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LIFESTYLE FURNISHINGS INTERNATIONAL LTD.
10-7/8% Senior Subordinated Notes due 2006
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INDENTURE
Dated as of August 5, 1996
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IBJ SCHRODER BANK & TRUST COMPANY
Trustee
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TABLE OF CONTENTS
Page
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ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.01. Definitions.............................................. 1
SECTION 1.02. Other Definitions........................................ 30
SECTION 1.03. Incorporation by Reference of Trust
Indenture Act........................................... 32
SECTION 1.04. Rules of Construction.................................... 32
ARTICLE II
The Securities
SECTION 2.01. Form and Dating.......................................... 33
SECTION 2.02. Execution and Authentication............................. 35
SECTION 2.03. Registrar and Paying Agent............................... 36
SECTION 2.04. Paying Agent To Hold Money in Trust...................... 37
SECTION 2.05. Securityholder Lists..................................... 38
SECTION 2.06. Transfer and Exchange.................................... 38
SECTION 2.07. Replacement Securities................................... 47
SECTION 2.08. Outstanding Securities................................... 48
SECTION 2.09. Temporary Securities..................................... 48
SECTION 2.10. Cancellation............................................. 48
SECTION 2.11. Defaulted Interest....................................... 49
SECTION 2.12. Numbers.................................................. 49
ARTICLE III
Redemption
SECTION 3.01. Notices to Trustee....................................... 49
2
SECTION 3.02. Selection of Securities to be Redeemed................... 50
SECTION 3.03. Notice of Redemption..................................... 50
SECTION 3.04. Effect of Notice of Redemption........................... 51
SECTION 3.05. Deposit of Redemption Price.............................. 51
SECTION 3.06. Securities Redeemed in Part.............................. 52
SECTION 3.07. Optional Redemption...................................... 52
ARTICLE IV
Covenants
SECTION 4.01. Payment of Securities.................................... 53
SECTION 4.02. SEC Reports.............................................. 53
SECTION 4.03. Limitation on Indebtedness............................... 54
SECTION 4.04. Limitation on Restricted Payments........................ 57
SECTION 4.05. Limitation on Restrictions on Distributions from
Subsidiaries............................................ 64
SECTION 4.06. Limitation on Sales of Assets and Subsidiary Stock....... 65
SECTION 4.07. Limitation on Transactions with Affiliates............... 70
SECTION 4.08. Change of Control........................................ 71
SECTION 4.09. Compliance Certificate................................... 72
SECTION 4.10. Further Instruments and Acts............................. 73
SECTION 4.11. Limitation on the Sale or Issuance of
Capital Stock of Domestic Subsidiaries.................. 73
SECTION 4.12. Limitation on Liens...................................... 73
SECTION 4.13. Limitation on Sale/Leaseback Transactions................ 73
SECTION 4.14. Limitation on Lines of Business.......................... 74
SECTION 4.15. Future Guarantor Subsidiaries............................ 74
ARTICLE V
Successor Company
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SECTION 5.01. When Company May Merge or Transfer Assets................ 75
ARTICLE VI
Defaults and Remedies
SECTION 6.01. Events of Default........................................ 76
SECTION 6.02. Acceleration............................................. 78
SECTION 6.03. Other Remedies........................................... 79
SECTION 6.04. Waiver of Past Defaults.................................. 79
SECTION 6.05. Control by Majority...................................... 79
SECTION 6.06. Limitation on Suits...................................... 80
SECTION 6.07. Rights of Holders to Receive Payment..................... 80
SECTION 6.08. Collection Suit by Trustee............................... 81
SECTION 6.09. Trustee May File Proofs of Claim......................... 81
SECTION 6.10. Priorities............................................... 81
SECTION 6.11. Undertaking for Costs.................................... 82
SECTION 6.12. Waiver of Stay or Extension Laws......................... 82
SECTION 6.13. Restoration of Rights and Remedies....................... 82
ARTICLE VII
Trustee
SECTION 7.01. Duties of Trustee........................................ 83
SECTION 7.02. Rights of Trustee........................................ 84
SECTION 7.03. Individual Rights of Trustee............................. 85
SECTION 7.04. Trustee's Disclaimer..................................... 85
SECTION 7.05. Notice of Defaults....................................... 85
SECTION 7.06. Reports by Trustee to Holders............................ 86
SECTION 7.07. Compensation and Indemnity............................... 86
SECTION 7.08. Replacement of Trustee................................... 87
SECTION 7.09. Successor Trustee by Merger.............................. 88
SECTION 7.10. Eligibility; Disqualification............................ 89
SECTION 7.11. Preferential Collection of Claims Against Company ....... 89
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ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities; Defeasance......... 89
SECTION 8.02. Conditions to Defeasance................................. 90
SECTION 8.03. Application of Trust Money............................... 92
SECTION 8.04. Repayment to Company..................................... 92
SECTION 8.05. Indemnity for Government Obligations..................... 92
SECTION 8.06. Reinstatement............................................ 92
ARTICLE IX
Amendments
SECTION 9.01. Without Consent of Holders............................... 93
SECTION 9.02. With Consent of Holders.................................. 94
SECTION 9.03. Compliance with Trust Indenture Act...................... 95
SECTION 9.04. Revocation and Effect of Consents and Waivers............ 95
SECTION 9.05. Notation on or Exchange of Securities.................... 96
SECTION 9.06. Trustee to Sign Amendments............................... 96
SECTION 9.07. Payment for Consent...................................... 97
ARTICLE X
Subordination of the Securities
SECTION 10.01. Agreement to Subordinate................................. 97
SECTION 10.02. Liquidation, Dissolution, Bankruptcy..................... 97
SECTION 10.03. Default on Senior Indebtedness of the Company............ 98
SECTION 10.04. Acceleration of Payment of Securities.................... 99
SECTION 10.05. When Distribution Must Be Paid Over...................... 99
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SECTION 10.06. Subrogation.............................................. 99
SECTION 10.07. Relative Rights.......................................... 100
SECTION 10.08. Subordination May Not Be Impaired by Company............. 100
SECTION 10.09. Rights of Trustee and Paying Agent....................... 100
SECTION 10.10. Distribution or Notice to Representative................. 101
SECTION 10.11. Article X Not To Prevent Events of Default or
Limit Right To Accelerate............................... 101
SECTION 10.12. Trust Moneys Not Subordinated............................ 101
SECTION 10.13. Trustee Entitled to Rely................................. 101
SECTION 10.14. Trustee to Effectuate Subordination...................... 102
SECTION 10.15. Trustee Not Fiduciary for Holders of Senior
Indebtedness of the Company............................. 102
SECTION 10.16. Reliance by Holders of Senior Indebtedness of the
Company on Subordination Provisions..................... 102
SECTION 10.17. Trustee's Compensation Not Prejudiced.................... 103
ARTICLE XI
Subsidiary Guarantees
SECTION 11.01. Subsidiary Guarantees.................................... 103
SECTION 11.02. Limitation on Liability.................................. 105
SECTION 11.03. Successors and Assigns................................... 106
SECTION 11.04. No Waiver................................................ 106
SECTION 11.05. Modification............................................. 106
SECTION 11.06. Execution of Supplemental Indenture
for Future Guarantor Subsidiaries....................... 107
ARTICLE XII
Subordination of the Subsidiary Guaranties
SECTION 12.01. Agreement to Subordinate................................. 107
SECTION 12.02. Liquidation, Dissolution, Bankruptcy..................... 108
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SECTION 12.03. Default on Senior Indebtedness of a
Guarantor Subsidiary.................................... 108
SECTION 12.04. Demand for Payment....................................... 109
SECTION 12.05. When Distribution Must Be Paid Over...................... 110
SECTION 12.06. Subrogation.............................................. 110
SECTION 12.07. Relative Rights.......................................... 110
SECTION 12.08. Subordination May Not Be Impaired by a
Guarantor Subsidiary.................................... 110
SECTION 12.09. Rights of Trustee and Paying Agent....................... 111
SECTION 12.10. Distribution or Notice to Representative................. 111
SECTION 12.11. Article XII Not To Prevent Events of Default or Limit
Right To Accelerate..................................... 111
SECTION 12.12. Trustee Entitled to Rely................................. 112
SECTION 12.13. Trustee to Effectuate Subordination...................... 112
SECTION 12.14. Trustee Not Fiduciary for Holders of Senior
Indebtedness of a Guarantor Subsidiary.................. 113
SECTION 12.15. Reliance by Holders of Senior Indebtedness of a
Guarantor Subsidiary on Subordination Provisions........ 113
ARTICLE XIII
Miscellaneous
SECTION 13.01. Trust Indenture Act Controls............................. 113
SECTION 13.02. Notices.................................................. 114
SECTION 13.03. Communication by Holders with Other Holders.............. 114
SECTION 13.04. Certificate of Opinion as to Conditions Precedent........ 115
SECTION 13.05. Statements Required in Certificate or Opinion............ 115
SECTION 13.06. When Securities Disregarded.............................. 115
SECTION 13.07. Rules by Trustee, Paying Agent and Registrar............. 116
SECTION 13.08. Legal Holidays........................................... 116
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SECTION 13.09. Governing Law............................................ 116
SECTION 13.10. No Recourse Against Others............................... 116
SECTION 13.11. Successors............................................... 116
SECTION 13.12. Multiple Originals....................................... 117
SECTION 13.13. Table of Contents; Headings.............................. 117
Exhibit A - Form of Face of Initial Security
Exhibit B - Form of Face of Exchange Security
Exhibit C - Form of Transferee Letter of Representation
Exhibit D - Form of Supplemental Indenture
Schedule 4.04 - Certain Investments
Schedule 4.07 - Certain Agreements with Affiliates
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.
(b) .................................................. 7.08; 7.10
(c) .................................................. N.A.
311(a) .................................................. 7.11
(b) .................................................. 7.11
(c) .................................................. N.A.
312(a) .................................................. 2.05
(b) .................................................. 13.03
(c) .................................................. 13.03
313(a) .................................................. 7.06
(b)(1) ............................................... N.A.
(b)(2) ............................................... 7.06
(c) .................................................. 13.02
(d) .................................................. 7.06
314(a) .................................................. 4.02; 4.09; 13.02
(b) .................................................. N.A.
(c)(1) ............................................... 13.04
(c)(2) ............................................... 13.04
(c)(3) ............................................... N.A.
(d) .................................................. N.A.
(e) .................................................. 13.05
(f) .................................................. 4.12
315(a) .................................................. 7.01
(b) .................................................. 7.05; 13.02
(c) .................................................. 7.01
(d) .................................................. 7.01
(e) .................................................. 6.11
316(a)(last
sentence) ............................................... 13.06
(a)(1)(A) ............................................ 6.05
(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) .................................................. 13.01
N.A. means Not Applicable.
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Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of this Indenture.
CONFORMED COPY
INDENTURE dated as of August 5, 1996, among LIFESTYLE
FURNISHINGS INTERNATIONAL LTD., a Delaware corporation (the
"Company"); certain of the Company's subsidiaries signatory
hereto (each, a "Guarantor Subsidiary" and, collectively, the
"Guarantor Subsidiaries"); and IBJ SCHRODER BANK & TRUST
COMPANY, a New York banking corporation (the "Trustee").
Each party agrees as follows for the benefit of the other parties
and for the equal and ratable benefit of the Holders of the Company's 10-7/8%
Senior Subordinated Notes due 2006 (the "Initial Securities") and, when and if
issued pursuant to a registered exchange for Initial Securities, the Company's
10-7/8% Senior Subordinated Notes due 2006.
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.01. Definitions.
"Acquisition Agreement" means the Acquisition Agreement dated as of
March 29, 1996, between Holdings and Masco as amended and as in effect on the
Issue Date.
"Additional Assets" means (i) any property or assets (other than
Indebtedness and Capital Stock), including improvements to existing assets, to
be used by the Company or a Restricted Subsidiary in a Related Business; (ii)
the Capital Stock of a Person that becomes a Restricted Subsidiary as a result
of the acquisition of such Capital Stock by the Company or another Restricted
Subsidiary; or (iii) Capital Stock constituting a minority interest in any
Person that at such time is a Restricted Subsidiary; provided, however, that, in
the case of clauses (ii) and
2
(iii), such Restricted Subsidiary is primarily engaged in a Related Business.
"Affiliate" of any specified Person means any other Person, directly
or indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing. For
purposes of Sections 4.06 and 4.07 only, "Affiliate" shall also mean any
beneficial owner of shares representing 5% or more of the total voting power of
the Voting Stock (on a fully diluted basis) of the Company or of rights or
warrants to purchase such Voting Stock (whether or not currently exercisable)
and any Person who would be an Affiliate of any such beneficial owner pursuant
to the first sentence hereof.
"Applicable Premium" means, with respect to a Security, the greater
of (i) 1.0% of the then outstanding principal amount of such Security and (ii)
the excess of (A) the present value of all remaining required interest and
principal payments due on such Security, computed using a discount rate equal to
the Treasury Rate plus 75 basis points, over (B) the then outstanding principal
amount of such Security.
"Asset Disposition" means any sale, lease, transfer or other
disposition of shares of Capital Stock of a Restricted Subsidiary (other than
directors' qualifying shares and, in the case of Foreign Subsidiaries, to the
extent required by local ownership laws in foreign countries, shares owned by
foreign shareholders), property or assets (each referred to for the purposes of
this definition as a "disposition") by the Company or any of its Restricted
Subsidiaries (including any disposition by means of a merger, consolidation or
similar transaction) other than: (i) a disposition by a Restricted Subsidiary to
the
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Company or by the Company or a Restricted Subsidiary to a Wholly Owned
Subsidiary; (ii) a disposition of property or assets, including inventory, in
the ordinary course of business consistent with past practices of the Home
Furnishings Group; (iii) a Financing Disposition; (iv) any sale of a Receivable,
or interest therein, pursuant to the Sunbury Factoring Arrangement; and (v) for
purposes of Section 4.06 only, a disposition subject to Section 4.04.
"Attributable Debt" in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value (discounted at the
interest rate assumed in making calculations in accordance with FAS 13) of the
total obligations of the lessee for rental payments during the remaining term of
the lease included in such Sale/Leaseback Transaction (including any period for
which such lease has been extended).
"Average Life" means, as of the date of determination, with respect
to any Indebtedness or Preferred Stock, the quotient obtained by dividing (i)
the sum of the products of the numbers of years from the date of determination
to the dates of each successive scheduled principal payment of such Indebtedness
or scheduled redemption or similar payment with respect to such Preferred Stock
multiplied by the amount of such payment by (ii) the sum of all such payments.
"Bank Indebtedness" means any and all amounts payable under or in
respect of the Credit Agreement or any refinancing or replacements thereof
including principal, premium (if any), interest (including interest accruing on
or after the filing of any petition in bankruptcy or for reorganization relating
to the Company whether or not a claim for postfiling interest is allowed in such
proceeding), fees, charges, expenses, reimbursement obligations, guarantees and
all other amounts payable thereunder or in respect thereof.
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"Board of Directors" means the Board of Directors of the Company or
any committee thereof duly authorized to act on behalf of such Board.
"Bridge Receivables Financing" means (a) the sale by Holdings and
the Subsidiaries of the Company of Receivables to the Receivables Subsidiary
pursuant to the Receivables Sale Agreement, (b) the sale of such Receivables (or
participation interests therein) by the Receivables Subsidiary pursuant to the
Receivables Pooling Agreement and (c) the servicing of such Receivables pursuant
to the Receivables Servicing Agreement.
"Business Day" means a day other than a Saturday, Sunday or other
day on which banking institutions in New York State are authorized or required
by law to close.
"Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
"Capitalized Lease Obligations" means an obligation that is required
to be classified and accounted for as a capitalized lease for financial
reporting purposes in accordance with GAAP. The amount of Indebtedness
represented by a Capitalized Lease Obligation shall be the capitalized amount of
such obligation determined in accordance with GAAP, and the Stated Maturity
thereof shall be the date of the last scheduled payment of rent or any other
amount due under the relevant lease prior to the first date upon which such
lease may be terminated by the lessee without payment of a penalty.
"Change of Control" means the occurrence of any of
the following events:
(a) prior to the earlier to occur of the first public offering of
Voting Stock of the Company or
5
Holdings, the Permitted Investors cease to be entitled (by "beneficial
ownership" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act) of
Voting Stock, contract or otherwise) to elect or cause the election of
directors of Holdings having a majority of the total voting power of the
board of directors of Holdings, whether as a result of issuance of
securities of Holdings, any merger, consolidation, liquidation or
dissolution of Holdings, any direct or indirect transfer of securities by
any Permitted Investor or otherwise (for purposes of this clause (a), the
Permitted Investors shall be deemed to beneficially own any Voting Stock
of a corporation (the "specified corporation") held by any other
corporation (the "parent corporation") so long as one or more of the
Permitted Investors beneficially own (as so defined), directly or
indirectly, in the aggregate a majority of the voting power of the Voting
Stock of the parent corporation);
(b) prior to the first public offering of Voting Stock of the
Company, Holdings shall cease to own 100% of the issued and outstanding
Voting Stock of the Company, whether as a result of issuance of securities
of the Company, any merger, consolidation, liquidation or dissolution of
the Company, any direct or indirect transfer of securities by Holdings or
otherwise;
(c) after the first public offering of Voting Stock of the Company
or Holdings, any person or group (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act), other than one or more of the Permitted
Holders, is or becomes the beneficial owner (as defined in clause (a)
above), directly or indirectly, of Voting Stock that represents more than
30% of the aggregate ordinary voting power of all classes of the Voting
Stock of the Company or Holdings, voting together as a single class, and
either (x) the Permitted Holders beneficially own (as defined in clause
(a) above), directly or indirectly, in the aggregate Voting Stock that
represents a lesser
6
percentage of the aggregate ordinary voting power of all classes of the
Voting Stock of the Company or Holdings, as the case may be, voting
together as a single class, than such other person or group and are not
entitled (by voting power, contract or otherwise) to elect directors of
the Company or Holdings having a majority of the total voting power of the
Board of Directors or the board of directors of Holdings, as the case may
be, or (y) such other person or group is entitled to elect directors of
the Company or Holdings having a majority of the total voting power of the
Board of Directors or the board of directors of Holdings, as the case may
be; or
(d) after the first public offering of Voting Stock of Holdings or
the Company, during any period of not greater than two consecutive years
beginning after the Issue Date, individuals who at the beginning of such
period constituted the Board of Directors or the board of directors of
Holdings, as the case may be (together with any new directors whose
election by such Board of Directors or such board of directors of
Holdings, as the case may be, or whose nomination for election by the
shareholders of the Company or Holdings, as the case may be, was approved
by a vote of a majority of the directors of the Company or Holdings, as
the case may be, then still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved), cease for any reason to have a majority of the
total voting power of the Board of Directors or the board of directors of
Holdings, as the case may be.
"Citicorp" means Citicorp, a Delaware corporation.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means the party named as such in this Indenture until a
successor replaces it pursuant to the
7
applicable provisions of this Indenture and, thereafter, means the successor
and, for purposes of any provision contained herein and required by the TIA,
each other obligor on the indenture securities.
"Consolidated Coverage Ratio" as of any date of determination means
the ratio of (i) the aggregate amount of EBITDA for the period of the most
recent four consecutive fiscal quarters ending at least 45 days prior to the
date of such determination (determined, for the four fiscal quarters ending
prior to the Issue Date, or any thereof, on a pro forma basis to give effect to
the acquisition of the Home Furnishings Group by the Company as if it occurred
at the beginning of such period) to (ii) Consolidated Interest Expense for such
four fiscal quarters (determined, for the four fiscal quarters ending prior to
the Issue Date, or any thereof, on a pro forma basis to give effect to the
acquisition of the Home Furnishings Group by the Company as if it had occurred
at the beginning of such period); provided, however, that (1) if the Company or
any Restricted Subsidiary has Incurred any Indebtedness since the beginning of
such period that remains outstanding on such date of determination or if the
transaction giving rise to the need to calculate the Consolidated Coverage Ratio
is an Incurrence of Indebtedness, EBITDA and Consolidated Interest Expense for
such period shall be calculated after giving effect on a pro forma basis to such
Indebtedness as if such Indebtedness had been Incurred on the first day of such
period and the discharge of any other Indebtedness repaid, repurchased, defeased
or otherwise discharged with the proceeds of such new Indebtedness as if such
discharge had occurred on the first day of such period (except that in the case
of Indebtedness to finance seasonal fluctuations in working capital needs
Incurred under a revolving credit or similar arrangement, the amount thereof
shall be deemed to be the average daily balance of such Indebtedness during such
four- quarter period); (2) if since the beginning of such period the Company or
any Restricted Subsidiary shall have made any Asset Disposition, (x) the EBITDA
for such period shall be reduced by an amount equal to the EBITDA (if positive)
directly attributable to the assets which are the
8
subject of such Asset Disposition for such period or increased by an amount
equal to the EBITDA (if negative) directly attributable thereto for such period
and (y) Consolidated Interest Expense for such period shall be reduced by an
amount equal to the Consolidated Interest Expense directly attributable to any
Indebtedness of the Company or any Restricted Subsidiary repaid, repurchased,
defeased or otherwise discharged with respect to the Company and its continuing
Restricted Subsidiaries in connection with such Asset Disposition for such
period (or, if the Capital Stock of any Restricted Subsidiary is sold, the
Consolidated Interest Expense for such period directly attributable to the
Indebtedness of such Restricted Subsidiary to the extent the Company and its
continuing Restricted Subsidiaries are no longer liable for such Indebtedness
after such sale); (3) if since the beginning of such period the Company or any
Restricted Subsidiary (by merger or otherwise) shall have made an Investment in
any Restricted Subsidiary (or any Person which becomes a Restricted Subsidiary)
or an acquisition of assets, including any acquisition of assets occurring in
connection with a transaction causing a calculation to be made hereunder, which
constitutes all or substantially all of the assets of an operating unit of a
business, EBITDA and Consolidated Interest Expense for such period shall be
calculated after giving pro forma effect thereto (including the Incurrence of
any Indebtedness in connection therewith) as if such Investment or acquisition
occurred on the first day of such period and (4) if since the beginning of such
period any Person (that subsequently became a Restricted Subsidiary or was
merged with or into the Company or any Restricted Subsidiary since the beginning
of such period) shall have made any Asset Disposition or any Investment or
acquisition of assets that would have required an adjustment pursuant to clause
(2) or (3) above if made by the Company or a Restricted Subsidiary during such
period, EBITDA and Consolidated Interest Expense for such period shall be
calculated after giving pro forma effect thereto as if such Asset Disposition,
Investment or acquisition of assets occurred on the first day of such period.
For purposes of this definition, whenever pro forma effect is to be given to
9
an acquisition of assets, the amount of income or earnings relating thereto and
the amount of Consolidated Interest Expense associated with any Indebtedness
Incurred in connection therewith, the pro forma calculations shall be determined
in good faith by a responsible financial or accounting Officer of the Company.
If any Indebtedness bears a floating rate of interest and is being given pro
forma effect, the interest expense on such Indebtedness shall be calculated as
if the rate in effect on the date of determination had been the applicable rate
for the entire period (taking into account any Interest Rate Agreement
applicable to such Indebtedness if such Interest Rate Agreement has a remaining
term as at the date of determination in excess of 12 months).
"Consolidated Interest Expense" means, for any period, the total
consolidated interest expense of the Company and its Restricted Subsidiaries for
such period, plus, to the extent Incurred by the Company and its Restricted
Subsidiaries in such period but not included in such interest expense: (i)
interest expense attributable to Capitalized Lease Obligations; (ii)
amortization of debt discount; (iii) capitalized interest; (iv) noncash interest
expense; (v) commissions, discounts and other fees and charges with respect to
letters of credit and bankers' acceptance financing; (vi) net costs associated
with Hedging Obligations; (vii) the interest portion of any deferred payment
obligation; (viii) interest actually paid on any Indebtedness of any other
Person that is Guaranteed by the Company or any Restricted Subsidiary; (ix) the
cash contributions to any employee stock ownership plan or similar trust to the
extent such contributions are used by such plan or trust to pay interest or fees
to any Person (other than the Company or a Wholly Owned Subsidiary) in
connection with Indebtedness Incurred by such plan or trust; and (x) the earned
discount or yield with respect to the sale of receivables (without duplication
of amounts included in Consolidated Net Income); but in no event shall include
(i) amortization of debt issuance costs; (ii) Preferred Stock dividends in
respect of all Preferred Stock of Subsidiaries of the Company and Disqualified
Stock of the
10
Company held by Persons other than the Company or a Wholly Owned Subsidiary; or
(iii) interest Incurred in connection with Investments in discontinued
operations.
"Consolidated Net Income" means, for any period, the consolidated
net income (loss) of the Company and its Subsidiaries for such period; provided,
however, that there shall not be included in such Consolidated Net Income:
(i) any net income (loss) of any Person if such Person is not a
Restricted Subsidiary, except that (A) subject to the limitations
contained in clause (iv) below, the Company's equity in the net income of
any such Person for such period shall be included in such Consolidated Net
Income up to the aggregate amount of cash actually distributed by such
Person during such period to the Company or a Restricted Subsidiary as a
dividend or other distribution (subject, in the case of a dividend or
other distribution to a Restricted Subsidiary, to the limitations
contained in clause (iii) below) and (B) the Company's equity in a net
loss of any such Person (other than an Unrestricted Subsidiary) for such
period shall be included in determining such Consolidated Net Income;
(ii) for purposes of Section 4.04(a)(3)(A) only, any net income
(loss) of any person acquired by the Company or a Subsidiary in a pooling
of interests transaction for any period prior to the date of such
acquisition;
(iii) any net income (loss) of any Restricted Subsidiary if such
Subsidiary is subject to restrictions, directly or indirectly, on the
payment of dividends or the making of distributions by such Restricted
Subsidiary, directly or indirectly, to the Company, except that (A)
subject to the limitations contained in (iv) below, the Company's equity
in the net income of any such Restricted Subsidiary for such period shall
be included in such Consolidated Net Income up to the aggregate amount of
cash that could
11
have been distributed by such Restricted Subsidiary during such period to
the Company or another Restricted Subsidiary as a dividend (subject, in
the case of a dividend that could have been made to another Restricted
Subsidiary, to the limitation contained in this clause) and (B) the
Company's equity in a net loss of any such Restricted Subsidiary for such
period shall be included in determining such Consolidated Net Income;
(iv) any gain (or loss) realized upon the sale or other disposition
of any asset of the Company or its consolidated Subsidiaries (including
pursuant to any Sale/Leaseback Transaction) which is not sold or otherwise
disposed of in the ordinary course of business and any gain (or loss)
realized upon the sale or other disposition of any Capital Stock of any
Person;
(v) any extraordinary gain or loss; and
(vi) the cumulative effect of a change in accounting principles
after the Issue Date.
Notwithstanding the foregoing, for the purpose of Section 4.04 only,
there shall be excluded from Consolidated Net Income any dividends, repayments
of loans or advances or other transfers of assets from Unrestricted Subsidiaries
to the Company or a Restricted Subsidiary to the extent such dividends,
repayments or transfers increase the amount of Restricted Payments permitted
under Section 4.04(a)(3)(D). Notwithstanding anything to the contrary in Section
4.04, all amounts paid, advanced or loaned to Holdings pursuant to Sections
4.04(b)(ix) or 4.04(b)(x) shall be deducted in computing Consolidated Net Income
and all repayments by Holdings of advances or loans made pursuant to Section
4.04(b)(x) shall be included in calculating Consolidated Net Income. For
purposes of determining Consolidated Net Income for a period, tax expense with
respect to taxes covered by the Tax Sharing Agreement shall equal the amount of
payments
12
required to be made by the Company and its Subsidiaries under the Tax Sharing
Agreement for such period.
"Consolidated Net Worth" means the total of the amounts shown on the
balance sheet of the Company and the Restricted Subsidiaries, determined on a
Consolidated basis, as of the end of the most recent fiscal quarter of the
Company ending at least 45 days prior to the taking of any action for the
purpose of which the determination is being made, as (i) the par or stated value
of all outstanding Capital Stock of the Company plus (ii) paid-in capital or
capital surplus relating to such Capital Stock plus (iii) any retained earnings
or earned surplus less (A) any accumulated deficit and (B) any amounts
attributable to Disqualified Stock.
"Consolidated Non-Cash Charges" of any Person means, for any period,
the aggregate depreciation, amortization (including the amortization of the cost
of the fabric sample books) and other non-cash charges of such Person and its
Consolidated Subsidiaries for such period, on a consolidated basis, as
determined in accordance with GAAP (excluding any such other non-cash charge
which requires an accrual or reserve for cash charges for any future period).
"Consolidation" means the consolidation of the accounts of each of
the Restricted Subsidiaries with those of the Company in accordance with GAAP
consistently applied; provided, however, that "Consolidation" shall not include
consolidation of the accounts of any Unrestricted Subsidiary, but the interest
of the Company or any Restricted Subsidiary in an Unrestricted Subsidiary shall
be accounted for as an investment. The term "Consolidated" has a correlative
meaning.
"Credit Agreement" means the Credit Agreement dated as of the Issue
Date, as amended, waived or otherwise modified from time to time, among
Holdings, the Company, the other borrowers party thereto from time to time, the
lenders party thereto from time to time, Chemical Bank, a New York banking
corporation, as administrative agent, and Chemical
13
Bank Delaware, as issuing bank (except to the extent that any such amendment,
waiver or other modification thereto would be prohibited by the terms of this
Indenture).
"Currency Agreement" means with respect to any Person any foreign
exchange contract, currency swap agreement or other similar agreement or
arrangement as to which such Person is a party or a beneficiary.
"Default" means any event which is, or after notice or passage of
time or both would be, an Event of Default.
"Definitive Securities" means Securities that are in the form of
Exhibit A or Exhibit B attached hereto that do not include the information
called for by footnote 1 thereof.
"Depository" means, with respect to the Securities issuable or
issued in whole or in part in global form, the person specified in Section 2.03
as the Depository with respect to the Securities, until a successor shall have
been appointed and becomes such pursuant to the applicable provisions of this
Indenture, and thereafter, "Depository" shall mean or include such successor.
"Designated Senior Indebtedness" of the Company means (i) the Bank
Indebtedness and (ii) any other Senior Indebtedness of the Company which, at the
date of determination, has an aggregate principal amount outstanding of, or
under which, at the date of determination, the holders thereof are committed to
lend at least $10.0 million and is specifically designated by the Company in the
instrument evidencing or governing such Senior Indebtedness as "Designated
Senior Indebtedness" for purposes of this Indenture. "Designated Senior
Indebtedness" of any Guarantor Subsidiary has a correlative meaning.
"Disqualified Stock" means, with respect to any Person, any Capital
Stock which by its terms (or by the terms of any security into which it is
convertible or for
14
which it is exchangeable or exercisable) or upon the happening of any event (i)
matures or is mandatorily redeemable pursuant to a sinking fund obligation or
otherwise; (ii) is convertible or exchangeable for Indebtedness or Disqualified
Stock; or (iii) is redeemable at the option of the holder thereof, in whole or
in part, in each case on or prior to 91 days after the Stated Maturity of the
Securities. Disqualified Stock shall not include any Capital Stock that is not
otherwise Disqualified Stock if by its terms the holders have the right to
require the issuer to repurchase such stock upon a Change of Control (or upon
events substantially similar to a Change of Control).
"Domestic Subsidiary" means any Restricted Subsidiary of the Company
other than a Foreign Subsidiary.
"EBITDA" for any period means the Consolidated Net Income for such
period, plus the following to the extent deducted in calculating such
Consolidated Net Income: (i) income tax expense; (ii) Consolidated Interest
Expense; and (iii) Consolidated Non-Cash Charges, in each case for such period.
Notwithstanding the foregoing, the provision for taxes based on the income or
profits of, and the depreciation and amortization of, a Subsidiary of the
Company shall be added to Consolidated Net Income to compute EBITDA only to the
extent (and in the same proportion) that the net income (loss) of such
Subsidiary was included in calculating Consolidated Net Income. For purposes of
determining EBITDA for a period, tax expense with respect to taxes covered by
the Tax Sharing Agreement shall equal the amount of payments required to be made
by the Company and its Subsidiaries under the Tax Sharing Agreement for such
period.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange and Registration Rights Agreement" means the Exchange and
Registration Rights Agreement dated as of the Issue Date by and among the
Initial Purchasers and the Company, as such agreement may be amended, modified,
or
15
supplemented from time to time in accordance with the terms thereof.
"Exchange Offer" shall have the meaning set forth in the Exchange
and Registration Rights Agreement.
"Exchange Offer Registration Statement" shall have the meaning set
forth in the Exchange and Registration Rights Agreement.
"Exchange Securities" means the 10-7/8% Senior Subordinated Notes
due 2006 to be issued pursuant to this Indenture in connection with the offer to
exchange Securities for the Initial Securities that may be made by the Company
pursuant to the Exchange and Registration Rights Agreement.
"Financing Disposition" means any sale of a Receivable, or interest
therein, by the Company or any Subsidiary to the Receivables Subsidiary, or by
the Receivables Subsidiary, pursuant to the Permitted
Receivables Financing.
"Foreign Subsidiary" means any Restricted Subsidiary of the Company
which is not organized under the laws of the United States of America or any
State thereof or the District of Columbia.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the Issue Date, including those set forth
in the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants, in statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession. All ratios and computations based on GAAP contained in
this Indenture shall be computed in conformity with GAAP.
16
"Global Security" means a Security that is in the form of Exhibit A
or Exhibit B hereto that includes the information called for by footnote 1
thereof.
"Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness or other obligation
of any other Person and any obligation, direct or indirect, contingent or
otherwise, of such Person (i) to purchase or pay (or advance or supply funds for
the purchase or payment of) such Indebtedness or other obligation of such other
Person (whether arising by virtue of partnership arrangements, or by agreement
to keep well, to purchase assets, goods, securities or services, to take or pay,
or to maintain financial statement conditions or otherwise) or (ii) entered into
for purposes of assuring in any other manner the obligee of such Indebtedness or
other obligation of the payment thereof or to protect such obligee against loss
in respect thereof (in whole or in part); provided, however, that the term
"Guarantee" shall not include endorsements for collection or deposit in the
ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"Guarantor Subsidiary" means any Person that has issued a Subsidiary
Guaranty.
"Hedging Obligations" of any Person means the obligations of such
Person pursuant to any Interest Rate Agreement or Currency Agreement.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Registrar's books.
"Holdings" means Furnishings International Inc., a Delaware
corporation.
"Holdings Business" means the business conducted by Holdings (i) as
successor to Lineage Home Furnishings, Inc. ("Lineage") and Masco Home
Furnishings, Inc. ("MHF") and (ii) that is substantially consistent with the
business
17
of Lineage and MHF as conducted immediately prior to the Issue Date.
"Home Furnishings Group" means the corporations comprising the home
furnishings group of Masco as constituted immediately prior to the Issue Date.
"Incur" means issue, assume, Guarantee, incur or otherwise become
liable for; provided, however, that any Indebtedness or Capital Stock of a
Person existing at the time such person becomes a Restricted Subsidiary (whether
by merger, consolidation, acquisition or otherwise) shall be deemed to be
Incurred by such person at the time it becomes a Restricted Subsidiary; provided
further, however, that in the case of a discount security, the accretion of
original issue discount on such security shall not be considered an Incurrence
of Indebtedness but the whole face amount of such security shall be deemed
Incurred upon issuance of such security.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication):
(i) the principal of and premium (if any) in respect of indebtedness
of such Person for borrowed money;
(ii) the principal of and premium (if any) in respect of obligations
of such Person evidenced by bonds, debentures, notes or other similar
instruments;
(iii) all obligations of such Person in respect of letters of credit
or other similar instruments (including reimbursement obligations with
respect thereto) other than letters of credit or similar instruments
supporting trade payables entered into in the ordinary course of business
of such person to the extent that such letters of credit are not drawn
upon or, if and to the extent drawn upon, such drawing is reimbursed not
later than the third business day following such drawing;
18
(iv) all obligations of such Person to pay the deferred and unpaid
purchase price of property or services (except Trade Payables), which
purchase price is due more than six months after the date of placing such
property in service or taking delivery and title thereto or the completion
of such services;
(v) all Capitalized Lease Obligations and all Attributable Debt of
such Person;
(vi) the amount of all obligations of such Person with respect to
the redemption, repayment or other repurchase of any Disqualified Stock
or, with respect to any Subsidiary of the Company, any Preferred Stock
(but excluding, in each case, any accrued dividends);
(vii) all Indebtedness of other Persons secured by a Lien on any
asset of such Person, whether or not such Indebtedness is assumed by such
Person; provided, however, that the amount of Indebtedness of such Person
shall be the lesser of (A) the fair market value of such asset at such
date of determination and (B) the amount of such Indebtedness of such
other Persons;
(viii) all Indebtedness of other Persons to the extent Guaranteed by
such Person; and
(ix) to the extent not otherwise included in this definition,
Hedging Obligations of such Person.
The amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date of all unconditional obligations as described
above and the maximum liability, upon the occurrence of the contingency giving
rise to the obligation, of any contingent obligations at such date.
"Indenture" means this Indenture as amended or supplemented from
time to time.
19
"Initial Securities" means the 10-7/8% Senior Subordinated Notes due
2006, issued under this Indenture on or about the date hereof.
"Interest Rate Agreement" means, with respect to any Person, any
interest rate protection agreement, interest rate future agreement, interest
rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement as to which such Person is party or a
beneficiary.
"Investment" in any Person means any direct or indirect advance,
loan (other than advances or loans to customers or suppliers in the ordinary
course of business that are recorded as accounts receivable on the balance sheet
of the Person making such loan or advance) or other extension of credit
(including by way of Guarantee or similar arrangement) 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 of Capital Stock, Indebtedness or other similar instruments issued
by such Person. For purposes of the definition of "Unrestricted Subsidiary" and
Section 4.04, (i) "Investment" shall include the portion (proportionate to the
Company's equity interest in such Subsidiary) of the fair market value of the
net assets of any Subsidiary of the Company at the time that such Subsidiary is
designated an Unrestricted Subsidiary; provided, however, that upon a
redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall
be deemed to continue to have a permanent "Investment" in an Unrestricted
Subsidiary in an amount (if positive) equal to (x) the Company's "Investment" in
such Subsidiary at the time of such redesignation less (y) the portion
(proportionate to the Company's equity interest in such Subsidiary) of the fair
market value of the net assets of such Subsidiary at the time of such
redesignation; and (ii) any property transferred to or from an Unrestricted
Subsidiary shall be valued at its fair market value at the
20
time of such transfer, in each case as determined in good faith by the Board of
Directors.
"Issue Date" means the date on which the Initial Securities are
originally issued.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any conditional sale or other title
retention agreement or lease in the nature thereof).
"Management Agreement" means the Management Agreement dated as of
the Issue Date, between Holdings and the Company as in effect on the Issue Date.
"Management Investors" means the officers and employees of Holdings,
the Company or a Subsidiary of the Company who acquire Voting Stock of Holdings
on or after the Issue Date and any of their Permitted Transferees.
"Masco" means Masco Corporation, a Delaware corporation.
"Masco Investors" means Masco and its Permitted Transferees.
"Masco Notes" means the senior pay-in-kind notes of Holdings issued
to Masco on the Issue Date in an aggregate amount of $285.0 million.
"Master Servicer" means any entity formed for purposes of acting as
a master servicer under a Permitted Receivables Financing, in each case, a
special purpose Wholly Owned Subsidiary.
"Moody's" means Moody's Investors Service, Inc., and its successors.
"Net Available Cash" from an Asset Disposition means cash payments
received (including any cash payments received by way of deferred payment of
principal pursuant to
21
a note or installment receivable, or from an escrow account or otherwise, in
each case only as and when received, but excluding any other consideration
received in the form of assumption by the acquiring person of Indebtedness or
other obligations relating to the properties or assets that are the subject of
such Asset Disposition or received in any other non-cash form) therefrom, in
each case net of: (i) all legal, title and recording expenses, commissions and
other fees and expenses incurred, and all Federal, state, provincial, foreign
and local taxes required to be paid or accrued as a liability under GAAP, as a
consequence of such Asset Disposition; (ii) all payments made on any
Indebtedness which is secured by any assets subject to such Asset Disposition,
in accordance with the terms of any Lien upon such assets, or which must by its
terms, or in order to obtain a necessary consent to such Asset Disposition, or
by applicable law, be repaid out of the proceeds from such Asset Disposition;
(iii) all distributions and other payments required to be made to minority
interest holders in Subsidiaries or joint ventures as a result of such Asset
Disposition; and (iv) appropriate amounts to be provided by the party or parties
making such Asset Disposition as a reserve, in accordance with GAAP, against any
liabilities associated with the assets disposed of in such Asset Disposition and
retained by the Company or any Restricted Subsidiary after such Asset
Disposition.
"Net Cash Proceeds," with respect to any issuance or sale of Capital
Stock, means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, filing and registration fees, trustee's fees,
consultant and other fees actually incurred in connection with such issuance or
sale and net of taxes paid or payable as a result thereof.
"Officer" means the Chairman of the Board, the Chief Executive
Officer, the Chief Financial Officer, the President, any Vice President, the
Treasurer or the Secretary of the Company.
22
"Officers' Certificate" means a certificate signed by two Officers.
"Opinion of Counsel" means a written opinion from legal counsel who
is acceptable to the Trustee. The counsel may be an employee of or counsel to
the Company or the Trustee.
"Permitted Holders" means the 399 Investors, the Masco Investors and
the Management Investors; provided that any Management Investor and any 399
Investor (other than 399 Venture Partners, Citicorp or any direct or indirect
wholly-owned Subsidiary of Citicorp) shall not be a "Permitted Holder" if such
Person is the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act), directly or indirectly, of Voting Stock that represents at least
30% of the aggregate ordinary voting power of all classes of the Voting Stock of
the Company or Holdings, voting together as a single class (without giving
effect to the attribution of beneficial ownership as a result of any
stockholders agreement as in effect on the Issue Date, and any amendment to such
agreement that does not materially change the allocation of voting power
provided for in such agreement).
"Permitted Investment" means an Investment by the Company or any
Restricted Subsidiary in: (i) the Company; (ii) a Restricted Subsidiary or a
Person which shall, upon the making of such Investment, become a Restricted
Subsidiary; provided, however, that the primary business of such Restricted
Subsidiary is a Related Business; (iii) another Person if as a result of such
Investment such other Person is merged or consolidated with or into, or
transfers or conveys all or substantially all its assets to, the Company or a
Restricted Subsidiary; provided, however, that such Person's primary business is
a Related Business; (iv) Temporary Cash Investments; (v) receivables owing to
the Company or any Restricted Subsidiary, if created or acquired in the ordinary
course of business and payable or dischargeable in accordance with customary
trade terms; provided, however, that such trade terms may include such
concessionary trade terms as the Company or any such
23
Restricted Subsidiary deems reasonable under the circumstances; (vi) payroll,
travel and similar advances to cover matters that are expected at the time of
such advances ultimately to be treated as expenses for accounting purposes and
that are made in the ordinary course of business; (vii) loans or advances to
employees made in the ordinary course of business and not exceeding $5.0 million
in the aggregate outstanding at any one time; and (viii) stock, obligations or
securities received in settlement of debts created in the ordinary course of
business and owing to the Company or any Restricted Subsidiary or in
satisfaction of judgments; (ix) Investments in property or assets to be used in
(or in Restricted Subsidiaries and any entity that, as a result of such
Investment, is a Restricted Subsidiary engaged in) a Related Business; (x)
securities received as consideration in sales of assets made in compliance with
Section 4.06; (xi) Guarantees relating to Indebtedness which is permitted to be
Incurred under Section 4.03; or (xii) other Investments, of any type, provided
that the amount of such Investments made after the Issue Date in reliance on
this clause (xii) and outstanding at any time does not exceed the amount of the
Investments set forth on Schedule 4.04 hereto plus $25.0 million.
"Permitted Investors" means (i) the Masco Investors: (ii) 399
Venture Partners, Citicorp and any direct or indirect wholly owned Subsidiary of
Citicorp; and (iii) any voting trust for shares held by Management Investors,
the voting trustees of which trust are (and must be) Management Investors and
which voting trust does not have the power (taking into account any voting
agreement) to elect or cause the election of directors having more than 30% of
the total voting power of directors on the board of directors of Holdings.
"Permitted Receivables Financing" means (a) the Bridge Receivables
Financing and (b) any subsequent financing secured substantially by Receivables
(and related assets) originated by Holdings and any Restricted Subsidiary in any
amount; provided that (i) such subsequent receivables financing has a later or
equal final maturity and a longer
24
or equal weighted average life than the Bridge Receivables Financing; (ii) all
sales of Receivables to or by the Receivables Subsidiary are made at fair market
value (as determined in good faith by the Board of Directors); (iii) the
interest rate applicable to such subsequent receivables financing shall be a
market interest rate (as determined in good faith by the Board of Directors) as
of the time such financing is entered into; (iv) such financing is non-recourse
to the Company and its Subsidiaries (other than the Receivables Subsidiary)
except to a limited extent customary for such financings; and (v) the covenants,
events of default and other provisions thereof, collectively, shall be market
terms (as determined in good faith by the Board of Directors).
"Permitted Transferee" means (a) with respect to 399 Venture
Partners: (i) Citicorp, any direct or indirect wholly owned subsidiary of
Citicorp, and any officer, director or employee of 399 Venture Partners,
Citicorp or any wholly owned subsidiary of Citicorp; (ii) any spouse or lineal
descendant (including by adoption and stepchildren) of the officers, directors
and employees referred to in clause (a)(i) above; and (iii) any trust,
corporation or partnership 100% in interest of the beneficiaries, stockholders
or partners of which consists of one or more of the persons described in clause
(a)(i) or (ii) above; (b) with respect to Masco, any direct or indirect
Subsidiary of Masco; and (c) with respect to any officer or employee of
Holdings, the Company or a Subsidiary of the Company, (i) any spouse or lineal
descendant (including by adoption and stepchildren) of such officer or employee
and (ii) any trust, corporation or partnership 100% in interest of the
beneficiaries, stockholders or partners of which consists of such officer or
employee, any of the persons described in clause (c)(i) above or any combination
thereof.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
25
"Preferred Stock," as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however designated)
that is preferred as to the payment of dividends, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"principal" of a Security means the principal of the Security plus
the premium, if any, payable on the Security that is due or overdue or is to
become due at the relevant time.
"Public Equity Offering" means an underwritten primary public
offering of common stock of the Company or Holdings (or, for purposes of Section
4.11(d), the Domestic Subsidiary referred to therein) pursuant to an effective
registration statement (other than a registration statement on Form S-4, S-8 or
any successor or similar forms) under the Securities Act (whether alone or in
conjunction with any secondary public offering).
"Public Market" means any time after (x) a Public Equity Offering
has been consummated and (y) at least 15% of the total issued and outstanding
common stock of the Company or Holdings (or, for purposes of Section 4.11(d),
the Domestic Subsidiary referred to therein) has been distributed by means of an
effective registration statement under the Securities Act.
"Purchase Money Indebtedness" means Indebtedness (i) consisting of
the deferred purchase price of an asset, any conditional sale obligation, any
obligation under any title retention agreement or any other purchase money
obligation, in each case where the maturity of such Indebtedness does not exceed
the anticipated useful life of the asset being financed, and (ii) incurred to
finance the acquisition by the Company or a Restricted Subsidiary of such asset,
including additions and improvements; provided that such Indebtedness is
incurred within 180 days after the acquisition by the Company or Restricted
Subsidiary of such
26
asset, or is in existence with respect to any asset or other property at the
time such asset or property is acquired.
"Receivable" means a right to receive payment arising from a sale or
lease of goods or services by a Person pursuant to an arrangement with another
Person pursuant to which such other Person is obligated to pay for goods or
services under terms that permit the purchase of such goods and services on
credit, as determined in accordance with GAAP.
"Receivables Pooling Agreement" means the Pooling Agreement relating
to a Permitted Receivables Financing, among the Receivables Subsidiary, the
Master Servicer and the Receivables Trustee.
"Receivables Sale Agreement" means the Receivables Sale Agreement
relating to a Permitted Receivables Financing, among the Receivables Subsidiary,
Holdings, the Company and the Subsidiaries of the Company party thereto.
"Receivables Servicing Agreement" means the Servicing Agreement
relating to a Permitted Receivables Financing, among the Receivables Subsidiary,
the Master Servicer, the Subsidiaries of the Company party thereto and the
Receivables Trustee.
"Receivables Subsidiary" means LFI Receivables Corporation or any
successor thereto or other entity formed for purposes of a Permitted Receivables
Financing, in each case a bankruptcy-remote, special-purpose Wholly Owned
Subsidiary.
"Receivables Trustee" means the trustee on behalf of the holders of
participation interests in the receivables sold pursuant to a Permitted
Receivables Financing.
"Redemption Date" means the date on which the Securities are
optionally redeemed pursuant to Section 3.07.
27
"Refinancing Indebtedness" means Indebtedness that is Incurred to
refund, refinance, replace, renew, repay or extend (including pursuant to any
defeasance or discharge mechanism) (collectively, "refinances" and "refinanced"
shall have a correlative meaning) any Indebtedness existing on the Issue Date or
Incurred in compliance with this Indenture (including Indebtedness of the
Company that refinances Indebtedness of any Restricted Subsidiary (other than
the Receivables Subsidiary) (to the extent permitted in this Indenture) and
Indebtedness of any Restricted Subsidiary that refinances Indebtedness of that
or another Restricted Subsidiary (other than the Receivables Subsidiary) or of
the Company), including Indebtedness that refinances Refinancing Indebtedness;
provided, however, that (i) the Refinancing Indebtedness has a Stated Maturity
no earlier than the Stated Maturity of the Indebtedness being refinanced; (ii)
the Refinancing Indebtedness has an Average Life at the time such Refinancing
Indebtedness is Incurred that is equal to or greater than the Average Life of
the Indebtedness being refinanced; (iii) such Refinancing Indebtedness is
Incurred in an aggregate principal amount (or, if issued with original issue
discount, an aggregate issue price) that is equal to or less than the aggregate
principal amount (or, if issued with original issue discount, the aggregate
accreted value) then outstanding of the Indebtedness being refinanced plus the
amount of any premium reasonably determined by the Company or such Restricted
Subsidiary, as applicable, as necessary at the time of such refinancing to
accomplish such refinancing or required pursuant to the terms thereof, plus the
amount of expenses the Company or such Restricted Subsidiary, as applicable,
Incurred in connection with such refinancing; and (iv) if the Indebtedness being
refinanced is subordinated in right of payment to the Securities, such
Refinancing Indebtedness is subordinated in right of payment to the Securities
to the extent of the Indebtedness being refinanced; provided further, however,
that Refinancing Indebtedness shall not include (x) Indebtedness of the
Receivables Subsidiary that refinances Indebtedness of the Company or (y)
Indebtedness of the Company or a Restricted
28
Subsidiary that refinances Indebtedness of an Unrestricted Subsidiary.
"Registered Exchange Offer" shall have the meaning set forth in the
Exchange and Registration Rights Agreement.
"Related Business" means any business of the Company and the
Restricted Subsidiaries as conducted on the Issue Date and any business related,
ancillary or complementary thereto.
"Representative" means the trustee, agent or representative (if any)
for an issue of Senior Indebtedness.
"Restricted Securities Legend" means the legend set forth in Section
2.06 hereof.
"Restricted Subsidiary" means any Subsidiary of the Company other
than an Unrestricted Subsidiary.
"S&P" means Standard and Poor's Ratings Group, a division of
McGraw-Hill, Inc., and its successors.
"Sale/Leaseback Transaction" means an arrangement relating to
property now owned or hereafter acquired by the Company or a Restricted
Subsidiary whereby the Company or such Restricted Subsidiary transfers such
property to a Person and the Company or such Restricted Subsidiary leases it
from such Person, other than leases between the Company and a Wholly Owned
Subsidiary or between Wholly Owned Subsidiaries.
"SEC" means the Securities and Exchange Commission.
"Secured Indebtedness" of the Company means any Indebtedness of the
Company secured by a Lien. "Secured Indebtedness" of any Guarantor Subsidiary
has a correlative meaning.
29
"Securities" means, collectively, the Initial Securities and, when
and if issued as provided in the Exchange and Registration Rights Agreement, the
Exchange
Securities.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Custodian" means the custodian with respect to the
Global Security (as appointed by the Depository), or any successor entity
thereto and shall initially be the Trustee.
"Senior Indebtedness" of the Company means all principal of, premium
(if any), accrued interest (including interest accruing on or after the filing
of any petition in bankruptcy or for reorganization relating to the Company
whether or not a claim for post filing interest is allowed in such proceedings),
fees, charges, expenses, reimbursement obligations, guarantees and other amounts
owing with respect to all Indebtedness of the Company, and including all Bank
Indebtedness, whether outstanding on the Issue Date or thereafter Incurred,
unless in the instrument creating or evidencing the same or pursuant to which
the same is outstanding it is provided that such obligations are not superior in
right of payment to the Securities; provided, however, that Senior Indebtedness
shall not include (1) any obligation of the Company to any Subsidiary; (2) any
liability for Federal, foreign, state, local or other taxes owed or owing by the
Company; (3) any accounts payable or other liability to trade creditors arising
in the ordinary course of business (including Guarantees thereof or instruments
evidencing such liabilities); (4) any Indebtedness or obligation of the Company
which is subordinate or junior in any respect (other than as a result of the
Indebtedness being unsecured) to any other Indebtedness or obligation of the
Company, including any Senior Subordinated Indebtedness and any Subordinated
Obligations; (5) any obligations with respect to any Capital Stock; or (6) any
Indebtedness Incurred in violation of this
30
Indenture. "Senior Indebtedness" of any Guarantor Subsidiary has a correlative
meaning.
"Senior Subordinated Indebtedness" of the Company means the
Securities and any other Indebtedness of the Company that specifically provides
that such Indebtedness is to rank pari passu with the Securities and is not
subordinated by its terms to any Indebtedness or other obligation of the Company
which is not Senior Indebtedness. "Senior Subordinated Indebtedness" of any
Guarantor Subsidiary has a correlative meaning (and for purposes of such
definition "Securities" shall mean "Subsidiary Guaranty").
"Shelf Registration Statement" shall have the meaning set forth in
the Exchange and Registration Rights Agreement.
"Significant Subsidiary" means any Restricted Subsidiary that would
be a "Significant Subsidiary" of the Company within the meaning of clause (w)(1)
or (2) of Rule 1-02 under Regulation S-X promulgated by the SEC.
"Simmons" means Simmons Upholstered Furniture Corporation, a
Delaware corporation.
"Specified Loss of the Holdings Business" means, for any period, the
amount, if any, by which the Cash Flow of the Holdings Business for such period
is less than zero. For such purpose, "Cash Flow of the Holdings Business" for
any period shall be calculated in accordance with the formula set forth in the
next sentence, for which purpose each item specified therein shall be determined
on an unconsolidated basis in accordance with GAAP on the basis of the
unconsolidated financial statements of Holdings for such period and in
accordance with such pro forma adjustments as are necessary (as determined in
the reasonable judgment of the Company) so as to take into account, with respect
to each item in such calculation, only the business and operations of Holdings
as they pertain to the Holdings Business in the form in which it is conducted on
the Issue
31
Date and not to any other business, operation, investment or subsidiary of
Holdings (including the Company and including any other business or investment
undertaken by the entities comprising the Holdings Business), whether in
existence on the Issue Date or thereafter made, developed or acquired. Cash Flow
of the Holdings Business shall equal (a) the sum of: (i) net income for such
period; (ii) the provision for income taxes to the extent such provision reduces
net income for such period; (iii) the amount of depreciation, amortization and
other non-cash expenses (including non-cash interest expense), losses or other
charges that were deducted in determining net income for such period; and (iv)
all Impermissible Expenses to the extent deducted in calculating net income;
minus (b) the sum of: (i) any non-cash gains included in net income and not
otherwise excluded from clause (a) above; (ii) capital expenditures paid for by
Holdings with cash from operations during such period for the sole purpose of
the operations of the Holdings Business; and (iii) payments in respect of income
taxes during such period, but only to the extent attributable to the taxable
income, if any, of Holdings attributable to the Holdings Business. For purposes
of the foregoing, non-cash interest expense shall be deemed to include any
interest expense (whether or not actually paid in cash) on the Masco Notes prior
to the eighth anniversary of the original issuance of the Masco Notes.
"Impermissible Expenses" shall mean all payments of any kind to, and expenses or
costs incurred by Holdings on behalf or for the benefit of, any holder of any
security of Holdings, any subsidiary of Holdings or any other Affiliate of
Holdings, except for payments for goods or services provided by such Person but
only to the extent of the fair market value of such goods and services provided
to or for the benefit of the Holdings Business.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the payment of principal
of such security is due and payable, including pursuant to any mandatory
redemption provision (but excluding any provision providing for the repurchase
of such security at the option of the holder thereof upon the happening of any
contingency beyond
32
the control of the issuer unless such contingency has occurred).
"Subordinated Obligation" of the Company means any Indebtedness of
the Company (whether outstanding on the Issue Date or thereafter Incurred) which
is subordinate or junior in right of payment to the Securities pursuant to a
written agreement. "Subordinated Obligation" of any Guarantor Subsidiary has a
correlative meaning.
"Subsidiary" of any Person means any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of Capital Stock or other interests (including partnership
interests) entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers, trustees or members of any other
governing body thereof is at the time owned or controlled, directly or
indirectly, by (i) such Person or (ii) one or more Subsidiaries of such Person.
"Subsidiary Guaranty" means any Guarantee of the Securities which
may from time to time be executed and delivered pursuant to the terms of this
Indenture. Each such Subsidiary Guaranty shall be in the form prescribed in this
Indenture.
"Sunbury" means Sunbury Textile Mills, Inc., a New York corporation.
"Sunbury Factoring Arrangement" means factoring arrangements entered
into in the ordinary course of business by Sunbury in an aggregate amount not to
exceed $20,000,000 at any time outstanding.
"Tax Sharing Agreement" means the Tax Sharing Agreement dated as of
the Issue Date among Holdings, the Company, Simmons and the Receivables
Subsidiary as in effect on the Issue Date.
33
"Temporary Cash Investments" means any of the following: (i) any
investment in direct obligations (x) of the United States of America or any
agency thereof or obligations Guaranteed by the United States of America or any
agency thereof or (y) of any foreign country recognized by the United States of
America rated at least "A" by S&P or "A-1" by Moody's; (ii) investments in time
deposit accounts, certificates of deposit and money market deposits maturing
within 365 days of the date of acquisition thereof issued by a bank or trust
company which is organized under the laws of the United States of America, any
state thereof or any foreign country recognized by the United States of America
having capital and surplus in excess of $250.0 million (or the foreign currency
equivalent thereof) and whose long-term debt is rated "A" (or such similar
equivalent rating) or higher by at least one nationally recognized statistical
rating organization (as defined in Rule 436 under the Securities Act); (iii)
repurchase obligations with a term of not more than 30 days for underlying
securities of the types described in clause (i) above entered into with a bank
meeting the qualifications described in clause (ii) above; (iv) investments in
commercial paper, maturing not more than 270 days after the date of acquisition,
issued by a corporation (other than an Affiliate of the Company) organized and
in existence under the laws of the United States of America or any foreign
country recognized by the United States of America with a rating at the time as
of which any investment therein is made of "P-1" (or higher) according to
Moody's or "A-1" (or higher) according to S&P; (v) investments in securities
with maturities of six months or less from the date of acquisition issued or
fully guaranteed by any state, commonwealth or territory of the United States of
America, or by any political subdivision or taxing authority thereof, and rated
at least "A" by S&P or "A" by Moody's; (vi) any money market deposit accounts
issued or offered by a domestic commercial bank or a commercial bank organized
and located in a country recognized by the United States of America, in each
case, having capital and surplus in excess of $250 million (or the foreign
currency equivalent thereof), or investments in money market funds complying
with the risk limiting
34
conditions of Rule 2a-7 (or any successor rule) of the Commission under the
Investment Company Act of 1940, as amended; and (vii) similar investments
approved by the Board of Directors in the ordinary course of business.
"Term Loans" means the Tranche A Term Loans and the Tranche B Term
Loans available pursuant to the Credit Agreement.
"399 Investors" means 399 Venture Partners and its Permitted
Transferees.
"399 Venture Partners" means 399 Venture Partners, Inc., a Delaware
corporation.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date of this Indenture.
"Trade Payables" means, with respect to any Person, any accounts
payable or any indebtedness or monetary obligation to trade creditors created,
assumed or Guaranteed by such Person arising in the ordinary course of business
in connection with the acquisition of goods or services.
"Transfer Restricted Securities" means Securities that bear or are
required to bear the legend set forth in Section 2.06 hereof.
"Treasury Rate" means the yield to maturity at the time of
computation of United States Treasury securities with a constant maturity (as
compiled by, and published in, the most recent Federal Reserve Statistical
Release H.15(519) which has become publicly available at least two business days
prior to the date fixed for redemption of the Securities following a Change of
Control (or, if such Statistical Release is no longer published, any publicly
available source of similar market data)) most nearly equal to the then
remaining Average Life to Stated Maturity of the Securities; provided, however,
that if the Average Life to Stated Maturity of the Securities is not equal to
the
35
constant maturity of a United States Treasury security for which a weekly
average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which such yields are
given, except that if the Average Life to Stated Maturity of the Securities is
less than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.
"Trustee" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor.
"Trust Officer" means the Chairman of the Board, the President, or
any other officer or assistant officer of the Trustee assigned by the Trustee to
administer its corporate trust matters.
"Uniform Commercial Code" means the New York Uniform Commercial Code
as in effect from time to time.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company
that at the time of determination shall be designated an Unrestricted Subsidiary
by the Board of Directors in the manner provided below and (ii) any Subsidiary
of an Unrestricted Subsidiary. The Board of Directors may designate any
Subsidiary of the Company (including any newly acquired or newly formed
Subsidiary of the Company) to be an Unrestricted Subsidiary unless such
Subsidiary or any of its Subsidiaries owns any Capital Stock or Indebtedness of,
or owns or holds any Lien on any property of, the Company or any other
Subsidiary of the Company that is not a Subsidiary of the Subsidiary to be so
designated; provided, however, that either (A) the Subsidiary to be so
designated has total consolidated assets of $1,000 or less or (B) if such
Subsidiary has consolidated assets greater than $1,000, then such designation
would be permitted under the Section 4.04. The Board of Directors may designate
any Unrestricted Subsidiary to be a Restricted
36
Subsidiary; provided, however, that immediately after giving effect to such
designation (x) the Company could Incur $1 of additional Indebtedness under
paragraph (a) of Section 4.03 and (y) no Default shall have occurred and be
continuing. Any such designation by the Board of Directors shall be evidenced to
the Trustee by promptly filing with the Trustee a copy of the resolution of the
Board of Directors giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
provisions.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable or redeemable at the issuer's option.
"Voting Stock" of a corporation means all classes of Capital Stock
of such corporation then outstanding and normally entitled to vote in the
election of directors.
"Wholly Owned Subsidiary" means a Restricted Subsidiary all the
Capital Stock of which (other than directors' qualifying shares and, to the
extent required by local ownership laws in foreign countries, shares owned by
foreign shareholders) is owned by the Company or another Wholly Owned Subsidiary
(including shares held of record by a nominee for the benefit of the Company or
another Wholly Owned Subsidiary).
SECTION 1.02. Other Definitions.
Term Defined in
---- Section
-------
"Affiliate Transaction"................................ 4.07
"Agent Members"........................................ 2.01(b)
"Bankruptcy Law"....................................... 6.01
"Blockage Notice"...................................... 10.03
37
"covenant defeasance option"........................... 8.01(b)
"Custodian"............................................ 6.01
"Event of Default"..................................... 6.01
"Guarantor Subsidiary Blockage Notice"................. 12.03
"Guarantor Subsidiary Payment Blockage
Period"............................................... 12.03
"Initial Purchasers"................................... 2.01(a)
"legal defeasance option".............................. 8.01(b)
"Legal Holiday"........................................ 13.08
"Non-Global Purchasers"................................ 2.01(c)
"Obligations".......................................... 11.01
"Offer"................................................ 4.06(b)
"Offer Amount"......................................... 4.06(c)
"Offer Period"......................................... 4.06(c)
"QIBs"................................................. 2.01(a)
"pay its Guaranty"..................................... 12.03
"pay the Securities"................................... 10.03
"Paying Agent"......................................... 2.03
"Payment Blockage Period".............................. 10.03
"Purchase Agreement"................................... 2.01(a)
"Purchase Date"........................................ 4.06(c)
"Registrar"............................................ 2.03
"Restricted Certificated Securities"................... 2.01(c)
"Restricted Global Security"........................... 2.01
"Restricted Payment"................................... 4.04
"Rule 144A"............................................ 2.01(a)
"Successor Company".................................... 5.01
38
SECTION 1.03. Incorporation by Reference of Trust Indenture Act.
This Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company and any
other obligor on the indenture 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 have the
meanings assigned to them by such definitions.
SECTION 1.04. 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) "including" means including without limita tion;
(5) words in the singular include the plural and words in the plural
include the singular;
39
(6) unsecured Indebtedness shall not be deemed to be subordinate or
junior to Secured Indebtedness of the Company or a Guarantor Subsidiary,
as the case may be, merely by virtue of its nature as unsecured
Indebtedness;
(7) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal amount thereof that
would be shown on a balance sheet of the issuer dated such date prepared
in accordance with GAAP and accretion of principal on such security shall
be deemed to be the Incurrence of Indebtedness; and
(8) the principal amount of any Preferred Stock shall be (i) the
maximum liquidation value of such Preferred Stock or (ii) the maximum
mandatory redemp tion or mandatory repurchase price with respect to such
Preferred Stock, whichever is greater.
ARTICLE II
The Securities
SECTION 2.01. Form and Dating. The Initial Securities and the
Trustee's certificate of authentication shall be substantially in the form of
Exhibit A, which is hereby incorporated in and expressly made a part of this
Indenture. Any Exchange Securities and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit B, which is
incorporated in and expressly made a part of this Indenture. The Securities may
have notations, legends or endorsements required by law, stock exchange rule,
agreements to which the Company or any Guarantor Subsidiary is subject, if any,
or usage (provided that any such notation, legend or endorsement is in a form
acceptable to the Company). Each Security shall be dated the date of its
authentication. The terms of the Securities set forth in Exhibit A and B are
part of the terms of this Indenture.
40
(a) Global Securities. The Initial Securities are being offered and
sold by the Company pursuant to a Purchase Agreement (the "Purchase Agreement"),
dated July 31, 1996, among the Company, the Guarantor Subsidiaries, Chase
Securities Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated (the
"Initial Purchasers").
Initial Securities offered and sold to "qualified institutional
buyers" (as defined in Rule 144A under the Securities Act) ("QIBs"), in
accordance with Rule 144A under the Securities Act ("Rule 144A") as provided in
the Purchase Agreement, shall be issued initially in the form of a single,
permanent Global Security in definitive, fully registered form without interest
coupons with the Restricted Securities Legend and the legend set forth in
footnote 1 to Exhibit A hereto (the "Restricted Global Security"), which shall
be deposited on behalf of the Initial Purchasers of the Initial Securities
represented thereby with the Trustee, as Securities Custodian for the
Depository, and registered in the name of the Depository or a nominee of the
Depository, duly executed by the Company and authenticated by the Trustee as
hereinafter provided. The aggregate principal amount of the Restricted Global
Security may from time to time be increased or decreased by adjustments made on
the records of the Trustee, as Securities Custodian, and the Depository or its
nominee as hereinafter provided.
(b) Book-Entry Provisions. This Section 2.01(b) shall apply only to
Global Securities deposited with or on behalf of the Depository.
The Company shall execute and the Trustee shall, in accordance with
this Section 2.01(b), authenticate and deliver initially one or more Global
Securities that (i) shall be registered in the name of the Depository for such
Global Security or Global Securities or the nominee of such Depository and (ii)
shall be held by the Trustee as custodian for the Depository.
41
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 by the Trustee as the custodian of the
Depository or under such 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 such 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 of such Depository governing the exercise of the rights of a
holder of a beneficial interest in any Global Security.
(c) Certificated Securities. Except as otherwise provided herein,
owners of beneficial interests in Global Securities shall not be entitled to
receive physical delivery of certificated Securities. Purchasers of Initial
Securities who are not QIBs (referred to herein as the "Non-Global Purchasers")
will receive certificated Initial Securities bearing the Restricted Securities
Legend set forth in Exhibit A hereto ("Restricted Certificated Securities");
provided, however, that upon transfer of such Restricted Certificated Securities
to a QIB or in accordance with Regulation S under the Securities Act, such
Restricted Certificated Securities will, unless the relevant Global Security has
previously been exchanged, be exchanged for an interest in a Global Security
pursuant to the provisions of Section 2.06 hereof. Restricted Certificated
Securities will include the Restricted Securities Legend set forth in Exhibit A
unless removed in accordance with this Section 2.01(c) or Section 2.06(g)
hereof.
After a transfer of any Initial Securities during the period of the
effectiveness of, and pursuant to, a Shelf Registration Statement with respect
to the Initial Securities, all requirements pertaining to legends on such
Initial Securities will cease to apply, the requirements
42
requiring that any such Initial Securities issued to certain Holders be issued
in global form will cease to apply, and certificated Initial Securities without
legends will be made available to the Holders of such Initial Securities. Upon
the consummation of a Registered Exchange Offer with respect to the Initial
Securities pursuant to which Holders of Initial Securities are offered Exchange
Securities in exchange for their Initial Securities, all requirements pertaining
to such Initial Securities that Initial Securities issued to certain Holders be
issued in global form will cease to apply and certificated Initial Securities
with the Restricted Securities Legend set forth in Exhibit A hereto will be
available to Holders of such Initial Securities that do not exchange their
Initial Securities, and Exchange Securities in certificated form will be
available to Holders that exchange such Initial Securities in such Registered
Exchange Offer.
Securities in certificated form shall be issuable only in registered
form without coupons and only in denominations of $1,000 in principal amount and
any integral multiple of $1,000.
SECTION 2.02. Execution and Authentication. Two Officers shall sign
the Securities for the Company by manual or facsimile signature. The Company's
seal shall be impressed, affixed, imprinted or reproduced on the Secu rities and
may be in facsimile form.
If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenti cates the Security, the Security shall
be valid neverthe less.
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 con clusive evidence that the Security has been authenticated
under this Indenture.
43
The Trustee shall authenticate and deliver (1) Initial Securities
for original issue in an aggregate principal amount of $200,000,000 and (2)
Exchange Securities for issue only in a Registered Exchange Offer, pursuant to
the Exchange and Registration Rights Agreement, for Initial Securities for a
like principal amount of Initial Securities exchanged pursuant thereto, in each
case upon a written order of the Company signed by two Officers or by an Officer
and either an Assistant Treasurer or an Assistant Secretary of the Company. Such
order shall specify the amount of the Securities to be authenticated, the date
on which the original issue of Securities is to be authenticated and whether the
Securities are to be Initial Securities or Exchange Securities. The aggregate
principal amount of Securities outstanding at any time may not exceed
$200,000,000 except as provided in Section 2.07.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate the Securities. Any such appointment
shall be evidenced by an instrument signed by an authorized officer of the
Trustee, a copy of which shall be furnished to the Company. Unless limited by
the terms of such 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 any Registrar, Paying Agent or agent
for service of notices and demands.
SECTION 2.03. Registrar and Paying Agent. The Company shall maintain
an office or agency where Securities may be presented for registration of
transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Registrar
shall keep a register of the Secur ities and of their transfer and exchange. The
Company may have one or more co-registrars and one or more additional paying
agents. The term "Paying Agent" includes any addi tional paying agent.
44
The Company shall enter into an appropriate agency agreement with
any Registrar, Paying Agent or co-registrar not a party to this Indenture, which
shall incorporate the terms of the TIA. The agreement shall implement the provi
sions of this Indenture that relate to such agent. The Company shall notify the
Trustee of the name and address of any such agent. If the Company fails to
maintain a Regis trar or Paying Agent, the Trustee shall act as such and shall
be entitled to appropriate compensation therefor pursuant to Section 7.07. The
Company or any of its domestically incorporated Wholly Owned Subsidiaries may
act as Paying Agent, Registrar, co-registrar or transfer agent.
The Company initially appoints the Trustee as Registrar and Paying
Agent in connection with the Securities.
The Company initially appoints The Depository Trust Company to act
as Depository with respect to the Global Securities.
The Company may remove any Registrar or Paying Agent upon written
notice to such Registrar or Paying Agent and to the Trustee; provided that no
such removal shall become effective until (1) acceptance of an appointment by a
successor as evidenced by an appropriate agreement entered into by the Company
and such successor Registrar or Paying Agent, as the case may be, and delivered
to the Trustee or (2) notification to the Trustee that the Trustee shall serve
as Registrar or Paying Agent until the appointment of a successor in accordance
with clause (1) above. The Registrar or Paying Agent may resign at any time upon
written notice; provided, however, that the Trustee may resign as Paying Agent
or Registrar only if the Trustee also resigns as Trustee in accordance with
Section 7.08.
SECTION 2.04. Paying Agent To Hold Money in Trust. Prior to each due
date of the principal and interest on any Security, the Company shall deposit
with the Paying Agent (or if the Company or a Subsidiary is acting as Paying
Agent, segregate and hold in trust for the benefit of the
45
Persons entitled thereto) a sum sufficient to pay such principal and interest
when so becoming due. The Company shall require each Paying Agent (other than
the Trustee) to agree in writing that the Paying Agent shall hold in trust for
the benefit of Securityholders or the Trustee all money 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. If the
Company or a Subsidiary acts as Paying Agent, it shall segregate the money held
by it as Paying Agent and hold it as a separate trust fund. The Company at any
time may require a Paying Agent to pay all money held by it to the Trustee and
to account for any funds disbursed by the Paying Agent. Upon complying with this
Section, the Paying Agent shall have no further liability for the money
delivered to the Trustee.
Any money deposited with any Paying Agent, or then held by the
Company or a Subsidiary in trust for the payment of principal or interest on any
Security and remaining unclaimed for two years after such principal and interest
has become due and payable shall be paid to the Company at its request, or, if
then held by the Company or a Subsidiary, shall be discharged from such trust;
and the Securityholders shall thereafter, as unsecured general creditors, look
only to the Company for payment thereof, and all liability of the Paying Agent
with respect to such money, and all liability of the Company or such Subsidiary
as trustee thereof, shall thereupon cease.
SECTION 2.05. Securityholder Lists. The Trustee shall preserve in as
current a form as is reasonably prac ticable the most recent list available to
it of the names and addresses of Securityholders. If the Trustee is not the
Registrar, the Company shall furnish, or cause the Registrar to furnish, to the
Trustee, in writing at least five Business Days before each interest payment
date and at such other times as the Trustee may request in writing, a list in
such form and as of such date as the Trustee may reasonably require of the names
and addresses of Securityholders.
46
SECTION 2.06. Transfer and Exchange. (a) Transfer and Exchange of
Definitive Securities. When Definitive Securities are presented to the Registrar
or a co-registrar with a request:
(x) to register the transfer of such Definitive Securities; or
(y) to exchange such Definitive Securities for an equal principal
amount of Definitive Securities of other authorized denominations,
the Registrar or co-registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
provided, however, that the Definitive Securities surrendered for transfer or
exchange:
(i) shall be duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Company and the Registrar
or co-registrar, duly executed by the Holder thereof or his attorney duly
authorized in writing; and
(ii) in the case of Transfer Restricted Securities that are
Definitive Securities, are being transferred or exchanged pursuant to an
effective registration statement under the Securities Act or pursuant to
clause (A), (B) or (C) below, and are accompanied by the following
additional information and documents, as applicable:
(A) if such Transfer Restricted Securities are being delivered
to the Registrar by a Holder for registration in the name of such
Holder, without transfer, a certification from such Holder to that
effect (in substantially the form set forth on the reverse of the
Security); or
(B) if such Transfer Restricted Securities are being
transferred to the Company or to a
47
"qualified institutional buyer" (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A under the Securities
Act, a certification to that effect (in substantially the form set
forth on the reverse of the Security); or
(C) if such Transfer Restricted Securities are being
transferred (w) pursuant to an exemption from registration in
accordance with Rule 144 or Regulation S under the Securities Act;
or (x) to an institutional "accredited investor" within the meaning
of Rule 501(a)(1), (2), (3) or (7) under the Securities Act that is
acquiring the security for its own account, or for the account of
such an institutional accredited investor, in each case in a minimum
principal amount of the Securities of $250,000 for investment
purposes and not with a view to, or for offer or sale in connection
with, any distribution in violation of the Securities Act; or (y) in
reliance on another exemption from the registration requirements of
the Securities Act: (i) a certification to that effect (in
substantially the form set forth on the reverse of the Security),
(ii) if the Company or Registrar so requests, an Opinion of Counsel
reasonably acceptable to the Company and to the Registrar to the
effect that such transfer is in compliance with the Securities Act
and (iii) in the case of clause (x), a signed letter substantially
in the form of Exhibit C hereto.
(b) Restrictions on Transfer of a Definitive Security for a
Beneficial Interest in a Global Security. A Definitive Security may not be
exchanged for a beneficial interest in a Global Security except upon
satisfaction of the requirements set forth below. Upon receipt by the Trustee of
a Definitive Security, duly endorsed or
48
accompanied by appropriate instruments of transfer, in form satisfactory to the
Trustee, together with:
(i) if such Definitive Security is a Transfer Restricted Security,
certification, substantially in the form set forth on the reverse of the
Security, that such Definitive Security is being transferred to a
"qualified institutional buyer" (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A under the Securities Act; and
(ii) whether or not such Definitive Security is a Transfer
Restricted Security, written instructions directing the Trustee to make,
or to direct the Securities Custodian to make, an adjustment on its books
and records with respect to such Global Security to reflect an increase in
the aggregate principal amount of the Securities represented by the Global
Security,
then the Trustee shall cancel such Definitive Security and cause, or direct the
Securities Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depository and the Securities Custodian, the
aggregate principal amount of Securities represented by the Global Security to
be increased accordingly. If no Global Securities are then outstanding, the
Company shall issue and the Trustee shall authenticate, upon written order of
the Company in the form of an Officers' Certificate, a new Global Security in
the appropriate principal amount.
(c) Transfer and Exchange of Global Securities. The transfer and
exchange of Global Securities or beneficial interests therein shall be effected
through the Depository, in accordance with this Indenture (including applicable
restrictions on transfer set forth herein, if any) and the procedures of the
Depository therefor.
49
(d) Transfer of a Beneficial Interest in a Global Security for a
Definitive Security.
(i) Any person having a beneficial interest in a Global Security
that is being transferred or exchanged pursuant to an effective
registration statement under the Securities Act or pursuant to clause
(A),(B) or (C) below may upon request, and if accompanied by the
information specified below, exchange such beneficial interest for a
Definitive Security of the same aggregate principal amount. Upon receipt
by the Trustee of written instructions or such other form of instructions
as is customary for the Depository from the Depository or its nominee on
behalf of any Person having a beneficial interest in a Global Security and
upon receipt by the Trustee of a written order or such other form of
instructions as is customary for the Depository or the Person designated
by the Depository as having such a beneficial interest in a Transfer
Restricted Security only, the following additional information and
documents (all of which may be submitted by facsimile):
(A) if such beneficial interest is being transferred to the
Person designated by the Depository as being the owner of a
beneficial interest in a Global Security, a certification from such
Person to that effect (in substantially the form set forth on the
reverse of the Security); or
(B) if such beneficial interest is being transferred to a
"qualified institutional buyer" (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A under the Securities
Act, a certification to that effect (in substantially the form set
forth on the reverse of the Security); or
(C) if such beneficial interest is being transferred (w)
pursuant to an exemption from
50
registration in accordance with Rule 144 or Regulation S under the
Securities Act; or (x) to an institutional "accredited investor"
within the meaning of Rule 501(a)(1), (2), (3) or (7) under the
Securities Act that is acquiring the security for its own account,
or for the account of such an institutional accredited investor, in
each case in a minimum principal amount of the Securities of
$250,000 for investment purposes and not with a view to, or for
offer or sale in connection with, any distribution in violation of
the Securities; or (y) in reliance on another exemption from the
registration requirements of the Securities Act: (i) a certification
to that effect from the transferee or transferor (in substantially
the form set forth on the reverse of the Security), (ii) if the
Company or Registrar so requests, an Opinion of Counsel from the
transferee or transferor reasonably acceptable to the Company and to
the Registrar to the effect that such transfer is in compliance with
the Securities Act, and (iii) in the case of clause (x), a signed
letter substantially in the form of Exhibit C hereto,
then the Trustee or the Securities Custodian, at the direction of the
Trustee, will cause, in accordance with the standing instructions and
procedures existing between the Depository and the Securities Custodian,
the aggregate principal amount of the Global Security to be reduced on its
books and records and, following such reduction, the Company will execute
and the Trustee will authenticate or cause authentication and deliver to
the transferee a Definitive Security.
(ii) Definitive Securities issued in exchange for a beneficial
interest in a Global Security pursuant to this Section 2.06(d) shall be
registered in such names and in such authorized denominations as the
Depository, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee.
51
The Trustee shall deliver such Definitive Securities to the persons in
whose names such Securities are so registered in accordance with the
instructions of the Depository.
(e) Restrictions on Transfer and Exchange of Global Securities.
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in subsection (f) of this Section 2.06), a Global Security
may not be transferred as a whole except (i) by the Depository to a nominee of
the Depository or (ii) by a nominee of the Depository to the Depository or
another nominee of the Depository or (iii) by the Depository or any such nominee
to a successor Depository or a nominee of such successor Depository.
(f) Authentication of Definitive Securities in Absence of
Depository. If at any time:
(i) the Depository for the Securities notifies the Company that the
Depository is unwilling or unable to continue as Depository for the Global
Securities and a successor Depository for the Global Securities is not
appointed by the Company within 90 days after delivery of such notice; or
(ii) the Company, in its sole discretion, notifies the Trustee in
writing that it elects to cause the issuance of Definitive Securities
under this Indenture,
then the Company will execute, and the Trustee, upon receipt of an Officers'
Certificate requesting the authentication and delivery of Definitive Securities
to the Persons designated by the Company, will authenticate or cause
authentication and deliver Definitive Securities, in an aggregate principal
amount equal to the principal amount of Global Securities, in exchange for such
Global Securities.
52
(g) Legend.
(i) Except as permitted by the following paragraph (ii), each
Security certificate evidencing the Global Securities and the Definitive
Securities (and all Securities issued in exchange therefor or substitution
thereof) shall bear a legend in
substantially the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES
LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED
OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE
(THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS THREE YEARS
AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE
ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER
OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY) ONLY (A) TO
THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE
SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO
OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO
53
AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE
501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS
ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF
SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM
PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000 FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION
WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F)
PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE
TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT
TO CLAUSE (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF
COUNSEL, CERTIFICATION AND OTHER INFORMATION SATISFACTORY TO EACH OF
THEM, AND IN THE CASE OF ANY OF THE FOREGOING CLAUSES (A)-(F), A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF
THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE
TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER
AFTER THE RESALE RESTRICTION TERMINATION DATE."
(ii) Upon any sale or transfer of a Transfer Restricted Security
(including any Transfer Restricted Security represented by a Global
Security) pursuant to Rule 144 under the Securities Act or an effective
registration statement under the Securities Act:
(A) in the case of any Transfer Restricted Security that is a
Definitive Security, the Registrar shall permit the Holder thereof
to exchange such Transfer Restricted Security for a Definitive
Security that does not bear the legend set forth above and rescind
any restriction on the transfer of such Transfer Restricted
Security; and
(B) any such Transfer Restricted Security represented by a
Global Security shall not be subject to the provisions set forth in
clause (i)
54
of this Section 2.06(g) (such sales or transfers being subject only
to the provisions of Section 2.06(e) hereof); provided, however,
that with respect to any request for an exchange of a Transfer
Restricted Security that is represented by a Global Security for a
Definitive Security that does not bear a legend, which request is
made in reliance upon Rule 144, the Holder thereof shall certify in
writing to the Registrar that such request is being made pursuant to
Rule 144 (such certification to be substantially in the form set
forth on the reverse of the Security).
(h) Cancellation and/or Adjustment of Global Security. At such time
as all beneficial interests in a Global Security have either been exchanged for
Definitive Securities, redeemed, repurchased or canceled, such Global Security
shall be returned to the Depository for cancellation unless it is being held by
the Trustee in which case such Global Security shall be retained and cancelled
by the Trustee. At any time prior to such cancellation, if any beneficial
interest in a Global Security is exchanged for Definitive Securities, redeemed,
repurchased or canceled, the principal amount of Securities represented by such
Global Security shall be reduced and an adjustment shall be made on the books
and records of the Trustee (if it is then the Securities Custodian for such
Global Security) with respect to such Global Security, by the Trustee or the
Securities Custodian, to reflect such reduction.
(i) Obligations with Respect to Transfers and Exchanges of
Securities.
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate Definitive Securities and
Global Securities at the Registrar's or co-registrar's
request.
(ii) No service charge shall be made for any registration of
transfer or exchange, but the Company
55
may require payment of a sum sufficient to cover any transfer tax,
assessments, or similar governmental charge payable in connection
therewith.
(iii) The Registrar or co-registrar shall not be required to
register the transfer of or exchange of (a) any Definitive Security
selected for redemption in whole or in part pursuant to Article III,
except the unredeemed portion of any Definitive Security being redeemed in
part, or (b) any Security for a period beginning 15 Business Days before
the mailing of a notice of an offer to repurchase or redeem Securities or
15 Business Days before an interest payment date.
(iv) Prior to the due presentation for registration of transfer of
any Security, the Company, the Trustee, the Paying Agent, the Registrar or
any co-registrar may deem and treat the person in whose name a Security is
registered as the absolute owner of such Security for the purpose of
receiving payment of principal of and interest on such Security and for
all other purposes whatsoever, whether or not such Security is overdue,
and none of the Company, the Trustee, the Paying Agent, the Registrar or
any co-registrar shall be affected by notice to the contrary.
(v) All Securities issued upon any transfer or exchange pursuant to
the terms of this Indenture shall evidence the same debt and shall be
entitled to the same benefits under this Indenture as the Securities
surrendered upon such transfer or exchange.
(j) No Obligation of the Trustee. (i) The Trustee shall have no
responsibility or obligation to any beneficial owner of a Global Security, a
member of, or a participant in the Depository or other Person with respect to
any ownership interest in the Securities, with respect to the accuracy of the
records of the Depository or its nominee or of any participant or member thereof
or with respect to the delivery to any participant, member, beneficial owner or
other Person (other than the Depository) of any notice
56
(including any notice of redemption) or the payment of any amount, under or with
respect to such Securities. All notices and communications to be given to the
Holders and all payments to be made to Holders under the Securities shall be
given or made only to the registered Holders (which shall be the Depository or
its nominee in the case of a Global Security). The rights of beneficial owners
in any Global Security in global form shall be exercised only through the
Depository subject to the applicable rules and procedures of the Depository. The
Trustee may rely and shall be fully protected and indemnified pursuant to
Section 7.07 in relying upon information furnished by the Depository with
respect to any beneficial owners, its members and participants.
(ii) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer imposed
under this Indenture or under applicable law with respect to any transfer of any
interest in any Security (including without limitation any transfers between or
among Depository participants, members or beneficial owners in any Global
Security) other than to require delivery of such certificates and other
documentation or evidence as are expressly required by, and to do so if and when
expressly required by, the terms of this Indenture, and to examine the same to
determine substantial compliance as to form with the express requirements
hereof.
SECTION 2.07. Replacement Securities. If a mutilated Security is
surrendered to the Registrar 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 requirements of
Section 8-405 of the Uniform Commercial Code are met, such that the Holder (i)
satisfies the Company or the Trustee within a reasonable time after he has
notice of such loss, destruction or wrongful taking and the Registrar does not
register a transfer prior to receiving such notification, (ii) makes such
request to the Company or the Trustee prior to the Security being acquired by a
bona fide
57
purchaser and (iii) satisfies any other reasonable requirements of the Trustee.
If required by the Trustee or the Company, such Holder shall furnish an
indemnity bond sufficient in the judgment of the Trustee to protect the Company,
the Trustee, the Paying Agent, the Registrar and any co-registrar from any loss
that any of them may suffer if a Security is replaced. The Company and the
Trustee may charge the Holder for their expenses in replacing a Secur ity. In
the event any such mutilated, lost, destroyed or wrongfully taken Security has
become or is about to become due and payable, the Company in its discretion may
pay such Security instead of issuing a new Security in replacement thereof.
Every replacement Security is an additional obligation of the
Company.
The provisions of this Section 2.07 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, lost, destroyed or wrongfully taken
Securities.
SECTION 2.08. Outstanding Securities. Securities outstanding at any
time are all Securities authenticated by the Trustee except for those canceled
by it, those delivered to it for cancellation and those described in this
Section as not outstanding. A Security does not cease to be outstanding because
the Company or an Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Sec tion 2.07, it ceases to be
outstanding unless the Trustee and the Company receive proof satisfactory to
them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in accordance
with this Indenture, on a redemption date or maturity date money sufficient to
pay all principal and interest payable on that date with respect to the
Securities (or portions thereof) to be redeemed or maturing, as the case may be,
and the Paying Agent is not prohibited from
58
paying such money to the Securityholders on that date pursuant to the terms of
this Indenture, then on and after that date such Securities (or portions
thereof) cease to be outstanding and interest on them ceases to accrue.
SECTION 2.09. Temporary Securities. Until definitive Securities are
ready for delivery, the Company may prepare and the Trustee shall authenticate
temporary Securities. Temporary Securities shall be substantially in the form of
Definitive Securities but may have variations that the Company considers
appropriate for temporary Secur ities. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate Definitive Securities and
deliver them in exchange for temporary Securities.
SECTION 2.10. 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 registration
of transfer, exchange or payment. The Trustee and no one else shall cancel and
destroy (subject to the record reten tion requirements of the Exchange Act) all
Securities surrendered for registration of transfer, exchange, payment or
cancellation unless the Company directs the Trustee to deliver canceled
Securities to the Company. The Company may not issue new Securities to replace
Securities it has redeemed, paid or delivered to the Trustee for cancellation.
The Trustee shall not authenticate Securities in place of canceled Securities
other than pursuant to the terms of this Indenture.
SECTION 2.11. Defaulted Interest. If the Company defaults in a
payment of interest on the Securities, the Company shall pay the defaulted
interest (plus interest on such defaulted interest to the extent lawful) in any
lawful manner. The Company may pay the defaulted interest to the persons who are
Securityholders on a subsequent special record date. The Company shall fix or
cause to be fixed any such special record date and payment date to the
reasonable satisfaction of the Trustee and shall promptly mail or cause
59
to be mailed to each Securityholder a notice that states the special record
date, the payment date and the amount of defaulted interest to be paid.
SECTION 2.12. CUSIP Numbers. The Company in issuing the Securities
may use "CUSIP" numbers (if then generally in use) and, if so, the Trustee shall
use "CUSIP" numbers in notices of redemption as a convenience to Holders;
provided, however, that any such notice may state that no representation is made
as to the correctness of such numbers either as printed on the Securities or as
contained in any notice of a redemption and that reliance may be placed only on
the other identification numbers printed on the Securities, and any such
redemption shall not be affected by any defect in or omission of such numbers.
ARTICLE III
Redemption
SECTION 3.01. Notices to Trustee. If the Company elects to redeem
Securities pursuant to Section 3.07, it shall notify the Trustee in writing of
the redemption date and the principal amount of Securities to be redeemed.
The Company shall give each notice to the Trustee provided for in
this Section at least 60 days before the redemption date unless the Trustee
consents to a shorter period. Such notice shall be accompanied by an Officers'
Certificate and an Opinion of Counsel from the Company to the effect that such
redemption will comply with the condi tions herein; provided, however, that an
Opinion of Counsel shall not be required in connection with a redemption
pursuant to Section 3.07. If fewer than all the Securities are to be redeemed,
the record date relating to such redemption shall be selected by the Company and
given to the Trustee, which record date shall be not less than 15 days after the
date of notice to the Trustee. Any such notice may be canceled at any time prior
to notice of such
60
redemption being mailed to any Holder and shall thereby be void and of no
effect.
SECTION 3.02. Selection of Securities to be Redeemed. If fewer than
all the Securities are to be redeemed, the Trustee shall select the Securities
to be redeemed pro rata or by lot or by a method that complies with applicable
legal and securities exchange requirements, if any, and that the Trustee
considers fair and appropriate and in accordance with methods generally used at
the time of selection by fiduciaries in similar circumstances. The Trustee shall
make the selection from outstanding Securities not previously called for
redemption. The Trustee may select for redemption portions of the principal of
Secur ities that have denominations larger than $1,000. Secur ities and portions
of them the Trustee selects shall be in amounts of $1,000 or a whole multiple of
$1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption. The
Trustee shall notify the Company promptly of the Securities or portions of
Securities to be redeemed.
SECTION 3.03. Notice of Redemption. At least 30 days but not more
than 60 days before a date for redemp tion of Securities, the Company shall mail
a notice of redemption by first-class mail to each Holder of Securities to be
redeemed.
The notice shall identify the Securities to be redeemed and shall
state:
(1) the redemption date;
(2) the redemption price;
(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 redemp tion price;
61
(5) if fewer than all the outstanding Securities are to be redeemed,
the certificate numbers and principal amounts of the particular Securities
to be redeemed;
(6) that, unless the Company defaults in making such redemption
payment or the Paying Agent is pro hibited from making such payment
pursuant to the terms of this Indenture, interest on Securities (or
portion thereof) called for redemption ceases to accrue on and after the
redemption date;
(7) the CUSIP number, if any, printed on the Securities being
redeemed; and
(8) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the
Securities.
At the Company's request (which may be revoked at any time prior to
the time at which the Trustee shall have given such notice to the Holders), the
Trustee shall give the notice of redemption in the Company's name and at the
Company's expense. In such event, the Company shall provide the Trustee with the
information required by this Section.
SECTION 3.04. Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable on
the redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price stated in the notice, plus accrued interest, if any, to the redemption
date; provided that if the redemption date is after a regular record date and on
or prior to the interest payment date, the accrued interest shall be payable to
the Securityholder of the redeemed Securities registered on the relevant record
date. Failure to give notice or any defect in the notice to any Holder shall not
affect the validity of the notice to any other Holder.
62
SECTION 3.05. Deposit of Redemption Price. At least one Business Day
prior to the redemption date, the Company shall deposit with the Paying Agent
(or, if the Company or a Subsidiary is the Paying Agent, shall segregate and
hold in trust) money sufficient to pay the redemption price of and accrued
interest on all Securities to be redeemed on that date other than Securities or
portions of Securities called for redemption which have been delivered by the
Company to the Trustee for cancellation.
SECTION 3.06. Securities Redeemed in Part. Upon surrender of a
Security that is redeemed in part, the Company shall execute and the Trustee
shall authenticate for the Holder (at the Company's expense) a new Security
equal in principal amount to the unredeemed portion of the Secur ity
surrendered.
SECTION 3.07. Optional Redemption. (a) Except as set forth in the
next two paragraphs, the Securities may not be redeemed prior to August 1, 2001.
On and after that date, the Company may redeem the Securities in whole at any
time or in part from time to time at the following redemption prices (expressed
in percentages of principal amount), plus accrued and unpaid interest, if any,
to the redemption date (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date that is on or prior to the date of redemption), if redeemed during the
12-month period beginning on or after August 1 of the years set forth below:
Redemption
Period Price
- ------ ----------
2001........................................................... 105.438%
2002........................................................... 103.625%
2003........................................................... 101.813%
2004 and thereafter............................................ 100.000%
63
(b) Notwithstanding the foregoing, at any time on or prior to August
1, 1999, the Company may redeem in the aggregate up to 33 1/3% of the original
aggregate principal amount of Securities ($66,666,666.67) with the proceeds of
one or more Public Equity Offerings following which there is a Public Market, at
a redemption price (expressed as a percentage of principal amount thereof) of
110.875% plus accrued and unpaid interest, if any, to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date that is on or prior
to the date of redemption); provided, however, that at least 66 2/3% of the
original aggregate principal amount of the Securities ($133,333,333.33) must
remain outstanding after each such redemption.
(c) At any time prior to August 1, 2001, the Securities may be
redeemed, in whole or in part, at the option of the Company within 180 days
after a Change of Control, at a redemption price equal to the sum of (i) the
principal amount thereof plus (ii) accrued and unpaid interest, if any, to the
redemption date (subject to the right of holders of record on the relevant
record date to receive interest due on the relevant interest payment date that
is on or prior to the date of redemption) plus (iii) the Applicable Premium.
ARTICLE IV
Covenants
SECTION 4.01. Payment of Securities. The Company shall promptly pay
the principal of and interest on the Securities on the dates and in the manner
provided in the Securities and in this Indenture. Principal and interest shall
be considered paid on the date due if on such date the Trustee or the Paying
Agent holds in accordance with this Indenture money sufficient to pay all
principal and interest then due and the Trustee or the Paying Agent, as the case
may be, is not prohibited from paying such money to the
64
Securityholders on that date pursuant to the terms of this Indenture.
The Company shall pay interest on overdue princi pal at the rate
specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
SECTION 4.02. SEC Reports. Notwithstanding that the Company may not
be required to be or remain subject to the reporting requirements of Section 13
or 15(d) of the Exchange Act, the Company shall file with the SEC, and provide
the Trustee and Securityholders and prospective Securityholders (upon request)
with copies of its annual report and the information, documents and other
reports which are specified in Section 13 or 15(d) of the Exchange Act. In
addition, following a Public Equity Offering by the Company, the Company shall
furnish to the Trustee and the Securityholders, promptly upon their becoming
available, copies of the annual report to shareholders and any other information
generally provided by the Company to its public shareholders. The Company also
shall comply with the other provisions of TIA ss. 314(a).
SECTION 4.03. Limitation on Indebtedness. (a) The Company shall not,
and shall not permit any Restricted Subsidiary to, Incur any Indebtedness unless
on the date of such Incurrence the Consolidated Coverage Ratio exceeds 2.25:1,
if such Indebtedness is Incurred on or prior to December 31, 1998, and 2.50:1 if
such Indebtedness is Incurred thereafter.
(b) Notwithstanding Section 4.03(a), the Company and its Restricted
Subsidiaries may Incur the following Indebtedness:
(i) Indebtedness consisting of the Term Loans in an aggregate
principal amount outstanding of up to $300.0 million less the amount of
any principal payments thereon;
65
(ii) Indebtedness consisting of revolving credit, working capital or
letters of credit financing in an aggregate principal amount at any time
outstanding not in excess of $150.0 million (less the aggregate amount of
all repayments of principal actually made thereunder since the Issue Date
with Net Available Cash from Asset Dispositions pursuant to Section
4.06(a)(iii)(A));
(iii) Indebtedness of the Receivables Subsidiary pursuant to a
Permitted Receivables Financing;
(iv) Indebtedness of the Company owing to and held by any Wholly
Owned Subsidiary or Indebtedness of a Restricted Subsidiary owing to and
held by the Company or any Wholly Owned Subsidiary; provided, however,
that any subsequent issuance or transfer of any Capital Stock or any other
event which results in any such Wholly Owned Subsidiary ceasing to be a
Wholly Owned Subsidiary or any subsequent transfer of any such
Indebtedness (except to the Company or a Wholly Owned Subsidiary) will be
deemed, in each case, to constitute the Incurrence of such Indebtedness by
the issuer thereof;
(v) Indebtedness of the Company represented by the Securities;
(vi) any Indebtedness of the Company and its Restricted Subsidiaries
(other than (x) the Indebtedness described in clauses (i), (ii), (iii) or
(iv) above and (y) Indebtedness of any Foreign Subsidiary) outstanding on
the Issue Date;
(vii) Indebtedness of the Company and its Restricted Subsidiaries
(A) in respect of performance bonds, bankers' acceptances, letters of
credit and surety or appeal bonds provided by the Company and its
Restricted Subsidiaries in the ordinary course of their business and which
do not secure other Indebtedness and (B) under Currency Agreements and
Interest Rate Agreements that are designed to protect the Company and its
66
Restricted Subsidiaries against fluctuations in interest rates or currency
exchange rates and not for the purposes of speculation;
(viii) Indebtedness represented by Guarantees by the Company of
Indebtedness of a Restricted Subsidiary (other than Indebtedness of the
Receivables Subsidiary), or in respect of letters of credit provided by
the Company to support such Indebtedness, or Guarantees by a Restricted
Subsidiary (other than the Receivables Subsidiary) of Indebtedness of the
Company or a Restricted Subsidiary (other than Indebtedness of the
Receivables Subsidiary), or in respect of letters of credit provided by a
Restricted Subsidiary (other than the Receivables Subsidiary) to support
such Indebtedness; provided, however, that only Indebtedness that is
Incurred in compliance with this covenant may be guaranteed pursuant to
this clause (viii);
(ix) Purchase Money Indebtedness, industrial revenue bond or similar
indebtedness and Capitalized Lease Obligations of the Company and its
Restricted Subsidiaries in an aggregate principal amount at any time
outstanding not in excess of $30.0 million;
(x) Indebtedness of the Company and its Restricted Subsidiaries, to
the extent the proceeds thereof are immediately used after the Incurrence
thereof to purchase Securities tendered in an offer to purchase made as a
result of a Change of Control;
(xi) Indebtedness of the Company and its Restricted Subsidiaries
arising from agreements providing for indemnification, adjustment of
purchase price or similar obligations, in any case Incurred in connection
with the disposition of any business, assets or Subsidiary of the Company
(other than Guarantees of Indebtedness Incurred by any Person acquiring
all or any portion of such business, assets or Subsidiary for the purpose
of financing such acquisition), in a
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principal amount not to exceed the gross proceeds actually received by the
Company or any Restricted Subsidiary of the Company in connection with
such disposition;
(xii) Indebtedness of Foreign Subsidiaries in an aggregate principal
amount at any time outstanding not in excess of $50 million;
(xiii) Indebtedness of the Company or a Restricted Subsidiary owed
to (including obligations in respect of letters of credit for the benefit
of) any Person in connection with worker's compensation, health,
disability or other employee benefits or property, casualty or liability
insurance provided by such Person to the Company or such Restricted
Subsidiary, pursuant to reimbursement or indemnification obligations to
such Person, in each case Incurred in the ordinary course of business;
(xiv) Indebtedness to Masco in an aggregate principal amount not to
exceed $15.0 million in respect of reimbursement obligations for letters
of credit or credit support provided by Masco under the terms of the
Acquisition Agreement;
(xv) any Refinancing Indebtedness Incurred in respect of any
Indebtedness Incurred pursuant to paragraph (a) or pursuant to clauses
(i), (ii), (vi), (x), (xiv) or (xv) of this paragraph (b); and
(xvi) Indebtedness of the Company or any Restricted Subsidiary in an
aggregate principal amount at any time outstanding not in excess of $50.0
million.
(c) Notwithstanding any other provision of this Section 4.03, the
Company shall not Incur any Indebtedness if such Indebtedness is subordinate or
junior in ranking in any respect to any Senior Indebtedness of the Company
unless such Indebtedness is Senior Subordinated Indebtedness or is expressly
subordinated in right of payment to Senior
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Subordinated Indebtedness of the Company. In addition, the Company may not Incur
any Secured Indebtedness which is not Senior Indebtedness of the Company unless
contemporaneously therewith effective provision is made to secure the Securities
equally and ratably with (or on a senior basis to, in the case of Indebtedness
subordinated in right of payment to the Securities) such Secured Indebtedness
for so long as such Secured Indebtedness is secured by a Lien. A Guarantor
Subsidiary may not Incur any Indebtedness if such Indebtedness is subordinate or
junior in ranking in any respect to any Senior Indebtedness of the Subsidiary
Guarantor unless such Indebtedness is Senior Subordinated Indebtedness of such
Subsidiary Guarantor or is expressly subordinated in right of payment to Senior
Subordinated Indebtedness of such Subsidiary Guarantor. In addition, a Guarantor
Subsidiary may not Incur any Secured Indebtedness which is not Senior
Indebtedness of such Guarantor Subsidiary unless contemporaneously therewith
effective provision is made to secure the Subsidiary Guaranty equally and
ratably with (or on a senior basis to, in the case of Indebtedness subordinated
in right of payment to such Subsidiary Guaranty) such Secured Indebtedness for
so long as such Secured Indebtedness is secured by a Lien.
(d) For purposes of determining the outstanding principal amount of
any particular Indebtedness Incurred pursuant to this section 4.03, (i)
Indebtedness permitted by this section need not be permitted solely by reference
to one provision permitting such Indebtedness but may be permitted in part by
one such provision and in part by one or more other provisions of this provision
permitting such Indebtedness and (ii) in the event that Indebtedness or any
portion thereof meets the criteria of more than one of the types of Indebtedness
described in this section, the Company, in its sole discretion, shall classify
such Indebtedness and only be required to include the amount of such
Indebtedness in one of such clauses.
SECTION 4.04. Limitation on Restricted Payments. (a) The Company
shall not, and shall not permit any Restricted Subsidiary, directly or
indirectly, to (i)
69
declare or pay any dividend or make any distribution on or in respect of its
Capital Stock (including any payment in connection with any merger or
consolidation involving the Company) except dividends or distributions payable
solely in its Capital Stock (other than Disqualified Stock) and except dividends
or distributions payable to the Company or another Restricted Subsidiary (and,
if such Restricted Subsidiary has shareholders other than the Company or other
Restricted Subsidiaries, to its other shareholders on a pro rata basis or on a
basis that results in the receipt by the Company or a Restricted Subsidiary of
dividends or distributions of equal or greater value); (ii) purchase, redeem,
retire or otherwise acquire for value any Capital Stock of the Company or any
Restricted Subsidiary held by Persons other than the Company or another
Restricted Subsidiary; (iii) purchase, repurchase, redeem, defease or otherwise
acquire or retire for value, prior to scheduled maturity, scheduled repayment or
scheduled sinking fund payment any Subordinated Obligations (other than the
purchase, repurchase or other acquisition of Subordinated Obligations purchased
in anticipation of satisfying a sinking fund obligation, principal installment
or final maturity, in each case due within one year of the date of acquisition);
(iv) make any Investment (other than a Permitted Investment) in any Person or
(v) make any payment pursuant to the Management Agreement or any similar
agreement entered into with Holdings or extension or renewal thereof (any such
dividend, distribution, purchase, redemption, repurchase, defeasance, other
acquisition, retirement, Investment or payment being herein referred to as a
"Restricted Payment") if at the time the Company or such Restricted Subsidiary
makes such Restricted Payment:
(1) a Default shall have occurred and be continuing (or would result
therefrom);
(2) the Company could not Incur at least $1.00 of additional
Indebtedness under Section 4.03(a); or
(3) the aggregate amount of such Restricted Payment and all other
Restricted Payments (the amount
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so expended, if other than in cash, to be determined in good faith by the
Board of Directors, whose determination shall be conclusive and evidenced
by a resolution of the Board of Directors) declared or made subsequent to
the Issue Date would exceed the sum of:
(A) 50% of the Consolidated Net Income accrued during the
period (treated as one accounting period) from the Issue Date to the
end of the most recent fiscal quarter ending at least 45 days prior
to the date of such Restricted Payment (or, in case such
Consolidated Net Income shall be a deficit, minus 100% of such
deficit);
(B) the aggregate Net Cash Proceeds received by the Company as
a capital contribution or from the issue or sale of its Capital
Stock (other than Disqualified Stock) subsequent to the Issue Date
(other than an issuance or sale to a Subsidiary of the Company or an
employee stock ownership plan or other trust established by the
Company or any of its Subsidiaries to the extent the purchase by
such plan or trust is financed by Indebtedness of such plan or trust
and for which the Company or a Subsidiary is liable, directly or
indirectly, as a guarantor or otherwise (including by the making of
cash contributions to such plan or trust which are used to pay
interest or principal on such Indebtedness));
(C) the amount by which Indebtedness of the Company or its
Restricted Subsidiaries is reduced on the Company's balance sheet
upon the conversion or exchange (other than by a Subsidiary)
subsequent to the Issue Date of any Indebtedness of the Company or
its Restricted Subsidiaries convertible or exchangeable for Capital
Stock (other than Disqualified Stock) of the Company (less the
amount of any cash or other property (other than such Capital Stock)
distributed by the
71
Company or any Restricted Subsidiary upon such conversion or
exchange) and
(D) the amount equal to the net reduction in Investments in
Unrestricted Subsidiaries resulting from (i) payments of dividends,
repayments of the principal of loans, return of capital or advances
or other transfers of assets to the Company or any Restricted
Subsidiary from Unrestricted Subsidiaries or (ii) the redesignation
of Unrestricted Subsidiaries as Restricted Subsidiaries (valued in
each case as provided in the definition of "Investment") or the
receipt of proceeds from the sale or other disposition of any
portion of any Investment in an Unrestricted Subsidiary not to
exceed, in the case of any Unrestricted Subsidiary, the amount of
Investments previously made by the Company or any Restricted
Subsidiary in such Unrestricted Subsidiary, which amount was
included in the calculation of the amount of Restricted Payments.
(b) The provisions of Section 4.04(a) shall not prohibit:
(i) any purchase or redemption of Capital Stock or Subordinated
Obligations of the Company made by exchange for, or out of the proceeds of
the substantially concurrent sale of, Capital Stock of the Company (other
than Disqualified Stock and other than Capital Stock issued or sold to a
Subsidiary or an employee stock ownership plan or other trust established
by the Company or any of its Subsidiaries to the extent the purchase by
such plan or trust is financed by Indebtedness of such plan or trust and
for which the Company or a Subsidiary is liable, directly or indirectly,
as a guarantor or otherwise (including by the making of cash contributions
to such plan or trust which are used to pay interest or principal on such
Indebtedness)); provided, however, that (A) such purchase or redemption
shall be excluded in the
72
calculation of the amount of Restricted Payments and (B) the Net Cash
Proceeds from such sale to the extent so used shall be excluded from
Section 4.04(a)(3)(B);
(ii) any purchase or redemption of (A) Subordinated Obligations of
the Company made by exchange for, or out of the proceeds of the
substantially concurrent sale of, Indebtedness of the Company which is
permitted to be Incurred pursuant to Section 4.03(b) or (B) Subordinated
Obligations of a Restricted Subsidiary made by exchange for, or out of the
proceeds of the substantially concurrent sale of, Indebtedness of any
Restricted Subsidiary or the Company which is permitted to be Incurred
pursuant to Section 4.03(b); provided, however, that such purchase or
redemption shall be excluded in the calculation of the amount of
Restricted Payments;
(iii) any purchase or redemption of Disqualified Stock made by
exchange for, or out of the proceeds of the substantially concurrent sale
of, Disqualified Stock; provided, however, that such purchase or
redemption shall be excluded in the calculation of the amount of
Restricted Payments;
(iv) any purchase or redemption of Subordinated Obligations from Net
Available Cash to the extent permitted by Section 4.06; provided, however,
that such purchase or redemption shall be excluded in the calculation of
the amount of Restricted Payments;
(v) upon the occurrence of a Change of Control and within 60 days
after the completion of the offer to repurchase the Securities pursuant to
Section 4.08 (including the purchase of all Securities tendered), any
purchase or redemption of Subordinated Obligations required pursuant to
the terms thereof as a result of such Change of Control; provided,
however, that such purchase or redemption shall be included in the
calculation of the amount of Restricted Payments;
73
(vi) dividends paid within 60 days after the date of declaration
thereof if at such date of declaration such dividend would have complied
with this covenant; provided, however, that such dividend shall be
included in the calculation of the amount of Restricted Payments;
(vii) the repurchase, for cash or notes, of shares of, or options or
warrants to purchase shares of, or payments to Holdings to enable Holdings
to repurchase shares of, or options or warrants to purchase shares of,
Capital Stock of Holdings, the Company or any of the Subsidiaries of the
Company from employees, former employees, officers, former officers,
directors or former directors of Holdings, the Company or any of the
Subsidiaries of the Company (or permitted transferees of such employees,
former employees, directors or former directors) (or repayments of, or
payments to Holdings to permit Holdings to repay, notes previously issued
to so purchase such shares, options or warrants), pursuant to the terms of
the agreements (including employment agreements) or plans (or amendments
thereto) approved by the Board of Directors or the board of directors of
Holdings, as applicable, under which such individuals purchase or sell or
are granted the option to purchase or sell, shares of such capital stock;
provided, however, that the aggregate amount of such repurchases
(including the amount of any such notes issued by the Company or any of
its Restricted Subsidiaries, and cash payments to pay principal and
interest with respect to any such notes issued by Holdings, but excluding
the amount of any such notes issued by Holdings until so paid) shall not
exceed as of any date the product of (x) $5.0 million and (y) the number
of years (or fractions thereof) elapsed since the Issue Date; provided
further, however, that (x) the first $5.0 million in aggregate amount of
such purchases shall be excluded in the calculation of the amount of
Restricted Payments and (y) any amount of such purchases greater than $5.0
74
million in the aggregate shall be included in the calculation of the
amount of Restricted Payments;
(viii) to the extent otherwise deemed Restricted Payments, payments
to Holdings made pursuant to the Tax Sharing Agreement; provided however,
that such payments shall be excluded in the calculation of the amount of
Restricted Payments;
(ix) payments to Holdings pursuant to the Management Agreement for
operating costs of Holdings but only to the extent such costs (w)
constitute or are directly related to the corporate, general and
administrative expenses of the Company and its Restricted Subsidiaries and
not to any other business, subsidiary or investment of Holdings, (x) are
not otherwise paid for by the Company or its Restricted Subsidiaries and
(y) do not constitute payments in respect of the Masco Notes or otherwise
in respect of any Capital Stock of Holdings or in respect of Indebtedness
held by an Affiliate of Holdings; provided, however, that:
(A) the Company shall provide within 30 days of the end of
each fiscal quarter in which such payments are made a certificate to
the Trustee signed by the chief financial officer of the Company
certifying that such payments comply with the provisions hereof
(which shall include a report with respect to such certificate
prepared by the independent accountants to the Company in accordance
with attestation standards established by the American Institute of
Certified Public Accountants if the payments in such quarter exceed
1% of the consolidated revenues of the Company);
(B) if the Company provides such certificate, such payments
shall be excluded from the calculation of the amount of Restricted
Payments;
75
(C) if the Company fails to provide such certificate or if all
or any portion of such payments are not certified to be in
compliance with the provisions hereof, such payments (or portions
thereof) shall be included in the amount of Restricted Payments as
of such 30th day (or, if earlier, the date on which such certificate
is provided) and
(D) if as a result of the inclusion of such payments as set
forth in clause (C) the aggregate amount of Restricted Payments
declared or made subsequent to the Issue Date would exceed the
amount permitted to be so expended, the Company shall be deemed to
be in default of its obligations hereunder unless and until such
payments (or portions thereof) are repaid by Holdings;
(x) advances or loans to Holdings evidenced by a note in an amount
for any year not in excess of the amount which management estimates shall
be the Specified Loss of the Holdings Business for such year but in no
event in excess of $2.5 million in any year; provided, however, that:
(A) the Company shall provide within 90 days of the end of
each fiscal year in which such payments are made a certificate to
the Trustee signed by the chief financial officer of the Company
certifying that such payments comply with the provisions hereof;
(B) if the Company provides such certificate, such payments
shall be excluded from the calculation of the amount of Restricted
Payments;
(C) if the Company fails to provide such certificate or if all
or any portion of such payments are not certified to be in
compliance with the provisions hereof, such payments (or
76
portions thereof) shall be included in the amount of Restricted
Payments as of such 90th day (or, if earlier, the date on which such
certificate is provided) and
(D) if as a result of the inclusion of such payments as set
forth in clause (C) the aggregate amount of Restricted Payments
declared or made subsequent to the Issue Date would exceed the
amount permitted to be so expended, the Company shall be deemed to
be in default of its obligations hereunder unless and until such
payments (or portions thereof) are repaid by Holdings; and
(xi) payments to Holdings to enable Holdings to make payments to
Masco consisting of indemnification obligations, reimbursement of amounts
expended by Masco for the benefit of the Company and its Restricted
Subsidiaries required to be made pursuant to the Acquisition Agreement and
payments required by Section 12(r) of the Acquisition Agreement; provided,
however that such payments shall be excluded in the calculation of the
amount of Restricted Payments; provided further, however, that, at the
time any such payment is to be made, the Company shall have received all
indemnification or similar payments made by Masco to or for the benefit of
Holdings or the Company pursuant to the Acquisition Agreement.
SECTION 4.05. Limitation on Restrictions on Distributions from
Restricted Subsidiaries. The Company shall not, and shall not permit any
Restricted Subsidiary to, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to (i) pay dividends or make any other distributions on
its Capital Stock or pay any Indebtedness owed to the Company, (ii) make any
loans or
77
advances to the Company or (iii) transfer any of its property or assets to the
Company, except:
(1) any encumbrance or restriction pursuant to an agreement in
effect at or entered into on the Issue Date;
(2) any encumbrance or restriction with respect to a Restricted
Subsidiary pursuant to an agreement entered into prior to the date on
which such Restricted Subsidiary was acquired or designated as a
Restricted Subsidiary by the Company (other than as consideration in, in
contemplation of, or to provide all or any portion of the funds or credit
support utilized to consummate, the transaction or series of related
transactions pursuant to which such Restricted Subsidiary became a
Restricted Subsidiary or was otherwise acquired by the Company);
(3) any encumbrance or restriction pursuant to an agreement
constituting Refinancing Indebtedness of Indebtedness Incurred pursuant to
an agreement referred to in clause (1) or (2) of this Section or this
clause (3) or contained in any amendment to an agreement referred to in
clause (1) or (2) of this Section or this clause (3); provided, however,
that the encumbrances and restrictions contained in any such refinancing
agreement or amendment are, collectively, no more restrictive in any
material respect, than the encumbrances and restrictions contained in such
agreements;
(4) in the case of clause (iii) of this Section 4.05, any
encumbrance or restriction contained in security agreements securing
Indebtedness of a Restricted Subsidiary which are not prohibited by
Section 4.12 to the extent such encumbrances or restrictions restrict the
transfer of the property subject to such security agreements;
78
(5) any encumbrance or restriction existing under or by reason of
applicable law;
(6) any encumbrance or restriction with respect to the Receivables
Subsidiary pursuant to an agreement relating to Indebtedness of the
Receivables Subsidiary which is permitted under Section 4.03 or pursuant
to an agreement relating to a Financing Disposition to or by the
Receivables Subsidiary;
(7) customary non-assignment provisions of any licensing agreement
or of any lease;
(8) any encumbrance or restriction contained in contracts for sales
of assets otherwise permitted by this Indenture;
(9) with respect to a Restricted Subsidiary, any encumbrance or
restriction imposed pursuant to an agreement that has been entered into
for the sale of all or substantially all of the Capital Stock of such
Restricted Subsidiary; and
(10) any encumbrance or restriction with respect to a Foreign
Subsidiary pursuant to an agreement relating to Indebtedness Incurred by
such Foreign Subsidiary which is permitted under Section 4.03.
SECTION 4.06. Limitation on Sales of Assets and Subsidiary Stock.
(a) The Company shall not, and shall not permit any Restricted Subsidiary to,
make any Asset Disposition unless (i) the Company or such Restricted Subsidiary
receives consideration (including by way of relief from, or by any other Person
assuming sole responsibility for, any liabilities, contingent or otherwise) at
the time of such Asset Disposition at least equal to the fair market value, as
determined in good faith by the Board of Directors, whose determination shall be
conclusive and evidenced by a resolution of the Board of Directors (including as
to the value of all noncash consideration), of the shares and assets subject to
such
79
Asset Disposition, (ii) at least 80% (or 100% in the case of lease payments) of
the consideration thereof received by the Company or such Restricted Subsidiary
is in the form of cash or cash equivalents and (iii) an amount equal to 100% of
the Net Available Cash from such Asset Disposition is applied by the Company (or
such Restricted Subsidiary, as the case may be) (A) first, to the extent the
Company or such Restricted Subsidiary elects (or is required by the terms of any
Senior Indebtedness), to prepay, repay or purchase Senior Indebtedness of the
Company or a Wholly Owned Subsidiary or, in the case of a sale by a Restricted
Subsidiary which is not a Wholly Owned Subsidiary, to prepay, repay or purchase
Senior Indebtedness of such Restricted Subsidiary (in each case other than
Indebtedness owed to the Company or an Affiliate of the Company) within 360 days
after the later of the date of such Asset Disposition or the receipt of such Net
Available Cash; (B) second, to the extent of the balance of Net Available Cash
after application in accordance with clause (A), to the extent the Company or
such Restricted Subsidiary elects, to reinvest (or enter into a binding contract
to do so) in Additional Assets (including by means of an Investment in
Additional Assets by a Restricted Subsidiary with Net Available Cash received by
the Company or another Restricted Subsidiary) or to repay amounts borrowed under
a revolving credit facility or line of credit to the extent such funds were
invested in Additional Assets within 360 days prior to such Asset Disposition,
within 360 days from the later of such Asset Disposition or the receipt of such
Net Available Cash; (C) third, to the extent of the balance of such Net
Available Cash after application in accordance with clauses (A) and (B), to make
an Offer (as defined below) to purchase Securities pursuant to and subject to
the conditions of Section 4.06(b) and (D) fourth, to the extent of the balance
of such Net Available Cash after application in accordance with clauses (A), (B)
and (C), to fund (to the extent consistent with any other applicable provision
of this Indenture) any corporate purpose; provided, however, that in connection
with any prepayment, repayment or purchase of Indebtedness pursuant to clause
(A) above, the Company or such Restricted Subsidiary shall retire such
Indebtedness and shall cause
80
the related loan commitment (if any) to be permanently reduced in an amount
equal to the principal amount so prepaid, repaid or purchased. Notwithstanding
the foregoing provisions of this covenant, the Company and its Restricted
Subsidiaries shall not be required to apply any Net Available Cash in accordance
with this covenant except to the extent that the aggregate Net Available Cash
from all Asset Dispositions in any year which are not applied in accordance with
this covenant exceed $3.0 million in such year.
For the purposes of Section 4.06(a)(ii), the following are deemed to be
cash: (x) the assumption of Indebtedness of the Company (other than Disqualified
Stock of the Company) or any Restricted Subsidiary and the release of the
Company or such Restricted Subsidiary from all liability on such Indebtedness in
connection with such Asset Disposition and (y) securities received by the
Company or any Restricted Subsidiary from the transferee that are promptly
converted by the Company or such Restricted Subsidiary into cash.
(b) In the event of an Asset Disposition that requires the purchase
of Securities pursuant to Section 4.06(a)(iii)(C), the Company shall be required
to purchase Securities tendered pursuant to an offer, commenced within 30 days
following the expiration of the 360 day period referred to in Section
4.06(a)(iii)(B) (or, if the Company so elects, at any time within such 360 day
period), by the Company for the Securities (the "Offer") at a purchase price of
100% of their principal amount plus accrued and unpaid interest, if any, to the
date of purchase in accordance with the procedures (including prorationing in
the event of oversubscription) set forth in Section 4.06(c). If the aggregate
purchase price of Securities tendered pursuant to the Offer is less than the Net
Available Cash allotted to the purchase of the Securities, the Company shall
apply the remaining Net Available Cash in accordance with Section
4.06(a)(iii)(D). The Company shall not be required to make an Offer for
Securities pursuant to this Section if the Net Available Cash available therefor
(after application of the proceeds as provided in clauses (A) and (B) of Section
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4.06(a)(iii)) is less than $10 million (which lesser amount shall be carried
forward for purposes of determining whether an Offer is required with respect to
the Net Available Cash from any subsequent Asset Disposition).
(c)(1) Promptly, and in any event within 10 days after the Company
becomes obligated to make an Offer, the Company shall deliver to the Trustee and
send, by first-class mail to each Holder, a written notice stating that the
Holder may elect to have his Securities purchased by the Company either in whole
or in part (subject to prorationing as hereinafter described in the event the
Offer is oversubscribed) in integral multiples of $1,000 of principal amount, at
the applicable purchase price. The notice shall specify a purchase date not less
than 30 days nor more than 60 days after the date of such notice (the "Purchase
Date") and shall contain such information concerning the business of the Company
which the Company in good faith believes will enable such Holders to make an
informed decision (which at a minimum will include (i) the most recently filed
Annual Report on Form 10-K (including audited consolidated financial statements)
of the Company, the most recent subsequently filed Quarterly Report on Form 10-Q
and any Current Report on Form 8-K of the Company filed subsequent to such
Quarterly Report, other than Current Reports describing Asset Dispositions
otherwise described in the offering materials (or corresponding successor
reports), (ii) a description of material developments in the Company's business
subsequent to the date of the latest of such Reports, and (iii) if material,
appropriate pro forma financial information) and all instructions and materials
necessary to tender Securities pursuant to the Offer, together with the
information contained in clause (3).
(2) Not later than the date upon which written notice of an Offer is
delivered to the Trustee as provided below, the Company shall deliver to the
Trustee an Officers' Certificate as to (i) the amount of the Offer (the "Offer
Amount"), (ii) the allocation of the Net Available Cash from the Asset
Dispositions pursuant to which such Offer is being made and (iii) the compliance
of such allocation with the
82
provisions of Section 4.06(a). On such date, the Company shall also irrevocably
deposit with the Trustee or with a paying agent (or, if the Company is acting as
its own paying agent, segregate and hold in trust) in Temporary Cash Investments
an amount equal to the Offer Amount to be held for payment in accordance with
the provisions of this Section. Upon the expiration of the period for which the
Offer remains open (the "Offer Period"), the Company shall deliver to the
Trustee for cancellation the Securities or portions thereof which have been
properly tendered to and are to be accepted by the Company. The Trustee (or
paying agent) shall, on the Purchase Date, mail or deliver payment to each
tendering Holder in the amount of the purchase price. In the event that the
aggregate purchase price of the Securities delivered by the Company to the
Trustee is less than the Offer Amount, the Trustee (or paying agent) shall
deliver the excess to the Company (or if the Company is acting as paying agent,
the Company may release such amount from trust) promptly after the expiration of
the Offer Period for application in accordance with this Section.
(3) Holders electing to have a Security purchased will be required
to surrender the Security, with an appro priate form duly completed, to the
Company at the address specified in the notice at least three Business Days
prior to the Purchase Date. Holders will be entitled to withdraw their election
if the Trustee or the Company receives not later than one Business Day prior to
the Purchase Date, a telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of the Security which was
delivered for purchase by the Holder and a statement that such Holder is
withdrawing his election to have such Security purchased. If at the expiration
of the Offer Period the aggregate principal amount of Securities surrendered by
Holders exceeds the 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 integral multiples thereof, shall be purchased). Holders whose Securities are
purchased only in part will be
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issued new Securities equal in principal amount to the unpurchased portion of
the Securities surrendered.
(4) At the time the Company delivers Securities to the Trustee which
are to be accepted for purchase, the Company will also deliver an Officers'
Certificate stating that such Securities are to be accepted by the Company
pursuant to and in accordance with the terms of this Section. A Security shall
be deemed to have been accepted for purchase at the time the Trustee, directly
or through an agent, mails or delivers payment therefor to the surrendering
Holder.
(d) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Section. To the extent that the provisions of any securities laws or regulations
conflict with provisions of this Section, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under this Section by virtue thereof.
(e) (1) The Company shall not, and shall not permit any Restricted
Subsidiary to, make any Financing Disposition unless the Board of Directors
shall have determined in good faith, which determination shall be conclusive and
evidenced by a resolution of the Board of Directors, that such Financing
Disposition is economically fair and reasonable to the Company or such
Subsidiary.
(2) The Company shall not permit Sunbury to make any sale of a
Receivable, or interest therein, pursuant to the Sunbury Factoring Arrangement
unless the Board of Directors shall have determined in good faith, which
determination shall be conclusive and evidenced by a resolution of the Board of
Directors, that such sale is economically fair and reasonable to Sunbury.
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SECTION 4.07. Limitation on Transactions with Affiliates. (a) The
Company shall not, and shall not permit any Restricted Subsidiary to, directly
or indirectly, enter into or conduct any transaction (including the purchase,
sale, lease or exchange of any property or the rendering of any service) with
any Affiliate of the Company (an "Affiliate Transaction") on terms (i) that are
less favorable to the Company or such Restricted Subsidiary, as the case may be,
than those that could be obtained at the time of such transaction in
arm's-length dealings with a Person who is not such an Affiliate and (ii) that,
in the event such Affiliate Transaction involves an aggregate amount in excess
of $2.5 million, are not in writing and have not been approved by a majority of
the members of the Board of Directors having no personal stake in such Affiliate
Transaction. In addition, if such Affiliate Transaction involves an amount in
excess of $15.0 million, a fairness opinion must be obtained from a nationally
recognized appraisal or investment banking firm; provided no such opinion shall
be required with respect to (i) any series of transactions that comply with the
requirements of clauses (i) and (ii) of the preceding sentence (it being
understood that annual approval by the Board of Directors of such transaction
shall be sufficient) and that consist of the sale by the Company or any
Restricted Subsidiary of goods and inventory in the ordinary course of business
to a Person to whom the Home Furnishings Group sold more than $15.0 million of
goods and inventory in 1995; and (ii) the sale by Holdings of Receivables to the
Receivables Subsidiary pursuant to a Permitted Receivables Financing.
(b) The provisions of Section 4.07(a) shall not prohibit (i) any
Restricted Payment or Permitted Investment permitted to be made pursuant to
Section 4.04, (ii) fees, compensation or employee benefit arrangements paid to
and any indemnity provided for the benefit of directors, officers or employees
of the Company or any Subsidiary of the Company in the ordinary course of
business, (iii) any issuance of securities, or other payments, awards or grants
in cash, securities or otherwise pursuant to, or the funding of, employment
arrangements, stock options and stock
85
ownership plans approved by the Board of Directors, (iv) transactions pursuant
to agreements entered into or in effect on the Issue Date, including amendments
thereto entered into after the Issue Date, provided that the terms of any such
amendment are not, in the aggregate, less favorable to the Company or such
Restricted Subsidiary than the terms of such agreement prior to such amendment
and provided further that such agreements are set forth on Schedule 4.07 hereto,
(v) loans or advances to employees that are Affiliates of the Company in the
ordinary course of business, but in any event not to exceed $2.5 million in the
aggregate outstanding at any one time, (vi) any transaction between the Company
and a Restricted Subsidiary or between Restricted Subsidiaries (so long as the
other stockholders of any participating Restricted Subsidiaries which are not
Wholly Owned Subsidiaries are not themselves Affiliates of the Company) or (vii)
payments with respect to Indebtedness Incurred pursuant to Section 4.03(b)(xiv).
SECTION 4.08. Change of Control. (a) Upon a Change of Control, each
Holder shall have the right to require that the Company repurchase all or any
part of such Holder's Securities at a purchase price in cash equal to 101% of
the principal amount thereof, plus accrued and unpaid interest, if any, to the
date of purchase (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date that
is on or prior to the date of purchase), in accordance with the terms
contemplated in Section 4.08(b); provided, however, that notwithstanding the
occurrence of a Change of Control, the Company shall not be obligated to
purchase the Securities pursuant to this Section 4.08 in the event that it has
mailed notice of its election to redeem all the Securities under Section 3.07.
(b) Subject to the proviso to Section 4.08(a), within 30 days
following any Change of Control, the Company
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shall mail a notice to each Holder with a copy to the Trustee stating, among
other things:
(1) that a Change of Control has occurred and that such Holder has
the right to require the Company to purchase all or any portion of such
Holder's Securities at a purchase price in cash equal to 101% of the
principal amount thereof plus accrued and unpaid interest, if any, to the
date of purchase (subject to the right of Holders of record on a record
date to receive interest due on the relevant interest payment date that is
on or prior to the date of purchase);
(2) the circumstances and relevant facts and financial information
regarding such Change of Control;
(3) the repurchase date (which shall be no earlier than 30 days nor
later than 60 days from the date such notice is mailed); and
(4) the instructions determined by the Company, consistent with this
Section, that a Holder must follow in order to have its Securities or any
portion thereof purchased.
(c) Holders electing to have a Security purchased shall be required
to surrender the Security, with an appro priate form duly completed, to the
Company at the address specified in the notice at least three Business Days
prior to the purchase date. Holders shall be entitled to withdraw their election
if the Trustee or the Company receives not later than one Business Day prior to
the purchase date, a telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of the Security which was
delivered for purchase by the Holder and a statement that such Holder is
withdrawing his election to have such Security purchased.
(d) On the purchase date, all Securities pur chased by the Company
under this Section shall be delivered to the Trustee for cancellation, and the
Company shall pay
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the purchase price plus accrued and unpaid interest, if any, to the Holders
entitled thereto.
(e) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Section. To the extent that the provisions of any securities laws or regulations
conflict with provisions of this Section, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under this Section by virtue thereof.
SECTION 4.09. Compliance Certificate. The Company shall deliver to
the Trustee within 120 days after the end of each fiscal year of the Company an
Officers' Certificate complying with Section 314(a)(4) of the TIA and stating
that in the course of the performance by the signers of their duties as Officers
of the Company they would normally have knowledge of any Default or Event of
Default and, if such signer does know of such a Default or Event of Default, the
certificate shall describe such Default or Event of Default with particularity
and describe what actions, if any, the Company proposes to take with respect to
such Default or Event of Default.
SECTION 4.10. Further Instruments and Acts. Upon request of the
Trustee, the Company shall execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
SECTION 4.11. Limitation on the Sale or Issuance of Capital Stock of
Domestic Subsidiaries. The Company will not sell any shares of Capital Stock of
a Domestic Subsidiary, and will not permit any Domestic Subsidiary, directly or
indirectly, to issue or sell any shares of its Capital Stock, except (a) to the
Company or a Wholly Owned Subsidiary, (b) directors' qualifying shares (c) if,
immediately after giving effect to such issuance or sale,
88
such Domestic Subsidiary would no longer constitute a Restricted Subsidiary or
(d) in a Public Equity Offering as a result of or after which a Public Market
exists. The proceeds of any sale of such Capital Stock permitted by clauses (c)
and (d) will be treated as Net Available Cash from an Asset Disposition and must
be applied in accordance with the terms of Section 4.06.
SECTION 4.12. Limitation on Liens. The Company shall not, and shall
not permit any Guarantor Subsidiary to, directly or indirectly, create or permit
to exist any Lien on any of its property or assets (including Capital Stock),
whether owned on the Issue Date or thereafter acquired, securing any
Indebtedness other than Senior Indebtedness of the Company, in the case of the
Company, or Senior Indebtedness of a Guarantor Subsidiary, in the case of a
Guarantor Subsidiary, unless contemporaneously therewith effective provision is
made to secure the Securities and, in respect of Liens on any Guarantor
Subsidiary's property or assets, the Subsidiary Guaranty of such Guarantor
Subsidiary equally and ratably with (or on a senior basis to, in the case of
Indebtedness subordinated in right of payment to the Securities and such
Subsidiary Guaranty) such obligation for so long as such obligation is so
secured.
SECTION 4.13. Limitation on Sale/Leaseback Transactions. The Company
will not, and will not permit any Restricted Subsidiary to, enter into any
Sale/Leaseback Transaction with respect to any property unless (i) the Company
or such Restricted Subsidiary would be entitled to (A) Incur Indebtedness in an
amount equal to the Attributable Debt with respect to such Sale/Leaseback
Transaction pursuant to Section 4.03 and (B) create a Lien on such property
securing such Attributable Debt without equally and ratably securing the Notes
pursuant to Section 4.12, (ii) the net cash proceeds received by the Company or
any Restricted Subsidiary in connection with such Sale/Leaseback Transaction are
at least equal to the fair market value (as determined in good faith by the
Board of Directors, whose determination will be conclusive and evidenced by a
resolution of the Board of Directors) of such
89
property and (iii) the transfer of such property is permitted by, and the
Company applies the proceeds of such transaction in compliance with, Section
4.06.
SECTION 4.14. Limitation on Lines of Business. (a) The Company shall
not, and shall not permit any Restricted Subsidiary (other than the Receivables
Subsidiary) to, engage in any business other than (i) a Related Business and
(ii) the making of Permitted Investments.
(b) The Company shall not permit the Receivables Subsidiary to
engage in any business or transaction other than the purchase and sale of
Receivables (or participation interests therein) of Holdings and the
Subsidiaries of the Company and activities incidental thereto.
SECTION 4.15. Future Guarantor Subsidiaries. The Company shall cause
each Domestic Subsidiary (other than the Receivables Subsidiary and any Master
Servicer) which Incurs Indebtedness to execute and deliver to the Trustee a
supplemental indenture in the form of Exhibit D hereto pursuant to which such
Subsidiary shall Guarantee payment of the Securities as provided in Section
11.06; provided, however, that such Subsidiary shall not be required to execute
and deliver a supplemental indenture pursuant to this Section in the event that
such Subsidiary is a party hereto at the time of such Incurrence of
Indebtedness.
ARTICLE V
Successor Company
SECTION 5.01. When Company May Merge or Transfer Assets. The Company
shall not consolidate with or merge with or into, or convey, transfer or lease
all or substan tially all its assets to any Person, unless:
(i) the resulting, surviving or transferee Person (the "Successor
Company") shall be a corporation
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organized and existing under the laws of the United States of America, any
State thereof or the District of Columbia and the Successor Company (if
not the Company) shall expressly assume, by an indenture supplemental
hereto, executed and delivered to the Trustee, in form satisfactory to the
Trustee, all the obligations of the Company under the Securities and this
Indenture;
(ii) immediately after giving effect to such transaction (and
treating any Indebtedness which becomes an obligation of the Successor
Company or any Restricted Subsidiary as a result of such transaction as
having been Incurred by the Successor Company or such Restricted
Subsidiary at the time of such transac tion), no Default shall have
occurred and be continuing;
(iii) except in the case of a merger the sole purpose of which is to
change the Company's jurisdiction of incorporation, immediately after
giving effect to such transaction, the Successor Company would be able to
Incur an additional $1.00 of Indebtedness under Section 4.03(a);
(iv) immediately after giving effect to such transaction, the
Successor Company shall have Consolidated Net Worth in an amount which is
not less than the Consolidated Net Worth of the Company immediately prior
to such transaction; and
(v) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with this Indenture.
Notwithstanding the foregoing clauses (ii), (iii) and (iv), any
Restricted Subsidiary may consolidate with, merge into or transfer all or part
of its properties and assets to the Company.
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The Successor Company shall succeed to, and be substituted for, and
may exercise every right and power of, the Company under this Indenture, but the
predecessor Company in the case of a conveyance, transfer or lease of all or
substantially all its assets shall not be released from the obligation to pay
the principal of and interest on the Securities.
ARTICLE VI
Defaults and Remedies
SECTION 6.01. Events of Default. An "Event of Default" occurs if:
(1) the Company defaults in any payment of interest on any Security
when the same becomes due and payable, whether or not such payment shall
be prohibited by Article X, and such default continues for a period of 30
days;
(2) the Company defaults in the payment of the principal of any
Security when the same becomes due and payable at its Stated Maturity,
upon optional redemption, upon required repurchase, upon declaration or
otherwise, whether or not such payment shall be prohibited by Article X;
(3) the Company fails to comply with Section 5.01;
(4) the Company fails to comply with Section 4.02, 4.03, 4.04, 4.05,
4.06, 4.07, 4.08, 4.11, 4.12, 4.13, 4.14 or 4.15 (other than a failure to
purchase Securities when required under Section 4.06 or 4.08) and such
failure continues for 30 days after the notice specified in the
penultimate paragraph of this Section 6.01;
(5) the Company or any Guarantor Subsidiary fails to comply with any
of its agreements in the Securities
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or this Indenture (other than those referred to in (1), (2), (3) or (4)
above) and such failure continues for 60 days after the notice specified
in the penultimate paragraph of this Section 6.01;
(6) Indebtedness of the Company or any Significant Subsidiary is not
paid within any applicable grace period after final maturity or the
acceleration of any such Indebtedness by the holders of such Indebtedness
because of a default and the total amount of such Indebtedness unpaid or
accelerated exceeds $10,000,000 or its foreign currency equivalent at the
time;
(7) the Company or any Significant Subsidiary pursuant to or within
the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it in
an involuntary case;
(C) consents to the appointment of a Custo dian of it or for
any substantial part of its property;
(D) makes a general assignment for the benefit of its
creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
(8) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company or any Significant
Subsidiary in an involuntary case;
(B) appoints a Custodian of the Company or any Significant
Subsidiary or for any substantial part of its property; or
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(C) orders the winding up or liquidation of the Company or any
Significant Subsidiary;
or any similar relief is granted under any foreign laws and the order or
decree remains unstayed and in effect for 60 days;
(9) any judgment or decree not covered by insurance for the payment
of money in excess of $10,000,000 or its foreign currency equivalent at
the time is entered against the Company or any Significant Subsidiary and
is not discharged, waived or stayed and either (A) an enforcement
proceeding is commenced with respect to such judgment or decree or (B)
there is a period of 60 days following the entry of such judgment or
decree during which such judgment or decree is not discharged, waived or
the execution thereof stayed; or
(10) any Subsidiary Guaranty ceases to be in full force and effect
(except as contemplated by the terms thereof) or any Guarantor Subsidiary
shall deny or disaffirm its obligations under this Indenture or any
Subsidiary Guaranty and such Default continues for 10 days.
The foregoing shall constitute Events of Default whatever the reason
for any such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body.
The term "Bankruptcy Law" means Title 11, United States Code, or any
similar Federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator, custodian or similar official
under any Bankruptcy Law.
A Default under clause (4) or (5) is not an Event of Default until
the Trustee or the Holders of at least 25% in principal amount of the
outstanding Securities notify the
94
Company of the Default and the Company does not cure such Default within the
time specified in clauses (4) or (5) hereof after receipt of such notice. Such
notice must specify the Default, demand that it be remedied and state that such
notice is a "Notice of Default."
The Company shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice in the form of an Officers' Certificate of
any Event of Default under clause (3), (6), (7) or (10) and any event which with
the giving of notice or the lapse of time would become an Event of Default under
clause (4), (5), (8) or (9), its status and what action the Company is taking or
proposes to take with respect thereto.
SECTION 6.02. Acceleration. If an Event of Default (other than an
Event of Default specified in Section 6.01(7) or 6.01(8) with respect to the
Company) occurs and is continuing, the Trustee by notice to the Company, or the
Holders of at least 25% in principal amount of the outstanding Securities by
notice to the Company and the Trustee, may declare the principal of and accrued
but unpaid interest on all the Securities to be due and payable. Upon such a
declaration, such principal and interest shall be due and payable immediately.
If an Event of Default specified in Section 6.01(7) or 6.01(8) with respect to
the Company occurs and is continuing, the principal of and interest on all the
Securities shall ipso facto become and be immediately due and payable without
any declaration or other act on the part of the Trustee or any Securityholders.
The Holders of a majority in principal amount of the Securities by notice to the
Trustee may rescind an acceleration and its consequences if the rescission would
not conflict with any judgment or decree and if all existing Events of Default
have been cured or waived except nonpay ment of principal or interest that has
become due solely because of acceleration. No such rescission shall affect any
subsequent Default or impair any right consequent thereto.
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SECTION 6.03. Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of principal of or interest on the Securities or to enforce the performance of
any provision of the Securities or this Indenture.
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 acquies cence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
SECTION 6.04. Waiver of Past Defaults. The Holders of a majority in
principal amount of the Securities by notice to the Trustee may waive an
existing Default and its consequences except (i) a Default in the payment of the
principal of or interest on a Security or (ii) a Default in respect of a
provision that under Section 9.02 cannot be amended without the consent of each
Securityholder affected. When a Default is waived, it is deemed cured, but no
such waiver shall extend to any subsequent or other Default or impair any
consequent right.
SECTION 6.05. Control by Majority. The Holders of 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 of
exercising any trust or power conferred on the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture or,
subject to Section 7.01, that the Trustee determines is unduly prejudicial to
the rights of other Securityholders or would involve the Trustee in personal
liability; provided, however, that the Trustee may take any other action deemed
proper by the Trustee that is not inconsistent with such direction. Prior to
taking any action hereunder, the Trustee shall be entitled to indemnification
satisfactory to
96
it in its sole discretion against all losses and expenses caused by taking or
not taking such action.
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 stating that an
Event of Default is continuing;
(2) the Holders of at least 25% in principal amount of the
Securities make a written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable security
or indemnity 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 of security or indemnity; and
(5) the Holders of a majority in principal amount of the Securities
do not give the Trustee a direction inconsistent with the request during
such 60-day period.
A Securityholder may not use this Indenture to prejudice the rights
of another Securityholder or to obtain a preference or priority over another
Securityholder.
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 the Securities held by such Holder, on
or after the respective due dates expressed in the Securities, 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 such Holder.
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SECTION 6.08. Collection Suit by Trustee. If an Event of Default
specified in Section 6.01(1) or 6.01(2) occurs and is continuing, the Trustee
may recover judgment in its own name and as trustee of an express trust against
the Company for the whole amount then due and owing (together with interest on
any unpaid interest to the extent lawful) and the amounts provided for in
Section 7.07.
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee may file
such proofs of claim and other papers or documents and take such other actions,
including participating as a member, voting or otherwise, of any committee of
creditors appointed in the matter, as may be necessary or advisable in order to
have the claims of the Trustee and the Securityholders allowed in any judicial
proceedings relative to the Company, any Subsidiary, their respective creditors
or their property and, unless prohibited by law or applicable regulations, may
vote on behalf of the Holders in any election of a trustee in bankruptcy or
other Person performing similar functions, and any Custodian in any such
judicial proceeding is hereby authorized by each Holder to make payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and its counsel, and any other amounts due the Trustee under
Section 7.07.
Nothing herein shall be deemed to empower the Trustee to authorize
or consent to, or accept or adopt on behalf of any Securityholder, any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Securityholder, or to authorize the Trustee to vote in
respect of the claim of any Securityholder in any such proceeding.
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SECTION 6.10. Priorities. If the Trustee col lects any money or
property from the Company pursuant to this Article VI, it shall pay out the
money or property in the following order:
FIRST: to the Trustee for amounts due under Sec tion 7.07;
SECOND: to holders of Senior Indebtedness of the Company to the
extent required by Article X;
THIRD: to Securityholders 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
FOURTH: to the Company.
The Trustee may fix a record date and payment date for any payment
to Securityholders pursuant to this Section. At least 15 days before such record
date, the Trustee shall mail to each Securityholder and the Company a notice
that states the record date, the payment date and amount to be paid.
SECTION 6.11. Undertaking for Costs. In any suit for the enforcement
of any right or remedy under this Inden ture 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 undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including rea sonable attorneys' fees, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section does not apply to a suit by the
Company, a suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a
suit by Holders of more than 10% in principal amount of the Securities.
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SECTION 6.12. Waiver of Stay or Extension Laws. The Company (to the
extent it may lawfully do so) shall not at any time insist upon, or plead, or in
any manner whatso ever claim or take the benefit or advantage of, any stay or
extension law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Indenture; and the Company (to
the extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and shall not hinder, delay or impede the execution
of any power herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law had been enacted.
SECTION 6.13. Restoration of Rights and Remedies. If the Trustee or
any Securityholder has instituted any proceeding to enforce any right or remedy
under this Indenture and such proceeding has been discontinued or abandoned for
any reason, or has been determined adversely to the Trustee or to such
Securityholder, then, and in every such case, subject to any determination in
such proceeding, the Company, the Trustee and the Securityholders shall be
restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Company, Trustee and Securityholders
shall continue as though no such proceeding had been instituted.
ARTICLE VII
Trustee
SECTION 7.01. Duties of Trustee. (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in its
exercise as a prudent Person would exercise or use under the circumstances in
the conduct of such Person's own affairs.
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(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(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 furnished
to the Trustee and conforming to the require ments 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 liabil ity for its own
negligent action, its own negligent failure to act or its own wilful misconduct,
except that:
(1) this paragraph does not limit the effect of paragraph (b) of
this Section;
(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; and
(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) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section.
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(e) 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.
(f) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
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. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on the
Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be responsible
for the misconduct or negligence of any agent 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 believes to be authorized or within its rights or
powers;
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provided, however, that the Trustee's conduct does not constitute wilful
misconduct or negligence.
(e) The Trustee may consult with counsel, and the advice or opinion
of counsel with respect to legal matters relating to this Indenture and the
Securities shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it here under
in good faith and in accordance with the advice or opinion of such counsel.
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 or its Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar
or co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Secur ities, it shall not be accountable for the Company's
use of the proceeds from the Securities, it will not be responsible for the use
or application of any monies received by a Paying Agent other than the Trustee,
and it shall not be responsible for any statement of the Company in this
Indenture or in any document issued in connection with the sale of the
Securities or in the Securities other than the Trustee's certificate of
authentication.
SECTION 7.05. Notice of Defaults. If a Default occurs and is
continuing and if it is known to a Trust Officer of the Trustee, the Trustee
shall mail to each Securityholder notice of the Default within the earlier of 90
days after it occurs or 30 days after it is known to a Trust Officer or written
notice of it is received by the Trustee. Except in the case of a Default in
payment of principal of, premium (if any) or interest on any Security (including
payments pursuant to the mandatory redemption
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provisions of such Security, if any), 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 interests of Securityholders.
SECTION 7.06. Reports by Trustee to Holders. As promptly as
practicable after each May 15 beginning with the May 15 following the date of
this Indenture, and in any event prior to July 15 in each year, the Trustee
shall mail to each Securityholder a brief report dated as of [May 15] that
complies with TIA ss. 313(a). The Trustee will also comply with TIA ss. 313(b)
and TIA ss. 313(c).
A copy of each report at the time of its mailing to Securityholders
shall be filed with the SEC and each stock exchange (if any) on which the
Securities are listed. The Company agrees to notify promptly the Trustee
whenever the Securities become listed on any stock exchange and of any delisting
thereof.
SECTION 7.07. Compensation and Indemnity. The Company shall pay to
the Trustee, Paying Agent and Registrar from time to time reasonable
compensation for its services. 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 out-of-pocket expenses
incurred or made by it, including costs of collection, in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation and expenses, disbursements and advances of the Trustee's agents,
counsel, accountants and other professionals. Any costs and expenses associated
with the Exchange Securities shall be paid by the Company. The Company shall
indemnify the Trustee, Paying Agent, Registrar, and each of their officers,
directors and employees (each in their respective capacities), for and hold each
of them harmless against any and all loss, liability or expense (including
attorneys' fees) incurred by them without negligence or bad faith on their part
in connection with the administration of this trust and the performance of their
duties hereunder. The Trustee, Paying
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Agent and Registrar shall notify the Company of any claim for which they may
seek indemnity promptly upon obtaining actual knowledge thereof; provided that
any failure so to notify the Company shall not relieve the Company of its
indemnity obligations hereunder except to the extent the Company shall have been
adversely affected thereby. The Company shall defend the claim and the
indemnified party shall provide reasonable cooperation at the Company's expense
in the defense. Such indemnified parties may have separate counsel and the
Company shall pay the fees and expenses of such counsel; provided that the
Company shall not be required to pay such fees and expenses if it assumes such
indemnified parties' defense and, in such indemnified parties' reasonable
judgment, there is no conflict of interest between the Company and such parties
in connection with such defense. The Company need not pay for any settlement
made without its written consent. The Company need not reimburse any expense or
indemnify against any loss, liability or expense incurred by an indemnified
party through such party's own wilful misconduct, negligence or bad faith.
To secure the Company's payment obligations in this Section, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee other than money or property held in trust to pay
principal of and interest on particular Securities.
The Company's payment obligations pursuant to this Section shall
survive the discharge of this Indenture. When the Trustee, Paying Agent or
Registrar incurs expenses after the occurrence of a Default specified in Section
6.01(7) or 6.01(8) with respect to the Company, the expenses are intended to
constitute expenses of administration under the 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 Securities may remove the Trustee by so notifying the
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Company and the Trustee and may appoint a successor Trustee with the consent of
the Company, which shall not be unreasonably withheld. The Company shall remove
the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the Trustee
or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Company or by the Holders
of a majority in principal amount of the Securities and such Holders do not
reasonably promptly appoint a successor Trustee, or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Company shall promptly appoint a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.07.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee or the Holders of
10% in principal amount of the Securities may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
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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.
Notwithstanding the replacement of the Trustee pursuant to this
Section, the Company's obligations under Section 7.07 shall continue for the
benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Securities or in this Indenture provided
that the certificate of the Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee shall at
all times satisfy the requirements of TIA ss. 310(a). The Trustee shall have a
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with TIA
ss. 310(b); provided, however, that there shall be excluded from the operation
of TIA ss. 310(b)(1) any indenture or indentures under which other securities or
certificates of interest or
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participation in other securities of the Company are out standing if the
requirements for such exclusion set forth in TIA ss. 310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims Against Company. The
Trustee shall comply with TIA ss. 311(a), excluding any creditor relationship
listed in TIA ss. 311(b). A Trustee who has resigned or been removed shall be
subject to TIA ss. 311(a) to the extent indicated.
ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securi ties; Defeasance. (a)
When (i) the Company delivers to the Trustee all outstanding Securities (other
than Securities replaced pursuant to Section 2.07) for cancellation or (ii) all
outstanding Securities have become due and payable, whether at maturity or as a
result of the mailing of a notice of redemption pursuant to Article III hereof
and the Company irrevocably deposits with the Trustee funds or U.S. Government
Obligations on which payment of principal and interest when due will be
sufficient to pay at maturity or upon redemption all outstanding Securities,
including interest thereon to maturity or such redemption date (other than
Securities replaced pursuant to Section 2.07), and if in either case the Company
pays all other sums payable hereunder by the Company, then this Indenture shall,
subject to Section 8.01(c), cease to be of further effect. The Trustee shall
acknowledge satisfaction and discharge of this Indenture on demand of the
Company accompanied by an Officers' Certificate and an Opinion of Counsel and at
the cost and expense of the Company.
(b) Subject to Sections 8.01(c), 8.02 and 8.06, the Company at any
time may terminate (i) all its obliga tions under the Securities and this
Indenture ("legal defeasance option") or (ii) its obligations under Sections
4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.11,
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4.12, 4.13, 4.14, 4.15, 5.01(iii) and 5.01(iv) and the operation of Sections
6.01(4), 6.01(6), 6.01(7) (with respect to Significant Subsidiaries only),
6.01(8) (with respect to Significant Subsidiaries only), 6.01(9) and 6.01(10)
("covenant defeasance option"). The Company may exercise its legal defeasance
option notwithstanding its prior exercise of its covenant defeasance option.
If the Company exercises its legal defeasance option, payment of the
Securities may not be accelerated because of an Event of Default. If the Company
exercises its covenant defeasance option, payment of the Securities may not be
accelerated because of an Event of Default specified in Sections 6.01(4),
6.01(6), 6.01(7) (with respect to Significant Subsidiaries only), 6.01(8) (with
respect to Significant Subsidiaries only), 6.01(9) and 6.01(10) or because of
the failure of the Company to comply with Sections 5.01(iii) and 5.01(iv).
Upon satisfaction of the conditions set forth herein and upon
request of the Company, the Trustee shall acknowledge in writing the discharge
of those obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's
obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 7.07, 7.08, 8.04, 8.05 and
8.06 shall survive until the Securities have been paid in full. Thereafter, the
Company's obligations in Sections 7.07, 8.04 and 8.05 shall survive.
SECTION 8.02. Conditions to Defeasance. The Company may exercise its
legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee money
or U.S. Government Obligations for the payment of principal, premium (if
any) and interest on the Securities to maturity or redemption, as the case
may be;
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(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and without
reinvestment on the deposited U.S. Government Obligations plus any
deposited money without investment will provide cash at such times and in
such amounts as will be sufficient to pay principal and interest when due
on all the Securities to maturity or redemption, as the case may be;
(3) 123 days pass after the deposit is made and during the 123-day
period no Default specified in Section 6.01(7) or 6.01(8) with respect to
the Company occurs which is continuing at the end of the period;
(4) the deposit does not constitute a default
under any other agreement binding on the Company and is
not prohibited by Article 10;
(5) the Company delivers to the Trustee an Opinion of Counsel to the
effect that the trust resulting from the deposit does not constitute, or
is qualified as, a regulated investment company under the Investment
Company Act of 1940;
(6) in the case of the legal defeasance option, the Company shall
have delivered to the Trustee an Opinion of Counsel stating that (i) the
Company has received from, or there has been published by, the Internal
Revenue Service a ruling, or (ii) since the date of this Indenture there
has been a change in the applicable federal income tax law, in either case
to the effect that, and based thereon such Opinion of Counsel shall
confirm that, the Securityholders will not recognize income, gain or loss
for federal income tax purposes as a result of such defeasance and will be
subject to federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such defeasance had not
occurred;
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(7) in the case of the covenant defeasance option, the Company shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Securityholders will not recognize income, gain or loss for federal
income tax purposes as a result of such covenant defeasance and will be
subject to federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such covenant defeasance
had not occurred; and
(8) the Company delivers to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent to
the defeasance and discharge of the Securities as contemplated by this
Article VIII have been complied with.
Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date in
accordance with Article III.
SECTION 8.03. Application of Trust Money. The Trustee shall hold in
trust money or U.S. Government Obligations deposited with it pursuant to this
Article VIII. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal of and interest on the Securities. Money
and securities so held in trust are not subject to Article X.
SECTION 8.04. Repayment to Company. The Trustee and the Paying Agent
shall promptly turn over to the Company upon request any excess money or
securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee and
the Paying Agent shall pay to the Company upon request any money held by them
for the payment of principal or interest that remains unclaimed for two years,
and, thereafter, Securityholders entitled to the money must look to the Company
for payment as general creditors.
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SECTION 8.05. Indemnity for Government Obligations. The Company
shall pay and shall indemnify the Trustee against any tax, fee or other charge
imposed on or assessed against deposited U.S. Government Obligations or the
principal and interest received on such U.S. Government Obligations other than
any tax, fee or other charge which by law is for the account of the
Securityholders.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or U.S. Government Obligations in accordance with this
Article VIII 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 Secur ities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article VIII until such time as the
Trustee or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article VIII; provided, however, that, if
the Company has made any payment of interest on or principal of any Securities
because of the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Securities to receive such payment from the
money or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE IX
Amendments
SECTION 9.01. Without Consent of Holders. The Company, the Guarantor
Subsidiaries and the Trustee may amend this Indenture or the Securities without
notice to or consent of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article V;
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(3) to provide for uncertificated Securities in addition to or in
place of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes of
Sec tion 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
(4) to make any change in Article X or Article XII that would limit
or terminate the benefits available to any holder of Senior Indebtedness
of the Company or Senior Indebtedness of a Guarantor Subsidiary,
respectively, (or Representatives therefor) under Article X or Article
XII, respectively;
(5) to add further Guarantees with respect to the Securities or to
release Guarantor Subsidiaries when permitted by the terms hereof, or to
secure the Securities;
(6) to add to the covenants of the Company for the benefit of the
Holders or to surrender any right or power herein conferred upon the
Company;
(7) to comply with any requirements of the SEC in connection with
qualifying this Indenture under the TIA;
(8) to make any change that does not adversely affect the rights of
any Securityholder; or
(9) to provide for the issuance and authorization of the Exchange
Securities.
An amendment under this Section may not make any change that
adversely affects the rights under Article X or Article XII of any holder of
Senior Indebtedness of the Company or Senior Indebtedness of a Guarantor
Subsidiary, respectively, then outstanding unless the holders of such Senior
Indebtedness (or any group or representative thereof authorized to give a
consent) consent to such change.
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After an amendment under this Section becomes effective, the Company
shall mail to Securityholders a notice briefly describing such amendment. The
failure to give such notice to all Securityholders, or any defect therein, shall
not impair or affect the validity of an amendment under this Section.
SECTION 9.02. With Consent of Holders. The Company, the Guarantor
Subsidiaries and the Trustee may amend this Indenture or the Securities without
notice to any Securityholder but with the written consent of the Holders of at
least a majority in principal amount of the Securities. The Holders of at least
a majority in principal amount of the Securities may waive compliance by the
Company or any Guarantor Subsidiary with any provision or covenant of this
Indenture or the Securities. However, without the consent of each Securityholder
affected, an amendment or waiver may not:
(1) reduce the amount of Securities whose Holders must consent to an
amendment or waiver;
(2) reduce the rate of or extend the time for payment of interest on
any Security;
(3) reduce the principal of or extend the Stated Maturity of any
Security;
(4) reduce the premium payable upon the redemption of any Security
or change the time at which any Security may be redeemed in accordance
with Article III;
(5) make any Security payable in money other than that stated in the
Security;
(6) make any change in Article X or Article XII that adversely
affects the rights of any Securityholder under Article X or Article XII,
respectively;
(7) impair the right of any Holder to receive payment of principal
of and interest on such Holder's
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Securities on or after the due dates therefor or to institute suit for the
enforcement of any payment on or with respect to such Holder's Securities.
(8) modify the Subsidiary Guarantees (except as contemplated by the
terms thereof or of this Indenture) in any manner adverse to the Holders;
or
(9) make any change in Section 6.04, Section 6.07 or the third
sentence of this Section.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent approves the substance thereof.
An amendment under this Section may not make any change that
adversely affects the rights under Article X or Article XII of any holder of
Senior Indebtedness then outstanding unless the holders of such Senior
Indebtedness of the Company or Senior Indebtedness of a Guarantor Subsidiary,
respectively (or any group or representative thereof authorized to give a
consent) consent to such change.
After an amendment under this Section becomes effective, the Company
shall mail to Securityholders a notice briefly describing such amendment. The
failure to give such notice to all Securityholders, or any defect therein, shall
not impair or affect the validity of an amendment under this Section.
SECTION 9.03. Compliance with Trust Indenture Act. Every amendment
to this Indenture or the Securities shall comply with the TIA as then in effect.
SECTION 9.04. Revocation and Effect of Consents and Waivers. A
consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subsequent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's
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Security, even if notation of the consent or waiver is not made on the Security.
However, any such Holder or subsequent Holder may revoke the consent or waiver
as to such Holder's Security or portion of the Security if the Trustee receives
the notice of revocation before the date the amendment or waiver becomes
effective. After an amendment or waiver becomes effective, it shall bind every
Securityholder. An amendment or waiver becomes effective once the consents from
the Holders of the requisite percentage in principal amount of outstanding
Securities are received by the Company or the Trustee.
The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Securityholders entitled to give their
consent or take any other action described above or required or permitted to be
taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were
Securityholders at such record date (or their duly designated proxies), and only
those Persons, shall be entitled to give such consent or to revoke any consent
previously given or to take any such action, whether or not such Persons
continue to be Holders after such record date. No such consent shall be valid or
effective for more than 120 days after such record date.
SECTION 9.05. Notation on or Exchange of Securities. If an
amendment 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 regarding 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. Failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such
amendment.
SECTION 9.06. Trustee To Sign Amendments. The Trustee shall sign any
amendment authorized pursuant to this Article IX if the amendment does not
adversely affect the
116
rights, duties, liabilities or immunities of the Trustee. If it does, the
Trustee may but need not sign it. In signing such amendment the Trustee shall
be entitled to receive indemnity reasonably satisfactory to it and to receive,
and (subject to Section 7.01) shall be fully protected in relying upon, an
Officers' Certificate and an Opinion of Counsel stating that such amendment is
authorized or permitted by this Indenture and complies with the provisions
hereof (including Section 9.03).
SECTION 9.07. Payment for Consent. Neither the Company nor any
Affiliate of the Company shall, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any Holder
for or as an inducement to any consent, waiver or amendment of any of the terms
or provisions of this Indenture or the Securities unless such consideration is
offered to be paid to all Holders that so consent, waive or agree to amend in
the time frame set forth in solicitation documents relating to such consent,
waiver or agreement.
ARTICLE X
Subordination of the Securities
SECTION 10.01. Agreement To Subordinate. The Company agrees, and
each Securityholder by accepting a Security agrees, that the Indebtedness
evidenced by the Securities is subordinated in right of payment, to the extent
and in the manner provided in this Article X, to the prior payment in full of
all Senior Indebtedness of the Company and that the subordination is for the
benefit of and enforceable by the holders of Senior Indebtedness of the Company.
The Securities shall in all respects rank pari passu with all other Senior
Subordinated Indebtedness of the Company, and only Indebtedness of the Company
that is Senior Indebtedness of the Company shall rank senior to the Securities
in accordance with the provisions set forth herein. For purposes of these
subordination provisions, the Indebtedness evidenced by the Securities is deemed
to
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include the liquidated damages payable pursuant to the provisions set forth in
the Securities and the Exchange and Registration Rights Agreement. All
provisions of this Article X shall be subject to Section 10.12.
SECTION 10.02. Liquidation, Dissolution, Bankruptcy. Upon any
payment or distribution of the assets of the Company to creditors upon a total
or partial liquidation or a total or partial dissolution of the Company or in a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Company and its properties:
(1) holders of Senior Indebtedness of the Company shall be entitled
to receive payment in full of such Senior Indebtedness before
Securityholders shall be entitled to receive any payment of principal of
or interest on the Securities; and
(2) until the Senior Indebtedness of the Company is paid in full,
any payment or distribution to which Securityholders would be entitled but
for this Article X shall be made to holders of such Senior Indebtedness as
their respective interests may appear.
SECTION 10.03. Default on Senior Indebtedness of the Company. The
Company may not pay the principal of, premium (if any) or interest on the
Securities or make any deposit pursuant to Section 8.01 and may not otherwise
purchase, redeem or otherwise retire any Securities (collectively, "pay the
Securities") if (i) any Senior Indebtedness of the Company is not paid when due
or (ii) any other default on Senior Indebtedness of the Company occurs and the
maturity of such Senior Indebtedness is accelerated in accordance with its terms
unless, in either case, (x) the default has been cured or waived and any such
acceleration has been rescinded or (y) such Senior Indebtedness has been paid in
full; provided, however, that the Company may pay the Securities without regard
to the foregoing if the Company and the Trustee receive written notice approving
such payment from the Representative of the holders of such
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Senior Indebtedness with respect to which either of the events in clause (i) or
(ii) of this sentence has occurred and is continuing. During the continuance of
any default (other than a default described in clause (i) or (ii) of the
preceding sentence) with respect to any Designated Senior Indebtedness of the
Company pursuant to which the maturity thereof may be accelerated immediately
without further notice (except such notice as may be required to effect such
acceleration) or the expiration of any applicable grace periods, the Company may
not pay the Securities for a period (a "Payment Blockage Period") commencing
upon the receipt by the Trustee (with a copy to the Company) of written notice
(a "Blockage Notice") of such default from the Represen tative of the holders of
the Designated Senior Indebtedness of the Company specifying an election to
effect a Payment Blockage Period and ending 179 days thereafter (or earlier if
such Payment Blockage Period is terminated (i) by written notice to the Trustee
(with a copy to the Company) from the Person or Persons who gave such Blockage
Notice, (ii) because such Designated Senior Indebtedness has been repaid in full
or (iii) because the default giving rise to such Blockage Notice is no longer
continuing). Notwithstanding the provisions described in the immediately
preceding sentence (but subject to the provisions contained in the first
sentence of this Section), unless the holders of such Designated Senior
Indebtedness or the Representative of such holders shall have accelerated the
maturity of such Designated Senior Indebtedness, the Company may resume payments
on the Securities after such Payment Blockage Period, including any missed
payments. Not more than one Blockage Notice may be given in any consecutive
360-day period, irrespective of the number of defaults with respect to
Designated Senior Indebtedness of the Company during such period; provided,
however, that if any Blockage Notice within such 360-day period is given by or
on behalf of any holders of Designated Senior Indebtedness of the Company (other
than the Bank Indebtedness), the Representative of the Bank Indebtedness may
give another Blockage Notice within such period; provided further, however, that
in no event may the total number of days during which any Payment
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Blockage Period or Periods is in effect exceed 179 days in the aggregate during
any 360 consecutive day period.
SECTION 10.04. Acceleration of Payment of Securities. If payment of
the Securities is accelerated because of an Event of Default, the Company or the
Trustee shall promptly notify the holders of the Designated Senior Indebtedness
of the Company (or the Representative of such holders) of the acceleration. If
any Designated Senior Indebtedness of the Company is outstanding, the Company
may not pay the Securities until five Business Days after such holders or the
Representative of the holders of the Designated Senior Indebtedness of the
Company receive notice of such acceleration and, thereafter, may pay the
Securities only if this Article X otherwise permits payment at that time.
SECTION 10.05. When Distribution Must Be Paid Over. If a payment or
distribution is made to Securityholders that because of this Article X should
not have been made to them, the Securityholders who receive the payment or
distribution shall hold such payment or distribution in trust for holders of the
Senior Indebtedness of the Company and pay it over to them as their respective
interests may appear.
SECTION 10.06. Subrogation. After all Senior Indebtedness of the
Company is paid in full and until the Securities are paid in full,
Securityholders shall be subrogated to the rights of holders of Senior
Indebtedness of the Company to receive distributions applicable to Senior
Indebtedness of the Company. A distribution made under this Article X to holders
of Senior Indebtedness of the Company which otherwise would have been made to
Securityholders is not, as between the Company and Securityholders, a payment by
the Company on Senior Indebtedness of the Company.
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SECTION 10.07. Relative Rights. This Article X defines the relative
rights of Securityholders and holders of Senior Indebtedness of the Company.
Nothing in this Indenture shall:
(1) impair, as between the Company and Secu rityholders, the
obligation of the Company which is absolute and unconditional, to pay
principal of and interest on the Securities in accordance with their
terms; or
(2) prevent the Trustee or any Securityholder from exercising its
available remedies upon a Default, subject to the rights of holders of
Senior Indebtedness of the Company to receive distributions otherwise
payable to Securityholders.
SECTION 10.08. Subordination May Not Be Impaired by Company. No
right of any holder of Senior Indebtedness of the Company to enforce the
subordination of the Indebtedness evidenced by the Securities shall be impaired
by any act or failure to act by the Company or by its failure to comply with
this Indenture.
SECTION 10.09. Rights of Trustee and Paying Agent. Notwithstanding
Section 10.03, the Trustee or Paying Agent may continue to make payments on the
Securities and shall not be charged with knowledge of the existence of facts
that would prohibit the making of any such payments unless, not less than two
Business Days prior to the date of such payment, a Trust Officer of the Trustee
receives notice satisfactory to it that payments may not be made under this
Article X. The Company, the Registrar or co-registrar, the Paying Agent, a
Representative or a holder of Senior Indebtedness of the Company may give the
notice; provided, however, that, if an issue of Senior Indebtedness of the
Company has a Representative, only the Representative may give the notice. The
Trustee shall be entitled to rely on the delivery to it of a written notice by a
Person representing himself or itself to be a holder of any Senior Indebtedness
of the Company (or a Representative of such
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holder) to establish that such notice has been given by a holder of such Senior
Indebtedness or Representative thereof.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness of the Company with the same rights it would have if it were not
Trustee. The Registrar and co-registrar and the Paying Agent may do the same
with like rights. The Trustee shall be entitled to all the rights set forth in
this Article X with respect to any Senior Indebtedness of the Company which may
at any time be held by it, to the same extent as any other holder of Senior
Indebtedness of the Company; and nothing in Article VII shall deprive the
Trustee of any of its rights as such holder. Nothing in this Article X shall
apply to claims of, or payments to, the Trustee under or pursuant to Section
7.07.
SECTION 10.10. Distribution or Notice to Representative. Whenever a
distribution is to be made or a notice given to holders of Senior Indebtedness
of the Company, the distribution may be made and the notice given to their
Representative (if any).
SECTION 10.11. Article X Not To Prevent Events of Default or Limit
Right To Accelerate. The failure to make a payment pursuant to the Securities by
reason of any provision in this Article X shall not be construed as preventing
the occurrence of a Default. Nothing in this Article X shall have any effect on
the right of the Securityholders or the Trustee to accelerate the maturity of
the Securities.
SECTION 10.12. Trust Moneys Not Subordinated. Notwithstanding
anything contained herein to the contrary, payments from money or the proceeds
of U.S. Government Obligations held in trust under Article VIII by the Trustee
for the payment of principal of and interest on the Securities shall not be
subordinated to the prior payment of any Senior Indebtedness of the Company or
subject to the restrictions set forth in this Article X, and none of the
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Securityholders shall be obligated to pay over any such amount to the Company or
any holder of Senior Indebtedness of the Company or any other creditor of the
Company.
SECTION 10.13. Trustee Entitled To Rely. Upon any payment or
distribution pursuant to this Article X, the Trustee and the Securityholders
shall be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section
10.02 are pending, (ii) upon a certificate of the liquidating trustee or agent
or other Person making such payment or distribution to the Trustee or to the
Securityholders or (iii) upon the Representatives for the holders of Senior
Indebtedness of the Company for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of the Senior
Indebtedness of the Company and other Indebtedness of the Company, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article X. In the event that
the Trustee determines, in good faith, that evidence is required with respect to
the right of any Person as a holder of Senior Indebtedness of the Company to
participate in any payment or distribution pursuant to this Article X, the
Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior Indebtedness of the
Company held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and other facts pertinent to the
rights of such Person under this Article X, and, if such evidence is not
furnished, the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment. The
provisions of Sections 7.01 and 7.02 shall be applicable to all actions or
omissions of actions by the Trustee pursuant to this Article X.
SECTION 10.14. Trustee To Effectuate Subordina tion. Each
Securityholder by accepting a Security author izes and directs the Trustee on
his behalf to take such action as may be necessary or appropriate to acknowledge
or
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effectuate the subordination between the Securityholders and the holders of
Senior Indebtedness of the Company as provided in this Article X and appoints
the Trustee as attorney-in-fact for any and all such purposes.
SECTION 10.15. Trustee Not Fiduciary for Holders of Senior
Indebtedness of the Company. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Indebtedness of the Company and shall
not be liable to any such holders if it shall mistakenly pay over or distribute
to Securityholders or the Company or any other Person, money or assets to which
any holders of Senior Indebtedness of the Company shall be entitled by virtue of
this Article X or otherwise.
SECTION 10.16. Reliance by Holders of Senior Indebtedness of the
Company on Subordination Provisions. Each Securityholder by accepting a Security
acknowledges and agrees that the foregoing subordination provisions are, and are
intended to be, an inducement and a consideration to each holder of any Senior
Indebtedness of the Company, whether such Senior Indebtedness was created or
acquired before or after the issuance of the Securities, to acquire and continue
to hold, or to continue to hold, such Senior Indebtedness and such holder of
such Senior Indebtedness of the Company shall be deemed conclusively to have
relied on such subordination provisions in acquiring and continuing to hold, or
in continuing to hold, such Senior Indebtedness.
SECTION 10.17. Trustee's Compensation Not Prejudiced. Nothing in
this Article shall apply to amounts due to the Trustee pursuant to other
sections of this Indenture.
ARTICLE XI
Subsidiary Guarantees
SECTION 11.01. Subsidiary Guarantees. Each Guarantor Subsidiary
hereby jointly and severally
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unconditionally and irrevocably guarantees, as a primary obligor and not merely
as a surety, on an unsecured senior subordinated basis to each Holder and to the
Trustee and its successors and assigns (a) the full and punctual payment of
principal of and interest on the Securities when due, whether at maturity, by
acceleration, by redemption or otherwise, and all other monetary obligations of
the Company under this Indenture (including obligations to the Trustee) and the
Securities and (b) the full and punctual performance within applicable grace
periods of all other obligations of the Company whether for expenses,
indemnification or otherwise under this Indenture and the Securities (all the
foregoing being hereinafter collectively called the "Obligations"). Each
Guarantor Subsidiary further agrees that the Obligations may be extended or
renewed, in whole or in part, without notice or further assent from each such
Guarantor Subsidiary, and that each such Guarantor Subsidiary shall remain bound
under this Article XI notwithstanding any extension or renewal of any
Obligation.
Each Guarantor Subsidiary waives presentation to, demand of, payment
from and protest to the Company of any of the Obligations and also waives notice
of protest for nonpayment. Each Guarantor Subsidiary waives notice of any
default under the Securities or the Obligations. The obligations of each
Guarantor Subsidiary hereunder shall not be affected by (a) the failure of any
Holder or the Trustee to assert any claim or demand or to enforce any right or
remedy against the Company or any other Person under this Indenture, the
Securities or any other agreement or otherwise; (b) any extension or renewal of
any thereof; (c) any rescission, waiver, amendment or modification of any of the
terms or provisions of this Indenture, the Securities or any other agreement;
(d) the release of any security held by any Holder or the Trustee for the
Obligations or any of them; (e) the failure of any Holder or Trustee to exercise
any right or remedy against any other guarantor of the Obligations; or (f) any
change in the ownership of such Guarantor Subsidiary, except as provided in
Section 11.02(b).
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Each Guarantor Subsidiary further agrees that its Subsidiary
Guaranty herein constitutes a guarantee of payment, performance and compliance
when due (and not a guarantee of collection) and waives any right to require
that any resort be had by any Holder or the Trustee to any security held for
payment of the Obligations.
The Subsidiary Guaranty of each Guarantor Subsidiary is, to the
extent and in the manner set forth in Article XII, subordinated and subject in
right of payment to the prior payment in full of the principal of and premium,
if any, and interest on all Senior Indebtedness of the relevant Guarantor
Subsidiary and is made subject to such provisions of this Indenture.
The obligations of each Guarantor Subsidiary hereunder shall not be
subject to any reduction, limitation, impairment or termination for any reason,
including any claim of waiver, release, surrender, alteration or compromise, and
shall not be subject to any defense of setoff, counterclaim, recoupment or
termination whatsoever or by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of each Guarantor Subsidiary herein
shall not be discharged or impaired or otherwise affected by the failure of any
Holder or the Trustee to assert any claim or demand or to enforce any remedy
under this Indenture, the Securities or any other agreement, by any waiver or
modification of any thereof, by any default, failure or delay, willful or
otherwise, in the performance of the Obligations, or by any other act or thing
or omission or delay to do any other act or thing which may or might in any
manner or to any extent vary the risk of any Guarantor Subsidiary or would
otherwise operate as a discharge of any Guarantor Subsidiary as a matter of law
or equity.
Each Guarantor Subsidiary further agrees that its Subsidiary
Guaranty herein shall continue to be effective or be reinstated, as the case may
be, if at any time payment, or any part thereof, of principal of or interest on
any
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Obligation is rescinded or must otherwise be restored by any Holder or the
Trustee upon the bankruptcy or reorganization of the Company or otherwise.
In furtherance of the foregoing and not in limitation of any other
right which any Holder or the Trustee has at law or in equity against any
Guarantor Subsidiary by virtue hereof, upon the failure of the Company to pay
the principal of or interest on any Obligation when and as the same shall become
due, whether at maturity, by acceleration, by redemption or otherwise, or to
perform or comply with any other Obligation, each Guarantor Subsidiary hereby
promises to and shall, upon receipt of written demand by the Trustee, forthwith
pay, or cause to be paid, in cash, to the Holders or the Trustee an amount equal
to the sum of (i) the unpaid principal amount of such Obligations, (ii) accrued
and unpaid interest on such Obligations (but only to the extent not prohibited
by law) and (iii) all other monetary Obligations of the Company to the Holders
and the Trustee.
Each Guarantor Subsidiary agrees that it shall not be entitled to
any right of subrogation in relation to the Holders in respect of any
Obligations guaranteed hereby until payment in full of all Obligations. Each
Guarantor Subsidiary further agrees that, as between it, on the one hand, and
the Holders and the Trustee, on the other hand, (x) the maturity of the
Obligations guaranteed hereby may be accelerated as provided in Article VI for
the purposes of any Subsidiary Guaranty herein, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
Obligations guaranteed hereby, and (y) in the event of any declaration of
acceleration of such Obligations as provided in Article VI, such Obligations
(whether or not due and payable) shall forthwith become due and payable by such
Guarantor Subsidiary for the purposes of this Section.
Each Guarantor Subsidiary also agrees to pay any and all costs and
expenses (including reasonable attorneys'
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fees and expenses) incurred by the Trustee or any Holder in enforcing any rights
under this Section.
SECTION 11.02. Limitation on Liability. (a) Any term or provision of
this Indenture to the contrary notwithstanding, the maximum, aggregate amount of
the obligations guaranteed hereunder by any Guarantor Subsidiary shall not
exceed the maximum amount that can be hereby guaranteed without rendering this
Indenture, as it relates to any Guarantor Subsidiary, voidable under applicable
law relating to fraudulent conveyance or fraudulent transfer or similar laws
affecting the rights of creditors generally.
(b) This Subsidiary Guaranty as to any Guarantor Subsidiary shall
terminate and be of no further force or effect upon the sale or other transfer
(i) by such Guarantor Subsidiary of all or substantially all of its assets or
(ii) by the Company of all of its stock or other equity interests in such
Guarantor Subsidiary, to a Person that is not an Affiliate of the Company;
provided, however, that such sale or transfer shall be deemed to constitute an
Asset Disposition and the Company shall comply with its obligations under
Section 4.06.
SECTION 11.03. Successors and Assigns. This Article XI shall be
binding upon each Guarantor Subsidiary and its successors and assigns and shall
enure to the benefit of the successors and assigns of the Trustee and the
Holders and, in the event of any transfer or assignment of rights by any Holder
or the Trustee, the rights and privileges conferred upon that party in this
Indenture and in the Securities shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions of this
Indenture.
SECTION 11.04. No Waiver. Neither a failure nor a delay on the part
of either the Trustee or the Holders in exercising any right, power or privilege
under this Article XI shall operate as a waiver thereof, nor shall a single or
partial exercise thereof preclude any other or further exercise of any right,
power or privilege. The
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rights, remedies and benefits of the Trustee and the Holders herein expressly
specified are cumulative and not exclusive of any other rights, remedies or
benefits which either may have under this Article XI at law, in equity, by
statute or otherwise.
SECTION 11.05. Modification. No modification, amendment or waiver of
any provision of this Article XI, nor the consent to any departure by any
Guarantor Subsidiary therefrom, shall in any event be effective unless the same
shall be in writing and signed by the Trustee, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice to or demand on any Guarantor Subsidiary in any case shall
entitle such Guarantor Subsidiary to any other or further notice or demand in
the same, similar or other circumstances.
SECTION 11.06. Execution of Supplemental Indenture for Future
Guarantor Subsidiaries. Each Subsidiary which is required to become a Guarantor
Subsidiary pursuant to Section 4.15 shall promptly execute and deliver to the
Trustee a supplemental indenture in the form of Exhibit D hereto pursuant to
which such Subsidiary shall become a Guarantor Subsidiary under this Article XI
and shall guarantee the Obligations. Concurrently with the execution and
delivery of such supplemental indenture, the Company shall deliver to the
Trustee an Opinion of Counsel and an Officers' Certificate to the effect that
such supplemental indenture has been duly authorized, executed and delivered by
such Subsidiary and that, subject to the application of bankruptcy, insolvency,
moratorium, fraudulent conveyance or transfer and other similar laws relating to
creditors' rights generally and to the principles of equity, whether considered
in a proceeding at law or in equity, the Subsidiary Guaranty of such Guarantor
Subsidiary is a legal, valid and binding obligation of such Guarantor
Subsidiary, enforceable against such Guarantor Subsidiary in accordance with its
terms.
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ARTICLE XII
Subordination of the Subsidiary Guaranties
SECTION 12.01. Agreement To Subordinate. Each Guarantor Subsidiary
agrees, and each Securityholder by accepting a Security agrees, that the
Obligations of a Guarantor Subsidiary are subordinated in right of payment, to
the extent and in the manner provided in this Article XII, to the prior payment
in full of all Senior Indebtedness of such Guarantor Subsidiary and that the
subordination is for the benefit of and enforceable by the holders of Senior
Indebtedness of such Guarantor Subsidiary. The Obligations with respect to a
Guarantor Subsidiary shall in all respects rank pari passu with all other Senior
Subordinated Indebtedness of such Guarantor Subsidiary, and only Indebtedness of
such Guarantor Subsidiary that is Senior Indebtedness of such Guarantor
Subsidiary shall rank senior to the Obligations of such Guarantor Subsidiary in
accordance with the provisions set forth herein.
SECTION 12.02. Liquidation, Dissolution, Bankruptcy. Upon any
payment or distribution of the assets of a Guarantor Subsidiary to creditors
upon a total or partial liquidation or a total or partial dissolution of such
Guarantor Subsidiary or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to such Guarantor Subsidiary and its
properties:
(1) holders of Senior Indebtedness of such Guarantor Subsidiary
shall be entitled to receive payment in full of such Senior Indebtedness
before Securityholders shall be entitled to receive any payment of any
Obligations from such Guarantor Subsidiary; and
(2) until the Senior Indebtedness of such Guarantor Subsidiary is
paid in full, any payment or distribution to which Securityholders would
be entitled but for this Article XII shall be made to holders of
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such Senior Indebtedness as their respective interests may appear.
SECTION 12.03. Default on Senior Indebtedness of a Guarantor
Subsidiary. A Guarantor Subsidiary may not make any payment pursuant to any of
the Obligations or repurchase, redeem or otherwise retire any Securities
(collectively, "pay its Guaranty") if (i) any Senior Indebtedness of such
Guarantor Subsidiary is not paid when due or (ii) any other default on Senior
Indebtedness of such Guarantor Subsidiary occurs and the maturity of such Senior
Indebtedness is accelerated in accordance with its terms unless, in either case,
(x) the default has been cured or waived and any such acceleration has been
rescinded or (y) such Senior Indebtedness has been paid in full; provided,
however, that such Guarantor Subsidiary may pay its Guaranty without regard to
the foregoing if such Guarantor Subsidiary and the Trustee receive written
notice approving such payment from the Representative of the holders of such
Senior Indebtedness with respect to which either of the events in clause (i) or
(ii) of this sentence has occurred and is continuing. During the continuance of
any default (other than a default described in clause (i) or (ii) of the
preceding sentence) with respect to any Designated Senior Indebtedness of a
Guarantor Subsidiary pursuant to which the maturity thereof may be accelerated
immediately without further notice (except such notice as may be required to
effect such acceleration) or the expiration of any applicable grace periods,
such Subsidiary Guarantor may not pay its Guaranty for a period (a "Guarantor
Subsidiary Payment Blockage Period") commencing upon the receipt by the Trustee
(with a copy to such Guarantor Subsidiary and the Company) of written notice (a
"Guarantor Subsidiary Blockage Notice") of such default from the Representative
of the holders of the Designated Senior Indebtedness of such Guarantor
Subsidiary specifying an election to effect a Guarantor Subsidiary Payment
Blockage Period and ending 179 days thereafter (or earlier if such Guarantor
Subsidiary Payment Blockage Period is terminated (i) by written notice to the
Trustee (with a copy to such Guarantor Subsidiary and the Company) from the
Person or
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Persons who gave such Guarantor Subsidiary Blockage Notice, (ii) because such
Designated Senior Indebtedness has been repaid in full or (iii) because the
default giving rise to such Guarantor Subsidiary Blockage Notice is no longer
continuing). Notwithstanding the provisions described in the immediately
preceding sentence (but subject to the provisions contained in the first
sentence of this Section), unless the holders of such Designated Senior
Indebtedness or the Representative of such holders shall have accelerated the
maturity of such Designated Senior Indebtedness, such Guarantor Subsidiary may
resume to pay its Guaranty after such Guarantor Subsidiary Payment Blockage
Period, including any missed payments. Not more than one Guarantor Subsidiary
Blockage Notice may be given with respect to a Guarantor Subsidiary in any
consecutive 360-day period, irrespective of the number of defaults with respect
to Designated Senior Indebtedness of such Guarantor Subsidiary during such
period; provided, however, that if any Guarantor Subsidiary Blockage Notice
within such 360-day period is given by or on behalf of any holders of Designated
Senior Indebtedness of such Guarantor Subsidiary (other than the Bank
Indebtedness), the Representative of the Bank Indebtedness may give another
Guarantor Subsidiary Blockage Notice within such period; provided further,
however, that in no event may the total number of days during which any
Guarantor Subsidiary Payment Blockage Period or Periods is in effect exceed 179
days in the aggregate during any 360 consecutive day period.
SECTION 12.04. Demand for Payment. If payment of the Securities is
accelerated because of an Event of Default and a demand for payment is made on a
Guarantor Subsidiary pursuant to Article XI the Trustee shall promptly notify
the holders of the Designated Senior Indebtedness of such Guarantor Subsidiary
(or the Representative of such holders) of such demand. If any Designated Senior
Indebtedness of such Guarantor Subsidiary is outstanding, such Guarantor
Subsidiary may not pay its Guaranty until five Business Days after such holders
or the Representative of the holders of the Designated Senior Indebtedness of
such Guarantor Subsidiary receive notice of such demand and, thereafter,
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may pay its Guaranty only if this Article XII otherwise permits payment at that
time.
SECTION 12.05. When Distribution Must Be Paid Over. If a payment or
distribution is made to Securityholders that because of this Article XII should
not have been made to them, the Securityholders who receive the payment or
distribution shall hold such payment or distribution in trust for holders of the
Senior Indebtedness of the relevant Guarantor Subsidiary and pay it over to them
as their respective interests may appear.
SECTION 12.06. Subrogation. After all Senior Indebtedness of a
Guarantor Subsidiary is paid in full and until the Securities are paid in full,
Securityholders shall be subrogated to the rights of holders of Senior
Indebtedness of such Guarantor Subsidiary to receive distributions applicable to
Senior Indebtedness of such Guarantor Subsidiary. A distribution made under this
Article XII to holders of Senior Indebtedness of such Guarantor Subsidiary which
otherwise would have been made to Securityholders is not, as between such
Guarantor Subsidiary and Securityholders, a payment by such Guarantor Subsidiary
on Senior Indebtedness of such Guarantor Subsidiary.
SECTION 12.07. Relative Rights. This Article XII defines the
relative rights of Securityholders and holders of Senior Indebtedness of a
Guarantor Subsidiary. Nothing in this Indenture shall:
(1) impair, as between a Guarantor Subsidiary and Securityholders,
the obligation of a Guarantor Subsidiary which is absolute and
unconditional, to pay its Obligations to the extent set forth in Article
XI; or
(2) prevent the Trustee or any Securityholder from exercising its
available remedies upon a default by a Guarantor Subsidiary under its
Obligations, subject to the rights of holders of Senior Indebtedness of
such
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Guarantor Subsidiary to receive distributions otherwise payable to
Securityholders.
SECTION 12.08. Subordination May Not Be Impaired by a Guarantor
Subsidiary. No right of any holder of Senior Indebtedness of a Guarantor
Subsidiary to enforce the subordination of the Obligations of such Guarantor
Subsidiary shall be impaired by any act or failure to act by such Guarantor
Subsidiary or by its failure to comply with this Indenture.
SECTION 12.09. Rights of Trustee and Paying Agent. Notwithstanding
Section 12.03, the Trustee or Paying Agent may continue to make payments on the
Securities and shall not be charged with knowledge of the existence of facts
that would prohibit the making of any such payments unless, not less than two
Business Days prior to the date of such payment, a Trust Officer of the Trustee
receives notice satisfactory to it that payments may not be made under this
Article XII. A Guarantor Subsidiary, the Registrar or co-registrar, the Paying
Agent, a Representative or a holder of Senior Indebtedness of a Guarantor
Subsidiary may give the notice; provided, however, that, if an issue of Senior
Indebtedness of a Guarantor Subsidiary has a Representative, only the
Representative may give the notice. The Trustee shall be entitled to rely on the
delivery to it of a written notice by a Person representing himself or itself to
be a holder of any Senior Indebtedness of a Guarantor Subsidiary (or a
Representative of such holder) to establish that such notice has been given by a
holder of such Senior Indebtedness or Representative thereof.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness of a Guarantor Subsidiary with the same rights it would have if it
were not Trustee. The Registrar and co-registrar and the Paying Agent may do the
same with like rights. The Trustee shall be entitled to all the rights set forth
in this Article XII with respect to any Senior Indebtedness of a Guarantor
Subsidiary which may at any time be held by it, to the same extent as any other
holder of Senior Indebtedness of such Guarantor Subsidiary;
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and nothing in Article VII shall deprive the Trustee of any of its rights as
such holder. Nothing in this Article XII shall apply to claims of, or payments
to, the Trustee under or pursuant to Section 7.07.
SECTION 12.10. Distribution or Notice to Representative. Whenever a
distribution is to be made or a notice given to holders of Senior Indebtedness
of a Guarantor Subsidiary, the distribution may be made and the notice given to
their Representative (if any).
SECTION 12.11. Article XII Not To Prevent Events of Default or Limit
Right To Accelerate. The failure of a Guarantor Subsidiary to make a payment on
any of its Obligations by reason of any provision in this Article XII shall not
be construed as preventing the occurrence of a default by such Guarantor
Subsidiary under its Obligations. Nothing in this Article XII shall have any
effect on the right of the Securityholders or the Trustee to make a demand for
payment on a Guarantor Subsidiary pursuant to Article XI.
SECTION 12.12. Trustee Entitled To Rely. Upon any payment or
distribution pursuant to this Article XII, the Trustee and the Securityholders
shall be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 12.02
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Securityholders or (iii) upon the Representatives for the holders of Senior
Indebtedness of a Guarantor Subsidiary for the purpose of ascertaining the
Persons entitled to participate in such payment or distribution, the holders of
the Senior Indebtedness of a Guarantor Subsidiary and other Indebtedness of a
Guarantor Subsidiary, the amount thereof or payable thereon, the amount or
amounts paid or distributed thereon and all other facts pertinent thereto or to
this Article XII. In the event that the Trustee determines, in good faith, that
evidence is required with respect to the right of any Person as a holder of
Senior
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Indebtedness of a Guarantor Subsidiary to participate in any payment or
distribution pursuant to this Article XII, the Trustee may request such Person
to furnish evidence to the reasonable satisfaction of the Trustee as to the
amount of Senior Indebtedness of such Guarantor Subsidiary held by such Person,
the extent to which such Person is entitled to participate in such payment or
distribution and other facts pertinent to the rights of such Person under this
Article XII, and, if such evidence is not furnished, the Trustee may defer any
payment to such Person pending judicial determination as to the right of such
Person to receive such payment. The provisions of Sections 7.01 and 7.02 shall
be applicable to all actions or omissions of actions by the Trustee pursuant to
this Article XII.
SECTION 12.13. Trustee To Effectuate Subordination. Each
Securityholder by accepting a Security authorizes and directs the Trustee on
his behalf to take such action as may be necessary or appropriate to acknowledge
or effectuate the subordination between the Securityholders and the holders of
Senior Indebtedness of each of the Guarantor Subsidiaries as provided in this
Article XII and appoints the Trustee as attorney-in-fact for any and all such
purposes.
SECTION 12.14. Trustee Not Fiduciary for Holders of Senior
Indebtedness of a Guarantor Subsidiary. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness of a Guarantor
Subsidiary and shall not be liable to any such holders if it shall mistakenly
pay over or distribute to Securityholders or the relevant Guarantor Subsidiary
or any other Person, money or assets to which any holders of Senior Indebtedness
of such Guarantor Subsidiary shall be entitled by virtue of this Article XII or
otherwise.
SECTION 12.15. Reliance by Holders of Senior Indebtedness of a
Guarantor Subsidiary on Subordination Provisions. Each Securityholder by
accepting a Security acknowledges and agrees that the foregoing subordination
provisions are, and are intended to be, an inducement and a
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consideration to each holder of any Senior Indebtedness of a Guarantor
Subsidiary, whether such Senior Indebtedness was created or acquired before or
after the issuance of the Securities, to acquire and continue to hold, or to
continue to hold, such Senior Indebtedness and such holder of Senior
Indebtedness shall be deemed conclusively to have relied on such subordination
provisions in acquiring and continuing to hold, or in continuing to hold, such
Senior Indebtedness.
ARTICLE XIII
Miscellaneous
SECTION 13.01. Trust Indenture Act Controls. If any provision of
this Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
SECTION 13.02. Notices. Any notice or communication shall be in
writing and delivered in person or mailed by first-class mail or by national
overnight courier service addressed as follows:
if to the Company or any Guarantor Subsidiary:
Lifestyle Furnishings International Ltd.
1300 National Highway
Thomasville, NC 27360
Attention of:
Chief Financial Officer
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if to the Trustee:
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
Attention of:
Corporate Trust Agencies & Administration
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Securityholder shall be
mailed to the Securityholder at the Securityholder's address as it appears on
the registration books of the Registrar and shall be sufficiently given 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.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice.
SECTION 13.03. Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA ss. 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA ss. 312(c).
SECTION 13.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by
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the Company to the Trustee to take or refrain from taking any action under this
Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee and complying with Section 13.05 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 in form and substance reasonably
satisfactory to the Trustee and complying with Section 13.05 stating that,
in the opinion of such counsel, all such conditions precedent have been
complied with.
SECTION 13.05. Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Indenture shall include:
(1) a statement that the individual 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 individual, he has made
such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
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SECTION 13.06. When Securities Disregarded. 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 by any Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company shall be disregarded and deemed not to be
outstanding, except that, for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities which the Trustee knows are so owned shall be so disregarded. Also,
subject to the foregoing, only Securities outstanding at the time shall be
considered in any such determination.
SECTION 13.07. Rules by Trustee, Paying Agent and Registrar. The
Trustee may make reasonable rules for action by or a meeting of Securityholders.
The Registrar and the Paying Agent may make reasonable rules for their
functions.
SECTION 13.08. Legal Holidays. A "Legal Holiday" is a Saturday, a
Sunday or a day on which commercial banking institutions (including, without
limitation, the Federal Reserve System) are authorized or required by law to
close in New York City. If a payment date is a Legal Holiday, payment shall be
made on the next succeeding day that is not a Legal Holiday, and no interest
shall accrue for the intervening period. If a regular record date is a Legal
Holiday, the record date shall not be affected.
SECTION 13.09. Governing Law. THIS INDENTURE AND THE SECURITIES
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW
TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.
SECTION 13.10. No Recourse Against Others. A director, officer,
employee or stockholder, as such, of the Company of any Guarantor Subsidiary
shall not have any liability for any obligations of the Company or any Guarantor
Subsidiary under the Securities or this Indenture
140
or for any claim based on, in respect of or by reason of such obligations or
their creation. By accepting a Security, each Securityholder shall waive and
release all such liability. The waiver and release shall be part of the
consideration for the issue of the Securities.
SECTION 13.11. 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 successors.
SECTION 13.12. Multiple Originals. The parties may sign any number
of copies of this Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement. One signed copy is enough to prove
this Indenture.
SECTION 13.13. Table of Contents; Headings. The table of contents,
cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not intended
to be considered a part hereof and shall not modify or restrict any of the terms
or provisions hereof.
141
IN WITNESS WHEREOF, the parties have caused this Indenture to be
duly executed as of the date first written above.
LIFESTYLE FURNISHINGS
INTERNATIONAL LTD.,
by_____________________________
Name:
Title:
AMETEX FABRICS, INC.
by_____________________________
Name:
Title:
THE BERKLINE CORPORATION,
by_____________________________
Name:
Title:
BLUE MOUNTAIN TRUCKING
CORPORATION,
by_____________________________
Name:
Title:
142
CUSTOM TRUCK TIRES, INC.,
by_____________________________
Name:
Title:
D-H RETAIL SPACE, INC.,
by_____________________________
Name:
Title:
DREXEL HERITAGE ADVERTISING,
INC.,
by_____________________________
Name:
Title:
DREXEL HERITAGE FURNISHINGS
INC.,
by_____________________________
Name:
Title:
143
DREXEL HERITAGE HOME
INSPIRATIONS, INC.,
by_____________________________
Name:
Title:
HENREDON FURNITURE INDUSTRIES,
INC.,
by_____________________________
Name:
Title:
HENREDON TRANSPORTATION
COMPANY,
by_____________________________
Name:
Title:
INTERIOR FABRIC DESIGN, INC.,
by_____________________________
Name:
Title:
144
INTRO EUROPE, INC.,
by_____________________________
Name:
Title:
LA BARGE, INC.,
by_____________________________
Name:
Title:
LEXINGTON FURNITURE
INDUSTRIES, INC.,
by_____________________________
Name:
Title:
MAITLAND-SMITH, INC.,
by_____________________________
Name:
Title:
MARBRO LAMP COMPANY,
by_____________________________
Name:
Title:
145
RAMM, SON & CROCKER, INC.,
by_____________________________
Name:
Title:
ROBERT ALLEN FABRICS, INC.,
by_____________________________
Name:
Title:
ROBERT ALLEN FABRICS OF N.Y.,
INC.,
by_____________________________
Name:
Title:
SUNBURY TEXTILE MILLS, INC.,
by_____________________________
Name:
Title:
UNIVERSAL FURNITURE
INDUSTRIES, INC.,
by_____________________________
Name:
Title:
146
UNIVERSAL FURNITURE LIMITED,
by_____________________________
Name:
Title:
IBJ SCHRODER BANK AND TRUST
COMPANY,
by_____________________________
Name:
Title: