Exhibit 4.1
EXECUTION COPY
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ICON HEALTH & FITNESS, INC.,
as Issuer
THE SUBSIDIARY GUARANTORS NAMED HEREIN,
and
IBJ WHITEHALL BANK & TRUST COMPANY,
as Trustee
---------------------------------
Indenture
Dated as of September 27, 1999
-------------------------
$45,000,000
12% Notes due 2005, Series A
and
12% Notes due 2005, Series B
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ICON HEALTH & FITNESS, INC.
Reconciliation and tie between Trust Indenture Act
of 1939 and Indenture, dated as of ___________, 1999
Trust Indenture Indenture
Act Section Section
- ----------- -------
[to be revised]
ss.310 (a)(1)..........................................................6.7
(a)(2)..........................................................6.7
(b).............................................................6.8
ss.312 (c).............................................................7.1
ss.314 (a)(4).........................................................10.8(a)
(c)(1)..........................................................1.3
(c)(2)..........................................................1.3
(e).............................................................1.3
ss.315 (b).............................................................6.1
ss.316 (a)(last sentence).................................1.1 ("Outstanding")
(a)(1)(A)..................................................5.2, 5.12
(a).............................................................5.13
(b).............................................................5.8
(c)............................................................ 1.5(d)
ss.317 (a)(1)..........................................................5.3
(a)(2)..........................................................5.4
(b)............................................................10.3
ss.318 (a).............................................................1.12
TABLE OF CONTENTS
Page
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ARTICLE I. DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.1. Definitions.....................................................1
Section 1.2. Incorporation by Reference of Trust Indenture Act..............29
Section 1.3. Compliance Certificates and Opinions..........................30
Section 1.4. Form of Documents Delivered to Trustee.........................30
Section 1.5. Acts of Holders................................................31
Section 1.6. Notices, Etc., to Trustee and the Company......................32
Section 1.7. Notice to Holders; Waiver......................................33
Section 1.8. Effect of Headings and Table of Contents.......................34
Section 1.9. Successors and Assigns.........................................34
Section 1.10. Separability Clause...........................................34
Section 1.11. Benefits of Indenture.........................................34
Section 1.12. Governing Law.................................................34
Section 1.13. Legal Holidays................................................34
ARTICLE II. SECURITY FORMS
Section 2.1. Forms Generally................................................35
Section 2.2. Restrictive Legends............................................36
ARTICLE III. THE SECURITIES
Section 3.1. Title and Terms................................................37
Section 3.2. Denominations..................................................38
Section 3.3. Execution, Authentication, Delivery and Dating.................38
Section 3.4. Temporary Securities...........................................40
Section 3.5. Registration, Registration of Transfer and Exchange...........40
Section 3.6. Book-Entry Provisions for U.S. Global Security................42
Section 3.7. Special Transfer Provisions...................................43
Section 3.8. Mutilated, Destroyed, Lost and Stolen Securities..............45
Section 3.9. Payment of Interest; Interest Rights Preserved................46
Section 3.10. Persons Deemed Owners........................................48
Section 3.11. Cancellation.................................................48
Section 3.12. Computation of Interest......................................48
ARTICLE IV. SATISFACTION AND DISCHARGE
Section 4.1. Satisfaction and Discharge of Indenture.......................49
Section 4.2. Application of Trust Money....................................50
ARTICLE V. REMEDIES
i
Section 5.1. Events of Default.............................................50
Section 5.2. Acceleration of Maturity; Rescission and Annulment............53
Section 5.3. Collection of Indebtedness and Suits for Enforcement
by Trustee ..................................................54
Section 5.4. Trustee May File Proofs of Claim..............................55
Section 5.5. Trustee May Enforce Claims Without Possession of Securities...56
Section 5.6. Application of Money Collected................................56
Section 5.7. Limitation on Suits...........................................57
Section 5.8. Unconditional Right of Holders to Receive Principal,
Premium and Interest.........................................57
Section 5.9. Restoration of Rights and Remedies............................58
Section 5.10. Rights and Remedies Cumulative...............................58
Section 5.11. Delay or Omission Not Waiver.................................58
Section 5.12. Control by Holders...........................................58
Section 5.13. Waiver of Past Defaults......................................59
Section 5.14. Waiver of Stay or Extension Laws.............................59
ARTICLE VI. THE TRUSTEE
Section 6.1. Notice of Defaults............................................60
Section 6.2. Certain Rights of Trustee.....................................60
Section 6.3. Trustee Not Responsible for Recitals or
Issuance of Securities ......................................61
Section 6.4. May Hold Securities...........................................62
Section 6.5. Money Held in Trust...........................................62
Section 6.6. Compensation and Reimbursement................................62
Section 6.7. Corporate Trustee Required; Eligibility.......................63
Section 6.8. Resignation and Removal; Appointment of Successor.............63
Section 6.9. Acceptance of Appointment by Successor........................65
Section 6.10. Merger, Conversion, Consolidation or Succession to Business..65
ARTICLE VII. HOLDERS' LISTS AND REPORTS BY TRUSTEE
Section 7.1. Disclosure of Names and Addresses of Holders..................66
Section 7.2. Reports by Trustee............................................67
ARTICLE VIII. CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 8.1. Company May Consolidate, Etc., Only on Certain Terms..........67
Section 8.2. Successor Substituted.........................................69
Section 8.3. Securities to Be Secured in Certain Events.....................69
ARTICLE IX. SUPPLEMENTAL INDENTURES
Section 9.1. Supplemental Indentures Without Consent of Holders............70
ii
Section 9.2. Supplemental Indentures with Consent of Holders...............70
Section 9.3. Execution of Supplemental Indentures..........................71
Section 9.4. Effect of Supplemental Indentures.............................72
Section 9.5. Conformity with Trust Indenture Act...........................72
Section 9.6. Reference in Securities to Supplemental Indentures............72
Section 9.7. Notice of Supplemental Indentures.............................72
ARTICLE X. COVENANTS
Section 10.1. Payment of Principal, Premium, if any, and Interest..........72
Section 10.2. Maintenance of Office or Agency..............................73
Section 10.3. Money for Security Payments to Be Held in Trust..............74
Section 10.4. Corporate Existence...........................................75
Section 10.5. Payment of Taxes and Other Claims.............................76
Section 10.6. Maintenance of Properties.....................................76
Section 10.7. Insurance.....................................................76
Section 10.8. Statement by Officers as to Default...........................76
Section 10.9. Provision of Financial Statements.............................77
Section 10.10. Limitation on Indebtedness and Issuance of Preferred Stock...78
Section 10.11. Limitation on Restricted Payments............................79
Section 10.12. [Intentionally Omitted].....................................84
Section 10.13. Limitation on Transactions with Affiliates..................84
Section 10.14. Limitation on Liens.........................................85
Section 10.15. Change of Control Offer.....................................86
Section 10.16. Limitation on Line of Business..............................88
Section 10.17. Limitation on Sale of Assets................................88
Section 10.18. Limitation on Issuances of Guarantees of Indebtedness......90
Section 10.19. Limitation on Dividends and Other Payment Restrictions
Affecting Subsidiaries.....................................91
Section 10.20. Limitation on Sale and Leaseback Transactions...............92
Section 10.21. [Intentionally Omitted].....................................92
Section 10.22. Limitation on Designations of Unrestricted Subsidiaries.....92
Section 10.23. Waiver of Certain Covenants.................................93
Section 10.24. Limitation on Other Senior Indebtedness.....................94
Section 10.25. Rating......................................................94
Section 10.26. Payments for Consent........................................94
Section 10.27. Additional Subsidiary Guarantees............................94
ARTICLE XI. REDEMPTION OF SECURITIES
Section 11.1. Right of Redemption..........................................95
Section 11.2. Applicability of Article.....................................95
Section 11.3. Election to Redeem; Notice to Trustee........................95
Section 11.4. [Intentionally Omitted]......................................95
Section 11.5. Notice of Redemption.........................................95
iii
Section 11.6. Deposit of Redemption Price..................................96
Section 11.7. Securities Payable on Redemption Date........................96
ARTICLE XII. DEFEASANCE AND COVENANT DEFEASANCE
Section 12.1. Company's Option to Effect Defeasance or
Covenant Defeasance ........................................97
Section 12.2. Defeasance and Discharge.....................................97
Section 12.3. Covenant Defeasance..........................................98
Section 12.4. Conditions to Defeasance or Covenant Defeasance..............98
Section 12.5. Deposited Money and U.S. Government Obligations to Be
Held in Trust; Other Miscellaneous Provisions..............101
Section 12.6. Reinstatement...............................................101
ARTICLE XIII. SUBORDINATION OF SECURITIES
Section 13.1. Securities Subordinated to Senior Indebtedness..............102
Section 13.2. No Payment on Securities in Certain Circumstances...........102
Section 13.3. Payment over Proceeds upon Dissolution, Etc.................103
Section 13.4. Subrogation.................................................105
Section 13.5. Obligations of Company Unconditional........................106
Section 13.6. Notice to Trustee...........................................106
Section 13.7. Reliance on Judicial Order or Certificate of
Liquidating Agent .........................................107
Section 13.8. Trustee's Relation to Senior Indebtedness...................108
Section 13.9. Subordination Rights Not Impaired by Acts or Omissions
of the Trustee, the Holders, the Company or Holders
of Senior Indebtedness.................................108
Section 13.10. Holders Authorize Trustee to Effectuate Subordination of
Securities.............................................109
Section 13.11. Not to Prevent Events of Default...........................109
Section 13.12. Trustee's Compensation Not Prejudiced......................109
Section 13.13. No Waiver of Subordination Provisions......................109
Section 13.14. Payments May Be Paid Prior to Dissolution..................110
ARTICLE XIV. SUBSIDIARY GUARANTEES
Section 14.1. Guarantee...................................................110
Section 14.2. Guarantee Limitation On Subsidiary Guarantor Liability......112
Section 14.3. Execution And Delivery Of Subsidiary Guarantee..............112
Section 14.4. Subsidiary Guarantors May Consolidate, Etc., Only on
Certain Terms..............................................113
Section 14.5. Releases of Subsidiary Guarantee............................114
Section 14.6. Subordination of Subsidiary Guarantee.......................115
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SCHEDULES
SCHEDULE I List of Subsidiary Guarantors.
SCHEDULE II Agreements.
EXHIBITS
EXHIBIT A Form of Securities, Trustee's Certificate of Authentication.
EXHIBIT B [Intentionally Omitted]
EXHIBIT C Form of Certificate to be Delivered in Connection with
Transfers to Non-QIB Institutional Accredited Investors.
EXHIBIT D Form of Notation of Subsidiary Guarantee.
EXHIBIT E Form of Supplemental Indenture to be Delivered by Subsequent
Subsidiary Guarantors.
v
INDENTURE, dated as of September 27, 1999, between ICON HEALTH &
FITNESS, INC., a corporation duly organized and existing under the laws of the
State of Delaware (herein called the "Company" or "ICON"), as Issuer, having its
principal office at 1500 South 1000 West, Logan, Utah 84321, the Subsidiary
Guarantors listed on Schedule I hereto (collectively, the "Subsidiary
Guarantors") and IBJ Whitehall Bank & Trust Company, a New York banking
association, as trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue which will
consist of up to $45,000,000 principal amount at maturity of 12% Notes due 2005,
Series A (herein called the "Initial Securities"), and 12% Notes due 2005,
Series B (the "Exchange Securities" and, together with the Initial Securities,
the "Securities").
All things necessary have been done to make the Securities, when
executed by the Company and authenticated and delivered hereunder and duly
issued by the Company, the valid obligations of the Company and to make this
Indenture a valid agreement of the Company, in accordance with their and its
terms.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Securities, as set forth
herein.
ARTICLE I.
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
Section 1.1. Definitions.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
a) the terms defined in this Article have the meanings assigned to
them in this Article, and include the plural as well as the singular;
b) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein, and the terms "cash transaction" and
"self-liquidating paper", as used in TIA Section 311, shall have the meanings
assigned to them in the rules of the Commission adopted under the Trust
Indenture Act;
c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP; and
d) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
Certain terms, used principally in Articles Two, Ten and Twelve, are
defined in those Articles.
"Acquired Indebtedness" means, with respect to any specified Person,
(i) Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, whether or
not such Indebtedness is incurred in connection with, or in contemplation of,
such other Person merging with or into, or becoming a Subsidiary of, such
specified Person and (ii) Indebtedness secured by a Lien encumbering any asset
acquired by such specified Person.
"Act", when used with respect to any Holder, has the meaning
specified in Section 1.5.
"Affiliate" of any specified Person means any other Person (i) which
directly or indirectly through one or more intermediaries controls, is
controlled by or is under common control with, such Person, (ii) which directly
or indirectly through one or more intermediaries beneficially owns or holds 10%
or more of the combined voting power of the total Voting Stock of such Person,
or (iii) of which 10% or more of the combined voting power of the total Voting
Stock (or in the case of a Person that is not a corporation, 10% or more of the
equity interest), directly or indirectly, through one or more intermediaries is
beneficially owned or held by such Person; provided that the term "Affiliate"
shall not be deemed to apply to any Bank solely by virtue of its ownership
directly or indirectly of up to 20% of the Voting Stock of the Company. For the
purposes of this definition, "control" when used with respect to any Person
means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling", "controlled by" and "under common
control with" have meanings correlative to the foregoing. For the avoidance of
doubt, Holdings, Bain and Credit Suisse First Boston Corporation ("CSFB") shall
be deemed Affiliates of the Company as of the Issue Date.
"Asset Sale" means: (i) the sale, lease, conveyance or other
disposition of any assets or rights, other than sales of inventory in the
ordinary course of business consistent with past practices; provided that the
sale, conveyance or other disposition of all or substantially all of the assets
of the Company and its Restricted Subsidiaries taken as a whole shall be
governed by Article Eight and Section 10.15 of the Indenture and
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not Section 10.17 of the Indenture and (ii) the issuance or sale of Capital
Stock by any of the Company's Restricted Subsidiaries. Notwithstanding the
preceding, the following items shall not be deemed to be Asset Sales: (i) any
single transaction or series of related transactions that (a) involves assets
having a Fair Market Value of less than $500,000 or (b) results in net
proceeds to the Company and its Restricted Subsidiaries of less than
$500,000, (ii) a transfer of assets between or among the Company and its
Restricted Subsidiaries, (iii) an issuance of Capital Stock by a Restricted
Subsidiary to the Company or to another Restricted Subsidiary, (iv) a
Restricted Payment that is permitted by Section 10.11 and (v) the sale of
accounts receivable transferred to an Unrestricted Subsidiary or any other
Person that is not a Subsidiary of the Company in connection with a
Securitization Transaction for the Fair Market Value thereof, including cash
in an amount at least equal to 75% of the Fair Market Value thereof. For
purposes of clause (v) of the immediately preceding sentence, Securitization
Notes shall be deemed to be cash.
"Attributable Debt" in respect of a sale and leaseback transaction
means, at the time of determination, the present value of the obligation of the
lessee for net rental payments during the remaining term of the lease included
in such sale and leaseback transaction including any period for which such lease
has been extended or may, at the option of the lessor, be extended. Such present
value shall be calculated using a discount rate equal to the rate of interest
implicit in such transaction, determined in accordance with GAAP.
"Average Life to Stated Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the sum
of the products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment; by (b) the then outstanding principal
amount of such Indebtedness.
"Bain" means Bain Capital, Inc.
"Bankruptcy Law" means Title 11, United States Code, as amended, or
any similar United States Federal or State law relating to bankruptcy,
insolvency, receivership, winding-up, liquidation, reorganization or relief of
debtors or any amendment to, succession to or change in any such law.
"Banks" means General Electric Capital Corporation and Fleet
National Bank, as agents for the lenders, and the banks and other financial
institutions from time to time that are agents or lenders under the Credit
Agreement.
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"Board of Directors" means either the board of directors of the
Company or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in The City of New York
or in the city where the Corporate Trust Office or the principal office of the
Paying Agent is located are authorized or obligated by law or executive order to
close.
"Canadian Subsidiary Borrowing Base" means, as of any date, an
amount equal to the sum of (a) 85.0% of the book value of all accounts
receivable owned by the Company's Canadian Restricted Subsidiaries) (excluding
any accounts receivable from an Affiliate of such Canadian Restricted
Subsidiaries or that are more than 90 days past due, less (without duplication)
the allowance for doubtful accounts attributable to current trade accounts
receivable) and (b) 60.0% of the book value of all inventory owned by such
Canadian Restricted Subsidiaries as of such date (with a seasonal increase of
70.0% of inventory in effect from July 1 through November 30 of each year), all
calculated on a consolidated basis and in accordance with GAAP. To the extent
that information is not available as to the amount of accounts receivable or
inventory as of a specific date, Canadian Subsidiary Borrowing Base shall be
calculated utilizing the most recent available information.
"Capital Stock" means (a) in the case of a corporation, corporate
stock; (b) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock; (c) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited); and (d) 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; and in each case, all warrants, options or other rights to acquire any
of the foregoing (but excluding any debt security that is convertible into, or
exchangeable for, any of the foregoing).
"Capitalized Lease Obligation" means any obligation under a lease of
(or other agreement conveying the right to use) any property (whether real,
personal or mixed) that is required to be classified and accounted for as a
capital lease obligation under GAAP and, for the purpose of this Indenture, the
amount of such obligation at any date shall be the capitalized amount thereof at
such date, determined in accordance with GAAP.
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"Cash Equivalents" means (a) United States dollars, (b) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof having maturities of not
more than nine months from the date of acquisition, (c) certificates of deposit
and eurodollar time deposits with maturities of six months or less from the date
of acquisition and overnight bank deposits, in each case with any United States
commercial bank having capital and surplus in excess of $500 million, (d)
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clauses (b) and (c) entered into with any
financial institution meeting the qualifications specified in clause (c) above,
and (e) commercial paper having the highest rating obtainable from Moody's
Investors Service or Standard & Poors Ratings Group and bankers' acceptances of
a financial institution with such a commercial paper rating and in each case
maturing within 270 days after the date of acquisition.
"Change of Control" means the occurrence of any of the following
events: (i) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act), other than Bain or its Affiliates or CSFB or its
Affiliates, is or becomes the "beneficial owner" (as defined in Rules 13d-3 and
13d-5 under the Exchange Act, except that (x) a Person shall be deemed to have
beneficial ownership of all shares that such Person has the right to acquire,
whether such right is exercisable immediately or only after the passage of time
and (y) "beneficial owner" shall not include any "person" or "group" solely by
reason of such Person being party to the Stockholders Agreement or a member of
the limited liability company referred to in the Exchange Offer and Consent
Solicitation Statement), directly or indirectly, of more than 50% of the total
outstanding Voting Stock of the Company or Holdings, as the case may be measured
by voting power rather than number of shares; (ii) the sale, transfer,
conveyance or other disposition (other than by way of merger or
consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Subsidiaries taken as
a whole to any "person" or "group" (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act) other than Bain or its Affiliates or CSFB or
its Affiliates; (iii) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of Directors of the
Company or Holdings, as the case may be (together with any new directors
whose election to such Board or whose nomination for election by the
stockholders of the Company or Holdings, as the case may be, was approved by
a vote of 66 2/3% of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved, cease for any reason to constitute a
majority of such Board of Directors then in office; (iv) the Company or
Holdings, as the case may be, consolidates with or merges with or into
another Person, or any Person consolidates with or merges into or with the
Company or Holdings, as the case may be, in any such event pursuant to a
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transaction in which any of the outstanding Voting Stock of the Company or
Holdings, as the case may be, is converted into or exchanged for cash,
securities or other property, other than any such transaction where the
outstanding Voting Stock of the Company or Holdings, as the case may be, is
not changed or exchanged at all (except only to the extent necessary to
reflect a change in the jurisdiction of incorporation of the Company or
Holdings, as the case may be) or where (A) the outstanding Voting Stock of
the Company or Holdings, as the case may be, outstanding immediately prior to
such transaction is changed into or exchanged for Voting Stock of the
surviving transferee Person (other than Redeemable Capital Stock)
constituting a majority of the outstanding shares of such Voting Stock of
such surviving transferee Person immediately after giving effect to such
issuance and (B) no "person" or "group" other than Bain or its Affiliates or
CSFB or its Affiliates, owns immediately after such transaction, directly or
indirectly, more than 50% of the total outstanding Voting Stock of the
surviving corporation; (v) the Company is liquidated or dissolved or adopts a
plan of liquidation or dissolution; or (vi) Holdings shall hold less than
100% of the common stock of the Company.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act, or if at any time
after the execution of this Indenture such Commission is not existing and
performing the duties now assigned to it, then the body performing such
duties at such time.
"Company" means the Person named as the "Company" in the first
paragraph of this Indenture, until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"Company Borrowing Base" means, as of any date, an amount equal to
the sum of (a) 85.0% of the book value of all accounts receivable owned by the
Company and its Domestic Subsidiaries and Canadian Restricted Subsidiaries
(excluding any accounts receivable from an Affiliate of such Person or that are
more than 90 days past due, less (without duplication) the allowance for
doubtful accounts attributable to current trade accounts receivable) and (b)
60.0% of the book value of all inventory owned by the Company and its Domestic
Subsidiaries and Canadian Restricted Subsidiaries as of such date (with a
seasonal increase of 70.0% of inventory in effect from July 1 through November
30 of each year), all calculated on a consolidated basis and in accordance with
GAAP. To the extent that information is not available as to the amount of
accounts receivable or inventory as of a specific date, Company Borrowing Base
shall be calculated utilizing the most recent available information.
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"Company Request" or "Company Order" means a written request or
order signed in the name of the Company by any two of the following: its
Chairman, Chief Executive Officer, its President, any Vice President, its
Treasurer, its Chief Financial Officer, Director of Finance or an Assistant
Treasurer, and delivered to the Trustee.
"Consolidated Adjusted Net Income (Loss)" means, for any period, the
consolidated net income (or loss) of the Company and its Restricted Subsidiaries
for such period as determined in accordance with GAAP, adjusted, to the extent
included therein, by excluding, without duplication, (i) any net after-tax
extraordinary gains or losses (less all fees and expenses relating thereto),
(ii) the portion of net income (or loss) of the Company and its consolidated
Restricted Subsidiaries allocable to minority interests in unconsolidated
Persons or Persons that are accounted for by equity method of accounting to the
extent that cash dividends or distributions have not actually been received by
the Company or any Restricted Subsidiary, (iii) net income (or loss) of any
Person combined with the Company or any Restricted Subsidiary on a "pooling of
interests" basis attributable to any period prior to the date of combination,
(iv) any gain or loss, net of taxes, realized upon the termination of any
employee pension benefit plan, (v) net after-tax gains or losses (less all
fees and expenses relating thereto) in respect of dispositions of assets
other than in the ordinary course of business, (vi) the net income of any
Restricted Subsidiary to the extent that the declaration of dividends or
similar distributions by that Restricted Subsidiary of that income is not at
the time permitted without any prior governmental approval (that has not been
obtained) or, directly or indirectly, by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule
or governmental regulations applicable to that Restricted Subsidiary or its
shareholders, or (vii) the cumulative effect of a change in accounting
principles.
"Consolidated Fixed Charge Coverage Ratio" of the Company means, for
any period, the ratio of (a) the sum of (i) Consolidated Adjusted Net Income
(Loss), (ii) Consolidated Interest Expense, (iii) Consolidated Income Tax
Expense and (iv) Consolidated NonCash Charges, in the case of (ii), (iii) and
(iv) only to the extent such expense or charge was deducted in computing
Consolidated Adjusted Net Income (Loss), in each case, for such period, of the
Company and its Restricted Subsidiaries on a consolidated basis, all determined
in accordance with GAAP to (b) the sum of Consolidated Interest Expense for such
period and cash and non-cash dividends paid on any Preferred Stock of the
Company or any Restricted Subsidiary during such period; provided that in making
such computation, the Consolidated Interest Expense attributable to (A) interest
on any Indebtedness computed on a pro forma basis and bearing a floating
interest rate shall be computed as if the rate in effect on the date of
computation had been the applicable rate for the entire period, (B) interest on
any Indebtedness under a revolving credit
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facility computed on a pro forma basis shall be computed based upon the
average daily balance of such Indebtedness during the applicable period and
(C) notwithstanding clauses (A) and (B) above, interest on any Indebtedness
determined on a fluctuating basis, to the extent such interest is covered by
Interest Rate Protection Agreements, shall be deemed to have accrued at the
rate per annum resulting after giving effect to the operation of such
agreements.
"Consolidated Income Tax Expense" means for any period the provision
for federal, state, local and foreign income taxes of the Company and its
consolidated Subsidiaries for such period as determined in accordance with GAAP.
"Consolidated Interest Expense" means, without duplication, for any
period, (x) the sum of (a) the interest expense of the Company and its
Restricted Subsidiaries for such period, whether paid or accrued and whether or
not capitalized, as determined on a consolidated basis in accordance with GAAP
including, without limitation, (i) amortization of original issue discount
and non-cash interest payments, (ii) the net payment under Interest Rate
Protection Agreements (including amortization of discounts), (iii) the
interest portion of any deferred payment obligation (iv) imputed interest
with respect to Attributable Debt, (v) commissions, discounts and other fees
and charges incurred in respect of letter of credit or bankers' acceptance
financings and (vi) accrued interest and (b)(i) the interest component of
Capitalized Lease Obligations paid, accrued and/or scheduled to be paid or
accrued by the Company or any Restricted Subsidiary during such period and
(ii) all capitalized interest of the Company and its consolidated Restricted
Subsidiaries, in each case as determined in accordance with GAAP, minus (y)
any amortization of financing fees and expenses of the Company and its
consolidated Restricted Subsidiaries for such period.
"Consolidated Net Worth" means, with respect to any Person as of any
date, the sum of:
(1) the consolidated equity of the common stockholders of such
Person and its consolidated Subsidiaries as of such date; plus
(2) the respective amounts reported on such Persons's balance
sheet as of such date with respect to any series of Preferred Stock (other
than Redeemable Stock) that by its terms is not entitled to the payment of
dividends unless such dividends may be declared and paid only out of net
earnings in respect of the year of such declaration and payment, but only
to the extent of any cash received by such Person upon issuance of such
Preferred Stock.
"Consolidated Non-Cash Charges" means, for any period, the aggregate
depreciation, amortization and other non-cash charges of the Company and its
consolidated Restricted
-8-
Subsidiaries for such period, as determined in accordance with GAAP
(excluding any non-cash charge which requires an accrual or reserve for cash
charges for any future period or amortization of a prepaid cash expense that
was paid in a prior period).
"Consolidation" means, with respect to the Company, the
consolidation of the accounts of the Restricted Subsidiaries with those of the
Company, all in accordance with GAAP consistently applied; provided that,
"consolidation" will not include consolidation of the accounts of any
Unrestricted Subsidiary with the accounts of the Company. The term
"Consolidated" shall have a similar meaning.
"Corporate Trust Office" means the principal corporate trust office
of the Trustee, at which at any particular time its corporate trust business
shall be principally administered, which office at the date of this Indenture
is located at IBJ Whitehall Bank & Trust Company, One State Street, New York,
New York 10004, Attention: Corporate Trust Administration, except that with
respect to presentation of Securities for payment or for registration of
transfer or exchange, such term shall mean the office or agency of the
Trustee at which, at any particular time, its corporate agency business shall
be conducted.
"Corporation" includes corporations, associations, companies and
business trusts.
"Credit Agreement" means one or more Credit Agreements among the
Company and the Banks, as in effect as of the date of this Indenture, providing
for a revolving credit facility and term loans to the Company, as such
agreements may be amended, renewed, extended, substituted, refinanced,
restructured, replaced, supplemented or otherwise modified from time to time,
including, without limitation, amendments and modifications that provide for
loans to Canadian Restricted Subsidiaries and for sub-facilities (including,
without limitation, any successive renewals, extensions, substitutions,
refinancings, restructurings, replacements, supplementations or other
modifications of any of the foregoing), together with the security agreements
and other agreements in favor of the Banks entered into from time to time in
connection with such credit agreements as such security agreements and other
agreements may be amended, supplemented or otherwise modified from time to time.
"Currency Agreements" means any spot or forward foreign exchange
agreements and currency swap, currency option or other similar financial
agreements or arrangements entered into by the Company or any of its Restricted
Subsidiaries in the ordinary course of business and designed to protect against
or manage exposure to fluctuations in foreign currency exchange rates.
"Default" means any event which is, or after notice or passage of
time or both would be, an Event of Default.
-9-
"Defaulted Interest" has the meaning specified in Section 3.9.
"Depositary" means, with respect to the Securities issuable or
issued in whole or in part in global form, The Depository Trust Company, and any
and all successors thereto appointed as depositary hereunder and having become
such pursuant to the applicable provision of this Indenture.
"Disinterested Directors" means, with respect to any transaction or
series of related transactions, a member of the Board of Directors who does not
have any material direct or indirect financial interest in or with respect to
such transaction or series of related transactions.
"Domestic Subsidiary" means any Restricted Subsidiary that is
incorporated under the laws of the United States or any state thereof or the
District of Columbia.
"Event of Default" has the meaning set forth in Section 5.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Offer and Consent Solicitation Statement" means that
certain Exchange Offer and Consent Solicitation Statement dated July 30, 1999
relating to the offer of the Securities.
"Exchange and Registration Rights Agreement" means the Exchange and
Registration Rights Agreement between the Company and the holders of the Initial
Securities, dated as of September 27, 1999, relating to the Securities, as such
agreement may be amended, modified or supplemented from time to time.
"Exchange Registration Statement" means the Exchange Registration
Statement as defined in the Exchange and Registration Rights Agreement.
"Exchange Securities" has the meaning stated in the first recital of
this Indenture and refers to any Exchange Securities containing terms
substantially identical to the Initial Securities (except that such Exchange
Securities shall not contain terms with respect to transfer restrictions) that
are issued and exchanged for the Initial Securities pursuant to the Exchange and
Registration Rights Agreement and this Indenture.
"Fair Market Value" means, with respect to any asset or property,
the sale value that would be obtained in an arm's-length transaction between an
informed and willing seller under no compulsion to sell and an informed and
willing buyer.
-10-
"Foreign Subsidiary" means any Subsidiary that is incorporated in a
jurisdiction outside of the U.S. and territories thereof.
"Foreign Subsidiary Borrowing Base" means, as of any date, an amount
equal to the sum of (a) 85.0% of the book value of all accounts receivable owned
by the Company's Foreign Subsidiaries (other than Canadian Restricted
Subsidiaries) (excluding any accounts receivable from an Affiliate of such
Foreign Subsidiaries or that are more than 90 days past due, less (without
duplication) the allowance for doubtful accounts attributable to current
trade accounts receivable) and (b) 60.0% of the book value of all inventory
owned by such Foreign Subsidiaries (other than Canadian Restricted
Subsidiaries) as of such date (with a seasonal increase of 70.0% of inventory
in effect from July 1 through November 30 of each year), all calculated on a
consolidated basis and in accordance with GAAP. To the extent that
information is not available as to the amount of accounts receivable or
inventory as of a specific date, Foreign Subsidiary Borrowing Base shall be
calculated utilizing the most recent available information.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in other
statements by any other entity as have been approved by a significant segment of
the accounting profession, which are in effect on the Issue Date.
"Guarantee" or "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, by
way of a pledge of assets or through letters of credit or reimbursement
agreements in respect thereof, of all or any part of any Indebtedness.
"Holder" means a Person in whose name a Security is registered in
the Security Register.
"Holdings" means HF Holdings, Inc. and its successors.
"Indebtedness" means, with respect to any Person, without
duplication, (a) all liabilities of such Person for borrowed money or for the
deferred purchase price of property or services, excluding any trade payables
and other current liabilities incurred in the ordinary course of business, but
including, without limitation, all obligations, contingent or otherwise, of such
Person in connection with any letter of credit, bankers' acceptance or other
similar credit transaction and in connection with any agreement to purchase,
redeem, exchange, convert or otherwise acquire for value any Capital Stock of
such Person, or any warrants, rights or options to acquire such Capital Stock,
now or hereafter outstanding, if, and
-11-
to the extent, any of the foregoing would appear as a liability upon a
balance sheet of such Person prepared in accordance with GAAP, (b) all
obligations of such Person evidenced by bonds, notes, debentures or other
similar instruments, if, and to the extent, any of the foregoing would appear
as a liability upon a balance sheet of such Person prepared in accordance
with GAAP, (c) all indebtedness of such Person created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even if the rights and remedies of the seller or
lender under such agreement in the event of default are limited to
repossession or sale of such property), but excluding accounts payable
arising in the ordinary course of business, (d) all Capitalized Lease
Obligations of such Person, (e) all indebtedness referred to in the preceding
clauses of other Persons and all dividends of other Persons, the payment of
which is secured by (or for which the holder of such indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien upon
property (including, without limitation, accounts and contract rights) owned
by such Person, even though such Person has not assumed or become liable for
the payment of such Indebtedness or of such dividend (the amount of such
obligation being deemed to be the lesser of the value of such property or
asset or the amount of the obligation so secured), (f) all guarantees by such
Person of indebtedness referred to in this definition, (g) all Redeemable
Capital Stock of such Person valued at the greater of its voluntary or
involuntary maximum fixed repurchase price plus accrued dividends and (h) all
obligations of such Person under or in respect of Interest Rate Protection
Agreements and Currency Agreements. The amount of any Indebtedness
outstanding as of any date shall be (i) the accreted value thereof, in the
case of any Indebtedness issued with original issue discount and (ii) the
principal amount thereof, together with any interest thereon that is more
than 30 days past due, in the case of any other Indebtedness.
"Indenture" means this instrument as originally executed and as it
may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof.
"Initial Securities" has the meaning stated in the first recital of
this Indenture.
"Interest Payment Date" means the Stated Maturity of an installment
of interest on the Securities.
"Interest Rate Protection Agreements" means any interest rate
protection agreements and other types of interest rate hedging agreements
(including, without limitation, interest rate swaps, caps, collars and similar
agreements) designed to minimize exposure to fluctuations in interest rates in
respect of Indebtedness.
-12-
"Investment" means, with respect to any Person, directly or
indirectly, any advance, loan, or other extension of credit (including by means
of a guarantee) or capital contribution to (by means of any transfer of cash
or other property to others or any payment for property or services for the
account or use of others), or any purchase or acquisition by such Person of
any Capital Stock, bonds, notes, debentures or other securities or evidences
of Indebtedness issued by any other Person, except for purchases of assets in
the ordinary course of business of the Company or any of its Restricted
Subsidiaries, and all other items that would be classified as investments on
a balance sheet prepared in accordance with GAAP.
"Issue Date" means the closing date for the original issuance of the
Initial Securities under this Indenture.
"Lien" means any mortgage, charge, pledge, lien (statutory or
otherwise), security interest, hypothecation or other encumbrance of any kind
upon or with respect to any property of any kind, real or personal, movable or
immovable, now owned or hereafter acquired, whether or not filed, recorded or
otherwise perfected under applicable law, including any conditional sale or
other title retention agreement, any lease in the return thereof, any option or
other agreement to sell or give a security interest in and any filing or
agreement to give any financing statement under the Uniform Commercial Code or
equivalent statutes of any jurisdiction.
"Liquidated Damages" means all liquidated damages then owing
pursuant to the Registration Rights Agreement.
"Maturity" when used with respect to any Security means the date on
which the principal of such Security or an installment of principal becomes due
and payable as therein provided or as provided in this Indenture, whether at
Stated Maturity or by declaration of acceleration, call for redemption or
otherwise.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Cash Proceeds" means with respect to any Asset Sale the
proceeds thereof received by the Company or any of its Restricted
Subsidiaries in the form of cash or Cash Equivalents including payments in
respect of deferred payment obligations when received in the form of, or
stock or other assets when disposed for, cash or Cash Equivalents (including,
without limitation, any cash received upon the sale or other disposition of
any non-cash consideration received in any Asset Sale), net of (i) reasonable
out-of-pocket fees and expenses (including legal, accounting and investment
banking and sales commissions) related to such Asset Sale, (ii) provisions
for all taxes payable as a result of such Asset Sale, (iii) payments made to
retire Indebtedness where payment of such Indebtedness is secured by the
-13-
assets or properties which are the subject of such Asset Sale, (iv) amounts
required to be paid to any Person (other than the Company or any Restricted
Subsidiary) owning a beneficial interest in the assets subject to the Asset
Sale and (v) appropriate amounts to be provided by the Company or any
Restricted Subsidiary, as the case may be, as a reserve, in accordance with
GAAP, against any liabilities associated with such Asset Sale and retained by
the Company or any Restricted Subsidiary, as the case may be, after such
Asset Sale, including, without limitation, pension and other post-employment
benefit liabilities, liabilities related to environmental matters and
liabilities under any indemnification obligations associated with such Asset
Sale (provided that the amount of any such reserves shall be deemed to
constitute Net Cash Proceeds at the time such reserves shall have been
released or are not otherwise required to be retained as a reserve), all as
reflected in an Officers' Certificate delivered to the Trustee.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the
Company nor any of its Restricted Subsidiaries (a) provides credit support of
any kind (including any undertaking, guarantee, indemnity, agreement or
instrument that would constitute Indebtedness) or (b) is directly or indirectly
liable (as a guarantor, general partner or otherwise), or (c) constitutes a
lender; and (ii) no default with respect to which (including any rights that the
holders thereof may have to take enforcement action against an Unrestricted
Subsidiary) would permit (upon notice, lapse of time or both) any holder of any
other Indebtedness (other than the Securities) of the Company or any of its
Restricted Subsidiaries to declare a default under such other Indebtedness or
cause the payment thereof to be accelerated or payable prior to its stated
maturity; and (iii) as to which the lenders have been notified in writing that
they will not have any recourse to the stock or assets of the Company or any of
its Restricted Subsidiaries.
"Officers' Certificate" means a certificate signed by the Chairman,
the Chief Executive Officer, the President or a Vice President, and by the
Treasurer, the Chief Financial Officer, the Director of Finance, an Assistant
Treasurer, the Secretary or an Assistant Secretary of the Company, and delivered
to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company, including an employee of the Company, and who shall be
acceptable to the Trustee.
"Outstanding", when used with respect to Securities, means, as of
the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
-14-
(i) Securities theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
(ii) Securities, or portions thereof, for whose payment or
redemption money in the necessary amount has been theretofore deposited with the
Trustee or any Paying Agent (other than the Company) in trust or set aside and
segregated in trust by the Company (if the Company shall act as its own Paying
Agent) for the Holders of such Securities; provided that, if such Securities are
to be redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has been made;
(iii) Securities, except to the extent provided in Sections 12.2 and
12.3, with respect to which the Company has effected defeasance and/or covenant
defeasance as provided in Article Twelve; and
(iv) Securities which have been paid pursuant to Section 3.8 or in
exchange for or in lieu of which other Securities have been authenticated and
delivered pursuant to this Indenture, other than any such Securities in respect
of which there shall have been presented to the Trustee proof satisfactory to it
that such Securities are held by a bona fide purchaser in whose hands the
Securities are valid obligations of the Company;
provided, however, that, in determining whether the Holders of the requisite
principal amount of Outstanding Securities have given any request, demand,
authorization, direction, consent, notice or waiver hereunder, and for the
purpose of making the calculations required by TIA Section 313, Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of the
Company or such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in making such calculation or in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities which the
Trustee knows to be so owned shall be so disregarded. Securities so owned which
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Securities and that the pledgee is not the Company or any
other obligor upon the Securities or any Affiliate of the Company or such other
obligor.
"Paying Agent" means any Person (including the Company acting as
Paying Agent) authorized by the Company to pay the principal of (and premium, if
any, on) or interest on any Securities on behalf of the Company.
"Permitted Business" means the lines of business that the Company
and its Restricted Subsidiaries currently conduct on the date of the Indenture
and any businesses that derive (or are
-15-
expected to derive) a majority of their revenues from products and activities
reasonably related thereto.
"Permitted Indebtedness" means any of the following:
(i) Indebtedness of the Company and any Subsidiary Guarantor
(including Canadian Restricted Subsidiaries that are also Subsidiary
Guarantors) under the Credit Agreement; provided that the aggregate
principal amount of such Indebtedness at any one time outstanding shall
not exceed the greater of (1) the Company Borrowing Base plus $120 million
and (2) $350 million, in each case less (a) the aggregate amount of all
Net Cash Proceeds of Asset Sales applied by the Company and any of its
Subsidiaries since the date of this Indenture to permanently repay
Indebtedness under the Credit Agreement pursuant to Section 10.17 hereof
and (b) the amount of outstanding Indebtedness incurred by Canadian
Restricted Subsidiaries pursuant to clause (xiii) below; provided further
that the amount of Indebtedness permitted to be incurred pursuant to this
clause (i) shall be in addition to any Indebtedness permitted to be
incurred under the Credit Agreement in reliance on, and in accordance
with, clauses (viii) and (xii) of this definition of "Permitted
Indebtedness";
(ii) Indebtedness of the Company and any Restricted Subsidiary under
the Securities;
(iii) Indebtedness of the Company and any Restricted Subsidiary
(other than under the Credit Agreement) outstanding on the date of this
Indenture until such amounts are repaid;
(iv) obligations of the Company and any Restricted Subsidiary
incurred in connection with Interest Rate Protection Agreements relating
to Indebtedness (including Permitted Indebtedness) permitted pursuant to
Section 10.10 that are entered into in the ordinary course of business;
(v) obligations of the Company and any Restricted Subsidiary
incurred in connection with Currency Agreements that are entered into
in the ordinary course of business of the Company and its Restricted
Subsidiaries;
(vi) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the Company and
any of its Restricted Subsidiaries; provided, however, that:
(A) if the Company or any Subsidiary Guarantor is the obligor
on such Indebtedness and the obligee is not the Company or any
Subsidiary Guarantor, such Indebtedness must be expressly
subordinated to the prior payment in full in cash of all obligations
with
-16-
respect to the Securities, in the case of the Company, or the
Subsidiary Guarantee of such Subsidiary Guarantor, in the case of a
Subsidiary Guarantor; and
(B) (1) any subsequent issuance or transfer of Capital Stock
that results in any such Indebtedness being held by a Person other
than the Company or a Restricted Subsidiary thereof and (2) any sale
or other transfer of any such Indebtedness to a Person that is not
either the Company or a Restricted Subsidiary thereof; shall be
deemed, in each case, to constitute an incurrence of such
Indebtedness by the Company or such Restricted Subsidiary, as the
case may be, that was not permitted by this clause (vi);
(vii) Indebtedness arising from customary agreements providing for
indemnification or similar obligations, or from guarantees, letters of
credit, surety bonds or performance bonds securing any obligations of the
Company pursuant to such agreements, in any case entered into in a
commercially reasonable manner in the ordinary course of business
consistent with past practices incurred in connection with the disposition
of any business, assets or Restricted Subsidiary of the Company, in a
principal amount not to exceed the proceeds received by the Company and
its Restricted Subsidiaries in connection with such disposition;
(viii) Purchase Money Obligations and Capitalized Lease Obligations
of the Company and one or more Restricted Subsidiaries not to exceed, in
the aggregate at any time outstanding (including the amount of any
additional Indebtedness incurred under clause (i) of this definition of
"Permitted Indebtedness" in reliance on this clause (viii)), $10 million;
(ix) Indebtedness of Foreign Subsidiaries (other than Canadian
Restricted Subsidiaries) in an aggregate principal amount not to exceed,
at any time outstanding, the lesser of $50 million or the Foreign
Subsidiary Borrowing Base; provided, however, that such amount shall
be reduced by the amount of Indebtedness incurred by such Foreign
Subsidiaries pursuant to clause (i) above;
(x) any renewals, extensions, substitutions, refundings,
refinancings or replacements (each, a "refinancing") of any Indebtedness
(other than intercompany Indebtedness) described in clauses (ii) and (iii)
and clause (xii) of this definition of "Permitted Indebtedness," including
any successive refinancings so long as (A) the aggregate principal amount
or accreted value, if applicable,(or, if such Indebtedness provides for an
amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration thereof, then such lesser amount as of the
date of determination) of Indebtedness
-17-
represented thereby is not increased by such refinancing other than by
an amount equal to the stated amount of premium or other payment
actually paid at such time to refinance the Indebtedness, plus the
amount of reasonable expenses of the Company incurred in connection
with such refinancing, (B) such refinancing does not reduce the Average
Life to Stated Maturity or shorten the Stated Maturity of such
Indebtedness, (C) such new Indebtedness is subordinated to the
Securities at least to the same extent as the Indebtedness being
refinanced if the Indebtedness being refinanced is Subordinated
Indebtedness and (D) such Indebtedness is incurred either by the
Company or by the Restricted Subsidiary which is the obligor on the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded;
(xi) the accrual of interest, accretion or amortization of original
issue discount, the payment of interest on any Indebtedness in the form of
additional Indebtedness with the same terms, and the payment of dividends
on Redeemable Capital Stock in the form of additional shares of the same
class of Redeemable Capital Stock; provided, in each such case, that the
amount thereof is included in Consolidated Interest Expense of the Company
as accrued;
(xii) Indebtedness of the Company and one or more Restricted
Subsidiaries in addition to that described in clauses (i) through (xi) of
this definition of "Permitted Indebtedness," including Indebtedness
incurred pursuant to clause (x) above to refinance any Indebtedness
incurred pursuant to this clause (xii), not to exceed $15 million in the
aggregate at any one time outstanding (including the amount of any
additional Indebtedness incurred under clause (i) of this definition
of "Permitted Indebtedness" in reliance on this clause (xii)); and
(xiii) Indebtedness of Canadian Restricted Subsidiaries (to the
extent they are not also Subsidiary Guarantors) under the Credit Agreement
in an aggregate principal amount not to exceed, at any time outstanding,
the lesser of $50 million or the Canadian Subsidiary Borrowing Base.
"Permitted Investment" means:
(i) Investments in any Restricted Subsidiary or any Investment in
any Person by the Company or any Restricted Subsidiary as a result of
which such Person becomes a Restricted Subsidiary (provided, however, that
in each case such Restricted Subsidiary is engaged in a Permitted
Business) or any Investment in the Company by a Restricted Subsidiary;
-18-
(ii) intercompany Indebtedness to the extent permitted under clause
(vi) of the definition of "Permitted Indebtedness";
(iii) Investments in Cash Equivalents;
(iv) Investments in an amount not to exceed $2 million in the
aggregate at any given time outstanding;
(v) Investments in existence on the date of this Indenture;
(vi) Investments by the Company or any Restricted Subsidiary in any
Person (including any Unrestricted Subsidiary) whose operations consist
of, or has been formed to operate, a Permitted Business in an amount not
to exceed $8 million in the aggregate at any given time outstanding; and
(vii) any Investment made by the Company or a Restricted Subsidiary
in an Unrestricted Subsidiary or any other Person that is not a Subsidiary
of the Company in connection with a Securitization Transaction; provided
that any such Investment is in the form of a Securitization Note or an
equity interest.
"Permitted Liens" means any of the following:
(a) any Lien existing as of the date of this Indenture (other than
Liens securing Indebtedness under the Credit Agreement);
(b) any Lien arising by reason of (1) any judgment, decree or order
of any court, so long as such Lien is adequately bonded and any
appropriate legal proceedings which may have been duly initiated for the
review of such judgment, decree or order shall not have been finally
terminated or the period within which such proceedings may be initiated
shall not have expired, the claims secured thereby are being contested in
good faith by appropriate proceedings, adequate reserves have been
established with respect to such claims in accordance with GAAP and no
Default or Event of Default would result thereby; (2) taxes, assessments,
governmental charges or levies not yet delinquent or which are being
contested in good faith by appropriate proceedings promptly instituted and
diligently concluded, provided that, any reserve or other appropriate
provision as shall be required in conformity with GAAP shall have been
made therefor; (3) security for payment of workers' compensation or other
insurance incurred in the ordinary course of business; (4) security for
the performance of tenders, contracts (other than contracts for the
payment of money) or leases incurred in the ordinary course of business;
(5) deposits to secure public or
-19-
statutory obligations incurred in the ordinary course of business; (6)
operation of law in favor of carriers, warehousemen, mechanics,
materialmen, laborers, employees or suppliers and similar Liens
incurred in the ordinary course of business for sums which are not yet
delinquent or are being contested in good faith by negotiations or by
appropriate proceedings which suspend the collection thereof incurred
in the ordinary course of business; or (7) security for surety or
appeal bonds incurred in the ordinary course of business;
(c) any Lien existing on the assets of the Company or any Subsidiary
Guarantor (including Canadian Restricted Subsidiaries that are also
Subsidiary Guarantors) securing the Indebtedness of the Company or any
such Subsidiary Guarantor under the Credit Agreement, provided that the
principal amount of Indebtedness secured by such Lien does not exceed the
amount of Indebtedness permitted to be incurred under clause (i) of the
definition of "Permitted Indebtedness";
(d) any Lien in favor of the Company or a Subsidiary Guarantor;
(e) any Lien securing any Interest Rate Protection Agreements to the
extent such Agreements relate to Indebtedness that is otherwise permitted
to be incurred pursuant to this Indenture;
(f) any Lien securing the Securities;
(g) any Liens on assets acquired by the Company or any Restricted
Subsidiary after the date of this Indenture, whether by acquisition of
shares, assets or otherwise, provided that such Lien (i) existed on the
date such asset was acquired, (ii) only extends to assets that were
subject to such Lien prior to such acquisition, and (iii) was not incurred
in anticipation of such acquisition;
(h) Liens relating to Purchase Money Obligations, provided, however,
that (i) the principal amount of any Indebtedness secured by such Liens
shall not exceed 100% of the applicable purchase price or cost and (ii)
the Lien securing such Indebtedness shall be created (A) in the case of
any asset acquisition within 180 days of the closing of such asset
acquisition and (B) in all other cases, in the ordinary course of
business, within 90 days of such acquisition and (iii) such Lien does not
apply to any assets other than those acquired with such Purchase Money
Obligations and (iv) the Indebtedness secured by the Lien was permitted to
be incurred pursuant to clause (viii) of the definition of Permitted
Indebtedness;
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(i) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of custom duties in connection with the
importation of goods not yet delinquent, incurred in the ordinary course
of business; provided that, any reserve or other appropriate provision as
shall be required in conformity with GAAP shall have been made therefor;
(j) Liens upon 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 incurred in the ordinary course of business;
(k) [Intentionally Omitted];
(1) Liens encumbering property or assets under construction arising
from progress or partial payments by a customer of the Company or any
Restricted Subsidiary relating to such property or assets incurred in the
ordinary course of business;
(m) Liens securing an aggregate of $2.0 million of Indebtedness
permitted to be incurred under this Indenture by the Company and any
Restricted Subsidiary;
(n) easements, rights-of-way and other similar charges or
encumbrances which were not incurred in connection with the incurrence of
Indebtedness and do not interfere in any material respect with the
ordinary conduct of the business of the Company or any of its Restricted
Subsidiaries;
(o) Liens on the assets of Foreign Subsidiaries (other than Canadian
Restricted Subsidiaries) securing Indebtedness of Foreign Subsidiaries
(other than Canadian Restricted Subsidiaries) permitted to be incurred
under clause (ix) under the definition of "Permitted Indebtedness";
(p) any extension, renewal, substitution or replacement (or
successive extensions, renewals, substitutions or replacements), as a
whole or in part, of any of the Liens referred to in clauses (a), (c),
(f), (g), (o) and (q) of this definition or the Indebtedness secured
thereby; provided that (i) such extension, renewal, substitution or
replacement Lien shall be limited to all or any part of the same property
or assets, now owned or hereafter acquired, that secured the Lien
extended, renewed, substituted or replaced (plus improvements on such
property or assets) and (ii) the Indebtedness secured by such Lien
(assuming all available amounts were borrowed) at such time is not
increased, except to the extent permitted under clause (x) of the
definition of "Permitted Indebtedness"; and
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(q) Liens on the assets of Canadian Restricted Subsidiaries securing
Indebtedness of Canadian Restricted Subsidiaries permitted to be incurred
under clause (xiii) under the definition of "Permitted Indebtedness".
Notwithstanding the foregoing, under no circumstances shall any Lien securing
Indebtedness of the Company or any of its Subsidiaries, issued, directly or
indirectly, in exchange for or upon the conversion of any Indebtedness of IHF
Holdings, Inc. or ICON Fitness Corporation be deemed to be a "Permitted Lien".
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, joint-stock company, trust, unincorporated
organization, association, government or any agency or political subdivision
thereof or any other entity.
"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that evidenced
by such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 3.8 in exchange for a
mutilated security or in lieu of a lost, destroyed or stolen Security shall be
deemed to evidence the same debt as the mutilated, lost, destroyed or stolen
Security.
"Preferred Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated) of
such Person's preferred stock whether now outstanding, or issued after the date
of this Indenture, and including, without limitation, all classes and series of
preferred or preference stock.
"Purchase Money Obligations" of any Person means any Indebtedness
(including Capitalized Lease Obligations) of such Person incurred in the
ordinary course of business for the purpose of financing all or any part of the
acquisition price or the cost of construction or improvement of equipment or
property, but only if such equipment or property is included in "addition to
property, plant or equipment" in accordance with GAAP and only if such equipment
or property is not being purchased as part of an acquisition of any business.
"Redeemable Capital Stock" means any Capital Stock that, either by
its terms or by the terms of any security into which it is convertible or
exchangeable or otherwise, is or upon the happening of any event or passage of
time, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of the holder thereof,
in whole or in part, on or prior to the date that is 91 days after the Stated
Maturity of the principal of the Securities, or is convertible into or
exchangeable for debt securities at any time prior to the date that is 91 days
after such Stated Maturity at the option of the holder thereof; provided,
however, that any
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Capital Stock that would constitute Redeemable Capital Stock solely because
the holders thereof have the right to require the issuer thereof to
repurchase such Capital Stock upon the occurrence of a Change of Control or
an Asset Sale shall not constitute Redeemable Capital Stock if the terms of
such Capital Stock provide that such issuer may not repurchase or redeem any
such Capital Stock pursuant to such provisions unless such repurchase or
redemption complies with Section 10.11 hereof.
"Redemption Date", when used with respect to any Security to be
redeemed, in whole or in part, means the date fixed for such redemption pursuant
to Article X of this Indenture.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Registered Exchange Offer" means the registered exchange offer for
the Securities which may be effected pursuant to the Exchange and Registration
Rights Agreement.
"Registrar" has the meaning specified in Section 3.5.
"Registration Statement" means the Registration Statement as defined
in the Exchange and Registration Rights Agreement.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the January 1 or July 1 (whether or not a Business Day), as
the case may be, next preceding such Interest Payment Date.
"Regulation S" means Regulation S under the Securities Act.
"Responsible Officer", when used with respect to the Trustee, means
the chairman or any vice-chairman of the board of directors, the chairman or any
vice-chairman of the executive committee of the board of directors, the chairman
of the trust committee, the president, any vice president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, the cashier, any
assistant cashier, any trust officer or assistant trust officer, the controller
or any assistant controller or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above-designated
officers, and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Subsidiary" means any Subsidiary of the Company that has
not been designated as an Unrestricted Subsidiary; provided that on the date the
Initial Securities are
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originally issued, all Subsidiaries of the Company shall be Restricted
Subsidiaries of the Company.
"S&P" means Standard and Poor's Rating Group and its successors.
"Securities" has the meaning stated in the first recital of this
Indenture and more particularly means any Securities authenticated and delivered
under this Indenture. For all purposes of this Indenture, the term "Securities"
shall include any Exchange Securities issued and exchanged for any Securities
pursuant to the Exchange and Registration Rights Agreement and this Indenture
and, for purposes of this Indenture, all Securities and Exchange Securities
shall vote together as one series of Securities under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, and the rules and regulations thereunder.
"Securitization Note" means a promissory note of an Unrestricted
Subsidiary or any other Person that is not a Subsidiary of the Company
evidencing a line of credit, which may be irrevocable, from the Company or any
Restricted Subsidiary of the Company in connection with a Securitization
Transaction, which note shall be repaid from cash available to the Unrestricted
Subsidiary or such Person other than amounts required to be established as
reserves pursuant to agreements, amounts paid to investors in respect of
interest, principal and other amounts owing to such investors and amounts paid
in connection with the purchase of newly generated receivables.
"Securitization Transaction" means any transaction or series of
transactions pursuant to which the Company or any of its Restricted Subsidiaries
may sell, convey or otherwise transfer to an Unrestricted Subsidiary or any
other Person that is not a Subsidiary of the Company any accounts receivable
(whether now existing or arising or acquired in the future) of the Company or
any of its Restricted Subsidiaries, and any assets related thereto including,
without limitation, all collateral securing such accounts receivable, all
contracts and contract rights and all guarantees or other obligations in respect
of such accounts receivable, proceeds of such accounts receivable and other
assets (including contract rights) which are customarily transferred in
connection with asset securitization transactions involving accounts receivable.
"Security Register" has the meaning specified in Section 3.5.
"Senior Indebtedness" means the principal of, premium, if any, and
interest, fees and expenses (including, without limitation, post-petition
interest at the rate provided for in the documentation with respect thereto,
whether or not allowed as
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a claim in bankruptcy, reorganization, insolvency, receivership or similar
proceeding) with respect to any Permitted Indebtedness of the Company and its
Restricted Subsidiaries under the Credit Agreement, including without
limitation any guarantees thereof.
"Shelf Registration Statement" means the Shelf Registration
Statement as defined in the Exchange and Registration Rights Agreement.
"Significant Subsidiary" means, as of any date, any corporation or
partnership that is a Subsidiary of the Company and that, as of the end of the
most recently completed fiscal year of the Company for which financial
statements are available, was a "significant subsidiary" as defined in
Regulation S-X under the Securities Act and the Exchange Act or that, if
acquired after such date, would have been a "significant subsidiary" as defined
therein if it had been acquired as of such date.
"Special Record Date" for the payment of any Defaulted Interest
means a date fixed by the Trustee pursuant to Section 3.9.
"Specified Senior Indebtedness" means Indebtedness under the Credit
Agreement.
"Standard Securitization Undertakings" means representations,
warranties, covenants and indemnities entered into by the Company or any
Subsidiary of the Company that are customary in accounts receivable
securitization transactions.
"Stated Maturity" when used with respect to any Indebtedness or any
installment of principal thereof or interest thereon, means the dates specified
in such Indebtedness as the fixed date on which the principal of such
Indebtedness or such installment of principal or interest is due and payable.
"Stockholders Agreement" means the stockholders agreement
substantially in the form attached as an annex to the Exchange Offer and Consent
Solicitation Statement.
"Subordinated Indebtedness" means Indebtedness of the Company or any
Restricted Subsidiary contractually subordinated in right of payment to the
Securities.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the equity
ownership or the Voting Stock of which is at the time owned, directly or
indirectly, by such Person or one or more of the other Subsidiaries of that
Person (or a combination thereof) and (ii) any partnership (a) the sole general
partner or the managing general partner of which is such Person or a Subsidiary
of such Person or (b) the only general partners of which are such Person or of
one or more Subsidiaries of such Person (or any combination thereof).
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"Subsidiary Guarantee" means the Guarantee by each Subsidiary
Guarantor of the Company's payment obligations under this Indenture and the
Securities, executed pursuant to the provisions of this Indenture.
"Subsidiary Guarantors" means each of (i) the Company's Domestic
Subsidiaries, and (ii) any future Subsidiary that executes a Subsidiary
Guarantee in accordance with the provisions of the Indenture and their
respective successors and assigns.
"Tax Sharing Agreement" means the tax sharing agreement dated as of
September 27, 1999 among Holdings and its Subsidiaries, as amended from time to
time; provided that, such amendments shall not, in aggregate, provide for terms
that are materially less favorable to the Company than those in effect on the
Issue Date.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939
as in force at the date as of which this Indenture was executed, except as
provided in Section 9.5.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this Indenture until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"Unrestricted Subsidiary" means any Subsidiary that is designated by
the Board of Directors as an Unrestricted Subsidiary pursuant to a Board
Resolution, but only to the extent that such Subsidiary: (a) has no Indebtedness
other than Non-Recourse Debt, (b) is not a party to any agreement, contract,
arrangement or understanding with the Company or any Restricted Subsidiary of
the Company unless the terms of any such agreement, contract arrangement or
understanding are no less favorable to the Company or such Restricted Subsidiary
than those that might be obtained at the time from Persons who are not
Affiliates of the Company, (c) is a Person with respect to which neither the
Company nor any of its Restricted Subsidiaries has any direct or indirect
obligation (x) to subscribe for additional Capital Stock or (y) to maintain or
preserve such Person's financial condition or to cause such Person to achieve
any specified levels of operating results, and (d) has not guaranteed or
otherwise directly or indirectly provided credit support for any Indebtedness of
the Company or any of its Restricted Subsidiaries; provided that,
notwithstanding the above, the Company and its Restricted Subsidiaries may (i)
make payments to, provide credit or credit support for or make Investments in
the Unrestricted Subsidiaries to the extent that such payments or investments in
Unrestricted Subsidiaries are in compliance with Section 10.11 and (ii) may make
Standard Securitization Undertakings to an Unrestricted Subsidiary and other
Persons, and loans to an Unrestricted Subsidiary under a Securitization Note,
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in connection with a Securitization Transaction with such Unrestricted
Subsidiary.
"Vice President", when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president".
"Voting Stock" means stock of the class or classes pursuant to which
the holders thereof have the general voting power under ordinary circumstances
to elect at least a majority of the board of directors, managers or trustees of
a corporation (irrespective of whether or not, at the time, stock of any other
class or classes shall have or might have voting power by reason of the
happening of any contingency.)
"Wholly Owned Subsidiary" of any specified Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly Owned Subsidiaries of
such Person or by such Person and one or more Wholly Owned Subsidiaries of such
Person.
Section 1.2. 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 Securities;
"indenture security holder" means a Holder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
and
"obligor" on the indenture securities means the Company or any other
obligor on the Securities.
All other Trust Indenture Act terms used in this Indenture that are
defined by the Trust Indenture Act, defined by reference in the Trust Indenture
Act to another statute or defined by a rule of the Commission and not otherwise
defined herein shall have the meanings assigned to them therein.
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Section 1.3. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to
take any action under any provision of this Indenture, the Company shall furnish
to the Trustee an Officers' Certificate and an opinion of Counsel each
satisfactory in form and substance to the Trustee, which, taken together, state
that all conditions precedent, if any, provided for in this Indenture (including
any covenant compliance with which constitutes a condition precedent) relating
to the proposed action have been complied with, except that in the case of any
such application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than pursuant to
Section 10.8(a)) shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.4. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by,
or covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless
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such officer knows, or in the exercise of reasonable care should know, that
the certificate or opinion or representations with respect to the matters
upon which his certificate or opinion is based are erroneous. Any such
certificate or opinion of Counsel may be based, insofar as it relates to
factual matters, upon a certificate or opinion of, or representations by, an
officer or officers of the Company stating that the information with respect
to such factual matters is in the possession of the Company, unless such
counsel knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are
erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Section 1.5. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agents duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and conclusive in favor of the Trustee and the Company, if made in the
manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him or her the execution thereof.
Where such execution is by a signer acting in a capacity other than his or her
individual capacity, such certificate or affidavit shall also constitute
sufficient proof of authority. The fact and date of the execution of any such
instrument or writing, or the authority of the Person executing the same, may
also be proved in any other manner which the Trustee deems sufficient.
(c) The principal amount and serial numbers of Securities held by
any Person, and the date of holding the same, shall be proved by the Security
Register.
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(d) If the Company shall solicit from the Holders of Securities any
request, demand, authorization, direction, notice, consent, waiver or other Act,
the Company may, at its option, by or pursuant to Board Resolution, fix in
advance a record date for the determination of Holders entitled to give such
request, demand, authorization, direction, notice, consent, waiver or other Act,
but the Company shall have no obligation to do so. Notwithstanding TIA Section
316(c), such record date shall be the record date specified in or pursuant to
such Board Resolution, which shall be a date not earlier than the date 30 days
prior to the first solicitation of Holders generally in connection therewith and
not later than the date such solicitation is completed. If such a record date is
fixed, such request, demand, authorization, direction, notice, consent, waiver
or other Act may be given before or after such record date, but only the Holders
of record at the close of business on such record date shall be deemed to be
Holders for the purposes of determining whether Holders of the requisite
proportion of Outstanding Securities have authorized or agreed or consented to
such request, demand, authorization, direction, notice, consent, waiver or other
Act, and for that purpose the Outstanding Securities shall be computed as of
such record date; provided that, no such authorization, agreement or consent by
the Holders on such record date shall be deemed effective unless it shall become
effective pursuant to the provisions of this Indenture not later than eleven
months after the record date.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future Holder
of the same Security and the Holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made upon
such Security.
Section 1.6. Notices, Etc., to Trustee and the Company.
Any request, demand, authorization, direction, notice, consent,
waiver or Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company or any Guarantor
shall be sufficient for every purpose hereunder if made, given, furnished
or filed in writing to or with the Trustee at its Corporate Trust Office,
Attention: Corporate Trust Division, or
(2) the Company or the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to the Company
addressed to it at the
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address of its principal office specified in the first paragraph of this
Indenture, or at any other address previously furnished in writing to the
Trustee by the Company.
Section 1.7. Notice to Holders; Waiver.
Where this Indenture provides for notice of any event to Holders by
the Company or the Trustee, such notice shall be sufficiently given (unless
otherwise herein expressly provided) if in writing and mailed, first-class
postage prepaid, to each Holder affected by such event, at his address as it
appears in the Security Register, not later than the latest date, and not
earlier than the earliest date, prescribed for the giving of such notice. In any
case where notice to Holders is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular Holder shall
affect the sufficiency of such notice with respect to other Holders. Any notice
mailed to a Holder in the manner herein prescribed shall be conclusively deemed
to have been received by such Holder, whether or not such Holder actually
receives such notice. Where this Indenture provides for notice in any manner,
such notice may be waived in writing by the Person entitled to receive such
notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
In case by reason of the suspension of or irregularities in regular
mail service or by reason of any other cause, it shall be impracticable to mail
notice of any event to Holders when such notice is required to be given pursuant
to any provision of this Indenture, then any manner of giving such notice as
shall be satisfactory to the Trustee shall be deemed to be a sufficient giving
of such notice for every purpose hereunder.
Section 1.8. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents
are for convenience only and shall not affect the construction hereof.
Section 1.9. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
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Section 1.10. Separability Clause.
In case any provision in this Indenture or in the Securities shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
Section 1.11. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto, any Paying Agent, any
Securities Registrar and their successors hereunder or the Holders, any benefit
or any legal or equitable right, remedy or claim under this Indenture.
Section 1.12. Governing Law.
This Indenture and the Securities shall be governed by and construed
in accordance with the law of the State of New York, without regard to the
principles of conflicts of law. Upon the issuance of the Exchange Securities or
the effectiveness of the Shelf Registration Statement, this Indenture shall be
subject to the provisions of the Trust Indenture Act of 1939, as amended, that
are required to be part of this Indenture and shall, to the extent applicable,
be governed by such provisions.
Section 1.13. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date, Stated
Maturity or Maturity of any Security shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or of the Securities)
payment of interest or principal (and premium, if any) need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on the Interest Payment Date, Redemption Date or at the
Stated Maturity or Maturity; provided that, no interest shall accrue for the
period from and after such Interest Payment Date, Redemption Date, Stated
Maturity or Maturity, as the case may be.
ARTICLE II.
SECURITY FORMS
Section 2.1. Forms Generally.
The definitive Securities and the certificates of authentication
thereon shall be printed, lithographed or engraved on steel-engraved borders or
may be produced in any other manner, all as determined by the officers of the
Company executing such Securities, as evidenced by their execution of such
Securities.
The Initial Securities shall be known as the "12% Senior Notes due
2005, Series A" and the Exchange Securities shall be known as the "12% Senior
Notes due 2005, Series B", in
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each case, of the Company. The Securities and the Trustee's certificate of
authentication shall be in substantially the form annexed hereto as Exhibit
A. The Securities may have such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by the
Indenture and may have letters, notations or other marks of identification
and such notations, legends or endorsements required by law, or by stock
exchange agreements to which the Company is subject or usage. Any portion of
the text of any Security may be set forth on the reverse thereof, with an
appropriate reference thereto on the face of the Security. The Company shall
approve the form of the Securities and any notation, legend or endorsement on
the Securities.
The terms and provisions contained in the form of the Securities
annexed hereto as Exhibit A shall constitute, and are hereby expressly made, a
part of this Indenture. To the extent applicable, the Company and the Trustee,
by their execution and delivery of this Indenture, expressly agree to such terms
and provisions and to be bound thereby.
Initial Securities offered and sold in reliance on Rule 144A
(together with any Securities sold pursuant to other exemptions from the
Securities Act which are permitted to be evidenced by the U.S. Global Security
(as defined below)) shall be issued initially in the form of one or more
permanent global Securities substantially in the form set forth in Exhibit A
(the "U.S. Global Security") deposited with the Trustee, as custodian for the
Depositary, duly executed by the Company and authenticated by the Trustee as
hereinafter provided. The aggregate principal amount of the U.S. Global Security
may from time to time be increased or decreased by adjustments made on the
records of the Trustee, as custodian for the Depositary or its nominee, as
hereinafter provided.
Initial Securities which are not permitted to be evidenced by the
U.S. Global Security shall be issued in the form of permanent certificated
Securities in registered form in substantially the form set forth in Exhibit A
(the "U.S. Physical Securities").
Section 2.2. Restrictive Legends.
Unless and until (i) an Initial Security is sold under an effective
Registration Statement or (ii) an Initial Security is exchanged for an Exchange
Security in connection with an effective Registration Statement, in each case
pursuant to the Exchange and Registration Rights Agreement, each such U.S.
Global Security and each U.S. Physical Security shall bear the following legend
(the "Private Placement Legend") on the face thereof:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES
LAWS. NEITHER THIS
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SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED
OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
REGISTRATION. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF
AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO
THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO
YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST
DATE ON WHICH THE COMPANY, OR ANY AFFILIATE OF THE COMPANY, WAS THE
OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) ONLY
(A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH
HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO
LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A
UNDER THE SECURITIES ACT ("RULE 144A11), TO A PERSON IT REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE
144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF
SUBPARAGRAPH (1), (2), (3) OR (7) OF PARAGRAPH (A) OF RULE 501 UNDER
THE SECURITIES ACT THAT IS ACQUIRING THIS SECURITY FOR ITS OWN
ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED
INVESTOR", IN EACH CASE FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION
IN VIOLATION OF THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT
PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D) OR
(E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION
AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH
OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN
THE FORM APPEARING ON THIS SECURITY IS COMPLETED AND DELIVERED BY
THE TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE
REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
Each U.S. Global Security, whether or not an Initial Security, shall
also bear the following legend on the face thereof:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
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OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY OR SUCH OTHER NAME AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY
(AND ANY PAYMENT HEREON IS MADE TO CEDE & CO.), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF
THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN
ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTIONS 3.6 AND 3.7
OF THE INDENTURE.
ARTICLE III.
THE SECURITIES
Section 3.1. Title and Terms.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is limited to $45,000,000,
except for Securities authenticated and delivered upon registration of
transfer or, or in exchange for, or in lieu of, other Securities pursuant to
Section 3.4, 3.5, 3.6, 3.7, 3.8, 9.6, 10.15, 10.17 or 11.8.
The principal of (and premium, if any, on) and interest on the
Securities shall be payable at the office of the Paying Agent, if any, or at the
office or agency of the Company maintained for such purpose; provided, however,
that, at the option of the Company, interest may be paid by check mailed to
addresses of the Persons entitled thereto as such addresses shall appear on the
Security Register.
The Securities shall be redeemable as provided in Article Eleven.
Section 3.2. Denominations.
The Securities shall be issuable only in registered form without
coupons and only in denominations of $1,000 and any integral multiple thereof.
Section 3.3. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its
Chairman, Chief Financial Officer, its President or a Vice President, under its
corporate seal reproduced thereon and attested by its Secretary or an Assistant
Secretary. The signature of any of these officers on the Securities may be
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manual or facsimile signatures of the present or any future such authorized
officer and may be imprinted or otherwise reproduced on the Securities.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery
of this Indenture, the Company may deliver Initial Securities executed by the
Company to the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Initial Securities, and the Trustee in
accordance with such Company Order shall authenticate and deliver such Initial
Securities. On Company Order, the Trustee shall authenticate for original issue
Exchange Securities in an aggregate principal amount not to exceed $45,000,000;
provided that such Exchange Securities shall be issuable only upon the valid
surrender for cancellation of Initial Securities of a like aggregate principal
amount in accordance with a Registered Exchange Offer pursuant to the Exchange
and Registration Rights Agreement. In each case, the Trustee shall be entitled
to receive an Officers' Certificate and an Opinion of Counsel of the Company
that it may reasonably request in connection with such authentication of
Securities. Such order shall specify the amount of Securities to be
authenticated and the date on which the original issue of Initial Securities or
Exchange Securities is to be authenticated.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for in Exhibit
A duly executed by the Trustee by manual signature of an authorized officer, and
such certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered hereunder
and is entitled to the benefits of this Indenture.
In case the Company, pursuant to Article Eight, shall be
consolidated or merged with or into any other Person or shall convey, transfer,
lease or otherwise dispose of its properties and assets substantially as an
entirety to any Person, and the successor Person resulting from such
consolidation, or surviving such merger, or into which the Company shall have
been merged, or the Person which shall have received a conveyance, transfer,
lease or other disposition as aforesaid, shall have executed an indenture
supplemental hereto with the Trustee pursuant to
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Article Eight, any of the Securities authenticated or delivered prior to such
consolidation, merger, conveyance, transfer, lease or other disposition may,
from time to time, at the request of the successor Person, be exchanged for
other Securities executed in the name of the successor Person with such
changes in phraseology and form as may be appropriate, but otherwise in
substance of like tenor as the Securities surrendered for such exchange and
of like principal amount; and the Trustee, upon Company Request of the
successor Person, shall authenticate and deliver Securities as specified in
such request for the purpose of such exchange. If Securities shall at any
time be authenticated and delivered in any new name of a successor Person
pursuant to this Section in exchange or substitution for or upon registration
of transfer of any Securities, such successor Person, at the option of the
Holders but without expense to them, shall provide for the exchange of all
Securities at the time outstanding for Securities authenticated and delivered
in such new name.
Section 3.4. Temporary Securities.
Pending the preparation of definitive Securities, the Company may
execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten or otherwise
produced, in any authorized denomination, substantially of the tenor of the
definitive Securities in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Securities may determine, as conclusively evidenced by their
execution of such Securities.
If temporary Securities are issued, the Company will cause
definitive Securities to be prepared without unreasonable delay. After the
preparation of definitive Securities, the temporary Securities shall be
exchangeable for definitive Securities upon surrender of the temporary
Securities at the office or agency of the Company designated for such purpose
pursuant to Section 10.2, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Securities, the Company shall execute
and the Trustee shall authenticate and deliver in exchange therefor a like
principal amount of definitive Securities of authorized denominations. Until so
exchanged, the temporary Securities shall in all respects be entitled to the
same benefits under this Indenture as definitive Securities.
Section 3.5. Registration, Registration of Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register (the register maintained in such office and in any other
office or agency designated pursuant to Section 10.2 being herein sometimes
referred to as
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the "Security Register") in which, subject to such reasonable regulations as
it may prescribe, the Company shall provide for the registration of
Securities and of transfers of Securities. The Security Register shall be in
written form or any other form capable of being converted into written form
within a reasonable time. At all reasonable times, the Security Register
shall be open to inspection by the Trustee. The Trustee is hereby initially
appointed as security registrar (the "Registrar") for the purpose of
registering Securities and transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security at the
office or agency of the Company designated pursuant to Section 10.2, the Company
shall execute, and the Trustee shall authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Securities of any
authorized denomination or denominations of a like aggregate principal amount.
Furthermore, any Holder of the U.S. Global Security shall, by
acceptance of such Global Security, agree that transfers of beneficial interest
in such Global Security may be effected only through a book-entry system
maintained by the Holder at such Global Security (or its agent), and that
ownership of a beneficial interest in the Security shall be required to be
reflected in a book entry.
At the option of the Holder, Securities may be exchanged for other
Securities of any authorized denomination and of a like aggregate principal
amount, upon surrender of the Securities to be exchanged at such office or
agency. Whenever any Securities are so surrendered for exchange (including an
exchange of Initial Securities for Exchange Securities), the Company shall
execute, and the Trustee shall authenticate and deliver, the Securities which
the Holder making the exchange is entitled to receive; provided that, no
exchange of Initial Securities for Exchange Securities shall occur until an
Exchange Registration Statement shall have been declared effective by the
Commission and that the Initial Securities exchanged for the Exchange Securities
shall be canceled by the Trustee.
All Securities issued upon any registration of transfer or exchange
of Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer
or for exchange shall (if so required by the Company or the Registrar) be duly
endorsed, or be accompanied by a written instrument of transfer, in form
satisfactory to the Company and the Registrar, duly executed by the Holder
thereof or its attorney duly authorized in writing.
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No service charge shall be made for any registration of transfer or
exchange or redemption of Securities, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any registration of transfer or exchange of Securities, other
than exchanges pursuant to Section 3.4, 9.6, 10.15, 10.17 or 11.8 not involving
any transfer.
Section 3.6. Book-Entry Provisions for U.S. Global Security.
(a) The U.S. Global Security initially shall (i) be registered in
the name of the Depositary for such global Security or the nominee of such
Depositary, (ii) be delivered to the Trustee as custodian for such Depositary
and (iii) bear legends as set forth in Section 2.2.
Members of, or participants in, the Depositary ("Agent Members")
shall have no rights under this Indenture with respect to any U.S. Global
Security held on their behalf by the Depositary, or the Trustee as its
custodian, or under the U.S. Global Security, and the Depositary may be treated
by the Company, the Trustee and any agent of the Company or the Trustee as the
absolute owner of such U.S. Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company or the Trustee, from giving effect to any
written certification, proxy or other authorization furnished by the Depositary
or shall impair, as between the Depositary and its Agent Members, the operation
of customary practices governing the exercise of the rights of a holder of any
Security.
(b) Transfers of the U.S. Global Security shall be limited to
transfers of such U.S. Global Security in whole, but not in part, to the
Depositary, its successors or their respective nominees. Interests of beneficial
owners in the U.S. Global Security may be transferred in accordance with the
rules and procedures of the Depositary and the provisions of Section 3.7.
Beneficial owners may obtain U.S. Physical Securities in exchange for their
beneficial interests in the U.S. Global Security upon request in accordance with
the Depository's and the Registrar's procedures. In addition, U.S. Physical
Securities shall be transferred to all beneficial owners in exchange for their
beneficial interests in the U.S. Global Security if (i) the Depositary notifies
the Company that it is unwilling or unable to continue as Depositary for the
U.S. Global Security and a successor depositary is not appointed by the Company
within 90 days of such notice or (ii) an Event of Default has occurred and is
continuing and the Registrar has received a request from the Depositary.
(c) In connection with any transfer of a portion of the beneficial
interest in the U.S. Global Security to beneficial owners pursuant to subsection
(b) of this Section, the Registrar
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shall reflect on its books and records the date and a decrease in the
principal amount of the U.S. Global Security in an amount equal to the
principal amount of the beneficial interest in the U.S. Global Security to be
transferred, and the Company shall execute, and the Trustee shall
authenticate and deliver, one or more U.S. Physical Securities of like tenor
and amount.
(d) In connection with the transfer of the entire U.S. Global
Security to beneficial owners pursuant to subsection (b) of this Section, the
U.S. Global Security shall be deemed to be surrendered to the Trustee for
cancellation, and the Company shall execute, and the Trustee shall authenticate
and deliver, to each beneficial owner identified by the Depositary in exchange
for its beneficial interest in the U.S. Global Security, an equal aggregate
principal amount of U.S. Physical Securities of authorized denominations.
(e) Any U.S. Physical Security delivered in exchange for an interest
in the U.S. Global Security pursuant to subsection (c) or subsection (d) of this
Section shall, except as otherwise provided by paragraph (a)(i)(x) and paragraph
(c)(ii) of Section 3.7, bear the applicable legend regarding transfer
restrictions applicable to the U.S. Physical Security set forth in Section 2.2.
(f) The registered holder of the U.S. Global Security may grant
proxies and otherwise authorize any person, including Agent Members and persons
that may hold interests through Agent Members, to take any action which a Holder
is entitled to take under this Indenture or the Securities.
Section 3.7. Special Transfer Provisions.
Unless and until (i) an Initial Security is sold under an effective
Registration Statement, or (ii) an Initial Security is exchanged for an Exchange
Security in connection with an effective Registration Statement, in each case
pursuant to the Exchange and Registration Rights Agreement, the following
provisions shall apply:
(a) Transfers to Non-QIB Institutional Accredited Investors. The
following provisions shall apply with respect to the registration of any
proposed transfer of an Initial Security to any institutional "accredited
investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under
the Securities Act) which is not a qualified institutional buyer, as defined in
Rule 144A under the Securities Act (a "QIB"), excluding Non-U.S. Persons:
(i) The Registrar shall register the transfer of any Initial
Security, whether or not such Initial Security bears the Private Placement
Legend, if (x) the requested transfer is at least two years after the
later of the original issue date of the Initial Securities and the last
date on which
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such security was held by the Company or its Affiliates or (y) the
proposed transferee has delivered to the Registrar a certificate
substantially in the form of Exhibit C hereto.
(ii) If the proposed transferor is an Agent Member holding a
beneficial interest in the U.S. Global Security, upon receipt by the
Registrar of (x) the documents, if any, required by paragraph (i) and (y)
instructions given in accordance with the Depositary's and the Registrar's
procedures therefor, the Registrar shall reflect on its books and records
the date and a decrease in the principal amount of the U.S. Global
Security in an amount equal to the principal amount of the beneficial
interest in the U.S. Global Security to be transferred, and the Company
shall execute, and the Trustee shall authenticate and deliver, one or more
U.S. Physical Certificates of like tenor and amount.
(b) Transfers to QIBs. The following provisions shall apply with
respect to the registration of any proposed transfer of an Initial Security to a
QIB (excluding Non-U.S. Persons):
(i) If the Security to be transferred consists of U.S. Physical
Securities or Temporary Offshore Global Securities, the Registrar shall
register the transfer if such transfer is being made by a proposed
transferor who has checked the box provided for on the form of Initial
Security stating, or has otherwise advised the Company and the Registrar
in writing, that the sale has been made in compliance with the provisions
of Rule 144A to a transferee who has signed the certification provided for
on the form of Initial Security stating, or has otherwise advised the
Company and the Registrar in writing, that it is purchasing the Initial
Security for its own account or an account with respect to which it
exercises sole investment discretion and that it, or the person on whose
behalf it is acting with respect to any such account, is a QIB within the
meaning of Rule 144A, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as it has requested pursuant to Rule
144A or has determined not to request such information and that it is
aware that the transferor is relying upon its foregoing representations in
order to claim the exemption from registration provided by Rule 144A.
(ii) If the proposed transferee is an Agent Member, and the Initial
Security to be transferred consists of U.S. Physical Securities or
Temporary Offshore Physical Securities, upon receipt by the Registrar of
instructions given in accordance with the Depositary's and the Registrar's
procedures therefor, the Registrar shall reflect on its books and records
the date and an increase in the principal amount of the U.S. Global
Security in an amount equal to the principal amount of the U.S. Physical
Securities or Temporary Offshore Physical Securities, as the
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case may be, to be transferred, and the Trustee shall cancel the
Physical Security so transferred.
(c) Private Placement Legend. Upon the transfer, exchange or
replacement of Securities not bearing the Private Placement Legend, the
Registrar shall deliver Securities that do not bear the Private Placement
Legend. Upon the transfer, exchange or replacement of Securities bearing the
Private Placement Legend, the Registrar shall deliver only Securities that bear
the Private Placement Legend unless either (i) the circumstances contemplated by
paragraph (a)(i)(x) of this Section 3.7 exist or (ii) there is delivered to the
Registrar an Opinion of Counsel reasonably satisfactory to the Company and the
Trustee to the effect that neither such legend nor the related restrictions on
transfer are required in order to maintain compliance with the provisions of the
Securities Act.
(d) General. By its acceptance of any Security bearing the Private
Placement Legend, each Holder of such a Security acknowledges the restrictions
on transfer of such Security as set forth in this Indenture and in the Private
Placement Legend and agrees that it will transfer such Security only as provided
in this Indenture.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 3.6 or this Section 3.7. The
Company shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time upon the giving
of reasonable written notice to the Registrar.
Section 3.8. Mutilated, Destroyed, Lost and Stolen Securities.
If (i) any mutilated Security is surrendered to the Trustee, or (ii)
the Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Security, and there is delivered to the
Company and the Trustee such security or indemnity as may be required by them to
save each of them harmless, then, in the absence of notice to the Company or the
Trustee that such Security has been acquired by a bona fide purchaser, the
Company shall execute and upon Company Order the Trustee shall authenticate and
deliver, in exchange for any such mutilated Security or in lieu of any such
destroyed, lost or stolen Security, a new Security of like tenor and
principal amount, bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
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Upon the issuance of any new Security under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all benefits of this Indenture equally and proportionately with any
and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.
Section 3.9. Payment of Interest; Interest Rights Preserved.
Interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name such Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest at the
office or agency of the Company maintained for such purpose pursuant to Section
10.2; provided, however, that each installment of interest may at the Company's
option be paid by (i) mailing a check for such interest, payable to or upon the
written order of the Person entitled thereto pursuant to Section 3.10, to the
address of such Person as it appears in the Security Register or (ii) transfer
to an account maintained by the payee located in the United States.
Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date shall forthwith cease to
be payable to the Holder on the Regular Record Date by virtue of having been
such Holder, and such defaulted interest and (to the extent lawful) interest on
such defaulted interest at the rate borne by the Securities (such defaulted
interest and interest thereon herein collectively called "Defaulted
Interest") may be paid by the Company, at its election in each case, as
provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Securities (or their respective
Predecessor Securities) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest, which
shall be fixed in the following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be paid
on each Security and the date of the
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proposed payment, and at the same time the Company shall deposit with
the Trustee an amount of money equal to the aggregate amount proposed
to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the
date of the proposed payment, such money when deposited to be held in
trust for the benefit of the Persons entitled to such Defaulted
Interest as in this clause provided. Thereupon the Trustee shall fix a
Special Record Date for the payment of such Defaulted Interest which
shall be not more than 15 days and not less than 10 days prior to the
date of the proposed payment and not less than 10 days after the
receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Company of such Special Record Date,
and in the name and at the expense of the Company, shall cause notice
of the proposed payment of such Defaulted Interest and the Special
Record Date therefor to be given in the manner provided for in Section
1.6, not less than 10 days prior to such Special Record Date. Notice of
the proposed payment of such Defaulted Interest and the Special Record
Date therefor having been so given, such Defaulted Interest shall be
paid to the Persons in whose names the Securities (or their respective
Predecessor Securities) are registered at the close of business on such
Special Record Date and shall no longer be payable pursuant to the
following clause (2).
(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this clause,
such manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each
Security delivered under this Indenture upon registration of transfer of or
in exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.
Section 3.10. Persons Deemed Owners.
Prior to the due presentment of a Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name such Security is registered as the owner of
such Security for the purpose of receiving payment of principal of (and premium,
if any, on) and (subject to Sections 3.5 and 3.7) interest on such Security and
for all other purposes whatsoever, whether or not such Security be overdue, and
none of the Company, the Trustee or any agent of the Company or the Trustee
shall be affected by notice to the contrary.
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Section 3.11. Cancellation.
All Securities surrendered for payment, redemption, registration of
transfer or exchange shall, if surrendered to any Person other than the Trustee,
be delivered to the Trustee and shall be promptly canceled by it. The Company
may at any time deliver to the Trustee for cancellation any Securities
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and may deliver to the Trustee (or to any
other Person for delivery to the Trustee) for cancellation any Securities
previously authenticated hereunder which the Company has not issued and sold,
and all Securities so delivered shall be promptly canceled by the Trustee. If
the Company shall so acquire any of the Securities, however, such acquisition
shall not operate as a redemption or satisfaction of the indebtedness
represented by such Securities unless and until the same are surrendered to the
Trustee for cancellation. No Securities shall be authenticated in lieu of or in
exchange for any Securities canceled as provided in this Section, except as
expressly permitted by this Indenture. All canceled Securities held by the
Trustee shall be disposed of by the Trustee in accordance with its customary
procedures and certification of their disposal delivered to the Company unless
by Company Order the Company shall direct that canceled Securities be returned
to it.
Section 3.12. Computation of Interest.
Interest on the Securities shall be computed on the basis of a
360-day year of twelve 30-day months.
ARTICLE IV.
SATISFACTION AND DISCHARGE
Section 4.1. Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of further
effect (except as to surviving rights of registration of transfer or exchange of
Securities herein expressly provided for) and the Trustee, at the expense of the
Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture when
(1) either
(a) all Securities theretofore authenticated and delivered (other
than (i) Securities which have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 3.8 and (ii) Securities for whose
payment money has theretofore been deposited in trust with the Trustee or any
Paying Agent or segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust, as provided in Section
10.3) have been delivered to the Trustee for cancellation; or
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(b) all such Securities not theretofore delivered to the Trustee for
cancellation (i) have become due and payable, (ii) will become due and payable
at their Stated Maturity within one year, or (iii) are to be called for
redemption within one year under arrangements satisfactory to the Trustee for
the giving of notice of redemption by the Trustee in the name, and at the
expense, of the Company, and the Company or any Subsidiary Guarantor, in the
case of (i), (ii) or (iii) above, has irrevocably deposited or caused to be
deposited with the Trustee as trust funds in trust for the purpose an amount
sufficient to pay and discharge the entire indebtedness on such Securities not
theretofore delivered to the Trustee for cancellation, for principal (and
premium, if any) and interest to the date of such deposit (in the case of
Securities which have become due and payable) or to the Stated Maturity or
Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company and any Guarantor; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each satisfactory in form and
substance to the Trustee, which, taken together, state that all conditions
precedent herein provided for relating to the satisfaction and discharge
of this Indenture have been complied with and that such satisfaction and
discharge will not result in a breach or violation of, or constitute a
default under, this Indenture or any other agreement or instrument to
which the Company is a party or by which the Company is bound.
Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Company to the Trustee under Section 6.6 and, if money
shall have been deposited with the Trustee pursuant to subclause (b) of clause
(1) of this Section, the obligations of the Trustee under Section 4.2 and the
last paragraph of Section 10.3 shall survive.
Section 4.2. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 10.3, all
money deposited with the Trustee pursuant to Section 4.1 shall be held in trust
and applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for whose payment such money has been deposited with the
Trustee; but such money need not be segregated from other funds except to the
extent required by law.
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ARTICLE V.
REMEDIES
Section 5.1. Events of Default.
"Event of Default", wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be 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):
(1) default in the payment of the principal of or premium, if any,
when due and payable, on any of the Securities, whether or not prohibited
by Article Thirteen; or
(2) default in the payment of an installment of interest or
Liquidated Damages on any of the Securities, when due and payable, and
continuance of such default for a period of 30 days, whether or not
prohibited by Article Thirteen; or
(3) default in the performance or breach of the provisions of
Article Eight of this Indenture, the failure to make or consummate a
Change in Control Offer in accordance with the provisions of Section 10.15
or the failure to make or consummate an Excess Proceeds Offer in
accordance with the provisions of Section 10.17; or
(4) the Company or any Restricted Subsidiary shall fail to perform
or observe any other term, covenant or agreement contained in the
Securities or this Indenture (other than a default specified in (1), (2)
or (3) above) for a period of 45 days after written notice of such failure
requiring the Company to remedy the same shall have been given (x) to the
Company by the Trustee or (y) to the Company and the Trustee by the
Holders of 25% in aggregate principal amount of the Securities then
Outstanding; or
(5) default or defaults under one or more mortgages, bonds,
debentures or other evidences of Indebtedness under which the Company or
any of its Restricted Subsidiaries then has outstanding Indebtedness in
excess of $5,000,000, individually or in the aggregate, and either (a)
such Indebtedness is already due and payable in full or (b) such default
or defaults have resulted in the acceleration of the maturity of such
Indebtedness; or
(6) one or more final judgments, orders or decrees of any court or
regulatory or administrative agency of competent jurisdiction for the
payment of money in excess of $5,000,000, individually or in the
aggregate, shall be entered against the Company or any of its Restricted
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Subsidiaries or any of their properties and shall not be discharged or
fully bonded and there shall have been a period of 60 consecutive days
after the date on which any period for appeal has expired and during which
a stay of enforcement of such judgment, order or decree, shall not be in
effect; or
(7) (A) any holder of at least $5,000,000 in aggregate principal
amount of secured Indebtedness of the Company or of any of its Restricted
Subsidiaries as to which a default has occurred and is continuing shall
commence judicial proceedings (which proceedings shall remain unstayed for
5 Business Days) to foreclose upon assets of the Company or such
Restricted Subsidiary having an aggregate Fair Market Value, individually
or in the aggregate, in excess of $5,000,000 or shall have exercised any
right under applicable law or applicable security documents to take
ownership of any such assets in lieu of foreclosure or (B) any action
described in the foregoing clause (A) shall result in any court of
competent jurisdiction issuing any order for the seizure of such assets;
or
(8) the entry of a decree or order by a court having jurisdiction in
the premises adjudging the Company or any Significant Subsidiary or any
group of Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary, bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjustments or
composition of or in respect of the Company, any Significant Subsidiary or
any Subsidiary Guarantor or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary, under applicable
Bankruptcy Law, or appointing a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Company, any Significant
Subsidiary, or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary, or of any substantial part of its
property, or ordering the winding up or liquidation of its affairs, and
the continuance of any such decree or order unstayed and in effect for a
period of 60 consecutive days; or
(9) the institution by the Company or any Significant Subsidiary or
any group of Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary, of proceedings to be adjudicated bankrupt or
insolvent, or the consent by it 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, or the consent by it to the filing of any such petition or
to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Company or any Significant
Subsidiary or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary, of any
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substantial part of its property, or the making by it of assignment for
the benefit of creditors, or it is generally not paying its debts as they
become due; or
(10) except as otherwise permitted by this Indenture, any Subsidiary
Guarantee shall be held in any judicial proceeding to be unenforceable or
invalid or shall cease for any reason to be in full force and effect or
any Subsidiary Guarantor shall deny or disaffirm its obligations under its
Subsidiary Guarantee.
Section 5.2. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified in
Section 5.1(8) or 5.1(9)) occurs and is continuing, then the Trustee or the
Holders of not less than 25% in aggregate principal amount of the Outstanding
Securities may declare the principal of, premium, if any, and accrued interest
on all the Securities to be due and payable immediately, by a notice in writing
to the Company (and to the Trustee if given by Holders), and upon any such
declaration such principal amount shall become immediately due and payable. If
an Event of Default specified in Section 5.1(8) or 5.1(9) occurs and is
continuing, then the principal of, premium, if any, and accrued interest on all
the Securities shall ipso facto become and be immediately due and payable
without any declaration or other act on the part of the Trustee or any Holder.
At any time after a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter in this Article provided, the Holders of a majority
in principal amount of the Outstanding Securities, by written notice to the
Company and the Trustee, may rescind and annul such declaration and its
consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay,
(A) all overdue interest on all Outstanding Securities,
(B) all unpaid principal of (and premium, if any, on) any
Outstanding Securities which has become due otherwise than by such
declaration of acceleration, and interest on such unpaid principal
at the rate borne by the Securities,
(C) to the extent that payment of such interest is lawful,
interest on overdue interest at the rate borne by the Securities,
and
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(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel;
(2) such rescission would not conflict with any judgment or decree
of a court of competent jurisdiction; and
(3) all Events of Default, other than the non-payment of amounts of
principal of (or premium, if any, on) or interest on Securities which have
become due solely by such declaration of acceleration, have been cured or
waived as provided in Section 5.13.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
Notwithstanding the preceding paragraph, in the event of a
declaration of acceleration in respect of the Securities because of an Event of
Default specified in Section 5.1(5) or 5.1(7) shall have occurred and be
continuing, such declaration of acceleration shall be automatically annulled if
the Indebtedness that is the subject of such Event of Default has been
discharged or the holders thereof have rescinded their declaration of
acceleration or notification or action, as applicable, in respect of such
Indebtedness, and written notice of such discharge or rescission, as the case
may be, shall have been given to the Trustee by the Company or such Subsidiary
and countersigned by the holders of such Indebtedness or a trustee, fiduciary or
agent for such holders or the Person or Persons entitled to take the actions
described in Section 5.1(5)(b) or 5.1(7), within 30 days after such declaration
of acceleration in respect of the Securities, and no other Event of Default has
occurred during such 30-day period which has not been cured or waived during
such period.
Section 5.3. Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company covenants that if
(a) default is made in the payment of any installment of interest on
any Security when such interest becomes due and payable and such default
continues for a period of 30 days, or
(b) default is made in the payment of the principal of (or premium,
if any, on) any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to the Trustee for the benefit
of the Holders of such Securities, the whole amount then due and payable on such
Securities for principal (and premium, if any) and interest, and interest on any
overdue principal (and premium, if any) and, to the extent that payment of such
interest shall be legally enforceable, upon any overdue
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installment of interest, at the rate borne by the Securities, and, in
addition thereto, 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.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon the Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon the Securities, wherever
situated.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
Section 5.4. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal, premium, if any, or interest)
shall be entitled and empowered, by intervention in such proceeding or
otherwise,
(i) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest owing and unpaid in respect of the
Securities and to file such other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee (including any
claim for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel) and of the Holders
allowed in such judicial proceeding, and
(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
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and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
similar official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay the
Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 6.6.
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 Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
Section 5.5. Trustee May Enforce Claims Without Possession of
Securities.
All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name and as trustee of an express trust, and any recovery of judgment
shall, after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel and amounts
due the Trustee under Section 6.6, be for the ratable benefit of the Holders of
the Securities in respect of which such judgment has been recovered.
Section 5.6. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal (or premium,
if any) or interest, upon presentation of the Securities and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
6.6;
SECOND: To the payment of the amounts then due and unpaid for
principal of (and premium, if any, on) and interest on the Securities in
respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind, according
to the amounts due and payable on such Securities for principal (and
premium, if any) and interest, respectively; and
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THIRD: The balance, if any, to the Person or Persons entitled
thereto.
Section 5.7. Limitation on Suits.
No Holder of any Securities shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the Trustee
of a continuing Event of Default;
(2) the Holders of not less than 25% in aggregate principal amount
of the Outstanding Securities shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default in
its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 30 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 30-day period by the Holders of a
majority or more in aggregate principal amount of the Outstanding
Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
Section 5.8. Unconditional Right of Holders to Receive Principal,
Premium and Interest.
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment, as provided herein (including, if applicable, Article Twelve)
and in such Security of the principal of (and premium, if any, on) and
(subject to Section 3.9) interest on, such Security on the respective Stated
Maturities expressed in such Security (or, in the case of redemption, on the
Redemption Date) and to institute suit for the enforcement of any such
payment, and such rights shall not be impaired without the consent of such
Holder.
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Section 5.9. 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 proceeding, the Company, the Trustee the Holders shall be
restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
Section 5.10. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in the last paragraph
of Section 3.8, 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 5.11. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Security
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 5.12. Control by Holders.
The Holders of not less than a majority in aggregate principal
amount of the Outstanding Securities shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred on the Trustee, provided
that,
(1) such direction shall not be in conflict with any rule of law or
with this Indenture,
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction, and
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(3) the Trustee need not take any action which might subject it to
personal liability or be unjustly prejudicial to the Holders not
consenting.
Section 5.13. Waiver of Past Defaults.
The Holders of not less than a majority in aggregate principal
amount of the Outstanding Securities may on behalf of the Holders of all the
Securities waive any past default hereunder and its consequences, except a
default
(1) in respect of the payment of the principal of (or premium, if
any, on) or interest on any Security, or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each outstanding Security affected.
Upon any such waiver, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or Event of Default or impair any right consequent thereon.
Section 5.14. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law wherever
enacted, now or at any time hereafter in force which may affect the covenants or
the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE VI.
THE TRUSTEE
Section 6.1. Notice of Defaults.
If any Default or Event of Default occurs and is continuing and is
known to the Trustee, the Trustee shall transmit in the manner and to the extent
provided in TIA Section 313(c), notice of such Default within 30 days after the
occurrence thereof or, if later, when known to the Trustee; provided, however,
that, except in the case of a Default or an Event of Default in the payment of
the principal of (or premium, if any) or interest on any Security, the Trustee
shall be protected in withholding such notice if and so long as the board of
directors, the executive committee or a trust committee of directors and/or
Responsible Officers of the Trustee in good
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faith determines that the withholding of such notice is in the interest of
the Holders.
Section 6.2. Certain Rights of Trustee.
Subject to the provisions of TIA Sections 315(a) through 315(d):
(1) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented
by the proper party or parties;
(2) any request or direction of the Company mentioned herein shall
be sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a
Board Resolution;
(3) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an officers' Certificate;
(4) the Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(5) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture, unless such
Holders shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which might be incurred by it
in compliance with such request or direction;
(6) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and
premises of the Company, personally or by agent or attorney;
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(7) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder; and
(8) the Trustee shall not be liable for any action taken, suffered
or omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this
Indenture.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
Section 6.3. Trustee Not Responsible for Recitals or Issuance of
Securities.
The recitals contained herein and in the Securities, except for the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Securities, except that the Trustee represents that it is
duly authorized to execute and deliver this Indenture, authenticate the
Securities and perform its obligations hereunder and except, upon the
effectiveness of a Registration Statement, that the statements made by it in
a Statement of Eligibility on Form T-1 supplied to the Company are true and
accurate, subject to the qualifications set forth therein. The Trustee shall
not be accountable for the use or application by the Company of Securities or
the proceeds thereof.
Section 6.4. May Hold Securities.
The Trustee, any Paying Agent, any Registrar or any other agent of
the Company or of the Trustee, in its individual or any other capacity, may
become the owner or pledgee of Securities and, subject to TIA Sections 310(b)
and 311, may otherwise deal with the Company with the same rights it would have
if it were not Trustee, Paying Agent, Registrar or such other agent.
Section 6.5. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed in writing with the Company.
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Section 6.6. Compensation and Reimbursement.
The Company agrees:
(1) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee
of an express trust):
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses
and disbursements of its agents and counsel); and
(3) to indemnify the Trustee for, and to hold it harmless against,
any loss, liability or expense incurred without gross negligence or bad
faith on its part, arising out of or in connection with the acceptance or
administration of this trust, including the costs and expenses of
defending itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder.
The obligations of the Company under this Section to compensate the
Trustee, to pay or reimburse the Trustee for expenses, disbursements and
advances and to indemnify and hold harmless the Trustee shall constitute
additional indebtedness hereunder and shall survive the satisfaction and
discharge of this Indenture. As security for the performance of such obligations
of the Company, the Trustee shall have a claim prior to the Securities upon all
property and funds held or collected by the Trustee as such, except funds held
in trust for the payment of principal of (and premium, if any, on) or interest
on particular Securities previously called for redemption.
When the Trustee incurs expenses or renders services in connection
with an Event of Default specified in Section 5.1(8) or Section 5.1(9), the
expenses and the compensation for the services are intended to constitute
expenses of administration under any bankruptcy law.
Section 6.7. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be
eligible to act as Trustee under TIA Section 310(a)(1) and shall have a combined
capital and surplus of at least $50,000,000. If such corporation publishes
reports of condition at least annually, pursuant to law or to the requirements
of federal, state, territorial or District of Columbia supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such corporation shall be
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deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time the Trustee shall cease to
be eligible in accordance with the provisions of this Section, it shall
resign immediately in the manner and with the effect hereinafter specified in
this Article.
Section 6.8. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 6.9.
(b) The Trustee may resign at any time by giving written notice
thereof to the Company. If the instrument of acceptance by a successor Trustee
required by Section 6.9 shall not have been delivered to the Trustee within 30
days after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of
not less than a majority in principal amount of the outstanding Securities,
delivered to the Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with the provisions of TIA
Section 310(b) after written request therefor by the Company or by any
Holder who has been a bona fide Holder of a Security for at least six
months, except when the Trustee's duty to resign is stayed in accordance
with the provisions of TIA Section 310(b), or
(2) the Trustee shall cease to be eligible under Section 6.7 and
shall fail to resign after written request therefor by the Company or by
any Holder who has been a bona fide Holder of a Security for at least six
months, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company, by a Board Resolution, may remove the
Trustee, or (ii) subject to TIA Section 315(e), any Holder who has been a bona
fide Holder of a Security for at least six months may, on behalf of itself and
all others similarly situated, petition any court of competent jurisdiction
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for the removal of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company, by a Board Resolution, shall promptly appoint a successor Trustee. If,
within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding Securities
delivered to the Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment, become the
successor Trustee and supersede the successor Trustee appointed by the Company.
If no successor Trustee shall have been so appointed by the Company or the
Holders and accepted appointment in the manner hereinafter provided subject to
TIA Section 315(e), any Holder who has been a bona fide Holder of a Security for
at least six months may, on behalf of itself and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a
successor Trustee.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee to the
Holders of Securities in the manner provided for in Section 1.7. Each notice
shall include the name of the successor Trustee and the address of its Corporate
Trust Office.
Section 6.9. Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee; but, on request of the
Company or the successor Trustee, such retiring Trustee shall, upon payment of
its charges, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee and shall duly
assign, transfer and deliver to such successor Trustee all property and money
held by such retiring Trustee hereunder subject to the retiring Trustee's rights
as provided under the last sentence of Section 6.6. Upon request of any such
successor Trustee, the Company shall execute any and all instruments for more
fully and certainly vesting in and confirming to such successor Trustee all such
rights, powers and trusts.
No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article.
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Section 6.10. Merger, Conversion, Consolidation or Succession to
Business.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may
adopt such authentication and deliver the Securities so authenticated with
the same effect as if such successor Trustee had itself authenticated such
Securities; and in case at that time any of the Securities shall not have
been authenticated, any successor Trustee may authenticate such Securities
either in the name of any predecessor hereunder or in the name of the
successor Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Securities or in this Indenture
provided that the certificate of the Trustee shall have; provided, however,
that the right to adopt the certificate of authentication of any predecessor
Trustee or to authenticate Securities in the name of any predecessor Trustee
shall apply only to its successor or successors by merger, conversion or
consolidation.
ARTICLE VII.
HOLDERS' LISTS AND REPORTS BY TRUSTEE
Section 7.1. Disclosure of Names and Addresses of Holders.
Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that none of the Company or the Trustee
or any agent of either of them shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the Holders
in accordance with TIA Section 312, regardless of the source from which such
information was derived, and that the Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made under TIA Section
312(b).
The Company will furnish or cause to be furnished to the Trustee:
(a) semi-annually, not more than 15 days after each Regular Record
Date, a list, in such form as the Trustee may reasonably
require, of the names and
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addresses of the Holders of Securities as of such Regular
Record Date, and
(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such
request, a list of similar form and content as of a date not
more than 15 days prior to the time such list is furnished,
excluding from any such list names and addresses received by the Trustee in its
capacity as Registrar.
Section 7.2. Reports by Trustee.
Within 60 days after May 15 of each year commencing with the first
May 15 after the first issuance of Securities, the Trustee shall transmit to the
Holders, in the manner and to the extent provided in TIA Section 313(c), a brief
report dated as of such May 15 if required by TIA Section 313(a).
ARTICLE VIII.
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 8.1. Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not, in a single transaction or a series of
related transactions, directly or indirectly, consolidate or merge with or into
any other Person or, sell, assign, convey, transfer or otherwise dispose of all
or substantially all of its properties and assets as an entirety to any other
Person or group of affiliated Persons, or permit any of its Restricted
Subsidiaries to enter into any such transaction or transactions, if such
transaction or transactions, in the aggregate, would effectively result in a
sale, assignment, conveyance, transfer or disposition of all or substantially
all of the properties and assets of the Company and those of its Restricted
Subsidiaries on a consolidated basis to any other Person or group of affiliated
Persons, unless:
(a) either (i) the Company shall be the continuing corporation or
(ii) the Person (if other than the Company) formed by such consolidation or into
which the Company or such Restricted Subsidiary is merged or the Person which
acquires by sale, assignment, conveyance, transfer or disposition of all or
substantially all of the properties and assets of the Company and its Restricted
Subsidiaries on a consolidated basis (the "Surviving Entity") shall be a
corporation duly organized and validly existing under the laws of the United
States of America, any state thereof or the District of Columbia and such Person
assumes by a supplemental indenture in a form reasonably satisfactory to the
Trustee all the obligations of the Company under the Securities and this
Indenture and by an agreement in form reasonably satisfactory to the Trustee all
the obligations
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of the Company under the Exchange and Registration Rights Agreement, and in
each case, this Indenture shall remain in full force and effect;
(b) immediately after giving effect to such transaction or
transactions, no Default or Event of Default shall have occurred and be
continuing;
(c) immediately before and immediately after giving effect to such
transaction or transactions the Company (or the Surviving Entity if the Company
is not the continuing obligor under this Indenture) (i) will have a Consolidated
Net Worth immediately after the transaction equal to or greater than the
Consolidated Net Worth of the Company immediately preceding the transaction and
(ii) would be permitted to incur $1.00 of additional Indebtedness (other than
Permitted Indebtedness) under Section 10.10 if the ratio referred to therein
were "2.0:1.0"; and
(d) in connection with any consolidation, merger, transfer, sale,
assignment, conveyance or other disposition contemplated hereby, the Company or
the Surviving Entity, as the case may be, shall deliver, or cause to be
delivered, to the Trustee, in form and substance reasonably satisfactory to the
Trustee, an Officers Certificate stating that such consolidation, merger,
transfer, sale, assignment, conveyance or other disposition and the supplemental
indenture and any other agreements in respect thereof, if any, comply with the
requirements under this Indenture and that all conditions precedent herein
provided for relating to such transaction or series of transactions have been
complied with, and an Opinion of Counsel stating that the requirements of this
Section 8.1 have been complied with.
In addition, the Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, lease all or substantially
all of its properties or assets, in one or more related transactions, to any
other Person.
Notwithstanding the foregoing, the Company may not, in a single
transaction or a series of related transactions, directly or indirectly,
consolidate or merge with or into IHF Holdings, Inc. or ICON Fitness
Corporation, or sell, assign, convey, transfer or otherwise dispose of all or
substantially all of its properties and assets as an entirety to IHF Holdings,
Inc. or ICON Fitness Corporation, or permit any of its Restricted Subsidiaries
to enter into any such transaction or transactions with IHF Holdings, Inc. or
ICON Fitness Corporation, unless all of the Indebtedness of IHF Holdings, Inc.
or ICON Fitness Corporation is unsecured and is expressly subordinate in right
of payment to the Securities.
Notwithstanding the foregoing, the Company or any Wholly Owned
Restricted Subsidiary may consolidate, combine or
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amalgamate with or merge with or into any Wholly Owned Restricted Subsidiary
or sell, assign, convey, lease, transfer or otherwise dispose of all or
substantially all of its properties and assets to any Wholly Owned Restricted
Subsidiary.
Section 8.2. Successor Substituted.
Upon any consolidation of the Company with or merger of the Company
with or into any other corporation or any sale, assignment, transfer, conveyance
or other disposition of the properties and assets of the Company substantially
as an entirety to any Person in accordance with Section 8.1, the Surviving
Entity formed by such consolidation or into which the Company is merged or to
which such sale, assignment, transfer, 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 "Company" shall refer instead to
the Surviving Entity and not to the Company), and may exercise every right and
power of, the Company under this Indenture with the same effect as if such
Surviving Entity had been named as the Company herein, provided, however, that
the predecessor Company shall not be relieved from the obligation to pay the
principal of and interest on the Securities except in the case of a sale,
conveyance or transfer of the Company's assets that meets the requirements of
Section 8.1 hereof.
For all purposes of this Indenture and the Securities (including the
provision of this Article Eight and Section 10.10, Section 10.11 and Section
10.14), Subsidiaries of any Surviving Entity will, upon such transaction or
series of related transactions, become Restricted Subsidiaries or Unrestricted
Subsidiaries and all Indebtedness, and all Liens on property or assets, of the
Company and the Restricted Subsidiaries in existence immediately prior to such
transaction or series of related transactions will be deemed to have been
incurred upon such transaction or series of related transactions.
Section 8.3. Securities to Be Secured in Certain Events.
If, upon any such consolidation of the Company with or merger of the
Company into any other corporation, or upon any sale, assignment, transfer,
conveyance or other transfer of the property or assets of the Company
substantially as an entirety to any other Person, any property or assets of the
Company would thereupon become subject to any Lien, then unless such Lien could
be created pursuant to Section 10.14 without equally and ratably securing the
Securities, the Company, prior to or simultaneously with such consolidation,
merger, sale, assignment, transfer, conveyance or other transfer, will as to
such property or assets, secure the Outstanding Securities equally and ratably
with (or prior to) the Indebtedness which upon such consolidation, merger, sale,
assignment, transfer, conveyance or other transfer is to
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become secured as to such property or assets by such Lien, or will cause such
Securities to be so secured.
ARTICLE IX.
SUPPLEMENTAL INDENTURES
Section 9.1. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by
a Board of Resolution, and the Trustee at any time and from time to time, may
enter into one or more indentures supplemental hereto, in form satisfactory to
the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company
contained herein and in the Securities; or
(2) to add to the covenants of the Company for the benefit of the
Holders, to make any change that otherwise would provide additional rights
or benefits to the Holders or to surrender any right or power herein
conferred upon the Company; or
(3) to add any additional Events of Default; or
(4) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee pursuant to the requirements of Section
6.9; or
(5) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to
make any other provisions with respect to matters or questions arising
under this Indenture; provided that, such action shall not adversely
affect the interests of the Holders in any material respect.
Section 9.2. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in
principal amount of the Outstanding Securities, by Act of said Holders delivered
to the Company and the Trustee, the Company, when authorized by a Board
Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders under this Indenture;
provided, however, that, no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Security affected thereby:
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(1) change the Stated Maturity of the principal of, or any
installment of interest on, any Security, or reduce the principal amount
thereof or the rate of interest thereon or any premium payable upon the
redemption thereof, or change the coin or currency in which any Security
or any premium or the interest thereon is payable (except with respect to
liquidated damages as provided in the Exchange and Registration Rights
Agreement), or impair the right to institute suit for the enforcement of
any such payment after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date); or
(2) reduce the percentage in principal amount of the outstanding
Securities, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for
any waiver of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences provided for in this
Indenture, or
(3) modify any of the provisions of this Section or Sections 5.13
and 10.23, except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or waived
without the consent of the Holder of each Outstanding Security affected
thereby; or
(4) except as otherwise permitted under Section 8.1, consent to the
assignment or transfer by the Company of any of its rights and obligations
under this Indenture; or
(5) make any change in the provisions of Article Thirteen that
adversely affects the rights of any Holder.
It shall not be necessary for any Act of Holders under this Section
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
Section 9.3. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and shall be fully protected in relying upon, an Opinion of Counsel stating that
the execution of such supplemental indenture is authorized or permitted by
this Indenture. The Trustee may, but shall not be obligated to, enter into
any such supplemental indenture which affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise.
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Section 9.4. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
Section 9.5. Conformity with Trust Indenture Act.
Each supplemental indenture executed pursuant to the Article shall
conform to the requirements of the Trust Indenture Act as in effect on the date
of such supplemental indenture.
Section 9.6. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for
Outstanding Securities.
Section 9.7. Notice of Supplemental Indentures.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of Section 9.2, the Company
shall give notice thereof to the Holders of each Outstanding Security affected,
in the manner provided for in Section 1.7, setting forth in general terms the
substance of such supplemental indenture.
ARTICLE X.
COVENANTS
Section 10.1. Payment of Principal, Premium, if any, and Interest.
The Company covenants and agrees for the benefit of the Holders that
it will duly and punctually pay the principal of (and premium, if any, on) and
interest on the Securities in accordance with the terms of the Securities and
this Indenture. The Company shall pay all Liquidate Damages, if any, in the
same manner on the dates and in the amounts set forth in the Registration
Rights Agreement and shall inform the Trustee of any such payments of
Liquidated Damages pursuant thereto.
The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue
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principal at the rate equal to 2% per annum in excess of the then applicable
interest rate on the Securities to the extent lawful; it shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law)
on overdue installments of interest and Liquidated Damages (without regard to
any applicable grace period) at the same rate to the extent lawful.
Section 10.2. Maintenance of Office or Agency.
The Company will maintain in the Borough of Manhattan, the City of
New York, an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee, Registrar or co-registrar) where Securities may be
presented or surrendered for payment, where Securities may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Company in respect of the Securities and this Indenture may be served. The
Company will give prompt written notice to the Trustee of the location, and any
change in the location of any such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee, and the Company hereby appoints the Trustee as its agent to receive all
such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind any such designation;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, the City of New York, for such purposes. The Company will
give prompt written notice to the Trustee of any such designation or rescission
and any change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.3.
Section 10.3. Money for Security Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent, it
will, on or before each due date of the principal of (and premium, if any, on)
or interest on any of the Securities, segregate and hold in trust for the
benefit of the Persons entitled thereto a sum sufficient to pay the principal
(and premium, if any) or interest so becoming due until such sums shall be paid
to such Persons or otherwise disposed of as herein provided and will promptly
notify the Trustee of its action or failure so to act.
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Whenever the Company shall have one or more Paying Agents for the
Securities, it will, on or before each due date of the principal of (and
premium, if any, on) or interest on, any Securities, deposit with a Paying Agent
a sum sufficient to pay the principal (and premium, if any) or interest so
becoming due, such sum to be held in trust for the benefit of the Persons
entitled to such principal, premium or interest, and (unless such Paying Agent
is the Trustee) the Company will promptly notify the Trustee of such action or
any failure so to act.
The Company will cause each Paying Agent (other than the Trustee) to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:
(1) hold all sums held by it for the payment of the principal of
(and premium, if any, on) or interest on Securities in trust for the
benefit of the Persons entitled thereto until such sums shall be paid to
such Persons or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any
other obligor upon the Securities) in the making of any payment of
principal (and premium, if any) or interest; and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company
or such Paying Agent; and, upon such payment by any Paying Agent to the
Trustee, such Paying Agent shall be released from all further liability with
respect to such sums.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of (and premium,
if any, on) or interest on any Security and remaining unclaimed for four years
after such principal (and premium, if any) or interest has become due and
payable shall be paid to the Company on Company Request, or (if then held by the
Company) shall be discharged from such trust; and the Holder of such Security
shall thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make
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any such repayment, may at the expense of the Company cause to be published
once, in a newspaper published in the English language, customarily published
on each Business Day and of general circulation in the Borough of Manhattan,
The City of New York, and in each Place of Payment, notice that such money
remains unclaimed and that, after a date specified therein, which shall not
be less than 30 days from the date of such publication, any unclaimed balance
of such money then remaining will be repaid to the Company.
Section 10.4. Corporate Existence.
Subject to Article Eight, the Company will do or cause to be done
all things necessary to preserve and keep in full force and effect the
corporate, partnership or other existence, rights (charter and statutory),
licenses and franchises of the Company and each of its Restricted Subsidiaries,
in accordance with the respective organizational documents (as the same may be
amended from time to time) of the Company and each of its Restricted
Subsidiaries; provided, however, that, the Company shall not be required to
preserve any such right, license or franchise if the Board of Directors shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Company and its Restricted Subsidiaries, taken as a whole
and that the loss thereof is not adverse in any material respect to the Holders;
provided, further, that the foregoing will not prohibit a sale, transfer or
conveyance of a Subsidiary of the Company or any of its assets in compliance
with the terms of Section 10.17 of this Indenture.
Section 10.5. Payment of Taxes and Other Claims.
The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (a) all taxes, assessments and
governmental charges levied or imposed upon the Company or any of its
Subsidiaries or upon the income, profits or property of the Company or any of
its Subsidiaries and (b) all lawful claims for labor, materials and supplies,
which, if unpaid, might by law become a Lien upon the property of the Company or
any Subsidiary; provided, however, that, the Company shall not be required to
pay or discharge or cause to be paid or discharged any such tax, assessment,
charge or claim whose amount, applicability or validity is being contested in
good faith by appropriate proceedings promptly instituted and diligently
concluded and shall not have been finally determined or the period within which
such proceedings may be initiated shall not have expired.
Section 10.6. Maintenance of Properties.
The Company will cause all properties owned by the Company or any
Restricted Subsidiary, or used, useful or held for use in the conduct of its
business or the business of any Restricted Subsidiaries to be maintained and
kept in good
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condition, repair and working order and supplied with all necessary equipment
and will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the Company
may be necessary so that the business carried on in connection therewith may
be properly and advantageously conducted at all times; provided, however,
that, nothing in this Section shall prevent the Company or any Restricted
Subsidiary from discontinuing the maintenance of any of such properties, if
such discontinuance or disposal is, in the judgment of the Company, desirable
in the conduct of its business or the business of any of its Restricted
Subsidiaries and not disadvantageous in any material respect to the Holders.
Section 10.7. Insurance.
The Company will at all times keep and will keep all of its and all
of its Restricted Subsidiaries' properties which are of an insurable nature
insured with insurers, believed by the Company to be responsible, against loss
or damage to the extent that property of similar character is usually so insured
by corporations similarly situated and owning like properties.
Section 10.8. Statement by Officers as to Default.
(a) The Company will deliver to the Trustee, within 120 days after
the end of each fiscal year and within 45 days after the end of each fiscal
quarter of the Company, a brief certificate from the principal executive
officer, principal financial officer or principal accounting officer stating
that a review of the activities of the Company and its Subsidiaries during
the preceding fiscal year or quarter, as the case may be, has been made under
the supervision of the signing officer with a view to determining whether the
Company and its Subsidiaries has kept, observed, performed and fulfilled its
obligations under this Indenture, and further stating, as to each such
officer signing such certificate, that to the best of his or her knowledge
the Company has kept, observed, performed and fulfilled each and every
covenant contained in this Indenture (or, if a Default or Event of Default
shall have occurred, describing all such Defaults or Events of Default of
which he or she may have knowledge and what action the Company is taking or
proposes to take with respect thereto) and that to the best of his or her
knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the
Securities is prohibited or if such event has occurred, a description of the
event and what action the Company is taking or proposes to take with respect
thereto. For purposes of this Section 10.8(a), such compliance shall be
determined without regard to any period of grace or requirement of notice
under this Indenture.
(b) Whenever any Default or Event of Default has occurred under this
Indenture, or if the trustee for or the holder of any other evidence of
Indebtedness of the Company or
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any Restricted Subsidiary gives any notice or takes any other action with
respect to a claimed default (other than with respect to Indebtedness in the
principal amount of less than $5,000,000), the Company shall deliver to the
Trustee by registered or certified mail or by telegram, telex or facsimile
transmission an Officers' Certificate specifying such event, notice or other
action forthwith upon any Officer becoming aware of such event, notice or
other action, but in no event later than 10 days of its occurrence.
Section 10.9. Provision of Financial Statements.
Whether or not the Company is subject to Section 13(a) or 15(d) of
the Exchange Act, the Company will prepare and, unless the Commission will not
accept such filing, file with the Commission the annual reports, quarterly
reports and other documents which the Company would have been required to file
with the Commission pursuant to such Section 13(a) or 15(d) if the Company were
so subject, such documents to be filed with the Commission, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and, with respect to the annual information only, a report thereon
by the Company's certified independent accountants, on or prior to the
respective dates (the "Required Filing Dates") by which the Company would
have been required to file such documents if the Company were so subject. The
Company will also in any event (x) within 15 days of each Required Filing
Date (i) transmit by mail to all Holders, as their names and addresses appear
in the Security Register, and to such other Persons as may reasonably
request, without cost to such Holders or other Persons and (ii) file with the
Trustee copies of the annual reports, quarterly reports and other documents
which the Company has filed with the Commission or would have been required
to file with the Commission pursuant to Section 13(a) or 15(d) of the
Exchange Act if the Company were subject to such Section and (y) if filing
such documents by the Company with the Commission is not permitted under the
Exchange Act, promptly upon written request of any Holder or prospective
Holder, supply copies of such documents to any Holder or prospective Holder
or other Person at the Company's cost. If any Guarantor's financial
statements would be required to be included in the financial statements filed
or delivered pursuant hereto if the Company were subject to Section 13(a) or
15(d) of the Exchange Act, the Company shall include such Person's financial
statements in any filing or delivery pursuant hereto.
For so long as any Securities remain outstanding, the Company and
the Subsidiary Guarantors shall furnish to the Holders and to securities
analysts and prospective investors, upon their request, the information required
to be delivered pursuant to Rule 144(d)(4) under the Securities Act.
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Section 10.10. Limitation on Indebtedness and Issuance of Preferred
Stock.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, "incur"), any Indebtedness (including Acquired
Indebtedness), other than Permitted Indebtedness, and the Company will not issue
any Redeemable Stock and will not permit any of its Restricted Subsidiaries to
issue any shares of Preferred Stock; provided, however, that, the Company and
any Subsidiary Guarantor may incur Indebtedness (including Acquired
Indebtedness) or issue Redeemable Stock, and any Subsidiary Guarantor may issue
Preferred Stock, if (I) the Company's Consolidated Fixed Charge Coverage Ratio
for the four full fiscal quarters for which internal financial statements are
available immediately preceding the date on which such additional Indebtedness
is incurred or Preferred Stock is issued taken as one period (and after giving
pro forma effect to (i) the incurrence of such Indebtedness or issuance of such
Redeemable Stock or Preferred Stock and (if applicable) the application of
the net proceeds therefrom, including the refinancing of other Indebtedness
or Redeemable Stock or Preferred Stock, as if such Indebtedness was incurred
or Redeemable Stock or Preferred Stock was issued, and the application of
such proceeds occurred, on the first day of such four-quarter period; (ii)
the incurrence, repayment or retirement of any other Indebtedness by the
Company and of its Subsidiary Guarantors, or issuance or redemption of
Redeemable Stock or Preferred Stock, since the first day of such four-quarter
period, as if such Indebtedness was incurred, repaid or retired, Redeemable
Stock or Preferred Stock was issued or redeemed, on the first day of such
four-quarter period; and (iii) notwithstanding clause (iii) of the definition
of Consolidated Adjusted Net Income, any acquisition or disposition by the
Company or any Restricted Subsidiary of any company, entity or any business,
in each case since the first day of such four-quarter period, as if such
acquisition or disposition had occurred on the first day of such four-quarter
period) would have been at least equal to (A) 2.25:1.0 for the period from
the date of this Indenture through January 31, 2001 and (B) 2.50:1.0 for all
periods thereafter; (II) such Indebtedness is unsecured and is expressly
subordinate in right of payment to the Securities and (III) the Weighted
Average Life to Maturity of such Indebtedness or Redeemable Stock is greater
than the remaining Weighted Average Life to Maturity of the Securities.
Notwithstanding the foregoing, the Company shall not, and shall not
permit any Subsidiary to incur Indebtedness or issue any shares of Preferred
Stock of such Subsidiary, directly or indirectly, in exchange for or upon the
conversion of any Indebtedness of IHF Holdings, Inc. or ICON Fitness
Corporation, unless such Indebtedness is unsecured and is expressly subordinate
in right of payment to the Securities.
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Section 10.11. Limitation on Restricted Payments.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly:
(i) declare or pay any dividend or make any other payment or
distribution on account of the Company's or any of its Restricted
Subsidiaries' Capital Stock (including without limitation, any payment
in connection with any merger or consolidation involving the Company or
any of its Restricted Subsidiaries) or to the direct or indirect
holders of, any shares of Capital Stock of the Company or any
Restricted Subsidiary (other than dividends or distributions payable
solely in shares of Capital Stock of the Company or in options,
warrants or other rights to purchase such Capital Stock but excluding
dividends or distributions payable in Redeemable Capital Stock or in
options, warrants or other rights to purchase Redeemable Capital Stock
and other than to the Company or a Restricted Subsidiary of the
Company);
(ii) purchase, redeem or otherwise acquire or retire for value,
directly or indirectly, any shares of the Capital Stock of the Company or
any direct or indirect parent of the Company or any Restricted Subsidiary
of the Company or any Affiliate thereof or any options, warrants or other
rights to acquire such Capital Stock, held by a Person other than the
Company or any of its Restricted Subsidiaries (other than such a purchase,
redemption or acquisition of Capital Stock of a Restricted Subsidiary as a
result of which such Restricted Subsidiary becomes a Wholly Owned
Restricted Subsidiary);
(iii) make any payment on or with respect to, or repurchase, redeem,
defease or otherwise acquire or retire for value, prior to a scheduled
principal payment, interest payment, scheduled sinking fund payment or
maturity, any Subordinated Indebtedness or Indebtedness that ranks pari
passu with the Securities;
(iv) make any payment on or with respect to, or purchase or
repurchase, redeem, defease or otherwise acquire or retire for value any
Indebtedness of IHF Holdings, Inc. or ICON Fitness Corporation;
(v) incur any guarantee of Indebtedness of any Affiliate of the
Company or any Restricted Subsidiary of the Company (other than with
respect to (1) guarantees of Indebtedness of any Restricted Subsidiary by
the Company or (2) guarantees of Indebtedness of the Company or any
Restricted Subsidiary by any Restricted Subsidiary); or
(vi) make any Investment (other than any Permitted Investment) in
any Person
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(all such payments described in clauses (i) through (vi) above and not excepted
therefrom are collectively referred to herein as "Restricted Payments"), unless
at the time of and immediately after giving effect to the proposed Restricted
Payment (the amount of any such Restricted Payment, if other than cash, as
determined in good faith by the Board of Directors of the Company, whose
determination shall be conclusive and evidenced by a Board Resolution delivered
to the Trustee), (1) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; (2) the Company could, at
the time of such Restricted Payment and after giving pro forma effect
thereto as if such Restricted Payment had been made at the beginning of the
applicable four-quarter period, have been permitted to incur at least $1.00 of
additional Indebtedness (other than Permitted Indebtedness) under Section 10.10;
and (3) the aggregate amount of all such Restricted Payments declared or made
after the date of this Indenture shall not exceed the sum of: (A) 50% of the
aggregate cumulative Consolidated Adjusted Net Income of the Company accrued on
a cumulative basis during the period beginning on the first day of the month
commencing immediately after the date of this Indenture and ending on the last
day of the Company's last fiscal quarter ending prior to the date of such
proposed Restricted Payment (or, if such aggregate cumulative Consolidated
Adjusted Net Income shall be a loss, minus 100% of such loss); (B) the aggregate
net cash proceeds received after the date of this Indenture by the Company from
the issuance or sale (other than to any of its Restricted Subsidiaries) of
shares of Capital Stock of the Company (other than Redeemable Capital Stock) or
any options, warrants or rights to purchase shares of such Capital Stock; (C)
the aggregate net cash proceeds received after the date of this Indenture by the
Company from the issuance or sale of debt securities (other than to any
Restricted Subsidiary) that have been converted into or exchanged for Capital
Stock of the Company (other than Redeemable Capital Stock) to the extent such
debt securities were originally sold for cash, together with the aggregate of
any additional net cash proceeds received by the Company at the time of such
conversion or exchange; (D) the aggregate net cash proceeds received after the
date of this Indenture by the Company as capital contributions (other than from
any of its Restricted Subsidiaries); (E) to the extent that any Investment
(other than a Permitted Investment) that was made after the date of this
Indenture is sold for cash or otherwise liquidated or repaid for cash, the
lesser of (x) the cash return of capital with respect to such Restricted
Investment (less the cost of disposition, if any) and (y) the initial amount of
such Restricted Investment; (F) to the extent that any Unrestricted Subsidiary
is redesignated as a Restricted Subsidiary after the date of this Indenture in
accordance with Section 10.22, the lesser of (x) the net book value of the
Company's Investment in the Unrestricted Subsidiary at the time of redesignation
and (y) the Fair Market Value of the Company's Investment in such Unrestricted
Subsidiary as of the date of such redesignation; and (G) $2 million.
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(b) Notwithstanding paragraph (a) above, the Company and its
Restricted Subsidiaries may take the following actions so long as no Default or
Event of Default shall have occurred and be continuing or would be caused
thereby:
(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at such date of declaration such declaration
complied with the provisions of paragraph (a) above (and such payment
shall be deemed to have been paid on such date of declaration for
purposes of the calculation required by said paragraph (a));
(ii) the purchase, redemption or other acquisition or retirement of
any shares of Capital Stock of the Company in exchange for or out of the
net cash proceeds of, a substantially concurrent issuance and sale (other
than to a Subsidiary of the Company) of shares of Capital Stock (other
than Redeemable Capital Stock) of the Company, provided that the amount of
any such net proceeds that are utilized for any such purchase, redemption
or other acquisition or retirement shall be excluded from clause
(a)(3)(B), (a)(3)(C) and (a)(3)(D) of the preceding paragraph;
(iii) any purchase, redemption, defeasance or other acquisition or
retirement for value of any Subordinated Indebtedness (other than
Redeemable Capital Stock) in exchange for, or out of the net cash proceeds
of, a substantially concurrent issuance and sale (other than to any
Subsidiary of the Company) of any Capital Stock (other than Redeemable
Capital Stock) of the Company, provided that the amount of any such net
proceeds that are utilized for any such purchase, redemption or other
acquisition or retirement shall be excluded from clause (a)(3)(B),
(a)(3)(C) and (a)(3)(D) of the preceding paragraph;
(iv) payments to Holdings, to the extent actually used by Holdings
within 180 days of such payment for the payment of taxes pursuant to the
Tax Sharing Agreement as the same may be amended from time to time in a
manner that is not materially adverse to the Company;
(v) payments to Holdings to pay its reasonable operating and
administrative expenses including, without limitation, directors' fees,
legal and audit expenses, Commission compliance expenses and corporate
franchise and other taxes, in an amount not to exceed in the aggregate
$375,000 per year;
(vi) the repurchase of Capital Stock of Holdings or options,
warrants or rights to acquire Capital Stock of Holdings from the full-time
members or former members of management of the Company or any Restricted
Subsidiary upon death, disability, retirement or termination of employment
of such members, in amounts not to exceed $1.5 million in
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any fiscal year of the Company; provided that, if such repurchases are
less than $1.5 million in any fiscal year of the Company, the amount by
which $1.5 million exceeds such amount of repurchases actually made in
such fiscal year of the Company shall be carried forward for the next
fiscal year of the Company;
(vii) loans to members of management of the Company or any
Restricted Subsidiary in the ordinary course of business not to exceed
$1.2 million at any one time outstanding in addition to those otherwise
specifically referred to in the Exchange Offer and Consent Solicitation
Statement;
(viii) the purchase, redemption, defeasance or other acquisition or
retirement for value or payment of principal of any Subordinated
Indebtedness (other than Redeemable Capital Stock) through the issuance of
new Subordinated Indebtedness permitted to be incurred under clause (x) of
the definition of Permitted Indebtedness;
(ix) any Restricted Payment made pursuant to agreements (A) in
effect on the Issue Date (B) referred to in the Exchange Offer and Consent
Solicitation Statement and the Annexes thereto and (C) listed on Schedule
II hereto, as from time to time amended thereafter; provided that, as so
amended, such agreements shall provide for terms that are, in the
aggregate, not more disadvantageous to the Holders of Securities in any
material respect than as in effect on the Issue Date; and
(x) any payments made in settlement of claims arising out of the
transactions contemplated by, or made pursuant to agreements or
undertakings referred to in, the Exchange Offer and Consent Solicitation
Statement.
The actions described in clauses (i), (v), (vi), (vii), (ix) and (x)
and described in clause (iv) (to the extent not deducted in determining
Consolidated Adjusted Net Income of the Company in clause (a)(3)(A) above) of
this paragraph (b) shall be Restricted Payments that shall be permitted to be
taken in accordance with this paragraph (b) but shall reduce the amount that
would otherwise be available for Restricted Payments under clause (3) of
paragraph (a) (provided that any dividend paid pursuant to clause (i) of this
paragraph (b) shall reduce the amount that would otherwise be available under
clause (3) of paragraph (a) when declared, but not also when subsequently paid
pursuant to such clause (i) and the actions described in clauses (ii), (iii) and
(viii) of this paragraph (b) shall be Restricted Payments that shall be
permitted to be taken in accordance with this paragraph and shall not reduce the
amount that would otherwise be available for Restricted Payments under clause
(3) of paragraph (a).
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(c) In computing Consolidated Adjusted Net Income of the Company
under paragraph (a) above, (1) the Company shall use audited financial
statements for the portions of the relevant period for which audited financial
statements are available on the date of determination and unaudited financial
statements and other current financial data based on the books and records of
the Company for the remaining portion of such period and (2) the Company shall
be permitted to rely in good faith on the financial statements and other
financial data derived from the books and records of the Company that are
available on the date of determination. If the Company or any of its Restricted
Subsidiaries makes a Restricted Payment which, at the time of making such
Restricted Payment, would in the good faith determination of the Company be
permitted under the requirements of this Indenture, such Restricted Payment
shall be deemed to have been made in compliance with this Indenture
notwithstanding any subsequent adjustments made in good faith to the Company's
financial statements affecting Consolidated Adjusted Net Income of the Company
for any period.
The amount of all Restricted Payments (other than cash) shall be the
Fair Market Value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
The Board of Directors' determination must be based upon an opinion or appraisal
issued by an accounting, appraisal or investment banking firm of national
standing if the Fair Market Value exceeds $2.5 million. Not later than the date
of making any Restricted Payment pursuant to clause (a) of this Section, the
Company shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this "Restricted Payments" covenant were computed,
together with a copy of any fairness opinion or appraisal required by the
Indenture.
Section 10.12. [Intentionally Omitted].
Section 10.13. Limitation on Transactions with Affiliates.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, enter into or suffer to exist any transaction or series of
related transactions (including, without limitation, the sale, purchase,
exchange or lease of assets, property or services or enter into or make any
payment, loan, advance or guarantee) with or for the benefit of any Affiliate of
the Company or such Restricted Subsidiary unless such transaction or series of
related transactions is in writing on terms that are no less favorable to the
Company or such Restricted Subsidiary, as the case may be, than would be
available in a comparable transaction in arm's-length dealings with an
unrelated third party; provided, however, that, the Company will not, and
will
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not permit any of its Restricted Subsidiaries to, enter into or suffer to
exist any such transaction or series of related transactions which,
individually or in the aggregate, involve payments in excess of (a) $750,000,
unless an Officers' Certificate stating that such transaction complies with
this covenant shall be delivered to the Trustee, (b) $1.0 million, unless the
prior good faith approval of a majority of the Disinterested Directors of the
Company shall have been obtained and Board Resolution relating thereto shall
have been passed and set forth in an Officers' Certificate delivered to the
Trustee, or (c) $5.0 million, unless the prior good faith approval of a
majority of the Disinterested Directors of the Company shall have been
obtained and the Board of Directors shall have obtained from any nationally
recognized investment banking firm a favorable opinion as to the fairness to
it of the transaction (copies of which shall be filed with the Trustee); and
provided, further that, the terms of this provision shall not apply to (i)
reasonable fees and compensation, loans or options to purchase Common Stock,
indemnification and other benefits paid or made available to directors and
full time officers and employees of the Company or any of its Restricted
Subsidiaries for services rendered in such person's capacity as an officer,
director or employee of the Company or the applicable Restricted Subsidiary,
in each case entered into in the ordinary course of business consistent with
past practice, (ii) transactions with or among, or solely for the benefit of,
the Company or any of its Wholly-Owned Restricted Subsidiaries, (iii)
transactions with an Unrestricted Subsidiary effected as part of a
Securitization Transaction, and (iv) payments and other transactions pursuant
to agreements in effect on the Issue Date and described in the Exchange Offer
and Consent Solicitation Statement, as from time to time amended thereafter;
provided that, as so amended, such agreements shall provide for terms that
are, in aggregate, not more disadvantageous to the Holders of Securities in
any material respect than as in effect on the Issue Date.
Section 10.14. Limitation on Liens.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, affirm or suffer to
exist any Lien of any kind on or with respect to any of its property or assets,
whether owned at the date of this Indenture or thereafter acquired, or any
income, profits or proceeds therefrom, except if the Securities are directly
secured equally and ratably with (or prior to in the case of Liens with respect
to Subordinated Indebtedness) the obligation or liability secured by such
Lien; provided that Permitted Liens shall not be subject to the operation of
the foregoing.
Section 10.15. Change of Control Offer.
(a) Upon the occurrence of a Change of Control, the Company shall be
obligated to make an offer to purchase all of
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the then outstanding Securities (a "Change of Control Offer"), and shall
purchase, on a Business Day (the "Change of Control Purchase Date") not more
than 60 nor less than 30 days following the Change of Control, all of the
then Outstanding Securities validly tendered pursuant to such Change of
Control Offer, at a purchase price (the "Change of Control Purchase Price")
in cash equal to 101% of the aggregate principal amount thereof plus accrued
and unpaid interest and Liquidated Damages, if any, to the Change of Control
Purchase Date. The Change of Control Offer is required to remain open for at
least 20 Business Days and until the close of business on the Change of
Control Purchase Date.
(b) In order to effect such Change of Control Offer, the Company
shall, not later than the 30th day after the Change of Control, mail to each
Holder notice of the Change of Control Offer in the manner provided in Section
1.7, which notice shall govern the terms of the Change of Control Offer and
shall state:
(1) that a Change of Control has occurred and that such Holder has
the right to require the Company to repurchase such Holder's Securities in
cash at the Change of Control Purchase Price;
(2) the circumstances and relevant facts regarding such Change of
Control (including but not limited to information with respect to pro
forma historical income, cash flow and capitalization after giving effect
to such Change of Control);
(3) the Change of Control Purchase Date; and
(4) the instructions a Holder must follow in order to have its
Securities repurchased in accordance with paragraph (c) of this Section.
(c) Holders electing to have Securities purchased will be required
to surrender such Securities to the Company at the address specified in the
notice at least five Business Days prior to the Change of Control Purchase Date.
Holders will be entitled to withdraw their election if the Company receives, not
later than three Business Days prior to the Change of Control Purchase
Date, a telegram, telex, facsimile transmission or letter setting forth the name
of the Holder, the principal amount of the Securities delivered for purchase by
the Holder as to which its election is to be withdrawn and a statement that such
Holder is withdrawing its election to have such Securities purchased. Holders
whose Securities are purchased only in part will be issued new Securities equal
in principal amount of the unpurchased portion of the Securities surrendered.
(d) On the Change of Control Payment Date, the Company will, to the
extent lawful (1) accept payment for all Securities or portions thereof properly
tendered pursuant to the Change of
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Control Offer; (2) deposit with the Paying Agent an amount equal to the
Change of Control Payment in respect of all notes or portions thereof so
tendered; and (3) deliver or cause to be delivered to the Trustee Securities
so accepted together with an Officers' Certificate stating the aggregate
principal amount of Securities or portions thereof being purchased by the
Company. The Paying Agent will promptly mail to each Holder of Securities so
tendered the Change of Control Payment for those Securities, and the Trustee
will promptly authenticate and mail (or cause to be transferred by book
entry) to each Holder a new Security equal in principal amount to any
unpurchased portion of the Securities surrendered, if any; provided that each
new Security will be in a principal amount of $1,000 or an integral multiple
thereof. The Company shall publicly announce the results of the Change of
Control Offer on or as soon as practicable after the Change of Control
Payment Date.
(e) Prior to complying with any of the provisions of this Section,
but in any event within 60 days following a Change of Control, the Company will
either repay all outstanding Senior Indebtedness or obtain the requisite
consents, if any, under all agreements governing outstanding Senior Indebtedness
to permit the repurchase of Securities required by this Section.
(f) Notwithstanding anything to the contrary in this Section 10.15,
the Company shall not be required to make a Change of Control Offer upon 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 10.15 and all other provisions of this Indenture applicable to a
Change of Control Offer made by the Company and purchases all Securities validly
tendered and not withdrawn under such Change of Control Offer.
(g) The Company will comply with Rule l4e-1 under the Exchange Act
and any other securities laws and regulations thereunder to the extent such laws
and regulations are applicable, in the event that a Change of Control occurs
and the Company is required to purchase Securities as described above.
Section 10.16. Limitation on Line of Business.
The Company will not, and the Company will not permit any of its
Restricted Subsidiaries to, engage in any business other than a Permitted
Business.
Section 10.17. Limitation on Sale of Assets.
(a) The Company will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, consummate an Asset Sale unless: (i) at
least 75% of the proceeds from such Asset Sale are received in cash or Cash
Equivalents; provided that, the amount of any liabilities of the Company or such
Restricted Subsidiary that are assumed (and from which the
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Company or such Restricted Subsidiary is unconditionally released) (other
than contingent liabilities and liabilities that are by their terms
subordinated to the Securities or any Subsidiary Guarantee) in connection
with such Asset Sale by the transferee or purchaser of such assets or on
behalf of such transferee or purchaser by a third party shall be deemed to be
cash for purposes of this clause (i); and (ii) the Company or such Restricted
Subsidiary receives consideration at the time of such Asset Sale at least
equal to the Fair Market Value of the Capital Stock or assets issued or sold
or otherwise disposed of (as determined in good faith by the Board of
Directors of the Company, whose determination shall be conclusive and
evidenced in a Board Resolution delivered to the Trustee in an Officer's
Certificate).
(b) If either the Company or any of its Restricted Subsidiaries
engages in an Asset Sale, it may use the Net Cash Proceeds thereof, within one
year of the receipt of the proceeds of such Asset Sale, at its option, to (i)
repay or prepay permanently any then outstanding Senior Indebtedness of the
Company or of any of its Restricted Subsidiaries or (ii) invest (or enter into a
legally binding agreement to invest within one year and segregate such Net Cash
Proceeds from the general funds of the Company or such Restricted Subsidiary, as
the case may be, for that purpose), in properties and assets to replace the
properties and assets that were the subject of the Asset Sale or in properties
and assets that will be used in a Permitted Business. Pending the making of any
investment contemplated by clause (ii) of the immediately preceding sentence
such Net Cash Proceeds may be used to temporarily reduce the amount of
outstanding Indebtedness under the Credit Agreement and such reduction shall
constitute such a segregation referred to in the immediately preceding sentence.
In addition, if any such legally binding agreement to invest such Net Cash
Proceeds is terminated, then the Company shall, prior to the later of (1) one
year following the receipt of the proceeds of such Asset Sale and (2) 90 days
following the date of such termination, invest such Net Cash Proceeds as
provided in clause (i) or (ii) (without regard to the parenthetical contained
in such clause (ii)) above. The amount of such Net Cash Proceeds not so used
as set forth above in this paragraph (b) constitutes "Excess Proceeds."
(c) When the aggregate amount of Excess Proceeds exceeds $5,000,000,
the Company shall within 15 Business Days, be required to make an offer to
purchase (an "Excess Proceeds Offer") from all Holders, on a pro rata basis, in
accordance with the procedures set forth below, the maximum principal amount
(expressed as a multiple of $1,000) of Securities that may be purchased with the
Excess Proceeds. The offer price as to each Security shall be payable in cash in
an amount equal to 100% of the principal amount of such Security plus accrued
and unpaid interest and Liquidated Damages, if any, to the date such Excess
Proceeds Offer is consummated. To the extent that the aggregate principal amount
of Securities tendered pursuant to an Excess
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Proceeds Offer is less than the Excess Proceeds, the Company or the
applicable Restricted Subsidiary may use such deficiency for general
corporate purposes. If the aggregate principal amount of Securities validly
tendered and not withdrawn by holders thereof exceeds the Excess Proceeds,
the Securities to be purchased will be selected on a pro rata basis. Upon
completion of any such offer to purchase, the amount of Excess Proceeds shall
be reset to zero. Notwithstanding the provisions of paragraphs (a), (b) and
(c) of this Section 10.17, if the Company or any Restricted Subsidiary shall
incur Indebtedness (in compliance with Section 10.10) for the purpose of
purchasing assets, and such assets are then sold in a Sale and Leaseback
Transaction, the proceeds of such Sale and Leaseback Transaction may be used
to repay such Indebtedness and, if so applied, shall not constitute "Excess
Proceeds."
(d) If the Company becomes obligated to make an Excess Proceeds
Offer pursuant to clause (c) above, the Securities shall be purchased by the
Company, in integral multiples of $1,000, on a date that is not earlier than 45
days and not later than 60 days from the date the notice is given to Holders, or
such later date as may be necessary for the Company to comply with the
requirements under the Exchange Act.
(e) The Company shall comply with the applicable tender offer rules,
including Rule 14e-1 under the Exchange Act, and any other applicable securities
laws or regulations in connection with an Excess Proceeds Offer.
Section 10.18. Limitation on Issuances of Guarantees of
Indebtedness.
The Company shall not permit any Restricted Subsidiary (including
Foreign Subsidiaries) that is not a Subsidiary Guarantor, directly or
indirectly, to Guarantee or pledge any assets to secure the payment of any other
Indebtedness of the Company or any Subsidiary Guarantor unless (i) such
Restricted Subsidiary simultaneously executes and delivers a supplemental
indenture in the form attached as Exhibit E hereto providing for the Guarantee
of the payment of the Securities by such Subsidiary, which Guarantee shall be
senior to or pari passu with such Restricted Subsidiary's Guarantee of or pledge
to secure such other Indebtedness, unless such other Indebtedness is Senior
Indebtedness, in which case the Guarantee of the Securities may be subordinated
to the Guarantee of such Senior Indebtedness to the same extent as the
Securities are subordinated to such Senior Indebtedness and (ii) such Restricted
Subsidiary shall simultaneously waive, and agree that it will not in any manner
whatsoever claim or take any benefit from, any rights of reimbursement,
indemnity or subrogation or any other rights against the Company or any other
Subsidiary as a result of any payment by such Subsidiary under its Guarantee of
the Securities.
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Notwithstanding the preceding paragraph, if any Restricted
Subsidiary (including Foreign Subsidiaries) that is organized under the laws of
Quebec, Canada would otherwise be required pursuant to the preceding paragraph
to provide a Guarantee of the payment of the Securities by such Subsidiary, such
obligation to provide such a Guarantee shall be satisfied so long as such
Restricted Subsidiary delivers to the Trustee a Guarantee of another Subsidiary
Guarantor's Guarantee of the payment of the Securities, which Guarantee will be
substantially in the form of the Guarantee by ICON du Canada, Inc. of the
obligations of 510152 N.B. LTD., as Subsidiary Guarantor under this Indenture
delivered to the Trustee on the date of this Indenture.
Notwithstanding the preceding paragraphs, any Subsidiary Guarantee
of the Securities (including any Guarantee provided pursuant to the immediately
preceding paragraph) shall provide by its terms that it shall be automatically
and unconditionally released and discharged under the circumstances described in
Section 14 hereof. The form of the Subsidiary Guarantee is attached as Exhibit D
hereto.
Section 10.19. Limitation on Dividends and Other Payment
Restrictions Affecting Subsidiaries.
The Company will not, and will not permit any Restricted Subsidiary
to, directly or indirectly, create or otherwise cause or suffer to exist or
become effective any encumbrance or restriction of any kind on the ability of
any Restricted Subsidiary to (i) pay dividends, in cash or otherwise, or make
any other distribution on its Capital Stock, (ii) pay any Indebtedness owed to
the Company or any Restricted Subsidiary, (iii) make any loans or advances to
the Company or any Restricted Subsidiary or (iv) transfer any of its properties
or assets to the Company or any Restricted Subsidiary; provided that, the terms
of this Section 10.19 shall not apply to (a) any encumbrance or restriction
pursuant to an agreement relating to Indebtedness in effect on the date of this
Indenture, including pursuant to the Credit Agreement; (b) any encumbrance or
restriction pursuant to an agreement relating to Indebtedness with respect to a
Restricted Subsidiary that is not a Restricted Subsidiary on the date of this
Indenture, in existence at the time such Person becomes a Restricted Subsidiary
and not incurred in connection with, or in contemplation of, such Person
becoming a Restricted Subsidiary (so long as such encumbrance or restriction
does not extend to any assets of the Company or any other Restricted Subsidiary)
and provided that, the Indebtedness was permitted by the terms of the Indenture
to be incurred; (c) any encumbrance or restriction pursuant to customary
nonassignment provisions in leases governing leasehold interests only to the
extent such provisions restrict the transfer of the lease or the leased property
entered into in the ordinary course of business consistent with past practices;
(d) any encumbrance or restriction due to applicable law; (e) any encumbrance or
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restriction pursuant to Purchase Money Obligations permitted under this
Indenture, but only to the extent such restrictions restrict the transfer of the
property purchased with the proceeds of the applicable Purchase Money
Obligation; (f) [Intentionally Omitted]; (g) provisions with respect to the
disposition or distribution of assets or property in joint venture agreements
and other similar agreements entered into in the ordinary course of business
consistent with past practices; (h) restrictions on cash or other deposits or
net worth imposed by customers under contracts entered into in the ordinary
course of business consistent with past practices; (i) any agreement for the
sale or other disposition of a Restricted Subsidiary that restricts
distributions by such Restricted Subsidiary pending its sale or other
disposition; (j) restrictions on the transfer of assets subject to any Permitted
Lien by the holder of such Lien; (k) any agreement or instrument governing
Indebtedness (whether or not outstanding) of Foreign Subsidiaries that
constitutes Permitted Indebtedness; and (l) Indebtedness incurred pursuant to
clause (x) of the definition of "Permitted Indebtedness"; provided, however,
that, the provisions contained in such new Indebtedness are no more
restrictive in any material respect than those contained in the agreements
governing Indebtedness being refinanced.
Section 10.20. Limitation on Sale and Leaseback Transactions.
The Company will not, and will not permit its Restricted
Subsidiaries to, enter into, renew or extend any transactions or series of
related transactions pursuant to which the Company or any such Restricted
Subsidiary sells or transfers any property or asset in connection with the
leasing, or the resale against installment payments, or as part of an
arrangement involving the leasing or the resale against installment payments, of
such property or asset to the seller or transferor ("Sale and Leaseback
Transaction") unless (i) the Company or that Restricted Subsidiary could have
(x) incurred Indebtedness in an amount equal to the Attributable Debt relating
to that Sale and Leaseback transaction pursuant to the Consolidated Fixed Charge
Coverage Ratio test in Section 10.10 and (y) incurred Lien to secure that
Indebtedness pursuant to Section 10.14; (ii) the gross cash proceeds of that
Sale and Leaseback Transaction are at least equal to the Fair Market Value of
the property that is the subject of that Sale and Leaseback Transaction, as
determined in good faith by the Board of Directors evidenced by a Board
Resolution set forth in an Officers' Certificate delivered to the Trustee; and
(iii) the Sale and Leaseback Transaction is treated as an Asset Sale and all of
the conditions of Section 10.17 (including the provisions concerning the
application of Net Cash Proceeds) are satisfied with respect to such Sale and
Leaseback Transaction, treating all of the consideration received in such Sale
and Leaseback Transaction as Net Cash Proceeds for purposes of Section 10.17.
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Section 10.21. [Intentionally Omitted].
Section 10.22. Limitation on Designations of Unrestricted
Subsidiaries.
The Board of Directors of the Company may designate any Restricted
Subsidiary of the Company (other than any Restricted Subsidiary which owns
Capital Stock of a Restricted Subsidiary) as an "Unrestricted Subsidiary" under
this Indenture (a "Designation") only if:
(i) no Default or Event of Default shall have occurred and be
continuing at the time of or after giving effect to such Designation; and
(ii) except in the case of a newly organized Subsidiary in which the
Company and the Restricted Subsidiaries have made an aggregate Investment
of $1,000 or less or a Subsidiary formed in connection with a
Securitization Transaction with the Company or one or more Restricted
Subsidiaries, the Company would be permitted under this Indenture to make
an Investment constituting a Restricted Payment at the time of Designation
(assuming the effectiveness of such Designation) in an amount (the
"Designation Amount") equal to the Fair Market Value of the aggregate
amount of its Investments in such Subsidiary on such date.
The Company may revoke any Designation of a Subsidiary as an
Unrestricted Subsidiary (a "Revocation"), whereupon such Subsidiary shall then
constitute a Restricted Subsidiary, if:
(a) no Default or Event of Default shall have occurred and be
continuing at the time of and after giving effect to such Revocation; and
(b) all Liens and Indebtedness of such Unrestricted Subsidiary
outstanding immediately following such Revocation would, if incurred at such
time, have been permitted to be incurred for all purposes of this Indenture.
All Designations and Revocations must be evidenced by Officers'
Certificates of the Company delivered to the Trustee certifying compliance with
the foregoing provisions.
Section 10.23. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any
term, provision or condition set forth in Section 8.3 or Sections 10.7 through
10.22 and Sections 10.24, 10.25 and 10.27 inclusive, if before or after the time
for such compliance the Holders of at least a majority in principal amount of
the Outstanding Securities, by Act of such Holders, waive such compliance in
such instance with such term, provision or
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condition, but no such waiver shall extend to or affect such term, provision
or condition except to the extent so expressly waived, and, until such waiver
shall become effective, the obligations of the Company and the duties of the
Trustee in respect of any such term, provision or condition shall remain in
full force and effect.
Section 10.24. Limitation on Other Senior Indebtedness.
The Company will not, and will not permit any Restricted Subsidiary
to, incur, create, issue, assume, guarantee or otherwise become liable for any
Senior Indebtedness other than Indebtedness under the Credit Agreement. In
addition, the Company shall not, and shall not permit any Restricted Subsidiary
to incur Indebtedness or issue any shares of Preferred Stock of such Subsidiary,
directly or indirectly, in exchange for or upon the conversion of any
Indebtedness of IHF Holdings, Inc. or ICON Fitness Corporation, unless such
Indebtedness is unsecured and is expressly subordinate in right of payment to
the Securities.
Section 10.25. Rating.
The Company shall use its best efforts to have the Securities rated
by an established rating agency (which, for so long as is commercially
reasonable to do so, will be either Standard & Poor's Rating Group, a division
of McGraw-Hill, Inc. and Moody's Investors Service) no later than 120 days after
the date hereof and to maintain a rating through and including the Stated
Maturity for the Securities; provided, however, that the Company shall not be
required to maintain a specified rating.
Section 10.26. Payments for Consent.
The Company will not, and will not permit any of its Subsidiaries
to, directly or indirectly, pay or cause to be paid any consideration to or for
the benefit of any Holder of Securities for or as an inducement to any consent,
waiver or amendment of any of the terms or provisions of this Indenture or the
Securities unless such consideration is offered to be paid or is paid to all
Holders of the Securities that consent, waive or agree to amend in the time
frame set forth in the solicitation documents relating to such consent, waiver
or agreement.
Section 10.27. Additional Subsidiary Guarantees.
If the Company or any of its Restricted Subsidiaries acquires or
creates another Domestic Subsidiary after the date of this Indenture or if the
Company is otherwise required pursuant to Section 10.18 hereof, then the Company
shall cause that Domestic Subsidiary or such other Subsidiary, as the case may
be, to become a Subsidiary Guarantor and execute a supplemental indenture and
deliver an Opinion of Counsel to the Trustee within 10 Business Days of the date
on which it was acquired or created.
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ARTICLE XI.
REDEMPTION OF SECURITIES
Section 11.1. Right of Redemption.
The Securities will be subject to redemption at any time after the
Issue Date at the option of the Company, in whole but not in part, at the
following redemption prices (expressed in percentages of principal amount
thereof), plus accrued and unpaid interest and Liquidated Damages, if any, to
the Redemption Date if redeemed during the 12 month period ending February 15 of
each of the years set forth below:
Redemption
Year Price
-------- ----------
Issue Date through 2001 101%
2002 102%
2003 104%
2004 102%
2005 101%
Thereafter 100%
Section 11.2. Applicability of Article.
Redemption of Securities at the election of the Company or
otherwise, as permitted or required by any provision of this Indenture, shall be
made in accordance with such provision and this Article.
Section 11.3. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities pursuant to
Section 11.1 shall be evidenced by a Board Resolution. In case of any redemption
at the election of the Company, the Company shall, at least 60 days prior to the
Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date and of
the principal amount of Securities to be redeemed.
Section 11.4. [Intentionally Omitted]
Section 11.5. Notice of Redemption.
Notice of redemption shall be given in the manner provided for in
Section 1.7 not less than 30 nor more than 60 days prior to the Redemption Date,
to each Holder of Securities to be redeemed.
All notices of redemption shall state:
(1) the Redemption Date,
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(2) the Redemption Price,
(3) that on the Redemption Date the Redemption Price (together with
accrued interest, if any, to the Redemption Date payable as provided in
Section 11.7) will become due and payable upon each such Security, or the
portion thereof, to be redeemed, and that interest thereon will cease to
accrue on and after said date (unless the Company defaults with respect to
the payment of Securities to be redeemed), and
(4) the place or places where such Securities are to be surrendered
for payment of the Redemption Price.
Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
Section 11.6. Deposit of Redemption Price.
Prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 10.3) an amount of
money sufficient to pay the Redemption Price of, and accrued interest on, all
the Securities which are to be redeemed on that date.
Section 11.7. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities
so to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified (together with accrued interest, if any, to
the Redemption Date), and from and after such date (unless the Company shall
default in the payment of the Redemption Price and accrued interest) such
Securities shall cease to bear interest. Upon surrender of any such Security for
redemption in accordance with said notice, such Security shall be paid by the
Company at the Redemption Price, together with accrued interest, if any, to the
Redemption Date; provided, however, that installments of interest whose Stated
Maturity is on or prior to the Redemption Date shall be payable to the Holders
of such Securities, or one or more Predecessor Securities, registered as such at
the close of business on the relevant Record Dates according to their terms and
the provisions of Section 3.9.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate borne by the
Securities.
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ARTICLE XII.
DEFEASANCE AND COVENANT DEFEASANCE
Section 12.1. Company's Option to Effect Defeasance or Covenant
Defeasance.
The Company may, at its option by Board Resolution, at any time,
with respect to the Securities, elect to have either Section 12.2 or Section
12.3 applied to all outstanding Securities upon compliance with the conditions
set forth below in this Article Twelve.
Section 12.2. Defeasance and Discharge.
Upon the Company's exercise under Section 12.1 of the option
applicable to this Section 12.2, the Company and the Subsidiary Guarantors shall
be deemed to have been discharged from their respective obligations with respect
to all Outstanding Securities on the date the conditions set forth in Section
12.4 are satisfied (hereinafter, "defeasance"). For this purpose, such
defeasance means that the Company shall be deemed to have paid and discharged
the entire indebtedness represented by the outstanding Securities, which shall
thereafter be deemed to be "outstanding" only for the purposes of Section 12.5
and the other Sections of this Indenture referred to in (A) and (B) below, and
to have satisfied all its other obligations under such Securities and this
Indenture insofar as such Securities are concerned (and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging the
same), except for the following which shall survive until otherwise terminated
or discharged hereunder: (A) the rights of Holders of Outstanding Securities to
receive, solely from the trust fund described in Section 12.4 and as more fully
set forth in such Section, payments in respect of the principal of (and premium,
if any, on) and interest on such Securities when such payments are due, (B) the
Company's obligations with respect to such Securities under Sections 3.4, 3.5,
3.8, 10.2 and 10.3, (C) the rights, powers, trusts, duties and immunities of the
Trustee hereunder and (D) this Article Twelve. Subject to compliance with this
Article Twelve, the Company may exercise its option under this Section 12.2
notwithstanding the prior exercise of its option under Section 12.3 with respect
to the Securities.
Section 12.3. Covenant Defeasance.
Upon the Company's exercise under Section 12.1 of the option
applicable to this Section 12.3, the Company and the Subsidiary Guarantors shall
be released from their respective obligations under any covenant contained in
Section 8.1 and in Sections 10.7 through 10.27 with respect to the Outstanding
Securities on and after the date the conditions set forth below are satisfied
(hereinafter, "covenant defeasance"), and the Securities shall thereafter be
deemed not to be "Outstanding" for the purposes of any direction, waiver,
consent or declaration or
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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. For this purpose, such covenant defeasance means that,
with respect to the Outstanding Securities, the Company and the Subsidiary
Guarantors may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such covenant, 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 5.1(3) or
Section 5.1(4), but, except as specified above, the remainder of this
Indenture and such Securities shall be unaffected thereby.
Section 12.4. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application of either
Section 12.2 or Section 12.3 to the Outstanding Securities:
(1) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements
of Section 6.7 who shall agree to comply with the provisions of this
Article Twelve applicable to it) as trust funds in trust for the purpose
of making the following payments, specifically pledged as security for,
and dedicated solely to, the benefit of the Holders of such Securities,
(A) money in an amount, or (B) U.S. Government obligations which through
the scheduled payment of principal and interest in respect thereof in
accordance with their terms will provide, not later than one day before
the due date of any payment, money in an amount, or (C) a combination
thereof, sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay and discharge, and which
shall be applied by the Trustee (or other qualifying trustee) to pay and
discharge, the principal of (and premium, if any, on) and interest on the
outstanding Securities on the Stated Maturity (or Redemption Date, if
applicable) of such principal (and premium, if any) or installment of
interest; provided that the Trustee shall have been irrevocably instructed
to apply such money or the proceeds of such U.S. Government Obligations to
said payments with respect to the Securities. Before such a deposit, the
Company may give to the Trustee, in accordance with Section 11.3 hereof, a
notice of its election to redeem all of the Outstanding Securities at a
future date in accordance with Article Eleven hereof, which notice shall
be irrevocable. Such irrevocable redemption notice, if given, shall be
given effect in applying the foregoing. For this
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purpose, "U.S. Government Obligations" means securities that are (x)
direct obligations of the United States of America for the timely
payment of which its full faith and credit is pledged or (y)
obligations of a Person controlled or supervised by and acting as an
agency or instrumentality of the United States of America the timely
payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either
case, are not callable or redeemable at the option of the issuer
thereof, and shall also include a depository receipt issued by a bank
(as defined in Section 3(a)(2) of the Securities Act of 1933, as
amended), as custodian with respect to any such U.S. Government
Obligation or a specific payment of principal of or interest on any
such U.S. Government Obligation 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
Obligation or the specific payment of principal of or interest on the
U.S. Government obligation evidenced by such depository receipt.
(2) No Default or Event of Default with respect to the Securities
shall have occurred and be continuing on the date of such deposit.
(3) Such defeasance or covenant defeasance shall not cause the
Trustee to have a conflicting interest with respect to any securities of
the Company or any Subsidiary Guarantor.
(4) Such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default under, this Indenture
(including the provisions of Article Thirteen) or any other material or
instrument to which the Company or any Subsidiary Guarantor is a party
or by which it is bound.
(5) In the case of an election under Section 12.2, the Company shall
have delivered to the Trustee an opinion of Counsel stating that (x) the
Company has received from, or there has been published by, the Internal
Revenue Service a ruling, or (y) since the date of this Indenture there
has been a change in the applicable federal income tax law, in either case
to the effect that, and based thereon such opinion shall confirm that, the
Holders of the Outstanding Securities will not recognize income, gain or
loss for federal income tax purposes as a result of such defeasance and
will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such
defeasance had not occurred.
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(6) In the case of an election under Section 12.3, the Company shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of the outstanding Securities will not recognize income, gain or
loss for federal income tax purposes as a result of such covenant
defeasance and will be subject to federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if
such covenant defeasance had not occurred.
(7) The Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of preferring the Holders or any Subsidiary Guarantor over the
other creditors of the Company.
(8) The Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that after the 123rd day 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.
(9) The Company shall have delivered to the Trustee an Officers,
Certificate and an Opinion of Counsel satisfactory to the Trustee, which,
taken together, state that all conditions precedent provided for relating
to either the defeasance under Section 12.2 or the covenant defeasance
under Section 12.3 (as the case may be) have been complied with.
Section 12.5. Deposited Money and U.S. Government Obligations to Be
Held in Trust; Other Miscellaneous Provisions.
Subject to the provisions of the last paragraph of Section 10.3, all
money and U.S. Government Obligations (including the proceeds thereof) deposited
with the Trustee (or other qualifying Trustee, collectively for purposes of this
Section 12.5, the "Trustee") pursuant to Section 12.4 in respect of the
Outstanding Securities shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Securities and this Indenture, to the
payment, either directly or through any Paying Agent (including the Company
acting as its own Paying Agent) as the Trustee may determine, to the Holders of
such Securities of all sums due and to become due thereon in respect of
principal (and premium, if any) and interest, but such money need not be
segregated from other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the U.S. Governmental obligations
deposited pursuant to Section 12.4 or the principal and interest received in
respect thereof other
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than any such tax, fee or other charge which by law is for the account of the
Holders of the Outstanding Securities.
Anything in this Article Twelve to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or U.S. Government Obligations held by it as provided in
Section 12.4 which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect an equivalent defeasance or covenant
defeasance, as applicable, in accordance with this Article.
Section 12.6. Reinstatement.
If the Trustee or any Paying Agent is unable to apply any money in
accordance with Section 12.5 by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's and the Subsidiary Guarantors' obligations under
this Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to Section 12.2 or 12.3, as the case may be, until
such time as the Trustee or Paying Agent is permitted to apply all such money in
accordance with Section 12.5; provided, however, that if the Company or any
Guarantor makes any payment of principal of (or premium, if any, on) or interest
on any Security following the reinstatement of its obligations, the Company
or such Guarantor shall be subrogated to the rights of the Holders of such
Securities to receive such payment from the money held by the Trustee or
Paying Agent.
ARTICLE XIII.
SUBORDINATION OF SECURITIES
Section 13.1. Securities Subordinated to Senior Indebtedness.
The Company and the Trustee each covenants and agrees, and each
Holder, by its acceptance of a Security, likewise covenants and agrees that all
Securities shall be issued subject to the provisions of this Article Thirteen;
and each Person holding any Security, whether upon original issue or upon
transfer, assignment or exchange thereof, accepts and agrees that payments upon
or in respect of the Securities shall, to the extent and in the manner set forth
in this Article Thirteen, be subordinated in right of payment to the prior
payment in full, in cash or, at the option of the holders of Senior
Indebtedness, cash equivalents, of all amounts payable under Senior Indebtedness
(including, without limitation, any interest accruing subsequent to an event
specified in Sections 5.1(8) and 5.1(9) of this Indenture, without regard to any
cure periods
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specified therein, whether or not such interest is an allowed claim
enforceable against the debtor under Bankruptcy Law).
Section 13.2. No Payment on Securities in Certain Circumstances.
(a) Upon any default by the Company in the payment of the principal
of, premium, if any, or interest on Senior Indebtedness, when the same becomes
due, no payment may be made on or in respect of the Securities until such
default has been cured or waived or the benefits of this sentence waived by or
on behalf of the holders of such Senior Indebtedness.
(b) No payment may be made by the Company upon or in respect of the
Securities for the period specified below (the "Payment Blockage Period") during
the continuance of any non-payment event of default with respect to Specified
Senior Indebtedness pursuant to which the maturity thereof may be accelerated. A
Payment Blockage Period shall commence on the earlier of (i) the commencement of
judicial proceedings relating to a non-payment event of default, (ii) receipt by
the Trustee of notice from the representative of the holder or holders of any
Specified Senior Indebtedness (which notice shall specify the relevant default
and shall specify that it is a notice initiating a Payment Blockage Period) or
(iii) if such non-payment event of default results from the acceleration of
the Securities, the date of such acceleration, and shall end 179 days
thereafter unless such Payment Blockage Period shall have been earlier
terminated or the benefits of this sentence waived by the representative of
the holder or holders of the Specified Senior Indebtedness which declared
such Payment Blockage Period. Not more than one Payment Blockage Period with
respect to the Securities may be commenced during any period of 360
consecutive days. No event of default that existed or was continuing on the
date of the commencement of any Payment Blockage Period with respect to the
Specified Senior Indebtedness shall be made the basis for the commencement of
a second Payment Blockage Period by the representative for or the holders of
such Specified Senior Indebtedness whether or not within a period of 360
consecutive days.
(c) In the event that, notwithstanding the foregoing, any payment or
distribution of property or assets of the Company for any reason shall be
received by the Trustee or any Holder when such payment is prohibited by
paragraph (a) or (b) of this Section 13.2, the Trustee shall, to the extent it
is aware thereof, promptly notify the holders of Senior Indebtedness of such
prohibited payment and such payment shall be held in trust for the benefit of,
and shall be paid over or delivered to, the holders of Senior Indebtedness or
their respective representatives.
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Section 13.3. Payment over Proceeds upon Dissolution, Etc.
(a) Upon any payment or distribution of assets or securities of
the Company of any kind or character, whether in cash, property or
securities, upon any (i) bankruptcy, reorganization, insolvency, receivership
or similar proceeding of the Company (whether voluntary or involuntary), (ii)
assignment for the benefit of creditors or any marshaling of the assets and
liabilities of the Company or (iii) distribution to creditors of the Company
in a liquidation or dissolution of the Company, all amounts due or to become
due upon all Senior Indebtedness (including any interest accruing subsequent
to an event specified in Sections 5.1(8) and 5.1(9) of this Indenture,
without regard to any cure periods specified therein and whether or not such
interest is an allowed claim enforceable against the debtor under Bankruptcy
Law) shall first be paid in full, in cash or, at the option of holders of
Senior Indebtedness, cash equivalents, before the Holders or the Trustee on
their behalf shall be entitled to receive any payment by the Company on or in
respect of the Securities or any payment to acquire any of the Securities for
cash, property or securities, or any distribution with respect to the
Securities of any cash, property or securities (except that Holders may
receive (i) securities that are subordinated to at least the same extent as
the Securities to (a) Senior Indebtedness and (b) any securities issued in
exchange for Senior Indebtedness and (ii) payments and other distributions
made from any defeasance trust created pursuant to Section 12.4 of this
Indenture). Before any payment may be made by, or on behalf of, the Company
on or in respect of the Securities upon any such dissolution, winding up,
liquidation or reorganization, any payment or distribution of assets or
securities for the Company of any kind or character, whether in cash,
property or securities, to which the Holders or the Trustee on their behalf
would be entitled, but for the provisions of this Article Thirteen, shall be
made by the Company or by any receiver, trustee in bankruptcy, liquidating
trustee, agent or other similar Person making such payment or distribution,
or by the Holders or the Trustee if received by them or it, directly to the
holders of Senior Indebtedness (pro rata to such holders on the basis of the
respective amounts of Senior Indebtedness held by such holders) or their
representatives, as their respective interests appear, to the extent
necessary to pay all such Senior Indebtedness in full, in cash or, at the
option of holders of Senior Indebtedness, cash equivalents after giving
effect to any concurrent payment, distribution or provision therefor to or
for the holders of such Senior Indebtedness (except that Holders may receive
securities that are subordinated to at least the same extent as the
Securities to (i) Senior Indebtedness and (ii) any securities issued in
exchange for Senior Indebtedness).
(b) To the extent any payment of Senior Indebtedness (whether by or
on behalf of the Company, as proceeds of security or enforcement of any right of
setoff or otherwise) is declared
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to be fraudulent or preferential, set aside or required to be paid to any
receiver, trustee in bankruptcy, liquidating trustee, agent or other similar
Person under any bankruptcy, insolvency, receivership, fraudulent conveyance
or similar law, then if such payment is recovered by, or paid over to, such
receiver, trustee in bankruptcy, liquidating trustee, agent or other similar
Person, the Senior Indebtedness or part thereof originally intended to be
satisfied shall be deemed to be reinstated and outstanding as if such payment
had not occurred. To the extent the obligation to repay any Senior
Indebtedness is declared to be fraudulent, invalid, or otherwise set aside
under any bankruptcy, insolvency, receivership, fraudulent conveyance or
similar law, then the obligations so declared fraudulent, invalid or
otherwise set aside (and all other amounts that would come due with respect
thereto had such obligation not been affected) shall be deemed to be
reinstated and outstanding as Senior Indebtedness for all purposes hereof as
if such declaration, invalidity or setting aside had not occurred.
(c) In the event that, notwithstanding the foregoing provision
prohibiting such payment or distribution, any payment or distribution of assets
or securities of the Company or any kind or character, whether in cash, property
or securities, shall be received by the Trustee or any Holder at a time when
such payment or distribution is prohibited by paragraph (a) of this Section 13.3
and before all obligations in respect of Senior Indebtedness are paid in full,
in cash or, at the option of holders of Senior Indebtedness, cash equivalents,
such payment or distribution shall be received and held in trust for the benefit
of, and shall be paid over or delivered to, the holders of Senior Indebtedness
(pro rata to such holders on the basis of such respective amount of Senior
Indebtedness held by such holders) or their representatives, as their respective
interests appear, for application to the payment of Senior Indebtedness
remaining unpaid until all such Senior Indebtedness has been paid in full, in
cash or, at the option of the holders of Senior Indebtedness, cash equivalents,
after giving effect to any concurrent payment, distribution or provision
therefor to or for the holders of such Senior Indebtedness (except to the extent
that Holders receive securities that are subordinated to at least the same
extent as the Securities to (i) Senior Indebtedness and (ii) any securities
issued in exchange for Senior Indebtedness, in which event such securities shall
neither be held in trusts for nor paid over by the Holders to the holders of
Senior Indebtedness).
Section 13.4. Subrogation.
(a) Upon the payment in full of all Senior Indebtedness in cash or,
at the option of holders of Senior Indebtedness, cash equivalents, the Holders
shall be subrogated to the rights of the holders of Senior Indebtedness to
receive payments or distributions of cash, property or securities of the Company
made on such Senior Indebtedness until the principal of, premium, if any, and
interest on the Securities shall be paid in
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full; and, for the purposes of such subrogation, no payments or distributions
to the holders of the Senior Indebtedness of any cash, property or securities
to which the Holders or the Trustee on their behalf would be entitled except
for the provisions of this Article Thirteen, and no payment pursuant to the
provisions of this Article Thirteen to the holders of Senior Indebtedness by
Holders or the Trustee on their behalf shall, as among the Company, its
creditors other than holders of Senior Indebtedness, and the Holders, be
deemed to be a payment by the Company to or on account of the Senior
Indebtedness. It is understood that the provisions of this Article Thirteen
are intended solely for the purpose of defining the relative rights of the
Holders, on the one hand, and the holders of the Senior Indebtedness, on the
other hand.
(b) If any payment or distribution to which the Holders would
otherwise have been entitled but for the provisions of this Article Thirteen
shall have been applied, pursuant to the provisions of this Article Thirteen, to
the payment of all amounts payable under Senior Indebtedness, then, and in such
case, the Holders shall be entitled to receive from the holders of such Senior
Indebtedness any payments or distributions received by such holders of Senior
Indebtedness in excess of the amount required to make payment in full, in cash
or, at the option of holders of Senior Indebtedness, cash equivalents, of such
Senior Indebtedness of such holders.
Section 13.5. Obligations of Company Unconditional.
(a) Nothing contained in this Article Thirteen or elsewhere in this
Indenture or in the Securities is intended to or shall impair, as among the
Company and the Holders, the obligation of the Company, which is absolute and
unconditional, to pay to the Holders the principal of, premium, if any, and
interest on the Securities as and when the same shall become due and payable in
accordance with their terms, or is intended to or shall affect the relative
rights of the Holders and creditors of the Company other than the holders of the
Senior Indebtedness, nor shall anything herein or therein prevent the Holders or
the Trustee on their behalf from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the rights, if any,
under this Article Thirteen of the holders of the Senior Indebtedness.
(b) Without limiting the generality of the foregoing, nothing
contained in this Article Thirteen will restrict the right of the Trustee or the
Holders to take any action to declare the Securities to be due and payable prior
to their Stated Maturity pursuant to Section 5.1 or to pursue any rights or
remedies hereunder; provided, however, that, all Senior Indebtedness then due
and payable or thereafter declared to be due and payable shall first be paid in
full, in cash, or at the option of holders of Senior Indebtedness, cash
equivalents, before the Holders or the Trustee are entitled to receive any
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direct or indirect payment from the Company on or with respect to the
Securities.
Section 13.6. Notice to Trustee.
The Company shall give prompt written notice to the Trustee of
any fact known to the Company that would prohibit the making of any payment
to or by the Trustee in respect of the Securities pursuant to the provisions
of this Article Thirteen. The Trustee shall not be charged with the knowledge
of the existence of any default or event of default with respect to any
Senior Indebtedness or of any other facts that would prohibit the making of
any payment to or by the Trustee unless and until the Trustee shall have
received notice in writing at its Corporate Trust Office to that effect
signed by an Officer of the Company, or by a holder of Senior Indebtedness or
representative thereof; and prior to the receipt of any such written notice,
the Trustee shall, subject to Article Six, be entitled to assume that no such
facts exist; provided that, if the Trustee shall not have received the notice
provided for in this Section 13.6 at least two Business Days prior to the
date upon which, by the terms of this Indenture, any monies shall become
payable for any purpose (including, without limitation, the payment of the
principal of, premium, if any, or interest on any Security), then,
notwithstanding anything herein to the contrary, the Trustee shall have full
power and authority to receive any monies from the Company and to apply the
same to the purpose for which they were received, and shall not be affected
by any notice to the contrary that may be received by it on or after such
prior date except for an acceleration of the Securities prior to such
application. Nothing contained in this Section 13.6 shall limit the right of
the holders of Senior Indebtedness to recover payments as contemplated by
this Article Thirteen. The Trustee shall be entitled to rely on the delivery
to it of a written notice by a Person representing itself to be a holder of
any Senior Indebtedness (or a representative of such holder) to establish
that such notice has been given by a holder of such Senior Indebtedness or
representative on behalf of any such holder.
In the event that the Trustee determines in good faith that any
evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article Thirteen, the Trustee may request such Person to furnish evidence
to the reasonable satisfaction of the Trustee as to the amount of Senior
Indebtedness held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other facts pertinent to the
rights of such Person under this Article Thirteen and, if such evidence is not
furnished to the Trustee, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.
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Section 13.7. Reliance on Judicial Order or Certificate of
Liquidating Agent.
Upon any payment or distribution of assets or securities referred
to in this Article Thirteen, the Trustee and the Holders shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction in
which bankruptcy, dissolution, winding up, liquidation or reorganization
proceedings are pending, or upon a certificate of the receiver, trustee in
bankruptcy, liquidating trustee, agent or other similar Person making such
payment or distribution, delivered to the Trustee or to the Holders for the
purpose of ascertaining the persons entitled to participate in such
distribution, the holders of the Senior Indebtedness and other Indebtedness
of the Company, the amount thereof or payment thereon, the amount or amounts
paid or distributed thereon and all other facts pertinent thereto or to this
Article Thirteen.
Section 13.8. Trustee's Relation to Senior Indebtedness.
(a) The Trustee and any Paying Agent shall be entitled to all the
rights set forth in this Article Thirteen with respect to any Senior
Indebtedness that may at any time be held by it in its individual or any other
capacity to the same extent as any other holder of Senior Indebtedness and
nothing in this Indenture shall deprive the Trustee or any Paying Agent of any
of its rights as such holder; provided that nothing in this Section 13.8(a)
shall apply to the Company or any Affiliate of the Company that is acting as
Paying Agent.
(b) With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article Thirteen, and no implied covenants
or obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness (except as provided in
Sections 13.2(c) and 13.3(c) of this Indenture) and shall not be liable to any
such holders if the Trustee shall in good faith (and provided such payment shall
not constitute gross negligence) mistakenly pay over or distribute to Holders or
to the Company or to any other person cash, property or securities to which any
holders of Senior Indebtedness shall be entitled by virtue of this Article
Thirteen or otherwise.
Section 13.9. Subordination Rights Not Impaired by Acts or Omissions
of the Trustee, the Holders, the Company or Holders of Senior Indebtedness.
No right of any present or future holders of any Senior Indebtedness
to enforce subordination as provided in this Article Thirteen will at any time
in any way be prejudiced or impaired by
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any act or failure to act on the part of the Trustee, Holders or the Company
or by any act or failure to act by any such holder, or by any noncompliance
by the Company with the terms of this Indenture, regardless of any knowledge
thereof that any such holder may have or otherwise be charged with. The
provisions of this Article Thirteen are intended to be for the benefit of,
and shall be enforceable directly by, the holders of Senior Indebtedness.
Section 13.10. Holders Authorize Trustee to Effectuate Subordination
of Securities.
Each Holder by its acceptance of any Securities authorizes and
expressly directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article Thirteen, and appoints the Trustee its attorney-in-fact for such
purposes, including, in the event of any dissolution, winding up, liquidation or
reorganization of the Company (whether in bankruptcy, insolvency, receivership,
reorganization or similar proceedings or upon an assignment for the benefit of
creditors or otherwise) tending towards liquidation of the property and assets
of the Company, the filing of a claim for the unpaid balance of its Securities
in the form required in those proceedings. If the Trustee does not file a proper
claim or proof of indebtedness in the form required in such proceeding at least
30 days before the expiration of the time to file such claim or claims, each
holder of Senior Indebtedness is hereby authorized to file an appropriate claim
for and on behalf of the Holders.
Section 13.11. Not to Prevent Events of Default.
The failure to make a payment on account of principal of, premium,
if any, or interest on the Securities by reason of any provision of this Article
Thirteen will not be construed as preventing the occurrence of an Event of
Default.
Section 13.12. Trustee's Compensation Not Prejudiced.
Nothing in this Article Thirteen will apply to amounts due to the
Trustee pursuant to other sections of this Indenture.
Section 13.13. No Waiver of Subordination Provisions.
Without in any way limiting the generality of Section 13.9, the
holders of Senior Indebtedness 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 Holders and without impairing or releasing
the subordination provided in this Article Thirteen or the obligations
hereunder of the Holders to the holders of Senior Indebtedness may amend,
renew, extend, substitute, refinance, restructure, replace, supplement or
otherwise modify the Credit Agreement, including, without limitation, the
following: (a) change the manner, place
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or terms of payment or extend the time of payment of, or renew or alter,
Senior Indebtedness or any instrument evidencing the same or any agreement
under which Senior Indebtedness is outstanding or secured; (b) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing Senior Indebtedness; (c) release any Person liable in any
manner for the collection of Senior Indebtedness; and (d) exercise or refrain
from exercising any rights against the Company and any other Person.
Section 13.14. Payments May Be Paid Prior to Dissolution.
Nothing contained in this Article Thirteen or elsewhere in this
Indenture shall prevent (i) the Company, except under the conditions described
in Section 13.2 or 13.3, from making payments of principal of, premium, if any,
and interest on the Securities, or from depositing with the Trustee any money
for such payments, or (ii) the application by the Trustee of any money deposited
with it for the purpose of making such payments of principal of, premium, if
any, and interest on the Securities to the holders entitled thereto unless, at
least two Business Days prior to the date upon which such payment becomes due
and payable, the Trustee shall have received the written notice provided for in
Section 13.2(b) (or there shall have been an acceleration of the Securities
prior to such application) or in Section 13.6 of this Indenture. The Company
shall give prompt written notice to the Trustee of any dissolution, winding up,
liquidation or reorganization of the Company or other fact known to the Company
which would prohibit the making of payments hereunder.
ARTICLE XIV.
SUBSIDIARY GUARANTEES
Section 14.1. Guarantee.
Subject to this Article XIV, each of the Subsidiary Guarantors
hereby, jointly and severally, unconditionally guarantees to each Holder of a
Security 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 Securities or the obligations of the Company hereunder
or thereunder, that: (a) the principal of, premium, if any, interest and
Liquidated Damages, if any, on the Securities will be promptly paid in full
when due, whether at maturity, by acceleration, redemption or otherwise, and
interest on the overdue principal, premium, if any, and to the extent
permitted by law, interest on any interest, if any, and Liquidated Damages,
if any, on the Securities, and all other obligations of the Company to the
Holders or the Trustee hereunder or thereunder will 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 Securities or any
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of such other obligations, that same will 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 Subsidiary Guarantors shall be jointly and severally
obligated to pay the same immediately. Each Subsidiary Guarantor agrees that
this is a guarantee of payment and not a guarantee of collection.
The Subsidiary Guarantors hereby agree that their obligations
hereunder shall be unconditional, irrespective of the validity, regularity or
enforceability of the Securities or this Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Securities with
respect to any provisions hereof or thereof, the recovery of any judgment
against the Company, 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 Subsidiary Guarantor hereby waives diligence, presentment,
demand of payment, filing of claims with a court in the event of insolvency or
bankruptcy of the Company, any right to require a proceeding first against the
Company, protest, notice and all demands whatsoever and covenant that this
Subsidiary Guarantee shall not be discharged except by complete performance of
the obligations contained in the Securities and this Indenture.
If any Holder or the Trustee is required by any court or otherwise
to return to the Company, the Subsidiary Guarantors or any custodian, trustee,
liquidator or other similar official acting in relation to either the Company or
the Subsidiary Guarantors, any amount paid by either to the Trustee or such
Holder, this Subsidiary Guarantee, to the extent theretofore discharged, shall
be reinstated in full force and effect.
Each Subsidiary 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 Subsidiary Guarantor further agrees that, as between
the Subsidiary 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 V hereof for the purposes of this
Subsidiary 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 V hereof, such obligations (whether
or not due and payable) shall forthwith become due and payable by the
Subsidiary Guarantors for the purpose of this Subsidiary Guarantee. The
Subsidiary Guarantors shall have the right to seek contribution from any
non-paying Subsidiary Guarantor so long as the exercise of such right does
not impair the rights of the Holders under the Guarantee.
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Section 14.2. Guarantee Limitation On Subsidiary Guarantor
Liability.
Each Subsidiary Guarantor, and by its acceptance of Securities, each
Holder, hereby confirms that it is the intention of all such parties that the
Subsidiary Guarantee of such Subsidiary 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 Subsidiary Guarantee. To effectuate
the foregoing intention, the Trustee, the Holders and the Subsidiary Guarantors
hereby irrevocably agree that the obligations of such Subsidiary Guarantor under
its Subsidiary Guarantee and this Article XIV 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 Subsidiary 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
Subsidiary Guarantor in respect of the obligations of such other Subsidiary
Guarantor under this Article XIV, result in the obligations of such Subsidiary
Guarantor under its Subsidiary Guarantee not constituting a fraudulent transfer
or conveyance.
Section 14.3. Execution And Delivery Of Subsidiary Guarantee.
To evidence its Subsidiary Guarantee set forth in Section 14.1, each
Subsidiary Guarantor hereby agrees that a notation of such Subsidiary Guarantee
substantially in the form included in Exhibit D shall be endorsed by an officer
of such Subsidiary Guarantor on each Security authenticated and delivered by the
Trustee and that this Indenture shall be executed on behalf of such Subsidiary
Guarantor by its President or one of its Vice Presidents.
Each Subsidiary Guarantor hereby agrees that its Subsidiary
Guarantee set forth in Section 14.1 shall remain in full force and effect
notwithstanding any failure to endorse on each Security a notation of such
Subsidiary Guarantee.
If an officer whose signature is on this Indenture or on the
Subsidiary Guarantee no longer holds that office at the time the Trustee
authenticates the Security on which a Subsidiary Guarantee is endorsed, the
Subsidiary Guarantee shall be valid nevertheless.
The delivery of any Security by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the
Subsidiary Guarantee set forth in this Indenture on behalf of the Subsidiary
Guarantors.
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Section 14.4. Subsidiary Guarantors May Consolidate, Etc., Only on
Certain Terms.
No Subsidiary Guarantor may in a single transaction or a series of
related transactions consolidate or merge with or into (whether or not such
Subsidiary Guarantor is the surviving Person) or, sell, assign, convey,
transfer, lease or otherwise dispose of all or substantially all of its
properties to any other Person or group of affiliated Persons unless:
(a) except in the case of a merger of a Subsidiary Guarantor with or
into the Company or another Subsidiary Guarantor but subject to Section 14.5
hereof, the Person formed by or surviving any such consolidation or merger (if
other than such Subsidiary Guarantor) expressly assumes by a supplemental
indenture in a form reasonably satisfactory to the Trustee, all the obligations
of such Subsidiary Guarantor under the Securities, this Indenture and the
Subsidiary Guarantee on the terms set forth herein or therein; and
(b) immediately after giving effect to such transaction or series of
transactions, no Default or Event of Default shall have occurred or be
continuing.
Upon any consolidation, merger, sale or conveyance and upon the
assumption by the successor Person, by supplemental indenture, executed and
delivered to the Trustee and satisfactory in form to the Trustee, of the
Subsidiary Guarantee endorsed upon the Securities and the due and punctual
performance of all of the covenants and conditions of this Indenture to be
performed by the Subsidiary Guarantor, such successor Person shall succeed to
and be substituted for and may exercise every right and power of, the
Subsidiary Guarantor under this Indenture and the Securities with the same
effect as if such successor Person had been named herein as a Subsidiary
Guarantor. Such successor Person thereupon may cause to be signed any or all
of the Subsidiary Guarantees to be endorsed upon all of the Securities
issuable hereunder which theretofore shall not have been signed by the
Company and delivered to the Trustee. All the Subsidiary Guarantees so issued
shall in all respects have the same legal rank and benefit under this
Indenture as the Subsidiary Guarantees theretofore and thereafter issued in
accordance with the terms of this Indenture as though all of such Subsidiary
Guarantees had been issued at the date of the execution hereof.
Section 14.5. Releases of Subsidiary Guarantee.
The Subsidiary Guarantee of a Subsidiary Guarantor will be released:
(a) in connection with any sale or disposition of all or
substantially all of the assets of that Subsidiary Guarantor (including by way
of merger or consolidation), if the disposition is to the Company or another
Subsidiary Guarantor or if the
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Company applies the Net Proceeds of that sale or other disposition in
accordance with the applicable provisions of this Indenture, including
without limitation Section 10.17 hereof; or
(b) in connection with any sale of all of the capital stock of a
Subsidiary Guarantor, if the Company applies the Net Proceeds of that sale in
accordance with the applicable provisions of this Indenture, including without
limitation Section 10.17 hereof; or
(c) if the Company designates any Restricted Subsidiary that is a
Subsidiary Guarantor as an Unrestricted Subsidiary; or
(d) upon the release or discharge of all guarantees of such
Subsidiary Guarantor, and all pledges of property or assets of such Subsidiary
Guarantor securing all other Indebtedness of the Company and the other
Subsidiary Guarantors.
Upon delivery by the Company to the Trustee of an Officers'
Certificate and an Opinion of Counsel to the effect that such sale or other
disposition was made by the Company in accordance with the applicable provisions
of this Indenture, including without limitation Section 10.17 hereof, the
Trustee shall execute any documents reasonably required in order to evidence the
release of any Subsidiary Guarantor from its obligations under its Subsidiary
Guarantee.
Any Subsidiary Guarantor not released from its obligations under
its Subsidiary Guarantee shall remain liable for the full amount of principal
of and interest on the Securities and for the other obligations of any
Subsidiary Guarantor under this Indenture as provided in this Article XIV.
Section 14.6. Subordination of Subsidiary Guarantee.
Each Subsidiary Guarantor agrees, and each Holder by accepting a
Security agrees, that the obligations of each Subsidiary Guarantor under its
Subsidiary Guarantee, are subordinated and junior in right of payment to the
prior payment of all Senior Indebtedness of each Subsidiary Guarantor on the
same basis as the obligations on, or relating to the Securities, are
subordinated and junior in right of payment to the prior payment of all Senior
Indebtedness of the Company pursuant to Article Thirteen. In furtherance of the
foregoing, each Subsidiary Guarantor agrees, and the Trustee and each Holder by
accepting a Security agrees, that the subordination and related provisions
applicable to the obligations of each Subsidiary Guarantor under its Subsidiary
Guarantee by virtue of the preceding sentence shall be as set forth in Article
Thirteen as if each reference to "Company" therein were instead a reference to
"a Subsidiary Guarantor", each reference to "Senior Indebtedness of the Company"
therein were instead a reference to "Senior Indebtedness of each Subsidiary
Guarantor" and each
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reference to "Securities" therein were instead a reference to "this
Subsidiary Guarantee", with such appropriate modifications as the context may
require. For the purposes of the foregoing sentence, the Trustee and the
Holders shall have the right to receive and/or retain payments by any of the
Subsidiary Guarantors only at such times as they may receive and/or retain
payments in respect of the Securities pursuant to this Indenture, including
Article Thirteen hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
ICON HEALTH & FITNESS, INC.,
as Issuer
By: _______________________________
Name:
Title
Attest:_________________________
JUMPKING, INC.
as Subsidiary Guarantor
By: _______________________________
Name:
Title
Attest:_________________________
ICON INTERNATIONAL HOLDINGS, INC.
as Subsidiary Guarantor
By: _______________________________
Name:
Title
Attest:_________________________
UNIVERSAL TECHNICAL SERVICES, INC.
as Subsidiary Guarantor
By: _______________________________
Name:
Title
Attest:_________________________
510152 N.B. LTD.
as Subsidiary Guarantor
By: _______________________________
Name:
Title
Attest:_________________________
IBJ WHITEHALL BANK & TRUST COMPANY,
as Trustee
By: _______________________________
Title
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STATE OF UTAH )
) ss.:
COUNTY OF CACHE )
On the ___ day of __________, 1999, before me personally came
____________, to me known who, being by me duly sworn, did depose and say that
he _____________ is of ICON Health & Fitness, Inc. one of the corporations
described in and which executed the foregoing instrument; that he knows the seal
of said corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.
[stamp of notary] __________________
STATE OF )
) ss.:
COUNTY OF )
On the ____ day of _______________, 1999, before me personally came
__________________, to be known who, being by me duly sworn, did depose and say
that he is ___________________ of __________________ one of the corporations
described in and which executed the foregoing instrument; that he knows the seal
of said corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.
__________________
SCHEDULE I
Subsidiary Guarantors
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Jumpking, Inc.
c/o ICON Health & Fitness, Inc.
1500 South 1000 West
Logan, Utah 84321
510152 N.B. LTD.
c/o ICON Health & Fitness, Inc.
1500 South 1000 West
Logan, Utah 84321
Universal Technical Services, Inc.
c/o ICON Health & Fitness, Inc.
1500 South 1000 West
Logan, Utah 84321
ICON International Holdings, Inc.
c/o ICON Health & Fitness, Inc.
1500 South 1000 West
Logan, Utah 84321
SCHEDULE II
Agreements
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1. Securities Purchase Agreement, dated as of the Closing Date, among
Holdings and CSFB.
2. Note Agreement, dated as of the Closing Date, between Holdings and CSFB.
3. Stockholders Agreement, dated as of the Closing Date, among Holdings, ICON
Health & Fitness, Inc. ("Borrower"), the LLC, participating old 13%
holders, if any, Scott Watterson and Gary Stevenson, CSFB and other equity
holders.
4. Restated Employment Agreements, dated as of the Closing Date, between New
Holdings, Borrower and each of Scott Watterson and Gary Stevenson.
5. Termination Agreements, dated as of the Closing date, between IHF
Holdings, Inc., Borrower and each of Scott Watterson and Gary Stevenson.
6. Funding to Holdings of $500,000 for payments to junior management.
7. ICON Junior Management Deferred Bonus Plan.
8. Management Agreement, dated as of the Closing Date, among Holdings,
Borrower and Bain.
9. Management Agreements among Borrower, New Holdings and each of Scott
Watterson and Gary Stevenson.
10. Agreement and Plan of Merger, dated as of the Closing Date, among
Holdings, Borrower and Merger Sub.
Exhibit A
REGISTERED REGISTERED
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER
THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF
AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY, PRIOR TO THE DATE
(THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER
OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
THIS SECURITY) ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS
THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES
ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) TO AN "ACCREDITED
INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (1), (2), (3) OR (7) OF PARAGRAPH A
OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS SECURITY FOR ITS OWN
ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN "ACCREDITED INVESTOR", IN EACH CASE IN A
MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF $500,000 FOR INVESTMENT PURPOSES
AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE
OR TRANSFER PURSUANT TO CLAUSE (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION
OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM,
AND IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN
THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED
BY THE TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON REQUEST OF
THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE COMPANY OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR
SUCH OTHER REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO.), ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
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TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL
BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
SECTIONS 3.6 AND 3.7 OF THE INDENTURE.
ICON HEALTH & FITNESS, INC.
12% Series A Note due 2005
No.1 CUSIP 44929HACZ
ICON HEALTH & FITNESS, INC., a Delaware corporation (the "Company",
which term includes any successor under the Indenture hereinafter referred to),
for value received, promises to pay to ____________, or its registered assigns,
the principal sum of __________________________ ($_______________), on September
27, 2005.
Interest Rate: 12% per annum.
Interest Payment Dates: January 15 and July 15 of each year
commencing January 15, 2000.
Regular Record Dates: January 1 and July 1 of each year.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
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IN WITNESS WHEREOF, the Company has caused this Security to be
signed manually or by facsimile by its duly authorized officers.
Date: _____________, ___ ICON HEALTH & FITNESS, INC.
Attested by:
By: __________________________
_______________________________ Title: President
Title: Secretary
This is one of the 12% Series A Notes due 2005 described in the within-mentioned
Indenture.
Date of Authentication: IBJ WHITEHALL BANK & TRUST COMPANY, as Trustee
______________,____
By: ______________________
Authorized Signatory
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[REVERSE SIDE OF SECURITY]
ICON HEALTH & FITNESS, INC.
12% Series A Note due 2005
1. Principal and Interest.
The Company will pay the principal of this Security on September 27,
2005.
The Company promises to pay interest on the principal amount of this
Security on each Interest Payment Date, as set forth below, at the rate of 12%
per annum.
Interest will be payable semiannually (to the owners of record (the
"Holders") of the Securities (or any predecessor Securities) at the close of
business on the January 1 or July 1 immediately preceding the Interest Payment
Date) on each Interest Payment Date, commencing January 15, 2000. In addition,
as provided in the Exchange and Registration Rights Agreement dated September
27, 1999, liquidated damages may be required to be paid by the Company.
2. Method of Payment.
The Company will pay interest (except defaulted interest) on the
principal amount of the Securities on each Interest Payment Date to the persons
who are Holders (as reflected in the Security Register at the close of business
on the Regular Record Dates immediately preceding the Interest Payment Date), in
each case, even if the Security is canceled on registration of transfer or
registration of exchange after such record date; provided that, with respect to
the payment of principal, the Company will make payment to the Holder that
surrenders this Security to any Paying Agent on or after September 27, 2005.
The Company will pay principal, premium, if any, and interest in
money of the United States that at the time of payment is legal tender for
payment of public and private debts. However, the Company may pay principal,
premium, if any, and interest by its check payable in such money. The Company
may mail an interest check to a Holder's registered address (as reflected in the
Security Register). If a payment date is a date other than a Business Day at a
place of payment, payment may be made at that place on the next succeeding date
that is a Business Day and no interest shall accrue for the intervening period.
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3. Paying Agent and Registrar.
Initially, IBJ Whitehall Bank & Trust Company (the "Trustee") will
act as Paying Agent and Registrar. The Company may change any Paying Agent or
Registrar upon written notice thereto. The Company, any Restricted Subsidiary or
any Affiliate of any of them may act as Paying Agent, Registrar or co-registrar.
4. Indenture; Limitations.
The Company issued the Securities under an Indenture dated as of
September 27, 1999 (the "Indenture"), between the Company and the Trustee.
Capitalized terms herein are used as defined in the Indenture unless otherwise
indicated. The terms of the Securities include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act. The
Securities are subject to all such terms, and Holders are referred to the
Indenture and the Trust Indenture Act for a statement of all such terms. To the
extent permitted by applicable law, in the event of any inconsistency between
the terms of this Security and the terms of the Indenture, the terms of the
Indenture shall control.
The Securities are general unsecured obligations of the Company. The
Indenture limits the aggregate principal amount of the Securities to
$45,000,000.
5. Subordination.
The payment of the Securities will to the extent set forth in the
Indenture, be subordinated in right of payment to the prior payment in full, in
cash or cash equivalents, of all Senior Indebtedness.
6. Subsidiary Guarantee.
The payment of principal of, premium, if any, interest and
Liquidated Damages, if any, on the Securities are unconditionally guaranteed,
jointly and severally, on a senior subordinated basis by the Subsidiary
Guarantors.
7. Redemption.
The Securities will be subject to redemption at any time after
the Issue Date at the option of the Company, in whole but not in part, at the
following redemption prices (expressed in percentages of principal amount
thereof), plus accrued and unpaid interest and Liquidated Damages, if any, to
the Redemption Date if redeemed during the 12 month period ending February 15
of each of the years set forth below:
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Redemption
Year Price
-------- ---------
Issue Date through 2001 101%
2002 102%
2003 104%
2004 102%
2005 101%
Thereafter 100%
Notice of a redemption will be mailed at least 30 days but not more
than 60 days before the Redemption Date to each Holder to be redeemed at such
Holder's last address as it appears in the Security Register. On and after the
Redemption Date, interest ceases to accrue on Securities, unless the Company
defaults in the payment of the Redemption Price.
7. Repurchase upon a Change in Control and Asset Sales.
Upon the occurrence of (a) a Change of Control, the Company is
obligated to make an offer to purchase all outstanding Securities at a purchase
price of 101% of the aggregate principal amount thereof, plus accrued and unpaid
interest and Liquidated Damages, if any, to the date of purchase or (b) certain
Asset Sales, the Company may be obligated to make offers to purchase Securities
with a portion of the Net Cash Proceeds of such Asset Sales at a purchase price
of 100% of the principal amount thereof plus accrued and unpaid interest and
Liquidated Damages, if any, to the date of purchase.
8. Denominations; Transfer; Exchange.
The Securities are in registered form without coupons, in
denominations of $1,000 and multiples of $1,000 in excess thereof. A Holder may
register the transfer or exchange of Securities in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay any taxes and fees
required by law or permitted by the Indenture.
9. Persons Deemed Owners.
A Holder may be treated as the owner of a Security for all purposes.
10. Unclaimed Money.
If money for the payment of principal, premium, if any, or interest
remains unclaimed for two years, the Trustee and the
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Paying Agent will pay the money back to the Company at its request. After
that, Holders entitled to the money must look to the Company for payment,
unless an abandoned property law designates another Person, and all liability
of the Trustee and such Paying Agent with respect to such money shall cease.
11. Discharge Prior to Redemption or Maturity.
If the Company irrevocably deposits, or causes to be deposited, with
the Trustee money or U.S. Government Obligations sufficient to pay the then
outstanding principal of, premium, if any, and accrued interest on the
Securities (a) to redemption or maturity, the Company will be discharged from
the Indenture and the Securities, except in certain circumstances for certain
sections thereof, and (b) to the Stated Maturity, the Company will be discharged
from certain covenants set forth in the Indenture.
12. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Securities may
be amended or supplemented with the consent of the Holders of at least a
majority in aggregate principal amount of the Securities then outstanding, and
any existing default or compliance with any provision may be waived with the
consent of the Holders of a majority in aggregate principal amount of the
Securities then outstanding. Without notice to or the consent of any Holder, the
parties thereto may amend or supplement the Indenture or the Securities to,
among other things, cure any ambiguity, defect or inconsistency and make any
change that does not materially adversely affect the rights of any Holder.
13. Restrictive Covenants.
The Indenture contains certain covenants, including, without
limitation, covenants with respect to the following matters: (i)
Indebtedness; (ii) Restricted Payments; (iii) Transactions with Affiliates;
(iv) Liens; (v) Change of Control; (vi) Asset Sales; (vii) Guarantees by
Restricted Subsidiaries; (viii) Dividends and Other Payment Restrictions
Affecting Subsidiaries; (ix) Sale and Leaseback Transactions; (x) Designation
of Unrestricted Subsidiaries; (xi) Incurrence of Other Senior Indebtedness;
and (xii) Additional Subsidiary Guarantees. Within 120 days after the end of
each fiscal year and within 45 days after each fiscal quarter, the Company
must report to the Trustee on compliance with the Indenture.
14. Successor Persons.
When a successor person or other entity assumes all the obligations
of its predecessor under the Securities and the Indenture, the predecessor
person will be released from those obligations.
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15. Remedies for Events of Default.
If an Event of Default, as defined in the Indenture, occurs and is
continuing, the Trustee or the Holders of not less than 25% in aggregate
principal amount of the Securities then outstanding may declare all the
Securities to be immediately due and payable. If a bankruptcy or insolvency
default with respect to the Company or any of its Significant Subsidiaries
occurs and is continuing, the Securities automatically become immediately due
and payable. Holders may not enforce the Indenture or the Securities except as
provided in the Indenture. The Trustee may require indemnity satisfactory to it
before it enforces the Indenture or the Securities. Subject to certain
limitations, Holders of at least a majority in principal amount of the
Securities then outstanding may direct the Trustee in its exercise of any trust
or power.
16. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other
capacity, may become the owner or pledgee of Securities and may make loans to,
accept deposits from, perform services for, and otherwise deal with, the Company
and its Affiliates as if it were not the Trustee.
17. Authentication.
This Security shall not be valid until the Trustee signs the
certificate of authentication on the other side of this Security.
18. Abbreviations.
Customary abbreviations may be used in the name of a Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian) and U/G/M/A (= Uniform Gifts to Minors
Act).
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to Icon Health &
Fitness, Inc., 1500 South 1000 West, Logan, Utah 84321, Attention: President.
A-8
FOR VALUE RECEIVED the undersigned registered Holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please print or typewrite name and address including zip code of assignee)
- --------------------------------------------------------------------------------
the within Security and all rights thereunder, hereby irrevocably
- --------------------------------------------------------------------------------
constituting and appointing attorney to transfer such Security on the books of
the Company with full power of substitution in the premises.
In connection with any transfer of this Security occurring prior to
the Resale Restriction Termination Date, the undersigned confirms that without
utilizing any general solicitation or general advertising:
Check One
[ ](a) this Security is being transferred in compliance with the exemption
from registration under the Securities Act of 1933, as amended,
provided by Rule 144A thereunder.
or
[ ](b) this Security is being transferred other than in accordance with (a)
above and documents are being furnished which comply with the
conditions of transfer set forth in this Security and the Indenture.
If none of the foregoing boxes is checked, the Trustee or other Registrar shall
not be obligated to register this Security in the name of any Person other than
the Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 3.7 of the Indenture shall have
been satisfied.
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Date: __________________
--------------------------------------
NOTICE: The signature to this
assignment must correspond with the
name as written upon the face of the
within- mentioned instrument in every
particular, without alteration or any
change whatsoever.
Signature Guarantee: ___________________________________________________________
Participant in a Recognized Signature
Guaranty Medallion Program
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated: ________________________ ________________________________________
NOTICE: To be executed by an
executive officer
A-10
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Security purchased by the Company pursuant
to Section 10.15 or Section 10.17 of the Indenture, check the Box: [ ].
If you wish to have a portion of this Security purchased by the
Company pursuant to Section 10.15 or Section 10.17 of the Indenture, state the
amount (in principal amount at maturity) below:
$___________________.
Date: ________________
Your Signature: _________________________
(Sign exactly as your name appears on the other side of this Security)
Signature Guarantee: ______________________________________
Participant in a Recognized Signature
Guaranty Medallion Program
A-11
Exhibit C
Form of Certificate to Be
Delivered in Connection with
Transfers to Non-QIB Institutional Accredited Investors
________________ , ______
Icon Health & Fitness, Inc.
1500 South 1000 West
Logan, Utah 84321
IBJ Whitehall Bank & Trust Company
One State Street
New York, NY 10004
Re: Icon Health & Fitness, Inc.
(the "Company") 12% Notes due 2005 (the "Securities")
Ladies and Gentlemen:
In connection with our proposed purchase of $__________ aggregate
principal amount of the Securities:
1. We understand that the Securities have not been registered
under the Securities Act of 1933, as amended (the "Securities Act"), and may
not be sold except as permitted in the following sentence. We agree on our
own behalf and on behalf of any investor account for which we are purchasing
the Securities to offer, sell or otherwise transfer such Securities prior to
the date which is two years after the later of the date of original issue of
the Securities and the last date on which the Company or any affiliate of the
Company was the owner of such Securities, or any predecessor thereto (the
"Resale Restriction Termination Date") only (a) to the Company, (b) pursuant
to a registration statement which has been declared effective under the
Securities Act, (c) for so long as the Securities are eligible for resale
pursuant to Rule 144A under the Securities Act, to a person we reasonably
believe is a qualified institutional buyer under Rule 144A (a "QIB") that
purchases for its own account or for the account of a QIB to whom notice is
given that the transfer is being made in reliance on Rule 144A, (d) to an
institutional "accredited investor" within the meaning of subparagraph
(a)(1), (2), (3) or (7) of Rule 501 under the Securities Act that is
acquiring the Securities for its own account or for the account of such an
institutional "accredited investor" for investment purposes and not with a
view to, or for offer or sale in connection with, any distribution thereof in
violation of the Securities Act or (e) pursuant to any other available
exemption from the registration requirements of the Securities Act, subject
in each of the foregoing cases to any requirement of law that the
C-1
disposition of our property and the property of such investor account or
accounts be at all times within our or their control and to compliance with
any applicable state securities laws. The foregoing restrictions on resale
will not apply subsequent to the Resale Restriction Termination Date. If any
resale or other transfer of the Securities is proposed to be made pursuant to
clause (d) above prior to the Resale Restriction Termination Date, the
transferor shall deliver a letter from the transferee substantially in the
form of this letter to the Trustee or the Registrar, as the case may be,
which shall provide, among other things, that the transferee is an
institutional "accredited investor" within the meaning of subparagraph
(a)(1), (2), (3) or (7) or Rule 501 under the Securities Act and that it is
acquiring such Securities for investment purposes and not for distribution in
violation of the Securities Act. We acknowledge that the Company and the
Trustee or the Registrar, as the case may be, reserve the right prior to any
offer, sale or other transfer prior to the Resale Restriction Termination
Date of the Securities pursuant to clauses (d) and (e) above to require the
delivery of an opinion of counsel, certifications and/or other information
satisfactory to the Company and the Trustee or the Registrar, as the case may
be. We further understand that the securities purchased by us will bear a
legend to the foregoing effect.
2. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2) (3) or (7) of Regulation D under the Securities Act) purchasing
for our own account or for the account of such an institutional "accredited
investor," and we are acquiring the Securities for investment purposes and not
with a view to, or for offer or sale in connection with, any distribution in
violation of the Securities Act and we have such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of our investment in the Securities, and we and any accounts for which we
are acting are each able to bear the economic risk of our or its investment.
3. We are acquiring the Securities purchased by us for our own
account or for one or more accounts as to each of which we exercise sole
investment discretion.
C-2
4. You are entitled to rely upon this letter and you are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceeding or official inquiry with respect to the
matters covered hereby.
Very truly yours,
By: __________________
(NAME OF PURCHASER)
Date: ___________________
Upon transfer, the Securities should be registered in the name of
the new beneficial owner as follows:
Name: __________________________________________________________________________
Address: _______________________________________________________________________
Taxpayer ID Number: ____________________________________________________________
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Exhibit D
FORM OF NOTATION OF SUBSIDIARY GUARANTEE
For value received, each Subsidiary Guarantor (which term includes
any successor Person under the Indenture) has, jointly and severally,
unconditionally guaranteed, to the extent set forth in the Indenture and subject
to the provisions in the Indenture, dated as of September 27, 1999 (the
"Indenture"), among ICON Health & Fitness, Inc., the Subsidiary Guarantors party
thereto and IBJ Whitehall Bank & Trust Company, as trustee (the "Trustee"), (a)
the due and punctual payment of the principal of, premium, if any, and interest
on the Securities (as defined in the Indenture), whether at maturity, by
acceleration, redemption or otherwise, the due and punctual payment of interest
on overdue principal and premium, and, to the extent permitted by law, interest,
and the due and punctual performance of all other obligations of the Company to
the Holders or the Trustee all in accordance with the terms of the Indenture and
(b) in case of any extension of time of payment or renewal of any Securities or
any of such other obligations, that the same will 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 or otherwise. The obligations of the
Subsidiary Guarantors to the Holders of Securities and to the Trustee pursuant
to the Subsidiary Guarantee and the Indenture are expressly set forth in Article
14 of the Indenture and reference is hereby made to the Indenture for the
precise terms of the Subsidiary Guarantee. The obligations of the Subsidiary
Guarantors will be released only in accordance with the provisions of Article 14
of the Indenture. Each Holder of a Security, by accepting the same, (a) agrees
to and shall be bound by such provisions, (b) authorizes and directs the
Trustee, on behalf of such Holder, to take such action as may be necessary or
appropriate to effectuate the subordination as provided in the Indenture and (c)
appoints the Trustee attorney-in-fact of such Holder for such purpose; provided,
however, that the Indebtedness evidenced by this Subsidiary Guarantee shall
cease to be so subordinated and subject in right of payment upon any defeasance
of this Security in accordance with the provisions of the Indenture.
[Name of Subsidiary Guarantor(s)]
By:______________________________
Name:
Title:
D-1
Exhibit E
FORM OF SUPPLEMENTAL INDENTURE
TO BE DELIVERED BY SUBSEQUENT SUBSIDIARY GUARANTORS
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of
______________, among _______________ (the "Guaranteeing Subsidiary"), a
subsidiary of ICON Health & Fitness, Inc. (or its permitted successor), a
Delaware corporation (the "Company"), the Company, the other Subsidiary
Guarantors (as defined in the Indenture referred to herein) and IBJ Whitehall
Bank & Trust Company, as trustee under the indenture referred to below (the
"Trustee").
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to the
Trustee an indenture (the "Indenture"), dated as of ____________, providing for
the issuance of an aggregate principal amount of up to $45,000,000 of 12% Notes
due 2005 (the "Securities");
WHEREAS, the Indenture provides that under certain circumstances the
Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental
indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally
guarantee all of the Company's obligations under the Securities and the
Indenture on the terms and conditions set forth herein (the "Subsidiary
Guarantee"); and
WHEREAS, pursuant to Section 9.3 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the
equal and ratable benefit of the Holders of the Securities as follows:
1. Capitalized Terms.
Capitalized terms used herein without definition shall have the
meanings assigned to them in the Indenture.
2. Agreement To Guarantee.
The Guaranteeing Subsidiary hereby agrees as follows:
(a) Along with all Subsidiary Guarantors named in the Indenture,
to jointly and severally Guarantee to each Holder of a
Security authenticated and delivered by the Trustee and
to the Trustee and its successors and assigns,irrespective
of the
E-1
validity and enforceability of the Indenture, the Securities
or the obligations of the Company hereunder or thereunder,
that:
(i) the principal of and interest on the Securities will be
promptly paid in full when due, whether at maturity, by
acceleration, redemption or otherwise, and interest on
the overdue principal of and interest on the Securities,
if any, if lawful, and all other obligations of the
Company to the Holders or the Trustee hereunder or
thereunder will be promptly paid in full or performed,
all in accordance with the terms hereof and thereof; and
(ii) in case of any extension of time of payment or renewal
of any Securities or any of such other obligations, that
same will 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 or
otherwise. Failing payment when due of any amount so
guaranteed or any performance so guaranteed for whatever
reason, the Subsidiary Guarantors shall be jointly and
severally obligated to pay the same immediately.
(b) The obligations hereunder shall be unconditional, irrespective
of the validity, regularity or enforceability of the
Securities or the Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the
Securities with respect to any provisions hereof or thereof,
the recovery of any judgment against the Company, any action
to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense
of a guarantor.
(c) The following is hereby waived: diligence presentment, demand
of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Company, any right to require
a proceeding first against the Company, protest, notice and
all demands whatsoever.
(d) This Subsidiary Guarantee shall not be discharged except by
complete performance of the obligations contained in the
Securities and the Indenture.
(e) If any Holder or the Trustee is required by any court or
otherwise to return to the Company, the
E-2
Subsidiary Guarantors, or any Custodian, trustee,
liquidator or other similar official acting in relation to
either the Company or the Subsidiary Guarantors, any amount
paid by either to the Trustee or such Holder, this
Subsidiary Guarantee, to the extent theretofore discharged,
shall be reinstated in full force and effect.
(f) The Guaranteeing Subsidiary 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.
(g) As between the Subsidiary 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 5 of the Indenture for the purposes of
this Subsidiary 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 5 of the Indenture, such
obligations (whether or not due and payable) shall forthwith
become due and payable by the Subsidiary Guarantors for the
purpose of this Subsidiary Guarantee.
(h) The Subsidiary Guarantors shall have the right to seek
contribution from any non-paying Subsidiary Guarantor so long
as the exercise of such right does not impair the rights of
the Holders under the Subsidiary Guarantee.
(i) Pursuant to Section 14.2 of the Indenture, after giving
effect to any maximum amount and any other contingent and
fixed liabilities that are relevant under any applicable
Bankruptcy or fraudulent conveyance laws, and after giving
effect to any collections from, rights to receive
contribution from or payments made by or on behalf of any
other Subsidiary Guarantor in respect of the obligations of
such other Subsidiary Guarantor under Article 14 of the
Indenture shall result in the obligations of such
Subsidiary Guarantor under its Subsidiary Guarantee not
constituting a fraudulent transfer or conveyance.
3. Execution And Delivery.
Each Guaranteeing Subsidiary agrees that the Subsidiary Guarantees
shall remain in full force and effect notwithstanding
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any failure to endorse on each Security a notation of such Subsidiary Guarantee.
4. Guaranteeing Subsidiary May Consolidate, Etc. on Certain Terms.
(a) A Guaranteeing Subsidiary may not sell or otherwise dispose of all
or substantially all of properties, or consolidate with or merge
with or into (whether or not such Guaranteeing Subsidiary is the
surviving Person) another Person or group of affiliated Persons
unless:
(i) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred or be
continuing; and
(ii) except in the case of a merger of a Subsidiary Guarantor with
or into the Company or another Subsidiary Guarantor but
subject to Section 14.5 hereof, the Person formed by or
surviving any such consolidation or merger (if other than such
Subsidiary Guarantor) expressly assumes by a supplemental
indenture in a form reasonably satisfactory to the Trustee,
all the obligations of such Subsidiary Guarantor under the
Securities, the Indenture and the Subsidiary Guarantee on the
terms set forth therein.
(b) In case of any such consolidation, merger, sale or conveyance and
upon the assumption by the successor Person, by supplemental
indenture, executed and delivered to the Trustee and satisfactory
in form to the Trustee, of the Subsidiary Guarantee endorsed upon
the Securities and the due and punctual performance of all of the
covenants and conditions of the Indenture to be performed by the
Subsidiary Guarantor, such successor Person shall succeed to and
be substituted for and may exercise every right and power of, the
Subsidiary Guarantor under the Indenture and the Securities with
the same effect as if it had been named herein as a Subsidiary
Guarantor. Such successor Person thereupon may cause to be signed
any or all of the Subsidiary Guarantees to be endorsed upon all
of the Securities issuable hereunder which theretofore shall not
have been signed by the Company and delivered to the Trustee. All
Subsidiary Guarantees so issued shall in all respects have the
same legal rank and benefit under the Indenture as the Subsidiary
Guarantees theretofore and thereafter issued in accordance with
the terms of the Indenture as though all of such Subsidiary
Guarantees had been issued at the date of the execution hereof.
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5. Releases.
(a) The Subsidiary Guarantee of a Subsidiary Guarantor will be released
(i) in connection with any sale or other disposition of all or
substantially all of the assets of that Subsidiary Guarantor
(including by way of merger or consolidation), if the disposition is
to the Company or another Subsidiary Guarantor or if the Company
applies the Net Proceeds of that sale or other disposition in
accordance with the applicable provisions of the Indenture,
including without limitation Section 10.17 thereof; (ii) in
connection with any sale of all of the capital stock of a Subsidiary
Guarantor, if the Company applies the Net Proceeds of that sale in
accordance with the applicable provisions of the Indenture,
including without limitation Section 10.17 thereof; (iii) if the
Company designates any Restricted Subsidiary that is a Subsidiary
Guarantor as an Unrestricted Subsidiary; or (iv) upon the release or
discharge of all guarantees of such Subsidiary Guarantor, and all
pledges of property or assets of such Subsidiary Guarantor securing
all other Indebtedness of the Company and other Subsidiary
Guarantors. Upon delivery by the Company to the Trustee of an
Officers' Certificate and an Opinion of Counsel to the effect that
such sale or other disposition was made by the Company in accordance
with the provisions of the Indenture, including without limitation
Section 10.17 of the Indenture, the Trustee shall execute any
documents reasonably required in order to evidence the release of
any Subsidiary Guarantor from its obligations under its Subsidiary
Guarantee.
(b) Any Subsidiary Guarantor not released from its obligations under
its Subsidiary Guarantee shall remain liable for the full amount
of principal of and interest on the Securities and for the other
obligations of any Subsidiary Guarantor under the Indenture as
provided in Article 14 of the Indenture.
6. No Recourse Against Others.
No past, present or future director, officer, employee,
incorporator, stockholder or agent of the Guaranteeing Subsidiary, as such,
shall have any liability for any obligations of the Company or any Guaranteeing
Subsidiary under the Securities, any Subsidiary Guarantees, the Indenture or
this Supplemental Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder of the Securities by
accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Securities. Such
waiver may not be effective to waive liabilities under the federal
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securities laws and it is the view of the Commission that such a waiver is
against public policy.
7. New York Law To Govern.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED
TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
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.
9. Effect of Headings.
The Section headings herein are for convenience only and shall not
affect the construction hereof.
10. 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, all of which recitals are made
solely by the Guaranteeing Subsidiary and the Company.
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IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
Dated: _________, _____
[GUARANTEEING SUBSIDIARY]
By:______________________
Name:
Title:
IBJ WHITEHALL BANK & TRUST COMPANY,
as Trustee
By:______________________
Name:
Title:
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