will be sufficient for the Holder
of a Note to certify in a satisfactory manner (indicating sources of
information used) that it would have suffered a loss had an actual
purchase of U.S. dollars been made with the amount so received in that
other currency on the date of receipt or recovery (or, if a purchase of
U.S. dollars on such date had not been practicable, on the first date on
which it would have been practicable, it being required that the need for
a change of date be certified in the manner mentioned above).
(b) The Issuer and the Guarantors, jointly and severally, covenant
and agree that the following provisions shall apply to conversion of
currency in the case of the Notes, the Guarantees and this Indenture:
(i) (A) If for the purpose of obtaining judgment in, or
enforcing the judgment of, any court in any country, it becomes
necessary to convert into a currency (the "Judgment Currency") an
amount due in any other currency (the "Base Currency"), then the
conversion shall be made at the rate of exchange prevailing on the
Business Day before the day on which the judgment is given or the
order of enforcement is made, as the case may be (unless a court
shall otherwise determine).
(B) If there is a change in the rate of exchange
prevailing between the Business Day before the day on which the
judgment is
155
given or an order of enforcement is made, as the case may be (or
such other date as a court shall determine), and the date of receipt
of the amount due, the Issuer and the Guarantors will pay such
additional (or, as the case may be, such lesser) amount, if any, as
may be necessary so that the amount paid in the Judgment Currency
when converted at the rate of exchange prevailing on the date of
receipt will produce the amount in the Base Currency originally due.
(ii) In the event of the winding-up of the Issuer or any
Guarantor at any time while any amount or damages owing under the
Notes, the Guarantees and this Indenture, or any judgment or order
rendered in respect thereof, shall remain outstanding, the Issuer
and the Guarantors shall indemnify and hold the Holders and the
Trustee harmless against any deficiency arising or resulting from
any variation in rates of exchange between (i) the date as of which
the Applicable Currency Equivalent of the amount due or contingently
due under the Notes, the Guarantees and this Indenture (other than
under this subsection (b)(ii)) is calculated for the purposes of
such winding-up and (ii) the final date for the filing of proofs of
claim in such winding-up. For the purpose of this subsection
(b)(ii), the final date for the filing of proofs of claim in the
winding-up of the Issuer or any Guarantor shall be the date fixed by
the liquidator or otherwise in accordance with the relevant
provisions of applicable law as being the latest practicable date as
at which liabilities of the Issuer or such Guarantor may be
ascertained for such winding-up prior to payment by the liquidator
or otherwise in respect thereto.
(c) The obligations contained in this Section 12.17 shall constitute
separate and independent obligations from the other obligations of the
Issuer and the Guarantors under this Indenture, shall give rise to
separate and independent causes of action against the Issuer and the
Guarantors, shall apply irrespective of any waiver or extension granted by
any Holder or the Trustee or either of them from time to time and shall
continue in full force and effect notwithstanding any judgment or order or
the filing of any proof of claim in the winding-up of the Issuer or any
Guarantor for a liquidated sum in respect of amounts due hereunder (other
than under subsection (b)(ii) above) or under any such judgment or order.
Any such deficiency as aforesaid shall be deemed to constitute a loss
suffered by the Holders or the Trustee, as the case may be, and no proof
or evidence of any actual loss shall be required by the Issuer or any
Guarantor or the liquidator or otherwise or any of them. In the case of
subsection (b)(ii) above, the amount of such deficiency shall not be
deemed to be reduced by any variation in rates of exchange occurring
between the said final date and the date of any liquidating distribution.
(d) The term "rate(s) of exchange" shall mean the rate of exchange
quoted by Reuters at 10:00 a.m. (New York City time) for spot purchases of
the Base Currency with the Judgment Currency other than the Base Currency
referred to in subsections (b)(i) and (b)(ii) above and includes any
premiums and costs of exchange payable.
156
Section 14.18 Consent to Jurisdiction and Service.
Any Subsidiary Guarantor that is a Foreign Subsidiary shall appoint
CT Corporation System as its agent for actions relating to the Notes, this
Indenture or the Registration Rights Agreement or brought under U.S.
Federal or state securities laws brought in any U.S. Federal or state
court located in the Borough of Manhattan in The City of New York and
shall submit to such jurisdiction.
[Signatures on following page]
157
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, all as of the date first above written.
BAUBLE ACQUISITION SUB, INC.,
as Issuer
By: /s/ Lance Milken
--------------------------------------
Name: Lance Milken
Title: Treasurer and Secretary
THE BANK OF NEW YORK,
as Trustee
By: /s/ Remo J. Reale
--------------------------------------
Name: Remo J. Reale
Title: Vice President
EXHIBIT A
[Global Note Legend]
THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.06(h) OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,
(III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO
A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE ISSUER. UNLESS AND
UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS
NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF
THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER
NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC") TO THE ISSUER OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR
SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
[Private Placement Legend]
THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT
FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE
SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF
SECTION 5 OF THE SECURITIES ACT. THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT
OF THE ISSUER THAT (A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY (1) (a) IN THE UNITED STATES TO A PERSON WHO THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
A-1
BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A UNDER THE SECURITIES ACT, (b) OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (c) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER
THE SECURITIES ACT, (d) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN
RULE 501 (a) (1), (2), (3) OR (7) UNDER THE SECURITIES ACT (AN "INSTITUTIONAL
ACCREDITED INVESTOR")) THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS (THE FORM OF
WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF
AN AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS THAN $250,000, AN OPINION OF COUNSEL
ACCEPTABLE TO THE ISSUER THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES
ACT OR (e) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE
ISSUER SO REQUESTS), (2) TO THE ISSUER OR (3) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO,
NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS SET FORTH
IN (A) ABOVE.
[Regulation S Temporary Global Note Legend]
THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION ORIGINALLY
EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND MAY NOT BE TRANSFERRED IN THE UNITED STATES OR TO, OR FOR
THE ACCOUNT OR BENEFIT OF, ANY U.S. PERSON EXCEPT PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ALL
APPLICABLE STATE SECURITIES LAWS. TERMS USED ABOVE HAVE THE MEANINGS GIVEN TO
THEM IN REGULATION S UNDER THE SECURITIES ACT.
A-2
CUSIP [ ]
ISIN [ ](1)
[RULE 144A][REGULATION S] GLOBAL NOTE
representing up to
$335,000,000
No. ___ [$______________]
BAUBLE ACQUISITION SUB, INC.
promises to pay to Cede & Co., or registered assigns, the principal sum [set
forth on the Schedule of Exchanges of Interests in the Global Note attached
hereto] [of ________________________ United States Dollars] on June 1, 2017.
Interest Payment Dates: June 1 and December 1, commencing December 1, 2007
Record Dates: May 15 and November 15
[SIGNATURE PAGE FOLLOWS]
- --------
(1)144A CUSIP: 179584 AG2
144A ISIN: US179584AG24
Regulation S CUSIP: U17926 AC7
Regulation S ISIN: USU17926AC79
A-3
IN WITNESS HEREOF, the Issuer has caused this instrument to be duly
executed.
Dated: __________________
BAUBLE ACQUISITION SUB, INC.
By:
----------------------------------------
Name:
Title:
A-4
This is one of the Notes referred to in the within-mentioned Indenture:
THE BANK OF NEW YORK,
as Trustee
By:
----------------------------------------
Authorized Signatory
A-5
[REVERSE OF NOTE]
BAUBLE ACQUISITION SUB, INC.
10.50% SENIOR SUBORDINATED NOTES DUE 2017
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
1. INTEREST. Bauble Acquisition Sub, Inc., a Florida corporation (the
"Issuer"), promises to pay interest on the principal amount of this Note at a
rate per annum of 10.50% from May 29, 2007 until maturity and to pay the
Additional Interest, if any, payable pursuant to the Registration Rights
Agreement referred to below. The Issuer will pay interest on this Note
semi-annually in arrears on June 1 and December 1 of each year commencing on
December 1, 2007, or if any such day is not a Business Day, on the next
succeeding Business Day (each, an "Interest Payment Date"). The Issuer will make
each interest payment to the Holder of record of this Note on the immediately
preceding May 15 and November 15 (each, a "Record Date"). Interest on this Note
will accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from and including May 29, 2007. The Issuer will pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time on
demand at the rate borne by this Note; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest (without regard to any applicable grace periods) from
time to time on demand at the rate borne by this Note. Interest will be computed
on the basis of a 360-day year comprised of twelve 30-day months.
2. METHOD OF PAYMENT. The Issuer will pay interest on this Note to the
Person who is the registered Holder of this Note at the close of business on May
15 or November 15 (whether or not a Business Day), as the case may be, next
preceding the Interest Payment Date, even if this Note is canceled after such
record date and on or before such Interest Payment Date, except as provided in
Section 2.12 of the Indenture with respect to defaulted interest. Payment of
interest may be made by check mailed to the Holders at their addresses set forth
in the Note Register; provided that (a) all payments of principal, premium, if
any, and interest on, Notes represented by Global Notes registered in the name
of or held by DTC or its nominee will be made by wire transfer of immediately
available funds to the accounts specified by the Holder or Holders thereof and
(b) all payments of principal, premium, if any, and interest with respect to
certificated Notes will be made by wire transfer to a U.S. dollar account
maintained by the payee with a bank in the United States if such Holder elects
payment by wire transfer by giving written notice to the Trustee or the Paying
Agent to such effect designating such account no later than 30 days immediately
preceding the relevant due date for payment (or such other date as the Trustee
may accept in its discretion). Such payment shall be in such coin or currency of
the United States of America as at the time of payment is legal tender for
payment of public and private debts.
A-6
3. PAYING AGENT AND REGISTRAR. Initially, The Bank of New York, the
Trustee under the Indenture, will act as Paying Agent and Registrar. The Issuer
may change any Paying Agent or Registrar without notice to the Holders. The
Issuer or any of its Subsidiaries may act in any such capacity.
4. INDENTURE. The Issuer issued the Notes under an Indenture, dated as of
May 29, 2007 (the "Indenture"), between the Issuer and the Trustee. This Note is
one of a duly authorized issue of notes of the Issuer designated as its 10.50%
Senior Subordinated Notes due 2017. The Issuer shall be entitled to issue
Additional Notes pursuant to Section 2.01 and 4.09 of the Indenture. 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, as amended (the
"Trust Indenture Act"). The Notes are subject to all such terms, and Holders are
referred to the Indenture and such Act for a statement of such terms. To the
extent any provision of this Note conflicts with the express provisions of the
Indenture, the provisions of the Indenture shall govern and be controlling.
5. OPTIONAL REDEMPTION.
(a) Except as described below under clauses 5(b), 5(c) and 5(d) hereof,
the Notes will not be redeemable at the Issuer's option.
(b) On or after June 1, 2012, the Issuer may redeem the Notes at its
option, in whole at any time or in part from time to time, at the following
redemption prices (expressed as a percentage of principal amount), plus accrued
and unpaid interest and Additional Interest, if any, to the date of redemption
(the "Redemption Date"), if redeemed during the 12-month period commencing on
June 1 of the years set forth below:
Period Redemption Price
2012............................................ 105.25%
2013............................................ 103.50%
2014............................................ 101.75%
2015 and thereafter 100.000%
(c) Prior to June 1, 2012, the Issuer may redeem the Notes at its option,
in whole at any time or in part from time to time, at a redemption price equal
to 100% of the principal amount of the Notes redeemed plus the Applicable
Premium as of, and accrued and unpaid interest and Additional Interest, if any,
to, the Redemption Date.
(d) At any time and from time to time on or prior to June 1, 2010, the
Issuer may redeem in the aggregate up to 35% of the original aggregate principal
amount of the Notes (calculated after giving effect to any issuance of
Additional Notes) with the net cash proceeds of one or more Equity Offerings (1)
by the Issuer or (2) by any direct or indirect parent of the Issuer, in each
case to the extent the net cash proceeds thereof are contributed to the common
equity capital of the Issuer or used to purchase Capital Stock (other than
Disqualified Stock) of the Issuer from it, at a redemption price (expressed as a
percentage of principal amount thereof) of 110.50%, plus accrued and unpaid
interest and Additional Interest, if any, to the Redemption
A-7
Date (subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant Interest Payment Date); provided, however,
that at least 65% of the original aggregate principal amount of the Notes
(calculated after giving effect to any issuance of Additional Notes) must remain
outstanding after each such redemption; provided, further, that such redemption
shall occur within 90 days after the date on which any such Equity Offering is
consummated.
(e) Any redemption pursuant to this paragraph 5 shall be made pursuant to
the provisions of Sections 3.01 through 3.06 of the Indenture.
6. MANDATORY REDEMPTION. The Issuer shall not be required to make
mandatory redemption or sinking fund payments with respect to the Notes.
7. NOTICE OF REDEMPTION. Subject to Section 3.03 of the Indenture, notice
of redemption will be mailed by first-class mail at least 30 days but not more
than 60 days before the redemption date (except that redemption notices may be
mailed more than 60 days prior to a redemption date if the notice is issued in
connection with Article VIII or Article XI of the Indenture) to each Holder
whose Notes are to be redeemed at its registered address. Notes in denominations
larger than $2,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the Redemption Date, interest ceases to accrue on this Note or portions
thereof called for redemption.
8. OFFERS TO REPURCHASE. Upon the occurrence of a Change of Control, the
Issuer shall make a Change of Control Offer in accordance with Section 4.13 of
the Indenture. In connection with certain Asset Sales, the Issuer shall make an
Asset Sale Offer as and when provided in accordance with Section 4.10 of the
Indenture.
9. SUBORDINATION. The Notes and the Guarantees are subordinated to Senior
Indebtedness of the Issuer and the Guarantors on the terms and subject to the
conditions set forth in the Indenture. To the extent provided in the Indenture,
Senior Indebtedness must be paid before the Notes and Guarantees may be paid.
The Issuer agrees, and each Holder by accepting a Note agrees, to the
subordination provisions contained in the Indenture and authorizes the Trustee
to give them effect and appoints the Trustee as attorney-in-fact for such
purpose.
10. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form
without coupons in denominations of $2,000 and integral multiples of $1,000
thereafter. The transfer of Notes may be registered and Notes may be exchanged
as provided in the Indenture. The Registrar and the Trustee may require a
Holder, among other things, to furnish appropriate endorsements and transfer
documents and the Issuer may require a Holder to pay any taxes and fees required
by law or permitted by the Indenture. The Issuer need not exchange or register
the transfer of any Note or portion of a Note selected for redemption, except
for the unredeemed portion of any Note being redeemed in part. Also, the Issuer
need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed.
A-8
11. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated
as its owner for all purposes.
12. AMENDMENT, SUPPLEMENT AND WAIVER. The Indenture, the Guarantees or the
Notes may be amended or supplemented as provided in the Indenture.
13. DEFAULTS AND REMEDIES. The Events of Default relating to the Notes are
defined in Section 6.01 of the Indenture. If any Event of Default occurs and is
continuing, 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. Notwithstanding the foregoing, in the case of an Event
of Default arising from certain events of bankruptcy or insolvency, all
outstanding Notes will become due and payable immediately without further action
or notice. Holders may not enforce the Indenture, the Notes or the Guarantees
except as provided in the Indenture. Subject to certain limitations, Holders of
a majority in aggregate principal amount of the then outstanding Notes may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of the Notes notice of any continuing Default (except a
Default relating to the payment of principal, premium, if any, or interest) if
it determines that withholding notice is in their interest. The Holders of a
majority in aggregate principal amount of the Notes then outstanding by notice
to the Trustee may on behalf of the Holders of all of the Notes waive any
existing Default or and its consequences under the Indenture except a continuing
Default in payment of the principal of, premium, if any, or interest on, any of
the Notes held by a non-consenting Holder. The Issuer is required to deliver to
the Trustee annually a statement regarding compliance with the Indenture, and
the Issuer is required, after becoming aware of any Default, to deliver to the
Trustee a statement specifying such Default and what action the Issuer proposes
to take with respect thereto.
14. AUTHENTICATION. This Note shall not be entitled to any benefit under
the Indenture or be valid or obligatory for any purpose until authenticated by
the manual signature of the Trustee or an authentication agent.
15. TRUSTEE DEALINGS WITH ISSUER. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Issuer or its Affiliates, and may otherwise deal with the Issuer or its
Affiliates, as if it were not the Trustee.
16. NO RECOURSE AGAINST OTHERS. No director, officer, employee,
incorporator or stockholder of the Issuer or any Guarantor, as such, will have
any liability for any obligations of the Issuer or the Guarantors under the
Notes, the Indenture, the Guarantees 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.
17. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND RESTRICTED
DEFINITIVE NOTES. In addition to the rights provided to Holders of Notes under
the Indenture, Holders of Restricted Global Notes and Restricted
A-9
Definitive Notes shall have all the rights set forth in the Registration Rights
Agreement, dated as of May 29, 2007, among Claire's Stores, Inc., the Guarantors
named therein and the other parties named on the signature pages thereof (the
"Registration Rights Agreement"), including the right to receive Additional
Interest (as defined in the Registration Rights Agreement).
18. GOVERNING LAW. THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN AND BE
USED TO CONSTRUE THE INDENTURE, THE NOTES AND THE GUARANTEES.
19. CUSIP AND ISIN NUMBERS. Pursuant to a recommendation promulgated by
the Committee on Uniform Security Identification Procedures, the Issuer has
caused CUSIP and ISIN numbers to be printed on the Notes and the Trustee may use
CUSIP and ISIN numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption and reliance may be placed
only on the other identification numbers placed thereon.
The Issuer will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to the Issuer at the following address:
Bauble Acquisition Sub, Inc.
c/o Apollo Management, L.P.
10250 Constellation Boulevard
Suite 2900
Los Angeles, California 90067
Attention: Lance Milken
A-10
ASSIGNMENT FORM
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to: __________________________________
(Insert assignee's legal name)
________________________________________________________________________________
(Insert assignee's social security number or taxpayer identification number.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint ________________________________________________________
to transfer this Note on the books of the Issuer. The agent may substitute
another to act for him.
Date: _____________________
Your Signature: _____________________________
(Sign exactly as your name
appears on the face of this
Note)
Signature(s) must be guaranteed by an
"eligible guarantor institution" meeting the
requirements of the Registrar, which
requirements include membership or
participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other
"signature guarantee program" as may be
determined by the Registrar in addition to,
or in substitution for, STAMP, al in
accordance with the Securities Exchange Act
of 1934, as amended.
______________________________
Signature Guarantee
A-11
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Issuer pursuant to
Section 4.10 or 4.13 of the Indenture, check the appropriate box below:
[ ] Section 4.10 [ ] Section 4.13
If you want to elect to have only part of this Note purchased by the Issuer
pursuant to Section 4.10 or Section 4.13 of the Indenture, state the amount you
elect to have purchased:
$_______________
Date: _____________________
Your Signature: _____________________________
(Sign exactly as your name
appears on the face of this
Note)
Tax Identification No.:
Signature(s) must be guaranteed by an
"eligible guarantor institution" meeting the
requirements of the Registrar, which
requirements include membership or
participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other
"signature guarantee program" as may be
determined by the Registrar in addition to,
or in substitution for, STAMP, al in
accordance with the Securities Exchange Act
of 1934, as amended.
______________________________
Signature Guarantee
A-12
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*
The following increases or decreases in the principal amount of this Global Note
have been made:
Amount of increase Principal Amount of Signature of
Amount of decrease in Principal this Global Note authorized officer
in Principal Amount Amount of this following such of Trustee or
Date of Exchange of this Global Note Global Note decrease or increase Custodian
---------------- ------------------- ----------------- -------------------- ------------------
- ----------
* This schedule should be included only if the Note is issued in global form.
A-13
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Bauble Acquisition Sub, Inc.
c/o Apollo Management, L.P.
10250 Constellation Boulevard
Suite 2900
Los Angeles, California 90067
Attention: Lance Milken
The Bank of New York
101 Barclay Street
Corporate Trust Administration
Floor 8W
New York, New York 10286
Fax No.: (212) 815-5704
Attention: Claire's Stores Acquisition
Re: 10.50% Senior Subordinated Notes due 2017
Reference is hereby made to the Indenture, dated as of May 29, 2007 (the
"Indenture"), between Bauble Acquisition Sub, Inc. and the Trustee. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
_______________ (the "Transferor") owns and proposes to transfer the
Note[s] or interest in such Note[s] in the principal amount of $___________ (the
"Transfer"), to _______________ (the "Transferee"). In connection with the
Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN
THE RELEVANT 144A GLOBAL NOTE OR RELEVANT DEFINITIVE NOTE PURSUANT TO RULE 144A.
The Transfer is being effected pursuant to and in accordance with Rule 144A
under the United States Securities Act of 1933, as amended (the "Securities
Act"), and, accordingly, the Transferor hereby further certifies that the
beneficial interest or Definitive Note is being transferred to a Person that the
Transferor reasonably believes is purchasing the beneficial interest or
Definitive Note for its own account, or for one or more accounts with respect to
which such Person exercises sole investment discretion, and such Person and each
such account is a "qualified institutional buyer" within the meaning of Rule
144A in a transaction meeting the requirements of Rule 144A and such Transfer is
in compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Transfer in accordance with the
terms of the Indenture, the transferred beneficial interest or Definitive Note
will be subject to the restrictions on transfer enumerated in the Private
B-1
Placement Legend printed on the 144A Global Note and/or the Restricted
Definitive Note and in the Indenture and the Securities Act.
2. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN
THE RELEVANT REGULATION S GLOBAL NOTE OR RELEVANT DEFINITIVE NOTE PURSUANT TO
REGULATION S. The Transfer is being effected pursuant to and in accordance with
Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor
hereby further certifies that (i) the Transfer is not being made to a person in
the United States and (x) at the time the buy order was originated, the
Transferee was outside the United States or such Transferor and any Person
acting on its behalf reasonably believed and believes that the Transferee was
outside the United States or (y) the transaction was executed in, on or through
the facilities of a designated offshore securities market and neither such
Transferor nor any Person acting on its behalf knows that the transaction was
prearranged with a buyer in the United States, (ii) no directed selling efforts
have been made in contravention of the requirements of Rule 903(b) or Rule
904(b) of Regulation S under the Securities Act, (iii) the transaction is not
part of a plan or scheme to evade the registration requirements of the
Securities Act and (iv) if the proposed transfer is being made prior to the
expiration of the Restricted Period, the transfer is not being made to a U.S.
Person or for the account or benefit of a U.S. Person (other than an Initial
Purchaser). Upon consummation of the proposed transfer in accordance with the
terms of the Indenture, the transferred beneficial interest or Definitive Note
will be subject to the restrictions on Transfer enumerated in the Private
Placement Legend printed on the Regulation S Global Note and/or The Restricted
Definitive Note and in the Indenture and the Securities Act.
3. [ ] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN THE RELEVANT DEFINITIVE NOTE PURSUANT TO ANY PROVISION OF THE
SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The Transfer is being
effected in compliance with the transfer restrictions applicable to beneficial
interests in Restricted Global Notes and Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act and any applicable blue
sky securities laws of any state of the United States, and accordingly the
Transferor hereby further certifies that (check one):
(a) [ ] such Transfer is being effected pursuant to and in
accordance with Rule 144 under the Securities Act;
or
(b) [ ] such Transfer is being effected to the Issuer or a
subsidiary thereof;
or
(c) [ ] such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with the
prospectus delivery requirements of the Securities Act.
B-2
4. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN
AN UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE.
(a) [ ] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer
is being effected pursuant to and in accordance with Rule 144 under the
Securities Act and in compliance with the transfer restrictions contained
in the Indenture and any applicable blue sky securities laws of any state
of the United States and (ii) the restrictions on transfer contained in
the Indenture and the Private Placement Legend are not required in order
to maintain compliance with the Securities Act. Upon consummation of the
proposed Transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will no longer be
subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Global Notes, on Restricted
Definitive Notes and in the Indenture.
(b) [ ] CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The
Transfer is being effected pursuant to and in accordance with Rule 903 or
Rule 904 under the Securities Act and in compliance with the transfer
restrictions contained in the Indenture and any applicable blue sky
securities laws of any state of the United States and (ii) the
restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will no longer be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted
Global Notes, on Restricted Definitive Notes and in the Indenture.
(c) [ ] CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The
Transfer is being effected pursuant to and in compliance with an exemption
from the registration requirements of the Securities Act other than Rule
144, Rule 903 or Rule 904 and in compliance with the transfer restrictions
contained in the Indenture and any applicable blue sky securities laws of
any State of the United States and (ii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act. Upon
consummation of the proposed Transfer in accordance with the terms of the
Indenture, the transferred beneficial interest or Definitive Note will not
be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Global Notes or Restricted
Definitive Notes and in the Indenture.
B-3
This certificate and the statements contained herein are made for your
benefit and the benefit of the Issuer.
[Insert Name of Transferor]
By:
----------------------------------------
Name:
Title:
Dated:
----------------------------
B-4
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Bauble Acquisition Sub, Inc.
c/o Apollo Management, L.P.
10250 Constellation Boulevard
Suite 2900
Los Angeles, California 90067
Attention: Lance Milken
The Bank of New York
101 Barclay Street
Corporate Trust Administration
Floor 8W
New York, New York 10286
Fax No.: (212) 815-5704
Attention: Claire's Stores Acquisition
Re: 10.50% Senior Subordinated Notes due 2017
Reference is hereby made to the Indenture, dated as of May 29, 2007 (the
"Indenture"), between Bauble Acquisition Sub, Inc. and the Trustee. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
___________ (the "Owner") owns and proposes to exchange the Note[s] or
interest in such Note[s] specified herein, in the principal amount of
$__________ in such Note[s] or interests (the "Exchange"). In connection with
the Exchange, the Owner hereby certifies that:
(1) EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN A
RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN AN UNRESTRICTED GLOBAL NOTE OF THE SAME SERIES
(a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE OF THE SAME
SERIES. In connection with the Exchange of the Owner's beneficial interest in a
Restricted Global Note for a beneficial interest in an Unrestricted Global Note
of the same series in an equal principal amount, the Owner hereby certifies (i)
the beneficial interest is being acquired for the Owner's own account without
transfer, (ii) such Exchange has been effected in compliance with the transfer
restrictions applicable to the Global Notes and pursuant to and in accordance
with the United States Securities Act of 1933, as amended (the "Securities
Act"), (iii) the
C-1
restrictions on transfer contained in the Indenture and the Private Placement
Legend are not required in order to maintain compliance with the Securities Act
and (iv) the beneficial interest in an Unrestricted Global Note is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(b) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE OF THE SAME SERIES. In connection
with the Exchange of the Owner's beneficial interest in a Restricted Global Note
for an Unrestricted Definitive Note of the same series, the Owner hereby
certifies (i) the Definitive Note is being acquired for the Owner's own account
without transfer, (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to the Restricted Global Notes and pursuant to
and in accordance with the Securities Act, (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act and (iv) the Definitive
Note is being acquired in compliance with any applicable blue sky securities
laws of any state of the United States.
(c) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL
INTEREST IN AN UNRESTRICTED GLOBAL NOTE OF THE SAME SERIES. In connection with
the Owner's Exchange of a Restricted Definitive Note for a beneficial interest
in an Unrestricted Global Note of the same series, the Owner hereby certifies
(i) the beneficial interest is being acquired for the Owner's own account
without transfer, (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to Restricted Definitive Notes and pursuant to
and in accordance with the Securities Act, (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act and (iv) the beneficial
interest is being acquired in compliance with any applicable blue sky securities
laws of any state of the United States.
(d) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
UNRESTRICTED DEFINITIVE NOTE OF THE SAME SERIES. In connection with the Owner's
Exchange of a Restricted Definitive Note for an Unrestricted Definitive Note of
the same series, the Owner hereby certifies (i) the Unrestricted Definitive Note
is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Definitive Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the Unrestricted Definitive Note is
being acquired in compliance with any applicable blue sky securities laws of any
state of the United States.
C-2
(2) EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN
RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OF THE SAME SERIES OR
BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES OF THE SAME SERIES
(a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE OF THE SAME SERIES. In connection with
the Exchange of the Owner's beneficial interest in a Restricted Global Note for
a Restricted Definitive Note of the same series with an equal principal amount,
the Owner hereby certifies that the Restricted Definitive Note is being acquired
for the Owner's own account without transfer. Upon consummation of the proposed
Exchange in accordance with the terms of the Indenture, the Restricted
Definitive Note issued will continue to be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted
Definitive Note and in the Indenture and the Securities Act.
(b) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL
INTEREST IN A RESTRICTED GLOBAL NOTE OF THE SAME SERIES. In connection with the
Exchange of the Owner's Restricted Definitive Note for a beneficial interest in
the [CHECK ONE] [ ] 144A Global Note [ ] Regulation S Global Note of the same
series, with an equal principal amount, the Owner hereby certifies (i) the
beneficial interest is being acquired for the Owner's own account without
transfer and (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to the Restricted Global Notes and pursuant to
and in accordance with the Securities Act, and in compliance with any applicable
blue sky securities laws of any state of the United States. Upon consummation of
the proposed Exchange in accordance with the terms of the Indenture, the
beneficial interest issued will be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the relevant Restricted
Global Note and in the Indenture and the Securities Act.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Issuer and are dated ______________________.
C-3
[Insert Name of Transferor]
By:
-----------------------------------------
Name:
Title:
Dated:
----------------------------
C-4
EXHIBIT D
[FORM OF SUPPLEMENTAL INDENTURE
TO BE DELIVERED BY SUBSEQUENT GUARANTORS]
SENIOR SUBORDINATED NOTES SUPPLEMENTAL INDENTURE (this "Supplemental
Indenture"), dated as of __________, by and among Claire's Stores, Inc., a
Florida corporation (the "Company"), [insert each Guarantor executing this
Supplemental Indenture and its jurisdiction of incorporation], as guarantors
(the "Guarantors"), and The Bank of New York, as Trustee (the "Trustee"), to the
Senior Subordinated Notes Indenture (the "Indenture"), dated as of May 29, 2007,
among Bauble Acquisition Sub, Inc., a Florida corporation (the "Issuer"), and
the Trustee.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Issuer has heretofore executed and delivered to the Trustee
the Indenture providing for the issuance of $335,000,000 aggregate principal
amount of 10.50% Senior Subordinated Notes due 2017 (the "Notes");
WHEREAS, the Issuer has merged with and into the Company (the "Merger"),
with the Company as the surviving entity in the Merger;
WHEREAS, as a result of the Merger, the Company is assuming, by and under
this Supplemental Indenture, the obligations of the Issuer for the due and
punctual payment of the principal of, premium, if any, and interest on all the
Notes and the performance and observance of the Indenture on the part of the
Issuer;
WHEREAS, Sections 5.01 and 9.01 of the Indenture provide that the Trustee,
the Company and each of the Guarantors are authorized to execute and deliver
this Supplemental Indenture; and
WHEREAS, this Supplemental Indenture has been duly authorized by all
necessary corporate or other action on the part of the Trustee, the Company and
each of the Guarantors.
NOW, THEREFORE, for and in consideration of the foregoing premises and for
good and valuable consideration, the receipt of which is hereby acknowledged, it
is mutually covenanted and agreed, for the equal and ratable benefit of the
Holders of the Notes, as follows:
D-1
Section 1. Capitalized Terms. Capitalized terms used herein but not
defined shall have the meanings assigned to them in the Indenture.
Section 2. Assumption by the Company. The Company hereby assumes the
obligations of the Issuer for the due and punctual payment of the principal of,
premium, if any, and interest on all outstanding Notes issued pursuant to the
Indenture and the performance and observance of each other obligation and
covenant set forth in the Indenture to be performed or observed on the part of
the Issuer. The Company is hereby substituted for, and may exercise every right
and power of, the Issuer under the Indenture with the same effect as if the
Company had been named as the Issuer in the Indenture, and the Company is a
Successor Issuer under the Indenture.
Section 3. Agreement to Guarantee. Each of the Guarantors, by its
execution of this Supplemental Indenture, agrees to be a Guarantor under the
Indenture and to be bound by the terms of the Indenture applicable to
Guarantors, including but not limited to Article XI thereof.
Section 4. Ratification of Indenture; Supplemental Indenture Part of
Indenture. Except as expressly amended hereby, the Indenture is in all respects
ratified and confirmed and all the terms, conditions and provisions thereof
shall remain in full force and effect. This Supplemental Indenture shall form a
part of the Indenture for all purposes, and every Holder of Notes heretofore or
hereafter authenticated and delivered shall be bound hereby.
Section 5. The Trustee. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the recitals contained herein. Except as
otherwise expressly provided herein, no duties, responsibilities or liabilities
are assumed, or shall be construed to be assumed by the Trustee by reason of
this Supplemental Indenture. This Supplemental Indenture is executed and
accepted by the Trustee subject to all the terms and conditions set forth in the
Indenture with the same force and effect as if those terms and conditions were
repeated at length herein and made applicable to the Trustee with respect
hereto. In entering into this Supplemental Indenture, the Trustee shall be
entitled to the benefit of every provision of the Indenture relating to the
conduct or affecting the liability or affording protection to the Trustee,
whether or not elsewhere herein so provided.
Section 6. Notices. For purposes of the Indenture, the address for notices
to the Company shall be as set forth below:
Claire's Stores, Inc.
3 SW 129th Avenue
Pembroke Pines, FL 33027
Attention: Chief Financial Officer
Section 7. Governing Law. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
D-2
Section 8. Counterparts. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
Section 9. Effect of Headings. The Section headings herein are for
convenience only and shall not effect the construction of this Supplemental
Indenture and shall in no way modify or restrict any of the terms or provisions
hereof.
Section 10. Severability. In case any provision of this Supplemental
Indenture 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 11. Benefits Acknowledged. The Guarantors' guarantees are subject
to the terms and conditions set forth in the Indenture. Each of the Guarantors
acknowledges that it will receive direct and indirect benefits from the
financing arrangements contemplated by the Indenture and this Supplemental
Indenture and that the guarantee and waivers made by it pursuant to this
Supplemental Indenture are knowingly made in contemplation of such benefits.
[Signatures on following page]
D-3
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed, all as of the date first above written.
CLAIRE'S STORES, INC.
By:
-----------------------------------------
Name:
Title:
[GUARANTEEING SUBSIDIARY]
By:
-----------------------------------------
Name:
Title:
D-4
THE BANK OF NEW YORK,
AS TRUSTEE
By:
-----------------------------------------
Name:
Title:
D-5