Exhibit 4.1
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SCHOLASTIC BRANDS, INC.
$90,000,000
11% Senior Subordinated Notes due 2007
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INDENTURE
Dated as of December 16, 1996
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Marine Midland Bank,
as Trustee
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CROSS REFERENCE TABLE*
Indenture
Trust Indenture Act Section Section
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310 (a)(1)................................................... 7.10
(a)(2)................................................... 7.10
(a)(3)................................................... N.A.
(a)(4)................................................... N.A.
(a)(5) .................................................. 7.10
(b)...................................................... 7.3
7.8
7.10
(c)...................................................... N.A.
311(a).................................................... 7.11
(b)...................................................... 7.11
(c)...................................................... N.A.
312(a).................................................... 2.5
(b)...................................................... 11.3
(c)...................................................... 11.3
313(a).................................................... 7.6
(b)(1)................................................... N.A.
(b)(2)................................................... 7.6
(c)...................................................... 7.6
11.2
314(a).................................................... 4.3
4.4
(b)...................................................... N.A.
(c)(1)................................................... 11.4
(c)(2)................................................... 11.4
(c)(3)................................................... 11.4
(d)...................................................... N.A.
(e)...................................................... 11.5
(f)...................................................... N.A.
315(a).................................................... 7.2
(b)...................................................... 7.5
11.2
(c)...................................................... 7.1
(d)...................................................... 7.1
(e)...................................................... 6.12
316(a)(last sentence)..................................... 2.9
(a)(1)(A)................................................ 6.5
(a)(1)(B)................................................ 6.4
(a)(2)................................................... N.A.
(b)...................................................... 6.7
(c)...................................................... N.A.
317(a)(1)................................................. 6.8
(a)(2)................................................... 6.10
(b)...................................................... 2.4
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* This Cross Reference Table shall not, for any purpose, be deemed a part of
this Indenture.
318(a).................................................... 11.1
318(b).................................................... N.A.
318(c).................................................... 11.1
N.A. means not applicable.
TABLE OF CONTENTS**
Page
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ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1. Definitions....................................................1
Section 1.2. Other Definitions.............................................23
Section 1.3. Incorporation by Reference of Trust Indenture Act.............24
Section 1.4. Rules of Construction.........................................24
Section 1.5. Acts of Holders...............................................24
ARTICLE 2.
THE NOTES
Section 2.1. Form and Dating...............................................25
Section 2.2. Execution and Authentication..................................26
Section 2.3. Registrar and Paying Agent....................................27
Section 2.4. Paying Agents To Hold Money in Trust..........................27
Section 2.5. Holder Lists..................................................28
Section 2.6. Transfer and Exchange.........................................28
Section 2.7. Replacement Notes.............................................37
Section 2.8. Outstanding Notes.............................................37
Section 2.9. Treasury Notes................................................37
Section 2.10. Temporary Notes...............................................38
Section 2.11. Cancellation..................................................38
Section 2.12. Defaulted Interest............................................38
Section 2.13. Persons Deemed Owners.........................................38
Section 2.14. CUSIP Numbers.................................................39
ARTICLE 3.
REDEMPTION AND REPURCHASE
Section 3.1. Notices to Trustee............................................39
Section 3.2. Selection of Notes............................................39
Section 3.3. Notice of Optional or Special Redemption......................40
Section 3.4. Effect of Notice of Redemption................................41
Section 3.5. Deposit of Redemption Price or Purchase Price.................41
Section 3.6. Notes Redeemed or Repurchased in Part.........................42
Section 3.7. Optional Redemption...........................................42
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** This Table on Contents shall not, for any purpose, be deemed a part of
the Indenture.
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Section 3.8. Special Redemption............................................42
Section 3.9. Repurchase Upon Change of Control Offer.......................42
Section 3.10. Repurchase Upon Application of Excess Proceeds................44
ARTICLE 4.
COVENANTS
Section 4.1. Payment of Principal and Interest.............................46
Section 4.2. Maintenance of Office or Agency...............................46
Section 4.3. Reports.......................................................47
Section 4.4. Compliance Certificate........................................47
Section 4.5. Taxes.........................................................48
Section 4.6. Stay, Extension and Usury Laws................................48
Section 4.7. Restricted Payments...........................................48
Section 4.8. Dividend and Other Payment Restrictions Affecting
Subsidiaries................................................52
Section 4.9. Incurrence of Indebtedness and Issuance of Preferred Stock....53
Section 4.10. Asset Sales...................................................56
Section 4.11. Transactions with Affiliates..................................57
Section 4.12. Liens.........................................................58
Section 4.13. Continued Existence...........................................58
Section 4.14. Insurance Matters.............................................59
Section 4.15. Offer to Repurchase upon Change of Control....................59
Section 4.16. Limitations on Issuances and Sales of Capital Stock of
Subsidiaries................................................59
Section 4.17. Limitation on Future Subordinated Indebtedness................60
Section 4.18. Subsidiary Guarantees.........................................60
Section 4.19. Business Activities...........................................62
Section 4.20. Payments for Consent..........................................62
Section 4.21. Restrictions under Senior Indebtedness........................62
ARTICLE V.
SUCCESSORS
Section 5.1. Merger, Consolidation, or Sale of Assets......................63
Section 5.2. Successor Corporation Substituted.............................63
ARTICLE VI.
DEFAULTS AND REMEDIES
Section 6.1. Events of Default.............................................64
Section 6.2. Acceleration..................................................66
Section 6.3. Other Remedies................................................66
Section 6.4. Waiver of Past Defaults.......................................67
Section 6.5. Control by Majority...........................................67
Section 6.6. Limitation on Suits...........................................68
Section 6.7. Rights of Holders of Notes to Receive Payment.................68
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Section 6.8. Collection Suit by Trustee...................................68
Section 6.9. Event of Default to Avoid Premium............................69
Section 6.10. Trustee May File Proofs of Claim.............................69
Section 6.11. Priorities...................................................69
Section 6.12. Undertaking for Costs........................................70
ARTICLE 7.
TRUSTEE
Section 7.1. Duties of Trustee............................................70
Section 7.2. Rights of Trustee............................................71
Section 7.3. Individual Rights Of Trustee.................................72
Section 7.4. Trustee's Disclaimer.........................................72
Section 7.5. Notice of Defaults...........................................73
Section 7.6. Reports by Trustee to Holders of the Notes...................73
Section 7.7. Compensation, Reimbursement and Indemnity....................73
Section 7.8. Replacement Of Trustee.......................................74
Section 7.9. Successor Trustee by Merger, Etc.............................75
Section 7.10. Eligibility; Disqualification................................75
Section 7.11. Preferential Collection of Claims against Company............75
ARTICLE 8.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.1. Option to Effect Legal Defeasance or Covenant Defeasance......76
Section 8.2. Legal Defeasance and Discharge................................76
Section 8.3. Covenant Defeasance...........................................76
Section 8.4. Conditions to Legal or Covenant Defeasance....................77
Section 8.5. Deposited Money and U.S. Government Securities to Be
Held in Trust; Other Miscellaneous Provisions...............78
Section 8.6. Repayment to the Company......................................79
Section 8.7. Reinstatement.................................................79
ARTICLE 9.
AMENDMENT SUPPLEMENT AND WAIVER
Section 9.1. Without Consent of Holders of Notes...........................80
Section 9.2. With Consent of Holders of Notes..............................80
Section 9.3. Compliance with Trust Indenture Act...........................82
Section 9.4. Revocation And Effect Of Consents.............................82
Section 9.5. Notation on or Exchange of Notes..............................82
Section 9.6. Trustee to Sign Amendments, Etc...............................82
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ARTICLE 10.
SUBORDINATION
Section 10.1. Notes Subordinated to Senior Indebtedness....................83
Section 10.2. Priority and Payment Over of Proceeds in Certain Events......83
Section 10.3. Payments May Be Made Prior to Dissolution....................86
Section 10.4. Rights of Holders of Senior Indebtedness Not to Be Impaired..86
Section 10.5. Authorization to Trustee to Take Action to Effectuate
Subordination..............................................86
Section 10.6. Subrogation..................................................87
Section 10.7. Obligations of Company Unconditional.........................87
Section 10.8. The Trustee Entitled to Assume Payments Not
Prohibited in Absence of Notice............................88
Section 10.9. Right of Trustee to Hold Senior Indebtedness.................88
Section 10.10. No Implied Covenants by or Obligations of the Trustee........88
ARTICLE 11.
MISCELLANEOUS
Section 11.1. Trust Indenture Act Controls.................................89
Section 11.2. Notices......................................................89
Section 11.3. Communication by Holders of Notes with Other
Holders of Notes...........................................90
Section 11.4. Certificate and Opinion as to Conditions Precedent...........90
Section 11.5. Statements Required in Certificate or Opinion................91
Section 11.6. Rules by Trustee and Agents..................................91
Section 11.7. No Personal Liability of Directors, Officers,
Employees and Stockholders.................................91
Section 11.8. Governing Law; Submission to Jurisdiction; Waiver of Jury
Trial......................................................91
Section 11.9. No Adverse Interpretation of Other Agreements................92
Section 11.10. Successors...................................................92
Section 11.11. Severability.................................................92
Section 11.12. Counterpart Originals........................................92
Section 11.13. Table of Contents, Headings, Etc.............................92
Section 11.14. Qualification of Indenture...................................93
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EXHIBITS
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Exhibit A Form of Note
Exhibit B(1) Form of Regulation S Certification
Exhibit B(2) Form of Certificate to be Delivered upon Exchange or Registration
of Transfer of Notes
Exhibit C Form of Subsidiary Guarantee
Exhibit D Form of Certificate to be Delivered in connection with Transfers
to Non QIB Accredited Investors
Exhibit E Form of Certificate to be Delivered in connection with
Transfers Pursuant to Regulation S
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INDENTURE
INDENTURE dated as of December 16, 1996 between Scholastic Brands, Inc., a
Delaware corporation (the "Company"), and Marine Midland Bank, as trustee (the
"Trustee").
Each party agrees as follows for the benefit of the other party and for the
equal and ratable benefit of the Holders (as defined below) of the Company's 11%
Senior Subordinated Notes due 2007:
ARTICLE I.
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1. Definitions.
"Acquired Debt" 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 becomes a Subsidiary of such specified Person or
assumed in connection with the acquisition of assets from such other
Person, including, without limitation, Indebtedness incurred in connection
with, or in contemplation of, such other Person merging with or into or
becoming a Subsidiary of such specified Person or such acquisition of
assets, and (ii) Indebtedness secured by a Lien encumbering any asset
acquired by such specified Person.
"Acquisition Subsidiary" means any Wholly Owned Subsidiary of the
Company or any of its Wholly Owned Subsidiaries which is newly formed in
anticipation of and in order to effectuate the acquisition by such entity
of the capital stock or assets of another Person; provided that the making
of an Investment in such Subsidiary by the Company or any other Subsidiary
shall be made in compliance with the Section 4.7 hereof.
"Affiliate" means, with respect to any specified Person, any other
Person directly or indirectly controlling or controlled by or under direct
or indirect common control with such specified Person. For purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with"), as used
with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management
or policies of such Person, whether through the ownership of voting
securities, by agreement or otherwise; provided that beneficial ownership
of 10% or more of the voting securities of a Person shall be deemed to be
control.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Asset Sale" means (i) the sale (other than sales of inventory),
lease, conveyance or other disposition of any assets (including, without
limitation, by way of a sale and leaseback) other than in the ordinary
course of business
(provided that the sale, lease, conveyance or other disposition of all or
substantially all of the assets of the Company and its Subsidiaries taken
as a whole will be governed by the provisions of Section 4.15 and/or
Section 5.1 hereof, and not by Section 4.10 hereof), and (ii) the issue or
sale by the Company or any of its Subsidiaries of Capital Stock of any of
the Company's Subsidiaries, in the case of either clause (i) or (ii),
whether in a single transaction or a series of related transactions (a)
that have a fair market value in excess of $1.0 million or (b) for net
proceeds in excess of $1.0 million. Notwithstanding the foregoing: (i) a
transfer of assets by the Company to a Wholly Owned Subsidiary of the
Company or by a Wholly Owned Subsidiary of the Company to the Company or to
another Wholly Owned Subsidiary of the Company, (ii) an issuance or sale of
Capital Stock by a Wholly Owned Subsidiary of the Company to the Company or
to another Wholly Owned Subsidiary of the Company, (iii) a Permitted
Investment or a Restricted Payment that is permitted by Section 4.7 hereof,
(iv) a Permitted Lien, provided that no steps or actions have been taken by
the holder of such Permitted Lien to realize upon or dispose of the assets
subject thereto, (v) a sale or other disposition or abandonment of damaged,
worn out or obsolete property, (vi) the licensing of any intellectual
property for a period of not more than five years which is not in
connection with the sale of any other assets of the Company (except for any
such licensing of intellectual property that causes a reduction of the
assets of the Company or any of its Subsidiaries under GAAP), and (vii) the
sale of owned gold to consignment banks under the Bank Credit Facility in
the ordinary course of business, will not be deemed to be Asset Sales.
"Attributable Debt" means, in respect of a sale and leaseback
transaction, at the time of determination, the present value (discounted at
the rate of interest implicit in such transaction, determined in accordance
with GAAP) 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 lessee, be extended).
"Bank Credit Facility" means the Revolving Credit, Term Loan and Gold
Consignment Agreement among the Company, the Banks from time to time
parties thereto, and The First National Bank of Boston and Rhode Island
Hospital Trust National Bank, as agents for such Banks, together with the
related documents thereto (including, without limitation, any letters of
credit issued pursuant thereto, and any related guarantee agreements and
security documents), in each case as such agreements may be amended
(including any amendment and restatement thereof), supplemented or
otherwise modified or replaced (including with other lenders or
consignors), from time to time and including any agreement extending the
maturity of, refinancing, modifying, increasing, substituting for or
otherwise restructuring (including, but not limited to, the inclusion of
additional or different or substitute lenders, consignors or bank agents
thereunder) all or any portion of the Indebtedness, including changing the
borrowing limits, under such
2
agreements or any successor or replacement agreements, regardless of
whether the Bank Credit Facility or any portion thereof was outstanding or
in effect at the time of such replacement, refinancing, increase,
substitution, extension, restructuring, supplement or modification.
"Bankruptcy Law" means Title 11, U.S. Code or any similar Federal or
state law for the relief of debtors.
"Board" means the Board of Directors of the Company or any duly
authorized committee of the Board of Directors.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which banking institutions in the City of New York or at a place of
payment are authorized by law, regulation or executive order to remain
closed. If a payment date is not a Business Day at a place of payment,
payment may be made at that place on the next succeeding day that is a
Business Day, and no interest shall accrue for the intervening period.
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital
lease that would at such time be required to be capitalized on a balance
sheet in accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of a partnership, partnership interests (whether
general or limited), (iii) in the case of an association or any other
business entity, any and all shares, interests, participations, rights or
other equivalents (however designated) in the equity of such association or
entity, and (iv) any other interest or participation that confers on a
Person the right to receive a share of the profits and losses of, or
distributions of assets of, the issuing Person.
"Cash Equivalents" means (i) United States Dollars, (ii) 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 six months from the date of acquisition, (iii) demand and
time deposits, certificates of deposit and eurodollar time deposits with
maturities of six months or less from the date of acquisition, bankers'
acceptances with maturities not exceeding six months and overnight bank
deposits, in each case with any domestic commercial bank having capital and
surplus in excess of $500 million and a Keefe Bank Watch Rating of "B" or
better, (iv) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clauses (ii) and (iii)
above entered into with any financial institution meeting the
qualifications specified in clause (iii) above and (v) commercial paper
having the highest rating obtainable from Moody's Investors Service, Inc.
or Standard & Poor's and in each case maturing within six months after the
date of acquisition.
3
"Cedel" shall mean Cedel, S.A.
"Change of Control" means the occurrence of any of the following:
(i) the sale, lease, 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" (as
such term is used in Section 13(d)(3) of the Exchange Act),
(ii) the adoption of a plan relating to the liquidation or
dissolution of the Company,
(iii) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that
(a) prior to a Public Equity Offering, the Principals and their
Related Parties cease to be the "beneficial owner" (as such term is
defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act) of a
majority of the total outstanding Voting Stock of the Company, or (b)
after a Public Equity Offering, any "person" (as defined above), other
than the Principals and their Related Parties, becomes the "beneficial
owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under the
Exchange Act), directly or indirectly, of more than 35% of the total
outstanding Voting Stock of the Company and the Principals and their
Related Parties beneficially own a lesser percentage of the Voting
Stock of the Company than such person, or
(iv) the first day on which a majority of the members of the
Board are not Continuing Directors.
"Commission" means the United States Securities and Exchange
Commission.
"Common Stock" means, with respect to any Person, Capital Stock of
such Person that does not rank prior, as to the payment of dividends or as
to the distribution of assets upon any voluntary or involuntary
liquidation, dissolution or winding up of such Person, to shares of Capital
Stock of any other class of such Person.
"Company" means Scholastic Brands, Inc., a Delaware corporation, until
a successor Person shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter means such successor Person.
4
"Consolidated Cash Flow" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period plus, to
the extent deducted in computing Consolidated Net Income:
(i) an amount equal to any extraordinary loss plus any net loss
realized in connection with any Asset Sale plus any loss realized on
an extraordinary or non-recurring actuarial assumption adjustment with
regard to post-retirement, medical and other benefits, in each case
for such periods, plus
(ii) provision for taxes based on income or profits of such
Person and its Subsidiaries for such period, plus
(iii) consolidated interest expense of such Person and its
Subsidiaries for such period, whether paid or accrued and whether or
not capitalized (including, without limitation, amortization of
original issue discount, non-cash interest payments, the interest
component of any deferred payment obligations, the interest component
of all payments associated with Capital Lease Obligations, imputed
interest with respect to Attributable Debt, commissions, discounts and
other fees and charges incurred in respect of letter of credit or
bankers' acceptance financings, and net payments (if any) pursuant to
Hedging Obligations), plus
(iv) depreciation, amortization (including amortization of
goodwill, other intangibles, and other assets) and other non-cash
charges (excluding any such non-cash charge to the extent that it
represents an accrual of or reserve for cash charges in any future
period) of such Person and its Subsidiaries for such period,
in each case, on a consolidated basis and determined in accordance with
GAAP. Notwithstanding the foregoing, the provision for taxes on the income
or profits of, and the depreciation and amortization and other non-cash
charges of, a Subsidiary of the referent Person shall be added to
Consolidated Net Income to compute Consolidated Cash Flow only to the
extent (and in same proportion) that the Net Income of such Subsidiary was
included in calculating the Consolidated Net Income of such Person and only
if a corresponding amount would be permitted at the date of determination
to be dividended to the Company by such Subsidiary without prior
governmental approval (that has not been obtained), and without direct or
indirect restriction pursuant to, the terms of its charter and all
agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to that Subsidiary or its stockholders.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the net income of such Person and its Subsidiaries
for
5
such period, on a consolidated basis, determined in accordance with GAAP;
provided that there shall be excluded therefrom, without duplication:
(i) all items classified as extraordinary, unusual or
nonrecurring gains (but not losses);
(ii) any net loss or net income of any other Person (other than a
Subsidiary of such Person), except to the extent of the amount of
dividends or other distributions actually paid to such Person or its
Subsidiaries by such other Person during such period;
(iii) the net income of any Person acquired by such Person or a
Subsidiary thereof in a pooling-of-interests transaction for any
period prior to the date of such acquisition;
(iv) any gain or loss, net of taxes, realized on the termination
of any employee pension benefit plan;
(v) gains (but not losses) in respect of Asset Sales by such
Person or its Subsidiaries;
(vi) the net income (but not net loss) of any Subsidiary of such
Person to the extent that the declaration or payment of dividends or
distributions to such Person is restricted by the terms of its
constituent documents or any agreement, instrument, contract,
judgment, order, decree, statute, rule, governmental regulation or
otherwise, except for any dividends or distributions actually paid by
such Subsidiary to such Person or another Subsidiary of such Person;
(vii) with regard to a Subsidiary of such Person (other than a
Wholly Owned Subsidiary), any aggregate net income (or loss) in excess
of such Person's pro rata share of such Subsidiary's net income (or
loss) ; and
(viii) the cumulative effect of any change in accounting
principles.
"Consolidated Net Worth" means, with respect to any Person as of any
date, the consolidated stockholders' equity of such Person and its
consolidated Subsidiaries, as determined in accordance with GAAP, less, to
the extent included therein, all amounts, if any, attributable to
Disqualified Stock.
"Continuing Directors" means, as of any date of determination, any
member of the Board who (i) was a member of the Board on the date of this
Indenture or (ii) was nominated for election or elected to the Board with
the
6
approval of a majority of the Continuing Directors who were members of the
Board at the time of such nomination or election.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 11.2 hereof or such other address as to which
the Trustee may give notice to the Company.
"Default" means any event, occurrence or condition that, with the
passage of time, the giving of notice or both, would constitute an Event of
Default.
"Depositary" means, with respect to the Notes issuable in whole or in
part in global form, the Person specified in Section 2.6 hereof as the
Depositary with respect to the Notes, until a successor shall have been
appointed and become such pursuant to the applicable provisions of this
Indenture, and, thereafter, "Depositary" shall mean or include such
successor.
"Designated Investment Stock" means any Capital Stock of the Company,
designated as such by the Board of Directors of the Company upon issuance
for use in the capitalization of an Acquisition Subsidiary of the Company,
up to a maximum net cash proceeds of $12.0 million.
"Designated Senior Indebtedness" means (i) Indebtedness of the Company
under the Bank Credit Facility, including without limitation all principal,
interest (including interest accruing after the filing of a petition
initiating any proceeding under any applicable bankruptcy law, whether or
not a claim therefor is allowable in such proceeding), reimbursements of
amounts drawn under letters of credit, reimbursements of other amounts,
Hedging Obligations with any agent or other representative of the lenders
under the Bank Credit Facility, guarantees in respect thereof, and all
charges, consignment and other fees, indemnifications, damages, penalties,
expenses (including expenses accruing after the filing of a petition
initiating any proceeding under any applicable bankruptcy law, whether or
not a claim therefor is allowable in such proceeding) and all other amounts
or liabilities payable in respect thereof; and (ii) any other Senior
Indebtedness, and all fees, expenses, indemnities and other monetary
obligations in respect thereof, which, at the date of creation thereof or
determination, has an aggregate principal amount outstanding of, or under
which at the date of creation thereof or determination, the holders thereof
are committed to lend, at least $7.5 million and is specifically designated
by the Company (with the consent of the Senior Representative for the Bank
Credit Facility unless the Trustee has received written notice from such
Senior Representative waiving such right of consent) in the instrument
evidencing or governing such Senior Indebtedness as "Designated Senior
Indebtedness" for purposes of this Indenture.
"disposition" or "sale" or "transfer" or other words of similar
meaning do not include the granting or suffering of a Permitted Lien in
order to secure Indebtedness permitted by the Indenture, provided that no
steps or actions have
7
been taken by the holder of such Permitted Lien to realize upon or dispose
of the assets subject thereto.
"Disqualified Stock" means any Capital Stock of any Person which, by
its terms, or upon the happening of any event or with the 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 91 days after the maturity date of the
Notes, or which is exchangeable or convertible into debt securities of such
Person, except to the extent that such exchange or conversion rights cannot
be exercised prior to 91 days after the maturity date of the Notes. Series
A Preferred Stock is not Disqualified Stock.
"Escrow Agreement" means the escrow or other similar arrangement
referred to in Exhibit D to the Asset Purchase Agreement dated as of May
20, 1996 and amended as of November 21, 1996 among Town & Country
Corporation, L.G. Balfour Company, Inc. and the Company.
"Euroclear" means the Euroclear System.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Offer" means the offer that shall be made by the Company
pursuant to the Registration Rights Agreement to exchange New Senior
Subordinated Notes for Senior Subordinated Notes.
"Existing Indebtedness" means all Indebtedness of the Company and its
Subsidiaries (other than under the Bank Credit Facility) in existence on
the Issue Date, until such amounts are repaid.
"Fixed Charge Coverage Ratio" means with respect to any specified
Person for any period, the ratio of the Consolidated Cash Flow of such
Person for such period to the Fixed Charges of such Person for such period.
In the event that such specified Person or any of its Subsidiaries
incurs, assumes, Guarantees, repays or redeems any Indebtedness (other than
ordinary course repayments of revolving credit borrowings under the
Revolving Credit Facility or payments in connection with the consignment of
gold under the Gold Consignment Facility) or such specified Person issues
or redeems Disqualified Stock subsequent to the commencement of the period
for which the Fixed Charge Coverage Ratio is being calculated but prior to
the date on which the event for which the calculation of the Fixed Charge
Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge
Coverage Ratio shall be calculated giving pro forma effect to such
incurrence, assumption, Guarantee, repayment or redemption of Indebtedness
or such issuance or redemption of Disqualified Stock (including giving pro
forma effect to the application of any cash net proceeds
8
therefrom), as if the same had occurred at the beginning of the applicable
four-quarter reference period.
In addition, for purposes of making the computation referred to above,
(i) acquisitions that have been made by the specified Person or
any of its Subsidiaries, including through mergers or consolidations
and including any related financing transactions, during the
four-quarter reference period or subsequent to such reference period
and on or prior to the Calculation Date shall be deemed to have
occurred on the first day of the four-quarter reference period and
Consolidated Cash Flow for such reference period shall be calculated
without giving effect to clause (iii) of the proviso set forth in the
definition of Consolidated Net Income, and
(ii) the Consolidated Cash Flow attributable to discontinued
operations, as determined in accordance with GAAP, and operations or
businesses disposed of prior to the Calculation Date, shall be
excluded, and
(iii) the Fixed Charges attributable to discontinued operations,
as determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, shall be excluded, but only
to the extent that the obligations giving rise to such Fixed Charges
will not be obligations of the specified Person or any of its
Subsidiaries following the Calculation Date.
"Fixed Charges" means, with respect to any Person for any period, the
sum of:
(i) the consolidated interest expense of such Person and its
Subsidiaries (other than any Acquisition Subsidiary or any Subsidiary
thereof) for such period, whether paid or accrued and whether expensed
or capitalized, determined on a consolidated basis and in accordance
with GAAP (including, without limitation, amortization of original
issue discount, non-cash interest payments, the interest component of
any deferred payment obligations, the interest component of all
Capital Lease Obligations, imputed interest with respect to
Attributable Debt, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance
financings, and net payments (if any) pursuant to Hedging Obligations)
excluding, however, in the case of the Company, obligations of the
Company resulting from any extraordinary or non-recurring actuarial
adjustment assumptions with respect to post-retirement medical and
other benefits, plus
9
(ii) any interest expense on Indebtedness of another Person that
is Guaranteed by such Person or one of its Subsidiaries (other than
any Acquisition Subsidiary or any Subsidiary thereof) or secured by a
Lien on assets of such Person or one of its Subsidiaries (other than
Acquisition Subsidiary or any Subsidiary thereof) (whether or not such
Guarantee or Lien is called upon), plus
(iii) the product of (a) all cash dividend payments (and non-cash
dividend payments in the case of a Person that is a Subsidiary) on any
series of Preferred Stock of such Person, times (b) a fraction, the
numerator of which is one and the denominator of which is one minus
the then current combined federal, state and local statutory tax rate
of such Person, expressed as a decimal, in each case, on a
consolidated basis and in accordance with GAAP.
"Foreign Subsidiary" means any Subsidiary formed under the laws of any
jurisdiction other than the United States of America or any state,
territory, possession or political subdivision thereof.
"FTC Order" means any order of the Federal Trade Commission requiring
the Company to sell certain Assets or to refrain from certain business
activities or lines of business.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment
of the accounting profession of the United States, as in effect on the
Issue Date; provided, however, that all financial statements of the Company
(but not any other financial information or ratios calculated pursuant
hereto) provided by the Company to the Holders of the Notes or the Trustee
shall be prepared in accordance with GAAP as in effect on the date of such
report or other financial information.
"Gold Consignment Facility" means the gold consignment facility, as
set forth in the Bank Credit Facility, together with the related documents
thereto (including, without limitation, any related guarantee agreements
and security documents), in each case as such agreements may be amended
(including any amendment and restatement thereof), supplemented or
otherwise modified or replaced (including with other lenders), from time to
time and including any agreement extending the maturity of, refinancing,
modifying, increasing, substituting for or otherwise restructuring
(including, but not limited to, the inclusion of additional or different or
substitute lenders or bank agents thereunder)
10
all or any portion of the Indebtedness, including changing the consignment
limits, under such agreements or any successor or replacement agreements,
regardless of whether the Gold Consignment Facility or any portion thereof
was outstanding or in effect at the time of such replacement, refinancing,
increase, substitution, extension, restructuring, supplement or
modification.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit
and reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under interest rate swap agreements, interest
rate cap agreements, interest rate collar agreements, foreign currency
exchange contracts, foreign currency swaps, commodities futures and any
other agreement designed to protect such Person against fluctuations in
interest rates, currency valuations or commodity prices.
"Holder" means a Person in whose name a Note is registered.
"Indebtedness" means, with respect to any Person, without duplication,
(i) any liability of such Person (a) for borrowed money, or under
any reimbursement obligation relating to a letter of credit, bankers'
acceptance or note purchase facility; (b) evidenced by a bond, note,
debenture or similar instrument; (c) for the balance deferred and
unpaid of the purchase price for any property or service or any
obligation upon which interest charges or consignment fees are
customarily paid (except for trade payables (other than consignments)
arising in the ordinary course of business); (d) for the payment of
money relating to a lease that is required to be classified as a
Capitalized Lease Obligation in accordance with GAAP; or (e) for the
maximum fixed repurchase price of any Disqualified Stock of such
Person plus accrued and unpaid dividends thereon;
(ii) any obligation of others secured by a Lien on any asset of
such Person, whether or not any obligation secured thereby has been
assumed, by such Person;
(iii) any obligations of such Person under any Hedging
Obligation; and
(iv) any Guarantee of such person or any obligation of such
Person which in economic effect is a guarantee with respect to any
Indebtedness of another Person.
11
For purposes of this definition, "maximum fixed repurchase price" of any
Disqualified Stock which does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Disqualified Stock as if
such Disqualified Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to the Indenture, and if such
price is based upon, or measured by, the fair market value of such
Disqualified Stock, such fair market value shall be determined in good
faith by the board of directors of the Person issuing such Disqualified
Stock.
"Indenture" means this Indenture, as amended or supplemented from time
to time.
"Investment" by any Person means any direct or indirect loan, advance
(or other extension of credit) or capital contribution (by means of any
transfer of cash or other Property) to another Person or any other payments
for Property or services for the account or use of another Person,
including without limitation the following:
(i) the purchase or acquisition of any Capital Stock or other
evidence of beneficial ownership in another Person;
(ii) the purchase, acquisition or Guarantee of the Indebtedness
of another Person or the issuance of a "keep well" with respect
thereto; and
(iii) the purchase or acquisition of the business or assets of
another Person;
but shall exclude:
(a) accounts receivable and other extensions of trade credit on
commercially reasonable terms in accordance with normal trade
practices;
(b) the acquisition of property and assets from equipment
suppliers and other vendors in the ordinary course of business,
provided that such property and assets do not represent all or
substantially all of the production capacity of the supplier or other
vendor; and
(c) the acquisition of assets, Capital Stock or other securities
by the Company for consideration consisting solely of the Capital
Stock of the Company other than Disqualified Stock.
"Issue Date" means the date on which the Notes are first authenticated
and delivered under this Indenture.
12
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under
applicable law (including any conditional sale or other title retention
agreement, any lease in the nature thereof, any option or other agreement
to sell or give a security interest in and any filing of or agreement to
give any financing statement under the Uniform Commercial Code (or
equivalent statutes) of any jurisdiction).
"Liquidated Damages" means all liquidated damages then owing pursuant
to Section 5 of the Registration Rights Agreement.
"Net Proceeds" means the sum of the aggregate cash proceeds received
by the Company or any of its Subsidiaries (other than an Acquisition
Subsidiary or a Subsidiary of an Acquisition Subsidiary) in respect of any
Asset Sale (including, without limitation, any cash received upon the sale
or other disposition of any non-cash consideration received in any such
Asset Sale), and any funds received by the Company pursuant to the Escrow
Agreement, net of (i) the direct costs relating to such Asset Sale
(including, without limitation, legal, accounting and investment banking
fees, and sales commissions) and any relocation, severance or shut-down
costs or expenses incurred as a result thereof, (ii) taxes paid or payable
as a result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), (iii) amounts required to be
applied to the repayment of Indebtedness that is (a) secured by a Lien on
the asset or assets that were the subject of such Asset Sale, (b) Senior
Indebtedness, the repayment of which is required either pursuant to the
terms thereof, by applicable law, or in order to obtain a necessary consent
to such transaction, or (c) Indebtedness pari passu with Notes, the
repayment or purchase of which is required pursuant to the terms thereof on
a pro rata basis with the Notes in the event of an Asset Sale, and (iv) any
reserves established in accordance with GAAP for adjustment in respect of
the sale price of such asset or assets or for any liabilities associated
with such Asset Sale, including, without limitation, pension and other
post-employment benefit liabilities, liabilities relating to environmental
matters and liabilities under any indemnification obligations associated
with such Asset Sale; provided that any reversal of any such reserve shall
be added back in the determination of Net Proceeds.
"New Senior Subordinated Notes" means notes issued by the Company
hereunder containing terms identical to the Senior Subordinated Notes
(except that (i) interest thereon shall accrue from the last date on which
interest was paid on the Senior Subordinated Notes or, if no such interest
has been paid, from the date of original issuance, (ii) the legend or
legends relating to transferability and other related matters set forth on
the Senior Subordinated Notes, including the text referred to in footnote 2
of Exhibit A hereto, shall be removed or appropriately altered, and (iii)
as otherwise set forth herein), to be offered to Holders of Senior
13
Subordinated Notes in exchange for Senior Subordinated Notes pursuant to
the Exchange Offer.
"Note Custodian" means the Trustee, as custodian with respect to the
Notes in global form, or any successor entity thereto.
"Notes" means the Senior Subordinated Notes and the New Senior
Subordinated Notes, if any, that are issued under this Indenture, as
amended or supplanted from time to time.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable
under the documentation governing any Indebtedness.
"Officer" means, (a) with respect to any Person that is a corporation,
the Chairman of the Board, the Chief Executive Officer, the President, the
Chief Operating Officer, the Chief Financial Officer, the Treasurer, the
Controller, the Secretary or any Vice-President of such Person and (b) with
respect to any other Person, the individuals selected by such Person to
perform functions similar to those of the officers listed in clause (a).
"Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the Chief
Executive Officer, the Chief Financial Officer, the Treasurer or the
principal accounting officer of the Company, that meets the requirements of
Sections 11.4 and 11.5 hereof.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of
Sections 11.4 and 11.5 hereof. The counsel may be an employee of or counsel
to the Company, any Subsidiary of the Company or the Trustee.
"Permitted Investments" means:
(a) any Investment in the Company or in a Wholly Owned Subsidiary
of the Company (other than an Acquisition Subsidiary or a Subsidiary
thereof);
(b) any Investment in cash or Cash Equivalents;
(c) any Investment by the Company or any Subsidiary of the
Company in a Person, if as a result of such Investment (i) such Person
becomes a Wholly Owned Subsidiary of the Company (other than an
Acquisition Subsidiary or a Subsidiary thereof) or (ii) such Person is
merged, consolidated or amalgamated with or into, or transfers or
conveys substantially all of its assets to, or is
14
liquidated into, the Company or a Wholly Owned Subsidiary of the
Company (other than an Acquisition Subsidiary or a Subsidiary
thereof);
(d) any Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made pursuant to and in
compliance with Section 4.10 hereof;
(e) any obligations or shares of Capital Stock received in
connection with or as a result of a bankruptcy, workout or
reorganization of the issuer of such obligations or shares of Capital
Stock;
(f) any Investment received involuntarily;
(g) any Investment existing on the date of the Indenture;
(h) Investments by the Company or any Subsidiary of the Company
in Permitted Lines of Business that do not exceed $5 million in the
aggregate at any one time outstanding;
(i) Investments by any Acquisition Subsidiary or any Subsidiary
of an Acquisition Subsidiary in Permitted Lines of Business (without
regard to the aggregate amount thereof) but excluding any Investment
in Capital Stock or Indebtedness of the Company or any of its
Subsidiaries (other than an Acquisition Subsidiary or any Subsidiary
thereof);
(j) Investments representing loans or advances made to employees
in the ordinary course of business not exceeding $500,000 at any one
time; and
(k) Investments representing loans or advances made to
independent sales representatives made in the ordinary course of
business.
"Permitted Liens" means:
(i) Liens on assets of the Company or its Subsidiaries securing
the Bank Credit Facility;
(ii) Liens on assets of the Company or its Subsidiaries securing
Senior Indebtedness which is permitted by the terms of the Indenture
to be incurred;
(iii) Liens securing Existing Indebtedness;
15
(iv) Liens in favor of the Company;
(v) Liens on property of a Person existing at the time such
Person is merged into or consolidated with the Company or any
Subsidiary of the Company; provided that such Liens were not incurred
in contemplation of such merger or consolidation and do not extend to
any assets other than those of the Person merged into or consolidated
with the Company or any Subsidiary of the Company;
(vi) Liens on property existing at the time of acquisition
thereof by the Company or any Subsidiary of the Company, provided that
such Liens were not incurred in contemplation of such acquisition and
do not extend to any assets other than those so acquired by the
Company or any Subsidiary of the Company;
(vii) Liens to secure the performance of statutory obligations,
surety or appeal bonds, performance bonds or other obligations of a
like nature incurred in the ordinary course of business (or to secure
reimbursement obligations in respect of letters of credit issued in
connection with any of the foregoing obligations);
(viii) Liens to secure Indebtedness (including Capital Lease
Obligations) permitted to be incurred by clause (v) of the second
paragraph of Section 4.9 hereof covering only the assets acquired with
such Indebtedness;
(ix) Liens existing on the Issue Date;
(x) Liens for taxes, assessments or governmental charges or
claims that are not yet delinquent or that 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;
(xi) Liens incurred in the ordinary course of business of the
Company or any Subsidiary of the Company with respect to obligations
that do not exceed $5.0 million at any one time outstanding and that
(a) are not incurred in connection with the borrowing of money or the
obtaining of advances or credit (other than trade credit in the
ordinary course of business) and (b) do not in the aggregate
materially detract from the value of the property or materially impair
the use thereof in the operation of business by the Company or such
Subsidiary;
16
(xii) Liens to secure any Indebtedness which is pari passu with
or subordinate in right of payment to the Notes, where (a) in the case
of any Lien securing Indebtedness that is pari passu in right of
payment with the Notes, all obligations with respect to the Notes are
secured on an equal and ratable basis with the Indebtedness so secured
and (b) in the case of any Lien securing Indebtedness that is
subordinated in right of payment to the Notes, all obligations with
respect to the Notes are secured on a senior basis reflecting the
subordination of the Indebtedness so secured on terms substantially
similar to, or more favorable to senior creditors than, those
contained herein, in each case, until such time as such pari passu or
subordinated Indebtedness is no longer secured by such Lien, at which
time such Lien securing the Notes may be automatically released; and
(xiii) Liens granted by an Acquisition Subsidiary or a Subsidiary
of an Acquisition Subsidiary to secure Indebtedness incurred by such
Acquisition Subsidiary or Subsidiary of an Acquisition Subsidiary in
accordance with Section 4.9 hereof.
"Permitted Line of Business" means (i) the scholastic,
graduation-related and commemorative products business, the fine paper and
non-textbook graphics products business, the recognition, affinity and
insignia products business, and such business activities as are incidental
or related thereto, and (ii) such other businesses as the Company or its
Subsidiaries are engaged in on the Issue Date.
"Permitted Refinancing Debt" means any Indebtedness of the Company or
any of its Subsidiaries issued in exchange for, or the net proceeds of
which are used to extend, refinance, renew, replace, defease or refund
other Indebtedness of the Company or any of its Subsidiaries (other than an
Acquisition Subsidiary or a Subsidiary of an Acquisition Subsidiary);
provided that, except with respect to Indebtedness incurred to repay,
repurchase, redeem or defease all of the outstanding Notes at one time:
(i) the principal amount (or accreted value, if applicable), of
such Permitted Refinancing Debt does not exceed the principal amount
(or accreted value, if applicable), of the Indebtedness so extended,
refinanced, renewed, replaced, defeased or refunded (plus the amount
of up to six months of accrued and unpaid interest on such
Indebtedness and reasonable premiums, fees and expenses incurred in
connection therewith);
(ii) such Permitted Refinancing Debt has a final maturity date
later than the final maturity date of, and has a Weighted Average Life
to Maturity equal to or greater than the Weighted
17
Average Life to Maturity of, the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded;
(iii) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to
the Notes, such Permitted Refinancing Debt has a final maturity date
later than the final maturity date of, and is subordinated in right of
payment to, the Notes on terms at least as favorable to the Holders of
Notes as those contained in the documentation governing the
Indebtedness being extended, refinanced, renewed, replaced, defeased
or refunded; and
(iv) such Indebtedness is incurred either by the Company or by
the Subsidiary who is the obligor on the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded.
"Person" means any individual, corporation, limited or general
partnership, limited liability company, joint venture, association, joint
stock company, trust, unincorporated organization or government or any
agency or political subdivision thereof.
"PORTAL Market" means the Private Offerings, Resales and Trading
through Automated Linkages Market operated by the National Association of
Securities Dealers, Inc. or any successor thereto.
"Preferred Stock" means, with respect to any Person, all Capital Stock
of such Person of any class or classes (however designated, whether voting
or non-voting) that ranks prior, as to distribution in profit or
liquidation, to shares of Common Stock of such Person.
"Principals" means Castle Harlan Partners II, L.P., Castle Harlan,
Inc. and their respective Affiliates and the officers and directors of the
Company.
"Public Equity Offering" means any underwritten primary public
offering of the Common Stock or other Voting Stock of the Company, pursuant
to an effective registration statement (other than a registration statement
on Form S-4, Form S-8, or any successor or similar form) under the
Securities Act.
"Purchase Date" means, with respect to any Note to be repurchased, the
date fixed for such repurchase by or pursuant to this Indenture.
"Purchase Price" means the amount payable for the repurchase of any
Note on a Purchase Date, exclusive of accrued and unpaid interest and
Liquidated Damages (if any) thereon to the Purchase Date, unless otherwise
specifically provided.
18
"QIB" means a qualified institutional buyer as defined in Rule 144A
under the Securities Act.
"Redemption Date" means, with respect to any Note to be redeemed, the
date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price" means the amount payable for the redemption of any
Note on a Redemption Date, exclusive of accrued and unpaid interest and
Liquidated Damages (if any) thereon to the Redemption Date, unless
otherwise specifically provided.
"Related Party" means, with respect to any Principal, (A) any
controlling stockholder, director or officer, 80% (or more) owned
Subsidiary, or spouse or immediate family member or estate thereof (in the
case of an individual) of such Principal or (B) any trust, corporation,
partnership or other entity, the beneficiaries, stockholders, partners,
owners or Persons beneficially holding an 80% or more controlling interest
of which consist of such Principal and/or such other Persons referred to in
the immediately preceding clause (A).
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of December 16, 1996, among the Company, Lehman
Brothers Inc. and BT Securities Corporation, as such agreement may be
amended, modified or supplemented from time to time.
"Regulation S" means Regulation S as promulgated under the Securities
Act.
"Responsible Officer" means, when used with respect to the Trustee,
any officer of the Trustee assigned by the Trustee to administer this
Indenture and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Revolving Credit Facility" means the revolving credit facility, as
set forth in the Bank Credit Facility, together with the related documents
thereto (including, without limitation, any letters of credit issued
pursuant thereto, and any related guarantee agreements and security
documents), in each case as such agreements may be amended (including any
amendment and restatement thereof), supplemented or otherwise modified or
replaced (including with other lenders), from time to time and including
any agreement extending the maturity of, refinancing, modifying,
increasing, substituting for or otherwise restructuring (including, but not
limited to, the inclusion of additional or different or substitute lenders
or bank agents thereunder) all or any portion of the Indebtedness,
19
including changing the borrowing limits, under such agreements or any
successor or replacement agreements, regardless of whether the Revolving
Credit Facility or any portion thereof was outstanding or in effect at the
time of such replacement, refinancing, increase, substitution, extension,
restructuring, supplement or modification.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Indebtedness" means Designated Senior Indebtedness and the
principal of, and premium (if any) and interest (including interest
accruing after the filing of a petition initiating any proceeding under any
applicable bankruptcy law, whether or not a claim therefor is allowable in
such proceeding) on, any other Indebtedness of the Company, whether
outstanding on the date of the Indenture or thereafter created, incurred or
assumed, unless, in the case of any particular Indebtedness, the instrument
creating or evidencing, or the agreement governing, such Indebtedness or
pursuant to which such Indebtedness is outstanding expressly provides that
such Indebtedness shall not be senior in right of payment to the Notes.
Notwithstanding the foregoing, "Senior Indebtedness" shall not include:
(i) Indebtedness evidenced by the Notes;
(ii) Indebtedness that is by its terms subordinate or junior in
right of payment to any other Indebtedness of the Company;
(iii) that portion of any Indebtedness which is incurred in
violation of this Indenture;
(iv) Indebtedness of the Company to a Subsidiary or any other
Affiliate of the Company;
(v) Indebtedness which is represented by Disqualified Stock;
(vi) any liability for federal, state, local or other taxes owed
or owing by the Company;
(vii) accounts payable or other obligations to trade creditors
created, incurred or assumed in the ordinary course of business in
connection with obtaining materials or services and other current
liabilities (excluding the current portion of long-term Senior
Indebtedness);
20
(viii) Indebtedness of or amounts owing by the Company for
compensation to employees for services; and
(ix) amounts owing under leases (other than Capital Lease
Obligations).
"Senior Representative" means any trustee, agent or representative (if
any) for the holders of any Designated Senior Indebtedness.
"Senior Subordinated Notes" means the Company's 11% Senior
Subordinated Notes due 2007 issued pursuant to this Indenture, but excludes
the New Senior Subordinated Notes.
"Series A Preferred Stock" means the Series A preferred stock of the
Company, par value $.01 per share.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation
S-X, promulgated pursuant to the Securities Act, as such Regulation is in
effect on the date hereof.
"Subsidiary" of any Person means any other Person, the majority of the
Voting Stock or other ownership interests having ordinary voting power to
elect a majority of the board of directors of which is directly or
indirectly owned by such Person.
"Subsidiary Guarantee" means a Guarantee, substantially in the form of
Exhibit C hereto, executed and delivered by a Subsidiary Guarantor in
accordance with the provisions hereof.
"Subsidiary Guarantor" means any Subsidiary of the Company that
executes a Subsidiary Guarantee in accordance with the provisions of
Section 4.18 hereof, and its successors and assigns.
"Transfer Restricted Security" means a Note that is a restricted
security as defined in Rule 144(a)(3) under the Securities Act.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture,
and thereafter means the successor serving hereunder.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA; provided that in the event the Trust Indenture Act of 1939
is amended after such date, "TIA" means, to the extent required by any such
amendment, the Trust Indenture Act of 1939 as so amended.
21
"U.S. Government Securities" shall mean securities which are (i)
direct obligations of the United States of America for the payment of which
its full faith and credit is pledged or (ii) obligations of a Person
controlled or supervised by and acting as an agency or instrumentality of
the United States of America, the payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States of
America, which, in either case, are not callable or redeemable at the
option of the issuer thereof, and shall also include a depository receipt
issued by a bank or trust company as custodian with respect to any such
U.S. Government Securities or a specific payment of interest on or
principal of any such U.S. Government Securities held by such custodian for
the account of the holder of a 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
Securities or the specific payment of interest on or principal of the U.S.
Government Securities evidenced by such depository receipt.
"U.S. Persons" means any U.S. Person as defined in Regulation S.
"Voting Stock" means, with respect to any Person, securities of any
class or classes of Capital Stock in such Person entitling the holders
thereof (whether at all times or at the times that such class of Capital
Stock has voting power by reason of the happening of any contingency) to
vote in the election of members of the board of directors or other
governing body of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the
sum of the products obtained by multiplying (a) 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 (b) the number of years (calculated to the nearest one-twelfth)
that will elapse between such date and the making of such payment, by (ii)
the then outstanding principal amount of such Indebtedness.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such
Person, all of the outstanding Capital Stock or other ownership interests
of which (other than directors' qualifying shares or, in the case of a
Foreign Subsidiary of the Company, shares otherwise required by law to be
owned by other Persons, up to a maximum of 5% of the outstanding Capital
Stock, Voting Stock or other ownership interests of such Subsidiary) is at
the time owned by (i) such Person or (ii) one or more Wholly Owned
Subsidiaries of such Person or (iii) Such Person and one or more Wholly
Owned Subsidiaries of such Person.
22
Section 1.2. Other Definitions.
Defined in
Term Section
---- ----------
"Affiliate Transaction"........................4.11
"Asset Sale Offer".............................4.10
"Agent Member".................................2.6
"Asset Sale Offer Period"......................3.10
"Calculation Date".............................1.1
"Certificated Notes"...........................2.1
"Change of Control Offer"......................4.15
"Change of Control Offer Period"...............3.9
"Change of Control Payment"....................4.15
"Change of Control Payment Date"...............4.15
"Covenant Defeasance"..........................8.3
"Event of Default..............................6.1
"Excess Proceeds...............................4.10
"Foreign Person"...............................2.6
"Global Note"..................................2.1
"incur"........................................4.9
"Institutional Accredited Investors"...........2.1
"Legal Defeasance".............................8.2
"Management Agreement".........................4.7
"Offer Amount".................................3.10
"Offshore Certificated Notes"..................2.1
"Paying Agent".................................2.3
"Payment Default"..............................6.1
"Permanent Regulation S Global Note"...........2.1
"Private Placement Legend".....................2.6
"Public Equity Offering".......................3.9
"Registrar"....................................2.3
"Regulation S Global Note".....................2.1
"Restricted Payments"..........................4.7
"Rule 144A Global Note"........................2.1
"Senior Covenant Default".....................10.2
"Senior Payment Default"......................10.2
"Special Redemption"...........................3.9
"Surviving Entity".............................5.1
"Temporary Regulation S Global Note"...........2.1
"U.S. Certificated Notes"......................2.1
23
Section 1.3. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Notes;
"indenture security holder" means a Holder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Notes means the Company and any successor obligor
upon the Notes.
All other terms used in this Indenture that are defined by the TIA, defined
by TIA reference to another statute or defined by Commission rule under the TIA
have the meanings so assigned to them.
Section 1.4. Rules of Construction.
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(c) "or" is not exclusive;
(d) words in the singular include the plural, and in the plural
include the singular;
(e) provisions apply to successive events and transactions; and
(f) references to sections of or rules under the Securities Act, the
Exchange Act and the TIA shall be deemed to include substitute, replacement
and successor sections or rules adopted by the Commission from time to
time.
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 an agent duly appointed in writing;
and, except as herein otherwise expressly
24
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 Holders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Section 7.1) 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
the certificate of any notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him or her the execution thereof. Where such
execution is by an officer of a corporation or a member of a partnership, on
behalf of such corporation or partnership, such certificate or affidavit shall
also constitute sufficient proof of his or her authority.
(c) The ownership of Notes shall be proved by the register maintained by
the Registrar.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Note shall bind every future Holder of the
same Note and the holder of every Note issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof in respect of anything done
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 Note.
ARTICLE II.
THE NOTES
Section 2.1. Form and Dating.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A hereto. The Notes may have notations,
legends or endorsements required by law, stock exchange rule or usage in
addition to those set forth in Exhibit A hereto. Each Note shall be dated the
date of its authentication. The Notes shall be in denominations of $1,000 and
integral multiples thereof.
The terms and provisions contained in the Notes shall constitute, and are
hereby expressly made, a part of this Indenture and 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.
Notes offered and sold in reliance on Rule 144A shall be issued initially
in the form of a single permanent global Note in registered form, substantially
in the form set forth in Exhibit A (the "Rule 144A Global Note"), deposited with
the Trustee, as custodian for the Depositary, duly executed by the Company and
authenticated by the Trustee as hereinafter provided. The aggregate principal
amount of the Rule 144A Global Note may from time to time be increased or
25
decreased by adjustments made on the records of the Trustee, as custodian for
the Depositary or its nominee, as hereinafter provided.
Notes offered and sold in offshore transactions in reliance on Regulation S
shall be issued initially in the form of a single temporary global Note in
registered form substantially in the form set forth in Exhibit A (the "Temporary
Regulation S Global Note"), deposited with the Trustee, as custodian for the
Depositary, duly executed by the Company and authenticated by the Trustee as
hereinafter provided. At any time following 40 days after the later of the
commencement of the offering of the Notes and the Issue Date, upon receipt by
the Trustee and the Company of a duly executed certificate substantially in the
form of Exhibit B(1) hereto, a single permanent Global Note in registered form
substantially in the form set forth in Exhibit A (the "Permanent Regulation S
Global Note," and together with the Temporary Regulation S Global Note, the
"Regulation S Global Note") duly executed by the Company and authenticated by
the Trustee as hereinafter provided shall be deposited with the Trustee, as
custodian for the Depositary, and the Registrar shall reflect on its books and
records the date and a decrease in the principal amount of the Temporary
Regulation S Global Note in an amount equal to the principal amount of the
beneficial interest in the Temporary Regulation S Global Note transferred.
Notes offered and sold to institutional "accredited investors" (as defined
in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) ("Institutional
Accredited Investors") shall be issued in the form of permanent U.S.
Certificated Notes in registered form in substantially the form set forth in
Exhibit A (the "U.S. Certificated Notes"). Securities issued pursuant to Section
2.1 in exchange for interests in the Rule 144A Global Note or the Regulation S
Global Note shall be in the form of permanent Certificated Notes in registered
form substantially in the form set forth in Exhibit A (the "Offshore
Certificated Notes").
The Offshore Certified Notes and U.S. Certificated Notes are sometimes
collectively herein referred to as the "Certificated Notes". The Rule 144A
Global Note and the Regulation S Global Note are sometimes referred to herein as
the "Global Note."
Section 2.2. Execution and Authentication.
Two Officers of the Company shall sign the Notes for the Company by manual
or facsimile signature. The seal of the Company shall be reproduced on the Notes
and may be in facsimile form.
If an Officer whose signature is on a Note no longer holds that office at
the time a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature of
the Trustee. The signature shall be conclusive evidence that the Note has been
authenticated under this Indenture.
The Trustee, upon a written order of the Company signed by two Officers of
the Company, together with the other documents required by Sections 11.4 and
11.5 hereof, shall authenticate Senior Subordinated Notes for original issue up
to the aggregate principal amount stated in paragraph 4 of the Notes. The
Trustee, upon written order of the Company signed by
26
two Officers of the Company, together with the other documents required by
Sections 11.4 and 11.5 hereof, shall authenticate New Senior Subordinated Notes
for original issue up to the aggregate principal amount stated in paragraph 4 of
the Notes; provided that such New Senior Subordinated Notes shall be issuable
only upon the valid surrender for cancellation of Senior Subordinated Notes of a
like aggregate principal amount in accordance with the Exchange Offer. Such
written order of the Company shall specify the amount of Notes to be
authenticated and the date on which the original issue of Notes is to be
authenticated. The aggregate principal amount of Notes outstanding at any time
may not exceed such amount except as provided in Section 2.7 hereof.
The Trustee may appoint an authenticating agent acceptable to the Company
to authenticate Notes. An authenticating agent may authenticate Notes whenever
the Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Company or an Affiliate of the Company.
Section 2.3. Registrar and Paying Agent.
The Company shall maintain an office or agency where Notes may be presented
for registration of transfer or for exchange ("Registrar") and an office or
agency where Notes may be presented for payment ("Paying Agent"). The Registrar
shall keep a register of the Notes and of their transfer and exchange. At the
option of the Company, payment of interest and Liquidated Damages may be made by
check mailed to the Holders at their addresses set forth in the register of
Holders, provided that payment by wire transfer of immediately available funds
will be required with respect to principal, Redemption Price and Purchase Price
of, and interest and Liquidated Damages (if any) on, all Global Notes and all
other Notes the Holders of which shall have provided wire transfer instructions
to the Trustee or the Paying Agent. The Company may appoint one or more
co-registrars and one or more additional paying agents. The term "Registrar"
includes any co-registrar and the term "Paying Agent" includes any additional
paying agent. The Company may change any Paying Agent or Registrar without
notice to any Holder. The Company shall notify the Trustee in writing of the
name and address of any Paying Agent not a party to this Indenture. If the
Company fails to appoint or maintain another entity as Registrar or Paying
Agent, the Trustee shall act as such. The Company may act as Paying Agent or
Registrar. The Depositary shall, by acceptance of a Global Note, agree that
transfers of beneficial interests in such Global Note may be effected only
through a book-entry system maintained by the Depositary (or its agent), and
that ownership of a beneficial interest in the Note shall be required to be
reflected in a book entry.
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Note Custodian with respect to the Global Notes.
Section 2.4. Paying Agents To Hold Money in Trust.
The Company shall require each Paying Agent other than the Trustee to agree
in writing that the Paying Agent will hold in trust for the benefit of Holders
or the Trustee all money held by the Paying Agent for the payment of principal
of and premium, if any, interest and Liquidated
27
Damages, if any, on the Notes, and will notify the Trustee of any default by the
Company in making any such payment. While any such default continues, the
Trustee may require a Paying Agent to pay all money held by it to the Trustee.
The Company at any time may require a Paying Agent to pay all money held by it
to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other
than the Company) shall have no further liability for the money. If the Company
acts as Paying Agent, it shall segregate and hold in a separate trust fund for
the benefit of the Holders all money held by it as Paying Agent. Upon any
bankruptcy or reorganization proceedings relating to the Company, the Trustee
shall serve as Paying Agent for the Notes.
Section 2.5. Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA ss.312(a). If the Trustee is not
the Registrar, the Company shall furnish to the Trustee at least seven Business
Days before each interest payment date and at such other times as the Trustee
may request in writing, a list in such form and as of such date as the Trustee
may reasonably require of the names and addresses of the Holders of Notes, and
the Company shall otherwise comply with TIA ss.312(a).
Section 2.6. Transfer and Exchange.
(a) Transfer and Exchange Generally: Book Entry Provisions. Upon surrender
for registration of transfer of any Note to the Registrar, and satisfaction of
the requirements for such transfer set forth in this Section 2.6, the Company
shall execute, and the Trustee shall authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Notes of any
authorized denominations and of a like aggregate principal amount and bearing
such restrictive legends as may be required by this Indenture.
Notes may be exchanged for other Notes of any authorized denominations and
of a like aggregate principal amount, upon surrender of the Notes to be
exchanged at any such office or agency maintained by the Company pursuant to
Section 4.2. Whenever any Notes are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and deliver, the Notes which
the Holder making the exchange is entitled to receive bearing registration
numbers not contemporaneously outstanding.
All Notes presented or surrendered for registration of transfer or exchange
shall be duly endorsed, or be accompanied by a written instrument or instruments
of transfer in form satisfactory to the Company and the Registrar, and the Notes
shall be duly executed by the Holder thereof or his attorney duly authorized in
writing. Except as otherwise provided in this Indenture, and in addition to the
requirements set forth in the legend referred to in Section 2.6(g)(i) below, in
connection with any transfer of Transfer Restricted Securities any request for
transfer shall be accompanied by a certification to the Trustee relating to the
manner of such transfer substantially in the form of Exhibit B(2) hereto.
(b) Book-Entry Provisions for the Global Notes. The Rule 144A Global Note
and Regulation S Global Note initially shall (i) be registered in the name of
the Depositary or the
28
nominee of such Depositary, (ii) be delivered to the Trustee as custodian for
the Depositary and (iii) bear legends as set forth in Section 2.6(g).
Members of, or participants in, the Depositary ("Agent Members") shall have
no rights under this Indenture with respect to any Rule 144A Global Note or
Regulation S Global Note, as the case may be, held on their behalf by the
Depositary, or the Trustee as its custodian, or under the Rule 144A Global Note
or Regulation S Global Note, as the case may be, 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 Rule 144A Global Note or Regulation S Global Note, as
the case may be, 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 impair, as between the
Depositary and its Agent Members, the operation of customary practices governing
the exercise of the rights of a holder of any Note.
Transfers of the Rule 144A Global Note and the Regulation S Global Note
shall be limited to transfers of such Rule 144A Global Note or Regulation S
Global Note in whole, but not in part, to the Depositary, its successors or
their respective nominees. Beneficial interests in Rule 144A Global Note and the
Regulation S Global Note may be transferred in accordance with the applicable
rules and procedures of the Depositary and the provisions of this Section 2.6.
The registration of transfer and exchange of beneficial interests in the Global
Note, which does not involve the issuance of a Certificated Note, shall be
effected through the Depositary, in accordance with this Indenture (including
the restrictions on transfer set forth herein) and the procedures of the
Depositary therefor. The Trustee shall have no responsibility or liability for
any act or omission of the Depositary.
At any time at the request of the beneficial holder of an interest in the
Rule 144A Global Note or Permanent Regulation S Global Note to obtain a
Certificated Note, such beneficial holder shall be entitled to obtain a
Certificated Note upon written request to the Trustee and the Note Custodian in
accordance with the standing instructions and procedures existing between the
Note Custodian and Depositary for the issuance thereof. Upon receipt of any such
request, the Trustee, or the Note Custodian at the direction of the Trustee,
will cause, in accordance with the standing instructions and procedures existing
between the Depositary and the Note Custodian, the aggregate principal amount of
the Rule 144A Global Note or Permanent Regulation S Global Note, as appropriate,
to be reduced by the principal amount of the Certificated Note issued upon such
request to such beneficial holder and, following such reduction, the Company
will execute and the Trustee will authenticate and deliver to such beneficial
holder (or its nominee) a Certificated Note or Certificated Notes in the
appropriate aggregate principal amount in the name of such beneficial holder (or
its nominee) and bearing such restrictive legends as may be required by this
Indenture.
(c) Transfers to Non-QIB Institutional Accredited Investors. The following
provisions shall apply with respect to the registration of any proposed transfer
of a Transfer Restricted Security to any Institutional Accredited Investor that
is not a QIB (other than any Person that is not a U.S. Person as defined under
Regulation S, a "Foreign Person"):
29
(i) The Registrar shall register the transfer of any Note, whether or
not such Note bears the Private Placement Legend, if (x) (A) the requested
transfer is at least three years after the later of the Issue Date of the
Notes and (B) the proposed transferee has certified to the Registrar that
the requested transfer is at least three years after last date on which
such Note was held by an Affiliate of the Company, or (y) the proposed
transferee has delivered to the Registrar (A) a certificate substantially
in the form of Exhibit D hereto and (B) such certifications, legal opinions
and other information as the Trustee and the Company may reasonably request
to confirm that such transaction is in compliance with the Securities Act;
and
(ii) If the proposed transferor is an Agent Member holding a
beneficial interest in the Global Note, upon receipt by the Registrar of
(x) the documents, if any, required by clause (i) and (y) instructions
given in accordance with the Depositary's and the Registrar's procedures,
the Registrar shall reflect on its books and records the date and a
decrease in the principal amount of the Global Note in an amount equal to
the principal amount of the beneficial interest in the Global Note to be
transferred, and the Company shall execute, and the Trustee shall
authenticate and deliver, one or more Certificated Notes of like tenor and
amount.
(d) Transfers to QIBs. The following provisions shall apply with respect to
the registration of any proposed transfer of a Transfer Restricted Security to a
QIB (other than Foreign Persons):
(i) If the Note to be transferred consists of Certificated Notes or an
interest in the Regulation S Global Note, the Registrar shall register the
transfer if such transfer is being made by a proposed transferor who has
checked the box provided for on a certificate substantially in the form of
Exhibit B(2) 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 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
(ii) If the proposed transferee is an Agent Member, and the Note to be
transferred consists of Certificated Notes or an interest in the Regulation
S Global Note, upon receipt by the Registrar of the documents referred to
in clause (i) and instructions given in accordance with the Depositary's
and the Registrar's procedures, the Registrar shall reflect on its books
and records the date and an increase in the principal amount of the Rule
144A Global Note in an amount equal to the principal amount of the
Certificated Notes or the interest in the Regulation S Global Note, as the
case may be, to be transferred, and the Trustee shall cancel the
Certificated Notes or decrease the amount of the Regulation S Global Note
so transferred.
30
(e) Transfers of Interests in the Temporary Regulation S Global Note. The
following provisions shall apply with respect to the registration of any
proposed transfer of interests in the Temporary Regulation S Global Note:
(i) The Registrar shall register the transfer of an interest in the
Temporary Regulation S Global Certificate if (x) the proposed transferor
has delivered to the Registrar a certificate substantially in the form of
Exhibit E hereto stating, among other things, that the proposed transferee
is a Foreign Person or (y) the proposed transferee is a QIB and the
proposed transferor has checked the box provided for on a certificate
substantially in the form of Exhibit B(2) 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 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
(ii) if the proposed transferee is an Agent Member, upon receipt by
the Registrar of the documents referred to in clause (i)(y) above and
instructions given in accordance with the Depositary's and the Registrar's
procedures, the Registrar shall reflect on its books and records the date
and an increase in the principal amount of the Rule 144A Global Note in an
amount equal to the principal amount of the Temporary Regulation S Global
Note to be transferred, and the Trustee, as Note Custodian, shall decrease
the amount of the Temporary Regulation S Global Note.
(f) Transfers to Foreign Persons. The following provisions shall apply with
respect to any transfer of a Transfer Restricted Security to a Foreign Person:
(i) the Registrar shall register any proposed transfer of a Note to a
Foreign Person upon receipt of a certificate substantially in the form of
Exhibit E hereto from the proposed transferor and such certifications,
legal opinions and other information as the Trustee or the Company may
reasonably request; and
(ii) (a) If the proposed transferor is an Agent Member holding a
beneficial interest in the Rule 144A Global Note or the Note to be
transferred consists of Certificated Notes, upon receipt by the Registrar
of (x) the documents, if any, required by paragraph (i) and (y)
instructions in accordance with the Depositary's and the Registrar's
procedures, the Registrar shall reflect on its books and records the date
and a decrease in the principal amount of the Rule 144A Global Note in an
amount equal to the principal amount of the beneficial interest in the Rule
144A Global Note or cancel the Certificated Notes, as the case may be, to
be transferred, and (b) if the proposed transferee is an Agent Member, upon
receipt by the Registrar of instructions given in accordance with the
Depositary's and the Registrar's procedures, the Registrar shall reflect on
its books and records the date and an
31
increase in the principal amount of the Regulation S Global Note in an
amount equal to the principal amount of the Certificated Notes to be
transferred, and the Trustee shall decrease the amount of the Rule 144A
Global Note.
(g) The Depositary. The Depositary shall be a clearing agency registered
under the Exchange Act. The Company initially appoints The Depository Trust
Company to act as Depositary with respect to the Global Note. Initially, the
Rule 144A Global Note and the Regulation S Global Note shall be issued to the
Depositary, registered in the name of Cede & Co., as the nominee of the
Depositary, and deposited with the Note Custodian for Cede & Co.
Notes in Certificated form issued in exchange for all or a part of a Global
Note pursuant to this Section 2.6 shall be registered in such names and in such
authorized denominations as the Depositary, pursuant to instructions from its
direct or indirect participants or otherwise, shall instruct the Trustee. Upon
execution and authentication, the Trustee shall deliver such Certificated Notes
in Certificated form to the persons in whose names such Notes in Certificated
form are so registered.
Certificated Notes shall be transferred to all beneficial owners in
exchange for their beneficial interests in the Rule 144A Global Note or the
Permanent Regulation S Global Note, as the case may be, if at any time:
(i) the Depositary for the Notes notifies the Company that the
Depositary is unwilling or unable to continue as Depositary for the Rule
144A Global Note or the Permanent Regulation S Global Note, as the case may
be, and a successor Depositary is not appointed by the Company within 90
days after delivery of such notice; or
(ii) the Company, at its sole discretion, notifies the Trustee in
writing that it elects to cause the issuance of Certificates Notes under
this Indenture,
and the Company shall execute, and the Trustee shall, upon receipt of an
authentication order in accordance with Section 2.2 hereof, authenticate and
deliver Certificated Notes in an aggregate principal amount equal to the
principal amount of the Rule 144A Global Note or the Permanent Regulation S
Global Note, as the case may be, in exchange for such Global Notes.
(h) Legends.
(i) Except as permitted by the following paragraphs (ii) and (iii),
each Note certificate evidencing Global Notes and Certificated Notes (and
all Notes issued in exchange therefor or substitution thereof) shall (x) be
subject to the restrictions on transfer set forth in this Section 2.6
(including those set forth in the legend below) unless such restrictions on
transfer shall be waived by written consent of the Company, and the holder
of each Transfer Restricted Security, by such Holder's acceptance thereof,
agrees to be bound by all such restrictions on transfer and (y) bear the
legend set forth below (the "Private Placement Legend"):
32
THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY HAS NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR
ANY STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION
HEREOF, THE HOLDER: (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR
(B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) ("INSTITUTIONAL
ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THE
NOTE EVIDENCED HEREBY IN AN OFFSHORE TRANSACTION; (2) AGREES THAT IT WILL
NOT RESELL OR OTHERWISE TRANSFER THE NOTE EVIDENCED HEREBY EXCEPT (A) TO
THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED
INVESTOR OR A PURCHASER WHO IS NOT A U.S. PERSON THAT, PRIOR TO SUCH
TRANSFER, FURNISHES TO THE COMPANY AND MARINE MIDLAND BANK, AS TRUSTEE (OR
A SUCCESSOR TRUSTEE, AS APPLICABLE), A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF
THE NOTES EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM
SUCH TRUSTEE OR A SUCCESSOR TRUSTEE, AS APPLICABLE), (D) OUTSIDE THE UNITED
STATES IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT
TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE) OR IN ACCORDANCE WITH ANOTHER EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, OR (F) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND, IN EACH
CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OR ANY
OTHER APPLICABLE JURISDICTION; AND (3) AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THE NOTE EVIDENCED HEREBY IS TRANSFERRED NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IF THE PROPOSED TRANSFER IS
PURSUANT TO CLAUSE (C), (D) OR (E) ABOVE, THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO THE COMPANY AND MARINE MIDLAND BANK, AS TRUSTEE (OR A
SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH CERTIFICATIONS, LEGAL OPINIONS OR
OTHER INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS
USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S.
PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE
SECURITIES ACT.
(ii) Upon any sale or transfer of a Transfer Restricted Security
(including any Transfer Restricted Security represented by a Global Note)
pursuant to Rule 144 under the Securities Act or pursuant to an effective
registration statement under the Securities Act:
(a) in the case of any Transfer Restricted Security that is a
Certificated Note, the Registrar shall permit the Holder thereof to
exchange such Transfer Restricted Security for a Certificated Note
that
33
does not bear the legend set forth in (i) above and rescind any
restriction on the transfer of such Transfer Restricted Security; and
(b) in the case of any Transfer Restricted Security represented
by a Global Note, such Transfer Restricted Security shall not be
required to bear the legend set forth in (i) above, but shall continue
to be subject to the provisions of Section 2.6(b) hereof; provided,
however, that with respect to any request for an exchange of a
Transfer Restricted Security that is represented by a Global Note for
a Certificated Note that does not bear the legend set forth in (i)
above, which request is made in reliance upon Rule 144, the Holder
thereof shall certify in writing to the Registrar that such request is
being made pursuant to Rule 144 (such certifications to be
substantially in the form of Exhibit B(2) hereto).
(iii) Notwithstanding the foregoing, upon consummation of the Exchange
Offer, the Company shall issue and, upon receipt of an authentication order
in accordance with Section 2.2 hereof, the Trustee shall authenticate New
Senior Subordinated Notes in exchange for Senior Subordinated Notes
accepted for exchange in the Exchange Offer, which New Senior Subordinated
Notes shall not bear the legend set forth in (i) above, and the Registrar
shall rescind any restriction on the transfer of such Senior Subordinated
Notes, in each case unless the Company has notified the Registrar in
writing that the Holder of such Senior Subordinated Notes is either (A) a
broker-dealer, (B) a Person participating in the distribution of the Senior
Subordinated Notes or (C) a Person who is an affiliate (as defined in Rule
144A) of the Company.
(iv) Each global Note, whether or not a transfer Restricted security,
shall also bear the following legend on the face thereof:
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A
DEPOSITARY OR A SUCCESSOR DEPOSITARY. THIS NOTE IS NOT EXCHANGEABLE FOR
NOTES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS
NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND
NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A
WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF
THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY
BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE
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BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.
(v) Any Global Note may be endorsed with or have incorporated in the
text thereof such legends or recitals or changes not inconsistent with the
provisions of this Indenture as may be required by the Note Custodian, the
Depositary or by the National Association of Securities Dealers, Inc. in
order for the Notes to be tradable on the PORTAL Market or tradable on
Euroclear or Cedel or as may be required for the Notes to be tradable on
any other market developed for trading of securities pursuant to Rule 144A
or Regulation S under the Securities Act or required to comply with any
applicable law or any regulation thereunder or with the rules and
regulations of any securities exchange or automated quotation system upon
which the Notes may be listed or traded or to conform with any usage with
respect thereto, or to indicate any special limitations or restrictions to
which any particular Notes are subject.
(i) Cancellation and/or Adjustment of Global Notes. At such time as all
beneficial interests in Global Notes have been exchanged for Certificated Notes,
redeemed, repurchased or canceled, all Global Notes shall be returned to or
retained and canceled by the Trustee in accordance with Section 2.11 hereof. At
any time prior to such cancellation, if any beneficial interest in a Global Note
is exchanged for Certificated Notes, redeemed, repurchased or canceled, the
principal amount of Notes represented by such Global Notes shall be reduced
accordingly and an endorsement shall be made on such Global Note by the Trustee
or the Note Custodian, at the direction of the Trustee, to reflect such
reduction. In the event of any transfer of any beneficial interest between the
Rule 144A Global Note and the Regulation S Global Note in accordance with the
standing procedures and instructions between the Depositary and the Note
Custodian and the transfer restrictions set forth herein, the aggregate
principal amount of each of the Rule 144A Global Note and the Regulation S
Global Note shall be appropriately increased or decreased, as the case may be,
and an endorsement shall be made on each of the Rule 144A Global Note and the
Regulation S Global Note by the Trustee or the Note Custodian, at the direction
of the Trustee, to reflect such reduction or increase.
(j) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate Certificated Notes and
Global Notes at the Registrar's request.
(ii) No service charge shall be made to a Holder for any registration
of transfer or exchange, but the Company may require payment of a sum
sufficient to cover any transfer tax or similar governmental charge payable
in connection therewith (other than any such transfer taxes or similar
governmental charge payable upon exchange or transfer pursuant to Sections
3.6 and 9.5 hereof).
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(iii) The Registrar shall not be required to register the transfer of
or exchange any Note selected for redemption in whole or in part, except
the unredeemed portion of any Note being redeemed in part.
(iv) All Certificated Notes and Global Notes issued upon any
registration of transfer or exchange of Certificated Notes or Global Notes
shall be the valid obligations of the Company, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Certificated
Notes or Global Notes surrendered upon such registration of transfer or
exchange.
(v) The Company shall not be required:
(a) to issue, to register the transfer of or to exchange Notes
during a period beginning at the opening of business 15 days before
the day of any selection of Notes for redemption under Section 3.2
hereof and ending at the close of business on the day of selection; or
(b) to register the transfer of or to exchange any Note so
selected for redemption in whole or in part, except the unredeemed
portion of any Note being redeemed in part; or
(c) to register the transfer of or to exchange a Note between a
record date and the next succeeding interest payment date.
(vi) Prior to due presentment of the registration of a transfer of any
Note, the Trustee, any Agent and the Company may deem and treat the Person
in whose name any Note is registered as the absolute owner of such Note for
the purpose of all payments with respect to such Notes, and neither the
Trustee, any Agent nor the Company shall be affected by notice to the
contrary.
(vii) The Trustee shall authenticate Certificated Notes and Global
Notes in accordance with the provisions of Section 2.2 hereof.
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Section 2.7. Replacement Notes.
If any mutilated Note is surrendered to the Trustee or either the Company
or the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Note, the Company shall issue and the Trustee, upon receipt of an
authentication order in accordance with Section 2.2 hereof, shall authenticate a
replacement Note if the Trustee's requirements for replacement of Notes are met.
If required by the Trustee or the Company, an indemnity bond must be supplied by
the Holder that is sufficient in the judgment of the Trustee and the Company to
protect the Company, the Trustee, any Agent and any authenticating agent from
any loss that any of them may suffer if a Note is replaced. The Trustee and the
Company may charge the Holder for their expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company and shall
be entitled to all of the benefits of this Indenture equally and proportionately
with all other Notes duly issued hereunder.
Section 2.8. Outstanding Notes.
The Notes outstanding at any time are all the Notes authenticated by the
Trustee except for those canceled by it, those delivered to it for cancellation,
those reductions in the interest in a Global Note effected by the Trustee or the
Note Custodian in accordance with the provisions hereof, and those described in
this Section as not outstanding. Except as set forth in Section 2.9 hereof, a
Note does not cease to be outstanding because the Company or an Affiliate of
either of the Company holds the Note.
If a Note is replaced pursuant to Section 2.7 hereof, it shall cease to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser for value.
If the principal amount of any Note is considered paid under Section 4.1
hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an Affiliate
of any thereof) holds, on a redemption date or maturity date, money sufficient
to pay Notes payable on that date, then on and after that date such Notes shall
be deemed to be no longer outstanding and shall cease to accrue interest.
Section 2.9. Treasury Notes.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company or by any Affiliate thereof shall be considered as though not
outstanding, except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver of consent, only
Notes that a Responsible Officer of the Trustee knows are so owned shall be so
disregarded. The Company agrees to notify the Trustee of the existence of any
such treasury Notes or Notes owned by an Affiliate thereof.
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Section 2.10. Temporary Notes..
Until Certificated Notes are ready for delivery, the Company may prepare
and the Trustee, upon receipt of an authentication order in accordance with
Section 2.2 hereof, shall authenticate temporary Notes. Temporary Notes shall be
substantially in the form of Certificated Notes, but may have such variations as
the Company considers appropriate for temporary Notes and as shall be reasonably
acceptable to the Trustee. Without unreasonable delay, the Company shall prepare
and the Trustee shall authenticate Certificated Notes in exchange for temporary
Notes.
Holders of temporary Notes shall be entitled to all of the benefits of this
Indenture.
Section 2.11. Cancellation..
The Company at any time may deliver Notes to the Trustee for cancellation.
The Registrar and Paying Agent shall forward to the Trustee any Notes
surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy all
canceled Notes in accordance with the Trustee's usual procedures. The Trustee
shall maintain a record of the destruction of all canceled Notes. Certification
of the destruction of all canceled Notes shall be delivered to the Company. The
Company may not issue new Notes to replace Notes that have been paid or that
have been delivered to the Trustee for cancellation.
Section 2.12. Defaulted Interest..
If the Company defaults in a payment of interest on the Notes, the Company
shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Notes and in Section 4.1 hereof. The Company shall notify the Trustee in
writing of the amount of defaulted interest proposed to be paid on each Note and
the date of the proposed payment. The Company shall fix or cause to be fixed
each such special record date and payment date, provided that no such special
record date shall be less than 10 days prior to the related payment date for
such defaulted interest. At least 15 days before the special record date, the
Company (or, upon the written request of the Company, the Trustee in the name
and at the expense of the Company) shall mail or cause to be mailed to Holders a
notice that states the special record date, the related payment date and the
amount of such interest to be paid.
Section 2.13. Persons Deemed Owners..
Prior to due presentment of a Note for registration of transfer and subject
to Section 2.12 hereof, the Company, the Trustee, any Paying Agent, any
co-registrar and any Registrar may deem and treat the person in whose name any
Note shall be registered upon the register of Notes kept by the Registrar as the
absolute owner of such Note (whether or not such Note shall be overdue and
notwithstanding any notation of the ownership or other writing thereon made by
anyone other than the Company, any co-registrar or any Registrar) for the
purpose of receiving all payments with respect to such Note and for all other
purposes, and none of the Company, the
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Trustee, any Paying Agent, any co-registrar or any Registrar shall be affected
by any notice to the contrary.
Section 2.14. CUSIP Numbers.
The Company in issuing the Notes may use a "CUSIP" number, and if so, the
Trustee shall use the CUSIP number in notices of redemption or exchange as a
convenience to Holders; provided that any such notice may state that no
representation is made as to the correctness or accuracy of the CUSIP number
printed in the notice or on the Notes, and that reliance may be placed only on
the other identification numbers printed on the Notes.
ARTICLE III.
REDEMPTION AND REPURCHASE
Section 3.1. Notices to Trustee.
If the Company elects to redeem Notes pursuant to the provisions of
Sections 3.7 or 3.8 hereof, it shall furnish to the Trustee, at least 45 days
but not more than 60 days before the Redemption Date, an Officers' Certificate
setting forth the Section of this Indenture pursuant to which the redemption
shall occur, the Redemption Date, the principal amount of Notes to be redeemed
and the Redemption Price.
If the Company is required to offer to repurchase Notes pursuant to the
provisions of Section 4.10 or 4.15 hereof, it shall notify the Trustee in
writing, at least 30 days but not more than 60 days before the Purchase Date, of
the Section of this Indenture pursuant to which the repurchase shall occur, the
Purchase Date, the principal amount of Notes required to be repurchased and the
Purchase Price and shall furnish to the Trustee an Officers' Certificate to the
effect that (a) the Company is required to make or has made an Asset Sale Offer
or a Change of Control Offer, as the case may be, and (b) the conditions set
forth in Section 4.10 or 4.15 hereof, as the case may be, have been satisfied.
If the Registrar is not the Trustee, the Company shall, concurrently with
each notice of redemption or repurchase, cause the Registrar to deliver to the
Trustee a certificate (upon which the Trustee may rely) setting forth the
principal amounts of Notes held by each Holder.
Section 3.2. Selection of Notes.
If less than all of the Notes are to be redeemed, the Trustee shall select
the Notes or portions thereof to be redeemed in compliance with the requirements
of the principal national securities exchange, if any, on which the Notes are
listed or, if the Notes are not listed on a national securities exchange, by
lot, pro rata or by such other method as the Trustee shall deem fair and
reasonable. In the event of partial redemption by lot, the particular Notes or
portions thereof to be redeemed shall be selected, unless otherwise provided
herein, not less than 30 nor more than 60 days prior to the Redemption Date by
the Trustee from the outstanding Notes not previously called for redemption.
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If less than all of the Notes tendered are to be repurchased pursuant to
the provisions of Section 4.10 hereof, the Trustee shall select the Notes or
portions thereof to be repurchased in compliance with the requirements of the
principal national securities exchange, if any, on which the Notes are listed
or, if the Notes are not listed on a national securities exchange, on a pro rata
basis (with such adjustments as may be deemed appropriate by the Trustee so that
only Notes in denominations of $1,000, or integral multiples thereof, shall be
repurchased). In the event of partial repurchase by lot, the particular Notes or
portions thereof to be repurchased shall be selected at the close of business of
the last Business Day prior to the Purchase Date.
The Trustee shall promptly notify the Company in writing of the Notes or
portions thereof selected for redemption or repurchase and, in the case of any
Note selected for partial redemption or repurchase, the principal amount thereof
to be redeemed or repurchased. Notes and portions thereof selected shall be in
amounts of $1,000 or integral multiples of $1,000; except that if all of the
Notes of a Holder are to be redeemed, the entire outstanding amount of Notes
held by such Holder, even if not a multiple of $1,000, shall be redeemed.
Section 3.3. Notice of Optional or Special Redemption.
In the event Notes are to be redeemed pursuant to Section 3.7 or 3.8
hereof, at least 30 days but not more than 60 days before the Redemption Date,
the Company shall mail a notice of redemption to each Holder whose Notes are to
be redeemed in whole or in part, with a copy to the Trustee.
The notice shall identify the Notes or portions thereof to be redeemed and
shall state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the Redemption
Date, upon surrender of such Note, a new Note or Notes in principal amount
equal to the unredeemed portion will be issued;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the Redemption Price, Liquidated Damages, if any, and,
unless the Redemption Date is after a record date and on or before the
succeeding interest payment date, accrued interest thereon to the
Redemption Date;
(f) that, unless the Company defaults in making the redemption
payment, interest and any Liquidated Damages on Notes called for redemption
will cease to accrue on and after the Redemption Date, and the only
remaining right of the Holders of such Notes is to receive payment of the
Redemption Price, any Liquidated Damages and, unless the Redemption Date is
after a record date
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and on or before the succeeding interest payment date, accrued interest
thereon to the Redemption Date upon surrender to the Paying Agent of the
Notes redeemed;
(g) if fewer than all the Notes are to be redeemed, the identification
of the particular Notes (or portions thereof) to be redeemed, as well as
the aggregate principal amount of the Notes to be redeemed and the
aggregate principal amount of Notes to be outstanding after such partial
redemption; and
(h) the paragraph of the Notes pursuant to which the Notes called for
redemption are being redeemed.
At the Company's request, the Trustee shall give the notice of redemption
in the Company's name and at its expense; provided that the Company shall
deliver to the Trustee, at least 40 days prior to the Redemption Date, an
Officers' Certificate requesting that the Trustee give such notice and setting
forth the information to be stated in such notice as provided in the preceding
paragraph.
Section 3.4. Effect of Notice of Redemption.
Once notice of redemption is mailed, Notes or portions thereof called for
redemption become due and payable on the Redemption Date at the Redemption
Price. Upon surrender to any Paying Agent, such Notes or portions thereof shall
be paid at the Redemption Price, plus Liquidated Damages, if any, and accrued
interest to the Redemption Date; provided, however, that installments of
interest which are due and payable on or prior to the Redemption Date shall be
payable to the Holders of such Notes, registered as such, at the close of
business on the relevant record date for the payment of such installment of
interest.
Section 3.5. Deposit of Redemption Price or Purchase Price.
On or before each Redemption Date or Purchase Date, the Company shall
irrevocably deposit with the Trustee or with the Paying Agent money sufficient
to pay the aggregate amount due on all Notes to be redeemed or repurchased on
that date, including without limitation any accrued and unpaid interest and
Liquidated Damages, if any, to the Redemption Date or Repurchase Date. Upon
written request by the Company, the Trustee or the Paying Agent shall promptly
return to the Company any money not required for that purpose.
Unless the Company defaults in making such payment, interest and any
Liquidated Damages on the Notes to be redeemed or repurchased will cease to
accrue on the applicable Redemption Date or Purchase Date, whether or not such
Notes are presented for payment. If any Note called for redemption shall not be
so paid upon surrender because of the failure of the Company to comply with the
preceding paragraph, interest will be paid on the unpaid principal, from the
applicable Redemption Date or Purchase Date until such principal is paid, and on
any interest not paid on such unpaid principal, in each case at the rate
provided in the Notes and in Section 4.1 hereof.
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Section 3.6. Notes Redeemed or Repurchased in Part.
Upon surrender of a Note that is redeemed or repurchased in part, the
Company shall issue and the Trustee shall authenticate for the Holder at the
expense of the Company a new Note equal in principal amount to portion of the
Note surrendered that is not to be redeemed or repurchased.
Section 3.7. Optional Redemption.
The Company may redeem any or all of the Notes at any time on or after
January 15, 2002 at the Redemption Prices set forth in the Notes (an "Optional
Redemption"). Any redemption pursuant to this Section 3.7 shall be made pursuant
to the provisions of Sections 3.1 through 3.6 hereof.
Section 3.8. Special Redemption.
In the event the Company completes one or more Public Equity Offerings on
or before January 15, 2000, the Company, in its discretion, may use the net cash
proceeds from any such Public Equity Offering to redeem up to 33-1/3% of the
original principal amount of the Notes (a "Special Redemption") at a Redemption
Price of 111% of the principal amount thereof, together with accrued and unpaid
interest and Liquidated Damages, if any, to the date of redemption, provided,
however, that at least 66-2/3% of the original principal amount of the Notes
will remain outstanding immediately after each such Special Redemption; and
provided, further, that such Special Redemption shall occur within 90 days after
the date of the closing of the applicable Public Equity Offering. Any redemption
pursuant to this Section 3.8 shall be made pursuant to the provisions of
Sections 3.1 through 3.6 hereof.
Section 3.9. Repurchase Upon Change of Control Offer.
In the event that, pursuant to Section 4.15 hereof, the Company shall be
required to commence a Change of Control Offer, it shall follow the procedures
specified below.
The Change of Control Offer shall remain open for a period from the date of
the mailing of the notice of the Change of Control Offer described in the next
paragraph until a date determined by the Company which is at least 30 but no
more 60 days from the date of mailing of such notice and no longer, except to
the extent that a longer period is required by applicable law (the "Change of
Control Offer Period"). On the Purchase Date, which shall be no later than the
last day of the Change of Control Offer Period, the Company shall purchase the
principal amount of Notes properly tendered in response to the Change of Control
Offer. Payment for any Notes so purchased shall be made in the same manner as
interest payments are made.
Within 30 days following any Change of Control, the Company shall send, by
first class mail, a notice to the Trustee and each of the Holders. The notice
shall contain all instructions and materials necessary to enable such Holders to
tender Notes pursuant to the Change of Control Offer. The Change of Control
shall be made to all Holders. The notice, which shall govern the terms of the
Change of Control Offer, shall state:
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(a) the transaction or transactions that constitute the Change of
Control, providing information, to the extent publicly available, regarding
the Person or Persons acquiring control, and stating that the Change of
Control Offer is being made pursuant to this Section 3.9 and Section 4.15
hereof and that, to the extent lawful, all Notes tendered will be accepted
for payment;
(b) the Purchase Price, the last day of the Change of Control Offer
Period, and the Purchase Date;
(c) that any Note not properly tendered or otherwise not accepted for
repurchase will continue to accrue interest and Liquidated Damages, if any;
(d) that, unless the Company defaults in the payment of the amount due
on the Purchase Date, all Notes or portions thereof accepted for repurchase
pursuant to the Change of Control Offer shall cease to accrue interest and
Liquidated Damages, if any, after the Purchase Date;
(e) that Holders electing to have any Notes purchased pursuant to the
Change of Control Offer will be required to tender the Notes, with the form
entitled "Option of Holder To Elect Purchase" on the reverse of the Notes
completed, or transfer by book-entry transfer, to the Company, a
Depositary, if appointed by the Company, or a Paying Agent at the address
specified in the notice not later than the third Business Day preceding the
Purchase Date;
(f) that Holders will be entitled to withdraw their election if the
Company, the Depositary or the Paying Agent, as the case may be, receives,
not later than the expiration of the Change of Control Offer Period, a
telegram, facsimile transmission or letter setting forth the name of the
Holder, the principal amount of Notes delivered for repurchase, and a
statement that such Holder is withdrawing his election to have the Notes
redeemed in whole or in part; and
(g) that Holders whose Notes are being repurchased only in part will
be issued new Notes equal in principal amount to the portion of the Notes
tendered (or transferred by book-entry transfer) that is not to be
repurchased, which portion must be equal to $1,000 in principal amount or
an integral multiple thereof.
On or before the Purchase Date, the Company, shall, to the extent lawful,
(i) accept for payment all Notes or portions thereof properly tendered pursuant
to the Change of Control Offer, (ii) deposit with the Paying Agent an amount
equal to the Purchase Price, together with accrued and unpaid interest and
Liquidated Damages, if any, thereon to the Purchase Date in respect of all Notes
or portions thereof so tendered and accepted for repurchase and (iii) deliver or
cause to be delivered to the Trustee the Notes so accepted together with an
Officers' Certificate stating the aggregate principal amount of Notes or
portions thereof being repurchased by the Company. The Paying Agent shall
promptly (but in any case not later than five days after the Purchase Date) mail
to each Holder of Notes so repurchased the amount due in connection with such
Notes, and
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the Company shall promptly issue a new Note, and the Trustee, upon written
request from the Company in the form of an Officers' Certificate shall
authenticate and mail or deliver (or cause to transfer by book entry) to each
relevant Holder a new Note, in a principal amount equal to any unpurchased
portion of the Notes surrendered to the Holder thereof; provided, that each such
new Note shall be in a principal amount of $1,000 or an integral multiple
thereof. The Company shall publicly announce the results of the Change of
Control Offer on or as soon as practicable after the Purchase Date.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest and
Liquidated Damages, if any, in each case to the Purchase Date, shall be paid to
the Person in whose name a Note is registered at the close of business on such
record date, and no additional interest shall be payable to Holders pursuant to
the Change of Control Offer.
Section 3.10. Repurchase Upon Application of Excess Proceeds.
In the event that, pursuant to Section 4.10 hereof, the Company shall be
required to commence an Asset Sale Offer, it shall follow the procedures
specified below.
The Asset Sale Offer shall remain open for a period from the date of the
mailing of the notice of the Asset Sale Offer described in the next paragraph
until a date determined by the Company which is at least 30 but no more 60 days
from the date of mailing of such notice and no longer, except to the extent that
a longer period is required by applicable law (the "Asset Sale Offer Period").
On the Purchase Date, which shall be no later than the last day of the Asset
Sale Offer Period, the Company shall purchase the principal amount of Notes
required to be purchased pursuant to Section 4.10 hereof (the "Offer Amount")
or, if less than the Offer Amount has been tendered, all Notes properly tendered
in response to the Asset Sale Offer. Payment for any Notes so purchased shall be
made in the same manner as interest payments are made.
Within 30 days following the accumulation of sufficient Excess Proceeds to
obligate the Company to commence an Asset Sale Offer, the Company shall send, by
first class mail, a notice to the Trustee and each of the Holders. The notice
shall contain all instructions and materials necessary to enable such Holders to
tender Notes pursuant to the Asset Sale Offer. The Asset Sale Offer shall be
made to all Holders. The notice, which shall govern the terms of the Asset Sale
Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this Section
3.10 and Section 4.10 hereof;
(b) the Offer Amount, the Purchase Price, the last day of the Asset
Sale Offer Period, and the Purchase Date;
(c) that any Note not properly tendered or otherwise not accepted for
repurchase shall continue to accrue interest and Liquidated Damages, if
any;
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(d) that, unless the Company defaults in the payment of the amount due
on the Purchase Date, all Notes or portions thereof accepted for repurchase
pursuant to the Asset Sale Offer shall cease to accrue interest and
Liquidated Damages, if any, after the Purchase Date;
(e) that Holders electing to have any Notes repurchased pursuant to
any Asset Sale Offer shall be required to tender the Notes, with the form
entitled "Option of Holder To Elect Purchase" on the reverse of the Notes
completed, or transfer by book-entry transfer, to the Company, a
Depositary, if appointed by the Company, or a Paying Agent at the address
specified in the notice prior to the close of business on the third
Business Day preceding the Purchase Date;
(f) that Holders will be entitled to withdraw their election if the
Company, the Depositary or the Paying Agent, as the case may be, receives,
not later than the expiration of the Asset Sale Offer Period, a telegram,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of the Notes delivered for repurchase and a statement that
such Holder is withdrawing his election to have such Notes repurchased in
whole or in part;
(g) that, if the aggregate principal amount of Notes tendered for
repurchase by Holders exceeds the Offer Amount, the Trustee shall select
the Notes or portions thereof to be purchased on a pro rata basis (with
such adjustments as may be deemed appropriate by the Trustee so that only
Notes in denominations of $1,000, or integral multiples thereof, shall be
purchased); and
(h) that Holders whose Notes are being repurchased only in part will
be issued new Notes equal in principal amount to the portion of the Notes
tendered (or transferred by book-entry transfer) that is not to be
repurchased, which portion must be equal to $1,000 in principal amount or
an integral multiple thereof.
On or before the Purchase Date, the Company shall, to the extent lawful,
(i) accept for payment, on a pro rata basis in accordance with this Indenture to
the extent necessary, the Offer Amount of Notes or portions thereof properly
tendered pursuant to the Asset Sale Offer, or if less than the Offer Amount has
been tendered, all Notes properly tendered, (ii) deposit with the Paying Agent
an amount equal to the Purchase Price, plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the Purchase Date in respect of all Notes
or portions thereof so tendered and accepted for repurchase and (iii) deliver or
cause to be delivered to the Trustee the Notes so accepted together with an
Officers' Certificate stating the aggregate principal amount of Notes or
portions thereof being repurchased by the Company. The Paying Agent shall
promptly (but in any case not later than five days after the Purchase Date) mail
to each Holder of Notes so repurchased the amount due in connection with such
Notes, and the Company shall promptly issue a new Note, and the Trustee, upon
written request from the Company in the form of an Officers' Certificate shall
authenticate and mail or deliver such new Note to such Holder, in a principal
amount equal to any unpurchased portion to the Holder
45
thereof; provided, that each such new Note shall be in a principal amount of
$1,000 or an integral multiple thereof. The Company shall publicly announce the
results of the Asset Sale Offer on or as soon as practicable after the Purchase
Date.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest and
Liquidated Damages, if any, in each case to the Purchase Date, shall be paid to
the Person in whose name a Note is registered at the close of business on such
record date, and no additional interest shall be payable to Holders to the Asset
Sale Offer.
ARTICLE IV.
COVENANTS
Section 4.1. Payment of Principal and Interest.
The Company shall pay or cause to be paid the principal, Redemption Price
and Purchase Price of, and interest on the Notes on the dates, in the amounts
and in the manner provided herein and in the Notes. Principal, Redemption Price,
Purchase Price and interest shall be considered paid on the date due if the
Paying Agent, if other than the Company, holds as of 12:00 noon Eastern Time on
the due date money deposited by the Company in immediately available funds and
designated for and sufficient to pay the aggregate amount then due. The Company
shall pay all Liquidated Damages, if any, on the dates, in the amounts and in
the manner set forth in the Registration Rights Agreement.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal, Redemption Price and
Purchase Price at the rate equal to 1% per annum in excess of the then
applicable interest rate on the Notes to the extent lawful; it shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Liquidated Damages
(without regard to any applicable grace period) at the same rate to the extent
lawful.
Section 4.2. Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, the City of New
York, an office or agency (which may be an office of the Trustee or an affiliate
of the Trustee, Registrar or co-registrar) where Notes may be surrendered for
registration of transfer or for exchange and where notices and demands to or
upon the Company in respect of the Notes and this Indenture may be served. The
Company shall give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Office of the
Trustee.
The Company may also from time to time designate one or more other offices
or agencies where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations: provided, however,
that no such designation or rescission shall
46
in any manner relieve the Company or its obligations to maintain an office or
agency in the Borough of Manhattan, the City of New York. for such purposes. The
Company shall give prompt written notice to the Trustee of any such designation
or rescission and of any change in the location of any such other office or
agency.
The Company hereby designates the Corporate Trust Office of the Trustee as
one such office or agency of the Company in accordance with Section 2.3. The
Trustee may resign such agency at any time by giving written notice to the
Company no later than 30 days prior to the effective date of such resignation.
Section 4.3. Reports.
Whether or not required by the rules and regulations of the Commission, so
long as any of the Notes are outstanding, the Company, and, if the Company is
required to file financial statements for any Subsidiary Guarantor, such
Subsidiary Guarantor, shall furnish to the Holders of the Notes, within 15 days
after they are or would have been required to file such with the Commission, (i)
all quarterly and annual financial information that would be required to be
contained in filings with the Commission on Forms 10-Q and 10-K if the Company
and/or any Subsidiary Guarantor was required to file such forms, including
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and, with respect to annual consolidated financial statements and
schedules only, a report thereon by the independent auditors of the Company
and/or any Subsidiary Guarantor, and (ii) all information that would be required
to be contained in filings with the Commission on Form 8-K if the Company and/or
any Subsidiary Guarantor was required to file such form. In addition, whether or
not required by the rules and regulations of the Commission, the Company shall
file a copy of all such information and reports with the Commission for public
availability (unless the Commission will not accept such a filing) and make such
information available to securities analysts and prospective investors upon
request. Upon qualification of this Indenture under the TIA, the Company and any
Subsidiary Guarantor shall at all times comply with TIA ss. 314(a). In addition,
the Company shall, for so long as any Notes remain outstanding, furnish to the
Holders, and to securities analysts and prospective investors upon their
request, the information required to be delivered pursuant to Rule 144A(d)(4)
under the Securities Act.
Section 4.4. Compliance Certificate.
The Company and each Subsidiary Guarantor shall deliver to the Trustee,
within 105 days after the end of each fiscal year, an Officers' Certificate
further stating that a review of the activities of the Company and its
Subsidiaries during the preceding fiscal year has been made under the
supervision of the signing Officers with a view to determining whether the
Company has kept, observed, performed and fulfilled its obligations under this
Indenture in all material respects, 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
the Indenture in all material respects and is not in Default in the performance
or observance of any of the terms, provisions and conditions of this Indenture
(and, if a Default or Event of Default shall have occurred, describing all such
Defaults or Events of
47
Default) of which he or she may have knowledge, and that to the best of his or
her knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Notes is
prohibited or if such event has occurred, a description of the event.
So long as not contrary to the then current recommendations of the American
Institute of Certified Public Accountants, the year-end financial statements
delivered pursuant to Section 4.3 above shall be accompanied by a written
statement of the Company's independent public accountants (who shall be a firm
of established national reputation) that in making the examination necessary for
certification of such financial statements, nothing has come to their attention
that would lead them to believe that the Company has violated any provisions of
Article IV or Article V hereof or, if any such violation has occurred,
specifying the nature and period of existence thereof, it being understood that
such accountants shall not be liable directly or indirectly to any Person for
any failure to obtain knowledge of any such violation.
The Company shall, so long as any of the Notes are outstanding, deliver to
the Trustee, forthwith (and in any event within five days) upon any Officer of
the Company becoming aware of any Default or Event of Default an Officers'
Certificate specifying such Default or Event of Default.
Section 4.5. Taxes.
The Company shall pay or discharge, and shall cause each of its
Subsidiaries to pay or discharge, prior to delinquency, all material taxes,
assessments, and governmental levies except such as are contested in good faith
and by appropriate proceedings or where the failure to effect such payment is
not adverse in any material respect to the Holders of the Notes.
Section 4.6. Stay, Extension and Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that it
shall not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, that may affect the covenants or
the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants shall it shall not, by resort to any such law, hinder, delay
or impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though such law has not
been enacted.
Section 4.7. Restricted Payments.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly: (i) declare or pay any dividend or make any other
payment or distribution on account of the Company's Capital Stock (including,
without limitation, any payment in connection with any merger or consolidation
involving the Company) or to the direct or indirect holders of the Company's
Capital Stock in their capacity as such (other than dividends or distributions
payable in Capital Stock (other than Disqualified Stock) of the Company or
dividends or distributions
48
payable to the Company or any Wholly Owned Subsidiary of the Company); (ii)
purchase, redeem or otherwise acquire or retire for value any Capital Stock of
the Company or any direct or indirect parent or other Affiliate of the Company
(other than a Wholly Owned Subsidiary of the Company); (iii) make any principal
payment on, or purchase, redeem, defease or otherwise acquire or retire for
value prior to any scheduled maturity, scheduled repayment or sinking fund
payment date any Indebtedness that is subordinated to the Notes; or (iv) make
any Restricted Investment (all such payments and other actions set forth in
clauses (i) through (iv) above being collectively referred to as "Restricted
Payments"), unless, at the time of and after giving effect to such Restricted
Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(b) the Company would, 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 pursuant to
the Fixed Charge Coverage Ratio test set forth in the first paragraph of
Section 4.9 hereof; and
(c) such Restricted Payment, together with the aggregate of all other
Restricted Payments made by the Company and its Subsidiaries after the date
hereof (excluding Restricted Payments permitted by clauses (2), (3), (4),
(5), (6) and (8) of the next succeeding paragraph), is less than the sum
of:
(i) 50% of the Consolidated Net Income of the Company for the
period (taken as one accounting period) from the beginning of the
first fiscal quarter commencing after the date hereof to the end of
the Company's most recently ended fiscal quarter for which internal
financial statements are available at the time of such Restricted
Payment (or, if such Consolidated Net Income for such period is a
deficit, less 100% of such deficit), plus
(ii) 100% of the aggregate net cash proceeds received by the
Company from the issue or sale since the date hereof of Capital Stock
of the Company (to the extent not used as described in Section 3.8) or
of debt securities of the Company that have been converted into such
Capital Stock (other than Capital Stock (or convertible debt
securities) sold to a Subsidiary of the Company or Disqualified Stock
or debt securities that have been converted into Disqualified Stock),
plus
(iii) to the extent that any Restricted Investment that was made
after the date hereof is sold for cash or otherwise liquidated or
repaid for cash, the lesser of (A) the cash return of capital with
respect to such Restricted Investment (less the cost of disposition,
if any) and (B) the initial amount of such Restricted Investment.
49
The foregoing provisions shall not prohibit:
(1) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment would have
complied with the provisions of this Indenture;
(2) the payment of dividends on Series A Preferred Stock pursuant to
the Certificate of Designation for such Series A Preferred Stock in effect
on the date of the Indenture, provided that the Fixed Charge Coverage Ratio
for the Company's most recently ended four full fiscal quarters for which
internal financial statements are available immediately preceding the date
on which such payment of dividends is made would have been at least 2.25 to
1, determined on a pro forma basis, as if the Restricted Payment had been
made at the beginning of such four-quarter period, provided that the amount
of any such dividends paid on Series A Preferred Stock shall, after the
date of payment, be subtracted from the computation of Consolidated Net
Income solely for purposes of clause (c)(i) of the preceding paragraph;
(3) the redemption, repurchase, retirement or other acquisition of
Series A Preferred Stock pursuant to the Certificate of Designation for
such Series A Preferred Stock in effect on the date of the Indenture,
provided that (a) such redemption, repurchase, retirement or other
acquisition is for at least $2 million of Series A Preferred Stock, and (b)
the Fixed Charge Coverage Ratio for the Company's most recently ended four
full fiscal quarters for which internal financial statements are available
immediately preceding the date on which such redemption, repurchase,
retirement or other acquisition is made would have been at least 2.5 to 1,
determined on a pro forma basis, as if the Restricted Payment had been made
at the beginning of such four-quarter period;
(4) the redemption, repurchase, retirement or other acquisition of any
Capital Stock of the Company in exchange for, or out of the proceeds of,
the substantially concurrent sale (other than to a Subsidiary of the
Company) of other Capital Stock of the Company other than Disqualified
Stock; provided that the amount of any such net cash proceeds that are
utilized for any such redemption, repurchase, retirement or other
acquisition shall be excluded from clause (c)(ii) of the preceding
paragraph;
(5) the defeasance, redemption or repurchase of subordinated
Indebtedness with the net cash proceeds from an incurrence of Permitted
Refinancing Debt or the substantially concurrent sale (other than to a
Subsidiary of the Company) of Capital Stock of the Company (other than
Disqualified Stock); provided that the amount of any such net cash proceeds
that are utilized for any such redemption, repurchase, retirement or other
acquisition shall be excluded from clause (c)(ii) of the preceding
paragraph;
50
(6) any Investment made by the Company or any of its Subsidiaries in
an Acquisition Subsidiary with the net cash proceeds of an issuance of
Designated Investment Stock within 30 days of such issuance; provided that
the amount of any such net cash proceeds that are utilized for any such
Investment shall be excluded from clause (c)(ii) of the preceding
paragraph;
(7) the purchase or redemption of shares of Capital Stock of the
Company held by present or former officers, directors, employees or
independent sales representatives of the Company or by any employee stock
ownership plan or similar trust for the account of such present or former
officers, directors, employees or independent sales representatives upon
such person's death, disability, retirement or termination of employment or
other association with the Company or under the terms of any such plan or
trust or any other agreement under which such Capital Stock was issued in
an aggregate amount not to exceed $500,000 per year, provided that to the
extent that less than $500,000 of Capital Stock is purchased or redeemed in
a given year, the difference between $500,000 and the amount purchased or
redeemed during that year shall be added to the amount available to the
Company for purchases and redemptions in the next subsequent year only (for
which purpose the amount so added shall be deemed to be the last amount
expended in such next subsequent year);
(8) the payment to Castle Harlan, Inc. of a management fee of up to
$1.5 million per year pursuant to the Management Agreement entered into
between the Company and Castle Harlan, Inc., as in force on the Issue Date
(the "Management Agreement") (the payment for the first year following the
Issue Date to be a single installment payable at any time during such year
and payments thereafter to be payable in arrears in four equal quarterly
installments per annum), provided that, in the event the full amount
thereof is not paid in any year, the deficiency may cumulate and, provided
that there is no subsisting Default or Event of Default of a type described
in clause (a) or (b) in Section 6.1 at the time of payment, may be paid
together with the then current management fee for such subsequent year; and
(9) a Subsidiary of an Acquisition Subsidiary may purchase, redeem or
otherwise acquire or retire for value any of its Capital Stock.
The amount of all Restricted Payments (other than cash) shall be the fair market
value (evidenced by a resolution of the Board set forth in an Officers'
Certificate delivered to the Trustee) on the date of the Restricted Payment of
the asset(s) proposed to be transferred by the Company or such Subsidiary, as
the case may be, pursuant to the Restricted Payment. Not later than the date of
making any Restricted Payment, 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 Section 4.7
were computed, which calculations may be based upon the Company's latest
available financial statements.
51
Section 4.8. Dividend and Other Payment Restrictions Affecting
Subsidiaries.
The Company shall not, and shall not permit any of its Subsidiaries (other
than an Acquisition Subsidiary or a Subsidiary of an Acquisition Subsidiary) to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any encumbrance or restriction on the ability of such Subsidiary to:
(i)(a) pay dividends or make any other distributions to the Company or
any of its Subsidiaries (1) on its Capital Stock or (2) with respect to any
other interest or participation in, or measured by, its profits, or (b) pay
any Indebtedness owed to the Company or any of its Subsidiaries,
(ii) make loans or advances to the Company or any of its Subsidiaries,
or
(iii) transfer any of its properties or assets to the Company or any
of its Subsidiaries,
except for such encumbrances or restrictions existing under or by reason of:
(a) written agreements evidencing Existing Indebtedness as in effect
on the date hereof,
(b) the Bank Credit Facility as in effect from time to time, provided
that such provisions are no more restrictive with respect to such dividend
and other payment restrictions than those contained in the Bank Credit
Facility as in effect on the date hereof,
(c) this Indenture and the Notes,
(d) applicable law,
(e) any instrument or agreement governing Acquired Debt of the Company
or any of its Subsidiaries or Indebtedness or Capital Stock of a Person
acquired by the Company or any of its Subsidiaries as in effect at the time
of such acquisition (except to the extent such Indebtedness was incurred in
connection with or in contemplation of such acquisition), which
encumbrances or restrictions are not applicable to any Person, or the
properties or assets of any Person, other than the Person, or the property
or assets of the Person, so acquired,
(f) by reason of customary non-assignment provisions in leases entered
into in the ordinary course of business,
(g) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions of the nature described in
clause (iii) above on the property so acquired, or
52
(h) Permitted Refinancing Debt, provided that the restrictions
contained in the agreements governing such Permitted Refinancing Debt are
no more restrictive than those contained in the agreements governing the
Indebtedness being refinanced, or
(i) in the case of any Foreign Subsidiary, the laws, rules or
regulations of any foreign nation.
Section 4.9. Incurrence of Indebtedness and Issuance of Preferred Stock.
The Company shall not, and shall not permit any of its 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 Debt) and the
Company shall not issue any Disqualified Stock and shall not permit any of its
Subsidiaries to issue any shares of Preferred Stock (other than to the Company
or a Wholly Owned Subsidiary of the Company other than an Acquisition Subsidiary
or a Subsidiary of an Acquisition Subsidiary); provided, however, that the
Company may incur Indebtedness (including Acquired Debt) or issue shares of
Disqualified Stock, if the Fixed Charge Coverage Ratio for the Company's most
recently ended four full fiscal quarters for which internal financial statements
are available immediately preceding the date on which such additional
Indebtedness is incurred or such Disqualified Stock is issued would have been at
least 2.0 to 1.0, determined on a pro forma basis (including a pro forma
application of the net proceeds therefrom), as if the additional Indebtedness
had been incurred, or the Disqualified Stock had been issued, as the case may
be, at the beginning of such four-quarter period; provided that (x) until the
Company has internal financial statements for two full fiscal quarters the
Company will not, and will not permit any of its Subsidiaries to, incur any
additional Indebtedness or issue any shares of Preferred Stock, and (y) after
the Company has internal financial statements for two full financial quarters,
but before the Company has such internal financial statements for four full
financial quarters, the Fixed Charge Coverage Ratio will be calculated by
annualizing the available internal financial statements of the Company on a pro
rata basis. Notwithstanding the foregoing, neither the Company nor any
Subsidiary of the Company (other than an Acquisition Subsidiary or a Subsidiary
of an Acquisition Subsidiary) may incur Indebtedness in respect of a Guarantee
of Indebtedness of an Acquisition Subsidiary or a Subsidiary of an Acquisition
Subsidiary.
The foregoing provisions shall not apply to the incurrence of the following
Indebtedness:
(i) the incurrence by the Company of Indebtedness under the term loan
portion of the Bank Credit Facility in an aggregate principal amount at any
time outstanding not to exceed $25 million less the aggregate amount of all
repayments, optional or mandatory, of the principal thereof that have been
made since the date hereof;
(ii) the incurrence by the Company of Indebtedness under the revolving
credit and/or the gold consignment portions of the Bank Credit Facility in
an aggregate principal amount at any time outstanding not to exceed the
greater
53
of (x) $35 million less the aggregate amount of all Net Proceeds of Asset
Sales or other dispositions of assets that have been applied since the date
of the Indenture to permanently reduce the commitments with respect to such
Indebtedness pursuant to Section 4.10 hereof and (y) the "Borrowing Base"
(as determined and calculated under the terms of the Bank Credit Facility);
(iii) the incurrence by the Company and its Subsidiaries of Existing
Indebtedness;
(iv) the incurrence by the Company of Indebtedness represented by the
Notes;
(v) the incurrence by the Company or any of its Subsidiaries (other
than an Acquisition Subsidiary or a Subsidiary of an Acquisition
Subsidiary) of additional Indebtedness (including Acquired Debt)
represented by Capital Lease Obligations, mortgage financings, or purchase
money obligations, in each case incurred for the purpose of financing or
refinancing all or any part of the purchase price or cost of construction
or improvement of property, plant or equipment used in the business of the
Company or such Subsidiary, in an aggregate principal amount not to exceed
$5.0 million at any time outstanding;
(vi) the incurrence by the Company or any of its Subsidiaries of
Permitted Refinancing Debt in exchange for, or the net proceeds of which
are used to extend, refinance, renew, replace, defease or refund,
Indebtedness that was permitted by this Indenture to be incurred;
(vii) the incurrence by the Company or any of its Subsidiaries of
intercompany Indebtedness between or among the Company and any of its
Wholly Owned Subsidiaries; provided, however, that (x) neither the Company
nor any of its Subsidiaries may incur any Indebtedness to any Acquisition
Subsidiary of the Company; (y) if the Company is the obligor of such
Indebtedness, such Indebtedness is evidenced in writing and expressly
subordinate to the payment in full of all obligations with respect to the
Notes and (z)(I) any subsequent issuance, transfer or other disposition of
Capital Stock that results in any such Indebtedness being held by a Person
other than the Company or a Wholly Owned Subsidiary which is not an
Acquisition Subsidiary or a Subsidiary of an Acquisition Subsidiary and
(II) any sale, transfer or other disposition of any such Indebtedness to a
Person that is not either the Company or a Wholly Owned Subsidiary which is
not an Acquisition Subsidiary or a Subsidiary of an Acquisition Subsidiary
shall be deemed, in each case, to constitute an incurrence of such
Indebtedness by the Company or such Subsidiary, as the case may be;
(viii) the incurrence by the Company or any of its Subsidiaries of
Hedging Obligations that are incurred for the purpose of fixing or hedging
interest rate, commodity or currency risk, in connection with the conduct
of its business and not for speculative purposes;
54
(ix) the incurrence by the Company of Indebtedness under a Guarantee
of any Indebtedness permitted under the Indenture to be incurred by a
Subsidiary of the Company which is not an Acquisition Subsidiary or a
Subsidiary of an Acquisition Subsidiary;
(x) the incurrence by any Subsidiary of the Company of Indebtedness
under a Guarantee of any Indebtedness permitted under the Indenture to be
incurred by the Company; provided that (a) in the case such Guarantee is of
Indebtedness that is pari passu in right of payment with the Notes, all
obligations with respect to the Notes are Guaranteed on an equal and
ratable basis with the Indebtedness so Guaranteed, and (b) in the case such
Guarantee is of Indebtedness that is subordinated in right of payment to
the Notes, all obligations with respect to the Notes are Guaranteed on a
senior basis reflecting the subordination of the Indebtedness so Guaranteed
on terms substantially similar to, or more favorable to senior creditors
than, those contained in the Indenture;
(xi) the incurrence by the Company of Indebtedness (in addition to
Indebtedness permitted by any other clause of this paragraph) in an
aggregate principal amount (or accreted value, as applicable) at any time
outstanding not to exceed $8.0 million;
(xii) the incurrence by the Company or any of its Subsidiaries of
Indebtedness in respect of bid, performance or advance payment bonds, and
appeal and surety bonds;
(xiii) the incurrence of Indebtedness by an Acquisition Subsidiary or
a Subsidiary of an Acquisition Subsidiary, provided that (a) any such
Indebtedness is without recourse to, and is not Guaranteed by, the Company
or any other Subsidiary of the Company (other than an Acquisition
Subsidiary or a Subsidiary of an Acquisition Subsidiary) without regard to
whether such recourse complies or would comply with Section 4.7 hereof, and
(b) no Default or Event of Default is in existence and continuing after
giving effect to such issuance or incurrence;
(xiv) the issuance of Capital Stock, including Disqualified Stock, by
a Subsidiary of an Acquisition Subsidiary, provided that (a) such
Disqualified Stock is without recourse to, and is not Guaranteed by, the
Company or any other Subsidiary of the Company (other than a Subsidiary of
an Acquisition Subsidiary) without regard to whether such recourse complies
or would comply with Section 4.7 hereof, and (b) no Default or Event of
Default is in existence and continuing after giving effect to such
issuance;
(xv) the incurrence by the Company of Indebtedness for the purpose of
effecting a Restricted Payment described in clause (7) of the second
paragraph of Section 4.7 hereof, provided that (a) the aggregate original
issue price of such Indebtedness at anytime outstanding does not exceed $1
million, (b) such Indebtedness pays no current interest and matures no
earlier than six months after
55
the scheduled maturity date of the Notes, and (c) such Indebtedness is
subordinated to the Notes on terms substantially similar to, or more
favorable to senior creditors than, those contained in the Indenture; and
(xvi) the incurrence by the Company or any of its Subsidiaries of
interest, fees or other expenses on Indebtedness otherwise permitted under
this covenant, provided that such interest, fees or other expenses are
payable on a current basis no less frequently than semi-annually and are
paid when due or within any applicable customary grace period thereafter,
not to exceed thirty days.
For purposes of determining compliance with this covenant, (i) in the event that
an item of Indebtedness meets the criteria of more than one of the types of
Indebtedness permitted by this covenant, the Company in its sole discretion will
classify such item of Indebtedness and will only be required to include the
amount and type of each class of Indebtedness in the test specified in the first
paragraph of this covenant or in one of the clauses of the second paragraph of
this covenant; (ii) the amount of Indebtedness issued at a price which is less
than the principal amount thereof shall be equal to the amount of liability in
respect thereof determined in accordance with GAAP; and (iii) the amount of
Indebtedness represented by a Guarantee of a primary obligation of another
Person shall be deemed to be the lower of (x) an amount equal to the maximum
amount of the primary obligation (including without limitation all principal,
premiums (if any), interest, fees and all other amounts in respect thereof) in
respect of which such Guarantee is made and (y) the maximum amount for which
such guaranteeing Person may be liable pursuant to the terms of the applicable
Guarantee, which, in any case in which such Guarantee consists solely of the
granting of a Lien on any asset of such guaranteeing Person, shall be limited to
the fair market value of such asset.
Section 4.10. Asset Sales.
The Company shall not, and shall not permit any of its Subsidiaries to,
engage in an Asset Sale unless (i) the Company (or the Subsidiary, as the case
may be) receives consideration at the time of such Asset Sale at least equal to
the fair market value (evidenced by a resolution of the Board set forth in an
Officers' Certificate delivered to the Trustee, provided that such Officer's
Certificate shall be delivered only in the event of any Asset Sale involving
$5.0 million or more of consideration) of the assets or Capital Stock issued or
sold or otherwise disposed of and (ii) at least 80% of the consideration
therefor received by the Company or such Subsidiary is in the form of cash or
Cash Equivalents; provided that the amount of (x) any liabilities (as shown on
the Company's or such Subsidiary's most recent balance sheet) of the Company or
any of its Subsidiaries (other than contingent liabilities and liabilities that
are by their terms subordinated to the Notes or any Guarantee thereof) that are
assumed by the transferee of any such assets pursuant to a customary novation
agreement that releases the Company or such Subsidiary from further liability,
and (y) any notes or other obligations received by the Company or any such
Subsidiary from such transferee that are immediately converted by the Company or
such Subsidiary into cash (to the extent of the cash received), shall be deemed
to be cash for purposes of this provision, and provided, further, that (A) the
Company and its Subsidiaries will not be required to comply with clauses (i) and
(ii) of this paragraph in connection with any Asset Sale
56
effected in order to comply with an FTC Order which is consummated within the
lesser of (a) 365 days of the date of such FTC Order, or (b) the time period
specified in such FTC Order and (B) any Acquisition Subsidiary and any
Subsidiary of an Acquisition Subsidiary will not be required to comply with
clause (ii) of this paragraph in connection with any Asset Sale.
Within 365 days after the receipt of any Net Proceeds from an Asset Sale,
the Company or the applicable Subsidiary may apply such Net Proceeds, at its
option, (a) to permanently reduce outstanding Senior Indebtedness (and
correspondingly reduce commitments with respect thereto) or (b) to the
acquisition of an interest in another business, the making of a capital
expenditure or the acquisition of other long-term assets, in each case, in a
Permitted Line of Business. Pending the final application of any such Net
Proceeds, the Company or the applicable Subsidiary may temporarily reduce
Indebtedness under the Revolving Credit Facility or otherwise invest such Net
Proceeds in any manner that is not prohibited by the Indenture. Any Net Proceeds
from Asset Sales that are not applied or invested as provided in the first
sentence of this paragraph will be deemed to constitute "Excess Proceeds."
Within 30 days after the aggregate amount of Excess Proceeds exceeds $5.0
million, the Company shall make an offer to all Holders of Notes (an "Asset Sale
Offer") to purchase an aggregate principal amount of Notes equal to such Excess
Proceeds, at a Purchase Price in cash in an amount equal to 100% of the
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the Purchase Date. The Asset Sale Offer shall be
made in compliance with all applicable laws, including, without limitation, Rule
14e-1 under the Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are applicable in connection
with the repurchase of the Notes as a result of an Asset Sale, and the
applicable procedures set forth in Article III hereof and shall include all
instructions and materials necessary to enable Holders to tender their Notes.
To the extent that the aggregate amount of Notes tendered pursuant to an
Asset Sale Offer is less than the Excess Proceeds, the Company or the applicable
Subsidiary may use any remaining Excess Proceeds for general corporate purposes.
If the aggregate principal amount of Notes surrendered by Holders thereof
exceeds the Offer Amount, the Trustee shall select the particular Notes or
portions thereof to be purchased in accordance with Article III hereof. Upon
completion of such Asset Sale Offer, the amount of Excess Proceeds shall be
reset at zero.
Section 4.11. Transactions with Affiliates.
The Company shall not, and shall not permit any of its Subsidiaries to,
make any payment to, or sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into
or make or amend any contract, agreement, loan, advance or guarantee with any
Affiliate or with any Person (other than an Affiliate) for the benefit of, any
Affiliate (each of the foregoing, an "Affiliate Transaction"), unless:
(i) such Affiliate Transaction is on terms that are no less favorable
to the Company or the relevant Subsidiary than those that would have been
obtained in a comparable transaction by the Company or such Subsidiary with
an unrelated Person and
57
(ii) the Company delivers to the Trustee (a) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $2.0 million, a resolution of the
Board set forth in an Officers' Certificate certifying that such Affiliate
Transaction complies with clause (i) above and that such Affiliate
Transaction has been approved by a majority of the disinterested members of
the Board and (b) with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving aggregate consideration in excess
of $5.0 million, an opinion as to the fairness to the Company of such
Affiliate Transaction from a financial point of view issued by an
accounting, appraisal or investment banking firm of national standing
experienced in the appraisal or similar review of similar types of
transactions;
provided that (w) any employment or consulting agreement entered into or any
employee benefit plan adopted by the Company or any of its Subsidiaries in the
ordinary course of business, (x) transactions between or among the Company
and/or its Wholly Owned Subsidiaries (other than Acquisition Subsidiaries and
Subsidiaries of Acquisition Subsidiaries) and transactions between or among an
Acquisition Subsidiary and/or its Subsidiaries, (y) Restricted Payments
(including the management fee payable to Castle Harlan, Inc. pursuant to the
Management Agreement) that are permitted by Section 4.7 hereof, and (z)
reasonable and customary payments and other benefits (including indemnification)
provided to directors for service on the Board of the Company or any of its
Subsidiaries, including the reimbursement or advancement of out-of-pocket
expenses and directors' and officers' liability insurance, in each case, shall
not be deemed Affiliate Transactions. For the purposes of determining if a
transaction is an Affiliate Transaction, Castle Harlan Partners II, L.P., Castle
Harlan, Inc. and their respective Affiliates shall be deemed to be an Affiliate
of the Company and each of its Subsidiaries.
Section 4.12. Liens.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume or suffer to exist any Lien on any
asset now owned or hereafter acquired, or any income or profits therefrom or
assign or convey any right to receive income therefrom, except Permitted Liens.
Section 4.13. Continued Existence.
Subject to Article V hereof, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect (i) its corporate
existence in accordance with the organizational documents (as the same may be
amended from time to time) of the Company and (ii) the material rights (charter
and statutory), licenses and franchises of the Company, except to the extent
that the Board determines in good faith that the preservation of such right,
license or franchise is no longer necessary or desirable in the conduct of the
business of the Company and that the loss thereof is not disadvantageous in any
material respect to the Holders.
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Section 4.14. Insurance Matters.
The Company shall provide or cause to be provided, for itself and each of
its Subsidiaries, insurance (including appropriate self-insurance) against loss
or damage of the kinds that, in the reasonable, good faith opinion of the
Company, are adequate and appropriate for the conduct of the business of the
Company and its Subsidiaries in a prudent manner, with reputable insurers or
with the government of the United States of America or an agency or
instrumentality thereof, in such amounts, with such deductibles, and by such
methods as shall be either (i) consistent with past practices of the Company or
the applicable Subsidiary or (ii) customary, in the reasonable, good faith
opinion of the Company, for corporations similarly situated in the industry,
unless the failure to provide such insurance (together with all other such
failures) would not have a material adverse effect on the financial condition or
results of operations of the Company and its Subsidiaries, taken as a whole.
Section 4.15. Offer to Repurchase upon Change of Control.
Upon the occurrence of a Change of Control, each Holder of Notes shall have
the right to require the Company to repurchase all or any part (equal to $1,000
or an integral multiple thereof) of such Holder's Notes (a "Change of Control
Offer") at a Purchase Price in cash equal to 101% of the aggregate principal
amount thereof, together with accrued and unpaid interest and Liquidated
Damages, if any, thereon to the Purchase Date. The Change of Control Offer shall
be made in compliance with all applicable laws, including, without limitation,
Rule 14e-1 under the Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are applicable in connection
with the repurchase of the Notes as a result of a Change of Control, and the
applicable procedures set forth in Article III hereof and shall include all
instructions and materials necessary to enable Holders to tender their Notes.
Section 4.16. Limitations on Issuances and Sales of Capital Stock of
Subsidiaries.
The Company (i) shall not, and shall not permit any Subsidiary of the
Company to, transfer, convey, sell, lease or otherwise dispose of any Capital
Stock of any Subsidiary of the Company to any Person (other than the Company or
a Wholly Owned Subsidiary of the Company which is not an Acquisition Subsidiary
or a Subsidiary of an Acquisition Subsidiary), unless (a) such transfer,
conveyance, sale, lease or other disposition (unless made by an Acquisition
Subsidiary or a Subsidiary of an Acquisition Subsidiary) is of all the Capital
Stock of such Subsidiary and (b) the Net Proceeds from such transfer,
conveyance, sale, lease or other disposition are applied in accordance with
Section 4.10 hereof and (ii) shall not permit any Subsidiary of the Company
(other than a Subsidiary of an Acquisition Subsidiary) to issue any of its
Capital Stock (other than, if necessary, shares of its Capital Stock
constituting directors' qualifying shares or, in the case of a Foreign
Subsidiary, shares issued to foreign nationals pursuant to applicable law,
provided that such Foreign Subsidiary remains a Wholly Owned Subsidiary) to any
Person other than to the Company or a Wholly Owned Subsidiary of the Company
which is not an Acquisition Subsidiary or a Subsidiary of an Acquisition
Subsidiary.
59
Section 4.17. Limitation on Future Subordinated Indebtedness.
The Company shall not incur any Indebtedness, other than the Notes, that is
subordinated in right of payment to any other Indebtedness of the Company unless
such Indebtedness, by its terms is pari passu with the Notes or subordinated to
the Notes pursuant to subordination provisions substantially similar to, or more
favorable to senior creditors than, those contained herein.
Section 4.18. Subsidiary Guarantees.
(a) The Company shall cause each of its Subsidiaries (other than an
Acquisition Subsidiary or a Subsidiary of an Acquisition Subsidiary), not
later than fifteen (15) days after such Subsidiary of the Company becomes a
Significant Subsidiary (whether as a result of creation, acquisition,
additional investment, internal growth or otherwise), to cause a Subsidiary
Guarantee to be executed by two officers of such Subsidiary and deliver
such Subsidiary Guarantee and an Opinion of Counsel acceptable to the
Trustee (as set forth in paragraph (b) below) to the Trustee; provided,
however, that the Company shall cause any of its Subsidiaries which becomes
a Significant Subsidiary as a result of creation, acquisition or additional
investment to execute such Subsidiary Guarantee concurrently with such
creation, acquisition or additional investment, and provided, further, that
any Foreign Subsidiary shall only be required to execute a Subsidiary
Guarantee to the extent permitted under the laws of its jurisdiction of
organization.
(b) The Opinion of Counsel required by clause (a) above shall state
that the Subsidiary Guarantee has been duly authorized, executed and
delivered by such Subsidiary, that the obligations of such Subsidiary under
such Subsidiary Guarantee are enforceable against such Subsidiary in
accordance with the terms of such Subsidiary Guarantee and that delivery by
such Subsidiary of the Subsidiary Guarantee will not (i) result in any
violation of the provisions of the charter or bylaws of such Subsidiary,
(ii) to the best knowledge of such counsel, conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan or credit
agreement, or other agreement or instrument known to such counsel to which
such Subsidiary is a party, or (iii) to the best knowledge of such counsel,
result in any violation of the provisions of any federal or state statute,
or any order, rule or regulation of any federal or state court or
governmental agency or body having jurisdiction over such Subsidiary or any
of its properties or assets.
(c) Except as set forth in Articles IV and V hereof, nothing contained
in this Indenture or in any of the Notes shall prevent any consolidation or
merger of a Subsidiary Guarantor with or into the Company or another
Subsidiary Guarantor or shall prevent any sale or conveyance of the
property of a Subsidiary Guarantor as an entirety or substantially as an
entirety to the Company or another
60
Subsidiary Guarantor. No Subsidiary Guarantor may consolidate with or merge
into (whether or not such Subsidiary Guarantor is the surviving Person),
another corporation, Person or entity (other than the Company or another
Subsidiary Guarantor) whether or not affiliated with such Subsidiary
Guarantor unless, subject to clause (d) below,
(i) the Person formed by or surviving any such consolidation or
merger (if other than such Subsidiary Guarantor) assumes all the
obligations of such Subsidiary Guarantor, in form and substance
reasonably satisfactory to the Trustee, under the Subsidiary Guarantee
of such Subsidiary Guarantor;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default exists; and
(iii) the Company would be permitted, by virtue of the Company's
pro forma Fixed Charge Coverage Ratio immediately after giving effect
to such transaction, to incur at least $1.00 of additional
Indebtedness pursuant to the first paragraph of Section 4.9 hereof.
(d) In the event of a sale or other disposition of all or
substantially all of the assets of any Subsidiary Guarantor, by way of
merger, consolidation or otherwise, or a sale or other disposition
(including, without limitation, by foreclosure) of all of the Capital Stock
of any Subsidiary Guarantor, then such Subsidiary Guarantor shall be
automatically released and relieved of any obligations under its Subsidiary
Guarantee; provided that the Net Proceeds of such sale or other disposition
are applied in accordance with Section 4.10 hereof. 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 this Indenture, including
without limitation Section 4.10 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.
(e) By its acceptance of Notes, each Holder, hereby confirms that it
is the intention of the Holders that a Subsidiary Guarantee of any
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 hereby irrevocably agree that the
obligations of such Subsidiary Guarantor under its Subsidiary Guarantee
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
61
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 its Subsidiary Guarantee, result in the obligations of such
Subsidiary Guarantor under its Subsidiary Guarantee not constituting a
fraudulent transfer or conveyance.
(f) All Subsidiary Guarantees shall be of no further force and effect
upon the occurrence of a Legal Defeasance or a Covenant Defeasance, subject
to reinstatement pursuant to Section 8.7 hereof under the circumstances
described therein.
Section 4.19. Business Activities.
The Company shall not, nor shall it permit any of its Subsidiaries to,
engage in any business other than a Permitted Line of Business.
Section 4.20. Payments for Consent.
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of this
Indenture or the Notes unless such consideration is offered to be paid or is
paid to all Holders of the Notes 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 4.21. Restrictions under Senior Indebtedness.
Prior to giving notice to Holders of Notes relating to a Change of Control
Offer or an Asset Sale Offer, but in any event within 90 days following a Change
of Control or the accumulation of Excess Proceeds in excess of $5.0 million, the
Company shall (i) repay, or otherwise make arrangements satisfactory to the
holders of all Senior Indebtedness (or their respective Senior Representatives)
for the repayment of, all Senior Indebtedness in full in cash or Cash
Equivalents or offer to repay all such Senior Indebtedness in full in cash or
Cash Equivalents and have repaid, or otherwise made arrangements satisfactory to
the holders of all Senior Indebtedness (or their respective Senior
Representatives) for the repayment of, all Senior Indebtedness in full in cash
or Cash Equivalents of any lender who accepts such offer; and/or (ii) obtain the
requisite consents under the Bank Credit Facility or under agreements relating
to other Senior Indebtedness to purchase Notes as required by this Indenture.
The Company shall not effect the purchase of Notes until all Senior Indebtedness
has been repaid in full in cash or Cash Equivalents and/or such requisite
consents have been obtained.
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ARTICLE V.
SUCCESSORS
Section 5.1. Merger, Consolidation, or Sale of Assets.
The Company shall not consolidate or merge with or into any other Person
(other than a Wholly Owned Subsidiary which is not an Acquisition Subsidiary or
a Subsidiary of an Acquisition Subsidiary), or permit any other Person to
consolidate or merge with or into the Company, nor will the Company sell, lease,
convey or otherwise dispose of all or substantially all of its assets unless:
(i) the Company shall be the continuing corporation or the entity
formed by or surviving any such consolidation or merger, or to which such
sale, lease, conveyance or other disposition shall have been made (the
"Surviving Entity"), is a corporation organized and existing under the laws
of the United States, any state thereof, or the District of Columbia;
(ii) the Surviving Entity assumes by supplemental indenture all of the
obligations of the Company under the Notes and this Indenture;
(iii) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing;
(iv) immediately after giving effect to such transaction, the
Consolidated Net Worth of the Company or the Surviving Entity, as the case
may be, would be at least equal to the Consolidated Net Worth of the
Company immediately prior to such transaction; and
(v) immediately after giving effect to such transaction, the Company
or the Surviving Entity, as the case may be, could incur at least $1.00 of
additional Indebtedness pursuant to the first paragraph of Section 4.9
hereof.
The Company shall deliver to the Trustee prior to the consummation of the
proposed transaction an Officers' Certificate to the foregoing effect and an
Opinion of Counsel stating that the proposed transaction and such supplemental
indenture comply with this Indenture.
Section 5.2. Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, lease, conveyance or other
disposition of all or substantially all of the assets of the Company in
accordance with Section 5.1 hereof, the Surviving Entity shall succeed to and be
substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such 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, Purchase Price or
Redemption Price of or interest or Liquidated Damages, if any, on the Notes
except in the case of a sale of all of the Company's assets that meets the
requirements of Section 5.1 hereof.
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ARTICLE VI.
DEFAULTS AND REMEDIES
Section 6.1. Events of Default.
An "Event of Default" occurs if:
(a) the Company defaults in the payment when due of interest or
Liquidated Damages, if any, on the Notes and such default continues for a
period of 30 days (whether or not prohibited by Article X hereof);
(b) the Company defaults in the payment when due of principal,
Redemption Price or Purchase Price of the Notes, whether at maturity, upon
redemption or repurchase or otherwise (whether or not prohibited by Article
X hereof);
(c) the Company fails to comply with any of the provisions of Section
3.9, 3.10, 4.15 or 5.1 hereof or fails to make an Asset Sale Offer when and
as required by the provisions of Section 4.10 hereof, as applicable;
(d) the Company fails to comply with any of the provisions of Section
4.7 or 4.9 hereof and such failure to comply continues for a period of 30
days after notice thereof from the Trustee or the Holders of at least 25%
in aggregate principal amount of the then outstanding Notes;
(e) the Company fails to comply with any other covenant,
representation, warranty or other agreement in this Indenture or the Notes
and such failure to comply continues for a period of 60 days after notice
thereof from the Trustee or the Holders of at least 25% in aggregate
principal amount of the then outstanding Notes;
(f) a default occurs under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Subsidiaries
or the payment of which is Guaranteed by the Company or any of such
Subsidiaries, whether such Indebtedness or Guarantee now exists, or is
created after the date of this Indenture, which default (a) is caused by a
failure to pay any amount due with respect to such Indebtedness at the
stated maturity thereof (a "Payment Default") or (b) results in the
acceleration of any such Indebtedness prior to its express maturity and, in
each case, the principal amount of such Indebtedness, together with the
principal amount of any other such Indebtedness under which there has been
a Payment Default or the maturity of which has been so accelerated,
aggregates $5.0 million or more;
(g) a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against the Company
or any
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of its Subsidiaries and such judgment or judgments are not paid, stayed or
discharged for a period of 60 days, provided that the aggregate of all such
judgments exceeds $5.0 million;
(h) the Company, any Significant Subsidiary of the Company or any
group of Subsidiaries of the Company that, taken together, would constitute
a Significant Subsidiary:
(i) commences a voluntary case under any Bankruptcy Law,
(ii) consents to the entry of an order for relief against it in
an involuntary case,
(iii) consents to the appointment of a custodian or receiver of
it or for all or substantially all of its property,
(iv) makes a general assignment for the benefit of its creditors,
or
(v) generally is not paying its debts as they become due; or
(i) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(i) is for relief in an involuntary case against the Company, any
Significant Subsidiary of the Company or any group of Subsidiaries of
the Company that, taken together, would constitute a Significant
Subsidiary;
(ii) appoints a custodian or receiver of the Company, any
Significant Subsidiary of the Company or any group of Subsidiaries of
the Company that, taken together, would constitute a Significant
Subsidiary or for all or substantially all of the property of any of
the foregoing;
(iii) orders the liquidation of the Company, any of its
Significant Subsidiaries or any group of Subsidiaries of the Company
that, taken together, would constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60 consecutive
days.
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Section 6.2. Acceleration.
If any Event of Default (other than an Event of Default specified in clause
(h) or (i) of Section 6.1 hereof with respect to the Company, any Significant
Subsidiary or any group of Subsidiaries that, taken together, would constitute a
Significant Subsidiary) occurs and is continuing, the Trustee or the Holders of
at least 25% in principal amount of the then outstanding Notes by written notice
to the Company (and the Trustee, if such notice is given by such Holders) may
declare all the Notes to be due and payable immediately. Upon any such
declaration, the entire principal amount of, and accrued and unpaid interest and
Liquidated Damages, if any, on the Notes (i) shall become immediately due and
payable; or (ii) if there is any Designated Senior Indebtedness outstanding,
shall become due and payable upon the first to occur of (a) an acceleration
under such Designated Senior Indebtedness or (b) five days after receipt by the
Company and the Senior Representative for such Designated Senior Indebtedness of
such acceleration notice, unless all Events of Default specified in such
acceleration notice (other than any Event of Default in respect of non-payment
of principal, premium, or interest, if any, which has become due solely by
reason of such declaration of acceleration) shall have been cured.
Notwithstanding the foregoing, if an Event of Default specified in clause
(h) or (i) of Section 6.1 hereof occurs with respect to the Company or any
Significant Subsidiary or group of Subsidiaries that, taken together, would
constitute a Significant Subsidiary, all outstanding Notes shall be due and
payable immediately without further action or notice. The Holders of not less
than a majority in aggregate principal amount of the then outstanding Notes by
written notice to the Company and the Trustee may, on behalf of the Holders of
all of the Notes, rescind an acceleration and its consequences if the rescission
would not conflict with any judgment or decree and if (i) the Company has paid
or deposited with the Trustee a sum sufficient to pay (a) all sums paid or
advanced by the Trustee under the Indenture and the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, (b)
all overdue interest and Liquidated Damages, if any, on all Notes and (c) to the
extent that payment of such interest is lawful, interest upon overdue interest
and Liquidated Damages, if any, at the rate borne by the Notes; and (ii) all
Events of Default, other than the non-payment of principal of the Notes which
has become due solely by such declaration of acceleration, have been cured or
waived.
Section 6.4. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may pursue any
available remedy to collect the payment of principal, premium, if any, interest
or Liquidated Damages, if any, on the Notes or to enforce the performance of any
provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Notes or does not produce any of them in the proceeding, and any recovery or
judgment shall, after provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, be
for the ratable benefit of the Holders of the Notes. A delay or omission by the
Trustee or any Holder in exercising any right or remedy accruing upon an Event
of Default shall not impair the right or remedy or constitute a waiver of
66
or acquiescence in the Event of Default. All remedies are cumulative to the
extent permitted by law.
Section 6.4. Waiver of Past Defaults.
Holders of all of the aggregate principal amount of the then outstanding
Notes by notice to the Trustee may, on behalf of the Holders of all of the
Notes, waive an existing Default or Event of Default and its consequences
hereunder with regard to a continuing Default or Event of Default in the payment
of the principal, Redemption Price or Purchase Price of, or interest or
Liquidated Damages, if any, on the Notes. Holders of not less than 75% in
aggregate principal amount of the then outstanding Notes by notice to the
Trustee may, on behalf of the Holders of all of the Notes, waive an existing
Default or Event of Default and its consequences hereunder for all Defaults or
Events of Default arising from provisions of this Indenture which may only be
amended by Holders of not less than 75% in aggregate principal amount of the
then outstanding Notes. Holders of not less than a majority in aggregate
principal amount of the then outstanding Notes by notice to the Trustee may, on
behalf of the Holders of all of the Notes, waive an existing Default or Event of
Default and its consequences hereunder for all Defaults or Events of Default
arising from provisions of this Indenture which may only be amended by Holders
of not less than a majority in aggregate principal amount of the then
outstanding Notes. After a declaration of acceleration has been made, but before
a judgment or decree for payment of the money due has been obtained by the
Trustee, the Holders of the applicable percentage of aggregate principal amount
of Notes outstanding, by written notice to the Company and the Trustee, may
annul such declaration if (i) the Company has paid or deposited with the Trustee
a sum sufficient to pay (a) all sums paid or advanced by the Trustee under the
Indenture and the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel, (b) all overdue interest and Liquidated
Damages, if any, on all Notes, and (c) to the extent that payment of such
interest is lawful, interest upon overdue interest and Liquidated Damages, if
any, at the rate borne by the Notes; and (ii) all Events of Default, other than
the non-payment of principal of the Notes which has become due solely by such
declaration of acceleration, have been cured or waived. Upon any such waiver,
such Default shall cease to exist, and any Event of Default arising therefrom
shall be deemed to have been cured for every purpose of this Indenture; but no
such waiver shall extend to any subsequent or other Default or impair any right
consequent thereon.
Section 6.5. Control by Majority.
Holders of a majority in principal amount of the then outstanding Notes may
direct the time, method and place of conducting any proceeding for exercising
any remedy available to the Trustee or exercising any trust or power conferred
on it. However, the Trustee may refuse to follow any direction that conflicts
with applicable law or this Indenture that the Trustee reasonably determines may
be unduly prejudicial to the rights of other Holders of Notes or that may
subject the Trustee to personal liability and shall be entitled to the benefit
of Section 7.1(c)(iii) and (e) hereof. Notwithstanding any provision in this
Indenture to the contrary, the Trustee shall not be obligated to take any action
with respect to the provisions of Section 6.9
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hereof unless directed to do so pursuant to this Section 6.5 by the Holders of
at least 10% in principal amount of the then outstanding Notes.
Section 6.6. Limitation on Suits.
A Holder of a Note may pursue a remedy with respect to this Indenture or
the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the
remedy;
(c) such Holder or Holders of Notes offer and, if requested, provide
to the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights of
another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
Section 6.7. Rights of Holders of Notes to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal of, or premium, if any,
interest or Liquidated Damages, if any, on the Note, on or after the respective
due dates therefor (including in connection with an offer to repurchase), or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the written consent of such
Holder.
Section 6.8. Collection Suit by Trustee.
If an Event of Default specified in Section 6.1(a) or (b) occurs and is
continuing, the Trustee is authorized to recover judgment in its own name and as
trustee of an express trust against the Company for the whole amount of
principal of, premium and Liquidated Damages, if any, and interest remaining
unpaid on the Notes and interest on overdue principal and, to the extent lawful,
interest and Liquidated Damages, if any, and such further amounts as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expense, disbursements and advances of the Trustee, its
agents and counsel.
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Section 6.9. Event of Default to Avoid Premium.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have had
to pay if the Company then had elected to redeem the Notes pursuant to the
optional redemption provisions hereof, an equivalent premium shall also become
and be immediately due and payable to the extent permitted by law upon the
acceleration of the Notes. If an Event of Default occurs prior to the first date
on which the Notes are subject to redemption at the option of the Company as
provided in Section 3.7 hereof by reason of any willful action (or inaction)
taken (or not taken) by or on behalf of the Company with the intention of
avoiding the prohibition on the optional redemption of the Notes prior to such
first date, then the premium specified herein for an optional redemption of the
Notes on such first date shall also become immediately due and payable to the
extent permitted by law upon the acceleration of the Notes.
Section 6.10. Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents (including accountants,
experts or such other professionals as the Trustee deems necessary, advisable or
appropriate) and counsel and the Holders of the Notes allowed in any judicial
proceedings relative to the Company (or any other obligor upon the Notes), its
creditors or its property and shall be entitled and empowered to collect,
receive and distribute any money or other property payable or deliverable on any
such claims, and any custodian in any such judicial proceeding is hereby
authorized by each Holder to make such payments to the Trustee, and in the event
that the Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.7 hereof. To
the extent that the payment of any such compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, and any other amounts due
the Trustee under Section 7.7 hereof out of the estate in any such proceeding,
shall be denied for any reason, payment of the same shall be secured by a Lien
on, and shall be paid out of, any and all distributions, dividends, money,
securities and other properties that the Holders may be entitled to receive in
such proceeding whether in liquidation or under any plan of reorganization or
arrangement or otherwise. Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder, or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.
Section 6.11. Priorities.
If the Trustee collects any money pursuant to this Article, it shall pay
out the money in the following order:
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First: to the Trustee, its agents and attorneys for amounts due under
Section 7.7 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs
and expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the Notes
for principal, Purchase Price, Redemption Price and Liquidated Damages, if
any, and interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Notes for principal,
Purchase Price, Redemption Price and Liquidated Damages, if any, and
interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a special record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.11.
Section 6.12. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this Indenture
or in any suit against the Trustee for any action taken or omitted by it as a
Trustee, a court in its discretion may require the filing by any party litigant
in the suit of an undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section does
not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.7
hereof, or a suit by Holders of more than 10% in principal amount of the then
outstanding Notes.
ARTICLE VII.
TRUSTEE
Section 7.1. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise thereof, as a prudent man
would exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the TIA and the Trustee need
perform only those duties that are specifically set forth in this Indenture
and no others, and no implied covenants or obligations shall be read into
this Indenture or the TIA against the Trustee; and
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(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, without investigation, as to the truth of the statements
and the correctness of the opinions expressed therein, upon any statements,
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture. However, the Trustee shall examine the
certificates and opinions to determine whether or not they conform on their
face to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(i) this paragraph does not limit the effect of paragraph (b) of this
Section;
(ii) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it is proved that the Trustee
was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.5 hereof.
(d) Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to this Section 7.1.
(e) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, pursuant to the provisions of this Indenture, including,
without limitation, Section 6.5 hereof, unless such Holder shall have offered to
the Trustee security and indemnity satisfactory to it against any loss,
liability or expense which might be incurred by it in compliance with such
request or direction.
(f) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
Section 7.2. Rights of Trustee.
(a) The Trustee may conclusively rely and shall be protected in acting or
refraining from acting upon any document believed by it to be genuine and to
have been signed or presented by the proper Person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officer's Certificate or an Opinion of Counsel or both. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel and
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Opinions of Counsel shall be full and complete authorization and protection from
liability in respect of any action taken, suffered or omitted by it hereunder in
good faith and in reliance thereon.
(c) The Trustee may act through its attorneys, accountants, experts and
such other professionals as the Trustee deems necessary, advisable or
appropriate and shall not be responsible for the misconduct or negligence of any
attorney, accountant, expert or other such professional appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from the Company shall be sufficiently evidenced by
a written order signed by two Officers of the Company.
(f) The Trustee shall not be charged with knowledge of any Default or Event
of Default under Section 6.1 hereof (other than under Section 6.1(a) (subject to
the following sentence) or Section 6.1(b) hereof) unless either (i) a
Responsible Officer shall have actual knowledge thereof, or (ii) the Trustee
shall have received notice thereof in accordance with Section 11.2 hereof from
the Company or any Holder of the Notes. The Trustee shall not be charged with
knowledge of the Company's obligation to pay Liquidated Damages, or the
cessation of such obligation, unless the Trustee receives written notice thereof
from the Company or any Holder.
Section 7.3. Individual Rights Of Trustee.
The Trustee in its individual or any other capacity may become the owner or
pledgee of Notes and may otherwise deal with the Company or any Affiliate of the
Company with the same rights it would have if it were not Trustee. However, in
the event that the Trustee acquires any conflicting interest within the meaning
of the TIA it must eliminate such conflict within 90 days, apply (subject to the
consent of the Company) to the Commission for permission to continue as trustee
or resign. Any Agent may do the same with like rights and duties. The Trustee is
also subject to Sections 7.10 and 7.11 hereof.
Section 7.4. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation as to
the validity or adequacy of this Indenture, or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
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Section 7.5. Notice of Defaults.
If a Default or Event of Default occurs and is continuing, the Trustee
shall mail to Holders of Notes a notice of the Default or Event of Default
within 90 days after it occurs. Except in the case of a Default in payment on
any Note (including the failure to make a mandatory repurchase pursuant hereto),
the Trustee may withhold the notice if and so long as a committee of its
Responsible Officers in good faith determines that withholding the notice is in
the interests of the Holders of the Notes.
Section 7.6. Reports by Trustee to Holders of the Notes.
Within 60 days after each May 15 beginning with the May 15 following the
date of this Indenture, and for so long as Notes remain outstanding, the Trustee
shall mail to the Holders of the Notes a brief report dated as of such reporting
date that complies with TIA ss. 313(a) (but if no event described in TIA ss.
313(a) has occurred within the twelve months preceding the reporting date, no
report need be transmitted). The Trustee also shall comply with TIA ss. 313(b).
The Trustee shall also transmit by mail all reports as required by TIA ss.
313(c).
A copy of each report at the time of its mailing to the Holders of Notes
shall be mailed to the Company and filed with the Commission and each stock
exchange on which the Notes are listed in accordance with TIA ss. 313(d). The
Company shall promptly notify the Trustee when the Notes are listed on any stock
exchange.
Section 7.7. Compensation, Reimbursement and Indemnity.
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and the rendering by it of the
services required hereunder. The Trustee's compensation shall not be limited by
any law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee promptly upon request for all reasonable disbursements,
advances and expenses incurred or made by or on behalf of it in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's attorneys,
accountants, experts and such other professionals as the Trustee deems
necessary, advisable or appropriate.
The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture (including its
duties under Section 9.6 hereof), including the costs and expenses of enforcing
this Indenture or any Subsidiary Guarantee against the Company or a Subsidiary
Guarantor (including this Section 7.7) and defending itself against or
investigating any claim (whether asserted by the Company, any Subsidiary
Guarantor, any Holder or any other Person) or liability in connection with the
exercise or performance of any of its powers or duties hereunder, except to the
extent any such loss, liability or expense may be attributable to its negligence
or willful misconduct. The Trustee shall notify the Company promptly of any
claim for which it may seek indemnity. Failure by the Trustee to so notify the
Company shall not relieve the Company of its obligations hereunder. The Company
shall defend any claim or threatened claim asserted against the Trustee, and the
Trustee shall cooperate in the defense. The
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Trustee may have separate counsel and the Company shall pay the reasonable fees
and expenses of such counsel. The Company need not pay for any settlement made
without its consent, which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.7 shall survive the
resignation or removal of the Trustee, the satisfaction and discharge of this
Indenture and the termination of this Indenture.
To secure the Company's payment obligations in this Section 7.7, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal, Redemption
Price or Purchase Price of or Liquidated Damages, if any, or interest on,
particular Notes. Such Lien shall survive the resignation or removal of the
Trustee, the satisfaction and discharge of this Indenture and the termination of
this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.1(g) or (h) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
Section 7.8. Replacement Of Trustee.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from the
trust hereby created by so notifying the Company. The Holders of Notes of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company may
remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a custodian, receiver or public officer takes charge of the
Trustee or its property for the purpose of rehabilitation, conversation or
liquidation; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the date on which the successor Trustee takes
office, the Holders of a majority in principal amount of the then outstanding
Notes may appoint a successor Trustee to replace the successor Trustee appointed
by the Company.
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If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of Notes of at least 10% in principal amount of the then outstanding
Notes may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee, after written request by any Holder of a Note who has been
a bona fide holder of a Note or Notes for at least six months, fails to comply
with Section 7.10, such Holder of a Note may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon, the resignation or
removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. The Company shall mail a notice of its succession to Holder of the
Notes. The retiring Trustee shall promptly transfer all property held by it as
Trustee to the successor Trustee, provided all sums owing to the Trustee
hereunder have been paid and subject to the Lien provided for in Section 7.7
hereof. Notwithstanding replacement of the Trustee pursuant to this Section 7.8,
the Company's obligations under Section 7.7 hereof shall continue for the
benefit of the retiring Trustee.
Section 7.9. Successor Trustee by Merger, Etc.
If the Trustee consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation that
is eligible under Section 7.10 hereof, the successor corporation without any
further act shall be the successor Trustee.
Section 7.10. Eligibility; Disqualification.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof (including the District of Columbia) that is authorized
under such laws to exercise corporate trust power, that is subject to
supervision or examination by federal or state authorities and that has a
combined capital and surplus of at least $100 million as set forth in its most
recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the requirements
of TIA (beta) 310(a)(1), (2) and (5). The Trustee is subject to TIA (beta)
310(b).
Section 7.11. Preferential Collection of Claims against Company.
The Trustee is subject to TIA (beta) 311(a), excluding any creditor
relationship listed in TIA (beta) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (beta) 311(a) to the extent indicated therein.
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ARTICLE VIII.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.1. Option to Effect Legal Defeasance or Covenant Defeasance.
The Company may, at the option of its Board evidenced by a resolution set
forth in an Officers' Certificate, at any time, elect to have either Section 8.2
or 8.3 hereof be applied to all outstanding Notes upon compliance with the
conditions set forth below in this Article VIII.
Section 8.2. Legal Defeasance and Discharge.
Upon the Company's exercise under Section 8.1 hereof of the option
applicable to this Section 8.2, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.4 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Notes on the
date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall be
deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Notes, which shall thereafter be deemed to the "outstanding" only
for the purposes of Section 8.5 hereof and the other Sections of this Indenture
referred to in clauses (a) through (d) below, and to have satisfied all their
other obligations under such Notes and this Indenture (and the Trustee, on
demand of and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall survive
until otherwise terminated or discharged hereunder:
(a) the rights of Holders of outstanding Notes to receive solely from
the trust fund described in Section 8.4 hereof, and as more fully set forth
in such Section, payments in respect of the principal or Redemption Price
of, and interest and Liquidated Damages, if any, on such Notes when such
payments are due,
(b) the Company's obligations with respect to such Notes under Article
II and Section 4.2 hereof,
(c) the rights, powers, trusts, duties and immunities of the Trustee
hereunder and the Company's obligations in connection therewith, and
(d) this Article Eight.
Subject to compliance with this Article Eight, the Company may exercise its
option under this Section 8.2, notwithstanding the prior exercise of its option
under Section 8.3 hereof.
Section 8.3. Covenant Defeasance.
Upon the Company's exercise under Section 8.1 hereof of the option
applicable to this Section 8.3, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.4 hereof, be released from its
obligations under the covenants contained in Sections 3.9, 3.10, 4.5, 4.7
through 4.12 and 4.14 through 4.21 hereof, both inclusive, and Section 5.1(iv)
and (v)
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with respect to the outstanding Notes on and after the date the conditions set
forth below are satisfied (hereinafter, "Covenant Defeasance"), and the Notes
shall thereafter be deemed not "outstanding" for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder (it being understood that such
Notes shall not be deemed outstanding for accounting purposes). For this
purpose, Covenant Defeasance means that, with respect to the outstanding Notes,
the Company may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to any such
covenant or by reason of any reference in any such covenant to any other
provision herein or in any other document, and such omission to comply shall not
constitute a Default or an Event of Default under Section 6.1 hereof, but,
except as specified above, the remainder of this Indenture and such Notes shall
be unaffected thereby. In addition, upon the Company's exercise under Section
8.1 hereof of the option applicable to this Section 8.3 hereof, subject to the
satisfaction of the conditions set forth in Section 8.4 hereof, Sections 6.1(c)
through 6.1(g) hereof shall not constitute Events of Default.
Section 8.4. Conditions to Legal or Covenant Defeasance.
The following are the conditions precedent to the application of either
Section 8.2 or 8.3 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders of the Notes, cash in United States dollars,
U.S. Government Securities, or a combination thereof, in such amounts as
will be sufficient (without reinvestment), in the opinion of a nationally
recognized firm of independent public accountants, to pay the principal or
Redemption Price of, and interest and Liquidated Damages, if any, on the
outstanding Notes on the stated date for payment thereof or on the
applicable Redemption Date, as the case may be, and the Company must
specify whether the Notes are being defeased to maturity or to a particular
Redemption Date;
(b) in the case of an election under Section 8.2 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that (A) the Company
has received from, or there has been published by, the Internal Revenue
Service a ruling or (B) 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 of Counsel shall confirm that,
the Holders of the outstanding Notes will not recognize income, gain or
loss for federal income tax purposes as a result of such Legal 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 Legal
Defeasance had not occurred;
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(c) in the case of an election under Section 8.3 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that the Holders of
the outstanding Notes will not recognize income, gain or loss for federal
income tax purposes as a result of such Covenant Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such Covenant Defeasance
had not occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of
Default resulting from the borrowing of funds to be applied to such
deposit) or insofar as Section 6.1(g) or (h) hereof is concerned, at any
time in the period ending on the ninety-first day after the date of deposit
(which condition shall not be deemed satisfied until such ninety-first
day);
(e) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any material
agreement or instrument to which the Company or any of its Subsidiaries is
a party or by which the Company or any of its Subsidiaries is bound;
(f) the Company shall deliver to the Trustee an Opinion of Counsel to
the effect that after the ninety-first 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;
(g) the Company shall deliver to the Trustee an Officers' Certificate
stating that the deposit was not made by the Company with the intent of
preferring the Holders of Notes over the other creditors of the Company, or
with the intent of defeating, hindering, delaying or defrauding any
creditors of the Company or others; and
(h) the Company shall deliver to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that the all conditions precedent
to the Legal Defeasance or Covenant Defeasance have been complied with.
Section 8.5. Deposited Money and U.S. Government Securities to Be Held in
Trust; Other Miscellaneous Provision
Subject to Section 8.6 hereof, all money and U.S. Government Securities
(including the proceeds thereof) deposited with the Trustee (or other qualifying
trustee, collectively for purposes of this Section 8.5 only, the "Trustee")
pursuant to Section 8.4 hereof in respect of the outstanding Notes shall be held
in trust and applied by the Trustee, in accordance with the provisions of such
Notes and this Indenture, to the payment, either directly or through any Paying
Agent (other than the Company) as the Trustee may determine, to the Holders of
such Notes of all sums due and to become due thereon in respect of principal or
Redemption Price of,
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and Liquidated Damages, if any, interest on, the Notes, 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 cash or U.S. Government
Securities deposited pursuant to Section 8.4 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article VIII to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon the request of the
Company any money or U.S. Government Securities held by it as provided in
Section 8.4 hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under Section
8.4(a) hereof), are in excess of the amount thereof that would then be required
to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
Section 8.6. Repayment to the Company.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal, Redemption Price or
Purchase Price of, or Liquidated Damages, if any, or interest on any Note and
remaining unclaimed for two years after such amount has become due and payable
shall be paid to the Company on its request or (if then held by the Company)
shall be discharged from such trust; and the Holder of such Note shall
thereafter look only to the Company for payment thereof as a general creditor,
and all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, at the expense of the Company, may cause to
be published once, in THE NEW YORK TIMES and THE WALL STREET JOURNAL (national
editions), notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days after the date of such
notification or publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
Section 8.7. Reinstatement.
If the Trustee or Paying Agent is unable to apply any United States dollars
or U.S. Government Securities in accordance with Section 8.2 or 8.3 hereof, as
the case may be, by reason of any order of judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, then
the obligations of the Company under this Indenture, and the Notes shall be
revived and reinstated as though no deposit had occurred pursuant to Section 8.2
or 8.3 hereof until such time as the Trustee or Paying Agent is permitted to
apply all such money in accordance with Section 8.2 or 8.3 hereof, as the case
may be; provided, however, that, if the Company makes any payment with respect
to any Note following the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Notes to receive such payment
from the money held by the Trustee or Paying Agent.
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ARTICLE IX.
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.1. Without Consent of Holders of Notes.
Notwithstanding Section 9.2 of this Indenture, the Company and the Trustee
may amend or supplement this Indenture or the Notes without the consent of any
Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(c) to provide for the assumption of the Company's obligations to the
Holders of the Notes in the case of a merger or consolidation pursuant to
Article V hereof;
(d) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the
legal rights hereunder of any Holder of the Notes; or
(e) to comply with the requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the TIA.
Upon the request of the Company, accompanied by a resolution of the Board
(evidenced by an Officers' Certificate) authorizing the execution of any such
amended or supplemental indenture, and upon receipt by the Trustee of the
documents described in Section 7.2 hereof, the Trustee shall join with the
Company in the execution of any amended or supplemental Indenture authorized or
permitted by the terms of this Indenture and to make any further appropriate
agreements and stipulations that may be therein contained, but the Trustee shall
not be obligated to enter into such amended or supplemental Indenture that
affects its own rights, duties or immunities under this Indenture or otherwise.
Section 9.2. With Consent of Holders of Notes.
Except as provided below in this Section 9.2, the Company and the Trustee
may amend or supplement this Indenture (including Sections 3.9, 3.10, 4.10, and
4.15 and Article X hereof, and including the defined terms used therein) and the
Notes may be amended or supplemented with the consent of the Holders of at least
a majority in principal amount of the Notes then outstanding (including, without
limitation, consents obtained in connection with a tender offer or exchange
offer for the Notes), and, subject to Sections 6.2, 6.4 and 6.7 hereof, any
existing Default or Event of Default or compliance with any provision of this
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes (including consents
obtained in connection with a tender offer or exchange offer for the Notes).
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Without the consent of the Holders of at least 75% in principal amount of
the Notes then outstanding (including consents obtained in connection with a
purchase of, tender offer or exchange offer for, the Notes), no waiver or
amendment to this Indenture may make any change in the provisions of Article X
or Sections 3.9, 3.10, 4.10 or 4.15, including the defined terms used therein,
that adversely affects the rights of any Holder of Notes.
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any Notes held by a non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must consent to
an amendment, supplement or waiver;
(b) reduce the principal, Redemption Price or Purchase Price of or
change the fixed maturity of any Note or alter or waive any of the
provisions with respect to the redemption of the Notes (except as provided
above with respect to Sections 3.9, 3.10, 4.10 and 4.15 hereof);
(c) reduce the rate of or change the time for payment of interest or
Liquidated Damages, if any, on or with respect to any Note;
(d) waive a Default or Event of Default in the payment of principal,
Redemption Price or Purchase Price of, or interest or Liquidated Damages,
if any, on the Notes (except a rescission of acceleration of the Notes by
the Holders of at least a majority in aggregate principal amount of the
then outstanding Notes and a waiver of the payment default that resulted
from such acceleration);
(e) make any Note payable in money other than that stated in the
Notes;
(f) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive
payments of principal, Redemption Price or Purchase Price of, or interest
or Liquidated Damages, if any, on the Notes (except as provided above with
respect to Sections 3.9, 3.10, 4.10 and 4.15 hereof);
(g) waive a redemption or repurchase payment with respect to any Note
(except as provided above with respect to Sections 3.9, 3.10, 4.10 and 4.15
hereof); or
(h) make any change in the foregoing amendment and waiver provisions.
Upon the written request of the Company accompanied by a resolution of the
Board (evidenced by an Officers' Certificate) authorizing the execution of any
such amended or supplemental indenture, and upon the filing with the Trustee of
evidence satisfactory to the Trustee of the consent of the Holders of Notes as
aforesaid, and upon receipt by the Trustee of
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the documents described in Section 7.2 hereof, the Trustee shall join with the
Company in the execution of such amended or supplemental indenture unless such
amended or supplemental Indenture affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise, in which case the Trustee may in
its discretion, but shall not be obligated to, enter into such amended or
supplemental indenture.
It shall not be necessary for the consent of the Holders of Notes under
this Section 9.2 to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section 9.2 becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver.
Section 9.3. Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the Notes shall be set
forth in a amended or supplemental indenture that complies with the TIA as then
in effect.
Section 9.4. Revocation And Effect Of Consents.
Until an amendment, supplement or waiver becomes effective, a consent to it
by a Holder of a Note is a continuing consent by the Holder of a Note and every
subsequent Holder of a Note or portion of a Note that evidences the same debt as
the consenting Holder's Note, even if notation of the consent is not made on any
Note. However, any such Holder of a Note or subsequent Holder of a Note may
revoke the consent as to its Note if the Trustee receives written notice of
revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
Section 9.5. Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall authenticate new Notes
that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
Section 9.6. Trustee to Sign Amendments, Etc.
The Trustee shall sign any amended or supplemental indenture authorized
pursuant to this Article IX if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The Company
may not sign an amendment or supplemental
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Indenture until the Board approves such amendment or supplemental indenture. In
executing any amended or supplemental indenture, the Trustee shall be entitled
to receive, in addition to the documents required by Sections 11.4 and 11.5
hereof, and, subject to Section 7.1, shall be fully protected in relying upon,
an Officer's Certificate and an Opinion of Counsel stating that (i) the
execution of such amended or supplemental indenture is authorized or permitted
by this Indenture, (ii) no Event of Default shall occur as a result of the
execution of such Officer's Certificate or the delivery of such Opinion of
Counsel and (iii) the amended or supplemental indenture complies with the terms
of this Indenture.
ARTICLE X.
SUBORDINATION
Section 10.1. Notes Subordinated to Senior Indebtedness.
Notwithstanding the provisions of this Agreement, but subject to this
Article X, the Company covenants and agrees, and the Trustee and each Holder of
the Notes by his acceptance thereof likewise covenants and agrees, that all
payments on the Notes (including, without limitation, payments of the principal,
Redemption Price and Purchase Price of, and interest and Liquidated Damages (if
any) on, the Notes by the Company (including, without limitation, by any
purchase of Notes pursuant to Section 4.10 or 4.15 hereof) shall be subordinated
and subject in right of payment in accordance with the provisions of this
Article X to the prior payment in full in cash or Cash Equivalents of all
amounts payable under Senior Indebtedness of the Company.
Section 10.2. Priority and Payment Over of Proceeds in Certain Events.
(a) Subordination on Dissolution, Liquidation or Reorganization of the
Company. In the event of any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or proceeding in
connection therewith, relative to the Company or its assets, or any liquidation,
dissolution or other winding up of the Company, whether voluntary or
involuntary, or any assignment for the benefit of creditors or other marshaling
of assets or liabilities of the Company (except in connection with the
consolidation or merger of the Company or its liquidation or dissolution
following the sale, assignment, transfer, lease or other disposition of all or
substantially all of its assets in one or more related transactions, upon the
terms and conditions described under Article V hereof to the extent permitted
under the terms of outstanding Senior Indebtedness), all Senior Indebtedness due
and owing (including, in the case of Designated Senior Indebtedness, interest
and consignment fees accruing after the commencement of any such proceeding at
the rate specified in the instrument evidencing the applicable Designated Senior
Indebtedness, whether or not a claim therefor is allowed in such proceeding, to
the date of payment of such Designated Senior Indebtedness) must be paid in full
in cash or Cash Equivalents before any payment or distribution of any assets of
the Company of any kind or character is made on account of the Notes (including,
without limitation, the principal, Redemption Price and Purchase Price
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of, and interest and Liquidated Damages (if any) on, the Notes). Before any
payment may be made by the Company on account of the Notes (including, without
limitation, the principal, Redemption Price and Purchase Price of, and interest
and Liquidated Damages (if any) on, the Notes), and upon any such dissolution or
winding up or liquidation or reorganization, any payment or distribution of
assets or securities of 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, except for the provisions of this Article X, shall be made by
the Company or by any receiver, trustee in bankruptcy, liquidating trustee,
agent or other person making such payment or distribution, directly to the
holders of the Senior Indebtedness of the Company or any Senior Representatives
thereof to the extent necessary to pay all such Senior Indebtedness in full in
cash or Cash Equivalents after giving effect to any concurrent payment or
distribution to the holders of such Senior Indebtedness.
(b) Subordination on Default in Senior Indebtedness. During the continuance
of any default in the payment of any principal of, gold consignment repurchase
obligation or reimbursement obligation under, or premium, if any, or interest or
consignment fee on, any Senior Indebtedness (a "Senior Payment Default"), no
payment or distribution of any assets of the Company of any kind or character
may be made on account of the Notes (including, without limitation, on account
of the principal, Redemption Price and Purchase Price of, and interest and
Liquidated Damages (if any) on the Notes unless and until such Senior Payment
Default has been cured, waived or has ceased to exist or such Senior
Indebtedness shall have been discharged or paid in full in cash or Cash
Equivalents or the right under this Indenture to prevent any such payment has
been waived by or on behalf of the holders of such Senior Indebtedness.
During the continuance of any event (other than a Senior Payment Default),
the occurrence of which entitles one or more Persons to accelerate the maturity
of any Designated Senior Indebtedness (a "Senior Covenant Default"), and the
receipt by the Trustee from the Senior Representative for such Designated Senior
Indebtedness of a written notice of such Senior Covenant Default, no payment or
distribution of any assets of the Company of any kind or character may be made
by the Company on account of Notes for the period specified below (a "Payment
Blockage Period").
A Payment Blockage Period shall commence upon the receipt by the Trustee of
notice from a Senior Representative for Designated Senior Indebtedness of a
Senior Covenant Default and shall end (subject to any blockage of payment that
may be in effect in respect of a Senior Payment Default or insolvency) on the
earliest of (i) 179 days after the receipt of such notice, provided such
Designated Senior Indebtedness shall not theretofore have been accelerated and
no Senior Payment Default shall be in effect; (ii) the date on which such Senior
Covenant Default is cured, waived or ceases to exist or such Designated Senior
Indebtedness is discharged or paid in full in cash or Cash Equivalents; or (iii)
the date on which such Payment Blockage Period shall have been terminated by
written notice to the Company and the Trustee from the Senior Representative
initiating such Payment Blockage Period or the holders of at least a majority in
principal amount of such issue of Designated Senior Indebtedness, after which
the Company shall promptly resume making any and all required payments in
respect of the Notes, including any missed payments. In no event will a Payment
Blockage Period extend beyond 179 days from the date of the receipt by the
Trustee of the notice initiating such Payment Blockage Period. Any number of
notices of a Senior Covenant Default may be given during a Payment Blockage
Period; provided, that no such notice shall extend such Payment Blockage Period,
only one
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Payment Blockage Period may be commenced within any 360-day period and there
shall be at least 181 consecutive days in each period of 360 consecutive days
when no Payment Blockage Period is in effect. No Senior Covenant Default with
respect to Designated Senior Indebtedness that existed or was continuing on the
date of the commencement of any Payment Blockage Period and that was known to
the holders of or the Senior Representative for such Designated Senior
Indebtedness will be, or can be, made the basis for the commencement of a second
Payment Blockage Period, whether or not within a period of 360 consecutive days,
unless such Senior Covenant Default has been cured or waived for a period of not
less than 90 consecutive days. The Company shall deliver a notice to the Trustee
promptly after the date on which any Senior Covenant Default is cured or waived
or ceases to exist or on which the Designated Senior Indebtedness related
thereto is discharged or paid in full in cash or Cash Equivalents.
(c) Rights and Obligations of Holders of Notes and Trustee. In the event
that, notwithstanding the foregoing provisions prohibiting such payment or
distribution, the Trustee or any Holder shall have received any payment on
account of the Notes (including, without limitation, the principal, Redemption
Price or Purchase Price of, or interest or Liquidated Damages (if any) on, the
Notes) (other than as permitted by subsections (a) and (b) of this Section 10.2)
at a time when such payment is prohibited by this Section 10.2 and before the
Senior Indebtedness is paid in full in cash or Cash Equivalents, then and in
such event (subject to the provisions of Section 10.8) such payment or
distribution shall be received and held in trust for the holders of Senior
Indebtedness and shall be paid over or delivered to the Senior Representative of
Designated Senior Indebtedness in the case of Designated Senior Indebtedness and
to the holders of the Senior Indebtedness in the case of Senior Indebtedness
which is not Designated Senior Indebtedness, in each case remaining unpaid at
their written direction to the extent necessary to pay such Senior Indebtedness
in full in cash or Cash Equivalents in accordance with its terms after giving
effect to any concurrent payment or distribution to the holders of such Senior
Indebtedness.
Nothing contained in this Article X will limit the right of the Trustee or
the Holders of Notes to take any action to accelerate the maturity of the Notes
pursuant to Section 6.2 or to pursue any rights or remedies hereunder against
the Company; provided that, to the extent provided in this Article X, all Senior
Indebtedness of the Company then or thereafter due or declared to be due shall
first be paid in full in cash before the Holders or the Trustee are entitled to
receive any payment from the Company on account of the Notes (including, without
limitation, the principal, Redemption Price or Purchase Price of, or interest or
Liquidated Damages (if any) on, the Notes).
Upon any payment or distribution of assets or Notes referred to in this
Article X, the Trustee and the Holders shall be entitled to rely upon any order
or decree of a court of competent jurisdiction in which such dissolution,
winding up, liquidation or reorganization proceedings are pending, and upon a
certificate of the receiver, trustee in bankruptcy, liquidating trustee, agent
or other person making any such payment or distribution, delivered to the
Trustee for the purpose of ascertaining the persons entitled to participate in
such distribution, the holders of Senior Indebtedness and other Indebtedness of
the Company, the amount thereof or payable thereon, the
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amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article X.
Section 10.3. Payments May Be Made Prior to Dissolution.
Nothing contained in this Article X or elsewhere in this Indenture shall
prevent (i) the Company, except under the conditions described in Section 10.2,
from making payments at any time for the purpose of making such payments of
principal, Redemption Price or Purchase Price of, or interest or Liquidated
Damages (if any) on, the Notes, or from depositing with the Trustee any monies
for such payments or (ii) the application by the Trustee of any monies deposited
with it for the purpose of making such payments of principal, Redemption Price
or Purchase Price of, or interest or Liquidated Damages (if any) on, the Notes,
to the Holders entitled thereto unless at least three Business Days prior to the
date upon which such payment would otherwise (except for the prohibitions
contained in Section 10.2) become due and payable, the Trustee shall have
received the written notice provided for in Section 10.2(b) (or there shall have
been an acceleration of the Notes prior to such application) or in Section
10.8).
Section 10.4. Rights of Holders of Senior Indebtedness Not to Be Impaired.
No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act in good faith by any such
holder, or by any noncompliance by the Company, with the terms and provisions
and covenants herein regardless of any knowledge thereof any such holder may
have or otherwise be charged with.
The provisions of this Article X are tended to be for the benefit of, and
shall be enforceable directly by, the holders of Senior Indebtedness.
Section 10.5. Authorization to Trustee to Take Action to Effectuate
Subordination.
Each Holder of Notes by his acceptance thereof authorizes and directs the
Trustee on his behalf to take such action as may be necessary or appropriate to
effectuate, as between the holders of Senior Indebtedness and the Holders, the
subordination as provided in this Article X and appoints the Trustee his
attorney-in-fact for any and all such purposes. Whenever a distribution is to be
made or a notice given to holders of Senior Indebtedness, the distribution or
notice may be made to the representatives and agents of such holders of Senior
Indebtedness as such agents or representatives are identified by such holders in
writing to the Trustee.
Each Holder of Notes by his acceptance thereof authorizes and directs the
Trustee on his behalf to take such action as may be necessary or appropriate to
effectuate, as between the Holders and the holders of Indebtedness that is
subordinate to the Notes, the subordination provisions of all Indebtedness
subordinate to the Notes, and appoints the Trustee his attorney-in-fact for any
and all such purposes. Whenever a distribution is to be made or a notice given
to holders of Indebtedness that is subordinate to the Notes, the distribution or
notice may be made to the representatives and agents of such holders of
Indebtedness that is subordinate to the Notes as such agents and representatives
are identified by such holders in writing to the Trustee.
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Section 10.6. Subrogation.
Subject to the payment in full of all amounts payable under or in respect
of Senior Indebtedness, the Holders shall be subrogated to the rights of the
holders of such Senior Indebtedness to receive payments or distributions of
assets of the Company made on such Senior Indebtedness until the Notes shall be
paid in full in cash; and for the purposes of such subrogation, no payments or
distributions to holders of such Senior Indebtedness of any cash, property or
securities to which Holders of the Notes would be entitled except for the
provisions of this Article X, and no payment pursuant to the provisions of this
Article X to holders of such Senior Indebtedness by the Holders, shall, as
between the Company, its creditors other than holders of such Senior
Indebtedness and the Holders, be deemed to be a payment by the Company to or on
account of such Senior Indebtedness, it being understood that the provisions of
this Article X are solely for the purpose of defining the relative rights of the
holders of such Senior Indebtedness, on the one hand, and the Holders, on the
other hand.
If any payment or distribution to which the Holders would otherwise have
been entitled but for the provisions of this Article X shall have been applied,
pursuant to the provisions of this Article X, to the payment of all amounts
payable under the Senior Indebtedness, then and in such case, the Holders shall
be entitled to receive from the holders of such Senior Indebtedness at the time
outstanding any payments or distributions received by such holders of Senior
Indebtedness in excess of the amount sufficient to pay all amounts payable under
or in respect of such Senior Indebtedness in full.
Section 10.7. Obligations of Company Unconditional.
Nothing contained in this Article X or elsewhere in this Indenture or in
any Note is intended to or shall impair, as between the Company and the Holders,
the obligations of the Company, which are absolute and unconditional to pay to
the Holders the principal, Redemption Price or Purchase Price of, or interest or
Liquidated Damages (if any) on, the Notes 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 Trustee or any Holder from exercising all remedies otherwise permitted by
applicable law upon Default under this Indenture, subject to the rights, if any,
under this Article X of the holders of such Senior Indebtedness in respect of
cash, property or Notes of the Company received upon the exercise of any such
remedy.
The failure to make a payment on account of principal, Redemption Price or
Purchase Price of, or interest or Liquidated Damages (if any) on, the Notes by
reason of any provision of this Article X shall not be construed as preventing
the occurrence of an Event of Default under Section 6.1.
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Section 10.8. The Trustee Entitled to Assume Payments Not Prohibited in
Absence of Notice.
The Trustee or Paying Agent shall not at any time be charged with the
knowledge of the existence of any facts which would prohibit the making of any
payment to or by the Trustee or Paying Agent, unless and until the Trustee or
Paying Agent shall have received written notice thereof from the Company or one
or more holders of Senior Indebtedness or from any trustee or agent therefor;
and, prior to the receipt of any such written notice, the Trustee or Paying
Agent shall be entitled to assume conclusively that no such facts exist. Unless
at least three Business Days prior to the date on which by the terms of this
Indenture any monies are to be deposited by the Company with the Trustee or any
Paying Agent (whether or not in trust) for any purpose (including, without
limitation, the payment of the principal, Redemption Price or Purchase Price of,
or interest or Liquidated Damages (if any) on, any Note), the Trustee or Paying
Agent shall have received with respect to such monies the notice provided for in
the preceding sentence, the Trustee or Paying Agent shall have full power and
authority to receive such monies and to apply the same to the purpose for which
they were received, and shall not be affected by any notice to the contrary
which may be received by it on or after such date, except for an acceleration of
the Notes prior to such application. The foregoing shall not apply to the Paying
Agent if the Company is acting as Paying Agent. Nothing contained in this
Section 10.8 shall limit the right of the holders of Senior Indebtedness to
recover payments as contemplated by Section 10.2. The Trustee shall be entitled
to rely on the delivery to it of a written notice by a person representing
himself or itself to be a holder of such Senior Indebtedness (or a trustee on
behalf of, or other agent of, such holder) to establish that such notice has
been given by a holder of such Senior Indebtedness or a trustee or agent on
behalf of any such holder. Nothing in this Article X shall apply to amounts due
the Trustee pursuant to Section 7.7 herein.
Section 10.9. Right of Trustee to Hold Senior Indebtedness.
The Trustee and any agent for the holders of Senior Indebtedness shall be
entitled to all of the rights set forth in this Article X in respect of any
Senior Indebtedness at any time held by it to the same extent as any other
holder of such Senior Indebtedness, and nothing in this Indenture shall be
construed to deprive the Trustee or any agent for the holders of Senior
Indebtedness of any of its rights as such holder.
Section 10.10. No Implied Covenants by or Obligations of the Trustee.
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 X, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Article X against the Trustee. The Trustee shall not be deemed to have
any fiduciary duty to the holders of the Senior Indebtedness.
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ARTICLE XI.
MISCELLANEOUS
Section 11.1. Trust Indenture Act Controls.
If any provision hereof limits, qualifies or conflicts with a provision of
the TIA or another provision that would be required or deemed under such Act to
be part of and govern this Indenture if this Indenture were subject thereto, the
latter provision shall control. If any provision of this Indenture modifies or
excludes any provision of the TIA that may be so modified or excluded, the
latter provision shall be deemed to apply to this Indenture as so modified or to
be excluded, as the case may be.
Section 11.2. Notices.
Any notice or communication by the Company or the Trustee to others is duly
given if in writing and delivered in Person or mailed by first class mail
(registered or certified, return receipt requested), telex, telecopier or
overnight air courier guaranteeing next day delivery, to the others' address:
If to the Company:
Scholastic Brands, Inc.
7211 Circle S Road
Austin, Texas 78745-6603
Attention: Jeffrey H. Brennan
Fax: (512) 443-5213
With a copy to:
Schulte Roth & Zabel
900 Third Avenue
New York, New York 10022
Attention: Janet C. Walden
Fax: (212) 593-5955
If to the Trustee:
Marine Midland Bank
Attention: Corporate Trust Administration
140 Broadway, 12th Floor
New York, New York 10005-1180
Fax: (212) 658-6425
The Company or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
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All notices and communications (other than those sent to Holders) shall be
deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when answered back, if telexed; when receipt acknowledged,
if telecopied; and the next Business Day after timely delivery to the courier,
if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA (beta) 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above within
the time prescribed, it is duly given, whether or not the addressee receives it.
If the Company mails a notice or communication to Holders, it shall mail a
copy to the Trustee and each Agent at the same time.
Section 11.3. Communication by Holders of Notes with Other Holders of
Notes.
Holders may communicate pursuant to TIA (beta) 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA (beta)
312(c).
Section 11.4. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company and/or any Subsidiary
Guarantor to the Trustee to take any action under this Indenture, the Company
and/or any Subsidiary Guarantor shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 11.5 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 11.5 hereof) stating that, in the opinion of such counsel, all
such conditions precedent and covenants have been satisfied.
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Section 11.5. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA (beta) 314(a)(4)) shall comply with the provisions of TIA (beta)
314(e) and shall include:
(a) a statement that the Person making such certificate or opinion has
read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been satisfied; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
Section 11.6. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
Section 11.7. No Personal Liability of Directors, Officers, Employees and
Stockholders.
No past, present or future director, officer, employee, incorporator or
stockholder of the Company, as such, shall have any liability for any
obligations of the Company under the Notes or this Indenture, or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder of Notes by accepting a Note waives and releases all such liability.
The waiver and release are part of the consideration for issuance of the Notes.
Section 11.8. Governing Law; Submission to Jurisdiction; Waiver of Jury
Trial.
THIS INDENTURE, THE SUBSIDIARY GUARANTEES AND THE NOTES SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING
SECTION 5-1401 OF THE GENERAL OBLIGATION LAW, BUT OTHERWISE WITHOUT REGARD TO
CONFLICT OF LAW RULES. THE COMPANY AND EACH SUBSIDIARY GUARANTOR HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN
THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN
THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN
91
RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
INDENTURE, THE SUBSIDIARY GUARANTEES AND THE NOTES, AND IRREVOCABLY ACCEPTS FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY,
JURISDICTION OF THE AFORESAID COURTS. THE COMPANY AND EACH SUBSIDIARY GUARANTOR
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT THAT IT MAY EFFECTIVELY DO SO UNDER
APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT
IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT
IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING HEREIN
SHALL AFFECT THE RIGHT OF THE TRUSTEE OR ANY HOLDER OF THE NOTES TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST THE COMPANY OR ANY SUBSIDIARY GUARANTOR IN ANY OTHER
JURISDICTION.
Section 11.9. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret any other indenture, loan or
debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
Section 11.10. Successors.
All agreements of the Company in this Indenture and the Notes shall bind
their successors. All agreements of the Trustee in this Indenture shall bind its
successors.
Section 11.11. Severability.
In case any provision in this Indenture or in the Notes shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
Section 11.12. Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.
Section 11.13. Table of Contents, Headings, Etc.
The Table of Contents, Cross-Reference Table and Headings of the Articles
and Sections of this Indenture, which have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
92
Section 11.14. Qualification of Indenture.
The Company shall qualify this Indenture under the TIA in accordance with
the terms and conditions of the Registration Rights Agreement and shall pay all
reasonable costs and expenses (including attorneys' fees for the Company, the
Trustee and the Holders of the Notes) incurred in connection therewith,
including, but not limited to, costs and expenses of qualification of the
Indenture and the Notes and printing this Indenture and the Notes. The Trustee
shall be entitled to receive from the Company any such Officers' Certificates,
Opinions of Counsel or other documentation as it may reasonably request in
connection with any such qualification of this Indenture under the TIA.
[Signatures on following page]
93
SIGNATURES
SCHOLASTIC BRANDS, INC.
By: /s/ David B. Pittaway
--------------------------
Name: David B. Pittaway
Title: President
By: /s/ William J. Lovejoy
--------------------------
Name: William J. Lovejoy
Title: Secretary
MARINE MIDLAND BANK,
As TRUSTEE
By: /s/ Frank J. Godino
-------------------------
Name: Frank J. Godino
Title: Assistant Vice President
94
EXHIBIT A
FORM OF NOTE
(Face of Note)
SCHOLASTIC BRANDS, INC.
11% SENIOR SUBORDINATED NOTE DUE 2007
[THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A
DEPOSITARY OR A SUCCESSOR DEPOSITARY. THIS NOTE IS NOT EXCHANGEABLE FOR
NOTES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS
NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND
NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A
WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF
THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY
BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.](1)
[THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY HAS NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR
ANY STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION
HEREOF, THE HOLDER: (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
- - ----------
(1) To be included only if the Note is issued in global form.
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INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR
(B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL
ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THE
NOTE EVIDENCED HEREBY IN AN OFFSHORE TRANSACTION; (2) AGREES THAT IT WILL
NOT RESELL OR OTHERWISE TRANSFER THE NOTE EVIDENCED HEREBY EXCEPT (A) TO
THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED
INVESTOR OR A PURCHASER WHO IS NOT A U.S. PERSON THAT, PRIOR TO SUCH
TRANSFER, FURNISHES TO THE COMPANY AND MARINE MIDLAND BANK, AS TRUSTEE (OR
A SUCCESSOR TRUSTEE, AS APPLICABLE), A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF
THE NOTE EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM
SUCH TRUSTEE OR A SUCCESSOR TRUSTEE, AS APPLICABLE), (D) OUTSIDE THE UNITED
STATES IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT
TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE) OR IN ACCORDANCE WITH ANOTHER EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, OR (F) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND, IN EACH
CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OR ANY
OTHER APPLICABLE JURISDICTION; AND (3) AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THE NOTE EVIDENCED HEREBY IS TRANSFERRED NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IF THE PROPOSED TRANSFER IS
PURSUANT TO CLAUSE (C), (D) OR (E) ABOVE, THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO THE COMPANY AND MARINE MIDLAND BANK, AS TRUSTEE (OR A
SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH CERTIFICATIONS, LEGAL OPINIONS OR
OTHER INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS
USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S.
PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE
SECURITIES ACT.](2)
- - ----------
(2) To be included on the Senior Subordinated Notes and omitted from the New
Senior Subordinated Notes.
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SCHOLASTIC BRANDS, INC.
11% SENIOR SUBORDINATED NOTE DUE 2007
CUSIP No. ______________
No. ____________________ $______________
Interest Payment Dates: January 15 and July 15
Record Dates: January 1 and July 1
SCHOLASTIC BRANDS, INC., a Delaware corporation (the "Company," which term
includes any successor corporation under the indenture hereinafter referred to),
for value received promises to pay to _______________________________ or
registered assigns, the principal sum of _________________________________
Dollars on January 15, 2007.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Note shall
not be entitled to any benefits under the Indenture referred to on the reverse
hereof or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed
under its corporate seal.
[SEAL] Dated:
SCHOLASTIC BRANDS, INC.
By:_________________________
Name:
Title:
By:__________________________
Name:
Title:
This is one of the Notes referred to in
the within-mentioned Indenture:
MARINE MIDLAND BANK,
as Trustee
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By:______________________________
Name:
Title:
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(Back of Note)
11% Senior Subordinated Notes due 2007
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
1. Interest. The Company promises to pay interest on the principal amount
of this Note at the rate of 11% per annum from the date of original issuance
until maturity and shall pay the Liquidated Damages payable pursuant to Section
5 of the Registration Rights Agreement referred to below. The Company will pay
interest and Liquidated Damages semi-annually on January 15 and July 15 of each
year, or if any such day is not a Business Day, on the next succeeding Business
Day (each an "Interest Payment Date"). Interest on the Note will accrue from the
most recent date to which interest has been paid or, if no interest has been
paid, from the date of issuance; provided that if there is no existing Default
in the payment of interest, and if this Note is authenticated between a record
date referred to on the face hereof and the next succeeding Interest Payment
Date, interest shall accrue from such next succeeding Interest Payment Date;
provided, further, that the first Interest Payment Date shall be July 15, 1997.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue payments of the principal,
Purchase Price and Redemption Price of this Note from time to time on demand at
a rate that is 1% per annum in excess of the rate then in effect; it shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Liquidated Damages, if
any, (without regard to any applicable grace periods) hereon from time to time
on demand at the same rate to the extent lawful. Interest will be computed on
the basis of a 360-day year of twelve 30-day months.
2. Method of Payment. The Company will pay interest on the Notes (except
defaulted interest) and Liquidated Damages, if any, to the Persons who are
registered Holders of Notes at the close of business on the January 1 or July 1
next preceding the Interest Payment Date, even if such Notes are canceled after
such record date and on or before such Interest Payment Date, except as provided
in Section 2.12 of the Indenture with respect to defaulted interest. Any such
installment of interest or Liquidated Damages, if any, not punctually paid or
duly provided for shall forthwith cease to be payable to the registered Holders
on such Interest Payment Date, and may be paid to the registered Holders at the
close of business on a special interest payment date to be fixed by the Trustee
for the payment of such defaulted interest, notice whereof shall be given to the
registered Holders not less than 10 days prior to such special interest payment
date, or may be paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the Notes may be
listed, and upon such notice as may be required by such exchange, all as more
fully provided in the Indenture. The Notes will be payable as to principal,
Redemption Price, Purchase Price, interest and Liquidated Damages, if any, at
the office or agency of the Company maintained for such purpose within or
without the City and State of New York, or, at the option of the Company,
payment of interest and Liquidated Damages may be made by check mailed to the
Holders at their addresses set forth in the register of Holders, provided that
payment by wire transfer of immediately available funds will be required with
respect to principal, Redemption Price and Purchase Price of, and interest and
Liquidated Damages (if any) on, all Global Notes and all other Notes the Holders
of which shall have provided wire transfer instructions to the Trustee or the
Paying Agent. Such payment
A-5
shall be in such coin or currency of the United States of America as at the time
of payment is legal tender for payment of public and private debts.
3. Paying Agent and Registrar. Initially, Marine Midland Bank, the Trustee
under the Indenture, will act as Paying Agent and Registrar. The Company may
change any Paying Agent or Registrar without notice to any Holder. The Company
may act in any such capacity.
4. Indenture. The Company issued the Notes under an Indenture dated as of
December 16, 1996 (the "Indenture") between the Company and the Trustee. The
terms of the Notes include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939, as amended (15
U.S. Code (beta)(beta) 77aaa-77bbbb). The Notes are subject to all such terms,
and Holders are referred to the Indenture and such Act for a statement of such
terms. The Notes are general obligations of the Company limited to $90 million
in aggregate principal amount.
5. Optional Redemption. The Company may redeem any or all of the Notes at
any time on or after January 15, 2002, upon not less than 30 nor more than 60
days' prior notice in amounts of $1,000 or an integral multiple thereof at the
Redemption Prices (expressed as a percentage of the principal amount) set forth
below, if redeemed during the 12-month period beginning January 15 of the years
indicated below:
Year Redemption Price
---- ----------------
2002................................................ 105.500%
2003................................................ 103.667%
2004................................................ 101.833%
2005 and thereafter................................. 100.000%
in each case together with accrued and unpaid interest and Liquidated Damages,
if any, to the Redemption Date.
If less than all the Notes are to be redeemed, the Trustee will select the
particular Notes or portions thereof to be redeemed by lot, pro rata or by any
other method the Trustee shall deem fair and reasonable.
6. Special Redemption. In the event the Company completes one or more
Public Equity Offerings on or before January 15, 2000, the Company, in its
discretion, may use the net cash proceeds from any such Public Equity Offering
to redeem up to 33-1/3% of the original principal amount of the Notes (a
"Special Redemption") at a Redemption Price of 111% of the principal amount,
together with accrued and unpaid interest and Liquidated Damages (if any), to
the date of redemption, provided, however, that at least 66-2/3% of the original
principal amount of the Notes will remain outstanding immediately after each
such redemption; and provided, further, that each such redemption shall occur
within 90 days after the date of the closing of the applicable Public Equity
Offering.
A-6
If less than all the Notes are to be redeemed, the Trustee will select
the particular Notes or portions thereof to be redeemed by lot, pro rata or by
any other method the Trustee shall deem fair and reasonable.
7. Mandatory Redemption. Except as set forth in Paragraph 9 below with
respect to repurchases of Notes in certain events, the Company shall not be
required to make mandatory redemption payments with respect to the Notes.
8. Notice of Redemption. Subject to the provisions of the Indenture, a
notice of redemption will be mailed at least 30 days but not more than 60 days
before the Redemption Date to each Holder whose Notes are to be redeemed at its
registered address. Notes in denominations larger than $1,000 may be redeemed in
part but only in whole multiples of $1,000, unless all of the Notes held by a
Holder are to be redeemed. On and after the redemption date interest ceases to
accrue on Notes or portions thereof called for redemption.
9. Repurchase at Option of Holder.
(a) If there is a Change of Control, the Company shall be required to
make an offer (a "Change of Control Offer") to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of each Holder's Notes at a Purchase
Price equal to 101% of the principal amount thereof plus accrued and unpaid
interest and Liquidated Damages, if any, to the date of repurchase, in
accordance with the procedures set forth in the Indenture. Within 30 days
following any Change of Control, the Company, shall mail a notice to each Holder
setting forth the procedures governing the Change of Control Offer as required
by the Indenture.
(b) If the Company or a Subsidiary consummates any Asset Sale, within
30 days after each date on which the aggregate amount of Excess Proceeds exceeds
$5.0 million, the Company shall commence an offer to all Holders of Notes (as
"Asset Sale Offer") pursuant to Section 3.10 of the Indenture to repurchase the
maximum principal amount of Notes that may be purchased out of the Excess
Proceeds at a Purchase Price equal to 100% of the principal amount thereof plus
accrued and unpaid interest and Liquidated Damages, if any, to the date of
repurchase, in accordance with the procedures set forth in the Indenture. To the
extent that the aggregate principal amount of Notes tendered pursuant to an
Asset Sale Offer is less than the Excess Proceeds, the Company (or such
Subsidiary) may use such balance for general corporate purposes. If the
aggregate principal amount of Notes tendered by Holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall select the Notes or portions
thereof to be purchased on a pro rata basis (with such adjustments as may be
deemed appropriate by the Trustee so that only Notes in denominations of $1,000,
or integral multiples thereof, are purchased). Holders of Notes will receive an
Asset Sale Offer from the Company prior to any related purchase date and may
elect to have such Notes purchased by completing the form entitled "Option of
Holder to Elect Purchase" below.
10. Subordination. The Notes are subordinated to the prior payment in full
cash or Cash Equivalents of all Senior Indebtedness which includes, among other
things, the principal, Redemption Price and Purchase Price of, and interest and
Liquidated Damages (if any) on, any Indebtedness of the Company (including
without limitation, the purchase of any Notes pursuant to Section 4.10 or 4.15
of the Indenture), whether outstanding on the date of the Indenture or
thereafter created, incurred or assumed, unless, in the case of any particular
Indebtedness, the
A-7
instrument creating or evidencing, or the agreement governing,
such Indebtedness or pursuant to which such Indebtedness is outstanding
expressly provides that such Indebtedness shall not be senior in right of
payment to the Notes. To the extent provided in the Indenture, Senior
Indebtedness must be paid before the Notes may be paid. The Company agrees, and
each Holder by accepting a Note agrees, to the subordination and authorizes the
Trustee to give it effect.
11. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, it need not
exchange or register the transfer of any Notes for a period of 15 days before a
selection of Notes to be redeemed or during the period between a record date and
the corresponding Interest Payment Date.
12. Persons Deemed Owners. The registered Holder of a Note may be treated
as its owner for all purposes.
13. Amendment, Supplement and Waiver. Subject to certain exceptions, the
Indenture and the Notes may be amended or supplemented with the consent of the
Holders of at least a majority in principal amount of the then outstanding
Notes, and any existing default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes. Without the consent
of any Holder of a Note, the Indenture and the Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's obligations to Holders of the Notes
in case of a merger or consolidation, to make any change that would provide any
additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder, or to
comply with the requirements of the Commission in order to effect or maintain
the qualification of the Indenture under the Trust Indenture Act.
14. Defaults and Remedies. Events of Default include: (i) default for 30
days in the payment when due of interest or Liquidated Damages, if any, on the
Notes; (ii) default in payment when due of principal, Redemption Price or
Purchase Price of the Notes when the same becomes due and payable at maturity,
upon redemption, repurchase or otherwise; (iii) failure by the Company to comply
with Section 3.9, 3.10, 4.15 or 5.1 of the Indenture, or fails to make an Asset
Sale Offer when and as required by Section 4.10 of the Indenture; (iv) failure
by the Company to comply with Sections 4.7 or 4.9 of the Indenture for 30 days
after notice to the Company by the Trustee or the Holders of at least 25% of the
aggregate principal amount of the Notes outstanding; (v) failure by the Company
for 60 days after notice to the Company to comply with certain other agreements
in the Indenture or the Notes by the Trustee or the Holders of at least 25% of
the aggregate principal amount of the Notes outstanding; (vi) default under
certain other agreements relating to Indebtedness of the Company which default
(a) is caused by a failure to pay any amount due at the stated maturity thereof
(a "Payment Default") or (b) results
A-8
in the acceleration of such Indebtedness prior to its express maturity and, in
each case, the principal amount of such Indebtedness, together with the
principal amount of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated, aggregates
$5.0 million or more; (vii) certain final judgments for the payment of money
that remain undischarged for a period of 60 days, provided that the aggregate of
all such undischarged judgments exceeds $5.0 million; and (viii) certain events
of bankruptcy or insolvency with respect to the Company any Significant
Subsidiary of the Company or any group of Subsidiaries of the Company that,
taken together, would constitute a Significant Subsidiary. If any Event of
Default occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Notes may declare all the Notes to be
due and payable immediately. Upon any such declaration, the entire principal
amount of, and accrued and unpaid interest and Liquidated Damages, if any, on
the Notes (i) shall become immediately due and payable; or (ii) if there is any
Designated Senior Indebtedness outstanding, shall become due and payable upon
the first to occur of (a) an acceleration under such Designated Senior
Indebtedness or (b) five days after receipt by the Company and the Senior
Representative for such Designated Senior Indebtedness of such acceleration
notice, subject to certain exceptions. Notwithstanding the foregoing, in the
case of an Event of Default arising from certain events of bankruptcy or
insolvency, all outstanding Notes will become due and payable without further
action or notice. Holders may not enforce the Indenture or the Notes except as
provided in the Indenture. Subject to certain limitations, Holders of a majority
in principal amount of the then outstanding Notes may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders of the
Notes notice of any continuing Default or Event of Default (except a Default or
Event of Default relating to payment on any Note) if it determines that
withholding notice is in their interest. The Holders of not less than a majority
in aggregate principal amount of the Notes then outstanding by notice to the
Trustee may on behalf of the Holders of all of the Notes waive any existing
Default or Event of Default and its consequences under the Indenture except a
continuing Default or Event of Default in the payment of the principal,
Redemption Price or Purchase Price of, or interest, or Liquidated Damages, if
any, on, the Notes (which may be waived only by Holders of all of the Notes then
outstanding) or a default in respect of certain other covenants or provisions of
the Indenture (which may be waived only by Holders of not less than 75% of the
Notes then outstanding). The Company is required to deliver to the Trustee
annually a statement regarding compliance with the Indenture, and the Company is
required upon becoming aware of any Default or Event of Default, to deliver to
the Trustee a statement specifying such Default or Event of Default.
15. Trustee Dealings with Company. Subject to certain limitations, the
Trustee under the Indenture, in its individual or any other capacity, may become
owner or pledgee of Notes and may otherwise deal with the Company or its
Affiliates, as if it were not Trustee.
16. No Recourse Against Others. No past, present or future director,
officer, employee, incorporator or stockholder of the Company, as such, shall
have any liability for any obligations of the Company under the Notes or the
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.
A-9
17. Authentication. This Note shall not be valid until authenticated by the
manual signature of the Trustee or an authenticating agent.
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).
19. Discharge Prior to Maturity. If the Company deposits with the Trustee
or Paying Agent cash or U.S. Government Securities sufficient to pay the
principal or Redemption Price of, and interest and Liquidated Damages, if any,
on, the Notes to maturity or a specified Redemption Date and satisfies certain
conditions specified in the Indenture, the Company will be discharged from the
Indenture, except for certain Sections thereof.
20. Governing Law. The Indenture and Subsidiary Guarantees and this Note
shall be governed by and construed in accordance with the laws of the State of
New York, including Section 5-1401 of the General Obligation Law, but otherwise
without regard to conflict of law rules. Each of the Company and each Subsidiary
Guarantor hereby irrevocably submits to the jurisdiction of any New York state
court sitting in the Borough of Manhattan in the City of New York or any Federal
court sitting in the Borough of Manhattan in the City of New York in respect of
any suit, action or proceeding arising out of or relating to the Indenture and
the Notes, and irrevocably accept for itself and in respect of its property,
generally and unconditionally, jurisdiction of the aforesaid courts. Each of the
Company and each Subsidiary Guarantor irrevocably waives, to the fullest extent
that it may effectively do so under applicable law, trial by jury and any
objection which it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding brought in any such court and any claim that any
such suit, action or proceeding brought in any such court has been brought in an
inconvenient forum. Nothing herein shall affect the right of the Trustee or any
Holder of the Notes to serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against the Company or any
Subsidiary Guarantor in any other jurisdiction.
21. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the correctness or accuracy of such numbers either as printed on the Notes
or as contained in any notice of redemption or repurchase and reliance may be
placed only on the other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Request may be made to:
Scholastic Brands, Inc.
7211 Circle S Road
Austin, Texas 78745-6603
Attention: Secretary
A-10
ASSIGNMENT FORM
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint ________________________________________________________
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him.
Date:___________________
Your Signature:____________________________
(Sign exactly as your name appears on the
face of this Note)
Signature Guarantee:____________________________________________________________
(Participant in recognized signature guarantee medallion program)
A-11
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to elect to have all or any portion of this Note
purchased by the Company pursuant to Section 4.10 ("Asset Sale Offer") or
Section 4.15 ("Change of Control Offer") of the Indenture, check the applicable
boxes:
|_| Asset Sale Offer: |_| Change of Control Offer:
in whole |_| in whole |_|
in part |_| in part |_|
Amount to be Amount to be
purchased: $ purchased: $______
Dated:_____________________ Signature:_________________________________
(Sign exactly as your name
appears on the other side of this
Note)
Signature
Guarantee:______________________________________________________________________
(Participant in recognized signature guarantee medallion program)
Social Security Number or
Taxpayer Identification Number:_________________________________________________
A-12
EXHIBIT B(1)
FORM OF CERTIFICATE
__________________,_____
Marine Midland Bank
140 Broadway, 12th Floor
New York, New York 10005-1187
Attention: Corporate Trust Administration
Re: Scholastic Brands, Inc. (the "Company") 11% Senior Subordinated Notes
due 2007 (the "Notes")
Dear Sirs:
This letter relates to U.S. $________________ principal amount at
maturity of Notes represented by a certificate (the "Legended Certificate")
which bears a legend outlining restrictions upon transfer of such Legended
Certificate. Pursuant to Section 2.1 of the Indenture (the "Indenture") dated as
of December 16, 1996 relating to the Notes, we hereby certify that we are (or we
will hold such securities on behalf of) a person outside the United States to
whom the Notes could be transferred in accordance with Rule 904 of Regulation S
promulgated under the U.S. Securities Act of 1933, as amended.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this letter have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Holder]
By:___________________________
Authorized Signature
B(1)-1
EXHIBIT B(2)
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF NOTES
__________________,_____
Marine Midland Bank
140 Broadway, 12th Floor
New York, New York 10005-1187
Attention: Corporate Trust Administration
Re: Scholastic Brands, Inc. (the "Company") 11% Senior Subordinated Notes
due 2007 (the "Notes")
Dear Sirs:
This Certificate relates to $_______ principal amount of Notes held in * __
book-entry or * __ certificated form by _______________________ (the
"Transferor").
The Transferor:*
|_| has requested the Trustee by written order to deliver in exchange for
its beneficial interest in the Global Note held by the Depositary a Note or
Notes in certificated, registered form of authorized denominations in an
aggregate principal amount equal to its beneficial interest in such Global Note
(or the portion thereof indicated above); or
|_| has requested the Trustee by written order to exchange or register the
transfer of a Note or Notes. In connection with such request and in respect of
each such Note, the Transferor does hereby certify that Transferor is familiar
with the Indenture relating to the above captioned Notes and as provided in
Section 2.6 of such Indenture, the transfer of this Note does not require
registration under the Securities Act (as defined below) because:(*)
|_| Such Note is being acquired for the Transferor's own account, without
transfer.
- - ----------
(*) Check applicable box
B(2)-1
|_| Such Note is being transferred to a "qualified institutional buyer" (as
defined in Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act")) in reliance on Rule 144A.
|_| Such Note is being transferred to an "Accredited Investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) in accordance with
Regulation D under the Securities Act.
|_| Such Note is being transferred pursuant to an exemption from
registration in accordance with Regulation S under the Securities Act.
|_| Such Note is being transferred in accordance with Rule 144 under the
Securities Act, or pursuant to an effective registration statement under the
Securities Act.
|_| Such Note is being transferred in reliance on and in compliance with an
exemption from the registration requirements of the Securities Act, other than
Rule 144A, 144 or Rule 904 under the Securities Act. An Opinion of Counsel to
the effect that such transfer does not require registration under the Securities
Act accompanies this Certificate.
Very truly yours,
_______________________________
[INSERT NAME OF TRANSFEROR]
By:____________________________
Name:
Title
Date:__________
B(2)-2
EXHIBIT C
SUBSIDIARY GUARANTEE
This Subsidiary Guarantee, dated as of ___________, _____, made by
______________, a ____________ (the "Guarantor"), is made pursuant to the
provisions of the Indenture dated as of December 16, 1996, between Scholastic
Brands, Inc. and Marine Midland Bank, as trustee, (the "Indenture") in favor of
the Holders of Notes and the Trustee. Capitalized terms used herein have the
same meanings given in the Indenture unless otherwise indicated.
Section 1. Subsidiary Guarantee. The Guarantor, jointly and severally with
any other Subsidiary Guarantor now existing or which may execute a Subsidiary
Guarantee in the future, hereby unconditionally guarantees to each Holder of a
Note authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, irrespective of the validity and enforceability of the
Indenture, the Notes or the obligations of the Company under the Indenture or
the Notes, that: (a) the principal, Redemption Price and Purchase Price of, and
interest and Liquidated Damages, if any, on the Notes shall be promptly paid in
full when due, whether at maturity, by acceleration, redemption, repurchase or
otherwise, and (to the extent permitted by law) interest on the overdue
principal, Redemption Price and Purchase Price of, and interest and Liquidated
Damages, if any, on the Notes, and all other obligations of the Company to the
Holders or the Trustee under the Indenture or the Notes shall be promptly paid
in full or performed, all in accordance with the terms of the Indenture and the
Notes; and (b) in case of any extension of time of payment or renewal of any
Notes or any of such other obligations, that same shall be promptly paid in full
when due or performed in accordance with the terms of the extension or renewal,
whether at stated maturity, by acceleration or otherwise. Failing payment when
due of any amount so guaranteed for whatever reason, the Guarantor shall be
obligated to pay the same immediately, whether or not such failure to pay has
become an Event of Default which could cause acceleration pursuant to Section
6.2 of the Indenture. The Guarantor agrees that this is a guarantee of payment
and not a guarantee of collection.
The Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Notes or the Indenture, the absence of any action to enforce the same, any
waiver or consent by the Trustee or any Holder of the Notes with respect to any
provisions thereof, the recovery of any judgment against the Company or any
Subsidiary Guarantor, any action to enforce the same or any other circumstance
which might otherwise constitute a legal or equitable discharge or defense of a
guarantor. The Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of insolvency or bankruptcy
of the Company or any Subsidiary Guarantor, any right to require a proceeding
first against the Company or any Subsidiary Guarantor, protest, notice and all
demands whatsoever and covenants that, except as set forth herein, this
Subsidiary Guarantee shall not be discharged except by complete performance of
the obligations contained in the Notes and the Indenture.
If any Holder of Notes or the Trustee is required by any court or otherwise
to return to the Company or any Subsidiary Guarantor, or any Custodian, Trustee,
liquidator or other similar official acting in relation to either the Company or
any Subsidiary Guarantor, any amount paid
C-1
by either to the Trustee or such Holder, this Subsidiary Guarantee, to the
extent theretofore discharged, shall be reinstated in full force and effect.
The Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders of Notes in respect of any obligations
guaranteed hereby until payment in full of all obligations guaranteed hereby.
The Guarantor further agrees that, as between the Guarantor, on the one hand,
and the Holders and the Trustee, on the other hand, (x) the maturity of the
Obligations guaranteed hereby may be accelerated as provided in Article VI 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 Section 6.2 of the Indenture,
such Obligations (whether or not due and payable) shall forthwith become due and
payable by the Guarantor for the purpose of this Subsidiary Guarantee. The
Guarantor 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 or the Trustee under this Subsidiary Guarantee.
Section 2. Subordination of Guarantee. This Subsidiary Guarantee shall be
unsecured and subordinated to the prior payment in full in cash or Cash
Equivalents of all Senior Debt of the Guarantor (including the Guarantor's
guarantee of the Bank Credit Facility), and the amounts for which the Guarantor
will be liable under the guarantees issued from time to time with respect to
other Senior Indebtedness of the Company. The Obligations of the Guarantor under
this Subsidiary Guarantee shall be junior and subordinated to the Guarantees of
such Guarantor which constitute Senior Debt of the Guarantor and all other
Senior Debt of the Guarantor on the same terms and in the same manner as the
Notes are junior and subordinated to Senior Indebtedness of the Company as set
forth in the Indenture; provided, however, that the Trustee and the Holders
shall have the right to receive and/or retain payments by the Guarantor only at
such times as they may receive and/or retain payments in respect of the Notes
pursuant to this Indenture.
For the purposes of the foregoing "Senior Debt" shall mean Indebtedness of
the Guarantor that, if incurred by the Company, would constitute Senior
Indebtedness.
Section 3. Limitation on Liability of the Subsidiary Guarantor. The
Guarantor, the Trustee, and by its acceptance of Notes, each Holder, hereby
confirms that it is the intention of all such parties that this Subsidiary
Guarantee 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 Guarantor hereby irrevocably agree that the obligations of the
Guarantor hereunder shall be limited to the maximum amount as will, after giving
effect to such maximum amount and all other contingent and fixed liabilities of
the 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 its Subsidiary Guarantee, result in the
obligations of the Guarantor hereunder not constituting a fraudulent transfer or
conveyance.
C-2
This is a continuing Subsidiary Guarantee and shall remain in full force
and effect and shall be binding upon the Guarantor and its respective successors
and assigns to the extent set forth herein and in the Indenture until full and
final payment of all of the Company's Obligations under the Notes and the
Indenture and shall inure to the benefit of the successors and assigns of the
Trustee and the Holders of Notes and, in the event of any transfer or assignment
of rights by any Holder of Notes or the Trustee, the rights and privileges
herein conferred upon that party shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions hereof and
of the Indenture.
Section 4. Governing Law. This Subsidiary Guarantee shall be governed by
and construed in accordance with the laws of the State of New York, including
Section 5-1401 of the General Obligation Law, but otherwise without regard to
conflict of law rules. The Guarantor hereby irrevocably submits to the
jurisdiction of any New York state court sitting in the Borough of Manhattan in
the City of New York or any Federal court sitting in the Borough of Manhattan in
the City of New York in respect of any suit, action or proceeding arising out of
or relating to the Indenture and the Notes, and irrevocably accept for itself
and in respect of its property, generally and unconditionally, jurisdiction of
the aforesaid courts. The Guarantor irrevocably waives, to the fullest extent
that it may effectively do so under applicable law, trial by jury and any
objection which it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding brought in any such court and any claim that any
such suit, action or proceeding brought in any such court has been brought in an
inconvenient forum. Nothing herein shall affect the right of the Trustee or any
Holder of the Notes to serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against the Guarantor in any
other jurisdiction.
[SUBSIDIARY GUARANTOR]
By:____________________________________
Name:
Title:
By:____________________________________
Name:
Title:
ACCEPTED BY:
MARINE MIDLAND BANK,
as Trustee
By:______________________________
Name:
Title:
C-3
EXHIBIT D
FORM OF CERTIFICATE TO BE
DELIVERED IN CONNECTION WITH
TRANSFERS TO NON QIB ACCREDITED INVESTORS
______________,____
Marine Midland Bank
140 Broadway, 12th Floor
New York, New York 10005-1187
Attention: Corporate Trust Administration
Re: Scholastic Brands, Inc. (the "Company") 11% Senior
Subordinated Notes due 2007 (the "Notes")
Dear Sirs:
In connection with our proposed purchase of 11% Senior Subordinated
Notes due 2007 (the "Notes") of the Company, we confirm that:
1. We understand that any subsequent transfer of the Notes is subject
to certain restrictions and conditions set forth in the Indenture dated as
of December 16, 1996 relating to the Notes (the "Indenture") and the
undersigned agrees to be bound by, and not to resell, pledge or otherwise
transfer the Notes except in compliance with such restrictions and
conditions and the Securities Act of 1933, as amended (the "Securities
Act").
2. We understand that the Notes have not been registered under the
Securities Act or any other applicable securities law, and that the Notes
may not be offered, sold or otherwise transferred except as permitted in
the following sentence. We agree, on our own behalf and on behalf of any
accounts for which we are acting as hereinafter stated, that if we should
offer, sell, transfer, pledge, hypothecate or otherwise dispose of any
Notes within three years after the original issuance of the Notes, we will
do so only (A) to the Company or any Subsidiary thereof, (B) inside the
United States to a "qualified institutional buyer" in compliance with Rule
144A under the Securities Act, (C) inside the United States to an
institutional "accredited investor" (as defined below) that, prior to such
transfer, furnishes to you a signed letter substantially in the form of
this letter, (D) outside the United States to a foreign person in
compliance with Rule 904
D-1
of Regulation S under the Securities Act, (E) pursuant to an exemption from
registration provided by Rule 144 under the Securities Act (if available)
or in accordance with another exemption from the registration requirements
of the Securities Act, or (F) pursuant to a registration statement which
has been declared effective under the Securities Act, and we further agree
to provide to any person purchasing any of the Notes from us a notice
advising such purchaser that resales of the Notes are restricted as stated
herein and in the Indenture.
3. We understand that, on any proposed transfer of any Notes prior to
the later of the original issue date of the Securities and the last date
the Notes were held by an affiliate of the Company pursuant to paragraphs
2(C), 2(D) and 2(E) above, we will be required to furnish to you and the
Company such certifications, legal opinions and other information as you
and the Company may reasonably require to confirm that the proposed
transfer complies with the foregoing restrictions. We further understand
that the Notes purchased by us will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act) and 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 Notes, and we
and any accounts for which we are acting are acquiring the Notes for
investment purposes and not with a view to, or offer of sale in connection
with, any distribution in violation of the Securities Act, and we are each
able to bear the economic risk of our or its investment.
5. We are acquiring the Notes purchased by us for our own account or
for one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
Very truly yours,
(Name of Transferee)
By:___________________________________
Authorized Signature
EXHIBIT E
FORM OF CERTIFICATE TO BE DELIVERED
IN CONNECTION WITH TRANSFERS
PURSUANT TO REGULATION S
_________________,_____
Marine Midland Bank
Attention: Corporate Trust Administration
140 Broadway, 12th Floor
New York, New York 10005-1180
Re: Scholastic Brands, Inc. (the "Company") 11% Senior
Subordinated Notes due 2007 (the "Notes")
Dear Sirs:
In connection with our proposed sale of $_____________ aggregate
principal amount at maturity of the Notes, we confirm that such sale has been
effected pursuant to and in accordance with Regulation S under the Securities
Act of 1933, as amended, and, accordingly, we represent that:
(1) the offer of the Securities was not made to a person in the United
States;
(2) at the time the buy order was originated, the transferee was
outside the United States or we and any person acting on our behalf
reasonably believed that the transferee was outside the United States;
(3) no directed selling efforts have been made by us in the United
States in contravention of the requirements of Rule 903(b) or Rule 904(b)
of Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the U.S. Securities Act of 1933.
E-1
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this letter have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:___________________________
Authorized Signature
E-2