Exhibit 4.1
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SHEFFIELD STEEL CORPORATION
AND
STATE STREET BANK AND TRUST COMPANY
as Trustee
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INDENTURE
Dated as of December 1, 1997
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up to $150,000,000
11 1/2% First Mortgage Notes due 2005, Series A
and
11 1/2% First Mortgage Notes due 2005, Series B
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CROSS-REFERENCE TABLE
TIA Indenture
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).......................................... 7.08; 7.10
(b)............................................. 7.08; 7.10;
12.02
(c)............................................. N.A.
311(a)............................................. 7.11
(b)............................................. 7.11
(c)............................................. N.A.
312(a)............................................. 2.05
(b)............................................. 12.03
(c)............................................. 12.03
313(a)............................................. 7.06
(b)(1).......................................... N.A.
(b)(2).......................................... 7.06
(c)............................................. 7.06; 12.02
(d)............................................. 7.06
314(a)............................................. 4.09; 4.10;
12.02
(b)............................................. 10.02
(c)(1).......................................... 7.02; 12.04
(c)(2).......................................... 7.02; 12.04
(c)(3).......................................... N.A.
(d)............................................. 10.03
(e)............................................. 12.05
(f)............................................. N.A.
315(a)............................................. 7.01(b)
(b)............................................. 7.05; 12.02
(c)............................................. 7.01(a)
(d)............................................. 6.05; 7.01(c)
(e)............................................. 6.11
316(a)(last sentence).............................. 2.09
(a)(1)(A)....................................... 6.05
______________________
N.A. means Not Applicable
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of the Indenture
(a)(1)(B)..................................... 6.04
(a)(2)........................................ N.A.
(b)........................................... 6.07
317(a)(1)........................................ 6.08
(a)(2)........................................ 6.09
(b)........................................... 2.04
318(a)........................................... 12.01
(c)........................................... 12.01
______________________
N.A. means Not Applicable
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of the Indenture
TABLE OF CONTENTS
Page
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ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.......................................... 1
SECTION 1.02. Incorporation by Reference of TIA.................... 28
SECTION 1.03. Rules of Construction................................ 29
ARTICLE TWO
THE SECURITIES
SECTION 2.01. Form and Dating...................................... 30
SECTION 2.02. Execution and Authentication......................... 31
SECTION 2.03. Registrar and Paying Agent........................... 32
SECTION 2.04. Paying Agent To Hold Assets in Trust................. 32
SECTION 2.05. Securityholder Lists................................. 32
SECTION 2.06. Transfer and Exchange................................ 33
SECTION 2.07. Replacement Securities............................... 33
SECTION 2.08. Outstanding Securities............................... 34
SECTION 2.09. Treasury Securities.................................. 34
SECTION 2.10. Temporary Securities................................. 35
SECTION 2.11. Cancellation......................................... 35
SECTION 2.12. Defaulted Interest................................... 35
SECTION 2.13. CUSIP Number......................................... 36
SECTION 2.14. Deposit of Moneys.................................... 36
SECTION 2.15. Book-Entry Provisions for Global Securities.......... 36
SECTION 2.16. Special Transfer Provisions.......................... 38
SECTION 2.17. Designation.......................................... 40
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee................................... 40
SECTION 3.02. Selection of Securities To Be Redeemed............... 40
SECTION 3.03. Notice of Redemption................................. 41
SECTION 3.04. Effect of Notice of Redemption....................... 42
SECTION 3.05. Deposit of Redemption Price.......................... 42
SECTION 3.06 Securities Redeemed in Part.......................... 42
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ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Securities................................ 43
SECTION 4.02. Maintenance of Office or Agency...................... 43
SECTION 4.03. Limitation on Restricted Payments.................... 43
SECTION 4.04. Limitation on Indebtedness........................... 45
SECTION 4.05. Corporate Existence.................................. 46
SECTION 4.06. Payment of Taxes and Other Claims.................... 46
SECTION 4.07. Maintenance of Properties and Insurance.............. 47
SECTION 4.08. Compliance Certificate; Notice of Default............ 47
SECTION 4.09. Compliance with Laws................................. 48
SECTION 4.10. SEC Reports.......................................... 48
SECTION 4.11. Waiver of Stay, Extension or Usury Laws.............. 49
SECTION 4.12. Limitation on Transactions with Affiliates........... 49
SECTION 4.13. Impairment of Security Interest...................... 50
SECTION 4.14. Limitation on Dividend and Other Payment
Restrictions Affecting Subsidiaries................ 50
SECTION 4.15. Limitation on Liens.................................. 51
SECTION 4.16. Change of Control.................................... 51
SECTION 4.17. Limitation on Sale of Assets......................... 53
SECTION 4.18. Limitation on Sale and Leaseback Transactions........ 57
SECTION 4.19. Limitation on Preferred Stock of Subsidiaries........ 58
SECTION 4.20. Limitation on Designations of Unrestricted
Subsidiaries....................................... 58
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. Merger, Consolidation and Sale of Assets............. 59
SECTION 5.02. Successor Corporation Substituted.................... 61
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default.................................... 61
SECTION 6.02. Acceleration......................................... 63
SECTION 6.03. Other Remedies....................................... 64
SECTION 6.04. Waiver of Past Defaults.............................. 64
SECTION 6.05. Control by Majority.................................. 64
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SECTION 6.06. Limitation on Suits.................................. 65
SECTION 6.07. Rights of Holders To Receive Payment................. 66
SECTION 6.08. Collection Suit by Trustee........................... 66
SECTION 6.09. Trustee May File Proofs of Claim..................... 66
SECTION 6.10. Priorities........................................... 67
SECTION 6.11. Undertaking for Costs................................ 67
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee.................................... 68
SECTION 7.02. Rights of Trustee.................................... 69
SECTION 7.03. Individual Rights of Trustee......................... 70
SECTION 7.04. Trustee's Disclaimer................................. 70
SECTION 7.05. Notice of Default.................................... 71
SECTION 7.06. Reports by Trustee to Holders........................ 71
SECTION 7.07. Compensation and Indemnity........................... 72
SECTION 7.08. Replacement of Trustee............................... 73
SECTION 7.09. Successor Trustee by Merger, Etc..................... 74
SECTION 7.10. Eligibility; Disqualification........................ 75
SECTION 7.11. Preferential Collection of Claims Against Company.... 75
SECTION 7.12. Appointment of Co-Trustee............................ 75
ARTICLE EIGHT
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 8.01. Legal Defeasance and Covenant Defeasance............. 76
SECTION 8.02. Satisfaction and Discharge........................... 79
SECTION 8.03. Survival of Certain Obligations...................... 80
SECTION 8.04. Application of Trust Assets.......................... 80
SECTION 8.05. Repayment to the Company; Unclaimed Money............ 81
SECTION 8.06. Reinstatement........................................ 81
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders........................... 82
SECTION 9.02. With Consent of Holders.............................. 82
SECTION 9.03. Compliance with TIA.................................. 84
SECTION 9.04. Revocation and Effect of Consents.................... 84
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SECTION 9.05. Notation on or Exchange of Securities................ 85
SECTION 9.06. Trustee To Sign Amendments, Etc...................... 85
ARTICLE TEN
COLLATERAL AND SECURITY
SECTION 10.01. Collateral and Security Documents; Additional
Collateral........................................... 86
SECTION 10.02. Recording and Opinions............................... 87
SECTION 10.03. Release of Collateral................................ 89
SECTION 10.04. Possession and Use of Collateral..................... 90
SECTION 10.05. Specified Releases of Collateral..................... 90
SECTION 10.06. Disposition of Collateral Without Release............ 92
SECTION 10.07. Form and Sufficiency of Release...................... 93
SECTION 10.08. Purchaser Protected.................................. 93
SECTION 10.09. Authorization of Actions To Be Taken by the Trustee,
as Collateral Agent, Under the Security Documents.. 94
SECTION 10.10. Authorization of Receipt of Funds by the Trustee
Under the Security Documents....................... 94
ARTICLE ELEVEN
APPLICATION OF TRUST MONEYS
SECTION 11.01. "Trust Moneys" Defined............................... 95
SECTION 11.02. Withdrawals of Certain Net Cash Proceeds Aggregating
Less Than $5 Million............................... 96
SECTION 11.03. Withdrawal of Net Cash Proceeds Following an Asset... 100
Sale.
SECTION 11.04. Withdrawal of Trust Moneys for Replacement Assets.... 101
SECTION 11.05. Withdrawal of Trust Moneys on Basis of Retirement of
Securities......................................... 103
SECTION 11.06. Investment of Trust Moneys........................... 104
SECTION 11.07. Powers Exercisable by Trustee or Receiver............ 104
SECTION 11.08. Disposition of Securities Retired.................... 105
ARTICLE TWELVE
MISCELLANEOUS
SECTION 12.01. TIA Controls......................................... 105
SECTION 12.02. Notices.............................................. 105
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SECTION 12.03. Communications by Holders with Other Holders......... 107
SECTION 12.04. Certificate and Opinion as to Conditions Precedent... 108
SECTION 12.05. Statements Required in Certificate or Opinion........ 108
SECTION 12.06. Rules by Trustee, Paying Agent, Registrar............ 109
SECTION 12.07. Legal Holidays....................................... 109
SECTION 12.08. Governing Law........................................ 109
SECTION 12.09. No Adverse Interpretation of Other Agreements........ 109
SECTION 12.10. No Recourse Against Others........................... 109
SECTION 12.11. Successors........................................... 110
SECTION 12.12. Duplicate Originals.................................. 110
SECTION 12.13. Severability......................................... 110
SIGNATURES............................................................ 111
Exhibit A-1 - Form of Series A Security
Exhibit A-2 - Form of Series B Security
Exhibit B - Form of Legend for Global Securities
Exhibit C - Transferee Certificate for Non-QIB Accredited Investors
Exhibit D - Transferee Certificate for Transfers Pursuant
to Regulation S
Exhibit E - Form of Mortgage
Exhibit F - Form of Security Agreement
Exhibit G - Form of Intercreditor Agreement
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INDENTURE dated as of December 1, 1997, among SHEFFIELD STEEL
CORPORATION, a Delaware corporation (the "Company"), and STATE STREET BANK AND
TRUST COMPANY, a Massachusetts chartered trust company, as Trustee (the
"Trustee").
Each party hereto agrees as follows for the benefit of each other
party and for the equal and ratable benefit of the Holders of the Company's 11
1/2% First Mortgage Notes due 2005:
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
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"Acquired Indebtedness" means Indebtedness of a Person or any of its
Subsidiaries existing at the time such Person becomes a Restricted Subsidiary or
at the time it merges or consolidates with the Company or any of the Restricted
Subsidiaries or assumed in connection with the acquisition of assets from such
Person and in each case not incurred by such Person in connection with, or in
anticipation or contemplation of, such Person becoming a Restricted Subsidiary
or such acquisition, merger or consolidation.
"Affiliate" means, with respect to any specified Person, any other
Person who directly or indirectly through one or more intermediaries controls,
or is controlled by, or is under common control with, such specified Person.
The term "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative of the
foregoing.
"Affiliate Transaction" shall have the meaning provided in Section
4.12.
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Appraiser" means a Person who, in the ordinary course of its
business, appraises property and, where real property is involved, who is a
member in good
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standing of the American Institute of Real Estate Appraisers, recognized and
licensed to do business in the jurisdiction where the applicable real property
is held.
"Asset Acquisition" means (a) an Investment by the Company or any
Restricted Subsidiary in any other Person pursuant to which such Person shall
become a Restricted Subsidiary or shall be merged with or into the Company or
any Restricted Subsidiary, or (b) the acquisition by the Company or any
Restricted Subsidiary of the assets of any Person (other than a Restricted
Subsidiary) which constitute all or substantially all of the assets of such
Person or comprises any division or line of business of such Person or any other
properties or assets of such Person other than in the ordinary course of
business.
"Asset Sale" means any direct or indirect sale, issuance, conveyance,
transfer, lease (other than operating leases entered into in the ordinary course
of business), assignment or other transfer for value by the Company or any of
the Restricted Subsidiaries (including any Sale and Leaseback Transaction) to
any Person other than the Company or a Restricted Subsidiary of (a) any Capital
Stock of any Restricted Subsidiary; or (b) any other property or assets of the
Company or any Restricted Subsidiary other than in the ordinary course of
business; provided, however, that Asset Sales shall not include (i) the sale,
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lease, conveyance, disposition or other transfer of all or substantially all of
the assets of the Company as permitted under Section 5.01, (ii) disposals or
replacements of obsolete equipment in the ordinary course of business, (iii) the
sale, lease, conveyance, disposition or other transfer by the Company or any
Restricted Subsidiary of assets or property to the Company or one or more
Restricted Subsidiaries; provided, that, if such sale, conveyance, transfer,
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lease, assignment or other transfer is to a Restricted Subsidiary and the fair
market value of Property subject to such transfer is $1 million or greater, such
Restricted Subsidiary shall, in order for such transaction not to be an Asset
Sale, enter into a supplemental indenture wherein such Restricted Subsidiary
unconditionally guarantees all of the obligations of the Company under this
Indenture and the Securities and (iv) any Restricted Payment.
"Bankruptcy Law" means Title 11, U.S. Code or any similar Federal,
state or foreign law for the relief of debtors.
"Board of Directors" means, as to any Person, the board of directors
of such Person or any duly authorized committee thereof.
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"Board Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
"Business Day" means any day other than a Saturday, Sunday or any day
which banking institutions in the City of New York or in the city of the
Corporate Trust Office of the Trustee are required or authorized by law or other
governmental action to be closed.
"Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock, including
each class of Common Stock and Preferred Stock of such Person and (ii) with
respect to any Person that is not a corporation, any and all partnership or
other equity interests of such Person.
"Capitalized Lease Obligation" means, as to any Person, the
obligations of such Person under a lease that are required to be classified and
accounted for as capital lease obligations under GAAP and, for purposes of this
definition, the amount of such obligations at any date shall be the capitalized
amount of such obligations at such date, determined in accordance with GAAP.
"Cash Equivalents" means (i) marketable direct obligations issued by,
or unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof; (ii)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either Standard & Poor's Corporation ("S&P") or Moody's
Investors Service, Inc. ("Moody's"); (iii) commercial paper maturing no more
than one year from the date of creation thereof and, at the time of acquisition,
having a rating of at least A-1 from S&P or at least P-1 from Moody's; (iv)
certificates of deposit or bankers' acceptances maturing within one year from
the date of acquisition thereof issued by any bank organized under the laws of
the United States of America or any state thereof or the District of Columbia or
any U.S. branch of a foreign bank having at the date of acquisition thereof
combined capital and surplus of not less than $250,000,000; (v) repurchase
obligations with a term of not more than seven days for underlying secu-
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rities of the types described in clause (i) above entered into with any bank
meeting the qualifications specified in clause (iv) above; and (vi) investments
in money market funds which invest substantially all their assets in securities
of the types described in clauses (i) through (v) above.
"Change of Control" means the occurrence of one or more of the
following events: (i) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially all of
the assets of the Company to any Person (other than a Restricted Subsidiary or
any HMK Affiliate) or group of related Persons (other than any Restricted
Subsidiaries or any HMK Affiliate) for purposes of Section 13(d) of the
Exchange Act (a "Group"), together with any Affiliates thereof (whether or not
otherwise in compliance with the provisions of this Indenture); (ii) the
approval by the holders of Capital Stock of the Company of any plan or proposal
for the liquidation or dissolution of the Company (whether or not otherwise in
compliance with the provisions of this Indenture); (iii) any Person or Group,
other than any HMK Affiliate or Affiliates, shall become the owner, directly or
indirectly, beneficially or of record, of shares representing (x) more than 50%
of the aggregate voting power represented by the issued and outstanding Capital
Stock of the Company or (y) if the Company shall then have a class of Capital
Stock registered under Section 12(b) or 12(g) of the Exchange Act, more than
40% of the aggregate ordinary voting power represented by the issued and
outstanding Capital Stock of the Company; or (iv) the replacement of a majority
of the Board of Directors of the Company over a two-year period from the
directors who constituted the Board of Directors of the Company at the beginning
of such period, and such replacement shall not have been approved by a vote of a
least a majority of the Board of Directors of the Company then still in office
who either were members of any such Board of Directors at the beginning of such
period or whose election as a member of any such Board of Directors was
previously so approved.
"Change of Control Offer" shall have the meaning provided in Section
4.16.
"Change of Control Payment Date" shall have the meaning provided in
Section 4.16.
"Collateral" means, collectively, all of the property and assets that
are from time to time subject to the Security Documents.
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"Collateral Agent" means State Street Bank and Trust Company, a
Massachusetts chartered trust company, as collateral agent under the Security
Documents until a party replaces it in accordance with the provisions of this
Indenture and the Security Documents and thereafter means such successor.
"Collateral Account" means the collateral account established by the
Trustee pursuant to Section 11.01.
"Commodity Agreement" of any Person means any option or futures
contract or similar agreement or arrangement designed to protect such Person or
any of its subsidiaries against fluctuations in commodity prices.
"Common Stock" of any Person means any and all shares, interests or
other participations in, and other equivalents (however designated and whether
voting or non-voting) of such Person's common stock, whether outstanding on the
Issue Date or issued after the Issue Date, and includes, without limitation, all
series and classes of such common stock.
"Company" means Sheffield Steel Corporation, a Delaware corporation.
"Company Order" means a written order or request signed in the name of
the Company by its President or Vice President, and by its Treasurer, Assistant
Treasurer, Secretary or any other officer so authorized and delivered to the
Trustee.
"Consolidated EBITDA" means, for any period, the sum (without
duplication) of (i) Consolidated Net Income and (ii) to the extent Consolidated
Net Income has been reduced thereby, (A) all income taxes of the Company and the
Restricted Subsidiaries paid or accrued in accordance with GAAP for such period
(other than income taxes attributable to extraordinary, unusual or nonrecurring
gains or losses or taxes attributable to sales or dispositions outside the
ordinary course of business), (B) Consolidated Interest Expense and (C)
Consolidated Non-cash Charges less any non-cash items increasing Consolidated
----
Net Income for such period, all as determined on a consolidated basis for the
Company and the Restricted Subsidiaries in accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio" means the ratio of
Consolidated EBITDA during the four full fiscal quarters (the "Four Quarter
Period") ending on or prior to the date of the transaction giving rise to the
need to calculate the Consolidated Fixed Charge Coverage Ratio (the "Transaction
Date") to Consolidated Fixed
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Charges for the Four Quarter Period. In addition to and without limitation of
the foregoing, for purposes of this definition, "Consolidated EBITDA" and
"Consolidated Fixed Charges" shall be calculated after giving effect on a pro
---
forma basis (including any pro forma expense and cost reductions calculated on a
- ----- --- -----
basis consistent with Regulation S-X under the Securities Act) for the period of
such calculation to (i) the incurrence or repayment of any Indebtedness of the
Company or any of the Restricted Subsidiaries (and the application of the
proceeds thereof) giving rise to the need to make such calculation and any
incurrence or repayment of other Indebtedness (and the application of the
proceeds thereof), other than the incurrence or repayment of Indebtedness in the
ordinary course of business for working capital purposes pursuant to working
capital facilities, occurring during the Four Quarter Period or at any time
subsequent to the last day of the Four Quarter Period and on or prior to the
Transaction Date, as if such incurrence or repayment, as the case may be (and
the application of the proceeds thereof), occurred on the first day of the Four
Quarter Period and (ii) any Asset Sale or Asset Acquisitions (including, without
limitation, any Asset Acquisition giving rise to the need to make such
calculation as a result of the Company or one of the Restricted Subsidiaries
(including any Person who becomes a Restricted Subsidiary as a result of the
Asset Acquisition) incurring, assuming or otherwise being liable for Acquired
Indebtedness and also including any Consolidated EBITDA attributable to the
assets which are the subject of the Asset Acquisition or Asset Sale during the
Four Quarter Period) occurring during the Four Quarter Period or at any time
subsequent to the last day of the Four Quarter Period and on or prior to the
Transaction Date, as if such Asset Sale or Asset Acquisition (including the
incurrence, assumption or liability for any such Acquired Indebtedness) occurred
on the first day of the Four Quarter Period. If the Company or any of the
Restricted Subsidiaries directly or indirectly guarantees Indebtedness of a
third Person, the preceding sentence shall give effect to the incurrence of such
guaranteed Indebtedness as if the Company or any such Restricted Subsidiary had
directly incurred or otherwise assumed such guaranteed indebtedness.
Furthermore, in calculating Consolidated Fixed Charges for purposes of
determining the denominator (but not the numerator) of this Consolidated Fixed
Charge Coverage Ratio, (1) interest on outstanding Indebtedness determined on a
fluctuating basis as of the Transaction Date and which will continue to be so de
termined thereafter shall be deemed to have accrued at a fixed rate per annum
equal to the rate of interest on such Indebtedness in effect on the Transaction
Date; (2) if interest on any Indebtedness actually incurred on the Transaction
Date may optionally be deter mined at an interest rate based upon a factor of a
prime or similar rate, a eurocurrency interbank offered rate, or other rates,
then the interest rate in effect on the Transaction Date will be deemed to have
been in effect during the Four Quarter
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Period; and (3) notwithstanding clause (1) above, interest on Indebtedness
determined on a fluctuating basis, to the extent such interest is covered by
agreements relating to Interest Swap Obligations, shall be deemed to accrue at
the rate per annum resulting after giving effect to the operation of such
agreements.
"Consolidated Fixed Charges" means, with respect to the Company for
any period, the sum, without duplication, of (i) Consolidated Interest Expense,
plus (ii) the product of (x) the amount of all dividend payments on any series
of Preferred Stock of the Company (other than dividends paid in Qualified
Capital Stock) paid, accrued or scheduled to be paid or accrued during such
period times (y) a fraction, the numerator of which is one and the denominator
of which is one minus the then current effective consolidated federal, state
and local tax rate of such Person, expressed as a decimal.
"Consolidated Interest Expense" means, with respect to the Company for
any period, the sum of, without duplication: (i) the aggregate of the interest
expense of the Company and the Restricted Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP, including without
limitation, (a) any amortization of debt discount, (b) the net costs under
Interest Swap Obligations, (c) all capitalized interest and (d) the interest
portion of any deferred payment obligation; and (ii) the inter est component of
Capitalized Lease Obligations paid, accrued and/or scheduled to be paid or
accrued by the Company and the Restricted Subsidiaries during such period as
determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, with respect to the Company, for any
period, the aggregate net income (or loss) of the Company and the Restricted
Subsidiaries for such period on a consolidated basis, determined in accordance
with GAAP; provided that there shall be excluded therefrom (a) after-tax gains
--------
or losses from Asset Sales or abandonments or reserves relating thereto, (b)
after-tax items classified as extraordinary or nonrecurring gains or losses,
(c) the net income (or loss) of any Person acquired in a "pooling of interests"
transaction accrued prior to the date it becomes a Restricted Subsidiary or is
merged or consolidated with the Company or any Restricted Subsidiary, (d) the
net income (but not loss) of any Restricted Subsidiary to the extent that the
declaration of dividends or similar distributions by that Restricted Subsidiary
of that income is restricted by a contract, operation of law or otherwise, (e)
the net income of any Person, other than a Restricted Subsidiary, except to the
extent of cash dividends or distributions paid to the Company or to a
Restricted Subsidiary by such Person, (f) income or loss attributable to
discontinued operations (including, without limitation,
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operations disposed of during such period whether or not such operations were
classified as discontinued), (g) in the case of a successor to the Company by
consolidation or merger or as a transferee of the Company's assets, any net
income of the successor corporation prior to such consolidation, merger or
transfer of assets, (h) any non-cash charges incurred by the Company at any time
in connection with, and including at the time of, the adoption of Statement of
Financial Accounting Standards 106; and (i) any expenses related to the
refinancing of the 2001 Notes with the net proceeds from the issuance and sale
of the Securities including, without limitation, the premium on redemption of
the 2001 Notes, and the amortization of debt discount and other debt issuance
costs relating to the issuance of the Securities.
"Consolidated Non-cash Charges" means, with respect to the Company,
for any period, the aggregate depreciation, amortization and other non-cash
expenses of the Company and the Restricted Subsidiaries reducing Consolidated
Net Income of the Company for such period, determined on a consolidated basis in
accordance with GAAP (excluding any such charges constituting an extraordinary
item or loss or any such charge which requires an accrual of or a reserve for
cash charges for any future period).
"Consolidated Tangible Net Worth" of any Person means the consolidated
stockholders' equity of such Person, determined on a consolidated basis in
accordance with GAAP, less (without duplication) amounts attributable to
Disqualified Capital Stock of such Person; less the book value of all Intangible
Assets reflected on the consolidated balance sheet of the Company and its
Restricted Subsidiaries as of such date.
"Corporate Trust Office" means the office of the Trustee at which at
any particular time its corporate trust business shall be administered, which
office at the date of execution of this Indenture is located at Goodwin Square,
225 Asylum Street, Hartford, Connecticut 06103.
"Covenant Defeasance" shall have the meaning provided in Section 8.01.
"Currency Agreement" means any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement designed to protect the
Company or any Restricted Subsidiary against fluctuations in currency values.
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"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Default" means an event or condition the occurrence of which is, or
with lapse of time or the giving of notice or both would be, an Event of
Default.
"Depository" means, with respect to the Securities issued in the form
of one or more Global Securities, The Depository Trust Company or another Person
designated as Depository by the Company, which must be a clearing agency
registered under the Exchange Act.
"Designation" shall have the meaning provided in Section 4.20.
"Designation Amount" shall have the meaning provided in Section 4.20.
"Destruction" shall have the meaning assigned to such term in each
Mortgage.
"Disqualified Capital Stock" means that portion of any Capital Stock
which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the sole option of the holder
thereof on or prior to the final maturity date of the Securities.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Event of Default" shall have the meaning set forth in Section 6.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any successor statute or statutes thereto.
"Fair Value" or "fair market value" means, with respect to any asset
or property, the price which could be negotiated in an arm's-length, free market
transaction, for cash, between a willing seller and a willing and able buyer,
neither of whom is under undue pressure or compulsion to complete the
transaction. Fair market value shall be determined by the Board of Directors of
the Company acting reasonably and in
-10-
good faith and shall be evidenced by a Board Resolution of the Board of
Directors of the Company delivered to the Trustee.
"Final Memorandum" means the Final Offering Memorandum of the Company,
dated November 26, 1997 which describes the Securities.
"Four Quarter Period" has the meaning set forth in the definition of
"Consolidated Fixed Charge Coverage Ratio."
"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, which are in effect as of the Issue Date.
"Global Security" means a Security evidencing all or a part of the
Securities issued to the Depository in accordance with Section 2.01 and bearing
the legend prescribed in Exhibit B.
"HMK Affiliates" means Steven E. Karol, Jane M. Karol, Joan L. Karol,
William S. Karol and Thomas D. Karol, or any of them (each a "Karol Family
Member"), any spouse of a Karol Family Member, any lineal descendants of a Karol
Family Member, any trust, estate or family limited partnership or limited
liability company the sole beneficiaries of which are Karol Family Members,
spouses of Karol Family Members or any lineal descendants of Karol Family
Members, or any entity owned or controlled by any of the foregoing.
"Holder" or "Securityholder" means the Person in whose name a Security
is registered on the Registrar's books.
"incur" shall have the meaning provided in Section 4.04.
"Indebtedness" means with respect to any Person, without duplication,
(i) all Obligations of such Person for borrowed money, (ii) all Obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all Capitalized Lease Obligations of such Person, (iv) all Obligations of
such Person issued or assumed as the deferred purchase price of property, all
conditional sale obligations and
-11-
all Obligations under any title retention agreement (but excluding trade
accounts payable and other accrued liabilities arising in the ordinary course of
business), (v) all Obligations for the reimbursement of any obligor on any
letter of credit, banker's acceptance or similar credit transaction, (vi)
guarantees and other contingent obligations in respect of Indebtedness referred
to in clauses (i) through (v) above and clause (viii) below, (vii) all
Obligations of any other Person of the type referred to in clauses (i) through
(vi) which are secured by any Lien on any property or asset of such Person, the
amount of such Obligation being deemed to be the lesser of the fair market value
of such property or asset or the amount of the Obligation so secured, (viii) all
Obligations under Currency Agreements and all Interest Swap Obligations of such
Person and (ix) all Disqualified Capital Stock issued by such Person with the
amount of Indebtedness represented by such Disqualified Capital Stock being
equal to the greater of its voluntary or involuntary liquidation preference and
its maximum fixed repurchase price. For purposes hereof, the "maximum fixed re
purchase price" of any Disqualified Capital Stock which does not have a fixed
repurchase price shall be calculated in accordance with the terms of such
Disqualified Capital Stock as if such Disqualified Capital Stock were purchased
on any date on which Indebtedness shall be required to be determined pursuant to
this Indenture, and if such price is based upon, or measured by, the fair market
value of such Disqualified Capital Stock, such fair market value shall be
determined reasonably and in good faith by the Board of Directors of the
Company.
"Indenture" means this Indenture, as amended or supplemented from time
to time in accordance with the terms hereof.
"Independent" when used with respect to any specified Person means
such a Person who (a) is in fact independent, (b) does not have any direct
financial interest or any material indirect financial interest in the Company
or any of its Subsidiaries, or in any Affiliate of the Company or any of its
Subsidiaries and (c) is not an officer, employee, promoter, underwriter,
trustee, partner, director or person performing similar functions for the
Company or any of its Subsidiaries. Whenever it is provided in this Indenture
that any Independent Person's opinion or certificate shall be furnished to the
Trustee, such Person shall be appointed by the Company and approved by the
Trustee, and such opinion or certificate shall state that the signer has read
this definition and that the signer is Independent within the meaning thereof.
"Independent Financial Advisor" means a firm (i) which does not, and
whose directors, officers and employees or Affiliates do not, have a direct or
indirect
-12-
financial interest in the Company and (ii) which, in the judgment of the Board
of Directors of the Company, is otherwise Independent and qualified to perform
the task for which it is to be engaged.
"Initial Purchaser" means BT Alex. Brown Incorporated.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.
"Intangible Assets" of any Person means all unamortized debt discount
and expense, unamortized deferred charges, good will, patents, trademarks,
service marks, trade names, copyrights, write-ups of assets over their prior
carrying values (other than write-ups which occurred prior to the Issue Date and
other than, in connection with Asset Acquisitions, the write-up of the value of
such asset (within one year of its acquisition) to its fair market value in
accordance with GAAP), and all other times which would be treated as intangibles
on the consolidated balance sheet of the Company and its Restricted Subsidiaries
prepared in accordance with GAAP.
"Intercompany Agreements" means that certain letter agreement dated
October 1, 1997 relating to insurance services between Risk Management
Solutions, Inc. and the Company and that certain Income Tax Expense Allocation
Policy and Tax Sharing Agreements effective May 1, 1991 among HMK Enterprises,
Inc., the Company and the subsidiaries of the Company, in each case as in effect
on the Issue Date with such modifications subsequent thereto (other than
modifications of fee and expense reimbursement arrangements) which are not
adverse to the interests of Holders of the Securities.
"Intercreditor Agreement" means that certain intercreditor agreement,
of even date with this Indenture, by and between the Trustee on behalf of the
holders of the Securities, on the one hand, and NationsBank, N.A., formerly
known as NationsBank, N.A. (South), formerly known as NationsBank of Georgia
N.A. (and any successor or successors thereto or assignee or assignees
therefrom), on the other hand, substantially in the form of Exhibit G hereto, as
the same may be amended, supplemented or modified from time to time in
accordance with the terms thereof.
"Interest Payment Date" means the stated maturity of an installment of
interest on the Securities.
-13-
"Interest Swap Obligations" means the obligations of any Person
pursuant to any arrangements with any other Person, whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such other
Person calculated by applying a fixed or a floating rate of interest on the same
notional amount and shall include, without limitation, interest rate swaps,
caps, floors, collars and similar agreements.
"Investment" means, with respect to any Person, any direct or indirect
loan or other extension of credit (including, without limitation, a guarantee)
or capital contribution to (by means of any transfer of cash or other property
to others or any payment for property or services for the account or use of
others), or any purchase or acquisition by such Person of any Capital Stock,
bonds, notes, debentures or other securities or evidences of Indebtedness
issued by, any Person. "Investment" shall exclude ex tensions of trade credit
by the Company and the Restricted Subsidiaries on commercially reasonable terms
in accordance with normal trade practices of the Company or such Restricted
Subsidiary, as the case may be. If the Company or any Restricted Subsidiary
sells or otherwise disposes of any Common Stock of any direct or indirect
Restricted Subsidiary such that, after giving effect to any such sale or
disposition, it ceases to be a Subsidiary of the Company, the Company shall be
deemed to have made an Investment on the date of any such sale or disposition
equal to the fair market value of the Common Stock of such Restricted Subsidiary
not sold or disposed of.
"Issue Date" means the date of the original issuance of the
Securities.
"Legal Defeasance" shall have the meaning provided in Section 8.01.
"Legal Holiday" shall have the meaning provided in Section 12.07.
"Lien" means any lien, mortgage, deed of trust, pledge, security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof and any
agreement to give any security interest).
"Management Agreement" means that certain letter agreement dated the
Issue Date relating to management consulting services by and between HMK
Enterprises, Inc. and the Company, as in effect on the Issue Date with such
modifications
-14-
subsequent thereto (other than modifications of fee and expense reimbursement
arrangements) which are not adverse to the interests of Holders of the
Securities.
"Maturity Date" means December 1, 2005.
"Mortgage" means the mortgages (or deeds of trust) dated as of the
Issue Date or pursuant to Section 10.01(b) hereof granted by the Company to the
Collateral Agent for the benefit of the Trustee and the Holders, in
substantially the form of Exhibit E hereto, as the same may be amended,
supplemented or modified from time to time in accordance with the terms thereof.
"Mortgaged Property" has the meaning assigned to such term in the
Mortgages.
"Net Award" has the meaning assigned to such term in each Mortgage and
shall include any amounts received in respect of personal property pursuant to
the Security Agreement or otherwise.
"Net Cash Proceeds" means, with respect to any Asset Sale, the
proceeds in the form of cash or Cash Equivalents including payments in respect
of deferred payment obligations when received in the form of cash or Cash
Equivalents (other than the portion of any such deferred payment constituting
interest) received by the Company or any of the Restricted Subsidiaries from
such Asset Sale net of (a) reasonable out-of-pocket expenses and fees relating
to such Asset Sale (including, without limitation, legal, accounting and
investment banking fees and sales commissions), (b) taxes paid or payable after
taking into account any reduction in consolidated tax liability due to available
tax credits or deductions and any tax sharing arrangements, (c) repayment of
Indebtedness that is required to be repaid in connection with such Asset Sale
and (d) appropriate amounts to be provided by the Company or any Restricted
Subsidiary, as the case may be, as a reserve, in accordance with GAAP, against
any liabilities associated with such Asset Sale and retained by the Company or
any Restricted Subsidiary, as the case may be, after such Asset Sale, including,
without limitation, pension and other post-employment benefit liabilities,
liabilities related to environmental matters and liabilities under any
indemnification obligations associated with such Asset Sale.
"Net Proceeds" has the meaning assigned to such term in each Mortgage
and shall include any amounts received in respect of personal property pursuant
to the Security Agreement.
-15-
"Net Proceeds Offer" has the meaning set forth in Section 4.17.
"Net Proceeds Offer Amount" has the meaning set forth in Section 4.17.
"Net Proceeds Offer Payment Date" shall have the meaning provided in
Section 4.17.
"Obligations" means all obligations for principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and other liabilities
payable under the documentation governing any Indebtedness.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, any Vice President, the Chief
Financial Officer, the Controller, the Treasurer or the Secretary of such
Person.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Officers or by an Officer and either an Assistant
Treasurer or an Assistant Secretary of such Person and otherwise complying with
the requirements of Sections 12.04 and 12.05.
"Offshore Physical Securities" has the meaning set forth in Section
2.01.
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee complying with the requirements of Sections
12.04 and 12.05. Unless otherwise required by the TIA, the legal counsel may be
an employee of or counsel to the Company or the Trustee.
"Paying Agent" shall have the meaning provided in Section 2.03.
"Permitted Indebtedness" means, without duplication, each of the
following:
(i) Indebtedness under the Securities and this Indenture
incurred as of the Issue Date together with any guarantees of the
Securities by Restricted Subsidiaries of the Company required by the terms
of this Indenture;
(ii) Indebtedness incurred pursuant to the Revolving Credit
Facility in an aggregate principal amount at any time outstanding not to
exceed the greater of (a) $40 million or (b) the aggregate of 85% of the
Company's Eligible
-16-
Accounts Receivable (as defined in the Revolving Credit Facility or the
equivalent term defined in any facility which replaces such Revolving
Credit Facility) and 65% of the Company's Eligible Inventory (as defined in
the Revolving Credit Facility or the equivalent term defined in any
facility which replaces such Revolving Credit Facility) calculated in
accordance with GAAP;
(iii) other Indebtedness (including Capitalized Lease Obligations)
of the Company and the Restricted Subsidiaries outstanding on the Issue
Date after giving effect to the application of the proceeds from the sale
of the Securities set forth under "Use of Proceeds" in the Final
Memorandum;
(iv) purchase money indebtedness, Capitalized Lease Obligations
and any other Indebtedness in an aggregate amount for all Indebtedness
incurred pursuant to this subclause (iv) not to exceed $15 million
outstanding at any one time; provided, however, that not more than $5
-------- -------
million in aggregate principal amount of such Indebtedness outstanding at
any one time may be incurred by Restricted Subsidiaries of the Company;
(v) Interest Swap Obligations of the Company or a Restricted
Subsidiary covering Indebtedness of the Company or any of the Restricted
Subsidiaries and Interest Swap Obligations of any Restricted Subsidiary
covering Indebtedness of such Restricted Subsidiary; provided, however,
-------- -------
that such Interest Swap Obligations are entered into to protect the Company
and the Restricted Subsidiaries from fluctuations in interest rates on
Indebtedness incurred in accordance with this Indenture to the extent the
notional principal amount of such Interest Swap Obligation does not exceed
the principal amount of the Indebtedness to which such Interest Swap
Obligation relates;
(vi) Indebtedness under Currency Agreements and Commodity
Agreements; provided that in the case of Currency Agreements which relate
--------
to Indebtedness, such Currency Agreements do not increase the Indebtedness
of the Company and the Restricted Subsidiaries outstanding other than as a
result of fluctuations in foreign currency exchange rates or by reason of
fees, indemnities and compensation payable thereunder;
(vii) Indebtedness of a Restricted Subsidiary to the Company or to
a Restricted Subsidiary for so long as such Indebtedness is held by the
Company or a Restricted Subsidiary, in each case subject to no Lien held by
a Person other
-17-
than the Company or a Restricted Subsidiary; provided that if as of any
--------
date any Person other than the Company or a Restricted Subsidiary owns or
holds any such Indebtedness or holds a Lien in respect of such
Indebtedness, such date shall be deemed the incurrence of Indebtedness not
constituting Permitted Indebted ness by the issuer of such Indebtedness;
(viii) Indebtedness of the Company to a Restricted Subsidiary for
so long as such Indebtedness is held by a Restricted Subsidiary, in each
case subject to no Lien; provided that (a) any Indebtedness of the Company
--------
to any Restricted Subsidiary is unsecured and subordinated, pursuant to a
written agreement, to the Company's obligations under this Indenture and
the Securities and (b) if as of any date any Person other than a Restricted
Subsidiary owns or holds any such Indebtedness or any Person holds a Lien
in respect of such Indebtedness, such date shall be deemed the incurrence
of Indebtedness not constituting Permitted Indebtedness by the Company;
(ix) Indebtedness arising under the Railway Credit Facility, or
other Indebtedness the primary obligor of which is the Railway Company
(including, without limitation, the related guarantee by the Company of
Indebtedness thereunder owned by the Railway Company), in an aggregate
principal amount not to exceed $5 million;
(x) Indebtedness of the Company or any of the Restricted
Subsidiaries represented by letters of credit for the account of the
Company or such Restricted Subsidiary, as the case may be, in order to
provide security for workers' compensation claims, payment obligations in
connection with self-insurance or similar requirements in the ordinary
course of business;
(xi) Refinancing Indebtedness;
(xii) Indebtedness of the Company under the Subordinated
Management Notes; and
(xiii) additional Indebtedness of the Company in an aggregate
principal amount not to exceed $5 million at any one time outstanding.
"Permitted Investments" means (i) Investments by the Company or any
Restricted Subsidiary in any Person that is or will become immediately after
such In-
-18-
vestment a Restricted Subsidiary or that will merge or consolidate into the
Company or a Restricted Subsidiary; (ii) Investments in the Company by any
Restricted Subsidiary; provided that any Indebtedness incurred by the Company
--------
evidencing such Investment by a Restricted Subsidiary is unsecured and
subordinated, pursuant to a written agreement, to the Company's obligations
under the Securities and this Indenture; (iii) Investments in cash and Cash
Equivalents; (iv) loans and advances to employees and officers of the Company
and the Restricted Subsidiaries in the ordinary course of business; (v) Currency
Agreements and Interest Swap Obligations entered into in the ordinary course of
the Company's or a Restricted Subsidiary's businesses and otherwise in
compliance with this Indenture; (vi) other Investments, including Investments in
Unrestricted Subsidiaries not to exceed $2.5 million at any one time
outstanding; (vii) Investments in securities of trade creditors or customers
received pursuant to any plan of reorganization or similar arrangement upon the
bankruptcy or insolvency of such trade creditors or customers; and (viii)
Investments made by the Company or the Restricted Subsidiaries as a result of
consideration received in connection with an Asset Sale made in compliance with
Section 4.17 hereof.
"Permitted Liens" means the following types of Liens:
(i) Liens for taxes, assessments or governmental charges or
claims either (a) not delinquent or (b) contested in good faith by
appropriate proceedings and as to which the Company or the Restricted
Subsidiaries shall have set aside on its books such reserves as may be
required pursuant to GAAP;
(ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen and other Liens
imposed by Law incurred in the ordinary course of business for sums not yet
delinquent or being contested in good faith, if such reserve or other
appropriate provision, if any, as shall be required by GAAP shall have been
made in respect thereof;
(iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, including any Lien securing letters of
credit issued in the ordinary course of business consistent with past
practice in connection therewith, or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, government
contracts, performance and return-of-money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed money);
-19-
(iv) judgment Liens not giving rise to an Event of Default;
(v) easements, rights-of-way, zoning restrictions and other
similar charges or encumbrances in respect of real property not interfering
in any material respect with the ordinary conduct of the business of the
Company or any of the Restricted Subsidiaries;
(vi) any interest or title of a lessor under any Capitalized
Lease Obligation; provided that such Liens do not extend to any property
--------
or assets which is not leased property subject to such Capitalized Lease
Obligation;
(vii) Liens securing any Indebtedness incurred under the Revolving
Credit Facility or described in clause (ix) of the definition of "Permitted
Indebtedness": provided that such Liens extend solely to the categories of
--------
Property which were the subject of Liens securing the Revolving Credit
Facility and the Railway Credit Facility, as the case may be, as of the
Issue Date other than, in the case of Indebtedness described in clause (ix)
of the definition "Permitted Indebtedness", for additional security
consisting of a mortgage on the real property of the Railway Company owned
or leased on the Issue Date;
(viii) Liens upon specific items of inventory or other goods and
proceeds of any Person securing such Person's obligations in respect of
bankers' acceptances issued or created for the account of such Person to
facilitate the purchase, shipment or storage of such inventory or other
goods;
(ix) Liens securing reimbursement obligations with respect to
commercial letters of credit which encumber documents and other property
relating to such letters of credit and products and proceeds thereof;
(x) Liens encumbering deposits made to secure obligations
arising from statutory, regulatory, contractual, or warranty requirements
of the Company or any of the Restricted Subsidiaries, including rights of
offset and set-off;
(xi) Liens securing Interest Swap Obligations which Interest Swap
Obligations relate to Indebtedness that is otherwise permitted under this
Indenture;
(xii) Liens securing Indebtedness under Currency Agreements;
-20-
(xiii) Liens securing Acquired Indebtedness incurred in accordance
with Section 4.04 hereof; provided that such liens secured such Acquired
--------
Indebtedness at the time of and prior to the incurrence of such Acquired
Indebtedness by the Company or a Restricted Subsidiary and were not granted
in connection with, or in anticipation of, the incurrence of such Acquired
Indebtedness by the Company or a Restricted Subsidiary and (B) such Liens
do not extend to or cover any property or assets of the Company or of any
of the Restricted Subsidiaries other than the property or assets that
secured the Acquired Indebtedness prior to the time such Indebtedness
became Acquired Indebtedness of the Company or a Restricted Subsidiary and
are no more favorable to the lienholders than those securing the Acquired
Indebtedness prior to the incurrence of such Acquired Indebtedness by the
Company or a Restricted Subsidiary;
(xiv) Liens on Property of the Company or any of its Subsidiaries
acquired after the Issue Date in favor of governmental bodies to secure
progress or advance payments relating to such Property;
(xv) Liens on Property of the Company or any of its Subsidiaries
acquired after the Issue Date securing industrial revenue or pollution
control bonds issued in connection with the acquisition or refinancing of
such Property;
(xvi) Liens to secure certain Indebtedness that is otherwise
permitted under this Indenture and that is used to finance the cost of
Property of the Company or any of its Subsidiaries acquired after the
Issue Date; provided that (a) any such Lien is created solely for the
--------
purpose of securing Indebtedness representing, or incurred to finance,
refinance or refund, the cost (including sales and excise taxes,
installation and delivery charges and other direct costs of, and other
direct expenses paid or charged in connection with, such purchase or
construction) of such Property, (b) the principal amount of the
Indebtedness secured by such Lien does not exceed 100% of such cost, (c)
the Indebtedness secured by such Lien is incurred by the Company or its
Subsidiary within 180 days of the acquisition of such Property by the
Company or its Subsidiary, as the case may be, and (d) such Lien does not
extend to or cover any Collateral or other Property other than such item of
Property and any improvements on such item;
(xvii) Liens existing on the Issue Date to the extent and in the
manner existing on the Issue Date;
-21-
(xviii) Liens on the property or assets of a Person that becomes a
Restricted Subsidiary after the Issue Date to the extent that such Liens
are existing at the time such Person became a Restricted Subsidiary of the
Company and were not granted as a result of, in connection with or in
anticipation of such person be coming a Restricted Subsidiary of the
Company; provided that (A) the Indebtedness (if any) secured thereby is
--------
incurred in accordance with this Indenture and (B) such Liens do not extend
to or cover any property or assets of the Company or any of its Restricted
Subsidiaries other than the property or assets so acquired; and
(xix) Liens in respect of Indebtedness incurred to Refinance any of
the Indebtedness set forth in clauses (vi), (xiii), (xvi), (xvii) and
(xviii) above; provided that such Liens in respect of such Refinancing
---------
Indebtedness (A) are no less favorable to the Holders and are not more
favorable to the lienholders with respect to such Liens than in the Liens
in respect of the Indebtedness being Refinanced and (B) do not extend to
or cover any properties or assets of the Company or of any of the
Company's Subsidiaries, other than the property or assets that secured the
Indebtedness being Refinanced.
"Person" means an individual, partnership, corporation, limited
liability company, unincorporated organization, trust or joint venture, or a
governmental agency or political subdivision thereof.
"Physical Securities" has the meaning set forth in Section 2.01.
"Preferred Stock" of any Person means any Capital Stock of such Person
that has preferential rights to any other Capital Stock of such Person with
respect to dividends or redemptions or upon liquidation.
"principal" of any Indebtedness (including the Securities) means the
principal amount of such Indebtedness plus the premium, if any, on such
Indebtedness.
"Prior Liens" has the meaning assigned to such term in each Security
Document.
"Private Placement Legend" means the legend initially set forth on the
Securities in the form set forth on Exhibit A-1.
-22-
"pro forma" means, with respect to any calculation made or required to
be made pursuant to the terms of this Indenture, a calculation in accordance
with Article 11 of Regulation S-X under the Securities Act as interpreted by the
Company's Board of Directors in consultation with its Independent certified
public accountants.
"Property" of any Person means all types of real, personal, tangible,
intangible or mixed property owned by such Person whether or not included in
the most recent consolidated balance sheet of such Person and its Subsidiaries
under GAAP.
"Public Equity Offering" means an underwritten public offering of
Qualified Capital Stock of the Company pursuant to a registration statement
filed with the SEC in accordance with the Securities Act.
"Purchase Agreement" means the purchase agreement dated as of November
26, 1997 by and among the Company and the Initial Purchaser of the Securities.
"Qualified Capital Stock" means any Capital Stock that is not
Disqualified Capital Stock.
"Qualified Institutional Buyer" or "QIB" shall have the meaning
specified in Rule 144A under the Securities Act.
"Railway Company" means the Sand Springs Railway Company, an Oklahoma
corporation.
"Railway Credit Facility" means the revolving loan agreement and the
term loan agreement, each dated as of July 31, 1997, between the Company and
Bank of Oklahoma, N.A., together with the related documents thereto (including,
without limitation, any guarantee agreements and security documents), in each
case as such agreements may be amended (including any amendment and restatement
thereof), supplemented or otherwise modified from time to time, including any
agreement extending the maturity of, refinancing, replacing or otherwise
restructuring (including increasing the amount of available borrowings
thereunder (provided that such increase in borrowings is permitted under clause
--------
(ix) of the definition of "Permitted Indebtedness") all or any portion of the
Indebtedness under such agreement or any successor or replacement agreement and
whether by the same or any other lender or group of lenders.
-23-
"Real Property" means any interest of the Company in any real property
or any portion thereof whether owned in fee or leased or otherwise owned.
"Record Date" means the Record Dates specified in the Securities;
provided that if any such date is a Legal Holiday, the Record Date shall be the
- --------
first day immediately preceding such specified day that is not a Legal Holiday.
"Redemption Date," when used with respect to any Security to be
redeemed, means the date fixed for such redemption pursuant to this Indenture
and Paragraph 5 in the form of Security annexed hereto as Exhibit A.
"Redemption Price," when used with respect to any Security to be
redeemed, means the price fixed for such redemption pursuant to this Indenture
and Paragraph 5 in the form of Security annexed hereto as Exhibit A.
"Reference Date" shall have the meaning provided in Section 4.03.
"Refinance" means, in respect of any security or Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part. "Refinanced" and "Refinancing"
shall have correlative meanings.
"Refinancing Indebtedness" means any Refinancing by the Company or any
Restricted Subsidiary of Indebtedness incurred in accordance with Section 4.04
hereof (other than pursuant to clause (ii), (iv), (v), (vi), (vii), (viii),
(ix), (x) or (xii) of the definition of Permitted Indebtedness), in each case
that does not (1) result in an increase in the aggregate principal amount of
Indebtedness of such Person as of the date of such proposed Refinancing (plus
the amount of any premium required to be paid under the terms of the instrument
governing such Indebtedness and plus the amount of reasonable expenses incurred
by the Company or any Restricted Subsidiary in connection with such Refinancing)
or (2) create Indebtedness with (A) a Weighted Average Life to Maturity that is
less than the Weighted Average Life to Maturity of the Indebtedness being
Refinanced or (B) a final maturity earlier than the final maturity of the
Indebtedness being Refinanced; provided that (x) if such Indebtedness being
--------
Refinanced is Indebtedness of the Company, then such Refinancing Indebtedness
shall be Indebtedness solely of the Company and (y) if such Indebtedness being
Refinanced is subordinate or junior to the Securities, then such Refinancing
Indebtedness shall be subordinate to the
-24-
Securities at least to the same extent and in the same manner as the
Indebtedness being Refinanced.
"Registrar" shall have the meaning provided in Section 2.03.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of the Issue Date between the Company and the Initial
Purchaser.
"Regulation S" means Regulation S under the Securities Act.
"Released Interests" shall have the meaning provided in Section 10.05.
"Released Trust Moneys" shall have the meaning set forth in Section
11.04.
"Replacement Assets" means assets of a kind used or usable in the
business of the Company and its Restricted Subsidiaries as conducted on the date
of the relevant Asset Sale.
"Restricted Payment" shall have the meaning provided in Section 4.03.
"Restricted Security" has the meaning set forth in Rule 144(a)(3)
under the Securities Act; provided that the Trustee shall be entitled to request
--------
and conclusively rely upon an Opinion of Counsel with respect to whether any
Security is a Restricted Security.
"Restricted Subsidiary" means any Subsidiary of the Company that has
not been designated by the Board of Directors of the Company, by a Board
Resolution delivered to the Trustee, as an Unrestricted Subsidiary pursuant to
and in compliance with Section 4.20 hereof. Any such Designation may be revoked
by a Board Resolution of the Company delivered to the Trustee, subject to the
provisions of such Section 4.20.
"Revocation" shall have the meaning provided in Section 4.20.
"Revolving Credit Facility" means the revolving credit facility under
the Credit Agreement dated as of January 16, 1992, as amended, between the
Company and NationsBank of Georgia N.A., as lender thereunder, together with the
related documents thereto (including, without limitation, any guarantee
agreements and security documents), in each case as such agreements may be
amended (including any amendment
-25-
and restatement thereof), supplemented or otherwise modified from time to time,
including any agreement extending the maturity of, refinancing, replacing or
otherwise restructuring (including increasing the amount of available borrowings
thereunder (provided that such increase in borrowing is permitted under clause
--------
(ii) of the definition of "Permitted Indebtedness") or adding Subsidiaries of
the Company as additional borrowers or guarantors thereunder) all or any
portion of the Indebtedness under such agreement or any successor or replacement
agreement and whether by the same or any other lender or group of lenders.
"Rule 144A" means Rule 144A under the Securities Act.
"Sale and Leaseback Transaction" means any direct or indirect
arrangement with any Person or to which any such Person is a party, providing
for the leasing to the Company or a Restricted Subsidiary of any property,
whether owned by the Company or any Restricted Subsidiary at the Issue Date or
later acquired, which has been or is to be sold or transferred by the Company or
such Restricted Subsidiary to such Person or to any other Person from whom funds
have been or are to be advanced by such Person on the security of such Property.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Series A Securities and Series B Securities as
amended or supplemented from time to time in accordance with the terms hereof
that are issued pursuant to this Indenture.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"Security Agreement" means the security agreement dated as of the
Issue Date by and between the Company and the Collateral Agent, substantially in
the form of Exhibit F hereto, as the same may be amended, supplemented or
modified in accordance with the terms thereof.
"Security Documents" means, collectively, the Security Agreement, the
Mortgages and the Intercreditor Agreement and all security agreements,
mortgages, deeds of trust, collateral assignments or other instruments
evidencing or creating any security interests in favor of the Trustee in all or
any portion of the Collateral, in each
-26-
case as amended, supplemented or modified from time to time in accordance with
their terms.
"Significant Subsidiary" shall have the meaning set forth in Rule
1.02(v) of Regulation S-X under the Securities Act.
"Stock Option Plan" means the Company's 1993 Employee, Director and
Consultant Stock Option Plan as adopted by the Company's Board of Directors and
stockholders on September 15, 1993, as in effect on the Issue Date, with such
modifications subsequent thereto which are not adverse to the interests of
Holders of the Securities; provided, however, that any increase in the number
-------- -------
of shares of Common Stock re served for issuance under the Stock Option Plan in
excess of the number reserved on the Issue Date shall be deemed adverse to the
interests of the Holders.
"Subordinated Management Notes" means notes payable issued by the
Company upon the terms set forth in the Stock Option Plan in respect of options
or Capital Stock issued to such Persons under the Stock Option Plan; provided
--------
that such notes provide by their terms that holders thereof shall not be
entitled to receive any payments thereon upon an Event of Default under this
Indenture, except that if such an Event of Default is one described in clauses
(iii)-(vi) of Section 6.01 hereof and the Securities shall not have been
accelerated within 270 days after such Event of Default, holders of Subordinated
Management Notes shall be entitled to resume receiving payments thereof;
provided, further, that any payments made to holders thereof in violation of the
- -------- -------
provisions described in the preceding proviso shall be deemed to be held in
trust for the benefit of the Trustee on behalf of the holder of the Securities
and shall be required to be promptly turned over to the Trustee.
"Subsidiary", with respect to any Person, means (i) any corporation of
which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors under ordinary circumstances
shall at the time be owned, directly or indirectly, by such Person or (ii) any
other Person of which at least a majority of the voting interest under ordinary
circumstances is at the time, directly or indirectly, owned by such Person.
"Surviving Entity" shall have the meaning provided in Section 5.01.
-27-
"Survey" means a survey of any parcel of Real Property (and all
improvements thereon); (i) prepared by a surveyor or engineer licensed to
perform surveys in the state where such property is located; (ii) dated (or
redated) not earlier than six months prior to the date of delivery thereof
(unless there shall have occurred within six months prior to such date of
delivery any exterior construction on the site of such property, in which event
such survey shall be dated (or redated) after the completion of such
construction as of such date of delivery); (iii) certified by the surveyor (in a
manner reasonably acceptable to the title company providing title insurance)
and (iv) complying in all respects with the minimum detail requirements of the
American Land Title Association, or local equivalent, as such requirements are
in effect on the date of preparation of such survey, or that is otherwise
reasonably acceptable to the Trustee (giving consideration to the applicable
transaction).
"Taking" shall have the meaning set forth in each Mortgage.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-
77bbbb), as amended, as in effect on the date of the execution of this Indenture
until such time as this Indenture is qualified under the TIA, and thereafter as
in effect on the date on which this Indenture is qualified under the TIA, except
as otherwise provided in Section 9.03.
"Trust Moneys" shall have the meaning set forth in Section 11.01.
"Trust Officer" means any officer within the corporate trust
administration department (or any successor group of the Trustee), including
any vice president, assistant vice president, assistant secretary or any other
officer or assistant officer of the Trustee customarily performing functions
similar to those performed by the persons who at that time shall be such
officers, and also means, with respect to a particular corporate trust matter,
any other officer to whom such trust matter is referred because of his or her
knowledge of and familiarity with the particular subject.
"Trustee" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture and
thereafter means such successor.
"Unrestricted Subsidiary" means any Subsidiary of the Company
designated as such pursuant to and in compliance with Section 4.20 hereof. Any
such desig-
-28-
nation may be revoked by a Board Resolution of the Company delivered to the
Trustee, subject to the provisions of such Section 4.20.
"U.S. Government Obligations" shall have the meaning provided in
Section 8.01.
"U.S. Legal Tender" means such coin or currency of the United States
of America as at the time of payment shall be legal tender for the payment of
public and private debts.
"U.S. Physical Securities" shall have the meaning set forth in Section
2.01.
"Valuation Date" shall have the meaning set forth in Section 10.05.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding aggregate principal amount of such Indebtedness into (b) the sum of
the total of the products obtained by multiplying (i) the amount of each then
remaining installment, sinking fund, serial maturity or other required payment
of principal, including payment at final maturity, in respect thereof, by (ii)
the number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"Wholly Owned Subsidiary" means any Restricted Subsidiary of which all
the outstanding voting securities (other than in the case of a foreign
Restricted Subsidiary, directors' qualifying shares or an immaterial amount of
shares required to be owned by other Persons pursuant to applicable law) are
owned by the Company or another Wholly Owned Subsidiary.
SECTION 1.02. Incorporation by Reference of TIA.
---------------------------------
Whenever this Indenture refers to a provision of the TIA, such
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:
"Commission" means the SEC.
"indenture securities" means the Securities.
-29-
"indenture security holder" means a Holder or a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on this Indenture securities means the Company or any other
obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them therein.
SECTION 1.03. Rules of Construction.
---------------------
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the
plural include the singular;
(5) provisions apply to successive events and transactions; and
(6) "herein," "hereof" and other words of similar import refer to
this Indenture as a whole and not to any particular Article, Section or
other subdivision.
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ARTICLE TWO
THE SECURITIES
SECTION 2.01. Form and Dating.
---------------
The Series A and Series B Securities and the Trustee's certificate of
authentication shall be substantially in the form of Exhibits A-1 and A-2,
respectively. The Securities may have notations, legends or endorsements
required by law, stock ex change rule or usage. The Company and the Trustee
shall approve the form of the Securities and any notation, legend or endorsement
on them. Each Security shall be dated the date of its issuance and shall show
the date of its authentication.
The terms and provisions contained in the Securities shall constitute,
and are hereby expressly made, a part of this Indenture and, to the extent
applicable, the Company and the Trustee, by their execution and delivery of this
Indenture, expressly agree to such terms and provisions and to be bound thereby.
Securities offered and sold in reliance on Rule 144A shall be issued
initially in the form of one or more permanent Global Securities in registered
form, substantially in the form set forth in Exhibit A-1 ("Global Securities"),
deposited with the Trustee, as custodian for the Depository, and shall bear the
legend set forth on Exhibit B. The aggregate principal amount of any Global
Security may from time to time be in creased or decreased by adjustments made on
the records of the Trustee, as custodian for the Depository, as hereinafter
provided.
Securities offered and sold in offshore transactions in reliance on
Regulation S shall be issued in the form of certificated Securities in
registered form set forth in Exhibit A-1 (the "Offshore Physical Securities").
Securities offered and sold in reliance on any other exemption from registration
under the Securities Act other than as de scribed in the preceding paragraph
shall be issued, and Securities offered and sold in reliance on Rule 144A may be
issued, in the form of certificated Securities in registered form in
substantially the form set forth in Exhibit A-1 (the "U.S. Physical
Securities"). The Offshore Physical Securities and the U.S. Physical Securities
are sometimes collectively herein referred to as the "Physical Securities."
-31-
SECTION 2.02. Execution and Authentication.
----------------------------
Two Officers, or an Officer and an Assistant Secretary, shall sign, or
one Officer shall sign and one Officer or an Assistant Secretary (each of whom
shall, in each case, have been duly authorized by all requisite corporate
actions) shall attest to, the Securities for the Company by manual or facsimile
signature.
If an Officer whose signature is on a Security was an Officer at the
time of such execution but no longer holds that office at the time the Trustee
authenticates the Security, the Security shall be valid nevertheless.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been authenticated
under this Indenture.
The Trustee shall authenticate (i) Series A Securities for original
issue on the Issue Date in the aggregate principal amount of $110,000,000, (ii)
Series A Securities or Series B Securities from time to time in the aggregate
principal amount not to exceed $40,000,000 and (iii) Series B Securities from
time to time for issue in exchange for a like principal amount of Series A
Securities, in each case upon receipt of a written order of the Company in the
form of an Officers' Certificate. The Officers' Certificate shall specify the
amount of Securities to be authenticated, the series and type of Securities and
the date on which the Securities are to be authenticated. The aggregate
principal amount of Securities outstanding at any time may not exceed
$150,000,000, except as provided in Section 2.07. Upon receipt of a written
order of the Company in the form of an Officers' Certificate, the Trustee
shall authenticate Securities in substitution of Securities originally issued to
reflect any name change of the Company.
The Trustee may appoint an authenticating agent reasonably acceptable
to the Company to authenticate Securities. Unless otherwise provided in the
appointment, an authenticating agent may authenticate Securities 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 and Affiliates of the Company.
The Securities shall be issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof.
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SECTION 2.03. Registrar and Paying Agent.
--------------------------
The Company shall maintain an office or agency in the Borough of
Manhattan, The City of New York, where (a) Securities may be presented or
surrendered for registration of transfer or for exchange ("Registrar"), (b)
Securities may be presented or surrendered for payment ("Paying Agent") and (c)
notices and demands in respect of the Securities and this Indenture may be
served. The Registrar shall keep a register of the Securities and of their
transfer and exchange. The Company, upon notice to the Trustee, may have one or
more co-Registrars and one or more additional Paying Agents reasonably
acceptable to the Trustee. The term "Paying Agent" includes any additional
Paying Agent. The Company initially appoints the Trustee as Registrar and Paying
Agent until such time as the Trustee has resigned or a successor has been
appointed. Neither the Company nor any Affiliate of the Company may act as
Paying Agent.
SECTION 2.04. Paying Agent To Hold Assets in Trust.
------------------------------------
The Company shall require each Paying Agent other than the Trustee to
agree in writing that each Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all assets held by the Paying Agent for the payment of
principal of, or interest on, the Securities, and shall notify the Trustee of
any Default by the Company in making any such payment. The Company at any time
may require a Paying Agent to distribute all assets held by it to the Trustee
and account for any assets disbursed and the Trustee may at any time during the
continuance of any payment Default, upon written request to a Paying Agent,
require such Paying Agent to distribute all assets held by it to the Trustee
and to account for any assets distributed. Upon distribution to the Trustee of
all as sets that shall have been delivered by the Company to the Paying Agent,
the Paying Agent shall have no further liability for such assets.
SECTION 2.05. Securityholder 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
Holders. If the Trustee is not the Registrar, the Company shall furnish to the
Trustee before each Record Date and at such other times as the Trustee may
request in writing a list as of such date and in such form as the Trustee may
reasonably require of the names and addresses of Holders, which list may be
conclusively relied upon by the Trustee.
-33-
SECTION 2.06. Transfer and Exchange.
---------------------
Subject to the provisions of Sections 2.15 and 2.16, when Securities
are presented to the Registrar or a co-Registrar with a request to register the
transfer of such Securities or to exchange such Securities for an equal
principal amount of Securities of other authorized denominations, the Registrar
or co-Registrar shall register the transfer or make the exchange as requested if
its requirements for such transaction are met; provided, however, that the
-------- -------
Securities surrendered for transfer or exchange shall be duly endorsed or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Registrar or co-Registrar, duly executed by the Holder thereof
or his attorney duly authorized in writing. To permit registrations of
transfers and exchanges, the Company shall execute and the Trustee shall
authenticate Securities at the Registrar's or co-Registrar's written request.
No service charge shall be made 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 other governmental charge payable upon exchanges or
transfers pursuant to Section 2.02, 2.10, 3.06, 4.16, 4.17 or 9.05). The
Registrar or co-Registrar shall not be required to register the transfer of or
exchange of any Security (i) during a period beginning at the opening of
business 15 days before the mailing of a notice of redemption of Securities and
ending at the close of business on the day of such mailing and (ii) selected
for redemption in whole or in part pursuant to Article Three, except the
unredeemed portion of any Security being redeemed in part.
Any Holder of the Global Security shall, by acceptance of such Global
Security, agree that transfers of beneficial interests in such Global Security
may be effected only through a book-entry system maintained by the Depository
(or its agent), and that ownership of a beneficial interest in the Global
Security shall be required to be reflected in a book entry.
SECTION 2.07. Replacement Securities.
----------------------
If a mutilated Security is surrendered to the Trustee or if the Holder
of a Security claims that the Security has been lost, destroyed or wrongfully
taken, the Company shall issue and the Trustee shall authenticate a replacement
Security if the Trustee's requirements are met. If required by the Trustee or
the Company, such Holder must provide an indemnity bond or other indemnity,
sufficient in the judgment of both the Company and the Trustee, to protect the
Company, the Trustee and any Agent from any loss which any of them may suffer if
a Security is replaced. The Company may
-34-
charge such Holder for its reasonable, out-of-pocket expenses in replacing a
Security, including reasonable fees and expenses of counsel.
Every replacement Security is an additional obligation of the Company.
SECTION 2.08. Outstanding Securities.
----------------------
Subject to Article Eight, Securities outstanding at any time are all
the Securities that have been authenticated by the Trustee except those
cancelled by it, those delivered to it for cancellation and those described in
this Section as not outstanding. Subject to Section 2.09, a Security does not
cease to be outstanding because the Company or any of its Affiliates holds the
Security.
If a Security is replaced pursuant to Section 2.07 (other than a
mutilated Security surrendered for replacement), it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Security
is held by a bona fide purchaser. A mutilated Security ceases to be outstanding
---- ----
upon surrender of such Security and replacement thereof pursuant to Section
2.07.
If on a Redemption Date or the Maturity Date the Paying Agent holds
U.S. Legal Tender or U.S. Government Obligations sufficient to pay all of the
principal and interest due on the Securities payable on that date, then on and
after that date such Securities cease to be outstanding and interest on them
ceases to accrue.
SECTION 2.09. Treasury Securities.
-------------------
In determining whether the Holders of the required principal amount of
Securities have concurred in any direction, waiver or consent, Securities owned
by the Company or any of its Affiliates shall be disregarded, except that, for
the purposes of determining whether the Trustee shall be protected in relying on
any such direction, waiver or consent, only Securities that the Trustee knows
are so owned shall be disregarded.
The Trustee may require an Officers' Certificate listing Securities
owned by the Company, a Subsidiary of the Company or an Affiliate of the
Company.
-35-
SECTION 2.10. Temporary Securities.
--------------------
Until definitive Securities are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Securities upon receipt of
a written order of the Company in the form of an Officers' Certificate. The
Officers' Certificate shall specify the amount of temporary Securities to be
authenticated and the date on which the temporary Securities are to be
authenticated. Temporary Securities shall be substantially in the form of
definitive Securities but may have variations that the Company considers
appropriate for temporary Securities. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate upon receipt of a written order
of the Company pursuant to Section 2.02 definitive Securities in exchange for
temporary Securities.
SECTION 2.11. Cancellation.
------------
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Securities surrendered to them for transfer, exchange or payment. The
Trustee, or at the direction of the Trustee, the Registrar or the Paying Agent,
and no one else, shall cancel and, at the written direction of the Company,
shall dispose of all Securities surrendered for transfer, exchange, payment or
cancellation. Subject to Section 2.07, the Company may not issue new Securities
to replace Securities that it has paid or delivered to the Trustee for
cancellation. If the Company shall acquire any of the Securities, such
acquisition shall not operate as a redemption or satisfaction of the
Indebtedness represented by such Securities unless and until the same are
surrendered to the Trustee for cancellation pursuant to this Section 2.11.
SECTION 2.12. Defaulted Interest.
------------------
If the Company defaults in a payment of interest on the Securities, it
shall pay the defaulted interest, plus (to the extent lawful) any interest
payable on the de faulted interest, to the persons who are Holders on a
subsequent special record date, which date shall be the fifteenth day next
preceding the date fixed by the Company for the payment of defaulted interest or
the next succeeding Business Day if such date is not a Business Day. At least
15 days before the subsequent special record date, the Company shall mail to
each Holder, with a copy to the Trustee, a notice that states the subsequent
special record date, the payment date and the amount of defaulted interest, and
interest payable on such defaulted interest, if any, to be paid.
-36-
SECTION 2.13. CUSIP Number.
------------
The Company in issuing the Securities 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 Securities, and that reliance may be placed only
on the other identification numbers printed on the Securities.
SECTION 2.14. Deposit of Moneys.
-----------------
Prior to 11:00 a.m. New York City time on each Interest Payment Date
and Maturity Date, the Company shall have deposited with the Paying Agent in
immediately available funds money sufficient to make cash payments, if any, due
on such Inter est Payment Date or Maturity Date, as the case may be, in a timely
manner which permits the Paying Agent to remit payment to the Holders on such
Interest Payment Date or Maturity Date, as the case may be.
SECTION 2.15. Book-Entry Provisions for Global Securities
-------------------------------------------
(a) The Global Securities initially shall (i) be registered in the
name of the Depository or the nominee of such Depository, (ii) be delivered to
the Trustee as custodian for such Depository and (iii) bear legends as set
forth in Exhibit B.
Members of, or participants in, the Depository ("Agent Members") shall
have no rights under this Indenture with respect to any Global Security held on
their behalf by the Depository, or the Trustee as its custodian, or under the
Global Security, and the Depository may be treated by the Company, the Trustee
and any agent of the Company or the Trustee as the absolute owner of the Global
Security for all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall prevent the Company, the Trustee or any agent of the Company or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depository or impair, as between the Depository
and its Agent Members, the operation of customary practices governing the
exercise of the rights of a Holder of any Security.
(b) Transfers of Global Securities shall be limited to transfers in
whole, but not in part, to the Depository, its successors or their respective
nominees. Interests of beneficial owners in the Global Securities may be
transferred or exchanged for
-37-
Physical Securities in accordance with the rules and procedures of the
Depository and the provisions of Section 2.16. In addition, Physical Securities
shall be transferred to all beneficial owners in exchange for their beneficial
interests in Global Securities if (i) the Depository notifies the Company that
it is unwilling or unable to continue as Depository for any Global Security and
a successor depositary is not appointed by the Company within 90 days of such
notice or (ii) an Event of Default has occurred and is continuing and the
Registrar has received a request from the Depository to issue Physical
Securities.
(c) In connection with any transfer or exchange of a portion of the
beneficial interest in any Global Security to beneficial owners pursuant to
paragraph (b), the Registrar shall (if one or more Physical Securities are to be
issued) reflect on its books and records the date and a decrease in the
principal amount of the Global Security in an amount equal to the principal
amount of the beneficial interest in the Global Security to be transferred, and
the Company shall execute, and the Trustee shall authenticate and deliver, one
or more Physical Securities of like tenor and amount.
(d) In connection with the transfer of Global Securities as an
entirety to beneficial owners pursuant to paragraph (b), the Global Securities
shall be deemed to be surrendered to the Trustee for cancellation, and the
Company shall execute, and the Trustee shall authenticate and deliver, to each
beneficial owner identified by the Depository in exchange for its beneficial
interest in the Global Securities, an equal aggregate principal amount of
Physical Securities of authorized denominations.
(e) Any Physical Security constituting a Restricted Security
delivered in exchange for an interest in a Global Security pursuant to paragraph
(b) or (c) shall, except as otherwise provided by paragraphs (a)(i)(x) and (c)
of Section 2.16, bear the legend regarding transfer restrictions applicable to
the Physical Securities set forth in Exhibit A-1.
(f) The Holder of any Global Security may grant proxies and otherwise
authorize any person, including Agent Members and persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Securities.
-38-
SECTION 2.16. Special Transfer Provisions.
---------------------------
(a) Transfers to Non-QIB Institutional Accredited Investors and Non-
---------------------------------------------------------------
U.S. Persons. The following provisions shall apply with respect to the
- ------------
registration of any proposed transfer of a Security constituting a Restricted
Security to any Institutional Accredited Investor which is not a QIB or to any
Non-U.S. Person:
(i) the Registrar shall register the transfer of any Security
constituting a Restricted Security, whether or not such Security bears the
Private Placement Legend, if (x) the requested transfer is after December
5, 1999 or (y) (1) in the case of a transfer to an Institutional Accredited
Investor which is not a QIB (excluding Non-U.S. Persons), the proposed
transferee has delivered to the Reg istrar a certificate substantially in
the form of Exhibit C hereto or (2) in the case of a transfer to a Non-U.S.
Person, the proposed transferee has delivered to the Registrar a
certificate substantially in the form of Exhibit D hereto; and
(ii) if the proposed transferor is an Agent Member holding a
beneficial interest in a Global Security, upon receipt by the Registrar of
(x) the certificate, if any, required by paragraph (i) above and (y)
instructions given in accordance with the Depository's and the Registrar's
procedures,
(a) the Registrar shall reflect on its books and records the date and (if the
transfer does not involve a transfer of outstanding Physical Securities) a
decrease in the principal amount of a Global Security in an amount equal to the
principal amount of the beneficial interest in a Global Security to be
transferred, and (b) the Company shall execute and the Trustee shall
authenticate and deliver one or more Physical Securities of like tenor and
amount.
(b) Transfers to QIBs. The following provisions shall apply with
-----------------
respect to the registration of any proposed transfer of a Security constituting
a Restricted Security to a QIB (excluding transfers to Non-U.S. Persons):
(i) the Registrar shall register the transfer if such transfer
is being made by a proposed transferor who has checked the box provided for
on the form of Security stating, or has otherwise advised the Company and
the Registrar in writing, that the sale has been made in compliance with
the provisions of Rule 144A to a transferee who has signed the
certification provided for on the form of Security stating, or has
otherwise advised the Company and the Regis-
-39-
trar in writing, that it is purchasing the Security for its own account or
an account with respect to which it exercises sole investment discretion
and that it and any such account is a QIB within the meaning of Rule 144A,
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as
it has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon
its foregoing representations in order to claim the exemption from
registration provided by Rule 144A; and
(ii) if the proposed transferee is an Agent Member, and the
Securities to be transferred consist of Physical Securities which after
transfer are to be evidenced by an interest in the Global Security, upon
receipt by the Registrar of instructions given in accordance with the
Depository'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 Global Security in an amount equal to the principal amount of the
Physical Securities to be transferred, and the Trustee shall cancel the
Physical Securities so transferred.
(c) Private Placement Legend. Upon the transfer, exchange or
------------------------
replacement of Securities not bearing the Private Placement Legend, the
Registrar shall deliver Securities that do not bear the Private Placement
Legend. Upon the transfer, exchange or replacement of Securities bearing the
Private Placement Legend, the Registrar shall deliver only Securities that bear
the Private Placement Legend unless (i) the circumstances contemplated by
paragraph (a)(i)(x) of this Section 2.16 exist, (ii) there is delivered to the
Registrar an Opinion of Counsel reasonably satisfactory to the Company and the
Trustee to the effect that neither such legend nor the related restrictions on
transfer are required in order to maintain compliance with the provisions of the
Securities Act or (iii) such Security has been sold pursuant to an effective
registration statement under the Securities Act.
(d) General. By its acceptance of any Security bearing the Private
-------
Placement Legend, each Holder of such a Security acknowledges the restrictions
on transfer of such Security set forth in this Indenture and in the Private
Placement Legend and agrees that it will transfer such Security only as provided
in this Indenture.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.15 or this Section 2.16.
The Company shall have the right to inspect and make copies of all such letters,
notices or other writ-
-40-
ten communications at any reasonable time upon the giving of reasonable written
notice to the Registrar.
SECTION 2.17. Designation.
-----------
The Indebtedness evidenced by the Securities is hereby irrevocably
designated as "senior indebtedness" or such other term denoting seniority for
the purposes of any future Indebtedness of the Company which the Company makes
subordinate to any senior indebtedness or such other term denoting seniority.
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee.
------------------
If the Company elects to redeem Securities pursuant to Paragraph 5 of
the Securities, it shall notify the Trustee in writing of the Redemption Date
and the principal amount of Securities to be redeemed. The Company shall give
notice of redemption to the Trustee at least 35 days but not more than 60 days
before the Redemption Date (unless a shorter notice shall be agreed to by the
Trustee in writing), together with an Officers' Certificate stating that such
redemption will comply with the conditions contained herein.
SECTION 3.02. Selection of Securities To Be Redeemed.
--------------------------------------
If fewer than all of the Securities are to be redeemed, the Trustee
shall select the Securities to be redeemed on a pro rata basis, by lot or by
--- ----
such other method as the Trustee shall determine to be fair and appropriate;
provided, however, that if a partial redemption is made with the proceeds of a
- -------- -------
Public Equity Offering, selection of the Securities or portion thereof for
redemption shall be made by the Trustee only on a pro rata basis, unless such a
--- ----
method is prohibited.
The Trustee shall make the selection from the Securities outstanding
and not previously called for redemption and shall promptly notify the Company
in writing of the Securities selected for redemption and, in the case of any
Security selected for partial redemption, the principal amount thereof to be
redeemed. Securities in denomi-
-41-
nations of $1,000 may be redeemed only in whole. The Trustee may select for
redemption portions (equal to $1,000 or any integral multiple thereof) of the
principal of Securities that have denominations larger than $1,000. Provisions
of this Indenture that apply to Securities called for redemption also apply to
portions of Securities called for redemption.
SECTION 3.03. Notice of Redemption.
--------------------
At least 30 days but not more than 60 days before a Redemption Date,
the Company shall mail a notice of redemption by first class mail, postage
prepaid, to each Holder whose Securities are to be redeemed at its registered
address. At the Company's request made at least 35 days before the Redemption
Date, the Trustee shall give the notice of redemption in the Company's name and
at the Company's expense. Each notice for redemption shall identify the
Securities to be redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price and the amount of accrued interest, if
any, to be paid;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered to
the Paying Agent to collect the Redemption Price;
(5) that, unless the Company defaults in making the redemption
payment, interest on Securities called for redemption ceases to accrue on
and after the Redemption Date, and the only remaining right of the Holders
of such Securities is to receive payment of the Redemption Price upon
surrender to the Paying Agent of the Securities redeemed;
(6) if any Security is being redeemed in part, the portion of the
principal amount of such Security to be redeemed and that, after the
Redemption Date, and upon surrender of such Security, a new Security or
Securities in aggregate principal amount equal to the unredeemed portion
thereof will be issued; and
(7) if fewer than all the Securities are to be redeemed, the
identification of the particular Securities (or portion thereof) to be
redeemed, as well as
-42-
the aggregate principal amount of Securities to be redeemed and the
aggregate principal amount of Securities to be outstanding after such
partial redemption.
SECTION 3.04. Effect of Notice of Redemption.
------------------------------
Once notice of redemption is mailed in accordance with Section 3.03,
Securities called for redemption become due and payable on the Redemption Date
and at the Redemption Price plus accrued interest, if any. Upon surrender to
the Trustee or Paying Agent, such Securities called for redemption shall be paid
at the Redemption Price (which shall include accrued interest thereon to the
Redemption Date), but installments of interest, the maturity of which is on or
prior to the Redemption Date, shall be payable to Holders of record at the close
of business on the relevant Record Dates.
SECTION 3.05. Deposit of Redemption Price.
---------------------------
On or before the Redemption Date, the Company shall deposit with the
Paying Agent U.S. Legal Tender sufficient to pay the Redemption Price plus
accrued interest, if any, of all Securities to be redeemed on that date. The
Paying Agent shall promptly return to the Company any U.S. Legal Tender so
deposited which is not required for that purpose, except with respect to monies
owed as obligations to the Trustee pursuant to Article Seven.
If the Company complies with the preceding paragraph, then, unless the
Company defaults in the payment of such Redemption Price plus accrued interest,
if any, interest on the Securities to be redeemed will cease to accrue on and
after the applicable Redemption Date, whether or not such Securities are
presented for payment.
SECTION 3.06 Securities Redeemed in Part.
---------------------------
Upon surrender of a Security that is to be redeemed in part, the
Trustee shall authenticate for the Holder a new Security or Securities equal in
principal amount to the unredeemed portion of the Security surrendered.
-43-
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Securities.
---------------------
The Company shall pay the principal of and interest on the Securities
in the manner provided in the Securities. An installment of principal of or
interest on the Securities shall be considered paid on the date it is due if the
Trustee or Paying Agent holds on that date U.S. Legal Tender designated for and
sufficient to pay the installment.
The Company shall pay, to the extent such payments are lawful,
interest on overdue principal and it shall pay interest on overdue installments
of interest (without regard to any applicable grace periods) from time to time
on demand at the rate borne by the Securities. Interest will be computed on the
basis of a 360-day year comprised of twelve 30-day months.
SECTION 4.02. Maintenance of Office or Agency.
-------------------------------
The Company shall maintain in the Borough of Manhattan, The City of
New York, the office or agency required under Section 2.03. 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 address of the Trustee set forth in Section
12.02. The Company hereby initially designates the office of State Street Bank
and Trust Company located at 61 Broadway, 15th Floor, Corporate Trust Window,
New York, N.Y. 10006, as its office or agency in the Borough of Manhattan, The
City of New York.
SECTION 4.03. Limitation on Restricted Payments.
---------------------------------
The Company will not, and will not cause or permit any of the
Restricted Subsidiaries to, directly or indirectly, (a) declare or pay any
dividend or make any distribution (other than dividends or distributions payable
in Qualified Capital Stock of the Company) on or in respect of shares of the
Company's Capital Stock to holders of such
-44-
Capital Stock, (b) purchase, redeem or otherwise acquire or retire for value any
Capital Stock of the Company or any warrants, rights or options to purchase or
acquire shares of any class of such Capital Stock, (c) make any principal
payment on, purchase, defease, redeem, prepay or otherwise acquire or retire for
value, prior to any scheduled maturity, scheduled repayment or scheduled sinking
fund payment, any Indebtedness of the Company or its Subsidiaries that is
subordinate or junior in right of payment to the Securities, or (d) make any
Investment (other than Permitted Investments) (each of the foregoing actions set
forth in clauses (a), (b), (c) and (d) being referred to as a "Restricted Pay
ment"), if at the time of such Restricted Payment or immediately after giving
effect thereto, (i) a Default or an Event of Default shall have occurred and be
continuing or (ii) the Company is not able to incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with Section 4.04
or (iii) the aggregate amount of Restricted Payments (including such proposed
Restricted Payment) made subsequent to the Issue Date (the amount expended for
such purposes, if other than in cash, being the fair market value of such
property as determined reasonably and in good faith by the Board of Directors of
the Company) shall exceed the sum of: (w) 50% of the cumulative Consolidated Net
Income (or if cumulative Consolidated Net Income shall be a loss, minus 100% of
such loss) of the Company from and including the first full fiscal quarter of
the Company commencing after the Issue Date to the date the Restricted Payment
occurs (the "Reference Date") (treating such period as a single accounting
period); plus (x) 100% of the aggregate net cash proceeds received by the
Company from any Person (other than a Subsidiary of the Company) from the
issuance and sale subsequent to the Issue Date and on or prior to the Reference
Date of Qualified Capital Stock of the Company; plus (y) without duplication of
any amounts included in clause (iii)(x) above, 100% of the aggregate net cash
proceeds of any equity contribution received by the Company from a holder of the
Company's Capital Stock (other than from a Subsidiary of the Company).
Notwithstanding the foregoing, the provisions set forth in the
immediately preceding paragraph do not prohibit: (1) the payment of any
dividend or redemption payment within 60 days after the date of declaration of
such dividend if the dividend or redemption payment, as the case may be, would
have been permitted on the date of declaration; (2) if no Default or Event of
Default shall have occurred and be continuing, the repurchase, redemption,
retirement or acquisition of any shares of Capital Stock of the Company, either
(i) solely in exchange for shares of Qualified Capital Stock of the Company or
(ii) through the application of net proceeds of a substantially concurrent sale
for cash (other than to a Subsidiary of the Company) of shares of Quali-
-45-
fied Capital Stock of the Company; (3) if no Default or Event of Default shall
have occurred and be continuing, the repurchase, redemption, retirement or
acquisition of any Indebtedness of the Company or a Subsidiary of the Company
that is subordinate or junior in right of pay ment to the Securities either (i)
solely in exchange for shares of Qualified Capital Stock of the Company, or (ii)
through the application of net proceeds of a substantially concurrent sale for
cash (other than to a Subsidiary of the Company) of (A) shares of Qualified
Capital Stock of the Company or (B) Refinancing Indebtedness; (4) so long as no
Default or Event of Default shall have occurred and be continuing, pursuant to
and in accordance with the Stock Option Plan, the purchase of capital stock or
options from members of management or directors of the Company upon the terms
set forth in the Stock Option Plan for consideration consisting of cash and/or
Subordinated Management Notes; (5) the making of Restricted Payments in an
aggregate amount not to exceed $2.5 million; (6) the payment of a dividend as
described in the Final Memorandum under "Use of Proceeds" within 90 days of the
Issue Date in an aggregate amount not to exceed $10 million; and (7) the
purchase of an aggregate 50,625 shares of Common Stock from two former employees
of the Company, for an aggregate purchase price (exclusive of interest) not to
exceed $700,000, pursuant to those certain letter agreements dated September 10,
1996. In determining the aggregate amount of Restricted Payments made subsequent
to the Issue Date in accordance with clause (iii) of the immediately preceding
paragraph, amounts expended pursuant to clauses (1), (2)(ii), (3)(ii)(A) and (5)
above and clause (vi) of the definition of Permitted Investments shall be
included in such calculation.
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 complies with this Indenture and setting forth in reasonable
detail the basis upon which the required calculations were computed, which
calculations may be based upon the Company's latest available internal quarterly
financial statements.
SECTION 4.04. Limitation on Indebtedness.
--------------------------
(a) The Company will not, and will not permit any of the Restricted
Subsidiaries to, directly or indirectly, create, incur, assume, guarantee,
acquire, become liable, contingently or otherwise, with respect to, or otherwise
become responsible for payment of (collectively, "incur") any Indebtedness
(other than Permitted Indebtedness); provided, however, that if no Default or
-------- -------
Event of Default shall have occurred and be continuing at the time of or as a
consequence of the incurrence of any such Indebted-
-46-
ness, the Company may incur Indebtedness (including, without limitation,
Acquired Indebtedness) if on the date of the incurrence of such Indebtedness,
after giving effect to the incurrence thereof, the Consolidated Fixed Charge
Coverage Ratio of the Company is greater than 1.9 to 1.0 through October 31,
1999 and greater than 2.0 to 1.0 thereafter.
(b) The Company will not, directly or indirectly, in any event incur
any Indebtedness which by its terms (or by the terms of any agreement governing
such Indebtedness) is subordinated to any other Indebtedness of the Company
unless such Indebtedness is also by its terms (or by the terms of any agreement
governing such Indebtedness) made expressly subordinate to the Securities to
the same extent and in the same manner as such Indebtedness is subordinated
pursuant to subordination provisions that are most favorable to the holders of
any other Indebtedness of the Company.
SECTION 4.05. Corporate Existence.
-------------------
Except as otherwise permitted by Article Five, the Company shall do or
cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence and the corporate, partnership or other existence
of each of its Subsidiaries in accordance with the respective organizational
documents of each Subsidiary and the rights (charter and statutory) and material
franchises of the Company and each of its Subsidiaries; provided, however, that
-------- -------
the Company shall not be required to preserve any such right or franchise, or
the corporate existence of any Subsidiary, if the Board of Directors of the
Company shall determine that the preservation thereof is no longer desirable in
the conduct of the business of the Company and each of its Subsidiaries, taken
as a whole, and that the loss thereof is not, and will not be, adverse in any
material respect to the Holders.
SECTION 4.06. Payment of Taxes and Other Claims.
---------------------------------
The Company shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (i) all material taxes, assessments and
governmental charges levied or imposed upon it or any of its Subsidiaries or
upon the income, profits or property of it or any of its Subsidiaries and (ii)
all lawful claims for labor, materials and supplies which, in each case, if
unpaid, might by law become a material liability or Lien upon the property of
it or any of its Subsidiaries; provided, however, that the Company shall not be
-------- -------
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or
-47-
validity is being contested in good faith by appropriate proceedings and for
which appropriate provision has been made.
SECTION 4.07. Maintenance of Properties and Insurance.
---------------------------------------
(a) The Company shall cause all material properties owned by or
leased by it or any of its Subsidiaries used or useful to the conduct of its
business or the business of any of its Subsidiaries to be improved or maintained
and kept in normal condition, repair and working order and supplied with all
necessary equipment and shall cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in its judgment may
be necessary, so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided, however, that
-------- -------
nothing in this Section 4.07 shall prevent the Company or any of its
Subsidiaries from discontinuing the use, operation or maintenance of any of such
properties, or disposing of any of them, if such discontinuance or disposal is,
in the judgment of the Board of Directors or of the board of directors of any
Subsidiary of the Company concerned, or of an officer (or other agent employed
by the Company or of any of its Subsidiaries) of the Company or any of its
Subsidiaries having managerial responsibility for any such property, desirable
in the conduct of the business of the Company or any Subsidiary of the Company,
and if such discontinuance or disposal is not adverse in any material respect to
the Holders.
(b) The Company shall maintain, and shall cause its Subsidiaries to
maintain, insurance with responsible carriers against such risks and in such
amounts, and with such deductibles, retentions, self-insured amounts and co-
insurance provisions, as are customarily carried by similar businesses of
similar size, including property and casualty loss, workers' compensation and
interruption of business insurance. The Company shall provide, and shall cause
its Subsidiaries to provide, an Officers' Certificate as to compliance with the
foregoing requirements to the Trustee prior to the anniversary or renewal date
of each such policy, together with satisfactory evidence of such insurance,
which certificate shall expressly state such expiration date for each policy
listed.
SECTION 4.08. Compliance Certificate; Notice of Default.
-----------------------------------------
(a) The Company shall deliver to the Trustee, within 100 days after
the close of each fiscal year an Officers' Certificate stating that a review of
the activities of the Company has been made under the supervision of the signing
officers with a view to determining whether it has kept, observed, performed and
fulfilled its obligations under
-48-
this Indenture and further stating, as to each such Officer signing such
certificate, that to the best of his knowledge the Company during such preceding
fiscal year has kept, observed, performed and fulfilled each and every such
covenant and no Default or Event of Default occurred during such year and at the
date of such certificate there is no Default or Event of Default which has
occurred and is continuing or, if such signers do know of such Default or Event
of Default, the certificate shall describe its status with particularity. The
Officers' Certificate shall also notify the Trustee should the Company elect to
change the manner in which it fixes its fiscal year end.
(b) The Company shall deliver to the Trustee, forthwith upon becoming
aware of any Default or Event of Default in the performance of any covenant,
agreement or condition contained in this Indenture, an Officers' Certificate
specifying the Default or Event of Default and describing its status with
particularity.
SECTION 4.09. Compliance with Laws.
--------------------
The Company shall comply, and shall cause each of its Subsidiaries to
comply, with all applicable statutes, rules, regulations, orders and
restrictions of the United States of America, all states and municipalities
thereof, and of any governmental department, commission, board, regulatory
authority, bureau, agency and instrumentality of the foregoing, in respect of
the conduct of their respective businesses and the ownership of their respective
properties, except for such noncompliances as would not in the aggregate have a
material adverse effect on the financial condition or results of operations of
the Company and its Subsidiaries taken as a whole.
SECTION 4.10. SEC Reports.
-----------
(a) The Company will file with the SEC all information documents and
reports to be filed with the SEC pursuant to Section 13 or 15(d) of the Exchange
Act, whether or not the Company is subject to such filing requirements so long
as the SEC will accept such filings. The Company (at its own expense) will
deliver to the Trustee within 15 days after it files them with the SEC, copies
of the quarterly and annual reports and of the information, documents and other
reports (or copies of such portions of any of the foregoing as the SEC may by
rules and regulations prescribe) which the Company files with the SEC pursuant
to Section 13 or 15(d) of the Exchange Act. Upon qualification of this Indenture
under the TIA, the Company shall also comply with the provisions of TIA (S)
314(a).
-49-
(b) At the Company's expense, regardless of whether the Company is
required to furnish such reports to its stockholders pursuant to the Exchange
Act, the Company shall cause an annual report and each quarterly or other
financial report to be delivered to the Trustee and the Trustee will mail them
to the Holders at their addresses appearing in the register of Securities
maintained by the Registrar.
(c) The Company will, upon request, provide to any Holder of
Securities or any prospective transferee of any such Holder any information
concerning the Company (including financial statements) necessary in order to
permit such Holder to sell or transfer Securities in compliance with Rule 144A
under the Securities Act.
SECTION 4.11. Waiver of Stay, Extension or 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 or extension law or any usury law
or other law that would prohibit or forgive the Company from paying all or any
portion of the principal of and/or interest on the Securities as contemplated
herein, wherever enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of this Indenture, and (to the extent
that it may lawfully do so) the Company hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will suffer
and permit the execution of every such power as though no such law had been
enacted.
SECTION 4.12. Limitation on Transactions with Affiliates.
------------------------------------------
(a) The Company will not, and will not permit any of the Restricted
Subsidiaries to, directly or indirectly, enter into or permit to exist any
transaction or series of related transactions (including, without limitation,
the purchase, sale, lease or exchange of any property or the rendering of any
service) with, or for the benefit of, any of its Affiliates (each an "Affiliate
Transaction"), other than (x) Affiliate Transactions permitted under paragraph
(b) below and (y) Affiliate Transactions on terms that are no less favorable
than those that might reasonably have been obtained in a comparable transaction
at such time on an arm's-length basis from a Person that is not an Affiliate of
the Company or such Restricted Subsidiary. All Affiliate Transactions (and each
series of related Affiliate Transactions which are similar or part of a common
plan) involving aggregate payments or other property with a fair market value in
excess of
-50-
$500,000 shall be approved by the Board of Directors of the Company or such
Restricted Subsidiary, as the case may be, such approval to be evidenced by a
Board Resolution stating that such Board of Directors has determined that such
transaction complies with the foregoing provisions. If the Company or any
Restricted Subsidiary enters into an Affiliate Transaction (or a series of
related Affiliate Transactions related to a common plan) that involves an
aggregate fair market value of more than $4 million, the Company or such
Restricted Subsidiary, as the case may be, shall, prior to the consummation
thereof, obtain an opinion stating that such transaction or series of related
transactions are fair to the Company or the relevant Restricted Subsidiary, as
the case may be, from a financial point of view, from an Independent Financial
Advisor and file the same with the Trustee.
(b) The restrictions set forth in clause (a) shall not apply to (i)
reasonable fees and compensation paid to and indemnity provided on behalf of,
officers, directors, employees or consultants of the Company or any Restricted
Subsidiary as determined in good faith by the Company's Board of Directors; (ii)
transactions exclusively between or among the Company and any of the Restricted
Subsidiaries or exclusively between or among such Restricted Subsidiaries,
provided such transactions are not otherwise prohibited by this Indenture;
(iii) Restricted Payments permitted by this Indenture; (iv) advances and loans
to employees and officers in the ordinary course of business; and (v) payments
to HMK Enterprises, Inc. and/or its Affiliates required pursuant to the
Management Agreement or the Intercompany Agreements.
SECTION 4.13. Impairment of Security Interest.
-------------------------------
The Company shall not, and shall not permit any Restricted Subsidiary
of the Company to, take or omit to take any action, which action or omission
would have the result of materially adversely affecting the security interests
in the Collateral in favor of the Collateral Agent for the benefit of the
Trustee and the Securityholders, nor shall the Company or any such Subsidiary
grant any interest whatsoever in the Collateral except as expressly permitted by
this Indenture and the Security Documents.
SECTION 4.14. Limitation on Dividend and Other Payment
Restrictions Affecting Subsidiaries.
------------------------------------
The Company will not, and will not cause or permit any of the
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or
permit to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidi-
-51-
ary to (a) pay dividends or make any other distributions on or in respect of its
Capital Stock; (b) make loans or advances or to pay any Indebtedness or other
obligation owed to the Company or any other Restricted Subsidiary; or (c)
transfer any of its property or assets to the Company or any other Restricted
Subsidiary, except for such encumbrances or restrictions existing under or by
reason of: (1) applicable law; (2) this Indenture and the Security Documents;
(3) customary non-assignment provisions of any contract or any lease governing a
leasehold interest of any Restricted Subsidiary; (4) any instrument governing
Acquired Indebtedness, which encumbrance or restriction is not applicable to any
Person, or the properties or assets of any Person, other than the Person or the
properties or assets of the Person so acquired (including, but not limited to,
such Person's direct and indirect Subsidiaries); (5) agreements existing on the
Issue Date to the extent and in the manner such agreements are in effect on the
Issue Date; (6) Permitted Liens; or (7) an agreement governing Indebtedness
incurred to Refinance the Indebtedness issued, assumed or incurred pursuant to
an agreement referred to in clause (2), (4) or (5) above; provided, however,
that the provisions relating to such encumbrance or restriction contained in any
such Indebtedness are no less favorable to the Company in any material respect
as determined by the Board of Directors of the Company in its reason able and
good faith judgment than the provisions relating to such encumbrance or
restriction contained in agreements referred to in such clause (2), (4) or (5).
SECTION 4.15. Limitation on Liens.
-------------------
The Company will not, and will not cause or permit any of the
Restricted Subsidiaries to, directly or indirectly, create, incur, assume or
permit or suffer to exist any Liens upon any property or assets of the Company
or any of the Restricted Subsidiaries whether owned on the Issue Date or
acquired after the Issue Date, or any proceeds therefrom, except (i) in the case
of Property not constituting Collateral, Permitted Liens, and (ii) in the case
of Property constituting Collateral, Liens permitted by the Security Documents.
SECTION 4.16. Change of Control.
-----------------
(a) Upon the occurrence of a Change of Control, each Holder will have
the right to require that the Company purchase all or a portion of such Holder's
Securities pursuant to the offer described below (the "Change of Control
Offer"), at a purchase price equal to 101% of the principal amount thereof plus
accrued interest to the date of purchase.
-52-
(b) Within 30 days following the date upon which the Change of
Control occurred (the "Change of Control Date"), the Company shall send, by
first class mail, a notice to each Holder, with a copy to the Trustee, which
notice shall govern the terms of the Change of Control Offer. The notice to the
Holders shall contain all instructions and materials necessary to enable such
Holders to tender Securities pursuant to the Change of Control Offer. Such
notice shall state:
(1) that the Change of Control Offer is being made pursuant to this
Section 4.16 and that all Securities tendered and not withdrawn will be
accepted for payment;
(2) the purchase price (including the amount of accrued interest)
and the purchase date (which shall be no earlier than 30 days nor later
than 60 days from the date such notice is mailed, other than as may be
required by law) (the "Change of Control Payment Date") and that the Change
of Control Offer will remain open for at least 20 Business Days and until
the close of business on the Business Day prior to the Change of Control
Payment Date;
(3) that any Security not tendered will continue to accrue interest;
(4) that, unless the Company defaults in making payment therefor,
any Security accepted for payment pursuant to the Change of Control Offer
shall cease to accrue interest after the Change of Control Payment Date;
(5) that Holders electing to have a Security purchased pursuant to a
Change of Control Offer will be required to surrender the Security, with
the form entitled "Option of Holder to Elect Purchase" on the reverse of
the Security completed, to the Paying Agent at the address specified in the
notice prior to the close of business on the third Business Day prior to
the Change of Control Payment Date;
(6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than five Business Days prior to the
Change of Control Payment Date, a telegram, telex, facsimile transmission
or letter setting forth the name of the Holder, the principal amount of the
Securities the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Security purchased;
-53-
(7) that Holders whose Securities are purchased only in part will be
issued new Securities in a principal amount equal to the unpurchased
portion of the Securities surrendered; provided that each Security
purchased and each new Security issued shall be in an original principal
amount of $1,000 or integral multiples thereof; and
(8) the circumstances and relevant facts regarding such Change of
Control.
On or before the Change of Control Payment Date, the Company shall
(i) accept for payment Securities or portions thereof tendered pursuant to the
Change of Control Offer, (ii) deposit with the Paying Agent U.S. Legal Tender
sufficient to pay the purchase price plus accrued interest, if any, to the
Change of Control Payment Date of all Securities so tendered and (iii) deliver
to the Trustee Securities so accepted together with an Officers' Certificate
stating the Securities or portions thereof being purchased by the Company. The
Paying Agent shall promptly mail to the Holders of Securities so accepted
payment in an amount equal to the purchase price plus accrued interest, if any,
to the Change of Control Payment Date and the Trustee shall promptly
authenticate and mail to such Holders new Securities equal in principal amount
to any unpurchased portion of the Securities surrendered. Any Securities not so
accepted shall be promptly mailed by the Company to the Holder thereof. For
purposes of this Section 4.16, the Trustee shall act as the Paying Agent.
Any amounts remaining after the purchase of Securities pursuant to a
Change of Control Offer shall be returned by the Trustee to the Company.
The Company shall comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Securities pursuant to a Change of Control Offer. To the extent
the provisions of any securities laws or regulations conflict with the
provisions under this Section 4.16, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under this Section 4.16 by virtue thereof.
SECTION 4.17. Limitation on Sale of Assets.
----------------------------
(a) The Company will not, and will not permit any of the Restricted
Subsidiaries to, consummate an Asset Sale unless (i) the Company or the
applicable Re-
-54-
stricted Subsidiary, as the case may be, receives consideration at the time of
such Asset Sale at least equal to the fair market value of the assets sold or
otherwise disposed of (as determined in good faith by the Company's Board of
Directors), (ii) at least 75% of the consideration received by the Company or
the Restricted Subsidiary, as the case may be, from such Asset Sale shall be in
the form of cash and/or Cash Equivalents and is received at the time of such
disposition, and (iii) to the extent such Asset Sale involves Collateral, it
shall be in compliance with the provisions described under Section 10.04.
(b) Upon the consummation of an Asset Sale, the Company may apply, or
may cause such Restricted Subsidiary to apply, the Net Cash Proceeds relating to
such Asset Sale within 180 days of receipt thereof to make an investment in
properties and assets that replace the properties and assets that were the
subject of such Asset Sale or in Replacement Assets; provided that, to the
--------
extent the Net Cash Proceeds relate to an Asset Sale of Collateral, the
Replacement Assets, if any, relating to such Net Cash Proceeds shall be of a
type constituting Collateral and shall be subject to a first priority Lien in
favor of the Trustee pursuant to the Security Documents and shall constitute
Collateral.
(c) On the 180th day after an Asset Sale or such earlier date, if
any, as the Board of Directors of the Company or of such Restricted Subsidiary
determines not to apply the Net Cash Proceeds relating to such Asset Sale as set
forth in the next preceding sentence (each, a "Net Proceeds Offer Trigger
Date"), such aggregate amount of Net Cash Proceeds which have not been applied
on or before such Net Proceeds Offer Trigger Date as permitted in the next
preceding sentence (each a "Net Proceeds Offer Amount") shall be applied by the
Company or such Restricted Subsidiary to make an offer to purchase (the "Net
Proceeds Offer") on a date (the "Net Proceeds Offer Payment Date") not less than
30 nor more than 60 days following the applicable Net Proceeds Offer Trigger
Date, from all Holders on a pro rata basis, that amount of Securities equal to
--- ----
the Net Proceeds Offer Amount at a price equal to 100% of the principal amount
of the Securities to be purchased, plus accrued and unpaid interest thereon, if
any, to the date of purchase; provided, however, that if at any time any non-
-------- -------
cash consideration received by the Company or any Restricted Subsidiary, as the
case may be, in connection with any Asset Sale is converted into or sold or
otherwise disposed of for cash (other than interest received with respect to any
such non-cash consideration), then such con version or disposition shall be
deemed to constitute an Asset Sale hereunder and the Net Cash Proceeds thereof
shall be applied in accordance with this Section 4.17.
-55-
(d) The Company may defer the Net Proceeds Offer until there is an
aggregate unutilized Net Proceeds Offer Amount equal to or in excess of $5
million resulting from one or more Asset Sales (at which time, the entire
unutilized Net Proceeds Offer Amount, not just the amount in excess of $5
million, shall be applied as required pursuant to this paragraph). All Net Cash
Proceeds in excess of $5 million from Asset Sales not immediately applied to
purchase Replacement Assets, pending their application in accordance with this
Section 4.17 or the release thereof in accordance with Section 10.05 hereof,
shall be deposited in a cash collateral account under this Indenture.
(e) Subject to the deferral of the Net Proceeds Offer contained in
subsection (d) above, each notice of a Net Proceeds Offer pursuant to this
Section 4.17 shall be mailed or caused to be mailed, by first class mail, by the
Company within 25 days following the Net Proceeds Offer Trigger Date to all
Holders at their last registered ad dresses, with a copy to the Trustee. The
notice shall contain all instructions and materials necessary to enable such
Holders to tender Securities pursuant to the Net Proceeds Offer and shall state
the following terms:
(1) that the Net Proceeds Offer is being made pursuant to Section
4.17 and that all Securities tendered will be accepted for payment;
provided, however, that if the aggregate principal amount of Securities
-------- -------
tendered in a Net Proceeds Offer plus accrued interest at the Net Proceeds
Offer Payment Date exceeds the aggregate amount of the Net Proceeds Offer
Amount, the Company shall select the Securities to be purchased on a pro
---
rata basis (with such adjustments as may be deemed appropriate by the
----
Company so that only Securities in denominations of $1,000 or multiples
thereof shall be purchased);
(2) the purchase price (including the amount of accrued interest)
and the Net Proceeds Offer Payment Date (which shall be at least 20
Business Days from the date of mailing of notice of such Net Proceeds
Offer, or such longer period as required by law;
(3) that any Security not tendered will continue to accrue interest;
(4) that, unless the Company defaults in making payment therefor,
any Security accepted for payment pursuant to the Net Proceeds Offer shall
cease to accrue interest after the Net Proceeds Offer Payment Date;
-56-
(5) that Holders electing to have a Security purchased pursuant to
a Net Proceeds Offer will be required to surrender the Security, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of the
Security completed, to the Paying Agent at the address specified in the
notice prior to the close of business on the Business Day prior to the Net
Proceeds Offer Payment Date;
(6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than five Business Days prior to the Net
Proceeds Offer Payment Date, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder, the principal amount of the
Securities the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Security purchased; and
(7) that Holders whose Securities are purchased only in part will
be issued new Securities in a principal amount equal to the unpurchased
portion of the Securities surrendered; provided that each Security
--------
purchased and each new Security issued shall be in an original principal
amount of $1,000 or integral multiples thereof.
On or before the Net Proceeds Offer Payment Date, the Company shall
(i) accept for payment Securities or portions thereof tendered pursuant to the
Net Proceeds Offer which are to be purchased in accordance with item (e)(1)
above, (ii) deposit with the Paying Agent U.S. Legal Tender sufficient to pay
the purchase price plus accrued interest, if any, of all Securities to be
purchased and (iii) deliver to the Trustee Securities so accepted together with
an Officers' Certificate stating the Securities or portions thereof being
purchased by the Company. The Paying Agent shall promptly mail to the Holders
of Securities so accepted payment in an amount equal to the purchase price plus
accrued interest, if any. For purposes of this Section 4.17, the Trustee shall
act as the Paying Agent.
Any amounts remaining after the purchase of Securities pursuant to an
Asset Sale Offer shall be returned by the Trustee to the Company.
In the event of the transfer of substantially all (but not all) of the
property and assets of the Company and the Restricted Subsidiaries as an
entirety to a Person in a transaction permitted under Section 5.01, the
successor corporation shall be deemed to have sold the properties and assets of
the Company and the Restricted Subsidiaries not
-57-
so transferred for purposes of this Section 4.17, and shall comply with the
provisions of this Section 4.17 with respect to such deemed sale as if it were
an Asset Sale. In addition, the fair market value of such properties and assets
of the Company or the Restricted Subsidiaries deemed to be sold shall be deemed
to be Net Cash Proceeds for purposes of this Section 4.17.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of the Securities pursuant to a Net Proceeds Offer. To the extent
that the provisions of any securities laws or regulations conflict with the
provisions of this Indenture relating to an Asset Sale, the Company shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations relating to such Asset Sale by virtue thereof.
In the event that the Capital Stock of a Restricted Subsidiary of the
Company, which has entered into a supplemental indenture guaranteeing the
obligations of the Company under the Securities and this Indenture, is sold or
otherwise disposed of in a transaction with any Person that is not an Affiliate
of the Company, such Restricted Subsidiary shall be deemed automatically and
unconditionally released and discharged from any of its obligations under the
supplemental indenture without any further action on the part of the Trustee or
any holder of the Securities; provided that the Net Cash Proceeds of such sale
--------
or other disposition are applied in accordance with the applicable provisions of
this Indenture.
SECTION 4.18. Limitation on Sale and Leaseback Transactions.
---------------------------------------------
The Company will not, and will not permit any Restricted Subsidiary of
the Company to, enter into any Sale and Leaseback Transaction with respect to
Property (whether now owned or hereafter acquired) unless (i)(a) the Property
that is the subject of the Sale and Leaseback Transaction does not constitute
Collateral and (b) the sale or transfer of the Property to be leased complies
with the requirements of Section 4.17 and (ii) the Company or such Restricted
Subsidiary would be entitled under Section 4.04 to incur any Capitalized Lease
Obligation in respect of such Sale and Leaseback Transaction.
-58-
SECTION 4.19. Limitation on Preferred Stock of Subsidiaries.
----------------------------------------------
The Company will not permit any of the Restricted Subsidiaries to
issue any Preferred Stock (other than to the Company or to a Wholly Owned
Subsidiary) or permit any Person (other than the Company or a Wholly Owned
Subsidiary) to own any Preferred Stock of any Restricted Subsidiary.
SECTION 4.20. Limitation on Designations of Unrestricted Subsidiaries
------------
(a) The Company may designate any Subsidiary of the Company (other
than a Subsidiary of the Company which owns Capital Stock of a Restricted Sub-
sidiary) as an "Unrestricted Subsidiary" under this Indenture (a "Designation")
only if:
(i) no Default shall have occurred and be continuing at the time of
or after giving effect to such Designation;
(ii) the Company would be permitted under this Indenture to make an
Investment at the time of Designation (assuming the effectiveness of such
Designation) in an amount (the "Designation Amount") equal to the sum of
(i) fair market value of the Capital Stock of such Subsidiary owned by the
Company and the Restricted Subsidiaries on such date and (ii) the aggregate
amount of other Investments of the Company and the Restricted Subsidiaries
in such Subsidiary on such date; and
(iii) the Company would be permitted to incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) pursuant to paragraph (a)
of Section 4.04 at the time of Designation (assuming the effectiveness of
such Designation).
(b) In the event of any such Designation, the Company shall be
deemed to have made an Investment constituting a Restricted Payment pursuant to
Section 4.03 for all purposes of this Indenture in the Designation Amount. The
Company shall not, and shall not permit any Restricted Subsidiary to, at any
time (x) provide direct or indirect credit support for or a guarantee of any
Indebtedness of any Unrestricted Subsidiary (including of any undertaking,
agreement or instrument evidencing such Indebtedness), (y) be directly or
indirectly liable for any Indebtedness of any Unrestricted Subsidiary or (z) be
directly or indirectly liable for any Indebtedness which provides that the
holder thereof may (upon notice, lapse of time or both) declare a default
thereon
-59-
or cause the payment thereof to be accelerated or payable prior to its final
scheduled maturity upon the occurrence of a default with respect to any
Indebtedness of any Unrestricted Subsidiary (including any right to take
enforcement action against such Unrestricted Subsidiary), except, in the case
of clause (x) or (y), to the extent permitted under Section 4.03.
(c) The Company may revoke any Designation of a Subsidiary as an
Unrestricted Subsidiary (a "Revocation"), whereupon such Subsidiary shall then
constitute a Restricted Subsidiary, if:
(i) no Default shall have occurred and be continuing at the time of
and after giving effect to such Revocation; and
(ii) all Liens and Indebtedness of such Unrestricted Subsidiary
outstanding immediately following such Revocation would, if incurred at
such time, have been permitted to be incurred for all purposes of this
Indenture.
(d) All Designations and Revocations must be evidenced by Board
Resolutions of the Company delivered to the Trustee certifying compliance with
the foregoing provisions.
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. Merger, Consolidation and Sale of Assets.
----------------------------------------
(a) The Company will not, in a single transaction or series of
related transactions, consolidate or merge with or into any Person, or sell,
assign, transfer, lease, convey or otherwise dispose of (or cause or permit any
Restricted Subsidiary to sell, as sign, transfer, lease, convey or otherwise
dispose of) all or substantially all of the Company's assets (determined on a
consolidated basis for the Company and the Restricted Subsidiaries) whether as
an entirety or substantially as an entirety to any Person unless: (i) either
(1) the Company shall be the surviving or continuing corporation or (2) the
Person (if other than the Company) formed by such consolidation or into which
the Company is merged or the Person which acquires by sale, assignment,
transfer, lease, conveyance or other disposition the properties and assets of
the Company and of
-60-
the Restricted Subsidiaries substantially as an entirety (the "Surviving
Entity") (x) shall be a corporation organized and validly existing under the
laws of the United States or any State thereof or the District of Columbia and
(y) shall expressly assume, by supplemental indenture (in form and substance
satisfactory to the Trustee), executed and delivered to the Trustee, the due and
punctual payment of the principal of, and premium, if any, and interest on all
of the Securities and the performance of every covenant of the Securities, this
Indenture and the Registration Rights Agreement on the part of the Company to be
performed or observed; (ii) immediately after giving effect to such transaction
and the assumption contemplated by clause (i)(2)(y) above (including giving
effect to any Indebtedness and Acquired Indebtedness incurred or anticipated to
be incurred in connection with or in respect of such transaction), the Company
or such Surviving Entity, as the case may be, (1) shall have a Consolidated
Tangible Net Worth equal to or greater than the Consolidated Tangible Net Worth
of the Company immediately prior to such transaction and (2) shall be able to
incur at least $1.00 of additional Indebtedness (other than Permitted
Indebtedness) pursuant to Section 4.04; (iii) immediately before and immedi-
ately after giving effect to such transaction and the assumption contemplated by
clause (i)(2)(y) above (including, without limitation, giving effect to any
Indebtedness and Acquired Indebtedness incurred or anticipated to be incurred
and any Lien granted in connection with or in respect of the transaction), no
Default or Event of Default shall have occurred or be continuing; and (iv) the
Company or the Surviving Entity shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, sale, assignment, transfer, lease, conveyance or other
disposition and, if a supplemental indenture is required in connection with such
transaction, such supplemental indenture comply with the applicable provisions
of this Indenture and that all conditions precedent in this Indenture relating
to such transaction have been satisfied.
(b) For purposes of the foregoing, the transfer (by lease,
assignment, sale or otherwise, in a single transaction or series of
transactions) of all or substantially all of the properties or assets of one or
more Restricted Subsidiaries the Capital Stock of which constitutes all or
substantially all of the properties and assets of the Company, shall be deemed
to be the transfer of all or substantially all of the properties and assets of
the Company.
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SECTION 5.02. Successor Corporation Substituted.
---------------------------------
Upon any consolidation, combination or merger or any transfer of all
or substantially all of the assets of the Company in accordance with the
foregoing, in which the Company is not the continuing corporation, the successor
Person formed by such consolidation or into which the Company is merged or to
which such conveyance, lease or transfer is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture and the Securities with the same effect as if such surviving
entity had been named as such.
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default.
-----------------
An "Event of Default" occurs if:
(1) the Company fails to pay interest on any Securities when the
same becomes due and payable and the default continues for a period of 30
days;
(2) the Company fails to pay the principal on any Securities, when
such principal becomes due and payable, at maturity, upon redemption or
other wise;
(3) the Company defaults in the observance or performance of any
other covenant or agreement contained in this Indenture which default
continues for a period of 30 days after the Company receives written notice
specifying the default (and demanding that such default be remedied) from
the Trustee or the Holders of at least 25% of the outstanding principal
amount of the Securities (except in the case of a default with respect to
the Sections 4.16 and 5.01 which will constitute an Event of Default with
such notice requirement but without such passage of time requirement);
(4) the Company fails to pay at final maturity (giving effect to
any applicable grace periods and any extensions thereof) the principal
amount of any Indebtedness of the Company or any Restricted Subsidiary, or
the acceleration
-62-
of the final stated maturity of any such Indebtedness in either event if
the aggregate principal amount of such Indebtedness, together with the
principal amount of any other such Indebtedness in default for failure to
pay principal at final maturity or which has been accelerated, aggregates
$5 million or more at any time;
(5) one or more judgments in an aggregate amount in excess of $5
million in the aggregate shall have been rendered against the Company or
any of the Restricted Subsidiaries and such judgments remain undischarged,
unpaid or unstayed for a period of 60 days after such judgment or judgments
become final and non-appealable;
(6) the Company or any of its Significant Subsidiaries (A) admits
in writing its inability to pay its debts generally as they become due, (B)
commences a voluntary case or proceeding under any Bankruptcy Law with
respect to itself, (C) consents to the entry of a judgment, decree or order
for relief against it in an involuntary case or proceeding under any
Bankruptcy Law, (D) consents to the appointment of a Custodian of it or for
substantially all of its property, (E) consents to or acquiesces in the
institution of a bankruptcy or an insolvency proceeding against it, (F)
makes a general assignment for the benefit of its creditors, or (G) takes
any corporate action to authorize or effect any of the foregoing;
(7) a court of competent jurisdiction enters a judgment, decree or
order for relief in respect of the Company or any of its Significant
Subsidiaries in an involuntary case or proceeding under any Bankruptcy Law,
which shall (A) approve as properly filed a petition seeking
reorganization, arrangement, adjustment or composition in respect of the
Company or any of its Significant Subsidiaries, (B) appoint a Custodian of
the Company or any of its Significant Subsidiaries or for substantially
all of its property or (C) order the winding-up or liquidation of its
affairs; and such judgment, decree or order shall remain unstayed and in
effect for a period of 60 consecutive days; or
(8) any of the Security Documents cease to be in full force and
effect (other than in accordance with their respective terms), or any of
the Security Documents cease to give the Collateral Agent the Liens,
rights, powers and privileges purported to be created thereby, or any
Security Document is declared null and void, or the Company denies any of
its obligations under any Security
-63-
Document or any Collateral becomes subject to any Lien other than the Liens
created or permitted by the Security Documents.
The Trustee shall, within 90 days after the occurrence of any Default
known to it, give to the holders of Securities notice of such Default; provided
--------
that, except in the case of a Default in the payment of principal of or
interest on any of the Securities, the Trustee shall be protected in
withholding such notice if it in good faith determines that the withholding of
such notice is in the interest of the Holders of Securities.
SECTION 6.02. Acceleration.
------------
If an Event of Default (other than an Event of Default specified in
Section 6.01(6) or (7) relating to the Company) shall occur and be continuing,
the Trustee or the Holders of at least 25% in principal amount of outstanding
Securities may declare the principal of and accrued interest on all the
Securities to be due and payable by notice in writing to the Company and the
Trustee specifying the respective Event of Default, and the same shall become
immediately due and payable. If an Event of Default specified in Section
6.01(6) or (7) relating to the Company occurs and is continuing, then all unpaid
principal of, and premium, if any, and accrued and unpaid interest on all of the
outstanding Securities shall ipso facto become and be immediately due and
---- -----
payable without any declaration or other act on the part of the Trustee or any
Holder.
The Holders of a majority in principal amount of the Securities may
rescind and cancel such declaration and its consequences (i) if the rescission
would not conflict with any judgment or decree, (ii) if all existing Events of
Default have been cured or waived except nonpayment of principal or interest
that has become due solely because of the acceleration, (iii) to the extent the
payment of such interest is lawful, interest on overdue installments of interest
and overdue principal, which has become due otherwise than by such declaration
of acceleration, has been paid, (iv) if the Company has paid the Trustee its
reasonable compensation and reimbursed the Trustee for its expenses,
disbursements and advances and (v) in the event of the cure or waiver of an
Event of Default of the type described in Section 6.01(6) or (7), the Trustee
shall have received an Officers' Certificate and an Opinion of Counsel that such
Event of Default has been cured or waived. No such rescission shall affect any
subsequent Default or impair any right consequent thereto.
-64-
SECTION 6.03. Other Remedies.
--------------
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy by proceeding at law or in equity to collect the
payment of principal of or interest on the Securities or to enforce the
performance of any provision of the Securities or this Indenture and may
instruct the Collateral Agent to take any action under the Security Documents as
may be required or permitted thereunder.
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative to the
extent permitted by law.
Each Securityholder, by accepting a Security, acknowledges that the
exercise of remedies by Collateral Agent at the direction of the Trustee with
respect to the Collateral is subject to the terms and conditions of the Security
Documents and the proceeds received upon realization of the Collateral shall be
applied in accordance with Section 6.10 hereof.
SECTION 6.04. Waiver of Past Defaults.
-----------------------
Subject to Sections 2.09, 6.07 and 9.02, the Holders of not less than
a majority in principal amount of the outstanding Securities by notice to the
Trustee may waive an existing Default or Event of Default and its consequences,
except a Default in the payment of principal of or interest on any Security as
specified in clauses (1) and (2) of Section 6.01. The Company shall deliver to
the Trustee an Officers' Certificate stating that the requisite percentage of
Holders have consented to such waiver and attaching copies of such consents.
When a Default or Event of Default is waived, it is cured and ceases.
SECTION 6.05. Control by Majority.
-------------------
Subject to Section 2.09, the Holders of not less than a majority in
principal amount of the outstanding Securities may direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on it. Subject to Section 7.01,
however, the Trustee may refuse to
-65-
follow any direction that conflicts with any law or this Indenture, that the
Trustee determines may be unduly prejudicial to the rights of another
Securityholder, or that may involve the Trustee in personal liability; provided
--------
that the Trustee may take any other action deemed proper by the Trustee which
is not inconsistent with such direction.
In the event the Trustee takes any action or follows any direction
pursuant to this Indenture, the Trustee shall be entitled to indemnification
satisfactory to it in its sole discretion against any loss or expense caused by
taking such action or following such direction.
SECTION 6.06. Limitation on Suits.
-------------------
A Securityholder may not pursue any remedy with respect to this
Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(2) the Holder or Holders of at least 25% in principal amount of
the outstanding Securities make a written request to the Trustee to pursue
the remedy;
(3) such Holder or Holders offer and, if requested, provide to
the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;
(4) 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
(5) during such 60-day period the Holder or Holders of a majority
in principal amount of the outstanding Securities do not give the Trustee a
direction which, in the opinion of the Trustee, is inconsistent with the
request.
A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over such
other Security holder.
-66-
SECTION 6.07. Rights of Holders To Receive Payment.
------------------------------------
Notwithstanding any other provision of this Indenture, the right of
any Holder to receive payment of principal of and interest on a Security, on or
after the respective due dates expressed in such Security, 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 consent of the Holder except to the extent
that the institution or prosecution of such suit or entry of judgment therein
would, under applicable law, result in the surrender, impairment or waiver of
the Lien of this Indenture and the Security Documents upon the Collateral.
SECTION 6.08. Collection Suit by Trustee.
--------------------------
If an Event of Default in payment of principal or interest specified
in clause (1) or (2) of Section 6.01 occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company or any other obligor on the Securities for the whole amount of principal
and accrued interest remaining unpaid, together with interest on overdue
principal and, to the extent that payment of such interest is lawful, interest
on overdue installments of interest, in each case at the rate per annum borne by
the Securities and such further amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.09. Trustee May File Proofs of Claim.
--------------------------------
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Securityholders allowed in any judicial proceedings relating to the Company,
its creditors or its property and shall be entitled and empowered to collect
and receive any monies or other property payable or deliverable on any such
claims and to distribute the same, and any Custodian in any such judicial
proceedings is hereby authorized by each Securityholder 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 Securityholders, to pay to the Trustee any amount
due to it for the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agent and counsel, and any other amounts due the Trustee
under Section 7.07. Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept
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or adopt on behalf of any Securityholder any plan of reorganization,
arrangement, adjustment or composition affecting the Securities or the rights
of any Holder thereof, or to authorize the Trustee to vote in respect of the
claim of any Securityholder in any such proceeding.
SECTION 6.10. Priorities.
----------
If the Trustee collects any money or property pursuant to this Article
Six, it shall pay out the money or property in the following order:
First: to the Trustee for amounts due under Section 7.07 and then to
Collateral Agent for amounts due under the Security Documents (other than
payments of interest and principal described in the next subclause);
Second: to Holders for amounts due and unpaid on the Securities for
principal and interest, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Securities for
principal and interest, respectively; and
Third: to the Company.
The Trustee, upon prior notice to the Company, may fix a record date
and payment date for any payment to Securityholders pursuant to this Section
6.10.
SECTION 6.11. 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 Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an under taking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.07, or a suit by a Holder or Holders of more than 10% in
principal amount of the outstanding Securities.
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ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee.
-----------------
(a) If an Event of Default actually known to the Trustee 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
their exercise as a prudent person would exercise or use under the circumstances
in the conduct of his or her own affairs. The Trustee will be under no
obligation to exercise any of its rights or powers under this Indenture at the
request of any of the holders of Securities, unless they shall have offered to
the Trustee security and indemnity satisfactory to it.
(b) Except during the continuance of an Event of Default actually
known to the Trustee:
(1) The Trustee need perform only those duties as are specifically
set forth herein and no others and no implied covenants or obligations
shall be read into this Indenture against the Trustee.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions and such
other documents delivered to it pursuant to Section 12.04 hereof 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 to the requirements of this
Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b) of
this Section 7.01.
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(2) The Trustee shall not be liable for any error of judgment made in good
faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts.
(3) 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 6.05.
(d) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or to take or omit to take any action
under this Indenture or take any action at the request or direction of Holders
if it shall have reasonable grounds for believing that repayment of such funds
is not assured to it or it does not receive an indemnity satisfactory to it in
its sole discretion against such risk, liability, loss, fee or expense which
might be incurred by it in compliance with such request or direction.
(e) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c) and (d) of this Section 7.01.
(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 7.02. Rights of Trustee.
-----------------
Subject to Section 7.01:
(a) The Trustee may rely on 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 Officers' Certificate and an Opinion of Counsel, which shall conform to
the provisions of Section 12.05. The Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance on such
certificate or opinion.
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(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent (other
than an agent who is an employee of the Trustee) appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it reasonably believes to be authorized or
within its rights or powers.
(e) The Trustee may consult with counsel and the advice or opinion of
such counsel as to matters of law shall be full and complete authorization
and protection from liability in respect of any action taken, omitted or
suffered by it hereunder in good faith and in accordance with the advice or
opinion of such counsel.
(f) Subject to Section 9.02 hereof, the Trustee may (but shall not be
obligated to), without the consent of the Holders, give any consent,
waiver or approval required under the Security Documents or by the terms
hereof with respect to the Collateral, but shall not without the consent
of the Holders of not less than a majority in aggregate principal amount of
the Securities at the time outstanding (i) give any consent, waiver or
approval or (ii) agree to any amendment or modification of the Security
Documents, in each case, that shall have a material adverse effect on the
interests of any Holder. The Trustee shall be entitled to request and
conclusively rely on an Opinion of Counsel with respect to whether any
consent, waiver, approval, amendment or modification shall have a material
adverse effect on the interests of any Holder.
SECTION 7.03. Individual Rights of Trustee.
----------------------------
The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with the Company, its
Subsidiaries, or their respective Affiliates with the same rights it would have
if it were not Trustee. Any Agent may do the same with like rights. However,
the Trustee must comply with Sections 7.10 and 7.11.
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SECTION 7.04. Trustee's Disclaimer.
--------------------
The Trustee shall not be responsible for and makes no representation
as to the value or condition of the Collateral or any part thereof, or as to the
title of the Company thereto, or as to the security afforded thereby or hereby,
or as to the validity or genuineness of any Collateral pledged and deposited
with the Trustee, or as to the validity or adequacy of this Indenture or the
Securities. It shall not be accountable for the Company's use of the proceeds
from the Securities, and it shall not be responsible for any statement of the
Company in this Indenture or any document issued in connection with the sale of
Securities or any statement in the Securities other than the Trustee's
certificate of authentication. The Trustee makes no representations with respect
to the effectiveness or adequacy of this Indenture or the Security Documents, or
the validity or perfection, if any, of Liens granted under this Indenture or the
Security Documents. The Trustee shall not be responsible for independently
ascertaining or maintaining such validity or perfection, if any, and shall be
fully protected in relying upon certificates and opinions delivered to it in
accordance with the terms of this Indenture or the Security Documents.
SECTION 7.05. Notice of Default.
-----------------
If a Default or an Event of Default occurs and is continuing and the
Trustee receives actual notice of such event, the Trustee shall mail to each
Security holder, as their names and addresses appear on the Securityholder list
described in Section 2.05, notice of the uncured Default or Event of Default
within 90 days after the Trustee receives such notice. Except in the case of a
Default or an Event of Default in payment of principal of, or interest on, any
Security, including the failure to make payment on (i) the Change of Control
Payment Date pursuant to a Change of Control Offer; or (ii) the Net Proceeds
Offer Payment Date pursuant to an Asset Sale, the Trustee may withhold the
notice if and so long as a committee of its Trust Officers in good faith
determines that withholding the notice is in the interest of the
Securityholders.
SECTION 7.06. Reports by Trustee to Holders.
-----------------------------
This Section 7.06 shall not be operative as a part of this Indenture
until this Indenture is qualified under the TIA, and, until such qualification,
this Indenture shall be construed as if this Section 7.06 were not contained
herein.
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Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, the Trustee shall, to the extent that any of the
events described in TIA (S) 313(a) occurred within the previous twelve months,
but not otherwise, mail to each Securityholder a brief report dated as of such
May 15 that complies with TIA (S) 313(a). The Trustee also shall comply with
TIA (S)(S) 313(b), 313(c) and 313(d).
A copy of each report at the time of its mailing to Securityholders
shall be mailed to the Company and filed with the SEC and each securities
exchange, if any, on which the Securities are listed.
The Company shall notify the Trustee if the Securities become listed
on any securities exchange or of any delisting thereof.
SECTION 7.07. Compensation and Indemnity.
--------------------------
The Company shall pay to the Trustee from time to time reasonable
compensation for its services hereunder and under the Security Documents. 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 upon
request for all reasonable disbursements, expenses and advances (including
reasonable fees and expenses of counsel) incurred or made by it in addition to
the compensation for its services, except any such disbursements, expenses and
advances as may be attributable to the Trustee's negligence or bad faith. Such
expenses shall include the reasonable compensation, disbursements and expenses
of the Trustee's agents, accountants, experts and counsel and any taxes or other
expenses incurred by a trust created pursuant to Section 8.01 hereof.
The Company shall indemnify the Trustee for, and hold it harmless
against, any loss or liability incurred by the Trustee without negligence or bad
faith on its part in connection with the administration of this trust and its
duties under this Indenture and in its capacity as Collateral Agent under the
Security Documents, including the reasonable expenses and attorneys' fees of
defending itself against any claim of liability arising hereunder. The Trustee
shall notify the Company promptly of any claim asserted against the Trustee for
which it may seek indemnity. However, the failure by the Trustee to so notify
the Company shall not relieve the Company of its obligations hereunder. The
Company shall defend the claim and the Trustee shall cooperate in the defense
(and may employ its own counsel) at the Company's expense. The Company need not
pay for any settlement made without its written consent, which consent shall not
be unreasonably withheld. The Company need not reimburse any expense or in-
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demnify against any loss or liability incurred by the Trustee as a result of the
violation of this Indenture by the Trustee if such violation arose from the
Trustee's negligence or bad faith.
To secure the Company's payment obligations in this Section 7.07, the
Trustee shall have a senior claim prior to the Securities against all money or
property held or collected by the Trustee, in its capacity as Trustee, except
money or property held in trust to pay principal of or interest on particular
Securities.
When the Trustee incurs expenses or renders services after an Event of
Default specified in clause (6) or (7) of Section 6.01 occurs, the expenses
(including the reasonable fees and expenses of its agents and counsel) and the
compensation for the services shall be preferred over the status of the Holders
in a proceeding under any Bankruptcy Law and are intended to constitute expenses
of administration under any Bankruptcy Law. The Company's obligations under
this Section 7.07 and any claim arising hereunder shall survive the resignation
or removal of any Trustee, the discharge of the Company's obligations pursuant
to Article Eight and any rejection or termination under any Bankruptcy Law.
SECTION 7.08. Replacement of Trustee.
----------------------
The Trustee may resign at any time by so notifying the Company in
writing. The Holders of a majority in principal amount of the outstanding
Securities may remove the Trustee by so notifying the Company and the Trustee in
writing and may appoint a successor trustee with the Company's consent. The
Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of the Trustee
or its property; or
(4) 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 notify each Holder of such
event and shall promptly appoint a successor Trustee. Within one year after the
successor Trustee takes
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office, the Holders of a majority in principal amount of the Securities may
appoint a successor Trustee to replace the successor Trustee appointed by the
Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that,
the retiring Trustee shall transfer, after payment of all sums then owing to the
Trustee pursuant to Section 7.07, all property held by it as Trustee to the
successor Trustee, subject to the lien provided in Section 7.07, 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. A successor Trustee shall mail notice of its succession
to each Securityholder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or
the Holders of at least 10% in principal amount of the outstanding Securities
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Any resignation or removal of the Trustee pursuant to this Indenture
shall be deemed to be a resignation or removal of the Trustee in its capacity as
Collateral Agent under the Security Documents and any appointment of a successor
Trustee pursuant to this Indenture shall be deemed to be an appointment of a
successor Collateral Agent under the Security Documents and such successor shall
assume all of the obligations of the Trustee in its capacity as Collateral
Agent under the Security Documents.
Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Company's obligations under Section 7.07 shall continue for the
benefit of the retiring Trustee.
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SECTION 7.09. Successor Trustee by Merger, Etc.
--------------------------------
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee (and successor Collateral
Agent under the Security Documents).
SECTION 7.10. Eligibility; Disqualification.
-----------------------------
This Indenture shall always have a Trustee who satisfies the
requirement of TIA (S)(S) 310(a)(1) and 310(a)(5). The Trustee shall have a
combined capital and surplus of at least $100,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with TIA
(S) 310(b); provided, however, that there shall be excluded from the operation
-------- -------
of TIA (S) 310(b)(1) any indenture or indentures under which other securities,
or certificates of interest or participation in other securities, of the Company
are outstanding, if the requirements for such exclusion set forth in TIA (S)
310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims Against Company.
-------------------------------------------------
The Trustee, in its capacity as Trustee hereunder and in its capacity
as Collateral Agent under the Security Documents, shall comply with TIA (S)
311(a), excluding any creditor relationship listed in TIA (S) 311(b). A
Trustee who has resigned or been removed shall be subject to TIA (S) 311(a) to
the extent indicated.
SECTION 7.12. Appointment of Co-Trustee.
-------------------------
If the Trustee deems it necessary or desirable in connection with the
Collateral and/or the enforcement of the Security Documents, the Trustee may
appoint a co-Trustee with such powers of the Trustee as may be designated by the
Trustee at the time of such appointment, and the Company shall, on request,
execute and deliver to such co-Trustee any deeds, conveyances or other
instruments required by such co-Trustee so appointed by the Trustee to more
fully and certainly vest in and confirm to such co-Trustee its rights, powers,
trusts, duties and obligations hereunder.
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ARTICLE EIGHT
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 8.01. Legal Defeasance and Covenant Defeasance.
----------------------------------------
(a) The Company may, at its option by Board Resolution, at any time,
with respect to the Securities, elect to have either paragraph (b) or paragraph
(c) below be applied to the outstanding Securities upon compliance with the
conditions set forth in paragraph (d).
(b) Upon the Company's exercise under paragraph (a) of the option
applicable to this paragraph (b), the Company shall be deemed to have been
released and discharged from its obligations with respect to the outstanding
Securities on the date the conditions set forth below are satisfied
(hereinafter, "Legal Defeasance"). For this purpose, such Legal Defeasance
means that the Company shall be deemed to have paid and discharged the entire
indebtedness represented by the outstanding Securities, which shall thereafter
be deemed to be "outstanding" only for the purposes of the Sections and matters
under this Indenture referred to in (i) and (ii) below, and to have satisfied
all its other obligations under such Securities and this Indenture insofar as
such Securities are concerned, except for the following which shall survive
until otherwise terminated or discharged hereunder: (i) the rights of Holders
of outstanding Securities to receive solely from the trust fund described in
paragraph (d) below and as more fully set forth in such paragraph, payments in
respect of the principal of and interest on such Securities when such payments
are due and (ii) obligations listed in Section 8.03, subject to compliance with
this Section 8.01. The Company may exercise its option under this paragraph
(b) notwithstanding the prior exercise of its option under paragraph (c) below
with respect to the Securities.
(c) Upon the Company's exercise under paragraph (a) of the option
applicable to this paragraph (c), the Company shall be released and discharged
from its obligations under any covenant contained in Sections 4.03 through 4.20
and Article Five with respect to the outstanding Securities on and after the
date the conditions set forth below are satisfied (hereinafter, "Covenant
Defeasance"), and the Securities shall thereafter be deemed to be not
"outstanding" for the purpose 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
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purposes hereunder. For this purpose, such Covenant Defeasance means that, with
respect to the outstanding Securities, 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 De fault or an Event of Default
under Section 6.01(3), nor shall any event referred to in Section 6.01(4), (5)
or (8) thereafter constitute a Default or an Event of Default there under but,
except as specified above, the remainder of this Indenture and such Securities
shall be unaffected thereby.
(d) The following shall be the conditions to application of either
paragraph (b) or paragraph (c) above to the outstanding Securities:
(1) The Company shall have irrevocably deposited in trust with the
Trustee, pursuant to an irrevocable trust and security agreement in form
and substance satisfactory to the Trustee, U.S. Legal Tender or direct
non-callable obligations of, or non-callable obligations guaranteed by, the
United States of America for the payment of which obligation or guarantee
the full faith and credit of the United States of America is pledged ("U.S.
Government Obligations") maturing as to principal and interest in such
amounts and at such times as are sufficient, without consideration of the
reinvestment of such interest and after payment of all Federal, state and
local taxes or other charges or assessments in respect thereof payable by
the Trustee, in the opinion of a nationally recognized firm of Independent
public accountants expressed in a written certification thereof (in form
and substance reasonably satisfactory to the Trustee) delivered to the
Trustee, to pay the principal of, premium, if any, and interest on the out
standing Securities on the dates on which any such payments are due and
payable in accordance with the terms of this Indenture and of the
Securities;
(2) Such deposits shall not cause the Trustee to have a conflicting
interest as defined in and for purposes of the TIA;
(3) No Default or Event of Default (i) shall have occurred or be
continuing on the date of such deposit (other than a Default or Event of
Default resulting from the Incurrence of Indebtedness, all or a portion of
which will be used to defease the Securities concurrently with such
Incurrence) or (ii) shall occur on or before the 91st day after the date of
such deposit;
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(4) Such deposit will not result in a Default under this Indenture
or a breach or violation of, or constitute a default under, any other
material instrument or agreement to which the Company or any of its
Subsidiaries is a party or by which it or its property is bound;
(5) (i) In the event the Company elects paragraph (b) hereof, the
Company shall deliver to the Trustee an Opinion of Counsel in the United
States, in form and substance reasonably satisfactory to the Trustee to the
effect that (A) the Company has received from, or there has been published
by, the Internal Revenue Service a ruling or (B) since the Issue Date,
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
state that, or (ii) in the event the Company elects paragraph (c) hereof,
the Company shall deliver to the Trustee an Opinion of Counsel in the
United States, in form and substance reasonably satisfactory to the
Trustee, to the effect that, in the case of clauses (i) and (ii), Holders
of the Securities will not recognize income, gain or loss for Federal
income tax purposes as a result of such deposit and the defeasance
contemplated hereby and will be subject to Federal income tax in the same
amounts and in the same manner and at the same times as would have been the
case if such deposit and defeasance had not occurred;
(6) The deposit shall not result in the Company, the Trustee or the
trust becoming or being deemed to be an "investment company" under the
Investment Company Act of 1940;
(7) The Holders shall have a perfected security interest under
applicable law in the U.S. Legal Tender or U.S. Government Obligations
deposited pursuant to Section 8.01(d)(1) above;
(8) The Company shall have delivered to the Trustee an Officer's
Certificate, in form and substance reasonably satisfactory to the Trustee,
stating that the deposit under clause (1) was not made by the Company with
the intent of defeating, hindering, delaying or defrauding any other
creditors of the Company or others;
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(9) The Company shall have delivered to the Trustee an Opinion of
Counsel, in form and substance reasonably satisfactory to the Trustee, to
the effect that, (A) the trust funds will not be subject to the rights of
holders of Indebtedness of the Company other than the Securities and (B)
assuming no intervening bankruptcy of the Company between the date of
deposit and the 91st day following the deposit and that no Holder of
Securities is an insider of the Company, after the passage of 90 days
following the deposit, the trust funds will not be subject to any
applicable bankruptcy, insolvency, reorganization or similar law affecting
creditors' rights generally; and
(10) The Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent specified herein relating to the defeasance contemplated by this
Section 8.01 have been complied with; provided, however, that no deposit
-------- -------
under clause (1) above shall be effective to terminate the obligations of
the Company under the Securities the Security Documents or this Indenture
prior to 90 days following any such deposit.
In the event all or any portion of the Securities are to be redeemed
through such irrevocable trust, the Company must make arrangements satisfactory
to the Trustee, at the time of such deposit, for the giving of the notice of
such redemption or redemptions by the Trustee in the name and at the expense of
the Company.
SECTION 8.02. Satisfaction and Discharge.
--------------------------
This Indenture shall cease to be of further effect (except as to
surviving rights of registration of transfer or exchange of the Securities, as
expressly provided for in Section 2.06, and except as to Section 7.07) as to all
outstanding Securities when (i) either (a) all such Securities theretofore
authenticated and delivered (except (1) lost, destroyed or wrongfully taken
Securities which have been replaced or paid as provided in Section 2.07 and (2)
Securities for whose payment money has theretofore been deposited with the
Trustee or any Paying Agent and thereafter repaid to the Company as provided in
Section 8.06) have been delivered to the Trustee for cancellation or (b) all
such Securities not theretofore delivered to the Trustee for cancellation (A)
either (1) have become due and payable, (2) will become due and payable at their
Stated Maturity within one year or (3) are redeemable at the option of the
Company and are to be called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of redemption by the
Trustee in the name and at the expense of the
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Company, (B) and, in any event, the Company has irrevocably deposited or caused
to be deposited, in trust, with the Trustee funds in an amount sufficient to pay
and discharge the entire indebtedness for principal of, premium, if any and
interest to the date of such deposit (in the case of Securities that have become
due and payable) or to the Maturity Date or redemption date, as the case may
be, on the Securities not theretofore delivered to the Trustee for cancellation;
(ii) the Company has paid or caused to be paid all other sums payable under this
Indenture by the Company; and (iii) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel each stating that (a) all
conditions precedent under this Indenture relating to the satisfaction and
discharge of this Indenture have been complied with and (b) such satisfaction
and discharge will not result in a breach or violation of, or constitute a
default under, this Indenture or any other material agreement or instrument to
which the Company is a party or by which it is bound.
After such delivery or irrevocable deposit and delivery of an
Officers' Certificate and Opinion of Counsel, the Trustee upon request shall
acknowledge in writing the discharge of the Company's obligations under the
Securities and this Indenture except for those surviving obligations specified
above.
Notwithstanding the satisfaction and discharge of this Indenture, if
money shall have been deposited with the Trustee pursuant to subclause (b) of
clause (i) of the first paragraph of this Section 8.02, the obligations of the
Trustee under Sections 8.04 and 8.05 shall survive.
SECTION 8.03. Survival of Certain Obligations.
-------------------------------
Notwithstanding the Legal Defeasance provided for in Section 8.01(b),
the respective obligations of the Company and the Trustee under Sections 2.02,
2.03, 2.04, 2.05, 2.06, 2.07, 2.10, 2.12, 2.13, 4.01, 4.02, 6.07, Article Seven,
8.05, 8.06 and 8.07 shall survive until the Securities are no longer
outstanding, and thereafter the obligations of the Company and the Trustee
under Sections 7.07, 8.04, 8.05 and 8.06 shall survive. Nothing contained in
this Article Eight shall abrogate any of the obligations or duties of the
Trustee under this Indenture.
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SECTION 8.04. Application of Trust Assets.
---------------------------
The Trustee shall hold any U.S. Legal Tender or U.S. Government
Obligations deposited with it, in trust, pursuant to Section 8.01 or 8.02. The
Trustee shall apply the deposited U.S. Legal Tender or the U.S. Government
Obligations, together with earnings thereon, through the Paying Agent, in
accordance with this Indenture, to the payment of principal of and interest on
the Securities. The U.S. Legal Tender or U.S. Government Obligations so held in
trust and deposited with the Trustee in compliance with Section 8.01 or 8.02
shall not be part of the trust estate under this Indenture, but shall constitute
a separate trust fund for the benefit of all Holders entitled thereto.
SECTION 8.05. Repayment to the Company; Unclaimed Money.
-----------------------------------------
Upon termination of the trust established pursuant to Section 8.01 or
8.02, the Trustee and the Paying Agent shall promptly pay to the Company upon
request any excess U.S. Legal Tender or U.S. Government Obligations held by
them. Additionally, if money for the payment of principal or interest remains
unclaimed for one year, the Trustee and the Paying Agents will pay the money
back to the Company at its request. After that, all liability of the Trustee
and such Paying Agents with respect to such money shall cease. After payment to
the Company, Holders entitled to such payment must look to the Company for such
payment as general creditors unless an applicable abandoned property law
designates another person.
SECTION 8.06. Reinstatement.
-------------
If the Trustee or Paying Agent is unable to apply any U.S. Legal
Tender or U.S. Government Obligations in accordance with Section 8.01 or 8.02 by
reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Company's obligations under this Indenture and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to Section 8.01 or 8.02 until such time as the Trustee or Paying Agent
is permitted to apply all such U.S. Legal Tender or U.S. Government Obligations
in accordance with Section 8.01 or 8.02.
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ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders.
--------------------------
The Company, when authorized by a Board Resolution, and the Trustee
(or the Collateral Agent, as applicable), together, may amend or supplement this
Indenture, the Security Documents or the Securities without notice to or
consent of any Securityholder:
(1) to cure any ambiguity, defect or inconsistency; provided that
--------
such amendment or supplement does not adversely affect the rights of any
Holder;
(2) to comply with Article Five;
(3) to provide for uncertificated Securities in addition to or in
place of certificated Securities;
(4) to make any other change that does not materially adversely
affect the rights of any Securityholders hereunder or under the Security
Documents; or
(5) to comply with any requirements of the SEC in connection with
the qualification of this Indenture under the TIA;
provided that the Company has delivered to the Trustee an Opinion of Counsel and
- --------
an Officers' Certificate, each stating that such amendment or supplement
complies with the provisions of this Section 9.01.
SECTION 9.02. With Consent of Holders.
-----------------------
Subject to Section 6.07, the Company, when authorized by a Board
Resolution, and the Trustee (or the Collateral Agent, as applicable), together,
with the written consent of the Holder or Holders of at least a majority in
aggregate principal amount of the outstanding Securities, may amend or
supplement this Indenture, the Security Documents or the Securities, without
notice to any other Securityholders. Subject to Section 6.07, the Holder or
Holders of a majority in aggregate principal amount
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of the outstanding Securities may waive compliance by the Company with any
provision of this Indenture, the Security Documents or the Securities without
notice to any other Securityholder. Without the consent of each Securityholder
affected, however, no amendment, supplement or waiver, including a waiver
pursuant to Section 6.04, may:
(1) change the principal amount of Securities whose Holders must
consent to an amendment, supplement or waiver of any provision of this
Indenture, the Security Documents or the Securities;
(2) reduce the rate or change the time for payment of interest,
including default interest, on any Security;
(3) reduce the principal amount of any Security;
(4) change the Maturity Date of any Security, or alter the
redemption provisions contained in Paragraph 5 of the Securities in a
manner adverse to any Holder;
(5) make any changes in the provisions concerning waivers of
Defaults or Events of Default by Holders of the Securities or the rights of
Holders to recover the principal of, interest on, or redemption payment
with respect to, any Security;
(6) make any changes in Section 6.04, 6.07 or this third sentence
of this Section 9.02;
(7) make the principal of, or the interest on any Security payable
in money other than as provided for in this Indenture, the Security
Documents and the Securities as in effect on the date hereof;
(8) affect the ranking, or with respect to Collateral, the
priority, of the Securities, in each case in a manner adverse to the
Holders; or
(9) amend, modify or change the obligation of the Company to make
or consummate a Change of Control Offer (including the definition of Change
of Control) or after the Company's obligation to purchase Securities arises
thereunder a Net Proceeds Offer or waive any default in the performance
thereof or modify any of the provisions or definitions with respect
thereto.
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It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, supplement or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Company shall mail to the Holders 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 supplemental indenture.
SECTION 9.03. Compliance with TIA.
-------------------
From the date on which this Indenture is qualified under the TIA,
every amendment, waiver or supplement of this Indenture or the Securities shall
comply with the TIA as then in effect.
SECTION 9.04. Revocation and Effect of Consents.
---------------------------------
Until an amendment, waiver or supplement becomes effective, a consent
to it by a Holder is a continuing consent by the Holder and every subsequent
Holder of a Security or portion of a Security that evidences the same debt as
the consenting Holder's Security, even if notation of the consent is not made
on any Security. However, any such Holder or subsequent Holder may revoke the
consent as to his Security or portion of his Security by notice to the Trustee
or the Company received before the date on which the Trustee receives an
Officers' Certificate certifying that the Holders of the requisite principal
amount of Securities have consented (and not theretofore revoked such consent)
to the amendment, supplement or waiver.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver, which record date shall be at least 30 days prior to the
first solicitation of such consent. If a record date is fixed, then
notwithstanding the last sentence of the immediately preceding paragraph, those
persons who were Holders at such record date (or their duly designated proxies),
and only those persons, shall be entitled to revoke any consent previously
given, whether or not such persons continue to be Holders after such record
date. No such consent shall be valid or effective for more than 90 days after
such record date.
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After an amendment, supplement or waiver becomes effective, it shall
bind every Securityholder, unless it makes a change described in any of clauses
(1) through (9) of Section 9.02, in which case, the amendment, supplement or
waiver shall bind only each Holder of a Security who has consented to it and
every subsequent Holder of a Security or portion of a Security that evidences
the same debt as the consenting Holder's Security; provided that any such
--------
waiver shall not impair or affect the right of any Holder to receive payment of
principal of and interest on a Security, on or after the respective due dates
expressed in such Security, or to bring suit for the enforcement of any such
payment on or after such respective dates without the consent of such Holder.
SECTION 9.05. Notation on or Exchange of Securities.
-------------------------------------
If an amendment, supplement or waiver changes the terms of a Security,
the Trustee may require the Holder of the Security to deliver it to the Trustee.
The Trustee may place an appropriate notation on the Security about the changed
terms and return it to the Holder. Alternatively, if the Company or the Trustee
so determines, the Company in exchange for the Security shall issue and the
Trustee shall authenticate a new Security that reflects the changed terms.
SECTION 9.06. Trustee To Sign Amendments, Etc.
-------------------------------
The Trustee (or Collateral Agent, as applicable) shall execute any
amendment, supplement or waiver authorized pursuant to this Article Nine;
provided that the Trustee may, but shall not be obligated to, execute any such
- --------
amendment, supplement or waiver which affects the Trustee's own rights, duties
or immunities under this Indenture. The Trustee shall be entitled to receive,
and shall be fully protected in relying upon, an Opinion of Counsel and an
Officers' Certificate each stating that the execution of any amendment,
supplement or waiver authorized pursuant to this Article Nine is authorized or
permitted by this Indenture and constituted the legal, valid and binding
obligations of the Company enforceable in accordance with its terms. Such
Opinion of Counsel shall not be an expense of the Trustee.
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ARTICLE TEN
COLLATERAL AND SECURITY
SECTION 10.01. Collateral and Security Documents; Additional Collateral.
----------------------
(a) In order to secure the due and punctual payment of the principal
of and interest on the Securities when and as the same shall be due and payable,
whether on an Interest Payment Date, at maturity, by acceleration, purchase,
repurchase, redemption or otherwise, and interest on the overdue principal of
and interest (to the extent permitted by law), if any, on the Securities and
the performance of all other obligations of the Company to the Holders or the
Trustee under this Indenture and the Securities, the Company and the Collateral
Agent for the benefit of the Trustee and the Securityholders have simultaneously
with the execution of this Indenture entered into the Security Documents
pursuant to which the Company has granted to the Collateral Agent for the
benefit of the Trustee and the Securityholders a first priority Lien on and
security interest in the Collateral. The Collateral Agent and the Company
hereby agree that the Collateral Agent holds the Collateral in trust for the
benefit of the Trustee, in its capacity as Trustee, and for the benefit of the
Securityholders pursuant to the terms of the Security Documents. The Trustee
and the Collateral Agent are also authorized and directed to enter into the
Intercreditor Agreement.
(b) Promptly upon the acquisition by the Company of assets that would
constitute Collateral pursuant to the Security Documents including the
acquisition of any real property ("After-Acquired Property"),
(i) the Company and the Collateral Agent will enter into such
amendments or supplements to the Security Documents, or additional Security
Documents, in each case in recordable form and in substantially the forms
attached hereto as Exhibits F (to the extent the After-Acquired Property
consists of personal property) and E (to the extent the After-Acquired
Property consists of real property), with such changes thereto as are
necessitated by local law or other changes in circumstances (the
"Additional Security Documents"), as are necessary in order to grant to
the Collateral Agent for the benefit of the Trustee and for the benefit of
the Securityholders a valid first priority Lien on and security interest in
such After-Acquired Property; and
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(ii) the Company shall also deliver to the Collateral Agent the
following:
1. to the extent the After-Acquired Property consists of real
property, a policy of title insurance (or an endorsement to the title
insurance policy issued to the Collateral Agent on the Issue Date or
a commitment to issue a policy of title insurance or an endorsement)
insuring that the Lien of this Indenture and the applicable Security
Documents constitutes a valid and perfected first priority Lien on
such real property in an aggregate amount equal to the fair value of
the real property, together with an Officers' Certificate stating
that any specific exceptions to such title insurance are Liens
expressly permitted by the applicable Security Document and
containing such endorsements and other assurances of the type included
in the title insurance policy delivered to the Collateral Agent on the
Issue Date with respect to the Mortgaged Property; and
2. evidence of payment or a closing statement indicating payment
of all filing fees, recording charges, transfer taxes and other costs
and expenses, including reasonable legal fees and disbursements of
counsel for the Trustee and the Collateral Agent (and any local
counsel), that may be incurred to validly and effectively subject the
After-Acquired Property to the Lien of any applicable Security
Document and perfect such Lien.
(c) Each Securityholder, by accepting a Security, agrees to all of
the terms and provisions of the Security Documents, as the same may be amended
from time to time pursuant to the provisions of the Security Documents and this
Indenture, and authorizes and directs the Collateral Agent to act as mortgagee
or secured party with respect thereto.
SECTION 10.02. Recording and Opinions.
----------------------
(a) The Company shall at its sole cost and expense take or cause to
be taken all action required to perfect, maintain, preserve and protect the Lien
on and security interest in the Collateral granted by the Security Documents,
including, without limitation, the filing of financing statements, continuation
statements and any instruments of further assurance, in such manner and in such
places as may be required by law fully to preserve and protect the rights of the
Holders and the Trustee under this In
-88-
denture and the rights of the Collateral Agent under Security Documents to all
property comprising the Collateral. The Company shall from time to time
promptly pay all financing and continuation statement recording and/or filing
fees, charges, mortgage taxes and other taxes relating to this Indenture and the
Security Documents, any amendments thereto and any other instruments of further
assurance required pursuant to the Security Documents.
(b) The Company shall furnish to the Trustee, at the time of
execution and delivery of this Indenture, Opinion(s) of Counsel either (i)
substantially to the effect that, in the opinion of such counsel, this Indenture
and the grant of a security interest in the Collateral intended to be made by
the Security Documents and all other instruments of further assurance,
including, without limitation, financing statements, have been properly recorded
and filed to the extent necessary to perfect the security interests in the
Collateral created by the Security Documents and reciting the details of such
action, and stating that as to the security interests created pursuant to the
Security Documents, such recordings and filings are the only recordings and
filings necessary to give notice thereof and that no re-recordings or refilings
are necessary to maintain such notice (other than as stated in such opinion), or
(ii) to the effect that, in the opinion of such counsel, no such action is
necessary to perfect such security interests. Promptly after execution and
delivery of this Indenture, the Company shall deliver the opinion(s) required by
Section 314(b) of the TIA. The Company shall furnish to the Trustee, at the
time of execution and delivery of any Additional Security Document(s),
Opinion(s) of Counsel either substantially to the effect set forth in clause (i)
of the immediately preceding sentence (but relating only to such Additional
Security Documents and the related After-Acquired Property) or to the effect set
forth in clause (ii) thereof.
(c) The Company shall furnish to the Trustee on April 15 in each
year, beginning with April 15, 1998, an Opinion of Counsel, dated as of such
date, either (i)(A) stating that, in the opinion of such counsel, action has
been taken with respect to the recording, filing, re-recording and refiling of
all supplemental indentures, financing statements, continuation statements and
other documents as is necessary to maintain the Lien of the Security Documents
and reciting with respect to the security interests in the Collateral the
details of such action or referring to prior Opinions of Counsel in which such
details are given, and (B) stating that, based on relevant laws as in effect on
the date of such Opinion of Counsel, all financing statements, continuation
statements and other documents have been executed and filed that are necessary
as of such date and during the succeeding 24 months fully to maintain the
security interest of the Security-
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holders and the Trustee hereunder and under the Security Documents with respect
to the Collateral, or (ii) stating that, in the opinion of such counsel, no such
action is necessary to maintain such Lien.
(d) At the time of execution and delivery of this Indenture, with
respect to each Mortgage, a policy of title insurance (or a commitment to issue
such a policy) which may be issued pursuant to an endorsement to any existing
policy or commitment insuring (or committing to insure) the Lien of such
Mortgage as a valid first mortgage Lien on the Real Property and fixtures
described therein, subordinate only to those Liens specified in the Mortgage as
"Permitted Liens," in an amount not less than the fair market value of such
Real Property and fixtures, which policy (or commitment) shall (i) be issued by
Chicago Title Insurance Company, (ii) have been supplemented by the following
endorsements, to the extent available at commercially reasonable rates:
contiguity, first loss, last dollar, usury, doing business and so-called
comprehensive coverage over covenants and restrictions and (iii) contain only
such exceptions to title as shall be Prior Liens;
(e) The Company shall furnish to the Trustee at least annually a
Certificate of Insurance detailing the coverage(s) for each mortgaged property
secured by this Indenture and the Security Documents.
SECTION 10.03. Release of Collateral.
---------------------
(a) The Trustee, in its capacity as Collateral Agent under the
Security Documents, shall not at any time release Collateral from the security
interest created by this Indenture and the Security Documents unless such
release is in accordance with the provisions of this Indenture and the Security
Documents.
(b) At any time when an Event of Default shall have occurred and be
continuing, no release of Collateral pursuant to the provisions of this
Indenture and the Security Documents shall be effective as against the Holders
of the Securities.
(c) The release of any Collateral from the terms of the Security
Documents shall not be deemed to impair the security under this Indenture in
contravention of the provisions hereof if and to the extent the Collateral is
released pursuant to this Indenture and the Security Documents. To the extent
applicable, the Company shall cause TIA Section 314(d) relating to the release
of property from the Lien of the Security Documents and relating to the
substitution therefor of any property to be subjected
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to the Lien of the Security Documents to be complied with. Any certificate or
opinion required by TIA Section 314(d) may be made by an Officer of the
Company, except in cases where TIA Section 314(d) requires that such certificate
or opinion be made by an Independent Person, which Person shall be an
Independent engineer, appraiser or other expert selected or approved by the
Trustee in the exercise of reasonable care.
SECTION 10.04. Possession and Use of Collateral.
--------------------------------
Subject to and in accordance with the provisions of this Indenture,
the Security Documents and the TIA, so long as no Event of Default shall have
occurred and be continuing the Company shall have the right to remain in
possession and retain exclusive control of the Collateral (other than Trust
Moneys held by the Trustee), to operate, manage, develop, lease, use, consume
and enjoy the Collateral (other than Trust Moneys held by the Trustee), to alter
or repair any Collateral consisting of machinery or equipment so long as such
alterations and repairs do not diminish the value thereof or impair the Lien of
the Security Documents thereon and to collect, receive, use, invest and dispose
of the reversions, remainders, interest, rents, lease payments, issues, profits,
revenues, proceeds and other income thereof.
SECTION 10.05. Specified Releases of Collateral.
--------------------------------
(a) Satisfaction and Discharge; Defeasance. The Company shall be
--------------------------------------
entitled to obtain a full release of all of the Collateral from the Liens of
this Indenture and of the Security Documents upon compliance with the conditions
precedent set forth in Section 8.02 for satisfaction and discharge of this
Indenture or for Legal Defeasance pursuant to Section 8.01(b). Upon delivery
by the Company to the Trustee of an Officers' Certificate and an Opinion of
Counsel, each to the effect that such conditions precedent have been complied
with (and which may be the same Officers' Certificate and Opinion of Counsel
required by Article Eight), the Trustee shall forthwith take all necessary ac
tion (at the request of and the expense of the Company) to cause the release and
reconveyance to the Company of all of the Collateral, and shall deliver such
Collateral in its possession to the Company including, without limitation, the
execution and delivery of releases and satisfactions wherever required.
(b) Dispositions of Collateral Permitted by Section 4.17. The
----------------------------------------------------
Company shall be entitled to obtain a release of, and the Trustee shall cause to
be released, items of Collateral (the "Released Interests") subject to an Asset
Sale upon compliance with
-91-
the condition precedent that the Company shall have delivered to the Trustee the
following:
(i) Company Order. A Company Order requesting release of
-------------
Released Interests, such Company Order (A) specifically describing the
proposed Released Interests, (B) specifying the value of such Released
Interests on a date within 60 days of the Company Order (the "Valuation
Date"), (C) stating that the purchase price to be received is at least
equal to the fair market value of the Released Interests, (D) stating that
the release of such Released Interests will not interfere with or impede
the Trustee's ability to realize the value of the remaining Collateral and
will not impair the maintenance and operation of the remaining Collateral,
(E) confirming the sale of, or an agreement to sell, such Released
Interests in a bona fide sale to a Person that is not an Affiliate of the
Company or, in the event that such sale is to a Person that is such an
Affiliate, confirming that such sale is being made in accordance with
Section 4.12, (F) certifying that such Asset Sale complies with the terms
and conditions of Section 4.17 hereof and (G) in the event that there is to
be a substitution of property for the Collateral subject to the Asset Sale,
specifying the property intended to be substituted for the Collateral to be
disposed of;
(ii) Officers' Certificate. An Officers' Certificate certifying
---------------------
that (A) such Asset Sale covers only the Released Interests and complies
with the terms and conditions of an Asset Sale pursuant to Section 4.17,
(B) all Net Cash Proceeds from the sale of any of the Released Interests
will be applied pursuant to Section 4.17, (C) there is no Default or Event
of Default in effect or continuing on the date thereof, the Valuation Date
or the date of such Asset Sale, (D) the release of the Collateral will not
result in a Default or Event of Default hereunder and (E) all conditions
precedent to such release have been complied with; and
(iii) Compliance with TIA and Other Documentation. All
-------------------------------------------
certificates, opinions and other documentation required by the TIA, if any,
and, in the event there is to be a substitution of property for the
Collateral subject to the Asset Sale, all documentation necessary to effect
the substitution of such new Collateral, including without limitation the
documents required by Section 10.01(b).
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Upon compliance by the Company with the condition precedent set forth
above, the Trustee shall cause to be released and reconveyed to the Company, the
Released Interests.
(c) Eminent Domain and Other Governmental Takings. The Company
---------------------------------------------
shall be entitled to obtain a release of, and the Trustee shall cause to be
released, items of Collateral taken by eminent domain or sold pursuant to the
exercise by the United States of America or any State, municipality or other
governmental authority of any right which it may then have to purchase, or to
designate a purchaser or to order a sale of, all of any part of the Collateral,
upon compliance with the condition precedent that the Company shall have
delivered to the Trustee the following:
(i) Officers' Certificate. An Officers' Certificate certifying
---------------------
that (A) such Collateral has been taken by eminent domain and the amount of
the award therefor, or that such property has been sold pursuant to a right
vested in the United States of America, or a State, municipality or other
governmental authority to purchase, or to designate a purchaser, or order a
sale of such Collateral and the amount of the proceeds of such sale, and
(B) all conditions precedent to such release have been complied with;
(ii) Eminent Domain Award. Subject to the requirements of any
--------------------
Prior Lien (as defined in the applicable Mortgage) on the Collateral so
taken, cash equal to the amount of the award for such property or the
proceeds of such sale, to be held as Trust Moneys subject to the
disposition thereof pursuant to Article Eleven hereof; and
(iii) Compliance with TIA. All opinions, certificates and other
-------------------
documentation required by the TIA, if any.
Upon compliance by the Company with the condition precedent set forth
above, the Trustee shall cause to be released and reconveyed to the Company the
aforementioned items of Collateral.
SECTION 10.06. Disposition of Collateral Without Release.
-----------------------------------------
So long as no Event of Default shall have occurred and be continuing
and subject to the requirements of Section 314 of the TIA, the Company may,
without any release or consent by the Collateral Agent or the Trustee, sell or
otherwise dispose
-93-
of any machinery, equipment, furniture, apparatus, tools or implements or other
similar property subject to the Lien of the Security Documents, which (i) in any
single transaction has a fair market value of $25,000 (or if such $25,000
amount referred to in TIA Section 314(d)(1) increases then to such increased
amount) or less or (ii) shall have become worn out, obsolete or otherwise in
need of replacement or repair; provided that, in the case of this clause (ii)
--------
such sale or other disposition is in conjunction with a substantially
concurrent transaction whereby additional personal property is made subject to
the Lien of the Security Documents.
SECTION 10.07. Form and Sufficiency of Release.
-------------------------------
In the event that the Company has sold, exchanged, or otherwise
disposed of or proposes to sell, exchange or otherwise dispose of any portion of
the Collateral that under the provisions of Section 10.05 or 10.06 may be sold,
exchanged or otherwise disposed of by the Company, and the Company requests the
Trustee or the Collateral Agent to furnish a written disclaimer, release or
quit-claim of any interest in such property under this Indenture and the
Security Documents, the Trustee, in its capacity as Collateral Agent under the
Security Documents, shall execute, acknowledge and deliver to the Company (in
proper and recordable form) such an instrument promptly after satisfaction of
the conditions set forth herein for delivery of any such release.
Notwithstanding the preceding sentence, all purchasers and grantees of any
property or rights purporting to be released herefrom shall be entitled to rely
upon any release executed by the Trustee in its capacity as Collateral Agent
hereunder as sufficient for the purpose of this Indenture and as constituting a
good and valid release of the property therein described from the Lien of this
Indenture or of the Security Documents.
SECTION 10.08. Purchaser Protected.
-------------------
No purchaser or grantee of any property or rights purporting to be
released herefrom shall be bound to ascertain the authority of the Collateral
Agent or the Trustee to execute the release or to inquire as to the existence of
any conditions herein prescribed for the exercise of such authority; nor shall
any purchaser or grantee or any property or rights permitted by this Indenture
to be sold or otherwise disposed of by the Company be under any obligation to
ascertain or inquire into the authority of the Company to make such sale or
other disposition.
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SECTION 10.09. Authorization of Actions To Be Taken by the Trustee, as
--
Collateral Agent, Under the Security Documents.
----------------------------------------------
Subject to the provisions of the Security Documents, (a) the Trustee
may, in its capacity as Collateral Agent, in its sole discretion and without the
consent of the Securityholders, take all actions it deems necessary or
appropriate in order to (i) enforce any of the terms of the Security Documents
and (ii) collect and receive any and all amounts payable in respect of the
obligations of the Company hereunder and (b) the Trustee, for itself and in its
capacity as Collateral Agent, shall have power to institute and to maintain such
suits and proceedings as it may deem expedient to prevent any impairment of the
Collateral by any act that may be unlawful or in violation of the Security
Documents or this Indenture, and such suits and proceedings as the Trustee or
Collateral Agent may deem expedient to preserve or protect its interests and the
interests of the Securityholders in the Collateral (including, without
limitation, the power to institute and maintain suits or proceedings to restrain
the enforcement of or compliance with any legislative or other governmental
enactment, rule or order that may be unconstitutional or otherwise invalid if
the enforcement of, or compliance with, such enactment, rule or order would
impair the security interest thereunder or be prejudicial to the interests of
the Securityholders, the Trustee or the Collateral Agent).
SECTION 10.10. Authorization of Receipt of Funds by the Trustee Under the
---
Security Documents.
------------------
The Trustee is authorized to receive any funds for the benefit of
Security holders distributed under the Security Documents, and to make further
distributions of such funds to the Holders in accordance with the provisions of
Article Eleven and the other provisions of this Indenture.
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ARTICLE ELEVEN
APPLICATION OF TRUST MONEYS
SECTION 11.01. "Trust Moneys" Defined.
---------------------
All cash or Cash Equivalents received by the Trustee:
(a) upon the release of Collateral from the Lien of this Indenture
and/or the Security Documents, including investment earnings thereon; or
(b) as a Net Award or Net Awards upon the Taking of all or any part
of the Collateral; or
(c) as Net Proceeds upon the Destruction of all or any part of the
Collateral (other than any liability insurance proceeds payable to the
Trustee for any loss, liability or expense incurred by it); or
(d) pursuant to the provisions of any Mortgage; or
(e) as proceeds of any other sale or other disposition of all or any
part of the Collateral by or on behalf of the Trustee or any collection,
recovery, receipt, appropriation or other realization of or from all or any
part of the Collateral pursuant to this Indenture or any of the Security
Documents or otherwise; or
(f) for application under this Article Eleven as elsewhere provided
in this Indenture (including, without limitation, and subject to, paragraph
(d) of Section 4.17) or the Security Documents, or whose disposition is
not elsewhere otherwise specifically provided for herein or in any
Security Document;
(all such moneys being herein sometimes called "Trust Moneys"; provided,
--------
however, that Trust Moneys shall not include any property deposited with the
- -------
Trustee pursuant to Section 3.05 or 4.16 or Article Eight or delivered to or
received by the Trustee for application in accordance with Section 6.10 hereof)
shall be held by the Trustee for the benefit of the Holders as a part of the
Collateral and, upon any entry upon or sale or other disposition of the
Collateral or any part thereof pursuant to enforcement of the Security
Documents, said Trust Moneys shall be applied in accordance with Section 6.10;
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but, prior to any such entry, sale or other disposition, all or any part of the
Trust Moneys may be withdrawn, and shall be released, paid or applied by the
Trustee, from time to time as provided in this Article Eleven.
On the Issue Date there shall be established and, at all times
hereafter until this Indenture shall have terminated, there shall be maintained
with the Trustee an account which shall be entitled the "Collateral Account"
(the "Collateral Account"). The Collateral Account shall be established and
maintained by the Trustee at the Corporate Trust Office of the Trustee. All
Trust Moneys which are received by the Trustee shall be deposited in the
Collateral Account and thereafter shall be held, applied and/or disbursed by the
Trustee in accordance with the terms of this Article Eleven.
SECTION 11.02. Withdrawals of Certain Net Cash Proceeds Aggregating Less Than $5
------------
Million.
-------
To the extent that any Trust Moneys consist of either (i) any Net
Proceeds or (ii) any Net Award or the proceeds of any of the Collateral subject
to a Taking or sold pursuant to the exercise by the United States of America or
any State, municipality or other governmental authority of any right which it
may then have to purchase, or to designate a purchaser or to order a sale of any
part of the Collateral, and in either case the aggregate amount of all Net Cash
Proceeds (whether derived from one or more As set Sales, insurance or eminent
domain or similar proceedings) received by the Company or the Trustee to date is
less than $5 million, such Trust Moneys may be withdrawn by the Company and
shall be paid by the Trustee to reimburse the Company for expenditures made, or
to pay costs incurred, by the Company to repair, rebuild or replace the property
destroyed, damaged or taken, upon receipt by the Trustee of the following:
(a) an Officers' Certificate of the Company, dated not more than 30
days prior to the date of the application for the withdrawal and payment of
such Trust Moneys and signed also in the case of the following clauses (i),
(iv) and (vi), by an Appraiser or Financial Advisor, certifying:
(i) that expenditures have been made, or costs incurred, by
the Company in a specified amount for the purpose of making certain
repairs, rebuildings and replacements of the Collateral, which shall
be briefly described, and stating the Fair Value thereof to the
Company at the date of the acquisition thereof by the Company, except
that it shall
-97-
not be necessary under this clause (i) to state the Fair Value of any
such repairs, rebuildings or replacements that are separately
described pursuant to clause (v) of this paragraph (a) and whose Fair
Value is stated in the Independent Appraiser's or Independent
Financial Advisor's certificate under paragraph (c) of this Section
11.02;
(ii) that no part of such expenditures in any previous or then
pending application has been or is being made the basis for the
withdrawal of any Trust Moneys pursuant to this Section 11.02;
(iii) that there is no outstanding Indebtedness, other than
costs for which payment is being requested, for the purchase price or
construction of such repairs, rebuildings or replacements, or for
labor, wages, materials or supplies in connection with the making
thereof, which, if unpaid, might become the basis of a vendor's,
mechanic's, laborer's, materialman's, statutory or other similar Lien
upon any of such repairs, rebuildings or replacement, which Lien
might, in the opinion of the signers of such certificate, materially
impair the security afforded by such repairs, rebuildings or
replacement;
(iv) that the property to be repaired, rebuilt or replaced is
necessary or desirable in the conduct of the Company's business;
(v) whether any part of such repairs, rebuildings or
replacements within six months before the date of acquisition thereof
by the Company, has been used or operated by others than the Company
in a business similar to that in which such property has been or is to
be used or operated by the Company, and whether the fair value to the
Company, at the date of such acquisition, of such part of such
repairs, rebuildings or replacement is at least $250,000, and 1% of
the aggregate principal amount of the outstanding Securities; and, if
all of such facts are present, such part of such repairs, rebuildings
or replacements shall be separately described, and it shall be stated
that an Independent Appraiser's or Independent Financial Advisor's
certificate as to the Fair Value to the Company of such separately
described repairs, rebuildings or replacements will be furnished under
paragraph (b) of this Section 11.02;
-98-
(vi) that no Default or Event of Default shall have occurred
and be continuing; and
(vii) that all conditions precedent herein provided for relating
to such withdrawal and payment have been complied with.
(b) all documentation required under TIA (S) 314(d).
(c) In case any part of such repairs, rebuildings or replacements is
separately described pursuant to the foregoing clause (v) of paragraph (a)
of this Section 11.02, a certificate of an Independent Appraiser or
Independent Financial Advisor stating the fair value to the Company, in
such Independent Appraiser's or Independent Financial Advisor's opinion, of
such separately described repairs, rebuildings or replacements at the date
of the acquisition thereof by the Company.
(d) (i) In case any part of such repairs, rebuildings or
replacements constitutes Real Property:
(1) with respect to any such repairs, rebuildings or
replacements that are not encompassed within or are not erected upon
Mortgaged Property, an instrument or instruments in recordable form
sufficient for the Lien of this Indenture and any Mortgage to cover
such repairs, rebuildings or replacements which, if such repairs,
rebuildings or replacements include leasehold or easement interests,
shall include normal and customary provisions with respect thereto and
evidence of the filing of all such documents as may be necessary to
perfect such Liens;
(2) a policy of title insurance (or a commitment to issue
title insurance) insuring that the Lien of this Indenture and any
Mortgage constitutes a direct and valid and perfected first priority
mortgage Lien on such repairs, rebuildings or replacements in an
aggregate amount equal to the fair value of such repairs, rebuildings
or replacements, together with such endorsements and other opinions as
are contemplated by Section 10.02(b), or with respect to any such
repairs, rebuildings or replacements that are encompassed within or
are erected upon Mortgaged Property an endorsement to the title
insurance policy issued pursuant to Section 10.02(d) regarding the
affected Mortgaged Property confirming
-99-
that such repairs, rebuildings or replacements are encumbered by the
first priority Lien of the applicable Mortgage;
(3) in the event such repairs, rebuildings or replacements
have a fair value in excess of $250,000, a Survey with respect
thereto; and
(4) evidence of payment or a closing statement indicating
payments to be made by the Company of all title premiums, recording
charges, transfer taxes and other costs and expenses, including
reasonable legal fees and disbursements of counsel for the Trustee
(and any local counsel), that may be incurred to validly and
effectively subject such repairs, rebuildings or replacements to the
Lien of any applicable Security Document to perfect such Lien; and
(ii) in case any part of such repairs, rebuildings or
replacements constitutes personal property interests:
(1) an instrument in recordable form sufficient for the
Lien of any applicable Security Document to cover such repairs,
rebuildings or replacements; and
(2) evidence of payment or a closing statement indicating
payments to be made by the Company of all filing fees, recording
charges, transfer taxes and other costs and expenses, including
reasonable legal fees and disbursements of counsel for the Trustee
(and any local counsel), that may be incurred to validly and
effectively subject such repairs, rebuildings or replacements to the
Lien of any Security Document.
-100-
(e) An Opinion of Counsel substantially stating:
(i) that the instruments that have been or are therewith
delivered to the Trustee conform to the requirements of this
Indenture or any other Security Document, and that, upon the basis of
such request of the Company and the accompanying documents specified
in this Section 11.02, all conditions precedent herein provided for
relating to such withdrawal and payment have been complied with, and
the Trust Moneys whose withdrawal is then requested may be lawfully
paid over under this Section 11.02;
(ii) that the Company has acquired title to such repairs,
rebuildings and replacements at least the equivalent to its title to
the property destroyed, damaged or taken, and that the same and every
part thereof are free and clear of all Liens prior to the Lien of any
of the Security Documents, except Liens of the type permitted under
the applicable Security Document to which the property so destroyed,
damaged or taken shall have been subject at the time of such
destruction, damage or taking; and
(iii) that all of the Company's right, title and interest in
and to said repairs, rebuildings or replacements, or combination
thereof, are then subject to the Lien of any of the Security
Documents.
Upon compliance with the foregoing provisions of this Section 11.02,
the Trustee shall pay on the written request of the Company an amount of Trust
Moneys of the character aforesaid equal to the amount of the expenditures or
costs stated in the Officers' Certificate required by clause (i) of paragraph
(a) of this Section 11.02, or the fair value to the Company of such repairs,
rebuildings and replacements stated in such Officers' Certificate (and in such
Independent Appraiser's or Independent Financial Advisor's certificate, if
required by paragraph (b) of this Section 11.02), whichever is less.
SECTION 11.03. Withdrawal of Net Cash Proceeds Following an Asset Sale.
----
To the extent that any Trust Moneys consist of Trust Moneys received
by the Trustee pursuant to the provisions of Section 4.17 and the Company has
made a Net Proceeds Offer which is not fully subscribed to by the Holders, the
Trust Moneys re-
-101-
maining after completion of the Net Proceeds Offer may be withdrawn by the
Company and shall be paid by the Trustee to the Company (or as otherwise
directed by the Company) upon a Company Order to the Trustee and upon receipt by
the Trustee of the following:
(a) A notice which shall (A) refer to this Section 11.03 and (B)
describe with particularity the Asset Sale from which such Trust Moneys
were held as Collateral, the amount of Trust Moneys applied to the purchase
of Securities pursuant to the Net Proceeds Offer and the remaining amount
of Trust Moneys to be released to the Company;
(b) An Officer's Certificate certifying that (A) the release of the
Trust Moneys complies with the terms and conditions of Section 4.17, (B)
there is no Default or Event of Default in effect or continuing on the date
hereof, (C) the release of the Trust Moneys will not result in a Default or
Event of Default here under, and (D) all conditions precedent and covenants
herein provided relating to such release have been complied with;
(c) All documentation required under TIA (S) 314(d); and
(d) An Opinion of Counsel stating that the documents that have been
or are therewith delivered to the Collateral Agent and the Trustee conform
to the requirements of this Indenture and that all conditions precedent
herein provided for relating to such application of Trust Moneys have been
complied with.
SECTION 11.04. Withdrawal of Trust Moneys for Replacement Assets.
-------------------------------------------------
To the extent that any Trust Moneys consist of Net Cash Proceeds
received by the Trustee pursuant to the provisions of Section 4.17 and the
Company intends to invest such Net Cash Proceeds in Replacement Assets
consistent with the requirements of clause (b) of such Section 4.17 (the
"Released Trust Moneys"), such Trust Moneys may be withdrawn by the Company and
shall be paid by the Trustee to the Company (or as otherwise directed by the
Company) to reimburse the Company for expenditures made or to pay costs
incurred in connection with such Replacement Assets upon a Company Order to the
Trustee and upon receipt by the Trustee of the following:
(a) If the Replacement Assets are Real Property, the Company shall
also deliver to the Trustee and the Collateral Agent:
-102-
(i) an instrument or instruments in recordable form sufficient
for the Lien of any Mortgage to cover such Real Property which, if the
Real Property is a leasehold or easement interest, shall include
normal and customary provisions with respect thereto and evidence of
the filing of all such financing statements and other instruments as
may be necessary to perfect such Liens;
(ii) a policy of title insurance (or a commitment to issue title
insurance) insuring that the Lien of this Indenture and any Mortgage
constitutes a valid and perfected mortgage Lien on such Real Property
(subject to no Liens other than Prior Liens of the type which were
permitted with respect to the Collateral which was the subject of the
Asset Sale) in an aggregate amount equal to the Fair Market Value of
the Real Property, together with an Officers' Certificate stating that
any specific exceptions to such title insurance are Prior Liens of the
type which were permitted with respect to the Collateral which was the
subject of the Asset Sale, together with such endorsements and other
opinions as are contemplated by Section 10.02(d);
(iii) in the event such Real Property has a fair market value in
excess of $250,000, a Survey with respect thereto; and
(iv) evidence of payment or a closing statement indicating
payments to be made by the Company of all title premiums, recording
charges, transfer taxes and other costs and expenses, including
reasonable legal fees and disbursements of counsel for the Trustee
(and any local counsel), that may be incurred to validly and
effectively subject the Real Property to the Lien of any applicable
Security Document and to perfect such Lien.
(b) If the Replacement Assets are personal property, the Company
shall deliver to the Trustee and the Collateral Agent:
(i) an instrument in recordable form sufficient for the Lien
of any applicable Security Document to cover such personal property;
and
(ii) evidence of payment or a closing statement indicating
payments to be made by the Company of all filing fees, recording
-103-
charges, transfer taxes and other costs and expenses, including
reasonable legal fees and disbursements of counsel for the Trustee
(and any local counsel), that may be incurred to validly and
effectively subject the Replacement Assets to the Lien of any Security
Document and to perfect such Lien.
(c) all documentation required under TIA (S) 314(d); and
(d) An Opinion of Counsel stating that the documents that have been
or are therewith delivered to the Trustee conform to the requirements of
this Indenture and that all conditions precedent herein relating to such
application of Trust Moneys have been complied with.
Upon compliance with the foregoing provisions of this Indenture, the
Trustee shall apply the Released Trust Moneys as directed and specified by such
Company Order.
SECTION 11.05. Withdrawal of Trust Moneys on Basis of Retirement of Securities.
----------
Except as otherwise required by the Security Documents, the Trustee
shall apply Trust Moneys from time to time to the payment of the principal of
and interest on any Securities, as the Company shall request in writing, upon
receipt by the Trustee of the following:
(a) Board Resolutions of the Company directing the application
pursuant to this Section 11.05 of a specified amount of Trust Moneys and,
if such moneys are to be applied to payment, designating the Securities so
to be paid and, if such moneys are to be applied to the purchase of
Securities, prescribing the method of purchase, the price or prices to be
paid and the maximum principal amount of Securities to be purchased and
any other provisions of this Indenture governing such purchase;
(b) cash in the maximum amount of the accrued interest, if any,
required to be paid in connection with any such purchase, which cash shall
be held by the Trustee in trust for such purpose;
-104-
(c) an Officers' Certificate, dated not more than five Business Days
prior to the date of the relevant application stating (i) that no Default
or Event of Default exists unless such Default or Event of Default would
be cured thereby, and (ii) that all conditions precedent and covenants
herein provided for relating to such application of Trust Moneys have been
complied with; and
(d) an Opinion of Counsel stating that the documents and the cash or
Cash Equivalents, if any, which have been or are therewith delivered to and
deposited with the Trustee conform to the requirements of this Indenture
and that all conditions precedent herein provided for relating to such
application of Trust Moneys have been complied with.
Upon compliance with the foregoing provisions of this Section, the
Trustee shall apply Trust Moneys as directed and specified by such Board
Resolution, up to, but not exceeding, the principal amount of the Securities so
paid or purchased, using the cash deposited pursuant to paragraph (b) of this
Section 11.05, to the extent necessary, to pay any accrued interest required in
connection with such purchase.
SECTION 11.06. Investment of Trust Moneys.
--------------------------
All or any part of any Trust Moneys held by the Trustee shall from
time to time be invested or reinvested by the Trustee in any Cash Equivalents
pursuant to the written direction of the Company, which shall specify the Cash
Equivalents in which such Trust Moneys shall be invested. Unless an Event of
Default occurs and is continuing, any interest on such Cash Equivalents (in
excess of any accrued interest paid at the time of purchase) that may be
received by the Trustee shall be forthwith paid to the Company. Such Cash
Equivalents shall be held by the Trustee as a part of the Collateral, subject to
the same provisions hereof as the cash used by it to purchase such Cash
Equivalents.
The Trustee shall not be liable or responsible for any loss resulting
from such investments or sales except only for its own negligent action, its own
negligent failure to act or its own willful misconduct in complying with this
Section 11.06.
SECTION 11.07. Powers Exercisable by Trustee or Receiver.
-----------------------------------------
In case the Collateral (other than any cash, Cash Equivalents,
securities and other personal property held by, or required to be deposited or
pledged with, the
-105-
Trustee hereunder or under the Security Documents or with the trustee, mortgagee
or holder of a Prior Lien) shall be in the possession of a receiver or trustee
lawfully appointed, the powers hereinbefore in this Article Eleven conferred
upon the Company with respect to the withdrawal or application of Trust Moneys
may be exercised by such receiver or trustee, in which case a certificate signed
by such receiver or trustee shall be deemed the equivalent of any Officers'
Certificate required by this Article Eleven. If the Trustee shall be in
possession of any of the Collateral hereunder or under any of the Security
Documents, such powers may be exercised by the Trustee, in its discretion.
SECTION 11.08. Disposition of Securities Retired.
---------------------------------
All Securities received by the Trustee and for whose purchase Trust
Moneys are applied under this Article Eleven, if not otherwise cancelled, shall
be promptly delivered to the Trustee for cancellation and destruction unless the
Trustee shall be otherwise directed by the Company. Upon destruction of any
Securities, the Trustee shall issue a certificate of destruction to the Company.
ARTICLE TWELVE
MISCELLANEOUS
SECTION 12.01. TIA Controls.
------------
If any provision of this Indenture limits, qualifies, or conflicts
with the duties imposed by operation of Section 3.18(c) of the TIA, the imposed
duties shall control.
SECTION 12.02. Notices.
-------
Any notices or other communications required or permitted hereunder
shall be in writing, and shall be sufficiently given if made by hand delivery,
by telex, by telecopier, by registered or certified mail, postage prepaid,
return receipt requested, or by a nationally recognized overnight courier
service addressed as follows:
-106-
if to the Company:
SHEFFIELD STEEL CORPORATION
220 North Jefferson Street
Sand Springs, OK 74063
Facsimile No.: (918) 241-6595
Attention: Bob Ackerman
with copies to:
HMK Enterprises, Inc.
Watermill Center
800 South Street
Waltham, MA 02154
Attention: Dale S. Okonow
Facsimile: (781) 891-9712
Telephone: (781) 891-6660
Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
One Financial Center
Boston, Massachusetts 02111
Attention: Lewis J. Geffen, Esq.
Facsimile: (617) 542-2241
Telephone: (617) 542-6000
-107-
if to the Trustee or the Collateral Agent:
STATE STREET BANK AND TRUST COMPANY
Goodwin Square
225 Asylum Street
Hartford, Connecticut 06103
Attention: Corporate Trust Administration
Facsimile: (860) 244-1889
Telephone: (860) 244-1817
Each of the Company, the Trustee and the Collateral Agent by written
notice to each other such person may designate additional or different addresses
for notices to such person. Any notice or communication to the Company, the
Trustee or the Collateral Agent, shall be deemed to have been given or made as
of the date so delivered if personally delivered or delivered by nationally
recognized overnight courier service; when answered back, if telexed; when
receipt is acknowledged, if telecopied; and five (5) calendar days after mailing
if sent by registered or certified mail, postage prepaid (except that a notice
of change of address shall not be deemed to have been given until actually
received by the addressee).
Any notice or communication mailed to a Securityholder shall be mailed
to him by first class mail or other equivalent means at his address as it
appears on the registration books of the Registrar and shall be sufficiently
given to him if so mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 12.03. Communications by Holders with Other Holders.
-------
Securityholders may communicate pursuant to TIA (S) 312(b) with other
Securityholders with respect to their rights under this Indenture, the Security
Documents or the Securities. The Company, the Trustee, the Registrar and any
other person shall have the protection of TIA (S) 312(c).
-108-
SECTION 12.04. Certificate and Opinion as to Conditions Precedent
--------------------------------------------------
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee at the
request of the Trustee:
(1) an Officers' Certificate, in form and substance satisfactory to
the Trustee, stating that, in the opinion of the signers, all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with; and
(2) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 12.05. Statements Required in Certificate or Opinion.
-------
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture, other than the Officers'
Certificate required by Section 4.08, shall include:
(1) a statement that the person making such certificate or opinion
has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such person, he has made
such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether or not, in the opinion of each such
person, such condition or covenant has been complied with; provided,
--------
however, that with respect to matters of fact an Opinion of Counsel may
-------
rely on an Officers' Certificate or certificates of public officials.
-109-
SECTION 12.06. Rules by Trustee, Paying Agent, Registrar.
-----------------------------------------
The Trustee, Paying Agent or Registrar may make reasonable rules for
its functions.
SECTION 12.07. Legal Holidays.
--------------
If a payment date is not a Business Day, payment may be made on the
next succeeding day that is a Business Day, and no interest shall accrue for the
intervening period.
SECTION 12.08. Governing Law.
-------------
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW. Each of the parties hereto agrees to submit to the
jurisdiction of the courts of the State of New York in any action or proceeding
arising out of or relating to this Indenture.
SECTION 12.09. No Adverse Interpretation of Other Agreements.
----------
This Indenture may not be used to interpret another indenture, loan or
debt agreement of any of the Company or any of its Subsidiaries. Any such
indenture, loan or debt agreement may not be used to interpret this Indenture.
SECTION 12.10. No Recourse Against Others.
--------------------------
A director, officer, employee, stockholder or incorporator, as such,
of the Company shall not have any liability for any obligations of the Company
under the Securities, the Security Documents or this Indenture or for any claim
based on, in respect of or by reason of such obligations or their creations.
Each Securityholder by accepting a Security waives and releases all such
liability. Such waiver and release are part of the consideration for the
issuance of the Securities.
-110-
SECTION 12.11. Successors.
----------
All agreements of the Company in this Indenture and the Securities
shall bind its successors. All agreements of the Trustee in this Indenture
shall bind its successor.
SECTION 12.12. Duplicate Originals.
-------------------
All parties may sign any number of copies of this Indenture. Each
signed copy or counterpart shall be an original, but all of them together shall
represent the same agreement.
SECTION 12.13. Severability.
------------
In case any one or more of the provisions in this Indenture or in the
Securities shall be held invalid, illegal or unenforceable, in any respect for
any reason, the validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions shall not in any way be
affected or impaired thereby, it being in tended that all of the provisions
hereof shall be enforceable to the full extent permitted by law.
-111-
SIGNATURES
----------
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed all as of the date first written above.
SHEFFIELD STEEL CORPORATION
By: /s/ Stephen R. Johnson
--------------------------------------
Name: Stephen R. Johnson
Title: Chief Financial Officer
STATE STREET BANK AND TRUST COMPANY,
as Trustee and as Collateral Agent
By: /s/ E. C. Hammer
--------------------------------------
Name: Elizabeth C. Hammer
Title: Vice President
EXHIBIT A-1
-----------
[FORM OF SERIES A SECURITY]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), 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 BELOW. 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 "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) or (7) UNDER THE SECURITIES ACT) (AN "ACCREDITED INVESTOR")
OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (2) AGREES
THAT IT WILL NOT WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY
RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO SHEFFIELD STEEL
CORPORATION (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 ACCREDITED INVESTOR THAT,
PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A U.S.
BROKER--DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS
SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE FOR THIS
SECURITY), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION 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 (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION
WITH ANY TRANSFER OF THIS SECURITY WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE
OF THIS SECURITY, IF THE PROPOSED TRANSFEREE IS AN ACCREDITED INVESTOR, THE
HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE COMPANY SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM 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 MEANING GIVEN TO THEM
BY REGULATIONS UNDER THE SECURITIES ACT.
A-1-1
SHEFFIELD STEEL CORPORATION
11 1/2% First Mortgage Note due 2005
No. $
SHEFFIELD STEEL CORPORATION, a Delaware corporation (the "Company", which
term includes any successor corporation), for value received promises to pay to
or registered assigns, the principal sum of Dollars, on December 1,
2005.
Interest Payment Dates: June 1 and December 1 commencing June 1, 1998.
Record Dates: May 15 and November 15.
To the extent set forth in the Security Documents (as defined in the
Indenture), payment hereon is secured, on an equal and ratable basis with all
other Securities, by a valid, perfected first priority security interest in the
Collateral (as defined in the below-mentioned Indenture), the terms of which
security interests are more fully set forth in the Security Documents.
Reference is made to the further provisions of this Security contained
herein, which will for all purposes have the same effect as if set forth at this
place.
A-1-2
IN WITNESS WHEREOF, the Company has caused this Security to be signed
manually or by facsimile by its duly authorized officers.
Dated:
Attest: SHEFFIELD STEEL CORPORATION
_____________________ By: ________________________________
Name: Name:
Title: Title:
A-1-3
[FORM OF TRUSTEE's CERTIFICATE OF AUTHENTICATION]
This is one of the Securities described in the within mentioned
Indenture.
Dated: STATE STREET BANK AND TRUST COMPANY,
as Trustee
By: ___________________________________
Authorized Signatory
A-1-4
SHEFFIELD STEEL CORPORATION
11 1/2% First Mortgage Note due 2005
1. Interest.
--------
SHEFFIELD STEEL CORPORATION, a Delaware corporation (the "Company"),
promises to pay interest on the principal amount of this Security at the rate
per annum shown above. The Company will pay interest semi-annually on June 1
and December 1 of each year (the "Interest Payment Date"), commencing June 1,
1998. Interest on the Securities will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from December 5, 1997.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
The Company shall pay interest on overdue principal and on overdue
installments of interest from time to time on demand at the rate borne by the
Securities and on overdue installments of interest (without regard to any
applicable grace periods) to the extent lawful.
2. Method of Payment.
-----------------
The Company shall pay interest on the Securities (except defaulted
interest) to the persons who are the registered Holders at the close of business
on the Record Date immediately preceding the Interest Payment Date even if the
Securities are cancelled on registration of transfer or registration of exchange
after such Record Date. Holders must surrender Securities to a Paying Agent to
collect principal payments. The Company shall pay principal and interest in
money of the United States that at the time of payment is legal tender for
payment of public and private debts ("U.S. Legal Tender"). However, the Company
may pay principal and interest by wire transfer of Federal funds, or interest by
check payable in such U.S. Legal Tender. The Company may deliver any such
interest payment to the Paying Agent or to a Holder at the Holder's registered
address. Notwithstanding the foregoing, the Company shall pay or cause to be
paid all amounts payable with respect to Restricted Securities or non-DTC
eligible Securities by wire transfer of Federal funds to the account of the
Holders of such Securities.
3. Paying Agent and Registrar.
--------------------------
Initially, State Street Bank and Trust Company will act as Paying Agent
and Registrar. The Company may change any Paying Agent, Registrar or
co-Registrar without notice to the Holders. The Company or any of its
Subsidiaries may, subject to certain exceptions, act as Registrar or
co-Registrar.
4. Indenture.
---------
The Company issued the Securities under an Indenture, dated as of
December 1, 1997 (the "Indenture"), among the Company and State Street Bank and
Trust Company (the
A-1-5
"Trustee"). Capitalized terms herein are used as defined in the Indenture unless
otherwise defined herein. The terms of the Securities include those stated in
the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S. Code (S)(S) 77aaa-77bbbb) (the "TIA"), as in
effect on the date of the Indenture until such time as the Indenture is
qualified under the TIA, and thereafter as in effect on the date on which the
Indenture is qualified under the TIA. Notwithstanding anything to the contrary
herein, the Securities are subject to all such terms, and Holders of Securities
are referred to the Indenture and said Act for a statement of them. The
Securities are secured obligations of the Company limited in aggregate principal
amount to $150,000,000, which may be issued under the Indenture.
5. Optional Redemption.
-------------------
The Securities will be redeemable, at the Company's option, in whole at
any time or in part from time to time, on and after December 1, 2001, upon not
less than 30 nor more than 60 days' notice, at the following redemption prices
(expressed as percentages of the principal amount thereof) if redeemed during
the twelve-month period commencing on December 1 of the year set forth below,
plus, in each case, accrued and unpaid interest thereon, if any, to the date of
redemption:
Year Percentage
- ---- ----------
2001................................. 105.750%
2002................................. 102.875%
2003 and thereafter.................. 100.000%
At any time, or from time to time, on or prior to December 1, 2000, the
Company may, at its option, use the net cash proceeds of one or more Public
Equity Offerings to redeem up to 35% of the Securities at a redemption price
equal to 111.5% of the principal amount thereof plus accrued and unpaid interest
thereon, if any, to the date of redemption; provided that at least 65% of the
--------
principal amount of Securities originally issued remains outstanding immediately
after any such redemption. In order to effect the foregoing redemption with the
proceeds of any Public Equity Offering, the Company shall make such redemption
not more than 150 days after the consummation of any such Public Equity
Offering.
6. Notice of Redemption.
--------------------
Notice of redemption will be mailed at least 30 days but not more than 60
days be fore the Redemption Date to each Holder of Securities to be redeemed at
such Holder's registered address. Securities in denominations of $1,000 may be
redeemed only in whole. The Trustee may select for redemption portions (equal
to $1,000 or any integral multiple thereof) of the principal of Securities that
have denominations larger than $1,000.
A-1-6
Except as set forth in the Indenture, from and after any Redemption Date,
if monies for the redemption of the Securities called for redemption shall have
been deposited with the Paying Agent for redemption on such Redemption Date,
then, unless the Company defaults in the payment of such Redemption Price, the
Securities called for redemption will cease to bear interest and the only right
of the Holders of such Securities will be to receive payment of the Redemption
Price.
7. Change of Control Offer.
-----------------------
Upon the occurrence of a Change of Control, the Company will be required
to offer to purchase all of the outstanding Securities at a purchase price equal
to 101% of the principal amount thereof plus accrued and unpaid interest, if
any, to the date of repurchase.
8. Limitation on Disposition of Assets.
-----------------------------------
The Company is subject to certain conditions, obligated to make an offer
to purchase Securities at 100% of their principal amount plus accrued interest
to the date of repurchase with the net cash proceeds of certain sales or other
dispositions of assets.
9. Denominations; Transfer; Exchange.
---------------------------------
The Securities are in registered form, without coupons, in denominations
of $1,000 and integral multiples of $1,000. A Holder shall register the
transfer of or exchange Securities in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay certain transfer taxes or similar
governmental charges payable in connection therewith as permitted by the
Indenture. The Registrar need not register the transfer of or exchange any
Securities or portions thereof selected for redemption.
10. Persons Deemed Owners.
---------------------
The registered Holder of a Security shall be treated as the owner of it
for all purposes.
11. Unclaimed Funds.
---------------
If funds for the payment of principal or interest remain unclaimed for
one year, the Trustee and the Paying Agents will repay the funds to the Company
at its request. After that, all liability of the Trustee and such Paying Agents
with respect to such funds shall cease.
12. Legal Defeasance and Covenant Defeasance.
----------------------------------------
The Company may be discharged from its obligations under the Indenture,
the Securities and the Security Documents, except for certain provisions
thereof ("Legal Defeasance"),
A-1-7
and may be discharged from its obligations to comply with certain covenants
contained in the Indenture, the Securities and the Security Documents ("Covenant
Defeasance"), in each case upon satisfaction of certain conditions specified in
the Indenture.
13. Amendment; Supplement; Waiver.
-----------------------------
Subject to certain exceptions, the Indenture, the Security Documents or
the Securities may be amended or supplemented with the written consent of the
Holders of at least a majority in aggregate principal amount of the Securities
then outstanding, and any existing Default or Event of Default or compliance
with any provision may be waived with the consent of the Holders of a majority
in aggregate principal amount of the Securities then outstanding. Without
notice to or consent of any Holder, the parties thereto may amend or supplement
the Indenture or the Securities to, among other things, cure any ambiguity,
defect or inconsistency, provide for uncertificated Securities in addition to
or in place of certificated Securities, comply with Article Five of the
Indenture or comply with any requirements of the SEC in connection with the
qualification of the Indenture under the TIA, or make any other change that
does not materially adversely affect the rights of any Holder of a Security.
14. Restrictive Covenants.
---------------------
The Indenture imposes certain limitations on the ability of the Company
and its Subsidiaries to, among other things, incur additional Indebtedness, pay
dividends or make certain other Restricted Payments, create liens, consummate
certain asset sales, enter into sale-leaseback transactions, enter into certain
transactions with affiliates, and consummate certain mergers and consolidations
or sales of all or substantially all of its assets. The limitations are subject
to a number of important qualifications and exceptions. The Company must
annually report to the Trustee on compliance with such limitations.
15. Defaults and Remedies.
---------------------
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of Securities then
outstanding may declare all the Securities to be due and payable immediately in
the manner and with the effect provided in the Indenture. Holders of Securities
may not enforce the Indenture or the Securities except as provided in the In
denture. The Trustee is not obligated to enforce the Indenture or the
Securities unless it has received indemnity satisfactory to it. The Indenture
permits, subject to certain limitations therein provided, Holders of a majority
in aggregate principal amount of the Securities then outstanding to direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of Securities notice of any continuing Default or Event of Default
(except a Default in payment of principal or interest, including an accelerated
payment) if it determines that withholding notice is in their interest.
A-1-8
16. Trustee Dealings with Company.
-----------------------------
The Trustee under the Indenture, in its individual or any other capacity,
may become the owner or pledgee of Securities and may otherwise deal with the
Company, its Subsidiaries or their respective Affiliates as if it were not the
Trustee.
17. No Recourse Against Others.
--------------------------
No stockholder, director, officer, employee or incorporator, as such, of
the Company shall have any liability for any obligation of the Company under
the Securities or the Indenture or for any claim based on, in respect of or by
reason of, such obligations or their creation. Each Holder of a Security by
accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Securities.
18. Authentication.
--------------
This Security shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on this Security.
19. Abbreviations and Defined Terms.
-------------------------------
Customary abbreviations may be used in the name of a Holder of a Security
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).
20. CUSIP Numbers.
-------------
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company will cause CUSIP numbers to be
printed on the Securities immediately prior to the qualification of the
Indenture under the TIA as a convenience to the Holders of the Securities. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
The Company will furnish to any Holder of a Security upon written request
and without charge a copy of the Indenture. Requests may be made to: Sheffield
Steel Corporation, 220 North Jefferson Street, Sand Springs, OK 74063, Attn:
Chief Financial Officer.
A-1-9
ASSIGNMENT FORM
I or we assign and transfer this Security to
___________________________________________________________________________
___________________________________________________________________________
(Print or type name, address and zip code of assignee)
___________________________________________________________________________
(Insert Social Security or other identifying number of assignee)
and irrevocably appoint ___________________________________________________
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
In connection with any transfer of this Security occurring prior to the
date which is the earlier of (i) the date of the declaration by the SEC of the
effectiveness of a registration statement under the Securities Act of 1933, as
amended (the "Securities Act") covering resales of this Security (which
effectiveness shall not have been suspended or terminated at the date of the
transfer) and (ii) December 5, 1999, the undersigned confirms that it has not
utilized any general solicitation or general advertising in connection with the
transfer and that:
[Check One]
---------
[_] (a) this Security is being transferred in compliance with the exemption
from registration under the Securities Act provided by Rule 144A
thereunder.
or
--
[_] (b) this Security is being transferred other than in accordance with (a)
above and documents are being furnished which comply with the
conditions of transfer set forth in this Security and the Indenture.
A-1-10
If none of the foregoing boxes is checked, the Trustee or Registrar shall
not be obligated to register this Security in the name of any person other than
the Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.16 of the Indenture shall have
been satisfied.
Dated: __________________ Signed: _________________________________________
(Sign exactly as name appears on the other
side of this Security)
Signature Guarantee: _________________________________________________________
Participant in a recognized Signature Guarantee Medallion
Program (or other signature guarantor program reasonably
acceptable to the Trustee)
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon the undersigned's foregoing representations in order to claim the exemption
from registration provided by Rule 144A.
Dated: __________________ ______________________________________
NOTICE: To be executed by an
executive officer
A-1-11
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.16 or Section 4.17 of the Indenture, check the appropriate
box:
Section 4.16 [_] Section 4.17 [_]
If you want to elect to have only part of this Security purchased by the
Company pursuant to Section 4.16 or Section 4.17 of the Indenture, state the
amount: $
Dated: ______________ Your Signature: ________________________________
(Sign exactly as name appears on
the other side of this Security)
Signature Guarantee: _________________________________________________________
Participant in a recognized Signature Guarantee Medallion
Program (or other signature guarantor program reasonably
acceptable to the Trustee)
A-1-12
EXHIBIT A-2
-----------
[FORM OF SERIES B SECURITY]
SHEFFIELD STEEL CORPORATION
11 1/2% First Mortgage Note due 2005
No. $
SHEFFIELD STEEL CORPORATION, a Delaware corporation (the "Company",
which term includes any successor corporation), for value received promises to
pay to or registered assigns, the principal sum of
Dollars, on December 1, 2005.
Interest Payment Dates: June 1 and December 1 commencing June 1, 1998.
Record Dates: May 15 and November 15.
To the extent set forth in the Security Documents (as defined in the
Indenture), payment hereon is secured, on an equal and ratable basis with all
other Securities, by a valid, perfected first priority security interest in the
Collateral (as defined in the below-mentioned In denture), the terms of which
security interests are more fully set forth in the Security Documents.
Reference is made to the further provisions of this Security contained
herein, which will for all purposes have the same effect as if set forth at this
place.
A-2-1
IN WITNESS WHEREOF, the Company has caused this Security to be signed
manually or by facsimile by its duly authorized officers.
Dated:
Attest: SHEFFIELD STEEL CORPORATION
_______________________ By: __________________________________
Name: Name:
Title: Title:
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Securities described in the within mentioned
Indenture.
Dated: STATE STREET BANK AND TRUST COMPANY,
as Trustee
By: _______________________________________
Authorized Signatory
A-2-2
SHEFFIELD STEEL CORPORATION
11 1/2% First Mortgage Note due 2005
1. Interest.
--------
SHEFFIELD STEEL CORPORATION, a Delaware corporation (the "Company"),
promises to pay interest on the principal amount of this Security at the rate
per annum shown above. The Company will pay interest semi-annually on June 1
and December 1 of each year (the "Interest Payment Date"), commencing June 1,
1998. Interest on the Securities will accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from December 5,
1997. Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
The Company shall pay interest on overdue principal and on overdue
install ments of interest from time to time on demand at the rate borne by the
Securities and on over due installments of interest (without regard to any
applicable grace periods) to the extent lawful.
2. Method of Payment.
-----------------
The Company shall pay interest on the Securities (except defaulted
interest) to the persons who are the registered Holders at the close of business
on the Record Date immediately preceding the Interest Payment Date even if the
Securities are cancelled on registration of transfer or registration of exchange
after such Record Date. Holders must surrender Securities to a Paying Agent to
collect principal payments. The Company shall pay principal and interest in
money of the United States that at the time of payment is legal tender for
payment of public and private debts ("U.S. Legal Tender"). However, the Company
may pay principal and interest by wire transfer of Federal funds, or interest by
check payable in such U.S. Legal Tender. The Company may deliver any such
interest payment to the Paying Agent or to a Holder at the Holder's registered
address. Notwithstanding the foregoing, the Company shall pay or cause to be
paid all amounts payable with respect to Restricted Securities or non-DTC
eligible Securities by wire transfer of Federal funds to the account of the
Holders of such Securities.
3. Paying Agent and Registrar.
--------------------------
Initially, State Street Bank and Trust Company will act as Paying
Agent and Registrar. The Company may change any Paying Agent, Registrar or co-
Registrar without notice to the Holders. The Company or any of its Subsidiaries
may, subject to certain exceptions, act as Registrar or co-Registrar.
A-2-3
4. Indenture.
---------
The Company issued the Securities under an Indenture, dated as of
December 1, 1997 (the "Indenture"), among the Company and State Street Bank and
Trust Company (the "Trustee"). Capitalized terms herein are used as defined in
the Indenture unless otherwise defined herein. The terms of the Securities
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939 (15 U.S. Code (S)(S) 77aaa-77bbbb)
(the "TIA"), as in effect on the date of the Indenture until such time as the
Indenture is qualified under the TIA, and thereafter as in effect on the date on
which the Indenture is qualified under the TIA. Notwithstanding anything to
the contrary herein, the Securities are subject to all such terms, and Holders
of Securities are referred to the Indenture and said Act for a statement of
them. The Securities are secured obligations of the Company limited in
aggregate principal amount to $150,000,000, which may be issued under the
Indenture.
5. Optional Redemption.
-------------------
The Securities will be redeemable, at the Company's option, in whole
at any time or in part from time to time, on and after December 1, 2001, upon
not less than 30 nor more than 60 days' notice, at the following redemption
prices (expressed as percentages of the principal amount thereof) if redeemed
during the twelve-month period commencing on December 1 of the year set forth
below, plus, in each case, accrued and unpaid interest thereon, if any, to the
date of redemption:
Year Percentage
- ---- ----------
2001............................ 105.750%
2002............................ 102.875%
2003 and thereafter............. 100.000%
At any time, or from time to time, on or prior to December 1, 2000, the
Company may, at its option, use the net cash proceeds of one or more Public
Equity Offerings to redeem up to 35% of the Securities at a redemption price
equal to 111.5% of the principal amount thereof plus accrued and unpaid interest
thereon, if any, to the date of redemption; provided that at least 65% of the
--------
principal amount of Securities originally issued remains out standing
immediately after any such redemption. In order to effect the foregoing
redemption with the proceeds of any Public Equity Offering, the Company shall
make such redemption not more than 150 days after the consummation of any such
Public Equity Offering.
6. Notice of Redemption.
--------------------
Notice of redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each Holder of Securities to be redeemed
at such Holder's
A-2-4
registered address. Securities in denominations of $1,000 may be redeemed only
in whole. The Trustee may select for redemption portions (equal to $1,000 or any
integral multiple thereof) of the principal of Securities that have
denominations larger than $1,000.
Except as set forth in the Indenture, from and after any Redemption
Date, if monies for the redemption of the Securities called for redemption shall
have been deposited with the Paying Agent for redemption on such Redemption
Date, then, unless the Company defaults in the payment of such Redemption Price,
the Securities called for redemption will cease to bear interest and the only
right of the Holders of such Securities will be to receive payment of the
Redemption Price.
7. Change of Control Offer.
-----------------------
Upon the occurrence of a Change of Control, the Company will be
required to offer to purchase all of the outstanding Securities at a purchase
price equal to 101% of the principal amount thereof plus accrued and unpaid
interest, if any, to the date of repurchase.
8. Limitation on Disposition of Assets.
-----------------------------------
The Company is subject to certain conditions, obligated to make an
offer to purchase Securities at 100% of their principal amount plus accrued
interest to the date of re purchase with the net cash proceeds of certain sales
or other dispositions of assets.
9. Denominations; Transfer; Exchange.
---------------------------------
The Securities are in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. A Holder shall
register the transfer of or exchange Securities in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay certain transfer
taxes or similar governmental charges payable in connection therewith as
permitted by the Indenture. The Registrar need not register the transfer of or
exchange any Securities or portions thereof selected for redemption.
10. Persons Deemed Owners.
---------------------
The registered Holder of a Security shall be treated as the owner of
it for all purposes.
11. Unclaimed Funds.
---------------
If funds for the payment of principal or interest remain unclaimed for
one year, the Trustee and the Paying Agents will repay the funds to the Company
at its request. After that, all liability of the Trustee and such Paying Agents
with respect to such funds shall cease.
A-2-5
12. Legal Defeasance and Covenant Defeasance.
----------------------------------------
The Company may be discharged from its obligations under the Indenture,
the Securities and the Security Documents, except for certain provisions
thereof ("Legal Defeasance"), and may be discharged from its obligations to
comply with certain covenants contained in the Indenture, the Securities and
the Security Documents ("Covenant Defeasance"), in each case upon satisfaction
of certain conditions specified in the Indenture.
13. Amendment; Supplement; Waiver.
-----------------------------
Subject to certain exceptions, the Indenture, the Security Documents or
the Securities may be amended or supplemented with the written consent of the
Holders of at least a majority in aggregate principal amount of the Securities
then outstanding, and any existing Default or Event of Default or compliance
with any provision may be waived with the consent of the Holders of a majority
in aggregate principal amount of the Securities then outstanding. Without
notice to or consent of any Holder, the parties thereto may amend or supplement
the Indenture or the Securities to, among other things, cure any ambiguity,
defect or inconsistency, provide for uncertificated Securities in addition to
or in place of certificated Securities, comply with Article Five of the
Indenture or comply with any requirements of the SEC in connection with the
qualification of the Indenture under the TIA, or make any other change that
does not materially adversely affect the rights of any Holder of a Security.
14. Restrictive Covenants.
---------------------
The Indenture imposes certain limitations on the ability of the Company
and its Subsidiaries to, among other things, incur additional Indebtedness, pay
dividends or make certain other Restricted Payments, create liens, consummate
certain asset sales, enter into sale-leaseback transactions, enter into certain
transactions with affiliates, and consummate certain mergers and consolidations
or sales of all or substantially all of its assets. The limitations are subject
to a number of important qualifications and exceptions. The Company must
annually report to the Trustee on compliance with such limitations.
15. Defaults and Remedies.
---------------------
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of Securities then
outstanding may declare all the Securities to be due and payable immediately in
the manner and with the effect provided in the Indenture. Holders of Securities
may not enforce the Indenture or the Securities except as provided in the
Indenture. The Trustee is not obligated to enforce the Indenture or the
Securities unless it has received indemnity satisfactory to it. The Indenture
permits, subject to certain limitations therein provided, Holders of a majority
in aggregate principal amount of the Securities then outstanding to direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of Securities notice of any continuing Default or Event of
A-2-6
Default (except a Default in payment of principal or interest, including an
accelerated payment) if it determines that withholding notice is in their
interest.
16. Trustee Dealings with Company.
-----------------------------
The Trustee under the Indenture, in its individual or any other capacity,
may become the owner or pledgee of Securities and may otherwise deal with the
Company, its Subsidiaries or their respective Affiliates as if it were not the
Trustee.
17. No Recourse Against Others.
--------------------------
No stockholder, director, officer, employee or incorporator, as such, of
the Company shall have any liability for any obligation of the Company under
the Securities or the Indenture or for any claim based on, in respect of or by
reason of, such obligations or their creation. Each Holder of a Security by
accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Securities.
18. Authentication.
--------------
This Security shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on this Security.
19. Abbreviations and Defined Terms.
-------------------------------
Customary abbreviations may be used in the name of a Holder of a Security
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).
20. CUSIP Numbers.
-------------
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company will cause CUSIP numbers to be
printed on the Securities immediately prior to the qualification of the
Indenture under the TIA as a convenience to the Holders of the Securities. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
The Company will furnish to any Holder of a Security upon written request
and without charge a copy of the Indenture. Requests may be made to: Sheffield
Steel Corporation, 220 North Jefferson Street, Sand Springs, OK 74063, Attn:
Chief Financial Officer.
A-2-7
ASSIGNMENT FORM
I or we assign and transfer this Security to
________________________________________________________________________________
________________________________________________________________________________
(Print or type name, address and zip code of assignee)
________________________________________________________________________________
(Insert Social Security or other identifying number of assignee)
and irrevocably appoint ________________________________________________________
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
Dated: __________________ Signed: __________________________________________
(Sign exactly as name appears on the other
side of this Security)
Signature Guarantee: ___________________________________________________________
Participant in a recognized Signature Guarantee Medallion
Program (or other signature guarantor program reasonably
acceptable to the Trustee)
A-2-8
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.16 or Section 4.17 of the Indenture, check the appropriate
box:
Section 4.16 [_] Section 4.17 [_]
If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 4.16 or Section 4.17 of the Indenture, state
the amount: $
Dated: ______________ Your Signature: _______________________________________
(Sign exactly as name appears on the
other side of this Security)
Signature Guarantee: ___________________________________________________________
Participant in a recognized Signature Guarantee Medallion
Program (or other signature guarantor program reasonably
acceptable to the Trustee)
A-2-9
EXHIBIT B
---------
FORM OF LEGEND FOR BOOK-ENTRY SECURITIES
Any Global Security authenticated and delivered hereunder shall bear a
legend (which would be in addition to any other legends required in the case of
a Restricted Security) in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME
OF A DEPOSITORY OR A NOMINEE OF A DEPOSITORY OR A SUCCESSOR
DEPOSITORY. THIS SECURITY IS NOT EXCHANGEABLE FOR SECURITIES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY 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 DEPOSITORY TO A
NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO
THE DEPOSITORY OR AN OTHER NOMINEE OF THE DEPOSITORY) 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 ISSUER 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.
B-1
EXHIBIT C
---------
Form of Certificate To Be
Delivered in Connection with
Transfers to Non-QIB Institutional Accredited Investors
-------------------------------------------------------
___________, ____
State Street Bank and Trust Company
Attention: Corporate Trust Department
Re: SHEFFIELD STEEL CORPORATION (the
"Company") 11 1/2% First Mortgage Notes
due 2005 (the "Securities")
----------------------------------------
Ladies and Gentlemen:
In connection with our proposed purchase of 11 1/2% First Mortgage
Notes due 2005 (the "Securities") of Sheffield Steel Corporation (the
"Company"), we confirm that:
1. We have received a copy of the Offering Memorandum (the "Offering
Memorandum"), dated November 26, 1997, relating to the Securities and such other
information as we deem necessary in order to make our investment decision. We
acknowledge that we have read and agreed to the matters stated on pages i and ii
and under the captions "Transfer Restrictions" and "Book-Entry; Delivery and
Form" of such Offering Memorandum, including the restrictions on duplication and
circulation of such Offering Memorandum.
2. We understand that any subsequent transfer of the Securities is
subject to certain restrictions and conditions set forth in the Offering
Memorandum and the undersigned agrees to be bound by, and not to resell, pledge
or otherwise transfer the Securities except in compliance with, such
restrictions and conditions and the Securities Act of 1933, as amended (the
"Securities Act").
3. We understand that the offer and sale of the Securities have not
been registered under the Securities Act, and that the Securities may not be
offered or sold within the United States or to, or for the account or benefit
of, U.S. persons 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 sell any Securities, we will do so only
(A) to the Company or any subsidiary thereof, (B) inside the United States in
accordance with Rule 144A under the Securities Act to a "qualified institutional
buyer" (as defined therein), (C) inside the United States to an institutional
"accredited investor" (as defined below) that, prior to such transfer, furnishes
(or has furnished on its behalf by a U.S. broker-dealer) to the
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Trustee (as defined in the Indenture relating to the Securities), a signed
letter containing certain representations and agreements relating to the
restrictions on transfer of the Securities (the form of which letter can be
obtained from the Trustee), (D) outside the United States in accordance with
Rule 904 of Regulation S under the Securities Act, (E) pursuant to the exemption
from registration provided by Rule 144 under the Securities Act (if available),
or (F) pursuant to an effective registration statement under the Securities Act,
and we further agree to provide to any person purchasing Securities from us a
notice advising such purchaser that resales of the Securities are restricted as
stated herein.
4. We understand that, on any proposed resale of Securities, we will
be required to furnish to the Trustee and the Company, such certification,
legal opinions and other information as the Trustee and the Company may
reasonably require to confirm that the proposed sale complies with the
foregoing restrictions. We further understand that the Securities purchased by
us will bear a legend to the foregoing effect.
5. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D 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 Securities, and we
and any accounts for which we are acting are each able to bear the economic risk
of our or their investment, as the case may be.
6. We are acquiring the Securities purchased by us for our 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.
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You, the Company and the Initial Purchaser 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 proceeding or
official inquiry with respect to the matters covered hereby.
Very truly yours,
By: ________________________________________
Name:
Title:
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EXHIBIT D
---------
Form of Certificate To Be Delivered
in Connection with Transfers
Pursuant to Regulation S
------------------------------------
___________, ____
State Street Bank and Trust Company
Attention: Corporate Trust Department
Re: SHEFFIELD STEEL CORPORATION (the
"Company") 11 1/2% First Mortgage Notes
due 2005 (the "Securities")
----------------------------------------
Dear Sirs:
In connection with our proposed sale of $___________ aggregate
principal amount of the Securities, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the U.S. Securities Act
of 1933, as amended (the "Securities Act"), and, accordingly, we represent that:
(1) the offer of the Securities was not made to a person in the
United States;
(2) either (a) at the time the buy offer 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, or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been
pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United States
in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer restrictions
applicable to the Securities.
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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 certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By: ________________________________________
Authorized Signature
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